Pharmacy chain Walgreen (NASDAQ:WBA) and the U.S. Drug Enforcement Administration and Department of Justice have reached a settlement agreement over civil charges that the company had practiced improper distribution of prescription painkillers, the company announced yesterday.

The agreement includes Walgreen's paying $80 million and requires it to to surrender its DEA registrations at six of its more than 800 Florida pharmacies until May 2014 and at a Florida distribution center until September 2014.

The company had allegedly made violations in the record-keeping and dispensing of several controlled substances. Said violations were discovered through investigations of the company's distribution center in Jupiter, Fla., and six additional retail pharmacies in Florida. Walgreen has agreed to pay $80 million in the settlement, and expects the impact to be approximately $0.04 to $0.06 per share during its next quarter.

Kermit Crawford, Walgreen's president of pharmacy, health and wellness, said in a statement that the company has already made great strides in preventing abuse of prescription drugs. "We have identified specific compliance measures – many of which Walgreens has already taken – to enhance our ordering processes and inventory systems, to provide our team members with the tools, training and support they need to ensure the appropriate dispensing of controlled substances and to improve collaboration across the industry."

Authorities said the Jupiter center failed to flag suspicious orders of drugs it received from pharmacies, and the retail outlets routinely filled prescriptions that clearly were not for a legitimate medical use. The upshot was many more doses of prescription drugs were available illegally on the street. The drugs included oxycodone, hydrocodone, and Xanax.

Miami U.S. Attorney Wifredo Ferrer said the Walgreen civil penalty was the largest in the history of the Controlled Substances Act. The settlement also resolves similar allegations against Walgreens retail pharmacies in Colorado, Michigan and New York, Ferrer said. No criminal charges have been filed.

-- Material from The Associated Press was used in this report.


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