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FILED
8/15/2022 4:37 PM
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS IRIS Y. MARTINEZ
CIRCUIT CLERK
LAW DIVISION COOK COUNTY, IL
FILED DATE: 8/15/2022 4:37 PM 2022L007352

2022L007352
Calendar, F
19090841
BOONE COUNTY, ILLINOIS,
BUREAU COUNTY, ILLINOIS,
CHAMPAIGN COUNTY, ILLINOIS,
COOK COUNTY, ILLINOIS,
DEKALB COUNTY, ILLINOIS,
DUPAGE COUNTY, ILLINOIS,
HENRY COUNTY, ILLINOIS,
KANE COUNTY, ILLINOIS,
KANKAKEE COUNTY, ILLINOIS, Case No.: 2022L007352
KENDALL COUNTY, ILLINOIS,
LOGAN COUNTY, ILLINOIS,
MACON COUNTY, ILLINOIS,
MACOUPIN COUNTY, ILLINOIS,
MCHENRY COUNTY, ILLINOIS,
PIATT COUNTY, ILLINOIS,
PUTNAM COUNTY, ILLINOIS,
ROCK ISLAND COUNTY, ILLINOIS,
JURY DEMANDED
STEPHENSON COUNTY, ILLINOIS, AND
WILL COUNTY, ILLINOIS
Plaintiffs,
VS.
CVS HEALTH CORPORATION; CVS
INDIANA L.L.C.; CVS RX SERVICES, INC.;
CVS TN DISTRIBUTION, LLC; CVS
PHARMACY, INC.; CVS PHARMACY
LIMITED OF ILLINOIS, LLC; WALGREEN
CO.; WALGREENS BOOTS ALLIANCE, INC.;
WALGREEN EASTERN CO. INC.; WALMART
INC.; F/K/A/ WAL-MART STORES, INC.;
WAL-MART STORES EAST; LP WSE
MANAGEMENT, LLC; WSE INVESTMENT
LLC; WAL-MART STORES EAST, LLC
(FORMERLY KNOWN AS WAL-MART
STORES, INC.); SAM’S EAST, INC.; SAM’S
WEST, INC.; THE KROGER CO.; KROGER
LIMITED PARTNERSHIP I; KROGER
LIMITED PARTNERSHIP II;
(cont.)
 MEIJER INC.; MEIJER DISTRIBUTION, INC.;
MEIJER STORES LIMITED PARTNERSHIP;
ALBERTSONS COMPANIES, INC.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

(FORMERLY KNOWN AS ALBERTSONS

LLC); ALBERTSON’S LLC; AND SAFEWAY,
INC.
Defendants.

ii
 TABLE OF CONTENTS
I. INTRODUCTION ...................................................................................................................... 1
FILED DATE: 8/15/2022 4:37 PM 2022L007352

II. JURISDICTION AND VENUE ................................................................................................ 8

III. PLAINTIFFS ........................................................................................................................... 9
A. CVS ...................................................................................................................... 11
B. Walgreens ............................................................................................................ 13
C. Walmart................................................................................................................ 14
D. Kroger .................................................................................................................. 15
E. Meijer ................................................................................................................... 16
F. Albertsons ............................................................................................................ 16
G. Related Entities; Agency and Authority .............................................................. 18
V. FACTS .................................................................................................................................... 18
A. Opioids and Their Effects .................................................................................... 18
B. Defendants’ Conduct Created an Abatable Public Nuisance ............................... 20
C. Defendants Deliberately Disregarded Their Duties to Maintain Effective
Controls Against Diversion.................................................................................. 21
1. The Chain Pharmacies Were on Notice of and Contributed to Illegal
Diversion of Prescription Opioids. ................................................ 21
2. Defendants Have a Duty to Report Suspicious Orders and Not to Ship
Those Orders Unless Due Diligence Disproves Their
Suspicions ...................................................................................... 23
3. Defendants Were Aware of and Have Acknowledged Their Obligations
to Prevent Diversion and to Report and Take Steps to Halt
Suspicious Orders. ......................................................................... 32
4. Defendants Were Uniquely Positioned to Guard Against Diversion............... 44
5. Defendants Failed to Maintain Effective Controls Against Diversion. ........... 47
a. CVS .............................................................................................. 47
i. CVS Lacked a Genuine Suspicious Order Monitoring
System for Much of the Relevant
Time……………………………………...………………47
ii. CVS Failed to Remedy Fatal Flaws in the System it Slowly
Developed ........................................................................ 50
iii. CVS Failed to Perform Due Diligence ............................ 53

iii
 iv. CVS Conspired with Cardinal and McKesson to Prevent
Suspicious Order Monitoring of Its Retail Pharmacies ... 54
FILED DATE: 8/15/2022 4:37 PM 2022L007352

v. CVS Failed to Maintain Effective Controls Against

Diversion in the Illinois ................................................... 56
vi. CVS Failed to Implement Effective Policies and
Procedures to Guard Against Diversion from its Retail
Stores................................................................................ 59
b. Walgreens .................................................................................... 60
i. Walgreens Dragged Its Feet on Developing a SOM
Program, Instead Relying on After-the-Fact Reports of
“Excessive” Orders While Ignoring Red Flags ............... 60
ii. Walgreens Knew its After-the-Fact Excessive Purchase
Reports Failed to Satisfy Its Obligations to Identify, Report,
and Halt Suspicious Orders .............................................. 64
iii. Walgreens Lacked Meaningful Additional Systems to
Address the Failures in Its System of After-the-Fact
Reporting of Certain Orders............................................. 66
iv. Even as it Rolled Out its New SOM Program, Walgreens
Left Significant Gaps and Loopholes in Place and Failed to
Report and Perform Due Diligence on Orders It Flagged 68
v. Walgreens Failed to Put in Place Adequate Polices to
Guard Against Diversion at the Pharmacy Level ............ 74
vi. Walgreens Assumed Greater Responsibility for Controlling
Against Diversion by Discouraging Outside Vendors from
Exercising Their Own Oversight ..................................... 79
vii. Walgreens Failed to Maintain Effective Controls Against
Diversion in the Illinois ................................................... 80
c. Walmart........................................................................................ 84
i. Walmart Lacked a Suspicious Order Monitoring System for
Most of the Relevant Time Period ................................... 85
ii. Walmart Failed to Guard Against Diversion in Distributing
into the Counties .............................................................. 87
iii. Walmart Failed to Maintain Effective Controls Against
Diversion from its Pharmacies in the Counties................ 89
d. Kroger .......................................................................................... 96

iv
 i. Kroger Failed to Maintain Effective Controls Against
Diversion of Opioids It Distributed, Instead Oversupplying
Its Stores........................................................................... 96
FILED DATE: 8/15/2022 4:37 PM 2022L007352

ii. Kroger Failed to Implement Effective Policies and

Procedures to Prevent Diversion from Its Pharmacy Stores
…. ................................................................................ 98
e. Meijer ......................................................................................... 100
i. Meijer Failed to Guard Against Diversion in Distributing
and Dispensing in Illinois and Surrounding Areas ........ 100
ii. Meijer Failed to Effectively Identify and Investigate
Dispensing Red Flags at Its Pharmacies. ....................... 101
f. Albertsons .................................................................................. 103
iii. Albertsons Failed to Guard Against Diversion in
Distributing and Dispensing in Illinois .......................... 104
iv. Albertsons Failed to Effectively Identify and Investigate
Dispensing Red Flags at Its Pharmacies ........................ 105
D. Defendants’ Performance Metrics Put Profits Before Safety ............................ 107
E. Defendants Worked Together to Increase Their Profits and Lobbied
Against Restrictions on Opioid Use and DEA Enforcement. ............................ 119
F. Defendants Also Entered into Joint Ventures that Further Undermined
their Outside Vendors’ Incentive to Conduct Due Diligence, While
Increasing their Own Access to Information. .................................................... 127
G. Defendants Worked with Opioid Manufacturers to Promote Opioids and
Improperly Normalize Their Widespread Use. .................................................. 128
H. Defendants Delayed a Response to the Opioid Crisis by Pretending to
Cooperate with Law Enforcement ..................................................................... 143
I. Multiple Enforcement Actions Against the Chain Pharmacies Confirm
Their Compliance Failures ................................................................................. 148
J. The Opioids the Defendants Sold Migrated into Other Jurisdictions ................ 160
K. The Defendants Conspired to Engage In The Wrongful Conduct Complained Of
Herein and Intended To Benefit Both Independently and Jointly From Their
Conspiracy……………………………………………………………………...161
L. The Chain Pharmacies Have Created and Maintained a Public Health
Crisis in Illinois and the Counties. ..................................................................... 165
M. Statutes Of Limitations Are Tolled and Defendants Are Estopped From
Asserting Statutes Of Limitations As Defenses. ................................................ 168

v
 VI. CAUSES OF ACTION ........................................................................................................ 170
VII. PRAYER FOR RELIEF .................................... ERROR! BOOKMARK NOT DEFINED.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

vi
 I. INTRODUCTION
FILED DATE: 8/15/2022 4:37 PM 2022L007352

1. Plaintiffs in this action are Boone County, Illinois, Bureau County, Illinois,

Champaign County, Illinois, Cook County, Illinois, Dekalb County, Illinois, DuPage County,

Illinois, Henry County, Illinois, Kane County, Illinois, Kankakee County, Illinois, Kendall

County, Illinois, Logan County, Illinois, Macon County, Illinois, Macoupin County, Illinois,

McHenry County, Illinois, Piatt County, Illinois, Putnam County, Illinois, Rock Island County,

Illinois, Stephenson County, Illinois, and Will County, Illinois, each of which are political

subdivisions of the State of Illinois. The “County/Counties” or “Plaintiff/Plaintiffs” collectively

bring this action to prevent future harm and to redress past wrongs against the following

Defendants (“Chain Pharmacies” or “Pharmacy Defendants”): the CVS Defendants, 1 the

2
Walgreens Defendants, the Walmart Defendants, 3 the Kroger Defendants, 4
the Meijer

Defendants, 5 and the Albertsons Defendants. 6

1
The CVS Defendants are CVS Health Corporation, CVS Indiana L.L.C., CVS Rx Services,
Inc..; CVS TN Distribution, LLC, CVS Pharmacy, Inc. and CVS Pharmacy Limited of Illinois,
LLC.
2
The Walgreens Defendants are Walgreen Co., Walgreens Boots Alliance, Inc. and Walgreen
Eastern Co., Inc.
3
The Walmart Defendants are Walmart Inc., f/k/a/ Wal-Mart Stores, Inc.; Wal-Mart Stores East;
LP, WSE Management, LLC; WSE Investment LLC; Wal-Mart Stores East, LLC (formerly
known as Wal-Mart Stores, Inc.); Sam’s East, Inc.; and Sam’s West, Inc.
4
The Kroger Defendants are The Kroger Co.; Kroger Limited Partnership I; and Kroger Limited
Partnership II.
5
The Meijer Defendants are Meijer Inc., Meijer Distribution, Inc., and Meijer Stores Limited
Partnership.
6
The Albertsons Defendants are Albertsons Companies, Inc., formerly known as Albertsons
LLC; Albertson’s LLC; and Safeway, Inc.

1
 2. Plaintiffs seek to hold accountable the Chain Pharmacies that oversupplied opioids

into Plaintiff Counties. The Chain Pharmacies failed to monitor and restrict the improper sale and
FILED DATE: 8/15/2022 4:37 PM 2022L007352

distribution of opioids and abate the opioid epidemic in the Counties.

3. This case arises from the worst man-made epidemic in modern medical history: an

epidemic of addiction, overdose and death caused by Defendants’ flooding the United States,

including Plaintiffs’ communities, with prescription opioids.

4. By now, most Americans have been affected, either directly or indirectly, by the

opioid epidemic. This crisis arose not only from the opioid manufacturers’ deliberate marketing

strategy, but from distributors’ and pharmacies’ equally deliberate efforts to evade restrictions on

opioid distribution and dispensing, while also helping spread the manufacturers’ false marketing

messages about prescription opioids and encourage their widespread use. These distributors and

pharmacies acted without regard for the lives that would be trammeled in pursuit of profit.

5. All told, Illinois—with a population of 12,830,632 (2010 U.S. Census Bureau) —

received a total of 3,112,236,443 doses of hydrocodone and oxycodone, according to the ARCOS

data (2006-2014), amounting to 242 doses for every man, woman and child in the State.

6. Since the push to expand prescription opioid use began in the late 1990s, the death

toll has steadily climbed, with no sign of slowing. The number of opioid overdoses in the United

States rose from 8,000 in 1999 to over 20,000 in 2009, and over 33,000 in 2015. In the twelve
months that ended in September 2017, opioid overdoses claimed 45,000 lives. Another 46,000

opioid overdose deaths occurred in 2018, and in 2019 the number of opioid overdose deaths rose

to over 49,000.

2
FILED DATE: 8/15/2022 4:37 PM 2022L007352

7. Preliminary data indicates that the number of opioid related overdose deaths will

be in excess of 65,000 for 2020.

8. From 1999 through 2016, more than 350,000 people died from an overdose

involving any opioids. Well over half of those deaths—over 200,000 people—involved opioids

prescribed by doctors to treat pain. These opioids include brand-name prescription medications

like OxyContin, Opana ER, Vicodin, Subsys, and Duragesic, as well as generics like oxycodone,

hydrocodone, and fentanyl.

9. Most of the overdoses from non-prescription opioids are also directly related to

prescription pills. As soon as prescription opioids took hold on a population, the logical and

devastating progression to illicit drugs followed. Many opioid users, having become addicted to

but no longer able to obtain prescription opioids or trapped in a cycle of addiction that causes those

who suffer from the disease to need stronger and more potent drugs, have turned to heroin,

fentanyl, and other illicit drugs. According to the American Society of Addiction Medicine, 80%

of people who initiated heroin use in the past decade started with prescription painkillers which—

at the molecular level and in their effect— closely resemble heroin. In fact, people who are

3
 addicted to prescription painkillers are 40 times more likely to become addicted to heroin, and the

CDC identified addiction to prescription pain medication as the strongest risk factor for heroin
FILED DATE: 8/15/2022 4:37 PM 2022L007352

addiction.

10. The conduct of the manufacturers, distributors, and Chain Pharmacies caused the

nation, and Illinois, to be awash in a flood of prescription opioids. This has had a profound impact

on both morbidity and mortality, and these drugs have created an epidemic of addiction that has

had severe and wide-ranging effects on public health and safety in Illinois and in communities

across the country. Indeed, from those suffering with the disease of addiction themselves, to

children whose parents who suffer from addiction to employers who employ an addicted

population, to the first responders, law enforcement, the court system and the prison system who

cannot handle the burdens placed on them, there is almost no area of the community that has not

been significantly impacted.

11. As a result, in part, of the proliferation of opioid pharmaceuticals between the late

1990s and 2015, the life expectancy for Americans decreased for the first time in recorded history.

Drug overdoses are now the leading cause of death for Americans under 50.

12. In the words of Robert Anderson, who oversees death statistics at the Centers for

Disease Control and Prevention, “I don’t think we’ve ever seen anything like this. Certainly not

in modern times.” On October 27, 2017, the President declared the opioid epidemic a public health
emergency.

13. On September 6, 2017, Illinois Governor Bruce Rauner signed Executive Order 17-

05, creating the governor’s Opioid Prevention and Intervention Task Force to address the opioid

crisis that is ravaging the country and the State of Illinois and its citizens. At the time, Governor

Rauner stated, “The opioid crisis in Illinois affects people from all walks of life – small towns and

big cities, the wealth and the poor, young and old.”

14. The Illinois Department of Health reported a total of 21,226 opioid overdoses in

2021; 2,944 were fatal.

4
 15. 2012 marked the height of opioid prescriptions dispensed in Illinois with 66.1

prescriptions dispensed for every 100 Illinois residents. This translates to nearly 8.5 million opioid
FILED DATE: 8/15/2022 4:37 PM 2022L007352

prescriptions dispensed in Illinois that year. 7

16. The loss of each of these individuals cannot be adequately conveyed by statistics,

nor can the depth and breadth of the impact on those who survive. Because the addictive pull of

opioids is so strong, relapse is more common than with other drugs. Further, overdose deaths are

not the only consequence. Hundreds of people have been rushed to County emergency rooms or

revived by EMS or community members trained to administer Narcan — an antidote to overdose.

17. The damage inflicted cuts across ages and generations. Many who have

succumbed to overdoses have overdosed more than once. Those who survive are often not alone

at the time. Family members, including young children, have watched their loved ones lose

consciousness or die. Young children, including toddlers, also have been the direct victims of

overdoses themselves after coming into contact with opiates.

18. Children are being displaced from their homes and raised by relatives or placed in

the Counties’ care due to parents’ addiction. Others lose the chance to go home. Unable to be

discharged from the hospital with their mothers, babies born addicted to opioids due to prenatal

exposure are being placed in the care of the Counties or local citizens or non-profits who do their

best comfort them through the pain of withdrawal.

19. This devastation in the Counties was created by opioid manufacturers, distributors,

and Chain Pharmacies, who worked together to systematically dismantle the narcotic conservatism

that had existed around prescription opioids for decades, opened the floodgates to an unreasonably

large and unsafe supply of opioids, improperly normalized the widespread use of opioid drugs,

violated laws and regulations designed to protect the public from the dangers of narcotic drugs like

7
CDC, “U.S. State Opioid Dispensing Rates, 2012” 2006-2019 Illinois, available at
https://www.cdc.gov/drugoverdose/rxrate-maps/state2012.html
[Calculation of number of dispensed prescriptions in 2012 (Pop. Illinois 2012 of 12.8 million/ per person
rate of 100)* number of per person prescriptions filled of 66.1=8,460,000]
5
 opioids, and worked to dismantle protections designed to protect the public so more opioid drugs

could be sold and the manufacturers, distributors, and Chain Pharmacies could reap the profits
FILED DATE: 8/15/2022 4:37 PM 2022L007352

therefrom.

20. This suit takes aim at a substantial contributing cause of the opioid crisis: The

Chain Pharmacies, the last link in the opioid supply chain and the critical gatekeeper between

dangerous opioid narcotics and the public, who utterly failed in their gatekeeper role, flouted their

duties to protect the public, violated the laws designed to protect the public and dismantled and

disregarded measures designed to protect the public health and safety. The Chain Pharmacies

failed to design and operate systems to identify suspicious orders of prescription opioids, maintain

effective controls against diversion, and halt suspicious orders when they were identified, and

instead actively contributed to the oversupply of such drugs and fueled an illegal secondary market.

They also played an active role in helping the manufacturers promote their false marketing about

opioids to health care providers, their own pharmacists, and the public.

21. The mission of pharmacy practice is “to serve society as the profession responsible

for the appropriate use of medications, devices, and services to achieve optimal therapeutic

outcomes.” 8 Defendants subverted that role and instead played a significant role in a public health

epidemic throughout the Counties.

22. Defendants have contributed substantially to the opioid crisis by helping to inflate

the opioid market beyond any legitimate bounds and by flooding that market with far greater

quantities of prescription opioids than they know could be necessary for legitimate medical uses

while failing to report and take steps to halt suspicious orders and sales, thereby exacerbating the

oversupply of such drugs and fueling an illegal secondary market.

23. In 2014, almost two million Americas were addicted to prescription opioids and

another 600,000 to heroin. From 1999 to 2015, more than 183,000 people died in the U.S. from

8
Vision and Mission for the Pharmacy Profession, American Pharmacists Association, adopted by the
APhA House of Delegates (March 1991).
6
 overdoses related to prescription opioids—more than the number of Americans who died in the

Vietnam War. From 1999 to 2016, more than 200,000 people died in the U.S. from overdoses
FILED DATE: 8/15/2022 4:37 PM 2022L007352

related to prescription opioids. Overdose deaths involving prescription opioids were five times

higher in 2017 than 1999. The number of drug overdose deaths increased by nearly 5% from 2018

to 2019.

24. As millions became addicted to opioids, “pill mills,” often styled as “pain clinics,”

sprouted nationwide and rogue prescribers stepped in to supply prescriptions for non-medical use.

These pill mills, typically under the auspices of licensed medical professionals, issue high volumes

of opioid prescriptions under the guise of medical treatment. Prescription opioid pill mills and

rogue prescribers cannot channel opioids for illicit use without at least the tacit support and willful

blindness of the Defendants, if not their knowing support.

25. As a direct and foreseeable result of Defendants’ conduct, cities and counties

across the nation, including Plaintiffs, are now swept up in what the Centers for Disease Control

(“CDC”) has called a “public health epidemic” and what the U.S. Surgeon General has deemed an

“urgent health crisis.” 9 The increased volume of opioid prescribing—not all of which is for

legitimate use—correlates directly to skyrocketing addiction, overdose and death; black markets

for diverted prescriptions opioids; and a concomitant rise in heroin and fentanyl abuse by

individuals who could no longer legally acquire or could not afford prescription opioids.

26. This explosion in opioid use and Defendants’ profits has come at the expense of

patients and residents and has caused ongoing harm to and a public nuisance in the Illinois. As

the then CDC director concluded: “We know of no other medication routinely used for a nonfatal

condition that kills patients so frequently.” 10

9
Examining the Growing Problems of Prescription Drug and Heroin Abuse, Ctrs. For Disease Control
and Prevention (Apr. 29, 2014), http://www,cdc,give.washington/testimony/2014/t20140429.htm; see
also, Letter from Vivek H. Murthy, Surgeon General, Tide RX (Aug. 2016), http://turnthetiderx.org.
10
Id.
7
 27. Defendants’ conduct in promoting opioid use and fueling diversion has had severe

and far-reaching public health, social services, and criminal justice consequences, including the
FILED DATE: 8/15/2022 4:37 PM 2022L007352

fueling of addiction and overdose from illicit drugs such as heroin. The costs are borne by

Plaintiffs and other governmental entities. These necessary and costly responses to the opioid

crisis include the handling of emergency responses to overdoses, providing addiction treatment,

handling opioid-related investigations, arrests, adjudications, and incarceration, treating opioid-

addicted newborns in neonatal intensive care units, burying the dead, and placing thousands of

children in foster care placements, among others.

28. The burdens imposed on Plaintiffs are not the normal or typical burdens of

government programs and services. Rather, these are extraordinary costs and losses that are related

directly to Defendants’ illegal actions. The Defendants’ conduct has created a public nuisance and

a blight. Governmental entities, and the services they provide their citizens, have been strained to

the breaking point by this public health crisis.

29. Defendants have not changed their ways or corrected their past misconduct but

instead are continuing to fuel the crisis and perpetuate the public nuisance.

30. Within the next hour, six Americans will die from opioid overdoses; two babies

will be born dependent on opioids and begin to go through withdrawal.

31. Plaintiffs bring this suit to bring the devastating march of this epidemic to a halt
and to hold Defendants responsible for the crisis they caused.

II. JURISDICTION AND VENUE

32. This Court has personal jurisdiction over Defendants because they carry on a

continuous and systematic part of their general business within Illinois, have transacted substantial

business with Illinois entities and residents, and have caused harm in Illinois as a result of the

specific business activities complained of herein.

8
 33. Venue as to each Defendants is proper in this Court under 735 ILCS 5/2-101 as

the transactions and occurrences that form the basis for this Complaint occurred in Cook County,
FILED DATE: 8/15/2022 4:37 PM 2022L007352

Illinois.

34. There is no federal court jurisdiction in that there is not complete diversity of

citizenship because at least Defendant Walgreen Co. is a resident of the State of Illinois, and no

substantial federal question is presented.

III. PLAINTIFFS

35. Plaintiffs Boone County, Bureau County, Champaign County, Cook County,

Dekalb County, DuPage County, Henry County, Kane County, Kankakee County, Kendall

County, Logan County, Macon County, Macoupin County, McHenry County, Piatt County,

Putnam County, Rock Island County, Stephenson County, and Will County are all organized

exiting under the laws of the state of Illinois. Each Plaintiff provides a wide range of services on

behalf of its residents, including services for families and children, public health, public

assistance, law enforcement, and emergency care.

36. State’s Attorney of Boone County, Tricia Smith, is the chief legal officer of Boone

County and is authorized to bring suit on its behalf by and through the assistance of other counsel.

37. State’s Attorney of Bureau County, Geno J. Caffarini, is the chief legal officer of

Bureau County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

38. State’s Attorney of Champaign County, Julia Rietz, is the chief legal officer of

Champaign County and is authorized to bring suit on its behalf by and through the assistance of

other counsel.

39. State’s Attorney of Cook County, Kimberly M. Foxx, is the chief legal officer of

Cook County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

9
 40. State’s Attorney of Dekalb County, Rick Amato, is the chief legal officer of

Dekalb County and is authorized to bring suit on its behalf by and through the assistance of other
FILED DATE: 8/15/2022 4:37 PM 2022L007352

counsel.

41. State’s Attorney of DuPage County, Robert Berlin, is the chief legal officer of

DuPage County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

42. State’s Attorney of Henry County, Catherine L. Runty, is the chief legal officer of

Henry County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

43. State’s Attorney of Kane County, Jamie L. Mosser, is the chief legal officer of

Kane County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

44. State’s Attorney of Kankakee County, Jim Rowe, is the chief legal officer of

Kankakee County and is authorized to bring suit on its behalf by and through the assistance of

other counsel.

45. State’s Attorney of Kendall County, Eric Weis, is the chief legal officer of Kendall

County and is authorized to bring suit on its behalf by and through the assistance of other counsel.

46. State’s Attorney of Logan County, Brad Hauge, is the chief legal officer of Logan
County and is authorized to bring suit on its behalf by and through the assistance of other counsel.

47. State’s Attorney of Macon County, Scott Rueter, is the chief legal officer of Macon

County and is and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

48. State’s Attorney of Macoupin County, Jordan J. Garrison, is the chief legal officer

of Macoupin County and is authorized to bring suit on its behalf by and through the assistance of

other counsel.

10
 49. State’s Attorney of McHenry County, Patrick D. Kenneally, is the chief legal

officer of McHenry County and is authorized to bring suit on its behalf by and through the
FILED DATE: 8/15/2022 4:37 PM 2022L007352

assistance of other counsel.

50. State’s Attorney of Piatt County, Sarah N. Perry, is the chief legal officer of Piatt

County and is authorized to bring suit on its behalf by and through the assistance of other counsel.

51. State’s Attorney of Putnam County, Christina Judd Mennie, is the chief legal

officer of Putnam County and is authorized to bring suit on its behalf by and through the assistance

of other counsel.

52. State’s Attorney of Rock Island County, Dora A. Villarreal-Nieman, is the chief

legal officer of Rock Island County and is authorized to bring suit on its behalf by and through

the assistance of other counsel.

53. State’s Attorney of Stephenson County, Carl Larson, is the chief legal officer of

Stephenson County and is authorized to bring suit on its behalf by and through the assistance of

other counsel.

54. State’s Attorney of Will County, James W. Glasgow, is the chief legal officer of

Will County and is authorized to bring suit on its behalf by and through the assistance of other

counsel.

55. Plaintiff Counties provide a wide range of services and programs to their residents,
including an emergency call center, drug and alcohol services and programs, programs for

children, youth and families, other health and human services, law enforcement, and jails. Plaintiff

Counties also provide health insurance coverage for their employees and dependents, and

workers' compensation programs.

IV. DEFENDANTS

A. CVS

56. Defendant CVS Health Corporation (“CVS Health”) is a Delaware corporation

with its principal place of business in Rhode Island. CVS Health, through its various DEA-

11
 registered subsidiaries and affiliated entities, conducts business as a licensed wholesale distributor

and also operates retail stores, including in and around Plaintiffs’ geographical area, that sell
FILED DATE: 8/15/2022 4:37 PM 2022L007352

prescription medicines, including opioids.

57. Defendant CVS Indiana L.L.C. is an Indiana limited liability company with its

principal place of business in Indianapolis, Indiana. For much of the period the identification of

and due diligence on suspicious orders for the entire country was to be performed at CVS Indiana

L.L.C. CVS Indiana LLC Distributed Opioids into Illinois.

58. Defendant CVS Rx Services, Inc. is a New York corporation with its principal

place of business in Chemung, New York.

59. Defendant CVS TN Distribution, LLC is a Tennessee limited liability company

with its principal place of business in Knoxville, Tennessee and distributed opioids into Illinois

and the Plaintiff Counties.

60. Defendant CVS Pharmacy, Inc. is a Rhode Island corporation with its principal

place of business in Woonsocket, Rhode Island. CVS Pharmacy, Inc. is a wholly owned subsidiary

of CVS Health. Defendant CVS Pharmacy, Inc. is both a DEA registered “distributor” 11 and a

DEA registered “dispenser” 12 of prescription opioids and cocktail drugs and is registered to do

business in Illinois.

61. Defendant CVS Pharmacy Limited of Illinois, LLC is an Illinois Limited Liability

Company, with its principal place of business in Illinois.

62. Defendants CVS Health Corporation; CVS Indiana L.L.C.; CVS Rx Services, Inc.;

CVS TN Distribution, LLC; CVS Pharmacy, Inc.; and CVS Pharmacy Limited of Illinois, LLC,

are collectively referred to as “CVS.” CVS conducts business as a licensed wholesale distributor

and dispenser. At all times relevant to this Complaint, CVS distributed and/or dispensed

11
21 U.S.C. §802(11) and §822(a)(1).
12
21 U.S.C. §802(10) and §822(a)(2).
12
 prescription opioids throughout the United States, including in Illinois and the Counties

specifically.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

63. Defendants CVS Indiana, CVS Pharmacy Inc, CVS Rx Services, Inc. and CVS

TN Distribution, LLC, self-distributed prescription opioids and opioid cocktail drugs to CVS

pharmacies that it owned and operated in Illinois during the relevant time frame.

B. Walgreens

64. Defendant Walgreen Co. acted as a retail pharmacy in the United States, until

Walgreen Co. completed the acquisition of Alliance Boots, a British pharmacy giant, in 2014.

After this acquisition, the company simply became Walgreens Boots Alliance, Inc. traded on

NASDAQ under the symbol WBA.

65. Defendant Walgreens Boots Alliance, Inc. is a Delaware corporation that describes

itself as the successor of Walgreen Co., an Illinois corporation. Both Walgreens Boots Alliance,

Inc. and Walgreen Co. have their principal place of business in Illinois.

66. Walgreen Co. is portrayed as a subsidiary of Walgreens Boots Alliance, Inc. and

does business under the trade name “Walgreens.”

67. During the relevant time period, Walgreens self-distributed opioids and cocktail

drugs to its own pharmacies in Illinois from Walgreen Eastern Co., Inc., a distribution center which

it owned and operated.

68. Defendants Walgreens Boots Alliance, Inc., Walgreen Co. and Walgreen Eastern

Co. Inc., are collectively referred to as “Walgreens.”

69. Walgreens conducted business as a licensed wholesale distributor, as described

above. Throughout the relevant time period, and as further alleged below, Walgreens entities also

owned and operated pharmacies in the Counties. At all times relevant to this Complaint,

Walgreens distributed and/or sold prescription opioids throughout the United States, including in

Illinois and the Counties.

13
 70. The DEA distribution registrations for Walgreens’s controlled substances

distribution centers that distributed opioids and cocktail drugs into the Illinois and the Counties
FILED DATE: 8/15/2022 4:37 PM 2022L007352

were held by Walgreen Co.

71. Walgreen Co. created, implemented, and had the power to enforce policies,

practices, and training regarding distribution and sales in all Walgreens distribution and pharmacy

sales operations.

72. The DEA dispensing registrations for Walgreens’s pharmacies in Illinois and the

Counties were held by Walgreen Eastern Co. Inc., which operated each pharmacy as a “d/b/a/”

entity.

73. Collectively, Defendants Walgreen Co., Walgreens Boots Alliance, Inc. and

Walgreen Eastern Co., Inc., purchased and self-distributed prescription opioids and opioid cocktail

drugs to pharmacies that it owned and operated in Illinois during the relevant time frame.

C. Walmart

74. Defendant Walmart Inc., formerly known as Wal-Mart Stores, Inc., is a Delaware

corporation with its principal place of business in Bentonville, Arkansas.

75. Defendant Wal-Mart Stores East, LP is a Delaware limited partnership with its

principal place of business in Arkansas.

76. Defendant Sam’s East, Inc., d/b/a Sam’s Club, is an Arkansas corporation with

its principal place of business in Arkansas. Sam’s East, Inc. is an indirectly, wholly owned

subsidiary of Walmart Inc. The sole shareholder of Sam’s East, Inc. is Defendant Sam’s West,

Inc. d/b/a Sam’s Club, which is a wholly owned direct subsidiary of Walmart Inc. and an Arkansas

corporation. Defendants Sam’s East, Inc. and Sam’s West, Inc. jointly operate Sam’s Club stores.

77. Walmart Inc. is the sole owner of Sam’s West, Inc. Sam’s West, Inc. is the sole

shareholder of Sam’s East, Inc.

78. Defendant WSE Management, LLC, is a Delaware limited liability company, and

owns one percent of Wal-Mart Stores East, LP.

14
 79. Defendant WSE Investment, LLC, is a Delaware limited liability company, and a

ninety-nine percent owner of Wal-Mart Stores East, LP.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

80. The sole owner and member of both WSE Management, LLC and WSE

Investment, LLC is Wal-Mart Stores East LLC (formerly known as Wal-Mart Stores East, Inc.),

an Arkansas limited liability company.

81. The sole owner and member of Wal-Mart Stores East, LLC (formerly known as

Wal-Mart Stores East, Inc.) is Walmart Inc., f/k/a Wal-Mart Stores, Inc.

82. Defendants Walmart Inc., f/k/a Wal-Mart Stores, Inc., Wal-Mart Stores East, LP,

WSE Management, LLC, WSE Investment LLC, Wal-Mart Stores East, LLC (formerly known

as Wal-Mart Stores East, Inc.), Sam’s East, Inc., and Sam’s West, Inc., are collectively referred

to as “Walmart.”

83. Walmart, through its various DEA registrant subsidiaries and affiliated entities,

conducts business as a registered wholesale distributor and as a pharmacy.

84. At all times relevant to this Complaint, Walmart distributed and/or sold

prescription opioids throughout the United States, including in Illinois.

D. Kroger

85. Defendant Kroger Co. is an Ohio corporation with its principal place of business
in Cincinnati, Ohio. Defendant Kroger Limited Partnership I is an Ohio limited partnership with

its principal place of business in Cincinnati, Ohio. Defendant Kroger Limited Partnership II is an

Ohio limited partnership with its principal place of business in Columbus, Ohio. Kroger Co.,

Kroger Limited Partnership I, and Kroger Limited Partnership II are collectively referred to herein

as “Kroger.”

86. Kroger operates approximately 2,200 pharmacies across the country. 13

13
https://www.reuters.com/companies/KR

15
 87. At all relevant times, Kroger dispensed prescription opioids in Illinois. Until at

least 2014, Kroger self-distributed certain drugs, including one of the most widely diverted
FILED DATE: 8/15/2022 4:37 PM 2022L007352

opioids, hydrocodone, in Illinois.

E. Meijer

88. Defendant Meijer, Inc. has its principal place of business in Grand Rapids,

Michigan and upon information and belief, is a Michigan corporation. Defendants Meijer

Distribution, Inc. and Meijer Stores Limited Partnership are each based in Grand Rapids,

Michigan and upon information and belief, each is a Michigan corporation.

89. Meijer, Inc., through its various DEA registrant subsidiaries and affiliated entities,

conducts business as a registered wholesale distributor and as a pharmacy. Orders of controlled

substances came from Meijer Distribution, Inc. and other wholesalers. Meijer Stores Limited

Partnership, upon information and belief, operates each pharmacy in the Illinois as a “d/b/a/”

entity.

90. Defendants Meijer, Inc., Meijer Distribution, Inc., and Meijer Stores Limited

Partnership are collectively referred to as “Meijer.” Meijer operates over 200 stores across

Michigan, Ohio, Indiana, Illinois, and Kentucky. Upon information and belief, at all times

relevant to this Complaint, Meijer distributed and/or sold prescription opioids throughout these

states, including in Illinois specifically.

F. Albertsons

91. Defendant Albertsons Companies, Inc., formerly known as Albertsons LLC

(“Albertsons”), is a Delaware corporation with its principal place of business in Boise, Idaho.

92. Defendant Albertson’s LLC is a Delaware limited liability company with its

principal place of business in Boise, Idaho. Albertson’s LLC is a wholly owned subsidiary of

Albertsons Companies, Inc.

16
 93. Defendant Safeway, Inc. is a Delaware corporation with its principal place of

business in Pleasanton, California. Safeway, Inc. is a wholly owned subsidiary of Albertsons

FILED DATE: 8/15/2022 4:37 PM 2022L007352

Companies, Inc.

94. Albertsons Companies, Inc., Albertson’s LLC, and Safeway, Inc. are collectively

referred to as “Albertsons.”

95. Albertsons conducts business as a licensed pharmacy dispenser through its

various DEA-registered subsidiaries and affiliated entities. At all times relevant to this Complaint,

Albertsons operated as a licensed pharmacy dispenser in Illinois.

96. In addition, for a portion of the relevant time period, Albertsons operated as a

distributor of controlled substances, distributing certain prescription opioids to its own pharmacies

through Albertsons LLC Distribution Center #8720, located in Ponca City, Oklahoma.

97. Albertsons operates stores in 34 states and the District of Columbia under multiple

store “banners,” including Safeway, Vons, Jewel-Osco, Acme, Carrs, Randalls, Tom Thumb, and

Market Street.

98. In December 2013, Albertsons (then operating as Albertsons LLC) acquired

Texas based United Supermarkets, LLC, doing business as The United Family, which operates

50 retail stores under three brands: United Supermarket, Market Street, and Amigos.

99. In January 2015, AB Acquisition LLC, the parent company of Albertsons

Companies, Inc., and Safeway, Inc. completed a merger that positioned Albertsons as one of the

largest food and drug retailers in the country. Safeway stores include 266 Safeway-branded stores

in Northern California and Hawai‘i, 273 Vons stores in Southern California and Nevada, 107

Randalls and Tom Thumb stores in Texas, and 28 Carrs stores in Alaska.

100. Other store banners within the Albertsons Companies include Lucky, Shaws,

Haggen, and Star Market. “Albertsons” as used herein refers to all store banners used by the

Albertsons Companies.

17
 G. Related Entities; Agency and Authority
FILED DATE: 8/15/2022 4:37 PM 2022L007352

101. Defendants include the entities named above as well as their predecessors,

successors, affiliates, subsidiaries, partnerships and divisions to the extent that they are engaged

in the manufacture, promotion, distribution, sale, and/or dispensing of opioids.

102. All of the actions described in this Complaint are part of, and in furtherance of, the

unlawful conduct alleged herein, and were authorized, ordered, and/or done by Defendants’

officers, agents, employees, or other representatives while actively engaged in the management of

Defendants’ affairs within the course and scope of their duties and employment, and/or with

Defendants’ actual, apparent, and/or ostensible authority.

103. Plaintiffs allege that the corporate parents named as Defendants in this Complaint

are liable as a result of their own actions and obligations in distributing and selling opioids, and

not solely because of their vicarious responsibility for the actions of their pharmacy stores.

V. FACTS

A. Opioids and Their Effects

104. The term “opioid” refers to a class of drugs that bind with opioid receptors in the

brain and includes natural, synthetic, and semi-synthetic opioids. Natural opioids are derived from

the opium poppy. Generally used to treat pain, opioids produce multiple effects on the human

body, the most significant of which are analgesia, euphoria, and respiratory depression.

105. The medicinal properties of opioids have been recognized for millennia—as well

as their potential for abuse and addiction. The opium poppy contains various opium alkaloids,

three of which are used in the pharmaceutical industry today: morphine, codeine, and thebaine.

