Cardinal Health 2015 Annual Report Download - page 33

Business
Cardinal Health | Fiscal 2015 Form 10-K 32
loss of our ability to participate in Medicare, Medicaid and other
federal and state healthcare programs.
In addition, our U.S. federal and state government contracts are
subject to specific procurement regulations. Failure to comply with
applicable rules or regulations or with contractual or other
requirements may result in monetary damages and criminal or civil
penalties as well as termination of our government contracts or our
suspension or debarment from government contract work.
Health and Personal Information Practices
We collect, handle and maintain patient-identifiable healthcare
information. The Health Insurance Portability and Accountability Act
of 1996 ("HIPAA"), as augmented by the Health Information
Technology for Economic and Clinical Health Act, as well as some
state and foreign laws, regulate the use and disclosure of patient-
identifiable health information, including requiring specified privacy
and security measures.
We also collect, handle and maintain other sensitive personal
information that is subject to federal and state laws protecting such
information. Security and disclosure of personal information is also
highly regulated in many other countries in which we operate.
In Europe, we are subject to the European Union (“EU”) data
protection regulations, including the EU Directive on Data Protection,
which requires member states to impose minimum restrictions on the
collection and use of personal data that, in some respects, are more
stringent, and impose more significant burdens on subject
businesses, than current privacy standards in the United States.
Antitrust Laws
The U.S. federal government and most states have enacted antitrust
laws that prohibit certain types of conduct deemed to be anti-
competitive. Violations of federal or state antitrust laws can result in
various sanctions, including criminal and civil penalties. Private
plaintiffs also could bring civil lawsuits against us for alleged antitrust
law violations, including claims for treble damages. As previously
disclosed, in April 2015, we settled allegations by the FTC resulting
from an investigation into supplier arrangements involving our
Nuclear Pharmacy Services division primarily focused on the period
between 2003 and 2008. In that settlement, we agreed to a court
order and injunction under federal antitrust laws, and agreed, among
other things, to pay $27 million to the FTC, which the FTC has stated
will be used to establish a fund for allegedly aggrieved third parties.
Environmental, Health and Safety Laws
In the United States and other countries, we are subject to various
federal, state and local environmental laws, as well as laws relating
to safe working conditions and laboratory practices.
Laws Relating to Foreign Trade and Operations
U.S. and foreign laws require us to abide by standards relating to the
import and export of finished goods, raw materials and supplies and
the handling of information. We also must comply with various export
control and trade embargo laws, which may require licenses or other
authorizations for transactions within some countries or with some
counterparties.
Similarly, we are subject to U.S. and foreign laws concerning the
conduct of our foreign operations, including the U.S. Foreign Corrupt
Practices Act, Chinese anti-corruption laws, the U.K. Bribery Act and
other foreign anti-bribery laws. Among other things, these laws
generally prohibit companies and their intermediaries from offering,
promising or making payments to officials of foreign governments for
the purpose of obtaining or retaining business.
Regulation in China
Our China operations are subject to national, regional and local
regulations, including licensing and regulatory requirements of the
China National Health and Family Planning Commission, the State
Administration of Industry and Commerce, the Ministry of Commerce,
the Ministry of Finance, the China Food and Drug Administration, the
National Development and Reform Commission, the General
Administration of Customs, the Ministry of Industrial and Information
Technology and the China Insurance Regulatory Commission.
Other Information
Although our agreements with manufacturers sometimes require us
to maintain inventory levels within specified ranges, our distribution
businesses are generally not required by our customers to maintain
particular inventory levels other than as needed to meet service level
requirements. Certain supply contracts with U.S. government entities
require us to maintain sufficient inventory to meet emergency
demands, but we do not believe those requirements materially affect
inventory levels.
Our customer return policies generally require that the product be
physically returned, subject to restocking fees. We only allow
customers to return products that can be added back to inventory
and resold at full value, or that can be returned to vendors for credit.
We offer market payment terms to our customers.
Revenue and Long-Lived Assets by Geographic Area
See Note 15 of the “Notes to Consolidated Financial Statements” for
revenue and long-lived assets by geographic area.