ECONOMIC IMPACT ANALYSIS

of

Proposed Rule on Controlled Substances and List I Chemical Registration 

and Reregistration Fees, DEA-346 

Drug Enforcement Administration

U.S. Department of Justice

February 2011
Table of Contents

CHAPTER 1: PURPOSE.........................................................................................................................................3

CHAPTER 2: STATEMENT OF NEED FOR PROPOSED RULE ...................................................................................4

2.1 STATUTORY AUTHORITY.........................................................................................................................................4

2.2 PROPOSED REGISTRATION AND REREGISTRATION FEES .................................................................................................5

CHAPTER 3: REGISTRANT LANDSCAPE ................................................................................................................8

CHAPTER 4: ALTERNATIVE FEE CALCULATION METHODOLOGIES CONSIDERED ................................................ 11

4.1 SCOPE OF ANALYSIS ............................................................................................................................................11

4.2 PAST-BASED OPTION ..........................................................................................................................................12

4.2.1 Description ...........................................................................................................................................12

4.2.2 Analysis................................................................................................................................................13

4.3 FUTURE-BASED OPTION ......................................................................................................................................15

4.3.1 Description ...........................................................................................................................................15

4.3.2 Analysis................................................................................................................................................16

4.4 FLAT FEE OPTION...............................................................................................................................................18

4.4.1 Description ...........................................................................................................................................18

4.4.2 Analysis................................................................................................................................................19

4.5 WEIGHTED-RATIO OPTION (SELECTED METHODOLOGY) ............................................................................................20

4.5.1 Description ...........................................................................................................................................20

4.5.2 Analysis................................................................................................................................................21

CHAPTER 5: IMPACT ANALYSIS OF PROPOSED FEE ........................................................................................... 24

5.1 ANNUAL ECONOMIC EFFECT LESS THAN $100 MILLION.............................................................................................24

5.2 NO MATERIAL ADVERSE AFFECT ...........................................................................................................................25

5.2.1 Registration Fees as Business Expense ................................................................................................25

5.2.2 Registration Fees as Percentage of Income .........................................................................................25

5.2.3 Fee-Exempt Registrants.......................................................................................................................27

5.2.4 Conclusion............................................................................................................................................28

CHAPTER 6: IMPACT OF PROPOSED RULE ON SMALL ENTITIES......................................................................... 29

6.1 IMPACT OF PROPOSED FEES ON SMALL BUSINESSES ..................................................................................................29

6.2 IMPACT OF PROPOSED FEES ON OTHER REGISTRANTS................................................................................................31

6.2.1 Impact on Pharmacies .........................................................................................................................31

6.2.2 Impact on Manufacturers and Distributors .........................................................................................32

CHAPTER 7: COST-BENEFIT ANALYSIS OF PROPOSED REGULATORY ACTION..................................................... 34

7.1 COSTS OF THE PROPOSED RULE.............................................................................................................................34

7.2 BENEFITS OF THE PROPOSED RULE .........................................................................................................................34

7.3 EVALUATION OF COSTS AND BENEFITS OF PROPOSED RULE (THRESHOLD ANALYSIS).........................................................37
3

CHAPTER 1: PURPOSE

With proposed rule DEA-346, DEA proposes adjusting the fee schedule for DEA 

registration and reregistration fees necessary to recover the full costs of its Diversion Control 

Program (DCP) relating to the registration and control of the manufacture, distribution, 

dispensing, importation and exportation of controlled substances and List I chemicals as 

mandated by the Controlled Substances Act (CSA).

The purpose of this document is to:

Describe the need for the proposed rule.

Analyze alternative methodologies considered for calculating fees across 

registrant groups/business activities.

Demonstrate that the annual impact of the proposed fee is not a significant 

regulatory action under Executive Order (E.O.) 12866 and E.O. 13563.

Describe the small entities that are impacted by the proposed rule and the impact 

of the rule on those small entities as required by the Regulatory Flexibility Act (5 

U.S.C. 601- 612).

Provide an analysis of costs and benefits.
4

CHAPTER 2: STATEMENT OF NEED FOR PROPOSED RULE

2.1 STATUTORY AUTHORITY

Proposed rule DEA-346 is required by statute and proposes a new fee calculated pursuant 

to federal law. The proposed rule would adjust the registration and reregistration fees relating to 

the registration and control of the manufacture, distribution, and dispensing, importation and 

exportation of controlled substances and List I chemicals. This change is planned to take effect 

October 1, 2011 for the Fiscal Year 2012-2014 period.

The Drug Enforcement Administration (DEA) implements and enforces Titles II and III 

of the Comprehensive Drug Abuse Prevention and Control Act of 1970, often referred to as the 

Controlled Substances Act (CSA) and the Controlled Substances Import and Export Act 

(CSIEA) (21 U.S.C. 801-971), as amended (hereinafter “CSA”).1 DEA drafts and publishes the 

implementing regulations for these statutes in Title 21 of the Code of Federal Regulations (CFR), 

Parts 1300 to 1321. The Diversion Control Program (DCP) is a strategic component of DEA that 

carries out the mandates of the CSA and its regulations to prevent, detect, and eliminate the 

diversion of controlled substances and listed chemicals into the illicit market while ensuring a 

sufficient supply of controlled substances and listed chemicals for legitimate medical, scientific, 

research, and industrial purposes. 

All manufacturers, distributors, dispensers, importers, and exporters of controlled 

substances and List I chemicals are required to maintain an annual registration with DEA (21 

U.S.C. 822 and 958(f)). Under the CSA, DEA is authorized to charge reasonable fees relating to 

the registration and control of the manufacture, distribution, dispensing, importation, and 

exportation of controlled substances and listed chemicals. 21 U.S.C. 821 and 958(f). DEA must 

 

1

The Attorney General’s delegation of authority to DEA may be found at 28 CFR 0.100.
5

set fees at a level that ensures the recovery of the full costs of operating the various aspects of its 

DCP. 21 U.S.C. 886a. Each year, DEA is required by statute to transfer the first $15 million of 

fee revenues into the general fund of the Treasury and the remainder of the fee revenues is 

deposited into a separate fund of the Treasury called the Diversion Control Fee Account 

(DCFA). 21 U.S.C. 886a(1). On at least a quarterly basis, the Secretary of the Treasury is 

required to reimburse DEA an amount from the DCFA “in accordance with estimates made in 

the budget request of the Attorney General for those fiscal years” for the operation of the DCP.

2

 

21 U.S.C. 886a(1)(B) and (D). The first $15 million of fee revenues that are transferred to the 

Treasury do not support any DCP activities. 

2.2 PROPOSED REGISTRATION AND REREGISTRATION FEES

Currently, handlers of controlled substances and List I chemicals pay registration and 

reregistration fees as required by statute. These fees (some of which are paid annually and some 

of which are paid every three years) range from $184 to $2,293, depending on registrant 

category. Practitioners, mid-level practitioners, dispensers, researchers, and narcotic treatment 

programs pay an annual registration or annual equivalent of $184 (practitioners pay a registration 

fee of $551 every three years). Distributors, importers, and exporters pay an annual fee of 

$1,147, and manufacturers pay an annual fee of $2,293. 

In accordance with the statutory requirements of the CSA, DEA continually monitors the 

anticipated budget and collections to determine whether the registration fees need to be adjusted. 

