[Federal Register Volume 59, Number 49 (Monday, March 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5540]
[[Page Unknown]]
[Federal Register: March 14, 1994]
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Part III
Department of Health and Human Services
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Food and Drug Administration
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21 CFR Parts 203 and 205
Prescription Drugs, Policies, Requirements and Administrative
Procedures; Proposed Rule
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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
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rule.
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SUMMARY: The Food and Drug Administration (FDA) is issuing a proposed
rule to set forth agency policies and requirements and to provide
administrative procedures, information, and guidance for those sections
of the Prescription Drug Marketing Act of 1987 (PDMA), as modified by
the Prescription Drug Amendments of 1992 (PDA), that were not
implemented by the final rule that set forth Federal guidelines for
State licensing of wholesale drug distributors (55 FR 38012, September
14, 1990). FDA is also proposing to amend the definitions section of
the State licensing guidelines to make the definition of ``wholesale
distribution'' consistent with that in this proposed regulation.
DATES: Written comments by May 30, 1994.
ADDRESSES: Written comments to the Dockets Management Branch (HFA-305),
Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr., Rockville,
MD 20857.
FOR FURTHER INFORMATION CONTACT: Richard L. Arkin, Center for Drug
Evaluation and Research (HFD-362), Food and Drug Administration, 7500
Standish Pl., Rockville, MD 20855, 301-594-1046.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Description of the Proposed Rule
A. Scope
B. Reimportation
C. Sales Restrictions
D. Samples
E. Wholesale Distribution
F. Request and Receipt Forms, Reports, and Records
G. Penalties and Rewards
H. Technical Amendment to State Licensing Guideline
III. Economic Analysis
IV. Executive Order 12612: Federalism
V. Paperwork Reduction Act of 1980
VI. Environmental Impact
VII. Request for Comments
I. Background
On April 22, 1988, the President signed PDMA into law (Pub. L. 100-
293). According to the congressional findings that were made part of
the text of PDMA as section 2, the legislation was intended to ensure
that drug products purchased by consumers would be safe and effective
and to avoid an unacceptable risk that counterfeit, adulterated,
misbranded, subpotent, or expired drugs were being sold to American
consumers. (See sec. 2(8), PDMA.)
Congress found, among other things, that legislation was necessary
because there were insufficient safeguards in the drug distribution
system to prevent the introduction and retail sale of substandard,
ineffective, or counterfeit drugs, and that a wholesale drug diversion
submarket had developed that prevented effective control over, or even
routine knowledge of, the true sources of drugs. (See secs. 2(2) and
2(3), PDMA.)
Congress found that large amounts of drugs had been reimported into
the United States as American goods returned, causing a health and
safety risk to American consumers because the drugs may have become
subpotent or adulterated during foreign handling and shipping. Congress
also found that a ready market for prescription drug reimports had been
the catalyst for a continuing series of frauds against American
manufacturers and had provided the cover for the importation of foreign
counterfeit drugs. (See sec. 2(4), PDMA.)
The congressional findings stated that the then-existing system of
providing drug samples to physicians through manufacturers'
representatives had been abused for decades and had resulted in the
sale to consumers of misbranded, expired, and adulterated
pharmaceuticals. (See sec. 2(6), PDMA.)
According to the congressional findings, the bulk resale of below-
wholesale-priced prescription drugs by health care entities for
ultimate sale at retail helped to fuel the diversion market and was an
unfair form of competition to wholesalers and retailers who had to pay
otherwise prevailing market prices. (See sec. 2(7), PDMA.)
PDMA amends 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: (1)
Ban the reimportation of prescription human drugs produced in the
United States, except when reimported by the manufacturer or under FDA
authorization for emergency medical care; (2) ban the sale, purchase,
or trade, or the offer to sell, purchase, or trade, of any drug sample;
(3) ban the sale, purchase, or trade, or the offer to sell, purchase,
or trade, or counterfeit any drug coupon; (4) establish limits on the
distribution of drug samples to practitioners licensed to prescribe
such drugs or to pharmacies of hospitals or other health care entities,
including a requirement that such distributions occur only at the
request of a licensed practitioner; (5) require licensed practitioners
to request samples in writing; (6) mandate storage, handling, and
recordkeeping requirements for drug samples; (7) prohibit, with certain
exceptions, the sale, purchase, or trade, or the offer to sell,
purchase, or trade, of prescription human drugs that were purchased by
hospitals or other health care entities, or which were donated or
supplied at a reduced price to a charitable organization; (8) require
State licensing of wholesale distributors of prescription drugs under
Federal guidelines that include minimum standards for storage,
handling, and recordkeeping; (9) require unauthorized wholesale
distributors to provide to each wholesale distributor a statement
identifying each sale of the drug before the sale to such wholesale
distributor; and (10) set forth civil and criminal penalties for
violations of these provisions.
Most PDMA provisions became effective July 22, 1988. However, the
drug sample distribution requirements (section 503(d) of the act (21
U.S.C. 353(d))) became effective on October 20, 1988, and the
requirement for State licensure of wholesale distributors (section
503(e)(2) of the act) became effective on September 15, 1992 (2 years
after the adoption of final rules by the agency setting standards for
State licensing). In the Federal Register of September 13, 1988 (53 FR
35325), FDA published proposed State licensing guidelines to implement
that part of PDMA. FDA received approximately 50 comments on the
proposal. These comments were made part of a public docket (Docket No.
88N-0258), which is available for inspection at FDA's Dockets
Management Branch (address above). After considering all the comments
received on the proposed rule, FDA published revised State licensing
guidelines as a final rule (21 CFR part 205) in the Federal Register of
September 14, 1990 (55 FR 38012). That rule includes minimum
requirements for storage and handling of prescription drugs and for
establishment and maintenance of records of drug distribution.
The PDMA State licensing requirements were modified by the
enactment of PDA (Pub. L. 102-353, 106 Stat. 941) on August 26, 1992.
Among other things, PDA amended section 503(e) of the act to establish
a temporary Federal wholesale distributor registration procedure for
wholesale drug distributors in those States that do not have a
licensing program that meets the Federal guidelines. On September 3,
1992, FDA issued a letter to industry and other interested persons
providing information and guidance on the procedure to be followed by
wholesale distributors required to register under the procedure
established by PDA.
PDA also recast other parts of PDMA. Among other things, PDA: (1)
Amended section 303(b)(1) of the act to establish a scienter
requirement (``knowingly'') for conviction of violations of certain
prohibited acts under section 301(t) of the act relating to
reimportation (section 801(d)(1) of the act), samples (section
503(c)(1) of the act), coupons (503(c)(2) of the act), and unlicensed
wholesale distributors (section 503(e)(2)(A) of the act); (2) amended
section 503(d) of the act to prohibit the distribution of drug samples
by anyone other than the manufacturer or authorized distributors of
record, except that Congress excluded from the term ``distribute'' the
provision of a drug sample to a patient by a licensed practitioner,
health care professional acting at the direction and under the
supervision of such a practitioner, and a hospital or health care
entity pharmacy acting at the direction of such a practitioner; (3)
amended section 503(d)(2) and (d)(3) of the act to disallow any
distribution of drug samples by unauthorized distributors; (4) amended
section 503(e)(1) of the act to require that unauthorized distributors
provide a statement of origin identifying all prior sales, purchases,
or trades of such drugs and the names and addresses of the parties to
the transactions to all recipients; and (5) made certain conforming and
technical changes to the statute.
On August 1 and November 3, 1988, and January 26, 1990, FDA issued
letters to the regulated industry and other interested persons
providing information and guidance on those aspects of PDMA that were
not implemented by the State licensing rule. The letters requested
suggestions from the public regarding the drafting of regulations.
Suggestions from the public have been made part of a public docket
(Docket No. 88N-258L), which is also available for inspection at FDA's
Dockets Management Branch (address above). The agency has received
requests for the issuance of further guidance letters to provide
specific information in certain areas or to answer particular
questions. However, FDA believes that it is now appropriate to
establish definitive requirements through notice and comment
rulemaking.
In drafting this proposed rule, the agency considered the comments
submitted to Docket Nos. 88N-0258 and 88N-258L, including suggestions
received in response to FDA's three guidance letters, pertinent
comments received in response to the proposed rule on State licensing
of wholesale distributors, and other written submissions.
II. Description of the Proposed Rule
FDA is proposing to add a new part 203 to set forth agency policies
and requirements and to provide administrative procedures, information,
and guidance for those sections of PDMA that were not implemented by
part 205. FDA is also proposing to amend Sec. 205.3 to make the
definition of ``wholesale distribution'' consistent with that in
proposed part 203.
A summary of the provisions of proposed part 203 follows:
A. Scope
1. General
It was intended that PDMA would protect the public against the
threat of subpotent, adulterated, counterfeit, and misbranded drugs
posed by the existence of drug diversion schemes and a drug diversion
submarket, and the absence of appropriate controls over and creation
and maintenance of appropriate records regarding the distribution of
prescription drugs.
Accordingly, the scope of the proposed rule, as set forth in
proposed Sec. 203.1, includes establishment of procedures and
requirements pertaining to the reimportation and wholesale distribution
of prescription drugs; the sale, purchase, or trade (or the offer to
sell, purchase, or trade) of prescription drugs by hospitals, health
care entities, and charitable institutions; and the distribution of
prescription drug samples.
2. Bulk Drugs
Some questions have been raised about the applicability of PDMA to
bulk drugs. The statutory language of PDMA encompasses all drugs
subject to section 503(b) of the act within its scope.
The legislative history (``Report of the Committee on Energy and
Commerce,'' H. Rept. 100-76, April 30, 1987, and ``Report of the
Committee on Finance,'' S. Rept. 100-202, March 18, 1988) or the
congressional hearing record do not suggest that bulk drug substances
be treated any differently from other prescription drugs. Bulk drug
substances are susceptible to the same problems of lack of
accountability and diversion that this legislation was intended to
remedy. It is clear that applying the provisions of the statute to bulk
drug substances would help protect against the abuses that Congress
intended to address and contribute to the protection of the public
health. Accordingly, bulk drug substances are, as drugs within the
meaning of section 503(b) of the act, expressly brought within the
scope of PDMA and these implementing regulations.
3. Biological Products
Questions have also been raised about the applicability of PDMA to
biological products, even though the statutory language of PDMA
encompasses all drugs subject to section 503(b) of the act.
There is nothing in the legislative history or the congressional
hearing record to suggest that biological products that are
prescription drugs under section 503(b) of the act should be treated
differently from other prescription drugs. Biological products, except
for blood and blood components intended for transfusion, are
susceptible to the same problems of lack of accountability and
diversion that this legislation was intended to remedy. It is clear
that applying the provisions of the statute to biological products,
except for blood and blood components intended for transfusion, or
biological products which are also medical devices, would help protect
against the abuses that Congress intended to address and contribute to
the protection of the public health. Accordingly, biological products
that are prescription drugs under section 503(b) of the act, except for
blood and blood components intended for transfusion, fall under the
scope of PDMA and are expressly included in these implementing
regulations.
4. Blood and Blood Components Intended for Transfusion
Since passage of PDMA, a number of persons have presented to FDA
issues posed by the application of PDMA to the distribution and sale of
blood and blood components intended for transfusion by blood
establishments and hospitals. Two comments to the agency requested
clarification of PDMA's scope and urged FDA to exempt blood
establishments from all of PDMA's provisions. The comments contended
that licensing blood distributors as wholesalers would seriously
disrupt the Nation's blood services. A third comment suggested that the
agency could, by notice and comment rulemaking, exempt blood and blood
components from PDMA by declaring that they are not prescription drugs
for PDMA purposes.
PDMA, by its literal terms, applies to all drugs that are subject
to section 503(b) of the act; that is, to all human prescription drugs,
including biological products. There is no doubt that blood and blood
components intended for transfusion are prescription drugs. (See 21 CFR
606.121(c)(8)(i) and 610.61(s). See also 47 FR 22518, May 25, 1982; 46
FR 40212, August 7, 1981.) However, if PDMA were considered applicable
to the distribution of blood and blood components, the result would be
to impede the existing blood distribution system, thereby interfering
with our Nation's blood supply. Because application of PDMA to blood
and blood components would produce this untenable result, FDA believes
that Congress could not have intended to subject blood and blood
components to PDMA's provisions.
Moreover, the legislative history lacks any discussion of PDMA's
application to blood and blood components and also clearly shows that
Congress intended that PDMA remedy problems associated with the
distribution of those drugs that are popularly referred to as
``medicines'' or ``pharmaceuticals.'' (See Pub. L. 100-293, sec. 2
(1988) (``Report of the Committee on Energy and Commerce,'' H. Rept.
100-76, April 30, 1987, and ``Report of the Committee on Finance,'' S.
Rept. 100-202, March 18, 1988).) Blood and blood components are unique
drug products that are distributed in an entirely different way from
other prescription drugs. FDA believes that the fact that blood and
blood components are not part of the system of distribution and
marketing that Congress intended to regulate under the terms of PDMA
further signals that Congress could not have intended to include blood
and blood components within the scope of the licensing requirement.
Accordingly, FDA has taken a number of actions to clarify the scope
of PDMA to prescription drugs other than blood and blood components
intended for transfusion. In the final State licensing guideline rule
(55 FR 38012 at 38024), FDA specifically excluded from the definition
of ``wholesale distribution'' the sale, purchase, or trade of blood and
blood components intended for transfusion (see Sec. 205.3(f)(8)). At
the same time, FDA published another proposed rule, ``Applicability to
Blood and Blood Components Intended for Transfusion; Guidelines for
State Licensing of Wholesale Prescription Drug Distributors'' (55 FR
38027, September 14, 1990), asking for comments on the exclusion of
blood and blood components intended for transfusion from the PDMA State
licensing guidelines.
After considering the comments received and reviewing PDMA's
purpose and its legislative history, FDA has tentatively concluded that
PDMA is not intended to apply to blood and blood components intended
for transfusion. Accordingly, at Sec. 203.1 the proposed rule would
exclude blood and blood components intended for transfusion from the
requirements of and the restrictions in PDMA and also adds specific
language at Sec. 203.22(g) excluding blood and blood components
intended for transfusion from the PDMA sales restrictions.
5. Oxygen
Questions have also been raised about the applicability of PDMA to
the drug oxygen, U.S.P. (U.S. Pharmacopeia). FDA advises that oxygen,
U.S.P., is a prescription drug subject to section 503(b) of the act,
and, therefore, within the scope of PDMA and these proposed
regulations.
B. Reimportation
Section 801(d) of the act (21 U.S.C. 381(d)) provides that a
prescription drug that is manufactured in a State and exported may not
be reimported into the United States unless it is imported by the
manufacturer, except when authorized by the Secretary of Health and
Human Services for emergency medical care. The delegation of authority
provisions at 21 CFR 5.10 redelegate the functions of the Secretary to
the Commissioner of Food and Drugs.
Section 801(d) of the act responds to a finding that large amounts
of drugs were being reimported into the United States as ``American
Goods Returned,'' and that these imports posed a health and safety risk
to American consumers because they could become subpotent or
adulterated during foreign handling and shipping. (See sec. 2(4),
PDMA.)
The congressional findings also acknowledged that what was termed
``the ready market for prescription drug reimports'' was ``the catalyst
for a continuing series of frauds against American manufacturers and
has provided the cover for the importation of foreign counterfeit
drugs.'' (See sec. 2(5), PDMA.)
1. Restrictions on Reimportation
Proposed Sec. 203.10 sets forth the restriction that no
prescription drug manufactured in a State and exported from the United
States may be reimported by anyone other than its manufacturer, except
that FDA may grant permission to a person other than the manufacturer
to reimport a prescription drug if it deems such reimportation is
required for emergency medical care.
2. Defining ``Manufacturer''
FDA defined the term ``manufacturer'' in the PDMA State licensing
regulation to mean anyone engaged in manufacturing, preparing,
propagating, compounding, processing, packaging, repackaging, or
labeling of a prescription drug (Sec. 205.3(d)). This definition is
somewhat more inclusive than the definition used earlier by the agency
in the labeling provisions at Sec. 201.1 (21 CFR 201.1). The definition
in Sec. 201.1(b) states that the manufacturer is the person who
performs all of the following operations that are required to produce
the product: (1) Mixing, (2) granulating, (3) milling, (4) molding, (5)
lyophilizing, (6) tableting, (7) encapsulating, (8) coating, (9)
sterilizing, and (10) filling sterile, aerosol, or gaseous drugs into
dispensing containers; or at least some of the operations if the
labeling indicates the presence of other manufacturers. Under
Sec. 201.1, a packer or distributor is not the same as a manufacturer.
FDA concluded that the more inclusive definition of
``manufacturer'' was consistent with the intent of the statute in
imposing the requirement for State licensing of wholesale drug
distributors; however, the agency has preliminarily concluded that a
less inclusive definition of that term would be more consistent with
the intent of the remaining sections of PDMA. For example, the
statutory provision against reimportation by persons other than the
manufacturer (except when permission is granted by FDA) is intended to
establish accountability in reimportations so that adulterated and/or
misbranded goods do not reenter commercial channels in the United
States. The reimportation provision is based on the assumption that a
manufacturer, in the less inclusive sense, is the person most
knowledgeable about the product's characteristics; is the most capable
of determining that the product meets the stability, quality, and
purity standards it is represented to possess; and is the only person
capable of authenticating the basic integrity of the product.
The remaining sections of PDMA are consistent with the less
inclusive definition of ``manufacturer'' in Sec. 201.1, rather than the
more inclusive definition in Sec. 205.3(d). Accordingly, proposed
Sec. 203.3(p) proposes to adopt the definition of ``manufacturer'' in
Sec. 201.1 for this rule.
3. Applications for Reimportation to Provide Emergency Medical
CareProposed Sec. 203.11 provides an administrative procedure by which
applications may be made by a person other than the manufacturer for
the reimportation of prescription drugs for emergency medical care. The
proposal would codify the current procedure whereby applications for
reimportation are submitted to the Director of the FDA District Office
in the district where reimportation is sought. The District Office
would review and approve or disapprove each application.
4. An Appeal From an Adverse Decision by the District Office
Proposed Sec. 203.12 would also codify the current procedure that
permits an appeal from an adverse decision by the district office to be
made to the Office of Compliance (HFD-300), Center for Drug Evaluation
and Research, for prescription human drugs other than biological
products. An appeal from an adverse decision involving human
prescription biological products is to be made to the Office of
Compliance (HFM-600), Center for Biologics Evaluation and Research.
C. Sales Restrictions
Section 503(c)(3) of the act prohibits, with certain exceptions,
the sale, purchase, or trade (or any offer to sell, purchase, or trade)
of 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 described in section
501(c)(3) of the Internal Revenue Code of 1954.
1. Defining ``Charitable Organization''
Section 501(c)(3) of the Internal Revenue Code generally exempts
from income taxes not-for-profit organizations that operate for
religious, charitable, scientific, literary, educational, and public
safety purposes. However, such exemptions are not automatic. Under 26
CFR 1.501, a charitable organization must apply for and be granted tax-
exempt status. Tax-exempt status may be revoked and the organization
may lose its exemption if it fails to meet the requirements of the
statute and regulations.
It is FDA's view that an organization can be accurately described
as one fitting the requirements of section 501(c)(3) of the Internal
Revenue Code only if it has been granted tax-exempt status by the
Department of the Treasury. Accordingly, FDA proposes to define the
term ``charitable organization'' in proposed Sec. 203.3(f) as a
nonprofit hospital, health care entity, organization, institution,
foundation, association, or corporation that has been granted an
exemption under section 501(c)(3) of the Internal Revenue Code of 1954,
as amended.
