Business & Real Estate

Costco to pay nearly $12 million to settle federal drug case

Costco reached an agreement in Sacramento federal court Wednesday to settle allegations that the warehouse retailer improperly filled prescriptions for controlled substances such as opiates.

The Washington state-based company will pay $11.75 million to settle the case, according to a news release from the U.S. attorney for the Eastern District of California. Under the agreement, Costco acknowledged that certain pharmacies nationwide did not comply with the Controlled Substances Act.

Costco’s retail pharmacy operations will be unaffected by the settlement

The violations at its West Sacramento central fill center were the most egregious, according to Lauren Horwood, spokesman for the U.S. attorney in Sacramento.

“There’s missing drugs and we don’t know what they did with them,” Horwood said of the West Sacramento location. Prosecutors added that Costco’s lax oversight of its pharmacies resulted in some drugs reaching the black market.

Costco’s retail pharmacy operations will be unaffected by the settlement, but its West Sacramento central fill branch had its Drug Enforcement Registration revoked. That means that fill branch won’t be able to fill certain drugs on the Controlled Substances Act list, but medications such as antibiotics would be unaffected, Horwood said.

Nationwide, the violations included filling prescriptions from unlicensed practitioners and failing to maintain accurate records for central fill locations. The prescriptions in question are for drugs that are governed under the Controlled Substances Act.

The company has budgeted $127 million to purchase a new pharmacy management system and has implemented an audit program.

Richard Chang: 916-321-1018, @RichardYChang