[Federal Register: January 8, 2004 (Volume 69, Number 5)]
[Notices]
[Page 1304-1307]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja04-35]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
City Drug Company; Denial of Application
On November 19, 2002, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to City Drug Company (City Drug) notifying the
applicant of an opportunity to show cause as to why DEA should not deny
its pending
[[Page 1305]]
application for DEA Certificate of Registration as a retail-pharmacy
pursuant to 21 U.S.C. 823(f). As a basis for the denial, the Order to
Show Cause alleged that City Drug's registration would be inconsistent
with the public interest. The Order to Show Cause also notified City
Drug that should not request for a hearing be filed within 30 days, its
hearing right would be deemed waived.
The Order to Show Cause was sent by certified mail to City Drug at
its proposed registered location in Opp, Alabama and was received on
November 26, 2002. DEA has not received a request for hearing or any
other reply from City Drug or anyone purporting to represent the
pharmacy in this matter.
Therefore, the Acting Deputy Administrator of DEA, finding that (1)
30 days having passed since the attempted delivery of the Order to Show
Cause at the applicant's last known address, and (2) no request for
hearing having been received, concludes that City Drug is deemed to
have waived its hearing right. See David W. Linder, 67 FR 12579 (2002).
After considering material from the investigative file in this matter,
the Acting Deputy Administrator now enters her final order without a
hearing pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.
The Acting Deputy Administrator finds that on February 8, 2002, a
new application was submitted on behalf of City Drug for DEA
registration as a retail pharmacy. The application was submitted and
signed by Joseph G. Grimes, the President and owner of City Drug, and
that application is the subject of the current proceedings.
The Acting Deputy Administrator finds that prior to the submission
of its most recent registration application, City Drug previously
possessed DEA Certificate of Registration AC5430450. On August 29,
1996, an Order to Show Cause was issued proposing to revoke that
registration, and deny any pending applications for registration under
21 U.S.C. 823(f), for reason that City Drug's continued registration
would be inconsistent with the public interest pursuant to 21 U.S.C.
824(a)(4).
Following an April 15, 1997, administrative hearing in Mobile,
Alabama, the presiding Administrative Law Judge Gail A. Randall (Judge
Randall) recommended that City Drug's DEA Certificate of Registration
be revoked. Judge Randall further recommended however that favorable
consideration be given to any future application for registration
submitted by City Drug, should the pharmacy provide persuasive evidence
of procedural changes for the dispensing of controlled substances.
While the then-Acting Deputy Administrator did not adopt the latter
recommendation, he did adopt Judge Randall's recommendation with
respect to revocation of City Drug's Certificate of Registration.
Accordingly, City Drug's previous DEA registration was revoked,
effective November 13, 1997. See 62 FR 53338 (October 14, 1997).
In revoking City Drug's DEA registration, the then-Acting Deputy
Administrator relied upon evidence that in 1992, an investigation
revealed that between January 1990 and January 1992, the pharmacy
violated 21 U.S.C. 829 and 21 CFR 1306.04 by dispensing over 25,000
dosage units of controlled substances without a physician's
authorization. The then-Acting Deputy Administrator based this
conclusion on affidavits submitted by 11 physicians who reviewed
prescriptions found at City Drug that were attributed to them, compared
these prescriptions to their patient charts, and then swore that they
had not authorized the prescriptions. The then-Acting Deputy
Administrator found unpersuasive City Drug's argument that the
physicians had forgotten to note the issuance of the prescriptions in
the patient charts, stating that it was ``highly unlikely that eleven
different physicians forgot to note numerous prescriptions in the
patient charts which accounted for the dispensing of over 25,000 dosage
units of controlled substances.'' The then-Acting Deputy Administrator
also found that the patients' affidavits submitted by City Drug were
less reliable than the physicians' affidavits since the physicians'
affidavits were ``based upon a review of [their] patient records which
were prepared and maintained during the relevant time period, whereas
the patients' affidavits [were] based upon their recollection more than
six years after the event.''
The then-Acting Deputy Administrator further concluded that City
Drug violated 21 U.S.C. 827, by failing to maintain complete and
accurate records of controlled substances, as evidenced by the
pharmacy's inability to account for more than 80,000 dosage units of
Schedule III and IV substances, and to explain an overage of 859 dosage
units of oxycodone 5 mg., the only Schedule II controlled substance
that was audited. With respect to the failure of Joseph Grimes to
accept responsibility for past improper conduct, the then-Acting Deputy
Administrator found that:
(Joseph) Grimes has failed to acknowledge that he and his
pharmacy have done anything improper. An unexplained shortage of
80,000 dosage units and the unauthorized dispensation of over 25,000
dosage units of controlled substances are not merely minor technical
violations. The egregious nature of the violations in this matter
demonstrates that [City Drug] has failed miserably in its
responsibility as a DEA registrant to protect against the diversion
of controlled substances from the legitimate chain of distribution.
Id. at 53343.
