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facture and distribution safeguarding the integrity of the products and their security.

Similarly, appropriate criteria as to the character and reliability of the licensee should also be established. Present recordkeeping requirements on production, distribution, and inventory should be maintained and annual inventory should be required.

We also strongly urge adoption of an expanded program for Federal-State law enforcement cooperation in the drug abuse field. By such means, enforcement of present State licensing requirements for the retail level could be greatly strengthened.

One step that we recommend is to divide between Federal and State enforcement agencies specific functions each would carry out. For example, State agencies could be responsible for monitoring records of retail receipt and disposition of controlled drugs, and verifying inventories. They might also perform required inspections of these retail outlets.

In this manner better utilization of State manpower would be possible and duplication of Federal and State efforts avoided.

We recommend that the Federal Government make available to the States the funds necessary to properly carry out State drug control programs. The States are seriously hampered in their present programs by lack of manpower and other resources. They badly need Federal help.

For as they have said before, drug abuse control laws without the manpower and resources to enforce them are ineffective.

One of the other key points in the new Federal-State cooperative program S.K. & F. is proposing would be the preparation and periodic publication by the Justice Department's Bureau of Narcotics and Dangerous Drugs of a list of all pharmacies or other licensed outlets in all the States that hold valid licenses to posses and dispense "controlled" drugs.

The enforcement system I have just outlined would place on the pharmaceutical industry, at all levels of distribution, the responsibility for assuring itself that each shipment of controlled products is consigned to a person or organization lawfully authorized to handle these products. Periodic publication by the Government of a list of all licensees and State-approved retail outlets would greatly facilitate compliance by the trade.

For the first time, industry would have an official index of all persons in the trade by whom controlled drugs can lawfully be handled. Such a system, backed by vigilant enforcement, would do much, we believe, to insure that controlled drug products intended for lawful medical use in the United States remain in legitimate pharmaceutical and medical channels.

The present DACA system of registration, with limited after-thefact inspection and surveillance following virtually automatic assignment of registration numbers, leaves many loopholes.

We cannot overemphasize, however, that no regulatory program will work unless it is backed by sufficient manpower and resources to do what it is designed to do. The Federal and State enforcement agencies in the drug field are all too well aware of this truism. They are often the target for unjustified public criticism for not doing a job that would take many times their present resources to do.

Still another separate provision of law is needed to prevent the diversion of controlled drug products legally shipped for export. Persons who export these products should be required to obtain a separate annual Federal exporter license.

We are not suggesting that each export shipment be licensed. This would create masses of unnecessary paperwork. Exporter licenses not shipment licenses are all that is needed to take care of the problem. Customary criteria of character and integrity should be established as qualifications for licenses, along with requirements that no controlled drug be exported until after the shipper had taken steps to assure himself that the recipient in the country of destination is legally authorized to handle the products concerned.

A knowing violation of these requirements should be grounds for revocation or suspension of the exporter license, as well as the other penalties already established by existing laws.

This should help to put a stop to the reportedly common practice of shipment of legally manufactured "controlled" drug products from the United States to fictitious "authorized" persons in other countries.

A final recommendation for closing loopholes in the export field could be put into effect immediately by cooperative administrative action of the Bureau of Narcotics and Dangerous Drugs and the Bureau of Customs.

It has been stated authoritatively and accepted as correct, that export shipments consigned to persons in another country and perhaps moving through bonded customs warehouses are handed over to consignees on the U.S. side of the border purportedly for export from the United States. Then it is stated these consignees simply travel away from instead of across the border and the products move into the illegal U.S. market.

If this description is correct, perhaps U.S. enforcement agencies should take additional steps to insure that export shipments are in fact actually exported. We think this could be done in the following


1. At the time of a lawful export shipment the exporter would be directed to send to the Bureau of Narcotics and Dangerous Drugs in Washington a copy of the Export Declaration and that is already required by the Department of Commerce. He would prepare and attach to the Declaration a computer punch card containing essential information about the shipment-that is, shipper, consignee, contents and quantity.

