**SUPPORTING STATEMENT**

Prescription Drug Marketing Act of 1987

Administrative Procedures, Policies, and Requirements

21 CFR Part 203

Docket Number 02N-0486

**[Justification]{.underline}**

**1. [Circumstances of Information Collection]{.underline}**

The Food and Drug Administration (FDA) is requesting OMB approval under
the Paperwork Reduction Act (44 USC 35) for the reporting and
recordkeeping requirements contained in the regulations implementing the
Prescription Drug Marketing Act of 1987 (PDMA) (Pub. L. 100-293). PDMA
was intended to ensure that drug products purchased by consumers are
safe and effective and to avoid an unacceptable risk that counterfeit,
adulterated, misbranded, subpotent, or expired drugs are sold.

PDMA was enacted by Congress because there were insufficient safeguards
in the drug distribution system to prevent the introduction and retail
sale of substandard, ineffective, or counterfeit drugs, and that a
wholesale drug diversion submarket had developed that prevented
effective control over the true

sources of drugs.

Congress found that large amounts of drugs had been reimported into the
United States as American goods returned causing a health and safety
risk to American consumers because the drugs may become subpotent or
adulterated during foreign handling and shipping. Congress also found
that a ready market for prescription drug reimports had been the
catalyst for a continuing series of frauds against American
manufacturers and had provided the cover for the importation of foreign
counterfeit drugs.

Congress also determined that the system of providing drug samples to
physicians through manufacturers\' representatives had resulted in the
sale to consumers of misbranded, expired, and adulterated
pharmaceuticals.

The bulk resale of below-wholesale priced prescription drugs by health
care entities for ultimate sale at retail also helped to fuel the
diversion market and was an unfair form of competition to wholesalers
and retailers who had to pay otherwise prevailing market prices.

FDA is requesting OMB approval for the following reporting and
recordkeeping requirements:

REPORTING REQUIREMENTS

21 CFR 203.11 Applications for reimportation to provide emergency
medical care.

21 CFR 203.30(a)(1),(b) Drug sample requests (drug samples distributed
by mail or common carrier).

21 CFR 203.30(a)(3),(a)(4),(c) Drug sample receipts (receipts for drug
samples distributed by mail or common carrier).

21 CFR 203.31(a)(1),(b) Drug sample requests (drug samples distributed
by means other than the mail or a common carrier).

21 CFR 203.31(a)(3),(a)(4),(c) Drug sample receipts (drug samples
distributed by means other than the mail or a common carrier).

21 CFR 203.37(a) Investigation of falsification of drug sample records.

21 CFR 203.37(b) Investigation of a significant loss or known theft of
drug samples.

21 CFR 203.37(c) Notification that a representative has been convicted
of certain offenses involving drug samples.

21 CFR 203.37(d) Notification of the individual responsible for
responding to a request for information about drug samples.

21 CFR 203.38(a) Printing lot or control numbers on the drug sample unit
label.

21 CFR 203.39(g) Preparation by a charitable institution of a
reconciliation report for donated drug samples.

21 CFR 203.50(a) Drug origin statement.

RECORDKEEPING REQUIREMENTS

21 CFR 203.23(a),(b) Credit memo for returned drugs.

21 CFR 203.23(c) Documentation of proper storage, handling, and shipping
conditions for returned drugs.

21 CFR 203.30(a)(2)

and 21 CFR 203.31(a)(2) Verification that a practitioner requesting a
drug sample is licensed or authorized to prescribe the product.

21 CFR 203.31(d)(1),(d)(2) Contents of the inventory record and
reconciliation report required for drug samples distributed by
representatives.

21 CFR 203.31(d)(4) Investigation of apparent discrepancies and
significant losses revealed through the reconciliation report.

21 CFR 203.31(e) Lists of manufacturers\' and distributors\'
representatives.

21 CFR 203.34 Written policies and procedures describing administrative
systems.

21 CFR 203.37(a) Report of investigation of falsification of drug sample
records.

21 CFR 203.37(b) Report of investigation of significant loss or known
theft of drug samples.

21 CFR 203.38(b) Records of drug sample distribution identifying lot or
control numbers of samples distributed.

21 CFR 203.39(d) Records of drug samples destroyed or returned by a
charitable institution.

21 CFR 203.39(e) Record of drug samples donated to a charitable
institution.

21 CFR 203.39(f) Records of donation and distribution or other
disposition of donated drug samples.

21 CFR 203.39(g) Inventory and reconciliation of drug samples donated to
charitable institutions.

21 CFR 203.50(a) Drug origin statement.

21 CFR 203.50(b) Retention of drug origin statement for 3 years.

21 CFR 203.50(d) List of authorized distributors of record.

**2. [Purpose and Use of Information]{.underline}**

The reporting and recordkeeping requirements in the final regulations
are intended to help achieve the following goals:

