[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1919 Engrossed in House (EH)]

113th CONGRESS
  1st Session
                                H. R. 1919

_______________________________________________________________________

                                 AN ACT


 
 To amend the Federal Food, Drug, and Cosmetic Act with respect to the 
   pharmaceutical distribution supply chain, and for other purposes.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Safeguarding 
America's Pharmaceuticals Act of 2013''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. Pharmaceutical distribution supply chain.
Sec. 3. Enhanced drug distribution security.
Sec. 4. National standards for wholesale distributors.
Sec. 5. National licensure standards for third-party logistics 
                            providers.
Sec. 6. Penalties.
Sec. 7. Uniform national policy.
Sec. 8 Electronic labeling.

SEC. 2. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN.

    Chapter V of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
351 et seq.) is amended by adding at the end the following:

        ``Subchapter H--Pharmaceutical Distribution Supply Chain

``SEC. 581. DEFINITIONS.

    ``In this subchapter:
            ``(1) Authorized.--The term `authorized' means--
                    ``(A) in the case of a manufacturer or repackager, 
                having a valid registration in accordance with section 
                510; and
                    ``(B) in the case of a wholesale distributor, 
                third-party logistics provider, or dispenser, licensed 
                (as defined in this section).
            ``(2) Dispenser.--The term `dispenser'--
                    ``(A) subject to subparagraph (C), means a retail 
                pharmacy, hospital pharmacy, a group of chain 
                pharmacies under common ownership and control, or any 
                other person authorized by law to dispense or 
                administer prescription drugs, to the extent such 
                pharmacy, group, or person does not act as a wholesale 
                distributor;
                    ``(B) includes warehouses and distribution centers 
                under common ownership or control of entities described 
                in subparagraph (A) that are members of an affiliated 
                group pursuant to section 1504(a) of the Internal 
                Revenue Code of 1986, to the extent such warehouses and 
                distribution centers do not act as a wholesale 
                distributor; and
                    ``(C) does not include a person who only dispenses 
                prescription drug product to be used in animals in 
                accordance with section 512(a)(5).
            ``(3) Disposition.--The term `disposition', with respect to 
        a prescription drug product within the possession and control 
        of an entity--
                    ``(A) means the removal of such prescription drug 
                product, or taking measures to prevent the introduction 
                of such prescription drug product, from the 
                pharmaceutical distribution supply chain; and
                    ``(B) may include disposal, return of the 
                prescription drug product for disposal, or other 
                appropriate handling and other actions such as 
                retaining a sample of the prescription drug product for 
                additional physical examination or laboratory analysis 
                by a manufacturer or regulatory or law enforcement 
                agency.
            ``(4) Distribute or distribution.--The terms `distribute' 
        and `distribution' mean the sale, purchase, trade, delivery, 
        handling, or storage of a prescription drug product.
            ``(5) Illegitimate prescription drug product.--The term 
        `illegitimate prescription drug product' means a prescription 
        drug product which a manufacturer has confirmed--
                    ``(A) is counterfeit, diverted, or stolen;
                    ``(B) is intentionally adulterated such that the 
                prescription drug product would result in serious 
                adverse health consequences or death to humans; or
                    ``(C) is otherwise unfit for distribution such that 
                the prescription drug product is reasonably likely to 
                cause serious adverse human health consequences or 
                death.
            ``(6) Licensed.--The term `licensed' means--
                    ``(A) in the case of a wholesale distributor, 
                having a valid license to make wholesale distributions 
                consistent with the standards under section 583;
                    ``(B) in the case of a third-party logistics 
                provider, having a valid license to engage in the 
                activities of a third-party logistics provider in 
                accordance with section 584; and
                    ``(C) in the case of a dispenser, having a valid 
                license to dispense prescription drugs under State law.
            ``(7) Manufacturer.--The term `manufacturer' means, with 
        respect to a prescription drug product--
                    ``(A) a person that holds an application approved 
                under section 505 or a license issued under section 351 
                of the Public Health Service Act for such prescription 
                drug product, or if such prescription drug product is 
                not the subject of an approved application or license, 
                the person who manufactured the prescription drug 
                product;
                    ``(B) a co-licensed partner of the person described 
                in subparagraph (A) that obtains the prescription drug 
                product directly from the person described in such 
                subparagraph; or
                    ``(C) a person that--
                            ``(i) is a member of an affiliated group 
                        (as defined in section 1504(a) of the Internal 
                        Revenue Code of 1986) to which a person 
                        described in subparagraph (A) or (B) is also a 
                        member; and
                            ``(ii) receives the prescription drug 
                        product directly from a person described in 
                        subparagraph (A) or (B).
            ``(8) Package.--
                    ``(A) In general.--The term `package' means the 
                smallest individual saleable unit of prescription drug 
                product for distribution in interstate commerce by a 
                manufacturer or repackager that is intended by the 
                manufacturer for ultimate sale to the dispenser of such 
                prescription drug product.
                    ``(B) Individual saleable unit.--The term 
                `individual saleable unit' means the smallest container 
                of prescription drug product introduced into interstate 
                commerce by the manufacturer or repackager that is 
                intended by the manufacturer for individual sale to a 
                dispenser.
            ``(9) Prescription drug.--The term `prescription drug' 
        means a drug for human use subject to section 503(b)(1).
            ``(10) Prescription drug product.--The term `prescription 
        drug product' means a prescription drug in a finished dosage 
        form for administration to a patient without substantial 
        further manufacturing (such as capsules, tablets, and 
        lyophilized prescription drug products before reconstitution).
            ``(11) Prescription drug product identifier.--The term 
        `prescription drug product identifier' means a standardized 
        graphic that--
                    ``(A) includes the standardized numerical 
                identifier, lot number, and expiration date of a 
                prescription drug product; and
                    ``(B) is in both human-readable form and on a 
                machine-readable data carrier that conforms to the 
                standards developed by a widely recognized 
                international standards development organization.
            ``(12) Quarantine.--The term `quarantine' means to store or 
        identify a product, for the purpose of preventing distribution 
        or transfer of the product, in a physically separate area 
        clearly identified for such use, or through use of other 
        procedures such as automated designation.
            ``(13) Repackager.--The term `repackager' means a person 
        who owns or operates an establishment that repacks and relabels 
        a prescription drug product or package for further sale or 
        distribution.
            ``(14) Return.--The term `return' means providing 
        prescription drug product to the authorized trading partner or 
        trading partners from which such prescription drug product was 
        purchased or received, or to a returns processor for handling 
        of such prescription drug product.
            ``(15) Returns processor.--The terms `returns processor' 
        mean a person who owns or operates an establishment that 
        provides for the disposition of or otherwise processes saleable 
        and nonsaleable prescription drug product received from an 
        authorized trading partner such that the prescription drug 
        product may be processed for credit to the purchaser, 
        manufacturer, seller, or disposed of for no further 
        distribution.
            ``(16) Specific patient need.--The term `specific patient 
        need'--
                    ``(A) means with respect to the transfer of a 
                prescription drug product from one pharmacy to another, 
                to fill a prescription for an identified patient; and
                    ``(B) does not include the transfer of a 
                prescription drug product from one pharmacy to another 
                for the purpose of increasing or replenishing stock in 
                anticipation of a potential need.
            ``(17) Standardized numerical identifier.--The term 
        `standardized numerical identifier' means a set of numbers or 
        characters that--
                    ``(A) is used to uniquely identify each package or 
                homogenous case of the prescription drug product; and
                    ``(B) is composed of the National Drug Code that 
                corresponds to the specific prescription drug product 
                (including the particular package configuration) 
                combined with a unique alphanumeric serial number of up 
                to 20 characters.
            ``(18) Suspect prescription drug product.--The term 
        `suspect prescription drug product' means a prescription drug 
        product for which there is reason to believe that such 
        prescription drug product--
                    ``(A) is potentially counterfeit, diverted, or 
                stolen;
                    ``(B) is potentially intentionally adulterated such 
                that the prescription drug product would result in 
                serious adverse health consequences or death to humans; 
                or
                    ``(C) appears otherwise unfit for distribution such 
                that the prescription drug product would result in 
                serious adverse health consequences or death to humans.
            ``(19) Third-party logistics provider.--The term `third-
        party logistics provider' means an entity that provides or 
        coordinates warehousing, distribution, or other logistics 
        services of a prescription drug product in interstate commerce 
        on behalf of a manufacturer, wholesale distributor, or 
        dispenser of a prescription drug product, but does not take 
        ownership of the prescription drug product, nor have 
        responsibility to direct the sale or disposition of, the 
        prescription drug product.
            ``(20) Trading partner.--The term `trading partner' means--
                    ``(A) a manufacturer, repackager, wholesale 
                distributor, or dispenser from whom a manufacturer, 
                repackager, wholesale distributor, or dispenser accepts 
                ownership of a prescription drug product or to whom a 
                manufacturer, repackager, wholesale distributor, or 
                dispenser transfers ownership of a prescription drug 
                product; or
                    ``(B) a third-party logistics provider from whom a 
                manufacturer, repackager, wholesale distributor, or 
                dispenser accepts possession of a prescription drug 
                product or to whom a manufacturer, repackager, 
                wholesale distributor, or dispenser transfers 
                possession of a prescription drug product.
            ``(21) Transaction.--
                    ``(A) In general.--The term `transaction' means the 
                transfer in interstate commerce of prescription drug 
                product between persons in which a change of ownership 
                occurs.
                    ``(B) Exemptions.--The term `transaction' does not 
                include--
                            ``(i) intracompany distribution of any 
