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The U.S. Department of Justice has sued Walmart for playing a role in America’s opioid crisis. But there are several reasons why the stock can survive the lawsuit.
The DOJ maintains that the lack of adequate personnel contributes to this
Walmart
pharmacies and pressure from managers made it possible to fulfill suspicious orders on a large scale. According to the lawsuit, these decisions, which the DOJ says were profit-driven, led Walmart to unlawfully distribute these drugs – a violation of the Controlled Substances Act – and thus played a role in the opioid crisis.
Walmart, for his part, hit back at the desk. It says the lawsuit “devises a legal theory that unlawfully forces pharmacists to get between patients and their doctors,” and that the pharmacists had, in effect, refused to fill out “hundreds of thousands” of problematic prescriptions.
Walmart’s move and response are not too much of a surprise. This fall, Walmart sued the DOJ for clarifying the role of pharmacies and their employees under the law. Walmart shares also didn’t respond much to the news Wednesday morning, falling 0.2% to $ 143.88 on a recent check.
The news is certainly not welcome to Walmart. The DOJ alleges that the managers pressured pharmacists to process orders quickly because the company believed this service attracted customers and kept them in stores. The lawsuit also says the company did little to help pharmacists who raised red flags and, in one case, filled out prescriptions from a doctor under federal investigation who declined to answer pharmacists’ questions.
Walmart said it has “always allowed our pharmacists to refuse to comply with” prescriptions.
At the same time it could have been worse. The DOJ had previously considered criminal charges for Walmart, but decided not to go this route and instead file a civil suit. Walmart isn’t the only company in its sights, either. Bankrupt Purdue Pharma, the maker of OxyContin, has already pleaded guilty to three federal crimes. Meanwhile, other local governments have already sued Walmart, along with colleagues
CVS Health
(CVS),
Rite
Aid (RAD) and
Walgreens Boots Alliance
(WBA) for their alleged role in the crisis.
Ultimately, unless there are more bombshells in the lawsuit, it probably won’t mean much to Walmart’s stock. Shares are up more than 21% so far as the retailer has seen a wave of new customers during the pandemic. Even if Walmart were to settle with the DOJ – as Purdue did earlier this year, for a total of $ 8.34 billion – that would add up to just over 6% of its fiscal revenue in the third quarter, or 1.5 % of the nearly $ 555 billion in revenue is estimated to be cut this year.
Write to Teresa Rivas at [email protected]