Early use of opium in Western medicine was with a tincture of opium and alcohol called laudanum,

which contains all of the opium alkaloids and is still available by prescription today. Chemists

first isolated the morphine and codeine alkaloids in the early 1800s.

18
 106. In 1827, the pharmaceutical company Merck began large-scale production and

commercial marketing of morphine. During the American Civil War, field medics commonly used
FILED DATE: 8/15/2022 4:37 PM 2022L007352

morphine, laudanum, and opium pills to treat the wounded, and many veterans were left with

morphine addictions. By 1900, an estimated 300,000 people were addicted to opioids in the United

States, and many doctors prescribed opioids solely to prevent their patients from suffering

withdrawal symptoms. The nation’s first Opium Commissioner, Hamilton Wright, remarked in

1911, “The habit has this nation in its grip to an astonishing extent. Our prisons and our hospitals

are full of victims of it, it has robbed ten thousand businessmen of moral sense and made them

beasts who prey upon their fellows . . . it has become one of the most fertile causes of unhappiness

and sin in the United States.” 14

107. In 1898, Bayer Pharmaceutical Company began marketing diacetylmorphine

(obtained from acetylation of morphine) under the trade name “Heroin.” Bayer advertised heroin

as a non-addictive cough and cold remedy suitable for children, but as its addictive nature became

clear, heroin distribution in the U.S. was limited to prescription only in 1914 and then banned

altogether a decade later.

108. Although heroin and opium became classified as illicit drugs, there is little

difference between them and prescription opioids. Prescription opioids are synthesized from the

same plant as heroin, have similar molecular structures, and bind to the same receptors in the

human brain.

109. Due to concerns about their addictive properties, prescription opioids have usually

been regulated at the federal level as Schedule II controlled substances by the DEA since 1970.

110. Medical professionals describe the strength of various opioids in terms of

morphine milligram equivalents (“MME”). According to the CDC, doses at or above 50 MME/day

14
Nick Miroff, From Teddy Roosevelt to Trump: How Drug Companies Triggered an Opioid Crisis a
Century Ago, The Wash. Post (Oct. 17, 2017),
https://www.washingtonpost.com/news/retropolis/wp/2017/09/29/the-greatest-drug-fiends-in-the-world-
an-american-opioid-crisis-in-1908/?utm_term=.7832633fd7ca.
19
 double the risk of overdose compared to 20 MME/day, and one study found that patients who died

of opioid overdose were prescribed an average of 98 MME/day.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

111. Patients develop tolerance to the analgesic effect of opioids relatively quickly. As

tolerance increases, a patient typically requires progressively higher doses in order to obtain the

same perceived level of pain reduction. The same is true of the euphoric effects of opioids—the

“high.” However, opioids depress respiration, and at very high doses can and often do arrest

respiration altogether. At higher doses, the effects of withdrawal are more severe. Long-term

opioid use can also cause hyperalgesia, a heightened sensitivity to pain.

112. Discontinuing opioids after more than just a few weeks will cause most patients to

experience withdrawal symptoms. These withdrawal symptoms include: severe anxiety, nausea,

vomiting, headaches, agitation, insomnia, tremors, hallucinations, delirium, pain, and other serious

symptoms, which may persist for months after a complete withdrawal from opioids, depending on

how long the opioids were used.

B. Defendants’ Conduct Created an Abatable Public Nuisance

113. As alleged throughout this Complaint, Defendants’ conduct has created a public

health crisis and a public nuisance.

114. The public nuisance—i.e., the opioid epidemic—created, perpetuated, and

maintained by Defendants can be abated and further recurrence of such harm and inconvenience

can be abated by taking measures such as providing addiction treatment to patients who are already

addicted to opioids, making naloxone widely available so that overdoses are less frequently fatal,

and a number of other proven measures to address the epidemic.

115. Defendants have the ability to act to help end the public nuisance, and the law

recognizes that they are uniquely well-positioned to do so. All companies in the supply chain of

a controlled substance are primarily responsible for ensuring that such drugs are only distributed

and sold to appropriate patients and not diverted. These responsibilities exist independent of any

Food and Drug Administration (“FDA”) or Drug Enforcement Administration (“DEA”)

20
 regulation, to ensure that their products and practices meet both federal and state laws and

regulations. As registered distributors and dispensers of controlled substances, Defendants are

FILED DATE: 8/15/2022 4:37 PM 2022L007352

placed in a position of special trust and responsibility and are uniquely positioned, based on their

knowledge of prescribers and orders, to act as a key line of defense. Defendants, however, instead

abused their position of special trust and responsibility within the closed system of opioid

distribution and dispensing and fostered a black market for prescription opioids.

C. Defendants Deliberately Disregarded Their Duties to Maintain Effective

Controls Against Diversion.

1. The Chain Pharmacies Were on Notice of and Contributed to Illegal

Diversion of Prescription Opioids.

116. Retail pharmacy chains earned enormous profits by flooding the country with

prescription opioids. They were keenly aware of the oversupply of prescription opioids through
the extensive data and information they developed and maintained as both distributors and retail

sellers of opioids. Yet, instead of taking any meaningful action to stem the flow of opioids into

communities, they continued to participate in the oversupply and profit.

117. Each of the Chain Pharmacies does substantial business across the United States.

This business includes the distribution and sale of prescription opioids.

118. Statewide ARCOS data confirms that the Chain Pharmacies distributed and
dispensed substantial quantities of prescription opioids in Illinois and/or the Counties. In addition,

they distributed and dispensed substantial quantities of prescription opioids in other states and

other counties, and these drugs were diverted from these other states and counties to Illinois and/or

the Counties. The Chain Pharmacies failed to take meaningful action to stop this diversion despite

their knowledge of it, and thus contributed substantially to the diversion problem.

119. The Chain Pharmacies developed and maintained extensive data on the opioids

they distributed and dispensed. Through this data, Chain Pharmacies had direct knowledge of

patterns and instances of improper distribution, prescribing, sale, and use of prescription opioids

21
 in communities throughout the country, and in Illinois in particular. They used the data to evaluate

their own sales activities and workforce. The Chain Pharmacies also provided data regarding,
FILED DATE: 8/15/2022 4:37 PM 2022L007352

inter alia, individual doctors to drug companies, which targeted those prescribers with their

marketing, in exchange for rebates or other forms of consideration. The Chain Pharmacies’ data is

a valuable resource that they could and should have used to help prevent diversion, but they failed

to do so. Defendants facilitated the supply of far more opioids that could have been justified to

serve a legitimate market. The failure of the Defendants to maintain effective controls, and to

investigate, report, and take steps to halt orders that they knew or should have known were

suspicious, as well as to maintain effective policies and procedures to guard against diversion from

their retail stores, breached both their statutory and common law duties.

120. For over a decade, Defendants aggressively sought to bolster their revenue,

increase profit, and grow their share of the prescription painkiller market by unlawfully and

surreptitiously increasing the volume of opioids they sold. However, Defendants are not permitted

to engage in a limitless expansion of their sales through the unlawful sales of regulated painkillers.

121. Each participant in the supply chain of opioid distribution, including the Chain

Pharmacies, is responsible for preventing diversion of prescription opioids into the illegal market

by, among other things, monitoring and reporting suspicious activity.

122. According to the CDC, opioid prescriptions, as measured by the number of

prescriptions and morphine milligram equivalent (“MME”) per person, tripled from 1999 to 2015.

In 2015, on an average day, more than 650,000 opioid prescriptions were dispensed in the U.S.

Not all of these prescriptions were legitimate. Yet Defendants systemically ignored red flags that

they were fueling a black market and failed to maintain effective controls against diversion at both

the wholesale and retail pharmacy level. Instead, they put profits over the public health and safety.

Despite their legal obligations as registrants under the CSA, the Chain Pharmacies allowed

widespread diversion to occur—and they did so knowingly.

123. Upon information and belief, this problem was compounded by the Chain

Pharmacies’ failure to adequately train their pharmacists and pharmacy technicians on how to

22
 properly and adequately handle prescriptions for opioid painkillers, including what constitutes a

proper inquiry into whether a prescription is legitimate and what measures and/or actions to take
FILED DATE: 8/15/2022 4:37 PM 2022L007352

when a prescription is identified as potentially illegitimate.

124. Upon information and belief, the Chain Pharmacies also failed to put in place

effective policies and procedures to prevent their stores from facilitating diversion and selling into

a black market, and to conduct adequate internal or external reviews of their opioid sales to identify

patterns regarding prescriptions that should not have been filled, or if they conducted such reviews,

they failed to take any meaningful action as a result.

125. Upon information and belief, even where Chain Pharmacies enacted policies and

procedures to prevent stores from facilitating diversion and selling into a black market, such

policies were merely window-dressing and were not employed in any meaningful way.

126. Upon information and belief, the Chain Pharmacies also failed to effectively

respond to concerns raised by their own employees regarding inadequate policies and procedures

regarding the filling of opioid prescriptions. Instead, Chain Pharmacies put in place policies that

required and rewarded speed and volume over safety and the care necessary to ensure that narcotics

were distributed and sold lawfully. Defendants consistently put profits over safety in their

distribution and sale of prescription opioids.

127. The Chain Pharmacies were, or should have been, fully aware that the quantity of
opioids being distributed and dispensed by them was untenable, and in many areas patently absurd.

But they did not take meaningful action to investigate or to ensure that they were complying with

their duties and obligations under the law with regard to controlled substances.
2. Defendants Have a Duty to Report Suspicious Orders and Not to Ship
Those Orders Unless Due Diligence Disproves Their Suspicions

128. Multiple sources impose duties on the Defendants to report suspicious orders and

further not to ship those orders unless due diligence disproves those suspicions.

129. First, under the common law, Defendants had a duty to exercise reasonable care

in delivering dangerous narcotic substances. By flooding Illinois, and the Counties, with more

23
 opioids than could be used for legitimate medical purposes by filling and failing to report orders

that they knew or should have realized were likely being diverted for illicit uses and by failing to
FILED DATE: 8/15/2022 4:37 PM 2022L007352

maintain effective controls against diversion from their retail stores, Defendants breached that duty

and both created and failed to prevent a foreseeable risk of harm.

130. Second, each of the Defendants assumed a duty, when speaking publicly about

opioids and their efforts to combat diversion, to speak accurately and truthfully.

131. Third, distributors and chain pharmacies are required to register with the DEA to

distribute and/or dispense controlled substances under the federal Controlled Substances Act. See

21 U.S.C. § 823(a)-(b), (e); 28 C.F.R. § 0.100; 28 C.F.R. § 1301.71. Recognizing a need for

greater scrutiny over controlled substances due to their potential for abuse and danger to public

health and safety, the United States Congress enacted the Controlled Substances Act in 1970. The

CSA and its implementing regulations created a closed system of distribution for all controlled

substances and listed chemicals. Congress specifically designed the closed chain of distribution

to prevent the diversion of controlled substances into the illicit market. Congress was concerned

with the diversion of drugs out of legitimate channels of distribution and acted to halt the

“widespread diversion of [controlled substances] out of legitimate channels into the illegal

market.” Moreover, the closed system was specifically designed to ensure that there are multiple

ways of identifying and preventing diversion through active participation by registrants within the
drug delivery chain. All registrants must adhere to the specific security, recordkeeping, monitoring

and reporting requirements that are designed to identify or prevent diversion. Maintaining the

closed system under the CSA and effective controls to guard against diversion is a vital public

health concern. Controlled substances, and prescription opioids specifically, are recognized as

posing a high degree of risk from abuse and diversion. When the supply chain participants at any

level fail to fulfill their obligations, the necessary checks and balances collapse. The result is the

scourge of addiction that has occurred.

132. As registrants, Defendants were required to “maint[ain] . . . effective controls

against diversion” and to “design and operate a system to disclose . . . suspicious orders of

24
 controlled substances.” 21 U.S.C. § 823(a)-(b); 21 C.F.R. § 1301.74. Defendants were further

required to take steps to halt suspicious orders. Defendants violated their obligations under federal
FILED DATE: 8/15/2022 4:37 PM 2022L007352

law. Defendants have additional duties under Illinois’s controlled substances laws and common

law.

133. Further, under the CSA, pharmacy registrants are required to “provide effective

controls and procedures to guard against theft and diversion of controlled substances.” See 21

C.F.R. § 1301.71(a). In addition, 21 C.F.R. § 1306.04(a) states, “[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.” Thus, regardless

of whether they are registrants, all dispensers must ensure that prescriptions of controlled

substances are “issued for a legitimate medical purpose by an individual practitioner acting in the

usual course of his professional practice.” 21 C.F.R. § 1306.04(a). The DEA has recognized that

“as dispensers of controlled substances, pharmacists and pharmacy employees are often the last

line of defense in preventing diversion.” 15

134. “A prescription for a controlled substance may only be filled by a pharmacist,

acting in the usual course of his professional practice.” 21 C.F.R. § 1306.06. As the Department

of Justice’s recent lawsuit against Walmart alleges, 21 C.F.R. § 1306.06 requires that a

pharmacist’s conduct, when filling controlled-substance prescriptions adhere to the usual course

of a pharmacist’s professional practice. The obligation to identify any red flags relating to a

controlled-substances prescription, to resolve them before filing the prescription, and to document

any resolution of red flags is a well-recognized responsibility of a pharmacist in the professional

practice of pharmacy. United States of America v. Walmart Inc. et al., 1:20-cv-01744, (D. Del.

Dec. 22, 2020). Former DEA diversion investigator Demetra Ashley confirmed this proposition

in her testimony in a deposition in this MDL. And, as the Department of Justice’s complaint

alleges, when ‘Walmart pharmacists failed to comply with their own professional pharmacy

15
2012 Dear Registrant letter to pharmacy registrants, http://ppsconline.com/articles/2012/FL_PDAC.pdf.
25
 standards’ in this respect, ‘Walmart ... violated 21 C.F.R. § 1306.06.’” United States of America

v. Walmart Inc. et al., 1:20-cv-01744, (D. Del. Dec. 22, 2020).

FILED DATE: 8/15/2022 4:37 PM 2022L007352

135. Under the CSA, the duty to prevent diversion lies with the Chain Pharmacies, not

the individual pharmacist. As such, although it acts through its agents, the pharmacy is ultimately

responsible to prevent diversion, as described above. 16 Further, as described above, the obligations

under the controlled-substances laws extend to any entity selling prescription opioids, whether it

is the registration holder or not. It is unlawful for any person knowingly to distribute or dispense

controlled substances other than in accordance with the requirements of the federal CSA and its

implementing regulations, or in violation of state-controlled substances laws and regulations.

Chain pharmacies are responsible “persons” under the CSA. They also exert control over their

agents, including the responsibility to ensure they comply with applicable laws and regulations in

all dispensing of controlled substances. Pharmacy chains cannot absolve themselves of their own

obligations by attempting to place unilateral responsibility on their agents.

136. In addition to their duties as distributors, the Chain Pharmacies also had a duty to

design and implement systems to prevent diversion of controlled substances in their retail

pharmacy operations. The Chain Pharmacies had the ability, and the obligation, to look for these

red flags on a patient, prescriber, and store level, and to refuse to fill and to report prescriptions

suggestive of potential diversion. They also have a crucial role in creating chain-wide systems to

identify and avoid filling “prescriptions” that are not issued for a legitimate purpose or by a

prescriber with a valid, current license.

16
The Medicine Shoppe; Decision and Order, 79 FR 59504, 59515 (DEA Oct. 2, 2014) (emphasis added);
see also Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195; Decision and Order, 77 FR 62316-
01 (“When considering whether a pharmacy has violated its corresponding responsibility, the Agency
considers whether the entity, not the pharmacist, can be charged with the requisite knowledge.”); Top RX
Pharmacy; Decision and Order, 78 FR 26069, 62341 (DEA Oct. 12, 2012) (same); cf. Jones Total Health
Care Pharmacy LLC and SND Health Care LLC v. Drug Enforcement Administration, 881 F.3d 82 (11th
Cir. 2018) (revoking pharmacy registration for, inter alia, dispensing prescriptions that prescriptions
presented various red flags, i.e., indicia that the prescriptions were not issued for a legitimate medical
purpose without resolving red flags).
26
 137. Pharmacy Defendants’ obligations extend to monitoring, and documenting, the

steps they take in accessing state prescription drug monitoring programs, often referred to as
FILED DATE: 8/15/2022 4:37 PM 2022L007352

“PDMPs.” Yet, the Chain Pharmacies, upon information and belief, generally relied on their

pharmacists’ discretion in this area rather than setting forth requirements concerning PDMP

searches and implementing systems, at least for many years, to track and document PDMP

searches and their results.

138. The CSA requires distributors and pharmacies, along with other participants in the

supply chain of controlled substances like opioids to: (a) limit sales within a quota set by the DEA

for the overall production of controlled substances like opioids; (b) register to distribute opioids;

(c) maintain effective controls against diversion of the controlled substances that they manufacture

or distribute; and (d) identify suspicious orders of controlled substances and halt such sales.

139. To ensure that even drugs produced within quota are not diverted, federal

regulations issued under the CSA mandate that all registrants “design and operate a system to

disclose to the registrant suspicious orders of controlled substances.” 21 C.F.R. § 1301.74(b).

Registrants are not entitled to be passive (but profitable) observers, but rather “shall inform the

Field Division Office of the Administration in his area of suspicious orders when discovered by

the registrant.” Id. Suspicious orders include orders of unusual size, orders deviating substantially

from a normal pattern, and orders of unusual frequency. Id. Other indicia of potential diversion
may include, for example, “[o]rdering the same controlled substance from multiple distributors.”

140. These criteria are disjunctive and are not all inclusive. For example, if an order

deviates substantially from a normal pattern, the size of the order does not matter, and the order

should be reported as suspicious. Likewise, a distributor need not wait for a normal pattern to

develop over time before determining whether a particular order is suspicious. The size of an order

alone, regardless of whether it deviates from a normal pattern, is enough to trigger the

responsibility to report the order as suspicious. The determination of whether an order is

suspicious depends not only on the ordering patterns of the particular customer but also on the

patterns of the entirety of the customer base and the patterns throughout the relevant segment of

27
 the industry. For this reason, identification of suspicious orders serves also to identify excessive

volume of the controlled substance being shipped to a particular region.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

141. The DEA has provided sworn testimony that:

• DEA registrants are required to block all suspicious orders of prescription opioids.

• Shipping a suspicious order is a per se violation of federal law.

• If a wholesale distributor blocks a suspicious order, they should terminate all future

sales to that same customer until they can rule out that diversion is occurring.

• After the fact reporting of suspicious orders has never been in compliance with

federal law. 17

142. Of course, due diligence efforts must also be thorough: “the investigation must

dispel all red flags indicative that a customer is engaged in diversion to render the order non-

suspicious and exempt it from the requirement that the distributor inform the DEA about the order.

Put another way, if, even after investigating the order, there is any remaining basis to suspect that

a customer is engaged in diversion, the order must be deemed suspicious, and the Agency must be

informed. Indeed, the DEA may revoke a distributor’s certificate of registration as a vendor of

controlled substances if the distributor identifies orders as suspicious and then ships them without

performing adequate due diligence.

143. To comply with the law, wholesale distributors, including Defendants, must know

their customers and the communities they serve. Each distributor must “perform due diligence on

its customers” on an “ongoing [basis] throughout the course of a distributor’s relationship with its

customer.” Masters Pharms., Inc., 80 Fed. Reg. 55,418, 55,477 (DEA Sept. 15, 2015), petition

for review denied, 861 F.3d 206 (D.C. Cir. 2017).

144. Pharmacy order data provides detailed insight into the volume, frequency, dose,

and type of controlled and non-controlled substances a pharmacy typically orders. This includes

17
See Prevoznik Dep. Vol II, April 18, 2019 (DEA 30(b)(6) designee).
28
 non-controlled substances and Schedule IV controlled substances (such as benzodiazepines),

which are not reported to the DEA, but whose use with opioids can be indicative of diversion.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

145. As acknowledged in an article CVS published in the New England Journal of

Medicine, “[p]harmacies have a role to play in the oversight of prescriptions for controlled

substances, and opioid analgesics in particular.” Mitch Betses, R.Ph., and Troyen Brennan, M.D.,

M.P.H., Abusive Prescribing of Controlled Substances - A Pharmacy View, N. ENGL. J. MED.

369;11, Sept. 12., 2013, at 989-991. The DEA has identified “both pharmaceutical distributors

and chain pharmacies as part of the problem” contributing to opioid abuse and related deaths. Id.

146. The Chain Pharmacies have a particular “advantage” in meeting their obligations

under the CSA because these entities can use “aggregated information on all prescriptions filled at

the chain” in order to examine “patterns” of opioids and other “high-risk drugs” and target

“inappropriate prescribing.” Id. at 990. For example, a chain pharmacy should properly use its

chainwide dispensing data to identify “high risk prescribers” by “benchmarking” prescription data

based on “several parameters,” including “volume of prescriptions for high-risk drugs,” “the

proportion of the prescriber’s prescriptions that were for such [high-risk] drugs, as compared with

the volume and proportion for others in the same specialty and region,” cash payment, ages of

patients, and the prescriber’s ratio of “prescriptions for noncontrolled substances with

prescriptions for controlled substances.” Id. This “[a]nalysis of aggregated data” from chain

pharmacies can “target patterns of abuse,” in the face of “the growing use of controlled substances

and resulting illnesses and deaths.” Id. Accordingly, as CVS touts, “innovative use of transparent

data is only prudent.” Id.

147. As CVS counseled, Defendants may not ignore red flags of illegal conduct and

must use the information available to them to identify, report, and not fill prescriptions that seem

indicative of diversion. That would include reviewing their own data, relying on their observations

of prescribers, pharmacies, and customers, and following up on reports or concerns of potential

diversion.

29
 148. In addition to their duties as distributors, Defendants also had a duty to monitor

and report suspicious activity in their retail pharmacy operations. Specifically, Defendants had a
FILED DATE: 8/15/2022 4:37 PM 2022L007352

duty to analyze data and store-level information for known red flags such as (a) multiple

prescriptions to the same patient using the same doctor; (b) multiple prescriptions by the same

patient using different doctors; (c) prescriptions of unusual size and frequency for the same patient;

(d) orders from out-of-state patients or prescribers; (e) an unusual or disproportionate number of

prescriptions paid for in cash; (f) prescriptions paired with other drugs frequently abused with

opioids, like benzodiazepines, or prescription “cocktails”; (g) volumes, doses, or combinations

that suggested that the prescriptions were likely being diverted or were not issued for a legitimate

medical purpose.

149. The CSA also imposes important record-keeping obligations on pharmacies,

including pharmacy chains. “[E]very registrant . . . dispensing a controlled substance or substances

shall maintain, on a current basis, a complete and accurate record of each such substance . . .

received, sold, delivered, or otherwise disposed of by him.” 21 USC 827(a). “[A] registrant's

accurate and diligent adherence to [its recordkeeping] obligations is absolutely essential to protect

against the diversion of controlled substances.” Paul H. Volkman, 73 FR 30,630, 30,644 (2008).

An important component of an anti-diversion system is the documentation Chain Pharmacies

possess. They must utilize their information to identify patterns of diversion and for auditing,
training, and investigation of suspicious activity in an effort to prevent diversion of controlled

substances.

150. According to law and industry standards, if a pharmacy finds evidence of

prescription diversion, the Board of Pharmacy and DEA must be contacted.

151. As distributors and as pharmacies, Defendants have a duty, and are expected, to

be vigilant in ensuring that controlled substances are delivered only for lawful purposes.

152. State and federal statutes and regulations reflect a standard of conduct and care

below which reasonably prudent distributors and pharmacies would not fall. Together, these laws

and industry guidelines make clear that Defendants possess and are expected to possess,

30
 specialized and sophisticated knowledge, skill, information, and understanding of both the market

for scheduled prescription opioids and of the risks and dangers of the diversion of prescription
FILED DATE: 8/15/2022 4:37 PM 2022L007352

opioids when the supply chain is not properly controlled.

153. Further, these laws and industry guidelines make clear that Defendants have a

responsibility to exercise their specialized and sophisticated knowledge, information, skill, and

understanding to prevent the oversupply of prescription opioids and minimize the risk of their

diversion into an illicit market.

154. The privilege of holding a license to distribute and dispense controlled substances

comes with the responsibility of ensuring that the controlled substances distributed or sold are not

diverted and/or subject to abuse and misuse. State and federal laws also have developed fairly

uniform standards of practice across the country. It is both intuitive and understood that selling

drugs for non-medical purposes, or drugs which the dispenser knows or should know present a

significant risk for diversion falls outside the standards of care and is not a legitimate practice. As

part of usual and customary practice, prescriptions must be evaluated and determined to be valid

and issued for a legitimate medical purpose.

155. Pharmacies' evaluation process includes with what is known as “Drug Utilization

Review” or “DUR.” This practice is both part of traditional roles and duties and codified in federal

and state statutes. Notably, during the rulemaking practice for one authority, the Omnibus Budget
[R]econciliation Act of 1990 (OBRA 90), a commenter suggested that instructions for compliance

with prospective DUR should go to the pharmacist and not the pharmacy. In response, the

government stated that “the instructions for compliance with prospective DUR should be directed

to the pharmacies,” and that “[t]he owners or managers of pharmacies, as Medicaid providers, are

responsible for furnishing their staff with information pertaining to DUR.” States, seeking to

assure uniformity, have taken action to require the same mandates as this federal law. The DUR

process includes looking at over-utilization, drug interactions and identifying abuse and misuse of

dangerous drugs such as opioids. This process would have provided the Chain Pharmacies

information about potential diversion as well.

31
 156. Accordingly, states, including Illinois, revised and expanded practice acts and

rules and increased their support for, and reliance on, Prescription Drug Monitoring Programs
FILED DATE: 8/15/2022 4:37 PM 2022L007352

(PDMPs) such as the Illinois Automated Rx Reporting System (AWARXE) program.

157. Defendants themselves recognized the value of the tools available to them through

PMDPs. An internal CVS document, for example, characterized PDMPs as an “invaluable tool

for Pharmacists to prevent controlled substances from being diverted or dispensed for non-medical

purposes ….” It also described PDMPs as “cut[ting] down on prescription fraud and ‘doctor

shopping’ by providing Prescribers and Pharmacists with more complete information about a

patient’s controlled substance prescription history.” Separately, data also suggests that PDMP

utilization assists in detecting possible misuse and diversion of controlled substances.

158. Additionally, Chain Pharmacies have operating systems and methods to store and

retain prescription dispensing data and records. The information they possess must be readily

retrievable, and they have an obligation to use it to identify patterns of diversion, conduct internal

audits and training programs, investigate suspicious prescribers, patients, and pharmacists, and

prevent diversion of controlled substances. Their hiring, training, and management of pharmacy

personnel, and their supporting policies, procedures, and systems should and must promote public

health and safety and assist in the identification and prevention of the diversion of controlled

substances.
3. Defendants Were Aware of and Have Acknowledged Their Obligations to
Prevent Diversion and to Report and Take Steps to Halt Suspicious Orders.

159. The regulations aim to create a “closed” system in order to control the supply and

reduce the diversion of these drugs out of legitimate channels into the illicit market, while at the

same time providing the legitimate drug industry with a unified approach to narcotic and dangerous

drug control. Both because distributors handle such large volumes of controlled substances, and

because they are uniquely positioned, based on their knowledge of their customers and orders, as

the first line of defense in the movement of legal pharmaceutical controlled substances from

legitimate channels into the illicit market, distributors’ obligation to maintain effective controls to

32
 prevent diversion of controlled substances is critical. Should a distributor deviate from these

checks and balances, the closed system of distribution, designed to prevent diversion, collapses.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

160. Defendants were well aware they had an important role to play in this system, and

also knew or should have known that their failure to comply with their obligations would have

serious consequences.

161. Indeed, the DEA has repeatedly informed Defendants about their legal obligations,

including obligations that were so obvious that they simply should not have required additional

clarification. As former DEA agent Joseph Rannazzisi recently testified under oath:
Q. Someone says “Don’t steal,” do you have to put in there “from
a supermarket”?

A. No.

Q. Someone says “Don’t trespass on the property,” do you have to

put “wearing tennis shoes”?

A. No.

Q. Next, you got asked: “Well, you never instructed the companies
to keep their files.” Do you remember that?

A. Yes, sir.

Q. Would old files be important in monitoring—in your ongoing

monitoring? Would it be important that a company keep their files
so that they can look back at them?

A: Absolutely. That’s the—the whole idea behind maintaining a

due diligence file is you have a history of purchases. That way you
could see what they’re doing and where they’re going with their
purchases.

162. For example, it is not an effective control against diversion to identify a suspicious

order, ship it, and wait as long as weeks to report it to law enforcement, potentially allowing those

pills to be diverted and abused in the meantime.

33
 163. During a 30(b)(6) deposition in this MDL, the DEA’s Unit Chief of Liaison was

asked whether the DEA made it “clear to industry that the failure to prevent diversion was a threat
FILED DATE: 8/15/2022 4:37 PM 2022L007352

to public safety and the public interest.” In response, he testified:

Yes, I think it's established in 823 [the Controlled Substances Act]

where it's part of our -- part of the registrant that is applying to be a
registrant understands that they have to maintain effective controls .
. . . they also know that these drugs themselves are scheduled
controlled substances for a particular reason, because they're
addictive, psychologically and physically they're addictive, so they
know that these drugs have these properties within themselves. So
they would understand that these drugs are categorized or
scheduled in that manner because they have the potential to
hurt.

164. And Defendants did understand. As described below, at least Walgreens has itself

acknowledged (internally) its understanding of the potential consequences of its failure to report

and cease shipping suspicious orders.

165. In fact, trade organizations in which Defendants have actively participated have

acknowledged that distributors have been responsible for reporting suspicious orders for more than

40 years. The National Association of Chain Drug Stores (“NACDS”) is a national trade

association that represents traditional drug stores, supermarkets, and mass merchants with

pharmacies—from regional chains with four stores to national companies. Its members and/or

affiliate members also include stakeholders such as manufacturers, other distributors and other

trade organizations as well. Most of the Defendants serve on the Board of Directors of NACDS.

As controlling members of NACDS, the Chain Pharmacy Defendants have served on and run key

governing committees within the organization. Chain Pharmacies have repeatedly chaired

NACDS’s Board of Directors, which determines the “strategic plan and positions” of the

organization. During the last 12 years, representatives of CVS, Walgreens, and Walmart have

always held Board of Directors or officer seats. Kroger and Meijer have acted as chairs.

34
 166. The Healthcare Distribution Management Association (“HDMA,” now known as

the Healthcare Distribution Alliance (“HDA”), and prior to 2000, known as the National
FILED DATE: 8/15/2022 4:37 PM 2022L007352

Wholesale Druggists’ Association (“NWDA”)), is a national trade association representing

distributors that has partnered with NACDS. The two groups viewed their relationship as a

strategic “alliance.” CVS also has been a member of the HDA.

167. In 2006, the NACDS issued a “Model Compliance Manual” intended to “assist

NACDS members” in developing their own compliance programs. The Model Compliance

Manual notes that a retail pharmacy may “generate and review reports for its own purposes” and

refers to the assessment tools identified by CMS in its Prescription Drug Benefit Manual chapter

on fraud, waste and abuse, including:

Drug Utilization Reports, which identify the number of

prescriptions filled for a particular customer and, in particular,
numbers for suspect classes of drugs such as narcotics to identify
possible therapeutic abuse or illegal activity by a customer. A
customer with an abnormal number of prescriptions or prescription
patterns for certain drugs should be identified in reports, and the
customer and his or her prescribing providers can be contacted and
explanations for use can be received.

Prescribing Patterns by Physician Reports, which identify the

number of prescriptions written by a particular provider and focus
on a class or particular type of drug such as narcotics. These reports
can be generated to identify possible prescriber or other fraud.

Geographic Zip Reports, which identify possible “doctor shopping”

schemes or “script mills” by comparing the geographic location (zip
code) of the patient to the location of the provider who wrote the
prescription and should include the location of the dispensing
pharmacy.

168. In 2007 and 2008, the HDA, began developing “Industry Compliance Guidelines”

(“ICG”) that aimed to outline certain “best practices” for distributors of controlled substances. As

part of its development of the ICG, the HDA met with the DEA on at least three occasions. The

35
 HDA also sought extensive input from its membership, as well as other groups such as the Pain

Care Forum. Internal discussions concerning the ICG further demonstrate the industry’s
FILED DATE: 8/15/2022 4:37 PM 2022L007352

knowledge of what was expected of them. For example, when deciding whether or not the

guidelines should permit a distributor to still ship a part of an order identified as suspicious, the

HDA noted that one potential downside of this approach was that “DEA

correspondence/interpretation do not support this practice.”

169. The HDA released the ICG in 2008 and, in doing so, it emphasized that distributors

were “[a]t the center of a sophisticated supply chain” and “uniquely situated to perform due

diligence in order to help support the security of the controlled substances they deliver to their

customers.” 18

170. More recently, in the appeal that arose from DEA’s enforcement action against

wholesaler Masters Pharmaceuticals, Inc. for its distribution of opioids, the HDA and NACDS

submitted a joint amicus brief regarding the legal duty of distributors that acknowledged that

“HDMA and NACDS members” had a duty to prevent diversion.” See Masters Pharmaceuticals,

Inc. v. U.S. Drug Enforcement Admin., 2016 WL 1321983 (D.C. Cir. April 4, 2016). As described

below, both the HDA and NACDS have both long taken the position that distributors have

responsibilities to “prevent diversion of controlled prescription drugs” not only because they have

statutory and regulatory obligations do so, but “as responsible members of society.”

171. The requirement to report suspicious orders at the time (not after the fact) has

always been clear and Defendants themselves have acknowledged as much through their various

trade groups and associations. As described above, correspondence between the NWDA and the

DEA, as early as 1984, illustrates that the DEA provided clear guidance well before the opioid

crisis was unleashed. For example, in one letter to the NWDA, DEA Section Chief Thomas

Gitchel emphasized that “the submission of a monthly printout of after-the-fact sales will not

18
Healthcare Distribution Management Association (HDMA) Industry Compliance Guidelines: Reporting
Suspicious Orders and Preventing Diversion of Controlled Substances, filed in Cardinal Health, Inc. v.
Holder, No. 12-5061 (D.C. Cir. Mar. 7, 2012), Doc. No. 1362415 (App’x B at 1).
36
 relieve a registrant from the responsibility of reporting excessive or suspicious orders,” noting

“DEA has interpreted ‘orders’ to mean prior to shipment.” Consistent with that understanding,
FILED DATE: 8/15/2022 4:37 PM 2022L007352

the NWDA’s 1984 Guidelines repeated the same directive.

172. In addition, the DEA, for example, in April 1987, sponsored a three-day

“Controlled Substances Manufacturers and Wholesalers Seminar” that was attended by “over fifty

security and regulatory compliance professionals representing forty-three major pharmaceutical

manufacturers and wholesalers.” According to the executive summary of the event, Ronald

Buzzeo held a session on “excessive order monitoring programs,” wherein he explained:

[A]ny system must be capable of both detecting individual orders
which are suspicious, or orders which become suspicious over time
due to frequency, quantity, or pattern. The NWDA system, for
example, provides an excellent lookback, or trend system, but the
ability to identify one-time suspicious orders should not be
overlooked as an element of the program. Another area at issue was
whether DEA would take action against a registrant which reported
an order and then shipped it. DEA pointed out that the company is
still responsible under their registrations for acting in the public
interest. Reporting the order does not in any way relieve the firm
from the responsibility for the shipment.

173. The DEA also repeatedly reminded Defendants of their obligations to report and

decline to fill suspicious orders. Responding to the proliferation of internet pharmacies that

arranged illicit sales of enormous volumes of opioids, the DEA began a major push to remind

distributors of their obligations to prevent these kinds of abuses and educate them on how to meet

these obligations.

174. Specifically, in August 2005, the DEA’s Office of Diversion Control launched the

“Distributor Initiative.” The Distributor Initiative did not impose any new duties on distributors,

but simply reminded them of their duties under existing law. The stated purpose of the program

was to “[e]ducate and inform distributors/manufacturers of their due diligence responsibilities

under the CSA by discussing their Suspicious Order Monitoring System, reviewing their

[Automation of Reports and Consolidated Orders System (“ARCOS”)] data for sales and

37
 purchases of Schedules II and III controlled substances, and discussing national trends involving

the abuse of prescription controlled substances.” 19 The CSA requires that distributors (and
FILED DATE: 8/15/2022 4:37 PM 2022L007352

manufacturers) report all transactions involving controlled substances to the United States

Attorney General. This data is captured in ARCOS, the “automated, comprehensive drug reporting

system which monitors the flow of DEA controlled substances from their point of manufacture

through commercial distribution channels to point of sale or distribution at the dispensing/retail

level—hospitals, retail pharmacies, practitioners, mid-level practitioners, and teaching

institutions,”20 described above, from which certain data has now been made public.

175. As part of the Distributor Initiative, the DEA gave several presentations to

distributors both individually and through presentations and discussions at Defendants’ trade

groups meetings directly targeted at some of the red flags of diversion that the Defendants were

obligated to consider and monitor as part of their requirements under the law.

19
Thomas W. Prevoznik, Office of Diversion Control, Distributor Initiative presentation (Oct. 22, 2013),
https://www.deadiversion.usdoj.gov/mtgs/distributor/conf_2013/prevoznik.pdf.
20
U.S. Dept. of Justice, Drug Diversion Administration, Diversion Control Division website,
https://www.deadiversion.usdoj.gov/arcos/index.html.
38
 176. The DEA has hosted many different conferences throughout the years, including

Pharmacy Diversion Awareness Conferences, to provide registrants with updated information

FILED DATE: 8/15/2022 4:37 PM 2022L007352

about diversion trends and their regulatory obligations. The DEA also frequently presented at

various other conferences for registrants at the national, state, or local level.

177. Through presentations at industry conferences and on its website, the DEA

provided detailed guidance to distributors on what to look for in assessing their customers’

trustworthiness. As an example, the DEA published “Suggested Questions a Distributor Should

Ask Prior to Shipping Controlled Substances” 21

178. In addition, the DEA sent a series of letters, beginning on September 27, 2006, to

every commercial entity registered to distribute controlled substances, including chain pharmacy

distributors. The 2006 letter emphasized that distributors are:

one of the key components of the distribution chain. If the closed

system is to function properly . . . distributors must be vigilant in
deciding whether a prospective customer can be trusted to deliver
controlled substances only for lawful purposes. This responsibility
is critical, as . . . the illegal distribution of controlled substances has
a substantial and detrimental effect on the health and general welfare
of the American people.22

179. The letter also warned that “even just one distributor that uses its DEA registration
to facilitate diversion can cause enormous harm.” 23

21
U.S. Dept. of Justice, DEA, Diversion Control Division website, Pharmaceutical Industry Conference
(Oct 14 & 15, 2009), Suggested Questions a Distributor should ask prior to shipping controlled
substances, Drug Enforcement Administration available at
https://www.deadiversion.usdoj.gov/mtgs/pharm_industry/14th_pharm/levinl_ques.pdf; Richard Widup,
Jr., Kathleen H. Dooley, Esq., Pharmaceutical Production Diversion: Beyond the PDMA, Purdue Pharma
and McGuireWoods LLC, available at https://www.mcguirewoods.com/news-
resources/publications/lifesciences/product_diversion_beyond_pdma.pdf.
22
Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Off. of Diversion Control, Drug Enf’t
Admin., U.S. Dep’t of Justice, to Cardinal Health (Sept. 27, 2006), filed in Cardinal Health, Inc. Inc. v.
Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb. 10, 2012), ECF No. 14-51 (“2006 Rannazzisi Letter”);
see also CVS-MDLT1000091513; WAGMDL00757797.
23
Id.
39
 180. The DEA sent a second letter to distributors on December 27, 2007. Again, the

letter instructed that, as registered distributors of controlled substances, they must each abide by
FILED DATE: 8/15/2022 4:37 PM 2022L007352

statutory and regulatory duties to “maintain effective controls against diversion” and “design and

operate a system to disclose to the registrant suspicious orders of controlled substances.” 24 DEA’s

letter reiterated the obligation to detect, report, and not fill suspicious orders and provided detailed

guidance on what constitutes a suspicious order and how to report (e.g., by specifically identifying

an order as suspicious, not merely transmitting ARCOS data to the DEA).

