# ECONOMIC IMPACT ANALYSIS

o f

Schedules of Controlled Substances: Rescheduling Hydrocodone Combination Products

from Schedule II I to Schedule II

[Docket No. DEA

- 389]

Drug Enforcement Administration U.S. Department of Justice



# February 2014

## TAB LE OF CONTENTS

1. INTRODUCTION

................................ ................................ ................................ ................................ .............. 3

2. REGULATORY ANALYSES INVESTIGATED

................................ ................................ ........................... 4

2.1 E XECUTIVE 

### O RDERS 

### 12866 AND 

### 13563

................................ ................................ ................................ ........... 4

2.2 R EGULATORY 

### F LEXIBILITY 

### A CT



### ................................ ................................ ................................ ...................... 5

2.3 U NFUNDED 

### M ANDATES 

### R EFORM 

### A CT OF 

### 1995

................................ ................................ ................................ 6

2.4 C ONGRESSIONAL 

### R EVIEW 

### A CT OF 

### 1995

................................ ................................ ................................ ........... 6

3. ANTICIPATED ECONOMIC IMPACT OF REGULATORY ACTION

................................ .................... 7

3.1 G ENERAL 

### R ELATIONSHIP BETWEEN 

### R EGISTRATIONS



### , E NTITIES



### , AND 

### S MALL 

### E NTITIES



### ................................ ... 7

3.2 A FFECTED 

### E NTITIES



### ................................ ................................ ................................ ................................ ......... 8

3.2.1 N umber of Handlers of HCPs (Registrations)

................................ ................................ ....................... 8

3.2.2 Number of Entities and Small Entities Handling HCPs

................................ ................................ ....... 10

3.3 A NNUAL 

### C OST OF THE 

### R ULE



### ................................ ................................ ................................ .......................... 13

3.3.1 Costs Associated with Registration Requirements

................................ ................................ .............. 13

3.3.2 Costs Associated with Storage Requirements

................................ ................................ ...................... 14

3.3.3 Costs Associated with Labeling and Packaging Requirements

................................ ............................ 20

3.3.4 Costs Associated with Quota Requirements

................................ ................................ ........................ 21

3.3.5 Costs Associated with Recordkeeping and Reporting Requirements

................................ .................. 21

3.3.6 Costs Associated with Ordering Requirements

................................ ................................ .................... 22

3.3.7 Costs Associated with Prescription Requirements

................................ ................................ ............... 23

3.3.8 Costs Associated with Disposal Requirements

................................ ................................ .................... 24

3.3.9 Cost Summary

................................ ................................ ................................ ................................ ..... 24

3.4 I MPACT ON 

### S MALL 

### E NTITIES



### ................................ ................................ ................................ .......................... 25

3.4.1 Criteria for “Significant” Economic Impact

................................ ................................ ........................ 25

3.4.2 Analysis

................................ ................................ ................................ ................................ ............... 25

3.4.3 Criteria for “Substantial” Number

................................ ................................ ................................ ....... 28

3.5 E XAMINATION OF 

### I NDUSTRY 

### S EGMENTS WITH 

### S IGNIFICANT 

### E CONOMIC 

### I MPACTS



### ................................ ........ 29

4. ECONOMIC ANALYSIS RE SULTS

................................ ................................ ................................ ............. 29

4.1 E XECUTIVE 

### O RDERS 

### 12866 AND 

### 13563

................................ ................................ ................................ ......... 29

4.2 R EGULATORY 

### F LEXIBILITY 

### A CT



### ................................ ................................ ................................ .................... 29

4.3 U NFUNDED 

### M ANDATES 

### R EFORM 

### A CT OF 

### 1995

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

4.4 C ONGRESSIONAL 

### R EVIEW 

### A CT OF 

### 1995

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

APPENDIX A: REGISTR ANT LANDSCAPE

................................ ................................ ................................ ...... 31

APPENDIX B: BUSINES SES WITH IMPACT 1% OR MO RE OF ANNUAL REVENUE

............................ 40

## 1. INTRODUCTION

This document describes the economic analysis conducted by the Drug Enforcement Administration

( DEA ) in support of the regulatory analyses statements published wi th the n otice of p roposed r ulemaking

(NPRM) to reschedule hydrocodone combination products (HCPs) from schedule III to schedule II of the

Controlled Substances Act (CSA) [Docket No. DEA

- 389]

. The proposed action is based on a

recommendation from the Assis tant Secretary for Health of the HHS and on an evaluation of all other

relevant data by the DEA. Pursuant to the provisions of the CSA (21 U.S.C. 811(a)), this action is a

formal rulemaking “on the record after opportunity for a hearing.” Such proceeding s are conducted

pursuant to the provisions of the Administrative Procedure Act (APA) (5 U.S.C. 551

- 559), 21 CFR

1308.41

- 1308.45, and 21 CFR part 1316 subpart D. If finalized, this action would impose the regulatory

controls and administrative, civil, and criminal sanctions of schedule II controlled substances on any

person who handles hydrocodone combination products.

Dihydrocodeinone (hydrocodone), a semisynthetic opioid derived from codeine, is a narcotic drug as

defined by 21 U.S.C. 802(17). Hydrocod one was listed in schedule II of the CSA upon the enactment of

the CSA in 1971. Pub.L. 91

- 513, 84 Stat. 1236, sec. 202(c), s chedule II, paragraph (a), clause (1)

(codified at 21 U.S.C. 812(c)); initially implemented at 21 CFR 1 308.12(b)(1)(x) (36 FR 7776, April 24,

1971) (currently implemented at 21 CFR 1308.12(b)(1)(vi)). At that time, hydrocodone combination

products in specified do s es (containing no greater than 15 milligram s (mg) hydrocodone per dosage unit

or not more than 300 mg hydrocodone per 100 milliliters (m L ) ) were listed in schedule III of the CSA

when formulated with specified amounts of an isoquinoline alkaloid of opium or one or more

therapeutically active nonnarcotic ingredients. Pub.L. 91

- 513, 84 Stat. 1236, sec. 202(c), s chedule III,

pa ragraph (d), clauses (3) and (4) (codified at 21 U.S.C. 812(c)); initially implemented at 21 CFR

1 308.13(e)(3) and (4) (36 FR 7776, April 24, 1971) (currently implemented at 21 CFR 1308.13(e)(1)(iii)

and (iv)). A non

- exhaustive listing of currently market ed HCPs include Vicodin ® 

### , Vicoprofen ® 

### , Lortab ®



### ,

Lorcet ® 

### , Norco ® 

### , Hydrocet ® 

### , Anexsia ® 

### , Azdone ® 

### , and Zydone ®



### . Any other products that contain single



## 3

### entity hydrocodone or combinations of hydrocodone and other substances outside the range of specified

doses are listed in schedule II of the CSA.



## 2. REGULATORY ANALYS E S INVESTIGATED

2.1 E XECUTIVE 

### O RDERS 

### 12866 AND 

### 13563

Pursuant to Executive Order 12866 ( 58 FR 51735, Sept. 30, 1993), an agenc y must submit to the

Office of Management and Budget (OMB)

, Office of Informa tion 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

econ omy of $100 million or more , or 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 ; ( 2 ) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency ; ( 3 ) materially alter 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 forth in [ Executive Order

12866 ]

. 1



### For purposes of E.O. 12866, “regulatory action” “means any substantive action by an agency

(normally published in t he Federal Register) that promulgates or is expected to lead to the promulgation

of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and

notices of proposed rulemaking.” 2 

### Of note, however, in the context of CSA scheduling actions is the fact

that Executive Order 12866 excepts from the meaning of a “regulation” or “rule”: (1) “ regulations or

rules issued in accordance with the formal rulemaking provisions of 5 U.S.C. 556, 557; ” and (2) “ any

other category of regulations exempted by the Administrator of OIRA. ” 3 

### Pursuant to these categorical

1 E xec. Order No. 12866

, s ection 3(f).

2 Id. , sec. 3(e).

3 Id. sec. 3(d). ( Sec. 3(d) also exempts from the definition of regulation or rule regulations or rules that pertain to military or foreign affairs function of the United States, other than procurem ent regulations and regulations involving the import or export of



## 4

### exemption s , DEA actions concerning the scheduling of controlled substances are exempt from the

centralized review requirements of E.O. 12866. 4 

### Executive Order 13563 ( 76 FR 3821, Jan. 21 , 2011)

affirms and supplements Executive Order 12866.

2.2 R EGULATORY 

### F LEXIBILITY 

### A CT



### The R egulatory Flexibility Act (RFA ) 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. 5 

### “ The RFA does not seek preferential treatment for small

entities, require agencies to adopt regulations that impose the least burden on small entities, or mandate

e xemptions for small entities. Rather, it requires agencies to examine public policy issues using an

analytical process that identifies, among other things, barriers to small business competiveness and seeks

a level playing field for small entities, not an unfair advantage. ” 6



### Three types of small entities are defined in the RFA: small businesses, small organizations, and small

governmental jurisdictions. Pursuant to sec. 601(3) of the RFA, the term “small business” has the same

meaning as the term “smal l business concern” under sec. 3 of the Small Business Act. A small business

concern is an enterprise that is “independently owned and operated” and “not dominant in its field of

operation.” 7 

### Under the authority of the Small Business Act

, t he S mall B usin ess A dministration (SBA)

Administrator has establish ed standards to be used in the det ermination of a small business concern. 8



### SBA size standards have been established for the types of economic activity or industry utilizing the

non

- defense articles and services; and regulations or rules that are limited to agency organization, management, or personnel

matters. ).

4 21 U.S.C. 811(a) (“Rules of the Attorney General un der this subsection shall be made on the record after opportunity for a hearing pursuant to the rulemaking procedures prescribed by subchapter II of chapter 5 of Title 5.”); see also l etter from Sally Katzen, Administrator, OIRA, OMB to Eleanor D. Acheson, Assistant Attorney General, OPD, USDOJ (Feb. 4, 1994) (exempting from OMB review requirements of EO 12866 DEA rulemaking actions concerning the scheduling of controlled substances which are made on the record after opportunity for a hearing pursuant to th e Administrative Procedure Act).

5 Pub.L. 96

- 354, 94 Stat. 1164 (1980) (codified at 5 U.S.C. 601).

6 SBA O FFICE OF A DVOCACY

, A G UIDE FOR G OVERNMENT A GENCIES : H OW TO C OMPLY WITH THE R EGULATORY F LEXIBILITY A CT 1 (May 2012).

7 15 U.S.C. 632.

