Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy Controls

[nitpicker]

https://www.justice.gov/usao-edca/pr/costco-wholesale-pay-1175-million-settle-allegations-lax-pharmacy-controls

Department of Justice
U.S. Attorney’s Office
Eastern District of California

FOR IMMEDIATE RELEASE
Thursday, January 19, 2017

Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy Controls

Costco Failed to Maintain Records at West Sacramento Central Fill Pharmacy

SACRAMENTO, Calif. — Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act (CSA) when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA registration numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations, which resulted in a significant shortage at the West Sacramento central fill pharmacy.
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Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012, and December 31, 2015, certain Costco pharmacies dispensed controlled substances inconsistent with their compliance obligations under the CSA and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.
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To address the numerous issues uncovered in this investigation, Costco surrendered its DEA Registration at its central fill location in West Sacramento and accordingly, lost the ability to handle controlled substances. Costco also made improvements in its pharmacies by purchasing a new pharmacy management system at a total budgeted five-year cost of approximately $127 million. Additionally, Costco implemented a three-tier audit program of its pharmacy locations: Tier 1, done by pharmacy managers and regional pharmacy supervisors; Tier 2, completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3, an External Audit of 40 annual audits.

Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number — the authorization that allows them to write prescriptions for controlled substances.
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