Prescription Drug Control: DEA Has Enhanced Efforts to Combat Diversion, but Could Better Assess and Report Program Results
Released: 2011-09-26T00:00:00

Letter

Background

The CSA and DEA’s Office of Diversion Control

The CSA places various plants, drugs, and chemicals such as narcotics, stimulants, depressants, hallucinogens, and anabolic steroids, into one of five schedules based on the substance’s medical use or lack thereof, potential for abuse, and safety or potential for dependence. The act requires persons who handle controlled substances and/or listed chemicals (such as manufacturers, wholesale distributors, physicians who dispense controlled substances, hospitals, pharmacies, importers/exporters, and scientific researchers) to register with the DEA. This agency, by delegation from the U.S. Attorney General, is responsible for administering and enforcing the CSA and its implementing regulations. Through its Office of Diversion Control, DEA administers the Diversion Control Program whose mission is to prevent, detect, and investigate the diversion of controlled pharmaceuticals and listed chemicals into the illicit market, while ensuring an adequate and uninterrupted supply for legitimate needs. In addition to conducting investigations, the office conducts a variety of activities such as the establishment of production quotas, drafting and promulgating regulations for handling controlled substances, regulating handlers of controlled substances, and monitoring and tracking the production and distribution of certain controlled substances, among other things. To carry out this mission, the Office of Diversion Control is authorized approximately 1,300 full-time equivalent positions and a budget of approximately $292 million. The program is funded through the Diversion Control Fee Account, which consists of registration fees paid by registrants.

DEA Registers Entities Authorized to Handle Controlled Substances

As required by the CSA, businesses, individuals, or entities that import, export, manufacture, distribute, dispense, conduct research with respect to controlled substances and/or listed chemicals must register with the DEA. DEA has more than 1.3 million individuals and companies that are registered to handle controlled substances or regulated chemicals. These registrants include manufacturers, distributors, and importers/exporters of controlled substances or medications; pharmacies, hospitals, narcotic treatment programs, and clinics that dispense controlled medications; practitioners who prescribe and administer or dispense controlled medications; and researchers who use controlled substances or medications in their research or analyses (see table 1.)

In order to maintain their registration, DEA registrants must comply with a variety of regulatory requirements imposed by the CSA and its implementing regulations. Examples of these regulatory requirements include:  Recordkeeping: A registrant must keep accurate records and maintain detailed inventories of controlled substances in compliance with applicable federal and state laws. For example, the registrant must maintain accurate records of each substance manufactured, received, sold, delivered, or otherwise disposed of by the registrant.  Reporting: Manufacturers and distributors must report acquisition or distribution transactions of certain controlled substances, such as Schedule I and II drugs and Schedule III narcotics, to DEA through the Automated Reports and Consolidated Orders System (ARCOS). ARCOS is an automated reporting system to monitor the flow of controlled substances from their point of manufacture to the point of sale or distribution at the dispensing/retail level such as hospitals, retail pharmacies, practitioners, midlevel practitioners, and teaching institutions. Manufacturing transactions of Schedule I and II controlled substances, as well as Schedule III and IV narcotics, among others are also covered by the ARCOS reporting requirements.  Dispensing of controlled substances: The CSA provides special requirements for licensed practitioners and pharmacists who dispense controlled substances in Schedules II-V to patients. For example, a prescription for a controlled substance must be “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” Accordingly, practitioners also have a responsibility to ensure that the controlled substance is properly prescribed and dispensed while a corresponding responsibility exists with the pharmacist filling the prescription.  Security of controlled substances: For the purposes of ensuring the secure storage and distribution of controlled substances, all registrants must “provide effective controls and procedures to guard against theft and diversion of controlled substances.” Among other things, DEA regulations also detail specific security requirements for the different types of applicants and registrants. For example, nonpractitioners (i.e., manufacturers, distributors, and narcotic treatment programs) are required to store Schedule I and II substances in electronically monitored safes, steel cabinets, or vaults that meet or exceed certain specifications. Licensed practitioners must store controlled substances in a “securely locked, substantially constructed cabinet” and must notify DEA of the theft or significant loss of any controlled substances.  Regulatory Investigations: DEA conducts scheduled investigations or inspections (depending on the registrants, the frequency of the scheduled investigations can range from every 3 years to every 5 years) of wholesale registrants who include manufacturers, distributors, importer/exporters, and narcotic treatment programs as well as other registrants such as researchers, analytical labs, and teaching institutions, among others. Retail level registrants such as pharmacies and physicians—with the exception of physicians permitted to treat narcotic dependence—do not receive regulatory investigations by the DEA. These registrants are regularly investigated by the states in which they conduct business. According to DEA officials, they focus their efforts related to regulatory investigations on the wholesale registrants because such registrants are the sources of supply to criminal schemes such as rogue pharmacies and pill mills. To conduct these investigations, DEA Diversion Investigators arrive at the registrant unannounced and inspect and verify the registrant’s records, take a physical inventory of the registrant’s controlled substances, and inspect any other items necessary to verify the registrant’s compliance with the CSA and its implementing regulations. If deficiencies are found during the investigation, DEA may work with the registrant to correct the deficiencies. DEA may also take administrative, civil, or criminal action against the registrant depending on the type, severity, and frequency of the deficiencies found.  Complaint Investigations: Complaint investigations are investigations that are started on the basis of information or a tip provided to DEA or state regulators, or other information DEA has regarding purchases or losses of controlled substances. The origin of the information could be from any number of sources, such as a state or local official or citizen that saw something suspicious, employees of a registrant, the identification of unusual purchasing trends by a registrant such as a pharmacy tracked by DEA through its ARCOS, or a report of a loss of controlled substances by a registrant. Diversion Investigators conduct preliminary investigative work to determine whether the information is valid and warrants a full investigation. Depending on the outcome of the preliminary complaint investigation, DEA determines whether the investigation will be handled as a regulatory noncompliance issue, a criminal case, or a dismissal.  Criminal Investigations: DEA also conducts investigations into criminal activities involving diversion of controlled substances. Criminal diversion may involve DEA registrants such as pharmacies and practitioners and nonregistrants such as pharmacy burglars or doctor shoppers, among others.