                        prescription drug product, including between 
                        members of an affiliated group (as defined in 
                        section 1504(a) of the Internal Revenue Code of 
                        1986);
                            ``(ii) the distribution of a prescription 
                        drug product among hospitals or other health 
                        care entities that are under common control;
                            ``(iii) the distribution of a prescription 
                        drug product for emergency medical reasons 
                        including a public health emergency declaration 
                        pursuant to section 319 of the Public Health 
                        Service Act, except that a drug shortage not 
                        caused by a public health emergency shall not 
                        constitute an emergency medical reason;
                            ``(iv) the dispensing of a prescription 
                        drug product pursuant to a valid prescription 
                        executed in accordance with section 503(b)(1);
                            ``(v) the distribution of prescription drug 
                        product samples by a manufacturer or a licensed 
                        wholesale distributor in accordance with 
                        section 503(d);
                            ``(vi) the distribution of blood or blood 
                        components intended for transfusion;
                            ``(vii) the distribution of minimal 
                        quantities of prescription drug product by a 
                        licensed retail pharmacy to a licensed 
                        practitioner for office use;
                            ``(viii) the distribution of a prescription 
                        drug product by a charitable organization to a 
                        nonprofit affiliate of the organization to the 
                        extent otherwise permitted by law;
                            ``(ix) the distribution of a prescription 
                        drug product pursuant to the sale or merger of 
                        a pharmacy or pharmacies or a wholesale 
                        distributor or wholesale distributors, except 
                        that any records required to be maintained for 
                        the prescription drug product shall be 
                        transferred to the new owner of the pharmacy or 
                        pharmacies or wholesale distributor or 
                        wholesale distributors;
                            ``(x) the dispensing of a prescription drug 
                        product approved under section 512(b);
                            ``(xi) the transfer of prescription drug 
                        products to or from any facility that is 
                        licensed by the Nuclear Regulatory Commission 
                        or by a State pursuant to an agreement with 
                        such Commission under section 274 of the Atomic 
                        Energy Act of 1954 (42 U.S.C. 2021);
                            ``(xii) the distribution of a combination 
                        product that consists of--
                                    ``(I) a product comprised of two or 
                                more components that are each a drug, 
                                biological product, or device and that 
                                are physically, chemically, or 
                                otherwise combined or mixed and 
                                produced as a single entity;
                                    ``(II) two or more separate 
                                products packaged together in a single 
                                package or as a unit and comprised of a 
                                drug and device or a device and 
                                biological product; or
                                    ``(III) two or more finished 
                                devices plus one or more drug or 
                                biological products which are packaged 
                                together in a medical convenience kit 
                                described in clause (xiii);
                            ``(xiii) the distribution of a medical 
                        convenience kit which is a collection of 
                        finished products (consisting of devices or 
                        drugs) assembled in kit form strictly for the 
                        convenience of the purchaser or user if--
                                    ``(I) the medical convenience kit 
                                is assembled in an establishment that 
                                is registered with the Food and Drug 
                                Administration as a medical device 
                                manufacturer;
                                    ``(II) the person who manufacturers 
                                the medical convenience kit purchased 
                                the prescription drug product directly 
                                from the manufacturer or from a 
                                wholesale distributor that purchased 
                                the prescription drug product directly 
                                from the manufacturer;
                                    ``(III) the person who 
                                manufacturers the medical convenience 
                                kit does not alter the primary 
                                container or label of the prescription 
                                drug product as purchased from the 
                                manufacturer or wholesale distributor;
                                    ``(IV) the medical convenience kit 
                                does not contain a controlled substance 
                                (as defined in section 102 of the 
                                Controlled Substances Act); and
                                    ``(V) the prescription drug 
                                products contained in the medical 
                                convenience kit are--
                                            ``(aa) intravenous 
                                        solutions intended for the 
                                        replenishment of fluids and 
                                        electrolytes;
                                            ``(bb) drugs intended to 
                                        maintain the equilibrium of 
                                        water and minerals in the body;
                                            ``(cc) drugs intended for 
                                        irrigation or reconstitution;
                                            ``(dd) anesthetics;
                                            ``(ee) anticoagulants;
                                            ``(ff) vasopressors; or
                                            ``(gg) sympathicomimetics;
                            ``(xiv) the distribution of an intravenous 
                        prescription drug product that, by its 
                        formulation, is intended for the replenishment 
                        of fluids and electrolytes (such as sodium, 
                        chloride, and potassium) or calories (such as 
                        dextrose and amino acids);
                            ``(xv) the distribution of an intravenous 
                        prescription drug product used to maintain the 
                        equilibrium of water and minerals in the body, 
                        such as dialysis solutions;
                            ``(xvi) the distribution of a prescription 
                        drug product that is intended for irrigation or 
                        reconstitution, or sterile water, whether 
                        intended for such purposes or for injection;
                            ``(xvii) the distribution of compressed 
                        medical gas; or
                            ``(xviii)(I) the distribution of a product 
                        by a dispenser, or a wholesale distributor 
                        acting at the direction of the dispenser, to a 
                        repackager registered under section 510 for the 
                        purpose of repackaging the drug for use by that 
                        dispenser or another health care entity that is 
                        under the dispenser's ownership or control, so 
                        long as the dispenser retains ownership of the 
                        prescription drug product; and
                            ``(II) the saleable or nonsaleable return 
                        by such repackager of such prescription drug 
                        product.
                    ``(C) Compressed medical gas.--For purposes of 
                subparagraph (B)(xvii), the term `compressed medical 
                gas' means any substance in its gaseous or cryogenic 
                liquid form that meets medical purity standards and has 
                application in a medical or homecare environment, 
                including oxygen and nitrous oxide.
            ``(22) Transaction history.--The term `transaction history' 
        means a statement that--
                    ``(A) includes the transaction information for each 
                transaction conducted with respect to a prescription 
                drug product beginning with the manufacturer or initial 
                purchase distributor; and
                    ``(B) is in paper or electronic form.
            ``(23) Transaction information.--The term `transaction 
        information' means--
                    ``(A) the proprietary or established name or names 
                of the prescription drug product;
                    ``(B) the strength and dosage form of the 
                prescription drug product;
                    ``(C) the National Drug Code number of the 
                prescription drug product;
                    ``(D) the container size;
                    ``(E) the number of containers;
                    ``(F) the lot number of the prescription drug 
                product;
                    ``(G) the date of the transaction;
                    ``(H) the business name and address of the person 
                from whom ownership is being transferred; and
                    ``(I) the business name and address of the person 
                to whom ownership is being transferred.
            ``(24) Transaction statement.--The `transaction statement' 
        is a statement, which states that the manufacturer, repackager, 
        wholesale distributor, third-party logistics provider, or 
        dispenser transferring ownership in a transaction--
                    ``(A) is authorized;
                    ``(B) received transaction information and a 
                transaction statement as required under section 582 
                from the prior owner of the prescription drug product;
                    ``(C) did not knowingly and intentionally ship an 
                illegitimate prescription drug product;
                    ``(D) did not knowingly and intentionally provide 
                false transaction information; and
                    ``(E) did not knowingly and intentionally alter the 
                transaction history.
            ``(25) Verification and verify.--The terms `verification' 
        and `verify'--
                    ``(A) mean determining whether the prescription 
                drug product identifier affixed to, or imprinted upon, 
                a package or homogeneous case of the prescription drug 
                product corresponds to the standardized numerical 
                identifier or lot number, and expiration date assigned 
                to the prescription drug product by the manufacturer or 
                the repackager, as applicable; and
                    ``(B) include making the determination under 
                subparagraph (A) using human-readable or machine-
                readable methods.
            ``(26) Wholesale distributor.--The term `wholesale 
        distributor'--
                    ``(A) means a person engaged in wholesale 
                distribution (as defined in section 583); and
                    ``(B) excludes--
                            ``(i) a manufacturer, a co-licensed partner 
                        of a manufacturer, or a third-party logistics 
                        provider, or a dispenser who does not engage in 
                        such wholesale distribution;
                            ``(ii) a repackager engaged in such 
                        wholesale distribution; or
                            ``(iii) the distribution of prescription 
                        drug product or an offer to distribute 
                        prescription drug product by an authorized 
                        repackager that has taken ownership or 
                        possession of the prescription drug product and 
                        repacked the prescription drug product in 
                        accordance with the requirements of section 
                        582(e).

