[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 959 Reported in Senate (RS)]

                                                        Calendar No. 89
113th CONGRESS
  1st Session
                                 S. 959

   To amend the Federal Food, Drug, and Cosmetic Act with respect to 
                           compounding drugs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 15, 2013

 Mr. Harkin (for himself, Mr. Alexander, Mr. Roberts, Mr. Franken, Ms. 
Mikulski, and Ms. Warren) introduced the following bill; which was read 
 twice and referred to the Committee on Health, Education, Labor, and 
                                Pensions

                             June 19, 2013

Reported by Mr. Harkin, with an amendment and an amendment to the title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
   To amend the Federal Food, Drug, and Cosmetic Act with respect to 
                           compounding drugs.

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

<DELETED>SECTION 1. SHORT TITLE; REFERENCES IN ACT.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the 
``Pharmaceutical Compounding Quality and Accountability 
Act''.</DELETED>
<DELETED>    (b) 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.).</DELETED>

<DELETED>SEC. 2. REGULATION OF HUMAN AND ANIMAL DRUG 
              COMPOUNDING.</DELETED>

<DELETED>    (a) Clarification of New Drug and New Animal Drug 
Status.--For purposes of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 301 et seq.), the terms ``new drug'' (as defined in section 
201(p) of such Act) and ``new animal drug'' (as defined in section 
201(v) of such Act) shall include a compounded human drug and a 
compounded animal drug, respectively.</DELETED>
<DELETED>    (b) Regulation of Human and Animal Drug Compounding.--
Section 503A (21 U.S.C. 353a) is amended to read as follows:</DELETED>

