[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5839 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 5839

To amend the Federal Food, Drug, and Cosmetic Act to improve the safety 
                               of drugs.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 17, 2008

 Mr. Buyer (for himself, Mr. Matheson, Mr. Rogers of Michigan, and Mr. 
Gene Green of Texas) introduced the following bill; which was referred 
                to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
To amend the Federal Food, Drug, and Cosmetic Act to improve the safety 
                               of drugs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safeguarding America's 
Pharmaceuticals Act of 2008''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Destruction of counterfeit drugs offered for import.
Sec. 4. Interim provisions to assure the safety of the wholesale 
                            distribution of prescription drugs.
Sec. 5. Unique standardized numerical identifiers for each prescription 
                            drug.
Sec. 6. Prescription drug identification and tracking system.
Sec. 7. Facilitating prescription drug identification and tracking 
                            system for small pharmacies.
Sec. 8. Uniform national standards.
Sec. 9. Report to Congress.
Sec. 10. Requirements for licensure of wholesale distributors.
Sec. 11. Injunctions; civil penalties.
Sec. 12. State enforcement of Federal requirements.
Sec. 13. Study on threats to domestic prescription drug supply chain.

SEC. 3. DESTRUCTION OF COUNTERFEIT DRUGS OFFERED FOR IMPORT.

    Section 801(a) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 381(a)) is amended--
            (1) in the third sentence--
                    (A) by striking ``or (3) such'' and inserting ``(3) 
                such''; and
                    (B) by inserting ``, or (4) such article is a 
                counterfeit drug,'' before ``then such article shall be 
                refused admission''; and
            (2) by striking ``Clause (2) of the third sentence of this 
        paragraph'' and inserting ``Notwithstanding the preceding 
        sentence, the Secretary of the Treasury shall cause the 
        destruction of any such article refused admission if (1) the 
        article is a drug, the article appears to be adulterated, 
        misbranded, or in violation of section 505, and the article has 
        a value less than $2,000 or such amount as the Secretary of 
        Health and Human Services may determine by regulation; or (2) 
        the article appears to be a counterfeit drug. Clause (2) of the 
        third sentence of this subsection''.

SEC. 4. INTERIM PROVISIONS TO ASSURE THE SAFETY OF THE WHOLESALE 
              DISTRIBUTION OF PRESCRIPTION DRUGS.

