[Federal Register: July 11, 2003 (Volume 68, Number 133)]
[Rules and Regulations]
[Page 41222-41230]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy03-2]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300, 1301, 1304, 1305, and 1307
[Docket No. DEA-108I]
RIN 1117-AA19
Definition and Registration of Reverse Distributors
AGENCY: Drug Enforcement Administration (DEA), Justice.
ACTION: Interim final rule with request for comment.
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SUMMARY: DEA is amending its regulations to define the term ``reverse
distributor'' and to establish a new category of registration for
persons handling controlled substances. The amendments establish the
regulatory standards under which reverse distributors may handle
unwanted, unusable, or outdated controlled substances acquired from
another DEA registrant. These standards ensure the proper documentation
and recordkeeping necessary to prevent diversion of such controlled
substances to illegal purposes. Since this amendment mostly codifies
DEA's existing practices, it will have no significant impact on
existing reverse distributors.
DATES: Effective Date: August 11, 2003.
Comment Date: Written comments must be postmarked on or before
September 9, 2003.
ADDRESSES: Comments should be submitted to the Deputy Assistant
Administrator, Office of Diversion Control, Drug Enforcement
Administration, Washington, DC 20537, Attention: DEA Federal Register
Representative/CCR.
FOR FURTHER INFORMATION CONTACT: Patricia M. Good, Chief, Liaison and
Policy Section, Office of Diversion Control, Drug Enforcement
Administration, Washington, DC 20537. Telephone (202) 307-7297.
SUPPLEMENTARY INFORMATION:
Overview of and Benefits of This Interim Final Rule
As is more fully discussed in this preamble, this interim final
rule mostly codifies existing practices that reverse distributors
follow under memoranda of understanding (MOUs) with the Drug
Enforcement Administration. This approach is consistent with the
comments received (also discussed more fully later in this preamble)
that stated that reverse distributors would be significantly and
adversely impacted if, as was proposed, they were classified as
manufacturers. In recognizing this activity as a separate registration
category of distributors, DEA believes the entire controlled substances
industry will benefit. Existing reverse distributors operating under
MOUs will become fully recognized registrants under DEA rules.
Thousands of other registrants who need to dispose of unneeded or
outdated inventories will be able to turn to a fully registered group
of distributors. Furthermore, by essentially codifying existing
practices these benefits will be achieved with minimal need for change
or for disruption to the affected industry.
Background
The overall goal of the Controlled Substances Act (CSA) and of
DEA's regulations in Title 21, Code of Federal Regulations (CFR), parts
1300-1316 is to provide a closed distribution system so that a
controlled substance is at all times under the legal control of a
person registered, or specifically exempted from registration, by the
Drug Enforcement Administration until it reaches the ultimate user or
is destroyed. DEA achieves this goal by registering manufacturers,
distributors, and dispensers of controlled substances. Thus, any
movement of controlled substances between these registered persons is
covered by DEA regulations,
[[Page 41223]]
which ensure that all controlled substances are accounted for from
their creation until their consumption or destruction.
When a controlled substance has become outdated or otherwise
unusable, the registered person who possesses the substance must
dispose of it. However, over the past decade, environmental concerns
and regulatory changes have caused drug manufacturers and government
agencies (including DEA and State authorities) to become increasingly
reluctant to be involved in the disposal process. Thus, many disposal
options are no longer available.
Nonetheless, disposal of controlled substances can occur in several
ways:
1. The distributor or dispenser can return the controlled
substances to the pharmaceutical manufacturers who, as a service to
their customers, accept returns of outdated/damaged controlled
substances. Distributors, dispensers, and manufacturers are all
registered with DEA.
2. The distributor, dispenser, or manufacturer can itself dispose
of the controlled substances under the procedures outlined in 21 CFR
1307.21. Under 21 CFR 1307.21, any person may request permission to
dispose of controlled substances without the benefit of a DEA or State
witness. In many cases, blanket permission for disposal of controlled
substances is granted to registrants who have an ongoing need to
dispose of unwanted controlled substances. The disposal must be
authorized by DEA in writing, and DEA may require that a set schedule
be established. Other registrants are granted disposal authority on a
case-by-case basis. DEA normally requires that the registrant provide
two designated responsible individuals to accompany the drugs to the
disposal site and witness the destruction. This achieves DEA's goal of
assuring the controlled substances are rendered nonrecoverable.
Disposal under the authority of 21 CFR 1307.21 maintains the closed
distribution system because the controlled substances remain under the
legal control of a registered person at all times.
3. The distributor, dispenser, or manufacturer can distribute the
controlled substances to a reverse distributor to take control of the
controlled substances for the purpose of returning them to the
manufacturer or, if necessary, disposing of them.
For many years, DEA opposed granting DEA registrations to firms
solely or primarily engaged in the disposal (whether the transportation
portion, actual disposal, or both) of controlled substances because
they were not considered an essential link in the closed distribution
system that the Controlled Substances Act established to control the
flow of drugs from the manufacturer to the ultimate user. In recent
years, however, increasingly stringent requirements imposed by the U.S.
Environmental Protection Agency (EPA) resulted in fewer and fewer
approved disposal facilities. As a result, a new type of business has
developed that collects controlled substances from registrants and
either returns them to the manufacturer or arranges for their disposal.
