Case Law: Corresponding Responsibility, Red Flags, and Independent Pharmacy in Federal Court

In January 2025, the DEA Administrator revoked the controlled substance registration of Neumann’s Pharmacy, located in Louisiana.[1] DEA charged that the pharmacy failed its “corresponding responsibility” that requires the pharmacist to ensure every controlled substance prescription is valid, including being “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice”.[2] Furthermore, any “person knowingly filling” a prescription not issued in the usual course of practice of the prescriber shall be subject to penalties under the federal Controlled Substances Act.

The DEA determined that Neumann’s violated federal and state law when it repeatedly dispensed controlled substance prescriptions without properly addressing and resolving clear “red flags” of abuse and diversion, including dangerous drug cocktails with drug-drug interactions, therapeutic duplication, and cash payments, as well as failing to maintain appropriate records that documented the resolution of the red flags. In making this decision, the Administrator credited testimony from the DEA’s expert witness and their interpretation of DEA regulations as well as Louisiana’s prospective drug utilization review and record keeping requirements.[3] [4]

Neumann’s Pharmacy appealed this matter to the federal Court of Appeals for the Fifth Circuit, which overturned the decision by the DEA to revoke the pharmacy’s-controlled substance registration.[5]  The court rejected the DEA’s position that it only had to prove the pharmacy failed to exercise its corresponding responsibility to ensure prescriptions were valid (issued for a legitimate medical purpose) instead of actually showing that the prescriptions were invalid (not issued for a legitimate medical purpose). Therefore, the court held that since the DEA did not prove any prescriptions were invalid, the pharmacist could not have knowingly filled invalid prescriptions. Ultimately, according to the court, the DEA “misinterpreted” and “misapplied” its own regulations and Louisiana law, requiring the case to be remanded back to the DEA.

This decision by the Fifth Circuit upends traditional reasoning by the agency involving prescriptions with “red flags” of diversion, and the basis for many revocations and substantial fines. In this case, as in previous cases, DEA had adopted a less demanding knowledge test in its reasoning: what the pharmacist knows or has reason to know. The court reasoned that the term “knowingly” meant actual intent to fill invalid prescriptions. Actual, not probable, knowledge is now required as precedent by all courts in the Fifth Circuit (Louisiana, Texas and Mississippi) in cases in which a pharmacist is charged with failing their corresponding responsibility for controlled substance prescriptions. It is not clear if this precedent will be persuasive in other federal circuits, such as the Second Circuit governing New York, or the Third Circuit governing Pennsylvania and New Jersey. Pharmacy Law will discuss this case in greater detail in an upcoming issue.

[1] 90 FR 8039
[2] 21 C.F.R. § 1306.04(a).
[3] La. Admin Code LIII-515
[4] La. Admin Code LIII-1123(L)
[5] Federal Fifth Circuit Court of Appeals, No. 25-60068

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Pharmacy Law is published as an educational service to the pharmacy community in New York State. Its sole purpose is to promote an understanding of the laws, rules, and regulations that affect the practice of pharmacy in New York. The advisory board, authors and the University at Buffalo do not hold themselves out as offering legal advice. Readers should seek counsel for specific legal questions or concerns.