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

Letter

DEA Has Not Effectively Administered the Quota Process

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.

Lack of Effective Coordination May Hinder the Ability of DEA and FDA to Address Future Drug Shortages

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.

GAO Contacts and Staff Acknowledgments

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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