### ECONOMIC IMPACT ANALYSIS o f Proposed Rule on the Disposal of Controlled Substances, DEA
- 3 1 6

Drug Enforcement Administration U.S. Department of Justice December 2012

### Table of Contents

CHAPTER 1: OVERVIEW ................................ ................................ ................................ ................................ ...... 4 1.1 S TATUTORY A UTHORITY
................................ ................................ ................................ ................................ ......... 4 1.2 E XECUTIVE O RDERS 12866 AND 13563

................................ ................................ ................................ .................. 5 1.3 R EGULATORY F LEXIBILITY A CT
................................ ................................ ................................ ................................ . 6 1.4 P URPOSE
................................ ................................ ................................ ................................ ............................ 6 CHAPTER 2: REGISTRANT LANDSCAPE ................................ ................................ ................................ ................ 7 2.1 DEA R EGISTRANTS
................................ ................................ ................................ ................................ ............... 7 2.2 D ESCRIPTION OF S MALL E NTITIES A FFECTED
................................ ................................ ................................ .............. 8 2.2.1 Population Affected by Proposed Rule

................................ ................................ ................................ ... 9 2.2.2 Corresponding Number of Affected Businesses

................................ ................................ ..................... 9 2.2.3 Number of Affected Businesses that Are Small Businesses

................................ ................................ .. 15 CHAPTER 3: ALTERNATIVE REGISTRA NT AND NON
- REGISTRANT DISPOSAL METHODS CONSIDERED ............... 17 3.1 S COPE OF A NALYSIS
................................ ................................ ................................ ................................ ............ 17 3.2 N ON
- R EGISTRANT D ISPOSAL
................................ ................................ ................................ ................................ 18 3.2.1 Single Collection

................................ ................................ ................................ ................................ ... 19 3.2.2 Open Collection

................................ ................................ ................................ ................................ .... 20 3.2.3 Multiple Collection (Selected Methodology)

................................ ................................ ........................ 21 3.3 R EGISTRANT D ISPOSAL
................................ ................................ ................................ ................................ ........ 21 3.3.1 Retain Existing Regulations

................................ ................................ ................................ .................. 21 3.3.2 Establish Consistent National Standards ( Selected Methodology

)

................................ ...................... 22 3.4 R EVERS E D ISTRIBUTORS
................................ ................................ ................................ ................................ ....... 23 3.4.1 On

- site Requirement

................................ ................................ ................................ ............................ 23 3.4.2 Prompt Requirement

................................ ................................ ................................ ............................ 24 3.4.3 No Requirement

................................ ................................ ................................ ................................ ... 24 3.4.4 Fourteen Calendar Day Requirement

................................ ................................ ................................ ... 25 CHAPTER 4: ANTICIPATED ECONOMIC IMPACT OF PROPOSED R ULE ................................ ................................ 26 4.1 R EGISTRANT D ISPOSAL
................................ ................................ ................................ ................................ ........ 26 4.1.1 Impact on Registrants that Destroy Controlled Substances

................................ ................................ . 26 4.1.2 Impact on Reverse Distributors

................................ ................................ ................................ ............ 29 4.2 N ON
- R EGISTRANT D ISPOSAL
................................ ................................ ................................ ................................ 33 4.2.1 Impact on Collectors

................................ ................................ ................................ ............................ 33 4.2.2 Impact on Reverse Distributors and Distributors

................................ ................................ ................. 34 4.2.3 Impact on Law Enforcement Agencies

................................ ................................ ................................ . 35 4.3 R ETURN AND R ECALL
................................ ................................ ................................ ................................ .......... 36 4.4 D ESTRUCTION
................................ ................................ ................................ ................................ .................... 37 4.5 A NNUAL E CONOMIC E FFECT ON THE E CONOMY
................................ ................................ ................................ ....... 38 4.6 I MPACT ON S MALL E NTITIES
................................ ................................ ................................ ................................ . 40 CHAPTER 5: COST
- BENEFIT ANALYSIS OF PROPOSED REGULATORY ACTION ................................ ..................... 40 5.1 C OSTS OF THE P ROPOSED R ULE
................................ ................................ ................................ ............................. 40 5.2 B ENEFITS OF THE P ROPOSED R ULE
................................ ................................ ................................ ......................... 40 5.2.1 Prescription Drug Abuse Epid emic

................................ ................................ ................................ ....... 41 5.2.2 Monetary Costs of Prescription Drug Abuse

................................ ................................ ........................ 43 5.3 E VALUATION OF THE C OSTS AND B ENEFITS OF THE P ROPOSED R ULE ( THRESHOL D ANALYSIS )

................................ ............. 45 CHAPTER 6: CERTIFICATION STATEM ENTS ................................ ................................ ................................ ........ 47 6.1 E XECUTIVE O RDERS 12866 AND 13563

................................ ................................ ................................ ................ 473

6.2 R EGULATORY F LEXIBILITY A CT
................................ ................................ ................................ ............................... 474 

### CHAPTER 1: OVERVIEW

In DEA

- 3 1 6 , the notice of proposed rulemaking (NPRM) on the D isposal of C ontrolled
S ubstances, DEA proposes requirements to govern the secure disposal 1 of controlled substances by both DEA registrants and ultimate users. These regulations would implement the Secure and Responsible Drug Disposal Act of 2010 (Disposal Act) (Public Law 111

- 273 , 124 Stat. 2858 ) by providing ultimate users, persons lawfully entitled to dispose of ultimate user decedent’s property, and, in some circumstances, long term care facilities the following safe and convenient options to transfer controlled substances for the purpose of disposal : take back events, mail back
programs, and collection receptacles. This proposed rule also reorganizes and consolidates existing regulations on disposal, including the role of reverse distributors, and proposes a comprehensive regulatory framework for the collection and destruction of controll ed substances consistent with the Controlled Substances Act (CSA)

. 1.1 STATUTORY AUTHORITY On October 12, 2010, the Secure and Responsible Drug Disposal Act of 2010 (Disposal Act) was enacted (Pub. L. 111

- 273, 124 Stat. 2858). The Disposal Act amended the CS A to allow an ultimate user to “deliver” a controlled substance “to another person for the purpose of

1 The terms “disposal,” “dispose,” or “disposition” appear several times in the CSA and its implementing regulations, but these terms are not defined. For example, in the CSA, see 21 U.S.C. 822(g); 824(f) and (g); 826(c), (e), and (f); 827(a)(3) and (d)(1); 842(a)(7); 853(n); 880(a)(2); 881(e)(1); and 958(d)(6); and in the CFR, see 21 CFR 1307.21(b). The term “net disposal,” however, is define d at 21 CFR 1300.01(b). As used, the terms refer to a variety of activities that ultimately result in eliminating the availability of controlled substances for use. For example, within the meaning of the CSA, a controlled substance can be “disposed of” b y destruction, return, recall, sale, or through the manufacturing process. The Disposal Act allows an ultimate user to deliver a lawfully obtained controlled substance to another person “for the purpose of disposal.” DEA believes that the ultimate user d isposal authorized by the Disposal Act includes the transfer or delivery of controlled substances for purposes of destruction, return, and recall. Such ultimate user activities are consistent with the intent to remove unused, unwanted, tainted, and expire d substances from households and out of the reach of children and teenagers thereby reducing the risk of diversion and protecting the public health and safety. As used in this Notice of Proposed Rulemaking, DEA uses the terms “disposal” and “dispose” to r efer generally to the wide range of activities that result in controlled substances being unavailable for further use. When necessary to specify a particular activity within the disposal process, the particular activity is identified, e.g., transfer, deli ver, collect/collection, return, recall, destroy/destruction.5

disposal” if the person receiving the controlled substance is authorized to receive that substance and the disposal takes place in accordance with regulat ions issued by the Attorney General to prevent the diversion of controlled substances. 21 U.S.C. 822(g)(1). The Attorney General delegated responsibility for promulgating the Disposal Act implementing regulations to DEA. In addition to authorizing ulti mate users to deliver their controlled substances to another person for the purpose of disposal, the Disposal Act also authorized any person lawfully entitled to dispose of the ultimate user decedent’s property to deliver the ultimate user’s controlled
sub stance if the ultimate user dies while in lawful possession of the controlled substance. The Disposal Act also gave DEA the ability to authorize , by regulation, long term care facilities (LTCFs) to dispose of controlled substances on behalf of ultimate us ers who reside or have resided at the LTCF. Congress directed DEA, in promulgating the Disposal Act implementing regulations, to consider the public health and safety, ease and cost of program implementation, and participation by various communities. The implementing regulations may not require any person to establish or operate a delivery or disposal program. 1.2 EXECUTIVE ORDERS 128 66 AND 13563
Pursuant to Executive Order 12866 ( 58 FR 51735, October 4, 1993), an agenc y must submit to the Office of Managemen t and Budget (OMB) , Office of Information and Regulatory Affairs (OIRA) a regulatory impact analysis for m atters identified or determined by OIRA to be a “ significant regulatory action

