[Federal Register: January 14, 2004 (Volume 69, Number 9)]
[Rules and Regulations]
[Page 2062-2066]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ja04-3]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1300, 1309, 1310
[Docket No. DEA-239T]
Clarification of the Exemption of Sales by Retail Distributors of
Pseudoephedrine and Phenylpropanolamine Products
AGENCY: Drug Enforcement Administration (DEA), Justice.
[[Page 2063]]
ACTION: Interpretive rule.
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SUMMARY: By this interpretive rule, DEA is providing guidance to retail
distributors for compliance with the law and DEA regulations regarding
the exemption of sales of pseudoephedrine or phenylpropanolamine
regulated products. Pseudoephedrine and phenylpropanolamine, which are
regulated as List I chemicals, are components of many over-the-counter
cold and allergy products. This rule does not change DEA's regulations
and will have no impact on individual retail customers of such products
who have been purchasing them from retailers which have been properly
following DEA's regulations.
DEA regulations already provide--and this rule clarifies--that an
exemption from being a regulated transaction exists for sales of
ordinary over-the-counter pseudoephedrine and phenylpropanolamine
products (``safe harbor'' products) by retail distributors. However,
some sellers have failed to adequately understand that this exemption
must be considered in the context of the definition of a ``retail
distributor.'' A retail distributor is one whose sales of regulated
pseudoephedrine and phenylpropanolamine products are limited almost
exclusively to quantities below the 9 gram threshold--whether these
products are defined as ``safe harbor'' products or not--to individuals
for legitimate medical use. Therefore, a person who sells more than an
occasional amount of pseudoephedrine or phenylpropanolamine product at
or above the 9 gram threshold for these products does not fit the
definition of a retail distributor on which the exemption is based.
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:
Special Notice
Due to concerns regarding possible harmful side effects from the
use of phenylpropanolamine, the Food and Drug Administration (FDA)
initiated action in November, 2000, to remove products containing it
from the market. As a result, many firms voluntarily discontinued
marketing products containing phenylpropanolamine and removed them from
the shelves for disposal. However, since some products containing
phenylpropanolamine are still available, and since the regulations
specifically address products containing phenylpropanolamine, DEA has
written this interpretive rule to include drug products containing
phenylpropanolamine as well as drug products containing
pseudoephedrine.
Introduction
DEA is publishing this Interpretive Rule to clarify its policies
and procedures regarding the exemption of sales of ordinary over-the-
counter pseudoephedrine and phenylpropanolamine products (``safe
harbor'' products) by retail distributors from being regulated
transactions and to provide guidance for compliance with the law and
DEA regulations. The Controlled Substances Act (CSA), which is found in
Title 21 of the United States Code (21 U.S.C.), sections 801 et seq.,
sets forth the law for controlled substances and listed chemicals.
Implementing regulations are found in Title 21 of the Code of Federal
Regulations (21 CFR). Pertinent implementing regulations pertaining to
the distribution of List I chemicals are found in 21 CFR 1300.02--
definitions relating to listed chemicals; part 1309--information on the
requirements for registration and security; and part 1310--requirements
for recordkeeping and reports for listed chemicals. This interpretive
rule does not change the regulations. Also, this rule does not have an
impact on individual retail customers of regulated pseudoephedrine and
phenylpropanolamine products who have been purchasing them from
retailers that have been following DEA's regulations.
Some retail distributors have failed to adequately understand this
exemption. They believe that this exemption is absolute--that a
retailer may, without regulation, sell as much ``safe harbor''
pseudoephedrine and phenylpropanolamine product to any person for any
purpose as often as that person wishes to make a purchase. This is not
the case. The exemption of sales of ``safe harbor'' products by retail
distributors from being regulated transactions must be considered in
the context of the definition of a retail distributor of
pseudoephedrine and phenylpropanolamine products on which it is based.
In the definition of a retail distributor (21 U.S.C. 802(46)(A)), all
sales of these regulated products--whether the products are defined as
``safe harbor'' products or not--are limited almost exclusively to
below-threshold amounts to individuals for legitimate personal medical
use. The transaction threshold for sales of regulated pseudoephedrine
or phenylpropanolamine products by retail distributors is 9 grams (in
packages of not more than 3 grams) in a single transaction (21 U.S.C.