The businesses performing this middleman service refer to themselves as
``reverse distributors'' or ``returns processors.''
This interim final rule deals only with the distribution of
controlled substances to reverse distributors. The first two
categories--direct returns of controlled substances by distributors or
dispensers to manufacturers, and disposals by the distributor,
manufacturer or dispenser--are already covered by the existing rules.
Only the third category, i.e., persons who distribute controlled
substances to reverse distributors, is not expressly covered by the
current regulations, although DEA has regulated reverse distributors
for many years, first, as distributors generally, and second, as
reverse distributors specifically under the terms of Memoranda of
Understanding (MOUs), through which they are granted DEA registrations.
This rule will eliminate the need for MOUs. However, since this
amendment essentially codifies current DEA policies and practices, it
does not impose any significant additional burden on reverse
distributors.
On August 23, 1995, DEA issued a Notice of Proposed Rulemaking
(NPRM) (60 FR 43732) that proposed regulatory standards governing
disposers of controlled substances. DEA proposed to accomplish this by
amending its regulations to define the term ``Disposer'' to account for
this middleman function in the regulations and establish a new category
of manufacturer registration under which persons performing this
function would be registered. DEA also proposed amending the
regulations to exempt disposers from the quota requirements; to
identify the records and reports required of disposers; and to
establish order form procedures for disposers. Finally, DEA proposed
amendments to a number of gender-specific sections to make them gender
neutral.
DEA originally based its decision to define the persons performing
the reverse distribution function as disposers on the definition of
``manufacturer.'' In 21 CFR 1300.01(b)(27), DEA defines manufacture in
part as ``the producing, preparation, propagation, compounding, or
processing of a drug or other substance . . . .'' The section further
defines a manufacturer as ``a person who manufactures a drug or other
substance . . .'' In the proposed rule, DEA stated that by its nature,
a disposer processes a drug or other substance. Therefore, DEA proposed
to place disposers within the definition of manufacturer, under a new
disposer subcategory. Commenters to the proposed rule objected to being
categorized as disposers and manufacturers for the reasons explained
below under ``Comments.'' Therefore, in this interim final rule, DEA is
establishing a definition for ``reverse distributor'' and is
establishing a new category of registration as reverse distributors.
DEA is using an interim final rule because it will give interested
persons an additional opportunity for comment even though the substance
of this interim final rule is consistent with the purpose of the August
1995 NPRM, the comments submitted in response to that NPRM, and with
current DEA and industry practice.
Currently DEA registers persons performing reverse distributor
functions as distributors. Since reverse distributors are not
specifically identified in the current regulations, DEA enters into a
Memorandum of Understanding (MOU) with the person performing the
reverse distribution function. The Memorandum of Understanding (MOU)
specifies conditions which the reverse distributor must follow in
addition to the regulations that apply to distributors. These
registrations must be renewed annually and operations under them are
limited to products in schedules listed on the registration. DEA has
not experienced any difficulties in treating reverse distributors as
distributors for purposes of registration and other requirements. Any
reverse distributor that was registered under the terms of a MOU will
be reregistered as a reverse distributor under the terms of this
interim final rule in the next renewal cycle and will be specifically
identified in DEA's records as a reverse distributor. Persons currently
conducting reverse distribution operations must notify DEA by no later
than the time of renewal of their registration so that they may be
properly identified as reverse distributors in DEA's records.
The requirements for a reverse distributor in this interim final
rule are similar to those currently imposed on
[[Page 41224]]
all registrants at the distributor level. They include, but are not
necessarily limited to:
[sbull] Security: All applicants must install, at the registered
premises, physical security controls that meet the existing standards
of 21 CFR 1301.71 and 1301.72.
[sbull] Recordkeeping: In accordance with 21 CFR part 1304,
periodic inventories and records of all controlled substances received,
destroyed, or returned to the original, registered manufacturers must
be maintained for two years. The registrant must adequately describe
the receipt and accountability methods and records to be employed to
ensure the establishment of effective controls against diversion.
[sbull] Order Forms must be completed for all Schedule I and II
items received and transferred.
[sbull] Reports are required under the Automation of Reports and
Consolidated Orders System (ARCOS), as specified in 21 CFR 1304.33.
In addition to DEA requirements, reverse distribution applicants must
obtain the appropriate State and Federal approvals for controlled
substances and disposal activities.
After publication of the August 1995 NPRM, DEA completed a
rulemaking project in 1997 (62 FR 13938, March 24, 1997) that
reorganized and clarified the regulations that would have been affected
by that NPRM. The 1997 rulemaking also addressed the gender-specific
and other editorial changes that were contained in the 1995 NPRM.
Therefore, proposed changes to 21 CFR 1301.26 (now 21 CFR 1301.24),
Exemption of law enforcement officers; 21 CFR 1301.32 (now 21 CFR
1301.13), Application forms; contents; signature; and 21 CFR 1304.34
(now 21 CFR 1304.33(a)), Reports generally, are not included in this
interim final rule. For the proposed changes that relate to reverse
distributors, this interim final rule amends the appropriate CFR
sections as changed in 1997. Throughout the preamble, citations to both
previous section number and current section number are provided, where
relevant.