. ” A “significant regulatory action ” is any regulatory action that is l ikely to result in a rule that may : (1) have an annual effect on the economy of $100 million or

more , or (2) adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety , or s tate, local, or tribal governments or communities ; (3) create a serious inconsistency or otherwise interfere with an6

action taken or planned by another agency ; (4) materially alter the budgetary impact of entitlements, grants, user fees, or loan prog rams, or the rights and obligations of recipients thereof ; or (5) raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in Executive Order 12866. 2 Executive Order 13563 ( 76 FR 3821, Janua ry 18, 2011) affirms and supplements Executive Order 12866. 1.3 REGULATORY FLEXIBILI TY A CT In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. §§ 601 et seq.), an agency is required to prepare and make available for public comment an initial regu latory flexibility analysis for any notice of proposed rulemaking that, if promulgated, will have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603. The agency is not required to prepare an initial regulatory flexibili ty analysis, h owever, i f the head of such agency can certify that the rule will not, if promulgated, have a significant economic impact on a substantial amount of small entities. 5 U.S.C. 605(b). 1.4 PURPOSE The purpose of this document is to:

 Describe the registrants affected by this rulemaking, including small entities

.

 Analyze alternative methodologies considered for the collection and d estruction of controlled substances.

 Provide an analysis of the costs and benefits of this rulemaking.

 Analyze whether the annual impact of the proposed rule is a significant regulatory action pursuant to Executive Order s 12866 and 13563.

2 E.O. 12866, Section 3(f).7

 Analyze whether the proposed rule, if promulgated, will have a significant economic impact on a substantial number of small entities , pu rsuant to the Regulatory Flexibility Act

.



### CHAPTER 2: REGISTRANT LANDSCAPE
2.1 DEA REGISTRANTS If promulgated, t his proposed rule on the disposal of controlled substances will affect those manufacturers, distributors, dispensers, importers, and exporters of controlled sub stances that are required to register with DEA pursuant to the CSA (21 U.S.C. 822 and 958(f)). Since all registrants have the potential to engage in the disposal of controlled substances , for the purposes of this Economic Impact Analysis (EIA), DEA consid ers all current 1.4 million controlled substance registrants to be the entities affected by the proposed rule. As of June 2012 , there

were 1,441,608 controlled substances registrants as shown in Table 1.

Table 1 : Number of Registrants by Business Activit y Registrant Class/Business Controlled Substances Pharmacy 67,687 Hospital/Clinic 15,784 Practitioner 1,135,217 Teaching Institution 316 Mid
- Level Practitioner 208,508 Researcher/Canine Handler 9,368 Analytical Lab 1,511 Narcotic Treatment Program 1,298 Distributor 858 Reverse Distributor 62 Importer 216 Exporter 243 Manufacturer 540 Total 1,441,608 *Data as of June 2012 . If promulgated, this proposed rule would affect all 1.4 million controlled substance registrants who represent a wide variety of entities. The economic impact is analyzed at the business level,8

not at the individual registrant level, since Small Business Administration ( SBA ) size standards are established at the business level. 2.2 DESCRIPTION OF SMALL ENTITIES AFFECTED Most DEA registra nts 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. The Small Business Act designate s a “small

- business concern, ” as one which is independently o wned 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 established for the types of economic activity or ind ustry under the North American Industry Classification System (NAICS). SBA sets the maximum size standard

– in millions of dollars or number of employees

– allowed for concerns and their affiliates to be designated small. 13 CFR 121.201. The RFA requirem ents and SBA size standards apply to entities and businesses, not to individual DEA registrations, and any cost impact of the proposed rule is at the business level, not at the individual registration level. Therefore, DEA has associated the number of aff ected registrants to a corresponding number of businesses. 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 businesse s hold more than one registration in situations where a single business has more than one location or more than one business activity. Therefore, DEA employed the following methodology to estimate the number of small business affected by this proposed rul e.9 1. Identify the registrant population affected by the proposed rule

. 2. Estimate the corresponding number of businesses the affected population represents. 3. Estimate the number of affected businesses that are small businesses. 2.2.1 Population Affected by Proposed R ule As discussed earlier, this proposed rule affects all 1,441,608 controlled substances registrants that are registered with DEA. The business activities of the 1,441,608 controlled substances registrants are shown in Table 1. 2.2.2 Corresponding Number of Aff ected Businesses To determine the corresponding number of businesses affected by the proposed rule, DEA related the 1.4 million DEA registrants to the number of businesses, as described below. First, since the SBA size standards are organized by NAICS co des, the 1.4 million affected registrants were organized by NAICS codes. Because DEA does not collect NAICS code information from its registrants, DEA reviewed all NAICS codes 3 and developed a table that relates various registrant groups to NAICS codes ba sed on DEA’s estimate. Table 2 lists the DEA registrant groupings with NAICS titles and codes.

Table 2 : DEA Registrants and Estimated NAICS Codes

3 http://www.census.gov/eos/www/naics/

.1011

Second, using 2007 Economic Census data DEA determined the number of businesses for each NAICS code. See Table 3. Table 3: Number of Businesses by NAICS Codes12 Source: 2007 Economic Census, http://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 EIA.

There are many more businesses for the Manufacturers and Distributors/Importers/Exporter NAICS codes than the number of DEA registrants that fall within these NAICS codes. There are 540 and 1,379 Manufacturer and Distributor/Importer/Exporter registrants, respectiv ely, while the numbers of businesses for these NAICS codes are 4,172 and 27,401, respectively. Meanwhile, the number of businesses for Pharmacies and Other (remaining) NAICS codes are far fewer than the number of DEA registrants that fall within these bus iness activities. There are 67,687 and 1,372,002 Pharmacies and Other registrants, respectively, while the numbers of establishments for the corresponding NAICS codes are only 51,248 and 328,286, respectively. Therefore, DEA broadly classified registrant s in two categories: 1) Category 1: registrants in industries where very few businesses in the industry are registrants; 2) Category 2: registrants in industries where most businesses in the industry are registrants. Only a small fraction of Manufactu rers, Distributors, and Importers/Exporters are DEA registrants

– 1,919 of 31,573, while nearly all Pharmacies, Hospitals/Clinics, Offices of Doctors, etc., are registrants, employ registrants, or may represent multiple registrations, such as several Physi cians and/or Mid

- level practitioners working in the same office or hospital. Therefore, while recognizing that DEA registrants with Manufacturer, Distributor, or Importer/Exporter registrations can also have more than one registration, DEA estimates a one

- to

- one ratio and that 540 Manufacturer and 1,379 Distributor, Importer/Exporter registrations roughly equate to 540 and 1,379 businesses, respectively, for registrants in Category 1.13

For registrants in the Category 2, Pharmacies , H ospitals/ C linics, O ffi ces of D octors, 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 businesses that are in the Pharmacies a nd Other registrant categories. DEA estimates that 67,687 Pharmacy and 1,372,002 remaining Other registrations roughly equate to 379,534 Category 2 businesses. In total, DEA estimates 381,453 businesses are affected by this proposed rule. See Table 4. DEA recognizes that this estimate is not precise, but instead provides understanding of orders of magnitude.14 Table 4 : Number of Businesses Represented by DEA Controlled Substances Registrants15

