Last month, the Drug Enforcement Administration abruptly revoked the narcotics license held by the distributor Cardinal Health, preventing that firm from shipping prescription pain drugs to thousands of Florida pharmacies and hospitals. It's the latest tactic in the DEA's struggle to stem the illicit use of prescription painkillers like OxyContin and Vicodin.

The agency is going after professed "chokepoints" in the drug-supply system, including pharmacies and, now, drug distributors.

This approach is burdening a lot of innocent patients, including those with legitimate prescriptions who may be profiled at the pharmacy counter and turned away. Others have in effect lost access to care, because their doctors became too wary to prescribe what their patients need. But the DEA tactics aren't stemming the illegal activity.

"What can be done? We should free the DEA from the dual mandate to be both regulator and cop." -- Scott Gottlieb

In the Cardinal instance, the agency was focused on four shady pharmacies served by that distributor's warehouse. Each pharmacy showed unusually large sales of narcotics. The DEA's tough approach has a twin goal—to force drug distributors like Cardinal to more closely police the pharmacies they supply and to limit the total amount of narcotics in the system. The agency has been prosecuting its war on street drugs like cocaine and heroin by going after the source—cracking cartels and uprooting supply rings. When it comes to prescription narcotics, its is increasingly turning to these same strategies.

Only Cardinal isn't a Columbian drug ring. Its CEO isn't Pablo Escobar. Like other large distributors, Cardinal has invested heavily in systems to track unusual narcotics-sales patterns. It has hired former DEA agents to staff its oversight group and routinely reports irregular transactions back to DEA. Cardinal is fighting the suspension.

But making the cases directly against unscrupulous pharmacies is hard for the DEA. It can take years to penetrate a suspicious medical practice or pharmacy. The agency calculates that if it can coax the commercial distributors to take actions to cut off suspect establishments, it will not have to fuss with impediments like an obligation to provide procedural due process and the need to build a legally sustainable case.

The DEA's strategy is having its intended effect. Drug distributors have grown wary about whom they sell to. Cardinal has suspended sales to hundreds of pharmacies that it deems "suspicious," even those in good standing that retain their DEA license to sell narcotics. It's just too bad if a pharmacy is located close to a hospital or serves a nursing home, where it might see a higher volume of scripts for pain pills. Pharmacies, in turn, are closely scrutinizing which prescriptions they will fill, making things like baggy pants and a tattoo a liability if you need medicine.

While the DEA's tactics are imprudent, their underlying concerns aren't misplaced. According to government data, 12 million people took narcotics non-medically in 2010, thus using the drugs illicitly.

The problem is, the DEA may be the wrong enforcer here. It's very difficult to separate appropriate use from illicit use with law-enforcement tools alone because much of the illegal diversion starts in the same places where legitimate prescriptions are also satisfied—with a doctor who prescribes too casually, refilling obediently when patients "lose" their prescription; or the pharmacy that knowingly fills suspicious refills from the same patients. When authorities respond with law enforcement methods, important medical distinctions get lost.

There's a difference, for example, between being habituated to painkillers, and being an abuser. So the volume of prescriptions alone can be a poor indicator for illegal activity. Many patients with legitimate medical problems will develop physical dependence on narcotics and require a lot of medicine to manage their pain. They can be weaned off the drugs slowly. But pharmacies located near medical buildings like hospitals can see more of these patients.

What can be done? We should free the DEA from the dual mandate to be both regulator and cop. Public-health agencies inside the Department of Health and Human Services (HHS) would have more expertise in making the distinctions between illicit diversion and the legitimate practice of medicine. Regulating these activities requires close knowledge of how medical-practice decisions are made, as well as the ability to collaborate with provider groups to enlist them in achieving regulatory goals. Some of the DEA's resources and mission could be statutorily given to HHS.

A good line of demarcation would be at the point of care. Doctors prescribing narcotics, drug distributors and pharmacies could come under the supervision of HHS. The department would also take responsibility for apportioning active ingredients to manufacturers of narcotics, educating doctors on proper prescribing, and investigating pharmacies and providers who appear to have gone rogue.

HHS would need authority to bring civil and criminal cases against bad practitioners. Yet this is consistent with the impending, if long overdue, expansion of HHS's oversight of Medicare and Medicaid fraud. It combines many of the same methods, including sophisticated clinical data mining and provider-claims analysis. These competencies are beyond the reach of an already overburdened DEA.

The drug enforcement police of the DEA should still deal with the illegal narcotics out on the street. The agency's bold activities against criminal street enterprises will remain a cornerstone of the war on diversion. Health industry experts at HHS can then take on the complex task of separating the good medical actors from the bad, and finding the providers and suppliers who are breaking the law.

Dr. Gottlieb is a physician and fellow at AEI. He was deputy commissioner of the Food and Drug Administration from 2005-2007. He consults with and invests in health-care companies.