Health Law Daily McKesson pays $150M for ‘suspicious’ opioid orders, earns severe sanctions
Wednesday, January 18, 2017

McKesson pays $150M for ‘suspicious’ opioid orders, earns severe sanctions

By Harold Bishop, J.D.

McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, including controlled substances, has agreed to a pay a record civil money penalty (CMP) of $150 million for failure 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 from 2008 through 2013. These included orders for oxycodone and hydrocodone pills that were unusual in their frequency, size, or other patterns.

The nationwide settlement with the Department of Justice (DOJ), on behalf of the Drug Enforcement Administration (DEA), also requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor of controlled substances. The settlement also imposes new and enhanced compliance obligations on McKesson’s network of distribution centers located in Colorado, Illinois, New Jersey, Wisconsin, Florida, Michigan, Massachusetts, California, and Ohio.

Failure to adhere to 2008 settlement. According to a DOJ press release and language contained in the nationwide settlement, McKesson agreed to a $13.25 million CMP settlement in 2008 for similar violations. As a result of the 2008 settlement, McKesson developed a Controlled Substance Monitoring Program (CSMP) in which it had the duty to monitor it sales of all controlled substances and report suspicious orders to the DEA. The government’s current investigation developed evidence that after 2008 McKesson did not fully implement or adhere to its own CSNP. For example, in Colorado, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported only 16 of those orders as suspicious, all of which were connected to one instance related to a recently terminated customer.

Current settlement. In addition to the CMPs and suspension of sales, the DOJ and McKesson have agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to enter into a 2017 Administrative Memorandum of Agreement with rigorous staffing and organizational improvements, periodic auditing, and stipulated financial penalties for failing to adhere to the compliance terms.

Critical to the settlement is a Compliance Addendum, which requires McKesson to engage an independent review organization (IRO) to monitor and assess compliance, the first IRO monitor of its kind in a controlled substance CMP settlement.

Companies: McKesson Corporation

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