[Federal Register Volume 62, Number 198 (Tuesday, October 14, 1997)]
[Notices]
[Pages 53338-53343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27144]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 96-47]


City Drug Company: Revocation of Registration

    On August 29, 1996, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, (DEA), issued an 
Order to Show Cause to City Drug Company, (Respondent) of Opp, Alabama, 
notifying it of an opportunity to show cause as to why DEA should not 
revoke its DEA Certificate of Registration, AC5430450, and deny any 
pending

[[Page 53339]]

applications for registration under 21 U.S.C. 823(f), for reason that 
its continued registration would be inconsistent with the public 
interest pursuant to 21 U.S.C. 824(a)(4).
    By letter dated September 19, 1996, Respondent, through counsel, 
filed a request for a hearing, and following prehearing procedures, a 
hearing was held in Mobile, Alabama on April 15, 1997, before 
Administrative Law Judge Gail A. Randall. At the hearing, both parties 
called witnesses to testify and introduced documentary evidence. After 
the hearing, counsel for both parties submitted proposed findings of 
fact, conclusions of law and argument. On July 24, 1997, Judge Randall 
issued her Opinion and Recommended Ruling, recommending that 
Respondent's DEA Certificate of Registration be revoked and any pending 
applications for renewal of such registration be denied. In addition, 
Judge Randall recommended that favorable consideration be given to a 
new application for registration should Respondent present any 
persuasive evidence of proposed procedural changes for the dispensing 
of controlled substances. On August 4, 1997, Respondent filed a general 
objection to the Administrative Law Judge's decision, and on August 26, 
1997, Judge Randall transmitted the record of these proceedings to the 
Acting Deputy Administrator.
    By letter dated September 17, 1997, Judge Randall forwarded a 
letter from Respondent's counsel dated September 9, 1997, that set 
forth information concerning procedural changes implemented at 
Respondent and continuing education received by Respondent's owner. 
This letter was received by the Administrative Law Judge after the 
record had closed and been transmitted to the Acting Deputy 
Administrator. The Acting Deputy Administrator has not considered 
Respondent's September 9, 1997 letter in rendering his decision in this 
matter since it was submitted after the record had closed, and 
Respondent did not offer any explanation as to why this information was 
not submitted prior to the closing of the record.
    The Acting Deputy Administrator has considered the record in its 
entirety, and pursuant to 21 CFR 1316.67, hereby issues his final order 
based upon findings of fact and conclusions of law as hereinafter set 
forth. The Acting Deputy Administrator adopts, with one noted 
exception, the Opinion and Recommended Ruling of the Administrative Law 
Judge, and his adoption is in no manner diminished by any recitation of 
facts, issues and conclusions herein, or of any failure to mention a 
matter of fact or law.
    The Acting Deputy Administrator finds that Respondent is one of 
five pharmacies located in Opp, Alabama and has been in existence for 
approximately 25 years. Joseph Grimes is the owner and pharmacist in 
charge of Respondent.
    On March 2, 1992, a search warrant was executed at Respondent 
pharmacy as a result of an undercover operation conducted by a local 
police department. During the search, DEA investigators conducted a 
physical count of controlled substances on the premises using 
Respondent's pill counting machine, and collected all relevant 
controlled substance records for the period January 15, 1990 to March 
2, 1992, except purchase invoices and records of controlled substances, 
if any, returned to suppliers. A DEA investigator later contacted 
Respondent's suppliers and obtained records of controlled substance 
sales to Respondent for the period January 15, 1990 to March 2, 1992.
