OakmontScript Limited Partnership; Decision and Order

Federal RegisterApr 11, 2022

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 21-03]

OakmontScript Limited Partnership; Decision and Order

On October 20, 2020, a former Assistant Administrator, Diversion Control Division, of the Drug Enforcement Administration (hereinafter, DEA or Government), issued an Order to Show Cause (hereinafter, OSC) to OakmontScript Limited Partnership (hereinafter, Respondent). Administrative Law Judge Exhibit (hereinafter, ALJ Ex.) 1, (OSC) at 1. The OSC proposed the revocation of Respondent's DEA Certificates of Registration Nos. RO0504680 and RO0527082 (hereinafter, CORs or registrations) and the denial of any pending application to modify or renew the registrations and any applications for any other DEA registrations pursuant to 21 U.S.C. 823, 824, 958, and other federal laws, because Respondent's “registration[s are] inconsistent with the public interest,” as that term is defined in 21 U.S.C. 823(b), (d), and (e); 824(a); and 958(c).

Id.

In response to the OSC, Respondent timely requested a hearing before an Administrative Law Judge. ALJ Ex. 2. The hearing in this matter was conducted from March 8-12, 2021, at the DEA Hearing Facility in Arlington, Virginia, with the parties and their witnesses participating through video-teleconference.*

On June 11, 2021, Administrative Law Judge Paul E. Soeffing (hereinafter, ALJ) issued his Recommended Rulings, Findings of Fact, Conclusions of Law and Decision (hereinafter, Recommended Decision or RD). Neither party filed exceptions to the RD.

[This footnote has been relocated from RD n.1.] OakmontScript filed its Request for Hearing

pro se,

represented by Jufang (“Shirley”) Shi, its President and Chief Pharmacist. In the Order for Prehearing Statements issued by the tribunal on November 19, 2020, the tribunal advised the Respondent of its right under 21 CFR 1316.50 to seek representation by a qualified attorney at the Respondent's own expense. ALJ Ex. 3 at 1. At the Prehearing Conference held on January 5, 2021, this tribunal reiterated to the Respondent's representative the Respondent's right to obtain counsel. The Prehearing Ruling also discussed the Respondent's right to obtain counsel. ALJ Ex. 7 at 1 n.1.

Having reviewed the entire record, I agree with the ALJ's Recommended Decision and I adopt it with minor modifications, as noted herein.*

I have made minor, nonsubstantive, grammatical changes to the RD and nonsubstantive conforming edits. Where I have made substantive changes, omitted language for brevity or relevance, or where I have added to or modified the ALJ's opinion, I have noted the edits in brackets, and I have included specific descriptions of the modifications in brackets or in footnotes marked with an asterisk and a letter. Within those brackets and footnotes, the use of the personal pronoun “I” refers to myself—the Administrator.

Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision of the Administrative Law Judge *

I have omitted the RD's discussion of the procedural history to avoid repetition with my introduction.

[Footnote relocated,

see supra

n.*A.]

After carefully considering the testimony elicited at the hearing, the admitted exhibits, the arguments of counsel, and the record as a whole, I have set forth my recommended findings of fact and conclusions of law below.

The Allegations

The Government alleges that the Respondent's CORs should be revoked because OakmontScript exported controlled substances prior to obtaining its exporter COR, exported controlled substances it was not approved to export, demonstrated a lack of candor about controlled substances it was exporting, falsified a copy of its distributor DEA registration, distributed controlled substances to an individual not registered with the DEA, exported controlled substances to fulfill prescriptions for underage patients, and failed to keep complete and accurate records.

The Evidence

Stipulations of Fact

The Government and the Respondent have agreed to the below stipulations, which I recommend be accepted as fact in these proceedings:

The parties agreed to the following stipulations at the Prehearing Conference held on January 5, 2021. ALJ Ex. 7 at 2-3. The parties did not file any further Joint Stipulations.

(1) OakmontScript Limited Partnership (“OakmontScript”) [was] registered with the DEA as a distributor licensed to handle controlled substances within Schedules II-V under DEA COR No. RO0504680 (“Distributor COR”) at 1500 District Ave., Burlington, MA 01803-5069. DEA COR No. RO0504680 was first issued on October 7, 2016. [Respondent surrendered both registrations on December 22, 2021, therefore terminating these registrations.

Omitted.]

On January 3, 2022, I was notified by the Office of Administrative Law Judges that Respondent had surrendered its distributor and exporter registrations by submitting two DEA-104 surrender forms signed by Respondent's representative, Jufang Shi. Pursuant to DEA regulations, Respondent's registrations terminated on the day of the surrender, and Respondent is no longer authorized to distribute or export controlled substances under federal law. 21 CFR 1301.52 (“[T]he registration of any person . . . shall terminate, without any further action by the Administration, if and when such person . . . surrenders a registration.”) On January 20, 2021, the Government filed a letter informing me of Respondent's surrender. However, notably the Government did not request that I dismiss this matter.

Although Respondent's registrations have terminated, the Agency has discretion to adjudicate this Order to Show Cause to Finality.

See Jeffrey D. Olsen, M.D.,

84 FR 68,474, 68,479 (2019) (declining to dismiss an immediate suspension order as moot when the registrant allowed the subject registration to expire before final adjudication);

Steven M. Kotsonis, M.D.,

85 FR 85,667, 85,668-69 (2020) (concluding that termination of a DEA registration under 21 CFR 1301.52 does not preclude DEA from issuing a final decision on an order to show cause against that registration and stating that the Agency would assess such matters on a case-by-case basis to determine if a final adjudication is warranted or if the matter should be dismissed);

The Pharmacy Place,

86 FR 21,008, 21,008-09 (2021) (adjudicating to finality a registration terminated under 21 CFR 1301.52 in order to create a final record of allegations and evidence related to the matter);

Creekbend Community Pharmacy,

86 FR 40,627, 40,628 n.4 (2021) (same).

As in

The Pharmacy Place

and

Creekbend,

I have evaluated the particular circumstances of this matter and determined that the matter should be adjudicated to finality. 86 FR at 21,008-09; 86 FR 40,627, 40,628 n.4. As my predecessor identified in

Olsen,

“[b]ecause nothing in the CSA prohibits an individual or an entity from applying for a registration even when there is . . . a history of having a registration suspended or revoked. . . . having a final, official record of allegations, evidence, and the Administrator's decisions regarding those allegations and evidence, assists and supports future interactions between the Agency and the registrant or applicant.” 84 FR at 68,479. Here, absent a final adjudication, there would be no final record of the allegations and evidence from this matter. (

Contrast with Kotsonis

in which the plea agreement and judgment from the respondent's concurrent criminal case provided a final record on which the Agency could rely in any future interactions with the respondent. 85 FR at 85,667). Adjudicating this matter to finality will create an official record the Agency can use in any future interactions with Respondent's owners, employees, or other persons who were associated with Respondent. Moreover, as in

The Pharmacy Place

and

Creekbend,

“adjudicating this matter to finality will create a public record to educate current and prospective registrants about the Agency's expectations regarding the responsibilities of registrant pharmacies under the CSA and allow stakeholders to provide feedback regarding the Agency's enforcement priorities and practices.” 86 FR 21,008-09 (applying

Olsen,

84 FR 68,479); 86 FR 40,627, 40,628 n.4 (same).

It is noted that I recognize the importance of the parties' ability to request dismissal of a case, even after it has been forwarded to me for final adjudication. However, because surrenders are unilaterally submitted by the Respondent, without explicit instructions from both parties, I cannot assume the intent of a surrender is to dismiss the case. In this case, I assume that the Government has determined that a final decision on the merits will further DEA's adjudicatory efforts and law enforcement goals, because its letter to me regarding the surrender significantly omits any indication otherwise.

(2) OakmontScript is registered with the DEA as an exporter licensed to handle controlled substances within Schedules II-V under DEA COR No. RO0527082 (“Exporter COR”) at 1500 District Ave., Burlington, MA 01803-

5069. DEA COR No. RO0527082 was first issued on December 5, 2017. It will expire by its terms on December 31, 2021.

The parties agreed during the Prehearing Conference that since the filing of the Government's Prehearing Statement, DEA COR No. RO0527082 was renewed and [was] due to expire [again] on December 31, 2021.

(3) OakmontScript has a Controlled Substance Registration, #MA0092875, as a Drug Distributor for Schedules II-V with the Commonwealth of Massachusetts, Department of Public Health, Drug Control Program.

(4) Dr. Jufang “Shirley” Shi is OakmontScript's general partner, owner, and Resident Agent. She also serves as its Managing Director, President, and Chief Pharmacy Officer.

(5) Dr. Shi is New England Executive Care Limited Partnership's (“NEEC”) Resident Agent.

(6) Dr. L.W. is NEEC's General Partner. Dr. L.W. also has served as a consultant with OakmontScript. He has acted as OakmontScript's supervisory physician. He was employed by OakmontScript on an as-needed basis.

(7) On or about September 16, 2016, DEA conducted a pre-registration investigation of OakmontScript's then application for a distributor registration.

(8) On or about June 22, 2017, DEA conducted a pre-registration investigation of OakmontScript's then application for an exporter registration.

(9) On or about July 26, 2018, DEA conducted an on-site inspection for OakmontScript's Distributor COR at OakmontScript's registered location pursuant to a Notice of Inspection.

(10) In or around January, 2017, OakmontScript falsified a print out of its DEA Distributor COR in order to set up a customer account with another company, Pharmacy Buying Association (“PBA”). Specifically, OakmontScript's DEA registration was altered so that the word “Distributor” was replaced with the word “Pharmacy” under the Business Activity section of the registration.

(11) OakmontScript employed an intern from January 1, 2017, to February 2018.

(12) Diazepam (brand name “Valium”) is a Schedule IV controlled substance benzodiazepine class drug, commonly used to treat anxiety, muscle spasms, and seizures.

(13) Briviact is the brand name for brivaracetam, a Schedule V controlled substance commonly used to treat seizures.

(14) Belviq is the brand name for lorcaserin, a Schedule IV controlled substance commonly used to control appetite.

(15) Lyrica is the brand name for pregabalin, a Schedule V controlled substance commonly used to treat nerve and muscle pain and seizures.

(16) Clobazam (brand names include “Sympazan” and “Onfi”) is a Schedule IV controlled substance benzodiazepine class drug that is commonly used to control seizures.

(17) Lunesta is the brand name of eszopiclone, a Schedule IV controlled substance that is commonly used as a sedative.

The Government's Case

The Government's case consisted of testimony from three witnesses: (1) Diversion Investigator (“DI”) 1, (2) DI 2, and (3) DI 3. Below is a summary of the testimony of these witnesses.

I do not make any findings of fact in these summaries. Any facts necessary for a disposition of this case are set forth in the Analysis section of this Recommended Decision.

DI 1

DI 1 has been employed with the DEA for eighteen years. Tr. 35. For ten years, until 2010, she worked as a Registration Program Specialist in the New York Field Division where she reviewed applications and conducted background checks regarding registrants who applied for DEA registrations. Tr. 36-37. She currently serves as a DI in Boston where she does on-site inspections and educates applicants on the guidelines required by the Controlled Substances Act (“CSA”). Tr. 35, 37. She received a three-month training in Quantico and has worked on over eighty cases as a DI. Tr. 35, 37-38. She is familiar with DEA regulations and the CSA. Tr. 38.

In August 2016, DI 1 was assigned as the lead investigator to the Respondent's first DEA application as a distributor, which was ultimately assigned COR No. RO504680. Tr. 38-39, 43. On September 16, 2016, DI 1 coordinated with the Massachusetts Department of Health, through a Senior Investigator, to conduct an on-site inspection of OakmontScript. Tr. 44-45. During the inspection, DI 1 met with OakmontScript's Dr. Shi and L.W. Tr. 44-45. Dr. Shi informed DI 1 of her intention to potentially distribute controlled substances to international customers. Tr. 45-46. DI 1 explained to Dr. Shi that she would need to apply for a second DEA registration as an exporter, and to fill out a Form DEA-161, Application for Permit to Export Controlled Substances (“DEA Form 161”), and a Form DEA-236, Declaration of Exportation (“DEA Form 236”), which both apply to Schedule II-V controlled substances. Tr. 46-47.

But see

Tr. 94-95 (When questioned by the Respondent what schedule of controlled substances apply to a DEA Form 161, DI 1 stated “I don't recall” and when questioned regarding what controlled substances apply to a DEA Form 236 stated “Schedule III through V.”).

The tribunal admitted a blank DEA Form 236 with instructions as Government Exhibit 47. For “Type of Declaration” the form includes a check box for export of “Non-narcotic substances in Schedules III or IV and all substances in Schedule V,” but does not have a check box for Schedules I or II. Gov't Ex. 47 at 1. The instruction page for the form states that its purpose is “[t]o obtain information regarding the importation of nonnarcotic substances in Schedules III, IV, and V and the exportation of nonnarcotic substances in Schedules III and IV and all substances in Schedule V.” Gov't Ex. 47 at 2.

DI 1 had conversations with Dr. Shi explaining the term “end-use statement,” which is a statement that is provided by a pharmaceutical company or researcher stating the use of the drug. Tr. 47-49. DI 1 explained that an “ultimate user” is an individual that would use controlled substances for his or her own personal medical use and that some people use the term “end user” and “ultimate user” interchangeably. Tr. 49-50. DI 1 further explained that “ultimate user” and “end user” are different from the “end-use statement,” which is something that is “more for a business . . . a company for research purposes” and is documented in writing. Tr. 50.

DI 1 also discussed record-keeping requirements with Dr. Shi, including the requirement to create an initial inventory of controlled substances she has on site after her application is approved. Tr. 50. She explained that Dr. Shi needed to create a biennial inventory every two years, not to commingle records from her distributor registration and any future exporter registration, and to maintain records for two years. Tr. 50-51. As of April 28, 2017, DI 1's understanding was that OakmontScript had not exported any controlled substances, which was based on an email from OakmontScript stating “we do not have any executed controlled items to report during last two quarters.” Tr. 61; Gov't Ex. 4.

OakmontScript first applied for an exporter registration with the DEA in April of 2017. Tr. 60. At some point, OakmontScript submitted a second exporter application.

Tr. 62. Because the first exporter application was still pending action by DEA, DI 1 contacted Dr. Shi to inquire why she had filed a second exporter application, to which Dr. Shi responded that she wanted to import, not export. Tr. 62. Therefore, DI

1 contacted DEA Headquarters and had the second exporter application converted into an importer application. Tr. 62-63. The second exporter application, which was converted to an importer application, was ultimately withdrawn. Tr. 63.

OakmontScript first applied for an exporter registration for Schedules III, IV, and V in April 2017 and then later requested Schedule II. Tr. 114, 115, 117.

