[Congressional Record Volume 159, Number 76 (Monday, June 3, 2013)]
[House]
[Pages H2968-H2984]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SAFEGUARDING AMERICA'S PHARMACEUTICALS ACT OF 2013
Mr. LATTA. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1919) to amend the Federal Food,
[[Page H2969]]
Drug, and Cosmetic Act with respect to the pharmaceutical distribution
supply chain, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1919
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the
``Safeguarding America's Pharmaceuticals Act of 2013''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title.
Sec. 2. Pharmaceutical distribution supply chain.
Sec. 3. Enhanced drug distribution security.
Sec. 4. National standards for wholesale distributors.
Sec. 5. National licensure standards for third-party logistics
providers.
Sec. 6. Penalties.
Sec. 7. Uniform national policy.
Sec. 8 Electronic labeling.
SEC. 2. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN.
Chapter V of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 351 et seq.) is amended by adding at the end the
following:
``Subchapter H--Pharmaceutical Distribution Supply Chain
``SEC. 581. DEFINITIONS.
``In this subchapter:
``(1) Authorized.--The term `authorized' means--
``(A) in the case of a manufacturer or repackager, having a
valid registration in accordance with section 510; and
``(B) in the case of a wholesale distributor, third-party
logistics provider, or dispenser, licensed (as defined in
this section).
``(2) Dispenser.--The term `dispenser'--
``(A) subject to subparagraph (C), means a retail pharmacy,
hospital pharmacy, a group of chain pharmacies under common
ownership and control, or any other person authorized by law
to dispense or administer prescription drugs, to the extent
such pharmacy, group, or person does not act as a wholesale
distributor;
``(B) includes warehouses and distribution centers under
common ownership or control of entities described in
subparagraph (A) that are members of an affiliated group
pursuant to section 1504(a) of the Internal Revenue Code of
1986, to the extent such warehouses and distribution centers
do not act as a wholesale distributor; and
``(C) does not include a person who only dispenses
prescription drug product to be used in animals in accordance
with section 512(a)(5).
``(3) Disposition.--The term `disposition', with respect to
a prescription drug product within the possession and control
of an entity--
``(A) means the removal of such prescription drug product,
or taking measures to prevent the introduction of such
prescription drug product, from the pharmaceutical
distribution supply chain; and
``(B) may include disposal, return of the prescription drug
product for disposal, or other appropriate handling and other
actions such as retaining a sample of the prescription drug
product for additional physical examination or laboratory
analysis by a manufacturer or regulatory or law enforcement
agency.
``(4) Distribute or distribution.--The terms `distribute'
and `distribution' mean the sale, purchase, trade, delivery,
handling, or storage of a prescription drug product.
``(5) Illegitimate prescription drug product.--The term
`illegitimate prescription drug product' means a prescription
drug product which a manufacturer has confirmed--
``(A) is counterfeit, diverted, or stolen;
``(B) is intentionally adulterated such that the
prescription drug product would result in serious adverse
health consequences or death to humans; or
``(C) is otherwise unfit for distribution such that the
prescription drug product is reasonably likely to cause
serious adverse human health consequences or death.
``(6) Licensed.--The term `licensed' means--
``(A) in the case of a wholesale distributor, having a
valid license to make wholesale distributions consistent with
the standards under section 583;
``(B) in the case of a third-party logistics provider,
having a valid license to engage in the activities of a
third-party logistics provider in accordance with section
584; and
``(C) in the case of a dispenser, having a valid license to
dispense prescription drugs under State law.
``(7) Manufacturer.--The term `manufacturer' means, with
respect to a prescription drug product--
``(A) a person that holds an application approved under
section 505 or a license issued under section 351 of the
Public Health Service Act for such prescription drug product,
or if such prescription drug product is not the subject of an
approved application or license, the person who manufactured
the prescription drug product;
``(B) a co-licensed partner of the person described in
subparagraph (A) that obtains the prescription drug product
directly from the person described in such subparagraph; or
``(C) a person that--
``(i) is a member of an affiliated group (as defined in
section 1504(a) of the Internal Revenue Code of 1986) to
which a person described in subparagraph (A) or (B) is also a
member; and
``(ii) receives the prescription drug product directly from
a person described in subparagraph (A) or (B).
``(8) Package.--
``(A) In general.--The term `package' means the smallest
individual saleable unit of prescription drug product for
distribution in interstate commerce by a manufacturer or
repackager that is intended by the manufacturer for ultimate
sale to the dispenser of such prescription drug product.
``(B) Individual saleable unit.--The term `individual
saleable unit' means the smallest container of prescription
drug product introduced into interstate commerce by the
manufacturer or repackager that is intended by the
manufacturer for individual sale to a dispenser.
``(9) Prescription drug.--The term `prescription drug'
means a drug for human use subject to section 503(b)(1).
``(10) Prescription drug product.--The term `prescription
drug product' means a prescription drug in a finished dosage
form for administration to a patient without substantial
further manufacturing (such as capsules, tablets, and
lyophilized prescription drug products before
reconstitution).
``(11) Prescription drug product identifier.--The term
`prescription drug product identifier' means a standardized
graphic that--
``(A) includes the standardized numerical identifier, lot
number, and expiration date of a prescription drug product;
and
``(B) is in both human-readable form and on a machine-
readable data carrier that conforms to the standards
developed by a widely recognized international standards
development organization.
``(12) Quarantine.--The term `quarantine' means to store or
identify a product, for the purpose of preventing
distribution or transfer of the product, in a physically
separate area clearly identified for such use, or through use
of other procedures such as automated designation.
``(13) Repackager.--The term `repackager' means a person
who owns or operates an establishment that repacks and
relabels a prescription drug product or package for further
sale or distribution.
``(14) Return.--The term `return' means providing
prescription drug product to the authorized trading partner
or trading partners from which such prescription drug product
was purchased or received, or to a returns processor for
handling of such prescription drug product.
``(15) Returns processor.--The terms `returns processor'
mean a person who owns or operates an establishment that
provides for the disposition of or otherwise processes
saleable and nonsaleable prescription drug product received
from an authorized trading partner such that the prescription
drug product may be processed for credit to the purchaser,
manufacturer, seller, or disposed of for no further
distribution.
``(16) Specific patient need.--The term `specific patient
need'--
``(A) means with respect to the transfer of a prescription
drug product from one pharmacy to another, to fill a
prescription for an identified patient; and
``(B) does not include the transfer of a prescription drug
product from one pharmacy to another for the purpose of
increasing or replenishing stock in anticipation of a
potential need.
``(17) Standardized numerical identifier.--The term
`standardized numerical identifier' means a set of numbers or
characters that--
``(A) is used to uniquely identify each package or
homogenous case of the prescription drug product; and
``(B) is composed of the National Drug Code that
corresponds to the specific prescription drug product
(including the particular package configuration) combined
with a unique alphanumeric serial number of up to 20
characters.
``(18) Suspect prescription drug product.--The term
`suspect prescription drug product' means a prescription drug
product for which there is reason to believe that such
prescription drug product--
``(A) is potentially counterfeit, diverted, or stolen;
``(B) is potentially intentionally adulterated such that
the prescription drug product would result in serious adverse
health consequences or death to humans; or
``(C) appears otherwise unfit for distribution such that
the prescription drug product would result in serious adverse
health consequences or death to humans.
``(19) Third-party logistics provider.--The term `third-
party logistics provider' means an entity that provides or
coordinates warehousing, distribution, or other logistics
services of a prescription drug product in interstate
commerce on behalf of a manufacturer, wholesale distributor,
or dispenser of a prescription drug product, but does not
take ownership of the prescription drug product, nor have
responsibility to direct the sale or disposition of, the
prescription drug product.
``(20) Trading partner.--The term `trading partner' means--
``(A) a manufacturer, repackager, wholesale distributor, or
dispenser from whom a manufacturer, repackager, wholesale
distributor, or dispenser accepts ownership of a prescription
drug product or to whom a manufacturer, repackager, wholesale
distributor,
[[Page H2970]]
or dispenser transfers ownership of a prescription drug
product; or
``(B) a third-party logistics provider from whom a
manufacturer, repackager, wholesale distributor, or dispenser
accepts possession of a prescription drug product or to whom
a manufacturer, repackager, wholesale distributor, or
dispenser transfers possession of a prescription drug
product.
``(21) Transaction.--
``(A) In general.--The term `transaction' means the
transfer in interstate commerce of prescription drug product
between persons in which a change of ownership occurs.
``(B) Exemptions.--The term `transaction' does not
include--
``(i) intracompany distribution of any prescription drug
product, including between members of an affiliated group (as
defined in section 1504(a) of the Internal Revenue Code of
1986);
``(ii) the distribution of a prescription drug product
among hospitals or other health care entities that are under
common control;
``(iii) the distribution of a prescription drug product for
emergency medical reasons including a public health emergency
declaration pursuant to section 319 of the Public Health
Service Act, except that a drug shortage not caused by a
public health emergency shall not constitute an emergency
medical reason;
``(iv) the dispensing of a prescription drug product
pursuant to a valid prescription executed in accordance with
section 503(b)(1);
``(v) the distribution of prescription drug product samples
by a manufacturer or a licensed wholesale distributor in
accordance with section 503(d);
``(vi) the distribution of blood or blood components
intended for transfusion;
``(vii) the distribution of minimal quantities of
prescription drug product by a licensed retail pharmacy to a
licensed practitioner for office use;
``(viii) the distribution of a prescription drug product by
a charitable organization to a nonprofit affiliate of the
organization to the extent otherwise permitted by law;
``(ix) the distribution of a prescription drug product
pursuant to the sale or merger of a pharmacy or pharmacies or
a wholesale distributor or wholesale distributors, except
that any records required to be maintained for the
prescription drug product shall be transferred to the new
owner of the pharmacy or pharmacies or wholesale distributor
or wholesale distributors;
``(x) the dispensing of a prescription drug product
approved under section 512(b);
``(xi) the transfer of prescription drug products to or
from any facility that is licensed by the Nuclear Regulatory
Commission or by a State pursuant to an agreement with such
Commission under section 274 of the Atomic Energy Act of 1954
(42 U.S.C. 2021);
``(xii) the distribution of a combination product that
consists of--
``(I) a product comprised of two or more components that
are each a drug, biological product, or device and that are
physically, chemically, or otherwise combined or mixed and
produced as a single entity;
``(II) two or more separate products packaged together in a
single package or as a unit and comprised of a drug and
device or a device and biological product; or
``(III) two or more finished devices plus one or more drug
or biological products which are packaged together in a
medical convenience kit described in clause (xiii);
``(xiii) the distribution of a medical convenience kit
which is a collection of finished products (consisting of
devices or drugs) assembled in kit form strictly for the
convenience of the purchaser or user if--
``(I) the medical convenience kit is assembled in an
establishment that is registered with the Food and Drug
Administration as a medical device manufacturer;
``(II) the person who manufacturers the medical convenience
kit purchased the prescription drug product directly from the
manufacturer or from a wholesale distributor that purchased
the prescription drug product directly from the manufacturer;
``(III) the person who manufacturers the medical
convenience kit does not alter the primary container or label
of the prescription drug product as purchased from the
manufacturer or wholesale distributor;
``(IV) the medical convenience kit does not contain a
controlled substance (as defined in section 102 of the
Controlled Substances Act); and
``(V) the prescription drug products contained in the
medical convenience kit are--
``(aa) intravenous solutions intended for the replenishment
of fluids and electrolytes;
``(bb) drugs intended to maintain the equilibrium of water
and minerals in the body;
``(cc) drugs intended for irrigation or reconstitution;
``(dd) anesthetics;
``(ee) anticoagulants;
``(ff) vasopressors; or
``(gg) sympathicomimetics;
``(xiv) the distribution of an intravenous prescription
drug product that, by its formulation, is intended for the
replenishment of fluids and electrolytes (such as sodium,
chloride, and potassium) or calories (such as dextrose and
amino acids);
``(xv) the distribution of an intravenous prescription drug
product used to maintain the equilibrium of water and
minerals in the body, such as dialysis solutions;
``(xvi) the distribution of a prescription drug product
that is intended for irrigation or reconstitution, or sterile
water, whether intended for such purposes or for injection;
``(xvii) the distribution of compressed medical gas; or
``(xviii)(I) the distribution of a product by a dispenser,
or a wholesale distributor acting at the direction of the
dispenser, to a repackager registered under section 510 for
the purpose of repackaging the drug for use by that dispenser
or another health care entity that is under the dispenser's
ownership or control, so long as the dispenser retains
ownership of the prescription drug product; and
``(II) the saleable or nonsaleable return by such
repackager of such prescription drug product.
``(C) Compressed medical gas.--For purposes of subparagraph
(B)(xvii), the term `compressed medical gas' means any
substance in its gaseous or cryogenic liquid form that meets
medical purity standards and has application in a medical or
homecare environment, including oxygen and nitrous oxide.
``(22) Transaction history.--The term `transaction history'
means a statement that--
``(A) includes the transaction information for each
transaction conducted with respect to a prescription drug
product beginning with the manufacturer or initial purchase
distributor; and
``(B) is in paper or electronic form.
``(23) Transaction information.--The term `transaction
information' means--
``(A) the proprietary or established name or names of the
prescription drug product;
``(B) the strength and dosage form of the prescription drug
product;
``(C) the National Drug Code number of the prescription
drug product;
``(D) the container size;
``(E) the number of containers;
``(F) the lot number of the prescription drug product;
``(G) the date of the transaction;
``(H) the business name and address of the person from whom
ownership is being transferred; and
``(I) the business name and address of the person to whom
ownership is being transferred.
``(24) Transaction statement.--The `transaction statement'
is a statement, which states that the manufacturer,
repackager, wholesale distributor, third-party logistics
provider, or dispenser transferring ownership in a
transaction--
``(A) is authorized;
``(B) received transaction information and a transaction
statement as required under section 582 from the prior owner
of the prescription drug product;
``(C) did not knowingly and intentionally ship an
illegitimate prescription drug product;
``(D) did not knowingly and intentionally provide false
transaction information; and
``(E) did not knowingly and intentionally alter the
transaction history.
``(25) Verification and verify.--The terms `verification'
and `verify'--
``(A) mean determining whether the prescription drug
product identifier affixed to, or imprinted upon, a package
or homogeneous case of the prescription drug product
corresponds to the standardized numerical identifier or lot
number, and expiration date assigned to the prescription drug
product by the manufacturer or the repackager, as applicable;
and
``(B) include making the determination under subparagraph
(A) using human-readable or machine-readable methods.
``(26) Wholesale distributor.--The term `wholesale
distributor'--
``(A) means a person engaged in wholesale distribution (as
defined in section 583); and
``(B) excludes--
``(i) a manufacturer, a co-licensed partner of a
manufacturer, or a third-party logistics provider, or a
dispenser who does not engage in such wholesale distribution;
``(ii) a repackager engaged in such wholesale distribution;
or
``(iii) the distribution of prescription drug product or an
offer to distribute prescription drug product by an
authorized repackager that has taken ownership or possession
of the prescription drug product and repacked the
prescription drug product in accordance with the requirements
of section 582(e).
