[Federal Register Volume 77, Number 110 (Thursday, June 7, 2012)]
[Notices]
[Pages 33770-33772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-13805]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Pharmboy Ventures Unlimited, Inc., Decision and Order

    On August 26, 2011, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Pharmboy Ventures Unlimited, Inc., d/b/a Brent's Pharmacy 
and Diabetes Care (Applicant), of St. George, Utah. The Show Cause 
Order proposed the denial of Applicant's application for a DEA 
Certificate of Registration as a retail pharmacy, on the ground that 
its ``registration would be inconsistent with the public interest.'' 
Show Cause Order, at 1 (citing 21 U.S.C. 823(f)).
    The Show Cause Order alleged that on February 28, 2011, Applicant 
submitted an application for a DEA Registration as a retail pharmacy 
and that while applicant is owned by Caroline McFadden, her husband 
Brent McFadden is Applicant's pharmacist-in-charge and sole pharmacist. 
The Show Cause Order then alleged that in 2010, Brent McFadden, while 
working as a pharmacist at Lin's Pharmacy, had unlawfully taken 
phentermine, a schedule IV controlled substance, from the pharmacy's 
stock and ingested it; the Order also alleged that Brent McFadden had 
failed to document the disposition of the phentermine he had taken. Id. 
at 1-2 (citing 21 U.S.C. 844; 827; 21 CFR 1304.22(c); 1306.06; 
1306.21). The Order also alleged that while working as a pharmacist at 
Lin Pharmacy, Mr. McFadden had, on four or more occasions when it was 
open to the public, left the pharmacy unattended by a pharmacist, in 
violation of Utah Admin. Code R156-1-102a. Id. at 2.
    Next, the Show Cause Order alleged that based on the various acts 
set forth above, on October 27, 2010, the Utah Division of Occupational 
and Professional Licensing (DOPL) issued a consent order to Mr. 
McFadden placing his pharmacist's license on probation for three years. 
Id. The Order also alleged that on January 20, 2011, Mr. McFadden had 
pled no contest to seven state law counts of making or altering a false 
prescription based on his conduct in taking phentermine from Lin's 
Pharmacy, and that he had been sentenced to eighteen-months' probation, 
fined, and ordered to undergo a substance abuse evaluation. Id. (citing 
Utah Code Ch. 58, Sec.  37(3)(a)(iii)). Finally, the Order alleged that 
Mr. McFadden had engaged in such other conduct which may threaten 
public health and safety because he ``took and consumed legend drugs 
and food items'' from his former employer without paying for them, and 
that because of the aforementioned acts, he was terminated from his 
employment. Id. (citing 21 U.S.C. 823(f)(5)).
    The Show Cause Order, which also notified Applicant of its right to 
request a hearing on the allegations or to submit a written statement 
in lieu of a hearing, the procedures for electing either option, and 
the consequences for failing to do either, id. at 2-3 (citing 21 CFR 
1301.43); was served on Applicant by certified mail, return receipt 
requested, addressed to it at the address of its proposed registered 
location. GX C. As evidenced by the signed return receipt card, service 
was accomplished on September 2, 2011. Since that date, more than 
thirty days have now passed, and neither Applicant, nor anyone 
purporting to represent it, has either requested a hearing or submitted 
a written statement in lieu of a hearing. Accordingly, I find that 
Applicant has waived its right to a hearing and issue this Decision and 
Order based on relevant evidence contained in the investigative record 
submitted by the Government. I make the following findings of fact.

