[Federal Register Volume 64, Number 211 (Tuesday, November 2, 1999)]
[Notices]
[Pages 59212-59214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28602]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 98-20]
City Drug Co.; Denial of Application
On February 24, 1998, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA) issued an
Order to Show Cause to City Drug Company (Respondent) of Opp, Alabama,
notifying it of an opportunity to show cause as to why DEA should not
deny its application for registration as a retail pharmacy under 21
U.S.C. 823(f), for reason that such registration would be inconsistent
with the public interest.
By letter received by DEA on March 30, 1998, Respondent requested a
hearing on the issues raised by the Order to Show Cause. Following
prehearing procedures, a hearing was held in Mobile, Alabama on October
28, 1998, before Administrative Law Judge Mary Ellen Bittner. At the
hearing, both parties called witnesses to testify and introduced
documentary evidence. After the hearing, both parties submitted
proposed findings of fact, conclusions of law, and argument. On June
30, 1999, Judge Bittner issued her Opinion and Recommended Ruling,
Findings of Fact, Conclusions of Law and Decision, recommending that
Respondent's application for a DEA Certificate of Registration be
denied. Neither party filed exceptions to Judge Bittner's opinion and
on August 10, 1999, Judge Bittner transmitted the record of these
proceedings to the Deputy Administrator.
The Deputy Administrator has considered the record in its entirety,
and pursuant to 21 CFR 1316.67, hereby issues his final order based
upon findings of fact and conclusions of law as hereinafter set forth.
The Deputy Administrator adopts, in full, the Opinion and Recommended
Ruling, Findings of Fact, Conclusions of Law and Decision of the
Administrative Law Judge. His adoption is in no manner diminished by
any recitation of facts, issues and conclusions herein, or of any
failure to mention a matter of fact or law.
The Deputy Administrator finds that Respondent is a pharmacy that
is located in Opp, Alabama. Joseph Grimes was Respondent's owner and
pharmacist in charge until November 12, 1997. Respondent previously
possessed DEA Certificate of Registration AC5430450, which was revoked,
following a hearing, by the then-Acting Deputy Administrator in a final
order dated October 7, 1997, and effective November 13, 1997. See 62 FR
53338 (October 14, 1997).
In revoking Respondent's previous DEA registration, the then-Acting
Deputy Administrator concluded that a 1992 investigation revealed that
between January 1990 and January 1992, Respondent violated 21 U.S.C.
829 and 21 CFR 1306.04 by dispensing over 25,000 dosage units of
controlled substances without a physician's authorization. The then-
Acting Deputy Administrator based this conclusion on affidavits
submitted by 11 physicians who reviewed prescriptions found at
Respondent that were attributed to them, compared these prescriptions
to their patient charts, and then swore that they had not authorized
the prescriptions. The then-Acting Deputy Administrator found
unpersuasive Respondent's argument that the physicians had forgotten to
note the issuance of the prescriptions in the patient charts, stating
that it was ``highly unlikely that eleven different physicians forgot
to note numerous prescriptions in the patient charts which accounted
for the dispensing of over 25,000 dosage units of controlled
substances.'' The then-Acting Deputy Administrator also found that the
patients' affidavits submitted by Respondent were less reliable than
the physicians' affidavits since the physicians' affidavits were
``based upon a review of [their] patient records which were prepared
and maintained during the relevant time period, whereas the patients'
affidavits [were] based upon their recollection more than six years
after the event.''
The then-Acting Deputy Administrator further concluded that
Respondent violated 21 U.S.C. 827, by failing to maintain complete and
accurate records of controlled substances, as evidenced by Respondent's
inability to account for more than 80,000 dosage units of Schedule III
and IV substances, and to explain an overage of 859 dosage units of
oxycodone 5 mg., the only Schedule II controlled substance that was
audited.
In revoking Respondent's previous DEA Certificate of Registration,
the then-Acting Deputy Administrator states that:
(Joseph) Grimes has failed to acknowledge that he and his
pharmacy have done anything improper. An unexplained shortage of
80,000 dosage units and the unauthorized dispensation of over 25,000
dosage units of controlled substances are not merely minor technical
violations. The egregious nature of the violations in this matter
demonstrate that Respondent has failed miserably in its
responsibility as a DEA registrant to protect against the diversion
of controlled substances from the legitimate chain of distribution.
