Hey, DEA: Horses Are Not People

US Pharm. 2008;33(1):55-59.

This month's case is not about prescriptions for humans, at least not primarily. Instead, it is about a pharmacy that dispenses 95% of its annual prescription volume to veterinarians for subsequent administration to horses. Much of this pharmacy's practice involves compounding controlled substances and delivering them to equine veterinarians. This process involves a vet transmitting a prescription to the pharmacy with the desired drug "recipe," which shows the vet's name on the line where the patient's would normally appear. The definitions of "prescription" and a few other terms, like "compounding," "dispensing," and "manufacturing," will become critical to the outcome of the case.

Investigation
The Drug Enforcement Administration (DEA) decided to look into this practice after it received reports that the pharmacy was ordering very large amounts of controlled substances. The DEA obtained an administrative inspection warrant and searched the pharmacy between March 12 and 14, 2003. What the DEA found was "large quantities of bulk drug substances to manufacture large quantities of unapproved drug products" as well as large-scale equipment used in the manufacturing process. The investigation revealed that the pharmacy received 131 kg of phenylpropanolamine (PPA) between November 27, 2000 and October 29, 2002. During this time the pharmacy "manufactured" at least 750,000 PPA tablets. (In contrast, the typical retail pharmacy is expected to handle between 25 and 1,000 g.) The DEA also looked at the pharmacy's prescription logs, which contained a record of all controlled substances it sold between January 1, 2002 and December 31, 2002. The DEA noted that the pharmacy "routinely delivered controlled substances to another practitioner rather than directly to the ultimate user, using prescriptions that listed the same person as both prescribing doctor and patient."¹

Initial Order
The DEA concluded from this evidence that the pharmacy's activities are not consistent with "traditional retail pharmacy practices" and that the pharmacy was operating in violation of the Controlled Substances Act of 1970 (CSA) and the DEA's regulations implementing the CSA. On August 21, 2003, the DEA issued an order to the pharmacy to "immediately cease and desist manufacturing and distributing activities outside the scope of its registration" or risk revocation of its registration.² According to the DEA, the pharmacy ignored this order and continued to compound and dispense controlled substances for at least two months after the letter was sent. It stopped this practice only when it moved its operations to another location and the DEA refused to modify the pharmacy's registration.³

DEA Decision

On September 8, 2003, the DEA began formal proceedings to revoke the pharmacy's controlled substances registration. A hearing was held before an Administrative Law Judge (ALJ) on January 26 to 28, 2004. Approximately one year later, the ALJ issued a decision, concluding that the pharmacy had "manufactured and distributed controlled substances...without a valid DEA registration authorizing such activities." On April 3, 2006, the deputy administrator of the DEA issued the agency's final decision, adopting every finding and recommendation of the ALJ, and revoked the pharmacy's DEA registration.⁴

Appeal
The pharmacy appealed this decision to the U.S. Court of Appeals for the District of Columbia. The panel hearing the appeal voted unanimously to "vacate" the DEA's revocation of the pharmacy's registration and remanded the case back to the DEA for further deliberations.⁵ How and why the Court of Appeals came to its conclusion is an interesting course of action.

CSA Background
In 1970, the CSA was enacted to reduce drug abuse by preventing the diversion of controlled substances.⁶ It established a "closed system" of distribution in which all persons in the "legitimate distribution chain" must register with the DEA.⁷ Within this system, there are three categories: manufacturer, distributor, and practitioner, each with distinct requirements for registration.⁸ A "practitioner" is a "physician, dentist, veterinarian, or pharmacy registered to distribute, dispense...or administer...a controlled substance in the course of professional practice." ⁹ Dispensing involves the delivery of a controlled substance to an ultimate user, including compounding necessary to prepare the substance for delivery.¹⁰ Delivery includes the actual, constructive, or attempted transfer of a controlled substance.¹¹ The preparation or compounding of a drug by a practitioner as an incident to administration or dispensing of the drug does not constitute manufacturing.¹² The CSA does not define "compounding." Normally, a court could look to the Food, Drug, and Cosmetic Act,¹³ but this did not apply because the U.S. Supreme Court held that amendments attempting to regulate pharmacy compounding by limiting compounding pharmacies' ability to advertise or solicit prescriptions are unconstitutional. That decision left "compounding" without a statutory definition.¹⁴

Arguments
According to the DEA's interpretation of the CSA, a retail pharmacy may dispense controlled substances only to the ultimate user and not to another practitioner.¹⁵ It reached this conclusion because "dispense" is defined, in part, to mean "to deliver a controlled substance to an ultimate user."¹⁶ "Ultimate user" is defined as "a person who has lawfully obtainedÖa controlled substance for his own useÖor for an animal owned by him." ¹⁷ The DEA also concluded that all compounding must be patient specific and dispensed only to the patient identified in the prescription. It found that by compounding multidosage batches of controlled substances pursuant to orders that did not identify a specific patient, the pharmacy exceeded its registration. Noting that most of the pharmacy's sales were made with orders listing prescribing veterinarians or physicians as patients, the DEA took the position that a drug compound prepared for distribution to practitioners is considered a manufacturing activity. Because the pharmacy delivered controlled substances to other practitioners (i.e., veterinarians and physicians), the controlled substances were "manufactured" and not "compounded."

