[Federal Register Volume 74, Number 130 (Thursday, July 9, 2009)]
[Notices]
[Pages 32954-32960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16152]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. DEA-314E]


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

AGENCY: Drug Enforcement Administration (DEA), Justice.

ACTION: Notice of Assessment of Annual Needs for 2009.

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SUMMARY: This notice establishes the initial 2009 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: August 10, 2009.

FOR FURTHER INFORMATION CONTACT: Christine A. Sannerud, Ph.D., 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 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 United States, 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 
United States from any place outside thereof (but within the United 
States), or to import into the United States 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 Combat Methamphetamine Epidemic Act of 2005 
(CMEA) (Title VII of Pub. L. 109-177) amended section 306 of the 
Controlled Substances Act (CSA) (21

[[Page 32955]]

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 United States in 
2009 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.
    The 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 December 29, 2008, a notice entitled, ``Assessment of Annual 
Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and 
Phenylpropanolamine for 2009'' was published in the Federal Register 
(73 FR 79508). This notice established, on an interim basis, the 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 interim assessments on or before 
January 28, 2009.

Comments Received

    DEA received a total of four comments, one regarding the assessment 
for ephedrine (for sale) and the other three regarding the assessment 
for phenylpropanolamine (for sale). The first commenter was from a law 
firm representing an industry group comprised of distributors and 
retailers of over-the-counter (OTC) medications. This commenter 
believes that quota requests for ephedrine (for sale) are not 
comparable to the products sold and recommended that the 2009 ephedrine 
assessment be the same as the 2008 assessment (i.e. 11,500 kg).
    The second comment was from a DEA registered chemical manufacturer 
of phenylpropanolamine who requested that DEA ``consider revising the 
calculation methodology for establishing (individual) quotas'' and also 
encouraged ``the establishment of a safety reserve'' for the list I 
chemicals.
    The third and fourth comments were received from two distributors 
of veterinary prescription products containing phenylpropanolamine. 
These commenters encouraged DEA to consider in its evaluation the 
medical needs of the companion animal population and for DEA to include 
in its phenylpropanolamine (for sale) assessment a safety reserve to 
ensure an uninterrupted supply of the substance. All comments received 
during the comment period are discussed further below.
    DEA did not receive any comments on its Interim Final Assessment of 
Annual Needs for ephedrine (for conversion), phenylpropanolamine (for 
conversion), and pseudoephedrine (for sale). DEA is adjusting the 
interim established assessment for these chemicals based on additional 
information provided by DEA registered importers and manufacturers 
whose quota applications were received as of April 1, 2009 (i.e. one 
year after the April 1, 2008, application due date). DEA also is 
providing the underlying data used in establishing these assessments.

Comment Regarding DEA's Interim Final Assessment for Ephedrine (For 
Sale)

    DEA received one comment on its Interim Final assessment for 
ephedrine (for sale) from a law firm representing an industry group 
comprised of distributors and retailers of over-the-counter (OTC) 
medications. The comment stated that ``DEA's projection of decreased 
demand is inaccurate'' and recommended that the 2009 ephedrine 
assessment be the same as the 2008 (for sale) assessment (i.e. 11,500 
kg). The commenter made the following statements: (1) ``On an 
annualized basis, the level of 941 [sic] kg requested as of July 2008 
(134 kg per month) may well grow to 1,608 kg for all of 2009;'' (2) 
``Comparing requests for raw materials to actual sales of finished 
product does not provide an accurate basis to measure consumer demand 
or medical need;'' (3) ``DEA's projection of decreased demand is not 
based on the medical needs of consumers, but on the effects of 
increased regulation and decreased supply;'' and (4) the commenter 
stated its concern with the DEA's reliance on data provided by IMS 
Health's (IMS) National Sales PerspectiveTM (NSP) database.