``SEC. 582. REQUIREMENTS.

    ``(a) In General.--
            ``(1) Compliance required.--An entity that is a 
        manufacturer, repackager, wholesale distributor, third-party 
        logistics provider, or dispenser shall comply with the 
        requirements of this section. If an entity meets the definition 
        of more than one of the entities referred to in the preceding 
        sentence, such entity shall comply with all applicable 
        requirements of this section, but shall not be required to 
        comply with duplicative requirements.
            ``(2) Standards.--The Secretary shall, in consultation with 
        other appropriate Federal officials, manufacturers, 
        repackagers, wholesale distributors, third-party logistics 
        providers, and dispensers, establish, by regulation, standards 
        for the exchange of transaction history and transaction 
        statement (in paper or electronic form) for purposes of 
        complying with this section. The standards established under 
        this paragraph shall be in accordance with a form developed by 
        a widely recognized international standards development 
        organization. In establishing such standards, the Secretary 
        shall consider the feasibility of establishing standardized 
        documentation to be used by all members of the pharmaceutical 
        distribution supply chain to convey the transaction history and 
        transaction statement to the subsequent owner of a prescription 
        drug product. The Secretary shall publish such standards not 
        later than 180 days after the date of the enactment of the 
        Safeguarding America's Pharmaceuticals Act of 2013.
            ``(3) Waivers, exceptions, and exemptions.--Not later than 
        one year after the date of the enactment of the Safeguarding 
        America's Pharmaceuticals Act of 2013, the Secretary shall 
        promulgate a regulation to--
                    ``(A) establish a process by which the Secretary 
                may grant, at the request of an authorized 
                manufacturer, repackager, wholesale distributor, or 
                dispenser, a waiver from any of the requirements of 
                this section--
                            ``(i) if the Secretary determines that such 
                        requirements would result in an undue economic 
                        hardship; or
                            ``(ii) for emergency medical reasons, 
                        including a public health emergency declaration 
                        pursuant to section 319 of the Public Health 
                        Service Act;
                    ``(B) establish a process, with respect to the 
                prescription drug product identifier requirement under 
                paragraph (2) of subsections (b), (c), (d), and (e) 
                through which--
                            ``(i) a manufacturer or repackager may 
                        request a waiver with respect to prescription 
                        drug products that are packaged in a container 
                        too small or otherwise unable to accommodate a 
                        label with sufficient space to bear the 
                        information required for compliance with such 
                        requirement; and
                            ``(ii) the Secretary determines whether to 
                        waive such requirement; and
                    ``(C) establish a process by which the Secretary 
                may add the prescription drug products or transactions 
                that are exempt from the requirements of this section.
            ``(4) Grandfathered persons and prescription drug 
        products.--
                    ``(A) In general.--Not later than one year after 
                the date of the enactment of the Safeguarding America's 
                Pharmaceuticals Act of 2013, the Secretary shall 
                specify, by regulation, whether and under what 
                circumstances the prescription drug product identifier 
                requirement under paragraph (2) of subsections (b), 
                (c), (d), and (e) shall apply to a prescription drug 
                product that is in the supply chain or in a 
                manufacturer's inventory on the date of the enactment 
                of the Safeguarding America's Pharmaceuticals Act of 
                2013.
                    ``(B) Third-party logistics provider licenses.--
                Until the date that is 1 year after the effective date 
                of the third-party logistics provider licensing 
                requirements under section 584, a third-party logistics 
                provider shall be considered `licensed' under section 
                581(6)(B) unless the Secretary has made a finding that 
                the third-party logistics provider does not utilize 
                good handling and distribution practices and publishes 
                notice thereof.
                    ``(C) Label changes.--Changes made to package 
                labels solely to incorporate the prescription drug 
                product identifier may be submitted to the Secretary in 
                the annual report of an establishment, in accordance 
                with section 314.70(d) of chapter 21, Code of Federal 
                Regulations (or any successor regulation).
    ``(b) Manufacturer Requirements.--
            ``(1) Prescription drug product tracing.--
                    ``(A) In general.--Beginning not later than January 
                1, 2015, a manufacturer shall--
                            ``(i) prior to, or at the time of, each 
                        transaction in which such manufacturer 
                        transfers ownership of a prescription drug 
                        product--
                                    ``(I) until the date than is 5 
                                years after the date of the enactment 
                                of the Safeguarding America's 
                                Pharmaceuticals Act of 2013, provide 
                                the subsequent owner with the 
                                transaction history and a transaction 
                                statement in a single document in paper 
                                or electronic form; and
                                    ``(II) on or after such date, 
                                provide the subsequent owner with the 
                                transaction history and a transaction 
                                statement in electronic form; and
                            ``(ii) maintain the transaction information 
                        for each such transaction for not less than 3 
                        years after the date of the transaction.
                    ``(B) Requests for information.--Upon a request by 
                the Secretary or other appropriate Federal or State 
                official, in the event of a recall or for the purpose 
                of investigating a suspect prescription drug product or 
                an illegitimate prescription drug product, a 
                manufacturer shall, not later than 2 business days 
                after receiving the request or in such reasonable time 
                as determined by the Secretary, provide to the 
                Secretary or other official, the applicable transaction 
                history and transaction statement for the prescription 
                drug product.
            ``(2) Prescription drug product identifier.--Beginning not 
        later than 5 years after the date of the enactment of the 
        Safeguarding America's Pharmaceuticals Act of 2013, a 
        manufacturer shall affix or imprint a prescription drug product 
        identifier on each package and homogenous case of a 
        prescription drug product intended to be introduced in a 
        transaction. Such manufacturer shall maintain the information 
        in the prescription drug product identifier for such 
        prescription drug product for not less than 3 years after the 
        date of the transaction.
            ``(3) Authorized trading partners.--Beginning not later 
        than January 1, 2015, a manufacturer shall ensure that each of 
        its trading partners is authorized.
            ``(4) List of authorized distributors of record.--Beginning 
        not later than January 1, 2015, each manufacturer of a 
        prescription drug shall--
                    ``(A) maintain a list of the authorized 
                distributors of record of such drug at the corporate 
                offices of such manufacturer;
                    ``(B) make such list publicly available, including 
                placement on the Internet Website of such manufacturer; 
                and
                    ``(C) update such list not less than once per 
                quarter.
            ``(5) Verification.--Beginning not later than January 1, 
        2015, a manufacturer shall implement systems and processes to 
        enable the manufacturer to comply with the following 
        requirements:
                    ``(A) Suspect prescription drug product.--
                            ``(i) In general.--Upon making a 
                        determination that a prescription drug product 
                        in the possession or control of the 
                        manufacturer is a suspect prescription drug 
                        product, or upon receiving a request for 
                        verification from the Secretary that a 
                        prescription drug product within the possession 
                        or control of a manufacturer is a suspect 
                        prescription drug product, a manufacturer shall 
                        promptly conduct an investigation in 
                        coordination with trading partners, as 
                        applicable, to determine whether the 
                        prescription drug product is an illegitimate 
                        prescription drug product. Beginning not later 
                        than 5 years after the date of the enactment of 
                        the Safeguarding America's Pharmaceuticals Act 
                        of 2013, such investigation shall include--
                                    ``(I) verifying the prescription 
                                drug product at the package level;
                                    ``(II) validating any applicable 
                                transaction history in the possession 
                                of the manufacturer; and
                                    ``(III) otherwise investigating to 
                                determine whether the prescription drug 
                                product is an illegitimate prescription 
                                drug product.
                            ``(ii) Cleared prescription drug product.--
                        If the manufacturer determines that a suspect 
                        prescription drug product is not an 
                        illegitimate prescription drug product, the 
                        manufacturer shall promptly notify the 
                        Secretary of such determination and such 
                        prescription drug product may be further 
                        distributed.
                            ``(iii) Records.--A manufacturer shall keep 
                        records of its investigation of a suspect 
                        prescription drug product for not less than 3 
                        years after the conclusion of the 
                        investigation.
                    ``(B) Illegitimate prescription drug product.--
                            ``(i) In general.--Upon determining that a 
                        prescription drug product in the possession or 
                        control of a manufacturer is an illegitimate 
                        prescription drug product, the manufacturer 
                        shall--
                                    ``(I) quarantine such prescription 
                                drug product from prescription drug 
                                product intended for distribution; and
                                    ``(II) provide for the disposition 
                                of the illegitimate prescription drug 
                                product.
                            ``(ii) Trading partner.--Upon determining 
                        that a prescription drug product in the 
                        possession or control of a trading partner is 
                        an illegitimate prescription drug product, the 
                        manufacturer shall take reasonable steps to 
                        assist a trading partner to provide for the 
                        disposition of the illegitimate prescription 
                        drug product.
                            ``(iii) Making a notification.--Upon 
                        determining that a prescription drug product in 
                        the possession or control of the manufacturer 
                        is an illegitimate prescription drug product, 
                        the manufacturer shall notify the Secretary of 
                        such determination not later than 24 hours 
                        after making such determination. The Secretary 
                        shall determine whether additional trading 
                        partner notification is appropriate.
                            ``(iv) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary that a determination has been made 
                        that a prescription drug product is an 
                        illegitimate prescription drug product, a 
                        manufacturer shall--
                                    ``(I) identify all illegitimate 
                                prescription drug products that are 
                                subject to such notification and in the 
                                possession or control of the 
                                manufacturer, including any 
                                prescription drug product that is 
                                subsequently received; and
                                    ``(II) perform the activities 
                                described in clause (i).
                            ``(v) Records.--A manufacturer shall keep 
                        records of the disposition of an illegitimate 
                        prescription drug product for not less than 3 
                        years after the conclusion of the disposition.
                    ``(C) Electronic database.--A manufacturer may 
                satisfy the requirements of this paragraph through the 
                use of a secure electronic database developed and 
                operated by the manufacturer or another entity. The 
                owner of such database shall establish the requirements 
                and processes to respond to requests and may provide 
                for data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a manufacturer of the requirement under this 
                paragraph to respond to a verification request 
                submitted by means other than a secure electronic 
                database.
                    ``(D) Returned prescription drug product.--
                Beginning not later than 5 years after the date of the 
                enactment of the Safeguarding America's Pharmaceuticals 
                Act of 2013, upon receipt of a returned prescription 
                drug product that the manufacturer intends to further 
                distribute, before further distributing such 
                prescription drug product, the manufacturer shall--
                            ``(i) verify the prescription drug product 
                        identifier for each sealed homogeneous case of 
                        such prescription drug product; or
                            ``(ii) if such prescription drug product is 
                        not in a sealed homogeneous case, verify the 
                        prescription drug product identifier on each 
                        package.
    ``(c) Wholesale Distributor Requirements.--
            ``(1) Prescription drug product tracing.--
                    ``(A) In general.--Beginning not later than April 
                1, 2015, a wholesale distributor shall--
                            ``(i) not accept ownership of a 
                        prescription drug product unless the previous 
                        owner prior to, or at the time of, the 
                        transaction provides the applicable transaction 
                        history and a transaction statement for the 
                        prescription drug product;
                            ``(ii) subject to clause (iv), prior to, or 
                        at the time of, each transaction in which the 
                        wholesale distributor transfers ownership of a 
                        prescription drug product--
                                    ``(I) in the case that the 
                                wholesale distributor purchased the 
                                prescription drug product directly from 
                                the manufacturer, the exclusive 
                                distributor of the manufacturer, or a 
                                repackager that purchased directly from 
                                the manufacturer, provide the 
                                subsequent owner with transaction 
                                history and a transaction statement for 
                                the prescription drug product--
                                            ``(aa) if the subsequent 
                                        owner is a dispenser, on a 
                                        single document in paper or 
                                        electronic form; or
                                            ``(bb) if the subsequent 
                                        owner is a wholesale 
                                        distributor, through any 
                                        combination of self-generated 
                                        paper, electronic data, or 
                                        manufacturer-provided 
                                        information on the product 
                                        package;
                                    ``(II) in the case that the 
                                wholesale distributor did not purchase 
                                the prescription drug product as 
                                described in subclause (I)--
                                            ``(aa) provide the 
                                        subsequent owner with the 
                                        transaction history and a 
                                        transaction statement beginning 
                                        with the wholesale distributor 
                                        that did so purchase the 
                                        prescription drug product in 
                                        paper or electronic form; or
                                            ``(bb) pursuant to a 
                                        written agreement between the 
                                        wholesale distributor and a 
                                        dispenser, maintain the 
                                        transaction history and 
                                        transaction statement on behalf 
                                        of the dispenser and if 
                                        requested by the dispenser, 
                                        provide the transaction history 
                                        and transaction statement to 
                                        the dispenser in paper or 
                                        electronic form in a timely 
                                        manner so as to permit the 
                                        dispenser to comply with 
                                        requests pursuant to subsection 
                                        (d)(1)(D);
                            ``(iii) maintain the transaction 
                        information for each transaction described in 
                        clauses (i) and (ii) for not less than 3 years 
                        after the transaction; and
