[Federal Register Volume 61, Number 153 (Wednesday, August 7, 1996)]
[Rules and Regulations]
[Pages 40981-40993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19846]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Parts 1309, 1310 and 1313

[DEA-138F]
RIN 1117-AA32


Removal of Exemption for Certain Pseudoephedrine Products 
Marketed Under the Federal Food, Drug, and Cosmetic Act (FD&C Act)

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Final rule.

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SUMMARY: This rule is issued by the Deputy Administrator of the Drug 
Enforcement Administration (DEA) to remove the exemption for certain 
products containing pseudoephedrine (which are lawfully marketed under 
the Federal Food, Drug, and Cosmetic Act) from the regulatory chemical 
control provisions of the Controlled Substances Act (CSA) and the 
Controlled Substances Import and Export Act. This rule finalizes a 
Notice of Proposed Rulemaking (NPRM) published in the Federal Register 
on October 31, 1995 (60 FR 55348).
    Due to the large scale utilization of over-the-counter (OTC) 
pseudoephedrine products for the clandestine manufacture of controlled 
substances, the DEA has determined that certain products should be 
subject to recordkeeping, reporting, registration and notification 
requirements of the CSA to prevent their diversion. Such products 
include OTC tablets, capsules and powder packets containing 
pseudoephedrine alone or in combination with antihistamines, 
guaifenesin or dextromethorphan. This action also reduces the threshold 
for pseudoephedrine to 48.0 grams pseudoephedrine base. Such a 
threshold is sufficient to permit the purchase of up to a 244 day 
supply of OTC pseudoephedrine drug products without the application of 
regulatory requirements. In addition, the cumulative threshold 
requirement for multiple transactions of pseudoephedrine drug products 
in a calendar month will not apply to sales for personal use. To 
further ensure the availability of pseudoephedrine products to 
legitimate consumers at the retail level, this action also waives the 
registration requirement for retail distributors of regulated 
pseudoephedrine products.

EFFECTIVE DATES: October 7, 1996. Persons seeking registration must 
apply on or before November 20, 1996, in order to continue to 
distribute, import or export pseudoephedrine products for which 
registration is required pending final action by the DEA on their 
application.

FOR FURTHER INFORMATION CONTACT:
Howard McClain Jr., Chief, Drug and Chemical Evaluation Section, Office 
of Diversion Control, Drug Enforcement Administration, Washington, DC 
20537. Telephone (202) 307-7183.

SUPPLEMENTARY INFORMATION: On October 31, 1995, the DEA published a 
Notice of Proposed Rulemaking (NPRM) which proposed the removal of the 
exemption for certain over-the-counter (OTC) pseudoephedrine products 
from the chemical control provisions of the Controlled Substances Act 
(CSA). The NPRM documented the increasing problem of OTC product 
diversion for use as precursor material in the clandestine production 
of methamphetamine.
    The clandestine manufacture and distribution of methamphetamine are 
serious national public health problems which require Federal action. 
Methamphetamine, a Schedule II Controlled Substance, is the most 
prevalent controlled substance clandestinely synthesized in the United 
States. Between January 1, 1994 and December 31, 1995, the DEA has been 
involved in the domestic seizure of 587 methamphetamine laboratories. 
Ephedrine and/or pseudoephedrine were utilized as the precursor 
material at the vast majority of these laboratories.
    The significance of the abuse of methamphetamine is well known and 
documented. In recent years the problem has increased dramatically. In 
1994. alone, there were over 700 methamphetamine related deaths in the 
United States.
    The DEA monitors Medical Examiner (ME) data from approximately 42 
medical examiners located in major cities in the contiguous 48 states. 
Nationally, ME reported deaths related to methamphetamine increased 
145% from 1992 to 1994 and there were 1816 deaths for the period 1991 
to 1994. In addition, methamphetamine emergency room episodes increased 
significantly in 1993 and 1994. Current data indicate the illicit 
production, distribution and abuse of methamphetamine remain a serious 
problem.
    In addition, evidence of the illicit utilization of pseudoephedrine 
in clandestine laboratories is increasing. The identification of OTC 
pseudoephedrine products at clandestine methamphetamine laboratories 
increased dramatically in 1995.
    The NPRM documented that pseudoephedrine was utilized in 22 percent 
of the laboratories seized from January 1, 1995 through September 1995. 
DEA thereby acted to place regulatory controls on these products in an 
effort to further minimize the availability of widely used precursor 
material and ultimately protect the public health. Since publication of 
the NPRM, the extent of diversion of OTC pseudoephedrine products has 
intensified in the United States. End of year data for 1995 indicates 
that at least 28 percent of the clandestine methamphetamine 
laboratories seized utilized pseudoephedrine.
    In recent years, the diversion of OTC products has been the 
predominant source of precursor material for the clandestine synthesis 
of methamphetamine. As regulatory controls were implemented to counter 
the diversion of specific types of OTC products, clandestine laboratory 
operators have been successful in circumventing these controls to 
obtain precursor material through the diversion of millions of OTC 
dosage units of exempt products. The NPRM documents the progression of 
the diversion from bulk ephedrine, to single entity OTC ephedrine 
products, to OTC ephedrine combination products and OTC pseudoephedrine 
products.
    As stated in the NPRM, since 1989 ephedrine has been the primary 
precursor used in the clandestine synthesis of methamphetamine in the 
United States. Clandestine laboratory operators exploited the lack of 
control on OTC ephedrine products (such as tablets/capsules) to 
purchase millions of dosage units for the synthesis of methamphetamine 
and methcathinone.

[[Page 40982]]

    The Domestic Chemical Diversion Control Act (DCDCA) of 1993 (Pub. 
L. 103-200) became effective on April 16, 1994. This Act further 
amended the CSA and the Controlled Substances Import and Export Act and 
removed the exemption for those transactions involving products which 
are marketed or distributed lawfully in the United States under the 
Federal Food, Drug, and Cosmetic Act, if these products contain 
ephedrine (or its salts, optical isomers, or salts of optical isomers) 
as the only active medicinal ingredient or contain ephedrine in 
combination with therapeutically insignificant quantities of another 
active medicinal ingredient. Thus, single entity ephedrine products 
became subject to registration, reporting, recordkeeping and 
notification requirements of the CSA. The DCDCA, however, did not 
remove the exemption provided for pseudoephedrine OTC products, since 
the known illicit use of pseudoephedrine was relatively infrequent when 
the DCDCA was enacted.
    The DCDCA also provided the Attorney General with the authority (21 
U.S.C. 814) to remove the exemption for any drug product containing a 
listed chemical upon a determination that the drug product is being 
diverted for use in the illicit production of a controlled substance. 
In addition, the DCDCA imposed registration requirements for List I 
chemical distributors, importers and exporters.
    The Chemical Diversion and Trafficking Act (CDTA) established a 
system of thresholds for each listed chemical to determine which 
transactions would be subject to regulatory controls. Reporting, 
recordkeeping and notification requirements apply to all regulated 
transactions which meet or exceed these threshold amounts of a listed 
chemical. The threshold for ephedrine was originally established as 1.0 
kilogram for domestic, import and export transactions. The threshold of 
1.0 kilogram of ephedrine base is equivalent to greater than 48,800 
ephedrine 25 mg dosage units. Even though the dosage form exemption was 
eliminated by the DCDCA, a 1.0 kilogram threshold was not adequate to 
prevent the significant diversion of ephedrine to clandestine 
laboratories in the United States.
    Given evidence of the large-scale diversion of ephedrine from 
various types of outlets and the public health threat imposed by the 
diversion of these products, the DEA determined that additional action 
was needed to prevent further diversion. Effective November 10, 1994, 
(59 FR 51365) the DEA eliminated the threshold for ephedrine. 
Subsequently, all regulated transactions of ephedrine became subject to 
reporting recordkeeping and notification requirements of the CSA 
regardless of size.
    In response to regulatory and other actions taken against single-
entity ephedrine products, clandestine laboratory operators have again 
attempted to circumvent CSA chemical controls in an effort to obtain 
precursor material. The search for unregulated sources of precursor 
material has led to the diversion and illicit utilization of OTC 
ephedrine combination products and OTC pseudoephedrine products. The 
DEA is currently reviewing the regulatory options which address the 
diversion of OTC ephedrine combination products. This issue will be 
addressed in the near future.
    Pseudoephedrine and ephedrine are related as disastereomers. 
Because of this structural relationship, pseudoephedrine can serve as a 
direct substitute for ephedrine in the synthesis of methamphetamine. 
Clandestine laboratory operators are exploiting the lack of regulatory 
controls on OTC pseudoephedrine products by obtaining pseudoephedrine 
for use as precursor material for the synthesis of controlled 
substances.
    The DEA is aware of the large scale legitimate use of OTC 
pseudoephedrine products and their widespread distribution. However, 
the DEA believes that the registration, recordkeeping, reporting and 
notification requirements that have been successfully used to limit the 
diversion of other chemicals to clandestine laboratories are needed for 
some pseudoephedrine products to control this problem.
    The DEA has documented both mail order and retail diversion of OTC 
pseudoephedrine products for use in the clandestine production of 
methamphetamine. In proposing these regulations the DEA has 
specifically attempted to target both sources of the problem. In order 
for such regulatory action to be effective, it should include 
provisions which directly target the problem of indiscriminate 
distribution of wholesale level quantities by retail, mail order and 
wholesale distributors.
    While there is an urgent need to counter the diversion of OTC 
pseudoephedrine products for the clandestine production of 
methamphetamine, these regulations go to extreme lengths to protect the 
availability of these pseudoephedrine decongestant products for 
legitimate medical use. While all mail order and wholesale distributors 
will be subject to the full extent of CSA chemical regulatory controls, 
specific exemptions and waivers have been provided for retail 
distributors selling personal use quantities so that these retail 
distributors are not adversely impacted.
    In writing the NPRM, the DEA proposed the inclusion of four 
provisions which would eliminate potentially burdensome requirements 
for practically all of the estimated 750,000 retail distributors who 
would be impacted if pseudoephedrine products were made subject to the 
full extent of the CSA chemical provision established by law. First, 
the DEA has provided a waiver from registration for these distributors. 
Secondly, the DEA has limited controls to a specific group of products. 
Thirdly, the NPRM proposed the establishment of a threshold of 24.0 
grams pseudoephedrine base and therefore would allow for the purchase 
and sale of up to a 120 day supply of pseudoephedrine for personal 
legitimate medical use, without the application of regulatory 
requirements. In this final rule, this threshold has been increased to 
48.0 grams. Such a threshold would allow for the purchase and sale of 
up to a 244 day supply of pseudoephedrine without the application of 
regulatory requirements. (A 244 day supply of pseudoephedrine at the 
maximum recommended FDA dosage of 240 mg/day would be 976 
pseudoephedrine 60 mg tablets.) Lastly, the proposal specifies that the 
threshold quantity applies only to a single transaction. Therefore no 
cumulative threshold for multiple transactions applies to OTC 
pseudoephedrine transactions and there is no requirement to record each 
transaction as long as the individual transaction is below the 
threshold quantity.
    Because of these provisions, no retail distributor will be required 
to register or maintain records as long as they distribute only below-
threshold quantities in a single transaction. A retail distributor will 
only be required to reports suspicious regulated transactions to the 
DEA as per 21 CFR 1310.05.

