[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3204 Engrossed in House (EH)]
113th CONGRESS
1st Session
H. R. 3204
_______________________________________________________________________
AN ACT
To amend the Federal Food, Drug, and Cosmetic Act with respect to human
drug compounding and drug supply chain security, 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.
This Act may be cited as the ``Drug Quality and Security Act''.
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS.
(a) References in Act.--Except as otherwise specified, amendments
made by this Act to a section or other provision of law are amendments
to such section or other provision of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.).
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title.
Sec. 2. References in Act; table of contents.
TITLE I--DRUG COMPOUNDING
Sec. 101. Short title.
Sec. 102. Voluntary outsourcing facilities.
Sec. 103. Penalties.
Sec. 104. Regulations.
Sec. 105. Enhanced communication.
Sec. 106. Severability.
Sec. 107. GAO study.
TITLE II--DRUG SUPPLY CHAIN SECURITY
Sec. 201. Short title.
Sec. 202. Pharmaceutical distribution supply chain.
Sec. 203. Enhanced drug distribution security.
Sec. 204. National standards for prescription drug wholesale
distributors.
Sec. 205. National standards for third-party logistics providers;
uniform national policy.
Sec. 206. Penalties.
Sec. 207. Conforming amendment.
Sec. 208. Savings clause.
TITLE I--DRUG COMPOUNDING
SEC. 101. SHORT TITLE.
This Act may be cited as the ``Compounding Quality Act''.
SEC. 102. VOLUNTARY OUTSOURCING FACILITIES.
(a) In General.--Subchapter A of chapter V (21 U.S.C. 351 et seq.)
is amended--
(1) by redesignating section 503B as section 503C; and
(2) by inserting after section 503A the following new
section:
``SEC. 503B. OUTSOURCING FACILITIES.
``(a) In General.--Sections 502(f)(1), 505, and 582 shall not apply
to a drug compounded by or under the direct supervision of a licensed
pharmacist in a facility that elects to register as an outsourcing
facility if each of the following conditions is met:
``(1) Registration and reporting.--The drug is compounded
in an outsourcing facility that is in compliance with the
requirements of subsection (b).
``(2) Bulk drug substances.--The drug is compounded in an
outsourcing facility that does not compound using bulk drug
substances (as defined in section 207.3(a)(4) of title 21, Code
of Federal Regulations (or any successor regulation)), unless--
``(A)(i) the bulk drug substance appears on a list
established by the Secretary identifying bulk drug
substances for which there is a clinical need, by--
``(I) publishing a notice in the Federal
Register proposing bulk drug substances to be
included on the list, including the rationale
for such proposal;
``(II) providing a period of not less than
60 calendar days for comment on the notice; and
``(III) publishing a notice in the Federal
Register designating bulk drug substances for
inclusion on the list; or
``(ii) the drug compounded from such bulk drug
substance appears on the drug shortage list in effect
under section 506E at the time of compounding,
distribution, and dispensing;
``(B) if an applicable monograph exists under the
United States Pharmacopeia, the National Formulary, or
another compendium or pharmacopeia recognized by the
Secretary for purposes of this paragraph, the bulk drug
substances each comply with the monograph;
``(C) the bulk drug substances are each
manufactured by an establishment that is registered
under section 510 (including a foreign establishment
that is registered under section 510(i)); and
``(D) the bulk drug substances are each accompanied
by a valid certificate of analysis.
``(3) Ingredients (other than bulk drug substances).--If
any ingredients (other than bulk drug substances) are used in
compounding the drug, such ingredients comply with the
standards of the applicable United States Pharmacopeia or
National Formulary monograph, if such monograph exists, or of
another compendium or pharmacopeia recognized by the Secretary
for purposes of this paragraph if any.
``(4) Drugs withdrawn or removed because unsafe or not
effective.--The drug does not appear on a list published by the
Secretary of drugs that have been withdrawn or removed from the
market because such drugs or components of such drugs have been
found to be unsafe or not effective.
``(5) Essentially a copy of an approved drug.--The drug is
not essentially a copy of one or more approved drugs.
``(6) Drugs presenting demonstrable difficulties for
compounding.--The drug--
``(A) is not identified (directly or as part of a
category of drugs) on a list published by the
Secretary, through the process described in subsection
(c), of drugs or categories of drugs that present
demonstrable difficulties for compounding that are
reasonably likely to lead to an adverse effect on the
safety or effectiveness of the drug or category of
drugs, taking into account the risks and benefits to
patients; or
``(B) is compounded in accordance with all
applicable conditions identified on the list described
in subparagraph (A) as conditions that are necessary to
prevent the drug or category of drugs from presenting
the demonstrable difficulties described in subparagraph
(A).
``(7) Elements to assure safe use.--In the case of a drug
that is compounded from a drug that is the subject of a risk
evaluation and mitigation strategy approved with elements to
assure safe use pursuant to section 505-1, or from a bulk drug
substance that is a component of such drug, the outsourcing
facility demonstrates to the Secretary prior to beginning
compounding that such facility will utilize controls comparable
to the controls applicable under the relevant risk evaluation
and mitigation strategy.
``(8) Prohibition on wholesaling.--The drug will not be
sold or transferred by an entity other than the outsourcing
facility that compounded such drug. This paragraph does not
prohibit administration of a drug in a health care setting or
dispensing a drug pursuant to a prescription executed in
accordance with section 503(b)(1).
``(9) Fees.--The drug is compounded in an outsourcing
facility that has paid all fees owed by such facility pursuant
to section 744K.
``(10) Labeling of drugs.--
``(A) Label.--The label of the drug includes--
``(i) the statement `This is a compounded
drug.' or a reasonable comparable alternative
statement (as specified by the Secretary) that
prominently identifies the drug as a compounded
drug;
``(ii) the name, address, and phone number
of the applicable outsourcing facility; and
``(iii) with respect to the drug--
``(I) the lot or batch number;
``(II) the established name of the
drug;
``(III) the dosage form and
strength;
``(IV) the statement of quantity or
volume, as appropriate;
``(V) the date that the drug was
compounded;
``(VI) the expiration date;
``(VII) storage and handling
instructions;
``(VIII) the National Drug Code
number, if available;
``(IX) the statement `Not for
resale', and, if the drug is dispensed
or distributed other than pursuant to a
prescription for an individual
identified patient, the statement
`Office Use Only'; and
``(X) subject to subparagraph
(B)(i), a list of active and inactive
ingredients, identified by established
name and the quantity or proportion of
each ingredient.
``(B) Container.--The container from which the
individual units of the drug are removed for dispensing
or for administration (such as a plastic bag containing
individual product syringes) shall include--
``(i) the information described under
subparagraph (A)(iii)(X), if there is not space
on the label for such information;
``(ii) the following information to
facilitate adverse event reporting:
www.fda.gov/medwatch and 1-800-FDA-1088 (or any
successor Internet Web site or phone number);
and
``(iii) directions for use, including, as
appropriate, dosage and administration.
``(C) Additional information.--The label and
labeling of the drug shall include any other
information as determined necessary and specified in
regulations promulgated by the Secretary.
``(11) Outsourcing facility requirement.--The drug is
compounded in an outsourcing facility in which the compounding
of drugs occurs only in accordance with this section.
``(b) Registration of Outsourcing Facilities and Reporting of
Drugs.--
``(1) Registration of outsourcing facilities.--
``(A) Annual registration.--Upon electing and in
order to become an outsourcing facility, and during the
period beginning on October 1 and ending on December 31
of each year thereafter, a facility--
``(i) shall register with the Secretary its
name, place of business, and unique facility
identifier (which shall conform to the
requirements for the unique facility identifier
established under section 510), and a point of
contact email address; and
``(ii) shall indicate whether the
outsourcing facility intends to compound a drug
that appears on the list in effect under
section 506E during the subsequent calendar
year.
``(B) Availability of registration for inspection;
list.--
``(i) Registrations.--The Secretary shall
make available for inspection, to any person so
requesting, any registration filed pursuant to
this paragraph.
``(ii) List.--The Secretary shall make
available on the public Internet Web site of
the Food and Drug Administration a list of the
name of each facility registered under this
subsection as an outsourcing facility, the
State in which each such facility is located,
whether the facility compounds from bulk drug
substances, and whether any such compounding
from bulk drug substances is for sterile or
nonsterile drugs.
``(2) Drug reporting by outsourcing facilities.--
``(A) In general.--Upon initially registering as an
outsourcing facility, once during the month of June of
each year, and once during the month of December of
each year, each outsourcing facility that registers
with the Secretary under paragraph (1) shall submit to
the Secretary a report--
``(i) identifying the drugs compounded by
such outsourcing facility during the previous
6-month period; and
``(ii) with respect to each drug identified
under clause (i), providing the active
ingredient, the source of such active
ingredient, the National Drug Code number of
the source drug or bulk active ingredient, if
available, the strength of the active
ingredient per unit, the dosage form and route
of administration, the package description, the
number of individual units produced, and the
National Drug Code number of the final product,
if assigned.
``(B) Form.--Each report under subparagraph (A)
shall be prepared in such form and manner as the
Secretary may prescribe by regulation or guidance.
``(C) Confidentiality.--Reports submitted under
this paragraph shall be exempt from inspection under
paragraph (1)(B)(i), unless the Secretary finds that
such an exemption would be inconsistent with the
protection of the public health.
``(3) Electronic registration and reporting.--Registrations
and drug reporting under this subsection (including the
submission of updated information) shall be submitted to the
Secretary by electronic means unless the Secretary grants a
request for waiver of such requirement because use of
electronic means is not reasonable for the person requesting
waiver.
``(4) Risk-based inspection frequency.--
``(A) In general.--Outsourcing facilities--
``(i) shall be subject to inspection
pursuant to section 704; and
``(ii) shall not be eligible for the
exemption under section 704(a)(2)(A).
``(B) Risk-based schedule.--The Secretary, acting
through one or more officers or employees duly
designated by the Secretary, shall inspect outsourcing
facilities in accordance with a risk-based schedule
established by the Secretary.
``(C) Risk factors.--In establishing the risk-based
schedule, the Secretary shall inspect outsourcing
facilities according to the known safety risks of such
outsourcing facilities, which shall be based on the
following factors:
``(i) The compliance history of the
outsourcing facility.
``(ii) The record, history, and nature of
recalls linked to the outsourcing facility.
``(iii) The inherent risk of the drugs
compounded at the outsourcing facility.
``(iv) The inspection frequency and history
of the outsourcing facility, including whether
the outsourcing facility has been inspected
pursuant to section 704 within the last 4
years.
``(v) Whether the outsourcing facility has
registered under this paragraph as an entity
that intends to compound a drug that appears on
the list in effect under section 506E.
``(vi) Any other criteria deemed necessary
and appropriate by the Secretary for purposes
of allocating inspection resources.
``(5) Adverse event reporting.--Outsourcing facilities
shall submit adverse event reports to the Secretary in
accordance with the content and format requirements established
through guidance or regulation under section 310.305 of title
21, Code of Federal Regulations (or any successor regulations).
``(c) Regulations.--
``(1) In general.--The Secretary shall implement the list
described in subsection (a)(6) through regulations.
``(2) Advisory committee on compounding.--Before issuing
regulations to implement subsection (a)(6), the Secretary shall
convene and consult an advisory committee on compounding. The
advisory committee shall include representatives from the
National Association of Boards of Pharmacy, the United States
Pharmacopeia, pharmacists with current experience and expertise
in compounding, physicians with background and knowledge in
compounding, and patient and public health advocacy
organizations.
``(3) Interim list.--
``(A) In general.--Before the effective date of the
regulations finalized to implement subsection (a)(6),
the Secretary may designate drugs, categories of drugs,
or conditions as described such subsection by--
``(i) publishing a notice of such
substances, drugs, categories of drugs, or
conditions proposed for designation, including
the rationale for such designation, in the
Federal Register;
``(ii) providing a period of not less than
60 calendar days for comment on the notice; and
``(iii) publishing a notice in the Federal
Register designating such drugs, categories of
drugs, or conditions.
``(B) Sunset of notice.--Any notice provided under
subparagraph (A) shall not be effective after the
earlier of--
``(i) the date that is 5 years after the
date of enactment of the Compounding Quality
Act; or
``(ii) the effective date of the final
regulations issued to implement subsection
(a)(6).
``(4) Updates.--The Secretary shall review, and update as
necessary, the regulations containing the lists of drugs,
categories of drugs, or conditions described in subsection
(a)(6) regularly, but not less than once every 4 years. Nothing
in the previous sentence prohibits submissions to the
Secretary, before or during any 4-year period described in such
sentence, requesting updates to such lists.
``(d) Definitions.--In this section:
``(1) The term `compounding' includes the combining,
admixing, mixing, diluting, pooling, reconstituting, or
otherwise altering of a drug or bulk drug substance to create a
drug.
``(2) The term `essentially a copy of an approved drug'
means--
``(A) a drug that is identical or nearly identical
to an approved drug, or a marketed drug not subject to
section 503(b) and not subject to approval in an
application submitted under section 505, unless, in the
case of an approved drug, the drug appears on the drug
shortage list in effect under section 506E at the time
of compounding, distribution, and dispensing; or
``(B) a drug, a component of which is a bulk drug
substance that is a component of an approved drug or a
marketed drug that is not subject to section 503(b) and
not subject to approval in an application submitted
under section 505, unless there is a change that
produces for an individual patient a clinical
difference, as determined by the prescribing
practitioner, between the compounded drug and the
comparable approved drug.
``(3) The term `approved drug' means a drug that is
approved under section 505 and does not appear on the list
described in subsection (a)(4) of drugs that have been
withdrawn or removed from the market because such drugs or
components of such drugs have been found to be unsafe or not
effective.