\(1\) To ban the reimportation of prescription drugs produced in the
United States, except when reimported by the manufacturer or under FDA
authorization for emergency medical care;

\(2\) To ban the sale, purchase, or trade, or the offer to sell,
purchase, or trade, of any drug sample;

\(3\) To limit the distribution of drug samples to practitioners
licensed or authorized to prescribe such drugs or to pharmacies of
hospitals or other health care entities at the request of a licensed or
authorized practitioner;

\(4\) To require licensed or authorized practitioners to request samples
in writing;

\(5\) To mandate storage, handling, and recordkeeping requirements for
drug samples;

\(6\) To prohibit, with certain exceptions, the sale, purchase, or trade
of, or the offer to sell, purchase, or trade, prescription drugs that
were purchased by hospitals or other health care entities, or which were
donated or supplied at a reduced price to a charitable organization;

\(7\) To require unauthorized wholesale distributors to provide, prior
to the wholesale distribution of a prescription drug to another
wholesale distributor or retail pharmacy, a statement identifying each
prior sale, purchase, or trade of the drug.

**3. [Use of Improved Information Technology]{.underline}**

The final rule incorporates part 11 of the agency\'s regulations and
permits the use of electronic records, electronic signatures, and
handwritten signatures executed to electronic records (either alone or
in combination with paper records) to create and maintain required
records and signatures. An electronic record is any combination of text,
graphics, data, audio, pictorial, or other information representation in
digital form that is created, maintained, archived, retrieved, or
distributed by a computer system. Use of photographic records and
electrographic records, such as records maintained on microfilm,
microcard, microfiche, and xerographic copies, is also permitted under
the final rule. The agency believes that the use of these types of media
will provide industry with a high degree of flexibility in designing
recordkeeping systems that use of such systems will result in greater
efficiency and lower costs for industry than paper based systems.

**4. [Efforts to Identify Duplication]{.underline}**

The information collection required as a result of 21 CFR 203 does not
duplicate any other information collection. The requirements are
specifically mandated by the Prescription Drug Marketing Act of 1987.

**5. [Involvement of Small Entities]{.underline}**

In developing the final rule, the agency took several steps to minimize
the economic impact on small entities. The agency reduced or eliminated
several of the requirements under the proposed rule. Under the proposal,
the inventory of drug samples held by sales representatives would be
conducted by an executive other than the representative or the immediate
supervisor. Comments emphasized the costliness of this requirement,
indicating it was time consuming and entailed travel expenses to
regional sales offices. In response to these comments, the final rule
allows sales representatives and their supervisory personnel to conduct
the inventory and reconciliation functions. Also, in response to
comments on the proposal, FDA reduced the administrative burden
associated with the donation of prescription drug samples to charity.
Furthermore, FDA found it unnecessarily burdensome to require that lot
or control numbers appear on drug sample records, receipts, and
reconciliation reports, as proposed. Therefore, the final rule adds
flexibility by allowing the recording of lot or control numbers on other
types of records. Also, in response to comments, the agency is allowing
the use of adhesive stickers on retail units to designate a sample unit
as a sample. The final rule reduces the drug sample record retention
period, which was proposed as 3 years from the sample expiration date.
The agency decided that retention of drug sample records for 3 years
from the date of their creation is sufficient for recall facilitation
and proper accountability over sample distribution. The agency analyzed
each of the requirements of the final rule and determined that all of
them are necessary to ensure that misbranded, adulterated, or expired
pharmaceuticals are not distributed to consumers. In addition, the
license verification requirement was added in response to comment. The
agency determined that this requirement was important to meet the
objectives of PDMA, and that the per-company costs associated with it
are expected to decline with new verification methodology. To add
flexibility, the final rule permits the electronic transmission and
storage of all paperwork and forms.

**6. [Consequences If Information Collected Less
Frequently]{.underline}**

Congress intended that PDMA will protect the public against the threat
of subpotent, adulterated, counterfeit, and misbranded drugs posed by
the existence of drug diversion schemes and a drug diversion submarket,
and the absence of appropriate controls over and creation and
maintenance of appropriate records regarding the distribution of
prescription drugs. Accordingly, the scope and frequency of the
requirements is important to establish procedures and requirements
pertaining to the reimportation and wholesale distribution of
prescription drugs; the sale, purchase, or trade of prescription drugs
by hospitals, health care entities, and charitable institutions; and the
distribution of prescription drug samples.

