[Federal Register Volume 90, Number 72 (Wednesday, April 16, 2025)]
[Notices]
[Pages 15993-15996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-06425]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Empire Pharmacy Inc.; Skyline Pharmacy Inc.; Decision and Order
I. Introduction
On October 31, 2023, the Drug Enforcement Administration (DEA or
Government) issued an Order to Show Cause and Immediate Suspension of
Registrations (OSC/ISO) to Empire Pharmacy, Inc., and Skyline Pharmacy,
Inc., of Philadelphia, Pennsylvania (collectively, Registrants).
Request for Final Agency Action (RFAA), Exhibit (RFAAX) 2, at 1, 18.
The OSC/ISO informed Registrants of the immediate suspension of their
DEA Certificates of Registration, Nos. FE8167733 and FS0903840,
pursuant to 21 U.S.C. 824(d), alleging that Registrants' continued
registration constitutes ```an imminent danger to the public health or
safety.''' Id. at 1 (quoting 21 U.S.C. 824(d)). The OSC/ISO also
proposed the revocation of Registrants' registrations, alleging that
Registrants' continued registration is inconsistent with the
[[Page 15994]]
public interest. Id. (citing 21 U.S.C. 823(g)(1), 824(a)(4)).\1\
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\1\ According to Agency records, Empire Pharmacy's registration
expired on August 31, 2024, and Skyline Pharmacy's registration
expired on February 29, 2024. The fact that a registrant allows its
registration to expire during the pendency of an administrative
enforcement proceeding does not impact the Agency's jurisdiction or
prerogative under the Controlled Substances Act (CSA) to adjudicate
the OSC/ISO to finality. Jeffrey D. Olsen, M.D., 84 FR 68474, 68476-
79 (2019).
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Specifically, the OSC/ISO alleged that between February 20, 2019,
and August 30, 2023, Registrants failed to maintain accurate records of
their purchasing, dispensing, and physical inventory of controlled
substances, in violation of federal and Pennsylvania state law. RFAAX
2, at 4-6 (citing 21 CFR 1304.04(a), 1304.11(a)-(c), 1304.21(a); 35 Pa.
Cons. Stat. Ann. sections 780-112(a)-(c), and 780-113(a)(21)).
The OSC/ISO notified Registrants of their right to file with DEA a
written request for hearing and that if they failed to file such a
request, they would be deemed to have waived their right to a hearing
and be in default. RFAAX 2, at 7 (citing 21 CFR 1301.43). Here,
Registrants did not request a hearing. RFAA, at 2.\2\ ``A default,
unless excused, shall be deemed to constitute a waiver of the
registrant's/applicant's right to a hearing and an admission of the
factual allegations of the [OSC/ISO].'' 21 CFR 1301.43(e).
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\2\ Based on the Government's submissions in its RFAA dated
February 9, 2024, the Agency finds that service of the OSC/ISO on
Registrants was adequate. Specifically, the included Declaration
from a DEA Special Agent asserts that on November 1, 2023, the OSC/
ISO was personally served at both of Registrants' registered
addresses during the execution of simultaneous search warrants at
both locations. RFAAX 3, at 1-2. The Special Agent noted in the
Declaration that an individual who serves as the owner and/or
controlling officer at both Empire Pharmacy and Skyline Pharmacy was
physically present at the location of Empire Pharmacy during the
execution of the search warrant and service of the OSC/ISO. Id. at
2. This individual received a copy of the OSC/ISO as well as
instructions from DEA personnel. Id.
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Further, ``[i]n the event that a registrant . . . is deemed to be
in default . . . DEA may then file a request for final agency action
with the Administrator, along with a record to support its request. In
such circumstances, the Administrator may enter a default final order
pursuant to [21 CFR] Sec. 1316.67.'' Id. Sec. 1301.43(f)(1). Here,
the Government has requested final agency action based on Registrants'
default pursuant to 21 CFR 1301.43(c), (f), 1301.46. RFAA, at 1; see
also 21 CFR 1316.67.
II. Applicable Law
A. The Alleged Statutory and Regulatory Violations
As discussed above, the OSC/ISO alleges that Registrants violated
multiple provisions of the Controlled Substances Act (CSA) and its
implementing regulations. As the Supreme Court stated in Gonzales v.
Raich, ``the main objectives of the CSA were to conquer drug abuse and
to control the legitimate and illegitimate traffic in controlled
substances. . . . To effectuate these goals, Congress devised a closed
regulatory system making it unlawful to . . . dispense[ ] or possess
any controlled substance except in a manner authorized by the CSA.''