On June 22, 2017, Mr. L.U. sent DI 1 an email requesting that Schedule II be added to the existing exporter application and DI 1 added this request for Schedule II to the exporter application on OakmontScript's behalf. Tr. 74-76; Gov't Ex. 50. DI 1 and the Senior Investigator from the Department of Health conducted a pre-registration inspection of OakmontScript for its exporter application on June 22, 2017. Tr. 69-71. They discussed with Dr. Shi security and record-keeping requirements including creating an initial inventory and maintaining records for at least two years. Tr. 71-72. DI 1 also discussed the importance of maintaining the DEA Form 161s and DEA Form 236s as well as the enduse statements. Tr. 72-73. DI 1 also instructed Dr. Shi that records must be kept separate for separate registrations. Tr. 73. It was DI 1's understanding that OakmontScript had not exported or distributed any controlled substances. Tr. 70-71. At this inspection, DI 1 also noted that OakmontScript's safe was not connected to an alarm system, which was a security concern because OakmontScript was storing Schedule II drugs, which have a higher security standard. Tr. 77, 78.

On September 1, 2017, DI 1 went back to OakmontScript for a return visit to test the safe's alarm after being notified by OakmontScript that the alarm would be professionally installed on August 30th. Tr. 80-81, 83. On this visit, DI 1 found no issues with the alarm. Tr. 83. However, at this time, DI 1 noted that OakmontScript should obtain a larger-sized safe pending the approval of its exporter application, which she communicated to OakmontScript on September 6, 2017. Tr. 84-85. DI 1 had a third visit on September 22, 2017, when she observed that OakmontScript purchased a larger safe and DI 1 tested the security system. Tr. 85-86.

Sometime in October 2017, DI 1's supervisor informed her that OakmontScript added over 170 drug codes to its exporter application, which DI 1 thought to be an excessive amount of drug codes because OakmontScript had previously stated that it was only intending to export small amounts of Oxycodone. Tr. 86-87, 96-97, 100. DI 1 testified that a drug code “is a code that's assigned . . . to a controlled substance for identification purposes for individuals or pharmaceutical companies who are engaging in manufacturing, exporting, importing or distributing controlled substances.” Tr. 86. DI 1 brought this issue to Dr. Shi's attention on November 17, 2017, and Dr. Shi stated that she had to select the drug code for each controlled substance on the web page in order to move to the next screen in the application process. Tr. 87-88. DI 1 worked with Dr. Shi, walked her through modifying the application, and eventually Dr. Shi applied for five drug codes. Tr. 88-89.

On December 5, 2017, DEA COR No. RO0527082, an exporter registration, was assigned to OakmontScript. Tr. 90-91; Gov't Ex. 1B. DI 1 had no indication that OakmontScript had exported any controlled substances prior to this approval date. Tr. 91-92.

DI 1's testimony included a discussion of the investigation of OakmontScript's first DEA application as a distributor, COR No. RO0504680, OakmontScript's two applications for exporter registrations, OakmontScript's request to add Schedule II to its exporter application, and OakmontScript's withdrawn importer application.

Throughout her testimony, DI 1 was generally consistent, genuine, and credible.

As a public servant, DI 1 has no personal stake in the revocation of the Respondent's registrations. There was no indication during her testimony that she had any animus against OakmontScript or any of its employees. I therefore find her testimony to be entirely credible and it will be afforded considerable weight.

DI 1 explained to Dr. Shi that she would need to apply for a second DEA Registration as an exporter, and to fill out a DEA Form 161 and a DEA Form 236, which both apply to drug schedules II-V. Tr. 46-47;

but see

Tr. 94-95 (When questioned by the Respondent what schedule of controlled substances apply to a DEA Form 161, DI 1 stated, “I don't recall,” and when questioned regarding what controlled substances apply to a DEA Form 236, she stated, “Schedule III through V.”) [I find these statements to be confusing and inconsistent, but not to detract from the overall credibility of DI 1].

DI 2

DI 2 received a bachelor's degree in political science from the College of Charleston and worked as a paralegal for several years prior to joining the DEA. Tr. 124. She received a twelve-week training in Quantico when she became an investigator. Tr. 125.

She has been employed as a DI for the DEA for approximately three years and works in the Boston Field Office. Tr. 124. As a DI, she ensures that DEA registrants are abiding by the DEA rules and regulations and the CSA to ensure there is no diversion of controlled substances from the point of manufacture to the end user. Tr. 125, 126. She has worked as a lead investigator on approximately twenty to thirty investigations. Tr. 125-26.

DI 2 first became familiar with OakmontScript on July 26, 2018, when she met Dr. Shi to conduct an inspection regarding OakmontScript's distributor registration.

Tr. 126-27, 128. DI 2 conducted an alarm test, performed a closing inventory, and reviewed OakmontScript's records. Tr. 130. DI 2 noted two issues with OakmontScript's record-keeping: (1) Commingling records by keeping some of its distributor records with its exporter records

and (2) a lack of any transfer documents showing the transfer of controlled substances between the distributor and exporter registrations. Tr. 131-33, 136. After she identified these issues, she discussed them with Dr. Shi and Dr. Shi stated that she understood and would not commingle records in the future. Tr. 133.

As to the transfer documents, Dr. Shi created a template form that she stated she would use in the future. Tr. 133. DI 2 was not aware that OakmontScript had any inconsistencies with its records relating to exports and did not receive any documents indicating that OakmontScript had exported controlled substances before receiving its exporter registration. Tr. 134.

Dr. Shi consented to this inspection. Tr. 128-29;

See

Gov't Ex. 6.

DI 2 noted that OakmontScript was required to do an inventory for its distributor registration and its exporter registration and keep separate records for each registration. Tr. 138-39.

DI 2 did not “believe [Dr. Shi] knew about the commingling but once corrected, she understood.” DI 2 further believed that Dr. Shi thought that transfer documents were only required for Schedule II drugs. Tr. 133-34.

DI 2's testimony was limited to a one-time inspection of OakmontScript's distributor registration. As a public servant, DI 2 has no personal stake in the revocation of the Respondent's registrations. There was no indication during her testimony that she had any animus against OakmontScript or any of its employees. I therefore find her testimony to be entirely credible and it will be afforded considerable weight.

DI 3

Background

DI 3 received her bachelor's degree in business administration in 2015. Tr. 143. Prior to working with the DEA, she was working with the Department of the Army in California, where she mainly conducted background investigations. Tr. 143. She was then promoted to a headquarters position in Detroit, Michigan, where she worked until 2017,

when she was hired by the DEA. Tr. 143. She received a twelve-week training in Quantico at the DEA Academy and had six months of on-the-job training with a field investigator. Tr. 144-45. She received her master's degree in public policy in February 2021. Tr. 143.

DI 3 currently works as a DI for the DEA in the New England Field Division, in Boston, Massachusetts. Tr. 141-42. She has been a DI for three years. Tr. 142. As a DI, she investigates the diversion of controlled substances from licit channels to illicit channels by conducting investigations including completing accountability audits, reviewing records, testing security, and conducting on-site inspections. Tr. 143-44. She has led approximately seventy investigations and assisted on thirty. Tr. 145. She is familiar with the CSA and her job is to ensure public safety. Tr. 145, 766.

OakmontScript Assignment

DI 3 became familiar with OakmontScript in fiscal year 2019 when she was assigned to conduct an in-depth cyclical investigation of OakmontScript's exporter registration. Tr. 145-46. DI 3 reviewed OakmontScript's articles of limited partnership, with a date of organization of May 27, 2016, which indicate that Dr. Shi is the general partner and resident agent of OakmontScript. Tr. 146-49. Dr. Shi had explained to DI 3 that OakmontScript's business model was to procure controlled substances to export to foreign pharmaceutical companies for reverse engineering, so the companies can break down the controlled substance to recreate it. Tr. 150, 151, 760.

New England Executive Care (“NEEC”) is an entity with a date of organization of May 10, 2018, with Dr. Shi listed as its resident agent and Dr. L.W. and Dr. Donghui Yu listed as the general partners and it has some type of relationship with OakmontScript. Tr. 152-54. DI 3 is still unclear what NEEC's business model is and its full connection to OakmontScript. Tr. 155. Dr. L.W. is a consulting physician for OakmontScript and reviews patients' medical records and possibly prescriptions to determine if the drug being exported is appropriate for the patients' treatment. Tr. 155, 620-21.

February 19, 2019 Inspection

DI 3, DI 1, and DI 4, conducted an inspection of OakmontScript on February 19, 2019, and began their investigation by showing Dr. Shi their credentials and presenting a Notice of Inspection, which Dr. Shi signed. Tr. 156-58; Gov't Ex. 7. They discussed recordkeeping and the DIs explained that they would be conducting a controlled substance accountability audit.

Tr. 159.

The accountability audit is a fixed moment in time when the registrant has conducted a physical hand count of any controlled substances it has on hand and the DIs include anything the registrant has purchased or transferred. Tr. 165-66. The DIs then take a closing inventory based on what has been distributed, dispensed, etc. Tr. 166.

The initial inventory date was February 19, 2018, and based on OakmontScript's self-reporting that it did not have any substances on hand, the initial count was a zero balance. Tr. 167, 763. According to the closing inventory dated February 19, 2019, which was signed by DI 3, DI 4, and a representative from OakmontScript, OakmontScript did not have any of the eight controlled substances the DIs chose to audit on that date. Tr. 159-60; Gov't Exs. 8, 9.

DI 3 also discussed drug codes

with Dr. Shi and it is standard practice for her to discuss what drug codes a registrant is authorized to handle and whether the registrant is handling any other drug codes. Tr. 175-76, 597.

DI 3 had accessed the DEA registration system and made a list of drug codes that OakmontScript was authorized to handle, and asked OakmontScript what drugs codes it was handling.

Tr. 183; Gov't Ex. 11. Dr. Shi reported there were no other drug codes that OakmontScript was exporting or handling other than what DI 3 listed and that there were two drug codes OakmontScript was no longer handling. Tr. 189, 598, 889. Although the closing inventory was good because “it tied out to zero,” there were issues with OakmontScript's recordkeeping, including a failure to take an initial inventory, and there were also issues with the alarm system. Tr. 190, 192. DI 3 discussed these issues with her group supervisor and her group supervisor asked her to return to OakmontScript to conduct an alarm test and conduct an expanded controlled substance accountability audit going back to December 5, 2017, which is when OakmontScript first received its DEA exporter registration. Tr. 192-93.

A drug code, or Administrative Controlled Substance Code Number, is a four-digit code that is assigned to each controlled substance and certain DEA registrants are allowed to handle only specific drug codes for which they have been approved. Tr. 169, 868. For example, a DEA registrant who is an exporter is only able to purchase and export controlled substances for which it has an authorized drug code and cannot engage in exporting drugs for which it does not have the necessary drug code. Tr. 176-77. When exporting drugs, the registrant needs to report the drug codes in an export declaration, such as a DEA Form 236, to include the drug code, strength, quantity, shipping destination, shipping origin location, the anticipated date it is being released, the anticipated date it should arrive, and the drug's intended use. Tr. 178.

Dr. Shi asked DI 3 questions during her direct examination that led to a discussion about drug codes OakmontScript had requested in December 2020. Tr. 880-88. These discussions are not part of the Order to Show Cause that is the subject of the proceedings before this tribunal.

If a registrant wants to make a change to its registration, including adding or removing drug codes, it may request a modification of registration online or contact the local DEA office by email or phone, and adding drug codes can be approved at the field level, but may require further inspection. Tr. 273-74, 800, 874-75, 876. There is no uniform guidance on how the DEA handles a request for adding or removing a drug code. Tr. 879.

March 29, 2019 Inspection

On March 29, 2019, DI 3 completed another inspection with DI 5 and the audit did not show any discrepancies. Tr. 195-97. Dr. Shi provided a pack of additional documents to DI 3 and stated that she was having problems filing the DEA Form 236 for OakmontScript's exports. Tr. 198-201; Gov't Ex. 12. After reviewing these documents, DI 3 determined that OakmontScript was having issues with the DEA Form 236 because OakmontScript did not have the authority to export the controlled substances as it did not have the appropriate drug codes in its registration for most of the drugs. Tr. 201. Therefore, OakmontScript was unable to select the drug codes from the online drop-down box in the DEA Form 236. Tr. 201-02, 613. Despite being unable to fill out the DEA Form 236, Dr. Shi “exported them anyways” and she did not think “it was a big deal.” Tr. 204. Ultimately, DI 3 found that OakmontScript had violated the CSA by not filling out the DEA Form 236s, by exporting drugs prior to holding its exporter registration,

and exporting drugs it did not have authorization to handle. Tr. 205.

DEA registrants are required to provide the proximate date of export and to provide return information within thirty days. Tr. 759-60;

See

Gov't Ex. 47; 21 CFR 1304.22(d).

Follow-Up to March 29, 2019 Inspection

On April 23, 2019, DI 3 had a phone call with Dr. Shi and requested a detailed list of exports OakmontScript had conducted because it was apparent that OakmontScript had exported a lot more than what Dr. Shi had previously stated. Tr. 206. DI 3 also discussed a fraudulent DEA registration. Tr. 206. During this discussion, Dr. Shi stated that OakmontScript had conducted its first export in May or June of 2017. Tr. 206.

After the April 23, 2019 phone call, DI 3 and Dr. Shi had an email exchange in which Dr. Shi continued to provide conflicting information, so DI 3 asked

for further clarifying information. Tr. 208-21.

See

Gov't Exs. 16, 17, 18, 19, 20. After reviewing the several documents Dr. Shi emailed, DI 3 noted several issues, including that OakmontScript was not keeping complete and accurate records related to its controlled substance transactions, was unable to complete the DEA Form 236s, and was creating shipping labels well in advance of dropping off the controlled substances with the common carrier for shipment. Tr. 222-24; Gov't Exs. 16, 17, 18, 19, 20 at 9 (Dr. Shi responded to an email from DI 3 and indicated that the shipping label for an export of Belviq was “created on date of 10/13/2017, but drop-off on later date while waiting for receiving party get ready for custom clearance.”).

May 8, 2019 Inspection

DI 3 served two administrative subpoenas on OakmontScript with DI 5 on May 8, 2019, that were issued based on the serious violations that DI 3 discovered since conducting her initial inspection on February 19, 2019.

Tr. 235-40; Gov't Ex. 24.

At the May 8, 2019, meeting, DI 3 also discussed the Letter of No Objection (“LONO”) and that she had learned from someone at DEA Headquarters that a LONO must come from a foreign national government and not from a provincial or state-level government. Tr. 889-91, 893, 895-96, 910-11, 1432-33. A LONO is provided by the importing country stating that it has no objection to a controlled substance being imported into that country. Tr. 910, 1431-32.

