DEA Defense Attorney Tips: You’re Under Investigation by the DEA. Now what?

Trusted Defense Lawyers for DEA Investigations

From Anti-Kickback Statute violations to opioid diversion, the U.S. Drug Enforcement Administration (DEA) investigates pharmacies for a broad range of offenses. If your pharmacy is under investigation, you will need to act swiftly to mitigate your risk of facing civil or criminal charges.

When facing a DEA investigation, there is a lot you need to know. If the DEA is looking into your pharmacy, there could be numerous reasons why, and the potential outcomes will depend on both the scope of the investigation and how you respond to the DEA’s inquiry.

Due to the risks involved with facing a DEA investigation, if your pharmacy is being targeted for possible civil or criminal prosecution, it is imperative that you engage experienced federal defense counsel promptly.

At Oberheiden P.C., our DEA attorneys can intervene in the investigation, interact with the DEA’s agents on your pharmacy’s behalf, and steer the investigation toward a favorable outcome. We represent pharmacies across the country, and we have significant experience successfully resolving high-stakes DEA investigations.

10 Essential Steps When Facing a DEA Investigation

Is the DEA investigating your pharmacy? If so, here are 10 steps that need to be taken as soon as possible:

1. Intervene in the DEA’s Investigation

There are three primary ways that you can respond to a DEA investigation: (i) you can ignore it, (ii) you can comply with the DEA’s demands, or (iii) you can intervene. By hiring a DEA defense lawyer to intervene, not only can you slow down the investigative process, but you can also ensure that the investigating agents do not overreach, and you can avoid unnecessarily disclosing information that could potentially lead to trouble for your pharmacy. At Oberheiden P.C., we promptly intervene in our clients’ investigations, and we use our prior DEA experience to quickly assess our clients’ risks and options.

2. Determine the Scope of the Investigation

DEA investigations can target an extremely broad range of regulatory and statutory offenses. In order to ensure that your pharmacy puts forward the right defense, it is imperative to determine the scope of the inquiry. By intervening in your pharmacy’s DEA investigation, our defense lawyers can determine whether your pharmacy is being targeted for:

• Anti-Kickback Statute violations
• DEA registration violations
• Drug Supply Chain Security Act (DSCSA) violations
• Electronic prescription fraud
• Inventory, storage, disposal, or recordkeeping violations
• Medicare, Medicaid, or Tricare billing fraud
• Money laundering, mail fraud, or wire fraud
• Private insurance billing fraud
• Opioid diversion
• Specialty or compound pharmacy fraud

3. Identify What Triggered the Investigation

In addition to determining the scope of the investigation, it is also important to determine the investigation’s trigger. Is the DEA conducting a routine inspection? Or, did a patient or employee contact the agency? These are very different situations that require very different defense strategies.

4. Conduct an Internal Risk Assessment

When the DEA is investigating your pharmacy, you need to know what (if anything) the agency is going to find. This is information you need now, and you need to have a clear and comprehensive understanding of your pharmacy’s exposure (if any) in the investigation. Gathering this information requires a prompt and efficient internal DEA risk assessment, and this audit should be conducted by your pharmacy’s DEA defense counsel so that the attorney-client privilege will apply.

5. Assess the Audit Results

After conducting an internal DEA risk assessment, your pharmacy (and its defense counsel) must promptly assess the results. Is the DEA going to find deficiencies in your pharmacy’s compliance efforts? Or, does your pharmacy have clear and comprehensive documentation of compliance? Here, too, these are two very different scenarios that will mandate different approaches to your pharmacy’s DEA defense.

6. Formulate a DEA Defense Strategy

The next step after assessing the results of your pharmacy’s internal risk assessment is to formulate your pharmacy’s DEA defense strategy. Your pharmacy’s defense strategy must address all allegations at issue in the investigation, but it must also be tailored so as to not defend against (and potentially disclose information regarding) any charges that are not on the table.

7. Understand What To Do (and Not To Do) During the Investigation

As the target of a DEA investigation, you need to be very careful about everything you say and do. Your DEA defense attorney can advise you regarding both what to do and what not to do, and it will be extremely important for you to follow your attorney’s advice.

8. Defend Against the DEA’s Allegations

Once you have a clear understanding of the scope of the DEA’s investigation, what (if anything) has the potential to lead to charges, and what defenses your pharmacy can assert in response to the DEA’s allegations, your pharmacy will then be prepared to execute a sound defense. At this stage, you will need to rely on your pharmacy’s defense counsel to communicate with the investigating agents, deal with federal prosecutors, and try to protect your pharmacy (and you personally) against facing federal charges.

