[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
           PRESCRIPTION DRUG DIVERSION: COMBATING THE SCOURGE

=======================================================================


                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 1, 2012

                               __________

                           Serial No. 112-122



      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

           Subcommittee on Commerce, Manufacturing, and Trade

                       MARY BONO MACK, California
                                 Chairman
MARSHA BLACKBURN, Tennessee          G.K. BUTTERFIELD, North Carolina
  Vice Chairman                        Ranking Member
CLIFF STEARNS, Florida               CHARLES A. GONZALEZ, Texas
CHARLES F. BASS, New Hampshire       JIM MATHESON, Utah
GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
LEONARD LANCE, New Jersey            EDOLPHUS TOWNS, New York
BILL CASSIDY, Louisiana              BOBBY L. RUSH, Illinois
BRETT GUTHRIE, Kentucky              JANICE D. SCHAKOWSKY, Illinois
PETE OLSON, Texas                    MIKE ROSS, Arkansas
DAVID B. McKINLEY, West Virginia     HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
ADAM KINZINGER, Illinois
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................     1
    Prepared statement...........................................     4
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     6
    Prepared statement...........................................     8
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    13
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................   172

                               Witnesses

R. Gil Kerlikowski, Director, Office of National Drug Control 
  Policy.........................................................    13
    Prepared statement...........................................    16
    Answers to submitted questions...............................   175
Pamela Jo Bondi, Attorney General, State of Florida..............    35
    Prepared statement...........................................    37
    Answers to submitted questions...............................   183
Jack Conway, Attorney General, Commonwealth of Kentucky..........    44
    Prepared statement...........................................    47
    Answers to submitted questions...............................   189
Aaron E. Haslam, Senior Assistant Attorney General, State of Ohio    54
    Prepared statement...........................................    56
    Answers to submitted questions...............................   194
Joseph T. Rannazzasi, Deputy Assistant Administrator, Drug 
  Enforcement Administration.....................................    78
    Prepared statement...........................................    80
    Answers to submitted questions...............................   199
John M. Gray, President and Chief Executive Officer, Healthcare 
  Distribution Management Association............................   105
    Prepared statement...........................................   108
    Answers to submitted questions...............................   210
Joseph H. Harmison, Owner, DFW Prescriptions, on Behalf of 
  National Community Pharmacists Association.....................   116
    Prepared statement...........................................   118
    Answers to submitted questions...............................   246
Kevin N. Nicholson, Vice President, National Association of Chain 
  Drug Stores....................................................   125
    Prepared statement...........................................   127
    Answers to submitted questions...............................   249
Kendra A. Martello, Assistant General Counsel, Pharmaceutical 
  Research and Manufacturers of America..........................   140
    Prepared statement...........................................   142
    Answers to submitted questions...............................   252
David R. Gaugh, Vice President for Regulatory Sciences, Generic 
  Pharmaceuticals Association....................................   154
    Prepared statement...........................................   156
    Answers to submitted questions...............................   255


           PRESCRIPTION DRUG DIVERSION: COMBATING THE SCOURGE

                              ----------                              


                        THURSDAY, MARCH 1, 2012

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 11:10 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Mary Bono 
Mack (chairman of the subcommittee) presiding.
    Members present: Representatives Bono Mack, Blackburn, 
Stearns, Harper, Lance, Cassidy, McKinley, and Butterfield.
    Staff present: Paige Anderson, Policy Coordinator, 
Commerce, Manufacturing, and Trade; Charlotte Baker, Press 
Secretary; Kirby Howard, Legislative Clerk; Brian McCullough, 
Senior Professional Staff Member, Commerce, Manufacturing, and 
Trade; Gib Mullan, Chief Counsel, Commerce, Manufacturing, and 
Trade; Shannon Weinberg, Counsel, Commerce, Manufacturing, and 
Trade; Michelle Ash, Democratic Chief Counsel, Commerce, 
Manufacturing, and Trade; and Will Wallace, Democratic Policy 
Analyst.
    Mrs. Bono Mack. Good morning. If statistics hold true, by 
the time this hearing is over 10 Americans will have tragically 
and I believe needlessly died from prescription drug overdoses. 
Today prescription drug abuse is a deadly, serious, and rapidly 
escalating problem all across our Nation. We have a solemn 
obligation to tackle this growing epidemic head on, and I am 
going to keep beating the drums until Congress, the FDA, and 
the DEA come up with a comprehensive plan for action.
    The Chair now recognizes herself for an opening statement, 
and the clock is not working. That is all right for me. It 
won't be all right for you all, though, so don't get too 
comfortable.

 OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    As Americans we rally around efforts to fight breast 
cancer, childhood diseases, and other serious health threats. 
But for far too long there have been only hushed whispers about 
prescription drug abuse, now the fastest-growing drug problem 
in America according to the CDC.
    Today as the death toll from prescription drug overdoses 
continues to rise sharply, it is time to move the story from 
the obituary page to the front page where it belongs. It is 
time to realize that we can't simply wish this horrific problem 
away, not with nearly 30,000 people a year dying from it. See 
no evil, hear no evil often leads to a society's unspoken evil, 
indifference.
    We can do better than that, and we must. Just about 
everyone knows someone who is affected by prescription drug 
abuse, which impacts an estimated 12.5 million Americans and is 
now considered a health epidemic by the CDC. According to a 
recent, ``Monitoring the Future,'' national survey nearly one 
in four twelfth-graders have abused prescription drugs.
    Today two classes of medicines, painkillers and insomnia 
and anxiety drugs, are responsible for about 70 deaths and 
nearly 3,000 emergency room visits a day. These are stunning 
numbers, but here is what is even more alarming. The death toll 
from overdoses of these powerfully-addictive medicines is now 
more than double the death toll from heroin, cocaine, and all 
other illegal drugs combined. As a result, for the first time 
ever drug deaths outnumber traffic fatalities and has become 
the leading cause of accidental death in America.
    So what is the answer? When it comes to prescription drug 
abuse, where are the safety belts and the airbags that we need 
to deploy? First, like anyone in recovery knows we have to 
admit we have a serious problem. Americans today simply are 
prescribed too many medicines. There is a pill for just about 
every ache, pain, and malady.
    So what is wrong with that? Well, consider this. Not long 
ago the DEA conducted three national drug take-back days, and I 
applaud them for that, and at those 3 take-back days they 
collected an astonishing 995,815 pounds of unused and unneeded 
medicines. That is 995,000 pounds, not pills, in just 3 days.
    Today doctor shopping is a widespread problem which 
contributes to our Nation's alarming prescription drug 
addiction rate, increases costs to all of us through higher 
insurance rates, and makes it extremely difficult for the DEA 
to crack down on abusers. Compounding the problem is an 
oftentimes false sense of security. ``If it is approved by the 
FDA and prescribed by a doctor, then it must be OK.'' Wrong. 
Too many pills taken at once or combining them with other drugs 
and alcohol can have a serious and even deadly consequence.
    But the issue confronting us today is much more complex and 
involved than just what have you found lately in Grandma's 
medicine cabinet. The black market sale of powerful and highly-
addictive narcotic painkillers such as OxyContin and Vicodin is 
big business, prompting the DEA to attack the problem on 
multiple fronts from street-level sales all the way to the top 
of the supply chain. Targeted first were the so-called, ``pill 
mills'' in Florida which were largely unregulated until last 
year, and they routinely dispensed painkillers like they were 
M&Ms from a gumball machine.
    There is yet another, more insidious side of the story as 
well. After becoming addicted to prescription painkillers, law 
enforcement authorities say more and more people are now 
switching to heroin. In San Diego County, which borders my 
district, drug treatment experts say the use of heroin by young 
adults has more than tripled since 2006. Much of this growth is 
due to people who have switched to heroin as a cheaper 
alternative to OxyContin, now going on the street for as much 
as $80 for an 80-milligram tablet. By contrast, OxyContin sells 
for about $6 a tablet in pharmacies.
    Personally, I will never forget the very chilling phone 
call I received one night from a constituent of mine who told 
me that his son had had a gun put to his head because he 
couldn't pay the street price any long for his OxyContin.
    So what is the answer? I believe my legislation, the Ryan 
Creedon Act, H.R. 2119, and the Stop Oxy Abuse Act, H.R. 1316, 
are good starting points. My goal is to improve prescriber 
education by getting doctors, dentists, nurse practitioners, 
and other prescribers up to speed on the dangers of addiction 
and to make certain that powerful and seductive narcotic 
prescription drug such as OxyContin are used to treat severe 
pain only, not moderate pain like a toothache or a sore knee. 
In far too many cases addiction becomes a much greater health 
threat than the original pain itself, and in far too many cases 
death is the final result of a failed rehab.
    So let us not continue to blame this on Grandma and her 
medicine chest. She knows better, and in our hearts Americans 
do, too.
    [The prepared statement of Mrs. Bono Mack follows:]

    [GRAPHIC] [TIFF OMITTED] 80861.001
    
    [GRAPHIC] [TIFF OMITTED] 80861.002
    
    Mrs. Bono Mack. And I am happy to recognize the gentleman 
from North Carolina, the ranking member of our subcommittee, 
Mr. Butterfield, for his 5 minutes.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you. Let me thank the chairman for 
holding today's hearing on this very important subject of 
prescription drug diversion, and I know that this issue is very 
important to you, and I admire your work on it.
    Prescription drug diversion is an ever-growing problem in 
our country. In fact, a couple years ago in 2010, seven million 
people, seven million, over the age of 12 were considered 
current users of a prescription pain reliever; tranquilizers, 
stimulant, or a sedative, that was not prescribed to them. 
Sadly, it has become clear that as legitimate prescription drug 
use rises, so, too, does the number of people who abuse these 
drugs and so, too, does the number of people who accidentally 
die from prescription drug overdose. It is unconscionable that 
since 1990, a little over 20 years ago, the deaths resulting 
from an overdose of prescription drugs have risen. It has risen 
five-fold. Sometimes must be done, and I agree with that.
    But the question is what and by whom. Some of the testimony 
we will hear today comes from manufacturers and distributors of 
prescription drugs. It seems to me that the security and 
safeguards these entities employ is very impressive and goes 
beyond what might be expected. The use, layers upon layers of--
they use layers upon layers of security. They hire third 
parties to audit the processes and make immediate changes if a 
vulnerability is indentified. They track shipments with GPS 
precision and have built in a lot of redundancy in their 
security procedures.
    Understandably, though, the further down the supply chain a 
particular drug travels the greater are the opportunities for 
diversion. The National Survey on Drug Use and Health reported 
that 76 percent, more than three-quarters of people who use 
prescription drugs non-medically, gain access to them from 
someone they know. I think this needs to be our focus as we go 
forward.
    To that end, we need to focus on anti-diversion efforts, 
and I am pleased that the director from the White House Office 
of National Drug Control Policy is here today to tell us about 
their action plan.
    In a perfect world the answer to this problem is personal 
responsibility, but in the real world it is clear the Federal 
Government does have a defined role to play. We need to provide 
greater support for education programs for young people so they 
can learn at an early age the dangers of misusing prescription 
drugs. We need to provide greater support for rehabilitation 
initiatives so those who are addicted to prescription drugs 
have access to the help they medically need, and we need to 
make sure DEA has access to the resources it needs to 
scrutinize all the players involved and the manufacturer, 
distribution, and dispensing of controlled substances. Most 
involved in this process are good and honest people. DEA needs 
to find the ones who are not.
    And so I would like to personally on behalf of the 
Democrats on this committee thank all of you for coming today, 
and I look forward to your testimony. I stand ready to work 
with each of you, Madam Chair, and our colleagues and witnesses 
to curtail prescription drug abuse in the United States of 
America.
    Thank you so very much. I yield back.
    [The prepared statement of Mr. Butterfield follows:]
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    Mrs. Bono Mack. Thank you, Mr. Butterfield. Chairman Upton 
has yielded his 5 minutes for an opening statement to me in 
accordance with committee rules, and as his designee I now 
recognize Mr. Stearns for 2 minutes for an opening statement.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Thank you, Madam Chair, and just wanted to 
compliment you for this hearing on prescription drug diversion. 
Very important and I am also very pleased to have and welcome 
our attorney general, Florida's own attorney general, Pam 
Bondi. She is here to testify on this important hearing. She is 
Florida's 37th attorney general, sworn in in January of last 
year. She is a native of Florida, and she graduated from the 
University of Florida, which I represent, so I am proud to have 
her as a so-called constituent. She also graduated from Stetson 
Law School and was a prosecutor for almost 18 years.
    Among her top priorities is strengthening penalties to stop 
pill mills in the Sunshine State, which from our last hearing, 
Madam Chair, on this issue was a prevalent problem in our 
State, and with her dedication and leadership against 
prescription drug abuse, Florida went from having 98 of the top 
100 dispensing physicians for oxycodone pills to have 13 
dispensing physicians residing in Florida.
    So frankly her success in this effort resulted in 
recognition from the National Association of Drug Diversion 
Investigators, Florida Police Chiefs Association, and from the 
Florida Board of Medicine. So I want to welcome her, and I 
thank you, Madam Chair, for the opportunity to do so.
    Mrs. Bono Mack. Thank you, and I just want to point out 
that there is a hearing going on in the Health Subcommittee 
with the Cabinet Secretary. So a lot of members are bouncing in 
and out. If they are able to attend, I just want to thank the 
members who are here.
    Mr. Butterfield. Madam Chairman, that is where I was until 
I figured out I was in the wrong place.
    Mrs. Bono Mack. I am glad you figured it out. But we do 
have three panels before us today. Each of our witnesses has 
prepared an opening statement. They will be placed into the 
record. Each of you will have 5 minutes to summarize that 
statement in your remarks. The good news is the clock is 
working, and there is a timer in front of you now.
    On our first panel we have the Honorable Gil Kerlikowske, 
Director of the Office of National Drug Control Policy. Good 
morning, Director, and once again, thank you very much for 
being here. I am happy to recognize you now for 5 minutes for 
your statement.

