Controlling Opinions: Latest Developments Regarding Controlled Substance Issues in Telemedicine

On this episode of Ropes & Gray’s podcast series Controlling Opinions, hear from partners Brett Friedman, Andrew O’Connor, and Josh Oyster regarding recent developments related to the prescribing of controlled substances via telemedicine. They discuss the current DEA regulatory landscape related to prescriptions of controlled substances via telemedicine and explore the implications of a recently announced prosecution in which the Department of Justice alleged that executives at a digital health company wrongfully distributed controlled substances via telemedicine.

Transcript:

Josh Oyster: Hi, I’m Josh Oyster, a partner in the life sciences regulatory and compliance practice group in Ropes & Gray’s Washington, D.C. office. I’m excited to be with you today for this episode of Controlling Opinions, which is focused on current trends and developments related to controlled substances that affect the health care and life sciences industries. Today, we’re talking about recent developments related to the prescribing of controlled substances via telemedicine. I am here with Brett Friedman, a New York-based partner in our health care group, and Andrew O’Connor, a Boston-based partner in our litigation & enforcement group and co-chair of our life sciences and health care industry group. Welcome, Brett and Andrew.

We’ll first talk today about the current DEA regulatory landscape related to prescriptions of controlled substances via telemedicine, and then, we’ll talk about a recently announced prosecution where the Department of Justice is alleging that executives at a digital health company wrongfully distributed a controlled substance via telemedicine.

Part I: Latest DEA Regulatory Landscape Related to the Prescription of Controlled Substances via Telemedicine

Let’s get started and dive in. Brett, I’ll start with you first. On the DEA side, I know there have been a lot of developments in the last few years related to the prescribing of controlled substances via telemedicine—this was a very big issue and an important one during the COVID-19 pandemic. Our Ropes & Gray team previously covered this last year in a client alert we did, but can you get us up to speed on what the DEA has been doing in this area?

Brett Friedman: Sure, Josh. I really think this is an important topic to highlight, both for the reasons you mentioned around the importance of telehealth prescribing during the pandemic, but even before as telehealth has grown nationally. Telehealth companies have wanted to enter the medical assistant treatment space that would treat substance use disorder and prescribe prescriptions via telehealth more generally. It really is important to look into the regulatory history around this issue even before just these recent developments.

The story starts back when Congress passed the Ryan Haight Online Pharmacy Consumer Protection Act of 2008. The Ryan Haight Act amended the federal Controlled Substances Act to establish guidelines for physicians and other prescribers who prescribe controlled substances via online platforms and the practice of telemedicine. Importantly, the Act imposes a requirement on practitioners to engage in at least one in-person medical evaluation with a patient prior to providing an online prescription for a controlled substance subject to a few—what have historically been—very narrow exceptions. Unlike a lot of other forms of telehealth where if you wanted to go to your doctor, you can get a prescription for a drug that you want—if you’re seeking a prescription for a controlled substance, you need to see the doctor in person, face-to-face before you can receive a prescription via telehealth for the controlled substance. That became a problem during the COVID-19 pandemic.

In March 2020, as the federal public health emergency was declared, the DEA granted a temporary exception to the Ryan Haight Act, which provided that practitioners were authorized to dispense controlled substances in the United States, and they would be allowed to prescribe what are certain classes of controlled substances, Schedules II-V to patients without having first conducted that in-person medical evaluation if the relationship or the encounter met certain exceptions, which were far broader than the historically narrow exceptions to the Ryan Haight Act. This was, again, designed to promote people getting access to these controlled substances when they couldn’t visit their doctor in person due to COVID isolation restrictions, and these were very popular.

Fast forward to 2023, as the COVID-19 pandemic and the federal public health emergency was ending, there was widespread concern in the health care industry that with the expiration of the COVID-19 era exceptions, it would lead to massive disruption in patient care, especially for populations that had come to rely on telemedicine as a means of prescribing controlled substances. So, the DEA was prepared. In late February 2023, in concert with the Department of Health and Human Services, the DEA announced two proposed rules regarding the prescribing of controlled substances via telemedicine—these are the General Telemedicine Rule and the Buprenorphine Rule.

Josh Oyster: Brett, so what was industry reaction to these two rules? And what are some of the takeaways from the proposals that DEA put forth?

