Wednesday, July 12, 2017

CVS Pharmacy Inc. Pays $5 Million to Settle Alleged Violations of the Controlled Substance Act in Sacramento Federal Case

As is the norm, national chain pharmacies get fines and compliance plans while small businesses get criminally prosecuted. A recent settlement between the Department of Justice and Drug Enforcement Administration (DEA) with a national chain pharmacy is no different.

On or about July 5, 2017, CVS Pharmacy Inc. agreed to pay $5 million to resolve federal Controlled Substances Act (CSA) allegations that its pharmacies in the Eastern District of California failed to keep and maintain accurate records of Schedule II, III, IV, and V controlled substances. This payment covered only one federal court district. 

CVS also agreed to an administrative compliance plan with the DEA. The payment and plan resolve the United States’ allegations that during the period from April 30, 2011, through April 30, 2013, CVS pharmacies failed to provide effective controls and procedures to guard against diversion when CVS allegedly failed to:
(1) record the amount received and the date received of Schedule II drugs on DEA-222 Forms;
(2) maintain DEA-222 Forms and keep them separate from other records;
(3) record the date of acquisition of controlled substances in Schedules II through V; and
(4) maintain invoices for drugs in Schedules III through V and keep the records separate from non-controlled substance records; and conduct a biennial inventory on one specific day.

Under the settlement reached July 5, 2017, CVS acknowledged that its DEA-registered pharmacies were and are required to comply with the CSA, and that nine CVS pharmacies in the Eastern District of California failed to fulfill these recordkeeping obligations in a manner fully consistent with CVS’s responsibilities under the CSA. The settlement and compliance plan cover the 168 CVS pharmacies that operated in the Eastern District of California from April 30, 2011, through April 30, 2013.
The allegations resolved by this settlement were uncovered during a DEA investigation that began in 2012 after CVS self-reported thefts and losses of hydrocodone, a Schedule III drug at the time, at five of its Sacramento-area pharmacies. Under the CSA, DEA-registered pharmacies are obligated to report any thefts or significant losses of controlled substances to DEA.

On the compliance side, to address the issues uncovered by this investigation, CVS made improvements to its pharmacies in the Eastern District of California by, among other things, instituting annual CSA compliance training of its pharmacy staff, increasing loss prevention oversight, and excluding controlled substances prescriptions from the volume metric that can impact pharmacy staff compensation.

All non-chain pharmacies can learn from this compliance plan and how record keeping issues can result in large fines. It's especially critical for non-chains since they can get their DEA pulled and even criminal prosecution.

Posted by Tracy Green, Esq.
Office: 213-233-2260


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