## ECONOMIC IMPACT ANALYSIS

O f

Final Rule on the Disposal of Controlled Substances, DEA

- 3 1 6

Drug Enforcement Administration U.S. Department of Justice June 201 4

# Table of Contents

CHAPTER 1: INTRODUCTION

................................ ................................ ................................ ................................ ... 1
CHAPTER 2: REGULATO RY ANALYSES INVESTIG ATED

................................ ................................ .................. 3
2.1 E XECUTIVE O RDERS 12866 AND 13563

................................ ................................ ................................ .............. 3
2.2 R EGULATORY FLEXIBILIT Y ACT

................................ ................................ ................................ .......................... 3
2.3 U NFUNDED M ANDATES R EFORM A CT

................................ ................................ ................................ ................ 4
2.4 C ONGRESSIONAL R EVIEW A CT

................................ ................................ ................................ ........................... 4
CHAPTER 3: SCOPE OF ANALYSIS

................................ ................................ ................................ .......................... 6
CHAPTER 4: REGISTRA NT AND NON

- REGISTRANT DISPOSAL: REGULATORY ALTERNATI VES
CONSIDERED

................................ ................................ ................................ ................................ .................. 9
4.1 N ON

- R EGISTRANT D ISPOSAL

................................ ................................ ................................ .............................. 10 4.1.1 Single Collection

................................ ................................ ................................ ................................ ..... 10 4.1.2 Open Collection

................................ ................................ ................................ ................................ ....... 11 4.1.3 Multiple Colle ction (Selected Methodology)

................................ ................................ .......................... 12
4.2 R EGISTRANT D ISPOSAL

................................ ................................ ................................ ................................ ...... 13 4.2.1 Retain Existing Regulations

................................ ................................ ................................ .................... 13
4.2.2 Establish Consistent National Standards ( Selected Methodology )

................................ .......................... 13
4.3 R EVERSE D ISTRIBUTORS

................................ ................................ ................................ ................................ .... 14
4.3.1 On

- site Requirement

................................ ................................ ................................ ................................ 15 4.3.2 Prompt Requirement

................................ ................................ ................................ ................................ 16 4.3.3 No Requirement

................................ ................................ ................................ ................................ ...... 16 4.3.4 No Later Than 30 Calendar Day Requirement (Selected Methodology)

................................ ................. 17
CHAPTER 5: ANTICIPA TED ECONOMIC IMPACT OF MANDATORY PORTION S OF REGULATORY
ACTION: REGISTRANT DISPOSAL

................................ ................................ ................................ ............ 18
5.1 G ENERAL R ELATIONSHIP B ETWEEN R EGISTRATIONS , E NTITIES , AND S MALL E NTITIES

................................ ..... 18
5.2 E NTITIES A FFECTED BY M ANDATORY P ORTIONS OF THE R ULE

................................ ................................ .......... 20 5.2.1 Number of Registrations Affected by the Mandatory Portions of the Rule

................................ ............. 20
5.2.2 Number of Entities and Small Entities Affected by the Mandatory Portions of the Rule

....................... 21
5.3 Q UANTITATIVE A NALYSIS OF M ANDATORY P ORTIONS

................................ ................................ ...................... 21
5.3.1 Registrant Disposal: Impact on Reverse Distributors that Destroy Controlled Substances

.................... 21
5.3.2 Reverse Distribut or Additional Destruction Costs

................................ ................................ .................. 25 5.3.3 Reverse Distributor Additional Transport Costs

................................ ................................ ..................... 26
5.3.4 Reverse Distributor Additional Labor Costs

................................ ................................ ........................... 27 5.3.5 Reverse Distributor Additional Travel Costs: Per Diem and Vehicle Cost

................................ ............ 28
5.3.6 Manufacturer Additiona l Labor Cost

................................ ................................ ................................ ...... 29
5.3.7 Distributor Additional Labor Cost

................................ ................................ ................................ ........... 30



### i5.3.8 Combined Costs/Annual Cost of the Mandatory Portions of the Rule

................................ .................... 32
CHAPTER 6: ESTIMATED ECONOMIC IMPACT OF VOLUNTARY PARTICIPATION IN REGULATORY
ACTIVITY: NON

- REGISTRANT DISPOSAL

................................ ................................ .............................. 33
6.1 N UMBER OF E NTITIES AND S MALL E NTITIES A FFECTED

................................ ................................ ..................... 34
6.2 S CENARIO 1: R ETAIL P HARMACY C OLLECTION R ECEPTACLE

................................ ................................ ............ 35 6.2.1 Retail Pharmacy Participation Rate

................................ ................................ ................................ ......... 37 6.2.2 Cost to Pharmacies at Low Participation Rate

................................ ................................ ........................ 38
6.2.3 Cost to Pharmacies at Medium Participation Rate

................................ ................................ .................. 40 6.2.4 Cost to Pharmacies at High Participation Rate

................................ ................................ ........................ 41
6.3 S CENARIO 2: H OSPITAL /C LINIC WITH ON

- SITE PHARMACY C OLLECTION R ECEPTACLE

................................ ..... 43
6.4 S CENARIO 3: L ONG

- T ERM C ARE F ACILITY C OLLECTION R ECEPTACLE

................................ ............................. 45
6.4.1 Scenario 3A: Long

- Term Care Facility in an Urban or Suburban Location

................................ ........... 46 6.4.2 Scenario 3B: Long

- Term Care Facility in a Rural Location

................................ ................................ ... 48 6.4.3 Estimated Cost of Long

- Term Care Facility Collection Receptacle

................................ ........................ 50
6. 5 S CENARIO 4: M ANUFACTURER C OLLECT ION R ECEPTACLE

................................ ................................ ................ 51
6.6 S CENARIO 5: D ISTRIBUTOR C OLLECTION R ECEPTACLE

................................ ................................ ..................... 54
6.7 S CENARIO 6: N ARCOTIC T REATMENT P ROGRAM C OLLECTION R ECEPTACLE

................................ ..................... 55
6.8 S CENARIO 7: M AIL

- B ACK P ROGRAM

................................ ................................ ................................ ................. 57
CHAPTER 7: SUMMARY OF COSTS

................................ ................................ ................................ ......................... 63
CHAPTER 8: IMPACT ON SMALL ENTI TIES

................................ ................................ ................................ .......... 65
8. 1 C RITERIA FOR “S IGNIFICANT ” E CONOMIC I MPACT

................................ ................................ ............................. 65
8.2 A NALYSIS

................................ ................................ ................................ ................................ ........................... 65
8.2.1 Manufacturers

................................ ................................ ................................ ................................ .......... 65
8.2.2 Distributors

................................ ................................ ................................ ................................ .............. 67 8.2.3 Reverse Distributors

................................ ................................ ................................ ................................ 69 8.2.4 Narcotic Treatment Programs

................................ ................................ ................................ .................. 69 8.2.5 Hospitals/Clinics with On

- Site Pharmacy

................................ ................................ ............................... 71
8.2.6 Retail Pharmacies

................................ ................................ ................................ ................................ .... 75 8.2.7 Long Term Care Facilities

................................ ................................ ................................ ....................... 77 8.2.8 Results Summary

................................ ................................ ................................ ................................ ..... 81
8.3 C RITERIA FOR “S UBSTANTIAL N UMBER ”

................................ ................................ ................................ ............ 82
CHAPTER 9: COST

- BENEFIT ANALYSIS OF REGULATORY ACTION

................................ .............................. 84
9.1 C OSTS OF THE R ULE

................................ ................................ ................................ ................................ ........... 84 9.2 B ENEFITS OF THE R ULE

................................ ................................ ................................ ................................ ...... 84 9.2.1 Prescription Drug Abuse Epid emic

................................ ................................ ................................ ......... 84 9.2.2 Monetary Costs of Prescription Drug Abuse

................................ ................................ ........................... 86
9.3 E VALUATION OF THE C OSTS AND B ENEFITS OF THE R ULE ( THRESHOLD ANALYSIS )

................................ ........... 88



### iiCHAPTER 10: CERTIFI CATION STATEMENTS

................................ ................................ ................................ ...... 91
10.1 E XECUTIVE O RDERS 12866 AND 13563

................................ ................................ ................................ ............ 91
10.2 R EGULATORY F LEXIBILITY A CT

................................ ................................ ................................ ...................... 91
10.3 U NFUNDED M ANDATES R EFORM A CT

................................ ................................ ................................ .............. 93
10.4 C ONGRESSIONAL R EVIEW A CT

................................ ................................ ................................ ......................... 93
APPENDIX A

– AFFECTED ENTITIES AN D SMALL ENTITIES

................................ ................................ ............. 94



### iii

# List of Tables

Table 1. Number of Affected Registrations by Business Activity

................................ ................................ .............. 21 Table 2. Number of Affected Entities and Sma ll Entities

................................ ................................ ........................... 21
Table 3. Manufacturer Additional Labor Cost

................................ ................................ ................................ ............ 30
Table 4. Distributor Additional Labor Cost

................................ ................................ ................................ ................ 31 Table 5. Summary of Costs of Mandatory Portions of the Rule

................................ ................................ ................. 32 Table 6. Number of Affected Entities and Small Entities (Voluntary Participation)

................................ .................. 35 Table 7. Estimated Cost to Retail Pharmacy Operating a Collection Receptacle (Low or Medium Participation Rate)

................................ ................................ ................................ ................................ ............... 39 Table 8. Cost to Pharmacies Operating Collection Receptacles at Low Participation Rate

................................ ....... 40 Table 9. Cost to Pharmacies Operating Collection Receptacles at Medium Participation Rate

................................ . 41 Table 10. Estimated Annually Recurring Cost to Retail Pharmacy Operating a Collection Receptacle (High Participation Rate)

................................ ................................ ................................ ................... 42 Table 11. Cost to Pharmacies Operating Co llection Receptacles at High Participation Rate

................................ ..... 43 Table 12. Cost to Hospitals with On

- site Pharmacies Operating Collection Receptacles at Registered Locations

.... 45 Table 13. Annually Recurring Costs Associated with Operating a Collection Receptacle at a
LTCF in an Urban or Suburban Location

................................ ................................ ................................ ............. 47 Table 14. Annual Recurring Costs Associated with Operating a Collection Receptacle at a
LTCF in a Rural Location

................................ ................................ ................................ ................................ .... 49 Table 15. Cost of Operating Collection Receptacles at Long Term Care Facilities

................................ ................... 51
Table 16. Es timated Costs to Manufacturer Operating a Collection Receptacle

................................ ........................ 53 Table 17. Cost of Manufacturers Operating Collection Receptacles

................................ ................................ .......... 54 Table 18. Cost of Distributors Operating Collection Receptacles

................................ ................................ .............. 55 Table 19. Estimated Costs to NTPs Operating Collect ion Receptacles

................................ ................................ ...... 56 Table 20. Cost of NTPs Operating Collection Receptacles

................................ ................................ ........................ 57 Table 21. Estimated Costs to Conduct a Mail

- Back Program

................................ ................................ .................... 60 Table 22. Cost of Reverse Distributors Operating Mail

- back Program

................................ ................................ ...... 62 Table 23. Summary of Costs at Low, Medium, a nd High Voluntary Participation Rates

................................ .......... 64 Table 24. General Criteria for "Significant" Economic Impact

................................ ................................ .................. 65 Table 25. Cost to Manufacturers as Percentage of Total Value of Shipment per Establishment

................................ 67 Table 26. Cost to Distributors as Percentage of Total Value of Shipment per Establishment

................................ .... 69 Table 27. Cost to NTP as Percentage of Revenue per Establishment

................................ ................................ ......... 71 Table 28. Cost to Hospital/Clinic with On

- site Pharmacy as Percentage of Revenue per Establishment

.................. 73 Table 29. Cost to Retail Pharmacies as Perce ntage of Revenue per Establishment

................................ ................... 77 Table 30. Cost to Long Term Care Facilities as Percentage of Revenue per Establishment

................................ ...... 79 Table 31. Summary of Impact on Small Entities

................................ ................................ ................................ ........ 82



### ivTable 32. General Criteria for “Substantial Number”

................................ ................................ ................................ . 82
Table 33. U.S. Costs of Nonmedical Use of Prescription Opioids 2001 and 2006

................................ ..................... 87 Table A1: Summary of Affected Business Activities

................................ ................................ ................................ . 94
Table A2: Estimated number of affected entities

................................ ................................ ................................ ....... 99 Table A3: Estimated percentage of establishments/firms that are small entitie s

................................ ...................... 100 Table A4: Estimated number of affected entities and small entities affected by mandatory portions

...................... 109 Table A5: Estimated number of affected entities that are small entities

................................ ................................ ... 109



### v

### CHAPTER 1: INTRODUCTION
This rule governs the secure disposal of controlled substances by registrants and ultimate
users. These regulations will implement the Secure and Responsible Drug Disposal Act of 2010
(Pub. L. 111

- 273) by expanding the options available to collect pharmaceutical controlled
substances from ultimate users for the purpose of disposal, including: take

- back events, mail

back programs, and collection receptacles. These regulations contain specific language all owing
law enforcement to voluntarily continue to conduct take

- back events, administer mail

- back
programs, and maintain collection receptacles. These regulations allow authorized
manufacturers, distributors, reverse distributors, narcotic treatment program s (NTPs),
hospitals/clinics with an on

- site pharmacy, and retail pharmacies to voluntarily administer mail

back programs and maintain collection receptacles. In addition, this rule expands the authority
of authorized hospitals/clinics and retail pharmacie s to voluntarily maintain collection
receptacles at long

- term care facilities. This rule also reorganizes and consolidates previously
existing regulations on disposal, including the role of reverse distributors.

In response to the notice of p roposed r ulem aking (NPRM), the Drug Enforcement
Administration ( DEA ) received public comments regarding the economic impact of the rule. In
response to the public comments, the DEA has made changes in the final rule , and according ly , has updated the economic analysis. Because economic impact estimates changed, the rule has
been designated as economically significant, with an economic impact that may be greater than
$100 million in at least one year . Additionally, the DEA’s updated assessment of economic
impact by siz e category continues to indicate that the rule will not have a significant effect on a

substantial number of small entities. Details regarding the requirements of the rule, comments
received, and changes in the f inal r ule can be found in the NPRM and the f inal r ule.

1

### This document describes the economic analysis conducted by the DEA in support of
regulatory analyses statements published with the final r ule . Chapter 2 describes the regulatory
analyses that have economic analysis components, which are analyz ed in later chapters. Chapter

3 describes the scope of analysis

. Chapter 4 describes alternatives considered. Chapter 5
contains the economic analysis for the mandatory portions of the rule . Chapter 6 contains the
economic analysis for voluntary partic ipation in accordance with the rule . Chapter 7 contains the
summary of costs. Chapter 8 contains the analysis of the rule’s impact on small entities.
Chapter 9 contains a cost

- benefit analysis . Finally, Chapter 1 0 contains the certification

statements.

2

### CHAPTER 2: REGULATO RY ANALYSES INVESTIG ATED

2.1 EXECUTIVE ORDERS 128 66 AND 13563
Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993), an agency must submit
to the Office of Management and Budget (OMB), Office of Information and Regulatory Affairs
(OIRA) a regulatory impact analysis for “significant regulatory action s .” A “significant
regulatory action” is any regulatory action that is likely to result in a rulemaking that may: (1) have an annual effect on the economy of $100 million or more, or adversely affect in a material
way the economy, a sector of the economy, pr oductivity, competition, jobs, the environment,
public health or safety, or State, local, or tribal governments or communities; ( 2 ) create a serious
inconsistency or otherwise interfere with an action taken or planned by another agency; ( 3 )
materially alte r the budgetary impact of entitlements, grants, user fees, or loan programs, or the
rights and obligations of recipients thereof; or ( 4 ) raise novel legal or policy issues arising out of
legal mandates, the President’s priorities, or the principles set for th in Executive Order 12866. 1


### Executive Order 13563 (76 FR 3821, January 18, 2011) affirms and supplements Executive

Order 12866.

2.2 REGULATORY FLEX IBILITY ACT
The Regulatory Flexibility Act (RFA) (Pub. L. No. 96

- 354, 94 Stat. 1164 (1980) (codified at

5 U.S.C. 601)) requires agencies to consider the impact of their regulatory proposals on small
entities, analyze effective alternatives that minimize small entity impacts, and make their
analyses available for public comment. The RFA does not seek preferen tial treatment for small
entities, require agencies to adopt regulations that impose the least burden on small entities, or

1 E.O. 12866, Section 3(f).



### 3

### mandate exemptions for small entities. Rather, it requires agencies to examine public policy
issues using an analytical process tha t identifies, among other things, barriers to small business
competiveness and seeks a level playing field for small entities, not an unfair advantage. 2



### 2.3 U NFUNDED M ANDATES REFORM A CT
The Unfunded Mandates Reform Act (UMRA) (Pub. L. 104

- 4, 109 Stat. 48 (1995) (codified
at 2 U.S.C. 1501 et seq.)) was enacted to avoid imposin g unfunded F ederal mandates on S tate, local, and tribal governments (SLTG), or the private sector. Most of UMRA ’ s provisions apply
to proposed and final rules:

• 

### f or which a general no tice of proposed rule making was published ; and

• 

### that include a Federal mandate that may result in the expenditure of funds by SLTG, in the aggregate, or by the private sector of $100 million or more in any
one year, adjusted for inflation.

2.4 CONGRESSIONA L REVIEW A CT
Under the Congressional Review Act (CRA) (Pub. L. 104

- 121, sec. 251, 110 Stat. 847 (1996)
(codified at 5 U.S.C. 801

- 808)) , a rule generally cannot take effect until the agency submits a
rule report to each House of Congress and to the Comptrol ler General of the United States (head

of the United States Government Accountability Office ). Rules that are not considered “ major ”
under the CRA may take effect as they otherwise would under other applicable law once a rule
report is submitted. A rule is “ major ” if it results in an annual effect on the economy of $100
million or more; a major increase in costs or prices; or significant adverse effects on competition,

2 SBA Office of Advocacy. “Introduction: The RFA and Related Law,” A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act (May 2012).



### 4

### employment, investment, productivity, or the ability of United States companies to comp ete with
foreign companies.

5

### CHAPTER 3: SCOPE OF ANALYSIS
While some of the requirements in the final rule are mere codification of existing business
practices , having nominal economic impact , the final rule contains specific requirements for
registrants that transport or receive controlled substances from other registrants for the purposes
of disposal, as well as requirements for disposal programs voluntarily established to collect

controlled substances from ultimate users: take

- back events , mail

- back pr ograms , and collection
receptacles

. In the NPRM, based on the initial economic impact analysis, the DEA estimated that this rule

w ould have minimal to no economic impact. B ased on comments received regarding the
mandatory requirements of the registrant disposal portion of the rule, the DEA has updated the
economic impact of the requirement for reverse distributors to destroy controlled substances

within 30 day s (relaxed from 14 days proposed in the NPRM) . T he re qu irement that two employees accompany or transport controlled substance s to an unregistered location for

destruction remains unchanged

. When transporting and disposing of controlled substances,

r egistered manufacturers, distributors, and reverse distribu tors are currently required to employ
precautions to guard against in

- transit losses. 21 CFR 1301.74(e). Therefore, many non

practitioners currently utilize two employees to accompany or transport controlled substances to
an unregistered location for des truction as a counter

- measure against theft and diversion.
Additionally, the current Form DEA

- 41 (Registrant’s Inventory of Drugs Surrendered) requires

two signatures , one of the person who witness es the destruction and one of the person who
actually destroys the controlled substances

. Additionally, the DEA received comments related to the cost of voluntar ily participati ng in

the rule (i.e., collecting pharmaceutical controlled substances from ultimate users for th e purpose

6

### of disposal) . While these activities are voluntary , the DEA has estimated the level of
participation and the economic impact of the voluntary activities and included this in the estimate
of the economic impact of the rule.

T he DEA considers two mandatory requirements (30

- day destruction requirement and two

person transport ation requirement ) of r egistrant disposal , and voluntary participation in

accordance with the rule described above as having material cost s . T he estimated cost of the two
requi rements and the voluntary participation activities represent th e total economic impact of the

rule . Furthermore, the impact of the two requirements and the voluntary participation activities
is analyzed by Small Business Administration ( SBA ) size category to determine whether or not
the rule will have a significant impact on a substantial number of small entities. While there is
an underlying assumption that voluntary collection activities will only be implemented by
eligible registrants if t here is a net benefit, tangible or intangible, to the registrant , the DEA has

estimated the co st of voluntary participation , and the cost of voluntary participation is included

in the estimated total economic impact and analysis by size category

. Finally, the DEA does not have a basis for projecting future activities of existing reverse
distributors such as business growth/increased disposal services , entrance of new reverse
distributors, or changes in the pharmaceutical or healthcare industry that can affe ct controlled
substance disposal activities . Therefore, the DEA assumes , while there will be increases in the
number of disposal events due to the 30

- day destruction requirement, for the purposes of this
analysis, the number of reverse distributors and the total quantity of controlled substances
destroyed remain constant for the mandatory portion of the rule before the rule and after

7

### promulgation of the rule. Any increase in controlled substances being destroyed is due to the
voluntary participation el ements of the rule. 3

3 The estimated cost attributable to additional controlled substances received by distributors or reverse distributors from those entities that volunteer to be collectors is included in chapter 6.



