[Congressional Record Volume 150, Number 135 (Saturday, November 20, 2004)]
[Senate]
[Pages S11840-S11842]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONTROLLED SUBSTANCES EXPORT REFORM ACT OF 2004
Mr. FRIST. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of S. 3028, which was introduced
earlier today.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (S. 3028) to amend the Controlled Substances Import
and Export Act to provide authority for the Attorney General
to authorize the export of controlled substances from the
United States to another country for subsequent export from
that country to a second country, if certain conditions and
safeguards are satisfied.
There being no objection, the Senate proceeded to consider the bill.
Mr. HATCH. Mr. President, I rise to introduce with my colleague,
Senator Biden, the Controlled Substances Export Reform Act of 2004.
This bill would make a minor, but long overdue, change to the
Controlled Substances Act to reflect the reality of commerce in the
21st Century and to protect high-paying American jobs, while
maintaining strong safeguards on exports.
Before I discuss this bill, I want to thank Senator Biden for working
with me on this important legislation. Senator Biden has long been
recognized as a national leader on drug-related measures, and we have a
history of working together on a bipartisan basis to enact sensible
reforms in this area, as evidenced by the recent enactment of our
steroid precursor bill. I respect his thoughtful collaboration, and I
thank him for his work on the proposal we are introducing today.
In sum, this proposed legislation will amend the Controlled
Substances Act of 1970 providing greater parity for U.S. manufacturers,
who wish to export their products while retaining full DEA authority
over U.S. exports.
Current law places severe restrictions on exports of certain drug
products from the United States. The Controlled Substances Export
Reform Act proposes to amend that law to correct one small, but onerous
provision that is unnecessarily threatening American jobs. This change
is entirely consistent with the long-established regulatory scheme
pursuant to the Federal Food, Drug and Cosmetic Act.
At present U.S. pharmaceutical manufacturers are permitted to export
most controlled substances only to the immediate country where the
products will be consumed. Shipments to centralized sites for further
distribution across national boundaries are prohibited. This contrasts
with the freedom of pharmaceutical manufacturers throughout the rest of
the world to readily move approved medical products among and between
international drug control treaty countries without limitation or
restriction.
The unique prohibitions imposed on domestic manufacturers
disadvantage U.S. businesses by requiring smaller, more frequent and
costly shipments to each country of use without any demonstrable
benefit to public health or safety. By imposing significant logistical
challenges and financial burdens on U.S. companies, the law creates a
strong incentive for domestic pharmaceutical manufacturers to move
production operations overseas, threatening high-wage American jobs.
The Controlled Substances Act of 1970 permits U.S. manufacturers of
Schedule I and II substances and
[[Page S11841]]
Schedule III and IV narcotics to export their products from U.S.
manufacturing sites only to the receiving country where the drug will
be used. The law prohibits export of these products if the drugs are to
be distributed outside the country to which they are initially sent.
The effect of this restriction is to prevent American businesses from
using cost-effective, centralized foreign distribution facilities. In
addition, under the current regime, unexpected cross-border demands or
surges in patient needs cannot be met. Likewise, complex and time-
sensitive export licensing procedures prevent the shipment of
pharmaceuticals on a real time basis.
European drug manufacturers face no such constraints. They are able
to freely move their exported products from one nation to another while
complying with host country laws. This is entirely consistent with the
scheme of regulation imposed by international drug control treaties.
Only the United States imposes the additional limitation of prohibiting
the further transfer of controlled substances.
Thus, while a French or British company can ship its products to a
central warehouse in Germany for subsequent distribution across the
European Union, an American company must incur the added costs of
shipping its products separately to each individual country.
The Controlled Substances Export Reform Act would correct this
imbalance and permit the highly regulated transshipment of exported
pharmaceuticals placing American businesses on an equal footing with
the rest of the world. Importantly, however, DEA's authority to control
U.S. exports would not be diminished.
