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Commitments and Contingent Liabilities | 3 Months Ended
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Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities In addition to commitments and obligations in the ordinary course of business, we are subject to various claims, including claims with customers and vendors, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. As described below, many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided. Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates. Significant developments in previously reported proceedings and in other litigation and claims, since the filing of our 2017 Annual Report are set out below. We are party to the legal proceedings described below. Unless otherwise stated, we are currently unable to estimate a range of reasonably possible losses for the unresolved proceedings described below. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our financial position or results of operations. Litigation, Government Subpoenas and Investigations As previously disclosed, following removal of the action captioned State of West Virginia ex rel. Morrisey v. McKesson Corporation to the United States District Court for the Southern District of West Virginia, the court remanded the matter back to state court. On July 7, 2017, the Company again removed the matter to the United States District Court for the Southern District of West Virginia (Civil Action No. 2:16-cv-03555.) Since May 24, 2017, the Company has been served with seven complaints filed in state courts in West Virginia alleging claims related to the distribution of controlled substances to pharmacies in West Virginia. These lawsuits are Mayor Reba Honaker, on behalf of the City of Welch v. West Virginia Board of Pharmacy, et al., Cabell County, West Virginia Circuit Court, Civil Action 17-C-18, removed to the United States District Court for the Southern District of West Virginia, Civil Action 1:17-cv-03364; County Commission of Lincoln County v. West Virginia Board of Pharmacy, et al., Lincoln County, West Virginia Circuit Court, Civil Action 17-C-46, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03366; Mayor Vivian Livinggood on behalf of the Town of Gilbert v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-94, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03369; Mayor Charles Sparks on behalf of the Town of Kermit v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-13, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03372; Mayor Robert Carlton on behalf of the City of Williamson v. West Virginia Board of Pharmacy, et al., Mingo County, West Virginia Circuit Court, Civil Action 17-C-99, removed to the United States District Court for the Southern District of West Virginia, Civil Action 2:17-cv-03532; The County Commission of Mercer County v. West Virginia Board of Pharmacy, et al., Mercer County, West Virginia Circuit Court, Civil Action 17-C-236; and Mayor Raaimie Barker on behalf of the Town of Chapmanville v. West Virginia Board of Pharmacy, et al., Logan County, West Virginia Circuit Court, Civil Action 17-C-168. The Company has filed motions to dismiss in all cases in which responses were due. In response to the previously disclosed case captioned Cherokee Nation v. McKesson Corporation, et al., on June 8, 2017, the Company and the other defendants in this action filed suit in the United States District Court for the Northern District of Oklahoma, McKesson Corporation, et al. v. Todd Hembree, Attorney General of the Cherokee Nation, et al., No. 4:17-cv-00323, seeking a declaratory judgment that the Cherokee Nation District Court has no jurisdiction over the claims asserted by the Cherokee Nation. On that same day, the Company and the other plaintiffs in the federal action filed a motion for a preliminary injunction enjoining the defendants from taking any action in the case pending in the tribal court. On May 25, 2017, a lawsuit was filed in Stockton County, California Superior Court against various pharmaceutical manufacturers and the Company by the County of San Joaquin, City of Stockton and Montezuma Fire Protection District. City of Stockton, et al. v. Purdue Pharma LP, et al., Case No. STK-CV-UBT-2017-5325.The suit seeks damages for the funds spent by plaintiffs on municipal services due to alleged excessive sales of opioids. The causes of action against the Company are unjust enrichment and parens patriaie claims. On July 17, 2017, this case was removed to the United States District Court for the Eastern District of California (Case No. 2:17-at-00719.) Two municipalities in Ohio, the City of Dayton and the City of Lorain, have individually filed suit against various pharmaceutical manufacturers and three wholesalers, including the Company, as well as four individual physicians. City of Dayton v. Purdue Pharma LP, et al., Montgomery County, Ohio Court of Common Pleas, No. 2017 CV 02647, filed on June 5, 2017; and City of Lorain v. Purdue Pharma LP, et al., Lorain County, Ohio Court of Common Pleas, No. 17 CV 192705, filed on June 29, 2017. In each case, the plaintiff claims that all of the defendants engaged in unfair and deceptive acts or practices involving the marketing and sales of opioids, and created a public nuisance. Each plaintiff also contends that the distributor defendants failed to take any action to prevent or reduce the distribution of opioids. The suits contain causes of action for violation of the Ohio Consumer Sales Practices Act; deceptive trade practices; public nuisance; fraud, unjust enrichment; and negligence. On July 7, 2017, the City of Dayton case was removed to the United States District Court for the Southern District of Ohio (Case No. 3:17-cv-229). On June 12, 2017, the County of Nassau, New York filed suit against various pharmaceutical manufacturers and three wholesalers, including the Company, as well as four individual physicians. The County of Nassau v. Purdue Pharma LP, et al., Supreme Court of the State of New York, County of Nassau, Index No. 605477/2017. The plaintiff claims that all of the defendants engaged in unfair and deceptive acts or practices involving the marketing and sales of opioids, and created a public nuisance. Each plaintiff also contends that the distributor defendants failed to take any action to prevent or reduce the distribution of opioids. The suit contains causes of action for deceptive acts and practices under New York General Business Law § 349; false advertising under New York General Business Law § 350; public nuisance; violation of New York Social Services Law § 145-B; fraud, unjust enrichment; and negligence. On May 19, 2017, the plaintiff in the previously disclosed case captioned Silverman v. McKesson Corporation, filed a voluntary withdrawal of this action. 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 time and effort and can result in considerable costs being incurred by the Company. For example, the Company has received a request for information from the U.S. Attorney’s Office for the Eastern District of Pennsylvania relating to the use of a Company pharmacy management software system to process partially-filled prescriptions. The Company is currently responding to this request. 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.

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