Costco Wholesale, Lax Pharmacy Controls, California 2015

LOS ANGELES – 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 settlement announced today resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA 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.

The settlement was announced today by United States Attorney Eileen M. Decker, along with U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Barbara L. McQuade for the Eastern District of Michigan, and Phillip A. Talbert for the Eastern District of California.

“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies likely played a role in prescription drugs reaching the black market,” said United States Attorney Eileen M. Decker. “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.”

Under the settlement that was finalized yesterday, Costco acknowledged that, from the beginning of 2012 through the end of 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations included 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 and Everett, Washington.

As part of an investigation in 2012 into the diversion of controlled substances by local physicians, the DEA’s Los Angeles Field Division discovered that Los Angeles-area Costco pharmacies had filled numerous prescriptions issued by individual practitioners who lacked a valid DEA registration number. The resulting DEA investigation into the practices, policies and procedures for validating DEA registration numbers at local Costco pharmacies revealed that, between January 2012 and August 2013, area Costco pharmacies filled dozens of prescriptions issued by individual practitioners who lacked a valid DEA registration number, and filled nearly 200 prescriptions issued by individual practitioners with a valid DEA registration number but used an invalid DEA registration number when recording and reporting the prescription. Costco filled these prescriptions because its system for validating DEA registration numbers was deficient and flawed.

“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”

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