Alra Laboratories, Inc. v. Drug Enforcement Admin.

• Decision Date: 19 May 1995
• Docket Number: No. 94-3585,94-3585
• Citation: 54 F.3d 450
• Parties: ALRA LABORATORIES, INC., Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 450

54 F.3d 450

ALRA LABORATORIES, INC., Petitioner, v.DRUG ENFORCEMENT ADMINISTRATION, Respondent.

No. 94-3585.

United States Court of Appeals Seventh Circuit.

Argued April 7, 1995.

Decided May 19, 1995.

Steven M. Kowal, Richard O. Wood(argued), Burditt & Radzius, Chicago, IL, for Alra Laboratories.

Janet Reno, U.S. Atty. Gen., Philip Eric Urofsky(argued), U.S. Dept. of Justice, Narcotic & Dangerous Drug Section, Stephen H Green, Drug Enforcement Admin., Washington, DC, for Stephen H. Green.

Philip Eric Urofsky, Jo Ann Harris, Theresa VanVliet, U.S. Dept. of Justice, Narcotic & Dangerous Drug Section, Washington, DC, for Drug Enforcement Admin.

Before CUMMINGS, EASTERBROOK, and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

Between 1982 and 1989 Alra Laboratories held a license to manufacture and distribute "controlled substances"--principally drugs containing opiates or classed with them in the administrative pharmacopeia.Licensed firms must submit to periodic inspections to confirm their compliance with manufacturing and record-keeping rules.An inspection in 1990 revealed that Alra had neglected to apply for an extension of its license; by operating without a license, Alra violated innumerable statutes and regulations.The DEA seized Alra's inventory of 178,000 doses of clorazepate dipotassium, a Schedule IV controlled substance.Alra ceased making controlled substances (though it continued manufacturing other drugs) and applied for a new license.After an administrative process that lasted four years, the Drug Enforcement Administration said "no,"59 Fed.Reg. 50620(Oct. 4, 1994), and Alra seeks review under 21 U.S.C. Sec. 877.

An evidentiary hearing on Alra's application revealed that the firm had long been out of compliance with the recordkeeping and reporting requirements applicable to manufacturers of controlled substances.In 1987 the DEA had issued a letter of admonition to Alra because of these problems and its failure to maintain effective controls against the diversion of regulated substances.During the 1990 inspection that revealed the firm's unlicensed status, the inspectors also found that Alra was improperly storing controlled and uncontrolled substances together.Alra had even more serious problems with statutes and regulations under acts administered by the Food and Drug Administration, which repeatedly had cited Alra for bad manufacturing practices and recordkeeping.Alra's entire inventory of prescription drugs was seized for forfeiture in March 1991, and a district court found them to be "adulterated" because of the presence of contaminants; Alra was out of operation until November 1991(although it was permitted to "recondition" and sell most of the seized stock).Its troubles continue.In August 1993 Alra, its president and principal investor Baldev Raj Bhutani, and its corporate secretary Neelam Bhutani, were indicted for selling adulterated drugs, making false statements to the FDA, and attempting to obstruct justice by fabricating documents to throw the FDA off the scent and presenting false testimony to the grand jury.The indictment also charges the...