    Alabama law requires a pharmacy to conduct an inventory of 
controlled substances on the 15th day of January of each year. Included 
in the records seized during execution of the search warrant were these 
inventories conducted by Respondent for 1990, 1991, and 1992. Mr. 
Grimes testified at the hearing in this matter that when performing an 
inventory, he counts all individual dosage units of Schedule II 
controlled substances, and as permitted by Federal and state law, he 
estimates the quantities of Schedule III through V controlled 
substances.
    Using Respondent's records, records from Respondent's suppliers, 
and the closing inventory conducted on March 2, 1992, DEA conducted 
several accountability audits. One audit of Schedule III and IV 
controlled substances was conducted using Respondent's January 15, 1990 
inventory as the initial inventory figure and DEA's March 2, 1992 count 
as the closing inventory. This accountability audit revealed that 
Respondent could not account for 80,223 dosage units, including 18,774 
dosage units of Darvocet/propoxyphene 100 mg. and 10,428 dosage units 
of Darvocet/propoxyphene 65 mg. In addition, the audit revealed an 
overage of 402 dosage units of hydrocodone 5 mg. (brand and generic).
    An audit of the Schedule II controlled substance oxycodone 5 mg. 
for the period January 15, 1990 to January 15, 1992, revealed an 
overage of 859 dosage units. This unit used Respondent's January 15, 
1990 inventory as the initial inventory figure, and its January 15, 
1992 inventory as the closing inventory figure.
    Another audit was conducted of Schedule III and IV controlled 
substances using Respondent's January 15, 1990 inventory as the initial 
inventory figure and its January 15, 1992 inventory as the closing 
inventory figure. This audit revealed shortages totaling 13,706 dosage 
units and overages totaling 705 dosage units.
    Following execution of the search warrant, DEA organized 
prescription records taken from Respondent according to the prescribing 
doctor. Eleven of these doctors were provided copies of prescriptions 
attributed to them and each doctor reviewed his patient records in the 
presence of a DEA investigation to determine whether or not he had 
authorized the prescriptions found at Respondent pharmacy.
    Prescriptions taken from Respondent pharmacy indicated that Dr. Rex 
Butler had prescribed a total of 2,427 dosage units of controlled 
substances to five patients. By affidavit dated March 19, 1997, Dr. 
Butler indicated that he had not authorized any of these prescriptions. 
Respondent provided affidavits from two of these patients and one of 
their relatives which indicated that they had witnessed Mr. Grimes 
receiving authorization from Dr. Butler for controlled substance 
prescriptions for them. Another of the patients indicated by affidavit 
that Dr. Butler had prescribed Limbitrol DS for him on several 
occasions. However, like Judge Randall, the Acting Deputy Administrator 
finds these patient affidavits to be of limited value since they do not 
specifically address the prescriptions at issue nor do they reference 
any time period for their statements. In addition, the Acting Deputy 
Administrator finds Dr. Butler's affidavit to be more reliable than the 
patients' affidavits, since Dr. Butler's affidavit is based upon a 
review of his patient records which were prepared and maintained during 
the relevant time period, whereas the patients' affidavits are based 
upon their recollection more than six years after the event.
    Dr. Steven Davis declared in an affidavit dated March 3, 1997, that 
after reviewing the prescriptions taken from Respondent's files that 
were attributed to him and comparing them to his patient records, he 
determined that he had not authorized prescriptions for 20 specifically 
named patients, amounting to a total of approximately 2,650 dosage 
units of controlled substances. Respondent provided affidavits from 
patients or immediate family members of patients concerning Dr. Davis's