The legislation authorizes the Attorney General, or his designee, the
DEA, to permit the re-export of Schedule I and II substances and
Schedule III and IV narcotics to countries that are parties to the
Single Convention on Narcotic Drugs and the Convention on Psychotropic
Substances under tightly controlled circumstances: First, each country
is required to have an established system of controls deemed adequate
by the DEA. Next, only permit or license holders in those countries may
receive regulated products. Third, re-exports are limited to one single
cross-border transfer. Then the DEA must be satisfied by substantial
evidence that the exported substance will be used to meet an actual
medical, scientific or other legitimate need, and that the second
country of receipt will hold or issue appropriate import licenses or
permits. Fifth, in addition, the exporter must notify the DEA in
writing within 30 days of a re-export. And finally, an export permit
must have been issued by the DEA.
These safeguards are rigorous but fair, and represent a much-needed
modernization of the law. The current restrictions on U.S.
pharmaceutical exports have remained essentially unchanged for more
than thirty years. In that time, the global economy has changed
dramatically. For those among us who express concerns about the
outsourcing of American jobs and the competitiveness of U.S. companies,
this modest change represents an opportunity to address such problems
head-on.
The Controlled Substance Act's limitation on U.S. pharmaceutical
exports imposes unique, unnecessary, and significant logistical and
financial burdens on American businesses. The effect of this outdated
policy is to create a strong incentive for domestic pharmaceutical
companies to move production overseas, threatening American jobs and
eliminating DEA jurisdiction over the manufacture and shipment of their
products. The Controlled Substances Export Reform Act removes this
unwarranted barrier to U.S. manufacturers' use of cost-effective
distribution techniques while retaining full DEA control of U.S.
exports and re-exports. Accordingly, I urge my colleagues to join
Senator Biden and myself in support of this bill.
section 1003
I appreciate the distinguished Senator from Delaware's work on this
legislation and am pleased to join with him in correcting this small,
but important provision of law.
Section 1003 of the Controlled Substances Import and Export Act
currently permits U.S. pharmaceutical manufacturers to export schedule
I and II drugs and schedule III and IV narcotics only to the exact
country where the products will be used. While American companies are
prohibited from using centralized foreign distribution facilities, our
international competitors face no similar restrictions and can freely
ship medicines for cross-border distribution between all international
drug control treaty countries.
Mr. BIDEN. Will the Senator yield for a question?
Mr. HATCH. Yes.
Mr. BIDEN. Isn't it true that the disadvantage to U.S. businesses of
requiring smaller, more frequent shipments to each country of use is
substantial? When a foreign entity seeks to import a schedule I or II
drug, or a schedule III or IV narcotic from the United States, they
must first secure an import permit that is shared with the U.S.
manufacturer and DEA. Our companies then have 60 days in which to
obtain independent safety and quality testing on each separate product
batch to be shipped. Upon completion of that testing, the manufacturer
submits a highly detailed export permit application for DEA's approval.
If DEA fails to issue the permit within 60 days, the entire process
must be restarted. Because independent testing is expensive and the
export process is highly paper intensive, it is not unusual for
companies to struggle against the 60-day deadline only to have to begin
again. Unfortunately, while we engage in this burdensome process,
patients suffer without their drugs and foreign physicians seek out
substitutes to unreliable U.S. supplies.
This process was put in place long before the adoption of our
international drug control treaties and the anti-diversion protections
they provide. It is now outdated and unnecessary.
Mr. HATCH. Yes, the Senator is correct. In addition to the burden
imposed on U.S. manufacturing exporters, the advent of the European
Union has created a situation that places our foreign distributors in
violation of European law. Member countries of the EU are considered
borderless in terms of trade. Products introduced into the European
Union are required to be available for transport and shipment among and
between all member countries under their law. However, because we don't
recognize the European Union as a single entity and cross-border
transfers are prohibited, our distributors are placed in the position
of violating European law in being forced to deny inter-country
distribution of U.S. drugs.
Mr. BIDEN. Will the Senator yield for another question?
Mr. HATCH. Yes.
Mr. BIDEN. While the Controlled Substances Act restrictions made
sense when they were adopted over 30 years ago, would you agree that
changes in the way international pharmaceutical markets work, and in
the way controlled substances are tracked, and have since rendered the
requirements unnecessary? Our legislation was developed in cooperation
with the Drug Enforcement Administration to ensure that all necessary
anti-diversion controls remain.
