[Federal Register Volume 83, Number 136 (Monday, July 16, 2018)]
[Rules and Regulations]
[Pages 32784-32790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15141]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

21 CFR Part 1303

[Docket No. DEA-480]
RIN 1117-AB48


Controlled Substances Quotas

AGENCY: Drug Enforcement Administration, Department of Justice.

ACTION: Final rule.

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SUMMARY: The Drug Enforcement Administration (DEA) is publishing this 
final rule to strengthen the process for setting controls over 
diversion of controlled substances and make other improvements in the 
quota management regulatory system for the production, manufacturing, 
and procurement of controlled substances.

DATES: This final rule is effective August 15, 2018.

FOR FURTHER INFORMATION CONTACT: Michael J. Lewis, Diversion Control 
Division, Drug Enforcement Administration; Mailing Address: 8701 
Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-
8953.

SUPPLEMENTARY INFORMATION: 

Legal Authority

    Provisions of the Controlled Substances Act, 21 U.S.C. 801 et seq., 
authorize the Attorney General to issue rules and regulations relating 
to registration and control of the manufacture, distribution, and 
dispensing of controlled substances and listed chemicals. 21 U.S.C. 
821. Pursuant to this authority, the Attorney General, through the Drug 
Enforcement Administration (DEA), has issued and administers 
regulations setting aggregate production quotas for each basic class of 
controlled substances in schedules I and II, manufacturing quotas for 
individual manufacturers, and procurement quotas for manufacturers to 
produce other controlled substances or to convert the substances into 
dosage form. See 21 CFR part 1303.
    The current regulations, issued initially in 1971, need to be 
updated to reflect changes in the manufacture of controlled substances, 
changing patterns of substance abuse and markets in illicit drugs, and 
the challenges presented by the current national crisis of controlled 
substance abuse. This final rule modifies the regulations to strengthen 
controls over diversion--that is, the redirection of controlled 
substances which may have lawful uses into illicit channels--and makes 
other improvements in the controlled substance regulatory quota system.
    The quota process, in general terms, is a critical element of the 
Controlled Substances Act's regulatory system that seeks to prevent or 
limit diversion by preventing the accumulation of controlled substances 
in amounts exceeding legitimate need. The measures the final rule 
adopts to strengthen the system include authorizing the requisition 
from quota applicants of additional information helpful in detecting 
and preventing diversion, and ensuring that DEA's determinations 
regarding the appropriate quotas are adequately informed by input from 
other federal agencies, from the states, and from quota applicants.

Section-by-Section Analysis

    The DEA is finalizing the rule as proposed without changes. Below 
are summaries of provisions contained in the final rule.

Section 1303.11--Aggregate Production Quotas

    Section 1303.11 currently directs the Administrator of DEA to 
determine the total quantity of each basic class of controlled 
substance listed in schedule I or II needed in the calendar year for 
the medical, scientific, research, and industrial needs of the United 
States, for lawful export requirements, and for the establishment and 
maintenance of reserve stocks. Section 1303.11(b)(1) through (4) 
identifies a number of factors that are categorically to be considered 
in determining aggregate production quotas--relating to total net 
disposal, net disposal trends, inventories and inventory trends, and 
demand--followed by a final catchall factor, (5), regarding factors to 
be considered as the Administrator finds relevant.
    The final rule makes two additions to the list of factors that must 
regularly be considered in setting the aggregate production quotas 
because of their importance. First, it adds to the list the extent of 
any diversion of the controlled substance in the class, which will 
ensure that the allowed aggregate production quota is limited to that 
needed to provide adequate supplies for the United States' legitimate 
needs. Second, the final rule amends the list of factors to be 
considered in establishing these quotas to include relevant information 
from the Department of Health and Human Services (HHS) and its 
components, including the Food and Drug Administration (FDA), the 
Centers for Disease Control and Prevention (CDC), and the Centers for 
Medicare and Medicaid Services (CMS), as well as relevant information 
obtained from the states. The amendment will ensure that information 
will be requested from the relevant HHS components and will be 
considered in setting the aggregate production quotas.
    The final rule provides that the Administrator will consider 
information from the states in setting the aggregate production quotas 
and make additional changes enhancing their role in Sec.  1303.11(c). 
The states are critically situated to provide information about the 
extent of legitimate and illegitimate use of controlled substances 
because of their responsibilities for drug enforcement within their 
jurisdictions, including through the Prescription Drug Monitoring 
Programs (PDMP), their responsibilities for administration of their 
health care systems, and their responsibilities for dealing with the 
human and social costs of drug abuse and diversion. States may have 
relevant information indicating that individual procurement quota 
requests reflect quantities which will in fact be diverted to illicit 
use, which may in turn yield an exaggerated picture of the aggregate 
production quotas needed for legitimate purposes.
    The final rule accordingly includes amendments to Sec.  1303.11(c) 
which provide for (i) transmitting notices of proposed aggregate 
production quotas, and final aggregate production quota orders, to the 
state attorney general, and (ii) holding a hearing if necessary to 
resolve an issue of material fact raised by a state's objection to a 
proposed aggregate production quota as excessive in relation to 
legitimate United States need.

