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DENVER -- King Soopers said Friday that it has agreed to pay $7 million to settle claims by the U.S. Attorney for Colorado that the Kroger Co.-owned grocer might have failed to adequately guard controlled substances in its stores from theft, in compliance with the Comprehensive Drug Abuse Prevention and Control Act of 1970, otherwise known as the Controlled Substance Act.
In the course of audits and investigations undertaken at seven of King Soopers' 103 pharmacies in April 2004, the U.S. Drug Enforcement Agency (DEA) found that theft-prevention systems and inventory controls for some drugs were inadequate, and that the retailer was not consistently meeting all of the government reporting requirements of the act.
The audits and investigations additionally revealed that controlled substances were unaccounted for and had been stolen, including Oxycotin, Vicodin, Abien, and Xanax, local news organizations reported. According to the Denver Post, the DEA audits were unable to determine how many drugs had been lost or diverted, or who was responsible for potential drug losses.
Kroger spokesman Gary Rhodes told Progressive Grocer that 12 employees were disciplined as a result of the investigations' findings, with punishments "ranging from reprimand to termination."
"We have cooperated fully with the U.S. Attorney, the DEA, and other law enforcement agencies," noted King Soopers president Russ Dispense in a statement. "We began taking voluntary corrective action in all our pharmacies as soon as we learned of the DEA's concerns. We hired...nationally recognized pharmacy compliance expert [Richmond, Va.-based BuzzeoPDMA] to help overhaul our pharmacy security, inventory controls, and record-keeping procedures. We are implementing these best practices in every King Soopers pharmacy so that we can do the best possible job of accounting for and protecting prescription drugs."
Dispense emphasized that the DEA audits and investigations "did not involve any issues related to the quality of care to our pharmacy customers." He added that he was confident that the changes being made at the chain's pharmacies would not only place them in full compliance with regulations, but would "constitute industry-leading practices for theft prevention, inventory control and record-keeping for controlled substances."
Kroger recognized the $7 million liability in the first quarter of fiscal 2005, and has agreed to pay an additional $3 million if it and King Soopers fail to comply with the settlement terms. Although no violations were discovered beyond King Soopers pharmacies, the Cincinnati-based parent company is implementing a compliance and training program at its 1,900 pharmacies across the country, in a program is estimated to cost over $6 million, the Denver Business Journal reported.
Rhodes told PG that the program includes a complete redesign of the company's recordkeeping and processing systems, an increased number of audits, greater restriction of access to controlled substances, more monitoring and supervision of reporting and inventory management, and extensive compliance training of staff. He added that implementation should be completed by the end of January 2006.
In a statement, U.S. Attorney Bill Leone commended Kroger for realizing that it had a problem and taking steps to correct it on a national level.
King Soopers operates 103 supermarkets in Colorado.