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Authorized Sources of Narcotic Raw Materials
8
FR Doc E8-2142 [Federal Register: February 6, 2008 (Volume
73, Number 25)] [Rules and Regulations] [Page 6843-6851] From
the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06fe08-6]
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Part 1312
[Docket No. DEA-282F] RIN 1117-AB03
Authorized Sources of Narcotic Raw Materials
AGENCY: Drug Enforcement Administration (DEA),
Department of Justice.
ACTION: Final rule.
SUMMARY: The Drug Enforcement Administration (DEA) is
amending the list of non-traditional countries authorized to
export narcotic raw materials (NRM) to the United States by
removing Yugoslavia and adding Spain. This rule provides DEA
registered importers with another potential source from which to
purchase NRM that are used in the production of controlled
substances for medical purposes in the United States.
DATES: Effective Date: This rule is effective March 7,
2008.
FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud,
PhD, Chief, Drug and Chemical Evaluation Section, Office of
Diversion Control, Drug Enforcement Administration, Washington,
DC 20537, telephone (202) 307- 7183.
SUPPLEMENTARY INFORMATION:
Background and Legal Authority
DEA enforces the Comprehensive Drug Abuse Prevention and
Control Act of 1970, often referred to as the Controlled
Substances Act (CSA) and the Controlled Substances Import and
Export Act (21
U.S.C. 801, et seq.), as amended. DEA regulations
implementing these statutes are published in Title 21 of the
Code of Federal Regulations (CFR), Parts 1300 to
1316. These
regulations are designed to ensure that there is a sufficient
supply of controlled substances for legitimate medical,
scientific, research, and industrial purposes and to deter the
diversion of controlled substances to illegal purposes. The CSA
and its implementing regulations are consistent with United
States treaty obligations that, among other things, address the
production, import, and export of controlled substances.
Controlled Substances
Controlled substances are drugs that have a potential for
abuse and psychological and physical dependence, including
opiates, stimulants, depressants, hallucinogens, anabolic
steroids, and drugs that are immediate precursors of these
classes of substances. DEA lists controlled substances in 21 CFR
Part 1308. The substances are divided into five schedules.
Schedule I substances have a high potential for abuse and have
no accepted medical use in treatment in the United States. These
substances may only be used for research, chemical analysis, or
manufacture of other drugs. Substances listed in schedules II--V
have accepted medical uses but also have potential for abuse and
psychological and physical dependence. Narcotic raw materials
(opium, poppy straw, and concentrate of poppy straw (CPS)) are
in schedule II and are the materials from which morphine,
codeine, thebaine and oripavine are extracted for purposes of
manufacturing a number of schedule II and III controlled
substances.
Sources of Narcotic Raw Materials
In May 1979, the United Nations' Economic and Social Council
(ECOSOC) adopted Resolution 471, which called on importing
countries such as the United States to support traditional
suppliers of NRM and to limit imports from non-traditional
supplying countries. The resolution, which was reaffirmed by
ECOSOC in 1981, was
[[Page 6844]]
adopted to limit overproduction of NRM, to restore a balance
between supply and demand, and to prevent diversion to illicit
channels. The United States, based on long-standing policy, does
not cultivate or produce NRM, but relies solely on opium, poppy
straw, and CPS produced in other countries for the NRM necessary
to meet the legitimate medical needs of the United States. In
response to Resolution 471, on August 18, 1981, DEA published a
final rule specifying certain source countries of NRM (46 FR
41775); the rule is frequently referred to as the 80/20 rule.
Under the final rule, currently codified at 21 CFR 1312.13(f)
and (g), NRM can be imported from only seven countries.
Traditional suppliers India and Turkey must be the source of at
least 80 percent of the United States' requirement for NRM. Five
non- traditional supplier countries--France, Poland, Hungary,
Australia, and Yugoslavia--may be the source of not more than 20
percent. The 80/20 rule is calculated based on the amount of
morphine alkaloid contained in the NRM. The United States
continues to reaffirm its support of the original resolution by
supporting similar resolutions each year at the Commission on
Narcotic Drugs.
Just as with DEA's 1979 Federal Register publication first
proposing the 80/20 rule (44 FR 33695), it is important to
recite here some of the central principles of Resolution 471,
which remain crucial today:
Noting that in recent years there has been considerable
stepping up of morphine producing capacity for export, leading
to a situation of substantial overproduction of opiates,
* * * * *
Recognizing that it is essential to bring about a proper
balance between the global supply and demand,
Taking note of the continued reliance placed by the world
community on countries constituting the traditional sources of
supply for its medical needs of opiate raw materials and the
positive response of these countries in meeting the world
requirements and their contribution in the maintenance of
effective control systems;
Bearing in mind that the treaties which establish this system
are based on the concept that the number of producers of
narcotic materials for export should be limited in order to
facilitate effective control;
* * *
In view of these principles underlying Resolution 471, DEA
stated in proposing the 80/20 rule in 1979:
The United States is a significant importer of narcotic raw
materials. Its manufacturers account for one-third of the world
morphine manufacturing capacity, most of which is consumed
within the United States in the form of codeine.\1\ The
worldwide over- production of narcotic raw materials and
[Resolution 471] make it necessary for the United States to
reevaluate past and present narcotic policies.
---------------------------------------------------------------------------
\1\ Today, the United States remains a
significant importer of narcotic raw material. Its
manufacturers currently account for one- fourth of the world
morphine manufacturing capacity, with roughly two-thirds being
utilized for the production of codeine, which is consumed as
either codeine or hydrocodone.
---------------------------------------------------------------------------
Historically, the United States has relied exclusively upon
imports of opium gum to manufacture our narcotic medical
supplies instead of cultivating opium poppies in the United
States. The rationale behind this 57-year-old policy, which
foregoes [sic] U.S. self-sufficiency, was to set an example to
the world community to refrain from overproduction and to limit
the number of opium- producing nations to a minimum.
[44 FR 33696, June 12, 1979]
The foregoing principles remain central to United States drug
control policy and this final rule amending the 80/20 rule.
Of the countries included in the 80/20 rule, India is the
only country that cultivates poppies for production of opium.
