Preparation, Cooperation Key to Successfully Navigate DEA Audits and Investigations


An ounce of prevention is well worth a pound of cure when it comes to DEA investigations.

Pharmacists are no strangers to regulations. Independent pharmacists and pharmacy owners have become adept at navigating a maze of mandates and laws set forth by insurance companies, pharmacy benefit managers, and state boards of pharmacy. But audits and investigations by the Drug Enforcement Administration (DEA) are, for many, a different beast entirely.

As a part of its regulatory oversight authority, the DEA is authorized to conduct inspections of registered entities—especially those that are authorized distributors of Schedule II through Schedule V controlled substances. The key to avoiding these inspections? Eliminating any circumstances that may trigger one.

“We as pharmacies, when we’re dealing with a controlled substance, we need to be aware that not only are we regulated by the State Board of Pharmacy, not only do we have to follow all kinds of state and federal laws, but [it’s] equally important that we make sure we have policies and procedures in place that will satisfy DEA requirements,” said Jeffrey S. Baird, Esq., chairman of the Health Care Group at Brown & Fortunato.

Baird and his colleague Bradley W. Howard, Esq., also of Brown & Fortunato, led a session focused on navigating these investigations during the National Community Pharmacists Association (NCPA) 2023 Annual Convention and Expo, held October 14 to 17 in Orlando, Florida.

During the course of a pharmacist’s career, it’s highly likely—“a certainty,” Baird said—that the State Board of Pharmacy will conduct an inspection; it’s equally as likely that pharmacists will have to engage with and respond to questions from pharmacy benefit managers as well. “That’s to be expected,” he said. But the DEA? “We would like to avoid a DEA inspection. That’s our preference.”

Although periodic, random DEA inspections may occur, DEA investigations are nearly always the result of a specific compliance concern, such as reports of drug theft or diversion, unusual or concerning dispensing history, and whistleblower tips around noncompliance.

“The pharmacy profession is an integral part of health care delivery, because the [goal] of health care delivery is to keep patients out of hospitals; hospitals are a last resort,” Baird explained. “Pharmacists and pharmacists have become more than folks who dispense drugs.”

But, he continued, “because we are so integral to health care delivery, we live in a glass house. If you’re doing something that you shouldn’t be doing, somebody knows about it; you cannot hide it.”

As the saying goes, an ounce of prevention is worth a pound of cure. This is especially true when it comes to protecting a pharmacy against a DEA inspection, Baird pointed out, explaining that compliance is the best prevention to avoid a DEA investigation and the headache that follows.

Prevention can take many forms, but should be built around sound pharmacy practices and vigilance on the part of the pharmacy owner, pharmacists, and other staff around the control and dispensing of any controlled substances within the pharmacy. These practices include both the implementation and enforcement of internal controls around record keeping, ordering, dispensing, and physical security of the controlled substance stock. When combined with regular self-inspections, these steps can, in most cases, prevent issues from cropping up in the first place. Equally as crucial? Having a robust compliance program in place can go a long way if the DEA does initiate an investigation to mitigate any adverse consequences.

Red Flags for the DEA

DEA investigations can be triggered by any number of issues, according to Baird. Is the pharmacy over dispensing commonly abused controlled substances? Have there been reports of drug diversion? Or have whistleblowers—employees, business partners, or competitors—made reports to the agency?

When conducting an investigation, the DEA will focus in on 4 areas of focus: prescription validity, prescription legitimacy, drug theft and diversion, and record keeping.

“When we look at a script, is there a missing or incorrect DEA or license number? Are there other alterations? Is there an unusually high dose or concentration? These are telltale signs,” Baird said. “If we see these, we can’t just ignore them, because by ignoring them, we could put our business in jeopardy.”

According to Baird, other factors that pharmacists and staff should watch for include a single individual attempting to fill prescriptions for multiple third parties; an individual’s inability to explain why they’ve been prescribed a medication; cash payments, particularly for individuals who have insurance; and out of state or remote patients.

It’s also crucial that pharmacists ensure the legitimacy of the prescriptions brought in to fill. Examples of illegitimate prescriptions include those that are “cookie cutter” in nature; physicians writing prescriptions for a drug outside of their normal practice area; or prescriptions from a physician who has a high volume of prescriptions for commonly abused or misused drugs.

