FDA Law Blog

Scattered Oxycodone Shortages Reported

By John A. Gilbert & Larry K. Houck –      

WMSN-TV Fox 47 of Madison, Wisconsin, recently reported that pharmacies are experiencing difficulty obtaining oxycodone to fill their patients prescriptions.  Oxycodone, a schedule II opioid painkiller, is indicated for patients suffering from moderate to severe pain.  The report stated that “[a] DEA spokesperson in Chicago says this is not a nationwide shortage, and if pharmacies can’t get supply, it’s likely their manufacturer has reached its quota.”

While there may not be a nationwide oxycodone shortage, pharmacies and hospitals outside Wisconsin have also been unable to obtain the drug.  Oxycodone has been reported in short supply in Oregon and Washington, as well as in parts of California, Colorado and Maine.

The shortages have been attributed to several factors.  Some have blamed DEA for delaying the annual quota, giving manufacturers a late start.  Others have said that manufacturers have already hit their quota and were forced to cease production.  A recall by manufacturer Mallinckrodt and cutbacks by Ethex have also purportedly contributed to the problem.  One pharmacy expert observed that a few years ago five companies manufactured extended-release oxycodone and that four of the companies no longer manufacture the drug.

Other than the statement by the DEA spokesperson in Chicago, there has been no mention of the shortage by the agency.  The Controlled Substances Act (“CSA”) requires DEA to establish quotas that control the quantity of schedule I and II controlled substances that may be manufactured in the United States in a calendar year.  21 U.S.C. § 826.  DEA establishes an annual aggregate quota for each schedule I or II substance.  21 U.S.C. § 826(a).  The agency assigns individual manufacturing quotas to manufacturers of controlled substances such as oxycodone in bulk.  21 U.S.C. § 826(b).  DEA issues procurement quotas that authorize manufacturers to procure a basic class of schedule I or II substances to make dosage forms.  Manufacturers can only manufacture quantities within their assigned manufacturing quota and they may only procure source materials or manufacture dosage forms within their procurement quota.  Manufacturers apply for quotas in April of the year prior to the year of the quota request.

DEA regulations require the agency to publish aggregate production quotas on or before May 1 of each year, and individual procurement quotas and individual manufacturing quotas on or before July 1, 21 C.F.R. §§ 1303.11(c), 1303.12(c), 1303.21(a).  The CSA requires DEA to establish individual manufacturing quantities on or before October 1.  21 U.S.C. § 826(c).  DEA published the proposed aggregate production quotas for 2009 on November 7, 2008 and “established initial aggregate production quotas” for 2009 on December 29, 2008.

DEA Seeks Comments on Controlled Substance Disposal For Patients and Long Term Care Facilities

By John A. Gilbert & Larry K. Houck –

The Drug Enforcement Administration (“DEA”) has published advance notice of proposed rulemaking that solicits comments on the disposal of controlled substances by non-registrants.  This proposal for the first time could authorize DEA registrants to accept controlled substances back from patients for disposal.  It could also place additional burdens on registrants, particularly pharmacies, who may be inundated with requests to dispose of unused controlled substances. 

Under the Controlled Substances Act (“CSA”) and its regulations, controlled substances may be transferred only between DEA registrants, including manufacturers, distributors, pharmacies and practitioners.  Patients for obvious reasons, are exempt from DEA registration.  Long term care facilities such as nursing homes, retirement facilities and other institutions that provide extended health care to resident patients are also exempt because they hold prescribed controlled substances in a custodial capacity for their patient-residents.   

Because DEA registrants may not receive controlled substances from non-registrants, patients and long term care facilities cannot transfer unused or unwanted controlled substances to a DEA registrant.  For example, current law prohibits patients and long term care facilities from returning controlled substances to the dispensing pharmacies or transferring the drugs to reverse distributors, the registrants specifically authorized to receive and dispose of controlled substances.  Such prohibition would seem to contradict DEA’s mission to prevent the diversion of legitimate controlled substances because it could lead to non-registrants stockpiling unwanted drugs.

