[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Notices]
[Pages 79508-79514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30808]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. DEA-314I]


Assessment of Annual Needs for the List I Chemicals Ephedrine, 
Pseudoephedrine, and Phenylpropanolamine for 2009

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Interim Established Assessment of Annual Needs with Request for 
Comment.

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SUMMARY: This notice establishes, on an interim basis, the Assessment 
of Annual Needs for the List I chemicals ephedrine, pseudoephedrine, 
and phenylpropanolamine. DEA seeks comment regarding the Assessment of 
Annual Needs for those List I chemicals. The Assessment of Annual Needs 
for these chemicals will be proposed to be revised, pursuant to DEA 
regulations, during calendar year 2009. After consideration of the 
comments received, DEA will finalize the assessment for those 
chemicals, prior to proposing the revision of the assessment for those 
chemicals during calendar year 2009.

DATES: This notice is effective January 1, 2009. Written comments must 
be postmarked, and electronic comments must be sent, on or before 
January 28, 2009.

ADDRESSES: To ensure proper handling of comments, please reference 
``Docket No. DEA-314I'' on all written and electronic correspondence. 
Written comments being sent via regular or express mail should be sent 
to the Deputy Assistant Administrator, Office of Diversion Control, 
Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, 
Virginia 22152, Attention: DEA Federal Register Representative/ODL. 
Comments may be sent to DEA by sending an electronic message to 
[email protected]. DEA will accept attachments to 
electronic comments in Microsoft Word, WordPerfect, Adobe PDF, or Excel 
file formats only. DEA will not accept any file format other than those 
specifically listed here.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, PhD, Chief, 
Drug and Chemical Evaluation Section, Drug Enforcement Administration, 
8701 Morrissette Drive, Springfield, Virginia 22152, Telephone: (202) 
307-7183.

SUPPLEMENTARY INFORMATION: Section 713 of the Combat Methamphetamine 
Epidemic Act (CMEA) of 2005 (Title VII of Pub. L. 109-177) (CMEA) 
amended Section 306 of the Controlled Substances Act (CSA) (21 U.S.C. 
826) by adding ephedrine, pseudoephedrine, and phenylpropanolamine to 
existing language to read as follows: ``The Attorney General shall 
determine the total quantity and establish production quotas for each 
basic class of controlled substance in schedules I and II and for 
ephedrine, pseudoephedrine, and phenylpropanolamine to be manufactured 
each calendar year to provide for the estimated medical, scientific, 
research, and industrial needs of the U.S., for lawful export 
requirements, and for the establishment and maintenance of reserve 
stocks.'' Further, section 715 of CMEA amended 21 U.S.C. 952 
``Importation of controlled substances'' by adding the same List I 
chemicals to the existing language in paragraph (a), and by adding a 
new paragraph (d) to read as follows:

    (a) Controlled substances in schedule I or II and narcotic drugs 
in schedule III, IV, or V; exceptions:

It shall be unlawful to import into the customs territory of the 
U.S. from any place outside thereof (but within the U.S.), or to 
import into the U.S. from any place outside thereof, any controlled 
substance in schedule I or II of subchapter I of this chapter, or 
any narcotic drug in schedule III, IV, or V of subchapter I of this 
chapter, or ephedrine, pseudoephedrine, and phenylpropanolamine, 
except that--
    (1) such amounts of crude opium, poppy straw, concentrate of 
poppy straw, and coca leaves, and of ephedrine, pseudoephedrine, and 
phenylpropanolamine, as the Attorney General finds to be necessary 
to provide for medical, scientific, or other legitimate purposes * * 
* may be so imported under such regulations as the Attorney General 
shall prescribe.
* * * * *
    (d)(1) With respect to a registrant under section 958 who is 
authorized under subsection (a)(1) to import ephedrine, 
pseudoephedrine, or phenylpropanolamine, at any time during the year 
the registrant may apply for an increase in the amount of such 
chemical that the registrant is authorized to import, and the 
Attorney General may approve the application if the Attorney General 
determines that the approval is necessary to provide for medical, 
scientific, or other legitimate purposes regarding the chemical.

    Editor's Note: This excerpt of the amendment is published for 
the convenience of the reader. The official text is published at 21 
U.S.C. 952(a) and (d)(1).

