[Federal Register Volume 69, Number 35 (Monday, February 23, 2004)]
[Rules and Regulations]
[Pages 8105-8107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3856]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 203

[Docket No.1992N-0297]
RIN 0905-AC81


Prescription Drug Marketing Act of 1987; Prescription Drug 
Amendments of 1992; Policies, Requirements, and Administrative 
Procedures; Delay of Effective Date

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule; delay of effective date.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is further delaying, 
until December 1, 2006, the effective date of certain requirements of a 
final rule published in the Federal Register of December 3, 1999 (64 FR 
67720). In the Federal Register of May 3, 2000 (65 FR 25639), the 
agency delayed until October 1, 2001, the effective date of certain 
requirements in the final rule relating to wholesale distribution of 
prescription drugs by distributors that are not authorized distributors 
of record, and distribution of blood derivatives by entities that meet 
the definition of a ``health care entity'' in the final rule. The 
agency further delayed the effective date of these requirements in 
three subsequent Federal Register notices. Most recently, in the 
Federal Register of January 31, 2003 (68 FR 4912), FDA delayed the 
effective date until April 1, 2004. This action further delays the 
effective date of these requirements until December 1, 2006. The final 
rule implements the Prescription Drug Marketing Act of 1987 (PDMA), as 
modified by the Prescription Drug Amendments of 1992 (PDA), and the 
Food and Drug Administration Modernization Act of 1997 (the 
Modernization Act). The agency is taking this action to address 
concerns about the requirements in the final rule raised by affected 
parties.
    As explained in the SUPPLEMENTARY INFORMATION section, FDA is 
working with stakeholders through its counterfeit drug initiative to 
facilitate widespread, voluntary adoption of track and trace 
technologies that will generate a de facto electronic pedigree, 
including prior transaction history back to the original manufacturer, 
as a routine course of business. If this technology is widely adopted, 
it is expected to help fulfill the pedigree requirements of the PDMA 
and obviate or resolve many of the concerns that have been raised with 
respect to the final rule by ensuring that an electronic pedigree 
travels with a drug product at all times. Therefore, it is necessary to 
delay the effective date of Sec. Sec.  203.3(u) and 203.50 (21 CFR 
203.3(u) and 203.50) until December 1, 2007 to allow stakeholders time 
to continue to move toward this goal. In addition, the further delay of 
the applicability of Sec.  203.3(q) to wholesale distribution of blood 
derivatives by health care entities is necessary to give the agency 
additional time to consider whether regulatory changes are appropriate 
and, if so, to initiate such changes.

DATES: The effective date for Sec. Sec.  203.3(u) and 203.50, and the 
applicability of Sec.  203.3(q) to wholesale distribution of blood 
derivatives by health care entities, added at 64 FR 67720, December 3, 
1999, is delayed until December 1, 2006. Submit written or electronic 
comments by April 23, 2004.

ADDRESSES:  Submit written comments to the Division of Dockets 
Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, 
rm. 1061, Rockville, MD 20857. All comments should be identified with 
the docket number found in brackets in the heading of this document. 
Submit electronic comments to http://www.fda.gov/dockets/ecomments.

FOR FURTHER INFORMATION CONTACT: Aileen H. Ciampa, Center for Drug 
Evaluation and Research (HFD-7), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-594-2041.

SUPPLEMENTARY INFORMATION: PDMA (Public Law 100-293) was enacted on 
April 22, 1988, and was modified by the PDA (Public Law 102-353, 106 
Stat. 941) on August 26, 1992. The PDMA, as modified by the PDA, 
amended sections 301, 303, 503, and 801 of the Federal Food, Drug, and 
Cosmetic Act (the act) (21 U.S.C. 331, 333, 353, 381) to, among other 
things, establish requirements for the wholesale distribution of 
prescription drugs and for the distribution of blood derived 
prescription drug products by health care entities.
    On December 3, 1999, the agency published final regulations in part 
203 (21 CFR part 203) implementing PDMA (64 FR 67720) that were to take 
effect on December 4, 2000. After publication of the final rule, the 
agency received communications from industry, industry trade 
associations, and members of Congress objecting to the provisions in 
Sec. Sec.  203.3(u) and 203.50. Respectively, these provisions define

