One of the nation’s largest distributors of pharmaceutical drugs has agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act.
The settlement resolves allegations that beginning in 2008 and continuing into 2012, the McKesson Corporation’s former Landover, Maryland distribution facility routinely failed to report, and fulfilled, suspicious orders for Schedule II and III controlled substances placed by retail pharmacies, including numerous pharmacies in the Northern District of West Virginia.
“In many instances, the suspicious orders placed by West Virginia pharmacies resulted in prescription narcotics being diverted for illegal use and abuse,” said Acting U.S. Attorney Betsy Jividen.
“The abuse of prescription drugs has rampantly spread throughout our communities,” said DEA Special Agent in Charge Karl C. Colder. “This abuse has directly resulted in the escalation of heroin addiction and related overdoses. Today’s settlement sends a clear message to all distributors of pharmaceutical drugs that it is essential to dispense controlled substances in compliance with DEA’s record keeping requirements. DEA is dedicated to combat the prescription drug abuse problem in West Virginia and throughout the country and to hold all DEA registrants accountable.”
The nationwide settlement 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.
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. For example, 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.
A government 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.
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.
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.