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[Federal Register: March 1, 2001 (Volume 66, Number 41)]
[Rules and Regulations]
[Page 12850-12853]
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[DOCID:fr01mr01-4]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 203 and 205
[Docket No. 92N-0297]
RIN 0905-AC81
Prescription Drug Marketing Act of 1987; Prescription Drug
Amendments of 1992; Policies, Requirements, and Administrative
Procedures; Delay of Effective Date
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule; delay of effective date.
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SUMMARY: The Food and Drug Administration (FDA) is further delaying,
until April 1, 2002, the effective date regarding certain requirements
of the final rule published in the Federal Register of December 3, 1999
(64 FR 67720). The final rule implements the Prescription Drug
Marketing Act of 1987 (PDMA), as modified by the Prescription Drug
Amendments of 1992 (PDA), and the Food and Drug Administration
Modernization Act of 1997 (the Modernization Act). FDA is further
delaying the effective date for 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 entities that meet the definition
of a ``health care entity'' in the final rule. In the Federal Register
of May 3, 2000 (65 FR 25639), the agency previously delayed until
October 1, 2001, the effective date of these requirements. The other
provisions of the final rule became effective on December 4, 2000. The
agency is taking this action to address concerns about the requirements
raised by affected parties.
FDA believes that this further delay of the effective date of
certain requirements in the PDMA final rule satisfies the memorandum of
January 20, 2001, from the Assistant to the President and Chief of
Staff, entitled ``Regulatory Review Plan,'' published in the Federal
Register on January 24, 2001 (66 FR 7702). That memorandum requested
Federal agencies to delay by 60 days the effective date of any
regulation that was not effective as of January 20, 2001. The action
taken in this document to further delay the effective date of certain
requirements of PDMA exceeds 60 days. To the extent that 5 U.S.C. 553
applies to this action, it is exempt from notice and comment because it
constitutes a rule of procedure under 5 U.S.C. 553(b)(A).
Alternatively, the agency's implementation of this action without
opportunity for public comment, effective immediately upon publication
today in the Federal Register, is based on the good cause exceptions in
5 U.S.C. 553(b)(B) and (d)(3). Seeking public comment is impracticable,
unnecessary, and contrary to the public interest. As explained in the
SUPPLEMENTARY INFORMATION section entitled ``Need to Further Delay the
Effective Date,'' the delay will give distributors additional time to
exhaust inventories of drugs that do not have acceptable pedigrees to
avoid economic harm. Additionally, the delay will allow more time for
FDA to make recommendations to Congress, for Congress to evaluate those
recommendations and, if necessary,
[[Page 12851]]
time for a regulatory or legislative change.
DATES: The effective date for Secs. 203.3(u) and 203.50, and the
applicability of Sec. 203.3(q) to wholesale distribution of blood
derivatives by health care entities, added at 64 FR 67720, December 3,
1999, is delayed until April 1, 2002.
FOR FURTHER INFORMATION CONTACT: Lee D. Korb, Center for Drug
Evaluation and Research (HFD-7), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-594-2041.
SUPPLEMENTARY INFORMATION:
I. Background
A. Legislative and Regulatory Requirements for Distribution of
Prescription Drugs by Unauthorized Distributors
PDMA (Public Law 100-293) was enacted on April 22, 1988, and was
modified by the PDA (Public Law 102-353, 106 Stat. 941) on August 26,
1992. The PDMA, as modified 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.
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 (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.\1\
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.
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\1\ The statement required under section 503(e)(1)(A) of the act
is commonly referred to as a drug ``pedigree.''
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On December 3, 1999, the agency published final regulations in part
203 (21 CFR part 203) implementing these and other provisions of PDMA
(64 FR 67720). Section 203.50 requires that, before the completion of
any wholesale distribution of a prescription drug by a wholesale
distributor that 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 final rule requires unauthorized distributors (i.e.,
those distributors who do not have a written authorization agreement)
to provide a drug origin statement 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 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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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.''
Section 203.20 of the 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 organization. In Sec. 203.3(q) of
the 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 final
rule, a person could not simultaneously be a health care entity and a
retail pharmacy or wholesale distributor. Thus, under the 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 the
PDMA under Sec. 203.1 of the 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 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.
C. Events Leading to the Delay of the Effective Date
After publication of the 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, the agency met with
representatives from the wholesale drug industry and industry
[[Page 12852]]
associations to discuss their concerns. In addition, FDA received a
petition for stay of action requesting that the relevant provisions of
the final rule be stayed until October 1, 2001. The agency also
received a petition for reconsideration from the Small Business
Administration requesting that FDA reconsider the final rule and
suspend its effective date based on the severe economic impact it would
have on more than 4,000 small businesses.
