Dive Brief:

• Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances, the U.S. Department of Justice said on Thursday.

• The settlement resolves allegations that some Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or involved substances beyond doctors’ scope of practice, as well as allegations that Costco failed to keep accurate records for controlled substances. In addition to the monetary settlement, the Drug Enforcement Administration is allowed over the next three years to conduct unannounced and unrestricted inspections of all DEA-registered Costco Pharmacy locations without administrative inspection warrants.

• In a lengthy statement emailed to Retail Dive, Costco said in part that it "cooperated fully with the DEA’s investigation" and that the company "believes that at no time did its conduct put at risk the health or safety of our members or the public." 

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Dive Insight:

Since 1999, the number of prescription opioids sold in the U.S. nearly quadrupled, though there hasn’t been a corresponding rise in the amount of pain that Americans report, according to the Centers for Disease Control. Deaths from prescription drugs like oxycodone, hydrocodone and methadone have more than quadrupled in that time, the CDC notes. 

Against this backdrop, the DEA and other offices in the Justice Department have been increasingly cracking down on what they deem inappropriate sales of those drugs, and pharmacies are in their crosshairs.

“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” according to a statement from U.S. Attorney Annette L. Hayes of the Western District of Washington. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the DEA investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”  

The violations exceeded administrative or paperwork errors, U.S. Attorney Eileen M. Decker of the Central District of California said in a statement. “Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market... Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.” Still, DOJ attorneys credited Costco for cooperating with its investigation and for agreeing to the settlement.

In a statement emailed to Retail Dive, Costco said that it "shares the DEA’s commitment to prevent opioid drug abuse and continues to view the DEA, along with state and local law enforcement, as partners in promoting public health," adding "Costco will continue its longstanding practice of providing our customers with high-quality pharmaceutical products at a competitive price, while working closely with these customers and their health-care providers to ensure their use of controlled substances is safely administered and medically necessary."