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West Virginia Drug Company Agrees to Pay Record $150M Settlement

WHEELING — McKesson Corp., one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act, Acting U.S. Attorney Betsy Jividen announced Tuesday.

Jividen and Karl Colder, special agent in charge of the Drug Enforcement Administration, described the settlement of the civil penalty claims as “historic and unprecedented.”

“The settlement with McKesson announced today illustrates the coordinated response we are taking in addressing the prescription narcotics crisis in West Virginia and puts those who play a significant role in supplying narcotic medications in our district on clear notice that they must comply with the law and regulatory requirements or be held accountable,” Jividen said.

The settlement resolves allegations that beginning in 2008 and continuing into 2012, McKesson’s former Landover, Md., distribution facility routinely failed to report — and fulfilled — suspicious orders for Schedule II and III controlled substances placed by retail pharmacies, including numerous pharmacies in the Northern District of West Virginia. One such pharmacy was Judy’s Drug Store, located in Grant County, with which the U.S. Attorney’s Office for the Northern District of West Virginia entered into a $2 million civil penalty settlement in 2014.

“In many instances, the suspicious orders placed by West Virginia pharmacies resulted in prescription narcotics being diverted for illegal use and abuse,” Jividen said.

The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, 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 McKesson’s distribution system.

In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. 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.

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