[Federal Register Volume 66, Number 67 (Friday, April 6, 2001)]
[Notices]
[Pages 18299-18305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8478]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 99-13]


Alexander Drug Company, Inc.; Revocation of Registration

    The Deputy Assistant Administrator, Office of Diversion Control, 
Drug Enforcement Administration (DEA) issued an Order to Show Cause, 
dated January 22, 1999, to Alexander Drug, Co., Inc. (Respondent), 
seeking to revoke its DEA Certificate of Registration, #BA2660214, and 
deny any applications for renewal of such registration pursuant to 21 
U.S.C. 824(a)(2) for the reason that the Respondent was convicted of a 
felony related to controlled substances, and section 824(a)(4) for the 
reason that the Respondent's continued registration would be 
inconsistent with the public interest, as defined in 21 U.S.C. 823(f). 
The Order to Show Cause alleged that these grounds were evidenced by 
the following:
    1. The Respondent pharmacy had violated several state regulations 
and laws regarding record keeping.
    2. A pharmacist employee of the Respondent dispensed a controlled 
substance on two occasions without a physician's authorization.
    3. A DEA inspection on August 6, 1996, revealed over one-thousand 
record keeping violations.
    4. On April 28, 1997, the Respondent pharmacy and the president of 
the Respondent pharmacy were indicted on sixteen felony counts of 
maintaining false records and one count of conspiracy.
    5. On July 28, 1997, the Respondent pharmacy was convicted, upon a 
plea of guilty, of a felony related to maintaining false records.
    6. The president of the Respondent pharmacy was indicted and 
convicted upon a plea of guilty of one felony count of obstructing a 
federal officer.
    7. The president of the Respondent pharmacy was indicted on three 
felony counts of making a misrepresentation in the filing of insurance 
billing.
    8. On December 22, 1997, a pharmacist employee of the Respondent 
was charged with one felony count of obtaining controlled substances 
under false pretenses and one felony count of conspiracy to obtain 
controlled substances by fraud.
    The Respondent timely filed a request for a hearing on the 
allegations raised by the Order to Show Cause. After granting the 
Respondent's emergency motion for a continuance on June 7, 1999, the 
requested hearing was held in Greenville, South Carolina, on August 17, 
1999, before Administrative Law Judge Gail A. Randall. At the hearing, 
both parties called witnesses to testify and introduced documentary 
evidence. After the hearing, both parties filed Proposed Findings of 
Fact, Conclusions of Law Argument. On March 22, 2000, Judge Randall 
issued her Recommended Rulings, Findings of Fact, Conclusions of Law, 
and Decision of the Administrative Law Judge (Opinion). On May 17, 
2000, the record of these proceedings was transmitted to the 
Administrator for final decision.
    The Administrator has considered the record in its entirety, and 
pursuant to 21 CFR 1316.67, hereby issues his final order based upon 
the findings of fact and conclusions of law as hereinafter set forth. 
The Administrator adopts the findings of fact as set forth in Judge 
Randall's Opinion and also adopts Judge Randall's recommended 
conclusions of law and decision.
    The issue in this proceeding is whether or not the record as a 
whole establishes a by a preponderance of the evidence that the DEA 
should revoke the DEA Certificate of Registration of Alexander Drug 
Co., pursuant to 21 U.S.C. 824(a)(2) and 824(a)(4), and should deny any 
pending applications for renewal of such registration as a retail 
pharmacy pursuant to 21 U.S.C. 823(f), because Alexander Drug Co. was 
convicted of a felony and an officer of Alexander Drug Co. was 
convicted of a misdemeanor arising out of this investigation but not 
related to controlled substances, and because the continued 
registration of Alexander Drug Co. would be inconsistent with the 
public interest.
    The Administrator finds as follows: The Respondent is located in 
Greenville, South Carolina, and holds a DEA Certificate of 
Registration, BA2660214, as a retail pharmacy. The Respondent timely 
submitted a renewal application for this registration, that remains 
pending before the DEA. Mark Wansley is the President, owner, and 
pharmacist in charge of Respondent pharmacy. Sam Gaillard began working 
in charge of Respondent pharmacy. Sam Gaillard began working as a 
pharmacist for the Respondent in 1955. In 1957, he purchased the 
Respondent. In 1991, he sold the Respondent to Mr. Wansley but 
continued to be employed by the Respondent as a pharmacist until 1998.
    On July 20, 1994, two inspectors of the South Carolina Department 
of Health and Environmental Control (DHEC) conducted a routine 
inspection of the Respondent's controlled substance dispensing records. 
The inspectors noted their findings on a

[[Page 18300]]

