	DEA Has Not Effectively Administered the Quota Process

We found significant weaknesses involving DEA’s management of the  quota process for controlled substances. Similarly, DEA has not proposed APQs on or before May 1, as  required by its regulations, for any year from 2001 through 2014. DEA officials attributed the agency’s lack of compliance with its required  time frames to inadequate staffing of the Quota Unit. DEA officials said  the agency has not been able to find candidates with the right skills who  are also able to pass the background checks required for employment,  and offers to qualified candidates have been declined. Despite these challenges, DEA officials said that they expect the agency  will be compliant with its CSA time frames in the future because of  changes made to the quota process in 2011, specifically the  reorganization of the Quota Unit and moving to an electronic system for  the quota process (YERS/QMS). While  manufacturers are ultimately responsible for what they manufacture with  the quota authorized by DEA, their decisions are made within the  confines of the amount and timing of quota granted by DEA. Additionally, we found that DEA’s weak internal controls jeopardize the  agency’s ability to effectively manage the quota process. DEA does not  have adequate controls to ensure the reliability of YERS/QMS, which it  uses to track manufacturers’ quota applications and record its quota  decisions. However, the agency does not have systematic quality checks,  such as periodic comparisons of YERS/QMS records to source  documents, to ensure that the data are accurate or the checks it has in  place are sufficient. The lack of systematic data  checks is also concerning because we estimate that 44 percent of  YERS/QMS records in 2011 and 10 percent in 2012 had errors. DEA  officials said that 2011 was the first year manufacturers applied for quota  electronically and they expected data from 2012 and beyond to be more  accurate. We also found that DEA lacks critical management information because it  does not have performance measures related to setting quotas or  ensuring an adequate and uninterrupted supply of controlled substances,  nor does it monitor YERS/QMS data to assess its performance. guidance on how to conduct these activities. Specifically, we  recommended that DEA (1) strengthen its internal controls of  YERS/QMS, (2) establish performance measures related to quotas,   (3) monitor and analyze YERS/QMS data, and (4) develop internal  policies for processing quota applications and setting aggregate, annual,  and supplemental quotas. Lack of Effective Coordination May Hinder the Ability of DEA and FDA to Address Future Drug Shortages

Our report also identified several barriers that may hinder DEA and FDA  from effectively coordinating with each other during a quota-related drug  shortage. One barrier is that DEA and FDA sometimes disagree about  whether a shortage exists because the two agencies define shortages  differently. Although there has not  been a reported shortage of a drug containing a controlled substance  caused by quotas since FDASIA’s enactment in 2012, the law requires  the agencies to coordinate certain efforts to address such a shortage if  one occurs. Finally, both agencies stated that they were subject to restrictions on  exchanging the proprietary information they receive from drug  manufacturers, which may be helpful to prevent or address shortages of  drugs containing controlled substances. The agencies had been working  for more than 2 years on developing a new memorandum of  understanding (MOU) to facilitate the sharing of such information. It establishes procedures  regarding the exchange of proprietary and other sensitive information  between FDA and DEA in both written and verbal communications. Our report included a recommendation that DEA expeditiously establish  formal policies and procedures to facilitate coordination with FDA as  directed by FDASIA, including a specific time frame in which it will be  expected to respond to FDA’s requests to expedite shortage-related  quota applications. We also made two additional recommendations to  both DEA and FDA to strengthen their abilities to respond to shortages of  drugs containing controlled substances. We recommended that the two  agencies promptly update the MOU, and that has now been  accomplished. HHS agreed with the  two recommendations we made to FDA. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

In the last decade, shortages of drugs containing controlled substances, such as narcotics and stimulants, have increased nationwide, preventing providers and patients from accessing essential medications for treatment. Controlled substances are regulated by DEA because of the potential for abuse and addiction. DEA is responsible for preventing diversion of controlled substances, and also focuses on ensuring that an adequate and uninterrupted supply of these substances is available for legitimate medical and other needs.
(1) DEA’s administration of the quota process, and (2) coordination activities between DEA and FDA to prevent and mitigate shortages of drugs containing controlled substances. For the report, GAO analyzed data from 2011 and 2012 from YERS/QMS, which is the official record for the quota process. GAO interviewed officials from DEA, FDA, and drug manufacturers. GAO reviewed relevant statutes, regulations, and documents. To update selected information in March and April 2015, GAO reviewed documentation and contacted FDA officials.

What GAO Found

The Drug Enforcement Administration (DEA) has not effectively administered the quota setting process by which it limits the amount of certain controlled substances available for use in the United States. Each year, manufacturers apply for quotas of controlled substances in order to make certain drugs. DEA, however, has not responded to those applications within the time frames required by its regulations for any year from 2001 through 2014. DEA officials attributed this lack of compliance to inadequate staffing, stating that the agency has been unable to find qualified candidates who are able to pass the necessary background checks and that offers to qualified candidates have been declined. Manufacturers cited late quota decisions as causing or exacerbating some shortages of their drugs.
Additionally, DEA’s weak internal controls jeopardize the agency’s ability to effectively manage the quota process. For instance, agency officials said that DEA conducts some data checks to ensure the accuracy of its data in its Year-End Reporting and Quota Management System (YERS/QMS), but it has no systematic quality checks to ensure the quota data are accurate. GAO estimates that 44 percent of YERS/QMS records in 2011 and 10 percent in 2012 had errors. DEA officials said that 2011 was the first year manufacturers applied for quota electronically and they expected data from 2012 and beyond to be more accurate.
DEA also lacks critical management information because it does not have performance measures related to setting quotas, and it does not monitor YERS/QMS data to assess its performance. Moreover, DEA does not have reasonable assurance that the quotas it sets are in accordance with its requirements and cannot ensure continuity of its operations, as it does not have protocols, policies, training materials, or other documentation to manage the quota process.
The Food and Drug Administration Safety and Innovation Act (FDASIA) contains provisions that require DEA and the Food and Drug Administration (FDA), an agency within the Department of Health and Human Services (HHS), to coordinate certain efforts to address shortages of certain drugs caused by quotas. Despite this, the agencies have not established a sufficiently collaborative relationship. For example, DEA and FDA sometimes disagree about what constitutes a drug shortage. DEA also has no policies or procedures on how to coordinate with FDA to address shortages caused by quota. Given such barriers to coordination, DEA and FDA cannot effectively address shortages of drugs subject to quota. Additionally, both agencies stated that they were subject to restrictions on exchanging proprietary information, which may be helpful to address drug shortages. DEA and FDA had been working since 2012 to develop a new memorandum of understanding (MOU), which was finalized in March 2015. According to the MOU, the two agencies will still need to develop a plan to share such information.

What GAO Recommends

GAO is not making any new recommendations in this testimony. For GAO-15-202 , GAO recommended that DEA should take five actions to improve its management of the quota process: (1) strengthen its internal controls of YERS/QMS, (2) establish performance measures related to the quota process, (3) monitor and analyze YERS/QMS data, (4) develop internal policies for setting quotas, and (5) expeditiously establish formal policies and procedures to facilitate coordination with FDA as directed by FDASIA. Additionally, in GAO-15-202 , GAO recommended that DEA and FDA should take two actions to strengthen their ability to respond to shortages of drugs containing controlled substances: (1) promptly update their MOU (which has now been accomplished), and (2) specifically outline information the agencies will share and time frames for doing so. DEA neither agreed nor disagreed with GAO’s recommendations. HHS agreed with the applicable recommendations.