<DELETED>``SEC. 503A. HUMAN AND ANIMAL DRUG COMPOUNDING.</DELETED>

<DELETED>    ``(a) Scope.--</DELETED>
        <DELETED>    ``(1) Compounding.--In this section, the terms 
        `compounding' and `compound'--</DELETED>
                <DELETED>    ``(A) include--</DELETED>
                        <DELETED>    ``(i) the combining, admixing, 
                        mixing, diluting, reconstituting, or otherwise 
                        altering of a marketed drug;</DELETED>
                        <DELETED>    ``(ii) compounding a drug from a 
                        bulk drug substance; and</DELETED>
                        <DELETED>    ``(iii) repackaging, as defined in 
                        subsection (b)(5); and</DELETED>
                <DELETED>    ``(B) exclude mixing, reconstituting, or 
                other such acts with respect to a marketed drug that 
                are limited to and performed solely in accordance with 
                specific directions for such acts contained in approved 
                labeling provided by a drug's manufacturer, when 
                performed upon receipt of a prescription order for an 
                identified individual patient.</DELETED>
        <DELETED>    ``(2) Dispensing not a sale.--In this section, the 
        terms `sell' or `resale' do not include dispensing to patients, 
        or, in the case of animal drugs, to the individual responsible 
        for providing care for the animal for which the drug is 
        intended, in accordance with State law, including any fee 
        associated with such dispensing.</DELETED>
        <DELETED>    ``(3) Exemptions.--This section shall not apply 
        to--</DELETED>
                <DELETED>    ``(A) medical gases;</DELETED>
                <DELETED>    ``(B) animal drugs that are subject to 
                regulation as biological products by the Secretary of 
                Agriculture under the Act commonly known as the Virus-
                Serum-Toxin Act; or</DELETED>
                <DELETED>    ``(C) human blood and blood components for 
                transfusion.</DELETED>
<DELETED>    ``(b) Definitions.--In this section:</DELETED>
        <DELETED>    ``(1) Compounding manufacturer.--</DELETED>
                <DELETED>    ``(A) In general.--The term `compounding 
                manufacturer' means a facility at one geographic 
                location or address--</DELETED>
                        <DELETED>    ``(i) that compounds any sterile 
                        drug product without receiving a prescription 
                        order for such sterile drug product prior to 
                        beginning compounding, and distributes or 
                        offers to sell such compounded sterile drug 
                        product in interstate commerce; or</DELETED>
                        <DELETED>    ``(ii) that repackages any 
                        preservative-free sterile drug product or pools 
                        any sterile drug products, except as provided 
                        in paragraph (7)(B).</DELETED>
                <DELETED>    ``(B) Excluded activities.--
                Notwithstanding subparagraph (A)(ii), a facility shall 
                not be considered a compounding manufacturer if such 
                facility--</DELETED>
                        <DELETED>    ``(i) repackages drugs in 
                        accordance with section 506F or the final 
                        guidance described in section 506F(d); 
                        and</DELETED>
                        <DELETED>    ``(ii) does not otherwise meet the 
                        definition of compounding manufacturer under 
                        subparagraph (A).</DELETED>
        <DELETED>    ``(2) Pooling; pools.--The terms `pooling' and 
        `pool'--</DELETED>
                <DELETED>    ``(A) mean taking a single drug approved 
                under section 505 or 512, conditionally approved under 
                section 571, included on the index established under 
                section 572(a)(1), or licensed under section 351 of the 
                Public Health Service Act from the container in which 
                it is distributed by the original manufacturer and 
                combining it with the same drug from one or more other 
                containers without or before further manipulating the 
                product (such as by diluting it or mixing it with 
                another, different drug or drugs);</DELETED>
                <DELETED>    ``(B) do not include combining the drug 
                from two or more separate containers of the same drug 
                when a single container of the drug is not sufficient 
                to prepare a single dose for administration to an 
                individual patient; and</DELETED>
                <DELETED>    ``(C) do not include combining the drug 
                from two or more separate containers of component 
                products of a total parenteral nutrition product, if 
                such pooling, and labeling and use of the finished 
                total parenteral nutrition product, comply with State 
                pharmacy law.</DELETED>
        <DELETED>    ``(3) Practitioner.--The term `practitioner' 
        includes a physician, veterinarian, or any other person that is 
        authorized to prescribe medication under State law.</DELETED>
        <DELETED>    ``(4) Prescription; prescription order.--The term 
        `prescription' or `prescription order' means a prescription or 
        prescription order, as defined under applicable State law, that 
        complies with requirements applicable under such State 
        law.</DELETED>
        <DELETED>    ``(5) Repackage or repackaging.--The term 
        `repackage' or `repackaging' means taking a drug approved under 
        section 505 or 512, conditionally approved under section 571, 
        included on the index established under section 572(a)(1), or 
        licensed under section 351 of the Public Health Service Act 
        from the container in which it is distributed by the original 
        manufacturer and placing it in a different container of the 
        same or smaller size without further manipulating the drug 
        (such as by diluting it or mixing it with another, different 
        drug or drugs), unless such repackaging is done pursuant to a 
        prescription for an identified individual patient.</DELETED>
        <DELETED>    ``(6) Sterile drug product.--The term `sterile 
        drug product' means a drug that is--</DELETED>
                <DELETED>    ``(A) intended for parenteral 
                administration;</DELETED>
                <DELETED>    ``(B) an ophthalmic or inhalation drug; 
                or</DELETED>
                <DELETED>    ``(C) required to be sterile under Federal 
                or State law.</DELETED>
        <DELETED>    ``(7) Traditional compounder.--</DELETED>
                <DELETED>    ``(A) In general.--The term `traditional 
                compounder' means an entity--</DELETED>
                        <DELETED>    ``(i) wherein a drug is compounded 
                        by--</DELETED>
                                <DELETED>    ``(I) a licensed 
                                pharmacist, or other pharmacy personnel 
                                (to the extent permitted under State 
                                law), in a State-licensed pharmacy or a 
                                Federal facility; or</DELETED>
                                <DELETED>    ``(II) a licensed 
                                physician or licensed veterinarian, to 
                                the extent permitted under State 
                                law;</DELETED>
                        <DELETED>    ``(ii) that--</DELETED>
                                <DELETED>    ``(I) compounds a drug 
                                upon receipt of a prescription order 
                                for an identified individual patient; 
                                or</DELETED>
                                <DELETED>    ``(II) compounds a drug in 
                                limited quantities before receipt of a 
                                prescription order for an identified 
                                individual patient, to the extent 
                                permitted under State law, if such 
                                compounding is based on a history of 
                                the licensed pharmacist, licensed 
                                physician, or licensed veterinarian 
                                receiving prescription orders for the 
                                compounding of the drug, which orders 
                                have been generated solely within an 
                                established relationship between the 
                                licensed pharmacist, licensed 
                                physician, or licensed veterinarian 
                                and--</DELETED>
                                        <DELETED>    ``(aa) such 
                                        individual patient for whom the 
                                        prescription order will be 
                                        provided, or, in the case of an 
                                        animal drug, such individual 
                                        responsible for providing care 
                                        for the animal for which the 
                                        drug is ordered; or</DELETED>
                                        <DELETED>    ``(bb) the 
                                        licensed physician, licensed 
                                        veterinarian, or other licensed 
                                        practitioner who will write 
                                        such prescription order; 
                                        and</DELETED>
                        <DELETED>    ``(iii) that does not meet the 
                        definition of a compounding manufacturer under 
                        paragraph (1).</DELETED>
                <DELETED>    ``(B) Exceptions.--</DELETED>
                        <DELETED>    ``(i) Hospitals and health 
                        systems.--</DELETED>
                                <DELETED>    ``(I) In general.--A 
                                pharmacy within a hospital, veterinary 
                                hospital, or health system that 
                                compounds a drug and dispenses such 
                                drug (which may include interstate 
                                shipment) within such hospital or 
                                health system or ships such drug for 
                                dispensing to patients with an 
                                established relationship with the 
                                hospital or health system (which may 
                                include interstate shipment), or that 
                                repackages preservative-free sterile 
                                drug product or pools sterile drug 
                                products, shall be considered a 
                                traditional compounder if such pharmacy 
                                otherwise meets the definition under 
                                subparagraph (A).</DELETED>
                                <DELETED>    ``(II) Health system 
                                defined.--For purposes of this 
                                subparagraph, the term `health system' 
                                means two or more hospitals or 
                                veterinary hospitals that are owned and 
                                operated by the same entity and that 
                                share access to databases with drug 
                                order information for patients or 
                                animals, as applicable. A health system 
                                includes both the inpatient and 
                                outpatient facilities of hospitals 
                                within the health system.</DELETED>
                        <DELETED>    ``(ii) PET and 
                        radiopharmaceuticals.--A pharmacy that 
                        compounds positron emission tomography drugs or 
                        radiopharmaceuticals shall be considered a 
                        traditional compounder if it does not compound 
                        other drugs that would cause it to be a 
                        compounding manufacturer described in paragraph 
                        (1)(A).</DELETED>
<DELETED>    ``(c) Exemptions From Certain Requirements.--</DELETED>
        <DELETED>    ``(1) Drugs compounded by traditional 
        compounders.--Sections 501(a)(2)(B), 502(f)(1), 505 (in the 
        case of a human drug), section 512 (in the case of an animal 
        drug), and section 351 of the Public Health Service Act (in the 
        case of a biological product) shall not apply to a compounded 
        drug if such drug--</DELETED>
                <DELETED>    ``(A) is compounded by a traditional 
                compounder that is in compliance with this section; 
                and</DELETED>
                <DELETED>    ``(B) meets the requirements of this 
                section applicable to drugs compounded by traditional 
                compounders.</DELETED>
        <DELETED>    ``(2) Drugs compounded by compounding 
        manufacturers.--Sections 502(f)(1), 505 (in the case of a human 
        drug), section 512 (in the case of an animal drug), and section 
        351 of the Public Health Service Act (in the case of a 
        biological product) shall not apply to a compounded 
        prescription drug if such drug--</DELETED>
                <DELETED>    ``(A) is compounded by a compounding 
                manufacturer--</DELETED>
                        <DELETED>    ``(i) that is not licensed as a 
                        pharmacy in any State; and</DELETED>
                        <DELETED>    ``(ii) that is in compliance with 
                        this section; and</DELETED>
                <DELETED>    ``(B) meets the requirements of this 
                section applicable to drugs compounded by compounding 
                manufacturers.</DELETED>
<DELETED>    ``(d) Drugs That May Not Be Compounded.--</DELETED>
        <DELETED>    ``(1) In general.--The following drugs may not be 
        compounded, except under conditions specified by the 
        Secretary:</DELETED>
                <DELETED>    ``(A) Drugs that are demonstrably 
                difficult to compound.--A drug or category of drugs 
                that presents demonstrable difficulties for 
                compounding, which may include a complex dosage form or 
                biological product, as designated by the Secretary 
                pursuant to paragraph (2).</DELETED>
                <DELETED>    ``(B) Marketed drugs.--A drug, other than 
                a biological product, that is a copy of a marketed drug 
                approved under 505 or 512, conditionally approved under 
                section 571, or included on the index established under 
                section 572(a)(1), except as provided in paragraph 
                (3).</DELETED>
                <DELETED>    ``(C) Biological products.--A drug that is 
                a biological product, except as provided in paragraph 
                (4).</DELETED>
                <DELETED>    ``(D) Drugs removed for safety and 
                efficacy.--A drug that appears on a list published by 
                the Secretary in the Federal Register of drugs that 
                have been withdrawn or removed from the market because 
                such drug or components of such drug have been found to 
                be unsafe or not effective, subject to paragraph 
                (5).</DELETED>
        <DELETED>    ``(2) Drugs that are demonstrably difficult to 
        compound.--</DELETED>
                <DELETED>    ``(A) In general.--The Secretary may 
                promulgate a regulation that designates drugs or 
                categories of drugs that are demonstrably difficult to 
                compound that may not be compounded, or that may be 
                compounded only under conditions specified by the 
                Secretary. Such regulation--</DELETED>
                        <DELETED>    ``(i) may include the designation 
                        of drugs or categories of drugs that are 
                        complex dosage forms or biological products, 
                        such as extended release products, metered dose 
                        inhalers, transdermal patches, and sterile 
                        liposomal products; and</DELETED>
                        <DELETED>    ``(ii) shall specify, for each 
                        drug included on the list, whether the 
                        prohibition or condition applies to the use of 
                        the drug in humans, animals, or both.</DELETED>
                <DELETED>    ``(B) Interim list.--</DELETED>
                        <DELETED>    ``(i) In general.--Before the 
                        effective date of the regulation promulgated 
                        under subparagraph (A), the Secretary may 
                        designate drugs that are complex dosage forms 
                        or biological products that cannot be 
                        compounded by--</DELETED>
                                <DELETED>    ``(I) publishing a notice 
                                of such drugs proposed for designation, 
                                including the rationale for such 
                                designation, in the Federal 
                                Register;</DELETED>
                                <DELETED>    ``(II) providing a period 
                                of not less than 60 days for comment on 
                                the notice; and</DELETED>
                                <DELETED>    ``(III) publishing a 
                                notice in the Federal Register 
                                designating the drugs that are complex 
                                dosage forms and biological products 
                                that cannot be compounded.</DELETED>
                        <DELETED>    ``(ii) Sunset.--Any notice 
                        provided under clause (i) shall cease to have 
                        force or effect on the date that is 5 years 
                        after the date of enactment of the 
                        Pharmaceutical Compounding Quality and 
                        Accountability Act or on the effective date of 
                        the final regulation under subparagraph (A), 
                        whichever is earlier.</DELETED>
        <DELETED>    ``(3) Exceptions regarding marketed drugs.--
        </DELETED>
                <DELETED>    ``(A) In general.--A drug (other than a 
                biological product) that is a copy of a marketed drug 
                approved under 505 or 512, conditionally approved under 
                section 571, or included on the index established under 
                section 572(a)(1), including variations of such drug 
                compounded from bulk substances, may be compounded only 
                if--</DELETED>
                        <DELETED>    ``(i)(I) the compounded variation 
                        produces for the patient a clinical difference 
                        between the compounded drug and such marketed 
                        drug, as determined by the prescribing 
                        practitioner, and, prior to beginning 
                        compounding a variation of such drug, the 
                        facility compounding the variation receives a 
                        prescription order specifying that the 
                        variation may be compounded; or</DELETED>
                        <DELETED>    ``(II)(aa) such marketed drug, at 
                        the time of compounding a copy of such drug and 
                        at the time of distribution of the compounded 
                        drug, is on the drug shortage list under 
                        section 506E (in the case of a human drug), on 
                        the Current Drug Shortages list for veterinary 
                        products maintained on the Internet Web site of 
                        the Food and Drug Administration (in the case 
                        of an animal drug), or in the Secretary's sole 
                        discretion, has otherwise been identified by 
                        the Secretary as in shortage such as in a 
                        specific region or on a drug shortage list 
                        maintained by a private party; and</DELETED>
                        <DELETED>    ``(bb) the traditional compounder 
                        or the compounding manufacturer notifies the 
                        Secretary not later than 3 calendar days after 
                        beginning the compounding, unless the Secretary 
                        waives the notice requirement; and</DELETED>
                        <DELETED>    ``(ii) in the case of a marketed 
                        drug approved under section 505 that is subject 
                        to a risk evaluation and mitigation strategy 
                        approved with elements to assure safe use 
                        pursuant to section 505-1, the entity 
                        compounding the drug demonstrates to the 
                        Secretary that the entity will utilize controls 
                        that are comparable to the controls applicable 
                        under the relevant risk evaluation and 
                        mitigation strategy.</DELETED>
                <DELETED>    ``(B) Exclusion.--For purposes of this 
                paragraph, repackaging a marketed drug approved under 
                section 505, 512, conditionally approved under section 
                571, or included on the index established under section 
                572(a)(1), does not make the repackaged drug a copy of 
                such marketed drug.</DELETED>
        <DELETED>    ``(4) Exceptions regarding biological products.--A 
        drug that is a biological product may be compounded only if--
        </DELETED>
                <DELETED>    ``(A) such drug is compounded from a 
                licensed biological product and the compounding does 
                not involve combining or mixing the licensed biological 
                product with--</DELETED>
                        <DELETED>    ``(i) a bulk drug substance; 
                        or</DELETED>
                        <DELETED>    ``(ii) another, different drug or 
                        drugs approved under 505 or 512, conditionally 
                        approved under section 571, included on the 
                        index established under section 572(a)(1), or 
                        licensed under section 351 of the Public Health 
                        Service Act, unless the compounding is limited 
                        to the combining, mixing, or diluting of 
                        licensed allergenic products; and</DELETED>
                <DELETED>    ``(B)(i) with respect to a traditional 
                compounder, the compounded biological product produces 
                for the patient a clinical difference between the 
                compounded drug and the licensed biological product, as 
                determined by the prescribing practitioner, and, prior 
                to beginning compounding such drug, the facility 
                compounding the variation receives a prescription order 
                specifying that the biological product may be 
                compounded;</DELETED>
                <DELETED>    ``(ii) with respect to a compounding 
                manufacturer, the compounded variation biological 
                product produces for the patient a clinical difference 
                between the compounded drug and the licensed biological 
                product, as determined by a licensed practitioner 
                responsible for the patient's care in a health care 
                entity that provides medical services through licensed 
                prescribers directly to patients, and, prior to 
                beginning compounding such drug, the compounding 
                manufacturer receives a duly authorized medical order 
                from a hospital or health system specifying that the 
                biological product may be compounded; or</DELETED>
                <DELETED>    ``(iii) the compounded biological product 
                is an allergenic product.</DELETED>
        <DELETED>    ``(5) Requirement regarding drugs removed for 
        safety or efficacy.--The list published by the Secretary in the 
        Federal Register of drugs that have been withdrawn or removed 
        from the market, as described in paragraph (1)(D), shall 
        specify whether a human drug on such list may, notwithstanding 
