Assessment of Annual Needs for the List I Chemicals Ephedrine, Pseudoephedrine, and Phenylpropanolamine for 2011: Proposed

AGENCY:

Drug Enforcement Administration (DEA), Justice.

ACTION:

Notice of proposed annual assessment of needs for 2011.

SUMMARY:

This notice proposes the initial year 2011 Assessment of Annual Needs for certain List I chemicals in accordance with the Combat Methamphetamine Epidemic Act (CMEA) of 2005. The CMEA requires DEA to establish production quotas and import quotas for ephedrine, pseudoephedrine, and phenylpropanolamine. The CMEA places additional regulatory controls upon the manufacture, distribution, importation, and exportation of the three List I chemicals.

DATES:

Written comments must be postmarked, and electronic comments must be sent, on or before October 13, 2010.

ADDRESSES:

To ensure proper handling of comments, please reference “Docket No. DEA-350P” on all written and electronic correspondence. Written comments being sent via regular mail should be sent to the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, Virginia 22152, Attention: DEA Federal Register Representative/ODL. Written comments sent via express mail should be sent to DEA Headquarters, Attention: DEA Federal Register Representative/ODL, 8701 Morrissette Drive, Springfield, Virginia 22152. Comments may be directly sent to DEA electronically by sending an electronic message to dea.diversion.policy@usdoj.gov. However, persons wishing to request a hearing should note that such requests must be written and manually signed; requests for a hearing will not be accepted via electronic means. DEA will accept attachments to electronic comments in Microsoft Word, WordPerfect, Adobe PDF, or Excel file formats only. DEA will not accept any file format other than those specifically listed here.

FOR FURTHER INFORMATION CONTACT:

Christine A. Sannerud, PhD, Chief, Drug and Chemical Evaluation Section, Drug Enforcement Administration, 8701 Morrissette Drive, Springfield, Virginia 22152, Telephone: (202) 307-7183.

SUPPLEMENTARY INFORMATION:

Section 713 of the CMEA of 2005 (Title VII of Pub. L. 109-177) (CMEA) amended § 306 of the Controlled Substances Act (CSA) (21 U.S.C. 826) by adding ephedrine, pseudoephedrine, and phenylpropanolamine to existing language to read as follows: “The Attorney General shall determine the total quantity and establish production quotas for each basic class of controlled substance in schedules I and II and for ephedrine, pseudoephedrine, and phenylpropanolamine to be manufactured each calendar year to provide for the estimated medical, scientific, research, and industrial needs of the United States, for lawful export requirements, and for the establishment and maintenance of reserve stocks.” Further, § 715 of CMEA amended 21 U.S.C. 952 “Importation of controlled substances” by adding the same List I chemicals to the existing language in paragraph (a), and by adding a new paragraph (d) to read as follows:

(a) Controlled substances in schedule I or II and narcotic drugs in schedules III, IV, or V; exceptions:

It shall be unlawful to import into the customs territory of the United States from any place outside thereof (but within the United States), or to import into the United States from any place outside thereof, any controlled substance in schedule I or II of subchapter I of this chapter, or any narcotic drug in schedule III, IV, or V of subchapter I of this chapter, or ephedrine, pseudoephedrine, and phenylpropanolamine, except that—

(1) such amounts of crude opium, poppy straw, concentrate of poppy straw, and coca leaves, and of ephedrine, pseudoephedrine, and phenylpropanolamine, as the Attorney General finds to be necessary to provide for medical, scientific, or other legitimate purposes * * *

may be so imported under such regulations as the Attorney General shall prescribe.

(d)(1) With respect to a registrant under section 958 who is authorized under subsection (a)(1) to import ephedrine, pseudoephedrine, or phenylpropanolamine, at any time during the year the registrant may apply for an increase in the amount of such chemical that the registrant is authorized to import, and the Attorney General may approve the application if the Attorney General determines that the approval is necessary to provide for medical, scientific, or other legitimate purposes regarding the chemical.

Editor's Note:

This excerpt of the amendment is published for the convenience of the reader. The official text is published at 21 U.S.C. 952(a) and (d)(1).

