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113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-93
======================================================================
SAFEGUARDING AMERICA'S PHARMACEUTICALS ACT
OF 2013
_______
June 3, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1919]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 1919) to amend the Federal Food, Drug, and
Cosmetic Act with respect to the pharmaceutical distribution
supply chain, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 24
Background and Need for Legislation.............................. 24
Hearings......................................................... 26
Committee Consideration.......................................... 26
Committee Votes.................................................. 26
Committee Oversight Findings..................................... 29
Statement of General Performance Goals and Objectives............ 29
New Budget Authority, Entitlement Authority, and Tax Expenditures 29
Earmarks, Limited Tax Benefits, and Limited Tariff Benefits...... 29
Committee Cost Estimate.......................................... 29
Congressional Budget Office Estimate............................. 29
Federal Mandates Statement....................................... 34
Duplication of Federal Programs.................................. 34
Disclosure of Directed Rule Makings.............................. 34
Advisory Committee Statement..................................... 34
Applicability to Legislative Branch.............................. 34
Section-by-Section Analysis of the Legislation................... 35
Changes in Existing Law Made by the Bill, as Reported............ 36
Minority, Additional or Dissenting Views......................... 67
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Safeguarding
America's Pharmaceuticals Act of 2013''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title.
Sec. 2. Pharmaceutical distribution supply chain.
Sec. 3. Enhanced drug distribution security.
Sec. 4. National standards for wholesale distributors.
Sec. 5. National licensure standards for third-party logistics
providers.
Sec. 6. Penalties.
Sec. 7. Uniform national policy.
Sec. 8 Electronic labeling.
SEC. 2. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN.
Chapter V of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351
et seq.) is amended by adding at the end the following:
``Subchapter H--Pharmaceutical Distribution Supply Chain
``SEC. 581. DEFINITIONS.
``In this subchapter:
``(1) Authorized.--The term `authorized' means--
``(A) in the case of a manufacturer or repackager,
having a valid registration in accordance with section
510; and
``(B) in the case of a wholesale distributor, third-
party logistics provider, or dispenser, licensed (as
defined in this section).
``(2) Dispenser.--The term `dispenser'--
``(A) subject to subparagraph (C), means a retail
pharmacy, hospital pharmacy, a group of chain
pharmacies under common ownership and control, or any
other person authorized by law to dispense or
administer prescription drugs, to the extent such
pharmacy, group, or person does not act as a wholesale
distributor;
``(B) includes warehouses and distribution centers
under common ownership or control of entities described
in subparagraph (A) that are members of an affiliated
group pursuant to section 1504(a) of the Internal
Revenue Code of 1986, to the extent such warehouses and
distribution centers do not act as a wholesale
distributor; and
``(C) does not include a person who only dispenses
prescription drug product to be used in animals in
accordance with section 512(a)(5).
``(3) Disposition.--The term `disposition', with respect to a
prescription drug product within the possession and control of
an entity--
``(A) means the removal of such prescription drug
product, or taking measures to prevent the introduction
of such prescription drug product, from the
pharmaceutical distribution supply chain; and
``(B) may include disposal, return of the
prescription drug product for disposal, or other
appropriate handling and other actions such as
retaining a sample of the prescription drug product for
additional physical examination or laboratory analysis
by a manufacturer or regulatory or law enforcement
agency.
``(4) Distribute or distribution.--The terms `distribute' and
`distribution' mean the sale, purchase, trade, delivery,
handling, or storage of a prescription drug product.
``(5) Illegitimate prescription drug product.--The term
`illegitimate prescription drug product' means a prescription
drug product which a manufacturer has confirmed--
``(A) is counterfeit, diverted, or stolen;
``(B) is intentionally adulterated such that the
prescription drug product would result in serious
adverse health consequences or death to humans; or
``(C) is otherwise unfit for distribution such that
the prescription drug product is reasonably likely to
cause serious adverse human health consequences or
death.
``(6) Licensed.--The term `licensed' means--
``(A) in the case of a wholesale distributor, having
a valid license to make wholesale distributions
consistent with the standards under section 583;
``(B) in the case of a third-party logistics
provider, having a valid license to engage in the
activities of a third-party logistics provider in
accordance with section 584; and
``(C) in the case of a dispenser, having a valid
license to dispense prescription drugs under State law.
``(7) Manufacturer.--The term `manufacturer' means, with
respect to a prescription drug product--
``(A) a person that holds an application approved
under section 505 or a license issued under section 351
of the Public Health Service Act for such prescription
drug product, or if such prescription drug product is
not the subject of an approved application or license,
the person who manufactured the prescription drug
product;
``(B) a co-licensed partner of the person described
in subparagraph (A) that obtains the prescription drug
product directly from the person described in such
subparagraph; or
``(C) a person that--
``(i) is a member of an affiliated group (as
defined in section 1504(a) of the Internal
Revenue Code of 1986) to which a person
described in subparagraph (A) or (B) is also a
member; and
``(ii) receives the prescription drug product
directly from a person described in
subparagraph (A) or (B).
``(8) Package.--
``(A) In general.--The term `package' means the
smallest individual saleable unit of prescription drug
product for distribution in interstate commerce by a
manufacturer or repackager that is intended by the
manufacturer for ultimate sale to the dispenser of such
prescription drug product.
``(B) Individual saleable unit.--The term `individual
saleable unit' means the smallest container of
prescription drug product introduced into interstate
commerce by the manufacturer or repackager that is
intended by the manufacturer for individual sale to a
dispenser.
``(9) Prescription drug.--The term `prescription drug' means
a drug for human use subject to section 503(b)(1).
``(10) Prescription drug product.--The term `prescription
drug product' means a prescription drug in a finished dosage
form for administration to a patient without substantial
further manufacturing (such as capsules, tablets, and
lyophilized prescription drug products before reconstitution).
``(11) Prescription drug product identifier.--The term
`prescription drug product identifier' means a standardized
graphic that--
``(A) includes the standardized numerical identifier,
lot number, and expiration date of a prescription drug
product; and
``(B) is in both human-readable form and on a
machine-readable data carrier that conforms to the
standards developed by a widely recognized
international standards development organization.
``(12) Quarantine.--The term `quarantine' means to store or
identify a product, for the purpose of preventing distribution
or transfer of the product, in a physically separate area
clearly identified for such use, or through use of other
procedures such as automated designation.
``(13) Repackager.--The term `repackager' means a person who
owns or operates an establishment that repacks and relabels a
prescription drug product or package for further sale or
distribution.
``(14) Return.--The term `return' means providing
prescription drug product to the authorized trading partner or
trading partners from which such prescription drug product was
purchased or received, or to a returns processor for handling
of such prescription drug product.
``(15) Returns processor.--The terms `returns processor' mean
a person who owns or operates an establishment that provides
for the disposition of or otherwise processes saleable and
nonsaleable prescription drug product received from an
authorized trading partner such that the prescription drug
product may be processed for credit to the purchaser,
manufacturer, seller, or disposed of for no further
distribution.
``(16) Specific patient need.--The term `specific patient
need'--
``(A) means with respect to the transfer of a
prescription drug product from one pharmacy to another,
to fill a prescription for an identified patient; and
``(B) does not include the transfer of a prescription
drug product from one pharmacy to another for the
purpose of increasing or replenishing stock in
anticipation of a potential need.
``(17) Standardized numerical identifier.--The term
`standardized numerical identifier' means a set of numbers or
characters that--
``(A) is used to uniquely identify each package or
homogenous case of the prescription drug product; and
``(B) is composed of the National Drug Code that
corresponds to the specific prescription drug product
(including the particular package configuration)
combined with a unique alphanumeric serial number of up
to 20 characters.
``(18) Suspect prescription drug product.--The term `suspect
prescription drug product' means a prescription drug product
for which there is reason to believe that such prescription
drug product--
``(A) is potentially counterfeit, diverted, or
stolen;
``(B) is potentially intentionally adulterated such
that the prescription drug product would result in
serious adverse health consequences or death to humans;
or
``(C) appears otherwise unfit for distribution such
that the prescription drug product would result in
serious adverse health consequences or death to humans.
``(19) Third-party logistics provider.--The term `third-party
logistics provider' means an entity that provides or
coordinates warehousing, distribution, or other logistics
services of a prescription drug product in interstate commerce
on behalf of a manufacturer, wholesale distributor, or
dispenser of a prescription drug product, but does not take
ownership of the prescription drug product, nor have
responsibility to direct the sale or disposition of, the
prescription drug product.
``(20) Trading partner.--The term `trading partner' means--
``(A) a manufacturer, repackager, wholesale
distributor, or dispenser from whom a manufacturer,
repackager, wholesale distributor, or dispenser accepts
ownership of a prescription drug product or to whom a
manufacturer, repackager, wholesale distributor, or
dispenser transfers ownership of a prescription drug
product; or
``(B) a third-party logistics provider from whom a
manufacturer, repackager, wholesale distributor, or
dispenser accepts possession of a prescription drug
product or to whom a manufacturer, repackager,
wholesale distributor, or dispenser transfers
possession of a prescription drug product.
``(21) Transaction.--
``(A) In general.--The term `transaction' means the
transfer in interstate commerce of prescription drug
product between persons in which a change of ownership
occurs.
``(B) Exemptions.--The term `transaction' does not
include--
``(i) intracompany distribution of any
prescription drug product, including between
members of an affiliated group (as defined in
section 1504(a) of the Internal Revenue Code of
1986);
``(ii) the distribution of a prescription
drug product among hospitals or other health
care entities that are under common control;
``(iii) the distribution of a prescription
drug product for emergency medical reasons
including a public health emergency declaration
pursuant to section 319 of the Public Health
Service Act, except that a drug shortage not
caused by a public health emergency shall not
constitute an emergency medical reason;
``(iv) the dispensing of a prescription drug
product pursuant to a valid prescription
executed in accordance with section 503(b)(1);
``(v) the distribution of prescription drug
product samples by a manufacturer or a licensed
wholesale distributor in accordance with
section 503(d);
``(vi) the distribution of blood or blood
components intended for transfusion;
``(vii) the distribution of minimal
quantities of prescription drug product by a
licensed retail pharmacy to a licensed
practitioner for office use;
``(viii) the distribution of a prescription
drug product by a charitable organization to a
nonprofit affiliate of the organization to the
extent otherwise permitted by law;
``(ix) the distribution of a prescription
drug product pursuant to the sale or merger of
a pharmacy or pharmacies or a wholesale
distributor or wholesale distributors, except
that any records required to be maintained for
the prescription drug product shall be
transferred to the new owner of the pharmacy or
pharmacies or wholesale distributor or
wholesale distributors;
``(x) the dispensing of a prescription drug
product approved under section 512(b);
``(xi) the transfer of prescription drug
products to or from any facility that is
licensed by the Nuclear Regulatory Commission
or by a State pursuant to an agreement with
such Commission under section 274 of the Atomic
Energy Act of 1954 (42 U.S.C. 2021);
``(xii) the distribution of a combination
product that consists of--
``(I) a product comprised of two or
more components that are each a drug,
biological product, or device and that
are physically, chemically, or
otherwise combined or mixed and
produced as a single entity;
``(II) two or more separate products
packaged together in a single package
or as a unit and comprised of a drug
and device or a device and biological
product; or
``(III) two or more finished devices
plus one or more drug or biological
products which are packaged together in
a medical convenience kit described in
clause (xiv);
``(xiii) the distribution of a medical
convenience kit which is a collection of
finished products (consisting of devices or
drugs) assembled in kit form strictly for the
convenience of the purchaser or user if--
``(I) the medical convenience kit is
assembled in an establishment that is
registered with the Food and Drug
Administration as a medical device
manufacturer;
``(II) the person who manufacturers
the medical convenience kit purchased
the prescription drug product directly
from the manufacturer or from a
wholesale distributor that purchased
the prescription drug product directly
from the manufacturer;
``(III) the person who manufacturers
the medical convenience kit does not
alter the primary container or label of
the prescription drug product as
purchased from the manufacturer or
wholesale distributor;
``(IV) the medical convenience kit
does not contain a controlled substance
(as defined in section 102 of the
Controlled Substances Act); and
``(V) the prescription drug products
contained in the medical convenience
kit are--
``(aa) intravenous solutions
intended for the replenishment
of fluids and electrolytes;
``(bb) drugs intended to
maintain the equilibrium of
water and minerals in the body;
``(cc) drugs intended for
irrigation or reconstitution;
``(dd) anesthetics;
``(ee) anticoagulants;
``(ff) vasopressors; or
``(gg) sympathicomimetics;
``(xiv) the distribution of an intravenous
prescription drug product that, by its
formulation, is intended for the replenishment
of fluids and electrolytes (such as sodium,
chloride, and potassium) or calories (such as
dextrose and amino acids);
``(xv) the distribution of an intravenous
prescription drug product used to maintain the
equilibrium of water and minerals in the body,
such as dialysis solutions;
``(xvi) the distribution of a prescription
drug product that is intended for irrigation or
reconstitution, or sterile water, whether
intended for such purposes or for injection;
``(xvii) the distribution of compressed
medical gas; or
``(xviii)(I) the distribution of a product by
a dispenser, or a wholesale distributor acting
at the direction of the dispenser, to a
repackager registered under section 510 for the
purpose of repackaging the drug for use by that
dispenser or another health care entity that is
under the dispenser's ownership or control, so
long as the dispenser retains ownership of the
prescription drug product; and
``(II) the saleable or nonsaleable return by
such repackager of such prescription drug
product.
``(C) Compressed medical gas.--For purposes of
subparagraph (B)(xviii), the term `compressed medical
gas' means any substance in its gaseous or cryogenic
liquid form that meets medical purity standards and has
application in a medical or homecare environment,
including oxygen and nitrous oxide.
``(22) Transaction history.--The term `transaction history'
means a statement that--
``(A) includes the transaction information for each
transaction conducted with respect to a prescription
drug product beginning with the manufacturer or initial
purchase distributor for each prior transaction going
back to the manufacturer of the prescription drug
product or to the initial purchase distributor; and
``(B) is in paper or electronic form.
``(23) Transaction information.--The term `transaction
information' means--
``(A) the proprietary or established name or names of
the prescription drug product;
``(B) the strength and dosage form of the
prescription drug product;
``(C) the National Drug Code number of the
prescription drug product;
``(D) the container size;
``(E) the number of containers;
``(F) the lot number of the prescription drug
product;
``(G) the date of the transaction;
``(H) the business name and address of the person
from whom ownership is being transferred; and
``(I) the business name and address of the person to
whom ownership is being transferred.
``(24) Transaction statement.--The `transaction statement' is
a statement, which states that the manufacturer, repackager,
wholesale distributor, third-party logistics provider, or
dispenser transferring ownership in a transaction--
``(A) is authorized;
``(B) received transaction information and a
transaction statement as required under section 582
from the prior owner of the prescription drug product;
``(C) did not knowingly and intentionally ship an
illegitimate prescription drug product;
``(D) did not knowingly and intentionally provide
false transaction information; and
``(E) did not knowingly and intentionally alter the
transaction history.