181. In September 2007, the NACDS, among others, also attended a DEA

conference at which the DEA reminded registrants that not only were they required to report

suspicious orders, but also to halt shipments of suspicious orders. Walgreens, specifically,

registered for the conference.

182. The DEA’s regulatory actions against the three largest wholesale distributors

further underscore the fact that distributors such as Defendants were well aware of their legal

obligations. There is a long history of enforcement actions against registrants for their compliance

failures. For example, in 2007, the DEA issued an Order to Show Cause and Immediate

Suspension Order against three of Cardinal Health’s distribution centers, and on December 23,

2016, Cardinal Health agreed to pay the United States $44 million to resolve allegations that it

violated the CSA in Maryland, Florida, and New York. Similarly, on May 2, 2008, McKesson

entered into an Administrative Memorandum of Agreement (“AMA”) with the DEA related to its

failures in maintaining an adequate compliance program. Subsequently, in January 2017,

McKesson entered into an AMA with the DEA wherein it agreed to pay a $150 million civil

penalty for, inter alia, failure to identify and report suspicious orders at several of its facilities.

Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Office of Diversion Control, Drug. Enf’t
24

Admin., U.S. Dep’t of Justice, to Cardinal Health (Dec. 27, 2007), filed in Cardinal Health, Inc. v.
Holder, No. 1:12-cv00185-RBW (D.D.C. Feb. 10, 2012), ECF No. 14-8 (“2007 Rannazzisi Letter”).
40
 183. The DEA has also repeatedly affirmed the obligations of pharmacies to maintain

effective controls against diversion in regulatory action after regulatory action. 25 The DEA,
FILED DATE: 8/15/2022 4:37 PM 2022L007352

among others, also has provided extensive guidance to pharmacies on how to identify suspicious

orders and other evidence of diversion.

184. DEA has repeatedly emphasized that retail pharmacies, such as Defendants, are

required to implement systems that detect and prevent diversion and must monitor for and report

red flags of diversion. When red flags appear, the pharmacy's “corresponding responsibility”

under 21 C.F.R. § 1306.04(a) requires it either to take steps (and document those steps) to resolve

the issues or else to refuse to fill prescriptions with unresolvable red flags. 26 DEA has identified
several types of “unresolvable red flags” which, when present in prescriptions presented to a

pharmacist, may never be filled by the overseeing pharmacist. These unresolvable red flags

include: a prescription issued by a practitioner lacking valid licensure or registration to prescribe

the controlled substances; multiple prescriptions presented by the same practitioner to patients

from the same address; prescribing the same controlled substances in each presented prescription;

a high volume of patients presenting prescriptions and paying with cash; and, a prescription

presented to by a customer who has traveled significant and unreasonable distances from their

home to see a doctor and/or to fill the prescription at the pharmacy.

185. DEA guidance also instructs pharmacies to monitor for red flags that include: (1)

prescriptions written by a doctor who writes significantly more prescriptions (or in larger quantities

or higher doses) for controlled substances as compared to other practitioners in the area, and (2)

prescriptions for antagonistic drugs, such as depressants and stimulants, at the same time. Most

25
See, e.g., Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195; 77 Fed. Reg. 62,316 (DEA
Oct. 12, 2012) (decision and order); East Main Street Pharmacy, 75 Fed. Reg. 66,149 (DEAOct. 27,
2010) (affirmance of suspension order); Holiday CVS, L.L.C. v. Holder, 839 F.Supp.2d 145 (D.D.C.
2012); Townwood Pharmacy; 63 Fed. Reg. 8,477 (DEA Feb. 19, 1998) (revocation of registration);
Grider Drug 1 & Grider Drug 2; 77 Fed. Reg. 44,069 (DEA July 26, 2012) (decision and order); The
Medicine Dropper; 76 Fed. Reg. 20,039 (DEA April 11, 2011) (revocation of registration); Medicine
Shoppe-Jonesborough; 73 Fed. Reg. 363 (DEA Jan. 2, 2008) (revocation of registration).
26
Pharmacy Doctors Enterprises, Inc. v. Drug Enf't Admin., No. 18-11168, 2019 WL 4565481, at *5
(11th Cir. Sept. 20, 2019).
41
 of the time, these attributes are not difficult to detect and should be easily recognizable by

Defendants’ diversion control systems.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

186. The DEA has also explained these red flags in individual meetings with

Defendants. For example, in December 2010, DEA hosted a meeting with CVS’s representatives

and counsel and advised CVS of the “red flags . . . that a pharmacy should be familiar with in order

to carry out its corresponding responsibility to ensure that the controlled substances are dispensed

for a legitimate medical purpose.” 27

187. Examples of red flags that the DEA identified during its meeting with CVS

include:
• many customers receiving the same combination of prescriptions (i.e.,
oxycodone and alprazolam);

• many customers receiving the same strength of controlled substances

(i.e., 30 milligrams of oxycodone with 15 milligrams of oxycodone
and 2 milligrams of alprazolam);

• many customers paying cash for their prescriptions;

• many customers with the same diagnosis codes written on their

prescriptions (i.e., back pain, lower lumbar, neck pain, or knee pain);
and

• individuals driving long distances to visit physicians and/or to fill

prescriptions. 28

188. Similarly, in 2011, the DEA took Walgreens “to the woodshed” over its dispensing

cocktail drugs and opioids to questionable out of state customers, customers with the duplicate

diagnoses, young people, and customers only paying cash. Many of these same red flags were

highlighted in the 2009 Walgreens Order to Show Cause and resulting 2011 Memorandum of

Agreement.

27
Declaration of Joe Rannazzisi in Holiday CVS, L.L.C. v. Holder, 839 F. Supp.2d 145 (D.D.C. 2012).
28
Id.
42
 189. As another example, in a 2016 presentation to the American Pharmacists

Association, the DEA reiterated that retail pharmacies must watch for red flags such as: large
FILED DATE: 8/15/2022 4:37 PM 2022L007352

numbers of customers who: receive the same combination of prescriptions, receive the same

strength of controlled substance prescription (often for the strongest dose), have prescriptions from

the same prescriber, and have the same diagnosis code.

190. Red flags are common sense warning signs that have always been an important

component of controlled substance pharmacy best practices, not a novel concept to pharmacies.

Relevant guidance concerning narcotics dispensing dates back to at least since the 1930's and

1940's there has been guidance given to pharmacies and pharmacists related to the creation of

systems and programs to guard against diversion and lists of don'ts when dispensing narcotics.

DEA enforcement actions such as the Holiday decision, Medicine Shoppe-Jonesborough and

United Prescription Services, Inc. also hold pharmacies responsible for failing to fulfill their

corresponding responsibility under the CSA.

191. Many of many of the Chain Pharmacies, including CVS, Walgreens, Walmart, and

their trade organizations, including the HDMA and the NACDS, also participated in creating a

"Stakeholders" memorandum that acknowledges many of these red flags. These include for

example, traveling unexplainable and/or unreasonably long distance to a physician office and/or

the pharmacy, a controlled substance refill pattern inconsistent with regular refill patterns for non-
controlled substances, or a prescription that a pharmacist knows or reasonably believes another

pharmacy refused to fill. The "Stakeholders" memorandum acknowledges the danger of

"therapeutic duplication of two or more long-acting and/or two or more short-acting opiates

(cocktails)" and "patient presents prescriptions for highly abused 'cocktails' (combination of opiate,

benzodiazepine, and muscle relaxant) of controlled substance medications (cocktails)." The

"cocktail" often referred to as the "Holy Trinity" consists of an opioid, a benzodiazepine, and a

muscle-relaxer such as carisoprodol. A "trinity" combination can also refer to different

combinations of opioid/non-opioid prescriptions intended for abuse and to create a euphoric

feeling similar to heroin and other illicit drugs. Medical literature has long recognized the special

43
 dangers posed by cocktails composed of drugs of abuse which lack any documented medical

efficacy." Similarly, the East Main Street Pharmacy action acknowledged that “the combination
FILED DATE: 8/15/2022 4:37 PM 2022L007352

of a benzodiazepine, a narcotic and carisoprodol is well known in the pharmacy profession as

being used by patients abusing prescription drugs.”

192. As a DEA administrative decision from 2008 explains, “[w]hile carisoprodol

[was] not controlled under Federal law, it is controlled under various state laws and is highly

popular with drug abusers, especially when taken as part of a drug cocktail that includes an opiate

and a benzodiazepine.” See Your Druggist Pharmacy, 73 Fed. Reg. 75,774, 75,775 n.1 (DEA Dec.

2008). Other DEA and judicial decisions likewise acknowledge well-known and highly abused

cocktails. See, e.g., U.S. v. Evans, 892 F.3d 692, 706 (5th Cir. 2018).

193. As described above, red flags indicative of diversion includes suspicious behavior

of patients, such as stumbling while walking, slurred speech, appearance of intoxication, or of

customers coming and appearing like they may not need the medication, or requesting drugs by

brand name or street slang such as "blues" (a term referencing Mallinckrodt opioids). Pharmacies’

training materials and controls should assist pharmacists and technicians in the identification of

such behaviors.

194. Pharmacies must resolve red flags before a prescription for addictive and

dangerous drugs, such as opioids, are dispensed.

4. Defendants Were Uniquely Positioned to Guard Against Diversion

195. Not only do Chain Pharmacies often have firsthand knowledge of dispensing red

flags – such as distant geographic location of doctors from the pharmacy or customer, lines of

seemingly healthy patients, cash transactions, and other significant information – but they also

have the ability to analyze data relating to drug utilization and prescribing patterns across multiple

retail stores. As with other distributors, these data points give the Chain Pharmacies insight into

prescribing and dispensing conduct that enables them to prevent diversion and fulfil their

obligations under the CSA.

44
 196. Indeed, CVS Health president and CEO Larry Merlo has described the company

as “America’s front door to health care with a presence in nearly 10,000 communities across the
FILED DATE: 8/15/2022 4:37 PM 2022L007352

country,” which allowed it to “see firsthand the impact of the alarming and rapidly growing

epidemic of opioid addiction and misuse.” 29

197. Chain Pharmacies not only make observations through their local front doors but

have extensive data to which an individual pharmacist would not have access. They are uniquely

positioned to monitor, for example, the volume of opioids being dispensed in their pharmacies

relative to the size of the communities they serve. This is particularly important given that it is

recognized that as to the supply of opioids increases, so does the incidence of over-dose and death.

They could also use this information to monitor potentially suspicious prescribers. Pharmacies

must use the information available to them to guard against supplying controlled substances for

non-medical use, identify red flags or potential diversion and should share this information with

their agents, as well as provide clear guidance and training on how to use it. A former DEA

diversion investigator, whose testimony is also referenced above, agreed in a deposition that as

part of their obligation under Section 1301.71, pharmacies corporately have an obligation to

develop policies to train pharmacists to comply the CSA regulations. She further agreed that the

defendants had an obligation to develop and implement systems to provide the necessary tools for

their pharmacists to comply with the CSA regulations.

198. As explained above, in addition to their duties as distributors, the Chain

Pharmacies also had a duty to design and implement systems to prevent diversion of controlled

substances in their retail pharmacy operations. Specifically, the Chain Pharmacies had a duty to

analyze data and the personal observations of their employees for known red flags such as those

described above. The Chain Pharmacies had the ability, and the obligation, to look for these red

29
See, e.g., David Salazar, CVS Health Unveils New PBM, Pharmacy Efforts to Curb Opioid Abuse,
(Sept. 21, 2017), https://drugstorenews.com/pharmacy/cvs-health-unveils-new-pbm-pharmacy-efforts-
curb-opioid-abuse
45
 flags on a patient, prescriber, store, and chain level, and to refuse to fill and to report prescriptions

that suggested potential diversion.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

199. They were particularly well-positioned to do so given the dispensing data available

to them, which they could review at the corporate level to identify patterns of diversion and to

create policies and practices to proactively identified patterns of diversion. Each could and should

have also developed tools and programs to alert their pharmacists to red flags and to guard against

diversion.

200. As described above and further below, the Chain Pharmacies also possessed

sufficiently detailed and valuable information that other companies were willing to pay them for

it. In 2010, for example, Walgreen’s fiscal year 2010 SEC Form 10-K disclosed that it recognizes

“purchased prescription files” as “intangible assets” valued at $749,000,000. 30 In addition,

Walgreens’s own advertising has acknowledged that Walgreens has centralized data such that

customers’ “complete prescription records” from Walgreens’s “thousands of locations

nationwide” are “instantly available.”

201. Similarly, CVS’s Director of Managed Care Operations, Scott Tierney, testified

that CVS’s data vendors included IMS Health, Verispan, and Walters Kluwers and that CVS used

the vendors for “analysis and aggregation of data” and “some consulting services.” He also

testified that CVS would provide the vendors with “prescriber level data, drug level data, plan

level data, [and] de-identified patient data.” 31

202. Each of the Chain Pharmacies had complete access to all prescription opioid

dispensing data related to its pharmacies in the County, complete access to information revealing

the doctors who prescribed the opioids dispensed in its pharmacies in and around the County, and

complete access to information revealing the customers who filled or sought to fill prescriptions

for opioids in its pharmacies in and around the County. Each of the Chain Pharmacies likewise

30
https://www.sec.gov/Archives/edgar/data/104207/000010420710000098/exhibit_13.htm
31
Joint Appendix in Sorrell v. IMS Health Inc., No. 10-779, 2011 WL 687134 (U.S.) *245-46 (Feb. 22,
2011).
46
 had complete access to information revealing the customers who filled or sought to fill

prescriptions for opioids in its pharmacies in and around the Counties, complete access to
FILED DATE: 8/15/2022 4:37 PM 2022L007352

information revealing the opioids prescriptions dispensed by its pharmacies in and around the

Counties, and complete access to information revealing the opioids prescriptions dispensed by its

pharmacies in and around the Counties. Further, each of the Chain Pharmacies had complete

access to information revealing the geographic location of out-of-state doctors whose prescriptions

for opioids were being filled by its pharmacies in and around the Counties and complete access to

information revealing the size and frequency of prescriptions written by specific doctors across its

pharmacies in and around the Counties.

5. Defendants Failed to Maintain Effective Controls Against Diversion.

203. As described further below, the Chain Pharmacies failed to fulfill their legal duties

and instead, routinely distributed and/or dispensed controlled substances while ignoring red flags

of diversion and abuse. The unlawful conduct by these Defendants is a substantial cause for the

volume of prescription opioids and the public nuisance plaguing the Counties.

a. CVS

i. CVS Lacked a Genuine Suspicious Order Monitoring System

for Much of the Relevant Time.

204. CVS distribution centers, in tandem with outside wholesalers, such as Cardinal

and McKesson, supplied opioids to CVS pharmacy stores until October 2014. CVS self-

distributed hydrocodone and hydrocodone combination products and cocktail drugs to its own

stores, of which CVS had approximately 6,000 by 2006 and 9,700 by 2014. Hydrocodone

combination products (HCPs) were previously classified as Schedule III controlled substances, but

rescheduled to Schedule II status on or about October 6, 2014. CVS ceased self-distributing

hydrocodone and HCPs the same day the rescheduling took effect but continued to distribute

controlled substances including cocktail drugs to its CVS pharmacies.

47
 205. CVS pharmacies nationwide placed orders with CVS distribution centers through

CVS’s central mainframe computer ordering system.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

206. Before 2009, CVS, which stocked and sold opioids at more than 9,000 stores

across the country, lacked any meaningful suspicious order monitoring (“SOM”) system. Instead,

CVS relied on the gut instincts of Pickers and Packers of the drugs in the distribution center –

workers responsible for pulling items off distribution shelves for delivery to pharmacy stores – to

identify “really big” orders that they believed were simply too large. This, of course, was not an

effective SOM system.

207. Moreover, CVS lacked a training program to train its pickers and packers how to

identify unusual orders of size, frequency, or pattern. CVS also did not have any written policies,

procedures, or protocols with respect to the pickers’ and packers’ obligations until August, 2013.

And, there were no formal job requirements to be employed as a picker and packer.

208. In 2007, with the help of an outside consultant, CVS began work on a Standard

Operating Procedure Manual (“SOP”) that was intended to cover all facets of DEA controlled

substances compliance, including suspicious order monitoring. However, by the Summer of 2010,

neither the final manual nor the SOM section was complete. Internal documents from that time

acknowledge that CVS was “still in the process of writing the suspicious order monitoring section

of this standard operating procedure.” In fact, the section of the Standard Operating procedures
for Suspicious Order Monitoring states “BEING DEVELOPED AND WRITTEN.”

209. Drafts of the SOP Manual, meanwhile, show CVS understood, or should have

understood, that this was unacceptable. The draft manual provides that: “CVS is responsible for

ensuring compliance with DEA regulatory requirements, and that responsibility cannot be

abdicated or transferred to anyone else.” Despite this acknowledgement, when the first version of

the SOP Manual was issued in December 2007 and for multiple revisions thereafter, the SOM

section still remained incomplete. It was not completed until August of 2010. Completion of the

Manual in 2010 did not equate to compliance, however.

48
 210. As John Mortelliti, CVS’s Director of Loss Prevention, wrote in November 2009,

this had become “a big issue with CVS and the DEA,” and he was “trying to get a rough draft
FILED DATE: 8/15/2022 4:37 PM 2022L007352

SOM SOP” before a DEA meeting. CVS only incorporated the final missing SOMS section

because of the need to fulfill an apparent promise to provide it to the DEA.

211. CVS’s Indiana distribution center was audited and investigated by the DEA for its

distribution practices on August 24, 2010. The distribution center was responsible for portions of

the relevant period for identifying and performing due diligence on nationwide orders that flagged

on the IRR. The day after the DEA’s audit of CVS’s distribution practices began, CVS Pharmacy,

Inc. sent a new Standard Operating Procedure, which included for the very first time a policy on

suspicious order monitoring. CVS Pharmacy, Inc. internally posted the SOP at 1:35 pm on August

26, 2010. The document was hastily put together.

212. On September 1, 2010, John Mortelliti sent an e-mail to Terrance Dugger who was

present during the DEA audit. The subject of the e-mail and the attachment is “DEA Speaking

Points,” the importance was listed as high. He writes: “Terrence, This is for the DEA. The

corrections listed below have been updated. It is ok to review this with the agents.”

213. Mr. Mortelitti then sent the same presentation on the same day to another group of

CVS employees writing: “These are the final approved speaking points for the DEA agents if they

come to one of your facilities and question suspicious monitoring. It is ok to share this document.
Please be sure your team understands it before presenting so it doesn’t look like a prop instead

of a tool.” The presentation sent by Mr. Mortelitti to be shared with the DEA was not correct and

was not the procedure being used by CVS.

214. In a September 2010 e-mail, Mr. Mortelliti circulated an August 27, 2010

document titled “Suspicious Order Monitoring for PSE/Control Drugs: Summary of Key Concepts

& Procedures,” which he described as “final approved speaking points for the DEA” should DEA

agents question suspicious order monitoring at a CVS facility. In the correspondence, he asked

that the recipients “be sure [their team] understands [the material] before presenting so it doesn’t

look like a prop instead of a tool.”

49
 215. CVS had a “CVS DEA compliance coordinator” in name only. A CVS employee

who held the position from 2008 to 2014 said that her title was only “for reference in SOPs,” not
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her real job. For “personnel purposes,” she was never considered the CVS DEA compliance

coordinator. Moreover, she had nothing to do with suspicious order monitoring, other than

“updating the SOP with what was provided for the program.” This is according to CVS’s “DEA

Compliance Coordinator.”

ii. CVS Failed to Remedy Fatal Flaws in the System it Slowly

Developed

216. CVS claims that in 2009 it began using a computer algorithm that flagged

potentially suspicious orders needing additional investigation. The automated program was

delivered by an outside vendor to CVS in December of 2008. CVS called the output of the flagged

orders an Item Review Report (“IRR”).

217. The SOM algorithm delivered in December of 2008 was designed to “pend” (or

identify) an order with a score of 0.15 or higher as potentially suspicious. The higher the score the

more likely the order was potentially suspicious. In July 2009 CVS reported to the algorithm

designer that the SOM model was pending a large number of orders that CVS believed were “not

suspicious on their face” and it requested that the model be changed. As a result, revised

coefficients for the algorithm were delivered to CVS on August 27, 2009 and the pend score of .15

remained the same. Between June 2010 and August 2010, Mortelliti adjusted the IRR pend score

from .15 to .65. The higher the score, the less sensitive the model, flagging fewer potentially

suspicious orders for investigation. On February 8, 2011, the algorithm designer delivered a

completely retuned SOM algorithm with another set of coefficients. The February 2011 changes

returned the pend score to .15. CVS again changed the pend score to .65.

218. IRRs were the primary SOM process. A CVS corporate representative explained,

on behalf of the company, “for the most part,” if an order was not flagged as suspicious under the

50
 IRR system, there would be no due diligence of that order. Yet, CVS neglected to provide written

instructions to its employees for how to perform that critical review until February 29, 2012.
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219. CVS’s IRR system was deficient and failed in many respects to meet CVS’s

obligations as a distributor.

220. CVS also learned in 2010 that its SOM algorithm was not working properly

because it monitored by drug, not active ingredient, meaning that changes in a drug’s description

or name caused historical data to be lost. Thus, the system was unable to determine that orders for

these drugs exceeded or diverged from prior volumes or patterns.

221. CVS’s SOM algorithm also failed to consider outside vendor orders. In other

words, CVS’s SOM system would not track how many opioids CVS was ordering from third-party

distributors such as Cardinal when evaluating whether to distribute opioids to one of its

pharmacies. CVS knew this was a problem, as a “[s]tore may order a little from both the OV

[outside vendor] and DC [CVS distribution center] to stay under the radar.” It also knew that

excluding outside vendor data meant CVS “may ship a potentially reportable suspicious order from

[its] DC.” Stores, including one that had a “68,000 hydrocodone pill loss,” could also place

telephone orders to outside vendors, into which there was “no visibility . . . until a later time.”

This deficiency is particularly glaring because, at a corporate level, CVS had full access to the

orders its pharmacies placed to outside vendors.

222. Acknowledging the ineffectiveness and deficiencies within its SOM system, CVS

hired new consultants in 2012 to troubleshoot its existing SOM systems for the purpose of either

fixing the deficient system or developing a new SOM system so as to attempt to become compliant

with the law.

223. Still, as late as July 2013, internal e-mail reflects that CVS’s primary tool for

investigating suspicious orders relied on data that was months or even years old and made any

analysis, “for the most part, irrelevant and pointless.”

224. Not until mid to late 2014 did CVS fully implement a new SOM system. Even

then, CVS encountered problems in evaluating suspicious orders for opioids and its SOMS was

51
 entirely lacking. The deployment was further delayed due to system data feed issues that created

inaccuracies in the SOM historical data. A risk analysis of the new system was conducted in June
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2014. The risk level was determined to be high for the SOM system in the following categories

covering seemingly every aspect of its operation: inconsistent due diligence in SOM analysts

reaching out to stores to investigate suspicious orders; inconsistency in documenting due diligence

investigations of suspicious orders; lack of engagement by the Management Team; lack of

communication between the SOM Management Team and SOM Analysts; lack of resources to

handle the rollout of the new SOM system to all distribution centers; and lack of clarity in how the

new SOM system is identifying suspicious orders. Essentially, these are the key components of a

compliant and effective SOM system. That same year, CVS stopped distributing opioids at the

wholesale level, but it did continue to distribute cocktail drugs.

225. Meanwhile, on August 5, 2013, the DEA began another audit and investigation of

the CVS distribution center in Indiana. CVS’s own documents acknowledge that the DEA’s

investigation was focused on its failure to maintain a SOM program for controlled substances.

226. In response to queries from the DEA, CVS wrote a letter to the DEA revealing that

it had only stopped seven suspicious orders across the entire country. Right before sending the

letter, the author, Mark Nicastro, head of the CVS distribution center in Indiana, conceded

internally that “I wish I had more stopped orders that went back further.” Sadly, while Mr. Nicastro
was writing the letter on CVS’s behalf to the DEA, he could not even locate the SOP for the SOM,

writing to Pam Hinkle, “For the life of me I can’t find the SOP for SOM. Can you send me an

electronic copy please? I have been on the logistics website, looked through hundreds of e-mails,

nothing. I’m surprised it is not on the website.” Ms. Hinkle, Sr. Manager for Logistics, Quality

and Compliance for CVS, responds that she too is unsure of the final version of the SOP SOM.

CVS sent the wrong version of the SOP SOM to the DEA.

227. In May of 2014, CVS had a closing meeting with the DEA related to the

distribution center audit. According to handwritten notes from a CVS employee who attended the

meeting, the “most serious” violation is “failure to design” a SOM system. An internal CVS e-

52
 mail summarizing the meeting made a similar statement: DEA determined that CVS “faile[d] to

maintain an [sic] SOM program.” The head of CVS’s distribution center in Indiana described
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Betsy Ferguson’s, CVS’s in-house counsel, confrontation with the DEA during the meeting,

writing: “Dan [DEA Agent] finally pushed Betsy’s button and the gloves came off. . . . Betsy made

it very clear that a letter of admonishment was one thing. Anything other than that and she wanted

an opportunity to do a presentation to his boss and her boss about what we do with SOM. Anything

more than a letter and we would meet in D.C. in courts just like Walgreens did.”

228. The DEA issued its closing letter concluding that CVS failed to design and

maintain a system to detect and report suspicious orders for Schedule III-V Controlled Substances

as required by Title 21 United States Code (USC) 821, Title 21 USC 823(e)(1), and Title 21 Code

of Federal Regulations (CFR) 1301.74(b) in violation of Title 21 USC 842(a)(5).

iii. CVS Failed to Perform Due Diligence

229. All orders that appeared on the IRR required a thorough due diligence

investigation, but only a very small percentage were subjected to appropriate due diligence. From

early/mid-2009 through early 2011, one employee, John Mortelliti, the Director of Loss

Prevention, “was taking the first pass through the IRR himself.” According to CVS’s corporate

witness, “Mr. Mortelliti’s practice would have been to review the report on a daily basis and

determine whether items on the report warranted further review and due diligence and conduct
review and due diligence as he deemed appropriate.” At select times in 2013, CVS had only one

full-time employee in the position of “SOM analyst” reviewing all potentially suspicious orders

for every pharmacy in the country. The SOM system would identify orders as potentially

suspicious based on a number of factors and “pend” the order. Even though the orders had been

identified as potentially suspicious, the CVS SOM analysts would conduct an “in depth” dive on

only select orders. In fact, even though the SOM program could identify as many as 1,000

suspicious orders a day, the CVS employee would only do a “deep dive” on one to six orders per

day.

53
 230. Even as late as 2012 CVS’s SOM policy was clearly little more than window

dressing. For example, CVS’s own SOM policy specified that if multiple orders for the same store
FILED DATE: 8/15/2022 4:37 PM 2022L007352

are flagged during the same month, all orders after the first order will not be investigated and will

be automatically released based on the release of the first order.

231. As noted above, as of November 21, 2013, CVS had only reported seven

suspicious orders to the DEA across all of its distribution centers and pharmacies in the United

States. The first suspicious order CVS ever reported was on February 29, 2012. CVS reported no

suspicious orders in Illinois.

iv. CVS Conspired with Cardinal and McKesson to Prevent

Suspicious Order Monitoring of Its Retail Pharmacies

232. CVS’s collaboration with distributors went from lobbying to actually preventing

adequate due diligence investigations of suspicious opioid orders. CVS knew that Cardinal and

McKesson have independent due diligence obligations under the CSA to monitor all sales of

controlled substances for orders which deviate in size, pattern or frequency. CVS understood that,

to do so effectively, Cardinal and McKesson would require access to its dispensing information.

CVS did not provide dispensing information to Cardinal or McKesson. In an email from Paul

Farley to Michael Mone, both Cardinal employees, Farley wrote, “I spoke with Brian Whalen at

CVS a couple of times this morning… They will not provide the doctor or patient information you

requested unless it is requested by the DEA. He was quite adamant about this.” CVS prevented

Cardinal and McKesson from obtaining access to critical dispensing information for its pharmacies

to enable Cardinal and McKesson to conduct adequate due diligence of its pharmacies. Prior to

54
 2013, Cardinal and McKesson did not investigate CVS by calling its pharmacists or visiting CVS

stores as they did with other pharmacies. Instead, distributors were instructed to contact CVS’s
FILED DATE: 8/15/2022 4:37 PM 2022L007352

loss prevention offices at corporate headquarters to inquire about suspicious orders, ensuring that

any investigation into CVS ordering of opioids was conducted by CVS alone.

233. As a result, CVS controlled all “due diligence investigations” of its opioid orders.

This chart produced by Cardinal depicts the due diligence “investigations” of CVS orders:

234. CVS also prevented Cardinal from independently determining the appropriate

order thresholds for opioids at CVS stores. CVS contractually protected its right to establish and

change its threshold requirement for Schedule II controlled substances with Cardinal. The

agreement expressly states that CVS has the discretion under the contract to set its threshold

quantities for controlled substances at any level CVS deems appropriate:

CVS requires the ability to adjust (up or down) the quantity of
product our stores receive, this adjustment will be made on an NDC
by NDC basis and will include a Threshold Quantity and an
Adjustment Percentage. Both the Threshold Quantity and
Adjustment Percentage can be set to any value CVS deems
appropriate.

55
 v. CVS Failed to Maintain Effective Controls Against Diversion in
the Illinois
FILED DATE: 8/15/2022 4:37 PM 2022L007352

235. According to the data from the DEA's ARCOS database, between the years 2006

and 2014, CVS distributed more than 270 million dosage units of hydrocodone to its pharmacies

in Illinois. The volume of opioids CVS brought into Illinois and ultimately dispensed from its

pharmacy locations was so high as to indicate to CVS that not all of the prescriptions distributed

to and dispensed out of its Illinois stores could be for legitimate medical uses.

236. As a vertically integrated distributor and dispenser of prescription opioids, CVS

knew or should have known that an excessive volume of pills was being sold into Illinois, and

ultimately onto its streets. CVS’s activities as a distributor and a seller or dispenser of opioids are

inextricably linked.

237. CVS violated the standard of care for a distributor by failing to: (a) control the

supply chain; (b) prevent diversion; (c) report suspicious orders; and (d) halt shipments of opioids

in quantities it knew or should have known could not be justified and signaled potential diversion.

238. The sheer volume of prescription opioids distributed to and dispensed by CVS

pharmacies in and around Illinois, with a population of approximately 12.8 million residents as of

the 2010 census, is indicative of potential diversion and required appropriate due diligence.

239. CVS funneled far more opioids into Illinois, and out of its pharmacy doors, than

could have been expected to serve legitimate medical use, and ignored other red flags of diversion,

including but not limited to suspicious orders.

240. It cannot be disputed that CVS was aware of the suspicious orders that flowed

from its distribution facilities into its own stores. CVS simply refused to identify, investigate, and

report suspicious orders even though CVS knew, or should have been fully aware, that opioids it

distributed and sold were likely to be diverted. Conversely, CVS failed to report suspicious orders,

failed to meaningfully investigate or reject suspicious orders, and failed to prevent diversion, or

otherwise control the supply of opioids flowing into Illinois.

56
 241. Upon information and belief, CVS failed to analyze: (a) the number of opioid

prescriptions filled by its pharmacies relative to the population of the pharmacy’s community; (b)
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the increase in opioid sales relative to past years; and (c) the number of opioid prescriptions filled

relative to other drugs.

242. CVS was, or should have been, fully aware that the opioids being distributed and

dispensed by it were likely to be diverted. Yet it did not take meaningful action to investigate or

to ensure that it was complying with its duties and obligations with regard to controlled substances,

including its responsibility to report suspicious orders and not to ship such orders unless and until

due diligence allayed the suspicion.

243. Given CVS’s retail pharmacy operations, in addition to its role as a wholesale

distributor, CVS knew, or reasonably should have known, about the disproportionate flow of

opioids into Illinois and the operation of “pill mills” that generated opioid prescriptions that, by

their quantity or nature, were red flags for, if not direct evidence of, illicit supply and diversion.

244. In addition, CVS knew, or deliberately turned a blind eye to, its pharmacies’ role

in diversion of dangerous drugs. At the pharmacy level, discovery will reveal that CVS knew, or

should have known, that its pharmacies in Illinois, and the surrounding area, were (a) filling

multiple prescriptions to the same patient using the same doctor; (b) filling multiple prescriptions

by the same patient using different doctors; (c) filling prescriptions of unusual size and frequency
for the same patient; (d) filling prescriptions of unusual size and frequency from out-of-state

patients; (e) filling an unusual or disproportionate number of prescriptions paid for in cash; (f)

filling prescriptions paired with other drugs frequently abused with opioids, like benzodiazepines,

or prescription “cocktails”; 32 (g) filling prescriptions in volumes, doses, or combinations that

suggested that the prescriptions were likely being diverted or were not issued for a legitimate

medical purpose; and (h) filling prescriptions for patients and doctors in combinations that were

32
According to definitions applied by CVS for suspicious order monitoring purposes, “cocktails for
opioids are methadone, muscle relaxants, stimulants and benzodiazepines.”
57
 indicative of diversion and abuse. CVS had the ability, and the obligation, to look for these red

flags on a patient, prescriber, and store level, and to refuse to fill and to report prescriptions that
FILED DATE: 8/15/2022 4:37 PM 2022L007352

suggested potential diversion.

245. Failures regarding dispensing in CVS’s Florida stores also allowed diverted

opioids to be funneled into Illinois and demonstrated the failures of CVS systems. And, CVS saw

huge increases in the quantity of oxycodone it dispensed in Florida from 2006 to 2010. For

example, starting with an already high baseline, a single CVS store ordered in 2006 approximately

four times the amount of oxycodone a typical pharmacy orders in one year. By 2010, the same

pharmacy’s 10-month history showed quantities more than thirty times the amount of oxycodone

a typical pharmacy orders in one year, and the pharmacy’s supervisor could not explain why the

volume was so high. During that time, Cardinal was the pharmacy’s main distributor, and two of

CVS’s Florida pharmacies were among Cardinal’s top four retail pharmacy customers, dispensing

a staggering amount of oxycodone compared to Cardinal’s other Florida customers. Interviews

with employees of these pharmacies revealed that they routinely observed red flags and obvious

signs that they were filling illegitimate prescriptions. One set a daily limit of oxycodone 30mg

prescriptions the pharmacy would fill each day, basing the limit on the amount in stock that day,

so as to ensure that the “real pain patients” could get their prescriptions filled. 33 The pharmacy

usually reached its limit by lunchtime each day, and at times within 30 minutes of opening.

Customers, aware that prescriptions were first come, first served, would line up outside the store

as early as 7:45 AM. An employee acting as a “bouncer” included among his job duties escorting

off the premises customers who were “hooked” on opioids and became belligerent if their

prescriptions were refused. 34 Although CVS had in place dispensing guidelines for controlled

substances prescriptions, these guidelines were not followed at these stores. Rather, they

33
Declaration of Joseph Rannazzisi, Holiday CVS, LLC d/b/a CVS/Pharmacy Nos. 5195/219 v. Eric
Holder, Jr. et al., No. 1:12-cv-191, Doc. 19-6 ¶¶ 38-41 (D.D.C. Feb. 24, 2012).
34
Id. ¶ 41.d.
58
 dispensed controlled substances prescriptions despite the existence of “warning signs” in the

guidelines. 35
FILED DATE: 8/15/2022 4:37 PM 2022L007352

246. Because of its vertically integrated structure, CVS has access to complete

information regarding red flags of diversion across its pharmacies in and around Illinois, but CVS

chose not to utilize this information and failed to effectively prevent diversion.

247. By 2009, CVS Pharmacy, Inc. owned and/or operated more than 9,000 pharmacies

in the United States. According to its website, CVS now has more than 9,900 retail locations. At

all times relevant herein, CVS pharmacies sold controlled substances, including FDA Schedule II

and FDA Schedule III controlled substances otherwise known as opiate narcotics or opioids.

vi. CVS Failed to Implement Effective Policies and

Procedures to Guard Against Diversion from its Retail Stores

248. “CVS Corporation,” not any individual CVS store, is the DEA registrant for each

of CVS’s pharmacies across the country. CVS renews the DEA licenses for its pharmacies

through a “Registration Chain Renewal.” From October 2013 through December 2016, CVS

headquarters paid more than $5 million to renew the licenses for 7,597 CVS locations.

249. As described above, until October 6, 2014, CVS pharmacies ordered and were

supplied FDA Schedule III hydrocodone combination products (HCPs) from a combination of

outside vendors and CVS distribution centers. CVS pharmacies also received Schedule II opioids

from outside vendors, with Cardinal and McKesson acting as its outside suppliers for the entire

period for which ARCOS is available.

250. CVS Pharmacy, Inc. instituted, set-up, ran, directed and staffed with its own

employees the majority of the SOM functions for its pharmacy stores.

251. CVS also lacked meaningful policies and procedures to guide its pharmacy staff

in maintaining effective controls against diversion, even as they evolved over time. Not until 2012

35
Id. ¶¶ 48 & 56.
59
 did CVS create guidelines explaining in more detail the “red flags” or cautionary signals that CVS

pharmacists should be on the lookout for to prevent diversion and to uphold their corresponding
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responsibilities to ensure that all dispensed controlled substances are issued for a legitimate

medical purpose.

252. Even so, CVS’s conduct, and the volume it dispensed in the State thereafter

indicates that its policies were not applied. In addition, as discussed further below CVS had

performance metrics in place that pressured pharmacists to put profits ahead of safety.

253. CVS failed to use data held at the corporate level to assist pharmacists in

evaluating red flags of diversion. CVS’s later dispensing policies and procedures make clear that

for the majority of the time CVS had been engaged in the sale and dispensing of opioids, there was

no meaningful integration of data and information that was within the possession and control of

CVS corporate personnel.

b. Walgreens

254. Acting as both a distributor and a retail pharmacy chain, Walgreens self-

distributed opioids to its own individual Walgreens pharmacies. Although Walgreens had

visibility into indicia of diversion due to its vertically integrated distribution and dispensing

practices, it failed to take these factors into account in its SOM program during the vast majority

of the time it was distributing prescription opioids. Moreover, its program was wholly inadequate
and did not fulfill its duties to prevent diversion. Likewise, Walgreens also failed to maintain

effective controls against diversion from its pharmacy stores.

i. Walgreens Dragged Its Feet on Developing a SOM Program,

Instead Relying on After-the-Fact Reports of “Excessive” Orders
While Ignoring Red Flags

255. Though Walgreens had access to significant information about indicia of diversion

due to its vertical integration with its stores, Walgreens failed to use available information to

monitor and effectively prevent diversion.

60
 256. At least as early as 1998, and perhaps as early as 1988, Walgreens began to utilize

a series of formulas to identify orders that Walgreens deemed to be suspicious based on the orders’
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extraordinary size. These orders were listed on a report called the Suspicious Control Drug Order

report.