``SEC. 582. REQUIREMENTS.
``(a) In General.--
``(1) Compliance required.--An entity that is a
manufacturer, repackager, wholesale distributor, third-party
logistics provider, or dispenser shall comply with the
requirements of this section. If an entity meets the
definition of more than one of the entities referred to in
the preceding sentence, such entity shall comply with all
applicable requirements of this section, but shall not be
required to comply with duplicative requirements.
``(2) Standards.--The Secretary shall, in consultation with
other appropriate Federal officials, manufacturers,
repackagers, wholesale distributors, third-party logistics
providers, and dispensers, establish, by regulation,
standards for the exchange of transaction history and
transaction statement (in paper or electronic form) for
purposes of complying with this section. The standards
established under this paragraph shall be in accordance with
a form developed by a widely recognized international
standards development organization. In establishing such
standards, the Secretary shall consider the feasibility of
establishing standardized documentation to be used by all
members of the pharmaceutical distribution supply chain to
convey the transaction history and transaction statement to
the subsequent owner of
[[Page H2971]]
a prescription drug product. The Secretary shall publish such
standards not later than 180 days after the date of the
enactment of the Safeguarding America's Pharmaceuticals Act
of 2013.
``(3) Waivers, exceptions, and exemptions.--Not later than
one year after the date of the enactment of the Safeguarding
America's Pharmaceuticals Act of 2013, the Secretary shall
promulgate a regulation to--
``(A) establish a process by which the Secretary may grant,
at the request of an authorized manufacturer, repackager,
wholesale distributor, or dispenser, a waiver from any of the
requirements of this section--
``(i) if the Secretary determines that such requirements
would result in an undue economic hardship; or
``(ii) for emergency medical reasons, including a public
health emergency declaration pursuant to section 319 of the
Public Health Service Act;
``(B) establish a process, with respect to the prescription
drug product identifier requirement under paragraph (2) of
subsections (b), (c), (d), and (e) through which--
``(i) a manufacturer or repackager may request a waiver
with respect to prescription drug products that are packaged
in a container too small or otherwise unable to accommodate a
label with sufficient space to bear the information required
for compliance with such requirement; and
``(ii) the Secretary determines whether to waive such
requirement; and
``(C) establish a process by which the Secretary may add
the prescription drug products or transactions that are
exempt from the requirements of this section.
``(4) Grandfathered persons and prescription drug
products.--
``(A) In general.--Not later than one year after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, the Secretary shall specify, by
regulation, whether and under what circumstances the
prescription drug product identifier requirement under
paragraph (2) of subsections (b), (c), (d), and (e) shall
apply to a prescription drug product that is in the supply
chain or in a manufacturer's inventory on the date of the
enactment of the Safeguarding America's Pharmaceuticals Act
of 2013.
``(B) Third-party logistics provider licenses.--Until the
date that is 1 year after the effective date of the third-
party logistics provider licensing requirements under section
584, a third-party logistics provider shall be considered
`licensed' under section 581(6)(B) unless the Secretary has
made a finding that the third-party logistics provider does
not utilize good handling and distribution practices and
publishes notice thereof.
``(C) Label changes.--Changes made to package labels solely
to incorporate the prescription drug product identifier may
be submitted to the Secretary in the annual report of an
establishment, in accordance with section 314.70(d) of
chapter 21, Code of Federal Regulations (or any successor
regulation).
``(b) Manufacturer Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than January 1,
2015, a manufacturer shall--
``(i) prior to, or at the time of, each transaction in
which such manufacturer transfers ownership of a prescription
drug product--
``(I) until the date than is 5 years after the date of the
enactment of the Safeguarding America's Pharmaceuticals Act
of 2013, provide the subsequent owner with the transaction
history and a transaction statement in a single document in
paper or electronic form; and
``(II) on or after such date, provide the subsequent owner
with the transaction history and a transaction statement in
electronic form; and
``(ii) maintain the transaction information for each such
transaction for not less than 3 years after the date of the
transaction.
``(B) Requests for information.--Upon a request by the
Secretary or other appropriate Federal or State official, in
the event of a recall or for the purpose of investigating a
suspect prescription drug product or an illegitimate
prescription drug product, a manufacturer shall, not later
than 2 business days after receiving the request or in such
reasonable time as determined by the Secretary, provide to
the Secretary or other official, the applicable transaction
history and transaction statement for the prescription drug
product.
``(2) Prescription drug product identifier.--Beginning not
later than 5 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
manufacturer shall affix or imprint a prescription drug
product identifier on each package and homogenous case of a
prescription drug product intended to be introduced in a
transaction. Such manufacturer shall maintain the information
in the prescription drug product identifier for such
prescription drug product for not less than 3 years after the
date of the transaction.
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a manufacturer shall ensure that each
of its trading partners is authorized.
``(4) List of authorized distributors of record.--Beginning
not later than January 1, 2015, each manufacturer of a
prescription drug shall--
``(A) maintain a list of the authorized distributors of
record of such drug at the corporate offices of such
manufacturer;
``(B) make such list publicly available, including
placement on the Internet Website of such manufacturer; and
``(C) update such list not less than once per quarter.
``(5) Verification.--Beginning not later than January 1,
2015, a manufacturer shall implement systems and processes to
enable the manufacturer to comply with the following
requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a determination that a
prescription drug product in the possession or control of the
manufacturer is a suspect prescription drug product, or upon
receiving a request for verification from the Secretary that
a prescription drug product within the possession or control
of a manufacturer is a suspect prescription drug product, a
manufacturer shall promptly conduct an investigation in
coordination with trading partners, as applicable, to
determine whether the prescription drug product is an
illegitimate prescription drug product. Beginning not later
than 5 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, such
investigation shall include--
``(I) verifying the prescription drug product at the
package level;
``(II) validating any applicable transaction history in the
possession of the manufacturer; and
``(III) otherwise investigating to determine whether the
prescription drug product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If the
manufacturer determines that a suspect prescription drug
product is not an illegitimate prescription drug product, the
manufacturer shall promptly notify the Secretary of such
determination and such prescription drug product may be
further distributed.
``(iii) Records.--A manufacturer shall keep records of its
investigation of a suspect prescription drug product for not
less than 3 years after the conclusion of the investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon determining that a prescription
drug product in the possession or control of a manufacturer
is an illegitimate prescription drug product, the
manufacturer shall--
``(I) quarantine such prescription drug product from
prescription drug product intended for distribution; and
``(II) provide for the disposition of the illegitimate
prescription drug product.
``(ii) Trading partner.--Upon determining that a
prescription drug product in the possession or control of a
trading partner is an illegitimate prescription drug product,
the manufacturer shall take reasonable steps to assist a
trading partner to provide for the disposition of the
illegitimate prescription drug product.
``(iii) Making a notification.--Upon determining that a
prescription drug product in the possession or control of the
manufacturer is an illegitimate prescription drug product,
the manufacturer shall notify the Secretary of such
determination not later than 24 hours after making such
determination. The Secretary shall determine whether
additional trading partner notification is appropriate.
``(iv) Responding to a notification.--Upon the receipt of a
notification from the Secretary that a determination has been
made that a prescription drug product is an illegitimate
prescription drug product, a manufacturer shall--
``(I) identify all illegitimate prescription drug products
that are subject to such notification and in the possession
or control of the manufacturer, including any prescription
drug product that is subsequently received; and
``(II) perform the activities described in clause (i).
``(v) Records.--A manufacturer shall keep records of the
disposition of an illegitimate prescription drug product for
not less than 3 years after the conclusion of the
disposition.
``(C) Electronic database.--A manufacturer may satisfy the
requirements of this paragraph through the use of a secure
electronic database developed and operated by the
manufacturer or another entity. The owner of such database
shall establish the requirements and processes to respond to
requests and may provide for data access to other members of
the pharmaceutical distribution supply chain, as appropriate.
The development and operation of such a database shall not
relieve a manufacturer of the requirement under this
paragraph to respond to a verification request submitted by
means other than a secure electronic database.
``(D) Returned prescription drug product.--Beginning not
later than 5 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, upon
receipt of a returned prescription drug product that the
manufacturer intends to further distribute, before further
distributing such prescription drug product, the manufacturer
shall--
``(i) verify the prescription drug product identifier for
each sealed homogeneous case of such prescription drug
product; or
``(ii) if such prescription drug product is not in a sealed
homogeneous case, verify the prescription drug product
identifier on each package.
``(c) Wholesale Distributor Requirements.--
``(1) Prescription drug product tracing.--
[[Page H2972]]
``(A) In general.--Beginning not later than April 1, 2015,
a wholesale distributor shall--
``(i) not accept ownership of a prescription drug product
unless the previous owner prior to, or at the time of, the
transaction provides the applicable transaction history and a
transaction statement for the prescription drug product;
``(ii) subject to clause (iv), prior to, or at the time of,
each transaction in which the wholesale distributor transfers
ownership of a prescription drug product--
``(I) in the case that the wholesale distributor purchased
the prescription drug product directly from the manufacturer,
the exclusive distributor of the manufacturer, or a
repackager that purchased directly from the manufacturer,
provide the subsequent owner with transaction history and a
transaction statement for the prescription drug product--
``(aa) if the subsequent owner is a dispenser, on a single
document in paper or electronic form; or
``(bb) if the subsequent owner is a wholesale distributor,
through any combination of self-generated paper, electronic
data, or manufacturer-provided information on the product
package;
``(II) in the case that the wholesale distributor did not
purchase the prescription drug product as described in
subclause (I)--
``(aa) provide the subsequent owner with the transaction
history and a transaction statement beginning with the
wholesale distributor that did so purchase the prescription
drug product in paper or electronic form; or
``(bb) pursuant to a written agreement between the
wholesale distributor and a dispenser, maintain the
transaction history and transaction statement on behalf of
the dispenser and if requested by the dispenser, provide the
transaction history and transaction statement to the
dispenser in paper or electronic form in a timely manner so
as to permit the dispenser to comply with requests pursuant
to subsection (d)(1)(D);
``(iii) maintain the transaction information for each
transaction described in clauses (i) and (ii) for not less
than 3 years after the transaction; and
``(iv) on or after the date that is 5 years after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, provide the transaction history
and transaction statement in electronic form.
``(B) Inclusion of lot number in transaction history.--
Until the date that is 5 years after the date of the
enactment of the Safeguarding America's Pharmaceuticals Act
of 2013, the transaction history provided by a wholesale
distributer under this paragraph shall not be required to
include the lot number of the product or the initial date of
the transaction from the manufacturer (as such terms are used
in subparagraphs (F) and (G) of section 581(23)).
``(C) Returns exception.--
``(i) Saleable returns.--Notwithstanding subparagraph (A),
a wholesale distributor may--
``(I) accept returned prescription drug product without a
transaction history from a dispenser or repackager; and
``(II) distribute such returned prescription drug product
with a transaction history that begins with the wholesale
distributor that so accepted the returned product.
``(ii) Nonsaleable returns.--A wholesale distributor may
return a nonsaleable prescription drug to the manufacturer or
repackager, to the wholesale distributor from whom such
prescription drug was purchased, or to a person acting on
behalf of such a person, including a returns processor,
without providing the information required under subparagraph
(A).
``(D) Requests for information.--Upon a request by the
Secretary or other appropriate Federal or State official, in
the event of a recall or for the purpose of investigating a
suspect prescription drug product or an illegitimate
prescription drug product a wholesale distributor shall, not
later than 2 business days after receiving the request or in
such other reasonable time as determined by the Secretary,
provide the applicable transaction history and transaction
statements for the prescription drug product.
``(2) Prescription drug product identifier.--Beginning not
later than 7 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
wholesale distributor may engage in transactions involving a
prescription drug product only if such prescription drug
product is encoded with a prescription drug product
identifier, except as provided in subsection (a)(4).
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a wholesale distributor shall ensure
that each of its trading partners is authorized.
``(4) Verification.--Beginning not later than April 1,
2015, a wholesale distributor shall implement systems to
enable the wholesale distributor to comply with the following
requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a determination that a
prescription drug product in the possession or control of the
wholesale distributor is a suspect prescription drug product,
or upon receiving a request for verification from the
Secretary that a prescription drug product within the
possession or control of a wholesale distributor is a suspect
prescription drug product, a wholesale distributor shall
promptly conduct an investigation to determine whether the
prescription drug product is an illegitimate prescription
drug product. Beginning not later than 7 years after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, such investigation shall
include--
``(I) verifying a package of the prescription drug product;
``(II) validating any applicable transaction history in the
possession of the wholesale distributor; and
``(III) otherwise investigating to determine whether the
prescription drug product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If the wholesale
distributor determines that a suspect prescription drug
product is not an illegitimate prescription drug product, the
wholesale distributor shall promptly notify the Secretary of
such determination and such prescription drug product may be
further distributed.
``(iii) Records.--A wholesale distributor shall keep
records of its investigation of a suspect prescription drug
product for not less than 3 years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that a
manufacturer of a prescription drug product has determined
that a prescription drug product in the possession or control
of a wholesale distributor is an illegitimate prescription
drug product, the wholesale distributor shall--
``(I) quarantine such prescription drug product within the
possession or control of the wholesale distributor from
prescription drug product intended for distribution; and
``(II) provide for the disposition of the illegitimate
prescription drug product within the possession or control of
the wholesale distributor.
``(ii) Trading partner.--Upon determining that a
prescription drug product in the possession or control of a
trading partner is an illegitimate prescription drug product,
the wholesale distributor shall take reasonable steps to
assist a trading partner to provide for the disposition of
the illegitimate prescription drug product.
``(iii) Making a notification.--Upon determining that a
prescription drug product in the possession or control of the
wholesale distributor is an illegitimate prescription drug
product, the wholesale distributor shall notify the Secretary
of such determination not later than 24 hours after making
such determination. The Secretary shall determine whether
additional trading partner notification is appropriate.
``(iv) Responding to a notification.--Upon the receipt of a
notification from the Secretary that a determination has been
made that a prescription drug product is an illegitimate
prescription drug product, a wholesale distributor shall--
``(I) identify all illegitimate prescription drug products
subject to such notification that are in the possession or
control of the wholesale distributor, including any such
prescription drug product that is subsequently received; and
``(II) perform the activities described in clause (i).
``(v) Records.--A wholesale distributor shall keep records
of the disposition of an illegitimate prescription drug
product for not less than 3 years after the conclusion of the
disposition.
``(C) Electronic database.--A wholesale distributor may
satisfy the requirements of this paragraph through the use of
a secure electronic database developed and operated by the
manufacturer or another entity. The owner of such database
shall establish the requirements and processes to respond to
requests and may provide for data access to other members of
the pharmaceutical distribution supply chain, as appropriate.
The development and operation of such a database shall not
relieve a wholesale distributor of the requirement under this
paragraph to respond to a verification request submitted by
means other than a secure electronic database.
