[Congressional Record (Bound Edition), Volume 159 (2013), Part 6]
[House]
[Pages 7783-7800]
[From the U.S. 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, 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--

[[Page 7784]]

       ``(A) in the case of a manufacturer or repackager, having a 
     valid registration in accordance with section 510; and
       ``(B) in the case of a wholesale distributor, third-party 
     logistics provider, or dispenser, licensed (as defined in 
     this section).
       ``(2) Dispenser.--The term `dispenser'--
       ``(A) subject to subparagraph (C), means a retail pharmacy, 
     hospital pharmacy, a group of chain pharmacies under common 
     ownership and control, or any other person authorized by law 
     to dispense or administer prescription drugs, to the extent 
     such pharmacy, group, or person does not act as a wholesale 
     distributor;
       ``(B) includes warehouses and distribution centers under 
     common ownership or control of entities described in 
     subparagraph (A) that are members of an affiliated group 
     pursuant to section 1504(a) of the Internal Revenue Code of 
     1986, to the extent such warehouses and distribution centers 
     do not act as a wholesale distributor; and
       ``(C) does not include a person who only dispenses 
     prescription drug product to be used in animals in accordance 
     with section 512(a)(5).
       ``(3) Disposition.--The term `disposition', with respect to 
     a prescription drug product within the possession and control 
     of an entity--
       ``(A) means the removal of such prescription drug product, 
     or taking measures to prevent the introduction of such 
     prescription drug product, from the pharmaceutical 
     distribution supply chain; and
       ``(B) may include disposal, return of the prescription drug 
     product for disposal, or other appropriate handling and other 
     actions such as retaining a sample of the prescription drug 
     product for additional physical examination or laboratory 
     analysis by a manufacturer or regulatory or law enforcement 
     agency.
       ``(4) Distribute or distribution.--The terms `distribute' 
     and `distribution' mean the sale, purchase, trade, delivery, 
     handling, or storage of a prescription drug product.
       ``(5) Illegitimate prescription drug product.--The term 
     `illegitimate prescription drug product' means a prescription 
     drug product which a manufacturer has confirmed--
       ``(A) is counterfeit, diverted, or stolen;
       ``(B) is intentionally adulterated such that the 
     prescription drug product would result in serious adverse 
     health consequences or death to humans; or
       ``(C) is otherwise unfit for distribution such that the 
     prescription drug product is reasonably likely to cause 
     serious adverse human health consequences or death.
       ``(6) Licensed.--The term `licensed' means--
       ``(A) in the case of a wholesale distributor, having a 
     valid license to make wholesale distributions consistent with 
     the standards under section 583;
       ``(B) in the case of a third-party logistics provider, 
     having a valid license to engage in the activities of a 
     third-party logistics provider in accordance with section 
     584; and
       ``(C) in the case of a dispenser, having a valid license to 
     dispense prescription drugs under State law.
       ``(7) Manufacturer.--The term `manufacturer' means, with 
     respect to a prescription drug product--
       ``(A) a person that holds an application approved under 
     section 505 or a license issued under section 351 of the 
     Public Health Service Act for such prescription drug product, 
     or if such prescription drug product is not the subject of an 
     approved application or license, the person who manufactured 
     the prescription drug product;
       ``(B) a co-licensed partner of the person described in 
     subparagraph (A) that obtains the prescription drug product 
     directly from the person described in such subparagraph; or
       ``(C) a person that--
       ``(i) is a member of an affiliated group (as defined in 
     section 1504(a) of the Internal Revenue Code of 1986) to 
     which a person described in subparagraph (A) or (B) is also a 
     member; and
       ``(ii) receives the prescription drug product directly from 
     a person described in subparagraph (A) or (B).
       ``(8) Package.--
       ``(A) In general.--The term `package' means the smallest 
     individual saleable unit of prescription drug product for 
     distribution in interstate commerce by a manufacturer or 
     repackager that is intended by the manufacturer for ultimate 
     sale to the dispenser of such prescription drug product.
       ``(B) Individual saleable unit.--The term `individual 
     saleable unit' means the smallest container of prescription 
     drug product introduced into interstate commerce by the 
     manufacturer or repackager that is intended by the 
     manufacturer for individual sale to a dispenser.
       ``(9) Prescription drug.--The term `prescription drug' 
     means a drug for human use subject to section 503(b)(1).
       ``(10) Prescription drug product.--The term `prescription 
     drug product' means a prescription drug in a finished dosage 
     form for administration to a patient without substantial 
     further manufacturing (such as capsules, tablets, and 
     lyophilized prescription drug products before 
     reconstitution).
       ``(11) Prescription drug product identifier.--The term 
     `prescription drug product identifier' means a standardized 
     graphic that--
       ``(A) includes the standardized numerical identifier, lot 
     number, and expiration date of a prescription drug product; 
     and
       ``(B) is in both human-readable form and on a machine-
     readable data carrier that conforms to the standards 
     developed by a widely recognized international standards 
     development organization.
       ``(12) Quarantine.--The term `quarantine' means to store or 
     identify a product, for the purpose of preventing 
     distribution or transfer of the product, in a physically 
     separate area clearly identified for such use, or through use 
     of other procedures such as automated designation.
       ``(13) Repackager.--The term `repackager' means a person 
     who owns or operates an establishment that repacks and 
     relabels a prescription drug product or package for further 
     sale or distribution.
       ``(14) Return.--The term `return' means providing 
     prescription drug product to the authorized trading partner 
     or trading partners from which such prescription drug product 
     was purchased or received, or to a returns processor for 
     handling of such prescription drug product.
       ``(15) Returns processor.--The terms `returns processor' 
     mean a person who owns or operates an establishment that 
     provides for the disposition of or otherwise processes 
     saleable and nonsaleable prescription drug product received 
     from an authorized trading partner such that the prescription 
     drug product may be processed for credit to the purchaser, 
     manufacturer, seller, or disposed of for no further 
     distribution.
       ``(16) Specific patient need.--The term `specific patient 
     need'--
       ``(A) means with respect to the transfer of a prescription 
     drug product from one pharmacy to another, to fill a 
     prescription for an identified patient; and
       ``(B) does not include the transfer of a prescription drug 
     product from one pharmacy to another for the purpose of 
     increasing or replenishing stock in anticipation of a 
     potential need.
       ``(17) Standardized numerical identifier.--The term 
     `standardized numerical identifier' means a set of numbers or 
     characters that--
       ``(A) is used to uniquely identify each package or 
     homogenous case of the prescription drug product; and
       ``(B) is composed of the National Drug Code that 
     corresponds to the specific prescription drug product 
     (including the particular package configuration) combined 
     with a unique alphanumeric serial number of up to 20 
     characters.
       ``(18) Suspect prescription drug product.--The term 
     `suspect prescription drug product' means a prescription drug 
     product for which there is reason to believe that such 
     prescription drug product--
       ``(A) is potentially counterfeit, diverted, or stolen;
       ``(B) is potentially intentionally adulterated such that 
     the prescription drug product would result in serious adverse 
     health consequences or death to humans; or
       ``(C) appears otherwise unfit for distribution such that 
     the prescription drug product would result in serious adverse 
     health consequences or death to humans.
       ``(19) Third-party logistics provider.--The term `third-
     party logistics provider' means an entity that provides or 
     coordinates warehousing, distribution, or other logistics 
     services of a prescription drug product in interstate 
     commerce on behalf of a manufacturer, wholesale distributor, 
     or dispenser of a prescription drug product, but does not 
     take ownership of the prescription drug product, nor have 
     responsibility to direct the sale or disposition of, the 
     prescription drug product.
       ``(20) Trading partner.--The term `trading partner' means--
       ``(A) a manufacturer, repackager, wholesale distributor, or 
     dispenser from whom a manufacturer, repackager, wholesale 
     distributor, or dispenser accepts ownership of a prescription 
     drug product or to whom a manufacturer, repackager, wholesale 
     distributor, or dispenser transfers ownership of a 
     prescription drug product; or
       ``(B) a third-party logistics provider from whom a 
     manufacturer, repackager, wholesale distributor, or dispenser 
     accepts possession of a prescription drug product or to whom 
     a manufacturer, repackager, wholesale distributor, or 
     dispenser transfers possession of a prescription drug 
     product.
       ``(21) Transaction.--
       ``(A) In general.--The term `transaction' means the 
     transfer in interstate commerce of prescription drug product 
     between persons in which a change of ownership occurs.
       ``(B) Exemptions.--The term `transaction' does not 
     include--
       ``(i) intracompany distribution of any prescription drug 
     product, including between members of an affiliated group (as 
     defined in section 1504(a) of the Internal Revenue Code of 
     1986);
       ``(ii) the distribution of a prescription drug product 
     among hospitals or other health care entities that are under 
     common control;
       ``(iii) the distribution of a prescription drug product for 
     emergency medical reasons including a public health emergency 
     declaration pursuant to section 319 of the Public Health 
     Service Act, except that a drug shortage not caused by a 
     public health emergency

