Controlled Substances Export Reform Act of 2005

Mr. President, I rise to speak of the Controlled Substances Export Reform Act of 2005. This bill would make a minor, but long overdue, change to the Controlled Substances Act to reflect the reality of commerce in the 21st Century and to protect high-paying American jobs, while maintaining strong safeguards on exports.

Before I discuss this bill, I want to thank Senator Biden for working with me on this important legislation. Senator Biden has long been recognized as a national leader on drug-related measures, and we have a history of working together on a bipartisan basis to enact sensible reforms in this area, as evidenced by the recent enactment of our steroid precursor bill. I respect his thoughtful collaboration, and I thank him for his work on this proposal.

I would also like to thank Chairman Specter for his critical work on this legislation. We would not be able to move this important bill without his efforts. Furthermore, I would like to thank the majority leader for moving this legislation during the last Congress. We were able to pass the measure last fall, and I hope that we may do so again in the near future.

This Hatch-Biden bill has been my priority for a number of years. The need for this legislation was first brought to my attention by a number of Utah companies, who had experienced significant difficulties in exporting their pharmaceutical products.

Under current law, there are two differing regulatory schemes governing export of U.S.-manufactured pharmaceutical products. One system, adopted by the Congress 10 years ago, governs products regulated under the Federal Food, Drug and Cosmetic Act. The other, which we are today proposing to harmonize with the food and drug law, governs pharmaceuticals with abuse potential regulated under the Controlled Substances Act. In sum, our proposed legislation amends the Controlled Substances Act to allow greater opportunities for U.S. manufacturers to send their products abroad, still retaining full Drug Enforcement Administration authority over those exports.

At present, U.S. pharmaceutical manufacturers are permitted to export most controlled substances only to the immediate country where the products will be consumed. Shipments to centralized sites for further distribution across national boundaries are prohibited, even though this same system is allowed under the Federal Food, Drug and Cosmetic Act for products which are not controlled substances. The current system for export of controlled substances should be contrasted with the freedom of pharmaceutical manufacturers throughout the rest of the world to readily move approved medical products among and between international drug control treaty countries without limitation or restriction.

The unique prohibitions imposed on domestic manufacturers disadvantage U.S. businesses by requiring smaller, more frequent and costly shipments to each country of use without any demonstrable benefit to public health or safety. By imposing significant logistical challenges and financial burdens on U.S. companies, the law creates a strong incentive for domestic pharmaceutical manufacturers to move production operations overseas, threatening high-wage American jobs.

The Controlled Substances Act of 1970 permits U.S. manufacturers of Schedule I and II substances and Schedule III and IV narcotics to export their products from U.S. manufacturing sites only to the receiving country where the drug will be used. The law prohibits export of these products if the drugs are to be distributed outside the country to which they are initially sent. The effect of this restriction is to prevent American businesses from using cost- effective, centralized foreign distribution facilities. In addition, under the current regime, unexpected cross-border demands or surges in patient needs cannot be met. Likewise, complex and time-sensitive export licensing procedures prevent the shipment of pharmaceuticals on a real time basis.

European drug manufacturers face no such constraints. They are able to freely move their exported products from one nation to another while complying with host country laws. This is entirely consistent with the scheme of regulation imposed by international drug control treaties. Only the United States imposes the additional limitation of prohibiting the further transfer of controlled substances. Thus, while a French or British company can ship its products to a central warehouse in Germany for subsequent distribution across the European Union, an American company must incur the added costs of shipping its products separately to each individual country.

S. 1395, the Controlled Substances Export Reform Act, would correct this imbalance and permit the highly-regulated transshipment of exported pharmaceuticals placing American businesses on an equal footing with the

rest of the world. Importantly, however, DEA's authority to control U.S. exports would not be diminished.

The legislation authorizes the Attorney General, or his designee, the DEA, to permit the re-export of Schedule I and II substances and Schedule III and IV narcotics to countries that are parties to the Single Convention on Narcotic Drugs and the Convention on Psychotropic Substances under tightly controlled circumstances: First, each country is required to have an established system of controls deemed adequate by the DEA. Next, only permit or license holders in those countries may receive regulated products. Third, re-exports are limited to one single cross-border transfer. Then the DEA must be satisfied by substantial evidence that the exported substance will be used to meet an actual medical, scientific or other legitimate need, and that the second country of receipt will hold or issue appropriate import licenses or permits. Fifth, in addition, the exporter must notify the DEA in writing within 30 days of a re-export. And finally, an export permit must have been issued by the DEA.

These safeguards are rigorous but fair, and represent a much-needed modernization of the law. The current restrictions on U.S. exports of controlled substances have remained essentially unchanged for more than 30 years. In that time, the global economy has changed dramatically. For those among us who express concerns about the outsourcing of American jobs and the competitiveness of U.S. companies, this modest change represents an opportunity to address such problems head-on.

