While topics such as COVID-19, or the ongoing regulatory battles with big tech, remain at the front of most investors’ minds, it’s easy to forget that the opioid scandal still remains a major topic. Many large pharmaceutical companies have ended up going bankrupt over legal fines they’ve faced in regards to their involvement in the opioid epidemic. As it turns out, the U.S. government announced it would be suing Walmart (NYSE: WMT) for inadequately screening potential prescriptions despite persistent warnings from the very pharmacists it employed.
On Tuesday afternoon, the Department of Justice announced that it would be filing a lawsuit that would place the blame on Walmart itself rather than the pharmacists it employed. The lawsuit also claims that Walmart tried to boost profits by pressuring employees to fill prescriptions quickly and making it harder for a pharmacist to reject invalid prescriptions due to the pressure.
Even worse is the fact that Walmart seemingly ignored warnings from its own pharmacists. According to the lawsuit, this included claims that the company kept pharmacies perpetually understaffed to further pressure pharmacists to work faster.
“Many of these prescription drugs would never have hit the streets if Walmart pharmacies had complied with their obligations,” said Maria Chapa Lopez, one of the several attorneys involved in this case against the retailer.
Walmart responded almost immediately to the announcement, calling these claims frivolous and unjustified. The retailer had already been expecting a lawsuit announcement from the DOJ for quite some time now. Earlier this year, Walmart even announced it was trying to launch its own pre-emptive lawsuit against the DOJ in order to seek a judicial declaration that the company should be absolved from any potential fines. That plan seems to have largely failed at this point.
Companies like Purdue Pharma, one of the bigger opioid manufacturers, have gone bankrupt after being hit by a multi-billion-dollar fine. Although Walmart isn’t a manufacturer, it was one of the largest distributors of opioids across the country, thanks to its large chain of pharmacies.
In 2019, around 50,000 people died of an opioid overdose. While it’s uncertain exactly how large a potential fine against Walmart could be, it’s possible it could be one of the biggest seen so far in any opioid-related lawsuit.
Shares of Walmart are down 0.6% in pre-market trading following the news. Overall, it wouldn’t be surprising if there’s another dip in the company’s stock as Wednesday’s trading session begins.
Walmart Company Profile
America’s largest retailer by sales, Walmart operates over 11,300 stores under 58 banners, selling a variety of general merchandise and grocery items. It’s home market accounted for 76% of sales in fiscal 2019, with Mexico and Central America (6%), the United Kingdom (6%), and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 33% from general merchandise, and 11% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart, Jet.com, and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 5% of fiscal 2019 sales. – Warrior Trading News
