Tuesday, September 18, 2012

The DEA Nabs CVS and Walgreen

The Drug Enforcement Administration (DEA) continues its aggressive attack on the pharmacy supply chain with new penalties for CVS Caremark (NYSE: CVS) and Walgreen (NYSE: WAG).

Full details below. Here are the headlines:
  • Two Sanford, FL, CVS pharmacies will no longer be able to dispense controlled substances. Unless I’m mistaken, “revoke” means “never again.”
  • A Walgreens distribution center was hit with a suspension order for shipments to six of its own pharmacies.
We only have access to the government’s facts, so no outsider can know what truly happened. However, I do believe that targeting pharmacies is a step in the right direction, because it moves closer to the patient and prescriber.

Does misery love company? Ask Cardinal Health and AmerisourceBergen.

Here are the official DEA statements:
Let’s be clear. The abuse of prescription opioid pain relievers, such as oxycodone and hydrocodone, has become a U.S. epidemic that must be stopped.

As part of its approach, the DEA has been trying to disrupt the controlled substance supply chain by targeting wholesalers and manufacturers. In my opinion, the DEA is overly focused on the wrong actors in the U.S. drug distribution system. The real problems originate with consumers who abuse prescription medications, the physicians who operate pill mills, and the pharmacies that knowingly participate in diversion and abuse. Just read about the Florida "pain clinic" highlighted in July’s news roundup.

As far as I know, the DEA has never been this aggressive with the big drugstore chains. For Walgreen, the DEA presents compelling circumstantial data, although there could be alternative explanations for the shipment patterns that led to the suspension. The CVS action met the presumably-higher standard of an administrative hearing before a Chief Administrative Law Judge, who revoked the two stores’ licenses.

It’s surely not a coincidence that these two chains are also Cardinal Health’s (NYSE: CAH) largest customers. See Cardinal Health's Big Customers: Mo Money, Mo Problems.

In May, Cardinal Health agreed to a settlement with the DEA, agreeing to a two-year suspension of its Lakeland distribution center's DEA registration to ship controlled medicines. Cardinal also agreed to improve certain (undisclosed) anti-diversion procedures. In return, the DEA also confirmed it is planning no further administrative actions at other Cardinal Health facilities, although the agreement did not foreclose the possibility that the U.S. Department of Justice could seek civil fines for historical conduct covered by the settlement agreement. (source)

Meanwhile, AmerisourceBergen (NYSE: ABC) recently disclosed subpoenas from the DEA and the United States Attorney’s Office in New Jersey, requesting “….documents concerning AmerisourceBergen Distribution Company’s (ABDC's) program for controlling and monitoring diversion of controlled substances into channels other than for legitimate medical, scientific, and industrial purposes." (See News Roundup: August 2012.)

Who will be next?


  1. retail-combat.comSeptember 18, 2012

    With respect to DEA regulatory pressure on pharmacies, both independent and chain, the writing has been on the wall ever since pse/e laws were put into place at the retail consumer level in order to attempt to control the ever growing meth problem in America. Government regulatory agencies and law enforcements inability to curtail this activity with limited resources has forced them to look at solutions that force retail participation in policing criminal activity in order to disrupt the criminals retail supply chain.
    It is incumbent upon all pharmacies to understand that the "turn the other cheek mentality" in terms of driving script sales and profits is clearly no longer an option or accepted practice. By hammering the big boys in the industry the DEA is sending a clear message to ALL pharmacy operators to police themselves now and institute a culture change in the industry similar to what was needed with the PSE regulations. Bottom line, the focus should be on quality prescription dispensing in sales based upon legitimate medical needs and control prescriptions reflecting the patterns on alert signals industry is well aware of need to be weeded out at the retail level in order to avoid the consequences to ones business reputation and profits that this new higher standard of regulatory scrutiny will bring.

  2. when all your maintence rx are going to mail order or mandatory mail order programs. where do you think these pharmacies will make up the loss in volume. unintended consequences gentlemen. business is still business and some people need to pay the rent and employees. I am not saying it is the right thing but you do the correltion between the rise of mail order to the rise of control rx's being filled. I remember haveing to turn away just about every shady rxs that walk through the door without calling md to verify, now you call and verify every couple of them and fill em if authorized by md.

  3. Do you think that this will be a wake up call for the chains? They need to start caring about the patients and the communities in which they serve.
    Chains are ridiculous because they just seem to sweep everything under the rug but I am hoping that they see that the DEA is watching them and that they need to change how they work.

  4. retail-combat.comSeptember 18, 2012

    in 16 years of investigating rx diversion issues i would counter that it is people making poor decisions versus chains. Independents are just as profit oriented and to say they are not woukd be an unobjective statement. The control prescription issue is an issue of failing to review and react to poor quality scripts that can be clearly identified based on high % of cash versus insurance pymts, "cocktail scripts" for multiple control meds known to be abused together, patients (and i use that term lightly) that travel long distances to fill controls or fill after doctor hours to avoid verification. All large chains have loss prevention departments focused on identifying issues of outright diversion . . . In these instances the DEA is scrutinizing at a significantly higher level than in the past in terms of pharmacists turning away control scripts (particulary C2s, but you will see hydrocodone and others increasingly scrutinized going forward). Pharmacists will increasingly be held accountable for control script quality and looking the other way or avoiding a confrontatiin with a patient/customer will be a personal hurdle ALL oharmacists will need to overcome in terms of how they practice while on the bench.