8 Id



### . ; See als o S IZE STANDARDS D IVISION

, O FFICE OF G OV ’ T C ONTRACTING &B USINESS D EVELOPMENT

, SBA S IZE S TANDARDS

M ETHODOLOGY (April 2009) (available at www.sba.gov/site/default/files/size_standards/methdology.pdf ) (describing SBA methodology for establishing and adjustin g its small business size standards pursuant to the Small Business Act and related legislative guidelines).



## 5

### North American Industry Cl assification System (NAICS) classifications

. The SBA set s the maximum

size standards

— i n millions of do llars or number of employees

— a llowed for concerns (including their

affiliates ) to be designated as small. 9 

### Section 601(4) of the RFA defines a small org anization as any not

for

- profit enterprise that is independently owned and operated and not dominant in its field. Section

601(5) of the RFA defines small governmental jurisdictions as governments of cities, counties, towns,

townships, villages, school di stricts, or special districts with a population of less than 50,000.

Most DEA registrants are small businesses or employed by small businesses as defined under the

RFA; therefore, f or the purposes of this analysis, the terms “business” and “entity” are use d

interchangeably.

2.3 U NFUNDED 

### M ANDATES 

### R EFORM 

### A CT OF 

### 1995

The Unfunded Mandates Reform Act (UMRA) 10 

### w as enacted to avoid imposin g unfunded Federal

mandates on S tate, local, and tribal governments (SLTG), or the private sector. Most of UMRA’ s

provisions apply to proposed and final rules:

• 

### for which a general notice of proposed rulemaking was published, and

• 

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

inflation.

2.4 C ONGRESSIONAL 

### R EVIEW 

### A CT OF 

### 1995

Under the Congressional Review Act (CRA)

, a rule generally cannot take effect until the agency

submits a rule report to each House of Congress and to the Comptroller General of the United States

(head of the United States Government Accountability Office). 11 

### Rules 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 i n an annual effect on the economy of $100 million or more; a major

9 13 CFR 121.201

. 10 Pub.L. 104

- 4, 109 Stat. 48 (1995) (codified at 2 U.S.C. 1501 et seq.).

11 Pub.L. 104

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

- 808).



## 6

### increase in costs or prices; or significant adverse effects on competition, employment, investment,

productivity

, or the ability of United States companies to compete with foreign companies

.



## 3. ANTICIPATED ECONOMIC IMPACT OF REGULATORY ACTION

3.1 G ENERAL 

### R ELATIONSHIP BETWEEN 

### R EGISTRATIONS 

### , E NTITIES 

### , AND 

### S MALL 

### E NTITIES



### DEA registrations are held by a variety of persons, including businesses such as manufacturers,

distributors, and pharmacies, as we ll as individuals such as practitioners 12 

### and mid

- level practitioners

. 13



### It is very common for businesses and individuals to hold more than one registration, such as where a

registrant handles controlled substances at multiple locations or engages in multip le types of DEA

registered activities

. However, RFA requirements and 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 need s

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 registration s and the number of

entities)

.

The DEA estimates the number of entities represented by the number of DEA controlled substance

registration s by relating NAICS c lassification data to the various DEA business activity registration types.

Utilizing this inf ormation, the DEA broadly classifies registrations in to two categories: (1) registrations

associated with industries where very few businesses in the industry are DEA registrants; and (2)

registrations associated with industries where most businesses in t he industry are DEA registrants. The

first category includes manufacturers, distributors, importers and exporters. O nly a small fraction of all

12 For the purposes of this Economic Impact Analysis, “ p ractitioner ” means an individual registered with the DEA as a “practitioner” ( physician s , veterinarian s
, podiatrists, dentists) but does not include hospitals/clinics, pharma cists, pharmacies, or

mid

- level practitioners as defined below.

13 For the purposes of this Economic Impact Analysis, “ m id

- level practitioner ” means an individual registered with the DEA as a

“mid

- level practitioner” but does not include practitioners as d efined above . Examples of mid

- level practitioners include, but are not limited to, health care providers such as nurse practitioners, nurse midwives, nurse anesthetists, clinical nurse special ists and physician assistants.



## 7

### businesses engaged in these activities across the United States are DEA registrants

. The second category

inc ludes pharmacies, hospitals/clinics , offices of physicians, etc. In contrast to the first category, nearly

all the businesses engaged in these activities across the United States are DEA registrants, employ

registrants, or represent multiple registrations

. Based on this information , the DEA utilizes certain

assumptions unless more specific business information is readily available

.

• The DEA estimates a 1

- to

- 1 entity

- to

- registration ratio for manufacturers, distributors, and importers/exporters (“category 1 ”).

• The DEA u tiliz es the number of entities in the NAICS codes as an estimate for the number

of entities for pharmacies, hospitals/clinics , offices of physicians, etc. (“category 2 ” )

. Specifically, t he DEA estimates :

o A 0.74

- to

- 1 entity

- to

- registration ratio for pharmacies ; and

o A 0.23

- to

- 1 entity

- to

- registration ratio for practitioners, mid

- level practitioners, and hospitals/clinics (combined).

More in

- depth information on this topic is found in a ppendix A , which details the specific methodology

use d by the DEA to determine the entity

- to

- registration ratio s and the percentage s of entities that are

small entities.

3.2 A FFECTED 

### E NTITIES



### 3.2.1 Number of Handlers of HCP s (Registrations)

HCPs are the most frequently prescribed controlled substance in the United Sta tes. They are widely

prescribed for the treatment of pain and cough suppression. Hydrocodone/acetaminophen was the most

frequently dispensed prescription medicine in 2012 in the United States with a pproximately 135 million

prescriptions dispensed

. 14 

### If f inalized, HCPs will be classified as a schedule II controlled substance,

affecting all persons who currently handle HCPs. H andlers of HCPs pri marily include manufacturers

,

distributors, exporters, pharmacies, practitioners, mid

- level practitioners, and ho spitals/clinics. It is

14 IMS Health, National Prescript ion Audit, Dec. 2012.



## 8

### possible that other registrants, such as importers, 15 

### researchers, analytical labs, teaching institutions, etc.,

also handle HCPs. However, based on its understanding of its registrant population, the DEA assumes for

purposes of thi s analysis that for all business activities other than manufacturers, distributors, exporters,

pharmacies, practitioners, mid

- level practitioners, and hospitals/clinics

, that the volume of HCP s handled

is nominal, and therefore de minimis to the economic i mpact determination of the proposed rule.

Because HCPs are so widely prescribed, f or the purposes of this analysis

, the DEA conservatively

assumes all distributors, pharmacies, practitioners, mid

- level practitioners, and hospitals/clinics currently

regi ste red with the DEA to handle schedule III controlled substances are also handlers of HCPs

. The

DEA estimated the number of manufacturers (115) and exporters (5) handling HCPs directly from DEA

records. In total, t he DEA estimates that there are 1,478, 713 h andlers of HCPs

. 16 

### Table 1 provides the

breakdown of handlers of HCPs by DEA business activity registration

.

15 See 21 U.S.C. 952(a) (“It shall be unlawful to import***into the United States***any narcotic drug in schedule III***except***such amounts of crude opium, poppy straw, [and] concentrate of poppy straw***as the Attorney General finds to be necessary to provide for medical scientific, or other legitimate purposes , and such amounts of***any narcotic drug in schedule III***that the Attorney General finds to be necessary to provide for the medical, scientific, or other legitimate needs of the

United States

— (A) during an emergency in which domestic supplies of such substances or drugs are found by the Attorney General to be inadequate, (B) In any case in which the Attorney General finds that competition among domestic manufactures of

the co ntrolled substances is inadequate and will not be rendered adequate by the registration of additional manufacturers under section 823 [of the CSA], or (C) in any case in which the Attorney General finds that such controlled substance is in limited quantiti es exclusively for scientific, analytical or research use***.”).

16 The DEA notes that HCPs have been designated as schedule II controlled substances in New York under S tate law for prescribing purposes only

. Although the DEA recognizes that prescribing re quirements for HCPs under New York State law may be similar to Federal schedule II controlled substance prescribing requirements

, all HCP handlers in New York are conservatively included in this analysis as being affected

.



## 9Table 1 . Number of HCP Handlers by Registered DEA Business Activity

Business Activity # of Registrations

Manufactur er 115

Exporter 5

Distributor 7 06

Pharmacy 69,588

Practitioner 1,162,906

Mid

- level Practitioner * 229,676

Hospital/Clinic 15,717

Total 1,478,713

Source: DEA, Nov. 2013.

* Ambulance service s , animal shelters, euthanasia technicians, and medical psyc hologists are excluded from the count of handlers

of HCPs for this analysis as, w hile some S tates may authorize these entities to handl e schedule III controlled substance s , it is unlikely that these registrants handle HCP s

.



### 3.2.2 Number of Entities and Small En tities Handling HCPs

As previously summarized

, and as explained in detail in appendix A, the DEA utilizes an entity

- to

registration ratio to extrapolate the number of businesses represented by the number of DEA registration s

where specific data is not read ily available

. For manufacturers, distributors, importers, 17 

### and exporters,

the DEA assumes a 1

- to

- 1 entity

- to

- registration ratio. For pharmacies and “other” 18 

### registrants, where

businesses are more likely to hold multiple registration s
, employ multiple re gistrants, or engage in

controlled substance activities at multiple locations, the DEA utilizes the number of business es reported

under the potentially impacted NAICS classification code s in the most recent United States Economic

Census (currently the 2007 Economic Census) to represent the number of businesses represented by DEA

registra tions . Comparing economic census data for the number of employees and annual revenue with

SBA size standards for each potentially impacted NAICS c ode , the DEA estimate d the percentage of

businesses (represented by DEA registrations) that are small businesses

. Table A1 in appendix A

17 See note 1 6

. 18 Because practiti oners and mid

- level practitioners primarily work in various physician and health care specialist offices as well as hospitals and clinics, the analysis in appendix A groups practitioners, mid

- level practitioners, and hospital s /clinic s , as “other.”



## 10

### summarizes the relationship among controlled substance registrations, entities, and small entities. The

number of DEA registrations changes dai ly and the number of registrations in table 1 above can vary

from the number of registrations in table A1 used to determine the entity

- to

- registration ratio. However,

the analysis contained in appendix A is updated at least annually and any difference in the number of

registrations between table 1 above and table A1 has negligible impact on the entity

- to

- registration ratio.

