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McKesson (MCK) to Pay $150 Million to Department of Justice
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McKesson Corporation (MCK - Free Report) announced its decision to resolve potential federal civil and administrative claims from the U.S. Drug Enforcement Administration (DEA) and Department of Justice (DOJ) .
McKesson’s share price has grossly underperformed the Zacks classified Medical-Dental Supplies industry in the last 12 months due to drug pricing trends. The stock has lost 10.1% over this time frame, compared to a decline of 3.6% for the industry.
The claims relate to McKesson’s monitoring and reporting of suspicious controlled substance orders. We remind investors that the reporting practices date back to 2009 which were challenged by the DOJ in 2013.
Thereafter, McKesson has implemented significant changes to its monitoring and reporting processes.
In the fourth quarter of 2015, the company had reached an agreement with the DEA, Department of Justice (DOJ) and various other offices to settle all potential administrative and civil claims pertaining to investigations about McKesson’s suspicious order reporting practices for controlled substances. McKesson had agreed to pay $150 million and implement certain remedial measures for the same.
The company also suspended DEA registrations for a few of its distribution centres namely – for specified products and time periods: Aurora, Colorado: all controlled substances for three years; Livonia, Michigan: all controlled substances for two years; Washington Courthouse, Ohio: all controlled substances for the two-year period following completion of the Livonia suspension; and Lakeland, Florida: hydromorphone products for one year.
Hence, the finalization of these settlements represent the conclusion of discussions with the DEA and DOJ over several years regarding McKesson’s interpretation of the DEA’s regulations for the monitoring and reporting of suspicious controlled substance orders.
Management at McKesson claimed that the company decided to settle with the DEA and DOJ to help regulators curb the opioid epidemic.
Earlier in the month, Cardinal Health (CAH - Free Report) reached a settlement with the State of West Virginia to resolve a lawsuit filed by the State in 2012. The lawsuit filed, was regarding the company's distribution of controlled substances in West Virginia between 2007 and 2012. The company agreed to pay $20 million to the State of West Virginia to resolve these issues.
Rival AmerisourceBergen Corporation has also agreed to pay $16 million to the State of West Virginia to resolve the lawsuit related to distribution of substance abuse treatment.
McKesson currently carries a Zacks Rank #4 (Sell) while AmerisourceBergen carries a Zacks Rank #2 (Buy).
Aceto’s earnings estimates for 2017 have increased by 8 cents in the last thirty days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 3.19%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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McKesson (MCK) to Pay $150 Million to Department of Justice
McKesson Corporation (MCK - Free Report) announced its decision to resolve potential federal civil and administrative claims from the U.S. Drug Enforcement Administration (DEA) and Department of Justice (DOJ) .
McKesson’s share price has grossly underperformed the Zacks classified Medical-Dental Supplies industry in the last 12 months due to drug pricing trends. The stock has lost 10.1% over this time frame, compared to a decline of 3.6% for the industry.
The claims relate to McKesson’s monitoring and reporting of suspicious controlled substance orders. We remind investors that the reporting practices date back to 2009 which were challenged by the DOJ in 2013.
Thereafter, McKesson has implemented significant changes to its monitoring and reporting processes.
In the fourth quarter of 2015, the company had reached an agreement with the DEA, Department of Justice (DOJ) and various other offices to settle all potential administrative and civil claims pertaining to investigations about McKesson’s suspicious order reporting practices for controlled substances. McKesson had agreed to pay $150 million and implement certain remedial measures for the same.
The company also suspended DEA registrations for a few of its distribution centres namely – for specified products and time periods: Aurora, Colorado: all controlled substances for three years; Livonia, Michigan: all controlled substances for two years; Washington Courthouse, Ohio: all controlled substances for the two-year period following completion of the Livonia suspension; and Lakeland, Florida: hydromorphone products for one year.
Hence, the finalization of these settlements represent the conclusion of discussions with the DEA and DOJ over several years regarding McKesson’s interpretation of the DEA’s regulations for the monitoring and reporting of suspicious controlled substance orders.
Management at McKesson claimed that the company decided to settle with the DEA and DOJ to help regulators curb the opioid epidemic.
Earlier in the month, Cardinal Health (CAH - Free Report) reached a settlement with the State of West Virginia to resolve a lawsuit filed by the State in 2012. The lawsuit filed, was regarding the company's distribution of controlled substances in West Virginia between 2007 and 2012. The company agreed to pay $20 million to the State of West Virginia to resolve these issues.
Rival AmerisourceBergen Corporation has also agreed to pay $16 million to the State of West Virginia to resolve the lawsuit related to distribution of substance abuse treatment.
McKesson currently carries a Zacks Rank #4 (Sell) while AmerisourceBergen carries a Zacks Rank #2 (Buy).
McKesson Corporation Price and Consensus
McKesson Corporation Price and Consensus | McKesson Corporation Quote
Key Picks
A better-ranked stock in the industry is Aceto Corporation (ACET - Free Report) which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Aceto’s earnings estimates for 2017 have increased by 8 cents in the last thirty days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 3.19%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>