``(D) Returned prescription drug product.--Beginning not
later than 7 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, upon
receipt of a returned prescription drug product that the
wholesale distributor intends to further distribute, before
further distributing such prescription drug product, the
wholesale distributor shall--
``(i) verify the prescription drug product identifier for
each sealed homogeneous case of such prescription drug
product; or
``(ii) if such prescription drug product is not in a sealed
homogeneous case, verify the prescription drug product
identifier on each package.
``(d) Dispenser Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than July 1, 2015, a
dispenser--
``(i) shall not accept ownership of a prescription drug
product, unless the previous owner prior to, or at the time
of, the transaction, provides transaction history and a
transaction statement;
``(ii) prior to, or at the time of, each transaction in
which the dispenser transfers ownership of a prescription
drug product (but not including dispensing to a patient or
returns) shall provide the subsequent owner with transaction
history and a transaction statement for the prescription drug
product,
[[Page H2973]]
except that the requirements of this clause shall not apply
to sales by a dispenser to another dispenser to fulfill a
specific patient need; and
``(iii) shall maintain transaction information for a period
of not less than 3 years after the date of the transaction.
``(B) Agreements with third parties.--A dispenser may enter
into a written agreement with a third party, including an
authorized wholesale distributor, under which the third party
confidentially maintains the transaction information required
to be maintained under this subsection on behalf of the
dispenser. If a dispenser enters into such an agreement, the
dispenser shall maintain a copy of the written agreement.
``(C) Returns exception.--
``(i) Saleable returns.--Notwithstanding subparagraph
(A)(ii), a dispenser may return prescription drug product to
the trading partner from which the dispenser obtained the
prescription drug product without providing the information
required under such subparagraph.
``(ii) Nonsaleable returns.--Notwithstanding subparagraph
(A)(ii), a dispenser may return a nonsaleable prescription
drug to the manufacturer or repackager, to the wholesale
distributor from whom such prescription drug was purchased,
to a returns processor, or to a person acting on behalf of
such persons without providing the information required under
such subparagraph.
``(D) Requests for information.--Upon a request by the
Secretary or other appropriate Federal or State official, in
the event of a recall or for the purpose of investigating a
suspect prescription drug product or an illegitimate
prescription drug product--
``(i) a dispenser shall not later than 2 business days
after receiving the request or in another such reasonable
time as determined by the Secretary, provide the applicable
transaction history and transaction statement which the
dispenser received from the previous owner;
``(ii) the information provided by the dispenser under
clause (i) is not required to include the lot number of the
product, the initial date of the transaction, or the initial
date of the shipment from the manufacturer unless such
information was provided electronically by the previous
owner, manufacturer, or wholesale distributor to the
dispenser; and
``(iii) a dispenser may respond to the request by providing
the paper documentation received from the previous owner or
by providing electronic information.
``(2) Prescription drug product identifier.--Beginning not
later than 8 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
dispenser may engage in transactions involving a prescription
drug product only if such prescription drug product is
encoded with a prescription drug product identifier, except
as provided in subsection (a)(4).
``(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a dispenser shall ensure that each of
its trading partners is authorized.
``(4) Verification.--Beginning not later than January 1,
2015, a dispenser shall implement systems to enable the
dispenser to comply with the following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a determination that a
prescription drug product in the possession or control of the
dispenser is a suspect prescription drug product, or upon
receiving a request for verification from the Secretary that
a prescription drug product within the possession or control
of a dispenser is a suspect prescription drug product, a
dispenser shall promptly conduct an investigation to
determine whether the prescription drug product is an
illegitimate prescription drug product. Such investigation
shall include--
``(I) verifying whether the lot number of a suspect
prescription drug product corresponds with the lot number for
such prescription drug product;
``(II) beginning 8 years after the date of the enactment of
the Safeguarding America's Pharmaceuticals Act of 2013,
verifying that the product identifier of at least 3 packages
or 10 percent of such suspect prescription drug product,
whichever is greater, or all packages, if there are fewer
than 3, corresponds with the prescription drug product
identifier for such product;
``(III) validating any applicable transaction history in
the possession of the dispenser; and
``(IV) otherwise investigating to determine whether the
prescription drug product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If the dispenser
makes the determination that a suspect prescription drug
product is not an illegitimate prescription drug product, the
dispenser shall promptly notify the Secretary of such
determination and such prescription drug product may be
further dispensed.
``(iii) Records.--A dispenser shall keep records of its
investigation of a suspect prescription drug product for not
less than 3 years after the conclusion of the investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that a
manufacturer of a prescription drug product has determined
that a prescription drug product in the possession or control
of a dispenser is an illegitimate prescription drug product,
the dispenser shall--
``(I) quarantine such prescription drug product within the
possession or control of the dispenser from prescription drug
product intended for distribution; and
``(II) provide for the disposition of the illegitimate
prescription drug product within the possession or control of
the dispenser.
``(ii) Trading partners.--Upon determining that a
prescription drug product in the possession or control of a
trading partner is an illegitimate prescription drug product,
the dispenser shall take reasonable steps to assist a trading
partner to provide for the disposition of the illegitimate
prescription drug product.
``(iii) Making a notification.--Upon determining that a
prescription drug product in the possession or control of the
dispenser is an illegitimate prescription drug product, the
dispenser shall notify the Secretary of such determination
not later than 24 hours after making such determination. The
Secretary shall determine whether additional trading partner
notification is appropriate.
``(iv) Responding to a notification.--Upon the receipt of a
notification from the Secretary that a determination has been
made that a prescription drug product is an illegitimate
prescription drug product, a dispenser shall--
``(I) identify all illegitimate prescription drug products
that are subject to such notification and in the possession
or control of the dispenser, including any such prescription
drug product that is subsequently received; and
``(II) perform the activities described in clause (i).
``(v) Records.--A dispenser shall keep records of the
disposition of an illegitimate prescription drug product for
not less than 3 years after the conclusion of the
disposition.
``(C) Electronic database.--A dispenser may satisfy the
requirements of this paragraph through the use of a secure
electronic database developed and operated by the
manufacturer or another entity. The owner of such database
shall establish the requirements and processes to enable
responding to requests and may provide for data access to
other members of the pharmaceutical distribution supply
chain, as appropriate. The development and operation of such
a database shall not relieve a dispenser of the requirement
under this paragraph to respond to a verification request
submitted by means other than a secure electronic database.
``(e) Repackager Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than April 1, 2015,
with respect to a prescription drug product received by a
repackager from a wholesale distributor, and beginning not
later than January 1, 2015, with respect to any other
prescription drug product, a repackager shall--
``(i) not accept ownership of a prescription drug product
unless the previous owner, prior to, or at the time of, the
transaction, provides transaction history and a transaction
statement for the prescription drug product;
``(ii) prior to, or at the time of, each transaction in
which the repackager transfers ownership of a prescription
drug product, provide the subsequent owner with transaction
history and a transaction statement;
``(iii) maintain the transaction information for each
transaction described in clause (i) or (ii) for not less than
3 years after the transaction; and
``(iv) maintain records that allow the repackager to
associate the prescription drug product identifier the
repackager affixes or imprints with the prescription drug
product identifier assigned by the original manufacturer of
the prescription drug product.
``(B) Returns exception.--Notwithstanding subparagraph
(A)(ii), a repackager may return prescription drug product to
the trading partner from whom the repackager obtained the
prescription drug product without providing the information
required under such subparagraph.
``(C) Requests for information.--Upon a request by the
Secretary or other appropriate Federal or State official, in
the event of a recall or for the purpose of investigating a
suspect prescription drug product or an illegitimate
prescription drug product, a repackager shall, not later than
2 business days after receiving the request or in such other
reasonable time as determined by the Secretary, provide the
applicable transaction history and transaction statement for
the prescription drug product.
``(2) Prescription drug product identifier.--Beginning not
later than 6 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
repackager--
``(A) shall affix or imprint a prescription drug product
identifier to each package and homogenous case of
prescription drug product intended to be introduced in a
transaction;
``(B) shall maintain the prescription drug product
identifier for such prescription drug product for not less
than 3 years after the date of the transaction; and
``(C) may engage in transactions involving a prescription
drug product only if such prescription drug product is
encoded with a prescription drug product identifier except as
provided in subsection (a)(4).
``(3) Authorized trading partners.--Beginning on January 1,
2015, a repackager shall ensure that each of its trading
partners is authorized.
[[Page H2974]]
``(4) Verification.--Beginning not later than January 1,
2015, a repackager shall implement systems to enable the
repackager to comply with the following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a determination that a
prescription drug product in the possession or control of the
repackager is a suspect prescription drug product, or upon
receiving a request for verification from the Secretary that
a prescription drug product within the possession or control
of a repackager is a suspect prescription drug product, a
repackager shall promptly conduct an investigation to
determine whether the prescription drug product is an
illegitimate prescription drug product, including--
``(I) beginning not later than 6 years after the date of
the enactment of the Safeguarding America's Pharmaceuticals
Act of 2013, verifying the prescription drug product at the
package level;
``(II) validating any applicable transaction information in
the possession of the repackager; and
``(III) otherwise investigating to determine whether the
prescription drug product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If the
repackager determines that a suspect prescription drug
product is not an illegitimate prescription drug product, the
repackager shall promptly notify the Secretary of such
determination and such prescription drug product may be
further distributed.
``(iii) Records.--A repackager shall keep records of its
investigation of a suspect prescription drug product for not
less than 3 years after the conclusion of the investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that a
manufacturer of a prescription drug product has determined
that a prescription drug product in the possession or control
of a repackager is an illegitimate prescription drug product,
the repackager shall--
``(I) quarantine such prescription drug product within the
possession or control of the repackager from prescription
drug product intended for distribution; and
``(II) provide for the disposition of the illegitimate
prescription drug product within the possession or control of
the repackager.
``(ii) Trading partner.--Upon determining that a
prescription drug product in the possession or control of a
trading partner is an illegitimate prescription drug product,
the repackagers shall take reasonable steps to assist the
trading partner to provide for the disposition of the
illegitimate prescription drug product.
``(iii) Making a notification.--Upon determining that a
prescription drug product in the possession or control of the
repackager is an illegitimate prescription drug product, the
repackager shall notify the Secretary of such determination
not later than 24 hours after making such determination. The
Secretary shall determine whether additional trading partner
notification is appropriate.
``(iv) Responding to a notification.--Upon the receipt of a
notification from the Secretary that a determination has been
made that a prescription drug product is an illegitimate
prescription drug product, a repackager shall--
``(I) identify all illegitimate prescription drug products
that are subject to such notification and in the possession
or control of the repackager, including any such prescription
drug product that is subsequently received; and
``(II) perform the activities described in clause (i).
``(v) Records.--A repackager shall keep records of the
disposition of an illegitimate prescription drug product for
not less than 3 years after the conclusion of the
disposition.
``(C) Electronic database.--A repackager may satisfy the
requirements of this paragraph through the use of a secure
electronic database developed and operated by the
manufacturer or another entity. The owner of such database
shall establish the requirements and processes to respond to
requests and may provide for data access to other members of
the pharmaceutical distribution supply chain, as appropriate.
The development and operation of such a database shall not
relieve a repackager of the requirement under this paragraph
to respond to a verification request submitted by means other
than a secure electronic database.
``(D) Returned prescription drug product.--Beginning not
later than 6 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, upon
receipt of a returned prescription drug product that the
repackager intends to further distribute, before further
distributing such prescription drug product, the repackager
shall--
``(i) verify the prescription drug product identifier for
each sealed homogeneous case of such prescription drug
product; or
``(ii) if such prescription drug product is not in a sealed
homogeneous case, verify the prescription drug product
identifier on each package.
``(f) Third-Party Logistics Provider Requirements.--
``(1) Authorized trading partners.--Beginning on January 1,
2015, a third-party logistics provider shall ensure that each
of its trading partners is authorized.
``(2) Verification.--Beginning not later than January 1,
2015, a third-party logistics provider shall implement
systems to enable the third-party logistics provider to
comply with the following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a determination that a
prescription drug product in the possession or control of a
third-party logistics provider is a suspect prescription drug
product, a third-party logistics provider shall promptly
notify the owner of such prescription drug product of the
need to conduct an investigation to determine whether the
prescription drug product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If the owner of
the prescription drug product notifies the third-party
logistics provider of the determination that a suspect
prescription drug product is not an illegitimate prescription
drug product, such prescription drug product may be further
distributed.
``(iii) Records.--A third-party logistics provider shall
keep records of the activities described in clauses (i) and
(ii) with respect to a suspect prescription drug product for
not less than 3 years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that a
manufacturer of a prescription drug product has determined
that a prescription drug product in the possession or control
of a third-party logistics provider is an illegitimate
prescription drug product, the third-party logistics provider
shall--
``(I) quarantine such prescription drug product within the
possession or control of the third-party logistics provider
from prescription drug product intended for distribution;
``(II) promptly notify the owner of such prescription drug
product of the need to provide for the disposition of such
prescription drug product; and
``(III) promptly transfer possession of the prescription
drug product to the owner of such prescription drug product
to provide for the disposition of the prescription drug
product.
``(ii) Making a notification.--Upon determining that a
prescription drug product in the possession or control of the
third-party logistics provider is an illegitimate
prescription drug product, the third-party logistics provider
shall notify the Secretary not later than 24 hours after
making such determination. The Secretary shall determine
whether additional trading partner notification is
appropriate.
``(iii) Responding to a notification.--Upon the receipt of
a notification from the Secretary, a third-party logistics
provider shall--
``(I) identify all illegitimate prescription drug products
subject to such notification that are in the possession or
control of the third-party logistics provider, including any
such prescription drug product that is subsequently received;
and
``(II) perform the activities described in clause (i).
``(iv) Records.--A third-party logistics provider shall
keep records of the activities described in clauses (i) and
(ii) with respect to an illegitimate prescription drug
product for not less than 3 years after the conclusion of the
disposition.
``(g) Drop Shipments.--This section does not apply to any
entity, notwithstanding its status as a wholesale distributor
or repackager, or other status that is not involved in the
physical handling, distribution, or storage of a prescription
drug product. For purposes of this subsection, facilitating
the distribution of a prescription drug product by providing
various administrative services, including processing of
orders and payments, shall not, by itself, be construed as
being involved in the handling, distribution, or storage of a
prescription drug product.''.
SEC. 3. ENHANCED DRUG DISTRIBUTION SECURITY.
(a) Pilot Projects.--
(1) In general.--Not later than 2 years after the date of
the enactment of this Act, the Secretary shall establish one
or more pilot projects in coordination with manufacturers,
repackagers, wholesale distributors, third-party logistics
providers, and dispensers to explore and evaluate methods to
enhance the safety and security of the pharmaceutical
distribution supply chain.
(2) Content.--
(A) In general.--The Secretary shall ensure that the pilot
projects under paragraph (1) collectively--
(i) reflect the diversity of the pharmaceutical
distribution supply chain; and
(ii) include participants representative of every sector
within the pharmaceutical distribution supply chain,
including participants representative of small businesses.
