UNITED STATES DEPARTMENT OF JUSTICEDRUG ENFORCEMENT ADMINISTRATION

In the Matter of

Masters Pharmaceutical, Inc. Docket No. 13-39

DECLARATION OFJOANNA M. SHEPHERD-BAILEY, PH.D.

John A. Gilbert. Jr.Karla L. PalmerDelia A. StubbsI-lyman, Phelps & McNamara, P.C.700 Thirteenth Street, NW., Suite 1200Washington, D.C. 20005(202) 737-5600(202) 737-9329 (fax)jgi1berthprn.comkpalrnerhpm.comdstubbshprn.com

Richard I. LauerMasters Pharmaceutical. Inc.8695 Seward RoadFairfield, Ohio 45011(513) 619-8038(513) 619-8039 (fax)rlauer@mastersrx.com

Dated: December 31, 2013

I, Joanna M. Shepherd-Bailey, state the following:

L. SUMMARY

1. In its Prehearing Statement. DEA offers a number of statistics in

support of its allegations that Masters Pharmaceuticals, Inc. (“Masters”) did not

maintain adequate controls for oxycodone distribution.

2. In this declaration, I examine a number of the analyses presented by

DEA. I lind that DEA presents misleading statistics that are inconsistent with

actual data. In addition, DEA makes several inappropriate comparisons and

disregards numerous due diligence efforts undertaken by Masters. From these

inaccuracies emerge a biased and misleading picture of Masters’ distribution of

oxycodonc. When I present actual distribution data and provide important context

to contradict DEA’s misleading conclusions, a very different picture of Masters

emerges.

H. BACKGROUND AND QUALIFICATIONS

3. My name is Joanna Shepherd-Bailey, Ph.D. As described further in

my curriculum vitae. R67. I received a Ph.D. in Economics from Emory

University, with concentrations in Econometrics/Statistics and Law & Economics.

I am currently a tenured professor at Emory University School of Law, and! was

previously a professor of Economics at Emory University, Clemson University,

and Georgia State University. In addition, I previously worked on the Economic

Research Team at the Atlanta Federal Reserve Bank.

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4. I have taught numerous courses in statistics, econometrics.

economics. and other analytical courses to undergraduates, Ph.D. students, and law

students. I have published numerous empirical articles that have appeared in

leading peer-reviewed economics journals. peer-reviewed law journals, and law

reviews. The majority of these articles involve a detailed statistical analysis of

legal changes or legal institutions. Several have also focused on issues in the

pharmaceutical industry.

5. 1 have testified about my statistical work before the U.S. 1-louse of

Representatives’ Judiciary Committee and the National Academy of Sciences. I

have also served as an expert witness in federal and administrative courts, and

have testified for the Department of Justice. Most relevantly, I testified as a

statistical expert in the Matter of Novelty Distributors, Inc. (DEA Docket No. 08-

33), and was prepared to testify as a statistical expert in the Matter of Cardinal

I-Iealth (DEA Docket No. 12-32) and in the Matter of Walgreens, Co. (DEA

Docket No. 13-01).

III. MISLEADING AND INCORRECT STATEMENTS IN DEA’S ANALYSIS

6. DEA offers a number of statistics to support its allegation that

“Masters has failed to maintain effective controls against the diversion of

controlled substances” over the two-year period from April 2009 through March

2011.1 Many of these statistics are misleading and inconsistent with the reality

DEA Order to Show Cause at 2 (August 9, 2013) (hereinafter “DEA Order to Show Cause”).

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reflected in Masters’ actual oxycodone shipment data. From these inaccuracies

emerges a biased and misleading picture of Masters’ distribution of oxycodone.

A. DEA’s Misrepresentation of Masters’ Oxycodone Shipments OverTime.

7. In its Prehearing Statement. DEA asserts that Masters shipped large

amounts of oxycodone over a two-year period from April 2009 to March 2011:

“[Diespite the MOA and Masters’ newly implemented compliance policies (those

reviewed by DEA in August 2009) and SOMS, Masters continued to ship large

amounts of oxycodone to Florida independent retail pharmacies between April

2009 and March 201 l.” However, DEA’s assertions misrepresent Masters’ actual

shipment volumes to Florida. In reality, Masters’ shipments to Florida pharmacies

significantly declined during the two-year period identified by DEA.

