Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 73361 

1Title 21 U.S.C. 802(45) defines a scheduled 

listed chemical product as ‘‘a product that contains 

ephedrine, pseudoephedrine, or 

phenylpropanolamine; and * * * may be marketed 

or distributed lawfully in the United States under 

the Federal Food, Drug, and Cosmetic Act as a 

nonprescription drug.’’

Any such written comments or 

objections being sent via regular mail 

should be addressed, in quintuplicate, 

to the Drug Enforcement 

Administration, Office of Diversion 

Control, Federal Register Representative 

(ODL), Washington, DC 20537, or any 

being sent via express mail should be 

sent to Drug Enforcement 

Administration, Office of Diversion 

Control, Federal Register Representative 

(ODL), 8701 Morrissette Drive, 

Springfield, Virginia 22152; and must be 

filed no later than February 25, 2008. 

Dated: December 17, 2007. 

Joseph T. Rannazzisi, 

Deputy Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration. 

[FR Doc. E7–25048 Filed 12–26–07; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Manufacturer of Controlled 

Substances; Notice of Application 

Pursuant to § 1301.33(a) of Title 21 of 

the Code of Federal Regulations (CFR), 

this is notice that on November 15, 

2007, Organix Inc., 240 Salem Street, 

Woburn, Massachusetts 01801, made 

application by renewal to the Drug 

Enforcement Administration (DEA) to 

be registered as a bulk manufacturer of 

the basic classes of controlled 

substances listed in schedule I and II: 

Drug Schedule 

Tetrahydrocannabinols (7370) ..... I 

Cocaine (9041) ............................. II 

The company plans to manufacture 

the listed controlled substances in bulk 

for sale to its customers for research 

purposes. 

Any other such applicant and any 

person who is presently registered with 

DEA to manufacture such substances 

may file comments or objections to the 

issuance of the proposed registration 

pursuant to 21 CFR 1301.33(a). 

Any such written comments or 

objections being sent via regular mail 

should be addressed, in quintuplicate, 

to the Drug Enforcement 

Administration, Office of Diversion 

Control, Federal Register Representative 

(ODL), Washington, DC 20537, or any 

being sent via express mail should be 

sent to Drug Enforcement 

Administration, Office of Diversion 

Control, Federal Register Representative 

(ODL), 8701 Morrissette Drive, 

Springfield, Virginia 22152; and must be 

filed no later than February 25, 2008. 

Dated: December 17, 2007. 

Joseph T. Rannazzisi, 

Deputy Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration. 

[FR Doc. E7–25114 Filed 12–26–07; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

[Docket No. DEA–306E] 

Established Assessment of Annual 

Needs for the List I Chemicals 

Ephedrine, Pseudoephedrine, and 

Phenylpropanolamine for 2008 

AGENCY: Drug Enforcement 

Administration (DEA), Justice. 

ACTION: Notice of Assessment of Annual 

Needs for 2008. 

SUMMARY: This notice establishes the 

initial year 2008 Assessment of Annual 

Needs for certain List I chemicals in 

accordance with the Combat 

Methamphetamine Epidemic Act of 

2005 (CMEA), enacted on March 9, 

2006. 

EFFECTIVE DATE: December 27, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Christine A. Sannerud, PhD, Chief, Drug 

& Chemical Evaluation Section, Drug 

Enforcement Administration, 

Washington, DC 20537, Telephone: 

(202) 307–7183. 

SUPPLEMENTARY INFORMATION: 

Background and Legal Authority 

Section 713 of the Combat 

Methamphetamine Epidemic Act of 

2005 (CMEA) (Title VII of Pub. L. 109–

177) amended section 306 of the 

Controlled Substances Act (CSA) (21 

U.S.C. 826) requiring that the Attorney 

General establish quotas to provide for 

the annual needs for ephedrine, 

pseudoephedrine, and 

phenylpropanolamine. Section 715 of 

the CMEA amended 21 U.S.C. 952 by 

adding ephedrine, pseudoephedrine and 

phenylpropanolamine to the existing 

language concerning importation of 

controlled substances. 

The 2008 Assessment of Annual 

Needs represents those quantities of 

ephedrine, pseudoephedrine, and 

phenylpropanolamine which may be 

manufactured domestically and/or 

imported into the United States in 2008 

to provide adequate supplies of each 

chemical for: The estimated medical, 

scientific, research, and industrial needs 

of the United States; lawful export 

requirements; and the establishment 

and maintenance of reserve stocks. 

The responsibility for establishing the 

assessment has been delegated to the 

Administrator of the DEA by 28 CFR 

0.100. The Administrator, in turn, has 

redelegated this function to the Deputy 

Administrator, pursuant to 28 CFR 

0.104. 

On September 20, 2007, a notice 

entitled, ‘‘Assessment of Annual Needs 

for the List I Chemicals Ephedrine, 

Pseudoephedrine, and 

Phenylpropanolamine for 2008: 

Proposed’’ was published in the Federal 

Register (72 FR 53911). This notice 

proposed the initial 2008 Assessment of 

Annual Needs for ephedrine (for sale), 

ephedrine (for conversion), 

pseudoephedrine (for sale), 

phenylpropanolamine (for sale) and 

phenylpropanolamine (for conversion). 

All interested persons were invited to 

comment on or object to the proposed 

assessments on or before October 11, 

2007. 