### 8

### CHAPTER 4: REGISTRANT AND NON

- REGISTRANT DISPOSAL : REGULATORY ALTERNATIVES CONSIDERED
In developing this final rule, the DEA considered several options for both registrant and non

registrant disposal. The DEA analyzed altern ative regulatory approaches keeping in mind its
statutory obligations under the C ontrolled S ubstances A ct (CSA) . First, the DEA is required to
promulgate disposal regulations that will prevent the diversion of controlled substances. 21
U.S.C. 822(g)(1)(B ). Second, in developing the disposal regulations, the DEA is required to
consider the public health and safety, ease and cost of program implementation, and participation
by various communities. 21 U.S.C. 822(g)(2). Finally, the DEA cannot implement re gulations
that require any person to establish or operate a delivery or disposal program. 21 U.S.C.
822(g)(2). The DEA found that in order to properly address the disposal of controlled substances
by non

- registrants, it was necessary to co nduct a compreh ensive review of DEA policies and
regulations related to each element of the disposal process, including the transfer, delivery,
collection, destruction, return, and recall of controlled substances, by both registrants and non

registrants.
To this end, th e DEA considered three options for non

- registrant disposal: (1) Single

Collection ; (2) Open Collection; and (3) Multiple Collection. In addition, the DEA considered
two options for registrant disposal: (1) Retain Existing Regulations and (2) Establish Co nsistent
National Standards. Finally, the DEA considered four options for reverse distributors: (1) On

site Requirement ; (2) Prompt Requirement; (3) No Requirement; and (4) No Later Than 30

Calendar Day Requirement

. 4 

### The DEA performed a qualitative ana lysis of each of these
alternatives and selected the “Multiple Collection” option for non

- registrant disposal, the

4 Relaxed from 14 days proposed in the NPRM.



### 9

### “Establish Consistent National Standard s ” option for registrant disposal, and the “ No Later Than

30 Calendar Day Requirement” option for reverse distributors.

4.1 NON

- REGISTRANT DISPOSAL

The DEA considered several alternatives for the disposal of controlled substances by non

registrants, such as ultimate users and long

- term care facilities (LTCF) . Af ter a qualitative
analysis of each of the alternatives, the DEA selected the “Multiple Collection” option for the
disposal of non

- registrant controlled substances.

4.1.1 Single Collection

The DEA considered implementing the “Single Collection” option, whi ch would have
permitted non

- registrants to utilize only one method of collection to dispose of their lawfully
possessed controlled substances. First, the DEA considered permitting non

- registrants to utilize
only mail

- back program s to dispose of their lawf ully possessed controlled substances, and not
collection receptacle s or take

- back events. Second, the DEA considered permitting non

registrants to utilize only collection receptacle s to dispose of controlled substances. Finally, the

DEA considered mainta ining an existing option for ultimate user disposal and permit non

registrants to utilize take

- back events to dispose of their controlled substances.
In implementing the Disposal Act, the DEA is required to consider participation by various
communities, in addition to ease and cost of program implementation and public health and
safety. The DEA believes that permitting just one disposal option would reduce participation by

various communities and be of reduced benefit to the public health. With three very different
disposal options, the possibility for greater participation is increased because more entities will
have the opportunity to establish or operate a disposal program that reaches more members of the
public. For example, the mail

- back option is potentially more costly than the other options, but it

10

### also has the po tential to reach members of the public, such as rural communities, that might not
have easy access to take

- back events or collection receptacles. While take

- back events may be
the most secure collection method, because they must be under the control and supervision of
law enforcement, the cost of participation may be unreasonable for local law enforcement whose

resources may be limited . Finally, while collection receptacles strike a balance between
convenience and safety, as mentioned above, such location s might not be easily accessible to all
members of the public. As a result, the DEA does not believe that implement ing just one
disp osal option would result in optimal public participation, cost effectiveness, or public health

and safety.

4.1.2 Open Collection

The DEA also considered implementing the “Open Collection” option. Under this option,

the DEA considered authorizing any pers on to collect controlled substances from ultimate users
for disposal, regardless of their status as a DEA registrant. The DEA believes that this option
would not effectively protect the public health and safety or prevent the diversion of controlled

subst ances consistent with the statutory framework of the CSA.
Rather, the DEA’s final rule contain s specific language to continue to allow law

enforcement , and to additionally authorize certain registrants , to collect controlled substances

from ultimate user s for the purpose of disposal. The DEA is authorizing to become collectors
those persons registered as manufacturers, distributors, reverse distributors, NTP s, hospitals/clinics with an on

- site pharmacy, and retail pharmacies because, as registrants, these
persons are accountable, have experience handling controlled substances, and are subject to
controls related to their DEA registration. These consideration s protect against the diversion of
controlled substances in the process of ultimate user collection. Further, the DEA believes that

11

### ultimate user collection should occur only at authorized collector locations or in the presence of

law enforcement. DEA re gistered locations and controlled premises are subject to DEA
inspection, security, and other controls. Such requirements ensure that proper security and other
controls are in place to minimize the risk of diversion from the collection of controlled

subst ances.

4.1.3 Multiple Collection (Selected Methodology)

The DEA considered and selected the “Multiple Collection” option. The DEA is authorizing
the following safe and convenient options for non

- registrants to transfer pharmaceutical

controlled substan ces for purposes of disposal: take

- back events, mail

- back programs, and
collection receptacle locations. The DEA is also revising return and recall procedures for
ultimate users, as discussed below. Pursuant to the final rule, registered manufacturers,

d istributors, reverse distributors, NTPs, hospitals/clinics with an on

- site pharmacy, and retail
pharmacies may obtain authorization from the DEA to be a collector. A collector is a registrant

authorized to receive controlled substance s for the purpose of d estruction from non

- registrants in
lawful possession of controlled substances. The DEA is also specifying that law enforcement
may continue to voluntarily collect controlled substances from non

- registrants.

The DEA selected this alternative because, con sistent with Congress’s goal in passing the
Disposal Act, these three options will allow public and private entities to develop a variety of
methods for collecting and destroying pharmaceutical controlled substances in a secure,
convenient, and responsible manner. The disposal options for non

- registrants are intended to
maximize cost efficiency, participation, and accessibility while simultaneously promoting the
secure and responsible disposal of pharmaceutical controlled substances in order to prevent

div ersion and abuse

.

12

### 4.2 REGISTRANT DISPOSAL

The DEA also considered several alternatives for the disposal of controlled substances by
DEA registrants, and selected the “Establish Consistent National Standard s ” option.

4.2.1 Retain Existing Regulations

The DEA considered implementing the “Retain Existing Regulations” option, which would
have made no changes to the existing registrant disposal regulations (21 CFR 1307.12 and
1307.21). Currently, “any person in possession of any controlled substance and desir ing or
required to dispose of such substance may request assistance from the SAC in the area in which
the person is located for authority and instructions” for disposal. 21 CFR 1307.21(a). T he
procedures for the disposal of controlled substances by regis trants are often determined on a

case

- by

- case basis by the DEA Special Agent in Charge (SAC) in the area where the registrant is
located. In many circumstances, the SAC has the discretion to determine how the registrant
disposes of the controlled substanc e, including to whom the substances may be transferred or
delivered. 21 CFR 1307.21(a) and (b). While this approach is effective, with the enactment of
the Disposal Act and an increased need for the responsible disposal of controlled substances by
regist rants and non

- registrants alike, the DEA believes that in order to securely and effectively
dispose of unwanted or unused controlled substances, consistent national standards are

necessary.

4.2.2 Establish Consistent National Standards ( Selected Methodo logy )

The DEA considered and selected the “Establish Consistent National Standards” option.
This option removes existing regulations on the disposal of controlled substances (21 CFR
1307.12 and 1307.21) , revises parts 1300, 1301, 1304, 1305, and 1307 and promulgate s a new part 1317 . The selected methodology establish es uniform requirements on proper disposal

13

### procedure s , security, and recordkeeping for registrants , and comprehensively outline s the process
and procedure for the disposal of controlled substa nces by registrants and non

- registrants. The

DEA is establishing clear disposal procedures for all registrants that they can follow each time
they dispose, regardless of geographic location. This rule will also reduce the burden on
registrants by eliminating the existing requirement for every registrant to contact the SAC in
their area when they wish to destroy controlled substances. Although this rule revises the
regulations to authorize registrants to dispose of controlled substances without pri or approval
from the SAC, a practitioner disposing of inventory may continue to request assistance from the
SAC in their area in accordance with 21 CFR 1317.05(a)(4). The procedures and security and
recordkeeping requirements that the DEA is establishing are intended to codify existing practice
and set singular and consistent procedures for DEA registrants in accordance with their
authorized business activities while protecting the public health and safety and minimizing the

risk of diversion. The DEA als o r evised regulations for reverse distributors that are clear and

consistent. The DEA believes that these regulations will help reverse distributors comply with
the CSA in a manner that effectively decreases the risk of diversion of controlled substances
during the disposal process.

4.3 REVERSE DISTRIBUTORS
Reverse distributors are a unique group of registrants whose primary function is to receive
controlled substances for the purpose of destruction or return. In this regard, reverse distributors

prov ide a valuable service to other registrants in the disposal process. In the transfer of
controlled substances between registrants, each registrant serves as a check on the other and

verifies whether the controlled substance has reached its lawful destinat ion. This is
accomplished through existing reporting, recordkeeping, and order form requirements. 21

14

### U.S.C. 827 and 828; 21 CFR part s 1304 and 1305. However, a reverse distributor that acquire s a controlled substance from another registrant for destruct ion is the last person to possess such

substance before destruction and there is no recipient to verify that the substance has been
destroyed rather than diverted . Furthermore, reverse distributors accumulate greater amounts of

controlled substances that are destined for destruction in comparison to other registrants. This is
because reverse distributors routinely acquire controlled substances for destruction from other
registrants and may also be authorized as collectors pursuant to the final rule

. The DEA
considered several alternatives and selected the “No Later Than 30 Calendar Day Requirement”
option. The DEA is establishing this disposal requirement specific to reverse distributors in
order to prevent the accumulation of vast amounts of controlled substances, in a single location,
pending destruction.

4.3.1 On

- site Requirement

The DEA considered the “On

- site Requirement” option, which would have require d reverse

distributors to have and utilize an on

- site method of destruction. An effective way to reduce the

risk of diversion is to minimize the transfer of controlled substances between various locations.

The DEA considered this option but rejected it be cause the DEA wanted to maintain the existing
practice of many reverse distributors (and many other registrants) to use off

- site destruction.
Accordingly, reverse distributors may destroy controlled substances on

- site or off

- site. T he DEA

is requiring al l registrants that choose to destroy a controlled substance to follow certain security
procedures related to employees, transportation, handling, and recordkeeping

. The DEA is
establishing these requirements in order to strengthen the integrity of the des truction process, and
to help deter and detect diversion

.

15

### 4.3.2 Prompt Requirement

The DEA considered the “Prompt Requirement” option, which would have require d reverse distributors, like all other registrants, to promptly destroy controlled substances. The “prompt”
destruction requirement is flexible enough to ensure that controlled substances destined for
destruction do not accumulate and are destroyed in a timely manner, but still account for the

individual circumstances of certain registrants that d estroy controlled substances. The DEA
considered this option for reverse distributors and rejected it because the primary business
activity of reverse distributors, unlike other registrants, is to acquire controlled substances for the
purpose of destructi on or return. As a result, reverse distributors generally accumulate greater
amounts of controlled substances that are destined for destruction in comparison to other
registrants. They are typically the last registrant to handle the controlled substance with no other
registrant reporting and recording receipt , or non

- receipt, of the substance as a check against

diversion.

4.3.3 No Requirement

The DEA considered the “No Requirement” option, which would have retain ed the current

destruction standard and would not have put a ny dead line on when reverse distributors must
destroy controlled substances acquired for destruction. The DEA considered and rejected this
option. The DEA is establishing a comprehensive regulator y framework for the collection and
destruction of controlled substances. All registrants that destroy will be required to destroy
controlled substances within a certain time period

– reverse distributors will be required to
destroy the controlled substanc es no later than 30 day s after receipt and all other registrants will
be required to destroy their lawfully possessed controlled substances promptly. The DEA is
establishing destruction deadlines because, just as there is a greater risk of diversion when

16

### controlled substances are being transported, 5 

### there is also an increased risk of diversion the
longer controlled substance s accumulate and remain in storage awaiting destruction.

4.3.4 No Later Than 30 Calendar D ay Requirement (Selected Methodology)

The DEA considered and selected the “ No Later Than 30 Calendar D ay Requirement ”
option, which requires reverse distributors to destroy controlled substances received for the
purpose of destruction no later than 30 day s after receipt. The “No Later Than 30 Ca lendar Day
Requirement” is unique to reverse distributors

– other registrants that destroy must do so
promptly and do not have to follow a specific time limit

– because the primary business activity
of reverse distributors, unlike other registrants, is to acquire controlled substances for the
purpose of destruction. As a result, reverse distributors generally accumulate far greater amounts of controlled substances that are destined for destruction in comparison to other registrants.
Generally, other regis trants destroy only a minimal amount of controlled substances because they
acquire controlled substances for the purpose of further distribution through the supply chain or
healthcare delivery system

. R ecords of these acquisitions and transfers can be ver ified by other
registrants’ records in order to deter and detect diversion. In contrast, reverse distributors
acquire large amounts of controlled substances for the purpose of destruction, and are entrusted

to ensure that these substances are actually destroyed. The 30

- day destruction requirement will
ensure that reverse distributors destroy controlled substances in a timely manner , and will
prevent the accumulation of large amounts of controlled substances pending destruction, while
also enabling them sufficient time to prepare the necessary records required for destruction.

5 From 2010 to 2013, there were a total of 5,798 instances of theft/loss of controlled substances reported to the DEA by manufacturers, distributors, and reverse distributors, totaling 31,899,665 finished dosage units, 35,879,428 milligrams of raw powder, and 2 3,664,820 milliliters of liquid controlled substances. Of these th efts/losses, in transit thefts/losses accounted for 72% of the number of theft/loss incidents , 91% of the finished dosage units, 53% of the milligrams of raw powder, and 92% of the milliliters of liquid controlled substances.



### 17

### CHAPTER 5: ANTICIPATED ECONOMIC IMPACT OF MANDATORY PORTIONS OF REGULATORY ACTION : REGISTRANT DISPOS AL

5.1 GENERAL RELATIONSHIP BETWEEN REGISTRATION S , ENTITIES, AND SMALL ENTITIES
DEA registrations are held by a variety of entities , including businesses such as
manufacturers, distributors, and pharmacies, as well as individuals such as practitioners 6 

### and

mid

- level practitioners

. It is very common for businesses and individuals to hold more than one

DEA registration, such as where a registrant handles controlled substances at multiple locations
or engages in multiple types of DEA

- registered activities. However, RFA requirements an d
SBA size standards are applicable to entities and businesses. Because the DEA does not, in the
general course of business, collect or otherwise maintain information regarding associated or
parent organizations holding multiple registrations, the DEA nee ds some way of correlating and
applying the parameters of the RFA and corresponding SBA size standards to DEA registrations
(i.e., develop a relationship between the number of registrations and the number of entities).
This rule affects some registrant c ategories differently than other registrant categories, and it
affects different registrants within the same registrant category differently. In addition, some
registrants will be differently affected depending on factors outside the DEA’s control (e.g., the
number of registrants that volunteer to have a collection receptacle may have an economic effect
on the overall cost) , and it affects non

- registrants (e.g., LTCFs and ultimate users)

. Accordingly,
the DEA evaluated multiple data sources for this econo mic analysis

. The number of affected entities for each business activity is estimated from a combination of
DEA registration records and the 2007 Economic Census, the most recent census with a

6 For the purposes of this Economic Impact Analysis, “practitioner” means an individual registered with the DEA as a “practitio ner” (physicians, veterinarians, podiatrists, and dentists) , but does not include hospitals/clinics, pharmacies, or mid

- level prac titioners.



### 18

### complete set of available data. The DEA registration records form the basis for all DEA
registrants affected by this rule and an industry report which estimates the number of LTCFs
forms the basis of analysis for LTCFs. The method of estimating the number of affected entities

and small entities is the same for all business activities, with the exception of reverse
distributors. The analyses pertaining to the number of entities and small entities for reverse
distributors and the other business activities are presented in Appendix A.

The same general method for esti mating the number of affected entities and affected small

entities is applied to all business categories , except reverse distributors. The general method is

described below:

1. The number of DEA registrations by business activity forms the basis of the estim ate
( e xcept LTCFs, where an industry report is used to estimate the number of LTCF
facilities, because LTCFs are not registered with the DEA)

.
2. North American Information Classification System ( NAICS ) codes that most closely
represent the affected entities ( e. g. , manufacturer, distributor, pharmacy, etc. ) are

identified.

3. To account for entities with multiple registrations, the relationship between the
number of establishments and entities is developed for each NAICS code from the
Economic Census and applied to the number of registrations to estimate the number

of affected entities.

4. T he census data for employee size or annual revenue is compared to the SBA size
standards to determine the percentage of entities , for each business activity, that are

small.

19

### 5. T he percentage of businesses that are below SBA size standards is applied to the

number of affected entities above SBA size standards to estimate the number of

affected small entities.

I n

- depth information on this topic is found in appendix A , which details the specific
methodology used by the DEA to determine the number of entities affected by the rule and the

number of entities that are small entities.

5.2 ENTITIES AFFECTED BY MANDATOR Y PORTIONS OF THE RU LE

5.2. 1 Number of Registrations Affected by the M andatory Portions of the Rule
Upon effect of this final rule , all controlled substance DEA registra tions will be req uired to
comply with this rule. As of November 2013, there were 1,511,389 controlled substances
registrations

. However, only a very small subset of the 1.5 million controlled substance registrations are

associated with activities where the rule imposes new mandatory requirements : the 30

- day

destruction requirement and two

- person transport ation requirement

. M anufacturers and

di stributors that choose to transport controlled substances to reverse distributors or to an
unregistered, off

- site location for destruction are only affected by the two

- person transport ation
requirement

. R everse distributors that destroy on

- site are affected by the 30

- day requirement.

Reverse distributors that pick up controlled substances at a registered location and /or transport

controlled substances to an unregistered, off

- site location for destruction or to another reverse

distributor are af fected by both requirements

. Therefore, the number of registrations affected by
the mandatory portions of the final rule is the total number of current manufacturer, distributor,

and reverse distributor registrations, 1,425 . Table 1 lists the number of a ffected registrations by
business activity.

20Table 1. Number of Affected Registrations by Business Activity

Business a ctivity Number of r egistrations Manufacturer 5 36 Distributor 829 Reverse d istributor 60 Total 1,425


### 5.2.2 Number of Entities and Small Entities Affected by the Mandatory Portions of the Rule
As previously discussed, manufacturer s and distributor s are only affected by the mandatory

two

- person transportation requirement of this rule. R everse distributors are affected by both
mandatory portions of the rule ( 30

- day destruction and two

- person transport ation requirement )

. Appendix A contains the detailed analysis estimating the number of affected entities and
small entities. Table 2 contains the summary of results, by DEA busine ss activity, of the

estimated number of affected entities and affected small entities.

Table 2. Number of Affected Entities and Small Entities

Business activity Number of registrations Number of affected entities Percent below SBA size standards Number of affected small entities

Manufacturer 536 439 96.3 423

Distributor 829 585 94.9 555

Reverse distributor* 60 55 69.1 38

Total 1,425 1,079 1,016 * Reverse distributor figures are displayed for reference. As described in Appendix A , figures for reverse distributors were determined from research of the affected registrants. 

### 5.3 QUANTITATIVE ANALYSIS OF MANDATOR Y PORTIONS

5.3.1 Registrant Disposal: Impact on Reverse Distributors that D estroy C ontrolled S ubstances
Reverse distributors that receive controlled substances for the purpose of destruction must
destroy those substances no later than 30 calendar days after rece ipt . For all registrants that
destroy controlled substances or cause controlled substances to be destroyed (e.g., by

21

### transporting the substance to an off

- site, unregistered location for destruction), the DEA is
requiring that such registrants follow certain security procedures related to employees,
transportation, handling, and destruction. Additiona lly, a registrant that destroys a controlled
substance or causes controlled substances to be destroyed is required to maintain a record of that

dest ruction o n a form issued by the DEA ( Form DEA

- 41 ) . The DEA has modified Form DEA

41 to accurately re flect t he destruction, including the signature of the two employees who

witnessed the destruction.
In the initial EIA for the NPRM, the DEA estimated that such proposed disposal procedures

w ould have minimal to no economic impact on reverse distributors that destroy controlled
substances and invited public comment. Based on public comments received, the DEA has
updated the EIA as it pertains to the no later than 30

- day requirement and two

- person
transport ation requirement.