Pharmacy Inspection Form. The Pharmacy Inspection Form contains a list 
of areas reviewed during a South Carolina State pharmacy inspection. An 
inspector testified that during an inspection, the inspector may write 
an S (satisfactory), I (improvement needed), or U (Unsatisfactory) next 
to any general area of review. These notations are meant to heighten 
the awareness of the pharmacist to the pharmacy's practices in these 
areas. The determination of which notation a pharmacy receives depends 
on the number of violations found under the area of review. This DHEC 
inspection was the first of three such inspections, as set forth below, 
and a DHEC inspector who participated in each of the three inspections 
testified as to the findings of each inspection. Judge Randall credited 
the testimony of the DHEC inspector with regard to the findings of each 
of the inspections, as set forth below.
    The DHEC inspectors found that the Respondent's dispensing records 
for Schedule II controlled substance transfers included locally 
prepared prescription forms rather than the required DEA Form 222. The 
DHEC inspectors advised Mr. Wansley to use DEA form 222 for future 
controlled substance transfers, but the inspectors did not mark this 
area of review with an unsatisfactory designation.
    The DHEC inspectors noted on the Pharmacy Inspection Form that the 
dispensing records did not clearly state specific directions with 
regard to each controlled substance dispensed. The applicable Pharmacy 
Inspection Form indicates that the Respondent's practices in this area 
were satisfactory, however. Judge Randall credited the inspector's 
testimony that noting a potential discrepancy in this area is a ``means 
of trying to heighten the pharmacist's awareness to try to document 
according to the regulations.''
    The DHEC inspectors found two prescriptions for controlled 
substances that did not contain a physician's signature. The inspectors 
indicated on the Pharmacy Inspection Form that the Respondent needed to 
improve its record keeping in this area.
    The DHEC inspectors also informed the respondent of several repeat 
sales of Schedule V controlled substances to five individuals. State 
law requires documentation of such sales in a specified manner, 
including a description of why repetitive sales were needed.
    The DHEC inspector testified that the respondent had failed to note 
the reason that repetitive sales were allowed. The inspectors indicated 
on the Pharmacy Inspection Form that the Respondent needed to improve 
its record keeping in this area.
    On August 24, 1995, two DHEC inspectors conducted a second 
inspection of the Respondent. Mark Wansley was present during the 
inspection. The inspectors noted their findings on a Pharmacy 
Inspection Form.
    The DHEC inspectors noted that the Respondent had failed to record 
the dates when shipments of controlled substances were received at the 
pharmacy. The inspectors indicated on the Pharmacy Inspection Form that 
the Respondent needed to improve its record keeping in this area.
    The DHEC inspectors found that, due to a problem with the 
Respondent's computer system, some dispensing records for controlled 
substances did not contain complete patient addresses. Additionally, 
the inspectors noted that some of the dispensing records did not 
properly contain the dispensing pharmacist's information. The 
inspectors indicated on the Pharmacy Inspection Form that the 
Respondent needed to improve its record keeping in these area. The 
inspectors found more violations in these areas than could be recorded 
on the Pharmacy Inspection Form.
    As was found during the July 20, 1994 inspection, the DHEC 
inspectors again noted that the respondent's records for Schedule II 
controlled substance transfers included locally prepared prescription 
forms rather than the required DEA form 222. The inspectors indicated 
on the Pharmacy Inspection Form that the Respondent needed to improve 
its record keeping in this area.
    The DHEC inspectors noted several post-dated prescriptions, where 
the dispensing records indicated that prescriptions for controlled 
substances were written after the date that the Respondent filled the 
prescriptions. The inspectors also noted that at least one prescription 
refill was filled improperly more than 30 days after it was written by 
the practitioner.
    As was noted during the July 20, 1994 inspection, the DHEC 
inspectors found several repeat sales of Schedule V controlled 
substances and informed the Respondent ``to be careful.''
    On April 19, 1996, DHEC inspectors conducted a third inspection and 
also an audit of the Respondent. The inspectors noted their findings on 
a Pharmacy Inspection Form.
    The DHEC inspectors again found that the Respondent had transferred 
Schedule II controlled substances to another registered party without 
maintaining the proper records, including a DEA Form 222. The records 
on file for such transfers were unsatisfactory as they did not properly 
indicate the dates of the transfers. The unsatisfactory condition of 
these records was noted on the Pharmacy Inspection Form.
    The DHEC inspectors again found prescriptions without the proper 
patient or practitioner name and address information. The inspectors 
also found several controlled substance prescriptions that were expired 
or out of date; prescriptions for controlled substances that contained 
``use as directed'' instructions rather than more specific dosage 
directions; dosages dispensed with directions that indicate the amount 
dispensed exceeded the maximum 30-day limit for the substance; refills 
that were filled early; one prescription that appeared to be filled 
with the incorrect controlled substance; and a phone-in prescription 
for a Schedule II controlled substance that exceeded the amount 
allowable for an emergency situation. The investigator testified that 
each of these practices is a violation of state regulation.
    As was noted during the previous two inspections, the DHEC 
inspectors found several repeat sales of Schedule V controlled 
substances that did not contain the proper state-required 
documentation.
    During this inspection, the DHEC inspectors conducted an inventory 
and audit of six selected controlled substances. The inspectors 
analyzed the inventory records, invoices, transfer documents, and 
dispensing records related to th4ese substances from May 1, 1995, to 
April 19, 1996, and compared the recorded data to the amounts of the 
substances in inventory on April 19, 1996. The inspectors found the 
following shortages or overages for each substance:

