CVS logged 133 store-brand drug recalls in a decade — twice Walgreens' count

CVS sells more than 2,000 store-brand health and wellness items, and a June 2024 Bloomberg investigation found it had sourced some of them cheaply at a quality cost: over the past decade CVS logged 133 recalls of generic over-the-counter drugs, twice Walgreens' 70 and triple Walmart's 51. FDA inspectors found bacteria-contaminated water at a now-defunct Florida factory making fruit-flavored children's medicines, and standing liquid growing mold colonies inside an air purifier at the Indian plant making CVS's generic Allegra.

The structural quirk that made this possible: as a private-label distributor, CVS isn't required to approve or reject the medications it sells — the onus is on the manufacturer. The investigation counted 15 manufacturers in ten years that had previous problems producing medications. 'The best way to make a low-price product is to skimp on quality,' Stanford medicine professor Kevin Schulman told Bloomberg. CVS responded that its recalled products made up fewer than 1% of FDA drug recalls over the decade and that it runs an average of 350 daily quality tests.

The problem is bigger than one chain — pharmaceutical recalls jumped 42.4% to 517 events in 2023 per Sedgwick's recall report, as the US leaned on factories in India and China amid drug shortages. But CVS's rate stood out among its own peers, and the scrutiny landed as the company was already guiding 2024 earnings down to $7 a share from $8.30 on high medical costs at its Aetna insurance unit.

Sourcing on price led CVS to 15 manufacturers with prior problems, including plants later found with contaminated water and mold.

As a private-label distributor CVS can skip the FDA approval duties a brand-name maker carries — the manufacturer approves instead.

When companies must choose between quality and price, they tend toward cheap sourcing — and the recall record shows it.

Private label means owning the supply chain: when the cheapest source wins, the brand — and the risk — land on the label's owner

CVS disputed the framing, saying its recalled store-brand products made up fewer than 1% of the FDA's drug recalls over the decade and that it performs an average of 350 daily quality and safety tests. The scrutiny landed during a rough stretch: in May 2024 CVS cut its 2024 earnings guidance to $7 a share from $8.30 on rising medical costs at Aetna, its insurance arm.