Section 1303.12--Procurement Quotas

    Section 1303.12 currently directs the Administrator to issue 
procurement quotas for manufacturers that use controlled substances to 
put them into dosage form or to make other substances. The section 
requires applicants for procurement quotas to state what basic class of 
controlled substance is needed, the purpose or purposes for which the 
class is desired, the quantity desired for each purpose during the next 
calendar year, and the quantities used and estimated to be used for 
each purpose during the current and preceding two calendar years. If 
the applicant's purpose is to manufacture another basic class of 
controlled substance, the applicant also must state the quantity of the 
other basic class that the applicant has applied to

[[Page 32785]]

manufacture, and the quantity of the first basic class necessary to 
manufacture a specified quantity of the second basic class.
    The final rule amends Sec.  1303.12(b) to clarify that the 
Administrator may require additional information from applicants that 
may help to detect or prevent diversion, including customer identities 
and amounts of the controlled substance sold to each customer.

Section 1303.13--Adjustments of Aggregate Production Quotas

    Section 1303.13 authorizes the Administrator, at any time, to 
increase or reduce the aggregate production quotas for basic classes of 
controlled substances that were previously fixed pursuant to Sec.  
1303.11. The final rule in Sec.  1303.13 parallels some of the 
amendments made to Sec.  1303.11. Specifically, it includes changes in 
the extent of any diversion of the controlled substance among the 
factors to be considered in adjusting the aggregate production quota, 
requires transmission of adjustment notices and final adjustment orders 
to the state attorneys general, and provides for a hearing if necessary 
to resolve an issue of material fact raised by a state's objection to a 
proposed adjusted quota as excessive for legitimate United States need.

Section 1303.22--Procedure for Applying for Individual Manufacturing 
Quotas

    The final rules amends Sec.  1303.22 to clarify that the 
Administrator may require additional information from individual 
manufacturing quota applicants that may help to detect or prevent 
diversion, including customer identities and amounts of the controlled 
substance sold to each customer.

Section 1303.23--Procedures for Fixing Individual Manufacturing Quotas

    The final rule amends Sec.  1303.23 to provide that the factors the 
Administrator may deem relevant in fixing individual manufacturing 
quotas include the extent and risk of diversion of controlled 
substances.

Section 1303.32--Purpose of Hearing

    The final rule includes an amendment relating to hearings in Sec.  
1303.32(a), conforming to the amendments to Sec. Sec.  1303.11(c) and 
1303.13(c) concerning hearings based on state objections.

Other Matters

    In addition to the significant changes discussed above, the final 
rule corrects a number of typographic errors in the current 
regulations.

Notice of Proposed Rulemaking

    On April 19, 2018, the DEA published a notice of proposed 
rulemaking (NPRM) in the Federal Register, which provided an 
opportunity for comment on the proposed rule. The comment period closed 
on May 4, 2018. 83 FR 17329. The DEA specifically sought comments on 
the provisions regarding the factors the Administrator should consider 
when adjusting the aggregate production quotas (21 CFR 1303.13(b)(1)), 
and the additional information the Administrator may require from 
applicants (21 CFR 1303.12(b) and 21 CFR 1303.22).

Discussion of Comments

    DEA received a total of 1,561 written and electronic comments on 
the NPRM. In the NPRM, the DEA stated that some of the proposed rule's 
provisions relating to seeking information from other federal agencies 
and the states (21 CFR 1303.11(b)(6)) and those relating to the holding 
of hearings based on state objections (21 CFR 1303.11(c), 21 CFR 
1303.13(c), and 21 CFR 1303.32(a)) were exempt from the notice and 
comment requirements of the Administrative Procedure Act as ``rules of 
agency organization, procedure, or practice.'' 5 U.S.C. 553(b)(A). 
However, many commenters still addressed these two issues. While the 
DEA appreciates the interest commenters have shown in these areas, 
because they were exempt from the notice and comment requirements of 
the APA, the DEA has not considered these comments in its promulgation 
of this final rule.
    After a review of the comments, DEA noted that there were six main 
issues that commenters raised, and that many commenters raised multiple 
issues in their comments. Each issue is summarized below, along with 
the DEA's responses. The DEA has also summarized the remainder of the 
comments which did not fit into one of the six main issues.