2.2.3 Number of Affected Businesses that Are Small Businesses DEA then determined how many of the estimated 381,453 affected businesses are small businesses based on the SBA size standard. Because DEA does not collect data on company size of its registrants, DEA used 2007 Economic Census data 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 standard for each NAICS code to determine the number of businesses that are small businesses for each NAICS code. See Table 5. DEA determined that 97.9 percent of Manufacturers and 96.7 percent of Distributors/Importers/Exporters by NAICSs are small businesses. These percentages were applied to the tota l affected businesses ( 540 Manufacturers and 1,379 Distributors), resulting in number of businesses ( 529 Manufacturers and 1,334 Distributors) estimated to be small businesses. The e stimate for Category 2 registrants/businesses that are small businesses i s derived directly from the 2007 Economic Census. Combining the results of Manufacturers, Distributors/Importers/Exporters, Pharmacies, and Others, DEA estimates 371,485 of the 381,453 businesses affected by the proposed rule are small businesses. Again, DEA recognizes that its estimate is not precise, but instead provides understanding of orders of magnitude, so that DEA can assess whether or not the number of significantly impacted businesses constitute a substantial number of small businesses.16 Table 5 : Number of Affected Businesses that Are Small Businesses

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

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

.17 ** SBA size standards for Manufacturers and Distributor/Reverse Distributors are by number of employees, while size standard for Pharmacies Other, and Other

- Practitioner/Hospital/Clinic are by dollar amount of annual revenue. *** Number of establishments/firms data by number of employees/annual revenue is available in specific increments. When the SBA size s tandard/threshold is in between increments, half of the number in the increment was used to estimate the number below the threshold. For example, number of Offices of Dentists was available for various increments $4,999,999 and below is 110,410 and increm ent $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 total of 110,634.
If promulgated, this proposed rule would affect all 1.4 million controlled substance registrants who represent approximately 381,453 businesses affected by the proposed rule. DEA estimates that 371,485 (97 percent) of the affected businesses are considered “small entities” in accordance with the RFA and SBA standards. 5 U.S.C. 601(6) and 15 U.S.C. 6 32.


### CHAPTER 3: ALTERNATIVE REGISTRANT AND NON
- REGISTRANT D ISPOSAL M ETHODS CONSIDERED
3.1 SCOPE OF ANALYSIS In developing this proposed rule, DEA considered several options for both registrant and

non - registrant disposal. DEA analyzed alternative methodology approach es keeping in mind its statutory obligations under the CSA. First, DEA is required by statute to promulgate disposal regulations that will prevent the diversion of controlled substances. 21 U.S.C. 822(g)(1)(B). Second, in developing the disposal regulat ions, DEA is required by statute to consider the public health and safety, ease and cost of program implementation, and participation by various communities. 21 U.S.C. 822(g)(2). Finally, DEA can not implement regulations that require any person to establ ish or operate a delivery or disposal program. 21 U.S.C. 822(g)(2). DEA found that in order to properly address the disposal of controlled substances by non

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

- registrants.18

To this end, DEA considered three options for non

- registrant d isposal: (1) Single Collection, (2) Open Collection, and (3) Multiple Collection. In addition, DEA considered two options for registrant disposal : (1) Retain Existing Regulations and (2) Establish Consistent National Standards. Finally, DEA considered f our options for reverse distributors: (1) On

- site Requirement, (2) Prompt Requirement, (3) Fourteen Calendar Day Requirement, and (4) No Requirement. DEA performed a qualitative analysis of each of the se alternatives and selected the “Multiple Collection ” option for non

- registrant disposal , the “ Establish Consistent National Standard” option for registrant disposal , and the “ Fourteen Calendar Day Requirement” option for reverse distributors

. 3.2 NON
- REGISTRANT DISPOSAL DEA considered several alternatives fo r the disposal of controlled substances by non

registrants, such as ultimate users and long term care facilities. After a qualitative analysis of each of the alternatives, DEA selected the “Multiple Collection” option for the disposal of non

registrant co ntrolled substances.19

3.2.1 Single Collection DEA considered implementing the “Single Collection” option, which would permit non

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

- registrants to utilize only a mail

back program to dispose of their lawfully possessed controlled substances, and not a collection receptacle or take

- back events. Second, DEA considered permitting non

- registrants to utilize only a colle ction receptacle to dispose of controlled substances. Finally, DEA considered maintaining the existing option for ultimate user disposal and permit non

- registrants to utilize only take

- back events to dispose of their controlled substances. In implementi ng the Disposal Act, DEA is required to consider participation by various communities, in addition to ease and cost of program implementation and public health and safety. DEA believes that by proposing just one of the three disposal options, participatio n by various communities, ease and cost of program implementation, and public health and safety would not be maximized. With three disposal options, the possibility for greater participation is increased because more stakeholders have the opportunity to e stablish or operate a disposal program that reaches more members of the public. For example, the mail

- back option is potentially more costly than the other options, but it has the possibility to reach members of the public, such as the elderly or rural co mmunities, that might not have easy access to take

- back events or collection receptacles. While take

- back events may be the most secure collection method, because they are under the control and supervision of law enforcement, the cost of participation may be high for local law enforcement whose resources are already stretched. Finally, while collection receptacles strike a balance between convenience and safety, as mentioned above, such options might not be easily accessible or available to all members of the20

public, such as the elderly or rural communities. As a result, DEA does not believe that proposing just one or two disposal options would result in optimal public participation, cost effectiveness, or safety. 3.2.2 Open Collection DEA also considered i mplementing the “Open Collection” option. Under this option, DEA considered authorizing any person to collect controlled substances from ultimate users for disposal, regardless of their status as a DEA registrant. DEA believes that this option would not effectively protect the public health and safety or prevent the diversion of controlled substances consistent with the statutory framework of the CSA. Rather, DEA ’s proposed regulations contain specific language to continue to allow law enforcement agenc ies and to authorize only certain registrants to collect controlled substances from ultimate users for the purpose of disposal. DEA proposes to authorize as collectors those persons already registered as manufacturers, distributors, reverse distributors, and retail pharmacies because, as registrants, these persons are accountable, have experience handling controlled substances, and are subject to controls related to their DEA registration. These pre

existing controls protect against the diversion of contr olled substances in the process of ultimate user collection. Further, DEA believes that ultimate user collection should occur only at DEA registered locations or the physical location of a law enforcement agency , and , under specified circumstances , at cer tain long term care facilities. DEA registered locations are subject to DEA inspection, security, and other controls. Such requirements ensure that proper security and other controls are in place to minimize the risk of diversion from the collection of c ontrolled substances.21

3.2.3 Multiple Collection ( Selected Methodology) DEA considered and selected the “Multiple Collection” o ption . DEA is proposing the following safe and convenient options for non

- registrants to transfer controlled substances for
purposes of dispos al : take

- back events, mail

- back programs, and collection receptacle location s. DEA is also proposing revised return and recall procedures for ultimate users, as discussed below. In the proposed rule, registered manufacturers, distributors, rever se distributors, and retail pharmacies may obtain authorization from DEA to be a collector. A collector is a registrant authorized to r eceive a controlled substance for the purpose of disposal from non registrants in lawful possession of controlled substa nce s . DEA is also proposing to continue to allow law enforcement agencies to voluntarily collect controlled substances from non

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

- registran ts are intended to maximize cost efficiency, participation, and accessibility while simultaneously promoting the secure and responsible disposal of controlled substances in order to prevent diversion. 3.3 REGISTRANT DISPOSAL
DEA also considered several alte rnatives for the disposal of controlled substances by DEA registrants, and selected the “ Establish Consistent National Standard ” option. 3.3.1 Retain Existing Regulations DEA considered implementing the “ Retain Existing Regulations ” o ption , which would have made no changes to the existing registrant disposal regulations ( 21 CFR 1307.12 and22

1307.21 )

. T he procedures for the disposal of controlled substances by registrants are often determined on a case

