McKesson Corporation's principles are embodied in the acronym ICARE, supposedly standing for Integrity, Customer first, Accountability, Respect, Excellence. In reality, the ICARE principle was incomplete, as the company's real principle was "I care about profits more than anything else." McKesson was rated as the 5th most successful company in the US by Fortune in 2016 and is one-third of the oligopoly of three that controls the pharmaceutical drug distribution in this country, the other two being Cardinal Health and AmerisourceBergen. In 2008, McKesson was fined over $13 million for failing to report suspicious orders of Vicodin and other hydrocodone drugs, after having been earlier warned by the DEA about its excessive shipments. As part of that agreement, McKesson agreed to improve its monitoring and reporting of suspicious orders. At the time, the head of the DEA said, "By failing to report suspicious orders for controlled substances that it received from rogue Internet pharmacies, the McKesson Corporation fueled the explosive prescription drug abuse problem we have in this country."
But this little monetary slap on the wrist did not deter McKesson in any way. McKesson's net income in 2008 was $990 million and its CEO, John Hammergren, was paid millions, so the fine was treated as exactly what it was, nothing more than the cost of doing business, as was promise to improve its systems, which also turned out to be empty. In 2012, the DEA began another investigation of McKesson for once again ignoring the clear signs of suspicious orders of addictive opioids.
By 2014, the DEA had put together what one special agent called "the best case we’ve ever had against a major distributor in the history of the Drug Enforcement Administration." As an example of McKesson's behavior, the DEA found a small pharmacy serving a town of 38,000 25 miles from Denver that was prescribing 2,000 pills a day. When the pharmacy ran up against the limits that McKesson had for reporting suspicious orders, McKesson simply raised the limit, not once, but again and again. In the end, the pharmacist receiving these pills was indicted and convicted on drug trafficking charges. According to the indictment, "From 2008-2011, the percentage increase for oxycodone 30 mg orders supplied by McKesson to Platte Valley Pharmacy was approximately 1,469%." In essence, it seems clear that McKesson did absolutely nothing after their supposed agreement in 2008 to accurately monitor and report suspicious orders. In fact, the company continually subverted the process.
McKesson was engaging in this kind of activity all over the country. The DEA found that McKesson was supplying enormous numbers of pills to pharmacies that were in turn supplying criminal drug rings. As in the above case, when limits that would trigger reporting requirements were reached, McKesson would simply raise those limits. This activity occurred at all 12 McKesson distribution centers that basically served the entire US. As one DEA official noted, "Notwithstanding, their bad acts continued and escalated to a level of egregiousness not seen before. They were neither rehabilitated nor deterred by the 2008 [agreement]."
By 2014, the DEA wanted to actually bring criminal indictments against McKesson executives. But that effort was essentially shut down by the agency's lawyers in DC and the apparent timidity of US Attorneys around the country. As usual, the government seemed haunted by the spectre of Arthur Andersen which essentially ceased operations in 2002 after its indictment in the Enron scandal, costing thousands of jobs. That was reflected in a statement from one senior DEA official saying, "We could have fined them out of existence, or indicted the company and put them out of business. I’d rather have one of the largest drug distributors be the poster child for detection and reporting of suspicious orders."
But McKesson never became that poster child. In 2014, as the DEA field agents tried to convince agency lawyers to aggressively push the case, there was an effort underway in Congress to weaken the DEA's ability to constrain the pharmaceutical drug distributors. That effort, spearheaded by $1.5 million in campaign donations to 23 members of Congress focused on changing the language of the law that allowed the DEA to actually freeze suspicious shipments. That insidious change (which is outlined in the link) finally became law in 2016. But the drug distributor and pharmacy lobbies were clearly pressuring Congress and presumably the DOJ and the DEA in 2014 to relax its aggressive posture to what amounted to the dumping of millions of addictive pills onto the US population. That pressure resulted in a pathetic agreement in January of 2016 for McKesson to pay another fine of $150 million and temporarily suspend the shipment of controlled drugs from four of its twelve warehouses. McKesson's net income in 2015 was $1.78 billion. CEO Hammergren received about $26 million and has a golden parachute worth $300 million.
