Posted: 29 Jul 2020 01:44 AM PDT
By Larry K. Houck —
An interesting aspect of a federal or state administrative agency seeking appropriations or raising fees is its justification for doing so and the light it sheds on the priorities for fulfilling its mission. The Drug Enforcement Administration’s (“DEA’s”) recent increase of initial registration and renewal fees, through its Notice of Proposed Rulemaking, (Registration and Reregistration Fees for Controlled Substance and List I Chemical Registrants, 85 Fed. Reg. 14,810 (Mar. 16, 2020)) and Final Rule, (Registration and Reregistration Fees for Controlled Substance and List I Chemical Registrants, 85 Fed. Reg. 44,710 (July 24, 2020)) is no exception. In addition to raising fees, DEA also codifies the conditions under which it will now refund registration fees.
Raising Registration Fees
DEA asserts that increasing controlled substance and chemical registrant fees is necessary to recover the full costs of the Diversion Control Program (“DCP”) “so it can continue to meet the programmatic responsibilities set forth by statute, Congress, and the President.” Without the fee increases, DEA continues, “the DCP will be unable to continue current operations, necessitating dramatic program reductions, and possibly weakening the closed system of [controlled substance] distribution.” Fed. Reg. 44,717.
The Controlled Substances Act (“CSA”), while authorizing DEA “to charge reasonable fees relating to the registration and control of the manufacture, distribution, and dispensing of controlled substances and listed chemicals” also requires the agency to set fees “at a level that ensures the recovery of the full costs of operating the various aspects of” the DCP. 21 U.S.C. §§ 821, 886a(1)(C). So, DEA must set registration fees that are not only “reasonable” but which also cover all costs of the DCP.
DEA most recently increased registration fees in March 2012 to cover the “full costs” of the DCP for Fiscal Years 2012 through 2014. DEA has determined that it must increase its total collections by 21 percent to fund the DCP for Fiscal Years 2021 through 2023. Fed. Reg. 44,721.
DEA cites the following activities as factors justifying the fee increase:
Fee Calculation Methodology
DEA considered three methodologies for determining reasonable fees for each registrant category to cover DCP costs during Fiscal Years 2021 through Fiscal Year 2023. DEA decided to continue using Weight-Ratio methodology that has been in use since Congress established registrant fees and because it remains “a reasonable reflection of differing costs.” Fed. Reg. 44,725. The Weight-Ration methodology assigns fees to the different registrant categories based on DEA’s general historical cost data expressed as weighted ratios. The different fees are expressed in ratios: 1.0 for researchers, canine handlers, analytical labs, and narcotics treatment programs; 3.0 for registrants on three-year registration cycles including pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners; 6.25 for distributors and importers/exporters; and 12.5 for manufacturers. Fed. Reg. 44,724-25. Fees under the Weighted-Ratio methodology result in different fees for each registrant group in which “registrants with generally larger revenues and costs pay higher fees than registrants with lower revenues and costs.” Fed. Reg. 44,725.
DEA considered a Flat Fee methodology that would have set the same fee for all registrants. This methodology would not take into account the proportion of DCP costs and resources, such as cyclic inspections, that certain registrant categories require. DEA concluded that calculating fees using this methodology is “not reasonable” as required by the CSA as the disparity among registrant would be “too great,” resulting in reduced fees for manufacturers and distributors by 90 percent and 80 percent, and increase practitioner fees by 23 percent. Fed. Reg. 44,722-23.
DEA also considered a Past-Based methodology that would use historic DEA investigative work hour data to apportion the cost to each registrant type. DEA determined that Past-Based methodology would disproportionately burden a small number of registrants, finding that Narcotic Treatment Program fees would increase by 856 percent, while changes for the other registrant groups would range from a 44 percent decrease to an increase of 131 percent. DEA characterized the Past-Based methodology as “backward looking” and could not assume that the agency’s future workload would reflect past work hour data. Fed. Reg. 44,723-44,725.
The New Fees
DEA’s new initial registration and renewal fees for each three-year and annual registration cycle registrant category is as follows:
Current and New Fees for Three-Year Cycle Registrants
Current and New Fees for Annual Cycle Registrants
Fed. Reg. 44,718.
DEA received twelve comments received in response to the proposed fee increases. Five comments were outside the scope. Two comments supported the fee increases in part while the remaining five expressed concern.
