[Federal Register Volume 72, Number 182 (Thursday, September 20, 2007)]
[Notices]
[Pages 53908-53911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18523]



[[Page 53907]]

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Part VII





Department of Justice





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Drug Enforcement Administration



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 Established Assessment of Annual Needs for the List I Chemicals 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2007 and 2008; 
Notices

  Federal Register / Vol. 72, No. 182 / Thursday, September 20, 2007 / 
Notices  

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. DEA-300F]


Established Assessment of Annual Needs for the List I Chemicals 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2007

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Notice of assessment of annual needs for 2007.

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SUMMARY: This notice establishes the initial year 2007 assessment of 
annual needs for certain List I chemicals in accordance with the Combat 
Methamphetamine Epidemic Act of 2005 (CMEA), enacted on March 9, 2006.

DATES: Effective Date: September 20, 2007.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., Chief, 
Drug & Chemical Evaluation Section, Drug Enforcement Administration, 
Washington, DC 20537, Telephone: (202) 307-7183.

SUPPLEMENTARY INFORMATION:

Background and Legal Authority

    Section 713 of the CMEA (Title VII of Pub. L 109-177) amended 
section 306 of the Controlled Substances Act (CSA) (21 U.S.C. 826) 
requiring that the Attorney General establish quotas to provide for the 
annual needs for ephedrine, pseudoephedrine, and phenylpropanolamine. 
Further, section 715 of the CMEA amended 21 U.S.C. 952 by adding 
ephedrine, pseudoephedrine, and phenylpropanolamine to the existing 
language concerning importation of controlled substances.
    The 2007 assessment of annual needs represents those quantities of 
ephedrine, pseudoephedrine, and phenylpropanolamine which may be 
manufactured domestically and/or imported into the United States in 
2007 to provide adequate supplies of each chemical for: the estimated 
medical, scientific, research and industrial needs of the United 
States; lawful export requirements; and the establishment and 
maintenance of reserve stocks.
    This responsibility for establishing the assessment has been 
delegated to the Administrator of the DEA by 28 CFR section 0.100. The 
Administrator, in turn, has redelegated this function to the Deputy 
Administrator, pursuant to 28 CFR section 0.104.
    On October 19, 2006, a notice entitled, ``Assessment of Annual 
Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine for 2007: Proposed'' was published in the Federal 
Register (71 FR 61801). This notice proposed the initial 2007 
assessment of annual needs for ephedrine (for sale), ephedrine (for 
conversion), pseudoephedrine (for sale), phenylpropanolamine (for sale) 
and phenylpropanolamine (for conversion). All interested persons were 
invited to comment on or object to the proposed assessments on or 
before December 4, 2006.

Comments Received

    DEA received eight comments from five interested parties during the 
comment period. Two comments were received from two DEA registered 
chemical importers; one comment was received from a DEA registered 
chemical manufacturer; two comments were received from an association 
representing over-the-counter (OTC) manufacturers, distributors and 
retailers; and three comments were received from a law firm 
representing an OTC product manufacturer. After the comment period 
closed, DEA received an additional comment from the above-mentioned 
association. All comments received during the comment period are 
summarized here and discussed further below.
    One of the five commenters supported the DEA's proposal. This 
commenter, one of the DEA registered chemical importers, stated that 
DEA's proposed assessment of annual needs for pseudoephedrine and 
ephedrine was ``reasonable.'' Additionally, the commenter requested 
that the DEA consider providing ``regulatory relief'' with regard to 
the new import provisions by minimizing the amount of information that 
will be required on the import applications and relying more heavily on 
the requirements under the ``spot market'' provision to ensure that 
these substances are imported for legitimate needs. Since the 
information collected as part of the quota provisions and import 
applications is not the subject of this notice, the latter part of this 
comment was not considered by DEA.
    Three of the five commenters raised concerns regarding DEA's 
proposal. Two of these commenters raised concerns regarding the 
assessment for ephedrine while one raised concerns regarding the 
assessment for phenylpropanolamine (for conversion). These commenters 
included a DEA-registered manufacturer that imports 
phenylpropanolamine, an association representing OTC manufacturers, 
distributors, and retailers, and a law firm representing an OTC product 
manufacturer.
    The fifth commenter requested that DEA consider its proposed 
individual requirement for ephedrine in fixing the final assessment of 
annual needs.
    DEA did not receive any comments on its proposed assessment of 
annual needs for ephedrine (for conversion) and phenylpropanolamine 
(for sale) and is therefore finalizing these values as proposed. The 
assessment of annual needs for phenylpropanolamine (for conversion), 
ephedrine (for sale) and pseudoephedrine (for sale) are discussed below 
within the context of the comments received.

