On November 13, 2015, the DEA issued its final decision and order in the case against Perry County Food & Drug (“PCFD”). The Administrator denied PCFD’s pending application to renew its registration based on stipulations by PCFD that its pharmacist-in-charge, who happened to be the son of PCFD’s owner, created and filled fraudulent prescriptions and committed numerous other acts that each amounted to “an outright drug deal.” The Administrator also found that the owner was informed of his son’s diversion activities on multiple occasions by long-standing employees and other family members. With facts like these, the Administrator’s order denying PCFD’s application is not surprising. But the decision is noteworthy for its clarification of DEA precedent concerning “community impact.”

“Community impact” is a factor that respondents have raised to turn the Agency’s “public interest” determination on its head: instead of focusing on whether the respondent’s registration is inconsistent with the public interest, this factor looks at whether the revocation of the respondent’s registration would be inconsistent with the public interest. But when PCFD made its community impact argument based on Pettigrew Rexall Drugs, the CALJ summarily dismissed the argument as having been “rendered irrelevant by Agency precedent,” citing to several cases involving a physician or dentist.

In his decision, the Administrator rejects the CALJ’s determination that community impact is not relevant in PCFD’s case. The Administrator points out the CALJ’s misplaced reliance on Agency precedent that rejects the relevance of this factor in the context of a prescribing practitioner’s registration. And while the Administrator acknowledges that the reasoning in these cases “calls into question the continuing validity of Pettigrew Rexall Drugs even as applied to a pharmacy,” he nonetheless determines that “the Agency has not formally overruled the case.”

Thus, community impact is still a relevant argument for a pharmacy registrant, but don’t expect it to be easy. The Government will likely take its cue from the Administrator and directly challenge Pettigrew Rexall Drugs’ continued relevance next time. The take-aways from this case for a pharmacy that wants to make a community impact argument before the DEA are the following:

  • Be prepared to address PCFD and the prescribing practitioner cases.
  • When preparing community impact evidence, consider the Administrator’s assessment of PCFD’s community impact evidence and the information that was lacking.
  • Expect to face a high standard for the adverse community impact sufficient to persuade the Agency to grant a pharmacy’s registration or continued registration.