Cardinal Health in $10 million U.S. settlement over painkiller orders

By Nate Raymond

NEW YORK (Reuters) – A drug distributor owned by Cardinal Health Inc has agreed to pay $10 million to resolve claims that it failed to alert the U.S. Drug Enforcement Administration to suspicious orders of addictive painkillers by New York-area pharmacies.

The settlement with New York City-based pharmaceutical distributor Kinray LLC, disclosed in papers filed late on Thursday in Manhattan federal court, comes during efforts by U.S. authorities to combat the nation’s opioid drug epidemic.

Cardinal Health did not immediately respond to a request for comment. The healthcare services and products company announced its $1.3 billion acquisition of Kinray in 2010.

The settlement was secured by the office of Manhattan U.S. Attorney Preet Bharara, who has increasingly turned his sights toward the growing opioid drug epidemic.

Each day about 78 Americans die of an opioid overdose, authorities say. Oxycodone, a heavily regulated opioid painkiller that has enormous cash value to drug dealers, is abused by more than 13 million Americans annually, prosecutors say.

According to a lawsuit filed earlier this week, the settlement stemmed from a DEA investigation of pharmacies in New York and elsewhere that had ordered shipments of oxycodone or hydrocodone of unusual size or frequency.

The lawsuit said that from January 2011 and May 2012, Kinray shipped those drugs to more than 20 New York pharmacy locations in amounts that were many times greater than the distributor’s average sales of controlled substances to all of its customers.

Kinray ignored numerous “red flags” contained in the orders and did not report any suspicious orders to the DEA, despite requirements that it do so for such highly regulated drugs, the lawsuit said.

As part of the settlement, Kinray admitted and accepted responsibility for failing to report suspicious orders to the DEA, according to court papers.

The case is U.S. v. Kinray LLC, U.S. District Court, Southern District of New York, No. 16-cv-09767.

(Reporting by Nate Raymond in New York Editing by W Simon and Lisa Von Ahn)