Suspicious Orders of Controlled Substances

CourtDrug Enforcement Administration,Justice Department
Citation85 FR 69282
Record Number2020-21302
SectionProposed rules
Published date02 November 2020
69282
Federal Register / Vol. 85, No. 212 / Monday, November 2, 2020 / Proposed Rules
the proper city and state, the name of
the airport and the geographical
coordinates for McChord Field (Joint
Base Lewis McChord) to match the
FAA’s National Airspace System
Resource (NASR) database.
Class D and Class E airspace
designations are published in paragraph
5000 of FAA Order 7400.11E, dated July
21, 2020, and effective September 15,
2020, which is incorporated by
reference in 14 CFR part 71.1. The Class
E airspace designations listed in this
document will be published
subsequently in the Order.
FAA Order 7400.11, Airspace
Designations and Reporting Points, is
published yearly and effective on
September 15.
Regulatory Notices and Analyses
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current, is non-controversial and
unlikely to result in adverse or negative
comments. It, therefore: (1) Is not a
‘‘significant regulatory action’’ under
Executive Order 12866; (2) is not a
‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
regulatory evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this rule, when
promulgated, would not have a
significant economic impact on a
substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
Environmental Review
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
The Proposed Amendment
Accordingly, pursuant to the
authority delegated to me, the Federal
Aviation Administration proposes to
amend 14 CFR part 71 as follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
Authority: 49 U.S.C. 106(f), 106(g), 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
1959–1963 Comp., p. 389.
§ 71.1 [Amended]
2. The incorporation by reference in
14 CFR part 71.1 of FAA Order
7400.11E, Airspace Designations and
Reporting Points, dated July 21, 2020,
and effective September 15, 2020, is
amended as follows:
Paragraph 5000 Class D Airspace.
* * * * *
ANM WA D Tacoma, WA [AMEND]
McChord Field (Joint Base Lewis-McChord),
WA
(Lat. 47°0817N, long. 122°2835W)
That airspace extending upward from the
surface to and including 2,800 feet MSL
within a 5.4-mile radius of the McChord
Field (Joint Base Lewis-McChord), beginning
at the point the 315° bearing intersects the
5.4 mile radius clockwise to the point where
the 162° bearing intersects the 5.4 mile radius
thence south to lat. 47°0210N, long.
122°2613W, thence west to lat. 47°0219
N, long. 122°3128W, thence north to lat.
47°0417N, long. 122°3126W, thence
northwest to lat. 47°0847N, long.
122°3509W, thence east to lat. 47°0835 N,
long. 122°0303 W, thence north to the point
of beginning.
Issued in Seattle, Washington, on October
27, 2020.
Byron Chew,
Acting Group Manager, Operations Support
Group, Western Service Center.
[FR Doc. 2020–24154 Filed 10–30–20; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300 and 1301
[Docket No. DEA–437]
RIN 1117–AB47
Suspicious Orders of Controlled
Substances
AGENCY
: Drug Enforcement
Administration, Department of Justice.
ACTION
: Notice of proposed rulemaking.
SUMMARY
: The Drug Enforcement
Administration (DEA) is proposing to
revise its regulations relating to
suspicious orders of controlled
substances, in order to implement the
Preventing Drug Diversion Act of 2018
(PDDA) and to clarify the procedures a
registrant must follow for orders
received under suspicious
circumstances (ORUSCs). Upon receipt
of an ORUSC, registrants authorized to
distribute controlled substances would
have a choice of proceeding under one
of two options (the ‘‘two option
framework’’). In addition, these
registrants would be required to submit
all suspicious order reports to a DEA
centralized database, and keep records
pertaining to suspicious orders and
ORUSCs.
DATES
: Electronic comments must be
submitted, and written comments must
be postmarked, on or before January 4,
2021.
ADDRESSES
: To ensure proper handling
of comments, please reference ‘‘RIN
1117–AB47/Docket No. DEA–437’’ on
all correspondence, including any
attachments.
Electronic comments: The DEA
encourages that all comments be
submitted electronically through the
Federal eRulemaking Portal, which
provides the ability to type short
comments directly into the comment
field on the web page or attach a file for
lengthier comments. Please go to http://
www.regulations.gov and follow the
online instructions at that site for
submitting comments. Upon submission
of your comment, you will receive a
Comment Tracking Number. Please be
aware that submitted comments are not
instantaneously available for public
view on http://www.regulations.gov. If
you have received a Comment Tracking
Number, your comment has been
successfully submitted and there is no
need to resubmit the same comment.
Commenters should be aware that the
electronic Federal Docket Management
System will not accept comments after
11:59 p.m. Eastern Time on the last day
of the comment period.
Paper comments: Paper comments
that duplicate the electronic submission
are not necessary and are discouraged.
Should you wish to mail a paper
comment in lieu of an electronic
comment, it should be sent via regular
or express mail to: Drug Enforcement
Administration, Attn: DEA Federal
Register Representative/DPW, 8701
Morrissette Drive, Springfield, VA
22152.
Paperwork Reduction Act (PRA)
Comments: All comments concerning
collections of information under the
PRA must be submitted to the Office of
Information and Regulatory Affairs,
Office of Management and Budget
(OMB), Attention: Desk Officer for
Department of Justice (DOJ),
Washington, DC 20503. Please state that
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1
See Section IV.E titled ‘‘Scope of the Rule,’’
below.
2
Proposed new 21 CFR 1301.78(a)(1). Although
the registrant may not be conducting due diligence
to dispel each suspicious circumstance under the
first option, it could conduct due diligence related
to its initial determination to decline the order. See
proposed new 21 CFR 1300.01(b)’s definition of
‘‘due diligence’’ which includes ‘‘examination of
each suspicious circumstance surrounding an order,
and examination of all facts and circumstances that
may be relevant indicators of diversion in
determining whether a person (or a person
submitting an order) is engaged in, or is likely to
engage in, the diversion of controlled substances.’’
3
Proposed new 21 CFR 1301.78(a)(2).
4
Proposed new 21 CFR 1301.78(a)(2)(i).
5
Proposed new 21 CFR 1301.78(a)(2)(ii).
6
Proposed new 21 CFR 1301.78(b).
7
Proposed new 21 CFR 1301.78(c).
8
See Section V.B.3 titled ‘‘Procedures for
Identifying and Reporting Suspicious Orders of
Controlled Substances,’’ below.
9
Proposed new 21 CFR 1300.01(b).
10
E.O. 12866, ‘‘Regulatory Planning and Review,’’
September 30, 1993, published in the Federal
Register at 58 FR 51735 on October 4, 1993.
11
E.O. 13771, ‘‘Reducing Regulation and
Controlling Regulatory Costs,’’ January 30, 2017,
published in the Federal Register at 82 FR 9339 on
February 3, 2017.
12
5 U.S.C. 601–612.
13
See Part VI titled ‘‘Impact of Regulatory
Changes and Regulatory Analysis,’’ below.
your comment refers to ‘‘RIN 1117–
AB47/Docket No. DEA–437.’’
FOR FURTHER INFORMATION CONTACT
:
Scott A. Brinks, Diversion Control
Division, Drug Enforcement
Administration; Mailing Address: 8701
Morrissette Drive, Springfield, VA
22152, Telephone: (571) 362–3261.
SUPPLEMENTARY INFORMATION
:
Posting of Public Comments
Please note that all comments
received are considered part of the
public record. They will, unless
reasonable cause is given, be made
available by the DEA for public
inspection online at http://
www.regulations.gov. Such information
includes personal identifying
information (such as your name,
address, etc.) voluntarily submitted by
the commenter. The Freedom of
Information Act applies to all comments
received. If you want to submit personal
identifying information (such as your
name, address, etc.) as part of your
comment, but do not want it to be made
publicly available, you must include the
phrase ‘‘PERSONAL IDENTIFYING
INFORMATION’’ in the first paragraph
of your comment. You must also place
the personal identifying information
you do not want to be made publicly
available in the first paragraph of your
comment and identify what information
you want redacted.
If you want to submit confidential
business information as part of your
comment, but do not want it to be made
publicly available, you must include the
phrase ‘‘CONFIDENTIAL BUSINESS
INFORMATION’’ in the first paragraph
of your comment. You must also
prominently identify confidential
business information to be redacted
within the comment.
Comments containing personal
identifying information and confidential
business information identified as
directed above will generally be made
publicly available in redacted form. If a
comment has so much personal
identifying information or confidential
business information that it cannot be
effectively redacted, all or part of that
comment may not be made publicly
available. Comments posted to http://
www.regulations.gov may include any
personal identifying information (such
as name, address, and phone number) or
confidential business information
included in the text of your electronic
submission that is not identified as
directed above as confidential.
For easy reference, an electronic copy
of this document and supplemental
information (including the complete
Economic Impact Analysis to this notice
of proposed rulemaking) are available in
their entirety under the tab ‘‘Supporting
Documents’’ of the public docket for
this action at http://
www.regulations.gov under FDMS
Docket ID: DEA: (RIN 1117–AB47/
Docket Number DEA–437) for easy
reference.
I. Executive Summary
A. Summary of the Rule
The DEA is revising its regulations
relating to suspicious orders of
controlled substances in order to
implement the Preventing Drug
Diversion Act of 2018 (PDDA) and,
through the adoption of the two-option
framework, to clarify the procedures a
registrant must follow for orders
received under suspicious
circumstances (ORUSCs). Upon receipt
of an ORUSC, registrants authorized to
distribute controlled substances
1
will
have a choice (under the two-option
framework) to either: (1) Immediately
file a suspicious order report through
the DEA centralized database, decline to
distribute pursuant to the suspicious
order, and maintain a record of the
suspicious order and any due diligence
related to the suspicious order,
2
or (2)
before distributing pursuant to the
order, conduct due diligence to
investigate each suspicious
circumstance surrounding the ORUSC,
and maintain a record of its due
diligence regarding the ORUSC.
3
Under the second option, if, through
its due diligence, the registrant is able
to dispel each suspicious circumstance
surrounding the ORUSC within seven
calendar days after receipt of the order,
it is not a suspicious order. After that
determination is made, the registrant
may thereafter distribute pursuant to the
order. The order need not be reported to
the DEA as a suspicious order, but the
registrant must maintain a record of its
due diligence.
4
However, if the
registrant is unable, through its due
diligence, to dispel each suspicious
circumstance surrounding the ORUSC
within seven calendar days after
receiving the order, it is a suspicious
order. The registrant must then
promptly file a suspicious order report
through the DEA centralized database,
decline to distribute pursuant to the
suspicious order, and maintain a record
of its due diligence.
5
All suspicious
order reports must be made to the DEA
centralized database and contain certain
required information,
6
and all records of
suspicious orders and ORUSCs must be
prepared and maintained in accordance
with DEA regulations, and must contain
certain required information.
7
Related to this two-option framework,
and as discussed in more detail below,
8
the DEA is also defining four terms in
its regulations: ‘‘due diligence’’,
‘‘order’’, ‘‘order received under
suspicious circumstances’’, and
‘‘suspicious order.’’
9
B. Summary of the Impact of the Rule
The DEA has analyzed the impact of
the rule under Executive Order 12866
(E.O.),
10
E.O. 13771,
11
and the
Regulatory Flexibility Act (RFA).
12
The
Office of Information and Regulatory
Affairs (OIRA) in the Office of
Management and Budget has
determined that this rulemaking is a
significant regulatory action within the
meaning of E.O. 12866. The DEA has
therefore submitted this rule for review
by OMB. In addition, the DEA has
determined that this rule has a total cost
savings of $2,931,000 and is therefore
expected to be an E.O. 13771
deregulatory action. Finally, the DEA is
certifying that this rule will not have a
significant economic impact on a
substantial number of small entities
within the meaning of the RFA. The
DEA’s analysis and conclusions
regarding E.O. 12866, E.O. 13771, and
the RFA are discussed in further detail,
below.
13
II. Suspicious Orders and the Opioid
Epidemic
Identifying and reporting suspicious
orders of controlled substances (and
refusing to distribute based on such
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14
‘‘DEA registrant’’ in this context refers
generally to the responsibility of all registrants, and
not specifically to any particular group.
15
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36504 on July 3, 2007.
16
The DEA implements and enforces Titles II and
III of the Comprehensive Drug Abuse Prevention
and Control Act of 1970 (Pub. L. 91–513), as
amended. Titles II and III are known as the
‘‘Controlled Substances Act’’ and the ‘‘Controlled
Substances Import and Export Act,’’ respectively,
and are collectively referred to as the ‘‘Controlled
Substances Act’’ or ‘‘CSA’’ for purposes of this
document. The CSA is codified at 21 U.S.C. 801–
971. The DEA publishes implementing regulations
for these statutes in Title 21 of the Code of Federal
Regulations (CFR), chapter II.
17
See 21 U.S.C. 823(b)(1) and (e)(1) (requiring the
Attorney General to consider ‘‘maintenance of
effective controls against diversion’’ in determining
whether to register an applicant to distribute
controlled substances) and 21 CFR 1301.71(a) (‘‘[a]ll
applicants and registrants shall provide effective
controls and procedures to guard against theft and
diversion of controlled substances’’).
18
See Section IV.D titled ‘‘The Due Diligence
Requirement,’’ below.
19
Current DEA regulations require that ‘‘[t]he
registrant shall design and operate a system to
disclose to the registrant suspicious orders of
controlled substances.’’ 21 CFR 1301.74(b).
Similarly, the PDDA required that the system be
designed and operated to ‘‘identify’’ suspicious
orders for the registrant. For purposes of this
document, the PDDA phrase ‘‘identify for’’ will be
used in place of the phrase ‘‘disclose to.’’
20
See 21 CFR 1301.74(b), and Sections III.B
(titled ‘‘Legal Authority for the Rule: Centralized
Reporting Under the PDDA’’), III.C (titled ‘‘Legal
Authority for the Rule: Other Provisions of the
PDDA’’), and IV.A (titled ‘‘History of Relevant DEA
Regulations’’), below.
