Wheatland Pharmacy; Decision and Order, 69441-69447 [2013-27700]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 78, Number 223 (Tuesday, November 19, 2013)]
[Notices]
[Pages 69441-69447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27700]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Wheatland Pharmacy; Decision and Order

    On July 17, 2012, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Wheatland Pharmacy (Applicant), of Dallas, Texas. The 
Show Cause Order proposed the denial of Applicant's pending application 
for a DEA Certificate of Registration as a retail pharmacy on the 
ground that its registration ``would be inconsistent with the public 
interest,'' as defined in 21 U.S.C. 823(f). GX 7, at 1.
    The Show Cause Order alleged that on September 29, 2010, the 
Administrator issued an Order to Show Cause and Immediate Suspension of 
Registration to Applicant, and that, on January 18, 2011, Applicant 
voluntarily surrendered its previous registration. Id. at 1-2. 
Specifically, the Show Cause Order alleged that Lynn Michelle Clark, 
Applicant's owner/pharmacist, ``unlawfully filled numerous fraudulent 
controlled substance prescriptions for individuals known to divert 
these drugs,'' and that she ``knew or should have known that these 
prescriptions were fraudulent.'' Id. at 1. The Show Cause Order further 
alleged that ``Ms. Clark failed to fulfill her responsibility to 
dispense controlled substances only pursuant to a prescription issued 
for a legitimate medical purpose in the usual course of professional 
practice'' and that she ``also violated federal law by delivering 
prescriptions for controlled substances to persons who were not the 
ultimate users of the controlled substances.'' Id. at 1-2 (citing 21 
U.S.C. 829, 841(a)(1), 842(a) and 802(10) & (27)). Finally, the Order 
alleged that on July 7, 2011, Ms. Clark submitted an application for a 
new registration on Applicant's behalf.\1\ Id. at 1.
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    \1\ The Show Cause Order 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 procedure for electing either 
option, and the consequences for failing to do so. See 21 CFR 
1301.43.
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    Thereafter, Applicant apparently requested a hearing on the 
allegations and the matter was placed on the docket of the Office of 
Administrative Law Judges. However, on October 4, 2012, Applicant moved 
for a stay of the proceeding pending action on its request to withdraw 
its application, and on October 5, 2012, the ALJ granted the motion. GX 
14, at 1.
    On November 7, 2012, the Deputy Assistant Administrator, Office of 
Diversion Control, denied Applicant's request to withdraw. GX 13, at 1. 
Thereafter, on November 26, 2012, Applicant filed with the ALJ a letter 
waiving its right to a hearing, citing 21 CFR 1301.43(e). GX 13, at 3. 
The next day, the ALJ found that Applicant had waived its right to a 
hearing; the ALJ thus lifted the stay of the proceeding and ordered 
that the proceeding be terminated. GX 14.
    On June 12, 2013, the Government filed a Request for Final Agency 
Action and the Investigative Record with this Office. Req. for Final 
Agency Action, at 14. Therein, the Government requests that I deny 
Applicant's pending

[[Page 69442]]

application for a DEA Certificate of Registration. Based on Applicant's 
November 26, 2012 letter waiving its right to a hearing, I find that 
Applicant has waived its right to a hearing and issue this Decision and 
Final Order based on the Investigation Record submitted by the 
Government. 21 CFR 1301.43(e). I make the following factual findings.

Findings

    Applicant is a pharmacy located at 3207 Kirnwood Drive, Suite 116, 
Dallas, Texas, which is owned and operated by Lynn Michelle Clark, a 
registered pharmacist. GX 3; see also GX A. On August 12, 2009, the 
Texas State Board of Pharmacy (TSBP) issued an order suspending 
Applicant's license for one year; however, the suspension was then 
probated subject to Applicant's compliance with the terms of the 
order.\2\ GX 1, at 3.
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    \2\ The basis for the order was a deferred adjudication in 1991 
following Ms. Clark's guilty plea to a felony charge of Theft of 
Service in the District Court of Harris County, Texas. The record 
does not reflect why TSBP waited 18 years to issue the probationary 
order. The order required Applicant to ``obey . . . all Federal laws 
and laws of the State of Texas with respect to pharmacy, controlled 
substances, [and] dangerous drugs.'' GX 1, at 3.
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    On November 3, 2009, a DEA Diversion Investigator (DI) conducted a 
pre-registration investigation of Applicant. GX B, at 2. On November 
13, 2009, Applicant was issued DEA Certificate of Registration 
FW1734309, which authorized it to dispense controlled substances in 
schedules II through V as a retail pharmacy. GX 2.

