( CNN ) -- Illegal sales practices by CVS Pharmacy Inc. allowed criminals to make mass purchases of a component used in the manufacturer of methamphetamine , said federal prosecutors , who announced a settlement Thursday that will cost the company $ 77.6 million and bring new controls . The company 's improper sales of pseudoephedrine , an ingredient found in cold and sinus medicines , led directly to an increase in methamphetamine production in California , said the U.S. attorney 's office in Los Angeles , California . CVS is the biggest operator of retail pharmacies in the United States . As part of the agreement , CVS -- which blamed the sales on `` the flawed implementation of an electronic monitoring system '' -- has agreed to pay $ 75 million in civil penalties and to forfeit the $ 2.6 million in profits the company earned from the sales , prosecutors said in a news release . `` This case shows what happens when companies fail to follow their ethical and legal responsibilities , '' said U.S. Attorney Andre Birotte Jr. `` CVS knew it had a duty to prevent methamphetamine trafficking , but it failed to take steps to control the sale of a regulated drug used by methamphetamine cooks as an essential ingredient for their poisonous stew . '' The company will not face criminal charges ; instead it will implement a compliance and ethics program over the next three years , prosecutors said . CVS changed its sales practices only after it became aware of the government 's investigation , officials said . Authorities found thousands of violations of a 2005 act which , among other things , limits the amount of pseudoephedrine a customer can purchase in a single day . Prosecutors said the violations occurred in California , Nevada and `` likely '' 23 other states where `` CVS failed to implement appropriate safeguards . '' In 2007 , after Mexico banned the sale of pseudoephedrine , Los Angeles County experienced an epidemic of `` smurfing '' , a practice in which individuals make multiple purchases of items containing pseudoephedrine with the aim of getting large amounts for use in meth production , the statement said . CVS , unlike other retailers , failed to prevent the practice , prosecutors allege . `` Smurfers inundated CVS stores in Los Angeles and Orange County , and later stores in the Las Vegas [ Nevada ] area , to purchase cough and cold remedies , sometimes cleaning out store shelves , '' authorities said . CVS pledged to prevent such sales in the future . `` While this lapse occurred in 2007 and 2008 and has been addressed , it was an unacceptable breach of the company 's policies and was totally inconsistent with our values , '' said Thomas M. Ryan , chairman and CEO of CVS Caremark . `` CVS/pharmacy is unwavering in its support of the measures taken by the federal government and the states to prevent drug abuse . '' CVS has strengthened internal controls and compliance measures , Ryan said in a written statement .
2011 : Company says it will pursue new investigation . CVS agrees to pay $ 77.6 million to resolve investigation . Pseudoephedrine is found in methamphetamine ##s .