McKesson's $178M Vaccine Deal Brings CDC Off The Bench

By Jeff Overley
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Law360 (August 14, 2020, 9:31 PM EDT) -- The Trump administration on Friday tapped drug distribution giant McKesson Corp. to deliver COVID-19 vaccines in a public health operation of extraordinary speed and scope, and there were fresh signs of the administration dialing back its controversial sidelining of the Centers for Disease Control and Prevention.

The deal calls for McKesson to ship the vaccines once they become available, along with related supplies, to health care settings. Natalie Baldassarre, a spokesperson for the U.S. Department of Health and Human Services, told Law360 that McKesson will be paid nearly $178 million. David Matthews, a spokesperson for McKesson, confirmed the amount.

McKesson is one of the first companies publicly identified as a vaccine distributor under Operation Warp Speed, a multibillion-dollar effort to swiftly develop and disseminate COVID-19 inoculations. President Donald Trump announced the arrangement during a Friday press conference at the White House, calling McKesson "a great company [that] is a major medical supplier."

Other distributors are likely to be announced soon, given the breathtaking challenges of Operation Warp Speed. The project aims to discover safe and efficacious vaccines in record time and ship 300 million doses by January. Matters are further complicated by the fragility of proposed COVID-19 vaccines, some of which must be stored at roughly 80 degrees below zero Celsius.

HHS said in a Friday statement that the CDC is exercising an option for vaccine distribution during a pandemic under an existing vaccine contract awarded to McKesson in 2016. The same statement included comments from CDC Director Robert Redfield, who said the agreement "puts another building block in place as the nation moves toward a safe and effective COVID-19 vaccine."

"Detailed planning is underway to ensure rapid distribution as soon as the [U.S. Food and Drug Administration] authorizes one or more vaccines," HHS said in its statement. "Once these decisions are made, McKesson will work under CDC's guidance to ship COVID-19 vaccines to administration sites."

The CDC's prominence in Friday's announcement is noteworthy because the Trump administration on July 30 raised eyebrows by disclosing that the U.S. Department of Defense would be in charge of overseeing vaccine distribution, despite the CDC's longstanding expertise in that field.

During a July 30 briefing, a senior administration official said that the DOD would be "handling all the logistics of getting the vaccines to the right place at the right time in the right condition," while the CDC would be in charge of communicating with state officials and tracking vaccinated patients to see how they're doing.

Tom Frieden, CDC director during the Obama administration, criticized that move at the time, writing on Twitter that the "DOD has zero experience sending vaccines to doctors in the US."

Law360 on Friday asked Frieden for his thoughts on McKesson's selection and the CDC's seemingly elevated role. In an emailed response, Frieden called the development encouraging, specifically citing McKesson's work on the H1N1 influenza pandemic of 2009-10.

"McKesson did a terrific job with the H1N1 vaccine. This is good news," Frieden said.

The Trump administration has been accused of political interference with the CDC since early in the coronavirus crisis. After high-ranking CDC official Nancy Messonnier in February warned of potentially severe disruption to everyday life, her public appearances were curtailed, drawing speculation that she'd been muzzled.

The CDC also halted its regular press briefings during much of the spring. And HHS recently directed hospitals to stop reporting COVID-19 information to the CDC and instead send it to HHS. The switch quickly disrupted the availability of hospitalization data and drew widespread complaints that the outbreak's severity was being obscured.

There were hints before Friday that the administration might be reconsidering giving the DOD complete control over coronavirus vaccine distribution. During a Thursday press briefing, HHS deputy chief of staff Paul Mango told reporters that the DOD would be "coordinating, along with the CDC, the distribution logistics."

Texas-based McKesson said Friday that it distributes 150 million doses of all vaccine types annually and is the largest distributor of seasonal flu vaccines in America. McKesson's revenue topped $231 billion in its most recent fiscal year, placing it among the nation's largest companies.

Brian Tyler, CEO of McKesson, said in a Friday statement that the company has been distributing personal protective equipment during the pandemic, and that it is "honored that the U.S. government has asked McKesson to play a key role in the effort to distribute COVID-19 vaccines."

--Editing by Haylee Pearl.

For a reprint of this article, please contact reprints@law360.com.

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