``(25) Verification and verify.--The terms `verification' and
`verify'--
``(A) mean determining whether the prescription drug
product identifier affixed to, or imprinted upon, a
package or homogeneous case of the prescription drug
product corresponds to the standardized numerical
identifier or lot number, and expiration date assigned
to the prescription drug product by the manufacturer or
the repackager, as applicable; and
``(B) include making the determination under
subparagraph (A) using human-readable or machine-
readable methods.
``(26) Wholesale distributor.--The term `wholesale
distributor'--
``(A) means a person engaged in wholesale
distribution (as defined in section 583); and
``(B) excludes--
``(i) a manufacturer, a co-licensed partner
of a manufacturer, or a third-party logistics
provider, or a dispenser who does not engage in
such wholesale distribution;
``(ii) a repackager engaged in such wholesale
distribution; or
``(iii) the distribution of prescription drug
product or an offer to distribute prescription
drug product by an authorized repackager that
has taken ownership or possession of the
prescription drug product and repacked the
prescription drug product in accordance with
the requirements of section 582(e).
``SEC. 582. REQUIREMENTS.
``(a) In General.--
``(1) Compliance required.--An entity that is a manufacturer,
repackager, wholesale distributor, third-party logistics
provider, or dispenser shall comply with the requirements of
this section. If an entity meets the definition of more than
one of the entities referred to in the preceding sentence, such
entity shall comply with all applicable requirements of this
section, but shall not be required to comply with duplicative
requirements.
``(2) Standards.--The Secretary shall, in consultation with
other appropriate Federal officials, manufacturers,
repackagers, wholesale distributors, third-party logistics
providers, and dispensers, establish, by regulation, standards
for the exchange of transaction information for purposes of
complying with this section. The standards established under
this paragraph shall be in accordance with a form developed by
a widely recognized international standards development
organization. In establishing such standards, the Secretary
shall consider the feasibility of establishing standardized
documentation to be used by all members of the pharmaceutical
distribution supply chain to convey the transaction history and
transaction statement to the subsequent owner of a prescription
drug product. The Secretary shall publish such standards not
later than 180 days after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013.
``(3) Waivers, exceptions, and exemptions.--Not later than
one year after the date of the enactment of the Safeguarding
America's Pharmaceuticals Act of 2013, the Secretary shall
promulgate a regulation to--
``(A) establish a process by which the Secretary may
grant, at the request of an authorized manufacturer,
repackager, wholesale distributor, or dispenser, a
waiver from any of the requirements of this section--
``(i) if the Secretary determines that such
requirements would result in an undue economic
hardship; or
``(ii) for emergency medical reasons,
including a public health emergency declaration
pursuant to section 319 of the Public Health
Service Act;
``(B) establish a process, with respect to the
prescription drug product identifier requirement under
paragraph (2) of subsections (b), (c), (d), and (e)
through which--
``(i) a manufacturer or repackager may
request a waiver with respect to prescription
drug products that are packaged in a container
too small or otherwise unable to accommodate a
label with sufficient space to bear the
information required for compliance with such
requirement; and
``(ii) the Secretary determines whether to
waive such requirement; and
``(C) establish a process by which the Secretary may
add the prescription drug products or transactions that
are exempt from the requirements of this section.
``(4) Grandfathered persons and prescription drug products.--
``(A) In general.--Not later than one year after the
date of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, the Secretary shall
specify, by regulation, whether and under what
circumstances the prescription drug product identifier
requirement under paragraph (2) of subsections (b),
(c), (d), and (e) shall apply to a prescription drug
product that is in the supply chain or in a
manufacturer's inventory on the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013.
``(B) Third-party logistics provider licenses.--Until
the date that is 1 year after the effective date of the
third-party logistics provider licensing requirements
under section 584, a third-party logistics provider
shall be considered `licensed' under section 581(6)(B)
unless the Secretary has made a finding that the third-
party logistics provider does not utilize good handling
and distribution practices and publishes notice
thereof.
``(C) Label changes.--Changes made to package labels
solely to incorporate the prescription drug product
identifier may be submitted to the Secretary in the
annual report of an establishment, in accordance with
section 314.70(d) of chapter 21, Code of Federal
Regulations (or any successor regulation).
``(b) Manufacturer Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than January
1, 2015, a manufacturer shall--
``(i) prior to, or at the time of, each
transaction in which such manufacturer
transfers ownership of a prescription drug
product, provide the subsequent owner with the
transaction history and a transaction
statement; and
``(ii) maintain the transaction information
for each such transaction for not less than 3
years after the date of the transaction.
``(B) Requests for information.--Upon a request by
the Secretary or other appropriate Federal or State
official, in the event of a recall or for the purpose
of investigating a suspect prescription drug product or
an illegitimate prescription drug product, a
manufacturer shall, not later than 2 business days
after receiving the request or in such reasonable time
as determined by the Secretary, provide to the
Secretary or other official, the applicable transaction
history and transaction statement for the prescription
drug product.
``(2) Prescription drug product identifier.--Beginning not
later than 5 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
manufacturer shall affix or imprint a prescription drug product
identifier on each package and homogenous case of a
prescription drug product intended to be introduced in a
transaction. Such manufacturer shall maintain the information
in the prescription drug product identifier for such
prescription drug product for not less than 3 years after the
date of the transaction.
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, a manufacturer shall ensure that each of its
trading partners is authorized.
``(4) List of authorized distributors of record.--Beginning
not later than January 1, 2015, each manufacturer of a
prescription drug shall--
``(A) maintain a list of the authorized distributors
of record of such drug at the corporate offices of such
manufacturer;
``(B) make such list publicly available, including
placement on the Internet Website of such manufacturer;
and
``(C) update such list not less than once per
quarter.
``(5) Verification.--Beginning not later than January 1,
2015, a manufacturer shall implement systems and processes to
enable the manufacturer to comply with the following
requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a
determination that a prescription drug product
in the possession or control of the
manufacturer is a suspect prescription drug
product, or upon receiving a request for
verification from the Secretary that a
prescription drug product within the possession
or control of a manufacturer is a suspect
prescription drug product, a manufacturer shall
promptly conduct an investigation in
coordination with trading partners, as
applicable, to determine whether the
prescription drug product is an illegitimate
prescription drug product. Beginning not later
than 5 years after the date of the enactment of
the Safeguarding America's Pharmaceuticals Act
of 2013, such investigation shall include--
``(I) verifying the prescription drug
product at the package level;
``(II) validating any applicable
transaction history in the possession
of the manufacturer; and
``(III) otherwise investigating to
determine whether the prescription drug
product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If
the manufacturer determines that a suspect
prescription drug product is not an
illegitimate prescription drug product, the
manufacturer shall promptly notify the
Secretary of such determination and such
prescription drug product may be further
distributed.
``(iii) Records.--A manufacturer shall keep
records of its investigation of a suspect
prescription drug product for not less than 3
years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon determining that a
prescription drug product in the possession or
control of a manufacturer is an illegitimate
prescription drug product, the manufacturer
shall--
``(I) quarantine such prescription
drug product from prescription drug
product intended for distribution; and
``(II) provide for the disposition of
the illegitimate prescription drug
product.
``(ii) Trading partner.--Upon determining
that a prescription drug product in the
possession or control of a trading partner is
an illegitimate prescription drug product, the
manufacturer shall take reasonable steps to
assist a trading partner to provide for the
disposition of the illegitimate prescription
drug product.
``(iii) Making a notification.--Upon
determining that a prescription drug product in
the possession or control of the manufacturer
is an illegitimate prescription drug product,
the manufacturer shall notify the Secretary of
such determination not later than 24 hours
after making such determination. The Secretary
shall determine whether additional trading
partner notification is appropriate.
``(iv) Responding to a notification.--Upon
the receipt of a notification from the
Secretary that a determination has been made
that a prescription drug product is an
illegitimate prescription drug product, a
manufacturer shall--
``(I) identify all illegitimate
prescription drug products that are
subject to such notification and in the
possession or control of the
manufacturer, including any
prescription drug product that is
subsequently received; and
``(II) perform the activities
described in clause (i).
``(v) Records.--A manufacturer shall keep
records of the disposition of an illegitimate
prescription drug product for not less than 3
years after the conclusion of the disposition.
``(C) Electronic database.--A manufacturer may
satisfy the requirements of this paragraph through the
use of a secure electronic database developed and
operated by the manufacturer or another entity. The
owner of such database shall establish the requirements
and processes to respond to requests and may provide
for data access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database shall not
relieve a manufacturer of the requirement under this
paragraph to respond to a verification request
submitted by means other than a secure electronic
database.
``(D) Returned prescription drug product.--Beginning
not later than 5 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, upon receipt of a returned prescription drug
product that the manufacturer intends to further
distribute, before further distributing such
prescription drug product, the manufacturer shall--
``(i) verify the prescription drug product
identifier for each sealed homogeneous case of
such prescription drug product; or
``(ii) if such prescription drug product is
not in a sealed homogeneous case, verify the
prescription drug product identifier on each
package.
``(c) Wholesale Distributor Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than April 1,
2015, a wholesale distributor shall--
``(i) not accept ownership of a prescription
drug product unless the previous owner prior
to, or at the time of, the transaction provides
the applicable transaction history and a
transaction statement for the prescription drug
product;
``(ii) prior to, or at the time of, each
transaction in which the wholesale distributor
transfers ownership of a prescription drug
product--
``(I) in the case that the wholesale
distributor purchased the prescription
drug product directly from the
manufacturer, provide the subsequent
owner with transaction history and a
transaction statement for the
prescription drug product; or
``(II) in the case that the wholesale
distributor did not purchase the
prescription drug product directly from
the manufacturer, the exclusive
distributor of the manufacturer, or a
repackager that purchased directly from
the manufacturer, provide the
subsequent owner with transaction
history beginning with the wholesale
distributor that did purchase the
product directly from the manufacturer,
the exclusive distributor of the
manufacturer, or a repackager that
purchased directly from the
manufacturer;
``(iii) notwithstanding clause (ii), if the
wholesale distributor purchased the
prescription drug product directly from the
manufacturer, its exclusive distributor, or a
repackager that purchased directly from the
manufacturer or its authorized distributor of
record--
``(I) provide an initial purchase
transaction statement on the invoice to
the customer, stating that the
wholesale distributor purchased the
prescription drug product package
directly from the manufacturer,
exclusive distributor, or repackager;
``(II) make available to the
immediate subsequent recipient of such
prescription drug product the
information required under clause (ii)
through any combination of self-
generated paper, electronic data, or
manufacturer-provided information on
the prescription drug product package;
and
``(III) for purposes of subclauses
(I) and (II), need not include any
transactions occurring before the
transfer of the prescription drug
product to the wholesale distributor;
and
``(iv) maintain the transaction information
for each transaction described in clauses (i)
and (ii) for not less than 3 years after the
transaction.
``(B) Returns exception.--
``(i) Saleable returns.--Notwithstanding
subparagraph (A), a wholesale distributor may--
``(I) accept returned prescription
drug product without a transaction
history from a dispenser or repackager;
and
``(II) distribute such returned
prescription drug product with a
transaction history that begins with
the wholesale distributor that so
accepted the returned product.
``(ii) Nonsaleable returns.--A wholesale
distributor may return a nonsaleable
prescription drug to the manufacturer or
repackager, to the wholesale distributor from
whom such prescription drug was purchased, or
to a person acting on behalf of such a person,
including a returns processor, without
providing the information required under
subparagraph (A).
``(C) Requests for information.--Upon a request by
the Secretary or other appropriate Federal or State
official, in the event of a recall or for the purpose
of investigating a suspect prescription drug product or
an illegitimate prescription drug product a wholesale
distributor shall, not later than 2 business days after
receiving the request or in such other reasonable time
as determined by the Secretary, provide the applicable
transaction history and transaction statements for the
prescription drug product.
``(2) Prescription drug product identifier.--Beginning not
later than 7 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a wholesale
distributor may engage in transactions involving a prescription
drug product only if such prescription drug product is encoded
with a prescription drug product identifier, except as provided
in subsection (a)(4).
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, a wholesale distributor shall ensure that each
of its trading partners is authorized.
``(4) Verification.--Beginning not later than April 1, 2015,
a wholesale distributor shall implement systems to enable the
wholesale distributor to comply with the following
requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a
determination that a prescription drug product
in the possession or control of the wholesale
distributor is a suspect prescription drug
product, or upon receiving a request for
verification from the Secretary that a
prescription drug product within the possession
or control of a wholesale distributor is a
suspect prescription drug product, a wholesale
distributor shall promptly conduct an
investigation to determine whether the
prescription drug product is an illegitimate
prescription drug product. Beginning not later
than 7 years after the date of the enactment of
the Safeguarding America's Pharmaceuticals Act
of 2013, such investigation shall include--
``(I) verifying a package of the
prescription drug product;
``(II) validating any applicable
transaction history in the possession
of the wholesale distributor; and
``(III) otherwise investigating to
determine whether the prescription drug
product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If
the wholesale distributor determines that a
suspect prescription drug product is not an
illegitimate prescription drug product, the
wholesale distributor shall promptly notify the
Secretary of such determination and such
prescription drug product may be further
distributed.
``(iii) Records.--A wholesale distributor
shall keep records of its investigation of a
suspect prescription drug product for not less
than 3 years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that
a manufacturer of a prescription drug product
has determined that a prescription drug product
in the possession or control of a wholesale
distributor is an illegitimate prescription
drug product, the wholesale distributor shall--
``(I) quarantine such prescription
drug product within the possession or
control of the wholesale distributor
from prescription drug product intended
for distribution; and
``(II) provide for the disposition of
the illegitimate prescription drug
product within the possession or
control of the wholesale distributor.
``(ii) Trading partner.--Upon determining
that a prescription drug product in the
possession or control of a trading partner is
an illegitimate prescription drug product, the
wholesale distributor shall take reasonable
steps to assist a trading partner to provide
for the disposition of the illegitimate
prescription drug product.
``(iii) Making a notification.--Upon
determining that a prescription drug product in
the possession or control of the wholesale
distributor is an illegitimate prescription
drug product, the wholesale distributor shall
notify the Secretary of such determination not
later than 24 hours after making such
determination. The Secretary shall determine
whether additional trading partner notification
is appropriate.
``(iv) Responding to a notification.--Upon
the receipt of a notification from the
Secretary that a determination has been made
that a prescription drug product is an
illegitimate prescription drug product, a
wholesale distributor shall--
``(I) identify all illegitimate
prescription drug product subject to
such notification that is in the
possession or control of the wholesale
distributor, including any prescription
drug product that is subsequently
received; and
``(II) perform the activities
described in clause (i).
``(v) Records.--A wholesale distributor shall
keep records of the disposition of an
illegitimate prescription drug product for not
less than 3 years after the conclusion of the
disposition.
``(C) Electronic database.--A wholesale distributor
may satisfy the requirements of this paragraph through
the use of a secure electronic database developed and
operated by the manufacturer or another entity. The
owner of such database shall establish the requirements
and processes to respond to requests and may provide
for data access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database shall not
relieve a wholesale distributor of the requirement
under this paragraph to respond to a verification
request submitted by means other than a secure
electronic database.
``(D) Returned prescription drug product.--Beginning
not later than 7 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, upon receipt of a returned prescription drug
product that the wholesale distributor intends to
further distribute, before further distributing such
prescription drug product, the wholesale distributor
shall--
``(i) verify the prescription drug product
identifier for each sealed homogeneous case of
such prescription drug product; or
``(ii) if such prescription drug product is
not in a sealed homogeneous case, verify the
prescription drug product identifier on each
package.
