[Federal Register: January 6, 2009 (Volume 74, Number 3)]
[Notices]               
[Page 457-459]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ja09-48]                         

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

 
Wonderyears, Inc.; Denial of Application

    On December 17, 2007, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Wonderyears, Inc. (Respondent), of Deerfield Beach, 
Florida. The Show Cause Order proposed the denial of Respondent'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.'' Show Cause Order at 1.
    The Show Cause Order specifically alleged that on January 10, 2007, 
Daniel L. Dailey, Respondent's President and Chief Executive Officer, 
had applied for a DEA pharmacy registration to dispense controlled 
substances in schedules II through V. Id. The Show Cause Order alleged, 
inter alia, that Dailey had previously been the President and CEO of 
Powermedica, an entity which had held a DEA registration as a retail 
pharmacy, and that on several occasions, Special Agents of the Food and 
Drug Administration had obtained from Powermedica, anabolic steroids, 
which are schedule III controlled substances, without having any 
contact with a physician, in violation of federal and state laws. Id. 
at 2 (citing 21 U.S.C. 841; 21 CFR 1306.04, Fla. Stat. Ann. Sec.  
465.015(2)(c)).
    On December 26, 2007, the Show Cause Order, which also notified 
Respondent of its rights under 21 CFR 1301.43, was served on it by 
certified mail to the address of its proposed registered location. 
Since that date, neither Respondent, nor anyone purporting to represent 
it, has requested a hearing. Because more than thirty days have elapsed 
since Respondent was served with the Show Cause Order, and Respondent 
has not requested a hearing, I conclude that Respondent has waived its 
right to a hearing. 21 CFR 1301.43(d). I therefore enter this Decision 
and Final Order based on relevant material contained in the 
investigative file and make the following findings.

Findings

    Respondent is a Florida Corporation whose President is Daniel L. 
Dailey. On January 10, 2007, Respondent submitted an application for a 
DEA Certificate of Registration as a retail pharmacy and sought 
authority to handle controlled substances in schedules II through V, at 
the proposed location of 270 SW 12th Ave., Deerfield Beach, Florida. 
Respondent's application was prepared by Daniel L. Dailey.
    On March 16, 2007, DEA Diversion Investigators (DIs) went to 
Respondent's principal place of business (which was an address 
different than that listed on its application) to conduct a pre-
registration investigation and met with Dailey. Dailey, who was the 
only corporate officer of the entity, provided the DIs with a copy of 
Respondent's Articles of Incorporation and told the DIs that it would 
compound veterinary medications for swines and equines. Respondent, 
however, held only a community pharmacy license from the State of 
Florida and Dailey told the investigator that he had not even applied 
to the State for a compounding pharmacy license. Dailey further 
maintained that he would not compound steroids, but rather, only non-
controlled medications such as creams and gels.
    A week later, Dailey telephoned one of the DIs and told her that he 
now needed a DEA registration because he was seeking a contract with 
two AIDS clinics. He also stated that he planned to sell controlled 
substances to physicians.
    Dailey further told the DI that he had first become involved in the 
pharmaceutical business in November 2000, when he invested Powermedica, 
Inc. According to the records of the State of Florida, as well as a 
letter he submitted to the DI, Dailey ``was the President and CEO of a 
company Powermedica, Inc.[,] which was the subject of [an] FDA 
investigation in 2005.'' In the letter, Dailey further stated that 
Powermedica had ``not been charged or fined by the Federal 
Authorities.''
    According to the investigative file, on June 20, 2005, the Florida 
Department of Health ordered the emergency suspension of the pharmacy 
permit held by Powermedica, Inc. See Order of Emergency Suspension of 
Permit, In re: The Emergency Suspension of the Permit of PowerMedica, 
Inc., 1 (Fla. Dep't Health, 2005). The order found that ``at all times 
material to [the] cases, Daniel L. Dailey was chief executive of 
Powermedica.'' Id. at 2. The order further found that on August 13, 
2004, an FDA Special Agent (S/A) had visited Powermedica's Website and 
made an undercover purchase of stanozol (4 mg.), an anabolic steroid 
and schedule III controlled substance, by ``complet[ing] a brief 
medical questionnaire,'' and entering some personal information 
including a ``mailing address and credit card authorization.'' Id. at 
3. On August 18, 2004, the FDA S/A received the stanozol. Id. at 4. The 
accompanying prescription listed the prescribing physician as Dr. Abi 
Almarashi. Id. Almarashi, whose office was located in Flushing, New 
York, had ``never performed a physical examination of'' the S/A and had 
never discussed with her ``treatment options and the risks and benefits 
of treatment.'' Id.\1\
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    \1\ According to the investigative file, Powermedica's Web site 
advertised that the company offered for sale various anabolic 
steroids.
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    The same day, another FDA S/A visited the Powermedica Web site and 
made an undercover purchase of

