Follow-Up Review of the Drug Enforcement Administrationís Efforts
to Control the Diversion of Controlled Pharmaceuticals

Evaluations and Inspections Report I-2006-004
July 2006
Office of the Inspector General


Background


Introduction

On October 27, 1970, the Congress passed the Comprehensive Drug Abuse Prevention and Control Act (P.L. 91-513, 21 U.S.C. § 801 et seq.). According to the Drug Enforcement Administration (DEA), Title II of this Act, the Controlled Substances Act, is a “consolidation of numerous laws regulating the manufacture and distribution of narcotics, stimulants, depressants, hallucinogens, anabolic steroids, and chemicals used in the illicit production of controlled substances” and is “the legal foundation of the government’s fight against drugs and other substances.”22 The Act also regulates all legal and illegal substances that are recognized as having potential for abuse or addiction.

The DEA is charged with enforcing the Controlled Substances Act, including the regulation of controlled pharmaceuticals and regulated chemicals. Specifically, the DEA’s diversion control program oversees and regulates the legal manufacture and distribution of controlled pharmaceuticals, which include narcotics such as codeine and methadone, stimulants such as amphetamine, and depressants such as diazepam; and regulated chemicals, which include pseudo ephedrine and ephedrine.

The Controlled Substances Act requires registration with the DEA by all businesses that import, export, manufacture, or distribute controlled substances; all health care practitioners entitled to dispense, administer, or prescribe controlled pharmaceuticals; and all pharmacies entitled to fill prescriptions. Registrants must comply with a series of regulatory requirements relating to security, record keeping and accountability, and adherence to published standards. The DEA can deny, suspend, or revoke a registration for several reasons, including professional license sanctions (by state authorities), prior federal or state convictions, or a registrant’s incompatibility with the public interest.

Controlled Pharmaceutical Diversion

Controlled pharmaceuticals are used legitimately by a large share of the American public and are found in legitimate places such as doctors’ offices and pharmacies. However, they can be diverted intentionally or unintentionally by doctors, pharmacists, dentists, nurses, veterinarians, and individual users. Diversion cases may involve physicians who sell prescriptions to drug dealers or abusers, pharmacists who falsify records to obtain and then sell pharmaceuticals, employees who steal from physician or pharmacy inventories, individuals who forge prescriptions, individuals who commit armed robbery of pharmacies and drug distributors, “doctor shoppers” who routinely visit multiple doctors complaining of the same ailment to obtain multiple prescriptions for controlled substances, and individuals who establish Internet pharmacies that sell controlled pharmaceuticals without requiring prescriptions.

The abuse of controlled pharmaceuticals can be as dangerous as the abuse of illicit drugs. Both can result in addiction, overdoses, and deaths. Moreover, the emergence of illicit Internet pharmacies has increased the availability of controlled pharmaceuticals by facilitating an easy purchase with a credit card and without a prescription.

Scope of Diversion

In recent years, the amount of controlled pharmaceuticals diverted from legal channels has increased significantly. Statistics from the National Drug Intelligence Center show that between calendar years 2000 and 2003, thefts of pharmaceuticals increased by 15.7 percent.23 According to a July 2005 report from the National Center on Addiction and Substance Abuse of Columbia University (CASA), the number of people who admitted abusing controlled prescription drugs increased by 94 percent, from 7.8 million in 1992 to 15.1 million in 2003.24 This rate of increase was seven times faster than the increase in the U.S. population for that same period. Additionally, the 2004 National Survey on Drug Use and Health reported that 2.4 million people used prescription pain relievers non-medically for the first time within the past 12 months.25 This number was the largest number of new users for any type of illicitly used drug during that same time period.

