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“DEA Administrator Overrules ALJ, Revokes Distributor Registration in Sweeping Decision”

DEA Chronicles By Katea Ravega and D. Linden Barber

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

In a 308-page decision dated September 8, 2015, the new Acting Administrator of the DEA, Chuck Rosenberg, issued an Order revoking the DEA registration of wholesale distributor Masters Pharmaceuticals, Inc. (“Masters”). In doing so, the Administrator rejected the recommendation from DEA’s own Administrative Law Judge (“ALJ”) that Masters retain its DEA registration.

Masters was accused of failing to report hundreds of suspicious orders. Focusing on just 7 of Masters’ pharmacy customers located in Florida, the Administrator concluded that Masters’ registration should be revoked because (1) Masters failed to report suspicious orders from the pharmacies on numerous occasions; (2) Masters failed to acknowledge its misconduct; (3) senior Masters’ officials acknowledged that they were well aware of the oxycodone epidemic in Florida; (4) Masters did not follow its own Policies and Procedures for detecting and reporting suspicious orders (including components of the Policies and Procedures that require more than the applicable laws); and (5) revocation is justified by DEA’s interest in deterring future misconduct on the part of Masters and others in the industry.

The Administrator provided a thorough assessment of the parties’ exceptions to the ALJ’s recommended decision and analyzed in detail the evidence involving orders placed by the seven Florida pharmacy customers. The lengthy opinion discusses compliance obligations, entrenches the concept of “due diligence” on customers into the Agency’s case law, and provides insight into the Agency’s expansive concept of what makes an order “suspicious.” Look for future blog posts with detailed discussion on the effects that this Final Order may have on compliance obligations and practices for other registrants.

The full Decision and Order is available here. It will be published in the Federal Register on September 15, 2015. Masters has 30 days to file a Petition for Review with the U.S. Circuit Court of Appeals.