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5200 Federal Register / Vol. 71, No.

21 / Wednesday, February 1, 2006 / Proposed Rules

Subpart E—Termination ACTION: Proposed rule. www.fda.gov/ohrms/dockets/


default.htm, including any personal
22. Revise § 158.81 to read as follows: SUMMARY: The Food and Drug information provided. For additional
Administration (FDA) proposes to information on submitting comments,
§ 158.81 General.
amend the regulations to allow certain see the ‘‘Comments’’ heading of the
This subpart contains the procedures registered blood establishments that
for terminating PFCs or loss of Federal SUPPLEMENTARY INFORMATION section of
qualify as health care entities to this document.
airport grant funds for violations of this distribute drug products that are
part or 49 U.S.C. 40117. This subpart Docket: For access to the docket to
derivatives of blood (blood derivatives). read background documents or
does not address the circumstances This proposed rule, which is specific to
under which authority to collect PFCs comments received, go to http://
registered blood establishments and the www.fda.gov/ohrms/dockets/
may be terminated for violations of 49 distribution of blood derivatives, if
U.S.C. 47523 through 47528. default.htm and insert the docket
finalized, would amend certain limited number(s), found in brackets in the
§ 158.97 [Removed] provisions of the regulations heading of this document, into the
23. Remove § 158.97. implementing the Prescription Drug ‘‘Search’’ box and follow the prompts
24. Amend appendix A by revising Marketing Act of 1987 (PDMA), as and/or go to the Division of Dockets
paragraphs 10 and 12 of section B to modified by the Prescription Drug Management, 5630 Fishers Lane, rm.
read as follows: Amendments of 1992 (PDA) and the 1061, Rockville, MD 20852.
FDA Modernization Act of 1997. As
Appendix A to Part 158—Assurances FOR FURTHER INFORMATION CONTACT:
currently written, these regulations,
Kathleen Swisher, Center for Biologics
* * * * * among other things, restrict the sale,
Evaluation and Research (HFM–17),
B. * * * purchase, or trade of, or the offer to sell,
Food and Drug Administration, 1401
* * * * * purchase, or trade, prescription drugs
Rockville Pike, suite 200N, Rockville,
10. Recordkeeping and Audit. It will purchased by hospitals and other health
MD 20852–1448, 301–827–6210.
maintain an accounting record for audit care entities.
SUPPLEMENTARY INFORMATION:
purposes for 3 years after physical and DATES: Submit written or electronic
financial completion of the project. All comments on the proposed rule by May I. Background
records must satisfy the requirements of 2, 2006. The PDMA (Public Law 100–293) was
14 CFR part 158 and contain ADDRESSES: You may submit comments, enacted on April 22, 1988, and was
documentary evidence for all items of identified by Docket No. 2005N–0428, modified by the PDA (Public Law 102–
project costs. by any of the following methods: 353, 106 Stat. 941) on August 26, 1992.
* * * * * Electronic Submissions The PDMA, as modified, amended the
12. Compliance with 49 U.S.C. 47523 Federal Food, Drug, and Cosmetic Act
through 47528. It understands 49 U.S.C. Submit electronic comments in the
(the act) to establish restrictions and
47524 and 47526 require the authority following ways:
requirements relating to various aspects
to impose a PFC be terminated if the • Federal eRulemaking Portal: http://
of human prescription drug marketing
Administrator determines the public www.regulations.gov. Follow the
and distribution. Among other things,
agency has failed to comply with those instructions for submitting comments.
• Agency Web site: http:// the PDMA prohibited, with certain
sections of the United States Code or exceptions, the sale, purchase, or trade
with the implementing regulations www.fda.gov/dockets/ecomments.
Follow the instructions for submitting (or offer to sell, purchase, or trade) of
published under the Code. prescription drugs that were purchased
comments on the agency Web site.
Issued in Washington, DC, on January 26, by hospitals or other health care
2006. Written Submissions entities. Section 503(c)(3)(A)(ii)(I) of the
Dennis E. Roberts, Submit written submissions in the act (21 U.S.C. 353(c)(3)(A)(ii)(I)). Section
Director, Office of Airport Planning and following ways: 503(c)(3) also states that ‘‘[f]or purposes
Programming. • FAX: 301–827–6870. of this paragraph, the term ‘entity’ does
[FR Doc. 06–896 Filed 1–31–06; 8:45 am] • Mail/Hand delivery/Courier [For not include a wholesale distributor of
BILLING CODE 4910–13–P paper, disk, or CD-ROM submissions]: drugs or a retail pharmacy licensed
Division of Dockets Management (HFA– under State law * * *.’’
305), Food and Drug Administration, In the Federal Register of March 14,
DEPARTMENT OF HEALTH AND 5630 Fishers Lane, rm. 1061, Rockville, 1994 (59 FR 11842), we issued a
HUMAN SERVICES MD 20852. proposed rule to implement those
To ensure more timely processing of PDMA sections that were not
Food and Drug Administration comments, FDA is no longer accepting implemented by the final rule of
comments submitted to the agency by e- September 14, 1990, that set forth
21 CFR Parts 203 and 205 mail. FDA encourages you to continue Federal guidelines for State licensing of
to submit electronic comments by using wholesale drug distributors (55 FR
[Docket No. 2005N–0428] the Federal eRulemaking Portal or the 38012). The proposed rule contained
agency Web site, as described in the provisions on prescription drug
Distribution of Blood Derivatives by
Electronic Submissions portion of this reimportation; wholesale distribution of
Registered Blood Establishments that
paragraph. prescription drugs by unauthorized
Qualify as Health Care Entities;
Instructions: All submissions received distributors; the resale of prescription
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Prescription Drug Marketing Act of