DEA has determined that the fees need to increase in Fiscal Year (FY) 2012, beginning October 

 

2

The diversion control program (DCP) consists of the controlled substance and chemical diversion control activities 

of DEA. These activities are related to the registration and control of the manufacture, distribution, dispensing, 

importation, and exportation of controlled substances and listed chemicals (21 U.S.C. 886a(2)).
6

1, 2011, to the amounts indicated in Table 1: Proposed Registration and Reregistration Fees by 

Class/Business in order to fully fund the DCP. 

DEA is proposing to adjust the annual registrant fees as follows planned to be effective 

October 1, 2011:

Table 1: Proposed Registration and Reregistration Fee by Class/Business

Registrants on Three Year Registration Cycle

Registrant Class/Business Current 

Three Year

Fee*

Proposed

Three Year

Fee*

Difference

Per Year

Pharmacy $551 $732 $60

Hospital/Clinic $551 $732 $60

Practitioner $551 $732 $60

Teaching Institution $551 $732 $60

Mid-Level Practitioner $551 $732 $60

*Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners currently pay a fee for a 

three year period. This current three-year fee is $551. The proposed new fee for the three-year registration period 

would be $732. The three year difference is $181 or an annual difference of $60.

Registrants on Annual Registration Cycle

Registrant Class/Business Current 

Annual Fee

Proposed 

Annual Fee

Difference

Researcher/Canine Handler $184 $244 $60 

Analytical Lab $184 $244 $60 

Maintenance $184 $244 $60 

Detoxification $184 $244 $60 

Maintenance and Detoxification $184 $244 $60 

Compounder/Maintenance $184 $244 $60 

Compounder/Detoxification $184 $244 $60 

Compounder/Maintenance/ Detoxification $184 $244 $60 

Distributor (chemical and controlled substances) $1,147 $1,526 $379 

Reverse distributor $1,147 $1,526 $379 

Importer (chemical and controlled substances) $1,147 $1,526 $379 

Exporter (chemical and controlled substances) $1,147 $1,526 $379 

Manufacturer (chemical and controlled 

substances)

$2,293 $3,052 $759 

DEA last adjusted the registration fees in 2006 for the Fiscal Year 2006-2008 period. 

Since that time, the diversion control responsibilities and activities of the DCP have grown but 

the fees have not. Without an adjustment of the fees, DEA will face a projected budgetary 
7

shortfall by the end of FY 2014 that would require dramatic program reductions to maintain 

budget solvency. 
8

CHAPTER 3: REGISTRANT LANDSCAPE

This proposed rule affects those manufacturers, distributors, dispensers, importers, and 

exporters of controlled substances and List I chemicals that are required to obtain and pay a

registration fee with DEA pursuant to the CSA (21 U.S.C. 822 and 958(f)). As of December 

2010, there were 1,378,609 controlled substances and chemical registrants (1,377,466 controlled 

substances registrants and 1,143 chemical registrants), as shown in Table 2.

Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level 

practitioners make up 98.9 percent of all registrants. These registrants register every three years. 

Other registrants maintain an annual registration. Registration and reregistration costs vary by 

registrant category as described in more detail in the sections below. 

Table 2: Number of Registrants by Business Activity

Registrant Class/Business Controlled Substances Chemicals

Pharmacy 66,766

Hospital/Clinic 15,774

Practitioner 1,097,454

Teaching Institution 351

Mid-Level Practitioner 183,538

Researcher/Canine Handler 8,997

Analytical Lab 1,496

Narcotic Treatment Program 1,272

Distributor 795 584

Reverse Distributor 56

Importer 203 180

Exporter 236 166

Manufacturer 528 213

Total 1,377,466 1,143

Total (all registrants) 1,378,609

*Data as of December 2010.

The proposed fees would affect a wide variety of entities. Table 3 indicates the sectors 

affected by the proposed rule and their average annual revenue/income. Most DEA registrants 
9

are small entities under Small Business Administration (SBA) standards. Almost all 

practitioners, which are the largest category of registrants, would be considered small (annual 

revenues of less than $6 million to $8.5 million, depending on specialty), and practitioners and 

mid-level practitioners total 1,280,992 (as of December 2010). 

Table 3: Industrial Sectors of DEA Registrants

Sector NAICS 

Code

Average Annual Revenue 

per Establishment

Manufacturers

Petro-chemical Manufacturing (organic, inorganic) 32511 $1,390,485,971 

Medicinal and Botanical Manufacturing 325411 $27,601,834 

Pharmaceutical Manufacturing 325412 $144,173,821 

Adhesive Manufacturing 325520 $17,482,468 

Toilet Preparation Manufacturing 325620 $50,322,290 

Other Chemical Manufacturing 325998 $13,720,807 

Distributors

Drugs and Druggist Sundries Wholesalers 424210 $64,793,480 

General Line Grocery Wholesalers 424410 $45,518,407 

Confectionary Merchant Wholesalers 414450 $17,175,982 

Chemical Wholesalers 424690 $12,856,993 

Tobacco Wholesalers 424940 $71,437,205 

Miscellaneous Wholesalers 424990 $2,741,857 

Pharmacies

Supermarkets 445110 $7,247,540 

Drug Stores 446110 $4,829,487 

Discount Stores 452112 $26,535,201 

Warehouse Clubs and Superstores 452910 $76,300,280 

Other

Testing Labs 541380 $1,907,414 

Packaging and Labeling Services 561910 $2,696,904 

Other Practitioners

Professional Schools 611310 $1,373,855 

Ambulatory Health Care Services 621 $1,236,852 

Hospitals 622 $108,286,641 

Source: 2007 Economic Census. http://www.census.gov/econ/census07. 
10

Supermarkets, discount stores, warehouse clubs, and superstores handle controlled 

substances through their distribution centers and pharmacies. Drug products containing List I 

chemicals are primarily distributed as over-the-counter medicines. These are distributed by drug 

wholesalers who specialize in non-prescription drugs, wholesalers who supply convenience 

stores, and grocery, pharmacy, and discount stores (e.g., superstores) that operate their own 

distribution centers. 
11

CHAPTER 4: ALTERNATIVE FEE CALCULATION METHODOLOGIES

CONSIDERED

4.1 SCOPE OF ANALYSIS

In developing this proposed rule, DEA examined alternative methodologies to calculate the 

registration and registration fees. DEA analyzed alternative methodology approaches keeping in 

mind its statutory obligations under the CSA. First, pursuant to statute, DEA is authorized to 

charge reasonable fees relating to the registration and control of the manufacture, distribution, 

dispensing, importation, and exportation of controlled substances and listed chemicals. 21 

U.S.C. 821 and 958(f). Second, DEA must set fees at a level that ensures the recovery of the full 

costs of operating the various aspects of its diversion control program (DCP). 21 U.S.C. 886a. 

Accordingly, in examining each alternative methodology DEA considered whether the fee

calculation: (1) was reasonable and (2) could fully fund the costs of operating the various aspects 

of the DCP. 

Moreover, the CSA establishes a specific regulatory requirement that DEA charge fees to 

fully fund the DCP, but that the fees collected by DEA are to be expended through the budget 

process only. Specifically, each year DEA is required by statute to transfer the first $15 million 

of fee revenues into the general fund of the Treasury and the remainder of the fee revenues is 

deposited into a separate fund of the Treasury called the Diversion Control Fee Account 

(DCFA). 21 U.S.C. 886a(1). On at least a quarterly basis, the Secretary of the Treasury is 

required to refund DEA an amount from the DCFA “in accordance with estimates made in the 

budget request of the Attorney General for those fiscal years” for the operation of the DCP. 21 

U.S.C. 886a(1)(B) and (D). For that reason, DEA is only considering alternative methodologies 
12

to calculate the registration and reregistration fees, not alternative approaches to expend fees 

collected because those decisions are governed by the CSA and the budget process. 

