The 10 Biggest McKesson Lawsuits in Company History

McKesson Corporation is an American pharmaceutical distributor founded by John McKesson and Charles Olcott in 1833. It’s responsible for distributing drugs and providing health information technology. It’s based in San Francisco and is also in charge of providing a third of healthcare management tools and medical supplies. Since the COVID-19 pandemic, McKesson has taken up the role of distributing vaccines, making it the US government’s centralized distributor for hundreds of millions of COVID-19 vaccine doses and ancillary kits. The company operates under three segments:

• The US Pharmaceutical – It streamlines the distribution and logistics services for over-the-counter medications, branded or generic, biosimilar, and other products related to healthcare. According to Reuters, McKesson distributes these services to local and international clients in Canada and 13 countries.
• Medical-surgical solutions – The medical-surgical solutions department oversees the distribution and logistics for medical-surgical clients and other services related to healthcare providers.
• Prescription technology solutions (RxTS) – RxTS segment covers technologies, allowing clients like CoverMyMeds, RxCrossroads, and RelayHealth to effectively conduct and implement scientific research.

Over the years, McKesson has grabbed headlines because of various lawsuits, compromising the company’s reputation that it’s built for years. These lawsuits stem from failing to notify the DEA, FDA, and other authorities responsible for analyzing the sale of pharmaceuticals about suspicious orders they distributed. Below are some popular lawsuits the company has faced since it entered the pharmaceutical and healthcare industries:

10. McKesson vs. Cincinnati authorities (To make major changes in their operations- $3 million)

According to Modern Health Care, there are more than 130 reports of death every day from an opioid overdose. The report says that between 2010 and 2015, the largest drug distributors sold more than 290 million doses of opioids in Cincinnati, Hamilton County. Even worse, pregnant, lactating mothers and patients with underlying medical conditions weren’t left behind in the statistic. Cincinnati authorities had to fight against opioid overdose by filing a lawsuit against McKesson and three other drug distributors. Cincinnati joined hands with the state of South Carolina in accusing drug distributors of perpetuating the opioid epidemic. They realized that most opioid addicts resorted to heroin when they couldn’t access opioids. They argue that the right way to combat opioid dependency starts by suing distribution authorities so that they can see the repercussions of their actions.

9. McKesson vs. West Virginia (Lawsuit for the fight against opioid abuse- $37 million)

The state of West Virginia has for a long time battled opioid abuse. This pharmaceutical drug is used for pain-relieving purposes in patients with injuries and other life-threatening medical conditions. for some reason, West Virginia’s residents resorted to buying it as an over-the-counter medication as a stimulant. It reached a point where users were addicted to opioids. This became a crisis that the DEA has been battling over the years. It took the state of West Virginia’s intervention to sue McKesson for illegally distributing nearly 100 million doses of addictive opioids. According to the New York Times, McKesson Corporation’s primary objective for over-supplying opioids was more profit-related, not looking out for the end user’s interests. It focused on generating more sales translating into profits instead of investigating how opioids were used. Even though McKesson denied the allegations, the state of West Virginia won the case resulting in a $37 million settlement. The courts ruled that McKesson must pay nearly half the amount within three business days and the rest in annual installments within five years.

8. McKesson vs. the US Federal Government (Lawsuit for failure to report suspicious orders of pharmaceutical drugs- $150 million)

Once again, McKesson found itself on the wrong side of the law when it failed to report suspicious order placements of pharmaceutical drugs. As the six largest pharmaceutical distributors, McKesson oversees its logistics system, but it didn’t. All the company focused on was earning more profits and being ahead of its competitors. The federal government launched an investigation into developed evidence that McKesson didn’t play by the rules even after customizing a compliance initiative after the 2008 settlement. The government won the case, resulting in a $150 million settlement. It also suspended McKesson’s ability to sell controlled substances from its distribution centers in four states.

6. McKesson vs. the Department of Justice (Lawsuit for failing to report to the DEA about suspicious orders of highly addictive painkillers it distributed- $150 million)

The DEA is a department in the justice system responsible for curbing the manufacture and distribution of illegal substances. Its fight against drug lords, peddlers, and drug users has notably been tough. Drug barons have found loopholes for shipping and distributing addictive drugs to Americans, making their job even more difficult. Part of the DEA’s job is to work with companies like McKesson to ensure the drugs are used for their intended purposes. So, when McKesson received a large number of suspicious orders of opioids and other highly addictive painkillers and didn’t report it, the justice system had to step in. In January 2017, the Department of Justice announced that McKesson had agreed to pay a $150 million settlement for failing to warn the DEA about a large number of suspicious orders of highly addictive painkillers it shipped in some parts of the country. The terms of the deal demand that McKesson is to operate under a scrutinized compliance agreement. The justice department will monitor pharmaceutical distribution companies with the FDA for the next five years. McKesson is expected to work more closely with the government to help in the fight against the drug abuse epidemic.

6. McKesson vs. Sarasota Memorial Health Care System (Lawsuit for failing to monitor its distribution process-$150 million)

For a long time, hospitals like Sarasota Memorial Health Care System have blamed pharmaceutical companies for shifting how doctors and patients think about pain. Instead of addressing the underlying issue, they encourage healthcare providers to prescribe opioids as a treatment solution for acute post-surgical pain and end-stage cancer pain. Among those caught up in the haywire were McKesson Corp., Cardinal Health Inc., and AmerisourceBergen Corp. The hospital argues that these companies would go to any length to make opioids available even though they know how addictive these substances are. Sarasota, Manatee, and DeSoto counties have suffered heavy opioid usage, leading to high death rates. In 2016, McKesson had agreed to pay $150 million to the federal government for alleged violations. Since then, the company has made significant adjustments to how it monitored its distribution processes when the justice department challenged them.

