From: Gorelick, Jamie 51M: Tuesday, November 22, 2011 2:59 PM To: Dix, Melanie (ems); Goldberg, Stuart uinan, James O'Neil, David Subject: Timesensitive correspondence Attachments: Dear Deputy Attorney General Cole and members at the DAG's Office lhave attached a letter on behalf of Cardinal Health, one of the largest pharmaceutital distributors in the country, asking to be heard by the Department in advance of any actlon by the Drug Enforcement Administration against Cardinal Health, for the reasons set Forth in the letter. We have reason to believe that the DEA is considering imminent action to, in essence, shut down effective immediately . one of Cardinal Health's largest distribution facilities because of concerns that some of its customer pharmacies may be diverting (ontralled substances. Because both Cardinal Mealth and the DEA can deny access to identified pharmacies, there is no need for emergency action by DEA and such action which would deny Cardinal its right to notice and an opportunity to he heard .. would itself cause harm to the public health and to Cardinal Health. Thank you for your attention to this matter. Jamie Gorelick Jamie S. Golelick Wilmaanle 1875 Pennsyivanla Avenue NW Wastiln on DC 20006 USA Please consider Ihe environment beluve printing this email. and mly be rmemn Met an, atuaiments :1 Pg 59": Wilma Ptaetlnq tale UM LLF it, an. a the mended maple!" mm la in; "was-:6 by Sinairw .n imill in bum--Ir: rims, .u :Iaciu ct xhla message u, annulment: rum ycu we .mr WilmivHili u; .r ring mm mm: svmm_ecopy sent: Tuesday, November 21, 2am 2:40 PM ro: corelrck, Jamie subject: Cardinal Document 101803270 20170605000000: WILMERHALE November 22, 2011 limit Gnulld' By Electronic and First-Class Mall - The Honorable James Cole Deputy Altomey General us. Department of Justice 950 Avenue, NW. Washington, DC 20530 Dw Mr. Cole: I am writing to ask for a meeting regarding what we believe to be an imminent action by the Drug Enforcement Administration that, if carried out, would be inconsistent wilh DEA's authority and cause significant harm to the public health and to our client, Cardinal Health, one of the County's largest pharmaceutical distributors. We believe that DEA is about to issue an immediate suspension of Cardinal Health's registration to distribute controlled prescription drugs Erorn IIS facility in Lakeland, Florida. According to an affidavit filed by DEA in support of an administrative inspection warrant DEA is investigating whether some of Cardinal Health's large phannaoy customers in Florida have engaged in diversion ofoxycodone. DEA appears to contend that Cardinal Health could have prevented this from occun-ing by identifying the offending pharmacies and ceasing distributions to those pharmacies. As explained below, DEA's contemplated action is inappropriate for a number of compelling reasons: Erin, under the Controlled Substances Act, a registrant is generally entitled to notice and an opportunity to be heard prior to DEA (by delegation from the Attomey General) suspending its regis- anon. DEA is permitted to issue an immediate suspension only in extraordinary circumstances where necessary to prevent an "imminent danger to the public health or safety." Here, there is no basis for depriving Cardinal Health of its right to a meaningful hearing at a meaningful time. To the contrary, the company has already ceased distributions to those customers that it has identified as posing a risk of diversion. It has also informed DEA that it will take similar action with respect Io any other pharmacy identified by DEA that it believes is engaged in diversion. We believe there is nu basis for DEA to seek suspension of the Lakel and facility's registration. But if DEA wishes to pursue this course, it should be required to follow the usual procedures, which would give Cardinal Health a fair opportunity to meet the charges against it and would protect hospitals, pharmacies, and their patients from unnecessary dismptions in the supply of pharmaceuticals. Second, ifprovided an opportunity to be heard, Cardinal Health would be able to demonstrate that suspension ofthe registration for its Lakeland facility is wholly unwarranted. Responding to an earlier DEA enforcement action, Cardinal Health has invested many millions ofdollars in its Wilmer curler Pickering Hair and Don rtr. 1275 Avtnun NW. washingron, DC 20005 Eilmg Eelln bestow artisans Lnndurl Nequrk Oxtom FaloAllu Waltham maswinprai Document ID: 07.10160 92707000001 2017060570000003 WI LMERHALE James Cole November 22, 2011 Page 2 comprehensive anti-diversion program and has taken extraordinary steps to identify suspicious activity by its customers. DEA representatives are aware of the details of that program and have not previously identi?ed any shortcomings in its structure or implementation. Rather, the most substantial hurdle that Cardinal Health faces in preventing diversion is that it, like other distributors, lacks comprehensive information about the controlled substances that its customers receive from other distributors and directly from manufacturers. Although DEA possesses this information, as well as other information regarding suspicious activity by pharmacies around the country, it has been unwilling to share that information with distributors. If anything, it is that failure to provide distributors with important information that has limited their ability to identify all customers that pose an undue risk of diversion. 