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SENATE DRUG DIVERSION BILL MARKUP BY MATSUNAGA's SUBCOMMITTEE COULD COME AS EARLY AS END OF JULY AFTER QUICK "FOR THE RECORD" HEARING ON JUNE 15

Executive Summary

A markup of Sen. Matsunaga's (D-Hawaii) drug diversion bill by the Senate Finance Committee's Subcommittee on International Trade could come as early as the end of July after a relatively quick "for the record" hearing on June 15. The subcommittee's hearing on Matsunaga's S 368 raised only a few suggestions for amendments to the House version of the bill. The legislation is identical to the original version of the drug diversion bill sponsored by House Energy and Commerce Committee Chairman Dingell (D-Mich.). Dingell's amended bill passed the House May 4. The House bill permits distribution of physician samples by manufacturer sales representatives and mandates criminal and civil penalties for sample diversion by sales reps. In its initial form, the legislation prohibited distribution of samples except by common carrier. Three amendments to the resale provisions of the House version were recommended at Matsunaga's hearing by the National Association of Retail Druggists (NARD). Six industry witnesses at the hearing expressed support for the House bill and urged that the Senate version be revised accordingly. The seventh witness, the American Society of Hospital Pharmacists (ASHP), favored the more stringent sampling restrictions of the current Senate version. Those testifying in addition to NARD and ASHP included the Pharmaceutical Manufacturers Association, the American Pharmaceutical Association, the National Association of Chain Drug Stores, the National Wholesale Druggists' Association and the National Pharmaceutical Alliance. NARD recommended that the legislation "require the destruction of any diverted drug found to be adulterated or misbranded," or, if the drugs are safe and effective, "require that they be used for true charitable purposes." NARD also suggested the bill should "require the development of a guide for consumers and pharmacists which would assist them in reporting illegal diversion activities to U.S. attorneys." Finally, the association requested a provision to attach Medicare/Medicaid sanctions to diversion by nonprofits. NARD urged that the bill make ineligible for Medicare or Medicaid reimbursement any nonprofit organization convicted of violating the bill's resale provisions. The National Pharmaceutical Alliance sought changes in the legislative report language that would address the concerns of small distributors. For example, one change would assure that small companies would not be subject to the same $1 mil. fine as large firms for sampling abuses by detailmen. NPA requested that the fine be equivalent in impact, but lower in terms of dollars. The National Wholesale Druggists' Association asked that the section of the bill dealing with wholesale distributors be amended, like HR 1207, so that only unauthorized distributors -- rather than all distributors -- be required to certify in writing their drug source.
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