McKesson to Pink Slip Some Employees in Wisconsin, Effective March 31
January 20, 2017
By Mark Terry, BioSpace.com Breaking News Staff
McKesson Pharmaceuticals , based in San Francisco, announced it will lay off 67 staffers at its La Crosse, Wis. Distribution center.
The company is merging its distribution operations to a new facility in Clear Lake, Iowa. The layoffs will take place beginning March 31.
The layoffs overlap with the company having to pay a $150 million civil penalty for alleged violations of the Controlled Substances Act. In addition, McKesson will stop selling controlled substances from distribution centers in Colorado, Florida, Michigan and Ohio. The U.S. Attorneys office has also levied new compliance obligations on the company’s distribution system.
McKesson’s spokeswoman Kristin Hunter says the settlement and the job cuts are not related.
On Tuesday, the Justice Department announced the settlement. According to The Washington Post, the company paid $13.25 million in 2008 related to similar charges.
The charges relate to the company’s failure to design and implement an effective system to identify “suspicious orders” from pharmacies for strong painkillers like oxycodone. This is required by the Controlled Substances Act.
The Washington Post describes a case of the company’s Colorado distribution center filling more than 1.6 million controlled substance orders from June 2008 through May 2013, but reporting only 16 from a single customer as being suspicious.
McKesson will have to hire an independent monitor to ensure compliance with the law, and close the four warehouses on a staggered basic for “unspecified numbers of years.”
McKesson, in a statement, said it settled the allegations “in the interest of moving beyond disagreements about whether McKesson was complying with the controlled substance regulations … and to instead focus on the company’s partnership with regulators and others to help stem the opioid epidemic in this country.”
In December 2016, Cardinal Health , one of the three largest drug distributors in the U.S., also agreed to pay $44 million in penalties over similar allegations over failure to notify the Drug Enforcement Agency (DEA) of suspicious narcotic orders. Interestingly, The Washington Post reported in October that the DEA had slowed its campaign against wholesale drug distributors in response to pressure from the pharmaceutical industry.
The case against Cardinal Health alleged misconduct at its distribution warehouse in Lakeland, Fla. Under the deal, Cardinal acknowledge that it did not comply with reporting requirements in Florida and Maryland between 2009 and 2012. In 2008, Cardinal paid $34 million over similar allegations over seven warehouses.
“These agreements allow us to move forward and continue to focus on working with all participants addressing the epidemic of prescription drug abuse,” Cardinal’s chief legal and compliance officer, Craig Morford, said in a December 23, 2016 statement.
McKesson has said that as part of the case, it will improve compliance over the next five years, including improvements to staffing and operations, undergo periodic audits and the above mentioned financial penalties.
“The quality and integrity of the McKesson employees in La Crosse is unmatched, and we’re confident that they will be an asset for future employers in the La Crosse area,” McKesson told the Star Tribune.