Comments Received 

DEA did not receive any comments or 

objections from the more than 1,050 

DEA-registered manufacturers and 

importers directly impacted by this 

notice. However, DEA did receive one 

comment from a law firm representing 

a DEA-registered distributor of 

nonprescription (over-the-counter 

(OTC)) products containing ephedrine, 

pseudoephedrine, or 

phenylpropanolamine. When sold at 

retail, these products are referred to as 

scheduled listed chemical products.1

This same commenter commented to 

DEA’s proposed 2007 Assessment of 

Annual Needs which was published in 

the Federal Register on October 19, 

2006 (71 FR 61801). The comment 

submitted to this notice is virtually 

identical to that previously considered 

by DEA in that the comment included 

the same reports. However, DEA notes 

that the current comment includes one 

new report and one new letter. The new 

report was prepared by an economist 

who was retained by the DEA-registered 

distributor being represented by the law 

firm. The letter was prepared by the 

statistician whose report was submitted 

as part of this commenter’s comments to 

the 2007 proposed assessment. 

The commenter’s comments related to 

DEA’s proposed assessments for 

ephedrine (for sale) and 

pseudoephedrine (for sale). These 

assessments are discussed below within 

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73362 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 

the context of the comment received. As 

DEA did not receive any comments on 

its proposed Assessment of Annual 

Needs for ephedrine (for conversion), 

phenylpropanolamine (for conversion), 

and phenylpropanolamine (for sale), 

DEA is finalizing these values as 

proposed. 

Comments Regarding DEA’s Proposed 

Assessments for Ephedrine (For Sale) 

and Pseudoephedrine (For Sale) 

The commenter indicated its belief 

that the proposed ephedrine assessment 

was insufficient to meet market 

demands for ephedrine-containing OTC 

products. The commenter also 

questioned the sufficiency of the 

assessment for pseudoephedrine. The 

commenter included in its comment a 

report from a statistician, a report from 

an economist, and a report from a 

physician to assess the impact of the 

proposed quota on medical, industrial, 

scientific and other legitimate demand 

for the two chemicals. The commenter’s 

comments, and DEA’s responses, are 

discussed below. 

Economic Impact Analysis and Impact 

on Small Businesses 

The commenter claimed that DEA 

underestimated the economic impact of 

the proposed quota limits. The 

commenter also claimed that DEA failed 

to consider the quota impact on small 

businesses. To support its claims, the 

commenter provided a new report from 

an economist. The commenter claimed 

that ‘‘DEA has violated statutory 

requirements by relying on inaccurate 

and incomplete data to produce its 

economic impact.’’ Based on the new 

report, the commenter asserted that the 

economic impact of DEA’s proposal 

‘‘* * * will be a reduction of revenues 

of $2 billion dollars per year (from the 

effective ban on ephedrine product 

sales) and will result in the termination 

of 25–50 American workers’ jobs per 

firm.’’

DEA Response: The economic 

information submitted by the 

commenter in support of its claims is 

flawed. The commenter has made the 

fundamental mistake of assuming that 

its sales are representative of the 

industry as a whole, an assumption 

which broader industry numbers do not 

support. In addition, the commenter has 

overstated the number of convenience 

stores that are selling these products, 

which further magnifies the errors in its 

analyses. The commenter’s estimates of 

the convenience store market for 

scheduled listed chemical products are 

shown in Table 1. 

TABLE 1.—COMMENTER’S ESTIMATES OF ANNUAL VALUE OF THE EPHEDRINE MARKET

Lower bound Upper bound 

Ephedrine .......................................................... $166 million ...................................................... $237 million. 

Number of Convenience Stores Selling the 

Products*.

72,500.

* Commenter did not provide an upper bound. 

These numbers are at serious variance 

with the most comprehensive data 

available on sales of nonprescription 

medications (OTC drugs) at convenience 

and other nonconventional outlets and 

with estimates of the total size of the 

ephedrine market; nonconventional 

outlets include convenience stores, gas 

stations with convenience stores, gas 

stations without convenience stores, 

liquor stores, and novelty and gift 

stores. Conventional outlets include 

grocery stores, drug stores, discount 

stores, superstores and warehouse 

stores, and general merchandise stores. 

Internet and mail order stores are a third 

category. Table 2 presents data on the 

value of nonprescription medication 

sales at various retail sectors based on 

the 2002 Economic Census of the Retail 

Trade, Product Line, the most recent 

Census data. The table includes the 

number of establishments in the sector, 

the number of those establishments that 

sell nonprescription drugs, the value of 

nonprescription sales in the sector, and 

the value of all sales in drug, health, and 

beauty aids. Nonprescription drugs are 

a subset of the larger category; the value 

of the broader category is listed because 

it was used to derive an estimate of sales 

of nonprescription drugs for sectors 

whose sales the Census did not 

disaggregate. The final column lists the 

percentage of an establishment’s sales 

that the Census reported 

nonprescription drugs represent for 

those establishments that sell the 

products. 

TABLE 2.—CENSUS DATA ON PRODUCT LINE SALES BY SECTOR

[Thousand $] 

Retail sector 

Number of 

establishments 

Number of 

establishments 

w/OTC 

drugs 

OTC drug 

sales 2002 

All drug, 

health, and 

beauty aids 

OTC drugs 

as % of 

all sales 

Grocery .................................................................................................... 66,150 26,029 $2,670,914 $35,172,224 1.3 

Convenience Store .................................................................................. 29,212 12,399 133,263 443,116 1.6 

Specialty Food ......................................................................................... 24,485 194 2,551 24,045 1.6 

Liquor Store ............................................................................................. 28,957 1,496 19,344 89,541 2 

Drug and Personal Care .......................................................................... 81,797 36,797 8,348,218 140,759,601 4.7 

Gas Station with Convenience Store ....................................................... 93,691 * 24,597 * 248,082 824,904 ***<0.4 

Gas Station .............................................................................................. 27,755 * 685 * 7,488 70,577 ***<0.1 

Discount Store ......................................................................................... 5,650 2,079 1,439,227 22,025,430 1.1 

Superstore + Club .................................................................................... 2,912 2,758 2,270,530 21,066,107 1.2 

Other general merchandise ..................................................................... 28,546 11,840 167,951 3,357,825 1.2 

Gift and novelty ........................................................................................ 35,795 * 1,686 * 47,973 159,515 ***<1 

Electronic and Mail Order ........................................................................ 15,910 250 565,305 29,618,519 13 

Total .................................................................................................. 440,860 120,810 15,920,846 253,611,404 ....................