The final rule specifies the maximum time limit for reverse distributors to destroy or cause

the destruction of any controlled substance received for the purpose of destruction : no later than

30 day s after receipt . In addition, two employees are require d to accompany controlled

subs tances that are transported to an off

- site, unregistered location for destruction.
To estimate the impact of these requirements, the DEA examined destruction, transfer, and
transport practices of reverse distributors, specifically :

• Whether the reverse di stributor destroys controlled substances or transfers to
another reverse distributor for destruction;

• If the reverse distributor destroys controlled substances, whether destruction is

conducted on

- site, or off

- site;

• Destruction frequency;

22

### • If destruction is conducted off

- site, the distance to the off

- site location; and

• Number of employees involved in transport.
Below are operating parameters that may result in increase d cos t s due to the final rule :

• R everse distributors that destroy on

- site : additional on

- sit e destruction s to comply

with 30

- day destruction requirement ;

• R everse distributors that transfer or destroy off

- site : additional trips to unregistered destruction locations or other reverse distributors; or additional
shipment s to other reverse distributor s to comply with 30

- day destruction
requirement ;

• Distance and driving time to registered location or unregistered destruction
facility ; and

• Additional employee(s) to accompany transport. Transfer, Destruction, On

- site, or Off

- site

Below are the results of whether or not the affected entities transfer or destroy controlled
substances, and if they destroy whether they destroy on

- site or off

- site:

• 42 destroy off

- site

• 10 destroy on

- site

• 3 transfer only (do not destroy controlled substances)

Destruction or Transfer Frequency (number of trips per year)

To comply with the 30

- day destruction requirement while making the fewest number of trips,

reverse distribut o rs would need to make 12 destruction trips per year. The destruction frequency

was reviewed for 20 of the affected entit ies where destruction information was available

.
D estruction frequencies range from semi

- annually ( two per year ) to daily ( 365 times per year ) ,

23

### with median destruction frequency of 12 times per year. 7 

### The median destruction frequency of
12 per year was us ed for the remaining 35 entities where there was no specific destruction
frequency information available

.
Based on the information that the DEA obtain ed from 20 of the affected reverse distributors

and the information that the DEA es timated for the remaining 35 affected reverse distributors,

t he DEA estimates that 46 of 55 affected entities currently meet the 30

- day requirement . T he
remaining nine affected entities would be required to conduct additional destructions or transfers

to meet the 30

- day requirement. Of the nine entities that would be required to make additional
destructions or transfers, seven entities conduct destructions at off

- site facilities, one entity
conducts transfers only, and one entity conducts destructions on

- site. The difference between the
baseline number of trips and the number of trips after promulgation of the rule resulted in an
increased number of trips.
Distance and Driving Time to Transfer Location or Destruction Facility

Distance from the registered location to the transfer location (e.g., another reverse
distributor) or unregistered destr uction facility was estimated using online mapping applic ations.
The estimated distance and driving time are from the zip code of the registered location to the zip

code of the destination. When only the destination city was available , distance is estimated from

the zip code of the registered location to the destination city

. The destinatio n location was not

found for six reverse distributors that destroy off

- site. For these reverse distributors, the DEA
estimated the distance by determining the distance from the ir registered location to the nearest

7 The 20 destruction frequencies (destructions per year) as reported to the DEA are: 2, 3, 4, 4, 4, 4, 4, 5, 10, 12, 12, 12, 1 2, 20, 25, 25, 50, 50, 360, and 360.



### 24

### destruction facility identified by other reverse distributors that identified specific destruction

facilities.

Baseli ne Number of Employees for Transport

The n umber of employees used to accompany the transport of controlled substances for
destruction was determined for reverse distributors. However, the nu mber of employees for

transport was not found for 11 of the 42 re verse distributors that destroy off

- site

. Excluding the

one reverse distributor that exclusively used common carriers, the average number of 1.7
employees for transport was used as an estimate for the se 11 reverse distributors

. The two

- person transport ation requirement mandates that two employ ees accompany the
transport of controlled substances (unless the substances are transported by common or contract
carrier) . The difference between the baseline number and two employees contribute s to

additional la bor and possible travel costs.

5. 3.2 Reverse Distributor Additional Destruction Cost s

Additional destructions may be required as a result of the 30

- day destruction requirement.

As discussed , the difference between the baseline number of trips and the num ber of trips after
promulgation of the rule represents the increased number of trips required as a result of the 30

- day destruction requirement. This includes reverse distributors that only transfer to other reverse

distributors for destruction. These re verse distributors may incur costs for additional transfer s.

The cos t of the additional destructions is determined for each reverse distributor by multiplying the number of additional destructions by the estimated cost of each destruction, $250

for 1 0 0 to 3 0 0 pounds of controlled substances. The same amount is used for on

- site, off

- site,
and transferred destructions. The estimated $250 for each destruction is based on a number of
data points , i.e., publicly available research, public comments, and waste

- t o

- energy company

25

### websites. Destruction cost estimates are mostly expressed in dollars per pound. However, as
one source indicated, it is reasonable to estimate a minimum cost per batch. The cost of $250 per batch of 100 to 300 pounds equates to $0.83 to $2.50 per pound. If no additional destruction is
required, the cost will be zero.
Forty

- six of 55 affected businesses, a s described in section 5.3. 1 , are estimated to already

meet the 30

- day destruction requirement and are not expected to make addition al destructions or

transfers as a result of this rule. Nine of 55 affected businesses are estimated to make a

combine d total of 68 additional tri ps, for a total cost of $17,000 ($250 per destruction x 68

additional destructions )

.
5. 3.3 Reverse Distributor Additional Transport Cost s

W hen additional destruction or transfer for destr uction is required, the reverse distributor is
expected to incur corresponding transport cost s , i.e., the cost of transporting the controlled

substance for destruction or transfer

. On

- site destructions are estimated to incur no additional

transport cost. As discussed above, nine entities may need to make additional destructions, one
of which destroy s on

- site, incurring no additional transport ation costs. Therefore, e ight entities

may need to make additional destructions and destroy off

- site or transfer to other reverse

distributors for destructions and are anticipated to incur additional transport costs.
The additional transport cost s are estimated by multiplying the number of additional trips by estimated distance (described in above section) by $2.60 per mile. The $2.60 per mile is based

on an average van rate of $1.86 8 

### with a 40% premium for controlled substances. For example , a

reverse distributor who needs to make nine additional trips to a disposal site 617 miles away will

8 www.dat.com

.



### 26

### incur $14,4 60 ($1.86 per mile x 1.4 x 9 additional trips x 617 miles ) in additional transport cost.
This method is applied to all reverse distributors who need to make additional destruction trips or

transfers as a result of this rule. The estimated total additional transport cost s are $69,738

.
5. 3.4 Reverse Distributor Additional Labor Costs

The ‘ additional labor cost s ’ are the labor cost s associate d w ith transport ing controlled
substances for disposal. Th ese cost s arise from a combination of additional off

- site destruction s or transfers and the requirement to have two employees accompany the transport for disposal.

There are no a dditional labor cost s for additional on

- site destructions

.
The additional labor cost s are determined by first, estimating the baseline labor cost

associated with the number of off

- site destructions or transfers and number of employees
accompanying the transport, then, estima ting the labor cost associated with the number of off

site destructions or transfers after the implementation of the 30

- day destruction requirement and
with two employees accompanying the transport. The difference between the labor cost after
implementati on of the rule and the baseline labor cost is the calculated additional labor cost.

The labor cost s for baseline and final rule scenarios is estimated by multiplying the loaded
labor rate of $37.72 9 

### by the estimated round

- trip driving time plus rest time f or driving long

distances. The United States Department of Transportation (DOT) regulates the number of hours
a truck driver may drive per day as well as the total number of hours. The DOT’s General Hours

of Service Guidelines state that d rivers may driv e up to 11 hours, but are limited to 14 hours in a
duty period and drivers must take a mandatory 30

- minute break by their eighth hour of coming

9 The average of the Bureau of Labor Statistics, 2012, “mean hourly wages” for 11

- 3071 Transportation, Storage, and Distribution Managers in the Warehousing and Storage industry ($38.72) and 53

- 0000 Transportation and Material Moving Occupations in the Specialized Freight Trucking indu stry ($18.22) , plus 32.5% load applied for taxes and benefits.



### 27

### on duty. Therefore, there is zero additional rest time for round

- trip distance s between 0 and 8
hours, from 8 t o 11 hours the additional rest time of 30 minutes is need ed , and for distances more
than 11 hours a paid night of rest, or 13 additional hours , is needed. Sample calculation:

One reverse distributor who is currently sending one employee to destroy controlled substances at an off

- site location at an estimated 3.85 hour (7.7 hours round trip) drive on a quarterly basis will need to send two employees monthly. The eight additional trips and the additional employee will result in higher additional lab or cost. The estimated labor cost prior to the rule is $1,162 ($37.72 per hour x 1 employee x 7.7 hours x 4 trips). The estimated labor cost after promulgation of the rule is $6,971 ($32.72 per hour x 2 employees x 7.7 hours x 12 trips). The difference, additional labor cost, is $5,809 ($6,971

- $1,162).
Applying this method to all affected reverse distributors, t he additional labor cost to
transport controlled sub stances for disposal is $144,418

.
5. 3.5 Reverse Distributor Addition a l Travel Costs : Pe r Diem and Vehicle Cost
Per diem for lodging and incidental expenses is incurred when round

- trip driving time is

more than 11 hours. After 11 hours of driving time , a night of rest is added. The F iscal Y ear 2014 standard continental United States per die m rate used by the Federal government of $ 88 is
used to estimate the cost of lodging and incidental expense

. 10 

### For example, a reverse distributor
currently sending two employees to a destruction site at a distance requiring an estimated 29
hours of round trip driving time ten times per year is estimated to make two additional trips per

year. The estimated driving time of 29 hours requires two days of per diem cost per employee.
Therefore, this reverse distributor is estima ted to incur $ 704 ($ 88 per diem x 2 days x 2
employees x 2 additional trips) in additional per diem cost. Applying this method to all affected

10 Fiscal year 2014, standard “CONUS” per diem is $129, which includes $83 for lodging, $7 for breakfast, $11 for lunch, $23 for dinner, and $5 for incidental expense s , http://www.gsa.gov/porta l/content/103168#FY14PerDiemFiles. Since the employee receiving per diem would have eaten breakfast, lunch, and dinner, the meals portion of per diem represents a transfer of cost from the employee to the empl oyer and not a cost above the baseline of meal expenditure by the employee. Therefore, the per diem cost, as a result of the rule, is $88, lodging and incidental expense.



### 28

### reverse distributors, t he estimated total per diem cost for lodging and incidental expense is
$ 16,262

. The two

- p erson transport ation requirement requires two employees to accompany the

controlled substance s being transported (unless the substances are transported by common or
contract carrier) . The DEA estimates that there will be no additional vehicle cost s for th e

baseline scenario where there were one or two employees accompanying th e transport. The
additional vehicle cost is estimated by multiplying the round

- trip mileage by the Internal
Revenue Service reimbursement rate of $0.56 per mile . Whether the reverse distributor has a
vehicle available for the two employees to use to accompany the transport or the two employees
use a privately owned vehicle, the DEA believes the use of the mileage reimbursement rate of
$0.56 is a reasonable estim ate. One reverse distributor is estimated to incur addi tional vehicle

cost of $307 ($0.56 per mile x 274 one

- way miles x 2)

.
5. 3.6 Manufacturer Additional Labor Cost
Manufacturers are also affected by the two

- person transport ation requirement . Any

manu facturer that itself transports controlled substances to reverse distributors or to an
unregistered, off

- site location for destruction is required to have two employees transport or

accompany the controlled substances. Based on the DEA’s knowledge and exp erience with
manufacturers, most manufacturer s hire reverse distributors to pick up from their registered

location controlled substances destined for destruction , and any manufacturer s that transport the

controlled substances themselves for destruction do so infrequently and with two employees.
Additionally, a manufacturer ’ s primary business activity is to produce pharmaceutical controlled
substances in dosage form or in bulk for downstream customers and thus, a manufacturer would

genera lly destroy residual amounts of controlled substances. While the DEA believes this

29

### requirement affects far less than half of the manufacturers, the DEA utilizes the top of the likely
range to be conservative. F or the purposes of this analysis, the DEA as sumes 50 % of

manufacturers make 12 trips per year with one employee, thus requiring one additional employee
to accompany the transport . Additionally, the DEA assumes each trip will require eight hours of

round

- trip travel time . Applying the same labor ra te used for reverse distributors of $37.72, 11 

### to eight hours of travel time and 12 trips per year, the DEA estimates that each manufacturer will incur an additional annual cost of $3,621 ($37.72 x 8 x 12). Applying this cost to 50 % of
manufacturers, the DE A estimates the annual cost of the two

- person transport ation requirement

to the affected manufacturers combined is $ 970,531 . The calculation is summarized in table 3

below:

Table 3

. Manufacturer Additional Labor Cost

Manufacturer additional labor cost elements

Number of manufacturers 536 Percentage affected 50 Number of manufacturers affected 268 Trips per year 12 Additional labor cost per trip $ 302 Additional cost per manufacturer $ 3,621
Cost to manufacturers $ 970,531 * Figures are rounded

. 

### 5. 3.7 Distributor Additional Labor Cost
Like manufacturers, distributors are also affected by the two

- person transport ation
requirement when transporting controlled substances themselves . Any distributor that transports

controlled s ubstances to a reverse distributor or to an unregistered, off

- site location for

11 See note 12

.



### 30

### destruction is required to have two employees transport or accompany the controlled substances.
Based on the DEA’s knowledge and experience with distributors, most distributors hire reverse
distributors to pick up from their registered location controlled substances destined for

destruction and any distributor s that transport the controlled substances themselves for
destruction do so infrequently and with two employe es. Additionally, a distributor ’ s primary
business activity is to transfer pharmaceutical controlled substances in dosage form to the retail
market, and therefore a distributor would rarely need to destroy controlled substances.
Distributors may have to destroy expired or tainted controlled substances, but this is a lso a
relatively rare occurrence. While the DEA believes this requirement affects far less than half of

the distributors , the DEA utilizes the top of the likely range to be conservative. F or the purposes
of this analysis, the DEA assumes 50 % of distributor s make 12 trips per year with one employee,
thus, requiring one additional employee to accompany the transport. Additionally, the DEA
assumes each trip will require eight hours of round

- trip travel time. Applying the same labor rate
used for reverse distributors of $37.72, 12 

### to eight hours of travel time and 12 trips per year, the
DEA estimates that each distributor will incur an additional annual cost of $3,621 ($37.72 x 8 x
12). Applying t his cost to 50 % of distributors, the DEA estimates the annual cost of the two

person transport ation requirement to the affected distributors combined is $ 1,501,064 . The

calculation is summarized in table 4 below:

Table 4

. Distributor Additional Labor Cost

Distributor additional labor cost elements

Number of distributors 829 Percentage affected 50

12 See note 12

.



### 31Number of distributors affected 415 Trips per year 12 Additional labor cost per trip $ 302 Additional cost per distributor $ 3,621 Cost to distributors $ 1,501,064 * Figures are rounded



### 5. 3.8 Combined Costs/Annual Cost of the Mandatory Portions of the Rule
Below is a summary of the cost categories:

Table 5

. Summary of Costs of Mandatory Portions of the Rule

Summary of costs Manufacturers $ 970,531 Distributors $ 1,501,064 Reverse distributors Additional destruction cost: $ 17,000 Additional transport cost: $ 69,738 Additional labor cost: $ 144,418 Additional lodging and incidental expenses cost: $ 16,262 Additional vehicle cost: $ 307 Subtotal reverse distributor additional costs $ 247,725 Total $ 2,719,319 * Figures are rounded



### The annual cost of th e mandatory portion of the rule is estimated to be $ 2,719,319

.

32

### CHAPTER 6: ESTIMATED ECONOMIC IMPACT OF VOLUNTARY P ARTICIPATION IN REGULATORY ACTI VITY : NON

- REGISTRANT DISPOSAL
Manufacturers, distributors, reverse distributors, NTPs, hospitals/clinics with an on

- site
pharmacy, and retail pharmacies may be authorized to collect ultimate us er pharmaceutical

controlled substances if certain conditions are met. Collecting pharmaceutical controlled

substances from ultimate users is completely voluntary, not mandated. Manufacturers,
distributors, reverse distributors, NTPs , hospitals/clinics w ith an on

- site pharmacy, retail
pharmacies and law enforcement that choose to engage in the collection activitie s described in
this section, do so based on their own evaluation of costs and benefits (tangible and intangible).
For the purposes of the EIA, the DEA assumes that an entity will volunteer to perform the

activities to facilitate Non

- Registrant Disposal only if there is a p ositive benefit to the entity; and

any manufacturer, distributor, reverse distributor, NTP , hospital/clinic with an on

- site pharmacy,
retail pharmacy or law enforcement that chooses to engage in these activities can decide to cease
these activities at any time without suffering any negative consequences. Although there is

limited information fr om which to anticipate the level of participation in the voluntary activities,
the DEA estimated the level of participation and the costs of participating in voluntary collection

activities

. Each potential scenario a nd associated costs are described below

. Upon promulgat ion , this final rule will provide ultimate users, persons lawfully entitled to
dispose of ultimate user decedent’s property, and, in some circumstances, long

- term care

facilities , the following safe and convenient options to transfer contro lled substances for
purposes of disposal: take

- back events, mail

- back programs, and collection receptacles. These
new options are in addition to the methods of disposal currently in use by many ultimate users.
For long

- term care facilities, the rule provides additional options for disposal and does not
remove any methods currently used by long

- term care facilities to destroy controlled substances

33

### that are consistent with Federal , State, tribal, and local laws an d regulations.
Regi stered m anufacturers, distributors, reverse distributors, NTPs , hospitals/clinics with an

on

- site pharmacy, and retail pharmacies may obtain authorization from the DEA to be a

collector. A collector is a registrant authorized by the DE A to receive a pharmaceutical
controlled substance for the purpose of destruction from an ultimate user or other authorized

non

- registrant person in lawful possession of the controlled substance.

While the DEA specifies certain requirements, collectors h ave a myriad of options for
implementation. Based on the chosen implementation , costs and benefits can vary widely from

collector to collector. It is possible for collectors to incorporate collection activities as part of

their promotional activities and /or develop partnerships with other businesses and agencies to maintain a collection receptacle or mail

- back program in order to minimize costs and maximize

benefits

. For example, a pharmacy with a collection receptacle may derive tangible benefits,
such as additional revenue from increased retail traffic to the pharmacy. Collectors may also
derive intangible benefits such as public safety and good will from its collection activities.

6.1 NUMBER OF ENTITIES A ND SMALL ENTITIES AFFECTED
Based on the discussions above, manufacturers, distributors, reverse distributors, NTPs,
hospitals/clinics with an on

- site pharmacy, retail pharmacies, and LTCFs w ill be affected if they

choose to voluntar il y participat e in the collection activities authorized by this rule

. While the
DEA does not believe that any reverse distributors will place collection receptacles at their
registered locations because they are generally not open to the public and there are a small
number of employees ac tually working at those registered locations, reverse distributors will be
affected by the voluntary participation aspects of the rule in other ways. The affected number of

34

### manufacturer, distributor, and reverse distributor entities and small entities was es timated in the
mandatory requirements analysis , section 5.2.

As previously summarized in section 5.1 and explained in detail in appendix A, the DEA

utilizes the combination of the number of affected DEA registrations, the number of LTCFs,

2007 Economic Census data, and the SBA size standards to estimate the number of affected
entities and the number of affected small entities. The DEA estimates that the voluntary
participation elements of this rule affects 53,533 entities, of which 50,714 are small enti ties.

Table 6 provides a summary by business activity.

Table 6

. Number of Affected Entities and Small Entities (Voluntary Participation)

Business activity Number of registrations

or LTCFs Number of affected

entities Percent below SBA size standards Number of affected small entities

Manufacturer 536 439 96.3 423

Distributor 829 585 94.9 555

Reverse distributor 60 55 69.1 38 NTP 1,332 656 9 3

. 0 610 Hospital/clinic, with on

- site pharmacy 5,723 3,068 43.9 1,346
Retail Pharmacy 69,026 29,582 9 9

. 1 29,328
Total DEA registrations 77,506 34,385 93.9 32,300

LTCF 31,600 19,148 96.2 18,414

Total 109,106 53,533 94.7 50,714



### 6.2 SCENARIO 1: RETAIL PHARMACY COLL ECTION RECEPTACLE

This scenario is a retail pharmacy operating a collection receptacle. Requirements to operate
a collection receptacle include, but are not limited to:

C ollection receptacle requirements:

35

### • S ecurely fastened to a permanent structure so that it cannot be removed;

• S ecurely locked, substantially constructed container with a permanent outer

contai ner and a removable inner liner ;

• I nclude a small opening that allows contents to be added to the inner liner, but
does not allow removal of the inner liner’s contents; and

• P rominently display a sign indicating that only schedule II

– V controlled and non

controlled substa nces are acceptable

. Inner liner requirements:

• W aterproof, tamper

- evident, and tear

- resistant;

• R emovable and sealable immediately upon removal without em ptying or touching
the contents;

• C ontents of the inner liner shall not be viewable from the outside when sealed;

• S ize of the inner liner shall be clearly marked on the outside of the liner (e.g., 5

- gallon, 10

- gallon, etc.);

• B ear a permanent, unique identificati on number that enables the inner liner to be

tracked ;

• Access to the inner liner shall be restricted to employees of the collector;

• The inner liner shall be sealed immediately upon removal from the permanent

outer container and the sealed inner liner shall not be opened, x

- rayed, an alyzed,
or otherwise penetrated; and

• The installation, removal, transfer, and storage of inner liners shall be performed
under the supervision of two employees of the authorized collector.

36

### 6. 2 .1 Retail Pharmacy Participation Rat e The DEA estimates a range of possible participation rates for pharmacies. For the purposes
of this analysis, the DEA estimates costs at low, medium, and high participation rates.
For the low participation rate estimate, the DEA examined Washington State ’s voluntary

medicine take

- back program. As part of the program, participating pharmacies can have a drop
box where the public can drop

- off unwanted medicines that are not controlled substances. The
program was started in 2006 and currently includes 18 c ounties. The DEA determined that there
are 77 pharmacies participating as medicine drop

- off locations; while there are 1,074 DEA

registered retail pharmacies in those 18 counties. The participation rate equates to 7.2%
(77/1,074). The 7.2% participation rate in Washington’s 18 counties is applied as the low
participation rate estimate for the pharmacies that will become collectors and operate a collection
receptacle on their registered premises pursuant to the final rule

. The DEA believes the participati on rate could be higher. At various conferences and
industry forums many large chain pharmacies have expressed intent to operate collection
receptacles on their premises. The combination of this input and the participation data from the

18 counties in Wa shington State forms the basis for the medium participation rate estimate.
Upon closer examination of Washington State ’s program, the participation rate of independent
pharmacies is 11.1% (43 participating locations among 389 registered independent pharmacy
locations). The four chain pharmacies that participate in Washington State’s program did not
place drop boxes in al l of the ir stores. For the four chain pharmacies that participated, 34 of 148

total store locations ha ve drop boxes , establishing a combined participation rate of 23.0%. The
actions of these chain pharmacies reasonably indicate that chain pharmacies will likely achieve
the participation rate of 23.0%. Therefore, the medium participation rate is actually a

37

### combination of two participation rates ; 11.1% for independent pharmacies and 23.0% for chain
pharmacies , resulting in a weighted average of 17.6%.

