[Federal Register Volume 66, Number 244 (Wednesday, December 19, 2001)]
[Rules and Regulations]
[Pages 65429-65448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31026]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. 98N-0583]


Exports: Notification and Recordkeeping Requirements

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is issuing a final rule 
that establishes the notification and recordkeeping requirements for 
persons exporting human drugs, biological products, devices, animal 
drugs, food, and cosmetics that may not be marketed or sold in the 
United States. These regulations implement recent changes in the 
statutory requirements applicable to certain exports, and also codify 
recordkeeping requirements for exports of products that cannot be 
marketed or sold in the United States generally.

DATES: This rule is effective March 19, 2002.

FOR FURTHER INFORMATION CONTACT: Philip L. Chao, Office of Policy, 
Planning, and Legislation (HF-23), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-827-3380.

SUPPLEMENTARY INFORMATION:

I. Introduction

    In the Federal Register of April 2, 1999 (64 FR 15994), FDA 
published a proposed rule to establish notification and recordkeeping 
requirements for products exported under section 801 or 802 of the 
Federal Food, Drug, or Cosmetic Act (the act) (21 U.S.C. 381 or 382, 
respectively) or section 351 of the Public Health Service Act (PHS Act) 
(42 U.S.C. 262), as amended by the FDA Export Reform and Enhancement 
Act (Public Law 104-134, as amended by Public Law 104-180).
    The FDA Export Reform and Enhancement Act significantly changed and 
simplified the export requirements for unapproved human drugs, 
biological products, devices, and animal drugs. For example, before the 
law was enacted, most exports of unapproved new drugs could only be 
made to the 21 countries then identified in section 802 of the act, and 
these exports were subject to numerous restrictions. The FDA Export 
Reform and Enhancement Act amended section 802 of the act to allow, 
among other things, the export of unapproved new human drugs to any 
country in the world if the drug complies with the laws of the 
importing country and has valid marketing authorization from any of the 
following countries: Australia, Canada, Israel, Japan, New Zealand, 
Switzerland, South Africa, and the countries in the European Union (EU) 
and the European Economic Area (EEA) and certain other requirements are 
met (see section 802(b)(1)(A) of the act). Currently, the EU countries 
are Austria, Belgium, Denmark, Germany, Greece, Finland, France, 
Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, 
and the United Kingdom. The EEA countries are the EU countries, 
Iceland, Liechtenstein, and Norway. (The list of countries will expand 
automatically if any country accedes to the EU or becomes a member of 
the EEA.) This provision of section 802 of the act also applies to the 
export of certain devices that cannot be sold or marketed in the United 
States.
    The FDA Export Reform and Enhancement Act also established 
recordkeeping and notification requirements. Section 802(g) of the act 
requires an exporter of a drug or device under section 802(b)(1)(A) of 
the act to provide a ``simple notification'' to the agency 
``identifying the drug or device when the exporter first begins to 
export such drug or device'' to any of the 25 countries identified in 
section 802(b)(1)(A) of the act. For exports to other, nonlisted 
countries, section 802(g) of the act requires the exporter to provide a 
simple notification ``identifying the drug or device and the country to 
which such drug or device is being exported.'' This section also 
requires persons exporting drugs or devices under any provision of 
section 802 of the act to ``maintain records of all drugs or devices 
exported and the countries to which they were exported.''
    Certain aspects of the proposed rule raised numerous issues. As a 
result, in the Federal Register of June 17, 1999 (64 FR 32442), FDA 
extended the comment period from June 16, 1999, to July 16, 1999.
    FDA received 18 comments on the proposed rule. In addition, the 
agency received several comments on the export notification and 
recordkeeping discussions in its draft export guidance document which 
was published in the Federal Register on June 12, 1998 (63 FR 32219, 
FDA docket number 98D-0307). Drug manufacturers, device manufacturers, 
device exporters, and food, drug, and device trade associations 
submitted comments. An animal drug trade association and a biological 
product company also submitted comments. Because FDA wrote both the 
proposed rule and the guidance document contemporaneously, the agency 
considered comments submitted on the proposed rule and related comments 
submitted on the draft export guidance document when it prepared this 
final rule.

II. Comments on the Proposed Rule, Including Related Comments 
Submitted to the Draft Guidance Document

    Most comments focused on specific provisions in the proposed rule. 
However, others made general comments about FDA's export authority or 
the need for any regulations or addressed other export issues that were 
not directly related to the proposed rule. A description of the 
comments, and FDA's responses, follows.

A. General Comments

    (Comment 1) Several comments claimed that the proposal was contrary 
to the letter or intent of the FDA Export Reform and Enhancement Act 
because it would create ``unnecessary,'' ``cumbersome,'' or 
``burdensome'' requirements that would make it more difficult or time-
consuming to export products from the United States, place U.S. firms 
at a competitive disadvantage in global markets, force firms to 
relocate overseas, or result in lost profits. Some comments said FDA 
must withdraw the proposal, although others said the agency should 
significantly revise the proposal to reduce its requirements.
    FDA recognizes that the FDA Export Reform and Enhancement Act was 
designed to facilitate exports of unapproved products from the United 
States and, through the draft guidance document, proposed rules, and 
other contacts with individual firms, the agency worked to reduce or 
eliminate export requirements and facilitate exports. FDA drafted the 
proposed rule to implement the notification and recordkeeping 
requirements in section 802 of the act and to establish a single, 
consistent agency position regarding the types of records it would 
examine to determine compliance with section

[[Page 65430]]

801(e)(1) of the act. In general, FDA sought to establish recordkeeping 
requirements to inform firms about the types of records that would 
demonstrate a firm's compliance with the act and to ensure that the 
records could be linked to a specific export. For example, an export 
record stating only that ``product X was exported'' would be almost 
useless if multiple versions of the product exist (because neither FDA 
nor the exporter would be able to tell what specific version of the 
product was exported) or if the product was exported to multiple 
countries (because neither FDA nor the exporter would be able to alert 
foreign government officials if a problem developed or such 
communications became necessary).
    FDA disagrees, therefore, with those comments asserting that the 
proposed rule was ``burdensome'' or ``unnecessary.'' The agency's 
interest is to implement sections 801(e)(1) and 802 of the act and 
section 351(h) of the PHS Act in a consistent, uniform manner that will 
generate notifications and records that will be useful in determining 
compliance with the act and will have some value both to the exporter 
and the agency. Furthermore, as discussed later in this document, FDA 
has, in response to other comments, revised or eliminated various 
requirements. These changes to the final rule should make it easier for 
exporters to comply with the act.
    (Comment 2) Several comments argued that FDA lacks authority to 
issue any regulations pertaining to exports. One comment conceded that 
the act imposes substantive requirements and that FDA can exercise its 
enforcement authority if a manufacturer violates the export 
requirements, but argued that FDA does not have ``carte blanche'' to 
require exporters to retain records to defend against a possible FDA 
enforcement action before the agency alleges that a violation has 
occurred. The comment added that FDA cannot require records as a 
substantive requirement so that failure to maintain records would be 
the basis for regulatory action. Another comment asserted that FDA had 
failed to show that Congress expected FDA to impose new recordkeeping 
and reporting requirements on industry or how the requirements would be 
important in fulfilling FDA's statutory obligations.
    Another comment simply stated that the act does not require 
regulations or the recordkeeping described in the proposed rule.
    Other comments cited remarks by one legislator to emphasize that no 
export restrictions would be preferable.
    FDA's authority to issue regulations stems from section 701(a) and 
(b) of the act (21 U.S.C. 371(a) and (b)). Section 701(a) of the act 
gives the agency authority to issue regulations for the efficient 
enforcement of the act unless an exception exists, and section 701(b) 
of the act specifically authorizes the Departments of Health and Human 
Services (DHHS) and the Treasury to jointly prescribe and for the DHHS 
to promulgate regulations for the efficient enforcement of section 801 
of the act. Given these provisions of the act, FDA clearly has the 
authority to promulgate regulations concerning exports and to issue 
regulations for the efficient enforcement of sections 801 and 802 of 
the act.
    Additional discussion of FDA's authority to issue regulations for 
the efficient enforcement of section 351(h) of the PHS Act is included 
in the responses to the comments to Sec. 1.101(c) (21 CFR 1.101(c)) 
(see section II. D below).
    Records enable a person to show, and for FDA to verify, that the 
person has complied with its legal obligations. The FDA Export Reform 
and Enhancement Act, with very few exceptions, eliminated any need for 
prior FDA approval of an export, so determining whether a person has 
complied with the act must depend on an examination of records. If no 
records can be required, a firm cannot demonstrate that it met all 
applicable export requirements, and FDA would be unable to verify such 
compliance.
    Further, section 802(g) of the act clearly states, in part, that, 
``Any exporter of a drug or device shall maintain records of all drugs 
or devices exported and the countries to which they were exported'' 
(emphasis added). The most straightforward interpretation of this 
provision is that persons exporting drugs or devices under section 802 
of the act must keep records on the exported product and the foreign 
countries receiving the product. As a result, the final rule, at 
Sec. 1.101(e), describes the types of information that would 
demonstrate compliance with section 802(g) of the act. Failure to keep 
the records required by section 802(g) of the act would be a violation 
of section 802 of the act. As a result, the product would no longer 
have section 802 of the act's exemption from the applicable 
misbranding, adulteration, approval, and prohibited act provisions of 
the act. The product and/or the person responsible could be subject to 
enforcement action under the act.
    FDA acknowledges that one legislator, in his remarks accompanying 
the passage of the FDA Export Reform and Enhancement Act, indicated a 
desire to have no export requirements at all. Nevertheless, the FDA 
Export Reform and Enhancement Act did contain requirements for exports, 
and one cannot reasonably argue that Congress, in enacting those 
requirements, intended them to be ignored, rendered meaningless, or 
made unenforceable. When interpreting legislation, it is a well-settled 
principle that, ``Absent clear congressional intent to the contrary, we 
will assume the legislature did not intend to pass vain or meaningless 
legislation'' (Coyne & Delany v. Blue Cross & Blue Shield of Virginia, 
102 F.3d 712, 715 (4th Cir. 1996); see also Halverson v. Slater, 129 
F.3d 180, 185 (D.C. Cir. 1997) (Congress cannot be presumed to do a 
futile thing)).
    (Comment 3) Two comments argued that the proposal was deficient or 
had to be withdrawn because FDA had not shown how the proposal protects 
the public health of U.S. citizens or foreign citizens or benefits 
consumers.
    FDA disagrees with the comments. The rule is intended to implement 
sections 801(e) and 802(g) of the act and section 351(h) of the PHS Act 
by describing the types of records that should be kept in order to 
demonstrate that the export complied with the act and by describing the 
contents of the simple notification, which must be sent to FDA for 
certain exports under section 802 of the act. None of these provisions 
requires a demonstration of the public health benefits for United 
States or foreign citizens as a prerequisite to rulemaking. Thus, a 
preamble discussion concerning public health benefits to U.S. citizens 
or foreign citizens or possible congressional expectations for a 
regulation is unnecessary.
    Nevertheless, the act and, by extension, the final rule indirectly 
benefits the public health in the United States and in foreign 
countries. For example, sections 801(e) and 802 of the act permit 
exports of products that are not approved for use in the United States. 
(If the products were approved for use and otherwise in compliance with 
the act's requirements for marketing and sale in the United States, 
they would not be subject to the export provisions of the act.) 
Consequently, to the extent that records can show that a product not 
approved for use in the United States. was, in fact, exported, there 
would be no U.S. public health concern that a product whose safety or 
effectiveness has not been established had entered domestic commerce.
    As another example, section 351(h) of the PHS Act states, in part, 
that exports

[[Page 65431]]