The tribunal questioned DI 3 regarding markings on the administrative subpoenas. Tr. 790-91; Gov't Ex. 24. DI 3 stated that the various check and dash marks made on the front pages of the subpoenas were made by OakmontScript. Tr. 790. DI 3 further explained that when she had served the subpoenas, she had not made scanned copies that were hand-signed by the diversion program manager and these were copies that were provided by OakmontScript. Tr. 790-91.

OakmontScript kept track of each controlled substance it exported or distributed by assigning a purchase order number, usually starting with “OKS-” and followed by a series of numbers. Tr. 242. At the inspection, Dr. Shi provided DI 3 a large packet that was divided into smaller bundles by invoice, that DI 3 later may have reordered chronologically, but she did not remove or add any pages to the stack. Tr. 243-48, 709, 794-95;

See

Gov't Ex. 26. DI 3 discussed with Dr. Shi OakmontScript's exports for direct patient use, including a shipment of clobazam that was potentially sent to an underage patient, a fraudulent DEA registration, and OakmontScript's relationship with NEEC. Tr. 256.

May 13, 2019 Inspection

On May 13, 2019, DI 3 and DI 5 performed another inspection. Tr. 268. DI 3 discussed various topics with Dr. Shi, including a detailed discussion of all the violations DI 3 uncovered. Tr. 268-69. Prior to this visit, DI 3 had also reached out to DEA Headquarters to verify whether OakmontScript had properly completed DEA Form 236s for its exports. Tr. 269-70; Gov't Ex. 48.

Alteration of Distributor Certificate of Registration

A registrant receives a hard-copy certificate of registration, which is an official government document, based on DEA approval to hold a registration, which includes the company's or individual's name, the registered location address, the registrant's DEA registration number, the business activity for which the entity is approved, and—for exporters, importers, and bulk manufacturers—the drug codes that they are approved to handle. Tr. 272-73.

DI 3 had been reviewing OakmontScript's case files and discovered that there was a report filed by the Kansas City District Office of the DEA, naming OakmontScript as fraudulently creating a DEA registration. Tr. 275. OakmontScript had altered its distributor registration to indicate that it was a pharmacy and submitted it to Pharmacy Buying Association (“PBA”).

Tr. 275. PBA has a DEA registration and DI 3 spoke to one of PBA's Regulatory Compliance Team Leaders, B.W., and received email correspondence from B.W. that noted PBA “only sell[s] to pharmacies” and it does not “sell to other distributors.” Tr. 275-78; Gov't Ex. 55. PBA also requires customers to send a copy of their state pharmacy license and a copy of their DEA registration when they send in their account application. Tr. 278; Gov't Ex. 55. B.W. further noted that OakmontScript sent PBA a DEA registration indicating it was a pharmacy and after PBA performed its due diligence, PBA discovered that the document was altered. Tr. 278; Gov't Ex. 55. PBA reported OakmontScript and denied OakmontScript's account. Tr. 278; Gov't Ex. 55.

PBA is a distributor of controlled substances and non-controlled substances that only sells to pharmacies. Tr. 275, 1444;

See

Gov't Ex. 55.

The DEA registration OakmontScript provided to PBA listed its business activity as “pharmacy,” even though the COR of RO0504680 corresponded to OakmontScript's distributor registration. Tr. 286; Gov't Exs. 14, 55. Dr. Shi took responsibility for the falsified registration. Tr. 290-93.

On April 23, 2019, DI 3 discussed the falsified registration with Dr. Shi on the phone. Tr. 293. Dr. Shi stated that she had hired an intern and Dr. Shi instructed the intern to establish relationships with OakmontScript's competitors to determine how they conduct business. Tr. 293-94. After PBA refused to establish a relationship with OakmontScript, the intern altered the DEA registration to list OakmontScript as a pharmacy. Tr. 294; Gov't Ex. 14. During this phone call, Dr. Shi indicated to DI 3 that she had fired the intern as a result of this incident. Tr. 294. However, in an email dated April 24, 2019, Dr. Shi indicated that the intern moved back to China and her employment dates were January 1, 2017, to February 2018. Tr. 297; Gov't Ex. 20 at 13. The phone conversation and email were therefore in “direct conflict” and it appeared that the intern had not been fired for falsifying the registration. Tr. 297-98. Dr. Shi also texted information regarding this incident in May 2019 where she said if the incident regarding the falsified registration “constitutes any offensive sort, `I' should take responsibility. If any actions taken toward, please address to me directly.” Tr. 300-01; Gov't Ex. 29.

DI 3 had a follow-up inspection on May 13, 2019, and asked Dr. Shi why the intern's employment dates seemed to span an additional year after the date of the fraudulent DEA registration. Tr. 301-02. Dr. Shi stated that she had ties with the intern's family, who she felt had pressured her to keep the intern employed. Tr. 302. Dr. Shi also explained that the intern had come to her and explained that PBA would not “do business with them because they viewed OakmontScript as a competitor” and Dr. Shi had told the intern to “do whatever is needed” and to “[g]ive them basically whatever they want in order to establish this . . . client relationship with them.” Tr. 303. DI 3 was never able to contact the intern to discuss this violation with her. Tr. 304. OakmontScript was not able to obtain controlled substances from PBA. Tr. 304.

In this instance, DI 3 found that Dr. Shi had exhibited a lack of candor

because Dr. Shi initially stated that the intern had been fired and later stated the intern had not been fired, but maintained a position at OakmontScript and actually left the country and her

position with OakmontScript because her visa had expired. Tr. 307, 788.

Upon direct questioning by the tribunal, DI 3 testified that Dr. Shi exhibited a lack of candor when she “led me to believe that [the intern] had been fired for her actions related to that forged DEA registration” and that in their conversation Dr. Shi did use the exact word “fired.” Tr. 792-93. DI 3 did not believe this was a simple mistake by Dr. Shi. Tr. 793.

February 2020 Subpoena

DI 3 served another administrative subpoena on OakmontScript on February 28, 2020, and issued an administrative subpoena to NEEC after learning that Dr. L.W. was writing prescriptions for direct patient care at Dr. Shi's request.

Tr. 389-95; Gov't Exs. 37, 38.

As discussed

supra,

Dr. L.W. was listed as a general partner of NEEC. Tr. 154. Furthermore, based on Dr. Shi's statements, it was unclear to DI 3 as to what role NEEC was playing in OakmontScript's exports. Tr. 393-94.

In response to the subpoenas, David Schumacher sent a letter dated March 26, 2020, indicating he was an attorney representing OakmontScript and NEEC and that neither OakmontScript nor NEEC had any records that were responsive to the subpoena, but he did re-produce certain documentation to DI 3 and addressed certain questions DI 3 posed in a March 10, 2020 email. Tr. 397-98; Gov't Ex. 42. DI 3 followed up with questions to Mr. Schumacher in an April 14, 2020 email, and he subsequently sent an email to DI 3 on April 17, 2020, which responded to some of these questions. Tr. 402-03; Gov't Ex. 44. DI 3 sent her April 14, 2020, email to seek clarification regarding two identical prescriptions she identified for clobazam and what role they played in the export of this controlled substance. Tr. 405; Gov't Ex. 44.

Invoice OKS-00243 (Diazepam)

OakmontScript received diazepam, 10 milligram gel on May 16, 2017, from McKesson that appears to have been shipped by OakmontScript on June 10, 2017. Tr. 352-53, 366, 432; Gov't Exs. 12 at 14, 26 at 20.

However on other documentation, the shipping date is listed as May 18, 2017, and the client's name is listed as Par Pharmaceutical, an Endo International Company. Tr. 356, 1448; Gov't Ex. 17 at 3. In other documentation, the shipping date is listed as May 18, 2017, and the client is listed as Cangzhou People's Hospital. Tr. 357, 1449; Gov't Ex. 18 at 3. Furthermore, Dr. Shi sent an email to DI 3 on April 23, 2019, indicating that she was unsure of the exact date of export because the “shipping label was not retrievable due to USPS system update” and Ms. Liu has “made edit in the date multiple times and she thought the proper date is on the date of payment. . . .” Tr. 358-59, 386, 1449; Gov't Exs. 20 at 8, 28 at 22.

The “ship to name” is listed as H.H.

at Cangzhou People's Hospital in China and Dr. Shi's guess of the “best possible date” of shipment was the date of payment on May 18, 2017. Tr. 361-63, 1449-50; Gov't Ex. 21 at 9. The use was listed as “for research” and the “bill to” party was H.X.Z. at Par Pharmaceutical and the ship to party was Dr. H.H. at Cangzhou People's Hospital in China. Tr. 365, 435; Gov't Ex. 26 at 19.

This McKesson invoice listed OakmontScript's address as 15 New England Executive Park. Gov't Ex. 26 at 20. Dr. Shi explained that this address and the 1500 District Avenue address (OakmontScript's current address) are the same address. Tr. 367. Dr. Shi stated that the whole area where OakmontScript is located got “reorganized” and OakmontScript's address changed, but OakmontScript never changed its physical location. Tr. 368.

This was concerning for DI 3 because a registrant is required to know when it has conducted a transaction with a controlled substance and OakmontScript was unable to provide this information. Tr. 360.

In the translated prescription, H.H. appears to be a doctor in China. Tr. 413; Gov't Ex. 45 at 4. DI 3 conducted a search within the DEA database and determined that Dr. H.H. did not have a DEA registration. Tr. 413-14.

One of the license transfer documents for this export indicates that the diazepam was transferred from OakmontScript's distributor registration to its exporter registration on May 7, 2018. Tr. 371-72, 435; Gov't Exs. 26 at 21, 28 at 77. A different license transfer document indicates that the date of transfer was May 20, 2017. Tr. 371, 436; Gov't Ex. 26 at 22.

Other documentation provided by OakmontScript states that the diazepam prescription was made based on a request from a family in China for Patient S.Z. and was shipped sometime in May 2019. Tr. 407-09; Gov't Ex. 44 at 1-2. OakmontScript was unable to complete a DEA Form 236 for this export.

Tr. 352-53; Gov't Exs. 12 at 14, 16 at 2.

DI 3 indicated that “it seems more likely . . . that this license transfer document from May 20, 2017, is the more likely of the two to be accurate,” based on comparing the McKesson invoice that was dated in 2017. Tr. 436.

This is noted as “no XFER” in the Excel spreadsheets in the documents provided by OakmontScript, which indicates that OakmontScript was not able to fill out a DEA Form 236 for a particular drug. Tr. 202.

DI 3 confronted Dr. Shi regarding this conflicting information at the on-site inspection on May 8, 2019. Tr. 363. Dr. Shi recalled that this diazepam had been shipped for direct patient use in China. Tr. 363-64. Dr. Shi stated that OakmontScript had to label the reason for export as “research” in order to get the shipment past Chinese Custom Officials and that the actual intended use of the diazepam was for direct patient use. Tr. 366, 1446.

DI 3 was also confused by documents provided by Dr. Shi because although they appeared to be the exact same documents—a prescription written in Chinese, a hospital's government licenses, and a doctor's medical license—these documents were provided in stacks for two different invoices. Tr. 380-83; Gov't Ex. 26 at 12-14, 30-32. Based on a translation that DI 3 ultimately obtained for these documents, DI 3 learned that both prescriptions were for diazepam. Tr. 383.

OakmontScript also failed to include a DEA Form 236 for this invoice, which it was required to do. Tr. 416-19. Furthermore, OakmontScript's distributor registration and exporter registration do not allow for OakmontScript to fill prescriptions, as such prescriptions may only be filled by a pharmacist. Tr. 420-23, 429; 21 U.S.C. 1306.06. OakmontScript also did not provide the information required under Section 3a or Section 3b of the DEA Form 236.

Tr. 418-19; Gov't Ex. 48. Based on the records, OakmontScript appears to have exported 10 milligrams of diazepam under invoice number OKS-00243 prior to obtaining its DEA exporter registration on December 5, 2017. Tr. 423-25, 1433, 1452.

Section 3a of DEA Form 236 requires that, for exports, the exporter “list the U.S. port of export (port name, city, state) from where the shipment departs the United States and the anticipated date it will depart.” Gov't Ex. 47 at 1, 2. Section 3b of DEA Form 236 requires that, for exports, the exporter “list the foreign port of import (port name, city, country) and the anticipated date it will arrive.” Gov't Ex. 47 at 1, 2.

Furthermore, invoice OKS-00243 did not provide the DEA registration of the doctor prescribing the controlled substance and the patient's home address. Tr. 430-31.

See

21 CFR 1306.05(a).

DI 3 stated that this failure to provide the required information is a danger to the public because the information is needed to ensure registered practitioners are prescribing appropriately. Tr. 431.

The personal use exemption allows someone who is traveling across international boundaries to take a controlled substance with them and a third-party shipping a controlled substance overseas would not fall within a personal use exemption. Tr. 437-38.

Invoice OKS-00301 (Briviact)

Throughout her testimony, DI 3 mentioned that there were several handwritten notes or post-it notes with writing on the certain documents, and that these notes were in the documents when they were presented to her by OakmontScript. Tr. 373. There was one instance, however, where DI 3 acknowledged that she had made a handwritten note. Tr. 375-76; Gov't 26 at 25. Specifically, she had written the word “Par” next to the “Bill To” line of this invoice. She also made handwritten notes in Government Exhibit 26 noting that the

scanned documents were a “Hospital's Central Gov. License,” “Doctor's Medical License,” and a “Prescription.” Tr. 380-81;

See

Gov't Ex. 26 at 12, 14.

OakmontScript received 10 milligrams and 100 milligrams of

Briviact on July 12, 2017, that were shipped in August 2017—four months prior to OakmontScript receiving its exporter registration. Tr. 440-57, 1433; Gov't Exs. 12 at 7, 20 at 8, 26 at 35-36, 27 at 2, 28 at 27.

However, in other documentation provided by OakmontScript, this OKS-00301 invoice is not included in what is supposed to be a list of all controlled substances OakmontScript has exported.

See

Gov't Ex. 18 at 3-4. In other documentation, the commercial invoice for invoice OKS-00301 indicates that this shipment occurred May 8, 2019, and the indicated use was listed as “research.”

Gov't Ex. 26 at 33, 34.

This exhibit is titled as “Customer End-Use Certification.” Gov't Ex. 28 at 27; Tr. 453. An exporter is expected to know what the controlled substances it is exporting are being used for and this form includes questions regarding this use. Tr. 453-54. This is not a form created by the DEA, but rather a form “the industry has come up with” in order to meet the standards set forth in the Code of Federal Regulations. Tr. 454.

