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DEA REVIEWING QUOTA SYSTEM ON CONTROLLED SUBSTANCES TO ALLOW FOR GENERIC MARKET, AGENCY REP TELLS NAPM; BASIS FOR QUOTA MUST CHANGE, ATTORNEY SAYS

Executive Summary

The Drug Enforcement Administration is considering ways to redistribute its controlled substance manufacturing quotas to allow for the increasing number of generic marketers of Schedule II drugs, DEA Diversion Control Deputy Director Ronald Buzzeo said Jan. 14 at the Natl. Assn. of Pharmaceutical Mfrs. (NAPM) annual meeting in Puerto Rico. "We are looking for ways to distribute this quota fairly," Buzzeo said. While it would be easy for DEA to designate a given quota for a drug to one company with an established market position, Buzzeo maintained, "we can't do that. We realize that as an agency. We have another company that wants to come into the market. We have to figure out a way to give that company a sufficient amount so they have inventory, so they have some sales and begin to pick up part of the market -- even though the law talks about an amount only necessary to meet ligitimate medical needs and does not talk about companies." DEA also must "figure out ways [to deal with a quota] when the change in the share of the market comes about," Buzzeo noted. We have to figure out ways when new products come onto the market. And we have to figure out ways when new delivery units come onto the market." Although DEA is reviewing the quota system to accommodate the changing market place, Buzzeo emphasized that medical need will continue to be the basis of the quota system. Quotas, he said, "are meant to be restrictive. No getting around that. The quota is meant to meet a legitimate medical need." Quotas are adjusted for inventory, research, and export needs, Buzzeo noted. However, he said, the inventory allowance "is meant to be maintained," and firms need DEA permission to use it. "Dont't think when we give you that quota that you can sell off that inventory without coming to us," the DEA rep warned. "We are beginning to look carefully at that. Because what we are getting is an unnecessary creep in the quota." NAPM General Counsel Milton Bass (Bass & Ullman) argued that the "medical need" basis of the quota would have to be changed to make it possible for the generic companies to compete. "How is the generic company going to get into the drugstores if it can't get the product?" Bass asked. "We need to go to 56,000 drugstores with our generic product. If we are going to still apply a rule of medical need, the brandname companies will have a monopoly, a monoply more effective than a patent, an NDA or any other device that has been used to take over the market-place." Buzzeo directed NAPM's attention to the growing potential for drug diversion through computer fraud. "I can't stress enough the importance as you go into computer systems to figure our some safequard, some way to monitor them," Buzzeo said. "Have a knowledge of the system yourself and don't leave it up to somebody else." DEA is in the process of setting up a test program to explore the feasibility of eliminating order forms at the manufacturer and distributor level, Buzzeo said. "The order will be transmitted through our computer system [in order to] check the registration number and the schedule, and then we will tell you or the shipper whether it is a current . . . registration order," he explained. The actual monitoring of the order and the sales will still be up to the company, he added. If the agency feels the system is successful, Buzzeo predicted that it would be employed at the practitioner level within a few years. "We see the day within five or 10 years when there will be no more order forms and probably no more distribution records even at the lower schedules, and everything will be done by a computerized system if the industry wants it," Buzzeo said. He added, however, that DEA would still have to maintain a paper system for those companies and practitioners that are not capable of having a computerized system.

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