257. Walgreens used two different formulas: one formula from (at least) 1998-2007 and

one formula from March 2007 through 2012. These formulas were alike in that they each utilized

an average number based on historical orders, applied a three times multiplier to that base number,

and then deemed certain orders which were greater than that number to be suspicious. Under the

later formula, orders were only listed on the report as being suspicious if the orders exceeded the

three times multiplier for two consecutive months in a given time period. Walgreens based this

second formula on the DEA’s Chemical Handler’s Manual’s order monitoring system for listed

chemicals.

258. The first variation on this formula was in place until March 2007, even though the

DEA warned Walgreens that the “formulation utilized by the firm for reporting suspicious ordering

of controlled substances was insufficient,” via a May 2006 Letter of Admonition. The Letter cited

Walgreens for controlled substances violations at its Perrysburg, Ohio Distribution Center, but

highlighted problems that went far beyond that particular facility.

259. The DEA also reminded Walgreens that its suspicious ordering “formula should

be based on (size, pattern, frequency),” though Walgreens failed to even examine anything other

than the size of an order. When Walgreens did update its program some ten months later, however,

it still did not perform the size, pattern, and frequency analysis prescribed by the DEA, continuing

to use another “three times” formula.

260. Even with its ample threshold, each Walgreens Suspicious Control Drug Order

report could be thousands of pages or more in length.

261. Walgreens did not perform any due diligence on the thousands of orders identified

as “suspicious” on the Suspicious Control Drug Order reports, but instead shipped the orders

without review.

61
 262. Walgreens did not report the suspicious orders listed on the Suspicious Control

Drug Order report until after the orders were already filled and shipped. The report was generated
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on a monthly, nationwide basis, directly contravening the regulatory requirement that suspicious

orders be reported when discovered. 21 C.F.R. 1301.74(b). In some instances, months may have

elapsed between an order’s shipment and its subsequent reporting to the DEA, given the

requirement, described above, of two consecutive months of exceeding the three times multiplier

to trigger reporting.

263. In September 2012, the DEA issued an immediate suspension order (“ISO”)

regarding one of Walgreens’s three Schedule II distribution centers, finding Walgreens’s

distribution practices constituted an “imminent danger to the public health and safety” and were

“inconsistent with the public interest.” The DEA further found that Walgreens’s Jupiter

distribution center failed to comply with DEA regulations that required it to report to the DEA

suspicious drug orders that Walgreens received from its retail pharmacies, resulting in at least

tens of thousands of violations, particularly concerning massive volumes of prescription opiates.

There, the DEA stated: “Notwithstanding the ample guidance available, Walgreens has failed to

maintain an adequate suspicious order reporting system and as a result, has ignored readily

identifiable orders and ordering patterns that, based on the information available throughout the

Walgreens Corporation, should have been obvious signs of diversion occurring at [its] customer
pharmacies.”

264. In the ISO, the DEA also specifically considered the Suspicious Control Drug

Order reports and made the following further findings of fact and conclusions of law regarding

the reports and Walgreens’s suspicious order monitoring system—applicable across Walgreens’s

operations:

• “[Walgreens’s] practice with regard to suspicious order reporting was to send to the

local DEA field office a monthly report labeled ‘Suspicious Control Drug Orders.’”

• “[The Suspicious Control Drug] reports, consisting of nothing more than an

aggregate of completed transactions, did not comply with the requirement to report

62
 suspicious orders as discovered, despite the title [Walgreens] attached to these

reports.”
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• Upon review of an example of the Suspicious Control Drug Order report for

December 2011, “[Walgreens’s] suspicious order report for December 2011 appears

to include suspicious orders placed by its customers for the past 6 months. The report

for just suspicious orders of Schedule II drugs is 1712 pages and includes reports on

approximately 836 pharmacies in more than a dozen states and Puerto Rico.”

• Finding that the reports failed to appropriately consider the population and area

being served by the pharmacy: “This report from the Jupiter [Florida] Distribution

Center covers pharmacies in multiple states and Puerto Rico, yet the average order

and trigger amount is the same for a particular drug regardless of the pharmacy’s

location, the population it serves, or the number of other pharmacies in the area.”

• “As made clear in 21 CFR§ 1301.74(b), Southwood, and the December 27, 2007

letter to distributors from the Deputy Assistant Administrator for the Office of

Diversion Control, suspicious orders are to be reported as discovered, not in a

collection of monthly completed transactions. Moreover, commensurate with the

obligation to identify and report suspicious orders as they are discovered is the

obligation to conduct meaningful due diligence in an investigation of the customer

and the particular order to resolve the suspicion and verify that the order is actually

being used to fulfill legitimate medical needs. This analysis must take place before

the order is shipped. No order identified as suspicious should be fulfilled until an

assessment of the order’s legitimacy is concluded.”

• “DEA’s investigation of [Walgreens] ... revealed that Walgreens failed to detect

and report suspicious orders by its pharmacy customers, in violation of 21 C.F.R.

§1301.74(b). 21 C.F.R. § 1301.74(b).”

• “. . . DEA investigation of [Walgreens’s] distribution practices and policies ...

demonstrates that [Walgreens] has failed to maintain effective controls against the

63
 diversion of controlled substances into other than legitimate medical, scientific, and

industrial channels, in violation of 21 U.S.C. 55 823(b)(l and (e)(l). [Walgreens]

FILED DATE: 8/15/2022 4:37 PM 2022L007352

failed to conduct adequate due diligence of its retail stores, including but not limited

to, the six stores identified above, and continued to distribute large amounts of

controlled substances to pharmacies that it knew or should have known were

dispensing those controlled substances pursuant to prescriptions written for other

than a legitimate medical purpose by practitioners acting outside the usual course of

their professional practice. . . . [Walgreens has not] recognized and adequately

reformed the systemic shortcomings discussed herein.”

• “[DEA’s] concerns with [Walgreens’] distribution practices are not limited to the

six Walgreens pharmacies [for which DEA suspended Walgreens’ dispensing

registration].”

ii. Walgreens Knew its After-the-Fact Excessive Purchase Reports

Failed to Satisfy Its Obligations to Identify, Report, and Halt
Suspicious Orders

265. Walgreens knew its procedures were inadequate well before the 2012 ISO issued.

In addition to the guidance described above, in 1988, the DEA specifically advised Walgreens that

“[t]he submission of a monthly printout of after-the-fact sales does not relieve the registrant of the

responsibility of reporting excessive or suspicious orders.” The DEA further advised Walgreens

that, while “[a]n electronic data system may provide the means and mechanism for complying with

the regulations...the system is not complete until the data is carefully reviewed and monitored by

the registrant.”

266. Despite this instruction, there is no evidence that Walgreens ever took any action

related to the Suspicious Control Drug Order report besides generating it and mailing it out.

Walgreens has admitted that there is no evidence that Walgreens ever performed a due diligence

review on any of the orders listed on the Suspicious Control Drug Order report before shipment.

64
 One of the managers for Walgreens’s Pharmaceutical Integrity (“RX Integrity”) Department stated

that, when he was with the Loss Prevention Department, he “basically burned the data on a CD
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and sent it off. I didn’t dive into each individual report or CD” and that he “would look at it briefly,

but just to see if the data transferred to the CD, but that’s about the extent.” In an errata submitted

in connection with a deposition in the MDL, Walgreens acknowledged that it “is currently unaware

of due diligence that was performed based on orders being flagged . . .”

267. As described above, in May 2006, the DEA told Walgreens again that the formula

Walgreens was using to identify suspicious orders for the Suspicious Control Drug Order reports

was “insufficient” and “inadequate.”

268. Moreover, in September 2007, three Walgreens’s senior employees (Dwayne

Pinon, Senior Attorney; James Van Overbake, Auditor; and Irene Lerin, Audit Manager) attended

the DEA Office of Diversion Control’s 13th Pharmaceutical Industry Conference in Houston,

Texas. Michael Mapes, Chief, DEA, Regulatory Section, gave a presentation at this Conference

relating to suspicious orders, which included the reminder that the CSA “requirement is to report

suspicious orders, not suspicious sales after the fact.” Participant notes from this meeting indicate

that Mr. Mapes advised the audience not to “confuse suspicious order report with an excessive

purchase report. They are two different things.”

269. Similarly, handwritten notes on an internal document from July 2008 state that

“DEA really wants us to validate orders and only report true suspicious orders or what was done

to approve orders.” They go on to state that “[j]ust reporting these orders is not good enough –

need to document what happened.”

270. Though Walgreens claims that it implemented the three times formula based on

DEA guidance, DEA never approved Walgreens’s SOM system, or any use of the Appendix E-3

formula, during the course of DEA’s cyclic or scheduled investigations of Walgreens’s distribution

centers. As DEA 30b6 witness Clare Brennan testified, while DEA investigators are trained to

ensure a SOM system is in place, they are also trained not to approve any SOM system. This non-

approval, the impropriety of any attempt by Walgreens to rely on prior purported approval, and

65
 the compliance failures of Walgreens’s then utilized system, were re-emphasized by the letter

Walgreens—and all controlled substance distributors—received from the DEA in 2007.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

271. Upon information and belief, Walgreens’s knew that its post-2006 SOM system

did not comply with CSA requirements. Walgreens did not maintain an effective system to stop

the shipment of suspicious orders before investigating and resolving them.

272. The Walgreens controlled substances Distribution Center personnel who spoke to

the DEA during the DEA’s inspections of Walgreens’s controlled substances distribution centers

did not recall ever telling the DEA that Walgreens internally determined that Walgreens’s SOM

system contained no monitoring process, that the SOM system did not stop suspicious orders from

being shipped, that Walgreens could be filling illicit orders, or that the orders Walgreens was

reported to the DEA as suspicious had already been shipped.

273. Additionally, in November 2012, the Walgreens’s Divisional Vice President of

Pharmacy Services reported to Kermit Crawford, Walgreens’s President of Pharmacy, Health and

Wellness, his notes from meeting with the DEA about reporting suspicious orders, which included

the note, “[i]f suspicious - you don’t ship.”

iii. Walgreens Lacked Meaningful Additional Systems to Address

the Failures in Its System of After-the-Fact Reporting of Certain
Orders

274. Walgreens nominally employed additional procedures within its distribution

centers; however, these systems did not address the failings of the Suspicious Control Drug Order

reports. These distribution center systems were not designed to detect suspicious orders of

controlled substances, but rather were designed to detect typos or errors in order entry by the stores.

Walgreens admits that its Distribution Centers are “more akin to supply warehouses,” are “not

designed to be a backstop to pharmacists,” and that they are not well “equipped to ensure

compliance” or to “assist in combatting controlled substance abuse,” and “do not have the ability

to detect trends in local markets.”

66
 275. The Distribution Center (“DC”) level procedures are documented in a 2006

Questionable Order Quantity policy, which had two facets: first, it instructed DC personnel to
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review orders and contact the pharmacy with questions regarding quantities. The policy did not

mention reporting suspicious orders until 2010, when it was updated to state that the Corporate

Office Internal Audit Department would handle suspicious store orders and inquiries. There is no

evidence that the Internal Audit department had any involvement in reporting suspicious orders.

276. The second aspect of this DC level procedures required “pickers,” the DC

personnel who actually retrieved pill bottles off the shelves and placed them into totes for shipping,

to look for “questionable” orders while picking.

277. The only review of the orders identified by the DC level procedures was calling

the pharmacy to make sure the order had not been entered in error. Walgreens admitted this

procedure was not intended to detect suspicious orders. There is no evidence that any orders were
ever reported as suspicious or halted as a result of Walgreens’s distribution-center level policies.

There is no evidence these procedures resulted in timely reporting of, due diligence on, or non-

shipment of any order, including those listed as being “suspicious” on the Suspicious Control Drug

Order reports.

278. Walgreens’s documents effectively acknowledge that these were not true anti-

diversion measures, and it recognized internally that it did not begin creating a SOM system until

March 2008. Specifically, in March 2008, Walgreens finally formed a five department “team” to

“begin creating” a SOM program. The new SOM program was not piloted until more than a year

later, in August 2009, and even then, the pilot included orders form just seven stores. Not until

September 2010 would the program, implemented in pieces and phases, be rolled out chain-wide,

and from that point it took several more years to fully implement.

279. Through 2012, Walgreens continued to populate the Suspicious Control Drug

Order report with thousands of orders that exceeded Walgreens’s “three times” test, showing that

Walgreens’s post-2009 SOM program did little to mitigate the extraordinary volume of controlled

substances being shipped by Walgreens to its pharmacies.

67
 iv. Even as it Rolled Out its New SOM Program, Walgreens Left
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Significant Gaps and Loopholes in Place and Failed to Report and

Perform Due Diligence on Orders It Flagged

280. Walgreens did not prioritize compliance when instituting its SOM system. Sworn

testimony from the Senior Director of the Walgreen’s Pharmaceutical Integrity Department, which

is charged with supervising Walgreens’s SOM system, revealed that even as late as 2012, 2013,

and 2014, Walgreens’s viewed the SOM system as an inventory control mechanism rather than as

a compliance control mechanism:

Q: Now, Walgreens’s system, similar to my alarm, is there to detect

a potential red flag. Would you agree with that?

It was put in place to ensure that the stores had the proper quantities.
Not necessarily to . . . detect a red flag. The whole idea was to make
sure that the stores were getting the quantities that they needed based
on their peer group.

281. Perhaps because keeping supply moving, as opposed to preventing diversion, was

Walgreens’s primary focus, the SOM program Walgreens slowly developed had significant gaps

or loopholes. For example, for the first few years, the program did not include orders that

Walgreens stores were also placing to outside vendors, like Cardinal and AmerisourceBergen,

allowing stores to order opioids from Walgreens distribution centers and from Cardinal and

AmerisourceBergen, effectively permitting double dipping. It also did not prevent stores from

placing an order to an outside vendor if the store attempted to place the order to a Walgreens DC,

but was rejected by the new SOM system.

282. The new SOM-lite system also allowed Walgreens’s stores to transfer controlled

substances between stores and did not review these transfers (known as “interstores”) within the

SOM program, so that these transfers were not factored into SOM analytics. Additionally, stores

could also place ad hoc “PDQ” (“pretty darn quick”) orders for controlled substances outside of

68
 their normal order days and outside of the SOM analysis and limits. Walgreens could even remove

a store entirely from SOM review.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

283. Further, although the new SOM algorithm identified more than 389 pages of

suspicious orders per week as of August 2010, it failed to identify all the orders that Walgreens

had marked as suspicious under its “three times” formulas and previously listed on its Suspicious

Control Drug Order reports and submitted to the DEA “on a monthly basis.” This “discrepancy”

prompted an internal email from an employee in Walgreens’s Loss Prevention Department, to

Walgreens’s Vice President, Distribution Centers and Logistics, suggesting that “the new system

should be tested further and enhanced to provide broader coverage of controlled substance activity.

The same e-mail stated that “we are not equipped to handle the 389+ pages of ADR4 [suspicious

order monitoring] data which are compiled nationwide each week,” and asked if his department

had “a resource available” to assist. An email in response “recall[ed] the old paper report as being

inches thick” and an instruction “in 1985 not to review or contact anyone on the data,” and

inquired, among other things, “[w]ho from your group has been reviewing the data collected for

the past twenty-five years?” and “[a]t present is anyone doing any review on what would be

considered suspicious quantities that are physically ordered and are releasing to stores?”

284. Starting in 2010, certain orders that exceeded store-based limits imposed by

Walgreens’s new SOM system were reduced to the store limit and shipped out. These orders were
not reported to the DEA as suspicious, nor were they halted for review. The DEA found that

Walgreens’s policy of reducing and then filling and shipping suspicious orders without reporting

them violated the law:

This policy ignores the fact that the reporting requirement of 21 CFR
§ 1301.74(b) applies to orders, not shipments. A suspicious order
placed by a customer pharmacy is made no less suspicious by
application of a system designed to reduce or eliminate such orders
prior to shipping. Construing the regulation this way defeats the
essential purpose of the suspicious order requirement, which, as I
stated in Southwood, is “to provide investigators in the field with
information regarding potential illegal activity in an expeditious
manner.” 72 FR at 36501.

69
 285. Walgreens’s post-2009 SOM system flagged thousands of items per month as

being suspicious. Internal Walgreens documents indicate that, in July 2011 alone, as many as
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20,699 orders for controlled substances were “marked suspicious” by the new algorithm.

However, very few of these orders received any review, and any review performed was nominal

at best. Meanwhile, Walgreens failed to adequately staff the program and to train its employees

regarding its requirements.

286. Walgreens cited two people as being primarily responsible for performing due

diligence on suspicious orders in the 2009-2012 time period under the new SOM system. The

first was a representative from the Loss Prevention department who said her department was “not

equipped” to handle review and data analysis for the hundreds of pages of reports being compiled

nationwide each week. The second was Barbara Martin, who estimated that she spent somewhere

between one and three hours a week reviewing suspicious orders, reviewing only between 10 to

100 of the thousands of orders that were deemed suspicious under the new algorithm. Walgreens

did not provide Ms. Martin access to information about the area the store was serving, the order

history for comparable stores, or any other data beyond the sales and order history for that store.

If an order did not “make sense” to her based on those limited resources, she testified that she

would call the store or district manager or pharmacy supervisor. She lacked authority to take

“direct action” on an order.

287. Walgreens has previously cited to a series of email exchanges with Ms. Martin and

her deposition testimony as exemplars of its due diligence procedures under the post-2009 SOM

program. In the emails, which date from January 10–11, 2011, and are between Ms. Martin and a

Walgreens DC employee, the DC employee notes that “several stores that are ordering huge

quantities of 682971 [30 mg oxycodone] on a regular basis.” The DC employee continued, with

respect to a single store, “we have shipped them 3271 bottles [of 30 mg oxycodone] between

12/1/10 and 1/10/11. I don’t know how they can even house this many bottles to be honest. How

do we go about checking the validity of these orders?” Ms. Martin noted that the store had average

weekly sales of 36,200 dosage units, which was equal to 362 bottles per week, stating, “I have no

70
 idea where these stores are getting this type of volume. The last pharmacy I was manager at did

about 525 rxs/day and we sold about 500 tabs a month (5 bottles).” Ms. Martin then told the DC
FILED DATE: 8/15/2022 4:37 PM 2022L007352

employee that she could call the district pharmacy supervisor to see if he “may be able to shed

some light on the subject.” Despite the fact that questions had been raised about this store ordering

volume in January 2011, the very next month, Walgreens filled and shipped orders totaling another

285,800 dosage units of 30 milligram oxycodone to the same pharmacy, which was located in a

town of less than 3,000 people.

288. In her deposition, Ms. Martin stated that she never even attempted to determine

the size of the community that was receiving these “huge quantities” of oxycodone. She further

testified that she was not near that store, did not have access to the store’s prescriptions or patient

information, and as noted above, couldn’t take any “direct action.” Approximately 18 months

after this email exchange, as a result of DEA action, Walgreens agreed to surrender its DEA

registration for this same store that Ms. Martin reviewed as part of her exemplary “due diligence.”

289. In the ISO regarding the Distribution Center, the DEA found specifically regarding

the orders that were the subject of these email exchanges, that “[b]ased on the evidence available

to DEA, none of these orders were reported to DEA as suspicious and all appear to have been

shipped, without any further due diligence to verify their legitimacy.” The DEA further found

regarding this purported “due diligence,” that Walgreens “failed to conduct any meaningful

investigation or analysis to ensure that the massive amounts of commonly abused, highly addictive

controlled substances being ordered by these pharmacies were not being diverted into other than

legitimate channels.” The DEA noted that “[Walgreens] has been unable to provide any files

related to any effort to adequately verify the legitimacy of any particular order it shipped to its

customer stores.”

290. These failures were not limited to the specific Florida pharmacies and distribution

center described above; instead, they reflect systemic failures of Walgreens’s SOM system that

impacted its distribution in Illinois as well. Walgreens admits that the SOM systems and

procedures at all of its DCs were the same, including those at the facilities that continued shipping

71
 opioids into Illinois. Accordingly, it is not surprising that, in February 2013, the DEA issued

similar Subpoenas and Warrant of Inspection on the Perrysburg DC in Ohio to those issued to the
FILED DATE: 8/15/2022 4:37 PM 2022L007352

Jupiter DC in Florida. Walgreens employees made plans in preparation for the Perrysburg DC

being “shut down” by the DEA, like the Jupiter DC. Within weeks of receiving the six subpoenas

and warrant, Walgreens decided to “discontinue distribution of controlled substances from the

Perrysburg facility” in order to “eliminate any immediate need for further DEA administrative

action” regarding the Perrysburg facility.

291. Further, after the DEA began its investigation, Walgreens held meetings with and

informed the DEA that it was implementing “new changes” to “enhance” its SOM program.

Internal documents reveal that Walgreens improved its SOM program only “in an effort to

convince the DEA that the proposed penalty is excessive.”

292. Even so, by November 2012, the program still did not halt the orders for due

diligence evaluation or report the orders as suspicious. Further, at that time, the program began to

automatically reduce orders that violated ceiling thresholds.

293. There also is no evidence that these flagged or cut orders were reported as

suspicious to the regulatory authorities.

294. As a result of the DEA investigation, Walgreens formed the “Rx Integrity Team”

in 2012, purportedly to make sure that those types of failures did not continue. However, the

group’s true role was protecting Walgreens’s Distribution Centers and stores from losing their

DEA licenses. The effort was only for show. Walgreens never provided the Rx Integrity group

the resources needed to achieve due diligence on the large number of orders identified by

Walgreen’s SOM program for the company’s 5,000 plus stores.

295. In December 2012, the further enhanced SOM system flagged “14,000 items that

the stores ordered across the chain that would have to be investigated” before they could be

shipped. Walgreens admitted that yet again it did not have sufficient resources to timely review

these orders. Walgreens noted that “[t]he DEA would view this as further failures of our internal

processes, which could potentially result in additional pharmacies and distribution centers being

72
 subjected to regulatory actions and ultimately prohibited from handling controlled substances.”

At the time these 14,000 orders were flagged Walgreens Rx Integrity Team was comprised of
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fewer than five people. Even at its height, Rx Integrity had only eleven employees. Instead of

sufficiently staffing the SOM program, Walgreens recognized it had the ability to control its due

diligence workload by increasing the stores’ ceiling levels, and thereby reducing the number of

orders that would hit that ceiling and result in a flag.

296. As described below, Walgreens admits to failures in its suspicious order

monitoring prior to 2012. Comparing the 2013 SOM system to the previous system, one of

Walgreens’s Pharmaceutical Integrity Managers in August 2013 explained:

The Controlled Substances Order Monitoring system now in place

sets limits for each item based on the chain average for that item for
stores of similar size. If a particular store fills more of this item than
normal and needs additional product we would need to document
the reason and increase via a CSO Override .... The purpose for this
is to ensure we have performed adequate review before sending in
additional inventory.

The previous system would continue to send additional product to

the store without limit or review which made possible the runaway
growth of dispensing of products like Oxycodone, that played a roll
[sic] in the DEAs investigation of Walgreens.

297. Yet, even in 2013, orders being flagged as suspicious for review before shipment

were “a week old” before they made it to the review team, often “ha[d] already been shipped,” and

were not being reported.

298. Walgreens never equipped its distribution operations to properly monitor for,

report, and halt suspicious orders, or otherwise effectively prevent diversion. When it became

clear Walgreens would need to devote significant resources to achieve compliance, Walgreens

chose instead to cease controlled substance distribution all together. Walgreens stated that “while

the financial impact of no longer . . . [self distributing] from the Walgreens DCs was taken into

73
 consideration, there is a greater risk to the company in fines and loss of licenses if we continue to

sell these items in our warehouses.”

FILED DATE: 8/15/2022 4:37 PM 2022L007352

v. Walgreens Failed to Put in Place Adequate Polices to Guard

Against Diversion at the Pharmacy Level

299. Although Walgreens purported to have in place “Good Faith Dispensing” (“GFD”)

Policies for many years, it failed to meaningfully apply policies and procedures, or to train

employees in its retail pharmacies on identifying and reporting potential diversion.

300. Despite knowing that prescribers could contribute to diversion, and having a

separate and corresponding duty with respect to filling prescriptions, from at least 2006 through

2012, Walgreens’s dispensing policies, which it titled “Good Faith Dispensing”, or “GFD”,

explicitly instructed pharmacists who “receive[] a questionable prescription” or otherwise were

“unable to dispense a prescription in good faith” to “contact the prescriber” and, if “confirm[ed]”

as “valid” by the prescriber, to then “process the prescription as normal.” Further, though

Walgreens’s policies listed a handful of “questionable circumstances,” such as “increased

frequency of prescriptions for the same or similar controlled drugs by one prescriber[,] for large

numbers of patients [,] for quantities beyond those normally prescribed,” it is unclear what, if any,

resources Walgreens made available to its pharmacists for checking these vague criteria, which, in

any event, became meaningless if a prescriber “confirm[ed]” the prescription as “valid,” by calling

the prescriber. For example, in 2010 when a pharmacy manager expressed concern about

significant numbers of opioid prescriptions from pain clinics, and being help responsible for

“excessive c2 rx dispensing,” her district supervisor instructed her “not [to] refuse script for large

quantities” but simply to “call the MD’s, document it on the hard copy[,] and that is all that is

needed to protect your license.” Despite internally recognizing that “a prescriber of a controlled

substance prescription [may be] involved in diversion”, Walgreens’s GFD policies continued to

endorse calling the doctor as a greenlight to any “questionable” prescription.

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 301. In 2012, Walgreens finally removed the “process the prescription as normal”

language from its formal GFD policies, admitting that under the law “it is not enough to get
FILED DATE: 8/15/2022 4:37 PM 2022L007352

confirmation that the prescriber wrote the prescription.” However, Walgreens still failed to ensure

it complied with its duties.

302. Walgreens failed to adequately train its pharmacists and pharmacy technicians on

how to prevent diversion, including what measures and/or actions to take when a prescription is

identified as phony, false, forged, or otherwise illegal, or when other suspicious circumstances are

present, and failed to provide them the means of doing so. To be clear, this required no inquiry

into whether an opioid prescription was the proper treatment for a particular patient; instead, as a

registrant, Walgreens was obligated, and failed, to implement policies and procedures at a

corporate level to identify and address signs of diversion.

303. Indeed, during the course of a 2009 DEA investigation into Walgreens dispensing

noncompliance, Walgreens internally noted that it currently had “no training” for employees

dispensing controlled substances. Meanwhile, Walgreens corporate officers turned a blind eye to

these abuses. In fact, a Walgreens corporate attorney suggested, in reviewing the legitimacy of

prescriptions coming from Florida, that “if these are legitimate indicators of inappropriate

prescriptions perhaps we should consider not documenting our own potential noncompliance,”

underscoring Walgreens’s attitude that profit outweighed compliance with the law or protecting

public health.

304. Ultimately, in 2011, Walgreens and the DEA entered a Memorandum of

Agreement regarding all “Walgreens . . . pharmacy locations registered with the DEA to dispense

controlled substances,” requiring Walgreens to implement significant nationwide controls lacking

in its operations. Walgreen Co. was required to create a nationwide “compliance program to detect

and prevent diversion of controlled substances as required by the … (CSA) and applicable DEA

regulations.” Pursuant to the MOA, the “program shall include procedures to identify the common

signs associated with the diversion of controlled substances including but not limited to, doctor-

shopping and requests for early refills” as well as “routine and periodic training of all Walgreens

75
 walk-in, retail pharmacy employees responsible for dispensing controlled substances on the

elements of the compliance program and their responsibilities under the CSA.” Further, Walgreens
FILED DATE: 8/15/2022 4:37 PM 2022L007352

was required to “implement and maintain policies and procedures to ensure that prescriptions for

controlled substances are only dispensed to authorized individuals pursuant to federal and state

law and regulations.”

305. Walgreens would also make more promises in a 2013 Memorandum with the

DEA, described further below, related to failures to that lead to the ISOs described above.

306. Even after development and a relaunch of its GFD policy in response to

settlements with the DEA, however, Denman Murray, Director of Rx Supply Chain Retail,

provided sworn deposition testimony that, “traditionally, we’ve always treated a controlled

substance like any other, [a] widget’s a widget to the system.”

307. Further, after the June 2012 GFD “relaunch” in April 2014, a Walgreens

“RxIntegrity” presentation focused on Walgreens “Market 25,” but also assessing “average

market” trends, reported that “pharmacists [were] not being too strict with GFD, nor [were] they

losing volume.” 36

308. As with distribution, Walgreens failed to allocate appropriate resources to

dispensing compliance and supervision. Walgreens has approximately 26,000 pharmacists, each

of whom may receive as many as 400-500 prescriptions a day. In 2013, however, Walgreens

internally reported that its District Managers and Pharmacy Supervisors were “challenged to get

into the stores” and in a 90-day period, more than a thousand stores did not receive a visit from the

managers or supervisors. These supervisory personnel were assigned a “high number of stores”

and their time was consumed with “people processes, business planning, market and district

meetings,” such that supervision in store was being handled informally by “community leaders”

who have “limited formal authority.”

36
Market 25 consisted of Indiana, Kentucky, and West Virginia. Similar results reported for Market 3,
Florida.
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 309. Even where Walgreens’s policies recognized red flags, Walgreens failed to

provide its pharmacists with effective tools for assessing them. For example, Walgreens’s policies
FILED DATE: 8/15/2022 4:37 PM 2022L007352

and internal documents acknowledged that distance between the patient, pharmacists, and/or

prescriber constituted a red flag, however, Walgreens did not even begin piloting an automated

process for flagging such distances through common and long available technological solutions

until the Spring of 2021.

310. Walgreens knew its much touted good faith dispensing, or “GFD,” policies were

ineffective, and, in 2013, it launched a “Target Drug GFD” program to purportedly “put teeth

around GFD for high-risk products.” The policies required pharmacists to perform extra checks

on red flags and to complete TD GFD checklists when presented with certain opioid prescriptions.

311. However, the TDGFD procedures were largely window dressing. Walgreens

deliberately omitted hydrocodone from its TDGFD process, despite knowing in 2013 that HCPs

were the most abused of all prescription opioids, and in 2019 was still considering whether to add

hydrocodone, even though it had been a Schedule II opioid since 2014. Walgreens further failed

to make the TDGFD checklist an electronic form until 2020, despite knowing that doing so would

make compliance and supervision more effective. A review of Walgreens’s TDGFD forms in

certain jurisdictions reveals Walgreens failed to even complete a TDGFD form for as many as half

of the prescriptions for which Walgreens’s own policies stated such a form was required.
312. A Walgreens internal audit performed after the 2013 DEA settlement confirms that

Walgreens’s supervision and compliance failures continued. Among other failings, the audit team

noted no formal monitoring program existed to confirm that pharmacies across the chain are

complying with controlled substance documentation and retention requirements, no monitoring

outside of the deficient “store walk program” existed to monitor target drug good faith dispensing

requirements and no corporate reporting was being generated, and employees were failing to

timely complete Good Faith Dispensing training, such that, at the time of the audit, over 35,000

employees had not completed their required training for that year. Management’s response largely

was to seek to incorporate additional compliance measures into the store walk procedure.

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 However, documents from 2016 regarding monthly store compliance walks indicate that during

the monthly “Compliance Walks” to “verify compliance … [with] regulatory requirements in…
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pharmacy areas,” substantially no dispensing compliance supervision occurred, outside of

ensuring the pharmacy was verifying the patient’s address on five sample prescription fills.

313. Unsurprisingly, compliance with GFD and TD GFD has been poor. For example,

in 2014 Walgreens discovered a pharmacist who failed to follow GFD for five to six months

without being discovered by supervisors. In 2014, Rx Integrity noted dozens of stores dispensing

opioids without performing the required checks. In certain cases, the pharmacists were unaware

of the GFD procedures or had been told by supervisors to disregard them.

314. In 2015, Walgreens performed a “business continuity” audit of a random sample

of approximately 2,400 pharmacies to determine whether Walgreens was “compliant with the

policies/procedures put in place” regarding dispensing pursuant to Walgreens’s agreement with

the DEA. As the audit progressed, Walgreens internally noted “put your seatbelts on” because the

audits were “not going great” and they would need to implement a “mitigation plan … to satisfy

the MOA” for the non-compliance revealed by the audit. In Walgreens’s own words, “Results

were unfavorable.” Fewer than 60% of stores were complying with TD GFD with respect to filled

prescriptions, 1,160 stores did not have a single refused prescription, and an additional 1,182 stores

had refused fewer than 25 prescriptions total in a nine-month period. Only 63 out of 2,400
pharmacies had refused 26 or more prescriptions during that same nine months in 2015.

315. Walgreens’s determination to bury evidence of noncompliance in the service of

profit goals has continued. When a Walgreens consultant interviewed Walgreens pharmacy

employees, they drafted a report finding that employees “sometimes skirted or completely

ignored” proper procedures to meet corporate metrics and committed “errors resulting from

stress.” The consultants reported that they “heard multiple reports of improper behavior” that was

“largely attributed to the desire” to meet a corporate metric known as “promise time,” which

ensures that patients get prescriptions filled within a set amount of time. Upon reviewing a draft

of the report, senior leaders at Walgreens directed the consultants to remove some of the damaging

78
 findings, which the consultant company ultimately did, even though the consultant’s employees

stated requests to remove information from slides conflicted with their business ethics. At around
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this same time, Walgreens awarded the consultant company a $1.5 billion contract.

vi. Walgreens Assumed Greater Responsibility for Controlling

Against Diversion by Discouraging Outside Vendors from
Exercising Their Own Oversight

316. The “Big Three” wholesalers: Cardinal, McKesson, and AmerisourceBergen, gave

deferential treatment to chain pharmacies. An internal Cardinal document for example, stresses
that “certain chain pharmacies refuse to allow any sort of administrative inspection by Cardinal or

to make certifications” and that large, national chains can “take their billions upon billions of

dollars in business to any wholesaler in the country.”

317. Thus, for example, in 2008, Cardinal prepared talking points for a NACDS

Conference about its planned retail chain SOM program, making it clear that the program would

“minimize the disruption” to retail chains and that they would “work together” with the pharmacies

“to ensure that our Suspicious Order Monitoring program for retail chains does not interrupt”

business. Cardinal also provided warnings to chain pharmacies, including Walgreens, that they

were approaching thresholds so that the chains could avoid triggering SOM reporting and adjust

ordering patterns by, for example, delaying orders or, more often, obtaining a threshold increase.
Such “early warnings” were so helpful to Walgreens that as of 2012 Walgreens adopted the

concept for its own SOM system for self-distribution, noting internally that by “flagging the stores

at 75%,” it could “avoid cutting/reducing orders and subsequently not have to report a SOM to the

DEA.”

318. Preferential treatment of Walgreens ultimately was not enough for Cardinal to

keep Walgreens’s business, however. In 2013, Walgreens entered a ten-year agreement with

AmerisourceBergen Drug Company. The shift to AmerisourceBergen as its exclusive supplier

prompted Cardinal to complain: “we bailed you guys out when you had your [DEA] issues.”

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 319. By 2017, Walgreens accounted for 30% of AmerisourceBergen’s revenue. 37

AmerisourceBergen was similarly deferential, allowing Walgreens to “police their own orders
FILED DATE: 8/15/2022 4:37 PM 2022L007352

and block any order to [AmerisourceBergen (“ABC”)] that would exceed ABC’s threshold thus

triggering a suspicious order being sent to DEA from ABC. Additionally, when AmerisourceBergen

received orders from Walgreens “outside the expected usage,” Walgreens and AmerisourceBergen

met to discuss adjusting thresholds or using “soft blocking.” Contrary to DEA guidance and its own

stated policy, AmerisourceBergen also shared the threshold limits set by its “order monitoring

program” with Walgreens, and also provided Walgreens with weekly SOM statistics.

AmerisourceBergen generally would not take action on Walgreens orders that exceeded its

thresholds without first talking to Walgreens.

320. Walgreens also owns 26% of AmerisourceBergen’s stock. In 2018, after a coalition

of AmerisourceBergen shareholders sought greater transparency from its Board related to the
“financial and reputational risks associated with the opioid crisis,” Walgreens, together with other

insiders, reportedly leveraged this position to defeat the proposal, which enjoyed majority support

among the independent shareholders.

vii. Walgreens Failed to Maintain Effective Controls Against

Diversion in the Illinois

321. As described above and further below, as both a distributor and a dispenser,

Walgreens ignored indicia of diversion in Illinois.

322. According to the data from the DEA's ARCOS database, between the years 2006

and 2014, Walgreens distributed more than 906 million dosage units of oxycodone and

hydrocodone to its pharmacies in Illinois. The volume of opioids Walgreens brought into Illinois

37
As a part of its distribution agreement, Walgreens gained purchase rights to AmerisourceBergen equity,
allowing it to further participate in the prescription opioid shipment boom in America. Walgreens
subsequently exercised these purchase rights, ultimately owning approximately 26% of
AmerisourceBergen. As part of the transaction, Walgreens has the ability to nominate up to two members
of the Board of Directors of AmerisourceBergen. Currently, Walgreen’s Co-Chief Operating Officer sits
on the AmerisourceBergen Board of Directors.
80
 and ultimately dispensed from its pharmacy locations was so high as to indicate to Walgreens that

not all of the prescriptions distributed to and dispensed out of its Illinois stores could be for
FILED DATE: 8/15/2022 4:37 PM 2022L007352

legitimate medical uses.

323. Walgreens violated the standard of care for a distributor by failing to: (a) control

the supply chain; (b) prevent diversion; (c) report suspicious orders; and (d) halt shipments of

opioids in quantities it knew or should have known could not be justified and signaled potential

diversion.

324. The volume of opioids Walgreens shipped into, and dispensed from locations in,

the County was so high as to raise a red flag that not all of the prescriptions being ordered could

be for legitimate medical uses.

325. Yet, upon information and belief, Walgreens did not make any suspicious order

report of an order in the County between 2007 and 2014. Instead, Walgreens funneled far more

opioids into Illinois and the Counties than could have been expected to serve legitimate medical

use and ignored other indicia of suspicious orders. This information, along with the information

known only to distributors such as Walgreens (especially with its pharmacy dispensing data),

would have alerted Walgreens to potential diversion of opioids.

326. In addition, Walgreens also distributed and dispensed substantial quantities of

prescription opioids in other states, and these drugs were diverted from these other states to Illinois.
Walgreens failed to take meaningful action to stop this diversion despite its knowledge of it, and

it contributed substantially to the opioid epidemic in Illinois.

327. Walgreens also developed and maintained highly advanced data collection and

analytical systems. These sophisticated software systems monitor the inventory and ordering

needs of customers in real-time and depicted the exact amounts of pills, pill type, and anticipated

order threshold for its own stores.

328. Through this proprietary data, Walgreens had direct knowledge of patterns and

instances of improper distribution, prescribing, and use of prescription opioids in Illinois, including

in the Counties. It used this data to evaluate its own sales activities and workforce. Walgreens

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 also was in possession of extensive data regarding individual doctors’ prescribing and dispensing

to its customers, the percentage of a prescriber’s prescriptions that were controlled substances,
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individual prescription activity across all Walgreens stores, and the percentages of prescriptions

purchased in cash. Such data are a valuable resource that Walgreens could have used to help stop

diversion, but it did not.

329. Walgreens, by virtue of its data analytics, was actually aware at a corporate level

of indicia of diversion, such as (1) individuals traveling long distances to fill prescriptions; (2)

prescriptions for drug “cocktails,” known for their abuse potential, such as oxycodone and Xanax;

(3) individuals who arrived together with identical or nearly identical prescriptions; (4) high

percentage of cash purchases; and (5) doctors prescribing outside the scope of their usual practice

or geographic area. However, Walgreens failed to effectively make the data demonstrating these

obvious flags available to its pharmacists and failed to properly address the red flag dispensing

patterns.

