Cardinal Health Pays $34M for Ignoring Suspicious Pill Orders

Cardinal Health Inc. and its subsidiary Kinray, LLC are paying $34 million to settle federal civil charges for systematically ignoring red flags in the distribution of powerful opioid painkillers across Florida, Maryland, and Washington. The Lakeland-based drug distributor failed for years to report suspicious orders of Class II controlled substances—including oxycodone and hydrocodone—from pharmacies feeding the rampant pill mill pipeline, federal prosecutors revealed today.

The settlement, announced by U.S. Attorney A. Lee Bentley, III and DEA Miami Field Division Special Agent in Charge Adolphus P. Wright, resolves allegations that from January 1, 2009, to May 14, 2012, Cardinal Health turned a blind eye to abnormal purchasing patterns by pharmacies in central Florida and Maryland. Those pharmacies were later linked to illegal opioid diversion and overdose deaths. The company’s failure violated the Controlled Substances Act, which mandates that distributors report any order that deviates from normal demand.

In a separate but related deal, the Southern District of New York secured an additional $10 million from Cardinal Health for Kinray’s failure to report suspicious orders within its distribution network. The combined $44 million nationwide penalty marks one of the largest civil recoveries against a pharmaceutical distributor for breaching anti-diversion laws. Cardinal Health admitted no wrongdoing in the settlement but acknowledged the administrative violations that led to a two-year suspension of its Class II distribution license by the DEA in 2012.

That suspension, lifted in May 2014, stemmed from the same conduct now being monetarily punished. Despite the reinstatement, civil penalty negotiations continued for years as federal prosecutors built cases across multiple districts. The Middle District of Florida investigation, led by DEA’s Diversion Group and prosecuted by Assistant U.S. Attorneys Randy Harwell and Katherine M. Ho, was pivotal in exposing Cardinal’s systemic compliance failures.

“Today’s settlement with Cardinal Health, along with last year’s $22 million settlement with CVS, illustrates the coordinated response we have taken to Florida’s pill mill crisis,” said U.S. Attorney Bentley. “Those who play a significant role in supplying Class II medications in our district must meet regulatory requirements or be held accountable.” He credited collaborative efforts with U.S. Attorneys Rod Rosenstein (Maryland), Preet Bharara (Southern District of New York), and Annette Hayes (Western District of Washington), as well as Deputy Civil Chief Tom Corcoran and Assistant U.S. Attorney Tony Pellegrino.

“National pharmaceutical drug companies are not exempt from following the law,” declared DEA Miami’s Wright. “This settlement sends out a clear message that all drug companies will be held accountable when they violate the law and threaten public health and safety. The DEA will continue its efforts to work with our registrants and our law enforcement partners to combat pharmaceutical drug abuse and diversion in Florida.” The DEA’s Orlando Field Office, under Assistant Special Agent in Charge Jeff Walsh, played a key role in the investigation.