    (a) In General.--Subsection (e) of section 503 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 353) is amended--
            (1) by striking paragraphs (1) and (3);
            (2) by redesignating paragraph (2) as paragraph (4); and
            (3) by inserting before paragraph (4), as so redesignated 
        by paragraph (2) of this subsection, the following:
    ``(e) Regulation of Wholesale Distributors of Prescription Drugs.--
            ``(1) Interim provisions.--
                    ``(A) Definitions.--Except as otherwise noted, for 
                purposes of this subsection--
                            ``(i) for purposes of this paragraph and 
                        subsection (d) only, the term `authorized 
                        distributor of record' with respect to a 
                        prescription drug means a wholesale distributor 
                        that has a written agreement for such drug 
                        currently in effect with the drug's 
                        manufacturer (as defined in clause (iv)(I) or 
                        (II)) to distribute such drug;
                            ``(ii) the term `co-licensed partner' means 
                        one of two or more persons who has the right to 
                        engage in the manufacturing or marketing of a 
                        prescription drug;
                            ``(iii) the term `dispenser' means a retail 
                        pharmacy, hospital pharmacy, or any other 
                        person authorized by law to dispense or 
                        administer prescription drugs;
                            ``(iv) for purposes of this paragraph and 
                        subsection (d) only, the term `manufacturer' 
                        means, with respect to a prescription drug--
                                    ``(I) the person that holds the 
                                application approved under section 505 
                                or the license issued under section 351 
                                of the Public Health Service Act for 
                                the drug, or if the drug is not the 
                                subject of an approved application or 
                                license, the person identified on the 
                                original label of the drug as the 
                                manufacturer, distributor, or both;
                                    ``(II) a co-licensed partner of the 
                                person identified in subclause (I) that 
                                obtains the drug directly from the 
                                person identified in subclause (I) or 
                                (III);
                                    ``(III) a person that manufactures 
                                the prescription drug for the person 
                                identified in subclause (I) or (II);
                                    ``(IV) a third-party logistics 
                                provider operating on behalf of the 
                                person identified in subclause (I) or 
                                (II) that obtains the drug directly 
                                from the person identified in subclause 
                                (I), (II), or (III); or
                                    ``(V) the exclusive distributor of 
                                the person identified in subclause (I) 
                                or (II) that obtains the drug directly 
                                from the person identified in subclause 
                                (I), (II), or (III);
                            ``(v) the term `exclusive distributor' 
                        means any person who contracts with another 
                        person to provide or coordinate warehousing, 
                        distribution, or other services on behalf of 
                        such person and who takes title to that 
                        person's prescription drug, but who does not 
                        have general responsibility to direct the sale 
                        or disposition of that person's prescription 
                        drug;
                            ``(vi) the term `prescription drug' means a 
                        drug subject to subsection (b);
                            ``(vii) the term `third party logistics 
                        provider' means a person that, by agreement 
                        with another person, is responsible for 
                        providing or coordinating distribution, 
                        warehousing, and related services with respect 
                        to a prescription drug on behalf of that 
                        person, but that does not take title to such 
                        drug and does not have general responsibility 
                        to direct the sale or distribution of the 
                        prescription drug;
                            ``(viii) for purposes of subsection (d) and 
                        this subsection, the term `wholesale 
                        distribution' means the sale, purchase, trade, 
                        or delivery of a prescription drug between and 
                        within any State, but does not include--
                                    ``(I) intracompany sales, 
                                purchases, trades, or transfers of any 
                                prescription drug between members of an 
                                affiliated group (as that term is 
                                defined in section 1504 of the Internal 
                                Revenue Code);
                                    ``(II) the purchase or other 
                                acquisition by a hospital or other 
                                health care entity that is a member of 
                                a group purchasing organization of a 
                                drug for its own use from the group 
                                purchasing organization or from other 
                                hospitals or health care entities that 
                                are members of such organizations;
                                    ``(III) the sale, purchase, or 
                                trade of a drug or an offer to sell, 
                                purchase, or trade a drug by a 
                                charitable organization to a nonprofit 
                                affiliate of the organization to the 
                                extent otherwise permitted by law;
                                    ``(IV) the sale, purchase, or trade 
                                of a drug or an offer to sell, 
                                purchase, or trade a drug among 
                                hospitals or other health care entities 
                                that are under common control;
                                    ``(V) the sale, purchase, or trade 
                                of a drug or an offer to sell, 
                                purchase, or trade a drug for emergency 
                                medical reasons;
                                    ``(VI) the sale, purchase, or trade 
                                of a drug, an offer to sell, purchase, 
                                or trade a drug, or the dispensing of a 
                                drug under a prescription executed in 
                                accordance with subsection (b);
                                    ``(VII) the distribution of drug 
                                samples by a manufacturer's 
                                representative or an authorized 
                                distributor of record's representative;
                                    ``(VIII) the sale, purchase, or 
                                trade of blood or blood components 
                                intended for transfusion;
                                    ``(IX) drug returns, when conducted 
                                by a dispenser or wholesale distributor 
                                in accordance with the requirements of 
                                subparagraph (D);
                                    ``(X) the sale of minimal 
                                quantities of drugs by retail 
                                pharmacies to licensed practitioners 
                                for office use; or
                                    ``(XI) the sale, purchase, or trade 
                                of prescription drugs when such drugs 
                                are contained in sealed medical or 
                                surgical kits that have been assembled 
                                in a facility registered with the Food 
                                and Drug Administration as a device 
                                manufacturer under section 510(c) and 
                                such drug was purchased by the kit 
                                assembler directly from the 
                                manufacturer of such drug; and
                            ``(ix) the term `wholesale distributor' 
                        means any person engaged in wholesale 
                        distribution, except a common carrier.
                    ``(B) Manufacturer packing list.--The manufacturer 
                of a prescription drug shall provide to each wholesale 
                distributor or dispenser to whom it delivers such drug 
                a packing list or comparable document, in paper or 
                electronic form, that identifies the proprietary and 
                established names of the drug, the National Drug Code 
                number of the drug, the strength of the drug, the 
                container size of the drug, the number of containers of 
                the drug, the lot number or numbers of the drug, the 
                date of the transaction, and the names and addresses of 
                the manufacturer and the person to whom the drug is 
                being delivered.
                    ``(C) Statement of distribution history.--Each 
                person engaged in wholesale distribution of a 
                prescription drug (except a manufacturer that is 
                engaged in the wholesale distribution of a prescription 
                drug, or a wholesale distributor on whose behalf a 
                manufacturer delivers a prescription drug directly to a 
                dispenser) shall provide to each wholesale distributor 
                or dispenser to whom such person delivers such a drug 
                before, or at the time of, each wholesale distribution, 
                one of the following:
                            ``(i) Direct purchase pedigree.--
                                    ``(I) If the person providing the 
                                statement is an authorized distributor 
                                of record for such drug and purchased 
                                such drug directly from the 
                                manufacturer, a statement on the 
                                invoice, whether in paper or electronic 
                                form, stating that such person is an 
                                authorized distributor of record for 
                                such drug; and such person purchased 
                                the specific unit of the prescription 
                                drug directly from the manufacturer.
                                    ``(II) If the person providing the 
                                statement is a member of the affiliated 
                                group (as that term is defined in 