 STATEMENT OF R. GIL KERLIKOWSKE, DIRECTOR, OFFICE OF NATIONAL 
                      DRUG CONTROL POLICY

    Mr. Kerlikowske. Thank you, Chairman Bono Mack and Ranking 
Member Butterfield and distinguished members of the 
subcommittee. It is a great opportunity for us to update you on 
this important issue of prescription drug abuse in the United 
States.
    Prescription drug abuse has been a major focus of the 
Office of National Drug Control Policy since my confirmation. I 
am particularly indebted to Chairman Bono Mack for calling me 
up to her office in the first week that I was in the office to 
really begin to educate me about an issue that, frankly, 3 
years ago was not on the public's radar screen, but it is 
clearly in front of the public today.
    I included prescription drug abuse as a signature 
initiative as part of the administration's National Drug 
Control Strategy. As been mentioned, it has been categorized as 
a public health epidemic by the Centers for Disease Control and 
Prevention.
    The scope of non-medical use of pharmaceuticals is 
striking. CBC found in 2008, that the opioid pain relievers 
were involved in 14,800 deaths, and opioid pain relievers are 
now involved in more overdose deaths as has been mentioned in 
heroin and cocaine combined. The vast majority of abused 
pharmaceutical drugs originally enter into circulation through 
a prescription. The quantity of prescription painkillers sold 
to pharmacies, hospitals, and doctors' offices has quadrupled 
from 1999, to 2010.
    When I testified last year before this subcommittee in 
April, the administration had just released that month its 
Comprehensive Prescription Drug Abuse Prevention Plan. The plan 
focuses on four major pillars.
    The first pillar is education. Most prescription 
painkillers are prescribed by primary care doctors, internists, 
and dentists, not pain specialists. The FDA is requiring 
manufacturers of these opioids to develop educational materials 
and training for prescribers. The administration is working 
with Congress to amend the Federal law to require mandatory 
education and training for prescribers, and we are also working 
very hard to educate the general public about the risks and the 
prevalence of prescription drug abuse and about the safe use 
and proper storage and disposal of these medications.
    The second pillar, monitoring. We focused on expanding and 
improving State prescription drug-monitoring programs. Forty-
eight states have those laws. Despite the progress, some states 
lack operational programs. Many states operate PDMPs that lack 
interoperability with other states. But I am pleased to report 
the administration worked with Congress to secure legislative 
language to allow the Department of Veterans' Affairs to share 
prescription drug data with these PDMPs.
    Our third pillar focuses on safe disposal of unused and 
expired medications and through the National Prescription Drug 
Take Back Days that the DEA has collected and was talked about 
by the chair. The administration also recognizes the 
significant role that pill mills and rogue prescribers play in 
this issue. Our surveys and research show that with chronic 
addiction to prescription drug they are more likely to obtain 
their drugs from the pill mills than the recent initiates.
    And final pillar of the administration's plan focuses on 
improving law enforcement capabilities to address diversion. 
Across the country law enforcement regulatory and legislative 
actions are forcing doctors and shoppers and doctor shoppers 
and others seeking these sources of prescription drugs to be 
apprehended.
    The problem, of course, was highlighted in the State of 
Florida, which was in 2010, the epicenter of the Nation's pill 
mill epidemic, but I have to tell you that working with the 
attorney general in the State of Florida has led to marked 
changes in that State, and I couldn't be more pleased that not 
only she, but Attorney General Conway are also here.
    In 2011, ONDCP, our office, supported training events 
because we know if you are going to do the enforcement, it 
can't be just at the Federal level. It has to be at the State 
and local level also, and experts in law enforcement need that 
kind of training in order to investigate these complex cases.
    We are undertaking a data analysis project right now to 
examine the ways that prescription drugs are purchased, 
purchasing behaviors, and whether those patterns are indicative 
of suspicious behavior. We held a round table with members of 
the pharmacy community and law enforcement to discuss pharmacy 
robberies and burglaries. We called in the heads of 
organizations that worked on the security of the manufacturers 
and distributors to make sure that we were knowledgeable about 
what they were doing to secure these very potent 
pharmaceuticals.
    In closing just let me thank the members of Congress for 
their support on the ONDCP and my Executive Branch colleagues 
who know that without your efforts and without your support we 
would not make a difference in this very important area.
    Thank you.
    [The prepared statement of Mr. Kerlikowske follows:]
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    Mrs. Bono Mack. Thank you very much, Director. I will 
recognize myself now for 5 minutes for questioning.
    And just ask you with everything that your office is doing 
together, the DEA and the FDA, why are we losing this battle 
against the prescription drug epidemic, and you have mentioned 
a lot of progress we have made, but you do live in Florida, but 
prescription drug abuse has not decreased. What is the next 
step?
    Mr. Kerlikowske. I think the fact that all of these things 
are coming together, that we actually are starting to see some 
fruition to all of the work that has been going on. For 
instance, in the most recent Monitoring the Future Survey, 
eighth, tenth, and twelfth graders have actually reduced their 
level of use of prescription drugs, but I couldn't agree with 
the chair more that it is an epidemic, that it is so wide 
spread and that people still don't get it. They don't 
understand that these are dangerous, they can be deadly, and 
they can certainly be addictive.
    I think that one of the greatest hopes will be in the next 
step forward, and that is mandatory prescriber education. 
Physicians must be told and must have unequivocal information 
about the dangers of addiction, pain management, tolerance, 
dependence, and they really don't get that in medical school. 
The second part I know you will hear form the Drug Enforcement 
administration as non-enforcement. The laws have to be 
enforced, and people have to be prosecuted.
    Mrs. Bono Mack. I appreciate that and especially your 
viewpoint on prescriber education, but a problem for me, too, 
is we examined this problem. There are clearly gaps in the 
data, and we don't really know the extent of the problem.
    What are the gaps, and how can they be filled?
    Mr. Kerlikowske. Well, quite often we rely, for instance, 
on fatality data to come from the individual states, and we 
know that depending on the particular State, whether it is a 
medical examiner system or others, those states can often be 
delayed.
    We also know that at times, whether it is from fatalities 
from driving accidents or others, that the level of 
examinations to determine what the cause and whether or not 
that person had the drugs in their system is not always as 
thorough as it can and should be. There are data gaps, but I 
will be happy at another time to tell you about this new 
initiative to take some of the data and really identify and 
drill down into it.
    Mrs. Bono Mack. I would be happy to work with you on that. 
I think they are critical even for policymakers. We need that 
data critically.
    The DEA is going to testify that there are 1.4 million DEA 
registrants. That seems awfully high. Do you think that 1.4 
million registrants is about right for America, or is that kind 
of a crazy number?
    Mr. Kerlikowske. Chairman, I actually wouldn't know what 
the right number would be, but I think when you look at nurse 
practitioners, physicians, and all of the other people that 
hold those DEA registration licenses across the country in the 
healthcare field, that the number doesn't seem completely out 
of line to me. I think more importantly is how they are 
policed.
    Mrs. Bono Mack. Thank you, and lastly, should we be 
thinking about creating new classification schedules under the 
Controlled Substance Act with stricter regimes for the drugs 
that are clearly the biggest problems?
    Mr. Kerlikowske. I know that issue has come up before to 
put those into the higher schedule. I think the more important 
part is to try and keep them out of the hands of the abusers 
but not at the same time they get so restrictive that the 
issues that led us to where we are today 15 years ago, which 
was the clear indication that pain was not being adequately 
treated in the United States, I think the pendulum was too far 
over there. Clearly today the pendulum is too far over here 
when it comes to the availability of these.
    I am not sure scheduling would be the right answer, but we 
have to bring this back to some equilibrium.
    Mrs. Bono Mack. Are you working with the physicians who are 
saying that pain shouldn't always be treated solely with 
opioids and that there have to be other ways of treating pain, 
that this is creating an epidemic that is hurting more people 
than it is saving?
    Mr. Kerlikowske. I have. I have heard from a number of 
physicians that want to be much more flexible and understanding 
and treating pain rather than writing prescriptions for 30, 60, 
or 90 days worth of very powerful painkillers. They also want 
to make sure that there are systems in place where they can be 
adequately reimbursed for treatments other than what right now 
seems to be a very simple and quick method but not always 
particularly effective in treating pain by writing a script.
    Mrs. Bono Mack. In the last 22 more seconds that I do have 
something Attorney General Bondi cares deeply about are the 
opiate babies. Can you speak briefly to what you have learned 
about opiate babies?
    Mr. Kerlikowske. I can. I can tell you that in the past and 
having visited in one of the centers for newborns in Seattle 
the issue always centered around newborns and the addiction 
through heroin. Today when I met and saw all of those infants 
and actually held one of those infants, the issue was all about 
prescription drugs, and there was very little discussion about 
mothers using heroin.
    And so we are building some tremendous healthcare costs as 
a result of not treating this adequately.
    Mrs. Bono Mack. Thank you very much, Director, and happy to 
recognize Mr. Butterfield for 5 minutes.
    Mr. Butterfield. Thank you. Again, thank you very much for 
coming forward today with your testimony. We have heard your 
testimony, and we appreciate so much what you do.
    I have a question that I would like to ask, and I may even 
ask it of the other panels as well, but I believe it is very 
critical, and it is central to the problem that we are dealing 
with.
    Efforts in one state may yield declines in the number of 
pills dispensed, hospitalizations, or deaths, any of which are 
very commendable achievements within that state's border, but 
how can we be sure that addicted individuals simply don't go to 
another state?
    Mr. Kerlikowske. I think the key would be on the example 
would be the fact that Florida had become such as has been 
talked about, so publicly an epicenter for not only the use of 
these very powerful, misuse and abuse of these very powerful 
prescription drugs for people within the State of Florida but 
for people traveling all the way through Appalachia and 
actually New York, Connecticut, and other places.
    The regulation of medicine is done at the state level. It 
is not done at the Federal level, and we have to provide the 
training, the technical assistance, the start-up money for the 
computer systems, and the assistance to law enforcement, 
particularly state and local law enforcement to understand how 
to investigate these complex cases.
    I would tell you that greater use of the PDMPs is 
necessary. Not as many physicians or people in the healthcare 
industry utilize them as should and that they need to be real 
time and that they need to be interoperable across states.
    When those things come together and I think we are seeing 
some of this in the number of states that are sharing the 
information, I think that that way we can stop that balloon 
effect that you were talking about, Congressman.
    Mr. Butterfield. We have been looking at the data in our 
office, and the data seems to suggest that the total number of 
elicit drug users was constant for 2 years, even though we have 
seen great strides in states like Kentucky and Florida and even 
Ohio.
    Are we on the right path with this?
    Mr. Kerlikowske. I think we are on the right path with this 
with what I believe is a very balanced way and a very 
comprehensive way of looking at this. I think that if I go back 
and look at where we were, and believe me, I am the first one 
to tell you that a lot more has to be done, particularly in 
redoubling our efforts in some of these areas, but I look at 
where we were 3 years ago. As a chief of police of a city of 
almost 700,000 people, I was really unaware of this 
prescription drug problem. I think that my colleagues who were 
sworn to protect people in the city and learn about what are 
the dangers when you don't realize it, when we didn't realize 
it and prosecutors and judges and many others did not realize 
it, we weren't paying attention to it because after all, it is 
a prescription, it is coming out of the medicine cabinet. It 
was a huge mistake.
    This is on the front page of every major newspaper on a 
regular basis. It is on television. We are moving in the right 
direction.
    Mr. Butterfield. Let me talk about tribal communities for a 
minute, and I only have a minute 50 left. As the National Drug 
Control Strategy points out, tribal communities have been 
particularly hard hit by unemployment and combined with 
problems accessing healthcare, education, and other services, 
tribal communities can be disproportionately vulnerable to 
prescription drug abuse.
    A 2009, study by the Substance Abuse and Mental Health 
Administration found that American Indians are more than twice 
as likely as whites to abuse prescription drugs. What is the 
administration doing to help tribal communities address these 
unique challenges?
    Mr. Kerlikowske. We started looking at that almost 
immediately and a couple things that are done. First Assistant 
Secretary Echo Hawk from the Department of Interior has been a 
great partner, along with the Indian Health Service and along 
with the Bureau of Indian Affairs. We have made trips to a 
number of the tribal lands, for example, the Tohono O'odham 
Nation in Arizona, and the issues around dietary issues, 
alcohol issues, and illegal drugs was significant, but the 
growing problem that was pointed out to us is exactly as you 
said, and that is around the prescription drug issues.
    Mr. Butterfield. But are you working with them to set up 
databases?
    Mr. Kerlikowske. Education, so the education and prevention 
and working through the Indian Health Service and the Treatment 
Service, and let me just mention on the enforcement side for 
the first time one of our high-intensity drug trafficking 
groups, HIDTA, in Portland includes a member of--a tribal chief 
to help direct those needed enforcement resources back onto 
tribal lands.
    Mr. Butterfield. That includes databases and other 
resources?
    Mr. Kerlikowske. I don't know about the database in 
particular. I would think that the health service would 
probably be more knowledgeable about that.
    Mr. Butterfield. All right. Thank you. You have been very 
kind.
    Mr. Kerlikowske. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Butterfield.
    The Chair recognizes Mr. Stearns for 5 minutes.
    Mr. Stearns. Thank you, Madam Chair.
    Is it true that prescription drug overdose deaths now 
surpass our car-related fatalities?
    Mr. Kerlikowske. It is true that all overdose deaths are 
now the leading, from drugs, misuse and abuse, not accidental, 
are the number one cause of accidental death in this country, 
ahead of gunshot wounds and ahead of car crash deaths, driven 
by prescription drugs.
    Mr. Stearns. That is a startling fact, don't you think?
    Mr. Kerlikowske. Yes.
    Mr. Stearns. Do you think based upon that that we should 
have a radical change in our approach?
    Mr. Kerlikowske. I think that we haven't gotten anywhere 
near the attention or near the traction to something that is 
killing more people in this country than car----
    Mr. Stearns. And, in fact, 10 or 20 years ago I wouldn't 
find the statistics like it is today?
    Mr. Kerlikowske. Not at all.
    Mr. Stearns. And why do you think that occurred?
    Mr. Kerlikowske. One, I think that the driver of the 
prescription drugs as we have been, as has been mentioned a 
little bit, people don't see them as addictive, they don't see 
them as dangerous, and they don't see them as deadly, because 
they are, after all, a prescription.
    Mr. Stearns. I think in your opening statement you were 
talking about opiates were sold in 2010, to medicate every 
American adult six times a day for a month. That was in your 
statement.
    Mr. Kerlikowske. Yes.
    Mr. Stearns. Doesn't that put a line to the claim that we 
are just getting better at pain management?
    Mr. Kerlikowske. When I have spoken with the physicians who 
looked at and were instrumental in the early days of under-
treating and the recognition of under-treating pain, I think 
that a clear recognition, and as I mentioned a minute ago I 
think that the pendulum was there and that in very good faith 
ways they worked very hard to make sure that people actually 
were adequately treated for pain.
    A few things were missing. One is the amount of education 
that a physician would need to clearly understand and recognize 
some of the dangers of these. The other is that as many people 
have mentioned, we have become kind of an overmedicated 
society.
    Mr. Stearns. How would we educate Americans to not be an 
overly medicated society?
    Mr. Kerlikowske. It is a pretty tough issue. It is kind of 
like dealing with the obesity issue.
    Mr. Stearns. Do you think it is something to do with our 
culture today that----
    Mr. Kerlikowske. I think that the more important part is to 
educate the physicians around this, as physicians are so much 
more knowledgeable about dietary issues and the causes, I don't 
see the same level of knowledge among them and among healthcare 
practitioners when it comes to the addictive properties of 
these drugs.
    Mr. Stearns. Could you from your department make it more 
difficult for the doctors to provide prescription drugs in the 
areas that are causing the overdoses? Is there something that 
you could do?
    Mr. Kerlikowske. I--we are kind of a small policy shop 
that----
    Mr. Stearns. You couldn't make any recommendations?
    Mr. Kerlikowske [continuing]. We bring all of these folks 
together. I think the key will be education and then making 
sure that they follow the rules, and I think that we are well 
on the way to hopefully getting that done.
    Mr. Stearns. You mentioned in your opening statement the 
actual cost to society is estimated at $56 billion in 2007, and 
maybe likely higher today. Do you have any idea what the cost 
in terms of devastating affects on families and communities--so 
if it is $56 million [sic] in 2007, what do you think it is 
today?
    Mr. Kerlikowske. Well, and I think that the most recent 
study on the costs to the United States taxpayer on drug abuse 
is well around $190 billion that----
    Mr. Stearns. One hundred and ninety billion.
    Mr. Kerlikowske. For--and that includes all types of 
heroin, cocaine, marijuana issues, et cetera, but I think that 
you couldn't be more correct in putting forward the fact that 
it is not only a huge cost in our healthcare system, it is a 
huge personal cost and a huge personal tragedy the child that 
doesn't graduate from high school, the employer that wants to 
start a new business and can't find people that are drug free 
so that they will have less accidents and be more productive. 
All of these things play a huge part, and so the dollar cost is 
one thing. The tragedy to this country is another important 
part.
    Mr. Stearns. Lots of times all of us talk about the legal 
war on drugs, but we are also--I think we have to consider a 
war on prescription drugs, and so I guess the question is where 
does the current prescription drug war rank compared to our war 
on illegal drugs?
    Mr. Kerlikowske. I think my colleagues, particularly in the 
Drug Enforcement Administration, when they set their goals and 
they move forward each year in recognizing what the drug threat 
is, several years ago they recognized this issue much more 
quickly and actually changed their direction and focus. I think 
you will hear about the number of what are called tactical 
diversion squads, the number of investigations, the number of 
local law enforcement and prosecutors that have been trained in 
how to investigate these complex cases, because these are 
actually legal drugs that are manufactured and often through 
prescriptions or pill mills. So those are important steps 
forward.
    Mr. Stearns. Are we winning or losing?
    Mr. Kerlikowske. We are moving ahead. I am encouraged by a 
couple of things. One, the number of dispensed opioid 
prescriptions has flattened, and if you looked at the charts in 
a number of years, it looked like the space shuttle taking off. 
The amount of opioids manufactured has flattened, and the fact 
that in this most recent monitor in the future, eighth, tenth, 
and twelfth graders actually decreased in their use of one of 
the very powerful painkillers, Vicodin.
    I think we are moving there, but as the chair and others 
know so well, it is not enough, and it is not fast enough.
    Mrs. Bono Mack. Thank you very much, Mr. Stearns, and I am 
pleased to recognize Mr. McKinley for 5 minutes for his 
questions.
    Mr. McKinley. Thank you, Madam Chairman.
    Briefly, I think you and I had a little conversation 
beforehand, before we began, and we were concerned about 
privacy. I still would, I would like you to expand a little bit 
about that. What--to me from an engineering for small business 
perspective, I am a little concerned about, very concerned 
about the privacy, but I know and I think you would recognize 
that if there were a national registry of all the prescription 
drug used in America, the pharmacies would be held responsible 
to check that registry to find out that they just got OxyContin 
just one day earlier for a 3-months' supply, and they would be 
able to say no.
    Isn't there something, some form, I know we don't want to 
have FDA, because as we have had other hearings here, someone 
being able to hack into that information.
    Mr. Kerlikowske. Right.
    Mr. McKinley. There were penalties according--that are 
related to that, but we all know if we had a list, if someone 
had a list, we could go hold those people responsible more so 
than the distributors that are doing the best they can to 
curtail that.
    Tell me a little bit about what efforts we can do in 
security privatizing those names so that individuals can't be 
identified but yet we--a pharmacy would be able to know that 
they have now, this is their third prescription for the same 
medicine in the last 2 weeks. Isn't there something you are 
doing on that?
    Mr. Kerlikowske. I think----
    Mr. McKinley. I saw this the other night. I just think that 
is just great, education. It works so well with teenage 
pregnancies and everything else, hasn't it? Sanctions against 
governments that they continue to--so I really want something 
with more substance to it that is going to solve the problem.
    Mr. Kerlikowske. Sure. I think the answer is the 
prescription drug monitoring plans that are done by the state. 
Since the Federal Government doesn't regulate the practice of 
medicine and the state does, having the PDMP, that electronic 
database that would be used by all physicians and healthcare 
professionals that would be real time and that in states, 
particularly neighboring states, that information could be 
shared across the states.
    When it is led and directed and the start-up money comes 
from the Federal Government but led and directed by the state 
government, they can put in the protections about patient 
confidentiality and privacy. I think in the best of all worlds 
that national database would be a wonderful thing. I think it 
would be difficult to implement because of the protections that 
would be needed to prevent exactly as you said hacking, and I 
think that part of that national database would be the fact 
that it would be 5 or 6 or 7 years in the making. Right now we 
have all but two states that have PDMPs, and as they become 
more well used and more well robust, it will actually make a 
difference with their use.
    Mr. McKinley. So are you suggesting, and I think I 
understand, something that would not work with mail orders 
because they are ordered someplace else other than just in the 
state, but tell me again, you think that if pharmacists knew by 
looking at computer screen that that person got--would he or 
she still fill that prescription if he knew it was being 
violated?
    Mr. Kerlikowske. When I speak with all of the different 
groups and the individual pharmacists, and you look at their 
ethical standards and their patient safety practices and the 
number of pharmacists that have picked up the phone and either 
said, either called the physician saying something isn't right 
or the ones that have told that patient, you know what, I am 
not going to fill that because I have that information, I am 
pretty heartened by where the pharmacists are.
    But I think going upstream a little bit, that doctor that 
realizes that that patient that has come into his or her office 
has been to two or three other physicians or that patient that 
walks in on Friday evening to an emergency department and says, 
gee, I am traveling or I have lost my prescription or I need 
something like that, when that frontline, upstream person can 
take a look at that system and say, well, this is the third 
hospital you have been to this weekend or you are seeing two 
other doctors with a similar complaint, I am not going to be 
dealing with this, I think that is a help also.
    Mr. McKinley. So what do we do with that individual when 
they come in? Are they held?
    Mr. Kerlikowske. They are not held because I think that 
unless they actually get, unless there is a law violation, they 
are not going to be charged or they are not going to be held, 
but I think the other important part of this education piece is 
that they need to get into the treatment. I have met so many 
people now across this country on these travels that have 
become addicted to prescription drugs, have received proper 
quality treatment, and they are back. I mean, they are back 
taking care of their families, they are back paying taxes, they 
are back working, and I think that this is the entry point to 
get them the help that they are needed, because we are talking 
about a disease. We are talking about addiction.
    Mr. McKinley. OK. I guess we have run out of time. Thank 
you very much.
    Mr. Kerlikowske. Thank you, Congressman.
    Mrs. Bono Mack. Thank you. Mr. Harper, you are recognized 
for 5 minutes.
    Mr. Harper. Thank you, Madam Chair.
    Director Kerlikowske, thank you for your time here and all 
that you are trying to do in a very serious situation. You 
know, with regard to the PDMPs, what do you think the biggest 
barrier is in the implementation of a drug-monitoring program 
for states whose programs have yet to go online?
    Mr. Kerlikowske. One of the barriers is the fact that it 
needs to be real time, and it needs to be ease of use. 
Physicians have about, as I have been told, about 16 minutes 
with a new patient to assess everything. These are busy 
practices and busy offices, and they need to be given a tool 
that is easy, that is accessible in order to use it and of 
course, once they do and they become schooled in it and rely on 
it, the physicians that I have spoken with tell me that it is a 
patient safety tool.
    Mr. Harper. OK. Now, we have 48 states that have authorized 
programs, 40, I understand, have operational programs. Are all 
of these state PDMPs created equal?
    Mr. Kerlikowske. No.
    Mr. Harper. OK.
    Mr. Kerlikowske. They are not, but we are fortunate at Rice 
University to have a center of excellence that takes the best 
practices that helps those that are--and of course, the heads 
of each of these agencies come together several times a year 
for us to be able to speak with them. We want to be able to 
make them as robust and helpful as possible, but I would be the 
first to tell you that some are better than others.
    Mr. Harper. Well, are there some that you would hold out as 
a role model for the other states or for those that have yet to 
go operational?
    Mr. Kerlikowske. I think you will hear from Attorney 
General Conway, and I think Kentucky is clearly one of those 
states that has addressed this not just with a very robust and 
smart PDMP and some pending changes that they have planned in 
their laws to make it an even better system. I would tell you 
that from what I have looked at in California, the CURES 
System, is another one. The Center for Excellence, they have 
done a very good job of putting in the hands of the people that 
use these, develop these systems, information that is 
necessary.
    Mr. Harper. What are you seeing as strengths and weaknesses 
as communication between the various states with their 
monitoring programs? Is that a weak link? Do you feel like that 
the communication between those states can be improved, and if 
so, what would you suggest?
    Mr. Kerlikowske. Now, you ask the million-dollar question, 
and I think you are exactly right. Some states are easier to 
get along with amongst each other on this particular issue and 
to work together. Some states when you look at these systems 
and it is not a huge amount of money but every state is facing 
difficult budget times, how much of a priority is it. But when 
I talked to these physicians or listen to these physicians in 
all these states, I said, look. If I am in eastern Kentucky, I 
really don't want to spend the time to check Ohio, West 
Virginia. I need to get to a system that is already linked to 
those neighboring states.
    Mr. Harper. Uh-huh. Do you--are the PDMPs the only option 
out there for states to implement the sharing of this 
information?
    Mr. Kerlikowske. Right now on the prescription drug abuse 
issue, those are the options. I think the healthcare technology 
in the future, e-prescribing, all of these other things will 
play a big role in the future and make it easier and more 
helpful.
    Mr. Harper. We want to thank you for your work on this very 
important topic, and with that I yield back, Madam Chair.
    Mrs. Bono Mack. Thank you, Mr. Harper.
    Director Kerlikowske, thank you so much for being here 
today and all of your hard work. You have been generous not 
only today but every day in working with me on these issues. I 
applaud you for raising the profile for many years and 
especially coming from somebody who said you didn't know 3 
years ago, you certainly know now. I don't know that we have 
all the answers, but at least we are finally starting to 
confront it, and I look forward to working with you.
    Thank you, again, very much for being here today. Is there 
anything you would like to close--rather than a second round of 
questions, something you just need to say that you didn't get 
to say?
    Mr. Kerlikowske. Madam Chair, one--I am indebted to the 
committee and the members of Congress that take this issue on. 
You have so many issues in front of you, and yet as I mentioned 
to the President on the drug issue, when we think about keeping 
our kids in school and we think about who is going to be the 
workforce that we are all going to depend on in the future, I 
think about healthcare costs, I think about law enforcement 
issues.
    The more that we can do on the drug prevention side and the 
more that we can do to get people adequate treatment and get 
them back into the--into being productive members of society, 
none of that could happen without the will and the support and 
the help of members like you all.
    Thank you.
    Mrs. Bono Mack. Thank you very much.
    And with that we are going to take a very, very brief 
recess just while we seat the second panel. Hopefully it is 30 
seconds or so, and we ask the second panel to join the table.
    [Recess]
    Mrs. Bono Mack. All right. On our second panel we have four 
very distinguished witnesses who are very deeply involved in 
the issues of prescription drug abuse and prescription drug 
diversion, which clearly go hand in hand. We are honored today 
to have with us the Honorable Pamela Jo Bondi, attorney general 
for the State of Florida, the Honorable Jack Conway, attorney 
general for the State of Kentucky. Also joining us are Aaron 
Haslam, Senior Assistant attorney general for the State of 
Ohio, and Joseph Rannazzisi, Deputy Administrator for the Drug 
Enforcement Administration.
    Thank you all, again, for being with us this morning. To 
help you keep track of time there is a timer light on your 
table. When it turns yellow, you have a minute to wrap up. So, 
again, you don't have to come to a screeching halt when it 
turns red, but if you can wrap up your comments, we would 
appreciate it.
    So with that we are happy to recognize Attorney General 
Bondi for her 5 minutes, and please just remember to turn your 
microphones on, and you may begin.

