The diversion and abuse of prescription drugs are associated with incalculable costs to society in terms of addiction, overdose, death, and related criminal activities. DEA has stated that the diversion and abuse of legitimately produced controlled pharmaceuticals constitute a multibillion-dollar illicit market nationwide. One recent example of this growing diversion problem concerns the controlled substance oxycodone, the active ingredient in over 20 prescription drugs, including OxyContin, Percocet, and Percodan. OxyContin is the number one prescribed narcotic medication for treating moderate-to-severe pain in the United States. Currently, a single 20-milligram OxyContin tablet legally selling for about $2 can be sold for as much as $25 on the illicit market in some parts of Kentucky. Combating the illegal diversion of prescription drugs while ensuring that the pharmaceuticals remain available for those with legitimate medical need involves the efforts of both federal and state government agencies. The Controlled Substances Act of 1970 provides the legal framework for the federal government’s oversight of transactions involving the sale and distribution of controlled substances at the manufacturer and wholesale distributor levels. The states address these issues through their regulation of the practice of medicine and pharmacy. The Controlled Substances Act established a classification structure for drugs and chemicals used in the manufacture of drugs that are designated as controlled substances. Controlled substances are classified by DEA into five schedules on the basis of their medicinal value, potential for abuse, and safety or dependence liability. Schedule I drugs—including heroin, marijuana, and hallucinogens such as LSD and PCP—have a high potential for abuse and no currently accepted medical use. Schedule II drugs—including methylphenidate (Ritalin) and opiates such as hydrocodone, morphine, and oxycodone—have a high potential for abuse among drugs with an accepted medical use and may lead to severe psychological and physical dependence. Drugs on schedules III through V have accepted medical uses and successively lower potentials for abuse and dependence. Schedule III drugs include anabolic steroids, codeine, hydrocodone in combination with aspirin or acetaminophen, and some barbiturates. Schedule IV contains such drugs as the antianxiety medications diazepam (Valium) and alprazolam (Xanax). Schedule V includes preparations such as cough syrups with codeine. All scheduled drugs except those in schedule I are legally available to the public with a prescription. Under the act, DEA provides legitimate handlers of controlled substances—including manufacturers, distributors, hospitals, pharmacies, practitioners, and researchers—with registration numbers, which are used in all transactions involving controlled substances. Registrants must comply with a series of regulatory requirements relating to drug security and accountability through the maintenance of inventories and records. Although all registrants, including pharmacies, are required to maintain records of controlled substance transactions, only manufacturers and distributors are required to report their transactions involving schedule II drugs and schedule III narcotics, including sales to the retail level, to DEA. The data provided to DEA are available for use in monitoring the distribution of controlled substances throughout the United States, in identifying retail-level registrants that received unusual quantities of controlled substances, and in investigations of illegal diversions at the manufacturer and wholesaler levels. Although data are reported to DEA regarding purchases by pharmacies, the act does not require the reporting of dispensing information by pharmacies at the patient level to DEA. State laws govern the prescribing and dispensing of prescription drugs by licensed health care professionals. State medical practice laws generally delegate the responsibility of regulating physicians to state medical boards, which license physicians and grant them prescribing privileges. In addition, state medical boards investigate complaints and impose sanctions for violations of the state medical practice laws. States regulate the practice of pharmacy based on state pharmacy practice acts and regulations enforced by the state boards of pharmacy. The state boards of pharmacy are also responsible for ensuring that pharmacists and pharmacies comply with applicable state and federal laws and for investigating and disciplining those that fail to comply. According to the National Association of Boards of Pharmacy, all state pharmacy laws require that records of prescription drugs dispensed to patients be maintained and that state pharmacy boards have access to the prescription records. State prescription drug monitoring programs varied in their objectives and operation. While all programs were intended to help law enforcement identify and prevent prescription drug diversion, some programs also included education objectives to provide information to physicians, pharmacies, and the public. Program operation also varied across states, in terms of which drugs were covered and how prescription information was collected. Which agency, such as a pharmacy board or public health department, was given responsibility for the program also varied across states. Additionally, methods for analyzing the data to detect potential diversion activity differed among state programs. State monitoring programs are intended to facilitate the collection, analysis, and reporting of information on the prescribing, dispensing, and use of prescription drugs within a state. The first state monitoring program was established in California in 1940, and the