[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25272]
[[Page Unknown]]
[Federal Register: October 13, 1994]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 94-3]
The Medicine Shoppe Denial of Application
On September 16, 1993, the Deputy Assistant Administrator, Office
of Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to The Medicine Shoppe (Respondent), of Newnan,
Georgia, proposing to deny its application for a DEA Certificate of
Registration as a retail pharmacy. The Order to Show Cause alleged that
Respondent's registration would be inconsistent with the public
interest as that term is used in 21 U.S.C. 823(f). Specifically, the
Order to Show Cause alleged that: Vincent Ehule (Mr. Ehule) was the
majority stockholder and president of Respondent's predecessor
pharmacy, Real Vitality, Inc., d/b/a All In One Stop Pharmacy (All In
One Stop Pharmacy); Yvonne Ehule, Mr. Ehule's wife was the minority
stockholder of All In One Stop Pharmacy; in 1992, DEA commenced an
investigation of All In One Stop Pharmacy, including an audit for the
period September 1990 to September 1992, which revealed substantial
shortages of Schedule III and IV controlled substances; the
investigation also revealed that Mr. Ehule had no initial inventory and
that he dispensed large quantities of controlled substances pursuant to
prescriptions which he knew, or should have known, were fraudulent; by
letter dated November 11, 1992, Mr. Ehule notified DEA that All In One
Stop Pharmacy changed its location to 97 Temple Avenue, Newnan,
Georgia, and was renamed The Medicine Shoppe (Respondent); in this same
letter Mr. Ehule requested a transfer of his registration under the
same corporate ownership, i.e. Real Vitality, Inc.; in response to this
letter, DEA indicated that it would initiate proceedings to deny the
modification and revoke All In One Stop Pharmacy's DEA registration;
and subsequently DEA received an application for registration from
Yvonne Ehule on behalf of Respondent, dated July 30, 1993.
The Order to Show Cause was sent to Respondent by registered mail.
Respondent timely requested a hearing. After the Government filed its
Prehearing Statement, Respondent waived the hearing but requested that
Respondent's statements in its request for a hearing be considered in
rendering a final decision regarding its application for a new
registration. Based upon 1301.54(c), Respondent is deemed to have
waived its opportunity for a hearing. Accordingly, the Deputy
Administrator now enters his final order in this matter without a
hearing and based upon the investigative file and the material
submitted in Respondent's request for hearing. 21 CFR 1301.57.
Respondent's predecessor, Real Vitality, Inc., d/b/a All In One
Stop Pharmacy, possessed DEA Certificate of Registration, BR2400339. In
May of 1992, an investigation of All In One Stop Pharmacy commenced
when DEA investigators obtained information from informants that Mr.
Ehule, the majority owner and the head pharmacist of All In One Stop
Pharmacy, dispensed controlled substances to customers without a valid
prescription and that Mr. Ehule dispensed controlled substances in
excess of what was legitimately prescribed. As a result, DEA
investigators executed an administrative inspection warrant at All In
One Stop Pharmacy on September 18, 1992. The inspection revealed that
All In One Stop Pharmacy had no initial or biennial controlled
substance inventories.
In addition, a review of the controlled substance prescriptions at
All In One Stop Pharmacy revealed that 12 prescriptions were not dated;
11 had no patient address indicated; 15 had no practitioner's
signature; 88 failed to record the practitioner's address; 37 did not
have DEA registrations numbers; 78 Schedule III and IV controlled
substance prescriptions were interspersed among non-controlled
prescriptions and were not stamped with letter ``C''; 19 original
prescriptions did indicate the date of dispensing; 6 refills were also
not dated dispensed; 66 prescriptions had no initials of the dispensing
pharmacist; 137 refills were not initialed by the dispensing
pharmacist; one prescription for a Schedule III controlled substance
had an annotation that it had been refilled eleven times and four of
those refills were for 100 dosage units more than authorized by the
original prescription; and three other prescriptions were filled more
than five times within a six month period.
An accountability audit of All In One Stop Pharmacy's controlled
substances for the period of August 27, 1990 through September 18,
1992, was conducted. The audit revealed shortages of controlled
substances including approximately: 6,500 dosage units of Schedule II
controlled substances; 2,450 dosage units of Schedule IV controlled
substances; and 27 ounces of Schedule III liquid form controlled
substances.
