Judge James C. Chalfant, Case 22STCP04253 2023-02-16 Tentative Ruling

Plaintiff Absolute Pharmacy, LLC (“Absolute”) applies for a stay of the California State Board of Pharmacy (“Board”) decision revoking its license during the pendency of this action.

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

Petitioner Absolute commenced this action on December 1, 2022 against the Board’s Department of Consumer Affairs and Anne Sodergren (“Complainant”) in her official capacity as Executive Officer of the Board, alleging one claim for traditional mandamus and two claims for administrative mandamus. The Petition alleges in pertinent part as follows.

In 2019, the Board formed a sterile compounding committee (“Committee”) to discuss amendments to California’s sterile compounding regulations. The Committee recommended amendments specifying that no component shall be used to compound a sterile preparation if it is an “ungraded ingredient” or did not have a United States Pharmacopoeia-National Formulary (“USP”) drug monograph. In 2020, the Board rejected this proposal and informed the public that it would not change the regulations governing compounded preparations.

In July 2021, Complainant filed an Accusation against Absolute (“Accusation”) with five causes for discipline, all of which concerned unprofessional conduct related to the compounding of certain sterile medications. The core allegation was that, because Absolute had used certain ungraded ingredients, the sterile medications thereby compounded lacked quality, were adulterated, and violated the federal Food, Drug and Cosmetic Act (“FDCA”). Complainant also alleged that Absolute failed to perform the specific type of sterility testing required by state regulations and failed to record the supplier of the ingredients as required by a state recordkeeping regulation.

The Board referred the Accusation to the Office of Administrative Hearings (“OAH”) for hearing, which occurred on March 21, 2022. On May 2, 2022, the Administrative Law Judge (“ALJ”) issued a proposed decision recommending dismissal of three of the five causes of action, also concluding that the Board had established the allegations concerning sterility testing and failure to record ingredient manufacturers. However, the proposed decision concluded that public reproval was the appropriate sanction because the evidence demonstrated that Absolute could continue to be licensed without threating public health, safety, or welfare.

On August 4, 2022, the Board rejected the ALJ’s proposed decision. The parties submitted written arguments, in which Absolute asserted that per the proposed decision, Complainant failed to establish actual contamination or filth, putrid, or decomposed substances and instead applied a per se standard against the use of ungraded ingredients. The Accusation was the first time such a standard had been applied. Absolute also argued that the evidence showed that its sterility test exceeded the Board’s regulatory requirement. The fifth cause of action had to be dismissed because the Board did not have jurisdiction to enforce the FDCA, and Complainant failed to prove the allegation even if it did.

On November 10, 2022, the Board issued its decision, finding against Absolute on all five causes of action without addressing the underground-regulation or unfair-notice arguments. The Board revoked Absolute’s Original Non-Resident Pharmacy Permit and Non-Resident Sterile Compounding Permit (collectively, the “Permits”), effective December 10, 2022.

On November 18, 2022, Absolute petitioned the Board for reconsideration on the basis that its decision was issued more than 100 days after the Board received the transcript of ALJ proceedings which required adoption of the ALJ’s proposed decision. The decision also was not based on the weight of the evidence because it did not address several key arguments and critical admissions. The Board did not respond.

Absolute seeks a writ of administrative mandamus directing the Board to set aside its decision and to adopt the ALJ’s proposed decision. Absolute also seeks administrative mandamus dismissing the Accusation’s fifth cause of action, holding that the first two causes are void as enforcement of an unlawful underground regulation, and requiring the Board to reconsider the discipline.

Absolute further seeks a writ of traditional mandamus ordering that the per se standard for the use of ungraded ingredients is an invalid enforcement of an underground regulation, and that the Board and Complainant not file any accusation or impose any discipline using the per se standard until the Board adopts such a regulation through required rulemaking procedures. Absolute seeks attorney’s fees and costs.

On December 2, 2022, Absolute personally served the Board and Complainant with the Petition and Summons.

On December 6, 2022, the court denied Absolute’s ex parte application for a stay of enforcement of the Decision, for failure to show an emergency that justifies ex parte basis. The court granted an ex parte application admitting Rachael Pontikes, Esq. (“Pontikes”) as counsel pro hac vice.

An injunction is a writ or order requiring a person to refrain from a particular act; it may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. CCP §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160.[1] It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. See Scaringe v. J.C.C. Enterprises, Inc., (1988) 205 Cal.App.3d 1536. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.

A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2).[2] Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. See e.g. Ancora-Citronelle Corp. v. Green, (1974) 41 Cal.App.3d 146, 150. Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §527(a). For this reason, a pleading alone rarely suffices. Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007). The burden of proof is on the plaintiff as moving party. O’Connell v. Superior Court, (2006) 141 Cal.App.4th 1452, 1481.

A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.

In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. Doe v. Wilson, (1997) 57 Cal.App.4th 296, 304. The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. See CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.

Pursuant to CCP section 1094.5(h), the court may stay the operation of the administrative order or decision of a state agency or licensed hospital pending judgment, or until the filing of a notice of appeal from the judgment or until the expiration of the time for filing the notice, whichever occurs first. The stay shall not be imposed unless the public interest will not suffer and the agency is unlikely to prevail at trial. Id.

In addition to these requirements, the applicant for a stay must show irreparable harm. The reason is that a stay is a form of preliminary injunction. In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402; Pillsbury, Madison & Sutro v. Schectman (1997) 55 Cal.App.4th 1279, 1283.

Thus, a request for a stay under CCP section 1094.5(h) presents three elements: (a) the agency is unlikely to prevail, (b) balancing of irreparable harms, and (c) the stay will not be against the public interest. The burden is on the petitioner to establish the criteria for a stay. The decision to grant any preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A drug or device shall be deemed to be adulterated if it consists in whole or in part of any filthy, putrid, or decomposed substance; has been prepared, packed, or held under insanitary conditions whereby it may have been contaminated with filth, or whereby it may have been rendered injurious to health; or is a drug and the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements of the FDCA as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess. 21 U.S.C. §351(a)(1)-(2)(B).

The regulations set forth in Title 21 of the Code of Federal Regulations (“21 CFR”) sections 210.1, 211, 225, and 226 contain the minimum current good manufacturing practice for methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packing, or holding of a drug to assure that such drug meets the requirements of the act as to safety, and has the identity and strength and meets the quality and purity characteristics that it purports or is represented to possess. 21 CFR §210.1(a). The failure to comply with any of these regulations shall render such drug to be adulterated under 21 CFR section 501(a)(2)(B) and such drug, as well as the person who is responsible for the failure to comply, shall be subject to regulatory action. 21 CFR §210.1(b).

The drug product regulations in Title 21 United States Code (“21 U.S.C.”) sections 351(a)(2)(B), 352(f)(1), and 355 shall not apply to a drug product if the drug product is compounded for an identified individual patient based on the receipt of a valid prescription order or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, if the drug product meets the requirements of this section, and if the compounding is by a licensed pharmacist in a state licensed pharmacy or a federal facility, or a licensed physician, on the prescription order for such individual patient made by a licensed physician or other licensed practitioner authorized by state law to prescribe drugs. 21 U.S.C. §353a(a)(1).

Alternatively, the compounding can be by a licensed pharmacist or licensed physician in limited quantities before the receipt of a valid prescription order for such individual patient; and based on a history of the licensed pharmacist or licensed physician receiving valid prescription orders for the compounding of the drug product, which orders have been generated solely within an established relationship between the licensed pharmacist or licensed physician and either (1) such individual patient for whom the prescription order will be provided; or (2) the physician or other licensed practitioner who will write such prescription order. 21 U.S.C. §353a(a)(2).

Under section 503A of the FDCA, a drug product may be compounded if the licensed pharmacist or licensed physician compounds the drug product using bulk drug substances that (1) comply with the standards of an applicable USP or NF monograph, if a monograph exists, and the USP chapter on pharmacy compounding; (2) if such a monograph does not exist, are drug substances that are components of drugs approved by the Secretary; or (3) if such a monograph does not exist and the drug substance is not a component of a drug approved by the Secretary that appears on a list developed by the Secretary through regulations issued by the Secretary under 21 U.S.C. section 353a(c). 21 U.S.C. §353a(b)(1)(A)(i).

No person shall introduce or deliver for introduction into interstate commerce any new drug unless an approval of an application filed pursuant to 21 U.S.C. sections 355(b)-(j) is effective with respect to such drug. 21 U.S.C. §355(a).

Generally, all proceedings for the enforcement, or to restrain violations of the FDCA shall be by and in the name of the United States. 21 U.S.C. §337(a). As an exception, a state may bring in its own name and within its jurisdiction proceedings for the civil enforcement, or to restrain violations, of 21 U.S.C. sections 401, 403(b)-(i), 403(k), 403(q), or 403(r) if the food that is the subject of the proceeding is located in that state. 21 U.S.C. §337(b)(1).

To survive a defense of preemption, a plaintiff must assert a state law claim that is premised on a violation of the FDCA but not based solely on it. Glennen v. Allergan, Inc. (“Glennen”) (2016), 247 Cal. App. 4th 1, 11-12. When there is no analogous state law duty, a plaintiff cannot allege a claim based on a duty existing solely by virtue of the FDCA requirements. Id. at 20.

The FDA has declared that states are primarily responsible for day-to-day oversight over the vast majority of the thousands of compounders in the United States, most of which do not register with FDA. Food & Drug Adm., Compounding Information for States (https://www.fda.gov/drugs/human-drug-compounding/compounding-information-states).

The FDA’s nonbinding Guidance for Industry as to Insanitary Conditions at Compounding Facilities (“FDA Guidance”) represents only the FDA’s current thinking on a topic. RJN Ex. B, p. 1. It does not create any rights for any person and is not binding on the FDA or the public. RJN Ex. B, p. 1. A pharmacy can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. RJN Ex. B, p. 1.

The FDA Guidance charges state regulatory bodies with the duty to assess whether the compounding facilities that they oversee engage in poor practices. RJN Ex. B, p. 3. If they do, the FDA encourages states to take appropriate action, consistent with state laws and regulations, and to contact the FDA. RJN Ex. B, p. 3.

If the FDA has encouraged a compounder to voluntarily comply with the FDCA but a follow-up inspection reveals that the compounder continues to violate the law, the FDA may consider enforcement action such as seizure or injunction. RJN Ex. A. The FDA maintains a list of enforcement actions it has taken. RJN Ex. A.

Any pharmacy engaged in compounding sterile drug preparations shall conform to the parameters and requirements stated by Title 16 of the California Code of Regulations (“16 CCR”), section 1735 et seq., and those applicable solely to sterile compounding (16 CCR §1751 et seq.). 16 CCR §1751(a).

These regulations define “quality” as the absence of harmful levels of contaminants, including filth, putrid, or decomposed substances, the absence of active ingredients other than those listed on the label, and the absence of inactive ingredients other than those listed on the master formula document. 16 CCR §1735.1(ae).

The Health and Safety Code (“H&S Code”) defines a drug or device as adulterated if it includes any filthy, putrid, or decomposed substance; was produced, prepared, packed, or held under conditions whereby it may have been contaminated with filth, or whereby it may have been rendered injurious to health; or uses methods, facilities, or controls for its manufacture, processing, packing, or holding that do not conform to, or are not operated or administered in conformity with, current good manufacturing practice to assure that the drug or device meets the requirements of this part as to safety and has the identity and strength, and meets the quality and purity characteristics that it purports or is represented to possess. H&S Code §§ 111250, 111255, 111260.

Batch-produced sterile drug preparations compounded from one or more non-sterile ingredients shall be subject to documented end-product testing for sterility and shall be quarantined until the end product testing confirms sterility. 16 CCR §1751.77(e)(1). Sterility testing shall be USP chapter 71 compliant. 16 CCR §1751.77(e)(1). The requirement of end-product testing confirming sterility shall apply regardless of any sterility testing that may have been conducted on any ingredient or combination of ingredients that were previously non-sterile. 16 CCR §1751.77(e)(1).

