Last month, McKesson Corp. was named a defendant in a New York lawsuit aimed at some of the largest drug distributors and manufacturers in the country. McKesson, which was listed as six on the Fortune 500 list with $198.5 billion in revenue in 2017, is the largest pharmaceutical company in the country with 76,000 employees. The company moved its international headquarters from San Francisco to Irving last fall.
As first reported in the New York Times, the New York Attorney General alleges that McKesson and other major distributors conducted a number of fraudulent practices leading to the proliferation of opioid addiction in the state. The lawsuit claims the distributors warned pharmacies when they were nearing their monthly opioid limits and helped them get around the rules by changing the timing and volume of the drugs. The complaint says that the distributor would also warn pharmacies before they made what were supposed to be surprise audits.
Distributors such as McKesson purchase wholesale medication from manufacturers and distribute them to pharmacies. The lawsuit says that McKesson and other defendants who were “entrusted under New York law with critical roles in preventing the misuse and diversion of controlled substances—deliberately betrayed those duties through a persistent course of fraudulent and illegal misconduct, in order to profiteer from the plague they knew would be unleashed.”
According to the suit, these distributors neglected their duties to monitor where opioids were going. “And even though their customers were displaying a continuous parade of red flags indicating illegal activity, they continued to pour enormous volumes of opioid drugs into those customers’ dispensaries,” it reads.
The suit describes marketing material from the defendants that made false claims about the impact and addictiveness of the painkillers while the companies funded and manipulated “front groups” that posed as unbiased organizations that promoted the drugs.
The lawsuit contains data that shows how opioid prescriptions quadrupled nationwide between 2001 and 2011, and in New York prescriptions increased ninefold over the same period. In 1999, there were less than 10,000 opioid related deaths nationwide, but by 2017, there were nearly 50,000.
Up to 80 percent of heroin addicts were originally introduced to addictive opioids from legitimate prescriptions, the lawsuit says. Heroin is often cut with the cheaper, more addictive, and more deadly fentanyl. “Opioid-related overdose fatalities in the State have more than doubled since 2013—with a 30-fold increase in fentanyl-related deaths in New York City,” the suit reads.
McKesson didn’t respond to the specific suit, but in a statement on their website wrote, “McKesson delivers life-saving medicines to millions of Americans each day. As a company, we are deeply concerned by the impact the opioid epidemic is having on families and communities across our nation. We are committed to engaging with all who share our dedication to acting with urgency and working together to end this national crisis.”
“We maintain—and continuously enhance—strong programs designed to detect and prevent opioid diversion within the pharmaceutical supply chain. We only distribute controlled substances, including opioids, to DEA-registered and state-licensed pharmacies. For many years, sales of controlled substances ordered by pharmacies in the U.S. have been reported to the DEA (Drug Enforcement Administration) for its internal database.”
In 2017, the Washington Post reported that McKesson agreed to pay $150 million in fines to the federal government and to suspend the sale of controlled substances at four distribution centers, a record for drug distribution companies. They paid $13.25 million in 2008 on similar charges. The Justice Department said that McKesson failed to stop suspicious orders of powerful painkillers from pharmacies as required by the Controlled Substances Act. Between 2008 and 2013, Colorado pharmacies filed 1.6 million orders from controlled substances, but reported just 16 of them as suspicious.
Another Washington Post article and 60 Minutes episode, explains how the Drug Enforcement Agency worked to revoke registrations to distribute controlled substances at McKesson’s 30 drug warehouses, fine the company $1 billion, and bring the first ever criminal case against a drug distribution company. But federal attorneys were not convinced to make a criminal charge, and struck a more lenient deal with McKesson. None of the warehouses would lose their registration, and the fine was the aforementioned $150 million.
“Within the ranks, we feel like our system was hijacked,” Helen Kaupang told the Washington Post. Kaupang is a veteran DEA investigator who worked the McKesson case.