I t i s possible that the participation rate will be even higher. One of the four chain pharmacies
participating in Washington State has drop boxes in 22 of its 53 locations, for a 41.5%
participation rate. 13 

### Upon promulgation of this rule, increased competiti on could drive
participation rates for chain pharmacies higher than 23%. Considering that the percentage of all
participating chain pharmacies in Washington State that placed receptacles in their stores was
23.0%, and the highest store participation rate among participating chain pharmacies was 41.5%,
the upper limit of chain pharmacy participation may be 50%. Similarly, with increased
participation and competition, independent pharmacies may react by also participating at higher

rates . The upper limit o f independent pharmacy participation is also estimated at 50%.
Therefore, the high participation rate is 50% for both independent and chain pharmacies, on a

number of store s basis.

6. 2 .2 Cost to Pharmacies at Low Participation Rate

The volume of collections for this scenario is 10 pounds of collected controlled substances
every week , with 52 inner liner replacements per year. The DEA estimates that the retail
pharmacy will incur one

- time (non

- recurring) costs as well as recurring costs. Non

- recu rring

costs consist of one

- time initial costs, such as: registration modification, collection receptacle
acquisition and mounting, signage development , and bar coding equipment . Recurring costs

include cost s of operational material and labor costs, such a s: inner liner costs, labor cost of
receiving, installing, removing, and sealing inner liners , and storing and transferring sealed inner

13 This chain pharmacy is one of the larger in Washington State and is one of the longest participating pharmacies in this progr am.



### 38

### liners, destruction c ost s (including transport costs ) , and biennial inventory cost. The total

estimated non

- recurring cost is $ 1,819.53 ; the total estimated annual recurring cost i s $ 2,131.27 ;

and the total estimated biennial inventory cost is $4.67. Table 7 itemizes the estimated non

recurring and recurring costs.

Table 7

. Estimated Cost to Retail Pharmacy Operating a Collection Receptacle (Low or Medium Participation Rate)

Activity Description Unit c ost* ($) Quantity Amount ($) Non

- recurring Registration m odification Pharmacist, 12 minutes 74.32 0.20 14.86 Collection r eceptacle Steel drop box 800.00 1 800.00 Mounting of c ollection r eceptacle Labor and material 200.00 1 200.00 Signage of c ollection r eceptacle Pharmacy Technician, 15 minutes 18.68 0.25 4.67
Barcode scanning equipment Scanner, software, printer 800.00 1 800.00

Total n on - recurring 1,819.53 Recurring ( a nnual ) Cost of inner liners $101.48 / box of 100** 1.01 52 52.77 Receive, install, remove, seal inner liner. Transfer sealed innerliner

. . 9 minutes per liner by 2 employees: Pharmacy Technician, Pharmacy Aid 4.89 52 254.34

Destruction c osts Average 10 pound bag 3 5.00 52 1,82 0.00 Barcode tag (ID numbers) $80/1000 0.08 52 4.16
Total r ecurring ( a nnual ) 2,131.27 Recurring ( b iennial ) Inventory Pharmacy Technician, 15 minutes 18.68 0.25 4.67

Total r ecurring ( b iennial ) 4.67 * Labor rates include 32.5% load for payroll taxes and benefits. Labor rates are based on Bureau of Labor Statistics May 201 2 National Occupational Employment and Wage Estimates, www.bls.gov/oes/current/oes_nat.htm

. ** $101.48 estimated from a combination of available products. 

### The estimated costs were annualized by 1) determining the present value of the estimated
costs for the next 20 years at 3% and 7% discount rates, and 2) determining the equal a nnualized
payments for the present values at 3% and 7% interest rates, respectively

. 14 

### The present value

14 The use of 3% and 7% discount rates for present value calculation, annual payment calculation, and analysis time horizon is based on OMB Circular A

- 4, September 17, 2003. Also “Regulatory Impact Analysis: A Primer” (no date) and “Regulatory Impact Analysis: Frequently As ked



### 39

### and annualized cost at 3% discount and interest rates is $ 33,562 and $ 2,256 , respectively. The present value and annualized cost at 7% discount and interest rates is $ 24,422 and $ 2,305 , respectively.

From table 6 in section 6 .1, there are 69,026 affected retail pharmacy registrations (31,402
independent and 37,624 chain). Applying the 7.2% low participation rate to independent and
chain pharmacies, the DEA estimates that 4,949 affected pharmacies will operate collection receptacles. Applying the annualized cost of $ 2,305 to the 4,949 anticipated voluntary
participants, the DEA estimates the total a nnualized cost for pharmacies that volunteer to operate a collection receptacle is $ 11,408,357 . The calcu lation for the low participation rate is

summarized in table 8 below.

Table 8 . Cost to Pharmac ies Operating Collection Receptacles at Low Participation Rate , Annualized Over 20 Years at a 7 Percent Discount Rate

Pharmacy collection receptacle operation co st elements Number of Pharmacies Percentage Participation Number Participation Cost per Participant ($) Total ($) Independent pharmacies 31,402 7.2 2,251 2,305 5,190,004 Chain pharmacies 37,624 7.2 2,697 2,305 6,218,353 Total 69,026 4,949 11,408,357 * Figures are rounded



### 6.2.3 Cost to Pharmacies at Medium Participation Rate

The non

- recurring and recurring costs associated with operating a collection receptacle is the

same at the medium participation rate as at the low participation rate. See table 7 . As estimated

in section 6. 2 .2, the a nnualized cost to operate a collection receptacle is $2,305.
Applying the 11.1% participation rate to 31,402 independent pharmacies and the 23.0%
participation rate to 37,624 c hain pharmacies, the DEA estimates that 12,115 affected

Questions (FAQ)” February 7, 2011, Office of Information and Regulatory Affairs (OIRA). The DEA used a 20 year time horizon for this analysis as there is no predetermined end to this rule.



### 40

### pharmacies will operate collection receptacles using the combined medium participation rate of
17.6%. Applying the same annualized cost as the low participation rate of $2,305 to the 12,115
anticipat ed voluntary participants, the DEA estimates the total a nnualized cost for pharmacies that volunteer to operate a collection receptacle is $27,927,387. The calculation for the medium
participation rate is summarized in table 9 below.

Table 9 . Cost to Pha rmac ies Operating Collection Receptacles at Medium Participation Rate , Annualized Over 20 Years at a 7 Percent Discount Rate

Pharmacy collection receptacle operation cost elements Number of Pharmacies Percentage Participation Number Participation Cost per Participant ($) Total ($) Independent pharmacies 31,402 11.1 3,471 2,305 8,002,029 Chain pharmacies 37,624 23.0 8,643 2,305 19,925,358 Total 69,026 12,115 27,927,387 * Figures are rounded



### 6.2.4 Cost to Pharmacies at High Participation Rate
As in the low and medium participation rates, the total estimated non

- recurring cost for
pharmacies at the high participation rate is $1,819.53; and the total estimated biennial inventory cost is $4.67. However, the total annually recurring cost for these pharmacies is estimated to be $1,065.64 (versus $2,131.27 for low and medium participation rates). This is because individual
pharmacies in the “high participation rate” scenario are projected to collect fewer controlled
substances per pharmacy (resultin g in fewer inner liner changes) than pharmacies in the “low
participation rate” or “medium participation rate” scenarios. A higher percentage of
participating pharmacies, beyond a certain point, is expected to spread the use of collection
receptacles acro ss a greater number of locations.
The low participation rate of 7.2% equates to approximately one in 14 pharmacies
participating. The medium participation rate of 17.6% equates to approximately one in six
pharmacies participating. The high participatio n rate of 50% equates to one in two pharmacies

41

### participating. Under the low participation rate scenario, there will be few collection receptacles ,
and less ultimate users disposing, resulting in more controlled substances collected per collection
receptacle, or 52 liner replacements per year. If participation increas es to one in six pharmacies
(under the medium participation scenario) , more controlled substances would be collected, but

still resulting in 52 liner replacements per ye ar as the market reache s saturat ion . However, under
the high participation scenario, the quantity of collected controlled substances is expected to be
spread across a large number of collection receptacles, resulting in decreased amounts of

controlled sub stances per collection receptacle an d fewer liner replacements because the market

reached saturation at the medium participation rate . Thus, for the high participation rate, the

DEA estimate s 26 liner replacements per year. This estimated reduction in li ner replacements results in a lower annually recurring cost of $1,065.64. Table 10 itemizes the estimated recurring

costs.

Table 10 . Estimated Annually Recurring Cost to Retail Pharmacy Operating a Collection Receptacle (High Participation Rate)

Activity Description Unit c ost* ($) Quantity Amount ($) Recurring ( a nnual) Cost of inner liners $101.48 box of 100** 1.01 26 26.38 Receive, install, remove, seal inner liner . Transfer sealed inner liner

. 9 minutes per liner by 2 employees: Pharmacy Technician, Pharmacy Aid 4.89 26 127.17

Destruction c osts Average 10 bound bag 35 .00 26 910.00

Barcode tag (ID numbers) $80/1000 0.08 26 2.08

Total r ecurring ( a nnual) 1,065.64 * Labor rates include 32.5% load for payroll taxes and benefits. Labor rates are based on Bureau of Labor Statistics May 201 2 National Occupational Employment and Wage Estimates, www.bls.gov/oes/current/oes_nat.htm

. ** $101.48 estimated from a combination of available products. 

### In summary, the total estimated non

- recurring cost is $1,819.53; the total estimated annual recurring cost is $1, 065.64 ; and the total estimated biennial inventory cost is $4.67. As in the

cost for low and medium participation rate s , the present value and annualized cost were

42

### determined for the high participation rate . The present value and annualized cost at 3% discount and interest rates is $17,708 and $1,190, respectively. The present value and annualized cost at

7% discoun t and interest rates is $13,133 and $1,240, respectively.
Applying the 50% participation rate to 69,026 pharmacies, the DEA estimates that 34,513
pharmacies will voluntarily operate collection receptacles. Applying the annualized cost of
$1,240 to the 34, 513 anticipated participants, the DEA estimates the total a nnualized cost for pharmacies that volunteer to operate a collection receptacle is $42,783,851. The calculation for
the high participation rate is summarized in table 11 below.

Table 11

. Cost to Pharmac ies Operating Collection Receptacles at High Participation Rate , Annualized Over

20 Years at a 7 Percent Discount Rate

Pharmacy collection receptacle operation cost elements Number of Pharmacies Percentage Participation Number Participatio n Cost per Participant ($) Total ($) Independent pharmacies 31,402 50.0 15,701 1,240 19,463,658 Chain pharmacies 37,624 50.0 18,812 1,240 23,320,192 Total 69,026 34,513 42,783,851 * Figures are rounded



### 6. 3 SCENARIO 2 : HOSPITAL/CLINIC WITH ON

- SITE PHARMACY COLLECTION RECEPTACLE
Hospitals/clinics with on

- site pharmacies may get authority from the DEA to install and
operate a collection receptacle at their registered locations

. B ased on the estimated range of
participati on rate s for retail pharmacies of 7.2% to 50%, the DEA conservatively estimates the
participation rate for hospitals/clinics with on

- site pharmacies to be 50%.
For purposes of this EIA, t he DEA assumes that no DEA registered clinics will have on

- site
pharmacies because these clinics do not gener ally fill controlled substance prescriptions or orders
on premises , and therefore, will not be able to get authority from the DEA to install and operate a
collection receptacle. For p urposes of this EIA , the DEA assumes that a ll hospitals have on

- site

43

### pharmacies. As discussed above in section 6. 2 , the req u irements for operating a collection
receptacle in a hospital are similar to the requirements for a retail pharmacy. The difference s in
monitoring, location, etc. do not incur costs in addition to the costs already calculated for retail
pharmacies. Accordingly, the cost of operating a collection receptacle at a hospital/clinic with an

on

- site pharmacy is estimated to be the same as a retail pharmacy at the low, medium, or high
participation rates.

T he DEA estimates the participation rate and the a nnualized cost of operating a collection
receptacle in a hospital is 50 % and $ 1,240 , respectively. Based on a study performed by an

indus try membership association , t here are 5,723 hospitals in the United States . Applying the

50 % participation rate , 2 , 86 2 hospitals/clinics are estimated to voluntarily operate collection
receptacles. Similar to the retail pharmac y scenarios , the DEA estimates the inner liner
replacement frequency will be influenced by the retail pharmacy participation rate. When the
pharmacy participation rate is high, 50%, many collection receptacles can be utilized by many

ultimate users , leading to a low er liner replacement frequency. Therefore, the DEA estimates the
liner replacement frequency at hospitals is 52 time s per year when the retail pharmacy
participation rate is low or medium and 26 times per year when the retail pharmacy participation

rate i s high.
The cost of operating a collection receptacle at a hospital is estimated to be the same as at a retail pharmacy. At the low and medium participation rates for pharmacies, the cost of operating
a collection receptacle at a hospital is $2,305
, an d at the high retail pharmacy participation rate
the cost of operating a collection receptacle at a hospital is $1,240 . At the low and medium
pharmacy participation rates, applying the a nnualized cost of $2,305 to the 2,862 participating
hospitals , the to tal cost to hospitals is estimated to be $6,597,716. At an a nnualized cost of

44

### $ 1,240 at the high pharmacy participation rate , the estimated a nnualized cost of collection receptacles at hospitals is $ 3,547,863 . The calculation s are summarized in table 12 below.

Table 12 . Cost to Hospitals with On

- site Pharmacies Operating Collection Receptacles at Registered Locations

Hospitals with on

- site pharmacies collection receptacle operation cost elements Low and m edium p harmacy p articipation r ate High p harmacy p articipation r ate Number of affected hospitals 5,723 5,723 Percentage of hospitals with on

- site pharmacy 100 100 Number of hospitals with on

- site pharmacy 5,723 5,723 Percentage participation 50 50 Number of hospitals participating 2,862 2,862 A nnualized cost per hospital $ 2,305 $ 1,240 Total $ 6,597,716 $ 3,547,863
* Figures are rounded



### 6. 4 SCENARIO 3 : LONG

- TERM CARE FACILITY C OLLECTION RECEPTACLE

In accordance with the rule , a long

- term care facility (LTCF) may dispose of controlled

substances in schedules II, III, IV, and V on behalf of an ultimate user who resides, or has
resided, at such LTCF by transferring those controlled substances into an authorized collection
receptacle located at that LTCF

. Registe red hospitals/clinics with on

- site pharmacies, and retail
pharmacies , are authorized to maintain collection receptacles at LTCFs. In this section, the term
“pharmacy” is used generically to include retail pharmacies as well as hospitals/clinics with on

si te pharmacies. I t is important to note that the rule provides additional options for disposal and

does not prevent any methods currently used by long

- term care facilities that are consistent with

Federal , State, tribal, and local laws and regulations.
Requirements for operating a collection receptacle at a LTCF are similar to that of a retail
pharmacy. Some differences include, but are not limited to:

45

### • When disposing of such controlled substances by transferring those substances

into a collection rece ptacle, such disposal shall occur immediately, but no longer
than three business days after the discontinuation of use by the ultimate user.

• The installation, removal, transfer, and storage of inner liners shall be performed
either: by or under the super vision of one employee of the authorized collector
and one supervisor

- level employee of the long

- term care facility (e.g., a charge
nurse or supervisor) designated by the authorized collector; or, by or under the
supervision of two employees of the authori zed collector.

• Upon removal, sealed inner liners may only be stored at the LTCF for up to three
business days in a securely locked, substantially constructed cabinet or a securely

locked room with controlled access.

6. 4 .1 Scenario 3 A: Long

- Term Care Facility in a n Urban or Subu rban Location
For this scenario, the LTCF is l ocated in a n urban or sub urban location where the serving
pharmacy is one mile away with 20

- minute s driving time for one pharmacy employee

. To
transfer sealed inner liners containing collected control led substances, the managing pharmacy
arranges for transfer of the controlled substances to the reverse distributor for d estruction

. Although LTCFs have patients that are on many medications, most o f these medications are only
prescribed in short intervals on a dose

- by

- dose basis . It is also likely that LTCF staff will not be
disposing of medicine containers in the collection receptacles, just the actual controlled
substances. Therefore, the volume of controlled substances that will be deposited in the
collection receptacles is estimated to be 10 pounds of collected controlled substances twice a

month resulting in 24 inner liner replacements per year. Based on indications that LTCFs wish

46

### to be invo lved with the collection receptacle operations, the inner liner replacements are assumed
to be conducted by a pharmacy employee and a supervisory level LTCF employee.
In this scenario, t he DEA estimates that the pharmacy managing the collection receptacl e at

the LTCF will incur the same non

- recurring and biennial inventory costs as a pharmacy
operating a collection receptacle on its own premises, $1,819.53 and $4.67 respectively (see
table 7)

. However, the managing pharmacy is estimated to incur $1,264.90 in annually recurring
costs, which includes the cost of the pharmacy employee’s travel to the LTCF , rather than the
$1
, 065.64 or $2
, 131.27 it is estimated to incur if the receptacle is on its own premises

. Additionally, the DEA estimates the su pervisory level LTCF employee for liner replacements will cost $206.57 per year. See table 13 for itemization of the annually recurring costs.

Table 13

. Annually Recurring Costs Associated with Operating a Collection Receptacle at a LTCF in an Urban or S uburban Location

Activity Description Unit c ost * ($) Quantity Amount ($) Recurring ( a nnual) to p harmacy
Cost of inner liners $101.48 box of 100** 1.01 24 24.36

Recordkeeping (Receive inner liner, log liner information) 1 minute per liner by 2 employees: p harmacy t echnician, p harmacy a id 0.54 24 13.04

Recordkeeping (Install, remove, seal inner liner. Transfer sealed inner liner

. ) 8 minute s per liner by 1 p harmacy t echnician 2. 49 24 59.78

Destruction c osts Average 10 pound bag 35.00 24 840.00
Barcode tag (ID numbers) $80/1000 0.08 24 1.92

Vehicle cost 1 mile each way at reimbursement rate of $0.56/mile 1.12 24 26.88

Travel to LTCF 40 minutes round

- trip ( 20 minutes each way ) for 1 employee: p harmacy t echnician 12.46 24 298.92

Total a nnually r ecurring
c osts to p harmacy 1,264.90 Recurring ( a nnual) to LTCF Remove, seal inner liner, install new liner, and transfer 8 minutes per liner by 1 employee: m edical and h ealth 8.61 24 206.57



### 47inner liner . s ervices m anagers Total a nnually r ecurring
c ost to LTCF 206.57 * Labor rates include 32.5% load for payroll taxes and benefits. Labor rates are based on Bureau of Labor Statistics May 201 2 National Occupational Employment and Wage Estimates, www.bls.gov/oes/current/oes_nat.htm

. ** $101.48 estimated from a combination of available products

. 

### In summary , t he total estimated non

- recurring cost is $ 1,819.53 ; the total estimated annual
recurring cost is $1,264 ; and the total estimated biennial inventory cost is $4.67 for the operating
pharmacy . The estimated costs were annualized as f or pharmacies operating a collection
receptacle on their own premises . The present value and annualized cost at 3% discount and

interest rates is $ 20,672 and $ 1,390 , respectively. The present value and annualized cost at 7%
discount and interest rates is $ 15,244 and $ 1,439 , respectively. Additionally, the LTCF is
anticipated t o incur an annual cost of $207.

6. 4

. 2 Scenario 3 B: Long

- Term Care Facility in a Rural Location

This scenario is the same as Scenari o 3A , except the LTCF is located in a rural location
where the serving pharmacy is 35 miles away with 4 5

- minute s driving time for one pharmacy
employee

. Again, to transfer sealed inner liners containing collected controlled substances, the
managing pharmacy arranges to transfer the controlled substances to the reverse distributor for
disposal. The volume of collec tions is assumed to be lower than that in an urban/suburban

LTCF , with 10 pounds of collected controlled substances every month resulting in 12 inner liner
replacements per year. The DEA estimates that the pharmacy managing the collection receptacle

at th e rural LTCF will incur the same non

- recurring and biennial recurring costs as it would at a n

urban/suburban LTCF . However, the reduction in the number of liner replacements lowers the

cost to operate a collection receptacle in a rural location, while the longer travel distance raises

the cost. The annually recurring cost to pharmacies operating a collection receptacle at a rural

48

### LTCF is estimated to be $1,276.24. Additionally, the DEA estimates the supervisory level LTCF
employee for liner replacements w ill cost $103.29. See table 14 for itemization of these costs.