In 2019, the Board formed the Committee to discuss amendments to California’s sterile compounding regulations. RJN Ex. J. The Committee’s Proposal included amendments whereby any active pharmaceutical ingredient (“API”) or added substance used to compound a compounded sterile preparation must be from an FDA-registered facility and shall be accompanied by a valid certificate of analysis. RJN Ex. J, §1751.9(d). No component shall be used to compound a compounded sterile preparation that meets only the European Pharmacopoeia standards, Japanese Pharmacopoeia standards, dietary supplement standards, food ingredient standards, food additive, reagent standard, or is of unspecified quality. RJN Ex. J, §1751.9(e).

On May 7, 2020, the Board announced that the versions of the regulations passed in 2004 and 2008 remain in effect. RJN Ex. K.[4] The Board also announced that it did not intend to pursue changes to the current regulations governing compounded preparations. RJN Ex. K.

Protection of the public shall be the highest priority for the Board in exercising its licensing, regulatory, and disciplinary functions, such that it is paramount whenever other interests sought to be promoted are inconsistent with it. Bus. & Prof. Code §4001.1. The purpose of discipline against any licensee is to protect the public. Furnish v. Board of Medical Quality Assurance (1957) 149 Cal.App.2d 326, 331. The purpose is to “set up a plan” whereby those who practice their profession will have the qualifications which will prevent “the evils which could result from ignorance or incompetency or a lack of honesty and integrity.” Bryce v. Board of Medical Quality Assurance (1986) 184 Cal.App.3d 1471, 1476.

The compounding of drug preparations by a pharmacy for furnishing, distribution, or use in this state shall be consistent with standards established in the pharmacy compounding chapters of the current version of the USP, including relevant testing and quality assurance. Bus. & Prof. Code §4126.8. The Board may adopt regulations to impose additional standards for compounding drug preparations. Bus. & Prof. Code §4126.8.

USP chapter 797 states that its objective is to describe conditions and practices to prevent harm to patients that could result from the use of ingredients of inappropriate quality in compounded sterile preparations. USP chapter 797 defines high risk compounding and states that compounded sterile drug preparations compounded using manufactured products not intended for sterile routes of administration (e.g., oral) are either contaminated or at a high risk to become contaminated. USP chapter 797, p. 5.

Whenever the Board has a reasonable belief, based on information obtained during an inspection or investigation, that a pharmacy compounding sterile drug products poses an immediate threat to the public health or safety, the executive officer of the Board may issue an order to the pharmacy to immediately cease and desist from compounding sterile drug products. Bus. & Prof. Code §4127.3(a). The cease-and-desist order shall remain in effect for no more than 30 days or the date of a hearing seeking an interim suspension order, whichever is earlier. Bus. & Prof. Code §4127.3(a).

A person or entity shall not (1) purchase, trade, sell, warehouse, distribute, or transfer dangerous drugs or dangerous devices at wholesale with a person or entity that is not licensed with the Board as a wholesaler, third-party logistics provider, or pharmacy; (2) purchase, trade, sell, or transfer dangerous drugs that the person knew or reasonably should have known were adulterated; (3) purchase, trade, sell, or transfer dangerous drugs that the person knew or reasonably should have known were misbranded; (4) purchase, trade, sell, or transfer dangerous drugs or dangerous devices after the beyond use date on the label; or (5) fail to maintain records of the acquisition or disposition of dangerous drugs or dangerous devices for at least three years. Bus. & Prof. Code §4169(a); see also Health and Safety Code §111295 (it is unlawful for any person to manufacture, sell, deliver, hold, or offer for sale any drug or device that is adulterated).

The Board shall take action against any holder of a license who is guilty of unprofessional conduct, which includes violating, attempting to violate, assisting in or abetting the violation of, or conspiring to violate any provision or term of this chapter or of the applicable federal and state laws and regulations governing pharmacy, including regulations established by the Board or by any other state or federal regulatory agency. Bus. & Prof. Code §4301(o).

The Board may institute any action or actions as may be provided by law to prevent the sale of pharmaceutical preparations and drugs that do not conform to the standard and tests as to quality and strength, provided in the latest edition of the USP, or that violate any provision of the Sherman Food, Drug, and Cosmetic Law (H&S Code §109875 et seq.). Bus. & Prof. Code §4342(a).

In reaching a decision on a disciplinary action under the APA, the Board shall consider the disciplinary guidelines entitled “Disciplinary Guidelines” (“Guidelines”) (Rev. 2/2017). 16 CCR §1760. Deviation is appropriate where the Board, in its sole discretion, determines that the facts of the particular case warrant such a deviation. 16 CCR §1760.

The Guidelines identify four categories of violations and associated recommended minimum and maximum penalties for each. Guidelines, p. 38. Although Category I is least serious and Category IV most, any violation in any category, or any combination of violations in one or more categories, may merit revocation. Guidelines, p. 38. For each category, the Board has given representative offense descriptions and examples where violations would typically merit the recommended range of minimum to maximum penalties for that category. Guidelines, p. 38. For multiple violations, the appropriate penalty shall increase accordingly. Guidelines, p. 38. If multiple violations in multiple categories have occurred, the minimum and maximum penalties shall be those recommended in the highest category. Guidelines, p. 38.

337Absolute Chief Executive Officer (“CEO”) Andreas Dettlaff (“Dettlaff”) started Absolute in 2014. Dettlaff Decl., ¶3. Absolute developed proprietary prescription software that provides prescribers and patients with more prompt interaction with Absolute’s pharmacists, which in turn allows Absolute to process and dispense medications sooner. Dettlaff Decl., ¶4. This model allowed Absolute to expand to a total of 49 states. Dettlaff Decl., ¶5.

Absolute now has 11 employees. Dettlaff Decl., ¶3. Before the revocation, Absolute served about 11,000 California patients and received prescriptions through 172 prescribers each year. Dettlaff Decl., ¶10. Non-sterile compounding business was 27.4% of Absolute’s overall California business. Dettlaff Decl., ¶10.

Before the Accusation, Absolute had a clean disciplinary record with the FDA, the Florida Board of Pharmacy, and the Board. Dettlaff Decl., ¶¶ 6-7. In the two years since the Accusation, Absolute has remained without incident. Dettlaff Decl., ¶8.

On July 1, 2021, the Complainant filed the Accusation against Absolute. AR 17-41. The Accusation asserted that, between September 10, 2018 and March 26, 2020, Absolute used ungraded ingredients for non-sterile to sterile compounding in 461 vials of drug preparations for 218 prescriptions. AR 25-26. Absolute also adulterated these 461 vials of drug preparations for 218 prescriptions in violation of H&S Code section 111250 by using ungraded ingredients to compound them. AR 27-28. The Accusation explained that ungraded ingredients are ingredients that have not met any specific USP standards to ensure their quality, potency, and purity. AR 25.

The Accusation identified five causes for discipline. AR 38-39. First, Absolute committed unprofessional conduct in violation of Bus. & Prof. Code section 4301(o) because it failed to maintain the quality of compounded sterile preparations, as required by 16 CCR sections 1735.1(ae) and 1735.2(g), by using ungraded ingredients. AR 38.

Second, these same preparations were unprofessional conduct because they were adulterated as defined by H&S Code sections 111250 and 11295. AR 38.

Third, Absolute committed unprofessional conduct by compounding and furnishing at least 1,017 prescriptions and 1,562 vials from 39 lots without first confirming sterility via a USP chapter 71 compliant test. AR 39.

Fourth, Absolute committed unprofessional conduct by failing to document the manufacturer of each component for the 1,017 prescriptions and 1,562 vials from 39 lots, as required by 16 CCR section 1735.3(a)(2)(F). AR 39.

Fifth, Absolute committed unprofessional conduct by compounding with bulk drug substances that did not have a USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary – namely, CJC1295, BPC-157, Ipamorelin, and Thymosin Beta (TB-500) – in breach of 21 U.S.C. section 353a(b)(1)(A)(i). AR 39.

Based on these five allegations, the Accusation sought revocation and suspension of Absolute’s Permits. AR 40.[5]

The ALJ heard the Accusation on March 21 and 22, 2022. The testimony in part[6] is as follows.

Christine Acosta (“Acosta”) is a supervising inspector for the Board. AR 3255. The Accusation quotes 16 CCR section 1735.1(ae)’s definition of “quality” as the absence of harmful levels of contaminants like filth, putrid or decomposed substances, active ingredients other than those listed on the label, and inactive ingredients other than those listed on the master formula document. AR 3318. The words ungraded ingredients are not included in this definition of quality. AR 3318.

There is no evidence in the record that the FDA has taken action against Absolute for use of the compounding ingredients at issue in the Accusation. AR 3346. During Acosta’s inspection period, the FDA also has not issued Absolute any inspection findings about the use of such ingredients. AR 3346. Nor has the FDA ever issued a warning letter or took other action about the Absolute’s use of the compounding ingredients at issue. AR 3346.

Acosta acknowledged that bioluminescence is the best and most well-founded sterility test and should be used as a matter of science, but she does not have the authority to enforce that. AR 3466.

David Joseph (“Joseph”) has been a pharmacist for 48 years and is licensed in 18 states. AR 3377. Between 2018 and 2020, he was the Pharmacist-in-Charge at Absolute. AR 3389.

Absolute purchased all drug products from FDA-registered suppliers. AR 3394. Before it partnered with a supplier, Absolute ensured that it was a primary supplier in the United States rather than secondary or third level and that it would provide all certifications and FDA inspection reports. AR 3395. Absolute would also perform a web search to see if there were any negative comments about the supplier. AR 3395. Absolute limited how many suppliers it used, all of which had good national reputations. AR 3395.

The suppliers were required to provide Absolute with a certificate of analysis that clearly showed the contents of all delivered medication and percentages of each component in a compound. AR 3394. Suppliers sometimes included paper certificate of analysis in a shipment and other times gave a lot number for Absolute to use to download the certificate of analysis online. AR 3397.

The active pharmaceutical ingredient (API) is the ingredient in a compound that is supposed to provide the intended therapeutic effect. AR 3396. The certificate of analysis compares the standard percentage of each API that should be available with its actual percentage, with the goal that the actual percentage exceeds or meets the standard percentage. AR 3395.

The certificates of analysis were all within the bounds of acceptability to be used as APIs in compounding. AR 3396. Absolute would not compound with something unless it was for pharmaceutical use. AR 3396. If the certificate of analysis said otherwise, Absolute would sent it back. AR 3396-97.

Absolute’s quality assurance pharmacist would look at this information and make sure that it met Absolute’s standards for compounding. AR 3394. The pharmacist would ensure that all of the testing was done in a timely basis and that the compound either passed validations or was revalidated. AR 3397. The quality assurance pharmacist also ensured that all end-product testing and received before releasing a compound. AR 3397.

Absolute also had a chemist assure the potency and stability of all new compounds before their release. AR 3398-99. The chemist would run tests that determine the potency and the byproducts of the compounding process in order to determine the purity of the medication. AR 3399. Less than one percent of traditional compounding pharmacies have a chemist on staff; most have third parties do their testing. AR 3399.

Between 2016 and 2019, the Board did not object to Absolute’s use of bioluminescence sterility tests. AR 3424. In 2020, the Board informed Absolute that it would no longer accept this test despite extensive documentation that proved it was superior to the required USP 71 sterility test. AR 3424. Absolute immediately began to use both tests on all compounds and would not release a compound until the results from the 14-day USP test had returned. AR 3424-25.

The year 2020 was the first year that Absolute heard that it needed to include the name of an ingredient manufacturer on the compounding log instead of the supplier. AR 3426-27. The suppliers are ultimately responsible for the quality of the goods sent and in many cases they tested the APIs. AR 3427. It took some time for Absolute to contact every supplier for disclosure of the API manufacturer’s name. AR 3427. Absolute manually entered the manufacturers’ names as it received them and modified its standard procedure to indicate that the manufacturer’s identity goes on that line in the log. AR 3427.