(B) Project design.--The pilot projects shall be designed
to--
(i) utilize the prescription drug product identifier for
tracing of a prescription drug product, which utilization may
include--
(I) verification of the prescription drug product
identifier of a prescription drug product; and
(II) the use of aggregation and inference;
(ii) improve the technical capabilities of each sector
within the pharmaceutical supply chain to comply with systems
and processes needed to utilize the prescription drug product
identifiers to enhance tracing of a prescription drug
product; and
(iii) conduct such other activities as the Secretary
determines appropriate to explore and evaluate methods to
enhance the safety
[[Page H2975]]
and security of the pharmaceutical distribution supply chain.
(b) Public Meetings.--
(1) In general.--Not later than 6 months after the date of
the enactment of this Act, and at least every 6 months
thereafter until the submission of the report required by
subsection (e)(2), the Secretary shall hold a public meeting
to enhance the safety and security of the pharmaceutical
distribution supply chain. In conducting such meetings, the
Secretary shall take all measures reasonable and practicable
to ensure the protection of confidential commercial
information and trade secrets.
(2) Content.--In conducting meetings under this subsection,
the Secretary shall seek to address, in at least one such
meeting, each of the following topics:
(A) Best practices in each of the sectors within the
pharmaceutical distribution supply chain to implement the
requirements of section 582 of the Federal Food, Drug, and
Cosmetic Act, as added by section 2.
(B) The costs and benefits of implementation of such
section 582, including the impact on each pharmaceutical
distribution supply chain sector and on public health.
(C) Whether additional electronic traceability
requirements, including tracing of prescription drug product
at the package level, are feasible, cost effective, overly
burdensome on small businesses, and needed to protect public
health.
(D) The systems and processes needed to utilize the
prescription drug product identifiers to enhance tracing of
prescription drug product at the package level, including
allowing for verification, aggregation, and inference by each
sector within the pharmaceutical distribution supply chain
for cases, pallets, totes, and other containers of aggregated
prescription drug product as necessary.
(E) The technical capabilities and legal authorities, if
any, needed to establish an electronic system that provides
for enhanced tracing of prescription drug product at the
package level.
(F) The impact that the requirements, systems, processes,
capabilities, and legal authorities referred to in
subparagraphs (C), (D), and (E) would have on patient safety,
the drug supply, cost and regulatory burden, the timeliness
of patient access to prescription drugs, and small
businesses.
(c) Study of the Pharmaceutical Distribution Supply
Chain.--
(1) In general.--The Comptroller General of the United
States shall conduct a study to examine implementation of the
requirements established under subchapter H of chapter V of
the Federal Food, Drug, and Cosmetic Act, as added by section
2, in order to inform the regulations promulgated under this
section.
(2) Consideration.--In conducting the study under this
subsection, the Comptroller General shall provide for
stakeholder input and shall consider the following:
(A) The implementation of the requirements established
under such subchapter H with respect to--
(i) the ability of the health care system collectively to
maintain patient access to medicines;
(ii) the scalability of such requirements, including with
respect to prescription drug product lines; and
(iii) the capability of different sectors within the
pharmaceutical distribution supply chain, including small
businesses, to affix and utilize the prescription drug
product identifier.
(B) The need for additional legal authorities and
activities to address additional gaps in the pharmaceutical
distribution supply chain, if any, after the implementation
of the requirements established under such subchapter H with
respect to--
(i) the systems and processes needed to enhance tracing of
prescription drug product at the package level, including the
use and evaluation of verification, aggregation, and
inference by each sector within the pharmaceutical
distribution supply chain as necessary;
(ii) the impact, feasibility, and cost effectiveness that
additional requirements pursuant to this section would have
on each pharmaceutical distribution supply chain sector and
the public health; and
(iii) the systems and processes needed to enhance
interoperability among trading partners.
(C) Risks to the security and privacy of data collected,
maintained, or exchanged pursuant to the requirements
established under such subchapter H.
(d) Small Dispensers.--
(1) In general.--Not later than 10 years after the date of
the enactment of this Act, the Secretary shall enter into a
contract with a private, independent consulting firm with
relevant expertise to conduct a technology and software study
on the feasibility of dispensers that have 25 or fewer full-
time employees conducting interoperable, electronic tracing
of prescription drug products at the package level.
(2) Condition.--As a condition of the award of a contract
under paragraph (1), the private independent consulting firm
awarded such contract shall agree to consult with dispensers
that have 25 or fewer full-time employees when conducting the
study under such subparagraph.
(3) Study content.--The study conducted under paragraph (1)
shall assess whether, with respect to conducting
interoperable, electronic tracing of prescription drug
products at the package level, the necessary hardware and
software--
(A) is readily accessible to such dispensers;
(B) is not prohibitively expensive to obtain, install, and
maintain for such dispensers; and
(C) can be integrated into business practices, such as
interoperability with wholesale distributors, for such
dispensers.
(4) Publication.--The Secretary shall publish--
(A) the statement of work for the study conducted under
paragraph (1) for public comment not later than 30 days
before commencing the study; and
(B) the final version of such study for public comment not
later than 30 days after such study is completed.
(5) Report to congress.--Not later than 30 days after the
date on which the study conducted under paragraph (1) is
completed, the Secretary shall submit to the Committee on
Energy and Commerce of the House of Representatives and the
Committee on Health, Education, Labor, and Pensions of the
Senate, a report on the findings of the study and any
recommendations to improve the technology and software
available to small dispensers for purposes of conducting
electronic, interoperable tracing of prescription drug
products at the package level.
(6) Public meeting.--Not later than 180 days after the date
on which the study conducted under paragraph (1) is
completed, the Secretary shall hold a public meeting at which
members of the public, including stakeholders, may present
their views on the study.
(e) Reports.--
(1) GAO report.--Not later than 12 years after the date of
the enactment of this Act, the Comptroller General shall
submit to the Committee on Energy and Commerce of the House
of Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate a report on the results of
the study conducted under subsection (c).
(2) FDA report.--Not later than 12 years after the date of
the enactment of this Act, the Secretary shall submit to the
Committee on Energy and Commerce of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate a report on the results of
the pilot program conducted under subsection (a), taking into
consideration--
(A) the comments received during the public meetings
conducted under subsection (b); and
(B) the results of the study conducted, and the public
comments received during the public meeting held, under
subsection (d).
(f) Establishment of Additional Requirements.--
(1) In general.--Notwithstanding any other provision of
this Act, including the amendments made by this Act, not
earlier than January 1, 2027, and not later than March 1,
2027, the Secretary shall issue proposed regulations that
establish additional requirements to prevent a suspect
product, illegitimate product, or a product that is
counterfeit, stolen, diverted, or otherwise unfit for
distribution from entering into or being further distributed
in the supply chain, including--
(A) requirements related to the use of interoperable
electronic systems and technologies for enhanced tracing of
prescription drug product at the package level, which may
include verification of the prescription drug product
identifier of a package of prescription drug product and
enhanced verification of saleable returns;
(B) requirements related to the use of additional
prescription drug product identifiers or prescription drug
product identifier technology that meet the standards
developed under section 582(a)(2) of the Federal Food, Drug,
and Cosmetic Act, as added by section 2;
(C) requirements related to the use of aggregation,
inference, and other methods, which shall permit the use of
aggregation and inference for cases, pallets, totes, and
other containers of aggregated prescription drug products by
each sector of the pharmaceutical distribution supply chain,
if determined to be necessary components of the systems and
technologies referred to in subparagraph (A); and
(D) other data transmission and maintenance requirements
and interoperability standards.
(2) Flexibility.--The requirements described in paragraph
(1) shall provide for flexibility for a member of the
pharmaceutical supply chain, by--
(A) with respect to dispensers, allowing a dispenser to
enter into a written agreement with a third party, including
an authorized wholesale distributor, under which--
(i) the third party confidentially maintains any
information required to be maintained under such requirements
for the dispenser; and
(ii) the dispenser maintains a copy of the written
agreement and is not relieved of the other obligations of the
dispenser under such requirements;
(B) establishing a process by which an authorized
manufacturer, repackager, wholesale distributor, or dispenser
may request a waiver from any such requirements if the
Secretary determines that such requirements would result in
an undue economic hardship on the manufacturer, wholesale
distributor, or dispenser;
(C) not requiring the adoption of specific business systems
by a member of the pharmaceutical supply chain for the
maintenance and transmission of prescription drug product
tracing data; and
[[Page H2976]]
(D) prescribing alternative methods of compliance for small
businesses, as specified in paragraph (4).
(3) Considerations.--In issuing proposed regulations under
paragraph (1), the Secretary shall consider--
(A) the results of, and public comments resulting from, the
pilot project conducted under subsection (a);
(B) the public meetings held under subsection (b) and
public comments from such meetings;
(C) the studies conducted under subsections (c) and (d);
(D) the reports submitted under subsection (e);
(E) the public health benefits of such regulations compared
with the cost of compliance with the requirements contained
in such regulations, including with respect to entities of
varying sizes and capabilities; and
(F) the diversity of the pharmaceutical distribution supply
chain by providing appropriate flexibility for each sector in
the supply chain, including small businesses.
(4) Small business protection.--The Secretary, taking into
consideration the study conducted under paragraph (d), shall,
if the Secretary determines that the requirements established
pursuant to paragraph (1) would result in an undue economic
hardship on small businesses, provide for alternative methods
of compliance with any such requirement by small businesses,
including--
(A) establishing timelines for such compliance (including
compliance by dispensers with 25 or fewer full-time
employees) that do not impose undue economic hardship for
small businesses, including dispensers with respect to which
the study concluded has insufficient hardware and software to
conduct interoperable, electronic tracing of prescription
drug products at the package level; and
(B) establishing a process by which a dispenser may request
a waiver from any such requirement.
(5) Regulations.--In issuing regulations to carry out this
subsection, the Secretary shall--
(A) issue a notice of proposed rulemaking that includes a
copy of the proposed rule;
(B) provide for a period of not less than 60 days for
comments on the proposed rule; and
(C) provide for an effective date of the final rule that is
2 years after the date on which such final rule is published.
(6) Sunset.--The requirements regarding the provision and
receipt of transaction history and transaction statements
under section 582 of the Federal Food, Drug, and Cosmetic
Act, as added by section 2, shall cease to be effective on
the date on which the regulations issued under this section
are fully implemented.
(g) Definitions.--In this section:
(1) The terms defined in section 581 of the Federal Food,
Drug, and Cosmetic Act, as added by section 2, shall have the
same meanings in this section as such terms are given in such
section 581.
(2) The term ``Secretary'' means the Secretary of Health
and Human Services, acting through the Commissioner of Food
and Drugs.
SEC. 4. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.
(a) Standards.--Chapter V of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 351 et seq.) is amended--
(1) in section 503 (21 U.S.C. 353), by striking
``(e)(1)(A)'' and all that follows through ``(3) For the
purposes of this subsection and subsection (d)--'' and
inserting the following:
``(e) For purposes of subsection (d)--'';
(2) in section 503(e) (21 U.S.C. 353(e)), by redesignating
subparagraphs (A) and (B) as paragraphs (1) and (2),
respectively; and
(3) in subchapter H, as added by section 2, by adding at
the end the following:
``SEC. 583. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.
``(a) Standards.--
``(1) In general.--The Secretary shall establish, by
regulation, standards for the licensing of persons that make
wholesale distributions.
``(2) Requirements.--The standards under paragraph (1)
shall, with respect to wholesale distributions, include
requirements for--
``(A) the storage and handling of drugs subject to section
503(b)(1), including facility requirements;
``(B) the establishment and maintenance of records of the
distributions of such drugs;
``(C) the furnishing of a bond or other equivalent means of
security in accordance with paragraph (3);
``(D) mandatory background checks and fingerprinting of
facility managers or designated representatives;
``(E) the establishment and implementation of
qualifications for key personnel;
``(F) the mandatory physical inspection of any facility to
be used in wholesale distribution within a reasonable
timeframe from the initial application for licensure of the
wholesale distributor; and
``(G) in accordance with paragraph (5), the prohibition of
certain persons from engaging in wholesale distribution.
``(3) Bond or other security.--The requirements under
paragraph (2)(C) shall provide for the following:
``(A) An applicant that is not a government-owned-and-
operated wholesale distributor, for the issuance or renewal
of a wholesale distributor license, shall submit a surety
bond of $100,000 or other equivalent means of security
acceptable to the applicable licensing authority.
``(B) For purposes of subparagraph (A), the applicable
licensing authority may accept a surety bond of less than
$100,000 if the annual gross receipts of the previous tax
year for the wholesale distributor is $10,000,000 or less, in
which case the surety bond may not be less than $25,000.
``(C) If a wholesale distributor can provide evidence that
it possesses the required bond in a State, the requirement
for a bond in another State is waived.
``(4) Inspections.--To satisfy the inspection requirement
under paragraph (2)(F), the Secretary may conduct the
inspection, or may accept an inspection by--
``(A) the government of the State in which the facility is
located; or
``(B) a third-party accreditation or inspection service
approved by the Secretary.
``(5) Prohibited persons.--The requirements under paragraph
(2) shall include requirements to prohibit a person from
receiving or maintaining licensure for wholesale distribution
if the person--
``(A) has been convicted of--
``(i) any felony for conduct relating to wholesale
distribution;
``(ii) any felony violation of section 301(i) or 301(k); or
``(iii) any felony violation of section 1365 of title 18,
United States Code, relating to prescription drug product
tampering; or
``(B) has engaged in a pattern of violating the
requirements of this section that presents a threat of
serious adverse health consequences or death to humans.
``(b) Reporting by Licensed Wholesale Distributors.--
``(1) Annual report.--Beginning not later than 1 year after
the date of the enactment of this section, each person
engaged in wholesale distribution in interstate commerce
shall submit on an annual basis, and update as necessary, a
report to the Secretary including--
``(A) the wholesale distributor's name;
``(B) the wholesale distributor's address;
``(C) a listing of each State in which the wholesale
distributor is licensed for wholesale distribution; and
``(D) any disciplinary actions taken by a State, the
Federal Government, or a foreign government during the
reporting period against the wholesale distributor.
``(2) Posting on internet.--The Secretary shall post on the
public Internet Website of the Food and Drug Administration
the name of each wholesale distributor, and the State in
which each such distributor is licensed, based on reports
under paragraph (1).
``(c) Preservation of State Authority.--This subchapter
does not prohibit a State from--
``(1) licensing wholesale distributors for the conduct of
wholesale distribution activities in the State in accordance
with this subchapter; and
``(2) collecting fees from wholesale distributors in
connection with such licensing,
so long as the State does not require such licensure to the
extent to which an entity is engaged in third-party logistics
provider activities.