The proposed 2011 Assessment of Annual Needs represents those quantities of ephedrine, pseudoephedrine, and phenylpropanolamine which may be manufactured domestically and/or imported into the United States to provide adequate supplies of each substance to meet the estimated medical, scientific, research, and industrial needs of the United States; lawful export requirements; and the establishment and maintenance of reserve stocks.

As of June 25, 2010, the DEA has received a total of 99 applications for 2011 import, procurement and manufacturing quotas for ephedrine, pseudoephedrine, and phenylpropanolamine. As a comparison, for the 2010 quota year, DEA has received 204 applications for import, procurement, and manufacturing quotas. DEA calculated the 2011 Assessment of Annual Needs for the List I chemicals using the calculation methodology described in both the 2009 and 2010 Assessment of Annual Needs (74 FR 32954 and 74 FR 60294, respectively). These calculations take into account the criteria that DEA is required to consider in accordance with 21 U.S.C. 826 and its implementing regulations (21 CFR 1315.11).

In finalizing the assessments for these List I chemicals, DEA will consider the information contained in additional applications for 2011 import, manufacturing and procurement quotas from DEA registered manufacturers and importers that DEA receives after the date of drafting this notice, June 25, 2010, as well as the comments that DEA receives in response to this proposal. DEA registered manufacturers and importers are reminded that pursuant to 21 CFR 1315.22, 1315.32(e) and 1315.34(d) applications for import and procurement quotas are due by April 1 and that applications for manufacturing quotas are due by May 1 of the year preceding the year for which the quota is to be applied. DEA encourages registrants to submit their quota applications by the regulatory due dates to ensure their requirements are considered.

Underlying Data and DEA's Analysis

In determining the proposed 2011 assessments, DEA has considered the total net disposals (i.e. sales) of the List I chemicals for the current and preceding two years, actual and estimated inventories, projected demand (2011), industrial use, and export requirements from data provided by DEA registered manufacturers and importers in procurement quota applications (DEA 250), from manufacturing quota applications (DEA 189), and from import quota applications (DEA 488).

DEA further considered trends as derived from information provided in applications for import, manufacturing, and procurement quotas and in import and in export declarations. DEA notes that the inventory, acquisitions (purchases) and disposition (sales) data provided by DEA registered manufacturers and importers reflects the most current information available.

Ephedrine Data

Ephedrine Analysis

DEA calculated the proposed 2011 Assessment of Annual Needs for ephedrine using the calculation developed to determine the 2009 Assessment of Annual Needs. This calculation considers the criteria defined in 21 U.S.C. 826: estimated medical, scientific, research, and industrial needs of the United States; lawful export requirements; and the establishment and maintenance of reserve stocks.

As of June 25, 2010, DEA registered manufacturers of dosage form products containing ephedrine requested the authority to purchase a total of 2,867 kg ephedrine (for sale) in 2011. DEA registered manufacturers of ephedrine reported sales totaling approximately 2,136 kg in 2009 and 2,416 kg in 2010; this represents a 12 percent increase in sales reported by these firms from 2009 to 2010. Additionally, exports of ephedrine products from the United States as reported on export declarations (DEA 486) totaled 64 kg in 2009 and 52 kg in 2010; this represents a 19 percent decrease from levels observed in 2009. The average of the 2009 and 2010 exports of ephedrine products is approximately 58 kg. DEA also considered information on trends in the national rate of net disposals from sales data provided by IMS Health's NSP database. IMS NSP data reported the average sales volume of ephedrine for the calendar years 2008 and 2009 to be approximately 1,431 kg. DEA notes that the 2010 sales figure reported by manufacturers (2,416 kg) is higher than the average sales reported by IMS for the previous two years (1,431 kg). This is expected because a manufacturer's reported sales include quantities which are necessary to provide reserve stocks for distributors and retailers. In considering the manufacturer's reported sales, DEA thus believes that 2,416 kg fairly represents the U.S. sales of ephedrine for 2011 and that 58 kg fairly represents the export requirements of ephedrine.