Absolute stopped all sterile compounding in July 2021 because it had already stopped compounding peptide drugs and did not have enough other drugs to make the process financially viable. AR 3429, 3431.

On May 2, 2022, the ALJ issued a proposed decision recommending that the Board issue a public reproval against Absolute’s permits, which Absolute must thereafter report as a disciplinary action. AR 3193-225.

The ALJ addressed the Complainant’s position that an ungraded ingredient necessarily contains harmful levels of contaminants. AR 3212. The Board’s regulations do not define the term “ungraded” or specifically address the use of ungraded ingredients. AR 3212. The regulation requires harmful levels of contaminants, and active and inactive ingredients not listed on the label or master formula. AR 3212. The master formula did list the substances at issue: CJC-1295, BPC-157, TB-500, and Ipamorelin. AR 3212. FDA Guidance may suggest that these ingredients have higher levels of impurities when compared to compendial or pharmaceutical grade equivalents. AR 3212-13. But mere guidance does not establish by clear and convincing evidence that Absolute’s drug products lacked quality just because those ingredients were present. AR 3213.

Acosta raised serious concerns that Absolute used bulk drug substances that are ungraded, not considered drugs in the U.S., do not have a USP monograph, and are relatively unknown. AR 3213. However, the evidence did not establish that Absolute engaged in unprofessional conduct over the pertinent period by compounding drugs which lacked quality due to the use of ungraded substances. AR 3213. The same is true for adulterated drug products. AR 3214.

The evidence did not establish that Absolute engaged in unprofessional conduct via violation or attempted violation of 21 U.S.C. section 353a(b)(1)(A)(i), which sets forth requirements for compounding with bulk drug substances. AR 3215. Absolute compounded with bulk drug substances at issue which had no USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary. AR 3215-16. However, the Complainant failed to provide legal authority for enforcement of that statute. AR 3216. Although the FDA is beginning to enforce this provision and prohibit the compounding of CJC-1295, BPC-157, TB-500, and Ipamorelin, there is no interim guidance or FDA regulation in place to that effect. AR 3216. Absolute stopped compounding with these ingredients when the FDA sent a warning letter. AR 3216.

The Complainant failed to establish by clear and convincing evidence unprofessional conduct based on Absolute’s failure to maintain the quality of compounded drugs and distribution of adulterated drugs. Absolute did not compound and furnish drugs lacking in quality or that were adulterated. AR 3222.

The Complainant did not establish by clear and convincing evidence that Absolute violated 21 U.S.C. section 353a(b)91)(A)(i). Absolute did compound with bulk drug substances that lacked a USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary. AR 3223. However, the Complainant has no legal authority to enforce 21 U.S.C. section 353a(b)(1)(A)(i). AR 3223.

The Complainant did establish by clear and convincing evidence that Absolute failed to confirm the sterility of furnished drugs with a USP chapter 71 compliant test. AR 3222-23. The Complainant also established by clear and convincing evidence that Absolute failed to document the manufacturer of each component for 1,017 prescriptions and 1,562 vials from 39 lots, per 16 CCR section 1735.3(a)(2)(F). AR 3223. Based on these two violations, Absolute had demonstrated that it can remain licensed at this time without posing a threat to public health, safety, or welfare. AR 3224. Therefore, a public reproval was recommended. AR 3225.

The Board issued an order rejecting the ALJ’s proposed decision and inviting both parties to submit additional briefing. AR 3534. Both Absolute and the Complainant did so. AR 3595-618, 3636-48.

On November 10, 2022, the Board issued a decision revoking Absolute’s Permits, effective December 10, 2022. AR 3486, 3532.

Acosta testified she reviewed inspection reports and determined that further investigation of Absolute’s compounding practices using unapproved bulk drug substances. AR 3491.[7] Sterile compounding is taking two or more ingredients and making a product that is sterile. AR 3492. Acosta’s first thought after seeing the list of Absolute’s bulk drug substances, or active ingredients, used for compound drugs was “what in the world are some of these things?” AR 3492. She looked online and found that CFC-1295, BPC-157, TB-500, and Ipamorelin are active APIs that are not approved drugs in the U.S. AR 3492. She determined that the listed drugs do not have a UPS monograph, are not components of an FDA-approved drug product and are not listed on the FDA’s lists of bulk drug substances that can be used in compounding in violation of FDCA Section 503A. In addition, she determined that Section 503A does not allow a licensed pharmacist to compound these substances. AR 3496.

For non-sterile to sterile compounding, every step of quality must be built into the process including how the product was made, handled, and imported into the country. AR 3496. As part of this process, a pharmacy must make sure that it chooses the appropriate starting material so that it does not rely on statistical tests to determine whether it is safe. AR 3496. Testing at the end does not prove that quality was built into the entire process. AR 3496.

Acosta acknowledged that the term “ungraded” is not in the definition of “quality” set forth in the Board regulation. AR 3497. Acosta quoted the regulation’s definition of “quality” as the absence of harmful levels of contaminants, including filth, putrid, or decomposed substances, the absence of active ingredients other than those listed on the label, and the absence of inactive ingredients other than those listed on the master formula document. AR 3496. An ingredient has a grade, or a quality of a grade, just as grades exist for various food and animal food grade contexts in the United States. AR 3496. “Ungraded” means that no one knows what grade it is or what the intent of the product is for. AR 3496. This is not a legal term and Acosta agreed with the Accusation’s definition of “ungraded” to describe ingredients that have not met the USP’s standards to ensure quality, potency, and purity. AR 3496.

Acosta could not determine the grade of the ingredients at issue: CJC-1295, BPC-157, TB-500 and Ipamorelin. AR 3496. This meant that drug preparations using these ungraded ingredients in non-sterile to sterile compounding resulted in drug preparations lacking in quality and adulterated. AR 3496. This included 12 lots, 218 prescriptions, and 461 vials between September 10, 2019 and March 26, 2020. AR 3497.

The legal definition of an adulterated drug is one that contains, in whole or in part, any filth, putrid, or decomposed substance. AR 3497. In essence, an adulterated drug is one that would be extremely inappropriate for injection into a human patient. AR 3497. The unknown and unapproved chemicals of unknown quality used by Absolute resulted in putrid and filth substances. AR 3497. As a result, Absolute compounded and furnished compounding drug preparations that were adulterated due to use of non-pharmaceutical graded ingredients. AR 3497.

Passing a sterility test does not mean that a single vial is sterile. AR 3497. One would have to test every vial to know that they were sterile. AR 3497. Because this is impossible, sterility assurance asks whether each part of the process was sterile; it does not depend on just an end-product test result. AR 3497. The pharmacy must conduct the USP chapter 71 test regardless of any sterility or pyrogen testing on any previously non-sterile ingredient or ingredients. AR 3497. Acosta found that from August 23, 2019, to April 3, 2020, Absolute compounded and furnished 1,017 prescriptions and 1,562 vials from 39 lots without a USP chapter 71 compliant test. AR 3498. She also found that Absolute’s compounding logs were incomplete because they did not include the name of the manufacturer. AR 3498. Finally, she found that Absolute did compound with bulk drug substances that lacked a USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary in violation of section 503a of the FDCA. AR 3498.

Joseph testified to the quality assurance procedure that all Absolute drugs undergo. AR 3499. Absolute purchases all products from FDA-registered suppliers that are primary suppliers in the U.S. with a good national reputation. AR 3499. Suppliers must present a certificate of analysis of delivered compounds. AR 3499.

A Quality Assurance Pharmacist also ensures quality when it determines if the compounds meet Absolute’s standards for compounding. AR 3499. Said pharmacist ensures that testing by the facility is done on a timely basis, the testing of validations of staff is done correctly, and end product testing is completed and received before the drug is released by the pharmacy. AR 3499. Staff must pass an accepted technique checklist before it can partake in compounding. AR 3499. Absolute also has a chemist on staff to assure the potency and stability of compounds before releasing them and to evaluate the ingredients. AR 3499.

Absolute ensures that compounding only occurs in rooms with air purification systems and hoods certified for compounding. AR 3500. The rooms and hoods have their own sets of HEPA filters, and the drug products are also filtered. AR 3500.

As to the allegations of adulterated drugs, there is no evidence of filthy, putrid, or decomposed substances in the drugs. AR 3500. Joseph disagreed with Acosta’s use of the term “ungraded”; he has never heard that term used in pharmacy practice. AR 3500. Further, the fact that a drug has a USP monograph does not determine whether the product is free of impurities or has the quality as defined by the Board. AR 3500. Absolute ensured that all of its ingredients’ certificate of analysis were for pharmaceutical use. AR 3500-01. If they were not, Absolute returned them. AR 3501.

As to failure to confirm drug sterility before furnishment, Absolute used a bioluminescence test that is more accurate than the USP 71 test. AR 3501. Because a “USP compliant” sample is one where the measurement of bacterial particles within a product are at levels acceptable to USP, a more reliable test is acceptable. AR 3501. Further, the Board accepted Absolute’s bioluminescence testing for three years before 2020. AR 3501.

Joseph admitted that the compounding logs were incomplete because Absolute’s practice was to include the name of supplier instead of the manufacturer. AR 3501. Absolute has modified its standard operating procedures to accommodate that requirement henceforth. AR 3501.

As for the use of non-compliant bulk drug substances, no FDA regulation prohibited the compounding of CJC-1295, BPC- 157, TB-500, and Ipamorelin. AR 3502. Acosta’s ignorance of these compounds made little sense because physicians have sought these medications for years. AR 3502. Although his testimony was unclear on this point, the Board interpreted it as asserting that because the bulk substances list was not fully developed and the FDA had issued interim guidance, these limitations were not applicable at this time. AR 3502. Absolute had received notice that a competitor had been warned not to use those compounds. AR 3502.

The Board gave more weight to Acosta’s expert testimony because of Acosta’s greater education and Joseph’s former employment with Absolute. AR 3503.

Section 503A(b)(1)(A)(i) of the FDCA states that a drug product may be compounded if the licensed pharmacist or licensed physician compounds the drug product using bulk drug substances that (1) comply with the standards of an applicable USP or NF monograph if one exists; (2) if such a monograph does not exist, are drug substances that are components of drugs approved by the FDA; or (3) if such a monograph does not exist and the drug substance is not a component of a drug approved by the FDA, that appear on a list developed by the FDA. AR 3504. The FDA has not developed such a list for injections yet, but it has stated that it generally does not intend to take enforcement action if a bulk drug substance is listed in Category 1 of the FDA’s website if the compounding process otherwise complies with the FDCA. AR 3504-05. A substance that does not fit under one of the three prongs of section 503A(b)(1)(A)(i) of the FDCA cannot be used in compounding even if the process would otherwise comply. AR 3504-05.

The substances must also comply with FDCA section 503A(b)(1)(A)(ii)-(iii), which requires that the ingredient must be manufactured by an entity registered under FDCA section 360 and have a certificate of analysis for every bulk substance. AR 3505.

Drugs may be administered to humans topically, orally, or by injection. AR 3506. Drugs injected into a patient’s bloodstream bypass the body’s defense mechanism to filter out residual impurities. AR 3506. For this reason, the FDA requires a USP or NF drug formulation for bulk substances. AR 3506. The applicable monograph is a USP drug monograph, not a dietary supplement monograph. AR 3506.

The Board has defined quality as the absence of harmful levels of contaminants, including

filth, putrid, or decomposed substances, the absence of active ingredients other than those listed on the label, and the absence of inactive ingredients other than those listed on the master formula document. AR 3507.

The Board rejected Joseph’s claim that “ungraded” is not a common pharmaceutical term. AR 3507. As Acosta testified, it appears to mean that the drug product has no intended use, has not met specific USP drug monograph standards, and has not been established to be pharmaceutical grade for sterile compounding. AR 3507-08. The inherent risks for compounding substances that are non-pharmaceutical grade for administration by injection prompt compounding pharmacists to use pharmaceutical grade for the compounding of sterile drug products to be administered by injection. AR 3508.

