By Pat Anson, Editor

A British drug maker has agreed to pay a $35 million fine to settle allegations that it failed to report suspiciously large orders in the U.S. for the opioid painkiller oxycodone.

In the settlement, Mallinckrodt refused to admit any wrongdoing and said it was paying the fine “to eliminate the uncertainty, distraction and expense of litigation.”

Federal prosecutors say the company failed to detect and notify the Drug Enforcement Administration of unusually large orders for oxycodone from U.S. pharmacies and pain clinics from 2008 to 2011.  

The government also alleged that Mallinckrodt failed to keep accurate records at a manufacturing facility in upstate New York, which resulted in discrepancies between the actual number of oxycodone tablets produced and the number of tablets reported by the company.

“Mallinckrodt’s actions and omissions formed a link in the chain of supply that resulted in millions of oxycodone pills being sold on the street,” Attorney General Jeff Sessions said in a statement.

Prosecutors say the settlement includes a “groundbreaking parallel agreement” with the DEA, under which the company will analyze data it collects from customers down the supply chain to identify suspicious sales. The DEA maintains that drug makers need to go beyond a “know your customer” policy and should use all available data to “know your customer’s customer” to prevent opioid painkillers and other controlled substances from getting into the wrong hands.

“Mallinckrodt has agreed to do everything they can to help us identify suspicious orders in the future. And as a result of today's settlement, we are sending a clear message to drug companies: this Department of Justice will hold you accountable for your legal obligations and we will enforce our laws,” Sessions said.

"While Mallinckrodt disagreed with the U.S. government's allegations, we chose to resolve the legacy matter in order to eliminate the uncertainty, distraction and expense of litigation and to allow the company to focus on meeting the important needs of its patients and customers,” said Michael-Bryant Hicks, General Counsel, Mallinckrodt.

"We are proud of the fact that Mallinckrodt has long been an industry leader in actively combatting the serious issue of prescription drug abuse with a demonstrated record of meeting and exceeding the requirements of federal and state laws governing the manufacturing, sale and distribution of controlled substances.”

CVS to Pay $5 Million Fine

In a related story, CVS Health Corp agreed to pay a $5 million fine to settle allegations that several CVS pharmacies in California failed to detect thefts of the opioid painkiller hydrocodone.

“The Company agreed to settle this matter to avoid the delay, uncertainty, inconvenience and expense of protracted litigation,” CVS said in a statement. 

The allegations resolved by the settlement were uncovered by a DEA investigation that began in 2012 after CVS self-reported thefts and losses of hydrocodone at five of its Sacramento-area pharmacies. Under the Controlled Substances Act, pharmacies are required to report any thefts or significant losses of controlled substances to the DEA.

“National retailers that distribute massive amounts of controlled substances have a responsibility to comply with recordkeeping regulations because these regulations are specifically designed to prevent dangerous drugs from being diverted into the community and abused,” said U.S. Attorney Phillip Talbert.

In addition to paying the $5 million fine, CVS also agreed to a compliance plan for 168 its pharmacies in California, under which pharmacy staff would be provided with better training and monitoring.

“CVS Health is committed to the highest standards of ethics and business practices, including complying with all federal and state laws governing the dispensing of controlled substance prescriptions and is dedicated to helping reduce prescription drug abuse and diversion,” the company said. 

This is certainly not the first time CVS has been accused by the federal government of failing to comply with the Controlled Substances Act.

Last year CVS agreed to pay a $3.5 million fine to resolve allegations that 50 of its pharmacies in Massachusetts and New Hampshire filled forged prescriptions for opioid painkillers. One forger signed a dentist’s name on 131 prescriptions for hydrocodone and had them filled at eight CVS stores. Another forger obtained over 200 prescriptions for hydrocodone and methadone by forging the name of an emergency room physician.

In 2015, CVS paid a $22 million fine after two of its pharmacies in Florida were found to be routinely filling bogus prescriptions for painkillers, including some for customers as far away as Kentucky.

And in 2010, the DEA fined CVS $75 million for the improper selling of cold medicines in California and Nevada. The cold medicines contained pseudoephedrine, an ingredient that can be used to make methamphetamine.