Findings

    On February 28, 2011, Applicant filed an application for a DEA 
Certificate of Registration as a retail pharmacy. GX A. Applicant's 
application was signed by Ms. Caroline McFadden. Id. In response to one 
of the application's liability questions, Applicant noted that ``Brent 
McFadden, corporate owner, charges of unprofessional conduct and 
unlawful conduct for leaving the pharmacy unattended for thirty minutes 
and for taking 7 phentermine tablets from pharmacy stock and injesting 
[sic] them.'' GX A.
    Upon reviewing the application, a DEA Diversion Investigator (DI) 
noticed Applicant's statement regarding the action taken by the State 
of Utah against Brent McFadden. GX D, at 1. The DI learned that 
Applicant has a state pharmacy license and that Caroline McFadden was 
listed as the applicant and owner of the pharmacy. Id. at 1-2. The DI 
also obtained a report by a DOPL Investigator regarding an August 17, 
2010 interview she did of Mr. McFadden, who had previously worked at 
the pharmacy in Lin's Supermarket, a grocery store located in St. 
George, Utah. Id.; GX F, at 1.
    During the interview, Mr. McFadden admitted that he had taken both 
phentermine, a schedule IV stimulant, and Maxzide (Triamterene-HCTZ), a 
non-controlled legend drug used as a diuretic, from the store's 
pharmacy, where he had been employed for sixteen years. GX D, at 2. 
With respect to his use of phentermine, Mr. McFadden initially claimed 
that the drug had been prescribed to him by J.R.M., a physician's 
assistant and neighbor of his. Id. However, Mr. McFadden later admitted 
that J.R.M. had not treated him

[[Page 33771]]

and that he had taken the phentermine on his own. Id. Mr. McFadden 
admitted that he had taken a total of thirty phentermine pills over the 
preceding two to three months. Id. In a written statement he made on 
August 17, 2010, Mr. McFadden asserted that he had taken the 30-35 
phentermine tablets ``over a [two] month period'' based ``upon a verbal 
recommendation from a doctor.'' GX G, at 2. Mr. McFadden further stated 
that he paid for the drugs ``but an RX was never written.'' Id. 
Finally, McFadden claimed that he had repaid the twelve to fifteen 
tablets of Maxzide by taking them out of his subsequent prescription. 
Id. at 1.
    In addition, Mr. McFadden admitted that he had left the pharmacy 
unattended ``for a few minutes,'' on three or four occasions ``during 
the past two to four years,'' to get lunch or take a break because 
store policy did not allow for the pharmacy to close for lunch. GX F, 
at 2. However, upon being told by the State Investigator that it was 
reported that he had recently left the pharmacy for about 45 minutes, 
Mr. McFadden admitted that the week before, he had left the pharmacy, 
when no other pharmacist was in attendance, for 30 to 45 minutes to get 
lunch and run an errand. Id. Mr. McFadden denied, however, tampering 
with, or altering, the pharmacy's records when he removed tablets from 
the dispensing machine. Id.
    On October 20, 2010, Mr. McFadden entered into a Stipulation and 
Order with the DOPL; the Order was subsequently approved by the DOPL's 
Director. GX M, at 10-11. Among the Order's findings were that ``[o]n 
or about August 17, 2010[,] [Mr. McFadden] admitted to a Division 
investigator that [he] had, on multiple occasions, taken Maxide [sic], 
a prescription only medication, and [p]hentermine, a Schedule IV 
controlled substance, from pharmacy stock for Respondent's own use. 
Respondent did not possess a valid prescription for the 
[p]hentermine.'' Id. at 3. Of note, the DOPL did not find that Mr. 
McFadden lacked a prescription for the Maxzide.
    Mr. McFadden further stipulated that he ``recently left the 
pharmacy unattended for 30 to 45 minutes to run an errand and pick up 
lunch. [He] also admitted to the Division investigator that the 
practice of leaving the pharmacy unattended had occurred on three or 
four occasions in the past four years.'' Id. Mr. McFadden agreed that 
these (and other findings) constituted unprofessional conduct under 
Utah law and regulations, as well as unlawful conduct under Utah 
criminal law. Id. at 3-4.
    The DI also developed evidence that Mr. McFadden was observed on 
the store's security cameras occasionally taking various food items, 
including bagels and fountain drinks, without paying for them. GX D, 3-
4. Subsequently, based on his expropriation of drugs, the bagels, and 
fountain drinks, as well as his having left the pharmacy unattended, 
Lin's terminated Mr. McFadden. GX J.
    In addition, Mr. McFadden was charged with seven felony counts of 
violating Utah Code Sec.  58-37-8(3)(A)(III), which prohibits 
``mak[ing] any false or forged prescription or written order for a 
controlled substance, or * * * utter[ing] the same, or * * * alter[ing] 
any prescription or written order'' for a controlled substance. GX H, 
at 5. However, Mr. McFadden was allowed to plead no contest, with his 
plea being held in abeyance, to seven misdemeanor counts of Utah Code 
Sec.  58-37-8(3)(A)(III), as well as a single count of retail theft 
(also a misdemeanor), in violation of Utah Code Sec.  76-6-602. Id. The 
court ordered that his pleas be held in abeyance for eighteen months, 
fined him $1,000, and ordered him to both undergo a substance abuse 
evaluation and to successfully complete any treatment program and 
provide proof of completion to the court. Id. at 6.