The 2010 Investigation

    On May 7, 2010, Ms. Clark contacted the DEA-Dallas Field Division 
to report that the day before, a van arrived at Applicant carrying 
approximately twenty-seven (27) persons, each of whom presented 
prescriptions for the same three controlled substances: hydrocodone, 
alprazolam, and promethazine with codeine syrup. GX B, at 2. These 
prescriptions were all purportedly issued by a Physician's Assistant 
(PA) who worked for a medical clinic in Houston, Texas, approximately 
239 miles away. Id.; see also GX C, at 2. Ms. Clark filled all of these 
prescriptions. GX C, at 2.
    Ms. Clark also reported that on May 7, another twenty (20) persons 
had arrived in a van and presented prescriptions, which were also 
purportedly issued by the same PA and were for the same controlled 
substances. Id. Ms. Clark also stated that she filled all of these 
prescriptions, although several days later, she claimed that she had 
yet to fill some of them. Id. at 2-3; see also GX B, at 2.
    Ms. Clark told a DEA Diversion Investigator (DI) that she had 
contacted the PA and was told that the prescriptions were valid. GX B, 
at 2-3. However, the DI later determined that Ms. Clark's statement was 
false. Id. at 3. During the conversation, the DI advised Ms. Clark that 
``she could decline to fill such prescriptions'' and also reminded her 
``of a pharmacy's corresponding responsibility'' under the Controlled 
Substances Act. Id.
    On May 10, 2010, a DEA Special Agent (SA) and a Task Force Officer 
(TFO) interviewed Ms. Clark at Applicant. GX C, at 2. According to the 
SA's affidavit, Ms. Clark ``chang[ed] her story several times'' and 
``finally admitted that all of the prescriptions . . . purportedly 
issued by the PA had been brought to the pharmacy from May 5 through 
May 7, 2010, not by individual patients, but by one individual later 
identified'' by the alias of SF. Id. Ms. Clark claimed that she 
verified the validity of the prescriptions with personnel at the PA's 
office. Id. Ms. Clark further said that she had not filled all of the 
prescriptions which SF had presented to her because she had to order 
the drugs; \3\ she was then instructed by the SA ``to fill some of the 
prescriptions,'' so that law enforcement could monitor SF's activities. 
Id. at 2-3.
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    \3\ The record, however, is not clear as to how many of the 
prescriptions she had filled at the time of the May 10 interview.
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    On May 14, 2010, the SA and TFO returned to Applicant. Id. at 3. 
Ms. Clark informed the SA and TFO that the day before, KD, a known 
associate of SF, had presented additional controlled substance 
prescriptions (for alprazolam and either promethazine or hydrocodone), 
which were also purportedly issued by the PA, but that she did not fill 
those prescriptions.\4\ Id. Ms. Clark stated that she had again called 
the Houston clinic, and on this occasion, spoke to the PA, who told her 
that the prescriptions were fraudulent. Id. According to the SA, Ms. 
Clark was then told not to fill any further prescriptions from the 
clinic. Id.
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    \4\ None of these prescriptions are in the record.
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    On June 23, 2010, Agents from DEA and TSBP executed a search 
warrant at Applicant. Id. at 4. DEA seized numerous prescriptions for 
controlled substances which were purportedly issued by the 
aforementioned PA. Id.
    The Government submitted evidence of prescriptions for fifteen 
different patients, all of which were purportedly issued by the PA at 
the Houston-based clinic, located 239 miles from Applicant. See 
generally GX 6. Each prescription was pre-printed with the clinic name, 
address, phone and fax numbers, the names of a physician and the PA, 
and both practitioners' DEA and Texas Department of Public Safety 
registration numbers. See id. On each prescription, the PA's name was 
checked, indicating that she was the prescribing practitioner. Id. A 
review of the patients' addresses shows that all of them resided in the 
Dallas metropolitan area, at least 230 miles from the Houston clinic, 
and that thirteen of the patients lived more than fourteen (14) miles 
from Applicant. Id.; GX C, at 4. For example, one prescription lists 
the patient's address as: 2400 Skyline Dr., Dallas TX, 75149; this 
address is 253 miles from the Houston clinic, and 22 miles from 
Applicant. GX 6, at 66.
    As part of the record, the Government submitted evidence showing 
that on May 5 and 6, 2010, Applicant filled the following prescriptions 
for twenty-four controlled substances, each of which was purportedly 
issued by the PA at the Houston clinic on May 4, 2010:
    1. For SF: 120 Lortab 10/500 mg (hydrocodone/acetaminophen, a 
schedule III controlled substance), 240 ml of promethazine/codeine 
syrup (a schedule III controlled substance), and 90 Xanax 2 mg (a 
schedule IV controlled substance), along with amoxicillin (a non-
controlled drug), for a stated diagnosis of chronic pain/anxiety/
bronchitis. GX 6, at 3.
    2. For BJW: 120 Norco 10/325 mg (hydrocodone and acetaminophen), 
240 ml promethazine/codeine, and 90 Xanax 2 mg, as well as folic acid, 
for chronic pain/anxiety/bronchitis. Id. at 8.
    3. For WH: 120 Lortab 10/500 mg, 240 ml promethazine/codeine, 90 
Xanax 2 mg, along with Lovastatin (a non-controlled drug), for chronic 
pain/anxiety/bronchitis. This prescription bore a handwritten note 
stating: ``verified Michael Reed, RN.'' Id. at 15.
    4. For HL: 120 Norco 10/325 mg, 240 ml promethazine/codeine, 90 
Xanax 2 mg, along with Pravastatin (a non-controlled drug), for chronic 
pain/anxiety/bronchitis. Id. at 20.
    5. For LY: 120 Lortab 10/500 mg, 240 ml promethazine/codeine, 90 
Xanax 2 mg, and amoxicillin, again for chronic pain/anxiety/bronchitis. 
Id. at 25.
    6. For DSD: 120 Norco10/325 mg, 240 ml promethazine/codeine, 90 
Xanax 2 mg, and Lovastatin, for chronic pain/anxiety/bronchitis. Id. at 
30.
    7. For SJ: 120 Lortab 10/500 mg, 240 ml promethazine/codeine, 90 
Xanax 2 mg, and folic acid for chronic pain/anxiety/bronchitis. Id. at 
37. This prescription also bore a handwritten

