Previously, DEA regulations permitted registrations/renewals to be submitted either through its online portal or via mail delivery to DEA headquarters. Recently, DEA amended its regulations by requiring all registration and renewal applications be submitted only through the secure online portal. DEA believes this rule will mitigate some of the issues associated with paper applications by reducing inefficiencies and facilitating the application process.

In its final rule, DEA clarified that the online portal will be able to accept online batch applications and single payments for batch renewals (applicable if you own multiple locations). Payments could be made with ACH funds, credit cards and other forms of payment that may become available.

DEA also addressed a security concern expressed by one of the commentators by stating that “DEA routinely evaluates the security mechanisms of all of its electronic processes, and expends considerable time and resources to protect the privacy of all registrants and applicants.”

The bottom line is DEA will not accept paper application starting May 11, 2022.

One of the DEA’s latest enforcement cases against pharmacy is the case against Gulf Med Pharmacy. It is a good reminder of what the DEA audit focuses on. It also has a few new points, as explained in this blog post.

Gulf Med Pharmacy was a small independent pharmacy in southeast Florida. The DEA flagged the pharmacy due to its large orders of controlled substances. The DEA alleged that the pharmacy was one of the top ten purchasers of Oxycodone, Hydromorphone, and Hydrocodone in the entire state of Florida.

After the conclusion of its investigation,[1] the DEA issued an Order to Show Cause and Immediate Suspension of Registration to the pharmacy. The pharmacy timely requested a hearing before an Administrative Law Judge (“ALJ”). During the hearing the DEA alleged the following violations of the Controlled Substances Act (“CSA”):

  1.     Cocktail Medications

The DEA presented an expert opinion that the pharmacy dispensed cocktail medications which had no legitimate medical purpose. Cocktail medications are combinations of controlled substances that are widely known to be abused or diverted. For example, the DEA identified the following drug cocktails that allegedly raised red flags and had to be resolved prior to dispensing:

– 120 units of hydromorphone 8 mg, 60 units of morphine sulfate extended release 15mg, and 30 units of diazepam 10 mg.

– 120 units of hydromorphone 8 mg, 60 units of morphine sulfate extended release 30 mg, and 60–90 units of alprazolam 1 mg.

– 120 units of oxycodone 30 mg, 60 units of morphine sulfate extended release 30 mg, and 90 units of alprazolam

According to the DEA’s expert, the cocktail of an opioid, a benzodiazepine, and carisoprodol—commonly known as the ‘‘Trinity’’ cocktail—is a particularly serious red flag because that combination of controlled substances is highly dangerous and is widely known to be abused and/or diverted.

The DEA argued that the pharmacy repeatedly dispensed Trinity cocktail medications without any indication that its pharmacists addressed or resolved the fact that such prescriptions present a risk of abuse or diversion.

  1.    Improper Dosing for Pain Management

(Attention: this is not a commonly seen allegation).

The DEA alleged that the pharmacy repeatedly filled prescriptions for patients receiving a much greater daily morphine milligram equivalent dosage of short-acting opioids than long-acting opioids.

According to the DEA’s expert, for a patient receiving treatment with both long-acting and short-acting opioids, the proper pharmacologic dosing for pain management is to use larger, scheduled doses of the long-acting opioid to control chronic pain with smaller, as needed doses of the short-acting opioid for breakthrough pain.

The expert also testified that this method of dosing reduces the amount of the short-acting opioid that the patient must use in order to obtain the same level of pain control. The expert opined that prescriptions that provide a larger daily dose of short-acting opioids, rather than long-acting opioids, do not make pharmacologic sense and thus are a red flag of drug abuse or diversion.

The expert also noted that each of the short-acting or immediate release opioid prescriptions was scheduled four times a day or every six hours, even though the patient was also prescribed a scheduled, long-acting opioid.

  1.     Long Distances

The DEA presented evidence that some patients travelled on average 45 miles roundtrip to obtain their controlled substance medications.

  1.     Cash Payments

Some of the patients paid cash for their controlled substance medications. But according to the DEA’s expert, when a prescription for a controlled substance is electronically processed through insurance, the insurance company will frequently reject suspicious controlled substance prescriptions that may be related to drug abuse or diversion, such as controlled substance prescriptions for the same patient filled at multiple pharmacies. Such cash payments are especially suspicious when the patient bills insurance for other prescriptions, but pays cash for controlled substance prescriptions.