``(4)(A) The term `outsourcing facility' means a facility
at one geographic location or address that--
``(i) is engaged in the compounding of sterile
drugs;
``(ii) has elected to register as an outsourcing
facility; and
``(iii) complies with all of the requirements of
this section.
``(B) An outsourcing facility is not required to be a
licensed pharmacy.
``(C) An outsourcing facility may or may not obtain
prescriptions for identified individual patients.
``(5) The term `sterile drug' means a drug that is intended
for parenteral administration, an ophthalmic or oral inhalation
drug in aqueous format, or a drug that is required to be
sterile under Federal or State law.''.
``(d) Obligation to Pay Fees.--Payment of the fee under section
744K, as described in subsection (a)(9), shall not relieve an
outsourcing facility that is licensed as a pharmacy in any State that
requires pharmacy licensing fees of its obligation to pay such State
fees.''.
(b) Fees.--Subchapter C of chapter VII (21 U.S.C. 379f et seq.) is
amended by adding at the end the following:
``PART 9--FEES RELATING TO OUTSOURCING FACILITIES
``SEC. 744J. DEFINITIONS.
``In this part:
``(1) The term `affiliate' has the meaning given such term
in section 735(11).
``(2) The term `gross annual sales' means the total
worldwide gross annual sales, in United States dollars, for an
outsourcing facility, including the sales of all the affiliates
of the outsourcing facility.
``(3) The term `outsourcing facility' has the meaning given
to such term in section 503B(d)(4).
``(4) The term `reinspection' means, with respect to an
outsourcing facility, 1 or more inspections conducted under
section 704 subsequent to an inspection conducted under such
provision which identified noncompliance materially related to
an applicable requirement of this Act, specifically to
determine whether compliance has been achieved to the
Secretary's satisfaction.
``SEC. 744K. AUTHORITY TO ASSESS AND USE OUTSOURCING FACILITY FEES.
``(a) Establishment and Reinspection Fees.--
``(1) In general.--For fiscal year 2015 and each subsequent
fiscal year, the Secretary shall, in accordance with this
subsection, assess and collect--
``(A) an annual establishment fee from each
outsourcing facility; and
``(B) a reinspection fee from each outsourcing
facility subject to a reinspection in such fiscal year.
``(2) Multiple reinspections.--An outsourcing facility
subject to multiple reinspections in a fiscal year shall be
subject to a reinspection fee for each reinspection.
``(b) Establishment and Reinspection Fee Setting.--The Secretary
shall--
``(1) establish the amount of the establishment fee and
reinspection fee to be collected under this section for each
fiscal year based on the methodology described in subsection
(c); and
``(2) publish such fee amounts in a Federal Register notice
not later than 60 calendar days before the start of each such
year.
``(c) Amount of Establishment Fee and Reinspection Fee.--
``(1) In general.--For each outsourcing facility in a
fiscal year--
``(A) except as provided in paragraph (4), the
amount of the annual establishment fee under subsection
(b) shall be equal to the sum of--
``(i) $15,000, multiplied by the inflation
adjustment factor described in paragraph (2);
plus
``(ii) the small business adjustment factor
described in paragraph (3); and
``(B) the amount of any reinspection fee (if
applicable) under subsection (b) shall be equal to
$15,000, multiplied by the inflation adjustment factor
described in paragraph (2).
``(2) Inflation adjustment factor.--
``(A) In general.--For fiscal year 2015 and
subsequent fiscal years, the fee amounts established in
paragraph (1) shall be adjusted by the Secretary by
notice, published in the Federal Register, for a fiscal
year by the amount equal to the sum of--
``(i) 1;
``(ii) the average annual percent change in
the cost, per full-time equivalent position of
the Food and Drug Administration, of all
personnel compensation and benefits paid with
respect to such positions for the first 3 years
of the preceding 4 fiscal years, multiplied by
the proportion of personnel compensation and
benefits costs to total costs of an average
full-time equivalent position of the Food and
Drug Administration for the first 3 years of
the preceding 4 fiscal years; plus
``(iii) the average annual percent change
that occurred in the Consumer Price Index for
urban consumers (U.S. City Average; Not
Seasonally Adjusted; All items; Annual Index)
for the first 3 years of the preceding 4 years
of available data multiplied by the proportion
of all costs other than personnel compensation
and benefits costs to total costs of an average
full-time equivalent position of the Food and
Drug Administration for the first 3 years of
the preceding 4 fiscal years.
``(B) Compounded basis.--The adjustment made each
fiscal year under subparagraph (A) shall be added on a
compounded basis to the sum of all adjustments made
each fiscal year after fiscal year 2014 under
subparagraph (A).
``(3) Small business adjustment factor.--The small business
adjustment factor described in this paragraph shall be an
amount established by the Secretary for each fiscal year based
on the Secretary's estimate of--
``(A) the number of small businesses that will pay
a reduced establishment fee for such fiscal year; and
``(B) the adjustment to the establishment fee
necessary to achieve total fees equaling the total fees
that the Secretary would have collected if no entity
qualified for the small business exception in paragraph
(4).
``(4) Exception for small businesses.--
``(A) In general.--In the case of an outsourcing
facility with gross annual sales of $1,000,000 or less
in the 12 months ending April 1 of the fiscal year
immediately preceding the fiscal year in which the fees
under this section are assessed, the amount of the
establishment fee under subsection (b) for a fiscal
year shall be equal to \1/3\ of the amount calculated
under paragraph (1)(A)(i) for such fiscal year.
``(B) Application.--To qualify for the exception
under this paragraph, a small business shall submit to
the Secretary a written request for such exception, in
a format specified by the Secretary in guidance,
certifying its gross annual sales for the 12 months
ending April 1 of the fiscal year immediately preceding
the fiscal year in which fees under this subsection are
assessed. Any such application shall be submitted to
the Secretary not later than April 30 of such
immediately preceding fiscal year.
``(5) Crediting of fees.--In establishing the small
business adjustment factor under paragraph (3) for a fiscal
year, the Secretary shall--
``(A) provide for the crediting of fees from the
previous year to the next year if the Secretary
overestimated the amount of the small business
adjustment factor for such previous fiscal year; and
``(B) consider the need to account for any
adjustment of fees and such other factors as the
Secretary determines appropriate.
``(d) Use of Fees.--The Secretary shall make all of the fees
collected pursuant to subparagraphs (A) and (B) of subsection (a)(1)
available solely to pay for the costs of oversight of outsourcing
facilities.
``(e) Supplement Not Supplant.--Funds received by the Secretary
pursuant to this section shall be used to supplement and not supplant
any other Federal funds available to carry out the activities described
in this section.
``(f) Crediting and Availability of Fees.--Fees authorized under
this section shall be collected and available for obligation only to
the extent and in the amount provided in advance in appropriations
Acts. Such fees are authorized to remain available until expended. Such
sums as may be necessary may be transferred from the Food and Drug
Administration salaries and expenses appropriation account without
fiscal year limitation to such appropriation account for salaries and
expenses with such fiscal year limitation. The sums transferred shall
be available solely for the purpose of paying the costs of oversight of
outsourcing facilities.
``(g) Collection of Fees.--
``(1) Establishment fee.--An outsourcing facility shall
remit the establishment fee due under this section in a fiscal
year when submitting a registration pursuant to section 503B(b)
for such fiscal year.
``(2) Reinspection fee.--The Secretary shall specify in the
Federal Register notice described in subsection (b)(2) the
manner in which reinspection fees assessed under this section
shall be collected and the timeline for payment of such fees.
Such a fee shall be collected after the Secretary has conducted
a reinspection of the outsourcing facility involved.
``(3) Effect of failure to pay fees.--
``(A) Registration.--An outsourcing facility shall
not be considered registered under section 503B(b) in a
fiscal year until the date that the outsourcing
facility remits the establishment fee under this
subsection for such fiscal year.
``(B) Misbranding.--All drugs manufactured,
prepared, propagated, compounded, or processed by an
outsourcing facility for which any establishment fee or
reinspection fee has not been paid, as required by this
section, shall be deemed misbranded under section 502
until the fees owed for such outsourcing facility under
this section have been paid.
``(4) Collection of unpaid fees.--In any case where the
Secretary does not receive payment of a fee assessed under this
section within 30 calendar days after it is due, such fee shall
be treated as a claim of the United States Government subject
to provisions of subchapter II of chapter 37 of title 31,
United States Code.
``(h) Annual Report to Congress.--Not later than 120 calendar days
after each fiscal year in which fees are assessed and collected under
this section, the Secretary shall submit a report to the Committee on
Health, Education, Labor, and Pensions of the Senate and the Committee
on Energy and Commerce of the House of Representatives, to include a
description of fees assessed and collected for such year, a summary
description of entities paying the fees, a description of the hiring
and placement of new staff, a description of the use of fee resources
to support inspecting outsourcing facilities, and the number of
inspections and reinspections of such facilities performed each year.
``(i) Authorization of Appropriations.--For fiscal year 2014 and
each subsequent fiscal year, there is authorized to be appropriated for
fees under this section an amount equivalent to the total amount of
fees assessed for such fiscal year under this section.''.
SEC. 103. PENALTIES.
(a) Prohibited Acts.--Section 301 (21 U.S.C. 331) is amended by
adding at the end the following:
``(ccc)(1) The resale of a compounded drug that is labeled `not for
resale' in accordance with section 503B.
``(2) With respect to a drug to be compounded pursuant to section
503A or 503B, the intentional falsification of a prescription, as
applicable.
``(3) The failure to report drugs or adverse events by an entity
that is registered in accordance with subsection (b) of section
503B.''.
(b) Misbranded Drugs.--Section 502 (21 U.S.C. 352) is amended by
adding at the end the following:
``(bb) If the advertising or promotion of a compounded drug is
false or misleading in any particular.''.
SEC. 104. REGULATIONS.
In promulgating any regulations to implement this title (and the
amendments made by this title), the Secretary of Health and Human
Services shall--
(1) issue a notice of proposed rulemaking that includes the
proposed regulation;
(2) provide a period of not less than 60 calendar days for
comments on the proposed regulation; and
(3) publish the final regulation not more than 18 months
following publication of the proposed rule and not less than 30
calendar days before the effective date of such final
regulation.
SEC. 105. ENHANCED COMMUNICATION.
(a) Submissions From State Boards of Pharmacy.--In a manner
specified by the Secretary of Health and Human Services (referred to in
this section as the ``Secretary''), the Secretary shall receive
submissions from State boards of pharmacy--
(1) describing actions taken against compounding
pharmacies, as described in subsection (b); or
(2) expressing concerns that a compounding pharmacy may be
acting contrary to section 503A of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 353a).
(b) Content of Submissions From State Boards of Pharmacy.--An
action referred to in subsection (a)(1) is, with respect to a pharmacy
that compounds drugs, any of the following:
(1) The issuance of a warning letter, or the imposition of
sanctions or penalties, by a State for violations of a State's
pharmacy regulations pertaining to compounding.
(2) The suspension or revocation of a State-issued pharmacy
license or registration for violations of a State's pharmacy
regulations pertaining to compounding.
(3) The recall of a compounded drug due to concerns
relating to the quality or purity of such drug.
(c) Consultation.--The Secretary shall implement subsection (a) in
consultation with the National Association of Boards of Pharmacy.
(d) Notifying State Boards of Pharmacy.--The Secretary shall
immediately notify State boards of pharmacy when--
(1) the Secretary receives a submission under subsection
(a)(1); or
(2) the Secretary makes a determination that a pharmacy is
acting contrary to section 503A of the Federal Food, Drug, and
Cosmetic Act.
SEC. 106. SEVERABILITY.
(a) In General.--Section 503A (21 U.S.C. 353a) is amended --
(1) in subsection (a), in the matter preceding paragraph
(1), by striking ``unsolicited'';
(2) by striking subsection (c);
(3) by redesignating subsections (d) through (f) as
subsections (c) through (e), respectively; and
(4) in subsection (b)(1)(A)(i)(III), by striking
``subsection (d)'' and inserting ``subsection (c)''.
(b) Severability.--If any provision of this Act (including the
amendments made by this Act) is declared unconstitutional, or the
applicability of this Act (including the amendments made by this Act)
to any person or circumstance is held invalid, the constitutionality of
the remainder of this Act (including the amendments made by this Act)
and the applicability thereof to other persons and circumstances shall
not be affected.
SEC. 107. GAO STUDY.
(a) Study.--Not later than 36 months after the date of the
enactment of this Act, the Comptroller General of the United States
shall submit to Congress a report on pharmacy compounding and the
adequacy of State and Federal efforts to assure the safety of
compounded drugs.
(b) Contents.--The report required under this section shall
include--
(1) a review of pharmacy compounding in each State, and the
settings in which such compounding occurs;
(2) a review of the State laws and policies governing
pharmacy compounding, including enforcement of State laws and
policies;
(3) an assessment of the available tools to permit
purchasers of compounded drugs to determine the safety and
quality of such drugs;
(4) an evaluation of the effectiveness of the communication
among States and between States and the Food and Drug
Administration regarding compounding; and
(5) an evaluation of the Food and Drug Administration's
implementation of sections 503A and 503B of the Federal Food,
Drug, and Cosmetic Act.
TITLE II--DRUG SUPPLY CHAIN SECURITY
SEC. 201. SHORT TITLE.
This title may be cited as the ``Drug Supply Chain Security Act''.
SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN.
Chapter V (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) Affiliate.--The term `affiliate' means a business
entity that has a relationship with a second business entity
if, directly or indirectly--
``(A) one business entity controls, or has the
power to control, the other business entity; or
``(B) a third party controls, or has the power to
control, both of the business entities.
