Two cases involving five major U.S. retail pharmacy chains winding their way through court foretell a long and costly road ahead for all companies across the pharmaceutical supply chain battling litigation for their alleged roles in fueling the nationwide opioid epidemic.

In total, more than 3,000 opioid-related cases have been filed in state and federal courts over claims broadly alleging both the actions and nonactions of drugmakers, drug distributors, and pharmacy chains “led to a severe oversupply of prescription opioids, which ultimately created a public nuisance,” according to court documents. Judge Dan Polster of the U.S. District Court for the Northern District of Ohio is presiding over the now coordinated multidistrict opioid litigation.

Compliance officer liability case

Charges brought against a compliance officer in 2019 for his alleged role in conspiring to contribute controlled substances have been dropped.


On Aug. 26, Judge Matthew McFarland of the U.S. District Court for the Southern District of Ohio dismissed a case against James Barclay after federal prosecutors dropped charges against both Barclay and now-defunct pharmaceutical distributor Miami-Luken.


In a letter addressed to the court, Barclay wrote, “I was always the accounts receivable manager, and in 2012, I agreed to assume additional responsibility by assisting the company’s CEO with the compliance paperwork and responding to the [Drug Enforcement Administration’s] many inquiries. I never had any authority to stop any order from shipment, designate any order as suspicious, or report anyone to the DEA.”


Barclay said he repeatedly contacted the DEA requesting guidance about controlled substances issues but was ignored.


“I was indicted because the DEA failed to do their job and the government needed a scapegoat after the publicity of the opioid problems in West Virginia,” he wrote.

The consolidated cases in this first wave of litigation are called “bellwether” trials because each represent test cases for opioid-related litigation to come. Unlike some major drugmakers and drug distribution companies, no retail pharmacy chain has yet reached a nationwide opioid-related agreement.

On Aug. 17, in the first case to levy damages against retail pharmacy chains following a jury trial last fall, Judge Polster ordered CVS, Walgreens, and Walmart to pay a total of approximately $650.6 million over 15 years—including an immediate payment of nearly $87 million to cover the first two years of the abatement remediation plan—to two Ohio counties.

The damages award followed the jury’s conclusion CVS, Walgreens, and Walmart “engaged in intentional and/or illegal conduct, which was a substantial factor in producing the public nuisance.” Each retailer “caused a significant and ongoing interference with a public right to health or safety,” court documents stated.

During the hearing, Judge Polster expressed frustration the defendants “largely ignored the court’s directives to submit their own proposed abatement plan,” choosing instead to submit “three paragraphs suggesting a proper abatement remedy would be comprised of drug takeback programs to facilitate disposal of diverted opioids—and nothing more.”

Corporate counsel of pharmacy chains should heed Judge Polster’s warning: Be prepared to produce evidence, through witnesses or the cross-examination of experts, “that would support a finding that drug takeback programs, standing alone, would effectively abate the nuisance” if that’s the defense route taken.

Two other pharmacy defendants—Rite Aid and Giant Eagle—reached settlements with the counties before trial. Trumbull County received north of $2 million total from the companies; the amount Lake County received was not publicly disclosed.

CVS, Walgreens, and Walmart expressed disagreement over what they said was a gross misapplication of public nuisance law by the jury. They will each appeal.

“Instead of addressing the real causes of the opioid crisis—like pill mill doctors, illegal drugs, and regulators asleep at the switch—plaintiffs’ lawyers wrongly claimed that pharmacists must second-guess doctors in a way the law never intended,” Walmart stated.

CVS said in an emailed statement, “Pharmacists fill legal prescriptions written by [Drug Enforcement Administration]-licensed doctors who prescribe legal, [Food and Drug Administration]-approved substances to treat actual patients in need.”

Walgreens’ other landmark opioid trial

Walgreens has now lost two landmark opioid-related cases, both of which it is appealing.

“As we have said throughout this process, we never manufactured or marketed opioids, nor did we distribute them to the pill mills and internet pharmacies that fueled this crisis,” said Fraser Engerman, Walgreens’ senior director of external relations.

“The plaintiffs’ attempt to resolve the opioid crisis with an unprecedented expansion of public nuisance law is misguided and unsustainable,” Engerman added. “We look forward to the opportunity to address these issues on appeal.”

On Aug. 10, in the first bench trial to decide in a plaintiff’s favor in the multidistrict opioid litigation, Judge Charles Breyer of the U.S. District Court for the Northern District of California found Walgreens liable for “substantially contributing” to San Francisco’s opioid epidemic. The next phase of the trial will determine what amount the company must pay to the city of San Francisco.

