[United States Statutes at Large, Volume 127, 113th Congress, 1st Session]
[From the U.S. Government Publishing Office, www.gpo.gov]


Public Law 113-54
113th Congress

An Act


 
To amend the Federal Food, Drug, and Cosmetic Act with respect to human
drug compounding and drug supply chain security, and for other
purposes. <>

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <>
SECTION 1. SHORT TITLE.

This Act may be cited as the ``Drug Quality and Security Act''.
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS.

(a) References in Act.--Except as otherwise specified, amendments
made by this Act to a section or other provision of law are amendments
to such section or other provision of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.).
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title.
Sec. 2. References in Act; table of contents.

TITLE I--DRUG COMPOUNDING

Sec. 101. Short title.
Sec. 102. Voluntary outsourcing facilities.
Sec. 103. Penalties.
Sec. 104. Regulations.
Sec. 105. Enhanced communication.
Sec. 106. Severability.
Sec. 107. GAO study.

TITLE II--DRUG SUPPLY CHAIN SECURITY

Sec. 201. Short title.
Sec. 202. Pharmaceutical distribution supply chain.
Sec. 203. Enhanced drug distribution security.
Sec. 204. National standards for prescription drug wholesale
distributors.
Sec. 205. National standards for third-party logistics providers;
uniform national policy.
Sec. 206. Penalties.
Sec. 207. Conforming amendment.
Sec. 208. Savings clause.

TITLE <>  I--DRUG COMPOUNDING
SEC. <>  101. SHORT TITLE.

This Act may be cited as the ``Compounding Quality Act''.
SEC. 102. VOLUNTARY OUTSOURCING FACILITIES.

(a) In General.--Subchapter A of chapter V (21 U.S.C. 351 et seq.)
is amended--

[[Page 588]]

(1) <>  by redesignating section 503B as
section 503C; and
(2) by inserting after section 503A the following new
section:
``SEC. <>  503B. OUTSOURCING FACILITIES.

``(a) In General.--Sections 502(f)(1), 505, and 582 shall not apply
to a drug compounded by or under the direct supervision of a licensed
pharmacist in a facility that elects to register as an outsourcing
facility if each of the following conditions is met:
``(1) Registration and reporting.--The drug is compounded in
an outsourcing facility that is in compliance with the
requirements of subsection (b).
``(2) Bulk drug substances.--The drug is compounded in an
outsourcing facility that does not compound using bulk drug
substances (as defined in section 207.3(a)(4) of title 21, Code
of Federal Regulations (or any successor regulation)), unless--
``(A)(i) <>  the bulk drug substance appears on a
list established by the Secretary identifying bulk drug
substances for which there is a clinical need, by--
``(I) publishing a notice in the Federal
Register proposing bulk drug substances to be
included on the list, including the rationale for
such proposal;
``(II) <>  providing a period of not less than
60 calendar days for comment on the notice; and
``(III) publishing a notice in the Federal
Register designating bulk drug substances for
inclusion on the list; or
``(ii) the drug compounded from such bulk drug
substance appears on the drug shortage list in effect
under section 506E at the time of compounding,
distribution, and dispensing;
``(B) if an applicable monograph exists under the
United States Pharmacopeia, the National Formulary, or
another compendium or pharmacopeia recognized by the
Secretary for purposes of this paragraph, the bulk drug
substances each comply with the monograph;
``(C) the bulk drug substances are each manufactured
by an establishment that is registered under section 510
(including a foreign establishment that is registered
under section 510(i)); and
``(D) the bulk drug substances are each accompanied
by a valid certificate of analysis.
``(3) Ingredients (other than bulk drug substances).--If any
ingredients (other than bulk drug substances) are used in
compounding the drug, such ingredients comply with the standards
of the applicable United States Pharmacopeia or National
Formulary monograph, if such monograph exists, or of another
compendium or pharmacopeia recognized by the Secretary for
purposes of this paragraph if any.
``(4) Drugs withdrawn or removed because unsafe or not
effective.--The drug does not appear on a list published by the
Secretary of drugs that have been withdrawn or removed from the
market because such drugs or components of such drugs have been
found to be unsafe or not effective.
``(5) Essentially a copy of an approved drug.--The drug is
not essentially a copy of one or more approved drugs.

[[Page 589]]

``(6) Drugs presenting demonstrable difficulties for
compounding.--The drug--
``(A) is not identified (directly or as part of a
category of drugs) on a list published by the Secretary,
through the process described in subsection (c), of
drugs or categories of drugs that present demonstrable
difficulties for compounding that are reasonably likely
to lead to an adverse effect on the safety or
effectiveness of the drug or category of drugs, taking
into account the risks and benefits to patients; or
``(B) is compounded in accordance with all
applicable conditions identified on the list described
in subparagraph (A) as conditions that are necessary to
prevent the drug or category of drugs from presenting
the demonstrable difficulties described in subparagraph
(A).
``(7) Elements to assure safe use.--In the case of a drug
that is compounded from a drug that is the subject of a risk
evaluation and mitigation strategy approved with elements to
assure safe use pursuant to section 505-1, or from a bulk drug
substance that is a component of such drug, the outsourcing
facility demonstrates to the Secretary prior to beginning
compounding that such facility will utilize controls comparable
to the controls applicable under the relevant risk evaluation
and mitigation strategy.
``(8) Prohibition on wholesaling.--The drug will not be sold
or transferred by an entity other than the outsourcing facility
that compounded such drug. This paragraph does not prohibit
administration of a drug in a health care setting or dispensing
a drug pursuant to a prescription executed in accordance with
section 503(b)(1).
``(9) Fees.--The drug is compounded in an outsourcing
facility that has paid all fees owed by such facility pursuant
to section 744K.
``(10) Labeling of drugs.--
``(A) Label.--The label of the drug includes--
``(i) the statement `This is a compounded
drug.' or a reasonable comparable alternative
statement (as specified by the Secretary) that
prominently identifies the drug as a compounded
drug;
``(ii) the name, address, and phone number of
the applicable outsourcing facility; and
``(iii) with respect to the drug--
``(I) the lot or batch number;
``(II) the established name of the
drug;
``(III) the dosage form and
strength;
``(IV) the statement of quantity or
volume, as appropriate;
``(V) the date that the drug was
compounded;
``(VI) the expiration date;
``(VII) storage and handling
instructions;
``(VIII) the National Drug Code
number, if available;
``(IX) the statement `Not for
resale', and, if the drug is dispensed
or distributed other than pursuant to a
prescription for an individual
identified patient, the statement
`Office Use Only'; and

[[Page 590]]

``(X) subject to subparagraph
(B)(i), a list of active and inactive
ingredients, identified by established
name and the quantity or proportion of
each ingredient.
``(B) Container.--The container from which the
individual units of the drug are removed for dispensing
or for administration (such as a plastic bag containing
individual product syringes) shall include--
``(i) the information described under
subparagraph (A)(iii)(X), if there is not space on
the label for such information;
``(ii) the following information to facilitate
adverse event reporting: www.fda.gov/medwatch and
1-800-FDA-1088 (or any successor Internet Web site
or phone number); and
``(iii) directions for use, including, as
appropriate, dosage and administration.
``(C) <>
Additional information.--The label and labeling of the
drug shall include any other information as determined
necessary and specified in regulations promulgated by
the Secretary.
``(11) Outsourcing facility requirement.--The drug is
compounded in an outsourcing facility in which the compounding
of drugs occurs only in accordance with this section.

``(b) Registration of Outsourcing Facilities and Reporting of
Drugs.--
``(1) Registration of outsourcing facilities.--
``(A) <>  Annual registration.--
Upon electing and in order to become an outsourcing
facility, and during the period beginning on October 1
and ending on December 31 of each year thereafter, a
facility--
``(i) shall register with the Secretary its
name, place of business, and unique facility
identifier (which shall conform to the
requirements for the unique facility identifier
established under section 510), and a point of
contact email address; and
``(ii) shall indicate whether the outsourcing
facility intends to compound a drug that appears
on the list in effect under section 506E during
the subsequent calendar year.
``(B) Availability of registration for inspection;
list.--
``(i) Registrations.--The Secretary shall make
available for inspection, to any person so
requesting, any registration filed pursuant to
this paragraph.
``(ii) <>  List.--The Secretary shall make
available on the public Internet Web site of the
Food and Drug Administration a list of the name of
each facility registered under this subsection as
an outsourcing facility, the State in which each
such facility is located, whether the facility
compounds from bulk drug substances, and whether
any such compounding from bulk drug substances is
for sterile or nonsterile drugs.
``(2) Drug reporting by outsourcing facilities.--
``(A) In general.--Upon initially registering as an
outsourcing facility, once during the month of June of
each

[[Page 591]]

year, and once during the month of December of each
year, each outsourcing facility that registers with the
Secretary under paragraph (1) shall submit to the
Secretary a report--
``(i) <>  identifying the
drugs compounded by such outsourcing facility
during the previous 6-month period; and
``(ii) with respect to each drug identified
under clause (i), providing the active ingredient,
the source of such active ingredient, the National
Drug Code number of the source drug or bulk active
ingredient, if available, the strength of the
active ingredient per unit, the dosage form and
route of administration, the package description,
the number of individual units produced, and the
National Drug Code number of the final product, if
assigned.
``(B) Form.--Each report under subparagraph (A)
shall be prepared in such form and manner as the
Secretary may prescribe by regulation or guidance.
``(C) Confidentiality.--Reports submitted under this
paragraph shall be exempt from inspection under
paragraph (1)(B)(i), unless the Secretary finds that
such an exemption would be inconsistent with the
protection of the public health.
``(3) <>  Electronic registration and
reporting.--Registrations and drug reporting under this
subsection (including the submission of updated information)
shall be submitted to the Secretary by electronic means unless
the Secretary grants a request for waiver of such requirement
because use of electronic means is not reasonable for the person
requesting waiver.
``(4) Risk-based inspection frequency.--
``(A) In general.--Outsourcing facilities--
``(i) shall be subject to inspection pursuant
to section 704; and
``(ii) shall not be eligible for the exemption
under section 704(a)(2)(A).
``(B) Risk-based schedule.--The Secretary, acting
through one or more officers or employees duly
designated by the Secretary, shall inspect outsourcing
facilities in accordance with a risk-based schedule
established by the Secretary.
``(C) Risk factors.--In establishing the risk-based
schedule, the Secretary shall inspect outsourcing
facilities according to the known safety risks of such
outsourcing facilities, which shall be based on the
following factors:
``(i) The compliance history of the
outsourcing facility.
``(ii) The record, history, and nature of
recalls linked to the outsourcing facility.
``(iii) The inherent risk of the drugs
compounded at the outsourcing facility.
``(iv) The inspection frequency and history of
the outsourcing facility, including whether the
outsourcing facility has been inspected pursuant
to section 704 within the last 4 years.
``(v) Whether the outsourcing facility has
registered under this paragraph as an entity that
intends to

[[Page 592]]

compound a drug that appears on the list in effect
under section 506E.
``(vi) Any other criteria deemed necessary and
appropriate by the Secretary for purposes of
allocating inspection resources.
``(5) Adverse event reporting.--Outsourcing facilities shall
submit adverse event reports to the Secretary in accordance with
the content and format requirements established through guidance
or regulation under section 310.305 of title 21, Code of Federal
Regulations (or any successor regulations).

``(c) Regulations.--
``(1) In general.--The Secretary shall implement the list
described in subsection (a)(6) through regulations.
``(2) <>  Advisory committee on
compounding.--Before issuing regulations to implement subsection
(a)(6), the Secretary shall convene and consult an advisory
committee on compounding. The advisory committee shall include
representatives from the National Association of Boards of
Pharmacy, the United States Pharmacopeia, pharmacists with
current experience and expertise in compounding, physicians with
background and knowledge in compounding, and patient and public
health advocacy organizations.
``(3) Interim list.--
``(A) <>  In general.--Before the effective date
of the regulations finalized to implement subsection
(a)(6), the Secretary may designate drugs, categories of
drugs, or conditions as described such subsection by--
``(i) publishing a notice of such substances,
drugs, categories of drugs, or conditions proposed
for designation, including the rationale for such
designation, in the Federal Register;
``(ii) <>
providing a period of not less than 60 calendar
days for comment on the notice; and
``(iii) publishing a notice in the Federal
Register designating such drugs, categories of
drugs, or conditions.
``(B) Sunset of notice.--Any notice provided under
subparagraph (A) shall not be effective after the
earlier of--
``(i) the date that is 5 years after the date
of enactment of the Compounding Quality Act; or
``(ii) the effective date of the final
regulations issued to implement subsection (a)(6).
``(4) <>  Updates.--The Secretary shall
review, and update as necessary, the regulations containing the
lists of drugs, categories of drugs, or conditions described in
subsection (a)(6) regularly, but not less than once every
4 <> years. Nothing in the previous sentence
prohibits submissions to the Secretary, before or during any 4-
year period described in such sentence, requesting updates to
such lists.

``(d) Definitions.--In this section:
``(1) The term `compounding' includes the combining,
admixing, mixing, diluting, pooling, reconstituting, or
otherwise altering of a drug or bulk drug substance to create a
drug.
``(2) The term `essentially a copy of an approved drug'
means--

[[Page 593]]

``(A) a drug that is identical or nearly identical
to an approved drug, or a marketed drug not subject to
section 503(b) and not subject to approval in an
application submitted under section 505, unless, in the
case of an approved drug, the drug appears on the drug
shortage list in effect under section 506E at the time
of compounding, distribution, and dispensing; or
``(B) a drug, a component of which is a bulk drug
substance that is a component of an approved drug or a
marketed drug that is not subject to section 503(b) and
not subject to approval in an application submitted
under section 505, unless there is a change that
produces for an individual patient a clinical
difference, as determined by the prescribing
practitioner, between the compounded drug and the
comparable approved drug.
``(3) The term `approved drug' means a drug that is approved
under section 505 and does not appear on the list described in
subsection (a)(4) of drugs that have been withdrawn or removed
from the market because such drugs or components of such drugs
have been found to be unsafe or not effective.
``(4)(A) The term `outsourcing facility' means a facility at
one geographic location or address that--
``(i) is engaged in the compounding of sterile
drugs;
``(ii) has elected to register as an outsourcing
facility; and
``(iii) complies with all of the requirements of
this section.
``(B) An outsourcing facility is not required to be a
licensed pharmacy.
``(C) An outsourcing facility may or may not obtain
prescriptions for identified individual patients.
``(5) The term `sterile drug' means a drug that is intended
for parenteral administration, an ophthalmic or oral inhalation
drug in aqueous format, or a drug that is required to be sterile
under Federal or State law.''.

``(d) Obligation to Pay Fees.--Payment of the fee under section
744K, as described in subsection (a)(9), shall not relieve an
outsourcing facility that is licensed as a pharmacy in any State that
requires pharmacy licensing fees of its obligation to pay such State
fees.''.
(b) Fees.--Subchapter C of chapter VII (21 U.S.C. 379f et seq.) is
amended by adding at the end the following:

``PART <>  9--FEES RELATING TO OUTSOURCING
FACILITIES
``SEC. <>  744J. DEFINITIONS.