must include the agency name and drugs by hospitals, health care entities,
1987; Prescription Drug Amendments
Docket No(s). and Regulatory and charitable institutions; and
of 1992; Policies, Requirements and
Information Number (RIN) (if a RIN distribution of prescription drug
Administrative Procedures
number has been assigned) for this samples. After consideration of
AGENCY: Food and Drug Administration, rulemaking. All comments received may comments, we issued a final rule in the
HHS. be posted without change to http:// Federal Register of December 3, 1999

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Federal Register / Vol. 71, No. 21 / Wednesday, February 1, 2006 / Proposed Rules 5201

(64 FR 67720) (‘‘the final rule’’), with an Thus, under the final rule as written, distribution of counterfeit, expired,
effective date of December 4, 2000. blood establishments functioning as adulterated, misbranded, or otherwise
After publication of the final rule, we health care entities would not be unsuitable products; and the pricing of
received many letters on, and held allowed to engage in wholesale blood-derived products sold to health
several meetings to discuss the distribution of prescription drugs except care entities (65 FR 56480 at 56483)
implications of, the final regulations for for blood and blood components with regard to blood derivatives, as well
registered blood establishments that intended for transfusion, which are as other unrelated issues associated
distribute blood-derived products and exempted from the regulations under with wholesale distribution of drugs.
provide health care as a service to § 203.1 (21 CFR 203.1). As discussed in This proposed rule addresses only blood
hospitals and patients. According to the preamble to the final rule (64 FR derivatives and does not address the
comments received before the final rule 67720 at 67725 to 67727), blood other stayed requirements in the final
took effect, implementing the final rule derivatives are not blood components. rule relating to wholesale distribution of
as published would interfere with Therefore, should the final rule go into prescription drugs by distributors that
longstanding relationships between effect as written, registered blood are not authorized distributors of record
blood centers and other health care establishments that qualify as health (69 FR 8105, February 23, 2004).
providers such as hospitals, hemophilia care entities could not distribute blood The public hearing was held on
treatment centers, and other providers. derivatives. October 27, 2000, and comments were
The blood establishment industry Blood derivatives that are prescription accepted until November 20, 2000. In
asserted that the regulations, drugs include the following: Albumin, the Federal Register of March 1, 2001,
particularly the definition of ‘‘health antihemophilic factor, Factor IX we announced our decision to further
care entity’’ in § 203.3(q) (21 CFR Complex, alpha-1 anti-tripsin, and delay until April 1, 2002, the
203.3(q)), would, to the detriment of the immune globulin. Therefore, under the applicability of § 203.3(q) to the
public health, severely inhibit its ability rule as written, a blood center could not wholesale distribution of blood
to provide medical care and services resell blood derivatives to entities other derivatives by health care entities (66
than consumers or patients and FR 12850). Further delays of effective
and might disrupt the distribution of
simultaneously provide health care, dates followed until December 1, 2006,
blood derivatives, to what may be
such as medical services associated with to give us additional time to consider
otherwise unserved or inadequately
those products. whether regulatory changes are
served segments of the public. On May 3, 2000, we delayed until appropriate and, if so, to initiate such
Specifically, § 203.20 (21 CFR 203.20) of October 1, 2001, the effective date of changes (67 FR 6645, February 13, 2002;
the final rule as written states, in several provisions of the final rule and 68 FR 4912, January 31, 2003; 69 FR
