[Federal Register: September 19, 2000 (Volume 65, Number 182)]
[Rules and Regulations]
[Page 56480-56484]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se00-5]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 203 and 205
[Docket No. 92N-0297]
Prescription Drug Marketing Act of 1987; Prescription Drug
Amendments of 1992; Policies, Requirements, and Administration
Procedures; Public Hearing
AGENCY: Food and Drug Administration, HHS.
ACTION: Announcement of public hearing; request for comments.
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SUMMARY: The Food and Drug Administration (FDA) is announcing a public
hearing to discuss certain requirements of the final rule implementing
the Prescription Drug Marketing Act of 1987 (PDMA), as modified by the
Prescription Drug Amendments of 1992 (PDA) and the FDA Modernization
Act of 1997 (Modernization Act), which published in the Federal
Register of December 3, 1999 (64 FR 67720), (hereinafter referred to as
the PDMA final rule). The purpose of the hearing is to elicit comment
from interested persons, including professional groups and
associations, the regulated industry, health care professionals, and
consumers, on the potential impact of certain requirements in the PDMA
final rule relating to wholesale distribution of prescription drugs by
distributors that are not authorized distributors of record, and
distribution of blood derivatives by
[[Page 56481]]
entities that meet the definition of a ``health care entity'' in the
PDMA final rule. The agency will use information obtained from the
hearing and the comments to this document to determine what steps, if
any, should be taken to modify the requirements in the PDMA final rule.
DATES: The public hearing will be held on Friday, October 27, 2000,
from 8:30 a.m. to 4:30 p.m. Submit written notices of participation and
comments for consideration at the hearing to the docket number listed
in the heading of this document by October 13, 2000.\1\ Written
comments will be accepted after the hearing until November 20, 2000.
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\1\ Until recently, two dockets were being used to receive
comments on issues related to PDMA. One docket, the docket
established in 1988, will no longer be used. For simplicity, all
comments related to any issues involving PDMA should be forwarded to
the docket listed in the heading of this document.
ADDRESSES: The public hearing will be held at 5630 Fishers Lane, rm.
1066, Rockville, MD 20852. Submit written notices of participation to
the Dockets Management Branch (HFA-305), Food and Drug Administration,
5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Comments should also
be submitted to the Dockets Management Branch (address above).
Transcripts of the hearing will be available for review at the Dockets
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Management Branch (address above).
FOR FURTHER INFORMATION CONTACT: Anne M. Henig, Center for Drug
Evaluation and Research (HFD-006), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-594-5410.
SUPPLEMENTARY INFORMATION:
I. Background
A. Legislative and Regulatory Requirements for Distribution of
Prescription Drugs by Unauthorized Distributors
PDMA, as amended by the PDA, amended sections 301, 303, 503, and
801 of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C.
331, 333, 353, 381) to, among other things, establish requirements for
the wholesale distribution of prescription drugs; and to prohibit, with
certain exceptions, the sale or offer to sell prescription drugs that
have been purchased by a hospital or other health care entity or that
have been donated or supplied at a reduced price to a charitable
organization.
Section 503(e)(1)(A) of the act states that each person who is
engaged in the wholesale distribution of a prescription drug who is not
the manufacturer or an authorized distributor of record for the drug
must, before each wholesale distribution of a drug, provide to the
person receiving the drug a statement, also known as a drug
``pedigree,'' (in such form and containing such information as the
Secretary may require) identifying each prior sale, purchase, or trade
of the drug, including the date of the transaction and the names and
addresses of all parties to the transaction. Section 503(e)(4)(A) of
the act states that, for the purposes of section 503(e), the term
``authorized distributors of record'' means those distributors with
whom a manufacturer has established an ``ongoing relationship'' to
distribute the manufacturer's products.
In the PDMA final rule, the agency published regulations in part
203 (21 CFR part 203) implementing these and other provisions of PDMA.