Adderall: shortage of 41 dosage units
alprazolam: overage of 1,743 dosage units
Android: overage of 30 dosage units
Bontril: overage of 799 dosage units
Fiorinal: shortage of 27 dosage units
oxycodone: shortage of 176 dosage units

    The inspector testified that the series of DHEC inspections showed 
a consistent pattern of noncompliance with state regulation.
    During the April 19, 1996 inspection, the DHEC inspectors also 
discovered that the Respondent's records contained the following 
falsified phone-in prescriptions for controlled substances which had 
been illegally dispensed.
    In 1995, Sam Gaillard injured his back, which caused him 
discomfort. Mr. Gaillard was told by his physician to contact him 
whenever he needed

[[Page 18301]]

medication for pain. On at least ten occasions, Sam Gaillard was unable 
to reach his treating physician. In order to treat his back pain, Sam 
Gaillard wrote several controlled substances prescriptions for himself 
using his physician's name and dispensed the controlled substances to 
himself. Each prescription identifies Sam Gaillard as the recipient of 
these medications.
    On or about September 29, 1995, and again on or about November 3, 
1995, Sam Gaillard dispensed Lorazepam, a Schedule IV controlled 
substance, to himself, in the name of his wife, without a prescription 
issued by a practitioner in the usual course of professional practice. 
He also created a false prescription record indicating that a physician 
had authorized the prescription. Mr. Gaillard created this false 
prescription in the name of his wife because her health insurance did 
not require co-payment.
    On or about December 22, 1995, the pharmacy records indicate that 
Mark Wansley dispensed Lorazepam, a Schedule IV controlled substance, 
to Sam Gaillard without a prescription issued by a practitioner in the 
usual course of professional practice and that he created a false 
prescription record indicting that a physician had authorized the 
prescription. Although Mark Wansley's initials appear on the record for 
this prescription, Sam Gaillard testified that he was responsible for 
filling this prescription and creating the false record. Judge Randall 
credited Sam Gaillard's testimony that the Respondent's closing 
procedures often include the evening pharmacist initialing 
prescriptions that had been filled earlier in the day, in explaining 
how Mark Wansley's initials could appear on a prescription filled by 
Sam Gaillard. Judge Randall also credited the testimony of a DEA 
Diversion Investigator who testified, however, that Sam Gaillard stated 
to him that Mark Wansley knew of Gaillard's illicit activities. On or 
about January 24, 1996, and March 29, 1996, Sam Gaillard refilled this 
prescription and created a false prescription record indicating that a 
physician had authorized the refills.
    Again, on or about February 1, 1996, Sam Gaillard dispensed 
Vicodin, a Schedule III controlled substance, to himself, without a 
prescription issued by a practitioner in the usual course of 
professional practice. Yet Sam Gaillard created a false prescription 
record indicating that a physician had authorized the prescription.
    Sam Gaillard also took a medication prescribed for his wife and 
found that it relieved his back spasms. On or about March 5, 1996, Sam 
Gaillard then dispensed hydrocodone, a Schedule III controlled 
substance, to himself, in the name of this wife, without a prescription 
issued by a practitioner in the usual course of professional practice. 
He created a false prescription record indicating that a physician had 
authorized the prescription.
    On or about February 1, 1996, and again on or about February 6, 
1996, Sam Gaillard dispensed QV Tussin, a Schedule V controlled 
substance, to himself, in the name of his wife, without a prescription 
issued by a practitioner in the usual course of professional practice. 
He also created a false prescription record indicating that a physician 
had authorized the prescription.
    Sam Gaillard's son suffers from migraine headaches and had been 
prescribed Fiorinal #3 by his treating physician. When he was unable to 
reach his son's physician, Sam Gaillard wrote a prescription for 
Fiorinal #3 using the name of his son's treating physician and 
dispensed the controlled substances to his son.
    On five separate occasions on or about November 23, 1994, May 26, 
1995, September 19, 1995, December 12, 1995, and February 23, 1996, Sam 
Gaillard dispensed Fiorinal #3, a Schedule III controlled substance, to 
his son, without a prescription issued by a practitioner in the usual 
course of professional practice. He also created a false prescription 
record indicating that a physician had authorized the prescription.
    On or about December 18, 1995, Sam Gaillard dispensed Prometh VC 
with codeine, a Schedule V controlled substance, to his son, without a 
prescription issued by a practitioner in the usual course of 
professional practice. He also created a false prescription record 
indicating that a physician had authorized the prescription.
    On or about April 12, 1996, at Sam Gaillard's request, Mark Wansley 
dispensed Fiorinal #3, a Schedule III controlled substance, to Sam 
Gaillard's son without a prescription issued by a practitioner in the 
usual course of professional practice. He also created a false 
prescription record indicating that a physician had authorized the 
prescription. Judge Randall credited Sam Gaillard's testimony that he 
told Mark Wansley that he would obtain proper authorization from his 
son's physician, but he never did so.
    Sam Gaillard was charged in Greenville County, South Carolina, with 
obtaining controlled substances by fraud, and entered a pre-trial 
intervention program. In accordance with S.C. Code Ann. section 17-22-
150, a successful completion of this program results in a non-criminal 
disposition of the charges.
    On August 6, 1996, DEA Diversion Investigators executed a search 
warrant and conducted an inspection of the Respondent. During the 
execution of the warrant, the investigators acquired copies of DEA 222 
Narcotic Order Forms, invoices for the purchase of controlled 
substances, prescriptions for controlled substances, and records for 
the purchase, sale, and transfer of listed chemicals. Judge Randall 
credited the testimony of a DEA Diversion Investigator (Investigator) 
with regard to the findings of this investigation.
    The Investigator testified that on thirteen occasions, the 
Respondent transferred Schedule II controlled substances to other DEA 
registrants without properly executing a DEA Form 222. Although the 
Respondent did not prepare a DEA Form 222 for any of these transfers as 
required, the Respondent maintained records indicating the quantity and 
locations of controlled substances transferred. The Investigator 
testified that had the information contained on these records been 
placed properly on DEA forms, there would have been no violation.
    The Investigator also testified that the Respondent transferred 
Schedule III through V controlled substances on nine occasions without 
recording the proper information, including names, dates, substance 
type, and quantity. The Respondent did maintain records of each 
transfer. The records did not always contain all of the required 
information, however, and they were not always correctly maintained in 
the Respondent's filing system.
    The Investigator further testified that, between April of 1994 and 
July of 1996, on thirty occasions the Respondent failed to complete 
properly the required Supplier's Copy 1 of DEA Form 222. The Supplier's 
Copy 1 of DEA Form 222 failed to include the supplier's DEA number and 
street address. Further, on fifty occasions between August 23, 1994, 
and July 19, 1996, the Respondent failed to complete properly the 
required Purchaser's Copy 3 of DEA Form 222. Many of the records for 
these transfers were attached to invoices that contained a description 
of the type of controlled substance transferred, the quantity 
transferred, and the location of the transfer, however. Thus, the 
Respondent had the required information, but had failed to record 
completely the information on the required forms.
    On approximately 1000 occasions between August 1994 and August 
1996,

