Walmart responds to shareholder class action lawsuit and challenges DOJ’s interpretation of the law.
Two plaintiffs’ firms filed a shareholder class action against Walmart accusing the company of misleading investors about its opioid prescription practices in filings with the Securities and Exchange Commission (SEC) in the four-year span between 2016 and 2020. The complaint, filed by the Rosen Law Firm and Farnan, alleged Walmart “failed to inform shareholders that its pharmacies filled thousands of suspicious opioids prescriptions” under a company policy that, according to the suit, kept pharmacists “under pressure” to fulfill orders instead of raising red flags about overprescribing.
The plaintiffs’ firms claimed that the truth emerged in late December, when the Department of Justice (DOJ) pursued an enforcement action against the retailer, claiming it had committed thousands of violations of the Controlled Substances Act, which places drugs on a schedule based on intended medical use, potential for misuse or abuse, and overall safety considerations. Walmart is denying the DOJ’s allegations, stating the agency is trying to use a faulty legal theory that “unlawfully forces pharmacists to come between patients and their doctors,” and the DOJ’s suit is “riddled with factual inaccuracies and cherry-picked documents taken out of context.”
A release posted on Walmart’s website indicates when it comes to the DOJ’s accusations, there “are a lot of problems with the lawsuit – as we will explain in court, it is wrong on the law…And it is outrageous the Department is trying to shift blame for DEA’s own well-documented failures in policing the very doctors it gave permission to prescribe opioids.”
The DEA itself has taken the position that Walmart’s policies were far too relaxed. “We entrust distributors and dispensers with the responsibility to ensure controlled substances do not fall into the wrong hands,” said DEA Acting Administrator Timothy Shea. “When processes to safeguard against drug diversion are violated or ignored, or when pharmacies routinely fill illegitimate prescriptions, we will hold accountable anyone responsible, including Walmart. Too many lives have been lost because of oversight failures and those entrusted with responsibility turning a blind eye.”
Yet, in the site’s post, Walmart embeds a letter from the DEA and highlights lines to support its argument that the agency has little leverage, including, “[The DEA] does not act as the federal equivalent of a state medical board overseeing the general practice of medicine. The DEA lacks the authority to issue guidelines that constitute advice relating to the general practice of medicine. The DEA has not promulgated new regulations regarding the treatment of pain. Federal law and DEA regulations do not impose a specific quantitative minimum or maximum limit on the amount of medication that may be prescribed on a single prescription, or the duration.”
A Walmart spokesperson said the company “also disagrees with the allegations in the new shareholder fraud class action.” He said, “We take these matters seriously. We will defend this matter vigorously.”
On October 22, the retailer filed a declaratory judgment lawsuit in federal court in Sherman, Texas, seeking judicial weigh-in regarding the DOJ’s interpretation of the Controlled Substances Act. In an SEC filing in June 2018, Walmart previously said it had “been responding to subpoenas, information requests and investigations from government entities related to nationwide controlled substance dispensing practices involving the sale of opioids.”
Walmart shareholders face hurdle in new opioid fraud class action
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