Friday, March 14, 2008

The DEA's Anti-Diversion Strategy

I am getting a lot of questions from Drug Channels readers about the recent uptick in enforcement activities to combat diversion of legitimate controlled substances. As I see it, the increase stems from a combination of changing political priorities, new detection capabilities, and new approaches to the pharmacy supply chain.

Congressional testimony by the DEA on Wednesday shed some light on their strategy behind license suspensions at seven (not four) wholesale distribution centers. Expect more, not less, enforcement action in the future.

As background, you may want to browse the DEA’s list of Drugs and Chemicals of Concern.

POLITICAL FOCUS

There has been growing political pressure to stop the abuse of prescription drugs.

The President’s National Drug Control Strategy: 2008 Annual Report cites some startling data, such as the fact that abuse of prescription drugs among 12 and 13 year-olds now exceeds marijuana use. (Yikes!)

The DEA also has much-improved abilities to identify diversion of controlled substances. So far, 35 states have enacted legislation requiring Prescription Drug Monitoring Programs (PDMP) to track prescriptions for controlled substances. 26 programs are operating and 9 are in the start-up phase.

THE DEA'S STRATEGY

As I’ve noted on the blog, wholesalers are being “asked” to be “responsible” for stopping diversion by their pharmacy customers.

Michele Leonhart, Acting Administrator of the DEA, testified before Congress on Wednesday. (Read her testimony.) She described the DEA’s strategy for controlling diversion by pursuing actions against wholesalers in the following way:

“As part of our effort to attack rogue Internet pharmacies that are supplying millions of doses of licit drugs, DEA has sought to disrupt the supply chain that makes diversion by these rogue Internet pharmacies possible. To that end, DEA has undertaken an important initiative to educate wholesale distributors, and when necessary, pursue administrative, civil, or other criminal action against wholesalers that distribute excessive amounts of controlled pharmaceuticals. Since beginning the initiative, DEA has suspended the registrations of seven wholesale distributors, four of which were owned by two Fortune 500 companies.

I presume that four suspensions at Fortune 500 companies include Cardinal Health (CAH) and AmerisourceBergen (ABC). I was not aware of the other three suspensions. Does anyone know which other wholesalers had their licenses suspended? (UPDATED: See comments below.)

Wholesalers are now struggling to balance their enforcement responsibilities with the legitimate needs of pharmacies and patients, as evidenced by Cardinal's customer problems. Perhaps that’s one reason why drug distribution executives there seem to have as much job security as a Spinal Tap drummer. As the DEA has learned, you can't really dust for vomit...


6 comments:

  1. Look up Southwood Pharmaceuticals.

    ReplyDelete
  2. I've just received some emails pointing me to two of the other three suspensions.

    Here's what I have so far:

    Southwood Pharmaceuticals

    Bellco Drug Corporation

    Bellco was acquired by AmerisourceBergen in 2007. Here's the text from ABC's most recent 10-K:
    "On October 1, 2007, we acquired Bellco Health, a privately held New York distributor of branded and generic pharmaceuticals. Bellco Health consists of two companies, Bellco Drug Corp. and American Medical Distributors, Inc. (“AMD”). The DEA registration of Bellco Drug was suspended in May 2007 prior to our acquisition of the business. AMD’s registration was not suspended but both AMD and Bellco Drug received an order to show cause why their registrations should not be revoked . The suspension of Bellco Drug’s registration and the order to show cause were based on Bellco Drug’s alleged failures to maintain effective controls against the diversion of controlled substances as required by federal law. In June 2007, Bellco Drug entered into a consent judgment with the DEA in which Bellco Drug expressly denied the allegations of diversion and agreed to voluntarily surrender its DEA registration with leave to apply for a new registration. The administrative proceeding on the order to show cause relating to AMD’s DEA registration was also dismissed at that time pursuant to a separate memorandum of understanding between AMD and DEA, which allowed AMD to continue serving its customers and to expand its DEA registration so that AMD could service Bellco Drug’s Metro New York City customers. Bellco Drug has applied for a new DEA registration. As a result of our acquisition of Bellco Health and our own settlement agreement with the DEA, we expect that the Bellco Drug application for a new DEA registration may be subject to particular review and scrutiny by the DEA. Denial by the DEA of Bellco Drug’s application for a new registration could adversely affect Bellco Health’s operations and ability to conduct business in the ordinary course and, therefore, could adversely affect both the value of the businesses that we just acquired and our overall results of operations."

    Adam

    ReplyDelete
  3. Here’s the Federal Register Notice for Southwood.

    http://www.deadiversion.usdoj.gov/fed_regs/actions/2007/fr07032.htm

    ReplyDelete
  4. Hello Adam,

    I’d prefer to not have my name / company listed, but I believe the last (7th) license suspension you are looking for is Richie Pharmacal, Inc. Glasgow, KY (2007).

    ReplyDelete
  5. Here are clickable links for the previous two comments:

    Richie Pharmacal, Inc.

    Federal Register notice for Southwood Pharmaceuticals

    Thanks to my helpful readers!

    Adam

    ReplyDelete
  6. Dr. Fein: You can't blame Cardinal's management for whats going on with the DEA because the DEA is making an example of Cardinal. I agree that they have not handled the situation with their pharmacies very well but they don't have much choice.

    ReplyDelete

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