One the biggest pharmaceutical distributors in the United States agreed to pay a record $150 million civil penalty to settle claims that it failed to report suspicious opioid shipments between 2008 and 2013. For the second time in the past decade, the U.S. Justice Department claimed that McKesson Corporation failed to effectively implement a system to monitor and report suspicious shipments.
In 2008, McKesson settled similar claims for $13.25 million. Under that settlement, the company agreed to create a program to comply with the Controlled Substances Act, which requires distributors to report suspicious orders to the Drug Enforcement Administration.
However, a DOJ investigation revealed that McKesson never fully implemented or obeyed its own compliance standards. The company processed 1.6 million orders from June 2008 to May 2013, but it reported only 16 suspicious orders stemming from one purchaser.
“The epidemic of opioid abuse is carving an increasingly destructive path through our country,” U.S. Attorney Paul Fishman said in a statement. “But nearly a decade ago, McKesson was sanctioned for violations that were contributing to the misuse of these prescription painkillers. Given a chance to implement a more robust system for monitoring the distribution of these products, the company instead chose to ignore its own compliance regime in favor of a bigger bottom-line.”
The government alleged that McKesson supplied numerous pharmacies with increasing numbers of opioid pain relievers, such as oxycodone and hydrocodone, but it didn’t report orders that were unusually frequent or large.
Distributors have played a role in the ongoing opioid epidemic that has led to more than 200,000 fatal drug overdoses and affected millions of people. Other distributors, such as Cardinal Health and Walgreens, have also paid multimillion dollar fines for violating the Controlled Substances Act.
McKesson is the first distributor to pay a second fine from allegations involving opioids. The recent settlement includes a much larger fine and a multiyear suspension of sales involving controlled substances from four distribution centers. The centers are located in Florida, Ohio, Michigan and Colorado.
“Pharmaceutical distributors play an important role in identifying and combating prescription drug diversion and abuse,” McKesson CEO John Hammergren said in a statement. “McKesson, as one of the nation’s largest distributors, takes our role seriously.”
McKesson agreed to implement an even more rigorous monitoring program and to make “specific, rigorous staffing and organizational improvements.” It will also undergo regular audits and allow an independent monitor to assess its compliance. No company has ever agreed to an independent monitor in a Controlled Substance Act settlement case.
Corporations Contributed to the Epidemic
Purdue Pharma has long been at the forefront of litigation involving the opioid epidemic. The company agreed to a $600 million settlement and pled guilty to falsely marketing OxyContin, an extended-release version of oxycodone, in 2007.
Three Purdue executives also pled guilty to fraudulent marketing charges and agreed to pay $34.5 million in fines in a rare instance of personal accountability. In 2016, Purdue settled a $24 million case with Kentucky to resolve similar charges.
Other companies including Cephalon and Alpharma have also agreed to multimillion dollar settlements to resolve claims that they falsely marketed opiate-based medications.
In a statement about the McKesson settlement, DEA Special Agent Carl Kotowski said pharmaceutical companies were at the frontlines of the battle against prescription drug abuse.
“If they turn a blind eye to suspicious orders of pharmaceutical controlled substances they are contributing to this epidemic,” Kotowski said.
More than 33,000 people died from opioid overdoses in 2015, an increase from the 28,647 deaths that occurred in 2014. Prescription opioids were responsible for more than half of those deaths, according to the Centers for Disease Control and Prevention.
Numerous lawsuits involving opioids are currently pending against multiple companies for false marketing, conspiring to bribe prescribers, conspiring to defraud insurance companies or for conspiring to create a monopoly.