[[Page 18302]]

the Respondent failed to record information on purchase invoices for 
controlled substances as required by federal regulations. Missing 
information included the date the shipment of controlled substances was 
received, improperly recorded addresses, and no entry showing the 
number of packages actually received. This information is significant, 
the pharmacy needs the date and the quantity received to properly 
account for the controlled substances on hand and subsequently 
dispensed.
    Between November 17, 1995, and July 16, 1996, the Respondent 
purchased approximately 36,000 capsules of the List I chemical 
ephedrine without maintaining any required sales records. Regulations 
involving the record keeping requirements for the purchase and sale of 
ephedrine were changed in 1994; yet the Respondent's records were not 
in compliance with these requirements by 1995 or 1996.
    During the execution of the search warrant, Mark Wansley was 
arrested by DEA agents for failing to follow law enforcement officers' 
instructions, and he was charged with interfering with Federal officers 
in the execution of a warrant. During the execution of the search 
warrant, Mr. Wansley chose to remain at the Respondent during the 
search. The DEA investigators told him to remain seated during the 
search. Subsequently, Mark Wansley's mother knocked on the back door of 
the Respondent, and a DEA agent instructed Mr. Wansley that he could 
not leave his seat to speak with his mother. Contrary to the 
instructions of the DEA agent, Mr. Wansley left his seat, resulting in 
his being arrested.
    Subsequently, Mark Wansley was indicted, with one count pertaining 
to the obstruction of a federal officer during the execution of a 
search warrant in violation of 18 U.S.C. 111.
    On July 28, 1997, in the United States District Court for the 
District of South Carolina, Mark Wansley pleaded guilty to a 
misdemeanor count of Assaulting, Resisting and Impeding an Agent of the 
United States in violation of 18 U.S.C. 111 and was sentenced to two 
years probation.
    As a result of the DEA investigation, Mark Wansley and the 
Respondent were indicted on sixteen felony counts of maintaining false 
records in violation of 21 U.S.C. 843(a)(4)(A), and one count of 
conspiracy in violation of 21 U.S.C. 846. The government did not seek 
conviction on the conspiracy count.
    On July 28, 1997, in the United States District Court for the 
District of South Carolina, the Respondent was convicted of one felony 
count of maintaining false records in violation of 21 U.S.C. 
843(a)(4)(A) and was sentenced to two years of probation and fined 
$20,000.
    Pursuant to 21 U.S.C. 824(a), ``A registration pursuant to section 
823 of this title to * * * dispense a controlled substance * * * may be 
suspended or revoked by the Attorney General 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 or a list I chemical.'' 
Pursuant to this statute, a felony conviction is an ``independent 
statutory basis for revocation of a registration.'' See Bobby Watts, 
M.D., 58 FR 46995 (DEA 1993) (providing the standard for finding an 
independent statutory basis for revocation under section 824(a)). While 
a conviction for a felony related to controlled substances creates a 
lawful basis to revoke a pharmacy's DEA Certificate of Registration 
under 21 U.S.C. 824(a)(2), it remains within the Administrator's 
discretion as to whether or not to revoke the registration. Dobson Drug 
Co., Inc., 56 FR 46445, 46446 (DEA 1991).
    The record in this proceeding demonstrates that the Respondent was 
convicted of one felony count of maintaining false records regarding 
the dispensing of controlled substances in violation of 21 U.S.C. 
843(a)(4)(A). Pursuant to 21 U.S.C. 843(a)(4)(A), it shall be unlawful 
``to furnish false or fraudulent material information in, or omit any 
material information from, any application, report, record, or other 
document required to be made, kept, or filed under this subchapter or 
subchapter II of this chapter.'' Thus the preponderance of the evidence 
establishes this basis for revocation of the Respondent's Certificate 
of Registration.
    Pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Administrator may 
revoke a DEA Certificate of Registration and deny any pending 
applications to renew that registration, if he determines that the 
continued registration would be inconsistent with the public interest. 
See KK Pharmacy, 64 FR 49507 (DEA 1999). 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.
    It should be noted that these factors are to be considered in the 
disjunctive: the Administrator may properly rely on any one or a 
combination of these factors, and may give each factor the weight he 
deems appropriate in determining whether an application for 
registration should be denied. See Henry J. Schwarz, Jr., M.D., 54 FR 
16,422 (DEA 1989).
    Regarding factor one, in accordance with 21 U.S.C. 823(f)(1), the 
Administrator shall consider the recommendation of the appropriate 
state licensing agency in determining whether a registrant's continued 
registration is consistent with the public interest. Here, the state 
agency has not made a recommendation pertaining to the resolution of 
this proceeding.
    Further, a valid state registration is a prerequisite for DEA 
Registration. See 21 U.S.C. 823(f) (authorizing the Attorney General to 
register a practitioner to dispense controlled substances only if the 
applicant is authorized to dispense controlled substances under the 
laws of the state in which he or she conducts business); 21 U.S.C. 
802(21) (defining ``practitioner'' as ``a pharmacy * * * or other 
person licensed, registered, or otherwise permitted, by the United 
States or the jurisdiction in which he practices * * * to distribute, 
[or] dispense * * * controlled substance[s) in the course of 
professional practice''). In this case, the Respondent maintains state 
authority to handle and distribute controlled substances in the State 
of South Carolina.
    In accordance with 21 U.S.C. 823(f)(2), the Administrator shall 
consider the registrant's experience in dispensing controlled 
substances in determining whether its continued registration is 
consistent with the public interest. The Administrator shall also 
consider, pursuant to 21 U.S.C. 823(f)(4), the applicant's compliance 
with state and federal law. As the Respondent's experience in 
dispensing controlled substances is related to its compliance with 
state and federal law, factors two and four will be considered 
together. See Service Pharmacy, 61 FR 10,791, 10,795 (DEA 1996).
    It is undisputed that the Respondent was convicted of the felony of 
maintaining false records regarding the dispensing of controlled 
substances in violation of 21 U.S.C. 843(a)(4)(A). Additionally, the 
DHEC investigators detailed a series of the Respondent's