Id. at 53343.
On November 12, 1997, the day before the effective date of the
revocation of Respondent's previous DEA Certificate of Registration,
Joseph Grimes executed a Bill of Sale that transferred, ``in
consideration of ten dollars and other good and valuable
consideration,'' a life estate in Respondent to Louie Grimes. Louie
Grimes is Joseph Grimes' nephew and is also a pharmacist. The ``other
good and valuable consideration'' noted in the Bill of Sale was an oral
agreement that Joseph Grimes would continue to work at Respondent two
days per week in return for $1,500 per month, and that he would also
receive rent of $1,500 per month on the building in which the pharmacy
is located. According to the attorney who drafted and notarized the
Bill of Sale, Louie Grimes may transfer his life estate in Respondent
but that the pharmacy would revert back to Joseph Grimes upon his
nephew's death.
Louie Grimes testified that when he took over operation of
Respondent he withdrew the funds from the pharmacy's bank account and
used those funds to open a new account in a different bank in
Respondent's name. The utilities and business license fees are paid
from this account, and Joseph Grimes is not authorized to sign any
business check for Respondent. However, Louie Grimes was unaware that
the utilities for the property where Respondent is located are listed
in Joseph Grimes' name.
On November 13, 1997, Louie Grimes executed the application that is
the subject of these proceedings on behalf of Repondent. On the
application, Louie Grimes answered ``No'' to a question which asked
whether ``the applicant ever surrendered or had a Federal controlled
substance registration revoked.''
[[Page 59213]]
At the hearing regarding Respondent's pending application for
registration, evidence was presented from the 1992 investigation
concerning Louie Grimes' involvement in the operation of Respondent at
that time. During the execution of the search warrant at Respondent on
March 2, 1992, Joseph Grimes indicated that Louie Grimes worked part-
time at Respondent as a pharmacist. According to Louie Grimes, he
worked three days a week and Joseph Grimes worked three days a week
during the relevant time period. As discussed above prescription
records were seized from Respondent and DEA investigations generated a
computer report with information from these prescriptions, including
the initials of the dispensing pharmacist. This information was later
shown to eleven physicians who allegedly authorized a number of the
prescriptions. Each of these physicians, after reviewing their patient
charts, swore in written declarations that they did not prescribe most
of the controlled substances attributed to them. The declarations of
two of the physicians indicated that Louie Grimes dispensed 870 dosage
units of controlled substances that they had not authorized. In
addition, the declarations revealed eight instances, when Louie Grimes
refilled controlled substance prescriptions more than five times or
more than six months after issuance of the original prescription in
violation of 21 U.S.C. 829(b), for a total of 550 dosage units.
Louie Grimes testified at the hearing that he never dispensed a
controlled substance without a physician's authorization and that he
never refilled a controlled substance prescription more than five times
or after six months from its being issued. In an effort to refute the
physicians' declarations, Louie Grimes argued that nurses frequently
telephone in prescriptions for physicians to pharmacies and in these
instinces probably failed to note them in the patient charts. This
explanation was rejected by the then-Acting Deputy Administrator in
revoking Respondent's previous DEA registration as unlikely given the
volume of authorized dispensation.
Louie Grimes also argued that another possible explanation for his
initials appearing next to the unauthorized prescriptions is that
Respondent uses (and used during the relevant time period) a pharmacy
software program to track prescriptions that requires the pharmacist on
duty to enter his initials into the computer when he begins work.
According to Louie Grimes, these initials remain in the system until
the user exits the program or a pharmacist affirmatively changes the
initials. Therefore if two pharmacists were on duty at the same time,
one could not be absolutely sure which pharmacist filled a particular
prescription.
However, the Government entered into evidence a ``Daily Transaction
Report'' created by Respondent for May 22, 1991, which lists orginal
prescriptions in the order that they were dispensed at the pharmacy and
the initials of the pharmacist that allegedly filled each prescription.
This report indicates that Louie Grimes dispensed ten original
prescriptions, Joseph Grimes then dispensed three original
prescriptions, Louie Grimes then dispensed another four original
prescriptions, and finally Joseph Grimes dispensed another ten original
prescriptions.