In developing this rule, DEA considered four methodologies to calculate registration and 

reregistration fees: Past-Based Option, Future-Based Option, Flat Fee Option, and WeightedRatio Option. Although the increase in the fees may be passed down to the registrants’ 

customers, the alternatives are analyzed on the worst-case scenario where the increase in the fee 

is absorbed fully by the registrants.

For each of the alternatives considered, the calculated fees are analyzed for 

reasonableness by examining: (1) the absolute amount of the fee increase, (2) the change in fee 

as a percentage of revenue from 2007 to 2012, and (3) the relative fee increase across registrant 

groups. Additionally, each calculation methodology is re-evaluated for its overall strengths and 

weaknesses.

4.2 PAST-BASED OPTION 

4.2.1 Description

Option 1 is called the Past-Based Option, and is based on historic investigation work hour 

data to set the apportionment of cost to each registrant category. In considering Option 1, DEA 

used historic investigation work hour data from the Fiscal Year 2007-2009. DEA’s records 

permit an accurate apportionment of work hours for certain types of diversion control activities 

(e.g., investigations) among classes of registrants. DEA estimates that approximately three to 

five percent of costs can be directly linked to pre-registration and scheduled investigations. 

Although some criminal investigations can be attributed to registrant groups, DEA did not 

include the cost of criminal investigations for the fee calculation under the Past-Based Option. 

While DEA develops annual work plans for number of scheduled investigations by registrant 
13

type, DEA does not develop such plans for criminal investigations. Therefore, the cost of 

criminal investigations is allocated equally across all registrant groups, regardless of business 

activity. The remaining costs associated with DCP activities and components benefit all 

registrants (e.g., policy, registration, and legal activities); however, DEA records cannot attribute 

these costs by registrant class. Under Option 1, pre-registration and scheduled investigation 

costs are assigned to registrant classes and all other costs are recovered on an equal, perregistrant basis. 

Table 4: Annual Registrant Fees Under Past-Based Option

Source: 2007 Economic Census; Bureau of Labor Statistics.

*No NAICS code for Importer/Exporter of controlled substances and/or List I chemicals.

** Current Fee divided by average revenue/income in 2007, first full year of the current fee.

*** Past-Based Fee divided by average revenue in 2007 for manufacturers, distributors and pharmacies. Past-Based 

Fee divided by projected average income in 2012 for practitioners. Only 2002 and 2007 data is available for 

manufacturers, distributors, and pharmacies, while practitioner income projection is based on five years of income 

data, 2004 - 2009.

4.2.2 Analysis

Analysis of Fees

DEA calculated the annual registrant fee for key registrant groups under Option 1 and 

compared this fee to the current fee. Although distributors and importers/exporters are in the 

same fee class in the current fee structure (Weighted-Ratio Option), in this analysis, distributors 

are separated from importers and exporters based on the available historic work hour data and 

reported work hours by type of registrant.

Current 

fee 

(annual)

Past‐based 

fee (annual)

Increase 

from 

current fee

Ratio: 

Past‐based 

fee to 

current fee

Manufacturers $ 2,293 $ 2,668 $ 375 1.16 0.000% - 0.017% 0.000% - 0.019%

Distributors $ 1,147 $ 3,361 $ 2,214 2.93 0.002% - 0.042% 0.005% - 0.123%

Importers/exporter $ 1,147 $ 1,258 $ 111 1.10 

Pharmacies $ 184 $ 243 $ 59 1.32 0.000% - 0.004% 0.000% - 0.005%

Practitioners $ 184 $ 243 $ 59 1.32 0.119% - 0.237% 0.125% - 0.257%

% of Annual 

Revenue Current 

Fee**

% of Annual 

Revenue Past 

Based Fee***

* *
14

In the past-based option, the calculated fees increase by a factor of 1.16, 3.19, 1.10, and 

1.32 for manufacturers, distributors, importers/exporters, and practitioners respectively. 

The proposed fees as a percentage of revenue is very low as indicated in Table 4 below, 

0.000 to 0.019 percent, 0.005 to 0.134 percent, 0.000 to 0.005 percent, and 0.125 to 0.257

percent for manufacturers, distributors, pharmacies, and practitioners respectively. The impact 

of the incremental increase in the fee from current fees as a percentage of revenue is even lower.

Finally, the largest increase, by a factor of 3.19, is incurred by distributors, largely as a 

consequence of their separation from exporters and importers, while the increases for other 

groups range from a factor of 1.10 to 1.32. 

Evaluation of Methodology

While Option 1 is based on accurate historical data, it does not allow for future needs, 

demands and shifting responsibilities of the DCP, such as Agency priorities, new legislation, 

control of substances, new investigative requirements, and other program needs.

Conclusion

DEA does not propose the past-based option for two key reasons. First, the fee increase 

is disproportionately burdensome to a small number of registrants. Distributors’ fees would 

increase by over three fold, while the fees for the remaining registrant groups would increase 

from 10 percent to 32 percent. DEA deemed this option unreasonable. Second, the past-based 

option is backward looking and implicitly assumes that the future will be similar to the past. 

DEA cannot assume that future workload will reflect past DEA work hour data. For example, 

DEA plans to conduct more scheduled investigations in accordance with the new scheduled 

investigation work plan. As a result, DEA has concluded that past data is not the best basis for 

the calculation of proposed fees.
15

4.3 FUTURE-BASED OPTION

4.3.1 Description

Option 2 is called the Future-Based Option, and is based on projected work hours for 

each registrant class using scheduled investigation work plan goals and anticipated/planned 

resources. In considering Option 2, DEA based its calculations on projected work hour data by

registrant group for FY 2012-2014. The future-based option is based on DEA’s projection of 

work plan goals and the resources required for these years – specifically, examining the direct 

cost of anticipated scheduled investigations.3 Based on the data used to develop the projections, 

the future-based option divides registrants into six classes and examines the projected work hour 

data within these categories. In contrast to Option 1 above, which is calculated using actual data, 

Option 2 is calculated using projected data relative to work plan goals and resources. This type 

of calculation results in a more finely tuned analysis of anticipated work hours. DEA calculated 

the projected annual fees under Option 2 and compared these fees to the current fees. Table 5

presents these results: 

 

3 Many criminal investigations are attributable to the type of registrant(s) being investigated. However, because 

DEA cannot anticipate the volume of criminal cases initiated, either historically or in future years, these costs were 

not attributed directly to the registrant types affected. Rather, criminal investigative costs are spread across all 

registrants equally in both Option 1 and Option 2.
16

Table 5: Annual Registrant Fees Under Future-Based Option

Source: 2007 Economic Census; Bureau of Labor Statistics.

*No NAICS code for Importer/Exporter of controlled substances and/or List I chemicals.

** Current Fee divided by average revenue/income in 2007, first full year of the current fee.

*** Future-Based Fee divided by average revenue in 2007 for manufacturers, distributors and pharmacies. FutureBased Fee divided by projected average income in 2012 for practitioners. Only 2002 and 2007 data is available for 

manufacturers, distributors, and pharmacies, while practitioner income projection is based on five years of income 

data, 2004 - 2009.