1h_i1;d_, an immediate suspension would cause severe harm not only to Cardinal Health but also to its customers in the region, including hospitals that urgently need the medicines for patient care. Oncology, surgical, urgent care, and emergency room patients would experience delays and disruption in their access to crucial pain medicine. And Cardinal Health would experience a daily loss of customers and goodwill that could never be fully restored. Cardinal Health agrees strongly that wholesale drug distributors, including Cardinal Health, need to be committed to detecting and preventing unlawful diversion and abuse of controlled substances. The company hopes that it can work with DEA and the Department to identify those pharmacies that pose an undue risk of diversion, so that it and other distributors can cease distributions to those pharmacies. In the past, Cardinal Health cooperated with DEA to provide information to assist its efforts to combat the diversion of controlled substances. In the last few weeks, however, DEA has failed to respond to our attempts to begin a dialogue regarding the agency?s recent concerns. Because we feel that the adversarial approach DEA appears to be taking is both unlawful and inconsistent with the public interest, we request a meeting with you to express these concerns at the earliest possible opportunity. Further background regarding this issue is set forth below. Background Cardinal Health is a Fortune 500 company and one of the largest wholesale prescription drug distributors in the United States. Cardinal Health supplies to hospitals, pharmacies, and other customers medicines containing controlled substances. It provides daily delivery of controlled substances to hospitals and pharmacies that serve, among others, oncology, surgical, urgent care, and emergency room patients. Each of Cardinal Health?s distribution facilities holds a registration from the DEA to distribute those medicines. In recent years, the diversion of prescription drugs for illegitimate use has become a major enforcement priority of DEA. In 2007 and 2008, in an effort to combat the growing problem of diversion of controlled substances, DEA focused efforts on whether distributors were Document ID: 0.7.1 01 60.9270-000001 20170605-0000004 WILMERHALE James Cole November 22, 2011 Page 3 maintaining appropriate controls to detect and prevent diversion. During that time, several distributors were suspended from selling controlled substances while they enhanced their diversion control systems. Cardinal Health was among those distributors. In 2008, Cardinal Health entered into a Memorandum of Agreement with DEA to resolve allegations that it did not have suf?cient controls against the diversion of controlled substances. In 2008, Cardinal Health implemented a comprehensive anti-diversion program that exceeds the standards required by federal law, which program has been continuously improved since that time. Cardinal Health has 15 employees exclusively dedicated to its anti-diversion program and another 25 employees engaged in anti?diversion activities at its distribution centers. It has spent more than $25,000,000 on anti-diversion in the last four years, and has terminated hundreds of customers because they did not meet its strict standards. In many cases, Cardinal Health?s standards would appear to be stricter than those of DEA, as a large percentage of the pharmacies terminated by Cardinal Health have not, to date, had their controlled substance licenses suspended or revoked by DEA, notwithstanding Cardinal Health notifying DEA of such terminations. Cardinal Health?s Lakeland Facility and the Immediate Suspension Order Cardinal Health?s distribution facility in Lakeland, Florida, ships an average of approximately 190 million dosage units of prescription drugs, including approximately 36 million dosage units of controlled substances, on a basis to more than 2,500 customers in Florida, Georgia, and South Carolina. These hospitals, pharmacies, and other healthcare providers depend on daily delivery of these medicines to meet the legitimate medical needs of hundreds of thousands of patients. In connection with a Compliance Review conducted at the Lakeland facility under the MOA in 2009, and during a cyclical audit at the Lakeland facility in May 2010, DEA speci?cally reviewed the operation of Cardinal Health?s suspicious order monitoring program, and it did not identify any deficiencies. In fact, during the May 2010 audit, DEA representatives repeatedly stated that a focus of the audit would be on confirming Cardinal Health?s compliance with the MOA. Upon concluding that audit, DEA representatives made favorable comments in addition to con?rming it had no negative findings regarding the program. In October 2011, DEA executed an administrative warrant at the Lakeland facility, and in early November 2011 served a subpoena for