By Toni Clarke
(Reuters) - A key court ruling is expected on Wednesday in an ongoing battle between Cardinal Health Inc and the Drug Enforcement Administration over how best to fight prescription drug abuse - one that could affect Cardinal's business for the next year.
A federal judge will decide whether to extend a temporary restraining order that has blocked a DEA move to suspend Cardinal's license to distribute potentially addictive medicines from its facility in Lakeland, Florida.
The ruling by Judge Reggie Walton of the U.S. District Court for the District of Columbia will determine whether Cardinal can continue distributing from Lakeland, which serves about 2,700 customers, as it pleads its case over the next year to a judge within the DEA.
The case comes as prescription drug abuse has surged in the United States, eclipsing the abuse of most illicit drugs, including heroin and cocaine.
Distributors such as Cardinal argue they are unfairly targeted because it is easier for the DEA to attack a distributor than the thousands of doctors who write the prescriptions.
"Over the past four years, while we have stopped shipping controlled medicines to over 300 pharmacies, the majority of those pharmacies still retain their DEA registrations," said Debbie Mitchell, a Cardinal spokeswoman.
"We truly believe that the vast majority of our customers are healthcare professionals of the highest integrity and that effectively addressing prescription drug abuse requires a very different approach than the DEA's methods for fighting illicit drugs."
For its part, the DEA argues distributors have an obligation to ensure none of the controlled drugs that go out their doors land in the wrong hands.
Every entity that handles controlled narcotics, from physician to pharmacy to manufacturer, must register with the DEA and the agency says each entity must monitor the next.
Special Agent Gary Boggs of the DEA's Office of Diversion Control said the accountability expected of distributors is built into the 1970 Controlled Substances Act that allows companies such as Cardinal to sell such medicines in the first place.
"The way it is structured sets up checks and balances in the system that require registrants in the chain to check on each other," Boggs said in a recent interview.
Distributors, he said, are required to design systems that detect suspicious orders, which DEA claims Cardinal failed to do.
Cardinal contests this claim, saying it has set up one of the best diversion control systems in the industry. CEO George Barrett told analysts on a conference call after the DEA's suspension order that the company took significant steps to rebuild its systems and hire new personnel after DEA suspended the license at the same facility in 2007.
DEA ordered the current suspension on February 3, saying Cardinal knew, or should have known, that four of its customers, including two CVS Caremark Corp pharmacies, were inappropriately filling prescriptions for the painkiller oxycodone.
Cardinal, one of the country's largest healthcare distributors, said it had already cut off supplies to two of the pharmacies before the DEA's suspension order. It cut supplies to the remaining two pharmacies as soon as the DEA issued its order.
"We remain unequivocally committed to fighting prescription drug abuse and have made every effort to develop a best practice anti-diversion program based on the information we have as a distributor," said Mitchell.
Nonetheless, the DEA argues that, if Cardinal is allowed to retain its license to ship controlled substances from this facility, it would present an "imminent danger" to the public. Cardinal vigorously contests this, saying the affected pharmacies are no longer allowed to dispense controlled drugs and can therefore no longer pose a danger.
Whether Cardinal ultimately is allowed to keep its license will be determined at an administrative hearing scheduled to begin on April 3rd. That process could take as long as a year to play out as both sides present their cases to a judge within the DEA. The judge will then make a recommendation to the DEA's administrator, Michele Leonhart, who will make a ruling.
Leonhart may follow the recommendation of the administrator or she may not. Leonhart signed the initial order to suspend Cardinal's license.
In the meantime, Wednesday's hearing will determine whether Cardinal can keep its license while the administrative hearing plays itself out.
On February 3, Judge Walton ruled that an emergency restraining order granted at the time the DEA issued its suspension order should be extended. On February 13, the judge said he wanted both sides to present more information before deciding whether to uphold the restraining order.
On Wednesday, he could extend the restraining order pending the outcome of the administrative hearing. Or he could lift the restraining order, in which case Cardinal would be forced to cease shipments of controlled substances from its Lakeland facility. He could also delay the process and set another hearing.
The case is Cardinal Health Inc. V. Holder, U.S. District Court, District of Columbia, No. 12-185.
(Reporting By Toni Clarke; editing by Michele Gershberg and Andre Grenon)