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House Crime Subcommittee Holds Hearing on DEA Abuses in Investigating Drug Diversion


July-August 1998

On August 6, the U.S. House Judiciary Subcommittee on Crime, chaired by Rep. Bill McCollum (R-FL), held a hearing on "drug diversion investigations by the DEA," in which witnesses testified about abuses by the DEA (Bill McCollum, "Crime Subcommittee Hearing on Drug Diversion Investigations by the DEA," Press Release, August 6, 1998).

Late in 1997, with no prior warning, two dozen pharmacists in the Wichita Falls, Texas area received letters from the US Attorney demanding up to $400,000 in civil fines for alleged record keeping violations which involved no diversion of controlled substances (Michael Slozak, "Texas Pharmacists Fight DEA Nightmare," American Druggist, March 1998, p. 15).

In a typical letter, U.S. Attorney Paul E. Coggins wrote to Harvest Drug and Gift in Burkburnett, Texas that recent review by DEA of computerized records "revealed several instances in which controlled substances were dispensed unlawfully." Coggins explained in the letter that "the pharmacy could be subject to civil penalties in the amount of $25,000 for each of the violations. ... To date our sample review has revealed ten (10) violations." (emphasis original) He further states that "... if this matter is litigated, further violations may be charged by the United States. Our office prefers, when appropriate, to resolve matters without the expense of litigation. Without further investigation, our office will accept $100,000 (four violations at $25,000 per each violation) to settle this matter" by January 9, 1998 (Paul E. Coggins, U.S. Attorney, "Letter to Harvest Drug and Gift," December 18, 1997).

The Wichita Falls cases involved medical residents at a clinic for indigents who wrote prescriptions using the DEA number of the lead physician because they had not been issued their own DEA numbers yet. On February 23, DEA Administrator Thomas Constantine acknowledged in a letter to Rep. William Thornberry (R-TX), who complained on behalf of his constituents, that the letters to the Wichita Falls pharmacists were "inappropriately, unnecessarily harsh ... and that they should have advised the pharmacies of the violations and fines that could be assessed if these problems are not corrected" (Thomas A. Constantine, "Letter to Honorable William Thornberry," February 23, 1998).

On July 23, the U.S. Senate approved two amendments to the FY1999 DEA appropriation aimed at DEA harassment (S. 2260, sections 118 and 119). One measure would prevent fines for unintentional record keeping errors, and another would limit fines to $500 per violation. The Justice Department said the measures, if enacted, "would eviscerate DEA's regulatory authority to control the diversion of drugs and chemicals from licit sources to illicit channels."

The Controlled Substances Act (CSA) allows fines of up to $25,000 for any record keeping or reporting violation, such as having the wrong address or zip code on a DEA required form. James R. Phelps, a partner in Hyman, Phelps, and McNamara, attorneys who advise the pharmaceutical industry on statutory and regulatory compliance issues, told the panel that the fines contribute "to a hostile environment of mistrust that threatens the constructive relationship between the regulated and regulator under the CSA. ... The government's pursuit of these civil fines has often been overzealous, involving minor, inadvertent, and frivolous violations under the CSA" ("Statement of James R. Phelps Before the Subcommittee on Crime of the House Judiciary Committee," August 6, 1998).

Providing other examples of DEA overzealousness, Philip P. Burgess, National Director of Pharmacy Operations at Walgreens, testified that in 1995 Walgreens investigated one of its pharmacists for writing bogus prescriptions, and turned over all information to federal and local authorities. Instead of commending Walgreens for their thorough investigation, the Department of Justice demanded a substantial fine from Walgreens. The national chain is still negotiating a settlement with the Government, while the pharmacist who allegedly violated the CSA was dismissed from Walgreens but still practices pharmacy. In a second case, Walgreens paid a fine of approximately $250,000 for honoring prescriptions from a dentist whose name appeared as valid on a tape of the status of DEA registration numbers for practitioners throughout the U.S., provided by the Department of Commerce, although the dentist's state license had actually been revoked years earlier (Philip Burgess, "A Chain Perspective on DEA Oversight: Testimony Before the Subcommittee on Crime of the Committee on the Judiciary," August 6, 1998).

There are more than 63,000 pharmacies registered with the DEA. In 1997, 130 "actions" were taken against pharmacies, including 35 civil fines. "The alleged abuses by law enforcement in some of these cases have raised serious questions about whether the law needs to be revisited, and whether the diversion program is being properly enforced," said McCollum.

According to the statement of managers for the FY1997 State, Justice, Commerce Appropriations Conference Report, "DEA should not impose unreasonable monetary penalties on legitimate commercial businesses to avoid prosecutions for minor, unintentional violations of statutory or regulatory record keeping requirements" (105th Congress, "1997 Commerce, Justice, State, and the Judiciary conference report" H. Rept. 105-48," p. 25). John M. Rector, Senior Vice President for Government Affairs for the National Community Pharmacists Association, in a prepared statement for the subcommittee, said, "Unfortunately the DEA blatantly disregarded the Congressional concern about their heavy handed harassment of pharmacy registrants" (National Community Pharmacists Association, "Statement of John M. Rector to the Subcommittee on Crime on Civil penalties for small business DEA registrants not involving drug diversion," August 6, 1998).

National Community Pharmacists Association - 205 Daingerfield Road, Alexandria, VA 22314-2885

Attorney James R. Phelps - Hyman, Phelps and McNamara, P.C. - 700 13th St., NW, Washington, DC 20005, Tel: (202) 737-4280, Fax: (202) 737-9329.

Philip Burgess - Walgreens , 200 Wilmut Rd., Deerfield, IL 60015, Tel: (847) 914-3241, Fax: (847) 914-3109.

DEA Office of Diversion Control - Lincoln Place-1, 600 Army Navy Dr., Arlington, VA 22202, Tel: (202) 307-7165.

U.S. Attorney Paul Coggins - U.S. Attorney's Office, 801 Cherry St., Suite 1700, Fort Worth, TX 76102-6897, Tel: (817) 252-5200, Fax: (817) 978-3400.