[[Page 7785]]

     shall not constitute an emergency medical reason;
       ``(iv) the dispensing of a prescription drug product 
     pursuant to a valid prescription executed in accordance with 
     section 503(b)(1);
       ``(v) the distribution of prescription drug product samples 
     by a manufacturer or a licensed wholesale distributor in 
     accordance with section 503(d);
       ``(vi) the distribution of blood or blood components 
     intended for transfusion;
       ``(vii) the distribution of minimal quantities of 
     prescription drug product by a licensed retail pharmacy to a 
     licensed practitioner for office use;
       ``(viii) the distribution of a prescription drug product by 
     a charitable organization to a nonprofit affiliate of the 
     organization to the extent otherwise permitted by law;
       ``(ix) the distribution of a prescription drug product 
     pursuant to the sale or merger of a pharmacy or pharmacies or 
     a wholesale distributor or wholesale distributors, except 
     that any records required to be maintained for the 
     prescription drug product shall be transferred to the new 
     owner of the pharmacy or pharmacies or wholesale distributor 
     or wholesale distributors;
       ``(x) the dispensing of a prescription drug product 
     approved under section 512(b);
       ``(xi) the transfer of prescription drug products to or 
     from any facility that is licensed by the Nuclear Regulatory 
     Commission or by a State pursuant to an agreement with such 
     Commission under section 274 of the Atomic Energy Act of 1954 
     (42 U.S.C. 2021);
       ``(xii) the distribution of a combination product that 
     consists of--

       ``(I) a product comprised of two or more components that 
     are each a drug, biological product, or device and that are 
     physically, chemically, or otherwise combined or mixed and 
     produced as a single entity;
       ``(II) two or more separate products packaged together in a 
     single package or as a unit and comprised of a drug and 
     device or a device and biological product; or
       ``(III) two or more finished devices plus one or more drug 
     or biological products which are packaged together in a 
     medical convenience kit described in clause (xiii);

       ``(xiii) the distribution of a medical convenience kit 
     which is a collection of finished products (consisting of 
     devices or drugs) assembled in kit form strictly for the 
     convenience of the purchaser or user if--

       ``(I) the medical convenience kit is assembled in an 
     establishment that is registered with the Food and Drug 
     Administration as a medical device manufacturer;
       ``(II) the person who manufacturers the medical convenience 
     kit purchased the prescription drug product directly from the 
     manufacturer or from a wholesale distributor that purchased 
     the prescription drug product directly from the manufacturer;
       ``(III) the person who manufacturers the medical 
     convenience kit does not alter the primary container or label 
     of the prescription drug product as purchased from the 
     manufacturer or wholesale distributor;
       ``(IV) the medical convenience kit does not contain a 
     controlled substance (as defined in section 102 of the 
     Controlled Substances Act); and
       ``(V) the prescription drug products contained in the 
     medical convenience kit are--

       ``(aa) intravenous solutions intended for the replenishment 
     of fluids and electrolytes;
       ``(bb) drugs intended to maintain the equilibrium of water 
     and minerals in the body;
       ``(cc) drugs intended for irrigation or reconstitution;
       ``(dd) anesthetics;
       ``(ee) anticoagulants;
       ``(ff) vasopressors; or
       ``(gg) sympathicomimetics;
       ``(xiv) the distribution of an intravenous prescription 
     drug product that, by its formulation, is intended for the 
     replenishment of fluids and electrolytes (such as sodium, 
     chloride, and potassium) or calories (such as dextrose and 
     amino acids);
       ``(xv) the distribution of an intravenous prescription drug 
     product used to maintain the equilibrium of water and 
     minerals in the body, such as dialysis solutions;
       ``(xvi) the distribution of a prescription drug product 
     that is intended for irrigation or reconstitution, or sterile 
     water, whether intended for such purposes or for injection;
       ``(xvii) the distribution of compressed medical gas; or
       ``(xviii)(I) the distribution of a product by a dispenser, 
     or a wholesale distributor acting at the direction of the 
     dispenser, to a repackager registered under section 510 for 
     the purpose of repackaging the drug for use by that dispenser 
     or another health care entity that is under the dispenser's 
     ownership or control, so long as the dispenser retains 
     ownership of the prescription drug product; and
       ``(II) the saleable or nonsaleable return by such 
     repackager of such prescription drug product.
       ``(C) Compressed medical gas.--For purposes of subparagraph 
     (B)(xvii), the term `compressed medical gas' means any 
     substance in its gaseous or cryogenic liquid form that meets 
     medical purity standards and has application in a medical or 
     homecare environment, including oxygen and nitrous oxide.
       ``(22) Transaction history.--The term `transaction history' 
     means a statement that--
       ``(A) includes the transaction information for each 
     transaction conducted with respect to a prescription drug 
     product beginning with the manufacturer or initial purchase 
     distributor; and
       ``(B) is in paper or electronic form.
       ``(23) Transaction information.--The term `transaction 
     information' means--
       ``(A) the proprietary or established name or names of the 
     prescription drug product;
       ``(B) the strength and dosage form of the prescription drug 
     product;
       ``(C) the National Drug Code number of the prescription 
     drug product;
       ``(D) the container size;
       ``(E) the number of containers;
       ``(F) the lot number of the prescription drug product;
       ``(G) the date of the transaction;
       ``(H) the business name and address of the person from whom 
     ownership is being transferred; and
       ``(I) the business name and address of the person to whom 
     ownership is being transferred.
       ``(24) Transaction statement.--The `transaction statement' 
     is a statement, which states that the manufacturer, 
     repackager, wholesale distributor, third-party logistics 
     provider, or dispenser transferring ownership in a 
     transaction--
       ``(A) is authorized;
       ``(B) received transaction information and a transaction 
     statement as required under section 582 from the prior owner 
     of the prescription drug product;
       ``(C) did not knowingly and intentionally ship an 
     illegitimate prescription drug product;
       ``(D) did not knowingly and intentionally provide false 
     transaction information; and
       ``(E) did not knowingly and intentionally alter the 
     transaction history.
       ``(25) Verification and verify.--The terms `verification' 
     and `verify'--
       ``(A) mean determining whether the prescription drug 
     product identifier affixed to, or imprinted upon, a package 
     or homogeneous case of the prescription drug product 
     corresponds to the standardized numerical identifier or lot 
     number, and expiration date assigned to the prescription drug 
     product by the manufacturer or the repackager, as applicable; 
     and
       ``(B) include making the determination under subparagraph 
     (A) using human-readable or machine-readable methods.
       ``(26) Wholesale distributor.--The term `wholesale 
     distributor'--
       ``(A) means a person engaged in wholesale distribution (as 
     defined in section 583); and
       ``(B) excludes--
       ``(i) a manufacturer, a co-licensed partner of a 
     manufacturer, or a third-party logistics provider, or a 
     dispenser who does not engage in such wholesale distribution;
       ``(ii) a repackager engaged in such wholesale distribution; 
     or
       ``(iii) the distribution of prescription drug product or an 
     offer to distribute prescription drug product by an 
     authorized repackager that has taken ownership or possession 
     of the prescription drug product and repacked the 
     prescription drug product in accordance with the requirements 
     of section 582(e).

     ``SEC. 582. REQUIREMENTS.

       ``(a) In General.--
       ``(1) Compliance required.--An entity that is a 
     manufacturer, repackager, wholesale distributor, third-party 
     logistics provider, or dispenser shall comply with the 
     requirements of this section. If an entity meets the 
     definition of more than one of the entities referred to in 
     the preceding sentence, such entity shall comply with all 
     applicable requirements of this section, but shall not be 
     required to comply with duplicative requirements.
       ``(2) Standards.--The Secretary shall, in consultation with 
     other appropriate Federal officials, manufacturers, 
     repackagers, wholesale distributors, third-party logistics 
     providers, and dispensers, establish, by regulation, 
     standards for the exchange of transaction history and 
     transaction statement (in paper or electronic form) for 
     purposes of complying with this section. The standards 
     established under this paragraph shall be in accordance with 
     a form developed by a widely recognized international 
     standards development organization. In establishing such 
     standards, the Secretary shall consider the feasibility of 
     establishing standardized documentation to be used by all 
     members of the pharmaceutical distribution supply chain to 
     convey the transaction history and transaction statement to 
     the subsequent owner of a prescription drug product. The 
     Secretary shall publish such standards not later than 180 
     days after the date of the enactment of the Safeguarding 
     America's Pharmaceuticals Act of 2013.
       ``(3) Waivers, exceptions, and exemptions.--Not later than 
     one year after the date of the enactment of the Safeguarding 
     America's Pharmaceuticals Act of 2013, the Secretary shall 
     promulgate a regulation to--
       ``(A) establish a process by which the Secretary may grant, 
     at the request of an authorized manufacturer, repackager, 
     wholesale distributor, or dispenser, a waiver from any of the 
     requirements of this section--
       ``(i) if the Secretary determines that such requirements 
     would result in an undue economic hardship; or

[[Page 7786]]