``In this part:
``(1) The term `affiliate' has the meaning given such term
in section 735(11).
``(2) The term `gross annual sales' means the total
worldwide gross annual sales, in United States dollars, for an
outsourcing facility, including the sales of all the affiliates
of the outsourcing facility.
``(3) The term `outsourcing facility' has the meaning given
to such term in section 503B(d)(4).

[[Page 594]]

``(4) The term `reinspection' means, with respect to an
outsourcing facility, 1 or more inspections conducted under
section 704 subsequent to an inspection conducted under such
provision which identified noncompliance materially related to
an applicable requirement of this Act, specifically to determine
whether compliance has been achieved to the Secretary's
satisfaction.
``SEC. 744K. <>  AUTHORITY TO ASSESS AND
USE OUTSOURCING FACILITY FEES.

``(a) Establishment and Reinspection Fees.--
``(1) In general.--For fiscal year 2015 and each subsequent
fiscal year, the Secretary shall, in accordance with this
subsection, assess and collect--
``(A) an annual establishment fee from each
outsourcing facility; and
``(B) a reinspection fee from each outsourcing
facility subject to a reinspection in such fiscal year.
``(2) Multiple reinspections.--An outsourcing facility
subject to multiple reinspections in a fiscal year shall be
subject to a reinspection fee for each reinspection.

``(b) Establishment and Reinspection Fee Setting.--The Secretary
shall--
``(1) establish the amount of the establishment fee and
reinspection fee to be collected under this section for each
fiscal year based on the methodology described in subsection
(c); and
``(2) <>  publish such fee amounts in
a Federal Register notice not later than 60 calendar days before
the start of each such year.

``(c) Amount of Establishment Fee and Reinspection Fee.--
``(1) In general.--For each outsourcing facility in a fiscal
year--
``(A) except as provided in paragraph (4), the
amount of the annual establishment fee under subsection
(b) shall be equal to the sum of--
``(i) $15,000, multiplied by the inflation
adjustment factor described in paragraph (2); plus
``(ii) the small business adjustment factor
described in paragraph (3); and
``(B) the amount of any reinspection fee (if
applicable) under subsection (b) shall be equal to
$15,000, multiplied by the inflation adjustment factor
described in paragraph (2).
``(2) Inflation adjustment factor.--
``(A) <>  In general.--For fiscal year
2015 and subsequent fiscal years, the fee amounts
established in paragraph (1) shall be adjusted by the
Secretary by notice, published in the Federal Register,
for a fiscal year by the amount equal to the sum of--
``(i) 1;
``(ii) the average annual percent change in
the cost, per full-time equivalent position of the
Food and Drug Administration, of all personnel
compensation and benefits paid with respect to
such positions for the first 3 years of the
preceding 4 fiscal years, multiplied by the
proportion of personnel compensation and

[[Page 595]]

benefits costs to total costs of an average full-
time equivalent position of the Food and Drug
Administration for the first 3 years of the
preceding 4 fiscal years; plus
``(iii) the average annual percent change that
occurred in the Consumer Price Index for urban
consumers (U.S. City Average; Not Seasonally
Adjusted; All items; Annual Index) for the first 3
years of the preceding 4 years of available data
multiplied by the proportion of all costs other
than personnel compensation and benefits costs to
total costs of an average full-time equivalent
position of the Food and Drug Administration for
the first 3 years of the preceding 4 fiscal years.
``(B) Compounded basis.--The adjustment made each
fiscal year under subparagraph (A) shall be added on a
compounded basis to the sum of all adjustments made each
fiscal year after fiscal year 2014 under subparagraph
(A).
``(3) <>  Small business adjustment
factor.--The small business adjustment factor described in this
paragraph shall be an amount established by the Secretary for
each fiscal year based on the Secretary's estimate of--
``(A) the number of small businesses that will pay a
reduced establishment fee for such fiscal year; and
``(B) the adjustment to the establishment fee
necessary to achieve total fees equaling the total fees
that the Secretary would have collected if no entity
qualified for the small business exception in paragraph
(4).
``(4) Exception for small businesses.--
``(A) <>  In general.--In the
case of an outsourcing facility with gross annual sales
of $1,000,000 or less in the 12 months ending April 1 of
the fiscal year immediately preceding the fiscal year in
which the fees under this section are assessed, the
amount of the establishment fee under subsection (b) for
a fiscal year shall be equal to \1/3\ of the amount
calculated under paragraph (1)(A)(i) for such fiscal
year.
``(B) <>
Application.--To qualify for the exception under this
paragraph, a small business shall submit to the
Secretary a written request for such exception, in a
format specified by the Secretary in guidance,
certifying its gross annual sales for the 12 months
ending April 1 of the fiscal year immediately preceding
the fiscal year in which fees under this subsection are
assessed. <> Any such application shall
be submitted to the Secretary not later than April 30 of
such immediately preceding fiscal year.
``(5) Crediting of fees.--In establishing the small business
adjustment factor under paragraph (3) for a fiscal year, the
Secretary shall--
``(A) provide for the crediting of fees from the
previous year to the next year if the Secretary
overestimated the amount of the small business
adjustment factor for such previous fiscal year; and
``(B) consider the need to account for any
adjustment of fees and such other factors as the
Secretary determines appropriate.

[[Page 596]]

``(d) Use of Fees.--The Secretary shall make all of the fees
collected pursuant to subparagraphs (A) and (B) of subsection (a)(1)
available solely to pay for the costs of oversight of outsourcing
facilities.
``(e) Supplement Not Supplant.--Funds received by the Secretary
pursuant to this section shall be used to supplement and not supplant
any other Federal funds available to carry out the activities described
in this section.
``(f) Crediting and Availability of Fees.--Fees authorized under
this section shall be collected and available for obligation only to the
extent and in the amount provided in advance in appropriations Acts.
Such fees are authorized to remain available until expended. Such sums
as may be necessary may be transferred from the Food and Drug
Administration salaries and expenses appropriation account without
fiscal year limitation to such appropriation account for salaries and
expenses with such fiscal year limitation. The sums transferred shall be
available solely for the purpose of paying the costs of oversight of
outsourcing facilities.
``(g) Collection of Fees.--
``(1) Establishment fee.--An outsourcing facility shall
remit the establishment fee due under this section in a fiscal
year when submitting a registration pursuant to section 503B(b)
for such fiscal year.
``(2) Reinspection fee.--The Secretary shall specify in the
Federal Register notice described in subsection (b)(2) the
manner in which reinspection fees assessed under this section
shall be collected and the timeline for payment of such fees.
Such a fee shall be collected after the Secretary has conducted
a reinspection of the outsourcing facility involved.
``(3) Effect of failure to pay fees.--
``(A) Registration.--An outsourcing facility shall
not be considered registered under section 503B(b) in a
fiscal year until the date that the outsourcing facility
remits the establishment fee under this subsection for
such fiscal year.
``(B) Misbranding.--All drugs manufactured,
prepared, propagated, compounded, or processed by an
outsourcing facility for which any establishment fee or
reinspection fee has not been paid, as required by this
section, shall be deemed misbranded under section 502
until the fees owed for such outsourcing facility under
this section have been paid.
``(4) <>  Collection of unpaid fees.--In
any case where the Secretary does not receive payment of a fee
assessed under this section within 30 calendar days after it is
due, such fee shall be treated as a claim of the United States
Government subject to provisions of subchapter II of chapter 37
of title 31, United States Code.

``(h) Annual Report to Congress.--Not later than 120 calendar days
after each fiscal year in which fees are assessed and collected under
this section, the Secretary shall submit a report to the Committee on
Health, Education, Labor, and Pensions of the Senate and the Committee
on Energy and Commerce of the House of Representatives, to include a
description of fees assessed and collected for such year, a summary
description of entities paying the fees, a description of the hiring and
placement of new staff, a description of the use of fee resources to
support inspecting

[[Page 597]]

outsourcing facilities, and the number of inspections and reinspections
of such facilities performed each year.
``(i) Authorization of Appropriations.--For fiscal year 2014 and
each subsequent fiscal year, there is authorized to be appropriated for
fees under this section an amount equivalent to the total amount of fees
assessed for such fiscal year under this section.''.
SEC. 103. PENALTIES.

(a) Prohibited Acts.--Section 301 (21 U.S.C. 331) is amended by
adding at the end the following:
``(ccc)(1) The resale of a compounded drug that is labeled `not for
resale' in accordance with section 503B.
``(2) With respect to a drug to be compounded pursuant to section
503A or 503B, the intentional falsification of a prescription, as
applicable.
``(3) The failure to report drugs or adverse events by an entity
that is registered in accordance with subsection (b) of section 503B.''.
(b) Misbranded Drugs.--Section 502 (21 U.S.C. 352) is amended by
adding at the end the following:
``(bb) If the advertising or promotion of a compounded drug is false
or misleading in any particular.''.
SEC. <>  104. REGULATIONS.

In promulgating any regulations to implement this title (and the
amendments made by this title), the Secretary of Health and Human
Services shall--
(1) issue a notice of proposed rulemaking that includes the
proposed regulation;
(2) <>  provide a
period of not less than 60 calendar days for comments on the
proposed regulation; and
(3) <>  publish the final
regulation not more than 18 months following publication of the
proposed rule and not less than 30 calendar days before the
effective date of such final regulation.
SEC. <>  105. ENHANCED COMMUNICATION.

(a) Submissions From State Boards of Pharmacy.--In a manner
specified by the Secretary of Health and Human Services (referred to in
this section as the ``Secretary''), the Secretary shall receive
submissions from State boards of pharmacy--
(1) describing actions taken against compounding pharmacies,
as described in subsection (b); or
(2) expressing concerns that a compounding pharmacy may be
acting contrary to section 503A of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 353a).

(b) Content of Submissions From State Boards of Pharmacy.--An action
referred to in subsection (a)(1) is, with respect to a pharmacy that
compounds drugs, any of the following:
(1) The issuance of a warning letter, or the imposition of
sanctions or penalties, by a State for violations of a State's
pharmacy regulations pertaining to compounding.
(2) The suspension or revocation of a State-issued pharmacy
license or registration for violations of a State's pharmacy
regulations pertaining to compounding.
(3) The recall of a compounded drug due to concerns relating
to the quality or purity of such drug.

[[Page 598]]

(c) Consultation.--The Secretary shall implement subsection (a) in
consultation with the National Association of Boards of Pharmacy.
(d) Notifying State Boards of Pharmacy.--The Secretary shall
immediately notify State boards of pharmacy when--
(1) the Secretary receives a submission under subsection
(a)(1); or
(2) <>  the Secretary makes a
determination that a pharmacy is acting contrary to section 503A
of the Federal Food, Drug, and Cosmetic Act.
SEC. 106. SEVERABILITY.

(a) In General.--Section 503A (21 U.S.C. 353a) is amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by striking ``unsolicited'';
(2) by striking subsection (c);
(3) by redesignating subsections (d) through (f) as
subsections (c) through (e), respectively; and
(4) in subsection (b)(1)(A)(i)(III), by striking
``subsection (d)'' and inserting ``subsection (c)''.

(b) <>  Severability.--If any provision of
this Act (including the amendments made by this Act) is declared
unconstitutional, or the applicability of this Act (including the
amendments made by this Act) to any person or circumstance is held
invalid, the constitutionality of the remainder of this Act (including
the amendments made by this Act) and the applicability thereof to other
persons and circumstances shall not be affected.
SEC. 107. GAO STUDY.

(a) <>  Study.--Not later than 36 months
after the date of the enactment of this Act, the Comptroller General of
the United States shall submit to Congress a report on pharmacy
compounding and the adequacy of State and Federal efforts to assure the
safety of compounded drugs.

(b) Contents.--The report required under this section shall
include--
(1) a review of pharmacy compounding in each State, and the
settings in which such compounding occurs;
(2) a review of the State laws and policies governing
pharmacy compounding, including enforcement of State laws and
policies;
(3) an assessment of the available tools to permit
purchasers of compounded drugs to determine the safety and
quality of such drugs;
(4) an evaluation of the effectiveness of the communication
among States and between States and the Food and Drug
Administration regarding compounding; and
(5) an evaluation of the Food and Drug Administration's
implementation of sections 503A and 503B of the Federal Food,
Drug, and Cosmetic Act.

[[Page 599]]

TITLE <>  II--DRUG SUPPLY CHAIN
SECURITY
SEC. <>  201. SHORT TITLE.

This title may be cited as the ``Drug Supply Chain Security Act''.
SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN.

Chapter V (21 U.S.C. 351 et seq.) is amended by adding at the end
the following:

``Subchapter <>  H--Pharmaceutical
Distribution Supply Chain
``SEC. <>  581. DEFINITIONS.

``In this subchapter:
``(1) Affiliate.--The term `affiliate' means a business
entity that has a relationship with a second business entity if,
directly or indirectly--
``(A) one business entity controls, or has the power
to control, the other business entity; or
``(B) a third party controls, or has the power to
control, both of the business entities.
``(2) Authorized.--The term `authorized' means--
``(A) in the case of a manufacturer or repackager,
having a valid registration in accordance with section
510;
``(B) in the case of a wholesale distributor, having
a valid license under State law or section 583, in
accordance with section 582(a)(6), and complying with
the licensure reporting requirements under section
503(e), as amended by the Drug Supply Chain Security
Act;
``(C) in the case of a third-party logistics
provider, having a valid license under State law or
section 584(a)(1), in accordance with section 582(a)(7),
and complying with the licensure reporting requirements
under section 584(b); and
``(D) in the case of a dispenser, having a valid
license under State law.
``(3) Dispenser.--The term `dispenser'--
``(A) means a retail pharmacy, hospital pharmacy, a
group of chain pharmacies under common ownership and
control that do not act as a wholesale distributor, or
any other person authorized by law to dispense or
administer prescription drugs, and the affiliated
warehouses or distribution centers of such entities
under common ownership and control that do not act as a
wholesale distributor; and
``(B) does not include a person who dispenses only
products to be used in animals in accordance with
section 512(a)(5).
``(4) Disposition.--The term `disposition', with respect to
a product within the possession or control of an entity, means
the removal of such product from the pharmaceutical distribution
supply chain, which may include disposal or return of the
product for disposal or other appropriate handling and other
actions, such as retaining a sample of the product for further
additional physical examination or laboratory analysis

[[Page 600]]

of the product by a manufacturer or regulatory or law
enforcement agency.
``(5) Distribute or distribution.--The term `distribute' or
`distribution' means the sale, purchase, trade, delivery,
handling, storage, or receipt of a product, and does not include
the dispensing of a product pursuant to a prescription executed
in accordance with section 503(b)(1) or the dispensing of a
product approved under section 512(b).
``(6) Exclusive distributor.--The term `exclusive
distributor' means the wholesale distributor that directly
purchased the product from the manufacturer and is the sole
distributor of that manufacturer's product to a subsequent
repackager, wholesale distributor, or dispenser.
``(7) Homogeneous case.--The term `homogeneous case' means a
sealed case containing only product that has a single National
Drug Code number belonging to a single lot.
``(8) Illegitimate product.--The term `illegitimate product'
means a product for which credible evidence shows that the
product--
``(A) is counterfeit, diverted, or stolen;
``(B) is intentionally adulterated such that the
product would result in serious adverse health
consequences or death to humans;
``(C) is the subject of a fraudulent transaction; or
``(D) appears otherwise unfit for distribution such
that the product would be reasonably likely to result in
serious adverse health consequences or death to humans.
``(9) Licensed.--The term `licensed' means--
``(A) in the case of a wholesale distributor, having
a valid license in accordance with section 503(e) or
section 582(a)(6), as applicable;
``(B) in the case of a third-party logistics
provider, having a valid license in accordance with
section 584(a) or section 582(a)(7), as applicable; and
``(C) in the case of a dispenser, having a valid
license under State law.
``(10) Manufacturer.--The term `manufacturer' means, with
respect to a product--
``(A) a person that holds an application approved
under section 505 or a license issued under section 351
of the Public Health Service Act for such product, or if
such product is not the subject of an approved
application or license, the person who manufactured the
product;
``(B) a co-licensed partner of the person described
in subparagraph (A) that obtains the product directly
from a person described in this subparagraph or
subparagraph (A) or (C); or
``(C) an affiliate of a person described in
subparagraph (A) or (B) that receives the product
directly from a person described in this subparagraph or
subparagraph (A) or (B).
``(11) Package.--
``(A) In general.--The term `package' means the
smallest individual saleable unit of product for
distribution by a manufacturer or repackager that is
intended by the manufacturer for ultimate sale to the
dispenser of such product.