802(39)(A)(iv)(II)). Therefore, a person who sells more than an
occasional amount of these products at or above the 9 gram threshold
does not meet the definition of a retail distributor on which the
exemption is based. The seller would need to register with DEA as a
distributor of List I chemicals and comply with the recordkeeping and
other regulatory requirements that are set forth for all regulated
transactions.
Background
The Comprehensive Methamphetamine Control Act of 1996 (MCA) created
the exemption that sales of ordinary over-the-counter pseudoephedrine
and phenylpropanolamine products by retail distributors are not
regulated transactions (21 U.S.C. 802(39)(A)(iv)(I)(aa), 802(45) and
802(46)). To understand the intent of Congress in creating this
exemption, it is necessary to review the legislative history of the
MCA. Congress proposed the MCA to curb the fast spreading abuse of
methamphetamine and amphetamine across the United States. In the
Findings to the MCA, Congress stated that ``methamphetamine is a very
dangerous and harmful drug'' and that ``Illegal methamphetamine
manufacture and abuse presents an imminent public health threat * * *''
(Pub. L. 104-237, section 2).
To combat the illegal manufacture and the abuse of methamphetamine
and amphetamine, Congress chose to restrict access to the chemical
precursors of these drugs--ephedrine, pseudoephedrine and
phenylpropanolamine. However, many legal over-the-counter allergy and
cold products contain these precursor chemicals. Therefore, Congress
balanced the need to restrict access to legal over-the-counter drug
products containing precursor chemicals with the need of the public to
have access to them. Senator Biden clearly stated this in the
Congressional Record:
The legislation [MCA] goes after the source of the methamphetamine
problem--the precursor chemicals, often found in legal, over-the-
counter drug products, which are used to manufacture methamphetamine
and its ugly cousin, amphetamine. While still allowing consumer
access to many helpful and commonly used products containing the
precursor chemicals, the bill will place significant restrictions on
the bulk sale of the chemicals, both through the mail and over the
counter. (142 Cong. Rec. S 10717 (September 17, 1996))
In addition to allowing consumers access to over-the-counter
products
[[Page 2064]]
containing the precursor chemicals, Congress also tried not to
overburden retailers with recordkeeping. As Representative Riggs
stated:
Thus, while imposing measures to decrease the availability of
precursor chemicals, the legislation does not restrict the ability
of law-abiding citizens to use common remedies for colds and
allergies. Nor does the legislation subject sales of such legal
products to onerous recordkeeping requirements at the retail level.
(142 Cong. Rec. H 11111 (September 25, 1996))
Clarification
The MCA created an exemption or ``safe harbor'' for the sale by
retail distributors of ordinary over-the-counter pseudoephedrine or
phenylpropanolamine products. (Ephedrine and combination ephedrine
products were not included in this ``safe harbor.'') These
pseudoephedrine and phenylpropanolamine products are packaged according
to specific criteria, which includes blister packs or unit dose pouches
or packets for products in solid form (21 U.S.C. 802(45)). Many retail
distributors have the misconception that the exemption is unqualified--
that they may, without regulation, sell as many ``safe harbor''
pseudoephedrine or phenylpropanolamine products as they want to anyone
for any purpose so long as these products meet the ``safe harbor''
definition. A review of the law shows this is not the case, nor was it
the intent of Congress. The intent of Congress has been established by
the previous statements cited from the legislative history of the MCA.
It is further demonstrated by the following statement of Senator
Grassley, which clearly indicates that sales of large quantities of
these products at retail stores were not to be allowed.
