[Federal Register: October 28, 2003 (Volume 68, Number 208)]
[Notices]
[Page 61466-61468]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc03-87]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
SPA Dynamic Wholesalers: Denial of Request for Registration to
Handle List I Chemicals
On May 1, 2001, Spa Dynamic Wholesalers (Respondent) applied to be
registered with the Drug Enforcement Administration (DEA) as a
distributor of the List I chemicals ephedrine, pseudoephedrine and
phenylpropanolamine (PPA), Control Number K2202014201J. On April 24,
2002, after an investigation by DEA investigators, the Deputy Assistant
Administrator, Office of Diversion Control, issued an Order to Show
Cause (OTSC) why DEA should not deny Respondent's application. Prior to
the issuance of the OTSC, on March 13, 2002, Respondent's owner Ann
Marie Tess Wrigley (Ms. Wrigley) left a voicemail message at DEA
regarding the status of her application. The call-back number left by
Ms. Wrigley turned out to be a number for a facsimile machine. A DEA
investigator used the number to send a facsimile to Ms. Wrigley, asking
her to contact the investigator at DEA. Ms. Wrigley did not respond to
the fax, and has not contacted DEA since that time.
The OTSC was sent by certified mail to the latest address provided
by Ms. Wrigley to DEA. The OTSC was not claimed, indicating that
Respondent was no longer at the latest address provided by Ms. Wrigley,
and had left no forwarding address.Since the OTSC was issued, Ms.
Wrigley has not contacted DEA concerning the status of her application.
Therefore, the Acting Deputy Administrator, finding that DEA has
made reasonable attempts to serve the OTSC on Respondent, and no
request for a hearing has been received, concludes that Respondent is
deemed to have waived its hearing right. The Acting Deputy
Administrator has carefully reviewed the entire record in this matter,
as defined above, and hereby issues this final rule and final order
prescribed by 21 CFR 1301.43 and 21 CFR 1301.46, based upon the
following finding of fact and conclusions.
The Acting Deputy Administrator finds that the List I chemicals
ephedrine and pseudoephedrine are legitimate chemicals that also may be
used in the illicit manufacture of a controlled substance in violation
of the Controlled Substances Act. 21 U.S.C. 802(34), 21 CFR 1310.02(a).
Both chemicals are commonly used to illegally manufacture
methamphetamine, a schedule II controlled substance.
The Food and Drug Administration (FDA) has approved ephedrine for
over-the-counter (OTC) use as a bronchodilator for the treatment of
asthma. Ephedrine is also lawfully marketed as a nasal decongestant.
Ephedrine is also used lawfully in hospitals in the treatment of
hypotensive crisis and acute bronchospasm. Physicians have also used
ephedrine to promote urinary continence. OTC ephedrine products have
also been misused for their stimulant properties and for use as diet
aids. FDA has not approved these products for such uses.
Pseudoephedrine is lawfully marketed under the Federal Food Drug
and Cosmetic Act provisions for OTC use as a decongestant. It is often
found in combination with other active ingredients such as
antihistamines, expectorants and/or antitussives.
On November 6, 2000, the FDA issued a public health advisory
warning of the dangers associated with the use of PPA, including, but
not limited to, the risk of hemorrhagic stroke. The FDA advised that it
was taking steps to remove PPA from all drug products and requested
that all drug companies discontinue the sale of products containing
this listed chemicals.
DEA has observed nationwide that the vast majority of sales of
ephedrine and pseudoephedrine drug products destined for end users are
made in supermarkets, drug stores, and large discount stores. An
extremely small amount of face-to-face purchases are made in smaller
retail outlets. DEA has observed that many smaller or non-traditional
stores, such as liquor stores, gas stations, and some small markets,
purchase inordinate amounts of these products and become conduits for
the diversion of listed chemicals into illicit drug manufacturing.
During March 2001, DEA utilized an expert in the field of retail
marketing and statistics to analyze national sales data for over-the-
counter non-prescription drugs. Using official Government and
commercially available sales data, he was able to construct a model of
the traditional market for pseudoephedrine in the retail sector. His
study showed that over 90% of all sales of non-prescription drug
products occurred in drug stores, grocery stores and large discount
merchandisers. A very small percentage of such sales occurred in
convenience stores. Additionally, this expert analyzed expected sales
of non-prescription drugs by convenience stores and found that they
constituted about 2% of their total
[[Page 61467]]
sales. This analysis was consistent with sales data provided by the
convenience store industry.
