Costco to Pay Millions for Mismanaging Opioid Prescriptions

By Kelly Burch 01/25/17

One US Attorney said that Costco "played a role in prescription drugs reaching the black market." 

Costco store front.

Costco will pay the federal government a fine of $11.75 million to settle a lawsuit accusing the store's pharmacies of improperly filling prescriptions and failing to keep accurate records about controlled substances, a violation of the Controlled Substances Act.

“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said Annette Hayes, U.S. Attorney for the Western District of Washington where pharmacies in the suit are based. “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.”

The Justice Department felt there was little doubt that Costco’s practices and failure to follow regulations led to more prescription drugs being available on the streets. As part of the settlement, Costco agreed that it had violated the Controlled Substances Act. 

“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said Eileen Decker, U.S. Attorney for the Central District of California. 

The allegations came after an investigation by the Drug Enforcement Administration (DEA). The agency found that Costco filled incomplete prescriptions as well as prescriptions by doctors who did not have valid registration numbers or were not qualified to prescribe certain drugs.

The company also failed to keep proper records at its central locations in Sacramento, California and Everett, Washington. The pharmacies involved in the lawsuit were in California, Washington and Michigan. 

Costco says that the violations took place between 2011 and 2013. In 2012 the company updated its compliance systems, including implementing a $127 million pharmacy management system to detect potential prescribing concerns. The company also brought on internal and external auditors. 

“Costco voluntarily implemented these enhanced operational practices and pharmacy management systems independently of the settlement agreement with the DEA,” the company said. Despite the steps, Costco maintained that its practices did not result in harm. “Costco believes that at no time did its conduct put at risk the health or safety of our members or the public.”

As part of the settlement, Costco also agreed to comply with unannounced and unrestricted inspections of any of its pharmacies by the DEA for the next three years. 

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Kelly Burch writes about addiction and mental health issues, particularly as they affect families. Follow her on TwitterFacebook, and LinkedIn.