additional information regarding the Lakeland facility. Last week, Cardinal Health heard informally from DEA that it had concluded Cardinal Health had violated the MOA and, in that regard, DEA was staffing up to initiate an enforcement action, while at the same time refusing to meet with Cardinal Health to discuss suspension of the license of its Lakeland facility. Document ID: 0.7.1 01 60.9270-000001 20170605-0000005 WILMERHALE James Cole November 22, 2011 Page 4 Unlawfulness of Immediate Suspension Order Under the Controlled Substances Act, each participant in the distribution of controlled substances?including manufacturers, distributors, pharmacies, and prescribing doctors?must be registered by DEA. The statute allows DEA to revoke, restrict, or suspend a registration upon one of ?ve ?ndings, only one of which is arguably relevant here: that the registrant has committed acts that render the registration inconsistent with the public interest. Prior to revoking or restricting a DEA registration, DEA generally must follow certain procedures established by Congress to ensure due process for registrants. Under these statutory procedures, the agency must issue an order to show cause setting forth the basis for the agency?s action and provide the registrant with the opportunity to request a hearing. The registrant is entitled to 30 days? notice prior to the hearing, and the government bears the burden of proving, by a preponderance of the evidence, that the registrant?s continued registration is inconsistent with the public interest. Only in exceptional circumstances may DEA suspend a registrant without prior due process. To do so, the agency must demonstrate that immediate suspension is necessary to prevent an imminent danger to public health and safety. Here, DEA cannot satisfy this heavy burden. threatened action appears to be based on the volume of oxycodone Cardinal shipped to several large Florida pharmacies. But for at least three reasons, this is not an adequate basis for concluding that Cardinal Health?s registration must be suspended to prevent ?imminent danger to the public health or safety?: 0 Est, continued registration of Cardinal Health poses no threat to public health because DEA can suspend the registrations of any pharmacy it suspects of engaging in diversion of controlled substances. Immediate suspension of the Lakcland facility?s license is not necessary to avert an imminent threat to public health or safety when DEA wields the more narrowly focused enforcement power to shut down the pharmacies actually engaged in the illegal diversion. - Second, even before DEA threatened any action, Cardinal Health independently ceased distributions to those Florida pharmacies that it concluded pose an undue risk of diversion, and the company has continued its efforts to do so. To date, Cardinal Health has ceased distributions to more than 100 Florida pharmacies. Moreover, weeks ago Cardinal Health made clear to DEA that it will cease distribution of controlled substances to any customer that DEA identi?es, based on its more complete information, as posing an undue risk of diverting controlled substances. This action would immediately address the only potential public harm DEA has identi?ed, without taking the drastic step of interfering with the provision of medicines to patients who have a serious and legitimate need for them. DEA has much more information about potential diversion than does Cardinal Health. However, Document ID: 0.7.1 01 60.9270-000001 20170605-0000006 WILMERHALE James Cole November 22, 201 1 Page 5 despite multiple requests, DEA has declined to provide the names of the pharmacies it believes to be engaged in diversion. - T_hi[d_, DEA has failed to provide any evidence that Cardinal Health?s anti-diversion program so grossly failed to comport with the law so as to render the Lakeland distribution center?s continued registration an imminent danger to the public health and safety. Instead, tacit approval of Cardinal Health?s robust compliance program since 2008 re?ects the fact that Cardinal Health has maintained effective controls against diversion so as to render its continued registration consistent with the public interest. administrative warrant is based on alleged high volumes of orders from certain customers, but high volume on its own does not reveal whether the purchasing pharmacy is diverting controlled substances. After considering all of the relevant information available to it, including the size and location of the pharmacy, and whether the customer ?lls prescriptions for physicians specializing in oncology or other practices that legitimately utilize larger amounts of controlled substances, Cardinal Health has determined that its customers appear to have a legitimate need for the amounts of controlled substances that they order. Because some corrupt pharmacies engaged in diversion will often utilize multiple distributors and manufacturers and conceal that fact, distributors like Cardinal Health are not always able to determine the total quantities and relative percentages of particular drugs that those pharmacies are obtaining. Although Cardinal Health has sought this information