        the inclusion on such list, be compounded for use in animals. 
        The Secretary shall update the lists described in subparagraphs 
        (D) and (E) of subsection (e)(2), as appropriate, to conform 
        with the list described in paragraph (1)(D).</DELETED>
<DELETED>    ``(e) Quality of Drug Ingredients.--</DELETED>
        <DELETED>    ``(1) Human drugs.--A traditional compounder or a 
        compounding manufacturer shall--</DELETED>
                <DELETED>    ``(A) compound a human drug using only 
                bulk drug substances (as defined in regulations of the 
                Secretary published at section 207.3(a)(4) of title 21, 
                Code of Federal Regulations (or any successor 
                regulations))--</DELETED>
                        <DELETED>    ``(i) that--</DELETED>
                                <DELETED>    ``(I) comply with the 
                                standards of an applicable United 
                                States Pharmacopoeia or National 
                                Formulary monograph, if a monograph 
                                exists and has not been identified 
                                under paragraph (6), and the United 
                                States Pharmacopoeia chapters on 
                                pharmacy compounding;</DELETED>
                                <DELETED>    ``(II) if such a monograph 
                                does not exist, are drug substances 
                                that are components of drugs approved 
                                by the Secretary; or</DELETED>
                                <DELETED>    ``(III) if such a 
                                monograph does not exist and the drug 
                                substance is not a component of a drug 
                                approved by the Secretary, that appear 
                                on a list developed by the Secretary 
                                through regulations issued by the 
                                Secretary;</DELETED>
                        <DELETED>    ``(ii) that are manufactured by an 
                        establishment that is registered under section 
                        510 (including a foreign establishment that is 
                        registered under section 510(i)); and</DELETED>
                        <DELETED>    ``(iii) that are accompanied by 
                        valid certificates of analysis for each 
                        specific lot of bulk drug substance; 
                        and</DELETED>
                <DELETED>    ``(B) use ingredients (other than bulk 
                drug substances) that comply with the standards of an 
                applicable United States Pharmacopoeia or National 
                Formulary monograph, if a monograph exists and has not 
                been identified under paragraph (6), and with the 
                United States Pharmacopoeia chapter on pharmacy 
                compounding.</DELETED>
        <DELETED>    ``(2) Animal drugs.--A traditional compounder or a 
        compounding manufacturer shall--</DELETED>
                <DELETED>    ``(A) compound an animal drug using only 
                bulk drug substances (as defined in regulations of the 
                Secretary published at section 207.3(a)(4) of title 21, 
                Code of Federal Regulations (or any successor 
                regulations)) that--</DELETED>
                        <DELETED>    ``(i) are manufactured by an 
                        establishment that is registered under section 
                        510 (including a foreign establishment that is 
                        registered under section 510(i)); and</DELETED>
                        <DELETED>    ``(ii) are accompanied by valid 
                        certificates of analysis for each specific lot 
                        of bulk drug substance;</DELETED>
                <DELETED>    ``(B) use ingredients (other than bulk 
                drug substances) that comply with the standards of an 
                applicable United States Pharmacopoeia or National 
                Formulary monograph, if a monograph exists and has not 
                been identified under paragraph (6), and with the 
                United States Pharmacopoeia chapters on pharmacy 
                compounding;</DELETED>
                <DELETED>    ``(C) in the case of a compounded animal 
                drug for use in non-food-producing minor species, use 
                bulk substances that--</DELETED>
                        <DELETED>    ``(i) comply with the standards of 
                        an applicable United States Pharmacopoeia or 
                        National Formulary monograph, if a monograph 
                        exists and has not been identified under 
                        paragraph (6), and with the United States 
                        Pharmacopoeia chapters on pharmacy 
                        compounding;</DELETED>
                        <DELETED>    ``(ii) if such a monograph does 
                        not exist, are drug substances that are 
                        components of drugs approved by the Secretary; 
                        or</DELETED>
                        <DELETED>    ``(iii) if such a monograph does 
                        not exist and the drug substance is not a 
                        component of a drug approved by the Secretary, 
                        that appear on a list developed by the 
                        Secretary through regulations issued by the 
                        Secretary;</DELETED>
                <DELETED>    ``(D) in the case of a compounded animal 
                drug for use in non-food-producing major species, 
                beginning on the date of publication of the list 
                established in accordance with paragraph (3)(A), shall 
                use bulk substances that are included on such list, 
                subject to paragraph (3)(C); and</DELETED>
                <DELETED>    ``(E) in the case of a compounded animal 
                drug for use in food-producing major and minor species, 
                shall use bulk substances that are included on a list 
                established by the Secretary of bulk substances 
                acceptable for use in compounding a drug for one or 
                more such species, in accordance with paragraph 
                (4).</DELETED>
        <DELETED>    ``(3) Non-food-producing major species listing 
        procedure.--</DELETED>
                <DELETED>    ``(A) In general.--Not later than 30 days 
                after the effective date of the Pharmaceutical 
                Compounding Quality and Accountability Act, the 
                Secretary shall establish a list of bulk substances 
                acceptable for compounding a drug for use in non-food-
                producing major species, and any conditions applicable 
                to such use, and may also identify bulk substances that 
                the Secretary has determined not acceptable for 
                compounding with respect to a drug for use in such 
                species.</DELETED>
                <DELETED>    ``(B) Procedure.--In developing and 
                updating the list under subparagraph (A), the Secretary 
                shall--</DELETED>
                        <DELETED>    ``(i) publish a notice in the 
                        Federal Register identifying bulk substances 
                        proposed as acceptable and any bulk substance 
                        determine to be unacceptable, and the rationale 
                        for such proposed designations;</DELETED>
                        <DELETED>    ``(ii) provide a period of not 
                        less than 30 days for comment on the notice; 
                        and</DELETED>
                        <DELETED>    ``(iii) publish a notice in the 
                        Federal Register designating the bulk 
                        substances acceptable, and any bulk substances 
                        determined to be unacceptable, and the 
                        rationale for such designations and 
                        determinations.</DELETED>
                <DELETED>    ``(C) Notification.--Upon initial 
                publication of the list under subparagraph (B)(iii), 
                any traditional compounder or compounding manufacturer 
                that has received and filled a prescription in the 60 
                days prior to such publication for a compounded drug 
                for a non-food-producing major species from a bulk 
                substance not addressed in the notice (either as 
                acceptable or unacceptable), and that reasonably expect 
                to receive and fill another prescription for such a 
                drug for such species within 60 days after such 
                publication, may notify the Secretary of such bulk 
                substance within 30 days of such publication, in a 
                manner to be determined by the Secretary and published 
                in the Federal Register on or before publication of the 
                list under subparagraph (B)(iii). A traditional 
                compounder or compounding manufacturer that provides 
                such notice shall not be subject to the restriction in 
                paragraph (2)(D) until such time as the Secretary 
                designates such bulk substance as acceptable or 
                determines it to be unacceptable pursuant to the 
                process described in subparagraph (B)(iii).</DELETED>
                <DELETED>    ``(D) Modification of list.--The Secretary 
                may amend the list at any time, in accordance with 
                process described in subparagraph (B).</DELETED>
                <DELETED>    ``(E) Criteria.--In evaluating bulk 
                substances for purposes of subparagraph (B), the 
                Secretary shall consider, among other factors--
                </DELETED>
                        <DELETED>    ``(i) the safety of the bulk 
                        substance;</DELETED>
                        <DELETED>    ``(ii) historical use of the 
                        substance in pharmacy compounding;</DELETED>
                        <DELETED>    ``(iii) evidence of the 
                        effectiveness of the bulk substance or lack of 
                        effectiveness;</DELETED>
                        <DELETED>    ``(iv) whether any drug approved 
                        under section 505 or 512, conditionally 
                        approved under section 571, or included on the 
                        index established under section 572(a)(1), can 
                        be used on label, or any drug approved under 
                        section 505 or 512 can be used in an extralabel 
                        manner in accordance with section paragraphs 
                        (4) and (5) of section 512(a), to treat the 
                        applicable condition in the identified species; 
                        and</DELETED>
                        <DELETED>    ``(v) whether a compounded drug 
                        appropriate to treat the applicable condition 
                        in the identified species could be obtained by 
                        manipulating a drug approved under 505 or 512, 
                        conditionally approved under section 571, or 
                        included on the index established under section 
                        572(a)(1).</DELETED>
        <DELETED>    ``(4) Food-producing animals listing procedure.--
        In establishing a list of designated bulk substances acceptable 
        for use in compounding a drug for use in food-producing major 
        and minor species under paragraph (2), and any conditions 
        applicable to such use, the Secretary shall--</DELETED>
                <DELETED>    ``(A) publish a notice in the Federal 
                Register identifying bulk substances proposed as 
                acceptable and any bulk substance determine to be 
                unacceptable, and the rationale for such 
                designations;</DELETED>
                <DELETED>    ``(B) provide a period of not less than 30 
                days for comment on the notice; and</DELETED>
                <DELETED>    ``(C) publish a notice in the Federal 
                Register designating the bulk substances acceptable for 
                use in compounding a drug for use in food-producing 
                major and minor species, and the rationale for such 
                designations.</DELETED>
        <DELETED>    ``(5) Withdrawal periods.--The requirements for 
        establishing substantially extended withdrawal periods in 
        accordance with section 530.20 of title 21, Code of Federal 
        Regulations (or any successor regulations) shall apply to 
        compounded animal drugs for use in food-producing animals that 
        are compounded using bulk substances.</DELETED>
        <DELETED>    ``(6) Identification by secretary.--</DELETED>
                <DELETED>    ``(A) In general.--Notwithstanding the 
                existence of an applicable monograph under subparagraph 
                (A)(i)(I) or (B) of paragraph (1) or subparagraph (B) 
                or (C)(i) of paragraph (2), the Secretary may identify 
                bulk substances that the Secretary determines, based on 
                public health concerns, may not be used in compounding 
                a drug.</DELETED>
                <DELETED>    ``(B) Procedure.--In identifying the bulk 
                substances that may not be used in compounding, the 
                Secretary shall--</DELETED>
                        <DELETED>    ``(i) publish a notice of such 
                        bulk substances proposed for identification in 
                        the Federal Register;</DELETED>
                        <DELETED>    ``(ii) provide a period of not 
                        less than 60 days for comment on the 
                        notice;</DELETED>
                        <DELETED>    ``(iii) publish a notice in the 
                        Federal Register identifying the bulk 
                        substances that may not be used in compounding 
                        a drug; and</DELETED>
                        <DELETED>    ``(iv) state whether the bulk is 
                        not suitable for compounding of human drugs, 
                        animal drugs, or both.</DELETED>
<DELETED>    ``(f) Requirements Regarding Wholesaling and Labeling 
Applicable to Traditional Compounders and Compounding Manufacturers.--
</DELETED>
        <DELETED>    ``(1) In general.--A compounded drug--</DELETED>
                <DELETED>    ``(A) may not be sold by an entity other 
                than the compounding manufacturer or traditional 
                compounder that compounded the drug;</DELETED>
                <DELETED>    ``(B) compounded by a compounding 
                manufacturer may not be sold to an entity other than a 
                health care entity that provides medical services 
                through licensed prescribers directly to patients or 
                animals, or a network of such providers, except that a 
                compounding manufacturer may transfer without profit a 
                compounded sterile drug to a licensed pharmacy if--
                </DELETED>
                        <DELETED>    ``(i) the licensed pharmacy falls 
                        under the same corporate ownership as the 
                        compounding manufacturer;</DELETED>
                        <DELETED>    ``(ii) the transfer of such 
                        compounded sterile drug is solely for the 
                        purpose of dispensing the compounded sterile 
                        drug to the end user, who has been instructed 
                        by the prescribing physician to self-administer 
                        such compounded sterile drug;</DELETED>
                        <DELETED>    ``(iii) as of the date of 
                        enactment of the Pharmaceutical Compounding 
                        Quality and Accountability Act, the compounding 
                        manufacturer is an entity that provides 
                        pharmacy benefits management services on behalf 
                        of a health benefits plan;</DELETED>
                        <DELETED>    ``(iv) the compounding 
                        manufacturer identifies itself to the Secretary 
                        upon registering under subsection (g)(2) as an 
                        entity that qualifies for the exemption under 
                        this subparagraph, and provides documentation 
                        of the compounding of such drugs as of the date 
                        of enactment of the Pharmaceutical Compounding 
                        Quality and Accountability Act, in a manner 
                        described by the Secretary; and</DELETED>
                        <DELETED>    ``(v) the compounding manufacturer 
                        receives confirmation from the Secretary that 
                        the compounding manufacturer qualifies for the 
                        exemption under this subparagraph and the 
                        sterile drug or drugs for which the exemption 
                        applies; and</DELETED>
                <DELETED>    ``(C) in the case of a compounded drug 
                sold to a health care entity described in subparagraph 
                (B), shall be labeled `not for resale'.</DELETED>
        <DELETED>    ``(2) Advertising and promotion.--The advertising 
        and promotion of compounded drugs shall not be false or 
        misleading in any particular.</DELETED>
<DELETED>    ``(g) Other Requirements Applicable to Compounding 
Manufacturers.--</DELETED>
        <DELETED>    ``(1) Licensed pharmacist oversight.--A 
        compounding manufacturer shall ensure that a pharmacist 
        licensed in the State where the compounding manufacturer is 
        located exercises direct supervision over the operations of the 
        compounding manufacturer.</DELETED>
        <DELETED>    ``(2) Registration of compounding manufacturers 
        and reporting of drugs.--</DELETED>
                <DELETED>    ``(A) Registration of compounding 
                manufacturers.--</DELETED>
                        <DELETED>    ``(i) Annual registration.--During 
                        the period beginning on October 1 and ending on 
                        December 31 each year, each compounding 
                        manufacturer 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 e-mail address.</DELETED>
                        <DELETED>    ``(ii) New compounding 
                        manufacturers.--Each compounding manufacturer, 
                        upon first engaging in the operations described 
                        in subsection (b)(1), shall immediately 
                        register with the Secretary and provide the 
                        information described under clause (i). The 
                        Secretary shall establish a timeline for 
                        registration for the first year following the 
                        effective date of the Pharmaceutical 
                        Compounding Quality and Accountability Act. In 
                        no case may registration be required until at 
                        least 60 days following publication of the 
                        timeline in the Federal Register.</DELETED>
                        <DELETED>    ``(iii) Additional facilities.--
                        Each compounding manufacturer duly registered 
                        in accordance with clauses (i) and (ii) shall 
                        immediately identify to the Secretary any 
                        additional facility that engages in the 
                        activities described in subsection (b)(1) and 
                        that is owned or operated in any State by the 
                        person that owns or operates the compounding 
                        manufacturer.</DELETED>
                        <DELETED>    ``(iv) Availability of 
                        registration for inspection.--The Secretary 
                        shall make available for inspection, to any 
                        person so requesting, any registration filed 
                        pursuant to this subparagraph, except that any 
                        drug reporting information submitted pursuant 
                        to this subparagraph and the information 
                        accompanying such reporting shall be exempt 
                        from such inspection, unless the Secretary 
                        finds that such an exemption would be 
                        inconsistent with the protection of the public 
                        health.</DELETED>
                <DELETED>    ``(B) Drug reporting by compounding 
                manufacturers.--</DELETED>
                        <DELETED>    ``(i) In general.--Each 
                        compounding manufacturer who registers with the 
                        Secretary under subparagraph (A) shall submit 
                        to the Secretary, once during the month of June 
                        of each year and once during the month of 
                        December of each year, a report--</DELETED>
                                <DELETED>    ``(I) identifying the 
                                drugs compounded by such compounding 
                                manufacturer during the previous 6-
                                month period; and</DELETED>
                                <DELETED>    ``(II) with respect to 
                                each drug identified under subclause 
                                (I), providing the active ingredient, 
                                the source of such active ingredient, 
                                the National Drug Code number of the 
                                source drug or bulk active ingredient, 
                                the strength of the active ingredient 
                                per unit, the dosage form and route of 
                                administration, the package 
                                description, the number of individual 
                                units produced, the National Drug Code 
                                number of the final product, and which 
                                conforms to other applicable 
                                requirements identified by the 
                                Secretary in accordance with clause 
                                (ii).</DELETED>
                        <DELETED>    ``(ii) Form.--Each report under 
                        clause (i) shall be prepared in such form and 
                        manner as the Secretary may prescribe by 
                        regulation or guidance.</DELETED>
                <DELETED>    ``(C) Electronic registration and 
                reporting.--Registrations and drug reporting under this 
                paragraph (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.</DELETED>
                <DELETED>    ``(D) Risk-based inspection frequency.--
                </DELETED>
                        <DELETED>    ``(i) In general.--Compounding 
                        manufacturers shall be subject to inspection 
                        pursuant to section 704.</DELETED>
                        <DELETED>    ``(ii) Risk-based schedule.--The 
                        Secretary, acting through one or more officers 
                        or employees duly designated by the Secretary, 
                        shall inspect compounding manufacturers 
                        described in clause (i) in accordance with a 
                        risk-based schedule established by the 
                        Secretary.</DELETED>
                        <DELETED>    ``(iii) Risk factors.--In 
                        establishing the risk-based schedule under 
                        clause (ii), the Secretary shall inspect 
                        compounding manufacturers according to the 
                        known safety risks of such compounding 
                        manufacturers, which shall be based on the 
                        following factors:</DELETED>
                                <DELETED>    ``(I) The compliance 
                                history of the compounding 
                                manufacturer.</DELETED>
                                <DELETED>    ``(II) The record, 
                                history, and nature of recalls linked 
                                to the compounding 
                                manufacturer.</DELETED>
                                <DELETED>    ``(III) The inherent risk 
                                of the drug compounded at the 
                                compounding manufacturer.</DELETED>
                                <DELETED>    ``(IV) The inspection 
                                frequency and history of the 
                                compounding manufacturer, including 
