In its ongoing efforts to ensure an adequate supply of controlled substances for the legitimate medical needs of the United States, DEA is granting a temporary exception to 21 C.F.R. 1307.11 – what industry commonly refers to as the 5% Rule.

The 5% Rule allows practitioners to distribute controlled substances without being registered as a distributor, if they fulfill certain requirements.  In addition to the security and recordkeeping obligations, practitioners wishing to use the authority granted by the 5% Rule must ensure that the “total number of dosage units of all controlled substances distributed by the practitioner pursuant to this section … during each calendar year in which the practitioner is registered to dispense does not exceed 5 percent of the total number of dosage units of all controlled substances distributed and dispensed by the practitioner during the same calendar year.”

In response to the current public health emergency, DEA is waiving the 5% requirement “until the public health emergency declared by the Secretary of HHS ends, unless DEA specifies an earlier date or otherwise first modifies or withdraws this exception.”  In its announcement, DEA provides a helpful guide for practitioners to calculate their compliance with the 5% Rule:

All distributions made by practitioners beginning January 1, 2020, until this exception expires or is amended, are “excluded from consideration in applying the 5% rule.” Only distributions made after the public health emergency ends will be included in your 2020 5% Rule calculations.

Practice Tips

  • Check your state law. Many states also have a 5% Rule and they typically mimic DEA’s requirements.  If your state does not also issue an exception to their 5% Rule, DEA’s exception is meaningless to you.
  • If you choose to distribute pursuant to the 5% Rule, read the regulations and consult with your counsel. There are important security and recordkeeping requirements that are often overlooked by practitioners.  Failing to follow these requirements can result in civil monetary penalties and/or administrative action against your registration.
  • If you exceed 5%, after the exception expires, you may need to apply for a distributor registration. Again, consult with counsel.

Kudos to DEA for being nimble and responsive to the challenges brought on by the COVID-19 epidemic.