Walgreen Co. has agreed to pay $80 million in civil penalties under a settlement with the Drug Enforcement Administration and the Department of Justice regarding the distribution and dispensing of controlled substances in Florida.


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Walgreens to pay $80 million in DEA settlement

June 12th, 2013

MIAMI – Walgreen Co. has agreed to pay $80 million in civil penalties under a settlement with the Drug Enforcement Administration and the Department of Justice regarding the distribution and dispensing of controlled substances in Florida.

The DEA said late Tuesday that the settlement — the largest in the agency's history — resolves charges that Walgreens' Jupiter distribution center and six Walgreens drug stores in Florida committed record-keeping and dispensing violations under the Controlled Substances Act by negligently allowing drugs such as oxycodone and other prescription pain killers to be diverted for abuse and illegal black market sales.

"We reached an agreement with the DEA and the Department of Justice that settles and resolves all administrative and civil matters arising out of DEA's concerns relating to the distribution and dispensing of controlled substances," Kermit Crawford, president of pharmacy, health and wellness at Walgreens, said in a statement on the settlement. "We have worked closely with DEA over the past several months to reach this agreement, which concludes the DEA's review of our operations and provides direction going forward."

Crawford noted that Walgreens, the nation's largest pharmacy chain, is "fully committed to doing our part" in fighting prescription drug abuse.

"We also will continue to advocate for solutions that involve all parties — including leaders in the community, physicians, pharmacies, distributors and regulators — to play a role in finding practical solutions that combat the abuse of controlled substances and ensure patient access to critical medications," he stated.

Walgreens said the settlement resolves all pending litigation and requires the company to surrender its DEA registrations to dispense Schedule II - V controlled substances at six of its 800-plus Florida pharmacies until May 2014 and at its Jupiter distribution center until September 2014. The drug chain added that steps are under way to ensure there are no disruptions to the medication supply to its pharmacies in the state.

"As part of the agreement with DEA and our continuing desire to work with DEA to combat prescription drug abuse, we have identified specific compliance measures — many of which Walgreens has already taken — to enhance our ordering processes and inventory systems, to provide our team members with the tools, training and support they need to ensure the appropriate dispensing of controlled substances and to improve collaboration across the industry," Crawford stated.

Under the agreement, Walgreens will pay $80 million, which the company said it reserved in previous quarters, including $25 million in its most recent quarter ended May 31. The company said it expects the total impact of the settlement and related costs to be 4 cents to 6 cents per share in its fiscal third quarter.

Specifically, the DEA said, the settlement covers allegations that Walgreens' Jupiter distribution center didn't comply with DEA regulations requiring it report suspicious prescription drug orders that it received from the Walgreens retail pharmacies. The agency said that the alleged conduct was "a systematic practice that resulted in at least tens of thousands of violations" and allowed the Walgreens pharmacies to order and receive at least three times the Florida average for drugs such as oxycodone.

Also, the DEA said, the six Walgreens retail pharmacies in Florida that received the suspicious drug shipments from the Jupiter center filled customer prescriptions that they knew or should have known weren't for legitimate medical use. In addition, those pharmacies and others in the United States failed to properly identify and mark, as required by DEA regulations, hardcopy controlled-substance prescriptions that were outsourced to a central-fill facility for filling, according to the agency. As a result, the DEA said, the agency couldn't determine which prescriptions were filled from the retail pharmacies' drug supplies and which were filled by a central-fill facility, in turn preventing the DEA from determining the accuracy of the retail pharmacies' drug records.

"The record-keeping requirements of the Controlled Substances Act and DEA regulations are designed to prevent prescription pain killers, like oxycodone, from ending up on our streets," U.S. Attorney Wifredo Ferrer said in a statement. "For this reason, we cannot allow pharmacies to circumvent their regulatory record-keeping and dispensing obligations."

According to the DEA, Walgreens has agreed to create a department of pharmaceutical integrity to ensure regulatory compliance and prevent the diversion of controlled substances, as well as to enhance its training and compliance programs and to no longer monetarily or otherwise compensate its pharmacists based on the volume of prescriptions filled.

"This settlement sends out a clear message that all DEA registrants will be held accountable when they violate the law and threaten public health and safety," stated DEA Special Agent in Charge Mark Trouville. "The DEA will continue its efforts to work with our registrants and our law enforcement partners to combat pharmaceutical drug abuse and diversion in Florida."

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