[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