[[Page 69443]]

note stating: ``RX & PA verified by Shaquanna @ (713) 799-9400 same 
address.'' However, the pre-printed phone number on the prescription is 
(832) 236-5688.\5\ Id.
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    \5\ Also in evidence for each of the prescriptions discussed 
above, with the exception of the prescriptions for LH, is the 
pharmacy label for each medication. GX 6, at 2, 7, 14, 19, 24, 28, 
36.
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    A patient profile from Applicant also establishes that on May 5 and 
6, 2010, Ms. Clark dispensed to LH 120 hydrocodone/apap 10/500 mg, 240 
ml promethazine/codeine syrup, and 90 alprazolam 2 mg, along with 
Lovastatin, with the same PA's name listed as the doctor. Id. at 40. 
However, the record contains neither a prescription nor labels for 
these medications.
    The record includes evidence including prescriptions,\6\ pharmacy 
labels, and patient profiles establishing that between June 9 and 12, 
2010, Respondent dispensed additional prescriptions, which were also 
purportedly issued by the same Houston-based PA for eleven persons. See 
generally GX 6. The evidence shows that Respondent dispensed a total of 
thirty-three controlled substances, specifically for 120 Lortab 10/500 
mg, 240 ml promethazine/codeine, and 90 Xanax 2 mg.\7\ See id. at 13, 
18, 35, 42, 47, 52, 57, 62, 66, 71, 74. These prescriptions were issued 
to patients WH, VH, SJ, LFH, SD, EC, HJ, JM, BJR, KJ, and FW; each of 
the prescriptions listed the same three diagnoses of chronic pain/
anxiety/bronchitis.\8\ See id.; see also id. at 12, 34, 42, 46, 51, 61, 
66-A, 70, 74.
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    \6\ The prescriptions for Patient VH and FW were missing. 
However, the pharmacy's patient profile for VH establishes that on 
June 9, 2010, Applicant dispensed hydrocodone, alprazolam, and 
promethazine with codeine based on a prescription purportedly issued 
to her by the PA. GX 6, at 18. With respect to FW, both the patient 
profile and the pharmacy labels establish that on June 12, 2010, 
Applicant dispensed the same three drugs based on a prescriptions 
purportedly issued to him by the PA. GX 6, at 74-75.
    \7\ In his affidavit, the SA stated that the above-referenced 
combination of hydrocodone, alprazolam and promethazine with codeine 
syrup is known in the Dallas area as an illicit drug cocktail that 
is commonly abused and/or diverted by drug seekers and individuals 
involved in the trafficking of controlled substances. GX C, at 2. 
However, no evidence establishes why a pharmacist would know this.
    \8\ The names of four of the purported patients (WH, HL, SJ, and 
LFH) had been previously used on the prescriptions which were 
presented in May.
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    Ms. Clark filled the June 2010 prescriptions after she told the SA 
that the PA had personally informed her that the prescriptions were 
fraudulent. Moreover, Ms. Clark filled the prescriptions, 
notwithstanding that the SA had previously told her to stop filling the 
PA's prescriptions. GX C, at 4; GX 6, at 11-22, 33-77.
    A TSPB Investigator presented copies of the above-referenced 
prescriptions and other records from Applicant to the PA at the Houston 
clinic for her review. GX A, at 3. After reviewing these records, the 
PA provided affidavits wherein she stated that she ``did not write a 
prescription for, call in . . . or by any other means cause the 
authorization for'' each patient listed above. Id.; see also GX 6, at 
4, 9, 16, 21, 31, 38, 43, 48, 53, 58, 63, 67, 72, 76.

The Accountability Audit

    During the execution of the search warrant, the DI, along with TSPB 
investigators, conducted a closing inventory of controlled substances. 
GX B, at 3. In her affidavit, the DI stated that Ms. Clark signed the 
closing inventory sheet attesting to its accuracy, and that she later 
used that inventory in an accountability audit she conducted of 
Applicant's handling of six hydrocodone products from November 13, 2009 
through June 23, 2010. Id. According to the DI's affidavit, each of the 
audited drugs had a shortage or overage, with some types (notably 
hydrocodone 10/500) short as many as 4,000 tablets. Id.; see also GX 
12. However, the Government made no allegation in the Show Cause Order 
based on the results of the accountability audit and I therefore do not 
consider any of this evidence. See Kenneth Harold Bull, 78 FR 62666, 
62674 (2013); CBS Wholesale Distributors, 74 F 36746, 36749-50 (2009).
    The DI also stated that her review of prescriptions seized from 
Applicant revealed that it filled controlled substance prescriptions 
that were not properly executed by the prescribing practitioner (i.e., 
they lacked physician's DEA registration number, patient address, date 
prescription issued, etc.) in violation of 21 CFR 1306.05. GX B, at 3. 
While this evidence may have been relevant on the issue of whether Ms. 
Clark should have known the PA's prescription were fraudulent, none of 
the prescriptions were submitted for the record and it is unclear 
whether any of these prescriptions were issued by the PA. Moreover, to 
the extent the prescriptions were issued by other prescribers, the 
Government made no allegation in the Show Cause Order regarding the 
filling of these prescriptions.\9\ See Bull, 78 FR at 62674; CBS 
Wholesale, 74 FR at 367449-50. I therefore do not consider any of this 
evidence.
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    \9\ The DI also stated that Applicant commingled controlled 
substance prescriptions with non-controlled substance prescriptions. 
GX B, at 3. Because the Show Cause Order contains no allegation 
based on this assertion, I do not consider this evidence.
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    As noted above, on September 29, 2010, the Administrator issued an 
Order to Show Cause and Immediate Suspension of Registration (OTSC-ISO) 
to Applicant. GX 4, at 1-3. On October 4, 2010, Applicant's owner was 
personally served with the OTSC-ISO, and all controlled substances at 
Applicant were seized by the DEA Dallas field office. GX C, at 4. The 
OTSC-ISO specified that Applicant's registration was ``suspended, 
effective immediately,'' and would remain suspended until a final 
determination in the matter was reached. GX 4, at 3. On January 18, 
2011, Applicant voluntarily surrendered its registration. GX 5; see 
also Certified Registration History, GX 2.
    On July 7, 2011, Applicant re-applied for a registration. GX 3.

