[Federal Register Volume 61, Number 28 (Friday, February 9, 1996)]
[Notices]
[Pages 5031-5032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2766]



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DEPARTMENT OF JUSTICE
Drug Enforcement Administration


The Drugstore; Denial of Application

    On June 22, 1994, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to The Drugstore, (Respondent) of Oak Grove, 
Louisiana, proposing to deny its application, executed on January 23, 
1993, for registration as a retail pharmacy under 21 U.S.C. 823(f), as 
being inconsistent with the public interest. Specifically, the Order to 
Show Cause alleged inter alia that David Nagem, the owner of the 
Respondent company (Owner), (1) dispensed 11,850 various narcotic and 
non-narcotic controlled substances without a valid physician's 
authorization; (2) pled nolo contendere to charges brought by the 
Louisiana State Board of Pharmacy (Louisiana Board) that he had 
dispensed controlled substances without valid authorization and that he 
was responsible for controlled substances shortages at the pharmacy 
where he was employed; and (3) that he pled guilty to and was convicted 
of two counts of illegal distribution of controlled substances on June 
5, 1992. The order also notified the Respondent that, should no request 
for a hearing be filed within 30 days, the hearing right will be deemed 
waived. The DEA received a receipt from the United States Postal 
Service showing that the order was delivered, and the receipt was 
signed and dated June 27, 1994. However, no reply was received by the 
DEA to the order.
    Therefore, the Deputy Administrator concludes that the Respondent 
is deemed to have waived its hearing right. After considering the 
investigative file, the Deputy Administrator now enters his final order 
in this matter without a hearing pursuant to 21 CFR 1301.54(e) and 
1301.57.
    The Deputy Administrator finds that the Owner submitted a DEA 
application for registration as a retail pharmacy dated January 23, 
1993, in the name of The Drugstore. In response to a question on this 
application, the Owner wrote that his Louisiana pharmacy license ``was 
taken from Jan[uary] 25, 1992[,] to July 25, 1992[,] for giving out 
medicine (prescription) without proof of legal prescription from a 
physician. David's [Louisiana] license was taken for 6 months, fine was 
given & paid, and probation during [that] time.'' No other adverse 
information or explanations were contained on the application.
    DEA investigators researched the Owner's record in response to this 
application, finding that the West Carroll Parish Sheriff's Office 
(Sheriff) had conducted an investigation of the Owner after receiving 
information from a confidential source that he was dispensing 
controlled substances without prescriptions. The Sheriff found that, 
while the Owner was employed at the West Carroll Memorial Hospital 
Pharmacy, Oak Grove, Louisiana, he had dispensed, inter alia, Tylenol 
No. 3 and No. 4, and Darvocet without prescriptions authorized by a 
physician, to two individuals over a timeframe spanning January 1990 
through January 1992. Also, between September 1990 through February 
1992, he had dispensed controlled and non-controlled substances, 
including Xanax, Restoril, and Tylenol No. 4, to six other individuals 
without a physician-authorized prescription. Darvocet is a brand name 
for a substance containing propoxyphene napsylate, a Schedule IV 
controlled substance, Tylenol No. 3 and No. 4 are Schedule III 
controlled substances, Restoril is the brand name for a substance 
containing temazepam, a Schedule IV controlled substance, and Xanax is 
a brand name for a substance containing alprazolam, a Schedule IV 
controlled substance. As a result of this conduct, the Louisiana Board 
charged the Owner with five counts of violating Louisiana law by 
engaging in conduct which endangered the public health, by dispensing 
unauthorized Schedule III and IV controlled substances, and by 
violating audit shortage provisions of State law. On April 22, 1992, a 
hearing was held, the Owner entered a nolo contendere plea, and the 
Board ordered that the Owner's pharmacist's license be suspended for 60 
months, actively for 3 months, and on probation for 57 months.
    On June 8, 1992, the Owner entered a guilty plea in the Fifth 
Judicial District Court, Parish of West Carroll, Oak Grove, Louisiana, 
to two counts of unlawful distribution of drugs in violation of 
Louisiana law. The court accepted his plea and sentenced him to pay a 
total of $7,500.00 in fines. The Owner did not disclose this conviction 
on his DEA application.
    On February 12, 1993, the Louisiana Board voided the Owner's 
application for a pharmacy permit for the Drugstore, concluding that 
the application was no longer active.
    Pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Deputy 
Administrator may deny an application if he determines that the DEA 
registration would be inconsistent with the public interest. Section 
823(f) requires that the following factors be considered:
    (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 or 
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. 

