CVS Paying $77.6 Million in Pseudoephedrine Case

The company said it has fixed the "electronic monitoring system flaw" that caused a "lapse in controls of PSE sales in certain CVS/pharmacy stores in 2007 and 2008."

CVS/pharmacy, the retail division of CVS Caremark Corporation, Thursday afternoon announced it has agreed with the U.S. Drug Enforcement Administration and U.S. attorneys' offices to pay a $75 million civil settlement and forfeit $2.6 million in profits, along with maintaining certain compliance measures, for not controlling sales of pseudoephedrine at certain California and Nevada stores in 2007 and 2008. The company said it has fixed the "electronic monitoring system flaw" that caused a "lapse in controls of PSE sales in certain CVS/pharmacy stores in 2007 and 2008."

Pseudoephedrine sales are controlled because it is used to manufacture methamphetamine.

The company said the settlement "acknowledges that a distribution center in California failed to monitor and report excessive PSE sales by CVS/pharmacy stores" and is related only to the retail pharmacy business. An electronic monitoring system recorded individual PSE sales, but as implemented in California, Nevada, "and certain other states," according to the company's statement, "the system did not prevent multiple sales of PSE that totaled more than the federal daily legal limit, which made certain CVS/pharmacy stores vulnerable to criminals who intended to purchase large amounts of PSE. The excessive sales occurred primarily in California and Nevada. The settlement includes not only federal jurisdictions in California and Nevada, but also federal jurisdictions in twenty-three other states where the system was not implemented properly."

"We are announcing today that we have resolved this issue, which unfortunately resulted from a breakdown in CVS/pharmacy's normally high management and oversight standards," Thomas M. Ryan, chairman and CEO of CVS Caremark, said in the statement. "While this lapse occurred in 2007 and 2008 and has been addressed, it was an unacceptable breach of the company's policies and was totally inconsistent with our values. CVS/pharmacy is unwavering in its support of the measures taken by the federal government and the states to prevent drug abuse. To make certain this kind of lapse never takes place again, we have strengthened our internal controls and compliance measures and made substantial investments to improve our handling and monitoring of PSE by implementing enhanced technology and making other improvements in our stores and distribution centers."

CVS/pharmacy has more than 7,100 CVS/pharmacy and Longs Drug stores.

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