   STATEMENTS OF PAMELA JO BONDI, ATTORNEY GENERAL, STATE OF 
    FLORIDA; JACK CONWAY, ATTORNEY GENERAL, COMMONWEALTH OF 
 KENTUCKY; AARON E. HASLAM, SENIOR ASSISTANT ATTORNEY GENERAL, 
   STATE OF OHIO; AND JOSEPH T. RANNAZZISI, DEPUTY ASSISTANT 
         ADMINISTRATOR, DRUG ENFORCEMENT ADMINISTRATION

                  STATEMENT OF PAMELA JO BONDI

    Ms. Bondi. Thank you, Congresswoman Bono Mack, and thank 
you for championing this cause on behalf of our country, and 
thank you as well, Ranking Member Butterfield, for having us 
here today and also to Congressman Stearns from Florida and to 
all the committee members. We truly appreciate this.
    I am here to tell you about what Florida is doing to try to 
stop prescription drug abuse. As Congressman Stearns told you, 
just to put it in perspective, of the top 100 oxycodone dealers 
in the entire country, 98 of them were in Florida. Now we have 
13, and that is with legislation that has been in effect barely 
a year. So last year we had over 900 pain management clinics 
registered within our state. Today we have 580, and I guarantee 
you that number is going to continue to plummet.
    I want to outline now briefly our comprehensive legislation 
and what we have done in our state. As you know, we have become 
the Oxy Express, and that is why I worked so closely with 
General Conway, with General DeWine in Ohio because what was 
happening, people were buying their drugs in Florida, taking 
them to Kentucky. I had to hug a mother in Kentucky when I was 
with General Conway who lost her daughter 2 years ago to 
prescription drugs that were bought in Florida, and that had to 
stop.
    So we passed, with that we passed tough new legislation in 
our state, and we are very proud of that legislation. Long, 
long overdue, let me tell you that.
    The common characteristics of a pill mill in Florida were 
cash business, $200 to $300 cash, armed guards at the door, 
little to no medical equipment at all. Just shelves and shelves 
of pills. These doctors who we call drug dealers wearing white 
coats are sitting in a back room just signing prescription 
pads, and it was legal, and it was killing our kids.
    So we had very weak regulatory oversight of the pain 
management clinics. We had limited oversights of the physicians 
who were dispensing, which was very important, and we had a 
non-operational prescription drug monitoring program.
    So with that we have now passed some very tough 
legislation, and we are very proud of that. One of the most 
important things to me was that we banned doctors from 
dispensing most abused narcotics, and we made that a violation 
of the ban, both a third degree felony and how do you hurt a 
bad doctor? Take their license away. So with that dispensing 
ban we feel that we have been very successful as well.
    We also have--we created a standard of care for physicians 
prescribing controlled substances. We require these doctors to 
either electronically prescribe or to use counterfeit-proof 
prescription pads, none of which had been done in our state. We 
also added, as I said, enhanced criminal penalties, which were 
very important and required all of these pharmacies to be re-
permitted by the State of Florida.
    We did great things. We now have the PDMP up and running, 
which if you have any questions, I can discuss that with you as 
well, and with that, you know, we can always create tough new 
laws and onto something else, but what we did in Florida with 
Governor Scott's help, we started a strike force, and that is 
joint with Federal, state, and local officials all working 
together. You can pass these laws and move on, and it is not 
going to work. We are targeting these guys, and we are putting 
them out of business.
    And with that just--we have seven strike forces throughout 
our state, and if you have questions about the strike force, I 
can explain that in greater detail, but what we have done, 
since we have had the strike force is we have truly gone in and 
started putting these guys out of business. We are targeting 
them, and we are not letting up on them.
    We also have an educational component of this legislation, 
and that involves narcotics overdose prevention education, 
NOPE, and this task force, these remarkable people have done an 
amazing job of going into our schools and educating our 
children about this.
    We have also instituted along with DEA state drug take back 
days. I have participated personally in as many of those as I 
could. You would not believe the drugs that are being turned 
in, and it has gotten so successful that we plan on putting 
permanent drop boxes up at our police stations and our 
sheriff's offices as well. At two drug take back days alone we 
seized over five tons of prescription drugs. Unbelievable.
    So and we are very pleased to announce that as of February, 
2012, our strike force efforts have resulted in 2,040 arrests, 
34 of those are doctors. We have seized 390 weapons, almost $5 
million, but there is one other problem. I have run out of 
time, but that is the babies being born addicted to 
prescription drugs, and that is our newest fight this session, 
and we are not going to give up on that as well.
    Thank you for all of your efforts, and we do know we have a 
long way to go, but I don't think any of us in this room are 
going to stop.
    Thank you.
    [The prepared statement of Ms. Bondi follows:]
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    Mrs. Bono Mack. Thank you very much.
    And General Conway, you are recognized for 5 minutes.

                    STATEMENT OF JACK CONWAY

    Mr. Conway. Well, thank you, Chairwoman Bono Mack and 
Representative Butterfield for your commitment to this issue. I 
also want to recognize Congressman Guthrie, who is not here, 
but who is a fellow Kentuckian who works with our drug task 
forces on this very important issue.
    Prescription pill abuse is a reality that has touched the 
lives of just about every Kentucky family. It has touch my 
family's life in a very personal way. It has ravaged our 
communities, it has shattered families, and it has fueled 
crime.
    Depending on which study you believe, Kentucky is either 
the most third- or fourth-most medicated State in the entire 
country, and the four you always hear at the top of the list 
are Kentucky, West Virginia, Tennessee, and Oklahoma. Last year 
in Kentucky we had over 1,000 people that we documented died 
from prescription painkiller overdoses. That is more than we 
lost to auto accidents.
    And Madam Chairman, we actually think that is 
underreported, because our estimates are that only about half 
the people that actually die from overdoses autopsied by a 
medical examiner's offices. And when you take a look at the 
unnatural deaths in the Commonwealth of Kentucky, what you see 
over and over is not heroin or not cocaine, not even alcohol as 
much as you see Xanax, oxycodone, Methadone, and hydrocodone. 
Last year, Kentucky hospitals treated over 5,000 overdose 
patients.
    Now, this is an epidemic we first started to see in the 
1990s in eastern Kentucky. Eastern Kentucky is a region of 
heavy industry, of laborers, of coal mines. We have more 
injury-prone jobs, but it is also an area of economic 
depression, and we have too many doctors who overprescribed and 
too many people became hooked. And because of the economic 
depression, people figured out they could sell their pills on 
the street, and a black market was born. And today when you go 
through eastern Kentucky, which I do on a regular basis, you 
will find that about 80 percent of the crime according to law 
enforcement and prosecutors is fueled by the abuse and the 
insidious addiction to prescription painkillers.
    The problem has spread across the Commonwealth. It is not 
just in eastern Kentucky. According to a ``Lexington Herald'' 
leader study not too long ago in 120 of our counties which we 
have total, 118 were up in the number of schedule two and three 
narcotics prescribed, and I am sad to report that estimates 
from law enforcement and those in the healthcare community say 
that we have only about 10 percent of the treatment beds that 
we actually need in the Commonwealth of Kentucky.
    You know, I am sick and tired of hearing about losing an 
entire generation to prescription pill abuse in the 
Commonwealth of Kentucky, so we have started a public education 
program for doctors and also for school children in Kentucky. I 
actually travel across the Commonwealth with two mothers from 
Morehead, Kentucky, who lost their daughters to prescription 
pill abuse, and it is really important to get people like that 
who look like the mothers of these kids to tell them their 
story, because they will listen to an elected official for 5 
minutes or so, but when the mothers talk, they really listen.
    And here is what is disheartening. You can look at these 
kids, middle schoolers, high schoolers, and say, OK, you know, 
tell the truth. Just because I am the attorney general, tell 
the truth. How many of you have used a prescription pill or 
your best friend has used it for an off-label purpose. I am sad 
to report 70 or 80 percent of the hands go up. I ask them how 
many think that prescription pills are easy to get. Seventy or 
80 percent of the hands will stay up. Then I will ask them how 
many of their parents lock up their medicine cabinets. All the 
hands will go down. I realize it is not a problem that starts 
with Grandma, but in some instances, particularly in Kentucky, 
it is an addiction that is starting in our homes.
    I have tried to do all I can. I have created the State's 
first prescription pill task force. That is my drug 
investigators working with local law enforcement. We are trying 
to collaborate and share resources in a time of dwindling law 
enforcement resources. We participated in Operation Flamingo 
Road, where we partnered with the DEA and the Kentucky State 
Police to round up 500 individuals who were vanning pills up 
from Florida in 2009.
    At that point we thought about 60 percent of our pills in 
our streets were coming from Florida. Pam Bondi told me a story 
one time that they executed a search warrant on a pain 
management clinic in Broward County, Florida, and they seized 
1,700 patient records. Of those 1,700 individuals they seized 
the records 1,100 of them are from the Commonwealth of 
Kentucky. That is what we in law enforcement call ``a clue.'' 
We had people by the vanload going to Kentucky to bring pills 
back.
    And that is why I am not only happy to a friendship with 
Pam or General Bondi I should say, I am grateful that she came 
along at this time. She has done a tremendous job of taking on 
these pill pushers in her State. As she said, Florida was home 
to 97 or 98 of the Nation's top 100 prescribers of oxycodone. 
Now they are down to 13.
    This issue knows no party. It is an American tragedy. We 
are doing all we can. We have new legislation in the 
Commonwealth of Kentucky to reregulate our pill mills. We have 
entrepreneurs getting in the pill mill business. We need to 
stop them. We have the issue of the mail order forms cease 
shipping 90-day supplies of schedule two and three narcotics. I 
understand the issue of efficiency in our healthcare system, 
but that needs to be 30 days, and we need to make certain that 
we get doctors using these systems. Yes, we have KASPER, our 
PDMP. It is a good system, but only about 25 percent of our 
doctors are using it, and on top of that those of us in law 
enforcement can't see the data to do the investigations that we 
need to do, and I would be happy to talk with you a little bit 
more about that.
    I have heard the questioning here today, and I am out of 
time, so I am going to wrap up, but if you want to know what 
you can do to help, help us get all 50 states up with PDMPs and 
with systems that talk to one another. We can do our jobs if we 
can get those systems up and running and if we can get the 
doctors to use them.
    Thank you very much for the opportunity to appear.
    [The prepared statement of Mr. Conway follows:]
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    Mrs. Bono Mack. Thank you very much, General Conway.
    Mr. Haslam, you are recognized for 5 minutes.