                                whether the compounding manufacturer 
                                has been inspected pursuant to section 
                                704 within the last 4 years.</DELETED>
                                <DELETED>    ``(V) Any other criteria 
                                deemed necessary and appropriate by the 
                                Secretary for purposes of allocating 
                                inspection resources.</DELETED>
        <DELETED>    ``(3) Adverse event reporting.--</DELETED>
                <DELETED>    ``(A) Definitions.--In this 
                paragraph:</DELETED>
                        <DELETED>    ``(i) Adverse event.--The term 
                        `adverse event' means any health-related event 
                        associated with the use of a compounded drug 
                        that is adverse, including--</DELETED>
                                <DELETED>    ``(I) an event occurring 
                                in the course of the use of the drug in 
                                professional practice;</DELETED>
                                <DELETED>    ``(II) an event occurring 
                                from an overdose of the drug, whether 
                                accidental or intentional;</DELETED>
                                <DELETED>    ``(III) an event occurring 
                                from abuse of the drug;</DELETED>
                                <DELETED>    ``(IV) an event occurring 
                                from withdrawal of the drug; 
                                and</DELETED>
                                <DELETED>    ``(V) any failure of 
                                expected pharmacological action of the 
                                drug.</DELETED>
                        <DELETED>    ``(ii) Serious adverse event.--The 
                        term `serious adverse event' means an adverse 
                        event that--</DELETED>
                                <DELETED>    ``(I) results in--
                                </DELETED>
                                        <DELETED>    ``(aa) 
                                        death;</DELETED>
                                        <DELETED>    ``(bb) an adverse 
                                        drug event that places the 
                                        patient at immediate risk of 
                                        death from the adverse drug 
                                        event as it occurred (not 
                                        including an adverse drug event 
                                        that might have caused death 
                                        had it occurred in a more 
                                        severe form);</DELETED>
                                        <DELETED>    ``(cc) inpatient 
                                        hospitalization or prolongation 
                                        of existing 
                                        hospitalization;</DELETED>
                                        <DELETED>    ``(dd) a 
                                        persistent or significant 
                                        incapacity or substantial 
                                        disruption of the ability to 
                                        conduct normal life functions; 
                                        or</DELETED>
                                        <DELETED>    ``(ee) a 
                                        congenital anomaly or birth 
                                        defect; or</DELETED>
                                <DELETED>    ``(II) based on 
                                appropriate medical judgment, may 
                                jeopardize the patient and may require 
                                a medical or surgical intervention to 
                                prevent an outcome described in 
                                subclause (I).</DELETED>
                <DELETED>    ``(B) Reports.--</DELETED>
                        <DELETED>    ``(i) Adverse event reporting 
                        requirement.--</DELETED>
                                <DELETED>    ``(I) 15-day report.--If a 
                                compounding manufacturer becomes aware 
                                of any serious adverse event, such 
                                manufacturer shall submit reports of 
                                each instance to the Secretary as soon 
                                as practicable, but in no case later 
                                than 15 calendar days after the initial 
                                receipt of the applicable information. 
                                Such manufacturer shall investigate and 
                                submit to the Secretary followup 
                                reports for each such instance not 
                                later than 15 calendar days after 
                                receipt of new information or as 
                                requested by the Secretary. Unless and 
                                until the Secretary establishes the 
                                content and format of adverse event 
                                reports by guidance or regulation, 
                                reports shall be submitted in 
                                accordance with the content and format 
                                requirements under section 310.305 of 
                                title 21, Code of Federal Regulations 
                                (or any successor regulations) (in the 
                                case of human drugs), section 600.80 of 
                                title 21, Code of Federal Regulations 
                                (or any successor regulations) (in the 
                                case of biological products), or 
                                section 514.80 of title 21, Code of 
                                Federal Regulations (or any successor 
                                regulations) (in the case of animal 
                                drugs).</DELETED>
                                <DELETED>    ``(II) Annual report.--
                                Compounding manufacturers that report 
                                serious adverse events shall submit in 
                                December of each year a narrative 
                                summary of any analysis of each report 
                                submitted under subclause (I), 
                                including a history of actions taken 
                                during the year because of each report, 
                                using the content, format, and manner 
                                established by the Secretary by 
                                guidance or regulation. Until such time 
                                as the Secretary publishes such 
                                guidance or regulation, each 
                                compounding manufacturer shall retain 
                                such summaries as part of the records 
                                to be maintained in accordance with 
                                subparagraph (C).</DELETED>
                        <DELETED>    ``(ii) Product quality reporting 
                        requirement.--Not later than 3 calendar days 
                        after the compounding manufacturer becomes 
                        aware of information pertaining to sterility, 
                        stability, or other product quality concerns 
                        that could result in serious adverse events, 
                        the compounding manufacturer shall submit to 
                        the Secretary a product quality report, in a 
                        form and manner established by the Secretary by 
                        guidance or regulation.</DELETED>
                <DELETED>    ``(C) Maintenance of records.--A 
                compounding manufacturer shall maintain for a period of 
                10 years records of all serious adverse drug events 
                known to the compound manufacturer in accordance with 
                section 314.80(i) of title 21, Code of Federal 
                Regulations (or any successor regulation), or as 
                otherwise directed by the Secretary in 
                regulations.</DELETED>
        <DELETED>    ``(4) Labeling of drugs.--</DELETED>
                <DELETED>    ``(A) Label.--The label of a drug 
                compounded by a compounding manufacturer shall 
                include--</DELETED>
                        <DELETED>    ``(i) the statement `This is a 
                        compounded drug.' or a reasonable comparable 
                        alternative statement (as specified by the 
                        Secretary) that identifies the drug as a 
                        compounded drug;</DELETED>
                        <DELETED>    ``(ii) the name, address, and 
                        phone number of the applicable compounding 
                        manufacturer; and</DELETED>
                        <DELETED>    ``(iii) with respect to the 
                        compounded drug--</DELETED>
                                <DELETED>    ``(I) the lot or batch 
                                number;</DELETED>
                                <DELETED>    ``(II) the established 
                                name of the medication;</DELETED>
                                <DELETED>    ``(III) the dosage form 
                                and strength;</DELETED>
                                <DELETED>    ``(IV) the statement of 
                                quantity or volume, as 
                                appropriate;</DELETED>
                                <DELETED>    ``(V) in the case of a 
                                drug intended for use in a food-
                                producing animal, the withdrawal period 
                                established pursuant to subsection 
                                (e)(5) to ensure that no residues from 
                                the compounded drug can be detected in 
                                edible tissues of the treated 
                                animal;</DELETED>
                                <DELETED>    ``(VI) the date that the 
                                drug was compounded;</DELETED>
                                <DELETED>    ``(VII) the expiration 
                                date;</DELETED>
                                <DELETED>    ``(VIII) storage and 
                                handling instructions;</DELETED>
                                <DELETED>    ``(IX) the National Drug 
                                Code number, if available;</DELETED>
                                <DELETED>    ``(X) the `not for resale' 
                                statement required as required by 
                                subsection (f)(1)(C); and</DELETED>
                                <DELETED>    ``(XI) subject to 
                                subparagraph (B)(i), a list of active 
                                and inactive ingredients, identified by 
                                established name and the quantity or 
                                proportion of each 
                                ingredient.</DELETED>
                <DELETED>    ``(B) Container.--The container from which 
                the individual units of a drug compounded by a 
                compounding manufacturer are removed for dispensing or 
                for administration (such as a plastic bag containing 
                individual product syringes) shall include--</DELETED>
                        <DELETED>    ``(i) the information described 
                        under subparagraph (A)(iii)(XI), if there is 
                        not space on the label for such 
                        information;</DELETED>
                        <DELETED>    ``(ii) the following information 
                        to facilitate adverse event reporting: 
                        www.fda.gov/medwatch and 1-800-FDA-1088; 
                        and</DELETED>
                        <DELETED>    ``(iii) the directions for use, 
                        including dosage and administration, as 
                        appropriate.</DELETED>
                <DELETED>    ``(C) Additional information.--The label 
                and labeling of a drug compounded by a compounding 
                manufacturer shall include any other information as 
                determined necessary and specified in regulations 
                promulgated by the Secretary.</DELETED>
<DELETED>    ``(h) Compounding Manufacturer Establishment and 
Reinspection Fees.--</DELETED>
        <DELETED>    ``(1) Definitions.--In this subsection--</DELETED>
                <DELETED>    ``(A) the term `affiliate' has the meaning 
                given such term in section 735(11);</DELETED>
                <DELETED>    ``(B) the term `gross annual sales' means 
                the total worldwide gross annual sales, in United 
                States dollars, for a compounding manufacturer, 
                including the sales of all the affiliates of the 
                compounding manufacturer; and</DELETED>
                <DELETED>    ``(C) the term `reinspection' means, with 
                respect to a compounding manufacturer, one 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.</DELETED>
        <DELETED>    ``(2) Establishment and reinspection fees.--For 
        fiscal year 2015 and each subsequent fiscal year, the Secretary 
        shall, in accordance with this subsection, assess and collect--
        </DELETED>
                <DELETED>    ``(A) an annual establishment fee from 
                each compounding manufacturer to cover inspection-
                related costs relating to inspections of drug 
                compounders for such year; and</DELETED>
                <DELETED>    ``(B) a reinspection fee from each 
                compounding manufacturer subject to a reinspection in 
                such fiscal year.</DELETED>
        <DELETED>    ``(3) Establishment and reinspection fee 
        setting.--The Secretary shall establish the establishment and 
        reinspection fee to be collected under this subsection for each 
        fiscal year, based on the methodology described in paragraph 
        (4) and shall publish such fee in a Federal Register notice not 
        later than 60 days before the start of each such 
        year.</DELETED>
        <DELETED>    ``(4) Amount of establishment and reinspection 
        fee.--</DELETED>
                <DELETED>    ``(A) In general.--Except as provided in 
                subparagraph (D), the amount of the annual 
                establishment fee and the reinspection fee (if 
                applicable) under paragraph (2) for each compounding 
                manufacturer in a fiscal year shall be equal to the sum 
                of--</DELETED>
                        <DELETED>    ``(i)(I) $15,000 per compounding 
                        manufacturer, multiplied by</DELETED>
                        <DELETED>    ``(II) the inflation adjustment 
                        factor described in subparagraph (B); 
                        plus</DELETED>
                        <DELETED>    ``(ii) the small business 
                        adjustment factor described in subparagraph 
                        (C).</DELETED>
                <DELETED>    ``(B) Inflation adjustment factor.--
                </DELETED>
                        <DELETED>    ``(i) In general.--For fiscal year 
                        2015 and subsequent fiscal years, the revenues 
                        established in subparagraph (A) 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--</DELETED>
                                <DELETED>    ``(I) one;</DELETED>
                                <DELETED>    ``(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, and</DELETED>
                                <DELETED>    ``(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.</DELETED>
                        <DELETED>    ``(ii) Compounded basis.--The 
                        adjustment made each fiscal year under clause 
                        (i) shall be added on a compounded basis to the 
                        sum of all adjustments made each fiscal year 
                        after fiscal year 2014 under clause 
                        (i).</DELETED>
                <DELETED>    ``(C) Small business adjustment factor.--
                The small business adjustment factor described in 
                subparagraph (A)(ii) shall be an amount established by 
                the Secretary for each fiscal year based on the 
                Secretary's estimate of--</DELETED>
                        <DELETED>    ``(i) the number of small 
                        businesses that will pay a reduced 
                        establishment fee for such fiscal year; 
                        and</DELETED>
                        <DELETED>    ``(ii) 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 subparagraph 
                        (D).</DELETED>
                <DELETED>    ``(D) Exception for small businesses.--
                </DELETED>
                        <DELETED>    ``(i) In general.--In the case of 
                        a compounding manufacturer with gross annual 
                        sales of $1,000,000 or less in the 12 months 
                        ending June 1 of the fiscal year immediately 
                        preceding the fiscal year in which the fees 
                        under this subsection are assessed, the amount 
                        of the establishment fee and reinspection fee 
                        under paragraph (2) for a fiscal year shall be 
                        equal to </DELETED>\<DELETED>1/3</DELETED>\ 
                        <DELETED>of the amount calculated under 
                        subparagraph (A)(i) in such fiscal 
                        year.</DELETED>
                        <DELETED>    ``(ii) Application.--The Secretary 
                        may require a small business to apply for the 
                        exception under this subparagraph by certifying 
                        its gross annual sales for the 12 months ending 
                        June 1 of the fiscal year immediately preceding 
                        the fiscal year in which fees under this 
                        subsection are assessed. Any such application 
                        must be submitted to the Secretary prior to 
                        August 1 for the following fiscal year. Any 
                        statement or representation made to the 
                        Secretary shall be subject to section 1001 of 
                        title 18, United States Code.</DELETED>
                <DELETED>    ``(E) Crediting of fees.--In establishing 
                the small business adjustment factor under subparagraph 
                (C) for a fiscal year, the Secretary shall 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 consider the need to account for any 
                adjustment of fees and such other factors as the 
                Secretary determines appropriate.</DELETED>
        <DELETED>    ``(5) Use of fees.--The Secretary shall make all 
        of the fees collected pursuant to subparagraph (A) and (B) of 
        paragraph (2) available solely to pay for the inspection-
        related costs (including re-inspection) for the oversight of 
        drug compounding.</DELETED>
        <DELETED>    ``(6) Supplement not supplant.--Funds received by 
        the Secretary pursuant to this subsection shall be used to 
        supplement and not supplant any other Federal funds available 
        to carry out the activities described in this 
        subsection.</DELETED>
        <DELETED>    ``(7) Crediting and availability of fees.--Fees 
        authorized under this subsection 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 inspection-related costs (including reinspection) 
        for the oversight of drug compounding.</DELETED>
        <DELETED>    ``(8) Collection of fees.--</DELETED>
                <DELETED>    ``(A) Establishment fee.--A compounding 
                manufacturer shall remit the establishment fee due 
                under this subsection in a fiscal year when submitting 
                a registration pursuant to subsection (g) for such 
                fiscal year.</DELETED>
                <DELETED>    ``(B) Reinspection fee.--The Secretary 
                shall specify in the Federal Register notice described 
                in paragraph (3) the manner in which reinspection fees 
                assessed under this subsection 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 compounding manufacturer 
                involved.</DELETED>
                <DELETED>    ``(C) Effect of failure to pay fees.--
                </DELETED>
                        <DELETED>    ``(i) Registration.--A compounding 
                        manufacturer shall not be considered registered 
                        under subsection (g) in a fiscal year until the 
                        date that the compounding manufacturer remits 
                        the establishment fee under this subsection for 
                        such fiscal year.</DELETED>
                        <DELETED>    ``(ii) Misbranding.--All drugs 
                        compounded by a compounding manufacturer for 
                        which any establishment fee or reinspection fee 
                        has not been paid as required by this 
                        subsection shall be deemed misbranded under 
                        section 502(cc) until the fees owed for such 
                        compounding manufacturer under this subsection 
                        have been paid.</DELETED>
                <DELETED>    ``(D) Collection of unpaid fees.--In any 
                case where the Secretary does not receive payment of a 
                fee assessed under this subsection within 30 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.</DELETED>
        <DELETED>    ``(9) Annual report to congress.--Not later than 
        120 days after each fiscal year in which fees are assessed and 
        collected under this subsection, 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 each year, a summary 
        description of entities paying the fees, and the number of 
        inspections and reinspections of such entities performed each 
        year.</DELETED>
        <DELETED>    ``(10) Authorization of appropriations.--For 
        fiscal year 2015 and each subsequent fiscal year, there is 
        authorized to be appropriated for fees under this subsection an 
        amount equivalent to the total amount of fees assessed for such 
        fiscal year under this subsection.</DELETED>
<DELETED>    ``(i) Action by Secretary Regarding Complaints From State 
Boards of Pharmacy.--</DELETED>
        <DELETED>    ``(1) Designation.--The Secretary shall designate 
        a point of contact and establish a format and procedure for a 
        State Board of Pharmacy to notify the Secretary if it appears 
        to a State Board of Pharmacy that an entity licensed by a State 
        as a pharmacy is required to be registered with the Secretary 
        as a compounding manufacturer.</DELETED>
        <DELETED>    ``(2) Determination.--If the Secretary determines 
        that such an entity described in paragraph (1) is required to 
        be registered with the Secretary as a compounding manufacturer, 
        the Secretary shall transmit such determination to the State 
        Board of Pharmacy in the State in which the entity is located, 
        and to the State Board of Pharmacy in the notifying State, if 
        different, within 15 days of such determination.</DELETED>
        <DELETED>    ``(3) Effect.--The Secretary shall encourage 
        direct communications between States regarding traditional 
        compounders. Nothing in this subsection shall expand the 
        Secretary's authority over or responsibility for traditional 
        compounding.</DELETED>
<DELETED>    ``(j) Prescription Order Reference.--For purposes of this 
section, reference to a prescription order for an identified individual 
patient includes, in the case of animal drugs, a prescription order for 
a specific herd or flock (or other identified group) of 
animals.''.</DELETED>
<DELETED>    (c) Prohibited Act.--Section 301 (21 U.S.C. 331) is 
amended--</DELETED>
        <DELETED>    (1) in subsection (e), by striking ``417, 416, 
        504'' and inserting ``417, 416, 503A(g), 504''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
<DELETED>    ``(ccc) The resale of a compounded drug that is labeled 
`not for resale' as required by section 503A.''.</DELETED>
<DELETED>    (d) Report by GAO.--Not later than November 1, 2016, the 
Comptroller General of the United States shall conduct study and submit 
to Congress a report regarding the impact of this Act (and the 
amendments made by this Act) on the safety of animal drug compounding 
and the availability of safe and effective drugs for animals.</DELETED>