Under our bill, each country is required to have an established
system of controls deemed adequate by the DEA. Only DEA permit or
license holders in those countries may receive regulated products. Re-
exports are limited to one single cross-border transfer. The DEA must
be satisfied by substantial evidence that the exported substance will
be used to meet an actual medical, scientific or other legitimate need
and that the second country of receipt will hold or issue appropriate
import licenses or permits. The exporter must notify the DEA in writing
within 30 days of a re-export, and an export permit must have been
issued by the DEA.
The legislation specifically retains the Drug Enforcement
Administration's authority to deny a request to export or re-export a
controlled substance. A company seeking to export a drug for subsequent
transfer must provide the DEA with exhaustive information on both the
country of initial export and the countries to which the controlled
substances would ultimately be destined. In addition, DEA must be
provided follow-up notification of any cross border shipment within 30
days of that transfer. The U.S. Government will know where all drugs
are being shipped and for what purpose. Without that information, U.S.
pharmaceuticals will never leave our soil.
[[Page S11842]]
Mr. HATCH. That it is correct. The purpose and intent of this
legislation is to place U.S. pharmaceutical companies on equal footing
with their international competitors. Moreover, this change is entirely
consistent with the long-established regulatory scheme pursuant to the
Federal Food, Drug and Cosmetic Act. Eliminating the need for multiple,
small shipments and the associated wasteful, small batch testing, will
save U.S. companies nearly 80 percent over current export distribution
costs, savings that will result in more American jobs and stronger
international markets for U.S. products.
As the Senator noted, the bill has been crafted with the assistance
of the Drug Enforcement Administration to ensure all necessary controls
will remain in place while creating a level playing field for American
business. It is simply a commonsense update to an outdated law, and I
urge its passage.
Mr. FRIST. Mr. President, I ask unanimous consent that the bill be
read a third time and passed, the motion to reconsider be laid upon the
table, and that any statements regarding this matter be printed in the
Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (S. 3028) was read the third time and passed, as follows:
S. 3028
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. REEXPORTATION OF CONTROLLED SUBSTANCES.
(a) Short Title.--This Act may be cited as the ``Controlled
Substances Export Reform Act of 2004''.
(b) In General.--Section 1003 of the Controlled Substances
Import and Export Act (21 U.S.C. 953) is amended by adding at
the end the following:
``(f) Notwithstanding subsections (a)(4) and (c)(3), the
Attorney General may authorize any controlled substance that
is in schedule I or II or is a narcotic drug in schedule III
or IV to be exported from the United States to a country for
subsequent export from that country to another country, if
each of the following conditions is met:
``(1) Both the country to which the controlled substance is
exported from the United States (referred to in this
subsection as the `first country') and the country to which
the controlled substance is exported from the first country
(referred to in this subsection as the `second country') are
parties to the Single Convention on Narcotic Drugs, 1961, and
the Convention on Psychotropic Substances, 1971.
``(2) The first country and the second country have each
instituted and maintain, in conformity with such Conventions,
a system of controls of imports of controlled substances
which the Attorney General deems adequate.
``(3) With respect to the first country, the controlled
substance is consigned to a holder of such permits or
licenses as may be required under the laws of such country,
and a permit or license to import the controlled substance
has been issued by the country.
``(4) With respect to the second country, substantial
evidence is furnished to the Attorney General by the person
who will export the controlled substance from the United
States that--
``(A) the controlled substance is to be consigned to a
holder of such permits or licenses as may be required under
the laws of such country, and a permit or license to import
the controlled substance is to be issued by the country; and
``(B) the controlled substance is to be applied exclusively
to medical, scientific, or other legitimate uses within the
country.
``(5) The controlled substance will not be exported from
the second country.
``(6) Within 30 days after the controlled substance is
exported from the first country to the second country, the
person who exported the controlled substance from the United
States delivers to the Attorney General documentation
certifying that such export from the first country has
occurred.
``(7) A permit to export the controlled substance from the
United States has been issued by the Attorney General.''.
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