McKes­son hit with False Claims suit for al­legedly repack­ag­ing can­cer drugs

Modern Healthcare - - Legal - By Alex Kacik

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

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