from DEA to assist in the company?s anti-diversion efforts, DEA has declined to share it. Use of the immediate suspension authority is legitimate for one, and only one, purpose?to prevent an imminent threat to the public health. Where, as here, no such threat is present, DEA must provide registrants with their constitutional and statutory right to notice and a hearing before in?icting enormous and irreparable injury on them and the public. Lack of Basis for Suspension If Cardinal Health had the notice that Congress intended it to have from DEA, it could then effectively refute the charges in the administrative hearing that Congress required. DEA would be unable to establish Cardinal Health?s noncompliance with both federal law and the MOA, and Cardinal Health would be able to establish its good faith efforts to establish and maintain effective controls through its state-of?the-art anti-diversion program. Cardinal Health itself recognized well before any DEA action against Cardinal Health that oxycodone abuse was a particular problem in Florida. It therefore sent teams of compliance investigators to inspect its largest Florida independent pharmacy customers in October 2010. This ?investigative blitz,? designed to determine whether there were signs of diversion at the pharmacies, resulted in inspections being conducted at 53 Florida pharmacies and the termination of its relationships with ?ve pharmacies. Document ID: 0.7.10160.9270-000001 20170605-0000007 WILMERHALE James Cole November 22, 2011 Page 6 Harm to Cardinal Health and the Public Interest Over 2,500 hospitals, pharmacies, and other customers rely on the Lakeland facility to provide hundreds of thousands of patients with pain medication and other controlled substances to treat their illnesses. lf DEA issues an immediate suspension order, shipments of these vitally important medicines, including some desperately needed by seriously ill or terminal patients, would be disrupted without warning. Obtaining the medicine from other Cardinal Health distribution facilities would result in unnecessary and, in some instances, serious delays. Cardinal Health?s customers would be forced to try to locate other suppliers but would likely face interruption in the supply of critical medicines. In addition, nonprofit hospitals, who rely on revenue to provide free services to indigent patients, will incur additional costs for controlled substances procured from secondary vendors. An immediate suspension of the Lakeland facility by DEA would not, however, stop the problem of drug diversion that DEA is attempting to address. Any pharmacy engaged in illegal diversion would be able switch to another distributor. Because most distributors do not have anti?diversion programs as robust as Cardinal Health?s, such diversion would be less likely to be detected and stopped. The harm to legitimate patients in Florida, Georgia, and South Carolina and to Cardinal Health and its healthcare provider customers cannot be repaired by an administrative hearing after suspension. When DEA issues an immediate suspension, there is no statutory deadline for scheduling a hearing or issuing a ?nal determination. The proceedings before DEA can take up to a year or more to be resolved. In the meantime, patients, healthcare providers, and Cardinal Health will suffer grave harm. Immediate suspension is a drastic and punitive enforcement tool that is not appropriate for use in these circumstances. Cardinal Health has shown itself to be a good corporate citizen, interested in working with DEA on this important priority. DEA can be a regulator here or an enforcer. The latter choice is not appropriate to anti-diversion efforts, which should, in the circumstances, favor honoring due process rights, listening to both sides, solving problems and, where necessary, taking corrective action. There is no one objective test for determining whether a pharmacy is engaging in diversion. Numerous factors must be weighed, and judgment must be applied. Many times, Cardinal Health weighs the factors more stringently than DEA and stops selling to pharmacies that DEA has not suspended. Rather than taking the dramatic step of suspending a distributor that, on occasion, reaches a good-faith conclusion that differs from DEA, the agency should be engaging with distributors to help guide their decisions. Where DEA disagrees with a distributor?s good?faith judgment about whether sales to a particular pharmacy present an undue risk of diversion, DEA should engage in discussions with the distributor to resolve any difference of opinion rather than initiate punitive enforcement action against it. We Document ID: 0.7.1 01 60.9270-000001 20170605-0000008 W1 LMERHALE James Cole November 22, 2011 Page 7 would appreciate the opportunity to discuss this urgent matter with you prior to the initiation of any action by DEA. Sincerely, Mal/? Jamie S. Gorelick Document ID: 0.7.1 01 60.9270-000001 20170605-0000009 Gorelick, lamie Tuesday, November 22, 2011 5:19 PM Dinan, James (ODAG) Dix, Melanie Goldberg, Stuart looAGl; O'Neil, David (DDAG) Re: Time-sensitive correspondence Thank you cardinal Heallh had been trying to engage iyith DEA Without