The Acting Deputy Administrator also finds that on November 13,
1997, City Drug submitted an application for a new Certificate of
Registration as a retail pharmacy. The application was submitted on
behalf of City Drug by Louie Grimes, a pharmacist and the nephew of
Joseph Grimes. DEA again issued an Order to Show Cause on February 24,
1998, seeking the denial of City Drug's previous application, and a
hearing was held in Mobile, Alabama on October 28, 1998, before
Administrative Law Judge Mary Ellen Bittner (Judge Bittner). On June
30, 1999, Judge Bittner issued her Opinion and Recommended Ruling,
Findings of Fact, Conclusions of Law and Decision, recommending that
City Drug's application for a DEA Certificate of Registration be
denied. Accordingly, and effective November 2, 1999, DEA denied City
Drug's previous application for registration. 64 FR 59212 (November 2,
1999).
In that final order, the then-Deputy Administrator found that on
November 12, 1997, the day before the effective date of the revocation
of City Drug's previous DEA Certificate of Registration, Joseph Grimes
executed a Bill of Sale that transferred, ``in consideration of ten
dollars and other good and valuable consideration,'' a life estate in
City Drug to Louie Grimes. The ``other good and valuable
consideration'' noted in the Bill of Sale was an oral agreement that
Joseph Grimes would continue to work at City Drug two days per week in
return for $1,500 per month, and that he would also receive rent of
$1,500 per month on the building in which the pharmacy is located.
According to the attorney who drafted and notarized the Bill of Sale,
Louie Grimes was authorized to transfer his life estate in city Drug
but that the pharmacy would revert back to Joseph Grimes upon his
nephew's death.
As noted in the November 2, 1999, final order, evidence was
presented from the 1992 investigation concerning Louie Grimes'
involvement in the operation of the pharmacy at that time, including
his dispensation of 870 dosage units of controlled substances that had
not been authorized by a prescribing physician. The then-Deputy
Administrator also found that while Louie Grimes was the owner of City
[[Page 1306]]
Drug, he was also a pharmacist at City Drug working three days a week,
during 1990 to 1992, when unlawful dispensing practices were
documented. The then-Deputy Administrator further referenced evidence
which revealed eight instances, when Louie Grimes refilled controlled
substance prescriptions more than five times or more than six months
after issuance of the original prescription in violation of 21 U.S.C.
829(b), for a total of 550 dosage units. The then-Deputy Administrator
concluded that Louie Grimes was responsible for the unlawful
dispensation of approximately 1,400 dosage units of controlled
substances.
In addition, despite the apparent change of ownership of City Drug,
the then-Deputy Administrator nevertheless found that Joseph Grimes
continued to receive employment, salary and rent from City Drug, and he
held a reversionary ownership interest in the pharmacy. The then-Deputy
Administrator concluded that Joseph Grimes continued to derive a
benefit from City Drug's operation. The then-Deputy Administrator
further concluded that ``Joseph Grimes' continued interest in
Respondent, considered in conjunction with the Grimes` familial
relationship and the nominal consideration for the life estate, lead *
* * to the conclusion that the bonds linking Joseph Grimes with Louie
Grimes and [City Drug] are too close to ensure that Joseph Grimes will
have no influence in the operation of [City Drug].''
The Acting Deputy Administrator's review of the investigative file
reveals that with respect to City Drug's most recent application for
registration, DEA personnel from the Mobile, Alabama Resident Office
(the Mobile R.O.) requested from Joseph Grimes information on whether
he had attained any subsequent education with respect to the handling
of controlled substances and whether any steps were taken towards
improvement in recordkeeping. On March 22, 2002, the Mobile R.O.
received from Joseph Grimes a five page facsimile consisting of a cover
page, and accompanied by a photocopy of the Pharmacist's Manual,
Certificate of Continuing Education Participation titled ``Pain
Management for the RPh.,'' Certificate of Continuing Education
Participation titled ``Pain Management for the Pharmacists,'' and
Statement of Continuing Pharmaceutical Education Credit titled ``Use of
Opiods in Chronic Non-Cancer Pain.''
On the face of the cover page was a handwritten index which listed
the following: ``(1) Continuing Education material, (2) Pharmacist
Controlled Substances Manual, (3) Proposal to keep accurate records for
controlled drugs, [and] (4) Conscientious effort to comply with all
requirements involved with DEA certificate.'' The index was signed
``J.G. Grimes, RPh.'' Listed under heading number (3) ``Proposal to
keep accurate records,'' et. al., were the following:
(A) File prescriptions separately;
(B) Careful control of order books;
(C) Identify time and name of persons calling in prescriptions that
are allowed by phone;
(D) Careful scrutiny of controlled drug prescriptions in
determining authenticity of prescriptions, and ,
(E) Large red color ``C'' on each narcotic or controlled
prescription.
Absent from the supplied materials was any information
demonstrating Joseph Grimes' familiarity with controlled substance
regulations, diversion prevention or recordkeeping. In addition, Joseph
Grimes did not provide information on specific procedures that would be
employed at City Drug for maintaining accurate controlled substances
inventories and accountability.
