[Federal Register Volume 71, Number 21 (Wednesday, February 1, 2006)]
[Proposed Rules]
[Pages 5200-5203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-1225]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 203 and 205

[Docket No. 2005N-0428]


Distribution of Blood Derivatives by Registered Blood 
Establishments that Qualify as Health Care Entities; Prescription Drug 
Marketing Act of 1987; Prescription Drug Amendments of 1992; Policies, 
Requirements and Administrative Procedures

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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

SUMMARY: The Food and Drug Administration (FDA) proposes to amend the 
regulations to allow certain registered blood establishments that 
qualify as health care entities to distribute drug products that are 
derivatives of blood (blood derivatives). This proposed rule, which is 
specific to registered blood establishments and the distribution of 
blood derivatives, if finalized, would amend certain limited provisions 
of the regulations implementing the Prescription Drug Marketing Act of 
1987 (PDMA), as modified by the Prescription Drug Amendments of 1992 
(PDA) and the FDA Modernization Act of 1997. As currently written, 
these regulations, among other things, restrict the sale, purchase, or 
trade of, or the offer to sell, purchase, or trade, prescription drugs 
purchased by hospitals and other health care entities.

DATES: Submit written or electronic comments on the proposed rule by 
May 2, 2006.

ADDRESSES: You may submit comments, identified by Docket No. 2005N-
0428, by any of the following methods:

Electronic Submissions

    Submit electronic comments in the following ways:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web site: http://www.fda.gov/dockets/ecomments. 
Follow the instructions for submitting comments on the agency Web site.

Written Submissions

    Submit written submissions in the following ways:
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
    To ensure more timely processing of comments, FDA is no longer 
accepting comments submitted to the agency by e-mail. FDA encourages 
you to continue to submit electronic comments by using the Federal 
eRulemaking Portal or the agency Web site, as described in the 
Electronic Submissions portion of this paragraph.
    Instructions: All submissions received must include the agency name 
and Docket No(s). and Regulatory Information Number (RIN) (if a RIN 
number has been assigned) for this rulemaking. All comments received 
may be posted without change to http://www.fda.gov/ohrms/dockets/default.htm, including any personal information provided. For 
additional information on submitting comments, see the ``Comments'' 
heading of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.fda.gov/ohrms/dockets/default.htm 
and insert the docket number(s), found in brackets in the heading of 
this document, into the ``Search'' box and follow the prompts and/or go 
to the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Kathleen Swisher, Center for Biologics 
Evaluation and Research (HFM-17), Food and Drug Administration, 1401 
Rockville Pike, suite 200N, Rockville, MD 20852-1448, 301-827-6210.

SUPPLEMENTARY INFORMATION:

I. Background

    The 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, amended the Federal Food, Drug, and 
Cosmetic Act (the act) to establish restrictions and requirements 
relating to various aspects of human prescription drug marketing and 
distribution. Among other things, the PDMA prohibited, with certain 
exceptions, the sale, purchase, or trade (or offer to sell, purchase, 
or trade) of prescription drugs that were purchased by hospitals or 
other health care entities. Section 503(c)(3)(A)(ii)(I) of the act (21 
U.S.C. 353(c)(3)(A)(ii)(I)). Section 503(c)(3) also states that ``[f]or 
purposes of this paragraph, the term `entity' does not include a 
wholesale distributor of drugs or a retail pharmacy licensed under 
State law * * *.''
    In the Federal Register of March 14, 1994 (59 FR 11842), we issued 
a proposed rule to implement those PDMA sections that were not 
implemented by the final rule of September 14, 1990, that set forth 
Federal guidelines for State licensing of wholesale drug distributors 
(55 FR 38012). The proposed rule contained provisions on prescription 
drug reimportation; wholesale distribution of prescription drugs by 
unauthorized distributors; the resale of prescription drugs by 
hospitals, health care entities, and charitable institutions; and 
distribution of prescription drug samples. After consideration of 
comments, we issued a final rule in the Federal Register of December 3, 
1999

[[Page 5201]]