Section 203.50 implements section 503(e)(1)(A) of the act and requires
that, before the completion of any wholesale distribution by a
wholesale distributor of a prescription drug for which the seller is
not an authorized distributor of record to another wholesale
distributor or retail pharmacy, the seller must provide to the
purchaser a statement identifying each prior sale, purchase, or trade
of the drug. The identifying statement must include the proprietary and
established name of the drug, its dosage, the container size, the
number of containers, lot or control numbers of the drug being
distributed, the business name and address of all parties to each prior
transaction involving the drug, starting with the manufacturer, and the
date of each previous transaction. Section 203.3(b) defines
``authorized distributor of record'' as a distributor with whom a
manufacturer has established an ongoing relationship to distribute the
manufacturer's products. ``Ongoing relationship'' is defined in
Sec. 203.3(u) to mean an association that exists when a manufacturer
and a distributor enter into a written agreement under which the
distributor is authorized to distribute the manufacturer's products for
a period of time or for a number of shipments. If the distributor is
not authorized to distribute a manufacturer's entire product line, the
agreement must identify the specific drug products that the distributor
is authorized to distribute.
Thus, the PDMA final rule requires unauthorized distributors (i.e.,
those distributors who do not have a written authorization agreement)
to provide a drug statement, or pedigree, to purchasers showing the
entire prior sales history of the drug back to the first sale by the
manufacturer. As discussed in the preamble to the PDMA final rule (64
FR 67720 at 67747), manufacturers and authorized distributors of record
are not required to provide an identifying statement when selling a
drug, although the agency encouraged them to do so voluntarily to
permit unauthorized distributors to continue to be able to purchase
products from them.\2\
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\2\ An unauthorized wholesale distributor that purchases a
product from a manufacturer or authorized distributor of record
without an identifying statement showing the prior sales of the drug
could not provide an identifying statement to its purchasers and,
therefore, could not conduct further wholesale transactions of the
drug in compliance with Sec. 203.50.
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The provisions in the PDMA final rule related to wholesale
distribution of prescription drugs by unauthorized distributors (i.e.,
Secs. 203.3(u) and 203.50) were adopted from the provisions in the
proposed rule published in the Federal Register of March 14, 1994 (59
FR 11842), and are essentially the same as the proposed provisions,
except the definition for ``ongoing relationship'' in the proposed rule
was revised to eliminate certain requirements.\3\ The agency received
two comments on the proposed definition of ongoing relationship and one
comment on proposed Sec. 203.50, and responded in detail to those
comments in the preamble to the PDMA final rule (see 64 FR 67720 at
67727, 67728, and 67747).
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\3\ The proposed rule defined ``ongoing relationship'' to
require a written agreement and, in addition, the following two
requirements that were eliminated in the final rule: (1) That a sale
be completed under the written agreement and (2) that the
distributor be listed on the manufacturer's list of authorized
distributors.
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B. Legislative and Regulatory Requirements Restricting Distribution of
Blood Derived Prescription Drug Products by Health Care Entities
Section 503(c)(3)(A) of the act states that no person may sell,
purchase, or trade, or offer to sell, purchase, or trade, any
prescription drug that was purchased by a public or private hospital or
other health care entity. Section 503(c)(3)(B) of the act states
several exceptions to section 503(c)(3)(A), none of which are relevant
to this discussion. Section 503(c)(3) of the act also states that
``[f]or purposes of this paragraph, the term `entity' does not include
a wholesale distributor of drugs or a retail pharmacy licensed under
State law * * *.''
Sections 203.20 of the PDMA final rule provides, with certain
exceptions, that no person may sell, purchase, or trade, or offer to
sell, purchase, or trade any prescription drug that was purchased by a
public or private hospital or other health care entity or donated or
supplied at a reduced price to a charitable institution. In
Sec. 203.3(q)
[[Page 56482]]
of the PDMA final rule, ``Health care entity'' is defined as meaning
any person that provides diagnostic, medical, surgical, or dental
treatment, or chronic or rehabilitative care, but does not include any
retail pharmacy or wholesale distributor. Under both the act and the
PDMA final rule, a person could not simultaneously be a health care
entity and a retail pharmacy or wholesale distributor. Thus, under the
PDMA final rule, blood centers functioning as health care entities
could not engage in wholesale distribution of prescription drugs,
except for blood and blood components intended for transfusion, which
are exempt from PDMA under Sec. 203.1 of the PDMA final rule. Blood and
blood components include whole blood, red blood cells, platelets, and
cryoprecipitated antihemophilic factor, which are prepared by blood
banks who collect blood from donors and separate out the components
using physical or mechanical means. Blood derivatives are derived from
human blood, plasma, or serum through a chemical fractionation
manufacturing process. Examples of blood derivative products include
albumin, antihemophilic factor, immune globulin, and alpha-1 anti-
tripsin. As discussed in the preamble to the PDMA final rule in
response to comments (64 FR 67720 at 67725 through 67727), blood
derivative products are not blood or blood components intended for
transfusion and therefore could not be distributed by health care
entities, including full service blood centers that function as health
care entities, after the final rule goes into effect. The agency
received several comments on the proposed rule objecting to the
applicability of the sales restrictions to the sale of blood
derivatives by blood centers that function as health care entities, and
responded in detail to those comments (see 64 FR 67720 at 67726).
