me, that would be great. i'm no cheerleader for the fda, but i understand their fill philosophy and approach in that an agency as it applies to controlled substances seems much more measured than that of the dea at times. and my understanding is i want to talk about this post inspection feedback in the form of what's known as the fda form 483 inspection report. and my understanding on this fda form 83 is it sets out with specificity the agency's concerns and the parties have the opportunity to meet with the fda and discuss any issues that may be before them, that companies are given the opportunity to address issues and solve problems in a collaborative dialogue.

if the company were to choose not to address the issues, the agency then typically takes further action in the form of a warning letter. and proceeds with proosecution its decrease as appropriate. i think that fda-type approach is different from the dea approach when there are problems which is just enforcement and not the opportunity to address concerns. so it seems like dea there is no post inspection give and take or dialogue that may be there and no information sharing or the opportunity to address issues that are out there. so my question to you is this,

and you mentioned tennessee as one of the states with the pill mills. we all are concerned about patients that are in pain, that need medication, that companies that are trying to meet the needs and, here again want companies to do the right thing, want them to spend the money wisely, want individuals to be safe, want there to be pr protections that are in place. yestion is, is there a more surgical approach? should we be thinking of a more surgical approach to addressing the issue of prescription drug abuse rather than just looking at suspension of licenses? you though, where is the right balance in a vetting process? is there a more proportionate approach rather than a more immediate suspension? >> yeah, i would love to answer that question.

first of all the fda deals with drugs and they do have manufacturing processes, but the vast majority of their authority is over drugs and prescription drugs making sure that labeling is correct, putting the drug through the appropriate validation process. my responsibility under the act is to ensure there's no diversion of highly addictive medications into illicit marketplace. we do give chances to companies -- if you look at our history, we went on site on many companies we've taken actions against and explained what their obligations were. we sat down and talked to them what their obligations were. >> okay. so your response then would be you all are carrying out that dialogue? >> yes. >> okay. all right. >> i look at florida and the millions tablets that are going into the illicit marketplace not

from the pharmacies but the doctors and i think we have to hold the line somewhere. these are drugs that are killing people. it's not amoxicillin and we have to take a stand. >> okay. do any of the others of you want to make a response to that? no? okay. madam chairman, i'll yield whack. >> thank you, and i'm going to recognize myself for five minutes for a second round and any other member who wants to ask a second round, i will yield to you for your own five and then we'll move to the third panel. first of all, my comment on what dr. cassidy had to say, i think you brought up a good point and i think it's fair to ask if the dea data mining capabilities are as robust and clever as you suspect google's are and perhaps we can visit that in the days ahead. but this is sort of abaral question to each of you. and thank you, mr. rannazzisi, for mentioning my support of your takeback days, but 995,000

pounds of drugs in three days. the question i want to ask each of you if you care to comment or weigh in, who is paying for those pills? are we paying for them in the form of health care premiums? are we paying for them through dive@sin out of medicare part "d" and medicaid? who is paying for all of those pills? why are there 995,000 pounds of extra pills being turned back in? what is the overall toll in health care in our country just from this problem? anybody? >> i can tell you from are our local takeback days, these are good solid citizens who are coming in with brown paper bags filled with prescriptions that they've had and they're concerned because they know you cannot flush prescription drugs down your toilet and they don't know what to do with them and they don't want their grandkids to get hold of them. when i speak to people i say no

one ever wants to believe it's their kids so i say your kids' friends can get into your medicine cabinets. so people -- it's our citizens and a lot of them are getting them from the doctor, the dentist, taking one or two of them and just stockpiling them because they don't know what to do with them. but we have had remarkable results with good citizens turning them in. >> the question is, why are there so many left over in the medicine chest turned back in? what is the cost? you mentioned this as an american tragedy and i couldn't agree with you more, there's no question our doctors are working too hard and ultimate hadly this comes out of their patient visit. they're scrambling because health care is squeezed more and more and more and this is a part of the problem but $148 million out of medicare "d" in 2008 alone. so are we really, general conway, do you want to weigh in? >> i don't know if i can quantify the cost.