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Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 73363 

2A.C. Nielsen data from Consumer Healthcare 

Products Association (http://www.chpainfo.org/ 

ChpaPortal/PressRoom/Statistics/ 

OTCSalesbyCategory.htm). 3The A.C. Nielsen data were used to estimate 

only a ratio of the cough and cold medication to the 

total OTC medication market. The total value of the 

market was estimated based on the 2002 Census 

data inflated to 2006 dollars. The Nielsen data do 

not include Wal-Mart and may not include many 

convenience stores. In addition, the Nielsen data 

include a number of product lines that either are 

not nonprescription drugs (e.g., toothpaste) or mix 

nonprescription drugs and other products (e.g., first 

aid ointments and bandaids). The lower value of the 

range is based on inclusion of every OTC product 

line listed in the Nielsen data except toothpaste and 

sunscreens. The higher value excludes eye 

products, first aid, foot preparations, oral care, sun 

products, and undefined ‘‘others.’’ Note that the 

higher value will overstate the value of the cough 

and cold medication market because it includes 

some non-drug products, such as cough drops. 

4 Data available at http://www.drugtopics.com. 

Note that the data probably do not cover 

convenience stores and other nonconventional 

outlets. Even the lower estimate of the 

pseudoephedrine part of the market is overstated 

because it includes sales values for product lines 

that contain 4 to more than 20 products, only one 

of which contains pseudoephedrine. 

5As discussed in DEA’s October 19, 2006, 

‘‘Assessment of Annual Needs for the List I 

Chemicals Ephedrine, Pseudoephedrine, and 

Phenylpropanolamine for 2007: Proposed’’ (71 FR 

61801) and a subsequent notice establishing the 

assessment for 2007 (72 FR 53908, September 20, 

2007), since the manufacture and importation of 

ephedrine, pseudoephedrine, and 

phenylpropanolamine were not previously 

regulated through the establishment of an 

assessment of annual needs, DEA obtained 

assistance from a private independent contractor, 

IMS Health Government Solutions, to develop the 

initial estimate of the medical needs of the United 

States of ephedrine and pseudoephedrine. IMS 

provided DEA with two reports: ‘‘Methodology 

Used in Developing Preliminary Estimates of 

Ephedrine and Pseudoephedrine 2005 Legitimate 

Use’’ (and ‘‘2005 Ephedrine/Pseudoephedrine 

Legitimate Medical Use Methodology and Final 

Report’’ (July 3, 2007). Both reports may be found 

at http://www.deadiversion.usdoj.gov/meth/ 

index.html. 

6Comment to ‘‘Import and Production Quotas for 

Certain List I Chemicals’’ (72 FR 37439, July 10, 

2007) [Docket No. DEA–293, RIN 1117–AB08] 

available at http://www.regulations.gov. 

TABLE 2.—CENSUS DATA ON PRODUCT LINE SALES BY SECTOR—Continued 

[Thousand $] 

Retail sector 

Number of 

establishments 

Number of 

establishments 

w/OTC 

drugs 

OTC drug 

sales 2002 

All drug, 

health, and 

beauty aids 

OTC drugs 

as % of 

all sales 

All Nonconventional ** ............................................................... 215,410 40,863 456,150 1,587,653 ....................

* OTC sales not listed separately in Census data; OTC value estimated based on percentage of OTC to all drug, health, and beauty products 

sold at regular convenience stores (i.e., convenience stores that are not part of gas stations). Number of stores estimated using ratio of regular 

convenience stores that carry OTC to those that cover all drug, health, and beauty aids. 

** Nonconventional outlets include convenience stores, gas stations with and without convenience stores, liquor stores, and novelty stores. 

*** Percentage is the percentage that all drug, health, and beauty aid products sales represent of total sales; the nonprescription medications 

are a subset of these sales. 

The nonconventional outlets—

convenience stores, gas stations with 

and without convenience stores, novelty 

stores, and liquor stores—make up only 

about three percent of the total market 

for nonprescription drugs. Using A.C. 

Nielsen data 2 on the growth of the OTC 

market from 2002 to 2006 and the 

Census data on the value of the market, 

the annual value of nonprescription 

drug sales for nonconventional outlets 

in 2006 is estimated to be about $532 

million and the total market for all retail 

sectors is about $18 billion. 

Nonprescription drugs contain a wide 

range of medications. Data from the 

Consumer Healthcare Products 

Association and A.C. Nielsen indicate 

that cough and cold medications make 

up about 27 percent to 40 percent of the 

total OTC market, or about $4.8 billion 

to $7.3 billion in 2006 (other major 

groups include analgesics and heartburn 

medications).3 The cough and cold 

medications include a variety of drugs, 

from cough syrups to antihistamines. 

Because there is no reason to believe 

that nonconventional outlets selling 

nonprescription drugs sell more or less 

cough or cold medications in proportion 

to other nonprescription drugs than any 

other retail outlet, it is reasonable to 

estimate that the total value of their 

sales for all cough and cold drugs in 

2006 was approximately $142 million to 

$215 million (3 percent of the total), or 

somewhat less than the commenter 

estimated the market for ephedrine 

alone to be. 