[[Page 601]]

``(B) Individual saleable unit.--For purposes of
this paragraph, an `individual saleable unit' is the
smallest container of product introduced into commerce
by the manufacturer or repackager that is intended by
the manufacturer or repackager for individual sale to a
dispenser.
``(12) Prescription drug.--The term `prescription drug'
means a drug for human use subject to section 503(b)(1).
``(13) Product.--The term `product' means a prescription
drug in a finished dosage form for administration to a patient
without substantial further manufacturing (such as capsules,
tablets, and lyophilized products before reconstitution), but
for purposes of section 582, does not include blood or blood
components intended for transfusion, radioactive drugs or
radioactive biological products (as defined in section 600.3(ee)
of title 21, Code of Federal Regulations) that are regulated by
the Nuclear Regulatory Commission or by a State pursuant to an
agreement with such Commission under section 274 of the Atomic
Energy Act of 1954 (42 U.S.C. 2021), imaging drugs, an
intravenous product described in clause (xiv), (xv), or (xvi) of
paragraph (24)(B), any medical gas (as defined in section 575),
homeopathic drugs marketed in accordance with applicable
guidance under this Act, or a drug compounded in compliance with
section 503A or 503B.
``(14) Product identifier.--The term `product identifier'
means a standardized graphic that includes, in both human-
readable form and on a machine-readable data carrier that
conforms to the standards developed by a widely recognized
international standards development organization, the
standardized numerical identifier, lot number, and expiration
date of the product.
``(15) Quarantine.--The term `quarantine' means the storage
or identification of a product, to prevent distribution or
transfer of the product, in a physically separate area clearly
identified for such use or through other procedures.
``(16) Repackager.--The term `repackager' means a person who
owns or operates an establishment that repacks and relabels a
product or package for--
``(A) further sale; or
``(B) distribution without a further transaction.
``(17) Return.--The term `return' means providing product to
the authorized immediate trading partner from which such product
was purchased or received, or to a returns processor or reverse
logistics provider for handling of such product.
``(18) Returns processor or reverse logistics provider.--The
term `returns processor' or `reverse logistics provider' means a
person who owns or operates an establishment that dispositions
or otherwise processes saleable or nonsaleable product received
from an authorized trading partner such that the product may be
processed for credit to the purchaser, manufacturer, or seller
or disposed of for no further distribution.
``(19) Specific patient need.--The term `specific patient
need' refers to the transfer of a product from one pharmacy to
another to fill a prescription for an identified patient. Such
term does not include the transfer of a product from one
pharmacy to another for the purpose of increasing or
replenishing stock in anticipation of a potential need.

[[Page 602]]

``(20) Standardized numerical identifier.--The term
`standardized numerical identifier' means a set of numbers or
characters used to uniquely identify each package or homogenous
case that is composed of the National Drug Code that corresponds
to the specific product (including the particular package
configuration) combined with a unique alphanumeric serial number
of up to 20 characters.
``(21) Suspect product.--The term `suspect product' means a
product for which there is reason to believe that such product--
``(A) is potentially counterfeit, diverted, or
stolen;
``(B) is potentially intentionally adulterated such
that the product would result in serious adverse health
consequences or death to humans;
``(C) is potentially the subject of a fraudulent
transaction; or
``(D) appears otherwise unfit for distribution such
that the product would result in serious adverse health
consequences or death to humans.
``(22) Third-party logistics provider.--The term `third-
party logistics provider' means an entity that provides or
coordinates warehousing, or other logistics services of a
product in interstate commerce on behalf of a manufacturer,
wholesale distributor, or dispenser of a product, but does not
take ownership of the product, nor have responsibility to direct
the sale or disposition of the product.
``(23) Trading partner.--The term `trading partner' means--
``(A) a manufacturer, repackager, wholesale
distributor, or dispenser from whom a manufacturer,
repackager, wholesale distributor, or dispenser accepts
direct ownership of a product or to whom a manufacturer,
repackager, wholesale distributor, or dispenser
transfers direct ownership of a product; or
``(B) a third-party logistics provider from whom a
manufacturer, repackager, wholesale distributor, or
dispenser accepts direct possession of a product or to
whom a manufacturer, repackager, wholesale distributor,
or dispenser transfers direct possession of a product.
``(24) Transaction.--
``(A) In general.--The term `transaction' means the
transfer of product between persons in which a change of
ownership occurs.
``(B) Exemptions.--The term `transaction' does not
include--
``(i) intracompany distribution of any product
between members of an affiliate or within a
manufacturer;
``(ii) the distribution of a product among
hospitals or other health care entities that are
under common control;
``(iii) the distribution of a product for
emergency medical reasons including a public
health emergency declaration pursuant to section
319 of the Public Health Service Act, except that
a drug shortage not caused by a public health
emergency shall not constitute an emergency
medical reason;

[[Page 603]]

``(iv) the dispensing of a product pursuant to
a prescription executed in accordance with section
503(b)(1);
``(v) the distribution of product samples by a
manufacturer or a licensed wholesale distributor
in accordance with section 503(d);
``(vi) the distribution of blood or blood
components intended for transfusion;
``(vii) the distribution of minimal quantities
of product by a licensed retail pharmacy to a
licensed practitioner for office use;
``(viii) the sale, purchase, or trade of a
drug or an offer to sell, purchase, or trade a
drug by a charitable organization described in
section 501(c)(3) of the Internal Revenue Code of
1986 to a nonprofit affiliate of the organization
to the extent otherwise permitted by law;
``(ix) the distribution of a product pursuant
to the sale or merger of a pharmacy or pharmacies
or a wholesale distributor or wholesale
distributors, except that any records required to
be maintained for the product shall be transferred
to the new owner of the pharmacy or pharmacies or
wholesale distributor or wholesale distributors;
``(x) the dispensing of a product approved
under section 512(c);
``(xi) products transferred to or from any
facility that is licensed by the Nuclear
Regulatory Commission or by a State pursuant to an
agreement with such Commission under section 274
of the Atomic Energy Act of 1954 (42 U.S.C. 2021);
``(xii) a combination product that is not
subject to approval under section 505 or licensure
under section 351 of the Public Health Service
Act, and that is--
``(I) a product comprised of a
device and 1 or more other regulated
components (such as a drug/device,
biologic/device, or drug/device/
biologic) that are physically,
chemically, or otherwise combined or
mixed and produced as a single entity;
``(II) 2 or more separate products
packaged together in a single package or
as a unit and comprised of a drug and
device or device and biological product;
or
``(III) 2 or more finished medical
devices plus one or more drug or
biological products that are packaged
together in what is referred to as a
`medical convenience kit' as described
in clause (xiii);
``(xiii) the distribution of a collection of
finished medical devices, which may include a
product or biological product, assembled in kit
form strictly for the convenience of the purchaser
or user (referred to in this clause as a `medical
convenience kit') if--
``(I) the medical convenience kit is
assembled in an establishment that is
registered with the Food and Drug
Administration as a device manufacturer
in accordance with section 510(b)(2);

[[Page 604]]

``(II) the medical convenience kit
does not contain a controlled substance
that appears in a schedule contained in
the Comprehensive Drug Abuse Prevention
and Control Act of 1970;
``(III) in the case of a medical
convenience kit that includes a product,
the person that manufacturers the kit--
``(aa) purchased such
product directly from the
pharmaceutical manufacturer or
from a wholesale distributor
that purchased the product
directly from the pharmaceutical
manufacturer; and
``(bb) does not alter the
primary container or label of
the product as purchased from
the manufacturer or wholesale
distributor; and
``(IV) in the case of a medical
convenience kit that includes a product,
the product is--
``(aa) an intravenous
solution intended for the
replenishment of fluids and
electrolytes;
``(bb) a product intended to
maintain the equilibrium of
water and minerals in the body;
``(cc) a product intended
for irrigation or
reconstitution;
``(dd) an anesthetic;
``(ee) an anticoagulant;
``(ff) a vasopressor; or
``(gg) a sympathomimetic;
``(xiv) the distribution of an intravenous
product that, by its formulation, is intended for
the replenishment of fluids and electrolytes (such
as sodium, chloride, and potassium) or calories
(such as dextrose and amino acids);
``(xv) the distribution of an intravenous
product used to maintain the equilibrium of water
and minerals in the body, such as dialysis
solutions;
``(xvi) the distribution of a product that is
intended for irrigation, or sterile water, whether
intended for such purposes or for injection;
``(xvii) the distribution of a medical gas (as
defined in section 575); or
``(xviii) the distribution or sale of any
licensed product under section 351 of the Public
Health Service Act that meets the definition of a
device under section 201(h).
``(25) Transaction history.--The term `transaction history'
means a statement in paper or electronic form, including the
transaction information for each prior transaction going back to
the manufacturer of the product.
``(26) Transaction information.--The term `transaction
information' means--
``(A) the proprietary or established name or names
of the product;
``(B) the strength and dosage form of the product;
``(C) the National Drug Code number of the product;
``(D) the container size;
``(E) the number of containers;
``(F) the lot number of the product;

[[Page 605]]

``(G) the date of the transaction;
``(H) the date of the shipment, if more than 24
hours after the date of the transaction;
``(I) the business name and address of the person
from whom ownership is being transferred; and
``(J) the business name and address of the person to
whom ownership is being transferred.
``(27) Transaction statement.--The `transaction statement'
is a statement, in paper or electronic form, that the entity
transferring ownership in a transaction--
``(A) is authorized as required under the Drug
Supply Chain Security Act;
``(B) received the product from a person that is
authorized as required under the Drug Supply Chain
Security Act;
``(C) received transaction information and a
transaction statement from the prior owner of the
product, as required under section 582;
``(D) did not knowingly ship a suspect or
illegitimate product;
``(E) had systems and processes in place to comply
with verification requirements under section 582;
``(F) did not knowingly provide false transaction
information; and
``(G) did not knowingly alter the transaction
history.
``(28) Verification or verify.--The term `verification' or
`verify' means determining whether the product identifier
affixed to, or imprinted upon, a package or homogeneous case
corresponds to the standardized numerical identifier or lot
number and expiration date assigned to the product by the
manufacturer or the repackager, as applicable in accordance with
section 582.
``(29) Wholesale distributor.--The term `wholesale
distributor' means a person (other than a manufacturer, a
manufacturer's co-licensed partner, a third-party logistics
provider, or repackager) engaged in wholesale distribution (as
defined in section 503(e)(4), as amended by the Drug Supply
Chain Security Act).
``SEC. <>  582.
REQUIREMENTS.

``(a) In General.--
``(1) <>  Other activities.--Each
manufacturer, repackager, wholesale distributor, and dispenser
shall comply with the requirements set forth in this section
with respect to the role of such manufacturer, repackager,
wholesale distributor, or dispenser in a transaction involving
product. If an entity meets the definition of more than one of
the entities listed in the preceding sentence, such entity shall
comply with all applicable requirements in this section, but
shall not be required to duplicate requirements.
``(2) Initial standards.--
``(A) <>  In general.--The
Secretary shall, in consultation with other appropriate
Federal officials, manufacturers, repackagers, wholesale
distributors, dispensers, and other pharmaceutical
distribution supply chain stakeholders, issue a draft
guidance document that establishes standards for the
interoperable exchange of transaction information,

[[Page 606]]

transaction history, and transaction statements, in
paper or electronic format, for compliance with this
subsection and subsections (b), (c), (d), and (e). In
establishing such standards, the Secretary shall
consider the feasibility of establishing standardized
documentation to be used by members of the
pharmaceutical distribution supply chain to convey the
transaction information, transaction history, and
transaction statement to the subsequent purchaser of a
product and to facilitate the exchange of lot level
data. The <> standards established
under this paragraph shall take into consideration the
standards established under section 505D and shall
comply with a form and format developed by a widely
recognized international standards development
organization.
``(B) <>  Public input.--Prior
to issuing the draft guidance under subparagraph (A),
the Secretary shall gather comments and information from
stakeholders and maintain such comments and information
in a public docket for at least 60 days prior to issuing
such guidance.
``(C) <>  Publication.--The
Secretary shall publish the standards established under
subparagraph (A) not later than 1 year after the date of
enactment of the Drug Supply Chain Security Act.
``(3) Waivers, exceptions, and exemptions.--
``(A) <>  In general.--
Not later than 2 years after the date of enactment of
the Drug Supply Chain Security Act, the Secretary shall,
by guidance--
``(i) establish a process by which an
authorized manufacturer, repackager, wholesale
distributor, or dispenser may request a waiver
from any of the requirements set forth in this
section, which the Secretary may grant if the
Secretary determines that such requirements would
result in an undue economic hardship or for
emergency medical reasons, including a public
health emergency declaration pursuant to section
319 of the Public Health Service Act;
``(ii) establish a process by which the
Secretary determines exceptions, and a process
through which a manufacturer or repackager may
request such an exception, to the requirements
relating to product identifiers if a product is
packaged in a container too small or otherwise
unable to accommodate a label with sufficient
space to bear the information required for
compliance with this section; and
``(iii) establish a process by which the
Secretary may determine other products or
transactions that shall be exempt from the
requirements of this section.
``(B) Content.--The guidance issued under
subparagraph (A) shall include a process for the
biennial review and renewal of such waivers, exceptions,
and exemptions, as applicable.
``(C) Process.--In issuing the guidance under this
paragraph, the Secretary shall provide an effective date
that is not later than 180 days prior to the date on
which manufacturers are required to affix or imprint a
product identifier to each package and homogenous case
of product

