Over the past several months, we have represented multiple pharmacies that received abrupt notices from Cardinal Health indicating the suspension of their ability to purchase controlled substances for a period of twelve months. In many cases, the suspension was communicated verbally, with little or no written explanation. When pharmacies sought clarification, representatives from their distributor reportedly stated that the pharmacy was “on a list” associated with Mallinckrodt Pharmaceuticals and that the distributor’s internal committee believed the pharmacy’s dispensing profile fell “outside of program parameters.”
Cardinal reportedly has not provided affected pharmacies with objective criteria, comparative benchmarks, or individualized findings supporting these determinations.
Across multiple matters, a consistent pattern emerged: the pharmacies impacted by these suspensions were dispensing levorphanol sourced from manufacturers that compete with Mallinckrodt and obtained through non-Mallinckrodt-affiliated channels. This raises serious questions as to whether these actions reflect legitimate diversion-control assessments under applicable DEA guidance or improper manufacturer influence over distribution decisions.
Levorphanol and Lawful Dispensing
Levorphanol is a Schedule II opioid analgesic with established clinical uses, particularly for opioid-tolerant patients and those requiring alternatives to more commonly prescribed opioids. While Mallinckrodt is a major manufacturer in the controlled-substance space, levorphanol is also lawfully manufactured and supplied by competing generic manufacturers.
There is no federal or state prohibition on dispensing levorphanol, nor is there any requirement that pharmacies source it from a particular manufacturer. Pharmacies dispensing levorphanol are subject to the same Controlled Substances Act (CSA) requirements as any other Schedule II drug, including DEA registration, recordkeeping, and compliance with suspicious order monitoring (SOM) obligations.
Against that backdrop, a year-long suspension of a pharmacy’s controlled-substance purchasing privileges, often affecting all Schedule II through V products, can be economically devastating.
Wholesaler Obligations and Authority
Wholesale distributors play an essential role in diversion prevention, but their authority is not unlimited. DEA guidance emphasizes individualized, risk-based assessments of pharmacy customers, rather than categorical or undisclosed determinations. Opaque “lists,” categorical exclusions, or suspensions driven by manufacturer preferences (particularly without identifying specific diversion indicators or providing supporting data)create significant legal risk.
When a wholesaler suspends a pharmacy’s access to controlled substances, basic questions must be answered: what criteria were applied, how the pharmacy was benchmarked against peers, and whether the pharmacy was given notice and an opportunity to respond. Absent those safeguards, a suspension may resemble market exclusion rather than compliance.
Manufacturer Influence and Competition Concerns
The reported linkage between these suspensions and Mallinckrodt raises additional concerns. At a high level, manufacturers may not use distribution relationships to penalize customers for purchasing competing products or to foreclose competitors from the market.
Where a wholesaler acts at the direction – or under pressure – of a manufacturer, potential legal issues may include concerted refusals to deal, de facto exclusive dealing, anticompetitive conduct, and tortious interference with lawful pharmacy-manufacturer relationships. These concerns exist regardless of whether levorphanol dispensing is clinically appropriate or lawful.
Practical Implications
Pharmacies facing such suspensions should not assume they are mandatory or unchallengeable. Depending on the facts, strategies may include demanding written justification, requesting comparative dispensing analyses, engaging regulators to clarify compliance expectations, and pursuing legal remedies where appropriate. In fact, several lawsuits have been brought by pharmacies to successfully reinstate their ordering privileges.
Manufacturers of generic levorphanol should also be attentive to conduct that restricts pharmacy access to distribution channels based on sourcing decisions rather than safety or compliance.
How Frier Levitt Can Help
Wholesalers play a vital role in protecting the controlled-substance supply chain. However, when such enforcement goes beyond reasonable oversight, affected pharmacies may have rights to protect their interests and access. If your pharmacy has been affected by controlled-substance ordering suspension, it is important to consult experienced healthcare counsel. Frier Levitt routinely represents pharmacies that have faced ordering restrictions or been placed on lists maintained by manufacturers and wholesalers.