The 2012 Investigation

    On August 14, 2012, DEA was alerted by the Pharmacy Buying 
Association (PBA), a pharmaceutical distributing company, that 
Applicant ordered 1,000 tablets of carisoprodol, a schedule IV 
controlled substance in Texas,\10\ on December 1, 2010, December 27, 
2010, and February 15, 2011. GX C, at 5. Based on this information, an 
SA accessed the Texas prescription monitoring data for this period and 
discovered that Applicant had dispensed controlled substances on ten 
occasions after its DEA registration was suspended on October 4, 2010. 
Id. Specifically, the SA found that Applicant made the following 
dispensings:
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    \10\ Carisoprodol was scheduled as a Schedule IV controlled 
substance by the Texas Legislature in June 2009. See 2009 Tex. Sess. 
Law Serv. Ch. 774 (S.B. 904) (codified in Tex. Health & Safety Code 
Ann. Sec.  481.037). However, there is no evidence in the 
Investigative Record that Applicant did not hold a Texas controlled 
substance registration when it obtained these drugs and the rule 
placing carisoprodol into Schedule IV of the CSA did not take effect 
until January 11, 2012. See DEA, Schedules of Controlled Substances: 
Placement of Carisoprodol into Schedule IV, 76 FR 77330 (2011).

------------------------------------------------------------------------
                  Date                          Drug and schedule
------------------------------------------------------------------------
Oct. 7, 2010...........................  propoxyphene napsylate (sch.
                                          IV)
Oct. 9, 2010...........................  Lyrica (pregabalin, sch. V)
Oct. 9, 2010...........................  Provigil (modafinil, sch. IV)
Oct. 11, 2010..........................  diazepam (sch. IV)
Oct. 19, 2010..........................  clonazepam (sch. IV)
Oct. 19, 2010..........................  Lyrica
Oct. 26, 2010..........................  hydrocodone (sch. III)
Oct. 26, 2010..........................  propoxyphene napsylate (two
                                          prescriptions)
Oct. 27, 2010..........................  lorazepam (sch. IV)
------------------------------------------------------------------------

GX C, at 5.

[[Page 69444]]