545 U.S. 1, at 12-13 (2005). In maintaining this closed regulatory
system, ``[t]he CSA and its implementing regulations set forth strict
requirements regarding registration, . . . drug security, and
recordkeeping.'' Id. at 14.
Here, the OSC/ISO's allegations concern the CSA's ``strict
requirements regarding registration[,] . . . drug security, and
recordkeeping'' and, therefore, go to the heart of the CSA's ``closed
regulatory system'' specifically designed ``to conquer drug abuse and
to control the legitimate and illegitimate traffic in controlled
substances.'' Id.
B. Improper Dispensing, Recordkeeping, and Unaccounted for Controlled
Substances
According to DEA's implementing regulations, pharmacies must
maintain ``a complete and accurate record of each controlled substance
. . . sold . . . .'' 21 CFR 1304.21(a). This includes conducting and
maintaining an ``initial inventory . . . of all stocks of controlled
substances on hand on the date [the pharmacy] first engages in the . .
. dispensing of controlled substances,'' as well as a ``biennial
inventory . . . of all stocks of controlled substances on hand.'' 21
CFR 1304.11(a)-(c). Pharmacies must retain these inventories ``for at
least 2 years from the date of such inventory or records, for
inspection and copying.'' 21 CFR 1304.04.
Pennsylvania law also requires pharmacies to keep accurate records
and maintain proper inventories regarding the purchase, sale, or
dispensing of any controlled substances. 35 Pa. Cons. Stat. Ann.
section 780-112(a)-(c). In Pennsylvania, it is unlawful for a pharmacy
to fail to ``make, keep or furnish any record, notification, order
form, statement, invoice or information'' relating to the purchasing or
dispensing of a controlled substance. Id. section 780-113(a)(21).
III. Findings of Fact
The Agency finds that, in light of Registrants' default, the
factual allegations in the OSC/ISO are deemed admitted.\3\ Registrants
are deemed to have admitted that from February 20, 2019, until at least
August 30, 2023, Empire Pharmacy failed to maintain accurate records of
its purchasing and dispensing of controlled substances. RFAAX 2, at 6.
For example, Registrants admit that there were significant
discrepancies between the dispensing/order data that Empire submitted
to its distributors and the dispensing data that Empire reported to
Pennsylvania's PDMP. Id. at 4. Registrants admit that a comparison of
Empire's PDMP data to Empire's distributor order data from February 20,
2019, through July 14, 2022, revealed discrepancies of: (1)
approximately 404,106 dosage units of alprazolam 1 mg, (2)
approximately 822,700 dosage units of alprazolam 2 mg, and (3)
approximately 1,969 bottles of promethazine with codeine. Id. at 5.
These discrepancies amounted to an approximately 99% variance between
the PDMP data and Empire's distributor order data. Id. Registrant
admits that there were also significant discrepancies for Skyline
Pharmacy,\4\ and that both pharmacies failed to maintain accurate
records of their purchasing and dispensing of controlled substances.
Id. at 4-6. Registrants further admit that Empire Pharmacy failed to
adequately maintain an initial and biennial inventory, and that Skyline
Pharmacy failed to maintain an initial inventory of controlled
substances. Id. at 4.
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\3\ Registrants are deemed to have admitted and the Agency finds
that Registrants share common management and control. RFAAX 2, at 3.
Registrants admit that S.O. is the owner and/or controlling officer
of both Empire Pharmacy and Skyline Pharmacy. Given the fact that
the same individual exercises management and control over the
entities, the misconduct of any entity is relevant to the
determination of whether the others can be entrusted with a DEA
registration. See Morning Star Pharmacy & Med. Supply, 85 FR 51045,
51062 (2020)) (``Due to the commonality of . . . management, and key
employees between Respondent Pharmacy and Ceder Hill [Pharmacy], any
misconduct related to controlled substances at Cedar Hill is
relevant to the determination of whether Respondent pharmacy can be
entrusted with a registration.'').
\4\ Registrants admit that when comparing Skyline Pharmacy's
PDMP data to Skyline's distributor order data from July 18, 2022,
through October 18, 2021, there was a discrepancy of approximately
117,600 dosage units of alprazolam 1 mg, 223,500 dosage units of
alprazolam 2 mg, and 789 bottles of promethazine with codeine. Id.
at 6. These discrepancies amounted to an approximately 100% variance
between the PDMP data and Skyline's distributor order data. Id.