``(d) Definition.--In this section, the term `wholesale
distribution' means the distribution of a drug subject to
section 503(b)(1) to a person other than a consumer or
patient, but does not include--
``(1) intracompany distribution of any drug between members
of an affiliated group (as defined in section 1504(a) of the
Internal Revenue Code of 1986);
``(2) the distribution of a drug, or an offer to distribute
a drug among hospitals or other health care entities which
are under common control;
``(3) the distribution of a drug or an offer to distribute
a drug for emergency medical reasons, including a public
health emergency declaration pursuant to section 319 of the
Public Health Service Act, except that a drug shortage not
caused by a public health emergency shall not constitute such
an emergency medical reason;
``(4) dispensing of a drug pursuant to a valid prescription
executed in accordance with subsection 503(b)(1);
``(5) the distribution of minimal quantities of drug by a
licensed retail pharmacy to a licensed practitioner for
office use;
``(6) the distribution of a drug or an offer to distribute
a drug by a charitable organization to a nonprofit affiliate
of the organization to the extent otherwise permitted by law;
``(7) the purchase or other acquisition by a dispenser,
hospital, or other health care entity of a drug for use by
such dispenser, hospital, or other health care entity;
``(8) the distribution of a drug by the manufacturer of
such drug;
``(9) the receipt or transfer of a drug by an authorized
third-party logistics provider provided that such third-party
logistics provider does not take ownership of the drug;
``(10) the transport of a drug by a common carrier,
provided that the common carrier does not take ownership of
the drug;
``(11) the distribution of a drug, or an offer to
distribute a drug, by an authorized repackager that has taken
ownership of the drug and repacked it in accordance with
section 582(e);
``(12) saleable drug returns when conducted by a dispenser
in accordance with section 203.23 of title 21, Code of
Federal Regulations (or any successor regulation);
``(13) the distribution of a combination prescription drug
product described in section 581(20)(B)(xii);
``(14) the distribution of a medical convenience kit
described in section 581(21)(B)(xiii);
[[Page H2977]]
``(15) the distribution of an intravenous drug that, by its
formulation, is intended for the replenishment of fluids and
electrolytes (such as sodium, chloride, and potassium) or
calories (such as dextrose and amino acids);
``(16) the distribution of an intravenous drug used to
maintain the equilibrium of water and minerals in the body,
such as dialysis solutions;
``(17) the distribution of a drug that is intended for
irrigation or reconstitution, or sterile water, whether
intended for such purposes or for injection;
``(18) the distribution of compressed medical gas (as
defined in section 581(21)(C));
``(19) facilitating the distribution of a prescription drug
product by providing administrative services, such as
processing of orders and payments, without physical handling,
distribution, or storage of a prescription drug product; or
``(20)(A) the distribution of a product by a dispenser, or
a wholesale distributor acting at the direction of the
dispenser, to a repackager registered under section 510 for
the purpose of repackaging the drug for use by that dispenser
or another health care entity that is under the dispenser's
ownership or control, so long as the dispenser retains
ownership of the prescription drug product; and
``(B) the saleable or nonsaleable return by such repackager
of such prescription drug product.
``(e) Effective Date.--The standards required by subsection
(a) shall take effect not later than 2 years after the date
of the enactment of this section. The Secretary shall issue
the regulations required by subsection (a) not later than 1
year after the date of the enactment of this Act.''.
(b) Conforming Amendment.--Section 804(a)(5)(A) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384(a)(5)(A))
is amended by striking ``503(e)(2)(A)'' and inserting
``583(a)''.
SEC. 5. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY
LOGISTICS PROVIDERS.
Subchapter H of chapter V of the Federal Food, Drug, and
Cosmetic Act, as amended by section 4, is further amended by
adding at the end the following:
``SEC. 584. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY
LOGISTICS PROVIDERS.
``(a) License Requirement.--No facility may engage in the
activities of a third-party logistics provider in any State
unless--
``(1) the facility is licensed--
``(A) by the State from which the drug is distributed by
the third-party logistics provider in accordance with a
qualified licensing program, if the State has such a program;
or
``(B) by the Secretary under this section, if the State
from which the drug is distributed does not have such a
program; and
``(2) if the drug is distributed interstate and the
facility is not licensed by the Secretary under paragraph
(1)(B), registers with the State into which the drug is
distributed if such State requires such registration.
``(b) Reporting by Licensed Third-Party Logistics
Providers.--
``(1) Annual report.--Beginning not later than 1 year after
the date of the enactment of this section, each facility
engaged in the activities of a third-party logistics provider
shall submit on an annual basis, and update as necessary, a
report to the Secretary including--
``(A) the facility's name;
``(B) the facility's address;
``(C) a listing of each jurisdiction (whether State or
Federal) in which the facility is licensed for third-party
logistics provider activities; and
``(D) any disciplinary actions taken by a State or Federal
licensing authority during the reporting period against the
facility.
``(2) Posting on internet.--The Secretary shall post on the
public Internet Website of the Food and Drug Administration
the name of each third-party logistics provider, and each
jurisdiction (whether State or Federal) in which the provider
is licensed, based on reports under paragraph (1).
``(c) Preservation of State Authority.--This subchapter
does not prohibit a State from--
``(1) licensing third-party logistic providers for the
conduct of third-party logistics provider activities in the
State in accordance with this subchapter; and
``(2) collecting fees from third-party logistics providers
in connection with such licensing,
so long as the State does not require such licensure to the
extent to which an entity is engaged in wholesale
distribution.
``(d) Costs.--
``(1) Authorized licensure fees.--In the case of a facility
engaging in the activities of a third-party logistics
provider licensed by the Secretary under this section, the
Secretary may assess and collect a reasonable fee in an
amount equal to the costs to the Federal Government of
establishing and administering the licensure program
established, and conducting period inspections, under this
section.
``(2) Adjustment.--The Secretary shall adjust the amount of
the fee under paragraph (1) on an annual basis, if necessary,
to generate an amount of revenue equal to the costs referred
to in such paragraph.
``(3) Availability.--Fees assessed and collected under this
subsection shall be available for obligation only to the
extent and in the amount provided in advance in
appropriations Acts. Such fees shall remain available until
expended.
``(e) License Regulations.--
``(1) In general.--The Secretary shall establish, by
regulation, standards, terms, and conditions for licensing
persons to engage in third-party logistics provider
activities.
``(2) Content.--The regulations under paragraph (1) shall--
``(A) include standards relating to eligibility for, and
revocation and reissuance of, licenses;
``(B) establish a process by which the applicable licensing
authority will, upon request by a third-party logistics
provider that is accredited by a third-party accreditation
program approved by the Secretary, issue a license to the
provider;
``(C) establish a process by which the Secretary shall
issue a license to a third-party logistics provider if the
Secretary is not able to approve a third-party accreditation
program because no such program meets the Secretary's
requirements necessary for approval of such a third-party
accreditation program;
``(D) require that the third-party logistics provider
comply with storage practices, as determined by the
Secretary, at the provider's facilities, including--
``(i) maintaining access to warehouse space of suitable
size to facilitate safe operations, including a suitable area
to quarantine suspect prescription drug product;
``(ii) maintaining adequate security; and
``(iii) having written policies and procedures to--
``(I) address receipt, security, storage, inventory,
shipment, and distribution of a prescription drug product;
``(II) identify, record, and report confirmed losses or
thefts in the United States;
``(III) correct errors and inaccuracies in inventories;
``(IV) provide support for manufacturer recalls;
``(V) prepare for, protect against, and address any
reasonably foreseeable crisis that affects security or
operation at the facility, such as a strike, fire, or flood;
``(VI) ensure that any expired prescription drug product is
segregated from other prescription drug products and returned
to the manufacturer or repackager or destroyed;
``(VII) maintain the capability to electronically trace the
receipt and outbound distribution of a prescription drug
product, and supplies and records of inventory; and
``(VIII) quarantine or destroy a suspect prescription drug
product if directed to do so by the respective manufacturer,
wholesale distributor, dispenser, or an authorized government
agency;
``(E) provide for periodic inspection, as determined by the
Secretary, of such facility warehouse space to ensure
compliance with this section;
``(F) prohibit a facility from having as a manager or
designated representative anyone convicted of any felony
violation of section 301(i) or 301(k) or any felony violation
of section 1365 of title 18, United States Code, relating to
prescription drug product tampering;
``(G) perform mandatory background checks of the provider's
facility managers or designated representatives of such
managers;
``(H) require a third-party logistics provider to provide
to the applicable licensing authority, upon the authority's
request, a list of all prescription drug product
manufacturers, wholesale distributors, and dispensers for
whom the third-party logistics provider provides services at
the provider's facilities; and
``(I) include procedures under which any third-party
logistics provider license--
``(i) will expire on the date that is 3 years after
issuance of the license; and
``(ii) may be renewed for additional 3-year periods.
``(f) Validity of License.--A license issued under this
section shall remain valid as long as such third-party
logistics provider remains accredited by the Secretary,
subject to renewal under subsection (d). If the Secretary
finds that the third-party accreditation program demonstrates
that all applicable requirements for licensure under this
section are met, the Secretary shall issue a license under
this section to a third-party logistics provider receiving
accreditation.
``(g) Qualified Licensing Program Defined.--In this
section, the term `qualified licensing program' means a
program meeting the requirements of this section and the
regulations thereunder.
``(h) Effective Date.--The requirements of this section
shall take effect not later than 1 year after the date of the
enactment of this section. The Secretary shall issue the
regulations required by subsection (d) not later than 180
days after the date of the enactment of this section.''.
SEC. 6. PENALTIES.
(a) Prohibited Acts.--Section 301(t) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 331(t)) is amended by
striking ``or the distribution of drugs in violation of
section 503(e) or the failure to otherwise comply with the
requirements of section 503(e)'' and inserting ``the failure
to comply with any requirement of section 582, engaging in
the wholesale distribution of a drug in violation of section
583 or the failure to otherwise comply with the requirements
of section 583, or engaging in the activities of a third-
party logistics provider in violation of section 584 or the
failure to otherwise comply with the requirements of section
584''.
(b) Enhanced Penalty for Knowing Unlicensed Activities.--
Section 303(b)(1)(D) of
[[Page H2978]]
the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
333(b)(1)(D)) is amended by striking ``503(e)(2)(A)'' and
inserting ``583 or 584''.
(c) Misbranding.--Section 502 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 352) is amended by adding at the
end the following:
``(bb) If it is a drug and it fails to bear a prescription
drug product identifier as required by section 582.''.
SEC. 7. UNIFORM NATIONAL POLICY.
Subchapter H of chapter V of the Federal Food, Drug, and
Cosmetic Act, as amended by section 5, is further amended by
adding at the end the following:
``SEC. 585. UNIFORM NATIONAL POLICY.
``(a) Preemption of State Prescription Drug Product Tracing
and Other Requirements.--Beginning on the date of the
enactment of the Safeguarding America's Pharmaceuticals Act
of 2013, no State or political subdivision of a State may
establish or continue in effect any requirements for tracing
drugs through the distribution system (including any
requirements with respect to paper or electronic pedigrees,
track and trace, statements of distribution history,
transaction history, or transaction statements, or
verification, investigation, disposition, alerts, or
recordkeeping relating to the pharmaceutical distribution
supply chain system) that--
``(1) are inconsistent with, more stringent than, or in
addition to any requirements applicable under this Act; or
``(2) are inconsistent with any applicable waiver,
exception, or exemption issued by the Secretary under section
582(a).
``(b) Standards or Licensure.--
``(1) In general.--Beginning on the date of the enactment
of Safeguarding America's Pharmaceuticals Act of 2013, no
State or political subdivision of a State may establish or
continue any standards, requirements, or regulations with
respect to wholesale drug distributor or third-party
logistics provider licensure which are inconsistent with,
less stringent than, in addition to, or more stringent than,
the standards and requirements under this Act.
``(2) Licensing fees.--Paragraph (1) does not affect the
authority of a State to collect fees from wholesale drug
distributors or third-party logistics providers in connection
with State licensing under section 583 or 584 pursuant to a
licensing program meeting the requirements of such sections.
``(3) Enforcement, suspension, and revocation of
licenses.--Notwithstanding paragraph (1), a State--
``(A) may take administrative action, including fines, to
enforce a licensure requirement promulgated by the State in
accordance with this Act;
``(B) may provide for the suspension or revocation of
licenses issued by the State for violations of the laws of
such State;
``(C) upon conviction of a person for a violation of
Federal, State, or local controlled substance laws or
regulations, may provide for fines, imprisonment, or civil
penalties; and
``(D) may regulate activities of entities licensed pursuant
to section 583 or 584 in a manner that is consistent with the
provisions of this subchapter.''.
SEC. 8. ELECTRONIC LABELING.
(a) In General.--Section 502(f) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 352(f)) is amended by adding at
the end the following new sentence: ``Required labeling
(other than immediate container or carton labels) that is
intended for use by a physician, a pharmacist, or another
health care professional, and that provides directions for
human use of a drug subject to section 503(b)(1), may (except
as necessary to mitigate a safety risk, as specified by the
Secretary in regulation) be made available by electronic
means instead of paper form, provided that such labeling
complies with all applicable requirements of law, the
manufacturer or distributor, as applicable, affords health
care professionals and authorized dispensers (as defined in
section 581) the opportunity to request the labeling in paper
form, and after such a request the manufacturer or
distributor promptly provides the requested information
without additional cost.''.
(b) Regulations.--The Secretary of Health and Human
Services shall promulgate regulations implementing the
amendment made by subsection (a).
(c) Application.--The last sentence of section 502(f) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 352(f)),
as added by subsection (a), shall apply beginning on the
earlier of--
(1) the effective date of final regulations promulgated
under subsection (b); or
(2) the day that is 180 days after the date of enactment of
this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Latta) and the gentleman from California (Mr. Waxman) each
will control 20 minutes.
The Chair recognizes the gentleman from Ohio.
General Leave
Mr. LATTA. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days in which to revise and extend their remarks and
insert extraneous matters in the Record on the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. LATTA. Mr. Speaker, I yield myself such time as I may consume.
I rise today in support of H.R. 1919, the Safeguarding America's
Pharmaceuticals Act of 2013. This legislation is the culmination of
many years of hard work by legislators and stakeholders alike, and I'm
honored to have introduced this legislation, along with Congressman
Matheson.
This is an issue that was brought to my attention when I was first
elected to Congress 5\1/2\ years ago by concerned stakeholders in Ohio,
and I am pleased that the legislation is being considered on the House
floor today. Securing our Nation's pharmaceutical supply chain is an
extremely important issue, and passage of this bill will be an
important step forward to protecting America's families.
The pharmaceutical supply chain touches every part of the health care
system, and it is imperative that we get the structure and segments of
it connected in a safe, secure, and effective manner that provides the
best protection for patients.
H.R. 1919 will make improvements to the current supply chain while
providing a clear path for industry stakeholders towards enhanced
supply chain protections.
Pharmaceutical distribution occurs nationwide, and it is estimated
that within the United States there are more than 4 billion
prescriptions filled each year. By replacing the current patchwork of
multiple State laws with a uniform national standard, we improve
safety, eliminate duplicative regulations, and create certainty for all
members of the pharmaceutical supply chain.
When anyone takes a prescribed medication, he or she should have full
confidence that the medication is as prescribed and will do no harm. It
is of utmost importance that we implement commonsense solutions to
safeguard our distribution supply chain against counterfeit and
adulterated drugs, as well as improve security and integrity throughout
the supply chain. This legislation is an important step forward to
ensure greater patient safety for all Americans.
