In Brief: McKesson Acquires Rexall Chain; Olympus Will Pay $646 Million To Settle Scope Allegations

McKesson Acquires Rexall Chain

San Francisco-based McKesson Corp. has acquired the Canadian-based drugstore chain Rexall Health for $2.2 billion.

The Canadian-based Rexall operates some 470 pharmacies in both Canada and the United States.

The move by McKesson suggests it may be an attempt to beef up the burgeoning retail clinic business in North America, although the company also noted it would enhance its existing pharmacy service business.

“The acquisition of Rexall Health supports McKesson’s commitment to drive value in the industry by improving healthcare solutions delivered in the pharmacy; it enhances our ability to provide best-in-class pharmacy care through an expanded retail footprint for patients across Canada,” said McKesson Chief Executive Officer John H. Hammergren. “Canada’s healthcare environment is rapidly evolving; it is marked by a move of primary care into pharmacy and increasingly complex patient demand.”

The transaction, which McKesson said will be financed through a mixture of cash and debt, is expected to close in the latter half of 2016.  

Olympus Will Pay $646 Million To Settle Scope Allegations

Japanese tech giant Olympus Corp. has agreed to pay $646 million to settle charges of paying kickbacks to hospitals and doctors in the United States and elsewhere in order to sell more of its endoscopes and duedonoscopes.

Olympus’ duedonoscopes proved extraordinarily difficult to clean and sterilize in between procedures, leading to at least 13 outbreaks of infections at U.S. hospitals that sickened scores of patients, including those who received care at Ronald Reagan UCLA Medical Center. At least two UCLA patients died due to infections related to Olympus duedonoscopes.

According to the U.S. Department of Justice, Olympus gave one hospital a $5,000 grant in lieu of it purchasing $750,000 worth of equipment; held up a $50,000 research grant at another hospital until it agreed to purchase the company’s equipment, and gave a physician $400,000 worth of medical equipment free for his private practice in lieu of persuading a hospital to make equipment purchases.

Olympus will pay $623.3 million to settle civil and criminal cases in the U.S., and another $22.7 million to settle allegations of bribery involving sales in Latin America. It will enter into a corporate integrity program in order to defer prosecution.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up healthcare costs for everybody.”

Olympus was originally sued by its former head corporate compliance officer in the U.S. That relator, John Slowik, will receive $51.1 million of the settlement under the federal False Claims Act.