Controlled Substances: DEA Needs to Better Manage Its Quota Process and Improve Coordination with FDA
Published: 2015-05-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In the last decade, shortages of drugs containing controlled substances, such as narcotics and stimulants, have increased nationwide, preventing providers and patients from accessing essential medications for treatment. Controlled substances are regulated by DEA because of the potential for abuse and addiction. DEA is responsible for preventing diversion of controlled substances, and also focuses on ensuring that an adequate and uninterrupted supply of these substances is available for legitimate medical and other needs.
(1) DEA’s administration of the quota process, and (2) coordination activities between DEA and FDA to prevent and mitigate shortages of drugs containing controlled substances. For the report, GAO analyzed data from 2011 and 2012 from YERS/QMS, which is the official record for the quota process. GAO interviewed officials from DEA, FDA, and drug manufacturers. GAO reviewed relevant statutes, regulations, and documents. To update selected information in March and April 2015, GAO reviewed documentation and contacted FDA officials.
section_title: What GAO Found
paragraphs: The Drug Enforcement Administration (DEA) has not effectively administered the quota setting process by which it limits the amount of certain controlled substances available for use in the United States. Each year, manufacturers apply for quotas of controlled substances in order to make certain drugs. DEA, however, has not responded to those applications within the time frames required by its regulations for any year from 2001 through 2014. DEA officials attributed this lack of compliance to inadequate staffing, stating that the agency has been unable to find qualified candidates who are able to pass the necessary background checks and that offers to qualified candidates have been declined. Manufacturers cited late quota decisions as causing or exacerbating some shortages of their drugs.
Additionally, DEA’s weak internal controls jeopardize the agency’s ability to effectively manage the quota process. For instance, agency officials said that DEA conducts some data checks to ensure the accuracy of its data in its Year-End Reporting and Quota Management System (YERS/QMS), but it has no systematic quality checks to ensure the quota data are accurate. GAO estimates that 44 percent of YERS/QMS records in 2011 and 10 percent in 2012 had errors. DEA officials said that 2011 was the first year manufacturers applied for quota electronically and they expected data from 2012 and beyond to be more accurate.
DEA also lacks critical management information because it does not have performance measures related to setting quotas, and it does not monitor YERS/QMS data to assess its performance. Moreover, DEA does not have reasonable assurance that the quotas it sets are in accordance with its requirements and cannot ensure continuity of its operations, as it does not have protocols, policies, training materials, or other documentation to manage the quota process.
The Food and Drug Administration Safety and Innovation Act (FDASIA) contains provisions that require DEA and the Food and Drug Administration (FDA), an agency within the Department of Health and Human Services (HHS), to coordinate certain efforts to address shortages of certain drugs caused by quotas. Despite this, the agencies have not established a sufficiently collaborative relationship. For example, DEA and FDA sometimes disagree about what constitutes a drug shortage. DEA also has no policies or procedures on how to coordinate with FDA to address shortages caused by quota. Given such barriers to coordination, DEA and FDA cannot effectively address shortages of drugs subject to quota. Additionally, both agencies stated that they were subject to restrictions on exchanging proprietary information, which may be helpful to address drug shortages. DEA and FDA had been working since 2012 to develop a new memorandum of understanding (MOU), which was finalized in March 2015. According to the MOU, the two agencies will still need to develop a plan to share such information.
section_title: What GAO Recommends
paragraphs: GAO is not making any new recommendations in this testimony. For GAO-15-202 , GAO recommended that DEA should take five actions to improve its management of the quota process: (1) strengthen its internal controls of YERS/QMS, (2) establish performance measures related to the quota process, (3) monitor and analyze YERS/QMS data, (4) develop internal policies for setting quotas, and (5) expeditiously establish formal policies and procedures to facilitate coordination with FDA as directed by FDASIA. Additionally, in GAO-15-202 , GAO recommended that DEA and FDA should take two actions to strengthen their ability to respond to shortages of drugs containing controlled substances: (1) promptly update their MOU (which has now been accomplished), and (2) specifically outline information the agencies will share and time frames for doing so. DEA neither agreed nor disagreed with GAO’s recommendations. HHS agreed with the applicable recommendations.

section_title: Letter
paragraphs: I am pleased to be here today to discuss our recent report on the Drug  Enforcement Administration’s (DEA) quota setting process for controlled  substances and the agency’s coordination with the Food and Drug  Administration (FDA) during shortages of drugs containing these  substances. Drugs that contain controlled substances, such as narcotics,  sedatives, and stimulants, play an important role in health care. These  drugs are used to treat patients experiencing seizures, traumatic injuries,  and other medical crises. They may also be taken by patients with a  prescription to manage pain and other ailments. Controlled substances  are required to be regulated by DEA in accordance with the Controlled  Substances Act (CSA) because individuals may abuse them and become  psychologically and physically dependent on them. As part of its work to  prevent diversion of controlled substances, DEA sets limits, known as  quotas, on the amount of certain classes of controlled substances  available for use in the United States.