[[Page 18303]]

record keeping discrepancies over a 21 month period, including failures 
to record required information on the required forms. Additionally, the 
DHEC investigators also noted that the Respondent failed properly to 
record repeat sales of Schedule V controlled substances as required by 
state regulation. The DHEC investigators noted that the majority of 
these discrepancies were in areas in which the Respondent needed to 
improve its practices. In three inspections of the Respondent, the DHEC 
investigators noted three areas in which the Respondent's practices 
were unsatisfactory. As was explained during the hearing in this matter 
by the testifying DHEC investigator, the notations on the Pharmacy 
Inspection Form generally were intended to help the Respondent 
understand and fully comply with the relevant state and federal 
regulations. The results of the DHEC investigation show that, although 
repeatedly advised of relevant state and federal regulations, the 
Respondent did not alter its practices to conform to these regulations. 
By not following the directives of the DHEC investigators, the 
Respondent's actions over the 21 month period show a general and 
continued noncompliance with state regulation.
    Similarly, the DEA investigation revealed that the Respondent had 
committed a series of record keeping violations. By not properly 
preparing DEA Form 222 for each Schedule II transfer, and by not 
properly preparing Supplier's Copy 1 and Purchaser's Copy 3 of DEA Form 
222 for each Schedule II transfer, the Respondent violated 21 U.S.C. 
828 and 842(a)(5), and 21 CFR 1305.03, 1305.09, and 1305.11. Respondent 
also failed properly to record information on purchase invoices for 
controlled substances in violation of 21 U.S.C. 827 and 842(a)(5), and 
21 CFR 1304.22. The non-conforming records actually on file with the 
Respondent arguably detailed sufficient information to determine that 
the controlled substances were not diverted to an illicit purpose, 
however, but were actually transferred to other registrants. 
Nevertheless, Respondent's non-conforming record keeping is also a 
violation of 21 CFR 1304.04.
    Even if Respondent arguably had sufficient albeit non-conforming 
information in its files to comply with some of the state and federal 
record keeping requirements (Respondent had no records whatsoever 
regarding the disposition of the 36,000 capsules of the List I chemical 
ephedrine), this does not absolve Respondent from its obligation to 
adhere to the law. The efficacy of the closed system of distribution 
for controlled substances and certain chemicals mandated by Congress 
through the Controlled Substances Act depends upon strict adherence by 
all registrants to all record keeping requirements including those set 
forth at 21 U.S.C. 827, 828, 829, and 830, and all implementing 
regulations found in Title 21 Code of Federal Regulations, as well as 
all applicable state laws and regulations.
    Past DEA cases consistently have held that the failure to comply 
with record keeping requirements is a basis for revoking a 
registration. Singers-Andreini Pharmacy, Inc., 63 FR 4,668 (DEA 1998); 
Arthur Sklar, d/b/a King Pharmacy, 54 FR 34623 (DEA 1989); Summer Grove 
Pharmacy, 54 FR 28522 (DEA 1989); The Boro Pharmacy and Bell 
Apothecary, 53 FR 15151 (DEA 1988). These cases reflect the 
Congressional purpose and intent embodied in the Controlled Substances 
Act with regard to protecting the public against the dangers of the 
diversion of controlled substances. ``In passing the Controlled 
Substances Act, `Congress was particularly concerned with the diversion 
of drugs from legitimate channels to illegitimate channels.' '' United 
States v. Frederick M. Blanton, 730 F.2d 1425, 1427, (11th Cir. 1984) 
(quoting United States v. Moore, 423 U.S. 122, 135, 96 S. Ct. 335, 342 
