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McKesson pays $18 million to settle CDC shipping allegations


By Bob Herman
Posted: August 8, 2014 - 5:45 pm ET
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McKesson Corp. will pay the federal government $18 million to settle allegations tied to a whistle-blower lawsuit. The suit involved a company shipping contract with the Centers for Disease Control and Prevention.

Terms of the settlement were announced Friday. San Francisco-based McKesson, a healthcare technology and pharmaceutical distribution conglomerate, said in a statement the settlement represents an “express denial of liability of any kind.” But because of the “uncertainty of litigation” and its ongoing relationship with the CDC, “a settlement was in the best interest” of the company, McKesson said.

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The false-claims case stemmed from a 2012 qui tam, or whistle-blower, lawsuit from Terrell Fox, a former finance director with McKesson's specialty distribution arm. The feds claimed that during an eight-month period in 2007, McKesson did not comply with the government's “cold chain” shipping and handling requirements for vaccines. A vaccine cold chain is essentially a temperature-controlled environment to protect the medications.

McKesson contracted with the CDC for its Vaccines for Children program, which provides federally purchased vaccines to children age 18 and younger. McKesson distributed the vaccines from manufacturers to healthcare providers. According to the government contract, the shipping of vaccines requires temperature monitors in each box, and those monitors must be programmed to detect if the air temperature falls below 2 degrees Celsius or rises above 8 degrees Celsius. The Department of Justice alleged McKesson did not set the temperature monitors to the proper range, yet still submitted claims for services.

The CDC said temperature monitors are a secondary safeguard, and that other packing measures are put in place to ensure vaccines are transported safely. McKesson echoed those thoughts in a statement, and said it believed the air temperature monitors in use at the time were in compliance.

“The government did not allege that vaccine potency was ever compromised, or that anyone vaccinated was not immunized,” the statement read. “At all times, McKesson shipped vaccines for the VFC program using specialized, insulated containers and packing materials that were validated to maintain appropriate air temperatures during shipment. The air temperature monitors approved by the CDC are included as a redundant measure.”

A McKesson spokeswoman also said the company renewed its shipping deal with the CDC in December 2013.

McKesson alluded to the government's subpoena and investigation in its fiscal 2014 filing with the Securities and Exchange Commission, but provided few details at the time.

The DOJ did not disclose how much of the settlement money would go to Fox. The outlined terms, however, said that McKesson must pay $525,000 to the whistle-blower's legal team to cover attorneys' fees and costs.

Follow Bob Herman on Twitter: @MHbherman


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