  5. "The focus should be on quality prescription dispensing in sales based upon legitimate medical needs" - true enough, but the current DEA posture and wholesaler programs don't take this into consideration. If a pharmacy takes every precaution to verify prescriptions and ensure they are for legitimate medical needs they will still be cut off by the wholesaler because they've triggered the red flags based on sales volume. The DEA needs to provide some slack to wholesalers and pharmacies to allow legitimate CS orders to be filled. Otherwise, no pharmacy in town will be providing pain meds to anyone for fear of losing their DEA certificate. .

  6. Legitimate allergy suffers are paying the price for illegal meth clinics and no longer have easy access to their medicine, even though considered OTC. Now legitimate chronic pain suffers will pay the horrendous price for the plethora of "pain clinics" that have been allowed to surface in FL. & elsewhere. It took decades for the Rx development of adequate pain control, and due to the narrow world of greed and abuse, everyone must suffer as a result. This has always been, and will continue to be, a reality folks. There will always be a limited world of abuse in humans, no matter what the subtance is. How long & at what expense do we, as a society, allow confining legal regulations based on, what should already be, the statistically expected limited abuser population? It's a matter of "Do the overall benefits outweigh the risks", which is exactly how drugs are approved by the FDA, based on the expected patient benefit vs. side effects. Maybe FDA should apply the same methodology to society as a whole so that the DEA doesn't have to taint legitimate business and new Gov't regulations don't have to penalize the good general population on behalf of the limited criminal element that will always exist in society. We should be tiried of the 1 step forward and 2 steps back mentality that continues to occur in the U.S. on the citizen tax dollar. I think the FDA needs to employ at least one top-notch human behavioral scientist on their Rx approval team, (and I don't mean a new 600-man new department). It's time for the Gov't to stop protecting us from ourselves when it comes to prescription meds.

  7. Controlled substances require a prescription. Patients cannot walk into a pharmacy and simply buy them. Eliminate the prescribers who write prescriptions for patients with no legitimate medical need and the magnitude of the problem is greatly decreased. These doctors are required to have DEA registration, too.

  8. My only concern is that the DEA will get too loose with assigning blame and inflicting punishment. They have a history of using draconian and often senseless punishments.Most DEA agents have little medical background or understanding of pharmacy operations.While I agree with the need to punish pharmacies which are active participants in diversion or even consistently negligent, it is important that the DEA not see every mistake a part of a conspiracy. We reject suspicious opiate prescriptions several times a week, but the reality is that pharmacies can't catch every forged prescription or shopping patient.

    Outside of pill mills, most diversion occurs from legitimate patients who aren't using some or any of their prescriptions. Addicts are easy to spot - non-users aren't. Unless a "pain-o-meter" is developed, it's not feasible to stop this kind of diversion. Creating a culture of fear among pharmacies won't stop this. Again, I'm not saying the DEA is misguided, but their history makes me worry that they will take things too far.

  9. Honestly, the blame - im only referring to FL here - is on the whole distribution system and publicly held companies. When the pill mills went down - what did anyone think would happen. That addicts would lose their "jones." no. Independents knew better, as stats show, and the larger wholesalers - you know who you are - wanted to reap the same profits that the docs they sold to got. Ahem, CVS/Cardinal. You can't act like the pill mills were the problem when 90% of medications in the U.S. came from the wholesalers referred to above. CVS Sanford and Their co-problem proved everything. "Hey, jerk-offs, we want a part in this selling for 46% of street value thing. We'll do what pleases shareholders - more revenue."
    The penalty/fine could be amounted to pulling a gray hair from justin beiber's head - its possible; but it was more likely one of sandusky's. There's meaning deep down in there - look for it.

  10. I think there is a solution to this problem. Just as the DEA implemented CSOS for ordering CII between pharmacy and wholesaler why not have an escript version for prescriptions between pharmacy and prescriber, this way real time data can be generated on who is writing, who is dispensing and who is receiving. No patient would have access to a paper script and the DEA can truly inhibit diversion by identifying fraudulent practitioners and taking swift actions to halt their practice. To top it off many lives would be saved and patients who truly need these medications would have access.

  11. I agree with ur words that the DEA should provide some "slack" to Pharmacies providing pain meds to REAL patients in Pain..Not only me but countless thousands suffer our chronic pain 24/7 cause of few pharmacies under scrutiny. I have been seeing the same doctor for years, am disabled cause of mty pain and the severe depression from it and from a car accident. I use the same Walgreens each month for my pain medicine, and they know me by name..Now that the DEA has blocked all shipments of narcotic pain meds to my store and every store, I am beside myself, and tired of crying in bed each night and screaming in pain..Tylenol does nothing, nd the amt I take will probably kill my liver in a year, all thanks to the DEA, and the cries of parents that have lost a child to Opioids. Kids don't educated themselves, they only want a high..When they die of overdose, parents never blame their kids, they always look to someone else, this time its Walgreens.  So, How much longer do I have to suffer?  At what point do I look for alternative means?