U.S. suspends Cardinal Health license in Florida

(Reuters) - Cardinal Health Inc (CAH.N) said the U.S. Drug Enforcement Administration has suspended its license to distribute potentially addictive medicines from its Florida facility, citing concern over unusually high shipments to four pharmacies.

Cardinal, one of the country's largest drug wholesalers, said the DEA alleges Cardinal knew, or should have known, that the pharmacies were inappropriately filling prescriptions for oxycodone by physicians for illegitimate reasons.

The company said on Friday it will continue to supply its customers from its facility in Jackson, Mississippi, if necessary.

Cardinal also filed a complaint against the DEA in federal court in Washington, D.C., and asked a judge to block the DEA suspension order saying it unfairly affected all shipments of all controlled substances to about 2,700 pharmacies, hospitals and other customers.

On a conference call with Wall Street analysts, Cardinal Chief Executive George Barrett said he was "outraged" at the imperial way in which the DEA suspended its license, saying the agency had not contacted the company beforehand or given it the "opportunity to be heard."

He also said that the order will not affect its financial forecasts.

DEA representatives did not immediately respond to phone calls or an email seeking comment.

The dispute highlights a growing rift between the DEA and companies that make painkillers, stimulants, tranquilizers and other potentially addictive medicines at a time of increased prescription drug abuse. Florida is one of states most affected by the problem.

Cardinal said DEA suspended the company's license based on increased shipments made to four pharmacies, but the company said volume alone is not sufficient evidence to assume products are being diverted for recreational use.

The needs of pharmacies are varied, and higher volumes might be appropriate based on factors such as pharmacy size, patient demographics and proximity to acute care centers, the company said.

PREVIOUS SUSPENSION

In 2007, the DEA suspended Cardinal's license to distribute controlled substances from the same Lakeland center, and another center, in Auburn, Washington, saying the company had failed to maintain effective controls of its distribution to retail pharmacies.

The DEA at the time cited the sale of the painkiller hydrocodone to pharmacies that allegedly dispensed the drug based on improper prescriptions from Internet pharmacy websites.

Barrett said the company has since taken significant steps to rebuild its systems and hire new personnel to oversee the process. He said it already scans for potential misappropriation of the drugs, and said a spike in volume is one red flag.

He blamed the DEA for not sharing information that would make it easier to prevent drugs from being diverted, and said today's action "does nothing to solve the problem."

Cardinal Health said in its court filing that the immediate suspension was unnecessary because it had already stopped dispensing controlled substances to the four pharmacies in question, two independent ones and two CVS pharmacies.

"Additionally, Cardinal Health has pledged promptly to terminate sales of controlled substances to any pharmacy or other customer that DEA believes is likely engaged in illegal activity or diversion," the company said in court papers.

A spokesman for the U.S. Justice Department, which oversees and represents the DEA in federal court, had no immediate comment.

Cardinal's shares closed down 0.4 percent at $42.05 in regular trading on the New York Stock Exchange.

The case is Cardinal Health Inc v. Holder, U.S. District Court, District of Columbia, No. 12-185.

(Reporting By Toni Clarke in Boston; Additional reporting by Jeremy Pelofsky in Washington; Editing by Matthew Lewis and Tim Dobbyn)