21
See Section IV.D, titled ‘‘The Due Diligence
Requirement,’’ below.
22
Examples of terms used to describe information
system formulas in the context of suspicious orders
include ‘‘algorithm,’’ ‘‘blocked,’’ ‘‘flagged,’’ ‘‘held,’’
‘‘order of interest,’’ ‘‘pended,’’ or ‘‘threshold.’’
23
The CSA requires manufacturers and
distributors to report their controlled substance
transactions to the DEA on a quarterly basis, and
the DEA implements this requirement through
ARCOS. ARCOS and the ARCOS Distributor Tool
are discussed in further detail in Sections IV.B and
IV.C, below.
24
The ARCOS reporting requirement and the
suspicious orders serve two different purposes.
While ARCOS provides the DEA with information
regarding trends in the diversion of controlled
substances, the reports need not be submitted until
fifteen days after the end of the reporting period.
In contrast, a suspicious order must be reported
when discovered by the registrant. The suspicious
orders reporting requirement exists to provide
investigators in the field with information regarding
potential illegal activity in an expeditious manner.
See, e.g., Southwood Pharmaceuticals, Inc.;
Revocation of Registration, published in the Federal
Register at 72 FR 36487, 36501 on July 3, 2007.
25
21 CFR 1301.74(b) (suspicious orders ‘‘include
orders of unusual size, orders deviating
substantially from a normal pattern, and orders of
unusual frequency’’). For purposes of this
document, orders of unusual size, orders deviating
substantially from a normal pattern, and orders of
unusual frequency will be referred to as ‘‘size,
pattern, and frequency orders.’’ As discussed below
in Section III.C titled ‘‘Legal Authority for the Rule:
Other Provisions of the PDDA,’’ the PDDA provided
that the term suspicious order ‘‘may include, but is
no limited to’’ size, pattern, and frequency orders.
26
Registrants were already under a legal
obligation to report suspicious orders. The MOAs
required that the reports be filed electronically and
centrally. Since the deployment of the ARCOS
distributor tool and the on-line reporting system,
the number of suspicious order reports has
increased.
27
See ‘‘Drug firms poured 780M painkillers into
WV amid rise of overdoses,’’ Eric Eyre Staff Writer,
Charleston Gazette-Mail, December 17, 2016.
https://www.wvgazettemail.com/news/cops_and_
courts/drug-firms-poured-m-painkillers-into-wv-
amid-rise-of/article_99026dad-8ed5-5075-90fa-
adb906a36214.html. The relevance of West Virginia
to suspicious orders has been generally recognized
and accepted, including by congressional
committees, as it illustrated the nature of the
relationship and interaction between distributors
and their customer pharmacies with respect to
controlled substances.
28
See DEA Press Release, ‘‘Walgreens Agrees to
Pay a Record Settlement of $80 Million for Civil
orders), has always been, and remains,
the responsibility of the DEA
registrant.
14
This responsibility is of
critical importance because diversion
methods are constantly evolving, and
because registrants are best situated to
know their customers. As the DEA has
previously stated, cutting off the
controlled substance supply sources of
‘‘drug pushers operating under the
patina of legitimate authority’’ is not
something the DEA can do entirely by
itself—rather, the DEA ‘‘must rely on
registrants to fulfill their obligation
under the [Controlled Substances Act
(CSA)] to ensure that they do not supply
controlled substances to entities which
act as drug pushers.’’
15
Five closely related legal obligations
contained in the CSA
16
and DEA
regulations relate to the identification
and reporting of suspicious orders: The
obligation to maintain effective controls
against diversion,
17
to conduct due
diligence,
18
to design and operate a
system to identify suspicious orders for
the registrant,
19
to report suspicious
orders (the reporting requirement),
20
and to refuse to distribute controlled
substances that are likely to be diverted
into illegitimate channels (the shipping
requirement).
21
The purpose of
identifying and reporting suspicious
orders to DEA is to provide DEA
investigators in the field with
information regarding potential illegal
activity in an expeditious manner.
However, at various times, and in
various places and manners, some
registrants have failed to fulfill their
obligations regarding the identification
and reporting of suspicious orders. For
example, some registrants failed to
design or operate any system to identify
suspicious orders. Other registrants
designed a system, but in doing so
relied solely on rigid formulas that may
not identify suspicious orders.
22
Still
other registrants failed to properly
operate a system, by, for example,
failing to implement their internal
policies regarding due diligence in the
identification and reporting of
suspicious orders.
Some registrants failed to file timely
and specific suspicious order reports,
opting instead to file no reports, or rely
on the submission of Automation of
Reports and Consolidated Information
Systems (ARCOS)
23
reports as a
purported substitute for submitting
suspicious order reports.
24
Other
registrants filed end-of-month
‘‘excessive purchase’’ reports (that were
reported after the order had already
been filled), submitted a list of largest
purchasers, or reported customers with
whom the registrant had terminated a
business relationship. Some registrants
interpreted the definition of suspicious
order found in DEA regulations to
extend no further than orders deemed
suspicious based on the size, pattern, or
frequency of the order or orders.
25
Reports were often filed with DEA Field
Division Offices, with no fixed format,
and often without a stated reason as to
why the order was considered
suspicious.
Other registrants filed suspicious
order reports, but then distributed
controlled substances pursuant to the
order anyway—failing to conduct due
diligence prior to distributing controlled
substances by, for example, keeping
sparse or inadequate records and due
diligence files, or by merely verifying
that their customer was a DEA
registrant.
As a consequence of failing to fulfill
their obligations regarding the
identification and reporting of
suspicious orders, some registrants were
required to pay large fines and enter
into Memorandums of Agreement
(MOAs) with DEA requiring, among
other things, that they report suspicious
orders electronically and centrally to
DEA Headquarters.
26
In sum, this was unsuccessful in
detecting and preventing diversion.
Suspicious orders ultimately rose to
national significance through various
cases. For example, one investigation
revealed that between 2007 and 2012,
wholesale distributors shipped 780
million hydrocodone and oxycodone
pills to West Virginia, and 1,728 West
Virginians fatally overdosed on these
two substances.
27
And in 2013, the
nation’s largest drug store chain entered
into the largest settlement in DEA
history, agreeing to pay $80 million in
civil fines for, among other things,
allegations that it failed to report
suspicious orders.
28
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Penalties Under the Controlled Substances Act,’’
June 11, 2013. https://www.dea.gov/press-releases/
2013/06/11/walgreens-agrees-pay-record-
settlement-80-million-civil-penalties-under.
29
For example, through its Distributor Initiative,
the DEA educated registrants on identification and
reporting of suspicious orders and on maintaining
effective controls against diversion. As part of the
Initiative, the DEA polled ARCOS data and met
with individual distributors to highlight various
indicia of suspicious orders for their consideration.
In addition, the DEA held industry conferences and
sent guidance letters to industry regarding
suspicious orders.
30
The CSA provides that it shall be unlawful for
any person . . . to refuse or negligently fail to
make, keep, or furnish any record, report,
notification, declaration, order or order form,
statement, invoice, or information required under
this subchapter or subchapter II of this chapter . . .
.’’ 21 U.S.C. 842(a)(5). The CSA also provides that
a violation of this section carries a civil penalty
which shall not exceed $10,000, but that ‘‘[i]f a
violation of this section is prosecuted by an
information or indictment which alleges that the
violation was committed knowingly and the trier of
fact specifically finds that the violation was so
committed, such person shall . . . be sentenced to
imprisonment of not more than one year or a fine
under Title 18, or both. 21 U.S.C. 842(c)(1)(B) and
842(c)(2)(A).In addition to the loss of registration
through administrative actions such as Orders to
Show Cause and Immediate Suspension Orders, the
DEA uses a wide array of diversion enforcement
tools to ensure its registrants are in compliance
with the CSA. These include civil penalties and
criminal charges. See, e.g., https://www.justice.gov/
usao-sdny/pr/manhattan-us-attorney-and-dea-
announce-charges-against-rochester-drug-co-
operative-and.
31
See Section IV.C titled ‘‘ARCOS Distributor
Tool,’’ below.
32
21 U.S.C. 871.
33
28 CFR 0.100 through 0.104.
34
Public Law 115–271.
35
The PDDA is comprised of Sections 3291 and
3292 of the SUPPORT Act.
36
SUPPORT Act, Section 3292. The registrant’s
notification requirement is codified at 21 U.S.C.
832(a)(3). The DEA’s requirement to establish a
centralized database is codified at 21 U.S.C. 832(b).
37
As noted above, the PDDA provisions are
similar to current DEA regulations with respect to
the system to identify suspicious orders for the
registrant.
38
SUPPORT Act, Section 3292, codified at 21
U.S.C. 802(57). The PDDA’s ‘‘may include, but is
not limited to’’ clause is an addition to existing law,
which currently provides that ‘‘[s]uspicious orders
include orders of unusual size, orders deviating
substantially from a normal pattern, and orders of
unusual frequency.’’ 21 CFR 1301.74(b).
39
See Section IV.D. titled ‘‘The Due Diligence
Requirement,’’ below.
40
The PDDA, Section 3292, as codified at 21
U.S.C. 832(a)(2), provides that ‘‘[e]ach registrant
shall . . . ensure that the system designed and
operated . . . by the registrant complies with
applicable Federal and State privacy laws . . . .‘‘
Over the years, DEA has taken steps
to address suspicious orders based on
its own initiative, based on registrant
requests that DEA further clarify their
obligations under the law and provide
registrants with the ability to see the
distributions a particular customer has
received from other distributors, and
based on the PDDA. DEA has provided
guidance, training, and individualized
meetings for the regulated industry,
29
and has utilized the various
enforcement tools available to it under
the CSA.
30
DEA has also proactively
leveraged the data that is available to it
through ARCOS, and has developed a
tool through ARCOS to assist
distributors in making their suspicious
order assessments (the ‘‘ARCOS
distributor tool’’).
31
In addition, DEA
has taken appropriate criminal, civil,
and administrative action against
distributors, pharmacies, and other
practitioners. By proposing this
regulation to implement the PDDA and
clarify the procedures a registrant must
follow in identifying and reporting
suspicious orders (and refusing to
distribute based on such orders), DEA is
taking the next step to address
suspicious orders and combat the opioid
epidemic.
III. Legal Authority for the Rule
A. Legal Authority for the Rule: The
CSA and Rulemaking Authority
The CSA and its implementing
regulations are designed to prevent,
detect, and eliminate the diversion of
controlled substances into the illicit
market while ensuring an adequate
supply is available for the legitimate
medical, scientific, research, and
industrial needs of the United States.
Controlled substances have the potential
for abuse and dependence and are
controlled to protect the public health
and safety. Through the enactment of
the CSA, Congress has established a
closed system of distribution by making
it unlawful to handle any controlled
substance except in a manner
authorized by the CSA. In order to
maintain this closed system of
distribution, the CSA imposes
registration requirements on handlers of
controlled substances.
The CSA also grants the Attorney
General authority to promulgate and
enforce any rules, regulations, and
procedures which he may deem
necessary and appropriate for the
efficient executions of his functions
under the CSA.
32
The Attorney General
delegated these authorities to the
Administrator of the DEA, who in turn
redelegated many of these authorities to
the Deputy Administrator of the DEA
and the Assistant Administrator of the
DEA Office of Diversion Control.
33
B. Legal Authority for the Rule:
Centralized Reporting Under the PDDA
On October 24, 2018, President
Trump signed into law the ‘‘Substance
Use-Disorder Prevention that Promotes
Opioid Recovery and Treatment for
Patients and Communities Act’’
(SUPPORT Act).
34
The PDDA was
contained within the SUPPORT Act.
35
The PDDA required DEA to establish a
centralized database for collecting
reports of suspicious orders not later
than one year from the date of the
PDDA’s enactment. Upon discovering a
suspicious order or series of orders, the
PDDA required registrants to notify the
DEA Administrator and Special Agent
in Charge of the Division Office of the
DEA for the area in which the registrant
is located or conducts business, but
provided that ‘‘[i]f a registrant reports a
suspicious order to the DEA centralized
database . . . the registrant shall be
considered to have complied with the
[notification] requirement . . . .’’
36
With these provisions, the PDDA
replaced DEA Field Division Office
reporting (reflected in current DEA
regulations at 21 CFR 1301.74(b)) with
centralized reporting to DEA
Headquarters.
C. Legal Authority for the Rule: Other
Provisions of the PDDA
In addition to centralized reporting of
suspicious orders, the PDDA required
each registrant to design and operate a
system to identify suspicious orders for
the registrant,
37
and to ensure that the
system complies with applicable
Federal and State privacy laws. The
PDDA also provided that the term
suspicious order ‘‘may include, but is
not limited to’’
38
size, pattern, and
frequency orders.
By its codification of the phrase ‘‘may
include, but is not limited to,’’ the
PDDA clarified that an order for
controlled substances can be deemed
suspicious for reasons other than size,
pattern, or frequency (including reasons
related to the characteristics of the
customer submitting the order).
39
Therefore, systems to identify
suspicious orders should be designed
and operated in light of the ultimate
goal of the suspicious order inquiry: to
provide DEA investigators in the field
with information regarding potential
illegal activity in an expeditious
manner. To this end, DEA is proposing
to amend its regulations to provide that
registrants should design privacy-law-
compliant systems
40
not only to
identify size, pattern, and frequency
orders, but also to identify suspicious
orders based on facts and circumstances
that may be relevant indicators of
diversion in determining whether a
person (or a person submitting an order)
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41
Proposed amended 1301.74(b)(1). See also
Section V.B. titled ‘‘Discussion of Regulatory
Changes,’’ below.
42
21 U.S.C. 823(b)(1) and (e)(1) (requiring the
Attorney General to consider ‘‘maintenance of
effective controls against diversion’’ in determining
whether to register an applicant to distribute
controlled substances); 21 CFR 1301.71(a) (‘‘[a]ll
applicants and registrants shall provide effective
controls and procedures to guard against theft and
diversion of controlled substances’’).