(1975). ``The purpose of the enactment of the [Controlled Substances 
Act] was to provide a system for the control of drug traffic and to 
prevent the abuse of drugs. The statutory scheme envisioned by the Act 
is one of control through record keeping. Any person who desires to 
shoulder the responsibility of engaging in the manufacture or 
distribution of these products subjects himself to the regulatory 
system laid down by the 1970 act.'' United States v. Stidham, 938 F. 
Supp. 808, 814 (S.D. Ala. 1996) quoting United States v. Greenberg, 334 
F. Supp. 364, 366-7, (W.D. Pa. 1971). ``The Controlled Substances Act 
attempts to limit this diversion by strict registration requirements of 
all persons . . . who are authorized by state law to handle controlled 
substances. The registration scheme includes formalized drug ordering 
procedures and certain types of recordkeeping thus allowing the federal 
government's Drug Enforcement Administration to closely monitor the 
flow of controlled substances from manufacturer to the hands of the 
consumer.'' Blanton, 730 F.2d at 1427. ``The Controlled Substances Act 
focuses on recordkeeping, in `an attempt to regulate closely the 
distribution of certain substances determined by Congress to pose 
dangers, if freely available, to the public at large.' '' United States 
v. David P. Poulin, 926 F. Supp. 246, 250 (D. Mass. 1996) quoting 
United States v. Averi, 715 F. Supp. 1508, 1510 (M.D. Ala. 1989). The 
statutory text and legislative history of the Controlled Substances Act 
makes clear that Congress intended strict compliance with the 
recordkeeping provisions. United States v. Green Drugs, 905 F.2d 694, 
698 (3d Cir. 1990), cert. denied, 498 U.S. 985, 111 S.Ct. 518 (1990); 
United States v. James Little, 59 F. Supp. 2d 177, 183 (D. Mass. 1999). 
See also United States v. Naeem Akhtar, 95 F. Supp. 2d 668, 671 (S.D. 
Tex. 1999); United States v. Stidham, 938 F. Supp. at 813.
    The DHEC audit and inventory of the Respondent revealed shortages 
or overages of each controlled substances investigated. These 
discrepancies constitute a violation of 21 U.S.C. 827 and 21 CFR 
1304.21, which require the Respondent to keep complete and accurate 
records of all controlled substances. The audit also revealed the 
presence of prescriptions that were post-dated, filled beyond the 
expiration date, incorrectly filled, refilled too early, and filled for 
more than allowed by regulation. These practices constituted a 
violation of state and federal regulations.
    The DEA inspection also found that the Respondent purchased 
approximately 36,000 units of the List I chemical ephedrine without 
maintaining any required sales record, which is a violation of 21 
U.S.C. 830(a) and 842(a)(10), and 21 CFR 1310.03 and 1310.04. As 
previously noted, the regulations regarding record keeping requirements 
for the purchase and sale of the List I chemical ephedrine were changed 
in 1994; yet the Respondent's records were still not in compliance with 
these requirements from November 1995 through July 1996. Therefore, the 
Administrator finds Respondent's consistent pattern of record keeping 
violations weigh in favor of revocation of its registration.
    The DEA has consistently recognized that a pharmacy operates under 
the control of owners, stockholders, pharmacists, or other employees. 
Further, the DEA has consistently held that the conduct of these 
individuals is relevant in evaluating a respondent pharmacy's fitness 
to be registered by the DEA. See e.g., Rick's Pharmacy, 62 FR 42,595, 
42,597 (DEA 1997); Big T Pharmacy, Inc., 47 FR 51,830 (DEA 1982), Seals 
Energy Outlet, 64 FR 14,269, 14,271 (DEA 1999). On fourteen occasions, 
the former owner and pharmacist-in-charge of the Respondent, Sam 
Gaillard, dispensed controlled