2. Restrictions and Exclusions
Proposed Sec. 203.20 restates the statutory restrictions on
prescription drug sales by hospitals, health care entities, and
charitable institutions (section 503(c)(3) of the act). These
restrictions reflect a congressional finding that the resale of
prescription drugs by health care entities at below wholesale prices
had helped to fuel the drug diversion market and that such sales
constituted an unfair form of competition to legitimate wholesalers and
retailers paying the prevailing market prices. (See sec. 2(7), PDMA.)
The statute does not distinguish sales made at the average
wholesale price (AWP) and those made at below AWP or at more than the
AWP. The sales restrictions apply to all sales, purchases, or trades by
hospitals, health care entities, and charitable institutions. Sales of
any human prescription drugs purchased by a hospital or other health
care entity, or donated or supplied at reduced cost to a charitable
institution, are prohibited unless excepted by section 503(c)(3)(B) of
the act or exempted under proposed Secs. 203.22, 203.23, or 203.24.
In its findings, Congress stated that it believed that these
resales had helped to create an unacceptable risk that counterfeit,
adulterated, misbranded, subpotent, or expired drugs would be sold to
American consumers. (See sec. 2(8), PDMA.)
a. Hospital, health care entity, or charitable institution cannot
be wholesaler. FDA has learned that some hospitals and health care
entities, including physicians, have obtained licenses as wholesale
distributors in an effort to circumvent the statutory restrictions
against the sale of prescription drugs by hospitals, health care
entities, and charitable institutions. Those hospitals and health care
entities that have secured wholesale drug distributor licenses claim
that the statutory restrictions are made inapplicable to them by the
first clause of the last sentence of section 503(c)(3) of the act,
which reads: ``For purposes of this paragraph, the term `entity' does
not include a wholesale distributor of drugs or a retail pharmacy
licensed under State law * * *.''
Such a reading is inconsistent not only with general rules of
statutory construction, but with the intent of Congress as reflected in
the legislative history. The legislative history, which addresses
Congress' concern about donations to charitable institutions and
institutional discounts for hospitals and health care entities, notes
that some of these institutions had been sources of unfair competition
and drug diversion, and explains that the statutory prohibition against
the sale of drugs donated to or acquired at reduced price by charitable
institutions or purchased by hospitals or health care entities is
directed at preventing unfair profits through resales of such drugs.
Congress said:
Section 503(c)(3) would prohibit resales of pharmaceuticals by
hospitals and other health care entities or charitable organizations
with certain exceptions. This provision is intended to cover resales
by both for profit and nonprofit health care entities. These
institutions typically receive discount prices, substantially below
the average wholesale price (AWP) for pharmaceuticals, based on
their status as a health care entity or charity. When hospitals or
other health care entities obtain pharmaceuticals at favorable
prices and then resell those drugs at a profit, they are unfairly
competing with wholesalers and retailers who cannot obtain such a
favorable price. Such resales defraud manufacturers, who are led to
believe that the drugs are for the use of the health care entity. In
any case, these resales reward the unscrupulous and penalize the
otherwise honest and efficient wholesaler or retailer while fueling
the diversion market.
(H. Rept. 100-76, pp. 12-13.)
FDA interprets the first clause of the last sentence of section
503(c)(3) of the act to mean that the general prohibition against drug
sales by hospitals, health care entities, and charitable institutions
was not intended to interfere with the operations of legitimate
licensed prescription drug wholesalers and retail pharmacies. Section
503(c)(3) of the act does not open up a loophole for a hospital, health
care entity, or charitable institution to avoid the statutory
prohibition against drug sales simply by obtaining a wholesaler
license.
Accordingly, proposed Sec. 203.3(n) would state that a person
cannot simultaneously be a ``health care entity'' and a retail pharmacy
or wholesale distributor. The agency is also proposing to amend the
State licensing guidelines by adopting the same definition for ``health
care entity'' at Sec. 205.3(h).
If a charitable institution or a for-profit or nonprofit hospital
or health care entity has a corporate for-profit subsidiary that is a
wholesale distributor or retail pharmacy, or if it is part of a group
in which there is common control over the hospital or health care
entity and a wholesale distributor or retail pharmacy, then the
charitable institution, hospital, or health care entity would be
prohibited under section 503(c)(3) of the act and proposed Secs. 203.20
and 203.22 from transferring any prescription drug donated or supplied
at reduced price to the charitable institution or purchased by the
hospital or health care entity to the related wholesale distributor or
retail pharmacy for further sale except for a sale under a valid
prescription or for emergency medical reasons.
A charitable institution, hospital, or health care entity that has
a wholesale distributor or retail pharmacy subsidiary, or one that is
part of a group in which there is common control over the charitable
institution, hospital, or health care entity and a wholesale
distributor or retail pharmacy, should maintain books and records that
provide sufficient audit trails to trace the purchase and sale of
prescription drugs to ensure that no prescription drug donated or
supplied at reduced price to the charitable institution or purchased by
the hospital or health care entity is transferred to a related
wholesale distributor or retail pharmacy for further sale except for a
sale under a valid prescription or for emergency medical reasons.
b. Statutory exclusions. Proposed Sec. 203.22 restates the
statutory exclusions to the sales restrictions. They are: (1) The
purchase or other acquisition of a drug for its own use by a hospital
or other health care entity that is a member of a group purchasing
organization from the group purchasing organization or from other
hospitals or health care entities that are members of the organization;
(2) the sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug by a charitable organization to a nonprofit
affiliate of the organization to the extent otherwise permitted by law;
(3) the sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug among hospitals or other health care entities
that are under common control; (4) the sale, purchase, or trade of a
drug or an offer to sell, purchase, or trade a drug for emergency
medical reasons; or (5) the sale, purchase, or trade of a drug, an
offer to sell, purchase, or trade a drug, or the dispensing of a drug
under a valid prescription.
c. Common control. One statutory exclusion to the general
prohibition against resale of drugs by hospitals, health care entities,
and charitable institutions permits the sale, purchase, or trade of
prescription drugs among hospitals and health care entities that are
under common control. There is no statutory definition of the term
``common control,'' nor is the term mentioned in the legislative
history.
The concept of common control can be found in other Federal
regulatory schemes that were in use at the time PDMA was enacted into
law. Both the Securities and Exchange Commission and the Environmental
Protection Agency define ``common control'' to mean possession of the
power to direct or cause the direction of the management and policies
of a person or an organization, whether by ownership of stock, voting
securities or rights, contract, or otherwise. (See 17 CFR 230.405 and
40 CFR 66.3(f).) FDA included this definition in the State licensing
guidelines at Sec. 205.3(f)(4). This proposal would adopt the same
definition in proposed Sec. 203.3(g).
d. Sales for emergency medical reasons. Section 503(c)(3) of the
act permits the sale, purchase, or trade of prescription drugs by a
hospital, health care entity, or charitable institution for emergency
medical reasons. The statute states that ``emergency medical reasons''
includes transfers of a drug between health care entities or from a
health care entity to a retail pharmacy undertaken to alleviate
temporary shortages of the drug arising from delays in or interruptions
of regular distribution schedules. The statute does not further
elaborate on the term ``emergency medical reasons.''
FDA believes that it may be useful to specify some of the
circumstances in which a sale for emergency medical reasons would be
allowed. (See proposed Sec. 203.3(k).)
FDA received a significant number of comments from providers of
emergency care, including emergency medical services, ambulance
corporations, fire companies, rescue squads, urgent care providers,
emergency care physicians and technicians, and State emergency care
agencies and commissions that advised the agency that hospital
pharmacies have traditionally supplied drugs for emergency use by
emergency medical services and licensed practitioners' offices
operating in the general service area of the hospital. Several comments
stated that wholesale distributors are reluctant to open small accounts
to provide such drugs for emergency care, and that nearby hospital
pharmacies are the logical providers. Moreover, the comments noted that
many States encourage hospitals to supply drugs for emergency use to
emergency medical services, and some States require emergency services
to acquire their drugs exclusively from hospitals.
The proposal would allow sale of drugs by a hospital or health care
entity to nearby emergency medical services such as ambulance services,
rescue squads, and fire companies in the same State or service or
marketing area for use in emergency treatment and to licensed
practitioners for emergency office treatment. The proposal would also
define emergency medical reasons to allow hospitals and health care
entities to provide minimal emergency supplies to nursing homes.
In contrast, FDA believes that the exception for emergency medical
reasons does not permit hospitals or health care entities regularly to
sell to licensed practitioners prescription drugs that will be used for
routine office procedures.
e. Government hospitals and health care entities. Proposed
Sec. 203.22(f) would also exclude the sale, purchase, or trade of
prescription drugs by Federal, State, and local government hospitals
and health care entities to other Federal, State, and local government
hospitals or health care entities from the general prohibition against
the sale, purchase, or trade of prescription drugs by a hospital,
health care entity, or charitable institution.
Congress has established an extensive system of public hospitals
and health care entities. These include hospitals, clinics, and
dispensaries operated for the military by the Department of Defense;
hospitals and clinics operated by the Veterans' Administration; and
hospitals and clinics operated by the U.S. Public Health Service
(including Indian Health Service hospitals and clinics).
In addition, State and local governments have established public
health hospitals, clinics, and dispensaries, including drug treatment
inpatient and outpatient facilities. These facilities operate under a
variety of organizational structures. They may be owned and operated by
governmental entities, or be organized as private corporations or
associations under contract to State or local government agencies.
These health care entities may have interagency arrangements for
the purchase and exchange of prescription drugs. Such facilities
operate because of Federal, State, or local governmental commitments to
provide health care to particular classes of patients in response to
specific client needs. Among these needs are the provision of services
to people with low incomes, the distribution of vaccines, and the
dispensing of antitoxins and blood derivatives in public health
emergencies.
As noted, the adoption of the prohibition against sales by
hospitals or health care entities was prompted in part because of the
differential pricing structure that permits purchases by hospitals and
health care entities at below wholesale prices and the resultant
temptation to resell drugs so acquired at a profit. However, there is
no financial incentive for a Federal, State, or local government
hospital or health care entity to sell prescription drugs purchased at
below wholesale prices because any profit from such a sale would go to
the Federal or State treasury. Accordingly, FDA believes that there is
little likelihood that permitting Federal, State, or local government
hospitals and health care entities to sell prescription drugs to other
Federal, State, or local government hospitals and health care entities
would lead to the kinds of abuses that PDMA was designed to end.
Therefore, proposed Sec. 203.22(f) would exclude such transactions
from the general prohibition against resales by hospitals and health
care entities and thus permit Federal, State, or local government
hospitals and health care entities to sell drugs to other Federal,
State, or local government hospitals and health care entities.
FDA has been asked whether a State or local government agency,
which, under a contract or memorandum of agreement, sends or allows
some of its patients to be treated at a private local clinic or other
health care entity, may transfer prescription drug products to such a
facility to be dispensed to patients. In other words, would such a
transfer violate the prohibition against the sale, purchase, or trade
of prescription drugs by a hospital, health care entity, or charitable
institution?
FDA advises that if a State or local government agency functions as
or operates a hospital, health care entity, or charitable institution,
and a private health care entity is bound by a contractual agreement to
the State or local government agency, then the State or local
government hospital or health care entity may sell prescription drugs
to the contract private health care entity provided that the
prescription drugs sold are only used to serve government patients and
programs. The State or local government hospital or health care agency
supplying the drug and the contract health care entity would be
obligated to implement appropriate controls to ensure that the drugs
sold by the Government hospital or health care entity to the contract
health care entity are dispensed to patients in the Government program
and not diverted or sold to other patients or otherwise used for non-
Government purposes.
If the State or local government agency does not function as or
operate a hospital, health care entity, or charitable institution, and
is acting as a prescription drug wholesaler, the prohibition against
the sale of prescription drugs by a hospital, health care entity, or
charitable institution would not be applicable.
3. Revocation of Acceptance, Reshipment, and Returns
FDA proposes to clarify the circumstances under which hospitals,
health care entities, and charitable institutions may, without
violating section 503(c)(3) of the act, return or ship back
prescription drugs to the manufacturer or distributor from which they
were purchased.
In particular, proposed Secs. 203.23 and 203.24 would,
respectively, describe the conditions by which hospitals, health care
entities, and charitable institutions may: (1) Revoke acceptance of any
prescription drug received because of an ordering or delivery mistake
and ship them back to the manufacturer or distributor, and (2) return a
drug to the manufacturer or distributor.
A number of persons who submitted comments to the PDMA docket
questioned the effect of the new statutory language on commercial
practice in the pharmaceutical industry. Several persons argued that
the sales provisions in the Uniform Commercial Code treat a sale as
completed once a nondefective product has been ordered, delivered, and
paid for, unless specific contractual provisions make the sale
conditional or revocable. Several persons urged that FDA view a return
for cash or credit after a completed sale as a new and prohibited sales
transaction.
However, many other comments to the agency in the months after
passage of PDMA observed that under common commercial practice in the
pharmaceutical industry, manufacturers and wholesale distributors
permit returns and urged that this practice be allowed to continue. FDA
is aware that hospital, health care entity, or charitable institution
pharmacies, and distributors sometimes return products because of
overstocks, changes in institutional formularies, the death of a
patient for whose use a drug product was acquired, or other reasons.
The comments received by the agency argued that to permit returns would
both help to keep down the costs of medical care and reduce the risk
that adulterated or misbranded drugs would find their way into the
diversion market.
FDA has tentatively concluded that it should, under specified
conditions, allow drug products to be shipped back or returned to the
manufacturer or distributor, and this tentative conclusion is reflected
in proposed Secs. 203.23 and 203.24.
Under proposed Sec. 203.23, a hospital, health care entity, or
charitable institution could revoke a sale and purchase transaction
because of a mistake in ordering or delivery and ship the prescription
drug back, provided: (1) The hospital, health care entity, or
charitable institution ships the drug back within 10 working days of
receipt; (2) the reshipment is made under proper storage, handling, and
shipping conditions; and (3) if reshipped to the wholesale distributor,
the hospital, health care entity, or charitable institution provides
written notice to the manufacturer of the revocation and reshipment.
The proposal would require that the manufacturer be notified of the
reshipment so that any chargebacks to the manufacturer by the wholesale
distributor or special price reduction credited by the manufacturer to
the wholesale distributor would be factored into the credit or refund
given the distributor. This is intended to prevent windfall profits
from the return of a specially priced drug to the wholesale
distributor.
Under proposed Sec. 203.24, a hospital, health care entity, or
charitable institution could return a product it had purchased from a
manufacturer or wholesale distributor, provided that: (1) The hospital,
health care entity, or charitable institution notifies the manufacturer
that the prescription drug product has been returned to the wholesale
distributor; and (2) the hospital, health care entity, or charitable
institution fills out a credit memo. Proposed Sec. 203.24 would require
the hospital, health care entity, or charitable institution to send a
copy of the credit memo to the manufacturer, for the same reasons that
notification of the manufacturer is required in the event of a
revocation and reshipment, i.e., so that any chargebacks or reduced
prices will be factored into any credit or refund to prevent windfall
profits from the transaction.
Proposed Secs. 203.23 and 203.24 would both require detailed
documentation to provide the kind of accountability contemplated by the
act to help ensure against diversion. To ensure that returned drugs
remain safe and effective, both proposed sections would require that
drugs returned to a manufacturer or wholesale distributor be kept under
proper conditions for storage, handling, and shipping, and that written
documentation reflecting the maintenance of proper conditions be
provided to the manufacturer or wholesale distributor to which the
drugs are returned.
Under the proposal, the value of any credit, refund, or merchandise
exchanged for the returned product could not exceed the purchase price.
For purposes of clarification and to ensure that the State
licensing regulation and this proposed rule, when adopted, are
consistent, the agency is also proposing to amend the definitions in
the State licensing guidelines at Sec. 205.3(f) by adding two
additional exceptions to ``wholesale distribution'' for the reshipment
of drugs, when conducted in accordance with Sec. 203.23, and drug
returns, when conducted in accordance with Sec. 203.24.
D. Samples
To provide accountability and oversight in the sample distribution
process, PDMA established in section 503(d) of the act a strict system
of controls over the distribution of prescription drug samples, which
are defined in section 503(c)(1) of the act. Under the statutory
scheme, no person could distribute any drug sample, except for a
manufacturer or distributor who distributed drug samples in accordance
with specific requirements and in response to a written request from a
licensed practitioner.
Under sections 503(d)(1) and (d)(2) of the act, both manufacturers
and distributors could engage in sample distribution if certain
requirements were followed. However, section 4(2) of PDA further
restricted the persons who can engage in distribution of drug samples
by amending section 503(d)(1) and (d)(2) of the act to restrict sample
distributions to manufacturers and authorized distributors of record.
This amendment is demonstrative of the intent of Congress, as reflected
elsewhere in PDMA and PDA, to restrict the activities of drug
distributors who are not authorized distributors of record. Proposed
Secs. 203.30, 203.31, and 203.33 through 203.39 are consistent with
this amendment.
Under the revised statutory scheme, no person may distribute any
drug sample, except for a manufacturer or authorized distributor of
record who distributes drug samples in accordance with specific
requirements and in response to a written request from a licensed
practitioner.
Section 503(d)(1) of the act states that, for purposes of this
subsection, the term ``distribute'' does not include the providing of a
drug sample to a patient by a practitioner licensed to prescribe such
drug, by a health care professional acting at the direction and under
the supervision of such a practitioner, or the pharmacy of a hospital
or of another health care entity acting at the direction of such a
practitioner who received the drug sample in accordance with the act
and regulations. The definition of ``distribute'' in proposed
Sec. 203.3(h) reflects this statutory exclusion.
PDMA sets up two different sample distribution systems, depending
on the mode of delivery: (1) By mail or common carrier, and (2) by
means other than mail or common carrier, i.e., representative or
detailer.
If a sample is delivered by mail or common carrier, the statute
requires the recipient to execute a written receipt when the drug
sample is delivered and return the receipt to the manufacturer or
authorized distributor of record from which the drug sample was
received. If the sample is delivered by a representative, a number of
additional procedures are required by the statute that pertain to
storage and handling, inventories, recordkeeping, reporting of thefts
and significant losses, notification of convictions of representatives
for drug sample violations, and accountability. The statute specifies
minimum requirements for the contents of written request forms and
details certain recordkeeping and reporting requirements.
1. Requirements for Drug Sample Distribution
The requirements for distribution of drug samples by manufacturers
and authorized distributors of record by mail or common carrier are set
forth in proposed Sec. 203.30. The requirements for distribution of
drug samples by representatives are set forth in proposed Sec. 203.31.
The proposed sections provide detailed requirements for written request
forms, receipts, and recordkeeping.
Most of these requirements are statutory; however, FDA has
tentatively concluded that clarification of some of the statutory
requirements is desirable. FDA also has tentatively concluded that
other requirements should be imposed to help ensure smooth operation of
the system, effective enforcement, effective accountability and
oversight of drug sample distribution, and provide adequate safeguards
against drug sample diversion.
2. Contents of the Sample Request Forms
Proposed Secs. 203.30 and 203.31 would require the written request
form for drug samples to bear certain information: (1) The name,
address, professional title, signature of the practitioner making the
request; (2) the practitioner's State license number or the Drug
Enforcement Administration (DEA) identification number; (3) the
proprietary or established name and strength of the drug sample
requested; (4) the quantity requested; (5) the name of the manufacturer
of the drug sample and the authorized distributor of record, if the
drug sample is requested from a distributor; and (6) the date of the
request.
