Cardinal Health Resolves Controlled Substance License Suspensions

Main Category: Pharma Industry / Biotech Industry
Also Included In: Regulatory Affairs / Drug Approvals
Article Date: 03 Oct 2008 - 3:00 PDT

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Cardinal Health, a global provider of products and services that improve the safety and productivity of health care, today announced agreements with the U.S. Drug Enforcement Administration (DEA) and seven U.S. Attorneys' Offices that will result in reinstated licenses to distribute controlled substances from the company's Auburn, Wash., Lakeland, Fla. and Swedesboro, N.J. distribution centers.

The administrative and civil settlement agreements also resolve all DEA claims related to the company's controls against the diversion of controlled substances. Without admitting any wrongdoing, Cardinal Health also agreed to pay a $34 million settlement payment, an amount the company fully reserved during fiscal 2008.

"Protecting the integrity of the pharmaceutical supply chain is a responsibility we take very seriously, and preventing prescription drug abuse is a public policy goal that Cardinal Health fully supports," said R. Kerry Clark, chairman and CEO. "We settled this matter so that we could quickly resume the distribution of these vital medicines to our valued customers, and we will continue to work with the DEA and other supply chain partners to take all necessary steps to keep these powerful drugs out of the wrong hands."

Since November 2007, Cardinal Health has invested more than $20 million to significantly enhance its controls across its network to prevent the diversion of controlled substances and has worked diligently with the DEA to resolve the suspensions.

Specifically, the company has expanded its training, implemented new processes, introduced an electronic system that identifies and blocks potentially suspicious orders pending further investigation, and enhanced the expertise and overall staffing of its pharmaceutical distribution compliance team. In addition, to strengthen its overall compliance practices, the company hired former Acting Deputy U.S. Attorney General Craig Morford to an expanded role as its chief compliance officer, reporting directly to Clark and to the audit committee of the company's board of directors. Morford is responsible for regulatory, environmental health and safety compliance, as well as ethics and enterprise risk management.

Cardinal Health is currently replenishing its controlled substance inventories in its Auburn, Lakeland and Swedesboro facilities and will take a phased approach to restoring controlled substance shipments from each facility. The company expects to fully resume shipments of controlled substances from all three facilities by the end of November. Customers served by these distribution facilities will be notified by Cardinal Health when they can begin ordering and receiving controlled substance shipments.

In addition, on Sept. 29, the company lifted a voluntary suspension for its Stafford, Texas facility and resumed shipping controlled products to customers from that location.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $91 billion, global company serving the health care industry with products and services that help hospitals, physician offices and pharmacies reduce costs, improve safety, productivity and profitability, and deliver better care to patients. With a focus on making supply chains more efficient, reducing hospital-acquired infections and breaking the cycle of harmful medication errors, Cardinal Health develops market-leading technologies, including Alaris(R) IV pumps, Pyxis(R) automated dispensing systems, MedMined(TM) electronic infection surveillance service, VIASYS(R) respiratory care products and the CareFusion(TM) patient identification system. The company also manufactures medical and surgical products and is one of the largest distributors of pharmaceuticals and medical supplies worldwide. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 40,000 people on five continents. More information about the company may be found at http://www.cardinalhealth.com

Cautions Concerning Forward-Looking Statements

This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: uncertainties regarding the decision to spin off Cardinal Health's clinical and medical products businesses and regarding the impacts of such decision if the spin-off is accomplished; competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; uncertainties relating to timing of generic and branded pharmaceutical introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by any regulatory authority or any legal or administrative proceedings; future actions of regulatory bodies or government authorities relating to Cardinal Health's manufacturing or sale of products and other costs or claims that could arise from its manufacturing, compounding or repackaging operations or from its other services; difficulties and uncertainties related to the integration of acquired businesses; and conditions in the pharmaceutical market and general economic and market conditions. This news release reflects management's views as of Oct. 2, 2008. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

Cardinal Health