Table 14

. Annual Recurring Costs Associated with Operating a Collection Receptacle at a LTCF in a Rural Location

Activity Description Unit Cost* ($) Quantity Amount ($) Recurring ( a nnual) to p harmacy Cost of inner liners $101.48 box of 100** 1.01 12 12.18 Recordkeeping ( r eceive inner liner, log liner information.) 1 minute per liner by 2 employees: p harmacy t echnician, p harmacy a id 0.54 12 6.52
Recordkeeping (Install, remove, seal inner liner. Transfer sealed inner liner. ) 8 minute s per liner by 1 p harmacy t echnician 2.49 12 29.89

Destruction c osts Average 10 pound bag 35.00 12 420.00 Barcode tag (ID numbers) $80/1000 0.08 12 0.96

Vehicle cost 35 miles each way at reimbursement rate of $0.56/mile 39.20 12 470.40

Travel to LTCF 90 minutes round

- trip ( 4 5 minutes
ea ch way ) for 1 employee: p harmacy t echnician 48.91 12 336.29

Total a nnual ly r ecurring
a dditional c osts to p harmacy 1,276.24 Recurring ( a nnual) to LTCF

Remove, seal inner liner, install new liner, and transfer inner liner. 8 minutes per liner by 1 employee: m edical and h ealth
s ervices m anagers 8 .61 12 103.29

Total annual ly recurring cost to LTCF 103.29

* Labor rates include 32.5% load for payroll taxes and benefits. Labor rates are based on Bureau of Labor Statistics May 2012 National Occupational Employment and Wage Estimates, http:// www.bls.gov/oes/current/oes_nat.htm. ** $101.48 estimated from a combination of available products

. 

### In summary , the total estimated non

- recurring cost is $ 1 , 819.53 ; the total estimated an nual recurring cost is $ 1,276.24 ; and the total estimated biennial inventory cost is $4.67. The

estimated costs were annualized as in a pharmac y operating a collection receptacle on its own
premises . The present value and annualized cost at 3% discoun t and interest rates is $ 20,841 and
$ 1,401 , respectively. The present value and annualized cost at 7% discou nt and interest rates is

49

### $ 15,365 and $ 1 ,450 , respectively. Additionally, the LTCF is anticipated to incur an annual cost
of $103.

6. 4 .3 Estimated Cost of Long

- Term Care Facility Collection Receptacle

The DEA ha s limited data available to estimate the participation rate for LTCFs, so t he DEA

i nitially examined the number of pharmacies with automated dispensing systems at LTCFs.
While automated dispensing systems and collection receptacles have different purposes, they

both allow the servicing pharmacy and LTCF to provide additional convenience to LTCF
residents, allow third

- party operators to install machines/receptacles on the LTCF’s premises,

and allow pharmacy employees to service or operate the machine/receptacle on the LTCF’s
premises.
As of November 2013, there were 682 automated dispensi ng systems registered with the

DEA , indicating a 1% participation rate. The DEA believes the rate of LTCFs with collection
receptacles will be higher becaus e of the comments received in response to the NPRM.
However, the DEA does not believe the voluntary participation rate would be higher than that of

retail pharmacies. The DEA believes a retail pharmacy has more potential commercial
advantages from placing a collection receptacle at its own location than at a LTCF. Therefore,

the DEA believes the voluntary participation rate of LTCFs will not exceed that of retail
pharmacies, 50% (high estimate). For the purposes of this analysis, the DEA conservatively

estimates that 50% of LTCFs will have collection receptacles voluntarily operated by pharma cies
or hospitals/clinics with on

- site pharmacies

. Accordingly, t he DEA estimates that 15,800 of
estimated total of 31,600 LTCFs will allow a pharmacy or hospital/clinic with an on

- site

50

### pharmacy to install and operate a collection receptacle at the LTCF. The DEA estimates 76% of
LTCFs are in urban/suburban areas, and the remaining 24% are in rural areas. 15 

### Applying these
percentages for the locations of LTCFs anticipated to have collection receptacles, the DEA

estimates 12,049 LTCFs in urban/suburban loc ations, and 3,751 LTCFs in rural locations, will
have collection receptacles. Applying the a nnualized cost of $ 1,439 per collection receptacle in

an urban/suburban location to the 12,049 LTCFs and the $ 1,450 per collection receptacle in a

rural location to the 3,751 LTCFs, the DEA estimates the total a nnualized cost of operating
15,800 collection receptacles at LTCFs is $ 22,777,292 to pharmacies

. Applying the annual cost
of $207 to 12,049 urban/suburban LTCF s and applying the $103 to the 3,751 rural LTCFs, the total cost to LTCFs is $2,867,417. The estimated total cost of operating collection receptacles at
LTCFs is $25,653,710. The calculation is summarized in table 15 below.

Table 15 . Cost of Operating C ollection Receptacles at Long Term Care Facilities , Annualized Over 20 Years

at a 7 Percent Discount Rate

LTCF collection receptacle cost Number of LTCFs Percentage Participation Number Participating Cost / Pharmacy ($) Cost / LTCF

($) Total Cost : Pharmacies ($) Total Cost : LTCFs ($) Total ($) LTCF in urban/suburban (76% of total) 24,098 50 12,049 1,439 207 17,337,355 2,488,985 19,826,340 LTCF in rural (24% of total) 7,502 50 3,751 1,450 103 5,439,937 387,432 5,827,369
Total 31,600 15,800 22,777,292 2,876,418 25,653,710 *Figures are rounded



### 6. 5 SCENARIO 4 : MANUFACTURER COLL ECTION RECEPTACLE
In this scenario, a manufacturer operates a collection receptacle on

- site, primarily for its
employees. The requirements for operating a collection receptacle by a registered manufacturer

15 Includes Home Health Agency, Hospice, and Nursing Home. Harris

- Kojetin L, Sengupta M, Park

- Lee E, Valverde R. Long

- term care services in the United States: 2013 overvi ew. Hyattsville, MD: National Center for Health Statistics. 2013.



### 51

### are generally same as that for a retail pharmacy operating a collec tion receptacle on its own
premises

. The volume of collections for this scenario is reduced from the retail pharmacy scenario to
10 pounds of collected controlled substances each month , resulting in 12 inner liner changes per

year

. T he collection receptacles in these locations will most likely not be heavily utilize d

because manufacturers are generally closed to the general public, and there are relatively few
employees located at the registered manufacturing facilities

. However, in order to preve nt diversion, and because manufacturers will already be transferring other controlled substances to
reverse distributors for destruction, the DEA estimates that manufacturers will change the inner
liners of the receptacles 12 times per year. The DEA’s est imation that 10 pounds of controlled
substances will be collected each month is a conservative estimate, and was based on the theory
that the inner liners will be able to hold 10 pounds of controlled substances. Also, the DEA

believes that the manufacture rs that will voluntarily pl ac e collection receptacles at their
registered locations will be the larger entities, and therefore have more employees depositing
controlled substances in the receptacles.
As in other scenarios, the DEA estimates that the manu facturer will incur non

- recurring as
well as recurring costs. Non

- recurring costs consist of one

- time initial costs, such as:
registration modification, collection receptacle acquisition and mounting, signage development , and barcoding equipment . Recurr ing costs consist of operational material and labor costs, such
as: inner liner costs, labor cost of receiving, installing, removing, and sealing inner liners , and
storing and transferring sealed inner liners, destruction cost s (including transport costs) , biennial
inventory cost s , and barcode tags . The total estimated non

- recurring cost is $ 1,820.49 ; the total

52

### estimated annual recurring cost i s $ 509.31 ; and the total estimated biennial recurring inventory
cost is $5.29. Table 16 itemizes the estimated n on

- recurring and recurring costs.

Table 16 . Estimated Costs to Manufacturer Operating a Collection Receptacle

Activity Description Unit c ost * ($) Quantity Amount ($) Non

- recurring
Registration m odification General & o peration m anger , 15 minutes 60.79 0.25 15.20

Collection r eceptacle Steel drop box 800.00 1 800.00 Mounting of c ollection

r eceptacle Labor and material 200.00 1 200.00

Signage of c ollection r eceptacle Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry , 15 minutes 21.16 0.25 5.29

Barcode scanning equipment Scanner, software, printer 800.00 1 800.00 Total n on - recurring 1,820.49 Recurring ( a nnual ) Cost of inner liners $101.48 box of 100** 1.01 12 12.18
Recordkeeping (Receive, install, remove, seal inner liner. Transfer sealed inner liner

. ) 9 minutes per liner by 2 employees: t ransportation and

m aterial m oving o ccupations , w arehousing and s torage i ndustry 6.35 12 76.18

Destruction c osts 10 pounds per liner at $2.50 per pound 3 5.00 12 420 .00
Barcode tag (ID numbers) $80/1000 0.08 12 0.96
Total r ecurring ( a nnual ) 50 9.31 Recurring ( b iennial)

Inventory Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry , 15 minutes 21.16 0.25 5.29

Total r ecurring ( b iennial ) 5.29 * Labor rates include 32.5% load for payroll taxes and benefits. Labor rates are based on Bureau of Labor Statistics May 201 2 National Occupational Employment and Wage Estimates, http:// www.bls.gov/oes/current/oes_nat.htm ** $101.48 estimated from a combination of available products.


### The estimated costs were annualized as in s cenario 1 above. The present value and

annualized cost at 3% discount and interest rates is $ 9,437 and $ 63 4 , respectively. The present

value and annualized cost at 7% discount and interest rates is $ 7, 24 3 and $ 68 4 , respectively.

53

### As discussed , the DEA anticipates that the level of participation for manufacturers will not be
as high as pharmacies or hospitals primarily because the collection receptacles would only be

acce ssible by the manufacturer’s employee s . For the purposes of this analysis, the DEA assumes

20 % ( 107 ) of 536 affected manufacturers will operate a collection receptacle at their registered

locations. At an a nnualized cost of $ 68 4 per manufacturer , the estimated a nnualized cost for all
the anticipated participating manufacturers is $ 73,157 . The calculation is summarized in table

17 below.

Table 17 . Cost of Manufacturers Operating Collection Receptacles , Annualized Over 20 Years at a 7 Percent Discount Rate

Manufacturer collection receptacle operation cost elements Number of Manufacturers Percentage Participation Number Participation Cost per Participant ($) Total ($) Manufacturers 536 20.0 107 684 73,157 Total 536 107 73,157 * Figures are rounded



### 6. 6 SCENARIO 5: DISTRIBUTOR COLLECTION RECEPTACLE

This scenario is similar to the manufacturer scenario described above

. A distributor operates
a collection receptacle on

- site, primarily for its employees. The distributor requirements for
operating a collection receptacle are the same as that for a manufacturer operating a collection
receptacle at its registered location.

The volume of collections and the a nnualized cost for this scenario is estimated to be the

same as t hose for manufacturers, $ 68 4. Table 16 itemizes the estimated non

- recurring and
recurring costs.

The DEA anticipates that the level of voluntary participation for distributors will be low
because distributors are generally closed to the general public, a nd there are relatively few
employees located at registered distribution facilities . For the purposes of this analysis, the DEA

assumes 20 % ( 166 ) of 829 affected distributors will operate a collection receptacle at their

54

### registered locations. At an a nnua lized cost of $ 68 4 per affected distributor , the estimated

a nnualized cost for all the anticipated participating manufacturers is $ 113,496 . The calculation

is summarized in table 18 below.

Table 18 . Cost of Distributors Operating Collection Receptacles , Annualized Over 20 Years at a 7 Percent Discount Rate

Distributor collection receptacle operation cost elements Number of Manufacturers Percentage Participation Number Participation Cost per Participant ($) Total ($) Distributors 829 20.0 166 684 113,496 Total 829 166 113,496 * Figures are rounded



### 6. 7 SCENARIO 6: NARCOTIC TREATMENT PROGRAM COLLECTION RECEPTACLE
In this scenario, a NTP operates a collection receptacle on

- site, primarily for its patients. The
requirements for operating a collection receptacle at a NTP are that the collection receptacle shall
be located in a room that does not contain any other con trolled substances and is securely locked

with controlled access

. None of the additional requirements for a collection receptacle at a NTP

would incur an additional cost because NTPs already have several securely locked, controlled

access rooms that do no t contain controlled substances for counseling patients, office space, and
other purposes.

As discussed in the final rule , the DEA is permitting those entities registered as NTPs to
become authorized collectors to manage collection receptacles at their re gistered locations.
NTPs help those seeking substance abuse treatment, and many, as a condition of obtaining
treatment, require patients to dispose of the pharmaceutical controlled substances that they abuse.
However, NTPs are generally closed to the gen eral public. The refore, the volume of collections
for this scenario is reduced from the retail pharmacy scenario to 10 pounds of collected
pharmaceutical controlled substances twice a month , 24 inner liner replacements per year.

55

### As in other scenarios, t he DEA estimates that the NTP will incur non

- recurring as well as
recurring costs. Non

- recurring costs consist of one

- time initial costs, such as: registration
modification, collection receptacle acquisition and mounting, signage development, and

barcodi ng equipment. Recurring costs consist of operational material and labor costs, such as:
inner liner costs, labor cost of receiving, installing, removing and sealing inner liners , and storing
and transferring sealed inner liners, destruction cost s (includ ing transport costs) , biennial
inventory costs, and barcode tags. The total estimated non

- recurring cost is $1,817.42; the total estimated annual recurring cost is $996.11; and the total estimated biennial recurring inventory
cost is $4.51. Table 1 9 itemizes the estimated non

- recurring and recurring costs.

Table 1 9 . Estimated Costs to NTP s Operating Collection Receptacle s

Activity Description Unit c ost* ($) Quantity Amount ($) Non

- recurring

Registration m odification Medical and h ealth
s ervices m anagers, 12 minutes 64.55 0.20 12.91

Collection r eceptacle Steel drop box 800.00 1 800.00
Mounting of c ollection r eceptacle Labor and material 200.00 1 200.00

Signage of c ollection r eceptacle Healthcare s upport
o ccupation, 15 minutes 18.03 0.25 4.51

Barcode scanning equipment Scanner, software, printer 800.00 1 800.00

Total n on - recurring 1,817.42 Recurring (Annual)

Cost of inner liners $ 101.48 for box of 100 1.01 24 24.36

Recordkeeping (Receive, install, remove, seal inner liner. Transfer sealed inner liner )

. 9 minutes per liner by 2 employees: h ealthcare s upport
o ccupations 5.41 24 129.84

Destruction Costs Average 10 pound bag 35.00 24 840.00

Barcode tag (ID numbers) $80/1000 0.08 24 1.92

Total r ecurring ( a nnual) 996.11



### 56Recurring ( b iennial)

Biennial i nventory Healthcare s upport
o ccupation, 15 minutes 18.03 0.25 4.51

Total r ecurring ( b iennial) 4.51 * Labor rates include 32.5% load for payroll taxes and benefits

. 

### The estimated costs were annualized as in pharmacies operating a collection receptacle on their own premises above in section 6.2 . The present value and annualized cost at 3% discount and interest rates is $16,670 and $1,120, respectively. The present va lue and annualized cost at 7% discount and interest rates is $12,393 and $1,170 respectively.

F or reasons expressed above, the DEA assumes that 75 % of NTPs will operate a collection
receptacle at an a nnualized cost of $1,170 . As of November 2013, there were 1,332 NTPs
registered with the DEA. Applying the 75 % participation rate, 999 NTPs are estimated to
voluntarily operate collection receptacles. At an a nnualized cost of $ 1,170 , the estimated

a nnualized cost of collection receptacles at NTPs is $ 1,168,674 . The calculation is summarized

in table 20 below.

Table 20 . Cost of NTPs Operating Collection Receptacles , Annualized Over 20 Years at a 7 Percent Discount Rate

NTP collection receptacle operation cost elements Number of NTPs Percentage Participation Number Participation Cost per Participant ($) Total ($) NTPs 1,332 75.0 999 1,170 1,168,674 Total 1,332 999 1,168,674 * Figures are rounded



### 6. 8 SCENARIO 7 : MAIL

- BACK PROGRAM

A mail

- back program may be conducted by law enforcement or any authorized collector that

has and utilizes an on

- site method of destruction

. Collectors or law enforcement that conduct a

mail

- back program shall make packages available (for sale or for free) as specified in the final

rule to ultimate users and persons lawfully entitled to dispose of an ultimate user decedent’s

57

### property, for the collection of pharmaceutical controlled substances by U.S. Mail, or common or

contract carrier. Package r equirements to operate a mail

- back program include, but are not

limited to:

• The package shall be nondescript and shall not include any markings or oth er information that might indicate that the package contains controlled substances;

• The package shall be water

- and spill

- proof; tamper

- evident; tear

- resistant; and
sealable;

• The package shall be preaddressed with and delivered to the collector’s registere d

address with the on

- site method of destruction or the participating law
enforcement’s physical address;

• The cost of shipping the package shall be postage paid;

• The package shall have a unique identification number that enables the package to
be tracked; and

• The package shall include instructions for the user that indicate the process for
mailing back the package, the permitted substances that can be sent, notice that
packages may only be mailed from within the customs territory of the United
States (the 5 0 States, the District of Columbia, and Puerto Rico), and notice that
only packages provided by the collector will be accepted for destruction.

Additional requirements for a collector operating a mail

- back program :

• Accept only those controlled substances contained within packages that the
collector made available for the collection of controlled substances by mail and
packages that are lawfully forwarded to the authorized collector ;

58

### • Within three business days of receipt, notify the Field Division Office of the
Administration in their area of the receipt of a package that likely contains

controlled substances that the collector did not make availa ble or did not agree to
receive; and

• Only law enforcement and employees of the collector shall handle packages

re ceived through an authorized mail

- back program.

This scenario details a single sample program of 500 empty mail

- back packages provided to local pharmacies, grocery stores, and other retail establishments, with the 500 sealed packages
received and destroy ed five at a time, 100 times per year . The DEA estimates that the collector

will incur one

- time (non

- recurring) costs as well as recurring costs. Non

- recurring costs consist

of one

- time initial costs, such as: registration modification, barcode scanning equipment , and

instruction insert development , totaling $899.84

. The DEA estimates that the collector will be
able to destroy the collected controlled substances with other controlled substances, and any

additional cost of destruction is not material. Re curring costs include various material and labor

costs as identified in t able 21 . The total estimated annual recurring cost i s $ 3,696.95 ; and the

total estimated biennial recurring inventory cost is $5.29. Additionally, the DEA estimates that there will be a cost to the public of $931.36 for reading the mail

- back instructions. Table 21

itemizes the estimated non

- recurring and recurring costs.

59Table 21 . Estimated Costs to Conduct a Mail

- Back Progra m

Activity Description Unit Cost* ($) Quantity Amount ($) Non

- recurring
Registration m odification General & o peration m anager , 15 minutes 60.79 0.25 15.20

Barcode scanning equipment Scanner, software, printer 800.00 1 800.00

Develop instruction inserts Transportation and m aterial

m oving o ccupations, w arehousing and s torage i ndustry, 4 hours 21.16 4 84.64

Total n on - recurring 899.84 Recurring ( a nnual )
Mail

- back packages $4.50 for box of 50 0. 09 500 45 .00 Postage/shipping Conservative estimate 4.00 500 2,000.00 Address labels $14 for box of 750 0.02 500 9.33

Preaddress, setup and print Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry, once per year, 15 minutes 21.16 0.25 5.29

Paper for instructions $6 per ream of 500 pages 0.01 500 6.00

Insertion of instructions and affix address label for each package Transportation and m aterial

m oving o ccupations , w arehousing

and s torage i ndustry , 1 hour per 500 packages 0.04 500 21.16

Barcode tag (ID numbers) $80/1000 0.08 500 40.00

Packages provided to 3rd party locations such as pharmacies, grocery stores, etc. Transportation and m aterial

m oving o ccupations , w arehousing

and s torage i ndustry, 10 minutes per 100 packages 0.04 500 17.63

Packages received and stored until destruction Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry, received 5 at a time, 5 minutes for each 5 packages 0.35 500 176.34



### 60Activity Description Unit Cost* ($) Quantity Amount ($)

Packages moved from storage to destruction. Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry , 5 minutes per packages, 100 times per year 1.76 100 176.34

Fill out destruction form, DEA

41 Transportation and m aterial

m oving o ccupations , w arehousing and s torage i ndustry , 30 minutes, 100 times per year 10.58 100 1,058.01

Notify DEA of unsolicited packages received General & o peration m an a ger , 10 minutes for initial call + 60 minutes for follow

- on visit, twice per year 70.92 2 141.85

Total r ecurring ( a nnual ) 3,696 .95 Recurring ( b iennial )

Inventory Transportation and m aterial

m oving o ccupations , w arehousing

and s torage i ndustry , 15 minutes 21.16 0.25 5.29

Total r ecurring ( b iennial ) 5.29 Recurring ( a nnual)

- p ublic

Time to read instruction 00

- 0000 a ll o ccupations, 5 minutes 1.86 500 931.36
Total r ecurring ( a nnual)

– p ublic 931.36



### The estimated costs were annualized . The present value and annualized cost to the registrant
at 3% discount and interest rates is $ 55,940 and $ 3,760 , respectively. The present value and
annualized cost at 7% discount and interest rates is $ 40,092 and $ 3,784 , respectively. The present value and annualized cost to the public is $931.
Having an on

- site destruction facility is a requirement to voluntarily implement the mail

- back

program. In an effort to be conservative, t he DEA estimates all 10 reverse distributors with on

site destruction facilities will voluntarily implement a mail

- back program. The calculation is

summarized in table 22 below.