DEA Response

    In response to the first comment that ``On an annualized basis, the 
level of 941 [sic] kg requested as of July 2008 (134 kg per month) may 
well grow to 1,608 kg for all of 2009,'' DEA believes that the 
commenter misinterpreted its original statement. DEA stated the 
following in its interim assessment:

    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. (73 FR 
79510)

    The commenter interpreted the statement above to mean that the 
manufacturers' request to purchase 921 kg represented purchase 
requirements for the first 7 months of the calendar year, or 134 kg/
month (134.4 kg x 7 = 941 kg [sic]). By this logic, the commenter 
believed the annual requirement for ephedrine could be as much as 1,608 
kg (134 kg x 12 months = 1,608 kg). This is an incorrect 
interpretation. DEA registered manufacturers of ephedrine that had 
submitted applications on or before July 15, 2008, requested the 
authority to purchase a total of 921 kg of ephedrine for the entire 
calendar year of 2009. This means that the total annual requirement of 
ephedrine (for sale) for 2009 for the United States was 921 kg, as 
reported by DEA registered manufacturers.
    In response to the commenter's second comment that ``comparing 
requests for raw materials to actual sales of finished product does not 
provide an accurate basis to measure consumer demand or medical need,'' 
DEA notes that the regulations require DEA to consider the ``projected 
demand for each chemical [ephedrine] as indicated by procurement and 
import quotas requested pursuant to section 1315.32.'' (see 21 CFR 
1315.11(b)(4)). DEA also notes that requests for raw material consider 
not only the raw material necessary to meet medical needs, but also the 
raw material needed for other uses. For instance, raw material requests 
include the additional quantities necessary to bring a finished product 
to market, to cover production losses occurring during manufacturing 
and packaging operations, to allow for quality assurance/control 
testing, and to provide additional quantities for the reserve stocks of 
distributors and retailers.
    The commenter's third comment is that the DEA's projection of 
decreased demand is not based on the medical needs of consumers, but on 
the effects of increased regulation and decreased supply. In response 
to this comment, DEA notes that the regulation at 21 CFR 1315.11(b) 
clearly articulates those

[[Page 32956]]

factors that DEA is to consider when making its determination, which 
include:

    1. Total net disposal of the chemical by all manufacturers and 
importers during the current and preceding two years;
    2. Trends in the national rate of net disposal of each chemical;
    3. Total actual (or estimated) inventories of the chemical and of 
all substances manufactured from the chemical, and trends in inventory 
accumulation;
    4. Projected demand for each chemical as indicated by procurement 
and import quotas requested pursuant to section 1315.32, and
    5. Other factors * * * as the Administrator finds relevant.

    Medical need could impact one or several of these factors. For 
instance, increased medical need could result in an increased number of 
quota applications, decreased inventories, and changes upward in the 
national rate of disposals. Thus, it is not necessary to consider 
medical need separately from the factors mandated by the regulation.
    Finally, in response to the fourth comment, in which the commenter 
noted its ``concern over the DEA's reliance on data provided by IMS in 
proposing the 2009 assessment,'' DEA notes that data provided by IMS 
Health provides national estimates of sales at the retail level which 
are used to consider trends in the rate of net disposals (i.e., sales) 
as mandated by regulation. The most recent IMS data available reports 
retail level sales totaling 1,267 kg in 2007 and 1,489 kg in 2008; this 
represents an 18 percent increase in retail sales from 2007 to 2008. 
During the same period registered manufacturers of ephedrine reported 
sales totaling approximately 5,409 kg in 2007 and 2,465 kg in 2008; 
this represents a 54 percent decrease in sales reported by these firms 
from 2007 to 2008. The retail sales reported by IMS Health are expected 
to be lower than the sales to distributors and retailers reported by 
manufacturers because a manufacturer's sales include quantities which 
are necessary to provide reserve stocks for distributors and retailers. 
DEA also believes that manufacturers' sales in 2007 may have been 
artificially inflated as manufacturers, distributors, and retailers 
built unusually large reserve stocks due to concerns over newly 
codified regulations that were thought to limit or restrict the 
availability of substances. DEA thus believes that the manufacturers' 
reported sales of 2,465 kg fairly represent the net disposals of 
ephedrine products. DEA notes that IMS data is one of several 
considerations that DEA uses to evaluate trends and projected demand of 
ephedrine-based products. As the calculations and methodology 
demonstrate, the assessment of annual needs for ephedrine is based 
primarily on the information provided by DEA registered manufacturers 
and importers of ephedrine products.
    DEA has received additional quota applications from DEA registered 
manufacturers and importers for the 2009 assessment year. Based on an 
analysis of the underlying data from quota applications received 
through April 1, 2009, DEA is establishing the 2009 assessment of 
annual needs for ephedrine (for sale) at 3,400 kg.