Discussion

    Section 303(f) of the Controlled Substances Act (CSA) provides that 
an application for a practitioner's registration may be denied upon a 
determination ``that the issuance of such registration would be 
inconsistent with the public interest.'' 21 U.S.C. 823(f). In making 
the public interest determination in the case of a practitioner, which 
includes a retail pharmacy, see id. Sec.  802(21), Congress directed 
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 * * * 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 and 
safety.

Id.

    ``[T]hese factors are considered in the disjunctive.'' Robert A. 
Leslie, 68 FR 15227, 15230 (2003). I may rely on any one or a 
combination of factors and may give each factor the weight I deem 
appropriate in determining whether to revoke an existing registration 
or to deny an application. Id. Moreover, while I ``must consider each 
of these factors, [I] `need not make explicit findings as to each one.' 
'' MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 2011) (quoting Volkman 
v. DEA, 567 F.3d 215, 222 (6th Cir. 2009)); see also Hoxie v. DEA, 419 
F.3d 477, 482 (6th Cir. 2005) (citing Morall v. DEA, 412 F.3d 165, 173-
74 (D.C. Cir. 2005)).
    Having considered all of the factors,\1\ I conclude that the 
Government's evidence with respect to Applicant's (more specifically, 
its pharmacist-in charge's) experience in dispensing controlled 
substances (factor two), his conviction record under laws relating to 
the distribution or dispensing of controlled substances (factor three), 
his compliance with applicable laws related to controlled substances 
(factor four), and his having engaged in other conduct which may 
threaten public health and safety (factor five), makes out a prima 
facie case to conclude that granting Applicant's application would be 
``inconsistent with the public interest.'' 21 U.S.C. 823(f). Because 
Applicant has waived its right to a hearing and present evidence 
refuting this conclusion, its application will be denied.
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    \1\ It is acknowledged that Applicant holds a state pharmacy 
license. However, the Agency has repeatedly held that while the 
possession of a state license is an essential condition for 
obtaining (and maintaining) a registration issued under 21 U.S.C. 
823(f), it is not dispositive of the public interest inquiry. Sun & 
Lake Pharmacy, Inc., 76 FR 24523, 24530 n.15 (2011).
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Factors Two--The Applicant's Experience in Dispensing Controlled 
Substances, Factor Three--The Applicant's Conviction Record Under 
Federal or State Laws Relating to the Distribution or Dispensing of 
Controlled Substances, Factor Four--Applicant's Compliance With 
Applicable Laws Related to Controlled Substances, and Factor Five--Such 
Other Conduct Which May Threaten Public Health and Safety

    As found above, the Utah DOPL found that Mr. Brent McFadden, 
Applicant's pharmacist-in-charge,\2\ expropriated

