Controlled Substances and List I Chemical Registration and Reregistration Application Fees, 51105-51115 [E6-14286]
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Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Rules and Regulations
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1301 and 1309
[Docket No. DEA–266F]
RIN 1117–AA96
Controlled Substances and List I
Chemical Registration and
Reregistration Application Fees
Drug Enforcement
Administration (DEA), Department of
Justice.
ACTION: Final Rule.
AGENCY:
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SUMMARY: This final rule establishes the
fee schedule for DEA registration and
reregistration fees relating to the
registration and control of the
manufacture, distribution and
dispensing of controlled substances and
listed chemicals to appropriately reflect
all costs associated with its Diversion
Control Program for the conduct of
activities as mandated by 21 U.S.C. 822
and 958. Specifically, this final rule
revises the fee schedule for controlled
substances and List I chemical handlers
so that all manufacturers, distributors,
importers, exporters, and dispensers of
controlled substances and of List I
chemicals pay an annual fee, by
registrant category, irrespective of
whether they handle controlled
substances or List I chemicals. In doing
so, this rule implements clarifications to
the Diversion Control Program and the
Diversion Control Fee Account made by
Congress in the Consolidated
Appropriations Act of 2005 (Pub. L.
108–447) that amended 21 U.S.C. 886a.
EFFECTIVE DATE: This rule is effective
November 1, 2006. The new fee
schedule will be in effect for all new
applications postmarked on or after
November 1, 2006 and for all renewal
applications postmarked on or after
November 1, 2006.
FOR FURTHER INFORMATION CONTACT:
Mark W. Caverly, Chief, Liaison and
Policy Section, Office of Diversion
Control, Drug Enforcement
Administration, Washington, DC 20537;
Telephone (202) 307–7297.
SUPPLEMENTARY INFORMATION:
I. Background and Statutory Authority
The Drug Enforcement
Administration published a Notice of
Proposed Rulemaking in the Federal
Register on November 16, 2005 (70 FR
69474) to adjust the registration and
reregistration fees for controlled
substances and List I chemical handlers.
The Controlled Substances Act (CSA)
requires that all manufacturers,
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distributors, dispensers, importers and
exporters of controlled substances and
List I chemicals obtain an annual
registration with DEA (21 U.S.C. 822
and 958(f)). In addition, the CSA, as
codified in 21 U.S.C. 821, authorizes the
Attorney General, who in turn
redelegates this authority to the
Administrator of DEA, to ‘‘promulgate
rules and regulations and to charge
reasonable fees relating to the
registration and control of the
manufacture, distribution, and
dispensing of controlled substances and
listed chemicals’’ (21 U.S.C. 821 as
amended by Pub. L. 108–447).
In October 1992, Congress passed the
Departments of Commerce, Justice and
State, the Judiciary and Related
Agencies Appropriations Act of 1993
which changed the source of funding for
DEA’s Diversion Control Program (DCP)
from being part of DEA’s Congressional
appropriation to full funding by
registration and reregistration fees
through the establishment of the
Diversion Control Fee Account (DCFA).
The Appropriations Act of 1993
required that ‘‘[f]ees charged by the
Drug Enforcement Administration under
its diversion control program shall be
set at a level that ensures the recovery
of the full costs of operating the various
aspects of that program.’’ The legislation
did not, however, provide clarification
on what constituted the ‘‘Diversion
Control Program,’’ thus leaving open the
issue as to what fee-setting criteria
should be used to determine which
costs could be reimbursed from the
DCFA.
In response to the Appropriations Act
of 1993, DEA published a Notice of
Proposed Rulemaking (NPRM) in
December 1992 to adjust the registration
and reregistration fees for controlled
substance registrants (57 FR 60148,
December 18, 1992). In the absence of
guidelines from Congress regarding the
specific criteria to be followed in
identifying costs and setting the fees,
DEA relied on the plain language of the
Appropriations Act of 1993 and
proposed fees necessary to cover the
costs of the activities that were
identified within the budget decision
unit known as the ‘‘Diversion Control
Program.’’
At the time that the Appropriations
Act of 1993 was passed, 21 U.S.C. 821
did not extend to chemical control
activities; accordingly, there were no
registration or fee requirements for
handlers of listed chemicals. DEA
therefore excluded chemical control
costs from its Final Rule implementing
the requirements of the Appropriations
Act of 1993 (58 FR 15272, March 22,
1993). Congress amended 21 U.S.C. 821
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on December 17, 1993 to require
reasonable fees relating to ‘‘the
registration and control of regulated
persons and of regulated transactions’’
(Domestic Chemical Diversion Control
Act of 1993, 3(a), Pub. L. 103–200, 107
Stat. 2333); however, despite this
amendment, DEA continued to
endeavor to maintain separate funding
for its controlled substances diversion
control and its chemical diversion
control activities. That is, DEA has paid
for its controlled substance diversion
control activities through the Diversion
Control Fee Account and registration
fees and its chemical diversion control
activities through appropriated funds.
Following publication of DEA’s Final
Rule, the American Medical Association
(AMA) and others filed a lawsuit
objecting to the increase in registration
and reregistration fees on the grounds
that DEA had failed to provide adequate
information as to what activities were
covered by the fees and how they were
justified. Upon appeal, the United States
Court of Appeals for the District of
Columbia Circuit remanded, without
vacating, the rule to DEA, requiring the
agency to provide an opportunity for
meaningful notice and comment on the
fee-funded components of the DCP. In
doing so, the court confirmed the
boundaries of the DCP that DEA can
fund by registration fees, finding that
the current statutory scheme (21 U.S.C.
821 and 958) required DEA to set
reasonable registration fees to recover
the full costs of the DCP. (AMA v. Reno,
57 F.3d 1129, 1135 (DC Cir. 1995)).
Thus, in the absence of a simple,
objective measure by which DCP costs
could be identified and the appropriate
fees calculated, both DEA and the courts
have looked to 21 U.S.C. 821 and 958
to define the guidelines for determining
what costs should be included in the
calculation of the fees and from whom
the fees might be collected.
On November 20, 2004, Congress
passed the Departments of Commerce,
Justice, and State, the Judiciary, and
Related Agencies Appropriations Act of
2005 which provided clarification as to
the activities constituting the DCP. This
Act was included in the Consolidated
Appropriations Act of 2005, which was
signed into law by the President on
December 8, 2004 (Pub. L. 108–447).
The Act amended 21 U.S.C. 886a to
define the Diversion Control Program as
‘‘the controlled substance and chemical
diversion control activities of the Drug
Enforcement Administration,’’ which
are further defined as the ‘‘activities
related to the registration and control of
the manufacture, distribution and
dispensing, importation and exportation
of controlled substances and listed
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chemicals.’’ It also amended the section
to provide that reimbursements from the
DCFA ‘‘* * * shall be made without
distinguishing between expenses related
to controlled substances activities and
expenses related to chemical activities.’’
Finally, the Act amended 21 U.S.C. 821
and 958(f) to make the language of those
sections consistent with the definition
of the DCP (Pub. L. 108–447). The net
effect of the amendments is to allow
DEA to deposit all registration and
reregistration fees (controlled substance
and chemical) into the Fee Account and
fund all controlled substance and
chemical diversion control activities
from the account without distinguishing
as to the type of activity (controlled
substance or chemical) being funded.
While the comingling of controlled
substances diversion control and
chemical diversion control fees and
activities might seem initially to be
incongruous, there is, in fact, a
significant amount of overlap, both in
terms of activities and registrant
populations. While it is easy to
distinguish between handlers of
controlled substances and the handlers
of commodity chemicals such as red
phosphorous, hydriotic acid, acetic
anhydride and nitroethane, the line
between handlers of controlled
substances and handlers of drug
products that contain listed chemicals is
blurred considerably. Not only are the
drug products that contain List I
chemicals often manufactured by
controlled substances manufacturers,
they are commonly distributed by
controlled substances distributors and
routinely sold or dispensed by
pharmacies, hospitals, and individual
practitioners. In calendar year 2004,
there were over 30 million prescriptions
filled for drug products containing the
List I chemicals ephedrine,
pseudoephedrine, and
phenylpropanolamine, which is still
routinely used in veterinary products.
There are undoubtedly many instances
in which practitioners also provided
their patients with free samples of
allergy and cough and cold preparations
that contain those chemicals. Within
this general environment, the use of a
single, unified account to fund the
controlled substances and chemical
diversion control activities of DEA is
consistent with the mandates of the law.
DEA is bound by all of the abovereferenced statutory requirements in
setting fees that recover the ‘‘full cost’’
of the Diversion Control Program and its
activities, as defined in the most recent
lawmaking action. Therefore, DEA has
developed this rulemaking according to
these legislative mandates.
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II. Comments Received
Following publication of the Notice of
Proposed Rulemaking on November 16,
2005, DEA received 12 comments to the
notice. Three comments were received
from practitioners (one physician, one
physician assistant, and one dentist);
three comments were received from
manufacturers or distributors; five
comments were received from
organizations representing different
registrant groups; and one comment was
submitted anonymously.
Most commenters raised concern
about the increase in fees, particularly
for chemical registrants. Two
commenters in particular wrote that the
increase in fees will have a significant
impact on chemical registrants
compared to current fee rates and
proposed an alternative fee increase.
One commenter wrote that programs
within DEA should be downsized or
eliminated to maintain a ‘‘neutral
budget’’ and keep costs lower. Three
commenters expressed concern that the
fee increase is coming at a time when
Congress and other entities are reevaluating medical reimbursements; one
physician commented that he would
pay the new fee as soon as his
reimbursements increased by the same
percentage. Another expressed concern
that the cost of the increased fees would
discourage physicians from registering
with DEA and using controlled
substances, thus affecting patient care.
Five commenters objected to the
removal of the waiver of the chemical
registration requirement for controlled
substances registrants that handle drug
products that are regulated as List I
chemicals. The commenters wrote that
they believed removal of this waiver
would damage the ability of affected
registrants to service their customer base
and posed an unreasonable hardship.
Two commenters also noted that
removal of the waiver could create
expensive administrative burdens for
both registrants and for DEA.
Two registrants objected to the
existing fee exemption for certain
entities such as some Federal agencies,
certain charitable organizations, law
enforcement entities, and military
personnel. Commenters noted that
exempting these organizations results in
larger fees for fee-paying registrants and
requested reevaluation of this policy by
DEA.
Two commenters raised the issue of
performance standards tied to the
increase in fees and requested
clarification on DEA’s expected
outcomes as a result of the increased
fees and the performance measures and
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metrics DEA has established to assess
these outcomes.
One commenter wrote that the
required $15 million annual transfer to
the U.S. Treasury out of collected fee
funds was a significant percentage of the
total fees collected, and the commenter
urged DEA to request that Congress
resume its annual $15 million
appropriation to offset this transfer. The
commenter wrote that it, too, would
work to see this appropriation restored.
One anonymous commenter wrote
that medical marijuana is ‘‘most popular
in California especially with grayhaired
men and women.’’ Marijuana is not a
licit controlled substance or listed
chemical covered by this rulemaking
and is not affected by this final rule;
accordingly, this comment is not further
addressed in this section. Another
commenter, a practitioner, submitted a
request for reregistration materials
through the comment response vehicle.
These materials were provided to the
commenter, and this matter is not
addressed further in this rulemaking.
Three commenters requested that
DEA extend implementation of the final
rule, noting that the rule comes in the
middle of budget cycles for many
registrants who had not planned for
increased fees as part of their budgets
and that it also comes at a time of
statutory and other change for the
industry. Each of these comments is
addressed below.
III. Objection to Fee Increase
Nine of the twelve comments received
by DEA expressed opposition to the
increase in fees. As described above, 21
U.S.C. 821 (as amended by Pub. L. 108–
447) authorizes DEA to collect
reasonable fees relating to the
registration and control of the
manufacture, distribution and
dispensing of controlled substances and
listed chemicals. In addition, the 1993
Departments of Commerce, Justice, and
State, the Judiciary, and Related
Agencies Appropriations Act that
established the Diversion Control Fee
Account (DCFA) specifically mandated
that fees ‘‘shall be set at a level that
ensures the recovery of the full costs of
operating the various aspects of that
program’’ (21 U.S.C. 886a(3)). Congress,
in using the mandatory term ‘‘shall’’ as
opposed to the discretionary ‘‘may,’’
unambiguously required DEA to
increase its then-existing registration
fees resulting in registrants fully
funding DCP expenses. DEA, therefore,
lacks discretion in this matter and must
fund the DCP totally from registration
fees (that is, not from fines,
Congressional appropriations or other
potential sources).
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Accordingly, while DEA recognizes
the economic pressures facing
practitioners, such as declining
Medicaid reimbursements and
increasing operating, equipment, and
insurance costs, the current statutory
scheme requires DEA to set registration
fees to recover the full costs of the DCP,
while limiting DEA to charge
‘‘reasonable’’ fees relating to the
registration and control of the
manufacture, distribution and
dispensing of controlled substances and
listed chemicals. DEA does not have the
discretion to partially fund the DCP or
to find alternative sources of funding for
the program. Rather DEA is mandated
by law to fund the DCP fully through
registration fees. The registration fees
outlined below are set at a level to
support the full costs of the DCP as
mandated by law.