                                section 1504 of the Internal Revenue 
                                Code) of an authorized distributor of 
                                record that purchased such drug 
                                directly from the manufacturer, and 
                                such person obtained such drug from 
                                such authorized distributor of record 
                                directly or by means of one or more 
                                transactions involving only members of 
                                such affiliated group, a statement on 
                                the invoice, whether in paper or 
                                electronic form, identifying such 
                                authorized distributor of record; 
                                stating that such person is a member of 
                                the affiliated group (as that term is 
                                defined in section 1504 of the Internal 
                                Revenue Code) of such authorized 
                                distributor of record; and stating that 
                                such authorized distributor of record 
                                purchased the specific unit of the 
                                prescription drug directly from the 
                                manufacturer.
                            ``(ii) Standard pedigree.--For all 
                        situations not described in clause (i), a 
                        statement, whether in paper or electronic form, 
                        identifying each wholesale distribution of such 
                        drug, back to the authorized distributor of 
                        record for such drug or a member of the 
                        affiliated group (as that term is defined in 
                        section 1504 of the Internal Revenue Code) of 
                        such authorized distributor of record that 
                        provided one of the statements described in 
                        clause (i), or, if there is no such authorized 
                        distributor of record, back to the manufacturer 
                        of such drug, and including the following:
                                    ``(I) The proprietary and 
                                established names of the drug.
                                    ``(II) The drug's National Drug 
                                Code number.
                                    ``(III) Strength.
                                    ``(IV) Container size.
                                    ``(V) Number of containers.
                                    ``(VI) The drug's lot or control 
                                number or numbers.
                                    ``(VII) The business name and 
                                address of all parties to each prior 
                                transaction involving the drug, 
                                starting with the authorized 
                                distributor of record who provided the 
                                original statement of distribution 
                                history required under clause (i) or, 
                                if there is no such authorized 
                                distributor of record, back to the 
                                manufacturer of such drug.
                                    ``(VIII) The date of each previous 
                                transaction involving such drug, back 
                                to the authorized distributor of record 
                                who provided the original statement of 
                                distribution history required under 
                                clause (i) or, if there is no such 
                                authorized distributor of record, back 
                                to the manufacturer of such drug.
                    ``(D) Returns.--
                            ``(i) In general.--A wholesale distributor 
                        or dispenser may return prescription drugs to a 
                        wholesale distributor, manufacturer, or a 
                        person acting on behalf of the wholesale 
                        distributor or the manufacturer, provided the 
                        requirements of clauses (ii) and (iii) are met.
                            ``(ii) Saleable returns.--
                                    ``(I) Mistaken orders.--A wholesale 
                                distributor or dispenser may return to 
                                the selling wholesale distributor 
                                prescription drugs that are the result 
                                of a mistake in ordering or shipment. 
                                For subsequent sales or trades of such 
                                returned drugs, the return of such 
                                prescription drugs is not required to 
                                be reflected in the statement pursuant 
                                to clause (i) or (ii) of subparagraph 
                                (C) provided--
                                            ``(aa) a return 
                                        authorization is requested by 
                                        the returning wholesale 
                                        distributor or dispenser within 
                                        7 days of receipt of such 
                                        mistaken order or shipment; and
                                            ``(bb) the return is 
                                        accompanied by a certified 
                                        statement, in written or 
                                        electronic form, that such drug 
                                        was received from the wholesale 
                                        distributor to which it is 
                                        being returned by mistake or 
                                        ordered in error and that such 
                                        drug was stored and handled 
                                        under proper conditions while 
                                        in the possession and control 
                                        of the returning party.
                                    ``(II) Other returns.--For returns 
                                not described in subclause (I), a 
                                wholesale distributor or dispenser may 
                                return prescription drugs under the 
                                following conditions:
                                            ``(aa) If a prescription 
                                        drug was delivered to a person 
                                        with a statement in accord with 
                                        subparagraph (C)(i), the drug 
                                        may be returned to the 
                                        wholesale distributor from 
                                        which it was purchased provided 
                                        it is accompanied with a 
                                        certified statement, in written 
                                        or electronic form, that such 
                                        drug was purchased from the 
                                        wholesale distributor and such 
                                        drug was stored and handled 
                                        under proper conditions while 
                                        in the possession and control 
                                        of the returning party. For 
                                        subsequent sales or trades of 
                                        such returned drugs, the return 
                                        of such prescription drugs is 
                                        not required to be reflected in 
                                        the statement of distribution 
                                        history required under 
                                        subparagraph (C)(i).
                                            ``(bb) If a prescription 
                                        drug was delivered to a person 
                                        with a statement pursuant to 
                                        subparagraph (C)(ii), the drug 
                                        may be returned to the 
                                        wholesaler from which it was 
                                        purchased provided the return 
                                        is accompanied by the statement 
                                        that was received pursuant to 
                                        subparagraph (C)(ii) and a 
                                        certified statement that such 
                                        drug was purchased from the 
                                        wholesale distributor and was 
                                        stored and handled under proper 
                                        conditions while in the 
                                        possession and control of the 
                                        returning party. For subsequent 
                                        sales or trades of such 
                                        returned drugs, the return of 
                                        such prescription drugs shall 
                                        be reflected in the statement 
                                        of distribution history 
                                        required under subparagraph 
                                        (C)(ii).
                            ``(iii) Non-saleable returns.--A wholesale 
                        distributor, manufacturer, or a person acting 
                        on behalf of the wholesale distributor or 
                        manufacturer may accept a return of a non-
                        saleable prescription drug including, but not 
                        limited to, recalled, expired, or damaged drugs 
                        without the statement required under 
                        subparagraph (C)(i) or (C)(ii). However, such 
                        drugs may not be resold and a wholesale 
                        distributor, manufacturer, or a person acting 
                        on behalf of the wholesale distributor or 
                        manufacturer must destroy the drug.
                    ``(E) List of authorized distributors of record.--
                The manufacturer (as defined in subclauses (I) and (II) 
                of subparagraph (A)(iv)) of a prescription drug shall--
                            ``(i) maintain a list of the authorized 
                        distributors of record of such drug at its 
                        corporate offices;
                            ``(ii) make such list publicly available, 
                        including placement on its Internet website; 
                        and
                            ``(iii) update such list not less than once 
                        a month.
                    ``(F) Applicability.--The requirements of this 
                paragraph shall not apply with respect to any 
                prescription drug that is subject to a requirement 
                under paragraph (3) for an effective drug 
                identification and tracking system based on 
                standardized numerical identifiers.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect 180 days after the date of enactment of this Act.