[[Page 53340]]

prescribing practices. The majority of these affidavits fail to address 
the specifically questioned prescriptions or to provide relevant time 
periods for their statements, and are therefore of limited value. 
However, two of the patients do indicate in their affidavits that they 
were prescribed the medication on the specific date at issue. 
Nonetheless, the Acting Deputy Administrator finds Dr. Davis' affidavit 
to be more reliable than the affidavits of these two patients since Dr. 
Davis' affidavit is based upon a review of his patient records which 
were prepared and maintained during the relevant time period, whereas 
the patients' affidavits are based upon their recollection more then 
six years after the event. As Judge Randall noted, the affidavit of the 
wife of one of the patients verified that her husband was prescribed 
Vicodin in December 1991 by Dr. Davis. Since Dr. Davis does not address 
in his affidavit whether or not he authorized this prescription, the 
Acting Deputy Administrator agrees with Judge Randall that the wife's 
affidavit ``warrant[s] a belief that this December 1991 prescription 
was authorized by Dr. Davis.''
    Prescriptions taken from Respondent pharmacy indicated that Dr. 
James Guest had prescribed a total of 1,205 dosage units of Halcion and 
Xanax for one patient between June 25, 1990 and February 29, 1992. By 
affidavit dated February 13, 1997, Dr. Guest stated that he had last 
seen this patient on May 17, 1989, and had not authorized any of the 
prescriptions taken from Respondent pharmacy that were attributed to 
him. Respondent provided affidavit from the patient and her daughter 
which indicated that Mr. Grimes had telephoned Dr. Guest's office for 
authorization to dispense Halcion and Xanax. However, like many of the 
previously discussed affidavits, these affidavits fail to address the 
specific prescriptions in question or to provide any specific time 
period for their statements.
    Respondent's prescription records indicated that Dr. Joe Sanders 
authorized the dispensing of 2,600 dosage units of propoxyphene N-100 
or Darvocet N-100 to one patient between August 31, 1990 and February 
1, 1992. But, in a letter dated June 4, 1993, Dr. Sanders wrote that he 
had last seen the patient on May 17, 1990, and had no record or 
recollection of calling in any prescriptions for the patient since that 
time.
    According to Respondent's records, between January 19, 1990 and 
November 21, 1991, Respondent dispensed 2,280 dosage units of lorazepam 
2 mg. to one patient as allegedly authorized by Dr. Kirit Joshi. 
However, by affidavit dated February 18, 1997, Dr. Joshi declared that 
while he has issued that patient prescriptions for other controlled 
substances, he had not authorized the lorazepam prescriptions for the 
patient. In an affidavit, the patient's husband stated that, ``[t]o my 
knowledge Joe Grimes has phoned Dr. Kiruit [sic] Joshi's office for 
lorazepam and other medication in 1990 and 1992 for my wife * * *.'' 
The Acting Deputy Administrator finds Dr. Joshi's affidavit to be more 
reliable than the husband's affidavit, since Dr. Joshi's affidavit is 
based upon a review of his patient record which was prepared and 
maintained during the relevant time period, whereas the husband's 
affidavit is based upon his recollection more than six years after the 
event.
    Respondent's records indicate that Dr. D.A. Marsh telephoned two 
prescriptions to Respondent for an individual, one on November 25, 
1991, for 18 dosage units of Fiorinal #3 with codeine, and the other on 
December 5, 1991, for 6 dosage units of Fiorinal #3 with codeine. In an 
affidavit dated February 19, 1997, Dr. Marsh declared that he did in 
fact see this patient on November 19 and 25, 1991, and that he did 
write her a prescription for 20 Fiorinal #3 with codeine on November 