                  STATEMENT OF AARON E. HASLAM

    Mr. Haslam. Thank you Chairman Bono Mack, Ranking Member 
Butterfield, and distinguished members of this committee. I 
thank you on behalf of Ohio attorney general Mike DeWine and 
all of Ohio for the opportunity to address you today.
    As the Chief Assistant Prosecutor and later the elected 
Prosecutor in Adams County, Ohio, I had a front row seat for 
the devastation that this scourge can cause on a community. In 
February, 2011, Ohio attorney general Mike DeWine recruited me 
to lead his prescription drug task force. Attorney General 
DeWine has been committed to using every resource Ohio has to 
fight this scourge.
    In Ohio we have taken nationwide--a nationwide stance in 
fighting back through changes in legislation, proactive law 
enforcement actions, partnering with prescribers and dispensers 
and being proactive with awareness, education, and treatment.
    Through this effort Ohio has raised public awareness, 
increased public education, and improved Ohio's investigations 
and prosecutions in both criminal and regulatory cases.
    However, to make a real difference we must limit the 
availability of prescription drugs to those individuals in 
actual need and in the proper quantities. In Ohio unintentional 
fatal and non-fatal drug poisoning has cost Ohioans $3.6 
billion annually. Between the years of 1999, and 2007, Ohio's 
rate of opioid distribution increased 325 percent. During that 
same time period Ohio's unintentional drug overdose death rate 
increased 305 percent. If you will look to my left, you can see 
this remarkable correlation on the graph located closest to the 
back of the room.
    In 1997, Ohio averaged seven doses of opioids per capita. 
In 2010, our average dose of opioid per capita increased to 67. 
In less than 15 years Ohio watched that average dose of opioids 
per capital increase almost 900 percent.
    The chart to my left, the closest to the front of the room, 
will illustrate that the death rates during the current 
prescription drug scourge is much higher in Ohio than the death 
rates in Ohio during the heroin epidemic in the '70s and the 
crack cocaine epidemic in the 1990s.
    Ohio's leaders recognize the seriousness of Ohio's 
prescription drug problem. On February 8, 2011, Representatives 
Terry Johnson and Dave Burke, a physician and a pharmacist, 
introduced what is known as House Bill 93 in Ohio. The bill 
passed through the House and the Senate unanimously. With the 
support of the attorney general, Governor John Kasich signed 
the bill into effect on May 20, 2011, and it became law.
    Much like Florida, our pain clinics, our pill mills were 
not regulated. House Bill 93 for the first time regulated pain 
clinics in Ohio. It required physician ownership of pain 
clinics. It required prescribers to review our PMDP--sorry, our 
Prescription Drug Monitoring Program, which is known as OARRS 
in Ohio, and they had to do that when they were treating 
chronic pain patients.
    Attorney General DeWine has worked tirelessly to create a 
multidisciplinary approach to the investigation and prosecution 
of prescription drug cases. Attorney General DeWine has worked 
with law enforcement at the local, State, and Federal levels in 
Ohio to investigate prescription drug cases. We are currently 
working with county prosecutors and Federal prosecutors all 
across Ohio to prosecute these cases. He is proud to be a part 
of the State-wide team in an effort to protect Ohio's families.
    Our next step the attorney general believes is to build a 
bridge with State and Federal officials across the Nation. To 
have a true impact we must collaborate on a multi-State 
approach to combat this scourge. Ohio and the Nation must be 
proactive working with all the stakeholders to tackle this 
epidemic. When this happens you will see success.
    For example, in Scioto County, one of Ohio's hardest hit 
counties, also a border county to Kentucky, the last pill mill 
was closed this past December. Scioto County has a population 
of approximately 78,000 residents. At one time it housed 12 
pill mills prior to Ohio's efforts. Today it houses zero pill 
mills. Just last week Scioto County learned that accidental 
overdoses decreased 17 percent and drug-related deaths 
decreased 42 percent in 2011. This was the first decrease 
Scioto County had seen in the past decade in these numbers. It 
had been a steady increase prior to 2011.
    I will end with a quote from Reverend Martin Luther King 
Jr., who said, ``We may have all come on different ships, but 
we are in the same boat now.'' Each of us may have arrived at 
the prescription drug scourge on a different ship, but today we 
are all in the same boat, and more importantly, people will die 
if we continue to ignore the scourge.
    Thank you.
    [The prepared statement of Mr. Haslam follows:]
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    Mrs. Bono Mack. Thank you very much.
    Mr. Rannazzisi, you are recognized for 5 minutes.