Some of the chemical companies also tried to create so-called safe
harbors so large that enormous bulk purchases of meth ingredients
would never have to be reported to the DEA. That means criminals
could go to the corner drugstore, purchase legal products like
pseudoephedrine in large quantities and make poison with no one the
wiser. And then that poison is sold to our kids. (142 Cong. Rec. S
10717 (September 17, 1996))
When reference is made to the ``safe harbor'' exemption, it is
actually referring to ordinary over-the-counter pseudoephedrine and
phenylpropanolamine products, which are defined as follows [emphasis
added]:
The term ordinary over-the-counter pseudoephedrine or
phenylpropanolamine product means any product containing
pseudoephedrine or phenylpropanolamine that is regulated * * * and *
* * sold in package sizes of not more than 3.0 grams of
pseudoephedrine base or 3.0 grams of phenylpropanolamine base, and
that is packaged in blister packs, each blister containing not more
than two dosage units, or where the use of blister packs is
technically infeasible, that is packaged in unit dose packets or
pouches; and * * * for liquids, sold in package sizes of not more
than 3.0 grams of pseudoephedrine base or 3.0 grams of
phenylpropanolamine base. (21 U.S.C. 802(45))
To fully understand the exemption of sales of ordinary over-the-
counter pseudoephedrine and phenylpropanolamine products by retail
distributors from a regulated transaction, it is necessary to clearly
understand the definition of a regulated transaction [emphasis added]:
The term regulated transaction means--a distribution, receipt, sale,
importation, or exportation of * * * a listed chemical, or if the
Attorney General establishes a threshold amount for a specific
listed chemical, a threshold amount, including a cumulative
threshold amount for multiple transactions * * * of a listed
chemical, except that such term does not include--* * *
[sbull] [not a regulated transaction] any transaction in a listed
chemical that is contained in a drug that may be marketed or
distributed lawfully in the United States under the Federal Food,
Drug, and Cosmetic Act * * * unless--
[sbull] [regulated transaction] the drug contains ephedrine or its
salts, optical isomers, or salts of optical isomers, pseudoephedrine
or its salts, optical isomers, or salts of optical isomers, or
phenylpropanolamine or its salts, optical isomers, or salts of
optical isomers * * * except
[sbull] [not a regulated transaction] that any sale of ordinary
over-the-counter pseudoephedrine or phenylpropanolamine products by
retail distributors shall not be a regulated transaction * * * (21
U.S.C. 802(39)(A))
It is also necessary to understand the definition of a retail
distributor as it relates to pseudoephedrine or phenylpropanolamine
products. A retail distributor of pseudoephedrine and
phenylpropanolamine products is defined as follows [emphasis added]:
The term retail distributor means--a[n] * * * entity or person whose
activities as a distributor relating to pseudoephedrine or
phenylpropanolamine products are limited almost exclusively to sales
for personal use, both in number of sales and volume of sales,
either directly to walk-in customers or in face-to-face transactions
by direct sales * * * Sale for personal use means the sale of below-
threshold quantities in a single transaction to an individual for
legitimate medical use. (21 U.S.C. 802(46))
This definition of the activities of a retail distributor makes no
distinction between ``safe harbor'' and other regulated pseudoephedrine
or phenylpropanolamine products. All retail sales of these products--
both safe harbor products and other regulated pseudoephedrine or
phenylpropanolamine products--are limited almost exclusively to amounts
below the retail threshold to an individual for legitimate medical use.
When all of the above definitions and conditions are taken as a
whole, the exemption of sales of ordinary over-the-counter
pseudoephedrine or phenylpropanolamine products (``safe harbor''
products) by a retail distributor from being a regulated transaction
must be read as follows:
Any sale of ordinary over-the-counter pseudoephedrine or
phenylpropanolamine products by [a] person whose activities as a
distributor relating to pseudoephedrine or phenylpropanolamine
products are limited almost exclusively to sales for personal use,
both in number of sales and volume of sales, either directly to
walk-in customers or in face-to-face transactions by direct sales
shall not be a regulated transaction. Sale for personal use means
the sale of below-threshold quantities in a single transaction to an
individual for legitimate medical use.