25, 1991. However, Dr. Marsh stated he did not orally authorize any 
prescriptions for this individual, and specifically denied authorizing 
the two prescriptions noted above. In an affidavit dated April 9, 1997, 
the patient stated that, ``[p]rescriptions for Fiorinal #3 were 
authorized for me by D.A. Marsh MD in November and December of 1991 and 
were filled at [Respondent] * * *. Some of these prescriptions were 
phoned in.'' She indicated that she was allergic to a drug prescribed 
for her by Dr. Marsh and that once he was informed of this allergy, 
``Dr. Marsh authorized a prescription for 6 Fiorinal with codeine 
capsules for me.'' While the patient's affidavit might help explain the 
prescription in Respondent's files for the six Fiorinal #3 with 
codeine, it does not address the 18 dosage units allegedly dispensed 
pursuant to an oral prescription, on the same day Dr. Marsh admitted 
issuing the patient a written prescription for 20 dosage units. 
However, as with the other affidavits, the Acting Deputy Administrator 
finds Dr. Marsh's affidavit to be more reliable than that of the 
patient since it is based upon a review of his patient record which was 
prepared and maintained during the relevant time period, whereas the 
patient's affidavit is based upon her recollection more than six years 
after the event.
    According to Respondent's records, between January 1, 1990 and 
March 2, 1992, Dr. Donald Newman orally authorized prescriptions for 
2,600 dosage units of chlordiazepoxide 10 mg. for a specific patient. 
By affidavit dated February 18, 1997, Dr. Newman stated that while he 
did prescribe controlled substances on occasion to this patient, it was 
always in writing and he did not authorize any of the oral 
prescriptions for chlordiazepoxide found in Respondent's files. 
Respondent provided an affidavit from this patient dated April 9, 1997, 
who stated that, ``I have witnessed Joe Grimes calling Dr. Donald 
Newman's office for permission to refill Librium (chlordiazepoxide HCL) 
on several occasions during the period of January 1990 to January 
1991.'' However, this affidavit does not address the specific 
prescriptions at issue. Again, the Acting Deputy Administrator finds 
Dr. Newman's affidavit to be more reliable than that of the patient 
since it based upon a review of his patient record which was prepared 
and maintained during the relevant time period, whereas the patient's 
affidavit is based upon her recollection more than six years after the 
event.
    According to Respondent's records, Dr. Steven Price authorized five 
prescriptions for a total of 150 dosage units of controlled substances 
to three patients. As to the first patient, Dr. Price stated in an 
affidavit dated February 20, 1997, that while he had prescribed the 
patient Xanax in January 1991, he did not authorize the prescription 
for Xanax found in Respondent's files dated February 22, 1991. 
Regarding the second patient, Dr. Price denied prescribing diazepam 5 
mg. for the individual on the dates listed on the three prescriptions 
found in Respondent's files. Finally, Dr. Price stated that he has no 
record of the patient whose name appeared on the fifth prescription 
attributed to Dr. Price. The first patient, in an affidavit dated April 
9, 1997, stated that Dr. Price had prescribed Xanax for her in January 
and February 1991. This affidavit confirms Dr. Price's conclusion, 
after reviewing his patient's chart, that he had prescribed Xanax in 
January of 1991, yet conflicts with his conclusion concerning the 
February 1991 prescription. Regarding the second patient, Respondent 
provided an affidavit dated April 9, 1997, from an individual who 
stated that she could ``verify that [the patient] was prescribed Valium 
(diazepam) by Dr. Steven Price and sometimes the prescription was 
phoned into [Respondent]. I personally