                            ``(iv) on or after the date that is 5 years 
                        after the date of the enactment of the 
                        Safeguarding America's Pharmaceuticals Act of 
                        2013, provide the transaction history and 
                        transaction statement in electronic form.
                    ``(B) Inclusion of lot number in transaction 
                history.--Until the date that is 5 years after the date 
                of the enactment of the Safeguarding America's 
                Pharmaceuticals Act of 2013, the transaction history 
                provided by a wholesale distributer under this 
                paragraph shall not be required to include the lot 
                number of the product or the initial date of the 
                transaction from the manufacturer (as such terms are 
                used in subparagraphs (F) and (G) of section 581(23)).
                    ``(C) Returns exception.--
                            ``(i) Saleable returns.--Notwithstanding 
                        subparagraph (A), a wholesale distributor may--
                                    ``(I) accept returned prescription 
                                drug product without a transaction 
                                history from a dispenser or repackager; 
                                and
                                    ``(II) distribute such returned 
                                prescription drug product with a 
                                transaction history that begins with 
                                the wholesale distributor that so 
                                accepted the returned product.
                            ``(ii) Nonsaleable returns.--A wholesale 
                        distributor may return a nonsaleable 
                        prescription drug to the manufacturer or 
                        repackager, to the wholesale distributor from 
                        whom such prescription drug was purchased, or 
                        to a person acting on behalf of such a person, 
                        including a returns processor, without 
                        providing the information required under 
                        subparagraph (A).
                    ``(D) Requests for information.--Upon a request by 
                the Secretary or other appropriate Federal or State 
                official, in the event of a recall or for the purpose 
                of investigating a suspect prescription drug product or 
                an illegitimate prescription drug product a wholesale 
                distributor shall, not later than 2 business days after 
                receiving the request or in such other reasonable time 
                as determined by the Secretary, provide the applicable 
                transaction history and transaction statements for the 
                prescription drug product.
            ``(2) Prescription drug product identifier.--Beginning not 
        later than 7 years after the date of the enactment of the 
        Safeguarding America's Pharmaceuticals Act of 2013, a wholesale 
        distributor may engage in transactions involving a prescription 
        drug product only if such prescription drug product is encoded 
        with a prescription drug product identifier, except as provided 
        in subsection (a)(4).
            ``(3) Authorized trading partners.--Beginning not later 
        than January 1, 2015, a wholesale distributor shall ensure that 
        each of its trading partners is authorized.
            ``(4) Verification.--Beginning not later than April 1, 
        2015, a wholesale distributor shall implement systems to enable 
        the wholesale distributor to comply with the following 
        requirements:
                    ``(A) Suspect prescription drug product.--
                            ``(i) In general.--Upon making a 
                        determination that a prescription drug product 
                        in the possession or control of the wholesale 
                        distributor is a suspect prescription drug 
                        product, or upon receiving a request for 
                        verification from the Secretary that a 
                        prescription drug product within the possession 
                        or control of a wholesale distributor is a 
                        suspect prescription drug product, a wholesale 
                        distributor shall promptly conduct an 
                        investigation to determine whether the 
                        prescription drug product is an illegitimate 
                        prescription drug product. Beginning not later 
                        than 7 years after the date of the enactment of 
                        the Safeguarding America's Pharmaceuticals Act 
                        of 2013, such investigation shall include--
                                    ``(I) verifying a package of the 
                                prescription drug product;
                                    ``(II) validating any applicable 
                                transaction history in the possession 
                                of the wholesale distributor; and
                                    ``(III) otherwise investigating to 
                                determine whether the prescription drug 
                                product is an illegitimate prescription 
                                drug product.
                            ``(ii) Cleared prescription drug product.--
                        If the wholesale distributor determines that a 
                        suspect prescription drug product is not an 
                        illegitimate prescription drug product, the 
                        wholesale distributor shall promptly notify the 
                        Secretary of such determination and such 
                        prescription drug product may be further 
                        distributed.
                            ``(iii) Records.--A wholesale distributor 
                        shall keep records of its investigation of a 
                        suspect prescription drug product for not less 
                        than 3 years after the conclusion of the 
                        investigation.
                    ``(B) Illegitimate prescription drug product.--
                            ``(i) In general.--Upon receiving notice 
                        that a manufacturer of a prescription drug 
                        product has determined that a prescription drug 
                        product in the possession or control of a 
                        wholesale distributor is an illegitimate 
                        prescription drug product, the wholesale 
                        distributor shall--
                                    ``(I) quarantine such prescription 
                                drug product within the possession or 
                                control of the wholesale distributor 
                                from prescription drug product intended 
                                for distribution; and
                                    ``(II) provide for the disposition 
                                of the illegitimate prescription drug 
                                product within the possession or 
                                control of the wholesale distributor.
                            ``(ii) Trading partner.--Upon determining 
                        that a prescription drug product in the 
                        possession or control of a trading partner is 
                        an illegitimate prescription drug product, the 
                        wholesale distributor shall take reasonable 
                        steps to assist a trading partner to provide 
                        for the disposition of the illegitimate 
                        prescription drug product.
                            ``(iii) Making a notification.--Upon 
                        determining that a prescription drug product in 
                        the possession or control of the wholesale 
                        distributor is an illegitimate prescription 
                        drug product, the wholesale distributor shall 
                        notify the Secretary of such determination not 
                        later than 24 hours after making such 
                        determination. The Secretary shall determine 
                        whether additional trading partner notification 
                        is appropriate.
                            ``(iv) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary that a determination has been made 
                        that a prescription drug product is an 
                        illegitimate prescription drug product, a 
                        wholesale distributor shall--
                                    ``(I) identify all illegitimate 
                                prescription drug products subject to 
                                such notification that are in the 
                                possession or control of the wholesale 
                                distributor, including any such 
                                prescription drug product that is 
                                subsequently received; and
                                    ``(II) perform the activities 
                                described in clause (i).
                            ``(v) Records.--A wholesale distributor 
                        shall keep records of the disposition of an 
                        illegitimate prescription drug product for not 
                        less than 3 years after the conclusion of the 
                        disposition.
                    ``(C) Electronic database.--A wholesale distributor 
                may satisfy the requirements of this paragraph through 
                the use of a secure electronic database developed and 
                operated by the manufacturer or another entity. The 
                owner of such database shall establish the requirements 
                and processes to respond to requests and may provide 
                for data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a wholesale distributor of the requirement 
                under this paragraph to respond to a verification 
                request submitted by means other than a secure 
                electronic database.
                    ``(D) Returned prescription drug product.--
                Beginning not later than 7 years after the date of the 
                enactment of the Safeguarding America's Pharmaceuticals 
                Act of 2013, upon receipt of a returned prescription 
                drug product that the wholesale distributor intends to 
                further distribute, before further distributing such 
                prescription drug product, the wholesale distributor 
                shall--
                            ``(i) verify the prescription drug product 
                        identifier for each sealed homogeneous case of 
                        such prescription drug product; or
                            ``(ii) if such prescription drug product is 
                        not in a sealed homogeneous case, verify the 
                        prescription drug product identifier on each 
                        package.
    ``(d) Dispenser Requirements.--
            ``(1) Prescription drug product tracing.--
                    ``(A) In general.--Beginning not later than July 1, 
                2015, a dispenser--
                            ``(i) shall not accept ownership of a 
                        prescription drug product, unless the previous 
                        owner prior to, or at the time of, the 
                        transaction, provides transaction history and a 
                        transaction statement;
                            ``(ii) prior to, or at the time of, each 
                        transaction in which the dispenser transfers 
                        ownership of a prescription drug product (but 
                        not including dispensing to a patient or 
                        returns) shall provide the subsequent owner 
                        with transaction history and a transaction 
                        statement for the prescription drug product, 
                        except that the requirements of this clause 
                        shall not apply to sales by a dispenser to 
                        another dispenser to fulfill a specific patient 
                        need; and
                            ``(iii) shall maintain transaction 
                        information for a period of not less than 3 
                        years after the date of the transaction.
                    ``(B) Agreements with third parties.--A dispenser 
                may enter into a written agreement with a third party, 
                including an authorized wholesale distributor, under 
                which the third party confidentially maintains the 
                transaction information required to be maintained under 
                this subsection on behalf of the dispenser. If a 
                dispenser enters into such an agreement, the dispenser 
                shall maintain a copy of the written agreement.
                    ``(C) Returns exception.--
                            ``(i) Saleable returns.--Notwithstanding 
                        subparagraph (A)(ii), a dispenser may return 
                        prescription drug product to the trading 
                        partner from which the dispenser obtained the 
                        prescription drug product without providing the 
                        information required under such subparagraph.
                            ``(ii) Nonsaleable returns.--
                        Notwithstanding subparagraph (A)(ii), a 
                        dispenser may return a nonsaleable prescription 
                        drug to the manufacturer or repackager, to the 
                        wholesale distributor from whom such 
                        prescription drug was purchased, to a returns 
                        processor, or to a person acting on behalf of 
                        such persons without providing the information 
                        required under such subparagraph.
                    ``(D) Requests for information.--Upon a request by 
                the Secretary or other appropriate Federal or State 
                official, in the event of a recall or for the purpose 
                of investigating a suspect prescription drug product or 
                an illegitimate prescription drug product--
                            ``(i) a dispenser shall not later than 2 
                        business days after receiving the request or in 
                        another such reasonable time as determined by 
                        the Secretary, provide the applicable 
                        transaction history and transaction statement 
                        which the dispenser received from the previous 
                        owner;
                            ``(ii) the information provided by the 
                        dispenser under clause (i) is not required to 
                        include the lot number of the product, the 
                        initial date of the transaction, or the initial 
                        date of the shipment from the manufacturer 
                        unless such information was provided 
                        electronically by the previous owner, 
                        manufacturer, or wholesale distributor to the 
                        dispenser; and
                            ``(iii) a dispenser may respond to the 
                        request by providing the paper documentation 
                        received from the previous owner or by 
                        providing electronic information.
            ``(2) Prescription drug product identifier.--Beginning not 
        later than 8 years after the date of the enactment of the 
        Safeguarding America's Pharmaceuticals Act of 2013, a dispenser 
        may engage in transactions involving a prescription drug 
        product only if such prescription drug product is encoded with 
        a prescription drug product identifier, except as provided in 
        subsection (a)(4).
            ``(3) Authorized trading partners.--Beginning not later 
        than January 1, 2015, a dispenser shall ensure that each of its 
        trading partners is authorized.
            ``(4) Verification.--Beginning not later than January 1, 
        2015, a dispenser shall implement systems to enable the 
        dispenser to comply with the following requirements:
                    ``(A) Suspect prescription drug product.--
                            ``(i) In general.--Upon making a 
                        determination that a prescription drug product 
                        in the possession or control of the dispenser 
                        is a suspect prescription drug product, or upon 
                        receiving a request for verification from the 
                        Secretary that a prescription drug product 
                        within the possession or control of a dispenser 
                        is a suspect prescription drug product, a 
                        dispenser shall promptly conduct an 
                        investigation to determine whether the 
                        prescription drug product is an illegitimate 
                        prescription drug product. Such investigation 
                        shall include--
                                    ``(I) verifying whether the lot 
                                number of a suspect prescription drug 
                                product corresponds with the lot number 
                                for such prescription drug product;
                                    ``(II) beginning 8 years after the 
                                date of the enactment of the 
                                Safeguarding America's Pharmaceuticals 
                                Act of 2013, verifying that the product 
                                identifier of at least 3 packages or 10 
                                percent of such suspect prescription 
                                drug product, whichever is greater, or 
                                all packages, if there are fewer than 
                                3, corresponds with the prescription 
                                drug product identifier for such 
                                product;
                                    ``(III) validating any applicable 
                                transaction history in the possession 
                                of the dispenser; and
                                    ``(IV) otherwise investigating to 
                                determine whether the prescription drug 
                                product is an illegitimate prescription 
                                drug product.
                            ``(ii) Cleared prescription drug product.--
                        If the dispenser makes the determination that a 
                        suspect prescription drug product is not an 
                        illegitimate prescription drug product, the 
                        dispenser shall promptly notify the Secretary 
                        of such determination and such prescription 
                        drug product may be further dispensed.
                            ``(iii) Records.--A dispenser shall keep 
                        records of its investigation of a suspect 
                        prescription drug product for not less than 3 
                        years after the conclusion of the 
                        investigation.
                    ``(B) Illegitimate prescription drug product.--
                            ``(i) In general.--Upon receiving notice 
                        that a manufacturer of a prescription drug 
                        product has determined that a prescription drug 
                        product in the possession or control of a 
                        dispenser is an illegitimate prescription drug 
                        product, the dispenser shall--
                                    ``(I) quarantine such prescription 
                                drug product within the possession or 
                                control of the dispenser from 
                                prescription drug product intended for 