330. Walgreens also failed to adequately use data available to it to identify doctors who

were writing suspicious numbers of prescriptions and/or prescriptions of suspicious amounts or

doses of opioids, or to adequately use data available to it to prevent the filling of prescriptions that

were illegally diverted or otherwise contributed to the opioid crisis. While Walgreens periodically

implemented programs that would identify the most suspicious prescribers, it failed to make this
data readily available to its pharmacists, and either terminated or failed to act on them at the

corporate level.

331. Upon information and belief, Walgreens failed to adequately analyze and address

its opioid sales relative to: (a) the number of opioid prescriptions filled by its pharmacies relative

to the population of the pharmacy’s community; (b) the increase in opioid sales relative to past

years; and (c) the number of opioid prescriptions filled relative to other drugs.

332. At the store level, Walgreens did not make any controlled substance metrics

available to pharmacists for specific prescribers. Further, despite the fact that at the corporate level

Walgreens utilized many tools, including IMS, for descriptive statistics around prescriber patterns,

82
 Walgreens was not aware of any consistent reports written using that data. Instead, when a

pharmacist or Walgreens team member had a concern about a particular prescriber, ad hoc
FILED DATE: 8/15/2022 4:37 PM 2022L007352

prescriber profiles were pulled. However, these reports were difficult to interpret so corporate

would have to assist with the analysis and interpretation of the reports.

333. Walgreens failed to adequately analyze and address its opioid sales relative to: (a)

the number of opioid prescriptions filled by its pharmacies relative to the population of the

pharmacy’s community; (b) the increase in opioid sales relative to past years; and (c) the number

of opioid prescriptions filled relative to other drugs. For example, Walgreens ran reports known

as “GFD Opportunities reports,” generated from data on its individual pharmacies and

pharmacists. A “GFD Opportunities” tool included information such as “Cash rank, Oxycodone

IR rank, “target” drug quantity rank, and target drug rate rank. With the information available to

it, Walgreens thus knew which pharmacists filled more controlled substances prescriptions that

others, however, Walgreens failed to meaningfully act to curtail red flag dispensing.

334. Upon information and belief, based on other enforcement actions against the

company, Walgreens also failed to conduct adequately analyze and address its opioid sales to

identify patterns regarding prescriptions that should not have been filled and to create policies

accordingly, or if it conducted such reviews, it failed to take any meaningful action as a result.

335. Discovery will reveal that Walgreens knew or should have known that its
pharmacies in Illinois, and the surrounding area, were (a) filling multiple prescriptions to the same

patient using the same doctor; (b) filling multiple prescriptions by the same patient using different

doctors; (c) filling prescriptions of unusual size and frequency for the same patient; (d) filling

prescriptions of unusual size and frequency from out-of-state patients; (e) filling an unusual or

disproportionate number of prescriptions paid for in cash (f) filling prescriptions paired with other

drugs frequently abused with opioids, like benzodiazepines, or prescription “cocktails”; (g) filling

prescriptions in volumes, doses, or combinations that suggested that the prescriptions were likely

being diverted or were not issued for a legitimate medical purpose; and (h) filling prescriptions for

patients and doctors in combinations that were indicative of diversion and abuse. Also, upon

83
 information and belief, the volumes of opioids distributed to and dispensed by these pharmacies

were disproportionate to non-controlled drugs and other products sold by these pharmacies, and
FILED DATE: 8/15/2022 4:37 PM 2022L007352

disproportionate to the sales of opioids in similarly sized pharmacy markets. Walgreens had the

ability, and the obligation, to look for these red flags on a patient, prescriber, and store level, and

to refuse to fill and to report prescriptions that suggested potential diversion.

336. Walgreens admits its role in the opioid epidemic, stating it has the “ability – and []

critical responsibility – to fight the opioid crisis” as the “nation’s largest pharmacy chain” in a time

when “[a]ddiction to prescription painkillers, heroin, and other opioids has surged, with opioid

overdoses quadrupling in this decade” and “drug overdose deaths – the majority from prescription

and illicit opioids” resulting in “more fatalities than from motor vehicle crashes and gun homicides

combined.” Walgreens also admits the “opioid crisis” is caused by “misuse, abuse and addiction”

that result from the “flow of opioids that fuel the epidemic.”

c. Walmart

337. During most of the time period relevant to Plaintiffs’ claims, Walmart acted as

both a distributor of controlled substances to its own Walmart pharmacies and a retailer dispensing

controlled substances at Walmart pharmacies and Sam’s Club pharmacies. While operating under

different brand names, both Walmart and Sam’s Club pharmacies were subject to the same flawed
policies, lack of oversight, and inadequate implementation emanating from Walmart’s Home

Office. In both its capacity as a distributor and as a dispenser of controlled substances, Walmart

failed to implement effective policies and practices to prevent diversion of opioids in and around

Plaintiff’s communities. By the time Walmart implemented a system for monitoring suspicious
orders or policies allowing corporate blocks of known pill mill doctors, the opioid epidemic had

already claimed hundreds of thousands of American lives.

338. Walmart is the largest private employer in the United States, employing over 1.5

million people. But for years, Walmart chose not to assign a single employee to design or operate

84
 a system to detect suspicious orders of controlled substances. Despite Walmart’s obligations as a

distributor of controlled substances, it was not until 2014 that Walmart began to take any
FILED DATE: 8/15/2022 4:37 PM 2022L007352

meaningful steps toward developing a system for monitoring suspicious orders.

i. Walmart Lacked a Suspicious Order Monitoring System for

Most of the Relevant Time Period

339. Walmart operated registered distribution centers to supply its own pharmacies

with controlled substances from the early 2000s until 2018.

340. Prior to 2011, Walmart did not have any written policy or procedure in place to

monitor orders of controlled substances shipped by its pharmacy distribution centers.

341. In the absence of an established policy or procedure, Walmart relied on its hourly

employees and associates filling orders at the distribution centers to subjectively monitor the orders

they were filling for anything unusual. These associates were responsible for filling and reviewing

several hundred orders a day.

342. Walmart did not provide any guidance or training to its associates as to what

constitutes a suspicious order or how to evaluate an order for unusual size, frequency, or pattern.

343. On information and belief, no Walmart employee ever flagged an order as

suspicious prior to 2011.

344. Although Walmart did create a procedure for identifying suspicious orders of

controlled substances beginning in 2011, this procedure was insufficient to identify suspicious

orders of controlled substances. Walmart’s program flagged only very large orders of controlled

substances. Specifically, it flagged weekly orders for controlled substances of 50 bottles (5,000

dosage units) or more and orders for more than 20 bottles (2,000 dosage units) that were 30%

higher than a rolling four-week average for that item. Orders under 2,000 dosage units per week

were never flagged, meaning that a pharmacy could order 8,000 dosage units per month without

ever being flagged. Moreover, that meant that even if an order was more than 30% greater than

the four-week average, it could not draw an alert unless it also was more than 20 bottles.

85
 345. Under this system, an alert did not mean Walmart would report the order to the

DEA or halt it pending necessary due diligence. To the contrary, upon information and belief,
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Walmart never reported an order flagged by its monitoring program to the DEA as suspicious. In

addition, rather than halting the order, Walmart simply cut the order to the amount of the 50-bottle

threshold and shipped it. Walmart never reported cut orders to the DEA. Although the distribution

centers sent information regarding flagged orders daily to Walmart’s corporate headquarters in

Arkansas (the “Home Office”), no system existed for follow-up on flagged orders by employees

at the Home Office.

346. In mid-2012, Walmart implemented a “hard limit” on orders of a single opioid

product, 30 mg oxycodone (“Oxy 30”). Under this approach, an order for over twenty bottles of

Oxy 30 was automatically reduced to twenty bottles. Walmart would not report these excessive

orders of Oxy 30 to the DEA.

347. At the same time, Walmart’s distribution center began generating a daily report of

all the pharmacies placing orders for over twenty bottles of various oxycodone medications,

although Walmart did not place a “hard limit” on any dosage strength or product other than Oxy

30. This report, called the “Over 20 Report” later included other controlled substances as well.

Although the report was generated and circulated on a daily basis, Walmart did not have an

adequate system in place to review and follow up on these excessive orders beyond investigating
for indicators of internal theft, and it did not have a system in place to address stores that repeatedly

appeared on the Over 20 Report. Regardless of having been identified on the Over 20 Report, these

orders were filled and shipped. Upon information and belief, there is no evidence of any order in

fact being held or halted pursuant to this practice.

348. Even if Walmart’s distribution center reduced an order to a smaller number of

bottles, nothing prevented a Walmart or Sam’s Club pharmacy from making up the difference by

ordering opioids from an outside distributor, such as McKesson and AmerisourceBergen. Not only

could Walmart pharmacies place another order with these outside vendors to make up the

difference, but they could also have orders fulfilled by both Walmart and a third-party distributor

86
 at the same time. Even though Walmart had the ability to monitor orders to outside vendors for

suspicious orders, it did not, which allowed Walmart pharmacies to exceed the already high
FILED DATE: 8/15/2022 4:37 PM 2022L007352

thresholds simply by ordering drugs from a third party.

349. Walmart knew that these policies and procedures were insufficient to fulfill its

obligations to prevent diversion of controlled substances. For example, in 2013, Walmart

acknowledged in an internal presentation that it had not yet designed a compliant system for

suspicious order identification, monitoring, and reporting. It also stated that it was “TBD” when

Walmart would develop such a system. In 2014, Walmart acknowledged that it still lacked a

compliant monitoring program and that it had “no process in place” to comply with government

regulations and that this created the “severe” risk of “financial or reputational impact to the

company.” At this point, Walmart still had no written policies and procedures required orders of

interest to be held and investigated.

350. In 2015, Walmart enhanced its suspicious order monitoring policy by

implementing store-specific thresholds. Upon information and belief, it based these thresholds on

the standard deviation of a specific pharmacy’s order history for each controlled substance. The

thresholds also included minimum amounts, below which no orders were flagged under any

circumstance, regardless of pattern or frequency.

351. For almost all Walmart pharmacies, this minimum was set at 2,000 dosage units
per week (or 8,000 dosage units per month). An order under this minimum threshold would not be

flagged regardless of changes in ordering patterns. A pharmacy could, for example, go from

ordering 10 dosage units of Oxycodone 10 mg per month to 7,999 per month without any order

being flagged or reviewed. Thus, even Walmart’s “enhanced” order monitoring program failed to

provide effective controls against diversion.

ii. Walmart Failed to Guard Against Diversion in Distributing into

the Counties

87
 352. According to the data from the DEA's ARCOS database, between the years 2006

and 2014, Walmart distributed more than 218 million dosage units of oxycodone and hydrocodone
FILED DATE: 8/15/2022 4:37 PM 2022L007352

to its pharmacies in Illinois. The volume of opioids Walmart brought into Illinois and

ultimately dispensed from its pharmacy locations was so high as to indicate to Walmart that not

all of the prescriptions distributed to and dispensed out of its Illinois stores could be for legitimate

medical uses.

353. Yet, upon information and belief, Walmart did not report a single suspicious order

in the County between 2007 and 2014. Instead, Walmart funneled far more opioids into Illinois

than could have been expected to serve legitimate medical use and ignored other red flags of

suspicious orders. This information, along with the information known only to distributors such as

Walmart (especially with its pharmacy dispensing data), would have alerted Walmart to potential

diversion of opioids.

354. In addition, Walmart, upon information and belief, also distributed and dispensed

substantial quantities of prescription opioids in other states, and these drugs were diverted from

these other states to Illinois. Walmart failed to take meaningful action to stop this diversion despite

its knowledge of it, and it contributed substantially to the opioid epidemic in Illinois.

355. In the Counties, Walmart violated the standard of care for a distributor by failing

to: (a) control the supply chain; (b) prevent diversion; (c) report suspicious orders; and (d) halt
shipments of opioids in quantities it knew or should have known could not be justified and signaled

potential diversion.

356. As a vertically integrated, national retail pharmacy chain, Walmart had the ability

to detect diversion in ways third-party wholesale distributors could not by examining the

dispensing data from their own retail pharmacy locations.

357. Given the volume and pattern of opioids distributed in Illinois and in the Counties,

Walmart was, or should have been aware that opioids were being oversupplied into the state and

should have detected, reported, and rejected suspicious orders. Yet, the information available

shows it did not.

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 358. Upon information and belief, Walmart, by virtue of the dispensing data available

to it, had actual knowledge of indicia of diversion, such as (1) individuals traveling long distances
FILED DATE: 8/15/2022 4:37 PM 2022L007352

to fill prescriptions; (2) prescriptions for drug “cocktails” known for their abuse potential, such as

oxycodone and Xanax; (3) individuals arriving together with identical or nearly identical

prescriptions; (4) high percentage of cash purchases; and (5) doctors prescribing outside the scope

of their usual practice or geographic area. However, Walmart ignored these obvious red flags.

359. Walmart, therefore, was aware of the suspicious orders that flowed from its

distribution facilities. Walmart refused to identify, investigate, and report suspicious order despite

its actual knowledge of drug diversion. Rather, Walmart failed to report suspicious orders, prevent

diversion, or otherwise control the supply of opioids flowing into Illinois.

360. Upon information and belief, Walmart failed to analyze: (a) the number of opioid

prescriptions filled by its pharmacies relative to the population of the pharmacy’s community; (b)

the increase in opioid sales relative to past years; and (c) the number of opioid prescriptions filled

relative to other drugs.

361. Walmart was, or should have been, fully aware that the opioids being distributed

and dispensed by it were likely to be diverted; yet, it did not take meaningful action to ensure that

it was complying with its duties and obligations with regard to controlled substances, including its

responsibility to report suspicious orders and not to ship such orders unless and until due diligence
allayed the suspicion.

362. Given Walmart’s retail pharmacy operations, in addition to its role as a wholesale

distributor, Walmart knew or reasonably should have known about the disproportionate flow of

opioids into Illinois and the operation of “pill mills” that generated opioid prescriptions that, by

their quantity or nature, were red flags for, if not direct evidence of, diversion.

iii. Walmart Failed to Maintain Effective Controls Against

Diversion from its Pharmacies in the Counties

89
 363. Walmart, throughout the relevant time period, owned and operated pharmacies

throughout the United States, including pharmacies in the Counties. Through its wholly owned or
FILED DATE: 8/15/2022 4:37 PM 2022L007352

controlled subsidiary companies, Walmart operates over 4,500 retail pharmacies across the U.S.,

a mail-order pharmacy, a specialty pharmacy, and six pharmacy distribution centers that distribute

to other Walmart entities.

364. Walmart set policies for its pharmacies at the corporate level. Walmart also

presented, through nationwide advertising, a public image of the safety and excellence of all the

pharmacists the company hired. In a recruitment video for pharmacists on Walmart’s YouTube

channel, the company shows Walmart pharmacists speaking about working at the company: “the

safety and the excellence we carry to our patients is phenomenal,” adding that “the culture that our

company has [is] respect for the individual, service, and excellence, and, of course, we always

have integrity.” 38 The commercial also states that Walmart’s pharmacists “strive for excellence”

and are “passionate about providing quality healthcare.” 39

365. Walmart pharmacies in and around Illinois received distributions of prescriptions

from Walmart’s distribution centers and from other wholesale distributors, which enabled these

pharmacies to have the same orders filled by both Walmart and a third-party distributor.

366. The volume of prescription opioids dispensed by Walmart pharmacies in and

around Illinois is indicative of potential diversion and required appropriate due diligence.

367. As a vertically integrated distributor and dispenser of prescription opioids,

Walmart had unique insight into all distribution and dispensing level data and knew or should have

known that it was dispensing an excessive volume of pills into Illinois.

368. Discovery will reveal that Walmart knew or should have known that its

pharmacies in Illinois, and the surrounding area, were: (a) filling multiple prescriptions to the same

38
Walmart, Your Career as a Walmart Pharmacist (Sept. 25, 2014), available at
https://www.youtube.com/watch?v=9VD12JXOzfs (last visited May 13, 2020).
39
Id.

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 patient using the same doctor; (b) filling multiple prescriptions by the same patient using different

doctors; (c) filling prescriptions of unusual size and frequency for the same patient; (d) filling
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prescriptions of unusual size and frequency from out-of-state patients; (e) filling an unusual or

disproportionate number of prescriptions paid for in cash; (f) filling prescriptions paired with other

drugs frequently abused with opioids, like benzodiazepines or prescription “cocktails”; (g) filling

prescriptions in volumes, doses, or combinations that suggested that the prescriptions were likely

being diverted or were not issued for a legitimate medical purpose; and (h) filling prescriptions for

patients and doctors in combinations that were indicative of diversion and abuse. Also, upon

information and belief, the volumes of opioids distributed to and dispensed by these pharmacies

were disproportionate to noncontrolled drugs and other products sold by these pharmacies, and

disproportionate to the sales of opioids in similarly sized pharmacy markets. Walmart had the

ability, and the obligation, to look for these red flags on a patient, prescriber, and store level, and

to refuse to fill and to report prescriptions that suggested potential diversion.

369. Walmart had complete access to all prescription opioid distribution data related to

Walmart pharmacies in and around Illinois.

370. Walmart had complete access to all prescription opioid dispensing data related to

Walmart pharmacies in and around Illinois.

371. Walmart had complete access to information revealing the doctors who prescribe
the opioids dispensed in Walmart pharmacies in and around Illinois.

372. Walmart had complete access to information revealing the customers who filled

or sought to fill prescriptions for opioids in Walmart pharmacies in and around Illinois.

373. Walmart had complete access to information revealing the opioid prescriptions

dispensed by Walmart pharmacies in and around Illinois.

374. Walmart had complete access to information revealing the geographic location of

out-of-state doctors whose prescriptions for opioids were being filled by Walmart pharmacies in

and around Illinois.

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 375. Walmart had complete access to information revealing the size and frequency of

prescriptions written by specific doctors across Walmart pharmacies in and around Illinois.
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376. Yet, on information and belief, Walmart did not begin to use this information to

identify prescribers of concern or signs of diversion until 2017. Walmart, however, always had the

ability to do so. Walmart also failed to put in place effective policies and procedures for the

identification of red flags when dispensing opioids and failed to provide adequate guidance or

training to its pharmacists on identification of red flags.

377. Even when Walmart pharmacists suspected that an individual prescriber was

consistently writing prescriptions for other than a legitimate medical purpose, they could not, for

most of the relevant time period, use a “blanket” refusal to fill to refuse all prescriptions from that

prescriber. Instead, Walmart pharmacists were required to evaluate and refuse to fill prescriptions

on a case-by-case basis. A 2011 document from Walmart Regulatory Affairs regarding the “Proper

Prescriber-Patient Relationship” stated, “Blanket refusals of prescriptions are not allowed.

378. A pharmacist must make an individual assessment of each prescription and

determine that it was not issued based on a valid prescriber-patient relationship or a valid medical

reason before refusing to fill.” The prescription-by-prescription refusal to fill procedure was time-

consuming and placed the burden on Walmart and Sam’s Club pharmacists, who were already

under pressure to fill prescriptions quickly. Moreover, many red flags for diversion are based on
prescribing patterns that are readily apparent from aggregate data—for example, the percentage of

controlled substance prescriptions compared to non-controlled substances written by a

prescriber—but not apparent based on an individual prescription.

379. Finally, in 2017, Walmart implemented a policy by which individual pharmacists

could request such blanket refusals, which would permit the pharmacist to refuse to fill future

prescriptions from that prescriber without evaluating each prescription individually. In addition,

Walmart also always had the ability to “centrally block” problematic prescribers across all

Walmart and Sam’s Club pharmacies but did not establish a procedure to do so until 2017. In the

“Practice Compliance” document describing this policy, Walmart recognized that its Home Office

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 may, “in certain situations,” have information about prescribing practices that is not available to

individual pharmacists:
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While pharmacists are in the best position to determine whether

individual prescriptions are appropriate, additional information may
be obtained that is not available to our pharmacists. Therefore, in
certain situations, a prescriber may be identified whose prescribing
practices raise concerns about prescribing controlled substances for
legitimate medical purposes. After a thorough review, these
additional insights may lead Walmart to place a block in Connexus
on controlled substance prescriptions from these prescribers.

380. Moreover, Walmart’s pressure on pharmacists to fill more prescriptions quickly

was at odds with a culture and practice of compliance. Incentive awards were tied to the number

of prescriptions a pharmacy filled and profit that the pharmacy generated. Upon information and

belief, controlled substances were included in Walmart’s pharmacy incentive program for most of

the relevant time period. In addition, pharmacists were under constant pressure to increase the

number of prescriptions they filled, and to increase the overall percentage of pharmacy sales. As a
result, upon information and belief, because of Walmart’s drive for speed, pharmacists often did

not have enough time to sufficiently review a prescription and conduct the appropriate due

diligence.

381. These systemic issues are reflected in numerous enforcement actions and

investigations that demonstrate the Walmart put profits and sales ahead of compliance, its

customers and communities, and public safety. In 2009, for example, the DEA issued a Show

Cause order seeking to revoke the registration of a Walmart pharmacy in California. The order

alleged that the pharmacy:

(1) improperly dispensed controlled substances to individuals based

on purported prescriptions issued by physicians who were not
licensed to practice medicine in California; (2) dispensed controlled
substances . . . based on Internet prescriptions issued by physicians
for other than a legitimate medical purpose and/or outside the usual
course of professional practice . . . ; and (3) dispensed controlled

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 substances to individuals that [the pharmacy] knew or should have
known were diverting the controlled substances.
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382. In addition, a 2011 Memorandum of Agreement (“2011 MOA”) arising out of the

investigation states that the DEA also learned that the same pharmacy was allegedly dispensing

controlled substances based on prescriptions that lacked valid DEA numbers and allegedly refilling

controlled-substances prescriptions too early.

383. Upon information and belief, the failures described in the 2011 MOA were not

limited to California but reflected systemic failures at the corporate level. Indeed, the 2011 MOA,

which required Walmart to maintain a “compliance program” states that it is applicable to “all
current and future Walmart Pharmacy locations.”

384. Following the 2011 MOA, Walmart was supposed to revamp its dispensing

compliance program, but still, its policies and procedures remained deficient.

385. Instead, systemic failures continued, and Walmart’s national corporate office not

only failed to insist that Walmart implement adequate controls against diversion, they ignored

concerns raised by Walmart pharmacists.

386. One internal document from 2015, for example, notes concerns from a Walmart

pharmacist that “his leadership would not support his refusing to fill any ‘legitimate’ (written by a

Dr) prescriptions and he stated that his current volume/staffing structure doesn’t allow time for

individual evaluation of prescriptions[.]” When this pharmacist refused to fill a customer’s

controlled substance prescription because the customer was attempting to fill it too soon, the

Market Health & Wellness Director for that store complained to management that the pharmacist

“sent a customer to a competitor” and “expressed significant concern about how ‘sending

customers away’ would impact the sales figures for the store,” and insisted that “the store needs to

fill every available prescription.

387. In December 2020, the U.S. Department of Justice (“DOJ”) filed a lawsuit against

Walmart over its opioid dispensing and distribution practices. United States of America v. Walmart

Inc. et al., No. 1:20-cv-01744, ECF No. 1 (D. Del. December 22, 2020) (“DOJ Compl.”). After a

94
 multi-year investigation, and based on a review of millions of pages of documents, the DOJ alleged

that Walmart pharmacists filled prescriptions issued by “known pill-mill prescribers” and filled
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“numerous prescriptions that, on their face, showed such obvious red flags . . . that Walmart

pharmacists would have known that the prescriptions had a very high probability of being invalid,”

in addition to Walmart having a “grossly inadequate suspicious-order monitoring program.” Id. ¶¶

22-23, 35. Pharmacists or pharmacy managers would contact Walmart’s central compliance

personnel for guidance on handling suspected pill mill doctors but felt that their “concerns are

falling upon deaf ears.” Id. ¶ 237. Pharmacists repeatedly sought help from Walmart’s corporate

office, to no avail. Walmart compliance officials failed to take action in response to these alarms.

Instead, they repeatedly sent the same boilerplate response, stating that pharmacists must use their

professional judgment but that they must continue to evaluate and refuse to fill on an individual,

prescription-by-prescription basis, even in situations where other retail pharmacies had stopped

filling any prescriptions from particular prescribers. As a result, Walmart and Sam’s Club

pharmacies often became channels for illegitimate controlled substance prescriptions from known

pill mills. Even in circumstances where a prescriber was under investigation by the DEA,

Walmart’s compliance department informed pharmacists that would not be a reason to refuse to

fill that prescriber’s controlled substance prescriptions.

388. The practice of filling prescriptions suspected of being illegitimate, including

prescriptions for large quantities of opioids and prescriptions for known “drug cocktails”

frequently diverted and abused, was not limited to handful of Walmart and Sam’s Club

pharmacies. Rather, Walmart had a systemic, national problem. Walmart pharmacists from across

the country, including Maine, Massachusetts, Kansas, Washington, Texas, and North Carolina,

contacted Walmart’s national compliance directors about problem prescribers and suspect

prescriptions. One Walmart pharmacist in North Carolina wrote to a Market Health and Wellness

Director, in an email subsequently sent to the national compliance department, that “there is no

way that many 25 year olds need 120 to 240 oxycodone per month.” DOJ Compl. ¶ 324. Regarding

one Texas doctor who was later convicted of illegal distribution of opioids, a Walmart pharmacy

95
 manager wrote; “Other chains are refusing to fill for him which makes our burden even greater.

Please help us.” Id. ¶174 (emphasis added). Another described the same doctor as a “risk that
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keeps [him] up at night.” Id. ¶ 236. Similarly, in September 2016, a Walmart pharmacy manager

in Illinois advised that a doctor was “under investigation by the DEA for what we believe is a pill

mill operation,” and that Rite Aid had begun refusing to fill his prescriptions. Id. 296. The

pharmacy manager requested that Walmart put in place a similar “blanket denial,” but Walmart’s

compliance department responded that all prescriptions from that doctor must be evaluated

individually. Id. Before this particular doctor was indicted in 2017 on nineteen counts including

unlawful distribution and dispensing of controlled substances and violations of federal drug laws

resulting in the death of five patients, Walmart pharmacies dispensed over 8,000 of his controlled

substance prescriptions. Id. ¶ 297.

389. Upon information and belief, Walmart also failed to adequately use data available

to it to identify doctors who were writing suspicious numbers of prescriptions and/or prescriptions

of suspicious amounts or doses of opioids, or to adequately use data available to it to prevent the

filling of prescriptions that were illegally diverted or otherwise contributed to the opioid crisis.

390. Upon information and belief, Walmart also failed to adequately analyze and

address its opioid sales to identify patterns regarding prescriptions that should not have been filled

and to create policies accordingly, or if it conducted such reviews, it failed to take any meaningful
action as a result.

d. Kroger

391. Although Kroger had access to significant information about red flags due to its

vertical integration with its stores, it failed to use this information in order to more effectively

prevent diversion.

i. Kroger Failed to Maintain Effective Controls Against Diversion of

Opioids It Distributed, Instead Oversupplying Its Stores

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 392. Kroger failed to implement an effective suspicious order monitoring program.

393. According to the data from the DEA's ARCOS database, between the years 2006
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and 2014, Kroeger distributed more than 32 million dosage units of hydrocodone to its pharmacies

in Illinois. The volume of opioids Kroger brought into Illinois and ultimately dispensed from its

pharmacy locations was so high as to indicate to Kroger that not all of the prescriptions distributed

to and dispensed out of its Illinois stores could be for legitimate medical uses.

394. Kroger funneled far more opioids into Illinois than could have been expected to

serve legitimate medical use and ignored other indicia of suspicious orders. This information,

along with the information known only to distributors such as Kroger (especially with its pharmacy

dispensing data), would have alerted Kroger to potential diversion of opioids.

395. Kroger appears to have assigned responsibility for reviewing “unusual orders” to

the Pharmacy Manager, who had the ability to release the order. Kroger had computer-assisted

ordering systems aiming to ensure it had enough supply of controlled substances and other drugs

on hand. “Excessive purchase” information about individual pharmacies was forwarded to a

“Pharmacy Coordinator,” who would either file a report internally or alert the Division

Merchandiser to start an internal investigation.

396. It is unclear when Kroger developed a “computerized statistical information” for

purposes of “pending” orders for evaluation, but it contracted with an outside consultant in 2013.
Even with that system in place, however, it still appears to allow release of orders based simply on

contacting the pharmacy coordinator and obtaining a reason such as “[n]ew customers” to clear an

order. This occurred even though Kroger understood that its “SOM system will fail if individuals

clear orders without adequate investigation.” As of October 2013, an internal document described

“rolling out the SOM program to all” distribution centers and acknowledged it currently lacked

any system to prevent a pharmacy from going to Kroger’s outside vendor, Cardinal Health, to

order items “pended” by the SOM program.

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 397. A Suspicious Order Monitoring Training Material notes the ability of analysts to

review “Business Objects” reports with sales trends and purchase history, and to clear orders based
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on that history.

398. Upon information and belief, Kroger by virtue of the data available to it, was

actually aware of indicia of diversion, such as (1) individuals traveling long distances to fill

prescriptions; (2) prescriptions for drug “cocktails,” known for their abuse potential, such as

oxycodone and Xanax; (3) individuals who arrived together with identical or nearly identical

prescriptions; (4) high percentage of cash purchases; and (5) doctors prescribing outside the scope

of their usual practice or geographic area. However, Kroger ignored these obvious red flags.

399. Upon information and belief, Kroger failed to report suspicious orders, prevent

diversion, or otherwise control the supply of opioids flowing into Illinois and the Counties.

400. Upon information and belief, Kroger failed to analyze: (a) the number of opioid

prescriptions filled by its pharmacies relative to the population of the pharmacy’s community; (b)

the increase in opioid sales relative to past years; and (c) the number of opioid prescriptions filled

relative to other drugs.

401. Kroger was, or should have been, fully aware that the opioids being distributed

and dispensed by it were likely to be diverted; yet, it did not take meaningful action to investigate

or to ensure that it was complying with its duties and obligations with regard to controlled
substances, including its responsibility to report suspicious orders and not to ship such orders

unless and until due diligence allayed the suspicion.

402. Given Kroger’s retail pharmacy operations, in addition to its role as a wholesale

distributor, Kroger knew or reasonably should have known about the disproportionate flow of

opioids into Illinois and the operation of “pill mills” that generated opioid prescriptions that, by

their quantity or nature, were red flags for, if not direct evidence of, illicit supply and diversion.

ii. Kroger Failed to Implement Effective Policies and Procedures to

Prevent Diversion from Its Pharmacy Stores

98
 403. Before 2005, the inadequacy of Kroger’s policies and procedures was particularly

glaring. DEA began investigating King Soopers and City Market, part of the “Kroger Co. Family
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of Stores” in response to information concerning potential diversion. Audits at seven Colorado

pharmacies revealed “a pattern of non-compliance” with the CSA and federal regulations. Because

of record-keeping and security problems, the DEA could not determine from the audit “how many

drugs had been lost or diverted,” but could tell that “many of the CSA violations were the result

of systemic weaknesses present in all King Soopers and City Market pharmacies.”

404. Ultimately, the parent corporation, Kroger Co., agreed in October 2005 to a then

record $7 million settlement for the “systemic violations of the Controlled Substances Act (CSA)

by the company’s pharmacies.” Kroger also “agreed to implement a pharmacy compliance

program estimated to cost over $6 million dollars in all 1,900 of its pharmacies nationwide.” The

changes included the Kroger stores in the County. Upon information and belief, Kroger promised

national reforms because it imposed its procedures at a national level across its “family” of stores,

such that the same systemic failures also existed in Illinois.

405. A DEA press release concerning the settlement highlighted the trust American

place in “corporations like Kroger” to “ensure that controlled substances aren’t diverted to the

illicit market.” Kroger understood the vital importance of its role as the last line of defense. “As

the last person that has the opportunity to speak with a patient or caregiver prior to handing over a
medication that has been known to end the lives of so many when diverted or misused, no one can

overestimate the responsibility of the pharmacist.” Kroger also recognized the “legislative and

social intent of regulating controlled substances” as consistent with its mission in “serving the

public good.”

406. Discovery will reveal that Kroger knew or should have known that its pharmacies

in Illinois and the surrounding area were (a) filling multiple prescriptions to the same patient using

the same doctor; (b) filling multiple prescriptions by the same patient using different doctors; (c)

filling prescriptions of unusual size and frequency for the same patient; (d) filling prescriptions of

unusual size and frequency from out-of-state patients; (e) filling an unusual or disproportionate

99
 number of prescriptions paid for in cash; (f) filling prescriptions paired with other drugs frequently

abused with opioids, like benzodiazepines, or prescription “cocktails”; (g) filling prescriptions in
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volumes, doses, or combinations that suggested that the prescriptions were likely being diverted

or were not issued for a legitimate medical purpose; and (h) filling prescriptions for patients and

doctors in combinations that were indicative of diversion and abuse. Also, upon information and

belief, the volumes of opioids distributed to and dispensed by these pharmacies were

disproportionate to noncontrolled drugs and other products sold by these pharmacies, and

disproportionate to the sales of opioids in similarly sized pharmacy markets. Kroger had the ability,

and the obligation, to look for these red flags on a patient, prescriber, and store level, and to refuse

to fill and to report prescriptions that suggested potential diversion.

a. Meijer

i. Meijer Failed to Guard Against Diversion in Distributing and

Dispensing in Illinois and Surrounding Areas

407. According to the data from the DEA's ARCOS database, between the years 2006

and 2014, Meijer distributed more than 3.9 million dosage units of hydrocodone to its pharmacies

in Illinois. The volume of opioids Meijer brought into Illinois and ultimately dispensed from its

pharmacy locations was so high as to indicate to Meijer that not all of the prescriptions distributed

to and dispensed out of its Illinois stores could be for legitimate medical uses.

408. In Illinois, Meijer violated the standard of care for a distributor and dispenser by

failing to: (a) control the supply chain; (b) prevent diversion; (c) report suspicious orders; and (d)

halt shipments of opioids in quantities it knew or should have known could not be justified and

signaled potential diversion.

409. For years, per capita opioid prescriptions in Illinois increased in ways that should

have alerted Meijer to potential diversion. Indeed, as an operator of retail pharmacies, Meijer had

the ability to detect diversion in ways that included examining the dispensing data from its own

retail pharmacy locations.

100
 410. Given the volume and pattern of opioids distributed in Illinois, Meijer was, or

should have been, aware that opioids were being oversupplied into the state and should have
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detected, reported, and rejected suspicious orders.

411. Meijer was, or should have been, fully aware that the opioids and “cocktail”

combinations being distributed and dispensed by it were likely to be diverted, yet it did not take

meaningful action to ensure that it was complying with its duties and obligations with regard to

controlled substances, including its responsibility to report suspicious orders and not to ship such

orders unless and until due diligence allayed the suspicion.

412. Given Meijer’s retail pharmacy operations, in addition to its role as a wholesale

distributor, Meijer knew or reasonably should have known about the disproportionate flow of

opioids into Illinois, and the operation of “pill mills” that generated opioid prescriptions that, by

their quantity or nature, were red flags for, if not direct evidence of, diversion.

ii. Meijer Failed to Effectively Identify and Investigate Dispensing Red

Flags at Its Pharmacies.

413. Meijer throughout the relevant time period, owned and operated pharmacies

throughout Ohio, Michigan, Indiana, Illinois, and Kentucky, including in Illinois.

414. As described above, the volume of prescription opioids ordered and dispensed by

Meijer pharmacies in and around Illinois is indicative of potential diversion and required
appropriate due diligence.

415. As a distributor and dispenser of prescription opioids, Meijer had visibility into all

distribution and dispensing-level data, and Meijer knew or should have known that it was

dispensing an excessive volume of pills in Illinois.

416. Upon information and belief, Meijer, by virtue of the dispensing data available to

it, had actual knowledge of indicia of diversion, such as (1) individuals traveling long distances to

fill prescriptions; (2) prescriptions for drug “cocktails” known for their abuse potential, such as

oxycodone and Xanax; (3) individuals arriving together with identical or nearly identical

101
 prescriptions; (4) high percentage of cash purchases; and (5) doctors prescribing outside the scope

of their usual practice or geographic area. However, Meijer ignored these obvious red flags.
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417. Upon information and belief, Meijer failed to analyze: (a) the number of opioid

prescriptions filled by its pharmacies relative to the population of the pharmacy’s community; (b)

the increase in opioid sales relative to past years; and (c) the number of opioid prescriptions filled

relative to other drugs.

418. Discovery will reveal that Meijer knew or should have known that its pharmacies in

Illinois, and the surrounding area were: (a) filling multiple prescriptions to the same patient using the

same doctor; (b) filling multiple prescriptions by the same patient using different doctors; (c) filling

prescriptions of unusual size and frequency for the same patient; (d) filling prescriptions of unusual

size and frequency from out-of-state patients; (e) filling an unusual or disproportionate number of

prescriptions paid for in cash; (f) filling prescriptions paired with other drugs frequently abused with

opioids, namely benzodiazepines or muscle relaxers; (g) filling prescriptions in volumes, doses, or

combinations that suggested that the prescriptions were likely being diverted or were not issued for a

legitimate medical purpose; and (h) filling prescriptions for patients and doctors in combinations that

were indicative of diversion and abuse. Also, upon information and belief, the volumes of opioids

distributed to and dispensed by these pharmacies were disproportionate to non-controlled drugs and

other products sold by these pharmacies, and disproportionate to the sales of opioids in similarly sized

pharmacy markets. Meijer had the ability, and the obligation, to look for these red flags on a patient,

prescriber, and store level, and to refuse to fill and to report prescriptions that suggested potential

diversion.

419. Meijer had complete access to all prescription opioid distribution data related to

its pharmacies in and around Illinois.

420. Meijer had complete access to all prescription opioid dispensing data related to its

pharmacies in and around Illinois.

421. Meijer had complete access to information revealing the doctors who prescribed

the opioids dispensed in its pharmacies in and around Illinois.

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 422. Meijer had complete access to information revealing the customers who filled or

sought to fill prescriptions for opioids in its pharmacies in and around Illinois.
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423. Meijer had complete access to information revealing the opioid prescriptions

dispensed by its pharmacies in and around Illinois.

424. Meijer had complete access to information revealing the geographic location of

out-of-state doctors whose prescriptions for opioids were being filled by its pharmacies in and

around Illinois.

425. Meijer had complete access to information revealing the size and frequency of

prescriptions written by specific doctors across its pharmacies in and around Illinois.

426. Upon information and belief, Meijer failed to adequately use data available to it to

identify doctors who were writing suspicious numbers of prescriptions and/or prescriptions of

suspicious amounts or doses of opioids, or to adequately use data available to it to prevent the

filling of prescriptions that were illegally diverted or otherwise contributed to the opioid crisis.

427. Upon information and belief, Meijer also failed to adequately analyze and address

its opioid sales to identify patterns regarding prescriptions that should not have been filled and to

create policies accordingly, or if it conducted such reviews, it failed to take any meaningful action

as a result.

428. As a Michigan-based company, Meijer would or should also be aware that,

according to the FBI, Michigan plays an important role in the opioid epidemic in other states;

opioids prescribed in Michigan are often trafficked into Illinois.

a. Albertsons

429. According to the data from the DEA's ARCOS database, between the years 2006

and 2014, Albertsons distributed more than 203 million dosage units of oxycodone and

hydrocodone to its pharmacies in Illinois. The volume of opioids Albertsons brought into Illinois

and ultimately dispensed from its pharmacy locations was so high as to indicate to Albertsons that

103
 not all of the prescriptions distributed to and dispensed out of its Illinois stores could be for

legitimate medical uses.

