New York Pharmaceutical Distributor to Pay $10 Million Penalty

With the opioid epidemic a crisis both nationally and internationally, pharmaceutical companies that distribute controlled substances are the first line of defense in the war against medical professionals who supply these drugs to addicts.

In fact, it’s the law. The Controlled Substances Act requires that pharmaceutical distributors track their shipments to doctors, clinics, and pharmacies and red flag any that are suspicious. Then, they must report these cases to the DEA

Kinray, LLC—a New York-based subsidiary of the pharmaceutical company Cardinal Health, Inc. failed to do so between January 1, 2011 and May 14, 2012.

The DEA found through its internal tracking system that Kinray shipped orders for hydrocodone or oxycodone to more than 20 pharmacies in the NYC-area that were many times greater than their average sales to customers overall.

These purchases should have triggered notification to the DEA, but the company did not report a single shipment during this period.

Kinray admitted this lapse and in a Consent Decree, agreed to pay a $10 million civil penalty to the federal government. The company also agreed to let the DEA inspect its facility in Whitestone, New York at any time without advanced notice or condition.

In a separate action, Kinray signed a Memorandum of Agreement with the DEA in which it agreed to improve its operating procedures on its handling and delivery of controlled substances to customers.

The parent company, Cardinal, agreed to pay an additional $34 million to the US because of similar lapses in Maryland, Florida’s Middle District, and Washington’s Western District.

Penalties of this magnitude send a message to pharmaceutical distributors that the DEA is watching them, and they should obey the dictates of the Controlled Substances Act.