Public Comments

    Interested parties were provided with 60 days in which to comment 
on the proposed regulations. The DEA received a total of 17 comments. 
While the general tone of the comments was supportive of the need to 
counter the clandestine production of controlled substances such as 
methamphetamine, the commentors raised a number of concerns regarding 
specific provisions of the proposed regulation as follows:
    (1) Five commentors requested that the comment period be extended. 
The

[[Page 40983]]

DEA responded that the 60 day comment period provided for in the NPRM 
was adequate and provided sufficient time for comments. Therefore the 
requests for extension were denied.
    (2) In response to the NPRM, the National Association of Boards of 
Pharmacy (NABP) submitted a letter of strong support for the proposed 
regulations. NABP wrote that a nationwide Federal effort, under the 
auspices of DEA, was necessary to deal with the diversion of such OTC 
products and accordingly NABP supports the present effort to bring the 
diversion of drug products containing pseudoephedrine under control.
    (3) Numerous commentors expressed concern that the term ``threshold 
quantity'' is not defined and that it is not clear in the NPRM whether 
the threshold is calculated on a single transaction or on a cumulative 
total of multiple purchases during a calendar month. These commentors 
stated that the proposed rule will affect the availability of 
pseudoephedrine products and retail distributors will be severely 
impacted by this proposal if a cumulative threshold applies. Commentors 
also expressed concerns that in order to ensure that a cumulative 
threshold was not exceeded during a calendar month, retailers would 
have to place non-exempt pseudoephedrine products behind the counter 
(thus creating a third class of drug products), maintain records of 
each and every transaction, register with the DEA and potentially pay 
large fines in the event that the cumulative threshold was exceeded. 
Several commentors stated that under such regulatory requirements they 
feared that retailers would cease to carry non-exempt pseudoephedrine 
products and these products would be placed at a competitive 
disadvantage. Commentors also stated that most of the distributors will 
not be able to afford or simply will not pay the registration fees and 
increased costs of paperwork associated with DEA registration or 
recordkeeping.
    These commentors misread the proposal which states that the sale of 
non-exempt pseudoephedrine products in quantities below 24.0 grams 
pseudoephedrine base applies to a single transaction. The phrase ``in a 
single transaction'' was specifically included in Sec. 1309.28 
(Exemption for retail distributors) which states that the sale for 
personal use means the sale of below-threshold quantities in a single 
transaction to an individual for legitimate medical use. The cumulative 
threshold requirements for multiple transactions of pseudoephedrine 
products within a calendar month will not apply to sales for personal 
use. Therefore, the DEA reemphasizes that retail sales of personal use 
quantities for legitimate medical use in a single transaction will not 
require (1) The placement of these pseudoephedrine products behind the 
counter, (2) maintenance of records for each transaction, or (3) 
registration with the DEA. In order to further clarify that the 
cumulative threshold requirements for multiple transactions of 
pseudoephedrine products within a calendar month will not apply to 
sales for personal use, Secs. 1309.28 and 1310.04 have been modified 
accordingly. In addition, Sec. 1309.71 has been modified to reflect 
that the requirement that certain drug products to be stocked behind a 
counter where only employees have access does not apply to drugs 
containing List I chemicals that are regulated pursuant to 
Sec. 1310.01(f)(1)(iv)(A)(2).
    (4) Several commentors stated that the NPRM does not present 
sufficient evidence of the scope, duration and significance of OTC 
pseudoephedrine diversion to justify the proposed action.
    The NPRM addresses each of these issues and includes a thorough 
discussion of the evolution and extent of the diversion of OTC drug 
products as precursor material for the clandestine synthesis of 
methamphetamine in the United States. The NPRM also describes actions 
taken to counter such diversion and specifically outlines steps taken 
by clandestine laboratory chemist to circumvent controls implemented at 
the Federal level.
    On October 31, 1995, the DEA published the NPRM in an attempt to 
counter the growing problem of pseudoephedrine diversion and thereby 
protect the public health and safety. This NPRM notes that (as of the 
date of publication) 22 percent of the methamphetamine laboratories 
seized in 1995 in the United States utilized pseudoephedrine as the 
precursor material. In addition, the NPRM documents specific increases 
in the percentage of clandestine methamphetamine laboratories using 
pseudoephedrine as precursor material between 1994 and 1995.
    Since publication of the NPRM, all indicators show clear evidence 
that the scope of the diversion of pseudoephedrine for the clandestine 
synthesis of methamphetamine continues to grow.
    Current data indicates that the DEA was involved in the seizure of 
327 methamphetamine laboratories in calendar year 1995 and that at 
least 28 percent of these laboratories utilized pseudoephedrine as the 
precursor material. Smuggling of bulk powder has not been shown to be a 
significant source of pseudoephedrine for use at these laboratories and 
investigative data indicates that essentially all pseudoephedrine 
utilized involved the diversion of OTC pseudoephedrine products.
    In regard to the significance of the problem, the adverse impact of 
methamphetamine abuse in the United States is clear. The NPRM clearly 
documents that the production of methamphetamine is the United States' 
most significant clandestine laboratory problem.
    Nationally, over 700 methamphetamine related deaths were documented 
in the United States in 1994. In addition, there is substantial 
evidence that the abuse of methamphetamine is associated with violent 
behavior and criminal activity. Coupled with the public health and 
safety consequences from the abuse of methamphetamine, the extensive 
use of pseudoephedrine as precursor material (in 28 percent of 1995 
seized laboratories) provides overwhelming support for the need to 
control OTC pseudoephedrine products in a manner which prevents their 
use as precursor material while permitting the unencumbered sale for 
legitimate use. In proposing these pseudoephedrine regulations, the DEA 
acted in a timely manner to counter a growing public health and safety 
problem. The increase in seizures of methamphetamine laboratories 
utilizing pseudoephedrine further justifies the proposed regulations.
    (5) Two commentors stated that the exemption for retail 
distributors arbitrarily discriminates against other legitimate 
distributors who provide consumers with convenience and savings of 
shopping at home (such as mail order distributors). One of these 
commentors further stated that the registration exemption is being 
provided to businesses (such as retail distributors) which have the 
least ability to monitor sales. In contrast, however, several 
commentors stated the converse. Specifically these commentors stated 
that the DEA should restrict its efforts to target mail order 
distribution and not impact retail distribution activity.
    The issue pertaining to the exclusion of mail order activities from 
the definition of retail distributor was addressed in the June 22, 
1995, Federal Register Notice (60 FR 32447) which implemented 
provisions of the DCDCA. As stated in that notice, it has been DEA's 
experience that mail order distributors deal with both individuals and 
businesses, the volume of product

