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"UNAUTHORIZED" WHOLESALER DISCLOSURE OF SUPPLY SOURCES

Executive Summary

"UNAUTHORIZED" WHOLESALER DISCLOSURE OF SUPPLY SOURCES to their customers is currently considered to be required under the Prescription Drug Marketing Act, FDA Associate Commissioner for Legislative Affairs Hugh Cannon said in an Aug. 9 letter to Sen. Heinz (R-Pa.). "At the present time," Cannon wrote, "the agency believes the intent of the law is to require an unauthorized distributor to disclose, in a statement to its customers, identifying information regarding all previous sales of a prescription drug product." FDA's tentative interpretation of the drug diversion law "is supported by both the House and the Senate reports on the legislation," the letter states. The agency has taken its position notwithstanding the fact that "there has been some concern that disclosure of identifying information of all previous sales to an unauthorized distributor's customers will eliminate competition in the wholesale pharmaceutical market." The agency is still considering the issue and may change its position in the future. Heinz was one of several Senate Finance Committee members to write FDA in opposition to mandatory disclosure of drug suppliers by secondary-source distributors to their customers ("The Pink Sheet" May 22, p. 4). The American Association of Pharmaceutical Distributors maintained in comments submitted last October that mandated disclosure "could eliminate hundreds of millions of dollars of legal, highly competitive sales" ("The Pink Sheet" Oct. 24, p. 15). The drug diversion act requires "unauthorized" distributors "to provide to each wholesale [customer] of such drugs a statement identifying each sale of the drug (including the date of the sale before the sale to)" the customer. The Senate Finance Committee report explains the provision in a way that apparently supports the FDA interpretation. "Unauthorized distributors will be required to certify in writing to drug wholesalers the source and place from which they obtained their drugs," the committee said. The report 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."
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