[[Page 53341]]

picked up this medication on many occasions for [the patient].'' The 
affidavit fails to give a time period for her statements. The Acting 
Deputy Administrator finds Dr. Price's affidavit to be more reliable 
than those submitted by Respondent, since it is based upon a review of 
his patient records which were prepared and maintained during the 
relevant time period, whereas the patients' affidavits are based upon 
the recollection of individuals more than six years after the event.
    During execution of the search warrant, investigators obtained from 
Respondent five prescriptions allegedly authorized by Dr. B.A. Santa 
Rossa for an individual for a total of 180 dosage units of 
proproxyphene 65 mg. and 120 dosage units of Wygesic. In his affidavit 
dated March 17, 1997, Dr. Santa Rossa stated that while he had 
prescribed controlled substances for this individual in the past, he 
always issued a written prescription for the drugs. In addition, a 
review of his patient record revealed that he had not authorized any of 
the five prescriptions attributed to him that were found in 
Respondent's files. Further, in his affidavit, Dr. Santa Rossa denied 
issuing a prescription to a second individual on June 8, 1991, for 30 
dosage units of diazepam 10 mg. However, Respondent provided an 
affidavit from this second patient who stated that, ``according to my 
best judgment and recol[l]ection do attest to the fact that Joe Grimes 
has called for permission to fill diazepam 10 mg. in June 1991.'' As 
Judge Randall noted, ``[e]ven if this affidavit is given more 
credibility than Dr. Santa Rossa's affidavit, a total of 300 dosage 
units of controlled substances were dispensed, without authority, by 
the Respondent's pharmacists * * *.''
    According to Respondent's records, Dr. Richard Spurlin authorized 
multiple prescriptions to six individuals which accounted for the 
dispensation of over 12,000 dosage units of controlled substances by 
Respondent. By affidavit, Dr. Spurlin stated that after reviewing his 
records for these patients, he determined that while he had at various 
times issued these individuals controlled substances prescriptions, he 
had not authorized any of the prescriptions found in Respondent's 
files. Respondent provided affidavits from four of these patients. 
Three of them indicated that they had observed Mr. Grimes telephoning 
Dr. Spurlin's office for authorization to fill or refill prescriptions. 
Yet, none of these affidavits address the specific prescriptions at 
issue nor do they provide a time period for the statements made. The 
other patient's affidavit indicated that ``Dr. Spurlin has authorized 
prescriptions for Xanax .25 mg. (alprazolam) and Halcion for me from 
1988 to 1997.'' The Acting Deputy Administrator finds that while this 
patient references a general time period, like the other patients, she 
fails to address the specific prescriptions at issue. Therefore,the 
Acting Deputy administrator finds Dr. Spurlin's affidavit to be more 
reliable than those submitted by Respondent, since it is based upon a 
review of his patient records which were prepared and maintained during 
the relevant time period, whereas the patients' affidavits are based 
upon their recollection more than six years after the event.
    In December 1992, DEA investigators asked Dr. Reddoch Williams to 
review prescriptions found in Respondent's files that indicated that 
they were authorized by him. By letter dated February 26, 1997, Dr. 
Williams certified that he had reviewed the original prescriptions and 
his patient filed. Dr. Williams also wrote that he had not authorized 
``[Respondent] or any other person or pharmacy to fill or refill the 
prescriptions which are marked as `forgery' or otherwise marked as not 
authorized by me.'' Some of Dr. Williams handwritten comments are 
difficult to read and other comments are not definitive in nature, 
being qualified with statements such as ``I believe'' or ``I think''. 
Therefore, the Acting Deputy Administrator declines to find that any of 
these prescriptions were unauthorized. However, in those instances 
where the prescriptions are clearly marked as forgeries without any 
qualifying language, the Acting Deputy Administrator finds that these 
prescriptions were not authorized by Dr. Williams. These unauthorized 
prescriptions accounted for the dispensation of over 1,100 dosage units 
of controlled substances. Three of the patients, whose names appeared 
on the prescriptions which were clearly marked as forgeries by Dr. 
Williams, provided affidavits. However, these affidavits did not 
provide any time period for their statements and the other only 
provided a general reference to a time period, but did not specifically 
reference the date of the prescription at issue. Like with the 
previously discussed affidavits, the Acting Deputy Administrator finds 
Dr. Williams' comments to be more reliable than the patients' 
affidavits, since his comments are based upon a review of his patient 
records which were prepared and maintained during the relevant time 
period, whereas the patients' affidavits are based upon their 
recollection more than six years after the event.
    In conducting the accountability audits which revealed significant 
shortages, DEA investigators included the unauthorized prescriptions as 
drugs for which Respondent could account. Mr. Grimes testified at the 
hearing before Judge Randall that he never filled a prescription 
without a doctor's authorization, and that while he disputes the 
results of the accountability audits, he does not have any explanation 
for the shortages and overages revealed by the audits.
    The state of Alabama has not withdrawn its licensing commission 
from Respondent. In addition, while arrested and charged, Mr. Grimes 
was ultimately found not guilty by a jury of all charges stemming from 
the undercover operation conducted by the local police department which 
led to the execution of the search warrant. Further, it is undisputed 
that there have never been any complaints about Respondent or Mr. 
Grimes made by any drug supplier, and no doctor or pharmacist has ever 
contacted Mr. Grimes about illegal prescriptions. Finally, Respondent 
introduced into evidence a letter from the co-chairman of a drug 
company attesting to Mr. Grimes' honesty and integrity.
    Pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Deputy 
Administrator may revoke a DEA Certificate of Registration and deny any 
pending applications, if he determines that the continued registration 
would be inconsistent with the public interest. Section 823(f) requires 
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, 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 or 
safety.
    These factors are to be considered in the disjunctive; the Deputy 
Administrator may rely on any one or a combination of factors and may 
give each factor the weight he deems appropriate in determining whether 
a registration should be revoked or an application for registration be 
denied. See Henry J. Schwarz, Jr., M.D., Docket No. 88-42, 54 F.R. 
16,422 (1989).