In the last decade, shortages of drugs containing controlled substances  have increased nationwide, preventing providers and patients from  accessing medications that are essential for treatment. Both DEA, an  agency within the Department of Justice (DOJ), and FDA, an agency  within the Department of Health and Human Services (HHS), have  important responsibilities in preventing and responding to shortages of  drugs containing controlled substances. In addition to preventing  diversion, DEA works to ensure that an adequate and uninterrupted  supply of controlled substances is available for legitimate medical and  other needs. As part of its mission, FDA works to prevent, alleviate, and  resolve drug shortages. The Food and Drug Administration Safety and  Innovation Act (FDASIA), enacted in 2012, also contains provisions that  require DEA and FDA to coordinate their respective efforts during  shortages of drugs containing controlled substances subject to quotas.
Within DEA, the Quota Unit in the Office of Diversion Control is  responsible for establishing quotas for each basic class of schedule I and  II controlled substances, such as amphetamine or morphine. The Quota  Unit calculates and proposes three types of quotas related to schedule I  and II controlled substances that are then established by the agency; the  CSA and DEA’s implementing regulations specify dates by which DEA  must propose and establish its quotas. Aggregate production quotas  (APQ) limit the total amount of bulk materials that may be manufactured  or synthesized in the United States and are subsequently made available  for use in the manufacture of drugs containing schedule I and II controlled  substances. Bulk manufacturing quotas limit the amount of a basic class  of schedule I or II controlled substances that an individual bulk  manufacturer can manufacture through the extraction or synthesis of  plant material or other controlled substances. Procurement quotas limit  the amount of a basic class of schedule I or II controlled substances that  an individual manufacturer can procure from a manufacturer of bulk raw  materials in order to manufacture into dosage forms of a drug or into  other substances. In setting APQs and bulk manufacturing and  procurement quotas, DEA considers information that includes data from  DEA’s internal system for tracking controlled substances transactions,  known as the Automation of Reports and Consolidated Orders System  (ARCOS). It also considers past histories of quota granted for each  substance from DEA’s system for tracking and recording quota  applications and decisions, known as the Year-End Reporting and Quota  Management System (YERS/QMS), among other things.
Such drugs are those that are life-supporting, life-sustaining, or intended for use in the  prevention or treatment of a debilitating disease or condition. Pub. L. No. 112-144, § 1001,  126 Stat. 993, 1099-1100 (2012) (codified at 21 U.S.C. § 356c). authorize additional quota for that substance. FDASIA requires that DEA  respond to these requests from manufacturers within 30 days.
See GAO, Standards for Internal Control in the Federal Government,  GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999) and GAO, Executive Guide:  Effectively Implementing the Government Performance and Results Act,  GAO/GGD-96-118 (Washington, D.C.: June 1996). we plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives.
It is important to note that completion of our work was significantly  delayed by DEA. In particular, DEA refused to comply with our requests  for information from and about YERS/QMS and ARCOS until intervention  by senior DOJ officials. We first requested access to YERS/QMS  materials and data in January 2013, but did not obtain needed information  until March 2014. We recognize that DEA has legitimate interests in  protecting certain types of sensitive information from public disclosure.  We share that interest as well and follow strict security guidelines in  handling such information, which we provided in writing to DEA. DEA’s  prolonged resistance to sharing sensitive information with GAO—an  agency that has a broad statutory right of access to agency records— impeded our ability to conduct audit work efficiently and to provide timely  information to congressional clients.
subsections: section_title: DEA Has Not Effectively Administered the Quota Process
paragraphs: We found significant weaknesses involving DEA’s management of the  quota process for controlled substances. We found that DEA had not  responded to manufacturers’ annual quota applications for bulk  manufacturing and procurement quotas by its regulatory deadline of   July 1 for any year from 2001 through 2014. From our analysis of a  random probability sample of YERS/QMS source documents, we  estimate that DEA took an average of 182 days in 2011 and 178 in 2012  beyond July 1 to establish annual bulk manufacturing and procurement  quotas. Similarly, DEA has not proposed APQs on or before May 1, as  required by its regulations, for any year from 2001 through 2014.
We estimate that on average DEA took nearly 60 days to respond to  supplemental quota applications in 2011 and 2012. While there are no  required time frames for DEA to respond to supplemental applications in  the CSA or DEA’s regulations, as of July 2012, FDASIA requires DEA to  respond to manufacturers’ quota requests that relate to shortages caused  by quotas within 30 days. Although this 30-day time frame was not yet a  requirement in 2011 and for much of 2012, it is worth noting that DEA  responded to 21 percent of supplemental applications within 30 days  during those years, suggesting this requirement could pose a challenge  during a future shortage.