Public Comments on the NPRM
Eight comments were received regarding the proposed rule.
Commenters included reverse distributors and disposers currently
operating under Memoranda of Understanding (i.e., facilities such as
incinerators that destroy controlled substances) and some of their
representative organizations. While some commenters supported the
intent of the rule, all commenters were against some or all aspects of
the rule. The following discussion summarizes the issues raised by
commenters and DEA's response to these issues.
Proposed Definition and Registration Requirements
Most commenters opposed the proposal to classify the activities
they engage in as either disposal or manufacturing and stated that
doing so would subject them to unnecessary and burdensome regulations.
One commenter stated that since reverse distributors neither
process nor package/repackage controlled substances within the meaning
of the statutory definition of ``manufacturer,'' it is beyond DEA's
statutory authority to regulate these companies as manufacturers.
Another commenter stated that the primary goal of disposers is not to
render a controlled substance unusable, but, rather, it is to sort,
inventory and perform other activities necessary to distribute products
back to the original manufacturer and only secondarily, arrange for the
actual destruction of controlled substances.
Four commenters stated that the proposed definition of disposer
implies that a disposer is manipulating the product and, therefore,
that waste is being accepted. This would, in turn, require disposers to
comply with the more burdensome guidelines of the Food and Drug
Administration (FDA) and EPA.
DEA Response
In response to these comments, DEA has decided to establish a
definition for reverse distributor and is establishing a new category
of registration as reverse distributors. In this interim final rule,
DEA is adding the definition for ``reverse distributors'' to 21 CFR
1300.01(b). Reverse distributors are defined as ``a person who receives
controlled substances acquired from another DEA registrant for the
purpose of returning unwanted, unusable, or outdated controlled
substances to the manufacturer or the manufacturer's agent, or, where
necessary, processing such substances or arranging for processing such
substances for disposal.'' When reverse distributors return unwanted,
unusable, or outdated controlled substances acquired from legitimate
medical, scientific, research or other industrial channels to a
manufacturer or a manufacturer's agent, they must follow the same DEA
requirements as distributors follow. When reverse distributors process
controlled substances or arrange for processing controlled substances
for disposal, they must follow the same procedures that distributors
would follow in complying with 21 CFR 1307.21, ``Procedure for
disposing of controlled substances.''
Applicability to Practitioners and Others
One commenter stated that classifying dentists and other small
disposers as manufacturers would be burdensome because they would now
have to register and pay burdensome registration fees. This could
result in dentists removing themselves from regulatory control by
refusing to handle controlled substances, which could adversely affect
their patients. This commenter recommended that the proposed rule
either exempt dentists and other small disposers by quantity, or state
that they are not members of the ``disposer'' subcategory.
Another commenter stated that previous contacts with DEA indicated
that the rulemaking is intended to regulate disposers that dispose of
or offer controlled substances for disposal over which they have legal
control. This commenter requested that DEA clarify that it should not
be subject to the proposed rule provided that it is acting as an agent
of DEA through a contract; or that it disposes of controlled substances
for manufacturers provided that the manufacturer's representatives
bring the controlled substances to a disposal facility and witness the
destruction, thus maintaining legal responsibility for the controlled
substances.
DEA Response
In this interim final rule, DEA is not changing the procedures for
disposing of controlled substances under 21 CFR 1307.21. Those
procedures are designed to ensure that controlled substances are under
the control of a DEA registrant until they are destroyed or rendered
unusable. If a disposal company never takes legal control of a
controlled substance and the actual destruction is witnessed by two
representatives of a DEA registrant, the disposal company itself is not
required to obtain a DEA registration. On the other hand, if a disposal
company receives controlled substances from a DEA registrant and then
disposes of them later, the disposal company becomes part of the chain
of responsible parties and must therefore be registered by DEA as a
reverse distributor.
Under the interim final rule, DEA registrants who need to
periodically dispose of controlled substances, such as practitioners,
would continue to follow their current procedures for disposal of
controlled substances.
[[Page 41225]]
Usually this involves obtaining authority and instructions from the
local DEA field office as specified in 21 CFR 1307.21. Such registrants
also have the option of returning controlled substances to the
manufacturer or to a reverse distributor.
Appropriateness of Security and Other Requirements That Apply to
Manufacturers
Commenters recommended creating a separate category for reverse
distributors, as a subcategory of distributors, who would be subject to
the existing registration and other requirements for distributors.
Commenters stated that reverse distributors should, therefore, not be
subject to the security, inventory, recordkeeping, and reporting
requirements of the proposed rule that apply to manufacturers.
DEA's Response
Since DEA has decided to create a completely separate category for
reverse distributors, persons who fall under this category will be
required to comply with the same security, reporting, and other
requirements that apply to distributors rather than the requirements
that apply to manufacturers.
Proposed Security Requirements: Monitoring Systems
DEA received one comment on the language in proposed 21 CFR
1301.71(b)(14) which requires the applicant or registrant to document
the adequacy of its system for monitoring the receipt, manufacture,
distribution, and disposal of controlled substances. The commenter
stated that all of the ``waste to energy'' facilities that it operates
have demonstrated that the implementation of supervised monitoring of
the receipt and disposal process, by the disposer, has proven effective
and that it would be physically impossible for them to construct the
vaults or other security barriers that the regulations require for
storage at manufacturer's locations (under 21 CFR 1301.72). Instead,
this commenter recommended that disposers be required to develop a set
of Standard Operating Procedures, to be approved by DEA, for the
receipt and disposal of controlled substances.