4.3.2 Analysis

Analysis of Fees

In the future-based option, as shown in the table above, the fee increase ranges from a 

factor of 1.26 for practitioners to 7.67 for manufacturers of controlled substances.

The proposed fees as a percentage of revenue is very low as indicated in Table 5: 0.001

to 0.128 percent for controlled substances manufacturers, 0.001 to 0.059 percent for 

Current 

fee 

(annual)

Futurebased fee 

(annual)

Amount of 

increase 

from 

current fee

Ratio: 

Futurebased fee to 

current fee

Manufacturers 1: 

controlled 

substance 

manufacturers

 $ 2,293 $ 17,595 $ 15,302 7.67 0.000% - 0.017% 0.001% - 0.128%

Manufacturers 2: 

List I chemical 

manufacturers

 $ 2,293 $ 8,124 $ 5,831 3.54 0.000% - 0.017% 0.001% - 0.059%

Distributors 1: 

controlled 

substance 

distributors and 

List I chemical 

distributors

 $ 1,147 $ 6,546 $ 5,399 5.71 0.002% - 0.042% 0.009% - 0.239%

Distributors 2: 

exporters and 

importers of 

controlled 

substances

 $ 1,147 $ 4,968 $ 3,821 4.33 

Distributors 3: List 

I chemical 

exporters and 

importers

 $ 1,147 $ 4,021 $ 2,874 3.51 

Pharmacies $ 184 $ 232 $ 48 1.26 0.000% - 0.004% 0.000% - 0.005%

Practitioners $ 184 $ 232 $ 48 1.26 0.119% - 0.237% 0.119% - 0.245%

* *

* *

% of Annual 

Revenue Current 

Fee**

% of Annual 

Revenue FutureBased Fee***
17

manufacturers of List I chemical manufacturers, 0.009 to 0.239 percent for distributors, 0.000 to 

0.005 percent for pharmacies, and 0.119 to 0.245 percent for practitioners. The impact of the 

incremental increase in the fee from current fees as a percentage of revenue is even lower. As 

expected, registrant groups with a larger fee increase under this option would experience a larger 

increase as a percentage of revenue.

Under this option, the increases in fees vary greatly across registrant groups. For 

example, controlled substances manufacturers incur the largest proportional increase by a factor 

of 7.67 or $15,302 annually, while practitioner fees increase by a factor of 1.26 or $48 annually.

Evaluation of Methodology

Option 2 is calculated using projected data relative to work plan goals and resources. 

This results in a more finely tuned analysis of anticipated work hours. The disadvantage of 

Option 2 is that, because the calculation is based on projected work hour data, it may not be able 

to adapt to the shifting priorities and demands of DCP operations. Additionally, a change in 

work plan can cause actual cost to be much different for some registrant groups, causing a 

contradiction between the rationales used to calculate the fees and actual operations.

Conclusion

In reviewing Option 2, DEA concluded that for most registrant categories, the large 

proportional increase in fees would not pass the “reasonable fee” standard required by statute and 

could represent a significant burden on some registrants. Additionally, DEA believes that the 

vast disparity in the increase, where fees for manufacturers increase by more than seven fold,

while fees for registrants increase by 26 percent, is unreasonable. Although there is concern 

regarding a potential difference between the scheduled investigation work plan and actual 

operations, DEA recognizes that no plan is perfect and operations may be adjusted as the 
18

environment changes. This potential exists for all four options. Therefore, the potential change 

in work plan did not weigh into the DEA’s decision to not select Option 2. DEA’s decision to 

not select Option 2 is based on the unreasonable increase in fees for some registrants and the 

severe disparity in increase among the registrant groups.

4.4 FLAT FEE OPTION

4.4.1 Description

Option 3 is called the Flat Fee Option. The flat fee option would provide equal fees 

across all registrant groups regardless of the proportion of DCP costs and resources the registrant 

group may require (e.g., investigation resources). The fee calculation is straightforward: the 

total amount needed to be collected over the three year period is divided by the total number of 

registration fee transactions over the three year period, adjusting for registrants on the three year 

registration cycle (so that the fees for a three year period are three times the annual fee).

DEA calculated the annual registrant fee for key registrant groups under Option 3 and 

compared this fee to the current fee: 

Table 6: Annual Registrant Fees Under Flat-Fee Option

Source: 2007 Economic Census; Bureau of Labor Statistics.

** Current Fee divided by average revenue/income in 2007, first full year of the current fee.

*** Flat Fee divided by average revenue in 2007 for manufacturers, distributors and pharmacies. Flat Fee divided 

by projected average income in 2012 for practitioners. Only 2002 and 2007 data is available for manufacturers, 

distributors, and pharmacies, while practitioner income projection is based on five years of income data, 2004 -

2009.

Current 

fee 

(annual)

Flat fee 

(annual)

Amount of 

increase 

from 

current fee

Ratio: Flat 

fee to 

current fee

Manufacturers $ 2,293 $ 247 $ (2,046) 0.11 0.000% - 0.017% 0.000% - 0.002%

Distributors $ 1,147 $ 247 $ (900) 0.22 0.002% - 0.042% 0.000% - 0.009%

Practitioners $ 184 $ 247 $ 63 1.34 0.119% - 0.237% 0.127% - 0.261%

% of Annual 

Revenue Current 

Fee**

% of Annual 

Revenue Flat 

Fee***
19

4.4.2 Analysis

Analysis of Fees

In the flat-fee option, the registration fees for manufacturers and distributors are reduced 

significantly, from $2,293 for manufacturers and $1,147 for distributors to $247 for both. This 

reduction represents an 89 percent and 78 percent reduction for manufacturers and distributors 

respectively. The registration fee for practitioners increases by 34 percent to $247 on an annual 

basis.

The proposed fees as a percentage of revenue is very low as indicated in Table 6 above: 

0.000 to 0.002 percent for manufacturers, 0.000 to 0.009 percent for distributors, and 0.127 to

0.261 percent for practitioners. The impact of the incremental increase in the fee from current 

fees as percentage of revenue is even lower. Registrant groups with a decrease in fee under this 

option would experience a decrease as a percentage of revenue.

As with the other options, the calculation considered in Option 3 results in a dramatic fee

disparity among registrant groups. The fees for manufacturers and distributors decrease, while 

the fees for practitioners increase. 

Evaluation of Methodology

The flat fee option has positive and negative aspects. The fee that DEA is required to 

charge registrants is based on a statutory requirement – it is not a user fee. A user fee calculation 

would require a calculation of the direct and indirect costs associated with each of the registrant 

groups and set fees to recover the costs associated with each of these groups. Since the 

registration fee is not a user fee, DEA is not required to calculate according to its costs by 

registrant groups. General historical costs of scheduled investigations support different fees
20

among the categories. However, setting the same fees for all registrants, from multi-national 

corporations to mid-level practitioners is unreasonable.

Conclusion

After consideration of the flat fee option, DEA did not select this option to calculate the 

proposed new fees. The fee disparity among registrant groups caused by this calculation 

alternative is too great. Under this option, the calculation would result in reduced fees for 

manufacturers and distributors by 89 percent and 78 percent respectively, while practitioner fees

would increase by 34 percent. Setting the fees at the same level across all registrant groups is 

not “reasonable.” DEA registrants include some of the largest corporations in the world,

although the vast majority of the registrants are practitioners, such as physicians and nurses. To 

satisfy the “reasonable” standard, registration fees should be different among the categories to 

account for cost and economic differences among the registrant group. Option 3 did not satisfy 

this requirement.