- by

- case basis by the DEA Special Agent in Charge (SAC) in the area where the registrant is located. In many circumstances, t he SAC has the discretion to determine how the registrant disposes of the controlled substance, including to whom the substances may be transferred or delivered. 21 CFR 1307.21 (a) and (b)

. Wh ile this approach is effective, with the enactment of the Disposal Act and an increas ed need for the responsible disposal of controlled substances by registrants and non

- registrants alike, DEA believes that in order to securely and effectively dispose of u nwanted or unused controlled substances, consistent national standards on disposal are necessary. 3.3.2 Establish C on sistent N ational S tandards ( Selected Methodology ) DEA considered and selected the “ Establish Consistent National Standards” option

. This opti on would delete existing regulations on the disposal of controlled substances (21 CFR
1307.12 and 1307.21 ) and promulgate a new part 1317 that would incorporate similar requirements on proper disposal procedure, security, and recordkeeping for regist rants and comprehensively outline the process and procedure for the disposal of controlled substances by registrants and non

- registrants. DEA is proposing c lear disposal procedures for all registrants that they can follow each time they dispose, regardles s of geographic location. Such regulations will reduce the burden on registrants by eliminating the existing requirement for every registrant to contact the SAC in their area when they wish to destroy controlled substance s . The procedures and security and recordkeeping requirements that DEA proposes are intended to codify existing practice and set singular and consistent procedures for DEA registrants in accordance with their authorized business ac tivities while protecting the public health and safety and minimizing the risk of diversion. DEA is also proposing revised regulations for reverse23

distributors that are clear, consistent, and consolidated into one part. DEA believes that these proposed r egulations will help reverse distributors comply with the C SA in a manner that effectively decreases the risk of diversion of controlled substances during the disposal process. 3.4 REVERSE DISTRIBUTORS
DEA also considered several alternatives for the d estruc tion of controlled substances by reverse distributors and selected the “ Fourteen Calendar Day Requirement ” option. Reverse distributors are a unique group of registrants whose primary function is to possess controlled substances for the purpose of destruc tion or return. In this regard, reverse distributors provide a valuable service to other registrants in the disposal process. In the distribution of controlled substances between registrants, each registrant serves as a check on the other and verifi es wh ether the controlled substance has reached its lawful destination. This is accomplished through existing reporting, recordkeeping, and order form requirements. 21 U.S.C. 827

– 828; 21 CFR part 1304 and 21 CFR part 1305. However, a reverse distributor th at acquires controlled substances from another registrant for destruction is the last person to possess such substance before destruction so there is no recipient to verify that the substance has been destroyed. Furthermore, reverse distributors accumulat e greater amounts of controlled substances that are destined for destruction in comparison to other registrants. This is because reverse distributors routinely acquire controlled substances for destruction from other re gistrant s and may also be authorized as collectors under the proposed regulations

. 3.4.1 On
- site Requirement DEA considered the “On

- site Requirement” option, which would require reverse distributors to have and utilize an on

- site method of destruction. An eff ective way to reduce the risk of diversion is to minimize the transfer of controlled substances between various locations.24

DEA considered this option but rejected it because DEA wanted to maintain the flexibility of DEA’s current disposal policy that allo ws reverse distributors to use off

- site destruction. Rather, DEA is proposing that all registrants that destroy a controlled substance must follow certain security procedures related to employees, transportation, loading and unloading, handling, and destr uction. DEA is proposing enhanced security requirements for those registrants that choose to destroy controlled substances in order to strengthen the integrity of the destruction process, especially the use of off

- site destruction. 3.4.2 Prompt Require ment DEA considered the “Prompt Requirement” option, which would require reverse distributors, like all other registrants, to promptly destroy controlled substances. The “prompt” destruction requirement is flexible and does not set a specific time frame f or destruction to ensure that controlled substances destined for destruction do not accumulate and are destroyed in a timely manner, but still account for the individual circumstances of registrants that destroy controlled substances. DEA considered this option for reverse distributors and rejected it because the primary business activity of reverse distributors, unlike other registrants, is to acquire controlled substances for the purpose of destruction or return. As a result, reverse distributors genera lly accumulate greater amounts of controlled substances that are destined for destruction in comparison to other registrants. They are typically the last registrant to handle the controlled substance with no other registrant reporting and recording receip t of the substance as a check against diversion. 3.4.3 No Requirement DEA considered the “No Requirement” option, which would retain the current destruction standard and would not put a timeline on when reverse distributors must destroy25

controlled substances acquired for destruction. DEA considered and rejected this option. DEA is proposing a comprehensive regulatory framework for the collection and destruction of controlled substances. All registrants that destroy will be required to destroy controlled sub stances within a certain time period

– reverse distributors will be required to destroy the controlled substances as soon as practicable but no later than fourteen calendar days of receipt and all other registrants will be required to destroy their lawfully possessed controlled substances promptly. DEA proposes destruction requirements because, j ust as there is a greater risk of diversion when controlled substances are being transported for the purposes of destruction, there is a great er risk of diversion the longer a substance destined for destruction remains in storage awaiting destruction. 3.4.4 Fourteen Calendar Day Requirement DEA considered and selected the “ Fourteen Calendar Day Requirement” option, which would require reverse dist ributors to destroy controlled substances received for the purpose of destruction as soon as practicable but no later than fourteen calendar days of receipt. A reverse distributor that acquires a controlled substance for destruction is the last pers on to possess such substance before destruction and, therefore, must follow increased security measures. The

“ fourteen calendar day” requirement is unique to reverse distributors

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

– because the primary business activity of reverse distributors, unlike other registrants, is to acquire controlled substances for the purpose of destruction or return. As a result, reverse distributors generally accumulate greate r amounts of controlled substances that are destined for destruction in comparison to other registrants. They are typically the last registrant to handle the controlled substance with no other registrant reporting and recording receipt of the substance as a check26

against diversion. The “ fourteen calendar day” requirement will ensure that reverse distributors destroy controlled substances in a timely manner while also enabling them sufficient time to prepare the necessary records required for destruction.


### CHAPTER 4: ANTICIPATED ECONOMIC IMPACT OF PROPOSED RULE As discussed above, in accordance with Executive Order 12866 and 13563 , an agenc y must submit to OIRA a regulatory impact analysis for matters identified or determined by OIRA to be a "significant regulator y action

. " DEA has concluded that this rule is not a “ significant regulatory action ” pursuant to Executive Order s 12866 and 13563. Specifically, DEA does not anticipate that t his proposed rule will: (1) have an annual effect on the economy of $100 millio n or more, or (2) adversely affect in a material way the economy, a sector of the economy, producti vity, competition, job s, the environment, public health or safety, or s tate , local, or tribal governments or communities. In addition, in accordance wi th the RFA, an agency is required to prepare and make available for public comment an initial regulatory flexibility analysis for any notice of proposed rulemaking that, if promulgated, will have a significant economic impact on a substantial number of sma ll entities. DEA has concluded that this rule, if promulgated, will not have a significant economic impact on a substantial amount of small entities. 4.1 REGISTRANT DISPOSAL 4.1.1 Impact on Registrants that Destroy Controlled Substances In this rulemaking, DEA i s proposing c lear disposal procedures for all registrants that they must follow each time that they destroy controlled substances

. Specifically, DEA is proposing to authorize registrants to dispose of controlled substances from the registrant’s own27

inventory in one of several ways, consistent with the type of business activity in which the registrant is engaged

. DEA proposes to authorize non

- practitioners to dispose of their controlled substance inventory in one of four ways: (1) promptly destroy the substance using an on

- site method of destruction in accordance with appl icable federal, state, tribal, and local laws and regulations; (2) promptly deliver the substance to a registered reverse distributor at its registered location by common or contract carrier, or by reverse distributor pick

- up; (3) for the purpose of
return or recall, promptly deliver the substance by common or contract carrier or pick

- up at the registrant ’s registered location to the person from whom it was obtained, the registered manufacturer of the substance, or another registrant authorized by the manuf acturer to accept returns or recalls; or (4) promptly transport the substance by its own means to the registered location of a reverse distributor, the location of destruction, or the registered location of any person authorized to receive the substance fo r the purpose of return or recall. DEA proposes to authorize practitioner registrants to dispose of the ir controlled substance inventory in one of four ways: (1) promptly destroy the substance using an on