The abuse of controlled pharmaceuticals rivals the abuse of illicit drugs. For example, the CASA report stated that more people reported abusing prescription drugs (15.1 million) in 2003 than abusing illicit drugs, such as cocaine, hallucinogens, inhalants, and heroin (12.3 million). From 2002 to 2003, the number of people in the U.S. population who reported using heroin at least once in their lifetime remained constant, while the number who reported using Oxycodone non-medically increased by 1.9 million users. A 2005 DEA report on prescription drug diversion stated that “twenty-two million Americans suffer from substance dependence or abuse, with the non-medical use of prescription drugs ranking second only to marijuana as the most prevalent category of drug abuse.”26

In 2005, Congress emphasized its concern regarding the diversion of controlled pharmaceuticals. The House Report on the Justice Department’s fiscal year (FY) 2005 appropriations stated that while more than 6 million Americans abused prescription drugs, the “DEA has demonstrated a lack of effort to address this problem.” The report also stated that the DEA was expected to work “to ensure a coordinated government-wide approach to address prescription drug diversion. . . [and that the] Department of Justice is directed to submit quarterly reports describing its efforts to address prescription drug diversion.”27 The House Report on the Justice Department's FY 2006 appropriations repeated the concerns from the previous year. The final appropriation for FY 2006 included an additional $8.8 million and 41 positions for the DEA to improve intelligence support and $4.7 million and 23 positions for additional agents to assist diversion control.28

One specific area in which diversion recently has increased dramatically is through the use of the Internet. According to one estimate cited in the CASA report, the number of Internet pharmacies in operation at any one time has reached as high as 1,400.29 Additionally, a study by comScore Networks reported that 17.4 million people visited an online pharmacy in the fourth quarter of 2004, an increase of 14 percent from the previous quarter.30 Sixty-three percent of these sites did not require a prescription to obtain controlled substances.

Three recent high-profile DEA-led Internet investigations indicate the scope of the problem of pharmaceutical diversion using the Internet. In April 2005, Operation Cyber Chase targeted an organization suspected of illegally distributed approximately 2.5 million dosage units of controlled pharmaceuticals per month over the Internet. Operation Cyber Chase was an international operation involving two DEA field divisions and one DEA foreign office, and resulted in the arrest of 26 people in four countries. It also resulted in the seizure of 10 million dosage units of controlled pharmaceuticals, 231 pounds of an animal tranquilizer (ketamine), and $8.5 million.

In September 2005, Operation CybeRx dismantled an organization that was averaging more than $50,000 a day in profits from an illegal Internet-based enterprise. The Special Agent in Charge (SAC) of the Dallas Field Division dedicated the entire staff of the Fort Worth field office to Operation CybeRx for 7½ months. The operation resulted in 19 arrests, suspension orders against 20 pharmacies and physicians, and the seizure of $16.8 million in cash and property.

In December 2005, Operation Gear Grinder targeted eight major steroid manufacturing companies whose combined illicit Internet sales of steroids smuggled from Mexico totaled $56 million a year. These companies were the source of 82 percent of all steroids seized in the Unites States and analyzed by DEA laboratories. Operation Gear Grinder took place over 21 months and resulted in 9 arrests.

Impact of Diversion

The DEA Administrator noted the consequences of non-medical pharmaceutical use in a 2004 cable to DEA employees, stating that “the diversion and abuse of legal controlled substances poses a significant threat to the health and safety of Americans.” In 2005 congressional testimony, the DEA’s Acting Deputy Assistant Administrator, Office of Diversion Control, also stated that:

The non-medical use of prescription drugs has become an increasingly widespread and serious problem in the United States. A new generation of high dose, extended release, opioid pain medications have taken the existing threat to a new level. The abuse and diversion statistics are alarming. . . . These powerful drugs provide strong incentives for diversion through new means, such as “rogue” Internet pharmacies, as well as older methods, like prescriptions for profit. Recent drug use surveys have highlighted the gravity of this problem.31

The DEA’s Diversion Control Program

The DEA’s diversion control program has two main functions:

  • Regulatory – Oversight of all registrants that provide controlled pharmaceutical products to the public to ensure that they are complying with the requirements of the Controlled Substances Act.

  • Enforcement – Responsibility for identifying, investigating, and penalizing (administratively, civilly, or criminally) those persons responsible for diversion, whether through willfully negligent or criminal acts.

The DEA’s diversion control activities are directed and supported from DEA headquarters but are conducted primarily through the DEA’s field divisions and offices. The DEA headquarters Office of Diversion Control coordinates regulatory activities, the Pharmaceutical Investigations Section in the Office of Enforcement Operations manages the enforcement functions, and the Special Operations Division provides assistance with Internet investigations (Chart 1).

