McKesson Corporation

Company information

  • Date founded: 1833
  • Industry: Pharmaceutical and Medical Distribution
  • Corporate headquarters: Irving, Texas
  • Type: Public

Overview

McKesson Corporation is one the largest pharmaceutical distributors in the United States. The company was founded in 1833 as Olcott & McKesson and then rapidly grew through a series of acquisitions, including HBO & Company in 1999, Per Se Technologies in 2006, and US Oncology, Inc., in 2010.

McKesson has several subsidiaries that each carry out a different part of the pharmaceutical giant’s operations. For example, McKesson Canada works with the Canadian healthcare system to effectively distribute pharmaceuticals to Canadian healthcare facilities, while McKesson Europe engages in similar operations overseas. Additionally, CoverMyMeds provides services to remove barriers between patients and necessary medications.

McKesson Corporation played a significant role in combatting the COVID-19 pandemic throughout the United States. The corporation was chosen by the US government as a primary distributor of COVID-19 vaccines, and by 2022, McKesson had distributed more than 370 million doses across the country. Additionally, McKesson worked with healthcare facilities to alleviate the strain placed upon them by the pandemic.

The corporation has repeatedly been implicated in the wave of opioid abuse that swept across the United States during the twenty-first century. McKesson was a significant supplier of the opioid oxycodone, providing pharmacies across the country with a steady supply of the drug. Other lawsuits allege that McKesson worked with pharmacies to help them evade federal regulations, supplying more opioids to patients than would otherwise be legally allowed. McKesson was also accused of supplying drugs to pharmacies known to be engaging in criminal activities. However, McKesson has continuously denied these allegations.

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History

McKesson Corporation was founded in 1833 in the United States as Olcott & McKesson. It was created by entrepreneurs John McKesson and Charles Olcott as a drug wholesale and import business. Olcott & McKesson quickly spread across the United States, becoming the first wholesale drug company to operate throughout the entire country. The company continued to grow in the nineteenth and early twentieth centuries, gradually becoming the largest distributor of wholesale pharmaceuticals in the United States.

Olcott & McKesson was later renamed McKesson & Robbins to reflect the influence of investor Daniel Robbins. McKesson & Robbins was purchased through a hostile takeover by Foremost Dairies in 1967, which renamed the combined entity Foremost-McKesson Inc. In 1982, Foremost-McKesson Inc. sold its dairy operations to a group of private investors for roughly $65 million. The organization decided to forgo dairy operations to focus on other product lines, namely pharmaceuticals. Because of these changes, the company was renamed McKesson Corporation.

Because of its acquisitions, McKesson Corporation continued to undergo changes. McKesson Corporation purchased HBO & Company in 1999, changing its name to McKessonHBOC. However, the merger did not go well and resulted in significant financial losses. In 2001, McKessonHBOC changed its name back to McKesson Corporation. The pharmaceutical company then continued making acquisitions to increase its market share, purchasing Per Se Technologies in 2006 and Practice Partner in 2007. In 2010, McKesson Corporation purchased US Oncology, Inc.

In 2013, McKesson made headlines when it was revealed that CEO John Hammergren’s pension plan was roughly $159 million, one of the largest in the country’s history at the time. Some media outlets considered this a marker of the company’s commercial success, while others criticized the exit package as being excessive.

The following year, McKesson utilized a public takeover to seize control of Celesio, a German pharmaceutical distributor. The company purchased 50.01 percent of Celesio, as well as Celesio’s debt, for $8.3 billion. It later secured the remaining shares of the company for $31.7 each. Following this acquisition, McKesson Corporation emerged as a global leader in the pharmaceutical wholesale and distribution industry.

In 2019, McKesson moved its company headquarters from San Francisco, California, to Irving, Texas. The San Francisco campus had grown too expensive, and headquartering the company in Irving would allow significantly reduced taxes. At the time of the move, McKesson Corporation was the sixth-largest corporation in the United States.

The COVID-19 pandemic spread across the world throughout 2020, causing millions of lives lost and significant damage to the global economy. Medical professionals worldwide worked to develop a vaccine to curb the spread of the virus. The Centers for Disease Control (CDC) and Prevention chose McKesson Corporation to serve as the centralized distributor of COVID-19 vaccines. McKesson successfully carried out this role, distributing more than 370 million vaccine doses nationwide.

Following the COVID-19 pandemic, McKesson turned its focus to diversifying its healthcare offerings. The company partnered with US Oncology Research (USOR) and HCA Healthcare’s Sarah Cannon Research Institute (SCRI) to improve research, clinical trials, and drug development. McKesson also acquired several companies between 2021 and 2024, including Rx Savings Solutions and Compile, and launched InspiroGene.

Impact

McKesson Corporation is a major employer in the wholesale pharmaceutical industry, employing more than 80,000 employees and serving customers in fourteen countries. The company distributes both branded and generic pharmaceuticals to healthcare providers using integrated delivery networks. It also offers a wide range of medical-surgical supplies, such as exam tables, bandages, and surgical instruments, which are sold and delivered to post-acute care agencies and surgical centers. This catalog includes both McKesson Corporation’s own line of medical and surgical supplies as well as more than 150,000 products from national medical brands.

