Harvard will pay the federal government $775,000 as part of a settlement for violations of the Controlled Substances Act by the University Health Services (UHS) Pharmacy.

The federal government's allegations against the pharmacy included charges of "lax security and improper pharmacy practices, ... persistent discrepancies between the pharmacy's inventory documents and physical counts, ... improper distribution of controlled drugs by the Pharmacy to unregistered Harvard locations ... and improper handling of outdated controlled drugs," according to a press release from the U.S. Attorney's office for the District of Massachusetts.

James H. Rowe III '73, Harvard's vice president for Government, Community and Public Affairs, said the settlement does not mean the University is admitting to violating the Controlled Substances Act.

"There is no significant allegation that we are admitting to," Rowe said. "This is an agreement to disagree in general. We don't agree with the breadth and scope of the government's allegations."

Rowe said the money that Harvard is paying is to "resolve the investigation."

The amount paid by Harvard "is the second largest monetary amount ever paid in the nation under the [Controlled Substances] Act, and is the largest ever paid in the District of Massachusetts," the U.S. Attorney's press release said.

In an interview with The Crimson yesterday, UHS Director David S. Rosenthal '59 said this investigation should in no way make members of the Harvard community concerned about the quality of treatment they receive from UHS.

"This does not involve any health issue and the government even said that," Rosenthal said. "At no time was any patient's health or safety ever in question."

The investigation began when Harvard discovered that a pharmacy employee had stolen codeine-based cough medicine for his own consumption, according to a statement from Rosenthal.

Harvard fired the employee and then notified the Drug Enforcement Administration of the misconduct, Rosenthal said in the statement.

Rosenthal noted in the statement that the incident prompted an internal investigation which "revealed shortcomings in administrative record-keeping, inventory control, and supervisory procedures."

The government also began its own investigation into the operations of the Pharmacy.

"Over a period of several years, Harvard fell considerably short of the strict legal requirements designed to reduce the diversion of legitimate drugs to illegal uses," U.S. Attorney Donald K. Stern said in a statement. "The upshot was thefts of drugs, inaccurate inventories, sloppy storage and improper distribution of drugs to unregistered sites."

The government determined that Harvard should have known about thefts and cash discrepancies as early as 1990, but failed to take action, according to the press release from the U.S. Attorney's office.

In addition, the government found that Harvard knew about inventory control problems in 1994, but again failed to comply with federal laws, according to the press release.

Harvard cooperated with the government throughout the investigation and took a series of voluntary steps in order to fix the institutional problems.

UHS has hired a new director of the Pharmacy and restructured operations there, according to the University's statement.

Harvard has also hired new pharmacists who are trained in the state and federal regulations, and has installed a new computer system with improved record-keeping capabilities, according to the statement.

Rowe said the Pharmacy's "two priorities have always been to ensure patient health and safety and full compliance with state regulations."

The UHS Pharmacy is licensed to fill prescriptions for only those patients affiliated with Harvard