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Arguably one of the most challenging responsibilities for those in the pharmaceutical supply chain handling controlled substances is the DEA’s “Know Your Customer” edict. It is a conundrum woven deep into the fabric of 21 CFR 1301.74. Many within the healthcare industry can readily identify this code as the specific regulation requiring registrants to design and operate suspicious order monitoring systems (SOM) for controlled substances. Since the very introduction of this regulation the requirement has been ripe with confusion, misinformation, and consisting of a general lack of clarity between the DEA and registrants as to how they can satisfactorily meet this subjective requirement. On the surface and to the uninformed, this sounds like a simple task. After all, the specific regulation (21 CFR 1301.74b) is only three sentences in length. How difficult can it be? I submit to you that it is in-fact very difficult.


The difficulty lies in several things that are not present in the specific text of the regulation. To simply surmise that the suspicious order monitoring requirement is straightforward would be grossly negligent. The first and perhaps the biggest issue is that by regulation, the onus is placed upon the pharmaceutical manufacturers and distributors to design the systems they use. Unlike Prescription Monitoring Programs (PMP’s) which are developed by the states and implemented for use at the pharmacy and prescriber level, the manufacturers and distributors are left to find their own way in developing their systems. Furthermore, without specific guidance from regulators, the healthcare companies have to determine what the correct algorithm to use is and how to integrate it with their ordering platform to ensure that a flagged or pended order is identified and is not subsequently sent unless it is determined not to be suspicious. If the algorithm is to restrictive, legitimate patients don’t get their medications, if it is not restrictive enough, there is the potential for drug diversion. Once the system is designed and implemented there is a vast network of unanswered questions.


Some of those questions are, what should we do with “no history pends?” Many SOM systems pend orders if there is no or limited history of ordering a specific controlled active ingredient. Additionally, how does one ship new customers controlled substances when they don’t have an established order history consisting of any frequency or pattern to speak of? These are just a few of the design, implementation, and use challenges registrants in the pharmaceutical supply chain face. There are also interconnected foundational “Know Your Customer” challenges that are fundamentally essential to suspicious order monitoring and very much established in DEA case precedent.


So, what does it mean to know your customer? Well, I’d like to tell you that it is a simple as it sounds but, again you would be deceived in thinking it is an elementary task. With each case the DEA brings against a pharmaceutical manufacturer or distributor, new insight is provided as to what the registrant should have known leaving them with the task of determining how they can obtain such information. Manufacturers and distributors around the nation have employed the use of detailed questionnaires, they have created in-depth analytical processes to examine purchasing and dispensing data, and are hiring experts, such as myself to conduct exhaustive site visits/audits. If you are reading this and believe that you have it all figured out, you would be sorely mistaken. The best DEA regulatory compliance programs in the world have been called to the mat and have sustained blows from regulators and litigators. So, what can you do?


Well as the old adage goes, “luck favors the prepared.” Employ the use of an outside expert that has experience in public safety/health, DEA regulatory compliance, and is willing to back his or her services with litigation support. As the 21st century tide of opioid litigation comes rushing-in, everything you do will soon be called into question. Don’t wait until it’s too late!