       ``(ii) for emergency medical reasons, including a public 
     health emergency declaration pursuant to section 319 of the 
     Public Health Service Act;
       ``(B) establish a process, with respect to the prescription 
     drug product identifier requirement under paragraph (2) of 
     subsections (b), (c), (d), and (e) through which--
       ``(i) a manufacturer or repackager may request a waiver 
     with respect to prescription drug products that are packaged 
     in a container too small or otherwise unable to accommodate a 
     label with sufficient space to bear the information required 
     for compliance with such requirement; and
       ``(ii) the Secretary determines whether to waive such 
     requirement; and
       ``(C) establish a process by which the Secretary may add 
     the prescription drug products or transactions that are 
     exempt from the requirements of this section.
       ``(4) Grandfathered persons and prescription drug 
     products.--
       ``(A) In general.--Not later than one year after the date 
     of the enactment of the Safeguarding America's 
     Pharmaceuticals Act of 2013, the Secretary shall specify, by 
     regulation, whether and under what circumstances the 
     prescription drug product identifier requirement under 
     paragraph (2) of subsections (b), (c), (d), and (e) shall 
     apply to a prescription drug product that is in the supply 
     chain or in a manufacturer's inventory on the date of the 
     enactment of the Safeguarding America's Pharmaceuticals Act 
     of 2013.
       ``(B) Third-party logistics provider licenses.--Until the 
     date that is 1 year after the effective date of the third-
     party logistics provider licensing requirements under section 
     584, a third-party logistics provider shall be considered 
     `licensed' under section 581(6)(B) unless the Secretary has 
     made a finding that the third-party logistics provider does 
     not utilize good handling and distribution practices and 
     publishes notice thereof.
       ``(C) Label changes.--Changes made to package labels solely 
     to incorporate the prescription drug product identifier may 
     be submitted to the Secretary in the annual report of an 
     establishment, in accordance with section 314.70(d) of 
     chapter 21, Code of Federal Regulations (or any successor 
     regulation).
       ``(b) Manufacturer Requirements.--
       ``(1) Prescription drug product tracing.--
       ``(A) In general.--Beginning not later than January 1, 
     2015, a manufacturer shall--
       ``(i) prior to, or at the time of, each transaction in 
     which such manufacturer transfers ownership of a prescription 
     drug product--

       ``(I) until the date than is 5 years after the date of the 
     enactment of the Safeguarding America's Pharmaceuticals Act 
     of 2013, provide the subsequent owner with the transaction 
     history and a transaction statement in a single document in 
     paper or electronic form; and
       ``(II) on or after such date, provide the subsequent owner 
     with the transaction history and a transaction statement in 
     electronic form; and

       ``(ii) maintain the transaction information for each such 
     transaction for not less than 3 years after the date of the 
     transaction.
       ``(B) Requests for information.--Upon a request by the 
     Secretary or other appropriate Federal or State official, in 
     the event of a recall or for the purpose of investigating a 
     suspect prescription drug product or an illegitimate 
     prescription drug product, a manufacturer shall, not later 
     than 2 business days after receiving the request or in such 
     reasonable time as determined by the Secretary, provide to 
     the Secretary or other official, the applicable transaction 
     history and transaction statement for the prescription drug 
     product.
       ``(2) Prescription drug product identifier.--Beginning not 
     later than 5 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, a 
     manufacturer shall affix or imprint a prescription drug 
     product identifier on each package and homogenous case of a 
     prescription drug product intended to be introduced in a 
     transaction. Such manufacturer shall maintain the information 
     in the prescription drug product identifier for such 
     prescription drug product for not less than 3 years after the 
     date of the transaction.
       ``(3) Authorized trading partners.--Beginning not later 
     than January 1, 2015, a manufacturer shall ensure that each 
     of its trading partners is authorized.
       ``(4) List of authorized distributors of record.--Beginning 
     not later than January 1, 2015, each manufacturer of a 
     prescription drug shall--
       ``(A) maintain a list of the authorized distributors of 
     record of such drug at the corporate offices of such 
     manufacturer;
       ``(B) make such list publicly available, including 
     placement on the Internet Website of such manufacturer; and
       ``(C) update such list not less than once per quarter.
       ``(5) Verification.--Beginning not later than January 1, 
     2015, a manufacturer shall implement systems and processes to 
     enable the manufacturer to comply with the following 
     requirements:
       ``(A) Suspect prescription drug product.--
       ``(i) In general.--Upon making a determination that a 
     prescription drug product in the possession or control of the 
     manufacturer is a suspect prescription drug product, or upon 
     receiving a request for verification from the Secretary that 
     a prescription drug product within the possession or control 
     of a manufacturer is a suspect prescription drug product, a 
     manufacturer shall promptly conduct an investigation in 
     coordination with trading partners, as applicable, to 
     determine whether the prescription drug product is an 
     illegitimate prescription drug product. Beginning not later 
     than 5 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, such 
     investigation shall include--

       ``(I) verifying the prescription drug product at the 
     package level;
       ``(II) validating any applicable transaction history in the 
     possession of the manufacturer; and
       ``(III) otherwise investigating to determine whether the 
     prescription drug product is an illegitimate prescription 
     drug product.

       ``(ii) Cleared prescription drug product.--If the 
     manufacturer determines that a suspect prescription drug 
     product is not an illegitimate prescription drug product, the 
     manufacturer shall promptly notify the Secretary of such 
     determination and such prescription drug product may be 
     further distributed.
       ``(iii) Records.--A manufacturer shall keep records of its 
     investigation of a suspect prescription drug product for not 
     less than 3 years after the conclusion of the investigation.
       ``(B) Illegitimate prescription drug product.--
       ``(i) In general.--Upon determining that a prescription 
     drug product in the possession or control of a manufacturer 
     is an illegitimate prescription drug product, the 
     manufacturer shall--

       ``(I) quarantine such prescription drug product from 
     prescription drug product intended for distribution; and
       ``(II) provide for the disposition of the illegitimate 
     prescription drug product.

       ``(ii) Trading partner.--Upon determining that a 
     prescription drug product in the possession or control of a 
     trading partner is an illegitimate prescription drug product, 
     the manufacturer shall take reasonable steps to assist a 
     trading partner to provide for the disposition of the 
     illegitimate prescription drug product.
       ``(iii) Making a notification.--Upon determining that a 
     prescription drug product in the possession or control of the 
     manufacturer is an illegitimate prescription drug product, 
     the manufacturer shall notify the Secretary of such 
     determination not later than 24 hours after making such 
     determination. The Secretary shall determine whether 
     additional trading partner notification is appropriate.
       ``(iv) Responding to a notification.--Upon the receipt of a 
     notification from the Secretary that a determination has been 
     made that a prescription drug product is an illegitimate 
     prescription drug product, a manufacturer shall--

       ``(I) identify all illegitimate prescription drug products 
     that are subject to such notification and in the possession 
     or control of the manufacturer, including any prescription 
     drug product that is subsequently received; and
       ``(II) perform the activities described in clause (i).

       ``(v) Records.--A manufacturer shall keep records of the 
     disposition of an illegitimate prescription drug product for 
     not less than 3 years after the conclusion of the 
     disposition.
       ``(C) Electronic database.--A manufacturer may satisfy the 
     requirements of this paragraph through the use of a secure 
     electronic database developed and operated by the 
     manufacturer or another entity. The owner of such database 
     shall establish the requirements and processes to respond to 
     requests and may provide for data access to other members of 
     the pharmaceutical distribution supply chain, as appropriate. 
     The development and operation of such a database shall not 
     relieve a manufacturer of the requirement under this 
     paragraph to respond to a verification request submitted by 
     means other than a secure electronic database.
       ``(D) Returned prescription drug product.--Beginning not 
     later than 5 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, upon 
     receipt of a returned prescription drug product that the 
     manufacturer intends to further distribute, before further 
     distributing such prescription drug product, the manufacturer 
     shall--
       ``(i) verify the prescription drug product identifier for 
     each sealed homogeneous case of such prescription drug 
     product; or
       ``(ii) if such prescription drug product is not in a sealed 
     homogeneous case, verify the prescription drug product 
     identifier on each package.
       ``(c) Wholesale Distributor Requirements.--
       ``(1) Prescription drug product tracing.--
       ``(A) In general.--Beginning not later than April 1, 2015, 
     a wholesale distributor shall--
       ``(i) not accept ownership of a prescription drug product 
     unless the previous owner prior to, or at the time of, the 
     transaction provides the applicable transaction history and a 
     transaction statement for the prescription drug product;

[[Page 7787]]