(64 FR 67720) (``the final rule''), with an effective date of December 
4, 2000.
    After publication of the final rule, we received many letters on, 
and held several meetings to discuss the implications of, the final 
regulations for registered blood establishments that distribute blood-
derived products and provide health care as a service to hospitals and 
patients. According to comments received before the final rule took 
effect, implementing the final rule as published would interfere with 
longstanding relationships between blood centers and other health care 
providers such as hospitals, hemophilia treatment centers, and other 
providers.
    The blood establishment industry asserted that the regulations, 
particularly the definition of ``health care entity'' in Sec.  203.3(q) 
(21 CFR 203.3(q)), would, to the detriment of the public health, 
severely inhibit its ability to provide medical care and services and 
might disrupt the distribution of blood derivatives, to what may be 
otherwise unserved or inadequately served segments of the public. 
Specifically, Sec.  203.20 (21 CFR 203.20) of the final rule as written 
states, in relevant part, that no person may sell, purchase, or trade, 
or offer to sell, purchase, or trade any prescription drug that was 
purchased by a health care entity (Sec.  203.20(a)).
    ``Health care entity'' is defined in Sec.  203.3(q) as any person 
that provides diagnostic, medical, surgical, or dental treatment, or 
chronic or rehabilitative care, but does not include any retail 
pharmacy or wholesale distributor. That definition specifically states 
that, ``A person cannot simultaneously be a `health care entity' and a 
retail pharmacy or wholesale distributor.'' ``Wholesale distributor'' 
is defined in Sec.  203.3(dd) (21 CFR 203.3(dd)) as any person engaged 
in wholesale distribution of prescription drugs, and ``wholesale 
distribution'' is defined in Sec.  203.3(cc) (21 CFR 203.3(cc)) as 
``distribution of prescription drugs to persons other than a consumer 
or patient * * *.'' The final rule made clear that those definitions 
should be interpreted to mean that an establishment that meets the 
definition of a health care entity would not be allowed to engage in 
wholesale distribution. The Federal Register of December 3, 1999, 
stated ``The agency declines to revise the definition of health care 
entity or otherwise revise the proposed rule to permit health care 
entities to engage in the wholesale distribution of blood derivatives 
or other prescription drug products.'' (64 FR 67720 at 67726).
    Thus, under the final rule as written, blood establishments 
functioning as health care entities would not be allowed to engage in 
wholesale distribution of prescription drugs except for blood and blood 
components intended for transfusion, which are exempted from the 
regulations under Sec.  203.1 (21 CFR 203.1). As discussed in the 
preamble to the final rule (64 FR 67720 at 67725 to 67727), blood 
derivatives are not blood components. Therefore, should the final rule 
go into effect as written, registered blood establishments that qualify 
as health care entities could not distribute blood derivatives.
    Blood derivatives that are prescription drugs include the 
following: Albumin, antihemophilic factor, Factor IX Complex, alpha-1 
anti-tripsin, and immune globulin. Therefore, under the rule as 
written, a blood center could not resell blood derivatives to entities 
other than consumers or patients and simultaneously provide health 
care, such as medical services associated with those products.
    On May 3, 2000, we delayed until October 1, 2001, the effective 
date of several provisions of the final rule and reopened the 
administrative record, giving interested persons until July 3, 2000, to 
submit written comments (65 FR 25639). This delay extended to the 
definition of ``health care entity'' in Sec.  203.3(q), as applied to 
the wholesale distribution of blood derivatives by health care 
entities. The purpose of delaying the effective date for these 
provisions was to give us time to obtain more information about the 
possible consequences of implementing these provisions and to further 
evaluate the issues involved (65 FR 25639 at 25641).
    On September 19, 2000, we announced a public hearing to discuss 
certain requirements of the final rule (65 FR 56480), including the 
provisions relating to the distribution of blood derivatives by 
entities that meet the definition of ``health care entity.'' We held 
the public hearing to develop an adequate factual basis to use to 
determine whether it is in the public health interest to modify or 
change the requirements in the final rule (65 FR 56480 at 56483).
    We developed a list of questions to promote a more useful 
discussion at the public hearing. These questions related to: The 
distribution systems available for blood derived products; the effect 
of the final rule on these distribution systems, including adverse 
public health consequences or economic costs; whether excluding blood 
derived products from the final rule's restrictions would increase the 
risk of distribution of counterfeit, expired, adulterated, misbranded, 
or otherwise unsuitable products; and the pricing of blood-derived 
products sold to health care entities (65 FR 56480 at 56483) with 
regard to blood derivatives, as well as other unrelated issues 
associated with wholesale distribution of drugs. This proposed rule 
addresses only blood derivatives and does not address the other stayed 
requirements in the final rule relating to wholesale distribution of 
prescription drugs by distributors that are not authorized distributors 
of record (69 FR 8105, February 23, 2004).
    The public hearing was held on October 27, 2000, and comments were 
accepted until November 20, 2000. In the Federal Register of March 1, 
2001, we announced our decision to further delay until April 1, 2002, 
the applicability of Sec.  203.3(q) to the wholesale distribution of 
blood derivatives by health care entities (66 FR 12850). Further delays 
of effective dates followed until December 1, 2006, to give us 
additional time to consider whether regulatory changes are appropriate 
and, if so, to initiate such changes (67 FR 6645, February 13, 2002; 68 
FR 4912, January 31, 2003; 69 FR 8105, February 23, 2004).
    We now propose to amend the regulations. The proposed amendments 
are narrow and would allow certain registered blood establishments that 
qualify as health care entities to distribute blood derivatives.

