[Federal Register: February 25, 2004 (Volume 69, Number 37)]
[Notices]
[Page 8696-8698]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe04-107]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Manufacturer of Controlled Substances; Notice of Registration
By Notice dated January 27, 2003, and published in the Federal
Register on February 6, 2003 (68 FR 6183), Houba, Inc., 16235 State
Road 17, Culver, Indiana 46511, made application by renewal to the Drug
Enforcement Administration (DEA) to be registered as a bulk
manufacturer of two basic classes of Schedule II controlled substances,
oxycodone (9143) and hydrocodone (9193).
Two registered manufacturers of bulk controlled substances filed
comments and objections in response to the Notice in a timely manner.
Both objectors filed comments and objections with respect to oxycodone
and hydrocodone. By Notice dated May 23, 2003 and published in the
Federal Register on June 11, 2003 (68 FR 35006), the DEA acknowledge
the receipt of the comments and objections, and its intent to
investigate and resolve the issues raised.
Both objectors argue that Houba, Inc. (hereafter referred to as
Houba) cannot prove its registration as a bulk manufacturer of opiates
is in the public interest, that Houba is in a precarious financial
state which could have a negative impact on its ability to fulfill its
activity as a bulk manufacturers, that Houba does not have adequate
experience as a manufacturer, that Houba will not promote technical
advances, that Houba's registration is not required to produce an
adequate and uninterrupted supply of oxycodone and hydrocodone, that
there is sufficient competition with the present bulk manufacturers,
and that Houba's registration will add to the risk of diversion both
domestically and internationally. Additionally, the first objector
argues that Houba's parent company can control Houba's management and
operations and the parent company has a history of non-compliance with
Federal laws and regulations. Both objectors request that DEA issue an
Order to Show Cause, pursuant to 21 CFR 1301.37(a) by one objector and
pursuant to 21 CFR 1301.44(a) and 1301.48(a) by the other objector, as
to why the agency should not deny Houba's application for re-
registration on the ground that Houba has not demonstrated that its
application is in the public interest. (Title 21 CFR 1301.48 was
deleted and currently is re-codified under 21 CFR 1301.37 in 1997.)
[[Page 8697]]
One of the objectors is apparently under the belief that if an
order to show cause were issued to revoke Houba's renewal applications
for the two bulk narcotic controlled substances at issue, then Houba
would bear the burden of proof to show that granting such renewal
applications would be in the public interest pursuant to 21 U.S.C.
823(a). Houba would have the burden of proof if the applications were
initial applications pursuant to 21 CFR 1301.44(a) and section 823(a).
Since Houba already is registered to bulk manufacture oxycodone and
hydrocodone, DEA bears the burden of proof to revoke Houba's DEA
registrations pursuant to 21 CFR 1301.44(e) and 21 U.S.C. 824(a).
With respect to the objectors' contentions that Houba is in a
precarious financial state, the DEA has reviewed the information
submitted as well as conducted independent investigation. The DEA has
determined that while Houba's parent company has had and continues to
have documented financial difficulty, Houba is a corporation in and of
itself. There is insufficient evidence at this time to revoke the
registration of a subsidiary corporation based on the financial
standing of the parent company.
Houba currently has a pending application to import raw opium
(9600), poppy straw (9650) and poppy straw concentrate (9670) pursuant
to 21 U.S.C. 958(a). Pursuant to 21 U.S.C. 958(i) and 21 CFR
1301.34(a), three bulk manufacturers filed objections and requested a
hearing to contest Houba's pending import application. At this time,
this hearing is still pending. Houba, Inc., Docket No. 02-6. One of the
issues will be Houba's current financial status and whether its alleged
financial problems would impact on its ability to utilize its import
registration and otherwise comply with its duties under the Controlled
Substances Act and the Act's implementing regulations. DEA may reassess
Houba's manufacturing registrations after the proceedings on Houba's
import application are completed. At this point, however, there does
not appear to be sufficient grounds to revoke Houba's bulk
manufacturing registration.
Moreover, if the financial conditions do make it impossible for
Houba to utilize its bulk manufacturing registration, DEA anticipates
that Houba would notify DEA, under 21 CFR 1301.52, that it is out of
business either altogether or with respect to the controlled substances
at issue. But at this point in time, DEA does not have evidence that
Houba is renewing its registrations merely to have a ``shelf''
registration.
With respect to the objectors' contentions that Houba lacks
manufacturing experience and will not promote technical advances, Houba
has been registered with the DEA as a bulk manufacturer since 2002.