[[Page 40984]]

sales can be quite large, and such firms are often less readily able to 
positively identify their customers. In addition, investigations will 
be significantly more complex and time consuming for a mail order 
distributor than a retail distributor. It is therefore appropriate that 
mail order activities not be provided the same waiver as retail 
distributors.
    In addition several commentors stated that the DEA has no evidence 
of retail diversion and instead should target the source of the problem 
such as mail order distributors. In response to these comments, the DEA 
has documented both mail order and retail diversion of OTC 
pseudoephedrine products for use in the clandestine production of 
methamphetamine. In implementing these regulations the DEA is 
specifically attempting to target both sources of the problem. In order 
for such regulatory action to be effective, it should include 
provisions which directly target the problem of indiscriminate 
distribution of wholesale level quantities by retail, mail order and 
wholesale distributors.
    While all mail order and wholesale distributors will be subject to 
the full extent of CSA chemical regulatory controls, specific 
exemptions and waivers have been provided for retail distributors 
selling personal use quantities. However, the regulation will affect 
large sales of non-exempt pseudoephedrine products by retail 
distributors. The following are several anecdotal examples of the 
diversion of pseudoephedrine which illustrate the need for regulating 
large purchases of pseudoephedrine that are not consistent with 
personal use quantities at all levels of distribution.
    The following are several examples of retail diversion: DEA has 
documented that individuals have successfully solicited pharmacists to 
order and sell excessive quantities of 60 mg pseudoephedrine OTC 
tablets. The DEA was initially notified by a pharmacist employee of a 
large chain pharmacy of an excessive pseudoephedrine purchase. DEA met 
with the pharmacist and was informed that the purchaser initially 
requested 300 pseudoephedrine 60 mg tablets but gradually increased his 
request to 10,000 pseudoephedrine 60 mg tablets. The pharmacist 
subsequently ordered and received the 10,000 tablets which the 
individual picked up and paid for in cash. The individual then 
requested a second order be placed for 50,000 pseudoephedrine 60 mg 
tablets which the pharmacist ordered and received. When the individual 
telephoned to inquire whether the order had been received, the 
pharmacist further questioned the individual about the intended 
purpose. After this phone conversation, however, the individual neither 
picked up his order or called the pharmacy again. DEA then conducted a 
random survey of other pharmacists in the nearby area for 
pseudoephedrine purchases. DEA investigators found that the same 
individual had also ordered excessive quantities from three other 
retail pharmacies. The individual ordered 20,000 pseudoephedrine 60 mg 
tablets, 100,000 tablets and 100,000 tablets respectively from these 
other pharmacies. At each of the retail distributors, the same 
individual had given different reasons for needing the pseudoephedrine.
    In an unrelated incident, the DEA was notified of a large purchase 
of pseudoephedrine tablets by a large chain pharmacy in California. 
Further investigation revealed that an individual had taken a bottle of 
pseudoephedrine off the shelf and requested that the pharmacy staff 
place a large order for the product on his behalf. Upon consultation 
with the pharmacist-in-charge, an order for 4,000 bottles was placed. 
According to pharmacy records, the pharmacy had purchased a total of 
550,000 pseudoephedrine tablets in five separate orders over a 3 month 
period. The individual never provided any identification, address or 
telephone number and always called the pharmacy to ask if the order had 
come in. After placing several orders, the pharmacist learned from a 
third party that pseudoephedrine tablets may be used to manufacture 
methamphetamine. At that point the pharmacist informed the individual 
that she would not order any more tablets because of possible misuse.
    In a separate action, the DEA was notified by a large retail drug 
chain that individuals had just purchased about $800 worth of 
pseudoephedrine tablets from four of their pharmacies. A license plate 
check revealed that the vehicle utilized at the time of purchase 
belonged to the wife of a DEA fugitive and subject of a state 
methamphetamine investigation. During the investigation, investigators 
also learned of an unrelated purchase from another retail pharmacy 
whereby an individual attempted to order and purchase 100,000 
pseudoephedrine tablets for ``export purposes'' to the Orient.
    In an another incident, the DEA received a call from loss 
prevention personnel for a large chain drug store advising of two 
incidents of pseudoephedrine diversion that day. The entire inventory 
of pseudoephedrine product was purchased off the shelf of the pharmacy 
through 3 purchases. The purchases were made in cash.
    In a separate case, DEA served an administrative subpoena on a 
pharmacy for records of receipt and sales of pseudoephedrine tablets. 
When the subpoena was served, DEA investigators found the pharmacy 
manager hiding in an adjacent room. After a consent to search, the DEA 
seized 300,000 pseudoephedrine tablets and $65,000 cash at the 
pharmacy. Agents later seized an additional $50,000 cash from a vehicle 
belonging to an individual who came to the pharmacy to buy 
pseudoephedrine from the pharmacy manager.
    In mid 1995, two retail distributors were identified as selling 
large quantities of OTC pseudoephedrine. During an 8 month period one 
retailer sold 70,000 pounds of pseudoephedrine tablets and the second 
retail distributor sold approximately 8,500 pounds of pseudoephedrine 
tablets. As a result of an investigation into these excessive sales, 
several employees and individuals associated with these establishments 
were arrested by DEA.
    In another instance, with the arrest of an individual for 
possession and manufacture of methamphetamine, DEA investigators found 
3 liters of methamphetamine and sufficient chemicals for the production 
of approximately one kilogram of methamphetamine. In addition, 
investigators found pseudoephedrine/antihistamine combination OTC 
tablets (consisting of pseudoephedrine 60 mg and triprolidine 2.5 mg) 
and receipts for the purchase of OTC pseudoephedrine tablets from a 
local chain drug store. Later, investigators interviewed the drug store 
manager and reviewed store cash register receipts which documented the 
sale of pseudoephedrine combination OTC tablets.
    The following are several examples which illustrate the magnitude 
of mail order diversion:
    In October of 1995, the DEA seized a large methamphetamine 
laboratory utilizing pseudoephedrine capable of manufacturing 200 
pounds of methamphetamine per month. Precursor material was obtained 
through the mail order purchase of OTC pseudoephedrine tablets.
    In a long term DEA methamphetamine investigation, DEA seized 7.5 
million dosage units of OTC pseudoephedrine and 1.8 million OTC 
ephedrine dosage units and other chemicals used in the manufacture of 
methamphetamine. The OTC products used as precursor material were 
obtained through mail order distributors. In the course of the 
investigation over 7.8 million dollars

[[Page 40985]]

was seized from the trafficking organization.
    In another investigation, after the undercover purchase of 20 
million pseudoephedrine tablets from an OTC manufacturer and 
distributor, DEA seized 25 metric tons of pseudoephedrine, ephedrine 
and phenylpropanolamine. Five tractor trailer trucks were required to 
remove the material to a secure storage facility. The company, which 
dealt extensively in mail order distribution, has been identified as 
purchasing 191 metric tons of pseudoephedrine and ephedrine between 
January 1994 and May 1995.
    The above examples of significant diversion illustrate the need for 
regulation at all levels of distribution of non-personal use 
quantities, whether it be wholesale, retail or mail order distribution.
    (6) One commentor noted that agencies are required to prepare and 
make available for public comment an initial regulatory flexibility 
analysis which describes the impact of a proposed rule on small 
entities. This commentor states that the NPRM is therefore deficient in 
that it does not adequately set forth such an analysis. The commentor 
did, however, recognize that this provision does not apply to instances 
where the head of the agency certifies that the rule will not have 
significant impact on a substantial number of small entities.
    The NPRM documents the various provisions which were specifically 
provided in order to minimize the impact on small businesses. These 
provisions were the result of a reasoned analysis of the potential 
impact of implementation of the full extent of CSA regulations on the 
affected industry and small businesses in particular. In providing for 
these special provisions, DEA gave special care and consideration to 
industry concerns and given these provisions, ensured that these 
regulations ``will not have significant impact on a substantial number 
of small entities''.
    As previously stated in the NPRM, the DEA met with and consulted 
with industry representatives prior to proposing these regulations in 
an effort to minimize any adverse impact. In addition, the NPRM 
specifically details provisions designed to eliminate the adverse 
impact on small businesses at the retail level. First, the DEA proposed 
that retail distributors not be subject to registration. Secondly, the 
DEA has limited controls to a specific group of products. Thirdly, the 
NPRM proposed the establishment of a threshold of 24.0 grams 
pseudoephedrine base and therefore would allow for the purchase and 
sale of up to a 120 day supply of pseudoephedrine for personal 
legitimate medical use, without the application of regulatory 
requirements. The proposed threshold was subsequently raised to 48.0 
grams in this final rule. Lastly, the NPRM specifies that the threshold 
quantity applies only to a single transaction.
    (7) One commentor suggested that small package sizes would be 
enormously expensive to divert and implied that these products 
therefore would not be cost effective sources of pseudoephedrine as 
precursor material for the synthesis of methamphetamine. Prior to 
proposing these regulations, however, the DEA reviewed the cost of 
various brand name pseudoephedrine products in various package sizes 
and formulations. The DEA undertook this examination for the specific 
purpose of determining whether certain products should remain exempt 
from the proposed regulations based solely on the fact that their use 
in the synthesis of methamphetamine would not be financially 
profitable. This review indicated that even the most expensive brand 
name pseudoephedrine dosage form products (including the more expensive 
syrups and products containing multiple active ingredients) would be 
cost effective sources of precursor material.
    (8) Several commentors stated that the DEA has not provided a 
rationale for its selection of the group of drugs whose legal exemption 
would be revoked. These commentors stated that the NPRM provides 
insufficient scientific explanation as to why the exemption was removed 
for certain products. One commentor challenged that its scientists 
state that removal of pseudoephedrine in combination with 
antihistamines, guaifenesin and dextromethorphan is at least as 
difficult, if not more so, than analgesics and less efficient than from 
liquids, syrup and soft gelatin capsules. The commentor further stated 
that the DEA must consider whether the drug or group of drugs are 
formulated in such a way that cannot be easily used in the illicit 
production of controlled substances.
    As stated in the NPRM, the DEA performed a review of the various 
pseudoephedrine dosage forms and available combinations of ingredients 
to determine which products are (1) formulated in such a way that the 
product itself cannot be easily used in the illicit production of 
methamphetamine; and (2) whether pseudoephedrine can be readily 
recovered from the product. In making determinations as to which 
product formulations should be subject to control, the DEA laboratory 
system undertook a study which utilized different types of OTC 
pseudoephedrine dosage forms and combinations of ingredients to see 
which of these formulations were most easily used in the clandestine 
synthesis of controlled substances using the procedures most commonly 
utilized by clandestine chemists. In addition, the study assessed 
whether pseudoephedrine could be readily extracted using clandestine 
laboratory techniques. In making its conclusions regarding which 
products and formulations should be regulated, the DEA considered, 
among other information, which products and formulations required 
modifications to normal clandestine manufacturing or extraction 
procedures and therefore required a more extension knowledge of 
chemistry. In response to comments that the DEA should elaborate 
further on its studies to determine the simplicity with which products 
may be converted to methamphetamine, the disclosure of such information 
would only serve to educate clandestine laboratory operators as to how 
to better produce methamphetamine and reveal which pseudoephedrine 
formulations provide the easiest source of precursor material.
    (9) One commentor questioned the basis for DEA's claim that certain 
formulations and products can not be readily recovered. The commentor 
stated that liquids would be easier to convert and that the DEA 
provided no explanation as to why aspirin, acetaminophen or ibuprofen 
combinations are less likely to be diverted for clandestine use. In 
response to this comment, in attempting to manufacture methamphetamine 
from liquid formulations and combination products having formulations 
which contained an analgesic, DEA found that when a typical clandestine 
laboratory procedure was utilized, it was necessary to modify the 
manufacturing procedure in order to achieve acceptable results.
    In determining which products should be subject to CSA chemical 
regulatory controls, the DEA has taken a conservative approach. As 
such, exemptions are being removed only for those products which did 
not require procedural changes when a typical methamphetamine 
clandestine manufacturing procedure was utilized. The exemptions are 
being retained for all pseudoephedrine products which required changes 
in these procedures.
    (10) Several commentors stated that the NPRM would require training 
of employees to recognize a threshold transaction. The DEA acknowledges 
that retail distributors will need to provide instruction to their 
personnel so that