- site method of destruction in accordance with appl icable federal, state, tribal, and local laws and regulations; (2) promptly deliver the substance to a reverse distributor at its registered location by common or contract carrier, or by reverse distributor pick

- up ; (3) for the purpose of return or recall, promptly deliver the substance to the registered person from whom the substance was obtained, the registered manufacturer of the substance , or another registrant authorized to accept returns or recalls by common or contract carrier or by pick

- up at the re gistrant’s registered location; or (4) request assistance fr o m the Special Agent in Charge of the Administration in the area in which the practitioner is located. Reverse distributors that receive controlled substances for the purpose of destruction
must destroy those substances as soon as practicable but no later than fourteen calendar days of28

pick

- up or delivery. For all registrants that destroy controlled substance s or cause controlled substances to be destroyed (e.g., by transferring t he substance to an authorized reverse distributor or transporting the substance to an off

- site, unregistered location for destruction) , DEA is proposing that such registrants be required to follow certain security procedures related to employees, transport ation, loading and unloading, handling, and destruction. Additionally, a registrant that destroys a controlled substance or causes controlled substances to be de s troyed is required to maintain a record of that destruction in a form issued by DEA

– Form 41 . DEA is proposing to modify DEA Form 41 to act as the record of destruction, includ ing the signature of the two authorized employees that witnessed the destruction. DEA anticipates that such proposed disposal procedures will have minimal to no economic impact on registrants that dispose of their controlled substances

. Based on DEA’s field experience and information provided at or in response to the January 19

- 20, 2011 public meeting , DEA believes the proposed regulation clarifies registrant disposal procedures and standardizes general practices that already meet the requirements contained in the proposed rule

. The existing procedures for the disposal of controlled substances by registrants are often determined on a case

- by

- case basis by the SAC in the area where the registrant is located

. In certain circumstances, t he SAC has the discretion to determine how to authorize and instruct registrants to dispose of controlled substances, including how the substances may be des troyed. 21 CFR 1307.21(a) and (b). DEA is proposing these changes to ensure consistency in disposal procedures among registrant categories, regardless of geographic location. Such regulations will reduce the burden on registrants by eliminating the existing requirement for every registrant to contact the SAC in their are a when they wish to destroy controlled substance s. Also, the procedures and security and recordkeeping requirements that DEA proposes are intended to set29

clear and consistent procedures for DEA registrant s each time they wish to destroy a controlled substance, while protecting the public health and safety and minimizing the risk of diversion. 4.1.2 Impact on Reverse Distributors DEA is proposing revised regulations for reverse distributors that are clear, cons istent, and consolidated into one part. These new regulations address reverse distributor registration requirements and authorized activities and propose to codify many existing practice s . In such instances, the codification of existing practices do es not impose additional costs above the established baseline costs that exist without the proposed rule. DEA believes that these proposed regulations will help reverse distributors comply with the C SA in a manner that effectively decreases the risk of di version of controlled substances during the disposal process. Security Requirements DEA is proposing enhanced employee security requirements for reverse distributors. DEA is proposing that reverse distributors be prohibited from employing, as an agent o r employee who has access to controlled substances, any person that has ever been convicted of any felony offense related to controlled substances or has ever had an application for registration with DEA denied, had a DEA registration revoked or suspended, or surrendered a DEA registration for cause. DEA is proposing these enhanced security requirements for reverse distributors in order to strengthen the integrity of the disposal process by ensuring that only certain employees are authorized to have access to or influence over controlled substances. This requirement is similar to existing employee security requirements for regi stered practitioners, where there is also a high risk of diversion.30

Analysis of available information regarding reverse distributors 4 indicates that many companies already conduct background checks on their employees , and this requirement is a

c odificati on of current business practices

. Therefore, DEA estimates that the proposed security requirements for reverse distributors imposes minimal or no additional cost above the established baseline cost associated with security requirements. DEA registrants have a n existing responsibility , by statute and regulation, to maintain effective controls against diversion, including procedures to guard against theft and diversion. 21 U.S.C. 823 and 21 CFR 1301.71.
To ensure that necessary controls against diversion are in place and to fulfill th eir regulatory responsibilities , it is likely that registrants already conduct background checks on their employees. DEA believes that this proposed provision of the rule is a codification of current general business practic e s . Therefore, DEA estimates that, because regist ered reverse distributors are likely to already conduct these practices, there should be minimal to no 5 economic impact on reverse distributors

. Finally, DEA is proposing to specify a maximum time limit f or reverse distributors to destroy or cause the destruction of any controlled substance received for the purpose of destruction as soon as practicable but no later than fourteen calendar days of receipt (pick

- up or delivery)

. While DEA believes that the majority of reverse distributors already destroy or cause the destruction of controlled substances received for the purpose of destruction as soon as practicable but no later tha n fourteen calendar day s o f receipt , DEA recognizes that some may

4 Research conducted through interviews with Diversion Investigators and analysis of reverse distributor websites. 5 Based on publically available information, the cost of a background check on an employee can cost $30

- $80. If a reverse distributor needs to conduct several more background checks as a result of this proposed rule the cost of the background check is expected t o not have significant impact on its financial performance.31

not

. 6 For the reverse distributors that do not currently meet this standard, this requirement may cause them to incur additional costs through more frequent transportation of controlled substances to the point of destruction and destruction o f partial loads. For purposes of this proposal, DEA assumes that some reverse distributors may have to adjust current business operations in order to comply with this new requirements , such as by restricting the receipt of deliveries to their registered location to specific days and/or amounts, or by modify ing pick

- up routes to accommodate the requirement that any controlled substance received for the purpose of destruction be destroyed as soon as practicable but no later than fourteen calendar days of receipt

. Although this may cause modifications to current business operations, DEA believes reverse distributors are able t o control the flow of controlled substances they receive through minor modifications with minimal to no cost. Recordkeeping Requirements DEA is also proposing to streamline and clarify recordkeeping requirements for registered reverse distributors so that they are consistent and accurately reflect reverse distributor authorized activities in compliance with the C SA

. First, the existing regulations require registered reverse distributors to record in inventory, information regarding quantities of controlle d substances that is different from the information required in continuing records. 21 CFR 1304.11(e)(3) and 1304.22(e). To reconcile this discrepancy, DEA is proposing that in both inventory and continuing records, a reverse distributor must record the quantity of a controlled substance in both finished and bulk form, and the quantity contained in a commercial container, carton, crate, drum, or other receptacle that has been opened. Second, DEA is proposing to require registered reverse distributors to: (1) keep records

6 Based on interviews with Diversion Investigators, DEA determined that the business practices of reverse distributors vary greatly.32

regarding each controlled substance received from another registrant for the purpose of return to a manufacturer or, if designated, to another registrant authorized by the manufacturer to accept
returns on the manufacturer’s behalf , and (2) keep records regarding each controlled substance destroyed, including information pertaining to the receipt and destruction of the controlled substance. DEA proposes that for all controlled substance records, reverse di stributors will be required to maintain the record of receipt with the corresponding record of return or destruction. In accordance with the CSA, every DEA registrant must maintain, on a current basis, a complete and accurate record of each controlled subs tance manufactured, received, sold, delivered, or otherwise disposed of. 21 U.S.C. 827(a). These records must be maintained separately from all other records of the registrant or , alternatively, in the case of non

- narcotic controlled substances, be in s uch a form that required information is readily retrievable from the ordinary business records of the registrant. 21 U.S.C. 827(b)(2). The records must be kept and be available for at least two years for inspection and copying by officers or employees of the Attorney General. 21 U.S.C. 827(b)(3). To fulfill their regulatory responsibilities, DEA assumes for the purpose of this analysis , that registrants already maintain record s of receipt for a controlled substance with the corresponding record s of retu rn or destruction for that controlled substance. DEA estimates that it is an existing business practice to maintain records in this manner and most registrants are likely already conducting these activities

. Therefore, DEA estimates that the proposed rec ord keeping requirements for reverse distributors impose s no additional economic impact above their existing baseline cost s associated with recordkeeping requirements

. DEA is also proposing that reverse distributors report acquisition/distribution transact ions pursuant to 21 CFR 1304.33 and that each person registered to reverse distribute controlled33

substances in Schedules I and II comply with 21 CFR 1305. As t hese are existing requirements clarified in the proposed rule , rather than new requirements , no additional economic impact will be imposed on reverse distributors.