C. Events Leading to the Delay of the Effective Date; Need for the
Public Hearing
After publication of the PDMA final rule, the agency received
letters and petitions and had other communications with industry,
industry trade associations, and members of Congress objecting to the
provisions in Secs. 203.3(u) and 203.50. On March 29, 2000,\4\ the
agency met with representatives from the wholesale drug industry and
industry associations. The meeting participants discussed their
concerns with both: (1) The requirement in Sec. 203.3(u) that there be
a written authorization agreement between a manufacturer and
distributor for the distributor to be considered an authorized
distributor of record under Sec. 203.3(b), and (2) the requirement in
Sec. 203.50 that unauthorized distributors provide a pedigree showing
all prior sales going back to the manufacturer.
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\4\ In a document published in the Federal Register of May 3,
2000 (65 FR 25639 at 25640), the agency incorrectly stated that this
meeting occurred in early February 2000.
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The meeting participants asserted that manufacturers are unwilling
to enter into written authorization agreements with the majority of
smaller wholesalers. As a result, these wholesalers cannot become
authorized distributors of record for the drugs they sell. The meeting
participants also said that smaller wholesalers cannot obtain the
required pedigree showing all prior sales of the drugs they purchase
for sale because a large portion of these drugs are purchased from
authorized distributors who are not required to provide a pedigree and
who are unwilling to voluntarily provide them. The meeting participants
asserted that authorized distributors will not voluntarily provide
pedigrees when they sell drugs to unauthorized distributors because it
would require them to change their warehouse and business procedures,
which would entail additional effort and expense.
The meeting participants asserted that implementation of the PDMA
final rule will prevent over 4,000 smaller, unauthorized distributors
from distributing drugs to their customers and may put them out of
business, at least with respect to their prescription drug wholesale
business. They also asserted that because many of their customers are
smaller retail outlets that are not served by larger distributors,
implementation of the PDMA final rule may leave certain markets for
prescription drugs, and ultimately consumers for prescription drugs,
underserved.
In addition to the meeting discussed above and other informal
communications that FDA has had with industry, industry associations,
and Congress, FDA received a petition for stay of action requesting
that the relevant provisions of the PDMA final rule be stayed until
October 1, 2001. That petition was supported by numerous letters
submitted to the docket from entities that would be considered
unauthorized distributors under the PDMA final rule. The agency also
received a petition for reconsideration from the Small Business
Administration (SBA) requesting that FDA reconsider the PDMA final rule
and suspend its effective date based on the projected severe economic
impact it would have on over 4,000 small businesses. The petitions
argued that the requirement for a written agreement in Sec. 203.3(u) is
unreasonable because manufacturers are not willing to enter into such
agreements with the majority of smaller distributors. The petitions
also asserted that authorized wholesalers are not now able and could
not provide, at a reasonable cost, a pedigree to their unauthorized
distributor customers that meets the requirements of Sec. 203.50 of the
PDMA final rule. The SBA petition asserted that, if the effective date
of the PDMA final rule is not stayed, drug products now in the
inventory of wholesalers will have to be cleared and new orders will
have to cease or be severely limited to comply with the PDMA final
rule's December 4, 2000, effective date, with corresponding disruptions
in the distribution of drugs possible by summer 2000.
In addition to the submissions on wholesale distribution by
unauthorized distributors, the agency has received several letters on,
and has held several meetings to discuss, the implications of the final
regulations on blood centers that distribute blood derivative products
and provide health care as a service to the hospitals and patients they
serve. The blood center industry asserts that the regulations and,
particularly the definition of ``health care entity,'' will severely
inhibit their ability to provide full service care to the detriment of
client hospitals and the patients they serve, and may disrupt the
distribution of these products to the public. The agency also received
a letter from Congress on this issue.
