Law Enforcement Track: Lessons from the Supply Side

1. Law Enforcement Track:
Lessons from the Supply Side
Presenters:
•Angélica Meinhofer, MS, Graduate Student, Department of
Economics, Brown University
•Kyle Simon, MS, Director of Policy and Advocacy, Center for
Lawful Access and Abuse Deterrence (CLAAD)
•Stacey L. Worthy, JD, Associate Attorney, DCBA Law and
Policy
Moderator: Frank Rapier, Executive Director, Appalachia High
Intensity Drug Trafficking Area (HIDTA)

2. Disclosures
• Angélica Meinhofer, MS, has disclosed no relevant, real or apparent
personal or professional financial relationships with proprietary
entities that produce health care goods and services.
• Stacey L. Worthy, JD, has disclosed no relevant, real or apparent
personal or professional financial relationships with proprietary
entities that produce health care goods and services.
• Kyle Simon, MS, has disclosed no relevant, real or apparent
personal or professional financial relationships with proprietary
entities that produce health care goods and services.
• Frank Rapier has disclosed no relevant, real or apparent personal or
professional financial relationships with proprietary entities that
produce health care goods and services.

3. Disclosures
• All planners/managers hereby state that they or their
spouse/life partner do not have any financial
relationships or relationships to products or devices
with any commercial interest related to the content of
this activity of any amount during the past 12 months.
• The following planners/managers have the following
to disclose:
– Kelly Clark – Employment: Publicis Touchpoint Solutions;
Consultant: Grunenthal US
– Robert DuPont – Employment: Bensinger, DuPont &
Associates-Prescription Drug Research Center
– Carla Saunders – Speaker’s bureau: Abbott Nutrition

4. Learning Objectives
1. Evaluate the impact of Rx drug supply-side
interventions caused by enforcement and
legislative interventions in Florida
2. Contrast the impacts of Rx drug and illicit
drug supply-side interventions.
3. Describe the problem of Rx drug fraud, abuse
and related issues.
4. Outline strategies for protecting consumers
from black-market Rx drugs.

5. Law Enforcement Track: Lessons from the Supply Side
Angélica Meinhofer
Ph.D. Candidate, Brown University
Are We Fighting the Right War? Estimating
the Effect of Prescription Drug Supply-Side
Interventions

6. Disclosure Statement
Angélica Meinhofer, Ph.D. Candidate, has
disclosed no relevant, real or apparent personal
or professional financial relationships with
proprietary entities that produce health care
goods and services.

7. Learning Objectives
• Evaluate the impact of Rx drug supply-side interventions
caused by enforcement and legislative interventions in
Florida.
• Contrast the impacts of Rx drug and illicit drug supply-side
interventions.
• Describe the problem of Rx drug fraud, abuse and related
issues.
• Outline strategies for protecting consumers from black-
market Rx drugs.

8. Motivation
• After marijuana, prescription drugs are the most
abused controlled substances in the United States
(NSDUH, 2013)
• Overdose deaths involving opioid pain relievers
(OPR) increased by 313% from 4,030 in 1999 to
16,651 in 2010 (CDC, 2013)
• OPR deaths now exceed those involving heroin and
cocaine combined (CDC, 2011)

9. Motivation
• OPR abuse imposes considerable societal
costs
• In 2007 these costs amounted to $55.7 billion
(Birnbaum et al., 2011)
– 46% workplace
– 45% health care
– 9% criminal justice

10. Overview
• Can interventions that aim to reduce drug
availability by targeting the supply-chain be
effective against prescription drug abuse?

11. Broader Questions
• Why should the use of controlled substances
be regulated?
• How should the use of controlled substances
be regulated?

12. Why should the use of controlled
substances be regulated?
• Market Failures
– Externalities (e.g. Neonatal Abstinence Syndrome)
– Imperfect information (e.g. Risk perception)
– Internalities (e.g. Time inconsistent preferences)

13. How should the use of controlled
substances be regulated?
• Controlled Substances Act (1970)
– Register with the Drug Enforcement
Administration
– Keep records of inventories and transactions
involving controlled substances
– Divide substances into five schedules
• Current accepted use in medical treatment
• Abuse potential
• Likelihood of dependence when abused

14. How should the use of controlled
substances be regulated?

15. Interventions
• Revoking or suspending a supplier's
prescription drug dispensing privilege

16. Questions of Interest
• Can supply-side interventions reduce drug
availability?
• Can supply-side interventions improve public
health?
• What mechanisms reinforce or offset supply-
side interventions’ effectiveness?

