CVS Caremark Corp. could face as much as $29 million in fines for allegedly losing track of prescription painkillers at four of its California stores, from which authorities said thousands of pills may have been sold on the black market.
Officials at the U.S. Drug Enforcement Administration and the California Board of Pharmacy told me Monday that more than 37,000 pills were apparently taken from CVS stores in Modesto, Fairfield, Dixon and Turlock.
Meanwhile, CVS pharmacists in Southern California said they've been instructed by the drugstore chain to get their paperwork in order so that no other prescription meds are found to be missing.
Casey Rettig, a special agent in the DEA's San Francisco office, said warrants were served on the four California CVS stores last May. She declined to comment further because the agency's investigation is still open.
Virginia Herold, executive officer of the state Board of Pharmacy, which licenses and oversees all drugstores in California, said each of the missing pills — all painkillers, such as Vicodin — could have a street value of as much as $10.
Lauren Horwood, a spokeswoman for the U.S. attorney's office in Sacramento, said CVS faces 2,973 possible violations of the federal Controlled Substances Act for alleged discrepancies between the company's records and its inventory of prescription drugs.
The maximum fine for these violations could be $29 million, she said.
Horwood said CVS has yet to respond to a letter sent last month by her office. The letter outlines the alleged violations and seeks more information from the company.
Officials, requesting anonymity because of the sensitivity of the matter, described the loss of painkillers as a big problem throughout the pharmacy business.
In some cases, the drugs have gone missing because pharmacists "self-medicate," they said. But in most cases, the officials said, lower-level pharmacy workers, such as technicians, have made off with the drugs and then sold them to others.
Such thefts typically come to light after pharmacies perform routine inspections of their inventory. They're required by law to report any missing meds within 14 days of discovery.
According to formerly sealed affidavits submitted as part of the DEA's application for search warrants, an investigator for the agency, Brian Glaudel, said the Sacramento district office became aware in late 2012 of losses of numerous hydrocodone tablets from CVS stores in the region.
Hydrocodone is a narcotic painkiller sold under various brand names, including Vicodin and Norco.
The pending investigations stem from a case involving a CVS store in Rocklin, northeast of Sacramento.
Glaudel said CVS notified officials in December 2012 that a pharmacy worker in the Rocklin store was seen hiding a bottle of hydrocodone in her pants.
The worker subsequently admitted to CVS managers that she had stolen more than 20,000 hydrocodone tablets, Glaudel said.
The worker was arrested and charged with embezzlement, he said. It's unclear whether the stolen hydrocodone was recovered in the Rocklin case.
Glaudel said DEA investigators went over records for other CVS stores in the area and found more than 16,000 hydrocodone tablets missing from the Turlock store, 11,000 from the Fairfield store and almost 5,000 each from the Modesto and Dixon stores.
Michael DeAngelis, a CVS spokesman, said the investigations are aimed at "assuring compliance with state and federal requirements for administrative record keeping related to invoices and inventory for controlled substances."
He said CVS regularly tells its pharmacists to "maintain certain records and paperwork," and recently sent them reminders.
This is the second time in the last year that CVS has found itself facing stiff fines for questionable oversight of prescription drugs.
The chain and its Oklahoma subsidiary agreed to pay $11 million last April to avoid civil charges that they failed to keep accurate records of drugs being received from wholesalers and dispensed to customers.
Federal prosecutors had accused CVS pharmacies in Oklahoma of creating fake DEA license numbers on dispensing records, filling prescriptions for doctors without valid licenses and improperly labeling prescription vials.
CVS said after that settlement was announced that the allegations against the company involved "administrative record-keeping matters," and that "neither the DEA nor the U.S. attorney claimed that any patient's health or safety was put at risk."
The company did not admit any wrongdoing, saying it settled "to avoid the uncertainty of time-consuming litigation."
Michele M. Leonhart, the head of the DEA, was more forceful in her appraisal of the case.
She said last year's settlement with CVS "highlights DEA's steadfast resolve to combat the growing prescription drug abuse problem in this country by ensuring that all DEA registrants, including nationwide pharmacy chains, are in compliance with the law."
"Abuse of prescription drugs is one of the most critical issues we face today," she said. "The scope of this problem is alarming."
In June, the DEA disclosed that Walgreen Co. had agreed to pay $80 million in fines to end a probe into allegations it failed to prevent prescription meds from going astray from some of its Florida stores. It was the largest-ever civil penalty paid under the Controlled Substances Act.
Pharmacies can be fined up to $25,000 for each violation of the law.
Herold at the state Board of Pharmacy said her office issued 144 warnings, citations or fines against pharmacies last year. CVS accounted for 55 of those incidents, she said.
Herold said it's unclear whether the relatively high number of cases involving CVS was because the company is better at spotting troubles or "whether they have a bigger problem."
On its website, CVS said that "prescription drug abuse in this country may be an epidemic, but it doesn't have to be."
It said it is "committed to advancing legislation, promoting technology and creating safer communities."
CVS is no stranger to official scrutiny. Investigations were launched by the U.S. Department of Justice and officials in California and New Jersey after I reported that pharmacists were refilling customers' prescriptions without their permission.
CVS blamed the practice on rogue drugstore managers and insisted that the company's official policy was that customers are always asked before being enrolled in ReadyFill, the chain's refill program.
But I subsequently obtained company documents showing that all CVS pharmacists were expected to enroll at least 40% of patients into ReadyFill. Failure to do so, pharmacists told me, could result in reduced compensation or even being fired.
The investigations into CVS' refill practices are pending.