Based on the concerns expressed by industry, industry associations,
and Congress about implementing Secs. 203.3(u) and 203.50 by the
December 4, 2000, effective date, the agency published a document in
the Federal Register of May 3, 2000 (65 FR 25639), delaying the
effective date for those provisions until October 1, 2001 (the May 2000
document). In addition, the May 2000 document delayed the applicability
of Sec. 203.3(q) to wholesale distribution of blood derivatives by
health care entities until October 1, 2001. The May 2000 document also
reopened the administrative record and gave interested persons until
July 3, 2000, to submit written comments. As stated in the May 2000
document, the purpose of delaying the effective date for these
provisions was to give the agency time to obtain more information about
the possible consequences of implementing them and to further evaluate
the issues involved.
[[Page 56483]]
On May 16, 2000, the House Committee on Appropriations (the
Committee) stated in its report accompanying the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Bill, 2001 (report 106-619) that it supported the
``recent FDA action to delay the effective date for implementing
certain requirements of the Prescription Drug Marketing Act until
October 1, 2001 and reopen the administrative record in order to
receive additional comments.'' In addition, the Committee stated that
it ``believes the agency should thoroughly review the potential impact
of the proposed provisions on the secondary wholesale pharmaceutical
industry.'' The Committee directed the agency to provide a report to
the Committee by January 15, 2001, summarizing the comments and issues
raised and agency plans to address the concerns.
In light of the complexity of the issues involved and the
potentially serious economic and public health consequences that
implementation of the relevant provisions of the PDMA final rule may
have, the agency believes that it is appropriate to hold a public
meeting to solicit information from, and the views of, interested
persons, including professional groups and associations, the regulated
industry, health care professionals, and consumers. This will help to
develop an adequate factual basis that the agency can use to determine
whether it is in the public health interest to take steps to modify or
change the requirements in the PDMA final rule.
II. Scope of the Hearing
The PDMA final rule provisions discussed in this document raise
many complex economic and public health issues. To promote a more
useful discussion at the public hearing, FDA has developed the
following list of questions, which are of specific interest. This list
is not intended to be exclusive, and presentations and comments
answering other questions or addressing other issues, to the extent
that they are pertinent to the PDMA final rule provisions discussed in
this document, are encouraged.
A. Questions on Distribution of Prescription Drugs by Unauthorized
Distributors
1. How does the PDMA final rule, as published, affect the ability
of unauthorized distributors to engage in drug distribution, i.e., what
specific requirements would be difficult or impossible for unauthorized
distributors to meet? Why?
2. If the PDMA final rule diminished the ability of unauthorized
distributors to engage in drug distribution, what effect would this
have on the drug distribution system? What, if any, adverse public
health consequences would result? What would be the economic costs to
manufacturers, distributors (authorized and unauthorized), and
consumers of drugs?
3. If the act were amended by Congress to delete the requirement
for provision of a drug pedigree by unauthorized distributors, would
there be an increased risk of distribution of counterfeit, expired,
adulterated, misbranded, or otherwise unsuitable drugs to consumers and
patients?
4. If the act were amended by Congress to require authorized
distributors to provide a pedigree, what types of additional costs and
burdens would they incur?
5. Could specific changes be made to the information that is
required under Sec. 203.50 to appear on a pedigree to make it more
practical, from an authorized distributor's standpoint, to voluntarily
provide a pedigree? Would use of a standardized government form be
helpful?
6. If actual sales by a manufacturer to a distributor were used by
FDA as the only criterion to determine whether an ongoing relationship
exists between them (and as a result, whether the distributor is an
authorized distributor of record), would it result in more distributors
being authorized than if a written authorization agreement is required?
What other types of criteria might be used by FDA to make this
determination?
B. Questions on Distribution of Blood Derivatives by Blood Banks and
Other Health Care Entities
1. What distribution systems are available for blood derived
products? Do these distribution systems differ from those for other
types of prescription drugs? If so, how?
2. What effect would the PDMA final rule, as published, have on the
distribution system for blood derived products? What, if any, adverse
public health consequences would result? What would be the economic
costs to manufacturers, distributors, and consumers of blood derived
products?