DEA clandestine laboratory teams continue to note the trend in
laboratories toward smaller capacity laboratories. This is likely due
to the ease of concealment associated with smaller capacity
laboratories. This is likely due to the ease of concealment associated
with smaller laboratories and the ability to acquire listed chemical
precursor product from smaller sources. Small capacity labs continue to
dominate law enforcement seizures and environmental cleanups. Small
illicit laboratories operate with listed chemical products often
procured, legally or illegally, from non-traditional retailers of over-
the-counter drug products, such as gas stations and small retail
markets. Some retailers acquire product from multiple distributors to
mask their acquisition of large amounts of listed chemicals.
DEA investigators have learned that the primarily market shares for
sales of combination ephedrine products belong to the manufacturers of
Primatene and Bronkaid products. The national sales of these products
in tablet forms have been on the decline for several years, since end-
users prefer an inhalant version. In addition, DEA knows that the
nationwide sales of combination ephedrine in the traditional market are
much smaller than the market for other traditional cough and cold
remedies, including products containing pseudoephedrine.
On May 1, 2001, Ms. Wrigley submitted, on behalf of her company, an
application for DEA registration as a distributor of the List I
chemicals ephedrine, pseudoephedrine and PPA. Respondent's listed
address on the application was in 7636 Village Trail, Dallas, Texas
75240. The application was received by the Dallas Field Division.
DEA investigators learned that in early 2001, Ms. Wrigley applied
for a Precursor Chemical/Laboratory Apparatus Business permit with the
Texas Department of Public Safety (DPS) under the name Dynamic
Wholesalers, at a listed address of 840 Central Parkway East,
120, in Plano Texas. A subsequent inspection of the physical
location revealed that Ms. Wrigley had not physically occupied the
premises, and the telephone number listed on the application was found
to be fictitious.
On December 11, 2001, Ms. Wrigley filed a second application for
licensure to DPS under the name Spa Dynamic Wholesalers, with a
business address of 1108 Summit Avenue 6, Plano, Texas. Ms.
Wrigley subsequently informed DEA that she would seek registration at
this location, and not the location provided in her May 2001
application for DEA registration. On December 11, 2001, DEA
investigators accompanied a DPS investigator during DPS's inspection of
Respondent at the Summit Avenue location. When the investigators
arrived at that location, they found it unlocked and vacant, without
furniture or telephone service. The property manager at the location
told the investigators that Ms. Wrigley failed to sign a contract and
had not taken possession of the location. The property manager also
said that on the previous day, Ms. Wrigley stated that she would not be
occupying the Summit Avenue location for business purposes.
On December 11, 2001, DEA investigators contacted Ms. Wrigley,
informed her of their concerns, and requested that she withdraw her
application. Ms. Wrigley refused to withdraw, and informed the
investigators that her company would be ready for a pre-registrant
inspection on December 20, 2001.
On December 20, 2001, DEA investigators went to Respondent's
physical location on Summit Avenue and conducted a pre-registration
investigation of Respondent. Ms. Wrigley informed the investigators
that Respondent intended to distribute List I chemicals to convenience
stores in the Dallas Metropolitan area. She estimated that List I
chemicals would comprise 30 to 45 percent of her business. Ms. Wrigley
stated that she had no experience with sales of OTC medications or
listed chemicals. She informed the investigators that her brother in
Kansas owned a wholesale establishment selling similar products and was
``making a lot of money,'' so she wanted to do the same.
Ms. Wrigley also admitted that she had no experience in reporting
suspicious orders. The investigators advised her of the reporting
requirements and provided her by facsimile a copy of the threshold
regulations. The investigators advised Ms. Wrigley of the necessity of
identifying and verifying customers, and of DEA recordkeeping
requirements. The investigators inspected the security measures at
Respondent's location and found that security was adequate.
When asked which brands of List I chemicals she intended to sell,
Ms. Wrigley provided a list of brand names, many of which are
manufactured by companies whose products had been found in
methamphetamine lab dump sites. Moreover, the list of products provided
by Ms. Wrigley contained only ephedrine and ephedrine combination
products. The list showed that Ms. Wrigley intended to sell, among
other things, 60 count bottles of ephedrine. This is significant in
that this type of packaging is not normally seen in traditional retail
establishments, and is the packaging favored by methamphetamine
manufacturers.
