On July 10, the Department of Justice (DOJ) announced a nearly $410 million settlement with Rite Aid Corporation to resolve allegations that Rite Aid and its affiliates ignored red flags and knowingly dispensed unlawful controlled substances in violation of the False Claims Act (FCA) and Controlled Substances Act (CSA). Under the agreement, the government will receive $7.5 million and have a $401.8 million claim in Rite Aid’s pending bankruptcy. At the end of last month, DOJ also announced a $20 million settlement to resolve allegations that a mail-order pharmacy run by OptumRx improperly filled “trinity” prescriptions (a combination of an opioid, a benzodiazepine, and a muscle relaxant) in violation of the CSA.

These settlements are the latest in an increasing trend of government enforcement actions resulting in significant liability based on allegations that pharmacies failed to exercise their corresponding responsibility when dispensing controlled substances.

Rite Aid Settlement

The agreement resolves an intervened qui tam FCA lawsuit alleging that Rite Aid pharmacists failed to properly investigate and resolve red flags raised by certain opioid prescriptions and improperly submitted claims for government reimbursement of these prescriptions.

• The complaint alleges that Rite Aid ignored evidence of unlawful dispensing by, among other things, filling trinity prescriptions, permitting early fills of fentanyl and oxycodone, and filling prescriptions from prescribers flagged internally for writing prescriptions with no medically valid purpose.
• As we discussed last year, it is a novel and significant development that the government chose to intervene in an FCA action based on alleged violations of the CSA. Because of the substantial liability that attaches to an FCA lawsuit (treble damages plus per-claim civil penalties), basing an FCA case on alleged CSA violations greatly magnifies the potential monetary exposure DEA registrants face from CSA violations, as this multi-hundred million dollar settlement makes clear. The size of the Rite Aid settlement may embolden the government or other relators to pursue similar claims against other defendants.
• The Rite Aid case settled without the court ruling on Rite Aid’s motion to dismiss, so the ultimate viability of CSA-based FCA claims remains to be tested.

OptumRx Settlement

In this case, the government likewise alleged that OptumRx’s mail-order pharmacy failed to exercise its corresponding responsibility when it did not properly investigate and resolve red flags that trinity prescriptions could be abused or diverted.

What is Corresponding Responsibility?

The concept derives from DEA regulations implementing the CSA, which provide that “[t]he responsibility for the proper prescribing and dispensing of controlled substances is upon the prescribing practitioner, but a corresponding responsibility rests with the pharmacist who fills the prescription.” 21 C.F.R. § 1306.04(a).

• The government contends that, in practice, pharmacists must investigate and resolve all “red flags” before dispensing prescriptions for controlled substances.
• Frustratingly for practitioners, DEA has not defined corresponding responsibility or published a list of red flags. DEA has said there is no categorical list of red flags and that what presents as a red flag is circumstance-dependent, even based on factors like geographic location and local news. Some pharmacies may justifiably feel that this stance leaves them open to allegations of wrongdoing based on 20/20 hindsight.
• The Rite Aid and OptumRx matters focused on corresponding responsibility for the dispensing of opioids. But the government has also brought enforcement actions based on corresponding responsibility for the dispensing of other drugs. The recent indictments of Done Global Inc. executives, for example, discussed corresponding responsibility when dispensing stimulants like Adderall.

Takeaways

There are several major points that all DEA registrants can take from these recent settlements.

• The government continues to pursue liability for alleged violations of the CSA. Government enforcement activity around the CSA has been increasing for years and shows no signs of stopping. If the government or relators pursue CSA-based FCA actions, it will only add fuel to the fire.
• Liability can also skyrocket based on refills of prescriptions where the government determines that corresponding responsibility was not performed properly in the first instance.
• Providers dispensing controlled substances should keep recent government enforcement actions in mind when assessing their policies and procedures for corresponding responsibility and CSA compliance.