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Accordingly, the Agency finds substantial record evidence that each
Registrant failed to maintain accurate records of its purchasing and
dispensing
[[Page 15995]]
of controlled substances. The Agency also finds substantial record
evidence that each Registrant failed to maintain adequate inventories
of all controlled substances on hand.
IV. Discussion
A. The Controlled Substances Act and Implementing Regulations
Under Section 304 of the CSA, ``[a] registration . . . to . . .
distribute[ ] or dispense a controlled substance . . . may be suspended
or revoked by the Attorney General upon a finding that the registrant .
. . has committed such acts as would render his registration under . .
. [21 U.S.C. 823] inconsistent with the public interest as determined
by such section.'' 21 U.S.C. 824(a)(4). In the case of a
``practitioner,'' which is defined in 21 U.S.C. 802(21) to include a
``pharmacy,'' Congress directed the Attorney General to consider five
factors in making the public interest determination. 21 U.S.C.
823(g)(1)(A-E).\5\
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\5\ The five factors of 21 U.S.C. 823(g)(1)(A-E) are:
(A) The recommendation of the appropriate State licensing board
or professional disciplinary authority.
(B) The [registrant's] experience in dispensing, or conducting
research with respect to controlled substances.
(C) The [registrant's] conviction record under Federal or State
laws relating to the manufacture, distribution, or dispensing of
controlled substances.
(D) Compliance with applicable State, Federal, or local laws
relating to controlled substances.
(E) Such other conduct which may threaten the public health and
safety.
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The five factors are considered in the disjunctive. Gonzales v.
Oregon, 546 U.S. 243, 292-93 (2006) (Scalia, J., dissenting) (``It is
well established that these factors are to be considered in the
disjunctive,'' citing In re Arora, 60 FR 4447, 4448 (1995)); Robert A.
Leslie, M.D., 68 FR 15227, 15230 (2003). Each factor is weighed on a
case-by-case basis. Morall v. Drug Enf't Admin., 412 F.3d 165, 173-74
(D.C. Cir. 2005). Any one factor, or combination of factors, may be
decisive. Penick Corp. v. Drug Enf't Admin., 491 F.3d 483, 490 (D.C.
Cir. 2007); Morall, 412 F.3d. at 185 n.2; David H. Gillis, M.D., 58 FR
37507, 37508 (1993).
In this matter, while all of the 21 U.S.C. 823(g)(1) factors have
been considered, the Agency finds that the Government's evidence in
support of its prima facie case is confined to Factors B and D.\6\ See
RFAAX 1, at 4. Moreover, the Government has the burden of proof in this
proceeding. 21 CFR 1301.44.
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\6\ The Agency has carefully considered the entire transmitted
record, and this Decision/Order is the result of its adjudication of
that record in its entirety.
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Here, the Agency finds that the Government's evidence satisfies its
prima facie burden of showing that each Registrant's continued
registration would be ``inconsistent with the public interest.'' 21
U.S.C. 823(g)(1).
A. Allegation That Registrants' Registrations Are Inconsistent With the
Public Interest
Factors B and/or D--Registrants' Experience in Dispensing Controlled
Substances and Compliance With Applicable Laws Related to Controlled
Substances
Evidence is considered under Public Interest Factors B and D when
it reflects compliance or non-compliance with federal and local laws
related to controlled substances and experience dispensing controlled
substances. 21 U.S.C. 823(g)(1)(B) and (D); see also Kareem Hubbard,
M.D., 87 FR 21156, 21162 (2022). Here, as found above, Registrants are
deemed to have admitted and the Agency finds that Registrants failed to
maintain accurate records of their purchasing and dispensing of
controlled substances. RFAAX 2, at 4-6. Additionally, Registrants are
deemed to have admitted and the Agency finds that each pharmacy failed
to maintain adequate inventories of all stocks of controlled substances
on hand. Therefore, the Agency finds substantial record evidence that
Registrants violated federal and state law, namely 21 CFR 1304.04(a),
1304.11(a)-(c), 1304.21(a); and 35 Pa. Cons. Stat. Ann. sections 780-
112(a)-(c), 780-113(a)(21).\7\
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\7\ The OSC/ISO alleges that Registrants violated additional
state statutes related to their failure to maintain adequate records
and their failure to adequately report their dispensing of
controlled substances to the Pennsylvania PDMP. See RFAAX 2, at 2
(citing 35 Pa. Cons. Stat. Ann. sections 872.7(a), (c), 780-
113(a)(12)). Neither the OSC/ISO nor the RFAA contains sufficient
analysis to allow the Agency to adjudicate these allegations.