2. A copy of the punch card would remain with the shipment itself until it actually crossed the border. At that time the card would be handed to the U.S. Customs inspector at the border.

3. The Customs Bureau would forward all such cards to the Bureau of Narcotics and Dangerous Drugs in Washington.

4. With a simple machine operation, BNDD would regularly check to determine that it had received, from the U.S. Customs at the border, a card matching every card submitted directly to BNDD by exporters. If no matching card came from the border, BNDD could take prompt steps to find out why.

5. In the interests of cooperation with other countries and to help curb illicit international traffic, BNDD might also forward to appropriate authorities in countries of destination essential summary infor

mation from the punch cards so that every shipment's delivery to a legitimate purchaser could be verified. With this cooperative action by U.S. agencies, other governments would have information needed to identify and prosecute diverters.

The effectiveness of this procedure should depend on careful verification at border points to make sure that shipments are actually leaving the United States at the time the punch card is turned in to Customs. Just receiving the card would mean little or nothing.

The most effective verification would be inspection of every shipment. But appropriations and manpower are not available for this comprehensive surveillance. Frequent spot checks might have to suffice, and should be an effective deterrent.

A few weeks ago, the Bureau of Narcotics and Dangerous Drugs promulgated a new regulation that forbids an exporter to turn over controlled drugs to the consignee or to a forwarding agent in this country. The exporter must either deliver the shipment to the border or hand it over to a bonded carrier for shipment directly to the consignee in the foreign country. This tightened procedure should help, but we believe our suggested exporter licensing and computer card verification system would do much more to prevent diversion.

If these new licensing and export control procedures are adopted, Mr. Chairman, no drug manufacturer or distributor would be able to excuse as entirely lawful the shipment of barrels of controlled drug products to the 11th or any other hole of a golf course in another country.

A Senate-passed bill, and H.R. 13743, introduced at the request of the administration by the chairman of your committee, the Honorable Harley Staggers, contains registration provisions that would accomplish many of the objectives of the licensing controls S.K. & F. is proposing. These two bills also include provisions, primarily applicable to the so called DACA drugs, requiring advance notification to the Attorney General of the export shipment and submission of proof that the shipment does not violate the laws of the destination country.

We think our own recommendations are somewhat better designed to achieve the levels of drug abuse control that all of us are seeking.

I know that the committee wants us to make specific comments today on some of the other major provisions contained in the various legislative proposals on drug abuse that are now before you.

We recognize that in testimony on this legislation we cannot ignore the existence of a major dispute in Congress and the executive branch, and in the scientific, medical, and educational and related professions, over whether this pending new law should place certain important decision making authority in the hands of the Attorney General or of the Secretary of Health, Education, and Welfare.

It also goes without saying that no one in the pharmaceutical industry, which is among here the most rigidly regulated of any American industry, wants to be caught "in the middle" between two Federal regulatory agencies, each of which has virtual life-and-death powers over certain aspects of his company's day-to-day operations.

It is said that W. C. Fields, a onetime Philadelphian, asked that his tombstone record the simple epitaph: "I'd rather be here than in Philadelphia."

Unlike W. C. Fields, I'd rather be in Philadelphia right now. But we know that all concerned with these issues respect the right of every citizen, including corporate citizens, to make their views known on matters of public policy. Because we believe it to be sound policy, Smith Kline & French recommends that the authority to make final decisions on matters dependent on scientific and medical judgments be assigned by Congress to the Secretary of Health, Education, and Welfare.

Equally the authority to make final judgments on matters dependent on expertise in law enforcement and associated fields should be assigned by Congress to the Attorney General.

Responsibility for carrying out or supporting research into scientific and medical aspects of drug abuse, and for educational programs of the kind already being conducted by the HEW department, and its constituent agency, the National Institute of Mental Health, and should remain the responsibility of HEW and NIMH.

The Justice Department, on the other hand, should be given full responsibility and unquestioned authority and responsibility for research and educational activities having a direct relationship to that department's programs of drug abuse enforcement.

