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SECONDARY DISTRIBUTORS' DISCLOSURE OF DRUG PRODUCT SOURCES UNDER FDA DIVERSION LAW REGS OPPOSED BY NINE SENATORS; AAPD PREDICTS ADDITIONAL HILL SUPPORT

Executive Summary

The disclosure of secondary-source drug wholesalers' product sources under the provisions of the Drug Diversion Act is opposed by nine senators who supported the drug diversion legislation's enactment last year, the American Association of Pharmaceutical Distributors pointed out to FDA in a May 5 letter. The nine Senate Finance Committee members have either signed or cosigned letters to FDA suggesting that the agency delete a proposed requirement that unauthorized distributors disclose to customers their supply sources. AAPD said it expects that "further letters will ensue." The nine members of the Finance Committee, which was responsible for adopting the drug diversion legislation and referring it to the Senate floor last year, are Democrats Baucus (Mont.), Riegle (Mich.), Rockefeller (W.Va.), and Daschle (S.Dak.) and Republicans Packwood (Ore.), Dole (Kan.), Danforth (Mo.), Roth (Del.), and Durenberger (Min.). Sen. Baucus wrote the agency on April 7 that "it has come to my attention that the FDA regulations currently being drafted may require public disclosure of confidential business information that could adversely affect certain distributors." The senator commented: "I don't believe this was the intent of the Senate." AAPD, echoing comments the association submitted last October, maintained that the drug diversion law "does not require identification of the name of the wholesale source from whom a pharmaceutical wholesaler purchased prescription drugs." The legislation requires wholesalers, if "unauthorized" by the manufacturer, to "provide to each wholesale distributor of such drugs a statement identifying each sale of the drug (including the date of the sale) before the sale to such wholesale distributor." Under FDA's draft interpretation, issued last summer, the law's mandate for an "identifying" statement requires a disclosure of the parties involved in each transaction in the paper trail from the original manufacturer to the unauthorized distributor. The Senate report on the bill seems to justify the FDA interpretation. The report states that "unauthorized distributors will be required to certify in writing to drug wholesalers the source and place from which they obtained their drugs." It defines "unauthorized distributors" as those "who do not have an ongoing business relationship with a manufacturer to provide wholesale distribution of that manufacturer's products." AAPD contended that such an interpretation "could eliminate hundreds of millions of dollars of legal, highly competitive sales if a contrary interpretation were adopted." The association, formed one year ago after the drug diversion law was enacted, says it comprises 70 secondary-source distributors, including Quality King and United Wholesale. It is represented by the New York law firm Bass & Ullman. In an April 28 letter to FDA, Sen. Danforth pointed out that the Prescription Drug Marketing Act requires pharmaceutical wholesalers "to keep detailed and accurate records of the source of a drug," and "that information should be made available to FDA upon request." However, the senator acknowledged that "there is some concern that mandatory disclosure of the drug source to the consumer will create an unintended and serious problem for the secondary market in pharmaceuticals." Danforth added that requiring wholesalers to disclose their sources to their customers "might force unauthorized distributors out of business and give the manufacturers control of all levels of distribution of their products, leading to increased prices without improved quality control."
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