Nobody would argue with the fact that there is an opioid crisis in our country – it is a demonstrable fact. However, there has recently been a significant focus on whether drug wholesalers and their business partners including lobbyists have caused people to die from overdoses, including a recent segment by 60 Minutes. While the segment sought to educate viewers on the causes of prescription drug abuse and the alleged slowdown in enforcement efforts by the government, it is of course journalism and takes a strong position against drug companies. Aided by reporters from the Washington Post and former employees from the Drug Enforcement Administration (“DEA”), the 60 Minutes segment, while dramatic in its presentation, only told the facts relevant to the position it was taking – which is what makes good headlines.

On June 30, 2017, the Court of Appeals for the D.C. Circuit issued an order in Masters Pharmaceutical, Inc. v. Drug Enforcement Administration (No. 15-1335). In sum, the Court denied Masters Pharmaceutical, Inc.’s (“Masters”) Petition for Review seeking to overturn the Drug Enforcement Administration’s (“DEA”) revocation of Masters’ DEA registration. This decision has wide-ranging implications for DEA-registered wholesalers, who are required to detect and report suspicious orders of controlled substances.

Pills production Line

On May 11, 2016, the Drug Enforcement Administration filed its brief in Masters Pharmaceutical, Inc. v. Drug Enforcement Administration (Docket No: 15-1335), in the United States Court of Appeals for the District of Columbia. The vast majority of the Government’s brief addresses whether “substantial evidence” (the applicable standard of review) supports Acting Administrator Rosenberg’s decision to revoke Masters’ DEA registration. Curiously, the Government does not dedicate much effort to one of the seminal issues in the case: whether DEA imposed new obligations on registrants in violation of the Administrative Procedure Act.

Rather than attempt to defend the indefensible, the Government invoked a creative reading of the Masters Final Order that is starkly at odds with Administrator Rosenberg’s decision. In its brief, DEA states that Administrator Rosenberg’s decision “did not impose any new duties on distributors.” In defending this position, the Government’s brief goes on to say the following:

Most of the “new duties” that Masters and amici cite in their briefs were obligations that Masters had voluntarily imposed on itself through its own compliance program. [citation omitted] The Administrator cited Masters’ failure to perform many of these duties – such as obtaining utilization reports or asking customers for explanations of unusually large orders – because Masters sought to rely on its compliance program to justify its reporting failures. However, in highlighting Masters’ disregard for its own program’s requirements, the Administrator did not impose those same requirements on all registered distributors.

On February 18, 2015, the DEA issued its final decision and order in the case against prescriber Hatem M. Ataya (“Ataya”). The Administrator ordered Ataya’s registration to be revoked and his pending applications for additional registrations to be denied on the grounds that Ataya has, since the proceedings began, lost the authority to dispense controlled substances under state law. Still, the Administrator’s decision also details the bases on which he agreed with the Administrative Law Judge’s (ALJ’s) findings that Ataya issued controlled substance prescriptions without a legitimate medical purpose (in violation of 21 CFR § 1306.04(a)) and violated federal and state law when he authorized more than five refills of schedule IV controlled substances, failed to include patients’ addresses on numerous prescriptions, and post-dated a prescription.

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.

The Chronicles welcomes guest blogger Katea Ravega, a Q&B Health Law attorney.

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