Ephedrine Data

                          Ephedrine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
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                    Ephedrine                          2006            2007           2008\1\      2009 Request
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Sales * (DEA 250)...............................           5,435           5,409           2,465           3,088
Imports ** (DEA 488)............................           3,886          10,480           2,104           2,678
Export Declarations (DEA 486)...................             313             168              91             n/a
Inventory * (DEA 250)...........................           1,245           1,457             423             n/a
IMS *** (NSP)...................................           1,256           1,267           1,489             n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) received as of April 1,
  2009.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of April 1, 2009.
*** IMS Health, IMS National Sales PerspectivesTM, January 2006 to December 2008, Retail and Non-Retail
  Channels, Data Extracted April 1, 2009.

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).\2\
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    \1\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
    \2\ 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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    DEA further considered trends as derived from information provided 
in applications for import, manufacturing, and procurement quotas and 
in import and export declarations. DEA notes that the inventory, 
acquisitions (purchases) and disposition (sales) data provided by DEA 
registered manufacturers and importers reflects the most current 
information provided by manufacturers and importers. This information 
includes applications which have been newly submitted, amended or 
withdrawn as of April 1, 2009, for the 2009 quota year.

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 United States; lawful export requirements; and 
the establishment and maintenance of reserve stocks.
    As of April 1, 2009, DEA registered manufacturers of dosage form 
products containing ephedrine reported sales totaling approximately 
5,409 kg in 2007 and 2,465 kg in 2008; this represents a 54 percent 
decrease in sales reported by these firms from 2007 to 2008. 
Additionally, exports of ephedrine products from the United States as 
reported on export declarations (DEA 486), totaled 168 kg in 2007 and 
91 kg in 2008; this represents a 46 percent decrease from levels 
observed in 2007. DEA also considered information on trends in the 
national rate of net disposals from sales data provided by IMS Health's 
NSP database. IMS NSP data reported the average sales volume of 
ephedrine for the calendar years 2007 and 2008 to be approximately 
1,378 kg.

[[Page 32957]]

DEA notes that the 2008 sales figure reported by manufacturers (2,465 
kg) is higher than the sales reported by IMS (1,378 kg). As previously 
explained, this is expected because a manufacturer's reported sales 
include quantities which are necessary to provide reserve stocks for 
distributors and retailers. DEA in considering the manufacturer's 
reported sales thus believes that 2,465 kg fairly represents the U.S. 
sales of ephedrine for 2009 and that 91 kg fairly represents the export 
requirements of ephedrine.
    For the establishment and maintenance of reserve stocks, DEA notes 
that 21 CFR 1315.24 allows for an inventory allowance (reserve stock) 
of 50 percent of a manufacturer's estimated sales. DEA also considered 
the estimated 2008 year end inventory as reported by DEA registrants in 
determining the inventory allowance.
    DEA calculated the ephedrine (for sale) assessment by the following 
methodology:

2008 sales + reserve stock + export requirement - existing inventory = 
AAN
2,465 + (50 percent * 2,465) + 91 - 423 = 3,366 kg ephedrine (for sale) 
for 2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
ephedrine can be revised to 3,400 kg rather than the 1,500 kg 
established in the Interim Final Rule. DEA notes that this upward 
revision is attributed to DEA's consideration of applications for 2009 
quotas received as of April 1, 2009, a one-year time period since the 
application due date.
    Accordingly, DEA is establishing the Assessment of Annual Needs for 
ephedrine (for sale) at 3,400 kg.

Comments Regarding DEA's Interim Final Assessment for 
Phenylpropanolamine (For Sale)

    The second commenter, a manufacturer of phenylpropanolamine 
products used by veterinary professionals, urged DEA ``to consider 
revising the calculation methodology for establishing quotas'' to 
consider whether the market need was met in the prior year. 
Additionally, the commenter suggested that there ``should be a factor 
inserted in the calculation that would more accurately reflect market 
need and the changing demand.'' The commenter also encouraged ``the 
establishment of a safety reserve so that the DEA and manufacturers can 
be responsive to the ever-changing health care needs of companion 
animals.''
    The third and fourth comments were received from two distributors 
that sell phenylpropanolamine products used by veterinarians. These 
commenters stated that ``To base quotas on last year's sales and 
inventories and formulas does not allow for the increased need.'' The 
commenters encouraged DEA ``to consider increasing the quotas based on 
the aging of the companion animal population.'' Additionally, the 
commenter encouraged DEA ``to work with individual manufacturers of PPA 
in order to assure the uninterrupted supply of PPA.''

