A drug manufacturer’s alleged failure to account for various amounts of three opioid drugs over a 32-month period, uncovered during a DEA on-site inspection, has led to the company’s agreement to pay a civil penalty of $2.25 million and enter into a three-year memorandum of agreement (MOA) directing the firm to improve its compliance operations.

According to the agency, Novel Laboratories Inc., a subsidiary of Lupin Inc., violated the Controlled Substances Act by failing to account for approximately 3.1 kg of oxycodone, 7.7 kg of hydrocodone and 30 kg of temazepam between January 2019 and August 2021.

The alleged discrepancies were discovered during an inspection of Novel’s Somerset, New Jersey, facility conducted in June and July 2021, the DEA said in announcing the settlement April 10.

The recordkeeping violations violated 21 U.S.C. §842(a)(5), the government said in a six-page settlement agreement executed on April 9.

Alleged Discrepancies

The discrepancies for oxycodone in active pharmaceutical ingredient form and for temazepam in 15 mg and 30 mg bulk capsule form “stood out for the degree of discrepancy,” the DEA said in the MOA.

The company said that the temazepam discrepancies were “most likely attributable to either their initial or closing inventory being completed incorrectly.” Such discrepancies, the agency said, violate the requirement under 21 C.F.R. §1304.11 that each inventory “contain a complete and accurate record of all controlled substances on hand on the date the inventory is taken.”

The oxycodone API was allegedly lost before entering any phase of manufacturing, according to the MOA. If the discrepancy did not result from a recordkeeping violation, the DEA said, the loss violated the requirement under 21 C.F.R. §1301.71(a) that registrants “provide effective controls and procedures to guard against theft and diversion of controlled substances.”

The DEA also alleged that its investigators found approximately 894 bottles of retained samples belonging to Novel’s quality assurance and quality control departments “stored within the vault, which failed to provide effective controls to guard against theft and diversion.”

“The controlled substances,” the agency also alleged, “were not properly sealed to disclose potential tampering and were stored on the ground floor of the vault, therefore increasing the possibility of theft or loss in violation of 21 C.F.R. §1301.71(a). … The assorted containers also lacked the proper labels to indicate the substance name, drug schedule, quantity or strength, in violation of 21 C.F.R. §1302.03(b).”

Also during the inspection, the DEA investigators allegedly found “multiple paper drums stored within the vault and labeled as containing acetaminophen, a noncontrolled substance.” The company “advised they were repurposed paper drums used to store assorted controlled substances … awaiting destruction.”

“Upon inspection,” the agency reported, “each drum contained a specific type of controlled substance and from the various stages of the manufacturing process set aside as waste and destined for destruction.”

The drums lacked proper labeling and did not include the symbol for the schedule of controlled substance that they contained, in violation of 21 C.F.R. §1302.03(b), the DEA alleged, as well as in violation of 21 C.F.R. §1301.71(a) because of the increased possibility of theft or loss.

The agency also noted in the MOA that in July 2019 Novel had identified and reported to the DEA an unaccounted loss of 7.698 kg of hydrocodone bitartrate API. “While Novel did not report any evidence of diversion,” the agency reported, “Novel was unable to document the reason for the discrepancy in the inventory.”

Novel’s Commitments Under MOA

In the MOA, Novel pledged to report all thefts or significant losses of controlled substances or listed chemicals to the DEA within 24 hours of discovering the theft or loss. The company will conduct internal investigations involving controlled substances and List I chemicals and provide the results of the investigations to the agency within 90 days.

Novel also committed to changing its standard operating procedures to “[define] for itself that ‘significant’ means.” The DEA reserved the right to direct the company to adopt a more restrictive definition of the term.

In the MOA, the agency also directed the company to conduct within 90 days “a complete and accurate inventory of all controlled substances on hand,” including “all stocks of controlled substances, in all forms” — including APIs, reference standards, in-process materials, samples, waste and finished products. The inventory was to be submitted to the DEA. The firm must also present to the agency “a separate list of all on-hand inventory designated as waste and set for destruction.”

Novel also agreed to implement a comprehensive training program that will provide instruction on the requirements of federal regulations and the company’s standard operating procedures. The company must report within 90 days of the execution of the MOA “what steps have been taken to ensure compliance.”