Drug wholesalers go to court to block shutdown by state

Michelle Swafford

Tuesday, March 9, 2004 | 11:09 a.m.

Two Las Vegas pharmaceutical wholesalers could learn this afternoon whether their drug licenses will be revoked and fines imposed for their violations of state regulations.

Attorneys for Dutchess Business Services Inc. and Legend Pharmaceuticals Inc. are scheduled to have a hearing at 1 p.m. in Clark County District Court before Judge Jennifer Togliatti to determine if they must pay the fines and lose their pharmaceutical licenses as ordered on Jan. 15 by the Nevada State Board of Pharmacy.

The companies filed a petition for judicial review on Friday, saying the Board of Pharmacy didn't grant the companies a fair administrative hearing when it found the companies guilty of 11 charges. If the Togliatti grants the request, the companies could continue to operate until their judicial review concludes.

"The testimony was completely inconsistent with their findings," said David Chesnoff, an attorney with Goodman & Chesnoff who is representing both wholesalers. "Their findings suggest that they had a preordained agenda that they set out to fulfill."

Chesnoff said he and his colleague Richard Schonfeld are confident that a judicial review would provide a fair hearing for their clients.

The District Court petition said, "The Nevada State Board of Pharmacy ignored the truthful testimony and deliberately misapplied the facts of this case to the law in order to reach their predetermined decision, which was reached for internal Pharmacy Board political purposes."

Dutchess and Legend have had a longstanding dispute with Pharmacy Board Legal Counsel Louis Ling and Pharmacy Board Executive Secretary Keith Mcdonald, who brought the accusations against the wholesalers on Aug. 21. The wholesalers have filed state and federal lawsuits pending against Mcdonald and Ling as individuals, accusing them of going beyond their regulatory duties to remove smaller drug wholesalers from the Nevada market.

Dutchess and Legend were found guilty of falsifying their company records and buying and selling drugs that were illegally obtained from companies not authorized to possess them.

Dutchess was run by E. H. Paul DeBree at the location where Legend now operates. Legend is owned and was run by Lance Packer, DeBree's son-in-law.

Dutchess was also found guilty of buying and selling counterfeit Serostim, a drug used to treat excessive weight loss in AIDS patients. The manufacturer, Rockland,Mass-based Serono said some of the fake Serostim reached patients who unknowingly took the drug.

DeBree said during testimony in January that his company had some potentially counterfeit Serostim and that he voluntarily recalled it once the lot numbers in question were called to his attention.

Dutchess was fined $1 million and ordered to pay another $37,609, which is half of the investigation costs. Legend was fined $371,000 and ordered to pay the other half of the costs. Both companies' licenses were revoked for an undetermined amount of time.