A Bitter Pill for DEA: GAO Releases its Report on Drug Shortages and DEA’s Management of the Quota System

March 9, 2015

By Karla L. Palmer

On March 4, 2015, the U.S. General Accountability Office (GAO) released a lengthy and detailed report, titled “Better Management of the Quota Process for Controlled Substances Needed; Coordination between DEA and FDA Should Be Improved,” addressing controlled substance shortages potentially resulting from DEA and FDA’s management and coordination of the quota process.  

The Report stems from a 2012 request from Senate Judiciary Committee members Charles Grassley (R-IA) and Sheldon Whitehouse (D-RI).  The Senators raised questions about shortages of controlled substances and asked GAO to examine the effect of such shortages on patients.  They also tasked GAO with a review of DEA’s administration of the quota process to understand its potential effects on shortages of drugs containing controlled substances, particularly those used by the emergency medical system.  

To prevent diversion of controlled substances, as established by the Controlled Substances Act (CSA) and its implementing regulations, DEA sets quotas that limit the amount of certain substances that are available in the United States.  However, the Report notes that shortages of controlled substances increased significantly in recent years; specifically, of the 168 shortages reported from January 2001 through June 2013, nearly 70 percent began after 2007, and lasted for about a year.   Many shortages involved generic pain relievers and drugs where there was only one manufacturer.

The Report reviews data from 2001-2013, and examines the following: (1) shortage trends; (2) effect on patients and providers; (3) DEA’s administration of the quota process; and, (4) coordination between DEA and FDA to prevent and mitigate shortages.  To prepare the Report, GAO reviewed relevant documents; the statutory and regulatory scheme; and interviewed officials from DEA, FDA, organizations representing patients and providers, and drug manufacturers.

GAO makes the several recommendations for executive action including the following: (1) DEA should take five actions to improve its management of the quota process; (2) DEA and FDA should quickly update their existing Memorandum of Understanding (MOU) that has not been revised since the 1970s; and, (3) DEA and FDA should better coordinate on steps moving forward.  

The Report generally concludes that DEA is not well prepared to “expeditiously respond to future shortages.”  After describing in detail the regulatory timelines that DEA must meet to issue quotas (see 9-14), the Report states DEA has “not met its required time frames for establishing quotas for more than a decade.”  (47)  DEA also lacks “sufficient internal controls to ensure the reliability of the data it uses to establish quotas,” which GAO found “led to errors in its data system.”  (47)  Moreover, the Report notes that DEA does not monitor the data it collects and has no established performance measures related to either setting quotas in a timely manner or ensuring an adequate and uninterrupted supply of controlled substances for legitimate medical use.  And, DEA’s “lack of written policies and procedures for a complex process poses a risk to the continuity of its future operations.” (42)  Below is a brief description of GAO’s seven recommendations. 

1.  The DEA Administrator should establish controls, including periodic data checks, to ensure that the Year End Reporting and Quota Management System (YERS/QMS) data, which is the official record of the quota process, accurately reflects both manufacturers' quota submissions and DEA's decisions.  For example, in a review of YERS data from 2011 and 2012, GAO estimates that “44 percent of the records in 2011 and 10 percent of the records in 2012, each of which corresponds to one quota application and DEA decision letter, contained at least one data field with incorrect data, such as incorrect dates or amounts of quota requested or authorized.”  (30-38)  In particular, DEA does not have adequate controls to ensure the reliability of the YERS/QMS system used to track manufacturers’ quota applications and record its decisions. DEA officials told GAO, “there are no systematic quality checks to ensure that the data in YERS/QMS are accurate, such as electronic checks for data outliers or manual comparisons of YERS/QMS data to source documents (i.e., manufacturers’ quota applications and corresponding DEA decision letters) to identify inconsistent information.”  (36)  The GAO found that DEA’s lacking systematic data checks is “inconsistent with federal standards for internal control, which calls for agencies to have appropriate control activities in place, such as periodic data checks, to ensure that the data used by the agency for decision making are accurate.”  (36) 

2.  The DEA Administrator should establish performance measures for DEA related to quotas and ensuring an adequate and uninterrupted supply of controlled substances for legitimate medical use.  In the absence of such performance measures, DEA does not have key information for program managers to make decisions about program resources, and the agency cannot effectively demonstrate program results.  Federal standards state that performance measures are “an important management tool and that such measures provide critical information to managers about agency performance and program outcomes.”  (40)   DEA officials counter that performance measures related to establishing quotas or ensuring an adequate and uninterrupted supply of controlled substances would be “inappropriate because of the complexity of individual quota applications and the difficulty of projecting the number of quota applications for future years.  (39)  Nonetheless, GAO notes that performance measures related to quotas, including percentage of applications that require follow-up by DEA, are a critical internal control, “without which DEA cannot determine if its process for establishing quotas is having the desired outcome.”  (39)  Without such measures, the agency cannot make decisions about resources or demonstrate results.

