[Congressional Record Volume 147, Number 92 (Thursday, June 28, 2001)]
[Senate]
[Pages S7104-S7105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CRAPO:
  S. 1132. A bill to amend the Federal Food, Drug, and Cosmetic Act 
relating to the distribution chain of prescription drugs; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. CRAPO. Mr. President, I rise today to introduce a bill designed 
to

[[Page S7105]]

prevent a serious disruption in the distribution of prescription drugs 
across America. Unless changed by this legislation, or modified by the 
agency itself, a regulation issued by the Food and Drug Administration 
will drive out of business thousands of small and medium sized drug 
wholesalers. Tens of thousands of small nursing homes, clinics, 
doctor's offices, drug stores, and veterinary practices, especially in 
rural areas, would be forced to find new suppliers of prescription 
drugs, who would almost certainly charge higher prices. Consumers, 
especially the sickest and the least able to pay, would be even further 
hard-pressed to afford the prescription drugs they need to maintain 
their health.
  There is no real health or safety reason behind the FDA's action, 
which is simply a lack of understanding of how the wholesale 
distribution of drugs actually works. The agency's regulation would 
complete the implementation of the Prescription Drug Marketing Act, 
which was enacted in April 1988. That statute, which was designed to 
stop the misuse of drug samples, prevent various types of resale fraud, 
stop the importation of counterfeit drugs, and establish minimum 
national standards for the storage and handling of drugs by 
wholesalers, has worked well.
  However, the FDA's regulation, which will go into effect on April 1, 
2001, created two problems for wholesalers, neither of which were 
present when the agency issued its initial policy guidance on the 
statute in 1988. The first problem relates to the sales history of drug 
products which wholesalers must provide their customers. A wholesaler 
who does not purchase directly from a manufacturer must provide their 
customer with a detailed history of all prior sales of that product 
back to the wholesaler who did purchase the drugs from the 
manufacturer. This provision was designed to prevent the introduction 
of counterfeits or other drugs from questionable or unknown sources 
into the marketplace. The FDA's initial guidance was that resellers who 
did not purchase drugs directly from a manufacturer had to trace the 
product back to the wholesaler who did purchase directly from the 
manufacturer. This wholesaler is known as an authorized distributor.
  Not withstanding the fact that this system has produced a drug 
distribution system of exceptional quality, the FDA has changed its 
mind as to what the statute required and proposed that a reseller now 
be required to trace the product history all the way back to the 
manufacturer. At the same time, however, the agency also concluded that 
the statute does not require either the manufacturer or the authorized 
distributor to provide this sales history to the secondary reseller. 
But without this very detailed sales history, it will be illegal for 
the secondary wholesaler to resell products. Since it is economically 
and logistically impractical for manufacturers or authorized 
distributors to keep track of the huge volume of product in the extreme 
detail required by the FDA rule, thousands of secondary wholesalers 
will be forced to cease business.
  Fortunately, there is a simple solution. In 1990, the FDA finalized a 
regulation implementing another part of the PDMA, which requires 
wholesalers to keep very detailed records of all purchases, sales, or 
other dispositions of the drugs they obtain. These records, which are 
very similar to the detailed sales history in the FDA's latest 
regulation, are also subject to audit by the agency, by state 
regulators, and must be made available to law enforcement agencies if 
needed. Thus, there is really no need for a secondary wholesaler to try 
and assemble the detailed and virtually unobtainable sales history now 
demanded by the FDA and to pass it on to their customers. Instead, the 
bill I am introducing today requires only that secondary wholesalers 
provide a written statement to their customers that the drug products 
were first purchased from a manufacturer or authorized distributor. 
Substituting the written statement would prevent a serious disruption 
in the wholesale drug sector while preserving the original intent of 
the PDMA, which was to guard the network of licensed and inspected 
wholesalers from counterfeits or drugs from questionable sources. It 
would be a simple matter for a secondary wholesaler to determine that a 
shipment of drugs was first purchased by an authorized wholesaler, and 
the written statement would be subject to criminal penalties if 
falsified under existing law. Substituting the written statement for 
the paper trail requirement would also reduce selling costs, which 
could be passed on to the consumer.
  This bill is a companion to H.R. 68, introduced on January 3, 2001, 
by Representatives Jo Ann Emerson and Marion Berry. That bill now has 
45 co-sponsors who represent an especially diverse geographical and 
ideological cross section of the House and is supported by nine major 
trade and professional organizations representing most companies that 
wholesale or retail prescription drugs in the U.S. I invite my 
colleagues in the Senate to add their names to this commonsense 
measure.
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