Monday, March 10, 2008

Diversion Risk for ABC?

The DEA’s aggressive enforcement efforts for the diversion of controlled substances and other prescription drugs may mean business disruptions for wholesalers besides Cardinal Health (CAH).

Last week, the DEA and FBI raided drug stores and placed two San Diego pharmacies under immediate suspension. See Feds Raid Drugstores, Mission Hills Home.

Unfortunately, it looks like this pharmacy was being supplied by AmerisourceBergen (ABC). Why do I say this?

  • According to the Statement of Facts filed with the Court, the defendant allegedly delivered the diverted drugs in “Good Neighbor Pharmacy” bags.

  • Slide 5 of MSNBC’s slideshow from the raids (reproduced above) shows a “Good Neighbor Pharmacy” sign on the pharmacy.

  • Good Neighbor Pharmacy is the national cooperative for independent pharmacies that is owned by AmerisourceBergen (ABC).
Of course, thousands of pharmacies participate in ABC’s Good Neighbor program, so finding one bad apple in the bushel is no cause for panic.

However, I wonder if the DEA will use a similar approach with ABC as the Agency is using with Cardinal Health (CAH). If so, then perhaps ABC may be facing the suspension of its license to distribute controlled substances at one of its facilities. Alternatively, ABC may have to limit shipments to independent pharmacists as Cardinal has done in Stafford, TX.

For better (or perhaps worse), the DEA now considers distributors and wholesalers to be responsible for ensuring that a pharmacy is only dispensing prescriptions issued for a legitimate medical purpose by an individual practitioner acting in the usual course of professional practice. (See One Pharmacist’s View of Cardinal’s DEA Issues.) What impact will these new responsibilities have on wholesalers' revenues and customer relationships?


  1. Just doodling, and thinking that since the DEA now considers distributors and wholesalers to be responsible for ensuring that a pharmacy is only dispensing prescriptions issued for a legitimate medical purpose by an individual practitioner acting in the usual course of professional practice - why does DEA need so many investigators and agents assigned to this task? I think it's time that the Office of Diversion Control is restructured. They are outsourcing their primary investigative function - therefore they should have a reduction in force. I suggest that State Pharmacy Associations lobby for this reduction in force, and "encourage" the Office of Diversion Control to get back to it's core industry function. That is to say that the activities of the Office of Diversion Control include control of imports and exports of drugs and chemicals; registration of all businesses which manufacture or distribute controlled drugs, all health professionals entitled to dispense, administer or prescribe them, and all pharmacies entitled to fill prescriptions; establishment of national drug production quotas; and U.S. obligations under drug control treaties. They are responsible for understanding and implementing the CSA and the DEA regulations, as well as for writing, adopting, revising, interpreting, and applying many of these regulations. They have been woefully short in conducting their regular "business" and this should be a wake up call for all of us to point the arrows back at them. Their excuse has always been - we're too busy conducting our field investigations. Oh really? Well now you can close all unnecessary small offices, consolidate your core investigators to their inspectional duties, send the agents back to conducting investigations on the illicit side and evaluate the industry as it controls its own retail customers - pharmacies, hospitals and doctors.

    This is a good approach - REDUCE THE FORCE - you are becoming irrelevant.

  2. If the author was paying attention, ABC took their lead from the DEA last summer. ABC had only one DC close in Florida, but they have led the way with the DEA by putting deterents in place and truly knowing their customers. Good Neighbor Pharmacy is an outstanding cooperative and a trademark of independent pharmacies nationwide. The name should not be soiled because of one store.
    Unlike Cardinal, Amerisourcebergen followed the guidelines set down by the DEA. They would not have THREE distributions centers closed and add the inconvenience to their customers and themselves.

  3. To Anonymous (March 11):

    Um, yeah, I've been paying close attention. I discussed ABC's agreement with the DEA in this post from last June. Apparently, the San Diego pharmacy slipped through ABC's new system.

    Just to be clear, I was quite careful not to "soil" ABC. I just pointed out a little-noticed aspect of a news story. But as I highlight in previous posts, the real challenge comes from the uncertainty associated with DEA policies regarding wholesalers.


  4. The Anonymous post above must clearly be a Good Neighbor Pharmacy. Too bad for him!! If Americsource Bergen has done such a good job combating diversion, why did they have a distribution center close? Certainly this new situation does not help them, but hey, they "Truly know their customers"

    What about McKesson or a number of regional wholesalers who have avoided any distribution center closings??

    The fact of the matter is, whether you agree or not, is that wholesalers are forced to become the policing force. It should be interesting to see how it all plays out.