CVS Caremark, Corp. and Cardinal Health, Inc. find themselves in the crosshairs of a Drug Enforcement Agency investigation in central Florida that threatens both companies’ ability to do business there. Pinning down who knew what and when within both organizations may lead to some very unpleasant results and the prospect that nobody knew anything is unlikely and lends little comfort.
Back on February 2, 2012, the DEA hit the two health care companies with suspension orders that shut down CVS’ ability to fill prescriptions at two Sanford pharmacies and Cardinal Health’s ability to ship controlled substances from its Lakeland distribution center. The two have since won a temporary reprieve after prevailing on a motion for a preliminary injunction in the U.S. District Court for the District of Columbia, but the DOJ is earnestly pursuing a reversal on the injunction and re-suspension of the CVS and Cardinal Health operations at issue.
As detailed earlier in The Orlando Sentinel, the CVS pharmacies on Orlando Drive and on West First Street in Sanford were considered to be an "imminent danger" to the public after raids on those stores in early February. SAC Mark Trouville, head of the DEA’s Miami field division, noted that roughly seven people die each day in Florida because of prescription-drug overdoses and that they originate at suspect pharmacies. Records show that while the average U.S. pharmacy ordered about 69,000 oxycodone pills last year, the two Sanford ones ordered more than 3 million pills in 2011, sorely putting them on the agency‘s radar screen.
Bloomberg reported yesterday that the DEA investigation found that Cardinal Health’s distribution plant in Lakeland shipped a “staggering” amount of oxycodone to four retail customers in Florida - including the two CVS pharmacies in Sanford - between October 2008 and December 2011. In court, the agency has said that the facility shipped about 50 times more oxycodone to those four customers than the average Florida pharmacy received.
According to the DEA, the Orlando Drive CVS was Cardinal Health's single best painkiller customer, receiving shipments of more than 5 million doses of oxycodone from January 2008 through December 2011. More troublesome for Cardinal Health are the additional allegations that the company repeatedly filled such orders, even when they exceeded its own volume thresholds and that orders flagged as suspicious by quality control personnel were ultimately released with little or no explanation as to why.
The DEA has made its position clear: either together or separately, CVS and Cardinal Health should have known that the volume of painkillers moving through their retail and supply operations indicated pill-mill and pharmacy-shopping activities in central Florida that both should have taken steps to curb. The only alternatives for not doing so would seem to be naked greed or willful ignorance, neither of which bode well for either organization.
Assuming that internal investigations are now ongoing at both companies, it is certain that they will hope to be able to exclude both of these poor explanations. The possibility of simple ignorance and inadequate controls surely has to be considered, but will they be born out by the facts? The sheer numbers are staggering and justification for the unexplained release of flagged shipments - if that allegation proves true - is daunting. This is especially so for a company like Cardinal Health that paid a $34 million civil fine to the DEA as recently as September 2008 for failing to halt and report suspicious orders.
CVS Caremark and Cardinal Health may be swallowing some bitter pills down the road.