II. The Blood Establishments' Concerns

    In response to the final rule, we received numerous comments 
arguing that blood establishments should be allowed to continue 
performing both functions of providing health care services and 
distributing blood derivatives. Some comments asserted that although 
the distribution of derivatives and the provision of health care 
services are small parts of a blood establishment's activities, they 
are vital to serving public health needs.
    At the October 2000 public hearing, we heard from four interested 
parties on this subject. Comments asserted that we had reached the 
wrong conclusion with respect to restrictions on blood establishments' 
activities. In addition to restating earlier objections made in 
response to the proposed rule, the comments presented new objections 
and new information, including more detailed descriptions of the health 
care services they provide and the derivatives they distribute. They 
also offered several potential regulatory solutions.
    We received no comments taking the position that the regulations 
should

[[Page 5202]]

remain unchanged. We received from a national trade organization that 
represents blood establishments additional comments about the scope of 
products they distribute for treating blood-related disorders, which 
include drugs that are not blood derivatives. The comment stated the 
exemption should extend to any distribution of blood-related products 
by blood centers, not just to blood derivatives because blood centers 
also distribute blood-related products not always from human sources. 
In this proposed rule, we are seeking additional information on the 
distribution of other prescription drug products by registered blood 
establishments.
    We have considered all comments and have changed our position from 
that expressed in the preamble discussion in the December 3, 1999, 
final rule (64 FR 67720). We now propose to allow certain registered 
blood establishments that qualify as health care entities to distribute 
blood derivatives. We are distinguishing blood derivatives from other 
prescription drugs when sold, purchased, or traded (or offered to sell, 
purchase, or trade) by a registered blood establishment that qualifies 
as a health care entity, provided all health care services offered by 
the establishment are related to its activities as a registered blood 
establishment.

III. The Proposed Amendments

    Our current proposal modifies part 203 (21 CFR part 203) to allow a 
registered blood establishment \1\ that provides health care services 
and that also distributes blood derivatives to continue in both 
capacities, as long as the blood establishment does not provide health 
care services unrelated to its activities as a registered blood 
establishment.
---------------------------------------------------------------------------

    \1\ Establishment is defined as ``a place of business under one 
management at one general physical location. The term includes, 
among others, human blood and plasma donor centers, blood banks, 
transfusion services, other blood product manufacturers and 
independent laboratories that engage in quality control and testing 
for registered blood product establishments.'' (Sec.  607.3 (21 CFR 
607.3)) All owners or operators of establishments that engage in the 
manufacturing of blood products are required to register, under 
section 510 of the Federal Food, Drug, and Cosmetic Act (Sec.  607.7 
(21 CFR 607.7)).
---------------------------------------------------------------------------

