"Smurfers" Come Home to Roost: CVS Finds Meth Dealers Aren't Good Customers
The $77.6 million settlement between CVS and the DEA over allegations it ignored sales of pseudoephedrine cough 'n' cold products to "smurfers," who then sold them as a raw ingredient to methamphetamine dealers, is a reminder that pharmacies are the crime-infested ghettos of the pharmaceutical business.
I'm not overstating the case. Here's the list of investigations and litigation currently faced by just CVS, according to its most recent 10-Q filed with the SEC:
- Department of Health and Human Services' Office of Inspector General and the Texas attorney general are probing the processing of Medicaid and other government agency claims.
- A civil class action suit in Alabama claiming CVS and its insurers misrepresented the amount of insurance coverage it had available to settle a previous class action securities suit.
- Various antitrust lawsuits claiming CVS Caremark operates restrictive anticompetitive practices.
- The FTC and 24 states are probing CVS's "business practices"; no details given.
- Unspecified probe by the OIG into the Medicare Part D prescription drug plans of RxAmerica, the PBM subsidiary of Longs Drug Stores, a CVS unit.
- Eight class action suits allege the company failed to pay assistant store managers overtime.
- OIG probe of "possible false or otherwise improper claims for payment under the Medicare and Medicaid programs" due in part to a CVS program that offered customers "gift cards, cash, non-prescription merchandise or discounts or coupons" in return for transferring prescriptions to CVS.
- A lawsuit alleging insider trading.
In today's settlement, the DEA said CVS had rigged its pseudoephedrine system to ignore potential violations of the law:
In 2007, CVS implemented an automated electronic logbook system to record individual pseudoephedrine sales, but the system did not prevent multiple purchases by an individual customer on the same day.What other industry would regard meth dealers as part of their product revenue model?
Fact of the day: Folks who gather pseudoephedrine for meth dealers by buying small amounts at multiple pharmacies so as not to trigger a federal law restricting the supply are called "smurfers" because they deliver the product to their boss, or "Papa Smurf."