All other exporting countries use the CPS method of NRM
production, a method that allows the plant to go to seed;
portions of the plant are then processed into a concentrate. It
is generally believed that CPS is less divertible than opium.
CPS may be rich in morphine (CPS-M), rich in thebaine (CPS-T),
or rich in oripavine (CPS-O). The United States imports the
majority of its CPS-M from Turkey, with Australia supplying the
vast majority of the balance. The vast majority of CPS-T and all
CPS-O are imported from Australia.
The 80/20 rule was established based on traditional import
amounts and on the United Nations resolution calling on member
nations to support traditional sources that have been reliable
suppliers and to take measures that curtail diversion. The
United States allowed a limited number of non-traditional
suppliers to have access to the United States market based on
past commercial relationships and on the desirability of
preserving alternative sources. This approach was consistent
with the United Nations Resolution because it supported India
and Turkey and ensured an adequate and uninterrupted supply of
NRM while limiting the number of supplying countries. Over the
last ten years, pursuant to the 80/20 rule, DEA registered
importers of NRM have imported 90 percent of United States NRM
requirements from traditional suppliers India and Turkey. DEA
continues its support of the intent of the 80/20 rule.
On June 6, 2005, the Kingdom of Spain (hereinafter referred
to as Spain) petitioned DEA seeking to be added to the list of
non- traditional suppliers. Spain stated four reasons that
granting its petition would be consistent with United States
interests:
The change would be consistent with the 80/20 rule because it
maintains India and Turkey as the two traditional supplier
countries, that is, Spain does not seek to be added to the list
of traditional suppliers.
The change would ensure adequate supplies of NRM.
The change would not result in diversion because Spain
maintains strict control and oversight over the cultivation and
distribution of NRM.
The change would allow DEA to monitor diversion and maintain
cost-effective supplies.
In its petition, Spain explained that in the early 1970s,
Spanish pharmaceutical firms sought authorization to cultivate
opium poppies to produce NRM. In 1973, the Government of Spain
authorized a single firm, Alcaliber, S.A., to cultivate,
harvest, store, and prepare extracts from the opium poppy. Spain
is now the fifth largest cultivator of opium poppies; Spain is
the fourth largest producer of CPS and the third largest
exporter of CPS-M.\2\ Spain has ratified international
agreements to control production and commerce in opium products.
As stated in its petition, Spain has implemented a comprehensive
regulatory regime for controlling the cultivation, production,
and export of NRM in accordance with international treaty
requirements. The petition stated that this control ensures that
NRM produced in Spain are not diverted to illicit uses.
---------------------------------------------------------------------------
\2\ "Narcotic Drugs: Estimated World
Requirements for 2005-- Statistics for 2003'', Tables II and
XIII; International Narcotics Control Board (E/INCB/2004/2).
---------------------------------------------------------------------------
After review of the petition, DEA published a Notice of
Proposed Rulemaking (NPRM) in the Federal Register on October 4,
2006 (71 FR 58569) to amend the list of non-traditional
countries authorized to export NRM to the United States.
Specifically, the proposed rule sought to revise the list of
non-traditional suppliers by removing Yugoslavia and replacing
it with Spain. At that time, DEA had determined that the
successor states to Yugoslavia no longer produced NRM for export
beyond Yugoslavia's prior border (e.g., Serbia and Montenegro
reported exports to the Republic of Macedonia (hereinafter
referred to as Macedonia) only). Therefore, DEA concluded that
[[Page 6845]]
replacing Yugoslavia with Spain would continue to limit the
number of non-traditional suppliers to the United States while
ensuring the availability of an adequate number of sources of
NRM for United States manufacturers. The proposed change would
not otherwise affect the implementation of the 80/20 rule.
Comments Received
Following publication of the Notice of Proposed Rulemaking on
October 4, 2006, DEA received a request for a 60-day extension
to the comment period. On December 1, 2006, DEA extended the
comment period of the proposed rule to January 3, 2007 (71 FR
69504).
During the comment period, DEA received 14 comments from 13
interested parties. Five comments were received from the
following countries: Australia, Spain, Macedonia, and Turkey.
One of the comments received from a foreign Government was a
joint comment with a foreign control board. Three comments were
received from three DEA-registered importers of NRM; one comment
was received from a DEA-registered opiate manufacturer; one
comment was received from a non-DEA registered firm; two
comments were received from two foreign NRM manufacturers; and
two comments were received from one individual. As part of the
above-listed comments, DEA also received a request to extend the
comment period, and four requests for a hearing.
After the comment period had ended, DEA received an
additional comment from a foreign NRM manufacturer. This
prompted two additional late comments, one from the foreign
control board which previously commented on the NPRM and the
other from the foreign government associated with that foreign
control board. Specifically, both commenters sought
clarification from DEA on the status of the late comment, which
DEA had administratively added to the docket. The Administrative
Procedure Act (APA) does not address the issue of late comments,
and the United States courts generally defer to federal agencies
in their handling of late comments. It is the policy of the DEA
that comments not properly filed, e.g., comments postmarked
after the close of a comment period, will not be considered by
the agency in its deliberative process. Accordingly, the late
comment from the foreign NRM manufacturer was not considered by
DEA in this Final Rule. All comments received during the comment
period are summarized here and discussed further below.
Comments in Support of DEA's NPRM
Four of the commenters supported the proposed rule. These
commenters included the Government of Spain, a DEA registered
NRM importer, one foreign NRM manufacturer, and a DEA-registered
opiate manufacturer. One of the DEA registrants commented that
the need to ensure an adequate number of sources of NRM for DEA-registered
NRM importers is "most keenly felt in CPS-T and CPS-O, for
which the U.S. demand is rapidly growing and in which global
supply sources to the U.S. are currently quite limited.''
Comments Raising Concerns to DEA's NPRM
Nine of the commenters raised various concerns regarding the
NPRM. These commenters included the Government of Australia, the
Government of Macedonia, and the Government of Turkey; a foreign
NRM control board; two DEA-registered importers of NRM; one non-DEA-registered
firm; one foreign NRM manufacturer; and one individual.