Under current law, patients and long term care facilities who wish to dispose or destroy controlled substances and do not want to just throw them away or flush them down the drain must submit a letter to the local DEA office for authorization.  The authorization may include transfer of the drugs to a registrant, delivery to a DEA agent or local DEA office, or destruction in the presence of a DEA agent.  Few consumers are aware of this regulation and the requirement can present a burden on long term care facilities who may need to dispose of controlled substances on a frequent basis.

On a case-by-case basis, DEA recently granted temporary permission to law enforcement agencies who have requested authorization to accept unwanted controlled substances from patients for disposal. 

The advanced notice of proposed rulemaking recognizes that there may be additional appropriate methods for disposing unwanted controlled substances held by non-registrants and DEA is requesting public comments on disposal options that minimize the risk of diversion, are consistent with the CSA and its regulations and which are environmentally sound.

Comments should be submitted to DEA on or before March 23, 2009.

DEA Sets Self-Certification Fees

By John A. Gilbert & Larry K. Houck  –      

The Drug Enforcement Administration (“DEA”) published a final rule on December 29, 2008 setting annual self-certification fees at $21 for “regulated sellers.”  “Regulated sellers,” persons and entities who sell scheduled listed chemical products at retail locations, must self-certify with DEA that they comply with certain requirements of the Combat Methamphetamine Epidemic Act of 2005 (“CMEA”).  The final rule is effective February 1, 2009.

Still left unanswered is what responsibility will suppliers or customers of these regulated entities have to determine whether the entity has submitted self-certification to DEA. For example, it is likely that DEA could hold suppliers accountable if there is a diversion issue and it turns out the purchaser has not self-certified.

The final rule states that regulated sellers cannot sell nonprescription products containing ephedrine, pseudoephedrine and phenylpropanolamine (“scheduled listed chemical products”) unless they have self-certified.  This certification must state that:

• Their employees have undergone training about CMEA requirements;
• They maintain records of that training;
• They understand that they cannot sell more than 3.6 grams of such products in a calendar day;
• Nonliquid products are packaged as required under the law;
• Scheduled listed chemical products are stored behind the counter or in a locked cabinet;
• They maintain a written or electronic logbook with required sales documentation; and
• They will disclose logbook information only to law enforcement authorities or to facilitate a product recall.

The Appropriations Act of 1993 requires DEA to set registrant fees to ensure the recovery of the full costs of operating the various aspects of the Diversion Control Program.  DEA determined that self-certification is one of the “various aspects” of its diversion control program.  DEA therefore calculated the Fiscal Year 2006 self-certification set-up costs, and operating and maintenance costs in Fiscal Year 2007 and 2008 to arrive at $2,240,496.  DEA divided the total cost by double the anticipated population of 55,000 affected regulated sellers (110,000) to reflect the initial self-certification and one renewal by each during the period.  DEA rounded the fee up to $21.00 per regulated seller.  DEA could not determine the cost of enforcement activities and subsequent proceedings and promised to recover their costs through fees revised by future rules. 

DEA waived self-certification fees for regulated sellers who hold current registrations to dispense controlled substances as pharmacies, rationalizing that “the retail sale of scheduled listed chemical products is essentially the same activity as dispensing (that is, sale at retail) of controlled substances.”        

FDLI to Hold Conference on Regulation of Controlled Substances

By John A. Gilbert

On December 4 and 5, FDLI will hold a conference on Regulation of Controlled Substances: Balancing Medical Need and Diversion Control.  The conference will focus on issues related to drug scheduling and regulation of controlled substances and List I chemicals and provide information on new initiatives to ensure medical availability of these drugs while reducing diversion.  John Gilbert of HPM will be speaking at the conference along with other government and industry representatives.  More information on the conference can be found at: http://www.fdli.org/conf/446/index.html.

Congress Passes Legislation To Regulate Controlled Substance Dispensing Over the Internet

In an effort to eliminate rogue pharmacies from dispensing controlled substances over the Internet, Congress passed legislation amending the Controlled Substances Act (“CSA”).  The Ryan Haight Act (H.R. 6353), which honors a teenager who died of an overdose of controlled drugs obtained over the Internet, awaits President Bush’s signature.  The legislation follows the recent Drug Enforcement Administration (“DEA”) crackdown on Internet pharmacies and distribution of controlled substances to those pharmacies.   