**7. [Consistency with the Guidelines in 5 CFR 1320.6]{.underline}**

There are no inconsistencies with this provision.

**8. [Consultation Outside the Agency]{.underline}**

In the [Federal Register]{.underline} of December 2, 2003 (64 FR 26657),
FDA requested comments on the proposed collection of information. FDA
received 1 comment requesting that it be deemed an \"other health care
entity\" and be permitted to receive and dispense samples to its
patients. This comment does not pertain to the information collection
estimates in the December 2, 2002, notice, and has been forwarded to the
appropriate office in FDA that reviews these types of requests

**9. [Remuneration of Respondents]{.underline}**

FDA has not provided and has no intention to provide any payment or gift
to respondents under these requirements.

**10. [Assurance of Confidentiality]{.underline}**

Confidentiality of the information submitted under these requirements is
protected under 21 CFR part 20. The unauthorized use or disclosure of
trade secrets is specifically prohibited under Section 310(j) of the
Act.

**11. [Questions of a Sensitive Nature]{.underline}**

There are no questions of a sensitive nature.

**12. [Estimates of Annualized Hour Burden]{.underline}**

  -----------------------------------------------------------------------
  **Estimated Annual Reporting Burden**

  -----------------------------------------------------------------------

+-----------+--------+------------+-------------+----------+---------+
| **21 CFR  | **     | **Number   | **Total     | **Hours  | **      |
| Section** | Number | of         | Annual**    | per**    | Total** |
|           | of**   | Responses  |             |          |         |
|           |        | per        | **          | **Re     | **      |
|           | **R    | Re         | Responses** | sponse** | Hours** |
|           | espond | spondent** |             |          |         |
|           | ents** |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| *         | **12** | **1**      | **12**      | **.5**   | **6**   |
| *203.11** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203.    | **61   | **12**     | **743,532** | **.06**  | **4     |
| 30(a)(1); | ,961** |            |             |          | 4,612** |
| (b)**     |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203     | **61   | **12**     | **743,532** | **.06**  | **4     |
| .30(a)(3) | ,961** |            |             |          | 4,612** |
| & (a)(4); |        |            |             |          |         |
| (c)**     |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203.    | **232  | **135**    | **3         | **.04**  | **1,25  |
| 31(a)(1); | ,355** |            | 1,367,925** |          | 4,717** |
| (b)**     |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203     | **232  | **135**    | **3         | **.03**  | **94    |
| .31(a)(3) | ,355** |            | 1,367,925** |          | 1,038** |
| & (a)(4); |        |            |             |          |         |
| (c)**     |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **25** | **1**      | **25**      | **6.00** | **150** |
| 3.37(a)** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | *      | **1**      | **200**     | **6.00** | **      |
| 3.37(b)** | *200** |            |             |          | 1,200** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **50** | **1**      | **50**      | **1.00** | **50**  |
| 3.37(c)** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **2    | **1**      | **2,208**   | **.08**  | **177** |
| 3.37(d)** | ,208** |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **2    | **1**      | **2,208**   | **3.00** | **      |
| 3.38(a)** | ,208** |            |             |          | 6,624** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **3    | **104**    | **334,984** | **2.00** | **66    |
| 3.39(g)** | ,221** |            |             |          | 9,968** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **     | **260**    | **          | **.08**  | **9     |
| 3.50(a)** | 4500** |            | 1,170,000** |          | 3,600** |
+-----------+--------+------------+-------------+----------+---------+
| Total     |        |            |             |          |         |
| Reporting |        |            |             |          |         |
| Burden    |        |            |             |          |         |
| Hours:    |        |            |             |          |         |
| **3,      |        |            |             |          |         |
| 056,754** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+

  -----------------------------------------------------------------------
  **Estimated Annual Recordkeeping Burden**