DI 3 discussed the fact that the Respondent asserted in its prehearing statement that there was an Excel macro that affected some of the dates on OakmontScript's documents. Tr. 574. In this instance, the document is dated May 8, 2019, which was the date of one of DI 3's inspections. Tr. 575. Therefore, this could account for the incorrect date listed in this invoice. DI 3 stated that she became aware of the macro issue after the May 8, 2019 inspection, but OakmontScript never specifically brought this to her attention during her investigation. Tr. 1439-40. If DI 3 had been made aware of this issue at the time, she would have worked with OakmontScript to obtain the most accurate records. Tr. 1440-41.

OakmontScript did not file a DEA Form 236 for this invoice because it was unable to do so. Tr. 443, 456-57; Gov't Exs. 20 at 8, 48. Dr. Shi claimed that OakmontScript did not need to make a declaration to Customs and Border Control as the value of the shipment was less than $2500. Tr. 443; Gov't Ex. 20 at 8.

An ultimate user is the individual who will be ingesting the controlled substance or providing it for a pet's use, while an end-use certification addresses what the controlled substance is being used for and if it is going to be re-exported. Tr. 454-55.

Invoice OKS-00315-1 (Belviq)

OakmontScript received 10 milligrams of Belviq on September 18, 2017, which was shipped on November 1, 2017, and OakmontScript was not able to file a DEA Form 236 for this prescription. Tr. 457-70; Gov't Exs. 12 at 3, 20 at 8,

26 at 38-39, 27 at 2, 28 at 6. However, Belviq is omitted from two Excel spreadsheets that were provided to DI 3 by Dr. Shi, which were supposed to include all of OakmontScript's exports. Gov't Ex. 17 at 2-3, 18 at 3-4. Also, a different invoice provided by OakmontScript is dated September 18, 2017. Gov't Ex. 26 at 37. Another commercial invoice is dated May 8, 2019. Gov't Ex. 26 at 40. Based on the November 1, 2017, shipping date, OakmontScript exported this Belviq product approximately one month before it obtained its exporter registration. Tr. 470, 1433.

In response to DI 3's email, Dr. Shi sent a reply email stating that per the DHL shipping label, the shipment was made by a custom broker, Hangzhou Junyuan Meditech, LLC and the end-user is Changzhou Pharmaceuticals with an address in China, but no export date was provided. Tr. 461-62.

Invoice OKS-00315-2 (Lyrica)

This invoice included several strengths of Lyrica: 25 milligram, 50 milligram, 75 milligram, 100 milligram, 150 milligram, 200 milligram, 225 milligram, and 300 milligram tablets. Tr. 470.

OakmontScript purchased Lyrica on September 12, 2017, from American Pharma Wholesale and it was shipped sometime between November 17 through 21 of 2017 to Changzhou Pharmaceuticals in China and OakmontScript did not file a DEA Form 236 because it was unable to do so.

Tr. 470-83, 895; Gov't Exs. 12 at 9-10, 26 at 41-43, 27 at 2, 28 at 8, 78, 48. However, in other documentation provided by OakmontScript, Lyrica is not listed as an export. Gov't Exs. 17 at 2-3, 18 at 3-4. Furthermore, in other documentation, the invoice is dated August 2017. Gov't Exs. 26 at 44, 28 at 31. This shipment of Lyrica was shipped approximately one month prior to OakmontScript receiving its exporter registration. Tr. 483, 1433.

DI 3 later testified that OakmontScript did submit a DEA Form 236, but it was subsequently cancelled. Tr. 909.

Invoice OKS-00108 (Belviq XR)

OakmontScript received Belviq on July 20, 2017, and shipped the same quantity of Belviq XR 20 milligrams on December 1, 2017. Tr. 483-95; Gov't Exs. 12 at 3; 26 at 45, 47, 27 at 2, 28 at 5, 19 (the shipping date is listed as December 1, 2017), 76 (the date OakmontScript transferred the Belviq from its distributor to exporter registration is listed as November 29, 2017). However, in other documentation provided by OakmontScript, Belviq is not listed as an export. Gov't Exs. 17 at 2-3, 18 at 3-4. In other documentation provided by OakmontScript, the shipping label for this invoice was created on October 13, 2017, and the customer was listed as Jiangsu Alicorn Pharmaceutical Co. Ltd in China. Gov't Ex. 20 at 9. There are also various dates included in the “Import Drugs Approval Notice” including February 16, 2017 and February 15, 2018. Gov't Ex. 26 at 46; Tr. 489. The packing list that OakmontScript provided is dated May 8, 2019. Gov't Ex. 28 at 19. OakmontScript did not file a DEA Form 236 for this export. Tr. 494. Regardless of whether the shipment was exported on December 1, 2017 or October 13, 2017, this shipment would have been exported prior to OakmontScript obtaining its exporter registration. Tr. 495, 1433.

Invoice OKS-00650 (Lunesta)

OakmontScript received Lunesta in May 2018 and shipped the Lunesta to Disha Pharmaceutical Group on May 21, 2018. Tr. 499-535; Gov't Exs. 12 at 17, 17 at 3, 18 at 3, 28 at 94. The Lunesta was shipped to Mr. Z.Y. at an address in the United States in Kearny, New Jersey. Tr. 1455; Gov't Ex. 22 at 10-11. Another document for this export that is dated May 3, 2017, states that this shipment was shipped to P.Z. in New Jersey. Tr. 515, 522-23; Gov't Ex. 26 at 87.

Upon further investigation, DI 3 realized that this was a domestic distribution or distributing to a registrant in the United States, as opposed to an export. Tr. 508, 510, 529, 533, 904-05; Gov't Exs. 22 at 10-11, 26 at 88, 89, 92, 27 at 3, 28 at 66, 67, 68. OakmontScript did not fill out a DEA Form 236 for this export. Tr. 500-01.

A distributor is not permitted to distribute controlled substances to an ultimate user and there is no coincidental activity that permits a distributor to provide controlled substances to non-DEA individuals or persons or companies. Tr. 511-12, 723. Distribution occurs between registrants while dispensing would take place through a prescription being filled by a pharmacy after a practitioner prescribes a controlled substance. Tr. 513.

DI 3 discussed this invoice with Dr. Shi. Tr. 513-14. Dr. Shi stated that she was provided a business card showing that Mr. Z.Y. was an employee of Disha Pharmaceutical Group, a pharmaceutical company in China, and that he was getting ready to move to China and asked that the Lunesta be shipped to his home address in New Jersey, and paid via personal payment. Tr. 514, 516, 531, 534-35. This invoice indicates that the “bill to” party was Disha Pharmaceutical Group. Tr. 530-31; Gov't Ex. 28 at 44. Dr. Shi had explained that Larry Yu, a colleague she had met at a conference, had requested the Lunesta for RefDrug and asked Dr. Shi to send the Lunesta to Mr. Z.Y. to

have him provide it in China as Dr. Yu was not able to acquire it. Tr. 515-16.

Dr. Shi confirmed for DI 3 that OakmontScript had purchased this Lunesta with its distributor registration and then distributed it to Mr. Z.Y. at his home address in New Jersey, which DI 3 testified was improper. Tr. 517-18. Dr. Shi did not believe that this incident was a violation and stated that because Disha Pharmaceutical Group was the end-user of this controlled substance that it did not have to be licensed or registered with the DEA to obtain this controlled substance. Tr. 518. In contrast, DI 3 believed that Disha was not the end-user or ultimate user

because it was seeking the Lunesta in order to conduct research as opposed to using it for personal medical use. Tr. 518-19, 772-73.

21 U.S.C. 802(27) defines “ultimate user” as “a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or by a member of his household.”

DI 3 conducted searches to see whether certain parties in this transaction had a DEA registration. Tr. 545. She conducted a search for Mr. Z.Y., RefDrug, Inc., L.Y., P.Z., Disha Pharmaceutical Group, and the address in Kearny, New Jersey, and found no results for any active or inactive DEA registrations for any of these searches. Tr. 545-54. DI 3 also conducted a Google search of the Kearny, New Jersey, address and was not provided any information from OakmontScript that this was a freight forwarding facility. Tr. 555-56, 558.

Invoice OKS-00715 (Lyrica)

A variety of Lyrica strengths were shipped on November 21, 2018, to J.F. at YaoPharma. Tr. 558-72; Gov't Ex. 31 at 1-4, 27 at 3, 31 at 1, 3-4. However, other documentation provided by Dr. Shi indicates that the date is November 21, 2019. Gov't Ex. 12 at 12.

Dr. Shi also sent an email stating that the label for the Lyrica was created on November 21, 2018, and the drop-off date was December 4, 2018. Gov't Ex. 20 at 10. Other documents list the date as March 29, 2019. Gov't Ex. 31 at 3. Other documents list an invoice date of May 8, 2019. Gov't Ex. 26 at 102.

The date of the invoice was also listed as August 8, 2018. Gov't Ex. 28 at 48. OakmontScript did not file a DEA Form 236 for this export. Tr. 572-73; Gov't Ex. 48.

DI 3 discussed these issues with Dr. Shi on April 23, 2019, and Dr. Shi indicated that this was an incorrect date and the date should be listed as November 21, 2018. Tr. 564.

This incorrect date could be related to the macro issue, but regardless, having these incorrect dates caused confusion for DI 3. Tr. 576-77.

Invoice OKS-00753 (Briviact)

Briviact 50 milligram and 100 milligram, a Schedule V drug, was received on October 22, 2018, the shipping label was created on October 25, 2018, and it was shipped on November 2, 2018. Tr. 579-96; Gov't Exs. 12 at 8, 20 at 10. Other documentation provided by OakmontScript states that this was shipped on October 26, 2018. Gov't Exs. 17 at 2, 18 at 4. The commercial invoice is dated September 26, 2018 and the “bill to” and “ship to parties” are Y.P. at Zhejiang Le Pu Technology Limited Company in China. Gov't Exs. 26 at 106, 28 at 53.

In other documentation provided by OakmontScript, no shipping date is provided. Gov't Ex. 27 at 3-4. OakmontScript did not have the authority to export Briviact. Tr. 580-81, 599, 1434-35; Gov't Ex. 11. OakmontScript did not fill out a DEA Form 236 for this controlled substance. Tr. 596, 1435-36; Gov't Ex. 48.

While this exhibit was being discussed, Dr. Shi objected and explained that this “page of the shipping label is different. So it's our mistake to put the shipping label of 715 in here. So this shipping label should not be discussed with this, it's our fault to misplace this page.” Tr. 591. This issue is discussed

infra,

during Dr. Shi's testimony.

DI 3 found Dr. Shi's statement regarding drug codes to demonstrate a lack of candor because she had specifically asked Dr. Shi if OakmontScript was handling other controlled substances outside those listed and Dr. Shi reported that she had not. Tr. 600, 724, 788.

Invoice OKS-00902 (Belviq)

Belviq, 10 milligrams was received by OakmontScript on January 30, 2019, transferred from its distributor license to its export license on February 14, 2019, and shipped on February 15, 2019, to Beijing HeMingTang Pharmaceutical Company Limited. Tr. 602-13; Gov't. Exs. 12 at 5, 18 at 4, 26 at 121, 27 at 4, 28 at 60, 82. However, other documentation provided by Dr. Shi listed a packing slip date of January 16, 2019. Gov't Ex. 26 at 119. Other documentation listed an invoice date of May 8, 2019. Gov't Ex. 26 at 122.

Other documentation lists the billing date from McKesson as January 16, 2019. Gov't Ex. 28 at 18. OakmontScript did not file a DEA Form 236 for the Belviq. Tr. 609, 1435-36; Gov't Ex. 48. OakmontScript did not have the authority to export Belviq at this time. Tr. 612, 1435; Gov't Ex. 11.

This could have also been related to the macro issue as the invoice was dated May 8, 2019, one of the dates DI 3 was present for an inspection.

DI 3 believed Dr. Shi's previous statement regarding drug codes demonstrated a lack of candor because she had specifically asked Dr. Shi if OakmontScript was handling other controlled substances outside those listed and Dr. Shi failed to report that OakmontScript had recently exported Belviq. Tr. 613, 724, 788.

Invoice DIW-0019 and NEEC-0019 (Clobazam)

Clobazam is a Schedule IV controlled substance. Tr. 614; Gov't Ex. 10 at 4. OakmontScript received a shipment of clobazam on February 28, 2019, and shipped it on March 5, 2019, to Patient J.L.'s home address in China. Tr. 613-41, 673-723, 727-33, 907, 912; Gov't Exs. 12 at 21, 26 at 15-16, 27 at 4, 28 at 65.

However, in other documentation provided by OakmontScript, there is no indication that clobazam was shipped or it is not listed on the invoice. Gov't Exs. 17 at 2-3, 18 at 3-4. OakmontScript did not have the authority to export clobazam and DI 3 was unable to confirm that it was used for a legitimate scientific, research, or medical purpose. Tr. 612-13; Gov't Ex. 11. OakmontScript also did not fill out a DEA Form 236 for this invoice. Tr. 615, 1435-36; Gov't Exs. 26 at 16, 28 at 76, 48 at 1.

At the May 8, 2019 visit, DI 3 asked why there was a discrepancy and Dr. Shi stated that the request had come to export the clobazam for direct patient use. Tr. 617-18. During this conversation, Dr. Shi stated that she had “begged” Dr. L.W. for about a week to write a prescription to legitimize this export of controlled substances and although he initially said no, he “eventually relented” and wrote the prescription, but asked that Dr. Shi not ask him to write a prescription like that again. Tr. 619-20, 621, 673, 769, 912, 1456.

It was DI 3's understanding that Patient J.L. was treated at Boston Children's Hospital, had returned to China, and was now seeking an export of clobazam to China. Tr. 620. Dr. Shi never provided this prescription to DI 3. Tr. 621-22.

Other documentation provided by OakmontScript indicates that the prescription was transferred to a doctor's office in the United States, which would appear to be a domestic distribution, but during the May 8, 2019 conversation, Dr. Shi indicated that the controlled substance was directly exported to Patient J.L. in China, which she asserted a distributor is able to do. Tr. 624, 633, 641, 726, 915; Gov't Ex. 20 at 11.

Administrative Subpoenas

DI 3 and DI 6 met with Dr. L.W. in January or February of 2020. Tr. 674. Upon arriving, both DIs explained the reason for the visit, identified themselves, and showed their credentials. Tr. 674. Dr. L.W. indicated he would be fine to answer questions. Tr. 674. During the interview, Dr. L.W. indicated that he was a consulting physician for OakmontScript, was paid a monthly stipend, and received extra compensation each time he wrote a prescription for OakmontScript. Tr. 675. It was unclear what his position was with NEEC. Tr. 675. Dr. L.W. reviewed the material transfer document that indicated the clobazam, invoice NEEC-019, was shipped directly to him and he stated that he had never taken physical possession of the clobazam or any controlled substances. Tr. 676, 677, 730.