4.5 WEIGHTED-RATIO OPTION (Selected Methodology)

4.5.1 Description

Option 4 is called the Weighted-Ratio Option. In this option, fees are assigned to 

different registrant categories based on DEA’s general historical cost data. This option 

distinguishes among the categories to establish a “reasonable” fee for each category. The 

different fees are expressed in ratios: 1 for researchers, canine handlers, analytical labs, and 

narcotics treatment programs; 3 for registrants on three year registration cycles, pharmacies, 

hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners; 6.25 for 

distributors and importers/exporters; and 12.5 for manufacturers. The adopted ratios are applied 

for administrative convenience since historically, costs vary and a fee must be set in advance. To 
21

determine the fee, a weighted ratio is assigned based on registrant group, and the amount needed 

to be collected over the FY 2012 – FY 2014 period is divided by the weighted number of 

estimated registrations to determine the fees.

Table 7: Annual Registrant Fees Under Weighted-Ratio Option

Registrants on Three Year Registration Cycle

Registrant Class/Business Current 

Three Year

Fee*

Proposed

Three Year

Fee*

Difference

Per Year

Pharmacy $551 $732 $60

Hospital/Clinic $551 $732 $60

Practitioner $551 $732 $60

Teaching Institution $551 $732 $60

Mid-Level Practitioner $551 $732 $60

*Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners currently pay a fee for a 

three year period. This current three year fee is $551. The proposed new fee for the three year registration period 

would be $732. The three year difference is $181 or an annual difference of $60.

Registrants on Annual Registration Cycle

Registrant Class/Business Current 

Annual Fee

Proposed 

Annual Fee

Difference

Researcher/Canine Handler $184 $244 $60 

Analytical Lab $184 $244 $60 

Maintenance $184 $244 $60 

Detoxification $184 $244 $60 

Maintenance and Detoxification $184 $244 $60 

Compounder/Maintenance $184 $244 $60 

Compounder/Detoxification $184 $244 $60 

Compounder/Maintenance/ Detoxification $184 $244 $60 

Distributor (chemical and controlled substances) $1,147 $1,526 $379 

Reverse distributor $1,147 $1,526 $379 

Importer (chemical and controlled substances) $1,147 $1,526 $379 

Exporter (chemical and controlled substances) $1,147 $1,526 $379 

Manufacturer (chemical and controlled 

substances)

$2,293 $3,052 $759 

4.5.2 Analysis

Analysis of Fees

In the weighted-ratio option, the registration fees for all registrant groups increase by 33 

percent from current fees, although the absolute dollar amount may differ. The proposed new 
22

registration fees range from $244 annually (or annual equivalent) to $3,052. Registration fees 

are collected by location and by registered business activity. Most small registrants are expected 

to pay a single registration fee of $244 ($60 annual increase), $1,526 ($379 annual increase) or 

$3,052 ($759 annual increase).

(See Chapter 6 for analysis of proposed fees as percentage of revenue).

Registration fees for all registrant groups increase by 33 percent and, as a result, there is 

no disparity in the fee increase among registrant groups.

Evaluation of Methodology

The weighted-ratio methodology, much like the flat fee, is straightforward and easy to 

understand, but unlike the flat fee, this method applies historic weighted ratios to differentiate 

fees among registrant groups. Additionally, the fees calculated using this methodology are 

similar to fees calculated in the past-based option, which allocates historical pre-registration and 

scheduled investigations costs to registrant groups. Finally, this method does not create a 

disproportionate fee increase in any registrant groups.

Conclusion

DEA selected Option 4 to calculate the proposed new fee structure. This approach has 

been used since Congress established registrant fees and continues to be a reasonable reflection 

of differing costs. The registration fees under the weighted-ratio option result in differentiated 

fees among registrant groups, where registrants with larger revenues pay higher fees than 

registrants with lower revenues. Furthermore, the weighted-ratio does not create a disparity in 

the relative increase in fees from the current to the proposed fees. The weighted ratios used by 

DEA to calculate the proposed fee have proven effective and reasonable over time. Additionally, 

the selected calculation methodology accurately reflects the differences in activity level, notably 
23

in pre-registration and scheduled investigations by registrant category; for example, these costs 

are greatest for manufacturers. DEA selected this option because it is the only option that 

resulted in “reasonable” fees for all registrant groups.
24

CHAPTER 5: IMPACT ANALYSIS OF PROPOSED FEE 

Executive Order 12866 provides that agencies must submit a regulatory impact analysis only 

for those regulatory actions that are "significant." A regulatory action is significant if it is anticipated

to: (1) have an annual effect on the economy of $100 million or more, (2) adversely affect in a 

material way the economy, a sector of the economy, productivity, competition, jobs, the 

environment, public health or safety, or State, local, or tribal governments or communities, (3) create 

a serious inconsistency or otherwise interfere with an action taken or planned by another agency, (4) 

materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights 

and obligations of recipients thereof, or (5) raises novel legal or policy issues arising out of legal 

mandates, the President’s priorities, or the principles set forth in Executive Order 12866.4 

DEA has concluded that this rule is a significant regulatory action reviewed by OMB 

pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993) as supplemented and 

affirmed by Executive Order 13563 (76 FR 3821, January 18, 2011). However, this rule is not 

an economically significant regulatory action because it does not meet the criteria for such 

actions including: an annual effect on the economy of $100 million or more, or adversely 

affecting in a material way the economy, a sector of the economy, productivity, competition, 

jobs, the environment, public health or safety, or State, local, or tribal governments or 

communities. 

5.1 ANNUAL ECONOMIC EFFECT LESS THAN $100 MILLION

DEA estimates that it will collect approximate $807,101,383 in registration fees at 

current fee levels between for the FY 2012 – FY2014 period. This estimated collection amount 

is insufficient to fully fund the DCP as mandated by law. Therefore, DEA proposes new fees 

 

4

E.O. 12866. See also Office of Management and Budget, Office of Information and Regulatory Affairs, 

“Regulatory Impact Analysis: Frequently Asked Questions,” February 7, 2011. 
25

that are estimated to result in a total collection of $1,072,100,474 for the Fiscal Year 2012-2014 

period. The estimated increase in collections is $264,999,091 for the three year period. The 

average annual increase in estimated registration fee collections is $88,333,030. Therefore, the 

annual effect on the economy is less than $100 million and does not meet the “annual effect on 

the economy of $100 million or more” criteria for “significant” regulatory action.

5.2 NO MATERIAL ADVERSE AFFECT 

The proposed fee, if implemented, is expected to have two levels of impact. Initially, the 

increase in the fee will impact the registrants. Then the fee increase or portion of the fee increase 

is expected to eventually pass on to the general public. To be analytically conservative, the 

analysis below assumes that the impact of the fee increase is absorbed entirely by the registrants.

5.2.1 Registration Fees as Business Expense

DEA assumes that the registration fees are business expenses for all registrants. As a 

result, the increase in the fee will be dampened by reduced tax liability, as a result of the increase 

in registration fee expense. For example, if a practitioner pays an additional $60 per year in

registration fees and the combined federal and state income tax is 35 percent, the net cash impact 

is $39, not $60. The additional $60 causes income/profit to decrease by $60, decreasing the tax 

liability by $21. The net cash outlay is $39.