One of the areas hardest-hit by the corporate-created opioid epidemic has been the Cherokee Nation. Earlier this year, the Nation sued not only the pharmaceutical distribution oligopoly of McKesson, Cardinal Health, and Amerisource Bergen but also the pharmacy oligopoly of Walgreens, CVS, and Walmart, claiming that these companies conspired to flood the 14 counties that comprise the Cherokee Nation with an opioid pill for every man, woman, and child in the Nation in the year 2015 alone. It accuses all six of these companies with willfully turning a blind eye to the suspicious nature of such quantities of opioids being delivered to such a small area as required by law.
The Cherokees filed this suit in Tribal Court, not so much in the hopes of actually holding these companies accountable but more so to force a discovery process that would begin to create an evidentiary trail of their abuses. As expected, the companies understand that they will probably not have as easy a time of perverting justice in the Tribal Court as they would in US courts and, accordingly, they are vigorously fighting to ensure that the Tribal Court has no jurisdiction. According to the Times report, "The companies have responded by asking a federal judge to deny the tribe’s authority to bring the case. They argue that a tribe cannot sue them in tribal court, much less enforce federal drug laws. They have questioned whether a Cherokee reservation even legally exists."
The case against these companies is pretty overwhelming. Again from the Times, the claims that "over a five-year period, drug distributors ignored red flags and allowed alarming quantities of prescription opioids — in 2015 and in 2016, 184 million pain pills — to pour into the region within the boundaries delineated by the Treaty of 1866. In doing so, the Cherokee argue, McKesson, Cardinal Health and AmerisourceBergen, three corporations which transport about 90 percent of the country’s prescription opioids, did not comply with federal drug monitoring and reporting requirements. Pharmacies, which sold the medication directly, also bear responsibility, the suit says. CVS, Walgreens and Walmart have stores in the Cherokee Nation that are among the top 10 Oklahoma pharmacies for opioid sales. Pharmacists sidestepped their duties, Mr. Hembree [the Nation's Attorney General] argues, looking the other way when filling prescriptions that were obviously photocopied, written for suspicious quantities or refilled too soon."
The companies' response is multi-pronged. They claim that the Cherokee Nation has no authority to enforce federal drug regulations. In addition, they claim that the Cherokee has no standing to sue them directly because there was no specific agreement between the Nation and the companies and, further, the companies' headquarters are not located in Oklahoma. The pharmacies are also claiming that some of the pharmacies included in the suit were not located specifically on Cherokee land and therefore outside tribal jurisdiction. Moreover, the firms are disputing the claim that there is any such thing as the "Cherokee reservation" as defined in an 1866 treaty any longer.
The companies are, of course, turning to the federal courts to protect them, asking for an injunction to stop the case going forward. Barring that injunction, the case will go forward in Tribal Court. However, even if the Nation actually wins in Tribal Court, the companies will ultimately have the right to appeal once again in federal court. But the discovery process that would occur in Tribal Court could produce some interesting and damaging information.
At this point, the evidence that a vast nationwide conspiracy between the pharmaceutical drug makers and distributors, the big pharmacy chains, and a select group of corrupt doctors is responsible for a public health epidemic this country has not seen in decades is simply overwhelming. So far, the occasional minnow in this process, such as that Colorado pharmacist, has been convicted of their crimes. But, not only in the drug industry but also in the financial world and elsewhere, the belief that large fines in absolute terms but simply a drop in the bucket in terms of the earnings companies make as well as promises to correct future behavior would somehow restrain these companies has proven to be severely misplaced. The number of repeat, if not serial, offenders is striking. Until this country finds the willingness to criminally prosecute senior executives or ignore the largely temporary effects that Arthur Andersen had in terms of employment and institute the "death penalty" to these serial criminal enterprises, businesses in this country will, in this case of the pharmacies and drug distributors especially, quite literally get away with murder; in fact, mass murder.
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