DEA Response

    As a preliminary matter, this Federal Register notice establishes 
the assessment of annual needs for List I chemicals and the methodology 
used by the DEA to set that number. The assessment of annual needs is 
different than individual quotas and this rulemaking does not address 
the regulatory process for evaluating individual import, manufacturing 
and procurement quotas issued to DEA registered manufacturers and 
importers.
    With regard to the establishment of the assessment of annual needs 
for phenylpropanolamine (for sale), DEA believes that the sales 
information provided in requests for quotas for the manufacture of 
phenylpropanolamine products fairly represents the legitimate medical 
needs of the companion animal population. Additionally, DEA notes that 
the requirements of the two distributors and one manufacturer of 
phenylpropanolamine were considered as part of the assessment for 
phenylpropanolamine. DEA notes that there was a 3 percent increase in 
reported sales of phenylpropanolamine from 2007 to 2008. For the 2009 
assessment, DEA has determined that the higher 2008 sales fairly 
represent the manufacturing requirements of phenylpropanolamine. In 
calculating the assessment, DEA provides for quantities to support 
sales of phenylpropanolamine and also for a reserve stock of 50 
percent. This is not only consistent with the 50 percent inventory 
allowance permitted under 21 CFR 1315.24, but also provides 
manufacturers with sufficient material to account for slight increases 
in demand that may occur in 2009.
    Additionally, DEA notes that pursuant to 21 CFR 1315.32, DEA 
registered manufacturers and importers may request adjustments to their 
individual quotas at any time. This option allows the DEA and DEA 
registrants to respond to the changing needs of the companion animal 
population.
    Considering that 2008 was the first year of implementation of 
quotas for the List I chemicals, DEA is revising the 2009 assessments 
to consider applications received as of April 1, 2009 (i.e. one year 
after the April 1, 2008, application due date). This ensures that DEA 
considered the most recent information provided by DEA registered 
manufacturers and importers for 2009. A summary of the underlying data 
from quota applications and other sources, as well as DEA's analysis of 
that data, are provided below.
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    \3\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
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Phenylpropanolamine (For Sale) Data

                     Phenylpropanolamine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
         Phenylpropanolamine (for sale)                2006            2007          2008 \3\      2009 Request
----------------------------------------------------------------------------------------------------------------
Sales * (DEA 250)...............................           4,179           4,224           4,362           5,462
Imports ** (DEA 488)............................           1,119           9,381           3,032           5,295
Export Declarations (DEA 486)...................               0           1,002               0             n/a
Inventory * (DEA 250)...........................           3,555           3,976           1,696             n/a
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* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) and manufacturing quotas
  (DEA 189) received as of April 1, 2009.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of April 1, 2009.


[[Page 32958]]

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 of ephedrine (for sale), above.
    As of April 1, 2009, DEA registered manufacturers of dosage form 
products containing phenylpropanolamine reported sales totaling 
approximately 4,224 kg in 2007 and 4,362 kg in 2008; this represents a 
3 percent increase in sales reported by these firms from 2007 to 2008. 
DEA notes that phenylpropanolamine is sold primarily as a veterinary 
product for the treatment for canine incontinence and is not approved 
for human consumption. IMS Health's NSP Data does not capture sales of 
phenylpropanolamine to these channels and is therefore not included.
    DEA calculated the phenylpropanolamine (for sale) assessment by the 
following methodology:

    2008 sales + reserve stock + export requirement - existing 
inventory = AAN
    4,362 + (50 percent * 4,362) + 0 - 1,696 = 4,847 kg 
phenylpropanolamine (for sale) for 2009

    This calculation suggests that DEA's Assessment of Annual Needs for 
phenylpropanolamine (for sale) can be revised to be 4,900 kg rather 
than the 4,500 kg established in the Interim Final Rule.
    DEA is establishing the Assessment of Annual Needs for 
phenylpropanolamine (for sale) at 4,900 kg.

Pseudoephedrine, Ephedrine (for Conversion), and Phenylpropanolamine 
(for Conversion)

    DEA did not receive any comments on its interim Assessment of 
Annual Needs for pseudoephedrine, ephedrine (for conversion), and 
phenylpropanolamine (for conversion). However, DEA is providing the 
underlying data, analysis, methodology and calculation for the 
establishment of the assessments for these List I chemicals. These 
assessments reflect new information received from applications for 
quota received as of April 1, 2009 (i.e. one year after the April 1, 
2008 application due date).