[[Page 40986]]

they are able to recognize an above-threshold transaction. In 
consultation with industry, the DEA has been informed that the most 
common package sizes range from 10 to 60 solid dosage units per package 
at the retail level. In proposing the establishment of the threshold of 
24.0 grams pseudoephedrine base the DEA specifically ensured that such 
common package sizes are not adversely impacted.
    DEA believes that the identification of above-threshold 
transactions will not be difficult, given package sizes routinely sold 
at the retail level. For example, one commentor stated that the vast 
majority of their brand name pseudoephedrine product is sold in package 
sizes of 24 dosage units or less with each unit containing 30 mg or 60 
mg pseudoephedrine hydrochloride. Such packages would only contain 
between 0.6 grams and 1.2 grams pseudoephedrine base. An above-
threshold purchase of greater than 24.0 grams of pseudoephedrine base 
contained in such products would be conspicuous and thereby difficult 
to conceal. An individual would have to purchase more than 976 dosage 
units of a 30 mg/dosage unit product. In the package size indicated, 
this would involve the purchase of more than 40 packages of such a 
product in a single transaction. For a 60 mg per dosage unit product 
packaged in bottles of 24 tablets, an above-threshold purchase would 
involve the purchase of over 488 dosage units in greater than 20 
packages. Given the large size of the above transactions, it is not 
unreasonable to expect that retail distributors should be able to 
instruct personnel to recognize such conspicuous quantities in a single 
transaction.
    Several commentors stated that in determining whether a transaction 
is above-threshold, retail distributors would have to differentiate 
between exempt and non-exempt pseudoephedrine products. These 
commentors stated that in the event that exempt and non-exempt 
pseudoephedrine products are both purchased in a single transaction, it 
will be difficult to determine whether the threshold has been exceeded.
    In response to this comment, if both exempt and non-exempt 
pseudoephedrine products are purchased in a single transaction, the 
quantities of OTC cough-cold medication necessary to exceed the 
pseudoephedrine threshold would be even larger and more conspicuous 
than the quantities outlined above. The comment submitted by the 
National Association of Chain Drug Stores (NACDS) mentioned point of 
sale scanning as a possible way to monitor threshold quantities in a 
single transaction.
    While the DEA believes that such transactions at the proposed 
threshold of 24.0 grams would be conspicuous and therefore easy to 
identify, the DEA has decided that in an effort to further reduce any 
potential burden on retailers, the threshold for pseudoephedrine will 
be increased to 48.0 grams. This quantity is double the proposed 
threshold. This would allow for the below-threshold purchase of 976 
dosage units of a pseudoephedrine 60 mg product or 1953 dosage units of 
a 30 mg product in a single transaction. Such transactions would be 
sufficient for at least a 244 day supply of pseudoephedrine in a single 
transaction at the maximum recommended FDA dosage.
    Concerns regarding the difficulty in providing instruction to 
employees to recognize a threshold transaction are therefore minimized 
by the implementation of the larger threshold and the magnitude of an 
above-threshold transaction. To further assist retailers in providing 
instruction to employees, the DEA will make available for distribution 
through industry associations, notices which provide further 
clarification of which pseudoephedrine products are regulated and 
guidance in recognizing a threshold transaction.
    Given the large quantities of product necessary to exceed a 
threshold of 48.0 grams, it is not unreasonable to expect that retail 
distributors should be able to provide the rudimentary instruction 
necessary to recognize such conspicuous quantities. Retail distributors 
dealing only in quantities below these levels will not have to register 
with DEA and will not have to maintain records of transactions. 
Therefore, any impact on retail distributors is minimal
    While the DEA has established the threshold at 48.0 grams 
(pseudoephedrine base) to permit the unregulated purchase of up to a 
244 day supply at the maximum FDA recommended dosage of 240 mg 
pseudoephedrine HCl per day, the DEA is in no way encouraging consumers 
to exceed or ignore the warnings contained on the labeling of these 
pseudoephedrine products. This labeling, which is required by the FDA, 
warns that ``if symptoms do not improve within 7 days or are 
accompanied by a fever, consult a doctor''. In addition, some 
pseudoephedrine products warn the consumer ``Do not take this product 
for more than 7 days.'' Therefore, when the product is used in a manner 
consistent with its labeling, the purchase of a threshold quantity of 
48.0 grams, will far exceed a 244 day supply of pseudoephedrine for 
personal legitimate medical use.
    (11) Several commentors stated that before taking action against 
OTC pseudoephedrine products, the DEA should first use the enforcement 
tools such as registration requirements that Congress imposed under the 
DCDCA. In response to this comment, the DCDCA amended 21 U.S.C. 822 and 
21 U.S.C. 823 to require registration of handlers of List I chemicals. 
However, the DCDCA stated that registration ``shall not be required for 
the distribution of a drug product that is exempted under section 
102(39)(A)(iv).'' Therefore, registration requirements implemented 
under the DCDCA would not pertain to handlers of OTC pseudoephedrine 
products lawfully marketed under the Federal Food, Drug and Cosmetic 
Act. Since the DEA has already seen a shift toward the utilization of 
OTC pseudoephedrine products in clandestine laboratories, the 
registration of only bulk handlers of pseudoephedrine and ephedrine 
products would have no direct beneficial impact on preventing the 
diversion of these products.
    (12) One commentor raised concerns that under the CSA chemical 
regulatory provisions, records will have to be maintained for a period 
of 4 years rather than a 2 year period. The commentor further states 
that while normal business records are adequate to meet the CSA 
regulatory requirements, the retention requirement will increase the 
recordkeeping burden. In response to this comment, the 4 year 
recordkeeping requirement for the chemical control provisions of the 
CSA was legislated by Congress (21 U.S.C. 830) and therefore is not 
within DEA's authority to change.
    (13) One commentor requested a 45 day grace period allowing sales 
of covered products pending DEA action on registration applications. 
The commentor noted that, as written, the NPRM appears to prohibit 
above-threshold pseudoephedrine sales between the date the rule is 
finalized and the date registration is approved by DEA.
    DEA agrees. In response to this comment, DEA has determined that 
each person required to obtain a registration because of implementation 
of this rule will be temporarily exempted from the registration 
requirement until the person has made proper application and the 
Administration has approved or denied such application, provided that 
the

[[Page 40987]]

