Pharmacies and other DEA Registrants sit at the crossroads of healthcare access and regulatory scrutiny. Every prescription, every dispensing record, and every audit trail tells a story and regulators are reading closely. From the DEA’s renewed focus on diversion control to the DOJ’s expansive use of the False Claims Act, the message is clear: compliance in pharmacy operations is no longer a back-office function; it’s a frontline priority.
At the American Health Law Association (AHLA) Fraud and Compliance Forum, Frier Levitt Partner Matthew Modafferi and William Matthews of Guidepost Solutions unpacked recent enforcement activity and how pharmacies can stay compliant. Their presentation, “Emerging Fraud and Compliance Risks in Pharmacy: Navigating False Claims, DEA Oversight, and What’s Ahead in 2025,” explored the trends for DEA registrants and why a strong compliance culture has become a business necessity, not just a legal safeguard.
The Expanding Web of Oversight
Modern pharmacy practice is governed by a dense network of federal and state oversight. The DEA, FDA, DOJ, State Boards of Pharmacy, and Attorneys General are no longer operating in silos, they’re coordinating investigations, sharing data, and pursuing enforcement under overlapping statutes like the Controlled Substances Act (CSA), Food, Drug, and Cosmetic Act (FDCA), and False Claims Act (FCA).
A DEA site visit can lead to state board review; a billing audit can trigger a federal investigation. As Modafferi noted, DEA Registrants are now expected to demonstrate “effective controls” not only in how they dispense medications but in how they document decisions, report losses, and respond to irregularities.
Drug Diversion: More Than a Criminal Issue
Drug diversion, which is the unauthorized distribution or use of prescription medications, remains one of the top areas of federal concern. Yet diversion is rarely just a matter of intentional misconduct; it often stems from internal process failures such as incomplete training, access-control gaps, or a lack of real-time monitoring.
Under the CSA, any theft or significant loss of a controlled substance must be reported to the DEA within one business day of discovery. But compliance goes beyond timely reporting. Regulators expect written policies that outline investigation procedures, corrective actions, and audit protocols. Pharmacies must track even minimal losses, identify trends, and maintain documentation that shows both awareness and accountability. When these controls are missing or inconsistently applied, the DEA often interprets it as an ineffective control rather than an isolated incident.
Recognizing and Responding to Red Flags
A recurring theme in DEA enforcement is the handling of “red flags.” Pharmacies are expected to recognize indicators of potential abuse or diversion, such as early refill requests, unusually high doses, or patients traveling long distances and take documented action before dispensing.
These red flags also extend to prescriber behavior. Regulators are watching for physicians who prescribe outside their usual specialty or who appear in an unusually high number of controlled-substance transactions. Ignoring or inadequately documenting red flag responses can be damaging.
The Shared Burden of Compliance
Under federal law, physicians may issue prescriptions for controlled substances only for legitimate medical purposes, and pharmacists must ensure those prescriptions are valid and appropriate before dispensing them. In practice, this creates a shared compliance burden between prescribers and pharmacies.
Pharmacies must take reasonable steps to verify patient histories, review prescription drug monitoring program (PDMP) data, and document communications with prescribers. The standard is not perfection—it is diligence. Demonstrating a thoughtful, consistent process can make the difference between a regulatory admonition and an enforcement action.
What a DEA Audit Really Looks Like
A DEA inspection often begins without warning. Agents typically arrive unannounced, present a Form 82, and request extensive documentation: prescription logs, biennial inventories, purchase records, and reconciliation data. They will then cross-check purchases and dispensing histories to ensure that quantities align.
Some of the most common findings are surprisingly preventable: missing documentation, disorganized recordkeeping, recurring inventory discrepancies, and patterns of dispensing high-risk combinations like opioids with benzodiazepines. Maintaining well-organized, easily retrievable records can significantly reduce the likelihood of a violation escalating into a broader enforcement matter.
False Claims Act Enforcement in the Pharmacy Space
The False Claims Act remains one of the government’s most potent enforcement tools and its reach continues to grow. Pharmacies have faced FCA liability not just for fraudulent billing but for administrative oversights that result in inaccurate or unsupported claims to government payors.
Recent settlements underscore this point. Rite Aid paid $7.5 million and an additional $401.8 million unsecured claim in bankruptcy to resolve allegations of dispensing controlled substances that lacked legitimate medical purpose.[1] Walgreens paid $106.8 million for billing federal programs for prescriptions never picked up by patients.[2]
These cases reflect a shift in enforcement philosophy where the question is no longer just “was there fraud?” but “was there sufficient oversight?”
Building Compliance That Works
Pharmacy compliance can no longer be viewed as a checklist. It must be integrated into day-to-day operations through training, documentation, and leadership commitment. Establishing clear policies for theft reporting, red flag management, and internal audits is essential but equally important is fostering a culture where compliance is owned at every level of the organization.
A well-documented compliance program does more than satisfy regulators; it demonstrates integrity, safeguards reputations, and preserves business relationships. In today’s environment, being able to show that you identified risks and acted promptly may be the strongest defense a pharmacy has.
How Frier Levitt Can Help
With decades of experience representing pharmacies, prescribers, wholesalers, and hospitals, Frier Levitt is uniquely positioned to help organizations navigate today’s complex compliance environment. Our attorneys work with clients to develop and implement effective diversion-prevention programs, prepare for and manage DEA and state board audits, defend against False Claims Act investigations, and ensure PBM and contractual compliance. Our team provides clear guidance to help you stay protected and positioned for success.
Contact our team to discuss how we can help your organization strengthen its compliance program and mitigate risk.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
[1] United States ex rel. White et al. v. Rite Aid Corp., et al., No. 1:21-cv-1239 (N.D. Ohio)
[2] United States ex rel. Bustos v. Walgreens Boots Alliance, Inc., et al., No. 1:15-cv-781 (DNM); United States ex rel. Turck, et al. v. Walgreens Boots Alliance, Inc., et al., No. 4:19-cv-315 (EDTX); and United States, et al. ex rel. Jacob v. Walgreens Boots Alliance, Inc., No. 8:20-cv-858-T-60TGW (MDFL)