of a partially processed biological product must conform with current 
good manufacturing practice (CGMP) requirements. CGMP requirements are, 
in part, intended to ensure that the product complies with certain 
adulteration and misbranding provisions. Obviously, consumers benefit 
by not receiving products that do not comply with these requirements. 
The final rule, at Sec. 1.101(c)(2), reflects the CGMP requirement 
adopted by Congress by requiring records demonstrating that the 
partially processed biological product was manufactured in conformity 
with CGMPs. If FDA could not require exporting firms to keep CGMP 
records, there would be no way to demonstrate or to verify that the 
partially processed biological product met CGMPs, was not contaminated, 
was correctly labeled and stored, and was otherwise in compliance with 
section 351(h) of the PHS Act and entitled to the provision's exemption 
from the requirements of the PHS Act and the act. This demonstration 
clearly benefits the public health.
    (Comment 4) One comment said that the present system is ``working 
well'' so new regulations are unnecessary. Other comments said the 
statute was sufficiently clear so no regulations are needed. Another 
comment asked that foods be excluded from the rule; the comment said, 
in part, that FDA did not understand the global food market or 
recognize congressional intent in adopting the FDA Export Reform and 
Enhancement Act. (The comment also made specific statements against 
individual provisions in the proposed rule and other claims; FDA 
addresses those comments elsewhere in this preamble.)
    FDA disagrees with the comments. The FDA Export Reform and 
Enhancement Act affected regulated industries differently. For example, 
for foods, no significant changes in the export authority occurred, 
whereas for drugs and devices, the new export provisions offered new 
authorities for exporting investigational products, products approved 
by certain foreign countries, and products intended to ``fill the 
pipeline'' while awaiting approval in a foreign country.
    As another example, before the enactment of the FDA Export Reform 
and Enhancement Act, unapproved new animal drugs were subject to the 
export requirements in section 802 of the act, and then-section 801(e) 
of the act did not permit the exportation of animal drugs that were 
``unsafe'' within the meaning of section 512 of the act (21 U.S.C. 
360b). After the enactment of the FDA Export Reform and Enhancement 
Act, animal drugs are excluded from section 802 of the act and, except 
for ``banned'' animal drugs which cannot be exported, now can be 
exported if they comply with the export requirements in section 
801(e)(1) of the act.
    Yet, while the new export provisions affected regulated industries 
differently, certain statutory requirements (such as compliance with 
section 801(e)(1) of the act) are common to all exports. Other 
statutory requirements, particularly those in section 802 of the act, 
are common to drugs and devices, or to drugs, biological products, and 
devices. In cases where a particular statutory requirement applied to 
more than one type of product, the agency decided that its 
interpretation and implementation of that statutory requirement should 
also be the same, regardless of the product involved. In other words, 
the rule implementing section 802(g) of the act should be the same for 
drug exporters as it is for device exporters because both are subject 
to section 802(g) of the act. Similarly, the requirements in section 
801(e)(1) of the act are incorporated by referring to section 802(f) of 
the act and section 351(h) of the PHS Act, and continue to operate as a 
freestanding export provision for foods, cosmetics, certain drugs, and 
devices. The interpretation of section 801(e)(1) of the act should be 
consistent regardless of the product involved.
    So, while the agency's implementation of the export provisions 
might have been sufficiently clear to some individuals and ``working 
well'' for certain industries in certain cases, the absence of a 
single, consistent interpretation of those statutory provisions created 
the possibility that different FDA centers would implement the same 
provisions of the act differently. The agency, therefore, formed a 
multi-center and multi-office group to develop FDA's policies and 
interpretations for the FDA Export Reform and Enhancement Act. The 
draft guidance document (which appeared in the Federal Register of June 
12, 1998 (63 FR 32219)), the proposed ``import for export'' rule (which 
appeared in the Federal Register on November 24, 1998 (63 FR 64930)), 
and this rule represent the consensus positions and interpretations of 
the agency's centers and offices.
    In short, a rule will help ensure that the export requirements 
``work well'' for all, rather than some, regulated industries and that 
they work the same way for all regulated industries.
    As for the comment requesting that FDA exclude food products from 
the rule, FDA declines to adopt the comment's suggestion. Section 
801(e)(1) of the act clearly and unequivocally applies to food exports, 
so, absent a compelling reason that would warrant separate or different 
export regulations for food, FDA declines to exclude food products from 
the final rule.
    (Comment 5) One comment said that the proposed rule contained the 
``same objectionable provisions'' that were in the draft guidance 
document on exports.
    While the agency disagrees with the comment's characterization of 
the rule, the proposed rule and guidance document contain the same 
concepts because FDA prepared the draft guidance document and its 
export-related proposed rules simultaneously. However, the 
administrative clearance and publication procedures and statutory 
requirements that apply to guidance documents are much simpler than 
those that apply to proposed rules. Consequently, the proposed rules 
appeared several months after FDA had published the draft guidance 
document in the Federal Register. In preparing this final rule, FDA 
reviewed both the comments submitted to the proposed rule and relevant 
comments submitted to the draft guidance document.
    (Comment 6) One comment accused the agency of engaging in 
``regulatory imperialism'' that is ``neither desired nor needed by 
other countries'' and that the rule reflected what it called ``FDA's 
continued belief that the agency is not simply the public-health agency 
for the United States, but for the entire world.''
    FDA disagrees with the comment. The rule implements parts of 
sections 801(e)(1) and 802 of the act and section 351(h) of the PHS 
Act. These provisions do not require, or expect, FDA to be a public 
health agency ``for the entire world,'' but the act and section 351(h) 
of the PHS Act do establish requirements on exports of products that 
cannot be legally marketed or sold under the act in the United States, 
and FDA is charged with enforcing the act and section 351 of the PHS 
Act. The final rule, as stated earlier, creates a single, uniform 
interpretation for certain export requirements by describing the types 
of records the agency would examine in order to determine whether a 
person complied with the law and by describing the content of the 
notification, if required by the act, to be sent to FDA.
    (Comment 7) Two comments involved investigational products. One 
comment said the proposal would make it more difficult for U.S. firms 
to conduct foreign clinical trials for drug and biological products. 
The other comment said the proposal fails to recognize that food 
samples are often exported for

[[Page 65432]]

testing or for product research and development. This comment said 
these food products are tested on site under controlled conditions or 
used for demonstration purposes and are never intended for human 
consumption in foreign countries. The comment added that these food 
products are never ``approved'' by foreign governments because they are 
not intended for retail markets, and said that the proposal overlooked 
the need for global market development.
    For clinical investigations involving human drugs and biological 
products, the FDA Export Reform and Enhancement Act created several 
avenues for exporting such products. First, if the drug or biological 
product has been approved for marketing in any of the countries 
identified in section 802(b)(1) of the act (the so-called ``listed 
countries''), the product may be shipped to any country for any 
purpose; this would include investigational use, and the export would 
be subject to the rule's notification and recordkeeping requirements.
    Second, if the drug or biological product is exported for 
investigational use in any listed country and is not approved in any 
listed country, section 802(c) of the act authorizes its export. These 
exports are not subject to the notification requirement in section 
802(g) of the act, but are subject to section 801(e)(1) of the act and 
to certain other requirements in section 802 of the act. Most drugs and 
biological products exported for investigational use would probably be 
subject to this provision of the act and Sec. 1.101(b) and (g).
    Third, the clinical investigation could be conducted under an 
investigational new drug application (IND). In these cases, only the 
IND requirements at part 312 (21 CFR part 312) would apply.
    Fourth, the person could seek permission to export the drug or 
biological product, without obtaining an IND, under Sec. 312.110. This 
program, known as the ``312 program,'' pre-dates the FDA Export Reform 
and Enhancement Act and allows exports for investigational use.
    FDA is preparing a proposed rule that would address exports of 
drugs and biological products for investigational use and also 
streamline the requirements for the ``312 program.'' Additionally, FDA 
has revised Sec. 1.101(b)(2) and other parts of this rule to simplify 
the requirements for demonstrating compliance with section 801(e)(1) of 
the act. These revisions significantly change the records required for 
demonstrating compliance with section 801(e)(1) of the act and are 
discussed later in this document.
    As for foods exported for investigational or research uses, the act 
does not contain any special provisions for such products. There is no 
apparent legal basis to distinguish them from other food exports.
    However, section 801(e)(1)(B) of the act only requires that the 
product intended for export be ``not in conflict'' with the foreign 
country's laws. This is considerably different--and far less 
restrictive than requiring that the exported product be ``approved'' in 
the foreign country. Market authorization is relevant only for drugs 
and devices exported under section 802(b)(1) of the act, because that 
provision of the act allows exports of unapproved drugs or devices if 
they have received valid marketing authorization from any listed 
country, and comply with the other applicable requirements of section 
802 of the act. Thus, in the food testing and research and development 
example cited by the comment, the export would comply with section 
801(e)(1)(B) of the act if such activities do not conflict with the 
laws of the importing country. Additionally, as stated earlier, revised 
Sec. 1.101(b)(2) greatly simplifies the types of records needed to show 
that the product is not in conflict with the foreign country's laws.
    (Comment 8) One comment objected to notifying FDA at all if a 
device is International Organization for Standardization (ISO)-9001 
certified or has received approval from a notified body so that it may 
be commercially marketed in the EU. The comment said the Conformite 
European (CE) mark should exempt the device from notification and said 
that small countries will find it in their best interests to accept the 
CE mark as their acceptance standard.
    FDA declines to exempt CE-marked or ISO-9001 certified devices from 
the notification requirement. The act requires notification for drugs 
and devices exported under section 802(b) of the act. The act does not 
exempt devices that bear a CE mark or meet ISO-9001 standards from the 
act's export requirements. The agency notes that such devices may 
qualify for export under section 801(e)(1) of the act. In such 
instances, no notification would be required as long as the export 
complies with section 801(e)(1) of the act.
    As for the comment's assertion that small countries should accept 
the CE mark, such matters are outside the scope of this rule. FDA 
cannot require other countries to accept a CE mark.
    (Comment 9) The preamble to the proposed rule described the 
requirements in section 802(f) of the act. It noted that the act 
prohibits exports of a drug or device if the product is the subject of 
a determination by FDA or by the U.S. Department of Agriculture (USDA) 
that the probability of reimportation of the exported drug or device 
would present an imminent hazard to the public health and safety of the 
United States. The preamble to the proposed rule noted that veterinary 
biological products are subject to USDA jurisdiction (64 FR 15944, col. 
3). One comment requested that FDA remove the reference to veterinary 
biological products.
    The statement in the preamble to the proposed rule accurately 
described the USDA's jurisdiction. However, the reference to veterinary 
biological products was inappropriate because sections 801(e)(1) and 
802 of the act apply only to FDA-regulated products. No changes to the 
final rule are necessary, though, because the reference to veterinary 
biological products appeared only in the preamble to the proposed rule.
    (Comment 10) Two comments said the rule failed to address or to 
distinguish between items that are imported as components or 
ingredients that are used in products destined for export and products 
that are manufactured solely for export purposes.
    In the Federal Register of November 24, 1998 (63 FR 64930), FDA 
published a proposed rule regarding ``import for export'' under section 
801(d) of the act. The proposal described the reporting and 
recordkeeping requirements for articles that are imported into the 
United States and are later further processed or incorporated into 
items for export.
    The import for export proposal, however, focused on requirements 
pertaining to the imported article, whereas this final rule pertains to 
the notification and recordkeeping requirements for exported products. 
In other words, the import for export provision in section 801(d) of 
the act does not relieve ``import for export'' products from satisfying 
the export requirements in sections 801(e) and 802 of the act or 
section 351(h) of the PHS Act. Thus, one should read this final rule in 
conjunction with the import for export proposal. FDA intends to 
finalize the import for export proposal in the near future.

B. Scope (Section 1.101(a))

    Section 1.101(a) would describe the provision's scope as covering 
notifications and records required for human drug, biological product, 
device,

[[Page 65433]]

animal drug, food, and cosmetic exports under sections 801 or 802 of 
the act or section 351 of the PHS Act.
    (Comment 11) One comment asked if a product meeting all applicable 
marketing requirements in the United States, but labeled in a foreign 
language and intended for the same uses as those approved by FDA, would 
be exempt from the rule.
    FDA considers a product which is labeled solely in a foreign 
language and whose foreign-language labeling has not been approved by 
FDA (where such FDA approval of labeling is required) to be an 
unapproved product and subject to the act's approval requirements. FDA 
approval, in general, includes approval of a product's labeling (see, 
e.g., sections 505(b)(1)(F), (d)(5), and (d)(7); 512(a)(1)(B), 
(a)(2)(C), and (b)(1)(F); and 515(c)(1)(F), and (d)(2) of the act (21 
U.S.C. 355(b)(1)(F), (d)(5), and (d)(7); 360b(a)(1)(B), (a)(2)(C), and 
(b)(1)(F); and 360e(c)(1)(F), and (d)(2))). Thus, if FDA has not 
reviewed or approved the foreign-language label, the product is 
unapproved and would not be exempt from this rule, even if an 
identical, FDA-approved product with approved labeling exists.
    For information regarding the exportation of products legally 
marketed in the United States that are accompanied by FDA-approved 
labeling, please see comment 28.
    (Comment 12) One comment objected to the rule's scope, saying that 
it would cover products that foreign countries might regulate 
differently from FDA. The comment gave an example of patient [disposal] 
washcloths, which would be medical devices in the United States, but 
would be cosmetics in Brazil. The comment said FDA should concern 
itself with compliance with FDA requirements for domestic shipments.
    FDA disagrees with the comment. The most logical interpretation of 
the act is to have FDA regulate products, and determine whether 
products are exempt from requirements applicable to products marketed, 
distributed, or sold in the United States because they qualify for 
export under sections 801(e) or 802 of the act or section 351(h) of the 
PHS Act, according to their classification or type in the United 
States. Thus, a product that would be considered a device in the United 
States remains a device under the export provisions even though a 
foreign country might regulate it differently or might not regulate it 
at all. It would be both inefficient and resource-intensive for 
exporters and FDA to apply the export requirements based on the product 
category in which a particular foreign country regulates the product. 
Moreover, such an approach is inconsistent with the structure of the 
act's export provisions. The export provisions are a means by which an 
exporter can ship products that would otherwise be subject to the act's 
domestic provisions. The purposes underlying the export provisions 
would be undermined if a product could qualify for export under the 
rules applicable to the product category of the importing country 
rather than based on how the product is regulated in the United States.
    (Comment 13) One comment said the proposal failed to address 
specific categories of food products. The comment said that food 
additives and dietary supplements are ``foods'' and subject to section 
801(e)(1) of the act, but said color additives are not foods, drugs, or 
any other product mentioned in proposed Sec. 1.101(a). The comment 
asked if color additives are exempt from the rule.
    The act's definitions of ``food,'' ``drug,'' and ``cosmetic'' 
include components of such products (see section 201(f)(3), (g)(1)(D), 
and (i)(2) of the act (21 U.S.C. 321(f)(3), (g)(1)(D), and (i)(2)). 
Section 201(t)(1)(B) of the act, in general, defines a ``color 
additive'' as a material that, when added or applied to a food, drug, 
or cosmetic, or to the human body or any part thereof, is capable of 
imparting color. Most color additives would be components of a food, 
drug, or cosmetic and, as a result, be subject to the act's export 
requirements for foods, drugs, or cosmetics. Only those color additives 
that are not classified as a food, drug, or cosmetic ``component'' fall 
outside sections 801(e) and 802 of the act. In such circumstances, if 
the color additive cannot be legally marketed, distributed, or sold in 
the United States because it does not comply with the act's 
requirements for color additives, it may not be exported.
    (Comment 14) FDA, on its own initiative, has replaced the word 
``biologic'' or ``biologics'' with ``biological product'' or 
``biological products'' throughout the rule. This change has no 
substantive effect and is intended only to use the term used in the PHS 
Act for these products.