In addition to the submissions on wholesale distribution by
unauthorized distributors, the agency received several letters on, and
held several meetings to discuss, the implications of the final
regulations for 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 medical care and services to the
detriment of client hospitals and the patients they serve, and may
disrupt the distribution of blood derivatives 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. 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.
D. House Committee on Appropriations Reaction to Agency Delay and
Committee's Report Request
On May 16, 2000, the House Committee on Appropriations (the
Committee) stated in its report accompanying the Agriculture, Rural
Development, FDA, and Related Agencies Appropriations Bill, 2001 (H.
Rept. 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.
E. Public Hearing
After issuing the delay of the effective date for the relevant
requirements of the final rule, the agency decided that it would be in
the public interest to hold a public hearing to elicit comment on the
requirements from interested persons. In the Federal Register of
September 19, 2000 (65 FR 56480), the agency announced that a public
hearing would be held on October 27, 2000, to discuss the requirements
at issue (i.e., the requirements for unauthorized distributors and the
provisions relating to distribution of blood derivatives by health care
entities). The document set forth the purpose of the hearing and the
procedure by which individuals could make a presentation at the
hearing. In addition, the document set forth questions the agency
wanted hearing participants and comments to address. The hearing was
held on October 27, 2000, and comments were accepted until November 20,
2000.
II. Need to Further Delay the Effective Date
As discussed in section I of this document, the House Committee on
Appropriations has 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. The agency is
currently considering the comments and testimony received and preparing
its report to Congress. If the agency determines that some type of
action is appropriate, this action could take the form of a change or
modification to the final rule initiated by the agency or a legislative
change initiated by Congress. Obviously, it would take a significant
amount of time beyond January 15, 2001, to initiate and carry out
either change. The agency believes that a legislative change to the act
could take well into the 2001 calendar year.
In its hearing testimony and in a letter submitted on November 3,
2000, the Pharmaceutical Distributors Association\3\ noted that if the
final rule were to apply to drugs already in distribution as of the
effective date of the final rule, a significant number of these drugs
would have to be taken out of distribution because of the absence of a
proper pedigree. The association specifically stated that if the final
rule as published were to go into effect October 1, 2001, distributors
would need to stop buying drugs that do not have the required pedigree
under the final rule and would have to begin to exhaust existing
inventories of drugs that do not have acceptable pedigrees by the
beginning of the year 2001 to avoid economic harm. The association
specifically sought a decision by the agency that the final rule not
apply to prescription drugs already in distribution as of the effective
date so those drugs could be distributed.
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\3\The Pharmaceutical Distributors Association is a trade
association representing unauthorized wholesale prescription drug
distributors.
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FDA acknowledges the concerns of the Pharmaceutical Distributors
Association and has decided that, in light of the uncertainty regarding
how to resolve the issues involved and the possible adverse
consequences that could result from implementation of the relevant
provisions of the final rule, it is reasonable and appropriate to delay
the effective date of Secs. 203.3(u) and 203.50 for another 6 months
until April 1, 2002. Additionally, the agency has decided to delay the
applicability of Sec. 203.3(q) to wholesale distribution of blood
derivatives by health care entities until April 1, 2002. This delay
will allow time for the agency to make its recommendations to Congress,
for Congress to evaluate those recommendations, and, depending on the
decisions of the agency and Congress, for a regulatory or legislative
change to address the issues raised. Although a further delay of the
effective date of the relevant provisions of the final rule is not the
exact relief requested by the Pharmaceutical Distributors Association,
the agency believes that it accomplishes the same purpose in that it
will permit unauthorized distributors to operate for an additional 6
months without concern that the drugs in their inventory may become
illegal to distribute and therefore valueless. All other provisions of
the PDMA final rule became effective on December 4, 2000. This action
should not be construed to indicate that FDA necessarily agrees with or
has made decisions about the substantive arguments made in the
petitions and other submissions related to implementation of
Secs. 203.3(u) and
[[Page 12853]]
203.50, or Sec. 203.3(q), as it applies to wholesale distribution of
blood derivatives by health care entities.
This action is being taken under FDA's authority under 21 CFR
10.35(a). The Commissioner of Food and Drugs finds that this further
delay of the effective date is in the public interest.
Dated: February 22, 2001.
Ann M. Witt,
Acting Associate Commissioner for Policy.
[FR Doc. 01-4964 Filed 2-28-01; 8:45 am]
BILLING CODE 4160-01-S