``(d) Dispenser Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than July 1,
2015, a dispenser--
``(i) shall not accept ownership of a
prescription drug product, unless the previous
owner prior to, or at the time of, the
transaction, provides transaction history and a
transaction statement;
``(ii) prior to, or at the time of, each
transaction in which the dispenser transfers
ownership of a prescription drug product (but
not including dispensing to a patient or
returns) shall provide the subsequent owner
with transaction history and a transaction
statement for the prescription drug product,
except that the requirements of this clause
shall not apply to sales by a dispenser to
another dispenser to fulfill a specific patient
need; and
``(iii) shall maintain transaction
information for a period of not less than 3
years after the date of the transaction.
``(B) Agreements with third parties.--A dispenser may
enter into a written agreement with a third party,
including an authorized wholesale distributor, under
which the third party confidentially maintains the
transaction information required to be maintained under
this subsection on behalf of the dispenser. If a
dispenser enters into such an agreement, the dispenser
shall maintain a copy of the written agreement.
``(C) Returns exception.--
``(i) Saleable returns.--Notwithstanding
subparagraph (A)(ii), a dispenser may return
prescription drug product to the trading
partner from which the dispenser obtained the
prescription drug product without providing the
information required under such subparagraph.
``(ii) Nonsaleable returns.--Notwithstanding
subparagraph (A)(ii), a dispenser may return a
nonsaleable prescription drug to the
manufacturer or repackager, to the wholesale
distributor from whom such prescription drug
was purchased, to a returns processor, or to a
person acting on behalf of such persons without
providing the information required under such
subparagraph.
``(D) Requests for information.--Upon a request by
the Secretary or other appropriate Federal or State
official, in the event of a recall or for the purpose
of investigating a suspect prescription drug product or
an illegitimate prescription drug product, a dispenser
shall, not later than 2 business days after receiving
the request or in another such reasonable time as
determined by the Secretary, provide lot level
transaction information.
``(2) Prescription drug product identifier.--Beginning not
later than 8 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a dispenser
may engage in transactions involving a prescription drug
product only if such prescription drug product is encoded with
a prescription drug product identifier, except as provided in
subsection (a)(4).
``(3) Authorized trading partners.--Beginning not later than
January 1, 2015, a dispenser shall ensure that each of its
trading partners is authorized.
``(4) Verification.--Beginning not later than January 1,
2015, a dispenser shall implement systems to enable the
dispenser to comply with the following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a
determination that a prescription drug product
in the possession or control of the dispenser
is a suspect prescription drug product, or upon
receiving a request for verification from the
Secretary that a prescription drug product
within the possession or control of a dispenser
is a suspect prescription drug product, a
dispenser shall promptly conduct an
investigation to determine whether the
prescription drug product is an illegitimate
prescription drug product. Such investigation
shall include--
``(I) verifying whether the lot
number of a suspect prescription drug
product corresponds with the lot number
for such prescription drug product;
``(II) beginning 8 years after the
date of the enactment of the
Safeguarding America's Pharmaceuticals
Act of 2013, verifying that the product
identifier of at least 3 packages or 10
percent of such suspect prescription
drug product, whichever is greater, or
all packages, if there are fewer than
3, corresponds with the prescription
drug product identifier for such
product;
``(III) validating any applicable
transaction history in the possession
of the dispenser; and
``(IV) otherwise investigating to
determine whether the prescription drug
product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If
the dispenser makes the determination that a
suspect prescription drug product is not an
illegitimate prescription drug product, the
dispenser shall promptly notify the Secretary
of such determination and such prescription
drug product may be further dispensed.
``(iii) Records.--A dispenser shall keep
records of its investigation of a suspect
prescription drug product for not less than 3
years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that
a manufacturer of a prescription drug product
has determined that a prescription drug product
in the possession or control of a dispenser is
an illegitimate prescription drug product, the
dispenser shall--
``(I) quarantine such prescription
drug product within the possession or
control of the dispenser from
prescription drug product intended for
distribution; and
``(II) provide for the disposition of
the illegitimate prescription drug
product within the possession or
control of the dispenser.
``(ii) Trading partners.--Upon determining
that a prescription drug product in the
possession or control of a trading partner is
an illegitimate prescription drug product, the
dispenser shall take reasonable steps to assist
a trading partner to provide for the
disposition of the illegitimate prescription
drug product.
``(iii) Making a notification.--Upon
determining that a prescription drug product in
the possession or control of the dispenser is
an illegitimate prescription drug product, the
dispenser shall notify the Secretary of such
determination not later than 24 hours after
making such determination. The Secretary shall
determine whether additional trading partner
notification is appropriate.
``(iv) Responding to a notification.--Upon
the receipt of a notification from the
Secretary that a determination has been made
that a prescription drug product is an
illegitimate prescription drug product, a
dispenser shall--
``(I) identify all illegitimate
prescription drug products that are
subject to such notification and in the
possession or control of the dispenser,
including any prescription drug product
that is subsequently received; and
``(II) perform the activities
described in clause (i).
``(v) Records.--A dispenser shall keep
records of the disposition of an illegitimate
prescription drug product for not less than 3
years after the conclusion of the disposition.
``(C) Electronic database.--A dispenser may satisfy
the requirements of this paragraph through the use of a
secure electronic database developed and operated by
the manufacturer or another entity. The owner of such
database shall establish the requirements and processes
to enable responding to requests and may provide for
data access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database shall not
relieve a dispenser of the requirement under this
paragraph to respond to a verification request
submitted by means other than a secure electronic
database.
``(e) Repackager Requirements.--
``(1) Prescription drug product tracing.--
``(A) In general.--Beginning not later than April 1,
2015, with respect to a prescription drug product
received by a repackager from a wholesale distributor,
and beginning not later than January 1, 2015, with
respect to any other prescription drug product, a
repackager shall--
``(i) not accept ownership of a prescription
drug product unless the previous owner, prior
to, or at the time of, the transaction,
provides transaction history and a transaction
statement for the prescription drug product;
``(ii) prior to, or at the time of, each
transaction in which the repackager transfers
ownership of a prescription drug product,
provide the subsequent owner with transaction
history and a transaction statement;
``(iii) maintain the transaction information
for each transaction described in clause (i) or
(ii) for not less than 3 years after the
transaction; and
``(iv) maintain records that allow the
repackager to associate the prescription drug
product identifier the repackager affixes or
imprints with the prescription drug product
identifier assigned by the original
manufacturer of the prescription drug product.
``(B) Nonsaleable returns.--Notwithstanding
subparagraph (A)(ii), a repackager may return
prescription drug product to the trading partner from
whom the repackager obtained the prescription drug
product without providing the information required
under such subparagraph.
``(C) Requests for information.--Upon a request by
the Secretary or other appropriate Federal or State
official, in the event of a recall or for the purpose
of investigating a suspect prescription drug product or
an illegitimate prescription drug product, a repackager
shall, not later than 2 business days after receiving
the request or in such other reasonable time as
determined by the Secretary, provide the applicable
transaction history and transaction statement for the
prescription drug product.
``(2) Prescription drug product identifier.--Beginning not
later than 6 years after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, a
repackager--
``(A) shall affix or imprint a prescription drug
product identifier to each package and homogenous case
of prescription drug product intended to be introduced
in a transaction;
``(B) shall maintain the prescription drug product
identifier for such prescription drug product for not
less than 3 years after the date of the transaction;
and
``(C) may engage in transactions involving a
prescription drug product only if such prescription
drug product is encoded with a prescription drug
product identifier except as provided in subsection
(a)(4).
``(3) Authorized trading partners.--Beginning on January 1,
2015, a repackager shall ensure that each of its trading
partners is authorized.
``(4) Verification.--Beginning not later than January 1,
2015, a repackager shall implement systems to enable the
repackager to comply with the following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a
determination that a prescription drug product
in the possession or control of the repackager
is a suspect prescription drug product, or upon
receiving a request for verification from the
Secretary that a prescription drug product
within the possession or control of a
repackager is a suspect prescription drug
product, a repackager shall promptly conduct an
investigation to determine whether the
prescription drug product is an illegitimate
prescription drug product, including--
``(I) beginning not later than 6
years after the date of the enactment
of the Safeguarding America's
Pharmaceuticals Act of 2013, verifying
the prescription drug product at the
package level;
``(II) validating any applicable
transaction information in the
possession of the repackager; and
``(III) otherwise investigating to
determine whether the prescription drug
product is an illegitimate prescription
drug product.
``(ii) Cleared prescription drug product.--If
the repackager determines that a suspect
prescription drug product is not an
illegitimate prescription drug product, the
repackager shall promptly notify the Secretary
of such determination and such prescription
drug product may be further distributed.
``(iii) Records.--A repackager shall keep
records of its investigation of a suspect
prescription drug product for not less than 3
years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that
a manufacturer of a prescription drug product
has determined that a prescription drug product
in the possession or control of a repackager is
an illegitimate prescription drug product, the
repackager shall--
``(I) quarantine such prescription
drug product within the possession or
control of the repackager from
prescription drug product intended for
distribution; and
``(II) provide for the disposition of
the illegitimate prescription drug
product within the possession or
control of the repackager.
``(ii) Trading partner.--Upon determining
that a prescription drug product in the
possession or control of a trading partner is
an illegitimate prescription drug product, the
repackagers shall take reasonable steps to
assist the trading partner to provide for the
disposition of the illegitimate prescription
drug product.
``(iii) Making a notification.--Upon
determining that a prescription drug product in
the possession or control of the repackager is
an illegitimate prescription drug product, the
repackager shall notify the Secretary of such
determination not later than 24 hours after
making such determination. The Secretary shall
determine whether additional trading partner
notification is appropriate.
``(iv) Responding to a notification.--Upon
the receipt of a notification from the
Secretary that a determination has been made
that a prescription drug product is an
illegitimate prescription drug product, a
repackager shall--
``(I) identify all illegitimate
prescription drug products that are
subject to such notification and in the
possession or control of the
repackager, including any prescription
drug product that is subsequently
received; and
``(II) perform the activities
described in clause (i).
``(v) Records.--A repackager shall keep
records of the disposition of an illegitimate
prescription drug product for not less than 3
years after the conclusion of the disposition.
``(C) Electronic database.--A repackager may satisfy
the requirements of this paragraph through the use of a
secure electronic database developed and operated by
the manufacturer or another entity. The owner of such
database shall establish the requirements and processes
to respond to requests and may provide for data access
to other members of the pharmaceutical distribution
supply chain, as appropriate. The development and
operation of such a database shall not relieve a
repackager of the requirement under this paragraph to
respond to a verification request submitted by means
other than a secure electronic database.
``(D) Returned prescription drug product.--Beginning
not later than 6 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, upon receipt of a returned prescription drug
product that the repackager intends to further
distribute, before further distributing such
prescription drug product, the repackager shall--
``(i) verify the prescription drug product
identifier for each sealed homogeneous case of
such prescription drug product; or
``(ii) if such prescription drug product is
not in a sealed homogeneous case, verify the
prescription drug product identifier on each
package.
``(f) Third-Party Logistics Provider Requirements.--
``(1) Authorized trading partners.--Beginning on January 1,
2015, a third-party logistics provider shall ensure that each
of its trading partners is authorized.
``(2) Verification.--Beginning not later than January 1,
2015, a third-party logistics provider shall implement systems
to enable the third-party logistics provider to comply with the
following requirements:
``(A) Suspect prescription drug product.--
``(i) In general.--Upon making a
determination that a prescription drug product
in the possession or control of a third-party
logistics provider is a suspect prescription
drug product, a third-party logistics provider
shall promptly notify the owner of such
prescription drug product of the need to
conduct an investigation to determine whether
the prescription drug product is an
illegitimate prescription drug product.
``(ii) Cleared prescription drug product.--If
the owner of the prescription drug product
notifies the third-party logistics provider of
the determination that a suspect prescription
drug product is not an illegitimate
prescription drug product, such prescription
drug product may be further distributed.
``(iii) Records.--A third-party logistics
provider shall keep records of the activities
described in clauses (i) and (ii) with respect
to a suspect prescription drug product for not
less than 3 years after the conclusion of the
investigation.
``(B) Illegitimate prescription drug product.--
``(i) In general.--Upon receiving notice that
a manufacturer of a prescription drug product
has determined that a prescription drug product
in the possession or control of a third-party
logistics provider is an illegitimate
prescription drug product, the third-party
logistics provider shall--
``(I) quarantine such prescription
drug product within the possession or
control of the third-party logistics
provider from prescription drug product
intended for distribution;
``(II) promptly notify the owner of
such prescription drug product of the
need to provide for the disposition of
such prescription drug product; and
``(III) promptly transfer possession
of the prescription drug product to the
owner of such prescription drug product
to provide for the disposition of the
prescription drug product.
``(ii) Making a notification.--Upon
determining that a prescription drug product in
the possession or control of the third-party
logistics provider is an illegitimate
prescription drug product, the third-party
logistics provider shall notify the Secretary
not later than 24 hours after making such
determination. The Secretary shall determine
whether additional trading partner notification
is appropriate.
``(iii) Responding to a notification.--Upon
the receipt of a notification from the
Secretary, a third-party logistics provider
shall--
``(I) identify all illegitimate
prescription drug product subject to
such notification that is in the
possession or control of the third-
party logistics provider, including any
prescription drug product that is
subsequently received; and
``(II) perform the activities
described in clause (i).
``(iv) Records.--A third-party logistics
provider shall keep records of the activities
described in clauses (i) and (ii) with respect
to an illegitimate prescription drug product
for not less than 3 years after the conclusion
of the disposition.
``(g) Drop Shipments.--This section does not apply to any entity,
notwithstanding its status as a wholesale distributor or repackager, or
other status that is not involved in the physical handling,
distribution, or storage of a prescription drug product. For purposes
of this subsection, facilitating the distribution of a prescription
drug product by providing various administrative services, including
processing of orders and payments, shall not, by itself, be construed
as being involved in the handling, distribution, or storage of a
prescription drug product.''.
SEC. 3. ENHANCED DRUG DISTRIBUTION SECURITY.
(a) Pilot Projects.--
(1) In general.--Not later than 2 years after the date of the
enactment of this Act, the Secretary shall establish one or
more pilot projects in coordination with manufacturers,
repackagers, wholesale distributors, third-party logistics
providers, and dispensers to explore and evaluate methods to
enhance the safety and security of the pharmaceutical
distribution supply chain.
(2) Content.--
(A) In general.--The Secretary shall ensure that the
pilot projects under paragraph (1) collectively--
(i) reflect the diversity of the
pharmaceutical distribution supply chain; and
(ii) include participants representative of
every sector within the pharmaceutical
distribution supply chain, including
participants representative of small
businesses.
(B) Project design.--The pilot projects shall be
designed to--
(i) utilize the prescription drug product
identifier for tracing of a prescription drug
product, which utilization may include--
(I) verification of the prescription
drug product identifier of a
prescription drug product; and
(II) the use of aggregation and
inference;
(ii) improve the technical capabilities of
each sector within the pharmaceutical supply
chain to comply with systems and processes
needed to utilize the prescription drug product
identifiers to enhance tracing of a
prescription drug product; and
(iii) conduct such other activities as the
Secretary determines appropriate to explore and
evaluate methods to enhance the safety and
security of the pharmaceutical distribution
supply chain.