The Act would permit DEA to register only certain pharmacies meeting specific criteria to dispense controlled substances over the Internet.  In summary, the Act would prohibit dispensing controlled substances by means of the Internet unless:

1.  The patient has a “valid prescription;”

2.  DEA has modified the pharmacy’s current DEA registration to dispense via the Internet. (It is unclear whether the Act would require Internet pharmacies to first register and then obtain a modification to their registration or if “online pharmacy” will be a separate category of registrant on the registration application.);

3.  The pharmacy reports to DEA the quantity dispensed over the Internet if it dispenses 100 prescriptions or 500 or more dosage units in a month;

4.  The pharmacy notifies DEA 30 days prior to offering to sell, deliver, distribute or dispense controlled substances over the Internet; and

5.  The pharmacy certifies that it complies with the Act and posts its name, address, telephone number and pharmacist in charge on its homepage.

The Act would also enhance penalties for the illegal distribution of schedule III-V controlled substances and provide state Attorneys General with the ability to bring civil action in federal district court to enjoin Internet pharmacies.

The Act prohibits controlled substances from being “delivered, distributed or dispensed by means of the Internet without a valid prescription.”  The Act defines “valid prescription” as “a prescription that is issued for a legitimate medical purpose in the usual course of professional practice by . . . a practitioner who has conducted at least 1 in-person medical evaluation of the patient . . . or a covering practitioner.”  An “in-person medical evaluation” is a “medical evaluation that is conducted with the patient in the physical presence of the practitioner, without regard to whether portions of the evaluation are conducted by other health professionals.”  A “covering practitioner” is “a practitioner who conducts a medical evaluation (other than an in-person medical evaluation) at the request of a practitioner who . . . has conducted at least 1 in-person medical evaluation of the patient or an evaluation through the practice of telemedicine, within the previous 24 months . . . and is temporarily unavailable to conduct the evaluation of the patient.”

To “deliver, distribute, or dispense by means of the Internet refers, respectively, to any delivery, distribution, or dispensing of a controlled substance that is caused or facilitated by means of the Internet.”

An “on-line” pharmacy is an entity or Internet site that “knowingly or intentionally delivers, distributes, or dispenses, or offers or attempts to deliver, distribute, or dispense, a controlled substance by means of the Internet” but does not include registered manufacturers or distributors who do not dispense to unregistered individuals or entities; registered nonpharmacy practitioners; hospitals or medical facilities operated by U.S. agencies; “mere advertisements that do not attempt to facilitate an actual transaction involving a controlled substance;” or a registered pharmacy “whose dispensing controlled substances via the Internet consists solely of” filling or refilling schedule III-V prescriptions.

The Act contains a lengthy section discussing the new requirements for telemedicine and provides the U.S. Attorney General with the authority to issue registrations to practitioners who practice telemedicine.       

There are several aspects of the Act that will need to be clarified.  For example, pharmacies do not “distribute” controlled substances pursuant to a prescription so it is unclear why the Act prohibits distributing, along with delivery and dispensing, without a valid prescription.  “Distribute” means “to deliver (other than by administering or dispensing) a controlled substance or listed chemical.”  21 U.S.C. § 802(11).  Controlled substances are “dispensed,” not “distributed,” pursuant to a prescription.  “Dispensing” is the delivery of “a controlled substance to an ultimate user or research subject by, or pursuant to the lawful order of, a practitioner.”  21 U.S.C. § 802(10).  By prohibiting distribution without a valid prescription the Act prohibits something that should not occur.

