United States Reaches $34 Million Settlement with Cardinal Health for Civil Penalties under the Controlled Substances Act

          Seattle -- Cardinal Health has agreed to pay $34 million in civil penalties to resolve allegations that the Lakeland, Florida-based distributor failed to report to the DEA suspicious orders of Class II controlled substances by pharmacies located in central Florida and Maryland.  The settlement also resolves a civil investigation in the Western District of Washington into Cardinal Health’s failure to maintain adequate records concerning Class II controlled substances in that district.

          Separately, the United States Attorney for the Southern District of New York announced that Cardinal Health has agreed to pay an additional $10 million to resolve allegations that its subsidiary, Kinray, Inc., failed to report suspicious orders by pharmacies operating in the Kinray service area.  In the settlement resolving the Florida and Maryland investigations, Cardinal Health acknowledged that, from January 1, 2009, to May 14, 2012, it failed to comply with regulations requiring reports of pharmacies’ suspicious orders of certain narcotic medications.  Cardinal did not admit to the recordkeeping allegations in the Western District of Washington, but chose to resolve the case along with the other investigations.

          “I am pleased to join with the U.S. Attorneys from Maryland, New York and the Middle District of Florida to hold Cardinal Health accountable for improperly securing the drug distribution chain,” said U.S. Attorney Annette L. Hayes.  “Our investigation, which uncovered recordkeeping violations, is resolved along with more wide-ranging violations identified in the other districts.”

          The Controlled Substances Act imposes civil penalties when DEA registrants fail to report suspicious pharmacy orders for Class II narcotic medications.  The settlement announced today imposes a civil monetary sanction for the conduct addressed in Cardinal Health’s administrative settlement executed with the DEA in 2012, which suspended Cardinal’s registration to distribute Class II narcotic medications for a period of two years.  The DEA returned Cardinal’s registration in May 2014 while the civil penalty negotiations that led to today’s announcement were pending. 

          The Western District of Washington investigation was conducted by the Drug Enforcement Administration’s Diversion Group, with negotiations handled by Assistant U.S. Attorney David East.