<DELETED>SEC. 3. OTHER REQUIREMENTS RELATING TO COMPOUNDING 
              MANUFACTURERS.</DELETED>

<DELETED>    (a) Labeling.--Section 502 (21 U.S.C. 352) is amended by 
adding at the end the following:</DELETED>
<DELETED>    ``(bb) If it is a compounded drug and the labeling does 
not include the information as required by subsections (f)(1)(C) and 
(g)(4) of section 503A, as applicable.</DELETED>
<DELETED>    ``(cc) If it is a drug, and it was compounded by a 
compounding manufacturer for which fees have not been paid as required 
by section 503A(g).''.</DELETED>
<DELETED>    (b) Application of Inspection Requirements to Compounding 
Manufacturers.--Section 704(a)(2) (21 U.S.C. 374(a)(2)) is amended by 
adding at the end the following flush text:</DELETED>
<DELETED>``The exemption in subparagraph (A) does not apply with 
respect to compounding manufacturers (as such term is defined in 
section 503A).''.</DELETED>
<DELETED>    (c) Adulteration of Compounded Animal Drugs Containing 
Drug Residues.--Section 402(a)(2)(C) is amended by striking ``512;'' 
and inserting ``512; or (iii) any residue from a compounded animal 
drug;''.</DELETED>

<DELETED>SEC. 4. IMPLEMENTATION.</DELETED>

<DELETED>    In promulgating any regulations to implement this Act (and 
the amendments made by this Act), the Secretary of Health and Human 
Services shall--</DELETED>
        <DELETED>    (1) issue a notice of proposed rulemaking that 
        includes the proposed regulation;</DELETED>
        <DELETED>    (2) provide a period of not less than 60 days for 
        comments on the proposed regulation; and</DELETED>
        <DELETED>    (3) publish the final regulation not more than 18 
        months following publication of the proposed rule and not less 
        than 30 days before the effective date of such final 
        regulation.</DELETED>

<DELETED>SEC. 5. EFFECTIVE DATE.</DELETED>

<DELETED>    This Act (and the amendments made by this Act) shall take 
effect on the date that is 1 year after the date of enactment of this 
Act.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pharmaceutical Quality, Security, 
and Accountability 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--HUMAN DRUG COMPOUNDING

Sec. 101. Short title.
Sec. 102. Regulation of human drug compounding.
Sec. 103. Other requirements.
Sec. 104. Implementation.
Sec. 105. Effective date.

                  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 licensure standards for prescription drug wholesale 
                            distributors.
Sec. 205. National licensure standards for third-party logistics 
                            providers; uniform national policy.
Sec. 206. Penalties.
Sec. 207. Conforming amendment.
Sec. 208. Savings clause.

                    TITLE I--HUMAN DRUG COMPOUNDING

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Pharmaceutical Compounding Quality 
and Accountability Act''.

SEC. 102. REGULATION OF HUMAN DRUG COMPOUNDING.

    (a) Clarification of New Drug Status.--For purposes of the Federal 
Food, Drug and Cosmetic Act (21 U.S.C. 301 et seq.), the term ``new 
drug'' (as defined in section 201(p) of such Act) shall include a 
compounded human drug.
    (b) Regulation of Human Drug Compounding.--Section 503A (21 U.S.C. 
353a) is amended to read as follows:

``SEC. 503A. HUMAN DRUG COMPOUNDING.