relevant part, that no person may sell, reopened the administrative record, 8105, February 23, 2004).
purchase, or trade, or offer to sell, giving interested persons until July 3, We now propose to amend the
purchase, or trade any prescription drug 2000, to submit written comments (65 regulations. The proposed amendments
that was purchased by a health care FR 25639). This delay extended to the are narrow and would allow certain
entity (§ 203.20(a)). definition of ‘‘health care entity’’ in registered blood establishments that
‘‘Health care entity’’ is defined in § 203.3(q), as applied to the wholesale qualify as health care entities to
§ 203.3(q) as any person that provides distribution of blood derivatives by distribute blood derivatives.
diagnostic, medical, surgical, or dental health care entities. The purpose of
treatment, or chronic or rehabilitative delaying the effective date for these II. The Blood Establishments’ Concerns
care, but does not include any retail provisions was to give us time to obtain In response to the final rule, we
pharmacy or wholesale distributor. That more information about the possible received numerous comments arguing
definition specifically states that, ‘‘A consequences of implementing these that blood establishments should be
person cannot simultaneously be a provisions and to further evaluate the allowed to continue performing both
‘health care entity’ and a retail issues involved (65 FR 25639 at 25641). functions of providing health care
pharmacy or wholesale distributor.’’ On September 19, 2000, we services and distributing blood
‘‘Wholesale distributor’’ is defined in announced a public hearing to discuss derivatives. Some comments asserted
§ 203.3(dd) (21 CFR 203.3(dd)) as any certain requirements of the final rule (65 that although the distribution of
person engaged in wholesale FR 56480), including the provisions derivatives and the provision of health
distribution of prescription drugs, and relating to the distribution of blood care services are small parts of a blood
‘‘wholesale distribution’’ is defined in derivatives by entities that meet the establishment’s activities, they are vital
§ 203.3(cc) (21 CFR 203.3(cc)) as definition of ‘‘health care entity.’’ We to serving public health needs.
‘‘distribution of prescription drugs to held the public hearing to develop an At the October 2000 public hearing,
persons other than a consumer or adequate factual basis to use to we heard from four interested parties on
patient * * *.’’ The final rule made determine whether it is in the public this subject. Comments asserted that we
clear that those definitions should be health interest to modify or change the had reached the wrong conclusion with
interpreted to mean that an requirements in the final rule (65 FR respect to restrictions on blood
establishment that meets the definition 56480 at 56483). establishments’ activities. In addition to
of a health care entity would not be We developed a list of questions to restating earlier objections made in
allowed to engage in wholesale promote a more useful discussion at the response to the proposed rule, the
distribution. The Federal Register of public hearing. These questions related comments presented new objections and
December 3, 1999, stated ‘‘The agency to: The distribution systems available new information, including more
declines to revise the definition of for blood derived products; the effect of detailed descriptions of the health care
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health care entity or otherwise revise the final rule on these distribution services they provide and the
the proposed rule to permit health care systems, including adverse public derivatives they distribute. They also
entities to engage in the wholesale health consequences or economic costs; offered several potential regulatory
distribution of blood derivatives or whether excluding blood derived solutions.
other prescription drug products.’’ (64 products from the final rule’s We received no comments taking the
FR 67720 at 67726). restrictions would increase the risk of position that the regulations should

