>> 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 medication. 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 -- we have 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. the 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 another 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 aggregated and critically important blinded data from the arcos system that could be used to further assess product orders and provide information for the agency and for the members. a distributor does not have the independent ability to determine whether a pharmacy or physician customer is ordering from multiple distributors. in closing, we strongly believe that all stakeholders, doctors, pharmacists, distributors, manufacturers and, indeed, the government must work together to achieve this shared goal to ensure a sufficient, safe supply of medicine while keeping the same drugs out of individuals who will abuse them. mr. chairman, thank you for your time. >> thank you. mr. haslam, you are recognized for five minutes. >> thank you, madam chairwoman. >> pull it close to you, please. >> does it help if i get it closer? >> yes, i'm sorry. i have a hearing deficit and people say i speak too softly. members of the subcommittee, i'm joe harmason. i am a pharmacy owner and the national organization representing the owners and pharmacists of the nonpublicly traded community pharmacies. everyone here today is in agreement the united states has a problem with drug abuse, misuse and diversion. i hope you will also acknowledge that the drugs we're discussing today when used appropriately are extremely beneficial. when they're not used as intended, they're destructive in many ways. as has been stated over and over, the majority of people that have abused prescription drugs get them from the family medicine cabinet or friends. this shines a bright light on how we need -- or we need a means to destroy these drugs. community pharmacists in the united states have been excited, willing participants in the drug takeback program for destruction. the problem we have, we're not allowed to take back the controlled substances, those are the drugs we really want to get off the street. we can't handle that. we are anxiously awaiting the rules we have been told with dea they are pro-mull gating to allow us to participate in the proce process. the pharmacists of america interact with millions of patients every day and advise them on how to use their medicines correctly and what can happen if they don't. we cannot cure the problem we are addressing today by ourselves. we use the tools we have, but we need more tools. there have been many suggestions on how you can get more, people can get more information to us. i am very much in agreement that the most readily implementable procedure we have now is the pmps. every pharmacist in i believe it's been stated 48 states has to submit on a regular basis the information on controlled substances they dispense. this goes into some giant computer somewhere. the problem the pharmacists have with it is most of us don't have access to that information. it's certainly not in real time, and it's not able to be incorporated into our work flow systems. it if you can find a way to get that to us, we will be your greatest advocates in using it. we do not want to be the drug police. we will be very willing to work with all parties to prevent abuse, misuse and diversion. another thing with this computer database, it must not be the deciding factor on whether a patient gets their medicine. that decision must be left to the responsible parties, the prescribers and the pharmacists. we're the ones that know the patients best. we know their conditions. another very important part of this equation is pharmacy burglaries and robberies n. 2010 there were 686 robberies in the united states and, unfortunately, some of these end up with murders involved with them. unfortunately, i have way too much experience firsthappened with pharmacy burglaries. one of my pharmacies has been burglarized three times since december 1 of 2011. this is one small pharmacy and from what i can determine the street value of the drugs taken from my pharmacy is in excess of $575,000. and more onerous than that almost 10,000 doses of controlled substances p potentially put on the street. i'd like to make a few recommendations for your consideration. one, require mandatory minimum sentences for robberies and burglaries involving controlled substances. find some way to give federal, state, and local law enforcement prosecutors the ability to better communicate and coordinate their efforts to do their work. third, shut down the pill mills. get the bad actors out of the process, leave those of us that are trying to do the best we know how what we're trying to do, care for patients, to do our jobs. another is consider a change to the tax code to allow those of us that have put out the money to have different security systems to depreciate those in one year. don't make us depreciate it over seven, ten, or more years. and, also, we would hope you might reconsider allocating some of the money taken from forfeiture from crimes related to controlled substance, put that in a pot somewhere and let pharmacists apply for some of that money if they can't afford security systems, let them apply to use some of that forfeiture money. ncpa and the community pharmacists of the united states are committed to working with congress and law enforcement to combat drug use -- misuse, abuse, and diversion, but we need your help. thank you for the ability to be here today and your attention. >> thank you. mr. nicholson, you are recognized for five minutes. >> chairman bono mack, butterfield and other subcommittee members. we represent traditional drugstores, supermarkets and mass merchants with pharmacies. our members operate more than 40,000 pharmacifarm and employ n 3.5 million employees. our members are deeply committed to serving the health care needs of americans. we are serious about the trust our patients impart upon us and about our responsibilities to provide the highest quality care. we are keenly aware of the skournlg of prescription drug diversion and our members actively work on numerous solutions. we support a number of federal and state policy initiatives. dea has implemented comprehensive regulations for a closed system to minimize the diversion of controlled drugs. our members have developed extensive policies and procedures to comply with dea's regulatory regime. some are requirements from state agencies such as boards of pharmacy and narcotic drug agencies. a complex regulatory and policy matrix of checks and balances protects americans. chain pharmacies have zae row tolerance for prescription drug diversion. we have implement add havevarief extensive and robust loss prevention and internal security systems from our prescription drug distribution centers. examples include that we conduct whack ground checks and random drug testing, extensive dea training within 30 days of hire, maintaining electronic inventories of controlled substances with random auditing, use of camera surveillance, closed circuit television, heavy duty safes, and complex alarm systems, training employees on how to handle suspicious prescription, and internally investigating unusually large drug orders. chain pharmacies support and comply with state monitoring programs. we support policies to prevent internet drug sellers from illegally selling drugs to consumers, and we support efforts to provide consumers with the means of a proper disposal of unwanted medications in ways to authorize by law enforcement. we are pleased to offer our support for the online pharmacy safety act which would take important steps to shut down the illegitimate internet sellers that prey on consumers. we applaud subcommittee members for their strong commitment to protecting the american public. 