SEC. 5. UNIQUE STANDARDIZED NUMERICAL IDENTIFIERS FOR EACH PRESCRIPTION 
              DRUG.

    (a) In General.--Subsection (e) of section 503 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 353), as amended by section 4, is 
amended by inserting after paragraph (1) the following:
            ``(2) Standardized drug identifiers.--
                    ``(A) Report; development.--
                            ``(i) Report on promising security 
                        technologies.--Not later than 18 months after 
                        the date of enactment of the Safeguarding 
                        America's Pharmaceuticals Act of 2008, the 
                        Secretary shall submit to the Committee on 
                        Energy and Commerce of the House of 
                        Representatives and the Committee on Health, 
                        Education, Labor, and Pensions of the Senate a 
                        report evaluating the feasibility and 
                        operational efficiencies of adopting the 
                        security technologies including barcodes, 
                        Radio-Frequency Identification Tags, 
                        nanotechnology, or other promising track and 
                        trace technology throughout the prescription 
                        drug supply chain. The report shall assess the 
                        cost-effectiveness and benefits of applying 
                        such technologies at the pallet, case, unit, 
                        and tablet levels, including the ability to 
                        defeat repackaging, enhance product 
                        identification or validation, and improve the 
                        overall security of the prescription drug 
                        supply chain.
                            ``(ii) Consideration.--The Secretary shall 
                        consider the findings made in the report 
                        submitted under clause (i) when developing a 
                        standard numerical identifier under section 
                        505D(b)(2).
                            ``(iii) Announcement of development of 
                        standardized numerical identifier.--Not later 
                        than March 27, 2010, the Secretary shall 
                        announce the development of a standardized 
                        numerical identifier under section 505D(b)(2) 
                        by means of a notice published in the Federal 
                        Register.
                    ``(B) High-risk drugs.--
                            ``(i) Criteria; list.--Not later than March 
                        27, 2010, and periodically thereafter, the 
                        Secretary shall develop, and shall notify 
                        members of the supply chain regarding, the 
                        following:
                                    ``(I) Criteria the Secretary will 
                                use to determine whether a drug is at 
                                high risk for counterfeiting or 
                                diversion.
                                    ``(II) A list identifying 
                                prescription drugs that are at high 
                                risk of diversion or counterfeiting. In 
                                developing or updating such list, the 
                                Secretary shall consult with the 
                                manufacturer of each drug involved, as 
                                well as with members of the supply 
                                chain and relevant Federal enforcement 
                                agencies, and, at least 1 year before 
                                including any drug in the list, provide 
                                the manufacturer of the drug and 
                                members of the supply chain notice of 
                                the Secretary's intent to include the 
                                drug in the list.
                            ``(ii) Requirement.--Not later than 18 
                        months after the date of notice in the Federal 
                        Register described in subparagraph (A)(iii), 
                        each manufacturer or repackager of a 
                        prescription drug that appears on the list of 
                        high risk drugs established under clause (i) 
                        shall apply a standardized numerical identifier 
                        that is unique to each unit (namely, a package 
                        from which the drug may be repackaged or 
                        dispensed) of the drug. The identifier shall be 
                        applied by the manufacturer or repackager (in 
                        which case the serialized number shall be 
                        linked to the numerical identifiers applied by 
                        the manufacturer).
                    ``(C) Other drugs.--
                            ``(i) In general.--Each manufacturer or 
                        repackager of a prescription drug not described 
                        in subparagraph (B) shall apply a standardized 
                        numerical identifier that is unique to each 
                        unit of the drug, in accordance with a 
                        compliance timetable established by the 
                        Secretary through rulemaking under section 553 
                        of title 5, United States Code. Such timetable 
                        may establish different compliance dates for 
                        different types of drugs. The identifier shall 
                        be applied by the manufacturer or repackager 
                        (in which case the serialized number shall be 
                        linked to the numerical identifiers applied by 
                        the manufacturer).
                            ``(ii) Regulations.--The Secretary shall 
                        issue proposed regulations to implement this 
                        subparagraph not later than the date that is 1 
                        year after the date of the notice in the 
                        Federal Register described in subparagraph 
                        (A)(iii), and promulgate final regulations not 
                        later than 2 years after the date of such 
                        Federal Register notice. In proposing or 
                        promulgating such regulations, the Secretary 
                        shall consult with members of the supply chain 
                        and take into account the economic and 
                        technical feasibility of compliance by 
                        manufacturers, repackagers, wholesale 
                        distributors, and dispensers and for different 
                        types of drugs. Such regulations shall not 
                        establish a compliance date for any drug that 
                        is earlier than the date that is 3 years after 
                        the date of the Federal Register notice 
                        described in subparagraph (A)(iii).
                            ``(iii) Exemption from identification 
                        requirement.--The regulations under clause (ii) 
                        shall include a process under which a 
                        manufacturer or repackager may request an 
                        exemption from the identification requirement 
                        if it can demonstrate to the Secretary's 
                        satisfaction that--
                                    ``(I) the requirement would 
                                adversely affect the safety, 
                                effectiveness, purity, or potency of 
                                the drug or would not be 
                                technologically feasible; and
                                    ``(II) the concerns underlying the 
                                request could not reasonably be 
                                addressed by measures such as package 
                                redesign or use of overwraps.''.
    (b) Validation.--Paragraph (2) of section 505D(b) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355e) is amended by striking 
``validation,''.

