CVS Pharmacy, the largest retail drug store chain in the nation, agreed to pay $77.6 million in fines for unlawfully selling pseudoephedrine to criminals who made methamphetamine, the U.S. attorney's office in Los Angeles announced today.It's the biggest civil penalty in the history of the Controlled Substances Act.
CVS' troubles began in mid-2007, when Mexico banned the sale of pseudoephedrine.
Los Angeles County soon saw a spike in sales of cold and cough remedies that contained the ingredient used to make the often addictive methamphetamine street drug.
Criminals were turning to CVS to buy the products because the chain, unlike others, allowed customers to make repeated purchases that exceeded the federal daily and monthly limits. The criminals inundated stores in the Los Angeles area and Nevada, buying cough and cold remedies that contained the key ingredient, sometimes wiping out store shelves, authorities said.
They also noted that there were sales violations at CVS stores in more than 20 states.
"This case shows what happens when companies fail to follow their ethical and legal responsibilities," U.S. Attorney Andre Birotte Jr. said in a statement. "CVS knew it had a duty to prevent methamphetamine trafficking, but it failed to take steps to control the sale of a regulated drug used by methamphetamine cooks as an essential ingredient for their poisonous stew."Authorities said that CVS eventually cracked down and changed its sale practices, but only after learning that federal investigators were probing the matter.
The problem, authorities said, was that CVS in 2007 implemented an "electronic logbook system" to record sales of pseudoephedrine sales, but it failed to prevent multiple purchases by an individual on the same day.
As part of the historical settlement, the government has agreed not to pursue criminal charges. CVS has agreed to pay $75 million in fines by Friday and $2.6 million in profits from sales within 30 days.
In a statement issued today, Thomas M. Ryan, chairman and CEO of CVS Caremark, the parent company, said: "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.
"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."
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