               STATEMENT OF JOSEPH T. RANNAZZISI

    Mr. Rannazzisi. Thank you. Chairman Bono Mack, Ranking 
Member Butterfield, distinguished members, on behalf of 
Administrator Michele Leonhart and the men and women of the 
Drug Enforcement Administration, I would like to thank you for 
the opportunity to appear today to discuss prescription drug 
diversion and the critical role the DEA plays in securing the 
integrity of the controlled substance supply chain and delivery 
system.
    Before I get going I would just like to thank the chairman 
and this committee for their leadership on this problem, and I 
also want to thank you for promoting the National Take Back 
Program. If I may throw in a plug, we will doing it again April 
28, Saturday, State, Federal, local agencies with community 
groups working together to collect those drugs, and I want to 
thank you again for that.
    Also, I would like to thank the leadership of Director 
Kerlikowske, who has gone out of his way to ensure that we get 
the--all of the resources that we need to do our job.
    The abuse of pharmaceuticals continues to be a significant 
problem in the United States, and it is based on pharmaceutical 
diversion from the supply chain and the medication delivery 
system, and we believe that is the major reason. There is just 
holes in the system. Over the last few years individuals and 
organizations have created schemes within the healthcare 
delivery system that appear legitimate but are nothing more 
than illegal operations to facilitate the illegal distribution 
of pharmaceuticals. Pharmaceutical diversion facilitated by 
these operations can be prevented if DEA registrants would just 
fulfill their obligations under the Controlled Substances Act.
    The act was designed so that each DEA registrant is a link 
in the closed system of distribution. Each registrant, 
manufacturers, wholesalers, distributors, practitioners, and 
pharmacies have a critical role to play in keeping the 
distribution chain closed.
    Two major schemes have emerged to divert millions of 
dosigents, powerful addictive drugs. The first one a few years 
back was the internet pharmacy scheme. You could go online, and 
you could purchase pretty much any schedule three, four, or 
five controlled substance you would like. hydrocodone was the 
drug of choice, and it came out of the distribution chain, and 
really no one fulfilled their obligations to the chain. You had 
distributors that weren't doing due diligence on pharmacies 
that were ordering huge amounts of hydrocodone. The pharmacists 
weren't checking those prescriptions to ensure they were valid, 
that is they were issued for legitimate medical purposes in the 
usual course of professional practice, and the doctors weren't 
doing the same thing. They were just prescribing without a 
legitimate reason for prescribing. There was no medical 
determination made. It was a major breech in the system.
    But because of law enforcement's focus on that problem and 
then Congress coming in and passing the Ryan Haight Act, we 
basically shut down that system. Unfortunately, that system 
moved back to Florida and turned into pain clinics, and pain 
clinics grew.
    Now, these pain clinics, besides the fact that they are 
operating illegally, they were doing the same thing that the 
internet pharmacies did. The only difference is on the internet 
pharmacies there was no face-to-face visit. In pain clinics 
they actually see patients, but, again, the doctors are moving 
huge amounts of prescriptions out the door. Pharmacists are not 
checking the validity of those prescriptions. They are not 
ensuring they are valid prescriptions, and the wholesalers and 
distributors just continue to ship large amounts of drugs to 
those pharmacies without doing due diligence, without knowing 
their customer, without saying, well, why are you ordering? Why 
are you ordering this amount of drug when every other average 
pharmacy in the U.S. only orders this, and you are ten, 12, 14 
times more than that? They have a responsibility under the act. 
They choose not to comply with that obligation.
    We are fighting this problem through education and 
regulatory control and enforcement. Since 2005, we have a 
distributor initiative that has educated distributors of their 
obligations under the act. When distributors fail to adhere to 
their obligations, DEA takes administrative or civil action 
against their registration. From mid 2010, through the end of 
2011, we took action against five wholesaler distributors for 
unlawfully supplying Florida-based pain clinics or associated 
pharmacies with controlled substances. These actions included 
the issuance of immediate suspension orders and result in the 
restriction and loss of DEA registrations.
    We also focus our resources on practitioners that issue 
those prescriptions not for legitimate medical purpose. These 
practitioners feed the addiction of drug seekers and allow 
drugs to enter the elicit market and facilitate overdose and 
death. Rogue practitioner activity is not limited to Florida. 
In fact, rogue pain clinics are moving northward, and they 
operate in Georgia, Tennessee, Kentucky, and southern Ohio now 
in addition to out west. A DEA investigation with State and 
local and Federal agencies of a pain clinic doctor operating in 
Portsmouth, Ohio, culminated this February with the doctor 
being sentenced to four life terms for overdose deaths of four 
individuals.
    I have to wrap it up here, but we are making progress. DEA 
is using its regulatory authority to ensure compliance with the 
CSA and its implementing regulations. These measures that we 
are taking are beginning to show promise. We are strengthening 
the integrity of the system through registrant compliance.
    In closing I want to assure you that DEA is working closely 
with all of our counterparts; Federal, State, and local, and 
our regulatory counterparts as part of the Administrator's 
comprehensive approach to combating prescription drug abuse. We 
are committed to balancing the need for diversion control 
enforcement with the need for access to these important 
medications by legitimate users.
    Thank you for this opportunity to appear, and I look 
forward to answering any questions.
    [The prepared statement of Mr. Rannazzisi follows:]
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    Mrs. Bono Mack. Thank you very much.
    I am going to recognize myself for 5 minutes of 
questioning, and I would like to begin with General, Attorney 
General Bondi, and I know you care passionately and you and I 
have spoken about the opiate babies, and it is my belief that 
when people dabble with heroin or cocaine, they understand they 
are dabbling with a potential addiction. They don't necessarily 
think that when they start playing around with pharmaceuticals.
    Can you speak to why you are so focused on the opiate 
babies? I mean, you really are passionate about it. I would 
love for you to--you ran out of time, so please talk about it 
for a little bit if you could.
    Ms. Bondi. Absolutely. You know, right after we passed our 
legislation last session I started getting calls from neonatal 
intensive care nurses, neonatologists, and said there is 
another problem, and you have got to come see this. I went to 
Saint Joseph's Hospital in Tampa. Twenty percent of the babies 
going through the neonatal intensive care unit are born 
addicted to prescription drugs.
    Now, imagine the worst addict you can see on TV going 
through those withdrawals, that is how these babies are born 
into this world. Their incubators have to be covered with 
blankets. They are sensitive to light, to sound, to touch. 
Instead of milk, they are getting morphine or methadone. That 
is how these kids are coming into this world.
    All Children's Hospital in St. Petersburg, that is a 
premiere hospital for children, 30 percent of the babies going 
through the neonatal intensive care unit born addicted to 
prescription drugs, and it has to stop. Take it from a cost 
perspective. I take it from a life, babies' lives, but if you 
look at it from a cost perspective, Saint Joe's had to expand 
their NICU just to accommodate these babies. So it is costing 
taxpayers a fortune, and I think a lot of it really has to do 
with education, and that is why we have legislation proposed 
this session. I have talked to adoption lawyers, I have talked 
to nurses, we brought in the Board of Health, we brought in the 
Board of Medicine. It is all about working together to educate 
these women, because unfortunately, I think some of these women 
will say I have stopped drinking alcohol, I have stopped 
smoking marijuana, but because it is the word prescription 
drugs, they don't realize the harm that it is doing to their 
unborn child.
    What scared me to death, Chairman Bono Mack, was when I 
asked a doctor, I said, we can't let this become the next crack 
baby epidemic, and he said, we have already surpassed it.
    Mrs. Bono Mack. Thank you. I just wanted to say we don't 
even know the long-term consequences for these opiate babies, 
and I just want to turn with my limited time to Mr.--and 
hopefully we will have a second round of questioning, but Mr. 
Rannazzisi, you and I have had multiple discussions, and we are 
not always on the same page, but I applaud some of your efforts 
recently.
    You and I have talked about quotas. If Florida is having 
success at shutting down their pill mills, wouldn't the quotas 
show a correlating reduction in the quotas that you do allow 
the manufacturing of these drugs? Are you seeing that?
    Mr. Rannazzisi. Actually, we are seeing a decrease somewhat 
in Florida, but we are seeing the expansion of these pill mills 
throughout the country. If you go to Tennessee, Kentucky, 
southern Ohio, and most of those in southern Ohio were shut 
down, but we still continue to see those flow out, and I just 
right now, even though Florida is on the going downhill, states 
north of Florida are starting on the rise. This problem is 
just, again, just moving north and west.
    Mrs. Bono Mack. Well, I am just glad you hear you admit 
that and to say that. That is encouraging to me, but can you 
speak briefly about the Cardinal Case? Now that the district 
court has dissolved the temporary restraining order, what are 
the next steps in the Cardinal Case, and apparently Cardinal 
plans to appeal. If the district court's order is upheld, what 
is the next step?
    Mr. Rannazzisi. Because that case is in active litigation, 
I am not allowed to answer questions, however, I can tell you 
we have had cases similar to Cardinal in the case in the last 2 
or 3 years. They are exercising their appeal rights, and we 
respect that. We will continue on with this program. Looking at 
our distributors, making sure that they meet their obligations 
under the act, and if they don't meet their obligations under 
the act, we will take the same action that we have taken.
    Mrs. Bono Mack. I am just encouraged because long ago you 
and I argued that it was all coming out of Grandma's medicine 
chest. Correct?
    Mr. Rannazzisi. Yes, ma'am, and not that I don't still 
believe it is coming out of the medicine chest, but I believe 
that we are handling it upstream now to prevent it from getting 
down to that level.
    Mrs. Bono Mack. Thank you for that.
    Mr. Haslam, you talk about shipments, whole cargo 
containers that go missing but they are unreported. Do you want 
to speak to that?
    Mr. Haslam. Anecdotally, law enforcement throughout Ohio 
has told us that they, that cargo shipments are falling off the 
trucks. We have heard----
    Mrs. Bono Mack. Just magically.
    Mr. Haslam. Just magically. We have heard----
    Mrs. Bono Mack. Yes.
    Mr. Haslam [continuing]. Through conversations with 
manufacturers about their security measures, and they do seem 
to be very good security measures as Director Kerlikowske 
alluded to earlier.
    However, there seems to be a point as it gets further down 
the chain that the security measures either weaken or are not 
as efficient, and once it gets to the distributors and then 
they send it to their distributors who send it out, there 
appear to be security measures that aren't in place that allow 
shipments to fall off of trucks.
    Mrs. Bono Mack. Thank you very much. My time is up, and I 
would like to recognize Mr. Butterfield for 5 minutes.
    Mr. Butterfield. Thank you. Let me go to the gentleman from 
the DEA. How do you pronounce your name? Is it Rannazzisi?
    Mr. Rannazzisi. Rannazzisi. Yes.
    Mr. Butterfield. Yes. All right. Thank you. Let me talk 
with you about the security procedures followed by the 
prescription drug manufacturers, specifically how the drug 
moves from raw materials to usable medicine, then to 
distributors, and then down to the wholesalers. Are you 
comfortable, sir, with the security mechanisms employed by 
these companies?
    Mr. Rannazzisi. The physical securities for the most, the 
physical security systems for the most part I am. We do onsite 
inspections every 3 years or so for manufacturers, importers, 
exporters, any other raw material holders, and if there is 
problems in physical security, we handle it onsite. We make 
suggestions, and generally it is corrected.
    Mr. Butterfield. All right. What kind of relationship does 
the DEA have with the prescription drug industry? Specifically, 
what programs does DEA employ to educate DEA manufacturers and 
distributors? How closely, if at all, does DEA audit or approve 
security measures employed by the manufacturers and 
distributors, and is there a difference in procedure for 
authorized distributors versus secondary distributors?
    Mr. Rannazzisi. Well, first of all, we are on site for 
these distribution and manufacturing facilities every 3 years. 
In addition, for instance, the wholesalers and the 
distributors, we have a program called the Distributor 
Initiative where we sit down, not as a group, but individually 
with each company, and we go over their distributions, and we 
talk to them about what to look for when they are sending their 
drugs downstream. We offer them assistance to help them 
identify what diversion is and where it is, and that is done 
individually by company.
    The manufacturers, we have an open door as far as the 
manufacturers go. I don't think we have ever had a problem with 
the manufacturers where we haven't rectified that problem.
    So we are regulators. We have a relationship between 
regulators and the industry, and we oversee them and make sure 
that they are operating under the act, in compliance with the 
act.
    Mr. Butterfield. All right. Technology advances have 
enabled new abuse deterrent drugs to take the place of 
conventional pills. I am encouraged by the addition of abuse-
deterrent drugs into the marketplace, and while it is not a 
silver or magic bullet in completely stopping prescription drug 
abuse, it seems to be a tool that can greatly help.
    Some medications have been reformulated to be extremely 
difficult to crush and dissolve. These are what we call abuse 
deterrent drugs and new additions to the prescription drug 
marketplace and have not yet been widely adopted. But things 
are moving in the right direction.
    Question. How do you think abuse-deterrent formulations 
will have an impact on reducing opiate abuse, and how do we 
ensure that those who are addicted do not just switch to a new 
drug such as Fentanyl or heroin?
    Mr. Rannazzisi. I think that the abuse, well, first of all, 
we are very supportive of these assistance formulations. We 
think that is the future that will curb drug abuse.
    However, we also know that abuse-resistance formulations 
tend to stop drug abusers from ingesting the drug in certain 
manners, for instance, injection or snorting the drug. When 
they need to, they take it orally, and abuse-resistant 
medication generally does not affect how you take it orally.
    What we are seeing in the field is they are taking the drug 
orally with an agent that will give it a synergistic property 
to enhance the, for instance, for a drug like oxycodone, they 
will take it with an Alprazolam product or Carisoprodol, which 
is a muscle relaxant to enhance the product, the effects of the 
product.
    Mr. Butterfield. Thank you. I yield back.
    Mrs. Bono Mack. Thank you, Mr. Butterfield.
    Mr. Harper, you are recognized for 5 minutes.
    Mr. Harper. Thank you, Madam Chair, and if I could, Mr. 
Rannazzisi, if you I could ask you a few questions.
    First, what regulation does DEA have that specifically 
outlined the legal requirements that pharmacies, distributors, 
and manufacturers are required to take to avoid drug diversion?
    Mr. Rannazzisi. Well, for starters, pharmacists are held 
pretty much to the same standard that doctors are under 
1306.04, 1306.04 says a prescription is not valid unless it is 
issued for legitimate medical purpose and use, of course, a 
professional practice. It also goes on to say that a 
corresponding responsibility exists with the pharmacist to 
ensure that the prescription is valid.
    Mr. Harper. OK.
    Mr. Rannazzisi. The manufacturers under 1301.71 and 1301.74 
have to maintain a system that stops diversion or the diversion 
of controlled substances into other than a legitimate 
marketplace. And it also goes on to say that you also have to 
maintain a system of suspicious ordering monitoring, and they 
leave it up to the manufacturers and distributors to determine 
how to set up that system of suspicious ordering and 
monitoring.
    Mr. Harper. You know, I know the DEA has the ability to see 
unusual ordering patterns. Are there certain thresholds or 
levels that you pass on to the distributors to look for? Are 
you giving them guidelines to--that you pass off?
    Mr. Rannazzisi. No. I think what distributors have to do is 
look at their customers. They know their customers. I don't 
know all of their customers. They do. If they went onsite and 
looked at their customers, they could make a determination of 
what thresholds should be maintained for those individual 
registrant customers.
    The problem is is I don't believe that the distributors and 
the wholesalers are actually looking at their customers as 
closely as they should. If you have customers that on the 
average purchase, I don't know, 70,000 oxycodone tablets a year 
and you have customers purchasing well in excess of a million a 
year, I think that would trigger something where you should go 
onsite and find out why that is the issue.
    Mr. Harper. Does the DEA have those volume parameters that 
it uses but are not shared with manufacturers or distributors?
    Mr. Rannazzisi. No. We--no, we don't share, we don't give 
them volume parameters. That is up to them. It is their system 
that they are setting up.
    Mr. Harper. All right. Well, what guidance has DEA provided 
to the manufacturers, distributors, pharmacies, or whatever on 
the specific steps that they should be taking to identify 
fraudulent prescriptions? What advice are you giving them to 
look for or suggestions?
    Mr. Rannazzisi. Well, there are certain red flags.
    Mr. Harper. OK.
    Mr. Rannazzisi. For instance, a pharmacy. If you have, if 
you are sitting in we will say Portsmouth, Ohio, and all of 
your customers are coming from, I don't know, 80 or 100 miles 
away, and the doctor you are filling for is 100 miles the 
opposite way, and it is all cash transactions, and you are 
seeing this over and over again, you know, I am not the 
smartest guy, but red flags pop up in my mind when that 
happens.
    Mr. Harper. Yes.
    Mr. Rannazzisi. And I think those are typical red flags, 
and Attorney General Bondi I am sure, or any one of these 
distinguished gentlemen could tell they are seeing the same 
thing that I am seeing. So over and over again we see these red 
flags. The pharmacists should see them, too.
    Mr. Harper. Would you favor under the Controlled Substance 
Act to create a stricter requirement, legal requirement for the 
most problematic drugs?
    Mr. Rannazzisi. I think the requirements that are in place 
right now for these drugs are fine if the individuals within 
the supply chain and healthcare delivery system would follow 
them. The problem is that the doctors continue, not all 
doctors, 99 percent of the doctors are perfect. It is that 
small percentage of doctors that just don't want to fulfill 
their obligation. What they do is prescribe for illegitimate 
purposes, or they don't make a medical determination. They just 
go with patient-directed prescribing, which is just wrong. I 
think that if everybody within that supply chain would just 
police each other, we wouldn't have the problem that we have 
right now.
    Mr. Harper. I thank each of the witnesses for being here 
today and for your insight, and with that I yield back.
    Mrs. Bono Mack. Thank you, Mr. Harper.
    Mr. McKinley, you are recognized for 5 minutes.
    Mr. McKinley. Thank you again.
    Let us go back to Florida or maybe Kentucky, but let us 
start with Florida. When you have your program, your PDMP, do 
you have an identification system? Is that how--is that 
included in it?
    Ms. Bondi. We, as I am sure you are aware, we had some very 
difficult problems getting our PDMP in place, our Prescription 
Drug Monitoring Program. It was, you know, 48 states have a 
PDMP but many weren't up and running, and ours was one of them.
    We received some resistance. What we have done now is that 
it is up and running. We had some issues with getting it 
funded. Do you know who came forward?
    Mr. McKinley. Wait a minute. Do you have an identification 
so when someone comes in, is this--do they enter their name or 
something into----
    Ms. Bondi. Yes.
    Mr. McKinley [continuing]. A file?
    Ms. Bondi. Yes, and it used----
    Mr. McKinley. It is available for everyone in the State of 
Florida?
    Ms. Bondi. Absolutely, and it used to be 15-day reporting, 
and now we have limited that down to 7-day reporting.
    Mr. McKinley. OK. So----
    Ms. Bondi. So we have shortened the reporting period.
    Mr. McKinley [continuing]. If it works in your State, why 
wouldn't that work nationally?
    Ms. Bondi. Well, and this is, like I said, brand new in our 
State because it had never been funded. So now it is funded by 
forfeiture funds from our sheriff for the next few years.
    Mr. McKinley. What about Kentucky? What are you doing in 
Kentucky? Do you have the database or names?
    Mr. Conway. We have the database, and what happens in 
Kentucky, we were one of the first states to bring a PDMP 
online, Congressman, but our doctors will go in and enter a 
patient name to see if that particular patient is doctor 
shopping. The problem we have in Kentucky is, it is a pretty 
good system, but only about 25 percent of our doctors are using 
it. It is not mandatory. It is not mandatory that ER docs, for 
example----
    Mr. McKinley. OK. Thank you.
    What concerns me some is you have done a great job in 
Florida. You just chased them to another State. That is what I 
am hearing from the other testimony here, and what we are 
hearing from around the country is that you did a great job. It 
happens in law enforcement when you start performing your 
duties, they go someplace else because they are not going to 
change their behavior. They just transfer to another State.
    I am looking to see how we can capture them nationally.
    Ms. Bondi. And we still have a long way to go in Florida, 
but I think what we are doing is we are working together, and 
as long as I can tell you the two of us are still alive, we are 
going to put this, we are going to put these guys out of 
business. I mean, we work together constantly, we share ideas, 
we share thoughts, and we frankly in Florida we work great with 
the DEA. We--you have to work as a team, and I don't know if 
you were here earlier for that part of it, but you have to 
bring State, local, and Federal authorities and now wrap all of 
our states into this, because this is a national crisis, and I 
mean, we are in a war with drugs, and just the drug has 
changed.
    Mr. Conway. If I may address that point, Congressman, not 
to take up too much of your time, but Kentucky borders seven 
states, and the pharmacists when they fill a script, enter the 
data that goes into the system that doctors later check.
    The problem for us has been that the docs feel like it is 
too time consuming. The docs don't want to be forced to do 
this, and they don't have a system that they think is user 
friendly that they can type in, takes 30 seconds or less, and 
tells you if you are in eastern Kentucky whether or not this 
patient has been to West Virginia, Ohio, or Virginia or 
Tennessee.
    And that is what we don't have, and really a State like 
Kentucky can't get to where we need to be. We can't get 50 
states with a good system that is interoperable unless we have 
the help of the Federal Government.
    Mr. McKinley. And Ohio, do you have the names up on--do you 
have with your program, do you have the names, the individual, 
so they know, we know what prescription drug they are 
acquiring?
    Mr. Haslam. We do, Congressman, and our program has been up 
and running for many years as well just as Kentucky's has.
    Mr. McKinley. Do you see a problem with that going 
nationally?
    Mr. Haslam. I don't. I think it is one of the necessary 
tools that we are going to need to fight this epidemic.
    Mr. McKinley. How do you deal with the privacy matter, 
because that seems to be the hang up, the confidentiality of 
people to access. What--how did you get around that for the 
State of Ohio?
    Mr. Haslam. Well, it is very protected by--our Ohio State 
Pharmacy Board houses that program, and they are very 
protective over the information and who it goes to and how it 
is distributed, and that is how they get around it. They make 
sure that it is protected, but it is, it is a necessary tool in 
this battle as we move forward.
    Mr. McKinley. So you are saying some states, in your three 
states, you all have that. You are doing something along that 
line.
    Mr. Conway. The information is protected. Only the doctor 
is going to see it, and if we have a designated case open on a 
specific target, we can ask to see the KASPER data, but one of 
the problems we have seen is that the Board of Medical 
Licensure when they see disturbing trends are not forwarding 
onto law enforcement. We have that problem in Kentucky.
    Mr. Haslam. That is the same issue in Ohio, Congressman. It 
is a great tool. It is under-utilized by our physicians. House 
Bill 93 required physicians that are treating pain management 
to utilize it, but as, exactly as you have alluded to, as we 
have success in law enforcement, we are squeezing the balloon 
and people are just moving to other states.
    And what has happened, the three states represented here 
today have all worked wonderfully together to tackle this issue 
