If you’re a part of the highly regulated pharmaceutical community, you’ve probably heard the old saying, “if you think compliance is expensive, try non-compliance.” But do you really know what the costs associated with non-compliance are? If you asked 10 people right now what a single DEA record keeping violation would cost them in 2023, you’d be hard pressed to find one that could give you the correct answer. In-fact most of what you read about DEA non-compliance fines is outdated and/or loosely based on averages from times gone by. For example in 2020, the fine for many DEA record keeping violations was $15,691.00 per violation. However, today (as of 01/30/2023) the fine for most DEA record keeping violations is a whopping $18,170.00 per violation. Making non-compliance quite expensive and even more so when there is more than one record keeping violation.

The truth of the matter is many DEA record keeping violations are systemic, because the DEA registrant is unaware they are violating DEA regulations until the are visited by DEA and scrutinized, at which point it is likely to late to remedy the issues without consequences. Think about it, when is the last time you saw a press release indicating a pharmaceutical manufacturer, distributor, pharmacy, or physician paid a fine for a single record keeping violation in the amount of $18,170.00 or less? You haven’t. But, if you’re not completely convinced google “DEA Fines (Insert-> “distributor”, “manufacturer”, “pharmacy”) and click news. You will see many recent fines/penalties DEA registrants had to pay in the hundreds of thousands of dollars (and some in the millions). This doesn’t even begin to encompass the cascade of civil liability claims that often arise following a press release articulating a registrants compliance failures. So, what does it actually cost? The answer is more than you want to pay.

Greed, complacency, arrogance, negligence, or something as simple as “you don’t know what you don’t know” are common contributing factors that can lead to unwanted regulatory enforcement action. And it’s not just the fines that are costly. DEA enforcement action can cause damage to a company’s reputation resulting in a loss of customers, it can result in an inability for the company to maintain reasonably priced liability and D&O insurance, and it almost always results in a resounding message of instability for prospective customers. So, if you’re compliance program consists of relying solely on the fox to guard the hen house or if your thinking your insurers will step up where you fall short, you might want to reconsider. Insurers are getting wiser and the stakes are getting higher. However, here are three things you can do immediately to drastically reduce your liability:

1. Carefully read 21 CFR 1304. This is where the record keeping regulations are found. Pay close attention to formatting language! *Expert TIP: with regard to controlled substance inventories, when it was taken (e.g., “Opening of Business” or “Closing of Business”) must be specified!
2. Any registrant may authorize one or more individuals to obtain and execute DEA Forms 222 by granting a power of attorney (POA) to each such individual. Failure to do so and/or to keep it in a readily retrievable area can trigger a much higher record keeping fine (e.g., $78,312.00)
3. Get a DEA Consultant on retainer, yesterday! Preferably one that has lots of related litigation experience and knows the industry, not just the regulations. Keep in mind, not all consultants are created equal so, make sure to do your research.

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