3. If blood derived products were excluded from the sales
restrictions (i.e., if such products were permitted to be sold by
health care entities), would there be an increased risk of distribution
of counterfeit, expired, adulterated, misbranded, or otherwise
unsuitable blood derived products to consumers and patients? Why or why
not?
4. Do manufacturers of blood derived products provide these
products to health care entities, particularly those that are also
charitable organizations, at a lower price when compared to other
customers? Do manufacturers sell these products to charitable or for
profit health care entities with the understanding that the products
will be used for patients of the purchasing health care entity and will
not be resold to other health care entities, distributors, or retail
pharmacies?
III. Notice of Hearing Under 21 CFR Part 15
The Commissioner of Food and Drugs (the Commissioner) is announcing
that the public hearing will be held in accordance with part 15 (21 CFR
part 15). The presiding officer will be the Commissioner or her
designee. The presiding officer will be accompanied by a panel of FDA
employees with relevant expertise.
Persons who wish to participate in the part 15 hearing must file a
written notice of participation with the Dockets Management Branch
(address above) prior to October 13, 2000. To ensure timely handling,
any outer envelope should be clearly marked with the Docket No. 92N-
0297 and the statement ``FDA PDMA Hearing.'' Groups should submit two
copies. The notice of participation should contain the person's name;
address; telephone number; affiliation, if any; the sponsor of the
presentation (e.g., the organization paying travel expenses or fees),
if any; brief summary of the presentation; and approximate amount of
time requested for the presentation. The agency requests that
interested persons and groups having similar interests consolidate
their comments and present them through a single representative. FDA
will allocate the time available for the hearing among the persons who
file notices of participation as described above. If time permits, FDA
may allow interested persons attending the hearing who did not submit a
written notice of participation in advance to make an oral presentation
at the conclusion of the hearing.
After reviewing the notices of participation and accompanying
information, FDA will schedule each appearance and notify each
participant by telephone of the time allotted to the person and the
approximate time the person's oral presentation is scheduled to begin.
The hearing schedule will be available at the hearing. After the
hearing, the hearing schedule will be placed on file in the Dockets
Management Branch under Docket No. 92N-0297.
[[Page 56484]]
Under Sec. 15.30(f), the hearing is informal, and the rules of
evidence do not apply. No participant may interrupt the presentation of
another participant. Only the presiding officer and panel members may
question any person during or at the conclusion of each presentation.
Public hearings under part 15 are subject to FDA's policy and
procedures for electronic media coverage of FDA's public administrative
proceedings (part 10, subpart C (21 CFR part 10, subpart C)). Under
Sec. 10.205, representatives of the electronic media may be permitted,
subject to certain limitations, to videotape, film, or otherwise record
FDA's public administrative proceedings, including presentations by
participants. The hearing will be transcribed as stipulated in
Sec. 15.30(b). The transcript of the hearing will be available on the
Internet at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/ohrms/dockets and orders for copies of
the transcript can be placed at the meeting or through the Freedom of
Information Staff (HFI-35), Food and Drug Administration, 5600 Fishers
Lane, Rockville, MD 20857.
Any handicapped persons requiring special accommodations to attend
the hearing should direct those needs to the contact person listed
above.
To the extent that the conditions for the hearing, as described in
this document, conflict with any provisions set out in part 15, this
document acts as a waiver of those provisions as specified in
Sec. 15.30(h).
IV. Request for Comments
Interested persons may submit to the Dockets Management Branch
(address above) written notices of participation and comments for
consideration at the hearing by October 13, 2000. To permit time after
the hearing for all interested persons to submit data, information, or
views on this subject, the administrative record of the hearing will
remain open following the hearing until November 20, 2000. Persons who
wish to provide additional materials for consideration should file
these materials with the Dockets Management Branch (address above) by
November 20, 2000. Two copies of any comments are to be submitted,
except that individuals may submit one copy.
Comments are to be identified with the docket number found in
brackets in the heading of this document. Received comments may be seen
in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday
through Friday.
Dated: September 12, 2000.
William K. Hubbard,
Senior Associate Commissioner for Policy, Planning, and Legislation.
[FR Doc. 00-24008 Filed 9-18-00; 8:45 am]
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