Background and Legal Authority

    Section 713 of the CMEA (Title VII of Pub. L. 109-177) amended 
section 306 of the CSA (21 U.S.C. 826) to require that the Attorney 
General establish quotas to provide for the annual needs for ephedrine, 
pseudoephedrine, and phenylpropanolamine. 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 2009 Assessment of Annual Needs represents those quantities of 
ephedrine, pseudoephedrine, and phenylpropanolamine which may be 
manufactured domestically and/or imported into the U.S. in 2009 to 
provide adequate supplies of each chemical for: the estimated medical, 
scientific, research, and industrial needs of the U.S.; lawful export 
requirements; and the establishment and maintenance of reserve stocks.
    The responsibility for establishing the assessment has been 
delegated to the Administrator of the DEA by 28 CFR 0.100. The 
Administrator, in turn, has redelegated this function to the Deputy 
Administrator, pursuant to 28 CFR 0.104.
    On September 19, 2008, a notice entitled, ``Assessment of Annual 
Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine for 2009: Proposed'' was published in the Federal 
Register (73 FR 54431). That notice proposed the initial 2009 
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 October 20, 2008.
    DEA received a total of two comments, one of which was from a law 
firm representing an industry group comprised of distributors and 
retailers of over-the-counter (OTC) medications. In that comment, the 
law firm requested that DEA ``indicate what data it reviewed and relied 
on to estimate trends and projected demands'' of

[[Page 79509]]

ephedrine. After consideration of this comment, DEA is providing the 
data used in developing the proposed assessment for each of the listed 
chemicals and is making additional information available in the 
administrative record.
    As discussed below, it is necessary to implement this notice on an 
interim basis so that DEA can issue individual import, manufacturing, 
and procurement quotas to DEA registered importers and manufacturers. 
It is necessary to issue these quotas, for import and manufacturing of 
pharmaceutical products containing ephedrine, pseudoephedrine, and 
phenylpropanolamine in a timely manner to provide for an uninterrupted 
supply of these materials that are important to the public health.

Comments Received

    The first comment received in response to the September 19, 2008, 
rulemaking was from a law firm representing an industry group comprised 
of distributors and retailers of OTC medications. This commenter raised 
concerns regarding the assessment for ephedrine (for sale).
    The second comment was from a DEA registered chemical manufacturer. 
The second commenter requested that DEA consider its individual 
requirement for phenylpropanolamine (for conversion) in fixing the 
final assessment of annual needs.
    In response to these comments, the assessments for 
phenylpropanolamine (for conversion) and ephedrine (for sale) are 
discussed below within the context of the comments received.
    DEA did not receive any comments on its proposed Assessment of 
Annual Needs for ephedrine (for conversion), phenylpropanolamine (for 
sale), and pseudoephedrine (for sale). While no comments were received 
regarding the assessment of annual needs for these materials, this 
notice also provides the underlying data which was used in determining 
the assessments for these List I chemicals, to allow for additional 
comment. Additional information is available in the docket.

Comment Regarding DEA's Proposed Assessment for Ephedrine (for Sale)

    The commenter, a law firm representing an industry group comprised 
of distributors and retailers of OTC medications indicated its belief 
that the proposed 2009 ephedrine assessment was ``both unsupported and 
insufficient to meet legitimate medical needs.'' The commenter 
recommended that the 2009 ephedrine assessment be the same as the 2008 
ephedrine (for sale) assessment (i.e., 11,500 kg). In its September 19, 
2008, proposed Assessment, DEA proposed an assessment of 2,500 kg of 
ephedrine (for sale) for 2009. The commenter stated that DEA provided 
no actual data or support for its 80% reduction in the 2009 ephedrine 
(for sale) assessment and that DEA failed to indicate what data it 
reviewed and relied upon in making its proposal, and for that reason 
requested that DEA publish the factual basis for the 2009 proposed 
assessment for ephedrine (for sale). The commenter also stated its 
belief that DEA failed to provide any indication that it considered 
medical factors before it proposed the 2009 assessment.

DEA Response

    In its proposal, DEA published the substance of the proposed 
Assessment of Annual Needs and provided a description of the subjects 
and issues involved, specifically:

    To develop the 2009 assessment of annual needs for the U.S., DEA 
considered applications for 2009 import, manufacturing, and 
procurement quotas received from DEA registered manufacturers and 
importers. DEA further considered information contained in import 
and export declarations (DEA-486) along with information relating to 
trends in the national rate of disposals, actual and estimated 
inventories, and projected demand for the List I chemicals 
ephedrine, pseudoephedrine and phenylpropanolamine in accordance 
with 21 CFR 1315.11. (73 FR 54432, September 19, 2008)

    In response to this comment, this notice further details the 
underlying data summarized from quota applications, from import/export 
documents, and data from a third party vendor, IMS Health Inc. DEA 
notes that the information sources used for the 2009 assessment are 
different from the data sources considered by DEA in establishing the 
2007 and 2008 assessments. Specifically, DEA was able to consider 
information obtained from applications for 2009 quotas. In contrast, 
when the 2007 and 2008 assessments were proposed, on October 19, 2006, 
and September 20, 2007, respectively, DEA either lacked quota 
applications altogether or believed that it did not have a sufficient 
number of applications from which to draw meaningful conclusions. With 
the absence of quota applications from DEA registered importers and 
manufacturers in those years (2006 and 2007), DEA relied on a report 
prepared by IMS Health Inc.\1\ The report was commissioned by DEA 
specifically for that purpose. This year, however, DEA is able to use 
the data from quota applications and from information as specified in 
21 CFR 1315.11.
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    \1\ 2005 Ephedrine/Pseudoephedrine Legitimate Medical Use 
Methodology and Final Report http://www.deadiversion.usdoj.gov/meth/dea_ims_study_070307.pdf.
    \2\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
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    A summary of the underlying data from quota applications and other 
sources, as well as DEA's analysis of that data, are provided below.

