Walmart sued for its “role” in opiate crisis: Stock price affected?
On Tuesday, the U.S. Justice Department sued Walmart, as the superstore company is accused of having a role in the opioid crisis: powerful, extremely addictive painkillers have killed hundreds of thousands of people in the U.S. The case hinges around alleged pressuring of pharmacies to fill opioid prescriptions – even if these orders seem suspicious.
Walmart runs thousands of pharmacies throughout the USA. According to a civil complaint associated with the lawsuit, Walmart is responsible for illegal distribution of controlled substances to pharmacies. Walmart allegedly violated federal law by selling opioids the pharmacists “knew were invalid”, according to Justice Department Acting Assistant Attorney General Jeffrey Clark.
According to federal law, Walmart must report suspicious opioid orders to the Drug Enforcement Administration. But prosecutors say it wasn’t doing so.
What’s in the opioid lawsuit against Walmart?
The 160-page-long lawsuit document stipulates that Walmart made it hard for pharmacists to follow rules about how to handle controlled substances, that pharmacists were under pressure to fill orders as fast they could, rather than taking the time to refuse invalid prescriptions.
“Walmart knew that its distribution centers were using an inadequate system for detecting and reporting suspicious orders,” claims Colorado U.S. Attorney Jason Dunn. “For years, Walmart reported virtually no suspicious orders at all. In other words, Walmart’s pharmacies ordered opioids in a way that went essentially unmonitored and unregulated.”
The suit also claims that there are issues with Walmart’s compliance department, and alleges that, even after pharmacists told the compliance department about suspicious orders, Walmart still filled them.
Walmart’s response to the lawsuit
Walmart published a corporate blog post responding to the suit:
“Walmart is helping fight the opioid crisis. We are proud of our pharmacists, who help patients understand the risks about opioid prescriptions. And our pharmacists have refused to fill hundreds of thousands of opioid prescriptions they thought could be problematic.”
In the post, Walmart claimed the lawsuit contains “a lot of problems” the company will explain when it goes to court. The blog post also counters that “it is outrageous the Department is trying to shift blame for DEA’s own well-documented failures in policing the very doctors it gave permission to prescribe opioids.”
Walmart’s preemptive lawsuit
Two months ago, Walmart filed a preemptive lawsuit against the Justice Department, the Drug Enforcement Administration, and Attorney General William Barr. It said the Justice Department’s investigation identified doctors who wrote invalid prescriptions. The lawsuit said most of those doctors still have active DEA registrations.
“Blaming pharmacists for not second-guessing the very doctors the Drug Enforcement Administration (DEA) approved to prescribe opioids is a transparent attempt to shift blame from DEA’s well-documented failures in keeping bad doctors from prescribing opioids in the first place,” Walmart said in a statement.
Walmart’s lawsuit said it was being blamed for a lack of enforcement policies brought on by the opioid crisis. Now the company is asking a federal judge to declare the Justice Department’s lawsuit lacking basis to seek civil damages.
The U.S. opioid crisis
Prescription opioids can be prescribed as a treatment for pain – but they also come with numerous risks & side effects. Common prescription opioids include oxycodone, hydrocodone, morphine, and methadone.
According to the Centers for Disease Control and Protection, drug overdoses have caused over 750,000 deaths between 1999 and 2018. Two thirds of overdose deaths in the U.S. involve opioids.
Because of how widespread and deadly the opioid crisis is in the U.S., it’s no surprise the government would sue a company for its handling of the drugs. More information about the suit against Walmart will likely come out when the case goes to court.
Will the lawsuit affect Walmart’s stock price?
Unless something major happened with the lawsuit, Barrons opines that it won’t likely have much effect on Walmart’s stock price; Walmart’s ownership in its stock have grown over 21% this year.
There’s a possibility Walmart could settle with the Justice Department: Walmart has a considerable cash balance to draw on, making a settlement well within its means. Because of this, investors aren’t likely to begin selling the retail giant’s shares any time soon.