8. DEA presents various statistics in support of the allegation that

Masters failed to maintain effective controls against diversion for the entire two-

year period. For example, DEA reports Masters’ total Florida oxycodone shipment

data that spans the entire two-year period: “From April 1, 2009 through March 31,

2011, Automation of Reports and Consolidated Orders System (“ARCOS”) data

shows that Masters’ sales of oxycodone products to its Florida customers exceeded

52 million dosage units.”3 Similarly, DEA presents aggregate shipment statistics

for the individual DEA-identified pharmacies. For example, ‘vhen describing

2 Government’s Prehearing Statement at 40 (September 25, 2013) (hereinafter “DEAPrehearing Statement”).

DEA Order to Show Cause at 2.

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shipments to Medical Plaza Pharmacy, DEA asserts that, “From April 1, 2009

through March 31, 2011, Masters distributed approximately 330,000 dosage units

of oxycodone 30 rng to the Medical Plaza Pharmacy of Plantation, LLC.”4

9. However, DEA’s aggregated two-year shipment figures obscure

significant changes in oxycodone shipment patterns over time. Importantly,

Masters’ monthly oxycodone shipments to the Florida pharmacies decreased

significantly during this two-year period. By presenting only aggregated statistics,

DEA conceals this decline in Masters’ oxycodone shipments.

10. In R68. I plot Masters’ total monthly shipments of oxycodone 30 mg

to Florida pharmacies from April 2009 to March 2011. During this two-year

period, Masters’ total shipments decrcased significantly from a peak of

approximately 3.5 million dosage units in June 2009 to approximately 500,000

dosage units in March 2011. DEA fails to recognize this significant decline.

11. Moreover, based on information provided by the Company. I

understand that in July 2011—long before the DEA issued the Order to Show

Cause—Masters voluntarily ceased all controlled substance shipments to Florida.

Not only does the two-year period identified by DEA end immediately before

shipments were ceased, DEA fails to even acknowledge Masters’ decision to stop

Florida shipments. By ignoring this decision, DEA continues to misrepresent the

actual patterns of Masters’ oxycodone shipments.

‘ DEA Prehearing Statement at 42,

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12. Thus, the data do not corroborate DEA’s assertion that Masters’ anti-

diversion controls were inadequate over a two-year period beginning in April

2009. To the contrary, when I examine Masters’ actual shipment data, a very

different picture emerges than the one painted by DEA. Most importantly, for

most of DEA’s two-year period, Masters’ actual oxycodone shipments were

declining to Florida pharmacies. This decline eventually culminated in Masters’

decision to cease oxycodone shipments altogether in July 2011.

B. DEA Erroneously Asserts That Shipments to the DEA-IdentiftedPharmacies Werc Unusually Large.

13. DEA further asserts that Masters failed to maintain effective controls

against diversion because it shipped “unusually” large oxycodone volumes to the

DEA-identi fled pharmacies. After reporting Masters’ aggregate total shipments to

the DEA-identifled pharmacies. DEA argues that “Masters was aware of the

discrepancy between their average pharmacy customer(s) and many of their

Florida pharmacy customers, particularly the pharmacy customers detailed in the

2013 OTSC.”5

14. 1-lowever. DEA’s assertions misrepresent Masters’ actual shipments

to the DEA-identifled pharmacies. In reality, neither Masters’ shipment data nor

statistical tests indicate that the shipments to these pharmacies were unusually

large.

DEA Prehearing Statement at 43.

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15. In R69 through R75. I report Masters’ monthly oxycodone

shipments to each Florida pharmacy customer for the period April 2009 through

July 201]. Each blue marker in the charts represents a monthly shipment to an

individual pharmacy and the red markers identify a monthly shipment to a specific

DEA-identifled pharmacy. It is evident from the charts that shipments to the

DEA-identified pharmacies rarely stand out from the rest of the monthly

shipments. Indeed, for many of the months, shipments to the DEA-identi fled

pharmacies are squarely in the mid-range of monthly shipments.

16. In addition, I performed a Z-score analysis to statistically measure

how shipments to each of the DEA-identifled pharmacies compared to the average

shipments. This analysis provides a scientific measurement of whether an

observation (here, a monthly shipment) is atypical compared to the rest of the

observations. The Z-score analysis confirms that most of the monthly shipments

to the DEA-identifled pharmacies do not stand out as atypical; fewer than half of

the monthly shipments to the DEA-identified pharmacies are statistically

significant at the 0.05 significance level.

