12.4 Theft, Significant Loss & CDS Destruction (DEA Form 106 & Form 41)

12.4 Theft, Significant Loss & CDS Destruction (DEA Form 106 & Form 41)

The security and integrity of controlled dangerous substances must be safeguarded at all times. When security breaches, internal diversion, armed robbery, burglary, or unexplained stock discrepancies occur, licensees are bound by strict statutory reporting mandates under federal law (21 CFR § 1301.76(b)) and Oklahoma administrative regulations (OAC Title 475:25-1-9 and OAC Title 535:15-3-2(j)(1)). Additionally, the lawful disposal and destruction of unwanted, expired, or adulterated controlled substances are strictly regulated under 21 CFR Part 1317.

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Mandatory Reporting of Theft or Significant Loss

When a pharmacy experiences an armed robbery, burglary, employee diversion, or discovers an unexplained discrepancy in controlled substance stock, a multi-agency notification timeline is immediately triggered.

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|               MANDATORY CDS THEFT & SIGNIFICANT LOSS TIMELINE           |
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| Discovery Date --> Notify DEA, OBNDD, and OSBP within 1 BUSINESS DAY    |
| Investigation  --> Conduct thorough audit, police report, internal review|
| Final Action   --> Submit electronic DEA Form 106 & send copies to OBNDD|
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1. One-Business-Day Initial Notification Mandate

Under 21 CFR § 1301.76(b), the registrant must notify the Special Agent in Charge (SAC) of the local DEA Field Division in writing within ONE BUSINESS DAY of discovery of any theft or significant loss of controlled substances. In Oklahoma, the registrant must simultaneously provide written notice to:

• The Oklahoma Bureau of Narcotics and Dangerous Drugs Control (OBNDD) (OAC 475:25-1-9);
• The Oklahoma State Board of Pharmacy (OSBP) — under OAC 535:15-3-2(j)(1) the pharmacy and PIC must report any theft or significant loss of any drugs (not only controlled substances) to the Board within one (1) day of discovery, must complete and submit DEA Form 106 to DEA within the required time, and must send a copy to the Board within fourteen (14) days of filing the Form 106;
• Local municipal or county law enforcement agencies (e.g., Police Department or Sheriff's Office).

2. Submission of DEA Form 106 (Report of Theft or Loss)

Following the initial 1-business-day notification, the registrant must conduct a comprehensive internal audit to determine the precise quantities and specific drug products involved:

• Electronic Submission: DEA Form 106 must be completed and submitted electronically via the secure DEA Diversion Control Division online portal.
• Required Data Elements: DEA Form 106 requires the pharmacy's DEA number, name, address, date of theft/loss, type of theft (e.g., armed robbery, night break-in, employee pilferage, customer theft, transit shortage), list of missing CDS with exact dosage forms, strengths, container sizes, and National Drug Codes (NDCs), and local police incident report numbers.
• State Regulatory Filings: Copies of the electronically submitted DEA Form 106 must be forwarded to the OBNDD and the OSBP, and a copy must be retained in the pharmacy's files for 5 years in Oklahoma.
• Extended Investigations: If the internal investigation takes longer than expected to quantify the loss, the registrant must submit an interim written status update to the DEA Field Division within 60 days.

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Defining and Evaluating "Significant Loss"

Neither the federal Controlled Substances Act nor Oklahoma statutes establish a rigid numerical threshold (such as a specific pill count or dollar value) to define what makes a loss "significant." A loss of 10 tablets of an expensive non-controlled drug is not reportable, whereas the unexplained loss of 10 tablets of fentanyl or oxycodone may represent active employee diversion and must be treated as significant.

The Six Federal Regulatory Evaluation Criteria (21 CFR § 1301.76(b))

When determining whether a loss of controlled substances is "significant," the registrant and Pharmacist-in-Charge must systematically evaluate the following six factors:

Golden Rule of Loss Reporting: If, after evaluating these factors, the pharmacist is uncertain whether a loss qualifies as "significant," the registrant has the legal burden of responsibility and should err on the side of compliance by reporting the event.

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In-Transit Losses vs. Dispensing Custody Losses

When controlled substances are stolen or lost during shipment between a supplier and a pharmacy, legal reporting responsibility hinges on custody and title transfer:

• Loss Prior to Customer Custody: If a shipment of CDS is lost, hijacked, or damaged in transit before the purchaser signs for and accepts physical delivery, the SUPPLIER (distributor) is legally responsible for submitting DEA Form 106 and notifying the DEA and state agencies.
• Loss After Acceptance / Custody Transfer: Once the purchaser's authorized agent signs the delivery receipt, bill of lading, or carrier manifest, custody is legally transferred. If the pharmacy subsequently discovers a shortage or experiences a theft after signing, the PURCHASER (pharmacy) must submit DEA Form 106.
• Central Fill Deliveries: If a central fill pharmacy utilizes a contracted private courier or common carrier to deliver filled CDS prescriptions to a retail pharmacy, the central fill pharmacy is responsible for reporting any in-transit loss.

