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  • stockmann2013 stockmann2013 Aug 1, 2013 2:00 AM Flag

    Walgreen Investors Sue CEO Over $80 Million Drug Fine

    Walgreen Investors Sue CEO Over $80 Million Drug Fine
    By Andrew Harris - Jul 31, 2013 9:36 PM ET

    Walgreen Co. Chairman James A. Skinner and Chief Executive Officer Gregory D. Wasson were sued by investors accusing them of failing to protect the company from an $80 million federal fine for lax oversight of prescription painkiller distribution.
    The shareholders’ complaint in federal court in Chicago also names 11 board members as defendants and was filed on behalf of the company, the biggest U.S. pharmacy chain.
    The penalty was paid last month to end a U.S. probe into the company’s drug distribution practices in New York, Florida, Michigan and Colorado, the U.S. Drug Enforcement Administration said in a statement. The fine was the biggest in DEA history.
    “Walgreens admitted, among other things, that it had not upheld its obligations as a DEA registrant, which requires the company to report suspicious orders of prescription painkillers like oxycodone,” according to today’s complaint.
    From late 2010 through mid-2011, 16 of the company’s top 25 biggest retail pharmacy purchasers of the painkiller oxycodone - - including the top six buyers -- were in Florida and being supplied by the same distribution facility in the city of Jupiter.
    Those top six stores each averaged more than 1.6 million dosage purchases of the drug’s strongest prescription, while the average U.S. pharmacy during the same period bought only 73,000 units at all dosages, according to the complaint.
    Board Aware
    “A majority of the board was aware of these improper sales of prescription painkillers since at least 2010 and appears to have either condoned the practices or done nothing to prevent them,” the investors said.
    Union pension plans from Pennsylvania, Missouri and Florida filed the complaint. They’re seeking a court determination that the executives breached their fiduciary duty to Walgreen and its owner-shareholders, restitution

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    • I believe those investors will have difficulty proving they were financially harmed by this situation. Walgreen's behavior in allowing questionable oxycodone rx's to be dispensed was reprehensible, but not financially damaging. $80million amounts to less than $10,000 per Walgreen store. Oxycodone rx's are extremely profitable. It may have been the largest fine ever from the DEA, but it amounted to no more than a slap on the wrist to Walgreen. The greatest harm is probably a diminished image of Walgreens among those aware of the issue.

    • Deduct the 80 million from their bonuses and salary