Costco to pay $11.75 million in prescription settlement

By Laura Halleman | Feb 3, 2017

Costco Wholesale has agreed to pay $11.75 million to settle a lawsuit stemming from allegations that its pharmacies violated the Controlled Substances Act (CSA) by filling prescriptions for controlled substances.

The settlement was announced by attorneys from the central and eastern districts of California and the states of Washington and Michigan.

Costco's pharmacies were accused of filled prescriptions that were incomplete, were outside the prescribing doctor's scope of practice, or did not have valid Drug Enforcement Administration (DEA) registration numbers. They were also accused of irregular record-keeping issues.

“As this settlement demonstrates, federal authorities have identified problems with pharmacies," Thom Mrozek, public affairs officer for the U.S. Attorney’s Office for the Los Angeles District of California, told the Southern California Record. "In fact, just this week, we saw the conviction of two men who owned a pharmacy that was involved in the diversion of prescription narcotics,”

Mrozek was referring to two brothers who owned Global Compounding Pharmacy, a West Los Angeles pharmacy and were found guilty of an operation that included narcotic drug trafficking and money laundering activity that illegally sold prescription narcotics to the black market across the United States. The brothers face over 300 years each in federal prison and are scheduled to be sentenced on March 29.

Under the Costco settlement, the company admits that from 2012 through 2015, several of its pharmacies handed out controlled substances that did not comply with the CSA. It also agreed that for three years, it would allow the DEA to go to DEA-registered Costco pharmacy locations unannounced and without inspection warrants to ensure that the pharmacies are complying with federal law.

“This settlement resolves an important investigation and is one more step toward ensuring that prescription drugs are not diverted to non-legitimate uses,” Mrozek said.

Costco yielded its DEA registration at the central fill location in West Sacramento where inventory shortages were found. The facility can no longer handle controlled substances.

In addition, pharmacy improvements have been made to assist with the maintenance of records, including a new pharmacy management system that cost of $127 million. A three-tier audit system for Costco’s pharmacy locations has also been implemented.

Mrozek hopes the Costco settlement will put pharmacies on notice.

“We hope that every case we do has a deterrent effect by dissuading other would-be violators from breaking the law,” he said.







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