DEA Insights from the 2018 DEA Diversion Conference
The DEA hosted a conference in San Antonio, TX that addressed multiple aspects of how those that manufacture, purchase, and/or sell controlled substances are regulated.
Topic 1: Opioid Epidemic
Will Glaspy – Special Agent in Charge of the Houston DEA office – started off the conference highlighting the primary role of the DEA: protecting the American public by preventing diversion of controlled substances. The death toll is continuing to rise, with 66,000 deaths in 2016 and 72,000 deaths in 2017 attributed to the Opioid Epidemic. To curb the Epidemic, Mr. Glaspy confirmed that the DEA does not target users but instead focuses on the supply: cartels and rogue individuals that divert products. Mr. Glaspy closed his piece by stating that the DEA “values private-public partnership” – which bodes well for upcoming changes to DEA regulation.
Topic 2: Registration Overview
Erika Gehrmann – Chief, Registration & Program Support Section – followed up with an in-depth overview of registration with the DEA. Some of the nuances covered include: DEA requires renewals for those companies with “Order to Show Cause” to be submitted 45 days before expiration; how the DEA defers to the state government on whether a company is considered a “new company” and requires a new registration, if there is a tax conversion, and how registration isn’t required for List 1 chemicals, if it is in the Finished Drug Form.
Topic 3: Manufacturers & Importers of Schedule 1 & 2
Kurt Roth – Unit Chief, Regulatory Unit – started off his presentation by delineating the difference between “manufacturers”; according to the 802 definition, Bulk Manufacturers create drugs from scratch (API) and Finished Dose manufacturer products that are ready for human consumption. One key aspect pointed out was that importing is only authorized for domestic use and not allowed for re-export.
Next, Mr. Roth touched on the Section 303 Investigation process. A Section 303 Investigation is the “approval” from the DEA to manufacturer or import Schedule 1 and 2 controlled substances. A Section 303 Investigation is triggered for every new registration, registration renewal, or significant modification to a registration. There are 6 factors evaluated for the approval of a Section 303 Investigation: (1) controls against diversion, (2) compliance with applicable laws, (3) promotion of technical advances, (4) prior conviction record/legal troubles, (5) past experience in manufacturing, and (6) other, special circumstances. Because of the significant diligence required (open comment, approvals, etc.), the process can take 4 to 6 months to complete!
Topic 4: ARCOS Reporting
Sam Weisman – ARCOS Analyst – took the stage next to cover some of the intricacies in ARCOS reporting. ARCOS Reporting is the act of reporting to the DEA transactions involving all Schedule 1 & 2 substances, Schedule 3 narcotics, and GMB; manufacturers additionally have to report on Schedule 3 & 4 psychotropic substances. A reportable transaction includes purchasing, manufacturing, sales, inventory, returns/destruction, loss/theft, lack of activity, and lack of inventory. One nuance clarified was that the appropriate Transaction Code for a transfer to a reverse distributor is “S” (sale), not destruction. Registrants are encouraged to brush up on the ARCOS Handbook, specifically sections 5 and 6 and Appendix 1 and 2.
Topic 5: Re-Export of Controlled Substances
Mark Via – Tech Specialist, Import/Export Unit – provided extensive information on how and why the re-exportation of controlled substances is controlled. Specifically, the DEA allows controlled substances to be transferred across a maximum of two countries (e.g. USA à Switzerland à Japan). However, if the product is transferred to the EEU, it can move unhindered within the EEU.
Although the motive is clear (to help curb diversion), there is a lot of concern that companies making a transfer into another really does not have any transparency or control over further distribution/exportation.
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