       ``(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

[[Page 7788]]

     with transaction history and a transaction statement for the 
     prescription drug product, except that the requirements of 
     this clause shall not apply to sales by a dispenser to 
     another dispenser to fulfill a specific patient need; and
       ``(iii) shall maintain transaction information for a period 
     of not less than 3 years after the date of the transaction.
       ``(B) Agreements with third parties.--A dispenser may enter 
     into a written agreement with a third party, including an 
     authorized wholesale distributor, under which the third party 
     confidentially maintains the transaction information required 
     to be maintained under this subsection on behalf of the 
     dispenser. If a dispenser enters into such an agreement, the 
     dispenser shall maintain a copy of the written agreement.
       ``(C) Returns exception.--
       ``(i) Saleable returns.--Notwithstanding subparagraph 
     (A)(ii), a dispenser may return prescription drug product to 
     the trading partner from which the dispenser obtained the 
     prescription drug product without providing the information 
     required under such subparagraph.
       ``(ii) Nonsaleable returns.--Notwithstanding subparagraph 
     (A)(ii), a dispenser may return a nonsaleable prescription 
     drug to the manufacturer or repackager, to the wholesale 
     distributor from whom such prescription drug was purchased, 
     to a returns processor, or to a person acting on behalf of 
     such persons without providing the information required under 
     such subparagraph.
       ``(D) Requests for information.--Upon a request by the 
     Secretary or other appropriate Federal or State official, in 
     the event of a recall or for the purpose of investigating a 
     suspect prescription drug product or an illegitimate 
     prescription drug product--
       ``(i) a dispenser shall not later than 2 business days 
     after receiving the request or in another such reasonable 
     time as determined by the Secretary, provide the applicable 
     transaction history and transaction statement which the 
     dispenser received from the previous owner;
       ``(ii) the information provided by the dispenser under 
     clause (i) is not required to include the lot number of the 
     product, the initial date of the transaction, or the initial 
     date of the shipment from the manufacturer unless such 
     information was provided electronically by the previous 
     owner, manufacturer, or wholesale distributor to the 
     dispenser; and
       ``(iii) a dispenser may respond to the request by providing 
     the paper documentation received from the previous owner or 
     by providing electronic information.
       ``(2) Prescription drug product identifier.--Beginning not 
     later than 8 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, a 
     dispenser may engage in transactions involving a prescription 
     drug product only if such prescription drug product is 
     encoded with a prescription drug product identifier, except 
     as provided in subsection (a)(4).
       ``(3) Authorized trading partners.--Beginning not later 
     than January 1, 2015, a dispenser shall ensure that each of 
     its trading partners is authorized.
       ``(4) Verification.--Beginning not later than January 1, 
     2015, a dispenser shall implement systems to enable the 
     dispenser to comply with the following requirements:
       ``(A) Suspect prescription drug product.--
       ``(i) In general.--Upon making a determination that a 
     prescription drug product in the possession or control of the 
     dispenser is a suspect prescription drug product, or upon 
     receiving a request for verification from the Secretary that 
     a prescription drug product within the possession or control 
     of a dispenser is a suspect prescription drug product, a 
     dispenser shall promptly conduct an investigation to 
     determine whether the prescription drug product is an 
     illegitimate prescription drug product. Such investigation 
     shall include--

       ``(I) verifying whether the lot number of a suspect 
     prescription drug product corresponds with the lot number for 
     such prescription drug product;
       ``(II) beginning 8 years after the date of the enactment of 
     the Safeguarding America's Pharmaceuticals Act of 2013, 
     verifying that the product identifier of at least 3 packages 
     or 10 percent of such suspect prescription drug product, 
     whichever is greater, or all packages, if there are fewer 
     than 3, corresponds with the prescription drug product 
     identifier for such product;
       ``(III) validating any applicable transaction history in 
     the possession of the dispenser; and
       ``(IV) otherwise investigating to determine whether the 
     prescription drug product is an illegitimate prescription 
     drug product.

       ``(ii) Cleared prescription drug product.--If the dispenser 
     makes the determination that a suspect prescription drug 
     product is not an illegitimate prescription drug product, the 
     dispenser shall promptly notify the Secretary of such 
     determination and such prescription drug product may be 
     further dispensed.
       ``(iii) Records.--A dispenser shall keep records of its 
     investigation of a suspect prescription drug product for not 
     less than 3 years after the conclusion of the investigation.
       ``(B) Illegitimate prescription drug product.--
       ``(i) In general.--Upon receiving notice that a 
     manufacturer of a prescription drug product has determined 
     that a prescription drug product in the possession or control 
     of a dispenser is an illegitimate prescription drug product, 
     the dispenser shall--

       ``(I) quarantine such prescription drug product within the 
     possession or control of the dispenser from prescription drug 
     product intended for distribution; and
       ``(II) provide for the disposition of the illegitimate 
     prescription drug product within the possession or control of 
     the dispenser.

       ``(ii) Trading partners.--Upon determining that a 
     prescription drug product in the possession or control of a 
     trading partner is an illegitimate prescription drug product, 
     the dispenser shall take reasonable steps to assist a trading 
     partner to provide for the disposition of the illegitimate 
     prescription drug product.
       ``(iii) Making a notification.--Upon determining that a 
     prescription drug product in the possession or control of the 
     dispenser is an illegitimate prescription drug product, the 
     dispenser shall notify the Secretary of such determination 
     not later than 24 hours after making such determination. The 
     Secretary shall determine whether additional trading partner 
     notification is appropriate.
       ``(iv) Responding to a notification.--Upon the receipt of a 
     notification from the Secretary that a determination has been 
     made that a prescription drug product is an illegitimate 
     prescription drug product, a dispenser shall--

       ``(I) identify all illegitimate prescription drug products 
     that are subject to such notification and in the possession 
     or control of the dispenser, including any such prescription 
     drug product that is subsequently received; and
       ``(II) perform the activities described in clause (i).

       ``(v) Records.--A dispenser shall keep records of the 
     disposition of an illegitimate prescription drug product for 
     not less than 3 years after the conclusion of the 
     disposition.
       ``(C) Electronic database.--A dispenser may satisfy the 
     requirements of this paragraph through the use of a secure 
     electronic database developed and operated by the 
     manufacturer or another entity. The owner of such database 
     shall establish the requirements and processes to enable 
     responding to requests and may provide for data access to 
     other members of the pharmaceutical distribution supply 
     chain, as appropriate. The development and operation of such 
     a database shall not relieve a dispenser of the requirement 
     under this paragraph to respond to a verification request 
     submitted by means other than a secure electronic database.
       ``(e) Repackager Requirements.--
       ``(1) Prescription drug product tracing.--
       ``(A) In general.--Beginning not later than April 1, 2015, 
     with respect to a prescription drug product received by a 
     repackager from a wholesale distributor, and beginning not 
     later than January 1, 2015, with respect to any other 
     prescription drug product, a repackager shall--
       ``(i) not accept ownership of a prescription drug product 
     unless the previous owner, prior to, or at the time of, the 
     transaction, provides transaction history and a transaction 
     statement for the prescription drug product;
       ``(ii) prior to, or at the time of, each transaction in 
     which the repackager transfers ownership of a prescription 
     drug product, provide the subsequent owner with transaction 
     history and a transaction statement;
       ``(iii) maintain the transaction information for each 
     transaction described in clause (i) or (ii) for not less than 
     3 years after the transaction; and
       ``(iv) maintain records that allow the repackager to 
     associate the prescription drug product identifier the 
     repackager affixes or imprints with the prescription drug 
     product identifier assigned by the original manufacturer of 
     the prescription drug product.
       ``(B) Returns exception.--Notwithstanding subparagraph 
     (A)(ii), a repackager may return prescription drug product to 
     the trading partner from whom the repackager obtained the 
     prescription drug product without providing the information 
     required under such subparagraph.
       ``(C) Requests for information.--Upon a request by the 
     Secretary or other appropriate Federal or State official, in 
     the event of a recall or for the purpose of investigating a 
     suspect prescription drug product or an illegitimate 
     prescription drug product, a repackager shall, not later than 
     2 business days after receiving the request or in such other 
     reasonable time as determined by the Secretary, provide the 
     applicable transaction history and transaction statement for 
     the prescription drug product.
       ``(2) Prescription drug product identifier.--Beginning not 
     later than 6 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, a 
     repackager--
       ``(A) shall affix or imprint a prescription drug product 
     identifier to each package and homogenous case of 
     prescription drug product intended to be introduced in a 
     transaction;
       ``(B) shall maintain the prescription drug product 
     identifier for such prescription drug

[[Page 7789]]

     product for not less than 3 years after the date of the 
     transaction; and
       ``(C) may engage in transactions involving a prescription 
     drug product only if such prescription drug product is 
     encoded with a prescription drug product identifier except as 
     provided in subsection (a)(4).
       ``(3) Authorized trading partners.--Beginning on January 1, 
     2015, a repackager shall ensure that each of its trading 
     partners is authorized.
       ``(4) Verification.--Beginning not later than January 1, 
     2015, a repackager shall implement systems to enable the 
     repackager to comply with the following requirements:
       ``(A) Suspect prescription drug product.--
       ``(i) In general.--Upon making a determination that a 
     prescription drug product in the possession or control of the 
     repackager is a suspect prescription drug product, or upon 
     receiving a request for verification from the Secretary that 
     a prescription drug product within the possession or control 
     of a repackager is a suspect prescription drug product, a 
     repackager shall promptly conduct an investigation to 
     determine whether the prescription drug product is an 
     illegitimate prescription drug product, including--

       ``(I) beginning not later than 6 years after the date of 
     the enactment of the Safeguarding America's Pharmaceuticals 
     Act of 2013, verifying the prescription drug product at the 
     package level;
       ``(II) validating any applicable transaction information in 
     the possession of the repackager; and
       ``(III) otherwise investigating to determine whether the 
     prescription drug product is an illegitimate prescription 
     drug product.