Four commenters claimed that the proposed rule would
exacerbate current global oversupplies of NRM and therefore
disrupt the balance between the supply of and demand for NRM.
Three commenters claimed that the proposed rule was not
consistent with the intent of the 80/20 rule or international
resolutions. Three commenters claimed that the proposed rule was
not necessary to assist the United States in maintaining cost
effective supplies of NRM. Three commenters questioned DEA's
decision to replace Yugoslavia with Spain.
The following additional concerns were raised. One commenter
believed that the addition of Spain to the list of
non-traditional NRM producing countries would lead to a
proliferation of NRM-producing countries. The commenter,
however, did not provide further information as to how this
rulemaking would specifically lead to a proliferation of NRM-producing
countries. Additionally, one commenter claimed that Spain has
diversion occurring within its borders and that it could not be
proven that the addition of Spain to the list of non-traditional
countries would not lead to an increase in diversion within
Spain. While the commenter provided a general statement
regarding the diversion of controlled substances, the commenter
did not provide any specific evidence regarding the diversion of
narcotic raw material specifically cultivated for lawful
purposes in Spain. Due to the lack of substantiation for the
claims discussed above, these comments are not addressed further
in this rulemaking.
Request for Hearing
Four commenters requested that DEA hold an administrative
hearing in this matter. Two of these commenters requested a
hearing prior to the issuance of the final rule. One of these
commenters stated that a hearing was appropriate "given the
gravity and complexity of the issues involved.'' The other
commenter stated that a hearing would "provide interested
parties with the fullest opportunity to make their views known
and have their positions considered.'' These commenters did not
proffer any specific information beyond that submitted in the
written comments, however, that would be brought to light if
their requests for a hearing were granted. DEA has determined
that an oral hearing prior to the issuance of this rule is
unnecessary. The amendment of the 80/20 rule to substitute one
non-traditional country for another that no longer exists in the
form it did at the time of the promulgation of the original rule
does not represent a major change in DEA policy or procedure.
Moreover, DEA has carefully considered all of the comments
received in connection with the proposal, and finds that the
comments fully set forth the issues relevant to this rulemaking.
Based on information provided in the comments, information
provided in technical reports by the International Narcotics
Control Board (INCB), and information provided by U.S. importers
of NRM pursuant to DEA regulations, DEA has been able fully to
address the relevant issues set forth in the comments and has
determined that conducting a hearing would not materially add to
the administrative record. DEA has concluded, therefore, that
such a hearing would be unnecessary.
Two other commenters requested a hearing following the
issuance of the final rule, if it is issued. Such a request does
not conform procedurally with traditional rulemaking procedures
under the APA, under which--if an agency holds a hearing in
connection with a proposed rule--it is held prior to the
issuance of the final rule. Moreover, neither the CSA nor DEA
regulations provide for an administrative hearing to
"appeal'' the promulgation of a final rule. Pursuant to 21
U.S.C. 877, exclusive jurisdiction for appeals of DEA final
decisions such as this rule rests with the United States Courts
of Appeals. Accordingly, the requests for a hearing if the final
rule is issued are denied.
[[Page 6846]]
Other Comments Received
One of the commenters wrote that if the proposal sought to
change the method by which the 80/20 rule was calculated, then
the commenter would object to the proposed rule. As noted
previously, the 80/20 rule is calculated based on the amount of
morphine alkaloid contained in the NRM. Since DEA's proposed
rule and this rulemaking do not affect how the 80/20 rule is
calculated, this matter is not addressed further in this
rulemaking.
One commenter submitted two comments. One of these comments
stated, "So we are deciding who to allow to do the
exporting of substances that are used to make heroin? We allow
this? And then kick down the doors of terminally ill patients
who smoke marijuana just to ease their pain. * * *'' The other
comment promoted the use of hallucinogens. NRM imported into the
United States pursuant to this rule are used to make legitimate
medicines that are used to treat pain, not to manufacture
heroin. Heroin production and the use of marijuana and
hallucinogens are not the subject of this rulemaking; these
matters are therefore not addressed further in this rulemaking.
Support for DEA's NPRM
Adequate Supply of NRM
Three commenters addressed the need to ensure adequate
supplies of NRM for United States markets. One commenter noted
that the need to ensure an adequate number of sources of NRM for
DEA registered NRM importers was "most keenly felt in CPS-T
and CPS-O, for which the U.S. demand is rapidly growing and in
which global supply sources to the U.S. are currently quite
limited.''
DEA Response: DEA agrees that United States sources of
NRM are limited based on data it collects quarterly from DEA
registered importers pursuant to 21 CFR 1304.31. The data
collected in these reports include the relative amounts of
morphine, codeine, thebaine and oripavine contained in each
individual NRM import to the United States as reported by each
of the five DEA registered NRM importers. In response to this
comment, DEA conducted an analysis of the source of each of the
primary alkaloids available in current NRM: morphine, thebaine
and oripavine. DEA notes that, in 2006, imports of NRM had as
their source, four of the seven countries authorized to export
NRM to the United States, specifically India, Turkey, Australia
and France. United States importers have not imported NRM from
Poland or Yugoslavia since at least 1985, and imports from
Hungary were minimal in the mid to late 1990s and have ceased
altogether since 2002. No imports from Poland, Yugoslavia, or
Hungary are anticipated in 2007. Since NRM contain a mixture of
these alkaloids, DEA's review of the NRM import situation
(below) is expressed in terms of the amount of morphine,
thebaine, and oripavine contained in imported NRM.