A number of comments suggested that it is sometimes difficult for a
manufacturer or distributor to determine whether or not a particular
person who wishes to receive drug samples is a licensed practitioner.
FDA has added the requirement that the request form bear the
practitioner's State license or DEA identification number to assist the
manufacturer or distributor in determining whether or not a person is a
licensed practitioner.
The statute requires a request form to bear the ``identity'' of the
drug sample being requested. FDA has clarified the meaning of
``identity'' in the proposed rule by specifying that the request form
bear the proprietary or established name and strength of the requested
sample.
PDMA requires that the request form bear the name of the
manufacturer of the drug. However, where the statute also permits an
authorized distributor of record to distribute drug samples, the
identity is incomplete without naming both the manufacturer and
distributor. In that circumstance, FDA proposes to require that the
name of the distributor as well as the manufacturer be made part of the
sample request form.
The statute also permits delivery of a drug sample to the pharmacy
of a hospital or other health care entity at the request of a licensed
practitioner. However, the statute does not state how that request for
delivery should be made. FDA has tentatively concluded that the name
and address of the intended recipient should be part of the request
form. This conclusion is reflected in the requirements in proposed
Secs. 203.30 and 203.31 that, if the request is being made by a
licensed practitioner for delivery of a drug sample to a hospital or
health care entity pharmacy, the name and address of the intended
recipient be included on the request form.
3. Drug Sample Receipts
Proposed Secs. 203.30 and 203.31 would require the execution of a
written receipt by the recipient upon delivery of a drug sample. The
proposed sections also set out the contents of the receipt.
The statute requires the execution of a receipt upon delivery of a
drug sample by mail or common carrier to establish an audit trail for
drug sample orders and deliveries and to ensure that drug samples
ordered are received. The statute does not require the execution of a
written receipt for samples delivered by representatives in the
apparent belief that a representative always delivers a drug sample to
a licensed practitioner at the same time that the licensed practitioner
signs the request form.
A number of comments suggested that samples frequently are not
delivered at the time of the request, i.e., some time elapses between
request and delivery, even when a representative personally delivers
the drug sample. Sometimes the period of time is only a few minutes,
but often it may be hours, days, or weeks. In some instances, a
representative may receive a request for a drug sample at one sales
call and deliver the requested sample at a later date. In these cases,
because of lapses of memory, mistake, or because a diversion scheme may
be underway, the samples delivered may not always match the request.
Accordingly, the agency has tentatively concluded that the requirement
for a written receipt should extend to all drug sample deliveries, and
that requirement is included in proposed Secs. 203.30 and 203.31.
A sample request and receipt need not be on separate forms if
delivery is by a representative. A single form could be devised and
used containing all of the required information, which could be fully
completed and executed with a single signature, if the request and
delivery are simultaneous, or executed in part with a signature for the
request at the time of the request, and executed in part with a second
signature acknowledging receipt at the time of the delivery.
Proposed Secs. 203.30(c) and 203.31(c) state that a receipt is to
be on a form designated by the manufacturer or distributor. If the drug
sample is received by the requesting practitioner, both proposed
sections would require that the receipt contain the name, address,
professional title, and signature of the practitioner or the
practitioner's designee who acknowledges delivery of the drug sample;
the proprietary or established name and strength of the drug sample,
the quantity, and the lot or control number of the drug sample
delivered; and the date of the delivery. If the drug sample is received
by the pharmacy of a hospital or other health care entity at the
request of a licensed practitioner, both proposed sections would
require the receipt to contain the name and address of the requesting
licensed practitioner, the name and address of the hospital or health
care entity pharmacy designated to receive the drug sample; the name,
address, professional title, and signature of the person acknowledging
delivery of the drug sample; the proprietary or established name and
strength of the drug sample, the quantity, and the lot or control
number of the drug sample delivered; and the date of the delivery. FDA
believes this information is necessary to ensure that the sample
received is the same as the sample requested.
4. Additional Requirements For Delivery of Drug Samples by
Representatives
PDMA provides that manufacturers and distributors that utilize
representatives for the delivery of drug samples must abide by a number
of additional requirements. These additional requirements are intended
to guard against the kinds of abuses that Congress' findings stated had
been an integral part of the drug sample delivery system and had led to
large-scale drug sample diversion.
a. Inventories of drug samples of manufacturers' and distributors'
representatives. The statute provides that each drug manufacturer or
distributor that engages in drug sample distribution is required to
conduct, at least annually, a complete and accurate inventory of all
drug samples in the possession of representatives (21 U.S.C.
353(d)(3)(C)). The inventory is intended to guard against drug sample
diversion by providing manufacturers and distributors information that
will permit them to identify diverters and take appropriate action and
provide data for FDA enforcement activities.
The statute does not specify what is meant by such an inventory,
nor how it is to be conducted and reported. It is FDA's preliminary
view that such an inventory must go beyond a mere physical count, and
that meaningful information and data can only be provided if the
inventory is conducted utilizing generally accepted inventory practices
and a reconciliation report is prepared that relates the latest
inventory to the most recent prior inventory and to drug samples
acquired and distributed in the interim.
Accordingly, proposed Sec. 203.31(d) would require the manufacturer
or distributor to inventory all drug samples in the possession of a
manufacturer's or distributor's representative, and keep a record of
the inventory. The record would be required to identify all drug
samples by established or proprietary name, dosage strength, and number
of sample units of each drug sample in stock.
The proposal would require that the manufacturer or distributor
reconcile the number of drug samples on hand with the number received
during the reporting period. The reconciliation report would be
required to include: (1) A report of the physical count of the most
recently completed prior inventory; (2) a record of each drug sample
shipment received since the most recently completed prior inventory,
including the sender and date of the shipment, and the established or
proprietary name, dosage strength, and number of sample units received;
(3) a record of drug sample distributions since the most recently
completed inventory showing the name and address of each recipient of
each sample unit shipped, the date of the shipment, and the established
or proprietary name, dosage strength, lot or control number, and number
of sample units shipped; and (4) an explanation for any significant
loss.
To ensure impartiality, the proposal would also require that the
inventory and reconciliation reports be conducted and prepared by
persons other than the representatives being inventoried or their
supervisors or managers in their direct line of supervision or command.
To guard against drug sample diversion, the proposed section would
require manufacturers and distributors to evaluate carefully any
apparent discrepancy or significant loss in the inventory and
reconciliation, and to investigate fully any significant loss that
cannot be justified.
b. Lists of manufacturers' and distributors' representatives. PDMA
requires that each manufacturer or authorized distributor of record who
distributes drug samples maintain a list of the names and addresses of
its representatives who distribute drug samples and of the sites where
drug samples are stored. The proposal restates this statutory
requirement (Sec. 203.31(e)).
c. Notification if representative is convicted of violations. The
statute requires drug manufacturers or distributors of record to report
to FDA any conviction of a representative for violations of section
503(c)(1) of the act or a State law because of the sale, purchase, or
trade of a drug sample or the offer to sell, purchase, or trade a drug
sample. The proposal restates this statutory requirement
(Sec. 203.31(f)).
5. Drug Sample Storage and Handling Requirements
FDA has already excluded the distribution of drug samples by
representatives from the definition of ``wholesale distribution'' in
Sec. 205.3(f)(7), and the agency is proposing to adopt this exclusion
in the definition of ``wholesale distribution'' in proposed
Sec. 203.3(y). In view of this, representatives are not required to be
licensed as wholesale distributors by the States. PDMA requires
manufacturers and authorized distributors of record to store all drug
samples under conditions that will maintain their stability, integrity,
and effectiveness, and ensure that the drug samples are not
contaminated, deteriorated, or otherwise adulterated. Proposed
Sec. 203.32 reflects this requirement.
A representative, as an agent of the manufacturer or authorized
distributor of record, is bound by the same standard, and is required
to take adequate precautions to ensure the safety and efficacy of any
drug samples the representative distributes. Generally, if a
representative follows the labeling and compendial requirements for
storage and handling of a particular prescription drug in handling
samples of that drug, the safety and efficacy of the drug sample may be
assured.
6. Drug Sample Forms
A number of persons posed questions regarding drug sample request
and receipt forms. FDA does not contemplate developing its own forms
for sample request and receipt, and instead intends to rely on
manufacturers and distributors to develop appropriate forms.
Accordingly, any written request or receipt form developed by a
manufacturer or authorized distributor of record that complies with the
requirements of proposed Sec. 203.33 would be acceptable to FDA if it
contains the information and any signature required in this section.
The agency wishes to encourage transmission and receipt of sample
request and receipt forms by the most efficient and expeditious means.
Accordingly, proposed Sec. 203.33 would permit such forms to be
delivered by mail, common carrier, or private courier or to be
transmitted photographically or electronically (i.e., by telephoto,
wirephoto, radiophoto, facsimile transmission (FAX), xerography, or
electronic data transfer) or by any other system, provided that the
method for transmission meets the security requirements set forth in
proposed Sec. 203.60(d).
7. Written Policies and Procedures and Other Requirements for Drug
Sample Distribution
FDA received a number of questions and comments from drug
manufacturers and distributors seeking assistance in developing
appropriate administrative systems for distributing drug samples. There
are a wide variety of administrative systems in use, and enforcement
has been complicated by the multiplicity of sample distribution
procedures. Although standardization is not necessary, the agency
believes that clear internal administrative systems are essential to
ensure that sample distribution is carried out efficiently and that the
statutory requirements are met.
In addition, FDA expects that manufacturers and distributors will
have administrative systems in place to review all losses and thefts so
that patterns that may indicate the possibility of drug sample
diversion will be detected. The agency believes that this is consistent
with Congress' intent that manufacturers and distributors develop
adequate audit and security systems to detect and investigate sample
losses and thefts. (H. Rept. 100-76, p. 20; S. Rept. 100-202, p. 9.)
Accordingly, under proposed Sec. 203.34, each manufacturer or
authorized distributor of record that distributes drug samples would be
expected to adopt an administrative system to monitor losses and
thefts.
Also, proposed Sec. 203.34 would require drug manufacturers and
distributors to establish, maintain, and adhere to written policies and
procedures describing its administrative systems for sample
distribution. The proposed section contemplates that each
manufacturer's or distributor's written policies and procedures would
describe its administrative system for: (1) Distributing drug samples
by mail or common carrier, including methodology for reconciliation of
requests and receipts; (2) distributing drug samples by means other
than mail or common carrier; (3) conducting its inventory of drug
samples under proposed Sec. 203.31(d), including an inventory schedule;
(4) auditing and detecting falsified or incomplete drug sample records;
(5) identifying any significant loss of drug samples and notifying FDA
of the loss; (6) monitoring any loss or theft of drug samples; and (7)
storing drug samples by representatives.
8. Standing Requests
Both the House Report and Senate Report state that it is the intent
of Congress that separate written requests be made each time that
samples are requested to be delivered and that standing requests do not
fulfill the requirements of the statute, except that the Senate Report
states that FDA may provide by regulation for the delivery by mail of a
small number of samples for strictly limited periods of time. (H. Rept.
100-76, p. 14; S. Rept. 100-202, p. 6.)
Proposed Sec. 203.35 would require that separate written requests
be made for each sample or group of samples and does not allow for
open-ended or standing requests to order drug samples.
The proposed section states, however, that the agency does not
consider standing requests to include an arrangement by which a
licensed practitioner requests in writing that a specified number of
drug samples be delivered over a period of not more than 6 months, with
the actual delivery dates for parts of the order to be set by
subsequent communication.
9. Use of Fulfillment Houses, Shipping and Mailing Services, Other
Contractors, and Comarketing Agreements
FDA understands that some manufacturers and distributors employ
third parties to meet some of the requirements imposed on them under
PDMA. Third parties may include contractors such as fulfillment houses
(companies that receive and fill orders), mailing services, and other
contractors. In addition, some manufacturers and distributors enter
into comarketing agreements in which one manufacturer or its
representatives undertake a contractual commitment to provide specified
services relating to drug marketing for one or more other manufacturers
or distributors. FDA does not regard the use of third parties or entry
into comarketing agreements as absolving a manufacturer or distributor
from its responsibility for complying with the statute and regulations
pertaining to the distribution of its drug samples.
Accordingly, proposed Sec. 203.36 would make clear that a
manufacturer or authorized distributor of record that uses a
fulfillment house, shipping or mailing service, or other third party to
fulfill some of the requirements of PDMA, or engages in a comarketing
agreement with another manufacturer, remains responsible for creating
and maintaining all requests, receipts, forms, reports, and records
required under PDMA, PDA, and proposed part 203.
The agency will give a manufacturer or distributor that contracts
with a third party to maintain some or all of its records up to 48
hours to produce requested forms, reports, records, or other required
documents.
10. Investigation and Notification Requirements
In proposed Sec. 203.37, FDA proposes to codify the requirements
and procedures for undertaking investigations and making reports and
notifications to the agency regarding sample distribution.
a. Drug sample diversion. To ensure against drug sample diversion,
proposed Sec. 203.37(a) would impose an investigation and reporting
requirement on a manufacturer or distributor who has reason to believe
that any person has falsified drug sample requests, receipts, or
records. A full and complete investigation would have to be undertaken,
and the manufacturer or distributor would be required to report to FDA
that such an investigation is under way and that it has completed such
an investigation. The proposal would require the report to include the
reason for the investigation and the results of the investigation.
Because persons who falsify drug sample requests may be prosecuted
under Title 18 of the United States Code, and because falsifications
are often associated with drug diversion, FDA is proposing to require
manufacturers and distributors to report such offenses to the agency.
Accordingly, the proposal would require that a manufacturer or
distributor notify the agency of any falsification of drug sample
requests, receipts, or records, no later than 5 working days of
learning of the falsification. The proposal would permit an initial
notification to be made by telephone or in writing, with a complete
written report required not later than 30 days after the date of the
initial telephone or written notification.
b. Significant loss and known theft. PDMA requires a manufacturer
or distributor that distributes drug samples to notify FDA of any
significant loss of drug samples and any known theft of drug samples
(21 U.S.C. 353(d)(3)(D)). FDA believes that enforcement would be
facilitated if the manufacturer or distributor promptly notifies the
agency upon becoming aware of a significant loss or theft. Accordingly,
proposed Sec. 203.37(b) would require a manufacturer or distributor to
notify FDA within 5 working days of becoming aware of such a loss or
theft.
FDA is proposing in Sec. 203.39 that charitable organizations be
permitted to solicit and receive surplus drug samples from licensed
practitioners. As part of this program, FDA proposes to require that a
charitable institution that receives donated drug samples from a
licensed practitioner also be required to notify FDA within 5 working
days of becoming aware of a loss or theft.
The reporting of any significant loss of drug samples is critical
to the success of diversion control. Although a sample can
inadvertently become adulterated through mishandling, spoilage, or
exposure to the elements, and although samples are reported as stolen
or lost from time to time, some representatives reportedly have used
false claims of damage, theft, or loss to divert drug samples into
illicit commercial channels.
FDA intends this requirement to mean that the agency is to be
advised of actual, physical losses, but not insignificant accounting
mistakes. The agency does not seek to receive reports concerning minor
mathematical errors that are caught and corrected in the normal course
of business. These are not significant losses that would trigger the
reporting requirement. FDA seeks comment on how to distinguish between
significant losses and minor accounting or inventory errors.
The agency is mindful of the difficulty of establishing a threshold
for significant loss and requests comment on this issue and examples of
situations that may and may not be appropriate reportable losses. FDA
currently believes that a small discrepancy in the total inventory of a
multimillion dollar company may not be significant and thus may not
trigger the reporting requirement, but the loss of a hundred tablets of
a particular drug by one sales representative in one quarter might be
significant. Similarly, a bookkeeping imbalance may not be a loss, as
long as it represents small inventory discrepancies that are likely to
be accounted for in the normal course of audits or other methods of
inventory control.
FDA is not proposing to establish any ``tolerance'' level for
sample losses below which no report is required. Each manufacturer or
distributor is required to establish its own threshold for determining
when inventory not accounted for is significant. This threshold should
be derived from the firm's past experience in sample distribution and
inventory and should be based on the level of accuracy of its internal
audit and security system.
Some manufacturers or distributors might be able to set a
historically validated statistical baseline for the minimal amounts of
shrinkage that might be caused by routine accounting errors, mistakes,
or losses, and a statistical baseline for the frequency of occurrences
that might routinely happen with a particular representative or
product. However, any loss of drug samples exceeding the number or
frequencies of the established baselines must be reported. In addition,
any loss possibly associated with falsification of drug sample
inventory or distribution records, or connected with diversion
activity, suspicious circumstances, or theft must be investigated and
reported.
When FDA becomes aware of a significant loss or theft of drug
samples, it may conduct its own investigation in cooperation with or
independent of the manufacturer's or distributor's investigation.
FDA is proposing that an initial notification of a significant loss
or known theft be made by telephone or in writing, with a complete
written report required not later than 30 days after the date of the
initial notification.
c. Conviction of a representative. PDMA requires a manufacturer or
distributor to notify FDA of any conviction of its representatives for
a violation of section 503(c)(1) of the act or any State law involving
the sale, purchase, or trade of a drug sample or the offer to sell,
purchase, or trade a drug sample (21 U.S.C. 353(d)(3)(E)).
FDA believes that enforcement would be facilitated if prompt notice
of such a conviction is provided to the agency. Accordingly, proposed
Sec. 203.37(c)(1) would require a manufacturer or distributor to notify
FDA within 5 working days of becoming aware of the conviction of one or
more of its representatives for such a violation.
To facilitate such reports, proposed Sec. 203.37(c) would permit an
initial notification of such a conviction to be made by telephone or in
writing, but would require a complete written report to be submitted no
later than 30 days after the date of the initial notification.
d. Selection of individual responsible for drug sample information.
PDMA requires a manufacturer or distributor who distributes drug
samples to provide FDA with the name and telephone number of the
individual responsible for responding to a request for information
respecting drug samples (21 U.S.C. 353(d)(3)(F)).
FDA believes that enforcement would be facilitated if that
information is transmitted to the agency shortly after a designation is
made. Accordingly, proposed Sec. 203.37(d) would require a manufacturer
or distributor to notify FDA in writing within 30 days of the selection
of such an individual and would also require the manufacturer or
distributor to supply the individual's business address to expedite
easy communication.
e. Whom to notify at FDA. The proposed rule would set forth the
addresses to which notifications and reports are required to be made.
Under the proposal, reports and notifications are required to be made
to the Division of Drug Quality Evaluation (HFD-330), Center for Drug
Evaluation and Research, for human prescription drugs; or the Division
of Inspections and Surveillance (HFM-650), Center for Biologics
Evaluation and Research, for human biological prescription drug
products.
11. Sample Lot or Control Numbers
A drug sample is a drug product as defined in 21 CFR 320.1(b). In
21 CFR 201.10(i)(1)(iii) and 201.18 of the general labeling regulations
and 21 CFR 211.130(b) of the current good manufacturing practice (CGMP)
regulations, the label of drug products is required to bear an
identifying lot or control number capable of yielding the complete
manufacturing history of the package. Persons subject to the CGMP
regulations are required under 21 CFR 211.196 to maintain distribution
records containing lot or control numbers.
Maintenance of records of lot numbers on drug samples will help
provide the kind of accountability and oversight of prescription drug
sample distribution that PDMA is intended to provide. A comment to the
docket from the Department of Health and Human Services' Office of the
Inspector General not only endorsed this view, but suggested that
maintenance of drug sample distribution records, including lot numbers,
would be important for enforcement purposes.