Eligible drug ingredients under FDCA section 503A must still meet the act’s other requirements. AR 3508. This includes the requirement that adulterated drugs are not introduced into interstate commerce, including preparing, packaging or holding drugs under insanitary conditions. AR 3508. FDA Guidance states that drugs held under insanitary conditions are adulterated regardless of whether they otherwise qualify. AR 3508. Those guidelines also identify one type of unsanitary condition as using active ingredients, inactive ingredients, or processing aides that have or may have higher levels of impurities compared to a compendial or pharmaceutical grade equivalents. AR 3508.

The Board agreed with Acosta that Absolute’s use of ungraded active ingredients adulterated the preparations and caused the products to lack quality. AR 3508. These ungraded ingredients lacked a USP drug monograph, and Acosta found that Absolute’s master formulas and compounding logs show that it added 10% extra of these active ingredients to account for processing error. AR 3508. For these reasons, Acosta reasonably concluded that Absolute’s compounded drugs lacked quality and were deemed adulterated under federal and state law. AR 3508.

The ALJ and Absolute erred in thinking that the FDA guidance was not binding or that an affirmative statement must say that a substance is not for pharmaceutical use. AR 3508-09. Rather, these substances lacked a USP or NF drug monograph so that a pharmacy or pharmacist could identify whether the non-pharmaceutical grade substances had or may have had higher levels of impurities compared to a drug monograph. AR 3509. The ungraded nature of such a substance is functionally equivalent to a rating as not for pharmaceutical use. AR 3509.

That Absolute added 10% extra of the active ingredients to account for processing error establishes that the compound had harmful levels of unknown contaminants, active ingredients other than those on the label, or inactive ingredients other than listed in the master formula. AR 3509.

The use of active ingredients that were not pharmaceutical grade and lacked a USP drug monograph to compare with a pharmaceutical monograph adulterates the compounds. AR 3510. Because USP drug monographs sets forth quality expectations and testing standards for substances, the lack of one indicates that a substance is an ineligible drug product. AR 3510.

Absolute also failed to subject the drug product to end product-testing prior to distribution and ensure that the product meets quality standards during compounding. AR 3510. The argument that there is no label that indicates these substances are not for pharmaceutical use is unpersuasive. AR 3510. Further, even if Joseph is correct that a monograph does not guarantee the quality of an end product can never be guaranteed due to human or equipment failure, a pharmacy must abide by the quality standards in a USP, NF, or applicable statute or regulation. AR 3511.

Joseph admitted that Absolute failed to use a USP chapter 71 compliant test to confirm sterility before dispensing vials. AR 3511. Joseph said in mitigation that the Board had accepted the bioluminescence test for three renewal periods but did not say the pertinent years. AR 3511. When the Board notified Absolute in 2020 that law required a USP 71 method test, Joseph replied on September 22, 2020 that Absolute would comply moving forward. AR 3511. At best, this reflects Joseph’s ignorance of legal requirements on testing and shows that Absolute thinks it can substitute its own opinion as to which test is superior. AR 3511.

The evidence established that Absolute compounded and furnished 1,017 prescriptions and 1,562 vials from 39 lots without documenting the manufacturer of each component. AR 3511. Joseph admitted this and said that while the software did not provide an drop-down box for this entry, Absolute has since added one to its standard operating procedures. AR 3511-3512. A pharmacist has a duty to ensure any software it chooses to use complies with relevant legal requirements of the jurisdictions in which it holds a license. AR 3512.

Joseph testified that he was generally aware of this requirement, but his testimony whether the drugs at issue complied with FDCA section 503A(b)(1)(A)(i) is unclear. AR 3512. If he is arguing that these substances comply because they are commercially available and physicians sought them, this misstates the law. AR 3512. Substances can be distributed and available from other compounding pharmacies in violation of the law even if they are not ingredients in an FDA-approved drug. AR 3512.

Joseph tried to justify compounding using these ineligible drug ingredients because Absolute otherwise complied with the law for supplier registration and certificate of analysis for bulk substances. AR 3513. This argument fails because a substance that does not comply with section 503A(b)(1)(A)(i) is ineligible for use even if a pharmacy complies with all or some of the other requirements of this exemption. AR 3513. Similarly, the absence of these substances from a list of disapproved drugs or ingredients removed from the market does not render them eligible. AR 3513. The FDA need not expressly prohibit usage of a substance by regulation or enforcement action. AR 3513-14. Congress established requirements for FDA approval of a drug, not disapproval. AR 3514.

Joseph also testified that there is not yet a federal list of bulk drug substances that can be used in compounding. AR 3514. While true, a practitioner need only look first to the USP or NF for a drug monograph, then to the Orange Book, then to 21 CFR section 216.23 or the FDA’s website. AR 3514. Acosta followed this procedure to determine that the substances at issue were not eligible drug ingredients; Absolute should have done the same. AR 3514.

Joseph’s argument that the bulk drug substance list is in the development stage and that Absolute stopped using those substances when it heard from the FDA that it should not use them also fails. AR 3514. While that list is in flux, the requirements to qualify for the exemption in Section 503A are not. AR 3514-15. The FDA did not need to issue any warning for substances that do not qualify, or institute criminal proceedings based on their use, to put Absolute on notice. AR 3515.

Joseph also argued that Absolute received prescriptions from physicians for the general wellness of their patients, that these physicians do some research into what they prescribe, and Absolute always required some indication that the ingredients will be safe for the patients. AR 3515. To the extent that Joseph tries to rely on physician prescriptions for the indicia that the ingredients will be safe, physicians lack the authority to approve ingredients for use in compounded drug products. AR 3515. When someone objected that FDA regulations interfere with a physician’s autonomy, the FDA replied that it exercised its authority to establish a framework for regulating what drugs physicians may prescribe, after which the physician’s decisions are unlimited for drugs legally available. AR 3515-3516. Until then, physicians and pharmacists cannot substitute their personal opinion as to the safety, effectiveness or legal availability of substances. AR 3516.

Joseph’s final argument cited 21 U.S.C. section 337(a) to assert that enforcement of the FCDA resides solely with the FDA and that the Board may not enforce it. AR 3517. The Board does not know of any federal decision in which this section denied a state licensing board the ability to discipline a license or permit issued to a pharmacist or a pharmacy. AR 3517, n. 45. The case law only concerns attempts by private parties to enforce the FDCA against other private parties. AR 3517, n. 45. Further, the FDA’s enforcement power is limited. AR 3517. Unlike a state board, it cannot discipline or revoke a pharmacist’s license. AR 3517. The FDA has stated that states are primarily responsible for day-to-day oversight over the vast majority of the thousands of compounders in the United States. AR 3517. The FDA also has recognized that states, as the primary regulator of compounding pharmacies, may take complementary state regulatory action. AR 3517-18.

In relying on Absolute’s violation of federal law, the Board is exercising its ability to enforce state licensing laws. AR 3518. The federal requirement that a pharmacy only use drugs or compounds approved by the FDA is grounds for discipline under Bus. & Prof. Code section 4301(o). AR 3518. Because Absolute’s violation of FDCA section 503A(b)(1)(A)(i) is clear, the Board is not intruding on the FDA’s discretionary authority. AR 3518. Absolute distributed sterile compounding drugs using these ineligible drug ingredients to consumers in California, and hence distributed unapproved new drugs in violation of both state and federal law. AR 3518.

Absolute tried to bolster the jurisdiction argument with the Board’s statement during a meeting that bulk drug substance and analysis resides with the FDA and not the Board. AR 3519. The Board only meant that the FDA is the agency that can add a substance to the bulk list and approve it for specific uses and mode of administration. AR 3519. This does not mean that the Board cannot use the bulk list or other FDA regulations as a basis for discipline under Bus. & Prof. Code section 4301(o). AR 3519-20.

The Board found that the ALJ’s proposed decision misstates the applicable standard of proof, which is preponderance of the evidence and not clear and convincing evidence. AR 3521. Clear and convincing evidence is the standard for disciplining a pharmacist or pharmacy technician license based on the education and training necessary to obtain both such licenses. AR 3522. The Accusation was solely against a non-resident pharmacy license and its sterile compounding license. Accordingly, preponderance of the evidence is the correct standard of proof. AR 3522.

The Complainant established that Absolute engaged in unprofessional conduct on five grounds, all of which justify discipline as to its permits. AR 3525-27. First, per 16 CCR sections 1735.1(ae) and 1735.2(g), Absolute failed to maintain the quality of the compounded sterile preparations when it used the ungraded ingredients. AR 3525-3526. Second, per H&S Code sections 111250 and 11295, those compounds were adulterated. AR 3526. Third, Absolute compounded and furnished least 1,017 prescriptions and 1,562 vials from 39 lots without first confirming sterility via a USP chapter 71 compliant test as per 16 C.C.R. section 1751.7(e)(1). AR 3526. Fourth, Absolute failed to document the manufacturer of each component of those vials. AR 3526. Finally, Absolute compounded sterile drug preparations using bulk drugs substances that had no a USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary, which violated 21 U.S.C. section 353a(b)(1)(A)(i). AR 3526-27.

Protection of the public is the Board’s highest priority in exercising its disciplinary functions. AR 3527. The Guidelines identify four categories of violations and associated recommended minimum and maximum penalties. AR 3527-28. Repeat or serious violations involving improper compounding of drug products appear in both Category II and Category III. AR 3528. Selling or transferring adulterated drugs falls within Category III. AR 3528. The Board also believed that compounding sterile drug products using ineligible drug ingredients should be a Category III offense because of the severe safety issues that can arise when someone uses those substances. AR 3528. The recommended discipline for Category III offenses ranges from a 3-5 year stayed revocation with 90 days actual suspension to revocation. AR 3528.

The Board reviewed the 17 Guideline factors that influence the appropriate remedy. AR 3528. No patient was actually harmed or has reported adverse serious reactions. AR 3528-29. However, even drugs that undergo exhaustive clinical trials can present concerns with safety and efficacy over time. AR 3528. The substances at issue were never reviewed or evaluated by the FDA, and their use for general wellness raises concerns whether Absolute ever weighed consumer safety against other business considerations. AR 3528-29.

The acts at issue occurred from 2019 to March 2020. AR 3530. The Board acknowledged that Absolute had no prior history of discipline or prior warnings. AR 3529. Absolute was guilty of five Category III violations of law. AR 3529. The repeated nature of these offenses was a matter in aggravation. AR 3529.

As to mitigating evidence, Absolute replaced internal software to include the drug manufacturer in records moving forward. AR 3529. Its decision to stop compounding with ineligible drug ingredients after FDA warning letters and criminal actions initiated against a competitor was not persuasive because Absolute should never have compounded the sterile preparations in the first place. AR 3529. As for rehabilitation, Joseph did not acknowledge that Absolute acted wrongfully. AR 3529. Its attitude towards the necessity of complying with both state and federal law prevents the Board from being sure that Absolute will comply with pharmacy law in the future. AR 3529.

Joseph confirmed that he was aware of FDCA section 503A(b)(1)(A)(i)’s requirements and testified as to why Absolute compounded non-compliant drugs anyway. AR 3530. This conduct, if not intentional, demonstrated incompetence or negligence in Absolute’s understanding of the federal law. AR 3530. That ignorance is why the Board discounted Joseph’s testimony compared to Acosta’s. AR 3530. Absolute’s conduct showed a reckless disregard for the health of the recipients. AR 3531.

The financial benefit Absolute received from its misconduct was an aggravating factor. AR 3531. Joseph testified that Absolute stopped all sterile compounding because there were only a few products that did not use the ineligible drug substances. AR 3531. This implies that compounding the ineligible drug substances provided a financial benefit. AR 3531. Although the evidence did not quantify this benefit, it financed the entire sterile compounding process. AR 3531.

Based on these factors, the Board found the maximum penalty of revocation appropriate. AR 3531. The evidence established violations of only sterile compounding laws, but this reflected the scope of the investigation. AR 3531. Absolute’s failure to fully acknowledge the wrongfulness of its past conduct could affect its other practices. AR 3531. Because it is a non-resident pharmacy without a licensed California pharmacist, the Board may not have the resources to ensure future compliance. AR 3531. An intermediate penalty that would allow Absolute to operate would not effectively guarantee full compliance with applicable of the protection of the public. AR 3532.