[[Page 607]]

intended to be introduced in a transaction into commerce
consistent with this section.
``(4) Self-executing requirements.--Except where otherwise
specified, the requirements of this section may be enforced
without further regulations or guidance from the Secretary.
``(5) Grandfathering product.--
``(A) <>  Product
identifier.--Not later than 2 years after the date of
enactment of the Drug Supply Chain Security Act, the
Secretary shall finalize guidance specifying whether and
under what circumstances product that is not labeled
with a product identifier and that is in the
pharmaceutical distribution supply chain at the time of
the effective date of the requirements of this section
shall be exempted from the requirements of this section.
``(B) Tracing.--For a product that entered the
pharmaceutical distribution supply chain prior to
January 1, 2015--
``(i) authorized trading partners shall be
exempt from providing transaction information as
required under subsections (b)(1)(A)(i),
(c)(1)(A)(ii), (d)(1)(A)(ii), and (e)(1)(A)(ii);
``(ii) transaction history required under this
section shall begin with the owner of such product
on such date; and
``(iii) the owners of such product on such
date shall be exempt from asserting receipt of
transaction information and transaction statement
from the prior owner as required under this
section.
``(6) <>  Wholesale distributor
licenses.--Notwithstanding section 581(9)(A), until the
effective date of the wholesale distributor licensing
regulations under section 583, the term `licensed' or
`authorized', as it relates to a wholesale distributor with
respect to prescription drugs, shall mean a wholesale
distributor with a valid license under State law.
``(7) <>  Third-party logistics provider
licenses.--Until the effective date of the third-party logistics
provider licensing regulations under section 584, a third-party
logistics provider shall be considered `licensed' under section
581(9)(B) unless the Secretary has made a finding that the
third-party logistics provider does not utilize good handling
and distribution practices and publishes notice thereof.
``(8) Label changes.--Changes made to package labels solely
to incorporate the product identifier may be submitted to the
Secretary in the annual report of an establishment, in
accordance with section 314.70(d) of chapter 21, Code of Federal
Regulations (or any successor regulation).
``(9) Product identifiers.--With respect to any requirement
relating to product identifiers under this subchapter--
``(A) unless the Secretary allows, through guidance,
the use of other technologies for data instead of or in
addition to the technologies described in clauses (i)
and (ii), the applicable data--
``(i) shall be included in a 2-dimensional
data matrix barcode when affixed to, or imprinted
upon, a package; and

[[Page 608]]

``(ii) shall be included in a linear or 2-
dimensional data matrix barcode when affixed to,
or imprinted upon, a homogeneous case; and
``(B) verification of the product identifier may
occur by using human-readable or machine-readable
methods.

``(b) Manufacturer Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning not later than January
1, 2015, a manufacturer shall--
``(i) prior to, or at the time of, each
transaction in which such manufacturer transfers
ownership of a product, provide the subsequent
owner with transaction history, transaction
information, and a transaction statement, in a
single document in an paper or electronic format;
and
``(ii) <>  capture the
transaction information (including lot level
information), transaction history, and transaction
statement for each transaction and maintain such
information, history, and statement for not less
than 6 years after the date of the transaction.
``(B) <>  Requests for
information.--Upon a request by the Secretary or other
appropriate Federal or State official, in the event of a
recall or for the purpose of investigating a suspect
product or an illegitimate product, a manufacturer
shall, not later than 1 business day, and not to exceed
48 hours, after receiving the request, or in other such
reasonable time as determined by the Secretary, based on
the circumstances of the request, provide the applicable
transaction information, transaction history, and
transaction statement for the product.
``(C) Electronic format.--
``(i) In general.--Beginning not later than 4
years after the date of enactment of the Drug
Supply Chain Security Act, except as provided
under clause (ii), a manufacturer shall provide
the transaction information, transaction history,
and transaction statement required under
subparagraph (A)(i) in electronic format.
``(ii) Exception.--A manufacturer may continue
to provide the transaction information,
transaction history, and transaction statement
required under subparagraph (A)(i) in a paper
format to a licensed health care practitioner
authorized to prescribe medication under State law
or other licensed individual under the supervision
or direction of such a practitioner who dispenses
product in the usual course of professional
practice.
``(2) Product identifier.--
``(A) In general.--Beginning not later than 4 years
after the date of enactment of the Drug Supply Chain
Security Act, a manufacturer shall affix or imprint a
product identifier to each package and homogenous case
of a product intended to be introduced in a transaction
into commerce. <> Such manufacturer
shall maintain the product identifier information for
such product for not less than 6 years after the date of
the transaction.

[[Page 609]]

``(B) Exception.--A package that is required to have
a standardized numerical identifier is not required to
have a unique device identifier.
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, the trading partners of a manufacturer may be
only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a manufacturer shall have systems in place to enable the
manufacturer to comply with the following requirements:
``(A) <>  Suspect product.--
``(i) In general.--Upon making a determination
that a product in the possession or control of the
manufacturer is a suspect product, or upon
receiving a request for verification from the
Secretary that has made a determination that a
product within the possession or control of a
manufacturer is a suspect product, a manufacturer
shall--
``(I) <>
quarantine such product within the
possession or control of the
manufacturer from product intended for
distribution until such product is
cleared or dispositioned; and
``(II) <>
promptly conduct an investigation in
coordination with trading partners, as
applicable, to determine whether the
product is an illegitimate product,
which shall include validating any
applicable transaction history and
transaction information in the
possession of the manufacturer and
otherwise investigating to determine
whether the product is an illegitimate
product, and, beginning 4 years after
the date of enactment of the Drug Supply
Chain Security Act, verifying the
product at the package level, including
the standardized numerical identifier.
``(ii) <>  Cleared
product.--If the manufacturer makes the
determination that a suspect product is not an
illegitimate product, the manufacturer shall
promptly notify the Secretary, if applicable, of
such determination and such product may be further
distributed.
``(iii) <>  Records.--A
manufacturer shall keep records of the
investigation of a suspect product for not less
than 6 years after the conclusion of the
investigation.
``(B) <>  Illegitimate
product.--
``(i) In general.--Upon determining that a
product in the possession or control of a
manufacturer is an illegitimate product, the
manufacturer shall, in a manner consistent with
the systems and processes of such manufacturer--
``(I) quarantine such product within
the possession or control of the
manufacturer from product intended for
distribution until such product is
dispositioned;
``(II) disposition the illegitimate
product within the possession or control
of the manufacturer;

[[Page 610]]

``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or control
of the manufacturer; and
``(IV) retain a sample of the
product for further physical examination
or laboratory analysis of the product by
the manufacturer or Secretary (or other
appropriate Federal or State official)
upon request by the Secretary (or other
appropriate Federal or State official),
as necessary and appropriate.
``(ii) Making a notification.--
``(I) <>
Illegitimate product.--Upon determining
that a product in the possession or
control of the manufacturer is an
illegitimate product, the manufacturer
shall notify the Secretary and all
immediate trading partners that the
manufacturer has reason to believe may
have received such illegitimate product
of such determination not later than 24
hours after making such determination.
``(II) High risk of illegitimacy.--A
manufacturer shall notify the Secretary
and immediate trading partners that the
manufacturer has reason to believe may
have in the trading partner's possession
a product manufactured by, or purported
to be a product manufactured by, the
manufacturer not later than 24 hours
after determining or being notified by
the Secretary or a trading partner that
there is a high risk that such product
is an illegitimate product. For purposes
of this subclause, a `high risk' may
include a specific high risk that could
increase the likelihood that
illegitimate product will enter the
pharmaceutical distribution supply chain
and other high risks as determined by
the Secretary in guidance pursuant to
subsection (h).
``(iii) Responding to a notification.--Upon
the receipt of a notification from the Secretary
or a trading partner that a determination has been
made that a product is an illegitimate product, a
manufacturer shall identify all illegitimate
product subject to such notification that is in
the possession or control of the manufacturer,
including any product that is subsequently
received, and shall perform the activities
described in subparagraph (A).
``(iv) <>  Terminating a
notification.--Upon making a determination, in
consultation with the Secretary, that a
notification is no longer necessary, a
manufacturer shall promptly notify immediate
trading partners that the manufacturer notified
pursuant to clause (ii) that such notification has
been terminated.
``(v) <>  Records.--A
manufacturer shall keep records of the disposition
of an illegitimate product for not less than 6
years after the conclusion of the disposition.
``(C) <>  Requests for
verification.--Beginning 4 years after the date of
enactment of the Drug Supply Chain Security Act, upon
receiving a request for verification from

[[Page 611]]

an authorized repackager, wholesale distributor, or
dispenser that is in possession or control of a product
such person believes to be manufactured by such
manufacturer, a manufacturer shall, not later than 24
hours after receiving the request for verification or in
other such reasonable time as determined by the
Secretary, based on the circumstances of the request,
notify the person making the request whether the product
identifier, including the standardized numerical
identifier, that is the subject of the request
corresponds to the product identifier affixed or
imprinted by the manufacturer. If a manufacturer
responding to a request for verification identifies a
product identifier that does not correspond to that
affixed or imprinted by the manufacturer, the
manufacturer shall treat such product as suspect product
and conduct an investigation as described in
subparagraph (A). If the manufacturer has reason to
believe the product is an illegitimate product, the
manufacturer shall advise the person making the request
of such belief at the time such manufacturer responds to
the request for verification.
``(D) Electronic database.--A manufacturer may
satisfy the requirements of this paragraph by developing
a secure electronic database or utilizing a secure
electronic database developed or operated by another
entity. The owner of such database shall establish the
requirements and processes to respond to requests and
may provide for data access to other members of the
pharmaceutical distribution supply chain, as
appropriate. The development and operation of such a
database shall not relieve a manufacturer of the
requirement under this paragraph to respond to a request
for verification submitted by means other than a secure
electronic database.
``(E) <>  Saleable returned
product.--Beginning 4 years after the date of enactment
of the Drug Supply Chain Security Act (except as
provided pursuant to subsection (a)(5)), upon receipt of
a returned product that the manufacturer intends to
further distribute, before further distributing such
product, the manufacturer shall verify the product
identifier, including the standardized numerical
identifier, for each sealed homogeneous case of such
product or, if such product is not in a sealed
homogeneous case, verify the product identifier,
including the standardized numerical identifier, on each
package.
``(F) Nonsaleable returned product.--A manufacturer
may return a nonsaleable product to the manufacturer or
repackager, to the wholesale distributor from whom such
product was purchased, or to a person acting on behalf
of such a person, including a returns processor, without
providing the information described in paragraph
(1)(A)(i).

``(c) Wholesale Distributor Requirements.--
``(1) Product tracing.--
``(A) <>  In general.--
Beginning not later than January 1, 2015, the following
requirements shall apply to wholesale distributors:
``(i) A wholesale distributor shall not accept
ownership of a product unless the previous owner
prior to,

[[Page 612]]

or at the time of, the transaction provides the
transaction history, transaction information, and
a transaction statement for the product, as
applicable under this subparagraph.
``(ii)(I)(aa) If the wholesale distributor
purchased a product directly from the
manufacturer, the exclusive distributor of the
manufacturer, or a repackager that purchased
directly from the manufacturer, then prior to, or
at the time of, each transaction in which the
wholesale distributor transfers ownership of a
product, the wholesale distributor shall provide
to the subsequent purchaser--
``(AA) a transaction statement,
which shall state that such wholesale
distributor, or a member of the
affiliate of such wholesale distributor,
purchased the product directly from the
manufacturer, exclusive distributor of
the manufacturer, or repackager that
purchased the product directly from the
manufacturer; and
``(BB) subject to subclause (II),
the transaction history and transaction
information.
``(bb) The wholesale distributor shall provide
the transaction history, transaction information,
and transaction statement under item (aa)--
``(AA) if provided to a
dispenser, on a single document
in a paper or electronic format;
and
``(BB) if provided to a
wholesale distributor, through
any combination of self-
generated paper, electronic
data, or manufacturer-provided
information on the product
package.
``(II) For purposes of transactions described
in subclause (I), transaction history and
transaction information shall not be required to
include the lot number of the product, the initial
transaction date, or the initial shipment date
from the manufacturer (as defined in subparagraphs
(F), (G), and (H) of section 581(26)).
``(iii) If the wholesale distributor did not
purchase a product directly from the manufacturer,
the exclusive distributor of the manufacturer, or
a repackager that purchased directly from the
manufacturer, as described in clause (ii), then
prior to, or at the time of, each transaction or
subsequent transaction, the wholesale distributor
shall provide to the subsequent purchaser a
transaction statement, transaction history, and
transaction information, in a paper or electronic
format that complies with the guidance document
issued under subsection (a)(2).
``(iv) For the purposes of clause (iii), the
transaction history supplied shall begin only with
the wholesale distributor described in clause
(ii)(I), but the wholesale distributor described
in clause (iii) shall inform the subsequent
purchaser that such wholesale distributor received
a direct purchase statement from a wholesale
distributor described in clause (ii)(I).
``(v) A wholesale distributor shall--

[[Page 613]]

``(I) <>
capture the transaction information
(including lot level information)
consistent with the requirements of this
section, transaction history, and
transaction statement for each
transaction described in clauses (i),
(ii), and (iii) and maintain such
information, history, and statement for
not less than 6 years after the date of
the transaction; and
``(II) <>
maintain the confidentiality of the
transaction information (including any
lot level information consistent with
the requirements of this section),
transaction history, and transaction
statement for a product in a manner that
prohibits disclosure to any person other
than the Secretary or other appropriate
Federal or State official, except to
comply with clauses (ii) and (iii), and,
as applicable, pursuant to an agreement
under subparagraph (D).
``(B) Returns.--
``(i) <>  Saleable
returns.--Notwithstanding subparagraph (A)(i), the
following shall apply:
``(I) Requirements.--Until the date
that is 6 years after the date of
enactment of the Drug Supply Chain
Security Act (except as provided
pursuant to subsection (a)(5)), a
wholesale distributor may accept
returned product from a dispenser or
repackager pursuant to the terms and
conditions of any agreement between the
parties, and, notwithstanding
subparagraph (A)(ii), may distribute
such returned product without providing
the transaction history. For
transactions subsequent to the return,
the transaction history of such product
shall begin with the wholesale
distributor that accepted the returned
product, consistent with the
requirements of this subsection.
``(II) Enhanced requirements.--
Beginning 6 years after the date of
enactment of the Drug Supply Chain
Security Act (except as provided
pursuant to subsection (a)(5)), a
wholesale distributor may accept
returned product from a dispenser or
repackager only if the wholesale
distributor can associate returned
product with the transaction information
and transaction statement associated
with that product. For all transactions
after such date, the transaction
history, as applicable, of such product
shall begin with the wholesale
distributor that accepted and verified
the returned product. For purposes of
this subparagraph, the transaction
information and transaction history, as
applicable, need not include transaction
dates if it is not reasonably
practicable to obtain such dates.
``(ii) Nonsaleable returns.--A wholesale
distributor may return a nonsaleable product to
the manufacturer or repackager, to the wholesale
distributor from whom such product was purchased,
or to a person acting on behalf of such a person,
including a returns