17. Thus, in contrast to DEA’s assertion, Masters’ shipments to the

DEA-identified pharmacies did not stand out as unusually large. Indeed, neither

monthly shipment data nor statistical tests support DEA’s claim. 1-lence, the

shipment volume to these pharmacies would not have appeared extraordinary to

Masters. DEA’s claim that Masters should have been aware of the discrepancy in

shipments to these pharmacies is inconsistent with reality.

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C. DEA’s Improper Assumptions Regarding Masters’ OxycodonePrices.

18. In its Prehearing Statement, DEA insinuates that Masters’ price

increases were an attempt to profit from oxycodone abuse in Florida. For

example, DEA states that it vill ask witnesses about: “whether Masters increased

its oxycodone prices in order to benefit from the massive amounts of oxycodone

being sold to Florida customers.”1’ The DEA also proposes to interview several

other witnesses about Masters’ pricing practices and strategies.

19. 1-lowever. this intimation contradicts fundamental economic

principles of supply and demand. In a competitive market such as the market for

pharmaceuticals, prices are established by basic supply and demand factors.

According to economic principles, markets experiencing a shortage of a product

will experience price increases until the shortage is alleviated. A market where

demand exceeds supply is out of equilibrium. and the natural market response is

an increase in prices until equilibrium is attained.

20. This market reaction exactly describes Masters’ pricing practices for

oxycodone in Florida. Based on my knowledge and understanding of certain

actions in 2010, there are several factors that contributed to a contracting supply of

oxycodone products in Florida: Florida legislation enacted in June 2010 and

effective in October 2010 made it illegal for healthcare practitioners to dispense

from their offices more than a 72-hour supply of schedule II controlled substances;

6 DEA Prehearing Statement at 58.

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DEA action taken in June 2010 against four distributors caused oxycodone sales to

Florida health practitioners to “plummet”;7 and various distributors decided to

voluntarily cease distribution of oxycodone products. The natural market response

to such supply-contracting events is an increase in prices, which is exactly the

response that Masters took. Based on my understanding. Masters monitored

numerous factors affecting the supply and demand of oxycodone on a daily basis,

and adjusted prices accordingly. Moreover, as would be expected in any market,

Masters continuously monitors the supply and demand fttctors of all of its

products, adjusting prices accordingly.

21. Thus. DEA’s insinuation that Masters’ increase in prices reflected a

strategy to profit from oxycodone abuse in Florida presents a misleading picture of

Masters’ business strategy. DEA’s assertion is inconsistent with the fundamental

economic principles of supply and demand.

IV. DEA’S INAPPROPRIATE COMPARISONS OFOXYCODONE SHIPMENTS AND SALES ACROSS PHARMACIES

22. DEA makes several inappropriate and misleading comparisons in

support of its argument that Masters failed to maintain effective controls against

diversion. It is critical to note that, even if the comparisons were appropriate,

Masters does not have the data to draw many of these comparisons. Unlike DEA

Responding to the Prescription Drug Epic/ernie: Strategiesfor Reducing Abuse, Misuse,Diversion, and Fraud, Statement for the Record of Michele M. Leonhart, Administrator,Drug Enforcement Administration. Before the Subcommittee on Crime and TerrorismCommittee on the Judiciajy, U.S. Senate, p.10 (May 24, 2011). available atwww.justice.aov/dca/pr/speeches-testirnonv/201 2-2009/1 10524 testimonv.pdf (hereinafter

Leonhart Statement”).

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that possesses complete oxycodone shipment data in its ARCOS data, Masters is

incapable of reliably comparing either its oxycodone distribution to other

wholesalers’ distributions or the oxycodone volumes purchased by a particular

pharmacy to the volumes purchased by an average Florida pharmacy.

23. Masters has no way to compare its distribution to other wholesalers

because it has no way to know the patterns and volumes of other wholesalers’

oxycodone shipments to Florida. Although Masters can potentially observe when

one of its own customers is buying from another distributor, it has no way to know

whether that customers’ purchases are representative of the distributors’ other

pharmacy customers. Thus, without insight into DEA’s ARCOS data. Masters

cannot compare its oxycodone shipments to other distributors’ shipments.

24. Similarly, Masters is not able to compare its pharmacy customers’

orders of oxycodone products to the majority of other Florida pharmacies.

Between April 2009 and July 2011, Masters distributed oxycodone products to 346

Florida pharmacies, and for many of these pharmacies, Masters supplied only a

handful of oxycodone shipments. Yet, Florida is home to over 4,000 pharmacies.

25. Thus, based on my review of the data, Masters supplied only

sporadic shipments of oxycodone to fewer than 10 percent of Florida pharmacies.

