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Executive Summary

The House drug diversion bill (HR 4820) would permit MDs to continue to distribute Rx samples -- if the samples were requested in writing and were delivered to the MD by common carrier. The establishment of a procedure for MDs to request samples through the mail is a compromise by House Commerce/Oversight Subcmte. Chairman Dingell. The subcommittee staff had originally indicated that the drug diversion hearings of 1985 would lead to a legislative recommendation for a different type of coupon system -- aimed at limiting the dispensing of samples to pharmacies. The subcommittee's report on the diversion hearings released at the end of April discussed the costs of dispensing samples through pharmacies ("The Pink Sheet" April 28, p. 7). Dingell modified that approach to satisfy the concerns of the Commerce Cmte.'s ranking minority member Broyhill (R-NC), who had objected to an outright ban on MD sampling. Broyhill has signed onto the bill as one of 10 cosponsors. The other cosponsors are Wyden (D-Ore.), Eckart (D-Ohio), Bliley (R-Va.), Sikorski (D-Minn.), Oxley (R-Ohio), Luken (D-Ohio), Eckert (R-NY), Bryant (D-Tex.) and Whittaker (R-Kan.). The request-and-mail compromise was feasible because of Broyhill's position. Dingell reportedly felt that he needed Broyhill's cosponsorship to move the bill in this session. Broyhill is running for the Senate and will not be back in the House next year. If the bill does not progress this year, it is probable that Dingell would go back to the pharmacy coupon system for a legislative proposal in the next Congress. The bill specifically excludes the distribution of samples by pharmaceutical sales forces. "No sales representative, employee or agent of a drug manufacturer may distribute any sample of a drug . . . which is manufactured by such manufacturer," the bill states. The bill further calls for record-keeping on the drugs distributed to MDs. "Practitioners receiving samples distributed under this paragraph," the bill states, "shall provide the manufacturer making the distribution a receipt for the samples received." Dingell maintained that "this proposal will allow the continued use of samples by MDs, but will provide the control and accountability that is lacking under the present system." The findings section of the bill declares that "the existing system of providing samples of drugs to MDs through manufacturer's sales representatives has been abused for decades and has resulted in the sale to consumers of misbranded, expired and adulterated pharmaceuticals." The bill would address the sale of gray market drugs purchased from non-profit hospitals by making it illegal to sell, trade or offer to trade any drug "which was donated or supplied at a reduced price to a charitable organization." The bill would permit sales by non-profits of discounted drugs to affiliates. The bill also bans the reimportation of American pharmaceuticals produced for export, "except by the mfr. or for emergency purposes," Dingell explained on the House floor. Samples, drugs discounted under the Nonprofit Institutions Act, and reimports "all have been major sources of diverted pharmaceuticals," he pointed out. The legislation also requires stricter licensing standards for whslrs. and mandates that whslrs. Disclose to purchasers their source of supply. In addition, it provides criminal penalties of up to 10 years in jail and $100,000 in fines for trading samples or reimports, and criminal penalties of up to three years and $10,000 for nonprofits that resell pharmaceuticals.

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