my experience is similar to general bondi. it's a concerned mother who doesn't want her can kid or saw something on tv and what she got for a broken arm has expired. the cost comes in crime. people are committing thefts to getting accesses to buy pills. the theft comes in cash. when you have health care companies trying to get more efficient and mandating 90 day supplies of mail order, a 90 day supply of objectiony condone, it's hitting the streets. that's something that we need to quanti quantify. and certainly medicare and medicaid are paying some of that. >> and i think what you're saying, if you go in for routine dental surgery, why do you need 60 oxycodone pills? you don't. >> thank you. you suggest that maybe they have

a tiered approach into needing the drugs. do you want to speak about your beliefs on this, too? >> absolutely madam chairman. what we see in ohio, to answer your original question, the taxpayers at some level is pay ing for the problem no matter how you look at it, when you boil it down to the common denominator whether it's medicaid costs in ohio, especially in southern ohio which is economically depressed it borders eastern kentucky, as we've heard attorney general conway allude to as an economically depressed area. it's a huge burden on the medicaid system there. as you move across the state of ohio it goes all through all the way from the middle class up to the upper class. whether it's a company that has to pay increased health care premiums that it's providing its employees because of the number of pills employees are receiving as part of a prescription or the

insurance companies the cost to those folks, the insurance companies in ohio have reached out to the attorney general's office to talk with us and say what role do we play in this? this is a huge cost to our bottom line. it touches everybody. it's the taxpayer that's poot footing the bill. >> so we win the day with the argument of the human suffering of the budgetary tolls, there's no rhyme or reason why we wouldn't be tackling this head-on as a nation. and, again, mr. rannazzisi, one last question to you. this committee has been investigating technologies that come out. can you speak briefly about future technologies you may be exploring like this on tracking drugs? >> ma'am, i can't take that question for the record. i'm not an expert.

>> we will be submitting questions to you for the record. mr. butterfield, did you have -- >> i have one. >> all right. i'll yield to you for five minutes. >> thank you. under the careful supervision of a doctor prescription drugs can alleviate severe pain or help those suffers from mental disorders like depression, insomnia or attention deficit d disorder 0. unfortunately, there are true stories of these drugs being prescribed inappropriate ly or not for their intended use. only 54% of physicians ask about prescription drug abuse when taking a patient's medical history. and only 55% regularly contact the patient's previous doctor before preskribing controlled pain medicat question, state entities certify and regulate both doctors and pharmacists. through this role, general conway, what do you think state authorities can do to educate medical practitioners?

>> well, the thing about the medical community, congressman, is that the one size fits all approach -- weae a piece of legislation that i'm supportive of that would require anyone who wants to prescribe a scheduled two or three narcotic to mandatorily register with our mp. i think that the education component for the medical community is important. chairwoman talked about what needs to happen with short-term prescriptions. our e.r. docs need standards for how much should they prescribe if someone shows up at the e.r., they ought it to do mandatory checks. the problem for us in law enforcement and in kentucky, and i can't speak to other states, but in kentucky we have a battle with our medical community in that the casper system, it is housed over in a cabinet with health and family services. they have the data. they observe the trends that are problematic. they are supposed to take actions against licenses if they spot trends and report them to law enforcement if necessary.

until this issue received scrutiny in the last couple of months, in my first four years as attorney general i didn't have a single law enforcement referral from the board of medical licensinlicensing. so the doctors if they're going to be prescribing -- there are different standards for an oncologist than a podiatrist but the doctors prescribing have an obligation to use the system to check their patients and to help us police the profession because they are underutilizing the system and need to work with us to see the data. i cannot ask who are the largest prescribers in pike county. i'd love to but the law prohibits me from doing it and the board of medical licensing is giving me old-fashioned surveillance. and we have a great system and all the data is right there. we are just underutilizing it and we're underutilizing it because we don't have the partnership we need with the medical community to make certain that's getting address in kentucky. >> 0 would it be helpful to work with the medical schools, the

dental schools, to develop a curriculum in the area? >> i speak to the students on an annual basis to tell them how big the problem is and to look out for this. it's a balance here. the medical community gets nervous whenever an attorney general or lawmaker gets in the middle of a doctor/patient relationship and i respect that. there ought to be some way to see the disturbing trend. in kentucky our data monitoring law says i have to have a designated case, a bona fide case on a designated target. i can't look at trends. i can't see where the problems are. i have to look at mr. smith. the data is there and i can't tell you how incredibly frustrating that is. >> do you believe the federal government should consider certain minimum standards for doctors, for doctor education or training in the area of addiction medications? >> i don't think it's a bad idea. traditionally the regulation of the practice of medicine has been left to the states. i respect that. i think we're doing all we can in the commonwealth of kentucky to educate doctors. a lot of the health care organizations are starting to

set up some of our larger hospital companies, are setting up standard for the e.r. docs. that's great. it's something best left to the states but i'd welcome federal guidance on that. >> all right. thank you. you may have spent some time at duke university. >> i can did, sir. i did, sir. i don't know your allegiance. one of the toughest things i have to do is get elected statewide being a graduate of duke university. >> state legislature just added duke university to my district. >> roy cooper and i have a running argument every time we see each other and i'm going to see him this week and i'm sure we'll be arguing over that little game this weekend. >> all right, thank you. >> thank you. mr. mckinley? no? the next panel. we want to thank you all very, very much for your expertise and your hard work on this. we look forward to working with you. please anticipate further questions in writing. we look forward to getting your responses. again, thank you for fight iing this battle. safe travels home. >> thank you. >> we'll take a quick 30-second break while we seat the next panel.

