Saturday, April 7, 2018

McKesson to Pay $150 Million for Controlled Substances Act Violations (2017)


McKesson was founded by John McKesson and Charles Olcott in New York City to import and sell therapeutic drugs and chemicals wholesale in 1833. It became one of the first wholesale firms to manufacture drugs, the company’s fluid extracts, tinctures, pills and tablets won medals for its pioneering work. In 1998 it Acquired HBO & Company and operated for a time as McKesson HBOC — the world’s largest health care services company. In 2010 it acquired US Oncology, becoming the second-largest specialty company, In 2014 acquired Celesio to become a global health care leader moving its ranking to 11th on the FORTUNE 500 with more than $179 billion in annual revenue. 

McKesson delivers pharmaceutical and medical products and business services to retail pharmacies and institutional providers like hospitals and health systems throughout North America and internationally. The company also provides specialty pharmaceutical solutions for biotech and pharmaceutical manufacturers, as well as practice management, technology and clinical support to oncology and other specialty practices. Additionally, it delivers a comprehensive offering of healthcare products, technology, equipment and related services to the non-hospital market — including physician offices, surgery centers, long-term care facilities and home healthcare businesses.
 McKesson was accused of failing to report suspicious orders for painkillers, which have been linked to the country’s opioid epidemic and pharmaceutical fraud.The settlement required McKesson to suspend the sales of controlled substances from distribution centers in Colorado, Florida, Michigan and Ohio for multiple years. The civil penalty and the suspension of sales constitute one of the most severe sanctions the Drug Enforcement Administration (DEA) has ever issued for a registered pharmaceutical distributor. The government alleged that McKesson failed to implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers. These suspicious orders were considered as such due to unusual frequency, size, or other patterns.
protestor outside the McKesson Corp HQ.


Stakeholders:  The stakeholder involves investors, retailers of pharmaceutical drugs, pharmacies like CVS, Walgreen, McKesson employers, Government officials (DEA), hospitals. McKesson is the largest distributor of drugs in the country. That means people who work in the pharmacy, hospitals and clinics are linked to this cooperation in one way or another. Therefore, any decision made by the company affects them directly. The society is affected when its people get addicted, since drugs are being supplied without and regulations. Families are also considered part of the stakeholder. Because the opioid epidemics break up families, leads to uncertain death due to overdose and increases the crime rates.

                  Individualism: An individualist perspective, McKesson Corporation managers stole from their owners through this act. The first way to view Individualism is according to Milton Friedman, who says that the only goal of business is to profit within the constraints of the law.  The second way of viewing Individualism is by Tibor Machan and what he calls “Classical Individualism.”  According to Machan the only direct goal of business is to profit, and the primary obligation of the businessperson is to maximize the profit (Salazar, 17-18). McKesson Corporation executives exercised individualism by increasing sales through the distribution of drugs. But it was essential for McKesson to dispense controlled substances in compliance with DEA’s record keeping requirements. In one case, DEA investigators discovered that McKesson was shipping the same quantities of opioid pills to small-town pharmacies in Colorado's San Luis Valley as it would typically ship to large drugstores next to big city medical centers. During that period McKesson CEO, John Hammergren's compensation was about $100m. He was the third-highest paid CEO in the country; only Tim Cook of Apple, and Reed Hastings of Netflix earned more. In the last earning period McKesson's revenues were up $8 billion. An individualist would find McKesson not ethical since the company made profit by fueling more drugs to sketchy pharmacies without following the proper procedure hence breaking the law. Which is against the ethical rule.