During the inspection, Mr. Ehule explained to the investigators
that controlled substance invoices were interspersed with non-
controlled substance purchases and that he did not believe he had all
the controlled substance invoices for the last two years. The DEA
investigators had to assume a zero beginning inventory because Mr.
Ehule did not have a current biennial inventory. In light of the zero
beginning inventory and the fact that All In One Stop Pharmacy did not
have records of all purchases of controlled substances during the audit
period, the shortages, in all likelihood, were understated.
After conducting the audit, DEA investigators interviewed over 30
practitioners whose names appeared on the 172 prescriptions removed
from All In One Stop Pharmacy during the administrative inspection.
Based upon these interviews, the investigators found that only 55 of
these controlled substance prescriptions were authorized. Many
prescriptions had been refilled without any authorization and had been
refilled in excess of what was authorized. In some cases the
prescriptions were filled with a higher strength of the controlled
substance than originally prescribed. Other prescriptions were filled
with completely different controlled substances than what were
authorized on the prescriptions.
Many of the physicians and dentists, who were interviewed,
indicated they never saw the patients in question. Many others
indicated that they never saw the patient on the day in question and in
some cases the practitioner had not seen the patient for over a year.
In many instances, the practitioners were able to identify the
signatures on the prescriptions as obvious forgeries. A number of the
prescriptions indicated DEA registration numbers that were not assigned
to the practitioner who ostensibly signed them.
Prior to the audit, a person acting in an undercover capacity
presented a controlled substance prescription to Mr. Ehule. This
prescription, which was one of the prescriptions recovered during the
administrative inspection, was filled by Mr. Ehule, despite the fact
that the practitioner's name and DEA number were fictitious.
At the time of the audit, Mr. Ehule indicated to the investigators
that he was planning on closing All In One Stop Pharmacy which was
incorporated under Real Vitality, Inc. Mr. Ehule owned 60% of Real
Vitality, Inc. stock and he operated the pharmacy. Mrs. Ehule owned 40%
of the stock and she operated the other part of the store, which
consisted of food and other convenience items.
On November 11, 1992, Mr. Ehule wrote DEA requesting that the
Certificate of Registration issued to Real Vitality, Inc., (d/b/a All
In One Stop Pharmacy) be transferred to The Medicine Shoppe
(Respondent), 97 Temple Avenue, Newnan, Georgia. The corporate owner,
Real Vitality, Inc., in which Mr. Ehule was the majority stockholder,
remained the same. In response to this request, DEA notified Mr. Ehule
that it planned to initiate proceedings to revoke his current DEA
number and to deny the request for modification. Since Mr. Ehule
discontinued business at his original location, All In One Stop
Pharmacy, the DEA registration for that location terminated pursuant to
21 CFR 1301.62.
Shortly thereafter, DEA learned that in April 1993, Real Vitality,
Inc. sold Respondent to Mr. Ehule's wife, Yvonne Ehule. DEA then
received a new application for registration of Respondent, which was
operating as The Medicine Shoppe and owned by Real Vitality, Inc. It
was signed by Mrs. Ehule and dated July 30, 1993.
Subsequently, DEA investigators determined that Mr. Ehule continued
to work as a pharmacist at Respondent. The Georgia State Board of
Pharmacy granted a state controlled substance license to Respondent,
based upon the transfer of ownership of Respondent from Mr. Ehule to
Mrs. Ehule. On three occasions, between August 1993 and October 1993,
Mr. Ehule accepted call-in prescriptions for controlled substances even
though Respondent was not authorized by DEA to handle controlled
substances. Mr. Ehule then arranged to have another pharmacy fill these
prescriptions.
DEA investigators also uncovered various documents relating to
Respondent which revealed that Mr. Ehule has a significant interest in
Respondent. Respondent is a franchise of the Medicine Shoppe
International, Inc. (franchisor). On August 25, 1992, Mr. Ehule, as
President of Real Vitality, Inc., signed a franchise contract with the
franchisor. Both Mr. and Mrs. Ehule are listed as guarantors of this
contract. The credit and security agreement between Real Vitality, Inc.
and the franchisor, dated October 5, 1992, designates Mr. Ehule, as
well as Mrs. Ehule, as the shareholders of Real Vitality, Inc. and all
licensing fees are designated to be drawn from Mr. and Mrs. Ehule's
joint checking account. On April 6, 1993, Real Vitality, Inc. assigned
its interest in the franchising agreement to Mrs. Ehule. The
assignment, however, provides that Mr. Ehule is not released from the
terms and conditions of the agreement.