Chart 1: Subset of the Overall DEA Organization Chart

Organization Chart. Click on chart for a text only version.

Source: The DEA

Diversion Control Program Structure in DEA Headquarters

Office of Diversion Control. The Office of Diversion Control is located within the DEA’s Operations Division. Until the fall of 2004, the Office of Diversion Control was the primary headquarters element responsible for both the regulatory and enforcement functions of diversion control. In the fall of 2004, the DEA relocated the enforcement functions of diversion control to the Office of Enforcement Operations and certain Internet investigative assistance to the Special Operations Division. Currently, the Office of Diversion Control provides policy direction, program guidance, and support to DEA diversion control staff in the field. It also coordinates all regulatory activities, such as working with registrants, potential registrants, and members of the community to help prevent the diversion of controlled pharmaceuticals.

In addition, the Office of Diversion Control manages two systems that allow the public to report suspicious Internet pharmacies. The first is the Unlawful Medical Internet Reporting Effort (UMPIRE) accessed from the DEA’s web site, and the second is the 1-877-RxAbuse telephone hotline. A report received through the web site or hotline is forwarded to the DEA field division located in the area where the complaint originated.

The E-Commerce Section of the Office of Diversion Control maintains two databases that are used at headquarters and in the field and serve as analytical tools for diversion investigators. The Automation of Reports and Consolidated Orders System (ARCOS) database contains information from the pharmaceutical industry such as the path of Schedule II controlled substances from point of manufacture to retail locations where they are sold to consumers.32 The E‑Commerce Section provides quarterly and yearly ARCOS reports to the field showing the most-ordered Schedule II controlled pharmaceuticals and regulated chemicals in certain geographic areas. The second database is an analytical search tool developed by the DEA and private industry. Implementation of this database began in 2004, and currently all DEA field divisions have access.

Office of Enforcement Operations. The Office of Enforcement Operations’ Pharmaceutical Investigations Section (OEP) in DEA headquarters oversees diversion investigations. As described in a cable from DEA headquarters to DEA staff worldwide in the fall of 2004, “OEP is responsible for all domestic and international, criminal and/or complaint investigations of pharmaceutical controlled substances. . . . OEP will provide operational support to domestic field divisions’. . . investigations and other domestic projects having a pharmaceutical nexus.” Diversion investigators in the unit who serve as staff coordinators monitor several field divisions and serve as the divisions’ contact for funding requests, receive and monitor reports of investigations from the field, and coordinate multi-jurisdictional investigations.

Special Operations Division. The Special Operations Division, through its Pharmaceutical and Chemical Internet Coordination unit established in the fall of 2004, supports the field by coordinating Internet investigations, providing administrative support, and providing a liaison between the field and certain intelligence resources located at headquarters. The Special Operations Division ensures that all investigators who are considering investigating a particular web site are aware of other DEA investigative activities associated with the site.

The Special Operations Division also responds to requests from the field for intelligence information pertaining to specific web sites as part of the DEA’s Online Investigations Project (OIP).33 In July 2003, in a memorandum to the Office of the Inspector General (OIG), the DEA stated that the OIP was intended to be a “state of the art data mining and warehousing system capable of rapidly detecting public domain web sites offering the illicit sale of controlled substances” that would “identify pharmacies and other businesses conducting illegal transactions via the web.”

Diversion Control Program Structure in the Field

The DEA domestic field structure consists of 21 field division offices, each headed by a SAC, and 234 sub-offices located throughout the United States. Sixty-three of these offices and sub-offices have a diversion control group of investigators led by a supervisor. As of June 2005, 482 of 535 diversion investigators were assigned to DEA domestic field divisions; the remaining positions were in headquarters and in foreign field offices.

Diversion investigators, special agents, and intelligence analysts are the three types of employees in DEA field offices that have primary roles in diversion investigations. The role of each is described below.

Diversion investigators. Diversion investigators conduct regulatory tasks, educate the public, coordinate with the pharmaceutical industry, work with state and local officials engaged in diversion control, and investigate pharmaceutical diversion.