                 Utilitarianism:“Utilitarianism tells us that we can determine the ethical significance of any action by looking to the consequences of that act” (Desjardins 29). Its goal is to maximize happiness for all affected parties and to minimize unhappiness for all affected parties. In other words, Utilitarianism can be described as pleasure and the absence of pain.  Ultimately, Utilitarian’s consider the costs and benefits of actions for all affected, not just the company or one individual (Salazar, 19-20). A Utilitarian believes in business actions that aim at maximize the happiness in the long run for all conscious beings that are affected by the business action. Utilitarians are concerned about the long-term costs and benefits of the business actions. According to the Justice Department, between 2008 and 2013, McKesson supplied various U.S. pharmacies with increasing amounts of oxycodone and hydrocodone pills, which are highly addictive, frequently misused pharmaceutical drugs. Many have pointed to the abuse of opioids as the biggest reason the U.S. is currently in the midst of a heroin epidemic. According to the Centers for Disease Control and Prevention (CDC), people who become addicted to prescription painkillers are most at risk of turning to heroin. A number of heroin users interviewed by NBC News have said they became addicted to prescription painkillers like OxyContin and Vicodin, then later switched to heroin because the pills are far more expensive on the black market than heroin. A Utilitarian would condemn these business actions since in the long run happiness is not achieve. High crime rates as a result of drug abuse leading to death and imprisonment. 
one of the most abused prescription drug.
Kantianism:  Is founded under core believes of honesty and Freedom. That’s how a business should conduct its self. Businesses are expected to act in a way that respect and honor individual and their choices. Don’t lie, cheat, manipulate or harm others to get your way. The enforcement action against McKesson isn’t the first time the company has been investigated for failing to report suspicious drug orders. In 2008, the drug distributor agreed to pay a $13.25 million civil penalty and enter into an administrative agreement over similar violations. The government’s most recent investigation into McKesson’s Controlled Substances Act violations uncovered evidence that even after designing a compliance program in the aftermath of the 2008 settlement, McKesson failed to fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances between June of 2008 and May of 2013. During that time, the drug distributor allegedly reported only 16 orders (or .001 percent) as suspicious. All 16 suspicious orders were connected to one instance involving a single customer that had been recently terminated. A Kant would say this is not ethical since they use people as mere means to their ends.  
pharmaceutical regulation a must.
Virtue Theory: Virtue Theory was developed by Aristotle.  Virtue Theory focuses on rationality and whether a person is virtuous or not.  There are 4 main virtues that include courage, honesty, temperance, and justice.  Aristotle said that rationality is what differentiates characteristics of people. So, people need to be rational in order to live a virtuous life.  Aristotle also said that people need to be rational in order to function well and said that if a thing achieves its function then the thing is happy.  Therefore, people who function well will live a virtuous life (Salazar, 23). 
 theory asks about a person’s character and assesses whether a person is virtuous or not. By analyzing how McKesson conducted itself after fines, we can assess that they are moving on a better and responsible direction. McKesson is committed to maintaining – and continuously enhancing – strong programs designed to detect and prevent opioid diversion within the pharmaceutical supply chain. In addition to reporting controlled substances transactions to DEA on a regular basis, they have invested significant amounts of time and financial resources into their Controlled Substance Monitoring Program (CSMP). 


            DesJardins, Joseph R. "Ethical Theory and Business." An Introduction to Business Ethics. 5th ed. N.p.: McGraw-Hill/Irwin, 2014. 20-46. Print.

 Salazar, Heather, “Kantian Business Ethics,” in Business in Ethical Focus,

               Benner, Katie, and Jan Hoffman. "Justice Department Backs a High-Stakes Lawsuit Against Opioid Makers in Ohio." New York Times, Late Edition (East Coast) ed.Feb 28 2018. ProQuest. Web. 5 Mar. 2018 .
 60 minutes opiod whistleblower CBS NEWS Dec 17th 20017.

               Benner, Katie, and Jan Hoffman. "Justice Department Backs a High-Stakes Lawsuit Against Opioid Makers in Ohio." New York Times, Late Edition (East Coast) ed.Feb 28 2018. ProQuest. Web. 5 Mar. 2018 .

Hufstader, Meghan, Yi. Yang, Max Sow, Varun Vaidya, and Tricia L., Wilkins. “Adoption of Electronic Prescribing for Controlled Substances among Providers and Pharmacies.” Am J Managed Care, 2014, 20(11 Spec No 17): SP541-SP546

John Hopkins Bloomberg School of Public Health. “Six in Ten Adults Prescribed Opioid Painkillers Have Leftover Pills”, released June 13, 2016 

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