Within its 21 field divisions, DEA utilizes a variety of personnel to carry out these investigative responsibilities:  Diversion Investigators conduct investigations of regulatory, civil, and criminal issues pertaining to DEA registrants. The investigators do not have law enforcement authority and cannot perform law enforcement functions such as making arrests and conducting surveillance.  Special Agents conduct diversion investigations and assist Diversion Investigators by performing law enforcement functions such as serving search warrants and making arrests.  Diversion Program Managers oversee diversion control activities in their field division.  Special Agents-in-Charge manage the activities of the DEA field division including diversion control activities.  Assistant Special Agents-in-Charge assist the Special Agents-in- Charge in managing activities of the field division including diversion control activities.

DEA Has Expanded Its Resources and Targeted Its Investigation Strategies to Respond to Rising Criminal Diversion and Growing Registrant Population

To respond to the increasing rate of criminal diversion and a growing registrant population, DEA has expanded its resources and targeted investigation strategies in ways to collaborate with state and local entities and enhance the effectiveness of its Diversion Control Program. Specifically, DEA has expanded its use of Tactical Diversion Squads, which work with DEA’s state, local, and other federal partners, to maximize resources and improve efforts to investigate, disrupt, and dismantle individuals or organizations involved in diversion schemes related to controlled substances and listed chemicals. DEA has also renewed its focus on regulatory oversight of the more than 1.3 million DEA registrants to ensure registrants comply with the CSA and implementing regulations. DEA accomplished this by increasing the frequency of scheduled investigations of DEA registrants that are registered to handle controlled prescription drugs.

Tactical Diversion Squad Expansion Provides Additional Resources and Facilitates Coordination and Information Sharing for Criminal Investigations

To help respond to the ever-changing methods of criminal diversion such as rogue pain clinics and rogue Internet pharmacy schemes, in October 2008 the DEA acting Administrator authorized the expansion of squads devoted to addressing criminal diversion of controlled substances and listed chemicals across the United States. DEA has historically utilized these squads, called Tactical Diversion Squads (squads), as a collaborative mechanism to address the criminal diversion of controlled substances. The squads are teams of DEA diversion personnel (such as Special Agents and Diversion Investigators), as well as state and local law enforcement personnel (task force officers) whose mission is to detect, investigate, and refer for prosecution, violators of federal and state statutes pertaining to diversion. They also develop investigative leads from information and intelligence obtained from participating agencies, undercover operations, and the use of informants. This multiagency effort helps coordinate the investigative activities of the participating agencies. According to DEA, the squads also allow DEA to provide manpower for diversion investigations at reduced costs to DEA because task force officer positions are less expensive than Special Agents or Diversion Investigators. For example, DEA compensates state and local Tactical Diversion Squad task force officers for overtime, use of a vehicle, equipment, and diversion training, while the parent agencies are responsible for their task force officers’ salary and benefits. requested an additional 60 Special Agent, 37 Diversion Investigator, and 64 task force officer positions for fiscal year 2011, and an additional 50 Special Agent, 16 Diversion Investigator, and 64 task force officer positions for fiscal year 2012. Because the Diversion Control program is funded through its fee account, DEA officials noted that such increases in personnel are contingent on the revision of the schedule of fees charged registrants, which is currently underway. They anticipate beginning to collect fees under the revised fee schedule in fiscal year 2012. DEA’s current annual registrant fees range from $184 to $2,293. The last time DEA revised its fees was in 2006.

States such as Florida have experienced significant diversion problems through illegal pain clinics. According to DEA officials, Florida physicians order the majority of oxycodone compared to the rest of the country. In 2010, Florida dispensing physicians ordered over 41 million dosage units of oxycodone, while the rest of the country ordered a total of 4 million dosage units. Some of these physicians are reported to have links to illegal pain clinics where they either dispensed or wrote prescriptions that were not for legitimate medical purposes. Individuals from other states would come to Florida to visit the clinics to obtain controlled substances for abuse or resale. Florida recently enacted legislation to address these clinics. Similarly, Texas and Louisiana have experienced problems with illegal pain clinics and also enacted legislation to address this roblem. Among other things, the legislation for these states requires pain clinics to be owned and operated by licensed physicians with no previous medical board action, and to register with state regulators. squad has enabled local law enforcement agencies to carry out more complex investigations into diversion within their localities. For example, although some local law enforcement agencies had conducted investigations of lower level diverters such as doctor shoppers prior to the establishment of squads, they did not have the resources on their own to carry out the longer, more complex investigations required for targeting higher level diverters such as physicians and their clinics. DEA officials noted that state and local agencies also lack the administrative authorities DEA has to take action against a DEA registrant when necessary. The squad provided a means for state and local law enforcement to collectively pool their resources with DEA to investigate higher level diverters.

Based on feedback from squad participants and DEA officials we interviewed, coordination and information sharing within the squads were reported as excellent and an improvement over presquad times. According to DEA and local officials we interviewed, the establishment of the squads has been a means to improve communication, coordination, and simplify information sharing as the squads have become the clearinghouse for diversion-related investigative information. As a result, information is now shared more rapidly and broadly between law enforcement agencies, according to these officials we interviewed. These squads have also become an important deconfliction mechanism for law enforcement agencies regarding the diversion cases they are working or information they receive from other sources. For example, one local law enforcement official with a task force officer on a squad stated that all leads his department receives for potential diversion investigations are first referred to the squad to determine whether there are any links to ongoing squad investigations or if the lead would be an appropriate target for it to take on as a new investigation.

Federal agencies such as the Federal Bureau of Investigation (FBI), the U.S. Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS) may also be involved in the squads’ criminal investigations depending on the case and if their expertise is needed. For example, FBI agents will generally join a squad’s investigation if fraud is involved; HHS investigators may become involved in investigations related to health care fraud; and IRS agents may assist in investigations involving tax evasion and money laundering. In March 2011, for example, the DEA in conjunction with the FBI and HHS, among other agencies, concluded an investigation into a Detroit physician for unlawfully distributing controlled substances, including the Schedule II controlled substance OxyContin (oxycodone), and fraudulently billing Medicare.