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Breakage, Spillage, and Waste vs. Theft/Loss

A critical legal distinction that frequently appears on the MPJE is the difference between an unrecoverable accident and a reportable loss:

Statutory Prohibition: Breakage, accidental spillage, and chemical waste do NOT constitute a theft or loss under federal or Oklahoma law and MUST NEVER be reported on DEA Form 106.

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|                  BREAKAGE & SPILLAGE REGULATORY MATRIX                  |
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| Non-Recoverable Spillage --> Log in pharmacy records; TWO witness signatures |
| (Liquid down sink, crushed debris) --> (DO NOT submit Form 106 or Form 41) |
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| Recoverable Damaged CDS  --> Transfer to Reverse Distributor (Form 222)   |
| (Broken vial with drug, intact pills) --> Reverse Distributor files Form 41|
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1. Non-Recoverable Breakage / Spillage

When a liquid controlled substance bottle breaks and spills onto the floor or down the sink, or when tablets fall into a hazardous waste receptacle and cannot be recovered:

• The drug is physically destroyed and cannot be diverted.
• The pharmacist must document the incident in the pharmacy's CDS logbook, recording the drug name, strength, dosage form, exact quantity, date, time, and circumstances.
• The logbook entry must be signed by the pharmacist and at least one other licensed witness (pharmacist or technician).
• Neither DEA Form 106 nor DEA Form 41 is submitted to the DEA for non-recoverable spillage.

2. Recoverable Breakage / Damaged Product

If a bottle of liquid morphine breaks but the liquid remains contained within an outer container, or if a box of ampoules is crushed but the drug product remains physically present, the damaged pharmaceuticals must be segregated in the pharmacy's secure CDS vault and transferred to a registered reverse distributor for formal destruction.

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Controlled Substance Disposal & Destruction (DEA Form 41 & Reverse Distributors)

Under 21 CFR Part 1317 (Disposal Regulations), retail pharmacies cannot simply destroy controlled substances on-site (such as flushing them down the toilet or incinerating them in local trash) without special direct DEA authorization. The standard, legally mandated method for a pharmacy to dispose of expired, damaged, recalled, or unwanted CDS is through an authorized reverse distributor.

Reverse Distributor Transfer Workflow

1. Schedule II CDS Transfers: The reverse distributor acts as the purchaser and issues a single-sheet DEA Form 222 (or CSOS order) to the pharmacy. The pharmacy fills the Form 222, ships the Schedule II drugs to the reverse distributor, and retains its copy of the Form 222 as legal documentation of disposition.
2. Schedule III–V CDS Transfers: Transferred using standard commercial invoices documenting drug names, strengths, dosage forms, container sizes, quantities, transfer date, and DEA registration numbers.
3. Execution of DEA Form 41 (Registrant Record of Controlled Substances Destroyed):
   • Once the reverse distributor receives the pharmaceuticals, it destroys them in a manner that renders them "non-retrievable" (permanently altering their chemical and physical condition to make them unavailable for human consumption, such as high-temperature thermal incineration).
   • The REVERSE DISTRIBUTOR executes and submits DEA Form 41 to the DEA.
   • Critical Rule: The retail pharmacy DOES NOT submit DEA Form 41 when utilizing a reverse distributor. The pharmacy's legal proof of disposition consists of the executed DEA Form 222 and commercial transfer invoices.

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The Secure and Responsible Drug Disposal Act of 2010 (21 CFR Part 1317)

To combat the opioid epidemic and prevent household diversion of unused medications, the federal Secure and Responsible Drug Disposal Act of 2010 authorizes retail pharmacies, hospital pharmacies, and narcotic treatment programs to voluntarily modify their DEA registration to become "Authorized Collectors" of unwanted controlled substances from ultimate users (patients and their families).

Operational Rules for Collection Receptacles (Kiosks)

• Physical Security: Collection kiosks must be securely locked, substantially constructed outer containers permanently bolted to the floor or a structural wall, located inside the physical pharmacy in the immediate, unobstructed view of pharmacy staff.
• Inner Liner Specifications: The kiosk must contain a removable, tamper-evident, tear-resistant, serialized inner liner that is completely opaque so the contents cannot be viewed from the outside.
• Liner Removal Protocol: Removing and installing kiosk inner liners must be conducted by two authorized pharmacy employees (pharmacists or designated staff). The inner liner must be sealed immediately upon removal without opening, examining, or sorting the contents.
• Strict Prohibition Against Staff Inspection: Pharmacy personnel are strictly prohibited by law from touching, handling, counting, inventorying, or sorting patient medications deposited into collection receptacles.
• Disposal of Sealed Liners: Sealed liners are weighed, logged, stored in the pharmacy's secure CDS safe, and transferred to a registered reverse distributor for destruction via DEA Form 41.

Mail-Back Programs

Authorized collectors may also distribute specialized, prepaid, tamper-evident, non-descript mail-back packages to patients, which are shipped directly by the patient to an authorized reverse distributor destruction facility.