[Federal Register Volume 62, Number 152 (Thursday, August 7, 1997)]
[Notices]
[Pages 42595-42599]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20787]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 96-45]
Rick's Pharmacy, Inc., Continuation of Registration With
Restrictions
On August 29, 1996, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to Rick's Pharmacy, Inc., (Respondent) of Clayton,
New Mexico, notifying it of an opportunity to show cause as to why DEA
should not revoke its DEA Certificate of Registration, BR0924440, under
21 U.S.C. 824 (a)(2) and (a)(4), and deny any pending applications for
registration as a retail pharmacy under 21 U.S.C. 823(f), for reason
that its owner/pharmacist has been convicted of a controlled substance
related felony offense and that its continued registration would be
inconsistent with the public interest.
By letter dated September 5, 1996, Respondent, through counsel,
filed a timely request for a hearing. In the midst of prehearing
proceedings, Respondent's counsel filed a motion to withdraw as
counsel, which was granted. Thereafter, Respondent was represented by
Rick Balzano, the principal shareholder and pharmacist of Respondent. A
hearing was held in Santa Fe, New Mexico on February 5, 1997, before
Administrative Law Judge Gail A. Randall. At the hearing, both parties
called witnesses and introduced documentary evidence. After the
hearing, Government counsel submitted proposed findings of fact,
conclusions of law and argument, and Respondent submitted a letter
setting forth its position. On May 16, 1997, Judge Randall issued her
Opinion and Recommended Ruling, recommending that Respondent's
registration be continued subject to certain conditions. On June 6,
1997, Government counsel filed exceptions to the Opinion and
Recommended Ruling of the Administrative Law Judge, and on June 18,
1997, Judge Randall transmitted the record of these proceedings,
including the Government's exceptions to the Acting Deputy
Administrator.
The Acting 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 Acting Deputy Administrator adopts, except as specifically
noted below, the Opinion and Recommended Ruling 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 Acting Deputy Administrator finds that Rick Balzano purchased
Respondent pharmacy with his parents in 1987. Mr. Balzano is the
president and pharmacist-in-charge of Respondent, his father is the
vice president and his mother is the secretary and treasurer. In
addition to Respondent pharmacy, there is only one other retail
pharmacy and one hospital pharmacy in Clayton, New Mexico, with the
next closest pharmacy approximately 82 miles from Clayton. Mr. Balzano
is one of only two pharmacists practicing in Clayton.
On October 6 and 7, 1992, New Mexico Board of Pharmacy inspectors
went to Respondent pharmacy to conduct a routine inspection and audit
of controlled substances. According to Mr. Balzano, by the time the
inspectors arrived at the pharmacy at 4:00 p.m. on the first day, he
had already consumed approximately 50 controlled substance pills.
The audit covered the period from January 6, 1991 to October 6,
1992, and revealed overages and shortages for all of the audited
substances. Significantly, Respondent could not account for 19,394
dosage units of Lortab 7.5 mg.; 8,201 dosage units of phentermine 30
mg.; 2,100 dosage units of ``Darvon Compound-65 generic''; 1,430 dosage
units of Halcion 0.25 mg.; 1,121 dosage units of temazepam 30 mg.;
1,546 dosage units of clorazepate 7.5 mg.; 1,244 dosage units of
diazepam 10 mg.; 2,800 dosage units of Roxicet; and 1,397 dosage units
of Tylox. Significant overages, where Respondent could account for more
of a drug than it was accountable for include, 1,521 dosage units of
Darvon-N-100; 1,606 Wygesic generic; and 1,994 Tranxene 3.75 mg.