With clarification of the activities
constituting the DCP in the
Appropriations Act of 2005, DEA is now
required to evaluate the ‘‘full costs’’ of
the DCP to include all controlled
substances and all listed chemical
diversion control activities; whereas,
previously the only DCP costs
supported through registrant fees were
controlled substances diversion control
costs, and listed chemical diversion
control activities were supported
through appropriated funds. (See the
Notice of Proposed Rulemaking
published on November 17, 2005, 70 FR
69474) for additional discussion on this
separation of activities.) In fact,
operating the DCP as a cohesive whole,
that is without distinction in activities
between controlled substances and
chemical diversion control activities,
offers scale efficiencies and ultimately
cost savings and improved services for
registrants.
The fees set forth in this final rule
reflect calculation of the full costs of
both the controlled substances and
chemical diversion control activities of
the DCP. The revised fee structure
contained in this final rule includes
annual fees (or fee equivalent) ranging
from $184 to $2,293. DEA recognizes
that the increase in fees may represent
a budgeting challenge for registrants,
particularly registrants with multiple
sites requiring separate registrations
(e.g., chain drug stores), however,
because the fees do not represent a
significant financial burden on
registrants, DEA has determined that the
fees contained in this final rule are
reasonable. DEA expects that among all
registrants, mid-level practitioners and
chemical distributors may feel the
greatest impact of the new fees (see
discussion in Section XII). However, for
most registrants qualifying as small
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businesses the revised fee will have a
minimal impact, representing from 0.28
percent to as little as 0.01 percent of
average annual sales (or income). For
registrants that are large businesses with
higher annual sales, the impact of the
fee is far less.
A. Differences in Fee Increase Among
Registrant Categories
Two commenters expressed concern
that the fees for chemical registrants
under this final rule reflect a higher
percentage increase than the change in
fees for controlled substances
registrants. Commenters noted that fees
for chemical manufacturers will
increase by approximately 300 percent
and that fees for chemical distributors
will increase by about 100 percent
compared to the current fee structure for
these chemical registrants. Commenters
proposed an alternative fee increase for
these categories based on the same
percentage increase as controlled
substances manufacturers and
distributors.
Currently, chemical handlers pay a
user fee that supports only the costs of
registration/reregistration and some
administrative oversight—not the
operating costs of the DEA’s chemical
diversion control program. With the
transfer of DEA’s chemical control
program costs to the DCFA, chemical
registrants must, together with
controlled substances registrants, pay a
fee to cover the full costs of the DCP.
The same circumstance occurred in
1993 with the establishment of the
DCFA; controlled substances registrants
were faced with a substantial increase in
their fees as they transferred from a
similar user fee that supported
registration costs only to a fee schedule
to cover the full costs of DEA’s
controlled substances diversion control
activities. With the transfer of the
chemical control program costs to the
DCFA and the amendments to the law
that reimbursements shall be made
without distinguishing between
chemical and controlled substances
activities, chemical registrants must
now be included in the DCFA
population and pay the fees necessary to
sustain that account.
DEA does not have the discretion to
adjust fees according to percentages,
such as was proposed by the
commenters, as it is required to fully
fund the DCP through fees paid by the
registrants while also maintaining
reasonable fees.
B. Program Costs
One commenter suggested that DEA
downsize or eliminate programs to
maintain a neutral budget and keep fees
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low. DEA works diligently to achieve
administrative efficiencies in all of its
programs, including the Diversion
Control Program. Through a scheduled,
periodic review process, virtually all
aspects of the DCP are inspected to
detect any waste, fraud or abuse. All
expenditures charged to the DCFA also
are reviewed and approved by an
independent unit within DEA that
reviews, approves, and audits feefunded expenditures.
Moreover, each of DEA’s annual
budget requests to Congress, which
contain all components of each DEA
program, including the DCP, is available
for public review. Each budget request
is examined and approved by both the
Department of Justice and the Office of
Management and Budget.
DEA has undertaken several
initiatives to streamline aspects of the
DCP both for DEA and for registrants.
For example, DEA is developing a
system to permit the electronic
transmission of controlled substances
prescriptions through electronic
creation, signature and record retention,
which will significantly increase the
efficiency by which prescriptions are
transmitted from prescriber to
pharmacy; however, it will not reduce
the review requirements of DEA
employees that monitor the prescription
process for controlled substances. DEA
has developed a system that permits the
electronic transmission of controlled
substances orders which provides
increased efficiencies for industry.
Moreover, in 2005, DEA underwent an
internal reorganization to increase
operational efficiencies and keep costs
as low as possible. This reorganization
shifted the focus from business decision
units to activities that support the
registration and control of the
manufacture, distribution, and
dispensing of controlled substances and
listed chemicals. However, DEA is also
subject to costs related to inflation and
additional costs of ‘‘doing business’’
that face all organizations despite its
best efforts to keep these expenses
reasonable.
C. Effect of Fee Increase on Practitioner
Registration
One practitioner commenter noted
concern that increases to annual
registrant fees could reduce the number
of physicians registering with DEA and
using controlled substances as part of
patient care. The Controlled Substances
Act requires that every person who
manufactures, distributes or dispenses
any controlled substance or who
proposes to engage in the manufacture,
distribution or dispensing of any
controlled substance obtain an annual
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registration (21 U.S.C. 822(a)(1) and
822(a)(2)).
DEA notes that the impact of the
annual registration fee on practitioners
($184 annual equivalent) is not
significant, ranging from a high of
0.28% to a low of 0.13% based on
annual income for this registrant
category (see discussion below on small
business impacts). The majority of
registered practitioners (71 percent) are
physicians whose annual income
averages more than $140,000 and for
whom the $184 annual fee equivalent
represents approximately 0.13 percent
of annual income. Other large
practitioner groups in this category
include dentists (16 percent of
practitioners) for whom the annual fee
equivalent represents about 0.14 percent
of their average annual income of
$133,000 and veterinarians (5 percent of
practitioners) for whom the annual fee
equivalent equates to 0.25 percent of
their average annual income of $76,000.
The revised fee will have greater
impacts on other types of practitioners
(less than 5 percent of all registered
practitioners) with lower annual
incomes, including nurse practitioners,
physician assistants, optometrists, and
others for whom the annual fee
equivalent has an average impact of
approximately 0.16–0.28 percent.
IV. Removal of Waiver for Chemical
Registrants Holding an Existing
Controlled Substances Registration
Four commenters objected to the
removal of the waiver of the registration
requirement for persons who distribute,
import or export a drug product
containing a List I chemical if that
person is already registered with DEA to
manufacture, distribute or dispense,
import or export a controlled substance.
Commenters noted that removal of this
waiver could dramatically increase the
annual registration fees for affected
registrants and would damage their
ability to service their customers, would
pose an ‘‘unreasonable hardship,’’ and
could adversely affect the List I
chemical supply chain since many
affected registrants also hold a
controlled substances registration. One
commenter also noted that removal of
this waiver could require significant
changes to internal operations for
affected registrants who would have to
maintain two DEA registrations,
imposing significant paperwork,
technological and operational burdens.
The commenter also suggested removal
of the waiver could result in increased
operational burdens for DEA.
After careful review of these
comments and consideration of the
benefits compared to the drawbacks
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associated with removal of this waiver,
DEA has decided to retain the current
registration waiver for persons who
distribute, import, or export a product
containing a List I chemical who already
hold a valid DEA registration to
manufacture, distribute or dispense,
import, or export a controlled substance.
Accordingly, the proposed changes to
the waiver provision are removed.
DEA will address registration issues
created by passage of the Combat
Methamphetamine Epidemic Act of
2005, included in the USA PATRIOT
Improvement and Reauthorization Act
of 2005 (Pub. L. 109–177) as part of the
Act’s implementing regulations.
V. Registration Fee Waivers for Certain
Organizations and Persons
Two commenters objected to DEA’s
fee exemption for certain entities and
persons. Currently, government
institutions, law enforcement agencies,
and military personnel are exempt from
fees. In addition, DEA waives fees for
some charitable organizations. The
commenters objected to these fee
waivers suggesting that the process is
inequitable and that the net result is
higher fees for fee-paying registrants
than if these organizations were also
required to pay annual registration and
reregistration fees. The commenters also
asserted that fee-paying registrants are
paying a ‘‘hidden contribution’’ or
‘‘forced donation’’ to charitable
organizations, without tax relief, by
partially subsidizing their fee
requirements.
DEA appreciates these comments.
DEA recognizes that exempting certain
entities from paying annual fees
provides a benefit to some at the
expense of others and is evaluating its
current practice of exempting certain
organizations and persons from annual
registration fees. Any changes to this
practice will require a separate
regulatory process, including notice and
comment.
VI. Performance Standards
Two commenters objected to the
omission of anticipated outcomes or
results expected by DEA as a result of
the increased fees. The commenters
requested detail on how DEA will track
such results and correlate them to the
higher fees while recommending the
development of a system of metrics,
accountability and reporting for the
DCP.
The Government Performance and
Results Act (GPRA) and the President’s
Management Agenda (PMA), requires
DEA, like all other agencies and
components, to provide a budget
summary that incorporates performance
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information on a quarterly basis. In
response to these requirements, DEA
already integrates budget and
performance in order to evaluate the
effectiveness of programs relative to
long-term, measurable outcome goals.
More specifically, in response to
GPRA and the PMA, the DCP’s
budgetary reporting on outlays from the
DCFA includes performance measures
that are consistent with DEA’s Strategic
Plan and that reflect the effectiveness of
programmatic activities funded by
registrant fees. Among the objectives
included in DEA Strategic Plan is
continued support to the registrant
population through improved
technology, including E-commerce and
customer support, while maintaining
cooperation, support, and assistance
from the regulated industry. These
efforts, funded through registration fees,
are intended to provide benefits to the
registrant population such as
streamlined processing and improved
access to information. They are also
intended to reduce the paperwork
burden on small businesses; reduce
forged or stolen prescriptions; improve
authentication and verification of the
prescribing or ordering party and reduce
processing time; increase overall
security; and improve DEA’s data
quality, agency efficiency and
responsiveness in carrying out its
mission.
All budget submissions for the
Diversion Control Program, like
submissions for all programs across
DEA, are subject to multiple levels of
scrutiny and review within DEA, the
Department of Justice, and the Office of
Management and Budget before being
included in the President’s annual
Budget Request to Congress.
VII. $15 Million Treasury Transfer
One commenter urged DEA to request
that Congress resume the annual $15
million appropriation to offset the
requirement that the first $15 million in
fee collections be transferred to the
Treasury, so that all fee funds may be
used for DCP activities. The commenter
noted that the annual $15 million
transfer represents a ‘‘significant
component’’ of the amounts to be
collected each year.
The Appropriations Act of 1993
requires that DEA transfer the first $15
million of fee revenue to the General
Fund of the Treasury each year (21
U.S.C. 886a(1)). For each fiscal year
from Fiscal Year 1993 through Fiscal
Year 1998, Congress appropriated an
additional $15 million to offset this
requirement (a total infusion to the
DCFA of $90 million). However,
beginning in Fiscal Year 1999, Congress
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discontinued this additional
appropriation. Accordingly, since Fiscal
Year 1999, DEA has to include the
annual $15 million transfer for fee
calculations; that is, DEA must pay for
all operational costs of the DCP plus the
$15 million transfer out of fee funds
collected from registrants.
VIII. Extension of Implementation of
the Final Rule
Three commenters requested delay of
implementation of the final rule to
Fiscal Year 2007 or later. Two
commenters requested the delay
because of the potential effects of
removal of the registration waiver for
chemical handlers holding a current
controlled substance registration.
Following careful review of comments,
DEA has decided to keep this waiver
intact (see discussion above).
Three commenters requested the
delay because of ongoing changes in the
industry, including pending state and
Federal legislation affecting over-thecounter products containing listed
chemicals (such as products containing
pseudoephedrine and ephedrine). One
commenter noted that such pending
legislation could affect distributors
carrying these products and therefore
DEA registrations and revenue
projections. The commenters also noted
that the fee modifications are coming at
a time when Congress, Federal agencies,
and private party payers are exploring
methods for reducing reimbursement for
prescription drugs. Two commenters
wrote that implementation of the final
rule would come in the middle of
budget cycles for affected registrants
and would, therefore, impose financial
challenges because of the unanticipated
additional expenses in the annual fees,
particularly for chain drug stores with
many separately registered sites. DEA
notes that very few chain registrants
have registrations expiring during the
current calendar year, thus limiting the
potential impact of the fee increase in
the current budget cycle. With respect to
pending legislation and its possible
effect on DEA registrations, DEA takes
into account the potential ebb and flow
of the registrant population through the
retirement of old registrations and new
applications for registration when
calculating the fees. DEA cannot delay
implementation of the new fee schedule
as the agency is required, by statute, to
recover the full costs of the diversion
control program through registration
fees.