                                distribution; and
                                    ``(II) provide for the disposition 
                                of the illegitimate prescription drug 
                                product within the possession or 
                                control of the dispenser.
                            ``(ii) Trading partners.--Upon determining 
                        that a prescription drug product in the 
                        possession or control of a trading partner is 
                        an illegitimate prescription drug product, the 
                        dispenser shall take reasonable steps to assist 
                        a trading partner to provide for the 
                        disposition of the illegitimate prescription 
                        drug product.
                            ``(iii) Making a notification.--Upon 
                        determining that a prescription drug product in 
                        the possession or control of the dispenser is 
                        an illegitimate prescription drug product, the 
                        dispenser shall notify the Secretary of such 
                        determination not later than 24 hours after 
                        making such determination. The Secretary shall 
                        determine whether additional trading partner 
                        notification is appropriate.
                            ``(iv) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary that a determination has been made 
                        that a prescription drug product is an 
                        illegitimate prescription drug product, a 
                        dispenser shall--
                                    ``(I) identify all illegitimate 
                                prescription drug products that are 
                                subject to such notification and in the 
                                possession or control of the dispenser, 
                                including any such prescription drug 
                                product that is subsequently received; 
                                and
                                    ``(II) perform the activities 
                                described in clause (i).
                            ``(v) Records.--A dispenser shall keep 
                        records of the disposition of an illegitimate 
                        prescription drug product for not less than 3 
                        years after the conclusion of the disposition.
                    ``(C) Electronic database.--A dispenser may satisfy 
                the requirements of this paragraph through the use of a 
                secure electronic database developed and operated by 
                the manufacturer or another entity. The owner of such 
                database shall establish the requirements and processes 
                to enable responding to requests and may provide for 
                data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a dispenser of the requirement under this 
                paragraph to respond to a verification request 
                submitted by means other than a secure electronic 
                database.
    ``(e) Repackager Requirements.--
            ``(1) Prescription drug product tracing.--
                    ``(A) In general.--Beginning not later than April 
                1, 2015, with respect to a prescription drug product 
                received by a repackager from a wholesale distributor, 
                and beginning not later than January 1, 2015, with 
                respect to any other prescription drug product, a 
                repackager shall--
                            ``(i) not accept ownership of a 
                        prescription drug product unless the previous 
                        owner, prior to, or at the time of, the 
                        transaction, provides transaction history and a 
                        transaction statement for the prescription drug 
                        product;
                            ``(ii) prior to, or at the time of, each 
                        transaction in which the repackager transfers 
                        ownership of a prescription drug product, 
                        provide the subsequent owner with transaction 
                        history and a transaction statement;
                            ``(iii) maintain the transaction 
                        information for each transaction described in 
                        clause (i) or (ii) for not less than 3 years 
                        after the transaction; and
                            ``(iv) maintain records that allow the 
                        repackager to associate the prescription drug 
                        product identifier the repackager affixes or 
                        imprints with the prescription drug product 
                        identifier assigned by the original 
                        manufacturer of the prescription drug product.
                    ``(B) Returns exception.--Notwithstanding 
                subparagraph (A)(ii), a repackager may return 
                prescription drug product to the trading partner from 
                whom the repackager obtained the prescription drug 
                product without providing the information required 
                under such subparagraph.
                    ``(C) Requests for information.--Upon a request by 
                the Secretary or other appropriate Federal or State 
                official, in the event of a recall or for the purpose 
                of investigating a suspect prescription drug product or 
                an illegitimate prescription drug product, a repackager 
                shall, not later than 2 business days after receiving 
                the request or in such other reasonable time as 
                determined by the Secretary, provide the applicable 
                transaction history and transaction statement for the 
                prescription drug product.
            ``(2) Prescription drug product identifier.--Beginning not 
        later than 6 years after the date of the enactment of the 
        Safeguarding America's Pharmaceuticals Act of 2013, a 
        repackager--
                    ``(A) shall affix or imprint a prescription drug 
                product identifier to each package and homogenous case 
                of prescription drug product intended to be introduced 
                in a transaction;
                    ``(B) shall maintain the prescription drug product 
                identifier for such prescription drug product for not 
                less than 3 years after the date of the transaction; 
                and
                    ``(C) may engage in transactions involving a 
                prescription drug product only if such prescription 
                drug product is encoded with a prescription drug 
                product identifier except as provided in subsection 
                (a)(4).
            ``(3) Authorized trading partners.--Beginning on January 1, 
        2015, a repackager shall ensure that each of its trading 
        partners is authorized.
            ``(4) Verification.--Beginning not later than January 1, 
        2015, a repackager shall implement systems to enable the 
        repackager to comply with the following requirements:
                    ``(A) Suspect prescription drug product.--
                            ``(i) In general.--Upon making a 
                        determination that a prescription drug product 
                        in the possession or control of the repackager 
                        is a suspect prescription drug product, or upon 
                        receiving a request for verification from the 
                        Secretary that a prescription drug product 
                        within the possession or control of a 
                        repackager is a suspect prescription drug 
                        product, a repackager shall promptly conduct an 
                        investigation to determine whether the 
                        prescription drug product is an illegitimate 
                        prescription drug product, including--
                                    ``(I) beginning not later than 6 
                                years after the date of the enactment 
                                of the Safeguarding America's 
                                Pharmaceuticals Act of 2013, verifying 
                                the prescription drug product at the 
                                package level;
                                    ``(II) validating any applicable 
                                transaction information in the 
                                possession of the repackager; and
                                    ``(III) otherwise investigating to 
                                determine whether the prescription drug 
                                product is an illegitimate prescription 
                                drug product.
                            ``(ii) Cleared prescription drug product.--
                        If the repackager determines that a suspect 
                        prescription drug product is not an 
                        illegitimate prescription drug product, the 
                        repackager shall promptly notify the Secretary 
                        of such determination and such prescription 
                        drug product may be further distributed.
                            ``(iii) Records.--A repackager shall keep 
                        records of its investigation of a suspect 
                        prescription drug product for not less than 3 
                        years after the conclusion of the 
                        investigation.
                    ``(B) Illegitimate prescription drug product.--
                            ``(i) In general.--Upon receiving notice 
                        that a manufacturer of a prescription drug 
                        product has determined that a prescription drug 
                        product in the possession or control of a 
                        repackager is an illegitimate prescription drug 
                        product, the repackager shall--
                                    ``(I) quarantine such prescription 
                                drug product within the possession or 
                                control of the repackager from 
                                prescription drug product intended for 
                                distribution; and
                                    ``(II) provide for the disposition 
                                of the illegitimate prescription drug 
                                product within the possession or 
                                control of the repackager.
                            ``(ii) Trading partner.--Upon determining 
                        that a prescription drug product in the 
                        possession or control of a trading partner is 
                        an illegitimate prescription drug product, the 
                        repackagers shall take reasonable steps to 
                        assist the trading partner to provide for the 
                        disposition of the illegitimate prescription 
                        drug product.
                            ``(iii) Making a notification.--Upon 
                        determining that a prescription drug product in 
                        the possession or control of the repackager is 
                        an illegitimate prescription drug product, the 
                        repackager shall notify the Secretary of such 
                        determination not later than 24 hours after 
                        making such determination. The Secretary shall 
                        determine whether additional trading partner 
                        notification is appropriate.
                            ``(iv) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary that a determination has been made 
                        that a prescription drug product is an 
                        illegitimate prescription drug product, a 
                        repackager shall--
                                    ``(I) identify all illegitimate 
                                prescription drug products that are 
                                subject to such notification and in the 
                                possession or control of the 
                                repackager, including any such 
                                prescription drug product that is 
                                subsequently received; and
                                    ``(II) perform the activities 
                                described in clause (i).
                            ``(v) Records.--A repackager shall keep 
                        records of the disposition of an illegitimate 
                        prescription drug product for not less than 3 
                        years after the conclusion of the disposition.
                    ``(C) Electronic database.--A repackager may 
                satisfy the requirements of this paragraph through the 
                use of a secure electronic database developed and 
                operated by the manufacturer or another entity. The 
                owner of such database shall establish the requirements 
                and processes to respond to requests and may provide 
                for data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a repackager of the requirement under this 
                paragraph to respond to a verification request 
                submitted by means other than a secure electronic 
                database.
                    ``(D) Returned prescription drug product.--
                Beginning not later than 6 years after the date of the 
                enactment of the Safeguarding America's Pharmaceuticals 
                Act of 2013, upon receipt of a returned prescription 
                drug product that the repackager intends to further 
                distribute, before further distributing such 
                prescription drug product, the repackager shall--
                            ``(i) verify the prescription drug product 
                        identifier for each sealed homogeneous case of 
                        such prescription drug product; or
                            ``(ii) if such prescription drug product is 
                        not in a sealed homogeneous case, verify the 
                        prescription drug product identifier on each 
                        package.
    ``(f) Third-Party Logistics Provider Requirements.--
            ``(1) Authorized trading partners.--Beginning on January 1, 
        2015, a third-party logistics provider shall ensure that each 
        of its trading partners is authorized.
            ``(2) Verification.--Beginning not later than January 1, 
        2015, a third-party logistics provider shall implement systems 
        to enable the third-party logistics provider to comply with the 
        following requirements:
                    ``(A) Suspect prescription drug product.--
                            ``(i) In general.--Upon making a 
                        determination that a prescription drug product 
                        in the possession or control of a third-party 
                        logistics provider is a suspect prescription 
                        drug product, a third-party logistics provider 
                        shall promptly notify the owner of such 
                        prescription drug product of the need to 
                        conduct an investigation to determine whether 
                        the prescription drug product is an 
                        illegitimate prescription drug product.
                            ``(ii) Cleared prescription drug product.--
                        If the owner of the prescription drug product 
                        notifies the third-party logistics provider of 
                        the determination that a suspect prescription 
                        drug product is not an illegitimate 
                        prescription drug product, such prescription 
                        drug product may be further distributed.
                            ``(iii) Records.--A third-party logistics 
                        provider shall keep records of the activities 
                        described in clauses (i) and (ii) with respect 
                        to a suspect prescription drug product for not 
                        less than 3 years after the conclusion of the 
                        investigation.
                    ``(B) Illegitimate prescription drug product.--
                            ``(i) In general.--Upon receiving notice 
                        that a manufacturer of a prescription drug 
                        product has determined that a prescription drug 
                        product in the possession or control of a 
                        third-party logistics provider is an 
                        illegitimate prescription drug product, the 
                        third-party logistics provider shall--
                                    ``(I) quarantine such prescription 
                                drug product within the possession or 
                                control of the third-party logistics 
                                provider from prescription drug product 
                                intended for distribution;
                                    ``(II) promptly notify the owner of 
                                such prescription drug product of the 
                                need to provide for the disposition of 
                                such prescription drug product; and
                                    ``(III) promptly transfer 
                                possession of the prescription drug 
                                product to the owner of such 
                                prescription drug product to provide 
                                for the disposition of the prescription 
                                drug product.
                            ``(ii) Making a notification.--Upon 
                        determining that a prescription drug product in 
                        the possession or control of the third-party 
                        logistics provider is an illegitimate 
                        prescription drug product, the third-party 
                        logistics provider shall notify the Secretary 
                        not later than 24 hours after making such 
                        determination. The Secretary shall determine 
                        whether additional trading partner notification 
                        is appropriate.
                            ``(iii) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary, a third-party logistics provider 
                        shall--
                                    ``(I) identify all illegitimate 
                                prescription drug products subject to 
                                such notification that are in the 
                                possession or control of the third-
                                party logistics provider, including any 
                                such prescription drug product that is 
                                subsequently received; and
                                    ``(II) perform the activities 
                                described in clause (i).
                            ``(iv) Records.--A third-party logistics 
                        provider shall keep records of the activities 
                        described in clauses (i) and (ii) with respect 
                        to an illegitimate prescription drug product 
                        for not less than 3 years after the conclusion 
                        of the disposition.
    ``(g) Drop Shipments.--This section does not apply to any entity, 
notwithstanding its status as a wholesale distributor or repackager, or 
other status that is not involved in the physical handling, 
distribution, or storage of a prescription drug product. For purposes 
of this subsection, facilitating the distribution of a prescription 
drug product by providing various administrative services, including 
processing of orders and payments, shall not, by itself, be construed 
as being involved in the handling, distribution, or storage of a 
prescription drug product.''.

