FDA withdraws challenge to Psychemedics' PDT-90 personal drug testing service.

CAMBRIDGE, Mass.--(BUSINESS WIRE)--March 27, 1996--Psychemedics Corp. (AMEX: PMD) today announced that the Food and Drug Administration has withdrawn the warning letter which it issued last August challenging Psychemedics' PDT-90 personal drug testing service which detects drug use through the analysis of hair samples.

FDA has also confirmed its decision not to actively regulate PDT-90 testing or pursue enforcement action on any of the grounds contemplated in the warning letter. As previously reported, Psychemedics had filed in the Federal Appeals Court in Boston a petition for judicial review of the FDA's determination that the hair collection envelope used by Psychemedics in connection with PDT-90 testing was a class III medical device requiring clinical trials and FDA approval. Psychemedics will dismiss its petition in response to the FDA's retraction.

Psychemedics has been providing hair analysis drug testing services to corporations and other business customers since 1987 and currently has over five hundred (500) corporate clients. The company introduced its PDT-90 service in July of 1995 in response to numerous requests from parents concerned about possible drug use by their children.

Raymond C. Kubacki, president and CEO of Psychemedics, states: "We are very pleased with the FDA's change of position on this matter which makes it unnecessary for the company to pursue its suit in federal court challenging FDA's allegations. In view of the mounting evidence of increasing drug use by teenagers in this country, it is especially important that Psychemedics continue to make its patented hair analysis drug testing technology also available to concerned parents."

CONTACT: Psychemedics Corp., Cambridge

Raymond C. Kubacki, 617/868-7455