Preparing for a DEA or State Board Pharmacy Investigation
The DEA and state pharmacy boards can conduct unannounced investigations to confirm compliance. Are you prepared to avoid penalties if federal agents or state auditors show up at your door?
Pharmacies in the United States are subject to heavy regulation and strict oversight at the state and federal levels. In order to ensure that pharmacies comply with the law and do not contribute to the nation’s ongoing opioid epidemic, the U.S. Drug Enforcement Administration (DEA) and state licensing boards can (and do) conduct unannounced audits, inspections, and investigations.
When these inquiries happen, pharmacists and pharmacy owners must be fully prepared. You do not want to be caught off guard by DEA agents or state inspectors, and you cannot afford to make mistakes in any facet of the inquiry. Federal and state pharmacy compliance enforcement can be both swift and severe; and, if you are not ready to defend your practice, your practice could be in jeopardy.
What Do Pharmacies Need to Do to Prepare?
If you own or operate a pharmacy for long enough, your pharmacy will get audited or inspected. With this in mind, what do you need to do in order to make sure you are prepared?
There are a few aspects to preparing for a DEA or state pharmacy board investigation. The first is compliance. During the audit or investigation, DEA agents or state inspectors are going to examine all aspects of your practice and comb through all of your practice’s recent patient and billing records to find any evidence that you have committed any statutory or regulatory violation. If your pharmacy is fully compliant, then you shouldn’t have anything to worry about (although federal agents and state inspectors make mistakes, and there can often be questions of interpretation with regard to whether a pharmacy’s compliance efforts are adequate).
The second is knowing how to demonstrate that your pharmacy is compliant. Even if your pharmacy is compliant, if you can’t prove it quickly, this is going to raise questions and most likely prolong the inquiry. Conversely, if you have a clear understanding of your pharmacy’s compliance program and how it is being implemented, this can go a long way toward fending off closer scrutiny.
The third is knowing how to interact with DEA agents or state licensing board personnel. For example, when can you ask for a warrant? When should you ask for a warrant? What questions do you need to answer, and how do you need to answer them? Should you go out of your way to be helpful? Should you stand down as federal agents or state inspectors do their job? You need to know the answers to these questions before the DEA or your state licensing board knocks on your door.
1. Establishing Compliance
Is your pharmacy fully compliant? Are you sure? When facing an audit or investigation, you cannot have any doubt as to the sufficiency and effectiveness of your pharmacy’s compliance program. Under the federal Controlled Substances Act (CSA) – which is enforced by the DEA, and when state licensing boards expect pharmacies to follow as well – pharmacies’ compliance obligations fall into four main categories:
- Registration – All pharmacies in the United States are required to register with the DEA (in addition to obtaining state licenses). Once registered with the DEA, pharmacies must continue to uphold the federal registration standards on an ongoing basis.
- Recordkeeping – The CSA and its enabling regulations establish varied and diverse recordkeeping requirements for registered pharmacies. During an inspection, DEA agents will be looking to see that all recordkeeping requirements have consistently been followed.
- Reporting – Registered pharmacies owe the DEA various reporting duties as well. If an audit or investigation reveals that a reportable event hasn’t been reported, this won’t bode well for the remainder of the inquiry.
- Security – Pharmacy security is a core component of federal compliance as well. Here too, if there is any indication that a pharmacy isn’t doing enough to prevent unauthorized access and prescription drug diversion, the pharmacy will be at significant risk for federal and state penalties.
Within these four main categories, pharmacies face a host of other, more-specific compliance obligations. For example, there are extensive rules and regulations around drug packing and disposal, electronic prescriptions, and specialty drug ordering. Additionally, state inspectors may examine compliance issues beyond the scope of the CSA, including (but not limited to) advertising practices, billing practices, and compliance with the ethical and legal restrictions on financial relationships with prescribing physicians.
2. Being Prepared to Demonstrate Compliance
While pharmacists and pharmacy owners must be careful to avoid being overly “helpful” during a DEA or state pharmacy board inquiry, they must be prepared to demonstrate their pharmacy’s compliance. At the most basic level, this means knowing the answers to questions such as:
- Where are the pharmacy’s DEA registration and state pharmacy board licensing records?