Morphine: Morphine is the principal alkaloid in Indian
opium and Turkish CPS-M and has historically been the principal
alkaloid extracted from NRM in the United States. Morphine
continues to be utilized in the United States for the
manufacture of morphine-based pharmaceutical products; the
manufacture of codeine, which is utilized to manufacture
codeine-based pharmaceutical preparations and hydrocodone; and
the manufacture of hydromorphone. Based on an analysis of
information received for 2006, imports of NRM totaled 124,000 kg
of morphine (124.0 metric tons (MT)), having the following
countries as its source: Turkey (59.9 MT morphine; 48.3
percent), India (43.9 MT morphine; 35.4 percent), and Australia
(20.4 MT morphine; 16.5 percent).\3\ When reviewing imports of
morphine over the last 10 years (1997-2006), United States
importers obtained commercial quantities of morphine from India,
Turkey, and Australia, with lesser amounts obtained from France
and Hungary. DEA concludes as a result that the United States
has at least three geographically distinct countries from which
morphine is obtained, each with large production capacity on
which the United States could rely if any of those countries
were to experience a hardship (i.e., crop failure, labor strife,
etc.). Adding Spain would provide DEA registered importers with
a fourth country from which to purchase NRM.
---------------------------------------------------------------------------
\3\ Percentages may not add to 100 percent
due to rounding.
---------------------------------------------------------------------------
Thebaine: Thebaine is the principal alkaloid in CPS-T.
CPS-T is available to the United States market from Australia
and France. Thebaine is also present in Indian opium at
approximately one sixth the level of morphine, thus the amount
of thebaine obtained from India is directly related to the
amount of morphine that United States importers import from
India. In the United States, thebaine is utilized for the
manufacture of oxycodone, a schedule II controlled substance.
More recently, oxycodone has been utilized for the manufacture
of oxymorphone, another schedule II controlled substance.
Oxycodone use in the United States has increased tremendously
over the last 10 years. For example, the aggregate production
quota for oxycodone, which represents the maximum amount that
may be manufactured in the United States to meet the estimated
medical, industrial, scientific, and research needs of the
United States; for lawful export requirements; and the
maintenance of reserve stocks, has increased over the last
decade from 5,275 kg in 1997 to 49,200 kg in 2006. The large
increase in oxycodone use in the United States followed the
approval and marketing in 1995 of a high dose, single-entity,
extended-release drug formulation known as OxyContin. Although
DEA remains concerned over the diversion and abuse of OxyContin
and other formulations that contain high doses of potent
schedule II controlled substances, the Food and Drug
Administration continues to advise DEA of double-digit growth in
the oxycodone market through 2008. This provides evidence that
the demand for thebaine-rich NRM that must be imported into the
United States for this purpose will also continue to increase.
When the same 2006 quarterly statistical import data was
reviewed for thebaine, DEA noted that 78.2 MT of thebaine was
imported into the United States in 2006, having as its source
the following countries: Australia (66.8 MT of thebaine; 85.4
percent), India (7.1 MT of thebaine; (9.1 percent), and France
(4.1 MT of thebaine; 5.2 percent).\4\ Thus, Australia was the
source of 85 percent of United States thebaine requirements in
2006.\5\ For comparison, in 2005, 73 percent of the 65.4 MT of
thebaine imported into the United States had Australia as it
source, and, in 2004, 75 percent of the 66.8 MT were imported
from Australia. In 2007, United States importers have reported
their plans to import 92 percent of their thebaine requirements
from Australia; they planned to import the remaining 8 percent
solely from India.
---------------------------------------------------------------------------
\4\ Ibid.
\5\ As discussed previously, The 80/20 rule
is calculated based on the amount of morphine alkaloid
contained in the NRM. As this discussion relates to the amount
of thebaine alkaloid in the NRM, not morphine, the 85 percent
obtained by the United States from Australia does not violate
principles of the 80/20 rule.
---------------------------------------------------------------------------
DEA notes that Australia has a stellar record in providing
thebaine-rich NRM to the United States, with little (if any)
record of diversion. DEA further notes that the United States
and Australia have excellent relations in this area, and
contrary to comments made by some commenters to this NPRM, DEA's
proposed rule and this final rule in no
[[Page 6847]]
way suggest that Australia has "not ensured an adequate
and uninterrupted supply'' of NRM to the United States. DEA
remains mindful, however, of the potential impact of a hardship
(i.e., crop failure, labor strife, etc.) in Australia that could
lead to a temporary lack of availability of thebaine to the
United States market. In this circumstance, the United States
would be required to obtain much larger volumes of NRM from
either India or France in order to meet thebaine demand.
Although France has demonstrated the capability of exporting up
to 16 MT of thebaine in a single year to the United States,
India's capacity to export thebaine, as mentioned above, is
directly related to the amount of morphine that importers wish
to import from India consistent with the 80/20 rule. Therefore,
importing vast quantities of Indian opium to meet United States
thebaine demands would be impractical because it would result in
the importation into the United States of excessive amounts of
morphine, which could then be the subject of diversion and
abuse. Thus, the amount of thebaine that could be derived from
India, consistent with United States requirements for morphine
contained in Indian opium, is likely to be 6-8 MT annually. DEA
concludes that the United States has limited sources from which
to obtain thebaine derived from NRM. The United States relies on
three countries for thebaine, but two of these countries have a
limited capacity to support the increasing size of the United
States' market for thebaine. DEA notes that, in 2004, the
Government of Spain reported for the first time commercial
production of CPS-T, so Spain would represent a fourth country
from which CPS-T could be imported. As a result, this rule will
provide DEA registered importers with another source from which
to purchase CPS-T for the production of medicines.
Oripavine: Oripavine, a schedule II controlled
substance, is the principal alkaloid found in Australian CPS-O
and is a minor constituent in French CPS-T. Oripavine is
becoming an increasingly important intermediate in the United
States for the manufacture of buprenorphine, a schedule III
controlled substance, oxymorphone, and a number of controlled
and non-controlled substances referred to generally as
"opiate antagonists'' (naltrexone for example, and its
derivatives). Using the same import data, DEA notes that, in
2006, 9.7 MT of oripavine was imported into the United States
having Australia as its source, virtually 100 percent of the
United States' oripavine requirements. In 2005, 4.1 MT were
imported from Australia and in 2004, 9.4 MT were imported with
roughly 86 percent imported from Australia. United States
importers have reported their plans to import 100 percent of the
9.7 MT of oripavine from Australia in 2007. DEA therefore
concludes that the United States has limited sources from which
to obtain oripavine derived from NRM.