See

Gov't Ex. 26 at 16. Dr. L.W. told DI 3 that he wrote prescriptions for OakmontScript after OakmontScript provided him with medical records for foreign patients who were being treated for illnesses in other counties and he would determine whether the drug OakmontScript wanted to export was the appropriate drug for the treatment of those patients. Tr. 677. He further stated that he had never seen Patient J.L. and did not have any medical records for Patient J.L. Tr. 678, 682. He stated that he did not have authority to write prescriptions for patients located outside of the United States, nor does he have foreign medical licenses or overseas privileges as a practitioner. Tr. 678.

DI 3 served an administrative subpoena on Dr. L.W. that was dated January 2, 2020. Tr. 678-79; Gov't Ex. 35. Dr. L.W. later called DI 3 to discuss the subpoena she had served on him. Tr. 681. Dr. L.W. stated that he did not have a response to the subpoena and he had not written prescriptions for controlled substances for OakmontScript. Tr. 681-82; Gov't Ex. 36. DI 3 asked him to email her his official response and he sent DI 3 an email stating this. Tr. 681-82; Gov't Ex. 36.

On March 6, 2020, DI 3 had an email exchange with Attorney Schumacher, in response to the administrative subpoenas that were served on OakmontScript and NEEC. Tr. 690; Gov't Ex. 40.

See

Gov't Exs. 37, 38. Mr. Shumacher indicated that he had no response to the subpoenas. Tr. 687-706; Gov't Exs. 39, 40, 41, 42.

Regarding the clobazam prescription,

Mr. Schumacher indicated that the prescription had been initiated or authorized by Dr. G.T. from a hospital in China and that this physician did not have a relationship with OakmontScript or NEEC. Tr. 710-11; Gov't Ex. 44 at 1. DI 3 conducted a search for Dr. G.T. in the DEA registration database known as RICS or CSA2 to determine whether Dr. G.T. or his hospital ever had a DEA registration associated with them and the search turned up no results. Tr. 715-17, 722.

DI 3 obtained a translation of the clobazam prescription. Tr. 713-16; Gov't Ex. 46.

Regarding the clobazam, 019 invoice, DI 3 found that Dr. Shi demonstrated a lack of candor because she initially provided documents indicating the clobazam had been exported, but then later provided information that it was actually transferred domestically to a doctor's office in Massachusetts and Dr. Shi continued to provide conflicting information. Tr. 730-31. This lack of candor made it difficult for DI 3 to understand what had actually been exported. Tr. 731, 788-89.

OakmontScript did not provide return information or a DEA Form 236 for the exports discussed at the hearing including, invoice OKS-00243 (Diazepam), invoice OKS-00301 (Briviact), invoice OKS-00315/OKS-00315-1 (Belviq), invoice OKS-00315/OKS-00315-2 (Lyrica), invoice OKS-00108 (Belviq XR), invoice OKS-00715 (Lyrica), invoice OKS-00753 (Briviact), invoice OKS-00902 (Belviq), and invoice DIW-0019/NEEC-0019 (clobazam). Tr. 732-35.

Overall, DI 3's investigation of OakmontScript identified record-keeping issues including, not having an initial inventory,

exporting before receiving its exporter registration,

and commingling records.

During her investigation in 2019, DI 3 requested that Dr. Shi provide specific dates of export, which is the actual date the controlled substance left the registrant's registered location and the date that the controlled substance was released by a customs official, which must be recorded within thirty days after the registrant learns of the export or within ten days if the Administrator asks for it earlier. Tr. 759-60, 807. The manner in which OakmontScript was conducting business violated the CSA and DEA regulations, which made it a potential threat to public safety. Tr. 762, 786. Although Dr. Shi and OakmontScript provided information upon request, the information was consistently conflicting and not necessarily helpful to DI 3. Tr. 765. Even if part of the exportation process occurred after OakmontScript obtained its exporter registration on December 5, 2017, this would not have legitimized the export because OakmontScript's intent to export the controlled substances was there once it transferred them to the common carrier. Tr. 1442-44.

Tr. 735-41; Gov't Exs. 9, 13.

DI 3 learned that OakmontScript had exported thirteen controlled substances prior to being granted its export license on December 5, 2017, which was counted based on each drug and strength. Tr. 864. DI 3 offered an example for the Briviact shipment, which was 10 milligrams and 100 milligrams, which would count as two separate controlled substances. Tr. 864-68.

There were issues with recordkeeping as OakmontScript had commingled records. Tr. 739. For instance, OakmontScript was keeping inventories for both its distributor registration and its exporter registration on the same document and it was difficult to discern under which registration each transaction had occurred. Tr. 743-48, 782; Gov't Ex. 12. DEA registrants are also required to take a physical hand count of all controlled substances that they have on hand under that DEA registration and document the results, which OakmontScript failed to do prior to the March 29, 2019 inspection date. Tr. 749, 778; Gov't Ex. 12.

DI 3 effectively explained her interactions with OakmontScript employees, including Dr. Shi and Dr. L.W. As a public servant, DI 2 has no personal stake in the outcome of the instant investigation or in the revocation of the Respondent's registration. There was no indication during her testimony that she had any animus against OakmontScript or any of its employees. I therefore find her testimony to be credible and it will be afforded considerable weight.

The Respondent's Case

The Respondent's case-in-chief consisted of the testimony of four witnesses: (1) Yujing Liu, (2) DI 3,

(3) Donghui Yu, Ph.D., and (4) Jufang Shirley Shi. Below is a summary of the testimony of these witnesses.

The Respondent called DI 3 as a witness for its case-in-chief. Tr. 862-63. The testimony elicited from DI 3 by the Respondent is incorporated into the summary of DI 3's testimony discussed above.

I do not make any findings of fact in these summaries. Any facts necessary for a disposition of this case are set forth in the Analysis section of this Recommended Decision.

Yujing Liu

Yujing Liu graduated from Northeastern University in 2015 with a major in project management. Tr. 814-15. Ms. Liu has been working for OakmontScript since February 2018 and coordinates logistics for OakmontScript including monitoring and tracking shipments, and preparing documents to support the exporting process. Tr. 815-16, 844. Ms. Liu also maintains OakmontScript's records on exports in a computer system that she reviews for accuracy, but all OakmontScript employees have access to these records. Tr. 849-50. A commercial invoice is part of the documents that are required to show the sale price of the drug. Tr.

834. A commercial invoice's “Bill to Address” and “Shipping to Address” are not always the same. Tr. 834-35. After creating the commercial invoice, Ms. Liu will save the document as a PDF because the Excel formula

of OakmontScript's working documents does not capture the accurate date. Tr. 854-58. When Ms. Liu provided export records to DI 3, she provided OakmontScript's internal documents from the Dropbox, which are the working templates, rather than the PDF versions. Tr. 831-32.

The Excel formula is a macro that populates the current date that the document is open. Tr. 857-58.

Ms. Liu knows how to fill out a DEA Form 236 and DEA Form 161, which is not difficult to do if the drug code is available or assigned to OakmontScript and the national level import permit is available. Tr. 817, 830, 859-61.

The exporting process includes many events, including tracking when the shipment passes Customs. Tr. 816, 844. It is difficult for Ms. Liu to track when Customs clears a shipment and she cannot record that date. Tr. 844-45. Instead of providing that exact date, OakmontScript records “every step we did,” which includes when Customs clears a controlled substance to leave the United States, but not when the controlled substance is released by the country it is being shipped to. Tr. 845-48. OakmontScript uses the date on the customer's import permit, which is the customer's deadline to receive the export and finish the customer clearance date. Tr. 848. OakmontScript uses the common carrier DHL, but can only track DHL shipments for three months because the DHL system only provides three months of history. Tr. 848-49. Therefore, if the shipment arrives with the client outside this three-month window, OakmontScript is not able to track the exact date the shipment arrives and although a client will tell OakmontScript when it receives a shipment, OakmontScript does not record this information. Tr. 849.

On cross-examination, Ms. Liu agreed with Government counsel that the dates of shipment for invoice OKS-00715, as recorded in the Respondent's documentation admitted as Government Exhibits 26 (showing a shipment date of May 8, 2019) and 31 (showing a shipment date of March 29, 2019) are incorrect, based on the Respondent's documentation admitted as Government Exhibit 27 (showing a shipment date of November 21, 2018). Tr. 856-58.

Throughout her testimony, Ms. Liu was generally consistent and credible. As an employee of OakmontScript, she has a personal stake in the outcome of the instant investigation as well as the revocation of the Respondent's registrations. Her testimony generally involved her job duties with OakmontScript. At one point, she also agreed with Government counsel that the dates of shipment for invoice OKS-00715 were incorrect, based on different documents providing conflicting dates. Overall, I found Ms. Liu's testimony credible.

Donghui Yu, Ph.D.

Donghui Yu has a Ph.D. in Pharmacology and her post-doctoral training was at Dana-Farber Cancer Institute and Harvard Medical School. Tr. 918. Her research focus was in oncology research and cancer drug development. Tr. 918. She was a teaching assistant at the School of Medicine in Beijing University, a Research Scientist at the Cubist Pharmaceutical, and an Investigator at Infectious Diseases at Novartis in Cambridge, Massachusetts. Tr. 918. During 2011 and 2015, she volunteered at Boston Children's Hospital by hosting weekly craft activities and saw children who had diseases that were still not cured.

Tr. 919. She worked in a health-related facility in Needham, Massachusetts, helping her husband, from 2012 through 2017. Tr. 1015-16.

Dr. Yu was connected to Patient J.L.'s parents when he had surgery at Boston Children's Hospital. Tr. 920.

Dr. Yu started working at OakmontScript in June 2017 and she enjoys working for OakmontScript because it gives her the opportunity to serve people in need in the medical and science field. Tr. 919, 930, 1015. She is the Executive Director and helps Dr. Shi train new employees by using OakmontScript's Standard Operating Procedure (“SOP”), and ensures that the Drug Supply Chain Security Act is implemented in the SOP and that OakmontScript is complying with the FDA and following the rules of other countries.

Tr. 921, 925, 932. She also ensures that the SOP is timely updated, the employees are trained properly, and all the procedures are followed in the SOP. Tr. 921, 923, 930. Client validation is a very important part of compliance and OakmontScript considers customer verification a top priority as the drug abuse epidemic was caused by controlled substances being distributed for a non-legitimate use. Tr. 922. OakmontScript invested in security including having a security system, a safe box, a door lock, an alarm, and temperature control in the warehouse where pharmaceutical products are being stored. Tr. 925-26.

This includes working with a Chinese client and needing to comply with the Chinese National Medical Product Administration. Tr. 933.

In order to export controlled substances legally in the United States, the person conducting the export of the controlled substance must have a DEA registration. Tr. 1029-30. Dr. Yu agreed with Government counsel's statement that applying for a DEA registration is not the same thing as having a DEA registration. Tr. 1030. Furthermore, a registrant can only export controlled substances for which it has authorization to do so. Tr. 1030-34.

OakmontScript obtained its DEA export registration on December 5, 2017. Tr. 1030. Dr. Yu stated that before DI 2 performed her on-site inspection,

OakmontScript was not aware that to do an export, it needed to transfer the controlled substances from its distributor registration to its exporter registration. Tr. 1011. As a result, after DI 2's inspection, OakmontScript updated its export process SOP to include the “license transfer document.” Tr. 1011. When a new customer comes to OakmontScript, OakmontScript checks the customer's business card, makes sure it belongs to the company it claims, ensures that person is the company's legal representative, obtains the company's business registration, and checks the company's website. Tr. 923. If there is an export of controlled substances to a Chinese client, OakmontScript asks the client to provide its business authorization for controlled substance usage, development, or manufacture. Tr. 923. OakmontScript also requires clients to fill out a form that “covers all the business, and the history, and their financial situation, so on, so on.” Tr. 923. In cases where clients need a clinical trial registration, OakmontScript will ask them to provide their clinical registration in order to go through its clinical trial protocol and once OakmontScript makes sure it is for a legitimate use, OakmontScript enters this information in a specific Dropbox database. Tr. 924.

DI 2 performed her on-site inspection on July 26, 2018. Tr. 126-27.

OakmontScript's company goal is to serve the clients and the public and to make sure every step of its SOP is executed properly. Tr. 926-27. Otherwise, it can impact public safety and OakmontScript always discusses and modifies the SOP when it finds a problem that is not perfectly described in the SOP. Tr. 927.

Dr. Yu is familiar with the CSA and DEA regulations and it would be wrong for a DEA registrant to fail to comply with these. Tr. 1023-25. However, what

is wrong or correct is defined by the DEA and not everything can be defined as black and white. Tr. 1024. For instance, some substances that are controlled substances in the United States are not controlled substances in China including Lyrica, Belviq, Briviact, and clobazam, while substances like caffeine, are not controlled in the United States, but are considered controlled substances in China. Tr. 936.

It is difficult for OakmontScript to obtain the LONO *

from other countries, particularly China, and instead the clients present the permits from the local province. Tr. 937. Dr. Yu noted that one example occurred with Belviq, OKS Invoice 00902. Tr. 1048-49. Because Belviq was not a controlled substance in China, OakmontScript was unable to obtain a LONO letter for the Belviq. Tr. 1049. In addition, OakmontScript did not complete a DEA Form 236 for this shipment of Belviq. Tr. 1049. Further, on the date that OakmontScript shipped clobazam, invoice number NEEC-019, it did not have a drug code for clobazam and did not submit a DEA-236. Tr. 1049-51. Finally, on the date that OakmontScript shipped Briviact, invoice number 753, it did not have a drug code for Briviact and did not file a DEA-236. Tr. 1051-53.

Although LONO was not defined in the RD, it is believed to reference a Letter of No Objection.

Dr. Yu's understanding of a drug code is that it is used for a controlled substance export only and is for controlled substance identification purposes as different dosage forms or formulations of drug substances could be assigned different drug codes. Tr. 970-71. This does not apply to Schedule V controlled substances, where only one drug code is assigned for different doses and populations. Tr. 971. The DEA field agents told OakmontScript that there were several ways to obtain new drug codes, including filling out an online application, emailing the local DI agent, and adding new drug codes when it renews its license. Tr. 972. OakmontScript is not a manufacturer and does not deal with controlled substance manufacturers in the United States. Tr. 982.

Dr. Yu discussed the macro issue that Ms. Liu had previously mentioned in her testimony, and noted that once OakmontScript realized this caused a potential problem, Dr. Yu corrected the template. Tr. 984, 1053-60. Dr. Yu would also create separate PDFs that list the correct date, and save them to the same folder. Tr. 1055-57. OakmontScript's SOP does not contain the “concept of date of export” as OakmontScript feels it “is unable to define” it. Tr. 986. Instead, OakmontScript “just document[s] every step we handled” because an “export is really a process.” Tr. 986. Therefore OakmontScript “had nothing to present” when DI 3 asked about a “specific export time.” Tr. 987. Although DI 3 used the shipping labels, OakmontScript did not believe the shipping label was proper to use as the export date. Tr. 987. Dr. Yu was “frightened” when DI 3 asked about the date of export at the February 19, 2019, inspection because she did not know the exact document to show her. Tr. 991-92. However, Dr. Yu later went on to confirm that the date of shipment is the date the controlled substance departed from the registered location. Tr. 1046.