Pseudoephedrine (for Sale) Data

                       Pseudoephedrine (for Sale) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
           Pseudoephedrine (for sale)                  2006            2007          2008 \4\      2009 Request
----------------------------------------------------------------------------------------------------------------
Sales * (DEA 250)...............................         232,721         215,877         262,159         273,659
Sales * (DEA 189)...............................          56,563         100,300         111,292         105,967
Imports ** (DEA 488)............................         133,802         225,973         165,708         205,783
Export Declarations (DEA 486)...................          37,069          42,142          85,756             n/a
Inventory * (DEA 250)...........................          83,104         115,307          89,921             n/a
IMS *** (NSP)...................................         207,509         183,382         151,013             n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) and manufacturing quotas
  (DEA 189) received as of April 1, 2009.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of April 1, 2009.
*** IMS Health, IMS National Sales PerspectivesTM, January 2006 to December 2008, Retail and Non-Retail
  Channels, Data Extracted April 1, 2009.

Pseudoephedrine (for Sale) Analysis

    DEA utilized the same general methodology and calculations to 
establish the assessment for pseudoephedrine (for sale) as was 
described for the assessment of ephedrine (for sale), above.
---------------------------------------------------------------------------

    \4\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
---------------------------------------------------------------------------

    As of April 1, 2009, DEA registered manufacturers of dosage form 
products containing pseudoephedrine reported sales totaling 
approximately 215,877 kg in 2007 and 262,159 kg in 2008; this 
represents a 21 percent increase in sales reported by these firms from 
2007 to 2008. During the same period exports of pseudoephedrine 
products from the United States as reported on export declarations (DEA 
486) totaled 42,142 kg in 2007 and 85,756 kg in 2008; this represents a 
103 percent increase 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. IMS NSP data reported the 
average retail sales volume of pseudoephedrine for the calendar years 
2007 and 2008 to be approximately 167,171 kg. DEA thus believes that 
262,159 kg of sales reported by manufacturers fairly represents the 
U.S. sales of pseudoephedrine for 2009 and that 85,756 kg fairly 
represents the export requirements of pseudoephedrine. DEA notes that 
manufacturer reported sales (262,159 kg) are higher than the retail 
sales reported by IMS (167,171 kg). This is expected because a 
manufacturer's reported sales include quantities which are necessary to 
provide reserve stocks for distributors and retailers. DEA calculated 
the pseudoephedrine (for sale) assessment by the following methodology:

2008 sales + reserve stock + export requirement - existing inventory = 
AAN
262,159 + (50 percent * 262,159) + 85,756 - 89,921 = 389,074 kg 
pseudoephedrine (for sale) for 2009

    This calculation suggests that based on quota applications received 
as of April 1, 2009, DEA's Assessment of Annual Needs for 
pseudoephedrine (for sale) should be established at 390,000 kg rather 
than the 380,000 kg established in the December 29, 2008 Interim Final 
Rule. DEA is establishing the Assessment of Annual Needs for 
pseudoephedrine (for sale) at 390,000 kg.

Phenylpropanolamine (for Conversion) Data

[[Page 32959]]



                  Phenylpropanolamine (for Conversion) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
      Phenylpropanolamine (for conversion)             2006            2007          2008 \5\      2009 Request
----------------------------------------------------------------------------------------------------------------
Sales * (DEA 250)...............................           8,004           9,991          15,498          13,606
Imports ** (DEA 488)............................          14,476           9,370          15,776          14,175
Export Declarations (DEA 486)...................               0               0               0             n/a
Inventory * (DEA 250)...........................           4,863           3,742           4,566             n/a
APQ Amphetamine ***.............................          17,000          22,000          22,000             n/a
----------------------------------------------------------------------------------------------------------------
* Reported sales and inventory from applications for 2009 procurement quotas (DEA 250) received as of April 1,
  2009.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of April 1, 2009.
*** Amphetamine Aggregate Production Quota History http://www.deadiversion.usdoj.gov/quotas/quota_history.htm.