9. Work Toward a Favorable Pre-Charge Result

Once your pharmacy falls within the DEA’s crosshairs, the best possible outcome is to resolve the investigation without charges being filed. At Oberheiden P.C., this is an outcome we pursue in every DEA investigation we handle. Whether this means avoiding liability entirely or negotiating a pre-charge settlement will depend on the specific circumstances presented. We have been successful in convincing federal prosecutors that no civil or criminal penalties are warranted in many cases; however, every case presents its own challenges based on the unique circumstances involved.

10. Prepare for a Federal Grand Jury if Necessary

If it is not possible to avoid charges as the result of your pharmacy’s DEA investigation, the next stage may be to prepare for a federal grand jury. Pharmacy investigations can lead to either civil or criminal charges; and, in cases involving opioid diversion and other federal law enforcement priorities, prosecutors will not hesitate to seek an indictment.

Common DEA Violations Discovered During a DEA Audit of a Pharmacy

The federal government has an interest in preventing those who are not prescribed controlled substances from obtaining them through illicit means. The DEA is the primary federal agency that investigates pharmacies to ensure they comply with all federal laws. The following are a few of the most commonly investigated statutes.

21 CFR 1304.03 – Persons Required to Keep Records and File Reports

Federal law requires pharmacists to keep records of certain controlled substances, including those classified as Schedule II, III, IV, and V. More specifically, practitioners who regularly dispense or administer controlled substances to patients and charge them for the substances must comply with the regulations on recordkeeping. However, practitioners who only prescribe controlled substances or if they dispense or administer controlled substances only occasionally are exempt from the recordkeeping requirements. As § 1304.03 explains, “The intent of the [DEA] is to permit the registrant to keep one set of records which are adapted by the registrant to account for controlled substances used in any activity.”

21 CFR 1304.04 – Maintenance of Records and Inventories

Section 1304.04 describes the individual recordkeeping requirements for individual practitioners. More specifically, individual practitioners, as well as each registered manufacturer, distributor, importer, exporter, narcotic treatment program and compounder for narcotic treatment program shall maintain inventories and records of controlled substances as follows:

• Inventories and records of controlled substances listed in Schedules I and II shall be maintained separately from all of the records of the registrant; and

• Inventories and records of controlled substances listed in Schedules III, IV, and V shall be maintained either separately from all other records of the registrant or in such form that the information required is readily retrievable from the ordinary business records of the registrant.

Pharmacies are subject to additional recordkeeping duties, including:

• Paper prescriptions for Schedule II controlled substances shall be maintained at the registered location in a separate prescription file.
• Paper prescriptions for Schedules III, IV, and V controlled substances shall be maintained at the registered location either in a separate prescription file for Schedules III, IV, and V controlled substances only or in such form that they are readily retrievable from the other prescription records of the pharmacy.
• Records of electronic prescriptions for controlled substances shall be maintained in an application that meets the requirements of part 1311 of this chapter.

21 CFR 1304.11 – Inventory Requirements

Section 1304.11 lists the inventorying requirements for pharmacists. More specifically, “each inventory shall contain a complete and accurate record of all controlled substances on hand on the date the inventory is taken, and shall be maintained in written, typewritten, or printed form at the registered location.” Under § 1304.11, pharmacists must take an initial inventory, as well as to conduct an inventory at least every two years.

21 CFR 1304.21 (a) – General Requirements for Continuing Records

Section 1304.21 discusses the continuing recordkeeping requirements pharmacists must adhere to. Any pharmacy covered under § 1304.03 “shall maintain, on a current basis, a complete and accurate record of each substance manufactured, imported, received, sold, delivered, exported, or otherwise disposed of by him/her, and each inner liner, sealed inner liner, and unused and returned mail-back package, except that no registrant shall be required to maintain a perpetual inventory.”

21 CFR 1304.21 (b) – Continuing Records for Pharmacies with Multiple Locations

Additionally, pharmacies with multiple locations must maintain a separate record for each location. Sub-section (b) provides that “separate records shall be maintained by a registrant for each registered location except as provided in §1304.04(a). In the event controlled substances are in the possession or under the control of a registrant at a location for which he is not registered, the substances shall be included in the records of the registered location to which they are subject to control or to which the person possessing the substance is responsible.”