       ``(ii) Cleared prescription drug product.--If the 
     repackager determines that a suspect prescription drug 
     product is not an illegitimate prescription drug product, the 
     repackager shall promptly notify the Secretary of such 
     determination and such prescription drug product may be 
     further distributed.
       ``(iii) Records.--A repackager shall keep records of its 
     investigation of a suspect prescription drug product for not 
     less than 3 years after the conclusion of the investigation.
       ``(B) Illegitimate prescription drug product.--
       ``(i) In general.--Upon receiving notice that a 
     manufacturer of a prescription drug product has determined 
     that a prescription drug product in the possession or control 
     of a repackager is an illegitimate prescription drug product, 
     the repackager shall--

       ``(I) quarantine such prescription drug product within the 
     possession or control of the repackager from prescription 
     drug product intended for distribution; and
       ``(II) provide for the disposition of the illegitimate 
     prescription drug product within the possession or control of 
     the repackager.

       ``(ii) Trading partner.--Upon determining that a 
     prescription drug product in the possession or control of a 
     trading partner is an illegitimate prescription drug product, 
     the repackagers shall take reasonable steps to assist the 
     trading partner to provide for the disposition of the 
     illegitimate prescription drug product.
       ``(iii) Making a notification.--Upon determining that a 
     prescription drug product in the possession or control of the 
     repackager is an illegitimate prescription drug product, the 
     repackager shall notify the Secretary of such determination 
     not later than 24 hours after making such determination. The 
     Secretary shall determine whether additional trading partner 
     notification is appropriate.
       ``(iv) Responding to a notification.--Upon the receipt of a 
     notification from the Secretary that a determination has been 
     made that a prescription drug product is an illegitimate 
     prescription drug product, a repackager shall--

       ``(I) identify all illegitimate prescription drug products 
     that are subject to such notification and in the possession 
     or control of the repackager, including any such prescription 
     drug product that is subsequently received; and
       ``(II) perform the activities described in clause (i).

       ``(v) Records.--A repackager shall keep records of the 
     disposition of an illegitimate prescription drug product for 
     not less than 3 years after the conclusion of the 
     disposition.
       ``(C) Electronic database.--A repackager may satisfy the 
     requirements of this paragraph through the use of a secure 
     electronic database developed and operated by the 
     manufacturer or another entity. The owner of such database 
     shall establish the requirements and processes to respond to 
     requests and may provide for data access to other members of 
     the pharmaceutical distribution supply chain, as appropriate. 
     The development and operation of such a database shall not 
     relieve a repackager of the requirement under this paragraph 
     to respond to a verification request submitted by means other 
     than a secure electronic database.
       ``(D) Returned prescription drug product.--Beginning not 
     later than 6 years after the date of the enactment of the 
     Safeguarding America's Pharmaceuticals Act of 2013, upon 
     receipt of a returned prescription drug product that the 
     repackager intends to further distribute, before further 
     distributing such prescription drug product, the repackager 
     shall--
       ``(i) verify the prescription drug product identifier for 
     each sealed homogeneous case of such prescription drug 
     product; or
       ``(ii) if such prescription drug product is not in a sealed 
     homogeneous case, verify the prescription drug product 
     identifier on each package.
       ``(f) Third-Party Logistics Provider Requirements.--
       ``(1) Authorized trading partners.--Beginning on January 1, 
     2015, a third-party logistics provider shall ensure that each 
     of its trading partners is authorized.
       ``(2) Verification.--Beginning not later than January 1, 
     2015, a third-party logistics provider shall implement 
     systems to enable the third-party logistics provider to 
     comply with the following requirements:
       ``(A) Suspect prescription drug product.--
       ``(i) In general.--Upon making a determination that a 
     prescription drug product in the possession or control of a 
     third-party logistics provider is a suspect prescription drug 
     product, a third-party logistics provider shall promptly 
     notify the owner of such prescription drug product of the 
     need to conduct an investigation to determine whether the 
     prescription drug product is an illegitimate prescription 
     drug product.
       ``(ii) Cleared prescription drug product.--If the owner of 
     the prescription drug product notifies the third-party 
     logistics provider of the determination that a suspect 
     prescription drug product is not an illegitimate prescription 
     drug product, such prescription drug product may be further 
     distributed.
       ``(iii) Records.--A third-party logistics provider shall 
     keep records of the activities described in clauses (i) and 
     (ii) with respect to a suspect prescription drug product for 
     not less than 3 years after the conclusion of the 
     investigation.
       ``(B) Illegitimate prescription drug product.--
       ``(i) In general.--Upon receiving notice that a 
     manufacturer of a prescription drug product has determined 
     that a prescription drug product in the possession or control 
     of a third-party logistics provider is an illegitimate 
     prescription drug product, the third-party logistics provider 
     shall--

       ``(I) quarantine such prescription drug product within the 
     possession or control of the third-party logistics provider 
     from prescription drug product intended for distribution;
       ``(II) promptly notify the owner of such prescription drug 
     product of the need to provide for the disposition of such 
     prescription drug product; and
       ``(III) promptly transfer possession of the prescription 
     drug product to the owner of such prescription drug product 
     to provide for the disposition of the prescription drug 
     product.

       ``(ii) Making a notification.--Upon determining that a 
     prescription drug product in the possession or control of the 
     third-party logistics provider is an illegitimate 
     prescription drug product, the third-party logistics provider 
     shall notify the Secretary not later than 24 hours after 
     making such determination. The Secretary shall determine 
     whether additional trading partner notification is 
     appropriate.
       ``(iii) Responding to a notification.--Upon the receipt of 
     a notification from the Secretary, a third-party logistics 
     provider shall--

       ``(I) identify all illegitimate prescription drug products 
     subject to such notification that are in the possession or 
     control of the third-party logistics provider, including any 
     such prescription drug product that is subsequently received; 
     and
       ``(II) perform the activities described in clause (i).

       ``(iv) Records.--A third-party logistics provider shall 
     keep records of the activities described in clauses (i) and 
     (ii) with respect to an illegitimate prescription drug 
     product for not less than 3 years after the conclusion of the 
     disposition.
       ``(g) Drop Shipments.--This section does not apply to any 
     entity, notwithstanding its status as a wholesale distributor 
     or repackager, or other status that is not involved in the 
     physical handling, distribution, or storage of a prescription 
     drug product. For purposes of this subsection, facilitating 
     the distribution of a prescription drug product by providing 
     various administrative services, including processing of 
     orders and payments, shall not, by itself, be construed as 
     being involved in the handling, distribution, or storage of a 
     prescription drug product.''.

     SEC. 3. ENHANCED DRUG DISTRIBUTION SECURITY.

       (a) Pilot Projects.--
       (1) In general.--Not later than 2 years after the date of 
     the enactment of this Act, the Secretary shall establish one 
     or more pilot projects in coordination with manufacturers, 
     repackagers, wholesale distributors, third-party logistics 
     providers, and dispensers to explore and evaluate methods to 
     enhance the safety and security of the pharmaceutical 
     distribution supply chain.
       (2) Content.--
       (A) In general.--The Secretary shall ensure that the pilot 
     projects under paragraph (1) collectively--
       (i) reflect the diversity of the pharmaceutical 
     distribution supply chain; and

[[Page 7790]]

       (ii) include participants representative of every sector 
     within the pharmaceutical distribution supply chain, 
     including participants representative of small businesses.
       (B) Project design.--The pilot projects shall be designed 
     to--
       (i) utilize the prescription drug product identifier for 
     tracing of a prescription drug product, which utilization may 
     include--

       (I) verification of the prescription drug product 
     identifier of a prescription drug product; and
       (II) the use of aggregation and inference;

