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Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Notices of January 1, 2017. For other controlled substances, the start of business was used. Among other inaccuracies, DI1s audit found that Pharmacy 4 Less had a shortfall of 731 tablets of oxycodone 30 mg, a shortfall of 526 tablets of carisoprodol 350 mg, and a surplus of 1,488 tablets of methadone HCL 10 mg.
DI1 will authenticate his computation chart. DI1 will also authenticate the handwritten oxycodone and methadone perpetual inventories that were used to conduct the oxycodone and methadone audits. Governments Supplemental Prehearing Statement, at 45.
During the Prehearing Conference, I
inquired with the Government as to the addition of this new allegation and whether they intended this to act as a new charge. The Government said that it did intend it as a new charge. The Respondent objected and argued that it should not be required to answer to charges not listed in the Order to Show Cause. I informed the Respondent as to the Agencys liberal notice requirements and provided them with the opportunity to address any new allegations in a Supplemental Prehearing Statement provided the Government amended or added to its new allegation. I find the Government provided sufficient notice to satisfy due process as to this supplemental charge.
In the Respondents Amended Supplemental Prehearing Statement, the Respondent not only offered a proposed stipulation that their inventory was correct, but also indicated that Ms.
Mincys proposed testimony would include testimony that Pharmacy 4
Lesss inventory was accurate. As it will be discussed, Respondent both crossexamined DI1 on his audit of Pharmacy 4 Lesss inventory, as well as provided testimony from Ms. Mincy about the pharmacys inventory.
The Government presented evidence from DI1 about the audit he conducted of Pharmacy 4 Lesss perpetual inventories in order to find if their inventories were accurate. As previously noted, DI1 did not use either an initial inventory or biennial inventory as the starting point for the audit.HHH DI1 created a computation HHH Respondent argued during the hearing that there is no requirement to maintain a perpetual inventory and that the perpetual inventory was thus an improper document upon which to base the audit. Tr. 18, 58, 63031, 925. I agree that Respondent was not required to create a perpetual inventory. However, what matters here is that Respondent could not account for a significant number of controlled substances by adequate documentation. See Ideal Pharmacy Care, Inc., d/
b/a Esplanade Pharmacy, 76 FR 51,415, 51,416
2011. These significant variances were present both where the perpetual inventory was used in the audit and where it was not. Notably, Respondent
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chart of the controlled substances in order to conduct an audit of the pharmacys inventories. GX 4.
DI1 indicated January 1, 2017, as the starting point for the audit. Tr. 55. This date was selected because it was the date in which the pharmacy had used in its handwritten Schedule 2 controlled substance inventories. Tr. 56; GX 31, 32.
These include the perpetual inventory form for Methadone 10 mg tablets GX
31 and Oxycodone 30 mg tablets GX
32. Id. at 57. He testified that he used the pharmacys inventories and made sure that the inventories received or filled prior to January 1, 2017 were correct to use as a starting point. Id. at 6162. Then he would take records from the pharmacy for the period of the audit and correlate those with invoices and any other records showing when the pharmacy had received additional controlled substances. Id. at 62. Once those numbers were verified, DI1 then looked at what the pharmacy had on hand according to their records, took all the received controlled substances within that timeframe, and then added those numbers together to find a total accountable number. Id. at 63.
DI1 then determined how many controlled substances Pharmacy 4 Less actually had on site during the June 6, 2017 on-site inspection. Id. This was done by hand counting the tablets located on hand in the pharmacy at the time of the inspection. Id. He also determined the number of sales for each controlled substance during the audit period by looking at documentation provided to him by Ms. Mincy. Id. at 6364. DI1 then added up the total number of the inventory that had been counted in the store on June 6 and the sales that had been accounted for by the records to determine the total amount of tablets accounted for. Id. at 65. DI1 then compared the total accountable for number and the total accounted for number to determine if there was a shortfall or surplus, indicated as the total difference. Id. The same process was completed for Schedules 3 through 5 controlled substances, but the starting number at the beginning of business was zero because the pharmacy had no controlled substances on hand when they started as a pharmacy. Id. at 66.
As previously noted, the Respondent conducted a cross-examination as to the computation chart revealing some formatting errors. This Tribunal allowed the Government to substitute a more legible copy of it. Tr. 91926. A check Pharmacy made no attempt to rebut the governments prima facie case demonstrating inaccurate recordkeeping aside from bald assertions that its on-hand inventory was accurate.

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of the mathematics done within GX 4
demonstrate that the mathematics have been done correctly and demonstrate discrepancies between the pharmacys records as used by DI1 and the amount that DI1 accounted for during his count at the pharmacy during his on-site inspection.
The Respondent presented testimony from Ms. Mincy about the pharmacys inventories. Ms. Mincy confirmed that DI1 had asked to see the pharmacys biennial and perpetual inventories,III
along with DI1 and DI2 conducting a pill count during the June 6, 2017 onsite inspection.JJJ
Based on the testimony and evidence presented by the parties, I find the audit conducted by DI1 to be consistent with his portrayal of events during the June 6, 2017 on-site inspection and that it credibly shows discrepancies between the records maintained by the pharmacy and the actual count of tablets as determined by DI1. For example, DI1s calculations determined that Pharmacy 4 Less has 1,488 more tablets of Methadone HCL 10 mg on hand than was provided for in their records. This large of a disparity between the amount counted and the records show that it cannot be the result of miscounting the tablets on hand at the pharmacy during the on-site inspection.
While Ms. Mincy may have testified to her role at the pharmacy in maintaining the supplies and inventories, I find, in light of my previous reliability analysis of Ms.
Mincy, that her explanations regarding inventory procedure and practice do not overcome the Governments evidence showing the pharmacy inventories were inaccurate. The failure of the pharmacy to maintain an initial inventory and failure to maintain an accurate biennial inventory, along with the great potential for error that a handwritten perpetual inventory provides, also lend weight to the Governments allegation that Pharmacy 4 Less maintained inaccurate inventories.
The Government has demonstrated that Respondents on-hand inventory had overages and shortages when compared to Respondents records at the time of the inspection. The Agency has found that such overages and shortages create a risk for diversion. It is clear that III Ms. Mincy testified that the perpetual inventory was a handwritten document. Tr. 631. As for its purpose, she stated every time we fill a prescription we like to note it so that we can keep up with our inventory on hand, to make sure that we are keeping enough drugs in stock like for the next day, you know, we do not want to run out.
Id.
JJJ Omitted information regarding the biennial inventory for brevity and inserted information regarding the perpetual inventory.

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