December 22, 2011

Kristin Fitzgerald

Environmental Protection Agency
Office of Resource Conservation and Recovery

5304P
Washington, DC 20460

Via Electronic Transmission to Fitzgerald.Kristin@epa.gov

Re: Questions on the Reverse Drug Distribution System

Dear Ms. Fitzgerald :

Thank you for contacting the Healthcare Distribution Management Association (HDMA) with questions

regarding drug reverse distribution. We hope you find the answers included in the attachment to this

letter helpful as you continue to develop the pharmaceutical waste rule

.

In preparing this response, we wanted to clarify certain points and assumptions underly ing some of our

answers, particularly when our explanations cannot be very extensive. Specifically,

 To HDMA, the term “ p rocess” means the act of determining that the product may receive credit
from the manufacturer followed by a determination of the product’s disposition, such as whether

the unit is suitable for resale or donation, should be returned back to the manufacturer in

accordance with the manufacturer’s return good s policy

, or arrange for proper disposal acc ording to

applicable EPA, state and DEA regulations and laws

.

 You will not e that in several places, we st ate that decisions are based on the manufacturers’ return

good s policies. In these policies, manufacturers d efined the products, quantities and other

conditions that must be met when returning a product so that the manufacturer is able to

determine suitab ility for potential reuse or other disposition of the product. On average, a forward

distributor obtain s supplies from approximately 1, 1 00 1 healthcare product manufacturers , and e ach

manufacturer has developed their own return goods policy or polic ies tha t vary from drug to drug or

manufacturer to manufacturer and can change at any time. Moreover, typical forward distribution

companies inventory nearly 56,000 healthcare products. Thus, given the sheer numbers of different

drugs and manufacturers

, we foun d it impossible to provide a single answer for several of the

questions

.

1 The exact number is constantly fluctuating with changes in the marketplace. The 1,100+ number is the measured standard for

the industry for 2011 but reflects an average of the most active and broadest manufacturers. Table 6. 2011

- 2012 HDMA

Factbook. The Facts, Figures & Trends in Healthcare. 2011.HDMA Responses to EPA on RD

December 22, 2011 2

 HDMA has prepared these questions jointly with our forward and r everse d istributor members.

Howeve r, they may, on their own, choose to provide responses to some of the questions.

If you have any questions, please do not hesitat e to contact me at 703

- 885

- 0240 or at

aducca@hdmanet.org

.

Sincerely,

Anita T. Ducca
Vice President, Regulatory AffairsHDMA Responses to EPA on RD

December 22, 2011 3



## Attachment

– An swers to EPA’s Questions for Reverse Distributors

Provided by the Healthcare Distribution Management Association

December 22, 2011

General Questions about the Returns Process

1. Who initiates the return?

 Typically, the reverse distributor’s (RD) customer ha s a process in place for dete rmining when

to send a return.

 T hese p rocesses vary for each facility.

Does the RD alert the healthcare facility that credit is available for certa in pharmaceuticals or do

health care facilities periodically go through invent ory to return un

- needed items?

 As noted above, healthcare facilities typically have process es in place for reviewing inventory

and returning products

.

 T he t ypical i ndustry practice is that a customer ships the product back to a RD at which point

the RD ev aluates the product for credit worthiness.

 The RD usually maintains records of manufacturer s’ return good

s policies which will include

credit information. Once the products are processed at the RD, credit eligibility is

determined in accordance with the prod uct manufacturer’s return goods policy.

2. Do es the RD have reps that go to healthcare facilities to pull and prepare pharmaceuticals for

shipment to the RD?

 It depends on the business model of the RD and on arrangements with the customer/

healthcare faci lity

.

 If an RD employee performs this process, it is usually at the customer ’ s request.

If so, does the rep know which items will/will not receive credit?

 The person pulling the product on behalf of the customer , in order to place it in reverse

distrib ution

, does not have knowledge about which products will receive credit and which

will not.

 Credit determination is assessed at the RD f acility and is based on the product

manufacturer ’s return goods policy.

3. Is credit received per container?

 Each man ufacturer has its own policies regarding what will and will not receive credit

.

 Credit can be given per container.

 These policies v a ry from m anufacturer to manufacturer and are subject to change.HDMA Responses to EPA on RD

December 22, 2011 4

Per pill if container has been opened?

 Yes, it may be po ssible to obtain credit o n a “per pill” count, also referred to as a partial

return, contingent on the manufacturer’s return goods policy.

4. Do healthcare facilities return pharmaceuticals from the patient floors (e.g., drugs that have been

re

- packaged)?

 It is possible, yes

, and the healthcare facilities would probably have a better understanding

of this type of return and their frequency.

Are re

- packaged pharmaceuticals creditable?

 Generally, no, but there are instances where a manufacturer’s return go od s policy will permit

credit for repackaged pharmaceuticals. Availability of credit may d epend upon the product

condition and the reason for the return (e.g., a manufacturer

- initiated recall of all product s
from the market for safety reasons).

5. Once the s hipment arrives at the RD facility, what is the timeframe for processing?

 Proces sing time varies by company, and is performed in accordance with local, state and

federal requirements applicable to the RD’s facility

.

 Allowing sufficient flexibility in the timeframe for processing products is critical for the

industry to accommodate various business models

, customer needs, and state, local and

federal regulatory requirements

, including DEA , DOT and FDA

.

6. Are generic brands creditable?

 Yes, in accordance wit h the manufacturer ’s return goods policy.