Objections to DEA's NPRM
Global Oversupply of Narcotic Raw Materials
The Government of Australia's primary concern regarding DEA's
proposed rule is that this rule would "exacerbate global
oversupply'' of NRM. In its comment, the Government of Australia
pointed to statistical data published by the INCB in its report,
"Narcotic Drugs: Estimated World Requirements for
2006--Statistics for 2004,'' which the Government of Australia
characterized as demonstrating that global production of both
morphine-rich and thebaine-rich NRM have been in excess of
global utilization since at least 2001. As a result of
overproduction, the Government of Australia argued, global
supplies have increased.
The DEA-registered NRM importer stated that "Alcaliber
[the sole Spanish poppy cultivator] made a significant
investment in capacity, dramatically increased production
contributing significantly to global overproduction and excess
stocks, and now wants access to the U.S. market to allow it to
increase production further to help recover its investment.''
The importer further stated that the Notice of Proposed
Rulemaking sent the message that "If a country adds
production capacity, uses it aggressively and thereby
contributes to the world's build up of excess stocks, the U.S.
will accommodate this behavior and reward it with access to the
U.S. market. The U.S. will simply delete a smaller producer from
the list.'' This commenter also stated that "Spain was
arguably the primary source of this build up in excess morphine
stocks.''
Finally, the foreign opiate manufacturer stated that
"Spain's rapid expansion of its domestic industry, its
aggressive approach to building export markets, its building of
clearly excessive stockpiles and capacity, and supply into a
market already in over-supply is not * * * broadly in accordance
with the obligations under the Single Convention, or the
Resolutions.''
DEA Response: DEA disagrees that Spain is the
"primary'' source of any build-up of global excesses in
morphine stocks. Instead, DEA concludes that all countries that
produce NRM contribute to the current global excess of NRM.
Among many of the requirements of NRM-producing countries, in
accordance with the Single Convention on Narcotic Drugs, 1961,
is a requirement to provide annual statistics to the INCB,
including estimated amounts of NRM to be cultivated and the
amount of NRM to be produced therefrom. The INCB utilizes these
estimates along with other statistical data it collects, in
accordance with the Single Convention, to monitor and analyze
the global supply of and demand for NRM. The results of this
analysis are published in a technical report series, which in
2004 was entitled, "Narcotic Drugs: Estimated World
Requirements for 2006; Statistics for 2003.'' The analysis
conducted by the INCB and the statistical reports published
continue to be an excellent resource for governments of consumer
countries such as the United States. A review of this report
series for 2004 and 2005 was conducted with relevant statistical
data provided in Tables 1 and 2.
Analysis for Morphine-Rich Poppies
Table 1.--"Global Cultivation of Morphine-Rich Poppies
(Hectares) for Licit Purposes Other Than Production of
Opium''
Country
|
2003 (ha.)
|
2004 (ha)
|
2005 (ha-est.)
|
2006 (ha-est.)
|
Australia
|
9,811
|
6,644
|
6,700
|
4,900
|
People's Republic of China
|
1,250
|
1,000
|
1,300
|
1,200
|
Czech Republic
|
21,045
|
16,030
|
25,000
|
38,000
|
France
|
7,919
|
8,312
|
8,500
|
9,100
|
Hungary |
2,937
|
7,084
|
14,000
|
12,000
|
Slovakia
|
332
|
326
|
550
|
...........
|
Spain
|
5,732
|
5,986
|
7,002
|
6,002
|
Republic of Macedonia
|
51
|
91
|
1,500
|
1,500
|
Turkey
|
99,430
|
30,343
|
70,000
|
70,000
|
United Kingdom
|
1,534
|
1,534
|
1,500
|
...........
|
Total
|
150,041
|
77,350
|
136,052
|
142,702
|
Neither DEA, nor any commenter, identified a single instance
in these reports in which the INCB raised concerns over Spain's
purported role in the global excess of production and the
resulting oversupply of NRM presently on hand. According to this
publication, Spain was one of eleven countries that cultivated
morphine-rich poppies in 2003 for licit pharmaceutical purposes
(i.e. non-culinary use). Spain planted 5,732 hectares of poppies
and produced roughly 4.7 percent of the world's morphine-rich
poppy straw. Spain's share of world production of poppy straw
increased in 2004 to 10.7 percent; the increase was attributed
to both an increase in 2004 acreage sown in Spain and a large
decrease in acreage sown by the primary cultivator of poppies
for this purpose, Turkey. Estimates for the "area to be
cultivated'' for 2005 and 2006 suggest that Spain will be
responsible for 5.1 percent of the area under cultivation and
had plans to decrease its area under cultivation in 2006 to 4.2
percent.
Although Spain remains one of the five largest cultivators of
morphine-rich poppies in the world, DEA concludes that Spain,
like all other producer and consumer countries, contributes to
what the INCB qualifies as a "high'' level of stocks of raw
materials rich in morphine.
Analysis of Thebaine-Rich Poppies
Table 2.--"Global Cultivation of Thebaine-Rich Poppies
(Hectares) for Licit Purposes Other Than Production of Opium''
Country
|
2003 (ha)
|
2004 (ha)
|
2005 (ha-est.)
|
2006 (ha-est.)
|
Australia
|
7,637
|
5,578
|
6,500
|
5,300
|
People's Republic of China
|
34
|
...........
|
40
|
50
|
France
|
1,499
|
1,007
|
1,100
|
1,000
|
Spain
|
...........
|
996
|
500
|
1,000
|
Total
|
9,170
|
7,581
|
8,140
|
7,350
|
Australia is the principal cultivator of thebaine-rich
poppies and is responsible for the vast majority of thebaine-rich
CPS that is produced and imported into the United States.
Although the INCB notes that production of thebaine-rich NRM
exceeded demand substantially until 2002, DEA notes that the
primary cultivators, Australia and France, began decreasing
areas under cultivation in 2003 and have made significant
decreases since that time in order to bring production in line
with utilization. Although Spain noted cultivation of thebaine-
rich poppies for the first time in 2004, it is not responsible
for excess production that resulted in excess supplies before
then.