C. Recordkeeping Requirements for Human Drugs, Biological Products, 
Devices, Animal Drugs, Foods, and Cosmetics Exported Under or Subject 
to Section 801(e)(1) of the Act (Section 1.101(b))

1. General Remarks
    Section 1.101(b) would establish the recordkeeping requirements for 
human drugs, biological products, devices, animal drugs, foods, and 
cosmetics exported under or subject to section 801(e)(1) of the act.
    (Comment 15) Several comments challenged FDA's authority to issue 
any recordkeeping regulations for section 801(e)(1) of the act. Two 
comments claimed that the act only requires records under section 
802(g) of the act, so FDA cannot issue recordkeeping requirements for 
section 801(e)(1) of the act. One comment added that the proposed 
recordkeeping requirements went ``far beyond'' the ``simple 
recordkeeping'' requirements specified in the act. Two comments argued 
that the act did not require records or prescribe what records are to 
be kept, although one comment acknowledged that companies should keep 
records to demonstrate compliance with the act. According to these 
comments, companies have the discretion to keep any records they wish 
to demonstrate compliance with section 801(e)(1) of the act.
    FDA has ample legal authority to require records. Section 701(b) of 
the act provides the principal legal basis for the recordkeeping 
requirements in Sec. 1.101(b). Section 1.101(b) reflects the basic 
export requirements in section 801(e)(1) of the act that apply to all 
exports under sections 801(e) and 802 of the act, regardless of whether 
the product is a food, human or animal drug, biological product, 
device, or cosmetic. The agency drafted this provision to provide a 
single, consistent interpretation of requirements in section 801(e)(1) 
of the act to both industry and to the agency's own components. This 
should result in less confusion and fewer disagreements as to whether a 
particular document adequately demonstrates compliance with section 
801(e)(1) of the act (which would occur if no regulation existed and 
firms had total discretion over what records to keep). FDA has, 
however, significantly revised Sec. 1.101(b) in response to the 
comments (by shortening the recordkeeping period and by clarifying the 
types of records needed to show that the export meets the foreign 
purchaser's specifications or does not conflict with foreign laws), and 
discusses those changes later in this document.
    For the records required in Sec. 1.101(e), section 701(a) of the 
act provides rulemaking authority for the efficient enforcement of the 
act, and this authority is independent of the recordkeeping requirement 
in section 802(g) of the act. FDA further notes that, contrary to one 
comment's claim, section 802(g) of the act does not refer to ``simple 
recordkeeping.'' Instead,

[[Page 65434]]

section 802(g) of the act refers to a ``simple notification'' that is 
to be sent to FDA, and requires drug and device exporters to ``maintain 
records of all drugs or devices exported and the countries to which 
they were exported.''
    (Comment 16) One comment argued that the proposal contains 
requirements and recommendations that are irrelevant or inappropriate 
to specific products, such as bulk agricultural commodities. The 
comment asked FDA to exclude foods from the rule.
    FDA declines to exclude foods from the rule. Section 801(e)(1) of 
the act specifically includes foods, so it is more practical and 
appropriate to include foods as part of this rule so that the rule 
applies equally to all products subject to section 801(e)(1) of the 
act.
    Section 801(e)(1) of the act also does not distinguish between 
types of food, so it would be inappropriate to create exemptions or 
exceptions for specific food products. FDA has, however, revised some 
requirements in Sec. 1.101(b) to make it easier to demonstrate 
compliance with section 801(e)(1) of the act. FDA is unable to respond 
further to the comment because it did not identify which requirements 
were supposedly irrelevant or inappropriate or explain why they were 
irrelevant or inappropriate.
    (Comment 17) Proposed Sec. 1.101(b)(1) would require records to be 
kept at least 5 years after the date of exportation and made available 
to FDA for review and copying.
    Several comments protested that the 5-year period was excessive. 
One comment claimed that food manufacturers do not even keep records 
regarding foreign regulatory requirements and that it would be 
unrealistic and unacceptable to expect them to do so. Two comments 
suggested that the retention period be 2 years, while another comment 
suggested that, for drugs, the period be 1 year after the product's 
expiration date.
    The agency has revised the rule to make the record retention period 
coincide with the CGMP or quality systems (QS) regulations applicable 
to the product. So, for example, the CGMP record retention period would 
apply to drug exports, and the QS regulation record retention period 
would apply to device exports. FDA decided to use CGMP and QS 
regulation record retention periods because most records described in 
Sec. 1.101 would be contained in a company's CGMP or QS regulation 
records. As a result, firms should find it easier to maintain their 
export records in the same manner and for the same period of time as 
their CGMP or QS regulation records.
    For food and cosmetic exports, the food CGMP regulations do not 
contain a recordkeeping requirement, and there is no CGMP regulation 
for cosmetics. Therefore, because the food CGMP and cosmetic 
regulations do not require records, FDA has revised Sec. 1.101(b)(1) to 
require records for food and cosmetic exports to be kept for 3 years 
after the date of exportation. The 3-year period is consistent with the 
CGMP record retention period for drugs (see 21 CFR 211.180(a)).
    As for the comment claiming that food manufacturers do not keep 
records of foreign regulatory requirements, neither the proposed nor 
final rules required them to do so. Section 1.101(b)(2) requires 
records demonstrating that the product does not conflict with the laws 
of the importing country. The final rule states that such records can 
consist of either: (1) A letter from an appropriate foreign government 
agency, department, or body stating that the product has marketing 
approval from the foreign government or does not conflict with the 
foreign government's laws; or (2) a notarized certification by a 
responsible company official in the United States that the product does 
not conflict with the importing country's laws and includes a statement 
acknowledging that he or she is subject to 18 U.S.C. 1001. Thus, 
showing that the export does not conflict with the foreign country's 
laws does not require a person to keep records regarding foreign 
regulatory requirements.
    (Comment 18) One comment argued that the recordkeeping obligations 
do not operate until a firm begins to export a product.
    FDA disagrees with the comment. Although the rule does not specify 
when a firm should begin keeping export records, FDA expects firms to 
begin creating and keeping records before they export a product under 
sections 801(e) or 802 of the act or section 351(h) of the PHS Act. For 
example, to show whether the export meets the foreign purchaser's 
specifications (as required by section 801(e)(1)(A) of the act), an 
exporter would keep a copy of the incoming purchase order showing which 
items the foreign purchaser wanted. It would be illogical for the 
exporter to ask the foreign purchaser to provide a purchase order when 
the exporter ships or after the exporter has shipped the products to 
the foreign purchaser or to start keeping such records after he or she 
has exported the product.
    In other words, a prudent firm should know whether exports are 
permitted or whether the export meets various obligations under the act 
or the PHS Act before the firm actually exports the product. Yet, even 
in the absence of this requirement, most firms would have the foreign 
purchaser's specifications before they export the product because they 
would want to ensure that they are manufacturing and exporting the 
correct item and to reassure the foreign purchaser that the exported 
item meets the purchaser's needs or expectations. Moreover, for 
purposes of the act, if a product does not comply with the applicable 
requirements for domestic marketing, distribution, and sale, and the 
manufacturer lacks evidence that the product is intended for export and 
meets the requirements of an applicable export exemption (i.e., 
sections 801 or 802 of the act or section 351(h) of the PHS Act), the 
product would be subject to enforcement action for violating the act.
2. Foreign Purchaser's Specifications (Section 1.101(b)(1))
    To demonstrate that the exported product meets the foreign 
purchaser's specifications, Sec. 1.101(b)(1) would require records 
describing or listing the product specifications requested by the 
foreign purchaser. The proposal indicated such records could include 
details about the product (e.g., dosage strength, dosage form, purity, 
quality, operating parameters, composition) and any manufacturing 
specifications requested by the foreign purchaser (e.g., type of 
sterilization process to be used, compliance with a particular 
manufacturing standard).
    (Comment 19) Most comments submitted in response to proposed 
Sec. 1.101(b)(1) interpreted the provision as requiring extremely 
detailed product specifications and protested the level of detail that 
they believed the rule required. For example, some comments said that 
in vitro diagnostic devices are not manufactured to unique 
specifications and are instead sold to the general laboratory or 
scientific community. These comments said package inserts describing 
product specifications, product labeling, or some indication that the 
in vitro diagnostic device met design criteria should be acceptable.
    Other comments said that, for food products or medical devices, 
contracts or purchase orders between exporters and foreign purchasers 
should suffice. One comment added that for devices FDA should not 
require specifications to be in English; the comment said requiring 
foreign purchasers to draft original specifications in English would be 
cumbersome and that product labeling is used worldwide as the basis for 
product performance characteristics.

[[Page 65435]]

    One comment from a trade association for human drug manufacturers 
said CGMP records should suffice, but also claimed that the act does 
not authorize FDA to require any records. In contrast, another comment 
said that some foreign purchasers have limited requirements and may not 
require detailed product specifications.
    One comment said that recipes, manufacturing specifications, and 
processes are proprietary information protected under ``international 
agreements'' and should not be available to FDA for review and copying. 
The comment accused FDA of trying to obtain proprietary information 
with the intent to share such information with foreign entities.
    Only one comment stated that the records described in proposed 
Sec. 1.101(b)(1) would not present any problem. The comment explained 
that a manufacturer would require a detailed specification for the 
custom manufacture of any product that is not regularly manufactured or 
sold in the United States.
    FDA believes that many comments misinterpreted the rule. FDA's 
principal interest is to link a record to a particular export to verify 
that the exported product met the foreign purchaser's specifications. 
For example, if the foreign purchaser sought 5,000 bottles of drug X 
tablets, with each tablet at a 50 milligram (mg) dose, FDA would look 
for records to show that a particular shipment of drug X to the foreign 
purchaser consisted of 5,000 bottles of 50 mg of drug X tablets. 
Records stating only that drug X was shipped to the foreign purchaser 
would not be satisfactory because they would provide no information 
regarding the foreign purchaser's specifications or how the export 
shipment met those specifications.
    The final rule does not prescribe any particular degree of detail 
in the foreign purchaser's specifications. The agency has revised 
Sec. 1.101(b)(1) to clarify that the records need only contain 
sufficient detail to match the foreign purchaser's specifications to a 
particular export. If CGMP records contain information on the foreign 
purchaser's specifications, they may be sufficient under 
Sec. 1.101(b)(1).
    As for translations, the specifications should be translated, if 
necessary, to facilitate a determination as to whether the exported 
product meets the foreign purchaser's specifications. The agency has no 
preference whether the foreign purchaser or the U.S. manufacturer or 
exporter does the translation. However, the U.S. manufacturer or 
exporter should know whether the exported product meets the foreign 
purchaser's specifications, so it is reasonable to expect that the U.S. 
manufacturer or exporter would understand the foreign purchaser's 
specifications and be able to communicate those specifications in 
English.
    FDA disagrees with the comment that claimed that FDA wants to 
obtain proprietary information in order to transmit that information to 
foreign entities. Such claims are totally unfounded. FDA is very 
conscious of its legal obligations to protect trade secrets and 
confidential commercial information (see section 301(j) of the act (21 
U.S.C. 331(j)), 21 CFR part 20) and has regulations governing 
communications with foreign governments (see 21 CFR 20.89). Those 
regulations contain several safeguards, such as sponsor consent, to 
protect any exchanges of confidential commercial information with 
foreign governments.
    (Comment 20) One comment asked how often foreign purchasers must 
provide product specifications. The comment explained that 
specifications are only as detailed as necessary to meet the 
purchaser's needs, so that if the foreign purchaser changes or amends 
its specifications, the foreign purchaser should be expected to provide 
an amendment to the U.S. manufacturer. The comment suggested that FDA 
interpret the rule to require foreign purchasers to provide complete 
specifications only with the initial order. If the foreign purchaser 
subsequently changed the specifications, the foreign purchaser would 
only provide the changes to the manufacturer (rather than a complete 
set of specifications). The comment added that batch records would be 
kept in accordance with existing recordkeeping requirements and would 
be made available during an inspection.
    FDA does not expect complete specifications to accompany every 
order of the same product. For example, if an exporter signs a contract 
to ship the same item to a foreign purchaser on a monthly basis, the 
agency would not expect the exporter to obtain complete specifications 
for each monthly shipment, but would expect the exporter to have 
specifications that applied to the initial shipment and records showing 
that subsequent shipments correspond to the same initial 
specifications. The agency's principal interest is to link records to 
specific export shipments to verify that a particular exported product 
met the foreign purchaser's specifications. The level of detail in the 
specifications may vary between orders, but the agency expects 
manufacturers to be able to demonstrate that the exported product met 
the foreign purchaser's specifications.
3. Not in Conflict With the Foreign Country's Laws (Section 
1.101(b)(2))
    Proposed Sec. 1.101(b)(2) would require the exporter to maintain 
documentation that demonstrates that the exported product does not 
conflict with the importing country's laws. The proposal stated that 
this would normally consist of a letter from the appropriate foreign 
government agency, department, or other authorized body stating that 
the product has marketing approval from the foreign government or does 
not conflict with that country's laws. The proposal would not consider 
letters or other documents from nongovernmental bodies or persons, such 
as company officials or attorneys in the foreign country, to be 
satisfactory for this purpose.
    (Comment 21) Many comments objected strongly to proposed 
Sec. 1.101(b)(2). In general, most comments said it would be difficult, 
time-consuming, burdensome, or impossible to obtain a letter from a 
foreign government. Other comments argued that foreign governments 
might not regulate the exported product so one could not demonstrate 
that the product was not in conflict with foreign laws or that foreign 
governments might not be willing to provide a letter due to 
disinterest, lack of staff, or a desire to protect domestic industry. A 
few comments suggested that manufacturers should not be responsible for 
determining whether a product does not conflict with foreign laws, 
arguing that importers, purchasers, or distributors in the foreign 
country should bear that responsibility.
    Many comments advocated alternative approaches that would eliminate 
any need for a letter from the foreign government. Most comments 
favored a certification, declaration, letter, or memo by a company 
official in the foreign country, a distributor in the foreign country, 
by a foreign subsidiary, an attorney (either in the United States or in 
the foreign country), a notified body (if the export were to Europe or 
Japan), or a foreign government official, or some combination of these 
firms or persons. These comments often explained that firms are 
responsible for meeting local requirements and supported the use of 
certifications or letters from company officials.
    One comment suggested using only contractual documents between the 
exporter and importer. The comment said previous FDA guidance to the 
grain handling industry used this approach.

