Federal authorities have reached an $80 million civil settlement with the Walgreens pharmacy chain over rules violations that allowed tens of thousands of units of powerful painkillers such as oxycodone to illegally wind up in the hands of drug addicts and dealers, officials said Tuesday.
Mark R. Trouville, chief of the U.S. Drug Enforcement Administration's Miami field office, said Walgreens committed numerous record-keeping and dispensing violations of the Controlled Substances Act at a major East Coast distribution center in Jupiter, Fla., and at six retail pharmacies around the state. The drugs also included hydrocodone and Xanax.
Authorities said the Jupiter center failed to flag suspicious orders of drugs it received from pharmacies, and the retail outlets routinely filled prescriptions that clearly were not for a legitimate medical use. The upshot was many more doses of prescription drugs were available illegally on the street.
Trouville called Walgreens' actions "a clear example of inexcusable corporate conduct that existed only for greed and profit. National pharmaceutical chains are not exempt from following the law."
Deerfield, Ill.-based Walgreens has more than 8,000 stores nationwide and had sales in 2012 of $72 billion, according to the company's website.
"As the largest pharmacy chain in the U.S., we are fully committed to doing our part to prevent prescription drug abuse," said Kermit Crawford, president of pharmacy, health and wellness at Walgreens. "We have worked closely with the DEA over the past several months to reach this agreement."
Florida has been a major East Coast source of highly addictive painkillers for illicit dealers and addicts. An ongoing crackdown in recent years — including passage of better prescription monitoring laws and numerous arrests of doctors, clinic operators and pharmacy owners — has reduced the number of illegal "pill mills" operating in the state.
Miami U.S. Attorney Wifredo Ferrer said the Walgreens civil penalty was the largest in the history of the Controlled Substances Act. He said Walgreens also agreed not to dispense certain tightly-controlled drugs until September 2014 through the Jupiter distribution center and until May 2014 at the six Walgreens locations: two in Fort Pierce and one each in Hudson, Port Richey, Fort Myers and Oviedo.
"We're tackling the problem from an entirely new angle," he said of pursuing a civil penalty rather than criminal prosecution.
The settlement also resolves similar allegations against Walgreens retail pharmacies in Colorado, Michigan and New York, Ferrer said. No criminal charges have been filed.
A surge of oxycodone prescriptions at Walgreens became apparent after 2009, according to the DEA. To take one example, the store in Hudson went from 388,100 oxycodone units purchased in 2009 to more than 913,000 in 2010, then to 2.1 million in 2011. Trouville said the national average for pharmacy purchases of oxycodone is about 73,000 units.
"No one with an ounce of common sense can believe this is the proper way to conduct the business of medicine," he said.
In addition to the penalty and the temporary ban on dispensing certain drugs at the selected Florida locations, the settlement requires that Walgreens create a new department to ensure regulatory compliance, a new training program for employees and that it end compensation for pharmacists based on prescriptions filled.
Crawford said the $80 million penalty was reserved by Walgreens in previous financial quarters and that the total impact of the agreement and related costs would be between 4 and 6 cents per share in the third quarter.