For the establishment and maintenance of reserve stocks, DEA notes that 21 CFR 1315.24 allows for an inventory allowance (reserve stock) of 50 percent of a manufacturer's estimated sales. DEA also considered the estimated 2010 year end inventory as reported by DEA registrants in determining the inventory allowance.

DEA calculated the ephedrine (for sale) assessment by the following methodology:

2010 sales + reserve stock + export requirement − existing inventory = AAN 2,416 + (50%*2,416) + 58 − 315 = 3,367 kg ephedrine (for sale) for 2011.

This calculation suggests that DEA's Assessment of Annual Needs for ephedrine should be proposed to be 3,400 kg. Accordingly, DEA is proposing the 2011 Assessment of Annual Needs for ephedrine (for sale) at 3,400 kg.

Phenylpropanolamine (for Sale) Data

Phenylpropanolamine (for Sale) Analysis

DEA utilized the same general methodology and calculation to establish the assessment for phenylpropanolamine (for sale) as was described for the assessment of ephedrine (for sale), above.

As of June 25, 2010, DEA registered manufacturers of dosage form products containing phenylpropanolamine requested the authority to purchase 5,638 kg phenylpropanolamine (for sale) in 2011. DEA registered manufacturers of phenylpropanolamine reported sales totaling approximately 4,350 kg in 2009 and 4,374 kg in 2010; this represents a 0.5 percent increase in sales reported by these firms from 2009 to 2010. Additionally, exports of phenylpropanolamine products from the U.S. as reported on export declarations (DEA 486) totaled 3 kg in 2009 and 0 kg in 2010; this represents a 3 kg decrease from levels observed in 2009. The average of the 2009 and 2010 exports of phenylpropanolamine products is approximately 2 kg. DEA thus believes that 4,374 kg fairly represents the U.S. sales of phenylpropanolamine for 2011 and that 2 kg fairly represents the export requirements of phenylpropanolamine. DEA notes that phenylpropanolamine is sold primarily as a veterinary product for the treatment for canine incontinence and is not approved for human consumption. IMS Health's NSP Data does not capture sales of phenylpropanolamine to these channels and is therefore not included.

DEA calculated the phenylpropanolamine (for sale) assessment by the following methodology:

2010 sales + reserve stock + export requirement − existing inventory = AAN

4,374 + (50%*4,374) + 2 − 1,951 = 4,612 kg phenylpropanolamine (for sale) for 2011.

This calculation suggests that DEA's 2011 Assessment of Annual Needs for phenylpropanolamine (for sale) should be proposed at 4,700 kg. Accordingly, DEA is proposing the 2011 Assessment of Annual Needs for phenylpropanolamine (for sale) at 4,700 kg.

Pseudoephedrine (for Sale) Data

Pseudoephedrine (for Sale) Analysis

DEA utilized the same general methodology and calculations to establish the assessment for pseudoephedrine (for sale) as were described for the assessment of ephedrine (for sale), above.

As of June 25, 2010, DEA registered manufacturers of dosage form products containing pseudoephedrine requested the authority to purchase 181,219 kg pseudoephedrine. DEA registered manufacturers of pseudoephedrine reported sales totaling approximately 145,853 kg in 2009 and 148,934 kg in 2010; this represents a 2 percent increase in sales reported by these firms from 2009 to 2010. During the same period exports of pseudoephedrine products from the U.S. as reported on export declarations (DEA 486) totaled 35,264 kg in 2009 and 8,480 kg in 2010; this represents a 76 percent decrease from levels observed in 2009. The average of the 2009 and 2010 exports is 21,872 kg. Additionally, DEA considered information on trends in the national rate of net disposals from sales data provided by IMS Health. IMS NSP data reported the average retail sales volume of pseudoephedrine for the calendar years 2008 and 2009 to be approximately 145,008 kg. DEA thus believes that 148,934 kg of sales reported by manufacturers fairly represents the U.S. sales of pseudoephedrine for 2011 and that 21,872 kg fairly represents the export requirements of pseudoephedrine.