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5202 Federal Register / Vol. 71, No. 21 / Wednesday, February 1, 2006 / Proposed Rules

remain unchanged. We received from a derivative products are distributed by phlebotomies, plasma exchange, and
national trade organization that community and Red Cross blood transfusion services. For clarification, a
represents blood establishments centers, with Red Cross alone registered blood establishment’s
additional comments about the scope of accounting for 10 percent.’’ 2 Those ordinary donor screening activities for
products they distribute for treating blood centers qualify as health care donor suitability (e.g., measuring a
blood-related disorders, which include entities because, in addition to donor’s temperature, blood pressure,
drugs that are not blood derivatives. The collecting blood and plasma and and hematocrit or hemoglobin) are not
comment stated the exemption should distributing blood derivatives, they also considered health care services for the
extend to any distribution of blood- provide certain health care services to purposes of § 203.3(q).
related products by blood centers, not the hospitals and health care entities A registered blood establishment that
just to blood derivatives because blood they serve, including therapeutic provides any health care services
centers also distribute blood-related phlebotomy, plasma exchange, stem cell unrelated to its activities as a registered
products not always from human and cord blood collection and blood establishment would not be
sources. In this proposed rule, we are processing, and medical expertise on eligible for the exclusion. For example,
seeking additional information on the the appropriate use of the blood if a registered blood establishment
distribution of other prescription drug derivatives they distribute.3 According provides health care services such as
products by registered blood to the testimony, the majority of local administering antibiotics to treat a
establishments. hospitals do not have that kind of respiratory infection unrelated to
We have considered all comments medical expertise, and as a practical transfusion medicine, we do not
and have changed our position from that matter could not obtain and maintain consider this to be a health care service
expressed in the preamble discussion in such expertise.4 related to the operation of a blood
the December 3, 1999, final rule (64 FR Prohibiting community and Red Cross establishment. Therefore, the blood
67720). We now propose to allow blood centers that qualify as health care establishment would not be permitted to
certain registered blood establishments entities from distributing blood distribute blood derivatives. Without
that qualify as health care entities to derivatives would have a particularly that limit on the exclusion, the rule
distribute blood derivatives. We are high impact on certain segments of would encourage hospitals and other
distinguishing blood derivatives from patients. For example, the Red Cross health care entities to register as blood
other prescription drugs when sold, testified that ‘‘85 percent of their anti- establishments strictly to take advantage
purchased, or traded (or offered to sell, hemophilic factor is supplied directly to of this exception. Allowing such entities
purchase, or trade) by a registered blood health care entities. They stated that that are not primarily blood
establishment that qualifies as a health implementation of the final rule would establishments to distribute blood
care entity, provided all health care deny hemophilia patients access to this derivatives could raise the same
services offered by the establishment are product because many treatment centers concerns that the PDMA was intended
related to its activities as a registered are smaller entities that are not to address. The prohibition against sales
blood establishment. supported by large distributors.’’ 5 by health care entities was prompted in
Additionally, the Red Cross stated that part because of the temptation for such
III. The Proposed Amendments ‘‘15 percent of their IVIG (intravenous entities to sell for-profit drugs acquired
Our current proposal modifies part immunoglobulin) products and 10 at below-wholesale prices.
203 (21 CFR part 203) to allow a percent of their albumin product are The proposed exclusion in § 203.22
registered blood establishment 1 that provided directly to healthcare applies only to the distribution of blood
provides health care services and that providers and account for 26,000 to derivatives by a registered blood
also distributes blood derivatives to 69,000 infusions annually.’’ 6 establishment and not by other entities.
continue in both capacities, as long as We now propose to amend § 203.22 The regulations implementing the
the blood establishment does not (21 CFR 203.22), which contains PDMA, as modified, would continue to
provide health care services unrelated to exclusions from the sales restrictions in apply to these other entities.
its activities as a registered blood § 203.20 (21 CFR 203.20). Proposed new Although the public hearing and
establishment. paragraph (h) provides a limited additional comments received on the
We have changed our position from exception for registered blood final rule provided us with an adequate
that discussed in the preamble to the establishments that qualify as a health factual basis to determine whether the
final rule (64 FR 67720 at 67726) care entity. Under the proposed requirements in the final rule should be
because of new information and a better exclusion, the sales restrictions in modified in the interest of public health,
understanding of the industry and how § 203.22 would not apply to the sale, new information provided with respect
the final rule, if enforced, might affect purchase, or trade of (or the offer to sell, to the function of registered blood
the public health. For example, purchase, or trade) any blood establishments indicates that additional
according to testimony at the public derivatives by a registered blood input is needed. We are seeking
hearing held on October 27, 2000, establishment that qualifies as a health information about the functions of
‘‘more than 15 percent of all U.S. blood care entity as long as all of the health registered blood establishments to assist
care services that it provides are related us in making a decision whether further
1 Establishment is defined as ‘‘a place of business to its activities as a registered blood modification of the final rule is
under one management at one general physical establishment. The following are necessary in the interests of public
location. The term includes, among others, human examples of such health care services: health.
blood and plasma donor centers, blood banks, therapeutic hemapheresis, therapeutic Proposed § 203.22(h) includes an
transfusion services, other blood product
‘‘exclusion’’ that would allow certain
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manufacturers and independent laboratories that