  1. Inflated Prices

(Attention: this is not a commonly seen allegation).

The DEA presented evidence that for controlled substance medications the pharmacy was charging its cash patients over three times the market rate. The DEA alleged that patients paying inflated prices for controlled substance prescriptions is another red flag of drug abuse or diversion, especially when the price paid is substantially higher than the market price available from other nearby pharmacies. According to the Diversion Investigator’s testimony, filling controlled substance prescriptions at inflated cash prices shows that a pharmacy has knowledge that it is filling prescriptions that are not legitimate, as its inflated prices reflect a ‘‘risk premium’’ that the pharmacy charges to account for the risk it is taking by filling illegitimate prescriptions.


The pharmacy disputed the above allegations by presenting evidence and expert opinions arguing that:

–  the DEA’s position that drug combinations and improper dosing present red flags  was not supported by medical literature.

– patients were traveling from some of the barrier islands. The distance between a straight line and coming from the barrier islands and comparing them to facilities on the mainland was a significant factor that was not considered by the DEA or its expert witness.

– the pharmacy based its cash prices on the cost of acquisition (therefore, it did not inflate its cash prices). It argued that the DEA based “market rate” on the National Average Drug Acquisition Cost (“NADAC”), which often reflects chain pharmacy acquisition cost across the nation. It presented evidence that an independent pharmacy in Florida acquires these medications at higher cost.

– the DEA did not interview any of the physicians or patients to verify the legitimacy of these prescriptions.


At the conclusion of the hearing process, the ALJ rendered an opinion explaining that while the pharmacy staff testified that they resolved red flags (by discussing their concerns with the prescribers and patients), there was no documentary evidence to corroborate this claim. This again, brings us to one of the pillars of compliance: document your conversations with patients and prescribers. The ALJ also noted that the pharmacy’s lack of acknowledgement of any wrongdoing, makes it possible that the alleged conduct continues, jeopardizing public safety. In fact, the pharmacy presented no evidence of any remediation going forward. As a result, the ALJ agreed with the DEA and recommended that the pharmacy’s registration be revoked.

This case is just another reminder of the importance of record-keeping, ongoing conversations with prescribers, flagging “cocktail medications” scrips, and conversations with the patients who are paying cash or travel long distances (anything over 10 miles).


[1] Click here to read more about the investigation and hearing (Federal Register/Vol. 86, No. 243 (2021))


While we are facing less issues in Covid-related prescribing and dispensing, the controversy around ivermectin continues. In my blog post “Risk of dispensing ivermectin,” I stressed the importance of obtaining informed consent prior to dispensing ivermectin.

On the same note, a legal action was filed in Arkansas against a prescriber (among others) for treating patients (inmates) with ivermectin without prior informed consent. The complaint alleges that the county and the prescriber undertook research on the inmates to better understand how ivermectin might help treat Covid symptoms. Allegedly, the inmates experienced side effects, including mental and emotional trauma. According to the complaint, the prescriber sought to obtain informed consent retroactively. This is just another case to stress the importance of obtaining informed consent especially prior to prescribing/dispensing novel medications/treatment. I usually recommend pharmacies to obtain informed consent for any injections, vaccination, and other services which may result in serious side effects.

Cardinal has recently agreed to pay over $13 million to resolve allegations that it violated the False Claims Act for paying “upfront” discounts to physicians in violation of the Anti-Kickback Statute.

As the Department of Justice (USAO) explained in its press release:

“The Anti-Kickback Statute prohibits pharmaceutical distributors from offering or paying any compensation to induce physicians to purchase drugs for use on Medicare patients. When a pharmaceutical distributor sells drugs to a physician practice for administration in an outpatient setting, the distributor may legally offer commercially available discounts to its customers under certain circumstances permitted by the Office of Inspector General for the Department of Health and Human Services (HHS-OIG). HHS-OIG has advised that upfront discount arrangements present significant kickback concerns unless they are tied to specific purchases and that distributors maintain appropriate controls to ensure that discounts are clawed back if the purchaser ultimately does not purchase enough product to earn the discount. According to facts that the company has acknowledged in the settlement agreement, Cardinal Health, Inc. failed to meet these requirements because the upfront discounts it provided to its customers were not attributable to identifiable sales or were purported rebates which Cardinal Health’s customers had not actually earned.”