Also part of McKesson is CoverMyMeds, a service that helps patients solve challenges that might prevent them from accessing necessary medications. CoverMyMeds serves as an umbrella for several smaller subsidiaries, including RxCrossRoads, McKesson Prescription Automation, and RelayHealth. CoverMyMeds works with more than 50,000 pharmacies and 900,000 providers, making it one of the leading pharmaceutical networks in the United States.

Two large McKesson subsidiaries carry out business in other parts of the world. McKesson Canada works with the unique Canadian healthcare industry to meet the needs of the Canadian public. This includes delivering new information technologies, as well as the company’s standard deliveries of large quantities of pharmaceuticals and medical supplies. Similarly, McKesson Europe works with two hundred twenty-four pharmaceutical distribution centers to deliver medicine to more than twenty-two thousand pharmacies and medical facilities throughout Europe. McKesson Europe employs more than forty-five thousand workers, serving more than two million people each day.

As the COVID-19 pandemic swept across the world, McKesson Corporation helped fight the virus in several ways. As a major pharmaceutical wholesaler, McKesson was used as a centralized distributor of COVID-19 vaccines. This involved the construction of dedicated distribution centers and the development of new technological systems designed to track the distribution of the vaccines. The company was also responsible for the distribution of specialized ancillary supply kits designed to aid physicians in administering the vaccine. By January 2022, McKesson successfully distributed more than 370 million vaccinations.

The COVID-19 pandemic put a significant strain on the US healthcare system. It also damaged the nation's supply chain, making it more difficult for doctors and medical staff to secure the supplies necessary to treat patients. To alleviate this strain, McKesson worked closely with the US government to help provide medical facilities with necessary supplies. The company worked with new manufacturers to expand its network of suppliers, working to repair the damage to the supply chain. McKesson also published articles about COVID-19 and the public’s options for vaccines, working to fight the growing wave of medical misinformation.

However, in addition to McKesson Corporation’s positive impact, the company has faced many lawsuits regarding improper conduct and putting patients at risk. In 2018, McKesson was sued by Omni Healthcare for repackaging cancer drugs from single-use vials. According to the lawsuit, McKesson maximized profits by harvesting the overfill in vials of covered drug products, such as oncology drugs. It then repackaged them in bulk into non-sterile and plastic syringes and resold them to cancer centers and physicians. The company then billed the government for the syringes, which put cancer patients at risk of infection.

The company has also been accused of intentionally contributing to the opioid epidemic in the United States. According to allegations made in various lawsuits, McKesson Corporation designed its distribution systems to make them difficult for regulators to track. The company also has been accused of giving advance notice to pharmacies that were at risk of being reported to the Drug Enforcement Administration (DEA) for over-prescription of opioids. According to allegations, McKesson then helped those pharmacies circumvent these limits. It also provided opioid prescriptions for pharmacies that it knew were engaging in illegal activities. The most common drug named in these allegations was oxycodone. The over-prescription of oxycodone and other opiates, which are extremely addictive, led to the overdose deaths of more than 218,000 deaths since 1996, according to the CDC. McKesson and pharmaceutical giants AmerisourceBergen and Cardinal Health reached a settlement in 2021 to resolve the majority of the lawsuits filed against them by state and local governments. The companies will collectively provide $21 billion over eighteen years to thousands of communities in the United States. McKesson agreed to contribute $7.9 billion to the settlement, the most of the three distributors.

Bibliography

"About McKesson." McKesson, www.mckesson.com/about-mckesson. Accessed 20 Jan. 2025.

Burger, Ludwig. “McKesson $8.3 Billion Deal for Drugs Trader Celesio to Create Market Leader.” Reuters, 2013, www.reuters.com/article/us-celesio-mckesson-deal/mckesson-8-3-billion-deal-for-drugs-trader-celesio-to-create-market-leader-idUSBRE99N05N20131024. Accessed 20 Jan. 2025.

“COVID-19 Response.” McKesson, www.mckesson.com/about-mckesson/coronavirus-response. Accessed 20 Jan. 2025.

“COVID-19 Vaccine Background.” McKesson, www.mckesson.com/about-mckesson/covid-19/vaccine-support. Accessed 20 Jan. 2025.

“Distributors Announce Proposed Opioid Settlement Agreement.” McKesson, 21 July 2021, www.mckesson.com/About-McKesson/Newsroom/Press-Releases/2021/Distributors-Announce-Proposed-Opioid-Settlement-Agreement. Accessed 20 Jan. 2025.

Hakim, Danny, et al. “The Giants at the Heart of the Opioid Crisis.” The New York Times, 22 Apr. 2019, www.nytimes.com/2019/04/22/health/opioids-lawsuits-distributors.html. Accessed 20 Jan. 2025.

“McKesson Reports Fiscal 2022 Third-Quarter Results.” McKesson, 2 Feb. 2022, www.mckesson.com/About-McKesson/Newsroom/Press-Releases/2022/McKesson-Reports-Fiscal-2022-Third-Quarter-Results. Accessed 20 Jan. 2025.

Raymond, Nate. “McKesson Says States Seek $21 Billion from Drug Distributors in Opioid Settlement.” Reuters, 3 Nov. 2020, www.reuters.com/article/us-usa-opioids-litigation/mckesson-says-states-seek-21-billion-from-drug-distributors-in-opioid-settlement-idUSKBN27J1UC. Accessed 20 Jan. 2025.

"What is CoverMyMeds?" CoverMyMeds, 2023, www.covermymeds.com/main/support/general/what-is-covermymeds. Accessed 20 Jan. 2025.