Cardinal Health to name spinoff after CareFusion line, announces amended consent decree

By Eric Wicklund
10:42 AM

Cardinal Health has chosen a familiar name to grace the spinoff company soon to be formed from its Clinical and Medical Products businesses.

The new company, to be launched sometime this spring or summer, will be called CareFusion, a trade name the company has held since acquiring the maker of hand-held barcode technology in 2006. The company will be based in San Diego, is expected to employ 13,000 people and earn roughly $4 billion in annual revenue, and will include in its product line Alaris IV pumps, Pyxis automated dispensing systems, MedMined electronic infection surveillance services, AVEA respiratory care products and ChloraPrep skin preparation products.

"CareFusion is a name that clearly communicates our ability to bring together technologies that improve patient safety and streamline the care process," said David Schlotterbeck, Cardinal Health's vice chairman and future CEO of CareFusion, in a press release. "Not only will CareFusion be an immediate market leader in medication safety and infection prevention, we will put a substantial emphasis on innovation and clinical differentiation to continue to serve this growing segment of the global healthcare industry. Patient safety has always been a moral obligation for hospitals, but with payers creating additional financial incentives to reduce errors, improving safety has become an economic mandate."

The spinoff, when completed, will cap an interesting process that began in August 2008, when the company announced plans to separate its sluggish drug distribution business - which ranks second in the nation in size behind McKesson - from its Clinical and Medical Products businesses. The company, struggling under the weight of a stagnant economy, had consolidated some of its smaller segments and cut roughly 600 jobs last July, and in January of this year officials lowered their fiscal guidance for 2009.

R. Kerry Clark, Cardinal Health's long-time president and CEO, has said that he will retire once the spinoff is completed.

Company officials say CareFusion, which will trade on the New York Stock Exchange under the ticker symbol CFN, "will be the largest medical technology company with a singular focus on patient safety."

In related news Wednesday, Cardinal Health has reached agreement with the U.S. Food and Drug Administration on an amended consent decree regarding the Alaris SE infusion pump products.

The company, which instituted a new quality system for the pumps on April 2, 2008 as part of the consent decree signed in February 2007, will conduct a thorough view of its broader line of infusion pump products within 60 days and submit a plan for any modifications to the FDA.

Within 100 days, the company will have an independent expert inspect and certify whether the company's infusion pump operations comply with federal regulations, and whether the company's procedures to recall defective products are in compliance.

The FDA ordered amendments to the consent degree following a January 2008 inspection, in which it said certain infusion pumps did not satisfy the requirements of the Federal Food, Drug and Cosmetic Act.

"We are taking the FDA's observations - and our obligation to deliver safe and effective products - very seriously," said Schlotterbeck in a separate press release. "We will continue to improve our systems as we prepare to meet the additional requirements of the amended consent decree."