    On August 30, 2012, the Texas Department of Public Safety (DPS) 
performed a registrant inspection of Applicant. GX A, at 3. The state 
inspector found that on October 4, 2010, Applicant had dispensed 30 
capsules of Lyrica. Id. However, it is unclear whether the dispensing 
occurred before or after the ISO was served.\11\
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    \11\ There is a conflict in the statements of the Government's 
witnesses as to whether this prescription, which was issued on 
October 4, 2010, was dispensed on that date or on October 9, 2010. 
Compare GX A, at 3; with GX C, at 5-6. However, there is no evidence 
that either affiant participated in the DPS's Inspection and both 
affiants apparently relied on the hearsay statement of the DPS 
Investigator. As the Government has the burden of proving its 
allegations by a preponderance of the evidence, and it has provided 
no further evidence to resolve the dispute, to the extent this 
evidence was offered to support a finding that Applicant dispensed a 
controlled substance after it was served with the ISO, I place no 
weight on it.
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    Later that day, a state search warrant was executed at Applicant by 
local law enforcement entities and DEA personnel. GX C, at 6. During 
the search, the officers seized prescription vials labeled as 
containing hydrocodone, propoxyphene napsylate, lorazepam and Lyrica, 
pharmacy receipt labels, prescriptions for controlled substances, and 
controlled substance dispensing records. Id.; see also GX 8. The vials 
were affixed with labels from both Applicant and other Dallas 
pharmacies.\12\ GX 8, at 2; GX C, at 7.
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    \12\ When asked why she continued to possess controlled 
substances, Ms. Clark ``stated that DEA must have left the drugs on 
the premises when they seized [her] controlled substances on October 
4, 2010.'' GX C, at 7-8.
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    During the search, the Officers found controlled substance 
prescriptions from various doctors on Applicant's fax machine. GX C, at 
8. When asked about the prescriptions, Ms. Clark asserted that she 
transferred them to other pharmacies to fill, and that she would 
sometimes bring the filled controlled-substance prescriptions back to 
Applicant and put them with the non-controlled substance prescriptions 
to be dispensed or delivered. Id. Ms. Clark also stated that on some 
occasions, patients came into Applicant to pick up their controlled and 
non-controlled substance prescriptions. Id. The Government did not, 
however, provide copies of the prescriptions nor identify how many it 
found; nor did it produce any evidence regarding the veracity of Ms. 
Clark's statement that she sent the prescriptions to other pharmacies 
for filling.
    In his affidavit, the SA stated that Applicant was dispensing 
controlled substances to clients classified as home healthcare service 
providers through August 2012. GX C, at 8. He also stated that he had 
interviewed the program director and medical assistant at BCA, a home 
healthcare provider, and was told that Applicant ``delivered controlled 
substances to BCA for dispensing to BCA's clients,'' and that it ``was 
the sole provider of all prescriptions filled for BCA.'' \13\ Id.
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    \13\ Also included in the record is a signed statement by the 
BCA program director stating that she ``has seen the pharmacist drop 
of [sic] medication to this office from Wheatland Pharmacy. I have 
seen Michelle drop of [sic] medication from Wheatland Pharmacy.'' GX 
10. However, this statement does not indicate whether the delivered 
medication included controlled substances. Moreover, while the 
statement was witnessed by an SA and TFO, it does not include an 
attestation clause.
    However, the record also includes a statement from the Medical 
Assistant. GX 11. Therein, the Medical Assistant stated that ``since 
[she] returned to the Grand Prairie office on May 1st 2012, all the 
medications received from Wheatland pharmacy, all had labels from 
Wheatland pharmacy, controlled and non-controlled medications.'' Id. 
The Medical Assistant also stated that when Applicant delivered 
drugs, she would review the medications to make sure that it was the 
correct drug for each patient. Id. This statement was also witnessed 
by an SA and TFO, and contained an attestation clause. See id. at 2. 
I therefore find that it constitutes substantial evidence that 
Applicant continued to dispense controlled substances when it did 
not possess a DEA registration.
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    During the interview, BCA's medical assistant showed the SA a 
prescription blister pack for 60 tablets of lorazepam .5mg; the label 
affixed to the pack establishes that Applicant dispensed the drugs on 
August 1, 2012. See GX C, at 8-9; GX 9, at 1-2. The medical assistant 
also showed the SA a second blister pack, which originally contained 60 
tablets of clonazepam 1 mg; its label establishes that Applicant 
dispensed the drugs on August 28, 2012. GX C, at 8-9; GX 9, at 3-5.

Discussion

    Pursuant to section 303(f) of the Controlled Substances Act (CSA), 
``[t]he Attorney General may deny an application for [a practitioner's] 
registration . . . if the Attorney General determines that the issuance 
of such registration would be inconsistent with the public interest.'' 
21 U.S.C. 823(f); see also id. Sec.  802(21) (defining ``[t]he term 
`practitioner''' to include a pharmacy). In making the public interest 
determination, 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.
    ``These factors are to be considered in the disjunctive.'' Robert 
A. Leslie, M.D., 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 . . . an application for 
registration [should be] denied.'' Id.; see also Kevin Dennis, M.D., 78 
FR 52787, 52794 (2013); MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 
2010). Moreover, while I am required to consider each of the factors, I 
``need not make explicit findings as to each one.'' MacKay, 664 F.3d at 
816 (quoting Volkman v. DEA, 567 F.3d 215, 222 (6th Cir. 2009) (quoting 
Hoxie, 419 F.3d at 482)).\14\
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    \14\ ``In short, this is not a contest in which score is kept; 
the Agency is not required to mechanically count up the factors and 
determine how many favor the Government and how many favor the 
registrant. Rather, it is an inquiry which focuses on protecting the 
public interest; what matters is the seriousness of the registrant's 
misconduct.'' Jayam Krishna-Iyer, 74 FR 459, 462 (2009). 
Accordingly, as the Tenth Circuit has recognized, findings under a 
single factor can support the revocation of a registration. See 
MacKay, 664 F.3d at 821.
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    The Government has the burden of proving, by substantial evidence, 
that grounds exist to deny the application pursuant to 21 U.S.C. 
823(f). 21 CFR 1301.44(d). This is so even in a non-contested case.
    Having considered all of the factors, I conclude that the 
Government's evidence with respect to Applicant's experience in 
dispensing controlled substances (factor two) and its compliance with 
applicable state and federal laws relating to controlled substances 
(factor four), establishes a prima facie case that issuing it a new 
registration ``would be inconsistent with the public interest.'' 21 
U.S.C. 823(f). Because Applicant waived its right to present evidence 
in refutation of the Government's prima facie case, I will order that 
its application be denied.

Factor 1: The Recommendation of the Appropriate State Licensing Board 
or Professional Disciplinary Authority

    Applicant currently holds a pharmacy license issued by the Texas 
State Board of Pharmacy and a Controlled Substance Registration issued 
by the Texas Department of Public Safety. As found above, in 2009 the 
TSBP issued an Order suspending Applicant's license on the basis of a 
felony offense of theft of services in 1991. The Board then probated 
the suspension, conditioned