21 CFR 1301.71 (a) – Security Requirements Generally

The theft of controlled substances is of great concern to the federal government. Thus, § 1301.71(a) provides that “all applicants and registrants shall provide effective controls and procedures to guard against theft and diversion of controlled substances.” Diversion of a controlled substance is defined as ““the unlawful channeling of regulated pharmaceuticals from legal sources to the illicit marketplace.” Depending on the schedule of the drug, one of the following options are required:

• A vault constructed of at least 8 inches of reinforced concrete or other “substantial masonry”;
• A secured steel cabinet;
• A separate building equipped with an alarm system;
• A metal cage constructed of not less than No. 10 gauge steel fabric mounted on steel posts of at least one inch in diameter.

However, § 1301.71(b) provides that “substantial compliance” with the security requirements may be acceptable when considering:

• The type of activity being conducted;
• The form of the substances on hand;
• The quantity of controlled substances handled;
• Whether the physical location of the pharmacy requires additional security needs;
• The type of building the pharmacy is located in;
• The type of vault, safe, or enclosure, as well as its opening mechanism;
• The adequacy of the building’s alarm system;
• Whether the public has unsupervised access to the location;
• The adequacy of the supervision over employees who have access to the controlled substances; and
• The adequacy of the pharmacy’s system for monitoring the receipt, manufacture, distribution, and disposition of controlled substances in its operations.

21 CFR 1301.76 – Other Security Control for Practitioners

To ensure that controlled substances remain secure, § 1301.76 provides additional security protocols pharmacies must follow. For example, a pharmacy cannot employ anyone as an agent or allow them access to controlled substances if they have been convicted of a drug felony. Similarly, pharmacies cannot allow anyone who had a DEA application denied or registration revoked to access controlled substances.

21 CFR 1301.76 (b) – Report Theft/Loss

Section § 1301.76(b) outlines the reporting requirements for pharmacies that discover controlled substances went missing. However, not every event resulting in the loss of a controlled substance must be reported. Pharmacies must notify the DEA of any “significant” theft or loss. This notice must be provided in writing within a day of discovery. Additionally, a pharmacy discovering a significant loss must complete DEA form 106 and submit the form to the Field Division Office.

In determining whether a theft or loss is significant, the DEA considers:

• The type of controlled substance;
• The amount lost or stolen;
• Whether there is any indication that the theft or loss was related to a particular person or employee; and
• Whether there is a pattern of smaller thefts or losses;
• Whether the specific controlled substances are likely candidates for diversion; and
• Local trends and other indicators of the diversion potential of the missing controlled substance.

21 CFR Part 1317 – Disposal

Part 1317 contains several provisions regarding the appropriate methods of disposal of controlled substances. This includes all damaged, expired, returned, recalled, unused, or otherwise unwanted controlled substances. Sub-part A (21 CFR 1317.05) discusses controlled substances in the possession of the pharmacy.

21 CFR 1317.05 – Registrant Disposal (includes practitioner inventory)

Section 1317.05 discusses the available ways that a pharmacy can dispose of damaged, expired, returned, recalled, unused, or otherwise unwanted controlled substances. This section provides for the following methods of disposal:

• Promptly destroy the controlled substance, according to the requirements of § 1317.05 Sub-Part C;
• Promptly deliver that controlled substance to a reverse distributor’s registered location;
• For the purpose of return or recall, promptly deliver that controlled substance to any of the following:
  • The registered person from whom it was obtained,
  • the registered manufacturer of the substance, or
  • another registrant authorized by the manufacturer to accept returns or recalls on the manufacturer’s behalf
• Request assistance from the Special DEA Agent in Charge in the area in which the pharmacy is located.

21 CFR 1317, Sub-Part C – Destruction of Controlled Substances

Section 1317, Sub-Part C discusses the manner in which pharmacies can legally destroy damaged, expired, returned, recalled, unused, or otherwise unwanted controlled substances. Pharmacies can destroy controlled substances in any of the following ways, provided the substances are non-retrievable by any member of the public:

• Transfer to a person registered or authorized to accept controlled substances for the purpose of destruction;
• Transport to a registered location for destruction along with two other employees;
• Transport to a non-registered location for destruction along with two other employees who actually witness the destruction of the controlled substances; or
• Destroy the substances on-site in the presence of two employees who witnesses the actual destruction of the controlled substances.

FAQs: DEA Investigation Defense

Speak with a Senior DEA Defense Lawyer at Oberheiden P.C.

Is your pharmacy under investigation by the DEA? If so, we strongly encourage you to speak with one of our senior DEA lawyers right away. Our career federal defense lawyers, former federal prosecutors, and former DEA agents can intervene in the investigation and determine what defenses you have available. To speak with a lawyer at Oberheiden P.C. in confidence, call 888-680-1745 or contact us online now.

Last Updated: 2023-05-03

DEA Defense Attorneys for DEA Investigations | Oberheiden, P.C.