7. Do expired items typically get credit?

 Generally, the expired items are eligible for credit in accordance with the manufacturer ’s

return goods policy.

8. How is the RD paid for its services?

 On the advice of coun sel, HDMA declines to facilitate a response to this question. HDMA

antitrust policy forbids discussion in HDMA

- sponsored activities of prices for services,

co mponents of prices for services and other related matters involving terms and conditionsHDMA Responses to EPA on RD

December 22, 2011 5

of sale. A company must exercise its independent business judgment in pricing its services

and products, dealing with its customers and suppliers and choosing the markets in which it

will compete.

Does the RD receive a percentage of the credit?

 See above

.

I s there a flat fee?

 See above

.

Are there additional charges to the healthcare facility for waste management?

 See above

.

9. Under what circumstances would a healthcare facility return pharmaceuticals to a (forward)

distributor in lieu of sending to a RD?

 Depending on the contractual agreement with the customer, returns from a healthcare

facility to a (forward) distributor could be due to issues such as mis

- shipped product, over

orders, da maged product, recalled product or general returns.

Do you proces s pharmaceuticals from (forward) distributors?

 Yes

10. When pharmaceuticals are received at the RD, are they ever shipped to another RD’s facility for

crediting?

 Yes, depending on the instructions in the product manufacturer ’s return goods policy.

11. Do you accept non

- pharmaceutical products?

 Yes

12. How long are pharmaceuticals kept on

- site after providing credit?

 It varies. Products are processed in accordance with the local, state and federal

requirements applicable to the RD’s facility

.HDMA Responses to EPA on RD

December 22, 2011 6

How long are t he pharmaceuticals that become hazardous wastes kept on

- site?

 Waste is stored in acco rdance with EPA, RCRA or state e nvironmental agency requirements

which vary based on the location ’ s generator status (i.e., CESQG, SQG and LQG status).

On average

, ho w long does it take a pharmaceutical to cycle through your facility?

 It varies. Products are processed in accordance with the local, state and federal

requirements applicable to the RD’s facility and based on manufacturer return goods policy

instructions

.

Shipment

1. Are returned pharmaceuticals shipped to the RD via commercial mail carrier or USPS or private

hauler ?

 Yes, returns are shipped by any of the above mentioned methods.

Is the shipment tracked and is the healthcare facility notified by the RD that the shipment has

been received?

 Ship ping, tracking and notification vary

.

Do healthcare facilities notify the RD that a shipment has been sent?

 Shipment notification varies.

2. Does the board of pharmacy require RDs to keep an inventory of everyt hing received at an RD?

 B oards o

f P harmacy requirements vary by state.

 FDA regulations also require establishment of distribution procedures and maintenance of

certain distribution records in accordance with current Good Manufacturing Practices . See

21 C.F.R. § 211.150 (distribution procedures)

, §211.196 (

records of name, strength of dosage

form, name and address of consignee, etc.).

3. Are controlled substances shipped separately from other pharmaceuticals?

 C ontrolled substance s are shipped in accordanc e with DEA regulations which do not

specifically require segregation.HDMA Responses to EPA on RD

December 22, 2011 7

Can you explain more about the process of handling returned controlled substances?

 Controlled substances are handled i n accordance with DEA regulations . These regulations

are exten sive and cover security for storage, shipment, handling, accompanying order forms

and other documentation. See 21 C.F.R. 1300 and the following sections for a complete

description.

4. Have there been incidences where shipments have been lost or stolen?

 Ca rgo theft and loss information for forward and reverse distributors is available from FDA
(through its Cargo Theft Website ) and DEA (through DEA Form 106) , as well as through local

law enforcement. FDA reporting is voluntary. DEA reporting is required under the Agency’s

regulations

. 2 While we do not track individual incidents on an industry level, forward and

reverse distributors have secure system s for management of these incidenc es and are in
compliance with al l applicable state and federal requirement s.

Waste Determination and Management

1. What percent age of returned pharmaceuticals is typically RCRA hazardous waste once it is

determined credit will or will not be given?

 We es timate that 5 percent or less of returned pharmaceuticals are classified as RCRA

hazardous waste.

Typically, do pharmaceuticals that meet RCRA’s definition of a hazardous waste get credit?

 Waste classification does not have bearing on credit. Credit i s based on the manufacturer

return goods policy.

Do you ever manage non

- hazardous pharmaceuticals as RCRA hazardous waste?

 It varies

, but the practice depends

, for example, on the RD’s business model, the

requirements of the licensed treatment

, storage and d isposal facilities and EPA, state , local

and federal requirements

.

2. Is the manufacturer always contacted prior to disposal of a creditable pharmaceutical?

 Not always. It varies by manufacturer and contractual arrangements.

2 21 C.F.R. 1301.74(c).HDMA Responses to EPA on RD

December 22, 2011 8

For a non

- creditable pharmace utical?

 It varies by manufacturer and contractual arrangements.

3. What percentage of returned pharmaceuticals is sent back to the manufacturer versus being

disposed of directly by the RD?

 RDs do not dispose of pharmaceuticals directly (unless they are a l icensed treatment, storage

and disposal facility) . However, the percentages they send back to manufacturers vary

depending, for example, on the RD’s business model.

 RDs manage pharmaceuticals in accordance with state, local and federal requirements and if

necessary, arrange for disposal by a licensed contract disposal company.