Case Document 1 Filed 03/02/18 Page 1 of 9 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA IN THE MATTER OF THE Magistrate Docket ADMINISTRATIVE INSPECTION OF - - Pi WALGREEN COMPANY .) . - 7_ DBA - WALGREENS #13000 A 2318 01 5 8 AC 860 East Avenue . - MAR 02 2018 Chico, California 95926 . 0' COURT av IFORNIA A APPLICATION FOR ADMINISTRATIVE INSPECTION W- UNDER THE CONTROLLED SUBSTANCES ACT, 21 U.S.C. 880 THE UNITED STATES EASTERN DISTRICT OF CALIFORNIA -The Controlled Substances Act, 21 801?904, (the provides for government supervision of those individuals or entities engaged inmanufacturing and distributing_controlled substances (?registrants?). The CSA requires that a manufacturer or distributor of-controlled substances be registered with the Drug Enforcement Administration (DEA). 21 U.S.C. 822. .There are bothcivil and criminal penalties for violations of the Act. 21 U.S.C. 825?865. To ensure compliance with the CSA and its implementing regulations, the DEA is authorized toconduct inspections of a registrant?s premises. 21 880, Specifically, the CSA authorizes the DEA to conduct administrative inspections to: (1) inspect records, reports, and other documents required to be kept or made under the Act; and (2) inspect the controlled premises, all pertinent equipment, drugs, and other substances or materials, containers, and labeling found therein (including 1 Case Document 1 Filed 03/02/18 Page 2 of 9 records, files, papers, processes, controls and facilities)- appropriate for verification of the records, reports and documents, or otherwise bearing on the provisions'oftheAct;l and (3) inventory the stock of any controlled substance and 'obtain samples of such.substances.- 21 U.S.C. 880(b)(3). ?The statutory scheme envisiOned by the Act is one of control through record keeping.? United States v. Greenberg, 334 F.Supp. 364, 366 (W.D. PA 1971). ?Any person who desires to shoulder the responsibility of engaging in the manufacture or diStribution of' these products . . . [is subject] to the regulatory system laid down by the 1970 Act.? EQL, at 367. Upon a showing of probable cause, a United States District Judge or United States Magistrate Judge-may issue a warrant for rthe purpose of conducting an administrative inspection. 21 U.S.C. 880(d). ?Probable cause? is defined by the CSA as ?a valid public interest in the effective enforcement Of tthe Act].? _21 U.S.C. 880(d)(1). ??robable cause" in the I traditional criminal law sense is not required to support the 7 issuance of an administrative warrant. Marshall v. Barlow's 436 U.S. 307, 320 (1978). Rather, the_faCt that a registrant has never been inspected to ensure compliance with 1. The Act provides for the inspectiOn of items such as records, files and papers, themaintenance of which is not required under the Act, but which is appropriate for_the verification of the requirements of the Act. 21 U.S.C. 880(b)13)(B). The Act does not specifically provide for the copying of such items. Id. Case 2:18-sw-00158-AC Document 1 Filed 03/02/18 Page 3 of 9 Compulsory record?keeping requirements alone justifies an ladministrative warrant. United States v. Prendergast, 585 F.2d 69, 70 (3Q Cir. 1978), citing United States v. Goldfine, 538 F.2d 815, 1976). The subject registrant has never been inspected by DEA. See attached Affidavit at paragraph?6. Christina Grijalva, Diversion Investigator, United States Drug Enforcement Administration, stationed in the Sacramento, California District Office, hereby applies for an Administrative Inspection warrant pursuant to the Controlled Substances Act, 21 U.S.C. 880(d), for the inspection and search of the following_ controlled premises: I I walgreen_Company DBA walgreens #13000 860_East Avenue Chico, California 95926 This-Application for an Administrative Inspection Warrant is based upon the attached Affidavit; _Dated: February ZU, 2018 Christina Grijalva Diversion Investigator Drug Enforcement Administration ?Approved as to-form: Assistant United States A orney 3 Case Document 1' Filed 03/02/18 Page 4 of 9 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA IN THE MATTER OF THE Magistrate Docket. Number: ADMINISTRATIVE INSPECTION OF WALGREEN COMPANY - DBA - WALGREENS #13000 860 East Avenue . . I-l Chico, California 95926 inn-q? AFFIDAVIT FOR APPLICATION FOR ADMINISTRATIVE INSPECTION WARRANT UNDER THE CONTROLLED SUBSTANCES ACT, 21 U.S.C. 880(d) 'The underSigned, Christina Grijalva,-being duly sworn, declare: l. I am a Diversion Investigator with the Drug' Enforcement AdminiStration United States Department of Justice,-assigned to the Sacramentof_r California District Office. 2. I DEA hired me in August 2012: I have received training. in the manufacturing, distribution and dispensation of pharmaceutical controlled substances, and the_corresponding records and inventories that are required to be kept pursuant to the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21-U.S.C. 801; et seq., (the A 3. Sections (2) and (3), of the CSA - authorize me as part of my job to eXecute Administrative Inspection Warrants to inspect the controlled premises of persons and firms registered under the CSA. The inspections Case 2:18-sw-00158-AC Document 1 Filed 03/02/18 Page 5 of 9 allow DEA Personnel to verify the correctness of all records, reports and other documents the CSA requires a registrant to make and keep. Specifically, the Act authorizes the DEA to conduct administrative inspectiOns to: inspect records, reports, and Other documents required to be kept Or made under the Act; and (2) inspect the controlled premises, all pertinent equipment, drugs, and other substances or materials, containers, and labeling found.therein (including records, files, papers, processes, contrOls and facilities) appropriate for verification of the records, reports and documents, or_otherwise bearing on the provisions of the and (3) inventory the stock of any controlled substance and obtain samples of such substances. 