Cardinal wins order lifting DEA suspension in Florida

BOSTON/WASHINGTON Fri Feb 3, 2012 7:11pm EST

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BOSTON/WASHINGTON (Reuters) - Cardinal Health Inc (CAH.N) won an order on Friday blocking the U.S. Drug Enforcement Administration's suspension of its license to distribute potentially addictive medicines from its Florida facility.

The DEA ordered suspension because Cardinal knew, or should have known, that the pharmacies were inappropriately filling prescriptions for oxycodone by physicians for illegitimate reasons, the company said.

Cardinal filed a request in federal court in Washington for a temporary restraining order to block the DEA order, saying it unfairly affected all shipments of all controlled substances to about 2,700 pharmacies, hospitals and other customers.

U.S. District Judge Reggie Walton responded quickly in granting Cardinal's request, noting the company had already suspended shipments to the four pharmacies in question, two independent and two CVS outlets.

The DEA suspension order "is unnecessary to address the problem the DEA alleges because the plaintiff is not currently supplying controlled substances to the four pharmacies identified," Walton wrote in a brief order.

Cardinal "has also pledged to terminate sales of controlled substances to any pharmacy or customer that the DEA believes is likely engaging in illegal activity or diversion."

He noted the suspension would have disrupted supplies to thousands of hospitals, pharmacies and healthcare providers.

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 the order will not affect its financial forecasts and that, if necessary, the company was prepared to ship medicines from its Mississippi facility.

A spokesman for the U.S. Justice Department, which oversees DEA and represents it in court, declined to comment. A DEA spokesman was not immediately available for comment after normal business hours.

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 the 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 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 that 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 added today's action "does nothing to solve the problem."

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, Tim Dobbyn editing by Andre Grenon)

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