Accordingly, proposed Sec. 203.38 would require the manufacturer or
authorized distributor of record of drug samples to include in the drug
sample labeling, the label of the sample unit, and distribution records
identifying lot or control numbers that will permit the tracking of the
distribution of each drug sample unit from the point of its manufacture
to the representative or, if delivered by mail or common carrier, to
the licensed practitioner. (In addition, as discussed earlier, proposed
Secs. 203.30 and 203.31 also require that drug sample request and
receipt forms include lot or control numbers.)
12. Sample Labels
FDA has been advised that some manufacturers and distributors use
ordinary stock packages as drug samples. The agency believes that this
practice makes it difficult to distinguish samples from ordinary stock
and contributes to drug diversion. FDA believes that it is essential
that drug samples be clearly and easily recognizable.
Accordingly, proposed Sec. 203.38(c) would require that each sample
unit bear a label that clearly denotes its status as a drug sample. An
appropriate designation would include (but not be limited to) the word
``sample'' and the terms ``not for sale'' and ``professional courtesy
package.'' The proposed section would also provide that drug products
that are labeled or imprinted as samples are deemed to be drug samples
within the meaning of the act.
An article that meets the statutory definition of a drug sample
that fails to bear the label required in proposed Sec. 203.38(c) would
still be a sample despite the absence of the required label.
13. Disposition of Drug Samples by Licensed Practitioners
PDMA permits manufacturers and distributors to distribute drug
samples to licensed practitioners and to hospital or health care entity
pharmacies at the request of a licensed practitioner, provided certain
documents and records are created and maintained.
PDMA restricts drug sample distribution to ``licensed
practitioners'' and to hospital or health care entity pharmacies at the
request of a ``licensed practitioner.'' A number of comments asked FDA
to define the term ``licensed practitioner.'' For purposes of proposed
part 203, FDA would, in proposed Sec. 203.3(o), define the term
``licensed practitioner'' to mean any person licensed by State law to
prescribe drugs.
Physicians and surgeons, including osteopathic physicians and
surgeons, are licensed to prescribe drugs in every State, as are
dentists and dental surgeons. In most States, podiatrists and
optometrists are licensed to prescribe certain drugs. In some States,
pharmacists, physicians' assistants, paramedics, emergency medical
technicians, certified nurse practitioners, certified nurse midwives,
or other medical professionals or paraprofessionals may be licensed to
prescribe drugs, sometimes on their own authority and sometimes on the
authority of supervising physicians.
Some States limit the authority to prescribe prescription drugs to
specific protocols or formularies for certain professionals or
paraprofessionals. For those professionals and paraprofessionals, FDA
follows the requirements of those States and considers the authority to
request and receive drug samples to be similarly limited.
Section 503(d)(1) of the act provides that no person may distribute
any drug sample unless the requirements set forth in paragraphs (d)(2)
and (d)(3) of that section are followed. Paragraphs (d)(2) and (d)(3)
set forth detailed requirements for manufacturers and authorized
distributors of record to follow when they distribute drug samples by
mail or common carrier and by representatives.
In the section-by-section analysis that the Senate and House of
Representatives ordered to be published in the Congressional Record
when PDA was introduced and passed, Congress stated that it did not
intend this prohibition to restrict the provision of a drug sample to a
patient by a licensed practitioner or by another person at the
direction of a licensed practitioner in certain circumstances.
(Congressional Record, August 10, 1992, p. S 12061-2; August 12, 1992,
p. H 8107-8.) Consequently, in PDA, Congress amended section 503(d)(1)
of the act to clarify the prohibition by stating that providing or
dispensing a drug sample in certain circumstances is not considered
distribution within the meaning of the statute. The clarification
specifically excludes from the term ``distribute'' the provision of a
drug sample to a patient by: (1) A practitioner licensed to prescribe
such drug, (2) a health care professional acting at the direction and
under the supervision of such a practitioner, and (3) the pharmacy of a
hospital or of another health care entity that received the drug sample
in accordance with the act and regulations, and that is acting at the
direction of the health care practitioner who requested the drug
sample.
A licensed practitioner who provides a drug sample other than as
set forth in section 503(d)(1) of the act is engaging in an act of
distribution, and drug sample distributions may be undertaken only as
permitted by PDMA.
FDA advises that PDMA and this proposed rule would permit a
licensed practitioner to: (1) Dispense the drug sample as set forth in
section 503(d)(1) of the act; (2) donate the drug sample to a
charitable institution as provided for in proposed Sec. 203.39; (3)
return the drug sample to the manufacturer or distributor; or (4)
destroy the drug sample.
FDA advises that any person, including a licensed practitioner, is
prohibited from carrying out certain distributions of drug samples,
including: (1) Selling, purchasing, or trading (or offering to sell,
purchase, or trade) any drug sample; (2) requesting a manufacturer or
distributor to deliver any drug sample to a retail pharmacy; (3)
delivering any drug sample to a retail pharmacy to be dispensed by the
pharmacist to a patient of the licensed practitioner or other persons;
(4) giving any drug sample to a retail pharmacy; or (5) donating any
drug sample to any charitable institution, except as provided in
proposed Sec. 203.39.
PDA singles out dispensing of drug samples by health care
professionals who act at the direction and under the supervision of
licensed practitioners, and hospital or health care entity pharmacies
that receive drug samples in accordance with the act and regulations
and that act at the direction of the health care practitioners who
request samples. Thus, Congress clearly intended to distinguish these
persons from retail pharmacists. The pharmacist in a retail pharmacy is
an autonomous professional who is licensed by the State and supervised
by the State Board of Pharmacy and independently dispenses drugs to
patients in response to a prescription written by a separate licensed
practitioner.
A manufacturer or distributor is prohibited from delivering a drug
sample to any retail pharmacy, and a retail pharmacy is barred from
receiving any drug sample from any person.
FDA has been advised that some licensed practitioners have
requested that drug samples be delivered to retail pharmacies in rural,
isolated, or medically underserved areas for dispensing to the
practitioner's patients. FDA views this practice as being inconsistent
with the accountability and oversight requirements imposed on sample
distribution by PDMA. The agency believes it makes enforcement of the
sample distribution sections difficult, and is a potential source of
drug diversion. Accordingly, FDA advises that a practitioner should not
request delivery of a drug sample to a retail pharmacy and that a
retail pharmacy should not accept a drug sample from a licensed
practitioner or from a manufacturer or distributor to be dispensed by
the pharmacist to a practitioner's patients or to other persons.
To cut off a potential source of drug diversion and promote
enforcement of PDMA, FDA advises licensed practitioners that they
should return adulterated or misbranded drug samples to the
manufacturer or distributor, or destroy them. Examples of drug samples
that may be adulterated or misbranded include, but are not limited to:
(1) Samples that have gone beyond the labeled expiration date; (2)
samples that are obviously discolored, soiled, spoiled, or otherwise
deteriorated; (3) samples with mutilated or damaged packaging; and (4)
samples with labeling that is torn, adjusted, or modified.
14. Donation of Drug Samples by Licensed Practitioners to Charitable
Institutions
FDA is aware of the practice whereby some licensed practitioners
give significant quantities of drug samples to charitable institutions,
such as free clinics, charity nursing homes, and charitable health care
entities. Donated drug samples are then dispensed by staff of the
charitable institutions to patients or given to domestic or overseas
missions or other charitable institutions.
Some charitable institutions actively solicit and collect donations
of drug samples from licensed practitioners, and it is not uncommon for
charitable institutions to rely on donated drug samples as a
significant source of prescription drugs for patient care. In response
to concerns about this practice, FDA established procedures for drug
sample donations in Compliance Policy Guide (CPG) 7132.08, ``Collection
and Charitable Distribution of Drugs,'' issued on October 1, 1980.
FDA continues to be concerned about drug sample donations. The
agency believes that ongoing donations of drug samples by licensed
practitioners to charitable institutions could be considered as being
inconsistent with the objectives of accountability and oversight of
sample distribution that PDMA is designed to provide. The agency is
concerned that this practice could make enforcement of the sample
distribution sections difficult and provide an avenue for drug
diversion.
One of the principal purposes of PDMA was to prevent drug
diversion. The easiest way to ensure that prescription drug samples
will not be diverted by charitable institutions would be to prohibit
such institutions from possessing them. However, Congress did not
choose to do so. Indeed, PDMA explicitly allows prescription drug
samples to be delivered by a manufacturer or distributor to the
pharmacy of a hospital or health care entity at the written request of
a licensed practitioner. Such a hospital or health care entity may be
operated for profit or as a charitable institution. PDMA is silent,
however, as to whether or not there are other legitimate means by which
a charitable institution can acquire prescription drug samples.
The operations of not-for-profit hospitals, health care entities,
and charitable institutions were closely scrutinized by Congress before
the passage of PDMA. Congress identified sales of drugs acquired at
below-wholesale prices by hospitals, health care entities, and
charitable institutions as a source of unfair competition for
prescription drug wholesalers who are required to pay the average
wholesale price, and suggested that such sales could be a source of
drug diversion. (See sec. 2(7), PDMA.)
Congress also identified the sale of prescription drug samples as a
source of diversion (see sec. 2(6), PDMA), but did not suggest that
charitable institutions were peculiarly likely to engage in this abuse.
Instead, Congress sought to balance the need for restrictions that
would prevent unfair competition and put an end to diversion of
prescription drug samples with the goals of providing prescription
drugs to all who need them and permitting the distribution, with
appropriate restrictions, of prescription drug samples to patients.
Congress did not alter this balance when in PDA, it revised the
PDMA sample distribution restrictions.
FDA has preliminarily concluded that development of a system that
would permit licensed practitioners to donate excess quantities of
prescription drug samples to charitable institutions for dispensing to
patients or for further distribution to domestic or overseas charitable
institutions for dispensing to patients would be consistent with PDMA,
PDA, and the goal of providing adequate medical care to patients in
need.
A system that would permit such donations with adequate
restrictions would ensure wider opportunities for the provision of
medical care, including prescription drugs, to patients in need, and
would, if appropriate controls were established similar to those
governing sample distribution, be consistent with the language and
intent of the statute. Controls would serve the objectives of
accountability and oversight in the act and minimize the potential for
drug diversion.
Such a system would also prevent the waste of significant
quantities of valuable prescription drugs that have been distributed as
drug samples to licensed practitioners who have not used or dispensed
them.
FDA believes that such a system should contain audit and security
protection, similar to those required in the statute for requesting
drug samples from manufacturers or distributors and delivering them to
licensed practitioners, to provide accountability and oversight, and to
protect the public against drug diversion.
In designing such a system, the agency has kept in mind that the
day-to-day operations of licensed practitioners, including the
provision of prescription drugs to patients, are regulated primarily by
the States. In addition, there is nothing in the legislative history of
PDMA or PDA that would suggest that Congress intended FDA to become
more deeply involved in the regulation of the activities of licensed
practitioners, except to the extent necessary to ensure that drug
samples are not diverted and that they do not, as a result, become
adulterated or misbranded.
Accordingly, the agency is proposing to establish a system of drug
sample donation controls in proposed Sec. 203.39. Proposed Sec. 203.39
would set up a system that would permit a licensed practitioner to
donate a drug sample to a charitable institution for dispensing to a
patient of that institution or for distribution to another properly
enrolled charitable institution for subsequent dispensing to patients,
provided that the institution is properly enrolled and certain
requirements are met.
Under proposed Sec. 203.39, a charitable institution that wishes to
solicit or receive drug samples would be required to: (1) Become
properly enrolled by notifying the agency of its intention to solicit
and receive drug sample donations and obtaining a central file number;
and (2) maintain records of drug samples received as donations and
subsequently dispensed or distributed to other charitable institutions.
A recipient charitable institution must provide written
certification of compliance with all regulations to a licensed
practitioner or charitable institution that provides a drug sample
before receiving any drug sample donation.
Under the proposal, the charitable institution or organization
(defined as one that has been granted tax exempt status by the
Department of the Treasury under the requirements of section 501(c)(3)
of the Internal Revenue Code of 1954) would be required to enroll with
FDA. A charitable institution would be enrolled when it has notified
the appropriate FDA district office that it intends to solicit and
receive drug samples, has made application to the district office for a
central file number, and has received the number. A charitable
institution would also be required to be licensed by the State, if
required by State law, and otherwise conform to State law.
Proposed Sec. 203.39(b) would establish procedures that the
charitable institution would be required to follow for receiving,
holding, dispensing, and distributing donated drug samples. These
requirements closely parallel the statutory and proposed regulatory
requirements for request and delivery of drug samples by manufacturers
and distributors to licensed practitioners.
Under proposed Sec. 203.39(b)(1), a recipient charitable
institution would be required to provide a written identification
document to any employee or agent authorized to act on behalf of the
institution in soliciting or receiving donations of prescription drug
samples. The employee or agent identification document would be valid
for a limited term, but could be renewed.
FDA is not proposing to delineate the form and content of the
required identification document, but it should be sufficient to
readily identify the agent or employee of the charity and to establish
that he or she has the authority to solicit and receive drug sample
donations.
Such an identification document would be acceptable to the agency,
for example, if it: (1) Would be effective for a fixed term, e.g., 1
year, and would bear an expiration date; (2) would include the name,
address, and central file number of the charitable institution; (3)
would exhibit the name, signature, and photograph of the authorized
employee or agent; and (4) would display an affirmative statement that
the employee or agent identified on the document is authorized by the
institution to solicit and receive donations of prescription drug
samples on behalf of the institution.
Proposed Sec. 203.39(b)(2) would require each recipient charitable
institution to maintain a current listing of all agents or employees
authorized to solicit and receive drug samples on behalf of the
institution. The listing would also be required to include the name and
telephone number of the authorized agent or employee in charge of
prescription drug sample solicitation, receipt, and redistribution.
One problem associated with drug sample diversion has been the
practice of ``shucking'' drug samples (separating drug sample dosage
units from their sample packaging (usually blister packs, cards, or
small boxes) and sample labeling) and repackaging them (often in
plastic bags or ``baggies,'' or in other nonstandard containers with
other sample dosage units from the same or different drug sample lots
or production runs). This repackaging process may be accompanied by
physical tampering with the sample dosage units with sharp or abrasive
instruments or with solvents to remove imprints denoting their status
as samples. Because this practice adulterates and misbrands the
samples, proposed Sec. 203.39(b)(3) would require that a drug sample
could be donated by a licensed practitioner or donating charitable
institution and could be received by a charitable institution only in
its original, unopened packaging with its labeling intact.
Proposed Sec. 203.39(b)(4) would permit delivery of a donated drug
sample to a recipient charitable institution by mail or common carrier,
collection by an authorized agent or employee of the recipient
charitable institution, or personal delivery by a licensed practitioner
or an authorized agent or employee of the donating charitable
institution. It would direct that the donor place the donated drug
samples in a sealed carton for delivery to or collection by the
recipient institution.
Under proposed Sec. 203.39(b)(5), a donated drug sample could not
be dispensed to a patient or be distributed to another charitable
institution until a licensed practitioner or registered pharmacist at
the recipient charitable institution has examined it to confirm that
the drug sample delivered matches the donation record and that any
adulterated or misbranded drug sample is eliminated. The recipient
would be required to reject any drug sample that: (1) Is out of date;
(2) has labeling that has become mutilated, obscured, or detached from
the drug sample packaging; (3) shows evidence of having been stored or
shipped under conditions that might adversely affect its stability,
integrity, or effectiveness; (4) is for a drug product that has been
recalled or is no longer marketed; or (5) is otherwise possibly
contaminated, deteriorated, or adulterated.
Proposed Sec. 203.39(b)(6) would require recipient charitable
institutions to dispose of any drug sample found to be unsuitable by
destroying it or by returning it to the manufacturer and to maintain
complete records of the disposition of all drug samples destroyed or
returned.
Proposed Sec. 203.39(b)(7) would require that, if a donated drug
sample is collected by an authorized agent or employee of the recipient
charitable institution or is personally delivered by a licensed
practitioner or an authorized agent of a donating charitable
institution, the employee or agent of the recipient institution is to
prepare at the time of collection or delivery a complete and accurate
donation record for the samples. Both the donor and recipient would be
required to sign the donation record when it is created, and the donor
and recipient would each retain a copy.
If a donated drug sample is transferred by mail or common carrier,
the licensed practitioner or donating charitable institution would be
required to prepare a donation record that would be signed by the
licensed practitioner or authorized agent of the donating charitable
institution (Sec. 203.39(b)(8) and (b)(9)). The donation record would
be shipped with the drug sample. An authorized agent or employee of the
recipient charitable institution would be required to countersign it,
keep a copy, and return a copy to the licensed practitioner or donating
charitable institution.
Proposed Sec. 203.39(b)(9) would require the donation record to
include: (1) The name, address, and telephone number of the licensed
practitioner (or donating charitable institution), and the
practitioner's professional title and State license number or DEA
identification number; (2) the manufacturer, brand name, quantity, and
lot or control number of the sample; (3) the date of the donation; (4)
the signature of the licensed practitioner (or the signature of the
authorized agent of the donating charitable institution); and (5) the
signature of the authorized agent or employee of the recipient
charitable institution.
The proposal would require charitable institutions to maintain
complete and accurate records of donation, receipt, inspection,
inventory, dispensing, redistribution, destruction, and returns
sufficient for complete accountability and auditing of drug sample
stocks (Sec. 203.39(b)(10)).
It would also require each recipient charitable institution to
conduct an inventory of drug sample stocks, at least annually,
utilizing independent inventory personnel, and to prepare a report
reconciling the results of each inventory with the most immediate prior
inventory. Inventory discrepancies and reconciliation problems would be
required to be investigated by the charitable institution and reported
to FDA (Sec. 203.39(b)(11)).
Proposed Sec. 203.39(b)(12) would require that a recipient
charitable institution provide written certification to the licensed
practitioner or donating charitable institution that it is in
conformity with all the requirements of proposed part 203 before
receiving any drug sample donation. Such certification, which links the
licensed practitioner with the charitable institution, could be made
part of the donation record.
Proposed Sec. 203.39(b)(13) would require a recipient charitable
institution to store drug samples under conditions that will maintain
the samples' stability, integrity, and effectiveness, and ensure that
the drug samples will be free of contamination, deterioration, and
adulteration.
Proposed Sec. 203.39(c) would also specify that a charitable
institution may donate drug samples to another recipient charitable
institution for dispensing to patients, provided that the recipient
charitable institution meets the appropriate requirements.
In addition to the procedure for drug sample donations delineated
in proposed Sec. 203.39, there are alternative means available for
charities to receive donated prescription drug products from
manufacturers and distributors. These include: (1) Direct donations of
prescription drug stock by manufacturers or distributors, with records
of distribution and receipt being maintained in accordance with State
regulations; and (2) deliveries of drug samples to charity hospital and
health care entity pharmacies by manufacturers and distributors or
their representatives under the request of a licensed practitioner in
accordance with the requirements set forth in proposed Secs. 203.30 and
203.31.
15. Free Distributions That Are Not Samples
There are certain situations in which manufacturers and
distributors may deliver prescription drugs at no charge without such
free distributions being samples. Accordingly, such distributions are
not subject to the recordkeeping requirements for samples.