Also, the Act would define a “valid prescription,” although historically DEA has deferred to local medical standards on these issues.  Including this definition raises a number of issues.  A “valid prescription” is defined as one “issued for a legitimate medical purpose in the usual course of professional practice by . . .a practitioner who has conducted at least 1 in-person medical evaluation of the patient . . . or a covering practitioner.”  The regulations have long required that for controlled substance prescriptions “to be effective,” they must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of professional practice.  21 C.F.R. § 1306.04(a).  DEA has addressed the issue of Internet pharmacies and opined that a bona fide physician/patient relationship must exist for a doctor to issue a prescriptions in the usual course of professional practice and that the doctor must have conducted a physical examination to establish such a relationship.  The Act requires an “in-person  medical evaluation.”  Is “an in-person medical evaluation” the same as a “physical examination?”  We surmise that an “in-person medical evaluation” appears close to a “physical examination.”  But conducting an “in-person medical evaluation” may involve diagnosing a patient without physically examining them, while a physical examination seems to include, at the very least, looking at the patient, listening to their heartbeat and taking their blood pressure.  DEA needs to further clarify what qualifies as “in-person medical evaluation.” Secondly, the definition of  “covering practitioner” appears to indicate that “an evaluation of the patient through the practice of  telemedicine” is an adequate substitute for an “in person medical evaluation.”   

Interestingly, a valid prescription has no time constraints during which a prescribing practitioner had to have conducted at least one in-person medical evaluation, but requires a practitioner for whom a prescriber is covering, to have conducted an evaluation within the past 24 months. 

There is also no information on the type of endorsement or registration DEA will provide to pharmacies so they can dispense via the Internet.  And while endorsement requests will assist DEA in determining the legitimate pharmacies, how will DEA keep those lacking endorsements from dispensing over the Internet, especially if they lack a permanent physical address?  The endorsement and notification requirements will help ensure a pharmacy’s legitimacy by providing DEA with a physical address, but in order for the Act to be effective, DEA must prevent patients from ordering from pharmacies that have not met the Act’s requirements.

By John A. Gilbert and Larry K. Houck

DEA Actions Upheld by D.C. Court of Appeals

A recent decision by the U.S. Court of Appeals for the District of Columbia in Chein v. DEA demonstrates the Court’s deference to agency expertise and a registrant’s heavy burden in overturning final action by the Drug Enforcement Administration (“DEA”) absent a “flagrant departure from DEA policy and practice.” 

In this case, DEA revoked a practitioner’s registration and denied his application for an export registration finding that the practitioner’s registration was not in the public interest.  The registrant, who is both a physician and lawyer, had a less than stellar history with DEA, the California Medical Board, and local law enforcement.  Relying on a 1995 decision of the Court in Morall v. DEA, the registrant argued that DEA revoked his registration when it had not revoked other physician’s registrations in analogous circumstances.  The Court explained its reasoning in Morall, stating that under the Administrative Procedure Act “the [DEA’s] choice of sanction is entitled to substantial deference and will be set aside only if [the] decision is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Relying on Supreme Court precedent in Butz v. Glover Livestock Comm’n Co., the court went on to explain that the “mere unevenness in the application of a sanction will not render its application in a particular case unwarranted in law.”  The Court found noteworthy that the practitioner failed to demonstrate that DEA has a “consistent” policy of allowing a practitioner to retain his registration under similar circumstances and “never accepted responsibility for his misconduct,” nor “cooperated with DEA.”

By John A. Gilbert & Serafina E. Lobsenz

District Court Rules on Jurisdiction and Non-Final Agency Action

In Novelty Distributors, Inc. v. Leonhart, the U.S. District Court for the District of Columbia recently confronted the issue of whether district courts have jurisdiction over a challenge to an agency action that is admittedly not final.   

Novelty Distributors, Inc. (“Novelty”), a distributor of controlled substances, must obtain a registration every year to distribute the List I chemicals ephedrine and pseudoephedrine.  Based on findings from an administrative inspection, the Drug Enforcement Administration (“DEA”) concluded that Novelty’s continued registration posed an imminent danger to the public health and safety and immediately suspended Novelty’s registration pursuant to 21 U.S.C. § 824(d). Following an expedited administrative hearing, and before DEA had issued its final decision, Novelty filed suit in federal district court seeking injunctive and declaratory relief.