SEC. 6. PRESCRIPTION DRUG IDENTIFICATION AND TRACKING SYSTEM.

    Subsection (e) of section 503 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 353), as amended by section 5, is amended by 
inserting after paragraph (2) the following:
            ``(3) Effective drug identification and tracking system.--
                    ``(A) In general.--The Secretary shall issue 
                regulations to establish an effective drug 
                identification and tracking system through which drug 
                manufacturers, repackagers, wholesale distributors, and 
                dispensers may authenticate the wholesale distribution 
                history of any prescription drug that is subject to a 
                requirement for a standardized numerical identifier 
                under paragraph (2).
                    ``(B) Content of regulations.--The regulations 
                under subparagraph (A) shall--
                            ``(i) establish standards for 
                        electronically accessible and interoperable 
                        databases through which drug manufacturers, 
                        repackagers, wholesale distributors, and 
                        dispensers may authenticate the wholesale 
                        distribution history of prescription drugs 
                        using the numerical identifiers required under 
                        paragraph (2), while maintaining the 
                        proprietary information of each entity;
                            ``(ii) require the manufacturer or 
                        repackager of a prescription drug to apply such 
                        numerical identifier in at least 1 standardized 
                        form that is electronically readable;
                            ``(iii) require the repackager of a 
                        prescription drug to link electronically within 
                        such databases the numerical identifier applied 
                        to the drug by the repackager to the numerical 
                        identifiers applied to the drug by the 
                        manufacturer or previous repackager;
                            ``(iv) require each person that receives a 
                        prescription drug in wholesale distribution to 
                        authenticate the transaction history of the 
                        drug by authenticating the numerical identifier 
                        with the appropriate database; and
                            ``(v) require protections to ensure patient 
                        privacy, in compliance with the regulations 
                        promulgated under section 264(c) of the Health 
                        Insurance Portability and Accountability Act of 
                        1996.
                    ``(C) Issuance of regulations.--
                            ``(i) Considerations.--In developing the 
                        regulations under subparagraph (A), the 
                        Secretary shall consider the technical 
                        feasibility of compliance--
                                    ``(I) by manufacturers, 
                                repackagers, wholesale distributors, 
                                and dispensers, including small 
                                businesses; and
                                    ``(II) for different types of 
                                drugs.
                            ``(ii) Timing.--The Secretary shall issue 
                        proposed regulations under subparagraph (A) not 
                        later than March 31, 2010, and shall issue 
                        final regulations not later than the date that 
                        is 1 year after the date of such proposed 
                        regulations.
                            ``(iii) Compliance date.--With regard to 
                        any drug, the regulations under subparagraph 
                        (A) shall not require compliance on a date that 
                        is--
                                    ``(I) earlier than 18 months or 
                                later than 2 years after the date on 
                                which such drug is subject to a 
                                requirement for the application of a 
                                standardized numerical identifier under 
                                paragraph (2)(B); or
                                    ``(II) earlier than 6 months or 
                                later than 9 months after the date on 
                                which such drug is subject to a 
                                requirement for the application of a 
                                standardized numerical identifier under 
                                paragraph (2)(C).
                        In determining the compliance dates of such 
                        regulations, the Secretary shall take into 
                        consideration operational and technical 
                        feasibility and provide sufficient time for 
                        inventory conversion across the supply chain.
                    ``(D) GAO study and report.--The Comptroller 
                General of the United States shall conduct a study on 
                the availability and cost of technologies to dispensers 
                to comply with this subsection during the 12-month 
                period beginning on the date of the Secretary's notice 
                of proposed regulations under subsection (C)(ii). Not 
                later than the end of such 12-month period, the 
                Comptroller General shall submit to the Secretary and 
                to the Congress a report on such study and shall 
                include in the report recommendations to facilitate the 
                adoption of identification and tracking system 
                technology by dispensers.''.