[[Page 33772]]

phentermine, a schedule IV controlled substance, from the stock of his 
former employer, which he ingested. The DOPL further found that Mr. 
McFadden did not have a prescription for the phentermine. These 
findings are entitled to preclusive effect in this proceeding. See 
Robert L. Dougherty, 76 FR 16823, 16830 (2011) (collecting cases).
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    \2\ DEA has long held that it can look behind a pharmacy's 
ownership structure ``to determine who makes the decisions 
concerning the controlled substance business of a pharmacy.'' 
Carriage Apothecary, 52 FR 27599, 27599 (1987) (citing cases); cf. 
Unarex of Plymouth Road, et al., 50 FR 6077, 6079-80 (1985) 
(revoking registration of pharmacy, whose pharmacist, transferred 
his ownership interest to his wife following his conviction for 
conspiracy to unlawfully distribute controlled substances; 
``Pharmacists do not operate by themselves. They require human 
intervention to operate''); Big-T Pharmacy, Inc. 47 FR 51830, 51831 
(1982) (``Pharmacies must operate through the agency of natural 
persons, owners or stockholders, pharmacists or other key employees. 
When such persons misuse the pharmacy's registration by diverting 
controlled substances obtained thereunder, and when those 
individuals are convicted as a result of that diversion, the 
pharmacy's registration becomes subject to revocation under section 
824, just as if the pharmacy itself had been convicted.''); S & S 
Pharmacy, Inc., 46 FR 13051, 13052 (1981) (``In a retail pharmacy, * 
* * the registered pharmacist in charge of the pharmacy is 
responsible for ordering controlled substances; for keeping and 
maintaining the required records and inventories; for taking all 
necessary measures to prevent the loss and diversion of controlled 
substances; and for dispensing such substances only in accordance 
with applicable State and Federal laws. The corporate pharmacy acts 
through the agency of its * * * pharmacist in charge.'').
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    Under the CSA, a controlled substance may only be dispensed 
``pursuant to the lawful order [such as a prescription] of, a 
practitioner.'' 21 U.S.C. 802(21).\3\ Mr. McFadden did not, however, 
have a prescription for phentermine. Thus, he unlawfully distributed 
phentermine to himself, which he then ingested. See id. Sec.  829(b) 
(``Except when dispensed directly by a practitioner, other than a 
pharmacist, to an ultimate user, no controlled substance in schedule 
III or IV, which is a prescription drug as determined under the Federal 
Food, Drug, and Cosmetic Act * * * may be dispensed without a written 
or oral prescription * * *.''); id. Sec.  841(a)(1) (prohibiting the 
knowing distribution or dispensing of a controlled substance ``[e]xcept 
as authorized by'' the CSA). See also Utah Code Sec.  58-17b-501(12) 
(prohibiting pharmacist from ``using a prescription drug or controlled 
substance for himself that was not lawfully prescribed for him by a 
practitioner''); id. Sec.  58-37-6(7)(c)(i) (``A controlled substance 
may not be dispensed without the written prescription of a 
practitioner, if the written prescription is required by the federal 
Controlled Substances Act.'').
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    \3\ Cf. 21 CFR 1306.03 (prescription may only be issued ``by an 
individual practitioner * * * authorized to prescribe controlled 
substances by the jurisdiction in which he is licensed to practice 
his profession''); id. 1306.04(a) (``A prescription for a controlled 
substance to be effective must be issued for a legitimate medical 
purpose by an individual practitioner acting in the usual course of 
* * * professional practice.'').
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    Mr. McFadden also violated 21 U.S.C. 844(a), which makes it 
``unlawful for any person knowingly or intentionally to possess a 
controlled substance unless such substance was obtained directly, or 
pursuant to a valid prescription or order, from a practitioner, while 
acting in the course of his professional practice,'' except as 
otherwise authorized by the CSA. See also Utah Code Sec.  58-37-
8(2)(a)(i) (same).
    In addition, the DOPL found that Mr. McFadden violated the Utah 
