Patricia Good opened the meeting, noting that the regulatory process is a two-way process that relies on the valuable expertise of industry. Ms. Good introduced Bill Wolf, Special Assistant to the Deputy Assistant Administrator.

Mr. Wolf reported on national trends. Seventy "superlabs" represent 78% of United States (U.S.) methamphetamine production capability. Most other labs are tiny ( 95% of clan labs account for the remaining 22% of production capability). This means that meeting participants represent that segment of industry on whose voluntary initiatives government depends for combating 95% of clandestine labs. The Federal 24 gram retail sales limit and industry’s voluntary efforts have been helpful in limiting large scale production. These efforts have not been sufficient, however, to prevent the continued increase in small (4 ounces or less) clandestine labs. John Uncapher presented specific examples of the trends which Mr. Wolf described.

Special Surveillance List Frank Sapienza explained the recently published Special Surveillance List of chemicals and equipment which can be used in the illicit production of controlled substances or listed chemicals. Additions or deletions to the Special Surveillance List will be made by means of the Federal Register notice process.

Chemical Mixtures The only exempt chemical mixtures are those that cannot be used to produce controlled substances and cannot be extracted from controlled substances. By regulation the Drug Enforcement Administration (DEA) must identify exempted mixtures. DEA is currently reviewing comments on a proposed rule before issuing a final regulation. The proposed rule contains a three-tiered approach.

Frank Moreno reported that a Federal Register notice on fees is being prepared. There will be a significant reduction, but the new fee will exceed the current $116 fee.

Mail Order Andy McFaul explained that Internet sales are covered by the mail order reporting requirement. Although Internet sales appear to be at the retail level, sales in the electronic setting are not retail. The face-to-face requirement that is a key element of the retail definition is missing. Internet transactions are similar to written or telephone orders -- the purchaser retains anonymity and the seller’s ability to determine the legitimacy of the transaction is diminished.

CSA Registrant Exemption Mr. McFaul spoke about the CSA registrant issue regarding freight forwarding/cross docking. DEA is considering whether an exemption for controlled substances justifies a similar exemption for chemical sales.

Brokers/Internet Mr. McFaul spoke about current situations where drug product suppliers and Internet providers enter into partnerships. Due to the manner in which the transactions are constructed, the Internet provider may have to register as a distributor.

Suspicious Orders Task Force (SOTF) Mr. Wolf reported that the Department of Justice (DOJ) has completed its review of the task force report and that final clearance is anticipated in the near future. Many companies involved in diversion are selling large quantities of drug product as retailers. They do not meet the definition of retail distribution. Although DEA does not expect wholesalers to become policemen, they must be aware of where their products go.

Mr. Wolf then discussed the Federal 24 gm retail limit and industry’s voluntary efforts to establish even lower limits on all products including exempt safe harbor products. Although these efforts have been helpful in limiting methamphetamine production, they have not been sufficient to prevent a continued increase in small (4 ozs or less) clandestine methamphetamine labs. He asked industry to consider this issue and to suggest solutions that would be practical for industry.

DEA is receiving fewer notifications of suspicious orders than anticipated. Michael Stulberg of the American Wholesale Marketers Association asked what DEA can do to provide feedback to reporters of suspicious orders. He said that distributors who have notified DEA of suspicious customers have subsequently lost sales to competitors. Lacking feedback from DEA, they doubt the effectiveness of the notification system. Mary Ann Wagner, Vice President for Pharmacy Affairs for the National Association of Chain Drug Stores, agreed and emphasized the importance of getting back to callers. Many members report to her that they receive no follow-up calls. Mary Kate Whalen, DEA Office of Chief Counsel, interjected that DEA is precluded from disclosing investigative information. DEA can, however, advise that action is being taken as a result of a report. We can only tell industry that their tips do matter.

Pharmacy Curriculum A participant noted that conversations with pharmacy school graduates in several states revealed that little or no time is devoted to the requirements of the MCA. It was recommended that DEA contact pharmacy schools to request that the MCA requirements be added to the curriculum.

Summary Mr. Wolf again raised the possibility of eliminating the 1000 count bottles and moving to safe harbor packaging, as recommended in the Supplementary Report of the Suspicious Orders Task Force. He noted that this could be accomplished voluntarily.

He concluded by urging industry to consider adopting several measures:

1. Act on the SOTF recommendation to move to smaller package sizes now.
2. Implement the SOTF guidelines and indicators now.
3. Cut off customers who will not cooperate on retail limits.
4. In setting voluntary limits, review state actions for useful benchmarks.
5. Incorporate SOTF guidelines in codes of conduct or good practices policies.

Ms. Good thanked the group for participating. The next meeting will be in about six months.

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