SEC. 3. ENHANCED DRUG DISTRIBUTION SECURITY.

    (a) Pilot Projects.--
            (1) In general.--Not later than 2 years after the date of 
        the enactment of this Act, the Secretary shall establish one or 
        more pilot projects in coordination with manufacturers, 
        repackagers, wholesale distributors, third-party logistics 
        providers, and dispensers to explore and evaluate methods to 
        enhance the safety and security of the pharmaceutical 
        distribution supply chain.
            (2) Content.--
                    (A) In general.--The Secretary shall ensure that 
                the pilot projects under paragraph (1) collectively--
                            (i) reflect the diversity of the 
                        pharmaceutical distribution supply chain; and
                            (ii) include participants representative of 
                        every sector within the pharmaceutical 
                        distribution supply chain, including 
                        participants representative of small 
                        businesses.
                    (B) Project design.--The pilot projects shall be 
                designed to--
                            (i) utilize the prescription drug product 
                        identifier for tracing of a prescription drug 
                        product, which utilization may include--
                                    (I) verification of the 
                                prescription drug product identifier of 
                                a prescription drug product; and
                                    (II) the use of aggregation and 
                                inference;
                            (ii) improve the technical capabilities of 
                        each sector within the pharmaceutical supply 
                        chain to comply with systems and processes 
                        needed to utilize the prescription drug product 
                        identifiers to enhance tracing of a 
                        prescription drug product; and
                            (iii) conduct such other activities as the 
                        Secretary determines appropriate to explore and 
                        evaluate methods to enhance the safety and 
                        security of the pharmaceutical distribution 
                        supply chain.
    (b) Public Meetings.--
            (1) In general.--Not later than 6 months after the date of 
        the enactment of this Act, and at least every 6 months 
        thereafter until the submission of the report required by 
        subsection (e)(2), the Secretary shall hold a public meeting to 
        enhance the safety and security of the pharmaceutical 
        distribution supply chain. In conducting such meetings, the 
        Secretary shall take all measures reasonable and practicable to 
        ensure the protection of confidential commercial information 
        and trade secrets.
            (2) Content.--In conducting meetings under this subsection, 
        the Secretary shall seek to address, in at least one such 
        meeting, each of the following topics:
                    (A) Best practices in each of the sectors within 
                the pharmaceutical distribution supply chain to 
                implement the requirements of section 582 of the 
                Federal Food, Drug, and Cosmetic Act, as added by 
                section 2.
                    (B) The costs and benefits of implementation of 
                such section 582, including the impact on each 
                pharmaceutical distribution supply chain sector and on 
                public health.
                    (C) Whether additional electronic traceability 
                requirements, including tracing of prescription drug 
                product at the package level, are feasible, cost 
                effective, overly burdensome on small businesses, and 
                needed to protect public health.
                    (D) The systems and processes needed to utilize the 
                prescription drug product identifiers to enhance 
                tracing of prescription drug product at the package 
                level, including allowing for verification, 
                aggregation, and inference by each sector within the 
                pharmaceutical distribution supply chain for cases, 
                pallets, totes, and other containers of aggregated 
                prescription drug product as necessary.
                    (E) The technical capabilities and legal 
                authorities, if any, needed to establish an electronic 
                system that provides for enhanced tracing of 
                prescription drug product at the package level.
                    (F) The impact that the requirements, systems, 
                processes, capabilities, and legal authorities referred 
                to in subparagraphs (C), (D), and (E) would have on 
                patient safety, the drug supply, cost and regulatory 
                burden, the timeliness of patient access to 
                prescription drugs, and small businesses.
    (c) Study of the Pharmaceutical Distribution Supply Chain.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study to examine implementation of the 
        requirements established under subchapter H of chapter V of the 
        Federal Food, Drug, and Cosmetic Act, as added by section 2, in 
        order to inform the regulations promulgated under this section.
            (2) Consideration.--In conducting the study under this 
        subsection, the Comptroller General shall provide for 
        stakeholder input and shall consider the following:
                    (A) The implementation of the requirements 
                established under such subchapter H with respect to--
                            (i) the ability of the health care system 
                        collectively to maintain patient access to 
                        medicines;
                            (ii) the scalability of such requirements, 
                        including with respect to prescription drug 
                        product lines; and
                            (iii) the capability of different sectors 
                        within the pharmaceutical distribution supply 
                        chain, including small businesses, to affix and 
                        utilize the prescription drug product 
                        identifier.
                    (B) The need for additional legal authorities and 
                activities to address additional gaps in the 
                pharmaceutical distribution supply chain, if any, after 
                the implementation of the requirements established 
                under such subchapter H with respect to--
                            (i) the systems and processes needed to 
                        enhance tracing of prescription drug product at 
                        the package level, including the use and 
                        evaluation of verification, aggregation, and 
                        inference by each sector within the 
                        pharmaceutical distribution supply chain as 
                        necessary;
                            (ii) the impact, feasibility, and cost 
                        effectiveness that additional requirements 
                        pursuant to this section would have on each 
                        pharmaceutical distribution supply chain sector 
                        and the public health; and
                            (iii) the systems and processes needed to 
                        enhance interoperability among trading 
                        partners.
                    (C) Risks to the security and privacy of data 
                collected, maintained, or exchanged pursuant to the 
                requirements established under such subchapter H.
    (d) Small Dispensers.--
            (1) In general.--Not later than 10 years after the date of 
        the enactment of this Act, the Secretary shall enter into a 
        contract with a private, independent consulting firm with 
        relevant expertise to conduct a technology and software study 
        on the feasibility of dispensers that have 25 or fewer full-
        time employees conducting interoperable, electronic tracing of 
        prescription drug products at the package level.
            (2) Condition.--As a condition of the award of a contract 
        under paragraph (1), the private independent consulting firm 
        awarded such contract shall agree to consult with dispensers 
        that have 25 or fewer full-time employees when conducting the 
        study under such subparagraph.
            (3) Study content.--The study conducted under paragraph (1) 
        shall assess whether, with respect to conducting interoperable, 
        electronic tracing of prescription drug products at the package 
        level, the necessary hardware and software--
                    (A) is readily accessible to such dispensers;
                    (B) is not prohibitively expensive to obtain, 
                install, and maintain for such dispensers; and
                    (C) can be integrated into business practices, such 
                as interoperability with wholesale distributors, for 
                such dispensers.
            (4) Publication.--The Secretary shall publish--
                    (A) the statement of work for the study conducted 
                under paragraph (1) for public comment not later than 
                30 days before commencing the study; and
                    (B) the final version of such study for public 
                comment not later than 30 days after such study is 
                completed.
            (5) Report to congress.--Not later than 30 days after the 
        date on which the study conducted under paragraph (1) is 
        completed, 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 on the findings of the study and any 
        recommendations to improve the technology and software 
        available to small dispensers for purposes of conducting 
        electronic, interoperable tracing of prescription drug products 
        at the package level.
            (6) Public meeting.--Not later than 180 days after the date 
        on which the study conducted under paragraph (1) is completed, 
        the Secretary shall hold a public meeting at which members of 
        the public, including stakeholders, may present their views on 
        the study.
    (e) Reports.--
            (1) GAO report.--Not later than 12 years after the date of 
        the enactment of this Act, the Comptroller General 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 on the results of the study 
        conducted under subsection (c).
            (2) FDA report.--Not later than 12 years after the date of 
        the enactment of this Act, 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 on the results of the pilot 
        program conducted under subsection (a), taking into 
        consideration--
                    (A) the comments received during the public 
                meetings conducted under subsection (b); and
                    (B) the results of the study conducted, and the 
                public comments received during the public meeting 
                held, under subsection (d).
    (f) Establishment of Additional Requirements.--
            (1) In general.--Notwithstanding any other provision of 
        this Act, including the amendments made by this Act, not 
        earlier than January 1, 2027, and not later than March 1, 2027, 
        the Secretary shall issue proposed regulations that establish 
        additional requirements to prevent a suspect product, 
        illegitimate product, or a product that is counterfeit, stolen, 
        diverted, or otherwise unfit for distribution from entering 
        into or being further distributed in the supply chain, 
        including--
                    (A) requirements related to the use of 
                interoperable electronic systems and technologies for 
                enhanced tracing of prescription drug product at the 
                package level, which may include verification of the 
                prescription drug product identifier of a package of 
                prescription drug product and enhanced verification of 
                saleable returns;
                    (B) requirements related to the use of additional 
                prescription drug product identifiers or prescription 
                drug product identifier technology that meet the 
                standards developed under section 582(a)(2) of the 
                Federal Food, Drug, and Cosmetic Act, as added by 
                section 2;
                    (C) requirements related to the use of aggregation, 
                inference, and other methods, which shall permit the 
                use of aggregation and inference for cases, pallets, 
                totes, and other containers of aggregated prescription 
                drug products by each sector of the pharmaceutical 
                distribution supply chain, if determined to be 
                necessary components of the systems and technologies 
                referred to in subparagraph (A); and
                    (D) other data transmission and maintenance 
                requirements and interoperability standards.
            (2) Flexibility.--The requirements described in paragraph 
        (1) shall provide for flexibility for a member of the 
        pharmaceutical supply chain, by--
                    (A) with respect to dispensers, allowing a 
                dispenser to enter into a written agreement with a 
                third party, including an authorized wholesale 
                distributor, under which--
                            (i) the third party confidentially 
                        maintains any information required to be 
                        maintained under such requirements for the 
                        dispenser; and
                            (ii) the dispenser maintains a copy of the 
                        written agreement and is not relieved of the 
                        other obligations of the dispenser under such 
                        requirements;
                    (B) establishing a process by which an authorized 
                manufacturer, repackager, wholesale distributor, or 
                dispenser may request a waiver from any such 
                requirements if the Secretary determines that such 
                requirements would result in an undue economic hardship 
                on the manufacturer, wholesale distributor, or 
                dispenser;
                    (C) not requiring the adoption of specific business 
                systems by a member of the pharmaceutical supply chain 
                for the maintenance and transmission of prescription 
                drug product tracing data; and
                    (D) prescribing alternative methods of compliance 
                for small businesses, as specified in paragraph (4).
            (3) Considerations.--In issuing proposed regulations under 
        paragraph (1), the Secretary shall consider--
                    (A) the results of, and public comments resulting 
                from, the pilot project conducted under subsection (a);
                    (B) the public meetings held under subsection (b) 
                and public comments from such meetings;
                    (C) the studies conducted under subsections (c) and 
                (d);
                    (D) the reports submitted under subsection (e);
                    (E) the public health benefits of such regulations 
                compared with the cost of compliance with the 
                requirements contained in such regulations, including 
                with respect to entities of varying sizes and 
                capabilities; and
                    (F) the diversity of the pharmaceutical 
                distribution supply chain by providing appropriate 
                flexibility for each sector in the supply chain, 
                including small businesses.
            (4) Small business protection.--The Secretary, taking into 
        consideration the study conducted under paragraph (d), shall, 
        if the Secretary determines that the requirements established 
        pursuant to paragraph (1) would result in an undue economic 
        hardship on small businesses, provide for alternative methods 
        of compliance with any such requirement by small businesses, 
        including--
                    (A) establishing timelines for such compliance 
                (including compliance by dispensers with 25 or fewer 
                full-time employees) that do not impose undue economic 
                hardship for small businesses, including dispensers 
                with respect to which the study concluded has 
                insufficient hardware and software to conduct 
                interoperable, electronic tracing of prescription drug 
                products at the package level; and
                    (B) establishing a process by which a dispenser may 
                request a waiver from any such requirement.
            (5) Regulations.--In issuing regulations to carry out this 
        subsection, the Secretary shall--
                    (A) issue a notice of proposed rulemaking that 
                includes a copy of the proposed rule;
                    (B) provide for a period of not less than 60 days 
                for comments on the proposed rule; and
                    (C) provide for an effective date of the final rule 
                that is 2 years after the date on which such final rule 
                is published.
            (6) Sunset.--The requirements regarding the provision and 
        receipt of transaction history and transaction statements under 
        section 582 of the Federal Food, Drug, and Cosmetic Act, as 
        added by section 2, shall cease to be effective on the date on 
        which the regulations issued under this section are fully 
        implemented.
    (g) Definitions.--In this section:
            (1) The terms defined in section 581 of the Federal Food, 
        Drug, and Cosmetic Act, as added by section 2, shall have the 
        same meanings in this section as such terms are given in such 
        section 581.
            (2) The term ``Secretary'' means the Secretary of Health 
        and Human Services, acting through the Commissioner of Food and 
        Drugs.