61Table 22

. Cost of Reverse Distributors Operating Mail

- back Program , Annualized Over 20 Years at a 7 Percent Discount Rate

Mail

- back program cost Number Participating Cost per Reverse Distributor ($) Cost to Public per Participant ($) Total Cost to Reverse Distributor ($) Total Cost to Public ($) Total ($) Reverse Distributors (with on

- site destruction) 10 3,784 931 37,844 9,314 47,158 Total 10 37,844 9,314 47,158 *Figures are rounded



### 62

### CHAPTER 7 : SUMMARY OF COSTS
This rule implements mandatory requirements for manufacturers, distributors , and reverse
distributors, and it allows certain registrants to voluntarily participate in collection activities by
following specified requirements. Chapter 5 estimated the cost of the mandatory requirements
for certain regist rants , the 30

- day and two

- person requirements for reverse distributors and the

two

- person requirement for manufacturers and distributors

. This portion of the rule is estimated
to cost $ 2,719,319 annually. Additionally, the DEA estimated the level of part icipation and the

cost of voluntary participation in accordance with the rul e , using t he following methods of
voluntary participation:

• Pharmacies operating collection receptacle s at their registered location s ;

• Hospitals/clinics with on

- site pharmacies operating collection receptacle s at their
registered location s ;

• Pharmacies and hospitals/clinics with on

- site pharmacies operating collection receptacle s on LTCF premises;

• Manufacturers operating collection receptacle s at their registered locations ;

• Distributors operating collection receptacle s at their registered locations ;

• NTP s operating collection receptacle s at their registered locations ; and

• 

### R everse distributors with on

- site destruction facilities operating mail

- back programs ; 16 , 17


### The DEA performed a discounted cash flow analysis of the costs associated with this rule,
over 20 years and 7% discount rate. The non

- recurring costs are estimated to occur in ‘Year 0’

16 The DEA does not expect reverse distributors to operate collection receptacles at their registered locations because, general ly, they have a small number of employees at these locations and the collection receptacles would most likely not be utilized. 17 Even though law enforcement agencies may continue to collect controlled substances from ultimate users, law enforcement agencies are not collectors, and they were not included in this an alysis. The Disposal Act’s implementing regulations do not cause a direct economic impact on law enforcement agencies. Law enforcement agencies had, and continue to have, autonomy regarding their collection activities

.



### 63

### and recurring costs begin in ‘ Year 1’. The DEA estimates the present value of the total
(mandatory and voluntary) cost of this rule is $475,637,202, $650,640,037, and $775,719,439.
These present values equate to $ 44,896,787 , $ 61,415,817 , and $ 73,222,427 annualized costs , at low, medium, and high pharmacy participation rate s, respectively. Table 23 b elow contains a summary of all costs in a discounted cash flow format

.

Table 23

. Summary of Costs at High Voluntary Participation Rates , Over 20 Years at a 7 Percent Discount Rate



### The same discounted cash flow analysis was performed for low and medium pharmacy
participation rates. Cost of Voluntary Participation per Participant Year 0 Year 1 Year 2 Year 3 Year 4 Year 20

Pharmacy/Hospitals with onsite pharmacies 1,820 1,066 1,070 1,066 1,070

... 1,070 Manufacturer/Distributor 1,820 509 515 509 515

... 515 Long Term Care Facility (Suburban) 1,820 1,265 1,270 1,265 1,270

... 1,270 Long Term Care Facility (Rural) 1,820 1,276 1,281 1,276 1,281

... 1,281 Narcotic Treatment Program 1,817 996 1,001 996 1,001

... 1,001 Mail-back (Reverse Distributor) 900 3,697 3,702 3,697 3,702

... 3,702 Mail-back (Public)

- 931 931 931 931

... 931

... Number of Participants (@ high pharmacy participation rate) Year 0 Year 1 Year 2 Year 3 Year 4

... Year 20

Pharmacy 34,513 34,513 34,513 34,513 34,513

... 34,513 Hospitals 2,862 2,862 2,862 2,862 2,862

... 2,862 Manufacturer 107 107 107 107 107

... 107 Distribuutor 166 166 166 166 166

... 166 LTCF (Suburban) 12,049 12,049 12,049 12,049 12,049

... 12,049 LTCF (Rural) 3,751 3,751 3,751 3,751 3,751

... 3,751 NTP 999 999 999 999 999

... 999 Mail-back (RD) 10 10 10 10 10

... 10 Mail-back (Public) 1 1 1 1 1

... 1

... Cost of Voluntary Participation Year 0 Year 1 Year 2 Year 3 Year 4

... Year 20

Pharmacy 62,797,593 36,778,329 36,939,526 36,778,329 36,939,526

... 36,939,526 Hospitals 5,207,508 3,049,853 3,063,220 3,049,853 3,063,220

... 3,063,220 Manufacturer 194,792 54,497 55,063 54,497 55,063

... 55,063 Distribuutor 302,201 84,546 85,424 84,546 85,424

... 85,424 LTCF (Suburban) 21,923,480 15,240,747 15,297,023 15,240,747 15,297,023

... 15,297,023 LTCF (Rural) 6,825,165 4,787,226 4,804,746 4,787,226 4,804,746

... 4,804,746 NTP 1,815,602 995,118 999,622 995,118 999,622

... 999,622 Mail-back (RD) 8,998 36,969 37,022 36,969 37,022

... 37,022 Mail-back (Public) - 931 931 931 931

... 931 Total Voluntary 99,075,339 61,028,217 61,282,578 61,028,217 61,282,578

... 61,282,578 Total Mandatory 2,719,319 2,719,319 2,719,319 2,719,319

... 2,719,319 Grand Total 99,075,339 63,747,536 64,001,898 63,747,536 64,001,898

... 64,001,898 Present Value of Cost (7% discount rate, 20 years) 775,719,439 Annualized Cost (7%, 20 years) (73,222,427)



### 64

### CHAPTER 8: IMPACT ON SMALL ENTI TIES
To comply with the RFA, the DEA conducted a preliminary analysis to determine whether
the final rule will have a significant economic impact on a substantial nu mber of small entities.

8.1 CRITERIA FOR “SIGNIFICANT” ECONOMIC IMPACT
When there are no special considerations for “significant economic impact” or criteria
prescribed by external sources, the DEA uses a revenue

- based criterion. Table 24 summarizes

the general criteria for “significant” economic impact.
For the purposes of this analysis, the revenue

- based general criteria is used, where if the cost
of the rule is greater than 1% of annual revenue, the rule has a “significant” economic impact on

the busin ess.

Table 24 . General Criteria for "Significant" Economic Impact

Criteria Basis Criteria Result

Revenue

- based <1% of annual revenue Not significant economic impact 1% to 3% of annual revenue Possible significant economic impact >3% of annual revenue Significant economic impact



### 8.2 ANALYSIS

8.2.1 Manufacturers
As discussed in section 5.2.2, the DEA estimates that 536 manufacturer registrations
correspond to 439 entities, of which 423 are small entities. Manufacturers are affected by the
mandatory two

- person transport ation requirement

.
As discussed in sections 5.3.6 and 6. 5 , the a nnualized cost s of the two

- person transport ation
requirement and the operation of a collection receptacle are $3,621 and $ 68 4, respectively, or
$4, 30 5 total for the manufacture r s affected by the mandatory portion of the rule that may also
volunteer to operate a collection receptacle. The combined a nnualized cost of $4,305 is
compared to revenue. If the combined cost is less than 1% of revenue, neither of the components

65

### alone will be greater than 1% of revenue. In order to estimate the average revenue per
establishment, the DEA used the Economic Census . T he “ total value of shipment s” is divided by
the number of establishments for each employ ment size category . Employ ment size data is

available for manufacturers according to the number of establishments. Therefore, the number
of establishments by employ ment size is used to estimate t he number of affected manufacture r

entities that are small entities. The combined mandatory and voluntary participation cost of $4,305 is expressed as a percentage of average total value of shipments per establishment

. T his
analysis shows that the cost a s a percentage of average total value of shipment s per establishment
is less than 1% for all employ ment size categories . Therefore, none of the small manufacturer
entities are anticipated to be significantly impacted by this rule. Table 25 details the an alysis

conducted.

66Table 25 . Cost to M anufacture r s as P ercentage of T otal V alue of S hipment per E stablishment

Note : “D

– withheld to avoid disclosing data for individual companies; data are included in higher level totals”


### 8.2.2 Distributors

As discussed in section 5.2.2, the DEA estimates that 829 distributor registrations correspond
to 585 entities, of which 555 are estimated to be small entities. Distributors are also affected by

the mandatory two

- person transportation requirement

.
As disc ussed in sections 5.3.7 and 6.6, the a nnualized cost s of the two

- person transportation requirement and operating a collection receptacle are $3,621 and $684, respectively, or $4,305 2007 NAICS code Employment size Number of establish

ments SBA size standard (# of employees) Number of establishm ents below SBA size standards Total value of shipments ($1,000) Average total value of shipments per establishment

($1,000) Cost of mandatory portion of rule

($1,000) Cost of voluntary participation

($1,000) Total cost per establishment

($1,000) % Total cost of total value of shipments per establishment All establishments 410 11,316,752 Establishments with 0 to 4 employees 161 161 D N/A N/A N/A N/A N/A Establishments with 5 to 9 employees 51 51 209,910 4,116 3.62 0.68 4.31 0.10% Establishments with 10 to 19 employees 42 42 325,815 7,758 3.62 0.68 4.31 0.06% Establishments with 20 to 49 employees 58 58 665,295 11,471 3.62 0.68 4.31 0.04% Establishments with 50 to 99 employees 40 40 1,029,811 25,745 3.62 0.68 4.31 0.02% Establishments with 100 to 249 employees 38 38 2,039,701 53,676 3.62 0.68 4.31 0.01% Establishments with 250 to 499 employees 13 13 2,980,631 229,279 3.62 0.68 4.31 0.00% Establishments with 500 to 999 employees 5 3 3,127,159 625,432 3.62 0.68 4.31 0.00% Establishments with 1,000 to 2,499 employees 1 0 D N/A N/A N/A N/A N/A Establishments with 2,500 employees or more 1 0 D N/A N/A N/A N/A N/A All establishments 991 142,876,257 Establishments with 0 to 4 employees 284 284 239,929 845 3.62 0.68 4.31 0.51% Establishments with 5 to 9 employees 124 124 344,727 2,780 3.62 0.68 4.31 0.15% Establishments with 10 to 19 employees 77 77 429,214 5,574 3.62 0.68 4.31 0.08% Establishments with 20 to 49 employees 163 163 1,998,457 12,260 3.62 0.68 4.31 0.04% Establishments with 50 to 99 employees 86 86 7,900,874 91,871 3.62 0.68 4.31 0.00% Establishments with 100 to 249 employees 114 114 13,656,361 119,793 3.62 0.68 4.31 0.00% Establishments with 250 to 499 employees 68 68 31,271,474 459,875 3.62 0.68 4.31 0.00% Establishments with 500 to 999 employees 53 27 34,060,606 642,653 3.62 0.68 4.31 0.00% Establishments with 1,000 to 2,499 employees 15 0 15,064,345 1,004,290 3.62 0.68 4.31 0.00% Establishments with 2,500 employees or more 7 0 37,910,270 5,415,753 3.62 0.68 4.31 0.00% Total 1,401 1,349 96.3% 325412 - Pharmaceutical

preparation manufacturing 750 750

% below SBA size standards 325411 - Medicinal and

botanical manufacturing



### 67

### for the distributors affected by the mandatory portion of the rule that ma y also volunteer to
operate a collection receptacle. The combined a nnualized cost of $4,305 is compared to revenue.
If the combined cost is less than 1% of revenue, neither of the components alone will be greater

than 1% of revenue. Similar to the manuf acturer analysis, Economic Census data was utilized.
Employment size data is available for distributors according to the number of firms, 18 

### as well as
the number of establishments. However, this analysis is conducted on a per establishment basis,

rather t han per firm, to account for firms with multiple establishments and to make each
establishment equally likely to participate. Accordingly, “sales” is divided by the number of
establishments for each employment size category to estimate the average sales p er establishment. The combined mandatory and voluntary participation cost of $4,305 is then
expressed as a percentage of average sales per establishment. Th is analysis shows that the cost
as a percentage of average total sales per establishment is less than 1% for all employ ment size
categories . Therefore, none of the small distributor entities are anticipated to be significantly
impacted by this rule. Table 26 details the analysis conducted.

18 Firm

— A firm is a business organi zation consisting of one or more domestic establishments in the same State and industry that were specified under common ownership or control. The firm and the establishment are the same for single

- establishment firms. For each multi

- establishment firm, establishments in the same industry within a State will be counted as one firm

- the firm employment and annual payroll are summed from the associated establishments. http://www.census.gov/econ/susb/definitions.html

. The 2007 Economic Census uses the term, “firm” to describe businesses. There are technical differences in the definition; however, any difference is expected to have no impact on the analysis. For the pu rposes of this analysis, “firm,” “business,” and “entity” are used synonymously.



### 68Table 26 . Cost to D is tributors as P ercentage of T otal V alue of S hipment per E stablishment



### 8.2.3 Reverse Distributors
As discussed in section 5.2.2, the DEA estimates that 60 reverse distributor registrations
correspond to 55 entities, of which 38 are estimated to be small entities. Each of the component
costs was combined to estimate the total cost impact of the mandatory and voluntary portions of
the rule for each affected entity. The total cost was compared to the estimated annual revenue

for each of the small ent ities. The economic impact of the rule is estimated to be significant,
greater than 1% of annual revenue, for two of the 38 affected (5%) small entities.
8.2.4 Narcotic Treatment Programs
As discussed in section 6.1, the DEA estimates that 1,332 NTP regi strations correspond to
656 entities, of which 610 are estimated to be small entities. As discussed in section 6. 7 , 999

NTP are estimated to volunteer to operate a collection receptacle at an a nnualized cost of $ 1,170

. The analysis to determine the perce ntage of significantly affected small entity NTPs is conducted
using information in the Economic Census for NAICS code 621420

— Outpatient mental health
and substance abuse centers. The resulting percentage of small firms with significant impact is 2007 NAICS code Employment size Number of firms SBA size standard (# of employees) Number of firms below SBA size standards Number of establishments Sales ($1,000) Average sales per establishment

($1,000) Cost of mandatory portion of rule

($1,000) Cost of voluntary participation

($1,000) Total cost per establishment

($1,000) % Total cost of sales per establishment Firms operated for the entire year 5,430 7,700 560,484,712 Firms operated entire year with less than 5 employees 2,652 2,652 2,663 2,820,937 1,059 3.62 0.68 4.31 0.41% Firms operated entire year with 5 to 9 employees 1,022 1,022 1,049 3,569,196 3,402 3.62 0.68 4.31 0.13% Firms operated entire year with 10 to 19 employees 724 724 766 4,958,834 6,474 3.62 0.68 4.31 0.07% Firms operated entire year with 20 to 49 employees 555 555 599 10,157,353 16,957 3.62 0.68 4.31 0.03% Firms operated entire year with 50 to 99 employees 202 202 302 12,241,218 40,534 3.62 0.68 4.31 0.01% entire year with 100 employees or more 275 2321 526,737,174 226,944 3.62 0.68 4.31 0.00% Total 5,430 5,155 94.9% % below SBA size standards 100 424210 - Drugs and druggists' sundries merchant wholesalers



### 69

### applied to the number of affected small NTP entities to determine the number of significantly
impacted small entities.
Using the revenue profile from the 2007 Economic Census, the DEA calculated the average
revenue per establishment

. The analysis is conducted o n a per establishment basis, rather than
per firm, to account for firms with multiple establishments to and make each establishment
equally likely to participate. The cost was greater than 1% of revenue for the 518 firms in the

census data with annual “re venue less than $100,000.” Since the DEA estimates a participation

rate of 75%, 75% of the firms in the census data would be significantly impacted , or 389 out of

518 . The 389 firms equate to 10.2% of all small firms in the NAICS code 621420

– Outpatient

mental health and substance abuse centers. Table 27 details this analysis. Applying the 10.2%
to the 610 estimated NTPs that are small entities, the DEA estimates that the economic impact of
voluntary participation will be significant for 62 small NTP e ntities.

70Table 27 . Cost to NTP as P ercentage of R evenue per E stablishment

Note: “D

– withheld to avoid disclosing data for individual companies; data are included in higher level totals”


### 8.2. 5 Hospitals/Clinics with On

- Site Pharmacy
As discussed in section 6.1, the DEA estimates that 5,723 hospitals/clinics with on

- site
pharmacies correspond to 3,068 entities, of which 1,346 are estimated to be small entities.

H ospitals/clinics with on

- site pharmacies can have three possible collecti on receptacle locations:
hospital clinic with on

- site pharmacy, urban/suburban LTCF, and rural LTCF. However for the
purposes of the small entity analysis , the activity with the highest cost, the $2,305 cost of
operating the collection receptacles on

- sit e , is conservatively evaluated as a percentage of annual

revenue . Using the revenue profile from the 2007 Economic Census, the DEA estimated the 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is >1% of revenue @75% participation rate Firms operated for the entire year 4,113 8,353 11,955,393 Firms operated entire year with sales/receipts/revenue less than $100,000 518 518 520 27,697 53 1.17 2.2% 389 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 641 641 652 105,312 162 1.17 0.7% 0 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 487 487 514 178,683 348 1.17 0.3% 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 594 594 655 423,660 647 1.17 0.2% 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 761 761 1,222 1,240,595 1,015 1.17 0.1% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 447 447 1,116 1,607,649 1,441 1.17 0.1% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 378 378 1,352 2,683,147 1,985 1.17 0.1% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 234 0 1,483 3,525,007 2,377 1.17 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 45 0 618 1,468,271 2,376 1.17 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 6 0 137 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 2 0 84 D N/A N/A N/A N/A Total 4,113 3,826 8,353 389 93.0% 10.2% Total % of small firms 10.0 621420 - Outpatient mental health and substance abuse centers

% NTP below SBA size standards



### 71

### percentage of establishments where the cost of the rule is 1% or more than annual revenue for

each of NAICS co des 621491

— HMO medical centers, 622110

— General medical and surgical
hospitals, and 622310

— Specialty (except psychiatric and substance abuse) hospitals . This
percentage was then applied to the affected registrants to determine the number of registrants

wit h economic impact greater than 1% of annual revenue.
Following the same steps described for NTPs above , the DEA estimates 0.0% of small
hospitals/clinics in the census data will be significantly impacted by the rule. Table 28 contains
the details of the analysis. Applying the 0.0% to the 1,346 estimated small entities, the DEA

estimates that the economic impact will be significant for zero small hospital/clinic entities.
Revenue data for many of the revenue ranges were with held by the data provider to avoid
disclosing data for individual companies. However, utilizing the figures for all “Firms operated
for the entire year,” net of the reported figures, the DEA evaluated the cost as a percentage of

annual revenue for the com bined revenue ranges where revenue data was withheld. The
economic impact is less than 1% for the combined revenue ranges where revenue data was
withheld for all three NAICS codes. Therefore, t he DEA believes the data, had it been available,

would not ch ange the overall evaluation.

72Table 28 . Cost to H ospital/ C linic with O n - s ite P harmacy as P ercentage of R evenue per E stablishment

(Continued on next page

. ) 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is >1% of revenue @50% participation rate Firms operated for the entire year 30 516 5,361,166 Firms operated entire year with sales/receipts/revenue less than $100,000 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 5 5 5 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 4 4 4 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 3 3 3 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 2 2 7 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 2 2 2 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 1 1 1 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 2 2 5 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 4 2 37 138,469 3,742 2.31 0.1% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 7 0 452 D N/A N/A N/A N/A Firms without reported revenue ("D" combined) 26 479 5,222,697 10,903 2.31 0.0% 621491 - HMO medical centers 30.0



### 73(Continued on next page

. ) 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is >1% of revenue @50% participation rate Firms operated for the entire year 3,051 5,077 657,110,475 Firms operated entire year with sales/receipts/revenue less than $100,000 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 2 2 2 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 1 1 1 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 18 18 18 35,355 1,964 2.31 0.1% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 117 117 117 455,242 3,891 2.31 0.1% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 316 316 316 2,370,826 7,503 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 613 613 619 9,841,428 15,899 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 436 218 444 15,504,169 34,919 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 416 0 444 29,553,509 66,562 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 1,132 0 3,116 599,349,144 192,346 2.31 0.0% 0 Firms without reported revenue ("D" combined) 3 3 802 267 2.31 0.9% 35.5 622110 - General medical and

surgical hospitals



### 74Note: “D

– withheld to avoid disclosing data for individual companies; data are included in higher level totals”


### 8.2.6 Retail Pharmacies
As discussed in section 6.1, the DEA estimates that 69,026 retail pharmacy registrations
correspond to 29,582 entities, of which 29,328 are estimated to be small entities. Simi lar to
hospitals/clinics with on

- site pharmacies , retail pharmacies can also have three possible
collection receptacle locations: on

- site at the retail pharmacy, urban/suburban LTCF, and rural
LTCF. However for the purposes of the small entity analysis, the cost sc en ario with the highest
number of pharmacies significantly affected is used, 50% participation operating on

- site
collection receptacles at an a nnualized cost of $1,240. The $1,240 cost of operating a collection 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is >1% of revenue @50% participation rate Firms operated for the entire year 352 811 28,271,443 Firms operated entire year with sales/receipts/revenue less than $100,000 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 0 0 0 0 N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1 1 1 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 7 7 7 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 27 27 27 102,723 3,805 2.31 0.1% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 49 49 50 360,808 7,216 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 73 73 77 1,236,933 16,064 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 86 43 119 3,130,772 26,309 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 55 0 89 3,821,692 42,940 2.31 0.0% 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 54 0 441 19,603,305 44,452 2.31 0.0% 0 Firms without reported revenue ("D" combined) 8 8 15,210 1,901 2.31 0.1% Total 3,433 1,506 6,404 0 43.9% 0.0% Total % of small firms 35.5

% Hospital/clinic below SBA size standards 622310 - Specialty (except psychiatric and substance

abuse) hospitals



### 75

### receptacle on

- site is evaluated a s a percentage of annual revenue. The analysis to determine the
percentage of significantly affected small entities is conducted utilizing information in the

Economic Census for NAICS code 446110

— Pharmacies and drug stores. The resulting
percentage of small firms with significant impact is applied to the number of affected small retail
pharmacy entities to determine the number of significantly impacted entities.
Using the revenue profile from the 2007 Economic Census, the DEA calculated the average
revenue per establishment. The analysis is conducted on a per establishment basis, rather than
per firm, to account for firms with multiple establishments and to make each establishment equally likely to participate. The cost of $1,240 is calculated as a percentage of revenue per
establishment for each revenue range. The cost was greater than 1% of average revenue for the

943 firms in the census data with annual “revenue less than $250,000.” Since the $1,240 cost is
based on a participation rate of 50%, 50% of the firms in the census data are significantly
impacted , or 472 out of 943 . The 472 firms equate to 2.8% of all firms below the SBA size

standard i n the NAICS code 446110

– Pharmacies and drug stores. Table 29 details the analysis

conducted

. Applying the 2. 8 % to the 29,328 estimated small retail pharmacy entities, the DEA
estimates that the economic impact will be significant for 810 small retail p harmacy entities.