       (ii) improve the technical capabilities of each sector 
     within the pharmaceutical supply chain to comply with systems 
     and processes needed to utilize the prescription drug product 
     identifiers to enhance tracing of a prescription drug 
     product; and
       (iii) conduct such other activities as the Secretary 
     determines appropriate to explore and evaluate methods to 
     enhance the safety and security of the pharmaceutical 
     distribution supply chain.
       (b) Public Meetings.--
       (1) In general.--Not later than 6 months after the date of 
     the enactment of this Act, and at least every 6 months 
     thereafter until the submission of the report required by 
     subsection (e)(2), the Secretary shall hold a public meeting 
     to enhance the safety and security of the pharmaceutical 
     distribution supply chain. In conducting such meetings, the 
     Secretary shall take all measures reasonable and practicable 
     to ensure the protection of confidential commercial 
     information and trade secrets.
       (2) Content.--In conducting meetings under this subsection, 
     the Secretary shall seek to address, in at least one such 
     meeting, each of the following topics:
       (A) Best practices in each of the sectors within the 
     pharmaceutical distribution supply chain to implement the 
     requirements of section 582 of the Federal Food, Drug, and 
     Cosmetic Act, as added by section 2.
       (B) The costs and benefits of implementation of such 
     section 582, including the impact on each pharmaceutical 
     distribution supply chain sector and on public health.
       (C) Whether additional electronic traceability 
     requirements, including tracing of prescription drug product 
     at the package level, are feasible, cost effective, overly 
     burdensome on small businesses, and needed to protect public 
     health.
       (D) The systems and processes needed to utilize the 
     prescription drug product identifiers to enhance tracing of 
     prescription drug product at the package level, including 
     allowing for verification, aggregation, and inference by each 
     sector within the pharmaceutical distribution supply chain 
     for cases, pallets, totes, and other containers of aggregated 
     prescription drug product as necessary.
       (E) The technical capabilities and legal authorities, if 
     any, needed to establish an electronic system that provides 
     for enhanced tracing of prescription drug product at the 
     package level.
       (F) The impact that the requirements, systems, processes, 
     capabilities, and legal authorities referred to in 
     subparagraphs (C), (D), and (E) would have on patient safety, 
     the drug supply, cost and regulatory burden, the timeliness 
     of patient access to prescription drugs, and small 
     businesses.
       (c) Study of the Pharmaceutical Distribution Supply 
     Chain.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study to examine implementation of the 
     requirements established under subchapter H of chapter V of 
     the Federal Food, Drug, and Cosmetic Act, as added by section 
     2, in order to inform the regulations promulgated under this 
     section.
       (2) Consideration.--In conducting the study under this 
     subsection, the Comptroller General shall provide for 
     stakeholder input and shall consider the following:
       (A) The implementation of the requirements established 
     under such subchapter H with respect to--
       (i) the ability of the health care system collectively to 
     maintain patient access to medicines;
       (ii) the scalability of such requirements, including with 
     respect to prescription drug product lines; and
       (iii) the capability of different sectors within the 
     pharmaceutical distribution supply chain, including small 
     businesses, to affix and utilize the prescription drug 
     product identifier.
       (B) The need for additional legal authorities and 
     activities to address additional gaps in the pharmaceutical 
     distribution supply chain, if any, after the implementation 
     of the requirements established under such subchapter H with 
     respect to--
       (i) the systems and processes needed to enhance tracing of 
     prescription drug product at the package level, including the 
     use and evaluation of verification, aggregation, and 
     inference by each sector within the pharmaceutical 
     distribution supply chain as necessary;
       (ii) the impact, feasibility, and cost effectiveness that 
     additional requirements pursuant to this section would have 
     on each pharmaceutical distribution supply chain sector and 
     the public health; and
       (iii) the systems and processes needed to enhance 
     interoperability among trading partners.
       (C) Risks to the security and privacy of data collected, 
     maintained, or exchanged pursuant to the requirements 
     established under such subchapter H.
       (d) Small Dispensers.--
       (1) In general.--Not later than 10 years after the date of 
     the enactment of this Act, the Secretary shall enter into a 
     contract with a private, independent consulting firm with 
     relevant expertise to conduct a technology and software study 
     on the feasibility of dispensers that have 25 or fewer full-
     time employees conducting interoperable, electronic tracing 
     of prescription drug products at the package level.
       (2) Condition.--As a condition of the award of a contract 
     under paragraph (1), the private independent consulting firm 
     awarded such contract shall agree to consult with dispensers 
     that have 25 or fewer full-time employees when conducting the 
     study under such subparagraph.
       (3) Study content.--The study conducted under paragraph (1) 
     shall assess whether, with respect to conducting 
     interoperable, electronic tracing of prescription drug 
     products at the package level, the necessary hardware and 
     software--
       (A) is readily accessible to such dispensers;
       (B) is not prohibitively expensive to obtain, install, and 
     maintain for such dispensers; and
       (C) can be integrated into business practices, such as 
     interoperability with wholesale distributors, for such 
     dispensers.
       (4) Publication.--The Secretary shall publish--
       (A) the statement of work for the study conducted under 
     paragraph (1) for public comment not later than 30 days 
     before commencing the study; and
       (B) the final version of such study for public comment not 
     later than 30 days after such study is completed.
       (5) Report to congress.--Not later than 30 days after the 
     date on which the study conducted under paragraph (1) is 
     completed, the Secretary shall submit to the Committee on 
     Energy and Commerce of the House of Representatives and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate, a report on the findings of the study and any 
     recommendations to improve the technology and software 
     available to small dispensers for purposes of conducting 
     electronic, interoperable tracing of prescription drug 
     products at the package level.
       (6) Public meeting.--Not later than 180 days after the date 
     on which the study conducted under paragraph (1) is 
     completed, the Secretary shall hold a public meeting at which 
     members of the public, including stakeholders, may present 
     their views on the study.
       (e) Reports.--
       (1) GAO report.--Not later than 12 years after the date of 
     the enactment of this Act, the Comptroller General shall 
     submit to the Committee on Energy and Commerce of the House 
     of Representatives and the Committee on Health, Education, 
     Labor, and Pensions of the Senate a report on the results of 
     the study conducted under subsection (c).
       (2) FDA report.--Not later than 12 years after the date of 
     the enactment of this Act, the Secretary shall submit to the 
     Committee on Energy and Commerce of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions of the Senate a report on the results of 
     the pilot program conducted under subsection (a), taking into 
     consideration--
       (A) the comments received during the public meetings 
     conducted under subsection (b); and
       (B) the results of the study conducted, and the public 
     comments received during the public meeting held, under 
     subsection (d).
       (f) Establishment of Additional Requirements.--
       (1) In general.--Notwithstanding any other provision of 
     this Act, including the amendments made by this Act, not 
     earlier than January 1, 2027, and not later than March 1, 
     2027, the Secretary shall issue proposed regulations that 
     establish additional requirements to prevent a suspect 
     product, illegitimate product, or a product that is 
     counterfeit, stolen, diverted, or otherwise unfit for 
     distribution from entering into or being further distributed 
     in the supply chain, including--
       (A) requirements related to the use of interoperable 
     electronic systems and technologies for enhanced tracing of 
     prescription drug product at the package level, which may 
     include verification of the prescription drug product 
     identifier of a package of prescription drug product and 
     enhanced verification of saleable returns;
       (B) requirements related to the use of additional 
     prescription drug product identifiers or prescription drug 
     product identifier technology that meet the standards 
     developed under section 582(a)(2) of the Federal Food, Drug, 
     and Cosmetic Act, as added by section 2;
       (C) requirements related to the use of aggregation, 
     inference, and other methods, which shall permit the use of 
     aggregation and inference for cases, pallets, totes, and 
     other containers of aggregated prescription drug products by 
     each sector of the pharmaceutical distribution supply chain, 
     if determined to be necessary components of the

[[Page 7791]]

     systems and technologies referred to in subparagraph (A); and
       (D) other data transmission and maintenance requirements 
     and interoperability standards.
       (2) Flexibility.--The requirements described in paragraph 
     (1) shall provide for flexibility for a member of the 
     pharmaceutical supply chain, by--
       (A) with respect to dispensers, allowing a dispenser to 
     enter into a written agreement with a third party, including 
     an authorized wholesale distributor, under which--
       (i) the third party confidentially maintains any 
     information required to be maintained under such requirements 
     for the dispenser; and
       (ii) the dispenser maintains a copy of the written 
     agreement and is not relieved of the other obligations of the 
     dispenser under such requirements;
       (B) establishing a process by which an authorized 
     manufacturer, repackager, wholesale distributor, or dispenser 
     may request a waiver from any such requirements if the 
     Secretary determines that such requirements would result in 
     an undue economic hardship on the manufacturer, wholesale 
     distributor, or dispenser;
       (C) not requiring the adoption of specific business systems 
     by a member of the pharmaceutical supply chain for the 
     maintenance and transmission of prescription drug product 
     tracing data; and
       (D) prescribing alternative methods of compliance for small 
     businesses, as specified in paragraph (4).
       (3) Considerations.--In issuing proposed regulations under 
     paragraph (1), the Secretary shall consider--
       (A) the results of, and public comments resulting from, the 
     pilot project conducted under subsection (a);
       (B) the public meetings held under subsection (b) and 
     public comments from such meetings;
       (C) the studies conducted under subsections (c) and (d);
       (D) the reports submitted under subsection (e);
       (E) the public health benefits of such regulations compared 
     with the cost of compliance with the requirements contained 
     in such regulations, including with respect to entities of 
     varying sizes and capabilities; and
       (F) the diversity of the pharmaceutical distribution supply 
     chain by providing appropriate flexibility for each sector in 
     the supply chain, including small businesses.
       (4) Small business protection.--The Secretary, taking into 
     consideration the study conducted under paragraph (d), shall, 
     if the Secretary determines that the requirements established 
     pursuant to paragraph (1) would result in an undue economic 
     hardship on small businesses, provide for alternative methods 
     of compliance with any such requirement by small businesses, 
     including--
       (A) establishing timelines for such compliance (including 
     compliance by dispensers with 25 or fewer full-time 
     employees) that do not impose undue economic hardship for 
     small businesses, including dispensers with respect to which 
     the study concluded has insufficient hardware and software to 
     conduct interoperable, electronic tracing of prescription 
     drug products at the package level; and
       (B) establishing a process by which a dispenser may request 
     a waiver from any such requirement.
       (5) Regulations.--In issuing regulations to carry out this 
     subsection, the Secretary shall--
       (A) issue a notice of proposed rulemaking that includes a 
     copy of the proposed rule;
       (B) provide for a period of not less than 60 days for 
     comments on the proposed rule; and
       (C) provide for an effective date of the final rule that is 
     2 years after the date on which such final rule is published.
       (6) Sunset.--The requirements regarding the provision and 
     receipt of transaction history and transaction statements 
     under section 582 of the Federal Food, Drug, and Cosmetic 
     Act, as added by section 2, shall cease to be effective on 
     the date on which the regulations issued under this section 
     are fully implemented.
       (g) Definitions.--In this section:
       (1) The terms defined in section 581 of the Federal Food, 
     Drug, and Cosmetic Act, as added by section 2, shall have the 
     same meanings in this section as such terms are given in such 
     section 581.
       (2) The term ``Secretary'' means the Secretary of Health 
     and Human Services, acting through the Commissioner of Food 
     and Drugs.