Houba has provided DEA with confidential information regarding its
intent to pursue technological advancement.
With respect to the remaining contentions submitted by both
objectors: that there already exists an adequate and uninterrupted
supply of oxycodone and hydrocodone, that there is sufficient
competition with present bulk manufacturers, and that Houba's
registration will add to the risk of diversion both domestically and
internationally, the arguments of the objectors were considered.
Pursuant to 21 CFR 1301.33(b), DEA is not: required to limit the number
of manufacturers in any basic class to a number less than that
consistent with maintenance of effective controls against diversion
solely because a smaller number is capable of producing an adequate and
uninterrupted supply. DEA previously registered Houba to manufacture
these two bulk controlled substances and in so doing made the
determination that Houba's registration would comply with section
1301.33(b) without resulting in an excessive supply of these controlled
substances domestically or excessive cultivation abroad.
One of the objectors noted that DEA lowered the aggregate
production quota for oxycodone in response to the domestic diversion of
this Schedule II narcotic (67 FR 59313). The objector argues that DEA,
consistent with this action, should issue an order to show cause to
revoke Houba's registration to bulk manufacture oxycodone. DEA does
have the discretion to limit the granting of Schedule II bulk
manufacturers and Schedule II bulk importers under the circumstances,
but DEA is not compelled by section 823(a)(1) or 21 U.S.C. 958(d).
Notwithstanding the lowering of the quota, DEA does not see the need to
commence to revoke existing registrations at this time.
Indeed, DEA may not have the statutory authority to revoke an
existing Schedule II bulk manufacture registration under 21 U.S.C.
824(a)(4) solely on the basis of limiting the bulk manufacture of these
controlled substances ``to a number of establishments which can produce
an adequate and uninterrupted supply of these substances under
adequately competitive conditions for legitimate medical, scientific,
research, and industrial purposes.'' (quoting from section 823(a)(1)).
Section 824(a)(4) permits DEA to revoke a registration when the
registrant ``has committed such acts as would render his registration
under section 823 of this title inconsistent with the public interest
as determined under such section * * *'' (Emphasis supplied). ``[S]uch
acts'' may be, however, limited to the individual acts of the
particular registrant as set forth in 21 U.S.C. 824(a)(2)-(6). A
registrant cannot commit ``such acts'' by lawfully manufacturing and
distributing controlled substances under its registration. Thus, there
is some considerable question whether DEA could seek a revocation of a
registration for a bulk manufacturer of Schedule II controlled
substances based solely on the micro-economic competition issue in
section 823(a)(1). (This micro-economic issue, however, could be
considered if DEA had other grounds to revoke a bulk manufacturing
registration pursuant to 824(a)(4) and 823(a)(2)-(6). In any event, it
is not necessary for DEA to reach this statutory construction issue at
this time, since there are not sufficient grounds under Sections
824(a)(4) and 823(2)-(6) to issue an order to show cause to revoke
Houba's bulk manufacturing registrations.
DEA is confident that the registration of Houba will not impede
DEA's statutory obligation to guard against the diversion of controlled
substances.
With regard to the first objector's contention that Houba has a
history of non-compliance with Federal statutes and regulations, DEA
finds that with a single exception, the comments offered pertained to
Houba's parent company and not to Houba itself. The remaining
circumstance involved the Foods and Drug Administration and was not
related to violations of the CSA. Additionally, DEA has investigated
Houba on a regular basis to ensure that the company's continued
registration is consistent with the public interest. These
investigations have included inspection and testing of the company's
physical security systems, audits of the company's records,
verification of the company's compliance with state and local laws, and
a review of the company's compliance with state and local laws, and a
review of the company's background and history. The results of these
investigations have led DEA to conclude that at this time, Houba is in
compliance with the CSA and that its continued registration is
consistent with the public interest.
After reviewing all the evidence, including the comments filed, DEA
has determined, pursuant to 21 U.S.C. 823(a), that the registration of
Houba as
[[Page 8698]]
a bulk manufacturer of oxycodone and hydrocodone is consistent with the
public interest at this time. Therefore, pursuant to 21 U.S.C. 823(a)
and 28 CFR 0.100 and 0.104, the Deputy Assistant Administrator hereby
orders that the application submitted by the above firm for
registration as a bulk manufacturer of the basis classes of controlled
substances listed is granted.
Dated: February 10, 2004.
Laura M. Nagel,
Deputy Assistant Administrator, Office of Diversion Control, Drug
Enforcement Administration.
[FR Doc. 04-4029 Filed 2-24-04; 8:45 am]
BILLING CODE 4410-09-M