Since sales of ordinary over-the-counter pseudoephedrine or
phenylpropanolamine products by retail distributors are limited almost
exclusively to below-threshold amounts to an individual for personal
medical use, it is necessary to set forth the general threshold for
pseudoephedrine and phenylpropanolamine products for retail
distributors:
The threshold for any sale of products containing pseudoephedrine or
phenylpropanolamine products by retail distributors * * * shall be 9
grams of pseudoephedrine or 9 grams of phenylpropanolamine in a
single transaction and sold in packages of not more than 3 grams of
pseudoephedrine base or 3 grams of phenylpropanolamine base; * * *
(21 U.S.C. 802(39)(A)(iv)(II)).
Thus, sales by retail distributors of all regulated pseudoephedrine
and phenylpropanolamine products--both ``safe harbor'' products as well
as other regulated products--are almost exclusively to be below the 9
gram threshold (in packages of not more than 3 grams) in a single
transaction. An occasional sale at or above the 9 gram threshold is
permitted for ``safe harbor'' products. Such an occasional sale is not
a regulated transaction and does not subject the retail distributor to
recordkeeping or registration as a distributor. Examples of occasional
sales at or above threshold for ``safe harbor'' products would include
a sale to a family where everyone is sick or suffering from allergies
or a sale to a person who comes from a long distance away, such as in a
rural area. For other
[[Page 2065]]
regulated pseudoephedrine and phenylpropanolamine products, a sale at
or above threshold, while permitted, is a regulated transaction
necessitating recordkeeping and other regulatory requirements (21
U.S.C. 802(39)(A)(iv)(I)(aa)).
If sales of either ``safe harbor'' or other regulated
pseudoephedrine or phenylpropanolamine products exceed ``almost
exclusively below-threshold'' amounts either in number of sales or
volume of sales (i.e., such sales are not just rare events or sales are
not in relatively small quantities), the seller does not meet the
definition of a retail distributor and must register with DEA as a
distributor of List I chemicals and meet all the applicable regulatory
requirements (21 CFR 1309). This includes the requirements for customer
identification (21 CFR 1310.07), recordkeeping and reporting (21 CFR
1310), and the security of List I chemicals (21 CFR 1309.71).
Following is a table showing the qualifications and requirements
for the exemption of sales of ``ordinary over-the-counter
pseudoephedrine or phenylpropanolamine'' regulated products by retail
distributors.
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Qualifications and Requirements for the Exemption of Sales of ``Ordinary
Over-the-Counter Pseudoephedrine or Phenylpropanolamine Regulated
Products'' (``Safe Harbor Products'') by Retail Distributors
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Seller must first meet the definition of retail distributor relating to
regulated pseudoephedrine, phenylpropanolamine, or ephedrine products
listed below:
1. Means a grocery store, general merchandise store, drug store, or
other entity or person whose activities as a distributor relating to
drug products containing pseudoephedrine or phenylpropanolamine are``
2. Limited to sales almost exclusively for personal use, both in the
number of sales and volume of sales [regardless of the packaging of the
products].
Sale for personal use means the sale of below-threshold quantities in a
single transaction to an individual for legitimate medical use.
AND
3. Sales are made either directly to walk-in customers or face-to-face
by direct sales. (21 U.S.C. 802(46) & 21 CFR 1300.02(b)(29))
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Requirements and conditions if Requirements and conditions if
retail distributor qualifies for retail distributor does not
the exemption qualify for the exemption
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DEA registration as a distributor Seller must register with DEA as a
of List I chemicals is waived. (21 distributor of List I chemicals.
CFR 1309.23(e)). (21 CFR 1309)
As a regulated person whose Distributor must meet security
registration has been waived, a requirements for List I chemicals
retail distributor must meet found in 21 CFR in 21 CFR 1309.71-
security requirements for List I 1309.73.
chemicals 1309.71-1309.73. (21 CFR
1309.24(k)).
As a regulated person whose Distributor is subject reporting
registration has been waived, a requirements for listed chemicals
retail distributor is subject to in 21 CFR 1310.
the to the reporting regulated
transactions requirements for of
listed chemicals in 21 CFR
1310.05. (21 CFR 1309.24(k)).
No records are required for sales No records are required for sales
of regulated pseudoephedrine or of regulated pseudoephedrine or
phenylpropanolamine products below phenylpropanolamine products below
threshold quantities in a single threshold quantities in a single
transaction regardless of transaction regardless of
packaging (not a regulated packaging (not a regulated
transaction). transaction).