I was pleased to receive a support letter for H.R. 1919 from the
United States Deputy Sheriffs' Association, which also recognizes that
a national system will help curb criminal activity surrounding
prescription drug diversion and criminal counterfeiting.
In the letter, it discusses how a national system could deter
opportunists' ability to focus their efforts on differing State laws,
or those States that have no laws or regulations, thereby allowing for
criminal infiltration.
Specifically, the letter states that ``tracking packages destined for
patients is a good defense against criminals who would profit from
contaminating or stealing those medicines, and put patients at risk.''
To protect patient safety, this bill would replace multiple State
laws and create a uniform national standard for securing the
pharmaceutical distribution supply chain, thereby preventing
duplicative State and Federal requirements.
It would increase security of the supply chain by establishing
tracing requirements for manufacturers, wholesale distributors,
pharmacies, and repackagers based on changes in ownership.
The bill also establishes a collaborative, transparent process
between the Food and Drug Administration and stakeholders to study ways
to even further secure the pharmaceutical supply chain.
Finally, the bill puts in place a requirement for the FDA to issue
proposed regulations on unit-level traceability. The timeline put forth
in this bill for all those steps is reasonable and will allow enough
time for stakeholders to comply with these new national standards and
ensure that, through feedback from these same stakeholders, phase two
is done efficiently and correctly.
As I stated earlier, this issue has been worked on for many years,
and setting up a track and trace process is complicated.
Chairman Upton, I appreciate your leadership in moving the
Safeguarding America's Pharmaceuticals Act to the floor today. We made
a number of changes in the Energy and Commerce
[[Page H2979]]
Committee to improve the language of the bill as we work to create a
safer pharmaceutical distribution system to protect against the threat
of counterfeit drugs.
This is a highly complex area, and I understand that additional
changes were made to the language in the version we are considering
today. Further changes are necessary to ensure that the wholesale
distribution system meets the highest standards of safety and consumer
protection. In order to achieve those high standards, I am committed to
ensuring that language is included in the conference report brought
back to the House that establishes a direct purchase pedigree for those
wholesalers who only purchase pharmaceuticals directly from the
manufacturers.
I know you share my goal of creating the strongest supply chain
system, and I look forward to working with you as we move forward.
There has been much work done on this issue over the many years, and
I am appreciative of all the input I have received on this bill from
stakeholders and interested parties. And I again want to specifically
thank Chairman Upton and Subcommittee Chairman Pitts for all their
assistance in advancing this legislation. I urge full support of my
colleagues for H.R. 1919.
I reserve the balance of my time.
{time} 1610
Mr. WAXMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise to discuss a number of concerns I have about H.R.
1919, the Safeguarding America's Pharmaceuticals Act of 2013. It's a
bill designed to improve the integrity of our drug supply chain.
Unfortunately, this bill falls far short of achieving that goal.
Throughout last year, Members on a bipartisan, bicameral basis
engaged in extensive discussions on legislation to protect our drug
supply chain. During those months of discussion last year--and at the
Health Subcommittee's hearing this past April--we repeatedly heard loud
and clear from FDA, the National Boards of Pharmacy, and many others,
that if we want a secure drug supply chain, we will ultimately need an
electronic interoperable system that tracks each package of drugs at
the unit level and that involves the entire supply chain. This kind of
system would enable us to identify illegitimate product in real-time
and prevent it from ending up in patients' hands. We also heard
repeatedly that creating this kind of system is doable. Unfortunately,
the bill we are considering today will not create that kind of system.
The bill does not require the establishment of an electronic,
interoperable unit-level system.
By 2027, 14 years from now, FDA will be required to issue proposed
regulations for such a system. But there's no requirement that these
regulations ever be finalized. And if they are ever finalized, they
cannot go into effect for at least 2 more years. Almost certainly we
are looking at 2030 or beyond under this proposed legislation; and, in
fact, it may never be done.
This bill also has a number of additional deficiencies. It fails to
adequately address the potential for bad actors to introduce
illegitimate product into the supply chain through supposed returns
from pharmacies to wholesale distributors. In the meantime, it will
prevent States from responding to particular needs they may have in
regulating their wholesale distributors, and it preempts important
existing State safeguards against the entry into the supply chain of
unsafe counterfeit drugs before any adequate substitute will be in
place.
Two weeks ago, Mr. Speaker, the Senate HELP Committee unanimously
approved a bill sponsored by Senators Burr, Bennet, Harkin, and
Alexander that requires the establishment of a unit-level, electronic,
interoperable system within 10 years and is not dependent upon FDA
issuing regulations. But the Senate bill still provides plenty of
notice, input, and guidance for industry stakeholders. FDA is required
to hold public meetings, one or more pilot projects, and to issue draft
and final guidances and, as needed, regulations. Because they will not
be able to delay or prevent implementation of the system, stakeholders
will have the incentive to work with FDA to see that the guidances and
any needed regulations are developed and released.
Our fundamental goal in establishing a Federal system should be to
prevent Americans from being harmed by counterfeit and substandard
medicines. If we cannot assure the public that legislation will
establish a system that will protect them and that will do so by a date
certain, then, in my view, it's not worth doing. The House bill needs
significant improvement as it moves forward if our goal is to enact
legislation that will truly protect the American public.
Mr. Speaker, I reserve the balance of my time.
Mr. LATTA. I yield 2 minutes to the chairman of the full committee,
the gentleman from Michigan (Mr. Upton).
Mr. UPTON. Certainly, this afternoon I rise today in strong support
of H.R. 1919, the Safeguarding America's Pharmaceutical Act of 2013. I
want to thank the bill's authors, including Mr. Latta, for their
bipartisan leadership on this very important issue.
This bill strengthens the prescription drug supply chain in order to
protect American families against counterfeit drugs. The bill also
would help prevent increases in drug prices, avoid additional drug
shortages, and literally eliminate hundreds of millions of dollars
worth of duplicative government red tape on American businesses that is
harming job growth.
As Mr. Latta said, supporters of the Federal track and trace
legislation include the U.S. Deputy Sheriffs' Association and also
those in the supply chain, including the National Community Pharmacists
Association. According to the CBO, the bill would reduce the deficit by
$24 million.
Last Congress, we spent a significant amount of time working on this
very important issue as we successfully moved the Food and Drug
Administration Safety and Innovation Act through the legislative
process, and our efforts continued beyond enactment and into the 113th
Congress. During that entire process, we also sought input from
stakeholders like Pfizer and Perrigo, in my district in Michigan, as
well as our smaller pharmacies, too. This hard work allowed us to
better understand the issue, and this bill reflects that understanding.
At the Energy and Commerce Committee, we held a legislative hearing
on the bill last April. We approved the bill in both subcommittee and
full committee by voice vote. We certainly did have a spirited debate
at the committee, but we stand here united in our belief that the
prescription drug supply chain has to be strengthened.
We look forward to working with our Senate colleagues on H.R. 1919 on
a bipartisan basis to improve the bill, including how it addresses
issues related to wholesale distributors during phase one. Because of
the hard work that has already been put in on this issue and the
importance of protecting our Nation's families from counterfeit drugs,
I am hopeful we can get a product to the President's desk by the August
recess.
Mr. WAXMAN. Mr. Speaker, I yield 3 minutes to the gentleman from Utah
(Mr. Matheson), one of the original sponsors of this legislation.
Mr. MATHESON. I thank the gentleman for yielding, and I thank Mr.
Latta for his work on this issue as well.
This bill before us today is a product of several years of
collaboration. It's a really complicated issue, and it's important that
you have a lot of collaboration to address something of this
complexity.
This legislation that Mr. Latta and I have introduced together will
provide what I think are important steps for the security of our
prescription drug supply chain from counterfeiters and other bad
actors. We've seen in recent press reports about fake drugs slipping
into the supply chain, so the threat of counterfeit drugs is a growing
problem in this country. In fact, when you think about it, the
counterfeit drug trade may be a more lucrative opportunity than the
illegal drug trade, since the United States, overall, spends roughly
$325 billion a year on prescription drugs. This bill is an effort to
try to keep those bad actors from entering the drug supply.
Since we've had some of these problems, some States have, rightly,
tried to take action to deal with this. What this legislation is going
to do, however,
[[Page H2980]]
is establish more of a national standard to create some certainty for
everyone in the supply chain so there's an opportunity to work
effectively in a national way. Without such action, everyone in the
supply chain could be forced to comply with a never-ending patchwork of
different and complex State laws. That patchwork will force
stakeholders to step up multiple State systems, and it could still open
the door for bad actors to exploit security gaps through some States
that may have weaker laws.
This bill also establishes a collaborative process between the FDA
and the industry in establishing protocols for unit-level traceability.
The bill stipulates the FDA will hold regular meetings and conduct
pilot programs with stakeholders to better inform the agency as to the
feasibility of unit-level traceability and the processes needed to
achieve that goal. This is critical to ensure that the unit-level
traceability regulation is achievable, does not increase prescription
drug costs for consumers, and ultimately protects patients from
counterfeit and adulterated prescription drug products. What we do not
want to see are regulations that are not technologically achievable by
industry stakeholders, causing a delay in implementation, as we've seen
in some States' circumstances.
{time} 1620
Now, there's no question that this legislation has been an effort of
several years, and there's still perhaps some work to be done. I'm
hopeful that as this legislation moves through the process, as the
House and the Senate go to conference, that there are some other
outstanding issues that can be addressed and we can build even greater
consensus as we go to a final product that goes to the President's
desk.
I urge my colleagues to support this bipartisan bill.
Mr. LATTA. Mr. Speaker, at this time I yield 2 minutes to the
gentleman from Pennsylvania (Mr. Pitts), the chairman of the
subcommittee.
Mr. PITTS. Mr. Speaker, the bill before us today is important and
necessary legislation to strengthen the prescription drug supply chain
and to provide greater safety for our Nation's patients.
Safeguarding our prescription drug supply chain is important to
protect against counterfeit drugs. It is necessary to help prevent
increases in drug prices while also ensuring adequate supplies of much-
needed prescription drugs. Equally important, H.R. 1919 includes
reforms that will eliminate hundreds of millions of dollars' worth of
duplicative government red tape on American drug manufacturers,
wholesale distributors, and pharmacies.
Sadly, counterfeit prescription drugs have proven to be a lucrative
business, with many of these illegal counterfeit drugs finding their
way to some of our sickest patients, including those with cancer.
Additionally, some States have taken draconian actions to safeguard
their prescription drug supply chain, but many of these steps will
force small and large businesses to implement costly and indefensible
electronic systems for tracking such drugs at the unit level.
After hearings in the Health Subcommittee of the Energy and Commerce
Committee, which I chair, we heard that a more feasible and practical
solution to this serious problem is attainable, and those provisions
are included in H.R. 1919.
Mr. Speaker, by approving this legislation, we will be saving our
Nation's businesses millions of dollars, protecting our patients from
counterfeit drugs, and securing our drug supply chain in a reasonable,
commonsense way.
I urge all my colleagues to support this bill and vote for H.R. 1919.
Mr. WAXMAN. Mr. Speaker, I'd like to yield 3 minutes at this time to
the gentleman from North Carolina (Mr. Butterfield) to speak on this
legislation.
Mr. BUTTERFIELD. First, let me thank Mr. Waxman for yielding time and
thank him for his extraordinary leadership on our committee. Let me
also thank Mr. Latta and Mr. Matheson for working together to try to
get this legislation to the floor today.
Mr. Speaker, I rise in support of H.R. 1919 and urge its passage.
Since the Prescription Drug Marketing Act was signed into law some 25
years ago, a patchwork of varying State pedigree laws has evolved,
leaving our drug supply chain very vulnerable. Resources should focus
on up-to-date and adaptable technology using global serialization
standards.
In the past 25 years, industry stakeholders have been unable to agree
on a uniform Federal solution, but today I'm happy to report that it
does exist. The fact that so many members of the industry have finally
come together to embrace new, commonsense regulations speaks to the
importance of getting this done soon.
If we fail to enact drug distribution safety legislation soon, my
fear is, Mr. Speaker, that we will miss the opportunity to
significantly enhance patient safety for all Americans.
The House bill has improved since its introduction. And while I
strongly support some of the provisions in the Senate companion bill,
including a date certain to reach unit-level tracking, the House bill
represents a good step forward and advances the ball toward one
ultimate goal. Hopefully, some of these concerns can be addressed in
conference.
My constituents, like all of yours, deserve to know that the
prescription drugs that they use to treat diabetes, high blood
pressure, and heart disease are not stolen, misbranded, or
counterfeited. This bill--and the Senate counterpart--addresses the
very real concerns that spurred the introduction of this legislation.
While the House bill isn't everything many of us want it to be--and
Mr. Waxman spoke to that earlier--I am hopeful that once the House and
Senate bills move to conference, we will see a final version that will
protect consumers and better protect the prescription drug supply
chain.
Therefore, Mr. Speaker, I urge my colleagues today in the Senate to
proceed with deliberate and swift action so that we can pass a workable
solution as soon as possible so as to better protect the American
people.
I ask my colleagues to support H.R. 1919.
Mr. LATTA. Mr. Speaker, at this time I yield 2 minutes to the
gentleman from Texas (Mr. Burgess).
Mr. BURGESS. I thank the gentleman for yielding.
You know, the United States has the best drug supply chain in the
world, but it faces attack each and every day by counterfeiters,
thieves, and rogue distributors.
Most Americans would just assume that their prescription drugs that
they buy in their drugstore have been tracked rigorously from
manufacturer to retail, but that assumption could not be more wrong. In
fact, current law leaves a great deal of leeway for counterfeit
medications to enter the market, and the punishment for those
counterfeiting prescription medication is oftentimes far from adequate.
From fake flu vaccines to fake cancer drugs, counterfeit medications
have been manufactured and allowed to enter the supply chain and in
some cases, unfortunately, even administered to unsuspecting patients.
The United States may be the most secure, but we are still at risk.
I believe we have a bill before us today that is guided by the strong
principles of patient safety and supply chain integrity. The bill is
flexible and does not seek to overly burden States, suppliers, or small
businesses. Maintaining the integrity of the United States'
prescription drug supply is a compelling national priority.
I want to congratulate Mr. Latta and Mr. Matheson, as well as
Chairman Upton and Ranking Member Dingell, for their leadership on the
issue. I appreciate you allowing me to be involved in the development
of this bill. I think it is a testament to all the hard work done,
including that by our committee staff, Clay Alspach and Paul Edattel,
and my personal staff, J.P. Paluskievicz.
I urge my colleagues to support this.
Mr. WAXMAN. Mr. Speaker, at this time I wish to yield 3 minutes to
the gentleman from Maine (Mr. Michaud).
Mr. MICHAUD. Mr. Speaker, I rise today to express opposition to H.R.
1919.
Specifically, I rise to express concern with section 8 of this bill,
which allows prescription drug labeling for physicians, pharmacists,
and other health
[[Page H2981]]
care professionals to be provided solely by electronic means.