The USAO called these upfront discounts “cash bonuses,” the purpose of which was to incentivize physicians to continue purchasing from Cardinal. While USAO calls this arrangement illegal and potentially fraudulent, there was no question regarding medical necessity and quality standards.

Due to heightened reporting requirements and recent large settlements against wholesalers for failure to report suspicious orders, many pharmacies  experience issues with their supply of controlled substances (“CS”). I have represented many pharmacies in petitioning  wholesalers to increase the cap on CS supply or not to cut such a supply. Often, such pleas fall on deaf ears.

This may change with a recent decision of a district court which granted an injunction requiring Cardinal to resume supplying controlled substances to MG Pharmacy.

MG Pharmacy – a family-owned Arizona pharmacy – has been having issues with Cardinal since 2013, when Cardinal placed a cap on how much oxycodone the pharmacy was able to order per month (up to 3,500 dosage units).

In 2021, however, Cardinal informed the pharmacy that it would no longer be supplying it with any CS (in addition to some non-controlled substances). Cardinal explained that the pharmacy had filled too many prescriptions for oxycodone from a single prescriber (a nurse practitioner from a nearby pain clinic). In other words, Cardinal had determined that the pharmacy posed an unreasonable risk of diversion and its continuing supply may trigger additional problems for Cardinal (to remind, back in 2017, the DEA fined Cardinal $44 million for failure to report suspicious orders).

In response, the pharmacy filed a motion for temporary restraining order and preliminary injunction alleging breach of contract and tortious interference with business relationships. The court denied the TRO but ruled for pharmacy on the injunction.

During litigation, Cardinal argued that the agreement with the pharmacy allowed Cardinal to terminate the supply at its sole discretion. The court, however, discussed in its opinion the doctrine of good faith and held that the balance of hardship was on the side of the pharmacy. Cardinal had no basis to believe that pharmacy engaged or assisted in diversion (there were no government investigations and Cardinal had no evidentiary proof of diversion). The pharmacy’s orders of CS had been consistent for years and were within the previously set cap.

In addition, the pharmacy was able to show reputational and monetary damages (patients prefer a one stop for all pharmaceutical needs).

While this is the first pharmacy victory (at least that I know of) in obtaining an injunction against its wholesaler for cutting the supply of CS, it could be an important decision for pharmacies arguing unconscionability of wholesaler contracts. The case was decided in Arizona and it is possible that a different court may come to a different conclusion. Nonetheless, this is an interesting and important case in pharmacy litigation.


Starting February 9, 2022, California pharmacies must submit controlled substance dispensing to CURES through Bamboo Health. The last date to submit data through Atlantic Associates is February 8, 2022. Pharmacies must complete the registration process with Bamboo Health as soon as possible to ensure they are prepared for the switch. Register with Bamboo here.

If you are currently registered with the Bamboo Health as a data submitter for another state, you will not need to register for a new account. You will be able to add California to your existing account for data submissions.

We encourage you to review Data Submission Guide for Dispensers “CA CURES Prescription Monitoring Program” for more information and compliance requirements.

Keeping accurate records for controlled substances often presents a challenge.  The Controlled Substances Act requires every pharmacy to maintain complete and accurate records on a current basis for each controlled substance received, sold, delivered, or otherwise disposed of.

This closed system is supposed to reduce the potential for diversion of controlled substances (“CS”).

But in reality, it is often difficult to implement effective inventory management. For example, the Department of Justice press releases are full of settlements with pharmacies that failed to keep accurate inventories and records concerning the distribution of CS.

In my practice, I often see pharmacy owners struggling to reconcile CS discrepancies discovered. Often, the manual count shows different amounts than what the software shows. And some pharmacists still use good old logbooks, which are extremely tedious and time-consuming to keep. This is a reason I want to introduce a new product designed to simplify and improve CS inventory management: C2 Keep. The team – consisting of a pharmacist and tech developers – claims that the product helps make pharmacist’s life easier by eliminating the logbook and digitally tracking CS. In addition the software also:

–  has a built-in calculator and the ability to scan barcodes (to improve the accuracy of the transactional data);

– integrates with the pharmacy software and streamlines filling process;

– prevents diversion by disabling data deletion/modification;

– assists during DEA, Board of Pharmacy, or PBM audits by quickly presenting the data you need (including biennial report);

– supports reporting diversion.