According to DEA, a conviction of this offense carries a maximum of 20 years in prison, a fine of $1 million, or both. In another example, according to DEA squad officials, DEA, FBI, and IRS, among others, conducted a joint criminal investigation into a Texas business owner’s rogue Internet pharmacy scheme. The investigation resulted in a guilty plea to several offenses including unlawfully distributing controlled substances, money laundering, and fraudulently billing healthcare providers, among other offenses. According to DEA officials, joint investigations with other federal agencies are very helpful for the squad in advancing the investigation because the other federal agencies bring specific subject matter expertise in areas that DEA staff do not have.

DEA Has Significantly Increased the Number of Regulatory Investigations to Help Ensure Growing Registrant Population Complies with CSA

In addition to the expansion of the squads in October 2008, the DEA acting Administrator also called for an enhanced focus on DEA’s regulatory oversight aimed at ensuring that the more than 1.3 million DEA registrants comply with the CSA and its implementing regulations. According to DEA, the overall registrant population tends to grow at a rate of 2 to 2.5 percent annually; however, registrants such as Drug Addiction Treatment Act waived physicians (DWPs) have grown faster. For example, from fiscal year 2002 to fiscal year 2010 the number of DEA registered DWPs increased from 1,451 to 19,211, an increase of about 1,300 percent. DWPs are physicians who dispense or prescribe Federal Food and Drug Administration approved buprenorphine products for treatment of narcotic addiction/dependence on an outpatient basis. In an effort to help meet the demand for this specialty, the Drug Addiction Treatment Act of 2000 waived the requirement for qualified physicians to obtain a separate DEA registration as a Narcotic Treatment Program in order to provide medication-assisted chemical substance therapy. With the enactment of the act, the Substance Abuse and Mental Health Services Administration within HHS aggressively pursued training for interested physicians to help meet this demand. As a result, there was a significant increase in the number of physicians who registered with DEA as DWPs. In response to this growing registrant population, DEA increased the frequency of scheduled investigations of DWPs as part of the enhanced regulatory oversight called for by the acting Administrator. For example, in October 2008, DEA decided to move towards conducting regulatory investigations of all DWPs every 5 years to monitor for compliance. Previously DEA was conducting regulatory investigations of only one DWP in each of its 21 Field Divisions annually, a rate that, given the growth of that registrant type, would have taken decades for DEA to investigate all registered DWPs, according to the Executive Assistant to the Deputy Assistant Administrator for the Diversion Control Program. According to DEA’s Chief of the Regulatory Section, the decision to increase the rate for conducting regulatory investigations of DWPs was also due, in part, to some DWPs not complying with regulatory requirements relating to recordkeeping and the loss of controlled substances used to treat patients.

DEA also increased the frequency of regulatory investigations for other registrant types as well, such as registrants involved in the manufacture and distribution of drugs (from once every 5 years to once every 3 years), and chemicals (from once every 3 years to once every 2 years). For some registrant types that had not previously been subject to regulatory investigation, such as researchers, analytical labs, and teaching institutions, DEA required that regulatory investigations be conducted once every 5 years. According to DEA’s Chief of the Regulatory Section, the increase in the frequency of regulatory investigations for some registrant types was also due to the registrants’ noncompliance with the CSA and DEA’s implementing regulations. For example, some distributors did not report suspicious orders for controlled substances to DEA, as required by regulation. Reflecting the changes in requirements for regulatory investigations, DEA more than tripled the number of regulatory investigations from 1,173 in fiscal year 2009 to 3,731 in fiscal year 2010 (see fig. 2 below).

According to the Executive Assistant to the Deputy Assistant Administrator for Diversion Control, DEA was able to increase its regulatory investigations primarily by using the squads to free up Diversion Investigator resources that had previously been working both criminal and regulatory cases and DEA plans to hire additional diversion staff in the future to conduct investigations. To keep up with the level of regulatory investigations to be completed in the future, DEA plans to hire additional staff. For example, for fiscal year 2011 DEA requested 60 Diversion Investigator positions and for fiscal year 2012 requested an additional 50 Diversion Investigator positions, pending completion of the revision of the schedule of fees charged registrants, which must provide the funding necessary to fill those positions. According to DEA officials, of the 60 Diversion Investigator positions requested for fiscal year 2011, 23 were requested to support regulatory activities while 37 were to support the squads; for fiscal year 2012, of the 50 Diversion Investigator positions requested, 34 were for regulatory activities and 16 for support of the squads.

In addition to conducting regulatory investigations, DEA has also actively engaged registrants and their industry associations to help the registrants understand current trends in diversion and the regulatory obligations they must demonstrate that they have fulfilled during regulatory investigations. For example, DEA periodically hosts conferences for the chemical and pharmaceutical industries to share information on current trends, issues, federal laws, and regulations, and to discuss practices to prevent diversion. Industry associations reported that DEA also attends industry- sponsored conferences and shares useful information and guidance. In addition, regulated industry reported that DEA provides information to registrants on DEA’s Web site as well as through policy letters and correspondence. According to DEA officials, they also speak at conferences such as the National Association of Boards of Pharmacy, the American Society of Interventional Pain Physicians, pharmacy schools, and other industry venues.

Furthermore, DEA has conducted other targeted outreach efforts to specific registrant types to inform them of specific regulatory responsibilities or help them prepare for regulatory investigations: In 2005 DEA established an initiative to better inform wholesale distributors of controlled substances of their responsibilities under the CSA to report suspicious orders from pharmacies that are possibly filling invalid prescriptions. As part of this initiative, DEA created a presentation explaining the laws, regulations, and DEA policies. The presentation provided examples of Internet pharmacies and rogue pain clinics as well as their purchase patterns and methods of operation. The presentation was designed to emphasize the need for wholesalers to utilize due diligence, and when appropriate, stop supplying retail outlets with controlled substances where diversion is occurring. From August 2005 through March 2011, DEA reported briefing 74 corporations concerning illegal Internet pharmacy operations and rogue pain clinics. Since the launch of the program, DEA reports that distributors have voluntarily stopped selling or restricted sales of controlled substances to approximately 1,390 customers believed to be placing suspicious orders for such substances.  During 2009 and 2010, DEA’s Office of Diversion Control officials met with a number of DWPs and industry associations that represent DWPs to inform them about the regulatory investigation process and regulatory requirements. They discussed recordkeeping and the security of controlled substances, among other items, that DWPs must meet to comply with the CSA and its implementing regulations.