There is a date of EEI

and all shipments need to claim EEI for the customs declaration for export. Tr. 988. The shipping label is created and OakmontScript prints out the label, but the package is not necessarily ready to be shipped. Tr. 988. OakmontScript then needs to send the shipping label to its clients to let them start the import process. Tr. 988. The most important part is “custom clearance ticket obtaining” and that process depends on how the country handles that and different city customs handle the speed differently, which could be a couple weeks to several months. Tr. 988-89, 990.

Dr. Yu did not provide the full term for this acronym, however, DI 3 defined this during her testimony as “Electronic Export Information.” Tr. 480.

There is a date of custom clearance, which is a cutoff date in which OakmontScript has an obligation to help the customer finish before the due date, or the whole purchase becomes invalid. Tr. 989. If the DEA Form 236 is available, OakmontScript records that transaction date. Tr. 989, 1039-41. At the end of the transaction, OakmontScript receives verbal confirmation from the client that it received the product. Tr. 989. Ms. Liu generates the shipping labels and takes care of the customs clearance and EEI. Tr. 989-90.

It would be ideal to use the DHL database to record the export date, but this was not part of OakmontScript's SOP. Tr. 990. Doing this is not always practical because the DHL online system only displays the last ninety days and if the package is dropped off several weeks after the shipping label was created, then it may fall out of this ninety-day window and OakmontScript cannot track this package. Tr. 991. Other issues occur when a client picks its own private carrier to pick up the package and OakmontScript can only get verbal confirmation from the client that it received the package. Tr. 991. OakmontScript records the date the client verbally tells it the package was received. Tr. 989, 991.

Physicians can order medications from distributors without a prescription, which includes foreign physicians who, in the name of the patient, order medication from an exporter or distributor. Tr. 993. Distributors or exporters need to verify the doctor's medical license. Tr. 993. As a DEA-registered distributor and exporter, OakmontScript is able to fill medical orders to serve hospitals, physicians, and other entities domestically and foreign research organizations. Tr. 993-94. Specifically, as it relates to the clobazam prescription, OakmontScript's client included the Chinese medical doctor, the hospital, and also pharmacists who “have the medical history based on Boston Children's Hospital.” Tr. 994. Without a legal prescription from a local hospital or physician, the controlled substance would not be permitted to enter the receiving country. Tr. 994. The foreign prescription has two functions: (1) Showing the medical necessity of the patient and (2) providing evidence to show when the controlled substance is imported at the Chinese border, acting as an import permit. Tr. 994-95.

For Patient J.L., the doctor's instruction is required to show that the patient was not hospitalized and instead had a chronic condition. Tr. 995. Per the doctor's instruction, OakmontScript contacted the patient and learned from his family that he was no longer in the hospital. Tr. 995-96, 1071. It is OakmontScript's practice to send controlled substances directly to patients if it receives a doctor's order to do so. Tr. 1066-67, 1070.

During the February 19, 2019, inspection, DI 3 told OakmontScript that it needed to fill out a DEA Form 236 for controlled substances Schedules III, IV, and V prior to shipping, and after receiving the approved DEA Form 236, it needed to wait for fourteen days to start shipping, which was new information to Dr. Yu. Tr. 996, 1025-26, 1028. Dr. Yu was not sure if this is what the regulation stated and was unable to confirm this is what the regulation actually required. Tr. 996-97, 1025-28.

See

21 CFR 1312.27(a).

The regulation states that DEA Form 236 must be filed with DEA “not less than 15 calendar days

prior to the anticipated date of release by a customs officer at the port of export.” 21 CFR 1312.27(a).

As a scientist, Dr. Yu believes it is important to keep complete and accurate records, and even though mistakes are possible, failing to keep accurate records can lead to further mistakes. Tr. 1017-18. Dr. Yu feels lucky to work at OakmontScript and finds it to be a good opportunity and the work OakmontScript does is meaningful to the whole pharmaceutical industry. Tr. 997-98. She and her colleagues work together every day to learn and grow, but sometimes they make mistakes and Dr. Shi takes full responsibility and never blames them. Tr. 998.

Overall, Dr. Yu provided consistent testimony. She testified regarding her employment and noted that client verification is a top priority for OakmontScript. As the Executive Director of OakmontScript, she has a direct stake in the outcome of this case and whether OakmontScript loses either of its registrations. It was evident throughout her testimony that Dr. Yu had a strong allegiance to Dr. Shi and that she had been thoroughly coached on her direct examination. Dr. Yu had nothing but positive things to say about Dr. Shi and even refused to provide a specific answer to a question because the answer was not “black and white.” Tr. 1024. At one point Dr. Yu testified that she was “frightened” when DI 3 asked about the date of export at the February 19, 2019, inspection because she did not know the exact document to show her. Tr. 991-92. However, Dr. Yu later went on to confirm on cross examination that the date of shipment is the date the controlled substance departed from the registered location. Tr. 1046. Such inconsistencies in her testimony, coupled with Dr. Yu's evident allegiance to Dr. Shi, does not allow me to fully credit Dr. Yu's testimony.

Jufang “Shirley” Shi

Background

Dr. Shi came to the United States to study as a graduate student in 1988. Tr. 1075. She received her Ph.D. in Pharmaceutical Sciences from Duquesne University in Pittsburgh, Pennsylvania, and a Pharm.D., and then worked in various industries as a scientist. Tr. 1076, 1280. She also taught pharmacodynamics and pharmacokinetics to pharmacy students at Northeastern University during 2005 and 2007. Tr. 1277-78. After fifteen years, she dedicated herself to becoming a clinical pharmacist and has been registered as a pharmacist in Massachusetts since 2008. Tr. 1076, 1276-77. She has contributed to technology that led to eight patents. Tr. 1076-77. She became a fellow in the American Society of Consultant Pharmacists (“FASCP”) after passing a pharmacist exam and the Certificate of Geriatric Pharmacotherapy (“CGP”) for which she needed to know how to apply a safe protocol to her client. Tr. 1278-79. She also worked in retail pharmacies and an institutional pharmacy, as well as hospitals. Tr. 1077-78. This included working for PharmMerica and Lahey Hospital. Tr. 1280-81. Based on these experiences, she “decided to take some risk and to start a company” to aid in the support of the “global research need.” Tr. 1078.

Dr. Shi started OakmontScript in May 2016 as the owner, chief pharmacist, and president. Tr. 1078-79, 1283-85. She is familiar with the CSA and DEA regulations including 21 CFR 1306.04, 1306.05(a). Tr. 1079, 1280-82. Dr. Shi needed to obtain a license from the state prior to receiving OakmontScript's “federal license.” Tr. 1080-81; Resp't Ex. 4. After receiving OakmontScript's DEA registration for Schedule III, IV, and V controlled substances, Dr. Shi requested to add Schedule II controlled substances and had updated its security system by adding a monitor and camera, updated the safe, and worked on updating the alarm system. Tr. 1082-84. Dr. Shi's thought process was to first obtain access to Schedule III, IV, and V controlled substances and later request the Schedule II drugs. Tr. 1084-91; Resp't Ex. 5, 6, 7.

Dr. Shi received the first state license as a distributor for Schedules III, IV, and V within a couple of months. Tr. 1086. After receiving the state license, it took less than a month for Dr. Shi to obtain the Federal distributor COR, on October 7, 2016. Tr. 1086-87. Dr. Shi then applied for the Schedule II DEA registration, for which the approval process took about eight months. Tr. 1088-89. During this time, Dr. Shi made sure OakmontScript was in compliance and she spent more time training her employees. Tr. 1088-89.

Exporter Registration

OakmontScript applied for its first exporter COR on April 26, 2017 and applied for its second exporter COR on May 10, 2017. Tr. 1091, 1286, 1289-91, 1308; Gov't Ex. 4 at 6-8. At the time OakmontScript submitted the second exporter application on May 2017, the first application filed in April 2017 was still pending. Tr. 1291. At some point in May 2017, DI 1 informed Dr. Shi that the applications were duplicates and Mr. L.U. and DI 1 discussed OakmontScript getting an importer COR. Tr. 1291-92. Dr. Shi recalls discussions regarding converting an exporter application to an importer application, but did not recall if it was ever done. Tr. 1293-95.

Regardless, Dr. Shi recalled withdrawing the May 2017 application in October 2017 and OakmontScript never obtained an importer registration. Tr. 1295-97. Dr. Shi felt that the April application was “neglected” by the DEA and the May 10 application was “mistreated.” Tr. 1093, 1493.

Although Dr. Shi has a “great appreciation for” DI 1, she “feel very bad” because her application had “been mistreated.” Tr. 1094. In an email to DI 1 dated April 28, 2017, Dr. Shi indicated that OakmontScript had not exported any controlled substances as of that date. Tr. 1287-88; Gov't Ex. 4 at 1.

After several unsuccessful attempts by Government counsel to elicit a response regarding whether Dr. Shi was aware whether OakmontScript had converted one of its exporter applications to an importer application, the tribunal intervened and asked Dr. Shi to directly answer the Government's question and—even then—the tribunal needed to ask the question four times. Tr. 1294-95.

This is not the first or only time Dr. Shi blamed the DEA or made disparaging comments about the DEA. Most notably, Dr. Shi made the following comments about the DEA in her closing statement: “Despite all evidence showed to their face, I'm very concerned about DEA's manner of how to treat the public, how to treat a small business, and how to treat the people who have a bundle of knowledge while they obviously lack it.” Tr. at 1497.

An inspection took place on June 22, 2017, with DI 1 and a Senior Investigator from the Massachusetts Department of Health. Tr. 1297-98.

At that time, Dr. Shi stated that she had not distributed or exported controlled substances as of that date. Tr. 1298. DI 1 also told Dr. Shi “everything that's required” including the requirement to maintain initial and biennial inventories, DEA Form 161s, DEA Form 236s, and foreign documents or invoices. Tr. 1298-99. DI 1 also explained that records must be maintained for at least two years, records for the DEA registrations must be maintained separately according to business activity, and theft or loss of controlled substances must be reported immediately. Tr. 1299. Overall, DI 1 was able to help OakmontScript address issues and problems. Tr. 1353-54.

Based on Dr. Shi's testimony on cross-examination, it appears that Dr. Shi was under the impression that DI 1's June 22, 2017, inspection was based on OakmontScript's request to add Schedule II drugs to its exporter application. Tr. 1308-10. However, Mr. L.U. had not yet made a request to add Schedule II to OakmontScript's exporter application when DI 1 scheduled the inspection. Tr. 1309-10.

As of July 26, 2017, Dr. Shi was aware that OakmontScript's exporter application was still being reviewed by the DEA, but that it was “coming any

time.” Tr. 1300-01.

As of July 26, 2017, Dr. Shi did not recall receiving a DEA communication about OakmontScript's April 2017 exporter application being approved. Tr. 1305. While waiting for OakmontScript's exporter registration, Dr. Shi assured her staff the exporter registration “should be coming any time, should be coming any minute. But it didn't come. And I thought it's coming any minute,” because it was her experience with the DEA that it only took about a month for the DEA to process an application for registration. Tr. 1095. She continued to tell her staff that the registration “should be coming any time” and that they should “start preparing” because “[i]t should come in any minute.” Tr. 1096.

Again, Government counsel made several attempts to get Dr. Shi to answer a specific question, in this case whether as of June 26, 2017, Dr. Shi was aware that OakmontScript's exporter application was still being reviewed. Tr. 1300-05. And again, the tribunal needed to interject and direct Dr. Shi to “listen to this question very carefully and give a direct response.” Tr. 1304.

Dr. Shi put too much trust in Mr. L.U., her chief pharmacist, who was her previous boss, but she also shares in the responsibility for not following up regarding the exporter application and leading her “people to believe the license coming any day.” Tr. 1096-97, 1305. Dr. Shi “made [the] assumption it should come in any minute” and “misled [her] people” by saying the exporter registration was on the way and thus OakmontScript started taking orders for Schedules III, IV, and V controlled substances. Tr. 1097-98. Dr. Shi began instructing her employees in June 2017 to start working on preparing controlled substances to be exported. Tr. 1311. OakmontScript ultimately received its exporter registration on December 5, 2017, in the mail.

Tr. 1099; Gov't Ex. 4 at 6-8.

According to the Government's Certification of Registration History, the Respondent was assigned an exporter Certificate of Registration number on December 5, 2017. Gov't Ex. 1B.

OakmontScript's Export Process

Based on DI 3's request for an exact export date, Dr. Shi created a document to track various parts of the export process. Tr. 1126-27. First, OakmontScript verifies the clients and records their import permit and sometimes their research proposal. Tr. 1126. The next step is to go through the contract to make sure everybody agrees on fees and that all parties are satisfied with the arrangement. Tr. 1127. The third step is to go through the “contract process” which is needed to finish the exporting process so the customer does not have to go back and reapply. Tr. 1127. OakmontScript also checks with Customs and Border Protection to see what type of license it needs to file. Tr. 1127-28. The U.S. Custom and Border Protection (“CBP”) also has updates that OakmontScript cannot “log into the process” if the value of the reported drugs are less than $2500, and this number is currently even lower. Tr. 1128. Dr. Shi updates the SOP based on the rules and regulations from the CBP, FDA, and the local government regarding the exporting process. Tr. 1128-29.

OakmontScript then prepares the shipping label and the customer ticket, which usually takes about two to four weeks. Tr. 1129-30. Dr. Shi instructs her staff to record what things happen, as opposed to providing the “right date” and she does not “want her people to have any concept about what is the right date” as this is not how this industry operates. Tr. 1130, 1366-67, 1495, 1498-99. Dr. Shi noted that “because we lack of the drug code . . . our export process foundation didn't lay out perfectly for my people” as it relates to the DEA Form 236. Tr. 1130-31. Dr. Shi does not “want to blame the government[ ] who didn't give” her a drug code. Tr. 1132. OakmontScript was not able to fill out DEA Form 236s for the diazepam 243 invoice, the Briviact 301 invoice, the Belviq 315 or 315-1 invoice, the Lyrica 315 or 315-2 invoice, or the Belviq 108 invoice. Tr. 1355.

OakmontScript did not export controlled substances prior to receiving its exporter registration on December 5, 2017, because the exporting process is not based around a specific date, but rather a customer's need. Tr. 1133. Dr. Shi started telling her employees that by May 2017, they “could start the business” because “the license [was] on the way.” Tr. 1134. The “right” date does not apply to OakmontScript because sometimes projects get cancelled and then reinstated. Tr. 1135. It takes about six to twelve months for OakmontScript to “work[ ] out each detail” to complete an export. Tr. 1136. The customer gives OakmontScript a due date and states when it wants OakmontScript to finish it. Tr. 1136-37. The exact date of export is not when the shipping label is created and the export is not defined by the exact date of export. Tr. 1138, 1495.