DEA Response
With respect to the issue of physical security, it should be noted
that the commenter does not take possession of the controlled
substances that are to be destroyed. Instead, the commenter maintains
incineration facilities at which DEA registrants carry out witnessed
destruction of their controlled substances. As a result, the commenter
is not subject to DEA's requirements and does not have to establish or
maintain physical security as required under 21 CFR 1301.72 of the
regulations.
Proposed Security Requirements: Compliance With Other Laws
One commenter commented on proposed 21 CFR 1301.71(b)(15), which
would require DEA to consider the applicability of the security
requirements contained in all Federal, State, and local laws and
regulations governing the management of waste, as they would apply to
applicants and registrants. The commenter stated that this requirement
would be inappropriate because it would exceed DEA's statutory
authority. While DEA inspectors should be concerned with compliance
with DEA statutes and regulations during audits, the inspectors should
not be empowered to look for violations of other Federal, State, and
local laws governing the management of waste. Enforcement of those laws
should be left to the other Federal agencies and individual
jurisdictions. Therefore, the commenter requested DEA clarification on
this issue.
DEA Response
With respect to this comment, the items listed in 21 CFR
1301.71(b)(1) through new (b)(15) are factors that the Administrator
may consider in evaluating whether the security controls provided by a
DEA registrant are adequate to guard against theft and diversion of
controlled substances and appropriate to the registrant's business. Not
all of the factors may be relevant for evaluation of a particular
registrant's operation. DEA is adding a new factor regarding the
applicability of other Federal, State, or local laws, not as an
enforcement issue for those specific laws, but only as guidance to the
registrant that DEA may consider how the registrant is complying with
such laws in making an evaluation of the adequacy of the registrant's
security system. DEA has the statutory authority under 21 U.S.C. 823 to
consider an applicant's compliance with applicable State and local laws
before granting a registration.
Proposed Inventory Requirements
A commenter that provides disposal facilities at which registrants
may conduct witnessed destructions recommended that additional language
be added to the end of proposed 21 CFR 1304.20 (current 21 CFR 1304.11)
to require that the information required under 21 CFR 1304.15(a), (c),
and (d) be provided by the manufacturer or its agent when tendering the
substances for disposal.
DEA Response
The commenter's suggested change is not necessary because in
witnessed destructions the registrant conducting the destruction must
accurately document the controlled substances being destroyed on DEA
Form 41. Further, a disposal facility of the type operated by the
commenter does not take possession of the controlled substances being
destroyed and, thus, is not subject to the registration, inventory, and
recordkeeping requirements under the law.
Proposed Recordkeeping Requirements
Several commenters made recommendations to change the language of
proposed 21 CFR 1304.30(a) (current 21 CFR 1304.22) to make the
specific requirements clear.
A commenter also expressed concern about proposed paragraph (b) and
stated that the disposer should not be expected to recount and itemize
the individual dosage units and containers for each substance being
delivered for disposal. This would put their employees at possible risk
for exposure to these substances, increase opportunities for diversion,
and significantly slow down the disposal operation. Instead, the
commenter recommended that sufficient controls be placed on the
manufacturer and its representatives prior to disposal so that the
disposer can focus on rapid and effective disposal procedures.
DEA Response
The comments primarily address problems that could have arisen if
the reverse distribution function was included under manufacturing, as
proposed. These concerns are mostly addressed by treating reverse
distribution as a separate category of registration. The concerns
expressed by disposers are, as previously discussed, not relevant as
long as legal control of the controlled substances remains with a
person who is registered with DEA.
Recordkeeping requirements for reverse distributors are set forth
in new paragraph (e) of 21 CFR 1304.22. These requirements are tailored
to the reverse distributor role and address recordkeeping for
controlled substances in both bulk and finished form. These
requirements are consistent with existing practice.
[[Page 41226]]
Witness Requirement
A commenter stated that DEA would require two responsible
individuals to accompany the drugs to the disposal site and actually
witness the destruction. The commenter stated that this would
significantly increase the costs of controlled substances destruction
for all registrants and that the rule should, therefore, require a
regulatory flexibility analysis.
DEA Response
The requirement to have two responsible individuals accompany the
drugs to the disposal site is also consistent with existing practice.
DEA Form 41, Registrants Inventory of Drugs Surrendered, must be
completed by a registrant's representative and witnessed by a second
representative of the registrant, to document the disposal of
controlled substances. This form must be sent to DEA.
Proposed Reporting Requirements
A commenter stated that ARCOS reporting becomes difficult and
costly when a disposer receives a quantity of a controlled substance
listed in Schedule I and II and a narcotic controlled substance listed
in Schedule III which is contained in a compound, mixture or
preparation which is not assigned an NDC number. The commenter stated
that this reporting ``will become more difficult as more returns are
accepted from Pharmacies, Home Infusion Pharmacies, Provider Pharmacies
to Long Term Care Facilities, Hospitals, and dispensers.''
