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Presenting a live 90-minute webinar with interactive Q&A

Prescription Audits:

When the DEA or AG Come Knocking Anticipating and Responding to Heightened Investigations of Prescribing and Dispensing Practices

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, AUGUST 16, 2017

Ronald J. Friedman, Shareholder, Karr Tuttle Campbell, Seattle

Lee H. Rosebush, Partner, BakerHostetler, Washington, D.C.

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Ronald J.

Friedman, JD

Karr Tuttle

Campbell,

Seattle, WA

PRESCRIPTION AUDITS:

WHEN THE DEA OR AG

COME KNOCKING (2017)

FEDERAL GOVERNMENT: SEARCH

WARRANT OR DEA ADMINISTRATIVE

INSPECTION AUTHORITY

STATE AG: SEARCH WARRANT OR

BOARD OF MEDICINE/DEPARTMENT OF

HEALTH INVESTIGATION

WHO MAY VISIT?

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CRIMINAL ACTIVITY = CRIMINAL ACTIVITY

MORE ROUTINE CIVIL AND ADMINISTRATIVE

INVESTIGATIONS … NO LESS IMPORTANT..

CONSEQUENCES: FINES, RESTRICTIONS TO PRACTICE,

REVOCATION… AND SOMETIMES TURN CRIMINAL

WHAT IS AT RISK?

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DOCTORS ARE A TARGET

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DOCTORS ARE A TARGET

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DOCTORS ARE TARGETS

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ASSESSING RISK LEVELS:

TYPE OF PRACTICE/TYPE

OF ACTIVTY

WHO IS AT RISK?

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3 GREATEST RISK FACTORS AT FEDERAL/STATE

LEVEL:

PAIN VS. PODIATRY

ARE YOU PRESCIBING/DISPENSING

OPIATES OR OTHER CS OF ABUSE?

DISPENSING VS PRESCRIPTION

SUBOXONE

RISK?

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HUGE PRESSURE ON REGULATORS RIGHT NOW

CLAMP DOWN AT ALL LEVELS

DEA Tactical Diversion Squads

POLITICAL PRESSURE

PDMPs in Every State

RISK FACTOR 1: OPIATE “EPIDEMIC”

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PDMPS

8/14/2017 14 14

Privacy Challenges defeated

Much more sharing within State and With Feds

Mining data for Outliers

Investigations and Actions based on Improper Prescribing as revealed by data

Pure metrics driven – Greatest new area of risk

Inconsistent As to Need for MD Review

BROADER USE OF PDMPS

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Many more states enacting prescribing guidelines

or rules

Requiring ICD-10 Diagnosis Codes (EG, Ohio)

Feds new Prosecutor Task Forces

MORE STATE PAIN RULES

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NYT August 2, 2017:

US Prosecutors Will Help Addiction-Ravaged Cities

COLUMBUS, Ohio — The Justice Department will

dispatch 12 federal prosecutors to cities ravaged by

addiction who will focus exclusively on investigating

health care fraud and opioid scams that are fueling

the nation's drug abuse epidemic, Attorney General

Jeff Sessions said Wednesday.

NEW FEDERAL TASK FORCES

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Sessions said the group of prosecutors he has dubbed the "opioid fraud and abuse detection unit" will rely on data in their efforts to root out pill mills and track down doctors and other health care providers who illegally prescribe or distribute narcotics such as fentanyl and other powerful painkillers.

What does that mean??? A lot of potential for physicians being caught in crosshairs and chilling impact

NEW FEDERAL TASK FORCES

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Center of the Road Driving (Prescribing)

Is medication contributing to “functionality’ of patient apart from addiction?

Pay for staff to Review PDMPs before all Prescribing

Try not to Dispense any CS; All prescriptions.

ADVICE

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DEA Administrative Inspection Authority: Consent or Warrant

(21 USC Section 880)

Do I have to consent?

What are they inspecting?

Required records: So if no dispensing, no visit

No search of sales or financial data

Generally, not looking at patient chart

Do I have to speak? What if I do?

