October 24, 2005
Contact: Special Agent Randy Ladd
Phone Number: (720-895-4294)
Record 7 Million Dollar Settlement
Kroger Corporation establishes corporate wide compliance program
Denver, CO - Jeffrey D. Sweetin, Special Agent in Charge (SAC) of the Drug Enforcement Administration (DEA) Rocky Mountain Division and Bill Leone, United States Attorney for the District of Colorado, announced today that King Soopers, City Market, and their parent company, Kroger, have agreed to pay a record $7 million dollar settlement for systemic violations of the Controlled Substances Act (CSA) by the company's pharmacies.
In addition to the penalty, the Kroger, Co., including King Soopers and City Market, has agreed to implement a pharmacy compliance program estimated to cost over $6 million dollars in all 1,900 of its pharmacies nationwide, even though the DEA had no evidence of any CSA violations outside of the King Soopers and City Market pharmacies.
According to SAC Sweetin, “Americans trust corporations like Kroger to supply them the medications they need. They also trust them to ensure that controlled substances aren't diverted to the illicit market. This record settlement is a clear message that DEA will hold companies accountable for not safeguarding these potentially dangerous substances, as well as an acknowledgement by Kroger that their internal monitoring systems need to be changed.”
“As a result of DEA's investigation, Kroger is initiating a corporate-wide compliance program to improve their pharmaceutical controls. Seven million dollars is a very large settlement. But, because diverted pharmaceuticals account for a large percentage of the drugs illegally abused, the cost of not imposing such settlements is much larger,” SAC Sweetin added.
Responding to information concerning possible illegal diversions of controlled substances, the DEA initiated an investigation, which included audits of seven King Soopers pharmacies. The audits revealed multiple discrepancies reflecting a pattern of non-compliance at King Soopers pharmacies with the requirements of the CSA and Federal regulation. Record-keeping and controlled substance security problems at King Soopers made it impossible to determine how many drugs had been lost or diverted.
The record-keeping problem also complicated the determination of who was responsible for potential diversions. King Soopers' inadequate accountability and security for controlled substances included from the time they were ordered to the time they were dispensed. After the audits it became clear that many of the CSA violations were the result of systemic weaknesses present in all King Soopers and City Market pharmacies.
As a result of the investigation, Kroger volunteered to implement a nationwide training program of all pharmacy employees, as well as institute a Comprehensive Regulatory Compliance Program. In addition to the $7 million dollar penalty, both parties have agreed to an additional $3 million dollar penalty which will be suspended as long as Kroger complies with their Comprehensive Regulatory Plan. The DEA will work closely and cooperatively with Kroger to ensure the plan is implemented.
“Today’s historic settlement against one of our nation’s most well-known pharmacy chains is a massive financial strike against those who fail to fulfill their responsibility to prevent diversion of prescription drugs. DEA will never tolerate irresponsible record-keeping and reckless practices that often lead to dangerous prescription drug abuse,” concluded Joseph T. Rannazzisi, Acting Deputy Assistant Administrator at DEA Headquarters.
For more information, please contact Special Agent Karen Flowers at 303-705-7351 or U.S. Attorney Public Affairs Officer Jeff Dorschner at (303) 454-0243.