A. Causes for the Increase in Opioid Deaths

    Issue: Approximately 156 commenters raised the issue that the 
increase in opioid deaths was due to illicitly manufactured opioids 
coming in from Mexico and China and errors in reporting deaths 
involving multiple substances, not written prescriptions for controlled 
substances. Advocacy groups and the general public voiced concern about 
the accuracy of CDC death calculations that they believe led to more 
strict quotas on the pain pills they need to live, instead of focusing 
on the issue of illicitly manufactured substances like fentanyl and 
heroin.
    One advocacy group noted that available data indicated that the 
large increase in overdose deaths was largely due to illicitly 
manufactured fentanyl, heroin, and synthetic opioids, not prescription 
opioids. The advocacy group stated that the data reinforced the need to 
address the growing threat posed by heroin, counterfeit fentanyl, and 
other counterfeit drugs.
    An association representing physicians also noted that although the 
rate of prescription opioid mortality continues to rise, illicit 
fentanyl and heroin have become the main contributors to opioid-related 
mortality.
    A coalition commented that a major issue with the proposed rule was 
that it would do nothing to solve the current opioid epidemic because 
illicit fentanyl and heroin cause most of the overdoses in the United 
States, not prescription opioids. The coalition referenced journal 
articles for statistics to support their argument. The coalition also 
noted that the vast majority of the illicit fentanyl that is arriving 
into the United States is coming from China through the U.S. Postal 
Service, and that the policies in the proposed rule would have no 
effect on the current number of overdose deaths.
    One law firm noted that after a re-evaluation of CDC data and DEA's 
own analyses, it has become evident that the current opioid ``crisis'' 
is caused by illicit synthetic opioids, particularly fentanyl and 
deadlier fentanyl derivatives with no medical use.
    DEA Response: This final rule does not establish specific quotas. 
Instead, this final rule revises and improves the process for DEA to 
follow in gathering information and taking other actions pertaining to 
quotas. The CDC has acknowledged that they have a new analysis 
confirming recent increases in drug overdose death,\1\ however, as 
stated in the NPRM, the CDC's data will not be the only source of 
information the DEA will be considering. The DEA will also consider 
relevant information from other components of HHS, as well as relevant 
information from the States.
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    \1\ https://www.cdc.gov/media/releases/2018/p0329-drug-overdose-deaths.html.
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    The DEA believes that the misuse of controlled prescription drugs 
(CPDs) is inextricably linked with the threat the United States faces 
from the trafficking of heroin and illicit fentanyl and fentanyl 
analogues. In 2016, almost 3.4 million Americans age 12 or older 
reported misusing prescription pain

[[Page 32786]]

relievers within the past month.\2\ Roughly 75 percent of heroin users 
reported nonmedical use of prescription opioids before using heroin 
(though the vast majority of individuals misusing opioid CPDs do not go 
on to use heroin).\3\ Many stated that they first obtained these drugs 
for free from the family medicine cabinet or from friends \4\ but then 
sought street or black market drugs to maintain their addiction. This 
illustrates the role that CPDs have played in the opioid epidemic and 
underscores the continued need for robust regulatory and enforcement 
measures to stop diversion of CPDs. Black-market sales for opioid CPDs 
are typically five to ten times their retail value, and DEA 
intelligence reveals the ``street'' cost of prescription opioids 
steadily increases with the relative strength of the drug.
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    \2\ Substance Abuse and Mental Health Services Administration. 
(2017). Key substance use and mental health indicators in the United 
States: Results from the 2016 National Survey on Drug Use and Health 
(HHS Publication No. SMA 17-5044, NSDUH Series H-52). Rockville, MD: 
Center for Behavioral Health Statistics and Quality, Substance Abuse 
and Mental Health Services Administration. Retrieved from https://www.samhsa.gov/data/.
    \3\ Cicero TJ, Ellis MS, Surratt HL, Kurtz SP. (2014). The 
changing face of heroin use in the United States: A retrospective 
analysis of the past 50 years. JAMA Psychiatry.71(7):821-826.
    \4\ Substance Abuse and Mental Health Services Administration. 
(2017). Key substance use and mental health indicators in the United 
States: Results from the 2016 National Survey on Drug Use and Health 
(HHS Publication No. SMA 17-5044, NSDUH Series H-52). Rockville, MD: 
Center for Behavioral Health Statistics and Quality, Substance Abuse 
and Mental Health Services Administration. Retrieved from https://www.samhsa.gov/data/.
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B. The Injectable Shortage and Adjusting the Quota Process