[[Page 614]]

processor, without providing the information
required under subparagraph (A)(i).
``(C) <>  Requests for
information.--Upon a request by the Secretary or other
appropriate Federal or State official, in the event of a
recall or for the purpose of investigating a suspect
product or an illegitimate product, a wholesale
distributor shall, not later than 1 business day, and
not to exceed 48 hours, after receiving the request or
in other such reasonable time as determined by the
Secretary, based on the circumstances of the request,
provide the applicable transaction information,
transaction history, and transaction statement for the
product.
``(D) Trading partner agreements.--Beginning 6 years
after the date of enactment of the Drug Supply Chain
Security Act, a wholesale distributor may disclose the
transaction information, including lot level
information, transaction history, or transaction
statement of a product to the subsequent purchaser of
the product, pursuant to a written agreement between
such wholesale distributor and such subsequent
purchaser. Nothing in this subparagraph shall be
construed to limit the applicability of subparagraphs
(A) through (C).
``(2) Product identifier.--Beginning 6 years after the date
of enactment of the Drug Supply Chain Security Act, a wholesale
distributor may engage in transactions involving a product only
if such product is encoded with a product identifier (except as
provided pursuant to subsection (a)(5)).
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, the trading partners of a wholesale distributor
may be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a wholesale distributor shall have systems in place to
enable the wholesale distributor to comply with the following
requirements:
``(A) <>  Suspect product.--
``(i) In general.--Upon making a determination
that a product in the possession or control of a
wholesale distributor is a suspect product, or
upon receiving a request for verification from the
Secretary that has made a determination that a
product within the possession or control of a
wholesale distributor is a suspect product, a
wholesale distributor shall--
``(I) <>
quarantine such product within the
possession or control of the wholesale
distributor from product intended for
distribution until such product is
cleared or dispositioned; and
``(II) <>
promptly conduct an investigation in
coordination with trading partners, as
applicable, to determine whether the
product is an illegitimate product,
which shall include validating any
applicable transaction history and
transaction information in the
possession of the wholesale distributor
and otherwise investigating to determine
whether the product is an illegitimate
product, and, beginning 6 years after
the date of enactment of the Drug Supply
Chain Security Act (except as provided
pursuant to subsection (a)(5)),

[[Page 615]]

verifying the product at the package
level, including the standardized
numerical identifier.
``(ii) <>  Cleared
product.--If the wholesale distributor determines
that a suspect product is not an illegitimate
product, the wholesale distributor shall promptly
notify the Secretary, if applicable, of such
determination and such product may be further
distributed.
``(iii) <>  Records.--A
wholesale distributor shall keep records of the
investigation of a suspect product for not less
than 6 years after the conclusion of the
investigation.
``(B) <>  Illegitimate
product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a product
in the possession or control of a wholesale
distributor is an illegitimate product, the
wholesale distributor shall, in a manner that is
consistent with the systems and processes of such
wholesale distributor--
``(I) <>
quarantine such product within the
possession or control of the wholesale
distributor from product intended for
distribution until such product is
dispositioned;
``(II) disposition the illegitimate
product within the possession or control
of the wholesale distributor;
``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or control
of the wholesale distributor; and
``(IV) retain a sample of the
product for further physical examination
or laboratory analysis of the product by
the manufacturer or Secretary (or other
appropriate Federal or State official)
upon request by the manufacturer or
Secretary (or other appropriate Federal
or State official), as necessary and
appropriate.
``(ii) <>  Making a
notification.--Upon determining that a product in
the possession or control of the wholesale
distributor is an illegitimate product, the
wholesale distributor shall notify the Secretary
and all immediate trading partners that the
wholesale distributor has reason to believe may
have received such illegitimate product of such
determination not later than 24 hours after making
such determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the Secretary
or a trading partner that a determination has been
made that a product is an illegitimate product, a
wholesale distributor shall identify all
illegitimate product subject to such notification
that is in the possession or control of the
wholesale distributor, including any product that
is subsequently received, and shall perform the
activities described in subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with the
Secretary, that a notification is no longer
necessary, a wholesale

[[Page 616]]

distributor shall promptly notify immediate
trading partners that the wholesale distributor
notified pursuant to clause (ii) that such
notification has been terminated.
``(v) <>  Records.--A
wholesale distributor shall keep records of the
disposition of an illegitimate product for not
less than 6 years after the conclusion of the
disposition.
``(C) Electronic database.--A wholesale distributor
may satisfy the requirements of this paragraph by
developing a secure electronic database or utilizing a
secure electronic database developed or operated by
another entity. <> The owner of
such database shall establish the requirements and
processes to respond to requests and may provide for
data access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database shall not
relieve a wholesale distributor of the requirement under
this paragraph to respond to a verification request
submitted by means other than a secure electronic
database.
``(D) Verification of saleable returned product.--
Beginning 6 years after the date of enactment of the
Drug Supply Chain Security Act, upon receipt of a
returned product that the wholesale distributor intends
to further distribute, before further distributing such
product, the wholesale distributor shall verify the
product identifier, including the standardized numerical
identifier, for each sealed homogeneous case of such
product or, if such product is not in a sealed
homogeneous case, verify the product identifier,
including the standardized numerical identifier, on each
package.

``(d) Dispenser Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning July 1, 2015, a
dispenser--
``(i) shall not accept ownership of a product,
unless the previous owner prior to, or at the time
of, the transaction, provides transaction history,
transaction information, and a transaction
statement;
``(ii) prior to, or at the time of, each
transaction in which the dispenser transfers
ownership of a product (but not including
dispensing to a patient or returns) shall provide
the subsequent owner with transaction history,
transaction information, and a transaction
statement for the product, except that the
requirements of this clause shall not apply to
sales by a dispenser to another dispenser to
fulfill a specific patient need; and
``(iii) <>  shall capture
transaction information (including lot level
information, if provided), transaction history,
and transaction statements, as necessary to
investigate a suspect product, and maintain such
information, history, and statements for not less
than 6 years after the transaction.
``(B) Agreements with third parties.--A dispenser
may enter into a written agreement with a third party,
including an authorized wholesale distributor, under
which

[[Page 617]]

the third party confidentially maintains the transaction
information, transaction history, and transaction
statements required to be maintained under this
subsection on behalf of the
dispenser. <>  If a dispenser enters
into such an agreement, the dispenser shall maintain a
copy of the written agreement and shall not be relieved
of the obligations of the dispenser under this
subsection.
``(C) Returns.--
``(i) Saleable returns.--A dispenser may
return product to the trading partner from which
the dispenser obtained the product without
providing the information required under
subparagraph (A).
``(ii) Nonsaleable returns.--A dispenser may
return a nonsaleable product to the manufacturer
or repackager, to the wholesale distributor from
whom such product was purchased, to a returns
processor, or to a person acting on behalf of such
a person without providing the information
required under subparagraph (A).
``(D) <>  Requests for
information.--Upon a request by the Secretary or other
appropriate Federal or State official, in the event of a
recall or for the purpose of investigating a suspect or
an illegitimate product, a dispenser shall, not later
than 2 business days after receiving the request or in
another such reasonable time as determined by the
Secretary, based on the circumstances of the request,
provide the applicable transaction information,
transaction statement, and transaction history which the
dispenser received from the previous owner, which shall
not include the lot number of the product, the initial
transaction date, or the initial shipment date from the
manufacturer unless such information was included in the
transaction information, transaction statement, and
transaction history provided by the manufacturer or
wholesale distributor to the dispenser. The dispenser
may respond to the request by providing the applicable
information in either paper or electronic format. Until
the date that is 4 years after the date of enactment of
the Drug Supply Chain Security Act, the Secretary or
other appropriate Federal or State official shall grant
a dispenser additional time, as necessary, only with
respect to a request to provide lot level information
described in subparagraph (F) of section 581(26) that
was provided to the dispenser in paper format, limit the
request time period to the 6 months preceding the
request or other relevant date, and, in the event of a
recall, the Secretary, or other appropriate Federal or
State official may request information only if such
recall involves a serious adverse health consequence or
death to humans.
``(2) Product identifier.--Beginning not later than 7 years
after the date of enactment of the Drug Supply Chain Security
Act, a dispenser may engage in transactions involving a product
only if such product is encoded with a product identifier
(except as provided pursuant to subsection (a)(5)).
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, the trading partners of a dispenser may be only
authorized trading partners.

[[Page 618]]

``(4) Verification.--Beginning not later than January 1,
2015, a dispenser shall have systems in place to enable the
dispenser to comply with the following requirements:
``(A) Suspect product.--
``(i) <>  In general.--
Upon making a determination that a product in the
possession or control of the dispenser is a
suspect product, or upon receiving a request for
verification from the Secretary that has made a
determination that a product within the possession
or control of a dispenser is a suspect product, a
dispenser shall--
``(I) <>
quarantine such product within the
possession or control of the dispenser
from product intended for distribution
until such product is cleared or
dispositioned; and
``(II) <>
promptly conduct an investigation in
coordination with trading partners, as
applicable, to determine whether the
product is an illegitimate product.
``(ii) Investigation.--An investigation
conducted under clause (i)(II) shall include--
``(I) beginning 7 years after the
date of enactment of the Drug Supply
Chain Security Act, verifying whether
the lot number of a suspect product
corresponds with the lot number for such
product;
``(II) beginning 7 years after the
date of enactment of such Act, verifying
that the product identifier, including
the standardized numerical identifier,
of at least 3 packages or 10 percent of
such suspect product, whichever is
greater, or all packages, if there are
fewer than 3, corresponds with the
product identifier for such product;
``(III) validating any applicable
transaction history and transaction
information in the possession of the
dispenser; and
``(IV) otherwise investigating to
determine whether the product is an
illegitimate product.
``(iii) <>  Cleared
product.--If the dispenser makes the determination
that a suspect product is not an illegitimate
product, the dispenser shall promptly notify the
Secretary, if applicable, of such determination
and such product may be further distributed or
dispensed.
``(iv) <>  Records.--A
dispenser shall keep records of the investigation
of a suspect product for not less than 6 years
after the conclusion of the investigation.
``(B) <>  Illegitimate
product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a product
in the possession or control of a dispenser is an
illegitimate product, the dispenser shall--
``(I) disposition the illegitimate
product within the possession or control
of the dispenser;

[[Page 619]]

``(II) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or control
of the dispenser; and
``(III) retain a sample of the
product for further physical examination
or laboratory analysis of the product by
the manufacturer or Secretary (or other
appropriate Federal or State official)
upon request by the manufacturer or
Secretary (or other appropriate Federal
or State official), as necessary and
appropriate.
``(ii) <>  Making a
notification.--Upon determining that a product in
the possession or control of the dispenser is an
illegitimate product, the dispenser shall notify
the Secretary and all immediate trading partners
that the dispenser has reason to believe may have
received such illegitimate product of such
determination not later than 24 hours after making
such determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the Secretary
or a trading partner that a determination has been
made that a product is an illegitimate product, a
dispenser shall identify all illegitimate product
subject to such notification that is in the
possession or control of the dispenser, including
any product that is subsequently received, and
shall perform the activities described in
subparagraph (A).
``(iv) Terminating a notification.--Upon
making a determination, in consultation with the
Secretary, that a notification is no longer
necessary, a dispenser shall promptly notify
immediate trading partners that the dispenser
notified pursuant to clause (ii) that such
notification has been terminated.
``(v) <>  Records.--A
dispenser shall keep records of the disposition of
an illegitimate product for not less than 6 years
after the conclusion of the disposition.
``(C) Electronic database.--A dispenser may satisfy
the requirements of this paragraph by developing a
secure electronic database or utilizing a secure
electronic database developed or operated by another
entity.
``(5) Exception.--Notwithstanding any other provision of
law, the requirements under paragraphs (1) and (4) shall not
apply to licensed health care practitioners authorized to
prescribe or administer medication under State law or other
licensed individuals under the supervision or direction of such
practitioners who dispense or administer product in the usual
course of professional practice.

``(e) Repackager Requirements.--
``(1) Product tracing.--
``(A) In general.--Beginning not later than January
1, 2015, a repackager described in section 581(16)(A)
shall--
``(i) not accept ownership of a product unless
the previous owner, prior to, or at the time of,
the transaction, provides transaction history,
transaction

[[Page 620]]

information, and a transaction statement for the
product;
``(ii) prior to, or at the time of, each
transaction in which the repackager transfers
ownership of a product, provide the subsequent
owner with transaction history, transaction
information, and a transaction statement for the
product; and
``(iii) capture the transaction information
(including lot level information), transaction
history, and transaction statement for each
transaction described in clauses (i) and (ii) and
maintain such information, history, and statement
for not less than 6 years after the transaction.
``(B) Returns.--
``(i) Nonsaleable product.--A repackager
described in section 581(16)(A) may return a
nonsaleable product to the manufacturer or
repackager, or to the wholesale distributor from
whom such product was purchased, or to a person
acting on behalf of such a person, including a
returns processor, without providing the
information required under subparagraph (A)(ii).
``(ii) Saleable or nonsaleable product.--A
repackager described in section 581(16)(B) may
return a saleable or nonsaleable product to the
manufacturer, repackager, or to the wholesale
distributor from whom such product was received
without providing the information required under
subparagraph (A)(ii) on behalf of the hospital or
other health care entity that took ownership of
such product pursuant to the terms and conditions
of any agreement between such repackager and the
entity that owns the product.
``(C) <>  Requests for
information.--Upon a request by the Secretary or other
appropriate Federal or State official, in the event of a
recall or for the purpose of investigating a suspect
product or an illegitimate product, a repackager
described in section 581(16)(A) shall, not later than 1
business day, and not to exceed 48 hours, after
receiving the request or in other such reasonable time
as determined by the Secretary, provide the applicable
transaction information, transaction history, and
transaction statement for the product.
``(2) Product identifier.--
``(A) In general.--Beginning not later than 5 years
after the date of enactment of the Drug Supply Chain
Security Act, a repackager described in section
581(16)(A)--
``(i) shall affix or imprint a product
identifier to each package and homogenous case of
product intended to be introduced in a transaction
in commerce;
``(ii) <>  shall maintain
the product identifier information for such
product for not less than 6 years after the date
of the transaction;
``(iii) may engage in transactions involving a
product only if such product is encoded with a
product identifier (except as provided pursuant to
subsection (a)(5)); and

