Cardinal Health Blocked From Shipping Painkiller in Florida

Cardinal Health Inc. was blocked from shipping controlled substances from its distribution center in Lakeland, Florida, as a judge lifted an order barring a U.S. Drug Enforcement Administration suspension.

U.S. District Judge Reggie Walton in Washington today said the government produced enough evidence to show that the distribution facility posed a public safety threat by shipping heavy volumes of the prescription painkiller oxycodone to pharmacies, including two owned by a unit of CVS Caremark Corp. (CVS)

“The government has a particular interest in ensuring that the public is not harmed by these types of dangerous substances,” said Walton, ruling from the bench after a two- hour hearing.

An investigation by the DEA found the company’s Lakeland facility shipped a “staggering” amount of oxycodone to four retail customers in the state between October 2008 and December 2011, according to documents the agency filed earlier this month in the case.

“All orders for controlled substances for retail pharmacy customers must be discontinued effective immediately, unless the order has already been picked and put on a truck for delivery,” Walton said in a brief order issued after the hearing.

He said Cardinal may continue to fill orders for controlled substances for all non-retail customers until 6 p.m. tomorrow. The company may also transfer its controlled substance inventory from the Lakeland facility to other Cardinal distribution centers, according to the order.

Shipping Suspended

The DEA said it suspended the distribution facility’s authority to ship controlled substances on Feb. 2 after determining continued operations posed an imminent danger to the public, the agency said.

Cardinal sued after a suspension order was issued and won a temporary restraining order from Walton that was extended to today.

The company, based in Dublin, Ohio, said the suspension is unwarranted because it already stopped distributing controlled substances to two of the retailers. Randolph Moss, a lawyer for Cardinal, told the judge today that the company has no control over doctors who write “bad prescriptions.”

“Shutting down the Cardinal Health facility doesn’t do anything to curb that immediate threat,” Moss, a partner at Wilmer Cutler Pickering Hale and Dorr LLP, said.

Debbie Mitchell, a spokeswoman for Cardinal Health, said the company has filed a notice of appeal with the court.

Cardinal said in an e-mailed statement that “contingency plans will be immediately activated” and the company will try to ensure that customers’ needs are met “with minimal disruption.”

‘Red Flags’

Last year Cardinal shipped enough oxycodone to pharmacies in Sanford, Florida, that could supply a population eight times its size, Clifford Reeves, a Justice Department lawyer, said today. Sanford has a population of 53,000 and the supply would support 400,000, he said.

“There’s no data than can explain those kinds of red flags that went ignored by Lakeland,” Reeves said.

The DEA said in its court filing that the Lakeland facility shipped about 50 times as much oxycodone to the four customers than the average Florida pharmacy received from Cardinal. The company repeatedly filled orders that exceeded volume thresholds that it set, and orders flagged by Cardinal as suspicious were released with little or no explanation why, the DEA said.

‘First Line of Defense’

Cardinal in 2008 agreed to pay $34 million in civil penalties to settle allegations that it failed to report suspicious orders of hydrocodone. The fine ended a 10-month suspension of the Lakeland facility and two others in New Jersey and Washington.

Reeves told the judge today that $16 million of that fine related to violations by the Lakeland facility.

“They are the agency’s first line of defense,” Reeves said. “They’re supposed to be proactive by auditing the stories. That’s how they’re supposed to police issues like this.”

“We work hard to actively prevent drug diversion and have spent millions of dollars to build a system of advanced analytics and on anti-diversion specialists,” Cardinal said in an e-mailed statement. “We have stopped distributing to hundreds of pharmacies determined to pose an unreasonable risk of diversion.”

“The majority” of the pharmacies cut off by Cardinal still retain DEA registrations to dispense controlled medicines, the company said in the statement.

The case is Cardinal Health Inc. (CAH) v. Eric Holder, 12-00185, U.S. District Court for the District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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