DOJ Files Civil Complaint Against Walmart for Illegal Opioid Distribution

Michael Volkov
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The Volkov Law Group

The Justice Department handed Walmart a huge slap in the face last year with the filing of a comprehensive civil case alleging that Walmart knowingly distributed large quantities of opioids in disregard of the law that fueled the national opioids crisis.

In a lengthy complaint (160 pages), DOJ outlined Walmart’s serious deficiencies in its compliance program and its unwillingness to spend money needed to prevent the diversion and abuse of opioids.  Even when Walmart attempted to prevent or reduce illegal diversion of opioids, it ignored evidence that of continuing illegal distribution activity in order to preserve the large revenues it earned from sale of opioids.

DOJ’s action was the result of bare knuckle negotiations and alleged threats between DOJ and Walmart lawyers.  Walmart filed a preemptive lawsuit claiming that it complied with DEA requirements, and alleged that DOJ attorneys threatened to bring a criminal prosecution against Walmart if Walmart did not settle a potential civil case.

DOJ’s complaint paints an ugly picture of Walmart’s conduct.  Walmart operates more than 5000 pharmacies and distributes opioids to and through these pharmacies to the public.  DOJ claims that Walmart virtually ignored its anti-diversion compliance requirements under the Controlled Substances Act despite its vast resources and expertise for detecting and preventing suspicious opioid purchases.

Over the last twenty years, the opioid epidemic has resulted in the deaths of nearly half a million people in the United States.

DOJ focus on Walmart’s dual role as a distributor of wholesale quantities of opioids and a retailer of opioids to customers through its pharmacies.  As a result of its compliance failures, DOJ claims that Walmart filled many “invalid” prescriptions for opioids and turned a blind eye to the illegal use of opioids.

In contrast  to competing drug distributors, Walmart maintained a low reporting rate of potential violations.  For example, over a four-year period in which Walmart filled 37.5 million orders of controlled substances, Walmart only reported 204 suspicious transactions.

By contrast, DOJ cited the fact that McKesson, a competing drug distributor, over the same four-year period shipped far fewer than 37.5 million orders but reported more than 13,000 suspicious transactions.  In light of this disparity, DOJ argued that Walmart paid little attention to illegal prescriptions and its reporting obligations under the Controlled Substances Act.

In another incredible allegation, DOJ alleged that Walmart’s own compliance department “actively undermined its mission” by failing to provide pharmacists information and authority to ensure compliance with DEA regulations.  In addition, Walmart’s compliance department failed to provide its pharmacies with information to identify suspicious “pill mills.”

Walmart’s business model was based on pressure and incentives to encourage pharmacists to rapidly fill prescriptions and preventing the implementation of blanket refusals to fill prescriptions from suspicious physicians.  Pharmacists were recognized and earned bonuses based on numbers of prescriptions filled.

DOJ’s complaint outlines 20 specific examples when Walmart failed to act in response to egregious incidents of known illegal prescribers were able to fill invalid prescriptions for opioids.

In  one example, a doctor was identified who write large numbers of opioid prescriptions for a patient who lived over 60 miles away from the doctor’s office.  After this suspicious situation was identified, a pharmacy manger alerted a Walmart director and warned that Walmart should not be filling these prescriptions.  The Walmart director failed to take any action in response and Walmart continued to fill these suspicious prescriptions.  The physician was eventually prosecuted criminally for illegal opioid distribution.

DOJ also outlined how Walmart ignored or avoided internal remediation actions designed to curb drug diversion.  In Vermont, for example, Walmart adopted a cap on total sales of a specific opioid but then ignored the cap when sales exceeded the limit.  Walmart also avoided reporting obligations by cutting order sizes to fall just below the reporting threshold to avoid DEA reporting obligations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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