DEA calculated the pseudoephedrine (for sale) assessment by the following methodology:

2010 sales + reserve stock + export requirement − existing inventory = AAN

148,934 + (50%*148,934) + 21,872 − 55,323 = 189,950 kg pseudoephedrine (for sale) for 2011

This calculation suggests that DEA's 2011 Assessment of Annual Needs for pseudoephedrine (for sale) should be proposed at 190,000 kg. Accordingly, DEA is proposing the 2011 Assessment of Annual Needs for pseudoephedrine (for sale) at 190,000 kg.

Phenylpropanolamine (for Conversion) Data

Phenylpropanolamine (for Conversion) Analysis

As of June 25, 2010, DEA registered manufacturers of phenylpropanolamine (for conversion) requested the authority to purchase a total of 12,200 kg phenylpropanolamine for the manufacture of amphetamine. DEA registered manufacturers of phenylpropanolamine reported sales of phenylpropanolamine totaling approximately 4,415 kg in 2009 and 5,855 kg in 2010; this represents a 26 percent increase in sales reported by these firms from 2009 to 2010. There were no reported exports of phenylpropanolamine (for conversion). DEA has not received any requests to synthesize phenylpropanolamine in 2011. DEA has concluded that the 2010 sales of phenylpropanolamine (for conversion), 5,855 kg, fairly represents U.S. requirements for 2011 and zero kg fairly represents the export requirements of phenylpropanolamine (for conversion).

DEA believes that the data provided in procurement, manufacturing, and import quota applications best represents the legitimate need for phenylpropanolamine (for conversion). Phenylpropanolamine (for conversion) is used for the manufacture of legitimate amphetamine products, but DEA notes that most legitimate amphetamine is manufactured by converting phenylacetone rather than phenylpropanolamine, to amphetamine. Basing the phenylpropanolamine (for conversion) calculation on the total Aggregate Production Quota (APQ) for amphetamine therefore would inaccurately inflate the phenylpropanolamine (for conversion) assessment.

DEA calculated the phenylpropanolamine (for conversion) assessment for the manufacture of amphetamine as follows:

(2010 sales) + reserve stock + export requirement − inventory = AAN (5,855) + (50%*5,855) + 0 − 713 = 8,070 kg PPA (for conversion) for 2011

This calculation suggests that DEA's 2011 Assessment of Annual Needs for phenylpropanolamine (for conversion) should be proposed at 8,100 kg. Accordingly, DEA is proposing the 2011 Assessment of Annual Needs for phenylpropanolamine (for conversion) at 8,100 kg.

Ephedrine (for Conversion) Data

Ephedrine (for Conversion) Analysis

As of June 25, 2010, DEA registered manufacturers of ephedrine (for conversion) requested the authority to purchase a total of 287 kg ephedrine (for conversion) for the manufacture of two substances: Methamphetamine and pseudoephedrine.

DEA considered the ephedrine (for conversion) requirements for the manufacture of methamphetamine and pseudoephedrine. DEA has determined that the established assessments for the manufacture of these two substances are the best indicators of the need for ephedrine (for conversion). The assessment of need for methamphetamine was determined by DEA as the Aggregate Production Quota (APQ) for methamphetamine. DEA determined that the estimated sale of pseudoephedrine, as referenced in the proposed Assessment of Annual Needs (AAN) for pseudoephedrine, represents the need for pseudoephedrine. Reported sales of ephedrine (for conversion) are included as reference to DEA's methodology.

DEA further considered the reported conversion yields of these substances. DEA registered manufacturers reported a conversion yield of 39 percent for the synthesis of methamphetamine from ephedrine. DEA cannot disclose the conversion yield for the synthesis of pseudoephedrine because this information is proprietary to the one manufacturer involved in this type of manufacturing.