17. Meanwhile, in Florida...
• Once the epicenter of the prescription drug abuse
epidemic
• Oxycodone was the drug on demand (in 2009, 44% of all
oxycodone 30mg products were distributed to Florida, DEA
2012)
• Practitioners operating from rogue pain management
clinics or “pill mills" were the main source of diversion

18. Meanwhile, in Florida...
Source: ARCOS

19. Interventions
• By mid 2010 and throughout 2011, the state of
Florida implemented a series of supply-side
interventions to address prescription drug abuse
– Enforcement: Operation Pill Nation
– Legislative: Dispensing Practitioner Laws
• SB 2272 (Oct. 2010): Can dispense up to 72-hour supply of
CS II-V
• HB 7095 (July 2011): Cannot dispense CS II-III
*Note: Prescription Drug Monitoring Program; Changes in
Oxycontin formulation

20. Interventions

21. Interventions
Source: DEA

22. Data Sources
• Total Quantities (DEA’s Automation of Reports and
Consolidated Orders System)
• Street Prices (StreetRx.com & Bluelight.org)
• Overdose Deaths (Florida’s Medical Examiners
Commission)
• Pain Clinic & Pharmacy Licensure (Florida
Department of Health)

23. Contributions
Explore supply-side interventions in a new context: the
case of prescription drugs
– Previous studies analyzed the effects of supply-side
interventions on illicit drug availability
– Results have been somewhat mixed, with most finding no
effects and others finding modest or temporary effects
– Previous findings may not generalize to controlled
prescription drugs
• Accepted use in medical treatment
• Legally produced, prescribed and dispensed
• Retail suppliers include healthcare providers
• End-consumer includes legitimate users

24. Contributions
• Study a particular type of supply-side intervention that
consists of revoking a supplier’s prescription drug
dispensing privilege
• Rely on novel, high frequency administrative data, and a
quasi-experimental research design
• Tie drug availability to health outcomes
• Foreshadow potential threats and benefits of re-
scheduling/legalizing controlled substances

25. Preliminary Results
• Post-period begins after Q3 2010
• Difference in differences type of approach
• Divide drugs into groups based on their relation to
Oxycodone
– Oxycodone
– Complements (Alprazolam, Diazepam)
– Substitutes (Hydrocodone, Hydromorphone, Morphine,
Oxymorphone, Codeine)
– NTP (Methadone, Buprenorphine)
– Stimulants (Amphetamines)
– Illegal drugs (Heroin, Marijuana, Cocaine)

26. Total Quantities

27. Street Prices
Source: Bluelight, StreetRx

28. Total Quantities by Provider - Practitioners

29. Total Quantities by Provider - Pharmacies

30. Total Quantities by Provider - Hospitals

31. Pain Clinic Closures

32. Pharmacy Openings

33. Total Deaths

34. Total Deaths

35. Conclusions
• PRELIMINARY FINDINGS suggest that in the context of
prescription drugs:
– Supply-side interventions reduced drug availability and
increased street prices
– No evidence of a supply recovery
– Supply-side interventions reduced drug abuse/
improved public health (despite substitution to other
drugs)
– Some suppliers changed their behavior in response to
the interventions and according to economic incentives

36. Lessons from the Supply Side
Stacey Worthy & Kyle Simon

37. Disclosure Statement
• Stacey L. Worthy has disclosed no relevant, real or apparent
personal or professional financial relationships with
proprietary entities that produce health care goods and
services.
• Kyle Simon has disclosed no relevant, real or apparent
personal or professional financial relationships with
proprietary entities that produce health care goods and
services.