engage in quality control and testing for registered
2 U.S. Food and Drug Administration, ‘‘The
registered blood establishments that
blood product establishments.’’ (§ 607.3 (21 CFR Prescription Drug Marketing Act: Report to qualify as health care entities to
607.3)) All owners or operators of establishments Congress,’’ June 2001, p.17 and p.18.
3 Id., at 18. distribute blood derivatives. In
that engage in the manufacturing of blood products
are required to register, under section 510 of the 4 Id. consideration of the issues that the
Federal Food, Drug, and Cosmetic Act (§ 607.7 (21 5 Id. industry raised, we seek comments on
CFR 607.7)). 6 Id. whether this exclusion should be

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Federal Register / Vol. 71, No. 21 / Wednesday, February 1, 2006 / Proposed Rules 5203

expanded to allow registered blood significant regulatory action as defined parts 203 and 205 be amended as
establishments that also provide health by the Executive order. follows:
care services to distribute drugs other The Regulatory Flexibility Act
than blood derivatives that might be requires agencies to analyze regulatory PART 203—PRESCRIPTION DRUG
used to treat blood disorders. We are options that would minimize any MARKETING
seeking information that includes, but is significant impact of a rule on small 1. The Authority citation for 21 CFR
not limited to, the number of entities entities. Because this rule proposes a part 203 continues to read as follows:
affected; how often drugs used to treat narrow revision that is intended to
blood disorders are distributed by Authority: 21 U.S.C. 331, 333, 351, 352,
maintain the status quo, the agency 353, 360, 371, 374, 381.
registered blood establishments and certifies that the proposed rule will not 2. Section 203.3 is amended by
whether the nature of this practice is have a significant economic impact on revising paragraph (q) to read as follows:
critical; and, any negative impact on a substantial number of small entities.
public health if the exclusion allows Therefore, under the Regulatory § 203.3 Definitions.
only for the distribution of blood Flexibility Act, no further analysis is * * * * *
derivatives. Actual numbers, statistics, required. (q) Health care entity means any
and examples would help us determine Section 202(a) of the Unfunded person that provides diagnostic,
the best course of action. In addition, we Mandates Reform Act of 1995 requires medical, surgical, or dental treatment, or
seek comments on whether hemophilia that agencies prepare a written chronic or rehabilitative care, but does
treatment centers, which are health care statement, which includes an not include any retail pharmacy or any
entities but are not registered blood assessment of anticipated costs and wholesale distributor. Except as
establishments, should be included benefits, before proposing ‘‘any rule that provided in § 203.22(h), a person cannot
within the scope of this exception. includes any Federal mandate that may simultaneously be a ‘‘health care entity’’
IV. Federalism result in the expenditure by State, local, and a retail pharmacy or wholesale
and tribal governments, in the aggregate, distributor.
FDA has analyzed this proposed rule or by the private sector, of $100,000,000 * * * * *
in accordance with the principles set or more (adjusted annually for inflation) 3. Section 203.22 is amended by
forth in Executive Order 13132. FDA in any one year.’’ The current threshold adding paragraph (h) to read as follows:
has determined that the proposed rule after adjustment for inflation is $115
does not contain policies that have million, using the most current (2003) § 203.22 Exclusions.