43
Bureau of Narcotics and Dangerous Drugs, DOJ,
‘‘Regulations Implementing the Comprehensive
Drug Abuse Prevention Control Act of 1970,’’
published in the Federal Register at 36 FR 7775,
7785 on April 24, 1971.
44
21 CFR 1301.74(b).
45
21 CFR 1301.74(b). As discussed above in
Section III.B titled ‘‘Legal Authority for the Rule:
Centralized Reporting Under the PDDA,’’ the PDDA
replaced DEA Field Division Office reporting with
centralized reporting to DEA Headquarters.
46
21 U.S.C. 827(d) (‘‘Every manufacturer
registered under section 823 of this title shall . . .
make periodic reports to the [DEA] of every sale,
delivery or other disposal by him of any controlled
substance, and each distributor shall make such
report with respect to narcotic controlled
substances, identifying by the registration number
assigned under this subchapter the person or
establishment (unless exempt from registration
under section 822(d) of this title) to whom such
sale, delivery, or other disposal was made.’’).
47
The DEA ARCOS regulations are found at 21
CFR 1304.33.
48
21 CFR 1304.33(c).
49
21 CFR 1304.33(b).
50
https://www.dea.gov/press-releases/2018/02/
14/dea-creates-new-resource-help-distributors-
avoid-oversupplying-opioids.
51
https://www.dea.gov/press-releases/2019/02/
26/dea-announces-enhanced-tool-registered-drug-
manufacturers-and.
52
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487 on July 3, 2007.
53
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36498 on July 3, 2007.
54
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36498 on July 3, 2007.
55
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36500 on July 3, 2007.
56
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36501–36502 on July 3, 2007.
57
Southwood Pharmaceuticals, Inc.; Revocation
of Registration, published in the Federal Register at
72 FR 36487, 36500 on July 3, 2007.
is engaged in, or is likely to engage in,
the diversion of controlled substances.
41
IV. Background Discussion
A. History of Applicable DEA
Regulations
Since the CSA became law in 1970,
all DEA registrants who distribute
controlled substances have had a duty
to maintain effective controls against
diversion of controlled substances into
other than legitimate medical, scientific,
and industrial channels.
42
In addition,
the first regulations implementing the
CSA in 1971 contained provisions
regarding suspicious orders of
controlled substances.
43
These
provisions, as currently codified in DEA
regulations, require that registrants
design and operate a system to disclose
to the registrant suspicious orders of
controlled substances, i.e., orders of
unusual size, orders deviating
substantially from a normal pattern, and
orders of unusual frequency.
44
It also
requires the registrant to ‘‘inform the
Field Division Office of the
Administration in his area of suspicious
orders when discovered by the
registrant.’’
45
B. History of ARCOS
In addition to the suspicious order
provisions, the CSA and DEA
regulations also require manufacturers
and distributors to report their
controlled substance transactions to
DEA.
46
DEA implements this
requirement through ARCOS.
47
ARCOS
is an automated, comprehensive drug
reporting system which monitors the
flow of controlled substances from their
point of manufacture through
commercial distribution channels to
point of sale or distribution at the
dispensing level through the use of
acquisition/distribution transaction
reports.
Included in the list of controlled
substance transactions tracked by
ARCOS are the following: All schedule
I and II materials (manufacturers and
distributors), schedule III narcotic and
gamma-hydroxybutyric acid (GHB)
materials (manufacturers and
distributors), and selected schedule III
and IV psychotropic drugs
(manufacturers only).
48
ARCOS
accumulates these transactions which
are then summarized into reports which
give investigators in Federal and State
government agencies information that
can then be used to identify the
diversion of controlled substances into
illicit channels of distribution. DEA
regulations require that ARCOS
acquisition/distribution reports be filed
every quarter, not later than the 15th
day of the month succeeding the quarter
for which it is submitted.
49
C. ARCOS Distributor Tool
Prior to the SUPPORT Act, the DEA
developed an ARCOS tool that allowed
registrants to obtain a count of the
number of registrants who had sold a
particular controlled substance to a
prospective customer in the last six
months.
50
On February 26, 2019, as part
of its implementation of the SUPPORT
Act, the DEA announced the launch of
an enhanced tool to help more than
1,500 registered drug manufacturers and
distributors in the U.S. more effectively
identify potential illicit drug
diversion.
51
The enhancement allows
DEA-registered manufacturers and
distributors to view and download the
number of distributors and the amount
(anonymized data in both grams and
dosage units) each distributor sold to a
prospective customer in the last
available six months of data.
D. The Due Diligence Requirement
1. Due Diligence and Southwood
In Southwood,
52
the registrant failed
repeatedly to comply with the effective
controls requirement, the system
requirement, and the reporting
requirement.
53
In Southwood, DEA
noted that Respondent’s due diligence
measures, which initially involved
nothing more than verifying license and
registration, were wholly deficient.
54
DEA stated that:
‘‘even after being advised by agency
officials that its internet pharmacy customers
were likely engaged in illegal activity,
Respondent failed miserably to conduct
adequate due diligence. Notwithstanding the
breadth of information provided during the
conference call, Respondent did not stop
selling to any of its internet pharmacy
customers while it investigated the
legitimacy of their business activities.’’
55
In addition, the DEA concluded that:
‘‘Respondent repeatedly violated federal
regulations by failing to report suspicious
orders . . . Respondent’s experience in
distributing controlled substances is
characterized by recurring distributions of
extraordinary quantities of controlled
substances to entities which then likely
diverted the drugs by filling prescriptions
which were unlawful. Moreover,
Respondent’s due diligence measures were
wholly inadequate to protect against the
diversion of the drugs. Respondent’s failure
to maintain effective controls against
diversion and its experience in distributing
controlled substances thus support the
conclusion that its continued registration
would be ‘inconsistent with the public
interest.’ ’’
56
In reaching these conclusions, DEA noted:
‘‘In short, the direct and foreseeable
consequence of the manner in which
Respondent conducted its due diligence
program was the likely diversion of millions
of dosage units of hydrocodone. Indeed, it is
especially appalling that notwithstanding the
information Respondent received from both
this agency and the pharmacies, it did not
immediately stop distributing hydrocodone
to any of the pharmacies.’’
57
2. Due Diligence and DEA I and II
In 2006 and 2007, DEA sent letters to
DEA registrants outlining their legal
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Letters from Joseph T. Rannazzisi, Deputy
Assistant Administrator, DEA Office of Diversion
Control to DEA Registrants, September 27, 2006
(‘‘DEA I’’) and December 20, 2007 (‘‘DEA II’’).
Whereas DEA I discussed the responsibility to
exercise due diligence to avoid filling suspicious
orders that might be diverted, DEA II reiterated the
responsibility to inform the DEA of suspicious
orders.
59
DEA I, pg. 1.
60
DEA I, pg. 1.
61
DEA I, pg. 2.
62
DEA I, pg. 2.
63
DEA I, pg. 2.
64
DEA I, pg. 2.
65
DEA I, pg. 2.
66
DEA II, pg. 1.
67
DEA II, pg. 1.
68
DEA II, pg. 1.
69
DEA II, pg. 2.
70
The Masters case is comprised of a decision by
the United States Court of Appeals for the District
of Columbia Circuit Decision and a DEA Decision
and Order. See Masters Pharmaceuticals, Inc. v.
DEA, 861 F.3d 206 (D.C. Cir. 2017) and Masters
Pharmaceuticals, Inc.; Decision and Order,
published in the Federal Register at 80 FR 55418
on September 15, 2015.
71
Masters Pharmaceuticals, Inc. v. DEA, 861 F.3d
206, 213–214 (D.C. Cir. 2017).
72
In Masters, the registrant’s system provided
that held orders ‘‘be subject to additional due
diligence.’’ Masters Pharmaceuticals, Inc.; Decision
and Order, published in the Federal Register at 80
FR 55418, 55427 on September 15, 2015.
73
Masters Pharmaceuticals, Inc.; Decision and
Order, published in the Federal Register at 80 FR
55418, 55420 on September 15, 2015.
74
Masters Pharmaceuticals, Inc.; Decision and
Order, published in the Federal Register at 80 FR
55418, 55478 on September 15, 2015.
75
Masters Pharmaceuticals, Inc. v. DEA, 861 F.3d
206, 212–213 (D.C. Cir. 2017).
76
Masters Pharmaceuticals, Inc. v. DEA, 861 F.3d
206, 222 (D.C. Cir. 2017).
77
Masters Pharmaceuticals, Inc. v. DEA, 861 F.3d
206, 220 (D.C. Cir. 2017).
obligations to report suspicious orders
and conduct due diligence.
58
These
letters emphasized that, as a condition
of maintaining their registration, all
legitimate handlers of controlled
substances must take reasonable steps to
ensure that their registration is not being
utilized as a source of diversion.
59
If the
closed system is to function properly,
registrants must be vigilant in deciding
whether a prospective customer can be
trusted to deliver controlled substances
only for lawful purposes.
60
The
requirement to report suspicious orders
is in addition to, and not in lieu of, the
general requirement to maintain
effective controls against diversion.
61
Thus, in addition to reporting all
suspicious orders, a distributor has a
statutory responsibility to exercise due
diligence to avoid filling suspicious
orders that might be diverted into other
than legitimate medical, scientific, and
industrial channels.
62
Failure to
exercise such due diligence could, as
circumstances warrant, provide a
statutory basis for revocation or
suspension of a distributor’s
registration.
63
In a similar vein, given
the requirement that a registrant
maintain effective controls against
diversion, a distributor may not simply
rely on the fact that the person placing
the suspicious order is a DEA registrant
and turn a blind eye to the suspicious
circumstances.
64
To maintain effective
controls against diversion, the registrant
should exercise due care in confirming
the legitimacy of all orders prior to
filling.
65
In addition, registrants’ responsibility
does not end merely with the filing of
a suspicious order report.
66
Registrants
must conduct an independent analysis
of suspicious orders prior to completing
a sale to determine whether the
controlled substances are likely to be
diverted from legitimate channels.
67
Reporting an order as suspicious will
not absolve the registrant of
responsibility if the registrant knew, or
should have known, that the controlled
substances were being diverted.
68
Registrants that routinely report
suspicious orders, yet fill these orders
without first determining that order is
not being diverted, may be failing to
maintain effective controls against
diversion; and failure to maintain
effective controls against diversion is
inconsistent with the public interest as
that term is used in the CSA and may
result in the revocation of the
registrant’s DEA Certificate of
Registration.
69
3. Due Diligence and Masters
The Masters case,
70
which involved
due diligence within the context of a
two-part system that the registrant failed
to properly operate, illustrates how the
due diligence requirement is relevant to
both the reporting and shipping
requirement. In Masters, the registrant
created a system consisting of a
computer program and a compliance
protocol. The computer program was
designed to identify and hold any order
that met or exceeded the criteria for
suspicious orders set out in DEA
regulations. Once an order was held, the
registrant’s staff would implement the
compliance protocol, which required an
investigation of the order to determine
whether it was legitimate. After this
investigation, the staff could deem the
order non-suspicious and ship it, or
treat the order as suspicious, report it to
the DEA, and decline to fill the order.
71
However, despite having designed its
system to require additional due
diligence into ‘‘held’’ orders,
72
the
registrant failed to actually conduct the
additional due diligence.
In the Masters Decision and Order,
the DEA stated that ‘‘upon investigating
an order, a distributor may determine
that an order is not suspicious . . . .’’
73
The DEA further explained:
‘‘[W]hile . . . a distributor’s investigation
of the order (coupled with its previous due
diligence efforts) may properly lead it to
conclude that the order is not suspicious, the
investigation must dispel all red flags
indicative that a customer is engaged in
diversion to render the order non-suspicious
and exempt it from the requirement that the
distributor ‘inform’ the Agency about the
order. Put another way, if even after
investigating the order, there is any
remaining basis to suspect that a customer is
engaged in diversion, the order must be
deemed suspicious and the Agency must be
informed.’’
74
On appeal in Masters, the United
States Court of Appeals for the District
of Columbia Circuit (the Masters Court)
stated:
‘‘[o]nce a distributor has reported a
suspicious order, it must make one of two
choices: decline to ship the order, or conduct
some ‘due diligence’ and—if it is able to
determine that the order is not likely to be
diverted into illegitimate channels—ship the
order . . . .’’
75
The Masters Court also added:
‘‘it is not necessary for a distributor of
controlled substances to investigate
suspicious orders if it reports them to DEA
and declines to fill them. But if a distributor
chooses to shoulder the burden of dispelling
suspicion in the hopes of shipping any it
finds to be non-suspicious, and the
distributor uses something like the
[Suspicious Order Monitoring Program]
Protocol to guide its efforts, then the
distributor must actually undertake the
investigation.’’
76
Finally, the Masters Court rooted due
diligence in the reporting requirement,
as something that a registrant would
perform as part of its duty to report
suspicious orders:
‘‘In Masters’ view, the Administrator
amended two notice-and-comment rules in
adjudicating this case: [the regulation
defining suspicious orders and the regulation
defining effective controls against the
diversion of controlled substances]. We need
not opine on DEA’s statutory authority to use
an adjudication to modify a rule enacted
through notice and comment because the
Administrator neither created not imposed
any new duties. He relied on the existing
Reporting Requirement.’’
77
V. Need for Regulatory Changes and
Discussion of Regulatory Changes
A. Need for Regulatory Changes
A change to existing DEA regulations
regarding suspicious orders is necessary
in order to implement the provisions of
the PDDA, and to clarify registrant
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See Section II titled ‘‘Suspicious Orders and the
Opioid Epidemic,’’ above.