Brett Friedman: The industry reaction on the whole was, “Yes, but more please,” in the sense that the proposed rules apply to telehealth prescribing of not the general scope of what was the COVID-19 rules, but really Schedules III-V, non-narcotic controlled medications and Schedule 3-5 narcotic controlled medications that are approved by the FDA for the maintenance and detoxification treatment of opioid use disorder, which at the time, was really just a fancy way of saying, buprenorphine (medication-assisted treatment or medication-assisted therapy (MAT)). The proposed rules apply only in “limited circumstances when the prescribing practitioner wishes to prescribe the controlled medication via telemedicine and has not otherwise conducted an in-person medical evaluation prior to issuing the prescription.” It allows for a 30-day supply of such controlled medications without an in-person evaluation provided that the prescription otherwise complies with applicable state and federal law.

During the pandemic—a little bit of my back story is—I was helping run the New York State Medicaid program, and we applied our own state rules that were slightly more restrictive than the federal exceptions to the Ryan Haight Act. It is an important recognition that the state rules have been—especially in certain big states—more restrictive than the federal permissions, and so, it’s always an important reminder to check both, even if these two DEA rules have allowed it. Under the federal rules and, importantly, the personal performance of an in-person medical evaluation by the prescribing practitioner or the receipt of a qualifying telemedicine referral—which we’ll define in a little bit more detail—is required before any prescription of a controlled II substance or narcotic controlled substances other than buprenorphine may be issued. And so, that was a very narrow exception under these two DEA rules.

The DEA was inundated—there were 38,000 comments to the two proposed rules. The major concerns, they were numerous, but the ones that we were tracking were raised by the industry that the proposed rules did not provide sufficient flexibility for telemedicine prescribing of essentially non-buprenorphine drugs and would have an impact on patient care. The number of comments certainly concerned DEA and HHS, which led them to announce in May 2023 an extension of the telehealth flexibilities that were set to expire with the expiration of the federal public health emergency, and they extended those emergencies through November 11, 2023. The temporary rule also provided a grace period of one year to November 11, 2024, if a physician/patient telemedicine relationship was established prior to or on November 11, 2023. So, we got a kick-the-can-down-the-road scenario.

Then, a few months later, in October 2023, as we were getting to this November deadline, the DEA again with HHS issued a second temporary rule—so, a lot of rulemaking here designed to increase flexibilities—that extended the Ryan Haight public health emergency exceptions all the way to December 31, 2024. So, we’re living in them now, and that was by virtue of these double extensions. It was really designed to give the DEA more time to review those 38,000 comments and additional commentary that was provided. The second temporary rule authorized all DEA registered practitioners to prescribe Schedules II-V controlled substances via telemedicine regardless of whether the patient and the practitioner had established a telemedicine relationship on or before that November 11, 2023, date. The DEA did announce with the extension that it planned to promulgate new safeguards by the fall of 2024, so we’re getting there, and we’ll mention where the rulemaking is in the process. But at the same time, and I think what’s driving a lot of this commentary is this—in addition to shutting down a lot of access to controlled substances—has really created a lot of tension for companies also looking to innovate in the telehealth and telemedicine space.

Josh Oyster: Thanks, Brett—that’s certainly a lot to digest. Sounds like a lot of unknowns and uncertainty that remains in this area. How is that affecting innovation among health care stakeholders and especially telehealth companies?

Brett Friedman: Telehealth and digital health companies constituted a large number of those 38,000 comments. Either before or through the pandemic, there was a lot of telehealth innovation around medication-assisted therapy, especially for people with substance use disorder. Telehealth is a really good and clinically proven modality for people who are trying to access drug treatment programs. It’s easy to access. And it’s been proven through the pandemic that telehealth is one of those areas that is really useful and beneficial for behavioral health in particular. A natural outgrowth of telehealth is the prescription of controlled substances, not just buprenorphine, but also things like Adderall. And so, while you have such uncertainty around DEA rulemaking and the requirement for an in-person prior examination, these digital health companies and telehealth providers are very cautious on when and how to expand. We’ve seen it in limiting fundraising ability as well as challenges in trying to scale telehealth companies nationwide, given the fact that after December 31, 2024, you may have to operate very differently in order to keep doing the things you’ve been doing since March 2020. It’s been a huge question for a number of my digital health clients, which is the area in which I practiced often, and something that we’re really eagerly awaiting clarity on.

Josh Oyster: I want to circle back to something you said earlier. When you were working at New York State Medicaid during the pandemic, what drove New York to have more restrictive rules than the flexibilities that were afforded at the federal level?