DEA will begin collecting the increased fees for new applications and renewal applications submitted on and after October 1, 2020. Fed. Reg. 44,710.
Fee Refunds
In addition to establishing new registration fees, DEA also amended 21 C.F.R. §§ 1301.13(e) and 1309.12(b) to “codify existing practices” for issuing controlled substance and chemical registration fee refunds. Fed. Reg. 44,718, 44,732, 44,734. Although registration fees are “generally . . . not refundable,” DEA recognizes the need to refund fees as they increase. The DEA Administrator now has discretionary authority to refund fees in limited circumstances, that include: applicant error such as making duplicate payments for the same renewal, incorrect billing or transposing incorrect credit card digits, payments for incorrect business activities or payments by exempt registrants; DEA error such as incorrectly advising that a new application was needed, or to submit payment for a wrong business activity; and death of a registrant within the first year of the three-year registration cycle. Fed. Reg. 44,718.
DEA will identify the process for obtaining refunds on the DCP website.
An interesting aspect of a federal or state administrative agency seeking appropriations or raising fees is its justification for doing so and the light it sheds on the priorities for fulfilling its mission. The Drug Enforcement Administration’s (“DEA’s”) recent increase of initial registration and renewal fees, through its Notice of Proposed Rulemaking, (Registration and Reregistration Fees for Controlled Substance and List I Chemical Registrants, 85 Fed. Reg. 14,810 (Mar. 16, 2020)) and Final Rule, (Registration and Reregistration Fees for Controlled Substance and List I Chemical Registrants, 85 Fed. Reg. 44,710 (July 24, 2020)) is no exception. In addition to raising fees, DEA also codifies the conditions under which it will now refund registration fees.
Raising Registration Fees
DEA asserts that increasing controlled substance and chemical registrant fees is necessary to recover the full costs of the Diversion Control Program (“DCP”) “so it can continue to meet the programmatic responsibilities set forth by statute, Congress, and the President.” Without the fee increases, DEA continues, “the DCP will be unable to continue current operations, necessitating dramatic program reductions, and possibly weakening the closed system of [controlled substance] distribution.” Fed. Reg. 44,717.
The Controlled Substances Act (“CSA”), while authorizing DEA “to charge reasonable fees relating to the registration and control of the manufacture, distribution, and dispensing of controlled substances and listed chemicals” also requires the agency to set fees “at a level that ensures the recovery of the full costs of operating the various aspects of” the DCP. 21 U.S.C. §§ 821, 886a(1)(C). So, DEA must set registration fees that are not only “reasonable” but which also cover all costs of the DCP.
DEA most recently increased registration fees in March 2012 to cover the “full costs” of the DCP for Fiscal Years 2012 through 2014. DEA has determined that it must increase its total collections by 21 percent to fund the DCP for Fiscal Years 2021 through 2023. Fed. Reg. 44,721.
DEA cites the following activities as factors justifying the fee increase:
- Continuing to address the nationwide opioid abuse crisis;
- Managing and supporting the growing registrant population, expected to rise from 1.4 million in 2012 to over 2 million by 2023, through inspections, registration improvements, enhanced information technology, education and outreach;
- Fulfilling expanded responsibilities and scope, that include promulgation, implementation and enforcement of regulations due to legislative amendments to the CSA by:
- The Designer Anabolic Steroid Control Act of 2014 (providing for temporary and permanent scheduling of anabolic steroids);
- The Comprehensive Addiction and Recovery Act of 2016 (expanding the type of practitioners who can dispense narcotic drugs for maintenance or detoxification treatment);
- The Protecting Patient Access to Emergency Medications Act of 2017 (creating emergency medical service agencies as a new registration category with recordkeeping and handling requirements); and
- The Substance Use-Disorder Prevention That Promotes Opioid Recovery and Treatment for Patients and Communities Act (addressing the opioid epidemic in a number of ways including establishment of a centralized database for suspicious order reports and providing manufacturer and distributor access to ARCOS data);
- Increasing scheduled regulatory inspections of various registrant types;
- Increasing education and outreach;
- Identifying additional sources of diversion;
- Collaborating investigations with state and local entities;
- Expanding the use of Tactical Diversion Squads (“TDSs”) (comprised of DEA diversion investigators and special agents, state and local law enforcement and regulatory officers conducting criminal investigations);
- Scheduling drugs of abuse;
- Establishing controlled substance and listed chemical quotas; and
- Employing sufficient personnel to fulfill DEA’s regulatory and enforcement mission. Reg. 14,814-14,819.