Without DEA disclosing data about oxycodone shipments to other pharmacies,

Masters would have no basis to compare its shipments of oxycodone to the more

than 90 percent of Florida pharmacies to whom Masters did not ship and did not

do business. Masters’ lack of information about oxycodone shipments to such a

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large proportion of Florida pharmacies prevents it from discerning how its

oxycodone shipment volumes compare to oxycodone shipments to oilier

individual pharmacies or to an average Florida pharmacy.

A. Inappropriate Comparison of Shipments to Florida and OtherStates.

26. In addition to presenting comparisons that Masters is not able to

draw based on its limited data, DEA also makes several improper comparisons.

27. As evidence that Masters Ruled to maintain effective controls against

diversion, DEA points to Masters’ greater oxycodone distribution to Florida

pharmacies compared to pharmacies in other states: “The amount of oxycodone

products distributed by Masters to its Florida customers vell exceeded the amount

of oxycodone distributed by Masters to its customers in other states. For example,

during this same time period in 2009, Masters distributed approximately 1.47

million dosage units of oxycodone to its Nevada customers, approximately 1.27

million dosage units of oxycodone to its Tennessee customers, approximately 1.14

million dosage units of oxycodone to its Pennsylvania customers and

approximately 1.09 million dosage units of oxycodone to its New Jersey

custoiTlers.”8

28. However, DEA’s comparison of Masters’ Florida shipments to

shipments in other states is inappropriate because it fails to account for several

DEA Prehearing Statement at 41.

Ii

important differences among the states. Without this important context,

comparison across states is irrelevant.

29. First, DEA’s comparison of total oxycodone shipments does not take

into account differences in state populations. Florida’s population of 18.8 million

far exceeds the populations of DEA’s comparison states (Nevada-2.7 million;

Tennessee-6.3 million; Pennsylvania-12.7 million; New Jersey-8.8 million).9

Because a state’s population represents the potential consumers of oxycodone,

DEA’s comparisons of total shipments ignore the fact that with more consumers

follows a greater quantity demanded.

30. In addition. DEA does not control for important differences across

states that may produce different volumes of legitimate oxycodone shipments.

The demographics of patients in different states can affect the mix of prescriptions

that the pharmacies fill. One such demographic characteristic is age. Specifically,

my analysis of the NAMCS data set obtained from the Centers for Disease Control

suggests that people in the 40-64 year old age group are disproportionately

represented among those who receive treatment to manage pain.’0 Concentrations

of people in this age range in a state may drive higher than average use of pain

U.s. Census Bureau, Annual Estimates of the Population for the United States, Regions,States, and Puerto Rico: April 1,2010 to July 1,2012(2012).

10 The National Ambulatory Medical Care Survey (“NAMCS”) is a national surveyadministered by the Centers for Disease Control and Prevention (“CDC”) that capturesinformation from a sample of visits to non-federal employed office-based physicians who areprimarily engaged in direct patient care. Based on aggregated NAMCS data from 2006 to2009. I estimate that 59% of patients that are prescribed oxycodone are in the 40-64 year oldage group. By comparison, people age 40-64 account for 33% of the overall populationaccording to the 2010 Census.

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management medication. Florida has a greater population of people age 40-64

than any of the other DEA-comparison states. Thus, one would expect Florida

to have more legitimate demand for oxycodone products.

31. Because of the older population, Florida is also home to more

medical establishments than any of the DEA-comparison states. Florida is home

to almost 52,000 medical establishments compared to almost 6,000 in Nevada,

26,000 in New Jersey, 35,000 in Pennsylvania, and 14,000 in Tennessee.t2

Because medical establishments drive legitimate traffic to pharmacies, Florida

would be expected to have greater legitimate demand for oxycodone products.

32. Moreover, the many DEA and state Jaw enforcement actions in

Florida also likely account for Masters’ higher oxycodone shipments to Florida

versus other states. DEA and state law enforcement actions have revoked the

registrations or forced the closure of many pharmacies, physician clinics, and

distributors in Florida)3 Other distributors and pharmacies have voluntarily

ceased selling oxycodone in Florida to avoid the risk of future enforcement

actions. I would expect that Masters, as a secondary wholesaler to most of its

pharmacy customers, receives more order requests when primary wholesalers

experience decreases in their oxycodone supplies. Thus, Masters’ business model

U.S. Census Bureau, Annual Estimates of die Resident Population for Selected Age Groupsby Sex for the United Stales, States. Counties, and Puerto Rico Commonwealth andMunicipios: April 1,2010 to July 1,2012 (2012).