SEC. 7. FACILITATING PRESCRIPTION DRUG IDENTIFICATION AND TRACKING 
              SYSTEM FOR SMALL PHARMACIES.

    (a) Grants for Adoption of Technology.--
            (1) In general.--The Secretary of Health and Human Services 
        shall award grants to eligible entities to facilitate the 
        purchase and enhance the utilization of a drug identification 
        and tracking system to ensure the security and integrity of the 
        drug supply chain.
            (2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1), an entity shall--
                    (A) submit to the Secretary an application at such 
                time, in such manner, and containing such information 
                as the Secretary may require;
                    (B) agree to provide matching funds in accordance 
                with paragraph (4); and
                    (C) be an independent pharmacy.
            (3) Use of funds.--Amounts received under a grant under 
        this subsection shall be used to facilitate the purchase of 
        qualified identification and tracking technology systems 
        required to comply with section 503(e) of the Federal Food, 
        Drug, and Cosmetic Act, as amended by sections 4, 5, and 6 of 
        this Act.
            (4) Matching requirement.--To be eligible for a grant under 
        this subsection, an entity shall contribute non-Federal 
        contributions to the costs of carrying out the activities for 
        which the grant is awarded in an amount equal to $1 for each $3 
        of Federal funds provided under the grant.
            (5) Preference in awarding grants.--In awarding grants 
        under this subsection, the Secretary shall give preference to 
        independent pharmacies that meet the definition of a small 
        business concern in section 3 of the Small Business Act (15 
        U.S.C. 632) by having annual gross revenues of $6,500,000 or 
        less.
    (b) Amount of Grants.--Upon receiving the report required by 
section 503(e)(3)(D) of the Federal Food, Drug, and Cosmetic Act, as 
amended by sections 4, 5, and 6 of this Act, the Secretary shall assess 
the findings of the report and provide grants to independent pharmacies 
in an amount deemed appropriate by the Secretary and based on the 
information provided by the Comptroller General.
    (c) Reports.--Not later than 1 year after receiving a grant under 
this section, an entity that receives such grant shall submit to the 
Secretary a report on the impact of the grant. Each such report shall 
include--
            (1) a description of the financial costs and benefits of 
        the technology system implemented and of the entities to which 
        such costs and benefits accrue;
            (2) an analysis of the impact of the grant on acquiring 
        technology necessary to comply with section 503(e)(3) of the 
        Federal Food, Drug, and Cosmetic Act, as amended by sections 4, 
        5, and 6 of this Act;
            (3) a description of the use of the grant; and
            (4) such other information as may be required by the 
        Secretary.
    (d) Definitions.--
            (1) Independent pharmacy.--The term ``independent 
        pharmacy'' means a pharmacy which is not owned (or operated) by 
        a publicly traded company.
            (2) Publicly traded company.--The term ``publicly traded 
        company'' means a company that is an issuer within the meaning 
        of section 2(a)(7) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
        7201(a)(7)).
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
    (e) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated 
        such sums as may be necessary to carry out this section.
            (2) Availability.--Amounts appropriated pursuant to 
        paragraph (1) shall remain available throughout the 2-year 
        period following the date of issuance of final regulations 
        under section 503(e)(3)(A) of the Federal Food, Drug, and 
        Cosmetic Act, as amended by sections 4, 5, and 6 of this Act.

SEC. 8. UNIFORM NATIONAL STANDARDS.

    Subsection (e) of section 503 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 353), as amended by sections 4, 5, and 6 of 
this Act, is amended by adding at the end the following:
            ``(5) Uniform national standards.--Effective 180 days after 
        the date of enactment of the Safeguarding America's 
        Pharmaceuticals Act of 2008, no State or political subdivision 
        of a State may establish or continue in effect any requirement 
        with respect to statements of distribution history, 
        manufacturer packing lists, unique standardized numerical 
        identifiers, or drug identification and tracking systems for 
        prescription drugs that is different from, or in addition to, 
        any requirement under this subsection.''.

SEC. 9. REPORT TO CONGRESS.