Diversion investigators’ regulatory tasks include conducting onsite pre-registration investigations of all applicants proposing to manufacture, distribute, import, or export controlled substances, or to operate a narcotic treatment program as required by the Controlled Substances Act. The Act also requires that the DEA conduct cyclic investigations of all pharmaceutical manufacturers, distributors, importers, exporters, and narcotic treatment programs.34

In addition, diversion investigators perform tasks to prevent and deter the diversion of pharmaceuticals. They engage in demand reduction activities, such as giving presentations to community organizations and institutions about the dangers of non-medical pharmaceutical use, training industry in how to comply with pertinent regulations of the Controlled Substance Act, assisting businesses seeking to register with the DEA, reviewing pharmaceutical labels, reviewing pharmaceutical companies’ drug promotion and risk management plans, and establishing quotas for controlled substances. Diversion investigators also provide diversion control training to state and local officials and collaborate with states on their Prescription Drug Monitoring Programs.35 The DEA Diversion Investigators Manual directs diversion investigators to spend 45 percent of their time on these and other regulatory activities.

Diversion investigators also investigate and take action against diverters of controlled pharmaceuticals. Diversion investigators initiate investigations through the detection of violations or irregularities uncovered during pre-registration or cyclic investigations, from complaints received from members of the public or registrants, or from leads received through intelligence sources. Targets of diversion investigations can be doctors, pharmacists, drug organizations, or individuals. The DEA Diversion Investigators Manual directs diversion investigators to spend 55 percent of their time on enforcement activities.

Diversion investigators are not criminal investigators and cannot perform law enforcement functions such as serving warrants, conducting surveillance, managing confidential informants, and working undercover. Diversion investigators rely on special agents or other law enforcement personnel when tasks requiring law enforcement authority are necessary.

Special agents. Special agents either are assigned permanently to assist diversion groups or are assigned temporarily to assist diversion groups on specific investigations or tasks when requested. Special agents assist diversion investigators by performing investigative tasks that require law enforcement authority such as surveillance, registering and working with confidential informants, serving search warrants, and making arrests.

Tactical Diversion Squads. In 1996, the DEA created Tactical Diversion Squads. The squads are composed of diversion investigators, special agents, and state and local law enforcement personnel who work on retail-level diversion cases, such as investigations of prescription forgers and doctor shoppers. Tactical Diversion Squads currently are located in the following five DEA field divisions: Denver, St. Louis, Houston, New Orleans, and Boston.

Intelligence analysts. Intelligence analysts also assist diversion investigations. The primary functions of intelligence analysts are to collect, collate, research, and analyze all available information on a particular operation, investigation, organization, drug-related issue, program, or project. They assist diversion investigators by analyzing data collected through wiretaps or prescription records, preparing background profiles on investigative targets, and performing database checks. Intelligence analysts provide three primary types of support: 36

  • Investigative – Assistance for ongoing cases, including telephone toll analysis, financial analysis, and debriefings of confidential informants;
  • Tactical – Information such as identification of “traffickers, conveyances, methods of operation, and the movement of drugs” that allows immediate enforcement action to take place, such as arrests and seizures; and
  • Strategic – Complex predictive and descriptive research and analysis regarding drug trafficking trends and issues.

Previous OIG Report on Pharmaceutical Diversion

The 2002 OIG review of the DEA’s pharmaceutical diversion control program concluded that the DEA’s enforcement efforts had not adequately addressed the problem of controlled pharmaceutical diversion.37 Specifically, we found that despite the widespread problem of controlled pharmaceutical diversion and abuse, the DEA had been slow to commit sufficient resources to address the problem. According to the DEA, special agents spent only 3 percent of their total work hours on diversion investigations, and the lack of special agent assistance negatively affected the quality and timeliness of diversion investigations (since diversion investigators lack law enforcement authority).38 In addition, the DEA had failed to resolve the question of the law enforcement authority for diversion investigators, provided minimal intelligence support to diversion investigators, and did not provide specialized training for special agents in diversion investigations.