    ``(a) Scope.--
            ``(1) Compounding.--In this section, the terms 
        `compounding' and `compound'--
                    ``(A) include--
                            ``(i) the combining, admixing, mixing, 
                        diluting, reconstituting, or otherwise altering 
                        of a marketed drug;
                            ``(ii) compounding a drug from a bulk drug 
                        substance; and
                            ``(iii) repackaging; and
                    ``(B) exclude mixing, reconstituting, or other such 
                acts with respect to a marketed drug that are limited 
                to and performed in accordance with specific directions 
                for such acts contained in approved labeling provided 
                by a drug's manufacturer, when performed based upon a 
                prescription order for an identified individual 
                patient.
            ``(2) Administration and dispensing not a sale.--In this 
        section, the terms `sell' or `resale' do not include--
                    ``(A) circumstances in which drug is administered 
                to a patient or provided to a patient who has been 
                instructed to self-administer the drug;
                    ``(B) the dispensing of a drug pursuant to a 
                prescription executed in accordance with section 
                503(b)(1); or
                    ``(C) any fee associated with such administration, 
                provision, or dispensing of the drug.
            ``(3) Inapplicability to certain drugs.--
                    ``(A) In general.--For purposes of this section, 
                the activities described in paragraph (1) shall not be 
                considered `compounding' if such activities are 
                conducted in whole or in part with respect to a drug 
                described in subparagraph (B).
                    ``(B) Excluded drugs.--The drugs described in this 
                subparagraph are the following:
                            ``(i) Blood and blood components for 
                        transfusion.
                            ``(ii) Medical gases, as defined in section 
                        575.
            ``(4) Animal drugs for human use.--Nothing in this section 
        shall be construed to permit the use of animal drugs in 
        compounding a drug for human use.
    ``(b) Definitions.--In this section:
            ``(1) Compounding manufacturer.--
                    ``(A) In general.--The term `compounding 
                manufacturer' means a facility at one geographic 
                location or address--
                            ``(i) that compounds any sterile drug 
                        without receiving a prescription order for an 
                        identified individual patient for such sterile 
                        drug prior to beginning compounding, and 
                        distributes or offers to sell such compounded 
                        sterile drug in interstate commerce; or
                            ``(ii) that repackages any preservative-
                        free sterile drug or engages in sterile 
                        pooling.
                    ``(B) Exclusions.--
                            ``(i) Excluded activities.--Notwithstanding 
                        subparagraph (A)(ii), a facility shall not be 
                        considered a compounding manufacturer if such 
                        facility--
                                    ``(I) repackages drugs in 
                                accordance with section 506F or the 
                                final guidance described in section 
                                506F(d) once the final guidance is 
                                published; and
                                    ``(II) does not otherwise meet the 
                                definition of compounding manufacturer 
                                under subparagraph (A).
                            ``(ii) Compounding nuclear pharmacy.--The 
                        term `compounding manufacturer' shall not 
                        include a compounding nuclear pharmacy.
            ``(2) Compounding nuclear pharmacy.--The term `compounding 
        nuclear pharmacy' means an entity that--
                    ``(A) is a State-licensed pharmacy or a Federal 
                facility;
                    ``(B) holds a license currently in effect from the 
                Nuclear Regulatory Commission or from a State pursuant 
                to an agreement with such commission under section 274 
                of the Atomic Energy Act of 1954; and
                    ``(C) does not compound non-radioactive drugs that 
                would cause the entity to be a compounding manufacturer 
                described in paragraph (1)(A).
            ``(3) Copy.--The term `copy' means an identical or nearly 
        identical version of a drug.
            ``(4) Practitioner.--The term `practitioner' includes a 
        physician or any other person that is authorized to prescribe 
        medication under State law.
            ``(5) Radioactive drug.--The term `radioactive drug'--
                    ``(A) means any substance defined as a drug in 
                section 201(g)(1) that exhibits spontaneous 
                disintegration of unstable nuclei with the emission of 
                nuclear particles or photons and includes any 
                nonradioactive reagent kit or nuclide regenerator which 
                is intended to be used in the preparation of any such 
                substance but does not include drugs such as carbon-
                containing compounds or potassium-containing salts 
                which contain trace quantities of naturally occurring 
                radionuclides; and
                    ``(B) includes a `radioactive biological product,' 
                which means a biological product which is labeled with 
                a radionuclide or intended solely to be labeled with a 
                radionuclide.
            ``(6) Repackage or repackaging.--The term `repackage' or 
        `repackaging'--
                    ``(A) means taking a drug approved under section 
                505 or licensed under section 351 of the Public Health 
                Service Act from the container in which it is 
                distributed by the original manufacturer and placing it 
                in a different container of the same or smaller size 
                without further manipulating the drug (such as by 
                diluting it or mixing it with another, different drug 
                or drugs); and
                    ``(B) does not include removing the drug from its 
                original container for immediate administration to an 
                identified individual patient, such as withdrawing a 
                drug into a syringe for immediate injection or filling 
                a cassette for immediate use within a drug delivery 
                device.
            ``(7) Sterile drug.--The term `sterile drug' means a drug 
        that is--
                    ``(A) intended for parenteral administration;
                    ``(B) an ophthalmic or oral inhalation drug in 
                aqueous format; or
                    ``(C) required to be sterile under Federal or State 
                law.
            ``(8) Sterile pooling.--The term `sterile pooling'--
                    ``(A) means taking a single sterile drug approved 
                under section 505 from the container in which it is 
                distributed by the original manufacturer and combining 
                it with the same sterile drug from one or more other 
                containers without or before further manipulating the 
                product (such as by diluting it or mixing it with 
                another, different drug or drugs);
                    ``(B) does not include combining the drug from two 
                or more separate containers of the same drug when a 
                single container of the drug is not sufficient to 
                prepare a single dose for administration to an 
                individual patient; and
                    ``(C) does not include combining a single drug from 
                two or more separate containers of component products 
                of a parenteral nutrition product, if such pooling, 
                labeling, and use of the finished parenteral nutrition 
                product, comply with State pharmacy law.
            ``(9) Traditional compounder.--
                    ``(A) In general.--The term `traditional 
                compounder' means a facility operating pursuant to 
                State law--
                            ``(i) wherein a drug is compounded by--
                                    ``(I) a licensed pharmacist in a 
                                State-licensed pharmacy or a licensed 
                                Federal facility; or
                                    ``(II) a licensed physician;
                            ``(ii) that--
                                    ``(I) compounds a drug upon receipt 
                                of a prescription order for an 
                                identified individual patient; or
                                    ``(II) compounds a drug in limited 
                                quantities before receipt of a 
                                prescription order for an identified 
                                individual patient, if such compounding 
                                is based on a history of the licensed 
                                pharmacist or licensed physician 
                                receiving prescription orders for the 
                                compounding of the drug, which orders 
                                have been generated solely within an 
                                established relationship between the 
                                licensed pharmacist or licensed 
                                physician and--
                                            ``(aa) such individual 
                                        patient for whom the 
                                        prescription order will be 
                                        provided; or
                                            ``(bb) the licensed 
                                        physician or other licensed 
                                        practitioner who will write 
                                        such prescription order; and
                            ``(iii) that does not meet the definition 
                        of a compounding manufacturer under paragraph 
                        (1).
                    ``(B) Exceptions.--
                            ``(i) Hospitals and health systems.--A 
                        pharmacy within a hospital or health system 
                        shall be considered a traditional compounder if 
                        such pharmacy otherwise meets the definition 
                        under subparagraph (A) and if, with respect to 
                        a drug compounded by such pharmacy, the only 
                        activity conducted by the pharmacy is to 
                        dispense or administer such drug (which may 
                        include interstate shipment) solely to a 
                        patient of such hospital or health system.
                            ``(ii) Health system defined.--The term 
                        `health system'--
                                    ``(I) means an entity that owns and 
                                operates--
                                            ``(aa) one hospital; or
                                            ``(bb) two or more 
                                        hospitals that have common 
                                        access to databases with drug 
                                        order information for patients; 
                                        and
                                    ``(II) includes only the inpatient, 
                                outpatient, and ambulatory facilities 
                                wholly owned and operated by such 
                                entity, and accredited by a national 
                                accreditation body recognized by the 
                                Secretary.
    ``(c) Exemptions From Certain Requirements.--
            ``(1) In general.--Except as otherwise provided in 
        paragraphs (2), (3), and (4), a compounded drug shall be 
        subject to all the requirements of this Act applicable to new 
        drugs.
            ``(2) Drugs compounded by traditional compounders.--
        Sections 501(a)(2)(B), 502(f)(1), and 505 of this Act and 
        section 351 of the Public Health Service Act shall not apply to 
        a compounded drug if such drug--
                    ``(A) is compounded by a traditional compounder 
                that is in compliance with this section; and
                    ``(B) meets the requirements of this section 
                applicable to drugs compounded by traditional 
                compounders.
            ``(3) Drugs compounded by compounding manufacturers.--
        Sections 502(f)(1) and 505 of this Act and section 351 of the 
        Public Health Service Act shall not apply to a compounded 
        prescription drug, if such prescription drug--
                    ``(A) is compounded by a compounding manufacturer--
                            ``(i) that is not licensed as a pharmacy in 
                        any State; and
                            ``(ii) that is in compliance with this 
                        section; and
                    ``(B) meets the requirements of this section 
                applicable to drugs compounded by compounding 
                manufacturers.
            ``(4) Drugs compounded by compounding nuclear pharmacies.--
        Sections 501(a)(2)(B), 502(f)(1), and 505 of this Act and 
        section 351 of the Public Health Service Act shall not apply to 
        a compounded radioactive drug if such drug is compounded--
                    ``(A) by a licensed pharmacist in a compounding 
                nuclear pharmacy;
                    ``(B) solely using a radioactive drug approved 
                under section 505 or licensed under section 351 of the 
                Public Health Service Act, and one or more ingredients 
                in compliance with subsection (e)(1)(B); and
                    ``(C) in compliance with the United States 
                Pharmacopoeia chapters on pharmacy compounding.
    ``(d) Drugs That May Not Be Compounded.--
            ``(1) In general.--The following drugs may not be 
        compounded:
                    ``(A) Drugs that are demonstrably difficult to 
                compound.--A drug or category of drugs that presents 
                demonstrable difficulties for compounding, which may 
                include a complex dosage form or biological product, as 
                designated by the Secretary pursuant to paragraph (2).
                    ``(B) Marketed drugs.--A drug (other than a 
                biological product) that is a copy of a marketed drug 
                approved under 505 or a variation of such drug 
                compounded from bulk drug substances, except as 
                provided in paragraph (3).
                    ``(C) Biological products.--A drug that is a 
                biological product, except as provided in paragraph 
                (4).
                    ``(D) Drugs subject to risk evaluation and 
                mitigation strategy.--A copy or variation of a drug 
                approved under section 505 or licensed under section 
                351 of the Public Health Service Act that is the 
                subject of a risk evaluation and mitigation strategy 
                approved with elements to assure safe use pursuant to 
                section 505-1, except provided in paragraph (5).
                    ``(E) Drugs removed for safety and efficacy.--A 
                drug that appears on a list published by the Secretary 
                in the Federal Register of drugs that have been 
                withdrawn or removed from the market because such drug 
                or components of such drug have been found to be unsafe 
                or not effective.
            ``(2) Drugs that are demonstrably difficult to compound.--
                    ``(A) In general.--The Secretary may promulgate a 
                regulation that designates drugs or categories of drugs 
                that are demonstrably difficult to compound that may 
                not be compounded, or that may be compounded only under 
                conditions specified by the Secretary. Such regulation 
                may include the designation of drugs or categories of 
                drugs that are complex dosage forms or biological 
                products, such as extended release products, metered 
                dose inhalers, transdermal patches, and sterile 
                liposomal products.
                    ``(B) Interim list.--
                            ``(i) In general.--Before the effective 
                        date of the regulation promulgated under 
                        subparagraph (A), the Secretary may designate 
                        drugs or categories of drugs that present 
                        demonstrable difficulties for compounding, 
                        which may include complex dosage forms or 
                        biological products that cannot be compounded, 
                        except under conditions specified by the 
                        Secretary, by--
                                    ``(I) publishing a notice of such 
                                drugs or categories of drugs 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 
                                or categories of drugs that cannot be 
                                compounded, including the rationale for 
                                such designation.
                            ``(ii) Sunset.--Any notice provided under 
                        clause (i) shall cease to have force or effect 
                        on the date that is 5 years after the date of 
                        enactment of the Pharmaceutical Compounding 
                        Quality and Accountability Act or on the 
                        effective date of the final regulation under 
                        subparagraph (A), whichever is earlier.
                    ``(C) Consultation with stakeholders.--Prior to 
                establishing the lists described in this paragraph, the 
                Secretary shall consult with relevant stakeholders 
                including pharmacists, professional associations, 
                patient and public health advocacy groups, 
                manufacturers and physicians about the need for the 
                compounded drugs to be included or excluded from the 
                lists.
                    ``(D) Updates to difficult to compound list.--Five 
                years after the effective date of the regulation 
                described in subparagraph (A), and every 5 years 
                thereafter, the Secretary shall publish a Federal 
                Register notice seeking public input about the need for 
                the compounded drugs to be included or excluded from 
                the list described in subparagraph (A). Nothing in the 
                previous sentence prohibits notifications or 
                submissions before or during any 5-year period 
                described under such sentence regarding the need for 
                the compounded drugs to be included or excluded from 
                the list.
            ``(3) Exceptions regarding marketed drugs.--
                    ``(A) In general.--A drug (other than a biological 
                product) that is a copy of a marketed drug approved 
                under 505, including variations of such drug compounded 
                from bulk drug substances, may be compounded only if--
                            ``(i) the compounded variation produces for 
                        the individually identified patient a clinical 
                        difference between the compounded drug and such 
                        marketed drug, as determined by the prescribing 
                        practitioner, and, prior to beginning 
                        compounding such variation, the traditional 
                        compounder compounding the variation receives a 
                        prescription order for an identified individual 
                        patient specifying that the variation may be 
                        compounded; or
                            ``(ii)(I) such marketed drug, at the time 
                        of compounding a copy of such drug and at the 
                        time of distribution of the compounded drug, is 
                        on the drug shortage list under section 506E, 
                        or has otherwise been identified by the 
                        Secretary, in the Secretary's sole discretion, 
                        as in shortage, such as in a specific region or 
                        on a drug shortage list maintained by a private 
                        party;
                            ``(II) the facility compounding the drug 
                        notifies the Secretary not later than 3 
                        calendar days after beginning the compounding; 
                        and
                            ``(III) in the case of a compounding 
                        manufacturer, the compounding manufacturer has 
                        registered under subsection (g)(2) as an entity 
                        that intends to compound pursuant to this 
                        paragraph and notifies the Secretary at least 
                        14 calendar days prior to beginning the 
                        compounding.
                    ``(B) Notice waiver.--The Secretary may waive a 
                notice required under subparagraph (A)(ii).
                    ``(C) Exclusion.--For purposes of this paragraph, 
                repackaging a marketed drug approved under section 505 
                does not make the repackaged drug a copy of such 
                marketed drug, unless the repackaged drug is also a 
                marketed drug approved under section 505.
            ``(4) Exceptions regarding biological products.--
                    ``(A) In general.--A drug that is a variation of a 
                licensed biological product may be compounded only if--
                            ``(i)(I) such compounded variation is 
                        compounded solely using a licensed biological 
                        product, or solely using a licensed biological 
                        product and one or more ingredients in 
                        compliance with subsection (e)(1)(B); or
                            ``(II) in the case of a licensed allergenic 
                        product, such variation is compounded solely 
                        using one or more licensed allergenic products, 
                        or solely using one or more licensed allergenic 
                        products and one or more ingredients in 
                        compliance with subsection (e)(1)(B);
                            ``(ii) such compounded variation produces 
                        for the patient a clinical difference between 
                        such compounded variation and the licensed 
                        biological product, as determined by--
                                    ``(I) the prescribing practitioner 
                                (in the case of a variation compounded 
                                by a traditional compounder); or
                                    ``(II) a licensed practitioner 
                                responsible for the patient's care in a 
                                health care entity that provides 
                                medical services through licensed 
                                practitioners directly to patients (in 
                                the case of a variation compounded by a 
                                compounding manufacturer);
                            ``(iii) prior to beginning compounding--
                                    ``(I) except as provided in 
                                subparagraph (B), the traditional 
                                compounder receives a prescription 
                                order for an identified individual 
                                patient specifying that the biological 
                                product may be compounded for an 
                                identified individual patient; or
                                    ``(II) the compounding manufacturer 
                                receives a duly authorized medical 
                                order from a health care entity that 
                                provides medical services through 
                                licensed practitioners directly to 
                                patients, specifying that the 
                                biological product may be compounded 
                                based on such order for an identified 
                                patient or patients; and
                            ``(iv) in the case of a radioactive 
                        biological product, the compounded variation is 
                        compounded by a compounding nuclear pharmacy in 
                        accordance with subsection (b)(2).
                    ``(B) Special rule for pediatric uses.--A 
                traditional compounder that is a hospital or health 
                system may begin compounding a drug that is a variation 
                of a licensed biological product prior to receiving a 
                prescription order as required under subparagraph 
                (A)(iii) if--
                            ``(i) such compounded variation is a 
                        diluted or repackaged variation of the licensed 
                        biological product for emergent use in 
                        pediatric patients; and
                            ``(ii) such compounded variation produces 
                        for the patient a clinical difference between 
                        such compounded variation and the licensed 
                        biological product, as determined by a licensed 
                        practitioner responsible for the patient's care 
                        in the hospital or health system.
                    ``(C) Inapplicability.--Clauses (ii) and (iii) of 
                subparagraph (A) shall not apply to a compounded 
                allergenic product.
                    ``(D) Pooling.--Notwithstanding any other provision 
                of this section, sterile pooling of a biological 
                product is not permitted.
            ``(5) Requirement for drugs that have risk evaluation and 
        mitigation strategies.--
                    ``(A) In general.--A copy or variation of a drug 
                approved under section 505 or biological product 
                licensed under section 351 of the Public Health Service 
                Act that is the subject of a risk evaluation and 
                mitigation strategy approved with elements to assure 
                safe use pursuant to section 505-1, may be compounded 
                only if--
                            ``(i) the entity compounding the copy or 
                        variation receives a prescription order for an 
                        identified individual patient specifying that 
                        the drug or biological product may be 
                        compounded; and
                            ``(ii) the entity compounding the copy or 
                        variation demonstrates to the Secretary, prior 
                        to beginning compounding, that the entity will 
                        utilize controls that are comparable to the 
                        controls applicable under the relevant risk 
                        evaluation and mitigation strategy for the 
                        approved drug or licensed biological product.
                    ``(B) Effect.--Nothing in this paragraph shall be 
                construed to permit compounding a copy or variation of 
                a drug other than as permitted in paragraphs (3) and 
                (4).
    ``(e) Quality of Drug Ingredients.--
            ``(1) Human drugs.--A traditional compounder or a 
        compounding manufacturer shall--
                    ``(A) if compounding a drug from bulk drug 
                substances (as defined in regulations of the Secretary 
                published at section 207.3(a)(4) of title 21, Code of 
                Federal Regulations (or any successor regulations)), 
                use only bulk substances--
                            ``(i) that--
                                    ``(I) comply with the standards of 
                                an applicable United States 
                                Pharmacopoeia or National Formulary 
                                monograph, if a monograph exists and 
                                has not been identified under paragraph 
                                (2);
                                    ``(II) if such a monograph does not 
                                exist, are drug substances that are 
                                components of drugs approved by the 
                                Secretary; or
                                    ``(III) if such a monograph does 
                                not exist and the drug substance is not 
                                a component of a drug approved by the 
                                Secretary, that appear on a list 
                                developed by the Secretary through 
                                regulations issued by the Secretary;
                            ``(ii) that are manufactured by an 
                        establishment that is registered under section 
                        510 (including a foreign establishment that is 
                        registered under section 510(i)); and
                            ``(iii) that are accompanied by valid 
                        certificates of analysis for each specific lot 
                        of bulk drug substance;
                    ``(B) use ingredients (other than bulk drug 
                substances) that comply with the standards of an 
                applicable United States Pharmacopoeia or National 
                Formulary monograph, if a monograph exists and has not 