79
The existing regulations to be amended at 21
CFR 1300.01 are titled ‘‘Definitions relating to
controlled substances’’ and at 21 CFR 1301.74 are
titled ‘‘Other security controls for non-practitioners;
narcotic treatment programs and compounders for
narcotic treatment programs.’’ In addition to
amending the text of 21 CFR 1301.74, the DEA is
amending the title of 21 CFR 1301.74 to clarify that
it applies to ‘‘non-practitioners and practitioners for
orders received under suspicious circumstances.’’
The new regulations at 21 CFR 1301.78 are titled
‘‘Procedures for identifying and reporting
suspicious orders of controlled substances.’’
80
Proposed new 21 CFR 1301.78(a)(1) and
(a)(2)(ii).
81
Proposed amended 21 CFR 1300.01(b).
82
Proposed amended 21 CFR 1301.74(b).
83
Proposed amended title to 21 CFR 1301.74 and
proposed amended 21 CFR 1301.74(b).
84
Proposed amended 21 CFR 1300.01(b).
85
Proposed amended 21 CFR 1301.74(b) and
proposed new 21 CFR 1301.78.
86
Proposed amended 21 CFR 1301.74(b).
87
Proposed new 21 CFR 1301.78(a)(1).
88
Proposed new 21 CFR 1301.78(a)(2).
89
Proposed new 21 CFR 1301.78(a)(2)(i).
90
Proposed new 21 CFR 1301.78(a)(2)(ii).
91
Proposed new 21 CFR 1301.78(b).
92
Proposed new 21 CFR 1301.78(c).
93
Proposed new 21 CFR 1301.78(b).
94
Sec. 3292.
95
See 21 U.S.C. 802(11) (‘‘[t]he term ‘distribute’
means to deliver (other than by administering or
dispensing) a controlled substance’’), 21 U.S.C.
823(b)(1) and (e)(1) (requiring the Attorney General
to consider ‘‘maintenance of effective controls
obligations under the CSA in light of the
issues discussed above.
78
B. Discussion of Regulatory Changes
1. Implementation of the PDDA
The DEA’s implementation of the
PDDA will involve amending existing
DEA regulations in two sections (21 CFR
1300.01 and 21 CFR 1301.74), and
adding a new section to DEA regulations
at 21 CFR 1301.78.
79
Specifically, the
DEA will implement the PDDA by: (1)
Establishing a DEA centralized database
for collecting reports of suspicious
orders; (2) amending DEA regulations to
require that all reports of suspicious
orders be submitted through the DEA
centralized database;
80
(3) incorporating
the PDDA’s definition of ‘‘suspicious
order’’ into DEA regulations;
81
and (4)
incorporating the PDDA’s requirement
that registrants design and operate
privacy-law-compliant suspicious order
system into DEA regulations.
82
2. Clarification of Registrant Procedures
Regarding Suspicious Orders
In addition to implementing the
PDDA, DEA is proposing to amend its
regulations to provide registrants with
additional clarity regarding the
procedures that must be followed upon
receiving an order under suspicious
circumstances by: (1) Clarifying the
scope of the rule (as discussed below);
83
(2) adding definitions of ‘‘order,’’ ‘‘order
received under suspicious
circumstances,’’ and ‘‘due diligence’’ to
DEA regulations;
84
and (3) amending
DEA regulations to include procedures
for identifying and reporting suspicious
orders of controlled substances
85
consistent with the due diligence
requirement articulated in the Masters
and Southwood decisions. The
proposed definition of ‘‘order’’ is
intended to reflect existing business
practices. The proposed definition of
‘‘order received under suspicious
circumstances’’ is intended to capture
any circumstances that might be
indicative of diversion, including but
not limited to orders ‘‘blocked,’’
‘‘flagged,’’ ‘‘held,’’ or ‘‘pended’’ by a
system designed and operated by a
registrant to identify suspicious orders.
In addition, DEA is proposing to amend
its regulations to clarify that the system
to identify suspicious orders shall be
designed and operated by the registrant
to identify suspicious orders based on
facts and circumstances that may be
relevant indicators of diversion in
determining whether a person (or a
person submitting an order) is engaged
in, or is likely to engage in, the
diversion of controlled substances.
86
3. Procedures for Identifying and
Reporting Suspicious Orders of
Controlled Substances
Building on the due diligence
requirement discussed in Southwood
and the two-part system discussed in
Masters, DEA is amending its
regulations to provide that, upon receipt
of an ORUSC, registrants shall proceed
under the following two-option
framework: Either (1) immediately file a
suspicious order report through the DEA
centralized database, decline to
distribute pursuant to the suspicious
order, and maintain a record of the
suspicious order and any due diligence
related to the suspicious order,
87
or (2)
before distributing pursuant to the
order, conduct due diligence to
investigate each suspicious
circumstance surrounding the ORUSC,
and maintain a record of its due
diligence regarding the ORUSC.
88
If, through its due diligence, the
registrant is able to dispel each
suspicious circumstance surrounding
the ORUSC within seven calendar days
after receipt of the order, it is not a
suspicious order; after that
determination is made, the registrant
may then distribute pursuant to the
order, and the order need not be
reported to DEA as a suspicious order,
but the registrant must maintain a
record of its due diligence.
89
However,
if the registrant is unable, through its
due diligence, to dispel each suspicious
circumstance surrounding the ORUSC
within seven calendar days after
receiving the order, it is a suspicious
order. The registrant must file a
suspicious order report through the DEA
centralized database and maintain a
record of its due diligence.
90
All suspicious order reports must be
made to the DEA centralized database
and contain certain required
information,
91
and all records of
suspicious orders and ORUSCs must be
prepared and maintained in accordance
with DEA regulations, and must contain
certain required information.
92
Regarding recordkeeping, the proposed
rule would require more than just a
‘‘check-the-box’’ type of documentation.
For example, new proposed § 1301.78(d)
requires that the record include ‘‘how
the registrant handled such orders,’’
‘‘[w]hat information and circumstances
rendered the order actually or
potentially suspicious,’’ [w]hat steps, if
any, the registrant took to investigate the
order,’’ and ‘‘[i]f the registrant
investigated the order, what information
it obtained during its investigation, and
where the registrant concludes that each
suspicious circumstance has been
dispelled, the specific basis for each
such conclusion . . . .’’
Upon notification from DEA that a
suspicious order report or reports
contain inaccurate or incomplete
information, the registrant shall have
seven calendar days to correct the
inaccurate or incomplete information.
93
DEA believes that seven calendar days
to conduct due diligence is consistent
with the Masters and Southwood
decisions, and with the PDDA’s
mandate that a registrant notify DEA
‘‘upon discovering’’
94
a suspicious
order. The seven calendar day
timeframe strikes an appropriate
balance between giving registrants
sufficient time to act and also allowing
DEA to promptly investigate potential
diversion, while also recognizing that
discovering a suspicious order
sometimes involves a process of
dispelling suspicious circumstances,
and that any ORUSC that cannot be
dispelled within seven days is a
suspicious order (assuming that the
system to identify suspicious orders for
the registrant is properly designed and
operated).
4. Scope of the Rule
Because the requirements related to
suspicious orders are based on the CSA
definition of ‘‘distribute,’’
95
this
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against diversion’’ in determining whether to
register an applicant to distribute controlled
substances) and 21 CFR 1301.74(a) (‘‘[b]efore
distributing a controlled substance’’ a registrant
shall make a good faith inquiry to determine that
their customer is registered to possess the
controlled substance) (emphasis added).
96
See 21 CFR 1304.25(a)(7) (requiring persons
registered or authorized to compound narcotic
drugs for off-site use in a narcotic treatment
program to maintain records of the quantity
distributed in bulk form to other programs)
(emphasis added).
97
21 CFR 1307.11(a)(1)(iv).
98
21 CFR 1301.13(e)(1)(i) and (viii).
99
21 U.S.C. 802(21) (‘‘[t]he term ‘practitioner’
means a physician, dentist, veterinarian, scientific
investigator, pharmacy, hospital, or other person
licensed, registered, or otherwise permitted, by the
United States or the jurisdiction in which he
practices or does research, to distribute, dispense,
conduct research with respect to, administer, or use
in teaching or chemical analysis, a controlled
substance in the course of professional practice or
research’’). As discussed below, the specific
practitioners affected by this rule are pharmacies,
hospital/clinics teaching institutions, practitioners,
mid-level practitioners (MLPs), MLP-ambulance
service, researchers, and analytical labs.
100
See 21 CFR 1300.01(b) (defining ‘‘Reverse
distribute’’ and ‘‘Reverse distributor’’).
101
See 21 U.S.C. 802(2) (defining ‘‘administer’’),
21 U.S.C. 802(10) (defining ‘‘dispense’’), and 21
U.S.C. 802(11) (defining ‘‘distribute’’). Compare 21
U.S.C. 802(11) (defining distribute as ‘‘to deliver [a
controlled substance] (other than by administering
or dispensing) . . . .’’) with 21 U.S.C. 802(10)
(defining dispense as ‘‘to deliver a controlled
substance to an ultimate user or research subject by,
or pursuant to the lawful order of, a practitioner,
including the prescribing and administering of a
controlled substance . . . .’’).
102
Although, in this example, the pharmacy
would not have a duty to report a suspicious order,
this scenario would nevertheless be relevant to the
pharmacist’s ‘‘corresponding responsibility.’’ See 21
CFR 1306.04(a) (‘‘[t]he responsibility for the proper
prescribing and dispensing of controlled substances
is upon the prescribing practitioner, but a
corresponding responsibility rests with the
pharmacist who fills the prescription’’).
103
Executive Order 12866, Sec. 3(f)(1).
104
Executive Order 12866, Sec. 3(f)(2)–(4).
105
Executive Order 13771, Sec. 2(a).
106
Executive Order 13771, Sec. 2(c).
107
Executive Office of the President, Office of
Management and Budget, M–17–21, April 5, 2017.
https://www.whitehouse.gov/sites/whitehouse.gov/
files/omb/memoranda/2017/M-17-21-OMB.pdf, pg.
3.
108
Executive Office of the President, Office of
Management and Budget, M–17–21, April 5, 2017.
https://www.whitehouse.gov/sites/whitehouse.gov/
files/omb/memoranda/2017/M-17-21-OMB.pdf, pg.
4.
proposed rule applies to registrants
authorized to distribute controlled
substances either directly (under the
registrant’s business activity), indirectly
(as a coincident activity to the business
activity), under the five percent rule, or
as a treatment program compounding
narcotics for treatment programs and
other locations.
96
The five percent rule
permits a practitioner dispenser, under
certain circumstances, to distribute
controlled substances to another
practitioner without having to obtain a
separate DEA registration as a
distributor a practitioner who is
registered to dispense a controlled
substance may distribute (without being
registered to distribute) a quantity of
such substance to another practitioner
for the purpose of general dispensing by
the practitioner to patients, provided
inter alia that the total number of dosage
units of all controlled substances
distributed by the practitioner during
each calendar year 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.
97
Therefore, this proposed rule applies
not only to persons who are registered
with DEA under the business activity of
distributor, but also to manufacturers
and importers (who are permitted to
distribute controlled substances as a
coincident activity to their manufacturer
or importer registration),
98
practitioners,
99
(who are permitted to
distribute controlled substances
pursuant to the five percent rule
without obtaining a separate registration
as a distributor), and Narcotic Treatment
Programs (NTPs) distributing in
controlled substances in bulk form to
other NTPs. These registrants are
authorized to distribute controlled
substances after receiving an order from
another DEA registrant.
However, the rule does not apply to
reverse distributors, who are authorized
by their registration to acquire
controlled substances for the purpose of
return or destruction
100
after receiving
an order from another DEA registrant. In
addition, because the CSA distinguishes
the terms ‘‘dispense’’ and ‘‘administer’’
from the term ‘‘distribute,’’
101
the rule
does not apply to controlled substances
dispensed or administered within the
normal course of professional practice
of a practitioner, to include
prescriptions filled by a pharmacy.
Therefore, pursuant to the five percent
rule, a pharmacy will have to report
suspicious orders for distributions of
controlled substances, but would not,
for example, have to report as a
suspicious order, suspicious requests by
a patient to have a controlled substance
prescription filled.
102
VI. Impact of Regulatory Changes and
Regulatory Analysis
A. Executive Orders 12866 (Regulatory
Planning and Review), 13563
(Improving Regulation and Regulatory
Review), and 13771 (Reducing
Regulation and Controlling Regulatory
Costs)
1. Introduction
E.O. 12866 directs agencies to assess
all costs and benefits of available
regulatory alternatives, and, when
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, public health and safety, and
environmental advantages, as well as
distributive impacts and equity). E.O.
13563 is supplemental to and reaffirms
the principles, structures, and
definitions governing regulatory review
as established in E.O. 12866.
Under E.O. 12866, significant
regulatory actions require review by
OMB. Significant regulatory actions can
be either economically significant or
non-economically significant. An
economically significant regulatory
action is any regulatory action that is
likely to result in a rule that may have
an annual effect on the economy of $100
million or more, or adversely affect in
a material way the economy, a sector of
the economy, productivity, competition,
jobs, environment, public health or
safety, or State, local, or tribal
governments or communities.
103
A non-
economically significant regulatory
action is any regulatory action that is
likely to result in a rule that may create
a serious inconsistency or otherwise
interfere with an action taken or
planned by another agency, may
materially alter the budgetary impact of
entitlements, grants, user fees, or loan
programs or the rights and obligations of
recipients thereof, or may raise novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in E.O 12866.
104
E.O. 13771 requires an agency, unless
prohibited by law, to identify at least
two existing regulations to be repealed
when the agency publicly proposes for
notice and comment or otherwise
promulgates a new regulation.
105
In
furtherance of this requirement, E.O.
13771 requires that the new incremental
costs associated with new regulations,
to the extent permitted by law, be offset
by the elimination of existing costs
associated with at least two prior
regulations.
106
According to OMB
guidance implementing E.O. 13771, the
requirements of E.O. 13771 only apply
to each new E.O. 12866 ‘‘significant
regulatory action . . . that has been
finalized and that imposes total costs
greater than zero.’’