(b) Public Meetings.--
(1) In general.--Not later than 6 months after the date of
the enactment of this Act, and at least every 6 months
thereafter until the submission of the report required by
subsection (e)(2), the Secretary shall hold a public meeting to
enhance the safety and security of the pharmaceutical
distribution supply chain. In conducting such meetings, the
Secretary shall take all measures reasonable and practicable to
ensure the protection of confidential commercial information
and trade secrets.
(2) Content.--In conducting meetings under this subsection,
the Secretary shall seek to address, in at least one such
meeting, each of the following topics:
(A) Best practices in each of the sectors within the
pharmaceutical distribution supply chain to implement
the requirements of section 582 of the Federal Food,
Drug, and Cosmetic Act, as added by section 2.
(B) The costs and benefits of implementation of such
section 582, including the impact on each
pharmaceutical distribution supply chain sector and on
public health.
(C) Whether additional electronic traceability
requirements, including tracing of prescription drug
product at the package level, are feasible, cost
effective, overly burdensome on small businesses, and
needed to protect public health.
(D) The systems and processes needed to utilize the
prescription drug product identifiers to enhance
tracing of prescription drug product at the package
level.
(E) The technical capabilities and legal authorities,
if any, needed to establish an electronic system that
provides for enhanced tracing of prescription drug
product at the package level.
(F) The impact that the requirements, systems,
processes, capabilities, and legal authorities referred
to in subparagraphs (C), (D), and (E) would have on
patient safety, the drug supply, cost and regulatory
burden, the timeliness of patient access to
prescription drugs, and small businesses.
(c) Study of the Pharmaceutical Distribution Supply Chain.--
(1) In general.--The Comptroller General of the United States
shall conduct a study to examine implementation of the
requirements established under subchapter H of chapter V of the
Federal Food, Drug, and Cosmetic Act, as added by section 2, in
order to inform the regulations promulgated under this section.
(2) Consideration.--In conducting the study under this
subsection, the Comptroller General shall provide for
stakeholder input and shall consider the following:
(A) The implementation of the requirements
established under such subchapter H with respect to--
(i) the ability of the health care system
collectively to maintain patient access to
medicines;
(ii) the scalability of such requirements,
including with respect to prescription drug
product lines; and
(iii) the capability of different sectors
within the pharmaceutical distribution supply
chain, including small businesses, to affix and
utilize the prescription drug product
identifier.
(B) The need for additional legal authorities and
activities to address additional gaps in the
pharmaceutical distribution supply chain, if any, after
the implementation of the requirements established
under such subchapter H with respect to--
(i) the systems and processes needed to
enhance tracing of prescription drug product at
the package level;
(ii) the impact, feasibility, and cost
effectiveness that additional requirements
pursuant to this section would have on each
pharmaceutical distribution supply chain sector
and the public health; and
(iii) the systems and processes needed to
enhance interoperability among trading
partners.
(C) Risks to the security and privacy of data
collected, maintained, or exchanged pursuant to the
requirements established under such subchapter H.
(d) Small Dispensers.--
(1) In general.--Not later than 10 years after the date of
the enactment of this Act, the Secretary shall enter into a
contract with a private, independent consulting firm with
relevant expertise to conduct a technology and software study
on the feasibility of dispensers that have 25 or fewer full-
time employees conducting interoperable, electronic tracing of
prescription drug products at the package level.
(2) Condition.--As a condition of the award of a contract
under paragraph (1), the private independent consulting firm
awarded such contract shall agree to consult with dispensers
that have 25 or fewer full-time employees when conducting the
study under such subparagraph.
(3) Study content.--The study conducted under paragraph (1)
shall assess whether, with respect to conducting interoperable,
electronic tracing of prescription drug products at the package
level, the necessary hardware and software--
(A) is readily accessible to such dispensers;
(B) is not prohibitively expensive to obtain,
install, and maintain for such dispensers; and
(C) can be integrated into business practices, such
as interoperability with wholesale distributors, for
such dispensers.
(4) Publication.--The Secretary shall publish--
(A) the statement of work for the study conducted
under paragraph (1) for public comment not later than
30 days before commencing the study; and
(B) the final version of such study for public
comment not later than 30 days after such study is
completed.
(5) Report to congress.--Not later than 30 days after the
date on which the study conducted under paragraph (1) is
completed, the Secretary shall submit to the Committee on
Energy and Commerce of the House of Representatives and the
Committee on Health, Education, Labor, and Pensions of the
Senate, a report on the findings of the study and any
recommendations to improve the technology and software
available to small dispensers for purposes of conducting
electronic, interoperable tracing of prescription drug products
at the package level.
(6) Public meeting.--Not later than 180 days after the date
on which the study conducted under paragraph (1) is completed,
the Secretary shall hold a public meeting at which members of
the public, including stakeholders, may present their views on
the study.
(e) Reports.--
(1) GAO report.--Not later than 12 years after the date of
the enactment of this Act, the Comptroller General shall submit
to the Committee on Energy and Commerce of the House of
Representatives and the Committee on Health, Education, Labor,
and Pensions of the Senate a report on the results of the study
conducted under subsection (c).
(2) FDA report.--Not later than 12 years after the date of
the enactment of this Act, the Secretary shall submit to the
Committee on Energy and Commerce of the House of
Representatives and the Committee on Health, Education, Labor,
and Pensions of the Senate a report on the results of the pilot
program conducted under subsection (a), taking into
consideration--
(A) the comments received during the public meetings
conducted under subsection (b); and
(B) the results of the study conducted, and the
public comments received during the public meeting
held, under subsection (d).
(f) Establishment of Additional Requirements.--
(1) In general.--Notwithstanding any other provision of this
Act, including the amendments made by this Act, not earlier
than January 1, 2027, and not later than March 1, 2027, the
Secretary shall issue proposed regulations that establish
additional requirements to prevent a suspect product,
illegitimate product, or a product that is counterfeit, stolen,
diverted, or otherwise unfit for distribution from entering
into or being further distributed in the supply chain,
including--
(A) requirements related to the use of interoperable
electronic systems and technologies for enhanced
tracing of prescription drug product at the package
level, which may include verification of the
prescription drug product identifier of a package of
prescription drug product and enhanced verification of
saleable returns;
(B) requirements related to the use of additional
prescription drug product identifiers or prescription
drug product identifier technology that meet the
standards developed under section 582(a)(2) of the
Federal Food, Drug, and Cosmetic Act, as added by
section 2;
(C) requirements related to the use of aggregation,
inference, and other methods, if determined to be
necessary components of the systems and technologies
referred to in subparagraph (A); and
(D) other data transmission and maintenance
requirements and interoperability standards.
(2) Flexibility.--The requirements described in paragraph (1)
shall provide for flexibility for a member of the
pharmaceutical supply chain, by--
(A) with respect to dispensers, allowing a dispenser
to enter into a written agreement with a third party,
including an authorized wholesale distributor, under
which--
(i) the third party confidentially maintains
any information required to be maintained under
such requirements for the dispenser; and
(ii) the dispenser maintains a copy of the
written agreement and is not relieved of the
other obligations of the dispenser under such
requirements;
(B) establishing a process by which an authorized
manufacturer, repackager, wholesale distributor, or
dispenser may request a waiver from any such
requirements if the Secretary determines that such
requirements would result in an undue economic hardship
on the manufacturer, wholesale distributor, or
dispenser;
(C) not requiring the adoption of specific business
systems by a member of the pharmaceutical supply chain
for the maintenance and transmission of prescription
drug product tracing data; and
(D) prescribing alternative methods of compliance for
small businesses, as specified in paragraph (4).
(3) Considerations.--In issuing proposed regulations under
paragraph (1), the Secretary shall consider--
(A) the results of the pilot project conducted under
subsection (a);
(B) the public meetings held under subsection (b);
(C) the studies conducted under subsections (c) and
(d);
(D) the reports submitted under subsection (e);
(E) the public health benefits of such regulations
compared with the cost of compliance with the
requirements contained in such regulations, including
with respect to entities of varying sizes and
capabilities; and
(F) the diversity of the pharmaceutical distribution
supply chain by providing appropriate flexibility for
each sector in the supply chain, including small
businesses.
(4) Small business protection.--The Secretary, taking into
consideration the study conducted under paragraph (d), shall,
if the Secretary determines that the requirements established
pursuant to paragraph (1) would result in an undue economic
hardship on small businesses, provide for alternative methods
of compliance with any such requirement by small businesses,
including--
(A) establishing timelines for such compliance
(including compliance by dispensers with 25 or fewer
full-time employees) that do not impose undue economic
hardship for small businesses, including dispensers
with respect to which the study concluded has
insufficient hardware and software to conduct
interoperable, electronic tracing of prescription drug
products at the package level; and
(B) establishing a process by which a dispenser may
request a waiver from any such requirement.
(5) Regulations.--In issuing regulations to carry out this
subsection, the Secretary shall--
(A) issue a notice of proposed rulemaking that
includes a copy of the proposed rule;
(B) provide for a period of not less than 60 days for
comments on the proposed rule; and
(C) provide for an effective date of the final rule
that is 2 years after the date on which such final rule
is published.
(6) Sunset.--The requirements regarding the provision and
receipt of transaction history and transaction statements under
section 582 of the Federal Food, Drug, and Cosmetic Act, as
added by section 2, shall cease to be effective on the date on
which the regulations issued under this section are fully
implemented.
(g) Definitions.--In this section:
(1) The terms defined in section 581 of the Federal Food,
Drug, and Cosmetic Act, as added by section 2, shall have the
same meanings in this section as such terms are given in such
section 581.
(2) The term ``Secretary'' means the Secretary of Health and
Human Services, acting through the Commissioner of Food and
Drugs.
SEC. 4. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.
(a) Standards.--Chapter V of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 351 et seq.) is amended--
(1) in section 503 (21 U.S.C. 353), by striking ``(e)(1)(A)''
and all that follows through ``(3) For the purposes of this
subsection and subsection (d)--'' and inserting the following:
``(e) For purposes of subsection (d)--'';
(2) in section 503(e) (21 U.S.C. 353(e)), by redesignating
subparagraphs (A) and (B) as paragraphs (1) and (2),
respectively; and
(3) in subchapter H, as added by section 2, by adding at the
end the following:
``SEC. 583. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.
``(a) Standards.--
``(1) In general.--The Secretary shall establish, by
regulation, standards for the licensing of persons that make
wholesale distributions.
``(2) Requirements.--The standards under paragraph (1) shall,
with respect to wholesale distributions, include requirements
for--
``(A) the storage and handling of drugs subject to
section 503(b)(1), including facility requirements;
``(B) the establishment and maintenance of records of
the distributions of such drugs;
``(C) the furnishing of a bond or other equivalent
means of security in accordance with paragraph (3);
``(D) mandatory background checks and fingerprinting
of facility managers or designated representatives;
``(E) the establishment and implementation of
qualifications for key personnel;
``(F) the mandatory physical inspection of any
facility to be used in wholesale distribution within a
reasonable timeframe from the initial application for
licensure of the wholesale distributor; and
``(G) in accordance with paragraph (5), the
prohibition of certain persons from engaging in
wholesale distribution.
``(3) Bond or other security.--The requirements under
paragraph (2)(C) shall provide for the following:
``(A) An applicant that is not a government-owned-
and-operated wholesale distributor, for the issuance or
renewal of a wholesale distributor license, shall
submit a surety bond of $100,000 or other equivalent
means of security acceptable to the applicable
licensing authority.
``(B) For purposes of subparagraph (A), the
applicable licensing authority may accept a surety bond
less than $100,000 if the annual gross receipts of the
previous tax year for the wholesale distributor is
$10,000,000 or less, in which case the surety bond may
not be less than $25,000.
``(C) If a wholesale distributor can provide evidence
that it possesses the required bond in a State, the
requirement for a bond in another State is waived.
``(4) Inspections.--To satisfy the inspection requirement
under paragraph (2)(F), the Secretary may conduct the
inspection, or may accept an inspection by--
``(A) the government of the State in which the
facility is located; or
``(B) a third-party accreditation or inspection
service approved by the Secretary.
``(5) Prohibited persons.--The requirements under paragraph
(2) shall include requirements to prohibit a person from
receiving or maintaining licensure for wholesale distribution
if the person--
``(A) has been convicted of any felony for conduct
relating to wholesale distribution; any felony
violation of section 301(i) or 301(k); or any felony
violation of section 1365 of title 18, United States
Code, relating to prescription drug product tampering;
or
``(B) has engaged in a pattern of violating the
requirements of this section that presents a threat of
serious adverse health consequences or death to humans.
``(b) Reporting by Licensed Wholesale Distributors.--
``(1) Annual report.--Beginning not later than 1 year after
the date of the enactment of this section, each person engaged
in wholesale distribution in interstate commerce shall submit
on an annual basis, and update as necessary, a report to the
Secretary including--
``(A) the wholesale distributor's name;
``(B) the wholesale distributor's address;
``(C) a listing of each State in which the wholesale
distributor is licensed for wholesale distribution; and
``(D) any disciplinary actions taken by a State, the
Federal Government, or a foreign government during the
reporting period against the wholesale distributor.
``(2) Posting on internet.--The Secretary shall post on the
public Internet Website of the Food and Drug Administration the
name of each wholesale distributor, and the State in which each
such distributor is licensed, based on reports under paragraph
(1).
``(c) Preservation of State Authority.--This subchapter does not
prohibit a State from--
``(1) licensing wholesale distributors for the conduct of
wholesale distribution activities in the State in accordance
with this subchapter; and
``(2) collecting fees from wholesale distributors in
connection with such licensing,
so long as the State does not require such licensure to the extent to
which an entity is engaged in third-party logistics provider
activities.
