[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