[[Page 65436]]

    Another comment said a copy of a valid import license should be 
sufficient because these licenses usually require inspection by the 
foreign government. The comment explained that a manufacturer will not 
ship a product if its export costs are significant, and it will not 
ship a product that does not comply with local requirements because the 
cost of returning the product would be too great.
    One comment said a label stating ``For export only'' should suffice 
to show that the product does not conflict with the foreign country's 
laws.
    Section 1.101(b)(2) was intended to provide the most reliable 
indicator that the exported product did not conflict with the foreign 
country's laws. However, in light of the comments, FDA has revised 
Sec. 1.101(b)(2) to accept, as an alternative to a letter from the 
foreign government, a notarized certification from a responsible 
company official in the United States that the product is not in 
conflict with the foreign country's laws. The certification must 
include a statement acknowledging that the responsible company official 
making the certification is subject to the provisions of 18 U.S.C. 
1001. This statutory provision makes it a criminal offense to knowingly 
and willfully make a false or fraudulent statement, or make or use a 
false document, in any matter within the jurisdiction of a department 
or agency of the United States. This statutory provision also makes it 
a criminal offense to knowingly and willfully falsify, conceal, or 
cover up by any trick, scheme, or device a material fact in any matter 
within the jurisdiction of a department or agency of the United States. 
This revision should address the concerns expressed in most comments 
and eliminate any potential delays or obstacles in demonstrating 
compliance with section 801(e)(1)(B) of the act. FDA reserves the 
authority to request additional documentation demonstrating that the 
export is not in conflict with the foreign country's laws if questions 
arise regarding a certification.
    FDA declines to amend the rule to accept contracts as evidence that 
an export is not in conflict with a foreign country's laws. While 
parties entering contracts usually intend to execute legally binding 
obligations, they do not necessarily take into account whether the 
export complies with foreign laws.
    (Comment 22) A few comments disputed FDA's authority to require a 
letter from a foreign government. They noted that a particular 
legislator considered such a requirement to be objectionable or simply 
declared that FDA exceeded its legal authority.
    As stated earlier, FDA has revised Sec. 1.101(b)(2) to accept 
certifications from company officials as an alternative to a letter 
from a foreign government agency.
    Additionally, as discussed earlier, FDA has ample legal authority 
under section 701 of the act to issue regulations for the efficient 
enforcement of the act.
    (Comment 23) One comment interpreted Sec. 1.101(b)(2) as being 
satisfied if the foreign country had issued an approval letter or 
published some document indicating that the product was approved.
    Copies of approval letters or other government-issued documents 
indicating government approval are acceptable to show that the product 
is not in conflict with the foreign country's laws, but, as stated 
earlier, the final rule also allows firms to provide a certification 
from a responsible company official that the product is not in conflict 
with the foreign country's laws. FDA reiterates that section 
801(e)(1)(B) of the act does not require the foreign government to 
``approve'' the exported product for commercial marketing; it only 
requires that the export ``not be in conflict'' with the foreign 
country's laws.
    Market authorization from a foreign government is relevant under 
section 802(b)(1) of the act, which authorizes the export of drugs and 
devices that have received marketing authorization from a listed 
country. However, the final rule does not contain any detailed 
provisions pertaining to the market authorization aspect of section 
802(b)(1) of the act.
    (Comment 24) Proposed Sec. 1.101(b)(2) also would require the 
letter from the foreign government to be in English or for the person 
exporting the article to have an English-language translation. One 
comment objected to the English-language translation requirement. The 
comment said World Trade Organization (WTO) notification processes do 
not require translations and that, for exported food products, English-
language translations are not always available or necessary.
    Section 1.101(b)(2) accepts certifications from company officials 
in the United States to show that the export does not conflict with the 
importing country's laws, and the final rule requires the certification 
to be in English or for an English-language translation to be 
available. This should not be objectionable because a U.S. exporter is 
likely to have a responsible official capable of writing a 
certification in English.
    FDA is not persuaded that WTO notification processes are relevant 
to the rule because this rule concerns compliance with U.S. law by U.S. 
companies. Section 801(e)(1)(B) of the act requires the exported food, 
drug, device, or cosmetic to not be in conflict with the laws of the 
country to which it is intended for export, and Sec. 1.101(b)(2) 
describes how a U.S. firm demonstrates compliance with section 
801(e)(1)(B) of the act.
    (Comment 25) One comment said proposed Sec. 1.101(b)(2) would 
adversely affect clinical trials conducted outside the United States by 
affecting the supplies of exported drugs for investigational use.
    Because FDA has revised Sec. 1.101(b)(2) to accept certifications 
as an alternative to a letter from a foreign government, the agency 
does not anticipate any significant problems or delays in executing the 
certifications, so there should be no adverse impact on exporting drugs 
for investigational use. Additionally, FDA intends to issue a proposed 
rule concerning exports of investigational new drugs. The proposal 
would describe some new regulatory approaches for exporting 
investigational new drugs and would streamline existing requirements 
for such exports.
4. ``For Export Only'' Label (Section 1.101(b)(3))
    Proposed Sec. 1.101(b)(3) would require the records to include 
copies of any labels or labeling statements, placed on the shipping 
packages, that show that the packages are intended for export. The 
proposal indicated that statements such as ``For export only'' may be 
sufficient for this purpose.
    (Comment 26) Two comments said that raw or processed agricultural 
commodities cannot be labeled. The comments said that FDA should accept 
a statement on the bill of lading, export declaration, or other 
shipping document. One comment suggested that the label, alone, should 
be sufficient and that FDA should not require firms to show that the 
export does not conflict with the foreign country's laws.
    FDA agrees and has revised the rule to permit the statement to be 
attached to a bill of lading, export declaration, or other document 
accompanying the exported product if the product, as it is ordinarily 
shipped, cannot be labeled.
    As for the comment's statement that FDA should not require firms to 
show that an export does not conflict with a foreign country's laws, 
FDA points out that section 801(e)(1)(B) of the act expressly requires 
that a food, drug, device, or cosmetic intended for export to be ``not 
in conflict with the laws of

[[Page 65437]]

the country to which it is intended for export.'' If a product intended 
for export fails to comply with section 801(e)(1)(B) of the act, the 
product may be considered to be adulterated or misbranded, and section 
301(a) of the act prohibits the introduction or delivery for 
introduction into interstate commerce of any adulterated or misbranded 
food, drug, device, or cosmetic.
5. ``Not Sold or Offered for Sale in the United States'' (Section 
1.101(b)(4))
    Proposed Sec. 1.101(b)(4) would require records showing that the 
product is not sold or offered for sale in the United States. The 
preamble to the proposal said that these records could pertain to the 
product, its labeling, and similar products sold in the United States. 
The idea was to show that the exported product, when compared to those 
sold in the United States, was different from products sold 
domestically.
    (Comment 27) Several comments objected to the proposed requirement, 
arguing that the act does not require any records or labeling to show 
that the exported product is not sold or offered for sale in the United 
States.
    In contrast, other comments stated that it is difficult to assemble 
records to ``prove a negative,'' namely that a particular product is 
not sold or offered for sale in the United States, particularly when a 
company does not sell a similar product in the United States or only 
exports products. Some comments suggested that FDA accept copies of 
shipping records, product labeling, price lists or catalogs, product 
listings submitted to FDA, or certifications from the exporter. Most 
comments recommended that the labeling statement in Sec. 1.101(b)(3)--
that the product is ``For export only''--be acceptable, although some 
would add a product label stating, ``Not for sale in the United 
States.'' Two comments said records relating to the production, 
destruction, and export of products or showing how exported products 
are segregated from those sold in the United States should be 
acceptable.
    After further consideration, FDA agrees that it would be difficult 
and impractical to require records of products sold domestically, 
product labels, or similar information in order to demonstrate that a 
particular export is ``not sold'' in the United States. The agency has 
revised the rule to state that production and shipping records relating 
to the exported product will be sufficient and that promotional 
material will be helpful in determining whether a product is ``offered 
for sale'' in the United States. The agency notes that information 
concerning products sold or offered for sale in the United States that 
are similar to an exported product may be used by the agency in 
determining compliance with section 801(e)(1) of the act. The final 
rule does not require an exporter to retain records concerning similar 
products sold or offered for sale in the United States, but other 
provisions in the act may require such records to be retained.
    (Comment 28) FDA interpreted section 801(e)(1)(D) of the act as 
requiring exported products to be different from products sold in the 
United States. One comment questioned FDA's interpretation. The comment 
said that section 801(e)(1)(D) of the act is only intended to prevent 
diversion of products into domestic commerce. The comment argued that 
preventing the sale of foreign-market versions of products sold in the 
United States ``perversely'' establishes a more restrictive regime for 
products sold in the United States than products not sold or offered 
for sale in the United States.
    Two comments disagreed with FDA's position as it pertains to 
multiple batches of the same product. (In the draft guidance document, 
FDA indicated that section 801(e)(1)(D) of the act would not be met if 
a manufacturer made five batches of the same drug and sought to sell 
some batches in the United States and to export the others; the draft 
guidance document indicated that the U.S. sales would show that the 
product is, in fact, sold in the United States contrary to section 
801(e)(1)(D) of the act.) The comments argued that section 801(e)(1)(D) 
of the act should be interpreted as applying only to specific products 
that are or were sold or offered for sale in the United States, so 
products that are intended for export may, in fact, be exported even 
though the same product or different batches of the product are sold in 
the United States.
    After considering the comment, FDA is clarifying its interpretation 
of section 801(e)(1)(D) of the act. If the product is legally sold in 
the United States, and the same product is intended for export for the 
same approved use and is accompanied by the FDA-approved labeling, FDA 
may consider the product to be sold or offered for sale in the United 
States. In most circumstances, the product would not have to meet the 
requirements of section 801(e)(1) of the act because the product to be 
exported is the same product that can be legally sold in the United 
States and does not need to qualify for an exemption from the act's 
requirements. By stating that the product is ``accompanied'' by the 
FDA-approved label, FDA does not require the FDA-approved label to be 
affixed to each exported product, but the agency does expect the FDA-
approved label to be included in the export shipment. The agency 
recognizes that no interest would be served by requiring firms to 
attach FDA-approved labels to exported products if those labels would 
have to be removed or altered for the product to be sold in a foreign 
country.
    In contrast, if the product to be exported involves a use that is 
not approved in the United States, or is labeled solely in a foreign 
language and whose foreign language labeling has not been approved by 
FDA, then the product is ``unapproved'' and falls within the act's 
export provisions. In these cases (as we stated in our response to 
comment 11 earlier), the product must comply with section 801(e)(1)(D) 
of the act, and FDA would not consider the product to be sold or 
offered for sale in the United States within the meaning of section 
801(e)(1)(D) of the act.
    As for batches of the same product, FDA is clarifying its position 
to state that batches of a product that are segregated from products 
intended for domestic commerce or produced on manufacturing lines that 
are dedicated to export markets, may meet the requirement in section 
801(e)(1)(D) of the act as long as the batch intended for export 
differs from the domestic product. (For example, the product intended 
for export is not made under the same CGMPs that apply to the product 
marketed in the United States.)
    FDA will revise its guidance document on the FDA Export Reform and 
Enhancement Act to reflect these positions.

D. Additional Recordkeeping Requirements for Partially Processed 
Biological Products Exported Under Section 351(h) of the Public Health 
Service Act (Section 1.101(c))

    Proposed Sec. 1.101(c) would establish recordkeeping requirements, 
in addition to those required under Sec. 1.101(b), for partially 
processed biological products exported under section 351(h) of the PHS 
Act.
    (Comment 29) One comment would delete all recordkeeping 
requirements for partially processed biological products. The comment 
said that proposed Sec. 1.101(b)'s recordkeeping requirements are based 
on section 802(g) of the act, but that provision is inapplicable to 
partially processed biological products.
    FDA disagrees with the comment. FDA licenses biological products 
under the authority of section 351 of the PHS Act. The PHS Act requires 
that biological products be licensed and be

[[Page 65438]]

safe, pure, potent, and manufactured in facilities designed to ensure 
that the product continues to be safe, pure, and potent. Biological 
products are approved for marketing under the provisions of the PHS 
Act. However, because most biological products also meet the 
definitions of ``drugs'' or ``devices'' under the act, they are also 
subject to regulation under the act. As part of the FDA Export Reform 
and Enhancement Act, Congress substantially revised section 351(h) of 
the PHS Act, the provision that allows exports of partially processed 
biological products not otherwise in compliance with section 351 of the 
PHS Act and the act. Prior to the amendments, exports of partially 
processed biological products required FDA approval and were limited to 
those countries listed in the previous version of section 802 of the 
act. As amended, section 351(h) of the PHS Act exempts exported 
partially processed biological products from the requirements of the 
chapter of the PHS Act and the requirements of the act if certain 
requirements are met. Section 351(h) of the PHS Act states that a 
partially processed biological product which:
    (1) is not in a form applicable to the prevention, treatment, or 
cure of diseases or injuries of man;
    (2) is not intended for sale in the United States; and
    (3) is intended for further manufacture into final dosage form 
outside the United States, shall be subject to no restriction on the 
export of the product under this chapter or the Federal Food, Drug, 
and Cosmetic Act * * * if the product is manufactured, processed, 
packaged, and held in conformity with current good manufacturing 
practice requirements or meets international manufacturing standards 
as certified by an international standards organization recognized 
by the Secretary and meets the requirements of section 801(e)(1) of 
the Federal Food, Drug, and Cosmetic Act * * *.
The records in Sec. 1.101(b) will show whether a product complies with 
section 801(e)(1) of the act, and section 351(h) of the PHS Act clearly 
requires exports of partially processed biological products to comply 
with section 801(e)(1) of the act. If FDA could not require such 
records, an exporter could not show, and FDA could not verify, that an 
exported, partially processed biological product complies with section 
801(e)(1) of the act.
    Furthermore, it would be both unfair and illogical to interpret 
section 801(e)(1) of the act in a manner that would impose more 
requirements on persons who export foods, drugs, devices, and 
cosmetics, and comparatively fewer (if any) requirements on persons who 
export partially processed biological products.
    The act and the PHS Act authorize additional recordkeeping 
requirements to demonstrate compliance with the other requirements for 
the export of partially processed biological products under section 
351(h) of the PHS Act. Partially processed biological products are 
drugs under the act, and section 351(h) of the PHS Act allows such 
products to be exempt from both the PHS Act and from the act if certain 
requirements are met. The rule's recordkeeping requirements for exports 
under section 351(h) of the PHS Act will allow FDA to determine 
efficiently whether the terms of the exemption have been met and 
whether any violations of the act exist, which would be the case if the 
export does not comply with the exemption in section 351(h) of the PHS 
Act. The issuance of these regulations, therefore, is authorized under 
section 701(a) of the act, which gives FDA the authority to issue 
regulations for the efficient enforcement of the act.
    Recordkeeping requirements to implement section 351(h) of the PHS 
Act are also authorized by section 361 of the PHS Act (42 U.S.C. 264). 
Under that section, FDA may make and enforce regulations necessary to 
prevent the introduction, transmission, or spread of communicable 
diseases between the States. Because of their nature, partially 
processed biological products pose a potential risk of transmitting 
diseases because they may not have been treated to inactivate 
infectious agents or other harmful agents. FDA has determined that it 
may appropriately and effectively regulate partially processed 
biological products intended for export, and the risks associated with 
their movement in interstate commerce, by imposing recordkeeping 
requirements specific to exports under section 351(h) of the PHS Act.
    FDA has, however, rewritten Sec. 1.101(c)(2) through (c)(4) to 
adopt parallel sentence structure. These changes are intended to make 
the rule easier to read and have no substantive impact on the rule.
    (Comment 30) Proposed Sec. 1.101(c)(1) would require persons 
exporting a partially processed biological product under section 351(h) 
of the PHS Act to maintain records demonstrating that the product for 
export is a partially processed biological product, that is, ``not in a 
form applicable to the prevention, treatment, or cure of disease or 
injuries of man.''
    One comment said it would be impractical to create records to show 
that a product is a partially processed biological product. The comment 
said that a partially processed biological product ``is just that, a 
partially processed biologic.''
    FDA disagrees with the comment. Before Congress enacted the FDA 
Export Reform and Enhancement Act, FDA interpreted the term ``partially 
processed biologic'' in section 351(h) of the PHS Act as including 
products that require purification, inactivation, fractionation, or 
significant chemical modification before the partially processed 
biological product can be used in making a final product. To 
demonstrate that a product was a partially processed biological 
product, a firm provided either an explanation or documentation 
explaining the need to purify, inactivate, fractionate, or chemically 
modify the partially processed biological product before it could be 
used in a final product.
    While the FDA Export Reform and Enhancement Act eliminated the need 
to submit an export application to FDA, it did not alter the term 
``partially processed biologic'' or suggest any changes to FDA's 
interpretation of the term. Consequently, FDA expects firms to have 
records demonstrating that the product intended for export is, indeed, 
a partially processed biological product that is eligible for export 
under section 351(h) of the PHS Act. Those records may consist of an 
explanation or documentation explaining the need to purify, inactivate, 
fractionate, or chemically modify the partially processed biological 
product before it could be used in a final product.
    (Comment 31) Proposed Sec. 1.101(c)(4) would require a firm to 
maintain copies of all labeling that accompanies the partially 
processed biological product for export, such as a container label with 
the statement, ``Caution: For Further Manufacturing Use Only,'' and any 
package insert and to make such copies and package inserts available to 
FDA during an inspection.
    One comment said the proposed requirement was unauthorized under 
the act and the PHS Act. The comment said that manufacturers should not 
have to keep copies of all labeling that accompanies an exported 
product.
    FDA disagrees with the comment. The requirement to maintain copies 
of all product labeling is consistent with CGMP requirements. For 
example, as part of the batch product and control record requirements 
for drugs, 21 CFR 211.188(b)(8) requires retention of complete labeling 
control records, including specimens or copies of all labeling used in 
batch products. Section 351(h) of the PHS Act expressly requires that 
exported partially processed

