CARDINAL HEALTH PAYS $11 MILLION TO RESOLVE ATTORNEY GENERAL INVESTIGATION

Cardinal Health will pay $11 million to settle an investigation by the New York Attorney General's Office into the purchase and sale of pharmaceutical products on the secondary market, the company announced.

Cardinal will pay $7 million to nonprofit research corporation Health Research, $3 million to the state of New York and $1 million to cover the costs of the investigation, the company said Dec. 27. The company added it does not admit or deny the investigation's findings.

New York Attorney General Eliot Spitzer launched the investigation in April 2005, focusing on pharmaceuticals bought and sold on the secondary market. In the market, wholesalers trade drugs among themselves after they are sold by manufacturers and before they are purchased by a pharmacy or hospital.

Although buying and selling products on the secondary market is not illegal, it could compromise the security and safety of drug distribution nationally, the attorney general's office said Dec. 26. The practice could allow unreliable drugs, including counterfeit products, into the marketplace, the attorney general said.

According to the attorney general, Cardinal bought drugs on the secondary market to take advantage of higher available profit margins. The company also sold pharmaceuticals to customers in spite of evidence that those customers may have been illegally diverting the drugs, the attorney general said.