DEA’s Internal Controls Help to Ensure the Quality of Investigations, but DEA Could Enhance Efforts to Measure Program Results

DEA helps to ensure the quality of its diversion control investigations through the use of internal controls, but could enhance its efforts to measure the results of its Diversion Control Program. To ensure that Diversion Investigators and Special Agents have the necessary skills to carry out their responsibilities and that DEA monitors the results of its employee guidance and training, DEA has established internal control activities, which are consistent with Standards for Internal Control in the Federal Government. DEA has established performance measures to assess and report on its progress toward meeting its performance goal of reducing the diversion of licit drugs, but could reassess the measures to identify ways to better capture and report on the results of DEA’s investigations.

DEA’s Efforts to Ensure Its Staff Have the Necessary Guidance, Training, and Oversight Are Consistent with Internal Control Standards

Diversion investigations are the primary means DEA uses to monitor registrant compliance with the CSA and to identify diversion activities. As such, it is important that the employees responsible for conducting investigations—Diversion Investigators and Special Agents—have the necessary skills to carry out their responsibilities and that DEA management monitors the results of its investigative efforts. To accomplish this, DEA has established internal control activities related to guidance, training, and monitoring. Given DEA’s increased focus on regulatory and criminal investigations in response to growing and evolving diversion, these internal controls help to provide reasonable assurance that investigators and agents have the necessary skill levels to meet existing program requirements for diversion investigations and changing organizational priorities as new trends in diversion emerge.

DEA has established internal control activities related to guidance and training such as program policy and procedures manuals and diversion investigation courses. These efforts are consistent with Standards for Internal Control in the Federal Government, which state that agency management should help to ensure it has a workforce that has the required skills that match those necessary to achieve organizational goals. Specifically, DEA provides guidance in the form of manuals to its Diversion Investigators and Special Agents on the policies and procedures they are to follow in conducting diversion investigations. DEA officials told us that they use this guidance for conducting diversion investigations and reviewing employee work products. The Diversion Investigator Manual describes and explains the policies and procedures for Diversion Investigators in carrying out their regulatory and investigative responsibilities, the processes for conducting diversion investigations, and the procedures for developing investigative reports. The Special Agent Manual describes and explains the responsibilities of Special Agents in diversion investigations.

In order to familiarize employees with the process for conducting diversion investigations and related policies and procedures, DEA requires basic training for new employees and offers advanced and supplemental training courses to existing personnel within the Diversion Control Program to help them maintain the knowledge and skills necessary to conduct diversion investigations. Specifically, DEA’s Office of Training provides a 12-week basic course to newly hired Diversion Investigator personnel, which includes techniques for diversion investigations among other relevant subjects, to help ensure that they have the required skills for performing investigator responsibilities. The training is provided through a combination of in-classroom lessons and practical application; direct observation; and instructor-to-trainee feedback. Course trainees must maintain an 80 percent average on exams and simulated on-site investigations in order to pass the course and be certified as a Diversion Investigator. After the completion of basic training, the investigators enter into duty under a 1-year probationary period with a midpoint review provided after 6 months of duty. In addition, according to DEA officials we spoke with, group supervisors may go on- site with newly hired employees to help ensure that they are familiar with the requirements of investigations.

DEA also requires its Diversion Investigators to complete an advanced (or in-service refresher) training course every 2 years to help ensure their investigative skills and knowledge remain current. The advanced training course is a 1-week course that focuses on current legal issues in diversion, recent updates to DEA program policies and technology, investigative techniques, and any other new initiatives or programs that DEA has incorporated as part of the diversion control program within the previous 2 years. Officials in DEA’s Office of Training told us that the topics that are covered during the advanced training course are identified through a biannual survey of Diversion Investigators and group supervisors to find out what issues they are facing in their work or what additional guidance is needed. DEA’s efforts to help ensure Diversion Investigators maintain their investigative skills and are informed of new program initiatives and program policy changes are consistent with federal internal controls standards which state that training should be aimed at developing and retaining employee skill levels to meet changing organizational needs.

Beyond the required basic and advanced training courses, Diversion Investigators and supervisors may take additional courses in other relevant subject matter areas as time, resources, and needs permit. For example, officials in DEA’s Office of Training told us that they offer specialized courses on specific issues related to diversion control investigations such as interviewing techniques, chemical investigations, techniques for financial investigations, and asset forfeiture, among others. Furthermore, the Diversion Control Program’s field divisions may occasionally sponsor supplemental training for personnel that they determine would be beneficial. Typically, such training is shorter in duration and narrowly focused on topics such as report writing, interviewing techniques, or legal or investigative issues specific to that division.

Group supervisors of Diversion Investigators also receive supervisory training to help ensure that they have the requisite knowledge to perform their supervisory responsibilities, including those responsibilities related to reviewing the work of Diversion Investigators. Specifically, when first promoted, supervisors attend a supervisory institute to learn their new roles and responsibilities as supervisors as well as receive training in management and leadership techniques. Group supervisors also have electronic access to PowerPoint presentations, handouts, and administrative manuals to help guide them in carrying out these responsibilities once they return to duty. As with the Diversion Investigators, supervisors also receive a 1-week advanced supervisor refresher course every 2 years.

Special Agents assigned to the Diversion Control Program are also provided training related to conducting criminal diversion investigations. The training for Special Agents includes a 1-week course to provide them with an in-depth understanding of criminal diversion investigations and includes instruction on methods of diversion, Internet investigations, and the investigative techniques to develop criminal investigations, among other issue areas related to diversion control.

Furthermore, DEA’s Office of Diversion Control recently developed and implemented a new training curriculum designed to retrain and retool all Diversion Investigators. According to DEA officials, as the reorganization of the diversion program required Diversion Investigators to conduct more regulatory investigations than previously, the retraining was developed to refresh the investigators’ skills and abilities for conducting the investigations. DEA officials reported that as of December 2010, all Diversion Investigators completed this training. These efforts are consistent with federal internal control standards which provide that training should help to retain employee skill levels in order to meet changes in organizational needs.