and to share that information and investigations.
    Mr. McKinley. I know the time. I think you are great 
models. I just want to see it replicated in all 50 states so we 
can protect this thing. We can't have you operating in the 
middle. So thank you. I yield back my time.
    Mrs. Bono Mack. Thank you, and Dr. Cassidy, you are 
recognized for 5 minutes.
    Mr. Cassidy. Thank you, Madam Chair. First I will say that 
we are introducing Mike Ross and I from the other side of the 
aisle, H.R. 4095, which is the Stop Online Pharmacy Safety Act, 
which attempts to close down or at least prevent the 
publicizing of these rogue pharmacies. So hopefully we will get 
some cosponsors on this.
    Secondly, Mr. Rannazzisi, man, I keep on thinking with the 
databases you all have, if we gave them to Google, I have no 
doubt that Google knows what color dress my daughter has on 
today. And so it seems like data mining could really go a long 
way to pinpointing these problems for a specific intervention. 
I am told by industry that you all have lots of data forwarded 
to you regularly.
    My question is why not?
    Mr. Rannazzisi. I think the data they are referring to is 
our ARCOS System.
    Mr. Cassidy. Yes.
    Mr. Rannazzisi. Yes. Under 827(D) they are required to send 
all narcotic control substance transactions to us to be put in 
a database, and we do have that information, and quite frankly, 
we use that information to assist us in investigations.
    However, that information is proprietary. It is protected 
information. I can't release that information to industry, and 
they have asked----
    Mr. Cassidy. But you could release it to local law 
enforcement.
    Mr. Rannazzisi. If local law enforcement is involved in 
investigation and they request the information, yes, we can.
    Mr. Cassidy. Let me ask because as I go through the 
testimony you have rank ordered states in which there is the 
highest prescriptions per capita of controlled substances, you 
have related it to over 65 how many people on Medicare Part D 
are getting X amount per, in a certain region. I also see other 
statistics where you speak about three or four physicians 
moving from one State to another, so you have physician level, 
and I am sure you also have a pharmacy level. It just seems, 
again, if Google had that or some other data miner had that, we 
could have a specific intervention here. Boom. And then there 
and then there. I seems like there is missed opportunities. 
What am I missing on this?
    Mr. Rannazzisi. I don't believe there is missed 
opportunities. The data that we have is very narrow. It is for 
the narcotic controlled substances. For instance, I am dealing 
with a pharmacy or a group of pharmacies and manufacturers or 
distributors that are selling Fentermine or Alprazolam or drugs 
like that. I have no way of tracking because it is not entered 
into the system.
    Mr. Cassidy. But if we just took those which are narcotics, 
I mean, probably there is going to be a correlation between 
somebody getting an illegal prescription for Ativan as well as 
an illegal prescription for OxyContin. So I am not saying you 
have to do the breath, but, again, if you have reported to you 
the narcotics for OxyContin----
    Mr. Rannazzisi. Uh-huh.
    Mr. Cassidy [continuing]. Again, knowing that you just from 
here have a heck of a lot of data----
    Mr. Rannazzisi. Uh-huh.
    Mr. Cassidy [continuing]. Why aren't we doing every week 
another intervention at another pharmacy, because it seems like 
it is a target-rich environment.
    Mr. Rannazzisi. We are. We have active investigations 
across the country based on complaints and our ARCOS data. Now, 
sometimes the ARCOS data might show up with a pharmacy that is, 
indeed, a legitimate pharmacy that does have a high volume, and 
the reason they have a high volume is because they are next to 
a hospital or oncology----
    Mr. Cassidy. And that is a fair statement. I can imagine a 
cross tab which would say, OK, here are the variables that we 
find associated with, you know, again, I can see Google with an 
algorithm that you give them.
    Mr. Rannazzisi. Right.
    Mr. Cassidy. Which would data mine. Are you all data mining 
on that, formally data mining?
    Mr. Rannazzisi. Yes. We look at that, we look at ARCOS data 
on a regular basis. We look at the top 50, top 100 in different 
areas of the country. We make sure that, you know, we do 
background and make sure those pharmacies and wholesalers are 
operating within the confines of the law, and if we have 
further information on it, we open investigations. Yes. That is 
what ARCOS is for. ARCOS is a targeting tool.
    Mr. Cassidy. How many active investigations do you all have 
right now?
    Mr. Rannazzisi. I would have to get back. I don't want to 
throw out a number.
    Mr. Cassidy. Ballpark, 50, 100, or 1,000?
    Mr. Rannazzisi. Oh, we have a lot. Many more than 1,000.
    Mr. Cassidy. Now, kind of a recurring theme from these 
folks is that people go from one State, they go to another. I 
live in Louisiana, my pain doc is legitimate and tell me that 
illegitimate patients, if you will, go to Mississippi or 
Houston and then back again.
    So is Federal, in your mind is Federal legislation required 
that would almost mandate some sort of standard so that Texas, 
Louisiana, Mississippi, Arkansas, or Kentucky with every State 
bordering it would be in some sort of interchangeable 
information?
    Mr. Rannazzisi. I think--my personal opinion is, yes, I 
would love to see that because I think doctors need that 
additional tool. I think there as a practitioner you would 
agree that I want to know what my patient is doing and who my 
patient is seeing, whether it is in Kentucky, Ohio, or, you 
know, four states over.
    The problem is interconnectivity, and the problem is is a 
lot of these states have different State laws and different 
laws regarding the information and how it could be distributed. 
So I don't think it is--I think the problem lies within the 
states. They have to work it out. This is not a Federal 
Government system, and while we support the states and we want 
the states to get that interconnectivity, that is a question 
better asked to the states. It is their decisions.
    Mr. Cassidy. Just if I may have a few more seconds, I will 
say that after Hurricane Katrina and all my patients were 
displaced to other states, I found that those, there is 
something that happened, a switch was turned, and a doctor in 
Oklahoma could find out the drugs I was prescribing for my 
patients in Louisiana, and so it does seem as if that 
interoperability could occur in a fairly straightforward 
fashion if we had, you know, a little direction.
    Mr. Rannazzisi. I remember that, and that State boards were 
working extremely well together, and I don't know how that 
information was passed because we don't have dispensing 
information, but I do know that we were working with the----
    Mr. Cassidy. I think it was through E-scripts. I think that 
there was something like that.
    Mr. Rannazzisi. But the State boards really came together, 
and they did a fine job getting everybody in line.
    Mr. Cassidy. So there is a chance we just need those folks 
to talk to their State boards.
    Thank you. I yield back.
    Mrs. Bono Mack. Thank you, Dr. Cassidy.
    The chair recognizes Ms. Blackburn for 5 minutes.
    Mrs. Blackburn. Thank you so much, and I want to thank you 
all for your patience today. As you know, we have had other 
hearings downstairs. We had Secretary Sebelius and looking at 
the budget that is there, and I know that those of you at the 
State level are quite concerned about the Obama Care impact 
that is coming to a State near you very quickly.
    Mr. Rannazzisi, am I saying your name correctly?
    Mr. Rannazzisi. Yes, ma'am.
    Mrs. Blackburn. I am close enough.
    Mr. Rannazzisi. Perfect.
    Mrs. Blackburn. OK. On the Ryan Haight Act how many online 
pharmacies have registered under that act? What is--how is that 
being built out?
    Mr. Rannazzisi. Currently I--we have no registered 
pharmacies under the act. We have I think four or five 
applications pending but no pharmacies have been registered. 
Now, remember there are a lot of provisions in the act that 
allow you to do certain things online that is not, that you 
don't--the Act was written so it would prevent the rogue 
pharmacies from jumping online and continuing practice, and it 
has done that. There is no domestic pharmacies currently there 
operational that are under----
    Mrs. Blackburn. OK. Then let me ask you this another way. 
How many enforcement actions has DEA taken against online 
pharmacies or rogue pharmacies under the act?
    Mr. Rannazzisi. I would have to get back to you, ma'am. 
Very few because the act pretty much shut down the domestic 
online pharmacy problem, and the problem moved overseas.
    Mrs. Blackburn. OK. Are you having difficulty in sorting 
and finding out which are the rouge foreign-based pharmacies 
or--I would like to visit with you more about that. I think 
that it is an issue that is of concern to us and being able to 
see where we have these online pharmacies, find out who is 
registering or not. That would be helpful and instructive to 
us.
    So let us look at that a little bit and then if you could 
quantify the kind of actions that have been taken against some 
of these rogue pharmacies, just--it allows us to do a little 
bit of due diligence and see if decisions we are making are 
working or having an impact or not. So I would appreciate 
having that time with you.
    I want to talk with you for just a little bit, if you can 
answer this within the allotted time, that is great, and if you 
need to get back to me, that would be great. I am no 
cheerleader for the FDA, but I understand their philosophy and 
approach that, in that an agency as it applies to controlled 
substances seems much more measured than that of the DEA at 
times, and my understanding is I want to talk about this post-
inspection feedback in the form of what is known as the FDA 
form 483, Inspection Report.
    And my understanding on this FDA form 83 [sic] is that it 
sets out with specificity the agency's concerns and the parties 
have the opportunity to meet with the FDA and discuss any 
issues that may be before them, that companies are given the 
opportunity to address issues and solve problems in a 
collaborative dialogue.
    And if the company were to choose not to address the 
issues, the agency then typically takes further action in the 
form of a warning letter and proceeds with prosecution and 
consent decrees as appropriate. And I think that that FDA-type 
approach is different from the DEA approach when there are 
problems, which his just enforcement and not the opportunity to 
address concerns.
    So it seems like DEA there is no post-inspection give and 
take or dialogue that may be there and no information sharing 
or the opportunity to address issues or--that are out there. So 
my question to you is this, and you mentioned Tennessee as one 
of the states with the pill mills, and you know, we all are 
concerned about patients that are in pain that need medication, 
companies that are trying to meet those needs, and here, again, 
want companies to do the right thing, want them to spend the 
money wisely, want individuals to be safe, want there to be 
protections that are in place.
    So my question is is there a more surgical approach? Should 
we be thinking of a more surgical approach to addressing the 
issue of prescription drug abuse rather than just looking at 
suspension of licenses? You know, where is the right balance in 
a vetting process? Is there a more proportional approach to 
take rather than just going to an immediate suspension?
    Mr. Rannazzisi. Yes. I would love to answer that question. 
First of all, the FDA deals mostly with legend drugs, and they 
do have manufacturing processes they do with controlled 
substances, but the vast majority of their authority is over 
legend drugs and prescription drugs, making sure they have good 
manufacturing processes, maybe making sure that labeling is 
correct, putting the drug through the appropriate validation 
process.
    My responsibility under the act is to ensure that there is 
no diversion of highly-addictive medications into an elicit 
marketplace. We do give chances to companies. If you look at 
our history, we went onsite on many of these companies that we 
have taken action against and pharmacies and explained to them 
what their obligations were. We sat down with them and talked 
to them of what their obligations were. They just----
    Mrs. Blackburn. OK. So your response then would be that you 
all are carrying out that dialogue?
    Mr. Rannazzisi. Yes.
    Mrs. Blackburn. OK. All right.
    Mr. Rannazzisi. Yes. I look at Florida and the millions of 
tablets that are going into the elicit marketplace in Florida, 
not only from the pharmacies but also from the distributors and 
the doctors. And I think we have to hold the line somewhere. 
These are drugs that are killing people. It is not Amoxicillin, 
and you know, we have to take a stand.
    Mrs. Blackburn. OK. Do any of the others of you want to 
make a response to that? No? OK.
    Madam Chairman, I will yield back.
    Mrs. Bono Mack. Thank you, and I am going to recognize 
myself for 5 minutes for a second round and any other member 
who wants to ask a second round, I will yield to you for your 
own 5, and then we will move to the third panel.
    My, first of all, my comment on what Dr. Cassidy had to 
say, I think he brought up a good point, and I think it is fair 
to ask if the DEA data mining capabilities are as robust and 
clever as you would suspect. Googles are and perhaps we can 
visit that in the days ahead, but this is a, sort of a general 
question to each of you, and thank you, Mr. Rannazzisi, for 
mentioning my support of your take back days, but 995,000 
pounds of drugs in 3 days.
    The question I want to ask each of you if you would care to 
comment or weigh in is who is paying for those pills? Are we 
paying for them in the form of healthcare premiums? Are we 
paying for them through diversion out of Medicare Part D and 
Medicaid? Who is paying for all of those pills? Why are there 
995,000 pounds of extra pills being turned back in? What is the 
overall toll in healthcare in our country just from this 
problem?
    Anybody?
    Ms. Bondi. I can tell you from our local take back days 
these are good, solid citizens who are coming in with brown 
paper bags filled with prescriptions that they have had and 
that they are concerned because they know you cannot flush 
prescription drugs down your toilet, and they don't know what 
to do with them, and they don't want their grandkids to get a 
hold of them, and you know, when I speak to people, I say, no 
one ever wants to believe it is their kids, so I say, your 
kid's friends can get into your medicine cabinet.
    So people--it is our citizens, and I think a lot of them 
are getting them from their doctors, their dentists for 
legitimate purposes. They are taking one or two of them, and 
they are just stockpiling them because they don't know what to 
do with them, but we have had remarkable results with good 
citizens turning them in to have them properly disposed of.
    Mrs. Bono Mack. But the question is is why is there so many 
left over in the medicine chest to turn back in? Who is paying 
for--what is the cost, and General Conway, you mentioned this 
is an American tragedy, and I couldn't agree with you more. 
There is no question our doctors are working too hard, and 
ultimately this comes out of their patient visit, they are 
scrambling because healthcare is squeezed more and more and 
more, and this is a part of the problem. But $148 million 
diverted out of Medicare Part D in 2008, alone.
    So are we really, I mean, General Conway, do you want to 
weigh in on----
    Mr. Conway. Well, I don't know that I can quantify the 
cost. I mean, sitting here as the attorney general of Kentucky 
I can't quantify the cost, but my experience is similar to 
General Bondi's. When I go to one of our drug take back days 
and sit there with my plastic gloves on, it is the concerned 
mother who doesn't want her kids and realized she saw something 
on TV and her hydrocodone she got for a broken arm is expired.
    The cost comes in crime. People are committing thefts to 
get access to resources to buy pills. The cost comes in cash. A 
lot of these pill mills deal on a purely cash basis. When you 
have healthcare companies that are trying to get more efficient 
in mandating 90-day supplies of some of these mail order pills, 
a 90-day supply in Kentucky of hydrocodone or oxycodone, 
chances are about 50 percent of that is hitting the streets. 
That is what my law enforcement officials are telling me. That 
is something that we need to quantify.
    And certainly Medicare and Medicaid are paying some of 
that.
    Ms. Bondi. And Chair Bono Mack, I think what you are saying 
is if you go in for a routine dental surgery, why do you need 
60 oxycodone pills.
    Mrs. Bono Mack. Exactly.
    Ms. Bondi. You don't.
    Mrs. Bono Mack. Thank you. Thank you, and Mr. Haslam, you 
speak on this, to this in your testimony, too. You suggest that 
maybe they have sort of a tiered approach into needing the 
drugs. Do you want to speak a little bit about your beliefs on 
this, too?
    Mr. Haslam. Absolutely, Madam Chairman. The--what we see in 
Ohio we see--to answer your original question, the taxpayers at 
some level is paying for the problem. No matter how you look at 
it when you boil it down to the common denominator, it is the 
taxpayer that is paying for it, whether it is Medicaid costs in 
Ohio, especially in southern Ohio, which is economically 
depressed, it borders eastern Kentucky as we have heard 
Attorney General Conway elude to is an economically-depressed 
area. That--it is a huge burden on the Medicaid System there, 
and as you move across the State of Ohio, though, it is not 
limited to that socioeconomic class. It goes all through all 
the way to the middle class up to the upper class, and whether 
it is a company that has to pay increased healthcare premiums 
that is I providing for its employees because of the number of 
pills their employees are receiving as part of a prescription 
or the insurance companies, the cost to those folks. The 
insurance companies in Ohio have recently reached out to the 
attorney general's office to talk with us and say what role do 
we play in this? This is a huge cost to our bottom line. It 
touches everybody.
    So at the end of the day it is the taxpayer that is footing 
the bill for this prescription drug problem and for those large 
amounts of pills that are on the street.
    Mrs. Bono Mack. Thank you. So when we win the day with the 
arguments of the human suffering of the budgetary tolls, there 
is no rhyme or reason why we wouldn't be tackling this head on 
as a Nation, and again, Mr. Rannazzisi, one last question to 
you.
    This committee has been investigating nano encryption, 
intagence, and other technologies coming out. Can you speak 
briefly about future technologies that you might be exploring 
like this on tracking drugs?
    Mr. Rannazzisi. Ma'am, I can't take that question for the 
record. I am not an expert on----
    Mrs. Bono Mack. OK.
    Mr. Rannazzisi. But I do have experts on staff.
    Mrs. Bono Mack. That is fair. You know we will be 
submitting plenty of questions to each of you for the record.
    Mr. Butterfield, did you have----
    Mr. Butterfield. I have one.
    Mrs. Bono Mack. All right. I will yield to you----
    Mr. Butterfield. Thank you.
    Mrs. Bono Mack [continuing]. For 5 minutes.
    Mr. Butterfield. Thank you. Under the careful supervision 
of a doctor, prescription drugs can alleviate severe pain or 
help those suffering from mental disorders like psychosis or 
depression or anxiety or insomnia or attention deficit 
disorder. Unfortunately, there are true stories of these drugs 
being prescribed inappropriately or not for their intended use.
    Only 54 percent of physicians ask about prescription drug 
abuse when taking a patient's medical history, and only 55 
percent regularly contact their patients' previous doctor 
before prescribing controlled pain medication.
    Question. State entities certify and regulate both doctors 
and pharmacies. Through this role, General Conway, what do you 
think State authorities can do to educate medical 
practitioners?
    Mr. Conway. Well, the thing about the medical community, 
Congressman, is that it is not a one-size-fits-all approach, 
and we have a piece of legislation we are considering right now 
in the general assembly that I am supportive of that would 
require anyone who wants to prescribe a schedule two or three 
narcotic to mandatorily register with our PDMP.
    But I think that the education component for the medical 
community is important. The Chairwoman talked about what needs 
to happen with short-term prescriptions. Our ER docs need to 
have standards for how much should they prescribe if someone 
shows up at the ER. They ought to do mandatory PDMP checks.
    The problem for us in law enforcement and in Kentucky, and 
I can't speak to it in other states, but in Kentucky we have a 
little bit of a battle with our medical community in that the 
KASPER System, our PDMP, is housed over in a cabinet of Health 
and Family Services. They have the data. They observe the 
trends that are problematic. They are supposed to take actions 
against licenses if they spot problematic trends and then refer 
them to law enforcement if necessary.
    Until this issue received increased scrutiny here in the 
last couple of months, in my first 4 years as attorney general, 
I didn't have a single law enforcement referral from the Board 
of Medical Licensure.
    So the doctors, if they are going to be prescribing, you 
know, there are different standards for an oncologist or pain 
management doctor from a podiatrist and an allergist. But the 
doctors that are going to be prescribing have an obligation to 
use the system, to check their patients, and to help us police 
their profession, because they are under-utilizing the system 
right now, and they need to work with us so that we can see the 
data.
    I cannot ask who are the two largest prescribers of 
schedule two and three narcotics in Pike County. I would love 
to, but the law prohibits me from doing it, and the Board of 
Medical Licensure is not sending me the data. So I am using 
old-fashioned surveillance and talking to people about where 
are they getting the pills in order to figure it out, and we 
have a great system, and all the data is right there. We are 
just under-utilizing it, and we are under-utilizing it because 
we don't have the partnership we need with the medical 
community to make certain that that is getting addressed in 
Kentucky.
    Mr. Butterfield. Would it be helpful to work with some of 
the medical schools, the dental schools to develop a curricula 
in this area?
    Mr. Conway. Oh, absolutely. I speak to the pharmacy 
students, and I speak to a lot of medical students on an annual 
basis to tell them how big the problem is and to look out for 
this. You know, it is a balance here. The medical community 
gets nervous whenever an attorney general or a lawmaker gets in 
the middle of the doctor, patient relationship, and I respect 
that. I respect that, but there ought to be some way for us to 
see the disturbing trends so that we can do our job in law 
enforcement, and right now in Kentucky our data monitoring law 
says I have to have a designated case, a bona fide case open on 
a designated target. I can't look at trends. I can't see where 
the problems are. I have to ask about Mr. Smith, and the data 
is all there, and I can't use it, and I can't tell you how 
incredibly frustrating that is.
    Mr. Butterfield. Do you believe the Federal Government 
should consider certain minimum standards for doctors, for 
doctor education or training in the area of addiction 
medications?
    Mr. Conway. I don't think it is a bad idea. Traditionally 
the regulation of the practice in medicine has been left to the 
states. I respect that. I think we are doing all we can in the 
Commonwealth of Kentucky to educate doctor. A lot of the 
healthcare organizations are starting to set up--some of our 
larger hospital companies are starting to set up standards for 
their ER docs. I think that is great. I think it is something 
probably best left to the states, but I would welcome some 
Federal guidance on that.
    Mr. Butterfield. All right. Thank you. I understand you may 
have spent some time at Duke University.
    Mr. Conway. I did, sir. I did, sir, and I don't know your 
allegiance. One of the toughest things I have to do is get 
elected statewide in the Commonwealth of Kentucky being a 
graduate of Duke University. It is--basketball passions being 
what they are.
    Mr. Butterfield. The State legislature has just added Duke 
University to my district.
    Mr. Conway. Well, Roy Cooper and I have a running argument 
every time we see each other, and I am going to see him this 
weekend. I am sure we will be arguing over that little game 
this weekend.
    Mr. Butterfield. All right. Thank you.
    Mrs. Bono Mack. Thank you. Mr. McKinley? No?
    OK. Well, we--the next panel. OK. We want to thank you all 
very, very much for your expertise and your hard work on this. 
We look forward to working with you. Please anticipate further 
questions in writing. We look forward to getting your 
responses.
    Again, thank you for fighting this battle, and we look 
forward to partnering with you in the future. Safe travels 
home.
    Ms. Bondi. Thank you, Chair.
    Mr. Conway. Thank you.
    Mrs. Bono Mack. We will take quick 30-second break while we 
seat the next panel.
    [Recess]
    Mrs. Bono Mack. On our third panel we have five witnesses. 
First is John Gray, President and CEO of Healthcare 
Distribution Management Association. Our next witness is Joseph 
Harmison, a Pharmacist and Owner of DFW, it sounds like Dallas 
Fort Worth Airport--oh, it is. OK. Of DFW Prescriptions, who is 
testifying on behalf of the National Community Pharmacists 
Association. Hopefully I will be flying through DFW later 
today.
    We also have another pharmacist joining us, Kevin 
Nicholson, Vice President of the National Association of Chain 
Drug Stores. Next is Kendra Martello, Assistant General 
Counsel, Pharmaceutical Research and Manufacturers of America, 
and our final witness is David Gaugh, Vice President for 
Regulatory Science of the Generic Pharmaceuticals Association.
    Welcome everyone. I think you know the drill. The 5 
minutes. There is the timer, and with that we will be happy to 
turn to you, Mr. Gray, for your 5 minutes. Please make sure 
your microphone is on.