The commenter recommended adding a new paragraph (e) to current 21
CFR 1304.33 (formerly 21 CFR 1304.39) that would provide for the
following exception: ``Exceptions. Any controlled substance listed in
Schedule I and II and on each narcotic controlled substance listed in
Schedule III which material, compounded, mixture or preparation
containing a quantity of a substance from a registered dispenser,
practitioner, researchers, and analytical registrants, e.g.,
prescription, IV mixture or non NDC material, may be exempted from
filing reports under this section to ARCOS Units of the
Administration.'' The commenter also stated that proposed paragraphs
(b) and (c) (with regard to ARCOS reports being filed no later than the
15th day of the month or no later than January 15th) would have a
significant economic impact and lead to ARCOS delays. This is because
disposers (unlike manufacturers or distributors) deal with open
containers that need validation (by count, weight, and/or volume)
before the containers can be placed into inventory; this can be a slow
and tedious process. The commenter added that the economic impact and
ARCOS delays would increase as the disposer class registration
utilization grows.
DEA Response
While the commenter addressed the reporting requirements in
proposed 21 CFR 1304.39(b) and (c), the commenter's real concern
appears to be related to inventory requirements currently in 21 CFR
1304.11. This interim final rule will allow reverse distributors to
follow the inventory requirements that currently apply to dispensers
and researchers. This would mean that in the circumstances described in
21 CFR 1304.11(e)(3)(ii), it would not be necessary to make an exact
count or measure of the contents in all cases, i.e., if the controlled
substance is listed in Schedule III, IV, or V, and the container holds
fewer than 1,000 tablets or capsules, the reverse distributor could
make an estimated count or measure.
Notwithstanding this change, a reverse distributor is required to
know what it has on hand from the moment it is received. It is the
reverse distributor's responsibility to have the proper documentation
and accountability for any controlled substances in his or her
possession. The best way for reverse distributors to accomplish this is
by doing the following: (1) Require customers to provide a list of the
controlled substances to be sent in advance of the shipment; (2)
Complete a form or invoice indicating the amount that the customer will
be sending, keep a copy of this document, and send 2 copies to the
customer; and (3) Require the customer to keep one copy of the document
and put the other copy in the package with the shipment. This procedure
would maintain a paper trail and provide the data on inventory from the
moment the shipment is received by the reverse distributor. Reverse
distributors who follow this procedure should not have difficulty
preparing the ARCOS reports that are required by current 21 CFR 1304.33
for controlled substances listed in Schedules I and II, and for
narcotic controlled substances listed in Schedules III, IV, and V.
With respect to the issue of non-NDC material, such as compounded
prescription products or infusion products, DEA's ARCOS Unit has
established a listing of generic codes that can be used to identify
products that do not have an NDC number assigned. If a product being
handled does not have a generic code, please contact the ARCOS Unit of
the Administration for assistance.
Reverse distributors are encouraged to make use of electronic
identification and tracking systems, such as bar codes, to aid in
meeting the inventory and reporting requirements. Also, reverse
distributors may use electronic versions of DEA Form 41 if the
electronic version is an exact reproduction of the form. If the
electronic version is not identical to the paper version, it is not the
official form, and may not be used.
DEA invites manufacturers, reverse distributors, and other
distributors to work with the Administration to establish standard
operating procedures so there is a standard recordkeeping system for
transferring, receiving, and inventorying partial containers. With a
standardized system there would be fewer inconsistencies among the
records of each registrant when controlled substances are transferred
from one to another.
Proposed Order Form Requirements
A commenter stated that in the preamble, DEA stated that ``Order
Forms must be completed for all Schedule I and III items received and
transferred.'' The commenter stated that this is incorrect and that the
correct statement should be: ``Order Forms must be completed for all
Schedule I and II items received and transferred.''
DEA Response
DEA agrees that there was a typographical error in the preamble and
is clarifying that order forms (DEA Form 222) required by part 1305 are
for Schedule I and II controlled substances received and transferred.
Reverse Distributor Receipt of Controlled Substances From Non-
registrants
Under the interim final rule, reverse distributors may only receive
controlled substances from DEA registrants. Non-registrants, such as
long term care facilities, do not have direct authority to handle
controlled substances. Further, the substances in their possession are
no longer part of the closed system of distribution and are no longer
subject to DEA's system of corresponding accountability. In cases where
long term care facilities must dispose of controlled substances, they
should follow the guidelines within their State for disposing of the
drugs and maintain appropriate documentation of the disposal. Likewise,
a former registrant, such as a pharmacy, whose registration has expired
or has been surrendered, would need to coordinate with the local DEA
office to develop a procedure to
[[Page 41227]]
dispose of any controlled substances on hand.
Why Is DEA Publishing This Action as an Interim Final Rule?