``(2) Authorized.--The term `authorized' means--
``(A) in the case of a manufacturer or repackager,
having a valid registration in accordance with section
510;
``(B) in the case of a wholesale distributor,
having a valid license under State law or section 583,
in accordance with section 582(a)(6), and complying
with the licensure reporting requirements under section
503(e), as amended by the Drug Supply Chain Security
Act;
``(C) in the case of a third-party logistics
provider, having a valid license under State law or
section 584(a)(1), in accordance with section
582(a)(7), and complying with the licensure reporting
requirements under section 584(b); and
``(D) in the case of a dispenser, having a valid
license under State law.
``(3) Dispenser.--The term `dispenser'--
``(A) means a retail pharmacy, hospital pharmacy, a
group of chain pharmacies under common ownership and
control that do not act as a wholesale distributor, or
any other person authorized by law to dispense or
administer prescription drugs, and the affiliated
warehouses or distribution centers of such entities
under common ownership and control that do not act as a
wholesale distributor; and
``(B) does not include a person who dispenses only
products to be used in animals in accordance with
section 512(a)(5).
``(4) Disposition.--The term `disposition', with respect to
a product within the possession or control of an entity, means
the removal of such product from the pharmaceutical
distribution supply chain, which may include disposal or return
of the product for disposal or other appropriate handling and
other actions, such as retaining a sample of the product for
further additional physical examination or laboratory analysis
of the product by a manufacturer or regulatory or law
enforcement agency.
``(5) Distribute or distribution.--The term `distribute' or
`distribution' means the sale, purchase, trade, delivery,
handling, storage, or receipt of a product, and does not
include the dispensing of a product pursuant to a prescription
executed in accordance with section 503(b)(1) or the dispensing
of a product approved under section 512(b).
``(6) Exclusive distributor.--The term `exclusive
distributor' means the wholesale distributor that directly
purchased the product from the manufacturer and is the sole
distributor of that manufacturer's product to a subsequent
repackager, wholesale distributor, or dispenser.
``(7) Homogeneous case.--The term `homogeneous case' means
a sealed case containing only product that has a single
National Drug Code number belonging to a single lot.
``(8) Illegitimate product.--The term `illegitimate
product' means a product for which credible evidence shows that
the product--
``(A) is counterfeit, diverted, or stolen;
``(B) is intentionally adulterated such that the
product would result in serious adverse health
consequences or death to humans;
``(C) is the subject of a fraudulent transaction;
or
``(D) appears otherwise unfit for distribution such
that the product would be reasonably likely to result
in serious adverse health consequences or death to
humans.
``(9) Licensed.--The term `licensed' means--
``(A) in the case of a wholesale distributor,
having a valid license in accordance with section
503(e) or section 582(a)(6), as applicable;
``(B) in the case of a third-party logistics
provider, having a valid license in accordance with
section 584(a) or section 582(a)(7), as applicable; and
``(C) in the case of a dispenser, having a valid
license under State law.
``(10) Manufacturer.--The term `manufacturer' means, with
respect to a 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 product, or
if such product is not the subject of an approved
application or license, the person who manufactured the
product;
``(B) a co-licensed partner of the person described
in subparagraph (A) that obtains the product directly
from a person described in this subparagraph or
subparagraph (A) or (C); or
``(C) an affiliate of a person described in
subparagraph (A) or (B) that receives the product
directly from a person described in this subparagraph
or subparagraph (A) or (B).
``(11) Package.--
``(A) In general.--The term `package' means the
smallest individual saleable unit of product for
distribution by a manufacturer or repackager that is
intended by the manufacturer for ultimate sale to the
dispenser of such product.
``(B) Individual saleable unit.--For purposes of
this paragraph, an `individual saleable unit' is the
smallest container of product introduced into commerce
by the manufacturer or repackager that is intended by
the manufacturer or repackager for individual sale to a
dispenser.
``(12) Prescription drug.--The term `prescription drug'
means a drug for human use subject to section 503(b)(1).
``(13) Product.--The term `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 products before reconstitution), but
for purposes of section 582, does not include blood or blood
components intended for transfusion, radioactive drugs or
radioactive biological products (as defined in section
600.3(ee) of title 21, Code of Federal Regulations) that are
regulated 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), imaging
drugs, an intravenous product described in clause (xiv), (xv),
or (xvi) of paragraph (24)(B), any medical gas (as defined in
section 575), homeopathic drugs marketed in accordance with
applicable guidance under this Act, or a drug compounded in
compliance with section 503A or 503B.
``(14) Product identifier.--The term `product identifier'
means a standardized graphic that includes, 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, the
standardized numerical identifier, lot number, and expiration
date of the product.
``(15) Quarantine.--The term `quarantine' means the storage
or identification of a product, to prevent distribution or
transfer of the product, in a physically separate area clearly
identified for such use or through other procedures.
``(16) Repackager.--The term `repackager' means a person
who owns or operates an establishment that repacks and relabels
a product or package for--
``(A) further sale; or
``(B) distribution without a further transaction.
``(17) Return.--The term `return' means providing product
to the authorized immediate trading partner from which such
product was purchased or received, or to a returns processor or
reverse logistics provider for handling of such product.
``(18) Returns processor or reverse logistics provider.--
The term `returns processor' or `reverse logistics provider'
means a person who owns or operates an establishment that
dispositions or otherwise processes saleable or nonsaleable
product received from an authorized trading partner such that
the product may be processed for credit to the purchaser,
manufacturer, or seller or disposed of for no further
distribution.
``(19) Specific patient need.--The term `specific patient
need' refers to the transfer of a product from one pharmacy to
another to fill a prescription for an identified patient. Such
term does not include the transfer of a product from one
pharmacy to another for the purpose of increasing or
replenishing stock in anticipation of a potential need.
``(20) Standardized numerical identifier.--The term
`standardized numerical identifier' means a set of numbers or
characters used to uniquely identify each package or homogenous
case that is composed of the National Drug Code that
corresponds to the specific product (including the particular
package configuration) combined with a unique alphanumeric
serial number of up to 20 characters.
``(21) Suspect product.--The term `suspect product' means a
product for which there is reason to believe that such
product--
``(A) is potentially counterfeit, diverted, or
stolen;
``(B) is potentially intentionally adulterated such
that the product would result in serious adverse health
consequences or death to humans;
``(C) is potentially the subject of a fraudulent
transaction; or
``(D) appears otherwise unfit for distribution such
that the product would result in serious adverse health
consequences or death to humans.
``(22) Third-party logistics provider.--The term `third-
party logistics provider' means an entity that provides or
coordinates warehousing, or other logistics services of a
product in interstate commerce on behalf of a manufacturer,
wholesale distributor, or dispenser of a product, but does not
take ownership of the product, nor have responsibility to
direct the sale or disposition of the product.
``(23) 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
direct ownership of a product or to whom a
manufacturer, repackager, wholesale distributor, or
dispenser transfers direct ownership of a product; or
``(B) a third-party logistics provider from whom a
manufacturer, repackager, wholesale distributor, or
dispenser accepts direct possession of a product or to
whom a manufacturer, repackager, wholesale distributor,
or dispenser transfers direct possession of a product.
``(24) Transaction.--
``(A) In general.--The term `transaction' means the
transfer of product between persons in which a change
of ownership occurs.
``(B) Exemptions.--The term `transaction' does not
include--
``(i) intracompany distribution of any
product between members of an affiliate or
within a manufacturer;
``(ii) the distribution of a product among
hospitals or other health care entities that
are under common control;
``(iii) the distribution of a 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 product pursuant
to a prescription executed in accordance with
section 503(b)(1);
``(v) the distribution of 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 product by a licensed retail
pharmacy to a licensed practitioner for office
use;
``(viii) the sale, purchase, or trade of a
drug or an offer to sell, purchase, or trade a
drug by a charitable organization described in
section 501(c)(3) of the Internal Revenue Code
of 1986 to a nonprofit affiliate of the
organization to the extent otherwise permitted
by law;
``(ix) the distribution of a 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 product shall
be transferred to the new owner of the pharmacy
or pharmacies or wholesale distributor or
wholesale distributors;
``(x) the dispensing of a product approved
under section 512(c);
``(xi) products transferred 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) a combination product that is not
subject to approval under section 505 or
licensure under section 351 of the Public
Health Service Act, and that is--
``(I) a product comprised of a
device and 1 or more other regulated
components (such as a drug/device,
biologic/device, or drug/device/
biologic) that are physically,
chemically, or otherwise combined or
mixed and produced as a single entity;
``(II) 2 or more separate products
packaged together in a single package
or as a unit and comprised of a drug
and device or device and biological
product; or
``(III) 2 or more finished medical
devices plus one or more drug or
biological products that are packaged
together in what is referred to as a
`medical convenience kit' as described
in clause (xiii);
``(xiii) the distribution of a collection
of finished medical devices, which may include
a product or biological product, assembled in
kit form strictly for the convenience of the
purchaser or user (referred to in this clause
as a `medical convenience kit') if--
``(I) the medical convenience kit
is assembled in an establishment that
is registered with the Food and Drug
Administration as a device manufacturer
in accordance with section 510(b)(2);
``(II) the medical convenience kit
does not contain a controlled substance
that appears in a schedule contained in
the Comprehensive Drug Abuse Prevention
and Control Act of 1970;
``(III) in the case of a medical
convenience kit that includes a
product, the person that manufacturers
the kit--
``(aa) purchased such
product directly from the
pharmaceutical manufacturer or
from a wholesale distributor
that purchased the product
directly from the
pharmaceutical manufacturer;
and
``(bb) does not alter the
primary container or label of
the product as purchased from
the manufacturer or wholesale
distributor; and
``(IV) in the case of a medical
convenience kit that includes a
product, the product is--
``(aa) an intravenous
solution intended for the
replenishment of fluids and
electrolytes;
``(bb) a product intended
to maintain the equilibrium of
water and minerals in the body;
``(cc) a product intended
for irrigation or
reconstitution;
``(dd) an anesthetic;
``(ee) an anticoagulant;
``(ff) a vasopressor; or
``(gg) a sympathomimetic;
``(xiv) the distribution of an intravenous
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
product used to maintain the equilibrium of
water and minerals in the body, such as
dialysis solutions;
``(xvi) the distribution of a product that
is intended for irrigation, or sterile water,
whether intended for such purposes or for
injection;
``(xvii) the distribution of a medical gas
(as defined in section 575); or
``(xviii) the distribution or sale of any
licensed product under section 351 of the
Public Health Service Act that meets the
definition of a device under section 201(h).
``(25) Transaction history.--The term `transaction history'
means a statement in paper or electronic form, including the
transaction information for each prior transaction going back
to the manufacturer of the product.
``(26) Transaction information.--The term `transaction
information' means--
``(A) the proprietary or established name or names
of the product;
``(B) the strength and dosage form of the product;
``(C) the National Drug Code number of the product;
``(D) the container size;
``(E) the number of containers;
``(F) the lot number of the product;
``(G) the date of the transaction;
``(H) the date of the shipment, if more than 24
hours after the date of the transaction;
``(I) the business name and address of the person
from whom ownership is being transferred; and
``(J) the business name and address of the person
to whom ownership is being transferred.
``(27) Transaction statement.--The `transaction statement'
is a statement, in paper or electronic form, that the entity
transferring ownership in a transaction--
``(A) is authorized as required under the Drug
Supply Chain Security Act;
``(B) received the product from a person that is
authorized as required under the Drug Supply Chain
Security Act;
``(C) received transaction information and a
transaction statement from the prior owner of the
product, as required under section 582;
``(D) did not knowingly ship a suspect or
illegitimate product;
``(E) had systems and processes in place to comply
with verification requirements under section 582;
``(F) did not knowingly provide false transaction
information; and
``(G) did not knowingly alter the transaction
history.
``(28) Verification or verify.--The term `verification' or
`verify' means determining whether the product identifier
affixed to, or imprinted upon, a package or homogeneous case
corresponds to the standardized numerical identifier or lot
number and expiration date assigned to the product by the
manufacturer or the repackager, as applicable in accordance
with section 582.
``(29) Wholesale distributor.--The term `wholesale
distributor' means a person (other than a manufacturer, a
manufacturer's co-licensed partner, a third-party logistics
provider, or repackager) engaged in wholesale distribution (as
defined in section 503(e)(4), as amended by the Drug Supply
Chain Security Act).
``SEC. 582. REQUIREMENTS.
``(a) In General.--
``(1) Other activities.--Each manufacturer, repackager,
wholesale distributor, and dispenser shall comply with the
requirements set forth in this section with respect to the role
of such manufacturer, repackager, wholesale distributor, or
dispenser in a transaction involving product. If an entity
meets the definition of more than one of the entities listed in
the preceding sentence, such entity shall comply with all
applicable requirements in this section, but shall not be
required to duplicate requirements.
``(2) Initial standards.--
``(A) In general.--The Secretary shall, in
consultation with other appropriate Federal officials,
manufacturers, repackagers, wholesale distributors,
dispensers, and other pharmaceutical distribution
supply chain stakeholders, issue a draft guidance
document that establishes standards for the
interoperable exchange of transaction information,
transaction history, and transaction statements, in
paper or electronic format, for compliance with this
subsection and subsections (b), (c), (d), and (e). In
establishing such standards, the Secretary shall
consider the feasibility of establishing standardized
documentation to be used by members of the
pharmaceutical distribution supply chain to convey the
transaction information, transaction history, and
transaction statement to the subsequent purchaser of a
product and to facilitate the exchange of lot level
data. The standards established under this paragraph
shall take into consideration the standards established
under section 505D and shall comply with a form and
format developed by a widely recognized international
standards development organization.
``(B) Public input.--Prior to issuing the draft
guidance under subparagraph (A), the Secretary shall
gather comments and information from stakeholders and
maintain such comments and information in a public
docket for at least 60 days prior to issuing such
guidance.
``(C) Publication.--The Secretary shall publish the
standards established under subparagraph (A) not later
than 1 year after the date of enactment of the Drug
Supply Chain Security Act.