Navigating the Investigation

Unfortunately for the community pharmacists in the room, “The DEA will come to everybody’s pharmacy,” said Howard. “They’re very, very focused…on community pharmacy. I’ll be frank: They don’t have a lot of confidence in a lot of smaller, family-owned operations.

There are a few reasons for that, said Howard. “Number one, they think a lot of the smaller operations are a little too cozy with prescribers, and they worry that you will fill whatever it is that’s written for any patient you’ve served before, and you’re not going to be discerning,” he explained. “That’s a DEA point of view that we see in a lot of the investigations that we handle.”

As with much in life, appearances matter to the DEA. “I can tell you, when they walk in, if the laminate on the door doesn’t look good, if it looks like a bad business hub—not an open and welcoming kind of business—that doesn’t look very professional, they immediately walk in and have a suspicion,” Howard added.

Howard acknowledged that DEA investigations can, of course, be intimidating; in any industry, people are rarely happy when government investigators show up. But first impressions count here, and remaining calm and cooperative can go a long way as the investigation unfolds. “If you come across as nervous, or lacking confidence, or not being transparent [or] helpful, they form judgments very quickly,” he explained. “If the DEA doesn’t have confidence in you or your team assisting with the audit…it’s hard to overcome [that first impression].”

Although the facts of the case at hand will dictate much of the scope and extent of a given investigation, all DEA audits generally follow a similar process, Howard explained. When they arrive, the DEA will inspect the pharmacy’s records, their stock of controlled substances, and the premises as a whole, as well as possibly conduct staff interviews. After the audit is complete, the agency reviews its findings and determines if any discrepancies or violations exist.

In cases where there are relatively few discrepancies, the agency may opt to resolve them through a Corrective Action Plan or Letter of Admonition. More significant discrepancies or violations, though, may be referred to the Department of Justice (DOJ).

“You want to train your team that when the DEA shows up, it can go really well, or it can go really poorly,” Howard said. “And the difference is so simple. Most audits go really well; courteous, well-prepared staff and pharmacists [who are] prepared to show them where the records are, and to drop what they’re doing to take care of them, who convey confidence in the way your business conducts operations…Rarely ever, in those cases, is it necessary for them, in their minds, to refer [the matter] to the DOJ.”

Preparing for a DEA Inspection

The first time a pharmacy owner considers who to retain as legal counsel shouldn’t be after the DEA has arrived for an inspection. Retaining health care counsel can not only assist pharmacists in preparing and implementing a compliance program, but can also be involved with the investigation from the onset.

“Understand that the DEA is used to working with health care lawyers,” Howard said. “I get asked all the time, ‘Am I going to look guilty if I get my lawyer involved in this investigation?’ No. It’s going to make you look smart.”

During the investigation, the goal of a pharmacist or pharmacy owner is to learn what they can about the reasons for the investigation. Don’t deny the DEA access to pharmacist records, Howard said, which will convey an attitude of noncompliance. Carefully note what the DEA agents ask about and focus on, and do not agree to an interview without first consulting with health care counsel. That counsel can guide pharmacists through the process of providing any additional or supplemental information the agency requires, help pharmacists conduct an internal investigation of their store, and begin to prepare their response to the agency.

Key Takeaways

Baird and Howard provided 5 key takeaways for session attendees:

  • Prevention is the best cure. The best way to handle an investigation is to avoid having one.
  • The pharmacy gets one first bite at the apple; don’t waste it. The first response is the most impactful, so take time and make it count.
  • Know your audience. The DEA has power over the pharmacy’s ability to operate, and is able to bring criminal charges if necessary.
  • Know when to involve an attorney. Counsel can be costly, but involving knowledgeable representation early in the process can be a significant help down the line.
  • Cooperation is advised. Present the pharmacy as an asset aligned with the goals of the DEA.

“If you take nothing else from this program today, take home the following: If our brain tells us one thing, and our stomach tells us something else, we ignore our brain and trust our stomach,” said Baird. “All of us can rationalize a dishonest decision, but our stomachs never lie. When we’re going through mental gymnastics to justify something, but our stomach kind of hurts? Walk away from it.”

Baird JS, Howard BW. How to respond to DEA investigations. Presented at: National Community Pharmacists Association 2023 Annual Convention and Expo; October 14-17, 2023; Orlando, FL.
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