However, the found violations in this decision are more than
sufficient to support the Government's requested sanction of
revocation under these circumstances.
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Accordingly, the Agency finds that Factors B and D weigh in favor
of revocation of Registrants' registrations and thus finds Registrants'
continued registration to be inconsistent with the public interest. The
Agency further finds that Registrants failed to provide any evidence to
rebut the Government's prima facie case.
V. Sanction
Here, the Government has met its prima facie burden of showing that
Registrants' continued registration is inconsistent with the public
interest due to their numerous violations pertaining to controlled
substance dispensing and recordkeeping. Accordingly, the burden shifts
to Registrants to show why they can be entrusted with registration.
Morall, 412 F.3d. at 174; Jones Total Health Care Pharmacy, LLC v. Drug
Enf't Admin., 881 F.3d 823, 830 (11th Cir. 2018); Garrett Howard Smith,
M.D., 83 FR 18882, 18904 (2018); supra sections III and IV. The issue
of trust is necessarily a fact-dependent determination based on the
circumstances presented by the individual registrant. Jeffrey Stein,
M.D., 84 FR 46968, 46972 (2019); see also Jones Total Health Care
Pharmacy, 881 F.3d at 833. Moreover, as past performance is the best
predictor of future performance, DEA Administrators have required that
a registrant who has committed acts inconsistent with the public
interest must accept responsibility for those acts and demonstrate that
he will not engage in future misconduct. Jones Total Health Care
Pharmacy, 881 F.3d at 833; ALRA Labs, Inc. v. Drug Enf't Admin., 54
F.3d 450, 452 (7th Cir. 1995). A registrant's acceptance of
responsibility must be unequivocal. Jones Total Health Care Pharmacy,
881 F.3d at 830-31. In addition, a registrant's candor during the
investigation and hearing has been an important factor in determining
acceptance of responsibility and the appropriate sanction. Id. Further,
the Agency has found that the egregiousness and extent of the
misconduct are significant factors in determining the appropriate
sanction. Id. at 834 & n.4. The Agency has also considered the need to
deter similar acts by the registrant and by the community of
registrants. Jeffrey Stein, M.D., 84 FR 46972-73.
Here, Registrants did not timely or properly request a hearing and
were deemed to be in default. 21 CFR 1301.43(c)(1), (e), (f)(1); RFAA,
at 1-2. To date, Registrants have not filed a motion with the Office of
the Administrator to excuse the default. 21 CFR 1301.43(c)(1).
Registrants have thus failed to answer the allegations contained in the
OSC and have not otherwise availed themselves of the opportunity to
refute the Government's case. As such, Registrants have made no
representations as to their future compliance with the CSA nor made any
demonstration that they can be entrusted with registration. Moreover,
the evidence presented by the Government shows that Registrants
violated the CSA, further indicating that Registrants cannot be
entrusted.
[[Page 15996]]
VI. Conclusion
Accordingly, the Agency will order the revocation of Registrants'
registrations.
Order
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21
U.S.C. 824(a) and 21 U.S.C. 823(g)(1), I hereby revoke DEA Certificates
of Registration Nos. FE8167733 and FS0903840 issued to Empire Pharmacy
Inc. and Skyline Pharmacy Inc. Further, pursuant to 28 CFR 0.100(b) and
the authority vested in me by 21 U.S.C. 824(a) and 21 U.S.C. 823(g)(1),
I hereby deny any pending applications of Empire Pharmacy Inc. and/or
Skyline Pharmacy Inc. to renew or modify the named registrations, as
well as any other pending application of Empire Pharmacy Inc. and/or
Skyline Pharmacy Inc. for additional registration in Pennsylvania. This
Order is effective May 16, 2025.
Signing Authority
This document of the Drug Enforcement Administration was signed on
April 10, 2025, by Acting Administrator Derek Maltz. That document with
the original signature and date is maintained by DEA. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DEA Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of DEA. This administrative process in no way alters the legal effect
of this document upon publication in the Federal Register.
Heather Achbach,
Federal Register Liaison Officer, Drug Enforcement Administration.
[FR Doc. 2025-06425 Filed 4-15-25; 8:45 am]
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