Fee Calculation Methodology
DEA considered three methodologies for determining reasonable fees for each registrant category to cover DCP costs during Fiscal Years 2021 through Fiscal Year 2023. DEA decided to continue using Weight-Ratio methodology that has been in use since Congress established registrant fees and because it remains “a reasonable reflection of differing costs.” Fed. Reg. 44,725. The Weight-Ration methodology assigns fees to the different registrant categories based on DEA’s general historical cost data expressed as weighted ratios. The different fees are expressed in ratios: 1.0 for researchers, canine handlers, analytical labs, and narcotics treatment programs; 3.0 for registrants on three-year registration cycles including pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid-level practitioners; 6.25 for distributors and importers/exporters; and 12.5 for manufacturers. Fed. Reg. 44,724-25. Fees under the Weighted-Ratio methodology result in different fees for each registrant group in which “registrants with generally larger revenues and costs pay higher fees than registrants with lower revenues and costs.” Fed. Reg. 44,725.
DEA considered a Flat Fee methodology that would have set the same fee for all registrants. This methodology would not take into account the proportion of DCP costs and resources, such as cyclic inspections, that certain registrant categories require. DEA concluded that calculating fees using this methodology is “not reasonable” as required by the CSA as the disparity among registrant would be “too great,” resulting in reduced fees for manufacturers and distributors by 90 percent and 80 percent, and increase practitioner fees by 23 percent. Fed. Reg. 44,722-23.
DEA also considered a Past-Based methodology that would use historic DEA investigative work hour data to apportion the cost to each registrant type. DEA determined that Past-Based methodology would disproportionately burden a small number of registrants, finding that Narcotic Treatment Program fees would increase by 856 percent, while changes for the other registrant groups would range from a 44 percent decrease to an increase of 131 percent. DEA characterized the Past-Based methodology as “backward looking” and could not assume that the agency’s future workload would reflect past work hour data. Fed. Reg. 44,723-44,725.
The New Fees
DEA’s new initial registration and renewal fees for each three-year and annual registration cycle registrant category is as follows:
Current and New Fees for Three-Year Cycle Registrants
| Registrant Category | Current Three-Year Fee | New Three-Year Fee | Increase Per 3-Year Cycle |
| Pharmacy; Hospital/Clinic;Practitioner; Teaching Institution; Mid-Level Practitioner | $731 | $888 | $157 |
| Registrant Category | Current Annual Fee | New Annual Fee | Increase Per Year |
| Manufacturer(controlled substance and chemical) | $3,047 | $3,699 | $652 |
| Distributor(controlled substance and chemical) | $1,523 | $1,850 | $327 |
| Researcher/ Canine Handler | $244 | $296 | $52 |
| Analytical Lab | $244 | $296 | $52 |
| Importer(controlled substance and chemical) | $1,523 | $1,850 | $327 |
| Exporter(controlled substance and chemical) | $1,523 | $1,850 | $327 |
| Reverse Distributor | $1,523 | $1,850 | $327 |
| Narcotic Treatment Program | $244 | $296 | $52 |
DEA received twelve comments received in response to the proposed fee increases. Five comments were outside the scope. Two comments supported the fee increases in part while the remaining five expressed concern.
DEA will begin collecting the increased fees for new applications and renewal applications submitted on and after October 1, 2020. Fed. Reg. 44,710.
Fee Refunds
In addition to establishing new registration fees, DEA also amended 21 C.F.R. §§ 1301.13(e) and 1309.12(b) to “codify existing practices” for issuing controlled substance and chemical registration fee refunds. Fed. Reg. 44,718, 44,732, 44,734. Although registration fees are “generally . . . not refundable,” DEA recognizes the need to refund fees as they increase. The DEA Administrator now has discretionary authority to refund fees in limited circumstances, that include: applicant error such as making duplicate payments for the same renewal, incorrect billing or transposing incorrect credit card digits, payments for incorrect business activities or payments by exempt registrants; DEA error such as incorrectly advising that a new application was needed, or to submit payment for a wrong business activity; and death of a registrant within the first year of the three-year registration cycle. Fed. Reg. 44,718.
DEA will identify the process for obtaining refunds on the DCP website.
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