DEA, DOJ, Making Moves to Contain Opioid Supply Chain

At a time when the Trump Administration is attempting to make inroads against the opioid crisis, the DEA and Justice Department are taking higher profile actions.

On June 28 the DOJ announced charges tied to alleged fraud worth $2 billion with many of the allegations linked to the sale of prescription opioids. The fraud was allegedly perpetrated by pharmacists, nurses and doctors.

The fraud and fake billings amounted to 13 million illegal opioid dosages, according to the DOJ. The DOJ charged 162 people with illegally prescribing or distributing drugs. In all 601 were criminally charged in the fraud probe.

Last year Attorney General Jeff Sessions created a new Opioid Fraud and Abuse Detection Unit with the charge of using data generated by the DOJ to go after crime tied to opioids. Earlier this year, as a part of the effort by the White House to get a handle on the opioid crisis, Sessions said the DEA would become more active in tracking opioid prescription activity that differed from normal levels.

The DOJ announcement comes one day after the FDA held a hearing on how to slow down online sales of opioids that included the DEA as well anti-drug groups and technology companies like Google (GOOGL) , Facebook (FB) , and Twitter (TWTR) .

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Some participants in the hearing said there was a willingness among the tech companies to work with the government to limit access to illicit opioids. In a post-hearing statement, FDA Commissioner Scott Gottlieb said the hearing is part of a long-term effort that could include the use of machine learning and artificial intelligence to identify illegal activity.

A March affidavit filed in federal court in California shows the DEA is taking interest in specific pharmacies and has zeroed in on Walgreens in Chico, a rural college town of about 91,000, 87 miles northeast of the state capitol Sacramento. The Center for Investigative Reporting first revealed the DEA's interest June 27.

Court documents point to the DEA probing purchase records for the store showing over a 3-year period it bought twice as much hydrocodone and oxycodone as the next largest purchaser in the area. In 2016 hydrocodone shipments to the location were seven times the national average, and oxy shipments were about five times what is considered normal.

The DEA did an administrative inspection of the Chico store, which is standard practice. But it yielded more than dozen boxes of evidence and the probe is ongoing. Among the items of interest is a record of 8,000 hydrocodone tablets that went missing in 2016 with no explanation for the missing drugs.

The Chico location is one of 8,100 Walgreens in the United States, Puerto Rico, Washington DC and the Virgin Islands owned by Walgreen Boots Alliance (WBA) . The holding company also operates Duane Reade, Boots and Alliance Healthcare and is one of the world's largest purchasers of prescription drugs.

The company has a history with the DEA regarding opioids, having settled civil charges the Walgreens Corp. had violated dispensing and record keeping requirements under the Controlled Substances Act in 2013, paying out $80 million. At the time, a Walgreens' distribution center in Jupiter, Florida was the largest supplier of oxycodone in the Sunshine State.

Like some U.S. drug makers and distributors, Walgreens has tried to address the opioid crisis. It has created the #ItEndsWithUs, a campaign to educate the public and in particularly youth about the dangers of opioids. The company also keeps naloxone on all of its store's shelves, a drug to reverse opioid overdoses.

Walgreens furnished the following comment on the DEA action, "We are committed to the safe and appropriate dispensing of all medications and working together with federal, state and local officials. In addition, we are very committed to doing all we can to help stem the opioid crisis through programs in which we've played an active and leading role in the industry, such as the installation of drug take-back kiosks and expanding the availability of naloxone to all of our stores chain-wide."

The DEA and DOJ isn't picking on Walgreens. CVS Health Corp. (CVS) agreed to pay a fine of $1.5 million to resolve allegations the company's pharmacies in Nassau and Suffolk counties in New York failed to report the loss of prescription drugs that included opioids.

CVS did not respond to a request for comment.

Both CVS and Walgreens have seen their shares tumble since Amazon (AMZN) acquired online pharmacy PillPack this week.

Congress has also stepped up it efforts to combat opioid abuse, passing a bipartisan package of 58 bills this month tied to addressing the crisis. Though the House has seldom found middle ground of late, the package passed on a 396-14 vote June 22. The package includes expanded access to treatment services, promoting alternative pain treatments, improving efforts to prevent illegal opioids from being shipped into the U.S. including more resources aimed at slowing the flow of fentanyl, a deadly synthetic form of opioids.

Now the Senate must decide how it will proceed with the measure: the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Community Act.

See also:

Why CVS May Be Less Vulnerable to Amazon's Healthcare Attack Than Walgreens

Why Amazon's Purchase of PillPack Is Such a Savvy Move 

Walgreens Price Target Is Lowered to $65 at Jefferies 

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