DEA challenged Novelty’s choice of forum citing 21 U.S.C. 877 and the D.C. Circuit’s 2007 decision in John Doe, Inc. v. DEA.  In John Doe, which concerned DEA’s denial of a permit to import for bioequivalency testing a generic version of an FDA-approved drug, the Court affirmed a district court decision concluding that exclusive jurisdiction over Doe’s claims lies in the courts of appeals pursuant to 21 U.S.C. § 877.  The court found, however, that “[r]ather than supporting DEA’s argument, John Doe demonstrates that only the district court can have jurisdiction at any time prior to a final DEA decision.”  As noted by the court:

Novelty’s motion for a preliminary injunction is not a disguised attempt at forum shopping or gun-jumping by going directly to the district court before exhausting its administrative remedies, but is rather a request for temporary injunctive relief from its pre-hearing suspension, which the court of appeals lacks jurisdiction to consider, until such time as DEA issues a final agency determination regarding the suspension or revocation of its registration, which the court of appeals can hear on appeal. . . . Accordingly, this Court has jurisdiction to consider Novelty’s motion for a preliminary injunction against DEA’s suspension of Novelty’s registration pending a final agency determination on the matter.

In considering whether to issue a preliminary injunction, however, the court found that: (1) DEA did not act arbitrarily and capriciously in suspending Novelty’s registration for posing an imminent danger to the public health or safety; and (2) that Novelty had not met the burden necessary of showing a “substantial likelihood of success on the merits.”  The court ultimately denied Novelty’s motion for preliminary injunction.

By John A. Gilbert & Serafina E. Lobsenz

DEA Proposes E-Prescribing Regulations; Cumbersome and Strict Framework Could be an Obstacle to Widespread Adoption

On June 27, 2008, the U.S. Drug Enforcement Administration (“DEA”) published a much anticipated Notice of Proposed Rulemaking Regarding Electronic Prescriptions for Controlled Substances.  The proposed regulations are in addition to existing prescribing requirements for controlled substances and are expected to work in tandem with standards developed by the U.S. Department of Health and Human Services on transmitting electronic prescriptions.

The proposed regulations are voluntary and provide practitioners with the option of issuing prescriptions for controlled substances electronically.  However, the practitioner must follow strict controls to deter the diversion of controlled substances.  Such controls include implementing a physically secure information management system and monthly review by the practitioner of a system-generated controlled substance prescription log.  There is a corresponding duty to notify DEA of anything found to be “unusual” within a certain time period.  There are also strict guidelines imposed upon a practitioner on transmitting electronic prescriptions, such as authenticating the system just before signing and not printing or faxing an electronically transmitted prescription.  The burden in on the practitioner to ensure compliance with the proposed regulations and to prevent the diversion of controlled substances.  Among other things, practitioners will be held liable for knowingly permitting another individual to issue electronic prescriptions in the practitioner’s name and for failing to maintain adequate security measures in the handling of electronically transmitted prescriptions.

The proposed regulations also permit pharmacies to receive, dispense, and archive electronic prescriptions.  Again, this is voluntary.  Upon receipt of an electronic prescription, a pharmacy must check the validity of the prescriber’s DEA registration.  “A pharmacy that fails to check the validity of a controlled substance prescription before dispensing is legally responsible if the prescription is invalid.”  The proposal also places strict controls on the participating pharmacy to guard against diversion, such as an enhanced pharmacy information management system, internal audits and back-up systems.  For example, the pharmacy must establish and implement a list of auditable events, and the pharmacy’s system must analyze the audit logs at least once every 24 hours and generate an incident report that identifies each auditable event.  The pharmacy must then decide whether any auditable event poses a security incident that would have to be reported to DEA.

The DEA’s proposal has been long awaited to complement existing initiatives  to promote electronic prescribing, such as those under Medicare and the Health Insurance Portability and Accountability Act.  However, the cumbersome and strict framework proposed by DEA could be an obstacle to widespread adoption of electronic prescribing.  The ability to integrate these requirements into existing technology could be important to how extensively electronic prescribing is used, particularly by doctors.  The fear of DEA enforcement actions for failure to comply with these requirements will also play a role in whether a practitioner decides to adopt these procedures.  DEA should consider these issues in refining the proposed rule before issuing final regulations.  Comments on the proposed regulations must be submitted by September 25, 2008.

