Drug Wholesalers Subpoenaed

Amerisource and Cardinal both get queries from the New York attorney general.

Author:: TSC Staff
Publish date:: Apr 8, 2005 8:50 AM EDT

Pharmaceutical suppliers

Cardinal Health

(CAH) - Get Report

and

AmerisourceBergen

(ABC) - Get Report

were both subpoenaed by the New York attorney general as part of an investigation of the drug industry's secondary market.

Both firms said they were cooperating with the probe. AmerisourceBergen also noted that its purchases from other drug wholesalers make up just 0.5% of its overall drug buying, and said such wholesalers are subject to background checks and other quality controls.

"AmerisourceBergen has been working closely with many manufacturers to minimize the need for pharmaceutical purchases from alternate sources," the company said. "AmerisourceBergen purchases from alternate sources to maintain high service levels to customers when products are in short supply and in some cases to improve its margin."

The company said it's unaware of any allegations of wrongdoing.

Along with

McKesson

(MCK) - Get Report

, Cardinal and Amerisource dominate the business of selling drugs to large buyers like hospitals and pharmacies. The sector has been repeatedly torpedoed over the last year by squeezed profit margins and inventory issues, most recently at Amerisource, which cut its full-year profit forecast from between $4 and $4.10 a share to between $3.10 and $3.50 a share last week.