    Issue: The DEA received 23 comments concerning how manufacturing 
quotas may cause a shortage of injectable opioids. Commenters were 
concerned that injectable opioids that are used routinely for surgeries 
and cancer treatment, such as injectable morphine, hydromorphone, and 
fentanyl would not be available to hospitals and patients. Commenters 
attributed the perceived shortages of these drugs to manufacturing 
setbacks and a government effort to restrict the amount of opioids and 
other pain medicines to be manufactured. Commenters stated that due to 
the alleged shortage of these drugs, hospitals are having a difficult 
time treating patients and finding alternatives for pain management.
    Many commenters stated that the DEA is focusing on the wrong 
issues. A majority asserted that synthetic drugs are the cause of most 
of the overdose opioid deaths, and that the government should focus on 
those synthetic drugs instead of creating regulations that they feel 
lead to a reduction in injectable opioids.
    Comments received from organizations and associations asserted that 
there is no risk of diversion for injectables. It was stated numerous 
times that the DEA should consider adding drug shortage information as 
a factor when establishing and adjusting quotas. It was also 
recommended that the DEA add the intent to resolve drug shortages to 
the relevant factors considered in adjusting quotas.
    DEA Response: The DEA is committed to ensuring that quotas are set 
in such a way as to grant manufacturers the ability to provide FDA-
approved drug products to meet the demand of the legitimate medical, 
scientific, and export needs of the United States. As required in 21 
U.S.C. 826(h), when there is a shortage, the DEA will ``increase the 
aggregate and individual production quotas and any ingredients therein 
to the level requested.'' When it is determined that the level 
requested is not necessary to address a shortage, the DEA provides a 
written response detailing the basis for the decision. 21 U.S.C. 
826(h)(1)(B)(ii). Quotas granted to the dosage form manufacturers based 
on legitimate medical need will always be considered in the aggregate 
production quota. The DEA will always take into consideration any 
changes in market dynamics that may require allocation of individual 
manufacturers' quotas or revisions of the aggregate production quota. 
The DEA, however, cannot set quotas based on individual pharmaceutical 
dosage forms (21 U.S.C. 826(a)) nor can DEA compel manufacturers to 
manufacture specific individual pharmaceutical dosage forms even though 
the latter may lead to manufacturer induced shortages based on their 
internal business decisions. Thus, independent of DEA's adjustment of 
quotas, manufacturers' business decisions and manufacturing practices 
may lead to a shortage of certain individual pharmaceutical dosage 
forms, despite the adequacy of the applicable aggregate production 
quota.

C. The DEA's Methodology for Quantifying Diversion

    Issue: The DEA received 16 comments regarding DEA's methodology for 
determining quantities of controlled substances being diverted. Three 
commenters recommended that the DEA obtain data from HHS, CDC, and CMS 
on topics such as patterns of drug abuse, and that such information be 
considered for calculating aggregate production quota. The same 
commenters suggested that the information from HHS, CDC, and CMS can 
contribute to appropriate methods for determining quantities of 
controlled substances being diverted. Another commenter stated that the 
DEA does not distinguish between diversion and abuse when considering 
the quota formula. Seven commenters stated that DEA does not have 
reliable measures to calculate diversion of controlled substances. One 
of these commenters stated that DEA did not provide any examples or 
explanations on how DEA will collect measureable data. Two commenters 
suggested that DEA obtain data from the FDA on controlled substances 
shortages (which can be broken down by dosage) to help the DEA quantify 
a clear picture of diversion risks by the specific dosage forms. 
Another commenter stated that DEA did not provide any scientific data 
that supports DEA claim that quota reductions decrease diversion of 
controlled substances.
    One commenter suggested DEA work on anti-diversion legislation that 
will put requirements in place during the manufacturing process to 
prevent diversion of controlled substances so it will not affect 
quotas. Another commenter requested DEA to provide quantitative 
evidence to show the impact current reductions have had on diversion of 
controlled substances.
    DEA Response: The DEA is committed to continuously developing sound 
and reliable methods for determining quantities of controlled 
substances being diverted. Currently, DEA's reliable method to measure 
the diversion of controlled substances occurs at the level of 
individual dosage manufacturers rather than at the aggregate production 
quota level. Selected opioid dispositions from these manufacturers are 
compared to known, completed regulatory and operation enforcement 
actions and counted toward diverted quantities for individual 
manufacturers and not the aggregate production quota itself.
    Modifications to section 1303.11 would allow relevant information 
from appropriate HHS components to be considered in setting the 
aggregate production quota. HHS studies the use and misuse of 
controlled substances regarding the quantities of controlled substances 
necessary to support the medical needs in the United States pursuant to 
42 U.S.C. 242(a). Furthermore, the CDC and the CMS may have relevant 
information related to the patterns of drug abuse and the diversion of 
controlled substances for illicit use which DEA will also consider when 
setting the aggregate production quota. The information collected from 
HHS

[[Page 32787]]

through FDA, CDC, and CMS, and that collected from the states, will 
improve DEA's ability to distinguish diversion of controlled substances 
at a more geographically localized level. The information collected 
will enhance the DEA's ability to determine registrant's compliance 
with suspicious order monitoring regulations. The modifications to 
section 1303.22 will allow the Administrator to require additional 
information from manufacturing quota applicants that will assist the 
DEA in detecting or preventing diversion of controlled substances.
    The Administrator of the DEA has the authority to determine the 
total quantity of each basic class of controlled substance listed in 
Schedule I or II needed in each calendar year for medical, scientific, 
research and industrial needs of the United States, for lawful export, 
and for the establishment and maintenance of reserve stocks. The DEA 
has observed a decline for certain prescriptions written for Schedule 
II opioids since 2014 which can be attributed to federal and state 
government activities and interventions, including the implementation 
of Prescription Drug Monitoring Programs, enforcement of current 
regulations, and guidance documents such as the CDC Guideline for 
Prescribing Opioids for Chronic Pain--United States March 2016.

