[Congressional Record Volume 151, Number 95 (Thursday, July 14, 2005)]
[Senate]
[Pages S8292-S8293]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          CONTROLLED SUBSTANCES IMPORT AND EXPORT ACT OF 2005

  Mr. HATCH. Mr. President, I rise to speak of the Controlled 
Substances Export Reform Act of 2005. 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 this proposal.
  I would also like to thank Chairman Specter for his critical work on 
this legislation. We would not be able to move this important bill 
without his efforts. Furthermore, I would like to thank the majority 
leader for moving this legislation during the last Congress. We were 
able to pass the measure last fall, and I hope that we may do so again 
in the near future.
  This Hatch-Biden bill has been my priority for a number of years. The 
need for this legislation was first brought to my attention by a number 
of Utah companies, who had experienced significant difficulties in 
exporting their pharmaceutical products.
  Under current law, there are two differing regulatory schemes 
governing export of U.S.-manufactured pharmaceutical products. One 
system, adopted by the Congress 10 years ago, governs products 
regulated under the Federal Food, Drug and Cosmetic Act. The other, 
which we are today proposing to harmonize with the food and drug law, 
governs pharmaceuticals with abuse potential regulated under the 
Controlled Substances Act. In sum, our proposed legislation amends the 
Controlled Substances Act to allow greater opportunities for U.S. 
manufacturers to send their products abroad, still retaining full Drug 
Enforcement Administration authority over those exports.
  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, even though 
this same system is allowed under the Federal Food, Drug and Cosmetic 
Act for products which are not controlled substances. The current 
system for export of controlled substances should be contrasted 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 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.
  S. 1395, 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

[[Page S8293]]

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. exports of 
controlled substances have remained essentially unchanged for more than 
30 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.

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