Health Care Law Blog

Walgreens Agrees to Record $80 Million Settlement with DEA

On Tuesday, June 11, 2013, the Drug Enforcement Administration (“DEA”) announced that it had reached an $80 million civil settlement agreement, the largest in DEA history, with Walgreen Co. (“Walgreens”) to resolve allegations involving an “unprecedented number” of record-keeping and dispensing violations under the Controlled Substance Act (“CSA”). According to the DEA’s Press Release, Walgreens negligently allowed controlled substances, including Oxycodone and other prescription painkillers, to be diverted into the black market.

The settlement specifically resolves allegations involving the Walgreens Jupiter Distribution Center and six Walgreens retail pharmacies located in Florida. According to the press release, the settlement covers “at least tens of thousands of violations” of the CSA, including the following conduct:

• Failure to prevent the diversion of controlled substances into the black market in violation of 21 U.S.C. § 823;
• Failure to timely detect and report suspicious orders of controlled substances as required by 21 U.S.C. § 823;
• Distribution of controlled substances to pharmacies that it knew or should have known were engaged in conduct that violated the CSA;
• Failure to ensure that controlled substances were dispensed pursuant to prescriptions issued for legitimate business purposes as required by 21. C.F.R. § 1306.04;
• Dispensing of controlled substances to individuals Walgreens knew or should have known were diverting controlled substances;
• Dispensing of controlled substances pursuant to prescriptions issued by physicians who did not have a current, valid DEA registration; and
• Failure to maintain accurate records and failure to properly label prescriptions pursuant to 21 C.F.R. Parts 1304 and 1306.

As a result of these violations, the DEA stated that Walgreens pharmacies ordered and received at least three times the Florida average number of prescription painkillers such as oxycodone.

In addition to the $80 million penalty, Walgreens agreed to the following remedial measures:

• Surrender of Walgreens Jupiter Distribution Center’s registration to distribute controlled substances until September 13, 2014;
• Surrender of the six retail pharmacies’ registrations to dispense controlled substances until May 26, 2014;
• Creation of a Department of Pharmaceutical Integrity Agreement to ensure compliance with CSA regulations and prevent future diversion of controlled substances;
• Maintenance of other procedures and policies by all Walgreens pharmacies to prevent diversion of controlled substances, including routine and periodic training of pharmacy employees;
• Discontinuation of Walgreens’ practice of compensating pharmacists based on the volume of prescriptions filled; and
• Maintenance of all records regarding the dispensing of controlled substances in both paper and electronic form, which shall be made available to DEA agents upon demand, without the need for a warrant or subpoena.

This settlement represents the latest example of the DEA’s recent increased efforts to combat the pharmaceutical drug abuse epidemic. According to a recent report from the Centers for Disease Control and Prevention (“CDC”), the number of deaths resulting from prescription painkiller overdoses has more than tripled in the past twenty years, with overdoses accounting for more than 15,500 deaths in 2009. Accordingly, the DEA has been cracking down on the epidemic. The DEA reports that its efforts have resulted in the seizure of approximately 2.5 million dosage units of controlled substances, along with the surrender of DEA registrations by 192 doctors, 68 pharmacies, and seven distributors throughout Florida.

DEA Special Agent in Charge, Mark R. Trouville, warned in the press release that “[n]ational pharmaceutical chains are not exempt from following the law. This settlement sends a clear message that all DEA registrants will be accountable when they violate the law and threaten public health and safety.” Therefore, pharmacies should review their current controlled substance policies and practices to avoid DEA inquiry. For assistance with such a review or other compliance-related activities, please contact a health care attorney at Foster Swift.

Julie C. LaVille authored this article as a Law Clerk.

Categories: Compliance, Fraud & Abuse, Hospitals, Pharmacy, Physicians, Regulatory