Ephedrine and pseudoephedrine 

constitute a subset of the cough and 

cold medication market. DEA has not 

been able to obtain any data on what 

percentage of the market they represent. 

In 2006, estimates of the retail value of 

products containing one of the 

chemicals that DEA and the Food and 

Drug Administration obtained from 

market researchers ranged from $500 

million to $1.5 billion, but the estimates 

involved considerable uncertainty; the 

estimates were also based on the market 

before many manufacturers began to 

market new products that substituted 

phenylephrine for pseudoephedrine. 

Data from market research firm 

Information Resources, Inc. on the top 

200 over-the-counter brands (including 

private label products) sold through 

grocery stores, drug stores, and mass 

market stores in 2006 indicate that at 

least 65 percent of the cough and cold 

medications do not contain 

pseudoephedrine; if private label 

products contain pseudoephedrine at 

the same rate as brand name products, 

at least 78 percent of the cough and cold 

medication sales do not contain 

pseudoephedrine.4 No product in the 

top 200 appears to contain ephedrine; 

the sales value of the 200th product was 

about $20.4 million. 

The cough and cold medication 

sector, as defined by A.C. Nielsen, 

includes a wide variety of tablets, gel 

capsules, liquids, and cough drops, 

many of which do not contain either 

ephedrine or pseudoephedrine. Even if 

the entire market sector consisted of 

scheduled listed chemical products, the 

estimates the commenter submitted and 

shown in Table 1 are clearly overstated. 

Data developed by IMS Health 

Government Solutions for the 

Assessment of Annual Needs for 2007, 5

which used a range of industry sources, 

plus data from a confidential source, 

indicate that the ephedrine market is at 

most between 2 percent and 6.6 percent 

the size of the pseudoephedrine market 

(i.e., the value of sales of ephedrine 

products represent 2 percent to 6.6 

percent of the value of sales of 

pseudoephedrine products). In a 

comment on a previous rule,6 the 

commenter submitted estimates that 

implied that ephedrine sales at 

convenience stores to which it 

distributes were about 20 percent of the 

value of pseudoephedrine sales at 

convenience stores to which it 

distributes. Table 3 shows the 

commenter’s implied size of the 

pseudoephedrine market at convenience 

stores. 

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73364 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 

7The Combat Methamphetamine Epidemic Act of 

2005 states that it is unlawful for any person who 

is a regulated seller to knowingly or recklessly sell 

at retail scheduled listed chemical products in 

violation of the requirements of 21 U.S.C. 830(e), 

including the requirement that regulated sellers 

self-certify to the Attorney General regarding 

compliance with the provisions of the Act (21 

U.S.C. 842(a)(13)). As of October 12, 2007, 18,044 

convenience stores had self-certified; DEA has 

identified another 10,000 that are selling the 

products. 

TABLE 3.—COMMENTER’S IMPLIED VALUE OF THE PSEUDOEPHEDRINE (PSE) SALES AT CONVENIENCE STORES

Ephedrine/PSE Implied PSE market 

(ephedrine market = $166m) 

Implied PSE market 

(ephedrine market 

= $237m) 

Ephedrine = 2% of PSE Sales ............................................................................... $8.3 billion ............................................. $11.85 billion. 

Ephedrine = 6.60% of PSE Sales .......................................................................... $2.5 billion ............................................. $3.6 billion. 

Ephedrine = 20% of PSE Sales ............................................................................. $830 million ........................................... $1.185 billion. 

Because convenience store sales of 

these products represent only 3 percent 

of all sales, even using the lowest 

number the commenter provided 

(ephedrine sales of $166 million 

representing 20 percent of 

pseudoephedrine sales), the 

commenter’s estimates produce an 

implied value of the total ephedrine and 

pseudoephedrine nonprescription 

market across all retail sectors of $33 

billion, or between 4.5 and 7 times the 

actual retail market for all cough and 

cold medications and almost twice the 

size of the entire nonprescription drug 

retail market of $18 billion. 

The commenter claimed that the 

ephedrine quota, which no importer or 

manufacturer objected to, would lead to 

job losses. Even the commenter’s own 

overestimates indicate that job losses are 

highly improbable. If all ephedrine 

products were removed from the market 

at these outlets, which is unlikely, the 

daily sales loss would be very low even 

at the commenter’s exaggerated levels. 

At more realistic market values, the 

daily losses would be trivial. Table 4 

presents the average value of daily sales 

using the commenter’s estimates of the 

value of ephedrine sales ($166 million 

to $237 million) and the number of 

convenience stores selling the products 

based on the commenter’s estimate 

(72,500), Census data (41,000), and DEA 

data (28,000). The table also presents 

the more reasonable level of daily sales 

based on an estimate of the value of 

ephedrine sales at nonconventional 

outlets ($24 to $36 million). The more 

reasonable estimates may still be 

overestimates because they are based on 

a series of conservative assumptions: 

That nonconventional outlets sell 3 

percent of nonprescription drugs or 

$532 million (Census data), that cough 

and cold medications represent 27 to 40 

percent of those sales (Consumer 

Healthcare Products Association and 

A.C. Nielsen data) or $142 million to 

$215 million, and that ephedrine 

products represent 20 percent of those 

sales (commenter’s implied estimate 

assuming that only ephedrine and 

pseudoephedrine products are sold in 

this category) or $24 million to $36 

million. 