76Table 29 . Cost to Retail P harmacies as P ercentage of R evenue per E stablishment



### 8.2.7 Long Term Care Facilities
As discussed in section 6.1, the DEA estimates that 31,600 LTCFs correspond to 19,148
entities, of which 18,414 are estimated to be small entities. As previously calculate d in sections
6.4.1 and 6.4.2, t here are two estimated a nnualized costs for LTCFs : $ 207 at 24 inner liner
changes per year , and $103 at 12 inner liner changes per year. For the purposes of the small entity analysis, the $207 cost is evaluated as a percentage of average annual revenue to determine
whether it is a significant economic impa ct, greater than 1% of revenue. The analysis to
determine the percentage of significantly affected entities is conducted utilizing information in 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Sales ($1,000) Average sales per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of sales per establishment # of firms where cost is >1% of sales

@50% participation rate Firms operated for the entire year 17,217 40,174 200,477,964 Firms operated entire year with sales/receipts/revenue less than $250,000 943 943 945 114,989 122 1.24 1.0% 472 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 769 769 778 286,262 368 1.24 0.3% 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1,486 1,486 1,493 1,118,959 749 1.24 0.2% 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 5,674 5,674 5,768 9,847,957 1,707 1.24 0.1% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 5,264 5,264 5,503 18,509,871 3,364 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 2,311 2,311 2,789 15,480,620 5,551 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 622 622 1,364 8,868,880 6,502 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 89 0 535 3,066,523 5,732 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 27 0 360 1,797,893 4,994 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 to $249,999,999 8 0 281 1,340,832 4,772 1.24 0.0% 0 Firms operated entire year with sales/receipts/revenue of $250,000,000 or more 24 0 20,358 140,045,178 6,879 1.24 0.0% 0 Total 17,217 17,069 472 99.1% 2.8% 25.5

% Pharmacy below SBA size standards 446110 - Pharmacies and

drug stores

Total % of small firms



### 77

### the Economic Census for NAICS codes 623110

— Nursing care facilities, 623312

— Homes for
the elderly, and 623990

— Other residential care facilities. The resulting percentage of small
firms with significant impact is applied to the number of affected small entity LTCFs to
determine the number of significantly impacted entities.
Using the revenue profile from the 20 07 Economic Census, the DEA calculated the average
revenue per establishment. The analysis is conducted on a per establishment basis, rather than
per firm, to account for firms with multiple establishments and to make each establishment
equally likely to participate. The cost of $207 is calculated as a percentage of revenue per
establishment for each revenue range. The cost was greater than 1% of average revenue for

0.0% of the small LTCFs in the census data. Applying the 0.0% to the 18,414 estimated sm all
entity LTCFs, the DEA estimates that the economic impact will be significant for zero small
entity LTCFs. Therefore none of the 18,414 affected small LTCF entities are economically
significantly affected. Table 30 summarizes the analysis.

Revenue da ta for three of the revenue ranges for NAICS code 623990

— Other residential
care facilities were withheld by the data provider to avoid disclosing data for individual
companies. However, the three revenue ranges are above the SBA size standards and firms i n these ranges are not small firms. Therefore, the DEA believes the data, had it been available,
would not change the overall evaluation.

78Table 30 . Cost to L ong T erm C are F acilities as P ercentage of R evenue per E stablishment

(Continued on next page

. ) 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is

>1% of

revenue @50% participation rate Firms operated for the entire year 7,675 15,335 91,135,877 Firms operated entire year with sales/receipts/revenue less than $100,000 327 327 329 14,439 44 0.21 0.5% 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 330 330 342 56,200 164 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 286 286 290 103,515 357 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 334 334 347 247,557 713 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,044 1,044 1,094 1,883,968 1,722 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 1,702 1,702 1,831 6,308,905 3,446 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 1,967 1,967 2,168 13,910,856 6,416 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 1,225 1,225 1,756 17,683,639 10,070 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 248 0 930 8,485,392 9,124 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 116 0 1,055 8,003,835 7,587 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 96 0 5,193 34,437,571 6,632 0.21 0.0% 0 25.5 623110 - Nursing care

facilities



### 79(Continued on next page

. ) 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is

>1% of

revenue @50% participation rate Firms operated for the entire year 9,697 12,864 14,809,660 Firms operated entire year with sales/receipts/revenue less than $100,000 1,548 1,548 1,550 85,236 55 0.21 0.4% 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 2,491 2,491 2,496 420,192 168 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 1,915 1,915 1,933 681,567 353 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1,435 1,435 1,514 1,010,748 668 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,419 1,419 1,727 2,209,253 1,279 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 539 539 851 1,827,583 2,148 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 216 216 667 1,486,737 2,229 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 81 0 410 1,250,235 3,049 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 30 0 365 1,053,821 2,887 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 9 0 139 596,432 4,291 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 14 0 1,212 4,187,856 3,455 0.21 0.0% 0 10.0 623312 - Homes for the elderly



### 80Note: “D

– withheld to avoid disclosing data for individual companies; data are included in higher level totals”


### 8.2.8 Results Summary
In summary, none of the manufacturers , distributors, hospitals/clinics with on

- site
pharmacies, and long term care facilities are significantly impacted (a nnualized cost greater than
1% of annual revenue) by this rule. Two (5.3%) of 38 small reverse distributor entities, 810
( 2.8 %) of 29,328 small pharmacy entities, and 62 ( 10.2 % ) of 610 small NTP entities are
significantly impacted by this rule. In total, 874 (1. 7 %) of 50,714 affected entities are
significantly impacted by this rule. Table 31 summarizes the analysis. 2007 NAICS code Sls/rcpts/rev size of firms operated entire year Number of firms SBA size standard (annual revenue, $

million) Number of firms below SBA size standards Number of establishments Receipts/ Revenue ($1,000) Average revenue per establishment

($1,000) Cost of voluntary participation

($1,000) % Cost of revenue per establishment # of firms where cost is

>1% of

revenue @50% participation rate Firms operated for the entire year 3,157 5,680 8,214,985 Firms operated entire year with sales/receipts/revenue less than $100,000 317 317 319 15,566 49 0.21 0.4% 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 420 420 421 74,758 178 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 525 525 540 189,857 352 0.21 0.1% 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 575 575 652 414,925 636 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 616 616 959 980,906 1,023 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 276 276 661 953,795 1,443 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 235 235 797 1,648,717 2,069 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 155 0 916 2,282,868 2,492 0.21 0.0% 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 32 0 323 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 4 0 62 D N/A N/A N/A N/A Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 2 0 30 D N/A N/A N/A N/A Total 20,529 19,742 33,879 0 96.2% 0.0% 10.0 623990 - Other residential care facilities

Total % of small firms % LTCF below SBA size standards



### 81Table 31

. Summary of Impact on Small Entities

Business activ ity Number of registrations

or LTCF Number of affected

entities Percentage below SBA size standards Number of affected small entities Percentage of small entities

with significant

impact Number of small entities

with significant

impact

Manufacturer 536 439 96.3 423 0 0

Distributor 829 585 94.9 555 0 0

Reverse distributor 60 55 69.1 38 5.3 2

NTP 1,332 656 93.0 610 10.2 62 Hospital/clinic, with on

- site pharmacy 5,723 3,068 43.9 1,346 0.0 0

Retail Pharmacy 69,026 29,582 99.1 29,328 2.8 810
Total DEA registrations 77,506 34,385 93.9 32,300 2.7 874

LTCF 31,600 19,148 96.2 18,414 0.0 0

Total 109,106 53,533 94.7 50,714 1.7 874



### 8.3 CRITERIA FOR “SUBSTANTIAL NUMBER”
When there are no special considerations for “substantial number” or criteria prescribed by
external sources, the DEA uses a general criterion based on percentage of affected entities.

Table 32 summarizes the general criteria for “substantial” number.

For the purposes of this analysis, a “substantial number” is defined as greater than 30%.

Table 32 . General Criteria for “ Substantial Number ”

Criteria Result <10% of small entities Not substantial number 10% to 30% of small entities Possible substantial number >30% of small entities Substantial number



### 82

### As summarized in section 8.2. 8 , 874 or 1. 7 % of 50,714 affected small entities are expected to
experience a significant economic impact by the final rule, which is far below the 30% criteria
for all regist rant categories.

83

### CHAPTER 9: COST

- BENEFIT ANALYSIS OF REGULATO RY ACTION

9.1 COST S OF THE R ULE

As summarized in Chapter 7 , the DEA anticipates this rulemaking will have an a nnualized

cost that ranges from a low of $ 44,896,787 to a high of $ 73,222,427 to the affected population

combined

. 9.2 B ENEFIT S OF THE R ULE

The citizens and residents of the United States bear an enormous cost from the diversion of
controlled substances into the illicit market, not only monetarily but also in public health and

s afety

. 9.2.1 Prescription Drug Abuse Epidemic
Before the Disposal Act, the CSA did not address the disposal of controlled substances by
ultimate users. To dispose of their controlled substances, ultimate users were permitted to
destroy the substances themselves (e.g., mix the substances with coffee grounds, place in a
plastic bag, and throw into the garbage or flush) or surrender the substances to law enforcement.
There is concern, however, that throwing controlled substances into the garbage or flush ing them
could be harmful to the environment. Because the public has limited options for disposal,
outdated and unwanted controlled substances often accumulate in medicine cabinets, easily
within reach of children and teenagers. In passing the Disposal A ct, Congress recognized that
the secure disposal of controlled substances is important because of the significant prescription
drug abuse problem in the United States. The Centers for Disease Control and Prevention

dec lared prescription drug overdoses an epidemic. 19

23 Centers for Disease Control and Prevention, “Morbidity and Mortality Weekly Report,” Vol. 61, No. 1, at 10 (January 13, 2012)

.



### 84

### The abuse of prescription drugs is the fastest growing drug problem in the United States.
Findings from the 2012 National Survey on Drug Use and Health (NSDUH) estimate that 6.1
million persons aged 12 or older used prescription

- type psychother apeutic drugs

– pain relievers,

anti

- anxiety medications, stimulants, and sedatives

– non

- medically in the previous month. 20 

### In
2012, 2.4 million persons aged 12 or older used pain relievers non

- medically for the first time. 21


### On average, every day 6,700 n ew initiates per day abuse a prescription pain reliever for the first

time. 22


### The availability of outdated or unwanted prescription controlled substances is problematic
because there is a concern that young people may perceive prescription and/or over

- the

- c ounter drugs as “safer” than illegal drugs because of their intended, legitimate medical use. 23 

### This
misperception may be shared by parents. Twenty percent of parents have give n a teen a prescription drug that was not prescribed to them and one in six par ents believes that so called
“legal highs” (through use of prescription drugs) are safer than those resulting from drugs off the

street

. 24



### The 201 2 NSDUH 25 

### indicates that over 68 % of Americans 12 and older who used pain

relievers non

- medically in the previ ous year obtained the drugs from a friend or relative. 26


### Another study found that more than 42 % of teens who have misused or abused prescription

20 Substance Abuse and Mental Health Services Administration, “Results from the 2010 National Survey on Drug Use and Health: Vol ume I, Summary of National Findings,” Office of Applied Studies, 2011 (NSDUH Series H

- 41, HHS Publication No. SMA 11

- 4658), http:/ /www.oas.samhsa.gov/NSDUH/2k10NSDUH/2k10Results.pdf. 21 Id. 22 Substance Abuse and Mental Health Services Administration, 201 2 National Survey on Drug Use and Health. 23 E.g., Partnership for a Drug

- Free America and MetLife Foundation, “ 2009 Parents and Teen s Attitude Tracking Study Report, ” March 2, 2010. 24 Id. 25 The National Survey on Drug Use and Health (NSDUH) is an annual survey of the civilian, non

- institutionalized, population of the United States aged twelve or older. The survey is conducted by the Department of Health and Human Services Office of Applied Studies, Substance Abuse and Mental Health Services Administration (SAMHSA). 26 Substance Abuse and Mental Health Services Administration, “Results from the 2010 National Survey on Drug Use and Health: Vol ume I, Summary of National Findings,” Office of Appl ied Studies, 2011 (NSDUH Series H

- 41, HHS Publication No. SMA 11

- 4658), http://www.oas.samhsa.gov/NSDUH/2k10NSDUH/2k10Results.pdf.



### 85

### drugs obtained the drugs from their own family’s medicine cabinet. 27 

### That same study also
reported that of the approximately 2.9 million persons aged 12 or older who had used an illicit
drug for the first time in 2012, one in four initiated with the non

- medical use of a prescription
drug. 28 

### The prevalence of controlled substance prescription drug abuse among teenag ers is right
behind their abuse of marijuana (to include organic marijuana and synthetic cannabinoids).
According to a 2012 survey by the Partnership at Drugfree.org, one in six teens have misused or
abused prescription pain relievers at least once in the ir lifetime. Non

- medical drug use,
particularly among young adults, is having a devastating effect on the United States. According
to the Centers for Disease Control and Prevention, poisoning deaths, which include drug
overdoses such as those from prescr iption drugs, are the leading cause of injury death in the
United States; nearly nine out of ten poisoning deaths are caused by drugs and more than 40% of
those involve opioid analgesics. 29



### 9.2.2 Monetary Costs of Prescription Drug Abuse

T he DEA estimated the baseline cost of diversion to the citizens and residents of the United
States without implementation of the rule. The DEA used “Economic Costs of Nonmedical Use
of Prescription Opioids” 30 

### and “Estimated Costs of Prescription Opioid Analgesic Abuse in the

United States in 2001” 31 

### as primary sources for obtaining estimated costs to the citizens and

residents of the U nited S tates associated with the diversion of controlled substances into the
illicit market. While opioids discussed in the publications rep resent a subset of all controlled

27 Partnership for a Drug

- Free America and MetLife Foundation, “ 2010 Partnership Attitude Tracking Study,” April 6, 2011. 28 Id

. 29 U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Injury Preventi on and Control, “Drug Poisoning Deaths in the United States, 1980

- 2008,” December 2011. 30 Clin J Pain (The Clinical Journal of Pain), Volume 27, Number 3, March/April 2011. 31 Clin J Pain (The Clinical Journal of Pain), Volume 22, Number 8, October 2006.



### 86

### substances regulated by the DEA, the cost estimates in the publications may represent a conservative estimated cost of the diversion of all controlled substances from a reputable source.
The authors of the primary sources relied upon by the DEA gathered data from numerous
sources including: emergency department information from the Drug Abuse Warning Network
(DAWN), nonmedical use of prescription opioids information from the National Surve y on Drug
Use and Health (NSDUH), substance abuse treatment information from the Treatment Episode
Data Sets (TEDS), statistical information from the U.S. Department of Justice Bureau of Justice
Statistics, Federal Bureau of Investigation, National Forensi c Laboratory, and Drug Enforcement
Administration budget documents. Data related to the total cost of treatment for the abuse of
prescription opioids also included input from the Substance Abuse and Mental Health Services
Administration at the U.S. Depart ment of Health and Human Services.
According to the research published in The Clinical Journal of Pain , estimated costs associated with the nonmedical use of prescription opioids increased from $8.6 billion in 2001 to
$53.4 billion in 2006 (table 33)

. Th e estimated costs to the criminal justice system associated with the nonmedical use of prescription opioids increased from $1.4 billion to $8.2 billion

— a
486% increase

— from 2001 to 2006. A reduced amount of controlled substances available for

diversion ma y reduce criminal justice costs, which include costs of crime, law enforcement,
prosecution and adjudication, and correctional treatment.

Table 33

. U.S. Costs of Nonmedical Use of Prescription Opioids 2001 and 2006

Cost ($ million) 2001 2006 % Increase Total Cost 8,600 53,400 521

Health Care 2,600 3,200 23 Criminal Justice 1,400 8,200 486 Workplace & Lost Productivity 4,600 42,000 813 

### The baseline cost of diversion to the citizens and residents of the United States is the
estimated cost in 2012 without the rule. The increase from $8.6 billion in 2001 to $53.4 billion

87

### in 2006 represents a compound annual growth rate (CAGR) of 44 %

. Although it is difficu lt to
project that the cost will continue to grow at this rate and nearly impossible to accurately
estimate the baseline cost, it would not be an exaggeration to say that the cost of nonmedical use
of prescription opioids to the public is enormous and acce lerating.

Although applying the 44 % CAGR results in an estimated cost of nonmedical use of prescription opioids of $477.7 billion in 2012, the DEA conservatively estimates, for the
purposes of the EIA, that the cost to the citizens and residents of the United States is greater than
$53.4 billion (the cost in 2006).

9.3 EVALUATION OF THE CO STS AND BENEFITS OF THE RULE (THRESHOLD ANALYSIS)
In evaluating the costs and benefits of the rule, the a nnualized cost of the rule is compared
with the anticipated reduction in the growth rate of costs associated with diversion of controlled

substances into the illicit market. The cost

- benefit analysis uses the costs associated with the
nonmedical use of prescription opioids, $8.6 billion in 2001 and $53.4 billion in 2006. These
may be conservative estimates of the rapidly growing total cost associated with diversion of

controlled substances into the illicit market.
It is preferable to conduct a discounted cash flow analysis where the costs and benefits are
quantified and the net benefits are calculated and presented in present dollar value. However, the

baseline costs associated with diversion of controlled substances into the illicit market is

unreliable. Therefor e, a quantitative analysis is not possible and a threshold analysis is utilized.
The threshold analysis considers whether the benefits of the rule are greater than or equal to

the cost of the rule.

88

### As discussed above, the impact of the rule is estimated to range from a low of $ 44,896,787 to a high of $ 73,222,427

. T hus the DEA must evaluate whether the benefit of the rule i s greater

than or equal to these costs of the rule

. 32



### The benefits of the rule are represented as the difference between the costs associated with

diversion of controlled substances into the illicit market at the baseline and the costs associated

with the diversion of controlled substances into the illicit market under the rule.

32 Although it may be posited that the rule’s voluntary benefits necessarily outweigh its voluntary costs, the private benefits t hat drive the decision to voluntarily install collection receptacles may not be social benefits (which are what matter for a break

- even calculation). For instance, if sales are merely shifting from pharmacies without receptacles to pharmacies with them, t he effect is a transfer, rather than a benefit, when viewed from the perspective of society as a whole. Moreover, there almost certainly exist successful disposal programs that will be non

compliant with this rule; some of the “voluntary” costs will not g enerate substantial new benefits but will instead maintain the benefits that are attributable to these currently

- existing programs. (The cost savings associated with discontinuing non

- compliant disposal programs would be attributable to this rule as well, so to be truly thorough, this EIA would include on the cost side of the analysis only the incremental cost of the compliant receptacles over the non

- compliant disposal programs.) To be conservative, the break

- even presentation uses the total estimated co st of the rule.



### 89

### Although there is a lack of evidence to quanti fy the cost savings or public health impacts of
the rule, t he D EA believes that this rule reduces the growth in the cost of the diversion of

controlled substances into the illicit market by at least $ 44.9 to $73.2 million annually and , therefore, this rule will have positive net economic benefit s , including benefit s related to the
health and safety of the citizens and residents of the United States.

90

### CHAPTER 1 0 : CERTIFICATION STATEM ENTS

1 0 .1 EXECUTIVE ORDERS 128 66 AND 13563

As summarized in chapter 7 , t he estimated first

- year cost of this rule ranges from a low of
$ 4 5,282,242 to a high of $ 99,075,339 ; therefore , this rule may r esult in an annual effect on the economy of $100 million or more

.
1 0 .2 REGULATORY FLEXIBILI TY ACT
In accordance with the RFA, t he DEA evaluated the impact of this rule on small entities.
Specifically, the DEA examined the impact of two mandatory provisions in the rule: 30

- day
destruction requirement for reverse distributors and two employee transport ation requirement for

non

- practitioners . Additionally, the DEA estimated the level of voluntary participation in

collection activities in accordance with the rule and the resulting cost impact

.
This rule is estimated to affect 53,533 entities ( 439 manufacturers, 585 distributo rs, 55
reverse distributors, 656 NTPs, 3,068 hospitals/clinics, 29,582 pharmacies, and 19,148 long term

care facilities ) . Of the 53,533 affected entities , 50,714 ( 423 manufacturers, 555 distributors, 38
reverse distributors, 610 NTPs, 1,346 hospitals/clin ics, 29,328 pharmacies, and 18,414 long term

care facilities ), or 94.7 % are estimated to be small entities.

