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Rite Aid to pay feds $4.75M for improper customer records in cold medicine sales

Rite Aid Inc. will pay $4.75 million to

Rite Aid Inc. will pay $4.75 million to the federal government to settle allegations it kept improper records in the sale of products used to make methamphetamine. The chain's drugstore on Ronkonkoma Avenue in Ronkonkoma is shown on Wednesday. Credit: James Carbone

Rite Aid, a popular drugstore operating in 18 states, has agreed to pay the federal government $4.75 million in penalties stemming from allegations that it improperly recorded required information about customers who bought products containing a substance used to produce methamphetamine.

U.S. Attorney for the Eastern District of New York Richard P. Donoghue announced in a news release Wednesday that employees of the retail giant, which operates 2,000 stores, had failed to properly report information about customers who purchased cold medicines and other pharmaceutical products that contain pseudoephedrine, in violation of the Controlled Substances Act.

"The settlement resolves allegations related to … the sale of over-the-counter cold and allergy medications, such as Advil Cold and Sinus and Claritin-D," Chris Savarese, director of public relations for Rite Aid, said in a statement. "When the alleged conduct was brought to Rite Aid’s attention" the drugstore "immediately and voluntarily" changed the way it sold cold and allergy medications, he said.

 "The settlement agreement was not an admission of liability by Rite Aid," Savarese said. 

Donoghue said the chain was obligated “to create and maintain a logbook that contains, among other things, the name and address of each customer who makes a purchase of a pseudoephedrine product” to thwart the manufacture and sale of methamphetamine.

“Pseudoephedrine products are regulated under federal law because they have been used in the production of a highly addictive and highly dangerous drug, methamphetamine,” Donoghue said. “The settlement with Rite Aid sends a clear message to all those engaged in the manufacture, distribution and sale of those products: you must comply with federal laws enacted to prevent the illegal use of your products.”

Officials said some Rite Aid employees improperly logged customer information between August 2009 and January 2014, producing “inaccurate or incomplete name and address information for customers” for tens of thousands of sales.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of New York, the U.S. Attorney’s Office for the Northern District of New York, and federal Drug Enforcement Administration.

"Rite Aid had a moral and a legal obligation to keep track of its pseudoephedrine sales to help ensure that the regulated drug was purchased for legitimate reasons, and not for the illegal manufacture of methamphetamine,” said Grant C. Jaquith, U.S. Attorney for the Northern District of New York.

Ray Donovan, Special Agent-in-Charge, U.S. Drug Enforcement Administration, New York Division, said: “Companies that do not comply with the Controlled Substances Act are violating the law. Regulatory laws are put in place for a reason — to ensure public health and safety. 

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