The Board therefore revoked both of Absolute’s Permits, effective December 10, 2022, and ordered it to pay costs of the suit. AR 3532. On December 9, 2022, the Board denied Absolute’s petition for reconsideration. AR 3672-73.

The Accusation only related to Absolute’s sterile compounding and did not make allegations about Absolute’s non-sterile compounding aspect. Dettlaff Decl., ¶8. After the Accusation was filed, in July 2021 Absolute chose to close the sterile compounding aspect of its pharmacy business. Dettlaff Decl., ¶9.

By September 2021, Absolute no longer dispensed compounded sterile medications to California patients. Dettlaff Decl., ¶9. It functioned as a retail pharmacy dispensing manufactured medications pursuant to patient-specific prescriptions. Dettlaff Decl., ¶10. In its final year before suspension of its Permits, Absolute’s non-sterile compounding business only formed 27.4% of Absolute’s California business. Dettlaff Decl., ¶10.

The revocation has cost Absolute $1 million of annual revenue from California customers, business that took years to develop. Dettlaff Decl., ¶11. This loss alone is enough to force Absolute’s closure. Dettlaff Decl., ¶12. Some of these customers selected Absolute to compound specialized non-sterile medications that only Absolute can make. Dettlaff Decl., ¶49. By January 3, 2023, 376 California patients had gone three weeks without medication, and many have called Absolute to complain. Dettlaff Decl., ¶50.

The loss of this business also has affected Absolute’s interstate revenue, as prescribers at nine nationwide clinics only chose Absolute because it could provide prompt and efficient pharmacy services in 49 states, including California. Dettlaff Decl., ¶¶ 13-14, 48. The revocation has damaged Absolute’s relationship with these clinics and, without a stay, the damage will become irreparable. Dettlaff Decl., ¶47. Because Absolute can no longer serve its California clientele, these clinics have begun to move their business to competitors. Dettlaff Decl., ¶14. One clinic has completely transitioned its $102,629.80 annual business away, and the others warn that they will do the same soon if Absolute can no longer be a one-stop shop. Dettlaff Decl., ¶¶ 15-16. The business from these nine nationwide clinics totals $4,438,520.41 in annual revenue, which Absolute cannot lose without shutting down. Dettlaff Decl., ¶17. The 1,039 smaller clinics that Absolute serves likely will follow suit. Dettlaff Decl., ¶18.

Absolute is a cash-free business that processes all orders and payment via credit card. Dettlaff Decl., ¶24. Absolute needs accreditation from the body LegitScript to receive payments through most credit card providers and to market online. Dettlaff Decl., ¶¶ 21, 23, 25. Serious discipline such as license revocation causes LegitScript to revoke accreditation. Dettlaff Decl., ¶22.

LegitScript received notice of Absolute’s license revocation once in effect, as required. Dettlaff Decl., ¶20. Absolute convinced LegitScript to refrain from any action against Absolute’s accreditation until the hearing on this motion to stay. Dettlaff Decl., ¶20. Without the stay, Legitscript will likely revoke Absolute’s accreditation. Dettlaff Decl., ¶20. Without the ability to process credit card payments or market online, Absolute will no longer operate. Dettlaff Decl., ¶¶ 23-26.

Permit revocation is a serious discipline that can lead to license suspension in other states; it is sometimes mandatory. Dettlaff Decl., ¶29. A public reproval is a low-level offense that does not lead to the same response from other states. Dettlaff Decl., ¶30.

Absolute has had to report the California Permits revocation to 13 states and has requested that they not to take reciprocal action until the hearing on this motion. Dettlaff Decl., ¶¶ 31-32. Georgia replied that California’s suspension required immediate suspension of Absolute’s non-resident pharmacy permit, which Absolute must then also report to the other 12 states. Dettlaff Decl., ¶¶ 34-35. This suspension will result in the loss of 1,500 Georgian patients, who provided $700,000 in revenue between 2019 and 2022, and will increase the incentive for nationwide and local clinics to find another pharmacy. Dettlaff Decl., ¶¶ 36-37.

Without a stay, Absolute will have to disclose the revocation to 14 other states plus the District of Columbia by June 2023 when it applies to renew its license in each state. Dettlaff Decl., ¶39. These states also have mandatory disclosure suspension and disciplinary provisions. Dettlaff Decl., ¶41. Virginia will immediately suspend Absolute’s license, which will compel Absolute to report it to the other states, cost it 960 Virginia patients who account for $500,000 of the revenue between 2019 and 2022, and provide more incentive for nationwide and local clinics to find a new pharmacy. Dettlaff Decl., ¶¶ 42-44.

Petitioner Absolute moves for a stay of the Board’s decision revoking its Permits.

Absolute assumes for purposes of its motion that it is guilty of the Accusation’s third and fourth causes, respectively, of (a) compounding medications without confirming sterility by a USP chapter 71 compliant test (AR 39, ¶40) and (b) compounding drug preparations without documenting the manufacturer of each component (AR 39, ¶41). Absolute notes that the Board’s decision does not indicate whether revocation was warranted based solely on these sterility testing and recordkeeping issues. AR3528-31. Absolute argues that revocation based solely on these issues would be an abuse of discretion because this conduct did not threaten public harm. Acosta admitted that Absolute’s testing was scientifically superior to the chapter 71 test, thereby providing greater protection to the public. The ALJ concluded that a Public Reproval is appropriate for the testing and recordkeeping issues because Absolute is not a threat to public safety. Thus, revocation based solely on these issues would be draconian and punitive. Mot. at 8; Reply at 8.

The Board does not address this argument and the court will assume, as Absolute has, that its guilt on the third and fourth causes would not alone result in revocation. Thus, the principal issues lie in the first, second, and fifth causes.

The first cause for discipline alleged that Absolute committed unprofessional conduct in violation of Bus. & Prof. Code section 4301(o) because it failed to maintain the quality of compounded sterile preparations, as required by 16 CCR sections 1735.1(ae) and 1735.2(g), by using ungraded ingredients. AR 38.

The second cause for discipline alleged that these same preparations were unprofessional conduct because they were adulterated as defined by H&S Code sections 111250 and 11295. AR 38.

Absolute argues that the core allegation of both causes is that the identified compounded sterile medications per se lacked quality and were adulterated under state law due to the use of “ungraded ingredients,” which the Accusation defined to mean ingredients that had not met any specific standards in the USP to ensure their quality, potency, and purity. AR 25-27 (¶¶ 33-34). Mot. at 8.

The Board’s decision relied on Acosta’s expert testimony. Acosta testified that CFC-1295, BPC-157, TB-500, and Ipamorelin are active ingredients that are not approved drugs in the U.S. AR 3492. For non-sterile to sterile compounding, every step of quality must be built into the process including how the product was made, handled, and imported into the country. AR 3496.

Acosta acknowledged that the term “ungraded” is not in the Board’s regulation defining “quality”, which is the absence of harmful levels of contaminants, including filth, putrid, or decomposed substances, the absence of active ingredients other than those listed on the label, and the absence of inactive ingredients other than those listed on the master formula document. AR 3496. However, an ingredient should have a grade, and “ungraded” means that no one knows what grade it is or the intent of the product. AR 3496. This is not a legal term. Acosta agreed with the Accusation’s definition of “ungraded” as ingredients that have not met the USP’s standards to ensure quality, potency, and purity. AR 3496.

The compounding of drug products is important for many patients, including those who are allergic to an FDA-approved drug. AR 3503. To permit such compounding, Congress passed Section 503A as an exemption, which permits the compounding of a drug product using bulk substances (active ingredients) that (a) comply with the standards of a USP drug monograph, (b) if there is no monograph, are substances of components of drugs approved by the FDA, or (c) if there is no monograph and the drug substance is not a component of an approved drug, appear on a list developed by the FDA. AR 3504. The FDA has not approved any bulk substance for administration by injection. AR 3504. Substances that do not meet these requirements are ineligible drug ingredients. AR 3505. In addition to being an eligible drug ingredient, the bulk substances must also be manufactured by an entity registered with the FDA and accompanied by a certificate of analysis for each bulk substance. AR 3505.

The Board’s decision accepted Acosta’s expert testimony on grading. AR 3507. As Acosta testified, the term “ungraded” appears to mean that the drug product has no intended use, has not met specific USP drug monograph standards, and has not been established to be pharmaceutical grade for sterile compounding. AR 3507-08. The inherent risks for compounding sterile drug products to be administered by injection prompt compounding pharmacists to use pharmaceutical grade drugs only. AR 3508.

Eligible drug ingredients under FDCA Section 503A must still meet the FDCA’s other requirements, including ensuring that adulterated drugs are not introduced in interstate commerce. AR 3508. FDA guidelines states that drugs held under insanitary conditions are adulterated. AR 3508. The guidelines identify one type of unsanitary condition as using active ingredients, inactive ingredients, or processing aides that have or may have higher levels of impurities compared to pharmaceutical grade equivalents. AR 3508.

Acosta testified that the legal definition of an “adulterated” drug is one that contains, in whole or in part, any filth, putrid, or decomposed substance. AR 3497. In essence, an adulterated drug is one that would be extremely inappropriate for injection into a human patient. AR 3497. Absolute’s use of unknown and unapproved chemicals of unknown quality resulted in putrid and filth substances. AR 3497.

According to the Board’s decision, the ALJ and Absolute erred in thinking that the FDA guidance is not binding or that there must be an affirmative statement on the label that a bulk substance is not for pharmaceutical use. AR 3508-09. Because the substances used by Absolute lacked a USP drug monograph, a pharmacy or pharmacist could not identify whether the non-pharmaceutical grade substances may have higher levels of impurities compared to a drug monograph. AR 3509. The ungraded nature of such a substance is functionally equivalent to a rating as not for pharmaceutical use. AR 3509. That Absolute added 10% extra of the active ingredients to account for processing error establishes that the compound had harmful levels of unknown contaminants, active ingredients other than those on the label, or inactive ingredients other than listed in the master formula. AR 3509.

Absolute contends that the Board abused its discretion in finding it guilty of these two charges because the test for quality relied on by the Board’s decision is an underground regulation. The Board’s reliance on this invalid regulation is a failure to proceed in the manner required by law. See Verdugo Hills Hospital, Inc. v. Department of Health, (1979) 88 Cal.App.3d 957, 963. Mot. at 11.

The Administrative Procedure Act (“APA”) requires that every regulation be adopted according to specific procedures. Govt. Code §11340.5(a), (b). A “regulation” is defined as every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of any rule, regulation, order or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure. Govt. Code 2111342.600. Any order which is a regulation as defined in Government Code section 11342.600 may not be enforced unless the order has been adopted as a regulation under the APA. Govt. Code §11340.5.

The two-part test for determining whether a rule constitutes a regulation subject to the APA is well established: “First, the agency must intend its rule to apply generally….Second, the rule must ‘implement, interpret, or make specific the law enforced or administered by [the agency], or . . . govern [the agency’s] procedure.” Tidewater Marine Western, Inc. v. Bradshaw, (“Tidewater”) (1996) 14 Cal.4th 557, 571 (quoting former Govt. Code §11342(g), now Govt. Code §11342.600). This definition sweeps “very broadly” (id. at 571) and ensures that all stakeholders may participate through a formal, public process in the adoption of any “regulation.” Id. at 568-69. An “underground regulation” is one that has not been promulgated according to the APA and therefore, is invalid and cannot be enforced. Govt. Code §11340.5; Naturist Action Com. v. DHCS of Parks & Recreation, (2009) 175 Cal.App.4th 1244, 1250.