DEA officials attributed the agency’s lack of compliance with its required  time frames to inadequate staffing of the Quota Unit. DEA officials said  the agency has not been able to find candidates with the right skills who  are also able to pass the background checks required for employment,  and offers to qualified candidates have been declined. In addition, they  added that the quality and timeliness of manufacturers’ quota applications  affects DEA’s ability to meet its required time frames for proposing APQs  and establishing manufacturers’ quotas. For example, DEA officials said  that manufacturers continue to revise their annual applications as  manufacturing conditions change throughout the year, such as when   However, DEA officials also  manufacturers’ gain or lose business. recognized the importance of manufacturers submitting revisions as  conditions change, to ensure they receive appropriate amounts of quota.  Despite these challenges, DEA officials said that they expect the agency  will be compliant with its CSA time frames in the future because of  changes made to the quota process in 2011, specifically the  reorganization of the Quota Unit and moving to an electronic system for  the quota process (YERS/QMS).
Manufacturers have expressed concerns about DEA’s timeliness in  establishing quotas and have asserted that the amount of time it takes  DEA to respond to their annual and supplemental quota applications has  caused or exacerbated shortages of some drugs containing schedule II  substances. Ten manufacturers reported to FDA that quota related issues  caused 7 of the 40 shortages of drugs containing schedule II substances  from January 2010 through June 2013. DEA officials do not agree that  quotas can cause such shortages because the agency authorizes quotas  at the basic class level of a substance, such as amphetamine or  morphine. DEA cannot authorize quota for specific drug products  containing those substances, as this is precluded by the CSA. Because of  concerns with the reliability of DEA’s data, among other things, we could  not confirm whether DEA’s lack of timeliness in establishing quotas has  caused or exacerbated shortages. However, we disagree that the  actions DEA takes in setting quotas at the class level would have no  bearing on the drug products that are made with those substances. While  manufacturers are ultimately responsible for what they manufacture with  the quota authorized by DEA, their decisions are made within the  confines of the amount and timing of quota granted by DEA.
Additionally, we found that DEA’s weak internal controls jeopardize the  agency’s ability to effectively manage the quota process. DEA does not  have adequate controls to ensure the reliability of YERS/QMS, which it  uses to track manufacturers’ quota applications and record its quota  decisions. DEA officials described some data checks, such as managers  verifying that information entered into YERS/QMS by the Quota Unit is  accurate. However, the agency does not have systematic quality checks,  such as periodic comparisons of YERS/QMS records to source  documents, to ensure that the data are accurate or the checks it has in  place are sufficient. A lack of systematic data checks is inconsistent with  federal standards for internal control. The lack of systematic data  checks is also concerning because we estimate that 44 percent of  YERS/QMS records in 2011 and 10 percent in 2012 had errors. DEA  officials said that 2011 was the first year manufacturers applied for quota  electronically and they expected data from 2012 and beyond to be more  accurate. We did find a substantial decrease in errors in the data for 2012  when compared to 2011; however, YERS/QMS is the official record of  how much quota is requested by manufacturers and authorized by DEA.  Maintaining accurate records is important for managing the quota  process, and that maintenance has implications for future quota  applications submitted by manufacturers because YERS/QMS  automatically populates a new application with information on quotas  previously authorized by DEA from the prior 2 years.
We also found that DEA lacks critical management information because it  does not have performance measures related to setting quotas or  ensuring an adequate and uninterrupted supply of controlled substances,  nor does it monitor YERS/QMS data to assess its performance. DEA  officials said that such performance measures would be inappropriate  because of the complexity of individual quota applications and the  difficulty of projecting the number of quota applications for future years.  DEA officials also said that the agency has no plans to monitor or analyze  YERS/QMS data or to produce aggregate information on its timeliness in  establishing quotas or other such performance measures. Federal  standards for internal control state that establishing performance  measures and monitoring data to assess a program’s performance are  important management tools. monitoring, DEA is missing important information for program managers  to use when making decisions about program resources and the agency  cannot effectively demonstrate program results.
GAO/AIMD-00-21.3.1. guidance on how to conduct these activities. According to federal internal  control standards, agencies should have written documentation, such as  detailed policies, procedures, and practices, to fit their operations and  ensure that they are an integral part of operations. The need for detailed  policies, procedures, and practices is particularly important because the  activities conducted by Quota Unit staff are very complex, requiring staff  to weigh data from at least five different sources that may have  contradictory information. DEA officials told us that they ensure  consistency in their decision-making by having the Deputy Assistant  Administrator of the Office of Diversion Control review and authorize  every quota decision that is made. However, given the volume of quota  applications that DEA processes each year—over 3,000 in 2012—it is  unreasonable to assume that one senior manager can devote sufficient  time to review these decisions and ensure that quotas are set in  accordance with DEA’s regulations and the CSA. Further, the lack of  written guidance poses a risk to the continuity of the agency’s operations  should personnel leave or be reassigned.