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430. On information and belief, for some of the relevant time period, Albertsons

operated an internal self-distribution network that supplied certain prescription opioids to

pharmacies owned and operated by Albertsons. Albertsons distributed controlled substances

through its distribution center in Ponca City, Oklahoma, registered as Albertsons LLC Distribution

Center #8720. 40

431. On information and belief, Albertsons lacked a suspicious order monitoring

system for most of the time it operated its self-distribution network, relying on its employees’

subjective evaluation of what constitutes a suspicious or unusual order.

432. On information and belief, when Albertsons did implement an objective measure

for detecting suspicious orders, it was based on a simple threshold that would be triggered by the

size of the order only and not the frequency or pattern of the orders.

433. As described below, Albertsons’s failure to establish effective controls against

diversion with respect to its self-distribution of opioids was compounded by its failures to

effectively monitor for dispensing red flags.

iii. Albertsons Failed to Guard Against Diversion in Distributing and

Dispensing in Illinois

434. In Illinois, Albertsons violated the standard of care for a distributor and dispenser

by failing to: (a) control the supply chain; (b) prevent diversion; (c) report suspicious orders; and

(d) halt shipments of opioids in quantities it knew or should have known could not be justified and

signaled potential diversion.

40
On information and belief, Albertsons pharmacies also ordered controlled substances through
McKesson, while Safeway pharmacies prior to 2015 ordered controlled substances primarily through
Cardinal Health.

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 435. For years, per capita opioid prescriptions in Illinois increased in ways that should

have alerted Albertsons to potential diversion. Indeed, as an operator of retail pharmacies,

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Albertsons had the ability to detect diversion in ways third- party wholesale distributors could not

by examining the dispensing data from its own retail pharmacy locations.

436. Given the volume and pattern of opioids distributed in Illinois, Albertsons was, or

should have been, aware that opioids were being oversupplied into the state and should have

detected, reported, and rejected suspicious orders.

437. Albertsons was, or should have been, fully aware that the opioids and “cocktail”

combinations being distributed and dispensed by it were likely to be diverted, yet it did not take

meaningful action to ensure that it was complying with its duties and obligations with regard to

controlled substances, including its responsibility to report suspicious orders and not to ship such

orders unless and until due diligence allayed the suspicion.

438. Given Albertsons’s retail pharmacy operations, in addition to its role as a

wholesale distributor, Albertsons knew or reasonably should have known about the

disproportionate flow of opioids into Illinois, and the operation of “pill mills” that generated opioid

prescriptions that, by their quantity or nature, were red flags for, if not direct evidence of, diversion.

iv. Albertsons Failed to Effectively Identify and Investigate Dispensing

Red Flags at Its Pharmacies

439. Albertsons, throughout the relevant time period, owned and operated pharmacies

throughout the United States, including in Illinois. Through its wholly owned or controlled

subsidiary companies, Albertsons operates over 1,700 retail pharmacies across the United States.

440. As described above, the volume of prescription opioids ordered and dispensed by

Albertsons pharmacies in Illinois is indicative of potential diversion and required appropriate due

diligence.

441. Upon information and belief, Albertsons, by virtue of the dispensing data available

to it, had actual knowledge of indicia of diversion, such as (1) individuals traveling long distances

105
 to fill prescriptions; (2) prescriptions for drug “cocktails” known for their abuse potential, such as

oxycodone and Xanax; (3) individuals arriving together with identical or nearly identical
FILED DATE: 8/15/2022 4:37 PM 2022L007352

prescriptions; (4) high percentage of cash purchases; and (5) doctors prescribing outside the scope

of their usual practice or geographic area. However, Albertsons ignored these obvious red flags.

442. Upon information and belief, Albertsons failed to analyze: (a) the number of

opioid prescriptions filled by its pharmacies relative to the population of the pharmacy’s

community; (b) the increase in opioid sales relative to past years; and (c) the number of opioid

prescriptions filled relative to other drugs.

443. Discovery will reveal that Albertsons knew or should have known that its

pharmacies in Illinois, as well as nearby states were: (a) filling multiple prescriptions to the same

patient using the same doctor; (b) filling multiple prescriptions by the same patient using different

doctors; (c) filling prescriptions of unusual size and frequency for the same patient; (d) filling

prescriptions of unusual size and frequency from out-of-state patients; (e) filling an unusual or

disproportionate number of prescriptions paid for in cash; (f) filling prescriptions paired with other

drugs frequently abused with opioids, namely benzodiazepines or muscle relaxers; (g) filling

prescriptions in volumes, doses, or combinations that suggested that the prescriptions were likely

being diverted or were not issued for a legitimate medical purpose; and (h) filling prescriptions for

patients and doctors in combinations that were indicative of diversion and abuse. Also, upon
information and belief, the volumes of opioids distributed to and dispensed by these pharmacies

were disproportionate to noncontrolled drugs and other products sold by these pharmacies, and

disproportionate to the sales of opioids in similarly sized pharmacy markets. Albertsons had the

ability, and the obligation, to look for these red flags on a patient, prescriber, and store level, and

to refuse to fill and to report prescriptions that suggested potential diversion.

444. Albertsons had complete access to all prescription opioid distribution data related

to its pharmacies in and around the Counties.

445. Albertsons had complete access to all prescription opioid dispensing data related

to its pharmacies in Illinois.

106
 446. Albertsons had complete access to information revealing the doctors who

prescribed the opioids dispensed in its pharmacies in Illinois.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

447. Albertsons had complete access to information revealing the customers who filled

or sought to fill prescriptions for opioids in its pharmacies in Illinois.

448. Albertsons had complete access to information revealing the opioid prescriptions

dispensed by its pharmacies in Illinois.

449. Albertsons had complete access to information revealing the geographic location

of out-of-state doctors whose prescriptions for opioids were being filled by its pharmacies in

Illinois.

450. Albertsons had complete access to information revealing the size and frequency

of prescriptions written by specific doctors across its pharmacies in Illinois.

451. Upon information and belief, Albertsons failed to adequately use data available to

it to identify doctors who were writing suspicious numbers of prescriptions and/or prescriptions of

suspicious amounts or doses of opioids, or to adequately use data available to it to prevent the

filling of prescriptions that were illegally diverted or otherwise contributed to the opioid crisis.

452. Upon information and belief, Albertsons also failed to adequately analyze and

address its opioid sales to identify patterns regarding prescriptions that should not have been filled

and to create policies accordingly, or if it conducted such reviews, it failed to take any meaningful
action as a result.

D. Defendants’ Performance Metrics Put Profits Before Safety

453. Not only did the Chain Pharmacies lack (and fail to implement) adequate policies

and procedures to guard against diversion, but CVS, Walgreens, and Walmart, and upon

information and belief, the other Chain Pharmacies compounded this problem by implementing

performance metrics and prescription quotas for retail stores that contributed to supplying of a

black market, including in the Counties.

107
 454. Defendants also had a responsibility to create a work environment that enables its

pharmacy staff to detect and prevent diversion, or at the very least does not undermine the ability
FILED DATE: 8/15/2022 4:37 PM 2022L007352

of staff to carry out these functions or direct emphasis toward increased sales instead of legal

compliance. Accordingly, former DEA diversion investigator Demetra Ashley testified that she

believed the duty to provide tools to prevent diversion under Section 1301.71 includes providing

a work environment that allows pharmacists to fulfill their corresponding responsibility to fill only

legitimate prescriptions. She further agreed as to the importance of adequate staffing and testified

that both strict time limits that deprived pharmacists of enough time to investigate red flags and

requiring quotas on prescriptions filled sounded unreasonable.

455. In connection with the DEA’s investigations described above, the DEA found

evidence that Walgreens had a corporate policy encouraging increased sales of oxycodone. As the

DEA’s September 2012 Order to Show Cause and Immediate Suspension of Registration explains:

In July 2010, Walgreens’s corporate headquarters conducted an

analysis of oxycodone dispensing for the prior month at its Florida
retail pharmacies and produced an 11-page spreadsheet, ranking all
Florida stores by the number of oxycodone prescriptions dispensed
in June. The spreadsheet was sent to Walgreens’s market pharmacy
supervisors in Florida on July 29, 2010, with the admonition that
they “look at stores on the bottom end .... We need to make sure we
aren’t turning legitimate scripts away. Please reinforce.” A
corporate market director of pharmacy operations did reinforce this
message to Florida market pharmacy supervisors, highlighting that
their “busiest store in Florida” was filling almost 18 oxycodone
prescriptions per day, yet “We also have stores doing about 1 a day.
Are we turning away good customers?”

456. In 2011, a Walgreens project to “Increase Rx Sales and prescription Counts”

instructed pharmacies to “improve C2 business” – i.e. dispense more Schedule 2 controlled

substances. This focus on increasing controlled substance dispensing – including opioids –

continued even after the DEA investigation and $80 million fine. For example, in 2014, the RX

Integrity department created a “Pharmacist Controlled Substance Dispensing Opportunities” tool

108
 to “identify pharmacists that are dispensing a low rate of controlled substances,” and help

pharmacists “feel more comfortable in filling controlled substances,” specifically focusing on

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pharmacists dispensing low rates of opioids like “hydromorphone, oxycodone, methadone…

hydrocodone,” and the cocktail drugs comprising the rest of the “holy trinity” of abuse, such as

“carisoprodol… [and] alprazolam.”

457. Walgreens also had a bonus program that factored prescription volume into bonus

calculations and served as an incentive for pharmacies and pharmacy technicians to ignore the “red

flags” of diversion. The corporate push for speed (or volume) deterred pharmacists from taking

the time to properly examine the prescriptions before them and exercising their corresponding

responsibility to prevent diversion.

458. Walgreens emphasized in its policies for pharmacist and pharmacy managers:

“The best evidence of a well-run pharmacy is the increase in prescriptions and pharmacy sales.”

One former Walgreens pharmacist described management critiques for “not going fast enough” in

dispensing prescriptions and believed “[t]hey’d like you to fill one a minute if you could.” She

recalled there was even a timer to alert her if she was falling behind, and threats of reduced hours

or a move to a different store or location. 41 Indeed, Walgreens had a tool, the “PhLOmometer”

that tracked the time to fill a prescription. A March 2013 memo confirms that volume targets

included controlled substances as late as 2013 and even after the adopting of the GFD policy.

Specifically, the memo states, as the response to an “[a]nticipated question” that “GFD concerns

doesn’t relieve you from trying to attain the numbers that have been set for you.” When

considering high schedule 2 dispensing at a particular pharmacy in New Jersey in 2012, as the

opiate crisis raged, the pharmacy supervisor pushed back against any attempt to reduce supply of

oxycodone, focusing on the impact the reduction would make on filled prescriptions and “the

bonus tied to” one pharmacy employee.

41
Are Business Tactics at Some Pharmacies Risking Your Health? (Nov. 8, 2017),
https://reachmd.com/news/are-business-tactics-at-some-pharmacies-risking-your-health/1610793/
109
 459. Such corporate goals obstruct the performance of pharmacists’ professional

obligations. There is an inherent conflict between performance metrics that pressure pharmacists
FILED DATE: 8/15/2022 4:37 PM 2022L007352

to fill certain volume of prescriptions, limit customers’ wait time, or base pharmacists’ incentive

pay on customer satisfaction, on the one hand, and the ability to conduct appropriate due diligence

to guard against diversion of controlled substances and refuse to fill illegitimate prescriptions even

if a customer is dissatisfied, on the other. Defendants have a duty to maintain a corporate culture

that promotes and ensures compliance with the law.

460. Defendants maintained no such corporate cultures. Walmart even pushed back

when, in 2013, the DEA expressed concerns that bonus incentives for dispensing controlled

substances could “lead to bad pharmacist decisions because they know they get will something out

of filling scripts.” Even though Walmart agreed it should not provide “special” incentives

particular to filling controlled substance prescriptions, it resisted excluding controlled substances

from incentives also applied with respect to other drugs and does not appear to have excluded

controlled substance prescriptions from bonus calculation formulas.

461. In February 2012, Richard Ashworth, then the Vice President of Walgreens’

Western Division, supervising over 2,000 Walgreens stores, encouraged stores “to drive for the

activities that drive incremental scripts. There are metrics we can improve, today, that we will

demonstrate the ‘doing whatever it takes’ to achieve 100% of FY2011 Script volume,” noting “we
are not doing whatever it takes,” and particularly that in the “Top 2 complaints” was “Pharmacy

Fill was denied.”

462. As described further below, pharmacists were expected to meet volume and speed

goals. With respect to the volume-based bonus policy, a March 2013 memo confirms that volume

targets included controlled substances as late as 2013 and even after the adopting of the GFD

policy. Specifically, the memo states, as the response to an “[a]nticipated question” that “GFD

concerns doesn’t relieve you from trying to attain the numbers that have been set for you.”

463. Only as part of its 2013 settlement with the DEA did Walgreens agree to exclude

controlled substances calculations from bonus calculations from 2014 forward. This resulted in a

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 21% reduction in the number of stores purchasing the 80mg OxyContin – evidence that a minimal

effort to implement common sense controls had a tangible impact on sales of the most potent
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controlled substances (although that reduction did not last, as described above, and Walgreens’s

volume by 2014 had increased again).

464. Even though controlled substances were removed from direct bonus calculations

for pharmacists, pharmacists still felt pressured by management to fill prescriptions they were

uncomfortable filling, as refusals to fill would impact other store metrics – like customer

satisfaction – that impacted management compensation. As one Walgreens pharmacist noted: “As

long as Walgreens allows their pharmacists to be evaluated by store managers (who are trained by

the Company to be concerned with profit, customer service, and resolving customer complaints),

store managers will assert their authority over the pharmacists and will naturally confuse good

faith dispensing issues with customer service issues. This is a clear conflict of interest.”

465. Walgreens also lobbied against imposition of caps or limits on the volume of

prescriptions a pharmacist may fill. As the New York Times reported last year, pharmacists at

chain pharmacies, including Walgreens have “said it had become difficult to perform their jobs

safely, putting the public at risk of medication errors,” as they “struggle to fill prescriptions, give

flu shots, tend the drive-through, answer phones, work the register, counsel patients, and call

doctors and insurance companies … all the while racing to meet corporate performance metrics
that they characterized as unreasonable and unsafe ….” 42 Instead of reducing performance targets,

chain pharmacies including Walgreens seek to assign more dispensing tasks to less qualified—and

less expensive—pharmacy technicians.

466. Walgreens Pharmacy Managers provided feedback stating that pharmacists did not

have enough time to do their work effectively and that a lack of resources kept them from being

effective and consistent. The feedback also indicated that pharmacy managers were “[s]truggling

42
See Ellen Gabler, How Chaos at Pharmacies Is Putting Patients at Risk, New York Times, (Jan. 31,
2020), https://www.nytimes.com/2020/01/31/health/pharmacists-medication-errors.html.
111
 to keep our heads above water let alone manage.” A consultant hired by Walgreens interviewed

pharmacy staff and reported “High Stress” and “errors resulting from stress” and stated, “we heard
FILED DATE: 8/15/2022 4:37 PM 2022L007352

multiple reports of improper behavior” that was “largely attributed to the desire” to meet a

corporate metric known as “promise time,” which ensures that patients get prescriptions filled

within a set amount of time.

467. As early as 2006 CVS judged a pharmacist’s performance based on metrics that

would motivate employees to exceed top line results and maximize store profits. These metrics,

would rely, in part, upon the number of prescriptions dispensed. By 2010, CVS had implemented

performance metrics that remain publicly available online. CVS’s metrics system lacked any

measurement for pharmacy accuracy or customer safety. They did, however, prioritize speed and

volume, including by requiring pharmacists to meet wait- or fill-time expectations. Moreover, the

bonuses for pharmacists are calculated, in part, on how many prescriptions that pharmacist fills

within a year. Even in 2020, pharmacists described CVS as the “most aggressive chain in imposing

performance metrics.”

468. As noted above, former pharmacists at both Walgreens and CVS have publicly

complained about pressure to put speed ahead of safety. Concerning the metrics at CVS, one

pharmacist commented that “You get stressed, and it takes your mind away from the actual

prescriptions.” Another former CVS pharmacist recalled that “[e]very prescription [wa]s timed,”
and a backlog would pop up in color on pharmacists’ computer screens if they fell behind. 43

Additionally, CVS has faced discrimination complaints alleging that the company’s “Metrics”

system set unobtainable goals—or at least, goals that could not be obtained without violating the

laws and practice rules governing pharmacists’ professional responsibilities, edging out older

pharmacists.

43
Sam Roe, Ray Long, and Karisa King, Contract Reporters, Pharmacies Miss Half of Dangerous Drug
Combinations, Dec. 15, 2016, http://www.chicagotribune.com/news/watchdog/druginteractions/ct-drug-
interactions-pharmacy-met-20161214-story.html.
112
 469. More recently, a former CVS pharmacist in North Carolina described being driven

to leave his position and open his own pharmacy, where he could work safely. He described
FILED DATE: 8/15/2022 4:37 PM 2022L007352

working a 13-hour shift with no breaks for lunch or dinner at CVS the day before he left in

December 2018; a day on which he filled “552 prescriptions—about one every minute and 25

seconds—while counseling patients, giving shots, making calls and staffing the drive-through.” 44

In departing, he let his manager know that he would not “work in a situation that is unsafe.” 45 One

pharmacist was so alarmed that he wrote anonymously to the Texas State Board of Pharmacy to

caution: “I am a danger to the public working for CVS.” 46

470. As further evidence of the complaints by CVS pharmacists, the State of Ohio

Board of Pharmacy (“Board of Pharmacy”) disseminated in July of 2020 a workload survey to all

pharmacists working in Ohio. 47 The Board of Pharmacy published its survey results, described
below, in April of 2021.

471. One survey comment from a CVS pharmacist states: “As a pharmacist for CVS

the working conditions are very dangerous. They are constantly cutting hours and expecting us to

do more with less. I feel like there are at least 1‐2 dispensing errors every month in my pharmacy.

If we were allowed to work at a safe pace, this would be completely avoidable. All of the retail

pharmacists I work with feel like they need to cut corners to finish all of the work in time. Many

cvs [sic]stores had over a hundred pages in their queues at the beginning of 2020 because they

were so far behind (15 prescriptions per page so this equates to over a weeks [sic] worth of work).”

472. Another CVS pharmacist comments: “At CVS, work load [sic] increase every year

and staffing don’t [sic] increase always decreasing hours on staffing, we pharmacists are counted

to help techs on their jobs to be able to make the pharmacy work and try to finish work load [sic]

44
Ellen Gabler, How Chaos at Pharmacies Is Putting Patients at Risk, New York Times, (Jan. 31,
2020), https://www.nytimes.com/2020/01/31/health/pharmacists-medication-errors.html.
45
Id.
46
Id.
47
State of Ohio Board of Pharmacy’s Pharmacist Workload Survey, April 2021. See
https://www.pharmacy.ohio.gov/Documents/Pubs/Reports/PharmacistWorkloadSurvey/2020%20Pharmac
ist%20Workload%20Survey.pdf.
113
 for the day. No breaks or lunchs [sic] for pharmacist. No time to do a proper counsel, mtm [sic]

and patient care. I think with the work load we should have over lap [sic] with pharmacist. Some
FILED DATE: 8/15/2022 4:37 PM 2022L007352

days we work 13hr shifts, too much with no lunch or break.”

473. Still another CVS pharmacist complains about CVS’s metrics: “I do want to point

out several years ago I worked at CVS and that was the worst experience I had as a retail

pharmacist. Too much focus on metrics and each Rx ends up not being given due attention.

Extreme workload , corporate pressure , [sic]low staff resulted in RPh having not even 5 mins in

a day of 10hrs [sic] to eat! [sic] Its time someone stopped CVS making a factory out of Pharmacy.”

474. While another CVS pharmacist complains about the work hours and a lack of a

break: “CVS makes pharmacist work 14 hrs [sic] days with no lunch break or schedule break. If

you complain they warn that there are hundreds of new grads who can’t find a job bc [sic] there

are so many pharmacy schools opened in Ohio who they can pay less to do your job d/t [sic] over

saturation.”

475. Another CVS pharmacist asserts CVS cares only about money: “CVS only cares

about money and numbers. Their customers and employees are the least of their concern. They cut

technician hours to the point where pharmacists are working alone on a consistent basis processing,

filling, checking, and dispensing a prescription every 2 minutes while also answering the phone,

assisting customers with questions out in the aisles and managing all the administrative
requirements on a day to day[sic].”

476. It is difficult to contemplate how any pharmacist could and/or would be able to

meaningfully comply with any corporate policy regarding red flag analyses or any anti-diversion

analysis under such draconian pressures.

477. Without describing individual pharmacies, Daniel Hussar, a nationally-known

expert and teacher of pharmacology at Philadelphia’s University of the Sciences, commented in

the media that the pace and pressure of prescription quotas appeared to be having an impact on

accuracy. “The frequency of these errors is increasing greatly,” Hussar said; “I’ve heard some

114
 pharmacists say, ‘It’s a blur as to what happened during the day and I can only pray I didn’t make

any serious mistakes.’” 48

FILED DATE: 8/15/2022 4:37 PM 2022L007352

478. This pressure and focus on profits would not only lead to mistakes, it also would

necessarily deter pharmacists from carrying out their obligations to report and decline to fill

suspicious prescriptions and to exercise due care in ascertaining whether a prescription is

legitimate.

479. Indeed, “a survey by the Institute for Safe Medication Practices (ISMP) revealed

that 83% of the pharmacists surveyed believed that distractions due to performance metrics or

measured wait times contributed to dispensing errors, as well as that 49% felt specific time

measurements were a significant contributing factor.” 49

480. In 2013, the National Association of Boards of Pharmacy (NABP), passed a

resolution which cited this survey and additionally stated that “performance metrics, which

measure the speed and efficiency of prescription work flow by such parameters as prescription

wait times, percentage of prescriptions filled within a specified time period, number of

prescriptions verified, and number of immunizations given per pharmacist shift, may distract

pharmacists and impair professional judgment” and “the practice of applying performance metrics

or quotas to pharmacists in the practice of pharmacy may cause distractions that could potentially

decrease pharmacists’ ability to perform drug utilization review, interact with patients, and

maintain attention to detail, which could ultimately lead to unsafe conditions in the pharmacy.” 50

481. Still, according to a 2016 investigation by the Chicago Tribune, as chain

pharmacies increasingly promote quick service, “pharmacists frequently race through legally

required drug safety reviews—or skip them altogether,” missing dangerous drug combinations in

48
Are Business Tactics at Some Pharmacies Risking Your Health?, ReachMD citing ksdk.com (Nov. 8,
2017), https://reachmd.com/news/are-business-tactics-at-some-pharmacies-risking-your-health/1610793.
49
NAPB, Performance Metrics and Quotas in the Practice of Pharmacy (Resolution 109-7-13) (June 5,
2013), https://nabp.pharmacy/performance-metrics-and-quotas-in-the-practice-of-pharmacy-resolution-
109-7-13.
50
Id.
115
 the process. 51 A pharmacist too rushed to check for a potentially deadly drug interaction is also

likely to be too rushed to check for red flags of diversion, such as prescription “cocktails” or other
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combinations of highly abused drugs.

482. According to the Tribune’s coverage, Walgreens failed a test of whether

pharmacists would dispense dangerous drug combinations without warning patients 30 percent of

the time. 52 In reporting on the results of its investigation, the Tribune quoted Bob Stout, president

of the New Hampshire Board of Pharmacy, stating that “‘They’re cutting corners where they think

they can cut.” 53 As the report itself explained: “some pharmacies emphasize fast service over
patient safety. Several chain pharmacists, in interviews, described assembly-line conditions in

which staff hurried to fill hundreds of prescriptions a day. 54

483. “The National Coordinating Council for Medication Error Reporting and

Prevention (NCCMERP), also passed a statement advocating for the “elimination of prescription

time guarantees and a strengthened focus on the clinical and safety activities of pharmacist within

the community pharmacy setting.” 55

More recently, a January 2020 New York Times article, referenced

above, revealed that the problematic performance metrics remain,
and have remained, in place. One South Carolina pharmacist
advised: We are being asked to do things that we know at a gut level
are dangerous. If we won’t or can’t do them, our employers will find
someone else who will, and they will likely try to pay them less for
the same work.

51
Sam Roe, Ray Long, and Karisa King, Contract Reporters, Pharmacies Miss Half of Dangerous Drug
Combinations, Dec. 15, 2016, http://www.chicagotribune.com/news/watchdog/druginteractions/ct-drug-
interactions-pharmacy-met-20161214-story.html.
52
Id.
53
Id.
54
Id.
55
National Coordinating Council for Medication Error Reporting and Prevention. Statement Advocating
for the Elimination of Prescription Time Guarantees in Community Pharmacy,
http://www.nccmerp.org/statement-advocating-elimination-prescription-time-guarantees-community-
pharmacy.
116
 484. An April 2021 workload survey from the Ohio Board of Pharmacy, 56 referenced

above, revealed a contrast between the responses of pharmacists at chain pharmacies and
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pharmacists at other locations concerning the time available to do their job safely:

485. The same was true concerning whether standards or metrics were perceived as

interfering with patient care:

56
https://www.pharmacy.ohio.gov/Documents/Pubs/Reports/PharmacistWorkloadSurvey/
2020%20Pharmacist%20Workload%20Survey.pdf
117
FILED DATE: 8/15/2022 4:37 PM 2022L007352

486. The overwhelming majority of pharmacist comments reported in the survey

reflected a belief that chain pharmacies place profit over safety. A common refrain heard from

pharmacists was being asked to do more with less: carrying more responsibilities and facing

increased prescription volumes while staffing levels have decreased. In a job market filled with

new graduates, pharmacists were reminded that they were replaceable. A Walmart pharmacist
complained that “CVS and Rite [A]id will fill anything” and expressed frustration that Walmart was

“under the microscope for filling opioids and benzodiazepines” and being told by DEA to “do more,”

because it was “buying too many controls.”

487. Pharmacists disclosed troubling information, including Walgreens pharmacists

who reported the following: “I received my first lunch break last week in the 7 years I have been

a pharmacist. I literally have almost passed out multiple times from lack of breaks.” 57 “Anytime I

would ask for more help or complain, I was told if you don’t want this job there are plenty of

unemployed pharmacists who will do your same job for less money.” 58 “The supervisors are

57
Id. at 61.
58
Id. at 83.
118
 always bending the rules to achieve certain metrics for the company. For instance, Pharmacists

make patient calls throughout the day and are expected to reach a certain percentage of people. To
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help reach this number we are asked to leave messages on patient voicemails telling them if they

don’t call us back, we are to call them again later that day. Many compliance issues are ignored.”59

488. Kroger pharmacists reported the following: “I specifically left retail pharmacy at

Kroger because of the complete and utter disregard for patient safety.” 60 Kroger pharmacies lacked

staffing, inadequately trained their employees, and committed “abundant” errors, which “lead to

punishment” when reported. 61 Concerns about “unsafe” staffing levels were rebuffed.” 62 “The

culture within Kroger is to look the other way.” 63 “The workload is unrealistic and unsafe.” 64

E. Defendants Worked Together to Increase Their Profits and Lobbied Against

Restrictions on Opioid Use and DEA Enforcement.

489. Beginning as early as the 1990s, outside distributors, largely through the HDA,

began to get together with the Chain Pharmacies through NACDS to discuss “concerns regarding

statutory requirements to report to DEA what are commonly referred to as suspicious orders.”

490. The DEA’s suspensions of the registrations of three major distributors in 2007 lit

a fuse within the industry. The very real threat of DEA enforcement prompted a flurry of

communications between NACDS members and members of the HDA, described above, as well

as the now-notorious Pain Care Forum (“PCF”), a forum run by opioid manufacturers. A goal of

HDA, which it shared with NACDS, was to “develop a comprehensive DEA strategy” to avoid

enforcement actions against distributors.

59
Id. at 89.
60
Id. at 80.
61
Id
62
Id.
63
Id. at 104.
64
Id. at 150.

119
 491. The NACDS and Defendants’ other trade groups saw their role in influencing

diversion policy as being one that was absolutely critical, considering all that was at stake. At
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times, these groups adopted militaristic strategies and used terminology ironically similar to the

“War on Drugs,” developing “task forces” and viewing the DEA’s crackdown on distributors and

chain pharmacies as an assault on the companies themselves. Only this time, the war was being

waged against the very regulatory authorities and government entities fighting to deal with the

ever-growing problem of abuse and diversion in this country.

492. Manufacturers’ participation in Defendants’ trade groups as a means to effectuate

favorable policies is clear when evaluated in the context of how Defendants and other stakeholders

viewed the DEA’s attempts to curb the opioid epidemic.

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493. Walgreens, like the other Defendants, recognized the importance of being able to

control and influence trade groups such as the NACDS in the context of influencing policy related

to opioid drug abuse and diversion. The efforts taken by the NACDS and other trade groups on

behalf of Defendants were so important to their bottom line that Defendants spared no expense in

supporting such groups. Walgreens took a particularly aggressive view of this mutually beneficial

relationship, at times, being its top donor across the country.

494. NACDS worked with the HDA, the Alliance to Prevent the Abuse of Medicines

(“APAM”), and the PCF to support the Marino Blackburn Bill, also known as S.483 or the “Marino

Bill.” NACDS and Defendants intended the Marino Bill to “tie the hands” of the DEA to actively

and aggressively address diversion and compliance with the CSA.” NACDS worked together with

others in the opioid supply chain to influence the language in the bill to make it most favorable for

them and more restrictive on the DEA. Notably, masking the influence of industry, when the

APAM was asked to sign on to a 2014 letter of support it was “signed by the Alliance, not the

individual members.” The final letter that was sent to Senators Hatch and Whitehouse was signed

by the members of the Pain Care Forum as well as the Alliance, the NACDS, American Academy

of Pain Management, and U.S. Pain Foundation.

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 495. The Marino Bill effectively removed the DEA’s ability to issue immediate

suspension orders regarding manufacturer or distributor registrations. It also permitted a non-

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compliant registrant an opportunity to cure its noncompliance before the DEA could take

enforcement action and changed the standard upon which revocation occurred. In the midst of a

growing opioid crisis, the Marino Bill removed the most effective deterrent and constrained DEA

enforcement actions. With respect to its efforts to tie the hands of the DEA in its ability to pursue

and hold accountable Defendants and other stakeholders for violations of law related to the sale

and distribution of prescription opioids, CVS appreciated NACDS’s influence.

496. CVS as a member of the HDA, NACDS and the APAM was actively involved in

efforts to curb the enforcement power of the DEA in its support of the Marino Bill. Its history and

ties to the HDA and NACDS run deep.

497. The APAM is a trade group launched in the fall of 2013 and compromised of

members of the American Medical Association, Cardinal, CVS, HDMA, Prime Therapeutics and

Teva Pharmaceuticals.

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498. CVS and Defendants used trade groups like the HDA, NACDS and APAM to gain

favorable results when it came to regulations and roadblocks that were seen as being in the way of

the Defendants ability to capitalize on the opioid business. In particular CVS would often hide

behind the APAM when it knew its position could be controversial as it related to abuse and

diversion. This particular letter was one in support of the controversial Marino Bill, a bill that

CVS fought hard to push through, supporting it on three different fronts.

499. In August of 2011, NACDS worked with others on a joint letter opposing DEA

fee increases for registrants that were intended to fund the “hir[ing of] more agents and do[ing]

more inspections.”

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 500. HDA’s Crisis Playbook, developed in 2013, was a direct response to the “threats”

perceived by HDA’s members and affiliates, including Defendants, to their bottom line: profits
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derived from the distribution and sale of prescription opioids. Defendants did and continue to rely

on and employ the strategies discussed in the Crisis Playbook. Curiously, there are no slides on

how best HDA and its members, including Defendants, might work to curb the crisis that is the

opioid epidemic.

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125
 501. In 2016, the NACDS Policy Council discussed ongoing efforts to shape opioid

legislation, including their success in removing a requirement that pharmacists have to check their
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state drug monitoring program before filling controlled prescriptions. NACDS also fought

regulatory efforts to require Defendants to use available dispensing related data and red flags to

prevent diversion, opposing what it described as “recent DEA actions in which DEA is expecting

pharmacists to be enforcement agents with respect to prescriptions for pain medications.

502. NACDS and HDA sought to slow down and impede DEA enforcement activities by

requiring the DEA to “work with the [Food and Drug Administration] FDA on all drug diversion

issues,” ostensibly on the grounds that the DEA’s diversion enforcement activities – including

“clos[ing] drug distribution centers and pharmacies” and “actions against pharmacies” were harmful

in “leading to patients not being able to receive their medications.” This purported concern, however,

was industry code for impediments to sales.

503. NACDS and HDA agreed that the pharmacies should “be more aggressive” and

“lead the charge” with respect to certain DEA issues. NACDS members coordinated regarding

pharmacy diversion and “DEA red flags” through a “DEA Compliance Workgroup.” Defendants

further used a NACDS “Pharmacy Compliance Roundtable” to discuss avoiding criminal and civil

liability for issues related to controlled substances, SOM, and diversion. And, in May 2012, the

NACDS formed a Policy Council “Task Group” to “discuss issues and develop strategies”

concerning “ongoing problems that NACDS members are having with DEA enforcement actions,”

through which it sought to influence the government and media set meetings with legislators

seeking to “address the problems with DEA actions,” and “collaborate with, and support others’

efforts” including HDA.

504. NACDS members coordinated regarding pharmacy diversion and “DEA red flags”

through a “DEA Compliance Workgroup.” Defendants further used a NACDS “Pharmacy

Compliance Roundtable” to discuss avoiding criminal and civil liability for issues related to

controlled substances, SOM, and diversion. And, in May 2012, the NACDS formed a Policy

Council “Task Group” to “discuss issues and develop strategies” concerning “ongoing problems

126
 that NACDS members are having with DEA enforcement actions,” through which it sought to

influence the government and media, set meetings with legislators seeking to “address the
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problems with DEA actions,” and “collaborate with, and support others’ efforts” including HDA.

F. Defendants Also Entered into Joint Ventures that Further Undermined their
Outside Vendors’ Incentive to Conduct Due Diligence, While Increasing their
Own Access to Information.

505. The collaboration between Defendants and other industry partners extended

beyond their mutual interest in limiting regulations and enforcement that constrained their ability

to sell opioids. Indeed, the companies had direct financial relationships that, quite literally,

invested them in each other’s success.

506. As described above, Walgreens entered into an exclusive arrangement with

AmerisourceBergen as its supplier, with Walgreens obtaining both equity in AmerisourceBergen

and a seat on its Board. As part of a three-year extension of that arrangement, in 2016, the two

agreed to include a requirement that AmerisourceBergen “make certain working capital

investments in the relationship and will proceed with additional capital investments in its

distribution network.”

507. The merger between Walgreens and AmerisourceBergen had begun in 2012, when

the two formed Walgreens Boots Alliance Development, a joint venture based in Switzerland.
AmerisourceBergen was described as being able to gain from Walgreens’s “purchasing synergies,”

through the companies’ relationship.

508. In 2014, CVS entered into a 50/50 joint venture with Cardinal to create Red Oak

Sourcing, LLC (“Red Oak”). Red Oak uses the combined generic purchasing power of CVS and

Cardinal to negotiate with generic drug manufacturers, and its website touts its management of a

“multi-billion dollar pharmaceutical portfolio.” To fund the venture, Cardinal would make

quarterly payments of $25.6 million to CVS, and also would contribute additional funds if the

joint venture reached certain milestones.

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 509. Given that Walgreens and CVS on the one hand, the largest wholesalers, on the

other, considered themselves partners invested in one another’s success, they had even less
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incentive to turn away from the blind deference the Chain Pharmacies received when buying and

selling controlled substances.

G. Defendants Worked with Opioid Manufacturers to Promote Opioids and

Improperly Normalize Their Widespread Use.

510. The Chain Pharmacies not only failed to check the oversupply of opioids by

violating laws and ignoring available safety measures, they were also a critical participant in the

manufacturers’ and distributors’ campaign to create a sea change in the way opioid were utilized

in the United States. This campaign included spreading false messaging about the addictive nature

of prescription opioids, creating the false perception that opioids should be widely utilized, actively

promoting widespread opioid utilization, improperly increasing opioid sales beyond legitimate

uses, and dismantling and undermining the last line of defense that was supposed to exist at the

pharmacy level.

511. As Purdue astutely recognized, the Chain Pharmacies were critical to the campaign

to promote prescription opioid us, noting in internal documents:

The pharmacist plays a vital role in pain management, as they are

the last piece of the puzzle in getting patients prescriptions filled. If
the pharmacist is not educated in the use of OxyContin or has any
misconceptions about the use of opioids, it can result in a
prescription not getting filled and a patient suffering from needless
pain.

The pharmacist is the ultimate gate keeper. At times, they can make
or break the effective use of Oxycontin. We are running into several
cases of legal and regulatory issues, which has resulted in counter
detailing of Oxycontin. Much of this is borne out of ignorance.

The absolute last thing we want is for the OxyContin prescription to

be bounced out at the pharmacy level because of unfounded fears
from the “uneducated” pharmacist.

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 512. Instead of playing the critical gatekeeper role that the Chain Pharmacies were

supposed to play, they instead helped open the floodgates of dangerous opioid narcotics flooding
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into communities like the County. The Chain Pharmacies participated in the multi-faceted

campaign to spread misinformation about opioids and improperly increase the utilization and

supply of opioids including by:

1. Spreading false messages to pharmacists and patients through provider and patient
“education” campaigns designed to improperly normalize widespread use of
opioids;

2. Direct marketing of opioids to patients, pharmacists and healthcare providers;

3. In-store advertisements and advertising campaigns designed to drive sales of

prescription opioids;

4. Use of financial incentives such as coupon programs, rebate programs, and loyalty
programs designed to drive opioid sales; and

5. Driving the sale of opioid products through patient adherence programs designed
to generate long-term opioid use.

513. Starting in the 1990s, opioid manufacturers created a carefully orchestrated

campaign to change the utilization of prescription opioids in the United States. The Chain

Pharmacies played a critical role in that campaign. Indeed, for that campaign to work, the

thousands of pharmacists employed by the Chain Pharmacies and the patients they serviced had to

be conditioned to accept the sea change in the use of opioids and be “re-educated” about their

dangers. In order for prescription opioids to achieve the blockbuster sales that occurred, their

widespread had to be normalized not only with doctors but also with patients and pharmacists.

514. Defendants worked as partners and conduits to spread the misinformation

campaign orchestrated by opioid manufacturers to pharmacists and patients across the country,

including the false messaging surrounding the use of opioids for the treatment of chronic pain and

the true addictive nature of opioids, all in an effort to increase profits for all stakeholders.

515. For example, as early as 2001, CVS worked closely with Purdue and its un-

branded marketing arm, Partners Against Pain (“PAP”) to “fight back” against allegations (later

129
 proved to be true) that Purdue’s Oxycontin was being abused at alarming rates. It was Purdue’s

Partner’s Against Pain website that Purdue, and its “Partners,” including CVS, utilized to make
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the claims that the risk of addiction associated with Oxycontin was very small.

516. Purdue worked together with CVS to ensure that CVS’s own pharmacists were

trained by Purdue on many of the misleading marketing messages that would later form the basis

for a 2007 criminal guilty plea and $600 million fine between Purdue and the Department of Justice

for misleading regulators, doctors, and patients about Oxycontin’s risk of addiction and its

potential for abuse. CVS’s ties to PAP were so deep that CVS even went so far as to put CVS’s

logo communications from its “partner.”

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517. CVS was so eager to ally itself with Purdue that it solicited Purdue for its

participation in co-hosting Continuing Education programs for healthcare providers and

pharmacists regarding training on diversion of prescription opioids.