107
Furthermore, an
action that has been finalized and has
total costs less than zero is an
‘‘Executive Order 13771 deregulatory
action.’’
108
DEA has analyzed the economic
impact of each provision of this rule
and, for the reasons discussed in detail
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A suspicious orders central database has been
in operation since prior to 2014 to allow certain
registrants to report electronically pursuant to an
MOA. The number of suspicious order reports
steadily decreased from 447,140 in 2014 to 102,434
in 2018 due to the decrease in number of registrants
under an MOA. Despite this decrease, the DEA uses
an average (rather than projecting a trend) of
338,840 because the decrease is a result of fewer
registrants reporting, not decreasing number of
reported suspicious orders. Since the DEA does not
have much data beyond what was reported to the
central database, it decided to use the data as-is.
The average number of suspicious orders reported
to the field is based on a poll of field offices
conducted in 2017.
below, estimates this rule will have a
cost savings of approximately $2.9
million. Additionally, DEA does not
anticipate that this rulemaking will have
an annual effect on the economy of $100
million or more or adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
governments or communities. OIRA has
determined that this rulemaking is a
significant regulatory action within the
meaning of E.O. 12866. DEA has,
therefore, submitted this rule for review
by OMB.
Because this rule is estimated to have
total costs less than zero, it is expected
to be an E.O. 13771 deregulatory action.
2. Four Key Areas of Change
There are four key areas of regulatory
change in this rule: (1) Definitions of
new terms, (2) explicit inclusion of
registrants, other than reverse
distributors, who are authorized to
distribute, (3) procedures for identifying
and reporting suspicious orders, and (4)
reporting and recordkeeping
requirements.
With the exception of reverse
distributors, this rule affects all
registrants who are authorized to
distribute controlled substances:
Distributors, manufacturers, importers,
pharmacies, hospital/clinics teaching
institutions, practitioners, mid-level
practitioners (MLPs), MLP-Ambulance
Service, Researchers, Analytical Labs,
and NTPs. As of May 6, 2019, there
were 1,731 registrations authorizing the
distribution of controlled substances,
either directly (under the registrant’s
business activity) (873 distributor), or
indirectly as a coincident activity to the
business activity (586 manufacturer and
272 importer). Additionally, based on a
sampling of DEA Forms 222 received at
DEA Field Division Offices pursuant to
21 CFR 1305.13(d), DEA estimates that
there are approximately 15,974
practitioners and NTPs who distribute
controlled substances under the five
percent rule or as a treatment program
compounding narcotics for treatment
programs and other locations.
a. Definition of Terms
The rule will incorporate the PDDA’s
definition of ‘‘suspicious order’’ into
DEA regulations. Furthermore, to
provide clarity, the rule also adds
definitions of three additional terms:
‘‘order,’’ ‘‘order received under
suspicious circumstances,’’ and ‘‘due
diligence.’’ The PDDA definition of
‘‘suspicious order’’ parallels the long-
standing definition of ‘‘suspicious
orders’’ in DEA regulations, and does
not expand or contract the current
understanding of what are suspicious
orders.
The definition of ‘‘order’’ clarifies and
codifies the meaning in the context of
suspicious orders. The DEA believes
that this is consistent with the current
understanding of the term order and
anticipates this definition will not cause
a change in the number of suspicious
orders or change in registrant business
activities. Therefore, DEA believes
defining order in DEA regulations will
have no economic impact on affected
registrants.
The rule also includes definitions of
‘‘order received under suspicious
circumstances’’ and ‘‘due diligence.’’
These definitions are intended to
provide clarity in describing the
procedures for identifying and reporting
suspicious orders. DEA does not
anticipate an increase or decrease in the
number of suspicious orders reported as
a direct result of the new definitions.
Therefore, DEA estimates this definition
will have no economic impact.
b. Explicit Inclusion of Registrants,
Other Than Reverse Distributors, Who
Are Authorized To Distribute
The rule amends DEA regulations to
clarify that, in addition to entities that
hold registration as distributors, the
requirement to design and operate a
system to identify suspicious orders of
controlled substances for the registrant
that complies with applicable Federal
and State privacy laws shall also apply
to practitioners when such distributions
are made pursuant to the five percent
rule.
This is a clarification of currently
existing requirements. As all registrants
are required to maintain effective
controls against diversion of controlled
substances, the DEA believes all
practitioners who distribute pursuant to
the provisions of the five percent rule
already understand the requirement to
‘‘design and operate a system’’ also
applies to them as well. A ‘‘system’’ in
this context is a combination of people,
process, and tools (such as an
information system). Some registrants
may rely more on information systems
while other may rely more on manual
processes. Regardless of whether the
system is automated or manual, DEA
believes the pharmacies and other
practitioners who distribute pursuant to
the five percent rule currently
understand and operate such a system.
Therefore, this proposed explicit
inclusion of pharmacies and other
practitioners in 21 CFR 1301.74(b) is
estimated to result in no cost to affected
registrants.
c. Procedures for Identifying and
Reporting Suspicious Orders of
Controlled Substances
The two-option framework for
identifying suspicious orders is a
codification of existing practices, and
therefore, there is no added cost
associated with the proposed suspicious
order determination process. Masters
and Southwood interpreted the
suspicious order provisions by
articulating that, upon receiving a
suspicious order, a registrant has a duty
to conduct due diligence before
distributing pursuant to the order. DEA
believes nearly all affected registrants
explicitly or implicitly utilize the two-
option framework. All suspicious order
reports must be made to the DEA
centralized database and contain certain
required information, and all records of
suspicious orders and ORUSCs must be
prepared and maintained in accordance
with DEA regulations, and must contain
certain required information. Moreover,
DEA estimates there is time and cost
savings resulting from using the ARCOS
Distributor Tool while conducting due
diligence.
Between 2014 and 2018, there were
an average of 338,840 suspicious order
reports per year. This figure includes an
estimated average of 308,540 suspicious
orders per year reported to the central
database and an estimated average of
30,300 orders per year reported to field
offices.
109
While the two-option
framework has been in practice for a
long time, DEA believes the reporting of
suspicious orders versus reporting of
ORUSCs has the potential to be more
consistent. DEA believes, under current
regulations, registrants make suspicious
order reports for all ORUSCs, regardless
of whether due diligence was conducted
and suspicions were dispelled.
Under the proposed rule, the DEA
estimates all reported average of 338,840
suspicious orders per year are ORUSCs.
Based on general understanding of
registrant operations and informal
anecdotal discussions with registrants,
DEA assumes for the purposes of this
analysis that of the 338,840 suspicious
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304,956 × 10 × (1/60) = 50,826.
111
The DEA utilizes the wage rate for
‘‘Compliance Officer’’ (SOC 13–1041, 2018
Standard Occupational Classification, https://
www.bls.gov/soc/2018/major_groups.htm), in the
‘‘Merchant Wholesalers, Nondurable Goods (4242
and 4246 only)’’ industry. The mean hourly wage
for that position and industry according to the May
2018 National Occupational Employment and Wage
Estimates United States (https://www.bls.gov/oes/
current/oes_nat.htm) is $36.76. Based on the BLS
report, ‘‘Employer Costs for Employee
Compensation—March 2019,’’ (ECEC) (https://
www.bls.gov/news.release/pdf/ecec.pdf) an
additional 42.7% load (for ‘‘private industry’’) is
added to the wage rate to account for benefits.
$36.76 × 1.427 = $52.46.
112
In addition to cost savings resulting from the
use of the ARCOS Distributor Tool in conducting
due diligence of an ORUSC, DEA anticipates there
will be a cost savings to registrants from using the
ARCOS Distributor Tool during a manufacturer or
distributor’s ‘‘on-boarding’’ process for accepting a
new customer. While the ARCOS Distributor Tool
is expected to save manufacturers and distributors
time and cost associated with due diligence
conducted during the evaluation of a prospective
customer, each registrant is expected to have its
own proprietary process for the evaluation and DEA
does not have a strong basis to quantify the cost
savings.
113
21 CFR 1301.74(b).
114
An estimated 81% of households in U.S.
households had a broadband internet subscription
in 2016. Camille Ryan, U.S. Census Bureau,
Computer and Internet Use in the United States:
2016, Issued August 2018.
orders that would be classified as
ORUSC under the proposed rule, 10
percent (33,884) would fall under
option 1, immediately deemed
suspicious and reported as ‘‘suspicious
orders.’’ Accordingly, the registrant
would conduct due diligence on the
remaining 90 percent (304,956), with
the suspicion dispelled and order filled
for 80 percent (271,072), and suspicion
not dispelled and order rejected for the
remaining 10 percent (33,884). In
summary, DEA assumes that 20 percent
of ORUCSs would be reported as
suspicious orders and rejected, while
the suspicion would be dispelled and
order filled for 80 percent. DEA believes
many orders previously (and currently)
reported as ‘‘suspicious orders’’ to the
central database were eventually filled
after conducting due diligence and
dispelling suspicion.
DEA estimates many registrants will
use the ARCOS Distributor Tool in
conducting due diligence. Estimated
time savings is zero for those registrants
who do not use the tool and
approximately 30 minutes for those
registrants using the tool to conduct due
diligence. DEA does not have a strong
basis to estimate the number of
registrants who use the ARCOS
Distributor Tool for conducting due
diligence, but conservatively estimates
the use of the tool will save registrants,
on average, 10 minutes each time due
diligence is conducted. Therefore, DEA
estimates using the ARCOS Distributor
Tool will save a total of 50,826 hours
per year
110
while conducting due
diligence. Based on a loaded hourly rate
of $52.46 for a ‘‘compliance officer,’’
111
DEA estimates the cost savings (negative
cost) from using the ARCOS Distributor
Tool while conducting due diligence is
approximately $2,666,000 (50,826 ×
$52.46, rounded). As indicated above,
DEA does not have a strong basis to
estimate the number of times due
diligence is conducted and how much
time the ARCOS Distributor Tool saves
per each time due diligence is
conducted.
112
DEA welcomes any
comments related to this estimate.
d. Reporting and Recordkeeping
Requirements
The rule contains new requirements
that specify the reporting method, time
limit for reporting, recordkeeping, and
contents of the record. The rule
requires, regardless of whether the
suspicious order determination resulted
from option 1 or option 2, a suspicious
order report be submitted no later than
seven calendar days after the order was
received. The rule also requires
suspicious order reports be made to the
DEA centralized database. The report
must include:
(1) The DEA registration number of
the registrant placing the order for
controlled substances;
(2) The date the order was received;
(3) The DEA registration number of
the registrant reporting the suspicious
order;
(4) The National Drug Code number,
unit, dosage strength, and quantity of
the controlled substances ordered;
(5) The order form number for
schedule I and schedule II controlled
substances;
(6) The unique transaction
identification number for the suspicious
order; and
(7) What information and
circumstances rendered the order
actually suspicious.
The seven calendar day reporting
timeframe and the reporting of specific
information to the DEA centralized
database provide standardization and
consistency for reporting suspicious
orders. First, the seven calendar day
time limit on reporting suspicious
orders is estimated to impose minimal
additional cost. DEA believes the
requirement to report suspicious orders
within seven calendar days of receiving
the order is a reasonable balance
between registrant operational demands,
and prompt action that can lead to
investigative leads. The current
requirement is to report suspicious
orders ‘‘when discovered’’ by the
registrant.’’
113
DEA believes the vast
majority of suspicious orders are already
reported within the seven calendar day
period. Therefore, DEA estimates any
cost associated with the seven calendar
day time requirement is minimal.
Second, reporting to the DEA
centralized database is estimated to
impose no additional burden. Based on
DEA’s registration data, nearly 99
percent of applications for registration
or renewal of registration in the
previous 12 months (May 2018 to April
2019) were made online. Furthermore,
although the email address is an
optional data field, nearly all
registrations have an email address on
record. Based on these facts and the
high rate of internet use in the general
U.S. population,
114
it is reasonable to
estimate virtually all affected registrants
have information systems capable of
completing, submitting, and retaining
electronic suspicious order reports at
minimal additional cost. DEA
acknowledges that is possible for an
affected registrant not to have
broadband internet access, especially in
rural areas. DEA welcomes any
comments regarding cost of obtaining
broadband access or the cost of
complying with the proposed
regulations without onsite broadband
internet access. No special software or
equipment will be required to access
and make reports to the DEA centralized
database. Also, the DEA centralized
database interface is very similar to
ARCOS which a majority of
manufacturers and distributors already
use. Thus, a manufacturer or distributor
familiar with ARCOS would require
minimal learning when initially using
the DEA centralized database.
Additionally, the proposed content of
suspicious order reports is a
codification of content expected of
current suspicious order reports or
content subsequently requested by DEA
if not provided in a suspicious order
report. Furthermore, DEA estimates, for
the estimated 30,300 suspicious order
reports currently reported to the field
offices, there will be an average time
savings of ten minutes per report. The
centralized database programmatically
requires the required information in a
suspicious order report. Currently,
when a suspicious order report is
received in the field office, it often lacks
needed information. In such instances,
the reporting registrant is highly likely
to receive a call-back or an on-site
interview from the field office, requiring
more of the registrant’s time to respond
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Similar to the discussion above, a total of 20%
of ORUSCs are suspicious orders that require
reporting to the DEA. The remaining 80% of
ORUSCs are estimated to have suspicion dispelled.
116
30,300 × 10 × (1/60) = 50,826.
117
See Footnote 78, above.
118
Proposed new 21 CFR 1301.78(c).
119
5 U.S.C. 601–612.
to DEA’s inquiries. Additionally, the
reduction in the number of ORUSC
reported as suspicious order is expected
to contribute to this decrease.
115
Therefore, DEA estimates reporting to
the centralized database will save a total
of 5,050 hours per year.
116
Based on a
loaded hourly rate of $52.46 for a
‘‘compliance officer,’’
117
DEA estimates
the cost savings (negative cost) from
using the centralized database is
approximately $265,000 (5,050 × $52.46,
rounded). DEA does not have a strong
basis to estimate the time savings per a
suspicious order report currently
received in the field. DEA welcome any
comments related to this estimate.