application has been submitted within 45 days following the effective 
date of this regulation. (Section 1310.09 has been modified to reflect 
this.) This exemption only applies to the registration requirement; all 
other chemical control requirements set forth under the CSA will be in 
full force and effect as of the effective date of this regulation.
    (14) One commentor noted that its independent distributors do not 
squarely meet the definition of ``retail distributors'' as defined as 
sales directly to ``walk-in'' customers for personal use. This 
commentor stated that most of their transactions are face-to-face but 
not walk-in. The commentor requested that the definition of retail 
distributor as set forth in Section 1309.02(g) be modified.
    DEA agrees. Therefore, the DEA is modifying Secs. 1309.28 and 
1309.02(f) to reflect that the term retail distributor means a 
distributor whose List I chemical activities are restricted to the sale 
of drug products that are regulated as List I chemicals pursuant to 
Sec. 1310.01(f)(1)(iv), in face-to-face transactions directly to 
individuals for personal use. The intent of this provision is for the 
distributor to be in the physical presence of the individual who is 
acquiring the pseudoephedrine for personal use.
    In addition, the commentor noted that some distributions are from 
one of their independent distributors to another of their independent 
distributors. The commentor requested that these sales also be exempt 
since they are primarily below-threshold. However, the DEA has 
determined that these types of transactions do not meet the definition 
of retail distributor since such transactions would be intended for 
further distribution and would not be intended for personal use.
    (15) One commentor requested clarification of the registration 
requirement for pharmacies. This commentor stated that because 
pharmacies are already registered, it could be implied that they would 
be subject to recordkeeping and reporting requirements.
    In response to this request, pharmacies that do not engage in 
above-threshold transactions are treated the same as other retail 
distributors. However, pharmacies that sell above-threshold quantities 
in a single transaction will not meet the definition of retail 
distributor and will be required to register with DEA. In order to 
avoid the imposition of duplicative registration requirements on these 
registrants, 21 CFR 1309.25 provides for an exemption from chemical 
registration for controlled substance registrants. Although these 
entities will not be required to obtain a separate chemical 
registration, they will be required to comply with other chemical 
regulatory requirements such as recordkeeping and reporting 
requirements. Therefore, these pharmacies which sell above-threshold 
quantities of regulated pseudoephedrine products will be required to 
maintain a record of each transaction which exceeds the threshold in a 
single transaction and report any suspicious regulated transactions to 
the DEA.
    (16) Two commentors inquired whether the exemption for their 
specific pseudoephedrine products could be reinstated if the products 
were modified in such a way that prevented their use as precursor 
material. In response to this comment, the DCDCA includes specific 
provisions for reinstatement of exemptions for particular drug products 
(21 U.S.C. 814). The DCDCA provides that upon application by a 
manufacturer of a particular drug product that has been removed from 
exemption, the exemption shall be reinstated with respect to the 
particular drug product if it is determined to be manufactured and 
distributed in a manner that prevents diversion. The DCDCA further 
states that factors to be considered shall include (1) the package 
sizes and manner of packaging of the drug product; (2) the manner of 
distribution and advertising of the drug product; (3) evidence of 
diversion of the drug product; (4) any actions taken by the 
manufacturer to prevent diversion of the drug product; and (5) such 
other factors as are relevant to and consistent with the public health 
and safety.
    One commentor raised concerns regarding the limitation that only 
manufacturers may petition for reinstatement of the regulatory 
exemption of a specific product. This commentor stated that the 
regulations should be amended to allow distributors of private-brand 
products or any interested party to submit applications for 
reinstatement of exemption. In response to this request, please note 
that this provision was legislated by Congress under the DCDCA (21 
U.S.C. 814) and specifies that ``on application by a manufacturer of a 
particular drug product'' the exemption may be reinstated if the 
particular drug product is manufactured or distributed in a manner that 
prevents diversion. Any such change would require Congressional 
legislation.
    (17) Two commentors requested a hearing on the proposal pursuant to 
21 U.S.C. 875. In response to these requests, unlike other rulemaking 
conducted pursuant to the CSA, the present rulemaking presents no 
requirement that the rule be made on the record after opportunity for a 
hearing. For example, 21 U.S.C. 811(a) requires the opportunity for a 
hearing whenever there is a proposed rescheduling of controlled 
substances. In addition, 21 U.S.C. 875 identifies general powers 
available to the DEA when exercising its authority under the CSA. Thus, 
21 U.S.C. 875 complements existing hearing provisions under the CSA 
rather than conferring independent hearing authority. In any event, the 
DEA believes that the notice and comment conducted pursuant to this 
rulemaking enabled interested parties to provide meaningful comment on 
the final rule.
    (18) One commentor stated that the rule is a significant regulatory 
action and should be reviewed by the Office of Management and Budget. 
This commentor also noted that the rule could have an annual effect on 
the economy of $100 million or more.
    As outlined above, these regulations go to great lengths to avoid 
impacting retail distribution of these OTC products. Since the vast 
majority of distributors who handle these products will not need to 
register or maintain records, the economic impact of this proposal is 
extremely small. This rule is therefore not a significant regulatory 
action.

Final Rule

    After careful consideration of each of the above comments, this 
regulation is finalized as follows:

Removal of Exemption

    21 U.S.C. 814(a) provides that the Attorney General shall remove 
from exemption under 21 U.S.C. 802(39)(A)(iv) and drug or group of 
drugs that the Attorney General finds is being diverted to obtain a 
listed chemical for use in the illicit production of a controlled 
substance. 21 U.S.C. 814(b) further provides that in removing the 
exemption for a drug or group of drugs, the Attorney General shall 
consider (1) the scope, duration, and significance of the diversion, 
(2) whether the drug or group of drugs is formulated in such a way that 
it cannot be easily used in the illicit production of a controlled 
substance and (3) whether the listed chemical can be readily recovered 
from the drug or group of drugs.
    Pseudoephedrine is available in a variety of dosage forms either as 
single entity products or in combination with one or more other active 
medicinal ingredients. While the majority of OTC pseudoephedrine 
products currently used for the illicit production of

[[Page 40988]]

methamphetamine are single entity products, combination products have 
been identified at clandestine laboratories. The DEA has reviewed the 
various pseudoephedrine dosage forms and available combinations of 
ingredients. Some of these products are formulated in such a way that 
the product itself can be used in the illicit production of 
methamphetamine; others are formulated in such a way that 
pseudoephedrine can be readily recovered from the product; and some of 
these products are formulated in such a way that the manufacture of 
methamphetamine is impeded. Based on this analysis, the DEA has 
determined that OTC solid dosage form products (i.e. tablets, capsules 
and powder packets) lawfully marketed under the Federal Food, Drug, and 
Cosmetic Act and which contain pseudoephedrine in combination with 
acetaminophen, aspirin or ibuprofen are formulated in such a way that 
pseudoephedrine cannot be readily recovered and these products are not 
easily used as precursors for the illicit production of 
methamphetamine. In addition, the DEA has determined that OTC liquids, 
syrups and soft gelatin capsules, which are lawfully marketed under the 
Federal Food, Drug, and Cosmetic Act and which contain pseudoephedrine 
either as the sole active ingredient or in combination with other 
active ingredients, are formulated in such a way that the 
pseudoephedrine cannot be readily recovered and the products cannot be 
easily used in the illicit production of methamphetamine.
    Thus the DEA is removing the exemption under 21 CFR 
1310.01(f)(1)(iv) and 21 CFR 1313.02(d)(1)(iv) for OTC solid dosage 
form pseudoephedrine products (i.e. tablets, capsules and powder 
packets) lawfully marketed under the Federal Food, Drug, and Cosmetic 
Act, which do not contain therapeutically significant quantities of 
acetaminophen, aspirin or ibuprofen. These products, which include 
tablets, capsules and powder packets containing pseudoephedrine as the 
sole active ingredient or in combination with one or more active 
ingredients such as antihistamines, guaifenesin or dextromethorphan, 
will be subject to the regulatory requirements of the CSA.
    For purposes of this paragraph, the term ``therapeutically 
significant quantities'' shall apply if the product formulation (i.e. 
the qualitative and quantitative composition of active ingredients 
within the product) is listed in current editions of the American 
Pharmaceutical Association (APhA) Handbook of NonPrescription Drugs; 
Drug Facts and Comparisons (published by Wolters Kluwer Company); or 
USP DI (published by the authority of the United States Pharmacopeial 
Convention, Inc.). For drug products having a formulation not found in 
the above compendiums, the DEA Administrator shall determine, pursuant 
to a written request as specified in Section 1310.14, whether the 
active medicinal ingredients are present in quantities considered 
therapeutically significant for purposes of this paragraph.
    The exemption provided under 21 CFR 1310.01(f)(1)(iv) and 21 CFR 
1313.02(d)(1)(iv) will remain for liquids, syrups, and soft gelatin 
capsules containing pseudoephedrine (regardless of formulation) and any 
type of solid dosage form product which contains pseudoephedrine in 
combination with therapeutically significant quantities of either 
acetaminophen, aspirin or ibuprofen provided that the product is 
lawfully marketed under the Federal Food, Drug, and Cosmetic Act. In 
addition, the final regulations allow pseudoephedrine prescription 
products, regardless of the product formulation, to remain exempt from 
the final regulations, given existing distribution and dispensing 
requirements already imposed under the Federal Food, Drug and Cosmetic 
Act.
    While certain pseudoephedrine products remain exempt from the 
regulatory controls of the CSA, all pharmaceutical products containing 
pseudoephedrine are List I chemicals, and as such, are subject to the 
criminal provisions of the CSA. Specifically, 21 U.S.C. 841(d) provides 
that any person who possesses or distributes any listed chemical 
knowing, or having reasonable cause to believe that it will be used to 
manufacture a controlled substance, shall be fined in accordance with 
Title 18, or imprisoned not more than 10 years, or both.
    Pursuant to 21 U.S.C. 814(c), the DEA has considered the evidence 
of diversion of the above listed pseudoephedrine products, the pattern 
of diversion of ephedrine products, including combination products and 
other relevant data, and has determined that the affected groups of 
pseudoephedrine products is limited to that currently necessary to 
prevent the diversion of pseudoephedrine products to illicit 
methamphetamine laboratories.

Revision of Threshold

    The threshold for pseudoephedrine is being changed from 1.0 
kilogram to 48.0 grams pseudoephedrine base for domestic, import and 
export transactions. Even if the exemption for certain OTC 
pseudoephedrine products is eliminated, a 1.0 kilogram threshold is not 
adequate to prevent the significant diversion of these pseudoephedrine 
products to clandestine laboratories. The threshold of 1.0 kilogram of 
pseudoephedrine base in equivalent to greater than 20,000 
pseudoephedrine HCl 60 mg dosage units. Therefore the DEA is reducing 
the threshold for pseudoephedrine. In order to ensure that OTC 
pseudoephedrine products remain available to those individuals who 
utilize these decongestants for legitimate medical purposes, the DEA is 
establishing the threshold for pseudoephedrine at a level which will 
have no impact on personal use. As such, individuals who purchase 
below-threshold quantities intended for legitimate personal medical 
use, and retailers who sell below-threshold quantities for use by 
individuals for legitimate personal medical use, will not be adversely 
impacted by these regulations.
    The FDA has established a labeling requirement which sets the 
maximum adult daily dosage of pseudoephedrine at 60 mg every 6 hours or 
240 mg per day. A 244 day supply of pseudoephedrine at the maximum 
daily recommended dose of 240 mg pseudoephedrine hydrochloride per day 
is equivalent to 58.56 grams of pseudoephedrine hydrochloride or 47.97 
grams pseudoephedrine base. Therefore the DEA is establishing a 
threshold of 48.0 grams pseudoephedrine base. Such a threshold will 
allow the purchase and sale of up to a 244 day supply of 
pseudoephedrine for personal legitimate medical use at the maximum FDA 
recommended dosage, without the application of regulatory requirements. 
This will allow continued access to these products for legitimate use.