This provision is flawed on multiple levels. First, Internet access
in rural States like mine can often be intermittent at best. In an area
with low Internet connectivity or reliability, health care providers
would not automatically have the necessary information about the drugs
to make sure that they're being administered and prescribed
appropriately. This is even true in areas that have good Internet
connectivity, but may have been hit by a natural disaster like
Hurricane Sandy.
Second, eliminating the paper labeling requirement will have
repercussions for the industry that it supports. There are more than
10,000 jobs nationwide associated with the printing of this sensitive
information.
In Maine, the paper industry supports 7,000 workers, including
hundreds in the pharmaceutical paper industry. These workers are part
of an important industry that keeps health care professionals,
dispensers, and consumers informed about their drugs. Section 8 would
jeopardize the jobs of more than 1,000 Mainers.
Finally, legislation passed during the 112th Congress required GAO to
conduct a study of the advantages and risks of electronic-only labeling
of pharmaceuticals. This study is due to be released next month.
Passing this legislation that preempts the finding of this study is bad
policy. So I would urge my colleagues to support informed health care
professionals and consumers and to fight for more than 10,000
manufacturing jobs across the country. So I would urge a ``no'' vote on
H.R. 1919.
Mr. WAXMAN. Will the gentleman yield?
Mr. MICHAUD. I yield to the gentleman from California.
Mr. WAXMAN. I thank you for yielding to me.
You're raising issues that I don't think were really brought to our
attention when we were considering the legislation, and I want to look
it over carefully.
But I think you raise an interesting point; and as we go into the
conference after this bill is passed, I want to pledge to you that I
will continue to review this issue with you and others to see what the
merits would be of whether this provision should continue in the bill.
I talked to Chairman Upton, who told me that he would continue to
review the issue as well.
Mr. LATTA. Will the gentleman yield?
Mr. MICHAUD. I yield to the gentleman from Ohio.
Mr. LATTA. I thank the gentleman.
As we discussed a little earlier, I will be happy to continue
discussing this with you.
Mr. MICHAUD. I thank both gentlemen for your willingness to look at
section 8 more closely.
{time} 1630
Mr. LATTA. Mr. Speaker, at this time I yield 2 minutes to the
gentleman from West Virginia (Mr. McKinley).
Mr. McKINLEY. Mr. Speaker, I rise today in support of H.R. 1919.
Let me bring attention to a provision in the bill that we were just
discussing about electronic distribution of prescription information
for health care professionals and pharmacists. Industry and the FDA
have been in discussions for years about eliminating the paper attached
to bottles of prescription drugs.
Let me show you this. This is what we are talking about--this wad of
paper on the top of a prescription bottle. It's a folded up piece of
paper. It can be in three and four parts. This is not an efficient way
to distribute critical information about prescription drugs.
Eliminating this wad of paper would save the consumers millions of
dollars in printing and shipping costs.
The House committee recognized the need to allow pharmacists the
option of electronic or paper copies, because some rural pharmacies may
not have Internet capabilities. Unfortunately, this labeling provision
is not in the Senate bill.
So, as the process moves forward into conference, this labeling
provision needs to be retained so that we have a final product that
assures patient safety and provides uniform national standards to
strengthen the national drug supply chain.
I urge my colleagues to support this bill and the labeling provision.
Mr. WAXMAN. Mr. Speaker, I would like to submit for the record three
letters from the California State Board of Pharmacy and four letters
from dozens of organizations representing consumers, patients,
physicians, researchers, and public health advocates. These letters
raise serious concerns with H.R. 1919, the track and trace legislation
before us today.
I would like to read a few sentences from just one of the letters:
We are concerned that the legislation as currently written
does not contain the minimum safeguards to keep unsafe
medicines from reaching patients. The subcommittee's proposal
does not create a clear path forward to a meaningful unit-
level traceability system. Furthermore, the proposed
legislation would eliminate all existing State drug pedigree
laws--which provide essential patient safety protections as
well as major tools for law enforcement. The bill would leave
the U.S. pharmaceutical supply unprotected for a full 2 years
before introducing even limited traceability requirements.
I urge my colleagues on both sides of the aisle to read these letters
carefully. They provide a detailed critique of the legislation and
offer suggestions on how to fix it. I hope we can improve this bill as
it moves forward through the legislative process.
Comments of the Pew Charitable Trusts to House Committee on Energy and
Commerce on H.R. 1919--Proposed Legislation to Improve Drug
Distribution Security, May 14, 2013
Dear Chairman Upton and Ranking Member Waxman: Thank you
for your ongoing interest in measures to secure the drug
distribution system in the United States.
We have reviewed H.R. 1919, the legislative proposal that
will be considered by the Committee on Energy and Commerce on
May 15. As currently drafted, this legislation does not
establish meaningful patient protections and does not justify
the preemption of state laws. The legislation continues to
provide no guarantee that there will be a national drug
distribution security system that will involve all members of
the supply chain and will track drugs at the unit level
within a reasonable time frame.
This bill does not require a proposed regulation until
2027, and does not set a timeline for a final rule. The
soonest an enhanced distribution security system could
possibly be in place is 2029--assuming FDA could propose and
finalize the regulations in one year. This prolonged timeline
will eradicate momentum in the supply chain towards unit-
level traceability, will halt progress on serialization and
data sharing system development, and will seriously undermine
investments already being made by stakeholders. We urge the
committee to amend this legislation to establish a clear path
to a unit-level traceability system, as called for by a
majority of the witnesses who testified at your April 25th
hearing.
Pharmaceutical manufacturers are already making investments
in drug serialization technology. To justify the expense--and
the preemption of strong state laws--it is essential that any
federal law establish meaningful patient protections through
use of this technology. Legislation must achieve the
following within a reasonable time frame:
Participation of all members of the supply chain
Traceability of drugs at the package/unit level, and
Routine checking of drug serial numbers.
We attach herewith our comments on the proposed legislation
considered by the Energy and Commerce Subcommittee on Health
on May 8, 2013.
____
California State Board
of Pharmacy,
Sacramento, CA, May 28, 2013.
Re Federal efforts to secure drug distribution security
Hon. Henry Waxman,
Ranking Member, Energy and Commerce Committee.
Hon. Frank Pallone, Jr.,
Ranking Member, Health Subcommittee, Energy and Commerce
Committee.
Dear Mr. Waxman and Mr. Pallone: I write on behalf of the
California State Board of Pharmacy (Board). We appreciate
this opportunity to submit our written comments on H.R. 1919,
titled the ``Safeguarding America's Pharmaceuticals Act of
2013.'' Our comments pertain to H.R. 1919 as it was reported
out of the Energy & Commerce Committee on or about May 15,
2013. We write to express our concern that this bill, as
currently drafted, does not do enough to promise an increase
in the security of the drug distribution supply chain, while
at the same time preempting the California pedigree law and
tying the hands of states like California to regulate
wholesalers.
We want to first thank you and the bill's authors and co-
sponsors for acknowledging and taking on the challenge of
increasing drug supply chain security. We understand
[[Page H2982]]
that it is not an easy task to balance the need for increased
security against a desire to avoid adding unnecessary costs
and possible interruptions to the supply chain. We also
recognize and appreciate just how much effort has gone into
the bipartisan and bicameral effort to reach agreement on
legislation necessary to achieve needed improvements in drug
supply chain security. Finally, we agree that it would be
ideal for the subject of supply chain security to have a
federal legislative solution, as this is a subject that would
be more ideally regulated at the federal level than by the
states.
However, we believe H.R. 1919 does not promise the kind of
robust supply chain security that is necessary to ensure
adequate patient protection, and is not an adequate
replacement for the California pedigree law that, absent this
bill, will go into effect beginning in 2015. Our reasons for
this are various; many of these have been covered in our
comments on prior legislative drafts. In the interest of
brevity, and because we want to get these comments to you in
time for them to be considered along with any action that
might be taken on H.R. 1919, we will keep this iteration of
our comments relatively succinct. Please find enclosed our
letters dated April 26, 2013, on the draft of the bipartisan
Senate bill released for comment at that time (since
introduced in much the same form as S. 957, and combined with
S. 959), and November 7, 2012, on the bicameral DDS Draft
that was at that time sent out for comment, which we hereby
incorporate by reference.
In brief, our primary though by no means only objection to
this draft is that it promises no certainty that we will ever
see the end-to-end, full participation, electronic track-and-
trace system monitoring drug distribution security at the
unit (package) level, with trading partner verification and
validation and the resulting protections against counterfeit
and adulterated products, that has been the recommendation of
the FDA since its Counterfeit Drug Task Force convened in
2004. This bill leaves the development of any such system to
some future rulemaking, to be published no sooner than 2027,
effective 2 years later, and even then this legislation
requires no particular outcome of such rulemaking. We have no
confidence, given the history of the Prescription Drug
Marketing Act of 1987 (PDMA), that this deferral will result
in any increase in security. While we have also expressed
concern (see April 26, 2013 comments) that Section 3 of the
Senate draft should be improved and strengthened, and that it
should not take an additional 10 years to get to the system
outlined in that section, we far prefer the relative
certainty of the Senate model to this draft. There has
already been substantial agreement that a uniform track-and-
trace infrastructure is needed to ensure supply chain
security, and many participants in the supply chain are
already well on their way to implementing that infrastructure
to comply with the California timeline. We believe that
without placing a definite outcome and a date certain into
the legislation, all of that momentum will be lost and all of
that industry investment will be wasted. We believe the
public deserves a robust supply chain security system, and we
further believe that the industry needs the certainty of firm
deadlines and objectives in order to adequately plan their
capital investments.
Of nearly co-equal importance, we also object, for many of
the same reasons stated in our November 7, 2012 letter, to
the language in Section 585, subdivision (b) (and/or
elsewhere), that has the effect of making the proposed
national wholesaler licensure standards both a ``floor'' and
a ``ceiling'' on the independent authority of states to
regulate wholesalers. We support national minimum standards
for wholesalers, and also support federal licensure of
distributors in states that do not provide such licensure.
But we strongly believe that states should remain able to
enact and enforce state-specific provisions that go above and
beyond national minimums, to respond to more local issues and
also to later developments requiring more immediate action.
We are happy to work with you further on this topic, and to
share examples of why we believe it is so crucial for states
to retain flexibility and additional authority with regard to
regulating wholesalers.
One such example would be the difficulty experienced in
California and other states over the last few years with
``gray market'' purchase and re-sale practices by (secondary)
wholesalers. California has seen a dramatic uptick in re-
sales of drugs that are in short supply, as wholesalers and
their trading partners evade typical drug shortage
allocations by purchasing from pharmacies who become de facto
``purchasing agents'' for the secondary wholesalers,
acquiring drugs from a primary wholesaler for the purposes of
re-sale to the secondary wholesaler, which in turn re-sells
the drugs to another secondary wholesaler or to an end user.
These practices can result in further increases in the
already-increased prices of shortage drugs, in further
distortions in supply, and in supply chain vulnerabilities
from the multiple purchases/re-sales. Some of these problems
have been documented in a bicameral investigation report by
Senators Rockefeller and Harkin, and by Representative
Cummings, which addressed the problem and possible solutions.
A copy of this report is available at http://
cummings.house.gov/cummings-releases-joint-report-gray-
market-drug-companies. This kind of unexpected and
unprecedented conduct by wholesalers presents a new challenge
that has not been anticipated by previous licensing schemes
(or the framework in the present draft). California and other
states will have to devise new regulatory language that is
able to better handle these kinds of market innovations. We
must retain the flexibility to do so, and to add to the
federal minimums when these kinds of situations come up.
Under the language of H.R. 1919, we will not have the
necessary flexibility and authority to do so.
conclusion
For these reasons, as well as those spelled out in more
detail in the enclosed letters, we cannot support the current
draft of H.R. 1919, although we believe and reiterate that a
federal model is ideal. We do not believe that additional
drug security can await the possible development of future
standards some 14 or more years after enactment. We believe
the security of the drug supply and the public's trust in
that drug supply are threatened, and any further delay simply
adds to the scope of these threats..
We also believe that the endpoint should be a national end-
to-end track-and-trace system that is worthy of any
additional delay, and adequate to replace the California
model. We believe the necessary components of any such system
include: participation by all industry partners; in passing
and receiving electronic drug ``pedigree''/chain-of-custody
data as to all prescription drugs; to which data all
shipments and deliveries are validated; by tracking and
validating shipments at the (saleable) unit level at each
stage of distribution. We believe this proposal fails to
fully articulate the system first envisioned by the FDA.
Finally, we remain concerned that the hands of California
and other states with robust programs to license and regulate
wholesale distributors will be tied by the national licensure
standards section(s) of the bill. We would encourage you to
adopt a model wherein the federal legistaltion sets a floor
for wholesaler licensure standards (and provides for federal
licensure where states do not offer same) but not a ceiling.
We again commend you for your leadership on these vital
issues of national security. Thank you also for your
willingness to hear our input. We look forward to our
continuing work together to secure the nation's drug supply.
Please feel free to contact the Board any time if we can be
of assistance.
The best ways to reach me are on my cell phone or by email.
You may also communicate with the Board's Executive Officer,
Virginia Herold, by telephone or by email.
Thank you again for your efforts. We are grateful to all of
you, and hopeful that we are nearing a strong federal system
for regaining a strong pharmaceutical supply.
Sincerely,
Stanley C. Weisser, R.Ph.,
President, California State Board
of Pharmacy.
Enclosures: April 26, 2013 Board comment letter, November
7, 2012 Board comment letter.
____
National Research Center for Women & Families, The TMJ
Association, WoodyMatters,
May 7, 2013
Re Energy and Commerce Health Subcommittee markup to amend
the Federal Food, Drug, and Cosmetic Act with respect to
the pharmaceutical distribution supply chain
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce, Committee on
Energy and Commerce, Washington, DC.
Hon. Henry Waxman,
Ranking Member, Committee on Energy and Commerce, Health
Committee on Energy and Commerce, Washington, DC.
Hon. Joseph R. Pitts,
Chairman, Subcommittee on Health, Committee on Energy and
Commerce, Washington, DC.
Hon. Frank Pallone,
Ranking Member, Subcommittee on Committee on Energy and
Commerce, Washington, DC.
Dear Chairman Upton, Chairman Pitts, Ranking Member Waxman,
and Ranking Member Pallone: Thank you for the opportunity to
provide comments on the pharmaceutical supply chain
legislation being marked up on May 7 and May 8.
We are writing on behalf of consumers, patients,
scientists, and public health advocates to express our strong
support for a drug distribution system that will protect
patients and the public's health from unsafe medicines. The
ongoing threat to the U.S. drug supply must be addressed
through a strong national serialization and traceability
system to track and authenticate medicines at the unit level.
Without such a system to track and authenticate drugs at the
unit level as they move from manufacturer to wholesaler to
pharmacy to patient, the public's health continues to be
placed at risk from unsafe or counterfeit medicines.