Nevertheless, FDA believes that States and manufacturers and
distributors should establish recordkeeping requirements and systems,
where appropriate, to prevent diversion.
a. Distribution of drugs to indigent patients. As noted above, a
drug sample is defined at proposed Sec. 203.3(i) as a unit of a
prescription drug that: (1) Is not intended to be sold; and (2) is
intended to promote the sale of the drug. Drugs that are given free of
charge to patients in some circumstances may not necessarily be
samples. For example, manufacturers of some expensive new drugs have
decided that, under certain circumstances, they will arrange for
licensed practitioners to prescribe and dispense these drugs at no
charge or at reduced cost to indigent patients. In FDA's view, if the
objective of this practice is to ensure that patients in need of
prescription drugs will have access to them, whatever their financial
circumstances, then it is not a promotional scheme, and such drugs are
not samples under section 503(c)(1) of the act or proposed
Sec. 203.3(i).
b. Starter packs. Starter packs are also not drug samples. Starter
packs are prescription drug products distributed without charge by
manufacturers or distributors to pharmacists with the intent that the
pharmacists place the prescription drugs in stock and sell them at
retail. Starter packs may be distributed by manufacturers' or wholesale
distributors' representatives (detailers), by mail or common carrier,
or by direct delivery from a manufacturer or distributor. Starter packs
of solid oral dosage forms can be offered in ordinary stock packages,
in special packaging comprised of unit-of-use or course-of-treatment
sizes, or in special packaging smaller than standard stock packages
whose sizes have no relationship to treatment regimens.
Starter packs are intended to ``prime the pump'' by making a
product available at no cost to the pharmacist so the pharmacist will
fill prescriptions with the manufacturer's product. They permit the
patient and pharmacist to become familiar with the manufacturer's
product. Starter packs are a widely used selling tool and thus are
intended to promote the sale of the drug. Representatives often will
make a sales presentation before delivering them or at the same time
they are delivered.
PDMA's definition of drug sample sets up a two-element test that
determines whether a particular item of prescription drug is a drug
sample. The two-element test requires that the drug: (1) Is not
intended to be sold; and (2) is intended to promote the sale of the
drug. Starter packs meet the second element of the drug sample test
because they are intended to promote the sale of a particular drug.
However, even though starter packs are delivered without charge to
pharmacists, they do not conform to the first element of the statutory
drug sample definition because the manufacturer or distributor intends
that they be sold by the pharmacist. Accordingly, starter packs are not
samples.
Because starter packs are not samples, they are not subject to the
sample restrictions in PDMA. Instead, they are subject to regulation as
prescription drugs under the act in like manner as stock shipments of
prescription drugs. Because starter packs are not drug samples, the
request, receipt, and recordkeeping requirements in PDMA for samples do
not apply, and pharmacists are free to sell these products at retail.
Because starter packs provide opportunities for diversion similar
to those presented by drug samples, manufacturers, and distributors
should establish and maintain accounting, audit, and security systems
for starter packs to guard against diversion.
c. Pharmacy colleges. For many years, manufacturers have given
pharmacy schools and colleges pharmaceutical products for teaching
purposes. These products are given to help the schools train pharmacy
students in drug formulation, compounding, packaging, and labeling, and
to familiarize students with dosage forms. These products are not
intended to be distributed or dispensed, nor are they intended to
promote the sale of the drug. Accordingly, the agency does not view
prescription drugs donated to colleges of pharmacy for educational
purposes as drug samples.
d. Donations of drugs to charitable institutions. There is nothing
in PDMA or in the legislative history of PDMA that would suggest that
PDMA is intended to discourage direct donations by manufacturers or
distributors of stock packages of prescription drug products to
charitable institutions. Because these donations provide patients with
the prescription drugs they need without regard to cost and are not
intended to promote the sale of the drug, the distributions are not
sample distributions within the meaning of section 503(c)(1) of the act
or proposed Sec. 203.3(i).
16. ``Bid'' and ``Commercial'' Samples
Manufacturers of drug products sometimes take delivery of bulk drug
ingredients or precursor specimens for testing and evaluation purposes.
These specimens are scrutinized for compatibility with a manufacturer's
production equipment and to determine if they are suitable for use in
formulating the drug products the manufacturer wishes to produce.
Sometimes, manufacturers take delivery of examples of unpackaged
finished dosage forms to determine if they are suitable for use with
the manufacturer's packaging materials and equipment. These specimens,
referred to as ``bid'' or ``commercial'' samples, are generally
delivered in limited quantities for evaluation purposes.
The act defines a drug sample as a unit of a drug subject to
section 503(b) of the act (i.e., a prescription drug), which is not
intended to be sold and is intended to promote the sale of the drug (21
U.S.C. 353(c)(1)). Proposed Sec. 203.3(i) restates this definition.
Because of the statutory language and the threat of diversion, persons
who distribute ``bid'' or ``commercial'' samples should follow the
requirements for sample distribution set forth in the act and this
proposed rule.
17. Retail Pharmacists and Drug Samples
Proposed Sec. 203.40 would provide that the presence in a retail
pharmacy of any drug sample shall be considered evidence that the drug
sample was obtained by the retail pharmacy in violation of section
503(c)(1) of the act.
E. Wholesale Distribution
1. Identifying Statements (``Pedigrees'')
Section 503(e)(1) of the act imposed a new requirement on
``unauthorized'' or ``secondary'' wholesale prescription drug
distributors (wholesale drug distributors who are not authorized
distributors of record) to provide to a wholesale distributor
purchaser, before the completion of a sale, a statement identifying
each sale of the drug (often referred to as a ``statement of origin''
or ``drug pedigree''). PDA expanded this requirement by specifying the
information to be included in the drug pedigree and mandating that it
be provided to retail pharmacy buyers as well as wholesale distributor
purchasers.
The pedigree requirements for unauthorized distributors under PDMA,
as later amended by PDA, have been a matter of continuing interest and
discussion. These requirements affect only unauthorized wholesale
distributors (i.e., those who do not have an ongoing business
relationship with a manufacturer to distribute that manufacturer's
drugs) and impose upon them more stringent requirements than are
imposed on authorized distributors of record.
Before passage of PDA, section 503(e)(1) of the act required that
each person engaged in the wholesale distribution of drugs subject to
section 503(b) of the act (prescription drugs) who is not an authorized
distributor of record of such drugs provide to each wholesale
distributor of such drugs a statement identifying each sale of the
drug, including the date of the sale, before the sale to such wholesale
distributor. Soon after the enactment of PDMA, the terms ``secondary''
and ``unauthorized'' distributors became common to describe persons who
are not authorized distributors of record, and the term ``drug
pedigree'' became popular to describe the required statement of origin.
In order to make it possible to distinguish between authorized and
unauthorized distributors, section 503(e)(1) of the act also required
each manufacturer to maintain at its corporate offices a current list
of its authorized distributors. This requirement was not altered by
PDA, which otherwise amplified the pedigree requirement.
When Congress adopted section 503(e)(1) of the act, it was
responding to information uncovered by the Oversight Subcommittee of
the House Committee on Energy and Commerce. The Committee found that
most counterfeit, stolen, expired, or fraudulently obtained drugs
entering commercial channels had been handled by distributors who were
not authorized to distribute the manufacturer's product, rather than by
the manufacturer's authorized distributors. Accordingly, Congress
imposed a more stringent reporting requirement on distributions by
unauthorized distributors, requiring them to inform their wholesale
customers of all previous sales of the drug product. (H. Rept. 100-76,
p. 17.)
A number of comments to the agency after enactment of PDMA
reflected concerns about application of the drug pedigree requirement.
One comment asked FDA to consider whether the drug pedigree must
include the name and address of the seller, or whether a general
statement, such as ``this shipment of drugs came from an unnamed
authorized distributor on ------------------ ----, 199--,'' or a coded
statement, such as ``this shipment of drugs came from unauthorized
distributor [code] on -------------- ----, 199--,'' would comply with
PDMA.
The agency stated its position on the form and content of the drug
pedigree requirement in PDMA in a section of the August 1, 1988,
information and guidance letter to regulated industry and other
interested parties. The August 1, 1988, letter requested that any drug
pedigree be in writing, that it bear the title ``Statement Identifying
Prior Sales of Prescription Drugs by Unauthorized Distributors Required
by the Prescription Drug Marketing Act,'' and that it include all
necessary identifying information regarding all sales in the chain of
distribution of the product, starting with the manufacturer or
authorized distributor of record. The agency believed that this was
consistent with the legislative history of PDMA, which indicated that
Congress intended that the drug pedigree be a written certification
fully identifying the source and place from which the drugs were
obtained. (H. Rept. 100-76, p. 17; S. Rept. 100-202, p. 7.)
In the August 1, 1988, letter, the agency requested that the
identifying statement include the following information: (1) The
business name and address of the source from which the drug was
purchased; (2) the date of the sale; and (3) the identity, strength,
container size, number of containers, and lot number(s) of the drug.
FDA also requested that the drug pedigree accompany all products
purchased from an unauthorized distributor, even when they are resold.
Late in 1988, the American Association of Pharmaceutical
Distributors (AAPD), an organization of wholesale prescription drug
distributors who are not authorized distributors of record for some or
all of the products they distribute, designed a form for drug pedigrees
that substituted codes for names and addresses. AAPD's system, which is
now reportedly being used by its members and certain nonmembers, is
administered by an accountant employed by AAPD for that purpose. The
agency does not know if other code systems exist that are being used in
place of the required names and addresses on drug pedigrees.
In the months following passage of PDMA, some Senators and members
of Congress wrote to support coded pedigrees or pedigrees that did not
disclose full names and addresses. However, others expressed their
support for full disclosure on drug pedigrees.
Even before passage of PDA, FDA considered that Congress had
intended the PDMA drug pedigree requirement to require that each party
in a chain of distribution be given sufficient information to make an
informed determination as to the origin of drugs being purchased. In
the agency's view, general statements of origin could not provide
sufficient information for purchasers, and coded statements that made
information unintelligible to purchasers without the intervention of a
trade association or regulatory agency to decipher the code, would not
provide purchasers with the information that Congress intended that
they receive. In FDA's opinion, the only meaningful way to identify the
``source and place'' from which drugs were obtained was to require that
the identifying statement bear the business name and address of each
previous distributor and the date of each prior sale. Furthermore, the
only meaningful way to identify fully the drugs being described was to
provide detailed particulars about the drugs being sold. FDA has stated
this position in a number of letters, speeches, and public comments
since PDMA became law.
The PDA amendments to the PDMA significantly tightened the drug
pedigree requirement and constitute Congress' latest word on the issue.
PDA amended section 503(e)(1) of the act to require that unauthorized
distributors provide, before a sale takes place, a drug pedigree to
every wholesale distributor or retail pharmacy customer. The drug
pedigree is required to identify all prior sales, purchases, or trades
of such drugs and to specify by name and address all parties to the
transactions. PDA also states that FDA may require additional
information or a specific form for the drug pedigree.
As Congress stated in the section-by-section analysis that
accompanied PDA when it was introduced and passed, the stricter
language in the PDA revision ``makes it clear'' that any wholesale
distribution of a prescription drug by an unauthorized distributor,
including any sale to another unauthorized distributor, an authorized
distributor of record, or a retail pharmacy, must be preceded by a full
and complete identifying statement. ``The identifying statement,'' the
analysis added, ``must in all cases include the dates of each
transaction involving the drug and the names and addresses of all
parties to the transaction, and must contain any such other information
as the Secretary may require.'' (Congressional Record, page S 12061,
August 10, 1992; page H 8107, August 12, 1992.)
Passage of PDA thus gave added emphasis to Congress' intent, as
stated in the legislative history of PDMA, to restore accountability to
the wholesale sector of the pharmaceutical market and to regulate the
wholesale distribution of prescription drug products. (H. Rept. 100-76,
pp. 16-17; S. Rept. 100-202, p. 7.)
Proposed Sec. 203.50(a) would restate the statutory requirement
that, before the completion of any wholesale distribution by an
unauthorized wholesaler to another wholesale distributor or retail
pharmacy, the seller is required to provide to the purchaser a
statement identifying each prior sale, purchase, or trade of such drug.
It would require that the drug pedigree include: (1) The proprietary
and established name of the drug; (2) the dosage; (3) the container
size; (4) the number of containers; (5) the drug's lot or control
number(s); (6) the business name and address of all parties to each
prior transaction involving the drug, starting with the manufacturer;
and (7) the date of each previous transaction involving the drug.
2. Additional Manufacturing Processes
A manufacturer applies at least one manufacturing process to a bulk
drug substance or precursor product to produce a finished dosage form
or a precursor product that will be further manufactured into a
finished dosage form. Each of these processes produces a changed
product. Accordingly, proposed Sec. 203.50(b) specifies that a
manufacturer who subjects a drug to any additional manufacturing
processes to produce a different drug is not required to provide to a
purchaser a statement identifying the previous sales of the component
drug or drugs.
3. Authorized Distributor Lists
Proposed Sec. 203.50(c) would require each manufacturer to maintain
at the corporate offices a current written list of all authorized
distributors of record. The term ``authorized distributor of record''
is defined in proposed Sec. 203.3(b) to mean a distributor with whom a
manufacturer has established an ongoing relationship to distribute such
manufacturer's products. Because an agreement by which a single
shipment of drugs is distributed would not constitute an ongoing
relationship (see proposed Sec. 203.3(r)) that shipment would not
establish an ``authorized distributor of record'' relationship.
The proposal would also require the manufacturer's list to specify
whether each distributor listed is authorized to distribute the
manufacturer's full product line, or only particular, specified
products. The proposal would also require the manufacturer to update
the list on a continuing basis.
In the PDMA legislative history, Congress stated that
manufacturers' lists of authorized distributors of record should be
freely available to the public. Accordingly, FDA is also proposing that
each manufacturer make its list of authorized distributors of record
available on request to the public for inspection and copying.
4. Unknown Origins or ``Salvaged'' Drugs
A number of comments inquired about persons that purchase lost or
abandoned drugs from transportation companies for sale to licensed
wholesale distributors. This procedure is sometimes referred to as drug
salvage, although it differs from the process identified as salvaging
in 21 CFR part 211. These inquiries suggested that identifying
statements for ``salvaged'' drugs should list the transportation
company from which the drugs were ``salvaged'' as the point of origin.
FDA believes that this kind of business operation cannot meet the
requirements of the CGMP regulations, nor can it operate in a manner
consistent with PDMA's requirements (e.g., that a wholesale distributor
give a wholesale distributor purchaser a statement of origin for the
product being sold).
FDA's view is that the requirement for a statement of origin is
designed to permit prospective purchasers to determine if the source of
a drug is a legitimate source, such as an authorized distributor or
secondary distributor licensed by the State as a wholesale distributor.
The agency believes that an ``origin unknown'' statement or a statement
that a particular shipment of prescription drugs originated as
``salvage'' or that they came from a lost shipment from unknown persons
at an unknown time would not be consistent with the meaning of that
provision. Thus, in FDA's view, use of an ``origin unknown'' or
``salvage'' statement would not meet the requirement for an identifying
statement under section 503(e)(1) of the act.
5. State Licensing of Wholesale Distributors
PDMA established a requirement that any person engaged in the
wholesale distribution in interstate commerce of prescription drugs in
a State be licensed by the State in accordance with guidelines issued
as a final rule by the agency (21 U.S.C. 353(e)(2)). The final rule
that set forth guidelines for State licensing of wholesale prescription
drug distributors was published in the Federal Register of September
14, 1990 (55 FR 38012), making the requirement that any person engaging
in the wholesale distribution of prescription drugs in interstate
commerce shall be licensed by the State in which it operates, become
effective September 15, 1992.
However, Congress passed PDA, which modified the State licensing
requirement, before the date on which the requirement would have gone
into effect. PDA amended section 503(e) of the act to establish a
temporary Federal registration procedure for wholesale prescription
drug distributors in those States that do not have a licensing program
that meets the Federal guidelines.
This temporary Federal wholesale distributor registration procedure
expires on September 14, 1994. After that date, all persons engaged in
the wholesale distribution of prescription drugs in interstate commerce
are required to be licensed by the State.
FDA issued a letter to industry and other interested persons on
September 3, 1992, that provides information and guidance on the
procedure to be followed by wholesale distributors required to register
under the temporary Federal wholesale distributor registration
procedure established by PDA. (See the Federal Register of December 2,
1992 (57 FR 57068).)
6. Defining ``Wholesale Distribution''
The term ``wholesale distribution'' is defined in section
503(e)(4)(B) of the act as distribution of prescription drugs to other
than the consumer or patient, but not including intracompany sales or
distributions of drugs described in section 503(c)(3)(B) of the act.
The exclusions under section 503(c)(3)(B) of the act are for the
purchase or other acquisition by a hospital or other health care entity
member of a group purchasing organization of a drug for its own use
from the organization or from other hospitals or health care entity
members of the organization; the sale, purchase, or trade of a drug or
an offer to sell, purchase, or trade a drug by a charitable
organization to a nonprofit affiliate of the organization to the extent
otherwise permitted by law; the sale, purchase, or trade of a drug or
an offer to sell, purchase, or trade a drug among hospitals or other
health care entities under common control; the sale, purchase, or trade
of a drug or an offer to sell, purchase, or trade a drug for emergency
medical reasons; and the sale, purchase, or trade of a drug, an offer
to sell, purchase, or trade a drug, or the dispensing of a drug
pursuant to a prescription executed in accordance with section 503(b)
of the act.
These exclusions are part of the proposed definition of ``wholesale
distribution'' in proposed Sec. 203.3(y).
For clarity, FDA proposes to codify additional exclusions in
proposed Sec. 203.3(y) that have already been discussed in this notice.
They are the distribution of drug samples by manufacturers' and
authorized distributors' representatives; the sale, purchase, or trade
of blood and blood components intended for transfusion; drug
reshipments, when conducted in accordance with proposed Sec. 203.23;
and drug returns, when conducted in accordance with proposed
Sec. 203.24.
In addition, as discussed below, FDA is proposing to codify an
exclusion from the definition of wholesale distribution for the sale of
minimal quantities of drugs by retail pharmacies to licensed
practitioners for office use.
For consistency, FDA is also proposing to incorporate these
additional exclusions in the definition of ``wholesale distribution''
at Sec. 205.3(f).
7. Sales to Licensed Practitioners by Retail Pharmacies
In general, a retail pharmacy that engages in the business of
selling prescription drugs to licensed practitioners is a wholesale
distributor that, since September 15, 1992, has been required to be
licensed by the State as a wholesaler or registered with FDA if the
State does not have a conforming licensing program.
Licensed practitioners often purchase small quantities of drugs
from retail pharmacies for office use. Many wholesale distributors are
reluctant to open accounts with individual practitioners for small
quantities of drugs, and some practitioners believe that there is no
cost-effective, reasonable alternative for making occasional purchases
of small quantities of drugs for office use.
The legislative history supports the view that Congress did not
intend to interfere with this small-scale practice. According to the
House Report, ``It is the express intent of the Committee that the
scope of section 6 include distribution by * * * all sellers of
prescription drugs in wholesale quantities to persons or firms other
than the consumer or patient.'' (H. Rept. 100-76, p. 17.)
FDA believes that permitting the sale of small quantities of
prescription drugs by retail pharmacies to licensed practitioners for
office use without the requirement of a State wholesale distributor's
license satisfies a legitimate need and is consistent with the intent
of the statute. Accordingly, the agency has included language in
proposed Sec. 203.3(y) that would exclude the sale of minimal
quantities of drugs by retail pharmacies to licensed practitioners for
office use from the definition of ``wholesale distribution.''
