DEA Failed To Bring Charges Against Top Painkiller Distributor; Despite Evidence

By Victoria Kim 12/19/17
Instead of criminal charges, the Big Pharma company reached a settlement with the DEA and Department of Justice that amounted to a slap on the wrist.
 Lawyer and attorney having team meeting at law firm

The U.S. Drug Enforcement Administration (DEA) refused to bring a criminal case against a top drug distributor, despite mounting evidence that the company routinely ignored suspicious ordering and continued supplying inordinate amounts of opioid painkillers to pharmacies across the United States.

These allegations come from multiple DEA officials who were tasked with investigating McKesson Corp, a drug company with a history of flouting warnings from the federal government to improve tracking of orders of controlled substances like oxycodone and hydrocodone.

“Under federal law, McKesson is required to notify the DEA about any orders of unusual size, frequency or pattern and hold off on shipping the drugs until those issues are resolved,” according to a joint report by The Washington Post and 60 Minutes.

The company was fined $13.25 million in 2008 for failing to comply with this very mandate, and promised to be more vigilant about excessive ordering. But Imelda L. Paredes, a DEA official, says the company was “neither rehabilitated nor deterred” by the agreement.

Then-DEA head Michele M. Leonhart stated at the time that the company “fueled the explosive prescription drug abuse problem” by failing to report suspicious orders that it received from “rogue Internet pharmacies,” some that were supplying criminal drug sellers.

David Schiller, a retired assistant special agent in charge of the DEA Denver field division, led a team that investigated McKesson. By 2014, he and his team said they had gathered enough evidence to bring a criminal case against the company, but the agency’s leaders were not as enthusiastic.

Ultimately, instead of criminal charges, the company settled with the DEA and the Department of Justice for much less than Schiller and his colleagues had hoped for. McKesson agreed to pay a $150 million fine and were ordered to suspend controlled substance shipments at four distribution centers. Schiller and other DEA investigators were hoping for at least a $1 billion fine.

“I said, ‘We have everything we could possibly want on a silver platter.’ We had corrupt pharmacies that were being supplied by McKesson, and they were turning a blind eye to everything that was going on,” said Schiller. 

The slap on the wrist was a slap in the face for the DEA investigators pursuing criminal charges against the company. McKesson’s board chairman and chief executive John H. Hammergren, America’s third-highest-paid chief executive, earned $100 million last year. McKesson Corp makes almost $200 billion in annual revenue.

The DEA investigators say the measly settlement has destroyed morale at the agency. “Within the ranks, we feel like our system was hijacked,” said Helen Kaupang, a DEA investigator and supervisor.

One case from a small Colorado suburb illustrates the enormity of McKesson’s actions. The DEA discovered that pharmacist Jeffrey Clawson was selling “as many as 2,000 pain pills per day” out of Platte Valley Pharmacy in Brighton, Colorado, a town with a population of just 38,000.

The bulk of the drugs was traced to a McKesson warehouse in Aurora, Colorado. “There was no legitimate reason for that pharmacy in that little town in remote Colorado to be getting hundreds of thousands of pills over a several-year period. None. There was no justifiable reason,” said Kaupang.

When Clawson would (repeatedly) hit his threshold for oxycodone that McKesson had set for the pharmacy, investigators say the company increased the limits so it could send him more of the drugs. By doing this, Kaupang explained, McKesson could avoid “setting off suspicious monitoring alarms inside the company.” The company’s attorneys deny allegations of criminal misconduct.

In just 16 reports of suspicious orders out of 1.6 million orders supplied by the Aurora warehouse between 2008 and 2013, McKesson did not report Clawson’s activities.

Jeffrey Clawson is now serving a 15-year prison sentence after being convicted on drug trafficking charges. McKesson was not penalized, despite being named in Clawson’s indictment as the main supplier of Platte Valley Pharmacy.

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Victoria is interested in anything that has to do with how mind-altering substances impact society. Find Victoria on LinkedIn or Tumblr