To estimate the number of entities that would be affected by the proposed action to reschedule HCPs,

the DEA applie d the entity

- to

- reg istration ratio for that registration category (other than manufacturers

and exporters ). Applying the 1

- to

- 1 entity

- to

- registration ratio for distributor s , the DEA estimates that the

706 registrations correspond to 706 entities. Applying the 0.74 ratio f or pharmacies, the DEA estimates

that the 69,588 registrations correspond to 51,495 entities . A pplying the 0.23 ratio for practitioners, mid

level practitioners, and hospitals/clinics ( combined ) , the DEA estimates that the 1,408,299 (1,162,906

practitione r + 229,676 mid

- level practitioner + 15,717 hospital/clinic ) registrations correspond to 323,909

entities that employ individuals holding practitioner, mid

- level practitioner, or hold hospital/clinic

registrations

. Based on research of DEA records and mul tiple subscription

- based and public data sources

,

t he DEA estimates that the 115 manufacturer and 5 exporter registrations correspond to 74 and 5 entities

,

respectively

. In total, the DEA estimates that 1,478, 713 registrations would be affected by the pro posed

action

, correspond ing to 376, 189 entities affected if HCPs are reschedule d from schedule III to II under

the CSA

. Table 2 contains the analysis, by DEA business activity

, of the estimated number of affected

entities and affected small entities utili zing the applicable entity

- registration ratios

.

T o determine the number of small manufacturer and exporter entities, the DEA estimated the number

of employees and annual revenue for each of the 79 (74 manufacturers + 5 exporters ) affected entities

based on research of DEA records and multiple subscription

- based and public data sources. Using the

SBA size standard for NAICS code “325412

– Pharmaceutical Preparation Manufacturing” of 750



## 11

### employees or less for manufacturers and “ Sector 42

– Wholesale Trade” 19 

### of 100 employees or less for

exporters

, the DEA estimates that 50 of the 74 affected manufacturers and 4 of 5 affected exporter are

small entities.

For the remaining affected business activities

, the DEA used t he per cent age of businesses b elow SBA

size standards

, as explained in a ppendix A

, to determine the number of affected businesses below SBA

size standard s ( i.e., the number of businesses represented by DEA registra tions that are small businesses).

Applying t he percentage (96.7%) of small entities to distributors

, the DEA estimates that 683 of the 706

affected distributors are small entities

. Applying t he percentage s of 98.6 % for pharmacies and 97.2% for

practitioners, mid

- level practitioners and hospitals/clinics , the DEA estimates that 50,774 of 51,495

pharmacies and 314,840 of 323,909 entities that employ practitioners, mid

- level practitioners

, or hold

hospital/clinic registrations are small entities

. In total

, the DEA estimates that 366, 35 1 (97.4%) of

376, 189 affected entities are small entitie s

. Table 2 lists the estimated number of affected small entities

by business activity.

Table 2 . Number of Affected Entities and Small Entities

Business Activity # of Registrations Entity

- to

Registration

Ratio # of

Entities % of

Small

Entities # of

Small

Entities

Manufacturer 115 N/A 74 N/A 50

Exporter 5 N/A 5 N/A 4

Distributor 706 1.00 706 96.7 683

Pharmacy 69,588 0.74 51,495 98.6 50,774

Practitioner 1,162,906

0.23 323,909 97.2 314,840 Mid

- level Practitioner 229,676

Hospital/Clinic 15,717

Total 1,478, 713 376, 189 366, 35 1

19 Sect or 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.



## 12

### 3.3 A NNUAL 

### C OST OF THE 

### R ULE



### If this rule is promulgated

, all persons who handle (manufacture, distribute, dispense, import, export,

engage in research, conduct instructional activities, and posses s)

, or propose to handle HCPs

, w ill be

subject to the CSA ’s regulatory controls and administrative, civil

, and criminal sanctions applicable to

schedule II controlled substances

.

3.3.1 Costs Associated with Registration R equirements

Of the 1,478, 713 registrati ons currently estimated as authorized to handle schedule III HCPs, 65, 330

(4.4%) of them are currently not authorized to handle schedule II controlled substances

. I f the proposed

rule were finalized , t hose 65, 330 registrations would need to be modified an d be authorized by the DEA

to handle schedule II controlled substances in order to continue to handle HCPs currently in schedule III

.

Table 3 lists the number of registrations by business activity which are currently not registered to handle

schedule II c ontrolled substances.

To request a registration modification, registrants would need to log on to the DEA’s registration

website, select the appropriate radio button (“Registration Changes”) to request a modification to add

schedule II

. Registrants can al so request a registration modification by submitting a letter of request to

the DEA’s Registration Unit in accordance with §1301.51. There is no fee to request a registration

modification and it requir es minimal time at nominal cost.

Therefore, the DEA estimates costs associated with the request to modify a DEA registration to be

nominal

.



## 13Table 3 . Number of Controlled Substance Registrations Not Currently Registered to Handle Schedule II Controlled

Substances

Business Activity # of Registrations # Not Registered

for Schedule II

Manufacturer 115 0

Exporter 5 0

Distributor 706 229

Pharmacy 69,588 344

Practitioner 1,162,906 14,652

Mid

- level Practitioner 229,676 49,876 *

Hospital/Clinic 15,717 229

Total 1,478, 713 65, 330

* While there are an estimated 49,876 mid

- level practitioner handlers of schedule III HCPs , the DEA estimates that 35,080 of those registrations are located in S tates where S tate law does not authorize the handling of schedule II controlled substances by

mid

- level practitioners . If finalized, various State laws will prevent those 35,080 mid

- level practi tioners from handl ing HCP s and they will need to refer patients to supervising or collaborating physicians. Practic e arrangement s between mid

- level practitioners and supervising physicians can vary greatly and th e DEA has no basis for estimat ing the econo mic impact o f such referrals

. Additionally, S tate laws regarding authorization for mid

- level practitioners to handle schedule II controlled substa nces are subject to change by S tate law

.



### 3.3.2 Costs Associated with Storage R equirements

Pursuant to 21 CFR 1301. 71(a ): “All applicants and registrants shall provide effective controls and

procedures to guard against theft and diversion of controlled substances.” S torage requirements for

controlled substances are described in 21 CFR 1301.72 for non

- practitioners

, 20 

### and in 21 CFR 1301.75

for practitioners. The DEA’s estimated costs associated with such physical security requirements a re

outlined in the following sub sections.

Manufacturers /Exporters :

Many manufacturers and exporters are likely to have sufficient s pace in their existing vaults to

accommodate HCPs. However, the DEA understands that some manufacturers and exporters will need to

build new vaults or expand existing vaults to store HCPs in compliance with schedule II controlled

substances storage requir ements

. Due to the uniqueness of each business, the DEA made assumptions

20 Non

- practitioners are all registrants other than practitioners. Examples include manufacture r s, distributors, importers/exporters, 

### and narcotic treatment programs (NTPs).



## 14

### based on research and institutional knowledge of its registrant community to quantify the costs associated

with storage requirements for manufacturers and exporters

.

T he DEA estimate s 120 (115 + 5) manufacturer and exporter registrations would be affected by this

rescheduling action . While 120 manufacturer and exporter registrations are estimated to correspond to 79

entities

, the cost estimate is based on registrations to account for multiple locations

. T he DEA assumes

60 of the 120 affected manufacturers and exporters (50%) would not need to increase vault space as a

result of this rule. The remaining 60 affected manufacturers and exporters are expected to need to

construct or add vault space a s a result of this rule. T he DEA assumes that 3 of the 60 (5%) would have a

need for a large expansion, 6 (10%) would have a need for a medium expansion, and the remaining 51

(85%) would have a need for a small expansion. T he DEA estimates : (1) a large expansion as an

expansion of 1 5,000 sq. ft. of vault space; (2) a medium expansion as an expansion of 1, 500 sq. ft. of

vault space; and (3) a small expansion as an expansion of 15 0 sq. ft. of vault space

. The DEA recognizes

that there are lar ge gaps between the small, medium

, and large expansions and th at the actual expansion

requirement for an individual registrant may be anywhere between 0 and 15,000 sq. ft., or even greater

than 1 5,000 sq. ft . Since the DEA does not collect data regarding storage space specifically dedicated to

HCPs, the DEA modeled expansion need into these three groups. The DEA is aware that in actuality

,

coincident to this rule, a manufacturer or exporter may choose to expand its vault greater than the

expansion specifi cally needed for HCPs. This coincident expansion is outside the scope of the proposed

action and is not factored into the cost of the proposed rule

. The small, medium, and large expansion

assumptions represent expansion needs for HCPs only.

T he DEA estim ates t otal vault construction or expansion project cost to be approximately $110 , $120,

and $130 per sq. ft

. for large, medium, and small expansion s, respectively

. These cost estimates include

planning, labor

, and material costs associated with vault cons truction, including electronics, ventilation,

and surveillance. M ultiplying 1 5,000 sq. ft. by $110 per sq. ft. for a large expansion , the DEA estimates

that each large expansion will cost $ 1,6 50,000. Multiplying 1, 500 sq. ft. by $120 per sq. ft. for a me dium



## 15

### expansion, the DEA estimates that each medium expansion will cost $ 18 0,000. Multiplying 15 0 sq. ft. by

$13 0 per sq. ft. for a small expansion, the DEA estimates that each small expansion will cost $ 19,50 0.

To determine the total physical security c ost as a result of this rule, the DEA utilized the combined

costs of large, medium, and small expansions. The DEA anticipates 3 manufactures /exporters would

need large expansions at $ 1,6 50,000 per expansion for a combined $ 4

, 9 50,000

. The DEA anticipates 6

manufacturers /exporters would need medium expansions at $ 180 ,000 per expansion for a combined

$ 1,080 ,000

. The DEA anticipates 51 manufacture r s /exporters would need small expansions at $ 19,500

per expansion for a combined $ 994 ,500

.

The total cost of ph ysical security for all manufacturers and exporters combined is $ 7,024 ,500

. Cost

of physical s ecurity r equirements for m anufacturers and exporters is summarized in t able 4

.

Table 4 . Cost of Physical Security Requirement s for Manuf acturers and Exporters

Required Expansion # of

Manufacturers and Exporters Additional space requirement s ( sq. ft. ) Cost per sq. ft. ($) Unit Cost ($) Cost ($)

All affected manufacturers and exporters 120

50% of manufacturers and expo rters need more space 60

Large expansion, 5% 3 1 5,000 110 1,650,000 4,950,000

Medium expansion, 10% 6 1, 500 120 180,000 1,080,000

Small expansion, 85% 51 150 130 19,500 994,500

Total 7,024,500



### The DEA annualized costs at a rate of 7% over 20 years for each of the large, medium, and small

expansions

. 21 

### These costs are calculated to be $ 155,748 , $ 16,991 , and $ 1,841 , resp ectively. Applying

these annualized costs to the number of large, medium, and small expansions, the total annualized cost of

the physical security requirements of this rule for manufacturers and exporters is anticipated to be

$ 663,063 . Table 5 summarizes the calculation for annualized physical security requirement costs for

21 The use of 7% and 3% rates for present value calculation, annual payment calculation, and analysis time hori zon is based on

OMB Circular A

- 4, September 17, 2003. See also “Regulatory Impact Analysis: A Primer” and “Regulatory Impact Analysis: Frequently Asked 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.