38. Disclosure Statement
• The Center for Lawful Access and Abuse Deterrence (CLAAD)
receives funding from businesses in the health care industry
that share CLAAD’s mission to reduce prescription drug fraud,
diversion, misuse, and abuse while advancing consumer
access to high-quality health care. CLAAD’s funders include
pharmaceutical companies, treatment centers, and
laboratories.
• CLAAD is managed by DCBA Law & Policy (DCBA). DCBA also
provides legal and policy counsel to professionals and
businesses whose activities align with CLAAD’s mission. To
avoid conflicts of interest, DCBA adheres to the District of
Columbia Rules of Professional Conduct §§ 1.7-1.9.

39. Learning Objectives
1. Describe Rx drug fraud, abuse, and related
issues
2. Outline strategies for protecting consumers
from black market Rx drugs

40. Preview
• Overview of the issues
– Terminology, introduction to the Rx epidemic and
biologics
– Recent examples of diversion
– Parallels to the Rx abuse epidemic
• Federal and state laws, issues, and policies
• Recommendations
• Conclusion

41. Terminology
• Policy meeting:
– Washington, DC, 10/24/15
– 18 organizations
• Black market
– Counterfeits
– Diverted
• “Gray market” FDA-approved drugs
• “Reimported” foreign counterparts of FDA-approved drugs
– FDCA terms: misbranded, non-FDA-approved,
adulterated

42. Prescription Drug Abuse
• 22,767 Americans died of prescription drug-related
overdoses in 2012
• Prescribers are gatekeepers in supply chain
– Educate unintentional/negligent actors
– Enforce against profiteers/rogue prescribers/pill mills
• Reduce supply of medications available for abuse
– Abuse-deterrent
– Non-controlled substances

43. Biologics
• Made through biological process
• Can treat cancer, Hep C, inflammatory pain,
migraines, etc.
• At center of national and state debates
– Nomenclature (follow-ons are not identical)
– Substitution
• Highly sought on black market
– New treatments and cures
– Lack of info among providers & patients
– Opportunity to profit

44. Threats to Consumers
• Unique risk for biologics products
– Environment and storage
– Lack of active ingredient
• Unapproved new drugs and misbranded drugs
(FDCA):
– Diverted drugs: FDA-approved medications flowing to
unauthorized purchasers
– Foreign counterparts: wrong label information
– Counterfeits: road paint, antifreeze, lead, rat poison
• Access restrictions and lack of awareness
– Unlike w/Rx abuse, consumers are unwitting
victims

45. Increase in Diversion
• Feb. 2015: Dr. ordered to pay $500k; administered
misbranded cancer drugs
• Jan. 2015: MO man received 30 years in prison;
smuggled misbranded cancer drugs
• Dec. 2014: 14 arrested; adulterated drugs caused
meningitis outbreak
• July 2013: TN doctors ordered to pay $4.25m;
administered misbranded cancer biologics
• 2004-2008: 31 arrested & 29 convicted; purposely
injected counterfeit wrinkle drugs

46. Motives and Methods
• Motives:
– Profit
– Misguided attempts to save patients money
– Shortages
• Methods:
– Samples
– Non-profits and exports
– Theft
– Hoarding
– Online pharmacies
• 97% violate U.S. laws and regulations

47. Parallels to Rx Abuse
• Diversion from intended sale and use
• Negligent vs. intentional wrongdoing
• Often the same “dirty docs” profiteering at
patients’ expense
• Often overlap with Rx abuse
– Feb. 2015: Man sentenced to 18 mos.; sold
counterfeit testosterone injectable to MLB players

48. Applicable Federal Laws
• Food, Drug & Cosmetic Act
• Federal Criminal Health Care Fraud Statute
• False Claims Act
• Prescription Drug Marketing Act
• Drug Quality & Security Act of 2013
• Others: Conspiracy, Fraud, False Statements,
etc.

