Drug company that ‘fueled’ opioid epidemic in Ky. to pay $150 million

One of the nation’s largest pharmaceutical distributors allegedly failed to report suspicious orders in Kentucky and elsewhere, contributing to a spike in abuse of painkillers called opioids, federal authorities have charged.

McKesson Corp. agreed to pay a $150 million penalty to the federal government for alleged violations of federal drug law, the U.S. Justice Department announced Wednesday. The case was a civil, not criminal, matter.

The settlement resolves an investigation of a McKesson distribution center in Ohio by the U.S. Drug Enforcement Agency office in London and the U.S. Attorney’s Office for the Eastern District of Kentucky, based in Lexington, according to a news release.

The deal also resolves investigations by 11 other U.S. Attorney’s Offices.

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

Because McKesson was not reporting as required, it’s more likely pills were illegally diverted because the DEA was not able to monitor as closely, Shier said.

Federal authorities said the drug orders at issue were suspicious because they were unusual in frequency, size or other patterns.

McKesson agreed in 2008 to pay $13.25 million for similar violations, but the federal investigation showed that the company didn’t fully implement or follow the compliance program it developed after that settlement.

That is why the penalties were ratcheted up under the new settlement, Shier said.

McKesson supplied drugs to independent pharmacies and small chains. From 2008 to 2013, the company shipped an increasing amount of oxycodone and hydrocodone pills, which are frequently misused, according to the federal news release.

Abuse of oxycodone and hydrocodone has been a factor in rising overdose deaths in Kentucky. In 2015, oxycodone was detected in 23 percent of overdose deaths and hydrocodone in 21 percent, according to the Kentucky Office of Drug Control Policy.

The nationwide settlement announced Wednesday requires McKesson to suspend sales of controlled substances from its distribution center in Washington Courthouse, Ohio, for two years, and centers in Colorado, Michigan and Florida.

The deal also includes tougher compliance requirements on the company, including hiring an independent monitor to make sure it follows the rules. It is the first time that has been required under such a settlement.

McKesson said on its website that it is the largest health care company in the country and delivers a third of all the medications used daily in North America.

The company has made significant changes in monitoring its distributions and is serious about its role in helping combat drug diversion, it said in a news release.

“We continue to significantly enhance the procedures and safeguards across our distribution network to help curtail prescription drug diversion while ensuring patient access to needed medications,” John H. Hammergren, the chairman and chief executive officer, said in the release.