Drug giant Cardinal Health’s CEO is stepping down amid pressure from investors and a flurry of lawsuits in West Virginia and other states that seek to hold the company accountable for the nation’s opioid epidemic.
Cardinal Health, which distributes more prescription drugs than any other wholesaler in West Virginia, announced Monday that CEO George Barrett will depart at the end of the year. Barrett will remain as Cardinal Health’s board chairman through November 2018.
The Teamsters union had planned to protest Cardinal Health’s annual shareholders meeting this week in Dublin, Ohio. The union has accused Barrett of poor leadership while the company faces dozens of lawsuits and a congressional investigation in connection with its role in the opioid crisis.
“Cardinal Health’s announcement of leadership changes ahead of Wednesday’s shareholder meeting demonstrates the strength of a growing investor movement led by the Teamsters to hold America’s largest drug distributors accountable for their role in fueling the opioid epidemic,” said Teamster General-Secretary Ken Hall, who lives in West Virginia. “The bar has been set. No more business as usual.”
Cardinal Health’s statement said nothing about the lawsuits and investigation. Instead, the company’s lead independent board member was quoted as saying the executive leadership changes were prompted by “a wide range of factors, including the current practices of other organizations, as well as the view of our shareholders.”
During the past decade, the company has paid more than $100 million in fines and settlements to end allegations that it distributed an excessive number of painkillers and neglected to report suspect drug orders from “pill mill” pharmacies. At the same time, Cardinal’s board awarded top executives lavish pay raises and bonuses.
Between 2007 and 2012, Cardinal Health shipped 241 million doses of hydrocodone and oxycodone — two powerful and potentially lethal painkillers — to pharmacies and hospitals across West Virginia, according to federal Drug Enforcement Administration data.
Lawsuits against the company have spotlighted large shipments of pain pills to small communities. Over two years, Cardinal Health shipped more than 309,000 prescription opioids to the Boone County town of Van, according to a state lawsuit filed in 2013. About 200 people live in Van.
In January, Cardinal Health agreed to pay $20 million to the state of West Virginia to settle that lawsuit, which alleged that the company acted “negligently” and “recklessly” by distributing an excessive number of painkillers in the state.
Cardinal Health has denied any wrongdoing.
The Teamsters union has criticized Barrett for his recent remarks on the opioid crisis, saying the CEO’s “tone was notably off-pitch.” During an August earnings call, Barrett said the “search for blame” in the opioid problem is the “enemy of the search for solutions,” according to the Teamsters. Such remarks undermine corporate accountability, the union said.
The Teamsters union also has skewered Cardinal Health’s compensation committee, which gave a bonus to the company’s chief compliance officer each of the past six years. Barrett has received $127 million in compensation over the past three years.
In May, a congressional committee started investigating Cardinal Health’s painkiller shipments to West Virginia. The inquiry also targets three other drug wholesalers — McKesson, AmerisourceBergen and Miami-Luken. The panel has directed the companies to turn over internal records.
Barrett, 61, has been Cardinal Health’s CEO since 2009. The company’s chief financial officer, Mike Kaufmann, will replace Barrett.
The company also announced Monday that it will have an independent chairman of its board of directors after Barrett departs. Barrett had dual roles as CEO and board chairman.