Mr. Ehule is listed as the sole lessee for the property of
Respondent. The period of the lease agreement is effective from October
12, 1992 through September 30, 2002. By letter, dated October 26, 1993,
the president of the leasing company stated that Mr. Ehule had not
notified the company of any change of ownership of Respondent.
Additionally, any change by way of sublease would not release Mr. Ehule
from the terms and conditions of the lease.
The franchisor also agreed to a financing loan for Respondent and
secured such loan using Mr. and Mrs. Ehule's personal residence as well
as the pharmacy, All In One Stop Pharmacy, that Mr. Ehule closed before
opening Respondent in Newnan, Georgia. Again, Mr. Ehule, as well as
Mrs. Ehule, signed this agreement and the security deed.
In evaluating whether Respondent's registration by the Drug
Enforcement Administration would be inconsistent with the public
interest, the Deputy Administrator considers the factors enumerated in
21 U.S.C. 823(f). They are as follows:
(1) The recommendation of the appropriate State licensing board or
professional disciplinary authority.
(2) The applicant's experience in dispensing, or conducting
research with respect to controlled substances.
(3) The applicant's conviction record under Federal or State laws
relating to the manufacture, distribution, or dispensing of controlled
substances.
(4) Compliance with applicable State, Federal, or local laws
relating to controlled substances.
(5) Such other conduct which may threaten the public health and
safety.
In determining whether a registration would be inconsistent with
the public interest, the Deputy Administrator is not required to make
findings with respect to each of the factors listed above. Instead, he
has the discretion to give each factor the weight he deems appropriate,
depending upon the facts and circumstances of each case. See David E.
Trawick, D.D.S., Docket No. 88-69, 53 FR 5326 (1988).
Factor two applies because Mr. Ehule's experience in dispensing
controlled substances was dismal. Based upon the practitioner
interviews, it was established that there were 117 unauthorized
controlled substance prescriptions filled between August 1990 and
September 1992. Mr. Ehule's pattern of dispensing without making any
bona fide attempts to verify prescriptions was confirmed when an
undercover person presented Mr. Ehule with a controlled substance
prescription that had entirely fictitious information on it. The
unauthorized dispensing was not limited to one specific problem but
included diverse violations such as dispensing unauthorized refills,
increasing the dosage units authorized, increasing the strength of the
controlled substance from what was authorized and even dispensing
different types of controlled substances in addition to what was
authorized. One prescription for a Schedule III controlled substance
had an annotation that it had been refilled eleven times and four of
those refills were for 100 dosage units more than authorized by the
original prescription.
Factor four is applicable based upon the numerous violations of
controlled substance regulations by Mr. Ehule while operating the All
In One Stop Pharmacy between August 1990 and September 1992. He filled
163 controlled substance prescriptions which did not include the date,
patient information and practitioner information (including
prescriptions which did not even have a DEA number on them) in
violation of 21 CFR 1306.05(a). Eighty-five initial prescriptions
either did not have the initials of the dispensing pharmacist or failed
to denote a date when the controlled substances were dispensed in
violation of 21 CFR 1304.24(d). Six refill prescriptions did not have
the date of refill and 137 refills did not have the initials of the
dispensing pharmacist in violation of 21 CFR 1306.22(a). Seventy-eight
Schedule III and IV controlled substance prescriptions were
interspersed with non-controlled substance prescriptions and did not
contain the letter ``C'' in the right hand corner. Thus these
prescriptions were not readily retrievable as required under 21 U.S.C.
827(b) and 21 CFR 1304.04(h)(2). Four controlled substance
prescriptions were refilled more than five times within a six month
period in violation of 21 CFR 1306.22(a). In one case, the prescription
was refilled eleven times. The audit revealed over 7,500 shortages of
various Schedule III and IV controlled substances.