``(d) Definition.--In this section, the term `wholesale distribution'
means the distribution of a drug subject to section 503(b)(1) to a
person other than a consumer or patient, but does not include--
``(1) intracompany distribution of any drug between members
of an affiliated group (as defined in section 1504(a) of the
Internal Revenue Code of 1986);
``(2) the distribution of a drug, or an offer to distribute a
drug among hospitals or other health care entities which are
under common control;
``(3) the distribution of a drug or an offer to distribute a
drug for emergency medical reasons, including a public health
emergency declaration pursuant to section 319 of the Public
Health Service Act, except that a drug shortage not caused by a
public health emergency shall not constitute such an emergency
medical reason;
``(4) dispensing of a drug pursuant to a valid prescription
executed in accordance with subsection 503(b)(1);
``(5) the distribution of minimal quantities of drug by a
licensed retail pharmacy to a licensed practitioner for office
use;
``(6) the distribution of a drug or an offer to distribute a
drug by a charitable organization to a nonprofit affiliate of
the organization to the extent otherwise permitted by law;
``(7) the purchase or other acquisition by a dispenser,
hospital, or other health care entity of a drug for use by such
dispenser, hospital, or other health care entity;
``(8) the distribution of a drug by the manufacturer of such
drug;
``(9) the receipt or transfer of a drug by an authorized
third-party logistics provider provided that such third-party
logistics provider does not take ownership of the drug;
``(10) the transport of a drug by a common carrier, provided
that the common carrier does not take ownership of the drug;
``(11) the distribution of a drug, or an offer to distribute
a drug, by an authorized repackager that has taken ownership of
the drug and repacked it in accordance with section 582(e);
``(12) saleable drug returns when conducted by a dispenser in
accordance with section 203.23 of title 21, Code of Federal
Regulations (or any successor regulation);
``(13) the distribution of a combination prescription drug
product described in section 581(20)(B)(xiii);
``(14) the distribution of a medical convenience kit
described in section 581(21)(B)(xiv);
``(15) the distribution of an intravenous drug that, by its
formulation, is intended for the replenishment of fluids and
electrolytes (such as sodium, chloride, and potassium) or
calories (such as dextrose and amino acids);
``(16) the distribution of an intravenous drug used to
maintain the equilibrium of water and minerals in the body,
such as dialysis solutions;
``(17) the distribution of a drug that is intended for
irrigation or reconstitution, or sterile water, whether
intended for such purposes or for injection;
``(18) the distribution of compressed medical gas (as defined
in section 581(21)(C));
``(19) facilitating the distribution of a prescription drug
product by providing administrative services, such as
processing of orders and payments, without physical handling,
distribution, or storage of a prescription drug product; or
``(20)(A) the distribution of a product by a dispenser, or a
wholesale distributor acting at the direction of the dispenser,
to a repackager registered under section 510 for the purpose of
repackaging the drug for use by that dispenser or another
health care entity that is under the dispenser's ownership or
control, so long as the dispenser retains ownership of the
prescription drug product; and
``(B) the saleable or nonsaleable return by such repackager
of such prescription drug product.
``(e) Effective Date.--The standards required by subsection (a) shall
take effect not later than 2 years after the date of the enactment of
this section. The Secretary shall issue the regulations required by
subsection (a) not later than 1 year after the date of the enactment of
this Act.''.
(b) Conforming Amendment.--Section 804(a)(5)(A) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 384(a)(5)(A)) is amended by striking
``503(e)(2)(A)'' and inserting ``583(a)''.
SEC. 5. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS
PROVIDERS.
Subchapter H of chapter V of the Federal Food, Drug, and Cosmetic
Act, as amended by section 4, is further amended by adding at the end
the following:
``SEC. 584. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS
PROVIDERS.
``(a) License Requirement.--No facility may engage in the activities
of a third-party logistics provider in any State unless--
``(1) the facility is licensed--
``(A) by the State from which the drug is distributed
by the third-party logistics provider in accordance
with a qualified licensing program, if the State has
such a program; or
``(B) by the Secretary under this section, if the
State from which the drug is distributed does not have
such a program; and
``(2) if the drug is distributed interstate and the facility
is not licensed by the Secretary under paragraph (1)(B),
registers with the State into which the drug is distributed if
such State requires such registration.
``(b) Reporting by Licensed Third-Party Logistics Providers.--
``(1) Annual report.--Beginning not later than 1 year after
the date of the enactment of this section, each facility
engaged in the activities of a third-party logistics provider
shall submit on an annual basis, and update as necessary, a
report to the Secretary including--
``(A) the facility's name;
``(B) the facility's address;
``(C) a listing of each jurisdiction (whether State
or Federal) in which the facility is licensed for
third-party logistics provider activities; and
``(D) any disciplinary actions taken by a State or
Federal licensing authority during the reporting period
against the facility.
``(2) Posting on internet.--The Secretary shall post on the
public Internet Website of the Food and Drug Administration the
name of each third-party logistics provider, and each
jurisdiction (whether State or Federal) in which the provider
is licensed, based on reports under paragraph (1).
``(c) Preservation of State Authority.--This subchapter does not
prohibit a State from--
``(1) licensing third-party logistic providers for the
conduct of third-party logistics provider activities in the
State in accordance with this subchapter; and
``(2) collecting fees from third-party logistics providers in
connection with such licensing,
so long as the State does not require such licensure to the extent to
which an entity is engaged in wholesale distribution.
``(d) Costs.--
``(1) Authorized licensure fees.--In the case of a facility
engaging in the activities of a third-party logistics provider
licensed by the Secretary under this section, the Secretary may
assess and collect a reasonable fee in an amount equal to the
costs to the Federal Government of establishing and
administering the licensure program established, and conducting
period inspections, under this section.
``(2) Adjustment.--The Secretary shall adjust the amount of
the fee under paragraph (1) on an annual basis, if necessary,
to generate an amount of revenue equal to the costs referred to
in such paragraph.
``(3) Availability.--Fees assessed and collected under this
subsection shall be available for obligation only to the extent
and in the amount provided in advance in appropriations Acts.
Such fees shall remain available until expended.
``(e) License Regulations.--
``(1) In general.--The Secretary shall establish, by
regulation, standards, terms, and conditions for licensing
persons to engage in third-party logistics provider activities.
``(2) Content.--The regulations under paragraph (1) shall--
``(A) include standards relating to eligibility for,
and revocation and reissuance of, licenses;
``(B) establish a process by which the applicable
licensing authority will, upon request by a third-party
logistics provider that is accredited by a third-party
accreditation program approved by the Secretary, issue
a license to the provider;
``(C) establish a process by which the Secretary
shall issue a license to a third-party logistics
provider if the Secretary is not able to approve a
third-party accreditation program because no such
program meets the Secretary's requirements necessary
for approval of such a third-party accreditation
program;
``(D) require that the third-party logistics provider
comply with storage practices, as determined by the
Secretary, at the provider's facilities, including--
``(i) maintaining access to warehouse space
of suitable size to facilitate safe operations,
including a suitable area to quarantine suspect
prescription drug product;
``(ii) maintaining adequate security; and
``(iii) having written policies and
procedures to--
``(I) address receipt, security,
storage, inventory, shipment, and
distribution of a prescription drug
product;
``(II) identify, record, and report
confirmed losses or thefts in the
United States;
``(III) correct errors and
inaccuracies in inventories;
``(IV) provide support for
manufacturer recalls;
``(V) prepare for, protect against,
and address any reasonably foreseeable
crisis that affects security or
operation at the facility, such as a
strike, fire, or flood;
``(VI) ensure that any expired
prescription drug product is segregated
from other prescription drug products
and returned to the manufacturer or
repackager or destroyed;
``(VII) maintain the capability to
electronically trace the receipt and
outbound distribution of a prescription
drug product, and supplies and records
of inventory; and
``(VIII) quarantine or destroy a
suspect prescription drug product if
directed to do so by the respective
manufacturer, wholesale distributor,
dispenser, or an authorized government
agency;
``(E) provide for periodic inspection, as determined
by the Secretary, of such facility warehouse space to
ensure compliance with this section;
``(F) prohibit a facility from having as a manager or
designated representative anyone convicted of any
felony violation of section 301(i) or 301(k) or any
felony violation of section 1365 of title 18, United
States Code, relating to prescription drug product
tampering;
``(G) perform mandatory background checks of the
provider's facility managers or designated
representatives of such managers;
``(H) require a third-party logistics provider to
provide to the applicable licensing authority, upon the
authority's request, a list of all prescription drug
product manufacturers, wholesale distributors, and
dispensers for whom the third-party logistics provider
provides services at the provider's facilities; and
``(I) include procedures under which any third-party
logistics provider license--
``(i) will expire on the date that is 3 years
after issuance of the license; and
``(ii) may be renewed for additional 3-year
periods.
``(f) Validity of License.--A license issued under this section shall
remain valid as long as such third-party logistics provider remains
accredited by the Secretary, subject to renewal under subsection (d).
If the Secretary finds that the third-party accreditation program
demonstrates that all applicable requirements for licensure under this
section are met, the Secretary shall issue a license under this section
to a third-party logistics provider receiving accreditation.
``(g) Qualified Licensing Program Defined.--In this section, the term
`qualified licensing program' means a program meeting the requirements
of this section and the regulations thereunder.
``(h) Effective Date.--The requirements of this section shall take
effect not later than 1 year after the date of the enactment of this
section. The Secretary shall issue the regulations required by
subsection (d) not later than 180 days after the date of the enactment
of this section.''.
SEC. 6. PENALTIES.
(a) Prohibited Acts.--Section 301(t) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 331(t)) is amended by striking ``or the
distribution of drugs in violation of section 503(e) or the failure to
otherwise comply with the requirements of section 503(e)'' and
inserting ``the failure to comply with any requirement of section 582,
engaging in the wholesale distribution of a drug in violation of
section 583 or the failure to otherwise comply with the requirements of
section 583, or engaging in the activities of a third-party logistics
provider in violation of section 584 or the failure to otherwise comply
with the requirements of section 584''.
(b) Enhanced Penalty for Knowing Unlicensed Activities.--Section
303(b)(1)(D) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
333(b)(1)(D)) is amended by striking ``503(e)(2)(A)'' and inserting
``583 or 584''.
(c) Misbranding.--Section 502 of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 352) is amended by adding at the end the following:
``(bb) If it is a drug and it fails to bear a prescription drug
product identifier as required by section 582.''.
SEC. 7. UNIFORM NATIONAL POLICY.
Subchapter H of chapter V of the Federal Food, Drug, and Cosmetic
Act, as amended by section 5, is further amended by adding at the end
the following:
``SEC. 585. UNIFORM NATIONAL POLICY.
``(a) Preemption of State Prescription Drug Product Tracing and Other
Requirements.--Beginning on the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, no State or
political subdivision of a State may establish or continue in effect
any requirements for tracing drugs through the distribution system
(including any requirements with respect to paper or electronic
pedigrees, track and trace, statements of distribution history,
transaction history, or transaction statements, or verification,
investigation, disposition, alerts, or recordkeeping relating to the
pharmaceutical distribution supply chain system) that--
``(1) are inconsistent with, more stringent than, or in
addition to any requirements applicable under this Act; or
``(2) are inconsistent with any applicable waiver, exception,
or exemption issued by the Secretary under section 582(a).
``(b) Standards or Licensure.--
``(1) In general.--Beginning on the date of the enactment of
Safeguarding America's Pharmaceuticals Act of 2013, no State or
political subdivision of a State may establish or continue any
standards, requirements, or regulations with respect to
wholesale drug distributor or third-party logistics provider
licensure which are inconsistent with, less stringent than, in
addition to, or more stringent than, the standards and
requirements under this Act.
``(2) Licensing fees.--Paragraph (1) does not affect the
authority of a State to collect fees from wholesale drug
distributors or third-party logistics providers in connection
with State licensing under section 583 or 584 pursuant to a
licensing program meeting the requirements of such sections.
``(3) Enforcement, suspension, and revocation of licenses.--
Notwithstanding paragraph (1), a State--
``(A) may take administrative action, including
fines, to enforce a licensure requirement promulgated
by the State in accordance with this Act;
``(B) may provide for the suspension or revocation of
licenses issued by the State for violations of the laws
of such State;
``(C) upon conviction of a person for a violation of
Federal, State, or local controlled substance laws or
regulations, may provide for fines, imprisonment, or
civil penalties; and
``(D) may regulate activities of entities licensed
pursuant to section 583 or 584 in a manner that is
consistent with the provisions of this subchapter.''.
SEC. 8 ELECTRONIC LABELING.
(a) In General.--Section 502(f) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 352(f)) is amended by adding at the end the
following new sentence: ``Required labeling (other than immediate
container or carton labels) that is intended for use by a physician, a
pharmacist, or another health care professional, and that provides
directions for human use of a drug subject to section 503(b)(1), may
(except as necessary to mitigate a safety risk, as specified by the
Secretary in regulation) be made available by electronic means instead
of paper form, provided that such labeling complies with all applicable
requirements of law, the manufacturer or distributor, as applicable,
affords health care professionals and authorized dispensers (as defined
in section 581) the opportunity to request the labeling in paper form,
and after such a request the manufacturer or distributor promptly
provides the requested information without additional cost.''.
(b) Regulations.--The Secretary of Health and Human Services shall
promulgate regulations implementing the amendment made by subsection
(a).
(c) Application.--The last sentence of section 502(f) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 352(f)), as added by subsection
(a), shall apply beginning on the earlier of--
(1) the effective date of final regulations promulgated under
subsection (b); or
(2) the day that is 180 days after the date of enactment of
this Act.
Purpose and Summary
H.R. 1919, the ``Safeguarding America's Pharmaceuticals Act
of 2013,'' was introduced on May 9, 2013, by Reps. Bob Latta
(OH-05) and Jim Matheson (UT-04) and referred to the Committee
on Energy and Commerce.
This legislation would amend the Federal Food, Drug, and
Cosmetic Act, with respect to the pharmaceutical distribution
supply chain.
Background and Need for Legislation
H.R. 1919 would strengthen the security of the United
States' prescription drug supply chain in order to protect
Americans against counterfeit drugs. Further, H.R. 1919 would
help prevent increases in drug prices, help avoid additional
drug shortages, and eliminate hundreds of millions of dollars
worth of duplicative government regulation by replacing the
patchwork of State requirements imposed on American drug
manufacturers, wholesale distributors, and pharmacies with a
uniform national standard.\1\
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\1\Grace-Marie Turner. ``Secure The Pharmaceutical Supply Chain
From Risky Counterfeiters'' Forbes, 20 May 2013, http://www.forbes.com/
sites/gracemarieturner/2013/05/20/secure-the-pharmaceutical-supply-
chain-from-risky-counterfeiters/ (accessed May 28, 2013).
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The American prescription drug supply chain is increasingly
vulnerable to counterfeit drugs. This vulnerability exists, in
large part, due to a patchwork of inconsistent State
regulations. According to recent reports, the number of
counterfeit prescription drugs is growing across the country.
Experts have commented that the counterfeiting of prescription
drugs has grown even more lucrative than trafficking illegal
drugs, such as heroin or cocaine.\2\ These counterfeit
prescription drugs have reached our nation's sickest patients,
including those with cancer. Cancer drugs are highly targeted
due to their high cost.\3\
---------------------------------------------------------------------------
\2\Weaver, Christopher. ``More Lucrative Than Cocaine: Fake
Medicine On The Rise,'' Wall Street Journal, 13 Feb 2013, http://
blogs.wsj.com/corporate-intelligence/2013/02/13/more-
lucrative-than-cocaine-fake-medicine-on-the-rise/ (accessed 28 May
2013).
\3\Whalen, Jeanne; Faucon, Benoit. ``Counterfeit Cancer Medicines
Multiply,'' Wall Street Journal, 31 Dec. 2013. http://online.wsj.com/
article/SB1000142412788732332040 4578211492452353034.html (accessed 28
May, 2013).
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Some States, including California, have taken steps or
implemented regulations for their States in an attempt to
secure the supply chain. While well-intentioned, these State
solutions will not increase the security of the U.S.
prescription drug supply. For example, California's e-pedigree
law will burden businesses in the drug supply chain by
requiring them to implement costly and infeasible electronic
systems for tracking and tracing prescription drugs at the
unit-level in an unreasonable timeframe.
According to the Pharmaceutical Distribution Security
Alliance (a consortium of supply chain actors), California's
law could impose up to $3.5 billion in costs on manufacturers.