Ephedrine Data

                          Ephedrine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
                                                                                                         2009
                          Ephedrine                               2006         2007       2008 \2\     Request
----------------------------------------------------------------------------------------------------------------
Sales* (DEA 250)............................................        1,993        2,840        1,291          921
Imports** (DEA 488).........................................        5,627        1,337        1,179           44
Export Declarations (DEA 486)...............................          313          168           16          n/a
Inventory* (DEA 250)........................................          856        1,795          468          n/a
IMS *** (NSP)...............................................        1,256        1,267          n/a          n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) received as of July 15,
  2008.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of July 15, 2008.
*** IMS Health, IMS National Sales Perspectives\TM\, January 2006 to December 2007, Retail and Non-Retail
  Channels, Data Extracted July 15, 2008.


[[Page 79510]]

Underlying Data and DEA's Analysis

    The DEA considered total net disposals (i.e., sales) of ephedrine 
for the current and preceding two years, actual and estimated 
inventories, projected demand (2009), industrial use, and export 
requirements from data provided by DEA registered manufacturers and 
importers in procurement quota applications (DEA 250), from 
manufacturing quota applications (DEA 189), and from import quota 
applications (DEA 488).\3\ The net disposals (i.e., sales) figures 
provided by DEA registered manufacturers on quota applications include 
the sales of ephedrine-based products that are used to treat asthma. In 
this regard, DEA considered ``medical factors'' in its assessment. For 
industrial use, ephedrine may be used as a chiral compound for the 
manufacture of non-controlled non-scheduled drug products. DEA did not 
receive requests for 2009 ephedrine for this industrial application.
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    \3\ Applications and instructions for procurement, import and 
manufacturing quotas can be found at http://www.deadiversion.usdoj.gov/quotas/quota_apps.htm.
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    Additionally, DEA considered data on trends in the national rate of 
net disposals from sales data provided by IMS Health's National Sales 
Perspective\TM\ (NSP) database. Export data was provided from import 
and export declarations (DEA 486).
    At the time DEA drafted the 2009 proposed assessment (i.e., July 
15, 2008), DEA considered applications for procurement quotas from DEA 
registered manufacturers of ephedrine. These applications were due on 
or before April 1, 2008. These firms requested authority to purchase a 
total of 921 kg of ephedrine (for sale) in 2009. Additionally DEA 
considered import quota applications from DEA registered importers 
requesting authority to import a total of 44 kg of ephedrine (for 
sale). DEA had not received any requests to synthesize ephedrine in 
2009.
    DEA further considered information on trends in the national rate 
of net disposals from sales data provided by IMS Health's National 
Sales Perspective\TM\ (NSP) database. IMS Health's NSP data provides 
national level monthly estimates of pharmaceutical product purchases by 
those that distribute/sell drug products to patients (retail 
pharmacies, hospitals, clinics, food chain stores, and etc.) and 
includes both prescription and OTC products. A detailed description of 
the methodology that IMS Health Inc. continues to use in assembling the 
NSP data can be found in IMS's publication, ``2005 Ephedrine/
Pseudoephedrine Legitimate Medical Use Methodology and Final Report.'' 
\4\ IMS NSP data reported the average sales volume of ephedrine for the 
calendar years 2006 and 2007 to be approximately 1,261 kg.
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    \4\ 2005 Ephedrine/Pseudoephedrine Legitimate Medical Use 
Methodology and Final Report http://www.deadiversion.usdoj.gov/meth/dea_ims_study_070307.pdf.
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    DEA further considered trends as derived from information provided 
in applications for import, manufacturing, and procurement quotas and 
in import and export declarations. Based on an analysis of the 
inventory, acquisitions (purchases) and disposition (sales) data 
provided by DEA registered manufacturers and importers on individual 
quota applications received as of July 15, 2008, for the 2009 quota 
year, manufacturers of dosage form products containing ephedrine 
reported sales totaling approximately 2,840 kg in 2007 and 1,291 kg in 
2008; this represents a 55 percent decrease from sales reported by 
these firms from 2007 to 2008. During the same period, exports of 
ephedrine products from the U.S. as reported on export declarations 
(DEA 486), totaled 168 kg in 2007 and 16 kg in 2008; this represents a 
90 percent decrease from levels observed in 2007. DEA notes that the 
import requirements are considered in respect to the sales of those 
substances or products produced there from. DEA notes for 2009 that DEA 
registered dosage form manufacturers requested authority to purchase a 
total of 921 kg of ephedrine which suggests that demand is expected to 
decrease again in 2009.