   STATEMENTS OF JOHN M. GRAY, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, HEALTHCARE DISTRIBUTION MANAGEMENT ASSOCIATION; JOSEPH 
 H. HARMISON, OWNER, DFW PRESCRIPTIONS, ON BEHALF OF NATIONAL 
  COMMUNITY PHARMACISTS ASSOCIATION; KEVIN N. NICHOLSON, VICE 
PRESIDENT, NATIONAL ASSOCIATION OF CHAIN DRUG STORES; KENDRA A. 
 MARTELLO, ASSISTANT GENERAL COUNSEL, PHARMACEUTICAL RESEARCH 
    AND MANUFACTURERS OF AMERICA; AND DAVID R. GAUGH, VICE 
  PRESIDENT FOR REGULATORY SCIENCES, GENERIC PHARMACEUTICALS 
                          ASSOCIATION

                   STATEMENT OF JOHN M. GRAY

    Mr. Gray. Now it is greener. Thank you. Good afternoon, 
Chairman Bono Mack and Ranking Member Butterfield and members 
of the Energy and Commerce Subcommittee on Commerce, 
Manufacturing, and Trade. I am John Gray, President and CEO of 
the Healthcare Distribution Management Association, and I want 
to thank you all for the opportunity to come here today and 
talk about this critically important problem of prescription 
drug abuse and diversion, and most importantly, what my members 
are doing to combat that problem.
    The pharmaceutical distribution industry's primary mission 
is operate the safest, most secure, and efficient supply chain 
in the world. As part of this mission HDMA and its members are 
committed to addressing the serious national problem of 
prescription drug abuse and to being a part of the solution.
    HDMA members have not only statutory and regulatory 
responsibilities to detect and prevent diversion and control 
prescription drugs, but to undertake such efforts as 
responsible members of our society.
    To address the issue of prescription drug abuse, 
distributors have developed complex systems to help prevent 
diversion of medicines and to comply with the DEA's expanded 
expectation for suspicious order in monitoring and reporting.
    To aid in the development and implementation of these 
systems, in 2008, HDMA and its member companies developed the 
Industry Compliance Guidelines to support the distribution 
industry practices on the evaluation of customer orders for 
controlled substances and the reporting of so-called suspicious 
orders to the DEA. The ICGs, as we call them, were vetted with 
the DEA in advance to their publication.
    These guidelines emphasize the concept of ``know your 
customer.'' That is obtaining and reviewing thorough background 
information about a perspective healthcare provider prior to 
doing business with them. Therefore, in many cases potential 
problems can be avoided even before an order is placed.
    Because the advanced systems now in place and the 
industry's proactive efforts, the DEA reported last year that 
since 2006, and 2011, distributors in this country stopped 
shipping controlled substances to more than 1,500 customers 
that could have posed an unreasonable risk of diversion.
    Let me add it is critical that the anti-diversion efforts 
of our industry, as well as the enforcement actions of DEA, 
should always carefully balance the need to cut of supply to 
any customer engaged in diversion while not limiting access to 
appropriately-prescribed and legally-dispensed medicines for 
seriously ill patients or potentially putting legitimate 
pharmacies out of the business.
    Despite the best efforts of our industry, we find ourselves 
today in a conundrum. Pharmaceutical distributors do not 
manufacture legal controlled substances. We do not license 
pharmacies or healthcare providers. We do not write 
prescriptions for patients. We do not dispense these products 
to patients. We do not see the prescription a patient presents 
for filling at a pharmacy. A single pharmaceutical distributor 
does not know and has no way of knowing if a pharmacy customer 
is purchasing prescription drugs from other distributors.
    Furthermore, we do not determine or set prescription drug 
fill rates.
    However, the DEA receives information from each distributor 
that sells controlled substances to a particular pharmacy or 
prescriber. The agency also sets annual allowable production 
quotas for manufacturers of these controlled substances. 
Distributors are often held accountable with incomplete 
information for diversion from parts of the supply chain they 
simply do not control.
    To comply with DEA's expectations, distributors are being 
asked to judge the diagnosis, intent, medical knowledge, 
experience of doctors and pharmacists.
    Furthermore, the DEA's emphasis on volumes and national 
averages to determine suspicious orders may simply over 
simplify the problem for schedule two controlled prescription 
drugs. Our members have found the analysis of a single 
pharmacy's controlled substance ordering pattern is simply far 
more complex and includes critical factors such as the size of 
the pharmacy, the patient demographics, the geographic 
proximity to the hospitals or surgery centers, nursing homes, 
cancer clinics, hospice providers, and other major urban areas.
    Now, as was stated earlier today, I need to correct that. 
We do not choose not to comply with these laws of suspicious 
ordering. The fact is our members have many questions about the 
compliance. You have heard this is a relatively new process, a 
new procedure, and unfortunately, today with the questions we 
have remaining each distributor essentially operates in an 
information silo. We are unaware if a new pharmacy customer may 
have been cut off by another distributor who had concern about 
potential diversion at the pharmacy, or we are unaware that an 
existing pharmacy customer is ordering controlled substances 
from multiple distributors. Or we are also unaware that 
specific pharmacies may be dispensing controlled substances for 
physicians who are writing prescriptions for patients when 
there is no legitimate medical need.
    So in an effort to break down these walls and get this new 
program going, HDMA has asked DEA in face-to-face meetings over 
the last several years as well as in written communications to 
provide some clarification and guidance on the agency's 
expanded expectations of an anti-diversion program for 
wholesale distributors, and we have sought greater information 
sharing in the process between the agency and our industry.
    Throughout these communications HDMA and its members have 
also asked DEA to provide aggregated and critically-important 
blinded data from the ARCOS System that could be used to 
further assess product orders and provide supportive 
information for the agency and for the members.
    A distributor does not have the independent ability to 
determine whether a pharmacy or a physician customer is 
ordering from multiple distributors. Only the DEA possesses 
that information.
    In closing, we strongly believe that all stakeholders, 
doctors, pharmacists, distributors, manufacturers, and indeed, 
the government must work together to achieve this shared goal 
to ensure a sufficient, safe supply of medicines for legitimate 
patients while keeping those same drugs out of the hands of 
individuals who will abuse them.
    Ms. Chairman, thank you for your time.
    [The prepared statement of Mr. Gray follows:]
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    Mrs. Bono Mack. Thank you, Mr. Gray.
    Mr. Harmison, you are recognized for 5 minutes.

                STATEMENT OF JOSEPH H. HARMISON

    Mr. Harmison. Thank you, Madam Chairwoman.
    Mrs. Bono Mack. Turn the mic on and pull it close to you, 
please.
    Mr. Harmison. Does it help if I get it closer?
    Mrs. Bono Mack. Yes. Thank you.
    Mr. Harmison. I am sorry. I have a hearing deficit, and 
people say I talk too softly. Sorry. Good afternoon, Madam 
Chairwoman Bono Mack, Ranking Member Butterfield, and Members 
of the subcommittee. I am Joe Harmison. I am a practicing 
pharmacist. I am a pharmacy owner and past President of the 
National Community Pharmacists Association. NCPA is a national 
organization representing the owners and pharmacists of the 
non-publically traded community pharmacies.
    Everyone here today is in agreement that the United States 
has a problem with drugs abuse, misuse, and diversion. I hope 
we will also acknowledge that the drugs we are discussing today 
when used appropriately are extremely beneficial. When they are 
not used as intended, they are destructive in many ways.
    As has been stated over and over, the majority of people 
that abuse prescription drugs get them from the family medicine 
cabinet or friends. This shines a very bright light on how we 
need to destroy these drugs. The community pharmacists in the 
United States have been excited, willing participants in the 
Drug Take Back Program for Destruction.
    The problem we have, we are not allowed to take back the 
controlled substances of what--those are the drugs we really 
want to get off the street. We can't handle that. We are 
anxiously awaiting the rules we have been told with DEA they 
are promulgating to allow us to participate in this process.
    The pharmacists of America interact with millions of 
patients every day and advises them on how to use their 
medicine correctly and what can happen if they don't. We cannot 
cure the problem we are addressing today by ourselves. We use 
the tools we have, but we need more tools.
    There have been many suggestions on how you can get more or 
people can get more information to us. I am very much in 
agreement that the most readily-implementable procedure we have 
out now is the PDMPs. Every pharmacist in I believe it has been 
stated 48 states has to submit on a regular basis the 
information on the controlled substances they dispense. This 
goes into some giant computer somewhere.
    The problem the pharmacists have with it is most of us 
don't have access to that information. It is certainly not in 
real time, and it is not able to be incorporated into our 
workflow systems. If you can find a way to get that to us, we 
will be your greatest advocates in using it. We do not want to 
be the drug police. We would be very willing to work with all 
parties to prevent abuse, misuse, and diversion.
    Another thing with this computer database, it must not be 
the deciding factor on whether a patient gets their medicine. 
That decision must be left to the responsible parties, the 
prescribers and the pharmacists. We are the ones that know the 
patients best. We know their conditions.
    Another very important part of this equation is pharmacy 
burglaries and robberies. In 2010, there were 686 armed 
robberies of pharmacies in the United States, and 
unfortunately, some of these end up with murders involved with 
them. Unfortunately, I have way too much experience first hand 
with pharmacy burglaries. One of my pharmacies has been 
burglarized three times since December 1, 2011. This is one 
small pharmacy, and from what I can determine the street value 
of the drugs taken from my pharmacy is in excess of $575,000. 
And more onerous than that, there were almost 10,000 doses of 
controlled substances potentially put on the street.
    I would like to make a few recommendations for your 
consideration. One, require mandatory minimum sentences for 
robberies and burglaries involving controlled substances. Find 
some way to give Federal, State, and local law enforcement and 
prosecutors the ability to better communicate and coordinate 
their efforts to do their work.
    Third, shut down the pill mills. Get the back actors out of 
the process. Leave those of us that are trying to do the best 
we know how, what we are trained to do, care for patients, to 
do our job. Another is consider a change to the tax code to 
allow those of us that have put out the money to have different 
security systems, to depreciate those in 1 year. Don't make us 
depreciate it over 7, 10, or more years.
    And also we would hope that you might reconsider allocating 
some of the money taken from forfeiture from crimes related to 
controlled substance, put that in a pot somewhere and let 
pharmacists apply for some of that money. If they can't afford 
security systems, let them apply to use some of that forfeiture 
money.
    NCPA and the Community Pharmacists of the United States 
will--are committed to working with Congress and law 
enforcement to combat drug use, abuse, and diversion, but we 
need your help.
    Thank you for the ability to be here today and your 
attention.
    [The prepared statement of Mr. Harmison follows:]
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    Mrs. Bono Mack. Thank you, and Mr. Nicholson, you are 
recognized for 5 minutes.

                STATEMENT OF KEVIN N. NICHOLSON

    Mr. Nicholson. Chairman Bono Mack, Ranking Member 
Butterfield, and subcommittee members, thank you for the 
opportunity to testify. My name is Kevin Nicholson. I am a 
pharmacist and Vice President of Government Affairs and Public 
Policy for the Nationals Association of Chain Drug Stores. 
NACDS represents traditional drug stores, supermarkets, and 
mass merchants with pharmacies. Our members operate more than 
40,000 pharmacies and employ more than 3.5 million employees, 
including 130,000 pharmacists.
    Our members are deeply committed to serving the healthcare 
needs of Americans. We are serious about the trust our patients 
impart upon us and about our responsibilities to provide the 
highest quality care. We are keenly aware of the scourge of 
prescription drug diversion, and our members actively work on 
numerous solutions. We also support a number of new and 
Federal-State policy initiatives.
    DEA has implemented comprehensive regulations for a closed 
system to minimize the diversion of controlled drugs. Our 
members have developed extensive policies and procedures to 
comply with DEA's regulatory regime and similar requirements 
from State agencies such as board's pharmacy and narcotic drug 
agencies. A complex regulatory and policy matrix of checks and 
balances protects Americans.
    Chain pharmacies have zero tolerance for prescription drug 
diversion. We have implemented a variety of extensive and 
robust loss prevention and internal security systems from our 
prescription drug distribution centers to the point of 
dispensing to patients. Examples include that we conduct 
background checks and random drug testing, extensive DEA 
training within 30 days of hire, maintaining electronic 
inventories of controlled substances with random auditing, use 
of camera surveillance closer to television, heavy-duty safes, 
and complete alarm systems, training employees on how to handle 
suspicious prescriptions, and internally investigating 
unusually large drug orders.
    Chain pharmacies support and comply with State prescription 
drug monitoring programs. We support policies to prevent 
illegitimate internet drug sellers from illegally selling 
prescription drugs to consumers, and we support efforts to 
provide consumers with the means for proper disposal of 
unwanted medications in ways authorized by law enforcement.
    NACDS is pleased to offer our support for the Online 
Pharmacy Safety Act, which would take important steps to shut 
down the illegitimate internet sellers that prey on consumers. 
We applaud subcommittee members Bill Cassidy and Mike Ross for 
their strong commitment to protecting the American public. 
Approximately 36 million Americans have purchased prescription 
medications online without a prescription. Americans are being 
harmed by these rouge internet sites daily.
    We also look forward to DEA's upcoming regulations to allow 
consumers to safely dispose their unwanted controlled 
prescription drugs. DEA recognizes that consumers' inability to 
safely dispose of controlled prescription drugs contributes to 
prescription drug diversion.
    NACDS routinely meets with DEA officials to learn about 
diversion trends and to develop strategies to mitigate and 
reduce problems, and although we support the mission and 
objectives of DEA, we do have concerns with DEA's recent 
policies surrounding the volumes of controlled substances 
ordered by pharmacies.
    Every pharmacy environment is different, and enforcement 
action should not be brought against a pharmacy merely based on 
the number of controlled substances ordered or dispensed. 
Certain pharmacy locations will have higher-than-average 
volumes of controlled substances. For the ultimate good of 
patients who rely on access to controlled substances for 
legitimate purposes such as pain management, we urge DEA to 
take a holistic approach when developing policies to pursue 
enforcement actions.
    We have worked over the past few years to develop 
prescription drug risk management programs with FDA called REMS 
to reduce the potential for addiction and abuse of prescription 
drugs, and we will continue to work with FDA on future similar 
risk management programs. We also meet routinely with the White 
House Office of National Drug Control Policy on trends and 
solutions.
    We are proud of the comprehensive approach that our chain 
pharmacies have taken and look forward to continuing our work 
with Federal and State policymakers to implement solutions, 
including expanding prescription drug monitoring programs, 
shutting down illegitimate internet sites, and providing 
consumers with the ability to safety dispose unwanted 
prescription drugs.
    I thank you for the opportunity to appear and welcome your 
questions.
    [The prepared statement of Mr. Nicholson follows:]
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    Mrs. Bono Mack. Thank you, Mr. Nicholson.
    Ms. Martello, you are recognized.

                STATEMENT OF KENDRA A. MARTELLO

    Ms. Martello. Thank you. Chairman Bono Mack, Ranking Member 
Butterfield, and distinguished members of the subcommittee, my 
name is Kendra Martello, and I am pleased to offer this 
testimony today on behalf of the Pharmaceutical Research and 
Manufacturers of America or PhRMA. Our members represent 
America's leading pharmaceutical research and biotechnology 
companies.
    Our prescription drug distribution system is a closed 
system. This means that all entities engaged in the 
manufacture, distribution, and dispensing of pharmaceutical 
products, including controlled substances, must be licensed, 
registered, or approved by FDA, DEA, or the states. Thus, each 
entity has a shared responsibility to prevent diversion of 
pharmaceutical products.
    When an authentic product is diverted, it could be 
mishandled and potentially cause patient harm if reintroduced 
into the legitimate supply chain. Additionally, the diverted 
medicine can be misused or abused.
    The Controlled Substances Act and DEA regulations require 
entities handling these products to register and to have in 
place effective controls and security measures to protect 
against theft, loss, or diversion of controlled substances. The 
DEA also has authority over Web sites dispensing controlled 
substances and recent additional authority to supervise return 
of unused controlled substances for disposal.
    PhRMA member companies engage in a variety of activities to 
help prevent diversion of their products from the regulated 
supply chain. Our companies take these efforts seriously 
because fundamentally patient safety and the public health 
demand no less. Our members employ a range of measures to 
prevent diversion from facility security including uniformed 
guards, fences, and extensive access control and video 
surveillance systems to strict controls over in-process 
manufacturing operations to in-transit security measures such 
as the use of GPS tracking devices on 18 wheelers that carry 
medicines across the country to enhancing enforcement by 
information sharing with law enforcement officials and to 
helping educate other on best practices. Our companies work to 
help secure the products we manufacture in the regulated supply 
chain.
    Because of the number of independent actors in the drug 
distribution chain, preventing diversion of medicines from the 
regulated supply chain is a shared responsibility. Recognizing 
this PhRMA members participate in broad-based coalitions to 
help address specific aspects of prescription drug diversion. 
These include coalitions to increase penalties for cargo theft, 
groups to facilitate information sharing and best practices, 
and participation in stakeholder coalitions that are pursuing 
new authorities in a variety of related and significant areas. 
These activities are detailed further in my written testimony 
submitted for the record.
    We do believe that there are additional authorities that 
could also have a significant impact on reducing diversion as 
well as reducing the non-medical use of prescription drugs. 
These include, first, increase the use of and improvements to 
State prescription drug monitoring programs, which can be an 
important tool to prevent and detect abusers and refer them for 
treatment.
    Second, reauthorize NASPER, which provides grants for these 
State's monitoring tools and which is legislation we have 
supported. Third, increase penalties for and enforcement 
against criminal cargo theft, Rogan mine drug sellers, and 
criminal counterfeiters. Fourth, fully implement DEA 
authorities over online sales of controlled substances and 
responsible secure disposal of unused controlled substances. 
And finally, increase licensure requirements for wholesale 
distributors to prevent unscrupulous actors from moving their 
operations across State lines.
    In conclusion, PhRMA and its member companies are dedicated 
to improving the lives of patients. This emphasis on the 
patient extends throughout the product life cycle, from 
researching and developing new medicines, including abuse-
resistant formulations, to helping ensure medicines are used 
appropriately, to helping prevent diversion from the regulated 
supply chain.
    At the same time addressing the growing problem of 
prescription drug abuse is also a shared responsibility, and 
patients need continued access to the medicines they need to 
allow them to live longer, healthier lives. We remain committed 
to addressing the issues surrounding prescription drug 
diversion and inappropriate use of prescription medicines, and 
we look forward to continuing to work with the subcommittee, 
members of Congress, and other stakeholders on these important 
issues. Thank you.
    [The prepared statement of Ms. Martello follows:]
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    Mrs. Bono Mack. Thank you, Ms. Martello.
    Mr. Gaugh, you are recognized.