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518. Upon information and believe, CVS and Purdue’s interests were so aligned that in

2014 Purdue and CVS entered into a “Common Interest Agreement.”

519. CVS’s refusal to take responsibility for its role in the crisis, including pointing the

finger at manufacturers like Purdue, has been part of its game plan all along.

520. One would have to seriously question the accuracy of any training CVS

pharmacists received from Purdue and Partners Against Pain on abuse and diversion, yet there has

been no evidence provided by Defendants that CVS undertook any measures to re-educate its

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 pharmacists on how or why Purdue and PAP training might be lacking in the area of diversion and

abuse of opioids.
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521. CVS’s role was not limited to expanding the market for prescription opioids. CVS

worked hard to ensure that demand for prescription opioids was not only sustained but multiplied.

It did so through its marketing, advertising, and promotion efforts both on its own and in concert

with other stakeholders.

522. Contrary to what CVS has stated under oath in other litigations, including the

MDL, CVS helped to grow the demand for prescription opioids and contributed to the public

nuisance by participating in the marketing, advertising and promotion of opioid products with and

on behalf of the opioid manufacturers.

523. CVS’s marketing and promotion of opioids was not limited to its involvement with

Purdue and Partners Against Pain. CVS did not draw lines when it came to promoting opioids, and

there were no brand boundaries.

524. One example can be found in CVS’s work with Endo to increase patient adherence

to continuing their use of opioids. In fact, CVS had such an important role in the promotion of

Endo’s Opana ER, that it was included as having a crucial role in carrying out one of key sales

tactics in Endo’s 2012 Business Plan.

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 525. Through a company called Catalina Health (“Catalina”), Endo Pharmaceutical

(“Endo”) helped CVS to target Oxycontin patients in areas where Opana ER, a highly abused
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opioid manufactured by Endo, had preferred formulary status. Catalina in turn worked to create a

brand loyalty program that kept new patients on their opioids. CVS, through its pharmacy

retention programs, sent letters to the patients’ homes to encourage them to stay on Opana – even

though prolonged use of opioids increases the risk of addiction, and even though patients in pain

presumably need no reminder to continue to take their pain medications. CVS formalized its

agreement to promote, market and advertise Endo’s opioid products via its “CVS Carecheck Plus

Patient Education Service.” Under this Agreement, CVS not only contractually agreed to promote

Opana ER to its customers (patients) at the point of sale, but it even insisted upon reviewing and

approving the specific messaging used.

526. Similarly, CVS contracted with manufacturers like Endo to prepare and

disseminate materials promoting Opana ER nationwide.

527. CVS likewise helped Actavis promote its opioids by participating with Cardinal’s

Marketing and Business Development team in programs designed to offer rebates and off-invoice

discounts on products, with the aim being to “move … product.”

528. Marketing, advertising and promoting opioids was not a new practice for CVS. In

fact, CVS had been advertising these services to manufacturers for years. For example, CVS made

at least one pitch to Insys, a company whose senior executives were recently criminally convicted

134
 for their unlawful marketing, to help sell its incredibly potent opioid, Subsys, a liquid form of

fentanyl.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

529. CVS also touted the reach of its communications and explained the science behind

its sophisticated marketing, advertising and promotional services.

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530. Hardly novices, CVS recognized its expertise in ensuring that opioid

manufacturers like Insys were able to reach their intended market by using CVS’s promotional

programs which are designed to “deliver results.”

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531. Through CVS’s NEWScript program, CVS claimed to be perfectly poised to assist

with new product launches and a truly impressive reach.

137
 532. CVS even offered Insys the chance at having a literature display in its patient

waiting rooms and to help Insys “target patients” using its signature ExtraCare consumer loyalty
FILED DATE: 8/15/2022 4:37 PM 2022L007352

card database.

533. Working with Purdue as early as 2001, Walgreens played a pivotal role in

expanding the market and ensuring the demand and supply for prescription opioids would grow to

tragic proportions. Purdue was particularly interested in using what Walgreens described to Purdue

as its Regional Level Market Programs to educate pharmacists and patients on the benefits of

Purdue’s OxyContin.

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534. In fact, Purdue leveraged its relationship with Walgreens and their mutually

beneficial goal of growing the opioid business to ensure that Purdue had input into Walgreens

“corporate guidelines” to which Walgreens pharmacists were “expected to follow” when it came

to the dispensing of prescription opioids.

535. Walgreens also used its corporate oversight abilities to identify stores it believed

were not filling enough oxycodone to make sure they weren’t “turning away good customers” and

encouraging stores to utilize continuing education created by opioid manufacturers to inform their

decisions regarding dispensing.

536. Starting in at least 1999, Purdue sponsored Walgreens’s Pharmacy continuing

education programs designed to encourage stores to “get on the Pro Pain Management Band

Wagon.” Purdue was thrilled with the response and assistance it received from Walgreens when

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 Purdue presented on “Pain Management for the Pharmacist.” At the beginning of each Purdue

sponsored meeting, a Walgreens pharmacist made a presentation on his store and the program
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implemented. His store actively advertised to area doctors and patients that they were a “full-

service” pain management pharmacy. This service included providing a list to physicians’ offices

of all CIIs they had in stock (and they had everything), accepting “verbal orders” for Class II

analgesics prior to presentation of the original prescription at the store to decrease “waiting time”,

allowing partial fills on CII prescriptions in terminal patients, and accepting after hours

“emergency CII prescriptions” without a hassle. Purdue praised the pharmacist’s actions as

“fantastic.”

537. Walgreens’s use of pro-opioid continuing education continued as the opioid crisis

grew. For example, Walgreens’s Market Director of Pharmacy Operations recommended that

Walgreens District Managers and Pharmacy Supervisors attend a continuing education program

titled “The Pharmacists' Role in Pain Management: A Legal Perspective,” which was available on-

line at RxSchool.com. This program was one in a long line of pharmacist “education” programs,

or CEs, that opioid manufacturer Purdue developed as part of its strategy to disseminate “a new

school of thought” about opioids. Through these programs, Purdue and the Chain Pharmacies

disseminated fraudulent information that redefined the red flags of abuse or diversion in an effort

to correct pharmacists’ “misunderstanding” about pain patients and the practice of pain

management. Purdue took what it called an “aggressive role” in the education of Walgreens’s and

other pharmacists on pain management issues.

538. Walgreens’s Market Director of Pharmacy Operations also recommended a second

continuing education program titled “Navigating the Management of Chronic Pain: A Pharmacist's

Guide.” The second “CE” incorporated into Walgreens’s dispensing training program,

“Navigating the Management of Chronic Pain: A Pharmacist’s Guide” was sponsored by opioid

manufacturer Endo Pharmaceuticals and disseminated manufacturer messaging designed to

broaden the market for opioids. For example, it stated, “according to most reports, approximately

30% of the population lives with chronic pain” and citing, inter alia, another CE presentation

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 sponsored by the American Pain Society (another known front-group). It also claimed that “most

opioid adverse effects can be managed with careful planning and patient education.” It went on to
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discuss “fears and prejudices” related to addictive behaviors that “unnecessarily limit” opioid use,

described as “opiophobia” which the piece claimed was the result of “misunderstandings regarding

the concepts of addiction, physical dependence, and tolerance.”

539. One of the presenters for this Endo sponsored CE was Kenneth C. Jackson. Mr.

Jackson was a frequent speaker and Key Opinion Leader (“KOL”) for Purdue. Mr. Jackson also

co-authored the CE program titled “Use of Opioids in Chronic Noncancer Pain,” which was

sponsored by Purdue. Released in April 2000, it was designed to eliminate “misconceptions about

addiction, tolerance and dependence” and contained many of the same messages as the pharmacist

guide he authored.

540. Walgreens also presented the video, The Pharmacist’s Role in Pain Management

- A Legal Perspective, at mandatory meetings for pharmacy managers. This continuing education

program (“CE”) was also sponsored by Purdue, was similar to the earlier presentations, and was

further disseminated to Walgreens pharmacists in June 2011. Released in 2009, the program was

presented by Jennifer Bolen, JD. Ms. Bolen was a frequent speaker for Purdue and other opioid
manufacturers, served as Special Counsel for the American Academy of Pain Medicine (a known

front group for opioid manufactures), acted as a Key Opinion Leader (“KOL”) for Purdue, and

was described by Purdue as “a pain patient who takes opioids.”

541. Armed with information gleaned from Purdue sponsored CE, the Walgreens

pharmacists who had temporarily stopped filling-controlled substances prescriptions began to

accept them again. 65 It is no surprise that in 2013 Walgreens acknowledged that several of the

stores that touted this CE as part of their controlled substance action plan dispensed “certain

65
WAGFLDEA00001011 (“After having received the CE presentation that you put on, along with the
presentation by the Pain Clinic at our pharmacy manager meeting, Megan went and visited the pain clinics
surrounding her store. Of the three, she feels very comfortable with two of the clinics, and accepts all
prescriptions from them (minus any natural concerns: early refills, patient condition, etc that occurs with
all stores”).
141
 controlled substances in a manner not fully consistent with its compliance obligations under the

CSA.”
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542. Kroger welcomed Purdue’s marketing into its stores. Following an NACDS

conference, a Purdue employee described Kroger’s Pharmacy Procurement Manager in attendance

as “very positive as to what Purdue is doing” and “interested in doing programs . . . a regional

level,” with Purdue’s “various brochures included.” He also described making another new contact

at Kroger, who had agreed to send Purdue’s brochure and letter out electronically. An “account

contact report” from Purdue further described the results of communication with Purdue’s

Pharmacy Category Manager, who “was very supportive and understanding” about Purdue’s

“ongoing OxyContin media battle” in 2001. Not only would Purdue’s “Pharmacy brochure and

letter” be sent out to all Kroger Pharmacy Directors in each division — when Kroger’s employee’s

“co-sign the letter” it would have “better impact.” Purdue would also send out its continuing

education (“CE”) programs on pain management.

543. The Chain Pharmacies coordinated marketing efforts to their pharmacists and staff

regarding opioids at trade shows and through email blasts, mailers, and brochures to promote the

idea that opioids were safe for widespread utilization, that pain was undertreated, and the

appropriate treatment of pain were opioid drugs.

544. Opioid manufacturers paid the Chain Pharmacies to conduct internal marketing to
pharmacists and pharmacy staff. For example, internal documents from Janssen illustrate the reach

the Chain Pharmacies could offer for opioid manufacturers’ marketing messages:

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545. These are but some examples. Since acting as a key participant in the expansion

of the market and normalization of prescription opioids in the 1990s and 2000s, for decades, the

Chain Pharmacies continued to offer “education” programs designed to grow and maintain the

market for prescription opioids by changing perceptions of pharmacists and staff so that the “last

line of defense” to increased opioid supply would be relaxed and sales would occur without

restriction.

546. This pervasive misinformation campaign was critical to the dramatic shift in the

way opioids were utilized in the United States and was a key factor in creating the dramatic

oversupply of opioids into the United States and Plaintiffs’ communites. The Chain Pharmacies

played a key role in that campaign.

H. Defendants Delayed a Response to the Opioid Crisis by Pretending to

Cooperate with Law Enforcement

547. When a distributor does not report or stop suspicious orders, or a pharmacy fails

to maintain effective policies and procedures to guard against diversion, prescriptions for

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 controlled substances may be written and dispensed to individuals who abuse them or who sell

them to others to abuse. This, in turn, fuels and expands the illegal market and results in opioid-
FILED DATE: 8/15/2022 4:37 PM 2022L007352

related overdoses. Without reporting by those involved in the supply chain, law enforcement may

be delayed in taking action—or may not know to take action at all.

548. Despite their conduct in flooding Illinois and other states with dangerous and

unreasonable amounts of opioids, Defendants publicly portrayed themselves as committed to

working with law enforcement, opioid manufacturers, and others to prevent diversion.

549. In its 2011 MOA, Walgreens agreed to undertake several different anti-diversion

measures. Yet, as a DEA official explained in a subsequent Order to Show Cause and Immediate

Suspension of its registration that was issued a mere month later and pertained to Walgreens’s

Jupiter Florida Distribution Center, Walgreens’s “anti-diversion” measures appeared to be

primarily self-serving:

[W]hen a company undertakes to survey its stores for regulatory

compliance, then selectively edits that survey for the explicit
purpose of avoiding evidence of its own non-compliance, as
Walgreens apparently did in May 2011, claims of effective remedial
measures have less credibility. I gave significant weight to the fact
that Walgreens appears to have deliberately structured certain of its
antidiversion measures to avoid learning about and/or documenting
evidence consistent with diversion. At best, I regard this as
deliberate indifference on Walgreens’[s] part as to its obligations as
a DEA registrant.

My confidence in Walgreens’[s] remedial measures is lessened

further by the fact that this manipulation of the compliance survey
occurred just one month after Walgreens entered into a nationwide
Memorandum of Agreement (MOA) with DEA to resolve an Order
to Show Cause issued to a San Diego Walgreens pharmacy based on
allegations of unlawful dispensing. . . . Walgreens’[s] effort to enact
. . . [a compliance] program in Florida appears to have been, in part,
intentionally skewed to avoid actually detecting certain evidence of
possible diversion.

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 550. Despite the behavior described above, Walgreens nevertheless publicly portrayed

itself as committed to working with law enforcement, opioid manufacturers, and others to prevent
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diversion of these dangerous drugs.

551. In August of 2018, after journalists at the Washington Post disclosed information

gleaned from the ARCOS data regarding the staggering number of opioids Walgreens distributed

and sold, Walgreens again publicly promoted itself as being and “ha[ving] been an industry leader

in combatting this crisis in the communities where our pharmacists live and work.” Walgreens

further asserted that “Walgreens pharmacists are highly trained professionals committed to

dispensing legitimate prescriptions that meet the needs of our patients.” 66

552. Yet, in January 2020, Walgreens released a Board Report on Oversight of Risks

Related to Opioids. There, it claimed that: “In recent years, the Company has implemented a

number of operational changes that it believes have helped to reduce its risk with respect to its

dispensing of prescription opioids. The Company is focused on the continuous improvement of

its controlled substances compliance program, implementing enhancements to prevent, identify

and mitigate the risk of non-compliance with federal and state legal requirements.” 67 It went on

to tout its “Good Faith Dispensing policy,” as “provid[ing] the foundation for our pharmacists to

understand their roles and responsibilities when dispensing prescriptions for controlled

substances.” 68 It also claimed that “the Company conducts its own voluntary, independent review

of controlled substance purchase orders placed by our pharmacies, providing an additional layer

of review above and beyond the legally required monitoring performed by the wholesalers.”69

There, Walgreens’s Board acknowledged that the “fundamental elements of an effective

66
Aaron C. Davis & Jenn Abelson, Distributors, pharmacies and manufacturers respond to previously
unreleased DEA data about opioid sales, Washington Post (Aug. 8, 2019),
https://www.washingtonpost.com/investigations/distributors-pharmacies-and-manufacturers-respond-to-
previously-unreleased-dea-data-about-opioid-sales/2019/07/16/7406d378-a7f6-11e9-86dd-
d7f0e60391e9_story.html.
67
https://s1.q4cdn.com/343380161/files/doc_downloads/governance_guidelines/Board-Report-on-
Oversight-of-Risk-Related-to-Opioids-June-2019-rev.-August-2019.pdf.
68
Id.
69
Id.
145
 compliance program include,” among other things, “[w]ritten policies, procedures, and standards

of conduct setting forth the Company’s expectations and requirements for operating all business
FILED DATE: 8/15/2022 4:37 PM 2022L007352

activities in an ethical and compliant manner”; “[o]versight of the Compliance Program by the

Global Chief Compliance and Ethics Officer, Compliance and Ethics Officers for each operating

division, and Compliance and Governance Committees”; and, “[a]uditing and monitoring.” 70

553. With respect to compensation, the Board stated: “[w]e have a strong pay-for-

performance philosophy.” Accordingly, its “Compensation and Leadership Performance

Committee,” the Board explained, “aims to incent leaders to support the Company’s culture and

model desired behaviors, ensuring ethical behavior and mitigating risks, through ongoing

monitoring, reviewing and governance of all incentive plans.” 71

554. Yet, at the end of January 2020, the New York Times revealed that Walgreens had

not reformed its policies putting speed ahead of safety and pharmacists continued to feel pressed

to do more with less. According to the article, pharmacists at Walgreens and Rite Aid stores

“described understaffed and chaotic workplaces where they said it had become difficult to perform

their jobs safely, putting the public at risk of medication errors.” 72 The article explained that these

pharmacists “struggle to fill prescriptions, give flu shots, tend the drive-through, answer phones,

work the register, counsel patients and call doctors and insurance companies,” while “racing to

meet corporate performance metrics that they characterized as unreasonable and unsafe in an

industry squeezed to do more with less.” 73

555. Citing company documents, the article showed that Walgreens continues to tie

bonuses to achieving performance metrics. Walgreens, in response stated that errors were rare and

that “it made ‘clear to all pharmacists that they should never work beyond what they believe is

70
Id.
71
Id.
72
Ellen Gabler, How Chaos at Pharmacies Is Putting Patients at Risk, New York Times, (Jan. 31,
2020), https://www.nytimes.com/2020/01/31/health/pharmacists-medication-errors.html.
73
Id.
146
 advisable.’” 74 Similarly, CVS assured that “[w]hen a pharmacist has a legitimate concern about

working conditions, we make every effort to address that concern in good faith.” 75
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556. Meanwhile, the New York Times’s coverage disclosed that a CVS form for staff

members to report errors internally asked whether the patient poses “a ‘media threat.’” 76

According to the article, “[t]he American Psychiatric Association is particularly concerned about

CVS, America’s eighth-largest company, which it says routinely ignores doctors’ explicit

instructions to dispense limited amounts of medication to mental health patients.” 77 The group’s

president further observed that “[c]learly it is financially in their best interest to dispense as many

pills as they can get paid for[.]

557. Kroger claims to be “committed to partnering with our associates, customers,

communities and” other “companies like” its outside supplier “Cardinal Health to help solve the opioid

epidemic.” 78

558. Moreover, in furtherance of their effort to affirmatively conceal their conduct and

avoid detection, all Defendants through the joint amicus brief filed by the HDA and NACDS in

Masters Pharmaceuticals, described above, made the following statements: 79

“HDMA and NACDS members not only have statutory and
regulatory responsibilities to guard against diversion of controlled
prescription drugs, but undertake such efforts as responsible
members of society.”

“Distributors take seriously their duty to report suspicious orders,

utilizing both computer algorithms and human review to detect
suspicious orders based on the generalized information that is
available to them in the ordering process.”

74
Id.
75
Id.
76
Id.
77
Id.
78
https://www.cardinalhealth.com/en/about-us/corporate-citizenship/combating-opioid-
misuse/news/kroger-and-cardinal-health-to-co-host-drug-take-back-events.html

79
Brief for HDMA and NACDS, 2016 WL 1321983, at *3-4, 25.
147
 559. NACDS, in response to media coverage concerning pharmacy working conditions

and safety concerns, said that “‘pharmacies consider even one prescription error to be too many’
FILED DATE: 8/15/2022 4:37 PM 2022L007352

and ‘seek continuous improvement.’” 80 NACDS also claimed one should not “assume cause-

effect relationships” between errors and the workload of pharmacists such as “distraught

pharmacists” who conveyed concerns to state boards and associations “in at least two dozen

states.” 81

560. The NACDS also filed an amicus brief supporting Walmart’s motion to dismiss in

the DOJ action described above.

561. Through the above statements made on their behalf by their trade association, and

other similar statements assuring its continued compliance with their legal obligations, Defendants

not only acknowledged that they understood their obligations under the law, but further affirmed

that their conduct was in compliance with those obligations. In doing so, Defendants further

delayed efforts to address the growing opioid epidemic.

I. Multiple Enforcement Actions Against the Chain Pharmacies

Confirm Their Compliance Failures

562. The Chain Pharmacies have long been on notice of their failure to abide by state

and federal law and regulations governing the distribution and dispensing of prescription opioids.

Indeed, several of the Chain Pharmacies have been repeatedly penalized for their illegal

prescription opioid practices. Upon information and belief, based upon the widespread nature of

these violations, these enforcement actions are the product of, and confirm, the failures of national

policies and practices of the Chain Pharmacies.

80
Ellen Gabler of the New York Times, Pharmacists at CVS, Rite Aid and Walgreens Are Struggling
With Understaffed and Chaotic Workplaces, Chicago Tribune (Feb. 3, 2020),
https://www.chicagotribune.com/business/ct-biz-nyt-pharmacy-mistakes-20200201-
wp2ftrt2sjhfvjwnmwbtnl3y3i-story.html
81
Id.
148
 a. CVS
FILED DATE: 8/15/2022 4:37 PM 2022L007352

563. CVS is one of the largest companies in the world, with annual revenue of more

than $250 billion. According to news reports, it manages medications for nearly 90 million

customers at 9,700 retail locations. CVS could be a force for good in connection with the opioid

crisis, but like other Defendants, CVS sought profits over people.

564. CVS is a repeat offender and recidivist: the company has paid fines totaling over

$40 million as the result of a series of investigations by the DEA and the United States DOJ. It

nonetheless treated these fines as the cost of doing business and has allowed its pharmacies to

continue dispensing opioids in quantities significantly higher than any plausible medical need

would require, and to continue violating its recordkeeping and dispensing obligations under the

CSA.

565. Confirming its systemic failures to implement and adhere to adequate controls

against diversion, CVS has repeatedly faced enforcement actions. In May 2020, CVS’s Omnicare

subsidiary agreed to pay a $15.3 million civil penalty as part of a settlement with the DEA

resolving allegations that it improperly dispensed opioids and other controlled substances to long-

term care facilities without a valid prescription.

566. In March 2019, CVS Pharmacy, Inc. (including all of its relevant subsidiaries and

affiliates) entered into a $535,000 settlement with the U.S. Attorney’s Office for the District of
Rhode Island, acting on behalf of the United States and the DEA’s Providence Office. In

connection with the settlement, a DEA agent stated: “Pharmacies put patients at risk when they

dispense Schedule II narcotics, which have the highest potential for abuse, without a valid and

legal prescription.” 82

567. In August of 2018, CVS paid $1 million to resolve allegations that CVS

pharmacies throughout the Northern District of Alabama violated record-keeping requirements

82
https://www.dea.gov/press-releases/2019/04/16/cvs-pay-535000-filling-invalid-prescriptions.
149
 under the CSA and its implementing regulations, the largest civil fine paid in Alabama by a DEA

registrant.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

568. In June of 2018, CVS paid $1.5 million to resolve allegations that CVS pharmacies

in Long Island, New York failed to timely report the loss or theft of controlled substances,

including hydrocodone, recognized as one of the most commonly diverted controlled substances.

569. In July 2017, CVS entered into a $5 million settlement with the U.S. Attorney’s

Office for the Eastern District of California regarding allegations that its pharmacies failed to keep

and maintain accurate records of Schedule II, III, IV, and V controlled substances. 83

570. This fine was preceded by numerous others throughout the country.

571. In February 2016, CVS paid $8 million to settle allegations made by the DEA and

the DOJ that from 2008-2012, CVS stores and pharmacists in Maryland violated their duties under

the CSA and filling prescriptions with no legitimate medical purpose.

572. In October 2016, CVS paid $600,000 to settle allegations by the DOJ that stores

in Connecticut failed to maintain proper records in accordance with the CSA.

573. In September 2016, CVS entered into a $795,000 settlement with the

Massachusetts Attorney General wherein CVS agreed to require pharmacy staff to access the

state’s prescription monitoring program website and review a patient’s prescription history before

dispensing certain opioid drugs.

574. In June 2016, CVS agreed to pay the DOJ $3.5 million to resolve allegations that

50 of its stores violated the CSA by filling forged prescriptions for controlled substances—mostly

addictive painkillers—more than 500 times between 2011 and 2014.

575. In August 2015, CVS entered into a $450,000 settlement with the U.S. Attorney’s

Office for the District of Rhode Island to resolve allegations that several of its Rhode Island stores

83
Press Release, U.S. Attorney’s Office E. Dist. of Cal., CVS Pharmacy Inc. Pays $5M to Settle Alleged
Violations of the Controlled Substance Act, U.S. Dep’t of Just. (July 11, 2017),
https://www.justice.gov/usao-edca/pr/cvs-pharmacy-inc-pays-5m-settle-alleged-violations-controlled-
substance-act.
150
 violated the CSA by filling invalid prescriptions and maintaining deficient records. The United

States alleged that CVS retail pharmacies in Rhode Island filled a number of forged prescriptions
FILED DATE: 8/15/2022 4:37 PM 2022L007352

with invalid DEA numbers, and filled multiple prescriptions written by psychiatric nurse

practitioners for hydrocodone, despite the fact that these practitioners were not legally permitted

to prescribe that drug. Additionally, the government alleged that CVS had recordkeeping

deficiencies.

576. In May 2015, CVS agreed to pay a $22 million penalty following a DEA

investigation that found that employees at two pharmacies in Sanford, Florida, had dispensed

prescription opioids, “based on prescriptions that had not been issued for legitimate medical

purposes by a health care provider acting in the usual course of professional practice. CVS also

acknowledged that its retail pharmacies had a responsibility to dispense only those prescriptions

that were issued based on legitimate medical need.”

577. In September 2014, CVS agreed to pay $1.9 million in civil penalties to resolve

allegations it filled prescriptions written by a doctor whose controlled-substance registration had

expired.

578. In 2013, CVS agreed to pay $11 million to resolve allegations it violated the CSA

and related federal regulations at its retail stores in Oklahoma and elsewhere by: (1) creating and

using “dummy” DEA registration numbers on dispensing records, including records provided to
state prescription drug monitoring programs; (2) filling prescriptions from prescribers who lacked

current or valid DEA numbers; and (3) substituting the DEA number of non-prescribing

practitioners for the DEA numbers of prescribers on prescription records.

579. Dating back to 2006, CVS retail pharmacies in Oklahoma and elsewhere

intentionally violated the CSA by filling prescriptions signed by prescribers with invalid DEA

registration numbers.

580. The DEA hosted a December 8, 2010, meeting attended by CVS' Head of

Pharmacy Professional Services, Papatya Tankut, and the CVS district supervisor before initiating

an enforcement action. CVS's counsel acknowledged at that time "that CVS was aware of the pill

151
 mill and/or pain clinic situation and the diversion of controlled substances, primarily oxycodone,

in Florida," and that it received an October 2010 plea from a local sheriff "to work with law
FILED DATE: 8/15/2022 4:37 PM 2022L007352

enforcement and closely scrutinize the prescriptions they receive." 84 The DEA advised CVS “that

the diversion of oxycodone, primarily originating from purported pain clinics, involves fraudulent

prescriptions, doctor shoppers, and unethical doctors.” 85 “CVS was further advised of the typical

'red flags' associated with the diversion of controlled substances that a pharmacy should be familiar

with in order to carry out its corresponding responsibility to ensure that the controlled substances

are dispensed for a legitimate medical purpose.” 86 “Some of the 'red flags' discussed included: (a)

many customers receiving the same combination of prescriptions (i.e., oxycodone and

alprazolam); (b) many customers receiving the same strength of controlled substances (i.e., 30

milligrams of oxycodone with 15 milligrams of oxycodone and 2 milligrams of alprazolam); (c)

many customers paying cash for their prescriptions; (d) many customers with the same diagnosis

codes written on their prescriptions ([e.g.], back pain, lower lumbar, neck pain, or knee pain); and

(e) individuals driving long distances to visit physicians and/or to fill prescriptions.” 87
581. CVS also acknowledged its awareness of an increase in oxycodone prescriptions

at Florida CVS stores during the December 2010 meeting. DEA discussed with CVS an ARCOS

summary which showed a “huge” increase at one CVS store, which was already ordering “more

than four times the amount of oxycodone a typical pharmacy orders in one year” in 2006; a more

recent 10-month history showed that it ordered “more than thirty times what a typical pharmacy

ordered in one.” 88 During the same meeting, DEA also made clear that CVS’s instruction to its

pharmacists to call the prescriber to verify that a physician wrote the prescription was not the same

thing as making an independent determination that the prescription was written for a legitimate

medical purpose in the usual course of professional practice.

84
Decl. of Joseph Rannazzisi, Holiday CVS, L.L.C., v. Holder, Civ. No. 1:12-cv-191 (D. D.C Fed. 24, 2012).
85
Id.
86
Id.
87
Id. ¶ 28.
88
Id. ¶ 31.
152
 582. The DEA then hosted a second meeting with CVS at the DEA Weston Resident

Office on August 12, 2011. Some 24 supervisors/managers from various South Florida CVS
FILED DATE: 8/15/2022 4:37 PM 2022L007352

pharmacies attended that meeting. At that meeting, the DEA again reminded CVS of its

corresponding responsibility under the CSA and:

the typical ‘red flags’ associated with the diversion of controlled

substances that a pharmacy should be familiar with in order to carry
out its corresponding responsibility to ensure that the controlled
substances are dispensed for a legitimate medical purpose. Some of
the ‘red flags’ discussed included: (a) many customers receiving the
same combination of prescriptions; (b) many customers receiving
the same strength of controlled substances; (c) many customers
paying cash for their prescriptions; (d) many customers with the
same diagnosis codes written on their prescriptions; (e) individuals
driving long distances to visit physicians and/or to fill prescriptions;
(f) customers coming into the pharmacy in groups, each with the
same prescriptions issued by the same physician; and (g) customers
with prescriptions for controlled substances written by physicians
not associated with pain management (i.e., pediatricians,
gynecologists, ophthalmologists, etc.).”

583. The meeting also stressed the importance of CVS’s obligations: a presentation

included “statistical information” that “showed drastic increases in prescription drug overdose

deaths.” 89

584. After the DEA executed Administrative Inspection Warrants at two Florida CVS

stores discussed in the meetings, interviews with CVS pharmacists revealed that no one spoke with

the pharmacist in charge of one store about the staggering amounts of oxycodone discussed in

CVS’s December 2010 meeting with the DEA and the pharmacist was unfamiliar with multiple

red flags. Further, other CVS employees believed that “polic[ing] the patients” was outside their

job description and they were filling prescriptions that were “probably were not legitimate.” 90 The

CVS employees “consistently ignored the red flags of controlled substance diversion,” and, until

89
Id. ¶ 34.
90
Id. ¶ 41.
153
 CVS faced heightened DEA scrutiny, filled prescriptions for more than twenty prescribers who

later faced enforcement action themselves, none of whom were located in the same city as the
FILED DATE: 8/15/2022 4:37 PM 2022L007352

stores, and most of whom were some distance away.” 91

b. Walgreens

585. Walgreens is the second-largest pharmacy store chain in the United States behind

CVS, with annual revenue of more than $118 billion. According to its website, Walgreens

operates more than 8,100 retail locations and filled 990 million prescriptions on a 30-day adjusted

basis in fiscal 2017.

586. Walgreens also has been penalized for serious and flagrant violations of the CSA.

Indeed, Walgreens agreed to the largest settlement in DEA history at the time—$80 million—to

resolve allegations that it committed an unprecedented number of recordkeeping and dispensing

violations of the CSA, including negligently allowing controlled substances such as oxycodone

and other prescription painkillers to be diverted for abuse and illegal black market sales. These

actions demonstrate Walgreens’s knowledge of, and disregard for, its obligations to prevent

diversion.

587. On September 30, 2009, the DEA issued an Order to Show Cause against a

Walgreens retail facility in San Diego, California based in part on allegations that it was

dispensing controlled substances, including opioids, to individuals that it knew or should have

known were diverting the controlled substances. Although the Order addressed this specific

location, the response, including Walgreens’s internal assessment of its compliance, or lack

thereof, revealed systemic failures from which its pharmacies in the County would not have been

exempt.

588. In April 2011, Walgreens entered into an Administrative Memorandum of

Agreement (“2011 MOA”) with the DEA arising from the San Diego OTSC and expressly agreed

that it would “maintain a compliance program to detect and prevent diversion of controlled

91
Id. ¶¶ 43 & 54-55.
154
 substances as required under the CSA and applicable DEA regulations” including regarding the

dispensing practices at all of its nationwide pharmacies.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

589. On September 14, 2012, however, the DEA also issued an Order to Show Cause

and Immediate Suspension Order (“ISO”), described above against Walgreens’s Distribution

Center in Jupiter, Florida, as well as Orders to Show Cause related to certain Walgreens

pharmacies. Evidencing the existence of systemic failures, the ISO stated that, “[DEA’s] concerns

with [Walgreens’] distribution practices are not limited to the six Walgreens pharmacies [discussed

in the ISO].”

590. In 2013, Walgreens agreed to the largest settlement in DEA history at the time—

$80 million—to resolve allegations that it committed an unprecedented number of recordkeeping

and dispensing violations of the CSA, including negligently allowing controlled substances such

as oxycodone and other prescription painkillers to be diverted for abuse and illegal black-market

sales. In addition to the monetary payment, the Jupiter, Florida distribution center lost its authority

to distribute or dispense controlled substances, including opioids, for two years. The Department

of Justice, in describing the settlement, explained that the conduct at issue included Walgreens’s

“alleged failure to sufficiently report suspicious orders was a systematic practice that resulted in

at least tens of thousands of violations and allowed Walgreens’s retail pharmacies to order and

receive at least three times the Florida average for drugs such as oxycodone.” 92

591. The settlement resolved investigations into, and allegations of, CSA violations in

Florida, New York, Michigan, and Colorado that resulted in the diversion of millions of opioids

into illicit channels.

592. As part of the 2013 MOA described above, Walgreens “acknowledge[d] that

certain Walgreens retail pharmacies did on some occasions dispense certain controlled substances

92
Press Release, U.S. Attorney’s Office S. Dist. of Fla., Walgreens Agrees To Pay A Record Settlement
Of $80 Million For Civil Penalties Under The Controlled Substances Act, U.S. Dep’t of Just. (June 11,
2013), https://www.justice.gov/usao-sdfl/pr/walgreens-agrees-pay-record-settlement-80-million-civil-
penalties-under-controlled.
155
 in a manner not fully consistent with its compliance obligations under the CSA . . . and its

implementing regulations.” The 2013 MOA required Walgreens to, among other things, “maintain
FILED DATE: 8/15/2022 4:37 PM 2022L007352

a compliance program in an effort to detect and prevent diversion of controlled substances” as

required by law.

593. Walgreens’s Florida operations at issue in this settlement highlight its egregious

conduct regarding diversion of prescription opioids. Walgreens’s Florida pharmacies each

allegedly ordered more than one million dosage units of oxycodone in 2011—more than ten times

the average amount.

594. They increased their orders over time, in some cases as much as 600% in the space

of just two years, including, for example, supplying a town of 3,000 with 285,800 orders of

oxycodone in a one-month period. Yet Walgreens corporate officers not only turned a blind eye

but provided pharmacists with incentives through a bonus program that compensated them based

on the number of prescriptions filled at the pharmacy. Yet Walgreens corporate officers turned a

blind eye to these abuses. In fact, the long term Controlled Substance Compliance Officer at

Walgreens suggested, in reviewing the legitimacy of prescriptions coming from pain clinics, that

“if these are legitimate indicators of inappropriate prescriptions perhaps we should consider not

documenting our own potential noncompliance,” underscoring Walgreens’s attitude that profit

outweighed compliance with the CSA or the health of communities.

595. Walgreens’s settlement with the DEA stemmed from the DEA’s investigation into

Walgreens’s distribution center in Jupiter, Florida, which was responsible for significant opioid

diversion in Florida. According to the Order to Show Cause, Defendant Walgreens’s corporate

headquarters pushed to increase the number of oxycodone sales to Walgreens’s Florida pharmacies

and provided bonuses for pharmacy employees based on number of prescriptions filled at the

pharmacy in an effort to increase oxycodone sales. In July 2010, Defendant Walgreens ranked all

of its Florida stores by number of oxycodone prescriptions dispensed in June of that year and found

that the highest-ranking store in oxycodone sales sold almost 18 oxycodone prescriptions per day.

156
 All of these prescriptions were filled by the Jupiter Center, a distribution center that also distributed

into the County.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

596. An August 2013 email shows Walgreens understood the consequences of its

actions, explaining that Walgreens’s “previous system would continue to send additional product

to the store without limit or review which made possible the runaway growth of dispensing

products like Oxycodone.”

597. Walgreens has also settled with a number of state attorneys general, including

West Virginia ($575,000) and Massachusetts ($200,000).

598. The Massachusetts Attorney General’s Medicaid Fraud Division found that, from

2010 through most of 2015, multiple Walgreens stores across the state failed to monitor the opioid

use of some Medicaid patients who were considered high-risk.

599. In January 2017, an investigation by the Massachusetts Attorney General found

that some Walgreens pharmacies failed to monitor patients’ drug use patterns and didn’t use sound

professional judgment when dispensing opioids and other controlled substances—despite the

context of soaring overdose deaths in Massachusetts. Walgreens agreed to pay $200,000 and

follow certain procedures for dispensing opioids.

600. The actions against Walgreens as both a distributor and a retail pharmacy

demonstrate it routinely, and as a matter of standard operating procedure, violated its legal
obligations under the CSA and other laws and regulations governing the distribution and

dispensing of prescription opioids.

c. Walmart

601. In addition to the actions described herein against Walmart, a prosecution against

a Virginia prescriber revealed failures at Walmart pharmacies from 2007 to 2012. A Decision and

Order in that case revealed that a Walmart pharmacy would fill prescriptions pursuant to a

telephone message from a staff member of the prescriber, purportedly on behalf of the prescriber,

even though she failed to provide the prescriber’s DEA number. Despite the absence of

157
 information required by DEA regulations, the Walmart pharmacy would fill the prescription. 93 By
mid-November of 2008, three Walmart pharmacies had dispensed more than 200 hydrocodone
FILED DATE: 8/15/2022 4:37 PM 2022L007352

prescriptions and refills on behalf of the prescriber. In 2012, the prescriber learned that someone was

fraudulently using his DEA number. He called a Walmart pharmacy regarding refill requests faxed

from his office and advised “that somebody was fraudulently using [his] DEA number.” 94 Although he

asked that his DEA number be blocked, the same pharmacy still filled two prescriptions on his behalf

after this alert. Although Walmart did not face sanctions for its conduct, the Opinion and Order

described “the fact that prescriptions which were missing [the] Respondent’s DEA number were

routinely filling notwithstanding that they were facially invalid,” and “that the prescriptions were for

hydrocodone in quantities and dosings that were clearly outside the scope of what is usually prescribed

by podiatrists” as “deeply disturbing.” 95

602. Federal prosecutors had also taken action against five Walmart and Sam’s Club

Pharmacies in Texas, alleging that they failed to keep records required to help prevent diversion of

controlled substances as required by the CSA. Specifically, “accountability audits did not match the

drugs on hand, revealing major overages and shortages in the accountability of controlled substances,

and there were missing invoices for controlled substances all in violation of the CSA.” 96 A U.S.

Attorney further explained that “[b]ecause of the pharmacies’ lack of proper record keeping, a variety

of Schedule II, III, IV and V controlled substances were lost or stolen and possibly diverted.” 97

603. As recently as September 2018, minutes of an Oklahoma State Board of Pharmacy

meeting reflect that an Oklahoma “Wal-Mart Pharmacy was charged with multiple violations of state

93
DOJ, DEA, Docket No. 15-26, [FR Doc. No. 2017-13158] Peter F. Kelly, D.P.M.; Decision and
Order, https://www.deadiversion.usdoj.gov/fed_regs/actions/2017/fr0623.htm.
94
https://www.deadiversion.usdoj.gov/fed_regs/actions/2017/fr0623.htm
95
Id.
96
Associated Press, Wal-Mart Settles Drug Records Accusation, (Jan 7, 2009),
http://prev.dailyherald.com/story/?id=262762
97
Id.