[[Page 8106]]

the phrase ``ongoing relationship'' as used in the definition of 
``authorized distributor of record'' and set forth requirements 
regarding an ``identifying statement'' (commonly referred to as a 
``pedigree'').
    On March 29, 2000, the agency met with representatives from the 
wholesale drug industry and industry associations to discuss their 
concerns. In addition, FDA received a petition requesting that the 
relevant provisions of the final rule be stayed until October 1, 2001. 
The agency also received a petition from the Small Business 
Administration requesting that FDA reconsider the final rule and 
suspend its effective date based on the severe economic impact it would 
have on more than 4,000 small businesses.
    In addition to the communications regarding wholesale distribution 
by unauthorized distributors, the agency received several letters on, 
and held several meetings to discuss, the implications of the final 
regulations for blood centers that distribute blood derivative products 
and provide health care to hospitals and patients.
    Based on the concerns expressed by industry, industry associations, 
and Congress about implementing Sec. Sec.  203.3(u) and 203.50 by the 
December 4, 2000, effective date, the agency delayed the effective date 
for those provisions until October 1, 2001 (65 FR 25639). FDA also 
delayed the applicability of Sec.  203.3(q) to wholesale distribution 
of blood derivatives by health care entities until October 1, 2001, and 
reopened the administrative record to give interested persons until 
July 3, 2000, to submit written comments. The rest of the regulations 
took effect on December 4, 2000.
    On May 16, 2000, the House Committee on Appropriations (the 
Committee) stated in its report accompanying the Agriculture, Rural 
Development, Food and Drug Administration, and Related Agencies 
Appropriations Bill, 2001 (H. Rept. 106-619), that it supported the 
``recent FDA action to delay the effective date for implementing 
certain requirements of the Prescription Drug Marketing Act until 
October 1, 2001, and reopen the administrative record in order to 
receive additional comments.'' The Committee further stated that it 
``believes the agency should thoroughly review the potential impact of 
the proposed provisions on the secondary wholesale pharmaceutical 
industry.'' The Committee directed the agency to provide a report to 
the Committee summarizing the comments and issues raised and agency 
plans to address the concerns.
    On March 1, 2001, FDA again delayed the effective dates of the 
provisions to allow time for the agency to consider the comments and 
testimony received at an October 27, 2000, public hearing and to 
prepare its report to Congress (65 FR 56480). The agency's report, 
which was submitted to Congress on June 7, 2001, concluded that FDA 
could address some of the concerns raised by the secondary wholesale 
industry and the blood industry through regulatory changes. However, to 
make other changes requested by the secondary wholesale industry, 
Congress would have to amend section 503(e) of the act.
    Since submitting its report to Congress, FDA has delayed the 
effective date of the provisions two more times, most recently until 
April 1, 2004. On both occasions, the effective date was delayed in 
order to give Congress additional time to determine whether legislative 
action was appropriate and to give the agency time to consider whether 
regulatory changes were warranted (67 FR 6645; 68 FR 4912).
    Today, the agency is further delaying, until December 1, 2006, the 
effective date of Sec. Sec.  203.3(u) and 203.50, and the applicability 
of Sec.  203.3(q) to wholesale distribution of blood derivatives by 
health care entities. The agency's decision to delay the effective date 
of Sec. Sec.  203.3(u) and 203.5 was based, in part, on comments 
received on FDA's Counterfeit Drug Task Force's Interim Report (Docket 
03N-0361).
    As part of its Counterfeit Drug Initiative, FDA sought comment on 
the most effective ways to achieve the goals of PDMA. In particular, 
given recent or impending advances in technology, the agency requested 
comment on the feasibility of using an electronic pedigree in lieu of a 
paper pedigree. Although many comments received by the Task Force 
supported the use of paper pedigrees for their deterrent value and as a 
means to verify prior sales through due diligence, the majority of 
comments confirmed that significant concerns persist regarding the 
feasibility and limitations of full implementation of the PDMA pedigree 
requirements. Some comments suggested a risk-based approach to 
implementing PDMA, focusing on those drugs that are at high-risk of 
being counterfeited. For example, some comments suggested that drugs at 
high risk for counterfeiting maintain a full pedigree that documents 
all sales and transactions back to the manufacturer. One comment 
suggested an interim solution of ``one forward, one back'' pedigree for 
most likely to be counterfeited. The majority of comments, however, 
supported the eventual use of an electronic pedigree for all drug 
products in the supply chain and indicated that an electronic pedigree 
should be considered as a long-term solution to fulfilling the PDMA 
requirements codified at Sec.  203.50.
    In response to these comments, FDA is continuing to work closely 
with affected parties to identify and resolve concerns related to the 
implementation of the pedigree requirements of the PDMA. FDA is 
encouraged by the enthusiasm and interest that stakeholders in the U.S. 
drug supply chain have expressed toward the adoption of sophisticated 
track and trace technologies. Although there are technical, 
operational, and regulatory issues that have yet to be resolved, these 
are being considered and addressed by FDA and stakeholders. Currently, 
it appears that industry will migrate toward and implement electronic 
track and trace capability by 2007. If this capability is widely 
adopted, a de facto electronic pedigree will follow the product from 
the place of manufacture through the U.S. drug supply chain to the 
final dispenser. If properly implemented, this electronic pedigree 
could meet the statutory requirement in 21 U.S.C. 353(e)(1)(A) that 
``each person who is engaged in the wholesale distribution of a drug*** 
who is not the manufacturer or authorized distributor of record of such 
drug*** provide to the person who receives the drug a statement (in 
such form and containing such information as the Secretary may require) 
identifying each prior sale, purchase, or trade of such drug (including 
the date of the transaction and the names and addresses of all parties 
to the transaction.)'' The permanent electronic pedigree would address 
the concerns that have been expressed by wholesalers, particularly 
secondary wholesalers, regarding access to pedigrees because the 
required information would travel with the product at all times, 
regardless of whether a party to the transaction is an authorized 
distributor of record.
    Until the electronic pedigree is in widespread use, FDA believes 
that the multi-layer strategies and measures discussed in the FDA's 
Counterfeit Drug Final Report (Final Report) can help reduce the 
likelihood that counterfeit drugs will be introduced into the U.S. drug 
distribution system. These measures, combined with implementation of 
Radio Frequency Identification (RFID) technology, could provide 
effective long-term protections to help minimize the number of 
counterfeit drug products in the U.S. distribution system. As discussed 
in greater detail in the Final Report, such long-term measures include 
the