If dispensing, detailed records: Acquisition records, invoices signed

and dated; biennial inventory; dispensing log; destruction records

(21 CFR Sections 1304 and 1306.05; Diversion Website)

DEA ADMINISTRATIVE INSPECTION

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The Name of the Substance

Each Finished Form (10mg tab) & The Number of

Units

Name & Address of the Person to whom it was

Dispensed

Date of Dispensing

Number of Units Dispensed

Written or Typewritten Name or Initials of the

Dispenser

** Beware multiple inventories/DEA #s/Clinic DEA #

DISPENSING LOG

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Law Enf can Multi-source prescriptions (pharmacy and/or

practice)

Trend in disciplinary actions based upon incomplete scripts:

Dated as of, and signed on, the day when issued

Full name and address of patient

Drug name, strength, dosage form, quantity prescribed,

direction for use

Full name, address, and DEA registration of the practitioner

And in some States, ICD disease state code

PRESCRIPTIONS

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Required to Inspect

Required records: Copies of prescriptions; Log of patients.

Instead of Script Review, Prescription log (Patient Identifier,

drug, strength, quantity, date)

List of Questions

SUBOXONE

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Letter of Admonition

MOU

Civil Action and/or Order to Show Cause

re. Revocation

DEA DISCIPLINE

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Much broader authority

General requirement to cooperate.

Much broader review of records and may also

include charts.

To Talk or not to Talk

STATE INSPECTIONS

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Protocol (handout)

Fire drills

Consult with counsel … at least get

some advice

GENERAL THOUGHTS RE. ANTICIPATING AND

RESPONSE

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Contact:

Ronald J. Friedman

Email: rfriedman@karrtuttle.com

©2017

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Prescription Audits: When the DEA or AG Come

Knocking: Anticipating and Responding to Heightened

Investigations of Prescribing and Dispensing Practices August 16, 2017

Lee H. Rosebush

lrosebush@bakerlaw.com

202-861-1567

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Current Topics and Trends

• Examples of DEA Actions

• Individual Prescribers

• Hospitals

• Pharmacies

• Wholesalers

• Constructive Delivery

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Image from: Pittsburgh Post-Gazette, available at http://www.post-gazette.com/news/overdosed/2016/08/12/Feds-have-taken-thousands-of-prescribing-licenses/stories/201608120095

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Examples of DEA Actions

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Examples of DEA Actions

• Samples of Administrative Actions

Actions Against Individual Prescribers

Recordkeeping

Medical Needs

Other offenses

Actions Against Pharmacies

Valid Prescriptions

Conducting a Proper Inventory

Largest Controlled Substance Fine

Actions Against Wholesalers

Compliance Program – Monitoring

State Actions

Largest Controlled Substance Fine

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Actions Against Individual Prescribers

Recordkeeping

• Sigrid Sanchez, M.D.

• Application for registration denied due to violations of

recordkeeping, physical security, employee oversight provisions

of CSA/regulations by pharmacy respondent.

• Responsible for prior actions of the original owner/operator who ceased

employment and passed on responsibilities to the respondent.

• The revocation was upheld despite arguments that the violations

underlying the revocation may not have been initially

perpetrated by the respondent (i.e. poor recordkeeping merely

continued from prior operations as opposed to abrogation of

adequate recordkeeping upon transfer).

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Actions Against Individual Prescribers

Medical Need

• Clair L. Pettinger, M.D.

• Registration revoked after DEA determined that the practitioner

had issued 9 prescriptions for controlled substances absent

legitimate medical need to undercover DEA agents.

• The revocation was upheld despite:

• The practitioner’s introduction of evidence that the undercover agents may

have deliberately induced diversionary prescription through symptomology

deception;

• Evidence that the practitioner had undertaken significant efforts to improve

identification of legitimate versus non-legitimate medical need.

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Actions Against Individual Prescribers

Other Offenses

• Sassan Bassiri, D.D.S. • Registration application denied in 2017 after DEA determined that the

practitioner had pled guilty to three charges of health care fraud in 2011

• The denial was upheld despite:

• North Carolina State Board of Dental Examiners allowing him to resume

practicing dentistry subject to certain limitations, including that he practice

for one year "under the supervision of a [North Carolina licensed] dentist"

and only practice (with the Board's prior approval) at an institution like a

hospital or sanatorium, a non-profit health care facility servicing low-income

patients, or for a State of North Carolina government agency or entity.