    We have changed our position from that discussed in the preamble to 
the final rule (64 FR 67720 at 67726) because of new information and a 
better understanding of the industry and how the final rule, if 
enforced, might affect the public health. For example, according to 
testimony at the public hearing held on October 27, 2000, ``more than 
15 percent of all U.S. blood derivative products are distributed by 
community and Red Cross blood centers, with Red Cross alone accounting 
for 10 percent.'' \2\ Those blood centers qualify as health care 
entities because, in addition to collecting blood and plasma and 
distributing blood derivatives, they also provide certain health care 
services to the hospitals and health care entities they serve, 
including therapeutic phlebotomy, plasma exchange, stem cell and cord 
blood collection and processing, and medical expertise on the 
appropriate use of the blood derivatives they distribute.\3\ According 
to the testimony, the majority of local hospitals do not have that kind 
of medical expertise, and as a practical matter could not obtain and 
maintain such expertise.\4\
---------------------------------------------------------------------------

    \2\ U.S. Food and Drug Administration, ``The Prescription Drug 
Marketing Act: Report to Congress,'' June 2001, p.17 and p.18.
    \3\ Id., at 18.
    \4\ Id.
---------------------------------------------------------------------------

    Prohibiting community and Red Cross blood centers that qualify as 
health care entities from distributing blood derivatives would have a 
particularly high impact on certain segments of patients. For example, 
the Red Cross testified that ``85 percent of their anti-hemophilic 
factor is supplied directly to health care entities. They stated that 
implementation of the final rule would deny hemophilia patients access 
to this product because many treatment centers are smaller entities 
that are not supported by large distributors.'' \5\ Additionally, the 
Red Cross stated that ``15 percent of their IVIG (intravenous 
immunoglobulin) products and 10 percent of their albumin product are 
provided directly to healthcare providers and account for 26,000 to 
69,000 infusions annually.'' \6\
---------------------------------------------------------------------------

    \5\ Id.
    \6\ Id.
---------------------------------------------------------------------------

    We now propose to amend Sec.  203.22 (21 CFR 203.22), which 
contains exclusions from the sales restrictions in Sec.  203.20 (21 CFR 
203.20). Proposed new paragraph (h) provides a limited exception for 
registered blood establishments that qualify as a health care entity. 
Under the proposed exclusion, the sales restrictions in Sec.  203.22 
would not apply to the sale, purchase, or trade of (or the offer to 
sell, purchase, or trade) any blood derivatives by a registered blood 
establishment that qualifies as a health care entity as long as all of 
the health care services that it provides are related to its activities 
as a registered blood establishment. The following are examples of such 
health care services: therapeutic hemapheresis, therapeutic 
phlebotomies, plasma exchange, and transfusion services. For 
clarification, a registered blood establishment's ordinary donor 
screening activities for donor suitability (e.g., measuring a donor's 
temperature, blood pressure, and hematocrit or hemoglobin) are not 
considered health care services for the purposes of Sec.  203.3(q).
    A registered blood establishment that provides any health care 
services unrelated to its activities as a registered blood 
establishment would not be eligible for the exclusion. For example, if 
a registered blood establishment provides health care services such as 
administering antibiotics to treat a respiratory infection unrelated to 
transfusion medicine, we do not consider this to be a health care 
service related to the operation of a blood establishment. Therefore, 
the blood establishment would not be permitted to distribute blood 
derivatives. Without that limit on the exclusion, the rule would 
encourage hospitals and other health care entities to register as blood 
establishments strictly to take advantage of this exception. Allowing 
such entities that are not primarily blood establishments to distribute 
blood derivatives could raise the same concerns that the PDMA was 
intended to address. The prohibition against sales by health care 
entities was prompted in part because of the temptation for such 
entities to sell for-profit drugs acquired at below-wholesale prices.
    The proposed exclusion in Sec.  203.22 applies only to the 
distribution of blood derivatives by a registered blood establishment 
and not by other entities. The regulations implementing the PDMA, as 
modified, would continue to apply to these other entities.
    Although the public hearing and additional comments received on the 
final rule provided us with an adequate factual basis to determine 
whether the requirements in the final rule should be modified in the 
interest of public health, new information provided with respect to the 
function of registered blood establishments indicates that additional 
input is needed. We are seeking information about the functions of 
registered blood establishments to assist us in making a decision 
whether further modification of the final rule is necessary in the 
interests of public health.
    Proposed Sec.  203.22(h) includes an ``exclusion'' that would allow 
certain registered blood establishments that qualify as health care 
entities to distribute blood derivatives. In consideration of the 
issues that the industry raised, we seek comments on whether this 
exclusion should be