Consistency With the 80/20 Rule and International Resolutions
As stated in DEA's Notice of Proposed Rulemaking, the 80/20
rule was promulgated following a resolution adopted by the
United Nations' Economic and Social Council (ECOSOC) in 1979. In
response to the resolution in 1979, DEA published an Advance
Notice of Proposed Rulemaking (44 FR 33695, June 12, 1979) and
then a Notice of Proposed Rulemaking (45 FR 9289, February 12,
1980). The comments resulting from the Notice of Proposed
Rulemaking led to an administrative hearing. On August 18, 1981,
DEA published a final rule promulgating the 80/20 rule (46 FR
41775).
Objections to the current Notice of Proposed Rulemaking
pointed to specific comments in the 1979 resolution, the Notice
of Proposed Rulemaking, the transcript of the administrative
hearing, and considerations made by then-Acting Administrator
Francis Mullen, Jr., in DEA's 1981 Final Rule.
The foreign opiate manufacturer stated that the 1979 ECOSOC
resolution called on "importing countries to * * * take
effective steps to support their traditional supplier
countries'' and urged "major producing and manufacturing
countries to which have set up [sic] additional capacity in
recent years to take effective measures to restrict
substantially their production levels to assure a lasting
balance between supply and demand and to prevent drug diversion
to illicit channels.'' The commenter believed that "[a]llowing
Spain to now enter the market directly contradicts and
undermines the objective of the Current 80/20 Rule, and rewards
a country for engaging in the very conduct the Current 80/20
Rule, and the Resolutions, were intended to discourage or
stop.''
The DEA-registered NRM importer who filed objections to the
NPRM provided a summary of the determinations of fact made by
Francis Young, the Administrative Law Judge (ALJ) who presided
over the hearing in 1980; these findings were adopted by
then-Acting Administrator Mullen when the final rule was
promulgated. The DEA-registered importer provided the following
summary of ALJ Young's determinations of fact: "(1) DEA
could lawfully promulgate the regulatory amendments limiting the
importation of narcotic raw materials; (2) the Administrator of
DEA could lawfully
[[Page 6849]]
require that a major portion of the [NRM] imported into the
United States be produced in India and Turkey while permitting
the remainder of the U.S. needs to be imported from other
countries which maintain adequate control; (3) such allocation
would be in harmony with U.S. trade agreements and would not be
inconsistent with Resolution 471 and 497; and (4) DEA staff
should determine an allocation ratio based upon world market
shares during a recent representative period.'' This commenter
further noted that the 1981 final rule "established clearly
stated criteria for selecting the other countries that could
supply the United States market with NRM: (a) France, Hungary,
Poland, and Yugoslavia 'provided the United States with [NRM]
during the period 1975 through 1979 and present alternate
sources' and Australia 'was the source of material for which
import permits had been requested during the time period' and
(b) Each country did 'impose adequate controls over their
production of narcotic raw materials in adherence to their
obligations under the Single Convention'.''
DEA Response: DEA disagrees with the commenters' assessments
that this rule is inconsistent with the intent of the 80/20 rule
and international resolutions. DEA finds that the proposed rule
is consistent with both the 1979 resolution and the 80/20 rule.
Consistency with 1979 Resolution: The text of the 1979
resolution contained separate and distinct operative language
for Governments of importing countries (i.e., the United States)
and Governments of producer countries. The operative paragraph
for importing countries:
"Urge[d] the Governments of the importing countries that
have not already done so to take effective steps to support the
traditional supplier countries and to give those countries all
the practical assistance they can in order to prevent the
proliferation of sources of production of narcotic raw materials
for export[.]'' \6\
---------------------------------------------------------------------------
\6\ Resolution 1979/8 of the Economic and Social Council.
"Maintenance of a world-wide balance between the supply of
narcotic drugs and the legitimate demand for those drugs for
medical and scientific purposes.''
Neither DEA nor the commenters disagree that the United
States meets the first prong of this operative paragraph, i.e.,
the support of "traditional supply countries,'' by
providing India and Turkey with access to at least 80 percent of
the United States market for morphine contained in NRM. As has
been stated throughout this rule, DEA remains committed to this
obligation through its continued support of the 80/20 rule. The
commenter's objections would, therefore, fall under United
States' obligations under the second prong of this operative
paragraph, namely to give all practical assistance in preventing
the proliferation of producing countries. Since it is not
refuted that the Government of Spain has been engaged in the
production of NRM since 1974, prior to international calls to
prevent proliferation, DEA concludes that the Government of
Spain is not a new or emerging participant in the global
production of NRM. The addition of Spain to the 80/20 rule will
not result in a proliferation of producer countries. DEA
therefore concludes that this action is consistent with the 1979
resolution.
Consistency with the 80/20 rule: As stated in the proposed
rulemaking and reaffirmed in this final rule, DEA concludes that
adding Spain to the list of countries authorized to export NRM
to the United States is consistent with the 80/20 rule.
Specifically, adding Spain is consistent with the criteria
established by then-Acting Administrator Mullen when
establishing Yugoslavia, France, Poland, Hungary, and Australia
as the list of non-traditional suppliers in 1981. In the 1981
Final Rule, then-Acting Administrator Mullen stated:
However, in view of the past commercial relations with
certain other countries as sources of narcotic raw material
supply and the desirability of preserving alternate sources of
narcotic raw materials, it is appropriate to allow certain
specific countries to compete for the U.S. narcotic raw
materials market on a limited basis. These countries, France,
Poland, Hungary and Yugoslavia have provided the United States
with supplies of narcotic raw materials during the period 1975
and 1979 and represent appropriate alternate sources. Australia
is included as well since it was the source of material for
which import permits had been requested during that time period.
In addition, we are presently persuaded that the nations
mentioned above impose adequate controls over their production
of narcotic raw materials in adherence to their obligations
under the Single Convention. (46 FR 41775).