Comments Regarding DEA's Proposed Assessment for Phenylpropanolamine 
(for Conversion)

    One commenter, a manufacturer that imports phenylpropanolamine, 
considered the proposed phenylpropanolamine (for conversion) 
assessment, i.e., the amount necessary for the manufacture of other 
substances, insufficient to meet its customers' needs. The commenter 
stated that phenylpropanolamine, and its isomers, are used as chiral 
agents in numerous chemical syntheses, a factor that the commenter 
believed DEA had not considered in its original proposal. The commenter 
stated that the synthesized drugs are used in drug products 
administered to patients with Acquired Immune Deficiency Syndrome 
(AIDS) and Attention Deficit Disorder (ADD). This commenter believed 
that these uses are probably the largest use of phenylpropanolamine.
    DEA had considered in its proposal the amount of 
phenylpropanolamine it believed was necessary for the manufacture of 
ADD medicines, but had not considered the chemical's use in the 
manufacture of drugs utilized in the treatment of AIDS. After 
consideration of this comment along with additional information 
obtained by DEA in connection with this comment, DEA has adjusted its 
assessment for phenylpropanolamine (for conversion) from 6,240 kg to 
85,470 kg.

Comments Regarding DEA's Proposed Assessments for Ephedrine (for Sale) 
and Pseudoephedrine (for Sale)

    Two commenters, the association representing OTC manufacturers, 
distributors, and retailers, and the law firm representing an OTC 
product manufacturer, indicated their belief that the proposed 
ephedrine assessment was insufficient to meet market demands for 
ephedrine-containing OTC products. The association also questioned the