TABLE 4.—ESTIMATED DAILY SALES OF EPHEDRINE-CONTAINING PRODUCTS AT CONVENIENCE STORES

Source of No. of outlet estimate Estimate No. 

of outlets 

Estimated total value of ephedrine nonconventional 

outlet market 

Daily sales of 

ephedrine 

products 

Commenter ................................................................ 72,500 $166–$237 million ephedrine .................................... $6.27–$8.96 

Census ....................................................................... 41,000 .................................................................................... 11.09–15.84 

DEA Estimate ............................................................ 7 28,000 .................................................................................... 16.24–23.19 

Commenter ................................................................ 72,500 24–36 million ephedrine ............................................ 0.89–1.36 

Census ....................................................................... 41,000 .................................................................................... 1.58–2.40 

DEA Estimate ............................................................ 28,000 .................................................................................... 2.32–3.51 

It is not reasonable to think that this 

level of sales loss, which represents 

considerably less than the cost of a 

single car buying a tank of gasoline, 

would affect employment as the 

commenter claimed. With about 28,000 

convenience stores continuing to sell 

these products, there is no reason to 

think that all or even most such sales 

will be lost. As DEA stated in its Interim 

Final Rule implementing the procedures 

for import and production quotas for 

ephedrine, pseudoephedrine, and 

phenylpropanolamine (72 FR 37439, 

July 10, 2007), its concern is with a 

limited number of high dosage unit 

products that are sold almost 

exclusively through nonconventional 

outlets and the Internet, not with low 

dosage unit products that are sold 

through both conventional and 

nonconventional outlets. 

The commenter’s claim that 

eliminating sales of ephedrine products 

at convenience stores, which neither 

DEA’s Interim Final Rule establishing 

the procedures for implementation of 

quotas for ephedrine, pseudoephedrine, 

or phenylpropanolamine, nor this notice 

would do, would harm the public is also 

not supported. The IMS Health 

Government Solutions study that DEA 

used to adjust the Assessment of Annual 

Needs for 2007 indicated that ephedrine 

sales at convenience stores had dropped 

after states implemented controls on 

sales, but that sales at conventional 

stores increased; total sales of ephedrine 

products actually grew. Although this 

change may produce minor harm to 

convenience stores, or serious harm to 

the commenter, as it claimed, 

economically it is a transfer. Other 

stores and distributors have benefited by 

the shift, and the economy as a whole 

has not been affected. DEA notes that 

most stores in both categories—

conventional and nonconventional 

outlets—are small businesses. 

The commenter asserted that DEA had 

failed to consider the impact on small 

businesses. The only small entities 

directly affected by the Assessment of 

Annual Needs are manufacturers and 

importers, none of whom filed 

comments or objections to the 

assessment. The increased sales of 

ephedrine products shown in the IMS 

Health Government Solutions data 

indicate that these entities have not 

been harmed. The indirect effects of the 

assessment on downstream users, such 

as the commenter and its customers, are 

not subject to review under the 

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Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 73365 

Regulatory Flexibility Act or Executive 

Order 12866. In any case, as noted 

above, the data collected indicate that if 

some small entities have lost sales, 

others have gained sales, which is in 

economics terms a transfer. The total 

sales of ephedrine products appears to 

have increased (in terms of quantity, not 

value), which is why DEA adjusted the 

ephedrine assessment upward when 

establishing the assessment for 

ephedrine for 2007 (72 FR 53908, 

September 20, 2007). If the 

manufacturers and importers provide 

data that indicates that the ephedrine 

market is continuing to grow, DEA will 

adjust future assessments to meet the 

medical, scientific, research, industrial, 

and other legitimate needs of the United 

States. 

In conclusion, the commenter has 

overestimated the size of the market for 

ephedrine products at convenience 

stores by a factor of at least six to ten, 

has made exaggerated claims about the 

impact on jobs when the daily sales 

values even using the commenter’s 

overestimated claims are low, and has 

claimed damage to the economy when 

the data indicate that increased sales of 

the products at conventional outlets 

have more than offset sales losses at 

nonconventional outlets. Whatever 

effect the statutorily mandated 

restrictions have had on the commenter 

or nonconventional outlets, the cough 

and cold medication market continues 

to grow; there is no evidence to support 

the commenter’s claim of a cost to the 

United States economy. 

Use of the IMS Health Government 

Solutions Report 

The commenter refers to the IMS 

Health Government Solutions study 

referenced above on numerous 

occasions throughout its comment. As 

discussed in DEA’s October 19, 2006, 

proposed 2007 Assessment of Annual 

Needs Notice (71 FR 61801) and its 

September 20, 2007, established 2007 

Assessment of Annual Needs Notice (72 

FR 53908), DEA obtained assistance 

from a private independent contractor, 

IMS Health Government Solutions, to 

develop the initial estimate of the 

medical needs of the United States for 

both ephedrine and pseudoephedrine. 

The results from IMS’ initial study were 

utilized by DEA to propose the 2007 

Assessment of Annual Needs. The 

commenter claimed that the IMS report 

underestimated legitimate demand for 

ephedrine sold in OTC drugs for 

respiratory ailments via convenience 

stores. The commenter further claimed 

that the study did not adequately 

address sales of ephedrine-based OTC 

drug products through the convenience 

store channel of distribution. The 

commenter claimed that since DEA 

relied on underestimated values of the 

medical need (as provided by IMS) 

when it established the 2007 

Assessment of Annual Needs, these 

same values, as proposed for the 2008 

assessment, would lead to inadequate 

supplies of drug products containing 

ephedrine and pseudoephedrine. 

DEA Response: The commenter’s 

belief that the IMS Health Government 

Solutions report underestimated the 

medical needs of ephedrine and 

pseudoephedrine OTC drug products is 

flawed in the same way that its belief 

regarding the economic impact of this 

notice is flawed, as discussed above. 

The commenter’s conclusion about the 

IMS Health Government Solutions 

report is predicated on the assumption 

that the commenter’s sales are 

representative of the industry as a 

whole. As explained below, this 

conclusion is not supported by 

applications that the DEA has received 

for individual import, manufacturing, 

and procurement quotas from DEAregistered importers and manufacturers 

for 2008. 

