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Title:Administrative Diversion Cases
Description:Administrative Diversion Cases
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Body: DEA Registrant Responsibilities and Administrative Penalties

The following visual presentation is not legal advice and is intended to be used with the live presentation given by the authors.

Agenda  Overview  The Controlled Substances Act  DEA Certificate of Registration  Registrant Responsibilities  "Effective Controls" & Security Controls  Results of CSA Violations  Problems  Recommendations

What is the CSA? The Controlled Substances Act (CSA) = A system created to ensure a closed distribution of controlled substances

DEA Certificate of Registration  21 U.S.C. 822(a)(1) Manufacturers and distributers shall obtain a registration issued by the AG in accordance with the rules and regulations promulgated by him.

Registration Responsibilities  21 U.S.C. Sections 824(a):  Suspension or Revocation:  Material falsification  Felony conviction relating to CS  No state license  Has committed such acts as would render registration "inconsistent with the public interest"-Section 823

Registration Responsibilities  Section 823(a) and (d)  (a): I and II  (d): III-V  Maintenance of effective controls against diversion  Compliance with State and local law  Prior conviction record under Federal and State laws relating to manufacture, distribution, and dispensing of controlled substances ((a)(4) and (d)(4))  Past experience in distributing CS ((a)(5) and (d)(5))  "Such other factors" - catch-all ((a)(6) and (d)(6))

Effective Controls  21 C.F.R. § 1301.71 - Security requirements generally  The "take away" here - "all applicants and registrants"  Must provide effective controls and procedures to guard against the theft and diversion of CS

Security Controls - Generally  Substantial compliance  §§ 1301.72-1301.74  May be deemed sufficient  In addition, § 1301.71(b) factors - "evaluation of the overall security system" and "needs of the applicant/registrant":  Notable regulatory examples:  Type of activity (processing of bulk chemicals, packaging, labeling, etc.)  Location of the premises and relationship between location and security  Type of vault and storage systems used  Type of closures on vaults, safes, and secure enclosures  Adequacy of key control systems  Extent of unsupervised public access  Adequacy of supervision of employees with access to CS  Adequacy of supervision over employees having access to manufacturing and storage areas

Security Controls - Generally  For manufacturers: §§ 1301.72, 1301.73, 1301.74  Key provisions:  Storage of raw material in Schedules I and II (§ 1301.72(a)(3))  (i) through (v)  If frequent access, equipped with a self-closing and self-locking gate  Alarm system  Section 1301.73 - applicable to "all manufacturing activities"  (a): In-process substances shall be securely locked  (b): Manufacturing activities conducted in limited access areas  (c): During production, areas accessible only to required employees; all others require observation by designated employee  Report suspicious orders and make theft and loss reports (§ 1301.74)  Employee Screening  §§ 1301.90 through 1301.93

CSA Violations-Administrative  Orders to Show Cause  Immediate Suspension Orders  Letters of Admonition  Enforcement Hearings  Memoranda of Agreement

CSA Violations-Administrative  Suspension - Section 824(d)  + (an added factor)  "Imminent threat to the public health and safety"  Generally:  "About to occur"  "Near at hand"  Case law:  Cardinal Health, Inc. v. Holder, 846 F. Supp. 2d 203 (D.D.C. 2012)  Holiday CVS, LLC v. Holder, 839 F. Supp. 2d 145 (D.D.C. 2012).

CSA-Recordkeeping Requirements  Each registrant manufacturing, distributing, or dispensing a controlled substance must maintain, on a current basis, a complete and accurate record of each such substance received, sold, delivered, or otherwise disposed of by it. 21 U.S.C. § 827(a)(3); 21 CFR 1304.03, 1304.04, 1304.21.  Records must be kept and be available for inspection and copying for at least two years. 21 U.S.C. § 827(b)(3), 21 CFR 1304.04.  It is unlawful to fail to make, keep, or furnish a required record or report. 21 U.S.C. § 842(a)(5), (10).  A registrant must be able to account for all controlled substances it receives.

CSA-Recordkeeping Violations  Required records  Inventories. 21 U.S.C. § 827(a); 21 CFR 1304.  DEA Form 222s. 21 U.S.C. § 828; 21 CFR 1305  Required reports  Theft or significant loss. 21 CFR 1304.74(c), 1310.05(a)(3)  Audit Results (accurate records): Confirmed shortages or overages of controlled substances constitute record-keeping violations. 21 U.S.C. § 827(a)(3); U.S. v. Little, 59 F.Supp.2d 177, 185-186 (D.Mass. 1999).  Must show negligence (failure to use reasonable care)

"Problems"-May Result in DEA Action  "We don't maintain a biennial inventory."  "The customer does not have a valid DEA registration."  "We have not installed cameras on-site to ensure controlled substances are not diverted."  "I'm not responsible for what my customer does with the drugs."

Recommendations  Know your responsibilities under the Act and regulations  Make timely ARCOS reports  Timely report errors  Develop an internal recordkeeping system that complies with the CSA  Make employees knowledgeable about policies and procedures  Train employees  Provide access to controlled substances to only those employees who need access

Recommendations  Document-Make complete and accurate reports  Be prepared during DEA cyclical investigations  Account for all controlled substances throughout manufacturing processes  Ensure controlled substances are properly safeguarded  Comply with State and local laws  Report thefts and losses

Contact Information: Dedra S. Curteman, Senior Attorney Diversion & Regulatory Litigation Office of Chief Counsel (202) 307-8133