While all affected registrants will be required to comply with this rule, only a very small
subset of registrants engage in the activities where t he rule imposes new requirements: the 30

- day destruction requirement and two

- person transport ation requirement.

Both requirements affect 55 reverse distributors that receive controlled substances from other
registrants for disposal , of which 38 were estimated to be small entities. The potential increase
in destruction, transport, travel, and labor cost associated with these two requirements was
analyzed for each of the 38 small entities

. Additionally, any of the ten reverse distrib utors with

91

### on

- site destruction facilities may receive authorization to voluntarily operate a mail

- back

program. Three of these ten reverse distributors are small entities. The DEA estimates all three

small entity reverse distributors will operate a mail

- back program. T he DEA does not estimate
that any reverse distributors will operate collection receptacles at their registered locations
because of the small numbers of employees that work at those locations. However, reverse
distributors will be impacted by the destruction of controlled substances from collection
receptacles that are transferred to them for destruction. The total estimated c ost of the mandatory
portions and voluntary participation aspect s of the rule was compared to the estimated annual

revenue for each of the small reverse distributors . The economic impact of the rule is estimated
to be significant, greater than 1% o f annual revenue, for two (5%) of 38 affected small

businesses.

The two

- person transport ation requirement also affects 423 small manufacturers and 555
small distributors that transport to reverse distributors or to an unregistered, off

- site location for
destruction. The potential increase in labor cost associated with the two

- person requirement was
analyzed for manufactur ers and distributors. Additionally, a small number of manufacturers and
distributors are estimated to volunteer to operate collection receptacle s at their registered

locations primarily for use by their employees

. However, the DEA believes that manufactu rers and distributors will not operate collection receptacles a t their registered locations unless they

believe there will be a benefit to them for the service. The economic impact of the mandatory
portion and voluntary participation aspect s of this rule is estimated to be significant for none
(0.0%) of the 423 small manufacturers and none ( 0.0 %) of the 555 small distributors.

The rule also permits certain other registrant categories to voluntarily conduct collection

activities . The DEA estimates some retail pharmacies, hospitals/clinics with on

- site pharmacies ,

92

### and NTPs will voluntarily participate as collectors by operating collection receptacle s at their

location s . Some retail pharmacies and hospitals/clinics with an on

- site pharmacy are also

estima ted to operate collection receptacle s at LTCF s . The level of participation and operating
costs were estimated to determine the number of small entities with impact greater than 1% of

revenue. In summary, t he DEA estimates that zero (0.0%) of the 423 smal l manufacturers, zero ( 0.0 %) of the 555 small distributors, two (5.0%) of 38 small reverse distributors, 62 (10.2%) of
the small NTPs, zero (0.0%) of the 1,349 small hospitals/clinics, 810 ( 2.8 %) of the 29,328 small
pharmacies, and zero (0.0%) of the 18,41 4 small long term care facilities to be significantly
impacted (a nnualized cost is estimated to be greater than 1% of annual revenue) by this rule.
In total, the DEA estimates 874 ( 1.7 %) of the 50,714 affected small entities to be
significantly affected by this rule. The DEA’s assessment of economic impact by size category
indicates that the rule will not have a significant effect on a substantial number of these small

business entities.

10.3 UNFUNDED MANDATES RE FORM ACT

The estimated first

- year impact of this rule ranges from a low of $ 45,282,242 to a high of
$ 99,075,339 ; thus it will not have an annual effect on the economy of $1 44 million or more (the
current threshold, inflation

- adjusted using the most recent GDP deflator)

.
1 0

. 4 CONGRESSIONAL REVIEW ACT

The estimated first

- year impact o f this rule ranges from a low of $ 45,282,242 to a high of
$ 99,075,339 ; thus it may have an annual effect on the economy of $100 million or more.

93

### APPENDIX A

– AFFECTED ENTITIES AN D SMALL ENTITIES
The mandatory portions of this rule affect DEA registered manufacturers, distributors, and
reverse distributors. Voluntary participation elements of the rule affect manufacturers,
distributors, reverse distributors, narcotic treatment programs (NTP), hosp itals/clinics with an

on

- site pharmacy, retail pharmacies, and long term care facilities (LTCF). Since the rule pertains
to the disposal of controlled substances, the business activities listed above refer to DEA
registrants except LTCFs, who are not regu lated by the DEA. Table A1 summarizes the affected
businesses by business activity, DEA registration requirement, and whether the business is
affected by the mandatory and/or voluntary provisions of the rule.

Table A1: Summary of Affected Business Activi ties Business Activity DEA Registrant (Yes/No) Provisions Affected By (Mandatory/Voluntary) Manufacturer Yes Mandatory and Voluntary Distributor Yes Mandatory and Voluntary Reverse Distributor Yes Mandatory and Voluntary NTP Yes Voluntary Hospital/Clinic (with on

- site pharmacy) Yes Voluntary Retail Pharmacy Yes Voluntary Long Term Care Facility No Voluntary



### The number of affected entities for each business activity is estimated from a combination of
DEA registration records and the 2007 Economic Census, the most recent census with a complete set of available data. The DEA registration records for m the basis for all DEA
registrants affected by this rule and an industry report which estimates the number of LTCFs
forms the basis of analysis for LTCFs. The method of estimating the number of affected entities

and small entities is the same for all business activi ties , with the exception of reverse
distributors. The analys e s pertaining to the number of entities and small entities for reverse
distributors and the other business activities are presented below.

94

### Reverse Distributor

The method used to determi ne the number of affected reverse distributor entities and small

entities differ s from the method applied to all other business activities. The analysis of reverse
distributors did not require the use of the census data (discussed in detail below with respect t o all other regist r ant business activities )

. As of November 2013, there were 60 active reverse distributor registrations. Four
registrations were identified as dual registrations, i.e., additional registrations held by the same
entity or parent entity t o facilitate additional locations. One reverse distributor was determined
to engage in returns only. Since this reverse distributor does not engage in d estruction or

transfers for d estruction , it is not impacted by the 30

- day destruction requirement or t wo

- person
transport ation requirement. Therefore, for the purposes of this EIA, 55 reverse distributor
entities are affected by the rule

. Based on review of DEA registration information for the 55 affected reverse distributor
entities, the DEA has determin ed that 54 are businesses, while one is a non

- profit organization.

The DEA determined the NAICS code , estimated the number of employees, and annual

revenue 33 

### for each of the 55 affected entities from examination of multiple proprietary records
and reports, subscription

- based research services, and public data sources. 34 

### This information
was compared to the SBA size standards and the RFA definition for small entities. When a
parent company is clearly identified, the NAICS code, number of employees, and annu al revenue
for the parent company was estimated and used to determine whether or not the affected entity is

33 Revenue for two of the small entities was not found, and was estimated by applying the number of employees to the median reve nue per employee, determined from the small entities whose employee and revenue data w as available. 34 Information sources include, but were not limited to, DEA records and reports as well as publicly available and subscription

- based services.



### 95

### a small entity. Employing the SBA size standard for “Sector 42

- Wholesale Trade” 35 

### of 100
employees, the DEA estimates that 38 of 55 affected rever se distributor entities are small

entities.
Manufacturer, Distributor, Narcotic Treatment Program, Hospital/Clinic with On

- site Pharmacy, Retail Pharmacy, Long Term Care Facility

T he method for estimating the number of affected entities and affected small entities is the

same for manufacturers, distributors, narcotic treatment programs, hospitals/clinics with an on

site pharmacy, retail pharmacies, and long term care facilities . The method is described below:

1. The number of DEA registrations by business activity forms the basis of the
estimate ( e xcept LTCFs, where an industry report is used to estimate the number of

LTCF facilities , because LTCFs are not registered with the DEA .)

2. North American Information Classification System ( NAICS ) codes that most
closely represent the affected entities (e.g., manufacturer, distributor, pharmacy, etc. ) are

identified.

3. To account for entities with multiple registrations, the relationship between the
number of establishments and entities is developed for each NAIC S code from the

Economic Census an d applied to the number of registrations 36 

### to estimate the number of

affected entities.

35 “Sector 42

– Wholesale Trade” includes many subsectors and industries including those commonly identified as DEA registered distributors and reverse distributors. The size standard for the entire sector is the same, 100 employees. 36 Firm

- A firm is a business organization consisting of one or more domestic establishments in the same state and industry that were specified under common ownership or control. The firm and the establishment are the same for single

- establishment firms. For eac h multi

- establishment firm, establishments in the same industry within a state will be counted as one firm

- the firm employment and annual payroll are summed from the associated establishments. Establishment

- A single physical location where business is conducted or where services or industrial operations are performed. http://www.census.gov/econ/susb/definitions.html.



### 96

### 4. T he census data for employee size or annual revenue is compared to the SBA size
standards to determine the percentage of entities , f or each business activity , that are

small.

5. Th e percentage of businesses that are below SBA size standard s is applied to the

number of affected entities above SBA size standards to estimate the number of affected

small entities.

The 2007 Economic Census uses the term, “firm” to describe businesses. There are technical
differences in the definition; however, any difference is expected to have no impact on the
analysis. For the purposes of this analysis, “firm,” “business,” and “entity” are used
synonymously.
Following the steps described above, as of November 2013, there are 536 manufacturers, 829
distributors, 69,026 retail pharmacies, 5,723 hospitals/clinics with on

- site pharmacies, 37 

### and
1,332 NTPs registered with the DEA. Additionally, based on an industry study, the DEA
estimates that there are 31,600 LTCFs 38 

### affected by this rule.

The DEA examined the 2007 NAICS code definitions to determine the NAICS codes that
most closely represent the affected registrants and LTCFs. The DEA determined the following
NAICS codes most closely represent the business activities affected by this rule:

• Manufacturer

o 325411

– Medicinal and Botanical Manufacturing

37 There are 15,953 DEA registrations under the hospital/clinic business activity. However, this rule affects only those with o n

- site pha rmacies. Based on the DEA’s understanding of this registrant category, nearly all hospitals have on

- site pharmacies while few clinics have on

- site pharmacies. Based on a study performed by an industry membership association, the DEA found that there are 5,723 hospitals in the United States. The DEA believes it is very likely that all 5,723 hospitals identified by the study are registered with the DEA and have on

- site pharmacies. Therefore, the DEA uses 5,723 as the estimated number of registrations in the hospital/clinic category that have on

- site pharmacies and thus are affected by this rule. 38 Includes Home Health Agency, Hospice, and Nursing Home.Harris

- Kojetin L, Sengupta M, Park

- Lee E, Valverde R. Long

- term care services in the United States: 2013 overview. Hyattsville, MD: National Center for Health Statistics. 2013



### 97

### o 325412

– Pharmaceutical P reparation Manufacturing

• Distributor

o 424210

– Drugs and Druggists’ Sundries Merchant Wholesalers

• NTP

o 621420

- Outpatient mental health and substance abuse centers

• Hospital/clinic, with on

- site pharmacy

o 621491

- HMO medical centers

o 622110

- General medical and surgical hospitals

o 622310

- Specialty (except psychiatric and substanc e abuse) hospitals

• Retail Pharmacy

o 446110

- Pharmacies and drug stores

• Long term care facility

o 623110

- Nursing care facilities

o 623312

- Homes for the elderly

o 623990

- Other residential care facilities
From the Economic Census, the relationship between the number of establishments and firms
(the firms

- to

- establishments ratio ) w as determined for each NAICS code. For example, there are

385 firms and 410 establishments under 325411

– Medicinal and botanical manufacturing and

763 firms and 991 establishment s under 325412

– Pharmaceutical preparation manufacturing, for
a total of 1,148 firms and 1,401 establishments. The weighted firms

- to

- establishment ratio is
0.82 (1,148/1,401). This ratio is applied to the number of affected manufacturer registrations to

determine that 536 manufacturer registrations represent approximately 439 entities. This
analysis is repeated for each of the affected business activities. The DEA estimates 77,506

98

### affected DEA registrations correspond to 34,38 5 entities and 31,600 LTCF s correspond to
19,148 entities, for a grand total of 53,53 3 entities affected by this rule, including reverse

distributors. Table A2 summarizes the estimated number of affected entities.

Table A2 : Estimated number of affected entities

* Figures for reverse distributors were estimated earlier and are included in this table for reference.



### To estimate the number of affected entities that are small entities as defined by the RFA, the
DEA compared establishments/firms (according to employment size) from the Economic Census
to the SBA size standards for each NAICS code. SBA size standards, the number of

establishment s /firms by size, and the number and percentage of establishments/firms below the Business activities NAICS codes Census: # of establishments Census: # of firms Firms-toestablishment ratio # of DEA registrations or LTCF facility # of affected entities 325411-Medicinal and Botanical Manufacturing 410 385 325412-Pharmaceutical Preparation Manufacturing 991 763 Subtotal 1,401 1,148 0.82

Distributor 424210-Drugs and Druggists’ Sundries Merchant Wholesalers 7,700 5,430 0.71 829 585 Reverse distributor* N/A N/A N/A N/A 60 55

Narcotic treatment program 621420 - Outpatient mental health and substance abuse centers 8,353 4,113 0.49 1,332 656 621491 - HMO medical centers 516 30 622110 - General medical and surgical hospitals 5,077 3,051 622310 - Specialty (except psychiatric and substance abuse) hospitals 811 352 Subtotal 6,404 3,433 0.54 Retail pharmacy 446110-Pharmacies and Drug Stores 40,174 17,217 0.43 69,026 29,582 77,506 34,385 623110 - Nursing care facilities 15,335 7,675 623312 - Homes for the elderly 12,864 9,697 623990 - Other residential care facilities 5,680 3,157 Subtotal 33,879 20,529 0.61 109,106 53,533 Manufacturer

536 439

Grand total 5,723 3,068 Hospital/clinic, with on-site pharmacy

Long term care facility

31,600 19,148 Total DEA registrations



### 99

### SBA size standards are contained in table A3. Employee siz e data is available for manufacturers
according to the number of establishments rather than the number of firms. Therefore, the
number of establishments by employee size is used to estimate the number of affected

manufacture r entities that are small entit ies. Manufacturer and distributor size standards are
based on the number of employees while the remaining business activities are based on annual

revenue.

Table A3 : Estimated percentage of establishments/firms that are small entities

Business Activity 2 007 NAICS code Employment size Number of establishments SBA size standard (# of employees) Number of establishments below SBA size standards

Manufacturer 325411

- Medicinal and botanical manufacturing All establishments 410

750 N/A Establishments with 0 to 4 employees 161 161 Establishments with 5 to 9 employees 51 51 Establishments with 10 to 19 employees 42 42 Establishments with 20 to 49 employees 58 58 Establishments with 50 to 99 employees 40 40 Establishments with 100 to 249 employees 38 38 Establishments with 250 to 499 employees 13 13 Establishments with 500 to 999 employees 5 3 Establishments with 1,000 to 2,499 employees 1 0 Establishments with 2,500 employees or more 1 0

325412

- Pharmaceutical

preparation manufacturing All establishments 991

750 N/A Establishments with 0 to 4 employees 284 284 Establishments with 5 to 9 employees 124 124 Establishments with 10 to 19 employees 77 77 Establishments with 20 to 49 employees 163 163 Establishments with 50 to 99 employees 86 86



### 100Business Activity 2 007 NAICS code Employment size Number of establishments SBA size standard (# of employees) Number of establishments below SBA size standards Establishments with 100 to 249 employees 114 114 Establishments with 250 to 499 employees 68 68 Establishments with 500 to 999 employees 53 27 Establishments with 1,000 to 2,499 employees 15 0 Establishments with 2,500 employees or more 7 0

Total Manufacturer 1,401 1,349 % Manufacturer below SBA size standards 96.3%

Business Activity 2007 NAICS code Employment size Number of firms SBA size standard (# of employees) Number of firms below

SBA size standards

Distributor 424210

- Drugs and druggists' sundries merchant wholesalers Firms operated for the entire year 5,430

100 N/A Firms operated entire year with less than 5 employees 2,652 2,652 Firms operated entire year with 5 to 9 employees 1,022 1,022 Firms operated entire year with 10 to 19 employees 724 724 Firms operated entire year with 20 to 49 employees 555 555 Firms operated entire year with 50 to 99 employees 202 202 Firms operated entire year with 100 employees or
more 275 0 Total Distributor 5,430 5,155 % Distributor below SBA size standards 94.9%

Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards

Retail Pharmacy 446110

- Pharmacies and

drug stores Firms operated for the entire year 17,217 25.5 Firms operated entire year with sales/receipts/revenue less than $250,000 943 943



### 101Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 769 769 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1,486 1,486 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 5,674 5,674 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 5,264 5,264 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 2,311 2,311 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 622 622 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 89 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 27 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 to $249,999,999 8 0 Firms operated entire year with sales/receipts/revenue of $250,000,000 or more 24 0 Total Retail Pharmacy 17,217 17,069 % Pharmacy below SBA size standards 99.1%

NTP 621420

- Outpatient mental health and substance abuse centers Firms operated for the entire year 4,113

10.0 Firms operated entire year with sales/receipts/revenue less than $100,000 518 518 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 641 641 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 487 487



### 102Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 594 594 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 761 761 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 447 447 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 378 378 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 234 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 45 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 6 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 2 0 Total NTP 4,113 3,826 % NTP below SBA size standards 93.0%

Hospital/cli nic, with
on

- site pharmacy 621491

- HMO medical centers Firms operated for the entire year 30

30.0 Firms operated entire year with sales/receipts/revenue less than $100,000 0 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 5 5 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 4 4 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 3 3 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 2 2



### 103Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 2 2 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 1 1 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 2 2 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 4 2 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 0 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 7 0

622110

- General medical and

surgical hospitals Firms operated for the entire year 3,051

35.5 Firms operated entire year with sales/receipts/revenue less than $100,000 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 2 2 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 1 1 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 0 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 18 18 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 117 117 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 316 316 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 613 613



### 104Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 436 218 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 416 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 1,132 0 Firms not operated for the entire year 25

622310

- Specialty (except psychiatric and substance abuse) hospitals All firms 375 Firms operated for the entire year 352

35.5 Firms operated entire year with sales/receipts/revenue less than $100,000 0 0 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 0 0 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 0 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1 1 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 7 7 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 27 27 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 49 49 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 73 73 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 86 43



### 105Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 55 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 54 0 Total Hospital/clinic 3,433 1,506 % Hospital/clinic below SBA size standards 43.9%

Long term care facility 623110

- Nursing care

facilities Firms operated for the entire year 7,675

25.5 Firms operated entire year with sales/receipts/revenue less than $100,000 327 327 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 330 330 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 286 286 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 334 334 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,044 1,044 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 1,702 1,702 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 1,967 1,967 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 1,225 1,225 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 248 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 116 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 96 0



### 106Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards

623312

- Homes for the elderly Firms operated for the entire year 9,697

10.0 Firms operated entire year with sales/receipts/revenue less than $100,000 1,548 1,548 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 2,491 2,491 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 1,915 1,915 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1,435 1,435 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,419 1,419 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 539 539 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 216 216 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 81 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 30 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 9 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 14 0

623990

- Other residential care f acilities Firms operated for the entire year 3,157

10.0 Firms operated entire year with sales/receipts/revenue less than $100,000 317 317 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 420 420



### 107Business Activity Meaning of 2007 NAICS code Sls/rcpts/rev size of firms operated entire yea r Number of firms SBA size standard (annual revenue, $

million) Number of firms below

SBA size standards Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 525 525 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 575 575 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 616 616 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 276 276 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 235 235 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 155 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 32 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 4 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 2 0 Total LTCF 20,529 19,742 % LTCF below SBA size standards 96.2%



### The percentages of entities that are small entities are applied to the estimated number of
affected entities, to estimate the number of affected small entities. For example, 96.3% of
manufacturers are estimated to be below the SBA size standard. Applying 96. 3 % to the number

affected manufac turers, the DEA estimates 423 of 439 are small entities. This process is
repeated for all business activities.

108

### In summary, the mandatory portions of the rule affect manufacturers, distributors, and

reverse distributors. Table A4 summarizes the numbers of entities and small entities affected by
the mandatory portions of the rule.

Table A4 : Estimated number of affected entities and small entities affected by mandatory portions

Business activity Number of registrations Number of affected entities % below SBA size standards Number of affected small entities

Manufacturer 536 439 96.3 423

Distributor 829 585 94.9 555

Reverse distributor 60 55 69.1 38

Total 1,425 1,079 1,016



### The voluntary participation elements of the rule affect all affected registrants and LTCFs. In
total, the rule affects 109,106 registrations and LTCFs (places of businesses), which correspond
to 53,533 entities, of which 50,714 are small entities. Table A5 contains the total number of
entities and small entities affected by both the voluntary participation elements and mandatory
portions of this rule.

Table A5 : Estimated number of affected entities that are small entitie s

Business activity Provisions Affected By (Mandatory/ Voluntary) Number of registrations

or LTCF Number of affected entities % below SBA size standards Number of affected small entities

Manufacturer Mandatory & Voluntary 536 439 96.3 423

Distributor Mandatory & Voluntary 829 585 94.9 555

Reverse distributor Mandatory & Voluntary 60 55 69.1 38
Pharmacy Voluntary 69,026 29,582 99.1 29,328 Hospital/clinic, with on

site pharmacy Voluntary 5,723 3,068 43.9 1,346

NTP Voluntary 1,332 656 93.0 610 Total DEA registrations 77,506 34,385 32,300

LTCF Voluntary 31,600 19,148 96.2 18,414



### 109Total 109,106 53,533 50,714



### 110