Covetrus settles for $1.1M over alleged opioid regulation failures

Covetrus’s North American subsidiary has agreed to pay $1.125 million to settle allegations that the animal health company failed to address a suspicious number of opioid orders from a veterinary hospital, maintain adequate records, and comply with federal regulations governing controlled substances.

The payout was part of a settlement with the U.S. Attorney’s Office for Massachusetts and the Drug Enforcement Agency (DEA), which conducted a civil and administrative investigation regarding alleged violations of the Controlled Substances Act (CSA) and associated record keeping requirements.

Also as part of the settlement, Covetrus NA, based in Portland, Maine, consented to a one-year memorandum of agreement with the DEA. The agreement mandates improvements to the company’s suspicious order monitoring system (SOM), which companies use to detect unusual or suspicious orders for controlled substances and other regulated products.

The agreement grants the DEA broad oversight to ensure compliance with federal, state, and local controlled substance laws. This includes employee training and operational reviews.

“Covetrus North America fully cooperated with both the U.S. Attorney’s Office and DEA in reaching this resolution,” according to a statement the company provided AVMA News. “Covetrus’ mission is to help veterinarians drive better financial and clinical outcomes and doing so in a way that is fully compliant with all federal and state laws, including those related to controlled substances.”

The investigation stemmed from the criminal prosecution of an office manager of a veterinary clinic in West Barnstable, Massachusetts, for fraudulently purchasing tablets of hydrocodone-homatropine and diverting them for personal use between March 2016 and June 2019, according to an October 30 statement by the DEA. This happened despite the orders having been flagged as suspicious by the company’s SOM. Hydrocodone is listed as a Schedule II drug in the CSA.

Some of these orders were fulfilled by Butler Animal Health Supply, which is now Covetrus NA, before and for a short period of time after it became a part of Covetrus in 2019.

When DEA investigators questioned Covetrus NA about the veterinary hospital’s unusually high number of hydrocodone orders, the company claimed its SOM personnel had conducted follow-up inquiries with the hospital. However, Covetrus NA failed to provide adequate documentation to justify its decision to release the drugs, the DEA stated.

In February 2022, the office manager pleaded guilty to several federal charges, including acquiring a controlled substance by misrepresentation, and was sentenced to time already served and a year of supervised release.

The DEA investigation further revealed Covetrus NA violated federal regulations by not notifying the agency about an order of hydrocodone lost in transit to the veterinary hospital in March 2018.

Nor did the company properly review the most recent information made available in ARCOS—an automated, comprehensive drug reporting system that monitors controlled substances from their point of manufacture through distribution—as required by the CSA.

“Drug distributors have an obligation to handle controlled substances responsibly, including maintaining complete and accurate records, and diligently investigating suspicious orders of controlled substances,” said acting U.S. Attorney Joshua S. Levy in the statement. “As this resolution demonstrates we not only prosecute individuals who divert controlled substances, but we will hold opioid distributors accountable for their failure to comply with important regulations.”

Earlier this year, Covetrus NA pleaded guilty to introducing and delivering more than $20 million in misbranded veterinary drugs into interstate commerce. The company was sentence to one year probation and agreed to pay more than $23 million in criminal fines and forfeitures.