21 4. Walgreens Company, DBA walgreens #13000 (?Walgreens 13000?) is registered under the CSA, as a Chain Pharmacy and has been assigned DEA Registration Number BW3614888 in controlled substances Schedules 2?5{ This registrant- conducts busineSs as Walgreens, at 860 East Avenue, Chico, California 95926; 5.. Walgreens #13000 is'a controlled premise within the meaning of 21 s.C. 880(a)(1) and (2), and 21 l. The Act provides for the inspection-of items such as records, files, and'papers, the maintenance of which-is not required under the Act, but such inspection is appropriate for the verification of.the requirements of the Act. 21 U.S.C. The Act does not specifically provide for the copying of such items. 20 Case 2:18-sw-00158-AC. Document 1 Filed 03/02/18 Page 6 of 9 and (2). As such, Walgreens #13000 is required to keep complete and accurate records of all- controlled substances received, sold, delivered or otherwise disposed at this location. 21 U.S.C. 827 and 21 C.F.R. 1304.01, et seq. The inspection of the controlled premises is designed to ensure Walgreens #13000 compliance with the CSA and its regulations. 6. I have examined the files, records and other databases, and determined the DEA has never inspected Walgreens #13000-. 7. On February 2, 2018, I completed an inquiry check of the Automation of Reports and Consolidated Orders System regarding Walgreens #13000 purchasing- patterns. The inquiry check covered the top drug . purchasers for the past two years of transactions. The reSults of this inquiry check revealed that Walgreens .#13000 was the number one purchaser in their area by zip code for the highly addictive and highly abused controlled Substances hydrocodone and oxycodone as follows: a. In 2017, Walgreens #13000 purchased 590,440 dosage units of hydrocodOne, where the number two top 'purchaser purchased a total of 294,290 dosage units of hydrocodone for the transaction year.? Case Document 1 Filed 03/02/18 Page 7 of 9 b. In 2016, Walgreens #13000 purchased 638,880 dosage units of hydrocodone, where the number two top purchaser purchased a total of 354,050 dosage units of hydrocodone for the transaction year. Comparatively, the state average for hydrocodone purchases in 2016 'was 125,830 dosage units and the U.S. average was 87,261 dosage units. c. In 2015, Walgreens #13000 purchased 680,030 dosage - units of.hydrocodone, wherethe number two top I purchaser purchased a total of 390,620 doSage units of hydrOcodone for the transaction year. d. In 2017, Walgreens #13000 purchased 258,100? dosage units of oiycodone, where the number two top- purchaser purchased a total of 128,100 dosage units of oxchdone for the transaction year. e. In'2016, Walgreens #13000 purchased 325,000 dosage units of oxycodone, where the number two top purchaser purchased a total of 160,300 dosage units of oxycodone for the transaction year. Comparatively, the state average for oxycodone purchases in 2016 was 48,976 dosage units and the U.S. average was 69,616 dosage units. f. In 2015, Walgreens #13000 purchased 344,600 dosage units of oxycodone, where the number two top purchaser Case Document 1 Filed 03/02/18 Page 8 of 9 purchased a total of 170,300 dosage units of Ihydrocodone for the transaction year. 8. On February 2, 2018, I also queried Walgreens #13000 in the Drug Theft/Loss system_and three DEA-106 forms, Report of Theft or_Lossof Controlled Substances. Of the three reports filed, one was submitted on October 18, 2016 citing an ?unexplained loss? of nearly 8000 hydrocodone 10/325mg tablets valued at $6,213.00. Given these facts, I believe there will be numerous record keeping violatiOns.related to the distribution and/or dispensation of controlled substances at walgreens #13000. I further believe the requested inspection will help protect the public health and safety, and advance the public interest in enforcing the Act's oversight provisions. ?10. The DEA needs to review Walgreen's #13000containers,' and labeling, and all other things therein including records, files and papers, processes, controls and facilities appropriate for the verification of the CSA, such as written and electronic correspondence regarding maintenance of inventories, theft or loss reports, communications related to Walgreen's #13000 compliance with the CSA, written policies, procedures and training. regarding maintenance of inventories, perpetual- inventories, biennial inventories, internal audits and 5 Case 2:18-sw-00158-AC Document 1 Filed 03/02/18 Page 9 of 9 manuals or written material describing computer programs or ?other procedures Walgreen's #13000 uses to maintain' inventories of controlled substances appropriate for the verification of the records, reports, and documents required by the CSA. 11. I will be accompanied by one or more investigators during the inspection who.are employees of the Attorney General authorized to conduct administrative inspections land one or more DEA Special Agents. A return will be made tO'the-onuduty MagiStrate Judge upon the inspection's completion.- 12. I have personal knowledge of the facts stated herein, and state they are true to the best of my knowledge. I. A Christiha Grijalva Diversion Investigator Drug Enforcement Administration Sworn to before me and subscribed in Sacramento, California on this day of February, 2018. Honorable Allison Claire United States Magistrate Judge United States District Court For the Eastern District of California