    If the Secretary of Health and Human Services does not issue any 
proposed or final regulations by the dates described in paragraphs (2) 
and (3) of section 503(e) of the Federal Food, Drug, and Cosmetic Act, 
as amended by sections 4, 5, and 6 of this Act, the Secretary shall 
provide the Committee on Energy and Commerce of the House of 
Representatives and the Committee on Health, Education, Labor, and 
Pensions of the Senate a report explaining the reasons why action on 
the proposed or final regulations did not occur and specifying the date 
by which the Secretary will issue such regulations.

SEC. 10. REQUIREMENTS FOR LICENSURE OF WHOLESALE DISTRIBUTORS.

    (a) Requirements.--Section 503(e)(4) of the Federal Food, Drug, and 
Cosmetic Act, as so redesignated by section 4(a)(2) of this Act is 
amended--
            (1) in subparagraph (B), by striking the second sentence 
        and inserting the following: ``Such guidelines shall prescribe 
        requirements for--
            ``(i) the storage and handling of such drugs;
            ``(ii) the establishment and maintenance of records of the 
        distributions of such drugs;
            ``(iii) the payment to the State of a bond or other 
        equivalent means of security in an amount deemed appropriate by 
        the State;
            ``(iv) the conduct of mandatory background checks and 
        fingerprinting of facility manager and his or her designated 
        representative;
            ``(v) the establishment and implementation of 
        qualifications for key personnel;
            ``(vi) in accordance with subparagraph (C), the mandatory 
        physical inspection prior to licensure of any facility to be 
        used in the wholesale distribution; and
            ``(vii) in accordance with subparagraph (D), the 
        prohibition of certain persons from receiving or maintaining 
        licensure for wholesale distribution.''; and
            (2) by adding at the end the following:
    ``(C) The guidelines under subparagraph (B) shall include 
requirements for the mandatory physical inspection prior to licensure 
of any facility to be used, pursuant to such licensure, in wholesale 
distribution. Such requirements shall allow a State to accept a 
satisfactory inspection report from a relevant State or Federal 
inspection authority, or from a third party inspection or accreditation 
program that meets criteria and standards developed by an advisory 
group consisting of representatives of the State, distributors, 
manufacturers, pharmacies and other stakeholders, in place of the State 
conducting the inspection.
    ``(D) The guidelines under subparagraph (B) shall include 
requirements to prohibit a person from receiving or maintaining 
licensure for wholesale distribution if the person--
            ``(i) has been convicted of any felony for conduct relating 
        to wholesale distribution, any felony violation of sections 
        301(i) or (k) of this Act, or any felony violation of 18 U.S.C. 
        1365 involving a drug or biologic (relating to product 
        tampering); or
            ``(ii) the person has engaged in a pattern of violating the 
        requirements of this section, or State requirements for 
        licensure, that presents a threat of serious adverse health 
        consequences or death to humans.''.
    (b) Effective Date.--The Secretary of Health and Human Services 
shall by regulation issue the guidelines required by section 503(e)(4) 
of the Federal Food, Drug, and Cosmetic Act, as amended by subsection 
(a), not later than 180 days after the date of the enactment of this 
Act. Section 503(e)(4) of such Act, as so amended, shall take effect 
upon the expiration of 2 years after the date such regulations are 
promulgated. The Secretary shall by regulation establish conditions 
under which a person who is licensed by a State to engage in wholesale 
distribution pursuant to guidelines set forth in part 205 of title 21 
of the Code of Federal Regulations, as it existed on the date of 
amendment of this act, may continue such wholesale distribution if such 
person is unable to obtain a timely State inspection under section 
503(e)(4)(C) of the Federal Food, Drug, and Cosmetic Act, as amended by 
subsection (a), solely because of the State's resource limitations.

SEC. 11. INJUNCTIONS; CIVIL PENALTIES.

    (a) Injunction Proceedings.--Subsection (a) of section 302 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 332) is amended by 
deleting ``paragraphs (h), (i), and (j)'' and inserting ``paragraphs 
(h) and (j)''.
    (b) Civil Penalty.--Subsection (f) of section 303 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 333) is amended--
            (1) by redesignating paragraphs (5), (6), and (7) as 
        paragraphs (6), (7), and (8);
            (2) by inserting after paragraph (4) the following:
    ``(5)(A) Any person who violates paragraph (2) or (3) of section 
301(i) shall be subject to a civil monetary penalty of not more than 
$50,000 in the case of an individual and $250,000 in the case of any 
other person for such violation, not to exceed $500,000 for all such 
violations adjudicated in a single proceeding.
    ``(B) A civil monetary penalty under this paragraph shall be paid 
to the United States, except that, in a proceeding brought by a State 
under section 310(c)(1), 50 percent of a civil monetary penalty under 
this paragraph shall be paid to the State.
    ``(C) Amounts paid to the United States under this paragraph shall 
be--
            ``(i) deposited in the account providing appropriations for 
        salaries and expenses of the Food and Drug Administration; and
            ``(ii) subject to the availability of appropriations, used 
        by the Secretary to prevent and address unlawful counterfeiting 
        and diversion of drugs, including through enforcement of 
        paragraphs (2) and (3) of section 301(i) and investigation of 
        potential violations of such paragraphs.
    ``(D) For fiscal year 2009 and each subsequent fiscal year, there 
is authorized to be appropriated to the Secretary for the programs and 
activities described in subparagraph (C)(ii) an amount equal to the 
total amount paid to the United States under this paragraph during the 
preceding fiscal year, to remain available until expended.'';
            (3) in paragraph (6), as so redesignated, by striking the 
        term ``paragraph (1), (2), (3), or (4)'' each place such term 
        appears and inserting ``paragraph (1), (2), (3), (4), or (5)'';
            (4) in paragraph (7), as so redesignated, by striking 
        ``paragraph (5)(A)'' and inserting ``paragraph (6)(A)''; and
            (5) in paragraph (8), as so redesignated, by striking the 
        term ``paragraph (6)'' each place such term appears and 
        inserting ``paragraph (7)''.