DEA calculated the ephedrine (for conversion) assessment by the following methodology:

methamphetamine requirement + pseudoephedrine requirement = AAN

DEA calculated the ephedrine (for conversion) requirement for the manufacture of methamphetamine as follows:

(2010 APQ methamphetamine/39 percent yield) + reserve stock − inventory = ephedrine (for manufacture of methamphetamine)

(3,130/39 percent yield) + 50 percent*(3,130/39 percent yield) − 152 = 11,887 kg

The calculation for the ephedrine (for conversion) requirement for the manufacture of pseudoephedrine leads to a result of 6,703 kg. DEA cannot provide the details of the calculation because this would reveal the conversion yield for the synthesis of pseudoephedrine, which is proprietary to the one manufacturer involved in this type of manufacturing. Therefore, the assessment for ephedrine was determined by the sum total of the ephedrine (for conversion) requirements as described by the following methodology:

methamphetamine requirement + pseudoephedrine requirement = AAN 11,887 + 6,703 = 18,590 kg ephedrine (for conversion) for 2011

This calculation suggests that DEA's 2011 Assessment of Annual Needs for ephedrine (for conversion) should be proposed at 18,600 kg. Accordingly, DEA is proposing the 2011 Assessment of Annual Needs for ephedrine (for conversion) at 18,600 kg.

Conclusion

In finalizing the 2011 assessments for these List I chemicals, DEA will use the methodology and calculations presented above. The numbers used in the calculations may be adjusted upwards or downwards based on the additional applications for 2011 import, manufacturing and procurement quotas received after June 25, 2010. DEA urges registered importers and manufacturers to submit applications for 2011 import, manufacturing and procurement quota so that DEA may include information from those applications when finalizing these assessments in accordance with 21 CFR 1315.

Therefore, under the authority vested in the Attorney General by Section 306 of the CSA (21 U.S.C. 826), and delegated to the Administrator of the DEA by 28 CFR 0.100, and redelegated to the Deputy Administrator pursuant to 28 CFR 0.104, the Deputy Administrator hereby proposes the following 2011 Assessment of Annual Needs for the List I chemicals ephedrine, pseudoephedrine, and phenylpropanolamine for 2011, expressed in kilograms of anhydrous base:

Ephedrine (for conversion) refers to the industrial use of ephedrine, i.e., that which will be converted to another basic drug class such as pseudoephedrine or methamphetamine used for the manufacture of prescription weight loss drug. Phenylpropanolamine (for conversion) refers to the industrial use of phenylpropanolamine, i.e., that which will be converted to another basic drug class such as amphetamine for the manufacture of drug products. The “for sale” assessments refer to the amount of ephedrine, pseudoephedrine, and phenylpropanolamine intended for ultimate use in products containing these List I chemicals.

All interested persons are invited to submit their comments in writing or electronically regarding this proposal following the procedures in the ADDRESSES section of this document. A person may object to or comment on the proposal relating to any of the above-mentioned substances without filing comments or objections regarding the others. If a person believes that one or more of these issues warrant a hearing, the individual should so state and summarize the reasons for this belief. Persons wishing to request a hearing should note that such requests must be written and manually signed; requests for a hearing will not be accepted via electronic means. In the event that comments or objections to this proposal raise one or more issues which the Deputy Administrator finds warrant a hearing, the Deputy Administrator shall order a public hearing by notice in the Federal Register, summarizing the issues to be heard and setting the time for the hearing as per 21 CFR 1315.13(e).

Regulatory Certifications

Regulatory Flexibility Act

The Deputy Administrator hereby certifies that this action will not have a significant economic impact upon small entities whose interests must be considered under the Regulatory Flexibility Act, 5 U.S.C. 601-612. The establishment of the Assessment of Annual Needs for ephedrine, pseudoephedrine and phenylpropanolamine is mandated by law. The assessments are necessary to provide for the estimated medical, scientific, research and industrial needs of the United States, for lawful export requirements, and the establishment and maintenance of reserve stocks. Accordingly, the Deputy Administrator has determined that this action does not require a regulatory flexibility analysis.

Executive Order 12866

The Office of Management and Budget has determined that notices of Assessment of Annual Needs are not subject to centralized review under Executive Order 12866.

Executive Order 13132

This action does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this action does not have federalism implications warranting the application of Executive Order 13132.

Executive Order 12988

This action meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform.

Unfunded Mandates Reform Act of 1995

This action will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $120,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Congressional Review Act

This action is not a major rule as defined by Section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This action will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.