SEC. 4. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.

    (a) Standards.--Chapter V of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 351 et seq.) is amended--
            (1) in section 503 (21 U.S.C. 353), by striking 
        ``(e)(1)(A)'' and all that follows through ``(3) For the 
        purposes of this subsection and subsection (d)--'' and 
        inserting the following:
    ``(e) For purposes of subsection (d)--'';
            (2) in section 503(e) (21 U.S.C. 353(e)), by redesignating 
        subparagraphs (A) and (B) as paragraphs (1) and (2), 
        respectively; and
            (3) in subchapter H, as added by section 2, by adding at 
        the end the following:

``SEC. 583. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.

    ``(a) Standards.--
            ``(1) In general.--The Secretary shall establish, by 
        regulation, standards for the licensing of persons that make 
        wholesale distributions.
            ``(2) Requirements.--The standards under paragraph (1) 
        shall, with respect to wholesale distributions, include 
        requirements for--
                    ``(A) the storage and handling of drugs subject to 
                section 503(b)(1), including facility requirements;
                    ``(B) the establishment and maintenance of records 
                of the distributions of such drugs;
                    ``(C) the furnishing of a bond or other equivalent 
                means of security in accordance with paragraph (3);
                    ``(D) mandatory background checks and 
                fingerprinting of facility managers or designated 
                representatives;
                    ``(E) the establishment and implementation of 
                qualifications for key personnel;
                    ``(F) the mandatory physical inspection of any 
                facility to be used in wholesale distribution within a 
                reasonable timeframe from the initial application for 
                licensure of the wholesale distributor; and
                    ``(G) in accordance with paragraph (5), the 
                prohibition of certain persons from engaging in 
                wholesale distribution.
            ``(3) Bond or other security.--The requirements under 
        paragraph (2)(C) shall provide for the following:
                    ``(A) An applicant that is not a government-owned-
                and-operated wholesale distributor, for the issuance or 
                renewal of a wholesale distributor license, shall 
                submit a surety bond of $100,000 or other equivalent 
                means of security acceptable to the applicable 
                licensing authority.
                    ``(B) For purposes of subparagraph (A), the 
                applicable licensing authority may accept a surety bond 
                of less than $100,000 if the annual gross receipts of 
                the previous tax year for the wholesale distributor is 
                $10,000,000 or less, in which case the surety bond may 
                not be less than $25,000.
                    ``(C) If a wholesale distributor can provide 
                evidence that it possesses the required bond in a 
                State, the requirement for a bond in another State is 
                waived.
            ``(4) Inspections.--To satisfy the inspection requirement 
        under paragraph (2)(F), the Secretary may conduct the 
        inspection, or may accept an inspection by--
                    ``(A) the government of the State in which the 
                facility is located; or
                    ``(B) a third-party accreditation or inspection 
                service approved by the Secretary.
            ``(5) Prohibited persons.--The requirements under paragraph 
        (2) shall include requirements to prohibit a person from 
        receiving or maintaining licensure for wholesale distribution 
        if the person--
                    ``(A) has been convicted of--
                            ``(i) any felony for conduct relating to 
                        wholesale distribution;
                            ``(ii) any felony violation of section 
                        301(i) or 301(k); or
                            ``(iii) any felony violation of section 
                        1365 of title 18, United States Code, relating 
                        to prescription drug product tampering; or
                    ``(B) has engaged in a pattern of violating the 
                requirements of this section that presents a threat of 
                serious adverse health consequences or death to humans.
    ``(b) Reporting by Licensed Wholesale Distributors.--
            ``(1) Annual report.--Beginning not later than 1 year after 
        the date of the enactment of this section, each person engaged 
        in wholesale distribution in interstate commerce shall submit 
        on an annual basis, and update as necessary, a report to the 
        Secretary including--
                    ``(A) the wholesale distributor's name;
                    ``(B) the wholesale distributor's address;
                    ``(C) a listing of each State in which the 
                wholesale distributor is licensed for wholesale 
                distribution; and
                    ``(D) any disciplinary actions taken by a State, 
                the Federal Government, or a foreign government during 
                the reporting period against the wholesale distributor.
            ``(2) Posting on internet.--The Secretary shall post on the 
        public Internet Website of the Food and Drug Administration the 
        name of each wholesale distributor, and the State in which each 
        such distributor is licensed, based on reports under paragraph 
        (1).
    ``(c) Preservation of State Authority.--This subchapter does not 
prohibit a State from--
            ``(1) licensing wholesale distributors for the conduct of 
        wholesale distribution activities in the State in accordance 
        with this subchapter; and
            ``(2) collecting fees from wholesale distributors in 
        connection with such licensing,
so long as the State does not require such licensure to the extent to 
which an entity is engaged in third-party logistics provider 
activities.
    ``(d) Definition.--In this section, the term `wholesale 
distribution' means the distribution of a drug subject to section 
503(b)(1) to a person other than a consumer or patient, but does not 
include--
            ``(1) intracompany distribution of any drug between members 
        of an affiliated group (as defined in section 1504(a) of the 
        Internal Revenue Code of 1986);
            ``(2) the distribution of a drug, or an offer to distribute 
        a drug among hospitals or other health care entities which are 
        under common control;
            ``(3) the distribution of a drug or an offer to distribute 
        a drug for emergency medical reasons, including a public health 
        emergency declaration pursuant to section 319 of the Public 
        Health Service Act, except that a drug shortage not caused by a 
        public health emergency shall not constitute such an emergency 
        medical reason;
            ``(4) dispensing of a drug pursuant to a valid prescription 
        executed in accordance with subsection 503(b)(1);
            ``(5) the distribution of minimal quantities of drug by a 
        licensed retail pharmacy to a licensed practitioner for office 
        use;
            ``(6) the distribution of a drug or an offer to distribute 
        a drug by a charitable organization to a nonprofit affiliate of 
        the organization to the extent otherwise permitted by law;
            ``(7) the purchase or other acquisition by a dispenser, 
        hospital, or other health care entity of a drug for use by such 
        dispenser, hospital, or other health care entity;
            ``(8) the distribution of a drug by the manufacturer of 
        such drug;
            ``(9) the receipt or transfer of a drug by an authorized 
        third-party logistics provider provided that such third-party 
        logistics provider does not take ownership of the drug;
            ``(10) the transport of a drug by a common carrier, 
        provided that the common carrier does not take ownership of the 
        drug;
            ``(11) the distribution of a drug, or an offer to 
        distribute a drug, by an authorized repackager that has taken 
        ownership of the drug and repacked it in accordance with 
        section 582(e);
            ``(12) saleable drug returns when conducted by a dispenser 
        in accordance with section 203.23 of title 21, Code of Federal 
        Regulations (or any successor regulation);
            ``(13) the distribution of a combination prescription drug 
        product described in section 581(20)(B)(xii);
            ``(14) the distribution of a medical convenience kit 
        described in section 581(21)(B)(xiii);
            ``(15) the distribution of an intravenous drug that, by its 
        formulation, is intended for the replenishment of fluids and 
        electrolytes (such as sodium, chloride, and potassium) or 
        calories (such as dextrose and amino acids);
            ``(16) the distribution of an intravenous drug used to 
        maintain the equilibrium of water and minerals in the body, 
        such as dialysis solutions;
            ``(17) the distribution of a drug that is intended for 
        irrigation or reconstitution, or sterile water, whether 
        intended for such purposes or for injection;
            ``(18) the distribution of compressed medical gas (as 
        defined in section 581(21)(C));
            ``(19) facilitating the distribution of a prescription drug 
        product by providing administrative services, such as 
        processing of orders and payments, without physical handling, 
        distribution, or storage of a prescription drug product; or
            ``(20)(A) the distribution of a product by a dispenser, or 
        a wholesale distributor acting at the direction of the 
        dispenser, to a repackager registered under section 510 for the 
        purpose of repackaging the drug for use by that dispenser or 
        another health care entity that is under the dispenser's 
        ownership or control, so long as the dispenser retains 
        ownership of the prescription drug product; and
            ``(B) the saleable or nonsaleable return by such repackager 
        of such prescription drug product.
    ``(e) Effective Date.--The standards required by subsection (a) 
shall take effect not later than 2 years after the date of the 
enactment of this section. The Secretary shall issue the regulations 
required by subsection (a) not later than 1 year after the date of the 
enactment of this Act.''.
    (b) Conforming Amendment.--Section 804(a)(5)(A) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 384(a)(5)(A)) is amended by 
striking ``503(e)(2)(A)'' and inserting ``583(a)''.

SEC. 5. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS 
              PROVIDERS.

    Subchapter H of chapter V of the Federal Food, Drug, and Cosmetic 
Act, as amended by section 4, is further amended by adding at the end 
the following:

``SEC. 584. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS 
              PROVIDERS.