IX. Overview of Diversion Control
Program Responsibilities
The mission of DEA’s Diversion
Control Program (DCP) is to enforce the
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provisions of the Controlled Substances
Act as they pertain to ensuring the
availability of controlled substances and
listed chemicals for legitimate uses in
the United States while exercising
controls to prevent the diversion of
these substances and chemicals for
illegal uses.
DCP activities include: Program
priorities and field management
oversight; coordination of major
investigations; drafting and
promulgating of regulations relating to
the enforcement of the CSA and other
legislation; establishment of national
policy on diversion; fulfillment of U.S.
obligations under drug control treaties;
advice and leadership on state
legislation/regulation; legal control of
drugs and chemicals not previously
under Federal control; control of
imports and exports of licit controlled
substances and chemicals; and program
resource planning and allocation,
among other activities.
As was outlined in the Notice of
Proposed Rulemaking, DCP activities
funded to date out of the DCFA have
been limited to controlled substances
diversion control activities, including
controlled substances scheduling,
registration, investigation, inspection,
data collection and analysis, training,
establishing production quotas,
cooperative efforts with state, local and
other Federal agencies, cooperative
efforts with the regulated industry,
international activities relating to the
registration and control of the
manufacture, distribution and
dispensing of controlled substances, and
attendant management, personnel,
administrative and clerical oversight for
the DCP. Fee-fundable activities also
have included travel, rent, utilities,
supplies, equipment, and services
associated with the above-listed
activities and activities related to the
control of licit controlled substances in
the U.S. in which the initial source is
foreign. One commenter wrote that
administrative expenses should not be
paid for out of the DCFA and fee funds;
however, the courts have found that all
activities and expenses that are directly
related to diversion control may be
funded with registration and
reregistration fees (AMA v. Reno, 57
F.3d 1129, 1135 (DC Cir. 1995)).
Administrative and other operational
costs are directly related to the ongoing
diversion control efforts of the DCP.
With the inclusion of the chemical
diversion control activities in the DCFA
and registrant fees by the
Appropriations Act, activities related to
the overall control of listed chemicals,
registration, investigation, inspection,
data collection and analysis, cooperative
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51109
efforts with the regulated industry,
related management and administrative
positions devoted to diversion control
activities, other personnel, and
administrative and clerical oversight
have been included in the budget
calculations that are used to determined
the registration fees.
For detail on the specific DCP
components to be funded through the
DCFA and their associated costs for the
Fiscal Year 2006–2008 period covered
by this rulemaking, please see DEA’s
Notice of Proposed Rulemaking,
published in the Federal Register on
November 16, 2005 (70 FR 69474).
X. Budget Changes
In calculating the registration and
reregistration fees contained in this
Final Rule, DEA has included all DCP
activities associated with the
‘‘registration and control of the
manufacture, distribution and
dispensing, importation and exportation
of controlled substances and listed
chemicals’’ (Pub. L. 108–447).
As discussed in detail in the Notice of
Proposed Rulemaking (70 FR 69474),
beginning in Fiscal Year 2006, both
controlled substance and chemical
diversion control costs must be
included in the calculation of DCFA
registration and reregistration fees.
Among the chemical diversion control
costs to be included among the ‘‘full
costs’’ of operating the DCP are a
portion of the Office of Training (TR)
that specifically supports the activities
of the DCP by providing training,
guidance and instruction for Diversion
Investigators, Diversion Task Force
Officers, regulatory agencies, state and
local law enforcement, and DCP
personnel on controlled substances and
chemical diversion control, advanced
skills and technical knowledge, and
systems applications. Also included are
188 chemical diversion control
positions; 12 overseas diversion
investigators dedicated to the DCP; and
costs associated with the chemical
transaction system (CTRANS).
The chemical diversion control costs
that will be supported through the
DCFA total $24,499,000 for Fiscal Year
2006, $24,880,000 for Fiscal Year 2007,
and $25,235,000 for Fiscal Year 2008,
accounting for salary growth and
inflation.
In addition to the chemical control
costs, DEA is including among feefundable activities certain other internal
resources that support the DEA’s
diversion control activities, but that, as
was discussed more fully in previous
rulemakings regarding the DCFA, had
previously been supported through
appropriated funds despite their direct
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Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Rules and Regulations
relationship to and support of the DCP.
These activities include portions of the
Office of Chief Counsel, the Office of
Forensic Sciences Special Testing
Laboratory, and the Special Operations
Division; and additional special agent
and intelligence analyst costs not
previously supported through the
DCFA. These components and
associated costs are described below. A
portion of DEA’s internal computer
system, Firebird, which already is
supported through the DCFA, is
included in the fee-fundable cost. The
total cost of these non-chemical
additions for Fiscal Year 2006 is
$26,996,000; for Fiscal Year 2007 is
$31,198,000; and for Fiscal Year 2008 is
$34,736,000.
In calculating the revised fee
schedule, DEA used the Fiscal Year
2006 enacted Appropriation, the
President’s Budget Request for Fiscal
Year 2007, the expected Budget Request
for Fiscal Year 2008, and the annual $15
million transfer to the U.S. Treasury as
mandated by the CSA (21 U.S.C. 886a).
In addition to fee funding all program
elements and activities related to the
registration and control of the
manufacture, distribution, dispensing,
importation, and exportation of
controlled substances and listed
chemicals, DEA must transfer the first
$15 million of fee revenue to the
General Fund of the Treasury each year
as described above (21 U.S.C. 886a(1)).
The Fiscal Year 2006 cost of the DCP
is $201,673,000, including a base of
$150,178,000 for controlled substances
diversion control activities, $24,499,000
in chemical diversion control activities,
and $26,996,000 for the additional nonchemical DCP support activities
outlined above and described in detail
in the November 16, 2005 Notice of
Proposed Rulemaking (70 FR 69474),
including 52 additional special agent
positions; a portion of the Forensic
Sciences Special Testing Laboratory; a
portion of the Office of Chief Counsel
that directly supports diversion control
activities; 34 of the 67 field intelligence
analysts to be phased in between Fiscal
Year 2006–2007 and 6 Headquarters
intelligence analysts to support
domestic and international diversion
control investigations (the remaining 33
field intelligence analysts will be
phased in during Fiscal Year 2007); a
portion of the Special Operations
Division directly related to diversion
control efforts; and Firebird operations
costs to support communication and
infrastructure of the diversion control
program.
With the addition of the required $15
million transfer to the U.S. Treasury, the
total amount necessary to collect
through registrant fees in Fiscal Year
2006 is $216,673,000.
The DCP cost for Fiscal Year 2007,
including all activities relating to the
registration and control of the
manufacture, distribution and
dispensing of controlled substances and
listed chemicals, is $212,078,000, as
reflected in the President’s Budget
Request to Congress. Including the
required $15 million transfer to the U.S.
Treasury, the total amount necessary to
collect through registrant fees in Fiscal
Year 2007 is $227,078,000. The
anticipated costs of the DCP for Fiscal
Year 2008, including all activities
relating to the registration and control of
the manufacture, distribution and
dispensing of controlled substances and
listed chemicals, is $218,669,000.
Including the required $15 million
transfer to the U.S. Treasury, the total
amount necessary to collect through
registrant fees in Fiscal Year 2008 is
$233,669,000.
The total amount that must be
collected through fee funds for the
Fiscal Year 2006–2008 period to fully
fund the DCP as mandated by statute is
$677,420,000. Without an increase in
fees, DEA would fall short by
$185,475,536 in funds to support the
operations of the DCP. The new fee
structure contained in this final rule,
therefore, provides the necessary
additional funds to ensure that the
operational costs of the DCP are fully
funded through registrant fees as
mandated by statute. As explained
above, DEA is required by statute to
collect the ‘‘full costs’’ associated with
operating the DCP.
XI. Calculation of Fees
Based on the total amount necessary
to collect for Fiscal Years 2006–2008,
DEA developed the specific fee levels
for each registrant category according to
its current fee structure and the feepaying ratios that have been in existence
since the inception of registrant fees.
New fees are shown in the table below.
For discussion on DEA’s analysis of
alternative fee schedules and
approaches to calculating registrant fees,
please see DEA’s 2002 Final Rule (67 FR
51988, August 9, 2002) and its 1996
Final Rule (61 FR 68624, December 30,
1996).
In developing the fee schedule, DEA
opted to set the fee level for a three-year
period (FY 2006–2008) for two reasons.
First, the vast majority of registrants are
practitioners who pay a three-year
registration fee. These registrants are
divided into roughly three separate
groups who pay their three-year
registration fees on alternate year cycles.
Accordingly, the fees below reflect the
total amount necessary to be collected
for the full three-year period (FY 2006–
2008), divided by projected registrants
and accounting for projected registrant
growth by category for each fiscal year.
Because different categories of
registrants pay different amounts, DEA
weighted the number of registrants in
each category to ensure the appropriate
reflection in the fee schedule. In
calculating the final fee schedule
reflected below, DEA relied on the latest
and current registrant population
figures, which have fluctuated since the
proposed fees contained in the Notice of
Proposed Rulemaking. Because the fees
reflect the total amount necessary for
collection over a three-year period
(Fiscal Years 2006–2008) and because
the type and number of registrants
varies from year to year, the total
amount of fees collected may not equal
the requested budget level for any given
year. Surplus fees collected in one year
are used to offset fee collection
shortfalls in another year. In no case are
fees spent in excess of the levels enacted
by Congress.
In evaluating options to structure the
fee schedule, DEA opted to remain with
the current fee structure to reduce
reporting burdens on registrants and
operational costs associated with the
DCP which would then be passed on to
registrants through annual fees.
To recover the full costs of the DCP
as required by statute and as outlined in
the preceding sections, DEA is adjusting
the fees in accordance with its existing
fee structure as shown in the following
table. Under this fee schedule,
controlled substances registrants and
chemical registrants in the same
registrant category (e.g., manufacturers)
pay the same fee regardless of the
substance or chemical being handled.
The table also includes the current fees
paid by each category.
New annual
fee
Registrant class
Manufacturers (controlled substances) ...................................................................................................................
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$2,293
Current annual
fee
$1,625
Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Rules and Regulations
New annual
fee
Registrant class
Manufacturers (chemical) ........................................................................................................................................
2,293
Distributors, Importers/Exporters (controlled substances), including reverse distributors ......................................
Distributors, Importers/Exporters (chemical) ...........................................................................................................
1,147
1,147
Chemical Retail Distributors ....................................................................................................................................
1,147
Dispensers/Practitioners * ........................................................................................................................................
Researchers, Narcotic Treatment Programs ...........................................................................................................
184
184
51111
Current annual
fee
595
(registration)
813
595
(registration)
255
(registration)
130
130
* Practitioners, mid-level practitioners, pharmacies, hospitals/clinics, and teaching institutions will pay a fee of $551 for a three-year registration
period.
The fee structure above supplants the
current fee structure for controlled
substances and for chemical registrants.
These fees go into effect November 1,
2006.
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XI. Related Issues and Waivers
Also by this Notice, DEA is removing
differentiation between retail and nonretail distributors of List I chemicals. As
of the effective date of this final rule,
both retail and non-retail distributors
must pay the same fee as described
above.
DEA also is withdrawing, by this
notice, its Notice of Proposed
Rulemaking issued on December 1,
1999, which proposed changes in
registration and reregistration fees for
manufacturers, distributors, importers,
exporters and retail distributors of List
I chemicals (64 FR 67216, December 1,
1999).
DEA also is rescinding the 1997
Notice of Fee Waiver published on
October 17, 1997 (62 FR 53958) which
had waived a portion of the registration
fee for non-retail distributors of
pseudoephedrine,
phenylpropanolamine, and combination
ephedrine drug products.
XII. Effects on Small Businesses
The new registrant fees range from
$184 to $2,293 annually per location
and per registered business activity. To
assess whether the fees could impose a
significant economic impact on a small
entity, DEA considered whether the fees
represent more than one percent of
annual revenues for the registrant
groups that qualify as small entities
under the Small Business
Administration (SBA) standards. As
discussed below, DEA does not
anticipate that the increase in fees will
have a significant impact on a
substantial number of small entities.
Most DEA registrants qualify as small
entities under the SBA standards.
Almost all practitioners, who compose
85 percent of all registrants affected by
this rulemaking, would be considered
small. For practitioners and dispensers,
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the annual revenues would have to be
below $18,400 to have the annual
registration fee or equivalent represent
more than one percent of revenues.
Medical practitioners who are granted
authority to handle controlled
substances have annual incomes well
above that level. Eighty-six percent of
all practitioners have annual incomes in
excess of $133,000 (Bureau of Labor
Statistics salary information). For these
practitioners, the new annual fee
equivalent of $184 represents less than
0.14 percent of annual income.