``(3) Waivers, exceptions, and exemptions.--
``(A) In general.--Not later than 2 years after the
date of enactment of the Drug Supply Chain Security
Act, the Secretary shall, by guidance--
``(i) establish a process by which an
authorized manufacturer, repackager, wholesale
distributor, or dispenser may request a waiver
from any of the requirements set forth in this
section, which the Secretary may grant if the
Secretary determines that such requirements
would result in an undue economic hardship or
for emergency medical reasons, including a
public health emergency declaration pursuant to
section 319 of the Public Health Service Act;
``(ii) establish a process by which the
Secretary determines exceptions, and a process
through which a manufacturer or repackager may
request such an exception, to the requirements
relating to product identifiers if a product is
packaged in a container too small or otherwise
unable to accommodate a label with sufficient
space to bear the information required for
compliance with this section; and
``(iii) establish a process by which the
Secretary may determine other products or
transactions that shall be exempt from the
requirements of this section.
``(B) Content.--The guidance issued under
subparagraph (A) shall include a process for the
biennial review and renewal of such waivers,
exceptions, and exemptions, as applicable.
``(C) Process.--In issuing the guidance under this
paragraph, the Secretary shall provide an effective
date that is not later than 180 days prior to the date
on which manufacturers are required to affix or imprint
a product identifier to each package and homogenous
case of product intended to be introduced in a
transaction into commerce consistent with this section.
``(4) Self-executing requirements.--Except where otherwise
specified, the requirements of this section may be enforced
without further regulations or guidance from the Secretary.
``(5) Grandfathering product.--
``(A) Product identifier.--Not later than 2 years
after the date of enactment of the Drug Supply Chain
Security Act, the Secretary shall finalize guidance
specifying whether and under what circumstances product
that is not labeled with a product identifier and that
is in the pharmaceutical distribution supply chain at
the time of the effective date of the requirements of
this section shall be exempted from the requirements of
this section.
``(B) Tracing.--For a product that entered the
pharmaceutical distribution supply chain prior to
January 1, 2015--
``(i) authorized trading partners shall be
exempt from providing transaction information
as required under subsections (b)(1)(A)(i),
(c)(1)(A)(ii), (d)(1)(A)(ii), and
(e)(1)(A)(ii);
``(ii) transaction history required under
this section shall begin with the owner of such
product on such date; and
``(iii) the owners of such product on such
date shall be exempt from asserting receipt of
transaction information and transaction
statement from the prior owner as required
under this section.
``(6) Wholesale distributor licenses.--Notwithstanding
section 581(9)(A), until the effective date of the wholesale
distributor licensing regulations under section 583, the term
`licensed' or `authorized', as it relates to a wholesale
distributor with respect to prescription drugs, shall mean a
wholesale distributor with a valid license under State law.
``(7) Third-party logistics provider licenses.--Until the
effective date of the third-party logistics provider licensing
regulations under section 584, a third-party logistics provider
shall be considered `licensed' under section 581(9)(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.
``(8) Label changes.--Changes made to package labels solely
to incorporate the 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).
``(9) Product identifiers.--With respect to any requirement
relating to product identifiers under this subchapter--
``(A) unless the Secretary allows, through
guidance, the use of other technologies for data
instead of or in addition to the technologies described
in clauses (i) and (ii), the applicable data--
``(i) shall be included in a 2-dimensional
data matrix barcode when affixed to, or
imprinted upon, a package; and
``(ii) shall be included in a linear or 2-
dimensional data matrix barcode when affixed
to, or imprinted upon, a homogeneous case; and
``(B) verification of the product identifier may
occur by using human-readable or machine-readable
methods.
``(b) Manufacturer Requirements.--
``(1) 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 product, provide the
subsequent owner with transaction history,
transaction information, and a transaction
statement, in a single document in an paper or
electronic format; and
``(ii) capture the transaction information
(including lot level information), transaction
history, and transaction statement for each
transaction and maintain such information,
history, and statement for not less than 6
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 product or an illegitimate
product, a manufacturer shall, not later than 1
business day, and not to exceed 48 hours, after
receiving the request, or in other such reasonable time
as determined by the Secretary, based on the
circumstances of the request, provide the applicable
transaction information, transaction history, and
transaction statement for the product.
``(C) Electronic format.--
``(i) In general.--Beginning not later than
4 years after the date of enactment of the Drug
Supply Chain Security Act, except as provided
under clause (ii), a manufacturer shall provide
the transaction information, transaction
history, and transaction statement required
under subparagraph (A)(i) in electronic format.
``(ii) Exception.--A manufacturer may
continue to provide the transaction
information, transaction history, and
transaction statement required under
subparagraph (A)(i) in a paper format to a
licensed health care practitioner authorized to
prescribe medication under State law or other
licensed individual under the supervision or
direction of such a practitioner who dispenses
product in the usual course of professional
practice.
``(2) Product identifier.--
``(A) In general.--Beginning not later than 4 years
after the date of enactment of the Drug Supply Chain
Security Act, a manufacturer shall affix or imprint a
product identifier to each package and homogenous case
of a product intended to be introduced in a transaction
into commerce. Such manufacturer shall maintain the
product identifier information for such product for not
less than 6 years after the date of the transaction.
``(B) Exception.--A package that is required to
have a standardized numerical identifier is not
required to have a unique device identifier.
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, the trading partners of a manufacturer
may be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a manufacturer shall have systems in place to enable the
manufacturer to comply with the following requirements:
``(A) Suspect product.--
``(i) In general.--Upon making a
determination that a product in the possession
or control of the manufacturer is a suspect
product, or upon receiving a request for
verification from the Secretary that has made a
determination that a product within the
possession or control of a manufacturer is a
suspect product, a manufacturer shall--
``(I) quarantine such product
within the possession or control of the
manufacturer from product intended for
distribution until such product is
cleared or dispositioned; and
``(II) promptly conduct an
investigation in coordination with
trading partners, as applicable, to
determine whether the product is an
illegitimate product, which shall
include validating any applicable
transaction history and transaction
information in the possession of the
manufacturer and otherwise
investigating to determine whether the
product is an illegitimate product,
and, beginning 4 years after the date
of enactment of the Drug Supply Chain
Security Act, verifying the product at
the package level, including the
standardized numerical identifier.
``(ii) Cleared product.--If the
manufacturer makes the determination that a
suspect product is not an illegitimate product,
the manufacturer shall promptly notify the
Secretary, if applicable, of such determination
and such product may be further distributed.
``(iii) Records.--A manufacturer shall keep
records of the investigation of a suspect
product for not less than 6 years after the
conclusion of the investigation.
``(B) Illegitimate product.--
``(i) In general.--Upon determining that a
product in the possession or control of a
manufacturer is an illegitimate product, the
manufacturer shall, in a manner consistent with
the systems and processes of such
manufacturer--
``(I) quarantine such product
within the possession or control of the
manufacturer from product intended for
distribution until such product is
dispositioned;
``(II) disposition the illegitimate
product within the possession or
control of the manufacturer;
``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or
control of the manufacturer; and
``(IV) retain a sample of the
product for further physical
examination or laboratory analysis of
the product by the manufacturer or
Secretary (or other appropriate Federal
or State official) upon request by the
Secretary (or other appropriate Federal
or State official), as necessary and
appropriate.
``(ii) Making a notification.--
``(I) Illegitimate product.--Upon
determining that a product in the
possession or control of the
manufacturer is an illegitimate
product, the manufacturer shall notify
the Secretary and all immediate trading
partners that the manufacturer has
reason to believe may have received
such illegitimate product of such
determination not later than 24 hours
after making such determination.
``(II) High risk of illegitimacy.--
A manufacturer shall notify the
Secretary and immediate trading
partners that the manufacturer has
reason to believe may have in the
trading partner's possession a product
manufactured by, or purported to be a
product manufactured by, the
manufacturer not later than 24 hours
after determining or being notified by
the Secretary or a trading partner that
there is a high risk that such product
is an illegitimate product. For
purposes of this subclause, a `high
risk' may include a specific high risk
that could increase the likelihood that
illegitimate product will enter the
pharmaceutical distribution supply
chain and other high risks as
determined by the Secretary in guidance
pursuant to subsection (h).
``(iii) Responding to a notification.--Upon
the receipt of a notification from the
Secretary or a trading partner that a
determination has been made that a product is
an illegitimate product, a manufacturer shall
identify all illegitimate product subject to
such notification that is in the possession or
control of the manufacturer, including any
product that is subsequently received, and
shall perform the activities described in
subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with
the Secretary, that a notification is no longer
necessary, a manufacturer shall promptly notify
immediate trading partners that the
manufacturer notified pursuant to clause (ii)
that such notification has been terminated.
``(v) Records.--A manufacturer shall keep
records of the disposition of an illegitimate
product for not less than 6 years after the
conclusion of the disposition.
``(C) Requests for verification.--Beginning 4 years
after the date of enactment of the Drug Supply Chain
Security Act, upon receiving a request for verification
from an authorized repackager, wholesale distributor,
or dispenser that is in possession or control of a
product such person believes to be manufactured by such
manufacturer, a manufacturer shall, not later than 24
hours after receiving the request for verification or
in other such reasonable time as determined by the
Secretary, based on the circumstances of the request,
notify the person making the request whether the
product identifier, including the standardized
numerical identifier, that is the subject of the
request corresponds to the product identifier affixed
or imprinted by the manufacturer. If a manufacturer
responding to a request for verification identifies a
product identifier that does not correspond to that
affixed or imprinted by the manufacturer, the
manufacturer shall treat such product as suspect
product and conduct an investigation as described in
subparagraph (A). If the manufacturer has reason to
believe the product is an illegitimate product, the
manufacturer shall advise the person making the request
of such belief at the time such manufacturer responds
to the request for verification.
``(D) Electronic database.--A manufacturer may
satisfy the requirements of this paragraph by
developing a secure electronic database or utilizing a
secure electronic database developed or operated by
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
request for verification submitted by means other than
a secure electronic database.
``(E) Saleable returned product.--Beginning 4 years
after the date of enactment of the Drug Supply Chain
Security Act (except as provided pursuant to subsection
(a)(5)), upon receipt of a returned product that the
manufacturer intends to further distribute, before
further distributing such product, the manufacturer
shall verify the product identifier, including the
standardized numerical identifier, for each sealed
homogeneous case of such product or, if such product is
not in a sealed homogeneous case, verify the product
identifier, including the standardized numerical
identifier, on each package.
``(F) Nonsaleable returned product.--A manufacturer
may return a nonsaleable product to the manufacturer or
repackager, to the wholesale distributor from whom such
product was purchased, or to a person acting on behalf
of such a person, including a returns processor,
without providing the information described in
paragraph (1)(A)(i).
``(c) Wholesale Distributor Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning not later than January
1, 2015, the following requirements shall apply to
wholesale distributors:
``(i) A wholesale distributor shall not
accept ownership of a product unless the
previous owner prior to, or at the time of, the
transaction provides the transaction history,
transaction information, and a transaction
statement for the product, as applicable under
this subparagraph.
``(ii)(I)(aa) If the wholesale distributor
purchased a product directly from the
manufacturer, the exclusive distributor of the
manufacturer, or a repackager that purchased
directly from the manufacturer, then prior to,
or at the time of, each transaction in which
the wholesale distributor transfers ownership
of a product, the wholesale distributor shall
provide to the subsequent purchaser--
``(AA) a transaction statement,
which shall state that such wholesale
distributor, or a member of the
affiliate of such wholesale
distributor, purchased the product
directly from the manufacturer,
exclusive distributor of the
manufacturer, or repackager that
purchased the product directly from the
manufacturer; and
``(BB) subject to subclause (II),
the transaction history and transaction
information.
``(bb) The wholesale distributor shall
provide the transaction history, transaction
information, and transaction statement under
item (aa)--
``(AA) if provided to a
dispenser, on a single document
in a paper or electronic
format; and
``(BB) if provided to a
wholesale distributor, through
any combination of self-
generated paper, electronic
data, or manufacturer-provided
information on the product
package.
``(II) For purposes of transactions
described in subclause (I), transaction history
and transaction information shall not be
required to include the lot number of the
product, the initial transaction date, or the
initial shipment date from the manufacturer (as
defined in subparagraphs (F), (G), and (H) of
section 581(26)).
``(iii) If the wholesale distributor did
not purchase a product directly from the
manufacturer, the exclusive distributor of the
manufacturer, or a repackager that purchased
directly from the manufacturer, as described in
clause (ii), then prior to, or at the time of,
each transaction or subsequent transaction, the
wholesale distributor shall provide to the
subsequent purchaser a transaction statement,
transaction history, and transaction
information, in a paper or electronic format
that complies with the guidance document issued
under subsection (a)(2).
``(iv) For the purposes of clause (iii),
the transaction history supplied shall begin
only with the wholesale distributor described
in clause (ii)(I), but the wholesale
distributor described in clause (iii) shall
inform the subsequent purchaser that such
wholesale distributor received a direct
purchase statement from a wholesale distributor
described in clause (ii)(I).
``(v) A wholesale distributor shall--
``(I) capture the transaction
information (including lot level
information) consistent with the
requirements of this section,
transaction history, and transaction
statement for each transaction
described in clauses (i), (ii), and
(iii) and maintain such information,
history, and statement for not less
than 6 years after the date of the
transaction; and
``(II) maintain the confidentiality
of the transaction information
(including any lot level information
consistent with the requirements of
this section), transaction history, and
transaction statement for a product in
a manner that prohibits disclosure to
any person other than the Secretary or
other appropriate Federal or State
official, except to comply with clauses
(ii) and (iii), and, as applicable,
pursuant to an agreement under
subparagraph (D).