Dr. Shi discussed using a “buy and bill” model and how OakmontScript has collaborated with other companies including Biologics, Accredo, McKesson, and Specialty Biologics. Tr. 1209. If the buy and bill model has problems, then OakmontScript will establish another channel by using its “doctors to provide another channel to support” patients. Tr. 1209-10.

OakmontScript must submit the DEA Form 236 about two weeks before the planned export, so OakmontScript needs to have the anticipated date of departure from the port of export. Tr. 1371-72. For its exports, OakmontScript has the information required by section 3b of the DEA Form 236, but the information is “recorded differently.” Tr. 1375;

See

Gov't Ex. 47. The foreign client provides a custom clearance ticket that is issued by the country, which provides a window of time in which the export must occur and can be as far as a year into the future. Tr. 1376-77. OakmontScript records the required DEA Form 236 section 3a information in the app because if OakmontScript does not record, then things “cannot move forward” and the logistical team uses “that app to record everything.” Tr. 1379. After “things done,” OakmontScript then downloads the information to the Dropbox. Tr. 1379-80. If the foreign clients do not call OakmontScript or report any problems, OakmontScript reports the due date for section 3b. Tr. 1380. Otherwise, OakmontScript's record will show any issues. Tr. 1380. OakmontScript records the anticipated arrival date in the app and will save a copy to the Dropbox “once things finish.” Tr. 1381. OakmontScript only provided “a portion” of the information to DI 3 based on her subpoena because “it's Chinese so she cannot read anyway, then. And so I stopped our oversharing with her, right.” Tr. 1381. DI 3, from the app, “should see that . . . all [OakmontScript's] process is being recorded in the app.” Tr. 1381. Dr. Shi did not tell DI 3 that OakmontScript was using the app, but “screenshotted a portion of the . . . app.” Tr. 1381-82.

Dr. Shi reviewed DEA regulations and conducted her own research to learn about drug codes because OakmontScript had “no guidelines . . . no laws, no rules” and was “left without being able to support our community of the research.” Tr. 1149-50. She reviewed the DEA's website and 21 CFR 1308.03. Tr. 1156-61. The DEA has a lot of resources and Dr. Shi wishes she was “led to a better source” regarding drug codes. Tr. 1161. Dr. Shi continues to study the law, rules, and regulations in order to understand and “better to learn how to help the people in this situation.” Tr. 1194.

OakmontScript's Interactions With DI 3

DI 3 initially told Dr. Shi that she wanted to help OakmontScript, but through this hearing, Dr. Shi learned that DI 3's duty was not to help her. Tr.

1147. Dr. Shi disagrees with the Government's accusation that she lacked candor. Tr. 1167-71. During the inspection in “the beginning,” OakmontScript showed DI 3 two lists and when DI 3 asked if OakmontScript was handling any other drugs, Dr. Shi said “thank you for asking,” “praised” DI 3 for asking this question, and stated that she was having trouble with another list of drugs for which OakmontScript did not have drug codes. Tr. 1172.

Dr. Shi provided two lists to DI 3 for clobazam with one list listing the clobazam and the other not listing the clobazam because DI 3 had repeatedly told her “I come in to help your business” and Dr. Shi did not know what DI 3's “true agenda” was. Tr. 1172-73. Dr. Shi did not “keep complete and accurate records” based on DI 3's standards, “so that should not be basis for lack of candor.” Tr. 1173. Dr. Shi “shared more than” she should have and believed that DI 3 would take all of the information they had discussed and “dialogue with” her. Tr. 1174-76, 1351. Dr. Shi never provided updated records to DI 3 after Dr. Shi found errors in the spreadsheets Dr. Shi had previously provided. Tr. 1321-23.

Again, Government counsel made several attempts to get Dr. Shi to answer a specific question, in this instance, whether Dr. Shi provided updated spreadsheets to DI 3. Tr. 1321-22. And again, the tribunal interjected and instructed that Dr. Shi answer the question posed by Government counsel, noting that the Government “is asking you very direct questions and we need direct answers for clarity of the record on this. Please answer . . . and please respond directly to the question that's asked.” Tr. 1322.

OakmontScript's Use of the WeChat App

OakmontScript uses an app

to communicate with foreign customers and uses this app to explain what is needed for an export. Tr. 1196-98. OakmontScript is not able to export to a hospital in bulk, such as tens of thousands of bottles. Tr. 1197. OakmontScript can only export if it has the name of a patient. Tr. 1197.

This app is called “WeChat.” Tr. 1382.

Dr. L.W. is part of the app and does not write prescriptions, but is there as a physician consultant and “check” for Dr. Shi as he “know[s] the medical record,” that a medication is being used for a legitimate purpose, and ensures that OakmontScript is delivering the treatment to the right patient. Tr. 1197-99.

OakmontScript will exchange documents with foreign clients through this app and will respond to clients with urgent issues. Tr. 1382-83.

Dr. Shi reviewed an example of her use of the WeChat app. Tr. 1383-90; Gov't Ex. 26 at 23. Dr. Shi translated this conversation, which was predominantly in Chinese. Tr. 1384-85. Part of this included a woman explaining that there was a child in her family that had seizures and she wanted to help that child. Tr. 1384. Dr. Shi explained that this person needed to send her the patient record, doctor's information, doctor's prescription, and the doctor's and hospital's registration so Dr. Shi could establish an account with her. Tr. 1385. Dr. Shi then obtained more information from a doctor in China. Tr. 1386. This document was then “dumped” to the Dropbox once this Order was done. Tr. 1385-86.

OakmontScript's Record-Keeping System

Dr. Shi noted that Government Exhibit 28, page 54, was misplaced and should actually be page 51 and with the other documents for invoice OKS-00715. Tr. 1391-92.

OakmontScript keeps accurate and complete records for controlled substances in a database system so all records are readily retrievable as required by the DEA based on OakmontScript's SOP. Tr. 1248-49, 1250. These folders contain subfolders and capture any changes that are made to an order. Tr. 1249-50. Each file has a name with a label and a number and these numbers are then assigned to a specific team to complete that order. Tr. 1250-52. Dr. Shi also created a link that a party can access if she gives that person authority to open a file. Tr. 1260. On the date of DI 3's March 29, 2019, inspection, Dr. Shi's printer had ink problems, so she wanted to be able to electronically download files and give access to DI 3, but DI 3 stated that she would only accept paper copies. Tr. 1260-61.

OakmontScript maintains separate inventory records for Schedule II, III, IV, and V controlled substances. Tr. 1268. There are separate folders for Schedule II and then Schedules III through V, for the initial inventory, for the biennial inventory, for exports, and for the distributions. Tr. 1268-69.

Corrective Measures

At the June 22, 2017 meeting, DI 1 told Dr. Shi there was an issue with OakmontScript's alarm system and OakmontScript then took steps to fix the alarm issue. Tr. 1313-14. DI 1 came back at some point to check the alarm. Tr. 1315-16. During DI 1's return visit to check the alarm, she also informed Dr. Shi that OakmontScript would need to get a different safe. Tr. 1316. In mid-September 2017, OakmontScript notified DI 1 that it was going to install a new safe. Tr. 1316-17. The new safe was installed in late September or early October 2017. Tr. 1317. At some point, DI 1 came back to OakmontScript to check the new safe and DI 1 stated that it “was okay.” Tr. 1317-18.

In approximately November 2017, Dr. Shi recalls having a conversation with DI 1 regarding requesting excessive drug codes. Tr. 1324-25. DI 1 walked Dr. Shi through how to delete the excess codes, and Dr. Shi deleted the codes. Tr. 1324-28.

Dr. Shi did not review 21 CFR 1301.26 when shipping the diazepam invoice number 243 and clobazam invoice number 0019 overseas because it is “a U.S. law” and “of course, I cannot base[ ] on that” and if the DEA is able to provide “such a law” that shows this regulation is applied globally, she “will be happy.” Tr. 1365. Before a controlled substance leaves the United States, OakmontScript complies with United States law and then “after border, [OakmontScript] comply[ ] whatever the law required upon” OakmontScript by the recipient country. Tr. 1366.

Alteration of Distributor Certificate of Registration

Dr. Shi met the intern through the intern's grandmother who was also Dr. Shi's teacher. Tr. 1395. Around Christmastime of 2016, the intern started working for OakmontScript as Dr. Shi's intern. Tr. 1395. The intern altered OakmontScript's distributor Certificate of Registration by using Adobe Shop on her personal laptop. Tr. 1405-06. Once Dr. Shi learned that the intern had changed OakmontScript's registration to state it was a pharmacy, Dr. Shi immediately analyzed the situation, realized the intern made a mistake and was still only learning so it was “not all her fault.” Tr. 1397.

See

Gov't Ex. 14. Therefore, Dr. Shi did not fire the intern and instead moved her to a different position with OakmontScript making shipping labels, which is a “more straightforward job.” Tr. 1397.

When Dr. Shi did business with other partners, including PBA and its staff, they would say they wanted OakmontScript to submit a pharmacy license. Tr. 1409. Dr. Shi believed that the intern made a change to the registration based on lack of experience. Tr. 1410-11.

Dr. Shi hoped to create an account with PBA so OakmontScript could purchase drugs from PBA. Tr. 1411-12. Dr. Shi believes that PBA

distributes to other distributors. Tr. 1412-13. Essentially, PBA told the intern that it needed some information about a pharmacy license associated with OakmontScript and the intern then used her laptop to edit the distributor registration to indicate it was a pharmacy registration, without specific instruction from an OakmontScript employee to do so. Tr. 1414-15.

Dr. Shi mentioned that OakmontScript has an “all-in-one license” from the state. Tr. 1396-97; 1409; ALJ Ex. 26 at 3-4. It is unclear what Dr. Shi believes the effect of this “all-in-one-license” is on its DEA registration. Regardless, it is clear that the intern altered OakmontScript's DEA distributor registration to state “Pharmacy” after B.W. indicated that PBA would only conduct business with pharmacies. Gov't Exs. 14, 55.

The intern left OakmontScript in February 2018 for multiple reasons, including that her visa expired. Tr. 1398. Dr. Shi explained to DI 3 that she “could have fired” the intern, but thought this would be “a little too much” because it was only the intern's “first week she ever entered the job.” Tr. 1399-1400.

Dr. Shi testified that it is a serious issue to falsify a DEA registration based on the consequences, but this issue did not get “somebody killed” or cause “some pandemic” and the intern was allowed to bring her laptop and continue to access OakmontScript files after this issue, but was limited to the “non-vendor” part. Tr. 1417-18. Furthermore, in her closing statement, Dr. Shi stated “this is not a controlled-substance-related issue,” yet the DEA “continued to maintain their limited understanding about controlled substances.” Tr. 1496. Dr. Shi went on in her closing to state that OakmontScript “did more than the minimum, we did 500 times more than what's required to address this incident.” Tr. 1496.

Invoice OKS-00243 (Diazepam)

This invoice indicates that OakmontScript's address is 15 New England Executive Park, which is the same as the 1500 District Avenue address, because after 2017, the District of Burlington was acquired and updated by a development company, National Development Corporation. Tr. 1393-94; Gov't Ex. 26 at 20.

Two of the documents provided by OakmontScript indicate that diazepam was shipped on May 18, 2017. Tr. 1311-12; Gov't Exs. 17 at 3, 18 at 3. Another document indicates that the diazepam was shipped on June 10, 2017. Tr. 1313;

Gov't Ex. 12 at 14. Dr. Shi had indicated that OakmontScript had not exported controlled substances at the June 22, 2017, meeting with DI 1, but both of these dates are prior to the meeting date with DI 1. Tr. 1313. Dr. Shi was not able to provide the date the diazepam was shipped because the USPS updated its online system sometime in 2017 and “erased all the information” during the upgrade. Tr. 1368-69.

During Dr. Shi's response on cross-examination regarding the shipping date of this diazepam, the tribunal needed to interject and instruct Dr. Shi to “[j]ust respond to the question please.” Tr. 1312.

Invoice OKS-00650 (Lunesta)

As it pertained to the Lunesta invoice, Dr. Shi testified that this transaction was an export and not a domestic distribution as claimed by the Government, because the address was the contact address for a company representative, Z.Y., who was taking this prescription to China and the company in China was the end-user. Tr. 1180-82, 1359. Dr. Shi had used “common sense” when sending this prescription because the representative of the company signed a contract with OakmontScript, the address was named on the PO contact,

it gave OakmontScript its import permit, and it signed the end-user certification. Tr. 1182. An “end-user is the person who signed the end-user statement to give [OakmontScript] a certificate.” Tr. 1183.

It is unclear what Dr. Shi meant by “PO contact.”

Dr. Shi noted this was an “informal channel” and “since this incident and since DI 3 have point this out, [OakmontScript] no longer accept[s] informal channel of delivery for any order.” Tr. 1182, 1183.

Subpoena Served on May 8, 2019

The subpoena was admitted as Government Exhibit 24.

Dr. Shi acknowledged that dates entered on OakmontScript's shipping labels are not actual shipping dates. Tr. 1342-43. Dr. Shi noted that “[w]e have, we have of course, we have the date, we have all the records.” Tr. 1344. After receiving the May 8, 2019 subpoena, Dr. Shi did not provide the specific information of the shipping date because it was “not required. [DI 3] didn't, she didn't ask for it” and DI 3 was “so confused about what is the shipping date, she don't know what to ask.” Tr. 1343-46. Furthermore, there is “no such things as the export date . . . [the regulations] do not require the export date to be recorded. That's, that's actually pity . . . wrong information to ask.” Tr. 1347. However, Dr. Shi provided export dates when DI 3 asked for them. Tr. 1347-48; Gov't Ex. 20 at 9.

Invoice OKS-00301 (Briviact)

Briviact was shipped on August 2, 2017. Tr. 1314; Gov't Exs. 12 at 7, 27 at 2.

Invoice OKS-00315-1 (Belviq)

OakmontScript shipped Belviq on November 1, 2017, based on the shipping label. Tr. 1318-19; Gov't Exs. 12 at 3, 27 at 2. However, the shipping label is an estimated time. Tr. 1319.

Invoice OKS-00315-2 (Lyrica)

Documentation provided by OakmontScript indicates that Lyrica was shipped on November 20, 2017. Tr. 1328-35;

Gov't Ex. 12 at 9-10.