In this context, sales of prescription drugs by a retail pharmacy
to licensed practitioners for office use will be considered to be
minimal if the total annual dollar volume of prescription drugs sold to
licensed practitioners does not exceed 5 percent of the dollar volume
of that retail pharmacy's annual prescription drug sales.
If a retail pharmacy is engaged in wholesale sales of prescription
drugs in any amount after September 15, 1992, the presumption will be
that the retail pharmacy is, in fact, a wholesale distributor that must
be licensed by the State in accordance with part 205, or registered
with FDA if the State does not have a conforming licensing program,
unless it can be shown that the total annual dollar volume of its sales
to licensed practitioners does not exceed 5 percent of the dollar
volume of that pharmacy's annual prescription drug sales and the
pharmacy does not otherwise engage in wholesale distribution.
8. Sales to Wholesale Distributors by Retail Pharmacies
FDA received a number of questions asking whether PDMA prohibits a
retail pharmacy from selling prescription drugs to a wholesale
distributor. FDA advises that there is no provision in PDMA, the final
PDMA State licensing guidelines, or this proposed rule that would
prohibit a retail pharmacy from selling prescription drugs to a
wholesale distributor. However, a retail pharmacy that engages in such
sales would become a wholesale distributor that would be required to
provide the wholesale distributor purchaser with an identifying
statement for the drugs sold and would be required to have a valid
State wholesale distributor license or be registered with FDA if the
State does not have a conforming licensing program.
F. Request and Receipt Forms, Reports, and Records
Proposed Sec. 203.60 sets forth standards for request and receipt
forms, reports, and for the creation, retention, and maintenance of
records and other documents under proposed part 203. These
requirements, although procedural in nature, are essential for the
efficient administration and enforcement of PDMA and proposed part 203.
1. Recordkeeping Media
FDA is proposing that manufacturers and distributors have the
option of creating or maintaining records on nonpaper media. FDA
believes that recent technological advances compel the agency to
reexamine how the requirements for written records (including forms
bearing written signatures) can be satisfied by electronic media. FDA
believes that greater efficiency, lower costs, and more effective
enforcement can result from an effort to facilitate the development and
use of photographic, electronic, and other nonpaper devices, and media
for creation and maintenance of sample requests, receipts, records, and
other forms.
Accordingly, proposed Sec. 203.60(a) would permit request and
receipt forms, reports, records, and other documents required by PDMA,
PDA, and this proposed rule to be created on paper or on electronic
media.
Proposed Sec. 203.60(b) would permit request and receipt forms,
reports, records, and other documents required by PDMA, PDA, and this
proposal that are created on paper to be maintained on paper or by
photographic or electronic recordation or imaging, provided that
appropriate security and authentication requirements are followed.
Proposed Sec. 203.60(c) would permit request and receipt forms,
reports, records, and other documents required by PDMA, PDA, and this
proposal that are created by means of electronic data entry and
recordkeeping equipment to be stored using computer technologies,
provided that appropriate security and authentication requirements are
followed.
Under this proposal, appropriate photographic records and
electrographic records could include, but not be limited to, those
maintained on microfilm, microcard, microfiche, and xerographic copies.
Appropriate electronic records could include, but not be limited to,
those maintained in analog or digital form or by means of image
recording technology on computer disks, cards, tapes, memory chips, or
optical media.
2. Security and Authentication Requirements for Request and Receipt
Forms, Reports, Records, and Other Documents
The proposed rule would require that any request or receipt form,
report, record, or other document, and any signature appearing thereon,
is to be created, maintained, or transmitted in a form that provides
reasonable assurance of being: (1) Resistant to tampering, revision,
modification, or alteration; (2) preserved in accessible and
retrievable fashion; and (3) visible or readily made visible to permit
copying or other means of duplication for purposes of review, analysis,
verification, authentication, and reproduction by the person who
executed the form or created the record, by the manufacturer or
distributor, and by authorized personnel of FDA or other regulatory and
law enforcement agencies.
3. Retention of Request and Receipt Forms, Reports, Lists, Records, and
Other Documents
The proposed rule also sets standards for the retention of request
and receipt forms, reports, lists, records, and other documents. PDMA
requires the retention of certain records for not less than 3 years.
FDA believes that, with one exception, the 3-year minimum requirement
should be extended to all records created and maintained under the
statute and the proposed rule to ensure efficient enforcement and
compliance operations. Accordingly, the proposal would state that any
person required to create or maintain forms, reports, lists, or other
records under the statute or regulations would have to retain them for
at least 3 years after the date of their creation.
The agency believes that a more stringent standard is necessary for
the retention of records relating to drug sample distribution because
some drug samples are relatively stable and may remain unexpired even
though 3 or more years may have elapsed since they were packaged and
shipped. Accordingly, the proposal would require that forms, reports,
or records relating to the distribution of drug samples be retained for
at least 3 years after the date of the record's creation or the date of
expiration of a drug sample for which the record is being kept,
whichever is later.
4. Availability of Forms, Reports, Lists, and Records
Forms, reports, lists, or other records are of little value to FDA
or other regulatory and law enforcement agencies, unless they are
readily available for inspection and copying. Accordingly, the proposal
would compel any person required to create or maintain forms, reports,
lists, or other records under PDMA, PDA, or the proposed rule to make
them available upon request, in a form that permits copying or other
means of duplication, to FDA or other Federal, State, or local
regulatory and law enforcement officials for review and reproduction.
5. Signatures on Forms, Reports, or Records
By affixing a signature to a document, the person who signs it is
giving his or her personal verification of the validity of a document.
For example, by affixing a signature to a drug sample request form, the
person signing it attests to the fact that he or she is a licensed
practitioner and that he or she has requested delivery of a specific
amount and type of drug sample. Similarly, a signature on a receipt
verifies the delivery of the drug samples to the licensed practitioner
or to the pharmacy of a hospital or other health care entity.
FDA has preliminarily concluded that a valid signature need not be
made by pen or indelible pencil on a piece of paper. Instead, the
agency believes that in certain circumstances a valid signature can be
created and recorded by electronic means.
Accordingly, under proposed Sec. 203.61 a verifiable signature may
be made by use of a writing or marking instrument such as a pen,
indelible pencil, or electronic stylus on electronic pad. Because some
imprinting or copying devices can be used to forge or falsely imprint a
signature, and because false signatures and forgeries could be an
integral part of a drug diversion scheme, the proposal would prohibit
imprinting or automatic reproduction of a signature by a device or
machine such as a stamp, copier, or autopen.
Proposed Sec. 203.61 would establish performance standards and
special security requirements for signatures signed on electronic
media. Proposed Sec. 203.61(b) would require that if electronic media
are used to execute and record signatures, it must be installed and
operated with: (1) A system permitting visual review of the signature;
(2) a system to detect or inhibit entry of a forged, traced,
fraudulent, or counterfeit signature, i.e., authentication software;
and (3) a mechanism that blocks alteration of documents or signatures
after the signatures are made, i.e., a locking device.
Persons interested in commenting on electronic records and
electronic signatures should be aware that an agency task force, the
FDA Electronic Identification/Signature Working Group, is currently
assessing issues relating to electronic signatures and recordkeeping.
In the Federal Register of July 21, 1992 (57 FR 32185), FDA published
an advance notice of proposed rulemaking (ANPRM) entitled ``Electronic
Identification/Signatures; Electronic Records; Request for Information
and Comments.'' The notice stated that the agency is considering
whether it should propose regulations that would, under certain
circumstances, accept electronic signatures in place of handwritten
signatures where signatures are currently required in Title 21 of the
Code of Federal Regulations and is asking for comments on any related
issues. Comments were to be identified with Docket No. 92N-0251. The
working group has reviewed the comments in the docket and the agency is
considering additional action. The agency's emerging position on
electronic signatures and records will be coordinated with the final
PDMA policies requirements and administrative procedures rule.
Suggestions on electronic signatures and other signature substitutes
and surrogates made to FDA in response to this proposed rule will also
be made available to the working group force for its review.
G. Penalties and Rewards
1. Criminal Penalties
Most violations of the act are punishable as misdemeanors, except
that a violation committed after a prior conviction, or a violation
committed with the intent to defraud or mislead, is punishable as a
felony. In addition, FDA advises that persons who knowingly make any
false, fictitious, or fraudulent statements or representations, or
knowingly make or use any false writing or document, in any matter
within the jurisdiction of a Federal department or agency; who engage
in mail fraud or wire fraud; or who otherwise obstruct agency
regulatory activities may be subject to prosecution under Title 18 of
the United States Code.
Most PDMA violations are felonies punishable by a prison term of
not more than 10 years, a fine of not more than $250,000, or both.
Felonies under PDMA include the knowing importation of a drug in
violation of section 801(d)(1) of the act; the knowing sale, purchase,
or trade of a drug or drug sample, or the knowing offer to sell,
purchase, or trade a drug or drug sample in violation of section
503(c)(1) of the act; the knowing sale, purchase, or trade of a drug
coupon; the knowing offer to sell, purchase, or trade a drug coupon, or
the knowing counterfeiting of such a coupon in violation of section
503(c)(2) of the act; or the knowing distribution of drugs in violation
of section 503(e)(2)(A) of the act. Misdemeanors include the
distribution of a drug sample in violation of section 503(d) of the act
and the failure to comply with the ``pedigree'' requirement of section
503(e)(1)(A) of the act.
2. Civil Penalties
PDMA also includes provisions for civil penalties for certain
violations of the drug sample distribution requirements.
A manufacturer or distributor who distributes drug samples by means
other than mail or common carrier, whose representative, in the course
of his or her employment, violates the PDMA prohibition against the
sale, purchase, or trade or offer to sell, purchase, or trade drug
samples, or any State law prohibiting the sale, purchase, or trade or
offer to sell, purchase, or trade drug samples, is, upon conviction of
the representative, subject to civil penalties as follows: (1) A civil
penalty of not more than $50,000 for each of the first two such
violations resulting in a conviction of any representative of the
manufacturer or distributor in any 10-year period; and (2) a civil
penalty of not more than $1,000,000 for each violation resulting in a
conviction of any representative after the second conviction in any 10-
year period.
A manufacturer or distributor who fails to report to FDA any
conviction of one of its representatives for violations of section
503(c)(1) of the act or any State law that prohibits the sale,
purchase, or trade of a drug sample (or the offer to sell, purchase, or
trade a drug sample) is subject to a civil penalty of not more than
$100,000.
In the Federal Register of May 26, 1993 (58 FR 30680), FDA
published a proposed rule on procedures for administrative hearings on
civil money penalties, including penalties under PDMA. FDA published a
correction to this proposal in the Federal Register of July 27, 1993
(58 FR 40103).
3. Rewards
Section 7 of PDMA (section 303(b)(5) of the act) provides that a
person who provides information leading to the institution of a
criminal proceeding against, and conviction of, a person for the sale,
purchase, or trade of a drug sample, or the offer to sell, purchase, or
trade a drug sample in violation of section 503(c)(1) of the act, is
entitled to one-half of the criminal fine imposed and collected for
such violation, but not more than $125,000. The proposed rule provides
in Sec. 203.70 that an application for such a reward be made to the
Director, Office of Compliance, of the appropriate Center.
H. Technical Amendment to State Licensing Guideline
FDA is proposing a technical amendment to the storage and handling
requirements of the State licensing guideline at Sec. 205.50(c) to
clarify the agency's intention that the paragraph require that
prescription drugs be stored at appropriate temperatures in accordance
with the requirements of the 22d edition of the U.S. Pharmacopoeia
(U.S.P. XXII), the current edition of that compendium.
III. Analysis of Impacts
FDA has examined the impacts of the proposed rule under Executive
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354).
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). The agency believes that
this proposed rule is consistent with the principles set out in the
Executive Order. In addition, the proposed rule is not a significant
regulatory action as defined by the Executive Order.
Most of the requirements in this proposed rule have already been
implemented by the regulated industry in response to PDMA's enactment,
FDA's guidance, and industry trade associations' recommendations.
The regulatory costs of this proposal, which are due to increased
paperwork requirements, were calculated by multiplying an estimate of
the time necessary to complete the paperwork for each section by an
hourly wage rate of $44.99. The agency estimates that nonprofit health
care organizations (hospitals and charitable organizations) will
require roughly 76,100 hours to complete the paperwork, at a cost of
just over $3.4 million (76,000 hours X $44.99) annually. Pharmaceutical
manufacturers and distributors will need about 476,000 hours to comply
with the paperwork requirements, at a cost of around $21.4 million
(476,000 hours X $44.99) annually. In total, therefore, the industry
will utilize 552,000 hours (76,000 + 476,000) and spend approximately
$24.8 million (3.4 million + 21.4 million) to complete the paperwork
requirements. Further details for these estimates are included with the
agency's paperwork reduction package, prepared pursuant to the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. Most of the requirements in this proposed rule have
already been implemented by the regulated industry, including small
entities, in response to PDMA's enactment, FDA's guidance, and industry
trade association recommendations. Consequently, the agency certifies
that the proposed rule will not have a significant economic impact on a
substantial number of small entities. Accordingly, under the Regulatory
Flexibility Act, no further analysis is required.
IV. Executive Order 12612: Federalism
Executive Order 12612 requires Federal agencies to examine
carefully regulatory actions to determine if they would have a
significant impact on federalism. Using the criteria and principles set
forth in the Order, the agency has considered the impact of this
proposed rule on the States, on their relationship with the Federal
government, and on the distribution of power and responsibilities among
the various levels of government.
FDA is publishing this proposed rule to set forth agency policies
and requirements and provide administrative procedures, information,
and guidance for those sections of PDMA that are not related to State
licensing of wholesale drug distributors. Because enforcement of these
sections of PDMA is a Federal responsibility, there should be little,
if any, impact on the States from this rule, if it is finalized.
FDA certifies that it has examined this proposed rule. Because it
has little, if any, effect on federalism issues, as stated above, and
because any effects are not significant, this proposed rule does not
require an assessment under Executive Order 12612.
V. Paperwork Reduction Act of 1980
This proposed rule contains information collections which are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1980. The title, description, and
respondent description of the information collection are shown below
with an estimate of the annual reporting and recordkeeping burden.
Included in the estimate is the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing the collection of information.
Title: Prescription Drug Marketing Act of 1987; Policies,
Requirements, and Administrative Procedures.
Description: The information requirements contained in the proposed
rule would collect information from establishments engaged in the
reimportation and wholesale distribution of drugs subject to section
503(b) of the act; the sale, purchase, or trade (or offer to sell,
purchase, or trade) of prescription drugs by hospitals, health care
entities, and charitable institutions; and the distribution of
prescription drug samples.
Description of Respondents: Businesses, hospitals, health care
entities, charitable institutions, and other for-profit and not-for-
profit organizations; small businesses or organizations.
Estimated Annual Reporting and Recordkeeping Burden
------------------------------------------------------------------------
Annual Average
Section number of Annual burden per Annual
respondents frequency response burden hours
------------------------------------------------------------------------
203.11............. 12 1 30 min 6.00
203.23(b), (c)..... 44,469 2 15 min 22,234.00
203.24............. 44,469 3 20 min 44,469.00
203.30(a), (b), (c) 34,000 120 1 min 68,000.00
203.31(a), (b), (c) 34,000 480 1 min 272,000.00
203.31(d).......... 27,200 1 30 min 13,600.00
203.31(e).......... 4,700 1 1 min 78.33
203.31(f).......... 12 1 30 min 6.00
203.34............. 4,700 1 24 hrs 112,800.00
203.37(a).......... 48 1 30 min 24.00
203.37(b).......... 1,200 1 60 min 1,200.00
203.37(c).......... 2 1 30 min 6.00
203.37(d).......... 4,700 1 15 min 1,175.00
203.39(a)(2)(i).... 6,800 1 15 min 1,700.00
203.39(b)(1), (2),
(6), (7), (8),
(9), (10), (12)... 300 1 3 hrs 900.00
203.39(b)(11), (14) 6,800 1 60 min 6,800.00
203.50(a).......... 125 1 30 min 62.50
203.50(c).......... 4,700 1 90 min 7,050.00
----------------------------------------------------
Total burden
hours........... ........... ........... ........... 552,111.33
------------------------------------------------------------------------
The agency has submitted a copy of this proposed rule to OMB for
its review of these information collections. Interested persons are
requested to send comments regarding this burden estimate or any other
aspect of thiscollection of information, including suggestions for
reducing the burden, to FDA's Dockets Management Branch (address
above), and to the Office of Information and Regulatory Affairs, OMB,
rm. 3208, New Executive Office Bldg., Washington, DC 20503, Attn.: Desk
Officer for FDA.
VI. Environmental Impact
The agency has determined under 21 CFR 25.24(a)(7) and (a)(8) that
this action is of a type that does not individually or cumulatively
have a significant effect on the human environment. Therefore, neither
an environmental assessment nor an environmental impact statement is
required.
VII. Request for Comments
Interested persons may, on or before May 30, 1994, submit to the
Dockets Management Branch (address above) written comments regarding
this proposal. 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 office above between 9
a.m. and 4 p.m., Monday through Friday.
List of Subjects
21 CFR Part 203
Drugs, Labeling, Manufacturing, Prescription drugs, Reporting and
recordkeeping requirements, Warehouses.
21 CFR Part 205
Intergovernmental relations, Prescription drugs, Reporting and
recordkeeping requirements, Security measures, Warehouses.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, it is
proposed that Title 21 of the Code of Federal Regulations be amended as
follows:
1. Part 203 is added to read as follows:
PART 203--PRESCRIPTION DRUG MARKETING
Subpart A--General Provisions
Sec.
203.1 Scope.
203.2 Purpose.
203.3 Definitions.
Subpart B--Reimportation
203.10 Restrictions on reimportation.
203.11 Applications for reimportation to provide emergency medical
care.
203.12 An appeal from an adverse decision by the district office.
Subpart C--Sales Restrictions
203.20 Sales restrictions.
203.22 Exclusions.
203.23 Revocation of acceptance and reshipment.
203.24 Returns.
Subpart D--Samples
203.30 Sample distribution by mail or common carrier.
203.31 Sample distribution by means other than mail or
commoncarrier (direct delivery by a representative or detailer).
203.32 Drug sample storage and handling requirements.
203.33 Drug sample forms.
203.34 Policies and procedures; administrative systems.
203.35 Standing requests.
203.36 Fulfillment houses, shipping and mailing
services,comarketing agreements, and third party recordkeeping.
203.37 Investigation and notification requirements.
203.38 Sample lot or control numbers; labeling of sample units.
203.39 Donation of drug samples to charitable institutions.
203.40 Retail pharmacists and drug samples.
Subpart E--Wholesale Distribution
203.50 Requirements for wholesale distribution of
prescriptiondrugs.
Subpart F--Request and Receipt Forms, Reports, and Records
203.60 Request and receipt forms, reports, and records.
203.61 Signatures.
Subpart G--Rewards
203.70 Application for a reward.
Authority: Secs. 301, 303, 501, 502, 503, 510, 701, 704, 801 of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331, 333, 351,
352, 353, 360, 371, 374, 381).
Subpart A--General Provisions
Sec. 203.1 Scope.
This part sets forth procedures and requirements pertaining to the
reimportation and wholesale distribution of prescription drugs,
including both bulk drug substances and finished dosage forms, and to
the sale, purchase, or trade (or the offer to sell, purchase, or trade)
of prescription drugs, including bulk drug substances, by hospitals,
health care entities, and charitable institutions, and to the
distribution of prescription drug samples. Blood and blood components
intended for transfusion are excluded from the restrictions in and the
requirements of the Prescription Drug Marketing Act of 1987 and the
Prescription Drug Amendments of 1992.
