retail news in context, analysis with attitude

The US Department of Justice yesterday filed a lawsuit yesterday that accuses Walmart of having illegally dispensed controlled substances - specifically opioids - and in doing so helped to worsen the nation's opioid crisis.

"As one of the largest pharmacy chains and wholesale drug distributors in the country, Walmart had the responsibility and the means to help prevent the diversion of prescription opioids," Jeffrey Bossert Clark, acting assistant attorney general of the Civil Division, said in a statement.  "Instead, for years, it did the opposite — filling thousands of invalid prescriptions at its pharmacies and failing to report suspicious orders of opioids and other drugs placed by those pharmacies … This unlawful conduct contributed to the epidemic of opioid abuse throughout the United States. Today's filing represents an important step in the effort to hold Walmart accountable for such conduct."

Penalties, according to National Public Radio, could be in the billions of dollars.

According the NPR story, "At its pharmacies, Walmart is alleged to have knowingly filled thousands of controlled substance prescriptions that were not issued for legitimate medical purposes. And at its distribution centers, the government says Walmart received hundreds of thousands of suspicious orders that it failed to report to the Drug Enforcement Administration, as required."

The Wall Street Journal provides this context:

"Walmart started with cut-rate prices on opioids that initially drove shoppers to its stores, the government alleges. Middle managers—under direction from executives at company headquarters—pressured pharmacists to work faster, the suit says, believing quick-fill prescriptions drew customers to stay and keep shopping.

"Many of the alleged problems centered in Walmart’s compliance unit, which oversaw dispensing nationwide from the company’s main office in Bentonville, Ark., the suit says. Walmart allegedly ignored repeated warnings that the company had understaffed its pharmacies as pressure to sell quickly caused mistakes and put patients’ health at risk, according to the complaint.

"Pharmacists allegedly got little help from compliance managers who for years didn’t share information between stores, and in many cases refused requests to give blanket rejections to suspect prescribers even after rival retailers had done so, the suit says."

The Washington Post offers some big-picture perspective:

"The lawsuit comes after lawsuits filed last summer by cities, towns, counties and Native American tribes across the country alleging that retailers such as Walmart, CVS, Rite Aid and Walgreens played a role in driving the opioid epidemic by distributing billions of pills. A number of those federal trials, in states including Ohio, West Virginia and Texas, have been delayed during the pandemic.

"Last month, Purdue Pharma, the maker of OxyContin, pleaded guilty to three felonies and agreed to an $8.3 billion settlement with the Justice Department for its role in a crisis that has killed more than 400,000 Americans in the past two decades.

"Roughly 50,000 Americans died of opioid overdoses last year, a record, federal data shows, and medical experts have warned that the coronavirus pandemic and economic crisis have led to new surges in opioid deaths."

The New York Times notes that "Walmart pre-emptively denied the charges in October in a suit against the Trump administration, saying the company was being used as a scapegoat and blaming the opioid crisis on what it called the federal government’s own weak enforcement … On Tuesday, Walmart made a similar argument, saying the Justice Department was forcing retailers to 'second guess' doctors and 'putting pharmacists and pharmacies between a rock and a hard place with state health regulators who say they are already going too far in refusing to fill opioid prescriptions'."

KC's View:

I have to believe that this thing gets settled before it ever reaches a courtroom.  While Walmart may be positioning itself as wanting to have a robust debate about the nature of legal culpability, I tend to think that that the last thing the folks in Bentonville want is for this thing to get into a courtroom, where people's whose loved ones died from opioid abuse - and got at least some of those opioids from a Walmart pharmacy - get on the stand and tell their stories.  Even if Walmart thinks its position is defensible, the optics would be horrible.

As for the basic issue … if it can be proven that some of Walmart's pharmacists alerted their bosses that way too many opioids seemed to be getting into the system, and the powers that be ignored those warnings because all those opioids were incredibly profitable … well, that sounds like a hard behavior to defend.