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sufficiency of the assessment for pseudoephedrine.
    The law firm representing an OTC product manufacturer submitted 
three individual comments during the comment period. The first comment 
requested a 30-day extension of the comment period. The commenter 
stated that they were unable to locate the IMS Health Government 
Solutions (IMS) report on the DEA Diversion Web site. The commenter was 
contacted by DEA and advised as to where the IMS report was located; 
upon locating the report, the commenter withdrew their request for a 
30-day extension. The second comment was another request for a 30-day 
extension of the comment period deadline in order to compile and submit 
to DEA a report from ``* * * experts in medicine, economics, and DEA/
law enforcement to assess the impact of the proposed quota on medical, 
industrial, scientific and other legitimate demand for the two chemical 
substances.'' The commenter submitted the report to DEA in its third 
comment. The commenter recommended ``withdrawal of the proposed 2007 
assessment due to its inaccuracy and incompleteness.'' The commenter 
requested that DEA issue a new notice. The comment made the following 
conclusions: (1) That the IMS report was flawed because it excluded and 
underestimated ``legitimate demand for ephedrine sold in over-the-
counter (OTC) drugs for respiratory ailments via convenience stores''; 
(2) ``The underestimation of legitimate medical need will lead to 
ephedrine quota levels beneath those necessary to ensure adequate 
supplies of ephedrine to treat respiratory ailments''; (3) ``The 
exclusion of convenience stores from the IMS calculus and any resulting 
deprivation of supply to satisfy legitimate demand in those stores will 
imperil the health and safety of Americans with respiratory ailments, 
resulting in increased hospitalization and possibly deaths due to a 
lack of ready access in moments of critical need''; (4) ``* * * the 
prejudicial exclusion of convenience store demand from the 2007 Annual 
Needs estimate not only reduces supply beneath safe levels but also 
creates an anti-competitive market bias in favor of pharmacies over 
convenience stores to the economic and physical detriment of all with 
legitimate medical needs.'' The commenter also stated that IMS did not 
conduct any ``sensitivity tests, assessments of bias, or estimates of 
precision related to use of surveys that are critical to estimates of 
certain segments of the legitimate medical use market, such as 
convenience stores.''
    DEA notes that IMS completed a sensitivity analysis upon review of 
the comments submitted by this commenter. The results of this analysis 
and DEA's consideration of the results of that analysis are discussed 
below. IMS' final report is available on the Office of Diversion 
Control's Web site (http://www.deadiversion.usdoj.gov).
    The association representing OTC manufacturers, distributors, and 
retailers provided two comments to the docket during the comment 
period. The commenter stated that the IMS report did not ``properly 
document data from the convenience store segment.'' The commenter noted 
its concern that DEA has ``narrowly defined `medical need' '' for 
preparations containing these List I chemicals, specifically ephedrine. 
The commenter stated that it had commissioned ``a study by an outside 
economic consulting firm to provide the DEA with substantive 
information that would help DEA produce a more accurate and substantive 
estimate of ephedrine needs assessment for 2007.'' The comment included 
a request for an extension of time which was not granted. The study was 
submitted to both DEA and IMS after the comment period had closed.
    In connection with the concerns raised by these two commenters that 
the preliminary IMS study did not adequately address sales of 
ephedrine-based OTC drug products through the convenience store channel 
of distribution, DEA notes that its contract with IMS had two distinct 
phases. Phase I, which was completed prior to publication of the 
proposed assessment of annual needs, involved a preliminary assessment 
of the medical use of ephedrine and pseudoephedrine and a written 
summary of the methodology it used to develop the estimates. This 
information was made available for review by the public when the DEA 
published the ``Assessment of Annual Needs for the List I Chemicals 
Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2007: 
Proposed'' (71 FR 61801). The second phase of DEA's contract involved 
IMS' development of a final estimate which was developed by IMS after 
consideration of all available information, including: comments 
received from the public during the comment period, the study submitted 
directly to IMS by the association representing OTC manufacturers, 
distributors and retailers, updated information from the data sources 
used by IMS to compile the initial estimates, and other available 
information on the sales of OTC drug products through various 
distribution channels. The final report is discussed below and is 
available on DEA's Office of Diversion Control Web site, http://www.deadiversion.usdoj.gov.

Report Prepared by IMS Health

    As discussed in its October 19, 2006, proposed Assessment of Annual 
Needs, since the manufacture and importation of ephedrine, 
pseudoephedrine, and phenylpropanolamine were not previously regulated 
through the establishment of an assessment of annual needs, DEA 
obtained assistance from a private independent contractor, IMS, to 
develop the initial estimate of the medical needs of the United States 
of ephedrine and pseudoephedrine.
    IMS' estimates of medical needs for ephedrine and pseudoephedrine 
were derived from data the company routinely collects and offers to 
customers to understand the pharmaceutical market. For this analysis, 
IMS utilized the following types of data: (1) Sales to retail 
establishments (including pharmacies), (2) sales by retail 
establishments to patients, and (3) medical insurance claims. IMS' 
estimates of medical needs were intended to encompass only those 
products containing either ephedrine or pseudoephedrine, whether 
requiring a prescription or available over-the-counter. The estimates 
of use encompassed those products containing ephedrine and 
pseudoephedrine which are lawfully marketed under the Federal Food, 
Drug and Cosmetic Act. As noted previously, IMS did not examine 
estimates for phenylpropanolamine.
    The CSA requires that DEA establish quotas for ephedrine, 
pseudoephedrine, and phenylpropanolamine to meet the estimated medical, 
scientific, research, and industrial needs of the United States, lawful 
export requirements, and maintenance of reserve stocks. Accordingly, 
DEA requested that IMS determine the amount of ephedrine and 
pseudoephedrine necessary to meet the estimated medical needs of the 
United States. DEA and IMS agreed that looking at sales of prescription 
and OTC drug products containing these list I chemicals through all 
distribution channels alone would not be an appropriate proxy from 
which to derive an estimate of what IMS describes in its report as the 
``legitimate medical use'' because this approach would have the 
unwanted effect of including amounts of ephedrine and pseudoephedrine 
purchased for use in the clandestine manufacture of methamphetamine.
    Therefore, IMS concluded that the best proxy for evaluating the 
estimated medical use for these chemicals, i.e., the alternate method 
that seeks to exclude