2 U.S. Census Bureau, Health Care and Social Assistance: Geographic Area Series: SummanStatistics: 2007 (2007).

3 Leonhart Statement at 10.

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naturally results in a greater supply of oxycodone products to a state that

experiences various supply disruptions.

33. DEA’s comparison of Masters’ shipments to Florida versus other

states is therefore inappropriate for several reasons. The comparison fails to

account for important differences in the population, demographics, and prevalence

of medical establishments that determine the legitimate demand in a state.

Moreover, DEA ignores that Masters’ business model as a secondary supplier

results in greater demand in states with frequent supply disruptions. Hence, any

comparison of Masters’ shipments across states is meaningless.

B. improper Comparison of DEA-identified Pharmacies to OtherPharmacies.

34. As further evidence that Masters railed to maintain effective controls

against diversion. DEA points to greater oxycodone shipments to the DEA

identified pharmacies versus other pharmacies: “Masters was aware of the

discrepancy between their average pharmacy customer(s) and many of their

Florida pharmacy customers, particularly the pharmacy customers detailed in the

2013 OTSC.”4 However, any comparison across Masters’ individual pharmacy

customers is useless because it ignores Masters’ fundamental business model.

35. Masters operates as a sccondary wholesaler to all of its customers.

providing products on an irregular basis when the customers’ primary wholesalers

are unable to supply the product at all or at a competitive price. Because of this

‘‘ DEA Prehearing Statement at 43.

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business mode]. Masters’ supply of oxycodone products to specific pharmacies

changes from month to month, fluctuating significantly more than if Masters

operated as a primary wholesaler. Indeed, the data I reviewed support this

conclusion. The irregular pattern of Masters’ oxycodone 30mg. shipments to the

346 Florida pharmacies it supplied between April 2009 and July 2011 reveals the

unpredictable nature of its business. During this period, only three pharmacies

received monthly shipments of oxycodone 30 mg. The median pharmacy during

this time received only ten monthly shipments during this 28-month period.

Moreover, shipments to the same pharmacy customer varied significantly month-

to-month as customers ordered more or less, likely depending on what they were

able to obtain from their primary wholesaler.

36. Thus, shipments of oxycodone to Masters’ customers varied

significantly, both across pharmacies and across months, because of Masters’ role

as a secondary wholesaler. As a result, any comparison across Masters’ pharmacy

customers is meaningless. Specific customers may have received more oxycodone

from Masters for countless legitimate reasons that involve the constancy of their

primary wholesalers’ oxycodone supply, the competitiveness of their primary

wholesalers’ prices, and the consistency of their own customer demand for

oxycodone products. Masters could not have made any conclusions about the

likelihood of diversion by comparing shipments across pharmacies. DEA’s

assertion that Masters’ anti-diversion efforts were inadequate given the differences

in shipments across pharmacies ignores the reality of Masters’ business model.

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C. DEA’s Failure to Account for Other Legitimate Factors thatExplain Differences in Oxycodone Shipments AcrossPharmacies.

37. Moreover. DEA’s comparisons are incomplete because they fail to

account for a number of legitimate factors that explain differences in oxycodone

shipments across pharmacies. Based on my review of data and information

provided to Masters by its customers, many of Masters’ pharmacy customers

maintained that these factors influenced their volume of oxycodone dispensing,

and Masters’ individual compliance files for the pharmacies confirmed the

existence of these factors. In my opinion, these factors are relevant to explain

differences in Masters’ shipments across pharmacies. Nevertheless. DEA ignores

these factors in its comparisons and allegations.

38. Co-location with treatment facilities. Proximity to medical

establishments is an important factor driving legitimate traffic to pharmacies.

Several of the DEA-identified pharmacies informed Masters that much of their

oxycodone dispensing was to patients of the nearby medical establishments.

Masters’ individual compliance files for the pharmacies confirmed their co

location with treatment facilities. For example. Englewood Pharmacy serviced

patients from two large hospitals and a number of physicians’ offices that were

located nearby) Lain’s Pharmacy explained that much of its oxycodone

IS Prehearing Statement of’ Masters Pharmaceutical. Inc. at 46 (October 18. 2013) (hereinafter“Masters’ Prehearing Statement”).

