Statement on Signing the Prescription Drug Marketing Act of 1987

I am today signing H.R. 1207, the "Prescription Drug Marketing Act of 1987," with mixed feelings.

On the one hand, I support the expressed goal of this legislation, which is to reduce potential public health risks that may result from the distribution of mislabeled, subpotent, counterfeit, or adulterated prescription drugs in the secondary source market, the so-called "diversion market." The investigations and prosecutions involving counterfeit and diverted drugs that have been conducted by the Department of Justice during the past few years have demonstrated that the principal factor facilitating the illegal activity that this bill is designed to combat is the almost total lack of traceability of drug products in the diversion market. This bill, to some extent, provides a response to this problem.

On the other hand, I have grave reservations about the bill's provision that would require States to adhere to Federal standards when licensing wholesale drug distributors. This provision represents a substantial intrusion into traditional State responsibilities and prerogatives. The States have always had the primary role in the regulation of wholesale drug distributors, and this bill would substitute the Federal Government for the States in that role.

This provision of H.R. 1207 is contrary to fundamental principles of federalism upon which our Constitution is based. Accordingly, I have directed the Department of Justice to submit to the Congress legislation repealing this portion of the bill, and I urge the Congress to enact this legislation promptly.

I am also troubled about the bill's provision that would generally prohibit certain types of beneficial competition in the sale of pharmaceuticals by hospitals and other health care providers. Such competition from innovative health care providers can benefit consumers through increased choices and lower prices, and should be encouraged, rather than discouraged. To be specific, I am very concerned that this legislation could impose on the sick and the elderly increased prices for prescription drugs. Consequently, I have requested the Attorney General to monitor the implementation of this portion of the bill and to make recommendations for remedial actions if warranted.

Finally, although the lack of traceability of drug products in the diversion market is a valid concern that I share, the magnitude of the public health problem created by diverted drugs is still not clear. I am therefore also concerned by provisions of the bill requiring use of substantial amounts of scarce Federal public health resources to police these practices.

Despite these concerns, I am willing to accept the view of the Congress that H.R. 1207 can assist in preventing potential health and safety problems for the American public. For this reason, I am approving this bill.

RONALD REAGAN

The White House,

April 22, 1988.