Physician assistants, the mid-level
practitioner with the lowest average
salary, have annual salaries of about
$65,000 (ibid.). For this practitioner
group, which represents about 2 percent
of registered practitioners, the annual
fee equivalent equates to 0.28 percent of
annual income.
The higher fees also will not impose
a significant burden on dispensers. The
average independent pharmacy has
sales of almost $2 million according to
the National Association of Chain Drug
Stores. The smallest clinics have
revenue streams higher than $18,400.
Among dispensers, the greatest impact
of this regulatory fee change will be on
chain pharmacies which must hold a
registration for each of their locations.
The largest chain holds retail pharmacy
registrations for more than 5,000
locations as well as almost 40
registrations for its distribution centers.
However, these businesses do not
qualify as small entities; moreover, for
the annual fee to have a significant
economic impact, annual revenues
would have to be less than $18,400.
DEA acknowledges the concerns of
one commenter that fee increases going
into effect in the middle of a budget
cycle represent a non-controllable and,
perhaps, unanticipated, expense for
large chain drug stores and chain
pharmacy distribution centers; however,
as discussed above, only a small fraction
of registered chain drug stores must
renew their DEA registration in the
second half of Calendar Year 2006 and
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are thus affected by the budgetary
implications of the fee increase.
For manufacturers, the 2002 Census
data indicate that the value of
shipments for the smallest chemical
manufacturers (including drugs) ranged
from $477,000 to $1.1 million per
location (establishment). For this
registrant group, therefore, the fee of
$2,293 does not represent more than one
percent of revenues and will not impose
a significant burden.
The one registrant group for which
the fees could exceed one percent of
revenues and have a significant
economic impact is chemical
distributors. According to 2004 Duns
data, between one percent and 11
percent of the wholesale sectors
handling listed chemicals have revenues
below $100,000. DEA does not collect
financial data on its registrants, but it is
possible that some chemical distributor
registrants have revenues below
$100,000. The increase in the annual
reregistration fee for chemical
distributors (from $477 to $1,147) may
impose a significant burden on these
registrants. The increase in the initial
registration fee (from a subsidized $116
for certain entities to $1,147 annually)
also could be a barrier to entrance for
these very small firms. Based on its
experience, however, DEA considers it
unlikely that any firm that lacked the
resources to pay the initial registration
fee would be granted a registration
because it would be unlikely to have the
resources necessary to prevent diversion
of the products. Moreover, the new
registration fees for all wholesale level
activities are far less than the estimated
annual fee of $6,400 that chemical
registrants would be charged if they
were required to independently fund
the chemical portion of the diversion
control program, as previously
discussed in the Notice of Proposed
Rulemaking (70 FR 69474, November
16, 2005).
In short, combining all diversion
control activities into a single Diversion
Control Program, as mandated by the
Consolidated Appropriations Act of
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2005, results in scale efficiencies and
overall reduced costs to all registrants.
XIII. Regulatory Analysis
Regulatory Flexibility Act
The Deputy Administrator hereby
certifies that this rulemaking has been
drafted in accordance with the
Regulatory Flexibility Act (5 U.S.C.
605(b)) and has provided above detailed
regulatory analysis on the effects of this
rulemaking on small entities. The rule
will not have a significant economic
impact on a substantial number of small
entities as discussed in Section XII.
While DEA recognizes that this
regulation will have a financial effect on
registrants, the change in fees is
necessary to fully comply with 21
U.S.C. 886a and related statutes, which
mandate that DEA establish the fees at
a level necessary to recover the full
costs of the Diversion Control Program.
Executive Order 12866
The Deputy Administrator certifies
that this rulemaking has been drafted in
accordance with the principles in
Executive Order 12866 § 1(b). DEA has
determined that, because the increased
fees will result in a total increase of less
than $70 million annually to be
collected through fees (that is the
difference between the amount collected
annually under the previous fee
structure and the amount to be collected
under the new fee structure), this is not
a significant regulatory action; however,
it was reviewed by the Office of
Management and Budget. The fees to be
collected represent an increase of less
than $70 million each year for the Fiscal
Year 2006–2008 period (based on
estimated fee collection figures and
compared to the previous fee schedule)
and are required to fully support the
President’s budget for the DCP, as
approved by Congress through the
appropriations process. Therefore, DEA
has no discretion in the establishment of
the new fees and is required by law to
collect registration and reregistration
fees of sufficient amount to fully
support the DCP.
Executive Order 12988
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This regulation meets the applicable
standards set forth in §§ 3(a) and 3(b)(2)
of Executive Order 12988 Civil Justice
Reform.
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Executive Order 13132
This rulemaking 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
rulemaking does not have federalism
implications warranting the application
of Executive Order 13132.
Unfunded Mandates Reform Act of 1995
This rule will not result in the
expenditure by State, local, and tribal
governments, in the aggregate of
$118,000,000 or more in any one year,
and will not significantly or uniquely
affect small governments. The increase
in fees for private sector entities and
individuals will result in a total increase
of less than $70 million annually to be
collected through fees (that is the
difference between the amount collected
annually under the prior fee structure
and the amount to be collected under
the new fee structure). Moreover, the
effect on individual entities and
practitioners is minimal. The majority of
the affected entities will pay a fee of
$551 for a three year registration period
(the equivalent of $184 per year) which
equates to about 0.13 percent of annual
income for most practitioners (the vast
majority of all registrants). This rule is
promulgated in compliance with 21
U.S.C. 886a that the full cost of
operating the DCP be collected through
registrant fees.
Small Business Regulatory Enforcement
Fairness Act of 1996
This rule is not a major rule as
defined by § 804 of the Small Business
Regulatory Enforcement Fairness Act of
1996. While this rule will result in an
annual effect on the economy of
$100,000,000 or more, in that it will
result in the collection of approximately
$216–$234 million annually, the
increase in fees (that is, the difference
between the amount collected annually
under the previous fee structure
compared to the new fee structure) will
result in a total increase of less than $70
million annually. Moreover, it will not
result in a major increase in costs or
prices or cause significant adverse
effects on competition, employment,
investment, productivity, innovation, or
on the ability of U.S.-based companies
to compete with foreign-based
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Fmt 4700
Sfmt 4700
companies in domestic and export
markets. This rule is not a discretionary
action but rather responds to statutory
clarification as to the activities
constituting the DCP which, by law,
must be fully funded through registrant
fees (21 U.S.C. 821 and 958 and 21
U.S.C. 886a, respectively). Moreover,
the individual effect on small business
registrants is minimal. The majority of
registrants considered to be small
businesses are practitioners who will
pay a three-year registration fee of $551
or the equivalent of $184 per year. For
the majority of these practitioners, who
compose the vast majority of registrants
and registrants qualifying as small
businesses, this annual fee equivalent
represents about 0.13 percent of their
annual mean salary. The impact on
other small business entities is
described in greater detail in the
preceding regulatory analysis.
List of Subjects
21 CFR Part 1301
Administrative practice and
procedure, Drug traffic control, Security
measures.
21 CFR Part 1309
Administrative practice and
procedure, Drug traffic control, Exports,
Imports, Security measures.
For the reasons set out above, 21 CFR
parts 1301 and 1309 are amended as
follows:
I
PART 1301—REGISTRATION OF
MANUFACTURERS, DISTRIBUTORS
AND DISPENSERS OF CONTROLLED
SUBSTANCES
1. The authority citation for part 1301
is revised to read as follows:
I
Authority: 21 U.S.C. 821, 822, 823, 824,
871(b), 875, 877, 886a, 951, 952, 953, 956,
957.
2. Section1301.13 is amended by
revising paragraph (e)(1) to read as
follows:
I
§ 1301.13 Application for registration; time
for application; expiration date; registration
for independent activities; application
forms, fees, contents and signature;
coincident activities.
*
*
*
(e) * * *
(1)
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*
Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Rules and Regulations
Application
fee
(dollars)
Registration
period
(years)
New—225 ......................
Renewal—225a .............
2,293
2,293
1
New—225 ......................
Renewal—225a .............
New—225 ......................
Renewal—225a .............
New—224 ......................
Renewal—224a .............
1,147
1,147
1,147
1,147
551
551
1
New—225 ......................
Renewal—225a .............
184
184
1
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29AUR1
Controlled
substances
DEA application forms
(i) Manufacturing .........................
Schedules I–V ....
(ii) Distributing .............................
Schedules I–V ....
(iii) Reverse distributing ..............
Schedules I–V ....
(iv) Dispensing or instructing (includes Practitioner, Hospital/
Clinic, Retail Pharmacy, Central fill pharmacy, Teaching Institution).
Schedules II–V ...
(v) Research ...............................
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Business activity
Schedule I ..........
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Coincident activities allowed
Schedules I–V: May distribute
that substance or class for
which registration was issued;
may not distribute or dispose
any substance or class for
which not registered. Schedules II–V: except a person
registered to dispose of any
controlled substance may
conduct chemical analysis
and preclinical research (including quality control analysis) with substances listed in
those schedules for which authorization as a mfg. was
issued.
1
3
May conduct research and instructional
activities
with
those substances for which
registration was granted, except that a mid-level practitioner may conduct such research only to the extent expressly authorized under state
statute. A pharmacist may
manufacture an aqueous or
oleaginous solution or solid
dosage form containing a narcotic controlled substance in
Schedule II–V in a proportion
not exceeding 20% of the
complete solution, compound
or mixture. A retail pharmacy
may perform central fill pharmacy activities.
A researcher may manufacture
or import the basic class of
substance or substances for
which registration was issued,
provided that such manufacture or import is set forth in
the protocol required in
§ 1301.18 and to distribute
such class to persons registered or authorized to conduct research with such class
of substance or registered or
authorized to conduct chemical analysis with controlled
substances.
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Application
fee ($)
Registration
period
(years)
New—225 ......................
Renewal—225a .............
184
184
1
Narcotic Drugs in
Schedules II–V.
Schedules I–V ....
New—363 ......................
Renewal—363a .............
New—225 ......................
Renewal—225a .............
184
184
1,147
1,147
1
(ix) Exporting ..............................
Schedules I–V ....
(x) Chemical Analysis .................
Schedules I–V ....
New—225 ......................
Renewal—225a .............
New—225 ......................
Renewal—225a .............
1,147
1,147
184
184
Business activity
Controlled
substances
DEA application forms
(vi) Research ..............................
Schedules II–V ...
(vii) Narcotic Treatment Program
(including compounder).
(viii) Importing .............................
*
*
*
*
§ 1309.11
*
cprice-sewell on PROD1PC66 with RULES
PART 1309—REGISTRATION OF
MANUFACTURERS, DISTRIBUTORS,
IMPORTERS, AND EXPORTERS OF
LIST I CHEMICALS
3. The authority citation for part 1309
is amended to read as follows:
I
Authority: 21 U.S.C. 821, 822, 823, 824,
830, 871(b), 875, 877, 886a, 958.
4. Section 1309.11 is revised to read
as follows:
I
VerDate Aug<31>2005
14:37 Aug 28, 2006
Jkt 208001
Fee amounts.
Frm 00020
Fmt 4700
Sfmt 4700
1
May conduct chemical analysis
with controlled substances in
those schedules for which
registration was issued; manufacture such substances if
and to the extent that such
manufacture is set forth in a
statement filed with the application for registration or reregistration and provided that
the manufacture is not for the
purposes of dosage form development; import such substances for research purposes; distribute such substances to persons registered
or authorized to conduct
chemical analysis, instructional activities or research
with such substances, and to
persons exempted from registration
pursuant
to
§ 1301.24; and conduct instructional activities with controlled substances.
May distribute that substance or
class for which registration
was issued; may not distribute any substance or class
for which not registered.
1
1
May manufacture and import
controlled substances for analytical or instructional activities; may distribute such substances to persons registered
or authorized to conduct
chemical analysis, instructional activities, or research
with such substances and to
persons exempted from registration
pursuant
to
§ 1301.24; may export such
substances to persons in
other countries performing
chemical analysis or enforcing
laws related to controlled substances or drugs in those
countries; and may conduct
instructional activities with
controlled substances.
5. Section 1309.12 is revised to read
as follows:
I
(a) For each application for
registration or reregistration to
manufacture for distribution the
applicant shall pay an annual fee of
$2,293.
(b) For each application for
registration or reregistration to
distribute (either retail distribution or
non-retail distribution), import, or
export a List I chemical, the applicant
shall pay an annual fee of $1,147.
PO 00000
Coincident activities allowed
§ 1309.12
refund.
Time and method of payment;
(a) For each application for
registration or reregistration to
manufacture for distribution, distribute
(either retail distribution or non-retail
distribution), import, or export a List I
chemical, the applicant shall pay the fee
when the application for registration or
reregistration is submitted for filing.
E:\FR\FM\29AUR1.SGM
29AUR1
Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Rules and Regulations
(b) Payment should be made in the
form of a personal, certified, or cashier’s
check or money order made payable to
‘‘Drug Enforcement Administration.’’
Payments made in the form of stamps,
foreign currency, or third party
endorsed checks will not be accepted.
These application fees are not
refundable.
