Executive Summary

DRUG DIVERSION LAW REQUIRES UNAUTHORIZED DISTRIBUTORS TO DISCLOSE their product sources and chain of distribution to customers, FDA Associate Commissioner for Legislative Affairs Hugh Cannon reiterated in a May 22 letter to Sen. Graham (D-Fla.). "The intent of the law [the 1987 Prescription Drug Marketing Act] 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," Cannon said. Graham had written FDA April 20 on behalf of Deerfield Beach, Fla.-based distributor United Wholesale, which says it is "adversely affected" by the agency's reading of the drug diversion law. "If the proposed regulations require us to reveal the sources of our product to our customers, it would permit them in most instances to buy directly from our vendors, effectively putting us and other wholesale distributors out of business," United Wholesale President Alan Peller protested in a letter to Graham. Calling the law as currently interpreted anticompetitive, United Wholesale proposed that second-hand distributors disclose their sources to FDA, rather than to customers. A similar objection to required disclosure of secondary-source wholesalers' product sources was registered last year by the American Association of Pharmaceutical Distributors ("The Pink Sheet" May 22, 1989, p. 5). United Wholesale is a member of AAPD. The association was formed to represent the interests of secondary-source distributors after passage of the drug diversion law. AAPD had elicited letters supporting a deletion of the disclosure requirement from nine senators on the Senate Finance Committee, which had jurisdiction over the diversion legislation. FDA has not changed its interpretation of the policy, according to the agency's letter to Graham.