[[Page 53342]]

    Respondent contends that the Government has not met its burden of 
proof in establishing that Respondent's continued registration would be 
inconsistent with the public interest. Judge Randall concluded and the 
Acting Deputy Administrator concurs that all five factors are relevant 
in determining the public interest in this matter.
    As to factor one, it is undisputed that the State of Alabama has 
not taken any action against Respondent pharmacy or its owner Mr. 
Grimes. Regarding Respondent's conviction record relating to controlled 
substances, it is also undisputed that neither Respondent pharmacy nor 
its owner Mr. Grimes has been convicted of any such offense.
    Factors two and four, Respondent's experience in dispensing 
controlled substances and its compliance with state, Federal, or local 
laws relating to controlled substances, are clearly relevant in 
determining whether Respondent's continued registration would be 
inconsistent with the public interest. The Acting Deputy Administrator 
finds that Respondent pharmacy dispensed over 25,000 dosage units of 
controlled substances without authorization from a physician in 
violation of 21 U.S.C. 829. Respondent argues that the physicians whose 
names appeared on the prescriptions at issue could have forgotten to 
note in the patient chart that the telephone prescriptions had been 
authorized. Respondent further argues that a patient's recollection is 
more reliable, since a patient is more likely to remember what was 
actually prescribed to him or her. Respondent also contends that in 
instances where there was no patient affidavit, Mr. Grimes was able to 
recall the circumstances of the dispensing at issue.
    The Acting Deputy Administrator concludes that it is highly 
unlikely that eleven different physicians forgot to note numerous 
prescriptions in patient charts which accounted for the dispensing of 
over 25,000 dosage units of controlled substances. Also as stated 
previously, most of the patients' affidavits are of little value since 
they do not address the specific prescriptions at issue nor do they 
provide a time period for the statements contained in the affidavits. 
In addition, the physicians' affidavits were based upon a review of 
patient records prepared contemporaneously with the events at issue, 
whereas the patients' affidavits and Mr. Grimes' testimony are based 
upon their recollection of events which occurred over six years ago.
    Therefore, the Acting Deputy Administrator finds that Respondent 
pharmacy dispensed controlled substances in violation of 21 U.S.C. 829. 
In addition, Mr. Grimes violated his corresponding responsibility as 
set forth in 21 C.F.R. 1306.04, to ensure that controlled substances 
are only prescribed and dispensed for a legitimate medical purpose.
    Additionally, pursuant to 21 U.S.C. 827, a registrant must maintain 
complete and accurate records of controlled substances received, sold, 
delivered or otherwise disposed of by him. The Acting Deputy 
Administrator finds that accountability audits of Respondent's 
controlled substances handling revealed that for the period January 15, 
1990 to March 1992, Respondent could not account for over 80,000 dosage 
units of Schedule III and IV controlled substances. In addition, the 
audits revealed overages of some audited substances, including an 
overage of 859 dosage units of oxycodone 5 mg., a Schedule II 
controlled substance. In conducting these audits, the investigators 
included the unauthorized prescriptions in their calculation of the 
total amount of controlled substances dispensed by Respondent. Had 
Respondent not been given credit for these unauthorized dispensations, 
the shortages would have been significantly greater.
    In its post-hearing filing, Respondent proposes a number of 
possible explanations for the audit discrepancies. First, Respondent 
argues that as allowed, it estimated the amount of Schedule III through 
V controlled substances on hand when conducting its yearly inventory, 
and consequently, it is possible that the overages and shortages could 
have resulted from these estimations. Respondent also argues that the 
audit results were possibly the result of a review by DEA of incorrect 
or incomplete receiving and/or return records. Next Respondent argues 
that it is possible that the audit discrepancies were the result of 
other prescription records not being examined at the time of the audit. 
In support of this argument, Respondent contends that in conducting the 
audit, DEA did not examine additional ledgers used by Respondent during 
the audit period. Finally, Respondent argues that another possible 
explanation for the audit results is that DEA's closing inventory 
conducted on March 2, 1992, was inaccurate since DEA used Respondent's 
pill counting machine without first verifying the accuracy of the 
machine.
    The Acting Deputy Administrator concurs with Judge Randall's 
conclusion that these possibilities advanced by Respondent ``are mere 
speculation, unsupported by the record in this case.'' Respondent did 
not provide any specific evidence that would account for the over 
80,000 dosage unit shortage of controlled substances. While it is 
permissible to estimate Schedule III through V controlled substances 
when conducting an inventory, clearly such estimations would not 
account for over 80,000 dosage units. In addition, a registrant cannot 
estimate Schedule II controlled substances, however, the audit revealed 
a significant overage of the one Schedule II controlled substance 
audited. The investigators who conducted the audits were confident that 
they had obtained all of the necessary records. It is significant to 
note that if one were to accept Respondent's argument that the 
receiving records were incomplete, then the shortages revealed by the 
audit should actually have been greater, since Respondent would have 
had to account for more controlled substances. As to the prescription 
ledgers that Respondent argues would have effected the audit, the 
investigator testified that those ledgers were examined, however, since 
they did not contain any information necessary for conducting an audit, 
they were discounted. Finally, Respondent did not present any evidence 
that its pill counting machine was not operating properly.
    Thus, the Acting Deputy Administrator concludes that the 
preponderance of the evidence supports a finding that Respondent did 
not maintain complete and accurate records of controlled substances as 
required by 21 U.S.C. 827, as evidenced by the results of the audits. 
The Acting Deputy Administrator finds it extremely significant that had 
DEA not included the unauthorized prescriptions in the audit and given 
Respondent credit for those dispensations, the shortages would have 
been far greater.
    As to factor five, the Acting Deputy Administrator concurs with 
Judge Randall's finding that Mr. Grime's failure to accept 
responsibility for the significant unexplained shortages and 
unauthorized dispensations of controlled substances indicates a 
potential threat to the public health and safety. Previously, DEA's 
then-Administrator found that a pharmacist's ``refusal to acknowledge 
the impropriety of his dispensing practices * * * give[s] rise to the 
inference that [he] is not likely to act more responsibly in the 
future.'' Medic-Aid Pharmacy, 55 FR 30,043 (1990); see also, Rocco's 
Pharmacy, 62 FR 3056 (1997).
    The Administrative Law Judge concludes that ``[t]he Government has 
proven by a preponderance of the evidence that the Respondent's past

