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Costco settles with DOJ over improper pharmacy controls

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WASHINGTON — Costco Wholesale Corp. has agreed to pay $11.75 million in a settlement with the Department of Justice (DOJ) on claims that it improperly filled prescriptions for controlled substances.

Costco pharmacy windowAlso under the settlement, over the next three years the Drug Enforcement Administration (DEA) can conduct unannounced and unrestricted inspections of all DEA-registered Costco pharmacy locations without administrative inspection warrants, the DOJ said Thursday.

The allegations involved Costco pharmacies and central fill facilities in Michigan, California and Washington state. The DOJ said under the settlement, Costco acknowledged that between Jan. 1, 2012, and Dec. 31, 2015, these locations dispensed controlled substances in violation of the Controlled Substances Act.

The violations included filling prescriptions from practitioners without a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions lacking all the required information; failing to maintain accurate dispensing records; and failing to maintain records for central fill sites in Sacramento, Calif., and Everett, Wash.

Costco could not be immediately reached for comment. The Issaquah, Wash.-based retailer operates pharmacies at its more than 500 warehouse club stores in the United States.

The DOJ noted that Costco has made improvements in its pharmacies to address issues uncovered in the investigation. The retailer purchased a new pharmacy management system for about $127 million and has implemented a three-tier audit program of its pharmacy locations, including audits by pharmacy managers and regional pharmacy supervisors, an internal audit group, and an external audit of 40 annual audits.

“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis. 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,” Annette Hayes, U.S. attorney for the Western District of Washington, said in a statement.  “I commend the DEA investigators for uncovering the violations at issue in this case and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”


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