The pharmacy argued that "unlike human health care physicians, equine veterinarians usually do not treat animals on an individual basis; instead, veterinarians, particularly those with an equine practice, travel to their patients, examine and diagnose them, and administer the appropriate medicines on site, a procedure that requires them to have a variety of medicines at their immediate disposal." The DEA's interpretation of dispensing threatens to "severely handicap" the practice of equine veterinary medicine by making it difficult for a vet to administer controlled substances to horses at the stables. The pharmacy explained that requiring a practitioner to only dispense controlled substances directly to the "ultimate user" (i.e., the animal's owner) runs counter to the goal of the CSA. It is a considerably more secure procedure for a licensed veterinarian to be responsible for the controlled substances rather than sending medications for each animal to the farm or stable where any worker has access.

The DEA countered that the CSA makes no distinction among physicians, veterinarians, dentists, and researchers as practitioners and that a veterinary exception was unnecessary because the law provides an adequate mechanism for any practitioner to obtain controlled substances for general office use or dispensing to a herd or large group as opposed to a specific animal. A veterinarian, just like any other practitioner, can obtain controlled substances for general dispensing from any properly registered manufacturer, distributor, or pharmacy.

The pharmacy answered these claims by arguing that the CSA does not limit dispensing to a direct transfer of controlled substances to a patient. Rather, the CSA permits a pharmacy to "constructively" dispense controlled substances to a patient by delivering them to an intermediary such as a veterinarian. The CSA authorizes a practitioner, including a pharmacy, to "distribute, dispense [or] administer...a controlled substance in the course of professional practice." ¹⁸ Further, it defines "dispensing" as the "delivery of a controlled substance to an ultimate user...including...[any] compounding necessary to prepare the substance for such delivery." "Delivery" expressly includes "the actual, constructive, or attempted transfer of a controlled substance." ¹⁹ By allowing a "constructive" transfer, the CSA recognizes that a pharmacy is not limited to dispensing controlled substances directly to the ultimate user. Instead, dispensing controlled substances to a vet for later administration to his animal patients is a "paradigmatic" example of a constructive transfer. Therefore, the pharmacy asserted, the DEA's conclusion that it distributed controlled substances because it did not deliver them directly to specific patients is incorrect.

The DEA countered that this would "eviscerate" the distinction between a distributor and a dispenser by allowing any practitioner to become a distributor of controlled substances, under the guise that the drugs were delivered "constructively" to the ultimate user. A "constructive transfer" is limited to circumstances in which no "actual transfer" of controlled substances takes place. Other courts have limited constructive transfers to situations in which controlled substances were not actually delivered, but rather were constructively delivered by virtue of a person illegally distributing prescriptions, which in turn could be used by the recipient to obtain the controlled drugs from a pharmacy.

Decision
After considering both positions, the court determined that the DEA's arguments fell short for three reasons. First, Black's Law Dictionary defines "constructive transfer" as "delivery of an item--especially a controlled substance--by someone other than the owner but at the owner's direction."²⁰ Nothing in the definition precludes a "constructive" transfer simply because an "actual" transfer has taken place.

Second, the definition of delivery includes an "attempted" transfer as a distinct term to cover circumstances in which there is no "actual" transfer.²¹ Delivery may, in some circumstances, occur constructively through an agent. Thus, the CSA definition conflicts with the DEA's assertion that dispensing only includes the direct transfer of a controlled substance to the ultimate user.

Finally, the DEA's narrow interpretation of "constructive transfer" conflicts with the DEA's own regulation defining "prescription" as "an order for medication which is dispensed to or for an ultimate user."²² Nothing prohibits practitioners from acting as intermediaries on behalf of ultimate users. The DEA could not explain why it would not allow registrant-to-registrant transfer of a controlled substance with or without a prescription.

The court then lambasted the DEA saying it knew from the beginning of its investigation that the bulk of the pharmacy's business was with veterinarians and that it had information indicating that animal medicine operates differently from human medicine. In essence, the court concluded that the DEA's claim that there is no difference between veterinarian and human medical practices is absurd.