On October 28, 1992, the inspectors went to Respondent pharmacy to
return the records used in conducting the audit and to discuss the
audit with Mr. Balzano. At that time, Mr. Balzano
[[Page 42596]]
admitted that he had a drug abuse problem. Mr. Balzano testified at the
hearing in this matter that his tolerance to the drugs built up to the
point that he could ingest more than 50 pills per day. He admitted to
personally taking a number of the missing controlled substances,
including lorazepam, Ativan, Dalmane, flurazepam, Fastin, phentermine,
Halcion, Restoril, temazepam, Valium, diazepam, Xanax, Lorcet, Lortab,
Vicodin, Dexedrine, Percodan, Roxiprin, Percocet, Roxicet, and Tylox.
However, Mr. Balzano denied taking the remaining substances that were
unaccounted for during the audit period. He suggested at the hearing
that had he been given an opportunity to explain the audit
discrepancies, the overages and shortages may have balanced each other
out based upon the dispensing of a generic substance when a brand name
substance had been prescribed or based upon the potential labeling or
mislabeling of the substances.
During the investigation, the New Mexico Board of Pharmacy
inspectors discovered several prescriptions apparently issued by a
local dentist for Mr. Balzano and other patients. The dentist denied
writing any of the prescriptions for Mr. Balzano, and Mr. Balzano
ultimately admitted that he had forged several of the dentist's
prescriptions. Mr. Balzano also admitted filling prescriptions that had
been issued by the dentist for individuals for the stimulant drugs,
phentermine and Fastin. In addition, the inspectors discovered 16
prescriptions for Fastin for an individual that were allegedly written
by a local physician. The physician denied writing these prescriptions,
and Mr. Balzano admitted at the hearing in this matter to improperly
dispensing the drugs. Finally, the investigation revealed several
prescriptions for family members allegedly authorized by Mr. Balzano's
brother who is a dentist. Dr. Balzano indicated to the inspectors that
he had not authorized some of these prescriptions, and Mr. Balzano
testified that he now understands that he should not have dispensed
these controlled substances.
Mr. Balzano testified that after the inspectors were at Respondent
pharmacy in early October 1992, he began his recovery efforts from drug
addiction, and has not improperly taken any controlled substances since
October 28, 1992. Which he began his recovery efforts on his own, in
March 1993, he entered a local treatment center where he stayed for
three weeks, during which time he closed Respondent pharmacy and
informed the community of his drug abuse problem.\1\ Following his in-
patient treatment, Mr. Balzano signed a two-year voluntary contract
with the Pharmacists' Recovery Network Committee of New Mexico (PRN)
which required at least 12 random urine screens a year, attendance at 3
to 4 Alcoholics Anonymous or Narcotics Anonymous meetings per week, and
attendance at monthly PRN meetings in Albuquerque, New Mexico. During
the term, of the contract, Mr. Balzano underwent 22 random urine
screens, and all were negative. According the PRN, Mr. Balzano complied
with all the requirements of the contract. Following the expiration of
the contract in March 1995, Mr. Balzano remained an active member of
the PRN.
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\1\ In her opinion and Recommended Ruling, the Administrative
Law Judge indicated that Respondent pharmacy remained closed for
three months, however, Mr. Balzano testified that the pharmacy was
closed for three weeks.
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As a result of the investigation, information was filed in the
United States District Court for the District of New Mexico, charging
that Mr. Balzano knowingly and intentionally acquired 60 Lortab 7.5 mg.
tablets, a Schedule III controlled substance, by forging the local
dentist's name to a prescription in violation of 21 U.S.C. 843(a)(3).
Thereafter, in March 1994, following Mr. Balzano's entering a plea of
guilty, he was convicted of the felony offense of acquiring or
obtaining a controlled substance by forgery, deception or subterfuge in
violation of 21 U.S.C. 843(a)(3). Mr. Balzano was sentenced to two
years probation, and on August 31, 1995, he was granted early
termination of probation due to satisfactory behavior.