Check out the product and read more at:




Is your pharmacy located in California and selling over-the-counter Covid-19 at-home test kits? If so, you must be careful on how much you charge for these Kits.

On January 8, 2022, Governor Newsom signed Executive Order prohibiting excessive charging for the Kits in order to allow access to these products for as many people as possible.

The order explains that:

“…the heightened transmissibility of the Omicron variant has increased the need for widely available, affordable COVID-19 At-Home Test Kits that can be administered by members of the public at their convenience. it is vital that residents of California have access to COVID-19 At- Home Test Kits in order to protect public health and safety, and enable the continued operation of California schools, businesses, and other institutions in as safe a manner as possible.

“COVID-19 At-Home Test Kit” is defined as a test that

(i) is authorized for use by the FDA,

(ii) detects the presence of the SARS-CoV-2 virus, and

(iii) is intended for non-prescription home use by an individual.

If your pharmacy was selling the Kits on December 1, 2021, the Order prohibits the pharmacy (until March 31, 2022) to sell the Kits at a price that is more than 10 percent greater than the highest price charged by the pharmacy on December 1, 2021.

If the pharmacy did not sell the Kits on December 1, 2021, then it is prohibited from selling the Kits at “unconscionably excessive price,” which is defined as more than 50 percent greater than the amount paid for the Kit. This restriction is also in effect until March 31, 2022.

Even before this Executive Order, California had (and still has) a provision prohibiting price gouging in the times of distress. Penal Code Sections 396 prohibits entities from taking unfair advantage of consumers by greatly increasing prices during a declared emergency. It provides that:

“…for a period of 30 days following that proclamation or declaration, it is unlawful for a person, contractor, business, or other entity to sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency, or prior to a date set in the proclamation or declaration.

However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by that seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency. If the person, contractor, business, or other entity did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency, it may not charge a price that is more than 50 percent greater than the cost thereof to the vendor as “cost” is defined in Section 17026 of the Business and Professions Code.” [Emphasis added].

So essentially, the Executive Order mirrors this already existing section by specifying that the Kits constitute emergency medical supplies. Note that a violation of Section 396 is a misdemeanor punishable by imprisonment in a county jail for a period not exceeding one year, by a fine of not more than ten thousand dollars ($10,000), or by both for each violation. This means that if you sell hundreds of Kits at an excessive mark-up, you could potentially face many years in prison and millions of dollars in fines. Something to keep in mind. ..


If you work in a pharmacy in California, I am sure you are aware of the new e-prescribing requirement that took effect on January 1, 2022. Because I’ve been receiving many calls from pharmacists regarding this new law, I decided to create this post and clarify a few points.

In a nutshell, the new law requires California prescribers to transmit electronic prescriptions (in lieu of paper/faxed/oral scripts) and pharmacies to have the capability to receive these transmissions.

Some exemptions apply. Namely, a prescriber can still issue a paper prescription or fax/call it to the pharmacy if:

  • the prescription is for a terminally ill patient;
  • the prescriber experiences a temporary technological or electrical failure;
  • the prescription to be dispensed by a pharmacy located outside California;
  • the prescription is issued in a hospital emergency department or urgent care clinic under certain scenarios (see the bill for more information);
  • the prescription is issued by a veterinarian;
  • the prescription is for eyeglasses or contact lenses;
  • the prescribing health care practitioner and the dispenser are the same entity;
  • the prescription is issued under circumstances whereby the prescriber reasonably determines that it would be impractical for the patient to obtain the medication by an electronic data transmission prescription in a timely manner, and the delay would adversely impact the patient’s medical condition;
  • the prescription includes elements not covered by the latest version of the NSPSP SCRIPT standard;
  • a prescription is for an inmate, individual on parole, or youth under the jurisdiction of the Department of Corrections and Rehabilitation.

As you can see, there are many exemptions and some of them are very broad. The good news is that the pharmacy does not need to verify that a written, oral, or faxed prescription satisfies the specified exemptions. The compliance in this respect is on the prescriber. The pharmacy, however, should immediately notify the prescriber if the electronic data transmission prescription fails, is incomplete, or is otherwise not appropriately received.

The bottom line: your pharmacy should have the ability to accept e-scripts. If you still receive “traditional” handwritten/faxed/phoned-in prescriptions, you can continue filling them as long as such prescriptions are compliant in all other aspects.