McKesson 2011 Annual Report Download - page 105

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
99
On January 4, 2011, the Company was served with a qui tam complaint that was originally filed in November
2005 in the United States District Court for the Eastern District of Pennsylvania by a relator, a former employee of a
Johnson & Johnson affiliate, against the Company, Johnson & Johnson and its affiliate companies, and Omnicare,
Inc., alleging that the Company engaged in conduct that violated the federal Anti-Kickback Statute, causing
subsequent claims for certain drugs manufactured by Johnson & Johnson to be submitted in violation of the federal
False Claims Act and the false claims act statutes of various states, United States ex rel. Scott Bartz v. Ortho McNeil
Pharmaceuticals, Inc., et al., (Case No. 2:05-cv-06010). The United States declined to intervene in the suit, which
alleges that the Company received illegal “kickbacks” from Johnson & Johnson that were disguised as discounts and
rebates. On February 23, 2011, the case was transferred to the District of Massachusetts. The Company has not yet
responded to the complaint.
In August of 2010, the Company was notified by the United States Attorneys’ Office in Kansas City that a qui
tam action had been filed on an unidentified date by two relators, a former pharmacy customer of the Company and
the customer’s advisor, in which the relators allege that in or about January of 2006, the Company and a competitor
drug wholesaler engaged in conduct that violated the federal Anti-Kickback Statute, causing subsequent claims by
the customer relator to be submitted in violation of the federal False Claims Act, United States ex rel. Saleaumua et
al. v. McKesson Corporation et al., (Case No. 4:08-CV-0848 (ODS)). The complaint alleges that the defendants’
conduct prior to the Company’s losing the account to the competitor in January of 2006, caused the customer relator
to file subsequent claims in violation of the False Claims Act. The complaint seeks monetary damages in an
unspecified amount, as well as attorneys’ fees and costs. The complaint has not been served on the Company. On
April 22, 2011, the Company was informed by the United States Attorney’s Office that the Department of Justice
had determined not to intervene against McKesson and that the qui tam action would be dismissed.
III. Government Investigations and Subpoenas
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 civil or criminal legal proceedings against the Company and other members of the health care
industry, as well as to settlements. In addition to the government investigations associated with the matters reported
on in Other Litigation and Claims above, examples of such requests and subpoenas include the following: (1) the
Company has 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; (2) the Company has received and responded to a Civil Investigative Demand from the Attorney General’s
Office of the State of Tennessee related to an investigation into possible violations of the Tennessee Medicaid False
Claims Act in connection with repackaged pharmaceuticals; (3) the Company has responded to a subpoena from the
office of the Attorney General of the State of New York requesting documents and other information concerning its
participation in the secondary or “alternative source” market for pharmaceutical products; (4) the Company has
responded to subpoenas and requests for information from a number of Offices of state Attorney Generals or other
state agencies, relating to the pricing for branded and generic drugs; and (5) the Company has completed its
response to a subpoena, issued by the United States Attorney’s Office in Houston, which seeks documents relating
to billing and collection services performed by a Company subsidiary for certain healthcare operations associated
with the University of Texas from 2004 through the dates of the subpoenas, which investigation the Company has
been informed has been closed.