WASHINGTON (LAWFUEL) – Cardinal Health Inc., one of the nation’s largest distributors of pharmaceutical drugs, has agreed to settle allegations that it violated federal reporting provisions relating to its handling of certain controlled substances regulated by the Drug Enforcement Administration (DEA). Under the agreement between the company and seven U.S. Attorney’s Offices, Cardinal Health agreed to pay $34,000,000 in civil penalties for alleged violations of its obligations under the Controlled Substances Act.
Cardinal Health, which operates 27 DEA-registered distribution facilities, failed to report to DEA suspicious orders of hydrocodone that it then distributed to pharmacies that filled illegitimate prescriptions originating from rogue Internet pharmacy Web sites. These prescriptions violated applicable Federal and State law because they were not issued for a legitimate medical purpose by physicians acting within the usual course of professional practice. Cardinal’s conduct allowed the “diversion” of millions of dosage units of hydrocodone from legitimate to non-legitimate channels. DEA regulations require all manufacturers and distributors to report suspicious orders of controlled substances and, more specifically, to “design and operate a system to disclose to the registrant suspicious orders of controlled substances.” Registrants are required to inform DEA of suspicious orders upon discovery.
“Despite DEA’s repeated attempts to educate Cardinal Health on diversion awareness and prevention, Cardinal engaged in a pattern of failing to report blatantly suspicious orders for controlled substances filled by its distribution facilities located throughout the United States,” said DEA Acting Administrator Michele M. Leonhart. “Cardinal’s negligent conduct contributed to our nation’s serious pharmaceutical abuse problem. This substantial civil penalty underscores DEA’s determination to prevent pharmaceutical diversion and protect the public health and safety by continuing to hold companies responsible if they fail to fulfill their obligations under the Controlled Substance Act.”
Seven Cardinal Health distribution centers received and filled thousands of suspicious orders placed by pharmacies participating in illicit Internet schemes, but failed to report the orders to DEA. They did so even after an Aug. 22, 2005, meeting at which DEA officials met with and warned Cardinal officials about excessive sales of their products to pharmacies filling illegal online prescriptions. The pharmacies filled purported online “prescriptions” for hydrocodone (contained in drugs such as Vicodin), but the prescriptions were issued outside the normal course of professional practice and not for a legitimate medical purpose. The U.S. Attorneys allege that the orders that Cardinal received from these pharmacies, and others, were unusually large, unusually frequent and/or deviated substantially from the normal pattern.
“The abuse of prescription medications is a significant and growing problem, and there is a widespread misconception that abuse of these substances is somehow safer than the abuse of illegal drugs such as cocaine, meth and heroin,” said Associate Deputy Attorney General Stuart Nash. “Today’s settlement makes clear that the Department of Justice is committed to doing its part to curtail illegal access to these dangerous drugs.”
Hydrocodone is the generic name of a prescription painkiller that is classified under federal narcotics law as a Schedule III controlled substance. Nonmedical use of prescription drugs ranks second only to marijuana as the most prevalent category of drug abuse. Hydrocodone is the most commonly diverted and abused controlled pharmaceutical in the United States.
The Controlled Substances Act is the primary federal law regulating the flow of controlled substances into the marketplace for medical purposes. Among other requirements, the Act requires that distributors register with DEA to sell controlled substances to retail pharmacies and report to DEA suspicious orders of controlled substances. The Act authorizes the imposition of up to a $10,000 civil penalty for each violation of the reporting requirement.
The civil penalty will be collected by the U.S. Attorney’s Office in each of the following districts, in the amounts indicated:
Middle District of Florida $16,000,000
Southern District of Texas $ 8,000,000
Western District of Washington $ 3,500,000
District of New Jersey $ 3,000,000
Northern District of Georgia $ 1,500,000
Central District of California $ 1,000,000
District of Colorado $ 1,000,000
This case was investigated by the DEA and handled by attorneys from DEA’s Office of Chief Counsel and trial attorneys from the following U.S. Attorneys’ Offices: Middle District of Florida, Southern District of Texas, Western District of Washington, District of New Jersey, Northern District of Georgia, Central District of California and District of Colorado. Additional assistance was provided by the Criminal Division’s Narcotics and Dangerous Drug Section.List your legal jobs on the LawFuel Network