As discussed previously, the goal of the NPRM was to give codified
status to reverse distributors. While DEA initially proposed doing this
by registering reverse distributors in the manufacturer category,
comments on the NPRM made it clear that this approach would adversely
affect the existing industry (e.g. by subjecting reverse distributors
to certain EPA and FDA regulations). By registering reverse
distributors as distributors, DEA accomplishes its original goal in a
manner that is consistent with the intent of the NPRM and with public
comments on the NPRM. Also, this approach is beneficial rather than
detrimental to the entire controlled substances industry. However,
recognizing the time which has elapsed between publication of the NPRM
and this action, as well as the growth and evolution of the reverse
distributor industry during that time, DEA has determined that, rather
than publishing final regulations on this issue, it is in the best
interest of industry that DEA publish an interim final rule. Publishing
an interim final rule will permit further comment from the affected
industry, ensuring that final regulations appropriately address
industry evolution and concerns.
Summary
In summary, the registration and other requirements for reverse
distributors under this interim final rule are the same as those
currently imposed on distributors and the same as currently imposed on
reverse distributors under MOUs; Registration requirements under
existing 21 CFR 1301.13; Security requirements under existing 21 CFR
1301.71 and 1301.72; Inventory requirements under existing 21 CFR
1304.11; Recordkeeping requirements under existing 21 CFR 1304.22;
Reporting requirements under existing 21 CFR 1304.33 (ARCOS reports);
Order form requirements under existing 21 CFR 1305.08 (Persons entitled
to fill order forms). In some cases these rules have been modified to
apply specifically to reverse distributors. In addition, DEA is
amending 21 CFR 1307.11 and 1307.12 to clarify that registrants can
transfer (``distribute'') controlled substances to a reverse
distributor, even if the registrant is not registered as a distributor.
As a result of DEA's decision to classify reverse distributors as a new
category of registration, instead of as a manufacturer, proposed 21 CFR
1303.12 on quotas is not applicable.
The closed system of distribution established under the CSA for
controlled substances relies on certain fundamental principles,
including registration, security, and accountability (i.e.,
inventories, recordkeeping, and reporting), to achieve a system of
controls that allows for legitimate commerce while minimizing the
potential for diversion. The fact that reverse distributors engage in a
unique activity within the controlled substances chain and are faced
with certain challenges that other registrants do not normally
encounter does not override the fundamental principals of DEA's
controls. Reverse distributors must register, provide security, and
maintain accurate records for all controlled substances in their
possession. However, the regulatory structure does provide some
flexibility and, where possible, DEA has made adjustments to address
some of the problems the industry has encountered, including use of a
separate category of registration and application of the inventory
requirements for dispensers and researchers.
Because of the length of time since the NPRM was published and the
evolving nature of this industry, DEA is using an interim final rule to
give an additional opportunity for comment. DEA will consider comments
on the appropriateness and the practical application of these rules to
current industry practice and will be flexible where possible in
developing final rules.
Application for Registration for Reverse Distributors
As has been previously noted in this rulemaking, persons wishing to
conduct reverse distributor activities must register with DEA to do so.
To apply for registration, persons must complete a DEA Form 225,
Application for Registration. To renew a DEA registration, persons must
complete a DEA Form 225a, Application for Registration Renewal. As DEA
has not yet issued updated forms specifically referencing the reverse
distributor business activity, persons wishing to register as reverse
distributors must choose the distributor business activity on the form
and then must attach a written statement signed by the person signing
the registration or registration renewal application acknowledging that
the applicant is conducting or wishes to conduct reverse distributor
activities.
Regulatory Certifications
Regulatory Flexibility Act
The Deputy Assistant Administrator hereby certifies that this
interim final rulemaking has been drafted in accordance with the
Regulatory Flexibility Act (5 U.S.C. 605(b)), and by approving it
certifies that this regulation will not have a significant economic
impact upon a substantial number of small entities. Therefore, no
regulatory flexibility analysis is required.
Executive Order 12866
The Deputy Assistant Administrator further certifies that this
rulemaking has been drafted in accordance with the principles of
Executive Order 12866 Section 1(b). DEA has determined that this rule
is a significant regulatory action. Therefore, this action has been
reviewed by the Office of Management and Budget.
Executive Order 12988
The Deputy Assistant Administrator further certifies that this
regulation meets the applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988.
Executive Order 13132
This rulemaking 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
$100,000,000 or more 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.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by Section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996. 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-
[[Page 41228]]
based companies in domestic and export markets.
List of Subjects
21 CFR Part 1300
Definitions, Drug traffic control.
21 CFR Part 1301
Administrative practice and procedure, Drug traffic control,
Security measures.
21 CFR Part 1304
Drug traffic control, Reporting requirements.
21 CFR Part 1305
Drug traffic control, Reporting requirements.
21 CFR Part 1307
Drug traffic control.
0
For the reasons set out above, 21 CFR parts 1300, 1301, 1304, 1305, and
1307 are amended as follows:
PART 1300--DEFINITIONS
0
1. The authority citation for part 1300 continues to read as follows:
Authority: 21 U.S.C. 802, 871(b), 951, 958(f).
0
2. Section 1300.01 is amended by redesignating paragraphs (b)(41)
through (b)(43) as paragraphs (b)(42) through (b)(44), and adding a new
paragraph (b)(41) to read as follows:
Sec. 1300.01 Definitions relating to controlled substances.
* * * * *
(b) * * *
(41) The term reverse distributor means a registrant who receives
controlled substances acquired from another DEA registrant for the
purpose of--
(i) Returning unwanted, unusable, or outdated controlled substances
to the manufacturer or the manufacturer's agent; or
(ii) Where necessary, processing such substances or arranging for
processing such substances for disposal.