By John A. Gilbert & Serafina E. Lobsenz

DEA Final Rule Increases the Allowable Number of Patients for Maintenance and Detox

On May 22, 2008, the Drug Enforcement Administration (“DEA”) issued a final rule to allow every qualified practitioner to offer maintenance or detoxification treatment to 30 patients without obtaining a separate registration regardless of the number of other qualified practitioners within their medical practice.  DEA previously limited group medical practices to 30 patients.  In addition, qualified practitioners can now treat up to 100 patients if they submit a second notification indicating the need and intent to treat the additional patients to Health and Human Services at least a year after submitting their initial notification.

Prior to passage of the Drug Addiction Treatment Act of 2000 (“DATA”), the Controlled Substances Act (“CSA”) and DEA regulations required practitioners to obtain a separate DEA registration as a Narcotic Treatment Program (“NTP”) to conduct maintenance and detoxification treatment using narcotic drugs.  DATA amended the CSA by establishing waiver authority for practitioners who dispense or prescribe certain narcotic drugs for maintenance or detoxification treatment.  DEA promulgated regulations to permit qualifying physicians to dispense and prescribe schedule III, IV and V narcotic drugs approved by the Food and Drug Administration for maintenance and detoxification for up to 30 patients in their practice without obtaining a second registration as an NTP. 

The final rule, which takes effect on June 23, 2008, will allow practitioners to treat more patients.  This should improve treatment in areas currently underserved for addiction treatment.

By John A. Gilbert and Larry K. Houck

Court Denies DEA Injunction to Suspend Practitioner’s Registration

A U.S. District Court recently denied the Drug Enforcement Administration’s (“DEA’s”) attempt to use an injunction to suspend a physician’s DEA registration.  The court noted that the Controlled Substances Act (“CSA”) provides adequate administrative procedures to suspend a DEA registration.  The court also denied the government’s motion for summary judgment, determining that the government’s contention that the physician prescribed outside the course of professional practice juxtaposed against the practitioner’s assertion that he followed accepted pain guidelines, present genuine issues of material fact to be decided at trial.

On May 12, 2008,  in United States v. Seth Paskon, Judge Carol E. Jackson of the U.S. District Court of the Eastern District of Missouri denied the government’s motions against Seth Paskon, M.D.  The government alleged that Dr. Paskon issued medically unnecessary prescriptions for narcotic medications.  The government’s civil case against the practitioner under the False Claims Act and the CSA seeking restitution to Medicaid, civil penalties and an injunction against future CSA violations, is set for trial in July. 

Preliminary Injunction

The government sought injunctive relief directing Dr. Paskon to immediately stop prescribing controlled substances and to surrender his DEA registration.  The court concluded that the government failed to meet the burden of showing why the injunction should be issued before trial.  The government did not cite, and the court did not find, any cases in which a court limited a physician’s registration prior to disposition of the government’s claims.  The court noted that “the CSA provides a comprehensive regime-complete with standards, burdens, and review procedures-pursuant to which DEA may revoke or suspend a physician’s registration.”  The court further found that the government did not explain why it did not rely on the CSA’s administrative process to stop Dr. Paskon’s prescribing and terminate his DEA registration.  In other words, DEA could have immediately suspended Dr. Paskon’s registration under the CSA's standard and administrative remedies, that is, if his continued registration posed an imminent danger to the public health or safety. 

Summary Judgment

The government also sought partial summary judgment in the matter.   The government alleges that Dr. Paskon violated 21 U.S.C. § 842(a)(1), which provides that it is unlawful for any person to distribute or dispense controlled substances in violation of 21 U.S.C. § 829.  Section 829 provides that controlled substances cannot be dispensed without a prescription issued by a practitioner.  For prescriptions to be valid, they must “be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” 

Judge Jackson cited examples from cases where defendant physicians had acted outside the bounds of “professional practice.”  The court distinguished those cases from the case against Dr. Paskon.  For example, the court found no evidence that Dr. Paskon, gave inadequate physical examinations, ignored test results, distributed controlled substances away from the office, or demanded cash for prescriptions. 

The court noted the government provided an expert opinion but lacked evidence from patients and undercover agents to support its contention while Dr. Paskon contended that he followed accepted guidelines, including the World Health Organization’s Pain Ladder, for managing patients with chronic pain.  Finding that the record presents genuine disputes of material fact, the court denied the government’s motion for partial summary judgment. 

By Larry K. Houck