[[Page 8107]]

following: Use of authentication technologies in products and packaging 
and labeling, in particular, for drugs most likely to be counterfeited; 
adoption of secure business practices by stakeholders; adoption of the 
revised model rules for wholesale distributor licensure by States; 
stronger criminal penalties and enforcement at the State and national 
levels; and education and outreach to stakeholders, including greater 
communication through the counterfeit alert network.
    Although FDA is further delaying the effective date of Sec. Sec.  
203.3(u) and 205.30, the agency encourages wholesalers to provide 
pedigree information that documents the prior history of the product, 
particularly for most likely to be counterfeited, even when such a 
pedigree is not required by the act. The suggestion from the comments 
that there be a one-forward, one-back pedigree for high-risk drugs 
until an electronic pedigree is uniformly adopted may have some merit. 
However, FDA believes legislative changes would be needed before it 
could adopt such a system.
    To summarize, FDA has concluded that an electronic pedigree should 
accomplish and surpass the goals of PDMA and is potentially a more 
effective solution to tracing the movement of pharmaceuticals than a 
paper pedigree. As stated previously, it appears that industry will 
migrate toward and implement electronic track and trace capability by 
2007. Therefore, to allow stakeholders to continue to move toward this 
goal, FDA has decided to delay the effective date of Sec. Sec.  
203.3(u) and 203.50 until December 1, 2006. Before the effective date, 
FDA intends to evaluate the progress toward implementation of the 
electronic pedigree and its capacity to meet the intent of PDMA, and 
determine whether to further delay the effective date of the 
regulations or take other appropriate regulatory action.
    FDA is also further delaying the applicability of Sec.  203.3(q) to 
wholesale distribution of blood derivatives by health care entities. 
This further delay is necessary to give FDA additional time to address 
concerns about the requirements raised by affected parties and consider 
whether regulatory changes are appropriate and, if so, initiate such 
changes.
    FDA has examined the impacts of this delay of effective date under 
Executive Order 12866. 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 
net benefits (including potential economic, environmental, public 
health and safety, and other advantages; distributive impacts; and 
equity). The agency believes that this action is consistent with the 
regulatory philosophy and principles identified in the Executive order. 
This action will ease the burden on industry by delaying the effect of 
Sec. Sec.  203.3(u) and 203.50, and the applicability of Sec.  203.3(q) 
to wholesale distribution of blood derivatives by health care entities 
while FDA works with industry to resolve concerns about these 
provisions either with the implementation of technological solutions 
(Sec. Sec.  203.3(u) and 203.50) or the consideration of possible 
regulatory changes (Sec.  203.3(q)). Thus, this action is not a 
significant action as defined by the Executive order.
    To the extent that 5 U.S.C. 553 applies to this action, it is 
exempt from notice and comment because it constitutes a rule of 
procedure under 5 U.S.C. 553(b)(A). Alternatively, the agency's 
implementation of this action without opportunity for public comment, 
effective immediately upon publication today in the Federal Register, 
is based on the good cause exceptions in 5 U.S.C. 553(b)(B) and (d)(3). 
Seeking public comment is impracticable, unnecessary, and contrary to 
the public interest. In addition, given the imminence of the current 
compliance date, seeking prior public comment on this delay is contrary 
to the public interest in the orderly issuance and implementation of 
regulations. Notice and comment procedures in this instance would 
create uncertainty, confusion, and undue financial hardship because, 
during the time that the agency would be proposing to extend the 
compliance date for the requirements identified below, those companies 
affected would have to be preparing to comply with the April 1, 2004, 
compliance date. In accordance with 21 CFR 10.40(c)(1), FDA is also 
providing an opportunity for comment on whether this delay should be 
modified or revoked.
    This action is being taken under FDA's authority under 21 CFR 
10.35(a). The Commissioner of Food and Drugs finds that this delay of 
the effective date is in the public interest.

    Dated: February 17, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-3856 Filed 2-18-04; 4:04 pm]
BILLING CODE 4160-01-S