In August 1996, New Mexico Board of Pharmacy inspectors conducted
another inspection at Respondent pharmacy. The inspector who testified
at the hearing in this matter indicated that the following violations
were revealed: (1) A required reference book, and the New Mexico
Pharmacy Laws and Regulations were not on the premises; (2) a required
``Purchaser's Statement'' was missing from the exempt narcotic book;
(3) the time of day was not properly recorded on the 1996 inventory;
and (4) the practitioner's DEA registration number was not recorded on
several prescription forms. The inspectors did not conduct an audit of
controlled substances during this inspection. According to the
inspector, the noted violations were corrected and Respondent pharmacy
has been in compliance with these requirements since the August 1996
inspection.
Following a formal hearing on January 28, 1997, the New Mexico
Board of Pharmacy (Board) issued a decision on February 24, 1997,
regarding Mr. Balzano's pharmacist license. The Board found inter alia,
that Mr. Balzano was the pharmacist-in-charge of Respondent; that the
1992 inspection revealed shortages of Schedule II, III and IV
controlled substances; that Mr. Balzano was convicted in March 9, 1994
in the United States District Court of the District of New Mexico of
one count of acquiring or obtaining a controlled substance by forgery,
deception or subterfuge, and was sentenced to two years probation with
conditions; that Mr. Balzano completed his probation and program with
the PRN; and that Mr. Balzano admitted that he had a substance abuse
problem and had the drugs for his own use. As a result, the Board
placed Mr. Balzano on probation for two years, and his pharmacist's
license was suspended for two years with all but 28 days held in
abeyance pending successful completion of the probationary period. In
addition, the Board ordered Mr. Balzano to sign a new five year
contract with the PRN; to not dispense any controlled substances to
himself or to his immediate family members; an to notify the Board of
any personal controlled substance prescription ``with a copy of the
prescription attached and a note from the prescribing authority that
the prescription is medically indicated.'' Finally, the Board noted
that, ``[i]f it comes to the attention of the Board that [Mr. Balzano]
was violated the terms and conditions of probation, [Mr. Balzano's]
license to practice will be immediately suspended pending a hearing
before the Board.''
Respondent entered into evidence affidavits from the administrator
of the local hospital, the president of a local bank, the chairman of
the PRN, the assistant director of the PRN, several physicans,
including the local dentist whose name Mr. Balzano had forged on the
prescription for Lortab, and others. These individuals attested to Mr.
Balzano's professional integrity and to the community's need for the
continued operation of Respondent pharmacy.
The Deputy Administrator may revoke or suspend a DEA Certificate of
Registration under 21 U.S.C. Sec. 824(a), upon a finding that the
registrant:
* * * * *
(2) Has been convicted of a felony under this subchapter or
subchapter II of this chapter or any other law of the United States,
or of any State relating to any substance defined in this subchapter
as a controlled substance;
* * * * *
(4) Has committed such acts as would render his registration
under section 823 of
[[Page 42597]]
this title inconsistent with the public interest as determined under
such section;
* * * * *
It is undisputed that Mr. Balzano was convicted on March 9, 1994,
of a felony violation of 21 U.S.C. 843(a)(3). It is well settled that a
pharmacy operates under the control of owners, stockholders,
pharmacists or other employees, and if any such person is convicted of
a felony offense related to controlled substances, grounds exist to
revoke the pharmacy's registration under 21 U.S.C. 824(a)(2). See
Maxicare Pharmacy, 61 FR 27,368 (1996); Big-T Pharmacy, Inc., 47 FR
51,830 (1982). Therefore, the Acting Deputy Administrator concurs with
Judge Randall's conclusion that the Government has proven by a
preponderance of the evidence that grounds exist to revoke Respondent's
registration under 21 U.S.C. 824(a)(2), based upon the controlled
substance related felony conviction of its owner/pharmacist, Mr.
Balzano.
Pursuant to 21 U.S.C. Secs. 823(f) and 824(a)(4), the Deputy
Administrator may also revoke a DEA Certificate of Registration and
deny any pending applications, if he determines that the continued
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 be denied. See Henry J. Schwarz, Jr., M.D., Docket No. 88-
42, 54 FR 16,422 (1989). In this case, all five factors are relevant.
