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CVS Fined $75M in Meth Case Settlement

John Commins, for HealthLeaders Media, October 15, 2010

The investigation uncovered thousands of violations of the Combat Methamphetamine Epidemic Act of 2005, which limits the amount of pseudoephedrine that a customer can purchase in one day.

CVS blamed the multistate illegal sales on "an electronic monitoring system flaw that has been corrected," and said the previously disclosed settlement would have no further impact on its finances.

In 2007, CVS implemented an automated electronic logbook system to record pseudoephedrine sales, but the system did not prevent multiple purchases by an individual customer on the same day. The government learned that violations occurred in California and Nevada, and in 23 other states where CVS failed to implement appropriate safeguards. The settlement addresses CVS's liability in 25 states.

"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," said Thomas M. Ryan, chairman/CEO of CVS Caremark. "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."

Ryan said CVS has strengthened internal controls to prevent future lapses, and has 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."

In mid-2007, after Mexico banned the sale of pseudoephedrine, federal officials said Los Angeles County experienced an epidemic in a practice known as "smurfing," where individuals buy small amounts of pseudoephedrine in separate purchase to make methamphetamine. Smurfers discovered that CVS, unlike other large chain retail pharmacies, allowed customers to make repeated purchases of pseudoephedrine which exceeded federal daily and monthly sales limits.

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