Then-Acting Administrator Mullen reaffirmed DEA's obligations
to preserve alternate sources of NRM for the United States
market. In an effort to determine the sources from which NRM
could be derived, he established the following two criteria in
designating the list of alternate sources: (1) The country had
to have supplied the United States with NRM for a period of five
years prior to the resolution's passage in 1979 and (2) the
country had to have imposed adequate controls over the
production of NRM consistent with its obligations under the
Single Convention. In his decision, then-Acting Administrator
Mullen created an exception to the first criterion; this
exception allowed the Government of Australia to be added to the
list of non- traditional suppliers. Specifically, then-Acting
Administrator Mullen found that, if a country was not the source
of imports during the period 1975-1979, then the country had to
be a source from which DEA- registered importers of NRM had
requested authority to import. Although Australia did not export
NRM to the United States during the period 1975-1979, it was
added because DEA-registered NRM importers had expressed
interest in importing from Australia and had submitted to DEA
the required "Application for Permit to Import Controlled
Substances for Domestic and/or Scientific Purposes'' (DEA-357)
from Australia.
Based on this exception, one could conclude that Spain,
despite not having been a source of NRM to the United States
from 1975-1979, could qualify consistent with the 80/20 rule if
a DEA-registered importer had expressed its interest in
importing from Spain by filing a DEA-357, requesting
authorization to do so. DEA notes, however, that the filing of
such an application by a DEA-registered importer at present
would be inconsistent with DEA regulations, specifically the
80/20 rule, and would therefore be impractical. Instead,
interest in importing NRM from Spain arose through this
rulemaking; DEA notes that one DEA-registered NRM importer
expressed its interest in importing NRM from Spain during the
comment period. DEA also notes that, during routine annual
discussions with its five DEA-registered NRM importers before
the receipt of the petition from the Government of Spain, the
majority expressed some degree of interest in importing from
Spain.
Neither the commenters nor DEA disagree with the statements
of fact made by the Government of Spain that it has implemented
a system of domestic controls for the handling of NRM that are
consistent with the Single Convention; DEA concludes, as a
result, that the second criterion has been satisfied. DEA finds
that adding Spain to the list of non-traditional suppliers is
consistent with the criteria established in 1981 by then- Acting
Administrator Mullen and is therefore consistent with the 80/20
rule.
Cost of Narcotic Raw Materials
One DEA-registered importer of NRM stated that DEA's Notice
of Proposed
[[Page 6850]]
Rulemaking "will do little or nothing to improve
adequacy of supply or the cost of NRMs for the U.S.'' The
Government of Australia, in its comments to the DEA's proposed
rule stated that "Spain's petition presents no evidence to
justify a need for change on the basis of adequacy of supply nor
the cost effectiveness of that supply'' and that "there is
no real issue with cost.'' Finally, the foreign opiate
manufacturer stated that there is no evidence that the proposed
rule would maintain cost-effective supplies and that there is
"no suggestion that current supplies are not cost
effective.''
DEA Response: DEA agrees that there is no evidence provided
in the petition from Spain that the addition of Spain to the
80/20 rule would lead to more cost-effective supplies of NRM.
This remains an open question. DEA does not routinely collect
information relating to the cost of NRM or the opiates
manufactured therefrom. Some of the commenters, however,
provided data that demonstrate that the costs of NRM have
steadily declined over the last five years and are presently at
"record lows.'' For example, the DEA-registered importer of
NRM that objected to the NPRM stated that the price of CPS-M
from Turkey was $660 per kilogram in 2001 and will be $300 per
kilogram in 2007. The same commenter noted that CPS-T was $825
per kilogram in 2001 and will be $500 per kilogram in 2007. The
foreign opiate manufacturer stated that, "taking the United
States supply price in 2001 as a benchmark, the 2006 average
price of Thebaine to the United States has declined over 20%.''
Given the increasing demand for thebaine, the foreign opiate
manufacturer contends that a decrease in price suggests a
"robust competitive environment.''
DEA disagrees with the implication made by the Government of
Australia, however, in its statement that "Spain's
assertion that its inclusion would further an underlying policy
objective of the 80/20 Rule by ensuring an adequate and reliable
supply at a stable price is based on a premise that prices of
NRM have not been stable.'' DEA concludes instead that the
prices of NRM are directly related to the global stocks of these
materials, which for more than the last 5 years have been in
excess of global demand. For example, in the 2005 INCB
publication, "Narcotic Drugs: Estimated World Requirements
for 2006-- Statistics for 2004,'' the INCB reported that
"global production of opiate raw materials rich in morphine
exceeded global demand considerably during the period
2002-2004.'' For opiate raw materials rich in thebaine, the INCB
reported that "the total supply (production and stocks)
continued to be above global demand also for thebaine-rich raw
materials * * * and that the balance between supply and demand
will continue to be positive.'' DEA therefore concludes that the
decrease in price noted by the commenters is more a function of
excess supply rather than evidence of "robust
competition,'' for, as noted, Australia supplies the vast
majority of the United States' demand for thebaine.
DEA further concludes that maintaining cost-effective
supplies of NRM to the United States equates to striking a
global balance between supply of and demand for NRM. For
producer countries such as India, Turkey, Australia, France and
Spain, this means reducing areas of cultivation in times when
global supplies are in excess and increasing production (to the
extent possible) if and when hardship arises in a producer
country that results in global demand being in excess of supply.
For consumer countries, such as the United States, this equates
to: (1) Ensuring that there are an adequate number of sources
from which to procure NRM during times in which supplies are not
in excess, (2) communicating accurate estimates of United States
requirements for NRM to authorized exporting countries, and (3)
working with the international community, including the INCB, to
ensure a global balance between supply and demand.
Replacing Yugoslavia With Spain
The Republic of Macedonia (Macedonia) forwarded a letter
prepared by the only company licensed in Macedonia to purchase
poppy straw and manufacture opiate alkaloids. The company raised
concerns regarding DEA's comment in the NPRM that "the
successor states to the former Yugoslavia no longer produce NRM
for export.'' The company disagreed with this observation,
stating that Macedonia has been "enjoying the rights
arising out of the 80/20 rule for more than 25 years.'' The
company therefore insisted that "Yugoslavia can only be
replaced on the list with its legitimate successor state
Macedonia.'' A second commenter stated that DEA's proposed rule
sought to "replace Macedonia with Spain.'' Finally, a third
commenter stated that DEA ignored "the position of its
[Yugoslavia's] clear successor state, namely Macedonia.''