``(B) Returns.--
``(i) Saleable returns.--Notwithstanding
subparagraph (A)(i), the following shall apply:
``(I) Requirements.--Until the date
that is 6 years after the date of
enactment of the Drug Supply Chain
Security Act (except as provided
pursuant to subsection (a)(5)), a
wholesale distributor may accept
returned product from a dispenser or
repackager pursuant to the terms and
conditions of any agreement between the
parties, and, notwithstanding
subparagraph (A)(ii), may distribute
such returned product without providing
the transaction history. For
transactions subsequent to the return,
the transaction history of such product
shall begin with the wholesale
distributor that accepted the returned
product, consistent with the
requirements of this subsection.
``(II) Enhanced requirements.--
Beginning 6 years after the date of
enactment of the Drug Supply Chain
Security Act (except as provided
pursuant to subsection (a)(5)), a
wholesale distributor may accept
returned product from a dispenser or
repackager only if the wholesale
distributor can associate returned
product with the transaction
information and transaction statement
associated with that product. For all
transactions after such date, the
transaction history, as applicable, of
such product shall begin with the
wholesale distributor that accepted and
verified the returned product. For
purposes of this subparagraph, the
transaction information and transaction
history, as applicable, need not
include transaction dates if it is not
reasonably practicable to obtain such
dates.
``(ii) Nonsaleable returns.--A wholesale
distributor may return a nonsaleable product to
the manufacturer or repackager, to the
wholesale distributor from whom such product
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)(i).
``(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 product or an illegitimate
product, a wholesale distributor shall, not later than
1 business day, and not to exceed 48 hours, after
receiving the request or in other such reasonable time
as determined by the Secretary, based on the
circumstances of the request, provide the applicable
transaction information, transaction history, and
transaction statement for the product.
``(D) Trading partner agreements.--Beginning 6
years after the date of enactment of the Drug Supply
Chain Security Act, a wholesale distributor may
disclose the transaction information, including lot
level information, transaction history, or transaction
statement of a product to the subsequent purchaser of
the product, pursuant to a written agreement between
such wholesale distributor and such subsequent
purchaser. Nothing in this subparagraph shall be
construed to limit the applicability of subparagraphs
(A) through (C).
``(2) Product identifier.--Beginning 6 years after the date
of enactment of the Drug Supply Chain Security Act, a wholesale
distributor may engage in transactions involving a product only
if such product is encoded with a product identifier (except as
provided pursuant to subsection (a)(5)).
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, the trading partners of a wholesale
distributor may be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a wholesale distributor shall have systems in place to
enable the wholesale distributor to comply with the following
requirements:
``(A) Suspect product.--
``(i) In general.--Upon making a
determination that a product in the possession
or control of a wholesale distributor is a
suspect product, or upon receiving a request
for verification from the Secretary that has
made a determination that a product within the
possession or control of a wholesale
distributor is a suspect product, a wholesale
distributor shall--
``(I) quarantine such product
within the possession or control of the
wholesale distributor from product
intended for distribution until such
product is cleared or dispositioned;
and
``(II) promptly conduct an
investigation in coordination with
trading partners, as applicable, to
determine whether the product is an
illegitimate product, which shall
include validating any applicable
transaction history and transaction
information in the possession of the
wholesale distributor and otherwise
investigating to determine whether the
product is an illegitimate product,
and, beginning 6 years after the date
of enactment of the Drug Supply Chain
Security Act (except as provided
pursuant to subsection (a)(5)),
verifying the product at the package
level, including the standardized
numerical identifier.
``(ii) Cleared product.--If the wholesale
distributor determines that a suspect product
is not an illegitimate product, the wholesale
distributor shall promptly notify the
Secretary, if applicable, of such determination
and such product may be further distributed.
``(iii) Records.--A wholesale distributor
shall keep records of the investigation of a
suspect product for not less than 6 years after
the conclusion of the investigation.
``(B) Illegitimate product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a
product in the possession or control of a
wholesale distributor is an illegitimate
product, the wholesale distributor shall, in a
manner that is consistent with the systems and
processes of such wholesale distributor--
``(I) quarantine such product
within the possession or control of the
wholesale distributor from product
intended for distribution until such
product is dispositioned;
``(II) disposition the illegitimate
product within the possession or
control of the wholesale distributor;
``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or
control of the wholesale distributor;
and
``(IV) retain a sample of the
product for further physical
examination or laboratory analysis of
the product by the manufacturer or
Secretary (or other appropriate Federal
or State official) upon request by the
manufacturer or Secretary (or other
appropriate Federal or State official),
as necessary and appropriate.
``(ii) Making a notification.--Upon
determining that a product in the possession or
control of the wholesale distributor is an
illegitimate product, the wholesale distributor
shall notify the Secretary and all immediate
trading partners that the wholesale distributor
has reason to believe may have received such
illegitimate product of such determination not
later than 24 hours after making such
determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the
Secretary or a trading partner that a
determination has been made that a product is
an illegitimate product, a wholesale
distributor shall identify all illegitimate
product subject to such notification that is in
the possession or control of the wholesale
distributor, including any product that is
subsequently received, and shall perform the
activities described in subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with
the Secretary, that a notification is no longer
necessary, a wholesale distributor shall
promptly notify immediate trading partners that
the wholesale distributor notified pursuant to
clause (ii) that such notification has been
terminated.
``(v) Records.--A wholesale distributor
shall keep records of the disposition of an
illegitimate product for not less than 6 years
after the conclusion of the disposition.
``(C) Electronic database.--A wholesale distributor
may satisfy the requirements of this paragraph by
developing a secure electronic database or utilizing a
secure electronic database developed or operated by
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) Verification of saleable returned product.--
Beginning 6 years after the date of enactment of the
Drug Supply Chain Security Act, upon receipt of a
returned product that the wholesale distributor intends
to further distribute, before further distributing such
product, the wholesale distributor shall verify the
product identifier, including the standardized
numerical identifier, for each sealed homogeneous case
of such product or, if such product is not in a sealed
homogeneous case, verify the product identifier,
including the standardized numerical identifier, on
each package.
``(d) Dispenser Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning July 1, 2015, a
dispenser--
``(i) shall not accept ownership of a
product, unless the previous owner prior to, or
at the time of, the transaction, provides
transaction history, transaction information,
and a transaction statement;
``(ii) prior to, or at the time of, each
transaction in which the dispenser transfers
ownership of a product (but not including
dispensing to a patient or returns) shall
provide the subsequent owner with transaction
history, transaction information, and a
transaction statement for the 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 capture transaction
information (including lot level information,
if provided), transaction history, and
transaction statements, as necessary to
investigate a suspect product, and maintain
such information, history, and statements for
not less than 6 years after 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, transaction history, and
transaction statements 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 and
shall not be relieved of the obligations of the
dispenser under this subsection.
``(C) Returns.--
``(i) Saleable returns.--A dispenser may
return product to the trading partner from
which the dispenser obtained the product
without providing the information required
under subparagraph (A).
``(ii) Nonsaleable returns.--A dispenser
may return a nonsaleable product to the
manufacturer or repackager, to the wholesale
distributor from whom such product was
purchased, to a returns processor, or to a
person acting on behalf of such a person
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 or an illegitimate product,
a dispenser shall, not later than 2 business days after
receiving the request or in another such reasonable
time as determined by the Secretary, based on the
circumstances of the request, provide the applicable
transaction information, transaction statement, and
transaction history which the dispenser received from
the previous owner, which shall not include the lot
number of the product, the initial transaction date, or
the initial shipment date from the manufacturer unless
such information was included in the transaction
information, transaction statement, and transaction
history provided by the manufacturer or wholesale
distributor to the dispenser. The dispenser may respond
to the request by providing the applicable information
in either paper or electronic format. Until the date
that is 4 years after the date of enactment of the Drug
Supply Chain Security Act, the Secretary or other
appropriate Federal or State official shall grant a
dispenser additional time, as necessary, only with
respect to a request to provide lot level information
described in subparagraph (F) of section 581(26) that
was provided to the dispenser in paper format, limit
the request time period to the 6 months preceding the
request or other relevant date, and, in the event of a
recall, the Secretary, or other appropriate Federal or
State official may request information only if such
recall involves a serious adverse health consequence or
death to humans.
``(2) Product identifier.--Beginning not later than 7 years
after the date of enactment of the Drug Supply Chain Security
Act, a dispenser may engage in transactions involving a product
only if such product is encoded with a product identifier
(except as provided pursuant to subsection (a)(5)).
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, the trading partners of a dispenser may
be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a dispenser shall have systems in place to enable the
dispenser to comply with the following requirements:
``(A) Suspect product.--
``(i) In general.--Upon making a
determination that a product in the possession
or control of the dispenser is a suspect
product, or upon receiving a request for
verification from the Secretary that has made a
determination that a product within the
possession or control of a dispenser is a
suspect product, a dispenser shall--
``(I) quarantine such product
within the possession or control of the
dispenser from product intended for
distribution until such product is
cleared or dispositioned; and
``(II) promptly conduct an
investigation in coordination with
trading partners, as applicable, to
determine whether the product is an
illegitimate product.
``(ii) Investigation.--An investigation
conducted under clause (i)(II) shall include--
``(I) beginning 7 years after the
date of enactment of the Drug Supply
Chain Security Act, verifying whether
the lot number of a suspect product
corresponds with the lot number for
such product;
``(II) beginning 7 years after the
date of enactment of such Act,
verifying that the product identifier,
including the standardized numerical
identifier, of at least 3 packages or
10 percent of such suspect product,
whichever is greater, or all packages,
if there are fewer than 3, corresponds
with the product identifier for such
product;
``(III) validating any applicable
transaction history and transaction
information in the possession of the
dispenser; and
``(IV) otherwise investigating to
determine whether the product is an
illegitimate product.
``(iii) Cleared product.--If the dispenser
makes the determination that a suspect product
is not an illegitimate product, the dispenser
shall promptly notify the Secretary, if
applicable, of such determination and such
product may be further distributed or
dispensed.
``(iv) Records.--A dispenser shall keep
records of the investigation of a suspect
product for not less than 6 years after the
conclusion of the investigation.
``(B) Illegitimate product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a
product in the possession or control of a
dispenser is an illegitimate product, the
dispenser shall--
``(I) disposition the illegitimate
product within the possession or
control of the dispenser;
``(II) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or
control of the dispenser; and
``(III) retain a sample of the
product for further physical
examination or laboratory analysis of
the product by the manufacturer or
Secretary (or other appropriate Federal
or State official) upon request by the
manufacturer or Secretary (or other
appropriate Federal or State official),
as necessary and appropriate.
``(ii) Making a notification.--Upon
determining that a product in the possession or
control of the dispenser is an illegitimate
product, the dispenser shall notify the
Secretary and all immediate trading partners
that the dispenser has reason to believe may
have received such illegitimate product of such
determination not later than 24 hours after
making such determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the
Secretary or a trading partner that a
determination has been made that a product is
an illegitimate product, a dispenser shall
identify all illegitimate product subject to
such notification that is in the possession or
control of the dispenser, including any product
that is subsequently received, and shall
perform the activities described in
subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with
the Secretary, that a notification is no longer
necessary, a dispenser shall promptly notify
immediate trading partners that the dispenser
notified pursuant to clause (ii) that such
notification has been terminated.
``(v) Records.--A dispenser shall keep
records of the disposition of an illegitimate
product for not less than 6 years after the
conclusion of the disposition.
``(C) Electronic database.--A dispenser may satisfy
the requirements of this paragraph by developing a
secure electronic database or utilizing a secure
electronic database developed or operated by another
entity.
``(5) Exception.--Notwithstanding any other provision of
law, the requirements under paragraphs (1) and (4) shall not
apply to licensed health care practitioners authorized to
prescribe or administer medication under State law or other
licensed individuals under the supervision or direction of such
practitioners who dispense or administer product in the usual
course of professional practice.
``(e) Repackager Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning not later than January
1, 2015, a repackager described in section 581(16)(A)
shall--
``(i) not accept ownership of a product
unless the previous owner, prior to, or at the
time of, the transaction, provides transaction
history, transaction information, and a
transaction statement for the product;
``(ii) prior to, or at the time of, each
transaction in which the repackager transfers
ownership of a product, provide the subsequent
owner with transaction history, transaction
information, and a transaction statement for
the product; and
``(iii) capture the transaction information
(including lot level information), transaction
history, and transaction statement for each
transaction described in clauses (i) and (ii)
and maintain such information, history, and
statement for not less than 6 years after the
transaction.
``(B) Returns.--
``(i) Nonsaleable product.--A repackager
described in section 581(16)(A) may return a
nonsaleable product to the manufacturer or
repackager, or to the wholesale distributor
from whom such product 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)(ii).
``(ii) Saleable or nonsaleable product.--A
repackager described in section 581(16)(B) may
return a saleable or nonsaleable product to the
manufacturer, repackager, or to the wholesale
distributor from whom such product was received
without providing the information required
under subparagraph (A)(ii) on behalf of the
hospital or other health care entity that took
ownership of such product pursuant to the terms
and conditions of any agreement between such
repackager and the entity that owns the
product.
``(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 product or an illegitimate
product, a repackager described in section 581(16)(A)
shall, not later than 1 business day, and not to exceed
48 hours, after receiving the request or in other such
reasonable time as determined by the Secretary, provide
the applicable transaction information, transaction
history, and transaction statement for the product.
``(2) Product identifier.--
``(A) In general.--Beginning not later than 5 years
after the date of enactment of the Drug Supply Chain
Security Act, a repackager described in section
581(16)(A)--
``(i) shall affix or imprint a product
identifier to each package and homogenous case
of product intended to be introduced in a
transaction in commerce;
``(ii) shall maintain the product
identifier information for such product for not
less than 6 years after the date of the
transaction;
``(iii) may engage in transactions
involving a product only if such product is
encoded with a product identifier (except as
provided pursuant to subsection (a)(5)); and
``(iv) shall maintain records for not less
than 6 years to allow the repackager to
associate the product identifier the repackager
affixes or imprints with the product identifier
assigned by the original manufacturer of the
product.