[[Page 69445]]

upon Applicant complying with the terms of the order, including that it 
comply with by all federal and state laws ``with respect to pharmacy, 
controlled substances, dangerous drugs,'' as well as ``all rules and 
regulations adopted pursuant to the above-mentioned statutes.'' GX 1, 
at 3. The Government has provided no additional evidence that since 
2009, either the TSBP or TDPS have taken action either against 
Applicant's pharmacy license or its state controlled substance 
registration. GX A.
    DEA has long held, however, that a State's failure to take action 
against an applicant's pharmacy license or controlled substance 
registration (where such registration is also required) is not 
dispositive in determining whether the continuation of a registration 
is in the public interest. East Main Street Pharmacy, 75 FR 66149, 
66162 n.47 (2010); Nicholas A. Sychak, d/b/a Medicap Pharmacy, 65 FR 
75959, 75967 (2000). ``[T]he Controlled Substances Act requires that 
the Administrator . . . make an independent determination [from that 
made by state officials] as to whether the granting of controlled 
substance privileges would be in the public interest.'' Mortimer Levin, 
57 FR 8680, 8681 (1992). Thus, while there is no evidence that the 
Texas Board has revoked Applicant's pharmacy license or its state 
registration, DEA has repeatedly held that while a practitioner's 
possession of state authority constitutes an essential condition for 
obtaining and maintaining a registration, see 21 U.S.C. 802(21) & 
823(f); it `` `is not dispositive of the public interest inquiry.' '' 
George Mathew, 75 FR 66138, 66145 (2010), pet. for rev. denied Mathew 
v. DEA, No. 10-73480, slip op. at 5 (9th Cir., Mar. 16, 2012); see also 
Patrick W. Stodola, 74 FR 20727, 20730 n.16 (2009); Robert A. Leslie, 
68 FR 15227, 15230 (2003). Thus, this factor is not dispositive either 
for or against the issuance of a registration to Applicant. See Paul 
Weir Battershell, 76 FR 44359, 44366 (2011) (citing Edmund Chein, 74 FR 
6580, 6590 (2007), pet. for rev. denied, Chein v. DEA, 533 F.3d 828 
(D.C. Cir. 2008)).\15\
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    \15\ As for factor three--the Applicant's Record of Convictions 
of Offenses Related to the Manufacture, Distribution, or Dispensing 
of Controlled Substances--it is noted that the TSBP's 2009 Order was 
based on a 1991 felony conviction of Ms. Clark for theft of 
services. GX 1, at 1. However, the Government does not contend that 
this offense falls within factor three. Moreover, there is no 
evidence that either Applicant or Ms. Clark has been criminally 
charged, let alone convicted of, any of the misconduct established 
on this record. Accordingly, consistent with DEA precedent, I find 
that this factor neither weighs in favor of, or against a 
determination that Applicant's registration ``would be inconsistent 
with the public interest.'' 21 U.S.C. Sec.  823(f). See also Dewey 
C. MacKay, 75 FR 49956, 49973 (2010); Edmund Chein, 72 FR 6580, 6593 
n.22 (2007).
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Factors Two and Four: The Applicant's Experience in Dispensing 
Controlled Substances and Compliance With Applicable State, Federal or 
Local Laws Relating to Controlled Substances

    Under a longstanding DEA regulation, a prescription for a 
controlled substance is unlawful unless it has been ``issued for a 
legitimate medical purpose by an individual practitioner acting in the 
usual course of his professional practice.'' 21 CFR 1306.04(a). This 
regulation further provides that while ``[t]he responsibility for the 
proper prescribing and dispensing of controlled substances is upon the 
prescribing practitioner, . . . a corresponding responsibility rests 
with the pharmacist who fills the prescription.'' Id. (emphasis added). 
Continuing, the regulation states that ``[a]n order purporting to be a 
prescription issued not in the usual course of professional treatment . 
. . is not a prescription . . . and the person knowingly filling such a 
purported prescription . . . shall be subject to the penalties provided 
for violations of the provisions of law relating to controlled 
substances.'' Id.\16\
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    \16\ To effectuate the dual goals of conquering drug abuse and 
controlling both legitimate and illegitimate traffic in controlled 
substances, ``Congress devised a closed regulatory system making it 
unlawful to manufacture, distribute, dispense, or possess any 
controlled substance except in a manner authorized by the CSA.'' 
Gonzales v. Raich, 545 U.S. 1, 13 (2005). As the Supreme Court has 
explained, the prescription requirement, 21 CFR 1306.04(a), advances 
this purpose by ``ensur[ing that] patients use controlled substances 
under the supervision of a doctor so as to prevent addiction and 
recreational abuse. As a corollary, [it] also bars doctors from 
peddling to patients who crave the drugs for those prohibited 
uses.'' Gonzales v. Oregon, 546 U.S. 243, 274 (2006) (citing United 
States v. Moore, 423 U.S. 122, 135, 143 (1975)).
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    DEA has consistently interpreted this provision ``as prohibiting a 
pharmacist from filling a prescription for a controlled substance when 
[s]he either `knows or has reason to know that the prescription was not 
written for a legitimate medical purpose.''' Medicine Shoppe-
Jonesborough, 73 FR 364, 381, pet. for rev. denied, Medicine Shoppe-
Jonesborough v. DEA, 300 Fed. Appd'x. 409, 412 (6th Cir. 2008) (quoting 
Medic-Aid Pharmacy, 55 FR 30043, 30044 (1990)); see also Frank's Corner 
Pharmacy, 60 FR 17574, 17576 (1995); Ralph J. Bertolino, 55 FR 4729, 
4730 (1990); United States v. Seelig, 622 F.2d 207, 213 (6th Cir. 
1980). This Agency has further held that ``[w]hen prescriptions are 
clearly not issued for legitimate medical purposes, a pharmacist may 
not intentionally close [her] eyes and thereby avoid [actual] knowledge 
of the real purpose of the prescription.'' Bertolino, 55 FR at 4730 
(citations omitted). The regulation thus ``requires . . . pharmacists 
[to] use common sense and professional judgment.'' Id.
    Similarly, under the TSBP's regulations, a pharmacist is required 
to ``exercise sound professional judgment with respect to the accuracy 
and authenticity of any prescription drug order dispensed.'' 22 Tex. 
Admin. Code Sec.  291.29(a). Moreover, ``[a] pharmacist shall not 
dispense a prescription drug if the pharmacist knows or should have 
known that the order for such drug was issued without a valid pre-
existing patient-practitioner relationship.'' Id. Sec.  291.29(b). The 
TSBP's regulations identify various ``[r]easons to suspect that a 
prescription may have been authorized in the absence of a valid 
patient-practitioner relationship,'' including, inter alia: ``(1) The 
number of prescriptions authorized on a daily basis by the 
practitioner; (2) the manner in which the prescriptions are . . . 
received by the pharmacy; [and] (3) [t]he geographical distance between 
the practitioner and the patients.'' Id. Sec.  291.29(c)(1)-(3).
    Here, the evidence shows that Ms. Clark, Applicant's owner and 
pharmacist, clearly knew or had reason to know that the prescriptions 
presented on May 6, 2010 by SF, which were purportedly issued by the 
Houston-based PA for some twenty-seven patients, each of whom received 
the same three controlled substances (hydrocodone/acetaminophen, 
promethazine with codeine cough syrup, and alprazolam), were not issued 
for a legitimate medical purpose. 21 CFR 1306.04(a). Ms. Clark had 
ample reason to know that the prescriptions were not legitimate given 
that the PA, whose prescription pad had been used, practiced in 
Houston, approximately 240 miles from Applicant; each of the persons 
received the same combination of controlled substances; and Ms. Clark 
eventually admitted that all of the prescriptions had been brought to 
Applicant by SF. Ms. Clark nonetheless filled the prescriptions.\17\ 
Moreover,

