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Executive Summary

DRUG DIVERSION BILL PASSES SENATE MARCH 31 by voice vote. The Senate adopted the House measure (HR 1207) 11 months after referral from the House. The bill was passed by the House on May 4 and by the Senate Finance Committee on Dec. 11. The bill permits nonprofit institutions to return recalled pharmaceuticals to their suppliers, under a clarification contained in the Senate Finance Committee's report, printed March 18. The report explains that the bill's prohibition against "resales and trades by hospitals and other health care entities of pharmaceuticals . . . does not include the withdrawal from the market for credit or exchange of any drugs in the event of a recall by a manufacturer, where the manufacturer has notified the secretary of HHS of the recall." The report also specifies that wholesaler reporting requirements apply to unauthorized distributors only. Section six of the legislation "is designed to restore accountability to the wholesale sector of the pharmaceutical market and to regulate the wholesale distribution of prescription drug products," the report states. A requirement in Section 6 "that distributors must inform their wholesale customers of all previous sales of the product applies only to wholesale distributors who are not authorized distributors for that product." the report states. Authorized distributors "are exempt from this requirement." The report defines "unauthorized distributors" as "those distributors who do not have an ongoing business relationship with a manufacturer to provide wholesale distribution of that manufacturer's products." The report notes that "unauthorized distributors will be required to certify in writing to drug wholesalers the source and place from which they obtained their new drugs." The bill will require manufacturers "to maintain for public review a current list of all authorized distributors of record."

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