4.2 NON
- REGISTRANT DISPOSAL The proposed provisions that facilitate Non

- Registrant Disposal are completely voluntary, not mandated. Any collector, reverse distributor, distributor, or law e nforcement agency (further discussed in Sections 4.2.1, 4.2.2, and 4.2.3) that chooses to engage in the voluntary activities described in this section, does so based on its own evaluation of costs and benefits (tangible and intangible). For the purposes o f the EIA, DEA assumes that an entity will volunteer to perform the activities to facilitate Non

- Registrant Disposal only if there is a net zero or positive benefit to the entity. Additionally, any collector, reverse distributor, distributor, or law enforcement agency that chooses to engage in these voluntary activities can decide to cease these activities at any time. Therefore, for the purposes of the EIA, DEA estimates that the voluntary provisions in this section have a net zero economic impact o n the regulated entities. Specifics are further discussed in the sub

- sections. 4.2.1 Impact on Collectors To implement the Disposal Act, DEA is proposing to provid e ultimate users , persons lawfully entitled to dispose of ultimate user decedent’s property, and, in some circumstances, long term care facilities the following safe and convenient options to transfer controlled substances for purposes of dispos al : take

- back events, mail

- back programs, and collection receptacle location s. In the proposed rule, regi stered manufacturers, distributors , reverse distributors, and retail pharmacies may obtain authorization from DEA to be a collector. A collector is a registrant authorized by DEA to receive a controlled substance for the purpose of34

disposal by destruction from an ultimate user or other authorized non

- registrant person in lawful possession of the controlled substance. These proposed options are voluntary and no person will be required to establish or operate a disposal program. While DEA specifies certai n requirements, collectors have a myriad of options for implementation. Based on the chosen implementation , costs and benefits can vary widely from collector to collector. It is possible for collectors to incorporate collection activities as part of its promotional activities and/or develop partnerships with other businesses and agencies in order to maintain a collection receptacle or mail

- back program

. DEA has no baseline to determine the level of registrant interest in modifying their registration to be a collector

. However, as described above, a registrant is expected to become a collector only if there is a net zero or a net benefit derived from performing these activities ; in other words , if the sum of the tangible and intangible benefits outweig h the costs . For example, a pharmacy may derive tangible benefits, such as additional revenue from increase d retail traffic to the pharmacy. Collectors may also derive intangible benefits such as public safety and good will from its collection activities

. As a conservative estimate, t hese optional activities are deemed to have a net zero economic impact for the purposes of conducting an economic impact analysis. 4.2.2 Impact on Reverse Distributors and Distributors This proposed rule would allow reverse distri butors to acquire for the purpose of destruction controlled substances that have been collected by: (1) law enforcement agencies through take

- back events, mail

- back programs, and collection receptacles , and (2) authorized collectors through collection re ceptacles

. DEA is also proposing to authorize registered distributors, in addition to registered reverse distributors, to acquire for purposes of destruction35

controlled substances collected through a collection receptacle at the collector’s authorized
loc ation

. T his is a voluntary activity. DEA assumes that a reverse distributor or distributor will only perform this activity if there is a net zero or positive benefit derived from performing these activities. DEA believes that reverse distributors and di stributor s may receive payment from law enforcement agencies , authorized collectors , or their partners for activities described. As a conservative estimate, t hese optional activities are deemed to have a net zero economic impact for the purposes of conduc ting an economic impact analysis

. 4.2.3 Impact on Law Enforcement Agencies DEA is proposing specific language to continue to allow federal, state, local, and tribal law enforcement agencies to collect controlled substances from ult imate users and persons lawfully entitled to dispose of an ultimate user decedent’s property through: (1) take

- back events, (2) mail

- back programs, and (3) collection receptacles located at the law enforcement agency’s physical address. As described above , these options are voluntary and impose no additional requirements on law enforcement agencies , unless they cho o se to participate

. There are some specific requirements that law enforcement agencies must follow if they cho o se to participate in a tak e - back event, conduct a mail

- back program, or maintain a collection receptacle, but most of the provisions in the proposed rule are r ecommendations for law enforcement agencies, not requirements. For the purposes of the EIA, DEA assumes that a law enfor cement agency will not choose to conduct these activities unless its evaluation of the costs and benefits showed a net zero or positive benefit. Benefits for a law enforcement agency are generally intangible benefits such as public safety, reduction in cr ime, reduction in drug availability, etc. As a conservative estimate, t hese optional activities are deemed to have a net zero economic impact for the purposes of conducting an economic impact analysis.36

4.3 RETURN AND RECALL DEA is proposing to delete the exis ting rule on return and recall, 21 CFR 1307.12, and to clarify and separate the role of registrants and non

- registrants in the return and recall of controlled substances . The pr oposed rule on return and recall for registrants is similar to the existing rule on return and recall, 21 CFR 1307.12 . The proposed new section s , however , clarif y which registrants are authorized to transfer and receive returns and r ecalls, in addition to clarifying recordkeeping and order form requirements

. In accordance with the CSA, every DEA registrant must maintain, on a current basis, a complete and accurate record of each controlled substance manufactured, received, sold, deli vered, or otherwise disposed of. 21 U.S.C. 827(a). To fulfill their regulatory responsibilities, DEA believes that it is likely that registrants already maintain a detailed record of controlled substances returned or controlled substances received for th e purpose of return or recall. DEA also believes that this proposed provision of the rule is a codification of g ood business practice

– e . g ., manufacturers keep detailed business records of what is coming into and out of their business and for what purpos e. DEA estimates that, because most compliant registrants are likely already maintaining these detailed records, there should be no additional material economic impact on reverse distributors as a result of the proposed rule. DEA is also proposing a new r ule on the recall of controlled substances for ultimate users. The proposed rule authorizes an ultimate user in lawful possession of a controlled substance in Schedules II, III, IV, or V to deliver the recalled controlled substance to the manufacturer or another registrant authorized by the manufacturer to accept returns or recalls on the manufacturer’s behalf . The existing language of 21 CFR 1307.12 is broad and the proposed rule reduces ambiguity that exists under current regulations by specifying t o whom an ultimate user is permitted to deliver their recalled controlled substance and by outlining consistent and37

clear requirements for registrants authorized to receive those recalled substances from ultimate

users . DEA is proposing that a registered m anufacturer or another registrant authorized by the manufacturer to accept returns or recalls on the manufacturer’s behalf maintain a record of each recalled controlled substance received from ultimate users. In contrast to existing regulations (21
CFR 13 07.12), DEA is proposing that t hose registrants be exempt from the requirements in 21 CFR 1305 pertaining to DEA Form 222. Consistent with existing regulations (21 CFR 1307.12), DEA is also proposing that the registered manufacturer or another registrant authorized by the manufacturer to accept returns or recalls on the manufacturer’s behalf report all recalled controlled substance acquisition transactions pursuant to 21 CFR 1304.33. Such registrants may report either each individual receipt or a single t ransaction that includes all recalled controlled substances of the same name and finished form (e.g., all 10

- milligram tablets or all 5

- milligram concentration per fluid ounce or milliliter) received from ultimate users. DEA anticipates that the new retur n and recall requirements proposed in this rule will not economically impact registrants. With the promulgation of the new 21 CFR 1317.85, DEA expect s that manufacturers will use the same mechanisms for the recall process that are currently in place. DEA believes that registrants currently maintain detailed records of these transactions as a matter of normal business practice and to fulfill their regulatory responsibilities pertaining to current regulations. As a result, DEA anticipates that the new requ irements pose no economic impact to registrants , including manufacturers to which 1317.85 applies. 4.4 DESTRUCTION DEA is proposing a standard of destruction

