Costco to Pay $11.75 Million to Settle Lax Pharmacy Control Case

Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances.


The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice.

The settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.

Costco acknowledged that between 2012 and 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations.

The violations include filling prescriptions from practitioners who did not have a valid DEA number,  incorrectly recording the practitioner’s DEA number, filling prescriptions outside the scope of a practitioner’s DEA registration, filling prescriptions that did not contain all the required information, failing to maintain accurate dispensing records and failing to maintain records for their central fill locations in Sacramento, California, and Everett, Washington.

The Justice Department said that to address issues uncovered in this investigation, Costco made improvements in its pharmacies.

The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million.

Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors, Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor, and Tier 3 an External Audit of 40 annual audits.

Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants.

The DEA monitors pharmacy prescribing practices to ensure compliance with federal law.

Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.


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