(AP) — CVS Pharmacy Inc. has agreed to pay $75 million in fines for
allowing repeated purchases of a key ingredient in the making of
methamphetamine in at least five states that also led to a spike in
Southern California drug trafficking, authorities said Thursday.
largest operator of retail pharmacies will pay what federal prosecutors
said was the largest civil penalty ever assessed under the Controlled
also will forfeit about $2.6 million in profits earned from the sales of
pseudoephedrine, which can often be found in cold medicine and is used to
said CVS didn't provide enough safeguards to monitor how much
pseudoephedrine someone was buying, and the company violated federal drug
regulations in Arizona, Georgia, California, Nevada, South Carolina and
possibly 20 other states.
"CVS knew it
had a duty to prevent methamphetamine trafficking," said U.S. Attorney
Andre Birotte Jr. "But it failed to take steps to control the sale of a
regulated drug used by methamphetamine cooks as an essential ingredient
for their poisonous stew."
was expected to pay the $75 million fine by Friday. The remaining
forfeiture is due within 30 days.
chairman and CEO of parent company CVS Caremark, said the company
unacceptably breached its policies and has worked to fix the problem.
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 (pseudoephedrine) by
implementing enhanced technology and making other improvements in our
stores and distribution centers," Ryan said.
began investigating CVS in 2008 after the arrest of several people in
Southern California for unlawful possession of pseudoephedrine with the
intent to manufacture meth. They said those people had bought large
amounts of the ingredient from CVS stores in the region.
learned CVS had committed thousands of violations of a federal law
limiting the amount of pseudoephedrine a customer can buy in a day.
Although the pharmacy chain created an automated system known as Meth
Tracker to record individual sales, it didn't prevent multiple purchases
by someone on the same day, authorities said.
As a result,
federal authorities in Southern California saw an increase in meth
production. In Los Angeles and Orange counties, so-called "smurfers," who
traveled from store to store picking up pseudoephedrine, inundated CVS
locations. In some locations, buyers would clear store shelves of cough
and cold medicines.
September 2007 and November 2008, CVS became one of the largest suppliers
of pseudoephedrine to meth providers in Southern California, authorities
"CVS did not
set out to be part of the meth trafficking trade but they made a poor
decision," said Assistant U.S. Attorney Shana Mintz. "Rather than choosing
to over-comply like their competitors did, they knowingly under-complied
with the law."
and store managers notified management about the large amount of
pseudoephedrine purchased in California and Nevada, but prosecutors said
the company failed to promptly investigate.
spokeswoman Carolyn Castel declined comment on that issue.
10-month period in 2008, sales of products containing pseudoephedrine
increased more than 150 percent in Los Angeles County, compared with the
same period in 2007, authorities said.
"We know those
sales were not your general customer who had a cold," Mintz said. "Some
people were making 10 purchases at a time. Suppliers couldn't keep up with
eventually changed its sales practices but only after it became aware of
the investigation, prosecutors said.
By agreeing to
pay the fine, CVS will not face potential criminal charges and the company
will implement a compliance and ethics program over the next three years.
CVS has more
than 7,100 stores in the U.S.