[[Page 18304]]

substances without practitioner authorization in violation of 21 U.S.C. 
829 and 21 CFR 1306.11(a). These violations include the dispensing of 
twelve unauthorized prescriptions and the dispensing of two 
unauthorized refills. On at least one occasion the current owner and 
pharmacist-in-charge of the Respondent, Mark Wansley, dispensed 
controlled substances without practitioner authorization in violation 
21 U.S.C. 829 and 21 CFR 1306.11(a). Additionally, a DEA Diversion 
Investigator credibly testified that Sam Gaillard stated that Mark 
Wansley knew about these illicit activities. For each unauthorized 
distribution of controlled substances, the Respondent's agents created 
a false record indicating that the distributions were authorized. This 
falsification of records is a violation of 21 U.S.C. 843(a)(4)(A).
    Each of these prescriptions was dispensed to Sam Gaillard or a 
member of his family. Sam Gaillard is no longer employed by the 
Respondent, however. Therefore, these unauthorized distributions 
currently pose no threat to the public interest.
    Regarding factor three, Respondent's conviction record, the record 
in this proceeding demonstrates without dispute that the Respondent was 
convicted of one felony count of maintaining false records regarding 
the dispensing of controlled substances in violation of 21 U.S.C. 
843(A)(4)(A).
    With regard to the fifth factor, such other conduct which may 
threaten the public health or safety, the record in this case 
demonstrates without dispute that Mark Wansley, owner and pharmacist-
in-charge of the Respondent, was convicted of the offense of 
Assaulting, Resisting, and Impeding an Agent of the United States. 
While Mr. Wansley's failure to follow the specific instructions of a 
DEA agent are relevant to a determination under this factor, the 
Administrator concurs with Judge Randall's finding that the 
circumstances surrounding this arrest and conviction are also relevant. 
Mark Wansley's actions had no effect on the DEA's ability to seize the 
targeted records nor did his actions serve to hide evidence from the 
investigation.
    Also relevant to this factor, the record demonstrates that Sam 
Gaillard created two false prescription records in his wife's name, and 
he used these prescriptions to make false representations to an 
insurance carrier. Again, however, also significant is the fact that 
Sam Gaillard is no longer employed by the Respondent.
    Finally, past DEA cases have found record keeping violations to be 
a basis for the revocation of a registration based on the public 
interest. Summer Grove Pharmacy, 54 FR 28522 (DEA 1989).
    The Administrator concurs with Judge Randall's conclusion that a 
preponderance of the evidence shows that the Respondent has violated 
state and federal law regarding the dispensing of controlled 
substances, and finds that the Respondent was convicted of a felony 
related to maintaining false records regarding the dispensing of 
controlled substances. Accordingly, the Administrator finds that the 
Government has established by a preponderance of the evidence that a 
basis exists to revoke the Respondent's DEA Certificate of Registration 
and to deny the pending renewal application. See Fourth Street 
Pharmacy, 52 FR 32,068 (DEA 1987) (holding that a conviction of the 
respondent corporate entity for a felony related to controlled 
substances is sufficient ground for revocation of a DEA Certificate of 
Registration).
    In determining whether revocation is warranted, the Administrator 
looks to the totality of the circumstances in each case. Martha 
Hernandez, M.D., 62 FR 61,145 (DEA 1997). The record demonstrates that 
the Respondent has taken proper ameliorative action by no longer 
employing Sam Gaillard. However, the DHEC and DEA inspections together 
revealed a consistent pattern of numerous state and federal record 
keeping violations spanning a period of over two years. The 
Administrator concurs with Judge Randall's concern that the Respondent 