According to court documents, from 2006-20, “Walgreens pharmacies in San Francisco dispensed hundreds of thousands of red-flag opioid prescriptions without performing adequate due diligence. Tens of thousands of these prescriptions were written by doctors with suspect prescribing patterns.”

Other opioid-related cases

On July 4, in the first federal trial of its kind marking a win for drug distributor companies, Judge David Faber of the U.S. District Court for the Southern District of West Virginia found AmerisourceBergen, Cardinal Health, and McKesson not liable in a case brought by Cabell County and the city of Huntington, West Virginia, in their opioid-related litigation.


“Plaintiffs failed to show that the volume of prescription opioids distributed in Cabell/Huntington was because of unreasonable conduct on the part of defendants,” Faber wrote in his 184-page ruling. He noted the companies have suspicious monitoring systems in place as required by the Controlled Substances Act.


On Aug. 17, drugmaker Endo International, which filed for Chapter 11 bankruptcy protection, agreed to pay $450 million over a 10-year period in a settlement with 34 states, along with the District of Columbia and the U.S. Virgin Islands, to resolve allegations it “boosted opioid sales using deceptive marketing that downplayed the risk of addiction,” stated the Vermont Attorney General’s Office.


Under the agreed resolution, contingent on bankruptcy court approval, Endo cannot market opioids again and must turn over millions of its opioid-related documents for online publication in a public document archive at a price tag of $2.75 million for archival expenses.


Drugmakers Teva Pharmaceuticals and Allergan at the end of July reached agreements in principle to pay as much as $6.6 billion total in nationwide opioid settlements that would also require the companies to change their business practices.

“As a result of Walgreens’ 15-year failure to perform adequate due diligence, plaintiffs proved that it is more likely than not that Walgreens pharmacies dispensed large volumes of medically illegitimate opioid prescriptions that were diverted for illicit use and that substantially contributed to the opioid epidemic in San Francisco,” Judge Breyer wrote.

Additionally, court documents stated, “Walgreens did not provide its pharmacists with sufficient time, staffing, or resources to perform due diligence on these prescriptions. Pharmacists experienced constant pressure to fill prescriptions as quickly as possible and a shortage of resources to review them before dispensing.”

The broader message for other pharmacy chains: “It is not enough for a pharmacy to simply ascertain that a licensed prescriber wrote the prescription,” Judge Breyer wrote. “Pharmacies have a corresponding duty to exercise independent judgment in determining whether the prescription was written for a legitimate medical purpose.”

Compliance considerations

The cases provide chief compliance officers in the retail pharmacy sector a robust framework for establishing a controlled substance compliance program (CSCP). As outlined in the case against CVS, Walgreens, and Walmart, a CSCP must include:

Establishment of a controlled substance compliance committee made up of representatives from legal, compliance, pharmacy operations, and asset protection departments.

Appointment of a chief controlled substance compliance officer who should have knowledge of, and experience with, laws and regulations governing controlled substances. This individual must sit on the controlled substance compliance committee and oversee a controlled substance compliance department.

Independent oversight: Compliance department personnel, retail pharmacy employees, and supervisory personnel shall not be compensated in whole or in part by commissions, bonuses, incentives, or any other benefit that depends on revenue, profitability targets, or expectations specific to sales of controlled substances. No employee shall face negative employment consequences for failing to meet revenue targets specific to the sales of controlled substances.

Establishment of a hotline allowing employees and/or customers “to anonymously report suspected inappropriate or illegitimate dispensing, prescribing, or diversion of controlled substances” or any CSCP violations.

Mandatory reporting requirements, including “a record of each hotline complaint regarding designated controlled substances and documentation regarding any investigation or response to such complaints.”

Mandatory training: At least annually, employees and contractors serving as pharmacists and pharmacy technicians should be tested on their knowledge regarding CSCP policies and procedures, including the prescription validation process. Training must clarify pharmacists shall refuse to dispense controlled substances “believed to be prescribed or being used for other than a legitimate medical purpose.”

Red flag monitoring obligations: Pharmacies are obligated to watch for both patient red flags and prescription red flags. Patient red flags include patients who seek to fill a controlled substance prescription “more than three days prior” to a prescription being exhausted; patients who seek to fill a controlled substance prescription “from more than four prescribers, from separate practices, in a given six-month period”; and/or patients who live more than 50 miles from where the controlled substance prescription was submitted. Prescription red flags include prescriptions that appear altered, contain misspellings or atypical abbreviations, or multiple colorings of ink or handwriting—all of which indicate they may not have been written by a prescriber.

The multidistrict opioid litigation is still in its earliest stages, with more bellwether cases to result. They come at a time when the U.S. government continues to target drug companies and drug distributors for their role in the opioid epidemic as well, with tens of billions of dollars on the table in those cases.