[[Page 53343]]

conduct would justify revocation of its DEA Certificate of 
Registration.'' Judge Randall further concluded that Respondent did not 
present any mitigating or rehabilitating evidence as it relates to its 
dispensing practices. Therefore, Judge Randall recommended that 
Respondent's DEA Certificate of Registration be revoked. Judge Randall 
further recommended however, that ``[s]ubsequently, should the 
Respondent provide any evidence of proposed procedural changes for the 
dispensing of controlled substances in a new application for a 
Certificate of Registration, and should such evidence be persuasive, 
then I would concur with a favorable decision concerning that 
subsequent application.''
    The Acting Deputy Administrator agrees with the Administrative Law 
Judge that the Government has met its burden of proof and that 
Respondent's registration should be revoked. However, the Acting Deputy 
Administrator does not adopt Judge Randall's recommendation that 
favorable consideration will be given to a new application for 
registration should Respondent present persuasive evidence of 
procedural changes regarding the dispensing of controlled substances. A 
change in procedures, in and of itself, might not justify granting 
Respondent a new registration, since Mr. 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 demonstrate that Respondent has failed 
miserably in its responsibility as a DEA registrant to protect against 
the diversion of controlled substances from the legitimate chain of 
distribution. Respondent is certainly free to apply for a new DEA 
Certificate of Registration. Any such application will be evaluated in 
light of all of the relevant circumstances in existence at that time to 
determine whether to grant the application.
    Accordingly, the Acting Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in him by 
21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that 
DEA Certificate AC5430450, issued to City Drug Company, be, and it 
hereby is, revoked. The Acting Deputy Administrator further order that 
any pending applications for renewal of such registration, be, and they 
hereby are, denied. This order is effective November 13, 1997.

    Dated: October 7, 1997.
James S. Milford,
Acting Deputy Administrator.
[FR Doc. 97-27144 Filed 10-10-97; 8:45 am]
BILLING CODE 4410-09-M