D. Trend in the Number of Prescriptions Written for Controlled 
Substances

    Issue: The DEA received 36 comments from commenters stating that 
prescription data shows that there has been a downward trend in the 
prescribing of controlled substances for the last several years, 
therefore prescription opioids are not responsible for the current 
opioid epidemic. As such, the commenters believed there was no need for 
the regulations to be updated. There were comments received from 
patients describing their inability to receive prescriptions for pain 
medications; they stated that their doctors had placed blame on the 
DEA.
    DEA Response: The DEA acknowledges that prescriptions for opioid 
drug products have decreased over the last several years due to the 
stepped up civil, criminal, and regulatory enforcement efforts of the 
agency. However, while there is a downward trend in prescribing, these 
schedule II prescription opiates continue to have a high potential for 
abuse and dependence and require the annual assessment of quotas. These 
decreases can be attributed to DEA's 360 Strategy, which combines 
local, state, and federal activities and interventions, including 
creating new partnerships, enforcing current regulations, and 
dissemination of provider education and guidance documents, including 
the CDC Guideline for Prescribing Opioids for Chronic Pain released in 
March 2016. In addition, more states have enacted and are enforcing 
laws mandating the use of PDMPs by medical providers and pharmacists, 
which provides prescribers with valuable information to guide their 
medical decisions.\5\ As such, this final rule will allow the downward 
trend to continue through the continued sharing of information from 
different HHS components and states.
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    \5\ Challenges and Solutions in the Opioid Abuse Crisis: Hearing 
Before the H. Comm. On the Judiciary, 115th Cong. 6,10 (2018) 
(statement of Robert W. Patterson, Acting Administrator, Drug 
Enforcement Administration).
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E. Fifteen Day Comment Period

    Issue: The DEA received 5 comments from commenters who felt the 
proposed rule's comment period was too short. One commenter suggested 
that the comment period remain open for 180 days because of the complex 
issues being addressed in the document. Two commenters voiced 
displeasure with the length of the comment period stating that it made 
it seem like the average citizens' opinion was not being valued.
    One national organization noted that the comment period provided by 
the DEA was unusual in its brevity. The national organization 
referenced Executive Order 13563, as well as guidance from the 
Administrative Conference of the United States, to suggest that the DEA 
comment period should have at least been 30 days since it was a 
rulemaking that was not considered ``significant.'' The national 
organization stated that they were not certain that the additional 15 
days necessary to achieve the 30-day period for review and input by 
experts outside of the agency would meaningfully ``impede putting into 
effect the diversion countermeasures [the proposal] authorizes.''
    DEA Response: The APA does not specify a minimum time for 
submission of written comments. Agencies must provide the public with a 
``meaningful opportunity'' to comment on a proposed notice. Rural 
Cellular Ass'n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009). While the length 
of the comment period is a factor in determining whether the public was 
afforded a ``meaningful opportunity'' to comment, courts have upheld 
comment periods of less than 30 days. See, e.g. Omnipoint Corp. v. FCC, 
78 F.3d 620 (D.C. Cir. 1996) (upholding 15-day comment period where 
there was ``urgent necessity for rapid administrative action under the 
circumstances'' and the public was not harmed).
    Under Executive Order 13563, there is a presumption that a period 
of 60 days should be allotted for the comment period. The 
Administrative Conference of the United States' recommendations serve 
as guidance for the notice-and-comment period. While they recommend 30 
to 60 days depending on the significance of a rule, they also recommend 
that agencies provide an explanation when they set a shorter comment 
period, as was done in the NPRM. 76 FR 48791 (Aug. 9, 2011).
    Here, the DEA received more than 1,500 comments, many of which 
included a thoughtful and detailed analysis. Due to the opioid epidemic 
as expressed in the proposed rule and the urgent need to finalize this 
rule, the 15-day comment period was sufficient.

F. Clarification of What Additional Data DEA May Seek From Registrants

    Issue: There were 11 comments received seeking clarification of 
what additional information the Administrator may require from 
registrants. The majority of the comments received were from industry 
and advocacy groups. While they agreed that steps need to be taken to 
address the current opioid epidemic, the views were not completely in 
support of the possibility of having to turn in additional information.
    One company felt the proposed changes seemed to codify the current 
practice of considering ARCOS (Automated Reporting and Consolidated 
Orders System) data when setting quotas. Many comments under this issue 
suggested that the DEA clearly detail what information would be 
required. A trade group also explained that knowing what the DEA could 
request beforehand would allow manufacturers the ability to ensure that 
systems are in place to collect and provide relevant data in a timely 
manner. The group felt that the DEA should determine whether additional 
data should be required beyond what is already required for schedule II 
controlled substances by way of the DEA Form 222. The group also 
requested that the DEA make sure that any additional requested 
information not place an undue burden on manufacturers or delay the 
issuance of initial quotas. They argued that DEA needs to include 
adequate protection of proprietary and sensitive commercial and 
financial information provided by the manufacturers, because the