Additionally, the rule requires
registrants to maintain a record of every
suspicious order and every ORUSC, and
how the registrant handled such
orders.
118
The record must be prepared
no later than seven calendar days after
the suspicious order or ORUSC was
received and must include the following
information:
(1) What information and
circumstances rendered the order
actually or potentially suspicious;
(2) What steps, if any, the registrant
took to conduct due diligence;
(3) If the registrant conducted due
diligence, what information it obtained
during its investigation, and where the
registrant concludes that each
suspicious circumstance has been
dispelled, the specific basis for each
such conclusion; and
(4) Whether or not the registrant
distributed controlled substances
pursuant to the order.
DEA believes registrants already
maintain all records documenting each
suspicious order and ORUSC. DEA
believes these records, in form of
notations made in their internal order
management systems, are maintained
for at least two years as part of their
ordinary business operations, even if the
registrants are able to dispel the
suspicious circumstances. DEA
estimates the number of ORUSC will not
increase as a result of the rule and
remain at current levels. DEA estimates
any additional costs associated with the
recordkeeping requirements are
minimal.
3. Summary of Costs
DEA has analyzed the economic
impact of each provision of this rule and
estimates there will be a total cost
savings of $2,931,000. The two-option
framework for identifying suspicious
orders is a codification of current
practices, and DEA believes nearly all
affected registrants explicitly or
implicitly utilize the two-option
framework. DEA estimates there will be
a cost savings of $2,666,000 from the
implementation of the ARCOS
Distributor Tool, which saves time
when conducting due diligence.
Additionally, reporting suspicious
orders to the DEA centralized database,
which saves time when reporting
suspicious orders, is estimated to save
of $265,000. All DEA registrants are
believed to have access to the use of an
internet-connected computer at no
additional cost. Based on DEA’s
registration data, nearly 99 percent of
applications for registration or renewal
of registration in the previous 12
months (May 2018 to April 2019) were
made online. Although the email
address is an optional data field,
virtually all registrations have an email
address on record. No special software
or equipment will be required to access
and make reports to the DEA centralized
database. Finally, the DEA believes
registrants already create and maintain
all records documenting each
suspicious order and ORUSC in the
form of notations made in their internal
order management systems.
4. Summary of Benefits
DEA believes there are numerous non-
quantifiable benefits associated with
this rule. First, adding the definition of
‘‘suspicious order’’ aligns DEA’s
regulations with the PDDA, and adding
other terms provides clarity and
enhances understanding of required
procedures when an ORUSC is received.
Second, the rule’s suspicious order
determination process would formalize
current business practices and create
consistency across all registrants and
DEA Field Division Offices. Third,
reporting suspicious orders to the DEA
centralized database would standardize
reporting procedures, content of the
reports, and how the reports are
handled within the DEA. Suspicious
orders are being reported centrally to
DEA by some registrants, and the ease
and efficiency of this electronic
submission has been embraced by these
registrants. Finally, the DEA centralized
database would allow DEA to efficiently
collect the data in a single database, and
to generate macro-level reports and
investigative leads.
B. Executive Order 12988
This rule meets the applicable
standards set forth in sections 3(a) and
3(b)(2) of E.O. 12988, Civil Justice
Reform to eliminate ambiguity,
minimize litigation, establish clear legal
standards, and reduce burden.
C. Executive Order 13132
This rule does not have federalism
implications warranting the application
of E.O. 13132. The rule does not have
substantial direct effects on the States,
on the relationship between the
National Government and the States, or
the distribution of power and
responsibilities among the various
levels of government.
D. Executive Order 13175
This rule does not have substantial
direct effects on the States, on the
relationship between the National
Government and the States, or the
distribution of power and
responsibilities between the Federal
Government and Indian tribes.
E. Regulatory Flexibility Act
In accordance with the RFA,
119
the
DEA evaluated the impact of this rule
on small entities. DEA’s evaluation of
economic impact by size category
indicates that the rule will not, if
promulgated, have a significant
economic impact on a substantial
number of these small entities.
The RFA requires agencies to analyze
options for regulatory relief of small
entities unless it can certify that the rule
will not have a significant impact on a
substantial number of small entities. For
purposes of the RFA, small entities
include small businesses, nonprofit
organizations, and small governmental
jurisdictions. DEA has analyzed the
economic impact of each provision of
this rule and estimates the rule will
have minimal economic impact on
affected persons, including small
entities.
The PDDA definition of suspicious
order parallels the long-standing
definition of suspicious order in DEA
regulations, and does not expand or
contract the current understanding of
what is a suspicious order. The
definition of ‘‘order’’ clarifies and
codifies the meaning of the word in the
context of suspicious orders. DEA
believes that this is not a departure from
the current understanding of the term
order, and anticipates this definition
will not cause a change in the number
of suspicious orders or change in
registrant business activities. The
definitions of ‘‘order received under
suspicious circumstances’’ and ‘‘due
diligence’’ codify current understanding
of the term and provide clarity in
describing the procedures for
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120
See Section VI.A.2.c. titled ‘‘Procedures for
Identifying and Reporting Suspicious Orders of
Controlled Substances,’’ above.
121
See Footnote 78, above.
122
Ibid.
identifying and reporting suspicious
orders. Therefore, DEA believes the
number of ORUSCs that are
investigated, and the number of
suspicious orders that are reported will
remain consistent with current levels,
and will not increase as result of this
rule.
The requirement to design and
operate a system to identify suspicious
orders of controlled substances is not
new, but is a clarification of existing
requirements for distributors,
manufacturers, importers, practitioners,
and NTPs. All registrants are required to
maintain effective controls, and to
design and operate the system.
Regardless of whether the system
(understood as a combination of people,
process, and tools) is automated or
manual, DEA believes that distributors,
manufacturers, importers, practitioners,
and NTPs currently understand and
operate such a system. Therefore, the
system requirement is estimated to
result in no cost to affected registrants.
This two-option framework for
identifying suspicious orders is a
codification of current practices.
Masters and Southwood interpreted the
suspicious order provisions by
articulating that, upon receiving a
suspicious order, a registrant has a duty
to conduct due diligence before
distributing pursuant to the order. DEA
believes nearly all affected registrants
explicitly or implicitly utilize the two-
option framework. All suspicious order
reports must be made to the DEA
centralized database and contain certain
required information, and all records of
suspicious orders and ORUSCs must be
prepared and maintained in accordance
with DEA regulations, and must contain
certain required information. DEA
believes the two-option framework is a
codification of existing business
practices, and therefore, the number of
ORUSCs and the number of suspicious
orders reported will remain consistent
with current levels. As discussed
earlier, Masters and Southwood
interpreted the suspicious order
provisions by articulating that, upon
receiving a suspicious order, a registrant
has a duty to conduct due diligence
before distributing pursuant to the
order. DEA believes nearly all affected
registrants explicitly or implicitly
utilize the two-option framework.
Moreover, DEA estimates there is time
and cost savings resulting from using
the ARCOS Distributor Tool while
conducting due diligence.
As previously detailed,
120
DEA
estimates due diligence will be
conducted on 90 percent (304,956) of all
ORUSCs. DEA believes all registrants
will use the ARCOS Distributor Tool in
conducting due diligence and the use of
the tool will save registrants 10 minutes
each time due diligence is conducted.
Therefore, DEA estimates using the
ARCOS Distributor Tool will save a total
of 50,826 hours per year while
conducting due diligence. Based on a
loaded hourly rate of $52.46 for a
‘‘compliance officer’’
121
DEA estimates
the cost savings from using the ARCOS
Distributor Tool while conducting due
diligence is approximately $2,666,000.
The rule requires, regardless of
whether the suspicious order
determination resulted from option 1 or
option 2, a suspicious order report be
submitted no later than seven calendar
days after the order was received. The
report must be made to the DEA
centralized database with certain
required information. DEA believes the
requirement to report suspicious orders
within seven calendar days of receiving
the order is a reasonable balance
between registrant operational demands,
and DEA’s need for prompt action that
can lead to investigative leads. DEA
believes the vast majority of suspicious
orders are already reported within the
seven calendar day period. Therefore,
DEA estimates any cost associated with
the seven calendar day time
requirement is minimal. Additionally,
reporting to the DEA centralized
database is estimated to impose no
additional burden. All DEA registrants
are believed to have access to the use of
an internet-connected computer at no
additional cost. Based on DEA’s
registration data, nearly 99 percent of
applications for registration or renewal
of registration in the previous 12
months (May 2018 to April 2019) were
made online. Although the email
address is an optional data field,
virtually all registrations have an email
address on record. No special software
or equipment will be required to access
and make reports to the DEA centralized
database. Based on these facts it is
reasonable to estimate virtually all
affected registrants have information
systems capable of completing,
submitting, and retaining electronic
suspicious order reports at no additional
cost. Furthermore, as detailed in section
IV.1.b.iv, DEA estimates, for the
estimated 30,300 suspicious order
reports reported to the field, there will
be a time savings of ten minutes per
report. The centralized database
programmatically requires the required
information in a suspicious order report.
Currently, when a suspicious order
report is received in the field office, it
often lacks needed information. In such
instances, the reporting registrant is
highly likely to receive a call-back or an
on-site interview from the field office,
requiring more of registrant’s time to
respond to DEA’s inquiries.
Additionally, the reduction in the
number of ORUSC reported as
suspicious order is expected to
contribute to this decrease. Therefore,
DEA estimates reporting to the
centralized database will save a total of
5,050 hours per year. Based on a loaded
hourly rate of $52.46 for a ‘‘compliance
officer,’’
122
DEA estimates the cost
savings (negative cost) from using the
centralized database is approximately
$265,000.
Finally, the registrant must maintain
a record of each suspicious order and
ORUSC, and how the registrant handled
the order, for two years. The record
must be prepared no later than seven
calendar days after the suspicious order
or ORUSC was received and must
include the following information:
(1) What information and
circumstances rendered the order
actually or potentially suspicious;
(2) What steps, if any, the registrant
took to conduct due diligence;
(3) If the registrant conducted due
diligence, what information it obtained
during its investigation, and where the
registrant concludes that each
suspicious circumstance has been
dispelled, the specific basis for each
such conclusion; and
(4) Whether or not the registrant
distributed controlled substances
pursuant to the order.
DEA believes the registrants already
maintain all records documenting each
suspicious order and ORUSC. DEA
believes these records, in the form of
notations made in their internal order
management systems, are already
maintained for at least two years as part
of their ordinary business operations,
even if the registrant is able to dispel the
suspicious circumstances. DEA
estimates any additional costs
associated with the recordkeeping
requirements are minimal.
In conclusion, the rule includes
clarification and codification of
generally understood terms, codification
of existing practices, and
standardization of information
submitted to the DEA (in terms of both
method and content of submissions).
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123
Two different data sources were used to
develop Table 3. Data table directly from SUSB
contained detailed firm size by number of
employees, while the data table from the Advocacy
contained detailed firm size by annual receipts.
Therefore, for NAICS codes 325412, 424210, and
541712, which size determination is by the number
of employees, the data set from SUSB is used—2015
SUSB Annual Datasets by Establishment Industry,
table: ‘‘U.S. & states, NAICS, detailed employment
sizes (U.S., 6-digit and states, NAICS sectors),
https://www.census.gov/data/datasets/2015/econ/
susb/2015-susb.html.’’ (Accessed July 3, 2019). For
the remaining NAICS codes, which size
determination is by annual receipts, the data set
from the advocacy is used—SBA Office of
Advocacy, Firm Size Data, U.S. static data, https://
www.sba.gov/advocacy/firm-size-data. (Accessed
July 3, 2019.)
Furthermore, DEA estimates a cost
savings of $2,666,000 from the use of
the ARCOS Distributor Tool and
$265,000 from the use of the centralized
database for the reporting of suspicious
orders. Therefore, DEA estimates a total
cost savings of $2,931,000.
1. Affected Registrations
With the exception of reverse
distributors, this rule affects all persons
who are authorized to distribute
controlled substances: Distributors,
manufacturers, importers, practitioners,
and NTPs. As of May 6, 2019, there
were 1,731 registrations authorized to
distribute as distributors,
manufacturers, and importers: 873
distributor, 586 manufacturer, and 272
importer. Additionally, based on
sampling of DEA Forms 222 received at
DEA Field Division Offices pursuant to
21 CFR 1305.13(d), DEA estimates there
are approximately 15,974 practitioner
and NTP registrations engaged in
distribution. Therefore, DEA estimates
17,705 total registrations are affected by
this rule. Table 1 details the number of
affected registrations by business
activity.
T
ABLE
1—N
UMBER OF
DEA R
EG
-
ISTRATIONS
A
FFECTED BY
B
USINESS
A
CTIVITY
Business activity Number of
registrations
Distributor ............................. 873
Manufacturer ......................... 586
Importer ................................ 272
Pharmacy .............................. 11,009
Hospital/Clinic ....................... 2,557
Teaching Institution .............. 6
Practitioner ............................ 1,150
MLP ...................................... 14
MLP-Ambulance Service ...... 37
Researcher ........................... 45
Analytical Lab ....................... 32
Narcotic Treatment Program
(NTP) ................................. 1,124
Total ............................... 17,705
Source: DEA, May 2019.
2. Number of Entities
It is common for DEA registrants to
hold more than one registration, such as
where a registrant handles controlled
substances at multiple locations or
engages in multiple types of DEA
registered activities. However, RFA
requirements and Small Business
Administration (SBA) size standards are
applicable to entities and businesses.
DEA does not, in the general course of
business, collect or otherwise maintain
information regarding associated or
parent organizations holding multiple
registrations. Therefore, DEA needs
some way of correlating and applying
the parameters of the RFA and
corresponding SBA size standards to
DEA registrations (i.e., develop a
relationship between the number of
registrations/establishments and the
number of entities).