– non - retrievable

– for persons that destroy or cause the destruction of controlled substanc es. DEA is not requiring particular methods of38

destruction so long as the desired result is achieved and the method is compliant with all applicable federal, state, tribal, and local laws and regulations . This standard i s intended to allow public and private entities to develop a variety of destruction methods that are secure, convenient, and responsible, consistent with preventing the diversion of such substances . DEA is proposing a standar d of destruction that provides communities the flexibility to tailor disposal options to meet their resources and needs and to allow for advances in technolog y . Generally, t he current standard for rendering controlled substances non

- ret rievable is incineration

. This is b ased on DEA’s experience with National Take Back Day s and DEA field experience with registrants that destroy controlled substances . As this is the current method, no additional costs are imposed on registrants. As appr opriate, DEA has made the determination on

a case - by

- case basis , particularly in manufacturing, that a controlled substance was altered in such a way that it wa s no longer controlled . However, DEA has not and is not able to generally approve alternate met hods of destruction for controlled substances. The fact that DEA is not imposing specific destruction methods, but instead allowing for greater flexibility and innovation by applying a standard of non - retrievable may lead to alternative destruction method s at a reduced cost. However, at this time, DEA cannot quantify potential savings for alternate methods for the destruction of controlled substances under the non

- retrievable standard as they have not been determined or are not currently used by registran ts. 4.5 ANNUAL ECONOMIC EFFE CT ON THE ECONOMY DEA does not anticipate that this rulemaking will have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competitio n, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.39

As discussed in Section 4.1 above, DEA anticipates that this rulemaking will have minimal or no economic impact on registrants that destroy controlled substances themselves and that modified DEA Form 41 could result in some level of cost savings. In addition, DEA anticipates that the security and recordkeeping requirements contained in the proposed rule will result in minimal or no costs for reverse di stributors

. Moreover, DEA conservatively estimates that the voluntary provisions for collectors, reverse distributors, distributors, and law enforcement agencies will have a net zero economic impact. The proposed provisions that facilitate Non

- Registran t Disposal are completely voluntary, not mandated. Any collector, reverse distributor, distributor, or law enforcement
agency may choose to engage in the voluntary activities based on its own evaluation of costs and benefits (tangible and intangible). Fo r the purposes of the EIA, DEA assumes that an entity will volunteer to perform the activities to facilitate Non

- Registrant Disposal only if there is a net zero or positive benefit to the entity. Additionally, any collector, reverse distributor, dist ributor, or law enforcement agency that chooses to engage in these voluntary activities can decide to cease these activities at any time. Therefore, for the purposes of the EIA, DEA estimates that the voluntary provisions in this section have net zero eco nomic impact on the regulated entities. In summary, DEA estimates t he proposed rule will impose minimal to no annual cost

. Accordingly, DEA believes this rulemaking will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or s tate , local, or tribal governments or communities

.40

4.6 IMPACT ON SMALL E NTITIES DEA has evaluated the impact of this ru le on the regulated entities by size category and has determined that this rule will not have a significant economic impact on a substantial number of small entities. In order to assess whether or not the proposed rule will have significant effect on subs tantial number of small entities, DEA first estimated the number of small businesses affected by the proposed rule, second determine d the number of small businesses that are significantly affected, and finally determine d whether the number of small busines ses significantly affected constitute a substantial number of small businesses. As discussed in Section 2.2, approximately 371,485 small businesses may be affected by th is proposed rule. DEA has concluded that the proposed rule will not have a significan t effect on a substantial number of small entities.


### CHAPTER 5: COST
- BENEFIT ANALYSIS OF PROPOSED REGULATORY ACTION

In drafting this proposed rule, DEA assessed the costs and benefits and decided to propose the rule only after a reasoned determination that the benefit s justify the cost in accordance with Executive Order s 12866 and 13563

. 5.1 COST S OF THE PROPOSED R ULE As discussed above, DEA anticipates this rulemaking will have minimal to no cost impact on affected businesses

.
5.2 B ENEFIT S OF THE PROPOSED R ULE
The ci tizens and residents of the United States bear an enormous cost from the diversion of controlled substances into the illicit market , not only monetarily but also in public health and safety

.41

5.2.1 Prescription Drug Abuse Epidemic Before the Disposal Act, the C SA did not address the disposal of controlled substances by ultimate users. To dispose of their controlled substances, ultimate users were permitted to destroy the substances themselves (e.g., mix the substances with coffee grounds, place in a plastic bag , and throw into the garbage or flush) or surrender the substances to law enforcement or DEA. There is concern, however, that throwing controlled substances into the garbage or flushing them could be harmful to the environment. Because the public has lim ited options for disposal, outdated and unwanted controlled substances often accumulate in medicine cabinets, easily within reach of children and teenagers. In passing the Disposal Act, Congress recognized that the secure disposal of controlled substances is important because of the significant prescription drug abuse problem in the United States. The Centers for Disease Control and Prevention decla red prescription drug overdoses an epidemic. 7 The availability of outdated or unwanted prescription drugs is problematic because t here is a concern that young people may perceive prescription and/or over

- the

- counter drugs as “safer” than illegal drugs beca use of their intended, legitimate medical use. 8 This misperception may be shared by parents. Over 20 percent of parents believe that it is acceptable to give a teen a prescription drug that was not prescribed to them. 9 The 20 10 National Survey on Drug U se and Health ( NSDUH ) 10 indicates that over 70 percent of Americans twelve and older who used pain

7 Centers for Disease Control and Prevention, “Morbidity and Mortality Weekly Report,” Vol. 61, No. 1, at 10 (January 13, 2012). 8 Partnership for a Drug

- Free America and MetLife Foundation , “ 20 09 Parents and Teens Attitude Tracking Study Report, ” March 2, 2010

. 9 Partnership for a Drug

- Free America and MetLife Fou ndation, “ 2010 Partnership Attitude Tracking Study,” April 6, 2011. 10 The National Survey on Drug Use and Health (NSDUH) is an annual survey of the civilian, non

- institutionalized, population of the United States aged twelve or older. The survey is conduc ted by the Department of Health and42

relievers non

- medically in the previous year obtained the drugs from a friend or relative. 11 Another study found that more than 50 percent of teens obtained p rescription drugs from their own family’s medicine cabinet. 12
The prevalence of controlled substance prescription drug abuse among teenagers is right behind their abuse of marijuana (to include organic marijua na and synthetic cannabinoids) . The
201 1 “Monitoring the Future” survey of teenagers found that 8 .1 percent of high school seniors reported non

- medical use of Vicodin (a brand name for Schedule III hydrocodone combination products) in the past year , and 4.9 percent reported non

- medical use of OxyContin (a brand name for Schedule II oxycodone sustained release products) in the past year

. 13 This is consistent with reports by high school students of increased non

- medical use of painkillers in the pas t five
years. 14 A ccording to a 2009 survey by t he Partnership at Drugfree.org , more than 50 percent of teenagers (grades 9

- 12) believe that prescription drugs are easier to obtain than illegal drugs. The abuse of prescription drugs is the fastest growing d rug problem in the United States. Findings from the 2010 NSDUH estimate that 7.0 million persons aged twelve or older used prescription

- type psychotherapeutic drugs

– pain relievers, anti

- anxiety medications, stimulants, and sedatives

– non - med ically in the previous month. 15 This represents 2. 7 percent of the U.S.