Smaller distributors would be forced to potentially ``restrict
operations'' and ``some may be forced out of business.'' A
study from Accenture, commissioned by the National Association
of Chain Drug Stores and National Community Pharmacists
Association, found that startup costs from the California law
would impose $84,000 to $112,000 per store, with additional
costs to maintain and operate the system in subsequent years.
Small businesses will be hardest hit. By some estimates,
California compliance costs could swallow two-thirds of the net
annual profit of pharmacies. The Pharmaceutical Distribution
Security Alliance reports that after expenses, the new
regulations will wipe out more than 100 percent of income for
smaller distributors.\4\
---------------------------------------------------------------------------
\4\Grace-Marie Turner. ``Secure The Pharmaceutical Supply Chain
From Risky Counterfeiters'' Forbes, 20 May 2013, http://www.forbes.com/
sites/gracemarieturner/2013/05/20/secure-the-pharmaceutical-supply-
chain-from-risky-counterfeiters/ (accessed May 28, 2013).
---------------------------------------------------------------------------
If the California law takes effect, these costs would have
dramatically negative impacts on patients. For example, the
price of prescription drugs would increase. The burden of the
California law would also potentially worsen drug shortages for
American patients. Additionally, the California law also would
impose massive costs on businesses across the nation because
the prescription drug industry is a nationwide market.
H.R. 1919 would secure the United States supply chain in a
reasonable, common sense way. This system would save our
nation's businesses millions of dollars and negate other
negative consequences of the onerous, infeasible California e-
pedigree law from spreading across the country. Additionally,
H.R. 1919 would ensure the Food and Drug Administration (FDA)
and industry work together in a transparent and collaborative
process to develop a unit-level tracing system. H.R. 1919, is a
pragmatic and effective solution to secure the United States
supply chain, which will ensure patients receive safe and
effective FDA approved drugs.
Hearings
The Subcommittee on Health held a hearing on legislation to
secure the American prescription drug supply chain on April 25,
2013. The Subcommittee received testimony from: Dr. Janet
Woodcock, Director, Center for Drug Evaluation and Research,
Food and Drug Administration; Elizabeth A. Gallenagh, Vice
President, Government Affairs and General Counsel, Healthcare
Distribution Management Association; Christine M. Simmon,
Senior Vice President, Policy and Strategic Alliances, Generic
Pharmaceutical Association; Michael Rose, Vice President,
Supply Chain Visability, Johnson and Johnson Health Care
Systems, Inc.; Tim Davis, Owner, Beaver Health Mart Pharmacy,
on behalf of the National Community Pharmacist Association;
Allan Coukell, Director, Medical Programs, Pew Health Group,
the Pew Cheritable Trusts; Carmet A. Catizone, Executive
Director and Secretary, National Association of Boards of
Pharamcy; and Walter Berghahn, President, SmartRmeds for Life,
Executive Director, Healthcare Compliance Packaging Council.
Committee Consideration
On May 8, 2013, the Subcommittee on Health met in open
markup session and approved H.R. 1919 for full Committee
consideration, as amended, by a voice vote. On May 15, 2013,
the full Committee met in open markup session and approved H.R.
1919, as amended, by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Upton to order H.R. 1919 reported to the House,
with amendment, was agreed to by a voice vote. The following
reflects the recorded votes taken during the Committee
consideration:
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
Statement of General Performance Goals and Objectives
H.R. 1919 will secure the United States supply chain by
creating a national standard for tracking all prescription drug
products and establishing a process to move to a unit level
system.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
1919, Safeguarding America's Pharmaceuticals Act of 2013, would
result in no new or increased budget authority, entitlement
authority, or tax expenditures or revenues.
Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI
of the Rules of the House of Representatives, the Committee
finds that H.R. 1919, Safeguarding America's Pharmaceuticals
Act of 2013, contains no earmarks, limited tax benefits, or
limited tariff benefits.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
May 31, 2013.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1919, the
Safeguarding America's Pharmaceuticals Act of 2013.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ellen Werble.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
H.R. 1919--Safeguarding America's Pharmaceuticals Act of 2013
Summary: H.R. 1919 would require the Food and Drug
Administration (FDA) to establish national standards for
monitoring the movement of prescription drugs through the drug
distribution system. The ``drug distribution system''
encompasses the network of companies that produce, handle,
distribute, and dispense drug products. The legislation would
impose new regulatory requirements on such companies relating
to the handling of drug products and recordkeeping of
transactions, and would create notification rules concerning
drugs that are potentially unsuitable for distribution.
The bill also would require the FDA to establish a
licensing program for certain third parties that provide
logistic services to support pharmaceutical manufacturers,
wholesalers, and dispensers. The bill would authorize FDA to
collect and spend fees to cover the costs of the licensing
program.
CBO estimates that enacting H.R. 1919 would increase
federal revenues by $19 million over the 2015-2018 period and
by $24 million over the 2015-2023 period. Pay-as-you-go
procedures apply because enacting the legislation would affect
revenues.
CBO estimates that implementing H.R. 1919 would have a
discretionary cost of $39 million over the 2014-2018 period,
assuming annual appropriation actions consistent with the bill.
H.R. 1919 would impose both intergovernmental and private-
sector mandates as defined in the Unfunded Mandates Reform Act
(UMRA) by requiring public and private-sector entities to
comply with standards for monitoring the movement of
prescription drugs through the distribution system. Because few
public entities manufacture, distribute, or dispense
prescription drugs, CBO estimates that the costs to public
entities to comply with the mandates in the bill would be small
and below the intergovernmental threshold established in UMRA
($75 million in 2013, adjusted annually for inflation). CBO
estimates that the costs to private entities would exceed the
threshold established in UMRA ($150 million in 2013, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1919 is shown in the following table.
The costs of this legislation fall within budget function 550
(health).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------
2014 2015 2016 2017 2018 2014-2018
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUESa
Collection of Licensing Fees
Estimated Revenuesb........................................... 0 6 6 6 1 19
Penalties
Estimated Revenues............................................ 0 * * * * *
Total Changes in Revenues
Estimated Revenues........................................ 0 6 6 6 1 19
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Spending of Licensing Fees
Estimated Authorization Level................................. 0 7 7 8 1 23
Estimated Outlays............................................. 0 6 7 8 2 23
Activities not Related to Fees
Estimated Authorization Level................................. 3 5 5 2 2 17
Estimated Outlays............................................. 2 4 5 3 2 16
Total Changes in Discretionary Spending
Estimated Authorization Level............................. 3 12 12 10 3 40
Estimated Outlays......................................... 2 10 12 11 4 39
----------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.
aCBO estimates that enacting the bill would increase revenues by $24 million over the 2015-2023 period.
bCBO estimates that the assessments in H.R. 1919 would reduce income and payroll taxes because assessments on
firms are indirect business charges that reduce the tax base of income and payroll taxes. Numbers here reflect
net receipts to the Treasury.
Basis of estimate: For the estimate, CBO assumes that the
legislation will be enacted by the end of fiscal year 2013, and
that the Congress will take appropriation actions consistent
with the bill for the funding of FDA activities. We also assume
that outlays will follow historical patterns for similar
activities.
H.R. 1919 would authorize FDA to expand its oversight of
the drug distribution system in the United States. The
legislation aims to improve the safety of the U.S. drug supply
by requiring enhanced monitoring of the chain of transactions
from the manufacturer of a drug to the party that ultimately
dispenses the drug to the consumer.
Key provisions of H.R. 1919 include new requirements on
entities in the drug distribution system relating to:
Storage and handling of prescription drug
products,
Maintenance of records,
Mandatory inspections of wholesaler
facilities,
Mandatory use of uniform identification
numbers (UIDs) on packages or cases,\1\ and
---------------------------------------------------------------------------
\1\After 2027, the bill would require that identifiers be applied
to individual units of drug products.
---------------------------------------------------------------------------
Identification and notification rules
concerning products that are potentially counterfeit,
diverted, stolen or otherwise appear unfit for
distribution.
Revenues: CBO estimates that enacting H.R. 1919 would
increase federal revenues by $19 million over the 2015-2018
period and by $24 million over the 2015-2023 period. The
legislation would affect revenues in two ways:
Authorizing the FDA to assess fees on
certain third parties to cover the costs of licensing
and conducting periodic inspections would increase
governmental receipts; and
Collecting fines associated with violations
of certain new requirements imposed by the bill that
would be recorded as federal revenues.
Collection of Licensing Fees. H.R. 1919 would require the
FDA to license and oversee certain third parties that provide
logistic services for a pharmaceutical manufacturer,
wholesaler, or distributor. For example, services provided by
such entities include warehousing and transporting drug
products without taking ownership or responsibility for the
sale or disposition of the products. The bill would require all
such facilities to be licensed by a state or the FDA. The bill
would authorize the collection and spending of fees by FDA to
cover the costs of activities related to issuing those licenses
such as periodic inspections.
CBO expects FDA would begin licensing facilities in fiscal
year 2015, thus we expect fee collections would start in that
year. CBO expects that FDA would set fees to cover $23 million
in estimated gross costs over the 2015-2018 period (as
described below under ``Spending Subject to Appropriation'').
However, because those fees are expected to reduce the tax base
for income and payroll taxes, CBO estimates revenues from those
sources would be reduced. Overall, CBO estimates net receipts
to the Treasury would increase by $19 million over the 2015-
2018 period.
Penalties. Civil monetary penalties could be assessed on
the facilities in the drug distribution system for violations
of new requirements under H.R. 1919. Based on enforcement
actions of violations, CBO expects that any additional revenues
from the imposition of penalties would not be significant
because of the small number of additional cases likely to be
affected.
Spending subject to appropriation: Assuming appropriation
actions consistent with the bill, CBO estimates that
implementing H.R. 1919 would have a discretionary cost of $39
million over the 2014-2018 period.
Spending of Licensing Fees. H.R. 1919 would authorize FDA
to collect fees to help defray the costs of establishing a
licensure program for third parties that provide logistic
services. The spending of fees would be subject to future
appropriation action. (CBO expects that the collections from
licensing fees would be classified as revenues, as discussed
above in the ``Revenues'' section.)
Based on information on costs of similar oversight
programs, CBO estimates the costs to the FDA of implementing
those provisions of H.R. 1919 would be $23 million over the
2015-2018 period. CBO expects higher start-up costs through
2017 to fund information technology systems and other
activities necessary to implement the program.
Activities Not Related to Fees. H.R. 1919 would require FDA
to establish a number of standards to enhance the safety and
security of prescription drugs as those drugs are distributed
from the manufacturer to the pharmacy, hospital, or other
persons authorized to dispense or administer prescription drugs
to consumers. In developing those standards the FDA would be
required to host numerous public meetings, implement at least
one pilot project, and promulgate regulations. CBO estimates
the costs to FDA of implementing those provisions would be
about $16 million over the 2014-2018 period, subject to
appropriation of the necessary amounts.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in revenues that are subject to those
pay-as-you-go procedures are shown in the following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1919, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON ENERGY AND COMMERCE ON MAY 15, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013-2018 2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact....................... 0 0 -6 -6 -6 -1 -1 -1 -1 -1 -1 -19 -24
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 1919
would impose both intergovernmental and private-sector mandates
as defined in UMRA by requiring public and private-sector
entities to comply with standards for monitoring the movement
of prescription drugs through the distribution system.
Effects on the Private Sector: To monitor the movement of
prescription drugs, the bill would impose a number of mandates,
as defined in UMRA, on drug manufacturers, repackagers,
wholesale distributors, dispensers (primarily pharmacies), and
third parties that provide logistic services (TPLs). Such
entities would be required to:
Maintain records of the transaction history
of all drug products for three years,
Only accept or transfer ownership of drug
products with a UID,
Identify suspect or illegitimate drug
products and notify the FDA of such a discovery,
Identify, quarantine, dispose, and maintain
records of illegitimate drug products, and
Pay fees to cover the costs of licensing.
Because existing law in California affects nearly all
manufacturers, repackagers, wholesale distributors, and TPLs,
CBO estimates that the cost of the mandates contained in H.R.
1919 for those private-sector entities would be small. However,
independent pharmacies and pharmacies based in hospitals--
currently unaffected by existing laws in California--would face
new costs to comply with the mandates. According to data from
the National Community Pharmacy Association, roughly 20,000
independent pharmacies operate outside of California, most of
which would incur new costs in complying with the requirements
in H.R. 1919.
The cost of compliance would vary across pharmacies and
would depend on the type of data systems developed by
manufacturers, wholesale distributors, TPLs, and repackagers. A
study by Accenture in 2011 estimated that the cost of complying
with a federal standard for tracing prescription drugs would
cost the average independent pharmacy roughly $84,000 per
pharmacy store in the first year.\2\ Even if the first-year
costs to independent and hospital-based pharmacies that operate
outside of California were half that amount, the costs to
comply with the mandate in that year would exceed $800 million.
Thus, CBO estimates the costs to those pharmacies of complying
with the standards in H.R. 1919 would exceed the threshold
established in UMRA ($150 million in 2013, adjusted annually
for inflation) in at least one of the first five years in which
the mandate would be in effect.
---------------------------------------------------------------------------
\2\``Current Status of Safety of the U.S. Prescription Drug
Distribution System,'' June 2008, Updated for NACDS March 2011,
Accenture.
---------------------------------------------------------------------------
Effects on state, local, and tribal governments: Because
few pharmacies are public entities, CBO estimates that the
intergovernmental costs of the mandates would be small and
below the threshold established in UMRA ($75 million in 2013,
adjusted annually for inflation). The bill also would preempt
state laws that require tracing prescription drugs through the
distribution system. In addition, the legislation would preempt
state licensing laws that govern wholesale drug distributors or
TPLs if those laws are less stringent than the standards
established by the bill. Because they would limit the
application of state law, those preemptions would be
intergovernmental mandates as defined in UMRA; however, they
would impose no duty on states that would result in additional
spending.
Estimate prepared by: Federal Costs: Ellen Werble, Lisa
Ramirez-Branum, and Barbara Edwards; Impact on State, Local,
and Tribal Governments: Lisa Ramirez-Branum; Impact on the
Private Sector: Michael Levine.
Estimate approved by: Holly Harvey, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Duplication of Federal Programs
No provision of H.R. 1919 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting H.R. 1919
specifically directs to be completed 6 specific rule makings
within the meaning of 5 U.S.C. 551.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1: Short Title
Section 1 provides the short title of ``Safeguarding
America's Pharmaceuticals Act of 2013.''
Section 2: Pharmaceutical Distribution Supply Chain
This section would increase the security of the supply
chain by establishing lot-level tracing requirements for
manufacturers, wholesale distributors, pharmacies, and
repackagers based on changes in ownership. These requirements
would be phased in starting on January 1, 2015. Under the
requirements, transaction statements would be passed through
the supply chain so those taking ownership would know where the
drug had been. It also would require the members of the supply
chain, including third-party logistics providers, to undertake
verification and notification activities regarding suspect or
illegitimate products. Further, it would require that members
of the supply chain only transact with registered or licensed
entities. Finally, the section would require manufacturers to
serialize prescription drugs at the unit-level starting in five
years.