As to factor one, it is undisputed that on February 24, 1997, the
New Mexico Board of Pharmacy issued a decision placing Mr. Balzano on
probation for two years and suspending his pharmacist license for two
years with all but 28 days held in abeyance pending successful
completion of the probationary period. As terms of his probation, the
Board ordered Mr. Balzano to sign a five year contract with the PRN,
prohibiting him from dispensing controlled substances to himself or to
immediate family members, and required him to notify the Board if he
obtained any personal controlled substance prescriptions.
Factors two and four, respondent's experience in dispensing
controlled substances and compliance with state, Federal or local laws
relating to controlled substances, are relevant in determining the
public interest. The 1992 audit results which revealed significant
overages and shortages of Schedule II-IV controlled substances
indicated at the very least a failure to maintain complete and accurate
records as required by 21 U.S.C. 827. However, Mr. Balzano admitted to
diverting many of the missing drugs for his personal use in violation
of under 21 U.S.C. 843(a)(3). Although Mr. Balzano admitted to having a
drug abuse problem, he denied taking a significant number of the
unaccounted for controlled substances. The Acting Deputy Administrator
concurs with Judge Randall's finding that Mr. Balzano ``failed to
provide a persuasive explanation for these shortages.''
Mr. Balzano admitted to other instances of improper dispensing of
controlled substances. He admitted to forging several prescriptions for
his personal use with the name of the local dentist in violation of 21
U.S.C. 829 and 843(a)(3). He admitted to filling prescriptions for
Fastin/phentermine issued by a dentist not in the usual course of
professional practice in violation of 21 U.S.C. 829 and 21 CFR 1306.04.
Finally, he admitted to dispensing controlled substances to family
members and to another individual without the appropriate authorization
from a practitioner in violation of 21 U.S.C. 829 and 841.
The subsequent state audit conducted in 1996 revealed the following
state regulatory violations: a required reference book and the New
Mexico Pharmacy Laws and Regulations were not on the premises; a
statement was missing in the exempt narcotic book; the time of day was
not recorded on the 1996 inventory, and the practitioner's DEA
registration number was not on several prescription forms.\2\ Failure
to record the time of the day on the inventory was also a violation of
21 CFR 1304.11, and failure to place the practitioner's DEA
registration on prescriptions was also a violation of 21 CFR 1306.05.
The Acting Deputy Administrator disagrees with Judge Randall's finding
that ``although the 1996 Board inspection found administrative
discrepancies, none of these errors involved the handling of controlled
substances.'' Failure to note the time on a controlled substance
inventory and failure to place a practitioner's DEA registration on
prescriptions clearly are violations that relate to the handling of
controlled substances. However, the Acting Deputy Administrator notes
that since the 1996 inspection, Respondent has been in compliance with
these requirements.
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\2\ The Government asserts that the inspection also revealed
that Respondent failed to have controlled substance invoices readily
retrievable. However, the testimony of the inspector at the hearing
in this matter did not specifically address Respondent's failure to
comply with this requirement of the state regulations.
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As to factor three, it is undisputed that Mr. Balzano, Respondent's
owner/pharmacist was convicted in March 1994 of one count of acquiring
or obtaining controlled substances by misrepresentation, fraud,
forgery, deception, or subterfuge in violation of 21 U.S.C. 843(a)(3),
as a result of his forging a local dentist's name to a prescription for
Lortab in order to obtain controlled substances for his own use. As
discussed previously, a pharmacy's registration may be revoked on the
basis of the owner/pharmacist's felony conviction relating to
controlled substances.
Regarding factor five, Mr. Balzano admitted that he had a substance
abuse problem for a number of years. Further, he admitted that he
diverted a significant amount of controlled substances from the
pharmacy for his own use. A number of the missing drugs however, remain
unaccounted for following the 1992 audit. The Acting Deputy
Administrator agrees with Judge Randall and the Government, ``that the
public health and safety was placed at risk by Mr. Balzano's lack of
judgment and concern for the precision needed by a pharmacist to
properly fill prescriptions for patients relying on his
professionalism.''