Brett Friedman: Stepping back and thinking about the policy behind the Ryan Haight Act is an important consideration here, which is: Why, unlike a lot of other forms of telehealth, do you have a prior in-person examination requirement? It’s a sense of validation. Prescribing the controlled substances, even buprenorphine, but other controlled substances—which are, by definition, addictive and subject to abuse—is something that should be taken very, very seriously. Without having that in-person prior examination requirement—and Andrew will probably talk about this later—there’s increased potential for fraud and prescription diversion. Every state looking to expand access via telehealth, especially the behavioral health and substance use disorder space, needs to balance that against the fact that we are and remain in an opioid epidemic. How state policymakers balance those two considerations at expanding access, especially around treatment, and not causing more of the harm is something that is a challenge that I think is driving a lot of the careful DEA consideration as evidenced by these two rulemakings and the delays inherent in trying to reach a final decision here.

Josh Oyster: Got you—thanks so much, Brett. Now, to circle back to the proposed rules and where things currently stand with DEA, what’s the latest on the DEA side? When can we expect to see those new standards the DEA promised, and are they actually going to happen this fall?

Brett Friedman: We’re hopeful they’re going to happen this fall. We’ve heard that a new proposed version of the General Telemedicine Rule was submitted to the White House Office of Management and Budget (OMB)—which is one of the steps in a rulemaking process—about a month ago, on June 13, 2024. As of today’s date, as of the reporting, it’s still under review by OMB. We don’t know how long that review is going to take or what the content of the proposed rule is, but we know that many health care industry stakeholders have been pushing DEA to broaden the scope of what was proposed last year, such as to ensure that narcotic stimulants, like Adderall, are covered by the policy—it’s not just limited to buprenorphine. Separately, no updated version of the Buprenorphine Rule has been submitted to OMB yet, so we have to wait to see whether the updated proposal for that rule will be issued at the same time as the General Telemedicine Rule. Given these developments, especially the submission to OMB, we think that fall of 2024 remains viable for DEA to issue updated proposals of both rules, but I don’t think it’s practical or feasible that the DEA would be able to finalize those rules prior to December 31, 2024, when the current extension expires. So, while we expect to see the rules in the next few months, we do think it’s reasonable to expect that DEA will continue to extend their telemedicine flexibilities past the 2024 end date while the rulemaking is finalized. How much they extend, we’ll have to see. I expect it will be probably a pretty short extension depending on where they are with the rulemaking.

Josh Oyster: Makes sense. We’ll certainly be watching closely there. One more question: DEA had wanted to limit the extension period under the second temporary rule, right? What was the thinking behind that?

Brett Friedman: The thinking was that when the second temporary rule was announced last October, DEA explained that part of the reason for keeping the second extension limited to that really short window of time was to avoid incentivizing investment necessary to develop new telemedicine companies that might encourage or enable problematic prescribing practices. So, exactly what I mentioned earlier, that there’s been so much digital health innovation in the substance use disorder and telehealth space that DEA essentially didn’t want people to keep going on those, which is a really interesting view by the federal government on digital health innovation and access, but something that’s certainly important to a lot of our clients, and so, that’s why we’re watching it so closely.

Part II: Discussion of Recent DOJ Criminal Prosecution Related to Online Distribution of Adderall via Telemedicine

Josh Oyster: Thanks, Brett. I think that actually provides a great segue into our next topic. Andrew, I’ll turn to you. DOJ recently announced a criminal prosecution of executives and others associated with the digital health company for a health care fraud scheme involving telemedicine and controlled substances. I know this is something you’ve been following. What are the basics of this case that the DOJ is pursuing?

Andrew O’Connor: Sure, Josh. In June of this year, the DOJ announced its first significant criminal prosecution related to a digital health company, related to controlled substances and telemedicine. It actually arrested the founder and CEO and another executive of a California-based company in connection with an alleged scheme to distribute Adderall over the internet for patients who were not necessarily appropriate for the drug. The claims the government is making range from false and fraudulent claims against the government, to conspiracy, to obstruction of justice, just to give you a flavor. DOJ says there was $100 million worth of claims here for Adderall and other stimulants. They claim that this company used deceptive social media advertisements targeted at drug seekers, and ultimately resulted in 40 million pills through the use of a monthly subscription service. Now, the allegations suggest that there were limits placed on prescribers working for the company limiting them to only 30 minutes per session and instructions to prescribe these medications even when the person requesting the drugs was not an appropriate patient. And then, allegedly, they followed that on with an auto-refill function, so the same patients were getting these prescriptions refilled on a monthly basis.