36 million americans have purchased prescription medications online without a prescription. americans are being harmed by these rogue internet sites da daily. we also look forward to dea's upcoming regulations to allow consumers to safely dispose their unwanted controlled prescription drugs. dea recognizes that consumers inability to safely dispose of these drugs contributes to prescription drug diversion. we routinely meet with dea officials to learn about diversion trends and to develop strategies to mitigate and reduce problems. and although we support the mission and objectives of dea, we do have concerns with dea's recent policies is your rounding the volumes of controlled substances ordered by pharmacies. every pharmacy environment is different and enforcement action should not be brought against a pharmacy merely based on the number of controlled substances ordered or dispensed. certain pharmacy locations will have higher than average volumes of controlled substances. for the ultimate good of patience who rely on access to controlled substances for legitimate purposes such as pain management, we urge dea to take a holistic approach developing policies to pursue enforcement actions. we have worked the past few years to to develop prescription drug risk management programs with fda to reduce poet tension for addiction and abuse of prescription drugs. and we will continue to work with fda on future similar risk management programs. we meet routinely with the white house office of national drug control policy on trends and solutions. we are proud of the comprehensive approach that our chain pharmacies have taken and look forward to continuing our work with federal and state policymakers to implement solutions including expanding prescription drug monitoring programs, shutting down illegitimate internet sites, and providing consumers with the ability to safely dispose unwanted prescription drugs. i thank you for the opportunity to appear and welcome your questions. >> thank you, mr. nicholson. ms. martello, you are recognized. >> chairman bono mack, ranking member butterfield and distinguished members of the subcommittee, my name is kendra martello and i'm pleased to offer this testimony on behalf of the pharmaceutical research and manufacturers of america or farma. our members represent america's leading pharmaceutical research and biotechnology companies. our prescription drug distribution system is a closed system. this means that all entities engaged in the manufacture, distribution and distensing of pharmaceutical products including controlled substances must be licensed, registered or approved by f by fda, dea or the stat states. when an authentic ro duct is diverted, it could be mishandled and potentially cause patient harm if reintroduced into the legitimate supply chain. additionally the divertsed medicine can be misused or abused. the controlled substances act and dea regulations require entities handling the products to register and have in place effective controls and security measures to protect against theft, loss or diversion of controlled substances. the dea also has authority over websites dispensing controlled substances and recent additional authority to supervise return of unused controlled substances for disposal. farma member companies engage in activities to help prevent diversion from the regulated supply chain. our companies take these efforts seriously because fundamentally patient safety and the public health demand no less. our members employ a range of measures to prevent diversion from facility security including uniformed guards, fences, and extensive access control and video surveillance systems to strict controls over in process manufacturing operations to in transit security measures such as the use of gps tracking devices on 18-wheelers that carry medicines across the country to enhancing enforcement by information sharing with law enforcement officials and to helping educate others on best practices. our companies work to help secure the products they manufacture in the regulated supply chain. because of the number of independent actors in the drug distribution chain, preventing diversion of medicines from the regulated supply chain is a shared responsibility. recognizing this farma members participate in broad-based coalitions to help address drug diversion. these include coalitions to increase penalties for cargo theft, groups to facilitate information sharing and best practices and participation in stakeholder coalitions that are pursuing new authorities in a variety of related and significant areas. these activities are detailed further in my written testimony submitted for the record. we do believe that there are additional authorities that could also have a significant impact on reducing diversion as well as reducing the nonmedical use of prescription drugs. these include, first, increase the use of and improvements to state prescription drug hohn touring programs which can be an important tool to prevent and detect abusers and refer them for treatment. second, reauthorize naspar that provides grants for monitoring tools and which is legislation we have supported. third, increase penalties for an enforcement against criminal cargo theft, rogue online sellers and criminal counterfeiters. the fourth, fully implement dea authorities over online sales of controlled substances and responsible secure disposal of substances. and finally, increase licenseure to prevent unscrupulous actors from moving across state lines. in conclusion, farma and member companies are dedicated to improving the lives of patients. this emphasis on the patient extends throughout the product life cycle from researching and developing new medicines including formulations to helping ensure medicines are used appropriately to help prevent diversion from the regulated supply chain. at the same time addressing the growing problem of prescription drug abuse is also a shared responsibility and patients need continued access to the medicines they need to allow them to live longer, healthier lives. we remain committed to addressing the issues surround ing prescription drug and prescription medicine and look forward to working with the subcommittee, members of copping and other stakeholders on these important issues. thank you. >> thank you, miss martello. mr. gaugh, you are recognized. >> thank you. good afternoon, ranking member butterfield and members of the energy and commerce subcommittee on commerce manufacturing and trade. i'm david gaugh, vice president of regulatory sciences at the generic pharmaceutical association and a licensed pharmacist. gpha represents the manufactures, distributors, the finished dose pharmaceuticals, and also suppliers of 0 other goods and services to the generic pharmaceutical industry. generic pharmaceuticals fill 80% of all dispensed in the united states but consume 25% of the total drugs spent for the prescriptions. gpha's member companies manufacture fda-approved generic versions of brand name drugs in all therapeutic classes including prescription painkillers. we share the concern of the members of the committee when medication that is are made to improve the quality of life and alleviate pain are abused. we believe addressing this issue will require coordination