  -----------------------------------------------------------------------

+-----------+--------+------------+-------------+----------+---------+
| **21 CFR  | **     | **Number   | **Total     | **Hours  | **      |
| Section** | Number | of         | Annual**    | per**    | Total** |
|           | of**   | Responses  |             |          |         |
|           |        | per        | **          | **Re     | **      |
|           | **R    | Re         | Responses** | sponse** | Hours** |
|           | espond | spondent** |             |          |         |
|           | ents** |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **2       | **31   | **5**      | **158,380** | **.25**  | **3     |
| 03.23(a); | ,676** |            |             |          | 9,595** |
| (b)**     |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **31   | **5**      | **158,380** | **.08**  | **1     |
| 3.23(c)** | ,676** |            |             |          | 2,670** |
+-----------+--------+------------+-------------+----------+---------+
| **203.    | **2    | **100**    | **220,800** | **.50**  | **11    |
| 30(a)(2); | ,208** |            |             |          | 0,400** |
| 203.3     |        |            |             |          |         |
| 1(a)(2)** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203     | **2    | **1**      | **2,208**   | *        | **8     |
| .31(d)(1) | ,208** |            |             | *40.00** | 8,320** |
| &         |        |            |             |          |         |
| (d)(2)**  |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+
| **203.3   | *      | **1**      | **442**     | *        | **1     |
| 1(d)(4)** | *442** |            |             | *24.00** | 0,608** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **2    | **1**      | **2,208**   | **1.00** | **      |
| 3.31(e)** | ,208** |            |             |          | 2,208** |
+-----------+--------+------------+-------------+----------+---------+
| *         | **2    | **1**      | **2,208**   | *        | **8     |
| *203.34** | ,208** |            |             | *40.00** | 8,320** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **25** | **1**      | **25**      | *        | **450** |
| 3.37(a)** |        |            |             | *18.00** |         |
+-----------+--------+------------+-------------+----------+---------+
| **20      | *      | **1**      | **200**     | *        | **      |
| 3.37(b)** | *200** |            |             | *18.00** | 3,600** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **2    | **14,543** | **3         | **.02**  | **64    |
| 3.38(b)** | ,208** |            | 2,111,457** |          | 2,229** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **65** | **104**    | **6,760**   | **1.00** | **      |
| 3.39(d)** |        |            |             |          | 6,760** |
+-----------+--------+------------+-------------+----------+---------+
| **20      | **3    | **104**    | **334,984** | **.50**  | **16    |
| 3.39(e)** | ,221** |            |             |          | 7,492** |
+-----------+--------+------------+-------------+----------+---------+
| 203.39(f) | 3,221  | 104        | 334,984     | 8.00     | 2,      |
|           |        |            |             |          | 679,872 |
+-----------+--------+------------+-------------+----------+---------+
| 203.39(g) | 3,221  | 104        | 334,984     | 8.00     | 2,      |
|           |        |            |             |          | 679,872 |
+-----------+--------+------------+-------------+----------+---------+
| 203.50(a) | 4,500  | 260        | 1,170,000   | .17      | 198,900 |
+-----------+--------+------------+-------------+----------+---------+
| 203.50(b) | 6,500  | 260        | 1,690,000   | .50      | 845,000 |
+-----------+--------+------------+-------------+----------+---------+
| 203.50(d) | 691    | 1          | 691         | 2.00     | 1,382   |
+-----------+--------+------------+-------------+----------+---------+
| **Total   |        |            |             |          |         |
| Reco      |        |            |             |          |         |
| rdkeeping |        |            |             |          |         |
| Burden    |        |            |             |          |         |
| Hours:    |        |            |             |          |         |
| 7,        |        |            |             |          |         |
| 577,678** |        |            |             |          |         |
+-----------+--------+------------+-------------+----------+---------+

Note: There are no operating and maintenance costs or capital costs
associated with this collection of information.

**13. [Estimates of Annualized Cost Burden to Respondents]{.underline}**

FDA\'s Economics Staff estimates an average industry wage rate of
\$50.00 per hour for preparing and submitting the information collection
requirements under 21 CFR 203. This figure is an average of the
following wage rates (based on the percentage of time required for each
type of employee): Upper management at \$70.00 per hour; middle
management at \$35.00 per hour; and clerical assistance at \$23.00 per
hour. Using the averaged wage rate of \$50.00 per hour, and multiplied
times the total hour burden estimated above (2,300,628 + 1,061,368 =
3,361,996), the total cost burden to respondents is \$168,099,800.

**14. [Estimates of Annualized Cost Burden to the
Government]{.underline}**

FDA estimates 10 FTE\'s will be required to review reports and to
inspect records resulting from the regulation. If each FTE costs
\$100,000, the total cost to the Federal Government will be \$1,000,000.

**15. [Changes in Burden]{.underline}**

No changes have been made to the estimated burden in this information
collection.

**16. [Time Schedule, Publication and Analysis Plans]{.underline}**

FDA does not intend to publish tabulated results of these information
collection requirements.

**17. [Exemption for Display of Expiration Date]{.underline}**

There are no forms associated with this information collection.

**18.** [**Exceptions to Certification for Paperwork Reduction Act
Submissions**]{.underline}

There are no exceptions to the Certification for Paperwork Reduction
Act Submissions of form OMB 83I.

prapdmaf.ss 4/03