PHARMACY

Walgreens chairman joins Penney board

BY Jim Frederick

PLANO, Texas JCPenney today said Walgreens chairman and chief executive officer Jeff Rein has joined its board of directors, effective Dec. 9, 2008.

Penney chairman and chief executive officer Myron (Mike) Ullman III praised the 56-year-old Walgreens veteran as “a highly respected leader and a strong addition to our company’s board.

“His 27 years of solid experience in developing and executing growth strategies at Walgreens has made it a recognized leader in innovative drug store retailing and the top choice for customers,” Ullman noted. “We look forward to Jeff’s contributions to our board as we focus on gaining market share within the current environment and executing our long-term plans for growth leadership in the retail industry.”

Rein will bring his retail expertise to the venerable department store giant at a critical time, as Penney struggles with a crisis on Wall Street and a sharp slowdown in consumer spending. With what is expected to be an anemic Christmas sales season just around the corner and consumer confidence in free-fall, Penney and other big-box retailers face a difficult task in the months ahead.

For his part, Rein was upbeat. “Walgreens’ and JCPenney’s core principles are strongly aligned,” he said. “JCPenney has achieved notable success in recent years by implementing new and exciting strategies to build deep connections with its customers and associates. I look forward to working with the Board to build on JCPenney’s growth and success over the long term.”

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PHARMACY

Cardinal reaches settlement on controlled-substances charge

BY Jim Frederick

DUBLIN, Ohio Resolving a major legal impasse that had threatened both its own business and that of some of its retail pharmacy customers, Cardinal Health has settled a wide-ranging series of charges that it violated federal reporting requirements in its handling of controlled substances. The agreement will allow the drug wholesaling and health services giant to resume shipments of controlled substances at all affected distribution centers.

Under terms of the legal pact, Cardinal will pay a total of $34 million in civil penalties to the U.S. Drug Enforcement Administration and seven U.S. attorneys’ offices to resolve the charges. The settlement “will result in reinstated licenses to distribute controlled substances from the company’s Auburn, Wash., Lakeland, Fla., and Swedesboro, N.J. distribution centers,” noted the company.

The charges were serious, and they had hampered Cardinal’s operations at those three facilities. According to the DEA, the violations led to large-scale diversion of controlled drugs.

“Cardinal Health, which operates 27 DEA-registered distribution facilities, failed to report to DEA suspicious orders of hydrocodone that it then distributed to pharmacies that filled illegitimate prescriptions originating from rogue Internet pharmacy Web sites,” noted the DEA in a statement. “These prescriptions violated applicable federal and state law because they were not issued for a legitimate medical purpose by physicians acting within the usual course of professional practice. 

“Cardinal’s conduct allowed the ‘diversion’ of millions of dosage units of hydrocodone from legitimate to non-legitimate channels,” the agency reported.

Without admitting any wrongdoing, Cardinal agreed both to pay the fines and alter some of its practices to prevent any possibility of diverted products. “Specifically, the company has expanded its training, implemented new processes, introduced an electronic system that identifies and blocks potentially suspicious orders pending further investigation, and enhanced the expertise and overall staffing of its pharmaceutical distribution compliance team,” Cardinal reported. In addition, “to strengthen its overall compliance practices,” the company noted that it has hired former acting deputy U.S. attorney general Craig Morford to an expanded role as chief compliance officer.

“Protecting the integrity of the pharmaceutical supply chain is a responsibility we take very seriously, and preventing prescription drug abuse is a public policy goal that Cardinal Health fully supports,” said R. Kerry Clark, chairman and chief executive officer.  “We settled this matter so that we could quickly resume the distribution of these vital medicines to our valued customers, and we will continue to work with the DEA and other supply chain partners to take all necessary steps to keep these powerful drugs out of the wrong hands.”

Cardinal spokesperson Tara Schumacher said the company was working to restore normal supply operations at the three affected DCs by the end of November. “As you can imagine, these license suspensions have caused challenges for some of our customers, particularly retail independents in the affected service areas,” she told Drug Store News today. “We worked diligently with the DEA to address its concerns, agreed to pay $34 million to settle the matter, and have invested more than $20 million to enhance our controls against diversion.”

Cardinal’s goal, said Schumacher, is “resolving this matter quickly so we could resume shipments to our valued customers, who need these medicines to in turn serve their patients.”

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Exelixis applies for approval of cancer treatment innovation

BY Alaric DeArment

SOUTH SAN FRANCISCO, Calif. Exelixis has filed an approval application with the Food and Drug Administration for the cancer-treating compound XL888, the biotech announced Thursday.

The drug is designed to inhibit the chaperone protein HSP90, which helps tumors grow and survive.

“Natural product-based inhibitors of HSP90 are currently in clinical trials and have shown encouraging signs of efficacy, but their utility has been limited by poor pharmacokinetic properties and by their side effect profiles,” Exelixis executive vice president and chief medical officer Gisela Schwab said.

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