The Controlled Substance Act's limitation on U.S. pharmaceutical exports imposes unique, unnecessary, and significant logistical and financial burdens on American businesses. The effect of this outdated policy is to create a strong incentive for domestic pharmaceutical companies to move production overseas, threatening American jobs and eliminating DEA jurisdiction over the manufacture and shipment of their products. The Controlled Substances Export Reform Act removes this unwarranted barrier to U.S. manufacturers' use of cost-effective distribution techniques while retaining full DEA control of U.S. exports and re-exports. Accordingly, I urge my colleagues to join Senator Biden and myself in support of this bill.

Mr. Speaker, as a sponsor of this legislation in the House, I rise in strong support of S. 1395. This bipartisan legislation would reform laws that govern the export of American-made pharmaceutical products, which our chairman, the gentleman from Georgia (Mr. Deal), has explained.

This really is a jobs bill that will benefit small businesses, particularly small pharmaceutical companies employing between 100 and 250 highly paid workers. Current law puts U.S. companies, particularly these small manufacturers, at significant disadvantage with their foreign competitors. Larger manufacturers, with an established foreign presence, may choose to manufacture offshore. Foreign firms do not have to worry about it. They readily export approved medical products between international drug control treaty countries without limit or restriction.

To compete, smaller U.S. companies, or those requiring specialized manufacturing plants for niche pharmaceuticals, are forced to choose between spending millions of dollars on export costs or spending millions of dollars in establishing overseas manufacturing facilities. This cost hurts smaller companies like Cephalon, back home in Pennsylvania.

The bottom line is our law ties the hands of American companies, forces them to do business elsewhere or not to do business at all. This legislation would authorize the Attorney General to permit carefully regulated pharmaceutical exports to international drug convention partner companies. The DEA would retain full authority over all shipments of controlled substances, and the bill establishes strict procedures to ensure these products are used solely for legitimate medical purposes.

Mr. Speaker, this legislation keeps jobs and capital right here at home, and removes one of the barriers to prevent the success of these small companies. I urge support of the bill; and I thank my colleague, the gentleman from Ohio (Mr. Brown), for the bipartisan effort, and I thank Chairman Deal for his leadership on the issue.

Mr. Speaker, as the sponsor of this legislation in the House I rise in strong support of S. 1395, the Controlled Substances Export Reform Act of 2005.

This bipartisan legislation would reform laws that govern the export of American-made pharmaceutical products.

This is a jobs bill that will benefit small businesses, particularly small pharmaceutical companies employing between 100 and 250 highly paid workers.

Current law allows U.S. companies to export most controlled substances only to the immediate country where the products will be consumed.

Shipment to central sites for further distribution across national boundaries is currently prohibited.

Current law puts U.S. companies, particularly small manufacturers, at a significant disadvantage with their foreign competitors.

Larger manufacturers with an established foreign presence may choose to manufacture off-shore using existing facilities.

Foreign firms don't have to worry about it.

They readily export approved medical products between international drug control treaty countries without limit or restriction.

To compete, smaller U.S. companies and those requiring specialized manufacturing plants for niche pharmaceuticals are forced to choose between spending millions, of dollars on export costs or spending millions of dollars in establishing overseas manufacturing facilities.

This cost harms smaller companies, like Cephalon, back home in Pennsylvania.

The bottom line: Our law ties the hands of American companies and forces them to do business elsewhere--or to not do business at all.

This legislation authorizes the Attorney General to permit carefully regulated pharmaceutical exports to international drug convention partner countries.

The Drug Enforcement Administration (DEA) would retain its full authority over all shipments of controlled substances.

It establishes strict procedures to ensure these products are used solely for legitimate medical purposes.

Once enacted it would save small companies nearly 75 percent on export costs.

It would enable them to compete in the long-term in the global market. And it would help them keep jobs and capital right here at home.

An informal review of impacted U.S. exporters indicates that current law, with the cost of compliance, jeopardizes between 100-250 new U.S. jobs each time a covered product is introduced in foreign markets.

Small businesses create new jobs; they strengthen communities; they drive innovation.

The law should help them thrive, not put them at a disadvantage with foreign competitors or large corporations.

We need to make sure that we treat them fairly and give them every opportunity to succeed.

This bill removes just one of the barriers that prevent their success.

I urge support for this bill.

And continued support for our Nation's small businesses.