DEA’s Proposed 2008 Assessment of 

Annual Needs for Ephedrine (For Sale) 

and Pseudoephedrine (For Sale) 

The comment received from the 

commenter is virtually identical to that 

submitted to the proposed 2007 

Assessment of Annual Needs on 

October 19, 2006 (71 FR 61801). Then, 

as now, the commenter asserted that the 

IMS Health Government Solutions 

report underestimated the legitimate 

demand for ephedrine sold in OTC drug 

products. The commenter further 

asserted that DEA’s Assessment of 

Annual Needs significantly understated 

the amount of ephedrine and 

pseudoephedrine required to satisfy 

legitimate medical, scientific, research, 

and industrial purposes and lawful 

imports. The commenter also claimed 

that the IMS Health Government 

Solutions study did not adequately 

address sales of ephedrine-based OTC 

drug products through the convenience 

store channel of distribution. The new 

information submitted by the 

commenter in this area is a two-page 

letter prepared by the statistician who 

had initially submitted a report to the 

commenter as part of the commenter’s 

comments to the 2006 proposed 

assessments. In that letter, the 

statistician stated that the DEA’s 

proposed medical use estimate (which 

is a component of the ephedrine (for 

sale) assessment, which also includes 

lawful export and inventory 

requirements) of 11,500 kg for 

ephedrine ‘‘falls far short of the 130% 

to 900% range of increases that would 

be needed to put the earlier proposed 

quota in line with actual over-thecounter sales of ephedrine products.’’

DEA notes the commenter did not 

provide any quantitative or qualitative 

data to support its belief that the DEA’s 

Assessment of Annual Needs for 

pseudoephedrine (for sale) was too low. 

DEA Response: The estimated 

ephedrine (for sale) requirements 

submitted by the commenter are not 

supported by the applications received 

by the DEA pursuant to 21 CFR part 

1315. On July 10, 2007, DEA published 

an Interim Final Rule which established 

procedures for administering individual 

quotas to DEA-registered manufacturers 

and importers of controlled substances 

(72 FR 37439). Although the rule 

became effective immediately upon 

publication, DEA chose not to issue 

individual import, manufacturing, and 

procurement quotas to DEA-registered 

importers and manufacturers of these 

chemicals in 2007 after finalizing the 

2007 Assessment of Annual Needs. DEA 

concluded that such action would 

negatively impact the immediate 

availability of these chemicals and the 

products derived therefrom. Instead, 

DEA stated on its web site (http:// 

www.deadiversion.usdoj.gov/meth/ 

q_a.htm) that it would solicit 

applications for individual 2008 quotas 

from DEA-registered manufacturers and 

importers with the intent of processing 

completed applications on or before 

January 1, 2008. 

On July 12, 2007, DEA notified all 

1,054 DEA registered manufacturers and 

importers of both controlled substances 

and List I chemicals in writing of the 

publication of the Interim Final Rule 

and its potential impact on companies’

ability to import or manufacture the List 

I chemicals ephedrine, 

pseudoephedrine, and 

phenylpropanolamine, and products 

containing those chemicals after January 

1, 2008. Those that received the letter 

would have included companies that 

manufacture ephedrine products for the 

convenience store market. Specifically, 

DEA advised each company to submit 

an individual application(s) for 2008 

quota; DEA advised that if no 

application was received, then DEA 

would assess each company’s importing 

and manufacturing requirements for 

2008 to be zero and, consequently, no 

quota would be issued. However, 

applications for quota could be 

submitted during the 2008 calendar 

year. 

In the first month and a half, prior to 

proposing the 2008 Assessment of 

Annual Needs (72 FR 53911, September 

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73366 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 

20, 2007), DEA received very few 2008 

quota applications. Since that time, 

however, DEA has received significantly 

more quota applications from DEA 

registrants. In connection with each 

application, DEA has been contacting 

each applicant and gathering additional 

information necessary to process each of 

these individual quota applications by 

the January 1, 2008 deadline. DEA has 

analyzed the statistical data provided by 

these registrants and the results of this 

analysis (below) are not consistent with 

the commenter’s comments. 

Analysis of Quota Applications for 

Ephedrine (For Sale) 

Based on an analysis of the inventory, 

acquisition (purchases) and disposition 

(sales) data provided by DEA-registered 

importers and manufacturers of 

ephedrine products on individual quota 

applications received since publication 

of the July 10, 2007 Interim Final Rule, 

manufacturers of dosage form products 

containing ephedrine reported sales 

totaling approximately 3,900 kg in 2007; 

this represents a 61 percent decrease 

from sales reported by these firms for 

2005 and a 49 percent decrease from the 

sales reported for 2006, as shown on the 

same quota applications. During the 

same period, exports of ephedrine 

products from the United States, as 

reported on export declarations (DEA 

Forms 486) received, are expected to 

total 245 kg in 2007, a 90 percent 

decrease from levels observed in 2005. 

These sales and export trends, when 

taken along with necessary inventory 

allowances, may suggest that DEA’s 

2008 Assessment of Annual Needs for 

ephedrine, as proposed, is too high, and 

may require and adjustment downward 

in the future. 