DEA estimated the number of entities
represented by the number of DEA
registrations by first determining which
North American Industry Classification
System (NAICS) classification codes
most closely represent each of the
affected business activities, and then
researching economic data for those
codes. The business activities and their
corresponding representative NAICS
codes are listed in table 2 below.
T
ABLE
2—B
USINESS
A
CTIVITIES AND
R
EPRESENTATIVE
NAICS C
ODES
Business activity NAICS
code NAICS code-description
Distributor .................................................... 424210 Drugs and Druggists’ Sundries Merchant Wholesalers.
Manufacturer ............................................... 325412 Pharmaceutical Preparation Manufacturing.
Importer ....................................................... 424210 Drugs and Druggists’ Sundries Merchant Wholesalers.
Pharmacy .................................................... 446110 Pharmacies and Drug Stores.
Hospital/Clinic .............................................. 622110 General Medical and Surgical Hospitals.
Teaching Institution ..................................... 611310 Colleges, Universities and Professional Schools.
Practitioner .................................................. 621111 Offices of Physicians (except Mental Health Specialists).
MLP ............................................................. 621111 Offices of Physicians (except Mental Health Specialists).
MLP-Ambulance Service ............................. 621910 Ambulance Services.
Researcher .................................................. 541712 Research and Development in the Physical, Engineering, and Life Sciences (except
Biotechnology).
Analytical Lab .............................................. 541380 Testing Laboratories.
NTP ............................................................. 621420 Outpatient Mental Health and Substance Abuse Centers.
The U.S. Census Bureau’s Statistics of
U.S. Businesses (SUSB) is an annual
series that provides national and
subnational data on the distribution of
economic data by enterprise size and
industry. Additionally, the SBA Office
of Advocacy partially funds the U.S.
Census Bureau to produce data on
employer firm size in the SUSB
program. SUSB employer data contain
the number of firms, number of
establishments, employment, and
annual payroll for employment size of
firm categories by location and industry.
From the SUSB data, the number of
firms and the number of establishments
were noted and the firm-to-
establishment ratio was calculated for
each related NAICS code. For the
purposes of this analysis, the term
‘‘firm’’ as defined in the SUSB is used
interchangeably with ‘‘entity’’ as
defined in the RFA. See table 3
below.
123
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‘‘U.S. Small Business Administration Table of
Small Business Size Standards Matched to North American Industry Classification System Codes,’’ October 1, 2017. https://www.sba.gov/sites/default/
files/files/Size_Standards_Table.pdf.
T
ABLE
3—F
IRM
-
TO
-E
STABLISHMENT
R
ATIO FOR
E
ACH
NAICS C
ODE
NAICS code NAICS code-description Firms Establishments Firm-to-
establishment
ratio
325412 ................ Pharmaceutical Preparation Manufacturing ............................................. 988 1,290 0.7659
424210 ................ Drugs and Druggists’ Sundries Merchant Wholesalers ........................... 6,812 10,129 0.6725
446110 ................ Pharmacies and Drug Stores ................................................................... 18,852 43,343 0.4349
622110 ................ General Medical and Surgical Hospitals .................................................. 2,904 5,281 0.5499
611310 ................ Colleges, Universities and Professional Schools ..................................... 2,282 4,329 0.5271
621111 ................ Offices of Physicians (except Mental Health Specialists) ........................ 174,901 210,721 0.8300
621910 ................ Ambulance Services ................................................................................. 3,390 5,051 0.6712
541712 ................ Research and Development in the Physical, Engineering, and Life
Sciences (except Biotechnology). 9,634 13,411 0.7184
541380 ................ Testing Laboratories ................................................................................. 5,191 6,599 0.7866
621420 ................ Outpatient Mental Health and Substance Abuse Centers ....................... 4,987 9,685 0.5149
The calculated firm-to-establishment
ratios were applied to the corresponding
business activities to estimate the
number of entities. For example, the
firm-to-establishment ratio of 0.7659 is
applied to the affected 586 manufacturer
registrations for an estimated 449
entities, and the firm-to-establishment
ratio of 0.6725 was applied to the
affected 1,145 distributor and importer
registrations for an estimated 770
distributor and importer entities. In
total, the 17,705 affected registrations/
establishments represent 9,043 entities.
Table 4 below summarizes the number
of entities for each business activity.
T
ABLE
4—N
UMBER OF
E
NTITIES BY
B
USINESS
A
CTIVITY
Business activity NAICS
code
Affected
registration/
establishments
Firm-to-
establishment
ratio
Affected
firms
Manufacturer ........................................................................................................ 325412 586 0.7659 449
Distributor, Importer ............................................................................................. 424210 1,145 0.6725 770
Pharmacy ............................................................................................................. 446110 11,009 0.4349 4,788
Hospital/Clinic ...................................................................................................... 622110 2,557 0.5499 1,406
Teaching Institution .............................................................................................. 611310 6 0.5271 3
Practitioner, MLP ................................................................................................. 621111 1,164 0.8300 966
MLP-Ambulance Service ..................................................................................... 621910 37 0.6712 25
Researcher .......................................................................................................... 541712 45 0.7184 32
Analytical Lab ...................................................................................................... 541380 32 0.7866 25
NTP ...................................................................................................................... 621420 1,124 0.5149 579
Total .............................................................................................................. ................ 17,705 .......................... 9,043
3. Number of Small Entities
SUSB data includes the number of
firms at various size ranges. To estimate
the number of affected entities that are
small entities, DEA compared the firm
size ranges with SBA size standards for
each of the representative NAICS codes
from Table 2. The SBA size standard is
the firm size based on the number of
employees or annual receipts depending
on industry.
124
If the entire size range
for the firms in the SUSB data was
below the SBA size standard, all of the
firms in the SUSB data size range were
considered ‘‘small.’’ If only part of the
size range for the firms in the SUSB data
was below the SBA size standard, only
the proportional number of firms in the
SUSB data size range was considered
‘‘small.’’
The number of firms below the SBA
size standard for each NAICS code was
added to determine the total number of
small firms for that NAICS code. The
number of small firms was divided by
the total number of firms to estimate the
‘‘percent small firms of total’’ (i.e., the
percent of total firms that are small
firms) for all firms in the related NAICS
code. The percent small firms of total
firms were applied to the estimated
number of entities for each business
activity to estimate the number of
affected entities that are small entities.
DEA estimates that 7,940 (87.8 percent)
of the total 9,043 affected entities are
small entities. The analysis is
summarized in Table 5 below.
T
ABLE
5—N
UMBER OF
E
NTITIES AND
S
MALL
E
NTITIES BY
B
USINESS
A
CTIVITY
Business activity Affected
registration/
establishments
Firm-to-
establishment
ratio
Affected
firms % Small
entities
Affected
small
entities
Distributor, Importer ............................................................. 1,145 0.6725 770 96.2 741
Manufacturer ........................................................................ 586 0.7659 449 93.2 419
Pharmacy ............................................................................. 11,009 0.4349 4,788 98.0 4,694
Hospital/Clinic ...................................................................... 2,557 0.5499 1,406 39.8 560
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125
SBA Office of Advocacy, Firm Size Data, U.S.
static data, https://www.sba.gov/advocacy/firm-
size-data. (Accessed July 3, 2019.)
T
ABLE
5—N
UMBER OF
E
NTITIES AND
S
MALL
E
NTITIES BY
B
USINESS
A
CTIVITY
—Continued
Business activity Affected
registration/
establishments
Firm-to-
establishment
ratio
Affected
firms % Small
entities
Affected
small
entities
Teaching Institution .............................................................. 6 0.5271 3 58.8 2
Practitioner, MLP ................................................................. 1,164 0.8300 966 97.2 939
MLP-Ambulance Service ..................................................... 37 0.6712 25 94.7 24
Researcher ........................................................................... 45 0.7184 32 94.4 30
Analytical Lab ....................................................................... 32 0.7866 25 94.1 24
NTP ...................................................................................... 1,124 0.5149 579 87.6 507
Total .............................................................................. 17,705 ........................ 9,043 ........................ 7,940
Percent small entity of total entities ............................. ........................ ........................ ........................ ........................ 87.8%
4. Impact on Small Entities
To comply with the RFA, DEA
conducted a preliminary analysis to
determine whether, if promulgated, this
rule will have a significant economic
impact on a substantial number of small
entities. As described above, DEA
estimates this rule will result in a total
cost savings of $2,931,000, or an average
of $324 per entity ($2,931,000/9,043),
including small entities. Average cost
savings of $324 is a high estimate for
small entities as small entities are
expected to have lower volume of
distribution and fewer times due
diligence is conducted or suspicious
order is reported to the centralized
database.
The average cost savings of $324 per
entity per year was compared to the
average annual receipt for the smallest
of small businesses in the NAICS codes
that represent the affected entities
(described in Table 2). For example, for
NAICS code ‘424210-Drugs and
Druggists’ Sundries Merchant
Wholesalers’ the smallest size category
is firm size with annual receipts ‘‘less
than $100,000.’’ There are 585 firms in
this size category with an estimated
combined total of $31,248,000 for an
average annual receipt of $53,415 per
firm.
125
The $324 in annual cost savings
per firm is 0.61 percent of $53,415. The
results for each of the NAICS codes are
listed in Table 6.
T
ABLE
6—C
OST
S
AVINGS AS
P
ERCENT OF
A
NNUAL
R
ECEIPTS BY
NAICS C
ODES
NAICS
code NAICS code-
description
Firm size in
receipts
($) Firms Estimated
receipts
($)
Average
receipt per
firm
($)
Average cost
savings
($)
Cost savings
as percent
of annual
receipts
325412 Pharmaceutical Prepara-
tion Manufacturing ...... *100,000–499,000 91 35,834,000 393,780 324 0.08
424210 Drugs and Druggists’
Sundries Merchant
Wholesalers ................ <100,000 585 31,248,000 53,415 324 0.61
446110 Pharmacies and Drug
Stores ......................... <100,000 751 36,066,000 48,024 324 0.67
622110 General Medical and
Surgical Hospitals ...... * 100,000–499,000 14 3,812,000 272,286 324 0.12
611310 Colleges, Universities
and Professional
Schools ....................... <100,000 163 7,510,000 46,074 324 0.70
621111 Offices of Physicians
(except Mental Health
Specialists) ................. <100,000 15,275 771,280,000 50,493 324 0.64
621910 Ambulance Services ...... <100,000 373 16,468,000 44,150 324 0.73
541712 Research and Develop-
ment in the Physical,
Engineering, and Life
Sciences (except Bio-
technology) ................. <100,000 1,457 71,428,000 49,024 324 0.66
541380 Testing Laboratories ...... <100,000 738 35,527,000 48,140 324 0.67
621420 Outpatient Mental Health
and Substance Abuse
Centers ....................... <100,000 800 41,204,000 51,505 324 0.63
* ‘‘Estimated Receipts’’ not available for the smallest size range of ‘‘<100,000; therefore, used next size range of ‘‘100,000–499,000’’ for
comparison.
DEA generally considers impacts that
are greater than three percent of annual
revenue to be a ‘‘significant economic
impact’’ on an entity. As indicated in
Table 6 above, the cost savings is far
below the three percent threshold.
Accordingly, DEA estimates that this
rule will not, if promulgated, have a
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44 U.S.C. 3501 et seq.
127
Proposed amended 21 CFR 1300.01 and
proposed amended 21 CFR 1301.74.
128
Proposed new 21 CFR 1301.78.
129
Proposed new §1301.78(b).
130
Proposed new 21 CFR 1301.78(b).
131
Proposed new 21 CFR 1301.78(c).
132
21 CFR 1304.04(a).
133
Proposed new 21 CFR 1301.78(c).
significant economic impact on a
substantial number of small entities.
F. Unfunded Mandates Reform Act of
1995
This rule will not result in the
expenditure by State, local and tribal
governments, in the aggregate, or by the
private sector, of $100,000,000 or more
(adjusted for inflation) in any one year,
and will not significantly or uniquely
affect small governments. Therefore, no
actions were deemed necessary under
the provisions of the Unfunded
Mandates Reform Act of 1995, 2 U.S.C.
1532.
G. Paperwork Reduction Act
Under the PRA,
126
the DEA is not
authorized to impose a penalty on
persons for violating information
collection requirements which do not
display a current OMB control number,
if one is required. Copies of existing
information collections approved by
OMB may be obtained at http://
www.reginfo.gov/public/do/PRAMain.
1. Collections of Information Associated
With the Rule
Title: Reporting and Recordkeeping
Requirements Related to Suspicious
Orders.
OMB Control Number: 1117–New.
Form Number: N/A.
Pursuant to the PRA, the DEA is
seeking approval from OMB for a new
information collection related to
suspicious orders. The collection would
include two distinct components: The
reporting of suspicious orders, and
recordkeeping related to suspicious
orders and ORUSCs. The rule applies to
all registrants that distribute controlled
substances, including manufacturers,
distributors, importers, and pharmacies
(and other practitioners in certain
cases). The rule would amend two
existing sections of DEA regulations,
127
and would create a new section of DEA
regulations
128
to include provisions
relating to suspicious orders.
a. Reporting of Suspicious Orders
Registrants must file suspicious order
reports through the DEA centralized
database.
129
Each suspicious order
report must contain the following
information:
The DEA registration number of the
registrant placing the order for
controlled substances;
The date the order was received;
The DEA registration number of the
registrant reporting the suspicious
order;
The National Drug Code number,
unit, dosage strength, and quantity of
the controlled substances ordered;
The order form number for
schedule I and schedule II controlled
substances;
The unique transaction
identification number for the suspicious
order; and
What information and
circumstances rendered the order
actually suspicious.