presented no evidence demonstrating a change in record keeping 
practices. See Singers-Andreini Pharmacy, Inc., 63 FR 4,668, 4,6672 
(DEA 1998). Mark Wansley's silence leaves the record void of any 
assurances of his future accountable conduct. See AML Corp., 61 FR 
8,973, 8,976 (DEA 1996) (finding that the pharmacy owner's failure to 
acknowledge past misconduct is significant in determining the public 
interest). Furthermore, past DEA cases have found that a negative 
inference may be drawn from a respondent's silence. Alan L. Ager, 
D.P.M., 63 FR 54,732 (DEA 1998).
    The actions by the Respondent's employees in creating false records 
are significant. The Administrator concurs with Judge Randall's finding 
that the evidence credibly shows Mark Wansley dispensed controlled 
substances on at least one occasion without practitioner authorization, 
and created at least one false prescription record. Such an indication 
of willingness to engage in dishonest conduct weights heavily in favor 
of revocation, especially since the record contains no assurances that 
such conduct will not be repeated in the future. See Rocco's Pharmacy, 
62 FR 3,056 (DEA 1997) (holding that improper dispensing of controlled 
substances is significant in predicting future compliance with relevant 
regulations).
    The DHEC audit of controlled substances revealed overages and 
shortages, indications that the Respondent's record keeping practices 
are not adequate to account for the controlled substances handled by 
the Respondent's employees. These overages and shortages demonstrate 
that Respondent's record keeping practices do not comport with the 
legal requirements and present an unacceptable risk of diversion. 
Further, the Respondent purchased approximately 36,000 units of a List 
I chemical, yet failed to account for any of its distribution. Thus no 
records exist to assure the DEA that this substance was lawfully 
distributed, in violation of 21 U.S.C. 830(a) and 842(a)(10), and 21 
CFR 1310.03 and 1310.04.
    After reviewing the totality of the circumstances, the 
Administrator finds that revocation is warranted in this case. The 
Administrator is very concerned regarding the absence of evidence of 
remedial actions and the Respondent's demonstrated continued 
unwillingness or inability to comply with state and federal regulations 
in the recording and handling of controlled substances and List I 
chemicals. See Singers-Andreini Pharmacy, Inc., 63 FR 4,668 (DEA 1998); 
AML Corp., 61 FR 8,973 (DEA 1996). Respondent's failure to comply with 
relevant record keeping requirements creates a serious risk of 
diversion, specifically undetected diversion. Such a risk is 
inconsistent with the public interest. The three DHEC inspections and 
the subsequent DEA inspection of the Respondent together revealed a 
persistent pattern of non-compliance with applicable record keeping 
regulations spanning over two years. Since ``an agency rationally may 
conclude that past performance is the best predictor of future 
performance,'' Alra v. Drug Enforcement Administration, 54 F.3d 450 
(7th Cir. 1995), the Administrator concludes that this persistent 
pattern of non-compliance, taken together with Mark Wansley's failure 
to testify as to corrective actions taken to prevent future record 
keeping violations, create an unacceptable risk for the public 
interest. It is the Respondent's responsibility to conduct its business 
in a manner that does not place the public at risk for the diversion of 
controlled substances.

[[Page 18305]]

    Accordingly, the 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 BA2660214, issued to Alexander Drug Co., 
Inc., be, and it hereby is, revoked. The Administrator further orders 
that any pending applications for the renewal of such registration, be, 
and they hereby are, denied. This order is effective May 7, 2001.

    Dated: March 27, 2001.
Donnie R. Marshall,
Administrator.
[FR Doc. 01-8478 Filed 4-5-01; 8:45 am]
BILLING CODE 4410-09-M