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Walgreens Agrees to Pay a Record Settlement of $80 Million for Civil Penalties under the Controlled Substances Act

Largest fine paid by a DEA registrant

JUNE 11 (MIAMI) – Mark R. Trouville, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Division, and Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, announced that Walgreens Corporation (Walgreens), the nation’s largest drug store chain, has agreed to pay $80 million in civil penalties,  resolving the DEA’s administrative actions and the United States Attorney’s Office’s civil penalty investigation regarding the Walgreens Jupiter Distribution Center and six Walgreens retail pharmacies (collectively “Registrants”) in Florida.  The settlement further resolves similar open civil investigations in the District of Colorado, Eastern District of Michigan, and Eastern District of New York, as well as civil investigations by DEA field offices nationwide, pursuant to the Controlled Substances Act (the Act).  

DEA Investigators and law enforcement officers entering the distribution center. DEA Investigators reviewing inventory in the distribution center.
DEA Investigators and law enforcement officers entering the distribution center. DEA Investigators reviewing inventory in the distribution center.

The settlement, the largest in DEA history, resolves allegations that the Registrants committed an unprecedented number of record-keeping and dispensing violations under the Act.  According to documents filed in the underlying administrative actions, the Registrants negligently allowed controlled substances listed in Schedules II – V of the Act, such as oxycodone and other prescription pain killers, to be diverted for abuse and illegal black market sales.  

According to the most recent report from the U.S. Center for Disease Control and Prevention, prescription drug overdose deaths exceeded motor vehicle deaths and deaths from illegal street drugs, such as cocaine, heroin, and amphetamines, in 2009.  Oxycodone is a powerful addictive narcotic that is one of the most abused prescription medications in Florida and throughout the United States.  Walgreens’ Distribution Center in Jupiter, Florida was the largest supplier of oxycodone to retail pharmacies in the State of Florida.

DEA Special Agent in Charge Mark R. Trouville stated, “National pharmaceutical chains are not exempt from following the law.  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.  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.”

L-R: AUSA Franklin Monsour, USAO Wifredo A. Ferrer, SAC Mark R. Trouville, Acting DSAC Michael Nussbaum. SAC Trouville announced the Walgreens Agreement and the Record of Settlement of $80 million.

L-R:  AUSA Franklin Monsour, USAO Wifredo A. Ferrer, SAC Mark R. Trouville, Acting DSAC Michael Nussbaum. SAC Trouville announced the Walgreens  Agreement and the Record of Settlement of $80 million.

U.S. Attorney Wifredo A. Ferrer stated, “Prescription drug abuse is a tremendous problem in Florida and throughout the country.  Every day, individuals die from prescription drug overdoses. 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.  For this reason, we cannot allow pharmacies to circumvent their regulatory record-keeping and dispensing obligations.”

The settlement agreement covers conduct that was the subject of DEA’s administrative actions and the U.S. Attorney’s Office civil penalty investigation.  More specifically, the settlement covers allegations against Walgreen’s Jupiter Distribution Center and six Walgreens’ retail pharmacies.  First, the Jupiter Distribution Center failed to comply with DEA regulations that required it to report to the DEA suspicious prescription drug orders that it received from Walgreens’ retail pharmacies.  Walgreens’ alleged failure to sufficiently report suspicious orders was a systematic practice that resulted in at least tens of thousands of violations and allowed Walgreens’ retail pharmacies to order and receive at least three times the Florida average for drugs such as oxycodone. 

Second, the six retail pharmacies in Florida that received the suspicious drug shipments from the Jupiter Distribution Center, in turn, filled customer prescriptions that they knew or should have known were not for legitimate medical use.  In addition, these retail pharmacies and others elsewhere 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” pharmacy for filling.  Without Walgreens’ retail pharmacies identifying these outsourced prescriptions, DEA could not accurately determine which prescriptions were filled from the retail pharmacies’ own drug supplies and which prescriptions were filled by a “central fill.”  Consequently, DEA could not determine the accuracy of the retail pharmacies’ drug records.  The DEA’s administrative actions demonstrated millions of violations of this type.

In addition to the $80 million civil penalty for the above violations, the settlement revokes the Registrants’ ability to distribute or dispense controlled substances listed in Schedules II – V for two years, ending in 2014.  As part of the settlement, Walgreens admitted that it failed to uphold its obligations as a DEA registrant regarding the above-described conduct.  Furthermore, Walgreens has agreed to create a Department of Pharmaceutical Integrity to ensure regulatory compliance and prevent the diversion of controlled substances.  Walgreens has also agreed to enhance its training and compliance programs, and to no longer monetarily or otherwise compensate its pharmacists based on the volume of prescriptions filled.

Since 2009, the DEA, along with its federal, state, and local counterparts, have partnered to combat the prescription drug abuse epidemic that has plagued Florida, culminating in Operation Pill Nation I and II and Operation Oxy Alley.  These investigations have resulted in charges against more than 172 individuals, including 51 doctors and 24 clinic/pharmacy owners, the seizure of approximately 2.5 million dosage units of controlled substances, approximately $16.6 million, real property, and exotic cars.  In addition, approximately 42 doctors and 11 pharmacies have lost their DEA registrations through the issuance of Immediate Suspension Orders.  As well, approximately 192 doctors and 68 pharmacies have voluntarily surrendered their DEA registrations following an official visit from the DEA.  Lastly, the DEA has also taken action against seven other Florida-based distributors.

This investigation was conducted by the DEA’s Miami Field Office and the U.S. Attorney’s Office for the Southern District of Florida, with the assistance of DEA’s Office of Chief Counsel. 

Settlement and Memorandum of Agreement >>
Memorandum of Agreement Appendix A >>

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