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What Is the Worst-Case Scenario in a DEA Pharmacy Audit?

When the DEA Audits a Pharmacy, it has One Goal in Mind: To Uncover Any Statutory or Regulatory Violations So that They Can Be Penalized Appropriately.

When agents from the U.S. Drug Enforcement Administration (DEA) show up at your pharmacy and start asking questions, what is at risk? Is it a routine visit just to ask a few questions and check a few boxes? Or, could your pharmacy (and you personally) be at risk for more-serious consequences?

Unfortunately, it is the latter. In fact, if your pharmacy is not fully compliant with all applicable laws and regulations, the consequences of a DEA audit could be severe.

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Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney

Partner

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

7 Potential Outcomes of DEA Pharmacy Audits

Under 21 U.S.C. Section 824, the DEA has the authority to deny, suspend, or even revoke a DEA registration if its investigators find that a registered pharmacy or pharmacist:

  • Has materially falsified its DEA registration application;
  • Has been convicted of a felony relating to a controlled substance or a List I chemical;
  • Has had a state license or registration suspended, revoked, or denied by a competent state authority (e.g. state pharmacy board) and is no longer authorized under state law to engage in the manufacturing, distribution, or dispensing of controlled substances or List I chemicals
  • Has had suspension, revocation, or denial of a registration recommended by an authorized state agency;
  • Has committed an act which would render its registration with the DEA inconsistent with the public interest; or
  • Has been excluded from participation in Medicare or a state healthcare program under 42 U.S.C. Section 1320a-7(a).

The DEA also has law enforcement authority with respect to other provisions of the Controlled Substances Act (CSA), and it can work in conjunction with the U.S. Department of Justice (DOJ) and other federal agencies to pursue civil and criminal violations of a multitude of other statutes. With this broad authority in mind, there are essentially seven outcomes that pharmacy owners and pharmacists can expect when facing a DEA pharmacy audit:

Potential Outcome #1: Audit Passed.

If the DEA’s investigators are satisfied that your pharmacy is compliant, then they will say so and conclude the audit without the imposition of any administrative, civil, or criminal penalties. This is the ideal scenario, and it is possible to achieve if your pharmacy is fully compliant. However, in order to demonstrate your pharmacy’s compliance, there are various steps you may need to take; and, in order to ensure that you take these steps (and avoid miscues), you will want to engage experienced pharmacy compliance and defense counsel promptly.

Potential Outcome #2: Request for Voluntary License Revocation.

If the DEA’s investigators determine that your pharmacy has a significant inventory error rate, or if they determine that your pharmacy has filled a disproportionate number of suspicious or dangerous opioid prescriptions, then the DEA may ask you to voluntarily surrender your registration.

However, there are a number of reasons why voluntarily surrendering your DEA registration may be strongly ill-advised; and, unless your legal counsel advises you otherwise, you should not agree to a voluntary surrender. If you are currently at this stage, you need to speak with a federal pharmacy defense lawyer immediately.

Potential Outcome #3: Letter of Admonishment.

In many cases, DEA audits will result in a determination that errors have been made, but the identified errors will not be severe or not systematic enough to warrant loss of registration or civil or criminal prosecution. In such a case, the DEA may issue a Letter of Admonishment.

A Letter of Admonishment from the DEA essentially points out the issues that needs to be addressed and puts the DEA registrant on probation. When a pharmacy or pharmacist receives a Letter of Admonishment, it is almost guaranteed that the DEA will return for a follow-up inspection within one or two years. If the follow-up inspection reveals that no improvements to the pharmacy’s compliance program have been made; or, worse, that additional errors have been committed, then DEA will likely move forward with terminating the pharmacy’s or pharmacist’s registration.

Potential Outcome #4: Administrative Registration Revocation.

If a pharmacy or pharmacist does not voluntarily surrender its DEA registration, then the DEA may move to revoke its registration through administrative procedures. The DEA can file a motion to show cause arguing that a pharmacy or pharmacist should not be able to continue to possess, manage, and dispense controlled substance medications.