Dated: August 22, 2006.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E6–14286 Filed 8–28–06; 8:45 am]
BILLING CODE 4410–09–P
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. DEA–269F]
21 CFR Part 1308
Schedules of Controlled Substances:
Placement of Embutramide Into
Schedule III
Drug Enforcement
Administration, Department of Justice.
ACTION: Final rule.
AGENCY:
SUMMARY: With the issuance of this final
rule, the Deputy Administrator of the
Drug Enforcement Administration
(DEA) places the substance
embutramide, including its salts, into
Schedule III of the Controlled
Substances Act (CSA). As a result of this
rule, the regulatory controls and
criminal sanctions of Schedule III will
be applicable to the manufacture,
distribution, dispensing, importation
and exportation of embutramide and
products containing embutramide.
DATES: Effective Date: September 28,
2006.
cprice-sewell on PROD1PC66 with RULES
FOR FURTHER INFORMATION CONTACT:
Christine A. Sannerud, Ph.D., Chief,
Drug and Chemical Evaluation Section,
Office of Diversion Control, Drug
Enforcement Administration,
Washington, DC 20537, (202) 307–7183.
SUPPLEMENTARY INFORMATION:
Embutramide has the chemical name of
N-[2-(m-methoxyphenyl)-2-ethyl-butyl]gamma-hydroxybutyramide (CAS
number 15687–14–6). On May 20, 2005,
the Food and Drug Administration
(FDA) approved a New Animal Drug
Application (NADA) for embutramide
for marketing under the trade name
TributameTM Euthanasia Solution (70
FR 36336). This product is a
combination of embutramide,
chloroquine phosphate, and lidocaine
for prescription use by intravenous
injection for euthanasia of dogs.
VerDate Aug<31>2005
14:37 Aug 28, 2006
Jkt 208001
On January 26, 2005, the Acting
Assistant Secretary for Health,
Department of Health and Human
Services (DHHS), sent the Deputy
Administrator of DEA a scientific and
medical evaluation and a letter
recommending that embutramide be
placed into Schedule III of the CSA.
Enclosed with the January 26, 2005,
letter was a document prepared by the
FDA entitled, ‘‘Basis for the
Recommendation to Control
Embutramide in Schedule III of the
Controlled Substances Act (CSA).’’ The
document contained a review of the
factors which the CSA requires the
Secretary to consider (21 U.S.C. 811(b))
Similar to barbiturates, embutramide
has a central nervous system (CNS)
depressant effect. It produces a
reversible stupor-like state (narcosis) in
experimental animals. The effects of
embutramide on locomotor activity,
rearing, forelimb grip strength, hindlimb splay, and the performance of
inverted screen tests on rodents were
similar to those of pentobarbital, a
classical barbiturate. Embutramide
mimics discriminative stimulus effects
of pentrobarbital in mice. Methohexitaltrained rhesus monkeys self-administer
embutramide, suggesting that
embutramide produces positive
reinforcing effects.
The pharmacological data suggest that
the abuse potential of embutramide may
be similar to that of CNS depressants
such as barbiturates and their products
(Schedule III through IV) that are
controlled under the CSA. Embutramide
as one of the ingredients in the
veterinary euthanasia drug product T–
61, was previously marketed in the
United States. T–16 was withdrawn
from the market in 1991. Embutramide
is not currently marketed in the United
States. During the period of marketing of
T–61, a limited number of case reports
of suicides, attempted suicides, and
accidental exposures involving this and
similar embutramide containing
products were published in the
scientific literature. DEA searched, but
has not found, any evidence of abuse or
trafficking of either T–61 or
embutramide.
After a review of the available data,
including the scientific and medical
evaluation and the scheduling
recommendation received from DHHS,
the Deputy Administrator of the DEA, in
a July 29, 2005, Federal Register Notice
of Proposed Rulemaking (70 FR 43809),
proposed placement of embutramide
into Schedule III of the CSA. The
proposed rule provided an opportunity
for all interested persons to submit their
comments, objections, or requests for
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
51115
hearing to be received by the DEA on or
before August 29, 2005.
On August 2, 2005, DEA received a
request for an extension of the period in
which to comment and request a
hearing. The requestor indicated that
the additional time was necessary to
review the scientific articles and other
information cited by DEA in support of
its scheduling proposal. DEA granted a
30 day extension of the time to
comment and request a hearing, until
September 28, 2005 (70 FR 50996).
Comments Received
DEA received two comments in
response to the notice of proposed
rulemaking. One commenter supported
the current proposal to control
embutramide as a Schedule III drug.
Another commenter supported the
proposal to schedule embutramide, the
substance, but not its finished
pharmaceutical product, TributameTM.
This commenter stated that the abuse
potential of TributameTM is non-existent
because the negative characteristics
such as the presence of a cardiotoxin
and the high cost of this formulation
outweigh its desirable effects.
DEA does not agree. Careful
consideration of all the available data
suggests that the amounts of cardiotoxin
present in the TributameTM formulation
are insufficient to eliminate the abuse
potential of this product. DEA field
experience suggests that the cost of a
given product is not a consistent
predictor of its actual abuse.
DEA also received a request for a
hearing on the scheduling of
embutramide and a request for an
exemption of the product, TributameTM,
from scheduling; however, the requestor
subsequently withdrew these requests
and asked that the scheduling of
embutramide be expedited.
Scheduling of Embutramide
Relying on the scientific and medical
evaluation and the recommendation of
the Acting Assistant Secretary for
Health, received in accordance with
Section 201(b) of the Act (21 U.S.C.
811(b)), and the independent review of
the available data by DEA, and after a
review of the comments received in
response to the notice of proposed
rulemaking, the Deputy Administrator
of DEA, pursuant to Sections 201(a) and
201(b) of the Act (21 U.S.C. 811(a) and
811(b)), finds that:
(1) Based on information now
available, embutramide has a potential
for abuse less than the drugs or other
substances in Schedules I and II;
(2) Embutramide has a currently
accepted medical use in treatment in the
United States; and
E:\FR\FM\29AUR1.SGM
29AUR1
]]>Agencies
[Federal Register Volume 71, Number 167 (Tuesday, August 29, 2006)]
[Rules and Regulations]
[Pages 51105-51115]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14286]
[[Page 51105]]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1301 and 1309
[Docket No. DEA-266F]
RIN 1117-AA96
Controlled Substances and List I Chemical Registration and
Reregistration Application Fees
AGENCY: Drug Enforcement Administration (DEA), Department of Justice.
ACTION: Final Rule.
-----------------------------------------------------------------------
SUMMARY: This final rule establishes the fee schedule for DEA
registration and reregistration fees relating to the registration and
control of the manufacture, distribution and dispensing of controlled
substances and listed chemicals to appropriately reflect all costs
associated with its Diversion Control Program for the conduct of
activities as mandated by 21 U.S.C. 822 and 958. Specifically, this
final rule revises the fee schedule for controlled substances and List
I chemical handlers so that all manufacturers, distributors, importers,
exporters, and dispensers of controlled substances and of List I
chemicals pay an annual fee, by registrant category, irrespective of
whether they handle controlled substances or List I chemicals. In doing
so, this rule implements clarifications to the Diversion Control
Program and the Diversion Control Fee Account made by Congress in the
Consolidated Appropriations Act of 2005 (Pub. L. 108-447) that amended
21 U.S.C. 886a.
EFFECTIVE DATE: This rule is effective November 1, 2006. The new fee
schedule will be in effect for all new applications postmarked on or
after November 1, 2006 and for all renewal applications postmarked on
or after November 1, 2006.
FOR FURTHER INFORMATION CONTACT: Mark W. Caverly, Chief, Liaison and
Policy Section, Office of Diversion Control, Drug Enforcement
Administration, Washington, DC 20537; Telephone (202) 307-7297.
SUPPLEMENTARY INFORMATION:
I. Background and Statutory Authority
The Drug Enforcement Administration published a Notice of Proposed
Rulemaking in the Federal Register on November 16, 2005 (70 FR 69474)
to adjust the registration and reregistration fees for controlled
substances and List I chemical handlers.
The Controlled Substances Act (CSA) requires that all
manufacturers, distributors, dispensers, importers and exporters of
controlled substances and List I chemicals obtain an annual
registration with DEA (21 U.S.C. 822 and 958(f)). In addition, the CSA,
as codified in 21 U.S.C. 821, authorizes the Attorney General, who in
turn redelegates this authority to the Administrator of DEA, to
``promulgate rules and regulations and to charge reasonable fees
relating to the registration and control of the manufacture,
distribution, and dispensing of controlled substances and listed
chemicals'' (21 U.S.C. 821 as amended by Pub. L. 108-447).
In October 1992, Congress passed the Departments of Commerce,
Justice and State, the Judiciary and Related Agencies Appropriations
Act of 1993 which changed the source of funding for DEA's Diversion
Control Program (DCP) from being part of DEA's Congressional
appropriation to full funding by registration and reregistration fees
through the establishment of the Diversion Control Fee Account (DCFA).
The Appropriations Act of 1993 required that ``[f]ees charged by the
Drug Enforcement Administration under its diversion control program
shall be set at a level that ensures the recovery of the full costs of
operating the various aspects of that program.'' The legislation did
not, however, provide clarification on what constituted the ``Diversion
Control Program,'' thus leaving open the issue as to what fee-setting
criteria should be used to determine which costs could be reimbursed
from the DCFA.
In response to the Appropriations Act of 1993, DEA published a
Notice of Proposed Rulemaking (NPRM) in December 1992 to adjust the
registration and reregistration fees for controlled substance
registrants (57 FR 60148, December 18, 1992). In the absence of
guidelines from Congress regarding the specific criteria to be followed
in identifying costs and setting the fees, DEA relied on the plain
language of the Appropriations Act of 1993 and proposed fees necessary
to cover the costs of the activities that were identified within the
budget decision unit known as the ``Diversion Control Program.''
At the time that the Appropriations Act of 1993 was passed, 21
U.S.C. 821 did not extend to chemical control activities; accordingly,
there were no registration or fee requirements for handlers of listed
chemicals. DEA therefore excluded chemical control costs from its Final
Rule implementing the requirements of the Appropriations Act of 1993
(58 FR 15272, March 22, 1993). Congress amended 21 U.S.C. 821 on
December 17, 1993 to require reasonable fees relating to ``the
registration and control of regulated persons and of regulated
transactions'' (Domestic Chemical Diversion Control Act of 1993, 3(a),
Pub. L. 103-200, 107 Stat. 2333); however, despite this amendment, DEA
continued to endeavor to maintain separate funding for its controlled
substances diversion control and its chemical diversion control
activities. That is, DEA has paid for its controlled substance
diversion control activities through the Diversion Control Fee Account
and registration fees and its chemical diversion control activities
through appropriated funds.
Following publication of DEA's Final Rule, the American Medical
Association (AMA) and others filed a lawsuit objecting to the increase
in registration and reregistration fees on the grounds that DEA had
failed to provide adequate information as to what activities were
covered by the fees and how they were justified. Upon appeal, the
United States Court of Appeals for the District of Columbia Circuit
remanded, without vacating, the rule to DEA, requiring the agency to
provide an opportunity for meaningful notice and comment on the fee-
funded components of the DCP. In doing so, the court confirmed the
boundaries of the DCP that DEA can fund by registration fees, finding
that the current statutory scheme (21 U.S.C. 821 and 958) required DEA
to set reasonable registration fees to recover the full costs of the
DCP. (AMA v. Reno, 57 F.3d 1129, 1135 (DC Cir. 1995)).
Thus, in the absence of a simple, objective measure by which DCP
costs could be identified and the appropriate fees calculated, both DEA
and the courts have looked to 21 U.S.C. 821 and 958 to define the
guidelines for determining what costs should be included in the
calculation of the fees and from whom the fees might be collected.
On November 20, 2004, Congress passed the Departments of Commerce,
Justice, and State, the Judiciary, and Related Agencies Appropriations
Act of 2005 which provided clarification as to the activities
constituting the DCP. This Act was included in the Consolidated
Appropriations Act of 2005, which was signed into law by the President
on December 8, 2004 (Pub. L. 108-447). The Act amended 21 U.S.C. 886a
to define the Diversion Control Program as ``the controlled substance
and chemical diversion control activities of the Drug Enforcement
Administration,'' which are further defined as the ``activities related
to the registration and control of the manufacture, distribution and
dispensing, importation and exportation of controlled substances and
listed
[[Page 51106]]
chemicals.'' It also amended the section to provide that reimbursements
from the DCFA ``* * * shall be made without distinguishing between
expenses related to controlled substances activities and expenses
related to chemical activities.'' Finally, the Act amended 21 U.S.C.
821 and 958(f) to make the language of those sections consistent with
the definition of the DCP (Pub. L. 108-447). The net effect of the
amendments is to allow DEA to deposit all registration and
reregistration fees (controlled substance and chemical) into the Fee
Account and fund all controlled substance and chemical diversion
control activities from the account without distinguishing as to the
type of activity (controlled substance or chemical) being funded.