Ephedrine Calculation

    DEA calculated the 2009 Assessment of Annual Needs for ephedrine as 
follows. DEA developed a calculation that considers the criteria 
defined in 21 U.S.C. 826: estimated medical, scientific, research, and 
industrial needs of the U.S.; lawful export requirements; and the 
establishment and maintenance of reserve stocks.
    In determining the needs of the U.S., DEA noted that the estimated 
2008 sales of ephedrine of 1,291 kg are consistent with the IMS NSP-
reported average sales of ephedrine of 1,261 kg. DEA thus believes that 
1,291 kg fairly represents the U.S. needs for 2009. For the 
establishment and maintenance of reserve stocks, DEA notes that 21 CFR 
1315.24 allows for an inventory allowance (reserve stock) of 50% of a 
manufacturer's estimated sales. In determining the inventory allowance, 
however, DEA also considered the anticipated 2008 year end inventory as 
reported by DEA registrants.

    DEA calculated the ephedrine (for sale) assessment by the following 
methodology:

2008 sales + reserve stock + export requirement - existing inventory = 
AAN 1,291 + (50%*1,291) + 16 - 468 = 1,485 kg ephedrine (for sale) for 
2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
ephedrine should have been proposed to be 1,500 kg rather than the 
2,500 kg actually proposed. Although DEA will revise the assessment of 
annual needs at least once during the 2009 calendar year, DEA's 
experience in the establishment of quotas has been to build a safety 
reserve into the assessment in the event that a DEA registered 
manufacturer failed to provide a timely quota application for DEA's 
consideration. As this notice provides for an opportunity to comment 
DEA is not including this safety reserve for those applicants who have 
failed to provide a timely application. DEA notes in its calculated 
assessment DEA provides for 50% reserve stock. All interested parties 
are invited to comment on the assessment.
    Accordingly, DEA is establishing on an interim basis the Assessment 
of Annual Needs for ephedrine (for sale) as 1,500 kg.

Comment Regarding DEA's Proposed Assessment for Phenylpropanolamine 
(for conversion)

    The commenter, a manufacturer that converts phenylpropanolamine to 
amphetamine requested DEA to consider its individual requirement for 
phenylpropanolamine (for conversion) in fixing the final assessment of 
annual needs.

DEA Response

    A summary of the underlying data from quota applications and other 
sources, as well as DEA's analysis of that data, are provided below in 
response to this commenter's request for consideration of its revised 
requirements in determining the phenylpropanolamine (for conversion) 
assessment.

Phenylpropanolamine (for conversion) data

[[Page 79511]]



                  Phenylpropanolamine (for Conversion) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
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                                                                                                         2009
            Phenylpropanolamine (for conversion)                  2006         2007       2008 \5\     Request
----------------------------------------------------------------------------------------------------------------
Sales* (DEA 250)............................................        8,004       13,712       16,923       16,522
Imports** (DEA 488).........................................       15,594        7,731       16,367        2,525
Export Declarations (DEA 486)...............................            0            0            0          n/a
Inventory* (DEA 250)........................................        4,863        3,021        4,566          n/a
APQ Amphetamine***..........................................       17,000       22,000       22,000         n/a
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* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) received as of July 15,
  2008.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of July 15, 2008.
*** Amphetamine Aggregate Production Quota History http://www.deadiversion.usdoj.gov/quotas/quota_history.htm

    At the time \5\ DEA drafted the 2009 proposed assessment (i.e., 
July 15, 2008), DEA reviewed procurement quota applications received 
from DEA registered manufacturers of phenylpropanolamine (for 
conversion). These firms requested the authority to purchase a total of 
16,522 kg phenylpropanolamine (for conversion). Additionally DEA 
reviewed import quota applications from DEA registered importers 
requesting the authority to import a total of 2,525 kg of 
phenylpropanolamine (for conversion). DEA had not received any requests 
to synthesize phenylpropanolamine in 2009.
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    \5\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
    \6\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
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    The commenter requested DEA to consider the commenter's increased 
revised requirements of 1,894 kg. DEA in its proposal considered the 
commenter's initial quota request in its original assessment for 
phenylpropanolamine (for conversion). Based on the upward revised 
requirements of the commenter, DEA registered manufacturers have 
requested the authority to purchase a total of 18,416 kg (16,522 kg + 
1,894 kg) phenylpropanolamine (for conversion).
    DEA determined that 18,416 kg of phenylpropanolamine (for 
conversion) would be insufficient to meet the historical requirements 
of phenylpropanolamine for the production of amphetamine as established 
by DEA as the Aggregate Production Quota (APQ) for amphetamine (i.e., 
22,000 kg for 2008). This amount 18,416 kg would be sufficient to 
manufacture 30% of the APQ of amphetamine (i.e., 22,000 kg for 2008). 
DEA further considered manufacturer's conversion yields of 
phenylpropanolamine to amphetamine of 50% in its calculation of the 
phenylpropanolamine assessment. DEA calculated the phenylpropanolamine 
(for conversion) assessment by the following methodology:

