Tuesday, February 26, 2008

Cardinal's Latest DEA Deal

Time for another installment in the continuing adventures of Cardinal Health and the Kingdom of the Crystal Meth, now showing in Stafford, TX!

Last Friday, Cardinal Health (CAH) told suppliers that it would discontinue all controlled substance and List 1 Chemical shipments from its Stafford distribution center for retail independent, Medicine Shoppe and Medicap pharmacies only. The move was announced to retail independent customers yesterday. Read Cardinal's letter online here.

As regular Drug Channels readers know, Cardinal had its license to distribute controlled substances suspended by the DEA in Washington, Florida, and New Jersey. While there’s no official DEA suspension, Cardinal has been negotiating with the DEA over the Company’s Stafford, TX distribution center (as I discuss in Fresh DEA News from Cardinal.)

The interesting twist -- and the likely reason that the facility's license was not suspended -- is that Cardinal will be discontinuing shipments only to the retail independent pharmacies from Stafford. The “legitimate controlled substance needs” (their words) of these customers will be serviced from another Texas facility. However, per Cardinal's letter: “We will continue to provide controlled and non-controlled products to acute care, regional chain and national chain customers out of our Stafford (Houston) distribution center.”

Yikes! I can't imagine that this statement will help Cardinal to regain or build market share among independents. Let’s hope that Cardinal’s “contingency plans” have progressed since their Washington license was suspended. (See One Pharmacist’s View of Cardinal’s DEA Issues.)

So what does this move signal about supply chain security? Are retail independent pharmacies now considered to be the weak link in guarding our supply chain against counterfeits and diversion—a demand-side security problem that just won’t go away?


  1. 2 things jump out.

    1. Compare this release to the prior release and the 'blame game' is clear. Cardinal is saying it's not me, it's those terrible independant pharmacy operators that made me lose my license.

    2. It appears that quality control is a much bigger isssue than we know. Notice the CAH letter posted on their website is dated "February 25, 2007" (!)

  2. I missed the 2007 date - good eye! Unfortunately, I suppose that they have a template for these situations now.


  3. Adam, as always a timely and insightful post. Any chance this is a hold over from previous problems or does Cardinal just not "get it"? Why is this so hard for them to figure out?


  4. To A (from 2/26):

    I suspect that the diversion activities of DEA are now being run by the gun-carrying field agents who usually go after illegal drug dealers. I can't confirm this suspicion, but it would explain the get-tough tactics.