                been identified under paragraph (2); and
                    ``(C) in the case of a traditional compounder, 
                comply with the standards of the United States 
                Pharmacopoeia chapters on pharmacy compounding.
            ``(2) Identification by secretary.--
                    ``(A) In general.--Notwithstanding the existence of 
                an applicable monograph under subparagraph (A)(i)(I) or 
                (B) of paragraph (1), the Secretary may identify bulk 
                substances that the Secretary determines, based on 
                public health concerns, may not be used in compounding 
                a drug.
                    ``(B) Procedure.--In identifying the bulk 
                substances that may not be used in compounding, the 
                Secretary shall--
                            ``(i) publish a notice of such bulk 
                        substances proposed for identification in the 
                        Federal Register, including the rationale for 
                        such proposal;
                            ``(ii) provide a period of not less than 60 
                        calendar days for comment on the notice; and
                            ``(iii) publish a notice in the Federal 
                        Register identifying the bulk substances that 
                        may not be used in compounding a drug.
    ``(f) Requirements Regarding Wholesaling and Labeling Applicable to 
Traditional Compounders and Compounding Manufacturers.--A compounded 
drug--
            ``(1) may not be sold by an entity other than the 
        compounding manufacturer or traditional compounder that 
        compounded the drug;
            ``(2) compounded by a compounding manufacturer may not be 
        sold or transferred to an entity other than a health care 
        entity that provides medical services through licensed 
        practitioners directly to patients, or a network of such 
        providers, except that a compounding manufacturer may transfer 
        without profit a compounded sterile drug to a licensed pharmacy 
        if--
                    ``(A) as of the date of enactment of the 
                Pharmaceutical Compounding Quality and Accountability 
                Act, and at the time of such transfer, the licensed 
                pharmacy falls under the same corporate ownership as 
                the compounding manufacturer;
                    ``(B) the transfer of such compounded sterile drug 
                is solely for the purpose of dispensing the compounded 
                sterile drug to the end user, who has been instructed 
                by the prescribing physician to self-administer such 
                compounded sterile drug;
                    ``(C) as of the date of enactment of the 
                Pharmaceutical Compounding Quality and Accountability 
                Act, and at the time of such transfer, the compounding 
                manufacturer is an entity wholly owned by an entity 
                that provides pharmacy benefits management services on 
                behalf of a health benefits plan;
                    ``(D) the compounding manufacturer identifies 
                itself to the Secretary upon registering under 
                subsection (g)(2) as an entity that qualifies for the 
                exception under this paragraph, and provides 
                documentation of the compounding of such drugs as of 
                the date of enactment of the Pharmaceutical Compounding 
                Quality and Accountability Act, in a manner described 
                by the Secretary; and
                    ``(E) the compounding manufacturer receives 
                confirmation from the Secretary that the compounding 
                manufacturer qualifies for the exception under this 
                paragraph and the sterile drug or drugs for which the 
                exemption applies; and
            ``(3) in the case of a compounded drug offered for sale, 
        shall be labeled `not for resale'.
    ``(g) Other Requirements Applicable to Compounding Manufacturers.--
            ``(1) Licensed pharmacist oversight.--A compounding 
        manufacturer shall ensure that a pharmacist licensed in the 
        State where the compounding manufacturer is located exercises 
        direct supervision over the operations of the compounding 
        manufacturer.
            ``(2) Registration of compounding manufacturers and 
        reporting of drugs.--
                    ``(A) Registration of compounding manufacturers.--
                            ``(i) Annual registration.--During the 
                        period beginning on October 1 and ending on 
                        December 31 each year, each compounding 
                        manufacturer 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 e-mail address, and shall indicate 
                        whether the compounding manufacturer intends to 
                        compound drug in shortage pursuant to 
                        subsection (d)(3)(A)(ii).
                            ``(ii) New compounding manufacturers.--Each 
                        compounding manufacturer, upon first engaging 
                        in the operations described in subsection 
                        (b)(1), shall immediately register with the 
                        Secretary and provide the information described 
                        under clause (i). The Secretary shall establish 
                        a timeline for registration for the first year 
                        following the effective date of the 
                        Pharmaceutical Compounding Quality and 
                        Accountability Act. In no case may registration 
                        be required until at least 60 calendar days 
                        following publication of the timeline in the 
                        Federal Register.
                            ``(iii) Availability of registration for 
                        inspection.--The Secretary shall make available 
                        for inspection, to any person so requesting, 
                        any registration filed pursuant to this 
                        subparagraph.
                    ``(B) Drug reporting by compounding 
                manufacturers.--
                            ``(i) In general.--Each compounding 
                        manufacturer who registers with the Secretary 
                        under subparagraph (A) shall submit to the 
                        Secretary, once during the month of June of 
                        each year and once during the month of December 
                        of each year, a report--
                                    ``(I) identifying the drugs 
                                compounded by such compounding 
                                manufacturer during the previous 6-
                                month period; and
                                    ``(II) with respect to each drug 
                                identified under subclause (I), 
                                providing the active ingredient, the 
                                source of such active ingredient, the 
                                National Drug Code number, if 
                                available, of the source drug or bulk 
                                active ingredient, the strength of the 
                                active ingredient per unit, the dosage 
                                form and route of administration, the 
                                package description, the number of 
                                individual units produced, the National 
                                Drug Code number of the final product, 
                                if assigned.
                            ``(ii) Form.--Each report under clause (i) 
                        shall be prepared in such form and manner as 
                        the Secretary may prescribe by regulation or 
                        guidance.
                            ``(iii) Confidentiality.--Reports submitted 
                        pursuant to this subparagraph shall be exempt 
                        from inspection under subparagraph (A)(iii), 
                        unless the Secretary finds that such an 
                        exemption would be inconsistent with the 
                        protection of the public health.
                    ``(C) Electronic registration and reporting.--
                Registrations and drug reporting under this paragraph 
                (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.
                    ``(D) Risk-based inspection frequency.--
                            ``(i) In general.--Compounding 
                        manufacturers shall be subject to inspection 
                        pursuant to section 704.
                            ``(ii) Risk-based schedule.--The Secretary, 
                        acting through one or more officers or 
                        employees duly designated by the Secretary, 
                        shall inspect compounding manufacturers 
                        described in clause (i) in accordance with a 
                        risk-based schedule established by the 
                        Secretary.
                            ``(iii) Risk factors.--In establishing the 
                        risk-based schedule under clause (ii), the 
                        Secretary shall inspect compounding 
                        manufacturers according to the known safety 
                        risks of such compounding manufacturers, which 
                        shall be based on the following factors:
                                    ``(I) The compliance history of the 
                                compounding manufacturer.
                                    ``(II) The record, history, and 
                                nature of recalls linked to the 
                                compounding manufacturer.
                                    ``(III) The inherent risk of the 
                                drug compounded at the compounding 
                                manufacturer.
                                    ``(IV) The inspection frequency and 
                                history of the compounding 
                                manufacturer, including whether the 
                                compounding manufacturer has been 
                                inspected pursuant to section 704 
                                within the last 4 years.
                                    ``(V) Whether the compounding 
                                manufacturer has registered under 
                                subsection (g)(2) as an entity that 
                                intends to compound pursuant to 
                                subsection (d)(3)(A)(ii).
                                    ``(VI) Any other criteria deemed 
                                necessary and appropriate by the 
                                Secretary for purposes of allocating 
                                inspection resources.
            ``(3) Adverse event reporting.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Adverse event.--The term `adverse 
                        event' means any health-related event 
                        associated with the use of a compounded drug 
                        that is adverse, including--
                                    ``(I) an event occurring in the 
                                course of the use of the drug in 
                                professional practice;
                                    ``(II) an event occurring from an 
                                overdose of the drug, whether 
                                accidental or intentional;
                                    ``(III) an event occurring from 
                                abuse of the drug;
                                    ``(IV) an event occurring from 
                                withdrawal of the drug; and
                                    ``(V) any failure of expected 
                                pharmacological action of the drug.
                            ``(ii) Serious adverse event.--The term 
                        `serious adverse event' means an adverse event 
                        that--
                                    ``(I) results in--
                                            ``(aa) death;
                                            ``(bb) an adverse drug 
                                        event that places the patient 
                                        at immediate risk of death from 
                                        the adverse drug event as it 
                                        occurred (not including an 
                                        adverse drug event that might 
                                        have caused death had it 
                                        occurred in a more severe 
                                        form);
                                            ``(cc) inpatient 
                                        hospitalization or prolongation 
                                        of existing hospitalization;
                                            ``(dd) a persistent or 
                                        significant incapacity or 
                                        substantial disruption of the 
                                        ability to conduct normal life 
                                        functions; or
                                            ``(ee) a congenital anomaly 
                                        or birth defect; or
                                    ``(II) based on appropriate medical 
                                judgment, may jeopardize the patient 
                                and may require a medical or surgical 
                                intervention to prevent an outcome 
                                described in subclause (I).
                    ``(B) Reports.--
                            ``(i) Adverse event reporting 
                        requirement.--
                                    ``(I) 15-day report.--If a 
                                compounding manufacturer becomes aware 
                                of any serious adverse event, such 
                                manufacturer shall submit reports of 
                                each instance to the Secretary as soon 
                                as practicable, but in no case later 
                                than 15 calendar days after the initial 
                                receipt of the applicable information. 
                                Such manufacturer shall investigate and 
                                submit to the Secretary followup 
                                reports for each such instance not 
                                later than 15 calendar days after 
                                receipt of new information or as 
                                requested by the Secretary. Unless and 
                                until the Secretary establishes the 
                                content and format of adverse event 
                                reports by guidance or regulation, 
                                reports shall be submitted in 
                                accordance with the content and format 
                                requirements under section 310.305 of 
                                title 21, Code of Federal Regulations 
                                (or any successor regulations) or 
                                section 600.80 of title 21, Code of 
                                Federal Regulations (or any successor 
                                regulations).
                                    ``(II) Annual report.--Compounding 
                                manufacturers that report serious 
                                adverse events shall submit in December 
                                of each year a narrative summary of any 
                                analysis of each report submitted under 
                                subclause (I), including a history of 
                                actions taken during the year because 
                                of each report, using the content, 
                                format, and manner established by the 
                                Secretary by guidance or regulation. 
                                Until such time as the Secretary 
                                publishes such guidance or regulation, 
                                each compounding manufacturer shall 
                                retain such summaries as part of the 
                                records to be maintained in accordance 
                                with subparagraph (C).
                            ``(ii) Product quality reporting 
                        requirement.--Not later than 3 calendar days 
                        after the compounding manufacturer becomes 
                        aware of information pertaining to sterility, 
                        stability, or other product quality concerns 
                        that could result in serious adverse events, 
                        the compounding manufacturer shall submit to 
                        the Secretary a product quality report, in a 
                        form and manner established by the Secretary by 
                        guidance or regulation.
                    ``(C) Maintenance of records.--A compounding 
                manufacturer shall maintain for a period of 10 years 
                records of all serious adverse drug events known to the 
                compound manufacturer in accordance with section 
                314.80(i) of title 21, Code of Federal Regulations (or 
                any successor regulation), or as otherwise directed by 
                the Secretary in regulations.
            ``(4) Labeling of drugs.--
                    ``(A) Label.--The label of a drug compounded by a 
                compounding manufacturer shall include--
                            ``(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 compounding manufacturer; and
                            ``(iii) with respect to the compounded 
                        drug--
                                    ``(I) the lot or batch number;
                                    ``(II) the established name of the 
                                medication;
                                    ``(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 `not for resale' 
                                statement as required by subsection 
                                (f)(3); 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 a drug compounded by a compounding 
                manufacturer 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; and
                            ``(iii) the directions for use, including, 
                        as appropriate, dosage and administration.
                    ``(C) Additional information.--The label and 
                labeling of a drug compounded by a compounding 
                manufacturer shall include any other information as 
                determined necessary and specified in regulations 
                promulgated by the Secretary.
    ``(h) Compounding Manufacturer Establishment and Reinspection 
Fees.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `affiliate' has the meaning given 
                such term in section 735(11);
                    ``(B) the term `gross annual sales' means the total 
                worldwide gross annual sales, in United States dollars, 
                for a compounding manufacturer, including the sales of 
                all the affiliates of the compounding manufacturer; and
                    ``(C) the term `reinspection' means, with respect 
                to a compounding manufacturer, 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.
            ``(2) Establishment and reinspection fees.--
                    ``(A) In general.--For fiscal year 2015 and each 
                subsequent fiscal year, the Secretary shall, in 
                accordance with this subsection, assess and collect--
                            ``(i) an annual establishment fee from each 
                        compounding manufacturer; and
                            ``(ii) a reinspection fee from each 
                        compounding manufacturer subject to a 
                        reinspection in such fiscal year.
                    ``(B) Multiple reinspections.--A compounding 
                manufacturer subject to multiple reinspections in a 
                fiscal year shall be subject to a reinspection fee for 
                each reinspection.
            ``(3) Establishment and reinspection fee setting.--The 
        Secretary shall establish the establishment and reinspection 
        fee to be collected under this subsection for each fiscal year, 
        based on the methodology described in paragraph (4) and shall 
        publish such fee in a Federal Register notice not later than 60 
        calendar days before the start of each such year.
            ``(4) Amount of establishment fee and reinspection fee.--
                    ``(A) In general.--For each compounding 
                manufacturer in a fiscal year--
                            ``(i) except as provided in subparagraph 
                        (D), the amount of the annual establishment fee 
                        under paragraph (2) shall be equal to the sum 
                        of--
                                    ``(I) $15,000, multiplied by the 
                                inflation adjustment factor described 
                                in subparagraph (B); plus
                                    ``(II) the small business 
                                adjustment factor described in 
                                subparagraph (C); and
                            ``(ii) the amount of any reinspection fee 
                        (if applicable) under paragraph (2) shall be 
                        equal to $15,000, multiplied by the inflation 
                        adjustment factor described in subparagraph 
                        (B).
                    ``(B) Inflation adjustment factor.--
                            ``(i) In general.--For fiscal year 2015 and 
                        subsequent fiscal years, the fee amounts 
                        established in subparagraph (A) 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) one;
                                    ``(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; and
                                    ``(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.
                            ``(ii) Compounded basis.--The adjustment 
                        made each fiscal year under clause (i) shall be 
                        added on a compounded basis to the sum of all 
                        adjustments made each fiscal year after fiscal 
                        year 2014 under clause (i).
                    ``(C) Small business adjustment factor.--The small 
                business adjustment factor referred to subparagraph 
                (A)(i)(II) shall be an amount established by the 
                Secretary for each fiscal year based on the Secretary's 
                estimate of--
                            ``(i) the number of small businesses that 
                        will pay a reduced establishment fee for such 
                        fiscal year; and
                            ``(ii) 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 subparagraph (D).
                    ``(D) Exception for small businesses.--
                            ``(i) In general.--In the case of a 
                        compounding manufacturer 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 subsection are assessed, the amount 
                        of the establishment fee under paragraph (2) 
                        for a fiscal year shall be equal to \1/3\ of 
                        the amount calculated under subparagraph 
                        (A)(i)(I) in such fiscal year.
                            ``(ii) Application.--To qualify for the 
                        exception under this subparagraph, 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 must be submitted to the 
                        Secretary not later than April 30 for the 
                        following fiscal year. Any statement or 
                        representation made to the Secretary shall be 
                        subject to section 1001 of title 18, United 
                        States Code.
                    ``(E) Crediting of fees.--In establishing the small 
                business adjustment factor under subparagraph (C) for a 
                fiscal year, the Secretary shall 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 consider the need to account for any 
                adjustment of fees and such other factors as the 
                Secretary determines appropriate.
            ``(5) Use of fees.--The Secretary shall make all of the 
        fees collected pursuant to clauses (i) and (ii) of paragraph 
        (2)(A) available solely to pay for the costs of oversight of 
        compounding manufacturers.
            ``(6) Supplement not supplant.--Funds received by the 
        Secretary pursuant to this subsection shall be used to 
        supplement and not supplant any other Federal funds available 
        to carry out the activities described in this section.
            ``(7) Crediting and availability of fees.--Fees authorized 
        under this subsection 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 compounding manufacturers.
            ``(8) Collection of fees.--
                    ``(A) Establishment fee.--A compounding 
                manufacturer shall remit the establishment fee due 
                under this subsection in a fiscal year when submitting 
                a registration pursuant to subsection (g) for such 
                fiscal year.
                    ``(B) Reinspection fee.--The Secretary shall 
                specify in the Federal Register notice described in 
                paragraph (3) the manner in which reinspection fees 
                assessed under this subsection 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 compounding manufacturer involved.
                    ``(C) Effect of failure to pay fees.--
                            ``(i) Registration.--A compounding 
                        manufacturer shall not be considered registered 
                        under subsection (g) in a fiscal year until the 
                        date that the compounding manufacturer remits 
                        the establishment fee under this subsection for 
                        such fiscal year.
                            ``(ii) Misbranding.--All drugs 
                        manufactured, prepared, propagated, compounded, 
                        or processed by a compounding manufacturer for 
                        which any establishment fee or reinspection fee 
                        has not been paid as required by this 
                        subsection shall be deemed misbranded under 
                        section 502(cc) until the fees owed for such 
                        compounding manufacturer under this subsection 
                        have been paid.
                    ``(D) Collection of unpaid fees.--In any case where 
                the Secretary does not receive payment of a fee 
                assessed under this subsection 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.
            ``(9) Annual report to congress.--Not later than 120 
        calendar days after each fiscal year in which fees are assessed 
        and collected under this subsection, 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 each year, a summary 
        description of entities paying the fees, and the number of 
        inspections and reinspections of such entities performed each 
        year.
            ``(10) Authorization of appropriations.--For fiscal year 
        2015 and each subsequent fiscal year, there is authorized to be 
        appropriated for fees under this subsection an amount 
        equivalent to the total amount of fees assessed for such fiscal 
        year under this subsection.
    ``(i) Action by Secretary Regarding Complaints From State Boards of 
Pharmacy.--
            ``(1) Identification of compounding manufacturers.--The 
        Secretary shall encourage States to identify to the Secretary 
        facilities that are licensed by a State as a pharmacy that 
        appear to be entities that are required to be registered with 
        the Secretary as a compounding manufacturer.
            ``(2) Designation.--The Secretary shall designate a point 
        of contact and establish a format and procedure for a State 
        Board of Pharmacy to notify the Secretary if it appears to a 
        State Board of Pharmacy that an entity licensed by a State as a 
        pharmacy is required to be registered with the Secretary as a 
        compounding manufacturer.
            ``(3) Determination.--If the Secretary determines that such 
        an entity described in paragraph (2) is required to be 
        registered with the Secretary as a compounding manufacturer, 
        the Secretary shall transmit such determination to the State 
        Board of Pharmacy in the State in which the entity is located, 
        and to the State Board of Pharmacy in the notifying State, if 
        different, within 15 calendar days of such determination and 
        shall make such determination publicly available on the 
        Internet Web site of the Food and Drug Administration.
            ``(4) Effect.--The Secretary shall encourage direct 
        communications between States regarding traditional 
        compounders. Nothing in this subsection shall expand the 
        Secretary's authority over or responsibility for traditional 
        compounders.''.
    (c) Prohibited Act.--Section 301 (21 U.S.C. 331) is amended--
            (1) in subsection (e), by striking ``417, 416, 504'' and 
        inserting ``417, 416, 503A(g), 504''; and
            (2) by adding at the end the following:
    ``(ccc)(1) The resale of a compounded drug that is labeled `not for 
resale' as required by section 503A.
    ``(2) The failure to register in accordance with subsection (g) of 
section 503A or the failure to submit a report as required by 
subsection (g)(2)(B) or (g)(3) of such section.''.
    (d) Report by GAO.--Not later than November 1, 2016, the 
Comptroller General of the United States shall conduct a study and 
submit to Congress a report on the safety of animal drug compounding 
and the availability of safe and effective drugs for animals.