Sec. 203.2 Purpose.
The purpose of this part is to implement the Prescription Drug
Marketing Act of 1987 and the Prescription Drug Amendments of 1992,
except for those sections relating to State licensing of wholesale
distributors (see part 205 of this chapter), to protect the public
health, and to protect the public against drug diversion by
establishing procedures, requirements, and minimum standards for the
distribution of prescription drugs and prescription drug samples.
Sec. 203.3 Definitions.
(a) The act means the Federal Food, Drug, and Cosmetic Act, as
amended (21 U.S.C. 301 et seq.).
(b) Authorized distributor of record means a distributor with whom
a manufacturer has established an ongoing relationship to distribute
such manufacturer's products.
(c) Blood means whole blood collected from a single donor and
processed either for transfusion or further manufacturing.
(d) Blood component means that part of a single-donor unit of blood
separated by physical or mechanical means.
(e) Bulk drug substance means any drug or drug component furnished
in other than finished dosage form that is intended to furnish
pharmacological activity or other direct effect in the diagnosis, cure,
mitigation, treatment, or prevention of disease, or to affect the
structure or any function of the body of humans.
(f) Charitable institution or charitable organization means a
nonprofit hospital, health care entity, organization, institution,
foundation, association, or corporation that has been granted an
exemption under section 501(c)(3) of the Internal Revenue Code of 1954,
as amended.
(g) Common control means the power to direct or cause the direction
of the management and policies of a person or an organization, whether
by ownership of stock, voting rights, by contract, or otherwise.
(h) Distribute means to sell, offer to sell, deliver, or offer to
deliver a drug to a recipient, except that the term ``distribute'' does
not include the providing of a drug sample to a patient by:
(1) A practitioner licensed to prescribe such drug;
(2) A health care professional acting at the direction and under
the supervision of such a practitioner; or
(3) The pharmacy of a hospital or of another health care entity
that is acting at the direction of such a practitioner and that
received such sample in accordance with the act and regulations.
(i) Drug sample means a unit of a prescription drug that is not
intended to be sold and is intended to promote the sale of the drug.
(j) Drug coupon means a form that may be redeemed, at no cost or at
reduced cost, for a drug that is prescribed in accordance with section
503(b) of the act.
(k) Emergency medical reasons include, but are not limited to,
transfers of a prescription drug between health care entities or from a
health care entity to a retail pharmacy to alleviate a temporary
shortage of a prescription drug arising from delays in or interruption
of regular distribution schedules; sales to nearby emergency medical
services, i.e., ambulance companies and fire fighting organizations in
the same State or same marketing or service area, or nearby licensed
practitioners, of drugs for use in the treatment of acutely ill or
injured persons; provision of minimal emergency supplies of drugs to
nearby nursing homes for use in emergencies or during hours of the day
when necessary drugs cannot be obtained; and transfers of prescription
drugs by a retail pharmacy to another retail pharmacy to alleviate a
temporary shortage; but do not include regular and systematic sales to
licensed practitioners of prescription drugs that will be used for
routine office procedures.
(l) FDA means the U.S. Food and Drug Administration.
(m) Group purchasing organization means any entity established,
maintained, and operated for the purchase of prescription drugs for
distribution exclusively to its members with such membership consisting
solely of hospitals and health care entities bound by written contract
with the entity.
(n) Health care entity means any person that provides diagnostic,
medical, surgical, or dental treatment, or chronic or rehabilitative
care, but does not include any retail pharmacy or any wholesale
distributor. A person cannot simultaneously be a ``health care entity''
and a retail pharmacy or wholesale distributor.
(o) Licensed practitioner means any person licensed by State law to
prescribe drugs.
(p) Manufacturer means any person who is a manufacturer as defined
by Sec. 201.1 of this chapter.
(q) Nonprofit affiliate means any not-for-profit organization that
is either associated with or a subsidiary of a charitable organization
as defined in section 501(c)(3) of the Internal Revenue Code of 1954.
(r) Ongoing relationship means an association that exists when a
manufacturer and a distributor enter into a written agreement under
which the distributor is authorized to sell the manufacturer's products
for a period of time or for a number of shipments, at least one sale is
made under that agreement, and the name of the authorized distributor
of record is entered on the manufacturer's list of authorized
distributors of record.
(s) PDA means the Prescription Drug Amendments of 1992.
(t) PDMA means the Prescription Drug Marketing Act of 1987.
(u) Person includes any individual, partnership, corporation, or
association.
(v) Prescription drug means any drug (including any biological
product, except for blood and blood components intended for transfusion
or biological products which are also medical devices) required by
Federal law (including Federal regulation) to be dispensed only by a
prescription, including finished dosage forms, bulk drug substances,
and active ingredients subject to section 503(b) of the act.
(w) Representative means an employee or agent of a drug
manufacturer or distributor who promotes the sale of prescription drugs
to licensed practitioners and who may solicit or receive written
requests for the delivery of drug samples. A detailer is a
representative.
(x) Sample unit means a packet, card, blister pack, bottle,
container, or other single package comprised of one or more dosage
units of a prescription drug sample, intended by the manufacturer or
distributor to be distributed by a licensed practitioner to a patient
in an unbroken or unopened condition.
(y) Wholesale distribution means distribution of prescription drugs
to persons other than a consumer or patient, but does not include:
(1) Intracompany sales;
(2) The purchase or other acquisition by a hospital or other health
care entity that is a member of a group purchasing organization of a
drug for its own use from the group purchasing organization or from
other hospitals or health care entities that are members of such
organizations;
(3) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug by a charitable organization to a nonprofit
affiliate of the organization to the extent otherwise permitted by law;
(4) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug among hospitals or other health care entities
that are under common control;
(5) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug for emergency medical reasons;
(6) The sale, purchase, or trade of a drug, an offer to sell,
purchase, or trade a drug, or the dispensing of a drug under a
prescription executed in accordance with section 503(b) of the act;
(7) The distribution of drug samples by manufacturers' and
authorized distributors' representatives;
(8) The sale, purchase, or trade of blood or blood components
intended for transfusion;
(9) The reshipment of drugs, when conducted in accordance with
Sec. 203.23;
(10) Drug returns, when conducted in accordance with Sec. 203.24;
or
(11) The sale of minimal quantities of drugs by retail pharmacies
to licensed practitioners for office use.
(z) Wholesale distributor means any person engaged in wholesale
distribution of prescription drugs, including, but not limited to,
manufacturers; repackers; own-label distributors; private-label
distributors; jobbers; brokers; warehouses, including manufacturers'
and distributors' warehouses, chain drug warehouses, and wholesale drug
warehouses; independent wholesale drug traders; and retail pharmacies
that conduct wholesale distributions.
Subpart B--Reimportation
Sec. 203.10 Restrictions on reimportation.
No prescription drug that was manufactured in a State and exported
from the United States may be reimported by anyone other than its
manufacturer, except that FDA may grant permission to a person other
than the manufacturer to reimport a prescription drug if it deems such
reimportation is required for emergency medical care.
Sec. 203.11 Applications for reimportation to provide emergencymedical
care.
(a) Applications for reimportation for emergency medical care are
required to be submitted to the director of the FDA District Office in
the district where reimportation is sought (addresses found in
Sec. 5.115 of this chapter).
(b) Applications for reimportation to provide emergency medical
care will be reviewed and approved or disapproved by each district
office.
Sec. 203.12 An appeal from an adverse decision by the district office.
An appeal from an adverse decision by the district office involving
prescription human drugs other than biological products may be made to
the Office of Compliance (HFD-300), Center for Drug Evaluation and
Research, Food and Drug Administration, 7500 Standish Pl., Rockville,
MD 20855. An appeal from an adverse decision by the district office
involving prescription human biological products may be made to the
Office of Compliance (HFM-600), Center for Biologics Evaluation and
Research, Food and Drug Administration, 1401 Rockville Pike, Rockville,
MD 20852.
Subpart C--Sales Restrictions
Sec. 203.20 Sales restrictions.
Except as provided in Secs. 203.22, 203.23, and 203.24, no person
may sell, purchase, or trade, or offer to sell, purchase, or trade, any
prescription drug that was:
(a) Purchased by a public or private hospital or other health care
entity; or
(b) Donated or supplied at a reduced price to a charitable
organization.
Sec. 203.22 Exclusions.
Section 203.20 does not apply to:
(a) The purchase or other acquisition of a drug for its own use by
a hospital or other health care entity that is a member of a group
purchasing organization from the group purchasing organization or from
other hospitals or health care entities that are members of the
organization.
(b) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug by a charitable organization to a nonprofit
affiliate of the organization to the extent otherwise permitted by law.
(c) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug among hospitals or other health care entities
that are under common control.
(d) The sale, purchase, or trade of a drug or an offer to sell,
purchase, or trade a drug for emergency medical reasons.
(e) The sale, purchase, or trade of a drug, an offer to sell,
purchase, or trade a drug, or the dispensing of a drug under a valid
prescription.
(f) The sale, purchase, or trade of a drug or the offer to sell,
purchase, or trade a drug by hospitals or health care entities owned or
operated by Federal, State, or local governmental units to other
hospitals or health care entities owned or operated by Federal, State,
or local governmental units.
(g) The sale, purchase, or trade of, or the offer to sell,
purchase, or trade, blood or blood components intended for transfusion.
Sec. 203.23 Revocation of acceptance and reshipment.
The revocation of a sale and purchase transaction by a hospital,
health care entity, or charitable institution because of a mistake in
ordering or delivery and the reshipment of the prescription drug to a
manufacturer or wholesale distributor for a credit or refund are exempt
from the prohibitions in Sec. 203.20, provided that:
(a) The hospital, health care entity, or charitable institution
ships the drug back to the manufacturer or distributor from which the
drug was received within 10 working days of receipt;
(b) The reshipment is made under proper conditions for storage,
handling, and shipping; and written documentation showing that proper
conditions were maintained is provided to the manufacturer or
distributor to whom the drug is reshipped;
(c) If reshipped to the wholesale distributor, the hospital, health
care entity, or charitable institution provides written notice to the
manufacturer of the revocation and reshipment that includes the
following information:
(1) The name and address of the hospital, health care entity, or
charitable institution;
(2) The name and address of the manufacturer and wholesale
distributor;
(3) The product name and lot number;
(4) The quantity involved in the revocation and reshipment; and
(5) The date of the revocation and reshipment.
Sec. 203.24 Returns.
The return of a prescription drug purchased by a hospital or health
care entity, or acquired at a reduced price by or donated to a
charitable institution, to the manufacturer or the wholesale
distributor that sold, donated, or supplied the prescription drug, is
exempt from the prohibitions in Sec. 203.20, provided that:
(a) The hospital, health care entity, charitable institution, or
wholesale distributor notifies the manufacturer that the prescription
drug product has been returned to the wholesale distributor;
(b) The hospital, health care entity, or charitable institution
documents the return by filling out a credit memo specifying:
(1) The name and address of the hospital, health care entity, or
charitable institution;
(2) The name and address of the manufacturer or wholesale
distributor from which it was acquired;
(3) The product name and lot or control number;
(4) The quantity returned; and
(5) The date of the return.
(c) The hospital, health care entity, or charitable institution
forwards a copy of each credit memo to the manufacturer and retains a
copy of each credit memo for its records;
(d) The value of any credit, refund, or exchange for the returned
product does not exceed the purchase price or, if a donation, the fair
market price of the returned product; and
(e) Any drugs returned to a manufacturer or wholesale distributor
are kept under proper conditions for storage, handling, and shipping,
and written documentation showing that proper conditions were
maintained is provided to the manufacturer or wholesale distributor to
which the drugs are returned.
Subpart D--Samples
Sec. 203.30 Sample distribution by mail or common carrier.
(a) Requirements for drug sample distribution by mail or common
carrier. A manufacturer or authorized distributor of record may
distribute a drug sample to a practitioner licensed to prescribe the
drug that is to be sampled, or, at the written request of a licensed
practitioner, to the pharmacy of a hospital or other health care
entity, by mail or common carrier, provided that:
(1) The licensed practitioner executes and submits a written
request to the manufacturer or authorized distributor of record, as set
forth in paragraph (b) of this section, before the delivery of the drug
sample;
(2) The recipient executes a written receipt, as set forth in
paragraph (c) of this section, when the drug sample is delivered; and
(3) The recipient returns the receipt to the manufacturer or
distributor from which the drug sample was received.
(b) Contents of the written request form for delivery of samples by
mail or common carrier. (1) A written request for a drug sample to be
delivered by mail or common carrier to a licensed practitioner is
required to contain the following:
(i) The name, address, professional title, signature of the
practitioner making the request;
(ii) The practitioner's State license number or Drug Enforcement
Administration identification number;
(iii) The proprietary or established name and strength of the drug
sample requested;
(iv) The quantity requested;
(v) The name of the manufacturer, and the authorized distributor of
record, if the drug sample is requested from an authorized distributor
of record; and
(vi) The date of the request.
(2) A written request for a drug sample to be delivered by mail or
common carrier to the pharmacy of a hospital or other health care
entity is required to contain, in addition to all of the information in
paragraph (b)(1) of this section, the name and address of the pharmacy
of the hospital or other health care entity to which the drug sample is
to be delivered.
(c) Contents of the receipt to be completed upon delivery of a drug
sample. The receipt is to be on a form designated by the manufacturer
or distributor, and is required to contain the following:
(1) If the drug sample is delivered to the licensed practitioner
who requested it, the receipt is required to contain the name, address,
professional title, and signature of the practitioner or the
practitioner's designee who acknowledges delivery of the drug sample;
the proprietary or established name and strength of the drug sample,
the quantity, and the lot or control number of the drug sample
delivered; and the date of the delivery.
(2) If the drug sample is delivered to the pharmacy of a hospital
or other health care entity at the request of a licensed practitioner,
the receipt is required to contain the name and address of the
requesting licensed practitioner, the name and address of the hospital
or health care entity pharmacy designated to receive the drug sample;
the name, address, professional title, and signature of the person
acknowledging delivery of the drug sample; the proprietary or
established name and strength of the drug sample, the quantity, and the
lot or control number of the drug sample delivered; and the date of the
delivery.
Sec. 203.31 Sample distribution by means other than mail or
commoncarrier (direct delivery by a representative or detailer).
(a) Requirements for drug sample distribution by means other than
mail or common carrier. A manufacturer or authorized distributor of
record may distribute by means other than mail or common carrier, e.g.,
by a representative or detailer, a drug sample to a practitioner
licensed to prescribe the drug to be sampled, or, at the written
request of such a licensed practitioner, to the pharmacy of a hospital
or other health care entity, provided that:
(1) The manufacturer or authorized distributor of record receives
from the licensed practitioner a written request signed by the licensed
practitioner before the delivery of the drug sample;
(2) A receipt is signed by the recipient, as set forth in paragraph
(c) of this section, when the drug sample is delivered;
(3) The receipt is returned to the manufacturer or distributor; and
(4) The requirements of paragraphs (d) through (f) of this section
are met.
(b) Contents of the written request forms for delivery of samples
by a representative. (1) A written request for delivery of a drug
sample by a representative to a licensed practitioner is required to
contain the following:
(i) The name, address, professional title, signature of the
practitioner making the request;
(ii) The practitioner's State license number or Drug Enforcement
Administration identification number;
(iii) The proprietary or established name and strength of the drug
sample requested;
(iv) The quantity requested;
(v) The name of the manufacturer and the authorized distributor of
record, if the drug sample is requested from an authorized distributor
of record; and
(vi) The date of the request.
(2) A written request for delivery of a drug sample by a
representative to the pharmacy of a hospital or other health care
entity is required to contain, in addition to all of the information in
paragraph (b) of this section, the name and address of the pharmacy of
the hospital or other health care entity to which the drug sample is to
be delivered.
(c) Contents of the receipt to be completed upon delivery of a drug
sample. The receipt is to be on a form designated by the manufacturer
or distributor, and is required to contain the following:
(1) If the drug sample is received by the licensed practitioner who
requested it, the receipt is required to contain the name, address,
professional title, and signature of the practitioner or the
practitioner's designee who acknowledges delivery of the drug sample;
the proprietary or established name and strength of the drug sample,
the quantity, and the lot or control number of the drug sample
delivered; and the date of the delivery.
(2) If the drug sample is received by the pharmacy of a hospital or
other health care entity at the request of a licensed practitioner, the
receipt is required to contain the name and address of the requesting
licensed practitioner, the name and address of the hospital or health
care entity pharmacy designated to receive the drug sample; the name,
address, professional title, and signature of the person acknowledging
delivery of the drug sample; the proprietary or established name and
strength of the drug sample, the quantity, and the lot or control
number of the drug sample delivered; and the date of the delivery.
(d) Inventories of drug samples of manufacturers' and distributors'
representatives. Each drug manufacturer or authorized distributor of
record that distributes drug samples by means of representatives shall
conduct, at least annually, a complete and accurate drug sample
inventory, utilizing generally accepted inventory practices. All drug
samples in the possession or control of each manufacturer's and
distributor's representatives are required to be inventoried, and the
results of the inventory are required to be recorded in an inventory
record and reconciliation report.
(1) The inventory record is required to identify all drug samples
by the proprietary or established name and dosage strength, and number
of sample units of each drug sample in stock.
(2) The reconciliation report is required to include:
(i) A report of the physical count of the most recently completed
prior inventory;
(ii) A record of each drug sample shipment received since the most
recently completed prior inventory, including the sender and date of
the shipment, and the proprietary or established name, dosage strength,
and number of sample units received;
(iii) A record of drug sample distributions since the most recently
completed inventory showing the name and address of each recipient of
each sample unit shipped, the date of the shipment, and the proprietary
or established name, dosage strength, lot or control number, and number
of sample units shipped; and
(iv) An explanation for any significant loss.
(3) The inventory and reconciliation reports shall be conducted and
prepared by persons other than the representatives being inventoried or
supervisors or managers in their department, division, or branch, or in
their direct line of supervision or command.
(4) A manufacturer or authorized distributor of record shall
carefully evaluate any apparent discrepancy or significant loss in its
inventory and reconciliation, and shall fully investigate any such
discrepancy or significant loss that cannot be justified.
(e) Lists of manufacturers' and distributors' representatives. Each
drug manufacturer or authorized distributor of record who distributes
drug samples by means of representatives shall maintain a list of the
names and addresses of its representatives who distribute drug samples
and of the sites where drug samples are stored.
(f) Notification if representative is convicted of violations. Drug
manufacturers or authorized distributors of record shall report to FDA
any conviction of their representatives for violations of section
503(c)(1) of the act or a State law because of the sale, purchase, or
trade of a drug sample or the offer to sell, purchase, or trade a drug
sample.
Sec. 203.32 Drug sample storage and handling requirements.
(a) Storage and handling conditions. Manufacturers, authorized
distributors of record, and their representatives shall store and
handle all drug samples under conditions that will maintain their
stability, integrity, and effectiveness, and ensure that the drug
samples are free of contamination, deterioration, and adulteration.
(b) Compliance with compendial and labeling requirements. A
manufacturer, authorized distributor of record, and their
representatives can generally comply with this section by following the
compendial and labeling requirements for storage and handling of a
particular prescription drug in handling samples of that drug.
Sec. 203.33 Drug sample forms.
A sample request or receipt form may be delivered by mail, common
carrier, or private courier or may be transmitted photographically or
electronically (i.e., by telephoto, wirephoto, radiophoto, facsimile
transmission (FAX), xerography, or electronic data transfer) or by any
other system, provided that the method for transmission meets the
security requirements set forth in Sec. 203.60(d).
