McKesson 2008 Annual Report Download - page 100

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
93
On July 14, 2006, an action was filed in the United States District Court for the Eastern District of New York
against McKesson, two McKesson employees, four other drug wholesalers and sixteen drug manufacturers, RxUSA
v. Alcon Laboratories et al., (Case No. 06-CV-3447-MJT). Plaintiff alleges that we, along with various other
defendants, unlawfully engaged in monopolization and attempted monopolization of the sale and distribution of
pharmaceutical products in violation of the federal antitrust laws, as well as in violation of New York State’ s
Donnelly Act. We are also alleged to have violated the Sarbanes-Oxley Act of 2002; and our employees are alleged
to have violated the Donnelly Act, the Sarbanes-Oxley Act and Sections 1962 (c) and (d) of the civil RICO statute.
Plaintiff alleges generally that defendants have individually, and in concert with one another, taken actions to create
and maintain a monopoly and to exclude secondary wholesalers, such as the plaintiff, from the wholesale
pharmaceutical industry. The complaint seeks monetary damages of approximately $1.6 billion, and also seeks
treble damages, attorneys’ fees and injunctive relief. All defendants have filed motions to dismiss all claims. The
motions were fully briefed and submitted to the trial court on March 13, 2007. The court has not yet decided any of
the motions and has not set a date to hear oral argument on the motions. Discovery has been stayed subject to
disposition of the motions to dismiss. No trial date has been set.
Between 1976 and 1987, our former McKesson Chemical Company division operated a facility in Santa Fe
Springs, California. We have been actively remediating the contamination at this site since 1994. Angeles
Chemical Company (“Angeles”) conducted similar repackaging activities at its property adjacent to the Company’ s
site between 1976 and 2000. In late 2001, Angeles filed an action against McKesson Angeles Chemical Company v.
McKesson Corporation, et al., (United States District Court for the Central District of California Case No. 01-
10532-TJH) claiming that McKesson’ s contamination had migrated to Angeles’ property. The causes of action in
the current complaint purport to state claims based on the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as amended, the “Superfund” law or its state law equivalent) and the
Resource Conservation and Recovery Act, as well as allege various state law claims, such as nuisance, trespass,
negligence, defamation, interference with prospective advantage, unfair business practices, and for declaratory
relief, among others. Angeles seeks injunctive relief, as well as compensatory and punitive damages, attorneys’ fees
and costs. We have answered the complaint, denying liability and asserting affirmative defenses. Fact discovery is
closed, expert discovery is ongoing and a pretrial conference is scheduled for June 23, 2008, at which time a trial
date is expected to be set.
V. Government Investigations and Subpoenas
The health care industry is highly regulated, and government agencies continue to increase their scrutiny over
certain practices affecting government programs. From time to time, the Company receives subpoenas or requests
for information from various government agencies. The Company generally responds to such subpoenas and
requests in a cooperative, thorough and timely manner. These responses sometimes require considerable time and
effort, and can result in considerable costs being incurred by the Company. Such subpoenas and requests also can
lead to the assertion of claims or the commencement of legal proceedings against the Company and other members
of the health care industry, as well as to settlements. Examples of such requests and subpoenas include the
following: (1) we are in the process of responding to a subpoena from the U.S. Attorney’ s Office (“USAO”) in
Massachusetts seeking documents relating to the Company’ s business relationship with a long-term care pharmacy
organization; (2) we have responded to a request from the Federal Trade Commission for certain documents as part
of a non-public investigation to determine whether the Company may have engaged in anti-competitive practices
with other wholesale pharmaceutical distributors in order to limit competition for provider customers seeking
distribution services; (3) we have received and responded to a Civil Investigative Demand from the Attorney
General’ s Office of the State of Tennessee apparently in connection with an investigation into possible violations of
the Tennessee Medicaid False Claims Act in connection with repackaged pharmaceuticals; (4) we have responded to
a subpoena from the office of the Attorney General of the State of New York requesting documents and other
information concerning our participation in the secondary or “alternative source” market for pharmaceutical
products; (5) we have received and have responded, or are in the process of responding to subpoenas from a number
of Offices of state Attorney Generals or other state agencies, including requests from New York, Wisconsin, and
Alabama, relating to the pricing, including First DataBank AWP, for branded and generic drugs; (6) we are
cooperating in an investigation by the USAO for the Northern District of Mississippi into whether it will intervene
in a civil qui tam action filed by an unknown private relator against the Company and other defendants, and we are
informed that the action purports to allege violations of the anti-kickback and/or false claims statutes in connection
with the provision of Medicare claims billing services to multi-facility nursing home customers; and (7) we are
responding to a subpoena, issued by the USAO in Houston, which seeks documents relating to billing and collection