``(B) Exception.--A package that is required to
have a standardized numerical identifier is not
required to have a unique device identifier.
``(3) Authorized trading partners.--Beginning January 1,
2015, the trading partners of a repackager described in section
581(16) may be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a repackager described in section 581(16)(A) shall have
systems in place to enable the repackager to comply with the
following requirements:
``(A) Suspect product.--
``(i) In general.--Upon making a
determination that a product in the possession
or control of the repackager is a suspect
product, or upon receiving a request for
verification from the Secretary that has made a
determination that a product within the
possession or control of a repackager is a
suspect product, a repackager shall--
``(I) quarantine such product
within the possession or control of the
repackager from product intended for
distribution until such product is
cleared or dispositioned; and
``(II) promptly conduct an
investigation in coordination with
trading partners, as applicable, to
determine whether the product is an
illegitimate product, which shall
include validating any applicable
transaction history and transaction
information in the possession of the
repackager and otherwise investigating
to determine whether the product is an
illegitimate product, and, beginning 5
years after the date of enactment of
the Drug Supply Chain Security Act
(except as provided pursuant to
subsection (a)(5)), verifying the
product at the package level, including
the standardized numerical identifier.
``(ii) Cleared product.--If the repackager
makes the determination that a suspect product
is not an illegitimate product, the repackager
shall promptly notify the Secretary, if
applicable, of such determination and such
product may be further distributed.
``(iii) Records.--A repackager shall keep
records of the investigation of a suspect
product for not less than 6 years after the
conclusion of the investigation.
``(B) Illegitimate product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a
product in the possession or control of a
repackager is an illegitimate product, the
repackager shall, in a manner that is
consistent with the systems and processes of
such repackager--
``(I) quarantine such product
within the possession or control of the
repackager from product intended for
distribution until such product is
dispositioned;
``(II) disposition the illegitimate
product within the possession or
control of the repackager;
``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or
control of the repackager; and
``(IV) retain a sample of the
product for further physical
examination or laboratory analysis of
the product by the manufacturer or
Secretary (or other appropriate Federal
or State official) upon request by the
manufacturer or Secretary (or other
appropriate Federal or State official),
as necessary and appropriate.
``(ii) Making a notification.--Upon
determining that a product in the possession or
control of the repackager is an illegitimate
product, the repackager shall notify the
Secretary and all immediate trading partners
that the repackager has reason to believe may
have received the illegitimate product of such
determination not later than 24 hours after
making such determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the
Secretary or a trading partner, a repackager
shall identify all illegitimate product subject
to such notification that is in the possession
or control of the repackager, including any
product that is subsequently received, and
shall perform the activities described in
subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with
the Secretary, that a notification is no longer
necessary, a repackager shall promptly notify
immediate trading partners that the repackager
notified pursuant to clause (ii) that such
notification has been terminated.
``(v) Records.--A repackager shall keep
records of the disposition of an illegitimate
product for not less than 6 years after the
conclusion of the disposition.
``(C) Requests for verification.--Beginning 5 years
after the date of enactment of the Drug Supply Chain
Security Act, upon receiving a request for verification
from an authorized manufacturer, wholesale distributor,
or dispenser that is in possession or control of a
product they believe to be repackaged by such
repackager, a repackager shall, not later than 24 hours
after receiving the verification request or in other
such reasonable time as determined by the Secretary,
based on the circumstances of the request, notify the
person making the request whether the product
identifier, including the standardized numerical
identifier, that is the subject of the request
corresponds to the product identifier affixed or
imprinted by the repackager. If a repackager responding
to a verification request identifies a product
identifier that does not correspond to that affixed or
imprinted by the repackager, the repackager shall treat
such product as suspect product and conduct an
investigation as described in subparagraph (A). If the
repackager has reason to believe the product is an
illegitimate product, the repackager shall advise the
person making the request of such belief at the time
such repackager responds to the verification request.
``(D) Electronic database.--A repackager may
satisfy the requirements of paragraph (4) by developing
a secure electronic database or utilizing a secure
electronic database developed or operated by 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 subparagraph (C) to respond to a
verification request submitted by means other than a
secure electronic database.
``(E) Verification of saleable returned product.--
Beginning 5 years after the date of enactment of the
Drug Supply Chain Security Act, upon receipt of a
returned product that the repackager intends to further
distribute, before further distributing such product,
the repackager shall verify the product identifier for
each sealed homogeneous case of such product or, if
such product is not in a sealed homogeneous case,
verify the product identifier on each package.
``(f) Drop Shipments.--
``(1) In general.--A wholesale distributor that does not
physically handle or store product shall be exempt from the
provisions of this section, except the notification
requirements under clauses (ii), (iii), and (iv) of subsection
(c)(4)(B), provided that the manufacturer, repackager, or other
wholesale distributor that distributes the product to the
dispenser by means of a drop shipment for such wholesale
distributor includes on the transaction information and
transaction history to the dispenser the contact information of
such wholesale distributor and provides the transaction
information, transaction history, and transaction statement
directly to the dispenser.
``(2) Clarification.--For purposes of this subsection,
providing 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
product.''.
SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY.
Section 582, as added by section 202, is amended by adding at the
end the following:
``(g) Enhanced Drug Distribution Security.--
``(1) In general.--On the date that is 10 years after the
date of enactment of the Drug Supply Chain Security Act, the
following interoperable, electronic tracing of product at the
package level requirements shall go into effect:
``(A) The transaction information and the
transaction statements as required under this section
shall be exchanged in a secure, interoperable,
electronic manner in accordance with the standards
established under the guidance issued pursuant to
paragraphs (3) and (4) of subsection (h), including any
revision of such guidance issued in accordance with
paragraph (5) of such subsection.
``(B) The transaction information required under
this section shall include the product identifier at
the package level for each package included in the
transaction.
``(C) Systems and processes for verification of
product at the package level, including the
standardized numerical identifier, shall be required in
accordance with the standards established under the
guidance issued pursuant to subsection (a)(2) and the
guidances issued pursuant to paragraphs (2), (3), and
(4) of subsection (h), including any revision of such
guidances issued in accordance with paragraph (5) of
such subsection, which may include the use of
aggregation and inference as necessary.
``(D) The systems and processes necessary to
promptly respond with the transaction information and
transaction statement for a product upon a request by
the Secretary (or other appropriate Federal or State
official) in the event of a recall or for the purposes
of investigating a suspect product or an illegitimate
product shall be required.
``(E) The systems and processes necessary to
promptly facilitate gathering the information necessary
to produce the transaction information for each
transaction going back to the manufacturer, as
applicable, shall be required--
``(i) in the event of a request by the
Secretary (or other appropriate Federal or
State official), on account of a recall or for
the purposes of investigating a suspect product
or an illegitimate product; or
``(ii) in the event of a request by an
authorized trading partner, in a secure manner
that ensures the protection of confidential
commercial information and trade secrets, for
purposes of investigating a suspect product or
assisting the Secretary (or other appropriate
Federal or State official) with a request
described in clause (i).
``(F) Each person accepting a saleable return shall
have systems and processes in place to allow acceptance
of such product and may accept saleable returns only if
such person can associate the saleable return product
with the transaction information and transaction
statement associated with that product.
``(2) Compliance.--
``(A) Information maintenance agreement.--A
dispenser may enter into a written agreement with a
third party, including an authorized wholesale
distributor, under which the third party shall
confidentially maintain any information and statements
required to be maintained under this section. If a
dispenser enters into such an agreement, the dispenser
shall maintain a copy of the written agreement and
shall not be relieved of the obligations of the
dispenser under this subsection.
``(B) Alternative methods.--The Secretary, taking
into consideration the assessment conducted under
paragraph (3), shall provide for alternative methods of
compliance with any of the requirements set forth in
paragraph (1), including--
``(i) establishing timelines for compliance
by small businesses (including small business
dispensers with 25 or fewer full-time
employees) with such requirements, in order to
ensure that such requirements do not impose
undue economic hardship for small businesses,
including small business dispensers for whom
the criteria set forth in the assessment under
paragraph (3) is not met, if the Secretary
determines that such requirements under
paragraph (1) would result in undue economic
hardship; and
``(ii) establishing a process by which a
dispenser may request a waiver from any of the
requirements set forth in paragraph (1) if the
Secretary determines that such requirements
would result in an undue economic hardship,
which shall include a process for the biennial
review and renewal of any such waiver.
``(3) Assessment.--
``(A) In general.--Not later than the date that is
18 months after the Secretary issues the final guidance
required under subsection (h), the Secretary shall
enter into a contract with a private, independent
consulting firm with expertise to conduct a technology
and software assessment that looks at the feasibility
of dispensers with 25 or fewer full-time employees
conducting interoperable, electronic tracing of
products at the package level. Such assessment shall be
completed not later than 8\1/2\ years after the date of
enactment of the Drug Supply Chain Security Act.
``(B) Condition.--As a condition of the award of
the contract under subparagraph (A), the private,
independent consulting firm shall agree to consult with
dispensers with 25 or fewer full-time employees when
conducting the assessment under such subparagraph.
``(C) Content.--The assessment under subparagraph
(A) shall assess whether--
``(i) the necessary software and hardware
is readily accessible to such dispensers;
``(ii) the necessary software and hardware
is prohibitively expensive to obtain, install,
and maintain for such dispensers; and
``(iii) the necessary hardware and software
can be integrated into business practices, such
as interoperability with wholesale
distributors, for such dispensers.
``(D) Publication.--The Secretary shall--
``(i) publish the statement of work for the
assessment under subparagraph (A) for public
comment prior to beginning the assessment;
``(ii) publish the final assessment for
public comment not later than 30 calendar days
after receiving such assessment; and
``(iii) hold a public meeting not later
than 180 calendar days after receiving the
final assessment at which public stakeholders
may present their views on the assessment.
``(4) Procedure.--Notwithstanding section 553 of title 5,
United States Code, the Secretary, in promulgating any
regulation pursuant to this section, shall--
``(A) provide appropriate flexibility by--
``(i) not requiring the adoption of
specific business systems for the maintenance
and transmission of data;
``(ii) prescribing alternative methods of
compliance for any of the requirements set
forth in paragraph (1) or set forth in
regulations implementing such requirements,
including--
``(I) timelines for small
businesses to comply with the
requirements set forth in the
regulations in order to ensure that
such requirements do not impose undue
economic hardship for small businesses
(including small business dispensers
for whom the criteria set forth in the
assessment under paragraph (3) is not
met), if the Secretary determines that
such requirements would result in undue
economic hardship; and
``(II) the establishment of a
process by which a dispenser may
request a waiver from any of the
requirements set forth in such
regulations if the Secretary determines
that such requirements would result in
an undue economic hardship; and
``(iii) taking into consideration--
``(I) the results of pilot
projects, including pilot projects
pursuant to this section and private
sector pilot projects, including those
involving the use of aggregation and
inference;
``(II) the public meetings held and
related guidance documents issued under
this section;
``(III) the public health benefits
of any additional regulations in
comparison to the cost of compliance
with such requirements, including on
entities of varying sizes and
capabilities;
``(IV) the diversity of the
pharmaceutical distribution supply
chain by providing appropriate
flexibility for each sector, including
both large and small businesses; and
``(V) the assessment pursuant to
paragraph (3) with respect to small
business dispensers, including related
public comment and the public meeting,
and requirements under this section;
``(B) issue a notice of proposed rulemaking that
includes a copy of the proposed regulation;
``(C) provide a period of not less than 60 days for
comments on the proposed regulation; and
``(D) publish in the Federal Register the final
regulation not less than 2 years prior to the effective
date of the regulation.
``(h) Guidance Documents.--
``(1) In general.--For the purposes of facilitating the
successful and efficient adoption of secure, interoperable
product tracing at the package level in order to enhance drug
distribution security and further protect the public health,
the Secretary shall issue the guidance documents as provided
for in this subsection.
``(2) Suspect and illegitimate product.--
``(A) In general.--Not later than 180 days after
the date of enactment of the Drug Supply Chain Security
Act, the Secretary shall issue a guidance document to
aid trading partners in the identification of a suspect
product and notification termination. Such guidance
document shall--
``(i) identify specific scenarios that
could significantly increase the risk of a
suspect product entering the pharmaceutical
distribution supply chain;
``(ii) provide recommendation on how
trading partners may identify such product and
make a determination on whether the product is
a suspect product as soon as practicable; and
``(iii) set forth the process by which
manufacturers, repackagers, wholesale
distributors, and dispensers shall terminate
notifications in consultation with the
Secretary regarding illegitimate product
pursuant to subsections (b)(4)(B), (c)(4)(B),
(d)(4)(B), and (e)(4)(B).
``(B) Revised guidance.--If the Secretary revises
the guidance issued under subparagraph (A), the
Secretary shall follow the procedure set forth in
paragraph (5).
``(3) Unit level tracing.--
``(A) In general.--In order to enhance drug
distribution security at the package level, not later
than 18 months after conducting a public meeting on the
system attributes necessary to enable secure tracing of
product at the package level, including allowing for
the use of verification, inference, and aggregation, as
necessary, the Secretary shall issue a final guidance
document that outlines and makes recommendations with
respect to the system attributes necessary to enable
secure tracing at the package level as required under
the requirements established under subsection (g). Such
guidance document shall--
``(i) define the circumstances under which
the sectors within the pharmaceutical
distribution supply chain may, in the most
efficient manner practicable, infer the
contents of a case, pallet, tote, or other
aggregate of individual packages or containers
of product, from a product identifier
associated with the case, pallet, tote, or
other aggregate, without opening each case,
pallet, tote, or other aggregate or otherwise
individually scanning each package;
``(ii) identify methods and processes to
enhance secure tracing of product at the
package level, such as secure processes to
facilitate the use of inference, enhanced
verification activities, the use of aggregation
and inference, processes that utilize the
product identifiers to enhance tracing of
product at the package level, including the
standardized numerical identifier, or package
security features; and
``(iii) ensure the protection of
confidential commercial information and trade
secrets.