[[Page 65439]]

biological products be in conformity with CGMP requirements. The 
recordkeeping requirement adopted for exports in this rule is, 
therefore, consistent with existing CGMP requirements that apply to 
partially processed biological products exported under section 351(h) 
of the PHS Act. As discussed in greater detail in the response to 
comment 42 (below), the final rule does not require exporters to 
maintain duplicate sets of records for export and CGMP purposes. 
Records required under this rule may be part of the exporter's CGMP or 
QS regulation records.
    The requirement to maintain copies of all product labeling is also 
consistent with the requirement in section 351(h)(2) of the PHS Act 
that a partially processed biological product intended for export not 
be ``intended for sale in the United States'' and the requirement in 
section 351(h)(3) of the PHS Act that the exported product be 
``intended for further manufacture into final dosage form outside the 
United States.'' Without copies of all labeling, FDA would be unable to 
determine that the product is labeled in a manner consistent with these 
requirements. Section 1.101(c)(4) provides a practical approach for 
implementing sections 351(h)(2) and (h)(3) of the PHS Act because the 
labeling will help show that the product is not intended for sale in 
the United States, while the suggested cautionary statement will help 
demonstrate that the product is intended for further manufacture 
outside the United States. This cautionary statement is consistent with 
the statement required on other products intended for further 
manufacture, such as source plasma (see 21 CFR 640.70(a)(2)), and is 
also consistent with FDA's authority under section 361(h) of the PHS 
Act to make and enforce regulations to prevent the introduction, 
transmission, or spread of communicable disease.
    Although FDA suggests the inclusion of the statement, ``Caution: 
For Further Manufacturing Use Only,'' on the label of exported 
partially processed biological products, the proposed rule did not 
mandate the use of that particular statement. The agency included a 
cautionary statement to give exporters specific information on label 
statements that may be sufficient to show that the product is intended 
for further manufacturing into a final dosage form outside the United 
States, as required by section 351(h)(3) of the PHS Act. The final 
rule, at Sec. 1.101(c)(4), clarifies that exporters may use other 
records demonstrating that the exported partially processed biological 
product is intended for further manufacturing into a final dosage form 
outside the United States.
    (Comment 32) One comment interpreted this provision as requiring 
valid marketing authorization for the partially processed biological 
product and stated that the act does not require valid marketing 
authorization for such products. The comment said that firms might 
export partially processed biological products for research purposes, 
for use in clinical evaluations, or for product evaluation before 
marketing. The comment suggested that an attestation by a company 
official in the foreign country suffice in place of valid marketing 
authorization.
    The comment misinterprets the rule. Section 1.101(b)(2) and section 
801(e)(1)(B) of the act only require that the product not be in 
conflict with the foreign country's laws. FDA does not interpret this 
to mean that the exported product must have valid marketing 
authorization in the foreign country to which it is being exported. FDA 
recognizes that some countries lack affirmative approval mechanisms for 
certain products and that some countries do not ``approve'' certain 
products, particularly products used for research or investigational 
purposes.
    For biological products that may be regulated as devices (and 
devices generally), the Center for Devices and Radiological Health 
(CDRH) has information on countries that are nonresponsive to inquiries 
seeking permission either to market or to conduct clinical tests on 
devices. Because regulatory conditions pertaining to devices are 
rapidly changing in many countries, FDA recommends that firms first 
attempt to obtain authorization from an appropriate government 
official. If a firm is unsuccessful in establishing communications with 
a government official and/or obtaining any type of written 
authorization, or denial of authorization, from a foreign government, 
it may contact the Division of Program Operations, CDRH, for guidance.
    FDA also reiterates that the final rule, as revised, accepts a 
certification from a responsible company official in the United States 
that the product does not conflict with the importing foreign country's 
laws.

E. Notification Requirements for Drugs, Biological Products, and 
Devices Exported Under Section 802 of the Federal Food, Drug, and 
Cosmetic Act (Section 1.101(d))

    Proposed Sec. 1.101(d) would establish the notification 
requirements for drugs, biological products, and devices exported under 
section 802 of the act. In brief, proposed Sec. 1.101(d)(1) would 
require exporters to provide written notification to the agency that 
identifies the article's name, identifies its generic name if the 
article is a drug or the article's type if the product is a device, 
describes the product's strength and dosage form (if the product is a 
drug or biological product) or the product's model number (if the 
product is a device), and identifies the country that is to receive the 
exported article.
    The proposed rule acknowledged that, for exports to listed 
countries under section 802(b)(1) of the act, section 802(g) of the act 
requires the notification to identify only the drug, biological 
product, or device being exported, and does not expressly require the 
notification to identify the country to which the drug, biological 
product, or device is being exported. (In contrast, for drugs, 
biological products, or devices exported to nonlisted countries under 
section 802 of the act, section 802(g) of the act requires both 
identification of the exported product and the country to which the 
product is being exported.) Nevertheless, proposed Sec. 1.101(d) would 
require that all export notifications under section 802(g) of the act 
identify the product and the importing country. FDA explained that it 
took this action because section 802(a)(2) of the act requires FDA to 
notify the ``appropriate public health official'' in the foreign 
country receiving an exported drug, biological product, or device if 
FDA disapproves a marketing application for the drug, biological 
product, or device, and section 802(f) of the act requires FDA to 
consult with the ``appropriate public health official in the affected 
country'' in the event that an exported drug, biological product, or 
device presents an imminent hazard to the public health. FDA further 
noted that similar consultation obligations exist if the product's 
labeling is not in accordance with the requirements and conditions for 
use in the country in which the drug, biological product, or device has 
valid marketing authorization and the country to which the drug, 
biological product, or device is being exported or if the drug, 
biological product, or device is not promoted in accordance with the 
labeling requirements of section 802(f) of the act. Thus, to facilitate 
these notifications and consultations with foreign officials 
(particularly in the event that FDA disapproves a drug, biological 
product, or device that has been exported, or the exported product 
presents an imminent hazard to the public health of the

[[Page 65440]]

receiving country), proposed Sec. 1.101(d)(1)(iv) would require all 
notifications to identify the country or countries that are to receive 
the exported product.
    (Comment 33) Many comments strongly objected to identifying a 
listed country. Most stated that the act did not require the 
notification to identify listed countries. Some comments dismissed 
FDA's rationale regarding its statutory obligation to consult foreign 
government officials as unlikely to occur or dismissed it without 
explanation. One comment described the proposed requirement to require 
notifications to identify the listed country as ``casting a wide net to 
catch a few guppies at tremendous cost to the other fish,'' and said 
FDA could conduct an inspection of the firm to obtain the information 
on the listed countries receiving an exported product. Another comment 
said that identifying a listed country would mean that FDA is 
questioning the foreign country's judgment. Others implied that 
identifying a listed country would be burdensome or would complicate 
export notifications.
    A few comments said firms could voluntarily disclose the identity 
of the listed country in the notification, but could not be required to 
do so. One comment suggested that the notification state that the 
foreign country has provided valid marketing authorization, without 
identifying the listed country. Only one comment agreed with FDA's 
rationale to have the notifications identify all countries, including 
listed countries.
    FDA agrees that, if it had to consult a foreign government as 
required by the act, it could inspect a firm's export records to 
determine whether listed countries received a particular export. This 
approach, however, would be much more time-consuming and costly both 
for the industry and the agency because FDA would have to schedule the 
inspection, the firm would have to locate and assemble export records, 
and FDA would have to examine those records before it learned the 
listed country's identity. Consultation with the listed country, as 
required by the act, would be delayed, and this could present public 
health concerns if the agency's obligation to consult the foreign 
government was due to an imminent hazard finding or if FDA disapproved 
the product because it was not safe or effective.
    The agency also notes that export declarations required by the 
Bureau of the Census for certain exports and submitted to the U.S. 
Customs Service identify the ultimate consignee, by name and address, 
and, depending on the form used, the foreign port of unloading or 
intermediate consignees (see 15 CFR 30.7 (``Information Required on 
Shipper's Export Declarations'')). Assuming that firms use these export 
declarations, it would seem that identifying a listed country would be 
less burdensome or less problematic than identifying consignees by name 
and address. It is also difficult to see how requesting identification 
of a listed country in a notification sent to FDA, when the export 
declaration given to the U.S. Customs Service identifies the consignee 
and foreign port, can be characterized as ``questioning'' the judgment 
of a foreign country.
    Nevertheless, given the distinction drawn in the statute and 
objections to this provision, FDA has revised Sec. 1.101(d) to require 
identification of unlisted countries only. Firms may voluntarily 
identify a listed country in a notification, but are not required to do 
so. If a firm chooses to withhold the identification of a listed 
country, FDA suggests, but does not require, the firm to state in its 
notification that the export went to a listed country. (This will 
enable FDA to determine quickly that the firm did not neglect to 
identify an unlisted country.) If the statutory obligation to consult 
with a country receiving an exported product is triggered, FDA will 
conduct an inspection of the exporting firm to identify which listed 
countries it must contact.
    (Comment 34) One comment said that approved products that are 
exported should not be the subject of an export notification, even if 
the product is exported for an unapproved use. The comment said that 
requiring notifications for these products would be inconsistent with 
Congressional intent to relieve manufacturers of export obligations and 
would be beyond FDA's jurisdiction. The comment said that foreign 
health authorities are ``fully empowered to approve labeling and/or 
indications that they deem appropriate.''
    The comment is only partially correct. Approved products that are 
exported for their approved indications and are otherwise in compliance 
with the act's requirements for marketing, distribution, and sale in 
the United States are not subject to the export requirements in section 
802 of the act. For these exports, no notification is necessary.
    However, exports of an ``approved'' product for an unapproved use 
are subject to section 802 of the act. For example, section 802 of the 
act applies to drugs that require approval under section 505 of the act 
(21 U.S.C. 355) ``before such drug * * * may be introduced or delivered 
for introduction into interstate commerce.'' The act defines 
``interstate commerce,'' in part, as ``commerce between any State or 
Territory and any place outside thereof.'' Exports fall within the 
definition of ``interstate commerce'' because the shipment originates 
in a State and is destined to a ``place outside.'' Additionally, 
contrary to the comment's suggestion, the exported drug is not 
``approved'' by FDA because the intended use in the foreign country was 
not the subject of a FDA-approved application. To phrase this another 
way, FDA's approval processes includes approval of the drug's 
indications for use, so the fact that the agency may have approved the 
drug for other uses does not relieve the manufacturer from compliance 
with section 505 of the act when unapproved uses are concerned.
    The agency notes that, as an alternative to section 802 of the act, 
such exports may be permitted under section 801(f) of the act. Exports 
under section 801(f) of the act must comply with the requirements in 
section 801(e)(1) and (f) of the act, but do not require notification 
to FDA. If a product can be exported under either section 802 or 801(f) 
of the act, the exporter has the option of determining which export 
authority to use.
    (Comment 35) The proposed rule would require persons exporting a 
product in anticipation of market authorization in a listed country 
under section 802(d) of the act to comply with the notification 
requirements in proposed Sec. 1.101(d)(1). The preamble to the proposed 
rule explained that this requirement would be consistent with an 
interpretation of section 802(g) of the act that considers the nexus 
between section 802(b)(1) and (d) of the act. Section 802(g) of the act 
requires exporters of drugs, biological products, and devices to 
provide a simple notification to the agency when they export a product 
to a listed country or to an unlisted country under section 802(b)(1) 
of the act. Section 802(b)(1) of the act permits exports when the drug, 
biological product, or device has valid marketing authorization in a 
listed country, whereas section 802(d) of the act permits exports to a 
listed country in anticipation of market authorization. FDA stated that 
a literal interpretation of section 802(g) of the act would not require 
an exporter to notify FDA when it shipped a product to a listed country 
in anticipation of market authorization, but would instead require the 
exporter to notify FDA when the exporter shipped the same product to 
the same country once it has marketing