[[Page 32788]]

additional data allowed for the collection of trade secrets or 
confidential commercial information. One association asked for the 
additional data to be used in a timely fashion to help anticipate and 
address potential shortages in the future. Another organization 
strongly objected to the proposed rule, because they did not see how 
the additional information could be useful in reducing opioid abuse and 
overdose when the main source of the problem is illicit drugs.
    A pharmaceutical company requested that the DEA provide 
opportunities for companies to receive guidance and training on how to 
best satisfy the additional information requirements. Another 
pharmaceutical company stated they contract with Contract Manufacturing 
Organizations (CMO) for the manufacturing of their finished drug 
products, and that because of this the CMO would be the actual quota 
applicant but would not be equipped with the additional information to 
help in detecting and preventing diversion.
    Two states commented on this issue and both applauded the DEA for 
taking action. West Virginia stated that obtaining additional 
information would be helpful because some of the legitimate demand may 
be double counted by way of multiple applicants relying on the same 
amounts of legitimate demand from the same customers. West Virginia's 
view was that the additional information will allow the DEA to prevent 
excess quota levels. Ohio also agreed with the proposed rule and 
encouraged the DEA to consider a more rigorous and information-driven 
quota application process.
    DEA Response: The DEA acknowledges that the CSA's requirement for 
allotting quotas for manufacturers was enacted on the business model of 
a vertically integrated system. Since its enactment, manufacturers have 
determined new and innovative ways of conducting business, as a 
response to a more robust, competitive market. While the CSA allows for 
adequate domestic competition, it also limits this competition to the 
legitimate medical, scientific, and industrial needs of the United 
States. The DEA has always had the ability to request information to 
clarify and support a manufacturer's request for quota to ensure that 
any quota granted is limited to legitimate need. Detailed information 
about what may be requested for clarification or support cannot be 
provided because the request would be on a case-by-case basis. DEA does 
not provide a list of additional items needed to process quotas because 
they may not pertain to every registrant. Therefore, additional data 
will be determined in light of the information manufacturers provide to 
the DEA as justification for a quota.
    Manufacturers of schedule I and II substances provide information 
needed to assist the DEA in making a quota determination. The 
information provided is based on their individual business activities. 
Regulations require manufacturers to utilize DEA Form 222 \6\ to 
document purchase and disposition information between DEA 
registrations; similar information is also transmitted to ARCOS. A 
limitation of ARCOS can be the reporting period a company opts to 
report their data (monthly or quarterly) and the timeliness of 
corrections to any errors in the reported data. There is no undue 
burden or cost to supply this information because it is already being 
captured in some form by the company per CSA regulations and good 
business practices.
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    \6\ 21 CFR 1305.11-1305.19.
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    The DEA communicates with registrants who have pending quota 
applications via telephone or email when necessary, to request 
clarification or additional information required to process their 
applications in a timely manner. The DEA also maintains an email box 
that registrants may preemptively supply information and communicate 
concerns related to quota requirements. Appropriate safeguards are 
currently in place to protect confidential business information.
    As stated above, requesting clarification or additional information 
is a current practice of DEA. The DEA provides training conferences 
annually, in strategic locations, to help registrants understand quota 
and reporting requirements. The agency also provides the presentations 
from the trainings on the DEA website. During these conferences, DEA 
explicitly states it never provides confidential and proprietary 
information supplied by registrants to outside sources. The additional 
information that may be requested is important and an integral part of 
the analysis as it helps DEA determine the amount of quota a 
manufacturer should be granted.

G. Other Comments

    Approximately 1,300 comments were received from the general public 
expressing concerns about the proposed regulations affecting their 
ability to get their prescriptions, and the possibility of drug 
shortages being created because of the proposed rule. The DEA 
understands and appreciates the nature of the comments. It is not the 
DEA's intent to create shortages or prevent a patient with a legitimate 
need from getting their prescription. The purpose of the proposed rule 
is to improve the process of setting the annual quota while ensuring an 
adequate supply is available for the United States' legitimate needs.

Regulatory Flexibility Act

    The Administrator, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 601-612), has reviewed this final rule and by approving 
it certifies that the rule will not have a significant economic impact 
on a substantial number of small entities.
    The DEA estimates that 325 manufacturers may be affected by the 
final rule, of which 301 manufacturers (92.6% of the total) are small 
entities. There will not be a significant economic impact on a 
substantial number of these small entities or any others because, as 
the ensuing certifications discuss, any overall cost of the rule is not 
significant.