An agency’s statutory interpretation in the course of a case-specific adjudication is not a regulation. Tidewater, supra, 14 Cal.4^th at 571. Nor are agency advice letters to private parties and policy manuals that restate or summarize the agency’s prior decisions without commentary. Id. at 571-72 (listing policies that have been found subject to APA procedure and those that have not). Whether an agency’s practices amount to the enforcement of an underground regulation may be challenged through an action in mandamus pursuant to CCP 1085. Union of Am. Physicians & Dentists v. Kizer, (1990) 223 Cal.App.3d 490, 495 (CCP 1085 challenge to DHCS underground regulation in audit proceeding).

According to Absolute,[8] the Board advances a general rule that ingredients that do not have a USP drug monograph, including dietary grade and ungraded ingredients, categorically lack quality under California law. Regardless of its potential wisdom or scientific merit, such a rule does not exist in California law. The Board’s proposed rule, which would apply generally to all California-licensed compounding pharmacies when determining the quality of their sterile injectable drug preparations, amounts to an impermissible underground regulation. The Board cannot circumvent the APA by disciplining Absolute for a violation of a non-existent standard. Mot. at 12.

Absolute argues that “every judge” that has analyzed the Board’s per se standard has concluded that the “ungraded ingredients” standard satisfies both Tidewater elements. The per se standard interprets the terms “quality” and “adulterated” to include a general prohibition against the use of “ungraded ingredients.” See Morning Star Co. v. State Bd. of Equalization, (2006) 38 Cal.4th 324, 334 (agency’s interpretation of the law it administered by deeming certain types of materials to be hazardous was underground regulation). Absolute cites six other administrative proceedings in which the Board’s complainant is using this standard. Mot. at 11-12.

Essentially, Absolute is arguing that the Board relied on a general rule that bulk drug substances that do not have a USP drug monograph categorically lack quality under California law and are inappropriate for compounding sterile injectable drug preparations.

Acosta testified that every ingredient has a grade and the term “ungraded” means that that no one knows what grade it is or the purpose of the product. AR 3496. This is a term used in the pharmaceutical industry, and an expert may rely on this definition without a regulation so stating. Acosta also testified to the import of the fact that a drug is ungraded: the drug product has no intended use, has not met specific USP drug monograph standards, and has not been established to be pharmaceutical grade for sterile compounding. AR 3507-08. This means that ungraded ingredients have not met the USP’s standards to ensure quality, potency, and purity. AR 3496.

The question arises: What is the import of a drug product being ungraded? The Board agreed with Acosta that Absolute’s use of ungraded active ingredients adulterated the preparations and caused the products to lack quality. AR 3508. This conclusion followed from the fact that an ungraded active ingredient necessarily lacks a pharmaceutical grade, and a pharmaceutical grade is necessary for sterile compounding. AR 3508. According to the Board, the lack of a pharmaceutical grade is the functional equivalent of saying that the drug is not for pharmaceutical use. AR 3509. The drugs at issue – CJC-1295, BPC-157, TB-500, and Ipamorelin were non-pharmaceutical grade substances used as active ingredients in Absolute’s drug preparations. AR 3507. Therefore, these ungraded ingredients lacked quality and were adulterants.

Acosta’s testimony and the Board’s conclusion do not appear to meet the two-part test in Tidewater. The definition of “ungraded” is not a rule but rather a term in the pharmaceutical industry. The application of the fact that Absolute’s drug products were ungraded to mean that they lack a pharmaceutical grade necessary for sterile compounding is a case-specific interpretation of FDA guidance which the Board views as binding. AR 3509. The interpretation does not appear to meet the definition of an underground regulation because an agency’s statutory interpretation in a case-specific adjudication is not a regulation. See Tidewater, supra, 14 Cal.4^th at 571. The fact that the Complainant has made this same claim in six other cases does help Absolute’s position, however, because it may be a rule of general application.[9]

In addition, the Board’s opposition notes that Absolute admitted to including 10% extra of the active ingredient beyond that required by the master formula for CJC-1295, BPC-157, TB-500, and Ipamorelin to account for error. This shows that the drug products had excess active ingredient and were therefore adulterated. Opp. at 11-12.

Absolute replies that the Board’s opposition relies on an argument never raised at the hearing. The Board’s argument is that whenever there is deviation from a master formula, it necessarily results in medications that lack quality and are adulterated. This argument is not supported by the regulatory definition of quality and the statutory definition of adulteration. See 16 CCR §1735.1(ae); H&S Code §111250. If the Board wishes to establish such a standard, it must amend the definition of “quality.” Moreover, even though the Board is expressly authorized to impound and test medications to establish such a deviation (see Bus. & Prof. Code §4084(a), (b)), it never did so. Reply at 4-5.

Absolute is incorrect. The Board’s decision found that the compounding logs show that Absolute added 10% extra of the active ingredients to account for processing error. AR 3508. This established that Absolute’s drug products contained other unknown contaminants, active ingredients other than those listed on the label, or inactive ingredients other than those listed in the master formula. AR 3509. The Board found that this fact supported the conclusion that Absolute’s compounded drugs lacked quality and were deemed adulterated under federal and state law. AR 3508.

Consequently, Absolute’s use of 10% extra active ingredient was raised and relied upon in the Board’s decision. The evidence supported the Board’s conclusion that the use of non-pharmaceutical grade substances as active ingredients for compounded sterile drugs intended for injection into humans resulted in a product lacking quality, regardless of the compounding practices used at the facility. See AR 3509. This point is not dependent on the underground regulation issue raised by Absolute.

The Board’s opposition explains certain governing law. Pharmacies are required to follow USP chapters 795 and 797 when performing sterile compounding. Bus. & Prof. Code § 4126.8. The first paragraph of USP chapter 797’s introduction states that its objective is to describe conditions and practices to prevent harm to patients that could result from the use of ingredients of inappropriate quality in compounded sterile preparations. USP chapter 797 defines high risk compounding and states that compounded sterile drug preparations using manufactured products not intended for sterile routes of administration are either contaminated or at a high risk to become contaminated. USP chapter 797, pg. 5. Opp. at 8.

Both federal and California law deem a drug to be adulterated if it consists in whole or in part of any filthy, putrid, or decomposed substance, if it has been prepared, packed, or held under insanitary conditions whereby it may have been contaminated with filth or whereby it may have been rendered injurious to health. 21 U.S.C. §351(a); H&S Code §§ 111250, 111255, 111260. In addition, federal law deems a drug to be adulterated if the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to “current good manufacturing practice”. 21 U.S.C. §351(a)(2)(B); 21 CFR §210.1 (defining “current good manufacturing practice”). Opp. at 8-9.

Federal law provides an exception to the requirement to comply with current good manufacturing practices, commonly referred to as the “Section 503a exemption.” 21 U.S.C. §353a. This exception applies only when the drug product is compounded by a licensed pharmacist in a state licensed pharmacy or by a licensed physician, for an identified individual patient based on a valid prescription order, and using a bulk drug substance that (1) complies with the standards of an applicable USP monograph, or (2) if no USP monograph exists, is a component of a drug approved by the FDA, or 3) if neither of the first two apply, appears on a list approved by the FDA and codified by regulation. This approved list, codified at 21 CFR section 216.23, contains only six substances. Opp. at 9.

Absolute promoted itself as a “Section 503a” compounding pharmacy. However, Absolute does not compound with any drugs covered by this exception. Therefore, Absolute was required to comply with current good manufacturing practices in order to compound the drug substances at issue. Additionally, Absolute must comply with 21 U.S.C. section 355, which requires that any new drugs compounded must follow requirements for filing and obtaining approval of a new drug application prior to dispensing the drug to any patient. Absolute did not comply with section 335 and dispensed compounded drugs without prior approval by the FDA. Because Absolute does not qualify for the Section 503a exemption, the drugs at issue are deemed adulterated by operation of law under both 21 CFR section 210.1 and H&S Code sections 111250 and 111255. Opp. at 9-10.

Absolute correctly replies that this discussion goes beyond the reasoning of the Board’s decision as well as the only statute (H&S Code §111250) and regulations (16 CCR §1735.1(ae) and 1735.2(g)) pleaded in support of these two causes for discipline. AR 38 (¶¶ 38, 39). Bus. & Prof. Code section 4126.8, the federal statutes discussing adulterated preparations and regulations on current good manufacturing practices, and H& S Code sections 111255 and 111260, discussing the sanitary conditions under which drugs must be manufactured, were not discussed in the Board’s decision. Furthermore, the Board cannot now introduce new statutory or regulatory provisions as the basis for discipline. See Govt. Code §11503(a) (accusation must “specify the statutes and rules that the respondent is alleged to have violated”); Wheeler v. State Bd. of Forestry, (1983) 144 Cal.App.3d 522, 527 (“The fulfillment of this [specificity] requirement is a statutory predicate for disciplinary action.”). Reply at 3-4. Consequently, while the Board’s decision discusses Section 503a and eligible drug ingredients (AR 3504-05), the Board’s opposition’s discussion of a Section 503A pharmacy and current good manufacturing practice are irrelevant.

The Board’s opposition also contends that the evidence showed that a certificate of analysis for BPC-157 Acetate stating that the purity was required to be not less than 95%. The certificate concluded: “The product meets the In House specifications.” However, the certificate of analysis does not indicate the purpose of these specifications and whether they were intended for oral or topical use, two routes of administration less dangerous and with more natural and biological protections for the patient than injection. The certificate of analysis showed that the purity of BPC-157 Acetate was 98.4%. By definition, this means that 1.6% of the drug was impure, i.e., adulterated. Similar impurities can be seen from every other certificate of analysis in evidence. Opp. at 11.

Not only does the opposition fail to cite this evidence, Absolute again correctly notes that the issue was not addressed directly in the Board’s decision and was not relied upon to find that Absolute’s medications lacked quality and were adulterated. Reply at 4.

For its part, Absolute notes that, in 2019, the Board formed the Committee to discuss potential amendments to California’s sterile compounding regulations. See 16 CCR §1751 et seq. The Committee recommended amending the regulations to state that no ingredient may be used for sterile preparations if, inter alia, the ingredient is an “ungraded ingredient” or did not have a USP drug monograph. RJN Ex. J. However, in 2020, the Board rejected the proposal and notified the public that the Board did “not intend to pursue changes to the current regulations governing compounded preparations.” RJN Ex. K. Therefore, the Board’s regulations remained unchanged, containing express no prohibition against the use of ungraded ingredients or ingredients without a USP drug monograph. Mot. at 7; Reply at 2.

The Board correctly responds that its declination to adopt a regulation regarding the use of properly graded drug ingredients does not support the conclusion that it is enforcing an underground regulation. The failure to enact a statue or regulation is of little significance in evaluating legislative intent. Grupe Development Co. v. Superior Court (1993) 4 Cal.4th 911, 922-23. “In most cases there are a number of possible reasons why the Legislature might have failed to enact a proposed provision.” Arnett v. Dal Cielo, (1996) 14 Cal.4th 4, 28. Opp. at 10.

One of the purposes for the proposed regulation was to conform with USP chapters 795 (non-sterile compounding) and 797 (sterile compounding) which were, during 2018 and 2019, being revised by USP. In March 2020, the Board was required to turn its attention to the COVID-19 pandemic and learned that USP was sending both chapters back to committee for further discussion. The Board always intended any new regulation to conform with the revised USP chapters and the rulemaking process was set aside until USP finalized its revisions. RJN Ex. B. The decision to set aside this rule-making was not a repudiation of the principles set forth therein and the Board issued a statement to remind licensees to continue to comply with 16 CCR section 1751 et. seq. RJN Ex. B. Opp. at 10-11.

The fifth cause alleged that Absolute compounded with certain ingredients that did not have a USP monograph, were not components of drugs approved by the Secretary of Health and Human Services, and did not appear on a list developed by the Secretary. AR 39 (¶42). Complainant alleged that this conduct violated 21 U.S.C. section 353a(b)(1)(A)(i). Mot. at 8.

