4th Largest US Wholesaler has DEA Registration Suspended
In an attempt to rein in the Opioid Epidemic, it seems that recently, the DEA has become more vigilant on Suspicious Order Monitoring and Reporting.
May 7 Update
Morris and Dickson was awarded a temporary restraining order which allows them to continue transacting business with controlled substances; it does not, however, reverse or change the DEA’s charges and stance.
The Law
The Title 21 Code of Federal Regulations
“The registrant shall design and operate a system to disclose to the registrant suspicious orders of controlled substances. The registrant shall inform the Field Division Office of the Administration in his area of suspicious orders when discovered by the registrant. Suspicious orders include orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.”
Morris and Dickson
Morris and Dickson became the subject of investigation after they failed to properly report large suspicious orders of controlled substances. These orders were placed by small independent pharmacies with shipments primarily consisted of Oxycodone and Hydrocodone.
The investigation concluded that Morris and Dickson allowed multiple small independent pharmacies across Louisiana to purchase as much or more narcotics than the largest chain pharmacies. One independent pharmacy in particular was sold a quantity of narcotics almost six times as much as their usual order.
Morris and Dickson clearly failed to follow DEA regulations, and on May 4th, their registration was officially suspended. Per the DEA press release, they will be awarded an administrative hearing within the next 60 days, and at this hearing, it will be decided if their registration will be permanently revoked.
What It Means
Morris and Dickson is a primary vendor, which makes this a make-or-break case: Morris and Dickson will lose a significant part, potentially a majority, of their business to the Big 3 and other primary vendors if the DEA action is successful. These are huge numbers as Morris and Dickson was estimated to have $4.2 billion in revenue as recently as 2017. In fact, Paul Dickson, President, testified that there was an immediate 14% drop in the value of the company. As customers move away from the company, that drop is sure to grow.
Controversy: Masters & McKesson & Morris and Dickson
In August 2013, DEA issued Masters a “Show Cause Order” alleging that, between 2009 and 2011, Masters’ sold oxycodone to eight of its retail pharmacy customers that it knew or should have known they were engaged in illegal diversion. After a bit of legal battle, on June 30, 2017, the Court of Appeals for the D.C. Circuit issued an order that confirmed the revocation of Masters’ DEA registration.
So Masters and Morris and Dickson both had their DEA registration revoked…but McKesson, reports .001% of their 1.6 million orders and they only get slapped with a fine. All three cases revolved around ineffective SOM software and shipping excessive amounts of oxycodone and/or hydrocodone pills.
Did McKesson’s Washington presence play a role in how they were treated?
This question is significant because it is arguable that Masters Pharmaceutical was forced to sell the company as a result of the decision (funnily enough, they sold to McKesson about 6 months after the announcement). Morris and Dickson might very soon be in the same exact boat because without controlled substances in their portfolio, they will be unable to function as a primary vendor.
NavigateSOM
Suspicious order monitoring software helps manufacturers and distributors make sure that they are in compliance with DEA regulations – in the case of Masters and Morris and Dickson, this could result in potentially losing the ability to buy and sell controlled substances completely and significant loss of your company’s value.
Pharma Solutions launched a cloud-based suspicious order monitoring software called NavigateSOM.
NavigateSOM uses 13 different algorithms to flag suspicious orders; NavigateSOM then allows for users to see the exact reason for the flag and upload investigation materials for rock-solid “DEA defensibility.” Other capabilities include, but are not limited to, easy API integration and expanded graph reporting per NDC, family, and class of trade.
To learn more about NavigateSOM, visit our website www.navigatesom.com and schedule a free consultation with us!
About Us
Based just outside of Philadelphia, Pharma Solutions provides actionable guidance and excellent administrative services with a focus on client care across Compliance, Commercial, and Quality solutions. Our mission is to improve the health and welfare of the American public by providing solutions and implementing best practices for companies in the pharmaceutical supply chain.
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