## 16

### manufacturers and exporters . Annualized cost at a rate of 3% over 20 years is also provided for

informational purposes. 22

Table 5 . Annualized Cost of P hysica l Security Requirement s for Manufacturers and Exporters

Required Expansion # of

Manufacturers and Exporters Annualized

Unit Cost @3%, 20 years ($) * Annualized

Cost @3%, 20 years ($) * Annualized

Unit Cost @7%, 20 years ($) * Annualized

Cost @7%, 20 years ($) *

All affected manufacturers and exporters 120

50% of manufacturers and exporters need more space 60

Large expansion, 5% 3 110,906 332,718 155,748 467,245

Medium expan sion, 10% 6 12,099 72,593 16,991 101,944

Small expansion, 85% 51 1,311 66,846 1,841 93,874

Total 472,157 663,063

* Decimals not shown.



### Distributors

Similar to manufacturers and exporters

, m any distributors are likely to have enough space in their

vaults to accommodate HCPs. However, the DEA understands that some distributors will need to build

new vaults or expand existing vaults to sto re HCPs. Due to the uniqueness of each business, the DEA

ma de assumptions to quantify the costs associated with storage requirements for distributors

.

The DEA used the same expansion parameters for distributors as for manufactures and exporters

.

T he DE A estimates: (1) a large expansion as an expansion of 1 5,000 sq. ft. of vault space; (2) a medium

expansion as an expansion of 1, 500 sq. ft. of vault space; and (3) a small expansion an expansion of 15 0

sq. ft. of vault space

. Again, the DEA recognizes t hat there are large gaps between the small, medium,

and large expansions and that the actual expansion requirement for an individual registrant may be

anywhere between zero and 15,000 sq. ft., or even greater than 1 5,000 sq. ft. Since the DEA does not

col lect data regarding storage space specifically dedicated to HCPs, the DEA modeled expansion need

into these three groups. The DEA is aware that in actuality, coincident to this rule, a distributor may

22 See Id.



## 17

### choose to expand its vault greater than the expansion specifically needed for HCPs. This coincident

expansion is outside the scope of the proposed action and is not factored into the cost of the proposed

rule. The small, medium, and large expansion assumptions represent expansion needs for HCPs only.

The sa me as with manufacturers and exporters , t he DEA estimates t otal vault construction or

expansion project cost to be approximately $110, $120, and $130 per sq. ft. for large, medium, and small

expansions, respectively

. These cost estimates include planning, labor and material costs associated with

vault construction, including electronics, ventilation, and surveillance.

T he DEA estimated there to be 706 affected distributors . Since the estimated entity

- to

- registration

ratio is 1

- to1 , the 706 affected dis tributor registrations correspond to 706 entities

. T he DEA estimates

353 ( 50% ) of the 706 affected distributors would not need to increase vault space as a result of this rule.

The remaining 353 (50%) affected distributors are estimated to need to constr uct or add vault space as a

result of this rule if finalized . Based on knowledge that a small number of large distributors handle the

bulk o f the HCPs, the DEA estimates that 18 (5%) of the 353 will have a need for a large expansion, 35

(10%) will have a need for a medium expansion, and the remaining 300 (85%) will have a need for a

small expansion.

To determine the total physical security cost as a result of this rule, the DEA utilized the combined

costs of large, medium, and small expansions (using the parameters previously discussed)

. The DEA

estimates that 18 distributors would need large expansions at $ 1,650 ,000 per expansion fo r a combined

subtotal of $ 29,700 ,000. Thirty

- five distributors would need medium expansions at $ 180 ,000 pe r

expansion for a combined subtotal of $ 6,300 ,000. Three hundred distributors would need small

expansions at $ 19,500 per expansion for a combined subtotal of $ 5,850 ,000.

The estimated combined cost of physical security for all distributors combined is a total of

$ 41 ,85 0 ,000. Table 6 summarizes the calculation.



## 18Table 6 . Cost of Physical Security Requirement for Distributors

Required Expansion # of Distributors Additional Space Requirements (sq. ft.) Cost per sq. ft. ($) Unit Cost ($) Cost ( $)

All affected distributors 706

50% of distributors need more space 353

Large expansion, 5% 18 1 5,000 110 1,650 ,000 29,700 ,000

Medium expansion, 10% 35 1, 500 120 180 ,000 6 ,300 ,000

Small expansion, 85% 300 150 130 19,500 5,850 ,000

Total 41 ,850,000



### The annualized costs at 7% interest over 20 years for each of the large, medium, and small expansions

were calculated to be $ 155,748 , $ 16,991 , and $ 1,8 41 , respectively. Applying these annualized costs to

the number of large, medium, and small expansions, the total annualized cost of the physical security

requirements of this rule to distributors is $ 3,950,344 . Table 7 summarizes the calculation for ann ualized

costs. Annualized cost at 3% interest over 20 years is also provided for informational purposes.

Table 7 . Annualized Cost of Physical Security Requirement for Distributors

Required Expansion # of

Distributors Annualiz ed

Unit Cost @ 3%, 20 years ($) * Annualized Cost @ 3%, 20 years ($) * Annualize

d Unit

Cost @ 7%, 20 years ($) * Annualized Cost @ 7%, 20 years ($) *

All affected distributors 706

50% of distributors need more space 353

Larg e expansion, 5% 18 110,906 1,996,307 155,748 2,803,470

Medium expansion, 10% 35 12,099 423,459 16,991 594,675

Small expansion, 85% 300 1,311 393,212 1,841 552,199

Total 2,812,977 3,950,344

* Decimals not shown.



### Pharmacies and Hospitals/Clinics

The physical security requirements for schedule II controlled substances are the same as the physical

security requirements for schedule III con trolled substances for pharmacies and institutional practitioners



## 19

### (i.e., hospitals/clinics), 23 

### pursuant to 21 CFR 1301.75(b) . In addition, pharmacies and institutional

practitioners may disperse both schedule II and III controlled substances throughout th eir stock of non

controlled substances in such manner as to obstruct the theft or divers ion of the controlled substances.

Therefore, the DEA estimates the physical security requirements of this proposed rule will impose

nominal cost to pharmacies and hosp itals/clinics

.

Practitioner s

The physical security requirements for schedule II controlled substances are the same as the physical

security requirements for schedule III controlled substances for practitioners . Therefore, the DEA

estimates the physical se curity requirements of this proposed rule will impose nominal cost to

practitioners

.

Mid

- level Practitioners

The physical security requirements for schedule II controlled substances are the same as the physical

security requirements for schedule III contro lled substances for mid

- level practitioners. Therefore, the

DEA estimates the physical security requirements of this proposed rule will impose nominal cost to mid

level practitioners.

3.3.3 Costs A ssociated with Labeling and P ackaging R equirements

DEA l abeling and packaging requirements are the same for schedule II controlled substances as

schedule III narcotic controlled substances. 21 CFR part 1302. Under the proposed rule, t he printed label

would need to be changed to indicate the HCPs ’ status as a schedule II controlled substance. For

example, the printed label would need to change from “C

- III” to “C

- II.” The DEA assumes that the

activity of manufacturers making labeling changes is routine and in their normal course of business . T he

DEA therefore assumes that the cost of making this change is nominal. Correspondingly , the DEA

23 Institutional practitioner means a hospital or other person (other than an individual) licensed, registered, or otherwise permitted, by the United States or the jurisdiction in which it practices, to dispense a controlled substance in the course of professional practice, but does not include a pharmacy.



## 20

### estimates that the cost of the labeling and packaging requirements of this proposed rule is nominal

.

3.3.4 Costs A ssociated with Q uota R equirements

Manufacturers of schedule II controlled substances are required to apply for a procurement quota

using DEA Form 250. I f finalized, manufacturers of HCPs would need to apply for a procurement quota

annually. 24 

### A ll quota applications currently are received online where much of the information is

automatically generated for each particular registrant

. Therefore, the DEA assumes procurement quota

applications can be completed by manufacturers of HCPs in their normal course of business at nominal

cost. Additionally, the DEA assumes that manufactu rers of HCPs are aware of their quota need for

hydrocodone; therefore, estimat ing procurement quota would be in the normal course of business.

Therefore, the DEA estimates that the cost of the quota requirements of this proposed rule is n o minal

.

3.3.5 Costs A ss ociated with R ecordkeeping and R e porting R equirements

Initial and biennial inventories are required for all schedule II

- V controlled substances pursuant to 21

U.S.C. 827, 958 and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11(c). If this rule is

promulgated, inventory requirements would not change, except dispensers, researchers, and reverse

distributors would be required to take an exact inventory of HCPs (at the next biennial inventory)

, as

compared to the current ability to estimate schedule II I controlled substance inventories in containers that

hold less than 1,000 tablets or capsules. 25 

### 21 CFR 1304.11. Likewise, all DEA registrants would be

required to maintain records with respect to HCPs, pursuant to 21 U.S.C. 827, 958, and in accordance

w ith 21 CFR parts 1304, 1307, and 1312. Manufacturers, distributors, and reverse distributors would

continue to be required to submit reports to the Automation of Reports and Consolidated Order System

(ARCOS) pursuant to 21 U.S.C. 827 and in accordance wit h 21 CFR 1304.33.

In association with HCPs ’ status as a schedule III narcotic controlled substance, handlers of HCPs are

24 Bulk hydrocodone is currently a schedule II controlled substance; thus, bulk hydrocodone manufacturers wo uld not be affected by this rule or the manufacturing quota requirements.

25 The DEA notes that many States may require exact counts for schedule III controlled substances.



## 21

### already conducting inventories and maintaining records accordingly

. Correspondingly, t he DEA assumes

that handlers of HCPs can conduct the initial inventory, maintain inventories and records separately from

all other records

, and preserve the DEA Forms 222 from all other records at nominal cost.

The DEA estimates that the cost of the records and reports requirements of this proposed ru le is

nominal

.

3.3.6 Costs A ssociated with O rdering R equirements

Either a DEA Form 222 or its electronic equivalent as set forth in sub part C of 21 CFR parts 1305 and

1311 is required for each distribution of a schedule I or II controlled substance. 26 

### If the pro posed rule is

finalized, all handlers of HCPs will need to use DEA Form 222 to acquire HCPs. This includes

manufacturers, distributors, exporters, pharmacies, practitioners, mid

- level practitioners, and

hospitals/clinics. The DEA Form 222 is provided by the DEA at no cost to the registrant. DEA Form

222 can be requested on DEA’s web site or by contacting the local DEA office . The registrant receives

the maximum number of order form books allowed for the business activity.

