The downfall of Purdue Pharma illustrated the role played by drugmakers in the opioid crisis. Large settlements paid by the likes of McKesson and AmerisourceBergen highlighted the culpability of the major drug wholesalers. Now more attention is being paid to the other players in the corrupt supply chain: pharmacies.
The assumption used to be that the main retail culprits were small pharmacies in places such as West Virginia that readily filled far more oxycontin prescriptions than would be expected to arise from legitimate use in their communities. Those businesses, like the unscrupulous clinics that wrote the prescriptions, are often called pill mills.
A decision just handed down by a federal court in San Francisco indicates that our understanding of that phrase needs to be revised. Following a bench trial, U.S. District Judge Charles Breyer ruled that the giant pharmacy chain Walgreens improperly dispensed hundreds of thousands of suspicious prescriptions for narcotic painkillers in the Bay Area over more than a decade.
“In exchange for the privilege of distributing and dispensing prescription opioids,” Judge Breyer wrote, “Walgreens has regulatory obligations to take reasonable steps to prevent the drugs from being diverted and harming the public. The evidence at trial established that Walgreens breached these obligations.”
Those regulatory obligations come from the Controlled Substances Act (CSA), a federal law which regulates the distribution of drugs ranging from Xanax to fentanyl. As shown in Violation Tracker, the U.S. Justice Department and the Drug Enforcement Administration have brought about two dozen successful CSA actions against large pharmacy chains, including those operated by the big supermarket companies.
In 2013 Walgreens had to pay $80 million to resolve a DEA case involving what the agency called “an unprecedented number of record-keeping and dispensing violations.” CVS, another pharmacy goliath, has paid out over $130 million in a dozen CSA cases.
These amounts are likely to be dwarfed by the damages against Walgreens in the San Francisco case, which have yet to be determined. Walgreens and CVS, along with Walmart, are also embroiled in an opioid test case brought by two counties in Ohio. The plaintiffs are seeking a payout of several billion dollars to help pay for addiction services.
If those Ohio counties are successful, it would give a green light to several thousand other cases that have been filed around the country and are being treated as a multidistrict action. On top of that, Walgreens, CVS and Walmart are facing a slew of opioid cases brought by the Cherokee Nation and other tribes.
It is unlikely that Walgreens or CVS will suffer the same fate as Purdue Pharma, which had to file for bankruptcy and agree to turn itself into a public benefit company while its owners, the Sackler Family, had to promise to pay out billions. CVS, which generated nearly $8 billion in profits last year, is particularly well positioned to handle the massive settlements to come.
The real question is whether it and Walgreens will own up to their misconduct and get serious about complying with their obligations to prevent opioid abuse.