49. State Law: Maine
• Maine Pharmacy Act Amendments (MPAA)
(Me. 32 Rev. Stat. § 13731)
– Residents import foreign drugs
– Permitted: Canada, UK, Australia, New Zealand
– Reality: Turkey, India Israel, Costa Rica, Vanuatu
– Proliferation using “medical marijuana” model

50. MPAA Struck Down
• Oct. 2014: 1st online pharmacy launched
• Jan. 2015: Maine res. ordered to return meds
• Feb. 2015: Struck down (Oullette v. Mills)
– Preempted: The MPAA’s “singling out of certain
countries from which pharmaceuticals may be
imported compromises the tightly regulated
structure set up by the FDCA and the federal
government’s ability to ‘speak with one voice’ when it
regulates foreign commerce.”
– Distinguished from marijuana cases – savings clause

51. Federal Supremacy
• Gonzalez v. Raich: Fed. gov’t has exclusive right to reg.
interstate commerce
• Ouellette v. Mills: Fed. gov’t regulates field of
pharmaceutical importation
• State-specific drug laws unlikely
• Change status quo through federal legislation
– Senator McCain: “This decision highlights the importance
that Congress act to change federal law. [I] continue[] to
believe that Americans ought to have the right to safely
import prescription drugs from Canada, where cheaper
alternatives come with the same safety standards and the
same dosages as those sold in the U.S.”

52. Federal Legislation
• Safe and Affordable Drugs from Canada Act
(S.122) introduced Jan. 8, 2015
• Transnational Drug Trafficking Act (S.32)
introduced Jan. 6, 2015
• Personal Drug Importation Fairness Act
(H.R.3715) died in previous Congress
• Gray Market Drug Reform and Transparency
Act (H.R.1958) died in previous Congress

53. Leadership in California
• SB600: foreign drugs lacking FDA approval or
illegally obtained are misbranded
• Illegally obtained: outside of supply chain
• Misdemeanor offense
– Imprisonment up to one year
– Fines up to $10,000 per occurrence
• Advances consumer safety & respects federal
supremacy

54. National Debate: Importation
of Foreign Drugs
• Pros:
– Cost in U.S. vs. abroad
– U.S. subsidizes the rest of the world
– “Obscene” pharmaceutical profits
• Cons:
– No U.S. oversight to protect health and safety;
• Populations with life-threatening diseases especially at risk
– Impact on innovation and new cures
• Return on investment in prescription drug mark is falling
– “Obscene” third-party payer profits

55. National Debate: Drug Cost
• Stable growth
• Competition reduces costs
– Brand and generic medications
• Expanded coverage
• Reducing costs due to foreign subsidies
requires major overhaul of system

56. Recommendations
• Prescriber Education
• Professional licensing boards
– Rehabilitation
– Sanctions
• Criminal enforcement (KY case)
– Law enforcement
– Prosecutors
• Implement professional best practices
• Consumer awareness
– Risks, pricing, and research and development
• Engage state leaders
– State legislation (CA model)

57. Professional Education
• FDA Know Your Source
• Mandatory/voluntary professional education
– Laws
– Standard of care (diagnosis, risks, and benefits)
– Whistleblower protections and incentives
• Professional society conferences and
publications
• Malpractice insurers
• Third-party payers

58. Consumer Awareness
• Obtain and use Rx drugs as directed
• Avoid diversion: safe purchase, storage, and
disposal
• Drugs.com pill identifier
• NABP VIPPS
• Whistleblower tip lines
• 1-888-INFO-FDA (1-888-463-6332)
• NADDI Rx tip form: http://rxtip.org/

59. Conclusion
• Contact us:
– Stacey Worthy
• sworthy@dcbalaw.com
• linkedin.com/in/staceyworthy
– Kyle Simon
• ksimon@claad.org
• linkedin.com/in/kyleasimon
– DCBALaw.com
• Facebook.com/DCBALaw
• Twitter.com/DCBALaw
• Thank you

60. Law Enforcement Track:
Lessons from the Supply Side
Presenters:
•Angélica Meinhofer, MS, Graduate Student, Department of
Economics, Brown University
•Kyle Simon, MS, Director of Policy and Advocacy, Center for
Lawful Access and Abuse Deterrence (CLAAD)
•Stacey L. Worthy, JD, Associate Attorney, DCBA Law and
Policy
Moderator: Frank Rapier, Executive Director, Appalachia High
Intensity Drug Trafficking Area (HIDTA)