Louie Grimes testified at the hearing that although the Alabama
State Board of Pharmacy required pharmacies to maintain a Daily
Transaction Report on which the dispensing pharmacist for each
prescription is identified by his initials, he could not be completely
sure which pharmacist dispensed controlled substances at any given
time. However, he also testified that ``we could pretty much go by
initials,'' and that he believed that during the relevant time period,
Respondent complied with 21 CFR 1304.24 and 1306.22, which required a
pharmacy to maintain certain information, including the initials of the
pharmacist who dispenses or refills a controlled prescription.
After receiving Respondent's November 12, 1997 application for
registration, DEA investigated whether ownership of Respondent had in
fact been transferred. Louie Grimes produced documents pertaining to
the transfer of ownership and a copy of his State pharmacy permit. As
of November 13, 1997, Respondent has not been authorized to dispense
controlled substances. Louie Grimes works as the pharmacist at
Respondent four days per week and Joseph Grimes is the pharmacist two
days per week. However, should Respondent become registered with DEA,
Respondent would need a waiver of 21 CFR 1306.04(a) to continue to
employ Joseph Grimes with access to controlled substances, in light of
the earlier revocation of Respondent's DEA Certificate of Registration.
Louie Grimes testified at the hearing in this matter that he has
taken certain measures to ensure that no prescription drugs are
dispensed without a prescription authorized by a physician.
Specifically, he testified that for oral prescriptions, he notes the
person who called in the prescription and the time of the call.
Further, Respondent no longer uses doctors' prescription pads to reduce
oral prescriptions to writing.
A DEA investigator testified at the hearing that she had not
received any complaints regarding Louie Grimes from physicians or the
general public. Louie Grimes testified that he has never been charged
with a crime and has never had any action taken against him by DEA or
the State of Alabama. He further testified that he has never received
any complaints from customers or anyone else regarding his conduct as a
pharmacist.
Pursuant to 21 U.S.C. 823(f), the Deputy Administrator may deny an
application for a DEA Certificate of Registration if he determines that
the granting of a registration would be inconsistent with the public
interest. Section 823(f) requires that the following factors be
considered in determining the public interest:
(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. These factors are to be considered in the disjunctive; the
Deputy Administrator may rely on any one or a combination of factors
and may give each factor the weight he deems appropriate in determining
whether a registration should be revoked or an application for
registration denied. See Henry J. Schwartz, Jr., M.D., 54 FR 16422
(1989).
Regarding factor one, it is undisputed that Respondent is currently
licensed to handle controlled substances in Alabama. But as Judge
Bittner noted, ``inasmuch as State licensure is a necessary but not
sufficient condition for a DEA registration, * * * this factor is not
determinative.''
Factors two and four, Respondent's experience in the dispensing of
controlled substances and its compliance with applicable laws, are
clearly relevant in this matter in determining the public interest.
Respondent's previous DEA registration was revoked based upon the then-
Acting Deputy Administrator's findings that Respondent could not
account for over 80,000 dosage units of controlled substances and that
the Respondent had
[[Page 59214]]
dispensed more than 25,000 dosage units of controlled substances
without a physician's authorization. The then-Acting Deputy
Administrator did not find Respondent's explanation persuasive
regarding the unauthorized dispensing of controlled substances. The
then-Acting Deputy Administrator's findings regarding the previous
revocation are res judicata for purposes of this proceeding. See
Stanley Alan Azen, M.D., 61 FR 57893 (1996), Liberty Discount Drugs,
Inc., 57 FR 2788 (1992).
Louie Grimes is now the owner of Respondent. However, Louis Grimes
was also a pharmacist at Respondent, working three days a week, during
1990 to 1992, when the above violations occurred. Louie Grimes insists
that he never dispensed a controlled substance in violation of Federal
laws and regulations. But, the Government presented evidence that Louie
Grimes was responsible for the unlawful dispensation of approximately
1,400 dosage units of controlled substances.
Louie Grimes' contention that the physicians were mistaken and that
they had in fact authorized the prescriptions in question was rejected
by the then-Acting Deputy Administrator, and his conclusions are
binding for purposes of this proceeding.