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sales of ephedrine and pseudoephedrine-based products destined for 
clandestine methamphetamine production in the United States, would 
involve evaluating the changes (increases or decreases) in sales of 
prescription and OTC products containing these List I chemicals which 
have resulted from various state initiatives aimed at imposing 
restrictions on the retail sales of OTC drug products containing these 
chemicals. These state-sponsored initiatives began as early as 2004. 
The requirements vary from state to state, but examples include: (1) 
Placing OTC products behind pharmacy counters, (2) restricting the 
quantity of OTC drug products that could be purchased by individuals, 
and (3) providing proof of identification at the time of purchase. 
Based on this analysis, IMS concluded that the median changes in OTC 
sales of ephedrine products were: 23.7 percent increase through retail 
channels (mass merchandisers, grocery stores, etc.) and a 45.2 percent 
decrease in ``other'' distribution channels (including gas station and 
convenience stores). For comparison, sales of OTC products containing 
pseudoephedrine decreased by 22 percent through retail distribution 
channels and also decreased by 10.8 percent through other distribution 
channels. Accordingly, these changes, along with the changes observed 
in the usage of prescription drug products containing ephedrine and 
pseudoephedrine, were applied across all data systems used in the IMS 
analysis.
    Based on the comments analyzed by IMS, IMS completed a sensitivity 
analysis of their final estimates. IMS concluded that the estimated 
medical use for pseudoephedrine was ``very stable * * * differing from 
the simple average of the component final estimates by at most 7.7%.'' 
By contrast, however, the estimated medical use for ephedrine was 
``relatively unstable, as the sensitivity estimates differ from the 
final estimate by as much as 46.5%.''

IMS' Medical Need Estimate for Pseudoephedrine and the DEA's Final 2007 
Assessment of Annual Needs for Pseudoephedrine (for Sale)

    In its final report, IMS concluded that the estimated medical need 
for pseudoephedrine decreased in all three models analyzed. The initial 
IMS report estimated that the medical need in the United States for 
pseudoephedrine was 350,700 kg and in the final report the medical need 
estimate was 280,268 kg. The results of the sensitivity analysis 
suggest that the pseudoephedrine medical need assessment was very 
stable from the simple average of the three component final estimates 
and, at most, differed by 7.7 percent. The decrease observed in IMS 
final estimate as compared with the preliminary estimate was due to a 
necessary adjustment resulting from IMS initially expressing its 
estimate (350,700 kg) in terms of the compound weight, e.g., 
pseudoephedrine hydrochloride, rather than expressing its estimate in 
terms of the weight of the molecule pseudoephedrine alone. Overall, 
this resulted in a correction down in the IMS estimate by approximately 
20 percent.
    Although IMS' final estimate is lower, DEA has concluded that the 
amount proposed would allow for sufficient inventory allowances to DEA 
registered manufacturers and importers of pseudoephedrine products and 
could account for any unexpected change (increase) in the use of 
pseudoephedrine that may result from changes in the acceptability of 
phenylephrine as a substitute for pseudoephedrine in many OTC cough and 
cold products currently on the market.