In any significant decision making in either general field as well as in the development of educational and research programs, it will be important to have close liaison between the two departments. But S.K. & F. strongly believes that medical and scientific decisions should be made by HEW and law enforcement decisions by the Justice Department.

There are several specific situations in which S.K. & F. believes ultimate responsibility should rest with HEW:

1. The responsibility for decisions on whether a drug should be brought under control and, if so, in which schedule it should be placed. The Senate passed bill and H.R. 13743 would establish four schedules of control on the basis of actual abuse or potential for abuse and the legitimate medical use of the drug in the United States. Fundamentally this is a medical-scientific judgment, in our view. The HEW secretary should be required to consider all information provided by the Justice Department bearing on law enforcement aspects, facts on actual street abuse, for example.

2. Responsibility for scientific and medical research necessary to make the fundamentally medical and scientific decisions on classification of drugs.

3. Responsibility for broad scale, general educational programs at all age levels of the population, to motivate the American people to understand that their world is not changed for the better when individuals retreat from their troubles with drugs.

4. Decisions on the approval or disapproval of research by scientists with controlled drugs.

When such research reaches the clinical stage, under present law, protocols describing the research design and other pertinent information about the drug and the investigator must be supplied to the Food and Drug Administration, HEW Department, in the form of an investigational new drug submission.

The Senate passed bill and H.R. 13743 would require, for clinical research, duplicate approval by the Bureau of Narcotics and Dangerous Drugs and FDA.

Mr. Chairman, I seriously doubt that there is a person in this room today with greater respect for the enforcement ability of the Justice Department and the Bureau of Narcotics and Dangerous Drugs than I have. S.K. & F.'s recommendations in no way downgrade the responsibilities of the BNDD in enforcement matters. In fact, we believe the enforcement ability of the Bureau would be enhanced by the separation of the scientific decision making and enforcement action.

Surely everyone would agree that the BNDD has the basic and primary responsibility in education of the regulated industry and professions. This is absolutely necessary to achieve compliance by industry and the professions with the letter and spirit of the law. In addition, everyone would agree that the Bureau must have an educational and informational outlet to the general public to gain support and voluntary compliance with the Bureau's important enforcement goals. Of course the Bureau would continue its excellent training programs for Federal, State and local law enforcement.

In the research area we must provide the Bureau with the ability to study and develop new enforcement techniques, concepts and equipment to enable it to carry out its duties.

One last observation about the administration proposal as set forth in the Senate passed bill and H.R. 13743.

We believe that any decision to control or reschedule drugs should be made only after an opportunity for a formal hearing and a finding based on a record subject to judicial review. Such a procedure is now provided for in section 701 (e), (f) and (g) of the Federal Food, Drug and Cosmetic Act, if we may suggest a pattern.

This is a substantive issue. There are many other technical amendments that S.K. & F. should like to see incorporated in any bill your committee reports to the House. We understand that these points will be fully covered in the testimony to be presented here later by the Pharmaceutical Manufacturers Association and we will not take your time to discuss them now.

Thank you, Mr. Chairman, and members of the committee, for the opportunity to present our views. If you have questions, we will be glad to try to answer them.

Mr. JARMAN. Thank you, Mr. Fletcher, for a comprehensive statement on this tremendously important subject. Certainly Smith Kline & French is to be commended for the constructive and vigorous and the hard-hitting role that you have played in the fight against drug abuse.

Mr. Rogers.

Mr. ROGERS. Thank you, Mr. Chairman.

Mr. Fletcher, I share the chairman's feeling in commending you on what you have tried to do against drug abuse and the publications and films. I also want to say if there is any indication of intimidation by the Justice Department or HEW as a result of your testimony or in medical terms any adverse reaction, you let this committee know and we will get to the root of that very quickly.

Mr. FLETCHER. Thank you, Mr. Chairman. I am sure that there will be none.

Mr. ROGERS. I would want them to know publicly that there had better not be. Let me say this: I think it would be helpful to the committee if your company would supply to us suggested amendments in

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