Summary
Cardinal Health Inc. (CAH) has filed an 8-K report detailing a significant product issue concerning its Alaris PCA (Patient Controlled Analgesia) module when used with specific software versions (8 through 9.1) of the Alaris PC Unit. A potential risk has been identified where the module may infuse medication at incorrect doses due to a specific sequence of events. In response, the company has placed a hold on shipping the affected products and is preparing a safety alert for customers. This issue is being addressed under a previously disclosed Amended Consent Decree with the U.S. Food and Drug Administration, requiring a software correction to be submitted by April 24, 2009. This product recall and associated corrective actions are expected to have a financial impact. Cardinal Health will record a $6 million reserve for the costs of developing and implementing the software correction. Furthermore, the company anticipates a negative impact of approximately $14 million on its clinical and medical products segment profit for the remainder of fiscal year 2009 due to the shipping hold. Management is actively pursuing cost control measures to mitigate these financial consequences.
Key Highlights
- 1Identified a potential risk with Alaris PCA module when used with Alaris PC Unit software versions 8-9.1, where infusion doses may be incorrect under specific conditions.
- 2Placed a hold on shipping the Alaris PCA module and related Alaris PC Unit until software is corrected.
- 3Issuing a safety alert to customers to notify them of the risk and provide mitigation instructions.
- 4Developing a software correction to address the identified issue.
- 5The software correction will be implemented under the corrective action plan mandated by an Amended Consent Decree with the FDA, due by April 24, 2009.
- 6Established a $6 million reserve for the estimated costs of software correction development and implementation.
- 7Expects a negative impact of approximately $14 million on the clinical and medical products segment profit for the remainder of FY2009 due to the shipping hold.