Waiver of Registration

    In an effort to ensure the continued availability of 
pseudoephedrine products for legitimate personal use at the retail 
level, the DEA is providing a waiver from registration for any retail 
distributor of regulated pseudoephedrine products. Therefore retail 
distributors (defined under 21 CFR 1309.02) of regulated 
pseudoephedrine products will not be required to obtain a DEA 
registration to distribute personal use quantities of OTC 
pseudoephedrine to individuals for legitimate medical use. The 
authority for providing a waiver is clearly set forth in 21 U.S.C. 
Section 822(d) whereby ``The Attorney General may, by regulation, waive 
the requirement for registration of certain manufacturers,

[[Page 40989]]

distributors, or dispensers if he finds it consistent with the public 
health and safety.''
    As discussed, it is estimated that there are approximately 750,000 
retail distributors of pseudoephedrine in the United States. Such a 
waiver will benefit the vast majority of these distributors. Firms 
engaging in above-threshold transactions of non-exempt pseudoephedrine 
products, however, will not be considered retail distributors. 
Therefore they will be required to obtain a DEA registration as a 
distributor, maintain records as specified in 21 CFR 1310.04 and report 
suspicious regulated transactions as specified in 21 CFR 1310.05 
notification requirement. In addition, all importers, exporters and 
other types of distributors (such as mail order distributors) of non-
exempt pseudoephedrine products will be required to register with the 
DEA and will be subject to the full regulatory provisions of the CSA 
Act and the Controlled Substances Import and Export Act.

Conclusion

    The clandestine manufacture and abuse of methamphetamine are 
serious national public health problems which require Federal action. 
Companies operating on the fringe of legitimate commerce are supplying 
these clandestine laboratories with needed precursor material such as 
ephedrine and pseudoephedrine. In an effort to minimize the impact of 
the final regulations on the legitimate industry, the DEA has examined 
various options available.
    The DEA is aware of the large scale legitimate use of OTC 
pseudoephedrine products and their widespread distribution at retail 
outlets. However, the DEA believes that the registration, 
recordkeeping, reporting and notification requirements that have been 
successfully used to limit the diversion of other chemicals to 
clandestine laboratories are needed to control this problem.
    The Attorney General has delegated authority under the CSA and all 
subsequent amendments to the CSA to the Administrator of the DEA (28 
CFR 0.100). The Administrator, in turn, has redelegated this authority 
to the Deputy Administrator pursuant to 28 CFR 0.104.
    The Deputy Administrator has reviewed this regulation and by 
approving it certifies that while this regulation will necessitate that 
retail distributors of regulated pseudoephedrine products instruct 
employees to recognize a threshold transaction, the level of 
instruction needed is minimal, given the magnitude of the quantities 
needed to exceed the threshold in a single transaction. In addition, 
the vast majority of retail distributors deal only in quantities far 
below the threshold in a single transaction and therefore will not need 
to register with the DEA and will not need to maintain records. 
Therefore the Deputy Administrator certifies that this regulation will 
not have a significant economic impact on a substantial number of small 
entities.
    The Drug Enforcement Administration has determined that this rule 
is not a ``significant regulatory action'' under Executive Order 12866 
Section 3(f) and the Office of Management and Budget (OMB) has waived 
its review under section 6(a)(3)(A) of the order.
    This final action has been analyzed in accordance with the 
principles and criteria in Executive Order 12612, and it has been 
determined that the final rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment.

List of Subjects

21 CFR Part 1309

    Administrative practice and procedure, Drug traffic control, List I 
and List II chemicals, Security measures.

21 CFR Part 1310

    Drug traffic control, List I and II chemicals, Reporting and 
recordkeeping requirements.

21 CFR Part 1313

    Drug Traffic Control, Exports, Imports, List I and II chemicals, 
Transshipment and in-transit shipments.

    For reasons as set out above, 21 CFR Parts 1309, 1310 and 1313 are 
amended as follows:

PART 1309--[AMENDED]

    1. The authority citation for part 1309 continues to read as 
follows:

    Authority: 21 U.S.C. 821, 822, 823, 824, 830, 871(b), 875, 877, 
958.

    2. Section 1309.02 is amended by revising paragraph (g) to read as 
follows:
* * * * *
    (f) The term retail distributor means a distributor whose List I 
chemical activities are restricted to the sale of drug products that 
are regulated as List I chemicals pursuant to Section 1310.01(f)(1)(iv) 
of this chapter, in face-to-face transactions directly to individuals 
for personal use. For purposes of Sec. 1309.28, sale for personal use 
means the sale of below threshold quantities in a single transaction to 
an individual for legitimate medical use.
    3. Section 1309.28 is added to read as follows:


Sec. 1309.28  Exemption of retail distributors of certain 
pseudoephedrine products.

    The requirement of registration is waived for any retail 
distributor, for the distribution of any product containing 
pseudoephedrine that is regulated pursuant to 
Sec. 1310.01(f)(1)(iv)(A)(2) of this chapter. The term retail 
distributor, as defined in Sec. 1309.02(f), means a distributor whose 
List I chemical activities are restricted to the sale of drug products 
that are regulated as List I chemicals pursuant to 
Sec. 1310.01(f)(1)(iv) of this chapter, in face-to-face transactions 
directly to individuals for personal use. For purposes of this 
paragraph, sale for personal use means the sale of below-threshold 
quantities in a single transaction to an individual for legitimate 
medical use. The cumulative threshold requirements for multiple 
transactions within a calendar month will not apply to sales for 
personal use of any product containing pseudoephedrine that is 
regulated pursuant to Sec. 1310.01(f)(1)(iv)(A)(2) of this chapter. 
(The threshold of 48.0 grams pseudoephedrine base is equivalent to 976 
pseudoephedrine hydrochloride 60 mg dosage units.)
    4. Section 1309.71 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 1309.71  General security requirements.

* * * * *
    (a) * * *
    (2) In retail settings open to the public where drugs containing 
List I chemicals that are regulated pursuant to 
Sec. 1310.01(f)(1)(iv)(A)(1) of this chapter are distributed, such 
drugs will be stocked behind a counter where only employees have 
access. This requirement does not apply to drugs containing List I 
chemicals that are regulated pursuant to Sec. 1310.01(f)(1)(iv)(A)(2) 
of this chapter.
* * * * *
    21 CFR part 1310 is amended as follows:

PART 1310--[AMENDED]

    1. The authority citation for part 1310 continues to read as 
follows:

    Authority: 21 U.S.C. 802, 830, 871(b).

    2. Section 1310.01 is amended by revising paragraph (f)(1)(iv)(A) 
to read as follows:

[[Page 40990]]

Sec. 1310.01  Definitions.

* * * * *
    (f) * * *
    (1) * * *
    (iv) * * *
    (A)(1) The drug contains ephedrine or its salts, optical isomers, 
or salts of optical isomers as the only active medicinal ingredient or 
contains ephedrine or its salts, optical isomers, or salts of optical 
isomers and therapeutically insignificant quantities of another active 
medicinal ingredient. For purposes of this paragraph, the term 
``therapeutically insignificant quantities'' shall apply if the product 
formulation (i.e. the qualitative and quantitative composition of 
active ingredients within the product) is not listed in current 
editions of the American Pharmaceutical Association (APhA) Handbook of 
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters 
Kluwer Company); or USP DI (published by the authority of the United 
States Pharmacopeial Convention, Inc.); or the product is not listed in 
Section 1310.15 as an exempt drug product. For drug products having 
formulations not found in the above compendiums, the Administrator 
shall determine, pursuant to a written request as specified in Section 
1310.14, whether the active medicinal ingredients are present in 
quantities considered therapeutically significant for purposes of this 
paragraph; or
    (2) The drug is an over-the-counter (OTC) solid dosage form product 
(tablet, capsule or powder packet) which contains pseudoephedrine or 
its salts, optical isomers, or salts of optical isomers but does not 
contain either acetaminophen, aspirin or ibuprofen in therapeutically 
significant quantities. (This provision applies only to OTC 
pseudoephedrine products and does not include those pseudoephedrine 
products dispensed only pursuant to a prescription.) For purposes of 
this paragraph, the quantities of either acetaminophen, aspirin or 
ibuprofen present in a pseudoephedrine drug product shall be considered 
to be present in ``therapeutically significant quantities'' if the 
product formulation (i.e. the qualitative and quantitative composition 
of active ingredients within the product) is listed in current editions 
of the American Pharmaceutical Association (APhA) Handbook of 
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters 
Kluwer Company); or USP DI (published by the authority of the United 
States Pharmacopeial Convention, Inc.); or the product is listed in 
Sec. 1310.15 as an exempt drug product. For drug products having a 
formulation not found in the above compendiums, the Administrator shall 
determine, pursuant to a written request as specified in Sec. 1310.14, 
whether the active medicinal ingredients (acetaminophen, aspirin or 
ibuprofen) are present in quantities considered therapeutically 
significant for purposes of this paragraph; or
* * * * *
    3. Section 1310.04 is amended by revising the introductory text in 
paragraph (f) and paragraph (f)(1)(x) to read as follows:


Sec. 1310.04  Maintenance of records.

