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McKesson’s $141 Million Shareholder Settlement Heads to Judge

Dec. 1, 2022, 3:58 PM

The pension fund leading shareholder litigation against McKesson Corp. is seeking court approval for a $141 million settlement of claims that the drug distributor kept investors in the dark about a nationwide scheme to fix generic drug prices.

The motion, filed late Wednesday by the Evanston Police Pension Fund, asks Judge Charles R. Breyer to sign off on the deal, which would resolve securities fraud claims facing McKesson in the US District Court for the Northern District of California.

The long-running investor lawsuit, like similar cases targeting other pharmaceutical wholesalers and manufacturers, stems from the price-fixing controversy that engulfed the generic drug industry after the Justice Department launched an investigation in 2014.

The DOJ probe has led so far to federal criminal charges and a sprawling multidistrict litigation that includes consolidated class actions and antitrust claims by pharmacies, pension funds, insurers, distributors, hospitals, and nearly every state attorney general.

That case, which McKesson escaped in 2019, is moving forward slowly in the US District Court for the Eastern District of Pennsylvania.

The class action settlement with McKesson shareholders, first disclosed out of court in early November, comes about a year after Breyer’s most recent ruling narrowing the allegations against the company. In that October 2021 decision, the judge threw out claims involving a 2016 stock drop, saying the market had already digested news of the drug pricing scandal.

Breyer previously rejected allegations that McKesson played a role in fixing drug prices, although he certified the case as a class action and let it move forward with claims that the company fraudulently touted a legitimate basis for the high prices sustaining its business.

Robbins Geller Rudman & Dowd LLP is lead counsel for the pension fund. McKesson is represented by Sidley Austin LLP and Simpson Thacher & Bartlett LLP.

The case is Evanston Police Pension Fund v. McKesson Corp., N.D. Cal., No. 18-cv-6525, motion for preliminary settlement approval filed 11/30/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com