SEC. 103. OTHER REQUIREMENTS.

    (a) Labeling.--Section 502 (21 U.S.C. 352) is amended by adding at 
the end the following:
    ``(bb) If it is a compounded drug and the labeling does not include 
the information as required by subsections (f)(3) and (g)(4) of section 
503A, as applicable.
    ``(cc) If the advertising or promotion of a compounded drug is 
false or misleading in any particular.
    ``(dd) If it is a drug, and it was manufactured, prepared, 
propagated, compounded, or processed by a compounding manufacturer for 
which fees have not been paid as required by section 503A(g).''.
    (b) Application of Inspection Requirements to Compounding 
Manufacturers.--Section 704(a)(2) (21 U.S.C. 374(a)(2)) is amended by 
adding at the end the following flush text:
``The exemption in subparagraph (A) does not apply with respect to 
compounding manufacturers (as such term is defined in section 503A).''.

SEC. 104. IMPLEMENTATION.

    (a) Consultation With Stakeholders.--In implementing this title 
(and the amendments made by this title), the Secretary of Health and 
Human Services shall consult with relevant stakeholders including 
pharmacists, professional associations, patient and public health 
advocacy groups, manufacturers and physicians.
    (b) 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. EFFECTIVE DATE.

    This title (and the amendments made by this title) shall take 
effect on the date that is 1 year after the date of enactment of this 
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) 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.
            ``(2) 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).
            ``(3) 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.
            ``(4) 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).
            ``(5) 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.
            ``(6) 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.
            ``(7) 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 could result in serious adverse health 
                consequence or death to humans.
            ``(8) 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.
            ``(9) Manufacturer.--
                    ``(A) In general.--The term `manufacturer' means, 
                with respect to a product--
                            ``(i) 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;
                            ``(ii) a co-licensed partner of the person 
                        described in clause (i) that obtains the 
                        product directly from a person described in 
                        this clause or clause (i) or (iii); or
                            ``(iii) an affiliate of a person described 
                        in clause (i) or (ii) that receives the product 
                        directly from a person described in this clause 
                        or clause (i) or (ii).
                    ``(B) Affiliate.--For purposes of this paragraph, 
                the term `affiliate' means a member of an affiliated 
                group, as that term is defined in section 1504(a) of 
                the Internal Revenue Code, or a member of a group of 
                corporations that would constitute an affiliated group, 
                as so defined, but for the fact that one or more 
                members of the group is a corporation described in 
                section 1504(b)(3) of the Internal Revenue Code.
            ``(10) 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.
            ``(11) Prescription drug.--The term `prescription drug' 
        means a drug for human use subject to section 503(b)(1).
            ``(12) 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), an 
        intravenous product described in clause xiv, xv, or xvi of 
        paragraph (23), any medical gas (as defined in section 575), or 
        a drug compounded in compliance with section 503A.
            ``(13) 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.
            ``(14) 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.
            ``(15) Repackager.--The term `repackager' means a person 
        who owns or operates an establishment that repacks and relabels 
        a product or package for further sale.
            ``(16) Return.--The term `return' means providing product 
        to the authorized immediate trading partner from which such 
        product was purchased, or to a returns processor or reverse 
        logistics provider for handling of such product.
            ``(17) 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.
            ``(18) 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.
            ``(19) 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.
            ``(20) 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.
            ``(21) 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.
            ``(22) 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.
            ``(23) 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 affiliated group 
                        (as defined in section 1504(a) of the Internal 
                        Revenue Code of 1986) 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 valid 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 1954 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(b);
                            ``(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--
                                    ``(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 which 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 or a collection of 
                        finished drug or biological products assembled 
                        in kit form strictly for the convenience of the 
                        purchaser or user (to be known 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 person who manufacturers 
                                a medical convenience kit purchased the 
                                product contained in the medical 
                                convenience kit directly from the 
                                pharmaceutical manufacturer or from a 
                                wholesale distributor that purchased 
                                the product directly from the 
                                pharmaceutical manufacturer;
                                    ``(III) the person who 
                                manufacturers a medical convenience kit 
                                does not alter the primary container or 
                                label of the product as purchased from 
                                the manufacturer or wholesale 
                                distributor;
                                    ``(IV) 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; and
                                    ``(V) the products contained in the 
                                medical convenience kit are--
                                            ``(aa) intravenous 
                                        solutions intended for the 
                                        replenishment of fluids and 
                                        electrolytes;
                                            ``(bb) products intended to 
                                        maintain the equilibrium of 
                                        water and minerals in the body;
                                            ``(cc) products intended 
                                        for irrigation or 
                                        reconstitution;
                                            ``(dd) anesthetics;
                                            ``(ee) anticoagulants;
                                            ``(ff) vasopressors; or
                                            ``(gg) sympathicomimetics;
                            ``(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 reconstitution, 
                        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).
            ``(24) 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.
            ``(25) 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 different from 
                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.
            ``(26) 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.
            ``(27) 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.
            ``(28) 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, third-party logistics provider, and 
        dispenser shall comply with the requirements set forth in this 
        section with respect to the role of such manufacturer, 
        repackager, wholesale distributor, third-party logistics 
        provider, 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, 
                third-party logistics providers, 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 subsections (a), (b), (c), (d), (e), 
                and (f). 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 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 the 
                date that is 1 year after the date of enactment of the 
                Drug Supply Chain Security Act--
                            ``(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(8)(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(8)(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 1 year 
                after the date of enactment of the Drug Supply Chain 
                Security Act, a manufacturer shall--
                            ``(i) prior to, or at the time of, each 
                        transaction in which such manufacturer 
                        transfers--
                                    ``(I) ownership of a product, 
                                provide the subsequent recipient with 
                                transaction history, transaction 
                                information, and a transaction 
                                statement, in a single document in an 
                                electronic or paper format; or
                                    ``(II) possession of a product to a 
                                third-party logistics provider for the 
                                purpose of transferring ownership as 
                                part of a transaction to a subsequent 
                                recipient, provide to the third-party 
                                logistics provider the transaction 
                                history, transaction information, and a 
                                transaction statement for such 
                                transaction to a subsequent recipient; 
                                and
                            ``(ii) maintain the transaction 
                        information, transaction history, and 
                        transaction statement for each transaction 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 24 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.
            ``(2) Product identifier.--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.
            ``(3) Authorized trading partners.--Beginning not later 
        than 1 year after the date of enactment of the Drug Supply 
        Chain Security Act, the trading partners of a manufacturer may 
        be only authorized trading partners.
            ``(4) Verification.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, 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 (i).
                            ``(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 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 manufacturer. If a manufacturer 
                responding to a verification request 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 verification request.
                    ``(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 
                verification request 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 1 year 
                after the date of enactment of the Drug Supply Chain 
                Security Act, 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 
                                affiliated group of such wholesale 
                                distributor, purchased the product 
                                directly from the manufacturer, 
                                exclusive distributor of the 
                                manufacturer, or repackager that 
                                purchased 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 an electronic or paper 
                                        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(25)).
                            ``(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 
                        maintain the transaction information, 
                        transaction history, and transaction statement 
                        for each transaction described in clauses (i), 
                        (ii), and (iii) for not less than 6 years after 
                        the date of the transaction.
                    ``(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 
                                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 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 
                        prescription drug to the manufacturer or 
                        repackager, to the wholesale distributor from 
                        whom such prescription drug was purchased, or 
                        to a person acting on behalf of such a person, 
                        including a returns processor, without 
                        providing the information required under 
                        subparagraph (A)(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 
                24 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.
            ``(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 1 year after the date of enactment of the Drug Supply 
        Chain Security Act, the trading partners of a wholesale 
        distributor may be only authorized trading partners.
            ``(4) Verification.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, 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 the 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 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 1 year after the date 
                of enactment of the Drug Supply Chain Security Act, 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 maintain transaction 
                        information, transaction history, and 
                        transaction statements, as necessary to 
                        investigate a suspect product, 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)(i).
                    ``(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.
            ``(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 1 year after the date of enactment of the Drug Supply 
        Chain Security Act, the trading partners of a dispenser may be 
        only authorized trading partners.
            ``(4) Verification.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, 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.
    ``(e) Repackager Requirements.--
            ``(1) Product tracing.--
                    ``(A) In general.--Beginning not later than 1 year 
                after the date of enactment of the Drug Supply Chain 
                Security Act, a repackager 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, or transfers possession 
                        of a product to a third-party logistics 
                        provider, provide the subsequent owner with 
                        transaction history, transaction information, 
                        and a transaction statement; and
                            ``(iii) maintain the transaction 
                        information, transaction history, and 
                        transaction statement for each transaction 
                        described in clauses (i) and (ii) for not less 
                        than 6 years after the transaction.
                    ``(B) Nonsaleable returns.--A repackager 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).
                    ``(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 shall, not later than 24 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.
            ``(2) Product identifier.--Beginning not later than 5 years 
        after the date of enactment of the Drug Supply Chain Security 
        Act, a repackager--
                    ``(A) shall affix or imprint a product identifier 
                to each package and homogenous case of product intended 
                to be introduced in a transaction in commerce;
                    ``(B) shall maintain the product identifier 
                information for such product for not less than 6 years 
                after the date of the transaction;
                    ``(C) 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
                    ``(D) 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.
            ``(3) Authorized trading partners.--Beginning 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, 
        the trading partners of a repackager may be only authorized 
        trading partners.
            ``(4) Verification.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, a 
        repackager 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 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 manufacturer 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) Third-party Logistics Provider Requirements.--
            ``(1) In general.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, a 
        third-party logistics provider shall--
                    ``(A) not accept possession of a product unless the 
                owner of the product provides the transaction history, 
                transaction information, and a transaction statement 
                for the product;
                    ``(B) maintain a copy of the information described 
                in subparagraph (A) for not less than 6 years after the 
                transfer of possession; and
                    ``(C) 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, not later than 24 
                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.
            ``(2) Product tracing.--Beginning not later than 6 years 
        after the date of enactment of the Drug Supply Chain Security 
        Act, a third-party logistics provider may accept possession of 
        product only if such product is encoded with a product 
        identifier (except as provided pursuant to subsection (a)(5)).
            ``(3) Authorized trading partners.--Beginning 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, 
        the trading partners of a third-party logistics provider may be 
        only authorized trading partners.
            ``(4) Verification.--Beginning not later than 1 year after 
        the date of enactment of the Drug Supply Chain Security Act, a 
        third-party logistics provider shall have systems in place to 
        enable the third-party logistics provider 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 third-party logistics provider 
                        is a suspect product, a third-party logistics 
                        provider shall--
                                    ``(I) quarantine such product 
                                within the possession or control of the 
                                third-party logistics provider from 
                                product intended for distribution until 
                                such product is cleared or transferred 
                                to the owner of such product for 
                                disposition of the product; and
                                    ``(II) promptly notify the owner of 
                                such product of the need to conduct an 
                                investigation to determine whether the 
                                product is an illegitimate product.
                            ``(ii) Cleared product.--If the owner of 
                        the product notifies the third-party logistics 
                        provider of the determination that a suspect 
                        product is not an illegitimate product, such 
                        product may be further distributed.
                            ``(iii) Records.--A third-party logistics 
                        provider shall keep records of the activities 
                        described in subclauses (I) and (II) of clause 
                        (i), as such subclauses relate to 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 
                        third-party logistics provider is an 
                        illegitimate product, the third-party logistics 
                        provider shall--
                                    ``(I) promptly notify the owner of 
                                such product of the need to disposition 
                                such product; and
                                    ``(II) promptly transfer possession 
                                of the product to the owner of such 
                                product to disposition the product.
                            ``(ii) Making a notification.--Upon 
                        determining that a product in the possession or 
                        control of the third-party logistics provider 
                        is an illegitimate product, the third-party 
                        logistics provider shall notify the Secretary 
                        not later than 24 hours after making such 
                        determination.
                            ``(iii) Responding to a notification.--Upon 
                        the receipt of a notification from the 
                        Secretary, a third-party logistics provider 
                        shall identify all illegitimate product subject 
                        to such notification that is in the possession 
                        or control of the third-party logistics 
                        provider, 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 and the owner of such product, 
                        that a notification is no longer necessary, a 
                        third-party logistics provider shall promptly 
                        terminate such notification.
                            ``(v) Records.--A third-party logistics 
                        provider shall keep records of the activities 
                        described in subclauses (I) and (II) of clause 
                        (i) as such subclauses relate to an 
                        illegitimate product for not less than 6 years 
                        after the conclusion of the disposition.
    ``(g) 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 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:
    ``(h) 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 (i), 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 (i), 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 (i), the Secretary shall 
                enter into 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. In no case may such 
                assessment commence later than 7\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 conducted 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 conducted 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 timelines--
                                    ``(I) 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) which shall include 
                                establishing 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;
                                    ``(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 the final regulation not less than 2 
                years prior to the effective date of the regulation.
    ``(i) 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 if the product is a 
                        suspect product as soon as practicable; and
                            ``(iii) set forth the process by which 
                        manufacturers, repackagers, wholesale 
                        distributors, dispensers, and third-party 
                        logistics providers shall terminate 
                        notifications in consultation with the 
                        Secretary regarding illegitimate product 
                        pursuant to subsections (b)(4)(B), (c)(4)(B), 
                        (d)(4)(B), (e)(4)(B), and (f)(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 (h). 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 (h), 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 Website 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.
    ``(j) Public Meetings.--
            ``(1) In general.--The Secretary shall hold not less than 3 
        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 (i); 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 (f) 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 (h), 
                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.
    ``(k) Pilot Projects.--
            ``(1) In general.--The Secretary shall establish 1 or more 
        pilot projects, in coordination with authorized manufacturers, 
        repackagers, wholesale distributors, third-party logistics 
        providers, and dispensers, to explore and evaluate methods to 
        enhance the safety and security of the pharmaceutical 
        distribution supply chain. 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, and inform the draft and final guidance under 
        paragraphs (3) and (4) of subsection (i).
            ``(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.
    ``(l) 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).
    ``(m) Rule of Construction.--The requirements set forth in 
subsections (h)(4), (j), and (k) shall not be construed as a condition, 
prohibition, or precedent for precluding or delaying the provisions 
becoming effective pursuant to subsection (h).''.

SEC. 204. NATIONAL LICENSURE STANDARDS FOR PRESCRIPTION DRUG WHOLESALE 
              DISTRIBUTORS.

    (a) Amendments.--
            (1) License requirement.--Section 503(e) (21 U.S.C. 353(e)) 
        is amended by striking paragraphs (1), (2), and (3) and 
        inserting the following:
            ``(1) License 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 
                        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) License 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) Licensure reporting and database.--
                    ``(A) Licensure reporting.--Beginning 1 year after 
                the date of enactment of the Drug Supply Chain Security 
                Act, any person who owns or operates an establishment 
                that engages in wholesale distribution shall 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.
                    ``(B) Database.--Not later than 1 year after the 
                date of enactment of the Drug Supply Chain Security 
                Act, the Secretary shall establish a database of 
                licensed wholesale distributors. Such database shall--
                            ``(i) identify each 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.
            ``(3) Costs.--
                    ``(A) Authorized licensure 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.
                    ``(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 affiliated group (as defined in section 
                1504(a) of the Internal Revenue Code of 1986) 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 valid 
                prescription executed in accordance with section 
                503(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 medical convenience kit 
                which is a collection of finished medical devices or a 
                collection of drug or biologic products assembled in 
                kit form strictly for the convenience of the purchaser 
                or user if--
                            ``(i) the medical convenience kit is 
                        assembled in an establishment that is 
                        registered with the Food and Drug 
                        Administration as a device manufacturer in 
                        accordance with section 510(b)(2);
                            ``(ii) the person who manufacturers the 
                        medical convenience kit purchased the finished 
                        drug or biologic product contained in the 
                        medical convenience kit directly from the 
                        pharmaceutical manufacturer or from a wholesale 
                        distributor that purchased the product directly 
                        from the pharmaceutical manufacturer;
                            ``(iii) the person who manufacturers a 
                        medical convenience kit does not alter the 
                        primary container or label of the product as 
                        purchased from the manufacturer or wholesale 
                        distributor;
                            ``(iv) 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 (21 
                        U.S.C. 801, et seq); and
                            ``(v) the products contained in the medical 
                        convenience kit are--
                                    ``(I) intravenous solutions 
                                intended for the replenishment of 
                                fluids and electrolytes;
                                    ``(II) drugs intended to maintain 
                                the equilibrium of water and minerals 
                                in the body;
                                    ``(III) drugs intended for 
                                irrigation or reconstitution;
                                    ``(IV) anesthetics;
                                    ``(V) anticoagulants;
                                    ``(VI) vasopressors; or
                                    ``(VII) sympathicomimetics;
                    ``(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 reconstitution, 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 to a repackager 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(21) 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) Licensure standards.--Subchapter H of chapter V, as 
        added by section 202, is amended by adding at the end the 
        following:

``SEC. 583. NATIONAL LICENSURE 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 minimum standards, terms, and conditions 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.--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 
prescribe minimum requirements for the following:
            ``(1) The storage and handling of such 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 the day that is 1 year after the date of enactment 
of this Act.

SEC. 205. NATIONAL LICENSURE 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 LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS 
              PROVIDERS.

    ``(a) License 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) Licensure 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 licensure 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.
            ``(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) License 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 minimum issuance and 
        eligibility requirements 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 minimum 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 minimum 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 re-packager 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; and
                    ``(G) require a third-party logistics provider to 
                provide the Secretary, upon a request by the Secretary, 
                a list of all product manufacturers, wholesale 
                distributors, and dispensers for whom the third-party 
                logistics provider provides services at such facility.
            ``(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) Renewal of Licenses.--The Secretary shall develop procedures 
for license renewal. Licenses issued under this section shall expire on 
the date that is 3 years after issuance of the license. Such an expired 
license may be renewed for additional 3-year periods according to 
procedures developed by the Secretary.

``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 
record-keeping 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) Distribution and Licensing 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 less stringent than 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 of 
        licenses.--Notwithstanding paragraph (1), a State--
                    ``(A) may take administrative action, including 
                fines, to enforce a licensure requirement promulgated 
                by the State in accordance with 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 subsection (a) or (b) 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), including any requirements 
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:
    ``(ee) 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 the day that is 1 year after the date of enactment of 
this Act.

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.).
            Amend the title so as to read: ``A bill to amend the 
        Federal Food, Drug, and Cosmetic Act with respect to 
        compounding drugs and the pharmaceutical distribution supply 
        chain.''.
                                                        Calendar No. 89

113th CONGRESS

  1st Session

                                 S. 959

_______________________________________________________________________

                                 A BILL

   To amend the Federal Food, Drug, and Cosmetic Act with respect to 
                           compounding drugs.

_______________________________________________________________________

                             June 19, 2013

        Reported with an amendment and an amendment to the title