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Walgreen in record $80 million settlement over painkillers

Cold and flu products are pictured on shelving during a private cocktail event celebrating the grand opening of drugstore chain Walgreens ne
Cold and flu products are pictured on shelving during a private cocktail event celebrating the grand opening of drugstore chain Walgreens ne

By Jonathan Stempel and Jessica Wohl

(Reuters) - Walgreen Co, the largest U.S. drugstore chain, has agreed to pay $80 million in civil penalties to resolve allegations that it violated federal rules governing the distribution of prescription painkillers.

The U.S. Drug Enforcement Administration on Tuesday said the settlement is the largest in its history.

The DEA accused Walgreen of committing an "unprecedented" number of record-keeping and dispensing violations of the Controlled Substances Act.

As a result, the DEA said, Walgreen negligently allowed controlled substances such as the narcotic oxycodone and other prescription painkillers to be distributed to abusers and sold illegally on the black market.

"National pharmaceutical chains are not exempt from following the law," Mark Trouville, special agent in charge in the DEA's Miami field division, said in a statement. "All DEA registrants will be held accountable when they violate the law and threaten public health and safety."

Kermit Crawford, Walgreen president of pharmacy, health and wellness, in a statement said the company has taken and will take further steps to improve oversight and training "to ensure the appropriate dispensing of controlled substances and to improve collaboration across the industry."

The settlement with the Deerfield, Illinois-based company also resolves a probe by U.S. Attorney Wifredo Ferrer in Miami.

Walgreen operates more than 8,000 drug stores in all 50 U.S. states, the District of Columbia, and Puerto Rico.

As part of the settlement, Walgreen admitted that it failed to uphold its obligations as a DEA registrant.

Six Walgreen pharmacies in Florida and a distribution center in Jupiter, Florida were given a two-year ban from dispensing various controlled substances, the DEA said.

Walgreen also agreed to enhance training and compliance programs, and set up a Department of Pharmaceutical Integrity to help prevent similar violations.

Florida has long been considered a center of prescription drug abuse, and the DEA has dismantled dozens of sham clinics known as "pill mills" where doctors have written prescriptions for drug dealers and addicts.

The Centers for Disease Control and Prevention said the U.S. death rate from drug overdoses has more than tripled since 1990.

It said prescription painkillers, also known as opioid or narcotic pain relievers, were involved in more than 15,500 overdose deaths in the United States in 2009.

Walgreen said it previously set aside $80 million for a settlement, including $25 million in its fiscal third quarter, which ended May 31. It said it expects the accord to reduce that quarter's earnings by 4 to 6 cents per share.

Shares of Walgreen closed Tuesday down 11 cents at $49.54 on the New York Stock Exchange.

(Reporting by Jonathan Stempel in New York and Jessica Wohl in Chicago; Editing by Gary Hill, Nick Zieminski and Steve Orlofsky)

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