[Federal Register Volume 67, Number 245 (Friday, December 20, 2002)]
[Notices]
[Pages 78019-78020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32007]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 02-6]


Houba, Inc., Culver, IN; Notice of Administrative Hearing, 
Summary of Comments and Objections; Notice of Hearing

    This Notice of Administrative Hearing, Summary of Comments and 
Objections, regarding the application of Houba, Inc. (Houba), for 
registration as an importer of the Schedule II controlled substances 
raw opium, opium poppy, and poppy straw concentrate is published 
pursuant to 21 CFR 1301.34(a). On September 6, 2001, notice was 
published in the Federal Register, 66 FR 46653 (DEA 2001), stating that 
Houba has applied to be registered as an importer of raw opium, opium 
poppy, and poppy straw concentrate.
    By filings dated October 9, 2001, Penick Corporation (Penick), 
Noramco of Delaware, Inc. (Noramco), and Mallinckrodt, Inc. 
(Mallinckrodt), filed comments and request for hearing on Houba's 
application. Notice is hereby given that a hearing with respect to 
Houba's application to be registered as an importer of raw opium, opium 
poppy, and poppy straw concentrate will be conducted pursuant to the 
provisions of 21 U.S.C. 952(a) and 958 and 21 CFR 1301.34.

Hearing Date

    The hearing will begin at 9:30 a.m. on February 3, 2003, and will 
be held at the Drug Enforcement Administration Headquarters, 600 Army 
Navy Drive, Hearing Room, Room E-2103, Arlington, Virginia. The hearing 
will be closed to any person not involved in the preparation or 
presentation of the case.

Notice of Appearance

    Any person entitled to participate in this hearing pursuant to 21 
CFR 1301.34, and desiring to do so, may participate by filing a notice 
of intention to participate, in triplicate, and in accordance with 21 
CFR 1301.34, with the Hearing Clerk, Office of Administrative Law 
Judges, Drug Enforcement Administration, Washington, DC 20537, within 
30 days of the date of publication of this notice in the Federal 
Register. Each notice of appearance must be in the form prescribed in 
21 CFR 1316.48. Houba, Penick, Noramco, Mallinckrodt, and the Drug 
Enforcement Administration (DEA) Office of Chief Counsel need not file 
a notice of intention to participate.

FOR FURTHER INFORMATION CONTACT: Helen D. Farmer, Hearing Clerk, Drug 
Enforcement Administration, Office of Administrative Law Judges, 
Washington, DC 20537; Telephone (202) 307-8188.

Summary of Comments and Objections

Noramco's Comments

    Noramco asserts that Houba bears the burden of providing that its 
registration to import would be consistent with the public interest, 
that Houba has apparently not engaged in the import or bulk manufacture 
of narcotic raw materials or controlled substances since withdrawing a 
previous application to manufacture the Schedule II controlled 
substance methylphenidate in 1994, and that existing manufacturers of 
bulk narcotic substances are producing an adequate and uninterrupted 
supply under adequately competitive conditions. Noramco further asserts 
that Houba's parent corporation, Halsey Pharmaceutical (Halsey), has 
previously failed to comply with DEA regulations and pled guilty in 
1993 to drug manufacturing-related crimes, that five former Halsey 
employees were indicted as a result, and that a controlled substance-
related murder occurred at Halsey's premises in 1992. Noramco also 
asserts that that there is significant evidence that Halsey has serious 
financial problems and does not likely have the financial resources to 
import and process narcotic raw materials. Finally, Noramco asserts 
that as of the date of its request for hearing, Mallinckrodt and 
Noramco were registered by DEA to import narcotic raw materials and 
applications by Penick, Chattem Chemicals, Inc. (Chattem), and Johnson 
Matthey, Inc. (Johnson Matthey), were pending, and that DEA is 
statutorily constrained to limit the number of approved importers and 
manufacturers to a number that can produce an adequate and 
uninterrupted supply of controlled substances for legitimate medical, 
scientific, research, and industrial purposes under adequately 
competitive conditions.

Penick's Comments

    Penick states that based on information in the public record, it 
appears that Houba may not be able to establish that its registration 
to import narcotic raw materials would be in the public interest, that 
in light of the applications for registration to import that were 
pending at the time Penick filed its comments a determination of the 
adequacy of competition among importers could not be made; that 
although it is not possible to determine Houba's capabilities to 
process narcotic raw materials in its manufacturing facilities, it 
appears that Houba has never been registered to manufacture a product 
produced from these substances; and that Penick is not aware whether 
Houba has ever held DEA registration as a researcher that would allow 
it to develop methods and procedures for processing narcotic raw 
materials. Penick further asserts that additional information is 
necessary about Houba's experience in processing narcotic raw materials 
and

[[Page 78020]]

manufacturing opiate active pharmaceutical ingredients; about Houba's 
knowledge of and experience with the international marketplace, customs 
and practices associated with purchases of narcotic raw materials, and 
control of possible diversion of those materials; and about whether 
Houba's manufacturing facility complies with DEA's security 
requirements, including those pertaining to the transport of narcotic 
raw materials from their port of entry in the United States to Houba's 
facility. Finally, Penick asserts that Halsey has suffered serious 
financial difficulties and may be seeking an importer registration in 
order to attract potential investors and funding, and that Halsey has 
encountered various regulatory problems.

Mallinckrodt's Comments

    Mallinckrodt asserts that Houba bears but cannot meet the burden of 
providing that its application satisfies applicable legal standards; 
that DEA, pursuant to its ``eighty-twenty rule'' (21 CFR 1312.13(f), 
requires importers of narcotic raw material to purchase eighty percent 
of these substances from India and/or Turkey and the remaining twenty 
percent from Yugoslavia, France, Poland, Hungary, and/or Australia, 
which provides insurmountable cost advantages to foreign producers; 
that in order to demonstrate that its application is in the public 
interest, Houba must demonstrate not only that it has adequate physical 
security at its facility, but also that it has a proven technology for 
processing narcotic raw materials that meets federal regulatory 
requirements, a detailed marketing and business plan, plans and firm 
capital commitments for construction of the facility in which it will 
process narcotic raw materials, and personnel with experience and 
expertise to implement the proven technology with minimal wastage of 
narcotic raw materials. Mallinckrodt further asserts that DEA is 
required to limit the number of importers and that the existing 
registrants provide an adequate supply under adequately competitive 
conditions. In addition, Mallinckrodt asserts that Houba should be 
required to demonstrate that, if registered, it would produce opiates 
from both opium and poppy straw concentrate, because failing to do so 
would violate DEA's ``eighty-twenty-rule'' and DEA's policy against 
permitting manufacturers to hold registrations and no use them, and 
because failing to do so would increase the instability of supply of 
narcotic raw materials. Finally, Mallinckrodt asserts that Halsey 
admits that it is in a precarious financial position, that Halsey is in 
a position to control Houba's management and operations, and that 
Halsey had a poor history of compliance with regulatory requirements 
throughout the 1990s; that it is uncertain whether Houba has the 
technical capability to process opium and poppy straw concentrate; and 
that Mallinckrodt has no knowledge that Houba has any experience in 
importing or extracting narcotic raw materials.

    Dated: December 13, 2002.
John B. Brown III,
Deputy Administrator.
[FR Doc. 02-32007 Filed 12-19-02; 8:45 am]
BILLING CODE 4410-09-M