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Actions Against Individual Prescribers

Other Offenses

• Kofi Etru Shaw-Taylor, M.D. • Medical license suspended by state of Maryland in May 2017 for

overprescribing opioids

• Pain clinic shut down after DEA raid

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Actions Against Hospitals

Drug Diversion - Abington Memorial Hospital

• Hospital paid $510,000 to settle allegations that the

hospital’s practices enabled its employees to divert

controlled substances

• DEA investigation uncovered that a pharmacist stole more than

35,000 pills

• Incomplete medication inventories

• Altered or missing drug records

• Pharmacist plead guilty to 25 counts of possession with intent to

distribute

• Hospital implemented new plan to handle controlled substances

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Actions Against Hospitals

Deficiencies in handling controlled substances

- Dignity Health

• In 2017, the nation’s fifth largest health system agreed to

pay $1.55 million to settle allegations of deficiencies in

the handling of controlled substances

• Hospital reported losses of over 20,000 tablets of controlled

substances

• DEA investigation revealed deficiencies in accurate record

keeping

• Hospital will comply with detailed compliance regimen for 2

years

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Actions Against Hospitals

Lax controls for controlled substances - Massachusetts General Hospital • Hospital agreed to pay $2.3 million to settle allegations

involving the Controlled Substances Act • A pediatric nurse with a 12-year substance abuse problem

injected himself with a controlled substance while at work

• A physician prescribed controlled substances without seeing patients

• Several nurses were able to divert prescription drugs for many years without being detected

• Medical staff failed to properly secure controlled substances, even, on occasion, bringing them to lunch.

• Hospital will implement corrective action plan, including: creation of internal drug diversion team and the creation of a full-time drug diversion compliance officer position

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Actions Against Pharmacies

Valid Prescriptions

• S&S Pharmacy (d/b/a Platinum Pharmacy &

Compounding)

• Registration revoked and all controlled substances seized after

informants made cash purchases of Schedule II narcotics

(oxycodone) from pharmacy employees based on fraudulent

prescriptions.

• The informants provided fraudulent prescriptions for oxycodone

to the pharmacy.

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Actions Against Pharmacies

Conducting a Proper Inventory

• Top RX Pharmacy • Registration revoked for multiple CSA/regulatory violations,

including:

- Failure to conduct initial inventory

- Providing false information to controlled substance distributors

- Failure to maintain accurate and complete records and/or account for

controlled substances

- Diluting promethazine syrup before dispensing

- Dispensing controlled substances under circumstances in which it knew or

should have known that the drugs were being diverted from non-medical,

illegitimate purposes.

• The pharmacy failed to conduct initial inventory or maintain

accurate records of controlled substances received, which led to

further investigations of the pharmacy’s dispensing practices.

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Actions Against Pharmacies

Valid Prescriptions- CVS • The DEA alleged that between 2008 and 2011 two large retail

pharmacies in Florida had purchased quantities of oxycodone that

considerably surpassed the amount ordinarily purchased by retail

pharmacies.

- Further, the DEA alleged that the pharmacies had dispensed

controlled substances to customers under circumstances indicating

that the drugs were illegally diverted and had failed to appropriately

monitor dispensing habits.

- The pharmacies argued that the high volume of dispensing was due to

the fact that the two locations, one of which was open 24 hours a day,

were busy stores, and that both locations had made significant efforts

to implement robust anti-diversion procedures.

• The pharmacies implemented several programs, such as monitoring

prescriber habits, to help ensure controlled substances were being

used properly.

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Actions Against Pharmacies

Largest Controlled Substance Fine- Walgreens

Pharmacy • On June 11, 2013, a large retail pharmacy chain agreed to pay $80

million in civil penalties to the DEA—the largest ever settlement at

time involving a pharmacy for allegations based on the Controlled

Substances Act.

• The settlement resolves allegations that the pharmacy chain had an

“unprecedented” number of record-keeping and dispensing

violations under the CSA. Specifically, the DEA alleged that the

pharmacy chain negligently allowed controlled substances, such as

oxycodone, to be diverted for abuse and black market sale.

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Actions Against Pharmacies

• Other recent allegations made by DEA against a large

pharmacy chain: - A chain pharmacy knowingly filled prescriptions for controlled

substances that were not issued for a legitimate medical purpose

pursuant to a valid physician-patient relationship in Kentucky and in

New York.

