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McKesson hit with record $150 million civil penalty for alleged Controlled Substance Act violations

Settlement will require McKesson to hire an independent monitor to assess compliance, first of its kind in a CSA civil penalty settlement, DOJ said.

Beth Jones Sanborn, Managing Editor

Pharmaceutical giant McKesson will pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act, the Department of Justice announced Tuesday. This civil penalty follows another the company was hit with in relation to the CSA, following another in 2008 for a much smaller amount in relation to similar allegations.

The settlement orders McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. Most notably, the settlement will require McKesson to hire an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement. McKesson also agreed to beefed up compliance terms for the next five years, including specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms.

"The staged suspensions are among the most severe sanctions ever agreed to by a Drug Enforcement Administration registered distributor," the DOJ said in a statement.

[Also: McKesson Technology Solutions to rebrand as Change Healthcare after merger closes]

McKesson's previous CSA violation case occurred in 2008, when the company agreed to a $13.25 million civil penalty after the government alleged that McKesson failed to implement and execute on an effective system by which "suspicious orders" for controlled substances distributed to its independent and small pharmacies could be detected and reported. These are orders whose size, frequency, or other details are unusual.

The DOJ said from 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills. These medications are frequently misused, and are central elements of the current opioid epidemic. For instance, McKesson processed in excess of 1.6 million orders for controlled substances between June 2008 and May 2013. However, only 16 orders were flagged as suspicious, and all were connected to one incident involving a customer who'd recently been "terminated," the DOJ said.

[Also: McKesson identifies five health system pharmacy trends to watch in 2017]

"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."

Numerous DEA field divisions assisted with the investigation, as did U.S. Attorney's Offices nationwide from California and Colorado to Illinois, Kentucky, and Massachusetts, as well as others.

Twitter: @BethJSanborn

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