16

dispensing was to patients of “Bone Alley”, the nearby area with a large

concentration of orthopedic physicians and medical centers nearby.’6 Similarly,

Medical Plaza Pharmacy supplied oxvcodone to patients in the medical center in

which it was located, which also included 60 physicians and an adjacent hospital.’7

As a result of their locations near treatment facilities, it was not unreasonable for

Masters to assume that these pharmacies had a unique, yet legitimate, patient mix.

DEA does not consider this factor in asserting that the DEA-identi lied pharmacies’

high volume of oxvcodone dispensing should have alerted Masters to probable

diversion.

39. Agreements to supply to certain care facilities (e.a.. lona-term care).

Some pharmacies may have exclusive contracts or special supply arrangements

with medical facilities like long-term care facilities or nursing homes. These

arrangements may also drive unique patterns of utilization. For example,

Morrison’s Rx attributed its high volume of oxycodone dispensing to its servicing

of a nearby nursing home and in-patient facility.’8 Temple Terrace pharmacy

explained that it filled the prescriptions for a juvenile in-patient thcility.’9

Similarly. City View described its business model as servicing “closed-door”

facilities such as nursing homes, hospice programs, and in-patient medical

16 Ic?. at 52.

Ic?. at 55.s Id. at 57.‘ Ic?. at 60.

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facilities.2° DEA does not consider this factor in asserting that the DEA-identifled

pharmacies’ high volume of oxycodone dispensing should have alerted Masters to

probable diversion.

40. Co-location with shopping centers and places of business. The

overall volume of business and the mix of patients that a pharmacy experiences

could be attributable to the presence of large shopping centers or employers

nearby. Many patients fill prescriptions while shopping or commuting to and from

work. For example. City View pharmacy explained that much of its traffic was

due to its location in a busy urban area of Orlando, Florida.2’ DEA does not

consider this factor in asserting that the DEA-identified pharmacies’ high volume

of oxycodone dispensing should have alerted Masters to probable diversion.

41. Local and regional demographics. The demographics of patients in

the areas around a pharmacy can affect the mix of prescriptions that the

pharmacies fill. Because people in the 40-64 year old age group are

disproportionately represented among those who receive treatment to manage

pain.22 concentrations of people in this age range in the vicinity of a pharmacy

may drive higher than average use of pain management medication. Similarly, the

demographics of the surrounding area can explain differences in payment methods

across pharmacies. For example, Drug Shoppe explained that it had many cash-

paying oxycodone customers because of its location in a less-affluent residential

20 Id. at49.21 Id.at49.22 See supra at 12, note 10.

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area.23 DEA does not consider this factor in asserting that the DEA-identified

pharmacies’ high volume of oxycodone dispensing should have alerted Masters to

probable diversion.

42. Patient consolidation to a particular store or set of stores. Patients

may face a limited selection of pharmacies at which they can fill their

prescriptions for controlled substances, thus driving controlled substance volume

away from one set of pharmacies to another. This limited selection can be due to a

variety of factors, including pharmacies that do not dispense controlled substances,

changes in the local pharmacy environment, or the reputation of some pharmacies

as specialists in pain management. DEA does not consider this factor in asserting

that the DEA-identifled pharmacies’ high volume of oxycodone dispensing should

have alerted Masters to probable diversion.

43. Impact of DEA and state law enforcement actions. From time to

time, DEA and state law enforcement actions have resulted in pharmacies,

physician clinics, or distributors having their DEA registrations or state licenses

revoked or being closed. In such instances, patients of these entities, many of

whom are legitimate oxycodone users, would instead turn to nearby pharmacies to

ill] their prescriptions. For example, I understand that DEA action taken in June

2010 against four distributors caused oxycodone sales to Florida health

practitioners to “plummet.”24 Many of the DEA-identified pharmacies explained

23 Masters’ Prehearing Statement at 42.21 Leonharl Statement at 1 0.

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that they filled oxycodone prescriptions for various types of health practitioners

who commonly treated pain. Moreover, many legitimate users likely turned to

these pharmacies to fill their prescriptions when they could no longer obtain their

prescriptions from the health care practitioners themselves. For example, Tru

Value Drugs,25 Englewood Pharmacy,26 and Lam’s Pharmacy27 indicated to

Masters that they serviced patients from nearby pain management clinics. DEA

does not indicate that these are factors it considered in asserting that the DEA

identified pharmacies’ high volume of oxycodone dispensing should have alerted

Masters to probable diversion.

25 Masters’ Prehearing Statement at 39.2 Id. at 4627 Id. at 52.

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1 LIrcidir IrTitler paurliy of perjury that the foregoing is true and concet.

/2-3o-13

Date