[[Page 5203]]

expanded to allow registered blood establishments that also provide 
health care services to distribute drugs other than blood derivatives 
that might be used to treat blood disorders. We are seeking information 
that includes, but is not limited to, the number of entities affected; 
how often drugs used to treat blood disorders are distributed by 
registered blood establishments and whether the nature of this practice 
is critical; and, any negative impact on public health if the exclusion 
allows only for the distribution of blood derivatives. Actual numbers, 
statistics, and examples would help us determine the best course of 
action. In addition, we seek comments on whether hemophilia treatment 
centers, which are health care entities but are not registered blood 
establishments, should be included within the scope of this exception.

IV. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the proposed 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 tentatively concludes that the proposed rule does not 
contain policies that have federalism implications as defined in the 
Executive order and, consequently, a federalism summary impact 
statement is not required.

V. Paperwork Reduction Act of 1995

    FDA tentatively concludes that this proposed rule contains no 
collections of information. Therefore, clearance by the Office of 
Management and Budget under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520) (PRA) is not required.

VI. Analysis of Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and 
the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). 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 proposed rule is not a significant regulatory action as defined by 
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. Because this rule proposes a narrow revision that is 
intended to maintain the status quo, the agency certifies that the 
proposed 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 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $115 million, using the most current (2003) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
proposed rule to result in any 1-year expenditure that would meet or 
exceed this amount.

VII. Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comments, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

List of Subjects

21 CFR Part 203

    Drugs, Labeling, Manufacturing, Prescription drugs, Reporting and 
recordkeepng requirements, Warehouses.

21 CFR Part 205

    Intergovernmental relations, Prescription drugs, Reporting and 
recordkeeping requirements, Security measures, Warehouses.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
the authority delegated to the Commissioner of Food and Drugs, it is 
proposed that parts 203 and 205 be amended as follows:

PART 203--PRESCRIPTION DRUG MARKETING

    1. The Authority citation for 21 CFR part 203 continues to read as 
follows:

    Authority: 21 U.S.C. 331, 333, 351, 352, 353, 360, 371, 374, 
381.
    2. Section 203.3 is amended by revising paragraph (q) to read as 
follows:


Sec.  203.3  Definitions.

* * * * *
    (q) Health care entity means any person that provides diagnostic, 
medical, surgical, or dental treatment, or chronic or rehabilitative 
care, but does not include any retail pharmacy or any wholesale 
distributor. Except as provided in Sec.  203.22(h), a person cannot 
simultaneously be a ``health care entity'' and a retail pharmacy or 
wholesale distributor.
* * * * *
    3. Section 203.22 is amended by adding paragraph (h) to read as 
follows:


Sec.  203.22  Exclusions.

* * * * *
    (h) The sale, purchase, or trade of, or the offer to sell, 
purchase, or trade any blood derivative by a registered blood 
establishment that qualifies as a health care entity, as long as all of 
the health care services that it provides are related to its activities 
as a registered blood establishment.

PART 205--GUIDELINES FOR STATE LICENSING OF WHOLESALE PRESCRIPTION 
DRUG DISTRIBUTORS

    4. The Authority citation for 21 CFR part 205 continues to read as 
follows:

    Authority: 21. U.S.C. 351, 352, 353, 371, 374.
    5. Section 205.3 is amended by revising paragraph (h) to read as 
follows:


Sec.  205.3  Definitions

* * * * *
    (h) Health care entity means any person that provides diagnostic, 
medical, surgical, or dental treatment, or chronic or rehabilitative 
care, but does not include any retail pharmacy or any wholesale 
distributor. Except as provided in Sec.  203.22(h), a person cannot 
simultaneously be a ``health care entity'' and a retail pharmacy or 
wholesale distributor.

    Dated: November 17, 2005.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. E6-1225 Filed 1-31-06; 8:45 am]
BILLING CODE 4160-01-S