However, other documentation provided by OakmontScript indicated that the Lyrica was shipped a day later, on November 21, 2017. Tr. 1339; Gov't Ex. 27 at 2. Dr. Shi does not know which document is incorrect and claims that regardless, it is “one days apart. This is not like somebody get killed or something.” Tr. 1340. Dr. Shi went on to say “I know it's mistake. It's 20 or 21st.” Tr. 1340. Moments later, Dr. Shi stated “I can say both [dates] are correct, or I mean, both are incorrect . . . I also can say both are right. Because that's just the date.” Tr. 1341. Dr. Shi stated OakmontScript did the best it could when entering these dates into the spreadsheets. Tr. 1341. OakmontScript has the exact date because in “the record, we have every app, the people coming to pick up. And then, all those too.” Tr. 1342. Regarding dates that OakmontScript's products were provided to the common carrier, Dr. Shi stated “[w]e have the record. But I didn't give it to DI 3” and “whatever cannot be exact, I cannot provide to her because that complicated her understanding.” Tr. 1349-50.

Again, Government counsel made several attempts to get Dr. Shi to answer a specific question, in this instance, how Dr. Shi's employees would have filled out documents. Tr. 1331. And again, the tribunal interjected and instructed Dr. Shi to answer the “straightforward question” posed by Government counsel. Tr. 1331. The tribunal needed to interject again during this cross-examination regarding the Lyrica and instructed Dr. Shi that she needed “to answer the question” and to “[l]isten carefully to the question.” Tr. 1334.

Dr. Shi was evasive in testifying that the “ship to date” was indeed the date the Lyrica was shipped. Dr. Shi continued to claim that there were several steps in the export process and this was likely the date the shipping label was created and this Lyrica would have been shipped “approximately around” November 20, 2017. Tr. 1338-39.

Invoice OKS-00108 (Belviq)

Some documentation indicates that the Belviq was shipped on December 1, 2017. Tr. 1351; Gov't Exs. 12 at 3, 27 at 2.

Invoices DIW-0019 and NEEC-0019 (Clobazam)

Patient J.L.'s family came into contact with Dr. Yu, who learned about Patient J.L.'s situation while doing community service at Boston Children's Hospital. Tr. 1195. When the family returned to China, they wanted to continue the therapy and they supplied

OakmontScript with the hospital discharge paper, the prescription from China, and the prescription from the United States. Tr. 1194-96.

As the founder and President of OakmontScript, Dr. Shi has the most at stake in this case involving the potential revocation of OakmontScript's CORs. Throughout her testimony, she was often evasive in answering the questions posed by opposing counsel to the point where Government counsel had to repeat questions multiple times and the tribunal even needed to intervene multiple times to instruct Dr. Shi to answer direct questions posed by the Government.

By her own admission, Dr. Shi purposely withheld documents that OakmontScript had in its possession and were requested in not one, but two administrative subpoenas that were served on OakmontScript. During her testimony, she condoned these actions and even when confronted with documents that provided conflicting export dates, she continued to be evasive and refused to admit there were errors. I therefore cannot make a wholly positive credibility finding with respect to Dr. Shi's testimony.

See supra

at 36 n.52, 37 n.55, 40 n.57, 44 n.63, 45 n.66, 45 n.67.

Analysis

The Government seeks revocation of the Respondent's distributor and exporter CORs based on its contention that the Respondent, through its employees, has committed acts that would render its registration inconsistent with the public interest as that term is defined in 21 U.S.C. 823(b), (d), and (e), 824(a), and/or 958. ALJ Ex. 1 at 1. The Government alleges that the Respondent's CORs should be revoked because it exported controlled substances prior to obtaining its exporter COR, exported controlled substances it was not approved to export, demonstrated a lack of candor to DEA investigators regarding its business activities, falsified a copy of its DEA distributor COR, distributed controlled substances to a non-DEA registered individual, exported controlled substances to fill prescriptions for underage patients, and commingled the records for its two registrations and otherwise failed to keep complete and accurate records.

Although the burden of proof at this administrative hearing is a preponderance-of-the-evidence standard,

see Steadman

SEC,

450 U.S. 91, 100-01 (1981), the Acting Administrator's factual findings will be sustained on review to the extent they are supported by “substantial evidence.”

Hoxie

DEA,

419 F.3d 477, 481 (6th Cir. 2005). [Omitted for brevity.] While “the possibility of drawing two inconsistent conclusions from the evidence” does not limit the Acting Administrator's ability to find facts on either side of the contested issues in the case,

Trawick

DEA,

861 F.2d 72, 77 (4th Cir. 1988), all “important aspect[s] of the problem,” such as a respondent's defense or explanation that runs counter to the Government's evidence, must be considered.

Wedgewood Vill. Pharmacy

DEA,

509 F.3d 541, 549 (D.C. Cir. 2007).

[Omitted for brevity.] It is well-settled that since the Administrative Law Judge has had the opportunity to observe the demeanor and conduct of hearing witnesses, the factual findings set forth in this Recommended Decision are entitled to significant deference,

see Universal Camera Corp.

NLRB,

340 U.S. 474, 496 (1951), and that this Recommended Decision constitutes an important part of the record that must be considered in the Acting Administrator's decision,

see Morall,

412 F.3d at 179. However, any recommendations set forth herein regarding the exercise of discretion are by no means binding on the Acting Administrator and do not limit the exercise of that discretion. 5 U.S.C. 557(b);

River Forest Pharmacy, Inc.

DEA,

501 F.2d 1202, 1206 (7th Cir. 1974);

Attorney General's Manual on the Administrative Procedure Act

8 (1947).

Public Interest Determination: The Standard

The Government seeks revocation of the Respondent's DEA CORs based on its allegations that continuation would be inconsistent with the public interest as that term is defined in 21 U.S.C. 823(b), (d), and (e). The CSA provides that the Agency may suspend or revoke a registrant's COR “upon a finding that the registrant . . . has committed such acts as would render [its] registration under section 823 . . . inconsistent with the public interest.” 21 U.S.C. 824(a)(4). The Government specifically alleged that the Respondent violated the law regarding its distributor registration by: (1) Falsifying its distributor registration, (2) displaying a lack of candor regarding this falsified registration, (3) domestically distributing Lunesta, a controlled substance, to a non-registrant in May 2018, and (4) commingling records. The Government further alleges that the Respondent violated the law regarding its exporter registration by: (1) Exporting controlled substances prior to obtaining its exporter COR, (2) exporting controlled substances it was not approved to export, (3) exporting controlled substances to fill foreign prescriptions for underage patients, and (4) failing to keep complete and accurate records of controlled substances it had exported.

The Government bears the burden of proving that the Respondent's continued registration would be inconsistent with the public interest. 21 CFR 1301.44(e). Where the Government has met its burden by making a

prima facie

case for revocation (or some other sanction), the burden of production then shifts to the registrant to show that, given the totality of the facts and circumstances in the record, revocation (or any other sanction) would not be appropriate.

Southwood Pharm., Inc.,

72 FR 36487, 36498, 36504 (2007) (citing

Gregory D. Owens, D.D.S.,

67 FR 50461, 50464 (2002)).

Any additional facts necessary for a disposition of this case are set forth in the balance of this Recommended Decision.

Distributor Registration

As to its distributor COR, the Government alleges that the Respondent violated the CSA and its implementing regulations by: (1) Altering its distributor registration to state that it was a pharmacy and then representing to another DEA registrant that it was a pharmacy by presenting the altered DEA COR, (2) displaying a lack of candor regarding this falsified registration, (3) domestically distributing Lunesta (eszopiclone, a schedule IV controlled substance) to a non-registrant in May 2018, and (4) commingling its distributor records with records pertaining to its exporter registration. The Government seeks the revocation of the Respondent's distributor COR based on its allegations that the Respondent's continued registration would be inconsistent with the public interest as that term is defined in 21 U.S.C. 823(b) and (e).

The CSA provides that “[a] registration . . . to manufacture, distribute, or dispense a controlled substance or a list I chemical may be suspended or revoked by the Attorney General upon a finding that the registrant . . . has committed such acts as would render [its] registration under section 823 . . . inconsistent with the public interest as determined under such section.” 21 U.S.C. 824(a)(4).

Congress has provided the following factors to be considered in the public interest analysis as it relates to

distributors of controlled substances, as set forth in 21 U.S.C. 823(b) and (e):

Subsection (b) applies to distributors of controlled substances in schedule I or II and subsection (e) applies to distributors of controlled substances in schedule III, IV, or V.

(1) Maintenance of effective control(s)

against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels;

21 U.S.C. 823(b) uses the term “control,” whereas 21 U.S.C. 823(e) uses the term “controls.” The origin of the variance appears typographical, not substantive. The text of subsections (b) and (e) is otherwise identical.

(2) compliance with applicable State and local law;

(3) prior conviction record of [the registrant] under Federal or State laws relating to the manufacture, distribution, or dispensing of such substances;

(4) past experience in the distribution of controlled substances; and

(5) such other factors as may be relevant to and consistent with the public health and safety.

21 U.S.C. 823(b), (e). The factors are considered in the disjunctive, and the Agency may give each factor the weight it deems appropriate in determining whether to revoke a registrant's registration.

Masters Pharm., Inc.,

80 FR 55418, 55472-73 (2015) (citing

Green Acre Farms, Inc.,

72 FR 24607, 24608 (2007);

ALRA Labs., Inc.,

59 FR 50620, 50621 (1994)). Moreover, the Agency is “not required to make findings as to all of the factors.”

Masters Pharm., Inc.,

80 FR at 55473 (quoting

Hoxie,

419 F.3d at 482).

Factor One: Maintenance of Effective Controls Against Diversion of Particular Controlled Substances Into Other Than Legitimate Medical, Scientific, and Industrial Channels

Evidence properly considered under Factor One of the public interest analysis for a distributor registrant includes the adequacy of the registrant's recordkeeping.

CBS Wholesale Distrib.,

74 FR 36746, 36749 (2009) (citing

Holloway Distrib., Inc.,

72 FR 42118, 42123 (2007);

Rick's Picks, L.L.C.,

72 FR 18275, 18278 (2007);

John J. Fotinopoulos,

72 FR 24602, 24605 (2007)). Although the Government failed to allege a specific public interest factor for this allegation, I find that the commingling of records allegation should be analyzed under Factor One.

21 CFR 1304.21(c) requires that “[s]eparate records shall be maintained by a registrant for each independent activity and collection activity for which he/she is registered or authorized, except as provided in § 1304.22(d).” Therefore, as OakmontScript possesses both an exporter and distributor registration, it must maintain separate records for each registration. 21 CFR 1304.21(c). “Recordkeeping, reporting and security requirements are also more rigorous for those who manufacture and distribute controlled substances.”

Wedgewood Vill. Pharmacy,

71 FR 16593, 16594 (2006).

On September 16, 2016, DI 1 conducted an on-site inspection of OakmontScript with a Senior Investigator with the Massachusetts Department of Health regarding OakmontScript's distributor registration. Tr. 44-45. At this time, DI 1 instructed Dr. Shi that OakmontScript needed to ensure it did not commingle records from its distributor registration with any future exporter registration. Tr. 51.

On July 26, 2018, a second DI, DI 2, conducted an inspection of OakmontScript's distributor registration and noted that OakmontScript was commingling records by keeping some of its distributor records with its exporter records. Tr. 129-33, 135-36. After she identified this issue, she discussed it with Dr. Shi, who indicated that she understood and stated that OakmontScript would not commingle records in the future. Tr. 133. DI 2 did not “believe [Dr. Shi] knew about the commingling but once corrected, she understood.” Tr. 133.

A third DI, DI 3 noted that there were issues with recordkeeping as OakmontScript had commingled records. Tr. 739. For instance, OakmontScript was keeping inventories for both its distributor registration and its exporter registration on the same document and it was difficult for DI 3 to discern under which registration each transaction had occurred. Tr. 743-48, 782; Gov't Ex. 12. DI 3 specifically noted that it was difficult to discern if the Lunesta invoice OKS-00650 was a distribution or export as the spreadsheet provided by OakmontScript had both CORs listed on the spreadsheet. Tr. 746-47; Gov't Ex. 12 at 17.

As discussed, prior to DI 3's most recent inspections, OakmontScript had been told by two DI investigators that it needed to maintain separate inventories for its distributor and exporter registrations. Tr. 51, 131-36. Despite this, when DI 3 performed her initial inspection on March 29, 2019, the only records OakmontScript provided for the biennial inventory included commingled records that contained information for both its distributor and exporter registrations. Tr. 351, 739, 744-49; Gov't Ex. 12. In fact, DI 3 was only able to discern invoice OKS-00243 was an export after reviewing the license transfer document for this export. Tr. 747-48; Gov't Ex. 26 at 21. However, another spreadsheet provided for this export at the March 29, 2019, inspection did not indicate this was an export or that the diazepam had been transferred from OakmontScript's distributor license to its exporter license. Tr. 747; Gov't Ex. 12 at 14.

I therefore find that OakmontScript commingled records that were provided to DI 3 at the March 29, 2019 inspection, after being put on notice of this not once, but twice. This commingling of OakmontScript's distributor and exporter records makes it difficult, if not at times impossible, to discern whether a particular controlled substance was distributed or exported.

Although it appears that OakmontScript attempted to rectify this issue, any attempts to do so were made after the March 29, 2019 inspection.

See

Gov't Ex. 28 at 83-97 (several of these inventory forms indicate that the forms were recreated on April 25, 2019). Dr. Shi provided these documents to DI 3 via email on May 10, 2019. Tr. 781.

See

Gov't Ex. 28.

Accordingly, in review of the evidence of record, including stipulations of the parties, OSC Allegation 21.b is

sustained

. [Based on Respondent's failure to maintain complete, accurate, and separate records, in accordance with federal law, I find that Factor One weighs against Respondent.]

Factor Five: Such Other Factors as May Be Relevant to and Consistent With the Public Health and Safety

The Government has alleged that Factor Five is relevant to the public interest analysis regarding the Respondent's distributor COR. ALJ Ex. 1 at 4, 5 ¶ 13.

Although the Government failed to explain under which factor the lack of candor allegation falls, the tribunal finds that the allegations regarding the Respondent's lack of candor fall squarely within the purview of Factor Five.

See John V. Scalera,

78 FR 12092, 12093, 12100 (2013) (considering under Factor Five, the respondent's lack of candor based on lies made to DEA investigators and false testimony under oath at the hearing). Further, the DEA has consistently held that “[c]andor during DEA investigations, regardless of the severity of the violations alleged, is considered by the DEA to be an important factor when assessing whether a . . . registration is consistent with the public interest” and that a registrant's “lack of candor and failure to take responsibility for his [or her] past legal troubles . . . provide substantial evidence that his

registration is inconsistent with the public interest.”

Jeri Hassman, M.D.,

75 FR 8194, 8236 (2010) (quoting

Hoxie,

419 F.3d at 483);