Walgreens helped fuel San Francisco’s opioid crisis, judge rules

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Walgreens helped fuel the opioid epidemic in San Francisco by shipping and dispensing the addictive drugs without proper due diligence, a federal judge ruled Wednesday in what attorneys suing the retailer called a “wake-up call for companies.”

US District Judge Charles Breyer said Walgreens “substantially contributed” to one of the nation’s deadliest public health crises by not stopping suspicious orders and dispensing drugs that were diverted for illicit use, causing a public nuisance in a major city that is among the hardest hit by addiction and overdoses. Walgreens, responsible for shipping nearly 1 out of every 5 oxycodone and hydrocodone pills distributed nationwide during the height of the opioid crisis, was the only drug company sued by San Francisco that did not settle, going to trial in April.

“Walgreens has regulatory obligations to take reasonable steps to prevent the drugs from being diverted and harming the public,” Breyer wrote. “The evidence at trial established that Walgreens breached these obligations.”

A trial will be held later to determine how much the company must pay the city to address the harms of the opioid crisis. The city does not yet have an estimated amount it will seek.

Walgreens spokesman Fraser Engerman said the company was “disappointed” with the decision and would appeal.

“As we have said throughout this process, we never manufactured or marketed opioids, nor did we distribute them to the ‘pill mills’ and internet pharmacies that fueled this crisis,” he wrote in an email. “We stand behind the professionalism and integrity of our pharmacists, dedicated healthcare professionals who live in the communities they serve.”

City Attorney David Chiu said the first bench trial finding Walgreens liable in the opioid epidemic “has national significance” in a years-long effort to hold drug distributors and pharmacies responsible. As the company has recently closed stores in the city, citing the effects of the drug epidemic, Chiu accused Walgreens of shifting blame.

“This is akin to an arsonist complaining about the fire,” he said at a news conference.

The verdict marks a second blow for the pharmacy giant — with thousands of other lawsuits by states, cities and counties remaining. Unlike the three largest drug distributors and drugmakers Johnson & Johnson and Teva, Walgreens has not reached a national settlement. It did not go through bankruptcy as manufacturers Purdue Pharma, Mallinckrodt and Insys have.

In a 112-page opinion, Breyer spelled out the specifics of the city’s drug crisis and the timeline of Walgreens’s response to drug misuse. Paul Geller, an attorney representing San Francisco and other communities across the country fighting drug companies, said the verdict “is anything but a run-of-the-mill legal ruling,” pointing to meticulous detail about the crisis in the city and the ways Walgreens contributed.

“I hope it is distributed as required reading in Big Pharma boardrooms throughout the country,” Geller said, “because his painstakingly detailed ruling ought to be a wake-up call for companies and help ensure this never happens again.”

Peter Mougey, an attorney also representing San Francisco and other communities, said the verdict will help in other cases.

“Walgreens has hidden, covered up and run from the truth throughout the entirety of this five-year litigation,” he said. “Walgreens knew its system to detect and stop suspicious orders was nonexistent but continued to ship opioids at an alarming pace to increase profits. San Francisco is now one step closer to starting the healing process.”

The decision comes after the company reached a $683 million settlement with the state of Florida in May, holding a trial in state court. In November, a jury in Ohio found that the company, along with CVS and Walmart, contributed to the opioid crisis in two counties — the first decision of its kind in a pharmacy case.

Walgreens stopped distributing opioids after the Drug Enforcement Administration shut down a warehouse in 2012.

But the city argued that the impact of Walgreens’s shipping and dispensing continues to reverberate as people who use drugs have moved from prescription pills to heroin to fentanyl as the illicit drug market has evolved.

Opioid overdoses, including heroin and fentanyl, have skyrocketed in San Francisco, where there was a 478 percent increase in those deaths between 2015 and 2020, climbing to 584, according to data from the city. Opioid-related emergency-room visits tripled at the same time, at nearly 3,000 in 2020.

During the trial, city officials tested about the extent that the crisis infiltrated everyday life. Needles were removed from the city’s parks “like changing out the toilet paper in the restrooms,” a park ranger said. When paramedics respond to someone who has no pulse and is not breathing, they assume it’s an opioid overdose.

The system of monitoring for suspicious orders from Walgreens was required to maintain under the Controlled Substances Act was ineffective, the judge said. Thousands of suspicious orders were sent to its pharmacies without investigation.

Breyer’s verdict criticized the company and faulted executives who failed to stop the diversion of drugs and repeatedly denied internal requests for a central database of reports on suspicious customers. He said the head of compliance was “vague and evasive” on the stand.

The judge sided with the city, agreeing that the company exerted pressure on pharmacists, who had little time and oversight before dispensing drugs. Pharmacists filled out the due diligence forms via paper and stored them in filing cabinets rather than electronically. A pharmacist in one store could not access records from other locations.

If pharmacists refused to fill a prescription, they noted the refusal in the internal computer system, which was limited to 320 characters.

“Walgreens pharmacies operated in information silos,” Breyer said. “This need not have been so.”

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