Cardinal Health will pay a $34 million settlement as part of an agreement with the U.S. Drug Enforcement Administration and seven U.S. Attorneys' Offices that will allow the nation's second largest distributor of prescription medicines to re-open three distribution centers.
The federal government had stripped the centers in Auburn, Wash., Lakeland, Fla. and Swedesboro, N.J. of their licenses to distribute controlled substances amid an investigation into the shipping of drugs to questionable Internet pharmacies. Those licenses will be reinstated under the agreement.
In addition, a fourth distribution center in Stafford, Texas, at which the company voluntarily suspended distribution services, was re-opened on September 29.
"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, the company's chairman and CEO, in a Friday press release announcing the administrative and civil settlement agreements. "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."
Aside from paying the $34 million fine, which the company fully reserved during fiscal year 2008, Cardinal has expanded its training process, beefed up its pharmaceutical distribution compliance team and instituted an electronic system the identifies and blocks potentially suspicious orders pending further investigation. Company officials said they have invested more than $20 million to enhance controls across the drug distribution network since November 2007.
The company has also hired former Acting Deputy U.S. Attorney General Greg Morford as chief compliance officer.
Company officials said they are now replenishing the controlled substance inventories at the three targeted distribution centers and will take a phased approach to restoring shipments from each facility, with full distribution services expected to resume by the end of November.