5

5.2.2 Registration Fees as Percentage of Income

DEA examined the proposed fees as a percentage of income for physicians, dentists, and 

physician’s assistants. The fee increase is expected to have the greatest affect on small 

 

5

This example is for illustration purposes only. Each entity should seek competent tax advice for tax consequences 

of the proposed rule.
26

businesses. The majority of practitioners and mid-level practitioners work in small businesses. 

Physicians, dentists, and physician’s assistants reflect a representative sub-group of the 

practitioner and mid-level practitioner registrant groups. The effect of the fee increase is 

diminished by any increase in registrant income.

The table below describes the average income for physicians, dentists, and physician’s 

assistants from 2004 to 2012. The table below also reflects the impact of the proposed fee 

increase as a percentage of average income. This analysis assumes that the fee increase is 

absorbed personally by each practitioner/mid-level practitioner. The analysis ignores the 

dampening effect of registration fees as a business expense and the potential that the fee increase 

might be passed on to customers.

Table 8: Fee as Percentage of Income FY 2004 - 2012

Average Income6Fee Fee as % of Average Income

Year Physicians Dentists

Physician 

Assistants

(Annual 

Basis) Physicians Dentists

Physician 

Assistants

2004 137,610 130,300 68,780 

2005 138,910 133,680 71,070 

2006 142,220 140,950 74,270 184 0.129% 0.131% 0.248%

2007 155,150 147,010 77,800 184 0.119% 0.125% 0.237%

2008 165,000 154,270 81,610 184 0.112% 0.119% 0.225%

2009 173,860 156,850 84,830 184 0.106% 0.117% 0.217%

2010 179,370 163,901 87,933 184 0.103% 0.112% 0.209%

2011 187,154 169,632 91,230 184 0.098% 0.108% 0.202%

2012 194,939 175,363 94,528 244 0.125% 0.139% 0.258%

Increase 

from 2007 

to 2012 26% 19% 22% 33% 6% 11% 9%

Increase 

from 2006 

to 2012 37% 24% 27% 33% -7% 3% 4%

*Average income data for 2004 to 2009 is provided by the Bureau of Labor Statistics. 2010 to 2012 are estimated 

figures based on linear regression, where a straight-line increase is calculated from years 2004 to 2009, then using 

the line to estimate average income for 2010 to 2012.

 

6

Source: Bureau of Labor Statistics, http://www.bls.gov. 
27

In 2007, the current fee of $184 on an annual basis represents 0.119 percent, 0.125

percent, and 0.237 percent of annual income for physicians, dentists, and physician’s assistants 

respectively. In 2012, the proposed fee of $244 (on an annual basis) would represent 

approximately 0.125 percent, 0.139 percent, and 0.258 percent of annual income for physicians, 

dentists, and physician’s assistants respectively. While proposed fees are 33 percent above the 

current fees implemented at the end of 2006, average incomes for physicians, dentists, and 

physician’s assistants increased 26 percent, 19 percent, and 22 percent respectively. This 

estimated increase in average income dampens the effect of the fee increase as a percentage of 

average income. The 33 percent fee increase as a percentage of average income is six percent for 

physicians, 11 percent for dentists, and nine percent for physician’s assistants from 2007 to 2012. 

The diminishing effect is more apparent when comparing 2012 to 2006, the year for which the 

current fee was calculated and implemented. Additionally, as the average income grows in 2013 

and 2014, the income adjusted fees are not any higher than in recent history.

5.2.3 Fee-Exempt Registrants

Exempt from the payment of registration fees are any hospital or other institution that is 

operated by an agency of the United States, of any State, or any political subdivision of an 

agency thereof. Likewise, an individual who is required to obtain a registration in order to carry 

out his/her duties as an official of a federal or State agency is also exempt from registration fees.

7

 

Fee exempt registrants are not affected by the proposed fees.

 

7

See 21 CFR 1301.21 for complete fee exemption requirements.
28

5.2.4 Conclusion

DEA concludes that this proposed rule is not a significant regulatory action because it 

does not result in a materially adverse effect on the economy, a sector of the economy, 

productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal 

governments or communities.8 The proposed fee, if implemented, would initially affect all fee 

paying registrants. The fees may eventually be passed on to the general public, diminishing the 

impact of the proposed fee increase on individual registrants. The impact of the proposed fee on 

registrants is also diminished by a reduction in tax liabilities and an increase in average income. 

Additionally, hospitals and institutions operated by federal, State, or local governments and for 

their employees are exempt from registration fees.9 Moreover, DEA believes that this proposed 

rule will enhance public health and safety. 

 

8

In accordance with 25 U.S.C. 1616q, employees of a tribal health or urban Indian organization are exempt from 

“payment of licensing, registration, and any other fees imposed by a Federal agency to the same extent that officer 

of the commissioned corps of the Public Health Service and other employees of the Service are exempt from those 

fees.” To the extent that any hospital or other institution operated by or any individual practitioner associated with 

an Indian Tribal Government must pay fees, the economic impact is not substantial.

9

See 21 CFR 1301.21 for complete requirements for exemption of registration fees.
29

CHAPTER 6: IMPACT OF PROPOSED RULE ON SMALL ENTITIES

In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) (RFA), 

DEA has evaluated the impact of this rule on small entities and has determined that this rule will 

not have a significant economic impact on a substantial number of small entities. As discussed 

in Chapter 3, most DEA registrants are small entities under Small Business Administration 

(SBA) standards. DEA has concluded that the proposed adjustments in registration fees will not 

have a significant effect on these small business entities.

6.1 IMPACT OF PROPOSED FEES ON SMALL BUSINESSES 

To assess whether the fees could impose a significant economic impact on a substantial 

number of small entities, DEA compared the proposed fees as a percentage of revenue in 2012 to 

the current fees as a percentage of revenue in 2007.

10 DEA has determined that the rule will not

have a significant economic impact on a substantial number of small entities. Economic impact 

by major registrant classes is discussed in the following sections. Practitioners and mid-level 

practitioners represent 92.9 percent of all registrants and nearly all practitioners and mid-level 

practitioners are employed by small businesses pursuant to SBA standards. Among all 

registrants, practitioners and mid-level practitioners have the lowest annual revenues. While 

there are many specialists listed in the Bureau of Labor Statistics income data, incomes for 

physicians, dentists, and physician’s assistants are representative of the practitioner and midlevel practitioner registrant groups.

Below is the table from Chapter 5.

