Department of Justice

Carlton S. Shier, IV
Acting United States Attorney
Eastern District of Kentucky
FOR IMMEDIATE RELEASE
TUESDAY, JANUARY 18, 2016
www.usdoj.gov/usao/kye

CONTACT: KYLE EDELEN

PHONE: (859) 685-4811
E-MAIL: Kyle.Edelen@usdoj.gov

MCKESSON AGREES TO PAY RECORD $150 MILLION SETTLEMENT FOR

FAILURE TO REPORT SUSPICIOUS ORDERS OF PHARMACEUTICAL DRUGS
LEXINGTON, Ky. McKesson Corporation (McKesson), one of the nations largest
distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged
violations of the Controlled Substances Act (CSA), Carlton S. Shier, IV, Acting United States
Attorney for the Eastern District of Kentucky, and Drug Enforcement Administration (DEA)
Detroit Field Division Special Agent in Charge, Timothy J. Plancon, announced today.
Locally, this settlement resolves the U.S. Attorneys Office for the Eastern District of
Kentuckys and DEA London Resident Office Diversion Groups joint investigation of
McKessons Washington Courthouse, Ohio Distribution Center, which distributed pharmaceutical
drugs to pharmacies in Kentucky, Ohio, and West Virginia. The settlement further resolves open
civil investigations being conducted by eleven other U.S. Attorneys Offices across the nation and
administrative investigations by DEA.
McKessons failure to report suspicious orders fueled the opioid epidemic in eastern
Kentucky, said Acting U.S. Attorney Shier. Opioid abuse has devastated our community, and
the investigation of drug distributors, like McKesson, is one aspect of the United Statess
multifaceted fight against this epidemic.
DEA Special Agent in Charge Plancon said: The United States is in the midst of an opiate
epidemic which is being fueled by the misuse of opiate painkillers. This historic settlement
demonstrates DEAs commitment to the public health and safety by holding the McKesson
Corporation accountable for their actions. It doesnt matter if the violator is a multi-billion dollar
corporation, or an individual selling smaller amounts of drugs on the street, DEA is committed to
fighting this epidemic from all angles.
The nationwide settlement requires McKesson to suspend sales of controlled substances
from its Washington Courthouse Distribution Center and distribution centers in Colorado,
Michigan, and Florida for multiple years. The staged suspensions are among the most severe
sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and
enhanced compliance obligations on McKessons distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement
for similar violations. In this case, the government alleged again that McKesson failed to design
and implement an effective system to detect and report suspicious orders for controlled

substances distributed to its independent and small chain pharmacy customers i.e. orders that are
unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied
various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently
misused products that are part of the current opioid epidemic.
The governments 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. For example, from January 1, 2009 to August 1, 2013, McKessons Washington
Courthouse Distribution Center failed to report suspicious orders of controlled substances to DEA.
In addition to the monetary penalties and suspensions, the government and McKesson
agreed to enhanced compliance terms for the next five years. Among other things, McKesson has
agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and
stipulated financial penalties for failing to adhere to the compliance terms. Critically, the
settlement will require McKesson to engage an independent monitor to assess compliance the
first independent monitor of its kind in a CSA civil penalty settlement.
Locally, the civil penalty investigation was conducted by the U.S. Attorneys Office for
the Eastern District of Kentucky and DEA Detroit Field Divisions London Resident Offices
Diversion Group. This multi-district investigation also involved the following DEA Offices:
Boston Field Division, Chicago Field Division, Denver Field Division, Miami Field Division,
Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington
District Office. The following U.S. Attorneys Offices also participated in the case: Central
District of California, Eastern District of California, District of Colorado, Middle District of
Florida, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan,
District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western
District of Wisconsin.
U.S. Attorneys Offices for the District of Colorado and the Northern District of West
Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil
settlement negotiations. DEAs Denver, Detroit, and Miami Field Divisions, and its Washington
Division Office led the administrative and civil investigation. The Criminal Divisions Narcotic
and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions
of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado), Alan McGonigal
(Northern District of West Virginia), and Katherine Crytzer (Eastern District of Kentucky)
represented the United States in the civil penalty investigations and negotiations. Associate Chief
Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill, and Krista Tongring
represented DEA. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.
END