(2008 APQ / 50% yield) + reserve stock-inventory = AAN
(22,000 / 50% yield) + 50%*(22,000 / 50% yield)-4,566 = 61,434 kg
PPA (for conversion) for 2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
phenylpropanolamine (for conversion) should have been proposed as 
62,000 kg rather than the 50,000 kg actually proposed. This upwards 
revision of the phenylpropanolamine assessment provides for a 50% 
inventory allowance which was not considered in DEA's original 
assessment.
    After consideration of this comment, DEA is establishing, on an 
interim basis the Assessment of Annual Needs for phenylpropanolamine 
(for conversion) as 62,000 kg.

Pseudoephedrine, Ephedrine (for conversion), and Phenylpropanolamine 
for Sale

    DEA did not receive any comments on its proposed Assessment of 
Annual Needs for ephedrine (for conversion), phenylpropanolamine (for 
sale), and pseudoephedrine (for sale). However, DEA is providing the 
underlying data and methodologies used in determining the assessment 
for these list I chemicals. In determining the assessments for 
pseudoephedrine (for sale) and phenylpropanolamine (for sale), DEA 
utilized the same general methodology and calculation as was described 
for the assessment of ephedrine (for sale), above. For ephedrine (for 
conversion), DEA utilized the same general methodology and calculation 
as was described for the assessment of phenylpropanolamine (for 
conversion), above. DEA is providing an additional opportunity for 
comments regarding these assessments.

Pseudoephedrine (for Sale) Data

                       Pseudoephedrine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
                                                                                                         2009
                 Pseudoephedrine (for sale)                       2006         2007       2008 \6\     Request
----------------------------------------------------------------------------------------------------------------
Sales* (DEA 250)............................................      157,205      242,043      225,898      148,992
Sales* (DEA 189)............................................       56,563       99,902       65,650      105,967
Imports** (DEA 488).........................................      125,269      241,264      235,682       27,905
Export Declarations (DEA 486)...............................       37,069       42,142       41,459          n/a
Inventory* (DEA 250)........................................       84,937       65,148        4,566          n/a
IMS*** (NSP)................................................      207,499      183,333          n/a          n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) and manufacturing quotas
  (DEA 189) received as of July 15, 2008.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of July 15, 2008.
*** IMS Health, IMS National Sales PerspectivesTM, January 2006 to December 2007, Retail and Non-Retail
  Channels, Data Extracted July 15, 2008.


[[Page 79512]]

Pseudoephedrine (for sale) Analysis

    DEA utilized the same general methodology and calculation to 
establish the assessment for pseudoephedrine (for sale) as was 
described for the assessment of ephedrine (for sale), above.
    At the time DEA drafted the 2009 proposed assessments (i.e., July 
15, 2008), DEA registered manufacturers dosage form products containing 
pseudoephedrine reported sales totaling approximately 242,043 kg in 
2007 and 225,898 kg in 2008; this represents a seven percent decrease 
from sales reported by these firms from 2007 to 2008. During the same 
period exports of pseudoephedrine products from the U.S. as reported on 
export declarations (DEA 486), totaled 42,142 kg in 2007 and 41,459 kg 
in 2008; this represents a two percent decrease from levels observed in 
2007. Additionally, DEA considered information on trends in the 
national rate of net disposals from sales data provided by IMS Health's 
National Sales PerspectiveTM (NSP) database. IMS NSP data 
reported the average sales volume of pseudoephedrine for the calendar 
years 2006 and 2007 to be approximately 195,416 kg. DEA in considering 
the manufacturers reported sales thus believes that 225,898 kg fairly 
represents the U.S. sales of pseudoephedrine for 2009 and that 41,459 
kg fairly represents the export requirements of pseudoephedrine.
    DEA calculated the pseudoephedrine (for sale) assessment by the 
following methodology:

2008 sales + reserve stock + export requirement-existing inventory = 
AAN
225,898 + (50%*225,898) + 41,459 - 4,566 = 375,740 kg pseudoephedrine 
(for sale) for 2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
pseudoephedrine (for sale) should have been proposed to be 380,000 kg 
rather than the 415,000 kg actually proposed in the September 19, 2008, 
notice. Under this rulemaking DEA is establishing, on an interim basis, 
the Assessment of Annual Needs for pseudoephedrine (for sale) as 
380,000 kg.