[[Page 621]]

``(iv) <>  shall
maintain records for not less than 6 years to
allow the repackager to associate the product
identifier the repackager affixes or imprints with
the product identifier assigned by the original
manufacturer of the product.
``(B) Exception.--A package that is required to have
a standardized numerical identifier is not required to
have a unique device identifier.
``(3) Authorized trading partners.--Beginning January 1,
2015, the trading partners of a repackager described in section
581(16) may be only authorized trading partners.
``(4) Verification.--Beginning not later than January 1,
2015, a repackager described in section 581(16)(A) shall have
systems in place to enable the repackager to comply with the
following requirements:
``(A) <>  Suspect product.--
``(i) In general.--Upon making a determination
that a product in the possession or control of the
repackager is a suspect product, or upon receiving
a request for verification from the Secretary that
has made a determination that a product within the
possession or control of a repackager is a suspect
product, a repackager shall--
``(I) <>
quarantine such product within the
possession or control of the repackager
from product intended for distribution
until such product is cleared or
dispositioned; and
``(II) <>
promptly conduct an investigation in
coordination with trading partners, as
applicable, to determine whether the
product is an illegitimate product,
which shall include validating any
applicable transaction history and
transaction information in the
possession of the repackager and
otherwise investigating to determine
whether the product is an illegitimate
product, and, beginning 5 years after
the date of enactment of the Drug Supply
Chain Security Act (except as provided
pursuant to subsection (a)(5)),
verifying the product at the package
level, including the standardized
numerical identifier.
``(ii) <>  Cleared
product.--If the repackager makes the
determination that a suspect product is not an
illegitimate product, the repackager shall
promptly notify the Secretary, if applicable, of
such determination and such product may be further
distributed.
``(iii) <>  Records.--A
repackager shall keep records of the investigation
of a suspect product for not less than 6 years
after the conclusion of the investigation.
``(B) <>  Illegitimate
product.--
``(i) In general.--Upon determining, in
coordination with the manufacturer, that a product
in the possession or control of a repackager is an
illegitimate product, the repackager shall, in a
manner that is consistent with the systems and
processes of such repackager--
``(I) <>
quarantine such product within the
possession or control of the repackager
from product

[[Page 622]]

intended for distribution until such
product is dispositioned;
``(II) disposition the illegitimate
product within the possession or control
of the repackager;
``(III) take reasonable and
appropriate steps to assist a trading
partner to disposition an illegitimate
product not in the possession or control
of the repackager; and
``(IV) retain a sample of the
product for further physical examination
or laboratory analysis of the product by
the manufacturer or Secretary (or other
appropriate Federal or State official)
upon request by the manufacturer or
Secretary (or other appropriate Federal
or State official), as necessary and
appropriate.
``(ii) <>  Making a
notification.--Upon determining that a product in
the possession or control of the repackager is an
illegitimate product, the repackager shall notify
the Secretary and all immediate trading partners
that the repackager has reason to believe may have
received the illegitimate product of such
determination not later than 24 hours after making
such determination.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the Secretary
or a trading partner, a repackager shall identify
all illegitimate product subject to such
notification that is in the possession or control
of the repackager, including any product that is
subsequently received, and shall perform the
activities described in subparagraph (A).
``(iv) <>  Terminating a
notification.--Upon making a determination, in
consultation with the Secretary, that a
notification is no longer necessary, a repackager
shall promptly notify immediate trading partners
that the repackager notified pursuant to clause
(ii) that such notification has been terminated.
``(v) <>  Records.--A
repackager shall keep records of the disposition
of an illegitimate product for not less than 6
years after the conclusion of the disposition.
``(C) <>  Requests for
verification.--Beginning 5 years after the date of
enactment of the Drug Supply Chain Security Act, upon
receiving a request for verification from an authorized
manufacturer, wholesale distributor, or dispenser that
is in possession or control of a product they believe to
be repackaged by such repackager, a repackager shall,
not later than 24 hours after receiving the verification
request or in other such reasonable time as determined
by the Secretary, based on the circumstances of the
request, notify the person making the request whether
the product identifier, including the standardized
numerical identifier, that is the subject of the request
corresponds to the product identifier affixed or
imprinted by the repackager. If a repackager responding
to a verification request identifies a product
identifier that does not correspond to that affixed or
imprinted by the repackager, the repackager shall treat
such product as suspect product and conduct an
investigation as described in subparagraph (A). If the
repackager

[[Page 623]]

has reason to believe the product is an illegitimate
product, the repackager shall advise the person making
the request of such belief at the time such repackager
responds to the verification request.
``(D) <>
Electronic database.--A repackager may satisfy the
requirements of paragraph (4) by developing a secure
electronic database or utilizing a secure electronic
database developed or operated by another entity. The
owner of such database shall establish the requirements
and processes to respond to requests and may provide for
data access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database shall not
relieve a repackager of the requirement under
subparagraph (C) to respond to a verification request
submitted by means other than a secure electronic
database.
``(E) Verification of saleable returned product.--
Beginning 5 years after the date of enactment of the
Drug Supply Chain Security Act, upon receipt of a
returned product that the repackager intends to further
distribute, before further distributing such product,
the repackager shall verify the product identifier for
each sealed homogeneous case of such product or, if such
product is not in a sealed homogeneous case, verify the
product identifier on each package.

``(f) Drop Shipments.--
``(1) In general.--A wholesale distributor that does not
physically handle or store product shall be exempt from the
provisions of this section, except the notification requirements
under clauses (ii), (iii), and (iv) of subsection (c)(4)(B),
provided that the manufacturer, repackager, or other wholesale
distributor that distributes the product to the dispenser by
means of a drop shipment for such wholesale distributor includes
on the transaction information and transaction history to the
dispenser the contact information of such wholesale distributor
and provides the transaction information, transaction history,
and transaction statement directly to the dispenser.
``(2) Clarification.--For purposes of this subsection,
providing administrative services, including processing of
orders and payments, shall not by itself, be construed as being
involved in the handling, distribution, or storage of a
product.''.
SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY.

Section 582, <>  as added by section 202, is
amended by adding at the end the following:

``(g) Enhanced Drug Distribution Security.--
``(1) <>  In general.--On the date
that is 10 years after the date of enactment of the Drug Supply
Chain Security Act, the following interoperable, electronic
tracing of product at the package level requirements shall go
into effect:
``(A) The transaction information and the
transaction statements as required under this section
shall be exchanged in a secure, interoperable,
electronic manner in accordance with the standards
established under the guidance issued pursuant to
paragraphs (3) and (4) of subsection (h), including any
revision of such guidance issued in accordance with
paragraph (5) of such subsection.

[[Page 624]]

``(B) The transaction information required under
this section shall include the product identifier at the
package level for each package included in the
transaction.
``(C) Systems and processes for verification of
product at the package level, including the standardized
numerical identifier, shall be required in accordance
with the standards established under the guidance issued
pursuant to subsection (a)(2) and the guidances issued
pursuant to paragraphs (2), (3), and (4) of subsection
(h), including any revision of such guidances issued in
accordance with paragraph (5) of such subsection, which
may include the use of aggregation and inference as
necessary.
``(D) The systems and processes necessary to
promptly respond with the transaction information and
transaction statement for a product upon a request by
the Secretary (or other appropriate Federal or State
official) in the event of a recall or for the purposes
of investigating a suspect product or an illegitimate
product shall be required.
``(E) The systems and processes necessary to
promptly facilitate gathering the information necessary
to produce the transaction information for each
transaction going back to the manufacturer, as
applicable, shall be required--
``(i) in the event of a request by the
Secretary (or other appropriate Federal or State
official), on account of a recall or for the
purposes of investigating a suspect product or an
illegitimate product; or
``(ii) in the event of a request by an
authorized trading partner, in a secure manner
that ensures the protection of confidential
commercial information and trade secrets, for
purposes of investigating a suspect product or
assisting the Secretary (or other appropriate
Federal or State official) with a request
described in clause (i).
``(F) Each person accepting a saleable return shall
have systems and processes in place to allow acceptance
of such product and may accept saleable returns only if
such person can associate the saleable return product
with the transaction information and transaction
statement associated with that product.
``(2) Compliance.--
``(A) Information maintenance agreement.--A
dispenser may enter into a written agreement with a
third party, including an authorized wholesale
distributor, under which the third party shall
confidentially maintain any information and statements
required to be maintained under this
section. <>  If a dispenser enters into
such an agreement, the dispenser shall maintain a copy
of the written agreement and shall not be relieved of
the obligations of the dispenser under this subsection.
``(B) <>  Alternative
methods.--The Secretary, taking into consideration the
assessment conducted under paragraph (3), shall provide
for alternative methods of compliance with any of the
requirements set forth in paragraph (1), including--
``(i) establishing timelines for compliance by
small businesses (including small business
dispensers with

[[Page 625]]

25 or fewer full-time employees) with such
requirements, in order to ensure that such
requirements do not impose undue economic hardship
for small businesses, including small business
dispensers for whom the criteria set forth in the
assessment under paragraph (3) is not met, if the
Secretary determines that such requirements under
paragraph (1) would result in undue economic
hardship; and
``(ii) <>  establishing a
process by which a dispenser may request a waiver
from any of the requirements set forth in
paragraph (1) if the Secretary determines that
such requirements would result in an undue
economic hardship, which shall include a process
for the biennial review and renewal of any such
waiver.
``(3) Assessment.--
``(A) <>  In general.--
Not later than the date that is 18 months after the
Secretary issues the final guidance required under
subsection (h), the Secretary shall enter into a
contract with a private, independent consulting firm
with expertise to conduct a technology and software
assessment that looks at the feasibility of dispensers
with 25 or fewer full-time employees conducting
interoperable, electronic tracing of products at the
package level. Such assessment shall be completed not
later than 8\1/2\ years after the date of enactment of
the Drug Supply Chain Security Act.
``(B) Condition.--As a condition of the award of the
contract under subparagraph (A), the private,
independent consulting firm shall agree to consult with
dispensers with 25 or fewer full-time employees when
conducting the assessment under such subparagraph.
``(C) Content.--The assessment under subparagraph
(A) shall assess whether--
``(i) the necessary software and hardware is
readily accessible to such dispensers;
``(ii) the necessary software and hardware is
prohibitively expensive to obtain, install, and
maintain for such dispensers; and
``(iii) the necessary hardware and software
can be integrated into business practices, such as
interoperability with wholesale distributors, for
such dispensers.
``(D) <>
Publication.--The Secretary shall--
``(i) publish the statement of work for the
assessment under subparagraph (A) for public
comment prior to beginning the assessment;
``(ii) publish the final assessment for public
comment not later than 30 calendar days after
receiving such assessment; and
``(iii) hold a public meeting not later than
180 calendar days after receiving the final
assessment at which public stakeholders may
present their views on the assessment.
``(4) <>  Procedure.--Notwithstanding
section 553 of title 5, United States Code, the Secretary, in
promulgating any regulation pursuant to this section, shall--
``(A) provide appropriate flexibility by--

[[Page 626]]

``(i) not requiring the adoption of specific
business systems for the maintenance and
transmission of data;
``(ii) <>  prescribing
alternative methods of compliance for any of the
requirements set forth in paragraph (1) or set
forth in regulations implementing such
requirements, including--
``(I) timelines for small businesses
to comply with the requirements set
forth in the regulations in order to
ensure that such requirements do not
impose undue economic hardship for small
businesses (including small business
dispensers for whom the criteria set
forth in the assessment under paragraph
(3) is not met), if the Secretary
determines that such requirements would
result in undue economic hardship; and
``(II) <>  the
establishment of a process by which a
dispenser may request a waiver from any
of the requirements set forth in such
regulations if the Secretary determines
that such requirements would result in
an undue economic hardship; and
``(iii) taking into consideration--
``(I) the results of pilot projects,
including pilot projects pursuant to
this section and private sector pilot
projects, including those involving the
use of aggregation and inference;
``(II) the public meetings held and
related guidance documents issued under
this section;
``(III) the public health benefits
of any additional regulations in
comparison to the cost of compliance
with such requirements, including on
entities of varying sizes and
capabilities;
``(IV) the diversity of the
pharmaceutical distribution supply chain
by providing appropriate flexibility for
each sector, including both large and
small businesses; and
``(V) the assessment pursuant to
paragraph (3) with respect to small
business dispensers, including related
public comment and the public meeting,
and requirements under this section;
``(B) <>  issue a notice of
proposed rulemaking that includes a copy of the proposed
regulation;
``(C) <>
provide a period of not less than 60 days for comments
on the proposed regulation; and
``(D) <>  publish in the Federal
Register the final regulation not less than 2 years
prior to the effective date of the regulation.