Analysis of Quota Applications for 

Pseudoephedrine (For Sale) 

Based on an analysis of the inventory, 

acquisition, and disposition data 

provided by DEA-registered importers 

and manufacturers of pseudoephedrine 

products on individual quota 

applications received since publication 

of the July 10, 2007 Interim Final Rule, 

manufacturers of dosage form products 

containing pseudoephedrine reported 

sales of these products totaling 

approximately 277.8 metric tons (MT; 

1000 kg equals 1 MT) in 2007; this 

represents a 38 percent increase from 

sales data provided by these firms for 

2005 and a 2 percent increase from sales 

reported in 2006, as shown on the same 

quota applications. During the same 

period, exports of pseudoephedrine 

products from the United States, as 

reported on export declarations (DEA 

Forms 486) received, are expected to 

total 29,145 kg in 2007, a 67.6 percent 

decrease from levels observed in 2005. 

These sales and export trends, when 

taken along with necessary inventory 

allowances, may suggest that DEA’s 

2008 Assessment of Annual Needs for 

pseudoephedrine, as proposed, is too 

high, and may require an adjustment 

downward in the future. 

Although the analysis of quota 

applications received by DEA would 

support a decrease in the Assessment of 

Annual Needs for both ephedrine (for 

sale) and pseudoephedrine (for sale), 

DEA cannot ensure that it has 

applications from all those who may 

require an individual quota in 2008. 

Specifically, manufacturers and 

importers may have purchased 

increased amounts of these List I 

chemicals during the 2007 calendar year 

in anticipation of the establishment of 

individual quotas for the 2008 calendar 

year, thereby increasing their inventory 

position (i.e. stockpiling). As a result, 

these same DEA registrants may have 

elected to defer submission of 

individual quota applications until such 

time that these inventory levels 

decrease. Additionally, it remains 

unclear as to what impact, if any, 

phenylephrine will have on the market 

for cough and cold remedies containing 

pseudoephedrine. Finally, the Food and 

Drug Administration announced an 

enforcement action against unapproved 

drug products containing timed-release 

guafenesin in combination with other 

drugs, including ephedrine and 

pseudoephedrine (72 FR 29517, May 29, 

2007). The Notice advises firms which 

are marketing unapproved products to 

obtain such drug approvals. As a result 

of this Notice, DEA believes that it may 

receive requests for quotas to support 

FDA validation requirements, thereby 

increasing the demand for ephedrine 

and/or pseudoephedrine for research 

purposes. For these reasons, DEA 

believes that the needs of the United 

States are best served by establishing the 

values initially proposed and therefore 

concludes the proposed amounts are 

sufficient to meet the estimated medical, 

scientific, research, and industrial needs 

of the United States; lawful export 

requirements; and the establishment 

and maintenance of reserve stocks. DEA 

will propose a revision to, and 

subsequently finalize, the Assessment of 

Annual Needs for 2008 during the 

calendar year, thereby giving interested 

persons an opportunity to provide 

substantive data to support or refute any 

proposed changes to assessments. 

Comment Period 

The commenter believed that DEA’s 

comment period of 21 days (September 

20, 2007, to October 11, 2007,) was too 

short, making it impossible, the 

commenter claimed, for affected parties 

to provide significant comment within a 

short window of opportunity. The 

commenter requested that DEA reopen 

the comment period for an additional 

sixty days. 

DEA Response: When DEA published 

its July 10, 2007, Interim Final Rule 

establishing procedures for 

administering the assessment of annual 

needs and individual import, 

manufacturing, and procurement 

quotas, DEA stated that it had ‘‘good 

cause’’ under the Administrative 

Procedure Act to implement those 

regulations without engaging in 

traditional notice and comment 

rulemaking. In support of that action, 

DEA specifically stated: 

Congress, in crafting CMEA, recognized 

that limiting of product availability at the 

retail level could potentially encourage 

diversion of either drug products or the List 

I chemicals themselves higher in the supply 

chain—at the import, manufacture, and 

distribution levels. To address its concern 

about ‘‘what immediately moves in behind,’’

(Rep. Souder, February 28, 2006, CR p. 423) 

Congress included provisions in CMEA to 

control the import, export, manufacture, and 

distribution of the three chemicals and 

products containing them. These provisions 

also will make it possible for the United 

States to meet the recommendations of the 

International Narcotics Control Board, which 

encouraged its member countries to provide 

for pre-export notifications and an 

assessment of legitimate need for these 

chemicals. * * * 

DEA must implement the quota provisions 

of the CMEA on an interim basis to ensure 

that product upstream from the retail level is 

not diverted for illicit purposes. It would be 

contrary to the public interest to allow the 

diversion of large amounts of ephedrine, 

pseudoephedrine, and phenylpropanolamine 

at the wholesale level while implementing 

controls at the retail level to limit sales of 

these very products. 

The broad scope of the new law [CMEA], 

as well as the expedited effective dates, is a 

clear reflection of Congress’ concerns about 

the nation’s growing methamphetamine 

epidemic and its [Congress] desire to act 

quickly to prevent further illicit use of these 

chemicals.’’ (specifically 72 FR 37443–37444) 

DEA’s decision to provide a 21-day 

comment period was based on Congress’

mandate for DEA to act quickly to 

implement the requirements of the 

CMEA including the establishment of an 

Annual Assessment of Needs and 

individual import, manufacturing, and 

procurement quotas. The regulations 

require that DEA establish the 

Assessment of Annual Needs prior to 

the issuance of individual quotas, 

meaning that DEA must establish the 

2008 Assessment of Annual Needs 

before it can issue individual import, 

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Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 73367 

manufacturing, and procurement 

quotas. DEA is required to complete the 

process of issuing individual import, 

manufacturing, and procurement quotas 

prior to January 1, 2008, as quotas are 

issued for a calendar year. DEA believes 

that a shorter comment period was 

necessary to review and consider the 

comments received from the public and 

then establish the 2008 Assessment of 

Annual Needs prior to the end of the 

2007 calendar year. 

