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From Health Law Daily, August 11, 2014

McKesson paid $18 million to settle whistleblower claims

By Harold M. Bishop, JD

Pharmaceutical distributor McKesson Corporation agreed to pay $18 million to settle allegations that it knowingly submitted false claims to the Centers for Disease Control and Prevention (CDC) under its vaccine distribution contract by improperly setting temperature monitors used in shipping the vaccines. The claims settled by the agreement are allegations only, and there has been no determination of liability against McKesson.

Under the contract with the CDC, McKesson received vaccines purchased by the government from manufacturers and then distributed the vaccines to health care providers. The lawsuit, captioned United States ex rel. Fox v McKesson Corp., No. 3:12-cv-00766 (M.D. Tenn.), alleged McKesson was required to ensure that the vaccines were maintained at proper temperatures—more than two degrees Celsius but less than eight degrees Celsius—by using electronic temperature monitors set to detect when the air temperature in the shipping carton went above or below the proper temperature.The government alleged that, from approximately April 2007 to November 2007, McKesson failed to set the monitors to the appropriate range, and as a result, knowingly submitted false claims to the CDC for shipping and handling services that did not satisfy its contractual obligations.

According to the CDC, the most important measure used to keep vaccines the proper temperature is validated packing procedures. The temperature monitors provide a secondary safeguard.

According to McKesson, as reported by the Wall Street Journal, it complied with the contract requirements, but “given the inherent uncertainty of litigation and in the interest of maintaining our strong, ongoing relationship with the CDC, we determined that a settlement was in the best interest of our customers, suppliers, employees and shareholders.” McKesson further stated “The government did not allege that vaccine potency was ever compromised or that anyone vaccinated was not immunized. At all times, McKesson shipped vaccines for the VFC [Vaccines for Children] program using specialized, insulated containers and packing materials that were validated to maintain appropriate air temperatures during shipment.”

The settlement resolves a qui tam lawsuit originally filed in July 2012 by Terrell Fox, a former finance director at McKesson Specialty Distribution LLC, and later joined by the federal government. Fox’s share of the settlement has not been determined, but qui tam relators generally receive between 15 and 25 percent in settle cases in which the government intervenes, plus attorney’s fees.

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