* * * * *
PART 1301--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS, AND
DISPENSERS OF CONTROLLED SUBSTANCES
0
3. The authority citation for part 1301 continues to read as follows:
Authority: 21 U.S.C. 821, 822, 823, 824, 871(b), 875, 877.
0
4. Section 1301.13 is amended by revising paragraph (c), redesignating
paragraphs (e)(1)(iii) through (e)(1)(ix) as paragraphs (e)(1)(iv)
through (e)(1)(x) and adding a new paragraph (e)(1)(iii) to read as
follows:
Sec. 1301.13 Application for registration; time for application;
expiration date; registration for independent activities; application
forms, fees, contents and signature; coincident activities.
* * * * *
(c) At the time a manufacturer, distributor, reverse distributor,
researcher, analytical lab, importer, exporter or narcotic treatment
program is first registered, that business activity shall be assigned
to one of twelve groups, which shall correspond to the months of the
year. The expiration date of the registrations of all registrants
within any group will be the last date of the month designated for that
group. In assigning any of these business activities to a group, the
Administration may select a group the expiration date of which is less
than one year from the date such business activity was registered. If
the business activity is assigned to a group which has an expiration
date less than three months from the date of which the business
activity is registered, the registration shall not expire until one
year from that expiration date; in all other cases, the registration
shall expire on the expiration date following the date on which the
business activity is registered.
* * * * *
(e) * * *
(1) * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
New--225 Renewal--
(iii) Reverse distributing Schedules I-V 225a 438 438 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
------------------------------------
0
5. Section 1301.71 is amended by revising paragraphs (b)(13) and
(b)(14) and adding a new paragraph (b)(15) to read as follows:
Sec. 1301.71 Security requirements generally.
* * * * *
(b) * * *
(13) The availability of local police protection or of the
registrant's or applicant's security personnel;
(14) The adequacy of the registrant's or applicant's system for
monitoring the receipt, manufacture, distribution, and disposition of
controlled substances in its operations; and
(15) The applicability of the security requirements contained in
all Federal, State, and local laws and regulations governing the
management of waste.
* * * * *
0
6. Section 1301.72 is amended by revising paragraph (b)(7) to read as
follows:
Sec. 1301.72 Physical security controls for non-practitioners;
narcotic treatment programs and compounders for narcotic treatment
programs; storage areas.
* * * * *
(b) * * *
(7) Such other secure storage areas as may be approved by the
Administrator after considering the factors listed in Sec. 1301.71(b);
* * * * *
PART 1304--RECORDS AND REPORTS OF REGISTRANTS
0
7. The authority citation for part 1304 continues to read as follows:
Authority: 21 U.S.C. 821, 827, 871(b), 958(e), 965, unless
otherwise noted.
0
8. Section 1304.11 is amended by revising paragraph (e)(2) and the
introductory text of paragraph (e)(3) to read as follows:
Sec. 1304.11 Inventory requirements.
* * * * *
(e) * * *
(2) Inventories of distributors. Except for reverse distributors
covered by paragraph (e)(3) of this section, each person registered or
authorized to distribute controlled substances shall include in the
inventory the same information required of manufacturers pursuant to
paragraphs (e)(1)(iii) and (iv) of this section.
(3) Inventories of dispensers, researchers, and reverse
distributors. Each person registered or authorized to dispense, conduct
research, or act as a reverse distributor with controlled substances
shall include in the inventory the same information required of
manufacturers pursuant to paragraphs (e)(1)(iii) and (iv) of this
section. In determining the number of units of each finished form of a
controlled substance in a commercial container which has been opened,
the dispenser, researcher,
[[Page 41229]]
or reverse distributor shall do as follows:
* * * * *
0
9. Section 1304.22 is amended by revising paragraph (b) and adding new
paragraph (e) to read as follows:
Sec. 1304.22 Records for manufacturers, distributors, dispensers,
researchers, importers, and exporters.
* * * * *
(b) Records for distributors. Except as provided in paragraph (e)
of this section, each person registered or authorized to distribute
controlled substances shall maintain records with the same information
required of manufacturers pursuant to paragraphs (a)(2)(i), (ii), (iv),
(v), (vii), (viii) and (ix) of this section.
* * * * *
(e) Records for reverse distributors. Each person registered to
distribute controlled substances as a reverse distributor shall
maintain records with the following information for each controlled
substance:
(1) For each controlled substance in bulk form the following:
(i) The name of the controlled substance.
(ii) The total quantity of the controlled substance to the nearest
metric unit weight consistent with unit size.
(iii) The quantity received from other persons, including the date
and quantity of each receipt and the name, address, and registration
number of the other person from whom the controlled substance was
received.
(iv) The quantity returned to the original manufacturer of the
controlled substance or the manufacturer's agent, including the date of
and quantity of each distribution and the name, address and
registration number of the manufacturer or manufacturer's agent to whom
the controlled substance was distributed.
(v) The quantity disposed of including the date and manner of
disposal and the signatures of two responsible employees of the
registrant who witnessed the disposal.
(2) For each controlled substance in finished form the following:
(i) The name of the substance.
