In response to issues raised by the Healthcare Distribution Alliance (“HDA”), earlier this week the Drug Enforcement Administration (“DEA”) published additional guidance for DEA-registered distributors on the agency’s COVID-19 Information Page.  Among other issues previously addressed by DEA, the recent guidance addresses suspicious order monitoring and conducting due diligence on customers.

Suspicious Orders

Ordering patterns for certain controlled substances, especially for pharmacies and hospitals, have changed as a result of the COVID-19 epidemic.  While some changes may be a result of hoarding, ordering patterns are also impacted by the change in prescribing habits (intended to limit in-person interactions) and by an increase in demand.  DEA acknowledges the change in order patterns but counsels distributors to investigate orders and properly document the basis for deviation from normal order patterns – which is what distributors are already required to do.

recent significant increases in demand for certain controlled substances by pharmacies and hospitals may be attributable to legitimate needs arising out of the COVID-19 pandemic. When in doubt about the legitimacy of an order, distributors should carefully assess the circumstances surrounding the order, including the nature of the practice engaged in by the registrant placing the order, as well as the types, quantities and dosage forms of the controlled substances being ordered. Distributors should inquire with their customers to obtain an explanation for the deviation from their normal ordering patterns and document the changes in ordering behavior and the possible reasons for it in its due diligence file for each customer.

Due Diligence

Considering the government’s recommendation regarding social distancing, HDA sought clarification and guidance from DEA regarding DEA’s expectation for conducting due diligence, especially with respect to conducting site visits for distributor customers.  Despite the challenges presented by the public health crisis, DEA will not relieve distributors of their obligation to execute their due diligence programs during the public health crisis.  Specifically, DEA suggests alternate approaches to conducting due diligence:

due diligence and site inspections via teleconferencing may be acceptable alternatives when the ability to conduct on-site inspections is determined to be impractical by the registrant. Distributors are also still able to obtain and review their customers’ utilization reports and other documents as part of their due diligence.

To discuss these or any other issues relating to DEA litigation and compliance matters, join me, Carla, and John on April 16, 2020.