While the comingling of controlled substances diversion control and
chemical diversion control fees and activities might seem initially to
be incongruous, there is, in fact, a significant amount of overlap,
both in terms of activities and registrant populations. While it is
easy to distinguish between handlers of controlled substances and the
handlers of commodity chemicals such as red phosphorous, hydriotic
acid, acetic anhydride and nitroethane, the line between handlers of
controlled substances and handlers of drug products that contain listed
chemicals is blurred considerably. Not only are the drug products that
contain List I chemicals often manufactured by controlled substances
manufacturers, they are commonly distributed by controlled substances
distributors and routinely sold or dispensed by pharmacies, hospitals,
and individual practitioners. In calendar year 2004, there were over 30
million prescriptions filled for drug products containing the List I
chemicals ephedrine, pseudoephedrine, and phenylpropanolamine, which is
still routinely used in veterinary products. There are undoubtedly many
instances in which practitioners also provided their patients with free
samples of allergy and cough and cold preparations that contain those
chemicals. Within this general environment, the use of a single,
unified account to fund the controlled substances and chemical
diversion control activities of DEA is consistent with the mandates of
the law.
DEA is bound by all of the above-referenced statutory requirements
in setting fees that recover the ``full cost'' of the Diversion Control
Program and its activities, as defined in the most recent lawmaking
action. Therefore, DEA has developed this rulemaking according to these
legislative mandates.
II. Comments Received
Following publication of the Notice of Proposed Rulemaking on
November 16, 2005, DEA received 12 comments to the notice. Three
comments were received from practitioners (one physician, one physician
assistant, and one dentist); three comments were received from
manufacturers or distributors; five comments were received from
organizations representing different registrant groups; and one comment
was submitted anonymously.
Most commenters raised concern about the increase in fees,
particularly for chemical registrants. Two commenters in particular
wrote that the increase in fees will have a significant impact on
chemical registrants compared to current fee rates and proposed an
alternative fee increase. One commenter wrote that programs within DEA
should be downsized or eliminated to maintain a ``neutral budget'' and
keep costs lower. Three commenters expressed concern that the fee
increase is coming at a time when Congress and other entities are re-
evaluating medical reimbursements; one physician commented that he
would pay the new fee as soon as his reimbursements increased by the
same percentage. Another expressed concern that the cost of the
increased fees would discourage physicians from registering with DEA
and using controlled substances, thus affecting patient care.
Five commenters objected to the removal of the waiver of the
chemical registration requirement for controlled substances registrants
that handle drug products that are regulated as List I chemicals. The
commenters wrote that they believed removal of this waiver would damage
the ability of affected registrants to service their customer base and
posed an unreasonable hardship. Two commenters also noted that removal
of the waiver could create expensive administrative burdens for both
registrants and for DEA.
Two registrants objected to the existing fee exemption for certain
entities such as some Federal agencies, certain charitable
organizations, law enforcement entities, and military personnel.
Commenters noted that exempting these organizations results in larger
fees for fee-paying registrants and requested reevaluation of this
policy by DEA.
Two commenters raised the issue of performance standards tied to
the increase in fees and requested clarification on DEA's expected
outcomes as a result of the increased fees and the performance measures
and metrics DEA has established to assess these outcomes.
One commenter wrote that the required $15 million annual transfer
to the U.S. Treasury out of collected fee funds was a significant
percentage of the total fees collected, and the commenter urged DEA to
request that Congress resume its annual $15 million appropriation to
offset this transfer. The commenter wrote that it, too, would work to
see this appropriation restored.
One anonymous commenter wrote that medical marijuana is ``most
popular in California especially with grayhaired men and women.''
Marijuana is not a licit controlled substance or listed chemical
covered by this rulemaking and is not affected by this final rule;
accordingly, this comment is not further addressed in this section.
Another commenter, a practitioner, submitted a request for
reregistration materials through the comment response vehicle. These
materials were provided to the commenter, and this matter is not
addressed further in this rulemaking.
Three commenters requested that DEA extend implementation of the
final rule, noting that the rule comes in the middle of budget cycles
for many registrants who had not planned for increased fees as part of
their budgets and that it also comes at a time of statutory and other
change for the industry. Each of these comments is addressed below.
III. Objection to Fee Increase
Nine of the twelve comments received by DEA expressed opposition to
the increase in fees. As described above, 21 U.S.C. 821 (as amended by
Pub. L. 108-447) authorizes DEA to collect reasonable fees relating to
the registration and control of the manufacture, distribution and
dispensing of controlled substances and listed chemicals. In addition,
the 1993 Departments of Commerce, Justice, and State, the Judiciary,
and Related Agencies Appropriations Act that established the Diversion
Control Fee Account (DCFA) specifically mandated that fees ``shall be
set at a level that ensures the recovery of the full costs of operating
the various aspects of that program'' (21 U.S.C. 886a(3)). Congress, in
using the mandatory term ``shall'' as opposed to the discretionary
``may,'' unambiguously required DEA to increase its then-existing
registration fees resulting in registrants fully funding DCP expenses.
DEA, therefore, lacks discretion in this matter and must fund the DCP
totally from registration fees (that is, not from fines, Congressional
appropriations or other potential sources).
[[Page 51107]]
Accordingly, while DEA recognizes the economic pressures facing
practitioners, such as declining Medicaid reimbursements and increasing
operating, equipment, and insurance costs, the current statutory scheme
requires DEA to set registration fees to recover the full costs of the
DCP, while limiting DEA to charge ``reasonable'' fees relating to the
registration and control of the manufacture, distribution and
dispensing of controlled substances and listed chemicals. DEA does not
have the discretion to partially fund the DCP or to find alternative
sources of funding for the program. Rather DEA is mandated by law to
fund the DCP fully through registration fees. The registration fees
outlined below are set at a level to support the full costs of the DCP
as mandated by law.
With clarification of the activities constituting the DCP in the
Appropriations Act of 2005, DEA is now required to evaluate the ``full
costs'' of the DCP to include all controlled substances and all listed
chemical diversion control activities; whereas, previously the only DCP
costs supported through registrant fees were controlled substances
diversion control costs, and listed chemical diversion control
activities were supported through appropriated funds. (See the Notice
of Proposed Rulemaking published on November 17, 2005, 70 FR 69474) for
additional discussion on this separation of activities.) In fact,
operating the DCP as a cohesive whole, that is without distinction in
activities between controlled substances and chemical diversion control
activities, offers scale efficiencies and ultimately cost savings and
improved services for registrants.
The fees set forth in this final rule reflect calculation of the
full costs of both the controlled substances and chemical diversion
control activities of the DCP. The revised fee structure contained in
this final rule includes annual fees (or fee equivalent) ranging from
$184 to $2,293. DEA recognizes that the increase in fees may represent
a budgeting challenge for registrants, particularly registrants with
multiple sites requiring separate registrations (e.g., chain drug
stores), however, because the fees do not represent a significant
financial burden on registrants, DEA has determined that the fees
contained in this final rule are reasonable. DEA expects that among all
registrants, mid-level practitioners and chemical distributors may feel
the greatest impact of the new fees (see discussion in Section XII).
However, for most registrants qualifying as small businesses the
revised fee will have a minimal impact, representing from 0.28 percent
to as little as 0.01 percent of average annual sales (or income). For
registrants that are large businesses with higher annual sales, the
impact of the fee is far less.
A. Differences in Fee Increase Among Registrant Categories
Two commenters expressed concern that the fees for chemical
registrants under this final rule reflect a higher percentage increase
than the change in fees for controlled substances registrants.
Commenters noted that fees for chemical manufacturers will increase by
approximately 300 percent and that fees for chemical distributors will
increase by about 100 percent compared to the current fee structure for
these chemical registrants. Commenters proposed an alternative fee
increase for these categories based on the same percentage increase as
controlled substances manufacturers and distributors.
Currently, chemical handlers pay a user fee that supports only the
costs of registration/reregistration and some administrative
oversight--not the operating costs of the DEA's chemical diversion
control program. With the transfer of DEA's chemical control program
costs to the DCFA, chemical registrants must, together with controlled
substances registrants, pay a fee to cover the full costs of the DCP.
The same circumstance occurred in 1993 with the establishment of the
DCFA; controlled substances registrants were faced with a substantial
increase in their fees as they transferred from a similar user fee that
supported registration costs only to a fee schedule to cover the full
costs of DEA's controlled substances diversion control activities. With
the transfer of the chemical control program costs to the DCFA and the
amendments to the law that reimbursements shall be made without
distinguishing between chemical and controlled substances activities,
chemical registrants must now be included in the DCFA population and
pay the fees necessary to sustain that account.
DEA does not have the discretion to adjust fees according to
percentages, such as was proposed by the commenters, as it is required
to fully fund the DCP through fees paid by the registrants while also
maintaining reasonable fees.
B. Program Costs
One commenter suggested that DEA downsize or eliminate programs to
maintain a neutral budget and keep fees low. DEA works diligently to
achieve administrative efficiencies in all of its programs, including
the Diversion Control Program. Through a scheduled, periodic review
process, virtually all aspects of the DCP are inspected to detect any
waste, fraud or abuse. All expenditures charged to the DCFA also are
reviewed and approved by an independent unit within DEA that reviews,
approves, and audits fee-funded expenditures.
Moreover, each of DEA's annual budget requests to Congress, which
contain all components of each DEA program, including the DCP, is
available for public review. Each budget request is examined and
approved by both the Department of Justice and the Office of Management
and Budget.
DEA has undertaken several initiatives to streamline aspects of the
DCP both for DEA and for registrants. For example, DEA is developing a
system to permit the electronic transmission of controlled substances
prescriptions through electronic creation, signature and record
retention, which will significantly increase the efficiency by which
prescriptions are transmitted from prescriber to pharmacy; however, it
will not reduce the review requirements of DEA employees that monitor
the prescription process for controlled substances. DEA has developed a
system that permits the electronic transmission of controlled
substances orders which provides increased efficiencies for industry.
Moreover, in 2005, DEA underwent an internal reorganization to increase
operational efficiencies and keep costs as low as possible. This
reorganization shifted the focus from business decision units to
activities that support the registration and control of the
manufacture, distribution, and dispensing of controlled substances and
listed chemicals. However, DEA is also subject to costs related to
inflation and additional costs of ``doing business'' that face all
organizations despite its best efforts to keep these expenses
reasonable.
C. Effect of Fee Increase on Practitioner Registration
One practitioner commenter noted concern that increases to annual
registrant fees could reduce the number of physicians registering with
DEA and using controlled substances as part of patient care. The
Controlled Substances Act requires that every person who manufactures,
distributes or dispenses any controlled substance or who proposes to
engage in the manufacture, distribution or dispensing of any controlled
substance obtain an annual
[[Page 51108]]
registration (21 U.S.C. 822(a)(1) and 822(a)(2)).
DEA notes that the impact of the annual registration fee on
practitioners ($184 annual equivalent) is not significant, ranging from
a high of 0.28% to a low of 0.13% based on annual income for this
registrant category (see discussion below on small business impacts).
The majority of registered practitioners (71 percent) are physicians
whose annual income averages more than $140,000 and for whom the $184
annual fee equivalent represents approximately 0.13 percent of annual
income. Other large practitioner groups in this category include
dentists (16 percent of practitioners) for whom the annual fee
equivalent represents about 0.14 percent of their average annual income
of $133,000 and veterinarians (5 percent of practitioners) for whom the
annual fee equivalent equates to 0.25 percent of their average annual
income of $76,000. The revised fee will have greater impacts on other
types of practitioners (less than 5 percent of all registered
practitioners) with lower annual incomes, including nurse
practitioners, physician assistants, optometrists, and others for whom
the annual fee equivalent has an average impact of approximately 0.16-
0.28 percent.
IV. Removal of Waiver for Chemical Registrants Holding an Existing
Controlled Substances Registration
Four commenters objected to the removal of the waiver of the
registration requirement for persons who distribute, import or export a
drug product containing a List I chemical if that person is already
registered with DEA to manufacture, distribute or dispense, import or
export a controlled substance. Commenters noted that removal of this
waiver could dramatically increase the annual registration fees for
affected registrants and would damage their ability to service their
customers, would pose an ``unreasonable hardship,'' and could adversely
affect the List I chemical supply chain since many affected registrants
also hold a controlled substances registration. One commenter also
noted that removal of this waiver could require significant changes to
internal operations for affected registrants who would have to maintain
two DEA registrations, imposing significant paperwork, technological
and operational burdens. The commenter also suggested removal of the
waiver could result in increased operational burdens for DEA.
After careful review of these comments and consideration of the
benefits compared to the drawbacks associated with removal of this
waiver, DEA has decided to retain the current registration waiver for
persons who distribute, import, or export a product containing a List I
chemical who already hold a valid DEA registration to manufacture,
distribute or dispense, import, or export a controlled substance.
Accordingly, the proposed changes to the waiver provision are
removed.