(ii) Each finished form (e.g., 10-milligram tablet or 10-milligram
concentration per fluid ounce or milliliter) and the number of units or
volume of finished form in each commercial container (e.g., 100-tablet
bottle or 3-milliliter vial).
(iii) The number of commercial containers of each such finished
form received from other persons, including the date of and number of
containers in each receipt and the name, address, and registration
number of the person from whom the containers were received.
(iv) The number of commercial containers of each such finished form
distributed back to the original manufacturer of the substance or the
manufacturer's agent, including the date of and number of containers in
each distribution and the name, address, and registration number of the
manufacturer or manufacturer's agent to whom the containers were
distributed.
(v) The number of units or volume of finished forms and/or
commercial containers disposed of including the date and manner of
disposal, the quantity of the substance in finished form disposed, and
the signatures of two responsible employees of the registrant who
witnessed the disposal.
0
10. Section 1304.33 is amended by revising paragraph (c) to read as
follows:
Sec. 1304.33 Reports to ARCOS.
* * * * *
(c) Persons reporting. For controlled substances in Schedules I, II
or narcotic controlled substances in Schedule III, each person who is
registered to manufacture in bulk or dosage form, or to package,
repackage, label or relabel, and each person who is registered to
distribute, including each person who is registered to reverse
distribute, shall report acquisition/distribution transactions. In
addition to reporting acquisition/distribution transactions, each
person who is registered to manufacture controlled substances in bulk
or dosage form shall report manufacturing transactions on controlled
substances in Schedules I and II, each narcotic controlled substance
listed in Schedules III, IV, and V, and on each psychotropic controlled
substance listed in Schedules III and IV as identified in paragraph (d)
of this section.
* * * * *
PART 1305--ORDER FORMS
0
11. The authority citation for part 1305 continues to read as follows:
Authority: 21 U.S.C. 821, 828, 871(b), unless otherwise noted.
0
12. Section 1305.08 is amended by revising paragraph (b) to read as
follows:
Sec. 1305.08 Persons entitled to fill order forms.
* * * * *
(b) A person who has obtained any controlled substance in Schedule
I or II by order form may return such substance, or portion thereof, to
the person from whom he/she obtained the substance, to the manufacturer
of the substance, or to a registered reverse distributor pursuant to
the order form of the latter person;
* * * * *
PART 1307--MISCELLANEOUS
0
13. The authority citation for part 1307 continues to read as follows:
Authority: 21 U.S.C. 821, 822(d), 871(b), unless otherwise
noted.
0
14. Section 1307.11 is revised to read as follows:
Sec. 1307.11 Distribution by dispenser to another practitioner or
reverse distributor.
(a) A practitioner who is registered to dispense a controlled
substance may distribute (without being registered to distribute) a
quantity of such substance to--
(1) Another practitioner for the purpose of general dispensing by
the practitioner to patients, provided that--
(i) The practitioner to whom the controlled substance is to be
distributed is registered under the Act to dispense that controlled
substance;
(ii) The distribution is recorded by the distributing practitioner
in accordance with Sec. 1304.22(c) of this chapter and by the
receiving practitioner in accordance with Sec. 1304.22(c) of this
chapter;
(iii) If the substance is listed in Schedule I or II, an order form
is used as required in part 1305 of this chapter; and
(iv) The total number of dosage units of all controlled substances
distributed by the practitioner pursuant to this section and Sec.
1301.25 of this chapter during each calendar year in which the
practitioner is registered to dispense does not exceed 5 percent of the
total number of dosage units of all controlled substances distributed
and dispensed by the practitioner during the same calendar year.
(2) A reverse distributor who is registered to receive such
controlled substances.
(b) If, during any calendar year in which the practitioner is
registered to dispense, the practitioner has reason to believe that the
total number of dosage units of all controlled substances which will be
distributed by him pursuant to paragraph (a)(1) of this section and
Sec. 1301.25 of this chapter will exceed 5 percent of this total
number of dosage units of all controlled substances distributed and
dispensed by him during that calendar year, the practitioner shall
obtain a registration to distribute controlled substances.
0
15. Section 1307.12 is amended by revising the title and revising
paragraph (a) to read as follows:
[[Page 41230]]
Sec. 1307.12 Distribution to supplier or manufacturer.
(a) Any person lawfully in possession of a controlled substance
listed in any schedule may distribute (without being registered to
distribute) that substance to the person from whom he/she obtained it
or to the manufacturer of the substance, or, if designated, to the
manufacturer's registered agent for accepting returns, provided that a
written record is maintained which indicates the date of the
transaction, the name, form and quantity of the substance, the name,
address, and registration number, if any, of the person making the
distribution, and the name, address, and registration number, if known,
of the supplier or manufacturer. In the case of returning a controlled
substance in Schedule I or II, an order form shall be used in the
manner prescribed in part 1305 of this chapter and be maintained as the
written record of the transaction. Any person not required to register
pursuant to sections 302(c) or 1007(b)(1) of the Act (21 U.S.C. 822(c)
or 957(b)(1)) shall be exempt from maintaining the records required by
this section.
* * * * *
Dated: July 3, 2003.
Laura M. Nagel,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 03-17578 Filed 7-10-03; 8:45 am]
BILLING CODE 4410-09-P