Cardinal Health 2008 Annual Report Download - page 36

that manufacture medical devices are subject to the Federal Food, Drug, and Cosmetic Act, as amended by the
Medical Device Amendments of 1976, the Safe Medical Devices Act of 1990, as amended in 1992, the FDA
Modernization Act of 1997, the Medical Device User Fee and Modernization Act of 2002, the Medical Device
User Fee and Modernization Act of 1997, the Food and Drug Amendments Act of 2007, and comparable foreign
regulations. In addition, certain of the Company’s subsidiaries are subject to the Needlestick Safety and
Prevention Act.
Laws regulating the manufacture and distribution of products also exist in most other countries where the
Company’s subsidiaries conduct business. In addition, the international manufacturing operations within the
Company’s Clinical Technologies and Services and Medical Products and Technologies segments are subject to
local certification requirements, including compliance with domestic and/or foreign good manufacturing
practices and quality system regulations established by the FDA and/or applicable foreign regulatory authorities.
The FDA in the United States, as well as other governmental agencies inside and outside of the United
States, administer requirements covering the design, testing, safety, effectiveness, manufacturing, labeling,
promotion and advertising, distribution and post-market surveillance of certain of the Company’s manufactured
products. The Company must obtain specific approval or clearance from the FDA and non-U.S. regulatory
authorities before it can market and sell many of its products in a particular country. Even after the Company
obtains regulatory approval or clearance to market a product, the product and the Company’s manufacturing
processes are subject to continued review by the FDA and other regulatory authorities.
The Company is subject to possible administrative and legal actions by the FDA and other regulatory
agencies. Such actions may include product recalls, product seizures, injunctions to halt manufacture and
distribution, and other civil and criminal sanctions. From time to time, the Company institutes compliance
actions, such as removing products from the market that were found not to meet applicable requirements. On
February 8, 2007, a Consent Decree for Condemnation and Permanent Injunction (the “Consent Decree”)
between the Company and the FDA was entered by a federal district court to resolve seizure litigation over
Alaris®SE pumps. The Company remains in the process of fulfilling the Consent Decree’s conditions to resume
manufacturing and selling Alaris SE pumps in the United States.
To assess and facilitate compliance with applicable FDA requirements, the Company regularly reviews its
quality systems to determine their effectiveness and identify areas for improvement. As part of its quality review,
the Company performs assessments of its suppliers of the raw materials, components and finished goods that are
incorporated into the medical devices that it manufactures. In addition, the Company conducts quality
management reviews designed to inform management of key issues that may affect the quality of products and
services. From time to time, the Company may determine that products manufactured or marketed by the
Company do not meet company specifications, published standards, such as those issued by the International
Standards Organization, or regulatory requirements. When a quality issue is identified to the Company, it
investigates the issue and takes appropriate corrective action, such as withdrawal of the product from the market,
correction of the product at the customer location, notice to the customer of revised labeling and other actions.
The Company operates nuclear pharmacies and related businesses, such as cyclotron facilities used to
produce positron emission tomography (“PET”) products used in medical imaging. This business operates in a
regulated industry which requires licenses or permits from the NRC, the radiologic health agency and/or
department of health of each state in which it operates and the applicable state board of pharmacy. In addition,
the FDA is also involved in the regulation of cyclotron facilities where PET products are produced.
Prescription Drug Pedigree Tracking
There have been increasing efforts by various levels of government agencies, including state departments of
health, state boards of pharmacy and comparable government agencies, to regulate the pharmaceutical
distribution system in order to prevent the introduction of counterfeit, diverted, adulterated or mislabeled
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