- A pharmacy chain did not properly notify the DEA of significant theft

and loss of controlled substances, which allowed the diversion of

controlled substances to continue and undermining DEA’s ability to

investigate such thefts and/or losses.

- At pharmacies in California, Pennsylvania and Maryland, a pharmacy

chain either failed to maintain or failed to furnish to the DEA upon

request records that are required to be kept under the CSA.

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Actions Against Pharmacies

• Other recent allegations made by DEA against a large

pharmacy chain: - A pharmacy chain failed to properly execute DEA forms used to

ensure that the amount of Schedule II drugs ordered by it were

actually received.

- The DEA also conducted accountability audits of controlled

substances at a pharmacy chain to determine whether the chain could

properly account for Schedule II and III controlled substances

purchased and dispensed. The results of the audits revealed

significant shortages or surpluses of the most highly abused drugs,

including oxycodone and hydrocodone products, reflecting a pattern of

non-compliance with the requirements of the CSA and federal

regulations that led to the diversion of controlled substances.

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Settlements Involving Pharmacies

• Other recent allegations made by DEA against a large

pharmacy chain:

- Health system agreed to pay $850,000 to settle allegations that one

pharmacy location violated the Controlled Substances Act by filling

prescriptions that were incomplete and failing to maintain proper

records.

- Large retail pharmacy agreed to pay $8,000,000 to settle allegations

that its pharmacies in Maryland violated the Controlled Substances Act

by dispensing controlled substances pursuant to prescriptions that

were not issued for a legitimate medical purpose.

47

Actions Involving Wholesalers

Compliance Program – Monitoring - Cardinal

• On May 15, 2012, a large wholesale distributor agreed to a two-year

suspension of its license to ship controlled substances from its

Florida center.

• The DEA suspended the wholesaler’s registration based on

allegations that it knew or should have known that 4 of its

customers, including two pharmacies in Sanford, Florida, were

inappropriately filling prescriptions for oxycodone. Specifically, the

DEA alleged that the wholesaler:

- Failed to maintain effective controls against the diversion of controlled

substances, including failing to conduct meaningful due diligence to

ensure that controlled substances were not diverted; and

- Failed to detect and report suspicious orders of controlled substances

as required by the CSA, on or before May 14, 2012.

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Actions Involving Wholesalers

State Actions

• The West Virginia Attorney General filed a lawsuit against 14 drug

distributors alleging that the entities have benefited from the state’s

prescription drug abuse problem and seeking damages and

attempting to cut off the so-called “pill mill” process.

• The lawsuit alleges that the distributors provide a bridge between

drug manufacturers and the nation's vast network of retail

pharmacies. These entities have been targeted before for allegedly

not doing enough to recognize and stop the flow of addictive pain

pills.

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Actions Involving Wholesalers

Largest Ever Controlled Substance Fine -

McKesson • On January 17, 2017, one of the nation’s largest distributors of

pharmaceutical drugs, agreed to pay a record $150 million civil

penalty-- the largest ever settlement at that time involving allegations

based on the Controlled Substances Act.

• The settlement resolves allegations that the distributor failed to

design and implement an effective system to detect and report

“suspicious orders” for controlled substances distributed to its

independent and small chain pharmacy customers.

• The settlement requires the distributor to engage an independent

monitor to assess compliance – the first independent monitor of its

kind in a Controlled Substances Act civil penalty settlement

• The distributor agreed to enhance compliance for five years

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Constructive Delivery

51

Constructive Delivery

• Congressional Intervention

- Will we finally get to see new legislation?

- Senate Bill 2825 of the 113th Congress (2013-2014) was introduced as

“Ensuring Safe Access to Prescription Medication Act of 2014”

- Never moved forward

• DEA policy is that the delivery must still be to the patient…even for

injectable medication.

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Atlanta

Chicago

Cincinnati

Cleveland

Columbus

Costa Mesa

Denver

Houston

Los Angeles

New York

Orlando

Philadelphia

Seattle

Washington, DC

www.bakerlaw.com

These materials have been prepared by Baker & Hostetler LLP for informational purposes only and are not legal advice. The information is not intended to create, and receipt of it does not constitute,

a lawyer-client relationship. Readers should not act upon this information without seeking professional counsel. You should consult a lawyer for individual advice regarding your own situation.

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