Under these circumstances, there is no question that had Mr. Ehule
simply applied for a transfer of the DEA Certificate of Registration
from All In One Stop Pharmacy to Respondent (The Medicine Shoppe) such
transfer would have been denied and All In One Stop Pharmacy's
registration revoked. The issue to be addressed, then, is the effect of
the transfer of Real Vitality, Inc.,
d/b/a Respondent to Mrs. Ehule. Given the circumstances of this
transfer, the Deputy Administrator concludes that the transfer does not
protect the public interest and thus, the application must be denied.
The transfer of Respondent to Mr. Ehule's wife occurred shortly
after Mr. Ehule was informed that DEA would oppose the modification and
seek revocation of All In One Stop Pharmacy's DEA registration. In
addition, Mr. Ehule continued to operate as Respondent's pharmacist.
Moreover, on three occasions, Mr. Ehule accepted controlled substance
prescriptions on behalf of Respondent although he had no authority to
do since Respondent was not authorized to handle controlled substances.
In its request for a hearing, Respondent argues that Mrs. Ehule is
the current owner and sole assignee of Respondent and therefore the
application should be granted. Yet Mr. Ehule retains a substantial
financial interest in Respondent. He is liable as a guarantor under the
franchising agreement and lease. Respondent also obtained a loan from
the franchisor; the collateral for this loan was the personal residence
of Mr. and Mrs. Ehule and the corporation of Respondent, Real Vitality
Inc., in which Mr. Ehule was the majority stockholder.
Respondent offers the assurance in its request for a hearing that
Mr. Ehule will not be involved in the ownership of Respondent. Given
Mr. Ehule's substantial financial stake in Respondent, this assurance
cannot be realized.
Respondent also maintains that Mrs. Ehule has not been convicted of
any offenses relating to controlled substances and that any errors
attributable to Mr. Ehule should not reflect on her fitness to operate
the Respondent pharmacy. While Respondent's former assertion may be
true, it is not relevant. The relevant issue is whether Mrs. Ehule will
operate Respondent independently of Mr. Ehule. In this respect Mrs.
Ehule has demonstrated that such a scenario is very unlikely. Under
similar circumstances, DEA has denied an application based upon the
sale of a retail pharmacy to a spouse. Cumberland Prescription Center,
Docket No. 86-91, 52 FR 37224 (1987).
Mrs. Ehule owned 40% of All In One Stop Pharmacy and operated the
non-pharmacy portion while Mr. Ehule was abusing the pharmacy's
controlled substances privileges. Mrs. Ehule exercised no control
whatsoever. Mr. Ehule continued to operate as a pharmacist of
Respondent (and represented that he had legal authority to accept
controlled substance prescriptions when he did not) even after Mrs.
Ehule became owner of Respondent. Nothing in the present record gives
the Deputy Administrator any confidence that Mrs. Ehule could or would
prevent Mr. Ehule from operating the Respondent pharmacy, her belated
assertions in the request for a hearing notwithstanding. Mrs. Ehule's
promises are even more suspect in the face of the fact that the
transfer of ownership to her occurred shortly after Respondent was
informed by DEA that modification of his registration would be opposed.
Under these circumstances, there is no assurance whatsoever that the
public interest would be protected if the present application were
granted.
No evidence of explanation or mitigating circumstances has been
offered by Respondent except the assertions and objections in its
request for a hearing which in no way refute the numerous controlled
substance violations that occurred. The public interest cannot be
protected by granting Respondent a registration in light of Mr. Ehule's
involvement with Respondent. Therefore, the Deputy Administrator
concludes that Respondent's application for a DEA Certification
Registration must be denied.
Accordingly, the Deputy Administrator of the Drug Enforcement
Administration, pursuant to the authority vested in him by 21 U.S.C.
823 and 824 and 28 CFR 0.100(b) and 0.104 (59 FR 23637), hereby orders
that the application executed by The Medicine Shoppe, on July 30, 1993,
for a DEA Certificate of Registration as a retail pharmacy, be, and it
hereby is, denied. This order is effective October 13, 1994.
Dated: October 5, 1994.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 94-25272 Filed 10-12-94; 8:45 am]
BILLING CODE 4410-09-M