Pursuant to 21 U.S.C. 823(f), the Acting Deputy Administrator may
deny an application for a DEA Certificate of Registration if she
determines that the granting of a registration would be inconsistent
with the public interest. Section 823(f) requires that the following
factors be considered in determining the public interest:
(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 and
safety.
These factors are to be considered in the disjunctive; the Acting
Deputy Administrator may rely on anyone or a combination of factors and
may give each factor the weight she deems appropriate in determining
whether a registration should be revoked or an application for
registration denied. See Henry J. Schwartz, Jr., M.D., 54 FR 16422
(1989).
Regarding factor one, there is no information before the Acting
Deputy Administrator with respect to the State licensure status of City
Drug. In prior DEA proceedings involving City Drug however, the agency
found that the pharmacy was in fact licensed to handled controlled
substances in Alabama. But as Judge Bittner noted in the prior
proceeding, ``inasmuch as State licensure is a necessary but not
sufficient condition for a DEA registration * * * this factor is not
determinative.'' 64 FR at 59212.
Factors two and four, City Drug's experience in the dispensing of
controlled substances and its compliance with applicable laws, are
clearly relevant in this matter in determining the public interest.
City Drug's previous DEA registration was revoked based upon the then-
Acting Deputy Administrator's findings that City Drug could not account
for over 80,000 dosage units of controlled substances and that the
pharmacy had dispensed more than 25,000 dosage units of controlled
substances without a physician's authorization. The then-Acting Deputy
Administrator did not find City Drug's explanation persuasive regarding
the unauthorized dispensing of controlled substances. The then-Acting
Deputy Administrator's findings regarding the previous revocation are
res judicata for purposes of this proceeding. See Stanley Alan Azen,
M.D., 61 FR 57893 (1996), Liberty Discount Drugs, Inc., 57 FR 2788
(1992).
Factors two and four are also relevant to evidence presented at a
prior DEA proceeding that Louie Grimes, the purported new owner of City
Drug was responsible for the unlawful dispensation of approximately
1,400 dosage units of controlled substances. 64 FR 59212. Louie Grimes'
prior contentions that physicians were mistaken, that they had in fact
authorized the prescriptions in question, as well as others, were
rejected by the then-Acting Deputy Administrator, and those conclusions
remain binding for purposes of this proceeding. Id.
Regarding factor three, there is no evidence that City Drug or its
owner or employees have ever been convicted under State or Federal laws
relating to the manufacture, distribution, or dispensing of controlled
substances. As to factor five, while not necessarily relying on such
evidence, the then-Deputy Administrator nevertheless referenced
evidence presented by the government at a prior proceeding questioning
the legitimacy of the transfer of City Drug from Joseph Grimes to Louie
Grimes and also the role that Joseph Grimes would play in City Drug's
future management. Id. at 59212.
The Acting Deputy Administrator concludes that City Drug's
registration would be inconsistent with the public
[[Page 1307]]
interest. As noted by my predecessors, from 1990 to 1992, City Drug
could not account for over 80,000 dosage units of controlled substances
and dispensed more than 25,000 dosage units of controlled substances
without a physician's authorization. The Acting Deputy Administrator
remains concerned that City Drug has yet to present any persuasive
evidence of meaningful procedural changes since 1992 that would ensure
that it will not again fail to account for controlled substances or
dispense controlled substances without authorization.
The Acting Deputy Administrator however notes that Joseph Grimes
has apparently directed his efforts toward educating himself on the
proper handling of controlled substances, as evidenced by the
information provided with his most recent DEA registration application.
Such evidence may be given favorable consideration in conjunction with
a future application for registration. However, without credible
evidence of any procedural changes having taken place at City Drug, and
the lack of acknowledgement or explanation for previous shortages of
large quantities of controlled substances, the Acting Deputy
Administrator remains unconvinced that the granting of the pending
application of City Drug is consistent with the public interest.
The Acting Deputy Administrator acknowledges that many of the
violations recited above took place more than 10 years ago. However, in
light of City Drug's failure to request a hearing in this matter, and
the absence of evidence to rebut the above allegations, the Acting
Deputy Administrator is left with the conclusion that the applicant has
not corrected the deficiencies which led to the revocation of its
previous Certificate of Registration and the denial of a previous
application for registration. City Drug, although given the opportunity
to request a hearing or to submit a written statement, has failed to do
either. Thus, the facts recited above stand uncontroverted. See,
Ruggero Angiolicchio, M.D., 58 FR 14426 (March 17, 1993). In view of
the foregoing, the Acting Deputy Administrator reiterates that City
Drug cannot be entrusted to handle controlled substances, and the
granting of its application would not be in the public interest.
Accordingly, the Acting Deputy Administrator of the Drug
Enforcement Administration, pursuant to the authority vested in her by
21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that
the application for DEA Certificate of Registration executed by City
Drug Company be, and it hereby is, denied. This order is effective
February 9, 2004.
Dated: December 18, 2003.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 04-346 Filed 1-7-04; 8:45 am]
BILLING CODE 4410-09-M