158
 and federal regulations and rules including establishing and maintaining effective controls against

diversion of prescription drugs.” 98 Walmart agreed to pay a fine to resolve the seven alleged violations.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

d. Kroger

604. In addition to the 2005 settlement described above, Kroger in 2019 reached another

settlement arising out of its failure to control against unlawful diversion and use of dangerous opioid

drugs. The settlement resolved allegations that a Virginia store violated the CSA sixteen separate times

in 2015-2016 “by improperly filling ‘office use only’ prescriptions for Schedule II controlled

substances,” failing “to make and keep DEA 222 order forms[,] improperly distribut[ing] a Schedule

II controlled substance absent the required DEA 222 form,” and “fail[ing] to provide effective controls

and procedures to guard against diversion of controlled substances.” 99

e. Albertsons

605. Albertsons is one of the largest food and drug retailers in the United States, with

annual revenues of approximately $70 billion. As of February 2021, it operated 1,727 pharmacies

across the United States.

606. In 2017, Albertsons agreed to pay $3 million to settle Department of Justice

allegations that the company failed to timely report controlled substances that were missing from

pharmacies. DOJ’s investigation of Safeway (a wholly owned subsidiary of Albertsons) began

when the DEA learned in 2014 that Safeway pharmacies in North Bend, Washington, and Wasilla,

Alaska, did not notify the DEA of losses of tens of thousands of hydrocodone tablets until months

after Safeway discovered the losses. DOJ then broadened its investigation to review practices at

all Safeway pharmacies nationwide between 2009 and 2014 and found a widespread practice of

Safeway pharmacies failing to timely report missing or stolen controlled substances.

98
https://www.ok.gov/pharmacy/documents/Min%20September%202018.pdf.
99
https://www.justice.gov/usao-wdva/pr/kroger-pay-us-government-225000-settle-civil-allegations-
it-violated-controlled

159
 607. In January 2020, Albertsons agreed to pay $1 million to resolve the DOJ’s

allegations that one of its pharmacies had committed numerous violations of the CSA. The DEA
FILED DATE: 8/15/2022 4:37 PM 2022L007352

began investigating Albertsons Osco Pharmacy #60 in Casper, Wyoming, during the course of

investigating a Casper-based prescriber who prescribed over 2 million pills between 2011 and

2016 and was eventually sentenced to 25 years in prison for prescribing oxycodone without a

legitimate medical purpose, including prescriptions that caused the death of an Arizona resident.

While investigating this doctor’s practices, the DEA began investigating the pharmacies filling his

prescriptions and found numerous alleged violations by the Albertsons Osco Pharmacy between

October 2015 and February 2017. According to DOJ, “[i]nvestigators uncovered 128 instances of

patients filling prescriptions for unusually large quantities and dosages of narcotics; patients

utilizing multiple pharmacies to fill prescriptions; or third parties filling prescriptions for out-of

state patients. Additional record keeping violations were also discovered.” 100
J. The Opioids the Defendants Sold Migrated into Other Jurisdictions

608. As the demand for prescription opioids grew, fueled by their potency and purity,

interstate commerce flourished: opioids moved from areas of high supply to areas of high demand,

traveling across state lines in a variety of ways.

609. First, prescriptions written in one state may, under some circumstances, be filled

in a different state. But even more significantly, individuals transported prescription opioids from

one jurisdiction specifically to sell them in another.

610. When authorities in the certain states cracked down on opioid suppliers, out-of-

state suppliers filled the gaps. Florida in particular assumed a prominent role, as its lack of

regulatory oversight created a fertile ground for pill mills. Residents of other states area would

simply drive to Florida, stock up on pills from a pill mill, and transport them back to home to

100
U.S. Attorney’s Office, District of Wyoming, Casper Pharmacy Agrees to $1 Million Settlement of
Allegations of Violations of the Controlled Substances Act (Jan. 28, 2020),
https://www.justice.gov/usaowy/
pr/casper-pharmacy-agrees-1-million-settlement-allegations-violations-controlled-substances.

160
 sell. The practice became so common that authorities dubbed these individuals “prescription

tourists” who would travel their “oxycodone pipelines” between their home states and Florida for
FILED DATE: 8/15/2022 4:37 PM 2022L007352

their prescription opioid supplies. In fact, the route from Florida to other states was so well

traveled that it became known as the “Blue Highway,” a reference to the color of the 30mg

Roxicodone pills manufactured by Mallinckrodt.

611. Abundant evidence, thus, establishes that prescription opioids migrated between

cities, counties, and states, including into Illinois from other states. As a result, prescription data

from any particular jurisdiction does not capture the full scope of the misuse, oversupply and

diversion problem in that specific area. As the criminal prosecutions referenced above show, if

prescription opioid pills were hard to get in one area, they migrated from another. Distributors of

opioids were fully aware of this phenomenon and profited from it.

K. The Defendants Conspired to Engage In The Wrongful Conduct Complained

Of Herein and Intended To Benefit Both Independently and Jointly From
Their Conspiracy.

614. In addition, and on an even broader level, all Defendants took advantage of the

industry structure, including end-running its internal checks and balances, to their collective

advantage. Defendants agreed among themselves to increase the supply of opioids and

fraudulently increase the quotas that governed the manufacture and supply of prescription opioids.

Defendants did so to increase sales, revenue, and profit from their opioid products.

615. The interaction and length of the relationships between and among the Defendants

reflects a deep level of interaction and cooperation between Defendants in a tightly knit industry.

Defendants operated together as a united entity, working together on multiple fronts, to engage in

the unlawful sale of prescription opioids.

616. Defendants collaborated to expand the opioid market in an interconnected and

interrelated network in the following ways, as set forth more fully below, including, for example,

membership in the NACDS and HDA.

161
 617. Defendants utilized their membership in the NACDS and HDA and other forms of

collaboration to form agreements about their approach to their duties under the CSA to report
FILED DATE: 8/15/2022 4:37 PM 2022L007352

suspicious orders. The Defendants overwhelmingly agreed on the same approach—to fail to

identify, report or halt suspicious opioid orders, and fail to prevent diversion. Defendants’

agreement to restrict reporting provided an added layer of insulation from DEA scrutiny for the

entire industry as Defendants were thus collectively responsible for each other’s compliance with

their reporting obligations. Defendants were aware, both individually and collectively, of the

suspicious orders that flowed directly from Defendants’ facilities.

618. Defendants knew that their own conduct could be reported by other Defendants

and that their failure to report suspicious orders they filled could be brought to the DEA’s attention.

As a result, Defendants had an incentive to communicate with each other about the reporting or

suspicious orders to ensure consistency in their dealings with DEA.

619. The Defendants also worked together to ensure that the opioid quotas allowed by

the DEA remained artificially high and ensured that suspicious orders were not reported to the

DEA in order to ensure that the DEA had not basis for refusing to increase or decrease production

quotas due to diversion.

620. The desired consistency, and collective end goal was achieved. Defendants

achieved blockbuster profits through higher opioid sales by orchestrating the unimpeded flow of
opioids.

621. The Chain Pharmacies all distributed and dispensed opioids in Illinois and failed

to meet their regulatory obligations while doing so.

622. Although they act through their agents, the Chain Pharmacies, as the registrants,

are ultimately responsible to prevent diversion of dangerous drugs.

623. The Chain Pharmacies owe duties to the Counties as licensed “registrants” under

the Federal Controlled Substances Act (21 U.S.C.A. § 321 et seq) and under Illinois state law. The

Illinois legislature has enacted The Illinois Pharmacy Practice Act (225 ILCS 85/ et seq.), and the

162
 Illinois Controlled Substances Act (720 ILCS 570/ et seq.), which impose duties on the Defendants

by regulating the distribution and the retail dispensing of dangerous drugs in the state.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

624. The Illinois Pharmacy Practice Act authorizes the Department of Financial and

Professional Regulation, along with the Illinois State Board of Pharmacy, to regulate the practice

of pharmacy, including the sales, use and distribution of drugs and devices at retail. The Illinois

State Board of Pharmacy is empowered to refuse, revoke, or suspend the permit of any pharmacy

upon proof satisfactory to it that it has violated any of the provisions of the Act or applicable

Federal regulations, or has ordered a pharmacist in its employ to engage in any aspect of the

practice of pharmacy in contravention of any provisions of the Act or applicable Federal

regulations.

625. As distributors, the Illinois Pharmacy Practice Act, and the Illinois Controlled

Substances Act impose safety and record-keeping requirements on the Defendants as well as

mandate compliance with all other applicable local, state or federal laws, including 21 U.S.C. §

823 et seq. (requiring “maintenance of effective controls against diversion . . . into other than

lawful medical, scientific, or industrial channels” and “compliance with applicable State and local

law”) and 21 C.F.R. § 1301.74 (imposing duty to monitor, detect, investigate, refuse to fill, and

report suspicious orders under federal law).

626. In addition to their duties as distributors, both state and federal laws impose duties
on Defendants as dispensers of controlled substances. The Illinois Pharmacy Practice Act and the

Illinois Controlled Substances Act, and all other applicable local, state, or federal laws, require the

Defendants to maintain records of, and to design and implement systems to prevent diversion of

controlled substances in their retail pharmacy operations. The Illinois Pharmacy Practice Act and

the Illinois Controlled Substances Act mandate that a prescription for a controlled substance can

be dispensed only if it is issued for a legitimate medical purpose by a licensed practitioner in the

usual course of professional practice.

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 627. The Chain Pharmacies had the ability, and the obligation, to look for “red flags”

on a patient, prescriber, and store level, and to refuse to fill and to report prescriptions that
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suggested potential diversion.

628. The Chain Pharmacies knew, or should have known, that their pharmacies in

Illinois, and the surrounding area were (a) filling multiple prescriptions to the same patient using

the same doctor; (b) filling multiple prescriptions by the same patient using different doctors; (c)

filling prescriptions of unusual size and frequency for the same patient; (d) filling prescriptions of

unusual size and frequency from out-of-state patients; (e) filling an unusual or disproportionate

number of prescriptions paid for in cash; (f) filling prescriptions paired with other drugs frequently

abused with opioids, like benzodiazepines, or prescription “cocktails”; (g) filling prescriptions in

volumes, doses, or combinations that suggested that the prescriptions were likely being diverted

or were not issued for a legitimate medical purpose; and (h) filling prescriptions for patients and

doctors in combinations that were indicative of diversion and abuse. The Chain Pharmacies had

the ability, and the obligation, to look for these red flags on a patient, prescriber, and store level,

and to refuse to fill and to report prescriptions that suggested potential diversion.

629. Every day, 91 people die across the country from an opioid-related overdose and

over 1,000 patients are given emergency treatment for misusing them. Many others are swept into

a cycle of addiction and abuse with which they will struggle their entire lives. As many as 1 in 4
patients who receive prescription opioids long-term for chronic pain in primary care settings

struggle with addiction. In 2014, almost 2 million Americans were addicted to prescription opioids

and another 600,000 to heroin. From 1999 to 2015, more than 194,000 people died in the U.S.

from overdoses related to prescription opioids—more than the number of Americans who died in

the Vietnam War.

630. The Chain Pharmacies either were on notice, or should have been on notice, that

the diversion of opioids was likely occurring in Illinois communities, should have investigated,

ceased filling orders for opioids, and reported potential diversion.

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 631. In addition, the increase in fatal overdoses from prescription opioids has been

widely publicized for years. Illinois is no exception to this phenomenon.

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632. The majority of the fatal drug-related overdoses are attributable to prescription

opioids or the illicit opioids that patients often began abusing after becoming addicted to

prescription opioids. The CDC estimates that for every opioid-related death, there are 733 non-

medical users. The Chain Pharmacies thus had every reason to believe that illegal diversion was

occurring in Illinois.

633. The Chain Pharmacies had information about suspicious orders that they did not

report, and also failed to exercise due diligence before filling orders from which drugs were

diverted into illicit uses in communities across Illinois deepening the crisis of opioid abuse,

addiction, and death within the state and the Counties.

634. Each of the Chain Pharmacies participated in growing the market for prescription

opioids in the United States and in Illinois far beyond reasonable limits and fueling the improperly

expanded market with opioids.

L. The Chain Pharmacies Have Created and Maintained a Public Health

Crisis in Illinois and the Counties.

635. The volume of opioids distributed and sold in Illinois is so high as to raise a red

flag that not all of the prescriptions being ordered and sold could be for legitimate medical uses.

636. By helping to improperly inflate the opioid market, continuing to fill and failing

to report suspicious orders of opioids, and by continuing to dispense opioids and “cocktails” of

opioids and other drug despite indicia of diversion, the Chain Pharmacies have contributed to an

oversupply of opioids in Illinois generally, and the Counties specifically. This oversupply allowed

non-patients to become exposed to opioids and facilitated access to opioids for both patients who

could no longer access or afford prescription opioids and individuals struggling with addiction and

relapse. The Chain Pharmacies had financial incentives to sell higher volumes of opioids and not

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 to report suspicious orders or guard against diversion, and to dispense opioids despite indicia of

diversion.
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637. The diversion of opioids into the Counties fueled a spike in the illicit market for

heroin. Individuals addicted to prescription opioids often transition to heroin due to its lower cost,

ready availability, and similar high. Despite the large number of individuals prescribed opioid drugs,

there has been a decline in opioid prescriptions in recent years with a concurrent increase in heroin use.

638. Despite these efforts, the demand for opioids is still strong, and with the

availability of counterfeit pharmaceuticals, heroin, fentanyl and Carfentanil (a powerful derivative

of fentanyl, a dose the size of a grain of salt can rapidly lead to deadly overdose in humans), use

and overdoses continue to rise as users will adapt to supply when necessary.

639. The epidemic is still on-going as the 2021 data reports that, as compared to 2020,

opioid overdose deaths in the state have increased by 2.3%. In 2021, Illinois Opioid overdose

fatalities comprised 83% of all drug overdoses.

640. The oversupply of opioids also has had a significant detrimental impact on

children throughout the state and in Illinois and the Counties. Young children have access to

opioids, nearly all of which were prescribed or supplied to adults in their household. If parents

become addicted and turn to illicit opiates, children risk overdose from these drugs as well.

Toddlers are particularly at risk, as they routinely put things in their mouths as they crawl and
explore their world. Tragically, Illinois and the Counties have seen their share of children exposed

to opioids, some of which have lost their lives because of such exposure.

641. Even infants have not been immune to the impact of opioid abuse. There has been

a dramatic rise in the number of infants who are born addicted to opioids due to prenatal exposure

and suffer from neonatal abstinence syndrome (“NAS,” also known as neonatal opioid withdrawal

syndrome, or “NOWS”). These infants painfully withdraw from the drug once they are born, cry

non-stop from the pain and stress of withdrawal, experience convulsions or tremors, have difficulty

sleeping and feeding, and suffer from diarrhea, vomiting, and low weight gain, among other

serious symptoms. The long-term developmental effects are still unknown, though research in

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 other states has indicated that these children are likely to suffer from continued, serious neurologic

and cognitive impacts, including hyperactivity, attention deficit disorder, lack of impulse control,
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and a higher risk of future addiction. When untreated, NAS can be life-threatening. Recent reports

suggest that the incidence of NAS in the U.S. increased by 433 percent from 2004 to 2014. In

2009, more than 13,000 infants in the United States were born with NAS, or about one every hour.

As a result, Plans of Safe Care are now required by federal and state laws to be developed when

an infant is born affected by substance use or withdrawal symptoms.

642. Rising opioid use and abuse have negative social and economic consequences far

beyond overdoses in other respects as well. According to a recent analysis by a Princeton

University economist, approximately one out of every three working age men who are not in the

labor force take daily prescription pain medication. The same research finds that opioid

prescribing alone accounts for 20% of the overall decline in the labor force participation for this

group from 2014-16, and 25% of the decline in labor force participation among women. Many of

those taking painkillers still said they experienced pain daily.

643. In 2007, the economic burden of prescription OUD on the Criminal Justice System

(CJS) in the United States was over $5.1 billion. This cost grew to over $7.8 billion by 2016. The

majority of these costs are born by the agencies within the local and state governments. Results

of a 2017 report suggest that the annual costs associated with combating the opioid epidemic will
have approximately doubled across all societal sectors, including the CJS, by 2020. 101

644. The total costs to Illinois’s CJS attributable to the opioid epidemic from 2007 to

2016 amounts to approximately $500 million, or approximately $50 million per year (adjusted to

2017 value).

101
Rhyan CN. The potential societal benefit of eliminating opioid overdoses, deaths, and substance use
disorders exceeds $95 billion per year. Altarum website. altarum.org/sites/default/files/uploaded-
publication-files/Research-Brief_Opioid-Epidemic-Economic-Burden.pdf. Published November 16, 2017.
Accessed February 27, 2019.
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 645. Opioid-related stories describe a public health crisis of epidemic proportions in

Illinois and the Counties. As a practical and financial matter, the Counties have been saddled with
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an enormous economic burden.

646. This human tragedy cannot be calculated or compensated. But the financial

burden to the Counties is staggering. The Counties have expanded their own services and worked

collaboratively with local communities to confront this public health epidemic. Narcan

administration has saved the lives of hundreds of its residents. Expanded addiction treatment

services, recovery housing, and innovative programs have sought to help people heal. The

Counties would further expand these efforts, but have only so much funding, which the demands

of this unprecedented epidemic have overwhelmed. The Counties are also faced with increased

costs of drug crimes and other public services because of this epidemic. Meanwhile, Defendants

have not changed their ways or corrected their past misconduct, but instead are continuing to fuel

the crisis.

647. While the Counties have committed substantial resources to address the crisis, the

opioid epidemic is nowhere near contained.

M. Statutes Of Limitations Are Tolled and Defendants Are Estopped

from Asserting Statutes of Limitations as Defenses.

a. Continuing Conduct

648. The Counties continue to suffer harm from the ongoing unlawful actions of the

Defendants as detailed herein.

649. The continued tortious and unlawful conduct by the Chain Pharmacies causes a

repeated or continuous injury. The damages have not occurred all at once but have continued to

occur and have increased as time progresses. The tort is not completed nor have all the damages

been incurred until the wrongdoing ceases. The wrongdoing and unlawful activity by the Chain

Pharmacies has not ceased. The public nuisance remains unabated. The conduct causing the

damages remains unabated.

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 b. Equitable Estoppel and Fraudulent Concealment

650. The Chain Pharmacies are equitably estopped from relying upon a statute of
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limitations defense because each has undertaken active efforts to deceive the Counties and to

purposefully conceal their unlawful conduct. Defendants, in an ongoing effort protect their

registered distributor and/or dispenser status and continue earning record profits, have falsely and

fraudulently assured the public, including the Counties, that they were undertaking the necessary

efforts to comply with all applicable state and federal controlled substances laws to curb the opioid

epidemic.

651. The Chain Pharmacies were deliberate in taking steps to conceal their

conspiratorial behavior and active role in the deceptive marketing and the oversupply of opioids,

which directly fueled the opioid epidemic.

652. The Chain Pharmacies further concealed the existence of any potential claims

through their repeated false assurances that they were properly reporting all suspicious opioid

sales. The Chain Pharmacies publicly portrayed themselves as being committed to working

diligently with law enforcement agencies and others to prevent the diversion of these dangerous

drugs when, in fact, they were not committed. These repeated misrepresentations misled

regulators, prescribers, and the public, including the Counties, and deprived the Counties of actual

or implied knowledge of facts sufficient to put the Counties on notice of the Defendants’ unlawful
conduct as alleged herein.

653. The Counties did not discover the nature, scope and magnitude of the Chain

Pharmacies’ misconduct, and its full impact on the Counties, and could not have acquired such

knowledge earlier through the exercise of reasonable diligence.

654. The Chain Pharmacies intended that their actions and omissions would be relied

upon, including by the Counties. The Counties did not know and did not have the means to know

the truth, due to the Chain Pharmacies’ actions, omissions, and concealment.

655. The Counties reasonably relied on the Chain Pharmacies’ repeated false

representations that they were complying with their obligations under the law.

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 VI. CAUSES OF ACTION
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COUNT I
Public Nuisance (By All Plaintiffs Against All Defendants)
656. Plaintiffs incorporate the allegations of all prior paragraphs of this Complaint

within this Count I as though fully set forth herein.

657. A public nuisance is something that negatively affects the public’s health, safety,

morals, or causes substantial annoyance, inconvenience, or injury to the public.

658. The Counties and its residents have a public right to health, safety, peace and

comfort. Those rights are a matter of great interest and of legitimate concern to the Counties, which

has a duty to protect the health, safety, and well-being of its residents. The State’s Attorneys of

each County has the power and authority to bring suit to abate a public nuisance.

659. Defendants, as distributors and dispensers, have, individually and acting through

their employees and agents, and in concert with each other, have intentionally, recklessly, or

negligently engaged in conduct or omissions which endanger or injure the property, health, safety

or comfort of the public in Illinois and the Counties.

660. Defendants created and maintained a public nuisance by marketing, distributing,

dispensing, and selling opioids in ways that unreasonably interfere with the public health, welfare,

and safety in Plaintiffs’ communities, and Plaintiffs and the residents of Plaintiffs’ communities

have a common right to be free from such conduct and to be free from conduct that creates a

disturbance and reasonable apprehension of danger to person and property.

661. Defendants had control over their conduct in the Counties and that conduct has

had an adverse effect on the public right. Defendants had sufficient control over, and responsibility

for, the public nuisance they created – Defendants were in control of the “instrumentality” of the

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 nuisance, namely prescription opioids, including the process of distribution, dispensing,

marketing, and promotion and creation and maintenance of the demand for prescription opioids at
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all relevant times.

662. The Defendants’ nuisance-creating conduct was intentional and unreasonable

and/or violated statutes which established specific legal requirements for the protection of others.

Specifically, Defendants are required to abide by the Illinois Controlled Substance Act, in which

the General Assembly specifically recognized, “the rising incidence in the abuse of drugs and other

dangerous substances and its resultant damage to the peace, health, and welfare of the citizens of

Illinois.” 720 ILCS 570/100.

663. Defendants, individually and together, have created and maintained a public

nuisance through their ongoing conduct of marketing, distributing, dispensing, and selling opioids,

which are dangerously addictive drugs, in a manner which caused prescriptions and sales of

opioids to skyrocket in the Counties, flooded Plaintiffs’ communities with opioids, and facilitated

and encouraged the flow and diversion of opioids into an illegal, secondary market, resulting in

devastating consequences to Plaintiffs and the residents of Plaintiffs’ communities.

664. In light of the information, knowledge, skill, and sophistication they possessed,

Defendants know, and have known, that their intentional, unreasonable, negligent, and unlawful

conduct will cause, and has caused, opioids to be used and possessed illegally and that their

conduct has produced an ongoing nuisance that has had, and will continue to have, a detrimental

effect upon the public health, welfare, safety, peace, comfort, and convenience of Plaintiffs and

Plaintiffs’ communities.

665. Defendants’ conduct has created an ongoing, significant, unlawful, and

unreasonable interference with rights common to the general public, including the public health,

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 welfare, safety, peace, comfort, and convenience of Plaintiffs and Plaintiffs’ community. See

Restatement (Second) of Torts § 821B.

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666. The interference is unreasonable because Defendants’ nuisance-creating conduct:

a. Involves a significant interference with the public health, the public safety,

the public peace, the public comfort, and/or the public convenience;

b. At all relevant times was and is proscribed by state and federal laws and

regulations; and/or

c. Is of a continuing nature and, as Defendants know, has had and is continuing

to have a significant effect upon rights common to the general public, including the

public health, the public safety, the public peace, the public comfort, and/or the

public convenience.

667. The significant interference with rights common to the general public is described

in detail throughout this Complaint and includes:

i. The creation and fostering of an illegal, secondary market for prescription

opioids;

ii. Easy access to prescription opioids by children and teenagers;

iii. A staggering increase in opioid abuse, addiction, overdose, injuries, and

deaths;

iv. Infants being born dependent on opioids due to prenatal exposure, causing

severe withdrawal symptoms and lasting developmental impacts;

v. Employers having lost the value of productive and healthy employees; and

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 vi. Increased costs and expenses for Plaintiffs relating to healthcare services,

law enforcement, the criminal justice system, social services, and education
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systems.

668. Defendants intentionally and unreasonably, unlawfully, and/or negligently

collaborated in deceptive marketing of opioids, acting in concert with opioid manufacturers to

promote the false messaging about the treatment of pain and the addictive nature of opioids, to

encourage their use by health care providers and patients, and to encourage their pharmacists to

fill as many opioid prescriptions as possible in the face of indicia of diversion. The Chain

Pharmacies worked in concert with opioid manufacturers and distributors to ensure that the false

messaging surrounding the treatment of pain and the addictive nature of opioids was consistent

and geared to increase profits for all stakeholders. The Chain Pharmacies invited manufacturers

to train and provide messaging to the Chain Pharmacies’ pharmacists to ensure that those

pharmacists would continue to fill as many prescriptions as possible despite indicia of diversion.

669. Defendants intentionally and unreasonably, unlawfully, and/or negligently pushed

as many opioids onto the market as possible, fueling addiction to and diversion of these powerful

narcotics, resulting in increased addiction and abuse, an elevated level of crime, death and injuries

to the residents of Plaintiff’s community, a higher level of fear, discomfort and inconvenience to

the residents of Plaintiff’s community, and direct costs to Plaintiffs and Plaintiffs’ communities.

670. Each Defendant is liable for creating the public nuisance because the intentional

and unreasonable, negligent, and/or unlawful conduct of each Defendant was a substantial factor

in producing the public nuisance and harm to Plaintiffs.

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 671. In the sale distribution, and dispensation of opioids in Illinois and Plaintiffs’

communities, Defendants violated federal law, including, but not limited to, 21 U.S.C.A. § 823
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and 21 C.F.R. § 1301.74.

672. Defendants’ unlawful nuisance-creating conduct includes violating federal and

Illinois statutes and regulations, including the controlled substances laws, by

a. Distributing, dispensing, dispensing, and selling opioids in ways that

facilitated and encouraged their flow into the illegal, secondary market;

b. Distributing, dispensing, and selling without maintaining effective controls

against the diversion of opioids;

c. Choosing not to and/or negligently failing to effectively monitor for

suspicious orders;

d. Choosing not to and/or negligently failing to investigate suspicious orders;

e. Choosing not to and/or negligently failing to report suspicious orders;

f. Choosing not to and/or negligently failing to stop or suspend shipments of

suspicious orders;

g. Distributing, dispensing, and selling opioids prescribed by “pill mills” when

Defendants knew or should have known the opioids were being prescribed by “pill

mills;”

h. Failing to use the data available to them to identify suspicious orders,

suspicious red flag prescriptions, and to otherwise prevent or reduce the risk of

diversion; and

i. Acting in concert with opioid manufacturers to promote the false messaging

about the treatment of pain and the addictive nature of opioids, to encourage their

174
 use by health care providers and patients, and to encourage their pharmacists to fill

as many opioid prescriptions as possible in the face of indicia of diversion.

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673. Defendants’ intentional, negligent, and/or unreasonable nuisance-creating

conduct, for which the gravity of the harm outweighs the utility of the conduct, includes:

a. Distributing, dispensing, and selling opioids in ways that facilitated and

encouraged their flow into the illegal, secondary market;

b. Distributing and dispensing, opioids without maintaining effective controls

against the diversion of opioids;

c. Choosing not to and/or negligently failing to effectively monitor for

suspicious orders;

d. Choosing not to and/or negligently failing to investigate suspicious orders;

e. Choosing not to and/or negligently failing to report suspicious orders;

f. Choosing not to stop or suspend shipments of suspicious orders;

g. Distributing, dispensing, and selling opioids prescribed by “pill mills” when

Defendants knew or should have known the opioids were being prescribed by “pill

mills;”

h. Failing to use the data available to them to identify suspicious orders,

suspicious red flag prescriptions, and to otherwise prevent or reduce the risk of

diversion; and

i. Acting in concert with opioid manufacturers to promote the false messaging

about the treatment of pain and the addictive nature of opioids, to encourage their

use by health care providers and patients, and to encourage their pharmacists to fill

as many opioid prescriptions as possible in the face of indicia of diversion.

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 674. Defendants’ conduct violates federal law, including, but not limited to, 21

U.S.C.A. § 823 and 21 C.F.R. § 1301.74.

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675. Defendants intentionally, negligently, and/or unreasonably distributed, dispensed,

and sold opioids that Defendants knew would be diverted into the illegal, secondary market and

would be obtained by persons with criminal purposes.

676. Defendants are in the business of marketing, distributing, and/or dispensing

prescription drugs, including opioids, which are specifically known to Defendants to be dangerous

because inter alia these drugs are defined under federal and state law as substances posing a high

potential for abuse and addiction.

677. Indeed, opioids are akin to medical-grade heroin. Defendants’ wrongful conduct

of deceptively marketing and pushing as many opioids onto the market as possible led directly to

the public nuisance and harm to Plaintiffs—exactly as would be expected when medical-grade

heroin in the form of prescription opioids are deceptively marketed, flood the community, and are

diverted into an illegal, secondary market.

678. Despite this knowledge, Defendants negligently, unreasonably and/or unlawfully

marketed and pushed as many opioids onto the market as possible, fueling addiction to and

diversion of these powerful narcotics.

679. Defendants owed the public legal duties, including:

a. a preexisting duty not to expose the Counties and their residents to an

unreasonable risk of harm;

b. a duty to exercise reasonable and ordinary care and skill in accordance with

applicable standards of conduct in marketing, selling, dispensing, and/or

distributing opioids; and

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 c. a duty not to breach the standard of care established under Illinois laws and

the federal Controlled Substances Act (“CSA”) and their respective implementing
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regulations to report suspicious prescribing and to maintain systems to detect and

report such activity.

680. As evidence of addiction and abuse of opioids widened, Defendants were

obligated to rein in their supply, prevent diversion, and mitigate the harms from opioid overuse

and abuse, but intentionally and unreasonably and/or negligently failed to do so.

681. The degree of care the law requires is commensurate with the risk of harm the

conduct creates. Defendants’ conduct in marketing, distributing, dispensing, and selling

dangerously addictive drugs requires a high degree of care and places them in a position of great

trust and responsibility. Their duty cannot be delegated.

682. Each Defendant breached its duty to exercise the degree of care, prudence,

watchfulness, and vigilance commensurate with the dangers involved in selling dangerous

controlled substances.

683. The Counties not only allege that Defendants were negligent for failure to protect

from harm, but that each Defendant engaged in affirmative conduct, the foreseeable result of which

was to cause harm to the Counties and their citizens.

684. Defendants know, and should have known, that their unreasonable and unlawful

conduct does cause, has caused, and will continue to cause, excessive availability of opioids in the

Counties and that their conduct has produced an ongoing nuisance that has had, and will continue

to have, a detrimental effect upon the public health, welfare, safety, peace, comfort, and

convenience of the Counties and their residents.

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 685. Despite this knowledge, Defendants intentionally, negligently, unreasonably

and/or unlawfully marketed and pushed as many opioids onto the market as possible, fueling
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addiction to and diversion of these powerful narcotics.

686. Defendants had control over their conduct in Plaintiffs’ communities and that

conduct has had an adverse effect on rights common to the general public. Defendants had control

over their own shipments of opioids and over their reporting, or lack thereof, of suspicious

prescribers and orders. Each of the Defendants controlled the systems they developed to prevent

diversion, whether they filled orders they knew or should have known were likely to be diverted

or fuel an illegal market.

687. It was reasonably foreseeable that Defendants’ actions and omissions would result

in the public nuisance and harm to Plaintiffs described herein.

688. Reasonably prudent distributors and dispensers of prescription opioids would have

anticipated that the conduct alleged herein would create a public nuisance in the Counties, and that

the public nuisance created would unreasonably interfere with the public health, safety, comfort

and convenience of the Counties and its residents.

689. Because of Defendants’ special positions within the closed system of opioid

distribution, without Defendants’ actions, opioid use would not have become so widespread, and

the enormous public health hazard of prescription opioid and heroin overuse, abuse, and addiction

that now exists would have been averted.

690. The public nuisance created, perpetuated, and maintained by Defendants’ actions

is substantial and unreasonable. It has caused and continues to cause significant harm to Plaintiffs’

communities and the harm inflicted outweighs any offsetting benefit.

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 691. The externalized risks associated with Defendants’ nuisance-creating conduct as

described herein greatly exceed the internalized benefits.

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692. As a direct and proximate result of Defendants’ tortious conduct and the public

nuisance created by Defendants, the Counties have taken proactive measures to abate the public

nuisance, and the Counties seek to expand these efforts.

693. As a direct and proximate result of Defendants’ tortious conduct and the public

nuisance created by Defendants, Plaintiffs have suffered and will continue to suffer stigma

damage, non-physical property damage, and damage to its proprietary interests.

694. The nuisance created by Defendants’ conduct is abatable.

695. Defendants’ misconduct alleged in this case is ongoing and persistent.

696. Defendants’ misconduct alleged in this case does not concern a discrete event or

discrete emergency of the sort a political subdivision would reasonably expect to occur, and is not

part of the normal and expected costs of a local government’s existence. Plaintiffs allege wrongful

acts which are neither discrete nor of the sort a local government can reasonably expect.

697. Plaintiffs have incurred expenditures for special programs over and above

Plaintiffs’ ordinary public services.

698. Plaintiffs seek to abate the nuisance created by the Defendants’ unreasonable,

unlawful, intentional, ongoing, continuing, and persistent actions and omissions and unreasonable

interference with rights common to the general public.

699. Plaintiffs are asserting their own rights and interests and Plaintiffs’ claims are not

based upon or derivative of the rights of others.

700. The tortious conduct of each Defendant was a substantial factor in producing harm

to Plaintiffs.

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 701. Plaintiffs have suffered an indivisible injury as a result of the tortious conduct of

Defendants.
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702. Because the Counties did not contribute in any way to creating the public nuisance,

each Defendant is joint and severally liable for creating the public nuisance.

703. Defendants acted intentionally and with actual malice because Defendants acted

with a conscious disregard for the rights and safety of other persons, and said actions had a great

probability of causing substantial harm.

704. Plaintiffs seek an order that provides for abatement of the public nuisance

Defendants have created, enjoins Defendants from further wrongful and unfair conduct, and

awards Counties the costs associated with abatement of the nuisance and harm to the Counties in

an amount to be determined at trial.

WHEREFORE Plaintiffs respectfully demand that this Honorable Court enter judgment

against Defendants in a dollar amount to satisfy the jurisdictional limitation of this Court and such

additional relief and amounts as the jury and the Court shall deem equitable and proper, and

additionally, costs of said suit.

COUNT II
Negligence (By All Plaintiffs Against All Defendants)
705. Plaintiffs incorporate the allegations of all prior paragraphs of this Complaint

within this Count II as though fully set forth herein.

706. Defendants have a duty to exercise reasonable care in marketing, selling, and

distributing highly dangerous opioid drugs in Illinois.

707. Upon information and belief, each of the Defendants repeatedly breached their

duties, including, but not limited to:

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 a. Selling prescription opioids in the supply chain when they knew, or should have

known, that there was a substantial likelihood the sale was for non-medical purposes and that
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opioids are an inherently dangerous product when used for non-medical purposes;

b. Using unsafe distribution practices;

c. Failing to comply with all state and federal laws as described above;

d. Failing to acquire or utilize special knowledge or skills that relate to the dangerous

activity of selling opioids in order to prevent or ameliorate such significant dangers;

e. Failing to review prescription orders for red flags;

f. Failing to report suspicious orders and failing to refuse to fill them; and

g. Failing to provide effective controls and procedures to guard against the theft and

diversion of controlled substances.

708. Defendants’ acts and omissions imposed an unreasonable risk of harm to others

separately and/or combined with the improper or unlawful acts of third parties.

709. As a proximate result of the Defendants’ breaches of their duties of care,

Defendants and its agents have caused damages to the Counties in an amount to be determined at

trial.

WHEREFORE Plaintiffs respectfully demand that this Honorable Court enter judgment

against Defendants in a dollar amount to satisfy the jurisdictional limitation of this Court and such

additional relief and amounts as the jury and the Court shall deem equitable and proper, and

additionally, costs of said suit.

COUNT III
Unjust Enrichment (By All Plaintiffs Against All Defendants)
710. Plaintiffs incorporate the allegations of all prior paragraphs within this Count III

as though fully set forth herein.

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 711. Defendants have unjustly retained a benefit to the Counties’ detriment, and the

Defendants’ retention of the benefit violates the fundamental principles of justice, equity, and good
FILED DATE: 8/15/2022 4:37 PM 2022L007352

conscience.

712. The Counties have expended substantial amounts of money in an effort to remedy

or mitigate the societal harms caused by Defendants' conduct.

713. These expenditures include the provision of healthcare services and treatment

services to people who use opioids.

714. These expenditures have helped sustain Defendants' businesses.

715. The Counties have conferred a benefit upon Defendants by paying for Defendants'

externalities: the cost of the harms caused by Defendants' improper distribution practices.

716. The Counties have also conferred a benefit upon Defendants by paying for

purchases by unauthorized users of prescription opioids from the Defendants' supply chain for

non-medical purposes.

717. By distributing and dispensing a large volume of opioids within the Counties and

by acting in concert with third parties, Defendants have unjustly enriched themselves at the

Counties’ expense. By engaging in the unlawful and unfair practices described in this Complaint,

the Defendants have unjustly enriched themselves at the Counties’ expense

718. Because of their conscious failure to exercise due diligence in preventing

diversion, Defendants obtained enrichment they would not otherwise have obtained. The

enrichment was without justification and Plaintiffs lack an adequate remedy provided by law.

719. These Defendants have unjustly retained a benefit to the Plaintiffs' detriment, and

the Defendants' retention of the benefit violates the fundamental principles of justice, equity, and

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 good conscience. The enrichment was without justification and Plaintiffs lack an adequate remedy

provided by law.
FILED DATE: 8/15/2022 4:37 PM 2022L007352

720. Defendants have been unjustly enriched at the expense of the Counties. It would

be inequitable for Defendants to retain the profits and benefits they have reaped from the improper

practices, misrepresentations, and unlawful conduct alleged herein.

721. The misconduct alleged herein is ongoing and persistent.

722. The misconduct alleged herein does not concern a discrete event or discrete

emergency of the sort a county would reasonably expect to occur and is not part of the normal and

expected costs of a county’s existence. The Counties allege wrongful acts which are neither

discrete nor of the sort a local government can reasonably expect.

723. The Counties has incurred expenditures for special programs over and above its

ordinary services.

WHEREFORE Plaintiffs respectfully demand that this Honorable Court enter judgment

against Defendants in a dollar amount to satisfy the jurisdictional limitation of this Court and such

additional relief and amounts as the jury and the Court shall deem equitable and proper, and

additionally, costs of said suit.

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 JURY DEMAND

The Counties demand trial by jury on all questions so triable.

FILED DATE: 8/15/2022 4:37 PM 2022L007352

Dated: August 12, 2022

/s/ Peter J. Flowers___________

Peter J. Flowers, Esq.

Michael W. Lenert, Esq.
MEYERS & FLOWERS, LLC
Cook County Firm #56079
3 N 2nd Street, Suite 300
St. Charles, IL 60174
(630)232-6333
pjf@meyers-flowers.com
mwl@meyers-flowers.com
and

Jayne Conroy
Sarah Burns
Holly Nighbert
SIMMONS HANLY CONROY, LLC
112 Madison Avenue
New York, NY 10016
212-784-6401
jconroy@simmonsfirm.com
sbunrs@simmonsfirm.com

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