With our nation under attack from an opioid breakout, the whole country is looking for answers. Who is responsible for the worsening opioid crisis and how we can fix it?
Just this week, President Trump conducted a major briefing on this very question. Shareholders of McKesson Corporation, the country’s biggest prescription drug distributor, overwhelmingly rejected an executive pay plan that protected top management from responsibility for the company’s participation in the opioid epidemic.
More than 70% of McKesson shareholders rejected CEO John Hammergren’s pay package—one that has paid out more than $691million in the last 10 years, including millions of dollars in cash bonuses connected to an evaluation of corporate integrity and accountability.
This package has turned him into one of the highest paid CEO’s in the United States despite devastating compliance malfunctions, increasing lawsuits and a congressional investigation dog McKesson over its supply of prescription medication into our communities.
It was a rare criticism, and after a focused attempt by the International Brotherhood of Teamsters, long-term shareholders of McKesson, to defeat the CEO’s pay plan. There’s a limited amount of companies deal with shareholder rejection of their pay packages, and the margin at McKesson turned this no-vote into the second highest in the S&P 500 in 2017, following right behind Mylan.
McKesson, with its two largest competitors, are the reason for the distribution of 85% of all prescription drugs across the country and play a vital role in flooding communities with prescription opioids. Just take a look at a state like West Virginia to witness the tragic consequences of their distribution practices and the size of the distributor’s role.
According to Drug Enforcement Agency (DEA) sales records, the “Big Three” together pumped enough hydrocodone and oxycodone into West Virginia over a six-year period to provide 235 pills to every man, woman, and child living in the state while more than 1,700 people die from an overdose.
The statistics are all the more disturbing that all three distributors were already on the DEA’s radar for failing to report suspicious orders of controlled substances, as required by the law for almost 10 years. McKesson paid $13.25 million in 2008 to settle claims by the DEA that it had failed to report hundreds of suspicious orders from online pharmacies and thereby “fueled the explosive prescription drug problem.”
In the wake of the 2008 settlement, McKesson CEO Hammergren assured investors on a conference call that, “nothing is more important to our industry than the safety and integrity of our drug supply chain.” Yet this year, McKesson paid a record $150 million fine to settle a second DEA claim that it had again failed to report suspicious orders of controlled substances it distributed.
These last ten years of denial is disrespectful to any person who has lost a family or friend to opioid addiction. It’s clear that the repeated, systemic failures of the “Big Three” connected to opioid distribution are symptomatic of bad corporate governance and a lack of accountability.