Masters Pharmaceutical, Inc. v. Drug Enforcement Administration

In the wake of an ongoing oxycodone-abuse epidemic, registered distributors of controlled substances were required to report suspicious orders to the Drug Enforcement Administration (DEA) (defendant) for investigation, pursuant to 21 C.F.R. § 1301.74(b). Masters Pharmaceutical, Inc. (Masters) (plaintiff), a distributor of controlled substances to retail pharmacies throughout the United States, failed to report suspicious orders to the DEA or to take other preventive measures against illegal distribution. According to the DEA, Masters distributed millions of oxycodone dosage units to eight unlawful pharmacies. In reaction to the receipt of suspicious orders, Masters modified some orders and filled others. Masters’s employees frequently limited the scope of their investigations into suspicious orders, at times neglecting to call the requesting entities. When making such calls, Masters’s employees would not always inquire satisfactorily into the reasons for the orders. Entries made by Masters employees would include outright falsehoods or dubious statements. On grounds of Masters’s noncompliance with the reporting requirement, the acting administrator of the DEA filed a decision determining that Masters’s noncompliance with the reporting requirement justified the revocation of Masters’s registered status. Thus, in 2014, the DEA revoked Masters’s certificate of registration, meaning Masters could no longer sell controlled substances. Masters appealed the DEA’s decision to the United States Court of Appeals for the District of Columbia Circuit, alleging that, considering the underlying facts and in light of 21 C.F.R. § 1301.74(b), this revocation constituted an overreach of the DEA’s authority.