``(h) Guidance Documents.--
``(1) In general.--For the purposes of facilitating the
successful and efficient adoption of secure, interoperable
product tracing at the package level in order to enhance drug
distribution security and further protect the public health, the
Secretary shall issue the guidance documents as provided for in
this subsection.
``(2) Suspect and illegitimate product.--
``(A) <>  In general.--Not later
than 180 days after the date of enactment of the Drug
Supply Chain Security Act, the Secretary shall issue a
guidance document to aid

[[Page 627]]

trading partners in the identification of a suspect
product and notification termination. Such guidance
document shall--
``(i) identify specific scenarios that could
significantly increase the risk of a suspect
product entering the pharmaceutical distribution
supply chain;
``(ii) provide recommendation on how trading
partners may identify such product and make a
determination on whether the product is a suspect
product as soon as practicable; and
``(iii) set forth the process by which
manufacturers, repackagers, wholesale
distributors, and dispensers shall terminate
notifications in consultation with the Secretary
regarding illegitimate product pursuant to
subsections (b)(4)(B), (c)(4)(B), (d)(4)(B), and
(e)(4)(B).
``(B) Revised guidance.--If the Secretary revises
the guidance issued under subparagraph (A), the
Secretary shall follow the procedure set forth in
paragraph (5).
``(3) Unit level tracing.--
``(A) <>  In general.--In order to
enhance drug distribution security at the package level,
not later than 18 months after conducting a public
meeting on the system attributes necessary to enable
secure tracing of product at the package level,
including allowing for the use of verification,
inference, and aggregation, as necessary, the Secretary
shall issue a final guidance document that outlines and
makes recommendations with respect to the system
attributes necessary to enable secure tracing at the
package level as required under the requirements
established under subsection (g). Such guidance document
shall--
``(i) define the circumstances under which the
sectors within the pharmaceutical distribution
supply chain may, in the most efficient manner
practicable, infer the contents of a case, pallet,
tote, or other aggregate of individual packages or
containers of product, from a product identifier
associated with the case, pallet, tote, or other
aggregate, without opening each case, pallet,
tote, or other aggregate or otherwise individually
scanning each package;
``(ii) identify methods and processes to
enhance secure tracing of product at the package
level, such as secure processes to facilitate the
use of inference, enhanced verification
activities, the use of aggregation and inference,
processes that utilize the product identifiers to
enhance tracing of product at the package level,
including the standardized numerical identifier,
or package security features; and
``(iii) ensure the protection of confidential
commercial information and trade secrets.
``(B) Procedure.--In issuing the guidance under
subparagraph (A), and in revising such guidance, if
applicable, the Secretary shall follow the procedure set
forth in paragraph (5).
``(4) Standards for interoperable data exchange.--
``(A) <>  In general.--In order to
enhance secure tracing of a product at the package
level, the Secretary, not later than 18 months after
conducting a public meeting on the

[[Page 628]]

interoperable standards necessary to enhance the
security of the pharmaceutical distribution supply
chain, shall update the guidance issued pursuant to
subsection (a)(2), as necessary and appropriate, and
finalize such guidance document so that the guidance
document--
``(i) identifies and makes recommendations
with respect to the standards necessary for
adoption in order to support the secure,
interoperable electronic data exchange among the
pharmaceutical distribution supply chain that
comply with a form and format developed by a
widely recognized international standards
development organization;
``(ii) takes into consideration standards
established pursuant to subsection (a)(2) and
section 505D;
``(iii) facilitates the creation of a uniform
process or methodology for product tracing; and
``(iv) ensures the protection of confidential
commercial information and trade secrets.
``(B) Procedure.--In issuing the guidance under
subparagraph (A), and in revising such guidance, if
applicable, the Secretary shall follow the procedure set
forth in paragraph (5).
``(5) Procedure.--In issuing or revising any guidance issued
pursuant to this subsection or subsection (g), except the
initial guidance issued under paragraph (2)(A), the Secretary
shall--
``(A) <>
publish a notice in the Federal Register for a period
not less than 30 days announcing that the draft or
revised draft guidance is available;
``(B) post the draft guidance document on the
Internet Web site of the Food and Drug Administration
and make such draft guidance document available in hard
copy;
``(C) provide an opportunity for comment and review
and take into consideration any comments received;
``(D) revise the draft guidance, as appropriate;
``(E) <>
publish a notice in the Federal Register for a period
not less than 30 days announcing that the final guidance
or final revised guidance is available;
``(F) post the final guidance document on the
Internet Web site of the Food and Drug Administration
and make such final guidance document available in hard
copy; and
``(G) <>  provide for an
effective date of not earlier than 1 year after such
guidance becomes final.

``(i) Public Meetings.--
``(1) In general.--The Secretary shall hold not less than 5
public meetings to enhance the safety and security of the
pharmaceutical distribution supply chain and provide for
comment. The Secretary <>  may hold the first
such public meeting not earlier than 1 year after the date of
enactment of the Drug Supply Chain Security Act. In carrying out
the public meetings described in this paragraph, the Secretary
shall--
``(A) prioritize topics necessary to inform the
issuance of the guidance described in paragraphs (3) and
(4) of subsection (h); and
``(B) take all measures reasonable and practicable
to ensure the protection of confidential commercial
information and trade secrets.

[[Page 629]]

``(2) Content.--Each of the following topics shall be
addressed in at least one of the public meetings described in
paragraph (1):
``(A) An assessment of the steps taken under
subsections (b) through (e) to build capacity for a
unit-level system, including the impact of the
requirements of such subsections on--
``(i) the ability of the health care system
collectively to maintain patient access to
medicines;
``(ii) the scalability of such requirements,
including as it relates to product lines; and
``(iii) the capability of different sectors
and subsectors, including both large and small
businesses, to affix and utilize the product
identifier.
``(B) The system attributes necessary to support the
requirements set forth under subsection (g), including
the standards necessary for adoption in order to support
the secure, interoperable electronic data exchange among
sectors within the pharmaceutical distribution supply
chain.
``(C) Best practices in each of the different
sectors within the pharmaceutical distribution supply
chain to implement the requirements of this section.
``(D) The costs and benefits of the implementation
of this section, including the impact on each
pharmaceutical distribution supply chain sector and on
public health.
``(E) Whether electronic tracing requirements,
including tracing of product at the package level, are
feasible, cost effective, and needed to protect the
public health.
``(F) The systems and processes needed to utilize
the product identifiers to enhance tracing of product at
the package level, including allowing for verification,
aggregation, and inference, as necessary.
``(G) The technical capabilities and legal
authorities, if any, needed to establish an
interoperable, electronic system that provides for
tracing of product at the package level.
``(H) The impact that such additional requirements
would have on patient safety, the drug supply, cost and
regulatory burden, and timely patient access to
prescription drugs.
``(I) Other topics, as determined appropriate by the
Secretary.

``(j) Pilot Projects.--
``(1) In general.--The Secretary shall establish 1 or more
pilot projects, in coordination with authorized manufacturers,
repackagers, wholesale distributors, and dispensers, to explore
and evaluate methods to enhance the safety and security of the
pharmaceutical distribution supply chain. Such projects shall
build upon efforts, in existence as of the date of enactment of
the Drug Supply Chain Security Act, to enhance the safety and
security of the pharmaceutical distribution supply chain, take
into consideration any pilot projects conducted prior to such
date of enactment, including any pilot projects that use
aggregation and inference, and inform the draft and final
guidance under paragraphs (3) and (4) of subsection (h).
``(2) Content.--

[[Page 630]]

``(A) In general.--The Secretary shall ensure that
the pilot projects under paragraph (1) reflect the
diversity of the pharmaceutical distribution supply
chain and that the pilot projects, when taken as a
whole, include participants representative of every
sector, including both large and small businesses.
``(B) Project design.--The pilot projects under
paragraph (1) shall be designed to--
``(i) utilize the product identifier for
tracing of a product, which may include
verification of the product identifier of a
product, including the use of aggregation and
inference;
``(ii) improve the technical capabilities of
each sector and subsector to comply with systems
and processes needed to utilize the product
identifiers to enhance tracing of a product;
``(iii) identify system attributes that are
necessary to implement the requirements
established under this section; and
``(iv) complete other activities as determined
by the Secretary.

``(k) Sunset.--The following requirements shall have no force or
effect beginning on the date that is 10 years after the date of
enactment of the Drug Supply Chain Security Act:
``(1) The provision and receipt of transaction history under
this section.
``(2) The requirements set forth for returns under
subsections (b)(4)(E), (c)(1)(B)(i), (d)(1)(C)(i), and
(e)(4)(E).
``(3) <>  The requirements set forth
under subparagraphs (A)(v)(II) and (D) of subsection (c)(1), as
applied to lot level information only.

``(l) Rule of Construction.--The requirements set forth in
subsections (g)(4), (i), and (j) shall not be construed as a condition,
prohibition, or precedent for precluding or delaying the provisions
becoming effective pursuant to subsection (g).
``(m) <>  Requests for
Information.--On the date that is 10 years after the date of enactment
of the Drug Supply Chain Security Act, the timeline for responses to
requests for information from the Secretary, or other appropriate
Federal or State official, as applicable, under subsections (b)(1)(B),
(c)(1)(C), and (e)(1)(C) shall be not later than 24 hours after
receiving the request from the Secretary or other appropriate Federal or
State official, as applicable, or in such other reasonable time as
determined by the Secretary based on the circumstances of the
request.''.
SEC. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE
DISTRIBUTORS.

(a) Amendments.--
(1) Requirement.--Section 503(e) (21 U.S.C. 353(e)) is
amended by striking paragraphs (1), (2), and (3) and inserting
the following:
``(1) Requirement.--Subject to section 583:
``(A) In general.--No person may engage in wholesale
distribution of a drug subject to subsection (b)(1) in
any State unless such person--
``(i)(I) is licensed by the State from which
the drug is distributed; or

[[Page 631]]

``(II) if the State from which the drug is
distributed has not established a licensure
requirement, is licensed by the Secretary; and
``(ii) if the drug is distributed interstate,
is licensed by the State into which the drug is
distributed if the State into which the drug is
distributed requires the licensure of a person
that distributes drugs into the State.
``(B) Standards.--Each Federal and State license
described in subparagraph (A) shall meet the standards,
terms, and conditions established by the Secretary under
section 583.
``(2) Reporting and database.--
``(A) <>  Reporting.--
Beginning January 1, 2015, any person who owns or
operates an establishment that engages in wholesale
distribution shall--
``(i) report to the Secretary, on an annual
basis pursuant to a schedule determined by the
Secretary--
``(I) each State by which the person
is licensed and the appropriate
identification number of each such
license; and
``(II) the name, address, and
contact information of each facility at
which, and all trade names under which,
the person conducts business; and
``(ii) report to the Secretary within a
reasonable period of time and in a reasonable
manner, as determined by the Secretary, any
significant disciplinary actions, such as the
revocation or suspension of a wholesale
distributor license, taken by a State or the
Federal Government during the reporting period
against the wholesale distributor.
``(B) Database.--Not later than January 1, 2015, the
Secretary shall establish a database of authorized
wholesale distributors. Such database shall--
``(i) identify each authorized wholesale
distributor by name, contact information, and each
State where such wholesale distributor is
appropriately licensed to engage in wholesale
distribution;
``(ii) <>  be available to the public on the
Internet Web site of the Food and Drug
Administration; and
``(iii) be regularly updated on a schedule
determined by the Secretary.
``(C) <>  Coordination.--The
Secretary shall establish a format and procedure for
appropriate State officials to access the information
provided pursuant to subparagraph (A) in a prompt and
secure manner.
``(D) Confidentiality.--Nothing in this paragraph
shall be construed as authorizing the Secretary to
disclose any information that is a trade secret or
confidential information subject to section 552(b)(4) of
title 5, United States Code, or section 1905 of title
18, United States Code.
``(3) Costs.--
``(A) <>  Authorized fees of
secretary.--If a State does not establish a licensing
program for persons engaged in the wholesale
distribution of a drug subject to subsection

[[Page 632]]

(b), the Secretary shall license a person engaged in
wholesale distribution located in such State and may
collect a reasonable fee in such amount necessary to
reimburse the Secretary for costs associated with
establishing and administering the licensure program and
conducting periodic inspections under this section. The
Secretary shall adjust fee rates as needed on an annual
basis to generate only the amount of revenue needed to
perform this service. Fees authorized under this
paragraph shall be collected and available for
obligation only to the extent and in the amount provided
in advance in appropriations Acts. Such fees are
authorized to remain available until expended. Such sums
as may be necessary may be transferred from the Food and
Drug Administration salaries and expenses appropriation
account without fiscal year limitation to such
appropriation account for salaries and expenses with
such fiscal year limitation.
``(B) State licensing fees.--Nothing in this Act
shall prohibit States from collecting fees from
wholesale distributors in connection with State
licensing of such distributors.''.
(2) Wholesale distribution.--Section 503(e) (21 U.S.C.
353(e)), as amended by paragraph (1), is further amended by
adding at the end the following:
``(4) <>  For the purposes of this
subsection and subsection (d), the term `wholesale distribution'
means the distribution of a drug subject to subsection (b) to a
person other than a consumer or patient, or receipt of a drug
subject to subsection (b) by a person other than the consumer or
patient, but does not include--
``(A) intracompany distribution of any drug between
members of an affiliate or within a manufacturer;
``(B) the distribution of a drug, or an offer to
distribute a drug among hospitals or other health care
entities which are under common control;
``(C) the distribution of a drug or an offer to
distribute a drug for emergency medical reasons,
including a public health emergency declaration pursuant
to section 319 of the Public Health Service Act, except
that, for purposes of this paragraph, a drug shortage
not caused by a public health emergency shall not
constitute an emergency medical reason;
``(D) the dispensing of a drug pursuant to a
prescription executed in accordance with subsection
(b)(1);
``(E) the distribution of minimal quantities of drug
by a licensed retail pharmacy to a licensed practitioner
for office use;
``(F) the distribution of a drug or an offer to
distribute a drug by a charitable organization to a
nonprofit affiliate of the organization to the extent
otherwise permitted by law;
``(G) the purchase or other acquisition by a
dispenser, hospital, or other health care entity of a
drug for use by such dispenser, hospital, or other
health care entity;
``(H) the distribution of a drug by the manufacturer
of such drug;

[[Page 633]]

``(I) the receipt or transfer of a drug by an
authorized third-party logistics provider provided that
such third-party logistics provider does not take
ownership of the drug;
``(J) a common carrier that transports a drug,
provided that the common carrier does not take ownership
of the drug;
``(K) the distribution of a drug, or an offer to
distribute a drug by an authorized repackager that has
taken ownership or possession of the drug and repacks it
in accordance with section 582(e);
``(L) salable drug returns when conducted by a
dispenser;
``(M) the distribution of a collection of finished
medical devices, which may include a product or
biological product, assembled in kit form strictly for
the convenience of the purchaser or user (referred to in
this subparagraph as a `medical convenience kit') if--
``(i) the medical convenience kit is assembled
in an establishment that is registered with the
Food and Drug Administration as a device
manufacturer in accordance with section 510(b)(2);
``(ii) the medical convenience kit does not
contain a controlled substance that appears in a
schedule contained in the Comprehensive Drug Abuse
Prevention and Control Act of 1970;
``(iii) in the case of a medical convenience
kit that includes a product, the person that
manufacturers the kit--
``(I) purchased such product
directly from the pharmaceutical
manufacturer or from a wholesale
distributor that purchased the product
directly from the pharmaceutical
manufacturer; and
``(II) does not alter the primary
container or label of the product as
purchased from the manufacturer or
wholesale distributor; and
``(iv) in the case of a medical convenience
kit that includes a product, the product is--
``(I) an intravenous solution
intended for the replenishment of fluids
and electrolytes;
``(II) a product intended to
maintain the equilibrium of water and
minerals in the body;
``(III) a product intended for
irrigation or reconstitution;
``(IV) an anesthetic;
``(V) an anticoagulant;
``(VI) a vasopressor; or
``(VII) a sympathomimetic;
``(N) the distribution of an intravenous drug that,
by its formulation, is intended for the replenishment of
fluids and electrolytes (such as sodium, chloride, and
potassium) or calories (such as dextrose and amino
acids);
``(O) the distribution of an intravenous drug used
to maintain the equilibrium of water and minerals in the
body, such as dialysis solutions;
``(P) the distribution of a drug that is intended
for irrigation, or sterile water, whether intended for
such purposes or for injection;

[[Page 634]]

``(Q) the distribution of medical gas, as defined in
section 575;
``(R) facilitating the distribution of a product by
providing solely administrative services, including
processing of orders and payments; or
``(S) the transfer of a product by a hospital or
other health care entity, or by a wholesale distributor
or manufacturer operating at the direction of the
hospital or other health care entity, to a repackager
described in section 581(16)(B) and registered under
section 510 for the purpose of repackaging the drug for
use by that hospital, or other health care entity and
other health care entities that are under common
control, if ownership of the drug remains with the
hospital or other health care entity at all times.''.
(3) Third-party logistics providers.--Section 503(e) (21
U.S.C. 353(e)), as amended by paragraph (2), is further amended
by adding at the end the following:
``(5) Third-party logistics providers.--Notwithstanding
paragraphs (1) through (4), each entity that meets the
definition of a third-party logistics provider under section
581(22) shall obtain a license as a third-party logistics
provider as described in section 584(a) and is not required to
obtain a license as a wholesale distributor if the entity never
assumes an ownership interest in the product it handles.''.
(4) Affiliate.--Section 503(e) (21 U.S.C. 353(e)), as
amended by paragraph (3), is further amended by adding at the
end the following:
``(6) <>  Affiliate.--For purposes of
this subsection, the term `affiliate' means a business entity
that has a relationship with a second business entity if,
directly or indirectly--
``(A) one business entity controls, or has the power
to control, the other business entity; or
``(B) a third party controls, or has the power to
control, both of the business entities.''.
(5) Standards.--Subchapter H of chapter V, as added by
section 202, is amended by adding at the end the following:
``SEC. <>  583. NATIONAL
STANDARDS FOR PRESCRIPTION DRUG WHOLESALE
DISTRIBUTORS.