DEA will address registration issues created by passage of the
Combat Methamphetamine Epidemic Act of 2005, included in the USA
PATRIOT Improvement and Reauthorization Act of 2005 (Pub. L. 109-177)
as part of the Act's implementing regulations.
V. Registration Fee Waivers for Certain Organizations and Persons
Two commenters objected to DEA's fee exemption for certain entities
and persons. Currently, government institutions, law enforcement
agencies, and military personnel are exempt from fees. In addition, DEA
waives fees for some charitable organizations. The commenters objected
to these fee waivers suggesting that the process is inequitable and
that the net result is higher fees for fee-paying registrants than if
these organizations were also required to pay annual registration and
reregistration fees. The commenters also asserted that fee-paying
registrants are paying a ``hidden contribution'' or ``forced donation''
to charitable organizations, without tax relief, by partially
subsidizing their fee requirements.
DEA appreciates these comments. DEA recognizes that exempting
certain entities from paying annual fees provides a benefit to some at
the expense of others and is evaluating its current practice of
exempting certain organizations and persons from annual registration
fees. Any changes to this practice will require a separate regulatory
process, including notice and comment.
VI. Performance Standards
Two commenters objected to the omission of anticipated outcomes or
results expected by DEA as a result of the increased fees. The
commenters requested detail on how DEA will track such results and
correlate them to the higher fees while recommending the development of
a system of metrics, accountability and reporting for the DCP.
The Government Performance and Results Act (GPRA) and the
President's Management Agenda (PMA), requires DEA, like all other
agencies and components, to provide a budget summary that incorporates
performance information on a quarterly basis. In response to these
requirements, DEA already integrates budget and performance in order to
evaluate the effectiveness of programs relative to long-term,
measurable outcome goals.
More specifically, in response to GPRA and the PMA, the DCP's
budgetary reporting on outlays from the DCFA includes performance
measures that are consistent with DEA's Strategic Plan and that reflect
the effectiveness of programmatic activities funded by registrant fees.
Among the objectives included in DEA Strategic Plan is continued
support to the registrant population through improved technology,
including E-commerce and customer support, while maintaining
cooperation, support, and assistance from the regulated industry. These
efforts, funded through registration fees, are intended to provide
benefits to the registrant population such as streamlined processing
and improved access to information. They are also intended to reduce
the paperwork burden on small businesses; reduce forged or stolen
prescriptions; improve authentication and verification of the
prescribing or ordering party and reduce processing time; increase
overall security; and improve DEA's data quality, agency efficiency and
responsiveness in carrying out its mission.
All budget submissions for the Diversion Control Program, like
submissions for all programs across DEA, are subject to multiple levels
of scrutiny and review within DEA, the Department of Justice, and the
Office of Management and Budget before being included in the
President's annual Budget Request to Congress.
VII. $15 Million Treasury Transfer
One commenter urged DEA to request that Congress resume the annual
$15 million appropriation to offset the requirement that the first $15
million in fee collections be transferred to the Treasury, so that all
fee funds may be used for DCP activities. The commenter noted that the
annual $15 million transfer represents a ``significant component'' of
the amounts to be collected each year.
The Appropriations Act of 1993 requires that DEA transfer the first
$15 million of fee revenue to the General Fund of the Treasury each
year (21 U.S.C. 886a(1)). For each fiscal year from Fiscal Year 1993
through Fiscal Year 1998, Congress appropriated an additional $15
million to offset this requirement (a total infusion to the DCFA of $90
million). However, beginning in Fiscal Year 1999, Congress
[[Page 51109]]
discontinued this additional appropriation. Accordingly, since Fiscal
Year 1999, DEA has to include the annual $15 million transfer for fee
calculations; that is, DEA must pay for all operational costs of the
DCP plus the $15 million transfer out of fee funds collected from
registrants.
VIII. Extension of Implementation of the Final Rule
Three commenters requested delay of implementation of the final
rule to Fiscal Year 2007 or later. Two commenters requested the delay
because of the potential effects of removal of the registration waiver
for chemical handlers holding a current controlled substance
registration. Following careful review of comments, DEA has decided to
keep this waiver intact (see discussion above).
Three commenters requested the delay because of ongoing changes in
the industry, including pending state and Federal legislation affecting
over-the-counter products containing listed chemicals (such as products
containing pseudoephedrine and ephedrine). One commenter noted that
such pending legislation could affect distributors carrying these
products and therefore DEA registrations and revenue projections. The
commenters also noted that the fee modifications are coming at a time
when Congress, Federal agencies, and private party payers are exploring
methods for reducing reimbursement for prescription drugs. Two
commenters wrote that implementation of the final rule would come in
the middle of budget cycles for affected registrants and would,
therefore, impose financial challenges because of the unanticipated
additional expenses in the annual fees, particularly for chain drug
stores with many separately registered sites. DEA notes that very few
chain registrants have registrations expiring during the current
calendar year, thus limiting the potential impact of the fee increase
in the current budget cycle. With respect to pending legislation and
its possible effect on DEA registrations, DEA takes into account the
potential ebb and flow of the registrant population through the
retirement of old registrations and new applications for registration
when calculating the fees. DEA cannot delay implementation of the new
fee schedule as the agency is required, by statute, to recover the full
costs of the diversion control program through registration fees.
IX. Overview of Diversion Control Program Responsibilities
The mission of DEA's Diversion Control Program (DCP) is to enforce
the provisions of the Controlled Substances Act as they pertain to
ensuring the availability of controlled substances and listed chemicals
for legitimate uses in the United States while exercising controls to
prevent the diversion of these substances and chemicals for illegal
uses.
DCP activities include: Program priorities and field management
oversight; coordination of major investigations; drafting and
promulgating of regulations relating to the enforcement of the CSA and
other legislation; establishment of national policy on diversion;
fulfillment of U.S. obligations under drug control treaties; advice and
leadership on state legislation/regulation; legal control of drugs and
chemicals not previously under Federal control; control of imports and
exports of licit controlled substances and chemicals; and program
resource planning and allocation, among other activities.
As was outlined in the Notice of Proposed Rulemaking, DCP
activities funded to date out of the DCFA have been limited to
controlled substances diversion control activities, including
controlled substances scheduling, registration, investigation,
inspection, data collection and analysis, training, establishing
production quotas, cooperative efforts with state, local and other
Federal agencies, cooperative efforts with the regulated industry,
international activities relating to the registration and control of
the manufacture, distribution and dispensing of controlled substances,
and attendant management, personnel, administrative and clerical
oversight for the DCP. Fee-fundable activities also have included
travel, rent, utilities, supplies, equipment, and services associated
with the above-listed activities and activities related to the control
of licit controlled substances in the U.S. in which the initial source
is foreign. One commenter wrote that administrative expenses should not
be paid for out of the DCFA and fee funds; however, the courts have
found that all activities and expenses that are directly related to
diversion control may be funded with registration and reregistration
fees (AMA v. Reno, 57 F.3d 1129, 1135 (DC Cir. 1995)). Administrative
and other operational costs are directly related to the ongoing
diversion control efforts of the DCP.
With the inclusion of the chemical diversion control activities in
the DCFA and registrant fees by the Appropriations Act, activities
related to the overall control of listed chemicals, registration,
investigation, inspection, data collection and analysis, cooperative
efforts with the regulated industry, related management and
administrative positions devoted to diversion control activities, other
personnel, and administrative and clerical oversight have been included
in the budget calculations that are used to determined the registration
fees.
For detail on the specific DCP components to be funded through the
DCFA and their associated costs for the Fiscal Year 2006-2008 period
covered by this rulemaking, please see DEA's Notice of Proposed
Rulemaking, published in the Federal Register on November 16, 2005 (70
FR 69474).
X. Budget Changes
In calculating the registration and reregistration fees contained
in this Final Rule, DEA has included all DCP activities associated with
the ``registration and control of the manufacture, distribution and
dispensing, importation and exportation of controlled substances and
listed chemicals'' (Pub. L. 108-447).
As discussed in detail in the Notice of Proposed Rulemaking (70 FR
69474), beginning in Fiscal Year 2006, both controlled substance and
chemical diversion control costs must be included in the calculation of
DCFA registration and reregistration fees. Among the chemical diversion
control costs to be included among the ``full costs'' of operating the
DCP are a portion of the Office of Training (TR) that specifically
supports the activities of the DCP by providing training, guidance and
instruction for Diversion Investigators, Diversion Task Force Officers,
regulatory agencies, state and local law enforcement, and DCP personnel
on controlled substances and chemical diversion control, advanced
skills and technical knowledge, and systems applications. Also included
are 188 chemical diversion control positions; 12 overseas diversion
investigators dedicated to the DCP; and costs associated with the
chemical transaction system (CTRANS).
The chemical diversion control costs that will be supported through
the DCFA total $24,499,000 for Fiscal Year 2006, $24,880,000 for Fiscal
Year 2007, and $25,235,000 for Fiscal Year 2008, accounting for salary
growth and inflation.
In addition to the chemical control costs, DEA is including among
fee-fundable activities certain other internal resources that support
the DEA's diversion control activities, but that, as was discussed more
fully in previous rulemakings regarding the DCFA, had previously been
supported through appropriated funds despite their direct
[[Page 51110]]
relationship to and support of the DCP. These activities include
portions of the Office of Chief Counsel, the Office of Forensic
Sciences Special Testing Laboratory, and the Special Operations
Division; and additional special agent and intelligence analyst costs
not previously supported through the DCFA. These components and
associated costs are described below. A portion of DEA's internal
computer system, Firebird, which already is supported through the DCFA,
is included in the fee-fundable cost. The total cost of these non-
chemical additions for Fiscal Year 2006 is $26,996,000; for Fiscal Year
2007 is $31,198,000; and for Fiscal Year 2008 is $34,736,000.
In calculating the revised fee schedule, DEA used the Fiscal Year
2006 enacted Appropriation, the President's Budget Request for Fiscal
Year 2007, the expected Budget Request for Fiscal Year 2008, and the
annual $15 million transfer to the U.S. Treasury as mandated by the CSA
(21 U.S.C. 886a). In addition to fee funding all program elements and
activities related to the registration and control of the manufacture,
distribution, dispensing, importation, and exportation of controlled
substances and listed chemicals, DEA must transfer the first $15
million of fee revenue to the General Fund of the Treasury each year as
described above (21 U.S.C. 886a(1)).
The Fiscal Year 2006 cost of the DCP is $201,673,000, including a
base of $150,178,000 for controlled substances diversion control
activities, $24,499,000 in chemical diversion control activities, and
$26,996,000 for the additional non-chemical DCP support activities
outlined above and described in detail in the November 16, 2005 Notice
of Proposed Rulemaking (70 FR 69474), including 52 additional special
agent positions; a portion of the Forensic Sciences Special Testing
Laboratory; a portion of the Office of Chief Counsel that directly
supports diversion control activities; 34 of the 67 field intelligence
analysts to be phased in between Fiscal Year 2006-2007 and 6
Headquarters intelligence analysts to support domestic and
international diversion control investigations (the remaining 33 field
intelligence analysts will be phased in during Fiscal Year 2007); a
portion of the Special Operations Division directly related to
diversion control efforts; and Firebird operations costs to support
communication and infrastructure of the diversion control program.
With the addition of the required $15 million transfer to the U.S.
Treasury, the total amount necessary to collect through registrant fees
in Fiscal Year 2006 is $216,673,000.
The DCP cost for Fiscal Year 2007, including all activities
relating to the registration and control of the manufacture,
distribution and dispensing of controlled substances and listed
chemicals, is $212,078,000, as reflected in the President's Budget
Request to Congress. Including the required $15 million transfer to the
U.S. Treasury, the total amount necessary to collect through registrant
fees in Fiscal Year 2007 is $227,078,000. The anticipated costs of the
DCP for Fiscal Year 2008, including all activities relating to the
registration and control of the manufacture, distribution and
dispensing of controlled substances and listed chemicals, is
$218,669,000. Including the required $15 million transfer to the U.S.
Treasury, the total amount necessary to collect through registrant fees
in Fiscal Year 2008 is $233,669,000.
The total amount that must be collected through fee funds for the
Fiscal Year 2006-2008 period to fully fund the DCP as mandated by
statute is $677,420,000. Without an increase in fees, DEA would fall
short by $185,475,536 in funds to support the operations of the DCP.
The new fee structure contained in this final rule, therefore, provides
the necessary additional funds to ensure that the operational costs of
the DCP are fully funded through registrant fees as mandated by
statute. As explained above, DEA is required by statute to collect the
``full costs'' associated with operating the DCP.
XI. Calculation of Fees
Based on the total amount necessary to collect for Fiscal Years
2006-2008, DEA developed the specific fee levels for each registrant
category according to its current fee structure and the fee-paying
ratios that have been in existence since the inception of registrant
fees. New fees are shown in the table below. For discussion on DEA's
analysis of alternative fee schedules and approaches to calculating
registrant fees, please see DEA's 2002 Final Rule (67 FR 51988, August
9, 2002) and its 1996 Final Rule (61 FR 68624, December 30, 1996).