Phenylpropanolamine (for Conversion) Analysis

    As of April 1, 2009, DEA registered manufacturers of 
phenylpropanolamine (for conversion) requested the authority to 
purchase a total of 13,606 kg phenylpropanolamine (for conversion). 
Additionally, DEA registered importers of phenylpropanolamine (for 
conversion) requested the authority to import a total of 14,175 kg of 
phenylpropanolamine (for conversion). DEA had not received any requests 
to synthesize phenylpropanolamine in 2009.
---------------------------------------------------------------------------

    \5\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
---------------------------------------------------------------------------

    DEA has determined that 13,606 kg of phenylpropanolamine (for 
conversion) would be insufficient to meet the requirements for 
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). 13,606 kg would be sufficient to manufacture only 
30 percent of the APQ of amphetamine. DEA further considered 
manufacturer's conversion yields of phenylpropanolamine to amphetamine 
of 50 percent in its calculation of the phenylpropanolamine assessment. 
DEA calculated the phenylpropanolamine (for conversion) assessment by 
the following methodology:

(2008 APQ/50 percent yield) + reserve stock - inventory = AAN
(22,000/50 percent yield) + 50 percent * (22,000/50 percent 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 be established as 62,000 
kg, as established in the Interim Final Rule.
    DEA is establishing the Assessment of Annual Needs for 
phenylpropanolamine (for conversion) at 62,000 kg.

Ephedrine (for Conversion) Data

                       Ephedrine (for Conversion) Data for 2009 Assessment of Annual Needs
                                                   [Kilograms]
----------------------------------------------------------------------------------------------------------------
           Ephedrine (for conversion)                  2006            2007          2008 \6\      2009 Request
----------------------------------------------------------------------------------------------------------------
Sales * (DEA 250)...............................          49,973         100,093         133,209         112,277
Imports ** (DEA 488)............................          43,612         107,230         122,683         111,365
Inventory * (DEA 250)...........................              77              28              10             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 April 1, 2009.
** Reported imports from applications for 2009 import quotas (DEA 488) received as of April 1, 2009.
*** 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.
---------------------------------------------------------------------------

    \6\ 2008 data represents estimated sales, imports, and 
inventories as reported on applications for quotas.
---------------------------------------------------------------------------

    As of April 1, 2009, DEA registered manufacturers of ephedrine (for 
conversion) requested the authority to purchase a total of 112,277 kg 
ephedrine (for conversion) for the manufacture of two substances: 
methamphetamine and pseudoephedrine.
    DEA in its methodology considered the ephedrine (for conversion) 
requirements for the manufacture of these two substances: 
methamphetamine and pseudoephedrine. DEA has determined the established 
assessments for the manufacture of these two substances are the best 
indicators of the need for ephedrine (for conversion). The assessment 
of need for methamphetamine was determined by DEA as the Aggregate 
Production Quota (APQ) for methamphetamine. The assessment of need for 
pseudoephedrine was determined by DEA as the estimated sales of 
pseudoephedrine as referenced in the 2008 Annual Assessment of Need 
(AAN) for pseudoephedrine. Reported sales of ephedrine (for conversion) 
are included as reference to DEA's methodology.
    DEA further considered the reported conversion yields of these 
substances. These firms reported a conversion yield of 39 percent 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.
    DEA calculated the ephedrine (for conversion) assessment by the 
following methodology:

methamphetamine requirement + pseudoephedrine requirement = AAN

    The calculation for the ephedrine (for conversion) requirement for 
the

[[Page 32960]]

manufacture of methamphetamine is as follows:

(2008 APQ methamphetamine/39 percent yield) + reserve stock - inventory 
= ephedrine (for manufacture of methamphetamine)
(3,130/39 percent yield) + 50 percent * (3,130/39 percent yield) - 35 = 
12,003 kg

    The calculation for the ephedrine (for conversion) requirement 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
12,003 + 106,424 = 118,427 kg ephedrine (for conversion) for 2009

    This calculation suggests that based on applications received as of 
April 1, 2009, DEA's Assessment of Annual Needs for ephedrine (for 
conversion) should be established as 120,000 kg rather than the 110,000 
kg established on an interim basis in the December 29, 2008, notice. 
Under this rulemaking, DEA is establishing the Assessment of Annual 
Needs for ephedrine (for conversion) as 120,000 kg.

Conclusion

    DEA has carefully considered the comments received in connection 
with the 2009 Assessment of Annual Needs. 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 has fully addressed the relevant issues set 
forth in the comments. 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 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)....................................           3,400
Ephedrine (for conversion)..............................         120,000
Pseudoephedrine (for sale)..............................         390,000
Phenylpropanolamine (for sale)..........................           4,900
Phenylpropanolamine (for conversion)....................          62,000
------------------------------------------------------------------------

    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 not 
have a significant economic impact upon 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 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 
United States; 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.
    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: June 26, 2009.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E9-16152 Filed 7-8-09; 8:45 am]
BILLING CODE 4410-09-P