McKesson paying record $150M to settle with feds over opioid sales

Drug wholesaler McKesson will pay $150 million to settle with the DOJ allegations that it did not monitor "suspicious" opioid orders.

Some years back, McKesson got fined $13.25 million for not reporting suspicious sales of controlled drugs from its distribution centers. The feds now say the drug distributor didn’t learn its lesson and this time around its penalty is larger, a record $150 million.

The Justice Department announced on Tuesday that in addition to the civil payment for alleged violations of the Controlled Substances Act (CSA), McKesson must suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida.  

“The staged suspensions are among the most severe sanctions ever agreed to by a Drug Enforcement Administration (DEA) registered distributor,” the government said.

McKesson said in a statement that it agreed to the settlement “in the interest of moving beyond disagreements about whether McKesson was complying with the controlled substance regulations." It said it was committed to doing its part to deal with the opioid abuse problem and had improved oversight since the Justice Department first made its allegations in 2013. It took a charge in 2015 to cover the expense.

“We are committed to tackling this multi-faceted problem in collaboration with all parties in the supply chain that share the responsibility for the distribution of opioid medications,” CEO John H. Hammergren said in the statement.

According to the DEA, McKesson never lived up to a 2008 agreement to watch out for and report “suspicious orders” for controlled substances from independent and small chain pharmacies and simply didn’t do it. The government pointed to growing sales of oxycodone and hydrocodone pills from small pharmacies that should have appeared unusual from their frequency or size.

In fact the government said that between 2008 and 2013, McKesson processed 1.6 million orders for controlled substances but reported only 16 orders, all from the same pharmacy, as suspicious.

The DEA says that McKesson has again agreed to certain improvements to its system, but more importantly, must hire “an independent monitor to assess compliance—the first independent monitor of its kind in a CSA civil penalty settlement.”

The McKesson deal caps off a series of settlements made in recent weeks by the country’s three biggest drug distributors with both state and federal authorities for not being more conscientious about opioid sales in the face of a national epidemic. The McKesson settlement comes just weeks after Cardinal Health struck its own deal with the DOJ over similar allegations but on a much smaller scale. Cardinal Health agreed to pay $44 million.

And Cardinal and AmerisourceBergen also recently agreed to settle claims with West Virginia for similar issues, with Cardinal paying $20 million and AmerisourceBergen paying $16 million, the West Virginia Record reported. A small wholesaler, Miami-Luken, had previously settled with the state for $2.5 million.

According to the Wall Street Journal, the companies said in separate statements that they were dedicated to doing their parts in the fight against addiction to prescription painkillers.

The settlements come amid a national backlash over the epidemic abuse of opioids and growing overdose deaths. The FDA and the Centers for Disease Control and Prevention have established new guidelines for prescribing opioids and encouraging doctors to look for alternatives.

States have been suing opioid makers, trying to hold them at least partially responsible for the epidemic for downplaying the risks of the highly addictive drugs. Meanwhile, some drugmakers have agreed to codes for marketing the drugs, and others have created marketing campaigns about the dangers of addiction, even humorous ones.