substantial direct effects on the States, Implicit Price Deflator for the Gross * * * * *
on the relationship between the Domestic Product. FDA does not expect (h) The sale, purchase, or trade of, or
National Government and the States, or this proposed rule to result in any 1- the offer to sell, purchase, or trade any
on the distribution of power and year expenditure that would meet or blood derivative by a registered blood
responsibilities among the various exceed this amount. establishment that qualifies as a health
levels of government. Accordingly, the care entity, as long as all of the health
agency tentatively concludes that the VII. Comments care services that it provides are related
proposed rule does not contain policies Interested persons may submit to the to its activities as a registered blood
that have federalism implications as Division of Dockets Management (see establishment.
defined in the Executive order and, ADDRESSES) written or electronic
consequently, a federalism summary comments regarding this document. PART 205—GUIDELINES FOR STATE
impact statement is not required. Submit a single copy of electronic LICENSING OF WHOLESALE
comments or two paper copies of any PRESCRIPTION DRUG DISTRIBUTORS
V. Paperwork Reduction Act of 1995
mailed comments, except that 4. The Authority citation for 21 CFR
FDA tentatively concludes that this individuals may submit one paper copy. part 205 continues to read as follows:
proposed rule contains no collections of Comments are to be identified with the
information. Therefore, clearance by the Authority: 21. U.S.C. 351, 352, 353, 371,
docket number found in brackets in the
Office of Management and Budget under 374.
heading of this document. Received 5. Section 205.3 is amended by
the Paperwork Reduction Act of 1995 comments may be seen in the Division
(44 U.S.C. 3501–3520) (PRA) is not revising paragraph (h) to read as
of Dockets Management between 9 a.m. follows:
required. and 4 p.m., Monday through Friday.
VI. Analysis of Impacts § 205.3 Definitions
List of Subjects
* * * * *
FDA has examined the impacts of the 21 CFR Part 203 (h) Health care entity means any
proposed rule under Executive Order person that provides diagnostic,
12866 and the Regulatory Flexibility Act Drugs, Labeling, Manufacturing,
Prescription drugs, Reporting and medical, surgical, or dental treatment, or
(5 U.S.C. 601–612), and the Unfunded chronic or rehabilitative care, but does
Mandates Reform Act of 1995 (Public recordkeepng requirements,
Warehouses. not include any retail pharmacy or any
Law 104–4). Executive Order 12866 wholesale distributor. Except as
directs agencies to assess all costs and 21 CFR Part 205 provided in § 203.22(h), a person cannot
benefits of available regulatory simultaneously be a ‘‘health care entity’’
alternatives and, when regulation is Intergovernmental relations,
Prescription drugs, Reporting and and a retail pharmacy or wholesale
necessary, to select regulatory distributor.
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approaches that maximize net benefits recordkeeping requirements, Security


(including potential economic, measures, Warehouses. Dated: November 17, 2005.
environmental, public health and safety, Therefore, under the Federal Food, Jeffrey Shuren,
and other advantages; distributive Drug, and Cosmetic Act and under the Assistant Commissioner for Policy.
impacts; and equity). The agency authority delegated to the Commissioner [FR Doc. E6–1225 Filed 1–31–06; 8:45 am]
believes that this proposed rule is not a of Food and Drugs, it is proposed that BILLING CODE 4160–01–S

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