DEA also believes that a 21-day 

comment period was sufficient given 

that its proposal was neither complex 

nor technical. DEA notes that two of the 

2008 assessments proposed were values 

initially proposed on October 19, 2006, 

when DEA proposed the 2007 

Assessment of Annual Needs, and the 

other three values were values 

significantly higher than the values 

proposed on October 19, 2006. 

Additionally, DEA notes that interested 

persons directly impacted by these 

quotas (i.e., DEA-registered 

manufacturers and importers) learned of 

the factors DEA would consider in the 

establishment of individual quotas in 

July when the Interim Final Rule was 

published. Many of these factors are set 

forth by statute; any remaining factors 

parallel the current system which has 

existed for individual quotas for 

controlled substances essentially since 

the inception of the Controlled 

Substances Act. For these reasons, DEA 

believes that DEA registrants had ample 

time to gather the necessary scientific 

and technical information that would be 

required to submit substantive 

comments to the proposed 2008 

Assessment of Annual Needs. 

Finally, DEA believes that the 

commenter did not proffer any specific 

information beyond that which it 

submitted in its written comments that 

would be brought to light if the DEA 

were to extend the comment period. 

Withdrawal of 2008 Proposed 

Assessment of Annual Needs 

The commenter requested that the 

proposed 2008 Assessment of Annual 

Needs be withdrawn and reproposed, 

presumably based on its comments. 

DEA Response: After considering the 

commenter’s comments, the DEA has 

determined that the request for a 

withdrawal of the proposed 2008 

Assessment of Annual Needs is 

unnecessary for the reasons discussed 

above. 

Conclusion 

DEA has carefully considered the 

comment received from the lone 

commenter in connection with the 

proposed 2008 Assessment of Annual 

Needs. Based on information provided 

in the comment, along with information 

provided by DEA-registered 

manufacturers and importers of these 

List I chemicals on applications for 

individual import, manufacturing, and 

procurement quotas pursuant to DEA 

regulations, DEA has fully addressed the 

relevant issues set forth in the comment. 

Therefore, under the authority vested in 

the Attorney General by section 306 of 

the CSA (21 U.S.C. 826), and delegated 

to the Administrator of the DEA by 28 

CFR 0.100, and redelegated to the 

Deputy Administrator pursuant to 28 

CFR 0.104, the Deputy Administrator 

hereby orders that the 2008 Assessment 

of Annual Needs for ephedrine, 

pseudoephedrine, and 

phenylpropanolamine, expressed in 

kilograms of anhydrous acid or base, be 

established as follows: 

List I Chemical 

Established 

2008 

assessment 

of 

annual 

needs 

(kg) 

Ephedrine (for sale) .................. 11,500 

Ephedrine (for conversion) ....... 128,760 

Pseudoephedrine (for sale) ...... 511,100 

Phenylpropanolamine (for sale) 5,545 

Phenylpropanolamine (for conversion) ................................. 85,470 

The Office of Management and Budget 

has determined that notices of quotas 

are not subject to centralized review 

under Executive Order 12866. 

This action does not preempt or 

modify any provision of state law; nor 

does it impose enforcement 

responsibilities on any state; nor does it 

diminish the power of any state to 

enforce its own laws. Accordingly, this 

action does not have any federalism 

implications warranting the application 

of Executive Order 13132. 

The Deputy Administrator hereby 

certifies that this action will not have a 

significant economic impact upon a 

substantial number of small entities 

whose interests must be considered 

under the Regulatory Flexibility Act, 5 

U.S.C. 601–612. The establishment of 

Assessment of Annual Needs for 

ephedrine, pseudoephedrine, and 

phenylpropanolamine is mandated by 

law. The assessments are necessary to 

provide for the estimated medical, 

scientific, research and industrial needs 

of the United States; for lawful export 

requirements; and the establishment 

and maintenance of reserve stocks. 

Accordingly, the Deputy Administrator 

has determined that this action does not 

require a regulatory flexibility analysis. 

This action meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988 Civil 

Justice Reform. 

This action will not result in the 

expenditure by state, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $120,000,000 or more 

(adjusted for inflation) in any one year, 

and will not significantly or uniquely 

affect small governments. Therefore, no 

actions were deemed necessary under 

the provisions of the Unfunded 

Mandates Reform Act of 1995. 

This action is not a major rule as 

defined by section 804 of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Congressional 

Review Act). This action will not result 

in an annual effect on the economy of 

$100,000,000 or more; a major increase 

in costs or prices; or significant adverse 

effects on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

companies to compete with foreignbased companies in domestic and 

export markets. 

Dated: December 18, 2007. 

Michele M. Leonhart, 

Deputy Administrator. 

[FR Doc. 07–6218 Filed 12–26–07; 8:45 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Manufacturer of Controlled 

Substances; Notice of Registration 

By Notice dated September 21, 2007, 

and published in the Federal Register 

on September 27, 2007, (72 FR 54929–

54930), Cedarburg Pharmaceuticals, 

Inc., 870 Badger Circle, Grafton, 

Wisconsin 53024, made application by 

renewal to the Drug Enforcement 

Administration (DEA) to be registered as 

a bulk manufacturer of the basic classes 

of controlled substances listed in 

schedules I and II: 

Drug Schedule 

Tetrahydrocannabinols (7370) ..... I 

Dihydromorphine (9145) ............... I 

Dihydrocodeine (9120) ................. II 

Oxycodone (9143) ........................ II 

Hydromorphone (9150) ................ II 

Hydrocodone (9193) ..................... II 

Sufentanil (9740) .......................... II 

Fentanyl (9801) ............................ II 

Remifentanil (9739) ...................... II 

The company plans to manufacture 

the listed controlled substances in bulk 

for distribution to its customers. 

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