Not An April Fool’s Joke: California BOP Establishes Loss Reporting Thresholds

Effective April 1, 2022, California Board of Pharmacy (“BOP”) regulations no longer require reporting every single missing tablet or dosage form.  Instead, the amended loss regulations establish thresholds which will reduce the number of reports received by the California BOP, and in our opinion, creates a more meaningful and substantive reporting system.  The joke appeared to be on the BOP because reporting every loss has created “an administrative burden for both the licensee and the Board to prepare, review, and document the reported loss.”  Reporting Drug Loss, Cal. Regulatory Notice Register, June 4, 2021, 727.  The Board is not joking now, for several reasons, including reducing the estimated number of an estimated 10,000 loss reports per year to 6,667 per year, and more closely aligning with federal requirements, has fine-tuned its loss reporting requirements.  Id.

The prior BOP regulations became effective April 1, 2018, requiring owners to report the loss of any controlled substance, even single doses, to the Board.  Id. § 1715.6(a)(1).  The new regulations, require reporting a loss in part if it hits one of several triggers including if it meets or exceeds established aggregate quantity thresholds within the prior year.

1. Owners must report the following dosage units meeting or exceeding these thresholds:

• Tablets, capsules or other medication-99 dosage units;
• Single-dose injectables, lozenges, films such as oral, buccal and sublingual,
  suppositories or patches-10 dosage units; and
• Injectable multidose injectables, infusion medications or unidentified other multi-dose unit-two or more multi-dose vials, infusion bags or other containers. Cal. Code Regs. § 1715.6(a)(1).

2. Owners must also report all losses caused by employee theft, diversion or self-use within 14 days of discovery. Id. at § 1715.6(a)(2); Cal. Business and Professions Code, 4104(c).  (Federal regulations enforced by the Drug Enforcement Administration (“DEA”) require reporting all thefts, not just those by employees.  21 C.F.R. § 1301.76(b)).  Board inspectors must investigate all employee thefts “to ensure that no additional controlled substances have been diverted and that appropriate action can be taken against the subject employee’s license to restrict their access to controlled substance in the future.”  Initial Statement of Reasons, Reporting Drug Loss, California Board of Pharmacy, March 24, 2021, 3.
3. Also similar to federal requirements, owners must report any “significant loss” determined by the Pharmacist-In-Charge (“PIC”), including though not limited to losses “deemed significant relative to the dispensing volume of the pharmacy.” Id. at § 1715.6(a)(3).
4. Loss reports must specify loss details including controlled substance name, quantity and strength, and date of discovery. Id. at § 1715.6(b).

No one should be surprised that requiring any controlled substance loss, including a single tablet, to be reported, has resulted in thousands of meaningless reports of de minimis losses.  The new regulations seek  “to eliminate this excessive reporting and more closely align the Board’s regulation with the federal regulation by providing increased clarity with respect to the quantities of controlled substance losses that must be reported.”  Initial Statement of Reasons, Reporting Drug Loss, California Board of Pharmacy, March 24, 2021, 1.

That the Board has established a minimum aggregate reporting threshold quantities to resolve ambiguity is laudable.  We note that DEA has provided the following factors as to what it considers may be a significant loss:

1. The actual quantity lost relative to the business type;
2. The controlled substances lost;
3. Whether the loss can be associated with access by specific individuals, or if the loss can be attributed to unique activities that take place involving the controlled substances;
4. A pattern of losses over a specific time period, whether the losses appear to be random, and the results of efforts taken to resolve the losses; and, if known,
5. Whether the controlled substances are likely candidates for diversion and
6. Local trends and other indicators of the diversion potential of the controlled substances.  Id.

Also, DEA regulations require pharmacies and other registrants to report all thefts, but only losses that are significant, in writing within one business day of discovery, and to complete and submit a DEA Form 106.  21 C.F.R. § 1301.76(b).

One difficulty with the new Board requirements involves how pharmacies maintain a running total of losses over a year in order to report if the aggregate total hits or exceeds the quantity threshold.  In addition, the new regulation does not totally eliminate ambiguity about “significant loss” because a PIC, using their professional judgment, must report if they determine it “significant” relative to how much the pharmacy dispenses.  So even if losses do not hit a threshold, a pharmacy must report a loss deemed significant.  We wonder how often the Board is going to second-guess a PIC regarding failure to report what it considers a significant loss.

It is noteworthy in reading the administrative record for the new regulations that the Board considered the loss of one tablet falling on the floor requiring disposal to be a reportable.  The Board presumably requires dosage units meeting the reporting threshold that fall on the floor or spilled requiring disposal to be reportable losses.  This is another area where Board requirements diverge from DEA requirements.  Unlike the Board, DEA does not require witnessed damaged, spilled or damaged controlled substances reportable because the registrant can account for them.  Reports by Registrants of Theft or Significant Loss of Controlled Substances, 68 Fed. Reg. 40,576, 40,578 (July 8, 2003).  DEA registrants, however, must maintain records if the lost controlled substances are not recoverable.

Unlike the April 1, 1957, BBC broadcast report that a Swiss region near the Italian border was experiencing “an exceptionally heavy spaghetti crop” and showing film footage of people harvesting spaghetti off trees, the amended California controlled substance loss reporting requirement is no joke.