As d etermined based on the fig ures in table 3, 96% ((1,478, 713

- 65, 330 ) / 1,478, 713 ) of handlers of

HCPs are already registered to handle schedule II controlled substances. The DEA assumes that these

registrants are already using DEA Form 222 or the electronic equivalent. If this pr oposed rule is

finalized, HCPs would represent additional line items o n the form. The DEA assumes that handlers of

HCPs can make additional HCP entries at nominal cost. H andlers of HCPs that are not registered for

schedule II controlled substances would need to start using DEA Form 222 to order HCPs. The DEA

assumes that the cost of using the DEA Form 222 is nominal.

Therefore, the DEA estimates that the cost of the ordering requirements of this proposed rule is

nominal

.

26 Except in certain circumstances described in 21 CFR 1305.02.



## 22

### 3.3.7 Costs A ssociated with P rescript ion R equirements

There are several key differences in prescription requirements between schedule II and III controlled

substances

. Prescriptions for schedule II controlled substances must be issue d on paper or electronic ally

,

whereas, orally issued prescr iptions (i.e.

, call

- in prescriptions) or facsimile copies are allowed for

schedule III controlled substances. Refills for schedule II controlled substances are prohibited, whereas

refills up to six months are allowed for schedule III controlled substances

. A practitioner or mid

- level

practitioner may issue multiple prescriptions authorizing the patient to be dispensed a total of up to a 90

-

day supply of a schedule II controlled substances in accordance with 21 CFR 1306.12. Finally, the

prescribing practi tioner or mid

- level practitioner must be authorized by the jurisdiction in which they

practice and registered with the DEA to prescribe schedule II controlled substances.

For practitioners and mid

- level practitioners, t he DEA assumes that there is nominal time and cost

difference s between issuing written, elec tronic

, facsimile

, and oral (call

- in ) prescription s

. For

pharmacies, the DEA assumes that there is nominal time and cost differences between filling written,

electronic, facsimile , and call

- in prescri ption s

.

If the proposed rule is finalized, prescription refills for HCPs will be prohibited. However, as

discussed, multiple prescriptions may be issued for up to a 90

- day supply , and a single prescription may

provide treatment for any length of time

. A prescription for a controlled substance to be effective must be

issued for a legitimate medical purpose by an individual practitioner acting in the usual course of

professional practice

. 21 CFR 1306.04. P ractitioners and mid

- level practitioners must dete rmine on their

own
, based on sound medical judgment and in accordance with established medical standards, whether it

is appropriate to issue multiple prescriptions and how often to see their patients

. T his rule will not

require a patient visit each time a prescription is issued for HCPs when it is issued for a legitimate

medical purpose by an individual practitioner acting in the usual course of professional practice.

Therefore, the DEA estimates that this rule will not require an increase in the number o f patient

- doctor

visits; and therefore, any cost associated with prescription requirements is nominal.



## 23

### Finally, if the proposed rule is finalized, the prescribing practitioner or mid

- level practitioner must be

registered to handle schedule II controlled su bstance s . As described in section 3.3 .1, the DEA estimates

the cost to modify a registration from schedule III to schedule II is nominal. Therefore, the DEA

estimates that the cost of the prescription requirements of this proposed rule is nominal

.

3.3.8 Costs A ssociated with D isposal R equirements

The disposal of controlled substances by registrants is generally performed by procuring the services

of a reverse distributor. Distribution of schedule II controlled substances to reverse distributor s requires

the us e of DEA Form 222. If the proposed rule is finalized

, the transfer of HCPs to reverse distributors

for disposal will require the use of the DEA Form 222. As discussed in section 3.3 .6, the DEA assumes

that the cost of using the DEA Form 222 is nominal. Therefore, the DEA estimates that the cost of the

disposal requirements of this proposed rule is nominal

.

3.3.9 Cost Summary

In summary, the DEA estimates that any economic impact of this proposed rule would be due to the

change in physical security requirements from schedule III to schedule II controlled substances for

manufacturers, distributors, and exporters. As described in section 3.3 .2, anticipated expansion of secure

storage area is estimated to cost $ 7,024 ,500 for all affected manufacture r s and exporter s combined and

$ 41 ,850,000 for all affected distributors.

The total economic impact of this rule is a one

- time cost of $ 48,874 ,500 ($ 7,024 ,500 for affected

manufacturers and exporters + $ 41 ,850,000 for all affected distributors ). Adding results from tab les 5

and 7, t he annualized cost over 20 years is $ 4,613,407 ($ 663,063 annualized cost of physical security

requirements for manufactures and exports + $ 3,950,344 annualized cost of physical security

requirements for distributors ) and $ 3,285,134 ($ 472,157 + 2,812,944 ) at 7% interest and 3% interest,

respectively. Conservatively

, using the 7% r a te , the DEA estimates the annual economic impact of the

proposed rule to be $ 4,613,407

.



## 24

### 3.4 I MPACT ON 

### S MALL 

### E NTITIES



### To comply with the RFA, the DEA conducted a prelimin ary analysis to determine whether

, if

promulgated, the rule will have a significant economic impact on a substantial number of small entities.

3.4.1 Criteria for “Significant” Economic Impact

When there are no special considerations for “significant economic imp act” or criteria prescribed by

external sources, the DEA uses one of two general criteria, either a revenue

- based criterion or a profit

based criterion

. T able 8 summarizes the general criteria for “ s ignificant” economic impact

.

Whereas t he revenue

- based c riteria are widely used, the profit

- based criteria can be used for some

high

- profit industries. 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 business.

Table 8 . 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

Profit

- based <5% of annual profit Not significant economic impact

5% or more of annual profit Significant economic impact



### 3.4.2 Analysis

Since the DEA does not collect revenue information on its registrants, t o estimate the number of

entities “significantly” impacted by the proposed rule, the DEA relied on publicly available information.

For manufacturers and exporters

, the DEA estimated the annual revenue for e ach of the 79 affected

entit ies, as described in section 3.3 .2. To determine the number of manufacturers and exporters with

economic impact greater than 1% of annual revenue, the DEA compared the revenue level at which

annualized cost of $ 1,841 , $ 16,991

, or $ 155,748 would be 1% of annual revenue. The smallest 85% of

manufacturers and exporters would be significantly impacted if their annual revenue were less than



## 25

### $ 184,100 , the next group of 10% of manufacturers and exporters if less than $ 1,699,100 , and l argest 5% if

annual revenue were less than $ 15,574,800 . Based on this analysis, the DEA determined that one of the

affected manufacturers would be significantly affected by this rule.

For distributors

, the revenue profile from the 2007 Economic Census for each NAICS code associated

with the affected entities was used to determine the number of affected businesses with impact greater

than 1% of annual revenue

. U sing the revenue profile from the 2007 Economic Census, the DEA

estimated the percentage of busi nesses where the cost of the rule is 1% or more than the annual revenue.

This percentage was then applied to the affected registrants to determine the number of registrant s with

economic impact greater than 1% of annual revenue.

For example, NAICS code “ 4 24210

– Drugs and druggists' sundries merchant wholesalers ” would

incur a n annual cost of $ 1,841 . The revenue l evel that corresponds to $ 1,841 as 1% of annual revenue is

$ 184,100 . Using the revenue profile for NAICS code 424210 from the 2007 Economic Censu s, the DEA

determine d the number of b usiness es with annual revenue less than $ 184,100

. Taking into consideration

that the $ 1,841 cost applies to the smallest 85% and $ 16,991 applies to the next 10%, and $ 155,748

applies to the remaining 5%, the “Revenue w here cost is 1%” is adjusted accordingly.

The revenue profil e indicates that there are 909 f irms in the “424210

– Drugs and druggists' sundries

merchant wholesalers” category with annual revenue less than $250 ,000. Applying the earlier discussed

estimate th at only 50% of the a ffected entities would require expansion of storage space, only 455 firms

with annual revenue less than $250,000 will have a cost impact. Using linear interpolation, 74 %

($ 184,100 /$250,000) of 455 firms, or 335 firms, are estimated to have annual revenue below $ 184,100

.

Therefore, the cost of the rule will be 1% or more of annual revenue for 335 of 5,430 businesses in the

“ 424210

– Drugs and druggists' sundries merchant wholesalers” category. Table 9 contains the revenue

profile for the “424210

– Drugs and druggists' sundries merchant wholesalers” category and summary of

analysis conducted.

This calculation was repeated for all NAICS codes associated with all affected r egistrations. Two

thousand eight

- seven ( 7.6 %) of all 27,401 firms, sel f

- identified with NAICS codes expected to be used by



## 26

### the DEA distributor registrants, are estimated to have an impact greater than 1% of annual revenue.

Appendix B contains the complete revenue profile and analysis for all distributor related NAICS codes.

Table 10 summarizes the results.

T able 9 . Revenue Profile for the “424210

– Drugs and druggists' sundries merchant wholesalers” category and Summary of Analysis Conducted

2007

NAICS

code 2007 NAICS

code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adjustedfor large, medium,and small storageexpansionrequirementRevenue where costis 1%($)#of Firms withRevenue below 1%Threshold

424 210 Drugs and druggists'

sundries

merchant

wholesalers All firms 6,261 3,131 Firms operated for the entire

year 5,430 2,715 Firms operated entire year with sales/receipts/revenue less than $250,000 909 455 455 184,100 335 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 626 313 313 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 744 372 372 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,059 530 530 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 651 326 326 184,100 0

Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 505 253 253 184,100 0

Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 425 213 60 184,100 0

153 1,699,100 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 193 97 97 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 114 57 23 1,699,100 0

34 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 204 102 102 15,574,800 0 Firms not operated for the entire year 831 416



## 27

### Based o n the revenue profile analysis discussed above , the DEA estimates that 7.6 % of 706 , or 54

,

distributors will have impact greater than 1% of revenue. Since 683 of 706 are estimated to be small

businesses, assuming all 54 are small businesses, 7.9 % ( 54 of 6 83 ) of affected small distributors are

expected to have significant impact. None of the other business activities are estimated to incur costs

greater than 1% of annual revenue as a result of this proposed rule. Overall, 55 (1 manufacturer and 54

distrib utors) of 366, 35 1 total affected small entities is 0. 015 %.