Josh Oyster: Thanks, Andrew. What has the DEA said about this case in particular? While it may be obvious to us, I don’t want to overlook the point. I thought we just covered that there were flexibilities during COVID-19 to prescribe controlled substances via telemedicine, so what went wrong here that led the DOJ to take action?

Andrew O’Connor: The DEA’s view is that this particular company was exploiting those flexibilities and pushing the limits to prescribe these ADHD meds even when they were not medically necessary. And whatever the flexibilities are from a procedural perspective, at the end of the day, even during COVID, a patient can only be prescribed, and the prescription can only be paid for when that prescription is really medically necessary, and that’s what DOJ is taking issue with here.

Josh Oyster: Got you—thanks. We mentioned the prosecution of the two executives. Are we seeing other prosecutions in connection with this particular scheme?

Andrew O’Connor: Yes, there have been several individuals associated with this issue charged. One was a Florida nurse practitioner who prescribed over 1.5 million pills of Adderall to patients across the United States, and again, using this auto-refill policy to result in additional medication ending up in the hands of patients that DOJ views as inappropriate.

Josh Oyster: This is the first scheme like this to be prosecuted by DOJ, but I’m guessing we don’t expect it to be the last, is that right?

Andrew O’Connor: That’s right. With the extension of the flexible telemedicine standards that we were speaking about earlier, I think we will see more enforcement cases like this. Importantly, we often see DOJ go after the obvious or most egregious examples first and then pivot towards more marginal or nuanced cases, and I think that is something we could see here. We certainly expect to see continued focus, in particular, on ADHD medications. Stimulants have been a recent focus of DOJ for the last several years, and with the continuing shortage of certain ADHD meds, we expect that DOJ may be very interested in going after companies and prescribers who may be diverting otherwise legitimate products to inappropriate patients when there are real patients in need who are having trouble getting their medications.

Josh Oyster: What lessons should companies take away from the ongoing prosecutions? Are there best practices to glean from what’s happened so far?

Andrew O’Connor: Sure, just to hit a few of the most obvious points: I think having clear processes and policies around prescriptions of controlled substances over telemedicine, whether you’re an entity that’s on the prescribing side or the dispensing side. Having a legitimate medical purpose for the prescription is absolutely essential, and that necessity ought to be documented. Prescribers need to ensure that there’s appropriate documentation, especially when they’re prescribing a controlled substance to a patient outside the traditional context of an in-person medical evaluation. If you’re a telehealth company, you should be taking a hard look at your practices in light of the ongoing prosecutions and investigations to make sure that this sort of issue that DOJ is spotlighting in these cases is not occurring in your organization.

Josh Oyster: Thanks, Andrew. Brett, to round up on this topic, do you think that the circumstances of this particular scheme being prosecuted or others like it might affect the way that DEA is thinking about its telemedicine policy in the upcoming revised rules?

Brett Friedman: Yes and no, Josh. I think the DEA’s definitely watching these cases closely and thinking about what lessons it could derive from these types of abuses and prosecutions, but I don’t think it will ultimately change whether it will make the extensions more permanent. There’s a need for telemedicine. Telemedicine, as I mentioned earlier, provides access, which means ultimately better patient care, especially for individuals who use buprenorphine or need Adderall to treat their behavioral health conditions. We’ve seen instances where the DEA has tried to limit as much as possible telemedicine prescriptions, and to a certain extent, they have. All of this uncertainty around Ryan Haight and the extension, and what they’re going to do long-term is definitely chilling investment and growth, and that comes with a lot of pushback because of the adverse impact it can have to patient care and access, especially for patients in Medicaid or other vulnerable populations who really need to rely on telehealth and telemedicine for that level of access.

Josh Oyster: Thanks, Brett, and thanks again, Andrew. I want to thank all of our listeners for joining us on this episode of Controlling Opinions. We look forward to diving into these issues further on a future episode maybe when DEA actually issues those updated rules. If you have any feedback on today’s episode or suggestions for future topics, please don’t hesitate to contact any of us. You can find our contact information and more information about our practices on ropesgray.com. You can listen to Controlling Opinions and other RopesTalk podcasts through our ropesgray.com website, or you can subscribe wherever you listen to podcasts including on Apple and Spotify. Thanks again for listening.