Appeals Court Upholds DEA Import Block On PDK Labs

The Drug Enforcement Administration had the authority to issue suspension orders for two of PDK Labs' bulk ephedrine shipments in 2001 to prevent the diversion of the finished products to methamphetamine production, federal judges ruled Feb. 24.

The decision by the D.C. Circuit Court of Appeals protects DEA's authority to suspend shipments of chemicals based on misuse of a finished product.

The ruling follows Jan. 10 oral arguments, during which PDK petitioned for review of a final order issued by DEA in November 2004 (¹ (Also see "Industry-Wide Effect Of PSE Import Block “Not Relevant,” Judges Say" - Pink Sheet, 16 Jan, 2006.), p. 11).

The order barred the firm from bulk imports of ephedrine used to make cough/cold products. Judge David Tatel's Feb. 24 opinion denies PDK's petition for review.

According to the opinion, PDK argued during the case that "when DEA suspends shipments of listed chemicals...it may act only on the basis of evidence that the raw listed chemical, not the finished product containing the listed chemical, may be diverted."

However, Tatel concludes that DEA "reasonably interpreted the phrase 'listed chemical' to include ephedrine and pseudoephedrine contained in finished drug products."

PDK also had asserted that DEA's rationale behind the import suspension could allow the agency to "shutter" the entire pseudoephedrine industry because every pseudoephedrine manufacturer's finished goods are subject to misuse or abuse.

Tatel's opinion acknowledges that DEA technically would have the authority to "shutter the industry" if it could provide enough evidence.

"If DEA could amass substantial evidence to support the inference that all raw ephedrine shipments 'may be diverted' - a big if, of course - then no one doubts it would have the authority to suspend those shipments, thus 'shuttering the industry,'" he writes.

However, he concludes that "the theoretical possibility that an agency might someday abuse its authority is of limited relevance" in determining whether the agency has correctly interpreted the authority it has been granted by Congress.

"Facing a persistent threat to public health and a challenging law-enforcement problem, Congress armed DEA with broad suspension authority, and only Congress, not this court, can take it away," the judge concludes.

Tatel's ruling differs from that issued by an Administrative Law Judge in an earlier review of the case in April 2002.

At that time, the ALJ "construed DEA's authority to suspend importations of 'listed chemicals' to extend only to cases in which the agency has evidence that bulk listed chemicals like raw ephedrine - and not finished over-the-counter drug products that contain listed chemicals - may be diverted to clandestine drug manufacturers," Tatel's opinion notes.

Tatel agrees with the rationale for suspension provided by DEA's deputy administrator, which explains that "if Congress wanted to make an express distinction between a bulk listed chemical and a finished product...it could have done so."

The DEA deputy administrator also stated that under the Administrative Law Judge's interpretation, even when DEA had facts to prove that an importer would likely distribute a listed chemical to a clandestine lab, the agency would have no power to suspend shipment.

DEA also stated it was able to "draw a reasonable inference regarding the likelihood that the instant shipments may be diverted" by PDK in this particular case, given the quantities and diverse locations of PDK products discovered at illegal labs.

Judge Tatel agreed, stating that there was "substantial evidence" to suggest diversion would occur.

DEA sent the pseudoephedrine generics manufacturer 23 warning letters between March 1998 and January 2001 alerting the company that its products were being diverted to meth labs; the agency issued import blocks on two ephedrine shipments totaling 6,000 kg destined for PDK in January 2001.

According to the agency, "thousands" of PDK products had been found in approximately 140 meth labs in at least 18 states. The letters provide "more than enough evidence to support the suspension orders," Tatel's opinion states.

- Jessica Lake