DEA Response: DEA disagrees with those commenters that
suggest that Macedonia is the de facto successor to Yugoslavia
for purposes of the 80/20 rule. Macedonia became a sovereign
country only after the dissolution of Yugoslavia. As a new
country, Macedonia cannot automatically replace Yugoslavia in
the 80/20 rule. Macedonia is but one of five countries that were
created after the dissolution of Yugoslavia in the early 1990s.
Any one of the five countries would be required to petition DEA
if it wished to be added to the list of countries authorized to
export NRM. DEA would then be required to review the merits of
any such petition in a manner consistent with DEA's review of
the petition filed by Spain.
DEA also disagrees with Macedonia's assessment that its
manufacturers have "enjoyed'' the rights arising from the
80/20 rule for the last 25 years. The company did not provide
any statistical data to demonstrate previous sales to the United
States or anticipated sales to the United States. In this
regard, DEA conducted a review of import permits issued for NRM
over the last five years and did not identify an occasion in
which a United States importer requested authority to import NRM
from Macedonia. Instead, according to the most recent statistics
available from the INCB (statistics for 2004), Macedonia did not
export opium, poppy straw, or concentrate of poppy straw from
2002 through 2004. Instead, Macedonia reported the exportation
of small quantities of morphine and codeine, schedule II
controlled substances whose importation into the United States
is generally regarded as being prohibited by DEA regulations
unless specifically requested in limited quantities for use
exclusively in scientific research (21 CFR
1312.13).
Conclusion
Based on the comments received, statistical data on imports
of NRM collected and analyzed by DEA pursuant to the Code of
Federal Regulations, and reports from the INCB, DEA concludes
that in order to continue to ensure an adequate supply of NRM
necessary to meet the estimated medical, industrial, scientific,
and research needs of the United States, for lawful export
requirements, and for the maintenance of adequate stocks, it is
appropriate to add Spain to the list of non- traditional
countries permitted to export NRM to the United States.
Regulatory Certifications
Regulatory Flexibility Act
The Deputy Assistant Administrator, Office of Diversion
Control, hereby certifies that this rulemaking has been drafted
in accordance with the Regulatory Flexibility Act (5 U.S.C.
601-612), that he has reviewed this regulation, and by approving
it certifies
[[Page 6851]]
that this regulation will not have a significant economic
impact on a substantial number of small business entities. This
rule imposes no new costs or burden on small entities. Rather,
this rule adds Spain to the list of non-traditional countries
permitted to export NRM to the United States, helping to ensure
that United States importers and manufacturers will have access
to, and be able to procure, supplies of NRM to meet legitimate
United States medical, scientific, research, and industrial
needs, to ensure maintenance of adequate reserve stocks, and to
meet lawful export requirements. Additionally, this rule
provides DEA registered importers with another source from which
to purchase NRM which are utilized for the production of
controlled substances used in the United States for medical
purposes.
Executive Order 12866
The Deputy Assistant Administrator, Office of Diversion
Control, further certifies that this rulemaking has been drafted
in accordance with the principles in Executive Order 12866
Section 1(b). It has been determined that this is a significant
regulatory action. Therefore, this action has been reviewed by
the Office of Management and Budget.
Executive Order 12988
This rule meets the applicable standards set forth in
Sections 3(a) and 3(b)(2) of Executive Order 12988.
Executive Order 13132
This rule does not preempt or modify any provision of State
law; nor does it impose enforcement responsibilities on any
State; nor does it diminish the power of any State to enforce
its own laws. Accordingly, this rulemaking does not have
federalism implications warranting the application of Executive
Order 13132.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private
sector, of $120,000,000 or more (adjusted for inflation) in any
one year, and will not significantly or uniquely affect small
governments. Therefore, no actions were deemed necessary under
the provisions of the Unfunded Mandates Reform Act of 1995.
Congressional Review Act
This rule is not a major rule as defined by Section 804 of
the Small Business Regulatory Enforcement Fairness Act of 1996
(Congressional Review Act). This rule will not result in an
annual effect on the economy of $100,000,000 or more; a major
increase in costs or prices; or significant adverse effects on
competition, employment, investment, productivity, innovation,
or on the ability of United States-based companies to compete
with foreign-based companies in domestic and export markets.
List of Subjects in 21 CFR Part 1312
Administrative practice and procedure, Drug traffic control,
Exports, Imports, Reporting and recordkeeping requirements.
For the reasons set out above, 21 CFR part 1312 is amended as
follows:
PART 1312--IMPORTATION AND EXPORTATION OF CONTROLLED
SUBSTANCES
1. The authority citation for part 1312 continues to read as
follows:
Authority: 21 U.S.C. 952, 953,
954,
957,
958.
2. Section 1312.13 is amended by revising paragraphs (f) and
(g) to read as follows:
Sec. 1312.13 Issuance of import permit.
* * * * *
(f) Notwithstanding paragraphs (a)(1) and (a)(2) of this
section, the Administrator shall permit, pursuant to section
1002(a)(1) or 1002(a)(2)(A) of the Act (21
U.S.C. 952(a)(1) or
(a)(2)(A)), the importation of approved narcotic raw material
(opium, poppy straw and concentrate of poppy straw) having as
its source:
(1) Turkey,
(2) India,
(3) Spain,
(4) France,
(5) Poland,
(6) Hungary, and
(7) Australia.
(g) At least eighty (80) percent of the narcotic raw material
imported into the United States shall have as its original
source Turkey and India. Except under conditions of insufficient
supplies of narcotic raw materials, not more than twenty (20)
percent of the narcotic raw material imported into the United
States annually shall have as its source Spain, France, Poland,
Hungary and Australia.
Dated: January 30, 2008.
Joseph T. Rannazzisi,
Deputy Assistant Administrator, Office of Diversion
Control.
[FR Doc. E8-2142 Filed 2-5-08; 8:45 am]
BILLING CODE 4410-09-P
NOTICE: This is an
unofficial version. An official version of these publications may be obtained
directly from the Government Printing Office (GPO).
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