Henry Schein 2009 Annual Report Download - page 28

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Failure to comply with existing and future regulatory requirements could negatively affect our business.
Our business is subject to requirements under various local, state, federal and international laws and
regulations applicable to the distribution of pharmaceuticals and medical devices, and human cells, tissue, and
cellular and tissue-based products (“HCT/P”). Among the federal laws with which we must comply are the
Controlled Substances Act, the Federal Food, Drug, and Cosmetic Act, as amended, the Prescription Drug
Marketing Act of 1987, and Section 361 of the Public Health Services Act (“Regulations to Control
Communicable Diseases”). Among other things, such laws, and the regulations promulgated thereunder:
• regulate the storage and distribution, labeling, packaging, handling, reporting, record keeping,
introduction, manufacturing and marketing of drugs, HCT/P and medical devices;
• subject us to inspection by the United States Food and Drug Administration and the United States Drug
Enforcement Administration;
• regulate the storage, transportation and disposal of certain of our products that are considered hazardous
materials;
• require registration with the United States Food and Drug Administration and the United States Drug
Enforcement Administration and various state agencies;
• require record keeping and documentation of transactions involving drug products;
• require us to design and operate a system to identify and report suspicious orders of controlled substances
to the United States Drug Enforcement Agency;
• require us to manage returns of products that have been recalled and subject us to inspection of our recall
procedures and activities; and
• impose reporting requirements if a pharmaceutical, HCT/P or medical device causes serious illness, injury
or death.
Applicable federal, state and local laws and regulations also may require us to meet various standards
relating to, among other things, licensure or registration, sales and marketing practices, product integrity and
supply tracking to the manufacturer of the product, personnel, privacy and security of health or other personal
information, installation, maintenance and repair of equipment, and the importation and exportation of
products. Our business also is subject to requirements of similar and other foreign governmental laws and
regulations affecting our operations abroad. The United States Food and Drug Administration and Drug
Enforcement Administration have recently increased their regulatory and enforcement activities.
The failure to comply with any of these regulations, or new interpretations of existing laws and
regulations, or the imposition of any additional laws and regulations, could negatively affect our business.
There can be no assurance that current government regulations will not adversely affect our business. The
costs to us associated with complying with the various applicable statutes and regulations, as they now exist
and as they may be modified, could be material. Allegations by a governmental body that we have not
complied with these laws could have a material adverse impact on our businesses. If it is determined that we
have not complied with these laws, we are potentially subject to penalties including warning letters, civil and
criminal penalties, mandatory recall of product, seizure of product and injunction, and suspension or
limitation of product sale and distribution. If we enter into settlement agreements to resolve allegations of
non-compliance, we could be required to make settlement payments or be subject to civil and criminal
penalties, including fines and the loss of licenses. Non-compliance with government requirements could
adversely affect our ability to participate in federal and state government healthcare programs, and damage
our reputation. Any of the foregoing could have a material adverse impact on our businesses. We believe
that the healthcare services industry will continue to be subject to extensive domestic and foreign government
regulation and that we have adequate compliance programs and controls in place to ensure substantial
compliance with the laws and regulations.