Section 3: Enhanced Drug Distribution Security
This section would require the FDA to establish pilot
projects and hold biannual public meetings in order to foster
collaboration with stakeholders regarding moving to unit-level
traceability. The section also would require that the
Government Accountability Office (GAO) and FDA submit reports
to Congress on those same subjects. As part of its report, FDA
would include the findings of a study by a third-party entity
on small dispensers' ability to conduct interoperable tracing
at the unit-level. Finally, it would require FDA to issue a
proposed regulation on unit-level traceabilty in 2027.
Section 4: National Standards for Wholesale Distributors
This section would establish national standards for
wholesale distributors, while continuing State licensing of
wholesale distributors and State fee collection.
Section 5: National Licensure Standards for Third-Party Logistics
Providers
This section would establish third-party logistics provider
licensure standards and allow FDA to charge a user fee. It
would not prevent a State from licensing third-party logistics
providers in accordance with the section.
Section 6: Penalties
This section would establish penalties for violations of
the requirements of the bill to ensure bad actors are held
accountable.
Section 7: Uniform National Policy
This section would preempt, upon enactment, State laws on
tracing drugs through the distribution system, including
California. It also would preempt State laws regarding
standards for wholesale drug distributors and third-party
logistics providers. This preemption would not affect the
authority of States to collect fees from wholesale drug
distributors or third-party logistics providers. In addition,
State programs related to prescription drug monitoring and
controlled substance reporting would not be affected.
Section 8: Electronic Labeling Requirement
This section would allow prescription drug labeling, other
than container or container labels, to be provided by
electronic means to physician, pharmacists, or other healthcare
professionals. The Secretary may exclude drugs subject to
section 503(b)(1) in order to mitigate safety risks.
Physicians, pharmacists, and healthcare professionals may
receive paper labeling by request at no cost to themselves.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FEDERAL FOOD, DRUG, AND COSMETIC ACT
* * * * * * *
CHAPTER III--PROHIBITED ACTS AND PENALTIES
PROHIBITED ACTS
Sec. 301. The following acts and the causing thereof are
hereby prohibited:
(a) * * *
* * * * * * *
(t) The importation of a drug in violation of section
801(d)(1), the sale, purchase, or trade of a drug or drug
sample or the offer to sell, purchase, or trade a drug or drug
sample in violation of section 503(c), the sale, purchase, or
trade of a coupon, the offer to sell, purchase, or trade such a
coupon, or the counterfeiting of such a coupon in violation of
section 503(c)(2), the distribution of a drug sample in
violation of section 503(d) or the failure to otherwise comply
with the requirements of section 503(d), [or the distribution
of drugs in violation of section 503(e) or the failure to
otherwise comply with the requirements of section 503(e)] the
failure to comply with any requirement of section 582, engaging
in the wholesale distribution of a drug in violation of section
583 or the failure to otherwise comply with the requirements of
section 583, or engaging in the activities of a third-party
logistics provider in violation of section 584 or the failure
to otherwise comply with the requirements of section 584.
* * * * * * *
PENALTIES
Sec. 303. (a) * * *
(b)(1) Notwithstanding subsection (a), any person who
violates section 301(t) by--
(A) * * *
* * * * * * *
(D) knowingly distributing drugs in violation of
section [503(e)(2)(A)] 583 or 584,
shall be imprisoned for not more than 10 years or fined not
more than $250,000, or both.
* * * * * * *
CHAPTER V--DRUGS AND DEVICES
Subchapter A--Drugs and Devices
* * * * * * *
MISBRANDED DRUGS AND DEVICES
Sec. 502. A drug or device shall be deemed to be misbranded--
(a) * * *
* * * * * * *
(f) Unless its labeling bears (1) adequate directions for
use; and (2) such adequate warnings against use in those
pathological conditions or by children where its use may be
dangerous to health, or against unsafe dosage or methods or
duration of administration or application, in such manner and
form, as are necessary for the protection of users, except that
where any requirement of clause (1) of this paragraph, as
applied to any drug or device, is not necessary for the
protection of the public health, the Secretary shall promulgate
regulations exempting such drug or device from such
requirement. Required labeling for prescription devices
intended for use in health care facilities or by a health care
professional and required labeling for in vitro diagnostic
devices intended for use by health care professionals or in
blood establishments may be made available solely by electronic
means, provided that the labeling complies with all applicable
requirements of law, and that the manufacturer affords such
users the opportunity to request the labeling in paper form,
and after such request, promptly provides the requested
information without additional cost. Required labeling (other
than immediate container or carton labels) that is intended for
use by a physician, a pharmacist, or another health care
professional, and that provides directions for human use of a
drug subject to section 503(b)(1), may (except as necessary to
mitigate a safety risk, as specified by the Secretary in
regulation) be made available by electronic means instead of
paper form, provided that such labeling complies with all
applicable requirements of law, the manufacturer or
distributor, as applicable, affords health care professionals
and authorized dispensers (as defined in section 581) the
opportunity to request the labeling in paper form, and after
such a request the manufacturer or distributor promptly
provides the requested information without additional cost.
* * * * * * *
(bb) If it is a drug and it fails to bear a prescription drug
product identifier as required by section 582.
EXEMPTIONS AND CONSIDERATION FOR CERTAIN DRUGS, DEVICES, AND BIOLOGICAL
PRODUCTS
Sec. 503. (a) * * *
* * * * * * *
[(e)(1)(A) Each person who is engaged in the wholesale
distribution of a drug subject to subsection (b) and who is not
the manufacturer or an authorized distributor of record of such
drug shall, before each wholesale distribution of such drug
(including each distribution to an authorized distributor of
record or to a retail pharmacy), provide to the person who
receives the drug a statement (in such form and containing such
information as the Secretary may require) identifying each
prior sale, purchase, or trade of such drug (including the date
of the transaction and the names and addresses of all parties
to the transaction).
[(B) Each manufacturer of a drug subject to subsection (b)
shall maintain at its corporate offices a current list of the
authorized distributors of record of such drug.
[(2)(A) No person may engage in the wholesale distribution in
interstate commerce of drugs subject to subsection (b) in a
State unless such person is licensed by the State in accordance
with the guidelines issued under subparagraph (B).
[(B) The Secretary shall by regulation issue guidelines
establishing minimum standards, terms, and conditions for the
licensing of persons to make wholesale distributions in
interstate commerce of drugs subject to subsection (b). Such
guidelines shall prescribe requirements for the storage and
handling of such drugs and for the establishment and
maintenance of records of the distributions of such drugs.
[(3) For the purposes of this subsection and subsection (d)--
] (e) For purposes of subsection (d)--
[(A)] (1) the term ``authorized distributors of
record'' means those distributors with whom a
manufacturer has established an ongoing relationship to
distribute such manufacturer's products, and
[(B)] (2) the term ``wholesale distribution'' means
distribution of drugs subject to subsection (b) to
other than the consumer or patient but does not include
intracompany sales and does not include distributions
of drugs described in subsection (c)(3)(B).
* * * * * * *
Subchapter H--Pharmaceutical Distribution Supply Chain
SEC. 581. DEFINITIONS.
In this subchapter:
(1) Authorized.--The term ``authorized'' means--
(A) in the case of a manufacturer or
repackager, having a valid registration in
accordance with section 510; and
(B) in the case of a wholesale distributor,
third-party logistics provider, or dispenser,
licensed (as defined in this section).
(2) Dispenser.--The term ``dispenser''--
(A) subject to subparagraph (C), means a
retail pharmacy, hospital pharmacy, a group of
chain pharmacies under common ownership and
control, or any other person authorized by law
to dispense or administer prescription drugs,
to the extent such pharmacy, group, or person
does not act as a wholesale distributor;
(B) includes warehouses and distribution
centers under common ownership or control of
entities described in subparagraph (A) that are
members of an affiliated group pursuant to
section 1504(a) of the Internal Revenue Code of
1986, to the extent such warehouses and
distribution centers do not act as a wholesale
distributor; and
(C) does not include a person who only
dispenses prescription drug product to be used
in animals in accordance with section
512(a)(5).
(3) Disposition.--The term ``disposition'', with
respect to a prescription drug product within the
possession and control of an entity--
(A) means the removal of such prescription
drug product, or taking measures to prevent the
introduction of such prescription drug product,
from the pharmaceutical distribution supply
chain; and
(B) may include disposal, return of the
prescription drug product for disposal, or
other appropriate handling and other actions
such as retaining a sample of the prescription
drug product for additional physical
examination or laboratory analysis by a
manufacturer or regulatory or law enforcement
agency.
(4) Distribute or distribution.--The terms
``distribute'' and ``distribution'' mean the sale,
purchase, trade, delivery, handling, or storage of a
prescription drug product.
(5) Illegitimate prescription drug product.--The term
``illegitimate prescription drug product'' means a
prescription drug product which a manufacturer has
confirmed--
(A) is counterfeit, diverted, or stolen;
(B) is intentionally adulterated such that
the prescription drug product would result in
serious adverse health consequences or death to
humans; or
(C) is otherwise unfit for distribution such
that the prescription drug product is
reasonably likely to cause serious adverse
human health consequences or death.
(6) Licensed.--The term ``licensed'' means--
(A) in the case of a wholesale distributor,
having a valid license to make wholesale
distributions consistent with the standards
under section 583;
(B) in the case of a third-party logistics
provider, having a valid license to engage in
the activities of a third-party logistics
provider in accordance with section 584; and
(C) in the case of a dispenser, having a
valid license to dispense prescription drugs
under State law.
(7) Manufacturer.--The term ``manufacturer'' means,
with respect to a prescription drug product--
(A) a person that holds an application
approved under section 505 or a license issued
under section 351 of the Public Health Service
Act for such prescription drug product, or if
such prescription drug product is not the
subject of an approved application or license,
the person who manufactured the prescription
drug product;
(B) a co-licensed partner of the person
described in subparagraph (A) that obtains the
prescription drug product directly from the
person described in such subparagraph; or
(C) a person that--
(i) is a member of an affiliated
group (as defined in section 1504(a) of
the Internal Revenue Code of 1986) to
which a person described in
subparagraph (A) or (B) is also a
member; and
(ii) receives the prescription drug
product directly from a person
described in subparagraph (A) or (B).
(8) Package.--
(A) In general.--The term ``package'' means
the smallest individual saleable unit of
prescription drug product for distribution in
interstate commerce by a manufacturer or
repackager that is intended by the manufacturer
for ultimate sale to the dispenser of such
prescription drug product.
(B) Individual saleable unit.--The term
``individual saleable unit'' means the smallest
container of prescription drug product
introduced into interstate commerce by the
manufacturer or repackager that is intended by
the manufacturer for individual sale to a
dispenser.
(9) Prescription drug.--The term ``prescription
drug'' means a drug for human use subject to section
503(b)(1).
(10) Prescription drug product.--The term
``prescription drug product'' means a prescription drug
in a finished dosage form for administration to a
patient without substantial further manufacturing (such
as capsules, tablets, and lyophilized prescription drug
products before reconstitution).
(11) Prescription drug product identifier.--The term
``prescription drug product identifier'' means a
standardized graphic that--
(A) includes the standardized numerical
identifier, lot number, and expiration date of
a prescription drug product; and
(B) is in both human-readable form and on a
machine-readable data carrier that conforms to
the standards developed by a widely recognized
international standards development
organization.
(12) Quarantine.--The term ``quarantine'' means to
store or identify a product, for the purpose of
preventing distribution or transfer of the product, in
a physically separate area clearly identified for such
use, or through use of other procedures such as
automated designation.
(13) Repackager.--The term ``repackager'' means a
person who owns or operates an establishment that
repacks and relabels a prescription drug product or
package for further sale or distribution.
(14) Return.--The term ``return'' means providing
prescription drug product to the authorized trading
partner or trading partners from which such
prescription drug product was purchased or received, or
to a returns processor for handling of such
prescription drug product.
(15) Returns processor.--The terms ``returns
processor'' mean a person who owns or operates an
establishment that provides for the disposition of or
otherwise processes saleable and nonsaleable
prescription drug product received from an authorized
trading partner such that the prescription drug product
may be processed for credit to the purchaser,
manufacturer, seller, or disposed of for no further
distribution.
(16) Specific patient need.--The term ``specific
patient need''--
(A) means with respect to the transfer of a
prescription drug product from one pharmacy to
another, to fill a prescription for an
identified patient; and
(B) does not include the transfer of a
prescription drug product from one pharmacy to
another for the purpose of increasing or
replenishing stock in anticipation of a
potential need.
(17) Standardized numerical identifier.--The term
``standardized numerical identifier'' means a set of
numbers or characters that--
(A) is used to uniquely identify each package
or homogenous case of the prescription drug
product; and
(B) is composed of the National Drug Code
that corresponds to the specific prescription
drug product (including the particular package
configuration) combined with a unique
alphanumeric serial number of up to 20
characters.
(18) Suspect prescription drug product.--The term
``suspect prescription drug product'' means a
prescription drug product for which there is reason to
believe that such prescription drug product--
(A) is potentially counterfeit, diverted, or
stolen;
(B) is potentially intentionally adulterated
such that the prescription drug product would
result in serious adverse health consequences
or death to humans; or
(C) appears otherwise unfit for distribution
such that the prescription drug product would
result in serious adverse health consequences
or death to humans.
(19) Third-party logistics provider.--The term
``third-party logistics provider'' means an entity that
provides or coordinates warehousing, distribution, or
other logistics services of a prescription drug product
in interstate commerce on behalf of a manufacturer,
wholesale distributor, or dispenser of a prescription
drug product, but does not take ownership of the
prescription drug product, nor have responsibility to
direct the sale or disposition of, the prescription
drug product.
(20) Trading partner.--The term ``trading partner''
means--
(A) a manufacturer, repackager, wholesale
distributor, or dispenser from whom a
manufacturer, repackager, wholesale
distributor, or dispenser accepts ownership of
a prescription drug product or to whom a
manufacturer, repackager, wholesale
distributor, or dispenser transfers ownership
of a prescription drug product; or
(B) a third-party logistics provider from
whom a manufacturer, repackager, wholesale
distributor, or dispenser accepts possession of
a prescription drug product or to whom a
manufacturer, repackager, wholesale
distributor, or dispenser transfers possession
of a prescription drug product.
(21) Transaction.--
(A) In general.--The term ``transaction''
means the transfer in interstate commerce of
prescription drug product between persons in
which a change of ownership occurs.
(B) Exemptions.--The term ``transaction''
does not include--
(i) intracompany distribution of any
prescription drug product, including
between members of an affiliated group
(as defined in section 1504(a) of the
Internal Revenue Code of 1986);
(ii) the distribution of a
prescription drug product among
hospitals or other health care entities
that are under common control;
(iii) the distribution of a
prescription drug product for emergency
medical reasons including a public
health emergency declaration pursuant
to section 319 of the Public Health
Service Act, except that a drug
shortage not caused by a public health
emergency shall not constitute an
emergency medical reason;
(iv) the dispensing of a prescription
drug product pursuant to a valid
prescription executed in accordance
with section 503(b)(1);
(v) the distribution of prescription
drug product samples by a manufacturer
or a licensed wholesale distributor in
accordance with section 503(d);
(vi) the distribution of blood or
blood components intended for
transfusion;
(vii) the distribution of minimal
quantities of prescription drug product
by a licensed retail pharmacy to a
licensed practitioner for office use;
(viii) the distribution of a
prescription drug product by a
charitable organization to a nonprofit
affiliate of the organization to the
extent otherwise permitted by law;
(ix) the distribution of a
prescription drug product pursuant to
the sale or merger of a pharmacy or
pharmacies or a wholesale distributor
or wholesale distributors, except that
any records required to be maintained
for the prescription drug product shall
be transferred to the new owner of the
pharmacy or pharmacies or wholesale
distributor or wholesale distributors;
(x) the dispensing of a prescription
drug product approved under section
512(b);
(xi) the transfer of prescription
drug products to or from any facility
that is licensed by the Nuclear
Regulatory Commission or by a State
pursuant to an agreement with such
Commission under section 274 of the
Atomic Energy Act of 1954 (42 U.S.C.