Table 10 . General Criteria for "Significant" Economic Impact

Registrant Categories and NAICS Code Titles NAICS Codes Represented by DEA Registrants Total # of Business by

NAICS

Code* # of Firms w/

Revenue below

Threshold % of

Business

Groups

below

Threshold

Distributors

Drugs and Druggists’ Sundries Merchant

Wholesalers 424210 5,430 335 General Line Grocery Merchant Wholesalers 424410 1 ,842 72 Confectionery Merc hant Wholesalers 424450 1,544 106

Other Chemical and Allied Products Merchant

Wholesalers 424690 5,948 326

Tobacco and Tobacco Product Merchant

Wholesalers 424940 1,053 21

Other M i sc. Nondurable Good Merchant

Wholesalers 424990 10,043 1,083 Packagi ng and Labeling Services 561910 1,541 144

Distributors Summary 27,401 2,087 7.6



### 3.4.3 Criteria for “Substantial ” Number

When there are no special considerations for “substantial number” or criteria prescribed by external

sources, the DEA uses a general crit eria based on percentage. Table 11 lists the general criteria for

“substantial” number.

For the purposes of this analysis, a “substantial number” is defined as greater than 30%.

As estimated above, 55 of 366, 35 1 (0. 015 %) affected small businesses would ex perience significant

economic impact if the proposed rule were finalized, far below the 30% criteria for all registrant

categories.



## 28

### The DEA estimates that a higher percentage ( 7.9 %) of small businesses in the distributor category

will experience a signific ant economic impact than the overall percentage (0. 015 %) of all small

businesses affected by the proposed rule. However, the 7.9 % is far less than the 30% criteria, and is not a

substantial number.

Table 11 . General Criteria for "Substantial" Number

Criteria Result

<10% of small businesses Not substantial number

10% to 30% of small businesses Possible substantial number

>30% of small businesses Substantial number



### 3.5 E XAMINATION OF 

### I NDUSTRY 

### S EGMENTS WITH 

### S IGNIFICANT 

### E CONOMIC 

### I MP ACTS



### No industry segment is estimated to experience significant economic impact. The number of small

businesses that are estimated to experience significant economic impact is less than the criteria for a

“substantial number.”



## 4. ECONOMIC ANALYSIS RE SULTS

4.1 E XECUTIVE 

### O RDERS 

### 12866 AND 

### 13563

The estimated annual impac t of this rule is $ 4,613,407 ; thus, this rule will not have an annual effect

on the economy of $100 million or more and is therefore not economically significant.

4.2 R EGULATORY 

### F LEXIBILITY 

### A CT



### In acco rdance with the RFA, the DEA evaluated the impact of this proposed rule on small entities.

The DEA estimates that 376, 189 entities are affected by this rule, of which 366, 35 1 are small entities.

Specifically, the DEA examined the registration, storage, i nventory and recordkeeping, and disposal

requirements for the 366, 35 1 small entities estimated to be affected by the proposed rule, 50

manufacturers, 4 exporters, 683 distribu tors, 50,774 pharmacies, and 314,840 entities that employ



## 29

### practitioners

, mid

- leve l practitioners , or hold hospital/clinic registrations

. 27 

### Based on the DEA’s

understanding of its registrants’ ope rations and facilities and research, the DEA estimates that 50% of

small manufacturers, distributors, and exporters requiring small expansions will incur an annualized cost

of $ 1,841 for small storage expansion. The DEA estimates the cost impacts associated with this proposed

action on the remaining 50% of manufacturers , distributors, and exporters

, as well as on all practitioners,

mid

- level pr actitioners, and hospitals/clinics will be de minimis

. The DEA estimates there will be

significant economic impact on 1 (2%) of 50 small business manufacturers and 54 ( 7.9 %) of 683 of small

business distributors . None of the 5 exporters , 50,774 pharmacie s, or 314,840 practitioners/mid

- level

practitioners/hospitals/clinics are anticipated to be significantly impacted by this rule. Fifty

- five of the

366, 35 1 (0. 015 %) affected small entities are estimated to experience significant impacted, (i.e., incur

cost s greater than 1% of annual revenue ) if the proposed rule were finalized. The percentage of small

entities with significant economic impact is below the 30% threshold for all registrant business activities

.

The DEA’s assessment of economic impact by size category indicates that the proposed rule will not have

a significant effect on a substantial number of these small entities.

4.3 U NFUNDED 

### M ANDATES 

### R EFORM 

### A CT OF 

### 1995

The estimated annual impact of this rul e is $ 4,613,407 , thus t his action would not result in any

Federal mandate that may result in “the expenditure by State, local, and tribal governments, in the

aggregate, or by the private sector, of $100 million or more (adjusted for inflation) in any one year ***. ”

4.4 C ONGRESSIONAL 

### R EVIEW 

### A CT OF 

### 1995

The estim ated annual impact of this rule is $ 4,613,407 ; thus

, the rule will not have an annual effect on

the economy of $100 million or more.

27 The practitioner an d mid

- level practitioners primarily work in various physician and health care specialist offices as well as hospitals and clinics. The numbers represent the estimated number of businesses for which the registrants work.



## 30

## APPENDIX A : REGISTRANT LANDSCAPE

The results of the analysis are summarized in the table below and detailed in the foll owing sections.

Table A 1

. DEA registrants who are Small Entities

Registrant Business Activity # of Registrations Est. # . of Entities Represented by DEA Registrants Entity

- to

Registra tion

Ratio # of Entities

Below SBA

Size Standards % Small

Entities

Man ufacturer 544 544 1.00 533 97.9 Distributor/Importer/Exporter 1,481 1,481 1.00 1,433 96.7 Pharmacy 69,404 51,248 0.74 50,517 98.6

Other * 1,414,596 328,286 0.23 319,105 97.2

Total 1,486,025 381,559 371,588 97.4

Note: The number of DEA registrations c hanges daily and the number of registrations in table 1 in the main body of the

document can vary from the number of registrations in table A1 used to determine the entity

- to

- registration ratio. However, the analysis contained in appendix A is updated at least annually and any difference in the number of registrations between table 1 and table A1 has nominal impact on the entity

- to

- registration ratio.

* Because individual practitioners and mid

- level practitioners primarily work in various physician and hea lth care specialist offices as well as hospitals and clinics, this analysis groups individual practitioners, mid

- level practitioners, and hospitals/clinics,

as “other.”



### DEA Registrant Population by Business Activity

As of June 2013 , the date of the cu rrent update of the entity

- to

- registration ratio , there were 1,486,025

controlled substances registrants as shown in table A2

.

Table A2

. Number of Registrants by Business Activity

Registrant Business Activity Controlled Substances Pharmacy 69,404 Hospit al/Clinic 15

, 899

Practitioner 1

, 156

, 879 Teaching Institution 318

Mid

- Level Practitioner 22

, 826

Researcher/Canine Handler 9

, 739 Analytical Lab 1

, 518 Narcotic Treatment Program 1

, 317

Distributor 954

Reverse Distributor 60 Importer 223 Exporter 244

Manufacturer 544

Total 1,486,025

Source: DEA, June 2013.

Note: The number of DEA r egistrations fluctuates daily and the number of DEA registrations at the time of the analysis can vary slightly from the number of DEA registrations contained in this ta ble. However, the base analysis contained in this section is updated at least annually and any difference in the number of DEA registrations between the time of the analysis and the numb er of DEA registrations contained in this table has minimal impact on the overall results.



## 31

### Corresponding N umber of Businesses

Most DEA registrants are small entities or employed by small entities as defined by the RFA. The

RFA defines a “small entity” as a “small business” (5 U.S.C. 601(3)), a “small organization” (5 U.S.C.

601(4)), or a “small governmental jurisdiction” (5 U.S.C. 601(5)). Pursuant to the RFA, the term “small

business” has the same meaning as the term “small business concern” under section 3 of the Small

Business Act (SBA) . The SBA designates a “smal l

- business concern,” as one which is independently

owned and operated and is not dominant in its field of operation. 15 U.S.C. 632(a)(1). Furthermore, the

SBA defines whether a business entity is small by size standards. These size standards have been

e stablished based on the types of economic activity or industry under NAICS. The SBA sets the

maximum size standard s

— in millions of dollars or number of employees

— allowed for concerns and their

affiliates to be designated small.

The RFA requirements and SB A size standards apply to entities and businesses

. Because the DEA

does not

, in the general course of business

, collect information regarding associated or parent

organizations holding multiple registrations

, the DEA has associated the number of registran ts to a

corresponding number of businesses. The DEA registrations are held by businesses such as

manufacturers, distributors, and pharmacies as well as individuals such as practitioners and mid

- level

practitioners. Additionally, many businesses hold more than one registration in situations where a single

business has more than one location or more than one business activity. Therefore, the DEA related the

approximately 1.5 million DEA registrations to the number of businesses, as described below. First, since

the SBA size standards are organized by NAICS codes, the approximately 1.5 million affected

registra tions are organized by NAICS codes. Because the DEA does not collect NAICS code information

from its registrants, the DEA reviewed all NAICS codes 28 

### and developed a table that relates various

registrant groups to NAICS codes. Table A3 lists the DEA registrant categories with NAICS titles and

28 www.census.gov/eos/www/naics/.



## 32

### codes. Second, using 2007 Economic Census data, the DEA determined the number of businesses for

each NAICS cod e. See table A4.



## 33Table A3

. DEA Registrant Categories and Corresponding Estimated NAICS Codes

Registrant Categories and NAICS Code Titles

Titles # of DEA Registrations NAICS Codes Represented by DEA Registrations

Manufacturers

544 Petrochemical Manuf acturing 325110

Medicinal and Botanical Manufacturing 325411

Pharmaceutical Preparation Manufacturing 325412

Adhesive Manufacturing 325520

Toilet Preparation Manufacturing 325620

All Other Msc. Chemical Product and Preparation Manufacturing 325998

Distributors/Importers/Exporter s

1,481 424210

Drugs and Druggists’ Sundries Merchant Wholesalers 424410

General Line Grocery Merchant Wholesalers 424450

Confectionary Merchant Wholesalers 424690

Tobacco and Tobacco Product Merchant Whol esalers 424940

Other Msc. Nondurable Goods Merchant Wholesalers 424990

Packaging and Labeling Services 651910

Pharmacies

69,404 Supermarkets and Other Grocery (except Convenience)

Stores 445110

Pharmacies and Drug Stores 446110

Discount De partment Stores 452112

Warehouse Clubs and Superstores 452910

Others

1,414,596 Colleges, Universities and Professional Schools 611310

Offices of Physicians (except Mental Health Specialists) 621111

Offices of Physicians, Mental Health Special ists 621112

Offices of Dentists 621210

Offices of Optometrists 621320

Offices of Podiatrists 621391

Offices of All Other Msc. Health Practitioners 621399

Outpatient Mental Health and Substance Abuse Centers 621420

HMO Medical Centers 621 491

General Medical and Surgical Hsps. 622110

Psychiatric and Substance Abuse Hsps. 622210

Specialty (except Psychiatric and Substance Abuse) Hsps. 622310

Testing Laboratories 541380

Total Controlled Substance Registrants 1,486,025



## 34Table A 4

. Number of Businesses by NAICS Codes

Source: 2007 Economic Census

, 

## www.census.gov/econ/census07

.

