Tuesday, May 15, 2012

Cardinal Settles with the DEA, while Senators ask for an Inquiry

Cardinal Health (NYSE: CAH) made news again today by announcing a settlement with the Drug Enforcement Administation (DEA) regarding its Lakeland, FL, distribution center. See Cardinal Health Brings Resolution to Litigation with DEA Settlement.

Regular readers know that I've been very critical of the DEA's aggressive and misguided pursuit of pharmaceutical manufatcurers and wholesalers. For perspective on this current dispute and Cardinal's historical troubles, see February's Cardinal Fights a Misdirected DEA.

Read on for some more thoughts on this issue and details of how Senator Chuck Grassley and Senator Sheldon Whitehouse are trying to shine a light on the DEA's impact on drug shortages.

In a Bloomberg Business Week hit job story on Cardinal, I stated: "Many people, including me, believe they are overstepping their bounds in going after Cardinal in this manner." You should also read Scott Gottlieb's excellent editorial The DEA's War on Pharmacies—and Pain Patients.

I'm not sure what went on behind the scenes, but Cardinal seems to have escaped with a relatively minor concession. So, I guess cooler heads prevailed.

Coincidentally (or not?), Senators Grassley and Whitehouse yesterday requested that the Government Accountability Office study the role of the DEA in drug shortages and recommend potential fixes. See Balancing Medicine and Drug Control. Key quote:
"The Drug Enforcement Administration sets quotas for drug companies that manufacture controlled substances and in effect limits how much product they are allowed to make. Since the drug shortage crisis developed, controlled substances are frequently on the drug shortage list of the Food and Drug Administration.

The Drug Enforcement Administration has to walk a fine line between managing dangerous controlled substances and making sure there are adequate supplies for legitimate medicine.
By chasing wholesalers and manufacturers, the DEA is simply going after the wrong actors in the U.S. drug distribution system. The real problems originate with consumers who abuse prescription medications, the physicians who operate “pill mills,” and the pharmacies that knowingly participate in diversion and abuse. Let's hope the GAO can help shine some light on the supply chain impact of overzealous prosecution.


  1. Adam,

    As always a good posting.  Your next to the last sentence puzzles me a little.  Isn't the role of of the pharmacy much the same as the role of the wholesaler/distributor in this regard?  Granted, they are one step closer but are they the gatekeeper any more than the wholesaler?  A case could be made that it is not difficult for a wholesaler to spot and question orders that are in 'excess' and not be part of the 'diversion and abuse'.  Is it anymore the responsibility of the pharmacy to monitor this than it is the wholesaler?  Granted, pharmacies that are knowningly part of the 'pill mills' should be subject to the law and scrutiny but then again can't a wholesaler be part of the 'pill mill', too?

    I've known many people at Cardinal for many years and I have no doubt they are in no way part of a 'pill mill' conspiracy.  But then why would the pharmacy be any more likely to be?

    Just a thought.


  2. I think the answer lies in the fact that a pharmacy can detect patient behavior to the extent the patient is in their pharmacy/pharmacies.  If they shop their pharmacies, I would agree with your position.  A drug wholesaler however, only sees product movement at a store level.  Granularity is gained one step down.

  3. This Wall Street Journal article has additional details: Cardinal Health Settles With U.S. Over Pain Pills.

  4.  When a pharmacy orders over 2000 bottles of oxycodone in one month you would think that either a computer program would halt it or common sense would take over.