number of programs has grown slowly. We reported that the number of states with programs has grown from 10 in 1992 to 15 in 2002; the number of programs stands at 16 in 2004. We found that state programs varied in their objectives. All states used monitoring programs primarily to assist law enforcement in detecting and preventing drug diversion, and but some also used the programs for educational purposes. Programs assisted law enforcement authorities both by providing information in response to requests for assistance on specific investigations and by referring matters to law enforcement officials when evaluations of program data revealed atypical prescribing or dispensing patterns that suggested possible illegal diversion. The programs evaluated prescribing patterns to identify medical providers who may have been overprescribing and inform them that their patterns were unusual. They also identified patients who may have been abusing or diverting prescription drugs and provided this information to practitioners. For example, the programs in Nevada and Utah sent letters to physicians containing patient information that could signal potential diversion activity, including the number and types of drugs prescribed to the patient during a given time period and the pharmacies that dispensed the drugs. Monitoring programs have also been used to educate physicians, pharmacies, and the public about the existence and extent of diversion, diversion scams, the drugs most likely to be diverted by individuals, and ways to prevent drug diversion. Monitoring programs also differed in operational factors, some of which have cost implications. These factors included the choice of controlled substance schedules monitored, approaches to analyzing and using data, computer programming choices, number and type of staff and contractors, turnaround times and report transmittal methods, and number and type of requests for information. State programs varied in the controlled substances they covered, in part because of differences in available resources and other state-specific factors such as level of drug abuse. Two of the states we studied— Kentucky and Utah—covered schedules II through V. These states’ program officials told us that covering those schedules allowed them flexibility to respond if drugs on other schedules became targets for diversion. Most experts agree that covering all controlled substance schedules prevents drug diverters from avoiding detection by bypassing schedule II drugs and switching to drugs in other schedules. States used different approaches to analyze the prescription information they received. A few states used a proactive approach, routinely analyzing prescription data collected by the programs to identify individuals, physicians, or pharmacies that had unusual use, prescribing, or dispensing patterns that could suggest potential drug diversion, abuse, or doctor shopping. Trend analyses were shared with appropriate entities, such as law enforcement, practitioners, and regulatory and licensing boards. In contrast, most state programs generally used the prescription data in a reactive manner to respond to requests for information. These requests may have come from physicians or from law enforcement or state officials based on leads about potential instances of diversion. According to state program officials, most programs operated in a reactive fashion because of the increased amount of resources required to operate a proactive system. Some state programs had electronic reporting systems, while others were paper-based. If data are reported electronically, there are ongoing computer maintenance and programming choices and their attendant costs. Similarly, some state programs engaged private contractors to collect and maintain the data, while others did so in-house. If a private contractor collects the raw data from dispensers and converts them to a standardized format, the program pays annual contracting costs for database maintenance. Kentucky and Nevada privately contracted with the same company to collect data for their program databases. Utah, in contrast, collected and maintained drug dispensing data in-house, using its own software and hardware. The number and type of staff a state chose to operate its monitoring program also varied. In 2002, Kentucky’s program employed four full-time and four part-time staff to help ensure the accuracy of its reports, including a pharmacist-investigator who reviewed each report before it was sent. Nevada’s program operated with one employee because a private contractor collected the data. In contrast, in 2002 Utah’s program, with three full-time employees and no private contractor, had one program administrator who collected all dispensing data, converted them to a standardized format for monitoring, and maintained the database. The two other staff answered requests. If the program seeks to provide more timely responses to report requests, such as same-day responses, the costs involved in returning the response to the requester may increase. For example, in 2001 Kentucky spent up to $12,000 in 1 month for faxing reports. Monitoring program officials from Kentucky, Nevada, and Utah told us in 2002 that they estimated 3- to 4- hour turnaround times for program data requests, and all mainly used faxing, rather than more costly mailing, to send reports to requesters. Same-day responses may be preferable for physicians who want the prescription drug history for a patient being seen that day and for law enforcement users who need immediate data for investigations of suspected illegal activity. As users become more familiar with the benefits of monitoring program report data, requests for information and other demands on the programs may increase.