Ephedrine (for Conversion) Data

                       Ephedrine (for Conversion) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
                                                                                                         2009
                 Ephedrine (for conversion)                       2006         2007       2008 \7\     Request
----------------------------------------------------------------------------------------------------------------
Sales* (DEA 250)............................................       50,107      100,256       69,576      111,282
Imports** (DEA 488).........................................      297,941      112,302       81,897      110,382
Inventory* (DEA 250)........................................        5,605          135       10,913          n/a
APQ Methamphetamine***......................................        3,130        3,130        3,130         n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) and manufacturing quotas
  (DEA 189) received as of July 15, 2008.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of July 15, 2008.
*** Methamphetamine Aggregate Production Quota History http://www.deadiversion.usdoj.gov/quotas/quota_history.htm

Ephedrine (for Conversion) Analysis

    For ephedrine (for conversion), DEA utilized the same general 
methodology and calculation as was described for the assessment of 
phenylpropanolamine (for conversion), above.
---------------------------------------------------------------------------

    \7\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
---------------------------------------------------------------------------

    At the time DEA drafted the 2009 proposed assessment (i.e., July 
15, 2008), DEA considered applications for procurement quotas from DEA 
registered manufacturers of ephedrine (for conversion). These firms 
requested the authority to purchase a total of 111,282 kg ephedrine 
(for conversion) for the manufacture of two substances: Methamphetamine 
and pseudoephedrine.
    The assessment of need for these two substances (methamphetamine 
and pseudoephedrine) are determined by DEA as the Aggregate Production 
Quota (APQ) for methamphetamine and as the estimated sales of 
pseudoephedrine as referenced in the 2008 Annual Assessment of Need 
(AAN) for pseudoephedrine. DEA in its methodology considered the 
ephedrine (for conversion) requirements for the manufacture of these 
two substances: methamphetamine and pseudoephedrine. DEA further 
considered the reported conversion yields of these substances. These 
firms reported a conversion yield of 39% for the synthesis of 
methamphetamine. DEA cannot disclose the conversion yield for the 
synthesis of pseudoephedrine because this information is proprietary to 
the one manufacturer involved in this type of manufacturing.
    The sum total of these manufacturing requirements therefore is the 
ephedrine (for conversion) assessment. DEA determined these established 
assessments for the manufacture of these two substances are the best 
indicators of ephedrine (for conversion). Reported sales of ephedrine 
(for conversion) are included as reference to DEA's proposed 
methodology.
    DEA calculated the ephedrine (for conversion) assessment by the 
following methodology:

methamphetamine requirement + pseudoephedrine requirement = AAN

    The calculation for the ephedrine (for conversion) requirements for 
the manufacture of methamphetamine are as follows:

(2008 APQ methamphetamine/39% yield) + reserve stock - inventory = 
ephedrine (for manufacture of methamphetamine) (3,130/39% yield) + 
50%*(3,130/39% yield) - 10,913 = 1,125 kg

    The calculation for the ephedrine (for conversion) requirements for 
the manufacture of pseudoephedrine leads to a result of 106,424 kg. DEA 
cannot provide the details of the calculation because this would reveal 
the conversion yield for the synthesis of pseudoephedrine, which is 
proprietary to the one manufacturer involved in this type of 
manufacturing.
    Therefore, the assessment for ephedrine was determined by the sum 
total of the ephedrine (for conversion) requirements as described by 
the following methodology:

methamphetamine requirement + pseudoephedrine requirement = AAN
1,125 + 106,424 = 107,549 kg ephedrine (for conversion) for 2009

    DEA is establishing, on an interim basis, the Assessment of Annual 
Needs for ephedrine (for conversion) as 110,000 kg, as originally 
proposed. DEA will revise the assessment of annual needs at least once 
during the 2009 calendar year.

[[Page 79513]]

Phenylpropanolamine (for Sale) Data

                     Phenylpropanolamine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
                                                                                                         2009
               Phenylpropanolamine (for sale)                     2006         2007       2008 \8\     Request
----------------------------------------------------------------------------------------------------------------
Sales* (DEA 250)............................................        4,718        5,502        3,938        6,721
Imports** (DEA 488).........................................        5,751        5,714        4,400        7,532
Export Declarations (DEA 486)...............................            0        1,002            0          n/a
Inventory* (DEA 250)........................................        3,617        4,439        1,405         n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) and manufacturing quotas
  (DEA 189) received as of July 15, 2008.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of July 15, 2008.