* * * * *
    (f) Except as provided in Sec. 1309.28 of this chapter for sales 
for personal use, for those listed chemicals for which thresholds have 
been established, the quantitative threshold or the cumulative amount 
for multiple transactions within a calendar month to be utilized in 
determining whether a receipt, sale, importation, or exportation is a 
regulated transaction is as follows:
    (1) List I Chemicals:

------------------------------------------------------------------------
                 Chemical                     Threshold by base weight  
------------------------------------------------------------------------
(x) Pseudoephedrine, its salts, optical     48 grams.                   
 isomers and salts of optical isomers.                                  
------------------------------------------------------------------------

* * * * *
    4. Section 1310.09 is revised to read as follows:


Sec. 1310.09  Temporary exemption from registration.

    Each person required by section 3(b) of the Domestic Chemical 
Diversion Control Act of 1993 (Pub. L. 103-200, effective April 16, 
1994), to obtain a registration to manufacture, distribute, import, or 
export a list I chemical (other than those list I chemicals exempted 
under Sec. 1310.01(f)(1)(iv)), is temporarily exempted from the 
registration requirement. The registration exemption will remain in 
effect for each person until the person has made proper application for 
registration and the Administration has approved or denied such 
application, provided that the application has been submitted within 45 
days following the effective date of the regulations in part 1309 
implementing the Domestic Chemical Diversion Control Act of 1993. In 
addition, each person required to obtain a registration to manufacture, 
distribute, import, or export a drug or group of drugs removed from 
exemption under Sec. 1310.01(f)(1)(iv) is also temporarily exempted 
from the registration requirement. The registration exemption will 
remain in effect for each person until the person has made proper 
application for registration and the Administration has approved or 
denied such application, provided that the application has been 
submitted within 45 days following the effective date of the regulation 
which eliminates the exemption under Sec. 1310.01(f)(1)(iv). These 
registration exemptions apply only to registration; all other chemical 
control requirements set forth in the Domestic Chemical Diversion 
Control Act of 1993 and in parts 1310 and 1313 of this chapter remain 
in full force and effect.
    5. Section 1310.14 is amended by revising the heading and by 
revising paragraph (a) to read as follows:


Sec. 1310.14  Exemption of certain ephedrine or pseudoephedrine 
combination drug products.

    (a) Any manufacturer of a drug product containing ephedrine in 
combination with another active medicinal ingredient, the product 
formulation of which is not listed in the compendiums set forth in 
Sec. 1310.01(f)(1)(iv)(A)(1), or any manufacturer of a drug product 
containing pseudoephedrine in combination with acetaminophen, aspirin 
or ibuprofen, the product formulation of which is not listed in the 
compendiums set forth in Sec. 1310.01(f)(1)(iv)(A)(2), may request that 
the Administrator exempt the product as one which contains ephedrine 
together with therapeutically significant quantities of the other 
active medicinal ingredients or pseudoephedrine in combination with 
therapeutically significant quantities of acetaminophen, aspirin or 
ibuprofen.
* * * * *
    6. Section 1310.15 is amended by revising the heading, by revising 
paragraph (a), and by revising paragraph (d) to read as follows:


Sec. 1310.15  Exempt combination drug products containing ephedrine or 
pseudoephedrine.

    (a) The drug products containing ephedrine in combination with 
therapeutically significant quantities of another active medicinal 
ingredient, or pseudoephedrine in combination with therapeutically 
significant quantities of acetaminophen, aspirin, or ibuprofen; listed 
in paragraph (d) of this section, have been exempted by the 
Administrator from application of sections 302, 303, 310, 1007, and 
1008 of the Act (21 U.S.C. 822-3, 830, and 957-8) to the extent 
described in

[[Page 40991]]

paragraphs (b), (c), and (d) of this section. * * *
    (d) In addition to the drug products listed in the compendium set 
forth in Secs. 1310.01(f)(1)(iv)(A)(1) and 1310.01(f)(1)(iv)(A)(2), the 
following drug products, in the form and quantity listed in the 
application submitted (indicated as the ``date'') are designated as 
exempt drug products for the purposes set forth in this section:

 Exempt Drug Products Containing Ephedrine in Combination With Therapeutically Significant Quantities of Another
       Active Medicinal Ingredient and Exempt Drug Products Containing Pseudoephedrine in Combination With      
                  Therapeutically Significant Quantities of Acetaminophen, Aspirin or Ibuprofen                 
----------------------------------------------------------------------------------------------------------------
               Supplier                      Product name                 Form                     Date         
----------------------------------------------------------------------------------------------------------------
[Reserved]...........................  .......................  .......................  .......................
----------------------------------------------------------------------------------------------------------------

    21 CFR part 1313 is amended as follows:

PART 1313--[AMENDED]

    1. The authority citation for part 1313 continues to read as 
follows:

    Authority: 21 U.S.C. 802, 830, 871(b), 971.

    2. Section 1313.02 is amended by revising paragraph (d)(1)(iv)(A) 
to read as follows:


Sec. 1313.02  Definitions.

* * * * *
    (d) * * *
    (1) * * *
    (iv) * * *
    (A)(1) The drug contains ephedrine or its salts, optical isomers, 
or salts of optical isomers as the only active medicinal ingredient or 
contains ephedrine or its salts, optical isomers, or salts of optical 
isomers and therapeutically insignificant quantities of another active 
medicinal ingredient. For purposes of this paragraph, the term 
``therapeutically insignificant quantities'' shall apply if the product 
formulation (i.e. the qualitative and quanitative composition of active 
ingredients within the product) is not listed in current editions of 
the American Pharmaceutical Association (APhA) Handbook of 
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters 
Kluwer Company); or USP DI (published by the authority of the United 
States Pharmacopeial Convention, Inc.); or the product is not listed in 
Sec. 1310.15 as an exempt drug product. For drug products having 
formulations not found in the above compendiums, the Administrator 
shall determine, pursuant to a written request as specified in Section 
1310.14, whether the active medicinal ingredients are present in 
quantities considered therapeutically significant for purposes of this 
paragraph; or
    (2) The drug is an over-the-counter (OTC) solid dosage form product 
(tablet, capsule or powder packet) which contains pseudoephedrine or 
its salts, optical isomers, or salts of optical isomers, but does not 
contain either acetaminophen, aspirin or ibuprofen in therapeutically 
significant quantities. (This provision applies only to OTC 
pseudoephedrine products and does not include those pseudoephedrine 
products dispensed only pursuant to a prescription.) For purposes of 
this paragraph, the quantities of either acetaminophen, aspirin or 
ibuprofen present in a pseudoephedrine drug product shall be considered 
to be present in ``therapeutically significant quantities'' if the 
product formulation (i.e. the qualitative and quantitative composition 
of the active ingredients within the product) is listed in current 
editions of the American Pharmaceutical Association (APhA) Handbook of 
NonPrescription Drugs; Drug Facts and Comparisons (published by Wolters 
Kluwer Company); or USP DI (published by the authority of the United 
States Pharmacopeial Convention, Inc.); or the product is listed in 
Sec. 1310.15 as an exempt drug product. For drug products having a 
formulation not found in the above compendiums, the Administrator shall 
determine, pursuant to a written request as specified in Sec. 1310.14, 
whether the active medicinal ingredients (acetaminophen, aspirin or 
ibuprofen) are present in quantities considered therapeutically 
significant for purposes or this paragraph; or
* * * * *
    Dated: May 9, 1996.
Stephen H. Greene,
Deputy Administrator.

    Note: The following text will not appear in the Code of Federal 
Regulations.

Appendix

    On May 9, 1996 the Deputy Administrator of the Drug Enforcement 
Administration (DEA) signed the above rule which finalizes a Notice 
of Proposed Rulemaking (NPRM) published in the Federal Register on 
October 31, 1995 (60 FR 55348). At the request of the Office of 
Management and Budget (OMB) Office of Information and Regulatory 
Affairs, the rule was provided to OMB for review on May 16, 1996. 
OMB cleared the final rule for publication on July 22, 1996. In the 
interim, however, 5 U.S.C. 605(b) was amended to require that at the 
time of publication of a final rule, the agency shall publish a 
statement providing the factual basis for the certification that the 
rule will not have a significant economic impact on a substantial 
number of small entities. While the issue of whether this rule will 
have a significant economic impact on a substantial number of small 
entities was addressed in this final rule, DEA is providing the 
information in this appendix to insure compliance with the 
amendments to 5 U.S.C. 605(b), which became effective on June 27, 
1996, after the final rule was signed.
    In making a determination that the rule will not have a 
significant economic impact on a substantial number of small 
entities, the DEA conducted a review of the affected industry. In 
performing this review, the DEA carefully considered regulatory 
alternatives and the potential impact of each regulatory alternative 
on the affected industry and small businesses in particular.
    The clandestine manufacture and abuse of methamphetamine are 
serious national public health problems which require Federal 
action. Pseudoephedrine products produced to meet legitimate medical 
needs are diverted by clandestine laboratory operators for use as 
precursor material for the production of methamphetamine.
    The DEA is aware of the large scale legitimate use of the over-
the-counter (OTC) pseudoephedrine products and their widespread 
distribution at retail outlets. However, the DEA believes that the 
registration, recordkeeping, reporting and notification requirements 
that have been successfully used to limit the diversion of other 
chemicals to clandestine laboratories are needed to control this 
problem. In writing this regulation, the DEA considered various 
levels of regulatory control on pseudoephedrine products. These 
options ranged from the establishment of no controls on 
pseudoephedrine products to the imposition of the full extent of 
controls permitted under existing statutory authority. Given the 
magnitude of documented deaths due to methamphetamine and the untold 
cost of violence and crime associated with methamphetamine abuse, 
the DEA determined that some measure of control is necessary and 
therefore the establishment of no regulatory control on 
pseudoephedrine products is not a viable option. However, the burden 
associated with the application of the full extent of regulatory 
controls, including the regulation of all pseudoephedrine products, 
a threshold of zero (whereby records would be required for all 
transactions regardless of size), and the imposition of a 
registration requirement on all retailers, would produce an 
excessive burden on legitimate industry. Given the potentially large 
impact of such regulatory action, the DEA sought to impose less 
stringent regulatory requirements so as not to adversely impact 
legitimate businesses.
    In the proposed regulation published in October of 1995, the DEA 
documented that it had determined that approximately 750,000 retail 
distributors and an