Human Services Office of Applied Studies, Substance Abuse and Mental Health Services Administration ( SAMHSA )

. 11 Substance Abuse and Mental Health Services Administration, “ Results from the 2010 National Survey on Drug Us e and Health: Volume I, Summary of National Findings ,” Office of Applied Studies, 2011 (NSDUH Series H

- 41, HHS Publication No. SMA 11

- 4658 ) , http://www.oas.samhsa.gov/ NSDUH /2k 10 NSDUH/2k 10 Results.pdf

. 12 Partnership for a Drug

- Free America and MetLife Founda tion, “ 2010 Partnership Attitude Tracking Study,” April 6, 2011. 13 Lloyd D. Johnson, Ph.D., et al , “ Monitoring the Future National Results on Adolescent Drug Use: Overview of Key Findings, 201 1 ,” Institute for Social Research, The University of Michiga n, 2012

. 14 Lloyd D. Johnston, Ph.D., et al, “ Monitoring the Future N ational R esults on A dolescent D rug U se: Overview of K ey F indings, 2009 , ” National Institute of Drug Abuse, 2010 (NIH Publication No. 10

- 7583). 15 Substance Abuse and Mental Health Servi ces Administration, “ Results from the 2010 National Survey on Drug Use and Health: Volume I, Summary of National Findings ,” Office of Applied Studies, 2011 (NSDUH Series H

- 41, HHS Publication No. SMA 11

- 4658 ) , http://www.oas.samhsa.gov/ NSDUH /2k 10 NSDUH/2k 10 Results.pdf

.43

population. 16 I n 20 10 , 2. 0 million persons aged twelve or older used pain relievers non

medically for the first time. 17 On average, every day 2,046 12

- to 17

- year - olds abuse a prescription pain reliever for t he first time. 18
N on - medical drug use, particularly among young adults, is having a devastating effect on the United States. According to the Centers for Disease Control and Prevention , poisoning deaths, which include drug o verdose s such as those from prescription drugs , are the leading cause of injury death in the United States ; nearly nine out of ten poisoning deaths are caused by drugs and more than 40% of those involve opioid analgesics

. 19 According to SAMHSA ’s latest Drug Abuse Warning Network (DAWN) data , of the 4.6 million emergency department visits in 2009 associated with drug use, about 1.2 million visits involved the non

- medical use of pharmaceuticals. 20 Emergency department visit s involving non

- medical use of pharmaceuticals (misuse or abuse) almost doubled between 2004 and 2009 from 627,291 in 2004 to 1,244,679 visits in 2009 ( a 98.4 percent increase). 21 About half of the 2009 emergency department visits related to misuse or abus e of pharmaceuticals involved painkillers and more than one

- third involved drugs to treat insomnia and anxiety. 22
5.2.2 Monetary Costs of Prescription Drug Abuse To capture the benefits of the proposed rule, DEA estimated the baseline cost of diversion to the ci tizens and residents of the United States without implementation of the

16 These estimates were similar to those from the 2009 survey but 13 percent higher than those from the 2008 s urvey. 17 Id. 18 Substance Abuse and Mental Health Services Administration, 2010 National Survey on Drug Use and Health. 19 U.S. Departm ent of Health and Human Services, Centers for Disease Control and Prevention, National Center for Injury Prevention and Control, “ Drug Poisoning Deaths in the United States, 1980

- 2008,” December 2011. 20 Behavioral Health Statistics and Quality, “Highlights of the 2009 Drug Abuse Warning Network (DAWN) Findings on Drug

- Related Emergency Department Visits,” The DAWN Repo rt , December 28, 2010. 21 Id. at 4. 22 Id. at 3.44

proposed rule. DEA used “Economic Costs of Nonmedical Use of Prescription Opioids” 23 and “Estimated Costs of Prescription Opioid Analgesic Abuse in the United States in 2001” 24 as prima ry sources for obtaining estimated costs to the citizens and residents of the U.S. associated with the diversion of controlled substances into the illicit market. While opioids discussed in the publications represent a subset of all controlled substances regulated by DEA , the cost estimates in the publications represent a conservative estimated cost of the diversion of all controlled substances from a reputable source. The authors of the primary sources relied upon by DEA gathered data from numerous

source s including : emergency department information from the Drug Abuse Warning Network (DAWN), nonmedical use of prescription opioids information from the National Survey on Drug Use and Health (NSDUH), substance abuse treatment information from the Treatment E pisode Data Sets (TEDS), statistical information from the U.S. Department of Justice Bureau of Justice Statistics, Federal Bureau of Investigation, National Forensic Laboratory, and Drug Enforcement Administration b udget documents . Data related to the tot al cost of treatment for the abuse of prescription opioids also included input from the Substance Abuse and Mental Health Services Administration at the U.S. Department of Health and Human Services. According to the research published in The Clinical Jour nal of Pain , estimated costs associated with the nonmedical use of prescription opioids increased from $8.6 billion in 2001 to $53.4 billion in 2006.

Table 3: U.S. Costs of Nonmedical Use of Prescription Opioids 2001 and 2006
($ million) 2001 2006 % Incre ase

23 Clin J Pain (The Clinical Journal of Pain), Volume 27, Number 3, March/April 2011. 24 Clin J Pain (The Clinical Journal of Pain), Volume 22, Number 8, October 2006.45 Total Cost $ 8,600 $ 53,400 521% Health Care $ 2,600 $ 3,200 23% Criminal Justice $ 1,400 $ 8,200 486% Workplace & Lost Productivity $ 4,600 $ 42,000 813%

The baseline cost of diversion to the citizens and residents of the United States is the estimated cost in 2012 without the proposed rule. The increase from $8.6 billion in 2001 to $53.4 billion in 2006 represents a compound annual growth rate (CAGR) of 44 percent. Although it is difficult to project that the cost will continue to grow at this rate and nearly impossible to accurately estimate the baseline cost, it would not be an exaggeration to say that the cost of nonmedical use of prescription opioids to the U.S. public is enormous and accelerating. Although applying the 44 p ercent CAGR results in an estimated cost of nonmedical use of prescription opioids of $477.7 billion in 2012 , DEA conservatively estimates, for the purposes of the EIA, that the cost to the citizens and residents of the United States is greater than $53.4
billion.

5.3 EVALUATION OF THE COSTS AND BENEFITS OF THE PROPOSED R ULE (THRESHOLD ANALYSIS) In evaluating the costs and benefits of the rule, the annual cost of the rule is compared with the anticipated reduction in the growth rate of costs associated with div ersion of controlled substances and listed chemicals into the illicit market. The cost

- benefit analysis uses the costs associated with the nonmedical use of prescription opioids , $8.6 billion in 2001 and $53.4 billion
in 2006. These are conservative esti mate s of the rapidly growing total cost associated with diversion of controlled substances and listed chemicals into the illicit market.46

It is preferable to conduct a discounted cash flow analysis where the costs and benefits are quantified and the net ben efits are calculated and presented in present dollar value. However, the baseline costs associated with diversion of controlled substances and listed chemicals into the illicit market is unreliable. Therefore, a quantitative analysis is not possible and a threshold analysis is utilized. The threshold analysis considers whether the benefits of the rule are greater than or equal to the cost of the rule.

As discussed above, the proposed rule poses minimal to no economic impact

.

The b enefits of the rule are represented as the difference between the costs associated with diversion of controlled substances and listed chemicals into the illicit market at the baseline and the costs associated with the diversion of controlled substances and listed chemic als into the illicit market under the rule.47

As DEA has determined this rule poses minimal to no economic impact, DEA concludes that this rule reduce s the growth in the cost of the diversion of controlled substances and listed chemicals into the illicit market , therefore, this rule will have a positive benefit for the health and safety of the citizens and residents of the United States.



### CHAPTER 6: CERTIFICATION STATEM ENTS
6.1 EXECUTIVE ORDERS 128 66 AND 13563 The analysis in this document indicates that this rule is not a significant regulatory action pursuant to Executive Order 12866 as supplemented and affirmed by Executive Order 13563. In particular, t his proposed rule is not likely to :

1. Result in an a nnual effect on the economy of $100 million or more ; or 2. Adversely a ffect 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. 6.2 REGULATORY FLEXIBILI TY ACT In accordance with the RFA, DEA eval uated the impact of this rule on small entities and anticipates that this rule will not have a significant economic impact on a substantial number of small entities. As discussed in Section 2.2, approximately 371,485 small businesses are affected by th is proposed rule. Additionally , as discussed in Sections 4.5 and 4.6, DEA estimates no total cost to the economy. The proposed rule will impose minimal to no annual cost.48

Accordingly, DEA analysis, assessing economic impact by size category, indicates th at the proposed rule will not have a significant effect on a substantial number of these small business entities.