To assess the effectiveness of its training courses, officials in DEA’s Office of Training stated that they obtain student feedback on a training course evaluation form at the conclusion of each training course. Additionally, DEA training officials review the curriculum for basic Diversion Investigator training every 3 years using feedback from students and input from a training working group comprised of Diversion Investigators and group supervisors to ensure that the material being presented is relevant and up to date. DEA officials also reported that the Office of Training is in constant communication with diversion management staff at headquarters and in the field to ensure that the training curriculums include updated policies relating to diversion operations.

As DEA continues to enhance its diversion control efforts, it is important that it has controls in place to review the quality of its diversion investigations and to test the effectiveness of its review process in order to readily identify and resolve deficiencies related to its key compliance activity. Standards for internal control in the federal government provide that internal control monitoring should assess the quality of performance over time and ensure that findings of audits and other reviews are promptly resolved. DEA’s internal control monitoring activities collectively are consistent with these standards, which also state that internal controls should generally be designed to assure that ongoing monitoring occurs in the normal course of operations. Internal control monitoring includes regular management and supervisory activities among other activities and is performed continually. DEA has implemented a multilayered approach to monitor the work of its Diversion Control Program personnel to help ensure that they are following policies and procedures for diversion investigations. The monitoring process includes direct supervisory review, self-inspection/peer review, and on-site internal inspection. Additionally, DEA assesses the effectiveness of its monitoring process by reviewing the results of inspections conducted as a part of the overall program evaluation responsibilities of DEA’s Office of Inspections (IN) and determining actions necessary for improvement and additional employee training needs. Furthermore, DEA’s 2009-2014 Strategic Plan reflects that the agency plans to use the Office of Inspections to help ensure effective and efficient program oversight through its on-site inspections.

DEA field division supervisory officials reported that they directly review employee work products to assess the extent to which employees are following required policies and procedures for diversion investigations. Specifically, these supervisory officials review reports and active case files submitted by their employees for completeness, accuracy, and adherence to reporting procedures. If any discrepancies are found that need to be corrected, feedback is provided to employees as appropriate detailing what needs to be revised or clarified. Additionally, supervisory officials in three of the five field divisions we spoke with reported that they maintain regular communication to help ensure that employees are completing investigations in an accurate and timely manner. DEA officials also reported that group supervisors work with Diversion Investigators on- site when necessary to help advise them on the appropriate steps to take during an investigation. Whenever a case is being elevated for disciplinary action (civil or criminal), Division management presents a summary of the case to the program manager detailing the facts and rationale for the disciplinary action. Division management reviews the case summary and determines approval for further action (e.g., prosecution).

In addition to direct supervisory review of work products, DEA’s Office of Inspections also has a Self-Inspection Program (SIP) in which DEA field divisions are required to conduct annual self-inspections of five major program areas: enforcement management; enforcement effectiveness; financial management; confidential source management; and evidence.

According to the DEA officials we spoke with, during the on-site inspection process, field division group supervisors inspect each others’ group case files to determine if investigations were conducted in accordance with required policies and procedures. Supervisory officials in all five field divisions we spoke with stated that they conduct the self- inspections on an annual basis. The results of the self-inspection reports are reviewed by the Office of Inspections. According to DEA’s 2009-2014 Strategic Plan, information related to the SIP is used as the starting point for the Office of Inspection’s cyclic, on-site inspections.

The Chief of the Diversion Control Program’s Regulatory Section reported that field division officials submit to headquarters for review a copy of the investigative reports for every regulatory investigation that has been conducted. DEA officials then conduct a quality review of these reports which assists them in identifying deficiencies and determine the training needs of diversion personnel as they relate to completing regulatory investigations. The chief of the Diversion Control Program’s Regulatory Section stated that if report errors are identified during the review process, officials in the Regulatory Section follow up with the respective field division to address the issue and submit supplemental report information.

The Office of Inspections also conducts on-site internal inspections of DEA’s 21 field divisions to ensure that employees are following required program policies and procedures—in accordance with the Diversion Investigator manual. The office’s primary objective for on-site inspections of the diversion control program is to determine how the diversion control work is being conducted by the field divisions and identify and address any problems. According to the Chief Inspector the Office of Inspections, it is the Office of Inspection’s goal to conduct on-site inspections every 3 years as resources allow. See figure 3 for a description of the steps involved in the internal inspection report process: According to DEA officials, the Office of Inspections briefs headquarters- level management about the issues identified, and sends the report to the field division. For findings, the field division then has 60 days to provide a written response about the corrective actions that the field division has taken or plans to take. DEA officials also reported that they use internal inspections as an internal management tool to review their areas of responsibility. We reviewed DEA’s most recent inspection reports available for each of its 21 field divisions which summarized the results of interviews with management and staff, reviews of program operations, and case files reviews for policy compliance, among other items. We found that the inspections did not identify widespread findings or issues related to the timeliness and overall quality of the diversion investigations.

DEA Could Better Identify and Report on the Results of Its Diversion Control Efforts

Given DEA’s increased focus on regulatory and criminal investigations in response to growing prescription drug diversion, it is critical for DEA to determine and report on the extent to which these additional efforts are helping to reduce diversion. In this regard, DEA has established performance measures to assess and report on its progress towards meeting its performance goal of reducing the diversion of licit drugs, but could enhance its set of performance measures to better capture and report on investigative outcomes and their results on diversion. We have previously reported that performance information can be used to help decide among competing priorities and allocate resources in a results- oriented management system. Such performance information allows program managers to compare their programs’ results with goals and thus help determine where to target resources to improve performance. In addition, one of the key characteristics of successful hierarchies of performance measures is the ability of the measures to demonstrate how well a program is achieving its goals. As shown in table 2, DEA has developed five measures to track and publicly report the progress and results of its efforts in reducing the diversion of licit drugs.

According to DEA program officials, these measures were selected as a result of a performance measure review by the Department of Justice (DOJ) in 2009. For this review, DOJ asked all of its components to reexamine their performance measures to identify and discontinue performance measures that were confusing or did not adequately reflect the core mission. In place of such measures, DOJ asked the components to develop five core measures that are easy to understand and explain what is being accomplished with the resources expended. Our analysis of the measures found that while some indicate results, such as the number of organizations disrupted or dismantled that were involved in diverting prescription drugs, when taken together, the set of measures does not clearly demonstrate to what extent the additional efforts DEA has made in investigations in recent years are having an effect on the diversion problem. As a result, the set of measures do not clearly explain how they demonstrate progress towards the overall program performance goal of reducing diversion. DEA program officials acknowledged that these measures do not fully reflect the results of the program towards the reduction of diversion and as a result, they do not rely on them exclusively for managing the program or determining where best to allocate program resources. They stated that for the purposes of internal program planning and management, they have access to and utilize other data and measures not reported, or can pull up additional information on investigative results that provide more detail on what the program is achieving towards the reduction of diversion.