Phenylpropanolamine (for Sale) Analysis

    DEA utilized the same general methodology and calculation to 
establish the assessment for phenylpropanolamine (for sale) as was 
described for the assessment\8\ of ephedrine (for sale), above.
---------------------------------------------------------------------------

    \8\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas. Import and 
export declarations data extracted July 15, 2008.
---------------------------------------------------------------------------

    At the time DEA drafted the 2009 proposed assessments (i.e., July 
15, 2008), DEA registered manufacturers dosage form products containing 
phenylpropanolamine reported sales totaling approximately 4,718 in 2006 
and 5,502 kg in 2007 and 3,938 kg in 2008; this represents a 28 percent 
decrease from sales reported by these firms from 2007 to 2008 and a 17% 
decrease from 2006 to 2008. DEA notes phenylpropanolamine is sold 
primarily as a veterinary product for the treatment for canine 
incontinence and is not FDA approved for human consumption. IMS NSP 
Health Data does not capture sales of phenylpropanolamine to these 
channels and is therefore not included. DEA in considering the 
manufacturers reported sales thus believes that 3,983 kg fairly 
represents the U.S. sales of phenylpropanolamine for 2009.
    DEA calculated the phenylpropanolamine (for sale) assessment by the 
following methodology:

2008 sales + reserve stock + export requirement - existing inventory = 
AAN
3,938 + (50%*3,938) + 0 - 1,405 = 4,502 kg phenylpropanolamine (for 
sale) for 2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
phenylpropanolamine (for sale) should have been proposed to be 4,500 kg 
rather than the 7,500 kg actually proposed. As noted above, DEA is no 
longer including a safety reserve into the assessment because DEA 
clearly demonstrates the data and methodology with which DEA calculated 
the assessment. Further, this notice provides for an opportunity to 
comment.
    DEA is establishing, on an interim basis the Assessment of Annual 
Needs for phenylpropanolamine (for sale) as 4,500 kg. For each of the 
established assessments, DEA will revise the assessment of annual needs 
at least once during the 2009 calendar year.

Conclusion

    Based on information provided in the comments, along with 
information provided by DEA-registered manufacturers and importers of 
these List I chemicals on applications for individual import, 
manufacturing, and procurement quotas pursuant to DEA regulations, DEA 
is publishing this notice establishing the assessment of annual needs 
effective January 1, 2009, on an interim basis. DEA believes that 
without the publication of this notice on an interim basis, DEA would 
be unable to issue quotas for the import and manufacture of the List I 
chemicals ephedrine, pseudoephedrine, and phenylpropanolamine. Without 
such quotas, regulated industry would be prevented from importing and 
manufacturing activities involving these chemicals.
    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 0.100, and redelegated to the Deputy 
Administrator pursuant to 28 CFR 0.104, the Deputy Administrator hereby 
orders that the 2009 Assessment of Annual Needs for ephedrine, 
pseudoephedrine, and phenylpropanolamine, expressed in kilograms of 
anhydrous acid or base, be established as follows:

------------------------------------------------------------------------
                                                        Established 2009
                   List I chemical                       assessment of
                                                          annual needs
------------------------------------------------------------------------
Ephedrine (for sale).................................              1,500
Ephedrine (for conversion)...........................            110,000
Pseudoephedrine (for sale)...........................            380,000
Phenylpropanolamine (for sale).......................              4,500
Phenylpropanolamine (for conversion).................             62,000
------------------------------------------------------------------------

Regulatory Certifications

Administrative Procedure Act (5 U.S.C. 553)

    The Administrative Procedure Act (APA) generally requires that 
agencies, prior to issuing a new rule, publish a notice of proposed 
rulemaking in the Federal Register. The APA also allows exceptions from 
this requirement when ``the agency for good cause finds (and 
incorporates the finding and a brief statement of reasons therefore in 
the rules issued) that notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.'' 5 
U.S.C. 553(b)(B).
    The CMEA of 2005 specifically amended 21 U.S.C. 826 to mandate the 
establishment of production quotas for the List I chemicals ephedrine, 
pseudoephedrine, and phenylpropanolamine. DEA has no discretion in this 
requirement and has established the same system of production quotas 
for these three List I chemicals as is currently established for 
controlled substances in Schedules I and II. Further, the CMEA amended 
21 U.S.C. 952 to prohibit all importation of ephedrine, 
pseudoephedrine, and phenylpropanolamine except such amounts as the 
Attorney General finds to be necessary for medical, scientific, or 
other legitimate purposes. The Act further amended Sec.  952 regarding 
import quotas for these three List I chemicals.
    Taken together, Sec. Sec.  826 and 952 require that DEA establish 
aggregate production quotas, herein referred to as an Assessment of 
Annual Needs, for these List I chemicals. Further, taken

