Chapter 16
Oviedo, Florida, 2012
On March 15, 2011, Jeffrey Chudnow, the police chief in Oviedo, Florida, a small city just northeast of Orlando, had written to the top executives at Walgreens, Chairman Alan G. McNally and President and Chief Executive Officer Gregory D. Wasson.
Oviedo, population 33,000, had two Walgreens stores, and Chudnow told the executives he had “seen the parking lots of your stores become a bastion of illegal drug sales and drug use.” Once oxycodone prescriptions were filled inside, the chief wrote, “the drugs are sold, distributed as payment, crushed and snorted, liquified and injected, or multiple pills swallowed while in the parking lot of your pharmacies.”
Chudnow asked the executives to stop Walgreens pharmacists from accepting orders when customers had more than one prescription for pain pills to fill. “These types of prescriptions overtly denote misuse and possible street sales of these drugs,” he told them.
Chudnow got no response.
Instead, over the next four months, the nation’s second-largest pharmacy chain shipped another 496,100 pills to one of its drugstores in Oviedo, a quantity far greater than demand in an average pharmacy.
The letter was the culmination of months of frustration with the pharmacies. Chudnow first directed his officers to surveil the Walgreens stores in 2010 after a chorus of complaints from the community. The parking lots appeared to have become open-air drug bazaars. After his officers responded to more than a hundred calls for help and made many arrests in and around the parking lots, Chudnow summoned managers from the two stores to police headquarters. He was concerned not only about the illegal oxycodone sales, but that people were popping pain pills and then getting behind the wheel.
“You can help stop this,” he told them.
Nothing changed.
Chudnow also wrote formal letters to the drugstore managers, listing the names of the people his officers had arrested, the drugs they seized, and the doctors who were writing the bogus prescriptions. He again asked the pharmacies for help in “dealing with the prescription medication epidemic.” He noted that under the law, if pharmacists suspected that a prescription was fraudulent or being misused, they weren’t supposed to fill it.
But the stores kept filling the prescriptions—even for those Chudnow had flagged as chronic offenders. The managers had the audacity to summon the police when the crowds in the parking lot became unruly. But they continued to do nothing to confront the underlying cause and stop filling the prescriptions.
Seriously? Chudnow thought to himself. You’re causing this problem. We’ve talked to you about the problem. And now you’re calling us to help you?
The chief turned to the DEA. He had a good relationship with the agency’s field office in Florida, and one of his officers worked with the DEA on a federal task force.
Joe Rannazzisi and his team opened another front: an investigation into Walgreens and its massive distribution center in Jupiter, Florida, which was selling pain pills to the Oviedo pharmacies and many others in the state.
The Oviedo pharmacies were among the nearly eight thousand drugstores owned by Walgreens Company, founded in Chicago in 1901 by Charles Walgreen Sr. In 2012, the company introduced a new slogan: “Walgreens: At the Corner of Happy & Healthy.”
The stores, in fact, were at the corner of addiction and misery. Between 2006 and 2012, Walgreens sat atop the nation’s retail opioid market, selling about thirteen billion pills—three billion more than CVS, its closest competitor. Most chain and independent pharmacies relied on drug distributors like McKesson, AmerisourceBergen, and Cardinal to supply their prescription opioids. Walgreens, however, obtained 97 percent of its pain pills directly from drug manufacturers. In effect, Walgreens, with its twelve warehouses around the United States, was acting as both drug distributor and pharmacy chain. By cutting out the middleman, the company could make more money and had more control over how many pills it sent to its stores. But by acting as its own distributor, Walgreens also had the responsibility to alert the DEA to enormous orders by its own pharmacies and make sure the drugs weren’t being diverted to the streets.
On April 4, 2012, the DEA launched its investigation, executing search warrants at six Florida Walgreens pharmacies—in Oviedo, Hudson, Fort Myers, Port Richey, and Fort Pierce. Using the ARCOS database and the records they had seized, DEA investigators discovered that Walgreens’s Jupiter warehouse had been the single largest distributor of oxycodone in Florida. Between April 2010 and February 2012, the facility sent 13.7 million oxycodone doses to those six Walgreens stores. While the average pharmacy in the United States ordered about 70,000 oxycodone pills in 2011, the six Walgreens pharmacies in Florida ordered more than a million pills apiece that year. The dispensing of oxycodone at the stores increased by more than 600 percent between 2009 and 2011.
Not everyone at Walgreens was blind to the obvious. On January 10, 2011, Kristine Atwell, who managed distribution of controlled substances at the Jupiter warehouse, wrote an email to Walgreens corporate headquarters with the subject line “High Quantity Stores.” She singled out a Walgreens pharmacy in Port Richey, near Tampa.
“I ran a query to see how many bottles we have sent to store #3836 and we have shipped them 3,271 bottles between 12/1/10 and 1/10/11,” Atwell wrote. “I don’t know how they can even house this many bottle[s] to be honest. How do we go about checking the validity of these orders?”
The month after Atwell raised her alarm, the stores received the same quantity of oxycodone. The indifference at all levels of the organization was illustrated by one incident at the Walgreens in Fort Pierce in 2010. A pharmacist mistakenly dispensed an extra 120 doses of oxycodone to one customer. When he called the customer’s home, he was told by the person who answered that the customer was a user and a dealer who had viewed the extra pills as a “pot of gold.” He refused to return them. After the mix-up, the store continued to fill the same customer’s prescriptions for pain pills.
In September 2012, the DEA shut down the Jupiter warehouse by using an Immediate Suspension Order—the same weapon Joe’s investigators had used against the Cardinal warehouse and the CVS stores in Sanford. They said the Walgreens warehouse posed “an imminent danger to the public health and safety.” Even when Walgreens employees identified extremely large orders, the warehouse shipped them anyway. The DEA documented similar problems in Colorado, Michigan, and New York.
DEA investigators also discovered that Walgreens’s corporate headquarters pushed its stores to increase sales with a program that gave bonuses to pharmacists based on the number of prescriptions filled. That practice seemed to come in conflict with the oath pharmacists take: “I shall always place the needs of all those I serve above my personal interests and considerations.”
The soaring sales of opioids caused some alarm at headquarters. Executives there began formulating a pharmacy store survey called “Florida Focus on Profit.” Among the survey’s proposed questions were some about the legitimacy of pain clinic prescriptions: “Do pain management clinic patients come all at once or in a steady stream?” and “Do you see an increase in pain management prescriptions on the day the warehouse order is received?”
Dwayne Pinon, a Walgreens attorney, balked at including the questions. “If these are legitimate indicators of inappropriate prescriptions, perhaps we should consider not documenting our own potential noncompliance,” he wrote in an email to Walgreens officials. The questions were dropped.
In June 2013, Walgreens agreed to pay an $80 million fine to settle allegations that the company committed an “unprecedented” number of violations and filled opioid prescriptions that they knew or should have known were not for legitimate medical use and were being diverted to the black market. The company surrendered its DEA registrations for six Florida Walgreens pharmacies until May 2014.
It was the largest fine and sanction in DEA history, but it had little impact on the company’s bottom line. That year, Walgreens posted $72 billion in revenue—$80 million was an easily absorbed cost of doing business.