DEA has designated an overall outcome measure to track the results of the diversion control program as a whole; however, this measure does not demonstrate program results. This measure—Milestones for Development, Implementation, and Maintenance of Data Warehouse to Monitor Closed Distribution System—tracks the development of an information warehouse system DEA is developing for use in diversion investigations. According to DEA officials, when completed, this warehouse—known as the Rapid Targeting Online Reports Tool (RapTOR)—will facilitate data and trends analysis as part of diversion investigations. DEA officials explained that RapTOR is intended to streamline the investigation process by providing a comprehensive data warehouse tool that is linked to other DEA databases such as ARCOS, the drug theft/loss reporting system, and a system that tracks the number of asset forfeitures, arrests, and other enforcement data.

While the RapTOR appears to hold promise as a useful tool in diversion investigations, tracking the milestones of its development as the outcome measure for the overall diversion program does not demonstrate results or capture outcomes from the program as a whole as it is only one project within the program. According to OMB guidance to agencies on preparing strategic plans and performance reports, outcome measures are to describe the intended result of carrying out a program and define an event or condition that is external to the program and is of direct importance to the intended beneficiaries or the public. While tracking milestones for the RapTOR’s deployment may be useful as project- specific outcome measures, due to their focused nature they do not provide information on results of the diversion control program as a whole. For instance, reporting on RapTOR’s testing and deployment status does not provide program management or other decision makers such as Congress information to indicate the results of DEA’s regulatory and criminal investigations are having towards the reduction of diversion of licit drugs, the program’s performance goal. Development of an outcome measure that more directly demonstrates the external results of the overall program could provide better information to DEA program managers and other decision makers such as Congress about program successes which could also help determine how to most effectively use resources. According to DEA’s fiscal year 2012 budget submission, the RapTOR will allow for the development of an outcome measure. When asked if they planned to develop an outcome measure to replace the RapTOR, DEA officials indicated that until RapTOR is fully developed and implemented, it would be too soon to tell when a replacement outcome measure would be necessary. Furthermore, DEA officials could not explain how they use the RapTOR measure to show overall program results or outcomes or how it will be used to develop a measure that reports such results or outcomes.

Two of DEA’s performance measures track results DEA has achieved through criminal investigations of priority targets. In April 2001, DEA implemented the Priority Target Organization (PTO) program as a strategic initiative to identify, target, investigate, and disrupt or dismantle drug trafficking and/or money laundering organizations having a significant impact on drug availability within the United States. Although the Diversion Control Program was not officially part of the DEA’s Priority Targeting Program prior to fiscal year 2010, with the creation of Tactical Diversion Squads in every domestic DEA field division, the Diversion Control Program has since begun focusing on the identification of PTOs and their eventual disruption and dismantlement.

DEA has two separate measures to track the number of PTOs disrupted and dismantled—one for those with identified links to Consolidated Priority Organization Targets (CPOTs) and another for those without links to CPOTs. As a participant in the PTO program, the Diversion Control Program is required to report on these performance measures. Whereas PTOs are organizations with an identified hierarchy engaged in drug trafficking or drug money laundering operations, CPOTs are the command and control elements of a major international drug trafficking organization and/or money laundering enterprise that significantly impacts the U.S. drug supply. An example of a diversion PTO cited by DEA officials was a practitioner who prescribed large quantities of controlled substance pharmaceuticals for nonmedical purposes to “patients” from at least five different states. DEA officials stated examples of CPOTs involved in diversion include international chemical distributors that traffic in chemicals used to manufacture methamphetamine while other CPOTs traffic in pharmaceuticals or counterfeit pharmaceuticals.

Specifically, these measures report the extent to which DEA disrupted (disrupt) or stopped (dismantle) the operations of PTOs and these organizations’ ability to divert controlled substances, which helps to reduce the diversion of licit drugs, the program’s overall performance goal. For example in fiscal year 2010, DEA reported that it disrupted one PTO with linkages to a CPOT and dismantled one PTO with CPOT linkages. For PTOs without linkages to a CPOT, DEA reported disrupting 96 and dismantling 65 in fiscal year 2010. According to DEA officials, the PTO-related measures are useful in helping the program to focus criminal investigations on those priority targets against which they are likely to have the greatest impact on the diversion of licit drugs.

While DEA has some performance measures to demonstrate the results of its criminal investigations, it lacks measures that clearly track resulting outcomes DEA has achieved through its additional regulatory investigations. For example, DEA has a measure that provides a numerical count of the scheduled or regulatory investigations completed. According to DEA’s Fiscal Year 2009-2014 Strategic Plan, one of the objectives for the diversion control program is to ensure 98 percent compliance of all registrants by fiscal year 2014. However, while the performance measure is focused on the regulatory investigations and provides a count of the number of investigations completed, this measure does not demonstrate the results of those completed investigations or give a sense as to the extent to which registrants were found to comply with the CSA and thereby the extent to which DEA is achieving its stated objective. According to DEA officials, while they previously reported on the compliance rate of a subset of wholesale registrants as the program’s outcome measure, the reexamination of program performance measures in 2009 resulted in discontinuing use of the measure. DEA officials stated that because the compliance level among registrants tends to be very high in general, the values of the measure did not significantly change from year to year. Consequently, they stated, the measure did not provide a meaningful gauge of the results regulatory investigations were having. However, DEA data reported before it discontinued use of this measure showed that the compliance rate, while always relatively high, fluctuated between 88.5 percent to as high as 97.7 percent between fiscal years 2003 and 2008. Further, as stated in DEA’s strategic plan, one of the key objectives of the program is to ensure a certain level of compliance among registrants. Without the reporting of a measure that directly tracks a level of compliance among registrants, the public and other external stakeholders such as Congress will not be able to determine the extent to which DEA is achieving that specific objective. In addition, given that DEA more than tripled the number of regulatory investigations conducted from fiscal year 2009 to fiscal year 2010 including investigations of previously excluded registrant groups as well as increasing the frequency of investigations for a rapidly growing DWP registrant group—it will be important for DEA to be able to assess and report on the potential results these additional investigations are having on regulatory compliance.