Absolute relies on statutory law that generally all proceedings for the enforcement, or to restrain violations of the FDCA shall be by and in the name of the United States. 21 U.S.C. §337(a) (“section 337”). As an exception, a state may bring in its own name and within its jurisdiction proceedings for the civil enforcement, or to restrain violations, of 21 U.S.C. sections 401, 403(b)-(i), 403(k), 403(q), or 403(r) if the food that is the subject of the proceeding is located in that state. 21 U.S.C. §337(b)(1).

Absolute relies on the preemption analysis for section 337 in Glennen v. Allergan, Inc. (“Glennen”) (2016), 247 Cal. App. 4th 1, 11-12. There, the court addressed a negligence claim against defendant’s Lap-Band gastric band inserted into her stomach through surgery, claiming that the defendant failed to adequately trained surgeons in its use. Id. at 4-5. The issue was whether the federal Medical Device Amendments of 1976, which imposed a regime of detailed federal oversight for medical devices, preempted the plaintiff’s tort claim. Id. at 11. The court noted that claims not tied to tort law duties are essentially private actions to enforce the FDCA and are barred by section 337(a). Id. at 11. To survive a defense of implied preemption based on conflict with federal law, a plaintiff must assert a state law claim that is premised on a violation of the FDCA but not based solely on it. Id. at 11. In other words, a state claim survives preemption if it (1) violates the FDCA and (2) would give rise to a state recovery even in the absence of the FDCA. Id. at 12. When there is no state law duty, a plaintiff cannot allege a claim based on a duty existing solely by virtue of the FDCA requirements. Id. at 20.

Absolute argues that the Board acted in contravention of section 337(a)’s unambiguous prohibition against non-federal enforcement of the FDCA. The Board’s decision erroneously reasoned that section 337(a) does not apply to state actors operating under their disciplinary statutes. According to the Board, Bus. & Prof. Code section 4301(o), which defines “unprofessional conduct” to include a violation of applicable federal laws governing pharmacies, is the operative statute. AR 3517-20 (¶62). Mot. at 13.

Absolute argues that this position is flawed for two reasons. First, the plain language of section 337(a) prohibits non-federal enforcement of the FDCA by all non-federal actors and does not distinguish between state agencies and private individuals. If section 337(a) did not apply to state actors, subsection (b) – which provides exemptions for state enforcement of certain food-related provisions of the FDCA -- would be superfluous. Mot. at 13.

Second, the Board’s reliance on the Bus. & Prof. Code fails the second element of the Glennen test. See also Amiodarone Cases, (2022) 84 Cal.App.5th 1091, 1102 (applying Glennen’s two-element test and concluding that private plaintiffs’ tort claims unlawfully sought to “enforce” the FDCA). There is no authority that the Board may enforce a drug-related provision of the FDCA in contravention of section 337(a)’s plain language. Mot. at 13. Section 337(a)’s limitation on the Board’s authority also is narrow because it can still enforce a host of other federal statutes. See, e.g., 21 U.S.C. § 801 et. seq. (federal Controlled Substances Act contains no prohibition against non-federal enforcement). Reply at 7.

Absolute concludes that the problematic nature of state enforcement of the FDCA is highlighted by the citation to various FDA guidance documents in the Board’s decision. See, e.g., AR 3508, n. 31-33. Yet, the decision ignores the numerous black-box warnings on the FDA’s guidance documents: “This guidance represents the current thinking of [FDA] on this topic. It does not create any rights for any person and is not binding on the FDA or the public.” RJN Ex. B, pp. 3-15. The Board’s misplaced reliance on these materials highlights the very reason Congress saw fit to limit enforcement to the federal government and avoid a patchwork of inconsistent enforcement actions. Reply at 7-8.

The Board’s opposition relies on Bus. & Prof. Code section 4301(o) as its specific authority to hold entities licensed by California accountable for violations of both state and federal law,[1] noting that it is the only entity that can discipline a pharmacy’s license to operate in California; the FDA does not license or discipline pharmacies. Opp. at 12.

Absolute argues that this is incorrect because the FDA can discipline pharmacies. See 21 U.S.C. §332 et. seq. (FDA has authority to seek injunctions for violations of FDCA, bring criminal and civil actions, and seize drugs); see RJN Ex. A (notice stating that FDA may consider enforcement action of seizure or injunction). Reply at 7. Absolute ignores the fact that the FDA may not discipline a pharmacy’s license. Only the Board can do that in California.[10]

The Board correctly distinguishes Section 337(a) on the basis that it is not enforcing violations of the FDCA but rather disciplining one of its licensees for failing to follow federal and state laws governing pharmacy. Glennen and the other known cases preempting actions under section 337(a) involved private plaintiffs attempting to enjoin another private party. See Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., (9th Cir. 2022), 48 F.4th 1040. The Board knows of no federal decision that would prohibit it from disciplining its own licensee for a violation of the FDCA. Opp. at 13.

The court agrees that this is a valid distinction, and it is supported by the fact that the Glennen court was discussing claims not tied to tort law duties. Id. at 11. Absolute describes it as an artificial distinction and in conflict with the Glennen test (Reply at 6), but it is a valid distinction. Whether it is sufficient for a California appellate court to apply the FDCA to state agency license discipline is not clear.

The court need not decide this issue, however, because the Board’s discipline of Absolute meets the Glennen test that a state law claim is not preempted if it is premised on a violation of the FDCA but not based solely on it. 247 Cal. App. 4th at 11. In other words, a state claim survives preemption if the conduct (1) violates the FDCA and (2) would give rise to a state recovery even in the absence of the FDCA. Id. at 12.

The fifth cause alleged that Absolute compounded with bulk drug ingredients that did not have a USP monograph, were not components of drugs approved by the Secretary, and did not appear on a list developed by the Secretary in violation of 21 U.S.C. section 353a(b)(1)(A)(i). AR 39 (¶ 42). The conduct at issue is the compounding of BCP-157, Ipamorelin, TB-500, and CJC-1295 during the period of September 10, 2019 through April 3, 2020. AR 35-38. This same compounding of the same drugs during most of the same period formed the basis of the first and second causes concerning quality and adulteration. AR 25-28. In other words, the same conduct of compounding of drugs formed the basis for violation of the FDCA and state law concerning quality and adulteration of drugs. As such, the Glennen test was met, and the fifth cause is not preempted.

Although not free from doubt, the first two causes are not burdened by an unlawful underground regulation. The Board’s reliance on the definition of “ungraded” is not a rule but rather a term in the pharmaceutical industry. The application of the fact that Absolute’s drug products were ungraded to mean that they lack a pharmaceutical grade necessary for sterile compounding appears to be a case-specific interpretation of FDA guidance which the Board views as binding. As such, the interpretation does not appear to meet the definition of an underground regulation. In addition, Absolute’s inclusion of 10% extra active ingredient beyond that required by the master formula to account for error shows that the drug products had excess active ingredient and were therefore adulterated.

Nor is the fifth cause preempted by Section 337 because the Glennen test has been met. As a result, Absolute has not shown that the Board is unlikely to prevail at trial. CCP §1094.5(h).

Absolute argues that it has sustained irreparable harm in the form of lost revenue since the revocation went into effect on December 10, 2022. This harm will be exacerbated once the floodgates of reciprocal discipline open. Mot. at 15.

Absolute has distinguished itself from competitors and grown into 49 other states. Detlaff Decl., ¶5. Absolute serves approximately 11,000 California patients and receives prescriptions through 172 prescribers each year. Detlaff Decl., ¶10. The loss of access to the California market has had catastrophic impact on Absolute’s viability. Detlaff Decl., ¶11. If the revocation remains in effect, Absolute will lose approximately $1 million in average annual revenue from California. Detlaff Decl., ¶11. Absent this revenue, Absolute cannot survive long-term. Detlaff Decl., ¶11. Mot. at 15.

As a result of the revocation, Absolute has suffered losses that are not confined to California. Detlaff Decl., ¶13. Absolute anticipates that the nine nationwide clinics with which it has worked since 2019 will move their accounts to Absolute’s competitors. Detlaff Decl., ¶14. One of these clinics, National Medical Inc., has already done so. Detlaff Decl., ¶15. The eight other clinics have informed Absolute that they will follow because it is inconvenient to log onto multiple pharmacy systems to check the status of their patients’ prescriptions. Detlaff Decl., ¶16. In 2022, Absolute received $4,438,520.41 in revenue from these nine nationwide clinics. Detlaff Decl., ¶17. Mot. at 15-16.

Absolute faces automatic suspensions and reciprocal discipline in other states. Detlaff Decl., ¶¶ 34, 41. Absolute had immediate reciprocal reporting requirements in 13 other states that were triggered by the revocation. Detlaff Decl., ¶31. In accordance with these reporting requirements, Absolute notified these state boards of the Board’s revocation and the hearing for a stay scheduled for January 26, 2023. Detlaff Decl., ¶¶ 32-33. Absolute asked these states not take action pending the outcome of the hearing. Detlaff Decl., ¶¶ 32-33. Mot. at 16.

If a stay is not granted, each of these 13 states will likely take adverse action against Absolute’s license. Detlaff Decl., ¶33. For example, Georgia and Virginia have automatic suspension provisions, meaning that Absolute’s licenses in those states will be suspended a result of the California revocation. Detlaff Decl., ¶¶ 34, 41. Absolute then will have to report the Georgia and Virginia suspensions to other states, resulting in a snowball effect of additional reciprocal actions. Detlaff Decl., ¶¶ 35, 39, 42, 45. Further, Absolute will not be able to dispense to Georgia or Virginia patients, making Absolute even more unattractive to the nationwide clinics it serves. Detlaff Decl., ¶¶ 37, 44. Mot. at 16-17.

Absolute also will have to continue reporting the revocation to at least 15 additional state boards of pharmacy during the license renewal process. Detlaff Decl., ¶¶ 39-40. In total, Absolute will have to report the revocation to 30 states—all of which are likely to take some type of adverse action. Detlaff Decl., ¶¶ 39-40. Mot. at 17.

Absolute has had to report the revocation to an accrediting body known as LegitScript. Detlaff Decl., ¶19. LegitScript can revoke accreditation based on serious disciplines such as state license revocation. Detlaff Decl., ¶22. If LegitScript withdraws Absolute’s accreditation, credit card companies will no longer process payments to Absolute. Detlaff Decl., ¶23. Absolute receives all payments through credit cards. Detlaff Decl., ¶24. Mot. at 16.

Even if Absolute ultimately succeeds on the merits, its harms are irreparable. The Board has public-entity immunity from money damages claims. See Govt. Code, §§ 815(a), 821.2. Accordingly, Absolute will likely close, and 11 employees will lose their jobs. Detlaff Decl., ¶3. Mot. at 17.

The Board’s opposition describes Absolute’s harm as potential and speculative. Dettlaff believes that its accreditor will take action against Absolute and believes that the 48 other states in which it is licensed will take action. However, Dettlaff admits that the lesser discipline of a public reproval also must be reported to the other states. Dettlaff Decl., ¶30. Thus, Absolute will suffer the same speculative harm even with a lower level of discipline. Opp. at 16.

Additionally, the Board considered Absolute’s harm when rendering its decision. It is obvious that financial harm will befall a pharmacy when its license to operate is revoked. A pharmacy with only a California license is required to close and dispense all of its drug stock in approved manners when the revocation decision becomes final. Absolute has the benefit of holding 48 additional state licenses where it can continue to do business. Certainly, the loss of a market as large as California may hurt revenue, but other pharmacies manage to stay in business without access to California’s market. Opp. at 16-17.

The Board’s arguments do not undermine the nature of Absolute’s harm. The anticipated harm may not come entirely into fruition, and Absolute may survive, but it is clear that it has lost business in California and that its reporting duties may compel further loss of business in other states. That this harm is both economic and obvious from the fact of revocation does not make it any less irreparable.

Absolute argues that the public will not be harmed if it is granted a stay because it presents no threat to public health or safety. The ALJ concluded that Absolute “demonstrated that it can continue to be licensed at this time without posing a threat to the health, safety, or welfare of the public.” AR 3224. Until the filing of the Accusation, Absolute did not have any disciplinary history. Further, there was no precipitating event such as a customer complaint or adverse event giving rise to the Accusation’s filing. Mot. at 17.