Analysis
This is not the end of the story, as the court reversed the order revoking the pharmacy's DEA registration and ordered the DEA to make findings consistent with the court's decision. Specifically, the DEA was ordered to explain how the difference, if any, between the practices of human and veterinary medicine might affect its analysis. Given that the federal government has been going after this pharmacy with both barrels loaded, it would not be surprising if the DEA came back with another adverse decision.²³

It should be clear that the method of distributing controlled substances at issue here is not the main complaint. Rather, it's the fact that this pharmacy is compounding drugs and the FDA does not agree with this practice. When the FDA could not get its way, it appears they went to the DEA to get the pharmacy on another matter.²⁴ Now that the Court of Appeals has blocked this strategy, the feds will have to try another route of attack.

The more serious implication of this decision is that it could alter the process by which controlled substances are transferred between practitioners for human use. For all of the reasons applied in this case, a physician could order controlled substances that need to be compounded by the pharmacy for use in the physician's office, using a prescription with the name of the prescriber where the name of the patient usually appears. Of course, this flies in the face of the way pharmacy is practiced in the human world. But then again, horses are not humans, so maybe different considerations should apply.

References

1. Wedgewood Village Pharmacy v. DEA, slip op No. 06-1156 consolidated with 06-1196 (December 11, 2007), U.S.D.C. DC, 2007 U.S. App. Lexis 28544.

2. 21 U.S.C. ß 824.

3. This action was addressed in a prior column. Vivian JC. DEA: you can't move. US Pharm. 2004;29(3):100-104.

4. In footnote 11 of the decision, the opinion states, in part, "The DA's annoyance with Wedgewood's decision to challenge DEA's interpretation of the CSA rings throughout the decision. [The pharmacy] appears to dispute [DEA's] reading of the CSA and has refused to comply with the August 21, 2003, letter from DEA advising that it is in violation of the statute. [The pharmacy] has been on notice by both the FDA and DEA that their [sic] activities were manufacturing and distribution, but has chosen to contest the position of the agencies."

5. As used in the law, the term "vacate" means that a judge sets aside or annuls an order or judgment from a different, prior proceeding that the judge finds was improper. Available at:
dictionary.law.com/default2.asp?selected=2208&bold=. Accessed December 22, 2007.

6. See Gonzales v. Oregon, 546 U.S. 243, 250, 126 S. Ct. 904, 163 L. Ed. 2d 748 (2006) for a discussion of the legislative history of CSA.

7. H.R. Rep. No. 91-1444 (1970), as reprinted in 1970 U.S.C.C.A.N. 4566, 4572. The CSA requires manufacturers, distributors, and dispensers to register with the Attorney General, 21 U.S.C. ß 822(b); the Attorney General, in turn, has delegated the registration authority to DEA. See 28 C.F.R. ß 0.100(b).

8. See 21 U.S.C. ß 823(a) (criteria for "manufacturer" registration), 823(b) ("distributor" registration), 823(f) ("practitioner" registration).

9. ß 802(21).

10. ß 802(10).

11. ß 802(8).

12. ß 802(15).

13. 21 USC ß 353a(a) and (c).

14. Congress enacted the Food and Drug Administration Modernization Act of 1997 (FDAMA), Pub. L. No. 105-115, 111 Stat. 2296 to address concerns of the FDA that some pharmacies were manufacturing unapproved drugs under the guise of compounding. The legislative history of the FDAMA indicates that its "intent was to ensure continued availability of compounded drug products as a component of individualized therapy, while limiting the scope of compounding so as to prevent manufacturing under the guise of compounding." H.R. Conf. Rep. No. 105-399, at 94, as reprinted in 1997 U.S.C.C.A.N. 2880, 2884. The FDAMA contained a definition of "compounding" that required a prescription to be unsolicited by a retail pharmacy and prohibited the pharmacy from advertising the compounding of a particular drug. Pub. L. No. 105-115 ß 127 [codified at 21 U.S.C. ß 353a(a), (c)]. Several pharmacies with large compounding practices challenged these provisions as violative of the First Amendment. In Thompson v. W. States Med. Ctr., 535 U.S. 357, 360, 122 S. Ct. 1497, 152 L. Ed. 2d 563 (2002), the Supreme Court agreed with the pharmacies, holding that the FDAMA improperly restricted solicitation and advertising, both legitimate forms of commercial speech.

15. ß 802(10).

16. ß 802(27).

17. ß 802(27).

18. ß 802(21).

19. ß 802(10) and (21).

20. Black's Law Dictionary. 17th ed. St. Paul, MN: West Publishing Company; 1999:1503.

21. See note 13, supra.

22. 21 C.F.R. ß 1300.01(b)(35).

23. See notes 3, 4, and 16, supra.

24. See note 16, supra.

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