 

10 2007 is the first full year of the previous registration fee increase. DEA proposes that 2012 be the first full year of 

the proposed new fee increase. Due to annual increases in annual income, the fees as percentage of income would 

also change. Comparing the fees to annual income at the first full year of fee increase would be a like comparison.
30

Fee as Percentage of Income FY 2004 - 2012

Average Income11 Fee Fee as % of Average Income

Year Physicians Dentists

Physician 

Assistants

(Annual 

Basis) Physicians Dentists

Physician 

Assistants

2004 137,610 130,300 

 

68,780 

2005 138,910 133,680 

 

71,070 

2006 142,220 140,950 

 

74,270 184 0.129% 0.131% 0.248%

2007 155,150 147,010 

 

77,800 184 0.119% 0.125% 0.237%

2008 165,000 154,270 

 

81,610 184 0.112% 0.119% 0.225%

2009 173,860 156,850 

 

84,830 184 0.106% 0.117% 0.217%

2010 179,370 163,901 

 

87,933 184 0.103% 0.112% 0.209%

2011 187,154 169,632 

 

91,230 184 0.098% 0.108% 0.202%

2012 194,939 175,363 

 

94,528 244 0.125% 0.139% 0.258%

Increase 

from 

2007 to 

2012 26% 19% 22% 33% 6% 11% 9%

Increase 

from 

2006 to 

2012 37% 24% 27% 33% -7% 3% 4%

For practitioners and mid-level practitioners, the proposed new fee, on an annual basis, is 

$244; the annual increase is $60 from the current fee. Physicians constitute the largest 

percentage of all practitioner registrants. Based on Bureau of Labor Statistics annual salary data, 

the current fee in 2007, the first full year of the current fee, represented 0.119 percent, 0.125

percent, and 0.237 percent of annual income for physicians, dentists, and physician’s assistants 

respectively. In 2012, the proposed fee of $244, on an annual basis, is estimated to be 

 

11 Source: Bureau of Labor Statistics, http://www.bls.gov. Average income data for 2004 to 2009 is provided by the 

Bureau of Labor Statistics. 2010 to 2012 are estimated figures based on linear regression, where a straight-line 

increase is calculated from years 2004 to 2009, then using the line to estimate average income for 2010 to 2012. 
31

approximately 0.125 percent, 0.139 percent, and 0.258 percent of annual income for physicians, 

dentists, and physician’s assistants respectively. The annual impact of the proposed rule is the 

difference between the proposed fee as a percentage of income in 2012 to the current fee as a 

percentage of income in 2007, which are 0.007 percent, 0.014 percent, and 0.022 percent for 

physicians, dentists, and physician’s assistants respectively.

As discussed in Chapter 5, there are additional mitigating factors not included in the 

above analysis. The proposed fee increase may be passed on to consumers. The fees are 

generally treated as businesses expenses where after tax impact is diminished.

For consideration of the impact of the proposed fee increase on small businesses, DEA 

analyzed the proposed registration fee as a percentage of annual income for a representative 

group: physicians, dentists, and physician’s assistants. The impact of the proposed fees, $60 per 

year increase from current fees, were found to be 0.007 percent, 0.014 percent, and 0.022 percent

of annual income for physicians, dentists, and physician’s assistants respectively, when 

normalized for income increases. In consideration of the calculated impact and potentially 

further mitigating factors discussed in Chapter 5, DEA concludes that the proposed rule will not 

have a significant economic impact on a substantial number of small entities.

6.2 IMPACT OF PROPOSED FEES ON OTHER REGISTRANTS

6.2.1 Impact on Pharmacies

Pharmacies represent 4.8 percent of all registrants. Many pharmacies are parts of chains, 

and some chains have thousands of stores. A corporate chain has the choice of having each store 

in the chain pay a registration fee on the individual location’s behalf or having the corporation 

pay for all locations at one time. Regardless of how the fee is paid, registration fees for a large 

chain can be substantial. For example, the proposed registration fee for each pharmacy is $244
32

on an annual basis. Therefore, a chain with 4,000 stores would have a combined annual fee 

equivalent of $976,000. The proposed increase in fees would be $240,000. Such fees are large, 

but compared to revenue, they are a much smaller percentage than those for physicians and 

dentists. The incremental increase in the fee from current fees as a percentage of revenue is even 

lower. Table 9 shows the proposed new fees (annual equivalent) as percentage of average yearly 

revenue for various types of pharmacies. 

Table 9: Proposed New Fees as Percentage of Revenue for Pharmacies

 Source: 2007 Economic Census.

 ** Current and Proposed Fees divided by average revenue in 2007, first full year the current fee.

6.2.2 Impact on Manufacturers and Distributors

The impact of the proposed fee increase on manufacturers and distributors is minimal. 

For manufacturers, the proposed fee as a percentage of revenue ranges from 0.000 to 0.022

percent of a manufacturing establishment. For distributors, it is slightly higher: 0.002 to 0.056

percent. The incremental increase in the fee from current fees as a percentage of revenue is even 

lower. Manufacturers’ and distributors’ fees are high relative to practitioners’ fees, but they are 

a much lower fraction of revenue than is the case for individual practitioners. Most 

manufacturers and distributors do not qualify as small businesses under SBA standards. 

Even for manufacturers and distributors that have multiple facilities and pay a registration 

fee for each facility, the percentage of revenue (economic impact) does not change. The 

percentages cited above are based on average revenue per establishment; increasing the number 

Pharmacy Types Current 

fee 

(annual)

Proposed 

fee 

(annual)

Amount of 

increase 

from 

current fee

Ratio: 

Proposed 

fee to 

current 

fee

% of 

Annual 

Revenue 

Current 

Fee**

% of 

Annual 

Revenue 

Proposed 

Fee**

Supermarkets $ 184 $ 244 $ 60 1.33 0.003% 0.003%

Drug Stores $ 184 $ 244 $ 60 1.33 0.004% 0.005%

Discount Stores $ 184 $ 244 $ 60 1.33 0.001% 0.001%

Warehouse Clubs and 

Superstores

 $ 184 $ 244 $ 60 1.33 0.000% 0.000%
33

of establishments will not change the fee as a fraction of revenue.

Table 10: New Fees as Percentage of Annual Revenue for Manufacturers and Distributors

 Source: 2007 Economic Census.

 ** Current and Proposed Fees divided by average revenue in 2007, first full year of the current fee.

Business Types Current 

fee 

(annual)

Proposed 

fee 

(annual)

Amount of 

increase 

from 

current fee

Ratio: 

Proposed 

fee to 

current 

fee

% of 

Annual 

Revenue 

Current 

Fee**

% of 

Annual 

Revenue 

Proposed 

Fee**

Manufacturer

Petrochemical Manufacturing $ 2,293 $ 3,052 $ 759 1.33 0.000% 0.000%

Medicinal & Botanical 

Manufacturing

 $ 2,293 $ 3,052 $ 759 1.33 0.008% 0.011%

Pharmaceutical 

Manufacturing

 $ 2,293 $ 3,052 $ 759 1.33 0.002% 0.002%

Adhesive Manufacturing $ 2,293 $ 3,052 $ 759 1.33 0.013% 0.017%

Toilet Preparation 

Manufacturing

 $ 2,293 $ 3,052 $ 759 1.33 0.005% 0.006%

Other Chemical 

Manufacturing

 $ 2,293 $ 3,052 $ 759 1.33 0.017% 0.022%

Distributor

Drugs and Druggist Sundries 

Wholesalers

 $ 1,147 $ 1,526 $ 379 1.33 0.002% 0.002%

General Line Grocery 

Wholesalers

 $ 1,147 $ 1,526 $ 379 1.33 0.003% 0.003%

Confectionary Merchant 

Wholesalers

 $ 1,147 $ 1,526 $ 379 1.33 0.007% 0.009%

Chemical Wholesalers $ 1,147 $ 1,526 $ 379 1.33 0.009% 0.012%

Tocacco Wholesalers $ 1,147 $ 1,526 $ 379 1.33 0.002% 0.002%

Miscellaneous Wholesalers $ 1,147 $ 1,526 $ 379 1.33 0.042% 0.056%
34

CHAPTER 7: COST-BENEFIT ANALYSIS OF PROPOSED

REGULATORY ACTION

In developing the Cost-Benefit Analysis (CBA), DEA focused on the costs and benefits

that accrue to citizens and residents of the United States over the three year period, 2012 to 2014. 