IMS' Medical Need Estimate for Ephedrine and the DEA's Final 2007 
Assessment of Annual Needs for Ephedrine (for Sale)

    As with the pseudoephedrine estimate, IMS based its preliminary 
ephedrine medical need estimate on the weights of the salt forms of 
ephedrine; this resulted in a necessary adjustment down by 20 percent 
for its final medical need estimate. Unlike the pseudoephedrine 
estimate which decreased in the final report, IMS' analysis of the data 
available resulted in an increase from 3,800 kg to 4,096 kg. 
Furthermore, the results of its sensitivity analysis concluded that the 
4,096 kg medical need estimate was ``unstable'' as compared to the 
estimate for pseudoephedrine and that the sensitivity estimates 
differed from the final estimate by as much as 46.5 percent (range was 
4,096 kg to 5,998 kg). The two factors principally responsible for the 
46.5 percent range were: (1) The incorporation of estimated amounts of 
OTC products sold in convenience stores, which IMS concluded to be 7.7 
percent, and (2) the incorporation of ``non-matched products,'' i.e., 
those products not originally confirmed to contain ephedrine or 
pseudoephedrine, into IMS' estimate.
    Based on this analysis, DEA concludes that the proposed assessment 
of annual needs for ephedrine (for sale) was inadequate to meet the 
estimated medical, scientific, research, and industrial needs of the 
United States, lawful export requirements, and maintenance of reserve 
stocks. After considering IMS' final estimate of the medical need of 
ephedrine-based prescription and OTC products (5,998 kg), along with 
information DEA collects from DEA registered chemical exporters 
(through the DEA-486 Import/Export Declaration for Listed Chemicals), 
and amounts necessary to maintain reserve stocks, DEA has increased the 
ephedrine (for sale) assessment from 7,100 kg to 11,500 kg.

Conclusion

    Therefore, under the authority vested in the Attorney General by 
section 306 of the CSA (21 U.S.C. 826), and delegated to the 
Administrator of the DEA by 28 CFR section 0.100, and redelegated to 
the Deputy Administrator pursuant to 28 CFR section 0.104, the Deputy 
Administrator hereby orders that the 2007 assessment of annual needs 
for ephedrine, pseudoephedrine, and phenylpropanolamine, expressed in 
kilograms of anhydrous acid or base, be established as follows:

------------------------------------------------------------------------
                                                        Final year 2007
                                                         assessment of
                   List I chemicals                       annual needs
                                                              (kg)
------------------------------------------------------------------------
Ephedrine (for sale).................................             11,500
Ephedrine (for conversion)...........................            128,760
Pseudoephedrine (for sale)...........................            511,100
Phenylpropanolamine (for sale).......................              5,545
Phenylpropanolamine (for conversion).................             85,470
------------------------------------------------------------------------

    The Office of Management and Budget has determined that notices of 
quotas are not subject to centralized review under Executive Order 
12866.
    This action does not preempt or modify any provision of state law; 
nor does it impose enforcement responsibilities on any state; nor does 
it diminish the power of any state to enforce its own laws. 
Accordingly, this action does not have any federalism implications 
warranting the application of Executive Order 13132.
    The Deputy Administrator hereby certifies that this action will 
have no significant impact upon small entities whose interests must be 
considered under the Regulatory Flexibility Act, 5 U.S.C. 601-612. The 
establishment of assessments of annual needs for ephedrine, 
pseudoephedrine, and phenylpropanolamine is mandated by law. The 
assessments are necessary to provide for the estimated medical, 
scientific, research and industrial needs of the United States, for 
export requirements, and the establishment and maintenance of reserve 
stocks.

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Accordingly, the Deputy Administrator has determined that this action 
does not require a regulatory flexibility analysis.
    This action meets the applicable standards set forth in sections 
3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform.
    This action will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$120,000,000 or more (adjusted for inflation) in any one year, and will 
not significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.
    This action is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996 
(Congressional Review Act). This action will not result in an annual 
effect on the economy of $100,000,000 or more; a major increase in 
costs or prices; or significant adverse effects on competition, 
employment, investment, productivity, innovation, or on the ability of 
United States-based companies to compete with foreign-based companies 
in domestic and export markets.

    Dated: September 13, 2007.
Michele M. Leonhart,
Deputy Administrator. >
 [FR Doc. E7-18523 Filed 9-19-07; 8:45 am]
BILLING CODE 4410-09-P