[[Page 458]]

another anabolic steroid and schedule III controlled substance, 
nandrolone decanoate (100 mg.), by ``complet[ing] a brief medical 
questionnaire'' and entering his mailing address and credit card 
information. Id. at 4. On August 25, 2004, the S/A received the 
nandrolone and a prescription sheet which authorized three refills. Id. 
The S/A ``did not have a physical examination nor did he speak to a 
doctor regarding this prescription at any time before receipt of the 
medication.'' Id.
    Subsequently, one of the FDA S/As, who had since visited 
Powermedica's office and purchased human growth hormone (HGH), 
introduced a Detective from the Broward County, Florida Sheriff's 
Office to Tony Jones, who represented that he was a ``clinical 
consultant'' for Powermedica.\2\ Id. at 9. The Detective, who was 
attempting to make an undercover purchase of Powermedica's Testosterone 
Replacement Therapy, which included both testosterone cypionate, an 
anabolic steroid and schedule III controlled substance, and human 
chorionic gonadotropin, a non-controlled drug, subsequently met with 
Jones, completed a questionnaire, and paid him $175 for a lab test and 
``doctor's fee.'' Id. Approximately two weeks after he underwent a 
blood test, the Detective went to Powermedica's office and picked up 
his order which contained 200 mg./ml. of testosterone cypionate, 
needles and syringes.\3\ Id. at 11. The Detective paid $312.10 for his 
order. Id. Powermedica distributed the drugs to the Detective 
notwithstanding that the Detective had not been physically examined by 
a physician and no physician had discussed with him the risks and 
benefits of using testosterone cypionate. Id.
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    \2\ The investigation also revealed that Powermedica distributed 
HGH to the FDA S/A and a Detective from the Miami-Dade Police 
Department based on prescriptions issued by Dr. Almarashi. Almarashi 
did not physically examine either the S/A or the Detective, and had 
not discussed the risks and benefits of using HGH with either 
officer. Id. at 6. Moreover, the FDA agents subsequently seized HGH 
which had been shipped to Powermedica from a non-FDA approved 
manufacturer in China; these imports violated the Food, Drug and 
Cosmetic Act, and the Florida statutes. Id. at 10-11. While HGH is 
not a controlled substance, Powermedica's violations of federal and 
state laws in distributing and importing this drug are relevant in 
assessing whether it would comply with the Controlled Substances 
Act.
    \3\ The Detective was also given a bag of Somatropin 6 mg. along 
with needles and syringes. Id. at 11.
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    Following the service of the suspension order, Powermedica did not 
contest the State's findings. Nor did it contest the allegations of the 
administrative complaints which the State subsequently filed. Instead, 
it voluntarily relinquished its pharmacy permits. See Final Order of 
Voluntary Relinquishment, Department of Health v. Powermedica, Inc. 
(Sept. 15, 2005). On September 18, 2005, Powermedica also surrendered 
its DEA registration.\4\
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    \4\ During the investigation of his new firm's application, 
Dailey asserted that a Special Agent had lied to a magistrate about 
obtaining controlled substances without prescriptions. Dailey's 
assertion begs the question of why he surrendered Powermedica's 
state license without contesting the allegations against it which 
were contained in the various complaints brought by the State.
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Discussion

    Section 303(f) of the Controlled Substances Act provides that 
``[t]he Attorney General may deny an application for [a pharmacy] 
registration if he determines that the issuance of such registration 
would be inconsistent with the public interest.'' 21 U.S.C. 823(f). In 
making the public interest determination, the Act requires the 
consideration of the following factors:

    (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.