any suctess, out ityustgoi a call sayingthat action is not likely to be taken before December 5 and that they iyill consider meeting us, so we Will iollow up With DEA in the first instance. ii looks like we don'I have a tiredrill, which is a reliei. rhant you < way u: wen-"5 mull-mi." uzlau>1 wu- mum. "(aim aw in: qu'tall deny access to identlilad phanmoes, lhera is no used for emergency action by DEA and such action which would deny Cardinal its right to malice and an oppommitv be heard would ilsell cause harm to the public health and to Cardmal Haalth. Thank you for your aflention was matter. Jamie Gorelick Jamie S. Gurelick WllmarHala '875 Avenue NW Washington DC 20005 USA "ease consider Ihe environment belnre priming this email. up a' ul "mu; 5" Ema My, u: Flayl": Mala . . m, we a-elwwew . . mm Menlue u, "lumen" mr- ,cu (millage. if gig Mi wmmumnmm- mm--lv': mus, IH 3CD is WESJEE we lr'lzw'v'ihv' mu: .mmwii Eli-ye .ml .3 s: lelmfla <Moss, Randolph From: Moss, Randolph Sent: Thursday, February 02, 2012 12:53 PM To: uinan, James (0mm c: Gorelick, Jamie Subjact: Cardinal Health Followmg up on Jamie's call Stu last night {Just wanted to let on know that I'm back 4n DC and avallahle to talk whenever you are, My direct dual li Many thanks, Randy Randolph at Moss wilmemale 1375 Avenue NW Washington, DC 20006 USA Please (ansidev the Environmenl bevme this email. indmiybiorl iglfl Hymannumemtuaenutlpvenl geandanyauuhmenu mum mag wllmirhili mm Document ID. 01.101 60.8597 20170605-0000024 Gorelick: Jamie I From: Gorelick, Jamie Sent: Thursday, February 02, 2012 7:01 PM To: Goldberg, Stuart (ODAG) Cc: Dinan, James (ODAG) Subject: Cardinal/DEA Stu: I am stunned by the events of the past couple of days as we have tried to interact with DEA to no avail. I don't think I have ever seen anything like this- Since DEA has refused to engage in any dialogue with us - even when Jim Dinan directed us back to the DEA's Chief Counsel as a predicate to the meeting we had sought with the Deputy AG - we have no idea whether it intends to issue an Immediate Suspension Order (ISO) or an Order to Show Cause (080). ll, in fact, the DEA intends to issue an ISO, I would ask that the Deputy's Of?ce assure itself that the Chief Counsel has found a legal and factual basis for that drastic action. The standard for issuing an is extremely high given the grave consequences of closing a facility without any due process of law- Here, we cannot imagine how DEA could even argue that immediate action against Cardinal, a distributor, is necessary to prevent an imminent dangerto public health or safety- Among other things, closing a Cardinal facility will do nothing to prevent unscrupulous doctors from writing bad prescriptions or stop pharmacies from filling them but it would surely cause disruption in the marketplace- DEA alone has the authority to shut down unscrupulous doctors and pharmacies which would address any imminent harm. Moreover, it has been months since our November 2011 letter to the Deputy asking for your Of?ce's review of this matter, which puts in context any suggestion that urgent action by DEA is necessary to prevent imminent danger to the public- Although we understand that the Administrator has made a decision to proceed against Cardinal in some manner, we would urge that the Department postpone issuing any notice until the serious process problems that have occurred over the past few days - as well as the more fundamental issues that we have sought to raise can be addressed. Yours. Document ID: 0.7.10160.8691 20170605-0000074 Jamie Gorelick Sent from my iPad Document ID: 0.7.10160.8691 20170605-0000075 From: Goldberg, Stuart (ODAG) 5: Sunday, February 05, 2012 9-20 AM To: 'Gorellck Jarme' Subjed: RE Caldlnal Health Holder (DDC) TRO Thanks Jamle for the lnformallon Stuart M. Goldberg Assoclale Deputy Attorney General Uruted States Department of Justrce 550 Avenue, N.W. Room 4205 77777 Message From Gorellcmamle -- Sent: Frlday, February 03, 2012 10:15 PM To Goldberg, Stuart looAGl Sublect Gardlnal Health v. Holder (DDC) mo Stu To keep you re the Cardlnal Health matter we drsoussed, here ls the mo lssued by Judge Walton Enlolnmg the enroroement orthe served on Health momlng. The related are attached. Jamre Document l0 0 7 494 9886 Gore Jamie From: Gorelick, Jamie Sam: Tuesday, February 07, 2012 11:32 PM To: Goldberg, sruan IODAG) Subject: Re: TRO Order Thanks. I will give you a call iusl ro give you 2 minules of background Sent lrom my iPad On Feb 7, 2012, ex 8:19 PM, "Goldberg, sruan icons)" _~role: Thanks. We will aka a luck. Original Message Fromzcorelick.1amie-- Sent: Tuesday, February 07, 2012 11:12 PM To: Goldberg, swan (ODAG) Subject: Fw: Fwd: CVS TRO Order This is the TRO issued by a second judge in the companion case in file DEA's action against Cardinal. Judge Jackson's commems echo Judge Walton's and both critiques reflect the concerns we were trying raise with DEA and with you. There are underlying policy issues that should concern the Deputy. Jamie W, Original Message 7" From: Moss, Randolph Sent: Tuesday, February 07, 2012 10:52 PM To: Gorelick, Jamie Subject: Fwd: CV5 TRO Order Document 10160.13997 20170605-0000089