Sec. 203.34 Policies and procedures; administrative systems.
Each manufacturer or authorized distributor of record that
distributes drug samples shall establish, maintain, and adhere to
written policies and procedures describing its administrative systems
for the following:
(a) Distributing drug samples by mail or common carrier, including
methodology for reconciliation of requests and receipts;
(b) Distributing drug samples by means other than mail or common
carrier including the methodology for their independent sample
distribution security and audit system;
(c) Conducting its inventory of drug samples under Sec. 203.31(d),
including an inventory schedule;
(d) Auditing and detecting falsified or incomplete drug sample
records;
(e) Identifying any significant loss of drug samples and notifying
FDA of the loss;
(f) Monitoring any loss or theft of drug samples; and
(g) Storing drug samples by representatives.
Sec. 203.35 Standing requests.
Manufacturers or authorized distributors of record shall not
distribute drug samples on the basis of open-ended or standing
requests, but shall require separate written requests for each drug
sample or group of samples. An arrangement by which a licensed
practitioner requests in writing that a specified number of drug
samples be delivered over a period of not more than 6 months, with the
actual delivery dates for parts of the order to be set by subsequent
oral communication or electronic transmission, is not considered to be
a standing request.
Sec. 203.36 Fulfillment houses, shipping and mailing
services,comarketing agreements, and third party recordkeeping.
(a) Responsibility for creating and maintaining forms, reports, and
records. Any manufacturer or authorized distributor of record that uses
a fulfillment house, shipping or mailing service, or other third party,
or engages in a comarketing agreement with another manufacturer or
distributor to distribute drug samples or to meet any of the
requirements of PDMA, PDA, or this part, remains responsible for
creating and maintaining all requests, receipts, forms, reports, and
records required under PDMA, PDA, and this part.
(b) Responsibility for producing requested forms, reports, or
records. A manufacturer or authorized distributor of record that
contracts with a third party to maintain some or all of its records
shall produce requested forms, reports, records, or other required
documents within 48 hours of a request by an authorized representative
of FDA or another Federal, State, or local regulatory or law
enforcement official.
Sec. 203.37 Investigation and notification requirements.
(a) Investigation of falsification of drug sample records. (1) A
manufacturer or authorized distributor of record that has reason to
believe that any person has falsified drug sample requests, receipts,
or records shall conduct a full and complete investigation, and shall
notify FDA, by telephone or in writing, within 5 working days of
becoming aware of a falsification and within 5 working days of the
completion of an investigation.
(2) A manufacturer or authorized distributor of record shall
provide FDA with a complete written report, including the reason for
and the results of the investigation, not later than 30 days after the
date of the initial notification.
(b) Significant loss or known theft of drug samples. (1) A
manufacturer or authorized distributor of record that distributes drug
samples or a charitable institution that receives donated drug samples
from a licensed practitioner shall notify FDA, by telephone or in
writing, within 5 working days of becoming aware of any significant
loss or known theft of drug samples and within 5 working days of the
completion of an investigation into a report of a significant loss or
known theft.
(2) A manufacturer or authorized distributor of record shall
provide FDA with a complete written report not later than 30 days after
the date of the initial notification.
(c) Conviction of a representative. (1) A manufacturer or
authorized distributor of record that distributes drug samples shall
notify FDA, by telephone or in writing, within 30 days of becoming
aware of the conviction of one or more of its representatives for a
violation of section 503(c)(1) of the act or any State law involving
the sale, purchase, or trade of a drug sample or the offer to sell,
purchase, or trade a drug sample.
(2) A manufacturer or authorized distributor of record shall
provide FDA with a complete written report not later than 30 days after
the date of the initial notification.
(d) Selection of individual responsible for drug sample
information. A manufacturer or authorized distributor of record that
distributes drug samples shall inform FDA in writing within 30 days of
selecting the individual responsible for responding to a request for
information about drug samples of that individual's name, business
address, and telephone number.
(e) Whom to notify at FDA. Notifications and reports concerning
prescription human drugs shall be made to the Division of Drug Quality
Evaluation (HFD-330), Office of Compliance, Center for Drug Evaluation
and Research, Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855. Notifications and reports concerning prescription
human biological products shall be made to the Division of Inspections
and Surveillance (HFM-650), Office of Compliance, Center for Biologics
Evaluation and Research, Food and Drug Administration, 1401 Rockville
Pike, Rockville, MD 20852.
Sec. 203.38 Sample lot or control numbers; labeling of sample units.
(a) Lot or control number required on drug sample labeling and
sample unit label. The manufacturer or authorized distributor of record
of a drug sample shall include in the labeling of the drug sample and
the label of the sample unit an identifying lot or control number that
will permit the tracking of the distribution of each drug sample unit.
(b) Lot or control number required on all drug sample distribution
records. All drug sample distribution records required under this part
shall contain the lot or control number.
(c) Labels of sample units. Each sample unit shall bear a label
that clearly denotes its status as a drug sample, e.g., ``sample,''
``not for sale,'' ``professional courtesy package.''
(1) A drug that is labeled as a drug sample is deemed to be a drug
sample within the meaning of the act.
(2) A drug product dosage unit that bears an imprint identifying
the dosage form as a drug sample is deemed to be a drug sample within
the meaning of the act.
(3) Notwithstanding the above, any article that is a drug sample as
defined in section 503(c)(1) of the act and Sec. 203.3(i) that fails to
bear the label required in this paragraph is a drug sample.
Sec. 203.39 Donation of drug samples to charitable institutions.
(a) A charitable institution may receive a drug sample donated by a
licensed practitioner for dispensing to a patient of the charitable
institution, provided that the charitable institution meets the
conditions set forth in paragraph (b) of this section; and
(1) The charitable institution is licensed by the State, if
required by State law, and is otherwise in compliance with State law;
and
(2) The charitable institution has enrolled with FDA. A charitable
institution is enrolled when it has notified the FDA district office in
which it is located (addresses found in Sec. 5.115 of this chapter)
that it intends to solicit and receive drug samples, has made
application to the district office for a central file number, and has
received such a number.
(i) A person, partnership, or corporation that seeks to enroll with
FDA as a charitable institution for the solicitation and receipt of
donated drug samples is required to provide the following information
to the district office:
(A) The name, address, and telephone number of the person,
partnership, or corporation seeking to enroll; and
(B) The name, address, and telephone number of the agent, employee,
or other individual responsible for solicitations and receipt of
donated drug samples.
(ii) Once the required information has been provided, the district
office will advise the applicant charitable institution that it has
been enrolled and issue the applicant a central file number.
(b) Each recipient charitable institution shall comply with the
following procedures for receiving, holding, dispensing, and
distributing donated drug samples:
(1) A recipient charitable institution shall provide a written
identification document to any employee or agent authorized to act on
behalf of the institution in soliciting or receiving donations of
prescription drug samples. The employee or agent identification
document shall be valid for a limited term, but may be renewable.
(2) Each recipient charitable institution shall maintain a current
listing of all agents or employees authorized to solicit and receive
drug samples on behalf of the institution. The listing shall include
the name and telephone number of the authorized agent or employee in
charge of prescription drug sample solicitation, receipt, and
redistribution.
(3) A drug sample donated by a licensed practitioner or donating
charitable institution may be received by a charitable institution only
in its original, unopened packaging with its labeling intact.
(4) Delivery of a donated drug sample to a recipient charitable
institution may be completed by mail or common carrier, collected by an
authorized agent or employee of the recipient charitable institution,
or personal delivery by a licensed practitioner or an authorized agent
or employee of the donating charitable institution. The licensed
practitioner or donating charitable institution shall place donated
drug samples in a sealed carton for delivery to or collection by the
recipient institution.
(5) A donated drug sample may not be dispensed to a patient or be
distributed to another charitable institution until it has been
examined by a licensed practitioner or registered pharmacist at the
recipient charitable institution to confirm that the donation record
accurately describes the drug sample delivered and that no drug sample
is adulterated or misbranded for any reason, including, but not limited
to, the following:
(i) The drug sample is out of date;
(ii) The labeling has become mutilated, obscured, or detached from
the drug sample packaging;
(iii) The drug sample shows evidence of having been stored or
shipped under conditions that might adversely affect its stability,
integrity, or effectiveness;
(iv) The drug sample is for a prescription drug product that has
been recalled or is no longer marketed; or
(v) The drug sample is otherwise possibly contaminated,
deteriorated, or adulterated.
(6) The recipient charitable institution shall dispose of any drug
sample found to be unsuitable by destroying it or by returning it to
the manufacturer. The charitable institution shall maintain complete
records of the disposition of all destroyed or returned drug samples.
(7) If a donated drug sample is collected by an authorized agent or
employee of the recipient charitable institution or is personally
delivered by a licensed practitioner or an authorized agent of a
donating charitable institution, the employee or agent of the recipient
institution shall prepare at the time of collection or delivery a
complete and accurate donation record containing the information set
forth in paragraph (b)(9) of this section, a copy of which shall be
retained by the recipient and by the donor.
(8) If the donated drug sample is transferred by mail or common
carrier, the donor shall prepare a complete and accurate donation
record for any drug sample so transferred.
(i) The donor shall include a copy of the donation record with the
drug sample shipment.
(ii) An authorized agent or employee of the recipient charitable
institution shall countersign the donation record, return one copy to
the donor, and retain one copy for the recipient's records.
(9) The completed donation record is required to include the
following information:
(i) The name, address, and telephone number of the licensed
practitioner (or donating charitable institution); and the
practitioner's professional title and State license number or Drug
Enforcement Administration identification number;
(ii) The manufacturer, brand name, quantity, and lot or control
number of the drug sample donated;
(iii) The date of the donation;
(iv) The signature of the licensed practitioner making the donation
(or the signature of the authorized agent of the donating charitable
institution); and
(v) The signature of the authorized agent or employee of the
recipient charitable institution.
(10) Each recipient charitable institution shall maintain complete
and accurate records of donation, receipt, inspection, inventory,
dispensing, redistribution, destruction, and returns sufficient for
complete accountability and auditing of drug sample stocks.
(11) Each recipient charitable institution shall conduct an
inventory of prescription drug sample stocks, at least annually,
utilizing independent inventory personnel, and shall prepare a report
reconciling the results of each inventory with the most immediate prior
inventory. Drug sample inventory discrepancies and reconciliation
problems shall be investigated by the charitable institution and
reported to FDA.
(12) A recipient charitable institution shall provide written
certification to the licensed practitioner or donating charitable
institution that it is in conformity with all the requirements of this
part before receiving any drug sample donation. Such certification may
be made part of the donation record.
(13) A recipient charitable institution shall store drug samples
under conditions that will maintain the sample's stability, integrity,
and effectiveness, and will ensure that the drug samples will be free
of contamination, deterioration, and adulteration.
(14) A charitable institution shall notify FDA within 5 working
days of becoming aware of a significant loss or known theft of
prescription drug samples.
(c) A charitable institution may donate drug samples to another
recipient charitable institution for dispensing to patients, provided
that the recipient charitable institution meets the requirements set
forth in paragraphs (a) and (b) of this section.
Sec. 203.40 Retail pharmacists and drug samples.
The presence in a retail pharmacy of any drug sample shall be
considered evidence that the drug sample was obtained by the retail
pharmacy in violation of section 503(c)(1) of the act.
Subpart E--Wholesale Distribution
Sec. 203.50 Requirements for wholesale distribution of prescription
drugs.
(a) Identifying statement for sales by unauthorized distributors.
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 shall provide to the purchaser a statement
identifying each prior sale, purchase, or trade of such drug. This
identifying statement shall include:
(1) The proprietary and established name of the drug;
(2) Dosage;
(3) Container size;
(4) Number of containers;
(5) The drug's lot or control number(s);
(6) The business name and address of all parties to each prior
transaction involving the drug, starting with the manufacturer; and
(7) The date of each previous transaction.
(b) Identifying statement not required when additional
manufacturing processes are completed. A manufacturer that subjects a
drug to any additional manufacturing processes to produce a different
drug is not required to provide to a purchaser a statement identifying
the previous sales of the component drug or drugs.
(c) List of authorized distributors of record. Each manufacturer
shall maintain at the corporate offices a current written list of all
authorized distributors of record.
(1) Each manufacturer's list of authorized distributors of record
shall specify whether each distributor listed thereon is authorized to
distribute the manufacturer's full product line, or only particular,
specified products.
(2) Each manufacturer shall update its list of authorized
distributors of record on a continuing basis.
(3) Each manufacturer shall make its list of authorized
distributors of record available on request to the public for
inspection or copying. A manufacturer may impose reasonable copying
charges for such requests from members of the public.
Subpart F--Request and Receipt Forms, Reports, and Records
Sec. 203.60 Request and receipt forms, reports, and records.
(a) Creation of request and receipt forms, reports, records, and
other documents. Request and receipt forms, reports, records, and other
documents required by PDMA, PDA, and this part may be created on paper
or on electronic media.
(b) Maintenance of request and receipt forms, reports, records, and
other documents created on paper. Request and receipt forms, reports,
records, and other documents created on paper may be maintained on
paper or by photographic or electronic imaging, provided that the
security and authentication requirements described in paragraph (d) of
this section are followed.
(c) Maintenance of request and receipt forms, reports, records, and
other documents created by electronic means. Request and receipt forms,
reports, records, and other documents created by means of electronic
data entry and recordkeeping equipment may be stored using computer
technologies, provided that the security and authentication
requirements described in paragraph (d) of this section are followed.
(d) Security and authentication requirements for request and
receipt forms, reports, records, and other documents. A request or
receipt form, report, record, or other document, and any signature
appearing thereon, shall be created, maintained, or transmitted in a
form that provides reasonable assurance of being:
(1) Resistant to tampering, revision, modification, fraud,
unauthorized use, or alteration;
(2) Preserved in accessible and retrievable fashion; and
(3) Visible or readily made visible to permit copying or other
means of duplication for purposes of review, analysis, verification,
authentication, and reproduction by the person who executed the form or
created the record, by the manufacturer or distributor, and by
authorized personnel of FDA and other regulatory and law enforcement
agencies.
(e) Retention of request and receipt forms, reports, lists,
records, and other documents. (1) Any person required to create or
maintain reports, lists, or other records under PDMA, PDA, or this part
shall retain them for at least 3 years after the date of their
creation.
(2) Any person required to create or maintain reports, or records
relating to the distribution of drug samples shall retain them for at
least 3 years after the date of their creation or 3 year after the date
of expiration of a drug sample for which the record is being kept,
whichever is later.
(3) Any person required to create or maintain reports, or records
relating to the distribution of drug samples shall maintain a record of
the distribution of drug samples that identifies the drugs distributed
and the recipients of the distributions and all drug samples destroyed
or returned to the manufacturer. These records shall be maintained for
3 years from the date on which they were created.
(f) Availability of request and receipt forms, reports, lists, and
records. Any person required to create or maintain request and receipt
forms, reports, lists, or other records under PDMA, PDA, or this part
shall make them available upon request, in a form that permits copying
or other means of duplication, to FDA or other Federal, State, or local
regulatory and law enforcement officials for review and reproduction.
Sec. 203.61 Signatures.
(a) Signatures on request and receipt forms, reports, and records.
A verifiable signature on a request and receipt form, report, record,
or other document shall be made by means of a writing or marking
instrument such as a pen, indelible pencil, or electronic stylus on
electronic pad. Imprinting or automatic reproduction of a signature by
a device or machine (such as a stamp, copier, or autopen) is
prohibited.
(b) Performance standards and special security requirements for
signatures on electronic media. If an electronic pad and stylus or
other electronic medium is used to execute and record signatures, it
shall be installed and operated with:
(1) A system permitting visual review of the signature;
(2) An authentication system to detect or inhibit entry of a
forged, traced, fraudulent, or counterfeit signature; and
(3) A locking mechanism that blocks alteration of documents or
signatures after the signatures are made.
(c) Signature surrogates. [Reserved]
Subpart G--Rewards
Sec. 203.70 Application for a reward.
(a) Reward for providing information leading to the institution of
a criminal proceeding against, and conviction of, a person for the
sale, purchase, or trade of a drug sample. A person who provides
information leading to the institution of a criminal proceeding
against, and conviction of, a person for the sale, purchase, or trade
of a drug sample, or the offer to sell, purchase, or trade a drug
sample, in violation of section 503(c)(1) of the act, is entitled to
one-half the criminal fine imposed and collected for such violation,
but not more than $125,000.
(b) Procedure for making application for a reward for providing
information leading to the institution of a criminal proceeding
against, and conviction of, a person for the sale, purchase, or trade
of a drug sample. A person who provides information leading to the
institution of a criminal proceeding against, and conviction of, a
person for the sale, purchase, or trade of a drug sample, or the offer
to sell, purchase, or trade a drug sample, in violation of section
503(c)(1) of the act, may apply for a reward by making written
application to: (1) Director, Office of Compliance (HFD-300), Center
for Drug Evaluation and Research, 7500 Standish Pl., Rockville, MD
20855; or (2) Director, Office of Compliance (HFM-600), Center for
Biologics Evaluation and Research, 1401 Rockville Pike, Rockville, MD
20852, as appropriate.
PART 205--GUIDELINES FOR STATE LICENSING OF WHOLESALE PRESCRIPTION
DRUG DISTRIBUTORS
2. The authority citation for 21 CFR part 205 continues to read as
follows:
Authority: Secs. 501, 502, 503, 701, 704 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 351, 352, 353, 371, 374).
3. Section 205.3 is amended by adding new paragraphs (f)(9),
(f)(10), (f)(11), and (h) to read as follows:
Sec. 205.3 Definitions.
* * * * *
(f) * * *
(9) The reshipment of drugs, when conducted in accordance with
Sec. 203.23 of this chapter;
(10) Drug returns, when conducted in accordance with Sec. 203.24 of
this chapter; or
(11) The sale of minimal quantities of drugs by retail pharmacies
to licensed practitioners for office use.
* * * * *
(h) Health care entity means any person that provides diagnostic,
medical, surgical, or dental treatment, or chronic or rehabilitative
care, but does not include any retail pharmacy or any wholesale
distributor. A person cannot simultaneously be a ``health care entity''
and a retail pharmacy or wholesale distributor.
4. Section 205.50 is amended by revising the introductory text of
paragraph (c) and paragraph (c)(1) to read as follow:
Sec. 205.50 Minimum requirements for the storage and handling of
prescription drugs and for the establishment and maintenance of
prescription drug distribution records.
* * * * *
(c) Storage. All prescription drugs shall be stored at appropriate
temperatures and under appropriate conditions in accordance with the
requirements, if any, in the labeling of such drugs, or with the
requirements in the U.S. Pharmacopeia XXII (U.S.P. XXII), which is
incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. Copies are available from the U.S. Pharmacopeial Convention,
Inc., 12601 Twinbrook Pkwy., Rockville, MD 20852, or available for
inspection at the Office of the Federal Register, 800 North Capitol
St., NW., suite 700, Washington, DC.
(1) If no storage requirements are established for a prescription
drug, the drug shall be held at ``controlled room temperature'' as
defined in U.S.P. XXII to help ensure that its identity, strength,
quality, and purity are not adversely affected.
* * * * *
Dated: March 1, 1994.
Michael R. Taylor,
Deputy Commissioner for Policy.
[FR Doc. 94-5540 Filed 3-11-94; 8:45 am]
BILLING CODE 4160-01-F