[[Page 65441]]

authorization. The preamble to the proposed rule stated that it would 
be more simple and efficient, both for exporters and FDA, if exporters 
notify FDA when they export a product in anticipation of market 
authorization under section 802(d) of the act rather than wait for 
marketing authorization in the listed country and then notify FDA when 
the product is exported under section 802(b)(1) of the act. FDA's 
intent was to allow firms to submit the notification when they first 
exported a product in anticipation of market authorization and to 
eliminate any need for them to submit a notification later when they 
received marketing authorization.
    Many comments objected to requiring a notification for exports 
under section 802(d) of the act, stating that the act did not authorize 
such notifications. Some said that FDA could not justify requiring such 
notification on the grounds that it would be more efficient or simpler. 
One comment viewed the proposed notification requirement as a 
prohibition on exports that would delay the availability of products. 
Another comment interpreted the rule as requiring two notifications--
one for exports in anticipation of market authorization, and a second 
when the product received marketing authorization.
    Only one comment agreed with the proposal, but reiterated that a 
subsequent notification once the product received marketing 
authorization should not be required.
    FDA has revised the final rule to limit notifications to products 
exported under section 802(b) of the act. In other words, no 
notification is required if the export is made in anticipation of 
market authorization under section 802(d) of the act. A person who 
exports a product in anticipation of market authorization, and later 
receives marketing authorization, would only submit the notification to 
FDA when the first export occurs to a particular foreign country 
following marketing authorization in that country.
    (Comment 36) One comment said that section 802(d) of the act 
permits anyone to export a product in anticipation of market 
authorization, regardless of who applied for market authorization.
    Section 802(d) of the act is commonly referred to as allowing firms 
to ``fill the pipeline'' so that a product will be available 
immediately upon market authorization by a foreign country. If the 
comment's interpretation of section 802(d) of the act were correct, any 
firm could export the product so long as one firm was seeking market 
authorization. In other words, under the comment's interpretation, if 
firm A were seeking market authorization to sell a drug called X, firms 
B, C, and D could export drug X to the same foreign country under the 
guise of ``anticipating'' market authorization. The comment's 
interpretation of section 802(d) of the act also would place little 
weight on the term ``anticipation'' of market authorization. Arguably, 
if a firm has not applied for market authorization, it cannot be 
characterized as ``anticipating'' market authorization. The inclusion 
of the word ``anticipation'' in section 802(d) of the act suggests that 
the firm exporting the drug or device is, in fact, the entity that is 
seeking market authorization or would be capable of distributing that 
drug or device upon marketing authorization.
    Consequently, FDA interprets section 802(d) of the act as follows. 
If the foreign country's product approval process is specific to an 
application (i.e., to have marketing authorization, a firm must submit 
an application, and the application must be approved), then a firm 
seeking to invoke section 802(d) of the act to export a drug or device 
to a foreign country must be seeking market authorization in that 
foreign country.
    If, however, the foreign country's product approval process would 
allow multiple products on the market upon market authorization (i.e., 
once marketing authorization occurs, any person can market a drug or 
device that meets the conditions of that marketing authorization), then 
a firm seeking to invoke section 802(d) of the act to export a drug or 
device to such a foreign country does not have to be the firm that 
sought marketing authorization in that foreign country.
    This interpretation of section 802(d) of the act acknowledges both 
the marketing authorization process in a foreign country and gives 
appropriate weight to the words ``in anticipation of market 
authorization.''
    (Comment 37) Proposed Sec. 1.101(d)(1) would require a notification 
to identify the exported product by name. If the exported product were 
a drug or biological product, the proposal would require the 
notification to provide a generic name and a description of the 
product's strength and dosage form. If the exported drug were a device, 
the proposal would require the notification to identify the type of 
device and to provide its model number.
    One comment stated that, because FDA is generally not able to 
examine sales and marketing information, it would be appropriate for 
the notification to contain information on the product, classification, 
lot code or unique identifying number, country of exportation, and 
whether or not the product was accepted.
    FDA declines to revise the rule as suggested by the comment. The 
product-specific information described in Sec. 1.101(d)(1) should be 
sufficient to identify a particular export. Firms are free to provide 
information on a lot code or a unique identifying number, but the final 
rule does not require this. Furthermore, because the act presumes that 
the United States is the country from which the product is exported and 
because section 801(e)(1)(B) of the act requires the exported product 
to be ``not in conflict'' with the foreign country's laws, FDA declines 
to require firms to identify the country of exportation or to state 
whether the product was ``accepted.''
    (Comment 38) FDA, on its own initiative, has revised 
Sec. 1.101(d)(1)(ii) to replace ``generic name'' with ``abbreviated or 
proper name.'' In proposing to require the export notification to 
contain the product's ``name'' and its ``generic name,'' FDA intended 
to require persons exporting a human drug to identify the product by 
its trade name and its abbreviated chemical name and to require persons 
exporting a biological product to identify the product by its trade 
name and its proper name. However, the term ``generic name'' created 
some confusion within FDA as to whether FDA was specifically interested 
in generic drug products. Consequently, FDA has revised 
Sec. 1.101(d)(1)(i) to require the notification to identify the 
product's trade name while Sec. 1.101(d)(1)(ii) now requires the 
notification to contain the exported product's ``abbreviated or proper 
name.'' The agency has made a similar change to Sec. 1.101(e)(1)(i) and 
(e)(1)(ii).
    The agency has also inserted language referring to biological 
products in Sec. 1.101(d)(1) to clarify that investigational biological 
products may be exported under section 802(c) of the act and that 
biological products may be exported in anticipation of marketing 
authorization under section 802(d) of the act.
    (Comment 39) A few comments addressed the frequency of export 
notifications. Two comments said notifications should be required only 
for the first export of a product. The comments stated that subsequent 
exports should not result in notifications, although the comments were 
unclear whether the subsequent export could be to a different country 
than the initial export.
    Section 802(g) of the act requires an exporter of a drug or device 
to provide

[[Page 65442]]

a simple notification to FDA under two different scenarios. In one 
scenario, the exporter must provide the simple notification when it 
first begins to export the drug or device to any listed country. This 
means that subsequent exports of the same drug or device to the same 
listed country or to any other listed country do not result in a simple 
notification to FDA. To illustrate how this works, assume that company 
X, under section 802(b) of the act, wants to export a drug to listed 
country A. Company X must provide a simple notification to FDA 
identifying the drug to be exported. If company X later wants to export 
the same drug to listed country B under section 802(b) of the act, the 
company does not have to send a simple notification to FDA because 
company X already provided a simple notification when it exported the 
drug to listed country A and because country B is a listed country.
    In the other scenario, when the export is to an unlisted country, 
section 802(g) of the act requires the exporter to provide the simple 
notification when it first begins to export the drug or device to that 
unlisted country, and the notification must identify the unlisted 
country. The act, therefore, requires a simple notification whenever 
the exporter first ships a drug or device to an unlisted country. Thus, 
to use the same illustration, if company X, under section 802(b) of the 
act, wants to export a drug to unlisted country D, company X must 
provide a simple notification that identifies the drug being exported 
and must also identify unlisted country D. Subsequent exports of the 
same drug to unlisted country D would not require company X to send a 
simple notification to FDA. However, if company X later wants to export 
the same drug to unlisted country E under section 802(b) of the act, 
company X must provide another simple notification to FDA, and the 
simple notification must identify the drug being exported and unlisted 
country E.
    (Comment 40) In the preamble to the proposed rule, FDA invited 
comment on possible alternatives to this notification requirement that 
would satisfy the consultation, notification, and recordkeeping 
obligations and requirements in section 802 of the act. The agency was 
especially interested in alternatives that would reduce the paperwork 
burden, such as electronic submissions and recordkeeping or periodic 
notifications (e.g., monthly, quarterly), and the details of such 
alternatives.
    One comment suggested that FDA accept export notifications that 
covered more than one country. Another comment suggested that FDA 
accept notifications on an annual basis, or no more often than a 
biannual basis, that the notifications be submitted in tabular form and 
submitted directly, if not electronically, to FDA. One comment 
suggested that FDA develop an interactive website so exporters could 
``fill in the blanks.'' Another comment suggested using Operational and 
Administrative System for Import Support (OASIS) system entries as 
notifications under section 802(g) of the act and would have annual 
reports submitted by exporters serve as confirmation of the export; the 
comment said that the notifications described in the proposed rule 
would add significant costs to manufacturers.
    FDA appreciates the comments' suggestions. The agency does not 
object if a simple notification covers more than one country; nothing 
in the act or these regulations prevents firms from identifying more 
than one country in a simple notification. Furthermore, if the foreign 
purchaser's specifications change after the first shipment, and the new 
specifications result in a drug or device that is not significantly 
different from the first exported drug or device, an exporter may, but 
is not required to, provide a new notification. For example, assume 
that company X is exporting an electronic device to listed country A. 
Later, the foreign purchaser revises its product specifications to 
change the voltage requirements for the device. The revised product 
specifications call for an electronic device that is substantially 
similar to the original electronic device, so FDA would not require 
another notification.
    In contrast, if company X is exporting a combination drug to listed 
country A, and the foreign purchaser revises its product specifications 
to substitute a different active ingredient, the drug to be exported 
has changed significantly, and FDA would expect the exporter to provide 
a new simple notification to cover the changed drug product when the 
exporter ``first begins'' to export the changed drug product.
    As for electronic submissions and other technology, FDA intends to 
explore options for facilitating notification to FDA, but is unable to 
create an interactive, web-based system at this time. The agency is 
also unable to adapt the OASIS system to cover notifications because 
the OASIS system focuses on imports, not exports, and is operationally 
separate from FDA's administrative oversight of exports.
    As for annual or semiannual submissions, the agency considered 
these options, but section 802(g) of the act appears to contemplate 
more timely notifications. The act requires notifications when the 
exporter ``first begins'' to export the drug or device under section 
802(b)(1) of the act, so the most logical interpretation of the phrase 
``first begins'' would mean that exporters must provide the 
notification to FDA when they actually export the drug or device.
    (Comment 41) FDA, on its own initiative, has revised the address 
for export notifications involving biological products and devices 
regulated by the Center for Biologics Evaluation and Research. The 
final rule replaces ``Office of Compliance'' with ``Office of 
Compliance and Biologics Quality.'' This change reflects the current 
office name.

F. Recordkeeping Requirements for Products Subject to Section 802(g) of 
the Act (Section 1.101(e))

    Proposed 1.101(e) would establish additional recordkeeping 
requirements for exported drugs, biological products, and devices 
subject to section 802(g) of the act. These records would include, but 
not be limited to: (1) Records concerning the product's name, (2) the 
product's generic name if the product is a drug or a biological product 
or the type of device if the product is a device, (3) a description of 
its strength and dosage form and the product's lot or control number 
(if the product is a drug or biological product) or the product's model 
number (if the product is a device), (4) the consignee's name and 
address, and (5) the date on which the product was exported and the 
quantity of product exported.
    (Comment 42) Several comments objected to most or all of the 
proposed recordkeeping requirements. Some comments argued that 
manufacturers already keep CGMP records and that none of the 
information sought in proposed Sec. 1.101(e) is required or even 
authorized by law. Another comment said the proposed recordkeeping 
requirement was ``excessive'' because it required too many documents be 
kept. Another comment said FDA should only require companies to keep 
records of exports to countries where they directly export drugs; if 
the drugs were subsequently exported elsewhere by the importing 
company, the importing company would be responsible for records of 
shipments to third countries.
    One comment sought clarification, asking if the records required by 
Sec. 1.101(e) are distinct from the quality system regulation records 
required for devices under 21 CFR part 820.
    Section 802(g) of the act clearly states that, ``Any exporter of a 
drug or device shall maintain records of all drugs or

[[Page 65443]]

devices exported and the countries to which they were exported.'' The 
most straightforward interpretation of this provision is that export 
records must be kept for drugs and devices exported under section 802 
of the act and that those records must also contain information 
regarding the countries receiving the exported product. Thus, FDA 
disagrees with those comments claiming that the records sought in 
Sec. 1.101(e) are not required or authorized by the act.
    Moreover, persons exporting drugs or devices, particularly persons 
who manufacture the exported drug or device, should already possess the 
information sought in Sec. 1.101(e). For example, Sec. 1.101(e)(1)(i) 
requires records containing the product's name. Most prudent exporters 
know the names of the products being exported. Section 1.101(e)(1)(ii) 
and (e)(1)(iii) requires records to contain more specific information 
about the drug or device, such as the drug's strength and dosage form 
or the type of device and its model number. A manufacturer who is 
exporting products should know the product's abbreviated name or proper 
name, strength, dosage form, and lot or control number (if the product 
is a drug or biological product) or the type of device and model number 
(if the product is a device), because this information is related to 
CGMPs for the product (see, e.g., 21 CFR 211.100 (written procedures 
for production and process control), 211.110 (sampling and testing of 
in-process materials and drug products), 820.70 (production and process 
controls for devices), and 820.160 (requiring device manufacturers to 
maintain distribution records which include or refer to the location of 
the consignee's name and address, the identification and quantity of 
devices shipped, the date shipped, and control numbers used). 
Additionally, section 802(f)(1) of the act prohibits exportation of a 
drug or device, under section 802 of the act, if the drug or device is 
not manufactured, processed, packaged, and held in substantial 
conformity with CGMP requirements. Thus, an exporter who is in 
substantial conformity with CGMPs should already possess the 
information described in Sec. 1.101(e)(1)(ii) and (e)(1)(iii). Finally, 
Sec. 1.101(e)(1)(iv) and (e)(1)(v) require the records to include the 
consignee's name and address, the date on which the product was 
exported, and the quantity of product exported. Presumably, an exporter 
knows where it is sending a product, when it ships the product, and how 
much was shipped.
    FDA emphasizes that Sec. 1.101(e) does not require exporters to 
keep duplicate sets of records--one for export purposes and another for 
CGMP purposes--nor does it require exporters to create new records if 
the exporter keeps the information described in Sec. 1.101(e) 
elsewhere. The records sought by Sec. 1.101(e) may be part of the 
exporter's CGMP or QS regulation records.
    Furthermore, to give exporters additional flexibility in meeting 
this requirement, FDA has amended Sec. 1.101(e)(2) to state that the 
records may be kept at the site from which the products were exported 
``or manufactured.'' This change will accommodate firms who manufacture 
products for export and are responsible for the product's exportation, 
but who send the product to another location for packaging or other 
operations before exportation occurs.
    (Comment 43) Two comments asked FDA to clarify what it wanted 
regarding a consignee's name and address. The comments explained that 
devices are often exported to distribution centers, and so the comment 
suggested that distribution centers should be acceptable as consignees. 
Other comments said FDA cannot require any records identifying a 
consignee. The comments asserted that the act does not require or even 
authorize FDA to require such information.
    FDA does not object if a distribution center in a foreign country 
is listed as a ``consignee'' under this rule. Identification of the 
consignee's name and address is intended to help FDA in the event that 
it has to consult foreign government officials regarding an exported 
product. The consignee's name and address will inform government 
agencies where the exported drug or device was first sent and will help 
speed efforts to recover or to prevent the distribution of potentially 
hazardous products.
    As for those comments objecting to identifying a consignee, FDA's 
general rulemaking authority in section 701(a) of the act provides 
sufficient statutory authority to require these records. FDA also 
believes that exporters would retain records identifying the consignee, 
by name and address, as part of their normal business practices 
because, presumably, the consignee ordered the drugs or devices and 
must pay for and receive the exported product. FDA further notes that 
export declarations submitted to the U.S. Customs Service must identify 
ultimate consignees by name and address, and, depending on the form 
used, may even identify intermediate consignees. Thus, exporters should 
have information regarding a consignee's name and address.
    (Comment 44) Proposed Sec. 1.101(e)(2) would require exporters to 
keep records at the site from which the products were exported and to 
maintain those records for at least 5 years after the date of 
exportation.
    Several comments objected to the 5-year period. Two comments 
advocated a 2-year period in order to be consistent with the QS 
regulation requirements. One comment suggested retaining records for 3 
years after the product's expiration date. Another comment criticized 
the agency for not providing a rationale for the 5-year period; this 
comment said that 5-year period might be too long in some situations, 
but not long enough in others, and said the time period was 
inappropriate without some rationale and a link to the act.
    The records required in Sec. 1.101(e) are similar, if not identical 
to, some records that are kept for CGMP or QS regulation purposes. To 
make recordkeeping easier for firms, FDA has revised the rule to state 
that these records must be retained in accordance with the record 
retention period for CGMP or QS regulation records. FDA reiterates that 
firms may use their CGMP or QS regulation records for dual purposes 
(i.e., to demonstrate compliance with CGMP or QS regulation 
requirements and to demonstrate compliance with the export regulations 
in Sec. 1.101) and do not have to keep dual sets of records.
    (Comment 45) One comment said that proposed Sec. 1.101(e) did not 
apply to investigational new drugs exported under section 802(c) of the 
act, but said that companies maintain records on such exports due to 
other obligations, such as CGMP requirements.
    FDA disagrees with the comment's interpretation. The relevant 
portion of section 802(g) of the act states that ``any exporter of a 
drug or device'' shall maintain records; this differs from the other 
sentences in section 802(g) of the act which refer to exporters of 
drugs or devices exported under section 802(b)(1)(A) of the act. As a 
result, Sec. 1.101(e) does apply to exports of investigational drugs 
under section 802(c) of the act.