``(B) Procedure.--In issuing the guidance under
subparagraph (A), and in revising such guidance, if
applicable, the Secretary shall follow the procedure
set forth in paragraph (5).
``(4) Standards for interoperable data exchange.--
``(A) In general.--In order to enhance secure
tracing of a product at the package level, the
Secretary, not later than 18 months after conducting a
public meeting on the interoperable standards necessary
to enhance the security of the pharmaceutical
distribution supply chain, shall update the guidance
issued pursuant to subsection (a)(2), as necessary and
appropriate, and finalize such guidance document so
that the guidance document--
``(i) identifies and makes recommendations
with respect to the standards necessary for
adoption in order to support the secure,
interoperable electronic data exchange among
the pharmaceutical distribution supply chain
that comply with a form and format developed by
a widely recognized international standards
development organization;
``(ii) takes into consideration standards
established pursuant to subsection (a)(2) and
section 505D;
``(iii) facilitates the creation of a
uniform process or methodology for product
tracing; and
``(iv) ensures the protection of
confidential commercial information and trade
secrets.
``(B) Procedure.--In issuing the guidance under
subparagraph (A), and in revising such guidance, if
applicable, the Secretary shall follow the procedure
set forth in paragraph (5).
``(5) Procedure.--In issuing or revising any guidance
issued pursuant to this subsection or subsection (g), except
the initial guidance issued under paragraph (2)(A), the
Secretary shall--
``(A) publish a notice in the Federal Register for
a period not less than 30 days announcing that the
draft or revised draft guidance is available;
``(B) post the draft guidance document on the
Internet Web site of the Food and Drug Administration
and make such draft guidance document available in hard
copy;
``(C) provide an opportunity for comment and review
and take into consideration any comments received;
``(D) revise the draft guidance, as appropriate;
``(E) publish a notice in the Federal Register for
a period not less than 30 days announcing that the
final guidance or final revised guidance is available;
``(F) post the final guidance document on the
Internet Web site of the Food and Drug Administration
and make such final guidance document available in hard
copy; and
``(G) provide for an effective date of not earlier
than 1 year after such guidance becomes final.
``(i) Public Meetings.--
``(1) In general.--The Secretary shall hold not less than 5
public meetings to enhance the safety and security of the
pharmaceutical distribution supply chain and provide for
comment. The Secretary may hold the first such public meeting
not earlier than 1 year after the date of enactment of the Drug
Supply Chain Security Act. In carrying out the public meetings
described in this paragraph, the Secretary shall--
``(A) prioritize topics necessary to inform the
issuance of the guidance described in paragraphs (3)
and (4) of subsection (h); and
``(B) take all measures reasonable and practicable
to ensure the protection of confidential commercial
information and trade secrets.
``(2) Content.--Each of the following topics shall be
addressed in at least one of the public meetings described in
paragraph (1):
``(A) An assessment of the steps taken under
subsections (b) through (e) to build capacity for a
unit-level system, including the impact of the
requirements of such subsections on--
``(i) the ability of the health care system
collectively to maintain patient access to
medicines;
``(ii) the scalability of such
requirements, including as it relates to
product lines; and
``(iii) the capability of different sectors
and subsectors, including both large and small
businesses, to affix and utilize the product
identifier.
``(B) The system attributes necessary to support
the requirements set forth under subsection (g),
including the standards necessary for adoption in order
to support the secure, interoperable electronic data
exchange among sectors within the pharmaceutical
distribution supply chain.
``(C) Best practices in each of the different
sectors within the pharmaceutical distribution supply
chain to implement the requirements of this section.
``(D) The costs and benefits of the implementation
of this section, including the impact on each
pharmaceutical distribution supply chain sector and on
public health.
``(E) Whether electronic tracing requirements,
including tracing of product at the package level, are
feasible, cost effective, and needed to protect the
public health.
``(F) The systems and processes needed to utilize
the product identifiers to enhance tracing of product
at the package level, including allowing for
verification, aggregation, and inference, as necessary.
``(G) The technical capabilities and legal
authorities, if any, needed to establish an
interoperable, electronic system that provides for
tracing of product at the package level.
``(H) The impact that such additional requirements
would have on patient safety, the drug supply, cost and
regulatory burden, and timely patient access to
prescription drugs.
``(I) Other topics, as determined appropriate by
the Secretary.
``(j) Pilot Projects.--
``(1) In general.--The Secretary shall establish 1 or more
pilot projects, in coordination with authorized manufacturers,
repackagers, wholesale distributors, and dispensers, to explore
and evaluate methods to enhance the safety and security of the
pharmaceutical distribution supply chain. Such projects shall
build upon efforts, in existence as of the date of enactment of
the Drug Supply Chain Security Act, to enhance the safety and
security of the pharmaceutical distribution supply chain, take
into consideration any pilot projects conducted prior to such
date of enactment, including any pilot projects that use
aggregation and inference, and inform the draft and final
guidance under paragraphs (3) and (4) of subsection (h).
``(2) Content.--
``(A) In general.--The Secretary shall ensure that
the pilot projects under paragraph (1) reflect the
diversity of the pharmaceutical distribution supply
chain and that the pilot projects, when taken as a
whole, include participants representative of every
sector, including both large and small businesses.
``(B) Project design.--The pilot projects under
paragraph (1) shall be designed to--
``(i) utilize the product identifier for
tracing of a product, which may include
verification of the product identifier of a
product, including the use of aggregation and
inference;
``(ii) improve the technical capabilities
of each sector and subsector to comply with
systems and processes needed to utilize the
product identifiers to enhance tracing of a
product;
``(iii) identify system attributes that are
necessary to implement the requirements
established under this section; and
``(iv) complete other activities as
determined by the Secretary.
``(k) Sunset.--The following requirements shall have no force or
effect beginning on the date that is 10 years after the date of
enactment of the Drug Supply Chain Security Act:
``(1) The provision and receipt of transaction history
under this section.
``(2) The requirements set forth for returns under
subsections (b)(4)(E), (c)(1)(B)(i), (d)(1)(C)(i), and
(e)(4)(E).
``(3) The requirements set forth under subparagraphs
(A)(v)(II) and (D) of subsection (c)(1), as applied to lot
level information only.
``(l) Rule of Construction.--The requirements set forth in
subsections (g)(4), (i), and (j) shall not be construed as a condition,
prohibition, or precedent for precluding or delaying the provisions
becoming effective pursuant to subsection (g).
``(m) Requests for Information.--On the date that is 10 years after
the date of enactment of the Drug Supply Chain Security Act, the
timeline for responses to requests for information from the Secretary,
or other appropriate Federal or State official, as applicable, under
subsections (b)(1)(B), (c)(1)(C), and (e)(1)(C) shall be not later than
24 hours after receiving the request from the Secretary or other
appropriate Federal or State official, as applicable, or in such other
reasonable time as determined by the Secretary based on the
circumstances of the request.''.
SEC. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE
DISTRIBUTORS.
(a) Amendments.--
(1) Requirement.--Section 503(e) (21 U.S.C. 353(e)) is
amended by striking paragraphs (1), (2), and (3) and inserting
the following:
``(1) Requirement.--Subject to section 583:
``(A) In general.--No person may engage in
wholesale distribution of a drug subject to subsection
(b)(1) in any State unless such person--
``(i)(I) is licensed by the State from
which the drug is distributed; or
``(II) if the State from which the drug is
distributed has not established a licensure
requirement, is licensed by the Secretary; and
``(ii) if the drug is distributed
interstate, is licensed by the State into which
the drug is distributed if the State into which
the drug is distributed requires the licensure
of a person that distributes drugs into the
State.
``(B) Standards.--Each Federal and State license
described in subparagraph (A) shall meet the standards,
terms, and conditions established by the Secretary
under section 583.
``(2) Reporting and database.--
``(A) Reporting.--Beginning January 1, 2015, any
person who owns or operates an establishment that
engages in wholesale distribution shall--
``(i) report to the Secretary, on an annual
basis pursuant to a schedule determined by the
Secretary--
``(I) each State by which the
person is licensed and the appropriate
identification number of each such
license; and
``(II) the name, address, and
contact information of each facility at
which, and all trade names under which,
the person conducts business; and
``(ii) report to the Secretary within a
reasonable period of time and in a reasonable
manner, as determined by the Secretary, any
significant disciplinary actions, such as the
revocation or suspension of a wholesale
distributor license, taken by a State or the
Federal Government during the reporting period
against the wholesale distributor.
``(B) Database.--Not later than January 1, 2015,
the Secretary shall establish a database of authorized
wholesale distributors. Such database shall--
``(i) identify each authorized wholesale
distributor by name, contact information, and
each State where such wholesale distributor is
appropriately licensed to engage in wholesale
distribution;
``(ii) be available to the public on the
Internet Web site of the Food and Drug
Administration; and
``(iii) be regularly updated on a schedule
determined by the Secretary.
``(C) Coordination.--The Secretary shall establish
a format and procedure for appropriate State officials
to access the information provided pursuant to
subparagraph (A) in a prompt and secure manner.
``(D) Confidentiality.--Nothing in this paragraph
shall be construed as authorizing the Secretary to
disclose any information that is a trade secret or
confidential information subject to section 552(b)(4)
of title 5, United States Code, or section 1905 of
title 18, United States Code.
``(3) Costs.--
``(A) Authorized fees of secretary.--If a State
does not establish a licensing program for persons
engaged in the wholesale distribution of a drug subject
to subsection (b), the Secretary shall license a person
engaged in wholesale distribution located in such State
and may collect a reasonable fee in such amount
necessary to reimburse the Secretary for costs
associated with establishing and administering the
licensure program and conducting periodic inspections
under this section. The Secretary shall adjust fee
rates as needed on an annual basis to generate only the
amount of revenue needed to perform this service. Fees
authorized under this paragraph shall be collected and
available for obligation only to the extent and in the
amount provided in advance in appropriations Acts. Such
fees are authorized to remain available until expended.
Such sums as may be necessary may be transferred from
the Food and Drug Administration salaries and expenses
appropriation account without fiscal year limitation to
such appropriation account for salaries and expenses
with such fiscal year limitation.
``(B) State licensing fees.--Nothing in this Act
shall prohibit States from collecting fees from
wholesale distributors in connection with State
licensing of such distributors.''.
(2) Wholesale distribution.--Section 503(e) (21 U.S.C.
353(e)), as amended by paragraph (1), is further amended by
adding at the end the following:
``(4) For the purposes of this subsection and subsection
(d), the term `wholesale distribution' means the distribution
of a drug subject to subsection (b) to a person other than a
consumer or patient, or receipt of a drug subject to subsection
(b) by a person other than the consumer or patient, but does
not include--
``(A) intracompany distribution of any drug between
members of an affiliate or within a manufacturer;
``(B) the distribution of a drug, or an offer to
distribute a drug among hospitals or other health care
entities which are under common control;
``(C) 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, for purposes of this paragraph, a
drug shortage not caused by a public health emergency
shall not constitute an emergency medical reason;
``(D) the dispensing of a drug pursuant to a
prescription executed in accordance with subsection
(b)(1);
``(E) the distribution of minimal quantities of
drug by a licensed retail pharmacy to a licensed
practitioner for office use;
``(F) 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;
``(G) 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;
``(H) the distribution of a drug by the
manufacturer of such drug;
``(I) 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;
``(J) a common carrier that transports a drug,
provided that the common carrier does not take
ownership of the drug;
``(K) the distribution of a drug, or an offer to
distribute a drug by an authorized repackager that has
taken ownership or possession of the drug and repacks
it in accordance with section 582(e);
``(L) salable drug returns when conducted by a
dispenser;
``(M) the distribution of a collection of finished
medical devices, which may include a product or
biological product, assembled in kit form strictly for
the convenience of the purchaser or user (referred to
in this subparagraph as a `medical convenience kit')
if--
``(i) the medical convenience kit is
assembled in an establishment that is
registered with the Food and Drug
Administration as a device manufacturer in
accordance with section 510(b)(2);
``(ii) the medical convenience kit does not
contain a controlled substance that appears in
a schedule contained in the Comprehensive Drug
Abuse Prevention and Control Act of 1970;
``(iii) in the case of a medical
convenience kit that includes a product, the
person that manufacturers the kit--
``(I) purchased such product
directly from the pharmaceutical
manufacturer or from a wholesale
distributor that purchased the product
directly from the pharmaceutical
manufacturer; and
``(II) does not alter the primary
container or label of the product as
purchased from the manufacturer or
wholesale distributor; and
``(iv) in the case of a medical convenience
kit that includes a product, the product is--
``(I) an intravenous solution
intended for the replenishment of
fluids and electrolytes;
``(II) a product intended to
maintain the equilibrium of water and
minerals in the body;
``(III) a product intended for
irrigation or reconstitution;
``(IV) an anesthetic;
``(V) an anticoagulant;
``(VI) a vasopressor; or
``(VII) a sympathomimetic;
``(N) 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);
``(O) the distribution of an intravenous drug used
to maintain the equilibrium of water and minerals in
the body, such as dialysis solutions;
``(P) the distribution of a drug that is intended
for irrigation, or sterile water, whether intended for
such purposes or for injection;
``(Q) the distribution of medical gas, as defined
in section 575;
``(R) facilitating the distribution of a product by
providing solely administrative services, including
processing of orders and payments; or
``(S) the transfer of a product by a hospital or
other health care entity, or by a wholesale distributor
or manufacturer operating at the direction of the
hospital or other health care entity, to a repackager
described in section 581(16)(B) and registered under
section 510 for the purpose of repackaging the drug for
use by that hospital, or other health care entity and
other health care entities that are under common
control, if ownership of the drug remains with the
hospital or other health care entity at all times.''.