3.  The DEA Administrator should monitor and analyze YERS/QMS data to assess administration of the quota process.  DEA told GAO that it does not monitor or analyze available data from YERS/QMS to assess its administration of the quota process, “which federal standards for internal control state is an important component of managing a program.”  DEA officials said that the agency does not monitor or analyze these data; DEA does not use YERS/QMS to produce aggregate information “on timeliness or other performance metrics and the agency has no plans to do so as of October 2014.”  (Emphasis added; 40.)  The Report notes, however, that absent such analysis, DEA cannot evaluate its responses to manufacturers’ quota applications or understand the nature of its workload.

4.  The DEA Administrator should establish internal policies for processing quota applications and setting aggregate, annual, and supplemental quotas to ensure that staff conduct these activities consistently and in accordance with the CSA and the agency's regulations.  The Report points out that DEA has not met its required time frames provided in regulations for establishing aggregate production quotas (APQ), or annual bulk manufacturing or procurement quotas for Schedule II substances  for 14 years (i.e., since at least 2001)  (30-33).  Manufacturers claim DEA’s untimeliness has contributed to drug shortages.  DEA officials acknowledged that the agency has failed to meet regulatory time frames for proposing and establishing quotas.  DEA officials cite “inadequate staffing” in the Quota Unit as the reason, and that its quota workload has increased in complexity since the CSA’s enactment. 

Interestingly, although DEA acknowledges it failed to adhere to required quota time frames for over a decade, it disagrees that quotas can cause shortages.  DEA authorizes quotas at the basic class level for a substance–such as amphetamine or morphine–not for specific drug products.  And, DEA has “no control over what specific drug products manufacturers actually produce with the quota authorized.”  (35)  For example, if DEA authorized 10,000 grams of morphine to a manufacturer, the manufacturer—and not DEA— decides how to authorize the quota among its products that contain different formulations, dosage forms, and concentrations.  (35)  

GAO concluded that it cannot confirm whether DEA’s lack of timeliness in establishing annual and supplemental quotas has caused or exacerbated shortages.  But, by not responding to annual applications in accordance with the time frames required by its regulations or the CSA, and by not acting promptly on supplemental applications, “DEA may hinder manufacturers’ ability to manufacture drugs that contain schedule II controlled substances that may help prevent or resolve a shortage.”  (35)

DEA responded, among other things, that it has already established procurement policies and procedures.  However, GAO notes that DEA “did not provide documentation of such policies and procedures despite repeated requests.”  (57)

5.  The DEA Administrator should expeditiously establish formal policies and procedures to facilitate coordination with FDA as directed by the Food and Drug Administration Safety and Innovation Act (FDASIA), including a specific time frame in which DEA will be expected to respond to FDA requests to expedite shortage-related quota applications.  FDASIA requires DEA and FDA to coordinate where additional quota may be needed to address a shortage of a drug containing controlled substances, but the Report notes several barriers to effective collaboration between the agencies, including DEA’s lack of trust concerning whether FDA’s website accurately reports and reflects shortages, whether certain controlled substances are interchangeable (such as extended and immediate release formulations of ADHD medications), and significant disagreement on what constitutes a shortage of controlled substances.  The agencies also lack compatible “policies, procedures, and other means to operate across agency boundaries, including mutually agreed upon time frames for DEA to respond if FDA notifies DEA of a shortage caused by quota.”  (44-45)  

6.  FDA and DEA should promptly update the MOU between the two agencies to address sharing of information between the agencies.  DEA and FDA have had MOUs in place since the 1970s, but they do not address drug shortages.  The agencies have been working for two years on a new MOU.  The new MOU is expected to establish procedures for sharing of certain proprietary information that they are currently prohibited from sharing.   

7.  Related to No. 6, either in an MOU or separate document, DEA and FDA should outline types of information they will share and the time frames for doing so in response to a potential or existing drug shortage.  Although FDA/HHS agreed with GAO’s applicable recommendations, DEA neither agreed nor disagreed; instead, and not surprisingly, DEA “raised multiple objections” to the Report.  Those objections may be found at pages 49-58, and at Appendix V (December 29, 2014 response from Joseph Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, DEA).

Also of note: Senators Chuck Grassley and Dianne Feinstein (leaders of the Caucus on International Narcotics Control) have announced a hearing on the quota system used to manage controlled substances in light the Report.