130
Currently, DEA is not able to
accurately estimate the number of
suspicious orders being reported
because there is no central database
tracking all of these orders. For the
purpose of this analysis and fulfilling
this new information collection
requirement, DEA initially estimates the
following number of respondents,
responses, and burden. Burden
estimates will be updated with actual
figures on next information collection
renewal request. DEA estimates there
will be an average of 338,840 ORUSCs,
of which approximately 20 percent are
reported as suspicious orders. The
suspicious order reports are made as
they occur, with no set frequency, and
have an estimated burden of 20 minutes
per response. The ‘number of
respondents’ is estimated based on the
number of unique DEA numbers
reporting to the centralized database;
DEA does not have an estimate of the
number of respondents reporting to the
field offices. DEA estimates the
following number of respondents and
burden associated with this collection of
information:
Number of respondents: 100.
Frequency of response: 677.78 per
year (calculated).
Number of responses: 67,768 average
per year.
Burden per response: 0.33 hour (20
minutes).
Total annual hour burden: 22,589
hours.
b. Recordkeeping for Suspicious Orders
and ORUSCs
Registrants must keep records for
suspicious orders and ORUSCs.
131
These records must be kept by the
registrant and be available, for at least
2 years from the date of the record, for
inspection and copying by authorized
employees of DEA.
132
Each record must
be prepared no later than seven calendar
days after the suspicious order or
ORUSC was received, must include how
the registrant handled such orders, and
must include the following information:
What information and
circumstances rendered the order
actually or potentially suspicious;
What steps, if any, the registrant
took to investigate the order;
If the registrant investigated the
order, what information it obtained
during its investigation, and where the
registrant concludes that each
suspicious circumstance has been
dispelled, the specific basis for each
such conclusion; and
Whether or not the registrant
distributed controlled substances
pursuant to the order.
133
Currently, DEA is not able to
accurately estimate the number of
suspicious orders or ORUSCs. For the
purpose of this analysis and fulfilling
this new information collection
requirement, DEA initially estimates the
following number of respondents,
responses, and burden. Burden
estimates will be updated with actual
figures on next information collection
renewal request. DEA estimates there
will be an average of 338,840 ORUSCs,
of which approximately 20 percent are
reported as suspicious orders and the
remaining 80 percent are ORUSCs that
require keeping of the abovementioned
records. The recordkeeping is
conducted as the events occur, with no
set frequency, and have an estimated
burden of 15 minute per response. The
‘number of respondents’ is estimated
based on the number of unique DEA
numbers reporting to the centralized
database; DEA does not have an
estimate of the number of respondents
reporting to the field offices. DEA
estimates the following number of
respondents and burden associated with
this collection of information:
Number of respondents: 100.
Frequency of response: 2,710.72 per
year (calculated).
Number of responses: 271,072 average
per year.
Burden per response: 0.25 hour (15
minutes).
Total annual hour burden: 67,768
hours.
2. Request for Comments Regarding the
Proposed Information Collections
Written comments and suggestions
from the public and affected entities
concerning the proposed collections of
information are encouraged. Under the
PRA, DEA is required to provide a
notice regarding the proposed
collections of information in the Federal
Register with the notice of proposed
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134
44 U.S.C. 3506(c)(2).
rulemaking and solicit public
comment.
134
The PRA requires DEA to
solicit comment on the following issues:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of DEA,
including whether the information shall
have practical utility.
The accuracy of DEA’s estimate of
the burden of the proposed collection of
information, including the validity of
the methodology and assumptions used.
Recommendations to enhance the
quality, utility, and clarity of the
information to be collected.
Recommendations to minimize the
burden of the collection of information
on those who are to respond, including
through the use of automated collection
techniques or other forms of information
technology.
Please send written comments to the
Office of Information and Regulatory
Affairs, OMB, Attention: Desk Officer
for DOJ, Washington, DC 20503. Please
state that your comments refer to RIN
1117–AB47/Docket No. DEA–437. All
comments must be submitted to OMB
on or before January 4, 2021. The final
rule will respond to any OMB or public
comments on the information collection
requirements contained in this proposal.
List of Subjects
21 CFR Part 1300
Chemicals, Drug traffic control.
21 CFR Part 1301Administrative
practice and procedure, Drug traffic
control, Exports, Imports, Security
measures.
Administrative practice and
procedure, Drug traffic control, Exports,
Imports, Security measures.
For the reasons set forth above, the
DEA proposes to amend 21 CFR parts
1300 and 1301 as follows:
PART 1300—DEFINITIONS
1. The authority citation for part 1300
is revised to read as follows:
Authority: 21 U.S.C. 802, 821, 822, 823,
829, 832, 871(b), 951, 958(f).
2. In § 1300.01, amend paragraph (b)
by adding definitions of ‘‘Due
diligence,’’ ‘‘Order,’’ ‘‘Order received
under suspicious circumstances,’’ and
‘‘Suspicious order’’ in alphabetical
order to read as follows:
§ 1300.01 Definitions relating to controlled
substances.
* * * * *
(b) * * *
Due diligence means a reasonable and
documented investigation into persons
and orders (coupled with other
appropriate investigations, including
previous investigations into persons and
orders) that includes, but is not limited
to, verification that a person (or a person
submitting an order) holds the
appropriate DEA registration,
verification that a person (or a person
submitting an order) holds all licenses
required by the state(s) in which a
person (or a person submitting an order)
conducts business with respect to
controlled substances, examination of
each suspicious circumstance
surrounding an order, and examination
of all facts and circumstances that may
be relevant indicators of diversion in
determining whether a person (or a
person submitting an order) is engaged
in, or is likely to engage in, the
diversion of controlled substances.
* * * * *
Order means any communication by a
person to a registrant proposing or
requesting a distribution of a controlled
substance, regardless of how it is
labeled by the person or the registrant,
and regardless of whether a distribution
is made by the registrant, except that
simple price/availability inquiries,
standing alone, do not constitute an
order.
Order received under suspicious
circumstances means an order
potentially meeting the definition of
suspicious order.
* * * * *
Suspicious order includes, but is not
limited to, an order of unusual size, an
order deviating substantially from a
normal pattern, or an order of unusual
frequency.
* * * * *
PART 1301—REGISTRATION OF
MANUFACTURERS, DISTRIBUTORS,
AND DISPENSERS OF CONTROLLED
SUBSTANCES
3. The authority citation for part 1301
is revised to read as follows:
Authority: 21 U.S.C. 821, 822, 823, 824,
831, 832, 871(b), 875, 877, 886a, 951, 952,
953, 956, 957, 958, 965.
4. In § 1301.74, revise the section
heading and paragraph (b) to read as
follows:
§ 1301.74 Other security controls for non-
practitioners; non-practitioners and
practitioners for orders received under
suspicious circumstances; narcotic
treatment programs and compounders for
narcotic treatment programs.
* * * * *
(b)(1) Each registrant shall design and
operate a system to identify suspicious
orders of controlled substances for the
registrant that complies with applicable
Federal and State privacy laws. The
system shall be designed and operated
to identify orders of unusual size, orders
deviating substantially from a normal
pattern, and orders of unusual
frequency. In addition, the system shall
be designed and operated to identify
suspicious orders based on facts and
circumstances that may be relevant
indicators of diversion in determining
whether a person (or a person
submitting an order) is engaged in, or is
likely to engage in, the diversion of
controlled substances.
(2) Registrants in receipt of an order
received under suspicious
circumstances shall follow the
procedures set forth in § 1301.78(a).
(3) In addition to entities that are
registered as distributors, the
requirements in this paragraph (b) shall
also apply to registrants authorized to
distribute controlled substances.
However, controlled substances
dispensed or administered within the
normal course of professional practice
of a practitioner, to include
prescriptions filled by a pharmacy, and
orders placed by registrants to DEA
registered reverse distributors
requesting the return or destruction of
controlled substances, are not
distributions subject to the provisions of
this part.
* * * * *
5. Add § 1301.78 to read as follows:
§ 1301.78 Procedures for identifying and
reporting suspicious orders of controlled
substances.
(a) Upon receipt of an order received
under suspicious circumstances, the
registrant shall proceed under one of the
following two options:
(1) The registrant shall decline to
distribute pursuant to the suspicious
order, immediately file a suspicious
order report through the DEA
centralized database (which includes
the information described in paragraph
(b) of this section), and maintain a
record of the suspicious order and any
due diligence related to the suspicious
order (which includes at least the
information described in paragraph (c)
of this section); or
(2) The registrant, before distributing
pursuant to the order received under
suspicious circumstances, shall conduct
due diligence to investigate each
suspicious circumstance surrounding
the order.
(i) If, through its due diligence, the
registrant is able to dispel each
suspicious circumstance surrounding
the order received under suspicious
circumstances within seven calendar
days after receiving the order, it is not
a suspicious order; the registrant may
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then distribute pursuant to the order,
and the order need not be reported to
the DEA as a suspicious order, but the
registrant must maintain a record of its
due diligence which includes at least
the information described in paragraph
(c) of this section.
(ii) If the registrant, through its due
diligence, is unable to dispel each
suspicious circumstance surrounding
the order received under suspicious
circumstances within seven calendar
days after receiving the order, it is a
suspicious order; the registrant shall file
a suspicious order report through the
DEA centralized database, which
includes the information described in
paragraph (b) of this section, decline to
distribute pursuant to the suspicious
order, and maintain a record of its due
diligence which includes at least the
information described in paragraph (c)
of this section.
(b)(1) Registrants shall report
suspicious orders to the DEA
centralized database. The report,
identifying each suspicious order, must
include the following information:
(i) The DEA registration number of the
registrant placing the order for
controlled substances;
(ii) The date the order was received;
(iii) The DEA registration number of
the registrant reporting the suspicious
order;
(iv) The National Drug Code number,
unit, dosage strength, and quantity of
the controlled substances ordered;
(v) The order form number for
schedule I and schedule II controlled
substances;
(vi) The unique transaction
identification number for the suspicious
order; and
(vii) What information and
circumstances rendered the order
actually suspicious.
(2) Upon notification from the DEA
that a suspicious order report or reports
contain inaccurate or incomplete
information, the registrant shall have
seven calendar days to correct the
inaccurate or incomplete information.
(c) Registrants shall maintain a record
of every suspicious order and every
order received under suspicious
circumstances for at least two years
from the date of such record in
accordance with 21 CFR 1304.04(a), and
how the registrant handled such orders.
The record must be prepared no later
than seven calendar days after the
suspicious order or order received
under suspicious circumstances was
received and must include the following
information:
(1) What information and
circumstances rendered the order
actually or potentially suspicious;
(2) What steps, if any, the registrant
took to conduct due diligence;
(3) If the registrant conducted due
diligence, what information it obtained
during its investigation, and where the
registrant concludes that each
suspicious circumstance has been
dispelled, the specific basis for each
such conclusion; and
(4) Whether or not the registrant
distributed controlled substances
pursuant to the order.
Timothy J. Shea,
Acting Administrator.
[FR Doc. 2020–21302 Filed 10–30–20; 8:45 am]
BILLING CODE 4410–09–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG–2020–0445]
RIN 1625–AA87
Security Zone; San Juan, Puerto Rico
AGENCY
: Coast Guard, DHS.
ACTION
: Notice of proposed rulemaking.
SUMMARY
: The Coast Guard is proposing
to revise an existing moving security
zone for the Port of San Juan, San Juan,
Puerto Rico. The proposed revision
would expand the existing moving
security zone to a 200-yard radius
around all cruise ships entering,
departing, or anchored in the Port of
San Juan. While the cruise ships are
moored at the Port of San Juan, the
security zone would remain at a 50-yard
radius around the cruise ships. This
action would continue to prohibit
persons and vessels from entering,
anchoring, mooring or transiting in the
security zone, unless authorized by the
Coast Guard Captain of the Port of San
Juan or a designated representative. This
action is necessary to better meet the
safety and security needs of the Port of
San Juan. We invite your comments on
this proposed rulemaking.
DATES
: Comments and related material
must be received by the Coast Guard on
or before December 2, 2020.
ADDRESSES
: You may submit comments
identified by docket number USCG–
2020–0445 using the Federal
eRulemaking Portal at https://
www.regulations.gov. See the ‘‘Public
Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION
section for
further instructions on submitting
comments.
FOR FURTHER INFORMATION CONTACT
: If
you have questions about this proposed
rulemaking, call or email Lieutenant
Natallia Lopez, Sector San Juan
Prevention Department, Waterways
Management Division, U.S. Coast
Guard; telephone 787–729–2380, email
Natallia.M.Lopez@uscg.mil.
SUPPLEMENTARY INFORMATION
:
I. Table of Abbreviations
CFR Code of Federal Regulations
COTP Captain of the Port
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code
II. Background, Purpose, and Legal
Basis
The existing regulation in 33 CFR
165.758 contains a moving security zone
of 50-yards around all cruise ships
entering, departing, moored or anchored
in the Port of San Juan, Puerto Rico. On
May 27, 2020, the Coast Guard received
a request from Coast Guard Station San
Juan to adjust the security zone to 200-
yards to provide an adequate reaction
zone for maritime security threats and
hazards and to match similar security
zones in other ports.
The purpose of this rulemaking is to
ensure the safety and security of cruise
ships in the Port of San Juan while they
are entering, departing, moored, and
anchored in port. The Coast Guard is
proposing this rulemaking under
authority in 46 U.S.C. 70034.
III. Discussion of Proposed Rule
The proposed rule wouldrevise the
existing moving security zone in
§ 165.758 to a 200-yard radius around
all cruise ships entering, departing, or
anchored in the Port of San Juan, San
Juan, Puerto Rico. Increasing the
security zone from 50-yards to 200-
yards while the cruise ships are in
transit or anchored would provide law
enforcement assets with more sufficient
time to react in case of potential terrorist
acts, sabotage, or other subversive acts,
accidents, or hazards of a similar nature.
While the cruise ships are moored, the
security zone would remain at a 50-yard
radius around the cruise ships. No
vessel or person would be permitted to
enter the security zone without
obtaining permission from the COTP or
a designated representative. The
regulatory text we are proposing appears
at the end of this document.
IV. Regulatory Analyses
We developed this proposed rule after
considering numerous statutes and
Executive orders related to rulemaking.
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