    ``(a) License Requirement.--No facility may engage in the 
activities of a third-party logistics provider in any State unless--
            ``(1) the facility is licensed--
                    ``(A) by the State from which the drug is 
                distributed by the third-party logistics provider in 
                accordance with a qualified licensing program, if the 
                State has such a program; or
                    ``(B) by the Secretary under this section, if the 
                State from which the drug is distributed does not have 
                such a program; and
            ``(2) if the drug is distributed interstate and the 
        facility is not licensed by the Secretary under paragraph 
        (1)(B), registers with the State into which the drug is 
        distributed if such State requires such registration.
    ``(b) Reporting by Licensed Third-Party Logistics Providers.--
            ``(1) Annual report.--Beginning not later than 1 year after 
        the date of the enactment of this section, each facility 
        engaged in the activities of a third-party logistics provider 
        shall submit on an annual basis, and update as necessary, a 
        report to the Secretary including--
                    ``(A) the facility's name;
                    ``(B) the facility's address;
                    ``(C) a listing of each jurisdiction (whether State 
                or Federal) in which the facility is licensed for 
                third-party logistics provider activities; and
                    ``(D) any disciplinary actions taken by a State or 
                Federal licensing authority during the reporting period 
                against the facility.
            ``(2) Posting on internet.--The Secretary shall post on the 
        public Internet Website of the Food and Drug Administration the 
        name of each third-party logistics provider, and each 
        jurisdiction (whether State or Federal) in which the provider 
        is licensed, based on reports under paragraph (1).
    ``(c) Preservation of State Authority.--This subchapter does not 
prohibit a State from--
            ``(1) licensing third-party logistic providers for the 
        conduct of third-party logistics provider activities in the 
        State in accordance with this subchapter; and
            ``(2) collecting fees from third-party logistics providers 
        in connection with such licensing,
so long as the State does not require such licensure to the extent to 
which an entity is engaged in wholesale distribution.
    ``(d) Costs.--
            ``(1) Authorized licensure fees.--In the case of a facility 
        engaging in the activities of a third-party logistics provider 
        licensed by the Secretary under this section, the Secretary may 
        assess and collect a reasonable fee in an amount equal to the 
        costs to the Federal Government of establishing and 
        administering the licensure program established, and conducting 
        period inspections, under this section.
            ``(2) Adjustment.--The Secretary shall adjust the amount of 
        the fee under paragraph (1) on an annual basis, if necessary, 
        to generate an amount of revenue equal to the costs referred to 
        in such paragraph.
            ``(3) Availability.--Fees assessed and collected under this 
        subsection shall be available for obligation only to the extent 
        and in the amount provided in advance in appropriations Acts. 
        Such fees shall remain available until expended.
    ``(e) License Regulations.--
            ``(1) In general.--The Secretary shall establish, by 
        regulation, standards, terms, and conditions for licensing 
        persons to engage in third-party logistics provider activities.
            ``(2) Content.--The regulations under paragraph (1) shall--
                    ``(A) include standards relating to eligibility 
                for, and revocation and reissuance of, licenses;
                    ``(B) establish a process by which the applicable 
                licensing authority will, upon request by a third-party 
                logistics provider that is accredited by a third-party 
                accreditation program approved by the Secretary, issue 
                a license to the provider;
                    ``(C) establish a process by which the Secretary 
                shall issue a license to a third-party logistics 
                provider if the Secretary is not able to approve a 
                third-party accreditation program because no such 
                program meets the Secretary's requirements necessary 
                for approval of such a third-party accreditation 
                program;
                    ``(D) require that the third-party logistics 
                provider comply with storage practices, as determined 
                by the Secretary, at the provider's facilities, 
                including--
                            ``(i) maintaining access to warehouse space 
                        of suitable size to facilitate safe operations, 
                        including a suitable area to quarantine suspect 
                        prescription drug product;
                            ``(ii) maintaining adequate security; and
                            ``(iii) having written policies and 
                        procedures to--
                                    ``(I) address receipt, security, 
                                storage, inventory, shipment, and 
                                distribution of a prescription drug 
                                product;
                                    ``(II) identify, record, and report 
                                confirmed losses or thefts in the 
                                United States;
                                    ``(III) correct errors and 
                                inaccuracies in inventories;
                                    ``(IV) provide support for 
                                manufacturer recalls;
                                    ``(V) prepare for, protect against, 
                                and address any reasonably foreseeable 
                                crisis that affects security or 
                                operation at the facility, such as a 
                                strike, fire, or flood;
                                    ``(VI) ensure that any expired 
                                prescription drug product is segregated 
                                from other prescription drug products 
                                and returned to the manufacturer or 
                                repackager or destroyed;
                                    ``(VII) maintain the capability to 
                                electronically trace the receipt and 
                                outbound distribution of a prescription 
                                drug product, and supplies and records 
                                of inventory; and
                                    ``(VIII) quarantine or destroy a 
                                suspect prescription drug product if 
                                directed to do so by the respective 
                                manufacturer, wholesale distributor, 
                                dispenser, or an authorized government 
                                agency;
                    ``(E) provide for periodic inspection, as 
                determined by the Secretary, of such facility warehouse 
                space to ensure compliance with this section;
                    ``(F) prohibit a facility from having as a manager 
                or designated representative anyone convicted of any 
                felony violation of section 301(i) or 301(k) or any 
                felony violation of section 1365 of title 18, United 
                States Code, relating to prescription drug product 
                tampering;
                    ``(G) perform mandatory background checks of the 
                provider's facility managers or designated 
                representatives of such managers;
                    ``(H) require a third-party logistics provider to 
                provide to the applicable licensing authority, upon the 
                authority's request, a list of all prescription drug 
                product manufacturers, wholesale distributors, and 
                dispensers for whom the third-party logistics provider 
                provides services at the provider's facilities; and
                    ``(I) include procedures under which any third-
                party logistics provider license--
                            ``(i) will expire on the date that is 3 
                        years after issuance of the license; and
                            ``(ii) may be renewed for additional 3-year 
                        periods.
    ``(f) Validity of License.--A license issued under this section 
shall remain valid as long as such third-party logistics provider 
remains accredited by the Secretary, subject to renewal under 
subsection (d). If the Secretary finds that the third-party 
accreditation program demonstrates that all applicable requirements for 
licensure under this section are met, the Secretary shall issue a 
license under this section to a third-party logistics provider 
receiving accreditation.
    ``(g) Qualified Licensing Program Defined.--In this section, the 
term `qualified licensing program' means a program meeting the 
requirements of this section and the regulations thereunder.
    ``(h) Effective Date.--The requirements of this section shall take 
effect not later than 1 year after the date of the enactment of this 
section. The Secretary shall issue the regulations required by 
subsection (d) not later than 180 days after the date of the enactment 
of this section.''.

SEC. 6. PENALTIES.

    (a) Prohibited Acts.--Section 301(t) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 331(t)) is amended by striking ``or the 
distribution of drugs in violation of section 503(e) or the failure to 
otherwise comply with the requirements of section 503(e)'' and 
inserting ``the failure to comply with any requirement of section 582, 
engaging in the wholesale distribution of a drug in violation of 
section 583 or the failure to otherwise comply with the requirements of 
section 583, or engaging in the activities of a third-party logistics 
provider in violation of section 584 or the failure to otherwise comply 
with the requirements of section 584''.
    (b) Enhanced Penalty for Knowing Unlicensed Activities.--Section 
303(b)(1)(D) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
333(b)(1)(D)) is amended by striking ``503(e)(2)(A)'' and inserting 
``583 or 584''.
    (c) Misbranding.--Section 502 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 352) is amended by adding at the end the 
following:
    ``(bb) If it is a drug and it fails to bear a prescription drug 
product identifier as required by section 582.''.

SEC. 7. UNIFORM NATIONAL POLICY.

    Subchapter H of chapter V of the Federal Food, Drug, and Cosmetic 
Act, as amended by section 5, is further amended by adding at the end 
the following:

``SEC. 585. UNIFORM NATIONAL POLICY.

    ``(a) Preemption of State Prescription Drug Product Tracing and 
Other Requirements.--Beginning on the date of the enactment of the 
Safeguarding America's Pharmaceuticals Act of 2013, no State or 
political subdivision of a State may establish or continue in effect 
any requirements for tracing drugs through the distribution system 
(including any requirements with respect to paper or electronic 
pedigrees, track and trace, statements of distribution history, 
transaction history, or transaction statements, or verification, 
investigation, disposition, alerts, or recordkeeping relating to the 
pharmaceutical distribution supply chain system) that--
            ``(1) are inconsistent with, more stringent than, or in 
        addition to any requirements applicable under this Act; or
            ``(2) are inconsistent with any applicable waiver, 
        exception, or exemption issued by the Secretary under section 
        582(a).
    ``(b) Standards or Licensure.--
            ``(1) In general.--Beginning on the date of the enactment 
        of Safeguarding America's Pharmaceuticals Act of 2013, no State 
        or political subdivision of a State may establish or continue 
        any standards, requirements, or regulations with respect to 
        wholesale drug distributor or third-party logistics provider 
        licensure which are inconsistent with, less stringent than, in 
        addition to, or more stringent than, the standards and 
        requirements under this Act.
            ``(2) Licensing fees.--Paragraph (1) does not affect the 
        authority of a State to collect fees from wholesale drug 
        distributors or third-party logistics providers in connection 
        with State licensing under section 583 or 584 pursuant to a 
        licensing program meeting the requirements of such sections.
            ``(3) Enforcement, suspension, and revocation of 
        licenses.--Notwithstanding paragraph (1), a State--
                    ``(A) may take administrative action, including 
                fines, to enforce a licensure requirement promulgated 
                by the State in accordance with this Act;
                    ``(B) may provide for the suspension or revocation 
                of licenses issued by the State for violations of the 
                laws of such State;
                    ``(C) upon conviction of a person for a violation 
                of Federal, State, or local controlled substance laws 
                or regulations, may provide for fines, imprisonment, or 
                civil penalties; and
                    ``(D) may regulate activities of entities licensed 
                pursuant to section 583 or 584 in a manner that is 
                consistent with the provisions of this subchapter.''.

SEC. 8. ELECTRONIC LABELING.

    (a) In General.--Section 502(f) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 352(f)) is amended by adding at the end the 
following new sentence: ``Required labeling (other than immediate 
container or carton labels) that is intended for use by a physician, a 
pharmacist, or another health care professional, and that provides 
directions for human use of a drug subject to section 503(b)(1), may 
(except as necessary to mitigate a safety risk, as specified by the 
Secretary in regulation) be made available by electronic means instead 
of paper form, provided that such labeling complies with all applicable 
requirements of law, the manufacturer or distributor, as applicable, 
affords health care professionals and authorized dispensers (as defined 
in section 581) the opportunity to request the labeling in paper form, 
and after such a request the manufacturer or distributor promptly 
provides the requested information without additional cost.''.
    (b) Regulations.--The Secretary of Health and Human Services shall 
promulgate regulations implementing the amendment made by subsection 
(a).
    (c) Application.--The last sentence of section 502(f) of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 352(f)), as added by 
subsection (a), shall apply beginning on the earlier of--
            (1) the effective date of final regulations promulgated 
        under subsection (b); or
            (2) the day that is 180 days after the date of enactment of 
        this Act.

            Passed the House of Representatives June 3, 2013.

            Attest:

                                                                 Clerk.
113th CONGRESS

  1st Session

                               H. R. 1919

_______________________________________________________________________

                                 AN ACT

 To amend the Federal Food, Drug, and Cosmetic Act with respect to the 
   pharmaceutical distribution supply chain, and for other purposes.