The revocation process is very time-consuming; however, does give the DEA registrant the opportunity to respond to and rebut the allegations with full due process, including an administrative hearing. For reasons that should be fairly obvious, it is imperative to have experienced federal defense counsel at this stage as well.

Potential Outcome #5: Emergency License Suspension.

Working in conjunction with state pharmacy boards, the DEA has the ability to request an emergency suspension of a pharmacy’s or pharmacist’s license if an audit reveals that allowing the pharmacy or pharmacist to continue dispensing controlled substances presents a danger to the public. Since this action is taken on an emergency basis, the DEA’s request will move quickly, and it does not necessarily have to wait until the end of the audit to initiate the process.

There are various circumstances in which a pharmacy’s dispensing practices may be deemed to constitute a danger to the public. For example, if an audit reveals that a substantial number of opioid pills are unaccounted for, this is likely a scenario in which the DEA would seek to prevent the pharmacy from continuing to dispense drugs. However, lesser issues can be sufficient to trigger a DEA request for an emergency suspension as well. Ultimately, DEA agents have a responsibility to protect the public; and, if they feel that a suspension is necessary, that is what they are going to pursue.

Potential Outcome #6: Referral for Civil Investigation.

In rare circumstances, the DEA’s investigators will refer an audited pharmacy to a civil prosecutor at the U.S. Department of Justice (DOJ). In order to do so, they must conclude that the pharmacy does not represent a danger to the public, but at the same time that significant enforcement action is warranted.

When the DEA refers a case for civil prosecution, each alleged violation carries a potential fine of $10,000. With each individual compliance deficiency potentially constituting a separate “violation,” pharmacies’ financial exposure in civil enforcement cases can be substantial.

Potential Outcome #7: Referral for Criminal Investigation.

In extreme cases, the DEA will refer an audited pharmacy to a federal criminal prosecutor at the U.S. Attorney’s Office. The DEA typically will not disclose or discuss such a referral with the pharmacy, and this means that pharmacy owners and pharmacists will typically need to play “catch up” – and quickly – once they discover that they are being prosecuted.

Recently, we have seen the U.S. Attorney’s Office prosecute these types of cases as conspiracies to commit violations of the Controlled Substances Act (CSA) under 21 U.S.C. Section 846. This statute states:

“Any person who attempts or conspires to commit any offense defined in [the CSA] shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.”

In other words, even if the evidence uncovered during an audit is insufficient to support charges for an actual violation of the CSA, if the evidence indicates that the pharmacy (or its owners or personnel) attempted or conspired to violate the CSA, then they can face the same penalties as defendants who went through with committing serious federal drug crimes.

How Can You Avoid These Outcomes if Your Pharmacy is Being Audited by the DEA?

All of this begs the question: If your pharmacy is being audited, what can you do to make sure your registration and license are secure and that you are not at risk for civil or criminal penalties?

Most importantly, you need to engage federal defense counsel promptly. In order to avoid unfounded allegations – or address founded allegations if necessary – you should engage a team of compliance consultants and defense lawyers who have extensive experience in DEA matters. At Oberheiden P.C., our team includes several former DOJ prosecutors as well as former DEA Diversion Program managers and investigators. We understand what is at stake if your pharmacy is being audited, and we know what the investigators are looking for. We can use this experience to your advantage, but only if you contact us for help.

If your pharmacy is being audited by the DEA, you do not have time to waste. Contact Oberheiden P.C. now to put our career federal defense attorneys, former federal prosecutors, and former DEA officials on your side.

Request a Confidential Case Assessment at Oberheiden P.C.

If you need to speak with a member of our pharmacy compliance and defense team about a DEA audit, call us at 888-680-1745 or contact us online. Our practice is nationwide in scope, and we have the knowledge and experience required to successfully defend pharmacy owners and pharmacists against all DEA allegations.

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