(3) Third-party logistics providers.--Section 503(e) (21
U.S.C. 353(e)), as amended by paragraph (2), is further amended
by adding at the end the following:
``(5) Third-party logistics providers.--Notwithstanding
paragraphs (1) through (4), each entity that meets the
definition of a third-party logistics provider under section
581(22) shall obtain a license as a third-party logistics
provider as described in section 584(a) and is not required to
obtain a license as a wholesale distributor if the entity never
assumes an ownership interest in the product it handles.''.
(4) Affiliate.--Section 503(e) (21 U.S.C. 353(e)), as
amended by paragraph (3), is further amended by adding at the
end the following:
``(6) Affiliate.--For purposes of this subsection, the term
`affiliate' means a business entity that has a relationship
with a second business entity if, directly or indirectly--
``(A) one business entity controls, or has the
power to control, the other business entity; or
``(B) a third party controls, or has the power to
control, both of the business entities.''.
(5) Standards.--Subchapter H of chapter V, as added by
section 202, is amended by adding at the end the following:
``SEC. 583. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE
DISTRIBUTORS.
``(a) In General.--The Secretary shall, not later than 2 years
after the date of enactment of the Drug Supply Chain Security Act,
establish by regulation standards for the licensing of persons under
section 503(e)(1) (as amended by the Drug Supply Chain Security Act),
including the revocation, reissuance, and renewal of such license.
``(b) Content.--For the purpose of ensuring uniformity with respect
to standards set forth in this section, the standards established under
subsection (a) shall apply to all State and Federal licenses described
under section 503(e)(1) (as amended by the Drug Supply Chain Security
Act) and shall include standards for the following:
``(1) The storage and handling of prescription drugs,
including facility requirements.
``(2) The establishment and maintenance of records of the
distributions of such drugs.
``(3) The furnishing of a bond or other equivalent means of
security, as follows:
``(A)(i) For the issuance or renewal of a wholesale
distributor license, an applicant that is not a
government owned and operated wholesale distributor
shall submit a surety bond of $100,000 or other
equivalent means of security acceptable to the State.
``(ii) For purposes of clause (i), the State or
other applicable authority may accept a surety bond in
the amount of $25,000 if the annual gross receipts of
the previous tax year for the wholesaler is $10,000,000
or less.
``(B) If a wholesale distributor can provide
evidence that it possesses the required bond in a
State, the requirement for a bond in another State
shall be waived.
``(4) Mandatory background checks and fingerprinting of
facility managers or designated representatives.
``(5) The establishment and implementation of
qualifications for key personnel.
``(6) The mandatory physical inspection of any facility to
be used in wholesale distribution within a reasonable time
frame from the initial application of the facility and to be
conducted by the licensing authority or by the State,
consistent with subsection (c).
``(7) In accordance with subsection (d), the prohibition of
certain persons from receiving or maintaining licensure for
wholesale distribution.
``(c) Inspections.--To satisfy the inspection requirement under
subsection (b)(6), the Federal or State licensing authority may conduct
the inspection or may accept an inspection by the State in which the
facility is located, or by a third-party accreditation or inspection
service approved by the Secretary or the State licensing such wholesale
distributor.
``(d) Prohibited Persons.--The standards established under
subsection (a) shall include requirements to prohibit a person from
receiving or maintaining licensure for wholesale distribution if the
person--
``(1) has been convicted of any felony for conduct relating
to wholesale distribution, any felony violation of subsection
(i) or (k) of section 301, or any felony violation of section
1365 of title 18, United States Code, relating to product
tampering; or
``(2) has engaged in a pattern of violating the
requirements of this section, or State requirements for
licensure, that presents a threat of serious adverse health
consequences or death to humans.
``(e) Requirements.--The Secretary, in promulgating any regulation
pursuant to this section, shall, notwithstanding section 553 of title
5, United States Code--
``(1) issue a notice of proposed rulemaking that includes a
copy of the proposed regulation;
``(2) provide a period of not less than 60 days for
comments on the proposed regulation; and
``(3) provide that the final regulation take effect on the
date that is 2 years after the date such final regulation is
published.''.
(b) Authorized Distributors of Record.--Section 503(d) (21 U.S.C.
353(d)) is amended by adding at the end the following:
``(4) In this subsection, the term `authorized distributors
of record' means those distributors with whom a manufacturer
has established an ongoing relationship to distribute such
manufacturer's products.''.
(c) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect on January 1, 2015.
SEC. 205. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS;
UNIFORM NATIONAL POLICY.
Subchapter H of chapter V, as amended by section 204, is further
amended by adding at the end the following:
``SEC. 584. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS.
``(a) Requirements.--No third-party logistics provider in any State
may conduct activities in any State unless each facility of such third-
party logistics provider--
``(1)(A) is licensed by the State from which the drug is
distributed by the third-party logistics provider, in
accordance with the regulations promulgated under subsection
(d); or
``(B) if the State from which the drug distributed by the
third-party logistics provider has not established a licensure
requirement, is licensed by the Secretary, in accordance with
the regulations promulgated under subsection (d); and
``(2) if the drug is distributed interstate, is licensed by
the State into which the drug is distributed by the third-party
logistics provider if such State licenses third-party logistics
providers that distribute drugs into the State and the third-
party logistics provider is not licensed by the Secretary as
described in paragraph (1)(B).
``(b) Reporting.--Beginning 1 year after the date of enactment of
the Drug Supply Chain Security Act, a facility of a third-party
logistics provider shall report to the Secretary, on an annual basis
pursuant to a schedule determined by the Secretary--
``(1) the State by which the facility is licensed and the
appropriate identification number of such license; and
``(2) the name and address of the facility and all trade
names under which such facility conducts business.
``(c) Costs.--
``(1) Authorized fees of secretary.--If a State does not
establish a licensing program for a third-party logistics
provider, the Secretary shall license the third-party logistics
provider located in such State and may collect a reasonable fee
in such amount necessary to reimburse the Secretary for costs
associated with establishing and administering the licensure
program and conducting periodic inspections under this section.
The Secretary shall adjust fee rates as needed on an annual
basis to generate only the amount of revenue needed to perform
this service. Fees authorized under this paragraph shall be
collected and available for obligation only to the extent and
in the amount provided in advance in appropriations Acts. Such
fees are authorized to remain available until expended. Such
sums as may be necessary may be transferred from the Food and
Drug Administration salaries and expenses appropriation account
without fiscal year limitation to such appropriation account
for salaries and expenses with such fiscal year limitation.
``(2) State licensing fees.--
``(A) State established program.--Nothing in this
Act shall prohibit a State that has established a
program to license a third-party logistics provider
from collecting fees from a third-party logistics
provider for such a license.
``(B) No state established program.--A State that
does not establish a program to license a third-party
logistics provider in accordance with this section
shall be prohibited from collecting a State licensing
fee from a third-party logistics provider.
``(d) Regulations.--
``(1) In general.--Not later than 2 years after the date of
enactment of the Drug Supply Chain Security Act, the Secretary
shall issue regulations regarding the standards for licensing
under subsection (a), including the revocation and reissuance
of such license, to third-party logistics providers under this
section.
``(2) Content.--Such regulations shall--
``(A) establish a process by which a third-party
accreditation program approved by the Secretary shall,
upon request by a third-party logistics provider, issue
a license to each third-party logistics provider that
meets the requirements set forth in this section;
``(B) establish a process by which the Secretary
shall issue a license to each third-party logistics
provider that meets the requirements set forth in this
section 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;
``(C) require that the entity complies with storage
practices, as determined by the Secretary for such
facility, including--
``(i) maintaining access to warehouse space
of suitable size to facilitate safe operations,
including a suitable area to quarantine suspect
product;
``(ii) maintaining adequate security; and
``(iii) having written policies and
procedures to--
``(I) address receipt, security,
storage, inventory, shipment, and
distribution of a 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
product is segregated from other
products and returned to the
manufacturer or repackager or
destroyed;
``(VII) maintain the capability to
trace the receipt and outbound
distribution of a product, and supplies
and records of inventory; and
``(VIII) quarantine or destroy a
suspect product if directed to do so by
the respective manufacturer, wholesale
distributor, dispenser, or an
authorized government agency;
``(D) provide for periodic inspection by the
licensing authority, as determined by the Secretary, of
such facility warehouse space to ensure compliance with
this section;
``(E) prohibit a facility from having as a manager
or designated representative anyone convicted of any
felony violation of subsection (i) or (k) of section
301 or any violation of section 1365 of title 18,
United States Code relating to product tampering;
``(F) provide for mandatory background checks of a
facility manager or a designated representative of such
manager;
``(G) require a third-party logistics provider to
provide the applicable licensing authority, upon a
request by such authority, a list of all product
manufacturers, wholesale distributors, and dispensers
for whom the third-party logistics provider provides
services at such facility; and
``(H) include procedures under which any third-
party logistics provider license--
``(i) expires on the date that is 3 years
after issuance of the license; and
``(ii) may be renewed for additional 3-year
periods.
``(3) Procedure.--In promulgating the regulations under
this subsection, the Secretary shall, notwithstanding section
553 of title 5, United States Code--
``(A) issue a notice of proposed rulemaking that
includes a copy of the proposed regulation;
``(B) provide a period of not less than 60 days for
comments on the proposed regulation; and
``(C) provide that the final regulation takes
effect upon the expiration of 1 year after the date
that such final regulation is issued.
``(e) Validity.--A license issued under this section shall remain
valid as long as such third-party logistics provider remains licensed
consistent with this section. 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, pursuant to subsection (d)(2)(A).
``SEC. 585. UNIFORM NATIONAL POLICY.
``(a) Product Tracing and Other Requirements.--Beginning on the
date of enactment of the Drug Supply Chain Security Act, no State or
political subdivision of a State may establish or continue in effect
any requirements for tracing products through the distribution system
(including any requirements with respect to statements of distribution
history, transaction history, transaction information, or transaction
statement of a product as such product changes ownership in the supply
chain, or verification, investigation, disposition, notification, or
recordkeeping relating to such systems, including paper or electronic
pedigree systems or for tracking and tracing drugs throughout the
distribution system) which are inconsistent with, more stringent than,
or in addition to, any requirements applicable under section 503(e) (as
amended by such Act) or this subchapter (or regulations issued
thereunder), or which are inconsistent with--
``(1) any waiver, exception, or exemption pursuant to
section 581 or 582; or
``(2) any restrictions specified in section 582.
``(b) Wholesale Distributor and Third-Party Logistics Provider
Standards.--
``(1) In general.--Beginning on the date of enactment of
the Drug Supply Chain Security Act, no State or political
subdivision of a State may establish or continue any standards,
requirements, or regulations with respect to wholesale
prescription drug distributor or third-party logistics provider
licensure that are inconsistent with, less stringent than,
directly related to, or covered by the standards and
requirements applicable under section 503(e) (as amended by
such Act), in the case of a wholesale distributor, or section
584, in the case of a third-party logistics provider.
``(2) State regulation of third-party logistics
providers.--No State shall regulate third-party logistics
providers as wholesale distributors.
``(3) Administration fees.--Notwithstanding paragraph (1),
a State may administer fee collections for effectuating the
wholesale drug distributor and third-party logistics provider
licensure requirements under sections 503(e) (as amended by the
Drug Supply Chain Security Act), 583, and 584.
``(4) Enforcement, suspension, and revocation.--
Notwithstanding paragraph (1), a State--
``(A) may take administrative action, including
fines, to enforce a requirement promulgated by the
State in accordance with section 503(e) (as amended by
the Drug Supply Chain Security Act) or this subchapter;
``(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 violations of Federal,
State, or local drug laws or regulations, may provide
for fines, imprisonment, or civil penalties; and
``(D) may regulate activities of licensed entities
in a manner that is consistent with product tracing
requirements under section 582.
``(c) Exception.--Nothing in this section shall be construed to
preempt State requirements related to the distribution of prescription
drugs if such requirements are not related to product tracing as
described in subsection (a) or wholesale distributor and third-party
logistics provider licensure as described in subsection (b) applicable
under section 503(e) (as amended by the Drug Supply Chain Security Act)
or this subchapter (or regulations issued thereunder).''.
SEC. 206. PENALTIES.
(a) Prohibited Act.--Section 301(t) (21 U.S.C. 331(t)), is
amended--
(1) by striking ``or'' after ``the requirements of section
503(d),''; and
(2) by inserting ``, failure to comply with the
requirements under section 582, the failure to comply with the
requirements under section 584, as applicable,'' after ``in
violation of section 503(e)''.
(b) Misbranding.--Section 502 (21 U.S.C. 352), as amended by
section 103, is further amended by adding at the end the following:
``(cc) If it is a drug and it fails to bear the product identifier
as required by section 582.''.
SEC. 207. CONFORMING AMENDMENT.
(a) In General.--Section 303(b)(1)(D) (21 U.S.C. 333(b)(1)(D)) is
amended by striking ``503(e)(2)(A)'' and inserting ``503(e)(1)''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2015.
SEC. 208. SAVINGS CLAUSE.
Except as provided in the amendments made by paragraphs (1), (2),
and (3) of section 204(a) and by section 206(a), nothing in this title
(including the amendments made by this title) shall be construed as
altering any authority of the Secretary of Health and Human Services
with respect to a drug subject to section 503(b)(1) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)) under any other
provision of such Act or the Public Health Service Act (42 U.S.C. 201
et seq.).
Passed the House of Representatives September 28, 2013.
Attest:
Clerk.
113th CONGRESS
1st Session
H. R. 3204
_______________________________________________________________________
AN ACT
To amend the Federal Food, Drug, and Cosmetic Act with respect to human
drug compounding and drug supply chain security, and for other
purposes.