Overview of DEA Quotas Within the Framework of the Controlled Substances Act
The Controlled Substances Act (CSA) has been a key part of Federal law for more than 55 years. One of the main purposes of the CSA is to establish a regulatory framework in which all legitimate handlers of pharmaceutical controlled substances (manufacturers, importers, distributors, and dispensers) must abide by certain requirements to prevent these drugs from being diverted from legitimate channels into the illicit market.
While Congress has made numerous changes to the CSA over the years, most of the core provisions in effect today were part of the original legislation that was enacted in 1970. Among these core provisions are those governing DEA quotas.
Quotas are the means by which DEA determines the maximum amounts of each schedule I and schedule II controlled substance that America’s drug manufacturers may collectively produce to meet our nation’s legitimate needs in a given year. Such amounts are referred to as Aggregate Production Quotas or APQs. In addition, quotas are the means by which DEA decides how much of these controlled substances may be produced in a given year by each bulk manufacturer of active pharmaceutical ingredient (API). The latter category is referred to as Individual Manufacturing Quotas. There is also a third category of quotas, known as Procurement Quotas, through which DEA authorizes the maximum amount of a controlled substance a manufacturer may procure and use for the purpose of manufacturing dosage form drugs or other substances.
How Frequently DEA Quotas Are Issued – and DEA’s Changed Approach
The text of the CSA contemplates that APQs and Individual Manufacturing Quotas will be issued by DEA on an annual basis. Likewise, the DEA regulations specify that Procurement Quotas will be issued on an annual basis. DEA followed this annual approach to issuing quotas for the first 53 years that the CSA was in effect. However, in late 2023, DEA announced a significant change to that approach.
In the November 2nd, 2023 edition of the Federal Register, as part of DEA’s publication of the proposed 2024 APQs, the agency stated: “For the 2024 quota year, DEA intends to allocate procurement quotas to DEA-registered manufacturers of schedule II controlled substances on a quarterly basis.” (Emphasis added.)
Two months later, when DEA issued its final order announcing the 2024 APQs, the agency stated that it received comments from manufacturers and associations representing manufacturers who “expressed concerns that DEA did not give sufficient notice of this significant change [to allow them] to adjust their business planning and schedules.” DEA further said that these commenters “believe[d] that the quarterly quota allotment will cause a bottleneck and exacerbate shortages of medications.” DEA said it disagreed with these comments. According to DEA, it needed to switch to a quarterly procurement quota process because the longstanding annual procurement quota process “did not allow [DEA] to remain nimble” in response to the expiration of patent exclusivity for Vyvanse and the resultant entry into the market of generic manufacturers.
DEA also said it did not believe switching to quarterly procurement quotas would create bottlenecks and exacerbate drug shortages. DEA explained that, in its view, there are a variety reasons why manufacturers of drugs containing controlled substances either gain or lose market share in any given calendar year and that “DEA believes that changes in its approach to allocating procurement quotas will ensure that it is best positioned to respond appropriately to changes in market demand.”
Having rejected the concerns of industry, DEA embarked on a quarterly DEA quota system at the beginning of 2024 under which manufacturers had to obtain procurement quotas every three months before commencing with the manufacture of dosage form schedule I or II controlled substances in the upcoming quarter.
Note Regarding the Administrative Procedure Act
Those who have some familiarity with the Administrative Procedure Act (APA) might wonder: Did DEA change the quota rules without going through notice-and-comment rulemaking? According to the agency, the answer to that question is “Yes.” In the Federal Register notice announcing the change, DEA acknowledged that “the quarterly quota allotment implementation did not go through a notice-and-comment the rulemaking procedure as required by the Administrative Procedure Act.” DEA did not provide a legal justification for its lack of adherence to the APA. Rather, DEA gave the following explanation: “DEA is undertaking these changes for the 2024 DEA quota year to allow it to more quickly and nimbly respond to fast-changing market trends, including potential shortages, with respect to medications subject to quotas.”
DEA is certainly familiar with the process of notice-and-comment rulemaking. Throughout DEA’s history (until the 2023 changes to DEA quota allotment process), essentially every substantive change to the agency’s rules utilized the notice-and-comment process in the manner required by the APA. Indeed, on the very subject of DEA quotas, DEA used the notice-and-comment rulemaking process to implement the “Management of Quotas” rules following the enactment by Congress in 2018 of the SUPPORT for Patients and Communities Act (“SUPPORT Act”). Those “Management of Quotas” rules were finalized by DEA in 2023 following a public comment period in which the agency received 258 comments from industry and other members of the public.
DEA’s Further Revisions to Its DEA Quota Process
APA considerations aside, not long after DEA began its switch to quarterly procurement DEA quota process, the agency reversed course to some extent. In a letter dated April 29, 2024, which DEA sent to manufacturers, the agency announced it would allocate procurement quotas for most schedule II controlled substances on semi-annual basis. And for injectable drug products containing schedule II controlled substances, DEA indicated it was returning to its former practice of issuing procurement quotas on an annual basis. Five months later, in the September 25th, 2024 Federal Register, as part of DEA’s notice of proposed adjustments to the 2024 APQs, DEA explained that its decision to make this partial reversal in course was based on input it received from manufacturers, the FDA, and other interested persons.
For APA buffs, it is notable that DEA again did not utilize notice-and-comment rulemaking to make this second round of revisions to the quota rules. Those who follow this issue closely might also notice that the DEA regulations governing procurement quotas have not been amended to reflect any of the foregoing changes. As of the date of this post, the DEA regulations still indicate that the procurement quotas shall be applied for and issued on a calendar-year basis.
DEA Quota Summary and Outlook
To sum up, how do DEA’s historical practices with respect to procurement quotas compare to its practices today? For more than 50 years following the enactment of the CSA in 1970 until 2023, the DEA regulations stated that the agency would issue procurement quotas no later than July 1 of each year – which (when followed by the agency) gave dosage form manufacturers a full six months to plan their operations for the upcoming year. And up until 2024, DEA historically issued procurement quotas for the entire upcoming year, allowing manufacturers to plan accordingly.
In contrast, DEA now grants procurement quotas on or about December 1 of each year, allowing manufacturers only about 30 days of fully informed planning time ahead of the upcoming year’s initial production runs (covering the first six months of the year). Then, at some point roughly in June of each year (there is no DEA regulation specifying the date), the process starts again, wherein manufacturers must await DEA’s decision on their procurement quotas for the remaining six months of the year.
Whether this current approach to issuing procurement quotas is beneficial to the nation by allowing DEA greater flexibility to prevent drug shortages, or whether it contributes to drug shortages by hampering the ability of manufacturers to plan sufficiently in advance, remains a matter of debate.
How Brinks DEA Consulting Can Help
Navigating the regulatory complexities of the CSA and DEA regulations, on issues such as DEA quotas, registration, recordkeeping, and security, is our specialty. Brinks DEA Consulting brings more than 75 years of combined regulatory, enforcement, and DEA diversion control experience. We work with manufacturers, importers, distributors, hospitals, physicians, researchers, pharmacies, and healthcare organizations to assist in strategic planning, identify compliance gaps, develop sound policies, and address real-world scenarios that place facilities at risk. If you or your organization have questions on how to strengthen your controlled substance compliance posture and operate most effectively within the framework of the law and regulations, we encourage you to contact us to discuss your specific challenges at Brinks DEA Consulting.