[[Page 5032]]
Schwarz, Jr., M.D., Docket No. 88-42, 54 FR 16422 (1989).
    In this case, all five factors are relevant in determining whether 
the Respondent's application should be denied as being inconsistent 
with the public interest. As to factor one, ``recommendation of the 
appropriate State licensing board,'' the Louisiana Board voided the 
Owner's pharmacy application for The Drugstore as being inactive. 
Further, the Board also suspended and placed on probation the Owner's 
pharmacy license as a result of finding that the Owner's conduct in 
1990 through 1992 violated state controlled substances laws.
    As to factor two, the Owner's ``experience in dispensing * * * 
controlled substances,'' factor three, the Owner's ``conviction 
record,'' and factor four, the Owner's ``[c]ompliance with applicable 
State, Federal, or local laws relating to controlled substances,'' the 
Owner admitted that he had dispensed controlled and non-controlled 
substances without prescriptions on numerous occasions in 1990 through 
1992. He was convicted in June of 1992 of unlawful distribution of 
drugs in violation of Louisiana law.
    As to factor five, ``[s]uch other conduct which may threaten the 
public health or safety,'' the Owner failed to note his conviction on 
his DEA application in violation of the requirements established by 21 
U.S.C. 824(a)(1). It has been previously noted that material 
falsification of an application, although not expressly mentioned under 
Section 823 as it is under Section 824, is an appropriate action to 
consider under factor five. See Robert L. Vogler, Docket No. 92-87, 58 
FR 51385 (1992). The appropriate test for determining whether the 
Respondent had materially falsified any application is whether the 
Respondent ``knew or should have known'' that he submitted a false 
application. See Bobby Watts, M.D., 58 FR 46995 (1993); accord Herbert 
J. Robinson, M.D., 59 FR 6304 (1994). Here, the Owner was convicted in 
June of 1992, and he submitted his registration application in January 
of 1993. The specific question asked whether the ``applicant [had] ever 
been convicted of a crime in connection with controlled substances 
under State or Federal law.'' Thus, in preparing the application, the 
Owner ``knew or should have known'' that the question sought 
information about convictions and that he had been convicted. Yet he 
did not disclose that information as required.
    As for mitigating information, the Deputy Administrator notes that 
the Respondent pled guilty to the charges against him, and in a letter 
to the Louisiana Board, he acknowledged his misconduct and stated 
remorse for his actions. However, the Owner has failed to provide any 
information or evidence, such as attendance at remedial courses or 
evidence of other corrective action taken, to assure that his future 
conduct would comply with Federal and State law governing the 
dispensing of controlled substances. The Owner's failure to respond to 
the Order to Show Cause, either by requesting a hearing or by 
submitting a written statement, indicates that he is either unwilling 
or unable to proffer support for this application. Therefore, the 
Deputy Administrator finds that the public interest is best served by 
denying the Respondent's application at this time, for the Owner's past 
conduct demonstrates that he cannot be entrusted with a DEA Certificate 
of Registration as an owner of a retail pharmacy.
    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 
Drugstore's application for a DEA Certificate of Registration as a 
retail pharmacy be, and it hereby is, denied. This order is effective 
March 11, 1996.

    Dated: February 5, 1996.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 96-2766 Filed 2-8-96; 8:45 am]
BILLING CODE 4410-09-M