Records must be retained for all Records must be retained for all
sales of threshold and above transactions of threshold or above
quantities of pseudoephedrine and CFR quantities regardless of type
phenylpropanolamine regulated of packaging (regulated
products not in blister packs transactions). (21 CFR 1310)
(such as bottles), which are
regulated transactions, as set
forth in 21 1310.
If sales of pseudoephedrine or For all transactions amountsat or
phenylpropanolamine regulated above threshold amounts (regulated
products exceed ``almost transactions), distributor must
exclusively below-threshold'' meet proof of identity
either in number of sales or requirements for customers. (21
volume of sales--regardless of the CFR 1310.07)
kind of packaging, then seller
must register with DEA as a
distributor of List I chemicals.
(See the other side of this table--
Requirements and Conditions If for
Retail Distributor Does Not
Qualify for the Exemption.).
------------------------------------------------------------------------
Conclusion
For sales of ordinary over-the-counter pseudoephedrine or
phenylpropanolamine products (``safe harbor'' products) by a retail
distributor to qualify for exemption from a regulated transaction, they
must fall within the definition of the activities of a retail
distributor (21 U.S.C. 802(46)(A)). The activities of a retail
distributor relating to regulated drug products containing
pseudoephedrine and phenylpropanolamine makes no distinction between
``safe harbor'' and other regulated pseudoephedrine and
phenylpropanolamine products. All sales by a retail distributor of
these products are limited almost exclusively to amounts below the
retail threshold for a single transaction to an individual for
legitimate personal medical use. Products must be sold to walk-in
customers or must be sold in face-to-face transactions. More than
occasional sales of these products by a seller at or above-threshold
quantities to an individual in a single transaction or a large number
of sales of these products to an individual are inconsistent with the
activities defined for a retail distributor. An occasional sale of
``safe harbor'' pseudoephedrine or phenylpropanolamine products at or
above the retail threshold is not a regulated transaction and does not
require the retail distributor to keep records. More than an occasional
sale that does not fit within these parameters requires the seller to
obtain a DEA registration as a distributor and to meet all the
requirements for a distributor, including, but not limited to, security
requirements for storing List I chemicals and all the requirements for
any sales that are regulated transactions.
Regulatory Certifications
Regulatory Flexibility Act
The Deputy Assistant Administrator hereby certifies that this
rulemaking has been drafted in accordance with the Regulatory
Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation, and by
approving it certifies that this regulation will not have a significant
economic impact on a substantial number of small entities. The rule
provides DEA's interpretation of its law
[[Page 2066]]
and regulations regarding the sale by retail distributors of ordinary
over-the-counter pseudoephedrine and phenylpropanolamine products
(``safe harbor'' products). Compliance with the current law and
regulations, as interpreted by this rulemaking, will not result in any
change in economic activity for retail distributors of pseudoephedrine
and phenylpropanolamine regulated products.
Executive Order 12866
The Deputy Assistant Administrator certifies that this rulemaking
has been drafted in accordance with the principles of Executive Order
12866, section 1(b). The rule provides DEA's interpretation of its law
and regulations regarding the sale by retail distributors of ordinary
over-the-counter pseudoephedrine and phenylpropanolamine products
(``safe harbor'' products). DEA has determined that this is not a
significant regulatory action. Therefore, this action has not 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, Civil Justice Reform.
Executive Order 13132
This rulemaking does not preempt or modify any provision of State
law; not does it impose enforcement responsibilities on any state; nor
does it diminish the power of any State to enforce its own laws.
Accordingly, this rule does not have federalism implications warranting
the application of Executive Order 13132.
Unfunded Mandates Act
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 are necessary
under 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-based companies in domestic and export markets.
Dated: January 5, 2004.
Laura M. Nagel,
Deputy Assistant Administrator, Office of Diversion Control.
[FR Doc. 04-722 Filed 1-13-04; 8:45 am]
BILLING CODE 4410-09-P