- Where is the pharmacy’s DEA Certificate posted?
- Where are the pharmacy’s compliance policies and procedures?
- When is the last time the pharmacy’s compliance documentation was updated?
- Where are the pharmacy’s DEA 222 forms, and are they all fully completed, dated, and signed?
- Are all pharmacists and pharmacy technicians’ personal licenses and registrations up to date?
- Where are the pharmacy’s controlled substance ordering system (CSOS) receipts saved and stored?
- Where are your pharmacy’s return vendor agreements? Where is the documentation that your pharmacy’s return vendors are registered with the DEA?
- Where are your pharmacy’s prescription and dispensing reports?
- Where are the records that confirm your pharmacy’s security systems are up-to-date and operating correctly?
Beyond these types of basic issues, there are many more-nuanced aspects to demonstrating compliance as well. In order to avoid issues that could be easily avoided with proof of compliance, pharmacists and pharmacy owners should work with their compliance counsel to ensure that they have an appropriate plan for responding to a DEA or state pharmacy board inspection.
3. Knowing How to Interact with DEA Agents or State Inspectors
Another critical way that compliance counsel can assist with preparing for DEA and state pharmacy board inspections is by providing guidance for interacting with DEA agents and state inspectors. Being able to anticipate questions is one thing, but responding to those questions in an appropriate manner is another matter entirely.
During DEA and state pharmacy board inspections, there is a balance to be struck between being too helpful and being too absent or adversarial. Pharmacists and pharmacy owners need to remain engaged in the investigative process, but they must do so strategically and with the ultimate goal of ending the inquiry without federal charges being filed or disciplinary action being taken. An experienced pharmacy compliance lawyer will be able to help you prepare to deal with the DEA or your state pharmacy board at the outset of the inquiry, but you will also want to contact your lawyer at the first possible opportunity.
Once you are contacted by the DEA or your state pharmacy board regarding an audit, inspection, or investigation, it is imperative that you contact your pharmacy’s legal counsel. While there are steps you can – and should – take as a pharmacist or pharmacy owner, you need to act on your attorney’s advice, and you should let your counsel handle most interactions with the DEA or your state pharmacy board on your behalf. At Oberheiden P.C., our pharmacy compliance lawyers routinely handle these types of matters, and several members of our pharmacy compliance and defense team have prior experience working with the DEA.
Additional Tips for DEA and State Pharmacy Board Audits, Inspections and Investigations
Here are some additional tips for pharmacists and pharmacy owners facing DEA and state pharmacy board audits, inspections, and investigations:
- When answering questions, be concise, and do not speculate. Unless otherwise advised by your legal counsel, the risks of volunteering information and making assumptions will typically far outweigh any potential benefits.
- Make copies and ask for receipts. You are entitled to keep copies of any records the DEA requires you to provide, and you should receive a receipt (DEA Form 12) for any original records or controlled substances the DEA takes from your pharmacy.
- Take detailed notes. When possible, take detailed notes about your interactions with DEA agents and state auditors. Also be sure to take note of any potential compliance issues of which you are aware so that you can discuss them with your legal counsel.
- Restrict who talks to the DEA and state licensing board. During an audit or investigation, you need to control the flow of information. Generally speaking, pharmacy technicians, junior pharmacists, administrators, and other personnel should not be communicating with federal agents or state inspectors.
- Do not hesitate to assert your right to counsel. Stating that you need to speak with your lawyer does not make you look guilty. It makes you look smart. DEA agents and state inspectors know what is at stake, and they expect you to rely on the advice of your legal counsel.
Contact the Pharmacy Compliance and Defense Lawyers at Oberheiden P.C.
Is your pharmacy facing a DEA audit or investigation? Are state pharmacy board auditors or inspectors scrutinizing your pharmacy’s compliance efforts? To speak with a member of our pharmacy compliance and defense team in confidence, call 888-680-1745 or send us a message online now.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.