In addition, the other performance measure reports on the number of sanctions DEA has taken against diverters or noncompliant registrants over the past year. As such, it is one indicator of the results of DEA investigations. However, as it is a count of the sanctions, it only demonstrates the number of sanctions taken, but does not provide context as to the severity of the sanctions or the reason for the sanctions. For example, administrative sanctions resulting from deficiencies in a registrant’s recordkeeping found during regulatory inspections may reflect a lack of compliance with the CSA but not necessarily instances of actual diversion. In contrast, criminal sanctions, such as prison time given to an individual or registrant for diversion of controlled substances, reflect sanctions taken against actual diversion that has occurred and identified during a criminal investigation. Because the sanctions are tallied together for the performance measure, it is difficult to determine to what extent they have resulted from regulatory noncompliance issues or instances of criminal diversion.

Another difficulty with combining the total number of administrative, civil, and criminal sanctions in one total is that changes in the number of the respective type of penalties mean different things in terms of what they indicate about the potential risk for diversion. For example, an increase in the number of criminal sanctions resulting from DEA’s criminal investigations indicates that individuals or PTOs involved in diversion have been disrupted or dismantled, reducing the potential risk for future diversionary activities, and is therefore a desirable change. However, an increase in the number of administrative sanctions resulting from regulatory investigations could indicate a trend of rising noncompliance among registrants, which is an undesirable change as it implies that DEA’s outreach efforts with industry may not have been effective and the potential risk for diversion is higher as a result of registrants’ noncompliance. As a result, this measure does not provide a clear indication as to the effect DEA’s investigative efforts are having on the problem of diversion. By tracking sanctions resulting from regulatory noncompliance combined with sanctions resulting from criminal diversion, program managers and other decision makers may lack information on what type of noncompliance is increasing and be able to determine what adjustments to the program’s efforts, if any, might be necessary to address the root causes of increases in the number of sanctions.

DEA officials acknowledged that this measure by itself is not detailed enough to provide that information. However, they stated they supplement the measure for internal program planning and management functions by conducting analyses that separate out the different types of sanctions and provide more meaningful data on the sanctions to identify diversion trends, determine the results of their efforts, and inform future program plans and policy decisions. Officials also noted that providing a single count of sanctions without breaking them out helped simplify the measure and meet DOJ’s goal of limiting the number of overall performance measures to five. While this may be more manageable for the purpose of providing performance information, the measure does not clearly tie to outcomes and demonstrate program performance—a key goal of DOJ’s performance measure reexamination effort—and does not provide sufficiently meaningful information and data to external stakeholders and policy makers such as Congress about the types of sanctions DEA has taken as a result of both regulatory and criminal investigations.

Conclusions

The growing problem of controlled substance diversion presents a serious and constantly evolving threat to public health and safety. In responding to this threat, DEA faces a unique challenge in being proactive to investigate and stop the diversion of controlled prescription drugs and substances, while at the same time, ensure that individuals with legitimate needs and uses for such substances can obtain them. In recent years, DEA has taken steps to adjust its approach to increase its efforts in conducting regulatory and criminal investigations to facilitate registrant compliance with the CSA and enhance coordination and leverage the resources and abilities of other federal, state, and local partners when conducting investigations into criminal diversion. Given the steps DEA has taken, it is important for DEA management to track the results its efforts are having against diversion in order to determine what benefits are being realized and what, if any, adjustments need to be made to make them more effective.

DEA has established a set of performance measures for the program, but the link between most of the measures and how they demonstrate the progress DEA is making towards the overall goal of reducing diversion is unclear. Making more meaningful information available externally about the program’s results would enable program managers and external stakeholders to better understand what the program is accomplishing and provide more effective oversight. By developing an outcome measure that demonstrates programwide results of benefit to the public and revising other performance measures to better track and report on the results of investigations and their results on reducing diversion of prescription drugs, DEA could make the measures more effective for demonstrating results. Doing so could also provide DEA program managers and other decision makers such as Congress better information to target program approaches accordingly to further optimize results against diversion.

Recommendation for Executive Action

In order for DEA to better determine to what extent its efforts are decreasing diversions and to inform future program decisions, we recommend that the Administrator of DEA strengthen the agency’s performance measurement for the Diversion Control Program by reassessing its set of performance measures for the program to identify ways to enhance the measures and their link to the program outcome goal of reducing diversion.

Agency Comments and Our Evaluation

We requested comments on a draft of this report from DOJ. DEA provided written comments, which are summarized below and reprinted in full in appendix I. In its comments, DEA stated it would take action to address the recommendation to strengthen its set of performance measures for the Diversion Control Program but that it disagreed with the finding that its performance measures do not adequately measure how its efforts reduce diversion or that such deficiencies impede resource allocation decisions. In an e-mail received on August 4, 2011, the Acting Assistant Director of DOJ’s Audit Liaison Group clarified DEA’s position stating that DEA did not concur with the recommendation.

In its comment letter and attachment, DEA stated that the report demonstrated that its management is appropriately directing its resources towards key points of diversion and confirms that DEA has been successful in accomplishing its objectives. DEA reiterated that performance measures must be viewed within the context of other information to assess the results that DEA efforts have on public health and safety as well as the reduction of diversion. To this end, DEA stated that its leadership provides policy makers and legislators information though a variety of other sources such as budget requests, intelligence reports, briefings, and testimonies. They also noted that the majority of such information presented to policy makers is based on investigative data and intelligence which is broader in scope than performance measures. In regards to developing or implementing measures to track regulatory performance, DEA stated that further strengthening the current performance measures to include regulatory performance measures would not provide any additional benefit in assisting the agency or other decision makers in the allocation of resources or targeting of program approaches to further optimize results. DEA stated that it would be extremely difficult to do so because the vast majority of registrant inspections do not uncover serious violations of the CSA and thus a very small number of registrants are subject to sanctions during the annual inspection cycle. Further, DEA stated that the deterrent effect of regulatory investigations cannot be quantified making it impossible to measure the lack of diversion resulting from DEA’s efforts.