The Government has proven by a preponderance of the evidence that
grounds exist to revoke Respondent pharmacy's DEA registration under 21
U.S.C. 824(a)(4). However, like Judge Randall, the Acting Deputy
Administrator finds that while ``Respondent's evidence in mitigation
does not justify or excuses the misconduct of Mr. Balzano, [it is]
significant and credible that he admitted to the extensive scope of his
previous drug addiction and to his misconduct that flowed from his
illness, to include the forging of prescriptions.'' Mr. Balzano last
improperly used controlled
[[Page 42598]]
substances in October 1992. He has undergone extensive rehabilitation
treatment which will now continue until the year 2002 in light of the
Board's recent decision requiring him to enter into a five year
contract with the PRN.
It is significant that beyond diverting drugs from the pharmacy for
his own use, Mr. Balzano forged prescriptions, and improperly dispensed
controlled substances to his family members and others. In addition,
the other shortages and overages revealed by the 1992 audit have yet to
be explained. However, Mr. Balzano testified at the hearing in this
matter that, ``I did some things when I was on drugs that I just cannot
believe that I did them. You're a different person when you're on these
drugs. I can't explain some of the things I did or why I did them.''
As noted above, Mr. Balzano has been free from drugs since October
1992, and Respondent has continued in operation since 1992 with no
allegations of improper handling of controlled substances other than
the several violations found during the August 1996 inspection which
have since been corrected. Previously, DEA has held that while a lapse
in time since the wrongdoing is not dispositive, it is a factor to be
considered. See Norman Alpert, M.D., 58 FR 67,420 (1993). In this case,
it is significant that since the 1992 inspection, Mr. Balzano has
undergone extensive treatment for his drug addiction, has remained
drug-free, has accepted responsibility for his past misconduct, and has
essentially remained in compliance with the laws and regulations
relating to controlled substances. In addition, as Judge Randall noted
that should Respondent's DEA registration be revoked, ``the residents
of Clayton, New Mexico will be left with only one retail pharmacy * * *
[and] will either have to use this pharmacy or travel 82 miles to the
next closest pharmacy.''
Judge Randall concluded ``that the public interest will best be
served by allowing the Respondent to continue with its Certificate of
Registration with certain conditions'' beyond those required by the
Board's decision. Judge Randall recommended that Respondent shall
comply with the following terms for three years from the effective date
of the final order:
(1) submit to the local DEA office a copy of the Respondent's
state-required annual inventory;
(2) submit to the local DEA office the results of any audit or
inspection conducted upon the Respondent by the Board; and
(3) notify the local DEA office within 5 work days in the event the
New Mexico Pharmacy Board reinstates the suspension of Mr. Balzano's
license. Judge Randall further recommended that ``[i]n the event Mr.
Balzano ceases to work as the Respondent's pharmacist, the Respondent
may apply to DEA to have these conditions removed from its Certificate
of Registration.''
The Government filed exceptions to the Administrative Law Judge's
Opinion and Recommended Ruling, arguing that the Administrative Law
Judge failed to ``make a finding with respect to unexplained controlled
substance shortages which were not alleged to have been consumed by
Respondent's pharmacist,'' The Government argued that ``at a minimum,
Respondent and pharmacist Balzano failed to keep complete and accurate
records. * * *'' The Government further contended that the ``evidence
of Mr. Balzano's activity with regard to unlawful distribution of
controlled substances by falsified prescriptions * * * could support an
inference that other missing controlled substances were also
diverted.'' The Acting Deputy Administrator finds that the
Administrative Law Judge, in considering factors two, four and five,
did in fact find that Mr. Balzano did not provide a persuasive
explanation for the missing drugs other than those he admitted to
consuming. The Acting Deputy Administrator agrees with the Government's
contention, that at a minimum, these shortages represent faulty
recordkeeping. However, the Acting Deputy Administrator rejects the
Government's argument that the evidence presented supports an inference
that the missing drugs were diverted. While Mr. Balzano admitted that
several forged prescriptions were filled and that controlled substances
were improperly dispensed on several occasions, there was no evidence
presented at the hearing which would warrant a finding that the
unexplained shortages were the result of diversion.
