TRAVERSE CITY, February 10, 2010

Small & Mid-Size Wholesale Distributors of Controlled Substances Weigh Options

Beginning in 2007 and continuing throughout 2008, the DEA made high profile examples of the “Big Three” in a renewed effort to bring CS registrants into compliance with Suspicious Order Monitoring (CFR 21 1301.74b). The DEA imposed strict sanctions and significant fines on Cardinal, McKesson and AmerisourceBergen;

Business Wire; Apr 25, 2007
AmerisourceBergen Receives DEA Order to Temporarily Halt Distribution of Controlled Substances from Its Orlando, Florida Facility.
U.S. Newswire; Oct 2, 2008
Cardinal Health Inc., Agrees to Pay $34 Million to Settle Claims That it Failed to Report Suspicious Sales of Widely-Abused Controlled Substances
U.S. Newswire; May 2, 2008
McKesson Corporation Agrees to Pay More Than $13 Million to Settle Claims That It Failed to Report Suspicious Sales of Prescription Medications

More recently, Cincinnati-based Masters Pharmaceutical was fined $500,000 for failing to report suspicious sales of controlled substances;

Business Courier of Cincinnati Monday, May 4, 2009:
A distributor of branded and generic prescription drugs . . . Masters Pharmaceutical, Inc. has agreed to pay $500,000 fine in a settlement with the Drug Enforcement Administration

Proactive, not Reactive: Registrants are required to place on hold, investigate, and disclose to the DEA all suspicious Orders of Controlled Substances- not suspicious Sales after the fact

False Positives: Industry experts recommend replacing traditional “order averaging” techniques with comprehensive, dynamic, computational analysis of each new Order entering the registrant’s business management system. Statistically defensible analysis of all Orders should flag only those having significant deviation in size, frequency, and pattern- without interrupting efficient distribution of critical medical products in Healthcare supply chains

SMB vs Big Three Budget: SMB Wholesale Distributors lacking the resources to develop custom SOM software applications will be relieved to know a robust, affordable SOM compliance toolset is scheduled for release in the first quarter of 2010- SOMLink^TM is designed specifically for Small and Mid-Size Wholesale Distributors of CS II-V

SOMLink integrates with any Financial/ERP to automatically review each new Order, apply multiple analytic tests, flag suspicious orders for verification by account managers, and maintain a permanent record of verification activities.

For more information, please visit: http://www.e-supplylink.com and click through to SOM

Computer generated analysis of orders for Controlled Substances is designed to compare new orders with the history of orders for a specific product, for a specific customer, and for the designated ship-to location.

SOMLink^TM, developed by e-SupplyLink, automatically reviews all incoming orders in a Wholesale Distributors’ financial/ERP system to identify and place on hold those orders having a substantial deviation in order size, frequency, or pattern according to DEA guidelines (21 CFR 1301.74b).

But what if there is no history? How does statistical analysis evaluate orders from fist-time buyers, or new ship-to locations?

» Read more: Pharmaceutical supply chain technology responds to DEA Suspicious Order Monitoring mandates

Pharmaceutical manufacturers and distributors have the responsibility to design & operate a system to disclose suspicious orders of controlled substances to the DEA.  Over the past three years, there have been numerous cases of DEA sanctions resulting from non-compliance with “DEA 21 CFR 1301.74 b: Suspicious Order Monitoring”.

In April 2007, the DEA orders AmerisourceBergen to suspend shipments from its Orlando distribution center.  The distribution center did not reopen until August 25, 2007.  http://www.contractormisconduct.org/ass/contractors/7/cases/576/629/amerisourcebergen-dea-lax-controls_pr.pdf

In late 2007, Cardinal Health had 4 distribution centers suspended.  The DEA charged that Cardinal was distributing excessive amounts of controlled substances to pharmacies that were then selling the products illicitly.   As a result of these suspensions, in 2008 Cardinal paid a $34-million “settlement” without admitting any wrongdoing.  http://www.pharmaceuticalcommerce.com/frontEnd/main.php?idSeccion=972

The DEA requires REGISTRANTS TO DESIGN AND OPERATE SYSTEMS TO DISCLOSE SUSPICIOUS ORDERS OF CONTROLLED SUBSTANCES.
» Read more: Pharmaceutical Suppliers: How are you handling DEA requirements for “Suspicious Order Monitoring”?