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Press Release

McKesson Agrees To Pay Record $150 Million Settlement For Failure To Report Suspicious Orders Of Pharmaceutical Drugs

For Immediate Release
U.S. Attorney's Office, Eastern District of Kentucky

LEXINGTON, Ky. – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Drug Enforcement Administration (DEA) Detroit Field Division Special Agent in Charge, Timothy J. Plancon, announced today.


Locally, this settlement resolves the U.S. Attorney’s Office for the Eastern District of Kentucky’s and DEA London Resident Office Diversion Group’s joint investigation of McKesson’s Washington Courthouse, Ohio Distribution Center, which distributed pharmaceutical drugs to pharmacies in Kentucky, Ohio, and West Virginia. The settlement further resolves open civil investigations being conducted by eleven other U.S. Attorney’s Offices across the nation and administrative investigations by DEA.


“McKesson’s failure to report suspicious orders fueled the opioid epidemic in eastern Kentucky,” said Acting U.S. Attorney Shier. “Opioid abuse has devastated our community, and the investigation of drug distributors, like McKesson, is one aspect of the United States’s multifaceted fight against this epidemic.”


DEA Special Agent in Charge Plancon said: “The United States is in the midst of an opiate epidemic which is being fueled by the misuse of opiate painkillers. This historic settlement demonstrates DEA’s commitment to the public health and safety by holding the McKesson Corporation accountable for their actions. It doesn’t matter if the violator is a multi-billion dollar corporation, or an individual selling smaller amounts of drugs on the street, DEA is committed to fighting this epidemic from all angles.”


The nationwide settlement requires McKesson to suspend sales of controlled substances from its Washington Courthouse Distribution Center and distribution centers in Colorado, Michigan, and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.


In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.


The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. For example, from January 1, 2009 to August 1, 2013, McKesson’s Washington Courthouse Distribution Center failed to report suspicious orders of controlled substances to DEA.


In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.


Locally, the civil penalty investigation was conducted by the U.S. Attorney’s Office for the Eastern District of Kentucky and DEA Detroit Field Division’s London Resident Office’s Diversion Group. This multi-district investigation also involved the following DEA Offices: Boston Field Division, Chicago Field Division, Denver Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices also participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.


U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit, and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado), Alan McGonigal (Northern District of West Virginia), and Katherine Crytzer (Eastern District of Kentucky) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill, and Krista Tongring represented DEA. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.


Updated January 19, 2017

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