Agenda - 01-23-2018 4-b - Presentation on Opioids and Legal Issues

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, To further combat diversion of controlled substances, the distributors are legally required under federal law to be on alert for suspicious controlled substance orders by pharmacies — such as orders of unusual size, frequency, or pattern — and to report these unusual orders to the relevant authorities so that they can be investigated. Federal law charges registered wholesale distributors with the non - delegable duty to "design and operate a system to disclose ... suspicious orders of controlled substances. The registrant [distributor] shall inform the Field Division Office of the Administration in his area of suspicious orders when discovered by the registrant. Suspicious orders include orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency." 21 C.F.R. § 1301.74(b). While the suspicious order reporting requirement is certainly entrenched in federal law, many states have taken the additional step of making this a state law requirement as well. States such as West Virginia, Indiana, and South Carolina, among others, require wholesale distributors to report suspicious orders of opioids to their state pharmacy boards. C. Wholesale Distributors Have Been Warned of and Have Admitted Their Obligations. The distributors have been on specific notice of their duties with regard to suspicious orders since at least September 2006, when the DEA sent distributors letters referencing the federal CSA monitoring and reporting requirements and providing guidance on what may constitute a "suspicious order." These letters identified diversion and abuse of controlled prescription drugs as a "serious and growing health problem," commanded that "distributors must be vigilant" in determining who can be trusted to receive controlled substances, reminded distributors of their obligation to identify and report suspicious orders, and provided guidance on what circumstances may be indicative of diversion. The wholesale distributors have readily admitted their monitoring and reporting obligations. The major pharmaceutical distributors (the potential defendants here) are members of the Healthcare Distribution Alliance ( "HDA ") (known until mid -2016 as the Healthcare Distribution Management Association, or "HDMA "), a trade association that represents pharmaceutical distributors throughout the Americas. Such members include, for example, McKesson, AmerisourceBergen and Cardinal Health, the heads of which also sit on the HDA executive committee and board. This membership is significant because, in response to DEA requirements that distributors investigate and report any suspicious controlled substance orders, HDA created "Industry Compliance Guidelines" for pharmaceutical distributors. These Guidelines, which were developed with the "strong endorsement and expertise of [HDA] members" not only function as admissions of the member distributors' duties, but also serve to set out the industry standards to which these distributors may be held. The distributors created these Guidelines "in recognition of a growing problem of misuse and diversion of controlled substances," so that the distributors could "further scrutinize purchase 3