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McKesson Corporation (NYSE:MCK) today announced that it has
reached administrative and civil settlements with the U.S. Drug
Enforcement Administration (DEA) and six U.S. Attorneys’ Offices
regarding the company’s distribution of so-called “lifestyle drugs.”
These drugs, especially hydrocodone and alprazolam, have come under
increased DEA scrutiny in recent months because of their potential for
abuse.

The administrative settlement, which resolves all DEA claims
against McKesson, calls for a temporary suspension of distribution of
the two drugs from two of McKesson’s 31 distribution centers. The
pharmacy accounts served by the two affected facilities will continue
to receive shipments of the two drugs from other nearby McKesson
distribution centers, with no disruption of service. Shipments of the
drugs to Federal governmental agencies, including the VA, will not be
subject to the suspension.

In connection with the settlement, the company is implementing
certain enhanced controls over the ways it monitors and reports orders
for controlled substances.

The civil settlement with the U.S. Attorneys’ Offices releases the
company from related monetary claims in exchange for payments totaling
$13.25 million. In January 2008, McKesson created a legal reserve in
the same amount for that exposure. The company does not anticipate any
other material financial impact from these settlements. McKesson
denied any wrongdoing in connection with all of the settled matters.

The two settlements are the result of McKesson’s collaboration
with the DEA and the U.S. Attorneys to resolve monetary,
administrative and regulatory claims, while at the same time enhancing
its monitoring of the distribution of the affected drugs in the
future.

“The security of the nation’s pharmaceutical supply chain is one
of McKesson’s highest priorities,” said John Figueroa, President,
McKesson U.S. Pharmaceutical. “While we believe that our policies and
procedures complied with all applicable laws and regulations, we chose
to resolve these matters in collaboration with the federal agencies
rather than in the courts to remove any uncertainty and ensure that
our customers–America’s retail pharmacies, hospitals and other care
facilities–continue to receive their vital medicines safely and on
time. We believe that these settlements are right for the company, our
customers, and our shareholders.”

As the oldest pharmaceutical distributor in America, McKesson
continually seeks ways to enhance the efficiency and safety of
pharmaceutical supply chain, from the loading dock to the patient
bedside. For instance, McKesson pioneered the use of portable bar code
readers in its warehouses and later developed bar code technology for
use in hospitals to dramatically improve the safety and accuracy of
medication administration.

About McKesson

McKesson Corporation, currently ranked 18th on the FORTUNE 500, is
a healthcare services and information technology company dedicated to
helping its customers deliver high-quality healthcare by reducing
costs, streamlining processes, and improving the quality and safety of
patient care. McKesson is the longest-operating company in healthcare
today and in 2008 is marking 175 years of continuous operations. Over
the course of its history, McKesson has grown by providing
pharmaceutical and medical-surgical supply management across the
spectrum of care; healthcare information technology for hospitals,
physicians, homecare and payors; hospital and retail pharmacy
automation; and services for manufacturers and payors designed to
improve outcomes for patients. For more information, visit us at
www.mckesson.com.