$37M settlement announced with pharmaceutical distributor McKesson

May 3, 2019

A $37 million settlement was announced Thursday between the state and McKesson Corporation for its role in fueling the opioid epidemic, according to a news release from West Virginia Attorney General Patrick Morrisey’s office.

The lawsuit against McKesson alleged the company failed to appropriately monitor the distribution of painkillers to pharmacies around the state, exacerbating the drug epidemic in some of West Virginia’s most vulnerable regions. McKesson, while agreeing to the settlement, still denies any wrongdoing or responsibility for West Virginia’s opioid epidemic, according to the release.

While the news release states that the $37 million is “believed to be” the largest state settlement against a single pharmaceutical distributor, it is less than 1 percent of the company’s $208.4 billion annual revenue from fiscal year 2018, and just a little more than double McKesson CEO John H. Hammergren’s $18 million salary in 2018.

In a statement Thursday, Sen. Joe Manchin, D-W.Va., expressed his disappointment and disgust at the size of the settlement.

“Last October, I called on [Gov.] Jim Justice to deny the settlement but it appears that he didn’t care enough to fight for the money that West Virginia deserves,” Manchin said in the statement. “I spoke out then and I’m speaking out now that it makes me sick that the very people that are supposed to protect West Virginians are letting a drug distributor screw us over. It makes me sick and I know it makes every West Virginian sick, especially those who have lost someone to this drug epidemic or knows someone who is struggling with drug addiction now. This disgraceful settlement is a shameful injustice to us all.”

In October, just weeks before the general election for Senate between Manchin and Morrisey, Manchin criticized the attorney general for an alleged $35 million settlement, citing “reliable sources.” He declined to identify them at the time.

“West Virginians can’t afford to let Patrick Morrisey cut a sweetheart settlement with McKesson,” Manchin said in October. “I’m speaking out because I will not watch our state get screwed over here by Morrisey because he wants to ram this through before the election. Can you believe that? This is a horrible deal anytime. Forget about politics, but Morrisey is playing politics with this.”

Manchin classified the alleged $35 million settlement as an unfair level of compensation compared to “the damage that’s been done to the people of West Virginia” by the opioid epidemic.

In 1998, the state agreed to a $1.8 billion settlement with cigarette manufacturers for harm done to West Virginians through the tobacco industry. In his statement Thursday, Manchin said the McKesson agreement, by comparison, is “disgraceful.”

“The governor and attorney general either don’t know how to negotiate, don’t understand the scope of this problem or don’t care about the impact this epidemic has had on the state of West Virginia,” Manchin wrote. “Either way, they have failed our state.”

Per the news release, the McKesson settlement brings the total paid to West Virginia from pharmaceutical wholesalers to more than $84 million, about 1 percent of the $8.8 billion the American Enterprise Institute estimates the opioid epidemic costs West Virginia annually.

McKesson is the second largest shipper of opioids to West Virginia, coming behind Cardinal Health.

In 2005 and 2006, McKesson shipped nearly five million doses of prescription painkillers to a now-shuttered Sav-Rite Pharmacy in Kermit, a town in Mingo County with 400 people, according to a letter sent to the company as part of a 2018 congressional committee investigation into drug distributors.

Between 2006 and 2014, McKesson also shipped a total of 5.8 million hydrocodone and oxycodone pills to a small pharmacy in Mount Gay, population 1,800. The company supplied another 2.3 million prescription painkillers to the Logan County drugstore’s branch location in Stollings, just 3 miles away, according to the committee’s letter.

The settlement with McKesson only concerns the lawsuit and allegations brought against the company by the state, and is completely unrelated to ongoing litigation brought by counties and municipalities throughout West Virginia.

Morrisey filed the suit along with the Department of Health and Human Resources and the Department of Military Affairs and Public Safety. According to the news release, all parties involved in the lawsuit agreed to the settlement in order to avoid “the delay, expense, inconvenience and uncertainty of protracted litigation.”

Per the terms in the settlement, McKesson must pay $14.5 million within three business days of the case’s dismissal, then make annual payments of $4.5 million until May 6, 2024, according to the release.

The funds collected will be used to “further the collective fight against drug abuse” in the state, however no specifics were available as to how.