What Happened to the DEA Case Against McKesson Corp?

It was 2014, and the Denver field division of the Drug Enforcement Administration (DEA) had been investigating McKesson Corp., one of the nation’s largest drug companies, for two years. The investigation revealed the company’s failure to report suspicious orders involving millions of addictive painkillers. Investigators said they even had evidence that some of the suspicious orders went to pharmacies that supplied drug rings.

David Schiller, formerly the assistant special agent in charge of the DEA’s Denver field division, said this was the best case the agency has ever had against a major drug distributor. His DEA team was ready to fine the company more than $1 billion, as well as revoke registrations to distribute controlled substances at several of the company’s warehouses. Moreover, they were ready to bring the first-ever criminal case against a drug distributor.

But when all was said and done, the DEA and Justice Department struck a deal with McKesson that did not include criminal charges. McKesson agreed to temporarily suspend shipments at four distribution centers, and paid a $150 million fine. None of McKesson’s warehouses lost their DEA registrations.

What Went Wrong?

Despite agents and investigators claiming they had enough evidence to pursue criminal charges, the U.S. attorney in Denver decided not to pursue a case. In fact, charges were never even part of the deal negotiations. Schiller said the dismissal of the agency’s findings broke his team’s morale. The settlement revealed the stark difference between DEA investigators’ aggressive approach to tackling the opioid epidemic, and government attorneys’ decision to go easy on major drug companies.

McKesson’s Track Record of Ignoring Suspicious Drug Orders

In 2008, McKesson was fined $13.25 million for failing to report suspicious hydrocodone orders from Internet pharmacies. The company received warnings from the DEA about its excessive shipments of the drug, which were ignored for three years. The company paid the fine, then agreed to temporarily suspend the distribution of narcotics from two of its distribution centers. McKesson also promised to improve its system for monitor and reporting suspicious orders.

DEA Investigates Colorado Distribution Center

Then in 2012, the company drew the DEA’s attention once again. Law enforcement began investigating a pharmacy in Brighton, Colorado. The city had a population of 38,000, yet one of the pharmacists at Platte Valley Pharmacy was selling up to 2,000 pain pills a day. Most of those drugs were coming from McKesson’s warehouse in Aurora, Colorado. Through an investigation, the DEA’s Denver field division discovered that McKesson filled 1.6 million orders from the Aurora warehouse from June 2008 through May 2013. However, they only reported 16 as suspicious. Moreover, none of those suspicious orders were from Platte Valley. McKesson reported them only after the DEA began investigating.

In response to this, the DEA team asked DEA attorneys to issue an immediate suspension order against McKesson. But the attorneys denied the request, stating that Schiller and his team needed more evidence that the drugs were posing an immediate danger to public health. In 2014, the DEA again tried to go after the Aurora distribution center. This time they requested an order to show cause, to bring the company to court. DEA attorneys once again declined the request, saying the team did not have enough evidence. At that point, settlement talks had already begun between McKesson and the DEA attorneys. Meanwhile, the pharmacist at Platte Valley Pharmacy was convicted of drug trafficking, for which he received a 15-year sentence.

More Suspicious McKesson Warehouses

Aurora was not the only McKesson distribution center that drew DEA attention. Investigators also found warehouses in Livonia, Michigan, and Washington Court House, Ohio, were supplying pharmacies that sold to criminal drug rings. Officials again said there was not sufficient evidence to pursue criminal charges.

In September 2015, the government reached a tentative settlement with McKesson. The company’s DEA registrations would be suspended for three years in Aurora, and two years in Washington Courthouse and Livonia. The company would be barred from distributing hydromorphone from the Lakeland, Florida warehouse, for one year. No criminal charges were filed. In January 2017, the Justice Department finalized the deal with McKesson, which included the $150 million fine.

McKesson’s revenue is nearly $200 billion a year. The company has 76,000 employees, and its CEO John Hammergren is the nation’s third-highest-paid chief executive.

“The opioid epidemic killed nearly 200,000 people between 2000 and 2016. The government’s decision to issue this company a slap on the wrist for its contribution to the epidemic is very troubling,” said Attorney Walter Clark, founder of Walter Clark Legal Group.

Our firm has been handling personal injury cases throughout the California Low Desert and High Desert communities for over 30 years. With a 95% success rate, the California personal injury attorneys at Walter Clark Legal Group will fight to hold those responsible for your loss accountable and win compensation to cover medical bills, lost wages, and pain and suffering. If you have been injured by a drug and want to discuss your legal options, contact us today for a free consultation with an experienced personal injury lawyer. We have offices in Indio, Rancho Mirage, Victorville, and Yucca Valley and represent clients through the entire California Low Desert and High Desert communities.

DISCLAIMER: The Walter Clark Legal Group blog is intended for general information purposes only and is not intended as legal or medical advice. References to laws are based on general legal practices and vary by location. Information reported comes from secondary news sources. We do handle these types of cases, but whether or not the individuals and/or loved ones involved in these accidents choose to be represented by a law firm is a personal choice we respect. Should you find any of the information incorrect, we welcome you to contact us with corrections.

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