Ontario government fines Costco $7 million after illegal kickbacks

Ontario’s government has fined Costco more than $7 million after an investigation into illegal kickbacks at 29 pharmacies in warehouses across the province.

The Ontario Ministry of Health announced Friday that it would be penalizing CWC Pharmacies (Ontario) Ltd. after it found that the company received illegal advertising payments before August 2015.

The government says the company approached the ministry for confirmation on the legality of the payments, which Costco voluntarily stopped receiving until the completion of the ministry’s review.

The inspection revealed that Cosctco received $7.25 million for advertising services that the ministry says violate its terms for accepting rebates.

According to the ministry, the Ontario government prohibits the operator of a pharmacy from accepting rebates from a drug manufacturer that has a product listed on the province’s drug database.

The ministry says the company co-operated with all aspects of the investigation and it agreed to make the rebate payment.

CWC Ontario is a ”wholly owned subsidiary” of Costco Wholesale Canada Ltd., according to the Costco Pharmacy website.

A company spokesperson did not immediately respond to a request for comment.

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