Absolute’s real failure was being unable to intuit that the Board would enforce a new compounding legal standard that was not implemented through a regulatory amendment. This cannot be used as the basis to suggest that Absolute is a threat to public health. If the Board thought as much, it would have invoked its cease-and-desist authority. See Bus. & Prof. Code §4127.3(a). As Absolute’s clean disciplinary history demonstrates, it can be trusted to follow rules governing the practice of pharmacy. Absolute voluntarily ceased the conduct at issue after receiving the Accusation, demonstrating its willingness to defer to the Board. Mot. at 17-18.

Moreover, Absolute introduced evidence demonstrating its efforts to go above and beyond regulatory requirements to ensure the quality of its compounded sterile medications. Absolute used a multi-step process to ensure the ingredients it used were high quality. AR 3377, 3389. The ingredients were only purchased from FDA-registered suppliers with verified good national reputations. AR 3394-95. They were always accompanied by a certificate of analysis that compared the standard percentage with the actual percentage of active ingredient. AR 3395. A quality-assurance pharmacist would analyze the certificate of analysis to confirm that the testing was done on a timely basis and that the ingredient passed validations. AR 3397. As an additional quality measure, Absolute had a chemist on staff who would assure the potency and stability of compounds before they were released. AR 3398-99. Mot. at 18.

Although it was compliant with sterile compounding requirements, Absolute made the decision to administratively close its sterile compounding aspect of its business in July 2021. AR 3429-31. When the revocation went into effect, Absolute was only compounding non-sterile and manufactured medications for California patients, with non-sterile compounding comprising only 27% of its California business. Dettlaff Decl., ¶10. The Accusation did not contain any allegations about Absolute’s non-sterile compounding practices. Dettlaf Decl., ¶8. Absolute has operated without incident for two years after the conduct underlying the Accusation. Id. Thus, no public harm will be suffered if a stay is granted. Mot. at 18-19.

Absolute’s prescribers and patients that rely upon its medications would benefit from a stay. Since the revocation went into effect, 376 patients have not received their medications that only Absolute is readily able to compound. Dettlaff Decl., ¶46. Absolute has received numerous calls from these patients, and their prescribers, voicing their concerns over the availability of these prescribed medications. Ibid. Mot. at 19.

These arguments are not persuasive and were mostly addressed by the Board’s decision. The highest priority of the Board is the protection of the public. Bus. & Prof. Code §4001.1. The Board found that Absolute committed serious violations involving improper compounding of drug products. AR 3528. Absolute was guilty of five Category III violations of law and the repeated nature of these offenses was a matter in aggravation. AR 3529.

The most egregious violation was that Absolute compounded sterile drug products for injection into the human body using ineligible bulk drug ingredients. AR 3512. The drugs at issue did not have a USP monograph, were not components of drugs approved by the FDA, and did not appear on a list that the FDA developed. AR 3512. The FDA has not approved any bulk substance for administration by injection. AR 3504. Substances that do not meet these requirements are ineligible drug ingredients. AR 3505. Absolute violated FDCA section 505 by distributing a new drug into interstate commerce without being approved by the FDA. AR 3512.

Joseph confirmed that he was aware of FDCA section 503A(b)(1)(A)(i)’s requirements and testified why Absolute compounded non-compliant drugs anyway. AR 3530. This conduct showed a reckless disregard for the health of the recipients. AR 3531. While no patient reported adverse serious reactions, the substances at issue were never reviewed or evaluated by the FDA, and their use for general wellness raises concerns whether Absolute ever weighed consumer safety against its business considerations. AR 3528-29.

Some of Absolute’s arguments carry weight. The disciplinary proceedings occurred in late 2019 and early 2020 and, if the Board truly believed that Absolute’s compounding practices presented a risk to the public, she would have invoked the Board’s cease and desist powers and immediately sought a Board order that Absolute stop compounding medications. Absolute’s lack of disciplinary history, discontinuance of sterile compounding, and the lack of any incident or complaint during the pendency of the proceedings also carry some weight.

However, the Board found that Absolute’s decision to stop compounding with ineligible drug ingredients after FDA warning letters and criminal actions initiated against a competitor was not persuasive. AR 3529. Similarly, Absolute’s lack of misconduct during the pendency of the proceedings is not significant. A licensee accused of misconduct is likely to be on his or her best behavior.

Absolute’s discontinuance of sterile compounding in California does not fully address the danger to the public. Absolute continues to perform non-sterile compounding of pharmaceutical substances and dispenses them to the California public. There is no assurance that Absolute’s failures in sterile compounding have not occurred for non-sterile compounding. As the Board’s decision noted, Absolute’s non-sterile compounding was not inspected. AR 3531.

Absolute’s arguments about the measures it took to ensure the quality of its medications, including obtaining all ingredients from FDA-registered suppliers, ensuring all certificates of analysis were analyzed by a quality-assurance pharmacist, and having a chemist on staff to ensure the potency and stability of its compounded medications are not sufficient. Acosta testified that every step of quality must be built into the process for non-sterile to sterile compounding, including how the product was made, handled, and imported into the country. AR 3496. As part of this process, a pharmacy must make sure that it chooses the appropriate starting material so that it does not rely on statistical tests to determine whether it is safe. AR 3496. Testing at the end does not prove that quality was built into the entire process. AR 3496.

The Board fairly concluded that Absolute’s continued operation poses a danger to the public because it compounded and dispensed drugs that lack quality and were adulterated, failed to confirm sterility of the drug products prior to dispensing them, failed to have complete compounding logs, and most important, compounded with ineligible bulk drug substances.[11]

Absolute has demonstrated irreparable harm from the Board’s decision to revoke its Permits, but it has not shown that the Board is not likely to succeed on the merits or that the public interest supports a stay. The motion is denied.

[1] The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.

[2] However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).

[3] Absolute initially requested judicial notice of over 20 documents. Absolute has since filed the Administrative Record and retracted its requests for judicial notice of any documents that are in the Record. The remaining exhibits retain their original RJN Exhibit citations.

Absolute requests judicial notice of (1) the Committee’s Proposal to Rename Article 7 Sterile Compounding and Repeal and Replace Sections 1751-1751.10, dated September 5, 2019 (“Proposal”) (RJN Ex. J); (2) the Board’s May 7, 2020 notice, Compounding Requirements Following USP Appeal Decisions, in response to the Proposal (RJN Ex. K); (3) the accusation filed in In the Matter of the Accusation Against: Infuserve America, Inc. et al., (“Infuserve”) Agency Case No. 7060 (RJN Ex. L); (4) the accusation filed in In the Matter of the Second Amended Accusation Against: Empower Clinic Services, LLC, et al., (“Empower”) Agency Case No. 7117 (RJN Ex. M); (5) the accusation filed in In the Matter of the Accusation Against: La Vita Compounding Pharmacy, LLC, et al., (“La Vita”) Agency Case No. 6851 (RJN Ex. N); (6) the accusation filed in In the Matter of the Accusation Against: College Pharmacy, Inc., et al., (“College”) Agency Case No. 7153 (RJN Ex. O); (7) the accusation filed in In the Matter of the Accusation Against: Koshland Pharmacy, Inc., et al. (“Koshland”), Agency Case No. 7147 (RJN Ex. P); (8) the accusation filed in In the Matter of the Accusation Against: APS Pharmacy, Inc., et al., (“APS”) Agency Case No. 7119 (RJN Ex. Q); (9) the proposed decision in La Vita, supra (RJN Ex. R); (10) Virginia’s Annotated Code (“Va. Code Ann.”) section 54.1-2409 (RJN Ex. S); and (11) Georgia’s Composite Rules and Regulations (“Ga. Regs.”) Rule 480-6-.02 (15) (RJN Ex. T).

Although the relevance of RJN Exs. S-T is uncertain, they are unopposed and granted. Evid. Code §452(a).

The Board objects to RJN Ex. J as a proposed amendment on which it took no action and to RJN Ex. K as a notice it posted to communicate with stakeholder. RJN Opp. at 2. The Board also objects that the meaning and intent of both as not capable of immediate and accurate determination. RJN Opp. at 2. That a document’s meaning is in dispute does not mean that a court cannot judicially notice it. Although the Board did not adopt the Proposal in RJN Ex. J, such a proposal and the decision to abandon such amendments to the sterile compounding regulations are still legislative history of Board regulations. RJN Reply at 5. The requests are granted. Evid. Code §452(b).

The Board objects to RJN Exs. L-M because the accusations ended in settlement agreements and not designated as precedential pursuant to Government Code section 11425.60. RJN Opp. at 2. A decision need not be precedential for judicial notice and can be used for other purposes, such as to show a pattern of prosecution by the Board. RJN Reply at 5. The requests are granted. Evid. Code §452(c).

The Board objects to RJN Exs. N-Q because, the accusations can be amended or supplemented until a matter is submitted to an administrative law judge. RJN Opp. at 3. Although that changes the exact nature of their relevance, that does not change the fact that the accusations were made. The accusations are records of both the Board and the OAH and the requests are granted. Evid. Code §452(c).

The Board objects to RJN Ex. R as a proposed ALJ decision that the Board has voted not to adopt. RJN Opp. at 3. A proposed decision is not an official agency act, and the request is denied.

In reply, Absolute requests judicial notice of (1) the Food and Drug Administration’s (“FDA”) webpage entitled “Compounding Oversight and Compliance Actions,” current as of April 11, 2022 (RJN Ex. A); and (2) the FDA’s Guidance for Industry regarding insanitary conditions at compounding facilities dated November 2020 (RJN Ex. B). The requests are granted. Evid. Code §452(c).

[4] The Board cites to Exhibit B to the Petition for the argument that it only set aside the Proposal to ensure that any new regulations conform with newly revised USP chapters. Opp. at 10. This is just a copy of the Proposal (RJN Ex. J) and does not support the argument.

[5] Between June 2021 and April 2022, the Board filed accusations against six other pharmacies in which at least one cause of action claimed a violation of the statutes regulating dangerous drugs based on use of ungraded materials. RJN Ex. L, pp. 29-30; RJN Ex. M, pp. 58, 61-62, 68, 74; RJN Ex. N, pp. 94, 96-97, 100, 102-05; RJN Ex. O, pp. 137, 141; RJN Ex. P, p. 159; RJN Ex. Q, p. 174.

[6] The court has not cited all significant parts of the witness testimony.

[7] A “bulk drug substance” is a substance, when used in preparing a compounded drug, is an active ingredient or a finished dosage of the drug. 16 CCR §1735.1(d).

[8] Absolute quotes the ALJ’s proposed decision in In the Matter of the Accusation Against: La Vita Compounding Pharmacy, LLC, et al., Board Case No. 6851, which the court declined to judicial notice. Mot. at 12. The court will consider this quotation as Absolute’s argument.

[9] Absolute’s argument that “every judge” that has analyzed the Board’s per se standard has concluded that the ungraded ingredients standard satisfies both Tidewater elements is supported only by a single ALJ whose proposed decision has been rejected by the Board.

[10] The Board also notes that the FDA has stated that states are primarily responsible for day-to-day oversight of the thousands of compounders in the United States and that “compounding facilities…are primarily overseen by the states…. Where insanitary conditions are identified, FDA encourages states to take appropriate action, consistent with state laws and regulations…” (citations omitted). Opp. at 12.

Absolute argues that the FDA’s guidance document undermines the Board’s position: “Where insanitary conditions are identified, FDA encourages states to take appropriate action, consistent with state laws and regulations, and to contact FDA.” RJN Ex. B, p. 3. In other words, the FDA recognizes the importance of states enforcing their own laws and contacting the FDA so that it may enforce the FDCA. Reply at 7. This argument begs the question whether license discipline is enforcement of the FDCA.

[11] The Board’s opposition expends three pages arguing that the discipline of revocation was appropriate. Opp. at 13-16. Absolute does not argue the appropriateness of the penalty and the court need not consider the issue.