As the report indicates, we recognize that DEA has taken steps to allocate resources and position the program to respond to emerging diversion trends. However, the report does not state that DEA management has appropriately directed its resources or confirm that DEA has been successful in accomplishing its objectives. The review on which this report is based describes how DEA manages its investigations to address the growing and evolving nature of diversion and did not evaluate those actions for their efficiency or effectiveness as implied by DEA. At the same time, as our evidence did not suggest that DEA’s use of current performance measures has directly impeded its resource allocation decisions to date, we made changes to the report to minimize any inference of such a finding. Moreover, the fact that a program may appear well managed on the basis of anecdotal and qualitative evidence does not negate the need or obligation for an agency to develop and use performance measures that hold it accountable for determining, articulating, and reporting what a program is accomplishing.

As performance measurement is a key part of an agency being results- oriented, that is, tracking and being held accountable for the results or outcomes an agency produces through its programs, our recommendation is intended to ensure that the program’s performance measures meet the standards for performance measures established by DOJ and OMB and are the best measures possible to demonstrate and report the program’s results to program management, other external decision makers such as Congress, as well as the public. We agree that program managers and decision makers can and should use other relevant program information in addition to performance measures when allocating resources and making program decisions. However, this also does not negate the need or obligation for an agency to develop and use performance measures that meet the standards established by DOJ and OMB. On the basis of our evaluation of the program’s performance measures against the guidance and criteria for performance measures provided by DOJ and OMB, as well as our previous work on performance measurement, we believe that further refinements to the program’s performance measures are merited and have the potential to help make the measures provide more useful information on the achievements of the program.

Because many outside parties, such as industry members and the American public, may not have access to other contextual information DEA may provide policy makers and legislators, refinement of the current set of program performance measures could enable DEA to better assess and externally report on the results of the program in a more meaningful and understandable way. As DOJ guidance to component agencies suggests, performance measures should clearly articulate what an agency is accomplishing with the resources used in language outsiders can understand. Some of the key measures DEA is using do not meet this standard. For example, according to DEA, tracking the milestones for the development, implementation, and maintenance of the program’s Rapid Targeting Online Reports Tool (RapTOR) was chosen as the program’s outcome measure so that managers could monitor the development and implementation of the system to ensure it was done in a timely and cost-efficient manner. While we agree that project schedule and cost should be closely monitored, this measure does not articulate to outsiders what the program is accomplishing as called for by DOJ’s guidance for performance measures. Further, given that the RapTOR is an internal data warehouse tool DEA is developing, the reporting of milestones for the development, implementation, and maintenance of the tool does not provide an overall indicator of success for DEA’s diversion program or its stated goal of reducing the diversion of licit drugs. As a result, it also does not meet OMB’s criteria that requires outcome measures to describe or capture an event or condition external to the program that is of importance to the public. Indeed, DEA program officials could not describe how they use this measure more broadly beyond tracking the progress of the project itself.

In regards to developing or implementing a performance measure to track the impact of the regulatory inspection process, we disagree with DEA that including a regulatory performance measure would not provide any additional benefit. DEA stated that it would be extremely difficult to develop such a measure because the vast majority of registrant inspections do not uncover serious violations and thus sanctions are taken against a very small number of registrants. While this may be the case, reporting the number of administrative, civil, and criminal sanctions taken as a single count as DEA currently does, does not provide perspective as to how many sanctions are a result of regulatory infractions and how many are a result of criminal infractions. Also, as DEA points out, the severity of sanctions and their impacts can vary greatly ranging from requiring on-site corrections by a registrant for minor infractions to DEA pursuing legal sanctions against a registrant which could have a profound effect on the wider registrant population as a whole. Given the differences between regulatory sanctions and criminal sanctions and the potential severity of different sanction types, we continue to believe it would be useful for DEA to develop a measure that separately tracks the results of regulatory investigations or the number and severity of regulatory sanctions taken for identified infractions. With such a measurement, more information would be available to program managers, other decision makers, and the public on what type of noncompliance, if any, is increasing and thereby decision makers would be better able to determine what adjustments to the program’s efforts, if any, might be necessary to address the causes of increases in the number of sanctions.

In terms of tracking the lack of diversion or similarly, the reduction in diversion resulting from DEA’s efforts, DEA stated that it would be impossible to measure. However, given that one of the key program objectives DEA identified in its strategic plan is ensuring a level of compliance with the CSA among DEA registrants, whose compliance in turn directly maintains the closed system of distribution established by the CSA, it is important that DEA have a performance measure that directly links to this objective. We and OMB have acknowledged the difficulty in developing measures for programs that aim to deter or prevent specific behaviors, and have reported that in such instances proxy measures should be designed to assess the effectiveness of program functions. Proxy measures can be used to assess the effectiveness of program functions rather than directly assess the effectiveness of the program. In this regard, one possible approach DEA could use is to develop a proxy measure that tracks the compliance rate of wholesale registrants based on the results of regulatory investigations completed that year. Also, OMB has pointed out, it may be necessary to have a number of proxy measures to help ensure sufficient safeguards are in place to account for performance results.

Given the significant and growing problem of the diversion and abuse of pharmaceutical-controlled substances in the United States, having a set of performance measures that clearly conveys the accomplishments of the Diversion Control program is perhaps even more important now. By reassessing the program’s current performance measures and making changes where necessary to the measures, DEA will be in a better position to provide enhanced information to program managers, other decision makers such as Congress, and the public on the extent to which the program is achieving its stated longer range performance goal of reducing diversion.

DEA also provided technical comments, which we incorporated as appropriate.

As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies of this report to interested congressional committees, the Attorney General, the Administrator of the DEA, and other interested parties. In addition, the report will be made available at no charge on GAO’s Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report or wish to discuss the matter further, please contact me at (202) 512-8777, or larencee@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix II.

Appendix I: Comments from the Drug Enforcement Administration

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Acknowledgments

In addition to the contact named above, Kirk Kiester, Assistant Director, and Christopher Hatscher, Analyst-in-Charge, managed this assignment. Frances Cook, Vanessa Dillard, Sally Gilley, Jessica Orr, and Alechia Smith made significant contributions to the report.