[[Page 69446]]

while Ms. Clark claimed to DEA Investigators that she had verified the 
prescriptions with the PA's office, the Investigators ultimately 
determined that she did not do so. I thus hold that Ms. Clark violated 
federal law by filling each of these prescriptions. 21 U.S.C. 
841(a)(1); 21 CFR 1306.04(a).
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    \17\ In East Main Street Pharmacy, the Administrator noted the 
following examples of red flags, including the respective locations 
of the patients and prescriber and that patients were travelling 
long distances to both obtain the prescriptions and fill them (and 
were bypassing numerous pharmacies en route), the lack of 
individualization of dosing, and that the patients were obtaining 
the same combination of multiple controlled substances. 75 FR 66149, 
66157-59 & 66164 (2010).
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    The following day, Ms. Clark again violated federal law by filling 
at least some of prescriptions for the same three controlled 
substances, which were purportedly issued in the name of twenty persons 
by the same Houston-based physician's assistant, whose prescriptions 
she filled the day before. Here again, the prescriptions were presented 
to Ms. Clark by SF, and here again, Ms. Clark falsely claimed that she 
verified the prescriptions with the PA's office. While Ms. Clark 
subsequently stated that she had not filled all of the prescriptions, 
she admitted to filling some of them. I thus hold that Ms. Clark 
violated federal law with respect to those prescriptions she did fill. 
21 U.S.C. 841(a)(1); 21 CFR 1306.04(a).\18\
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    \18\ However, with respect to those prescriptions she filled 
based on the instruction of Agency personnel to do so, so that the 
latter could monitor SF's activities, I do not find that she 
violated federal law in doing so.
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    On May 14, 2010, Ms. Clark told Investigators that the day before, 
KD, a known associate of SF, had brought in additional controlled 
substance prescriptions for alprazolam and either promethazine or 
hydrocodone, which were also purportedly issued by the same Houston-
based PA. GX C, at 3. Ms. Clark told the Investigators that she did not 
fill the prescriptions because she had actually spoken with the PA and 
was told that the prescriptions were fraudulent. Moreover, during the 
interview, Ms. Clark was told not to fill any further prescriptions 
from the PA's clinic.\19\
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    \19\ It is noted that on her application, Ms. Clark disputed 
that she was told not to fill the prescriptions, stating that ``DEA 
Agents never advised or admonished [her] not to fill the 
prescriptions.'' GX 3. However, I find credible the statement of the 
SA that during May 14, 2010 interview, he told her not to fill any 
further prescriptions from the PA's clinic. GX C, at 3.
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    Notwithstanding that Ms. Clark had been told by the PA that the 
prescriptions that were being presented at her pharmacy were fraudulent 
(and had also been told by a DEA Agent not to fill them)--as if she 
needed to be told, given the circumstances of a single person 
presenting on multiple days, prescriptions for multiple controlled 
substances for more than forty patients, all of which were purportedly 
issued by a PA located nearly 240 miles away--she proceeded to fill 
additional prescriptions which were purportedly issued by the PA. See 
GX C, at 4; see generally GX 6. As the evidence shows, on or about June 
9, 2010, Ms. Clark received eleven more prescription forms, which were 
purportedly issued by the PA and authorized the dispensing of thirty-
three additional prescriptions for the same cocktail of hydrocodone, 
promethazine with codeine, and alprazolam, which she had previously 
filled. Moreover, some of the prescriptions used the names of the same 
``patients'' whose names were used on the fraudulent prescriptions 
presented by SF to Ms. Clark in early May. Nonetheless, Ms. Clark 
filled the prescriptions, in abject disregard of her corresponding 
responsibility under the CSA not to fill clearly fraudulent 
prescriptions. See 21 CFR 1306.04(a).\20\ Ms. Clark's filling of the 
prescriptions is egregious misconduct and supports the conclusion that 
issuing Applicant a new registration ``would be inconsistent with the 
public interest.'' 21 U.S.C. 823(f).
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    \20\ The Government also alleged that Applicant and ``Ms. Clark 
violated federal law by delivering prescriptions for controlled 
substances to persons who were not the ultimate users of the'' 
drugs. GX 7, at 2. Because by definition, ``the term `ultimate user' 
means a person who has lawfully obtained, and who possesses, a 
controlled substance for his own use or for the use of a member of 