                  STATEMENT OF DAVID R. GAUGH

    Mr. Gaugh. Thank you. Good afternoon, Chairman Bono Mack, 
Ranking Member Butterfield, and members of the Energy and 
Commerce Subcommittee on Commerce, Manufacturing, and Trade. I 
am David Gaugh, Vice President of Regulatory Sciences at the 
Generic Pharmaceutical Association and a licensed pharmacist.
    GPhA represents the manufacturers, distributors, the 
finished dose generic pharmaceuticals bulk chemicals, and also 
suppliers of other goods and services to the generic 
pharmaceutical industry. Generic pharmaceuticals now fill about 
80 percent of all prescriptions dispensed in the United States 
but consume just 25 percent of the total drugs spent for the 
prescriptions. GPhA's member companies manufacture FDA-approved 
generic versions of brand-name drugs in all therapeutic 
classes, including prescription painkillers. We share the 
concern of the members of the committee when medications that 
are made to improve the quality of life and alleviate pain are 
abused. We believe that addressing this issue will require 
continued coordination among Federal agencies, State, local, 
and Federal law enforcement, healthcare professionals, drug 
manufacturers, patients, and even the caregivers. And we will 
work together to shape policy.
    To control the misuse of pain medications we must recognize 
that the overwhelming majority of individuals, including 
millions of senior and cancer patients, rely on these important 
medications to help treat their pain. In our collective efforts 
to curb drug diversion, we must carefully but not inadvertently 
punish the patients who need these medications. Rather we 
should punish the criminals who illegally acquire and sell 
these products outside the normal chains of distribution.
    GPhA member companies are absolutely committed to the safe 
and reliable manufacturing and delivery of generic drugs. As an 
industry we have invested millions of dollars in technologies 
and delivery systems to help assure that our products reach 
their destinations safely and securely.
    For example, our industry works with the DEA through the 
closed system that you have heard about before of distribution 
to prevent a diversion and also to assure that these products 
do not fall in the hands of abusers.
    The DEA also administers drug allotment and accountability 
systems to ensure against lost and diversion of controlled 
substances. While some have questioned whether the quota system 
needs to be reevaluated, we do not believe that doing so is an 
appropriate way to address concerns with prescription drug 
abuse. Further restrictions of the quota system could actually 
hinder access to important medical therapies for the patients 
who rely on them.
    For example, there are drugs specifically designed for 
attention deficit disorder and attention deficit hyperactive 
disorder in the quota system that are currently on the FDA's 
drug shortage list. Thus we are concerned that if Congress 
starts to tip the balance in the quota system, it could 
actually have unintended consequences on the patients who need 
these medications.
    GPhA has also been participating in the Pharmaceutical 
Distribution Security Alliance or the PDSA to develop a 
consensus technology model for increasing the security of the 
drug supply chain in the United States. As part of this model 
manufacturers have committed to maintaining a database that 
would associate unit level data and lot number association. 
GPhA believes this model will deliver greater safety to the 
patients and help to achieve FDA's stated goals of enhancing 
the identification of suspect products.
    But no matter how secure we make the supply chain for 
prescription drugs, ensuring safe use of these drugs is a 
responsibility that rests on all of us. In fact, recent studies 
suggest that the problem with prescription drug abuse in the 
United States today primarily stems not from drugs that are 
outside the legitimate supply chain or have been obtained 
illegally through the black market, but instead from those who 
legally prescribe and are available in the homes.
    According to a 2010, national survey of health more than 70 
percent of people abusing prescription drugs are doing so with 
products that were obtained either from friends or relatives.
    The general drug industry has been a leader in addressing 
the problem on drug diversion. We believe that education is the 
key component to addressing this issue and as such support 
efforts such as the American Medicine Chest Challenge, Smart 
Rx, and the National Council on Prescription Information and 
Education.
    In addition, our industry has focused its efforts in the 
area by joining the brand industry, patient groups, and the FDA 
to develop the REMS Program, which addresses long-acting and 
extended-release opioid medications. REMS, which is short for 
Risk Evaluation and Medication Strategies, are special programs 
that are used by the FDA to help prevent adverse outcomes for 
the patients and through the education of key participants 
about the risks that are associated with the medications and 
the proper and legitimate use of these medications.
    Madam Chairman, thank you for the tireless efforts to 
combat the problems of the prescription drug abuse in this 
country. You know more than anyone that this is very much a 
multi-faceted issue that will require multi-stakeholders to 
solution.
    Thank you, and I will be happy to answer any questions.
    [The prepared statement of Mr. Gaugh follows:]
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    Mrs. Bono Mack. Thank you, Mr. Gaugh, and I recognize 
myself for 5 minutes for questioning, and I just want to say I 
get very frustrated anytime I hear denial from anybody in front 
of this committee, as if they don't have a role in this. I 
think that there is plenty of blame to go around. There is no 
doubt, and in the private sector if anybody was analyzing 
statistics and looking at the number of overdose deaths 
screaming upward, I mean, Donald Trump would say, ``You are 
fired.''
    These statistics are staggering. The attorney general 
pointed that out. They did a fantastic job. I, you know, 
something that really struck me to the pharmacy, the two 
pharmacy representatives, the murders of the four people in New 
York, how the bad guy, the assailant, whatever you want to call 
him, was an addict, too. Correct? And it seems that--are these 
robberies, are these crimes on the uptick because of the 
prescription drug epidemic? Are they addicts themselves, and 
are they actually--which is worse? Are they, you know, I have 
seen people trying to go through withdrawal. They will do 
anything to get the drug, anything at all. So are you seeing it 
because they are addicts or just people who are trying to 
divert it to the black market?
    Mr. Harmison. I can't speak with a great deal of authority 
here. I think that it is a combination. To the best of my 
knowledge I have never seen a patient come in that I could say 
this person is in withdrawal. I think that there is so much 
money involved with the black market of this, I think there are 
so many people that enjoy the euphoria. There is a demand, and 
somebody is going to meet that demand. Some of them are evil 
enough they will do whatever it takes to get it.
    Mrs. Bono Mack. But it is not the euphoria. They need a 
basic level to sustain themselves, so let us make it clear that 
it is not to sustain the euphoria. At any point in time it 
becomes so that they can live. Correct?
    Mr. Harmison. Yes, ma'am, but what I mean by euphoria, it 
has been proven over and over people in true organic pain do 
not get euphoria from the pain-relieving drugs. If they are an 
addict, they do--the threshold to keep down the withdrawal 
syndromes does keep rising. They do have to have more and more, 
probably more often and more often.
    Mrs. Bono Mack. Right.
    Mr. Harmison. But I don't know the people committing the 
crimes are addicts or salespeople.
    Mrs. Bono Mack. Mr. Nicholson, do you want to weigh in on 
that?
    Mr. Nicholson. Thank you, Madam Chairwoman. First I would 
add that I start off by saying that nothing is more important 
to our members than the safety of their patients and their 
employees, and I would also add that the incidents that you are 
talking about with respect to deaths from pharmacy robberies, 
the pharmacy robbery problem is, in fact, not, from what we are 
hearing is not at a nationwide spike, but it is spiking in 
certain geographic areas such as in the greater, in the 
northeast and in the New York metropolitan area.
    To help address these issues, you know, we work on a number 
of initiatives. We have been recently meeting with the 
officials at the HIDTA Office in that area to develop solutions 
that would help pharmacies to prevent these types of 
circumstances in the future.
    Mrs. Bono Mack. Do you all flag and identify willingly if 
an addict is willing to disclose to you he is addicted to 
opiates and I just want to know in my record that I am asking 
for these, I know it presents a whole host of other problems, 
but there are these sorts of things that pharmacies are not 
addressing right now currently. Correct? Are you able to say, I 
know you can say you have an allergy to iodine, and you can put 
that on a patient's record. Correct? But can you say none 
addiction to a substance with a patient's willingness to 
provide that kind of information? Do you track that data?
    Mr. Nicholson. Well, we, I mean, the information that goes 
to a patient profile is provided either by the patient 
themselves----
    Mrs. Bono Mack. That is what I am asking you. Do you, but 
do you specifically if a patient says to you, I am in recovery 
for an opiate addiction, if I come to you with a prescription 
for Opana, Opana, whatever----
    Mr. Nicholson. Right.
    Mrs. Bono Mack [continuing]. Or Vicodin, whatever opiates--
--
    Mr. Nicholson. I mean----
    Mrs. Bono Mack [continuing]. Please talk to me, counsel me 
first, call my doctor and say, ``Doc, I want you to know.'' Do 
you do that now? I mean, that is a basic, simple step.
    Mr. Nicholson. The basic practice would be in a situation 
where a patient comes to you and says they are an addict, you 
would--the ultimate goal would be to refer them to treatment.
    Mrs. Bono Mack. Do you keep it on their record? It is a yes 
or no question.
    Mr. Nicholson. I can't answer. I mean----
    Mrs. Bono Mack. Yes, because the answer is no, but let me 
just move on because my time is limited. I just want to go down 
the line if I might and get a yes or no answer out of each of 
you.
    Do you agree with me that there is, is there an epidemic on 
prescription drug abuse?
    Mr. Gray. Yes.
    Mr. Harmison. Absolutely yes.
    Mr. Nicholson. Yes.
    Ms. Martello. Yes.
    Mr. Gaugh. Yes.
    Mrs. Bono Mack. Do you agree each of you have a 
responsibility in finding a solution to this problem?
    Mr. Harmison. Yes.
    Mr. Nicholson. Yes.
    Ms. Martello. Yes.
    Mr. Gaugh. Yes.
    Mrs. Bono Mack. Thank you. Lastly I am just going to close 
with this one thought that I am a little bit frustrated by the 
notion that a prescription drug monitoring program is punitive. 
It shouldn't be. My daughter was a professor of, I mean, excuse 
me, my father was a professor of medicine, and I really hold in 
very high regard doctors and understand their limited time. 
Same with pharmacists.
    But when we are thinking this is a cumulative measure 
rather than a holistic approach, the ability for each of you to 
see a patient in their entirety, perhaps if we changed the 
language, it is not punitive but it is supposed to be an added 
tool that will actually help you provide better healthcare to 
your patients, your consumers, your customers. I think that 
that would help if we could change the feeling and the 
language, and I am happy to work with all of you on that.
    My time has expired. I am happy to yield to Mr. Butterfield 
for 5 minutes.
    Mr. Butterfield. Thank you. I am happy that the chairman 
went a little bit over time because that kept me from having to 
ask each of you the question about whether or not you feel some 
shared responsibility in curving the abuse of drugs, and each 
one of you answered the question as I thought you would. I 
don't get the sense for 1 minute that any of you are not 
sensitive to what we are talking about today, and so I thank 
you for coming. I thank you for what you do in your industry 
and just encourage you to--let us work together to try to solve 
this huge problem that we are facing.
    I asked this question of the first panel, and I am going to 
try it again, and then I will close it out and head to the 
airport. Law enforcement efforts in one State may certainly 
yield reductions in the number of pills dispensed or 
hospitalizations or deaths. All of this is commendable if it 
happens within the State's border, but how can we be sure that 
addicted individuals simply don't go to another State and 
continue to commit the crime? We have asked other panels about 
that, and it is the elephant in the room. I mean, that is the 
big problem. If we fix the problem in one State, it is very 
simple for the addict to go to a neighboring State.
    Now, help us with some of your ideas on that very quickly. 
Mr. Gray.
    Mrs. Bono Mack. Please make sure your microphone is on.
    Mr. Gray. All they have to do is get in a car and go, and I 
think ultimately the solution is going to be the ability to 
link up these PDMP Systems and what other health IT record 
systems can be done across the country, and where doctors in 
Florida or doctors in Michigan can look at, you know, can go 
online and see what each individual patient is doing, I mean, 
that is the only way to kind of link up the information flow so 
a pharmacist in Tennessee can look up and understand that this 
patient was also just recently at a pharmacy in Florida, and 
now they are up here.
    But right now as you heard the earlier panel, these systems 
are discreet by their states. They are not connected, so the 
information flow isn't there.
    Mr. Butterfield. Thank you.
    Mr. Harmison. Is it on?
    Mr. Butterfield. Yes.
    Mr. Harmison. I don't know why they can't be connected. 
There are nationwide systems right now that we deal with every 
day with insurance that will feed back to us in a matter of 
seconds. There is drug allergy on record to this. They have had 
it refilled too soon. It is not on our formulary. There is all 
sorts of information that comes back in seconds. I don't know 
why something like this--but I am the most technologically 
illiterate person in this room, but I don't know why it can't 
be done.
    Mr. Nicholson. I would agree with, you know, my--Mr. Gray 
and Mr. Harmison that, yes, I mean, we definitely need, you 
know, the mater solution is to connect the prescription drug 
monitoring programs. At NACDS we support appropriations for 
NASPER and for the Harold Rogers Prescription Drug Monitoring 
Program to provide funding to the states so that they can 
upgrade and better maintain their prescription drug monitoring 
programs and work on programs to interconnect them with each 
other.
    I also would add that we are hopeful that as the healthcare 
delivery system becomes more interoperable that pharmacies and 
prescribers and hospitals and you know, other entities will 
have better access to patient's full, the patient's full record 
so that there won't be gaps that would allow a patient to go 
from prescriber to prescriber or from State to State.
    Mr. Butterfield. OK. Counsel.
    Ms. Martello. Similarly prescription drug monitoring 
programs, we think that they can be an efficient and effective 
tool in helping to identify folks for treatment as well, and 
some of the solutions that have been talked about today include 
making sure that information is provided to these State 
prescription drug-monitoring programs in real time but also 
enhancing their interoperability across State lines so that you 
can utilize this data to its maximum effect.
    Mr. Butterfield. All right. Fifty seconds.
    Mr. Gaugh. I would concur with my colleagues on the panel 
that PDMP is a system that is in place, but it does not cross 
borders at this point in time, and as Mr. Harmison said, the 
reimbursements are instantaneously, why can't this be 
instantaneously.
    Mr. Butterfield. Very well. Thank you.
    Mrs. Bono Mack. Thank you.
    Mr. McKinley, you are recognized for 5 minutes.
    Mr. McKinley. Thank you. Mr. Gray, I think you started in a 
direction, and I want to follow back up again. Maybe--but then 
you stopped short of going that direction.
    Question. When we have spoken with the DEA, they claim for 
the distribution groups they give you very specific suggestions 
for improvements or otherwise how to--I have a feeling that 
there is a breakdown from what they say they are doing and what 
you in the distribution business--are the distributors getting 
good advice, good direction when they go to the DEA and ask for 
improvements to their delivery system before they pull the 
registration?
    Mr. Gray. That is the big debate, and if you talk to my 
members, they would tell you that those meetings, particularly 
at the regional level, tend to be deficient in solid advice at 
the end of the day as to whether or not a particular pharmacy 
should be--have a stop order as far as delivery.
    You know, our members started in this process with the DEA 
4 years ago as they said. This is a relatively new program. It 
was certainly a novel idea to consider the distributor as a 
choke point. I think that is kind of a pejorative term for what 
we are trying to do as a team as Attorney General Bondi said. 
We should be working in cooperation and collaboration with the 
DEA, and we shouldn't be in an adversarial posture, which these 
things, when you issue an ISO, that is where you end up as was 
stated earlier.
    So what happens then, and I have heard, I have talked to 
most of my members about this, and a common situation that will 
occur is that there will be a discussion, the distributor will 
sit down and say, we have reason to believe, we see some 
spikes, something is wrong with the ordering of this particular 
pharmacy. We think maybe they should be cut off. What do you 
think? And the common refrain, I have heard this more than once 
so there has got to be some element of truth to it, the common 
refrain is, that is a business decision for the distributor to 
make.
    Well, sure it is, but then that business decision can be 
used against you if you decide not to, and the questions that 
we submitted to the DEA last June 1 to Administrator Leonhart 
attempted to get to answer some of those specific questions 
within the confines of these meetings. A question the 
distributor would obviously have about a pharmacy practice, and 
this all stems to the data discussion earlier.
    They have data we cannot see. We cannot see that a pharmacy 
may be delivering, may be receiving deliveries from more than 
one wholesaler. All we see is our numbers, and it--that has 
been a source of frustration. I am hoping today we can turn the 
dialogue into a constructive one. It is not us versus them, but 
how can we work together. I think we can make a lot of progress 
working together.
    Mr. McKinley. Let me stay on that question. If the--there 
are two other issues with it. First, are the pharmaceuticals 
that distributors, are they compensated for doing this police 
work for the DEA?
    Mr. Gray. Oh, no. This is all out of the distributor's 
pocketbook. We have--our companies have invested tens of 
millions of dollars in doing this.
    Mr. McKinley. Thank you. So a smaller distribution firm, 
how do they do that?
    Mr. Gray. Very expensive. If you want to talk to some of 
them, I can make that happen.
    Mr. McKinley. Well, I just wonder----
    Mr. Gray. Yes.
    Mr. McKinley [continuing]. Is the long and the short of 
this with the DEA trying to put the smaller distributors out of 
business?
    Mr. Gray. I wouldn't want to speculate on that. I can't 
imagine that that would be the case. I think the DEA is 
absolutely, you know, fervent and correctly so in attempting to 
stop this problem, but I think like any new initiative, we are 
in our dating period trying to figure out how to get along.
    Mr. McKinley. Is this an--is this one of those unfunded 
mandates that we are passing onto the companies to do, and we 
are not going to compensate them. Then we are going to turn 
around and criticize them for the cost of pharmaceuticals?
    Mr. Gray. Well, that is an interesting way to put it, but, 
well, I mean, as I say, the hardcore fact is when we put in 
these monitoring systems, it is at the company's expense to do 
so.
    Mr. McKinley. I want to see this in a most robust way to 
try to correct the problem, but I just have, I have this 
nagging feeling here that there are parts of the chain that are 
not being treated equally, and I hope that the DEA will revisit 
how they work with each----
    Mr. Gray. Well, we do, too, because we have a long history 
since I have been onboard in '04, we have worked more than--we 
were the first responders in Katrina, our companies are the 
ones that got in there and got--we were the only ones that got 
in and got medicines to the people stranded in New Orleans. We 
were the ones that set up the vaccine tracking system with the 
CDC in a cooperative effort. We worked cooperatively with the 
Secretary of HHS to develop the system for bird flu maintenance 
and stockpiling around the country. We have a long track record 
in the last 5 years of working hugely cooperatively with 
Federal agencies and the government. I would love to see that 
same level of participation and cooperation with the DEA, 
because I believe they are correct. Together we can solve a lot 
of this problem. If they help us help them, we can make a lot 
of strides to solving this problem, but we are working in a 
vacuum.
    Mrs. Bono Mack. Thank you very much, and I would like to 
begin wrapping things up, and I thank all of our panelists very 
much for being here today, for your time, and for your 
commitment to this critically-important issue. If 30,000 
Americans died every year from food poisoning, Congress would 
take action. If 30,000 Americans died from pesticide exposure, 
Congress would take action. For that matter, if 30,000 dolphins 
died and washed up on our beaches every year, Congress would 
take action.
    So why are the victims of prescription drug abuse treated 
any differently? But working together as we have all said I 
know that we can come up with some good answers, and we can 
save lives.
    So I again thank you all very much for being here and 
especially for weathering the delay that we had this morning. I 
would like to remind members they have 10 business days to 
submit questions for the record. I know we will have one 
specifically about undosed marking, and so we will submit 
questions to you, and I would ask the witnesses to please 
respond promptly to any questions you might receive.
    Again, thank you, and the hearing is now adjourned.
    [Whereupon, at 1:50 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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