* Manufacturer data is in number of establishments while all other sectors are in number of firms. A firm may have

more than one establishment. Based on sectors with both firm and establishment data, the number of establishments are similar to the number of firms. The term “firm” used in the source data is used synonymously with “business” for the purposes of this analysis. Registrant Categories and NAICS Code

Titles Number of

DEA
Registrations NAICS Codes
Represented
by DEA

Registrants Total

Number of

Businesses
by NAICS

Code*

Manufacturers 544
Petrochemical Manufacturing 325110 56
Medicinal and Botanical Manufacturing 325411 410

Pharmaceutical Preparation Manufacturing 325412 991

Adhesive Manufacturing 325520 600
Toilet Preparation Manufacturing 325620 854

All Other Miscellaneous Chemical Product
and Preparation Manufacturing 325998 1,261
Manufacturer Summary 4,172
Distributors/Importers/Exporters 1,481
Drugs and Druggists’ Sundries Merchant

Wholesalers 424210 5,430
General Line Grocery Merchant

Wholesalers 424410 1,842
Confectionery Merchant Wholesalers 424450 1,544

Other Chemical and Allied Products

Merchant Wholesalers 424690 5,948

Tobacco and Tobacco Product Merchant

Wholesalers 424940 1,053

Other Miscellaneous Nondurable Goods

Merchant Wholesalers 424990 10,043
Packaging and Labeling Services 561910 1,541 Distributors/Importers/Exporters

Summary 27,401

Pharmacies 69,404
Supermarkets and Other Grocery (except
Convenience) Stores 445110 34,009
Pharmacies and Drug Stores 446110 17,217

Discount Department Stores 452112 11
Warehouse Clubs and Superstores 452910 11
Pharmacies Summary 51,248

Others 1,414,596
Colleges, Universities and Professional

Schools 611310 2,149
Offices of Physicians (except Mental Health
Specialists) 621111 160,034
Offices of Physicians, Mental Health
Specialists 621112 9,075

Offices of Dentists 621210 111,013
Offices of Optometrists 621320 16,659

Offices of Podiatrists 621391 7,566

Offices of All Other Miscellaneous Health

Practitioners 621399 9,094
Outpatient Mental Health and Substance

Abuse Centers 621420 4,113

HMO Medical Centers 621491 30
General Medical and Surgical Hospitals 622110 3,051
Psychiatric and Substance Abuse Hospitals 622210 423
Specialty (except Psychiatric and Substance
Abuse) Hospitals 622310 352
Testing Laboratories 541380 4,727
Others Summary 328,286
Total Controlled Substance Registrants 1,486,025Category 1Category 2



## 35

### There are many more business es under the m anufacturers and distributors/importers/e xporter s NAICS

codes than the number of DEA registrations that fall within these NAICS c odes. There are 544 and 1,481

manufacturer and distributor/importer/e xporter registrants, respectively, while th e numbers of businesses

for these NAICS codes are 4,172 and 27,401, respectively. Meanwhile, the number of busin esses under

pharmacies and o ther (remaining) NAICS codes are far fewer than the number of DEA registrants that fall

within these business activ ities. There are 69,404 and 1,414,596 pharmacies and o ther registrants,

respectively, while the numbers of establishments for the corresponding NAICS codes are only 51,248

and 328,286, respectively. Therefore, the DEA broadly classified regi strants in tw o categories:

• C ategory 1: R egistrants in industries where very few businesses in the industry are registrants; and

• Category 2: R egistrants in industries where most businesses in the industry are registrants.

As shown in table A4, o nly a small fracti on of manufacturers, distributors, and importers/e xporters

are DEA registrants

— 2,025 (544 + 1,481) of 31,573 (4,172 + 27,401) , while nearly all pharmacies,

hospitals/clinics, offices of physicians , etc., are registrants, employ registrants, or may represen t multiple

registrations, such as several practi ti oners and/or m id

- level practitioners working in the same office or

hospital. Therefore, while recognizing that DEA registrants with manufacturer, distributor, or

importer/e xporter registrations can also ha ve more than one registration, the DEA estimates a 1

- to

- 1 ratio

and that 544 manufacturer and 1,481 distributor, importer/e xporter registrations roughly equate to 544

and 1,481 businesses, re spectively, for registrants in c ategory 1.

For registrants in c ategory 2 (p harmacies, hospitals/c linics, o ffices of physicians , etc. ), nearly all

businesses counted by the NAICS codes are expected to be or to hire DEA registrants. Therefore, the

number of businesses in these NAICS codes is used as an estimate for the number of busines ses that are

in the pharmacies and o ther registrant categories. The DEA estimates that 69,404 p harmacy registrations

rou ghly equate to 51,248 businesses resulting in a 0 .74

- to

- 1 business

- to

- registration ratio, and 1,414,596

remaining o th er registrat ions roughly equate to 328,286 businesses resulting in a 0.23

- to

- 1 business

- to

registration ratio . In total, the DEA estimates that the nearly 1.5 million DEA registrants represent



## 36

### approximately 381,559 businesses. See table A5

. The DEA reco gnizes that this estimate is not precise,

but instead provides understanding of orders of magnitude.

Number of Affected Businesses that Are Small Businesses

After estimating that approximately 1.5 million DEA registrants represent 381,559 businesses, the

D EA then determined how many of the estimated 381,559 businesses represented by DEA registrants are

small businesses based on the SBA size standards. Because the DEA does not collect data on company

size of its registrants, it used 2007 Economic Census dat a to make this determination. The Economic

Census provides the number of businesses by annual revenue ranges as well as the number of businesses

by number of employee ranges by NAICS codes. This data was compared to the SBA size standards for

each NAICS code to determine the number of businesses that are small businesses for each NAICS code.

See table A 6

.

The DEA determined that 97.9% of m anufacturers and 96.7% of distributors/importers/e xporters

by NAICSs are small businesses. These percentages were applied to the total affected businesses (544

manufacturers and 1,481 d istributors), resultin g in number of businesses (533 manufacturers and 1,433

d istributors) estimated to be small businesses. The estimate for c ategory 2 registrants/businesses that are

small businesses is derived directly from the 2007 Economic Census. 98.6% (50,517 of 51,248) of

pharmacies and 97.2% (319,105 of 328,286) of other businesses are estimated to be small businesses.

Combining the results of manufacturers, distributors/impo rters/exporters, pharmacies, and other, the DEA

estimates 371,588 of the 381,559 (97.4%) businesses that represent the registrant population are

considered “small entities” in accordance with the RFA and SBA standards, 5 U.S.C. 601(6) and 15

U.S.C. 632. A gain, the DEA recognizes that its estimate is not precise, but instead provides

understanding of orders of magnitude, so that the DEA can assess whether or not the number of

significantly impacted businesses constitute a substantial number of small busines ses.



## 37Table A5 : Number of Businesses Represented by DEA Controlled Substances Registrants

Registrant Categories and NAICS Code

Titles Number of

DEA Registrations NAICS

Codes
Represented

by DEA Registrants Total

Number of

Businesses by NAICS

Code* Estimated

Number of

Businesses
Represented

by DEA Registrants

Manufacturers 544 544
Petrochemical Manufacturing 325110 56
Medicinal and Botanical Manufacturing 325411 410

Pharmaceutical Preparation Manufacturing 325412 991

Adhesive Manufacturing 325520 600
Toilet Preparation Manufacturing 325620 854

All Other Miscellaneous Chemical Product and
Preparation Manufacturing 325998 1,261
Manufacturers Summary 4,172

Distributors/Importers/Exporters 1,481 1,481
Drugs and Druggists’ Sundries Merchant

Wholesalers 424210 5,430
General Line Grocery Merchant Wholesalers 424410 1,842
Confectionery Merchant Wholesalers 424450 1,544

Other Chemical and Allied Products Merchant

Wholesalers 424690 5,948

Tobacco and Tobacco Product Merchant

Wholesalers 424940 1,053

Other Miscellaneous Nondurable Goods

Merchant Wholesalers 424990 10,043
Packaging and Labeling Services 561910 1,541

Distributors/Importers/Exporters Summary 27,401

Pharmacies 69,404 51,248
Supermarkets and Other Grocery (except
Convenience) Stores 445110 34,009
Pharmacies and Drug Stores 446110 17,217
Discount Department Stores 452112 11
Warehouse Clubs and Superstores 452910 11
Pharmacies Summary 51,248

Others 1,414,596 328,286

Colleges, Universities and Professional Schools 611310 2,149
Offices of Physicians (except Mental Health
Specialists) 621111 160,034

Offices of Physicians, Mental Health Specialists 621112 9,075

Offices of Dentists 621210 111,013
Offices of Optometrists 621320 16,659

Offices of Podiatrists 621391 7,566

Offices of All Other Miscellaneous Health

Practitioners 621399 9,094
Outpatient Mental Health and Substance Abuse

Centers 621420 4,113

HMO Medical Centers 621491 30
General Medical and Surgical Hospitals 622110 3,051
Psychiatric and Substance Abuse Hospitals 622210 423
Specialty (except Psychiatric and Substance
Abuse) Hospitals 622310 352
Testing Laboratories 541380 4,727
Others Summary 328,286
Total Controlled Substance Registrants 1,486,025 381,559Category 1Category 2



## 38Table A6. Number of Affected Businesses that Are Small Businesses

Source: 2007 Economic Census, www.census.gov/econ/census07 ; and 13 CFR 121.201.

* Manufact urer data is in number of establishments while all other sectors are in number of firms. A firm may have more than one establishment. The term “firm” used in the source data is used synonymously with “business” for the purposes of this analysis.

* *SB A size standards for manufacturers and distributor s /reverse d istributors are by number of employees, while size standard s for pharmacies and other s ( practitioner s / hospitals/clinics ) are by dollar amount of annual revenue.

