© Reuters.
By Jonathan Stempel
NEW YORK (Reuters) -A federal appeals court on Tuesday revived a lawsuit by a whistleblower who accused McKesson of providing drug pricing tools to doctors for free, to induce them to buy drugs from the company.
The 3-0 decision by the 2nd U.S. Circuit Court of Appeals in Manhattan restored state law claims by Adam Hart, a former McKesson business development executive, over tools to help oncologists increase profit margins for prescribed cancer drugs.
Hart said McKesson offered the tools as a kickback to doctors who agreed to make the Irving, Texas-based pharmaceutical distributor their primary wholesale supplier of branded and generic drugs.
The Florida resident sued under the federal False Claims Act, saying the kickbacks tainted reimbursement claims submitted to Medicare and Medicaid, and violated a U.S. anti-kickback statute and similar laws of 27 states and Washington, D.C.
Writing for the appeals court, Circuit Judge Gerard Lynch said Hart fell short of alleging that McKesson willfully broke the federal anti-kickback law.
Hart’s allegations included that McKesson destroyed documents to conceal its wrongful conduct, and that one executive emailed another about the pricing tools and said: “You didn’t get this from me …. ok?”
Lynch, however, said a lower court judge erred in finding that Hart’s state law claims, some of which required no proof of willfulness, could survive only if the federal claim survived.
“The district court erred in dismissing Hart’s state-law claims on the basis that they were premised solely on violations of the federal AKS,” Lynch wrote.
McKesson and its lawyers did not immediately respond to requests for comment. Hart’s lawyers did not immediately respond to similar requests.
The appeals court returned Hart’s case to U.S. District Judge Ronnie Abrams in Manhattan.
False Claims Act cases let whistleblowers pursue claims on behalf of the federal government, and share in recoveries. The U.S. Department of Justice did not intervene in Hart’s case.
McKesson generated $2.21 billion of profit on $232.6 billion of revenue in the nine months ending Dec. 31.
The case is U.S. ex rel Hart v McKesson Corp (NYSE:) et al, 2nd U.S. Circuit Court of Appeals, No. 23-726.