Executive Orders 12866, 13563, and 13771--Regulatory Planning and 
Review, and Reducing Regulation and Controlling Regulatory Costs

    This regulation has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), Principles of Regulation, and Executive Order 13563, ``Improving 
Regulation and Regulatory Review.'' The DEA has determined that this 
final rule is not a ``significant regulatory action'' under Executive 
Order 12866, section 3(f). The DEA analyzed the economic impact of each 
provision of this final rule. Section 1303.11 is amended to make two 
additions to the list of factors to be considered by the Administrator 
in setting the aggregate production quotas. First, it adds the extent 
of any diversion of the controlled substance in the class. Second, it 
adds relevant information from HHS and its components, as well as from 
the states. The DEA has always considered any information obtained from 
other federal and state government agencies when fixing the aggregate 
production quotas for a controlled substance. While the DEA may receive 
additional information that is valuable in detecting and preventing 
diversion, the DEA has no reason to believe that there will be adverse 
economic impact or other consequences sufficient to implicate Executive 
Order (E.O.) 12866.
    Additionally, Sec. Sec.  1303.11 and 1303.13 are amended to require 
the DEA to transmit copies of aggregate production quotas and any 
adjustments to those quotas published in the Federal Register directly 
to state attorneys

[[Page 32789]]

general. While the DEA anticipates some labor burden to transmit 
aggregate production quota notices and orders to each state attorney 
general, the DEA estimates that this activity will result in a minimal 
yearly cost to the DEA and that the DEA has sufficient resources to 
absorb this minimal cost.
    Additionally, Sec. Sec.  1303.11, 1303.13, and 1303.32 are amended 
to explicitly state that the DEA Administrator shall hold a hearing if 
he or she determines it is necessary to resolve an issue of material 
fact raised by a state objecting to the proposed quantity for the class 
as excessive for legitimate United States need. The estimated yearly 
cost of this revision will be dependent on the number of hearings the 
DEA Administrator determines to be necessary to resolve an issue of 
material fact raised by a state regarding the aggregate production 
quota. Hearings regarding aggregate production quotas are infrequent 
and the DEA estimates that hearings of this type will continue to be 
infrequent under this final rule. For these reasons, the DEA does not 
expect a material increase in the number of hearings or in the 
associated costs to DEA or the states.
    Sections 1303.12 and 1303.22 are amended to explicitly state that 
the Administrator may require additional information from an individual 
manufacturing or procurement quota applicant, including customer 
identities and amounts of controlled substances sold to each of their 
customers. Currently, the DEA can and does request additional 
information of this nature from quota applicants if deemed necessary. 
While affording the Administrator express regulatory authority to 
require such information may result in the receipt of additional 
information that is valuable in detecting and preventing diversion, it 
is not expected that the difference will have adverse economic impact 
or other consequences sufficient to implicate E.O. 12866.
    Sections 1303.11, 1303.13, and 1303.23 are amended to add the 
requirement that the DEA consider diversion of a controlled substance 
when fixing aggregate production quotas, adjusting aggregate production 
quotas, and fixing individual manufacturing quotas. When fixing and 
adjusting the aggregate production quota, or fixing an individual 
manufacturing quota for a controlled substance, the DEA has always 
considered all available information regarding the diversion of that 
controlled substance. While the final rule's amendments, as discussed 
above, may result in the receipt and consideration of additional 
information relating to diversion, it is not expected that the 
difference will have adverse economic impact or other consequences 
sufficient to implicate E.O. 12866.
    This final rule is not an E.O. 13771 regulatory action because this 
final rule is not significant under E.O. 12866.

Executive Order 13132--Federalism

    This regulation will not have substantial direct effects on the 
states, on the relationship between the national Government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this final rule does not have 
sufficient federalism implications to warrant the preparation of a 
federalism assessment.

Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

Paperwork Reduction Act

    This final rule codifies current agency practice under existing 
approved information collections, and does not impose new information 
collection requirements under the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501-3521.

Unfunded Mandates Reform Act of 1995

    This final rule will not result in the expenditure by State, local 
and tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any one year, and it 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 rulemaking is not a major rule as defined by section 251 of 
the Congressional Review Act. 5 U.S.C. 804. This final rule will not 
result in an annual effect on the economy of $100 million or more; a 
major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, or innovation, or on 
the ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets.

List of Subjects in 21 CFR Part 1303

    Administrative practice and procedure, Drug traffic control.

    Accordingly, for the reasons stated in the preamble, part 1303 of 
title 21 of the Code of Federal Regulations is amended as follows:

PART 1303--QUOTAS

0
1. The authority citation for part 1303 continues to read as follows:

    Authority:  21 U.S.C. 821, 826, 871(b).


0
2. In Sec.  1303.11:
0
a. Remove the word ``and'' at the end of paragraph (b)(4).
0
b. Redesignate paragraph (b)(5) as paragraph (b)(7).
0
c. Add new paragraph (b)(5) and paragraph (b)(6).
0
d. Revise paragraph (c).
    The additions and revision read as follows:


Sec.  1303.11   Aggregate production quotas.