    ``[T]hese factors are * * * 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 a registration should be 
revoked.'' Id. Moreover, I am ``not required to make findings as to all 
of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); see 
also Morall v. DEA, 412 F.3d 165, 173-74 (DC Cir. 2005).
    While Respondent is a corporate entity and technically has an 
independent legal existence from its officers, DEA has long held that 
misconduct committed by a corporation's officers and owners (in the 
case of a closely held corporation) is properly considered in 
determining whether to revoke an existing registration, or deny an 
application for a new registration, of a corporate entity. See MB 
Wholesale, Inc., 72 FR 71956, 71958 (2007); Lawson & Sons Pharmacy, 48 
FR 16140, 16141 (1983). In light of Mr. Dailey's ownership of, and role 
as CEO of Powermedica, and his ownership of, and role as CEO of 
Respondent, I hold that Powermedica's experience in dispensing 
controlled substances and record of compliance with Federal and State 
laws related to controlled substances is properly considered in 
determining whether granting Respondent's application would be 
inconsistent with the public interest.
    As found above, Powermedica unlawfully distributed anabolic 
steroids including stanozol, nandrolone decanoate, and testosterone 
cypionate, which are schedule III controlled substances, on multiple 
occasions. The distributions were unlawful because they were based on 
prescriptions issued by a physician who did not establish a legitimate 
doctor patient relationship with the undercover officers and Dailey/
Powermedica had reason to know that the prescriptions were illegal. 
Indeed, the evidence shows that the undercover officers had no contact 
at all with Dr. Almarashi and that the officers' information was routed 
by Dailey/Powermedica to Almarashi in order to obtain the prescriptions 
necessary to dispense the steroids.
    As the State noted in the emergency suspension order, Fla. Sta. 
Sec.  465.023(1)(e) ``prohibits a pharmacy permittee from dispensing 
any medicinal drug based upon [a] prescription when the pharmacist 
knows or has reason to believe that the purported prescription is not 
based upon a valid practitioner-patient relationship that included a 
documented patient evaluation, including history and a physical 
examination adequate to establish the diagnosis for which any drug is 
prescribed.'' Order of Emergency Suspension at 16 (para. 58). These 
distributions likewise violated the CSA. See 21 CFR 1306.04(a) (``A 
prescription for a controlled substance * * * must be issued for a 
legitimate medical purpose by an individual practitioner acting in the 
usual course of his professional practice. The responsibility for the 
proper prescribing and dispensing of controlled substances is upon the 
prescribing practitioner, but a corresponding responsibility rests with 
the pharmacist who fills the prescription.'').
    Moreover, Dr. Almarashi was licensed in New York and maintained his 
office in Flushing, New York. Yet he was prescribing to persons in 
Florida, where he was not licensed. As previously noted, a prescription 
issued by a practitioner who is engaged in the unauthorized practice of 
medicine is not a prescription which has been issued in

[[Page 459]]

the usual course of professional practice. See 21 U.S.C. 802(21) (``The 
term `practitioner' means a physician * * * licensed, registered, or 
otherwise permitted, by * * * the jurisdiction in which he practices * 
* * to * * * dispense * * * a controlled substance.''); United States 
v. Moore, 423 U.S. 122, 140-41 (1975) (``In the case of a physician, 
the [CSA] contemplates that he is authorized by the State to practice 
medicine and to dispense drugs in connection with his professional 
practice.''); see also United Prescription Services, Inc., 72 FR 50397, 
50407 (2007) (``[A] physician who engages in the unauthorized practice 
of medicine under state laws is not a `practitioner acting in the usual 
course of * * * professional practice' under the CSA.'').
    I therefore conclude that Mr. Dailey's/Powermedica's experience in 
dispensing controlled substances (factor two) and his/its record of 
non-compliance with applicable Federal and State laws (factor four) 
amply demonstrate that granting Respondent's application for a new 
registration would be ``inconsistent with the public interest.'' 21 
U.S.C. 823(f).\5\ Accordingly, Respondent's application will be denied.
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    \5\ In light of my findings with respect to factors two and 
four, I conclude that it is unnecessary to make findings with 
respect to the remaining factors.
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Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well 
as 28 CFR 0.100(b) & 0.104, I order that the application of 
Wonderyears, Inc., for a DEA Certificate of Registration as a retail 
pharmacy be, and it hereby is, denied. This Order is effective February 
5, 2009.

    Dated: December 19, 2008.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E8-31414 Filed 1-5-09; 8:45 am]

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