Stafford, TX, facility is fourth to be examined by feds
Since November, Cardinal has been entangled with the Drug Enforcement Agency over how controlled substances (specifically, hydrocodone) have been distributed to retail pharmacies. The investigations first hit the company’s Auburn, WA, facility, then two others. Now, in its latest 10Q (filed on Feb. 6), the company reveals that a fourth facility—Stafford, TX—has received an “order to show cause” from DEA. Translation: the facility’s ability to distribute controlled substances might be suspended, but hasn’t yet. (Distribution at the other three facilities had been suspended when DEA filed its orders.)
In press releases and the 10Q, Cardinal has said that it is adding controls to its internal processes, and has spent $30 million to date to “address the security threat that diversion poses to the pharmaceutical supply chain,” according to R. Kerry Clark, chairman. In the 10Q, it notes that has “established a new centralized supply chain security and anti-diversion function accountable to executive management.”
Generally speaking, Cardinal’s problems have to do with its responsibility to monitor excessive shipments of controlled substances that wind up being channeled into illegal drug sales; unlike the state-based pedigree programs now coming into place, which are mostly for after-the-fact tracking purposes, DEA holds drug distributors directly responsible for this distribution. Other wholesalers have had similar problems; DEA has set up a purpose-built Controlled Substances Ordering System (CSOS) for the documentation necessary for this distribution (Pharmaceutical Commerce.
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