The costs and benefits are measured against a baseline to capture the incremental costs and 

benefits of the proposed rule.

7.1 COSTS OF THE PROPOSED RULE

The cost of the proposed rule is the incremental increase in the combined registration fees 

paid by registrants. DEA estimates that it will collect approximately $807,101,383 in 

registration fees at current fee levels for the FY 2012 – FY2014 period. This figure, 

$807,101,383, represents the baseline. The proposed fees are estimated to result in a total 

collection of $1,072,100,474 for Fiscal Years 2012-2014. The estimated increase in collections 

above the baseline is $264,999,091 for the three year period. Thus, the average annual increase 

in estimated registration fee collections is $88,333,030. Therefore, the cost of the proposed rule 

is $88,333,030 per year during FY 2012 – FY2014. Although registration fees are paid by 

registrants, some or all of the registration fees are passed on to the citizens and residents of the 

United States. For this CBA, DEA assumes the annual cost of the proposed rule is $88,333,030.

7.2 BENEFITS OF THE PROPOSED RULE

Benefits of the proposed rule are an extension of the benefits of the DCP. The DCP is a 

strategic component of DEA that carries out the mandates of the CSA and its regulations to 

prevent, detect, and eliminate the diversion of controlled substances and listed chemicals into the 
35

illicit market while ensuring a sufficient supply of controlled substances and listed chemicals for 

legitimate medical, scientific, research, and industrial purposes.

The citizens and residents of the United States bear an enormous cost from the diversion 

of controlled substances and listed chemicals into the illicit market. To capture the benefits of 

the proposed rule, DEA estimated the cost of diversion to the citizens and residents of the United 

States: (1) at a baseline, without implementation of the proposed rule, and (2) under the proposed 

rule.

DEA used “Economic Costs of Nonmedical Use of Prescription Opioids”12 and 

“Estimated Costs of Prescription Opioid Analgesic Abuse in the United States in 2001”13as 

primary sources for obtaining costs to the citizens and residents of the U.S. associated with the 

diversion of controlled substances and listed chemicals into the illicit market. While opioids 

discussed in the publications represent a subset of all controlled substances regulated by the 

DCP, the cost estimates in the publications represent a conservative estimated cost of diversion 

of all controlled substances and listed chemicals from a reputable source.

The researchers 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 Survey 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 Forensic Laboratory, and Drug Enforcement Administration Budget 

Summaries. Data related to the total cost of treatment for the abuse of prescription opioids also 

 

12 Clin J Pain (The Clinical Journal of Pain), Volume 27, Number 3, March/April 2011.

13 Clin J Pain (The Clinical Journal of Pain), Volume 22, Number 8, October 2006.
36

included input from the Substance Abuse and Mental Health Services Administration at the U.S. 

Department of Health and Human Services. 

According to the research published in The Clinical Journal of Pain, costs associated 

with the nonmedical use of prescription opioids increased from $8.6 billion in 2001 to $53.4

billion in 2006.

Table 11: U.S. Costs of Nonmedical Use of Prescription Opioids 2001 and 2006

($ million) 2001 2006

% 

Increase

Total Cost $ 8,600 $ 53,400 521%

Health Care $ 2,600 $ 3,200 23%

Criminal Justice14 $ 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 proposed rule. The increase from $8.6 billion in 2001 to 

$53.4 billion in 2006 represents a compound annual growth rate (CAGR) of 44 percent. Using 

CAGR of 44 percent, the estimated cost of nonmedical use of prescription opioids would be 

$477.7 billion in 2012. Although it is difficult to assume 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 U.S. public is 

enormous and accelerating. 

Since $477.7 billion is based on only two data points, it is not at the desired level of 

accuracy for estimating the baseline cost of nonmedical use of prescription opioids. However, it 

 

14DCFA budget is understood to be included in the Criminal Justice cost figure. However, the DCFA budget is 

relatively low compared to the total Criminal Justice and even lower compared to the Total Cost. Therefore, the 

analysis does not back out the DCFA budget because it is not material to the discussion and to maintain integrity of 

the published research.
37

is reasonable to assume that the cost to the citizens and residents of the United States is greater 

than $53.4 billion.

In FY 2010, the most recent year for which a full year of data is available, DEA initiated 

1,011 criminal diversion investigations, imposed 1,519 administrative/civil/criminal sanctions, 

and conducted 3,553 scheduled investigations. In FY 2012 DEA estimates that it will have 1,802 

administrative/civil/criminal sanctions and 3,906 scheduled investigations.

15 DEA believes that 

each administrative/civil/criminal sanction prevents the diversion of controlled substances and 

listed chemicals into the illicit market and that scheduled investigations deter the diversion of 

controlled substances and listed chemicals into the illicit market.

An increase in scheduled investigations and administrative/civil/criminal sanctions, in 

addition to added resources for criminal diversion investigations, is expected to, at a minimum, 

slow down the growth in the cost of nonmedical use of prescription opioids and diversion as a 

whole. 

This proposed rule provides additional resources to enhance the performance of the DCP 

and slow down the growth in the cost of controlled substances and listed chemicals diverted into 

the illicit market. Although difficult to accurately quantify, the benefit of this proposed rule is 

the slowdown in the growth of the cost of diversion of controlled substances and listed chemicals 

into the illicit market.

7.3 EVALUATION OF COSTS AND BENEFITS OF PROPOSED RULE 

(THRESHOLD ANALYSIS)

In evaluating the costs and benefits of the proposed rule, the annual cost of the proposed 

rule of $88,333,030, which represents 0.17 percent of $53.4 billion, is compared with the 

 

15 FY 2012 Performance Budget Congressional Submission, p. DEA-70.
38

anticipated reduction in the growth rate of costs associated with diversion of controlled 

substances and listed chemicals into the illicit market. The CBA uses the costs associated with 

nonmedical use of prescription opioids as a conservative estimate of the total cost associated 

with diversion of controlled substances and listed chemicals 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 today’s dollar value. 

However, the baseline costs associated with diversion of controlled substances and listed 

chemicals into the illicit market is unreliable. Therefore, a quantitative analysis is not possible 

and a threshold analysis is utilized.

The threshold analysis considers whether the benefits of the proposed rule are greater 

than or equal to the cost of the proposed rule.

As discussed above, the cost of the proposed rule is $88,333,030 per year.

The benefits of the proposed rule are represented as the difference between the costs

associated with diversion of controlled substances and listed chemicals into the illicit market at 

the baseline and the costs associated with the diversion of controlled substances and listed 

chemicals into the illicit market under the proposed rule.
39

The baseline costs associated with the diversion of controlled substances and listed 

chemicals into the illicit market is estimated to be at least $53.4 billion (the cost associated with 

the nonmedical use of prescription opioids in 2006).

Rearranging the equation,

Therefore, the break-even would occur if the costs associated with diversion of controlled 

substances and listed chemicals into the illicit market are reduced to $0.088 billion from a 

baseline of “at least $53.4 billion.”

DEA concludes that the proposed rule will reduce the costs of the diversion of controlled 

substances and listed chemicals into the illicit market for the citizens and residents of the United 
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States by at least $0.088 billion, and therefore the proposed rule will have a net positive benefit 

for the citizens and residents of the United States.