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West Virginia reaches $37 million opioid settlement with drug shipper McKesson

McKesson Corp. agreed to pay $14.5 million this year and $4.5 million annually for five years (Kristoffer Tripplaar/Sipa USA)

West Virginia and drug distributor McKesson Corp. announced a $37 million settlement of a lawsuit over the company’s role in the opioid epidemic Thursday, a record agreement for the state that leads the nation in drug overdose deaths.

McKesson, the sixth-largest company on the Fortune 500 list, admitted no wrongdoing but agreed to pay $14.5 million this year and $4.5 million annually for five years. The money will go toward state efforts to address the opioid crisis, including rehabilitation, job training and mental health programs, the company said in a statement.

The payment is the largest from any of 13 pharmaceutical wholesalers the state has been pursuing legally for years. It pushes the total recouped to $84 million, which includes previous settlements with Cardinal Health ($20 million) and AmerisourceBergen ($16 million), according to Gov. Jim Justice (R).

Those companies and McKesson control nearly 90 percent of the distribution of legal painkillers in the United States.

In 2017, McKesson agreed to pay $150 million in a record-setting settlement of charges brought by federal authorities. Last year the company pledged $100 million toward fighting the opioid crisis.

In a separate criminal case Thursday, a federal jury in Boston convicted five executives of Insys Therapeutics, including company founder John Kapoor, of racketeering charges for bribing doctors to unnecessarily prescribe the company’s powerful fentanyl spray.

The trial brought out evidence that the company paid doctors sham speaking fees and that in one case, an exotic dancer-turned-company executive gave a doctor a lap dance to encourage him to prescribe the spray, Subsys, which is used for pain suffered by cancer patients. The woman, Sunrise Lee, was among the people convicted Thursday.

Criminal charges against drug company management are rare. But last month, federal prosecutors in New York accused two former executives of the nation’s sixth-largest drug distributor, Rochester Drug Cooperative, of charges that include conspiring to distribute narcotics for nonmedical reasons. The men, one of whom has pleaded guilty and is cooperating with authorities, could face 10 years to life in prison.

Hundreds of states, counties, cities and Native American tribes have filed civil suits against drug distributors, manufacturers and pharmacy chains, hoping to win compensation for the costs of grappling with the two-decade-old drug crisis.

In a closely watched state case, Oklahoma settled in March with Purdue Pharma, the maker of OxyContin, for $270 million and is scheduled to go to trial against Johnson & Johnson and Teva Pharmaceuticals May 28.

Federal law makes distributors — which ship drugs from manufacturers to drugstores, hospitals, nursing homes and elsewhere — responsible for spotting unusual amounts, patterns or frequency of narcotic sales, which can indicate that drugs are being diverted to the black market.

McKesson distributed nearly 100 million doses of oxycodone and hydrocodone in West Virginia — home to 1.8 million people — between 2007 and 2012, the state charged. That included, for example, 1.3 million doses in Boone County, where 24,629 people lived in 201o.

In 2017, West Virginia led the nation with 57.8 drug overdose deaths per 100,000 residents, according to the Centers for Disease Control and Prevention. More than 400,000 people in the United States have died of overdoses to prescription drugs, heroin and illegal fentanyl between 1999 and 2017.

West Virginia’s attorney general, Patrick Morrisey, said in a statement that his department “has done as much or more than any office in the country to fight this terrible epidemic, fix the failed policies of the past and bring accountability to the system.” The number of pills coming into the state has declined 35 percent since he took office in 2013, he said.

Correction: An earlier version of this story inaccurately said that two executives of Rochester Drug Cooperative have been accused of charges that include conspiring to distribute narcotics for nonmedical reasons. The men are former executives of the company, and the story has been corrected.

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