G. Miscellaneous Comments

    Several comments addressed issues concerning implementation of the 
rule or other export matters.
    (Comment 46) One comment asked how the rule relates to other export 
documents issued by FDA. Another comment said interpreting sections 801 
and 802 of the act is complicated by the lack of clear implementing 
regulations; the comment said it is difficult to determine which 
requirements apply to a given product and asked FDA to

[[Page 65444]]

develop a rule to implement the export act.
    FDA prepared four agency wide documents to implement the FDA Export 
Reform and Enhancement Act. The agency developed a draft guidance 
document describing its interpretation of the export provisions; the 
guidance document is not binding on regulated industries or on FDA. For 
binding requirements, FDA prepared three regulations: (1) A rule to 
implement the ``import for export'' requirements in section 801(d) of 
the act, (2) a rule pertaining to export notifications and 
recordkeeping (which is presented here), and (3) a rule pertaining to 
exports of investigational new drugs (which FDA intends to publish in 
the Federal Register in the future). In general, the regulations would 
describe the types of records that should be kept or the contents of 
submissions that are sent to FDA. The agency published a draft guidance 
document in the Federal Register of June 12, 1998 (63 FR 32219). FDA 
published a proposed import for export regulation in the Federal 
Register on November 24, 1998 (63 FR 64930), and intends to publish a 
proposed rule on investigational new drug exports in the immediate 
future.
    Other export-related documents issued by FDA include a rule on 
investigational device exports (now codified at Sec. 812.18(b) (21 CFR 
812.18(b))) and a Compliance Policy Guide, CPG 7150.01, ``Certification 
for Exports,'' on export certificates.
    FDA agrees that implementing sections 801 and 802 of the act is 
difficult because the statutory requirements apply to different 
products in different ways. For example, most human drugs are subject 
to the export requirements in sections 802 and 801(e)(1) of the act, 
but insulin and antibiotics for human use and animal drugs are only 
exported under section 801(e) of the act. Most devices can be exported 
under section 801(e) or section 802 of the act, and either choice 
carries its own set of requirements. FDA prepared the guidance document 
in an effort to sort out the various requirements for each product and 
drafted the regulations to create binding requirements where such 
requirements were necessary. The agency decided against drafting a 
single rule because there was little overlap or commonality between 
subjects. For example, the import for export requirements are not 
relevant for exports of investigational new drugs, so a single rule 
would have been inappropriate and confusing.
    (Comment 47) One comment asked FDA to phase-in the rule to minimize 
its impact on commerce.
    The final rule is effective March 19, 2002. This should give firms 
sufficient time to comply with the rule.
    (Comment 48) One comment said FDA should conduct educational 
seminars or programs, in conjunction with the U.S. Customs Service and 
with the support of various trade associations, or do a televised 
program whose agenda is developed by industry and Federal agencies.
    FDA has, in the past, participated in conferences and educational 
programs that have discussed export matters, and individual centers 
have prepared guidance documents and other materials on selected 
topics. For example, CDRH has prepared a videotape on export issues. 
The agency intends to continue its participation in educational 
conferences and programs to the extent that its resources permit.
    (Comment 49) One comment would revise Sec. 1.101 to require only a 
simple notification for drugs and devices exported for investigational 
use. The comment said that drugs and biological products that are 
exported for investigational use and are the subject of an IND are 
regulated more strictly than drugs and biological products that are 
exported for investigational use without an IND. The comment said that 
FDA authorization is needed under Sec. 312.110, but drugs that are 
exported without an IND only require a simple notification to FDA. 
Consequently, the comment would revise the export provisions in both 
parts 312 and 812 (21 CFR part 812) to require only simple 
notifications for drugs and devices exported for investigational use.
    The agency declines to revise Sec. 1.101 as suggested by the 
comment. Section 802(g) of the act only requires simple notifications 
for exports under section 802(b)(1) of the act. FDA expects most 
exports of drugs or devices for investigational use in a listed country 
will fall under section 802(c) of the act; this means that exports of 
investigational drugs or devices to a listed country do not require a 
person to provide a simple notification to FDA. If, however, a firm 
exports a drug or device for investigational use under section 
802(b)(1) of the act, the firm will have to provide a simple 
notification to FDA.
    Additionally, as stated earlier, FDA intends to publish a proposed 
rule in the Federal Register to revise Sec. 312.110 to describe various 
approaches for exporting investigational new drugs. FDA has already 
revised Sec. 812.18(b) to state that exports of investigational devices 
are subject to either sections 801 or 802 of the act, so no further 
changes to Sec. 1.101 are necessary.
    (Comment 50) The draft guidance document discussed FDA's position 
on transshipment of investigational drugs and devices (the shipment of 
an export from one country to a second country, followed by the 
shipment of the same product from the second country to a third 
country) (see 63 FR 62219 at 32228). The draft guidance document 
interpreted section 802(c) of the act as not allowing transshipment 
from a listed country to an unlisted country because the act does not 
suggest that the listed countries are mere transfer points or conduits 
for investigational drugs and devices destined for unlisted countries 
and because allowing transshipment from listed to unlisted countries 
would undermine the statutory limitation on investigational drug and 
device exports to listed countries. The proposed rule on export 
notifications and recordkeeping was silent on this issue.
    Nevertheless, two comments submitted to the proposed rule (instead 
of the draft guidance document) objected to FDA's position on 
transshipment. The comments argued that shipments between listed and 
unlisted countries are matters covered by foreign law and that FDA's 
interpretation would restrict a firm's ability to conduct clinical 
trials outside the United States or otherwise defeat congressional 
intent and deprive foreign governments of the ``right'' to determine 
whether subsequent exports should be made.
    The issue of transshipment of investigational drugs and devices is 
not relevant to the final rule. Nevertheless, the unrestricted 
transshipment of investigational drugs and devices from listed to 
unlisted countries would undermine the express limitation in section 
802(c) of the act. Section 802(c) of the act allows exports of drugs 
and devices ``intended for investigational use in any [listed] country 
* * * in accordance with the laws of that country.'' The key statutory 
phrase is that the drug or device must be intended for investigational 
use in a listed country. In a transshipment scenario, the drug or 
device is intended for investigational use in an unlisted country, and 
this would be contrary to section 802(c) of the act.
    However, if the investigation in the unlisted country is subject to 
the laws and regulations of the listed country--in other words, if 
persons in the listed country remain responsible for the conduct of the 
clinical trial and the investigation complies with the listed country's 
laws--shipment to an unlisted country is not contrary to the act. To 
illustrate how this works, assume that an investigational new drug is 
exported

[[Page 65445]]

to a listed country, i.e., ``country LC.'' If the investigational new 
drug is then shipped to an unlisted country (``country X''), but the 
investigation is conducted in accordance with country LC's laws and 
regulations, shipment to country X is permitted under section 802(c) of 
the act. FDA reaches this interpretation because the investigation is 
intended for use in the listed country, albeit in a broad sense, and 
remains subject to the listed country's laws.
    If, however, the investigational drug is simply shipped to a 
warehouse in country LC and then shipped to country X, without anyone 
in country LC being responsible for the investigation or having the 
investigation remain subject to country LC's laws, then the export 
would not comply with section 802(c) of the act. The statutory 
requirements in section 802(c) of the act would not be met because the 
investigational use was never intended to be in the listed country and 
is not subject to country LC's laws.

III. Environmental Impact

    The agency has determined under 21 CFR 25.30(h) that this action is 
of a type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

IV. Paperwork Reduction Act of 1995

    The proposed rule estimated the costs associated with submitting 
notifications to FDA and maintaining records. FDA based its estimates 
on the number of notifications received by FDA in 1996 or 1997 
(depending on the last year for which complete figures were available 
at the time of the proposed rule) and consultations with industry 
sources (64 FR 15944 at 15946). The Office of Management and Budget 
(OMB), in reviewing FDA's Paperwork Reduction Act documents, neither 
approved nor rejected FDA's request for approval of a new information 
collection. Instead, OMB stated that it had concerns regarding the 
burden and utility of the collection which shall be assessed in light 
of public comments received. FDA received several comments on the 
agency's estimates.
    (Comment 51) For the recordkeeping requirements for human drugs, 
biological products, animal drugs, devices, foods, and cosmetics 
exported under or subject to section 801(e)(1) of the act, FDA 
estimated that there would be an average of 318 recordkeepers per year, 
at a annual frequency of 2.8 records per respondent, at 1 hour per 
record. One comment said that FDA ``grossly underestimated'' the 
recordkeeping burden because the rule presents significant burdens on 
food manufacturers and creates ``an entirely new recordkeeping 
bureaucracy for exporters of food products.'' The comment stated that 
translating letters alone will take more than 1 hour per product.
    FDA disagrees with the comment. Section 801(e)(1) of the act is not 
a new statutory requirement, particularly when applied to food exports, 
so it does not present a new or significant burden on food 
manufacturers or create ``an entirely new recordkeeping bureaucracy.'' 
Additionally, the final rule reduces any burden on exporters by 
revising certain requirements; for example, the final rule clarifies 
that the foreign purchaser's specifications should provide sufficient 
detail to be linked to a particular export and that a responsible 
company official may certify that the export does not conflict with the 
importing country's laws.
    While FDA concedes that Sec. 1.101(b) does, in one instance, seek 
English-language translations of foreign documents, presumably a 
prudent U.S. company would translate foreign-language documents as part 
of its ordinary business practice, if only to ensure that the foreign-
language document is what it purports to be or that the U.S. company 
truly understands the contents of the foreign-language document or that 
the U.S. company would be able to translate the foreign-language 
document into English.
    As for the burden hour estimate for Sec. 1.101(b), FDA, as 
explained below, has increased the burden hour estimate to 24 hours per 
record.
    (Comment 52) The preamble to the proposed rule estimated the total 
information collection burden to be 2,659 hours and that no capital 
costs or operating and maintenance costs would result.
    Several comments said FDA underestimated the total and that firms 
would incur new costs. Two trade associations, representing device 
manufacturers and drug manufacturers, indicated that the estimated 
information collection burden and costs for a single firm would be 
significant. For example, one device firm was said to market its 
products in 90 countries and in approximately 600 different packaging 
and labeling configurations. According to the comment, to meet the 
proposed recordkeeping requirements, the firm would need new records 
for at least 500 configurations, at $30 per hour and 4 hours per record 
(for a total update cost of $60,000) and recordkeeping costs would be 
$100 per hour for 500 records, or an additional $50,000. For new 
products, estimated record preparation costs would be $30 per hour x 4 
hours x 84 products (or $10,080) and recordkeeping costs of $8,400. As 
another example, a trade association representing the drug industry 
interpreted the rule as requiring detailed records on product 
specifications and translations. The comment said that one drug company 
estimated that it spends 160 employee hours of ``regulatory time'' and 
80 person hours of ``legal time'' alone to obtain documentation 
necessary to export to a single multicenter trial in Latin America and 
Eastern Europe. (The comment did not explain what ``regulatory time'' 
or ``legal time'' are.) The comment did not provide an estimate of the 
information collection burden because it said that FDA's requirements 
were open-ended; instead, it declared FDA's estimates to be 
``unrealistic.'' Two comments also said that drug companies would need 
to spend $50,000 to $100,000 in capital costs alone to upgrade their 
computers to comply with the proposed requirements.
    FDA reiterates that its estimates were based on the number of 
export notifications FDA has received and on information provided by 
industry sources. Those industry sources varied in terms of the amount 
of time required to maintain a record or to submit a notification, and 
none indicated that computer upgrades would be necessary. The averages 
must be compared against the estimates provided in the comments, which 
are based on information from a single company.
    The agency also disagrees, in part, with the estimates provided by 
a single device firm. In general, devices may be exported under section 
801(e) or 802 of the act. The agency reiterates that, for devices, the 
requirements in section 801(e)(1) of the act are not new; consequently, 
if the devices are exported under section 801(e) of the act, the 
comment's claim that hundreds of ``new'' records would be required 
cannot be accurate unless the firm has not been retaining any documents 
to show its compliance with section 801(e)(1) of the act. In contrast, 
if the firm is exporting devices under section 802(b) of the act, 
section 802(g) of the act would require the firm to submit a 
notification to FDA. Yet FDA's export notification records do not 
reveal a significant number of device exports or a significant number 
attributable to one firm. The average number of export notifications 
received was 244 per year. This average covers both drug and device 
firms and is far lower than the