Our report contained four recommendations to DEA to ensure it is best  positioned to administer the quota process. Specifically, we  recommended that DEA (1) strengthen its internal controls of  YERS/QMS, (2) establish performance measures related to quotas,   (3) monitor and analyze YERS/QMS data, and (4) develop internal  policies for processing quota applications and setting aggregate, annual,  and supplemental quotas. In commenting on a draft of our report DEA did  not explicitly agree or disagree with these four recommendations. In some  instances, DEA indicated that it had already taken steps consistent with  them or said that it is supportive of strengthening its management of the  quota process.
section_title: Lack of Effective Coordination May Hinder the Ability of DEA and FDA to Address Future Drug Shortages
paragraphs: Our report also identified several barriers that may hinder DEA and FDA  from effectively coordinating with each other during a quota-related drug  shortage. One barrier is that DEA and FDA sometimes disagree about  whether a shortage exists because the two agencies define shortages  differently. FDA defines a drug shortage as a period of time when the  demand or projected demand for the drug within the United States  exceeds the supply of the drug. In determining whether a shortage  exists, FDA assesses if there is enough supply to meet demand by  evaluating potential substitutes for the drug in shortage to determine  whether drugs are clinically interchangeable. In contrast, DEA officials  told us that there is no shortage, from DEA’s perspective, as long as there  is quota available to manufacture a given controlled substance,  regardless of which particular manufacturers are producing the product  and which strengths or formulations are available. Although there has not  been a reported shortage of a drug containing a controlled substance  caused by quotas since FDASIA’s enactment in 2012, the law requires  the agencies to coordinate certain efforts to address such a shortage if  one occurs. By not reaching agreement about what constitutes a drug  shortage, it is unclear whether they will be able to successfully  coordinate.
See FDA, Manual of Policies and Procedures, Drug Shortage Management, MAPP  4190.1 Rev. 2 (Sept. 3, 2014). agreement in place regarding this matter. A time frame for DEA to  respond is particularly important, given that a request from FDA means it  has determined that there is a shortage of a life-sustaining drug that an  increase in quota is necessary to address. If DEA does not agree with  FDA’s determination of a shortage, it is not clear whether or how quickly  DEA would respond.
Finally, both agencies stated that they were subject to restrictions on  exchanging the proprietary information they receive from drug  manufacturers, which may be helpful to prevent or address shortages of  drugs containing controlled substances. The agencies had been working  for more than 2 years on developing a new memorandum of  understanding (MOU) to facilitate the sharing of such information. On  March 24, 2015, the MOU was finalized. It establishes procedures  regarding the exchange of proprietary and other sensitive information  between FDA and DEA in both written and verbal communications. It also  specifies that information must be shared in accordance with applicable  laws, regulations, and policies, and safeguarded against improper use.  However, the agreement does not specify precisely what information is to  be shared, or who it is to be shared with. Instead it calls for this to be  designated in separate plans that are to be expeditiously established.  According to the MOU, the two agencies can begin to share information  while the plans are in development if both parties agree that it is  necessary and appropriate to their respective missions, or if it is  considered an “emergency circumstance”—a term the MOU does not  define.
Our report included a recommendation that DEA expeditiously establish  formal policies and procedures to facilitate coordination with FDA as  directed by FDASIA, including a specific time frame in which it will be  expected to respond to FDA’s requests to expedite shortage-related  quota applications. We also made two additional recommendations to  both DEA and FDA to strengthen their abilities to respond to shortages of  drugs containing controlled substances. We recommended that the two  agencies promptly update the MOU, and that has now been  accomplished. We also recommended that in the MOU or in a separate  agreement, the agencies specifically outline what information they will  share and the time frames for sharing such information in response to a  potential or existing drug shortage. The MOU did not include these  details.
In commenting on a draft of our report DEA did not explicitly agree or  disagree with these three recommendations but indicated that it has  already taken steps consistent with some of them. HHS agreed with the  two recommendations we made to FDA.
Chairman Grassley, Co-Chairman Feinstein, and Members of the  Caucus, this concludes my prepared statement. I would be pleased to  respond to any questions you may have.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For future contacts regarding this statement, please contact   Marcia Crosse (202-512-7114 or crossem@gao.gov). Individuals   making key contributions to this statement include Geri Redican-Bigott,  Assistant Director; Cathleen Hamann; Rebecca Hendrickson; and   Janet Temko-Blinder.
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