* * * * *
    (b) * * *
    (5) The extent of any diversion of the controlled substance in the 
class;
    (6) Relevant information obtained from the Department of Health and 
Human Services, including from the Food and Drug Administration, the 
Centers for Disease Control and Prevention, and the Centers for 
Medicare and Medicaid Services, and relevant information obtained from 
the states; and
* * * * *
    (c) The Administrator shall, on or before May 1 of each year, 
publish in the Federal Register, general notice of an aggregate 
production quota for any basic class determined by him under this 
section. A copy of said notice shall be mailed simultaneously to each 
person registered as a bulk manufacturer of the basic class and 
transmitted to each state attorney general. The Administrator shall 
permit any interested person to file written comments on or objections 
to the proposal and shall designate in the notice the time during which 
such filings may be made. The Administrator may, but shall not be 
required to, hold a public hearing on one or more issues raised by the 
comments and objections filed with him, except that the Administrator 
shall hold a hearing if he determines it is necessary to resolve an 
issue of material fact raised by a state objecting to the proposed 
quantity for the class as excessive for legitimate United States' 
needs. In the event the Administrator decides to hold a hearing, he 
shall publish notice of the hearing in the Federal Register, which 
notice shall summarize the issues to be heard and shall set the time 
for the hearing, which shall not be less than 30 days after the

[[Page 32790]]

date of publication of the notice. After consideration of any comments 
or objections, or after a hearing if one is ordered by the 
Administrator, the Administrator shall issue and publish in the Federal 
Register his final order determining the aggregate production quota for 
the basic class of controlled substances. The order shall include the 
findings of fact and conclusions of law upon which the order is based. 
The order shall specify the date on which it shall take effect. A copy 
of said order shall be mailed simultaneously to each person registered 
as a bulk manufacturer of the basic class and transmitted to each state 
attorney general.

0
3. In Sec.  1303.12, paragraph (b), add after the fifth sentence a new 
sentence to read as follows:


Sec.  1303.12   Procurement quotas.

* * * * *
    (b) * * * The Administrator may require additional information from 
an applicant which, in the Administrator's judgment, may be helpful in 
detecting or preventing diversion, including customer identities and 
amounts of the controlled substance sold to each customer. * * *
* * * * *

0
4. In Sec.  1303.13, revise paragraphs (b)(1) and (c) to read as 
follows:


Sec.  1303.13   Adjustments of aggregate production quotas.

* * * * *
    (b) * * *
    (1) Changes in the demand for that class, changes in the national 
rate of net disposal of the class, changes in the rate of net disposal 
of the class by registrants holding individual manufacturing quotas for 
that class, and changes in the extent of any diversion in the class;
* * * * *
    (c) The Administrator in the event he determines to increase or 
reduce the aggregate production quota for a basic class of controlled 
substance, shall publish in the Federal Register general notice of an 
adjustment in the aggregate production quota for that class determined 
by him under this section. A copy of said notice shall be mailed 
simultaneously to each person registered as a bulk manufacturer of the 
basic class and transmitted to each state attorney general. The 
Administrator shall permit any interested person to file written 
comments on or objections to the proposal and shall designate in the 
notice the time during which such filings may be made. The 
Administrator may, but shall not be required to, hold a public hearing 
on one or more issues raised by the comments and objections filed with 
him, except that the Administrator shall hold a hearing if he 
determines it is necessary to resolve an issue of material fact raised 
by a state objecting to the proposed adjusted quota as excessive for 
legitimate United States' needs. In the event the Administrator decides 
to hold a hearing, he shall publish notice of the hearing in the 
Federal Register, which notice shall summarize the issues to be heard 
and shall set the time for the hearing, which shall not be less than 10 
days after the date of publication of the notice. After consideration 
of any comments or objections, or after a hearing if one is ordered by 
the Administrator, the Administrator shall issue and publish in the 
Federal Register his final order determining the aggregate production 
for the basic class of controlled substance. The order shall include 
the findings of fact and conclusions of law upon which the order is 
based. The order shall specify the date on which it shall take effect. 
A copy of said order shall be mailed simultaneously to each person 
registered as a bulk manufacturer of the basic class and transmitted to 
each state attorney general.


Sec.  1303.21   [Amended]

0
5. In Sec.  1303.21, in paragraph (a), remove ``Sec. Sec.  '' in the 
second sentence and add in its place ``Sec.  ''.

0
6. In Sec.  1303.22:
0
a. In paragraph (c)(2), remove the word ``econolic'' and add in its 
place the word ``economic''.
0
b. Add paragraph (d).
    The addition reads as follows:


Sec.  1303.22   Procedure for applying for individual manufacturing 
quotas.

* * * * *
    (d) The Administrator may require additional information from an 
applicant which, in the Administrator's judgment, may be helpful in 
detecting or preventing diversion, including customer identities and 
amounts of the controlled substance sold to each customer.


Sec.  1303.23   [Amended]

0
7. In Sec.  1303.23, add the phrase ``the extent of any diversion of 
the controlled substance,'' after ``strikes),'' in paragraph (a)(2), 
and add the phrase ``any risk of diversion of the controlled 
substance,'' after ``strikes),'' in paragraph (b)(2).


Sec.  1303.32   [Amended]

0
8. In Sec.  1303.32, in paragraph (a), add the phrase ``and shall, if 
determined by the Administrator to be necessary under Sec.  1303.11(c) 
or 1303.13(c) based on objection by a state,'' before ``hold a 
hearing''.

    Dated: July 11, 2018.
Uttam Dhillon,
Acting Administrator.
[FR Doc. 2018-15141 Filed 7-13-18; 8:45 am]
 BILLING CODE 4410-09-P