LOS ANGELES – CVS Caremark Corp. agreed to pay $77.6 million to settle claims that some of its stores in California and Nevada allowed criminals to buy cold medications that were used to make methamphetamine.
The pharmacy chain will pay a $75 million fine, the largest civil penalty ever paid under the Controlled Substances Act, and forfeit $2.6 million in profits from the illegal sales, the U.S. Attorney’s Office in Los Angeles said on Thursday in a statement.
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Between September 2007 and November 2008, CVS failed to ensure that stores in Southern California complied with laws limiting sales of over-the-counter drugs made with pseudoephedrine, which allowed methamphetamine traffickers to buy large amounts of the drugs, according to the statement. CVS changed its sales practices only after it became aware of the investigation, prosecutors said.
“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,” CVS CEO Thomas Ryan said in a statement. “We have strengthened our internal controls and compliance measures and made substantial investments to improve our handling and monitoring of PSE.”
The Woonsocket-based company said the settlement will be paid from money that had been reserved and will have no effect on its financial results. CVS is the largest U.S. provider of prescription drugs.
The Combat Methamphetamine Epidemic Act of 2005 limits the amount of medication containing pseudoephedrine a customer can buy on a day. After Mexico banned pseudoephedrine sales in 2007, Los Angeles saw a surge in so-called smurfing, where individuals make multiple pseudoephedrine purchases in small amounts to produce methamphetamine, prosecutors said.