In the 2002 review, we made four recommendations, and the DEA concurred with all four. First, we recommended that the DEA increase investigative resources devoted to the controlled pharmaceutical diversion program. Subsequently, the DEA obtained approval in its FY 2004 budget for 75 additional diversion investigator positions.39 Second, we recommended that the DEA ensure adequate training for special agents in diversion investigation procedures. In response, the DEA implemented a week-long course on diversion investigation operations for special agents who assist with diversion investigations.

The third recommendation was for the DEA to clarify the roles, responsibilities, and law enforcement authorities of diversion investigators. On September 6, 2005, the DEA approved the reclassification of diversion investigator positions to positions with law enforcement authority and is now awaiting approval by the Department, the Office of Personnel Management, and the Office of Management and Budget for the reclassification. Finally, we recommended that the DEA fully implement the Online Investigations Project and the diversion intelligence group to provide effective intelligence support to the Office of Diversion, and that the DEA continue to explore additional intelligence capabilities to support the diversion investigators. The DEA has stated that the Online Investigations Project is now fully implemented and that “although the OIP does not perform in the manner originally intended (a push button system without any user interaction), it has developed into a viable investigative tool that is assisting field personnel in Internet investigations.”40 The DEA also received 40 additional field and headquarters intelligence analyst positions and one intelligence support position located in the Special Operations Division in its FY 2006 appropriation.



Footnotes
  1. DEA overview on the Controlled Substances Act, www.usdoj.gov/dea/agency/csa.htm.

  2. National Drug Threat Assessment 2005, National Drug Intelligence Center, February 2005.

  3. Under the Counter: The Diversion and Abuse of Controlled Prescription Drugs in the U.S., National Center on Addiction and Substance Abuse of Columbia University, July 2005. The report uses the term “abuse” to refer to non-medical use of a drug.

  4. The National Survey on Drug Use and Health defines non-medical use as the use of prescription-type drugs not prescribed for the respondent by a physician or the use of a drug only for the experience and feeling it causes. The CASA report uses the term abuse to refer to non-medical use of a drug.

  5. DEA, Prescription Drug Diversion, June 2005.

  6. H.R. Rep. No. 108-576 (July 1, 2004).

  7. H.R. Rep. No. 109-118 (June 10, 2005).

  8. Each of these pharmacies may have been represented by multiple web sites.

  9. ComScore is a global market research provider and consultant for Internet usage, audience measurement, and e-commerce tracking data. The study is at www.comscore.com/press/release.asp?press=571.

  10. Statement of Joseph Rannazzisi, Acting Deputy Assistant Administrator, Office of Diversion Control, DEA, before the House Committee on Government Reform, Subcommittee on Regulatory Affairs, Status of the Efforts of the FDA and DEA in regulating Schedule II Prescription Painkillers, Specifically OxyContin ® and Other Opioid Analgesics, September 13, 2005.

  11. All controlled substances, which include illicit drugs as well as those prescribed for medical purposes, are assigned to one of five categories or schedules based upon the substance's medicinal value, harmfulness, and potential for abuse or addiction. Schedule I is reserved for the most dangerous drugs that have no recognized medical use, while Schedule V is used for the least dangerous drugs. Controlled pharmaceuticals are found in Schedules II through V.

  12. The OIP is a computer program that searches the Internet, using key words or phrases to identify web sites possibly involved in the diversion of controlled substances.

  13. Currently, these cyclic investigations take place every 5 years.

  14. Prescription Drug Monitoring Programs are systems in which controlled pharmaceutical prescription data are submitted to a centralized database administered by an authorized state agency. These programs are designed to help prevent and detect the diversion and abuse of controlled pharmaceutical substances, particularly at the retail level where no other automated information collection system exists.

  15. Intelligence Program Policy Order 00-200, Responsibilities of Intelligence Analysts, November 1999.

  16. See the OIG report entitled Review of the Drug Enforcement Administration’s Control of the Diversion of Controlled Pharmaceuticals, I-2002-010, October 2002, www.usdoj.gov/oig/reports/DEA/e0210/index.htm.

  17. This 3 percent figure was based on information from interviews with DEA officials. In the current review, we used DEA work hour data to determine how much time special agents spent on diversion investigations.

  18. The remaining positions are DEA special agent positions.

  19. The DEA’s December 20, 2005, response to the OIG’s 2002 review.



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