McKesson Corp. pays $150M in record settlement with DOJ
- Drug distribution giant McKesson Corporation this week forked over $150 million to settle alleged violations of the Controlled Substances Act in an agreement with the Department of Justice and Drug Enforcement Agency.
- In addition to the penalty, McKesson will be required to halt sales of all controlled substances from four distribution centers in Colorado, Ohio, Michigan and Florida for several years— a penalty the DOJ described as among the most severe ever agreed to by a DEA-registered distributor.
- The U.S. government alleged that McKesson failed to detect and report suspiciously large or frequent orders of controlled substances from independent or small chain pharmacy customers.
Drug overdose deaths from opioids in the U.S. have increased sharply over the past two years, fueled in part by high prescribing rates for management of acute and chronic pain.
Opioid-related deaths totaled 33,091 in 2015 and overall overdoses reported have quadrupled since 1999, according to the Centers for Disease Control and Prevention. States such as West Virginia, New Hampshire and Ohio have been hit particularly hard by the epidemic.
While regulators and government had initially been slow to respond, growing awareness has ramped up pressure and led agencies like the Food and Drug Administration to unveil new efforts.
In that context, the federal government investigated McKesson's distribution practices for controlled substances such as oxycodone and hydrocodone. According to claims by the DOJ, McKesson failed to put in place a system that would appropriately detect and report suspicious orders of these controlled substances.
For example, McKesson processed 1.6 million orders for controlled substances in Colorado between 2008 and 2013, yet flagged only 16 orders as suspicious.
McKesson had paid $13.25 million in 2008 to resolve similar violations, putting in place a compliance program. But, according to the government, the company did not fully adhere and implement to that program, leading to the new claims.
McKesson agreed to enhanced compliance terms over the next five years and will hire an independent monitor to assess compliance.
"McKesson, as one of the nation’s largest distributors, takes our role seriously. We continue to significantly enhance the procedures and safeguards across our distribution network to help curtail prescription drug diversion while ensuring patient access to needed medications," said McKesson CEO John H. Hammergren.
But the company also pointed to the need for a broader approach addresses the entire supply chain, from the regulators, through the manufacturers and distributors, to the pharmacists, doctors and patients.
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