When asked about the identity of her customers, Ms. Wrigley
provided the investigators with a list of five customers. When called
by the investigators, three of the five customers had either never
heard of Respondent or Ms. Wrigley, or indicated that they would not by
buying from Respondent. One customer was waiting for Respondent to mail
him its inventory so that he could determine whether he would become a
customer of Respondent. One customer indicated that she would buy from
Respondent.
Ms. Wrigley also provided a ``cold call list'' that she had
purchased. She said that she intended to use the list to obtain more
customers. A review of the list by DEA investigators showed that most
of the potential customers on the list were convenience stores.
Based upon the above, the Acting Deputy Administrator will now
consider the factors used by DEA to determine whether the issuance of a
DEA Certificate of Registration is in the public interest. Under 21
U.S.C. 823(h), the Attorney General shall register an applicant to
distribute a List I chemical unless the Attorney General determines
that the registration of the applicant is inconsistent with the public
interest. (This function has been delegated to Administrator of DEA.)
In considering the public interest, the Acting Deputy Administrator
shall consider
1. Maintenance by the applicant of effective controls against
diversion of listed chemical into other than legitimate channels;
2. Compliance by the applicant with applicable Federal, State, and
local laws;
3. Any prior conviction record of the applicant under Federal or
State laws relating to controlled substances or to chemicals controlled
under Federal or State law;
4. Any past experience of the applicant in the manufacture and
distribution of chemicals and
5. Such other factors as are relevant to and consistent with the
public health and safety.
Consideration of the first factor weighs against Respondent.
Security was adequate at the physical location of the business that the
DEA investigators visited. Based upon the investigators' inability to
contact Ms. Wrigley in
[[Page 61468]]
February 2002, it appears that Ms. Wrigley is no longer at the location
that the DEA investigators inspected. Accordingly, DEA has no knowledge
of Respondent's current security measures.
With regard to the second factor, there is no evidence that Ms.
Wrigley has failed to comply with Federal, State or local law. As for
the third factor, there is no evidence that Ms. Wrigley has any prior
convictions related to controlled substances or chemicals. Accordingly,
the second and third factors weigh in Respondent's favor. Addressing
the fourth factor, Ms. Wrigley has no experience in the manufacture or
distribution of chemicals, which weights against Respondent.
With regard to the fifth factor, many considerations weigh heavily
against registering Respondent as a distributor of List I chemicals.
The great majority of Respondent's potential customers will be convene
stores. Convenience stores are considered part of the gray market, in
which large amounts of listed chemicals are diverted to the illicit
manufacture of amphetamine and methamphetamine. Ms. Wrigley admitted
that a portion of her sales will consist of 60 count bottle of
ephedrine, the favored packaging of illicit methamphetamine
manufactures.
The Acting Deputy Administrator also finds that Respondent's
frequent changes of address weigh against Respondent in its attempt to
obtain a DEA registration. The changes of address create the impression
that Respondent is an unstable, ``fly by night'' concern. Ms. Wrigley's
failure to notify DEA of changes of address indicates a serious failure
to comprehend the responsibilities of the holder of a DEA Certificate
of Registration. The Acting Deputy Administrator finds that Ms.
Wrigley's lack of a criminal record and compliance with the law are far
outweighed by her lack of experience with selling List I chemicals,
DEA's lack of knowledge concerning Respondent's current security system
and her frequent changes of address without notice to DEA. Moreover,
Respondent's product mix and potential sales of combination ephedrine
products are inconsistent with the known legitimate market and known
end-user demand for products of this type. Therefore Respondent would
be serving an illegitimate market for these products, and registration
of Respondent as a distributor of List I chemicals would likely lead to
increased diversion of List I chemicals.
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 and 0.104, hereby finds that
registration of Respondent as a distributor of List I chemicals is not
in the public interest. The Acting Deputy Administrator hereby orders
that the application for a DEA Certificate of Registration and any
requests for renewal or modification submitted by Respondent Spa
Dynamics Wholesalers be, and hereby are, denied.
Dated: October 9, 2003.
Michele M. Leonhart,
Acting Deputy Administrator.
[FR Doc. 03-27085 Filed 10-27-03; 8:45 am]
BILLING CODE 4410-09-M