Costco will pay $11.7 million to settle allegations its pharmacies in the Southland and elsewhere violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances, federal authorities announced Thursday.

“These are not just administrative or paperwork violations — Costco’s failure to have proper controls in place in its pharmacies likely played a role in prescription drugs reaching the black market,” said Eileen M. Decker, the U.S. attorney in Los Angeles.

“Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers,” she said.

The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations, according to the U.S. Attorney’s Office.

Under the settlement, Costco Wholesale, based in Issaquah, Washington, acknowledged that, from the beginning of 2012 through the end of 2015, certain of its pharmacies dispensed controlled substances inconsistent with their compliance obligations under federal law.

As part of an investigation in 2012 into the diversion of controlled substances by local doctors, the U.S. Drug Enforcement Administration’s Los Angeles field division discovered that local Costco pharmacies had filled numerous prescriptions issued by individual practitioners who lacked a valid DEA registration number.

The resulting probe into the practices, policies and procedures for validating DEA registration numbers at Costco pharmacies revealed that, between January 2012 and August 2013, area pharmacies filled nearly 200 prescriptions issued by individual practitioners with a valid DEA registration number but used an invalid DEA registration number when recording and reporting the prescription.

Costco filled these prescriptions because its system for validating DEA registration numbers was deficient and flawed, federal prosecutors said.

“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs,” said DEA Assistant Administrator Louis Milione. “This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs.”

To address issues uncovered in the investigation, Costco made improvements in its pharmacies, including the purchase of a new pharmacy management system and the implementation of a three-tier audit program, officials said.

—City News Service

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