One of the targets of state and federal investigations into prescription drug and medical product distribution and wholesaling practices hired a new chief financial officer.
Cardinal Health named Jeffrey Henderson, president of Eli Lilly Canada, to replace Michael Losh, who has served as interim CFO since Richard Miller resigned under pressure in July 2004. Miller left in the midst of investigations by the Securities and Exchange Commission and the U.S. attorney in New York into Cardinal's distribution practices. The company delayed its earnings reports after his departure and has been the subject of shareholder and class-action lawsuits.
"Jeff brings a wealth of leadership experience to Cardinal Health, including uncompromising standards for business and fiscal management and a passion for achieving the high goals he establishes," said Cardinal President and Chief Executive Officer Robert Walter in a news release. Henderson arrives at Cardinal as the company faces another government inquiry, this time from New York Attorney General Eliot Spitzer, who earlier this month served subpoenas to the medical supply and drug distribution company and at least two other large drug distributors and wholesalers.
While Spitzer's office refused to comment on the subpoenas, the companies revealed in their SEC filings that the subpoenas sought information about the secondary wholesale market for prescription drugs. Published stories indicated Spitzer may be examining whether and how counterfeit drugs enter the marketplace. Spitzer has publicly stated his concerns about the safety, pricing and integrity of pharmaceuticals.
In addition to Dublin, Ohio-based Cardinal, AmerisourceBergen Corp. and McKesson Corp. -- which also purchase drugs primarily from pharmaceutical manufacturers and resell them to pharmacies, hospitals and other providers -- confirmed receipt of subpoenas.
In its SEC filing, McKesson said it received a subpoena "seeking the production of documents and other information relating to the secondary wholesale market for pharmaceutical products." AmerisourceBergen subsidiary AmerisourceBergen Drug Corp. said the subpoena requested "documents and responses to interrogatories concerning the manner and degree to which the registrant purchases pharmaceuticals from other wholesalers, often referred to as the alternate source market."
AmerisourceBergen said it was not advised of any allegations of misconduct.
The secondary wholesaler market is created when large distributors purchase drugs not directly from manufacturers but from other wholesalers, particularly when certain drugs are in short supply.
Henderson, 40, who will also serve as executive vice president, officially joins Cardinal on April 18 for a transition period and becomes CFO effective May 15. Losh will remain on Cardinal's board. Henderson, who has been president of Eli Lilly Canada since 2003, previously served as Eli Lilly & Co.'s corporate controller and vice president.