In developing the fee schedule, DEA opted to set the fee level for
a three-year period (FY 2006-2008) for two reasons. First, the vast
majority of registrants are practitioners who pay a three-year
registration fee. These registrants are divided into roughly three
separate groups who pay their three-year registration fees on alternate
year cycles. Accordingly, the fees below reflect the total amount
necessary to be collected for the full three-year period (FY 2006-
2008), divided by projected registrants and accounting for projected
registrant growth by category for each fiscal year. Because different
categories of registrants pay different amounts, DEA weighted the
number of registrants in each category to ensure the appropriate
reflection in the fee schedule. In calculating the final fee schedule
reflected below, DEA relied on the latest and current registrant
population figures, which have fluctuated since the proposed fees
contained in the Notice of Proposed Rulemaking. Because the fees
reflect the total amount necessary for collection over a three-year
period (Fiscal Years 2006-2008) and because the type and number of
registrants varies from year to year, the total amount of fees
collected may not equal the requested budget level for any given year.
Surplus fees collected in one year are used to offset fee collection
shortfalls in another year. In no case are fees spent in excess of the
levels enacted by Congress.
In evaluating options to structure the fee schedule, DEA opted to
remain with the current fee structure to reduce reporting burdens on
registrants and operational costs associated with the DCP which would
then be passed on to registrants through annual fees.
To recover the full costs of the DCP as required by statute and as
outlined in the preceding sections, DEA is adjusting the fees in
accordance with its existing fee structure as shown in the following
table. Under this fee schedule, controlled substances registrants and
chemical registrants in the same registrant category (e.g.,
manufacturers) pay the same fee regardless of the substance or chemical
being handled. The table also includes the current fees paid by each
category.
------------------------------------------------------------------------
Current annual
Registrant class New annual fee fee
------------------------------------------------------------------------
Manufacturers (controlled substances)... $2,293 $1,625
[[Page 51111]]
Manufacturers (chemical)................ 2,293 595
(registration)
Distributors, Importers/Exporters 1,147 813
(controlled substances), including
reverse distributors...................
Distributors, Importers/Exporters 1,147 595
(chemical)............................. (registration)
Chemical Retail Distributors............ 1,147 255
(registration)
Dispensers/Practitioners *.............. 184 130
Researchers, Narcotic Treatment Programs 184 130
------------------------------------------------------------------------
* Practitioners, mid-level practitioners, pharmacies, hospitals/clinics,
and teaching institutions will pay a fee of $551 for a three-year
registration period.
The fee structure above supplants the current fee structure for
controlled substances and for chemical registrants. These fees go into
effect November 1, 2006.
XI. Related Issues and Waivers
Also by this Notice, DEA is removing differentiation between retail
and non-retail distributors of List I chemicals. As of the effective
date of this final rule, both retail and non-retail distributors must
pay the same fee as described above.
DEA also is withdrawing, by this notice, its Notice of Proposed
Rulemaking issued on December 1, 1999, which proposed changes in
registration and reregistration fees for manufacturers, distributors,
importers, exporters and retail distributors of List I chemicals (64 FR
67216, December 1, 1999).
DEA also is rescinding the 1997 Notice of Fee Waiver published on
October 17, 1997 (62 FR 53958) which had waived a portion of the
registration fee for non-retail distributors of pseudoephedrine,
phenylpropanolamine, and combination ephedrine drug products.
XII. Effects on Small Businesses
The new registrant fees range from $184 to $2,293 annually per
location and per registered business activity. To assess whether the
fees could impose a significant economic impact on a small entity, DEA
considered whether the fees represent more than one percent of annual
revenues for the registrant groups that qualify as small entities under
the Small Business Administration (SBA) standards. As discussed below,
DEA does not anticipate that the increase in fees will have a
significant impact on a substantial number of small entities.
Most DEA registrants qualify as small entities under the SBA
standards. Almost all practitioners, who compose 85 percent of all
registrants affected by this rulemaking, would be considered small. For
practitioners and dispensers, the annual revenues would have to be
below $18,400 to have the annual registration fee or equivalent
represent more than one percent of revenues. Medical practitioners who
are granted authority to handle controlled substances have annual
incomes well above that level. Eighty-six percent of all practitioners
have annual incomes in excess of $133,000 (Bureau of Labor Statistics
salary information). For these practitioners, the new annual fee
equivalent of $184 represents less than 0.14 percent of annual income.
Physician assistants, the mid-level practitioner with the lowest
average salary, have annual salaries of about $65,000 (ibid.). For this
practitioner group, which represents about 2 percent of registered
practitioners, the annual fee equivalent equates to 0.28 percent of
annual income.
The higher fees also will not impose a significant burden on
dispensers. The average independent pharmacy has sales of almost $2
million according to the National Association of Chain Drug Stores. The
smallest clinics have revenue streams higher than $18,400. Among
dispensers, the greatest impact of this regulatory fee change will be
on chain pharmacies which must hold a registration for each of their
locations. The largest chain holds retail pharmacy registrations for
more than 5,000 locations as well as almost 40 registrations for its
distribution centers. However, these businesses do not qualify as small
entities; moreover, for the annual fee to have a significant economic
impact, annual revenues would have to be less than $18,400.
DEA acknowledges the concerns of one commenter that fee increases
going into effect in the middle of a budget cycle represent a non-
controllable and, perhaps, unanticipated, expense for large chain drug
stores and chain pharmacy distribution centers; however, as discussed
above, only a small fraction of registered chain drug stores must renew
their DEA registration in the second half of Calendar Year 2006 and are
thus affected by the budgetary implications of the fee increase.
For manufacturers, the 2002 Census data indicate that the value of
shipments for the smallest chemical manufacturers (including drugs)
ranged from $477,000 to $1.1 million per location (establishment). For
this registrant group, therefore, the fee of $2,293 does not represent
more than one percent of revenues and will not impose a significant
burden.
The one registrant group for which the fees could exceed one
percent of revenues and have a significant economic impact is chemical
distributors. According to 2004 Duns data, between one percent and 11
percent of the wholesale sectors handling listed chemicals have
revenues below $100,000. DEA does not collect financial data on its
registrants, but it is possible that some chemical distributor
registrants have revenues below $100,000. The increase in the annual
reregistration fee for chemical distributors (from $477 to $1,147) may
impose a significant burden on these registrants. The increase in the
initial registration fee (from a subsidized $116 for certain entities
to $1,147 annually) also could be a barrier to entrance for these very
small firms. Based on its experience, however, DEA considers it
unlikely that any firm that lacked the resources to pay the initial
registration fee would be granted a registration because it would be
unlikely to have the resources necessary to prevent diversion of the
products. Moreover, the new registration fees for all wholesale level
activities are far less than the estimated annual fee of $6,400 that
chemical registrants would be charged if they were required to
independently fund the chemical portion of the diversion control
program, as previously discussed in the Notice of Proposed Rulemaking
(70 FR 69474, November 16, 2005).
In short, combining all diversion control activities into a single
Diversion Control Program, as mandated by the Consolidated
Appropriations Act of
[[Page 51112]]
2005, results in scale efficiencies and overall reduced costs to all
registrants.
XIII. Regulatory Analysis
Regulatory Flexibility Act
The Deputy Administrator hereby certifies that this rulemaking has
been drafted in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) and has provided above detailed regulatory analysis on
the effects of this rulemaking on small entities. The rule will not
have a significant economic impact on a substantial number of small
entities as discussed in Section XII. While DEA recognizes that this
regulation will have a financial effect on registrants, the change in
fees is necessary to fully comply with 21 U.S.C. 886a and related
statutes, which mandate that DEA establish the fees at a level
necessary to recover the full costs of the Diversion Control Program.
Executive Order 12866
The Deputy Administrator certifies that this rulemaking has been
drafted in accordance with the principles in Executive Order 12866
Sec. 1(b). DEA has determined that, because the increased fees will
result in a total increase of less than $70 million annually to be
collected through fees (that is the difference between the amount
collected annually under the previous fee structure and the amount to
be collected under the new fee structure), this is not a significant
regulatory action; however, it was reviewed by the Office of Management
and Budget. The fees to be collected represent an increase of less than
$70 million each year for the Fiscal Year 2006-2008 period (based on
estimated fee collection figures and compared to the previous fee
schedule) and are required to fully support the President's budget for
the DCP, as approved by Congress through the appropriations process.
Therefore, DEA has no discretion in the establishment of the new fees
and is required by law to collect registration and reregistration fees
of sufficient amount to fully support the DCP.
Executive Order 12988
This regulation meets the applicable standards set forth in
Sec. Sec. 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice
Reform.
Executive Order 13132
This rulemaking 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 rulemaking does not have federalism implications
warranting the application of Executive Order 13132.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate of $118,000,000 or more in any one
year, and will not significantly or uniquely affect small governments.
The increase in fees for private sector entities and individuals will
result in a total increase of less than $70 million annually to be
collected through fees (that is the difference between the amount
collected annually under the prior fee structure and the amount to be
collected under the new fee structure). Moreover, the effect on
individual entities and practitioners is minimal. The majority of the
affected entities will pay a fee of $551 for a three year registration
period (the equivalent of $184 per year) which equates to about 0.13
percent of annual income for most practitioners (the vast majority of
all registrants). This rule is promulgated in compliance with 21 U.S.C.
886a that the full cost of operating the DCP be collected through
registrant fees.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by Sec. 804 of the Small
Business Regulatory Enforcement Fairness Act of 1996. While this rule
will result in an annual effect on the economy of $100,000,000 or more,
in that it will result in the collection of approximately $216-$234
million annually, the increase in fees (that is, the difference between
the amount collected annually under the previous fee structure compared
to the new fee structure) will result in a total increase of less than
$70 million annually. Moreover, it will not result in a major increase
in costs or prices or cause significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
U.S.-based companies to compete with foreign-based companies in
domestic and export markets. This rule is not a discretionary action
but rather responds to statutory clarification as to the activities
constituting the DCP which, by law, must be fully funded through
registrant fees (21 U.S.C. 821 and 958 and 21 U.S.C. 886a,
respectively). Moreover, the individual effect on small business
registrants is minimal. The majority of registrants considered to be
small businesses are practitioners who will pay a three-year
registration fee of $551 or the equivalent of $184 per year. For the
majority of these practitioners, who compose the vast majority of
registrants and registrants qualifying as small businesses, this annual
fee equivalent represents about 0.13 percent of their annual mean
salary. The impact on other small business entities is described in
greater detail in the preceding regulatory analysis.
List of Subjects
21 CFR Part 1301
Administrative practice and procedure, Drug traffic control,
Security measures.
21 CFR Part 1309
Administrative practice and procedure, Drug traffic control,
Exports, Imports, Security measures.
0
For the reasons set out above, 21 CFR parts 1301 and 1309 are amended
as follows:
PART 1301--REGISTRATION OF MANUFACTURERS, DISTRIBUTORS AND
DISPENSERS OF CONTROLLED SUBSTANCES
0
1. The authority citation for part 1301 is revised to read as follows:
Authority: 21 U.S.C. 821, 822, 823, 824, 871(b), 875, 877, 886a,
951, 952, 953, 956, 957.
0
2. Section1301.13 is amended by revising paragraph (e)(1) to read as
follows:
Sec. 1301.13 Application for registration; time for application;
expiration date; registration for independent activities; application
forms, fees, contents and signature; coincident activities.
* * * * *
(e) * * *
(1)
[[Page 51113]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Application Registration
Business activity Controlled substances DEA application forms fee period Coincident activities
(dollars) (years) allowed
--------------------------------------------------------------------------------------------------------------------------------------------------------
(i) Manufacturing................ Schedules I-V............. New--225........................... 2,293 1 Schedules I-V: May
Renewal--225a...................... 2,293 distribute that
substance or class for
which registration was
issued; may not
distribute or dispose
any substance or class
for which not
registered. Schedules II-
V: except a person
registered to dispose of
any controlled substance
may conduct chemical
analysis and preclinical
research (including
quality control
analysis) with
substances listed in
those schedules for
which authorization as a
mfg. was issued.
(ii) Distributing................ Schedules I-V............. New--225........................... 1,147 1 .........................
Renewal--225a...................... 1,147
(iii) Reverse distributing....... Schedules I-V............. New--225........................... 1,147 1 .........................
Renewal--225a...................... 1,147
(iv) Dispensing or instructing Schedules II-V............ New--224........................... 551 3 May conduct research and
(includes Practitioner, Hospital/ Renewal--224a...................... 551 instructional activities
Clinic, Retail Pharmacy, Central with those substances
fill pharmacy, Teaching for which registration
Institution). was granted, except that
a mid-level practitioner
may conduct such
research only to the
extent expressly
authorized under state
statute. A pharmacist
may manufacture an
aqueous or oleaginous
solution or solid dosage
form containing a
narcotic controlled
substance in Schedule II-
V in a proportion not
exceeding 20% of the
complete solution,
compound or