[[Page 40992]]

undetermined number of other distributors would be impacted if 
pseudoephedrine products were made subject to the full extent of the 
Controlled Substances Act (CSA) chemical regulatory provisions. 
However, in recognizing the need to limit the regulatory impact on 
handlers of pseudoephedrine products to a level adequate to prevent 
the large scale diversion of these products of clandestine use, the 
DEA has taken significant steps to reduce or eliminate the controls 
on retailers who sell these pseudoephedrine products of legitimate 
consumers.
    First, given the large number of retail distributors who handle 
these products in the United States, the DEA has provided a waiver 
from registration for these distributors. Thus, the regulations 
primarily impact distributors who are not classified as retail 
distributors. These distributors include mail-order and wholesale 
distributors. The DEA has attempted to identify the number of firms 
which will be impacted by these regulations. This review included 
consultation with industry associations and other Federal and local 
government agencies. These entities were only able to identify a 
limited number of firms which would become subject to regulatory 
controls as a result of this rule.
    Secondly, the DEA has limited controls to a specific group of 
products which have been demonstrated to be most readily used for 
illicit purposes. This approach provides effective protection 
against diversion while minimizing the burden on industry. Thirdly, 
the proposed regulations allowed for the purchase and sale of up to 
a 120 day supply of pseudoephedrine for personal legitimate medical 
use in a single transaction, without the application of regulatory 
requirements. Based on comments, in the final rule the DEA doubled 
the amount to a 244 day supply (976 pseudoephedrine 60 mg dosage 
units) in a single transaction. Despite concerns that traffickers 
may exploit this increased threshold, DEA allowed the increase to 
ensure continued public access to the products for personal 
legitimate medical use at the retail level. A secondary benefit of 
this threshold is the fact that many retail outlets do not stock 
such quantities of pseudoephedrine products, thus obviating concerns 
regarding their regulation.
    Prior to writing the proposed regulation, the DEA consulted with 
the National Wholesale Druggists Association (NWDA) in an effort to 
determine the potential size of the impacted industry. According to 
NWDA sources, there are approximately 750,000 retail distributors in 
the U.S. which sell over-the-counter pseudoephedrine products. In 
addition, the DEA met with the Nonprescription Drug Manufacturers 
Association (NDMA) regarding the U.S. pseudoephedrine market to 
obtain input on the distribution of pseudoephedrine for legitimate 
medical use. NDMA has further confirmed that there are approximately 
750,000 retail distributors of over-the-counter products in the U.S. 
NDMA, which stated that its members account for the manufacture of 
over 90 percent of the over-the-counter drugs marketed domestically, 
informed DEA that member companies primarily distribute 
pseudoephedrine in package size ranging from 10 to 60 solid dosage 
units per package. In an effort to reduce the impact upon those who 
sell and purchase pseudoephedrine products at the retail level, the 
DEA established a threshold that was well above the standard package 
size manufactured by NDMA members and distributed by retail 
distributors. The threshold of 48.0 grams pseudoephedrine base is 
equivalent to 976 pseudoephedrine hydrochloride 60 mg dosage units.
    To further quantify the potential impact of the regulations the 
DEA has obtained data from the U.S. Bureau of the Census, 1992 
Census of Retail Trade. This data documents the number of retail 
trade establishments based upon Standard Industrial Classification 
(SIC). This data documents a total of 552,000 potential retailers of 
pseudoephedrine (to include 63,000 General Merchandise Stores SIC 
Code 53, 278,000 Food Stores SIC Code 54, 120,000 Gas Service 
Stations SIC Code 554, 51,000 Drug Stores and Proprietary Stores SIC 
Code 591 and 40,000 Liquor Stores SIC Code 592).
    In addition the DEA has obtained data from the U.S. Department 
of Agriculture, Economic Research Service, Food Marketing Review 
which breaks down the number of retail food stores by category for 
1993. Of the 249,600 retail food stores documented, 49,500 are 
classified as convenience stores and 89,800 as Superettes (defined 
as being primarily self-service in operation, selling a wide variety 
of food and non-food products with annual sales below $2.5 million.) 
In addition, the data documents 3,100 Warehouse Stores (which are 
defined as containing limited product variety and fewer services, 
while incorporating case lot stocking and shelving practices) and 
500 Superwarehouse Retail Outlets (defined as larger warehouses that 
offer expanded product variety.)
    Convenience Stores appear not to even shelf threshold quantities 
of pseudoephedrine. Such entities which do not stock a threshold 
quantity and therefore would not exceed the threshold quantities in 
a single transaction, would not be impacted by these regulations. 
The 3,600 Warehouse and Superwarehouse outlets, however, may choose 
to distribute above threshold quantities and therefore would not 
meet the definition of ``retail distributor''. These entities would 
therefore be required to register with the DEA and maintain a record 
of only those transactions which exceed the threshold of 48.0 grams 
pseudoephedrine base.
    Additionally, the National Association of Chain Drug Stores 
(NACDS) noted point of sale scanning as a possible way to monitor 
threshold quantities of regulated product in a single transaction. 
The DEA has obtained data on the percent of Supermarkets having 
point of sale scanning checkouts. A 1993 study performed by the 
Maclean Hunter Media, Inc., Stamford, CT, 61st Annual Report of the 
Grocery Industry indicated that approximately 85 percent of 
independent and chain supermarkets had scanning checkouts. The 
percent of Supermarkets having this capability was up from 71 
percent in 1990. NACDS's suggestion, therefore, appears to be 
applicable to the Supermarket industry as well.
    The primary impact of the regulations will be upon those 
entities not classified as retail distributors. Such entities 
include mail-order distributors and wholesale distributors. The DEA 
has attempted to quantify the number of these distributors in the 
U.S. The NWDA informed the DEA that its 1993 Operating Survey 
indicated that 70 full-line drug wholesalers (who distribute both 
prescription and over-the-counter products) distributed nearly 80 
percent of the prescription drugs in the U.S. in 1993. These full-
line drug wholesalers operated approximately 230 distribution 
centers. Information provided by NWDA indicates that due to 
consolidation within the drug wholesale industry, there are 
currently only approximately 50 full-line wholesale distributors 
supplying this market in the U.S.
    These firms are already CSA registrants and as such would not 
need to obtain a separate registration under the proposed 
regulations (Title 21 Code of Federal Regulations 1309.25). In 
addition, the impact upon these full-line distributors will be 
minimized since, pursuant to Sec. 1310.06(b), normal business 
records shall be considered adequate if they contain the information 
required in 21 CFR 1310.06(a) and are readily retrievable from other 
business records.
    The NWDA was unable to provide estimates of the percentage of 
the over-the-counter market supplied by these full-line distributors 
but informed DEA of the existence of other smaller wholesale 
distributors who only distribute over-the-counter pseudoephedrine 
products. These wholesale distributors will be impacted by the 
proposed regulations since they will be required to register with 
DEA and ensure that records maintained are adequate to meet the 
requirements under Section 1310.06.
    In addition to contact with the industry associations, the DEA 
has contacted the National Association of Boards of Pharmacy and 
several State Boards of Pharmacy in an attempt to quantify the 
number of these distributors currently operating in the U.S. which 
will be impacted by these regulations. These various industry and 
professional groups contacted by the DEA were unable to quantify the 
number of these firms operating in the U.S. or identify a 
professional association which represents these business entities. 
However, in the instance where a state was able to identify the 
number of firms licensed to distribute drug products into that 
state, the number of firms was not large, (e.g. As stated in the 
proposed rule, the State of Idaho licenses all business entities 
which distribute over-the-counter products into or within the state. 
The Idaho Board of Pharmacy indicated that the majority of the 
distributors are actually outside of Idaho and that only 418 
distributors are licensed to distribute drug products into Idaho.)

Conclusion

    The DEA has substantially limited the impact the regulations 
will have on pseudoephedrine handlers. The requirements have been 
designed to ensure that the vast majority of retailers of 
pseudoephedrine will not be subject to regulation. Retail 
distributors will not be required to register or maintain records 
unless they engage in

[[Page 40993]]

transactions involving a limited group of pseudoephedrine products 
in quantities that exceed a 244 day supply in a single transaction. 
Most retail distributors do not engage in such transactions and 
therefore will not be subject to these regulations.
    The proposed and final rule, in conjunction with this appendix 
document the various provisions which were specifically provided in 
order to minimize the impact on small businesses. These provisions 
were the result of a reasoned analysis of the potential impact of 
implementation of the full extent of CSA regulations on the affected 
industry and small businesses in particular. In providing for these 
special provisions, DEA gave special care and consideration to 
industry concerns and given these provisions, ensured that these 
regulations ``will not have significant impact on a substantial 
number of small entities''.

    Dated: July 30, 1996.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 96-19846 Filed 8-6-96; 8:45 am]
BILLING CODE 4410-09-M