5. McKesson vs. Maryland State (lawsuit to settle drug pricing- $151 million)

As of July 2019, McKesson Corp agreed to pay $151 million in settlement to the Maryland state and federal government for unfair drug pricing. Initially, the company overpriced prescription drugs, causing insurance companies like Medicaid to overstretch reimbursements. The state and the federal government launched an investigation and found out that McKesson inflated more than 1,400 brand-name drugs between 2001 and 2009. The state of New York received the lion’s share of the states’ settlement, $36 million, as the state Attorney General Eric Schneiderman’s office reported. The then McKesson’s representative- Kris Fortner, argued that these litigations were ill-intended, not centered towards combating opioid abuse. He maintained that the state and the federal government shouldn’t criminalize distribution companies and sanitize manufacturing companies or healthcare providers prescribing the drugs. However, the courts ruled that pharmaceutical companies should streamline their logistics systems in a way that doesn’t lead patients to health ruin.

4. McKesson vs. New York State (Lawsuit for accounting fraud at HBOC- $960 million)

In 1999, McKesson bought a healthcare software company called HBOC. Its fraudulent activities hit news headlines when its shareholders lost $8.6 million on April 28, 1999. According to the New York Times, this amount was about half the value of McKesson’s holdings. The state of New York sued McKesson for accounting fraud. After battling it out in court for nearly five years, McKesson agreed to pay $960 million to settle the lawsuit. The settlement was apportioned among the New York state pension funds and thousands of plaintiffs. The money was to be used for rehabilitating addicts, educating people on the dangers of prolonged opioid dependency, mitigating and emergency assistance for opioid abatement.

3. McKesson, Johnson and Johnson, Cardinal Health, and AmerisourceBergen vs. the New York State (Alleged role in opioid distribution -1.1 billion settlement)

McKesson, together with its competitors, agreed to pay a $1.1 billion settlement with the New York state over their alleged role of distributing opioids against the terms and conditions of the FDA act. An opioid is a pain-relieving drug that should only be prescribed for patients battling pain due to an injury or other medical condition. Heavy dependency on opioids leads to addiction, resulting in poor health. A user who’s run out of supply of opioid is likely to seek other highly addictive substances like heroin or even cocaine. As one of the leading pharmaceutical merchandizing companies, McKesson’s role was to distribute opioids on a prescription-only basis. It didn’t take long before dozens of state and local governments realized that McKesson was over-supplying communities with pain pills, leading to addiction and other health-related complications. The lawsuit against McKesson and three of the nation’s largest distributors resulted in a $1.1 million settlement.

2. McKesson vs. Wyoming state (lawsuit for the role of the distribution in the opioid epidemic- $18 billion)

Jason Ochs is a Cheyenne, Wyoming-based personal injury lawyer who’s spent years fighting against opioid abuse by using pharmaceutical distributors. He represents Casper, Rock Springs, Riverton, Carbon Country, and Cheyenne. Ochs brought this lawsuit against the likes of McKesson after his close friend lost his son to an opioid overdose. The victim received a 30-day prescription for an opioid for his shoulder injury, though medical reports indicate that any drug taken past five days is addictive. For years, he’s argued that the rise in opioid overdose and addiction numbers are due to irresponsible distribution. The drugs are available over-the-counter, and pharmacists don’t care if the customer has a prescription or not. Some may ask for prescriptions but not confirm whether they’re genuine or doctored. As a result, Wyoming received up to $18 billion in settlement over 18 years from major pharmaceutical distributors like McKesson, Cardinal Health, and AmerisourceBergen. On the other hand, Johnson and Johnson will disburse up to $8 billion over ten years.

1. McKesson vs. Washington State (lawsuit for alleged distribution of opioids- $95 billion)

Going by most views from critics, it is not clear who should be liable for opioid addiction. They argue that manufacturers and pharmacists should also follow suit if distributors like McKesson should carry the blame. McKesson argues that they are more like middlemen. Their role is to take in order and ensure pharmaceuticals reach the end-user, not to supervise how often they use it. However, the state of Washington doesn’t view McKesson’s argument in that light. The state believes that while opioid is an efficient pain-reliever, prolonged usage leads to dependency. Anyone who is addicted to such a substance can easily overdose on it. The state believes that McKesson should have notified the DEA or relevant authorities about the suspicious order placements it received and honored over the years. Washington state staged a trial against McKesson Corp and two other drug distributors, accusing them of perpetuating the US opioid epidemic. Though the case is still pending, the state expects McKesson to pay up to $95 billion in settlement to combat the fight against drug addiction. Surprisingly, the Washington state attorney general declined to be part of a $26 billion nationwide settlement.

Verdict

According to Fortune, it is now clear that an American will die more from a drug overdose than in a car crash. While pharmaceutical distributions are more like middlemen, it would be wise to look into their logistics” systems and what happens after the distribution to ensure users don’t become dependent on the drugs. Whether McKesson and other leading pharmaceutical companies will continue facing lawsuits from the state and healthcare facilities or otherwise depends on how they intend to streamline their supply chain process. These litigation charges are just a drop in the ocean. As long as McKesson keeps focusing on making profits and not the interest of their end-users, the lawsuits will keep coming.