Mr. Speaker, I move to suspend the rules and pass the Senate bill (S. 1395) to amend the Controlled Substances Import and Export Act to provide authority for the Attorney General to authorize the export of controlled substances from the United States to another country for subsequent export from that country to a second country, if certain conditions and safeguards are satisfied.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on S. 1395.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, S. 1395, the Controlled Substances Export Reform Act of 2005, is simply about allowing companies to better compete in the global marketplace.

Under the Controlled Substances Import and Export Act, a company is not allowed to export controlled substances to one country and then send it to a third country. Companies that export controlled substances must make a large number of long-distance, small shipments to individual countries, incurring large shipping costs. Due to this restriction, American manufacturers are less competitive than their foreign competitors, which results in high-paying U.S. jobs being sent overseas.

S. 1395 will enable U.S. companies to export products more efficiently by allowing them to send a large shipment to one nation overseas and from there to distribute smaller shipments to other countries. All subsequent transfers of controlled substances would still be subject to strict oversight by the DEA and will require a permit from the Attorney General to prevent any potential abuse.

Both the Committee on Energy and Commerce and the Committee on the Judiciary have reported the House companion legislation to this bill earlier this year. I would like to thank the gentleman from Pennsylvania (Mr. Pitts), a member of the Committee on Energy and Commerce, for his work on this issue.

I urge my colleagues to support this needed legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from Pennsylvania (Mr. Pitts), the author of the House companion bill to the legislation that we are considering now.

Mr. Speaker, I yield such time as he may consume to the gentleman from Georgia (Mr. Norwood) for closing.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, as America strives to adapt to a world of rapidly changing international trade, preserving and expanding U.S. manufacturing and production capabilities becomes ever more important. This is particularly true in Utah where current restrictions on exports of the medicines we produce have discouraged industry growth and threatened workers' jobs.

The Controlled Substances Export Reform Act currently allows U.S. pharmaceutical companies to export most controlled substances only to the exact country where their product will be used. Shipment of U.S. medicines to central sites for further cross-border distribution, even when conducted under the watchful

eyes of the U.S. Drug Enforcement Administration and Department of Justice, is prohibited for U.S. exporters. This contrasts with the freedom of drug manufacturers throughout the rest of the world to readily move their products among and between international drug control treaty countries without limit or restriction.

These limitations put U.S. manufacturers at a disadvantage by requiring more frequent and costly shipments to each individual country of use. We are effectively discouraging domestic manufacturing while encouraging U.S. drug exporters to move production overseas.

Utah, with a small but growing pharmaceutical manufacturing industry, is committed to maintaining a strong domestic base so that U.S. businesses can compete on a level playing field with our international competitors. But this industry faces an uncertain future unless we do something.

S. 1395, the Controlled Substances Export Reform Act of 2005, is the companion legislation to H.R. 184 that Rep. Joe Pitts and I introduced in the House, and that passed the House Judiciary and Energy and Commerce Committees. This legislation advances that goal by permitting the carefully regulated international transshipment of exported U.S. pharmaceuticals. The bill retains full DEA control over all drug exports and establishes strict permitting requirements to ensure drug safety while removing an unnecessary barrier to U.S. production and the growth of well-paid jobs.

Mr. Speaker, on behalf of the 500 Utah workers whose jobs may be endangered by current law, and on behalf of the many more workers we stand to gain by updating an outdated statute, I am pleased to support S. 1395 and I urge the measure's immediate adoption.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, before yielding to my friend from Guam, I would like to make a couple of opening comments. The Controlled Substances Import and Export Reform Act is commonsense legislation that would lift unnecessary barriers to the export of controlled substances.

I was pleased to join my colleague on the Committee on Energy and Commerce, the gentleman from Pennsylvania (Mr. Pitts), as a sponsor of this legislation.

Our bill expands the U.S. role in an important export while maintaining safeguards to prevent illegal diversion of controlled substances. The key provisions of this bill create a regulatory mechanism by which U.S. exporters can ship controlled substances efficiently from one country to another,

enabling those companies to compete on a global scale.

The Drug Enforcement Administration worked with us on this legislation to ensure sufficient protections for consumers and safeguards against illegal activity. I thank the gentleman from Pennsylvania (Mr. Pitts) and his staff for their work on this bill. I am pleased to support its passage.

Mr. Speaker, I yield such time as she may consume to the gentlewoman from Guam (Ms. Bordallo).

Mr. Speaker, I thank the gentlewoman from Guam, and I will work with the gentleman from Georgia (Mr. Deal) and the gentlewoman from Guam (Ms. Bordallo) and the congressional Representatives from other U.S. territories to secure the inclusion of U.S. territories in the conference report on the prior legislation reauthorizing the State high-risk pool grant funding; and I thank the gentlewoman from Guam and also the gentlewoman from the Virgin Islands (Mrs. Christensen) in joining us on the floor.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.