Louie Grimes' other contention that his initials appeared next to
unauthorized dispensations because changes were not made in the
computer is also rejected by the Deputy Administrator. The Daily
Transaction Report generated by Respondent for May 22, 1991, shows
that, at least on that day, the pharmacist's initials were changed
throughout the day. Further, Louie Grimes' own testimony at the hearing
was contradictory. On the one hand, he maintained that Respondent's
computer program made it impossible to be certain who dispensed a
controlled substance prescription when two pharmacists were on duty at
the same time. But, he also testified that he was ``a hundred percent''
certain that he was always in compliance with State and Federal laws
requiring that the dispensing pharmacist's initials appear next to each
dispensation in the pharmacy's records.
As Judge Bittner noted, this explanation was first raised at that
hearing. Judge Bittner concluded that ``Louie Grimes' testimony
regarding Respondent's computer program was a last-ditch attempt at
avoiding responsibility for his actions during the relevant time period
and that Louie Grimes did in fact on numerous occasions dispense
controlled substances without a physician's authorization, or refill a
prescription more than five times or after six months from its original
issuance.''
Regarding factor three, there is no evidence that Respondent or its
owner or employees have ever been convicted under State of Federal laws
relating to the manufacture, distribution, or dispensing of controlled
substances.
As to factor five, the Government contends that the legitimacy of
the transfer of Respondent from Joseph Grimes to Louie Grimes and also
the role that Joseph Grimes will play in Respondent's future management
should be considered. ``The [Deputy] Administrator has long held that
applications for registration should be denied where there is a
likelihood that a transfer of ownership or control of business is
actually an attempt to contravene the effects of a revocation.''
Hilltop Pharmacy, 53 FR 35936 (1988) (citing Darrow Drug, Inc., 49 FR
39246 (1984) ). Similarly, the Deputy Administrator may look to who
exerts influence over the registrant; sometimes the bonds linking the
former owner to the new owner are too close to ensure that the former
owner will have no influence over the operation of the pharmacy. See
Monk's Pharmacy, 52 FR 8988 (1987), Carriage Apothecary, 52 FR 27599
(1987).
Judge Bittner did not make findings regarding the legitimacy of the
transfer of ownership since the Government did not pursue this issue
but instead focused on the immediate and potential future effect of the
transfer. The then-Acting Deputy Administrator found that during the
time that Joseph Grimes was Respondent's owner and managing pharmacist,
Respondent ``failed miserably in its responsibility as a DEA
registrant.'' Joseph Grimes continues to receive employment, salary and
rent from Respondent. In addition, he holds a reversionary interest in
Respondent. Therefore the Deputy Administrator concludes that Joseph
Grimes continues to derive a benefit from Respondent's operation. The
Deputy Administrator agrees with judge Bittner that `'Joseph Grimes'
continued interest in Respondent, considered in conjunction with the
Grimes' familial relationship and the nominal consideration for the
life estate, lead * * * to the conclusion that the bonds linking Joseph
Grimes with Louie Grimes and Respondent are too close to ensure that
Joseph Grimes will have no influence in the operation of Respondent.''
The Deputy Administrator agrees with Judge Bittner's conclusion
that Respondent's registration would be inconsistent with the public
interest. From 1990 to 1992, Respondent could not account for over
80,000 dosage units of controlled substances and dispensed more than
25,000 dosage units of controlled substances without a physician's
authorization. During that time, Louie Grimes worked three days a week
as a pharmacist at Respondent and some of the unauthorized
dispensations are attributable to Louie Grimes. Yet Louie Grimes
continues to lay blame elsewhere, with the physicians or the computer
program, rather than accept responsibility for his actions. In
addition, Respondent did not present any persuasive evidence of
meaningful procedural changes since 1992 that would ensure that it will
not again fail to account for controlled substances or dispense
controlled substances without authorization. Further, the Deputy
Administrator is troubled by Joseph Grimes' continued involvement with
Respondent and his reversionary interest in Respondent.
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, hereby orders that the
application for registration, executed by Respondent, be, and it hereby
is , denied. This order is effective November 2, 1999.
Dated: October 25, 1999.
Donnie R. Marshall,
Deputy Administrator.
[FR Doc. 99-28602 Filed 11-1-99; 8:45 am]
BILLING CODE 4410-09-M