the subcommittee then heard the perspectives of drug distributors with testimony from officials of the pharmaceutical industry. this final panel runs about 45 minutes. on our third panel we have five witnesses. first is john gray, president and ceo of health care distribution management association.

our next witness is john, owner of dfw prescriptions who is testifying on behalf of the national community pharmacist association, hopefully i'll be flying through dfw later today. we also have another pharmacist joining us, kevin nicholson, vice president of the national association of chain drugstores. next is kendra martello, assistant general counsel pharmaceutical research and manufacturers of america, and our final witness is david gaugh, vice president for regulatory science of the generic pharmaceutical association. welcome, everyone. i think you know the drill, the five minutes. there's the timer. and with that we'll be happy to turn to you, mr. gray, for your five minutes. please make sure your microphone is on. >> thank you. good afternoon, members of the energy commerce subcommittee of manufacturing and trade.

i am john gray, president and ceo of the health care distribution management association. i want to thank you all for the opportunity to come here today and talk about this critically important problem of prescription drug abuse and it didversion and most importantly what my members are doing to combat that problem. the pharmaceutical industry's primary mission is to operate the most sufficient and safest supply chain in the world. as part of this mission, our members are committed to addressing the serious national problem of prescription drug abuse and to being a part of the soluti solution. hd members have not only statutory and regulatory responsibilities to detect and prevent diversion of controlled prescription drugs but to undertake such efforts as responsible members of our so i society. to address the issue of prescription drug abuse there are complex systems to comply with the dea's expanded expectation for suspicious order and monitoring and reporting. to weigh the development and implementation, in 2008, our member companies developed the industry compliance guidelines

to support the distry wugs practices on the valuation of customer orders for controlled substances and the reporting of so-called suspicious orders to the dea. the icg as we called them were vetted in advance of the publication. these guidelines emphasized the concept of know your customer. that is obtaining and reviewing auth thorough background information about a prospective health care buyer prior to doing business with them n. many cases pro-tension problems can be avoided before an order is even placed. because the advanced systems now in place this the industry's proactive efforts the dea reported last year that since 2006 and 2011 distributors in this country stopped shipping controlled substances to more than 1,500 customers that could have posed an unreasonable risk of diversion. let me add it's critical any diversion efforts of our industry as well as the enforcement actions of dea should carefully balance the need to cut off supply to any customer engaged in diverse will not limit access to a prescribed and legally dispensed medicine

for seriously ill patients or potentially putting legitimate pharmacies out of the business. despite the best efforts of our industry we find ourselves today in a conundrum. pharmaceutical distributors do not manufacturer legal controlled substances. we do not license pharmacies or health care providers. we do not write prescriptions for patients. we do not dispense these products to patients. we do not see the prescription a patient presents for filing at a pharmacy. a single pharmaceutical distributor does not know and has no way of knowing if a pharmacy customer is purchasing prescription drugs from other distributors. furthermore we do not determine or set prescription drug fill rates. however, the dea receives information from each distributor that sells controlled substances to a particular pharmacy or prescriber. the agency also sets annual allowable foe kas for manufacturers of these substances. distributors are often held accountable with incomplete information for didversion from parts of the supply chain they do not control. to comply with the expectations

distributors are being asked to judge the diagnosis, experience of tok tors and pharmacists. furthermore the empa sis on volumes and national average to determine suspicious orders may oversimplify the problem for schedule two drugs. our members have found the analysis of a single pharmacy's ordering patterns are far more complex and includes critical factors such as the size of the pharmacy, the patient demographics, the geographic proximity to the hospitals or surgery centers, nursing homes, hospice providers and other major urban areas. now as was stated earlier today, i need to correct that, we do not choose not to comply with the laws. the fact is our members have many questions about the compliance. you heard this is a relatively new process, a new procedure and, unfortunately, today the questions we have remain in each distributor operates in an information silo. we are unaware of the new

pharmacy customer may have been cut off by at@ distributor who had concern about diversion at the pharmacy or we are unaware that an existing customer is ordering controlled substances or we are unaware the specific pharmacies may be dispensing controlled substances for physicians writing prescriptions for patients when there is no legitimate medical need. so in effort to break down the silo walls and get the new program going, we have asked the dea in face-to-face meetings over the last several years as well as in written communications to provide some clarification and guidance on the agency's expanded expectations of an anti-diversion program for wholesale distributors and saw greater information sharing in the process between the agency and our industry. throughout these communications members have also asked dea to provide aggrega