SEC. 12. STATE ENFORCEMENT OF FEDERAL REQUIREMENTS.

    Section 310 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
337) is amended by adding at the end the following:
    ``(c)(1) A State may bring in its own name and within its 
jurisdiction proceedings for the civil enforcement, or to restrain 
violations, of paragraph (2) or (3) of section 301(i) or paragraph (1), 
(2), and (3) of section 503(e) if the drug or person that is the 
subject of the proceedings is located in the State.
    ``(2) No proceeding may be commenced by a State under paragraph 
(1)--
            ``(A) before 30 days after the State has given written 
        notice to the Secretary that the State intends to bring such 
        proceeding;
            ``(B) before 90 days after the State has given written 
        notice to the Secretary of such intent if the Secretary has, 
        within such 30 days, commenced an informal or formal 
        enforcement action pertaining to the violation which would be 
        the subject of such proceeding; or
            ``(C) if the Secretary is diligently prosecuting a 
        proceeding in court pertaining to the violation, has settled 
        such proceeding, or has settled the informal or formal 
        enforcement action pertaining to such violation.''.

SEC. 13. STUDY ON THREATS TO DOMESTIC PRESCRIPTION DRUG SUPPLY CHAIN.

    (a) In General.--Not later than 18 months after the date of the 
enactment of the Safeguarding America's Pharmaceuticals Act of 2008, 
the Secretary of Health and Human Services, in consultation with 
Federal health and security agencies including the Department of 
Homeland Security and the Department of Justice, shall--
            (1) complete a study on threats to the domestic 
        prescription drug supply chain; and
            (2) submit a report to the Congress describing the results 
        of the study and making recommendations for improvement.
    (b) Issues To Be Studied.--The study conducted under this section 
shall address the following:
            (1) How to improve coordination between the Food and Drug 
        Administration (including the Office of Criminal 
        Investigations) and the Department of Homeland Security 
        including at the Nation's 12 international mail facilities and 
        express carrier hubs.
            (2) Any additional authorities needed by the Food and Drug 
        Administration and the Department of Homeland Security in order 
        to ensure misbranded, adulterated, counterfeit, and 
        unauthorized drugs are destroyed at the Nation's international 
        mail facilities and express carrier hubs.
            (3) New and emerging technologies to assist with screening 
        drug imports in a more efficient manner.
            (4) The adequacy of the number of personnel within the Food 
        and Drug Administration and the Department of Homeland Security 
        and room for growth and improvement, including the need for 
        additional personnel and how such additional personnel should 
        be employed at the Nation's international mail facilities and 
        express carrier hubs.
            (5) The potential interface among the Department of 
        Homeland Security targeting systems (including the Automated 
        Targeting System), the Food and Drug Administration targeting 
        system (including the Oasis System), and express carrier 
        targeting systems to create a unified system that--
                    (A) tracks all illegal drug imports arriving at the 
                Nation's 12 international mail facilities and express 
                carrier hubs; and
                    (B) provides for consultation by manufacturers and 
                other private entities actively involved in tracking 
                counterfeit drug enterprises.
            (6) Any additional authorities which the Food and Drug 
        Administration and the Department of Homeland Security need to 
        provide greater security at the Nation's borders and within the 
        Nation against counterfeit and unapproved prescription drugs.
            (7) How the Food and Drug Administration and the Department 
        of Homeland Security can better coordinate with the private 
        sector to provide greater enforcement against counterfeit 
        prescription drugs.
            (8) Statistically significant data calculating the 
        percentage of drugs entering the Nation, including those 
        entering through the Nation's 12 international mail facilities 
        and express carrier hubs, that are counterfeit, misbranded, 
        adulterated, or otherwise inadmissible.
    (c) Consultation.--In conducting the study required by this 
section, the Secretary of Health and Human Services, in consultation 
with the Secretary of Homeland Security, shall consult with technology 
developers, drug manufacturers, and other interested parties.
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