The Subcommittee on Health's proposed legislation, as
currently written, lacks necessary and clearly defined
elements to guarantee a unit-level serialization and
traceability system in a timely manner. This is a serious
patient safety concern, and must be rectified. The proposed
legislation would also eliminate all existing state drug
pedigree laws--major tools for law enforcement--and would
leave the U.S. pharmaceutical supply unprotected for a full
two years before putting a limited system in place.
We do not support a federal law that preempts existing
strong state laws. The federal
[[Page H2983]]
law should be a floor, not a ceiling. Any federal law must
create a system that includes the following elements within a
timely manner:
Participation of all members of the supply chain
We need full participation of all supply chain stakeholders
in a unit-level serialization and traceability system to
protect the integrity of the supply chain. Pharmacies are the
last step in drug distribution before medicine reaches a
patient and are essential for ensuring pharmaceutical
integrity.
Traceability of drugs at the smallest saleable unit level
The legislation needs to create a clear, assured path to a
unit-level traceability system. The proposal takes away
strong existing state drug pedigree requirements, and does
not replace them with assurances that unit-level traceability
will be achieved. The legislation's requirement for numerous
studies and meetings and lack of requirement for a final rule
will create years of regulatory uncertainty and will not
protect the public's health.
Routine checking and verification of drug serial numbers
The legislation calls for limited verification under an
interim system, and does not create a meaningful framework to
achieve enhanced verification. A robust system should include
proactive verification of drug units in order to prevent
stolen and counterfeit drugs that are being distributed as
legitimate pharmaceutical products from entering the supply
chain.
The risk of counterfeit and diverted medicines in the U.S.
drug supply has not abated over the years. The Food and Drug
Administration announced three times in the past year that it
had discovered counterfeit Avastin--a critical drug used to
treat several types of advanced cancer--in the United States.
The FDA issued letters to clinical practices in California,
Texas, and Illinois warning that they may have knowingly or
unknowingly purchased and administered treatments missing
active ingredients to cancer patients.
In 2012 in New York, 48 individuals were charged in a huge
criminal diversion and fraud scheme to buy prescription drugs
``on the street,'' re-package or re-label them and sell them
back into distribution through licensed pharmaceutical
wholesalers, who in turn sold the drugs to pharmacies. These
``recycled'' medicines put patients at risk of contaminated
or compromised drugs. In addition, authorities estimated the
large-scale drug diversion scheme cost the New York state
Medicaid program $500 billion. Similar schemes in other
states are well documented, including one in Tennessee
earlier this year that cost the state Medicaid program more
than $58 million.
These incidents represent an unacceptable risk to patients.
We urge the Energy and Commerce Subcommittee on Health to
consider a strong unit-level serialization and traceability
framework that appropriately secures and protects the
distribution of medicines in the U.S. in a timely fashion.
Thank you for the opportunity to comment.
National Research Center for Women & Families.
The TMJ Association.
WoodyMatters.
____
Cancer Leadership Council,
Washington, DC, May 14, 2013.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce, House of
Representatives, Washington, DC.
Hon. Joseph Pitts,
Chairman, Subcommittee on Health, Committee on Energy and
Commerce, House of Representatives, Washington, DC.
Hon. Henry Waxman,
Ranking Member, Committee on Energy and Commerce, House of
Representatives, Washington, DC.
Hon. Frank Pallone,
Ranking Member, Subcommittee on Health, Committee on Energy
and Commerce, House of Representatives, Washington, DC.
Dear Chairman Upton, Ranking Member Waxman, Chairman Pitts,
and Ranking Member Pallone: The undersigned organizations
representing cancer patients, physicians, and researchers are
writing in support of efforts to develop legislation to
protect the security of the pharmaceutical distribution
supply chain.
Cancer patients and physicians have experienced the adverse
effects of disruptions in the supply chain and the
counterfeiting of cancer drugs, occurrences which can
compromise the quality of care they receive and the
effectiveness of their treatments. Patients and their
physicians must be able to trust that the drugs they
prescribe and receive are consistent with their labeling. In
the past, cancer patients have received counterfeit drugs
that were ineffective. In those circumstances, cancer
patients were harmed by time wasted receiving therapies that
provided no medical benefit.
As you continue your work on supply chain protections, we
urge that you develop a supply chain protection system that:
Includes participation by all those involved in the supply
chain; requires traceability of drugs at the smallest unit
level; and facilitates routine verification of drug serial
numbers.
We also urge that existing state drug pedigree laws not be
preempted until a strong national system is implemented.
Eliminating state protections without a national system to
replace them would not be in the best interest of cancer
patients and other Americans who trust that the medications
they are prescribed are safe and effective.
We understand that developing a strong supply chain
protection system will be accompanied by some costs. However,
the health care system and patients are already bearing the
costs associated with diversion and counterfeiting. Diversion
schemes can cost health care payers significant sums. Money
is wasted on counterfeit medicines, and additional resources
must be spent on the therapies that patients may need to
address the harm and/or lack of effectiveness of counterfeit
drugs. Companies that have been victims to counterfeiting or
diversion may bear significant costs as a result. Finally,
the human costs of counterfeiting and diversion are great, as
patients may be harmed by unsafe or ineffective medications.
We commend your commitment to addressing the safety of the
pharmaceutical distribution system and urge you to develop
protections that are adequate to meet the needs of cancer
patients and their physicians.
Sincerely,
Cancer Leadership Council:
American Society for Radiation Oncology
Bladder Cancer Advocacy Network
The Children's Cause for Cancer Advocacy
Coalition of Cancer Cooperative Groups
Fight Colorectal Cancer
International Myeloma Foundation
Kidney Cancer Association
Lymphoma Research Foundation
National Coalition for Cancer Survivorship
National Lung Cancer Partnership
Ovarian Cancer National Alliance
Pancreatic Cancer Action Network
Prevent Cancer Foundation
Sarcoma Foundation of America
Susan G. Komen for the Cure Advocacy Alliance
____
May 7, 2013.
Re Energy and Commerce Health Subcommittee markup to amend
the Federal Food, Drug, and Cosmetic Act with respect to
the pharmaceutical distribution supply chain
Hon. Joseph R. Pitts,
Chairman, Subcommittee on Health, Committee on Energy and
Commerce, Rayburn House Office Building, Washington, DC.
Hon. Frank Pallone,
Ranking Member, Subcommittee on Health, Committee on Energy
and Commerce, Rayburn House Office Building, Washington,
DC.
Dear Chairman Pitts and Ranking Member Pallone: We, the
undersigned, thank the Health Subcommittee for the
opportunity to provide feedback on the pharmaceutical
distribution supply chain legislation being marked up on May
8.
On behalf of millions of consumers, patients, and public
health advocates, we write in support of a strong national
unit-level serialization and traceability system to secure
the U.S. pharmaceutical supply. Without such a system to
track and authenticate drugs at the unit level as they move
from manufacturer to wholesaler to pharmacy to patient, the
public's health continues to be placed at risk from diverted
or counterfeit medicines.
We are concerned that the legislation as currently written
does not contain the minimum safeguards to keep unsafe
medicines from reaching patients. The Subcommittee's proposal
does not create a clear path forward to a meaningful unit-
level traceability system. Furthermore, the proposed
legislation would eliminate all existing state drug pedigree
laws--which provide essential patient safety protections as
well as major tools for law enforcement. The bill would leave
the U.S. pharmaceutical supply unprotected for a full two
years before introducing even limited traceability
requirements.
In order to justify the preemption of existing strong state
laws, it is essential that any federal law create a system
that includes the following elements within a reasonable time
frame: (1) Participation of all members of the supply chain;
(2) Traceability of drugs at the smallest saleable unit
level; (3) Routine checking and verification of drug serial
numbers.
As we have seen over the last several years, the risk of
counterfeit and diverted medicines in the U.S. drug supply is
real. The Food and Drug Administration announced three times
over the past year that it had discovered counterfeit
Avastin--a critical drug used to treat several types of
cancer--in the United States. The FDA issued letters to
clinical practices in California, Texas, and Illinois warning
that they may have knowingly or unknowingly purchased and
administered treatments missing active ingredients to cancer
patients.
Last year the U.S. Attorney for the Southern District of
New York charged 48 individuals in a large-scale criminal
diversion scheme to buy prescription drugs ``on the street'',
re-package and/or re-label them and sell them back into
distribution through licensed pharmaceutical wholesalers, who
in turn sold the drugs to pharmacies. The scheme included
medicines for HIV/AIDS, schizophrenia, and asthma, some of
which
[[Page H2984]]
were stored under unsafe conditions, or removed from their
original packaging and mixed with other medication. Patients
receiving these ``recycled'' medicines were at risk of
contaminated or compromised drugs. Authorities estimate the
large-scale drug diversion scheme cost the New York state
Medicaid program almost half-billion dollars. Similar schemes
in other states are well documented, including one in
Tennessee earlier this year that cost the state Medicaid
program more than $58 million.
In light of this ongoing and unacceptable risk to patients
we urge the Energy and Commerce Subcommittee on Health to
consider a strong unit-level serialization and traceability
framework that appropriately secures and protects the
distribution of medicines in the U.S. in a timely fashion.
Thank you again for your work on this important issue.
American Public Health Association (APHA)
American Medical Women's Association
Annie Appleseed Project
Bladder Cancer Advocacy Network
Community Catalyst
Consumers Union
Fight Colorectal Cancer
International Myeloma Foundation
Lymphoma Research Foundation
National Association of County and City Health Officials
(NACCHO)
National Women's Health Network
Ovarian Cancer National Alliance
Pancreatic Cancer Action Network
Susan G. Komen
Trust for America's Health
U.S. PIRG
I would like to ask the gentleman from Ohio how many speakers he has?
Mr. LATTA. We have none.
Mr. WAXMAN. Mr. Speaker, I yield back the balance of my time.
Mr. LATTA. Mr. Speaker, we have no further speakers. I ask for
support for the bill, and yield back the balance of my time.
Mr. DINGELL. Mr. Speaker, I rise today in support of H.R. 1919, the
Safeguarding America's Pharmaceuticals Act of 2013. The American people
deserve peace of mind in knowing the pharmaceuticals they take every
day are safe and have not been stolen, misbranded, or counterfeited. In
last year's Food and Drug Administration Safety and Innovation Act, we
took important steps to secure the upstream supply chain by ensuring
FDA has accurate information about who is manufacturing and importing
drugs, as well as requiring manufacturers to notify FDA if their
pharmaceuticals may cause injury or death or have been stolen or
counterfeited. That was a good first step, but now Congress must act to
secure our downstream drug supply chain.
A strong, national track-and-trace system for our pharmaceutical
supply chain will help improve public health and protect the American
people from harm. We have seen far too many examples of counterfeit or
unsafe pharmaceuticals entering the supply chain and ultimately ending
up in the hands of patients. Now is the time to act and implement a
system to trace pharmaceuticals as they move through the supply chain
to prevent this from ever happening again. This system must be fair,
feasible, and provide certainty to industry as to what is required of
it. If done properly, a strong track-and-trace system will protect our
pharmaceuticals from tampering and ensure their safety for patient use.
I want to thank my friends, Mr. Matheson and Mr. Latta, for their
hard work on this important issue. I am the first to admit that this is
not a perfect bill, and we have more work ahead of us. I also want to
acknowledge the concerns of my friend and colleague from Maine, Mr.
Michaud, about e-labeling. I commit to working with him to address this
issue of great importance and ask that my colleagues do the same.
The Senate has also made real, bipartisan progress on this issue and
taken a slightly different approach. I urge my colleagues to vote in
favor of this legislation today to move the process forward on this
matter. Congress has a clear opportunity to pass a bill with major
benefits for the American people and must avail itself of the
opportunity. I look forward to working with my colleagues on both sides
of the aisle and both sides of Capitol Hill to send a strong, bi-
partisan bill to President Obama.
Mr. PALLONE. Mr. Speaker, drug distribution security is critical to
public health and safety, and I strongly support taking steps to ensure
that the final pharmaceutical products patients receive are safe and
effective. Although the bill before us today, H.R. 1919, the
``Safeguarding America's Pharmaceuticals Act,'' is well-intentioned, I
have a number of concerns and believe the bill must be strengthened
before it becomes law in order to truly protect the American people.
There is widespread agreement that the best way to protect the supply
chain is to establish a unit-level, interoperable system that involves
all members of the supply chain. However, under H.R. 1919, there is no
assurance that an effective system for tracking and tracing drugs will
ultimately be put into place. The bill only calls on FDA to issue
proposed regulations--there is no requirement for final regulations.
In order to protect the drug supply chain, it is also important to
ensure that unused drugs that are returned to the previous supplier and
then re-enter the supply chain are just as safe as drugs going through
the chain for the first time. I am concerned that the provisions in
H.R. 1919, which allow the wholesaler to begin a new transaction
history when it sells a returned product, create the potential for
entry of illegitimate product into the system.
While I am pleased that H.R. 1919 sets national standards for the
licensing of wholesale distributors, I am concerned that these
standards preempt all state laws, effectively preventing states from
having stronger licensing standards if they deem it necessary in their
unique circumstance. National licensing standards should act as a floor
defining what states must require, not as a floor and a ceiling.
I am also concerned that if H.R. 1919 becomes law, there will be a
significant gap in the current level of information about a drug's path
through the supply chain. H.R. 1919 preempts all state requirements
regarding drug tracing on the date of enactment, but the new federal
standards do not go into effect until 2015. This leaves a potentially-
long window open for counterfeit or substandard products to enter the
supply chain and reach customers.
It is crucial that if we are going to preempt state efforts, we must
have a strong federal standard. This standard should serve as a true
building block to tracking drugs at the unit level, so that each and
every product is authenticated at the lowest unit of sale before they
reach patients, and counterfeit or contaminated products are kept out
of the drug supply chain or quickly eliminated from it. Unfortunately,
H.R. 1919 does not meet these goals.
While I do not want to stop this process from moving forward, I
remain concerned about the provisions in H.R. 1919 and look forward to
conference with the Senate to strengthen the bill and, ultimately,
enacting legislation that will truly protect the nation's drug supply.
Mr. PASCRELL. Mr. Speaker, as the House considers H.R. 1919, the
Safeguarding America's Pharmaceuticals Act of 2013, I would like to
voice my specific concerns with one provision within the legislation.
While the underlying bill seeks to address the issue of preventing
counterfeit drugs from reaching consumers, and improving national
regulatory standards for pharmaceuticals, Section 8 of the proposed
legislation instead mandates an electronic labeling requirement for
pharmaceuticals. This serves to eliminate hard copy professional
literature, and transition exclusively to electronic only literature.
Based on legislation passed by Congress in 2012, GAO was tasked with
studying the issue of e-labeling. This study is expected to be issued
in July of this year. I urge my colleagues to carefully consider the
potential ramifications of exclusive electronic labeling, and be
cautious about any premature legislative action on this issue until the
GAO report is released. The findings of this Congressionally mandated
study should be deliberated before making a change that has the
potential to impact consumers and providers.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Ohio (Mr. Latta) that the House suspend the rules and
pass the bill, H.R. 1919, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________