``(a) <>  In General.--The Secretary shall, not
later than 2 years after the date of enactment of the Drug Supply Chain
Security Act, establish by regulation standards for the licensing of
persons under section 503(e)(1) (as amended by the Drug Supply Chain
Security Act), including the revocation, reissuance, and renewal of such
license.

``(b) <>  Content.--For the purpose of
ensuring uniformity with respect to standards set forth in this section,
the standards established under subsection (a) shall apply to all State
and Federal licenses described under section 503(e)(1) (as amended by
the Drug Supply Chain Security Act) and shall include standards for the
following:
``(1) The storage and handling of prescription drugs,
including facility requirements.
``(2) The establishment and maintenance of records of the
distributions of such drugs.
``(3) The furnishing of a bond or other equivalent means of
security, as follows:

[[Page 635]]

``(A)(i) For the issuance or renewal of a wholesale
distributor license, an applicant that is not a
government owned and operated wholesale distributor
shall submit a surety bond of $100,000 or other
equivalent means of security acceptable to the State.
``(ii) For purposes of clause (i), the State or
other applicable authority may accept a surety bond in
the amount of $25,000 if the annual gross receipts of
the previous tax year for the wholesaler is $10,000,000
or less.
``(B) If a wholesale distributor can provide
evidence that it possesses the required bond in a State,
the requirement for a bond in another State shall be
waived.
``(4) Mandatory background checks and fingerprinting of
facility managers or designated representatives.
``(5) The establishment and implementation of qualifications
for key personnel.
``(6) The mandatory physical inspection of any facility to
be used in wholesale distribution within a reasonable time frame
from the initial application of the facility and to be conducted
by the licensing authority or by the State, consistent with
subsection (c).
``(7) In accordance with subsection (d), the prohibition of
certain persons from receiving or maintaining licensure for
wholesale distribution.

``(c) Inspections.--To satisfy the inspection requirement under
subsection (b)(6), the Federal or State licensing authority may conduct
the inspection or may accept an inspection by the State in which the
facility is located, or by a third-party accreditation or inspection
service approved by the Secretary or the State licensing such wholesale
distributor.
``(d) Prohibited Persons.--The standards established under
subsection (a) shall include requirements to prohibit a person from
receiving or maintaining licensure for wholesale distribution if the
person--
``(1) has been convicted of any felony for conduct relating
to wholesale distribution, any felony violation of subsection
(i) or (k) of section 301, or any felony violation of section
1365 of title 18, United States Code, relating to product
tampering; or
``(2) has engaged in a pattern of violating the requirements
of this section, or State requirements for licensure, that
presents a threat of serious adverse health consequences or
death to humans.

``(e) Requirements.--The Secretary, in promulgating any regulation
pursuant to this section, shall, notwithstanding section 553 of title 5,
United States Code--
``(1) <>  issue a notice of proposed
rulemaking that includes a copy of the proposed regulation;
``(2) <>  provide a period of not less
than 60 days for comments on the proposed regulation; and
``(3) provide that the final regulation take effect on the
date that is 2 years after the date such final regulation is
published.''.

(b) Authorized Distributors of Record.--Section 503(d) (21 U.S.C.
353(d)) is amended by adding at the end the following:
``(4) <>  In this subsection, the term
`authorized distributors of record' means those distributors
with whom a manufacturer

[[Page 636]]

has established an ongoing relationship to distribute such
manufacturer's products.''.

(c) <>  Effective Date.--The amendments made
by subsections (a) and (b) shall take effect on January 1, 2015.
SEC. 205. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS;
UNIFORM NATIONAL POLICY.

Subchapter H of chapter V, as amended by section 204, is further
amended by adding at the end the following:
``SEC. <>  584. NATIONAL STANDARDS FOR
THIRD-PARTY LOGISTICS PROVIDERS.

``(a) Requirements.--No third-party logistics provider in any State
may conduct activities in any State unless each facility of such third-
party logistics provider--
``(1)(A) is licensed by the State from which the drug is
distributed by the third-party logistics provider, in accordance
with the regulations promulgated under subsection (d); or
``(B) if the State from which the drug distributed by the
third-party logistics provider has not established a licensure
requirement, is licensed by the Secretary, in accordance with
the regulations promulgated under subsection (d); and
``(2) if the drug is distributed interstate, is licensed by
the State into which the drug is distributed by the third-party
logistics provider if such State licenses third-party logistics
providers that distribute drugs into the State and the third-
party logistics provider is not licensed by the Secretary as
described in paragraph (1)(B).

``(b) <>  Reporting.--Beginning 1 year after
the date of enactment of the Drug Supply Chain Security Act, a facility
of a third-party logistics provider shall report to the Secretary, on an
annual basis pursuant to a schedule determined by the Secretary--
``(1) the State by which the facility is licensed and the
appropriate identification number of such license; and
``(2) the name and address of the facility and all trade
names under which such facility conducts business.

``(c) Costs.--
``(1) <>  Authorized fees of secretary.--If
a State does not establish a licensing program for a third-party
logistics provider, the Secretary shall license the third-party
logistics provider located in such State and may collect a
reasonable fee in such amount necessary to reimburse the
Secretary for costs associated with establishing and
administering the licensure program and conducting periodic
inspections under this section. The Secretary shall adjust fee
rates as needed on an annual basis to generate only the amount
of revenue needed to perform this service. Fees authorized under
this paragraph shall be collected and available for obligation
only to the extent and in the amount provided in advance in
appropriations Acts. Such fees are authorized to remain
available until expended. Such sums as may be necessary may be
transferred from the Food and Drug Administration salaries and
expenses appropriation account without fiscal year limitation to
such appropriation account for salaries and expenses with such
fiscal year limitation.
``(2) State licensing fees.--
``(A) State established program.--Nothing in this
Act shall prohibit a State that has established a
program

[[Page 637]]

to license a third-party logistics provider from
collecting fees from a third-party logistics provider
for such a license.
``(B) No state established program.--A State that
does not establish a program to license a third-party
logistics provider in accordance with this section shall
be prohibited from collecting a State licensing fee from
a third-party logistics provider.

``(d) Regulations.--
``(1) <>  In general.--Not later than 2
years after the date of enactment of the Drug Supply Chain
Security Act, the Secretary shall issue regulations regarding
the standards for licensing under subsection (a), including the
revocation and reissuance of such license, to third-party
logistics providers under this section.
``(2) Content.--Such regulations shall--
``(A) establish a process by which a third-party
accreditation program approved by the Secretary shall,
upon request by a third-party logistics provider, issue
a license to each third-party logistics provider that
meets the requirements set forth in this section;
``(B) establish a process by which the Secretary
shall issue a license to each third-party logistics
provider that meets the requirements set forth in this
section if the Secretary is not able to approve a third-
party accreditation program because no such program
meets the Secretary's requirements necessary for
approval of such a third-party accreditation program;
``(C) require that the entity complies with storage
practices, as determined by the Secretary for such
facility, including--
``(i) maintaining access to warehouse space of
suitable size to facilitate safe operations,
including a suitable area to quarantine suspect
product;
``(ii) maintaining adequate security; and
``(iii) having written policies and procedures
to--
``(I) address receipt, security,
storage, inventory, shipment, and
distribution of a product;
``(II) identify, record, and report
confirmed losses or thefts in the United
States;
``(III) correct errors and
inaccuracies in inventories;
``(IV) provide support for
manufacturer recalls;
``(V) prepare for, protect against,
and address any reasonably foreseeable
crisis that affects security or
operation at the facility, such as a
strike, fire, or flood;
``(VI) ensure that any expired
product is segregated from other
products and returned to the
manufacturer or repackager or destroyed;
``(VII) maintain the capability to
trace the receipt and outbound
distribution of a product, and supplies
and records of inventory; and
``(VIII) quarantine or destroy a
suspect product if directed to do so by
the respective manufacturer, wholesale
distributor, dispenser, or an authorized
government agency;

[[Page 638]]

``(D) provide for periodic inspection by the
licensing authority, as determined by the Secretary, of
such facility warehouse space to ensure compliance with
this section;
``(E) prohibit a facility from having as a manager
or designated representative anyone convicted of any
felony violation of subsection (i) or (k) of section 301
or any violation of section 1365 of title 18, United
States Code relating to product tampering;
``(F) provide for mandatory background checks of a
facility manager or a designated representative of such
manager;
``(G) require a third-party logistics provider to
provide the applicable licensing authority, upon a
request by such authority, a list of all product
manufacturers, wholesale distributors, and dispensers
for whom the third-party logistics provider provides
services at such facility; and
``(H) include procedures under which any third-party
logistics provider license--
``(i) expires on the date that is 3 years
after issuance of the license; and
``(ii) may be renewed for additional 3-year
periods.
``(3) Procedure.--In promulgating the regulations under this
subsection, the Secretary shall, notwithstanding section 553 of
title 5, United States Code--
``(A) <>  issue a notice of
proposed rulemaking that includes a copy of the proposed
regulation;
``(B) <>
provide a period of not less than 60 days for comments
on the proposed regulation; and
``(C) <>  provide that the
final regulation takes effect upon the expiration of 1
year after the date that such final regulation is
issued.

``(e) <>  Validity.--A license issued under this
section shall remain valid as long as such third-party logistics
provider remains licensed consistent with this section. If the Secretary
finds that the third-party accreditation program demonstrates that all
applicable requirements for licensure under this section are met, the
Secretary shall issue a license under this section to a third-party
logistics provider receiving accreditation, pursuant to subsection
(d)(2)(A).
``SEC. <>  585. UNIFORM
NATIONAL POLICY.

``(a) Product Tracing and Other Requirements.--Beginning on the date
of enactment of the Drug Supply Chain Security Act, no State or
political subdivision of a State may establish or continue in effect any
requirements for tracing products through the distribution system
(including any requirements with respect to statements of distribution
history, transaction history, transaction information, or transaction
statement of a product as such product changes ownership in the supply
chain, or verification, investigation, disposition, notification, or
recordkeeping relating to such systems, including paper or electronic
pedigree systems or for tracking and tracing drugs throughout the
distribution system) which are inconsistent with, more stringent than,
or in addition to, any requirements applicable under section 503(e) (as
amended by such Act) or this subchapter (or regulations issued
thereunder), or which are inconsistent with--
``(1) any waiver, exception, or exemption pursuant to
section 581 or 582; or

[[Page 639]]

``(2) any restrictions specified in section 582.

``(b) Wholesale Distributor and Third-Party Logistics Provider
Standards.--
``(1) <>  In general.--Beginning on
the date of enactment of the Drug Supply Chain Security Act, no
State or political subdivision of a State may establish or
continue any standards, requirements, or regulations with
respect to wholesale prescription drug distributor or third-
party logistics provider licensure that are inconsistent with,
less stringent than, directly related to, or covered by the
standards and requirements applicable under section 503(e) (as
amended by such Act), in the case of a wholesale distributor, or
section 584, in the case of a third-party logistics provider.
``(2) State regulation of third-party logistics providers.--
No State shall regulate third-party logistics providers as
wholesale distributors.
``(3) Administration fees.--Notwithstanding paragraph (1), a
State may administer fee collections for effectuating the
wholesale drug distributor and third-party logistics provider
licensure requirements under sections 503(e) (as amended by the
Drug Supply Chain Security Act), 583, and 584.
``(4) Enforcement, suspension, and revocation.--
Notwithstanding paragraph (1), a State--
``(A) may take administrative action, including
fines, to enforce a requirement promulgated by the State
in accordance with section 503(e) (as amended by the
Drug Supply Chain Security Act) or this subchapter;
``(B) may provide for the suspension or revocation
of licenses issued by the State for violations of the
laws of such State;
``(C) upon conviction of violations of Federal,
State, or local drug laws or regulations, may provide
for fines, imprisonment, or civil penalties; and
``(D) may regulate activities of licensed entities
in a manner that is consistent with product tracing
requirements under section 582.

``(c) Exception.--Nothing in this section shall be construed to
preempt State requirements related to the distribution of prescription
drugs if such requirements are not related to product tracing as
described in subsection (a) or wholesale distributor and third-party
logistics provider licensure as described in subsection (b) applicable
under section 503(e) (as amended by the Drug Supply Chain Security Act)
or this subchapter (or regulations issued thereunder).''.
SEC. 206. PENALTIES.

(a) Prohibited Act.--Section 301(t) (21 U.S.C. 331(t)), is amended--
(1) by striking ``or'' after ``the requirements of section
503(d),''; and
(2) by inserting ``, failure to comply with the requirements
under section 582, the failure to comply with the requirements
under section 584, as applicable,'' after ``in violation of
section 503(e)''.

(b) Misbranding.--Section 502 (21 U.S.C. 352), as amended by section
103, is further amended by adding at the end the following:

[[Page 640]]

``(cc) If it is a drug and it fails to bear the product identifier
as required by section 582.''.
SEC. 207. CONFORMING AMENDMENT.

(a) In General.--Section 303(b)(1)(D) (21 U.S.C. 333(b)(1)(D)) is
amended by striking ``503(e)(2)(A)'' and inserting ``503(e)(1)''.
(b) <>  Effective Date.--The amendment made
by subsection (a) shall take effect on January 1, 2015.
SEC. <>  208. SAVINGS CLAUSE.

Except as provided in the amendments made by paragraphs (1), (2),
and (3) of section 204(a) and by section 206(a), nothing in this title
(including the amendments made by this title) shall be construed as
altering any authority of the Secretary of Health and Human Services
with respect to a drug subject to section 503(b)(1) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)) under any other provision
of such Act or the Public Health Service Act (42 U.S.C. 201 et seq.).

Approved November 27, 2013.

LEGISLATIVE HISTORY--H.R. 3204:
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 159 (2013):
Sept. 28, considered and passed House.
Nov. 14, 18, considered and passed Senate.