[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3622 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 3622

  To prohibit prescription drug price-gouging during states of market 
                               shortage.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 22 (legislative day, September 21), 2012

 Mr. Schumer (for himself, Mr. Merkley, and Mr. Blumenthal) introduced 
the following bill; which was read twice and referred to the Committee 
               on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
  To prohibit prescription drug price-gouging during states of market 
                               shortage.

    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 ``Protecting Patients and Hospitals 
From Price Gouging Act''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that--
            (1) many pharmaceutical drugs are necessary to maintain the 
        health and welfare of the American people;
            (2) currently the Nation is facing a chronic shortage of 
        vital drugs necessary in surgery, to treat cancer, and to fight 
        other life-threatening illnesses; and
            (3) in order to prevent any party within the chain of 
        distribution of any vital drugs from taking unfair advantage of 
        consumers during market shortages, the public interest requires 
        that such conduct be prohibited and made subject to criminal 
        penalties.
    (b) Purpose.--The purpose of this Act is to prohibit excessive 
pricing during market shortages.

SEC. 3. DEFINITIONS.

    As used in this Act--
            (1) the term ``market shortage'' means a situation in which 
        the total supply of all clinically interchangeable versions of 
        an FDA-regulated drug is inadequate to meet the current or 
        projected demand at the user level;
            (2) the term ``drug'' means a drug intended for use by 
        human beings, which--
                    (A) because of its toxicity or other potentiality 
                for harmful effect, or the method of its use, or the 
                collateral measures necessary to its use, is not safe 
                for use except under the supervision of a practitioner 
                licensed by law to administer such drug; or
                    (B) is limited by an approved application under 
                section 505 of the Federal Food, Drug, and Cosmetic Act 
                (21 U.S.C. 355) to use under the professional 
                supervision of a practitioner licensed by law to 
                administer such drug;
            (3) the term ``biologic'' means a virus, therapeutic serum, 
        toxin, antitoxin, vaccine, blood, blood component or 
        derivative, allergenic product, or analogous product, or 
        arsphenamine or derivative of arsphenamine (or any other 
        trivalent organic arsenic compound), applicable to the 
        prevention, treatment, or cure of a disease or condition of 
        human beings; and
            (4) the term ``vital drug'' means any drug or biologic used 
        to prevent or treat a serious or life-threatening disease or 
        medical condition, for which there is no other available source 
        with sufficient supply of that drug or biologic or alternative 
        drug or biologic available.

SEC. 4. UNREASONABLY EXCESSIVE DRUG PRICING.

    (a) In General.--
            (1) Authority.--The President may issue an Executive order 
        declaring a market shortage for a period of 6 months with 
        regard to one or more vital drugs due to a market shortage 
        under this Act.
            (2) Unlawful act.--If the President issues an Executive 
        order under paragraph (1), it shall be unlawful for any person 
        to sell vital drugs at a price that is unreasonably excessive 
        and indicates that the seller is taking unfair advantage of the 
        circumstances related to a market shortage to unreasonably 
        increase prices during such period.
    (b) Authority.--The Attorney General is authorized to enforce 
penalties under this Act.

SEC. 5. ENFORCEMENT.

    (a) Enforcement.--
            (1) In general.--Whoever sells, or offers to sell, any 
        vital drug during a declared market shortage with the knowledge 
        and intent to charge a price that is unreasonably excessive 
        under the circumstances shall be guilty of an offense under 
        this section and subject to injunction and penalties as 
        provided in paragraphs (2) and (3).
            (2) Action in district court for injunction.--Whenever it 
        shall appear to the Attorney General that any person is engaged 
        in or about to engage in acts or practices constituting a 
        violation of any provision of this section and until such 
        complaint is dismissed by the Attorney General or set aside by 
        a court on review, the Attorney General may in his or her 
        discretion bring an action in the proper district court of the 
        United States, the United States District Court for the 
        District of Columbia, or the United States courts of any 
        territory or other place subject to the jurisdiction of the 
        United States to enjoin such acts or practices, and upon a 
        proper showing a permanent or temporary injunction or 
        restraining order shall be granted without bond in the interest 
        of the public.
            (3) Criminal penalties.--Any person acting with the 
        knowledge and intent to charge a price that is unreasonably 
        excessive under the circumstances shall be guilty of an offense 
        under this section and title 18, United States Code, and 
        subject to imprisonment for a term not to exceed 3 years, fined 
        an amount not to exceed $5,000,000, or both.
    (b) Enforcement.--The criminal penalty provided by subsection (a) 
may be imposed only pursuant to a criminal action brought by the 
Attorney General or other officer of the Department of Justice.
    (c) Multiple Offenses.--In assessing the penalty provided by 
subsection (a) each day of a continuing violation shall be considered a 
separate violation.
    (d) Application.--
            (1) In general.--This section shall apply--
                    (A) in the geographical area where the vital drug 
                market shortage has been declared; and
                    (B) to all wholesalers and distributors in the 
                chain of distribution.
            (2) Inapplicable.--This section shall not apply to a 
        hospital (as defined in section 1861(e) of the Social Security 
        Act (42 U.S.C. 1395x(e)) or a physician (as defined in section 
        1861(q) of the Social Security Act (42 U.S.C. 1395x(q)).

SEC. 6. DETERMINATION OF UNREASONABLY EXCESSIVE.

    (a) In General.--The Attorney General, in determining whether an 
alleged violator's price was unreasonably excessive, shall consider 
whether--
            (1) the price reasonably reflected additional costs, not 
        within the control of that person or company, that were paid, 
        incurred, or reasonably anticipated by that person or company;
            (2) the price reasonably reflected additional risks taken 
        by that person or company to produce, distribute, obtain, or 
        sell such product under the circumstances;
            (3) there is a gross disparity between the challenged price 
        and the price at which the same or similar goods were readily 
        available in the same region and during the same Presidentially 
        declared market shortage;
            (4) the marginal benefit received by the wholesaler or 
        distributor is significantly changed in comparison with 
        marginal earnings in the year before a market shortage was 
        declared;
            (5) the price charged was comparable to the price at which 
        the goods were generally available in the trade area if the 
        wholesaler or distributor did not sell or offer to sell the 
        prescription drug in question prior to the time a market 
        shortage was declared; and
            (6) the price was substantially attributable to local, 
        regional, national, or international market conditions.
    (b) Consultation.--Not later than 1 year after the date of 
enactment of this Act and annually thereafter, the Attorney General or 
designee, shall consult with representatives of the National 
Association of Wholesalers, Group Purchasing Organizations, 
Pharmaceutical Distributors, Hospitals, Manufacturers, patients, and 
other interested community organizations to reassess the criteria set 
forth in subsection (a) in determining unreasonably excessive and 
prepare and submit to Congress a report on the results of the 
reassessment.

SEC. 7. DURATION.

    (a) In General.--Any market shortage declared by the President in 
accordance with this Act shall be in effect for a period of not to 
exceed 6 months from the date on which the President issues the 
Executive order.
    (b) Termination.--Any market shortage declared by the President in 
accordance with this Act shall terminate if--
            (1) there is enacted a law terminating the market shortage 
        which shall be passed by Congress after a national market 
        shortage is declared; or
            (2) the President issues a proclamation terminating the 
        market shortage;
whichever comes first.
    (c) Declaration Renewal.--The President may renew the state of 
market shortage declared under subsection (a), if the President 
declares that the severe shortage continues to affect the health and 
well being of citizens beyond the initial 6-month period.
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