[[Page 65446]]

500 export configurations claimed by the single device firm in the 
comment.
    Nevertheless, FDA has increased the recordkeeping burden hour 
estimate for Sec. 1.101(b) from 2 hours to 24 hours. This estimate 
exceeds the 4-hour estimate submitted by the device firm and is 
consistent with a comment (described below in comment 53) from a drug 
company.
    FDA declines to adopt the 240-hour figure provided by a drug 
company for exports of a drug for investigational use because FDA 
cannot determine what activities are covered by the comment's estimate 
or whether the comment's estimate even involves activities that are 
covered by the rule. For example, the comment stated that it devoted 
considerable time assembling documents to export drugs to a single 
multicenter trial in Latin America and Eastern Europe. The comment's 
reference to Latin America and Eastern Europe suggests that the firm is 
not exporting the drugs under section 802(c) of the act because section 
802(c) of the act pertains solely to exports of investigational new 
drugs and devices to listed countries, and Latin American and Eastern 
European countries are not listed countries. So, to export a drug for 
investigational use, the firm must be exporting the investigational new 
drugs under an IND or under Sec. 312.110, or the exported drugs have 
marketing authorization from a listed country. (It is possible that the 
firm could export an investigational new drug under section 802(b)(1) 
of the act if the drug received market authorization from a listed 
country, but the comment did not indicate that the investigational new 
drug has such market authorization.) Yet this final rule does not 
address exports under an IND or Sec. 312.110, and therefore, if the 
firm's comment is relevant to this rule, the firm would have to be 
exporting drugs that have marketing authorization from a listed country 
and using those drugs for investigational use in Latin America and 
Eastern Europe. Assuming this to be the case, the changes in the final 
rule, such as accepting a certification from a responsible company 
official in place of a letter from a foreign government and clarifying 
FDA's expectations regarding a foreign purchaser's specifications, 
should reduce the firm's information collection burden.
    (Comment 53) One comment said that FDA underestimated the rule's 
financial impact. The comment explained that, for a single firm, 
``notifications'' for section 801(e) of the act (which FDA presumes to 
be ``records'' because section 801(e)(1) of the act does not require 
notification) will result in five files and five records per year and 
require 24 to 32 hours for each export file. For notifications under 
section 802(g) of the act, there will be 10 files and 7 records per 
year, at 0.75 hours per export notification and 16 hours per export 
file. For partially processed biological products, the comment claimed 
its averages as 18 files and 5 records per year, at 16 hours per export 
file.
    FDA has increased the burden hour estimate for records under 
Sec. 1.101(b) to 24 hours per record. The agency declines to use the 
higher estimate of 32 hours because the final rule simplifies the types 
of records that are required to show compliance with section 801(e)(1) 
of the act. For example, the final rule accepts a company official's 
notarized certification that the exported product is not in conflict 
with the foreign country's laws, whereas the proposed rule would have 
required a letter from a foreign government official.
    FDA did not revise the estimates for Sec. 1.101(d). Although the 
comment suggests that the average number of notifications is greater 
than 2.4 per respondent, the comment's claimed average of five 
notifications per year may be accurate for that particular firm and may 
not be applicable to all firms exporting products. FDA based its 
estimate on the total number of notifications received and the total 
number of firms submitting notifications. FDA further notes that its 
estimate of 1 burden hour per notification is actually greater than the 
comment's estimate of 0.75 burden hours per notification. The comment's 
average time may reflect that firm's efficiency in processing notices, 
and FDA will not assume that all firms are as efficient.
    As for partially processed biological products, although the 
comment suggests that the average number of notifications is greater 
than 2.4 per respondent, the comment's claimed average of five 
notifications per year may be accurate for that particular firm and may 
not be applicable to all firms exporting products. FDA based its 
estimate on the total number of notifications received and the total 
number of firms submitting notifications. The agency is, however, 
increasing the burden hour estimate for Sec. 1.101(e) from 2 to 16 
hours as suggested by the comment.
    This final rule contains information collection requirements which 
are subject to review by OMB under the Paperwork Reduction Act of 1995. 
The title, description, and respondent description of the information 
collection requirements are shown below, with an estimate of the annual 
reporting and recordkeeping burden. Included in the estimate is the 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.
    Title: Exports: Notification and Recordkeeping Requirements.
    Description: The final rule establishes the notification and 
recordkeeping requirements for persons exporting a human drug, 
biological product, device, animal drug, food, or cosmetic under 
section 801(e) or 802 of the act or section 351(h) of the PHS Act.
    Description of Respondents: Businesses.

                                 Table 1.--Estimated Annual Reporting Burden\1\
----------------------------------------------------------------------------------------------------------------
                             No. of       Annual Frequency    Total Annual        Hours per
    21 CFR Section         Respondents      per Response        Responses         Response         Total Hours
----------------------------------------------------------------------------------------------------------------
1.101(b)                     316                 2.8             885                24            21,240
1.101(c)                       8                 2                16                 2                32
                                                                                               -----------------
  Subtotal--Regulatory                                                                            21,272
                                                                                               -----------------
1.101(d)                     244                 2.4             586                 1               586
1.101(e)                     175                 3.3             578                16             9,248
                                                                                               -----------------
  Subtotal--Statutory                                                                              9,834
                                                                                               -----------------
  Total                                                                                           31,106
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.


[[Page 65447]]

    The estimates are based on the number of notifications received by 
the relevant FDA centers in 1996 or 1997 (depending on the last year 
for which figures were available) as well as consultations with and 
comments from industry sources.
    As required by section 3507(d) of the Paperwork Reduction Act of 
1995, FDA has submitted a copy of this rule to OMB for its review of 
these previously approved information collection requirements.

V. Analysis of Impacts

    FDA has examined the impacts of this rule under Executive Order 
12866 and the Regulatory Flexibility Act (Public Law 96-354). Executive 
Order 12866 directs agencies to assess all costs and benefits of 
available regulatory alternatives and, when regulation is necessary, to 
select regulatory approaches that maximize new benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). The agency believes this 
rule is consistent with the regulatory philosophy and the principles 
identified in the Executive order. In addition, OMB has decided that 
the rule is a significant regulatory action as defined in the Executive 
order.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. The rule establishes the notification and 
recordkeeping requirements for persons exporting various FDA-regulated 
products under sections 801(e) and 802 of the act and section 351(h) of 
the PHS Act. The notification and recordkeeping requirements are 
minimal and involve information that should already be in an exporter's 
possession (such as the name of the product being exported, a 
description of the product being exported, and the date of 
exportation). Thus, FDA certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
Therefore, under the Regulatory Flexibility Act, no further analysis is 
required.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 (2 
U.S.C. 1501 et seq.) requires that agencies prepare a written statement 
of anticipated costs and benefits before proposing any rule that may 
result in an expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million in any one 
year (adjusted annually for inflation).
    The agency has determined that the final rule is not a significant 
action as defined in the Unfunded Mandates Reform Act, and will not 
have an effect on the economy that exceeds $100 million in any one 
year.

VI. Federalism

    FDA has analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the rule 
does not contain policies that have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, the agency has concluded 
that the rule does not contain policies that have federalism 
implications as defined in the order and, consequently, a federalism 
summary impact statement is not required.

List of Subjects in 21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
1 is amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

    1. The authority citation for 21 CFR part 1 is revised to read as 
follows:

    Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 321, 343, 352, 
355, 360b, 362, 371, 374, 381, 382, 393; 42 U.S.C. 216, 241, 243, 
262, 264.

    2. Section 1.101 is added to subpart E to read as follows:


Sec. 1.101  Notification and recordkeeping.

    (a) Scope. This section pertains to notifications and records 
required for human drug, biological product, device, animal drug, food, 
and cosmetic exports under sections 801 or 802 of the Federal Food, 
Drug, and Cosmetic Act (the act) or (21 U.S.C. 381 and 382) or section 
351 of the Public Health Service Act (42 U.S.C. 262).
    (b) Recordkeeping requirements for human drugs, biological 
products, devices, animal drugs, foods, and cosmetics exported under or 
subject to section 801(e)(1) of the act. Persons exporting an article 
under section 801(e)(1) of the act or an article otherwise subject to 
section 801(e)(1) of the act shall maintain records as enumerated in 
paragraphs (b)(1) through (b)(4) of this section demonstrating that the 
product meets the requirements of section 801(e)(1) of the act. Such 
records shall be maintained for the same period of time as required for 
records subject to good manufacturing practice or quality systems 
regulations applicable to the product, except that records pertaining 
to the export of foods and cosmetics under section 801(e)(1) of the act 
shall be kept for 3 years after the date of exportation. The records 
shall be made available to the Food and Drug Administration (FDA), upon 
request, during an inspection for review and copying by FDA.
    (1) Records demonstrating that the product meets the foreign 
purchaser's specifications: The records must contain sufficient 
information to match the foreign purchaser's specifications to a 
particular export;
    (2) Records demonstrating that the product does not conflict with 
the laws of the importing country: This may consist of either a letter 
from an appropriate foreign government agency, department, or other 
authorized body stating that the product has marketing approval from 
the foreign government or does not conflict with that country's laws, 
or a notarized certification by a responsible company official in the 
United States that the product does not conflict with the laws of the 
importing country and that includes a statement acknowledging that he 
or she is subject to the provisions of 18 U.S.C. 1001;
    (3) Records demonstrating that the product is labeled on the 
outside of the shipping package that it is intended for export: This 
may consist of copies of any labels or labeling statements, such as 
``For export only,'' that are placed on

[[Page 65448]]

the shipping packages or, if the exported product does not have a 
shipping package or container, on shipping invoices or other documents 
accompanying the exported product; and
    (4) Records demonstrating that the product is not sold or offered 
for sale in the United States: This may consist of production and 
shipping records for the exported product and promotional materials.
    (c) Additional recordkeeping requirements for partially processed 
biological products exported under section 351(h) of the Public Health 
Service Act. In addition to the requirements in paragraph (b) of this 
section, persons exporting a partially processed biological product 
under section 351(h) of the Public Health Service Act shall maintain, 
for the same period of time as required for records subject to good 
manufacturing practice or quality systems regulations applicable to the 
product, and make available to FDA, upon request, during an inspection 
for review and copying by FDA, the following records:
    (1) Records demonstrating that the product for export is a 
partially processed biological product and not in a form applicable to 
the prevention, treatment, or cure of diseases or injuries of man;
    (2) Records demonstrating that the partially processed biological 
product was manufactured in conformity with current good manufacturing 
practice requirements;
    (3) Records demonstrating the distribution of the exported 
partially processed biological products; and
    (4) Copies of all labeling that accompanies the exported partially 
processed biological product and other records demonstrating that the 
exported partially processed biological product is intended for further 
manufacture into a final dosage form outside the United States; this 
may include a container label with the statement, ``Caution: For 
Further Manufacturing Use Only'' and any package insert.
    (d) Notification requirements for drugs, biological products, and 
devices exported under section 802 of the act. (1) Persons exporting a 
human drug, biological product, or device under section 802 of the act, 
other than a drug, biological product, or device for investigational 
use exported under section 802(c) of the act, or a drug, biological 
product, or device exported in anticipation of marketing authorization 
under section 802(d) of the act, shall provide written notification to 
FDA. The notification shall identify:
    (i) The product's trade name;
    (ii) If the product is a drug or biological product, the product's 
abbreviated or proper name or, if the product is a device, the type of 
device;
    (iii) If the product is a drug or biological product, a description 
of the product's strength and dosage form or, if the product is a 
device, the product's model number; and
    (iv) If the export is to a country not listed in section 802(b)(1) 
of the act, the country that is to receive the exported article. The 
notification may, but is not required to, identify countries listed in 
section 802(b)(1) of the act or state that the export is intended for a 
listed country without identifying the listed country.
    (2) The notification shall be sent to the following addresses:
    (i) For biological products and devices regulated by the Center for 
Biologics Evaluation and Research--Division of Case Management (HFM-
610), Office of Compliance and Biologics Quality, Center for Biologics 
Evaluation and Research, Food and Drug Administration, 1401 Rockville 
Pike, rm. 200N, Rockville, MD 20852-1448;
    (ii) For human drug products--Division of Labeling and 
Nonprescription Drug Compliance (HFD-310), Center for Drug Evaluation 
and Research, Food and Drug Administration, 7520 Standish Pl., 
Rockville, MD 20855-2737;
    (iii) For devices--Division of Program Operations (HFZ-305), Center 
for Devices and Radiological Health, Food and Drug Administration, 2094 
Gaither Rd., Rockville, MD 20850.
    (e) Recordkeeping requirements for products subject to section 
802(g) of the act. (1) Any person exporting a product under any 
provision of section 802 of the act shall maintain records of all 
drugs, biological products, and devices exported and the countries to 
which the products were exported. In addition to the requirements in 
paragraph (b) of this section, such records include, but are not 
limited to, the following:
    (i) The product's trade name;
    (ii) If the product is a drug or biological product, the product's 
abbreviated or proper name or, if the product is a device, the type of 
device;
    (iii) If the product is a drug or biological product, a description 
of its strength and dosage form and the product's lot or control number 
or, if the product is a device, the product's model number;
    (iv) The consignee's name and address; and
    (v) The date on which the product was exported and the quantity of 
product exported.
    (2) These records shall be kept at the site from which the products 
were exported or manufactured, and be maintained for the same period of 
time as required for records subject to good manufacturing practice or 
quality systems regulations applicable to the product. The records 
shall be made available to FDA, upon request, during an inspection for 
review and copying by FDA.

    Dated: March 1, 2001.
Ann M. Witt,
Acting Associate Commissioner for Policy.
    Dated: April 10, 2001.\1\
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    \1\ Editorial Note: This document was received at the Office of 
the Federal Register on December 12, 2001.
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Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 01-31026 Filed 12-18-01; 8:45 am]
BILLING CODE 4160-01-S