     SEC. 4. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.

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

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

       ``(a) Standards.--
       ``(1) In general.--The Secretary shall establish, by 
     regulation, standards for the licensing of persons that make 
     wholesale distributions.
       ``(2) Requirements.--The standards under paragraph (1) 
     shall, with respect to wholesale distributions, include 
     requirements for--
       ``(A) the storage and handling of drugs subject to section 
     503(b)(1), including facility requirements;
       ``(B) the establishment and maintenance of records of the 
     distributions of such drugs;
       ``(C) the furnishing of a bond or other equivalent means of 
     security in accordance with paragraph (3);
       ``(D) mandatory background checks and fingerprinting of 
     facility managers or designated representatives;
       ``(E) the establishment and implementation of 
     qualifications for key personnel;

       ``(F) the mandatory physical inspection of any facility to 
     be used in wholesale distribution within a reasonable 
     timeframe from the initial application for licensure of the 
     wholesale distributor; and
       ``(G) in accordance with paragraph (5), the prohibition of 
     certain persons from engaging in wholesale distribution.
       ``(3) Bond or other security.--The requirements under 
     paragraph (2)(C) shall provide for the following:
       ``(A) An applicant that is not a government-owned-and-
     operated wholesale distributor, for the issuance or renewal 
     of a wholesale distributor license, shall submit a surety 
     bond of $100,000 or other equivalent means of security 
     acceptable to the applicable licensing authority.
       ``(B) For purposes of subparagraph (A), the applicable 
     licensing authority may accept a surety bond of less than 
     $100,000 if the annual gross receipts of the previous tax 
     year for the wholesale distributor is $10,000,000 or less, in 
     which case the surety bond may not be less than $25,000.
       ``(C) If a wholesale distributor can provide evidence that 
     it possesses the required bond in a State, the requirement 
     for a bond in another State is waived.
       ``(4) Inspections.--To satisfy the inspection requirement 
     under paragraph (2)(F), the Secretary may conduct the 
     inspection, or may accept an inspection by--
       ``(A) the government of the State in which the facility is 
     located; or
       ``(B) a third-party accreditation or inspection service 
     approved by the Secretary.
       ``(5) Prohibited persons.--The requirements under paragraph 
     (2) shall include requirements to prohibit a person from 
     receiving or maintaining licensure for wholesale distribution 
     if the person--
       ``(A) has been convicted of--
       ``(i) any felony for conduct relating to wholesale 
     distribution;
       ``(ii) any felony violation of section 301(i) or 301(k); or
       ``(iii) any felony violation of section 1365 of title 18, 
     United States Code, relating to prescription drug product 
     tampering; or
       ``(B) has engaged in a pattern of violating the 
     requirements of this section that presents a threat of 
     serious adverse health consequences or death to humans.
       ``(b) Reporting by Licensed Wholesale Distributors.--
       ``(1) Annual report.--Beginning not later than 1 year after 
     the date of the enactment of this section, each person 
     engaged in wholesale distribution in interstate commerce 
     shall submit on an annual basis, and update as necessary, a 
     report to the Secretary including--
       ``(A) the wholesale distributor's name;
       ``(B) the wholesale distributor's address;
       ``(C) a listing of each State in which the wholesale 
     distributor is licensed for wholesale distribution; and
       ``(D) any disciplinary actions taken by a State, the 
     Federal Government, or a foreign government during the 
     reporting period against the wholesale distributor.
       ``(2) Posting on internet.--The Secretary shall post on the 
     public Internet Website of the Food and Drug Administration 
     the name of each wholesale distributor, and the State in 
     which each such distributor is licensed, based on reports 
     under paragraph (1).
       ``(c) Preservation of State Authority.--This subchapter 
     does not prohibit a State from--
       ``(1) licensing wholesale distributors for the conduct of 
     wholesale distribution activities in the State in accordance 
     with this subchapter; and
       ``(2) collecting fees from wholesale distributors in 
     connection with such licensing,
     so long as the State does not require such licensure to the 
     extent to which an entity is engaged in third-party logistics 
     provider activities.
       ``(d) Definition.--In this section, the term `wholesale 
     distribution' means the distribution of a drug subject to 
     section 503(b)(1) to a person other than a consumer or 
     patient, but does not include--
       ``(1) intracompany distribution of any drug between members 
     of an affiliated group (as defined in section 1504(a) of the 
     Internal Revenue Code of 1986);
       ``(2) the distribution of a drug, or an offer to distribute 
     a drug among hospitals or other health care entities which 
     are under common control;
       ``(3) the distribution of a drug or an offer to distribute 
     a drug for emergency medical reasons, including a public 
     health emergency

[[Page 7792]]

     declaration pursuant to section 319 of the Public Health 
     Service Act, except that a drug shortage not caused by a 
     public health emergency shall not constitute such an 
     emergency medical reason;
       ``(4) dispensing of a drug pursuant to a valid prescription 
     executed in accordance with subsection 503(b)(1);
       ``(5) the distribution of minimal quantities of drug by a 
     licensed retail pharmacy to a licensed practitioner for 
     office use;
       ``(6) the distribution of a drug or an offer to distribute 
     a drug by a charitable organization to a nonprofit affiliate 
     of the organization to the extent otherwise permitted by law;
       ``(7) the purchase or other acquisition by a dispenser, 
     hospital, or other health care entity of a drug for use by 
     such dispenser, hospital, or other health care entity;
       ``(8) the distribution of a drug by the manufacturer of 
     such drug;
       ``(9) the receipt or transfer of a drug by an authorized 
     third-party logistics provider provided that such third-party 
     logistics provider does not take ownership of the drug;
       ``(10) the transport of a drug by a common carrier, 
     provided that the common carrier does not take ownership of 
     the drug;
       ``(11) the distribution of a drug, or an offer to 
     distribute a drug, by an authorized repackager that has taken 
     ownership of the drug and repacked it in accordance with 
     section 582(e);
       ``(12) saleable drug returns when conducted by a dispenser 
     in accordance with section 203.23 of title 21, Code of 
     Federal Regulations (or any successor regulation);
       ``(13) the distribution of a combination prescription drug 
     product described in section 581(20)(B)(xii);
       ``(14) the distribution of a medical convenience kit 
     described in section 581(21)(B)(xiii);
       ``(15) the distribution of an intravenous drug that, by its 
     formulation, is intended for the replenishment of fluids and 
     electrolytes (such as sodium, chloride, and potassium) or 
     calories (such as dextrose and amino acids);
       ``(16) the distribution of an intravenous drug used to 
     maintain the equilibrium of water and minerals in the body, 
     such as dialysis solutions;
       ``(17) the distribution of a drug that is intended for 
     irrigation or reconstitution, or sterile water, whether 
     intended for such purposes or for injection;
       ``(18) the distribution of compressed medical gas (as 
     defined in section 581(21)(C));
       ``(19) facilitating the distribution of a prescription drug 
     product by providing administrative services, such as 
     processing of orders and payments, without physical handling, 
     distribution, or storage of a prescription drug product; or
       ``(20)(A) the distribution of a product by a dispenser, or 
     a wholesale distributor acting at the direction of the 
     dispenser, to a repackager registered under section 510 for 
     the purpose of repackaging the drug for use by that dispenser 
     or another health care entity that is under the dispenser's 
     ownership or control, so long as the dispenser retains 
     ownership of the prescription drug product; and
       ``(B) the saleable or nonsaleable return by such repackager 
     of such prescription drug product.
       ``(e) Effective Date.--The standards required by subsection 
     (a) shall take effect not later than 2 years after the date 
     of the enactment of this section. The Secretary shall issue 
     the regulations required by subsection (a) not later than 1 
     year after the date of the enactment of this Act.''.
       (b) Conforming Amendment.--Section 804(a)(5)(A) of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384(a)(5)(A)) 
     is amended by striking ``503(e)(2)(A)'' and inserting 
     ``583(a)''.

