[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3204 Enrolled Bill (ENR)]

        H.R.3204

                     One Hundred Thirteenth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Thursday,
           the third day of January, two thousand and thirteen


                                 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.).

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.