McKesson hit with False Claims suit for allegedly repackaging cancer drugs
Omni Healthcare is suing wholesale drug distributor McKesson Corp. for allegedly repackaging cancer drugs from single-use vials at the expense of the government and patients.
Florida-based Omni filed the suit on behalf of the federal government, 30 states, Chicago, New York City and Washington, D.C.
McKesson, one of the largest pharmaceutical distributors in the U.S., is accused of violating the False Claims Act. The lawsuit, filed last week in New York federal court, alleges McKesson repackaged the “overfill” from vials of Aloxi, Procrit and other oncology drugs into non-sterile syringes and sold them to cancer centers, medical practices and physicians. The providers would then bill the government for the drugs.
Omni alleged that over a 10-year span McKesson intentionally put patients at serious risk for infection while defrauding federal, state and local governments of hundreds of millions of dollars.
McKesson “learned that they could maximize profits at the governments’ expense by harvesting overfill in covered drug products such as the oncology drugs, pooling the oncology drugs, and then repackaging them in bulk into non-sterile and plastic pre-filled syringes, despite the clear risk to vulnerable cancer patients,” the complaint said.
The vials are labeled single-use because the drugs have no preservatives to stop bacterial growth. Also, distributors aren’t charged for overfill, and the providers they sell the drugs to aren’t allowed to bill the government for it because they were repackaged at unapproved sites. That allegedly allowed McKesson to offer discounts for the pre-filled syringes, which providers would purchase instead of the vials, amounting to a kickback, the complaint said.
McKesson could be fined $10,000 per False Claims Act violation, plus three times the amount of the damages sustained by the government. McKesson competitor Amerisource-Bergen was accused of similar behavior in another case that resulted in fines, penalties and a civil settlement that amounted to approximately $900 million, according to court records.
McKesson said it is currently reviewing the complaint.
If the allegations hold up, the penalties have to be severe enough to hurt McKesson’s financial condition and force a change, said Kerry Harvey, a member at law firm Dickinson Wright.
“It gets down to a simple cost-benefit analysis. Does the potential risk of penalties outweigh the very real benefit of taking these liberties with the rules? ”
In addition to allegedly “fraudulently inducing reimbursements,” the overfill inflated the average sales price of the drugs that the government overpaid for, according to the suit.
McKesson is part of the “big three” wholesale drug distributors, along with Amerisource-Bergen and Cardinal Health, which collectively have more than an 85% market share of the pharmaceutical supply chain. McKesson supplies more than 40,000 healthcare facilities in the U.S. The company reported nearly $200 billion in revenue in 2017, the vast majority from its distribution solutions business.
In the suit, Omni claimed that the company’s alleged “profit motive” also caused it to contaminate the previously sterile drugs by skimming overfill and shipping and storing the products improperly. McKesson “presumably assumed that any infections and resulting patient deaths would likely be falsely attributed to the patients’ disease and treatment, as opposed to healthcare providers’ unwittingly administering non-sterile and unapproved drugs,” the complaint said.
Allegedly, an Omni employee saw McKesson employees pool overfill from the FDA-approved packages of the cancer drugs in a non-sterile facility in Frisco, Texas. The products were then placed into pre-filled syringes that were re-labeled—in some instances with fake product codes and expiration dates, according to the lawsuit.
Hundreds of cities, counties and states across the U.S. are also suing the big three distributors for allegedly not flagging suspicious opioid prescriptions.
“Some of the most senior government officials charged with ensuring the health and safety of Americans recently publicized their concerns that defendants are above the law—that they have harmed and will continue to harm millions of Americans, for profit, and with impunity,” the complaint said. “As evident in this action, (McKesson) continues to elect corporate revenue over
● patient safety.”
“Does the potential risk of penalties outweigh the very real benefit of taking these liberties with the rules?”
Kerry Harvey, a member at law firm Dickinson Wright