CVS agrees to record fine to settle meth suit

The CVS retail pharmacy chain agreed Thursday to pay a record fine to settle a civil case brought by federal prosecutors who said the company had allowed criminals to buy large amounts of methamphetamine ingredients over the counter.

Los Angeles Times: "CVS Pharmacy Inc. agreed to pay a $75 million fine and forfeit $2.6 million in profits on the unlawful sales of pseudoephedrine in California and Nevada in 2007 and 2008, according to federal prosecutors based in Los Angeles. The penalty is the largest for a civil violation of the Controlled Substances Act, a 40-year-old law that is more often aimed at street dealers and narcotics traffickers." The company said "CVS stores in California, Nevada and 23 other states were vulnerable for more than a year" and "blamed the problem on the flawed implementation of an electronic monitoring system that was supposed to guard against excessive purchases. Prosecutors said the company fixed the problem only after discovering that the government had opened an investigation" (Girion and Glover, 10/15).

Bloomberg: "'While this lapse occurred in 2007 and 2008 and has been addressed, it was an unacceptable breach of the company's policies and was totally inconsistent with our values,' CVS Chief Executive Officer Thomas Ryan said in a statement. 'We have strengthened our internal controls and compliance measures and made substantial investments to improve our handling and monitoring of [pseudoephedrine].' The Woonsocket, Rhode Island-based company said the settlement will be paid from money that had been reserved and will have no effect on its financial results. CVS is the largest U.S. provider of prescription drugs" (Pettersson, 10/14).

Reuters: "In 2007, Los Angeles County pharmacies experienced an epidemic of 'smurfing' in which individuals made several purchases of small amounts of over-the-counter medicine containing pseudoephedrine, which was then turned into meth, the government said. At the same time, CVS implemented a system that failed to prevent multiple purchases by an individual customer on a single day, prosecutors said, and smurfers soon inundated CVS stores in California and Nevada. CVS eventually changed its practices to prevent the sales after it became aware of the investigation, the government said in its statement" (Levine, 10/14).


http://www.kaiserhealthnews.orgThis article is republished with kind permission from our friends at The Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery of in-depth coverage of health policy developments, debates and discussions. The Daily Health Policy Report is published for Kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. Copyright 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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