[[Page 79514]]

together, Sec. Sec.  826 and 952 require that DEA issue individual 
import and manufacturing quotas to registrants registered to import or 
manufacture ephedrine, pseudoephedrine, and phenylpropanolamine who 
apply for, and are granted, such individual quotas. As section 826 
indicates, the Assessment of Annual Needs is established for each 
calendar year (21 U.S.C. 826(a)). The Attorney General, DEA by 
delegation, is required ``to limit or reduce individual production 
quotas to the extent necessary to prevent the aggregate of individual 
quotas from exceeding the amount determined necessary each year by the 
Attorney General,'' i.e., the Assessment of Annual Needs (21 U.S.C. 
826(b)). Thus, individual manufacturing and import quotas for 
ephedrine, pseudoephedrine, and phenylpropanolamine cannot be 
calculated without the establishment of the Assessment of Annual Needs.
    If DEA were not to establish the initial Assessment of Annual 
Needs, while seeking additional comment, DEA would be unable to issue 
individual quotas to importers and manufacturers who had applied for, 
and were to be granted, such quotas. If DEA cannot issue such 
individual quotas prior to January 1, 2009, importers and manufacturers 
will have no means by which to acquire the List I chemicals ephedrine, 
pseudoephedrine, or phenylpropanolamine necessary for them to conduct 
business.
    DEA believes that it is in the public interest to ensure that 
importers and manufacturers of products containing ephedrine, 
pseudoephedrine, and phenylpropanolamine be able to obtain these List I 
chemicals on and after January 1, 2009. DEA wishes to ensure that 
products containing these List I chemicals remain available to the 
public while interested parties are provided with further opportunity 
to comment on DEA's Assessment of Annual Needs. To ensure availability 
of these products, and to ensure continued legitimate commerce, 
including the importation and manufacture of products containing these 
List I chemicals, DEA finds good cause to publish this Assessment of 
Annual Needs on an interim basis while seeking additional comment. In 
so doing, DEA recognizes that exceptions to the APA's notice and 
comment procedures are to be ``narrowly construed and only reluctantly 
countenanced.'' Am. Fed'n of Gov't Employees v. Block, 655 F2d 1153, 
1156 (D.C. Cir. 1981) (quoting New Jersey Dep't of Envtl. Prot. v. EPA, 
626 F.2d 1038, 1045 (D.C. Cir. 1980)).
    Under 5 U.S.C. 553(d), DEA must generally provide a 30-day delayed 
effective date for final rules. DEA may dispense with the 30-day 
delayed effective date requirement ``for good cause found and published 
with the rule.'' DEA believes that good cause exists to make this 
Interim Assessment of Annual Needs with Request for Comment effective 
January 1, 2009. As DEA noted previously, the 2009 Assessment of Annual 
Needs must be established, and individual quotas issued, on January 1, 
2009, so as not to impede legitimate commerce in these List I chemicals 
during the calendar year. DEA believes that good cause exists not to 
delay the effective date of this notice by 30 days to ensure that the 
Assessment of Annual Needs may be established, and individual import 
and manufacturing quotas issued, by January 1, 2009.
    Finally, DEA notes that the CSA and its implementing regulations 
allow registrants who have applied for or received a manufacturing 
quota to apply for an increase in that quota to meet the registrant's 
estimated disposal, inventory, or other requirements during the 
remainder of the year (21 U.S.C. 826(e), 21 CFR 1315.25(a), 
1315.32(g)). Further, the CSA and its implementing regulations allow 
registrants who are authorized to import ephedrine, pseudoephedrine, or 
phenylpropanolamine to apply for an increase in the amount of the 
chemical the registrant is authorized to import (21 U.S.C. 952(d), 21 
CFR 1315.36(b)). DEA notes that registrants may use these provisions to 
request increases in individual manufacturing and import quotas, 
respectively, pending any revisions of this Interim Assessment.

Regulatory Flexibility Act

    The Deputy Administrator hereby certifies that this action will not 
have a significant economic impact on a substantial number of small 
entities whose interests must be considered under the Regulatory 
Flexibility Act, 5 U.S.C. 601-612. The establishment of the assessment 
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 
U.S., for lawful export requirements, and the establishment and 
maintenance of reserve stocks. Accordingly, the Deputy Administrator 
has determined that this action does not require a regulatory 
flexibility analysis.

Executive Order 12866

    The Office of Management and Budget has determined that notices of 
assessment of annual needs are not subject to centralized review under 
Executive Order 12866.

Executive Order 13132

    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 federalism implications 
warranting the application of Executive Order 13132.

Executive Order 12988

    This action meets the applicable standards set forth in Sections 
3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform.

Unfunded Mandates Reform Act of 1995

    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.

Congressional Review Act

    This action is not a major rule as defined by Section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. 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 U.S.-based companies to compete with 
foreign-based companies in domestic and export markets.

    Dated: December 19, 2008.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E8-30808 Filed 12-24-08; 8:45 am]
BILLING CODE 4410-09-P