The Government also argued in its exceptions that Judge Randall's
``recommended action in this matter is a departure from prior agency
practice and policy.'' In support of its argument, the Government cited
to several cases where a pharmacy's DEA registration was revoked based
upon the improper dispensing of controlled substances and the
conviction of the pharmacist for a felony offense relating to
controlled substances. See Farmacia Ortiz, 61 FR 726 (1996); Dellmar
Pharmacy #4, 59 FR 46,066 (1994); and Nasir Gore, T/A All Drugs
Pharmacy, Inc., 59 FR 60,661 (1994). The Acting Deputy Administrator
recognizes that the DEA registrations of these pharmacies were in fact
revoked, however these cases can be distinguished from the instant
proceeding. In this case, Respondent's owner/pharmacist admitted to a
serious drug abuse problem which caused his misconduct. Mr. Balzano has
accepted responsibility for his past behavior and has undergone
extensive rehabilitation. He has been drug-free since October 1992, and
will continue to be monitored by the PRN for a number of years. In
addition, Respondent pharmacy has continued in operation since 1992
with no evidence of violations of a similar nature to those revealed by
the 1992 inspection. Therefore, the Acting Deputy Administrator does
not find that the Administrative Law Judge's recommendation to continue
Respondent's registration subject to certain restrictions is a
departure from prior agency practice. The Acting Deputy Administrator
concludes that it is in the public interest to continue Respondent's
registration in light of the foregoing, as well as the need for
Respondent pharmacy in the community.
Nevertheless, the Acting Deputy Administrator does concur with the
Government's contention that if Respondent's registration is to be
continued, the restrictions imposed on its registration should more
directly address the nature of Respondent's misconduct, than those
restrictions recommended by Judge Randall. Mr. Balzano suffered from a
serious drug abuse problem causing him to divert controlled substances
from the pharmacy for his own use, to improperly dispense controlled
substances to others, and at the very least, to fail to maintain
complete and accurate records of controlled substances. Consequently,
the Acting Deputy Administrator concludes that Respondent's
registration shall be subject to the following conditions:
(1) If Mr. Balzano's contract with the PRN is terminated before the
expiration of the five year term, Mr. Balzano shall continue to undergo
random urinalysis at his own expense no less than one time per month
for the original term of the contract. Results of these urine screens
shall be submitted to the DEA office in Albuquerque, New Mexico.
(2) If Mr. Balzano's contract with the PRN is terminated before the
expiration of the five year term, Mr. Balzano shall be prohibited from
dispensing controlled substances to himself or members of his immediate
family for the original term of the contract.
(3) For three years from the effective date of this final order,
Respondent shall undergo an annual audit of
[[Page 42599]]
controlled substances conducted by an independent auditor hired by
Respondent. Results of these audits shall be forwarded to the DEA
office in Albuquerque, New Mexico.
(4) Respondent shall notify the local DEA office in Albuquerque,
New Mexico within 5 work days in the event the New Mexico Pharmacy
Board reinstates the suspension of Mr. Balzano's pharmacist license.
Accordingly, the Acting 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 DEA Certificate of Registration, BR0924440, issued to Rick's
Pharmacy, Inc., be continued, and any pending applications for renewal
be granted, subject to the above described restrictions. This order is
effective September 8, 1997.
Dated: July 31, 1997.
James S. Milford,
Acting Deputy Administrator.
[FR Doc. 97-20787 Filed 8-6-97; 8:45 am]
BILLING CODE 4410-09-M