Pharmacy Practice Act Rule, when he left the Lin's Pharmacy unattended 
on various occasions. See Utah Admin Code R156-17b-614(7). GX M, at 3. 
While this rule is applicable to pharmacy practice in general, given 
the evidence that controlled substances were dispensed (and obviously 
stored) at the pharmacy, the violations have a sufficient connection to 
the CSA's core purpose of preventing the diversion of controlled 
substances to be considered as ``such other conduct which may threaten 
public health and safety,'' 21 U.S.C. 823(f)(5), and are thus within 
the Agency's authority to consider under factor five.
    Finally, the evidence also shows that Mr. McFadden pled no contest 
to seven misdemeanor counts of making a false or forged prescription or 
written order for a controlled substance or uttering the same, in 
violation of state law. Notwithstanding that his pleas are being held 
in abeyance, and thus the charges may eventually be dismissed, DEA has 
repeatedly held that a plea of no contest which is subject to deferred 
adjudication, nonetheless constitutes a conviction for purposes of the 
CSA. See Kimberly Maloney, N.P., 76 FR 60922, 60922 (2011) (collecting 
cases). Nor does the fact that the charges were reduced to misdemeanors 
preclude consideration of his convictions under factor three, which, in 
contrast to 21 U.S.C. 824(a)(2), is not limited to felony offenses. See 
21 U.S.C. 823(f)(3).
    I thus conclude that the evidence with respect to factors two, 
three, four, and five \4\ establishes that granting Applicant's 
application would be ``inconsistent with the public interest.'' 21 
U.S.C. 823(f). And because Applicant waived its right to a hearing, 
there is no evidence to the contrary. Accordingly, I will deny 
Applicant's application.
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    \4\ The Government seeks several additional findings that Mr. 
McFadden engaged in ``such other conduct which may threaten public 
health and safety.'' 21 U.S.C. 823(f)(5). More specifically, the 
Government alleges that ``[w]hile working as a pharmacist for Lin's 
Pharmacy, * * * Mr. McFadden took and consumed legend drugs and food 
items from the pharmacy without compensating the store for the use 
of such items,'' GX B, at 2, and that ``[i]n August 2010, Lin's 
Pharmacy terminated Mr. McFadden from working as a pharmacist there 
because he unlawfully took and consumed drugs and food items and 
left the pharmacy unattended by a pharmacist.'' Gov. Req. for Final 
Agency Action, at 10.
    As for his former employer's termination of his employment, that 
decision is not conduct on his part but rather a response to his 
conduct. Moreover, his former employer's findings that he engaged in 
misconduct are not entitled to preclusive effect in this matter. 
Accordingly, an employer's termination decision clearly does not 
fall within the scope of factor five.
    As for his expropriation of store property, there is no evidence 
refuting Mr. McFadden's claim that he paid for the phentermine or 
that he ``reimbursed'' the pharmacy by taking the Maxzide out of his 
subsequent refill, and the evidence regarding his plea to 
misdemeanor retail theft does not identify what items were involved. 
To be sure, Mr. McFadden admitted in a statement to having taken 
bagels and fountain drinks from his employer without paying for 
them. However, his acts have no apparent relationship to controlled 
substances, and the Government offers no explanation as to why being 
a bagel bandit constitutes a threat to public health and safety, let 
alone one that is of such a degree as to ``create reason to conclude 
that a person will not faithfully adhere to [his] responsibilities 
under the CSA.'' Terese, Inc., d/b/a/ Peach Orchard Drugs, 76 FR 
46843, 46848 n.11 (2011).
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Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well 
as 28 CFR 0.100(b), I order that the application of Pharmboy Ventures 
Unlimited, Inc., for a DEA Certificate of Registration as a retail 
pharmacy, be, and it hereby is, denied. This order is effective 
immediately.

    Dated: May 4, 2012.
Michele M. Leonhart,
Administrator.
[FR Doc. 2012-13805 Filed 6-6-12; 8:45 am]
BILLING CODE 4410-09-P