* * * Number of establishments/firms data by number of employees/annual revenue is ava ilable in specific increments. When the SBA size standard/threshold is between increments, half of the number in the increment was used to estimate the number below the threshold. For example, the number of offices of d entists was available for various increments ; $4,999,999 and below is
110,410 and increment $5,000,000

- $ 9,999,999 is 448. Because the size standard is $7M, half of 448 (224) was estimated for $5,000,000

- $7,000,000 resulting in a total of 11 0,634

. Registrant Categories and NAICS Code

Titles Number of

DEA Registrations NAICS

Codes
Represented

by DEA Registrants Total

Number of

Businesses by NAICS

Code* Estimated

Number of

Businesses
Represented

by DEA Registrants SBA Size

Standards:

Number of
Employees or

Millions of

Dollars** Number of

Businesses

Below SBA

Size

Standard % of

Businesses

Below SBA

Size

Standard Note

Manufacturers 544 544 533
Petrochemical Manufacturing 325110 56 1,000 56
Medicinal and Botanical Manufacturing 325411 410 750 406 ***

Pharmaceutical Preparation Manufacturing 325412 991 750 943 ***
Adhesive Manufacturing 325520 600 500 600
Toilet Preparation Manufacturing 325620 854 500 828

All Other Miscellaneous Chemical Product and
Preparation Manufacturing 325998 1,261 500 1,253
Manufacturers Summary 4,172 4,086 97.9%

Distributors/Importers/Exporters 1,481 1,481 1,433
Drugs and Druggists’ Sundries Merchant

Wholesalers 424210 5,430 100 5,155
General Line Grocery Merchant Wholesalers 424410 1,842 100 1,739
Confectionery Merchant Wholesalers 424450 1,544 100 1,506

Other Chemical and Allied Products Merchant

Wholesalers 424690 5,948 100 5,824

Tobacco and Tobacco Product Merchant

Wholesalers 424940 1,053 100 978

Other Miscellaneous Nondurable Goods

Merchant Wholesalers 424990 10,043 100 9,926
Packaging and Labeling Services 561910 1,541 $7.0 1,381 ***

Distributors/Importers/Exporters Summary 27,401 26,509 96.7%

Pharmacies 69,404 51,248 50,517
Supermarkets and Other Grocery (except
Convenience) Stores 445110 34,009 $30.0 33,444 ***
Pharmacies and Drug Stores 446110 17,217 $25.5 17,069 ***
Discount Department Stores 452112 11 $27.0 3 ***
Warehouse Clubs and Superstores 452910 11 $27.0 1 ***
Pharmacies Summary 51,248 50,517 98.6%

Others 1,414,596 328,286 319,105

Colleges, Universities and Professional Schools 611310 2,149 $7.0 Not

Available
Offices of Physicians (except Mental Health
Specialists) 621111 160,034 $10.0 155,908

Offices of Physicians, Mental Health Specialists 621112 9,075 $10.0 9,056

Offices of Dentists 621210 111,013 $7.0 110,634 ***
Offices of Optometrists 621320 16,659 $7.0 16,611 ***

Offices of Podiatrists 621391 7,566 $7.0 7,556 ***

Offices of All Other Miscellaneous Health

Practitioners 621399 9,094 $7.0 9,070 ***
Outpatient Mental Health and Substance Abuse

Centers 621420 4,113 $10.0 3,826

HMO Medical Centers 621491 30 $10.0 17
General Medical and Surgical Hospitals 622110 3,051 $34.5 1,285 ***
Psychiatric and Substance Abuse Hospitals 622210 423 $34.5 334 ***
Specialty (except Psychiatric and Substance
Abuse) Hospitals 622310 352 $34.5 200 ***
Testing Laboratories 541380 4,727 $12.0 4,608 ***
Others Summary 328,286 319,105 97.2%
Total Controlled Substance Registrants 1,486,025 381,559 371,588Category 1Category 2



## 39

### APPENDIX B : BUSINESSES WITH IMPACT 1% OR MORE OF ANNUAL REVENUE

Table B contains the c omplete r evenue p rofile for d istributors a s well as the s ummary of a nalysis

c onducted

.

Table B

. Complete Revenue Profile for Distributors Based On 2007 NAICS Co des and Summary of Analysis Conducted

NAICS

code NAICS code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adj.forlarge, medium, andsmall storageexpansionrequirementRevenue where costis 1%($)Number of Firmswith Revenue below1% Threshold

424210 Drugs and druggists' sundries

merchant

wholesalers All firms 6,261 3,131

Firms operated for the entire year 5,430 2,715 Firms operated entire year with sales/receipts/revenue less than $250,000 909 455 455 184,100 335 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 626 313 313 184,100 0 Firms operated entire ye ar with sales/receipts/revenue of $500,000 to $999,999 744 372 372 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,059 530 530 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 651 326 326 184,100 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 505 253 253 184,100 0

Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 425 213 60 184,100 0

153 1,699,100 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 193 97 97 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 114 57 23 1,699,100 0

34 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 204 102 102 15,574,800 0 Firms not operated for the entire

year 831 416

424410 General line grocery merchant

wholesalers All firms 2,208 1,104

Firms operated for the entire year 1,842 921 Firms operated en tire year with sales/receipts/revenue less than $250,000 195 98 98 184,100 72 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 187 94 94 184,100 0



## 40NAICS

code NAICS code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adj.forlarge, medium, andsmall storageexpansionrequirementRevenue where costis 1%($)Number of Firmswith Revenue below1% Threshold

Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 243 122 122 184,100 0

424410 (cont.) General line grocery

merchant wholesalers (cont.) Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 3 65 183 183 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 273 137 137 184,100 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 1 88 94 94 184,100 0

Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 193 97 58 184,100 0

39 1,699,100 0 Firms operated entire year with

sales/rece ipts/revenue of $25,000,000 to $49,999,999 75 38 38 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 42 21 16 1,699,100 0

6 15,574,800 0

Fir ms operated entire year with sales/receipts/revenue of $100,000,000 or more 81 41 41 15,574,800 0 Firms not operated for the entire

year 366 183

424450 Confectionery

merchant wholesalers All firms 1,798 899

Firms operate d for the entire year 1,544 772 Firms operated entire year with sales/receipts/revenue less than $250,000 287 144 144 184,100 106 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 2 38 119 119 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 238 119 119 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 291 1 46 146 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 163 82 82 184,100 0

Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 132 6 6 48 184,100 0

19 1,699,100 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 91 46 46 1,699,100 0

Firms operated entire year with sales/receipts/r evenue of $25,000,000 to $49,999,999 46 23 13 1,699,100 0

10 15,574,800 0



## 41NAICS

code NAICS code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adj.forlarge, medium, andsmall storageexpansionrequirementRevenue where costis 1%($)Number of Firmswith Revenue below1% Threshold

Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 28 14 14 15,574,800 0 Firms oper ated entire year with sales/receipts/revenue of $100,000,000 or more 30 15 15 15,574,800 0 Firms not operated for the entire

year 254 127

424690 Other chemical and allied products

merchant wholesalers All firms 6,527 3,264

Firms operated for the entire year 5,948 2,974 Firms operated entire year with sales/receipts/revenue less than $250,000 886 443 443 184,100 326

424690 (cont.) Other chemical and allied products

merchant whole salers Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 706 353 353 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 894 447 447 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,164 582 582 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 771 386 386 184,100 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 562 281 281 184,100 0

Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 494 247 37 184,100 0

211 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 220 110 87 1,699,100 0

24 15,574,800 0 Firms operated entire year with

sales/recei pts/revenue of $50,000,000 to $99,999,999 101 51 51 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 150 75 75 15,574,800 0

Firms not operated for the entire

year 579 290

424940 Tobacco and tobacco product merchant

wholesalers All firms 1,135 568

Firms operated for the entire year 1,053 527 Firms operated entire year with sales/receipts/revenue less than $250,000 56 28 28 184,100 21 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 55 28 28 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 74 37 37 184,100 0



## 42NAICS

code NAICS code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adj.forlarge, medium, andsmall storageexpansionrequirementRevenue where costis 1%($)Number of Firmswith Revenue below1% Threshold

Fir ms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 139 70 70 184,100 0 Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 118 59 59 184,100 0

Fir ms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 159 80 80 184,100 0 Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 181 91 91 184,100 0

F irms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 99 50 50 184,100 0

Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 81 41 7 184,100 0

34 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 91 46 20 1,699,100 0

26 15,574,800 0

Firms not operated for the entire

year 82 41

42 4990 Other miscellaneous nondurable goods

merchant wholesalers All firms 12,118 6,059

Firms operated for the entire year 10,043 5,022 Firms operated entire year with sales/receipts/revenue less than $250,000 2,941 1,471 1,471 184,100 1,083 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 1,807 904 904 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 1,736 868 868 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 1,732 866 866 184,100 0

Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 827 414 161 184,100 0

253 1,699,100 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 447 224 224 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $ 10,000,000 to $24,999,999 348 174 26 1,699,100 0

149 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999,999 112 56 56 15,574,800 0 Firms operated enti re year with sales/receipts/revenue of $50,000,000 to $99,999,999 54 27 27 15,574,800 0



## 43NAICS

code NAICS code description Revenue size of firms operated entire year#of firmsAdjusted#of firmsfor 50%Distributor,Importer, Exporter#of firms adj.forlarge, medium, andsmall storageexpansionrequirementRevenue where costis 1%($)Number of Firmswith Revenue below1% Threshold

Firms operated entire year with sales/receipts/revenue of $100,000,000 or more 39 20 20 15,574,800 0 Firms not operated for the entire

year 2,075 1,038

561910 Packaging and labeling services All firms 1,809 905

Firms operated for the entire year 1,541 771 Firms operated entire year with sales/receipts/revenue less than $100,0 00 164 82 82 184,100 82 Firms operated entire year with sales/receipts/revenue of $100,000 to $249,999 221 111 111 184,100 62 Firms operated entire year with sales/receipts/revenue of $250,000 to $499,999 278 139 139 184,100 0 Firms operated entire year with sales/receipts/revenue of $500,000 to $999,999 247 124 124 184,100 0 Firms operated entire year with sales/receipts/revenue of $1,000,000 to $2,499,999 257 129 129 184,100 0

Firms operated entire year with sales/receipts/revenue of $2,500,000 to $4,999,999 161 81 71 184,100 0

10 1,699,100 0 Firms operated entire year with sales/receipts/revenue of $5,000,000 to $9,999,999 105 53 53 1,699,100 0

Firms operated entire year with sales/receipts/revenue of $10,000,000 to $24,999,999 74 37 15 15,574,800 0

22 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $25,000,000 to $49,999, 999 25 13 13 15,574,800 0 Firms operated entire year with sales/receipts/revenue of $50,000,000 to $99,999,999 6 3 3 15,574,800 0 Firms operated entire year with

sales/ receipts/revenue of $100,000,000 or more 3 2 2 1,699,100 0 Firms not operated for the entire

year 268 134

Total with impact greater than 1% of revenue 2,087



## 44