his household,'' 21 U.S.C. 802(27) (emphasis added), and it is 
indisputable that all of the PA's prescriptions were fraudulent, the 
allegation is simply duplicative of the allegation that Ms. Clark 
dispensed controlled substances when she had reason to know that the 
prescriptions were fraudulent and thus obviously not issued for a 
legitimate medical purpose.
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    This, however, is not the only misconduct proved on this record, as 
there is substantial evidence showing that after Ms. Clark was served 
with the Immediate Suspension Order on October 4, 2010, she continued 
to dispense controlled substances and did so notwithstanding that the 
Order, in addition to its title, clearly stated that it was ``effective 
immediately.'' GX 4, at 3. More specifically, the evidence shows that 
Applicant dispensed ten prescriptions for controlled substances between 
October 7 and October 27, 2010. GX C, at 5. Moreover, the evidence 
showed that Applicant was still dispensing controlled substances in 
August 2012, even though Ms. Clark had voluntarily surrendered 
Applicant's DEA registration in January 2011. See GX 5 (Voluntary 
Surrender form); GX 9 (blister packs for drugs dispensed on August 1 
and 28, 2012). Indeed, Investigators found that Applicant was still 
receiving prescriptions for controlled substances, notwithstanding that 
the Immediate Suspension Order had been served on Ms. Clark nearly two 
years earlier.
    Under the CSA, it is ``unlawful for any person knowingly or 
intentionally . . . to use in the course of the manufacture, 
distribution, or dispensing of a controlled substance . . . a 
registration number which is revoked [or] suspended.'' 21 U.S.C. 
843(a). Also, ``[e]very person who dispenses, or who proposes to 
dispense, any controlled substance, shall obtain from the Attorney 
General a registration issued in accordance with the rules and 
regulations promulgated by him.'' Id. Sec.  822(a)(2). Finally, a DEA 
regulation expressly provides that ``[n]o person required to be 
registered shall engage in any activity for which registration is 
required until the application for registration is granted and a 
Certificate of Registration is issued by the Administrator to such 
person.'' 21 CFR 1301.13(a). See also 21 U.S.C. 841(a) (``Except as 
authorized by this subchapter it shall be unlawful for any person 
knowingly or intentionally to dispense or possess with intent to . . . 
dispense . . . a controlled substance.'') \21\
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    \21\ While the Government also introduced evidence showing that 
the Investigators found on Applicant's premises several vials of 
controlled substances that had been dispensed by other pharmacies to 
persons other than Ms. Clark, it neither offered evidence 
establishing that the drugs were tested and found to be a controlled 
substance, nor evidence showing that the drugs match the physical 
appearance of the various medications as set forth in the 
Physicians' Desk Reference. Moreover, the Government offered no 
evidence showing that the patients listed on the vials were not 
employees of Applicant.
     As for the three purchases of carisoprodol, as found above, all 
of these purchases occurred before the drug became a federally 
controlled substance on January 11, 2012. See 76 FR 77330. Moreover, 
while at the time of the purchase, carisoprodol was a schedule IV 
controlled substance under Texas law, there is no evidence that 
Applicant did not hold a DPS registration at the time of the 
purchases. Thus, I do not place any weight on this evidence.
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    Here again, it is clear that Ms. Clark and Applicant flagrantly 
violated federal law by dispensing controlled substance knowing that 
she and Applicant lacked authority to do so. While, by itself, Ms. 
Clark's egregious misconduct in dispensing the fraudulent prescriptions 
warrants the denial of Applicant's application, Ms. Clark's further 
misconduct in dispensing controlled substances when she lacked the 
authority to do so provides an additional basis which supports the 
conclusion that the issuance of a new registration to Applicant ``would 
be inconsistent with the public interest.'' 21 U.S.C. 823(f). Because 
Applicant waived its right to a hearing or to submit a written 
statement in lieu of hearing, there is no evidence to the contrary. 
Accordingly, I will order

[[Page 69447]]

that Applicant's pending application be denied.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well 
as 28 CFR 0.100(b) and 28 CFR 0.104, I order that the application of 
Wheatland Pharmacy, for a DEA Certificate of Registration as a retail 
pharmacy, be, and it hereby is, denied. This order is effective 
immediately.

    Dated: November 8, 2013.
Thomas M. Harrigan,
Deputy Administrator.
[FR Doc. 2013-27700 Filed 11-18-13; 8:45 am]
BILLING CODE 4410-09-P