Centers for Medicare and Medicaid Services (CMS)

On Tuesday, September 1, 2020, the Drug Enforcement Agency (“DEA”) proposed 2021 aggregate production quotas (APQs) for controlled substances in schedules I and II of the Controlled Substances Act (“CSA”) and an Assessment of Annual Needs (“AAN”) for the List I Chemicals pseudoephedrine, ephedrine, and phenylpropanolamine. This marks the second year that DEA has issued APQs pursuant to Congress’s changes to the CSA via the SUPPORT Act.  After assessing the diversion rates for the five covered controlled substances, DEA reduced the quotas for four: oxycodone, hydrocodone, hydromorphone and fentanyl.

DEA recently increased the APQ to allow for the additional manufacture of certain controlled substances in response to the COVID-19 pandemic and the need to provide greater access to these medications for patients on ventilator treatment.  According to DEA, that increased demand has been factored into the proposed APQs for 2021.

Comments are due by October 1, 2020.  Because DEA’s APQs determine the amount of quota DEA can allocate to individual manufacturers in 2021, adversely impacted parties should file comments soon.

Background on APQs

The CSA requires the establishment of aggregate production quotas for schedule I and II controlled substances, and an assessment of annual needs for the list I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine.  These aggregate quotas limit the quantities of these substances to be manufactured – and with respect to the listed chemicals, imported –  in the United States in a calendar year, to provide for the estimated medical, scientific, research, and industrial needs of the United States, for lawful export requirements, and for the establishment and maintenance of reserve stocks.

Changes in Setting APQs Under The SUPPORT Act

The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (“SUPPORT Act”) signed into law October 24, 2018, provided significant changes to the process for setting APQs.  First, under the CSA, aggregate production quotas are established in terms of quantities of each basic class of controlled substance, and not in terms of individual pharmaceutical dosage forms prepared from or containing such a controlled substance.  However, the SUPPORT Act provides an exception to that general rule by giving the DEA the authority to establish quotas in terms of pharmaceutical dosage forms if the agency determines that doing so will assist in avoiding the overproduction, shortages, or diversion of a controlled substance.

Additionally, the SUPPORT Act changed the way the DEA establishes APQs with respect to five “covered controlled substances”: fentanyl, oxycodone, hydrocodone, oxymorphone, and hydromorphone.  Under the SUPPORT Act, when setting the APQ for any of the “covered controlled substances,” DEA must estimate the amount of diversion.  The SUPPORT Act requires DEA to make appropriate quota reductions “as determined by the [DEA] from the quota the [DEA] would have otherwise established had such diversion not been considered.”  Furthermore, when estimating the amount of diversion, the DEA must consider reliable “rates of overdose deaths and abuse and overall public health impact related to the covered controlled substance in the United States,” and may take into consideration other sources of information the DEA determines reliable.

Estimating Diversion  

In accordance with this mandate under the SUPPORT Act, in setting the proposed APQs for 2021 DEA requested information from various agencies within the Department of Health and Human Services (“HHS”), including the U.S. Food and Drug Administration (“FDA”), Centers for Disease Control and Prevention (“CDC”), and the Centers for Medicare and Medicaid Services (“CMS”), regarding overdose deaths, overprescribing, and the public health impact of covered controlled substances.  DEA also solicited information from each state’s Prescription Drug Monitoring Program (“PDMP”), and any additional analysis of prescription data that would assist DEA in estimating diversion of covered controlled substances.

After soliciting input from these sources, DEA extracted data on drug theft and loss from its internal databases and seizure data by law enforcement nationwide.  DEA then calculated the estimated amount of diversion by multiplying the strength of the active pharmaceutical ingredient (“API”) listed for each finished dosage form by the total amount of units reported to estimate the metric weight in kilograms of the controlled substance being diverted.


Continue Reading Deadline Looms for Responding to DEA’s Proposed Aggregate Production Quotas for 2021

The U.S. Supreme Court decision today in Maine Community Health Options v. United States, is a major decision affecting healthcare and resolving a significant Obamacare dispute. The Affordable Care Act famously established online exchanges where insurers could sell their healthcare plans. It included the now-expired “Risk Corridors” program aimed to limit the plans’ profits and losses during the exchanges’ first three years (2014-16). The Act contained a formula for computing a plan’s gains or losses at the end of each year, providing that eligible profitable plans “shall pay” the Secretary of the Department of Health and Human Services (HHS), while the Secretary “shall pay” eligible unprofitable plans. But the Act did not appropriate funds that the Secretary could dispense or cap the amounts that the Secretary would pay to unprofitable plans. Nor was there any budget neutrality stated in the Act. The program was something less than a great success and, after three years, in which unprofitable plans outnumbered those that were profitable, the net deficit was more than $12 billion. But the Centers for Medicare and Medicaid Services (CMS) couldn’t make any payments to unprofitable plans because, each year, its budget appropriation included a rider preventing CMS from using the funds for Risk Corridors payments. Four unprofitable plans brought suit against the government under the Tucker Act, alleging that the ACA obligated the government to pay the full amount of their negative deficit. With Justice Sotomayor writing for seven other Justices (Alito, J. dissented, and Thomas, J. and Gorsuch, J. did not join one section of the majority opinion), the Court agreed with the plans and reversed the Federal Circuit’s holding that while the ACA initially created an initial obligation, the subsequent riders vitiated it.

Continue Reading Supreme Court: The ACA & Risk Corridor Obligations