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

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

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

       ``(a) License Requirement.--No facility may engage in the 
     activities of a third-party logistics provider in any State 
     unless--
       ``(1) the facility is licensed--
       ``(A) by the State from which the drug is distributed by 
     the third-party logistics provider in accordance with a 
     qualified licensing program, if the State has such a program; 
     or
       ``(B) by the Secretary under this section, if the State 
     from which the drug is distributed does not have such a 
     program; and
       ``(2) if the drug is distributed interstate and the 
     facility is not licensed by the Secretary under paragraph 
     (1)(B), registers with the State into which the drug is 
     distributed if such State requires such registration.
       ``(b) Reporting by Licensed Third-Party Logistics 
     Providers.--
       ``(1) Annual report.--Beginning not later than 1 year after 
     the date of the enactment of this section, each facility 
     engaged in the activities of a third-party logistics provider 
     shall submit on an annual basis, and update as necessary, a 
     report to the Secretary including--
       ``(A) the facility's name;
       ``(B) the facility's address;
       ``(C) a listing of each jurisdiction (whether State or 
     Federal) in which the facility is licensed for third-party 
     logistics provider activities; and
       ``(D) any disciplinary actions taken by a State or Federal 
     licensing authority during the reporting period against the 
     facility.
       ``(2) Posting on internet.--The Secretary shall post on the 
     public Internet Website of the Food and Drug Administration 
     the name of each third-party logistics provider, and each 
     jurisdiction (whether State or Federal) in which the provider 
     is licensed, based on reports under paragraph (1).
       ``(c) Preservation of State Authority.--This subchapter 
     does not prohibit a State from--
       ``(1) licensing third-party logistic providers for the 
     conduct of third-party logistics provider activities in the 
     State in accordance with this subchapter; and
       ``(2) collecting fees from third-party logistics providers 
     in connection with such licensing,
     so long as the State does not require such licensure to the 
     extent to which an entity is engaged in wholesale 
     distribution.
       ``(d) Costs.--
       ``(1) Authorized licensure fees.--In the case of a facility 
     engaging in the activities of a third-party logistics 
     provider licensed by the Secretary under this section, the 
     Secretary may assess and collect a reasonable fee in an 
     amount equal to the costs to the Federal Government of 
     establishing and administering the licensure program 
     established, and conducting period inspections, under this 
     section.
       ``(2) Adjustment.--The Secretary shall adjust the amount of 
     the fee under paragraph (1) on an annual basis, if necessary, 
     to generate an amount of revenue equal to the costs referred 
     to in such paragraph.
       ``(3) Availability.--Fees assessed and collected under this 
     subsection shall be available for obligation only to the 
     extent and in the amount provided in advance in 
     appropriations Acts. Such fees shall remain available until 
     expended.
       ``(e) License Regulations.--
       ``(1) In general.--The Secretary shall establish, by 
     regulation, standards, terms, and conditions for licensing 
     persons to engage in third-party logistics provider 
     activities.
       ``(2) Content.--The regulations under paragraph (1) shall--
       ``(A) include standards relating to eligibility for, and 
     revocation and reissuance of, licenses;
       ``(B) establish a process by which the applicable licensing 
     authority will, upon request by a third-party logistics 
     provider that is accredited by a third-party accreditation 
     program approved by the Secretary, issue a license to the 
     provider;
       ``(C) establish a process by which the Secretary shall 
     issue a license to a third-party logistics provider if the 
     Secretary is not able to approve a third-party accreditation 
     program because no such program meets the Secretary's 
     requirements necessary for approval of such a third-party 
     accreditation program;
       ``(D) require that the third-party logistics provider 
     comply with storage practices, as determined by the 
     Secretary, at the provider's facilities, including--
       ``(i) maintaining access to warehouse space of suitable 
     size to facilitate safe operations, including a suitable area 
     to quarantine suspect prescription drug product;
       ``(ii) maintaining adequate security; and
       ``(iii) having written policies and procedures to--

       ``(I) address receipt, security, storage, inventory, 
     shipment, and distribution of a prescription drug product;
       ``(II) identify, record, and report confirmed losses or 
     thefts in the United States;
       ``(III) correct errors and inaccuracies in inventories;
       ``(IV) provide support for manufacturer recalls;
       ``(V) prepare for, protect against, and address any 
     reasonably foreseeable crisis that affects security or 
     operation at the facility, such as a strike, fire, or flood;
       ``(VI) ensure that any expired prescription drug product is 
     segregated from other prescription drug products and returned 
     to the manufacturer or repackager or destroyed;
       ``(VII) maintain the capability to electronically trace the 
     receipt and outbound distribution of a prescription drug 
     product, and supplies and records of inventory; and
       ``(VIII) quarantine or destroy a suspect prescription drug 
     product if directed to do so by the respective manufacturer, 
     wholesale distributor, dispenser, or an authorized government 
     agency;

       ``(E) provide for periodic inspection, as determined by the 
     Secretary, of such facility warehouse space to ensure 
     compliance with this section;
       ``(F) prohibit a facility from having as a manager or 
     designated representative anyone convicted of any felony 
     violation of section 301(i) or 301(k) or any felony violation 
     of section 1365 of title 18, United States Code, relating to 
     prescription drug product tampering;
       ``(G) perform mandatory background checks of the provider's 
     facility managers or designated representatives of such 
     managers;
       ``(H) require a third-party logistics provider to provide 
     to the applicable licensing authority, upon the authority's 
     request, a

[[Page 7793]]

     list of all prescription drug product manufacturers, 
     wholesale distributors, and dispensers for whom the third-
     party logistics provider provides services at the provider's 
     facilities; and
       ``(I) include procedures under which any third-party 
     logistics provider license--
       ``(i) will expire on the date that is 3 years after 
     issuance of the license; and
       ``(ii) may be renewed for additional 3-year periods.
       ``(f) Validity of License.--A license issued under this 
     section shall remain valid as long as such third-party 
     logistics provider remains accredited by the Secretary, 
     subject to renewal under subsection (d). If the Secretary 
     finds that the third-party accreditation program demonstrates 
     that all applicable requirements for licensure under this 
     section are met, the Secretary shall issue a license under 
     this section to a third-party logistics provider receiving 
     accreditation.
       ``(g) Qualified Licensing Program Defined.--In this 
     section, the term `qualified licensing program' means a 
     program meeting the requirements of this section and the 
     regulations thereunder.
       ``(h) Effective Date.--The requirements of this section 
     shall take effect not later than 1 year after the date of the 
     enactment of this section. The Secretary shall issue the 
     regulations required by subsection (d) not later than 180 
     days after the date of the enactment of this section.''.

     SEC. 6. PENALTIES.

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

     SEC. 7. UNIFORM NATIONAL POLICY.

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

     ``SEC. 585. UNIFORM NATIONAL POLICY.

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

     SEC. 8. ELECTRONIC LABELING.

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

  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

[[Page 7794]]

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 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

[[Page 7795]]

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, 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

[[Page 7796]]

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 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.

[[Page 7797]]



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 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

[[Page 7798]]

     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 legislation 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 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

[[Page 7799]]

     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 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

[[Page 7800]]

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.
  Mr. CUMMINGS. Mr. Speaker, although this bill takes important steps 
to secure our nation's pharmaceutical supply chain, we need to do more 
to protect patients and the public health.
  For over a year, I have been investigating the problem of so-called 
``gray market'' drug companies that take advantage of critical drug 
shortages to charge exorbitant prices.
  Working with the Senate Commerce Committee and the Senate HELP 
Committee, we identified numerous cases in which gray market drug 
companies were able to get their hands on shortage drugs when hospitals 
and other providers could not. And in many cases, these middleman 
companies exploited national drug shortages by charging exorbitant 
mark-ups for drugs used to treat cancer and other life threatening 
conditions.
  This kind of price gouging is unconscionable, and it represents a 
serious threat to patients' health and safety.
  Our investigation found that in more than two-thirds of cases, 
prescription drugs entered the gray market through pharmacies. These 
pharmacies purchased their drugs from authorized distributors, but 
instead of dispensing them to providers or patients in accordance with 
state laws, the pharmacies re-sold them to gray market wholesalers.
  For these reasons, I introduced the Gray Market Drug Reform and 
Transparency Act to implement reforms in this area and to protect 
consumers and providers from exploitation.
  I am encouraged that the bill before us takes up one of my proposals, 
which is to require wholesalers to register and report annually to the 
FDA, including on their disciplinary actions. Although this is a step 
in the right direction, the bill fails to make this information 
publicly available, which is critical to consumers, healthcare 
providers, and state boards of pharmacy.
  The bill also fails to close the primary loophole by which drugs 
enter the gray market, by prohibiting wholesalers from buying drugs 
from pharmacies.
  We need to put an end to unethical profiteering at the expense of 
patients with cancer and other critical illnesses, and I hope we can 
add these common sense provisions to H.R. 1919 in conference 
negotiations.
  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.

                          ____________________