McKesson Paying Settlement in Vaccine Shipping Case

A whistleblower's lawsuit triggered the federal government's allegations that the company did not comply with the shipping and handling requirements of its vaccine distribution contract in 2007.

The Department of Justice recently announced that McKesson Corporation has agreed to pay $18 million to resolve allegations that it improperly set temperature monitors used in shipping vaccines under its contract with CDC. McKesson is a pharmaceutical distributor with its corporate headquarters in San Francisco.

"Companies must comply with the requirements they agree to when they contract with the government to provide products that protect the public," said Assistant Attorney General Stuart F. Delery of DOJ's Civil Division. "If a contractor does not adhere to the terms it negotiated, its conduct not only hurts taxpayers but also could jeopardize the integrity of products, like vaccines, that Americans count on to be safe."

The government alleged McKesson didn't comply with the shipping and handling requirements of its vaccine distribution contract with the CDC, failing to ensure that vaccines were maintained at proper temperatures during shipping by, among other things, including electronic temperature monitors set to detect when the air temperature in the box reached 2 degrees Celsius and below or 8 degrees Celsius and above. This took place from approximately April 2007 to November 2007, when McKesson did not 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 meet its contractual obligations.

"Ensuring the integrity and performance of government contracts is paramount, especially when they impact programs intended to protect young children," said Derrick L. Jackson, special agent in charge of the U.S. Department of Health and Human Services-Office of Inspector General in Atlanta. "Holding accountable those who fail to meet their obligations – thereby violating the trust of the American taxpayer -- continues to be a top OIG priority."

The government's case began after Terrell Fox, a former finance director at McKesson Specialty Distribution LLC, sued McKesson under the qui tam, or whistleblower, provisions of the False Claims Act. Fox is entitled to a share of the settlement, but the amount has not been determined, according to DOJ.

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