2021);
(xii) the distribution of a
combination product that consists of--
(I) a product comprised of
two or more components that are
each a drug, biological
product, or device and that are
physically, chemically, or
otherwise combined or mixed and
produced as a single entity;
(II) two or more separate
products packaged together in a
single package or as a unit and
comprised of a drug and device
or a device and biological
product; or
(III) two or more finished
devices plus one or more drug
or biological products which
are packaged together in a
medical convenience kit
described in clause (xiv);
(xiii) the distribution of a medical
convenience kit which is a collection
of finished products (consisting of
devices or drugs) assembled in kit form
strictly for the convenience of the
purchaser or user if--
(I) the medical convenience
kit is assembled in an
establishment that is
registered with the Food and
Drug Administration as a
medical device manufacturer;
(II) the person who
manufacturers the medical
convenience kit purchased the
prescription drug product
directly from the manufacturer
or from a wholesale distributor
that purchased the prescription
drug product directly from the
manufacturer;
(III) the person who
manufacturers the medical
convenience kit does not alter
the primary container or label
of the prescription drug
product as purchased from the
manufacturer or wholesale
distributor;
(IV) the medical convenience
kit does not contain a
controlled substance (as
defined in section 102 of the
Controlled Substances Act); and
(V) the prescription drug
products contained in the
medical convenience kit are--
(aa) intravenous
solutions intended for
the replenishment of
fluids and
electrolytes;
(bb) drugs intended
to maintain the
equilibrium of water
and minerals in the
body;
(cc) drugs intended
for irrigation or
reconstitution;
(dd) anesthetics;
(ee) anticoagulants;
(ff) vasopressors; or
(gg)
sympathicomimetics;
(xiv) the distribution of an
intravenous prescription drug product
that, by its formulation, is intended
for the replenishment of fluids and
electrolytes (such as sodium, chloride,
and potassium) or calories (such as
dextrose and amino acids);
(xv) the distribution of an
intravenous prescription drug product
used to maintain the equilibrium of
water and minerals in the body, such as
dialysis solutions;
(xvi) the distribution of a
prescription drug product that is
intended for irrigation or
reconstitution, or sterile water,
whether intended for such purposes or
for injection;
(xvii) the distribution of compressed
medical gas; or
(xviii)(I) the distribution of a
product by a dispenser, or a wholesale
distributor acting at the direction of
the dispenser, to a repackager
registered under section 510 for the
purpose of repackaging the drug for use
by that dispenser or another health
care entity that is under the
dispenser's ownership or control, so
long as the dispenser retains ownership
of the prescription drug product; and
(II) the saleable or nonsaleable
return by such repackager of such
prescription drug product.
(C) Compressed medical gas.--For purposes of
subparagraph (B)(xviii), the term ``compressed
medical gas'' means any substance in its
gaseous or cryogenic liquid form that meets
medical purity standards and has application in
a medical or homecare environment, including
oxygen and nitrous oxide.
(22) Transaction history.--The term ``transaction
history'' means a statement that--
(A) includes the transaction information for
each transaction conducted with respect to a
prescription drug product beginning with the
manufacturer or initial purchase distributor
for each prior transaction going back to the
manufacturer of the prescription drug product
or to the initial purchase distributor; and
(B) is in paper or electronic form.
(23) Transaction information.--The term ``transaction
information'' means--
(A) the proprietary or established name or
names of the prescription drug product;
(B) the strength and dosage form of the
prescription drug product;
(C) the National Drug Code number of the
prescription drug product;
(D) the container size;
(E) the number of containers;
(F) the lot number of the prescription drug
product;
(G) the date of the transaction;
(H) the business name and address of the
person from whom ownership is being
transferred; and
(I) the business name and address of the
person to whom ownership is being transferred.
(24) Transaction statement.--The ``transaction
statement'' is a statement, which states that the
manufacturer, repackager, wholesale distributor, third-
party logistics provider, or dispenser transferring
ownership in a transaction--
(A) is authorized;
(B) received transaction information and a
transaction statement as required under section
582 from the prior owner of the prescription
drug product;
(C) did not knowingly and intentionally ship
an illegitimate prescription drug product;
(D) did not knowingly and intentionally
provide false transaction information; and
(E) did not knowingly and intentionally alter
the transaction history.
(25) Verification and verify.--The terms
``verification'' and ``verify''--
(A) mean determining whether the prescription
drug product identifier affixed to, or
imprinted upon, a package or homogeneous case
of the prescription drug product corresponds to
the standardized numerical identifier or lot
number, and expiration date assigned to the
prescription drug product by the manufacturer
or the repackager, as applicable; and
(B) include making the determination under
subparagraph (A) using human-readable or
machine-readable methods.
(26) Wholesale distributor.--The term ``wholesale
distributor''--
(A) means a person engaged in wholesale
distribution (as defined in section 583); and
(B) excludes--
(i) a manufacturer, a co-licensed
partner of a manufacturer, or a third-
party logistics provider, or a
dispenser who does not engage in such
wholesale distribution;
(ii) a repackager engaged in such
wholesale distribution; or
(iii) the distribution of
prescription drug product or an offer
to distribute prescription drug product
by an authorized repackager that has
taken ownership or possession of the
prescription drug product and repacked
the prescription drug product in
accordance with the requirements of
section 582(e).
SEC. 582. REQUIREMENTS.
(a) In General.--
(1) Compliance required.--An entity that is a
manufacturer, repackager, wholesale distributor, third-
party logistics provider, or dispenser shall comply
with the requirements of this section. If an entity
meets the definition of more than one of the entities
referred to in the preceding sentence, such entity
shall comply with all applicable requirements of this
section, but shall not be required to comply with
duplicative requirements.
(2) Standards.--The Secretary shall, in consultation
with other appropriate Federal officials,
manufacturers, repackagers, wholesale distributors,
third-party logistics providers, and dispensers,
establish, by regulation, standards for the exchange of
transaction information for purposes of complying with
this section. The standards established under this
paragraph shall be in accordance with a form developed
by a widely recognized international standards
development organization. In establishing such
standards, the Secretary shall consider the feasibility
of establishing standardized documentation to be used
by all members of the pharmaceutical distribution
supply chain to convey the transaction history and
transaction statement to the subsequent owner of a
prescription drug product. The Secretary shall publish
such standards not later than 180 days after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013.
(3) Waivers, exceptions, and exemptions.--Not later
than one year after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of 2013, the
Secretary shall promulgate a regulation to--
(A) establish a process by which the
Secretary may grant, at the request of an
authorized manufacturer, repackager, wholesale
distributor, or dispenser, a waiver from any of
the requirements of this section--
(i) if the Secretary determines that
such requirements would result in an
undue economic hardship; or
(ii) for emergency medical reasons,
including a public health emergency
declaration pursuant to section 319 of
the Public Health Service Act;
(B) establish a process, with respect to the
prescription drug product identifier
requirement under paragraph (2) of subsections
(b), (c), (d), and (e) through which--
(i) a manufacturer or repackager may
request a waiver with respect to
prescription drug products that are
packaged in a container too small or
otherwise unable to accommodate a label
with sufficient space to bear the
information required for compliance
with such requirement; and
(ii) the Secretary determines whether
to waive such requirement; and
(C) establish a process by which the
Secretary may add the prescription drug
products or transactions that are exempt from
the requirements of this section.
(4) Grandfathered persons and prescription drug
products.--
(A) In general.--Not later than one year
after the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of
2013, the Secretary shall specify, by
regulation, whether and under what
circumstances the prescription drug product
identifier requirement under paragraph (2) of
subsections (b), (c), (d), and (e) shall apply
to a prescription drug product that is in the
supply chain or in a manufacturer's inventory
on the date of the enactment of the
Safeguarding America's Pharmaceuticals Act of
2013.
(B) Third-party logistics provider
licenses.--Until the date that is 1 year after
the effective date of the third-party logistics
provider licensing requirements under section
584, a third-party logistics provider shall be
considered ``licensed'' under section 581(6)(B)
unless the Secretary has made a finding that
the third-party logistics provider does not
utilize good handling and distribution
practices and publishes notice thereof.
(C) Label changes.--Changes made to package
labels solely to incorporate the prescription
drug product identifier may be submitted to the
Secretary in the annual report of an
establishment, in accordance with section
314.70(d) of chapter 21, Code of Federal
Regulations (or any successor regulation).
(b) Manufacturer Requirements.--
(1) Prescription drug product tracing.--
(A) In general.--Beginning not later than
January 1, 2015, a manufacturer shall--
(i) prior to, or at the time of, each
transaction in which such manufacturer
transfers ownership of a prescription
drug product, provide the subsequent
owner with the transaction history and
a transaction statement; and
(ii) maintain the transaction
information for each such transaction
for not less than 3 years after the
date of the transaction.
(B) Requests for information.--Upon a request
by the Secretary or other appropriate Federal
or State official, in the event of a recall or
for the purpose of investigating a suspect
prescription drug product or an illegitimate
prescription drug product, a manufacturer
shall, not later than 2 business days after
receiving the request or in such reasonable
time as determined by the Secretary, provide to
the Secretary or other official, the applicable
transaction history and transaction statement
for the prescription drug product.
(2) Prescription drug product identifier.--Beginning
not later than 5 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, a manufacturer shall affix or imprint a
prescription drug product identifier on each package
and homogenous case of a prescription drug product
intended to be introduced in a transaction. Such
manufacturer shall maintain the information in the
prescription drug product identifier for such
prescription drug product for not less than 3 years
after the date of the transaction.
(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a manufacturer shall ensure that
each of its trading partners is authorized.
(4) List of authorized distributors of record.--
Beginning not later than January 1, 2015, each
manufacturer of a prescription drug shall--
(A) maintain a list of the authorized
distributors of record of such drug at the
corporate offices of such manufacturer;
(B) make such list publicly available,
including placement on the Internet Website of
such manufacturer; and
(C) update such list not less than once per
quarter.
(5) Verification.--Beginning not later than January
1, 2015, a manufacturer shall implement systems and
processes to enable the manufacturer to comply with the
following requirements:
(A) Suspect prescription drug product.--
(i) In general.--Upon making a
determination that a prescription drug
product in the possession or control of
the manufacturer is a suspect
prescription drug product, or upon
receiving a request for verification
from the Secretary that a prescription
drug product within the possession or
control of a manufacturer is a suspect
prescription drug product, a
manufacturer shall promptly conduct an
investigation in coordination with
trading partners, as applicable, to
determine whether the prescription drug
product is an illegitimate prescription
drug product. Beginning not later than
5 years after the date of the enactment
of the Safeguarding America's
Pharmaceuticals Act of 2013, such
investigation shall include--
(I) verifying the
prescription drug product at
the package level;
(II) validating any
applicable transaction history
in the possession of the
manufacturer; and
(III) otherwise investigating
to determine whether the
prescription drug product is an
illegitimate prescription drug
product.
(ii) Cleared prescription drug
product.--If the manufacturer
determines that a suspect prescription
drug product is not an illegitimate
prescription drug product, the
manufacturer shall promptly notify the
Secretary of such determination and
such prescription drug product may be
further distributed.
(iii) Records.--A manufacturer shall
keep records of its investigation of a
suspect prescription drug product for
not less than 3 years after the
conclusion of the investigation.
(B) Illegitimate prescription drug product.--
(i) In general.--Upon determining
that a prescription drug product in the
possession or control of a manufacturer
is an illegitimate prescription drug
product, the manufacturer shall--
(I) quarantine such
prescription drug product from
prescription drug product
intended for distribution; and
(II) provide for the
disposition of the illegitimate
prescription drug product.
(ii) Trading partner.--Upon
determining that a prescription drug
product in the possession or control of
a trading partner is an illegitimate
prescription drug product, the
manufacturer shall take reasonable
steps to assist a trading partner to
provide for the disposition of the
illegitimate prescription drug product.
(iii) Making a notification.--Upon
determining that a prescription drug
product in the possession or control of
the manufacturer is an illegitimate
prescription drug product, the
manufacturer shall notify the Secretary
of such determination not later than 24
hours after making such determination.
The Secretary shall determine whether
additional trading partner notification
is appropriate.
(iv) Responding to a notification.--
Upon the receipt of a notification from
the Secretary that a determination has
been made that a prescription drug
product is an illegitimate prescription
drug product, a manufacturer shall--
(I) identify all illegitimate
prescription drug products that
are subject to such
notification and in the
possession or control of the
manufacturer, including any
prescription drug product that
is subsequently received; and
(II) perform the activities
described in clause (i).
(v) Records.--A manufacturer shall
keep records of the disposition of an
illegitimate prescription drug product
for not less than 3 years after the
conclusion of the disposition.
(C) Electronic database.--A manufacturer may
satisfy the requirements of this paragraph
through the use of a secure electronic database
developed and operated by the manufacturer or
another entity. The owner of such database
shall establish the requirements and processes
to respond to requests and may provide for data
access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database
shall not relieve a manufacturer of the
requirement under this paragraph to respond to
a verification request submitted by means other
than a secure electronic database.
(D) Returned prescription drug product.--
Beginning not later than 5 years after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, upon receipt of a
returned prescription drug product that the
manufacturer intends to further distribute,
before further distributing such prescription
drug product, the manufacturer shall--
(i) verify the prescription drug
product identifier for each sealed
homogeneous case of such prescription
drug product; or
(ii) if such prescription drug
product is not in a sealed homogeneous
case, verify the prescription drug
product identifier on each package.
(c) Wholesale Distributor Requirements.--
(1) Prescription drug product tracing.--
(A) In general.--Beginning not later than
April 1, 2015, a wholesale distributor shall--
(i) not accept ownership of a
prescription drug product unless the
previous owner prior to, or at the time
of, the transaction provides the
applicable transaction history and a
transaction statement for the
prescription drug product;
(ii) prior to, or at the time of,
each transaction in which the wholesale
distributor transfers ownership of a
prescription drug product--
(I) in the case that the
wholesale distributor purchased
the prescription drug product
directly from the manufacturer,
provide the subsequent owner
with transaction history and a
transaction statement for the
prescription drug product; or
(II) in the case that the
wholesale distributor did not
purchase the prescription drug
product directly from the
manufacturer, the exclusive
distributor of the
manufacturer, or a repackager
that purchased directly from
the manufacturer, provide the
subsequent owner with
transaction history beginning
with the wholesale distributor
that did purchase the product
directly from the manufacturer,
the exclusive distributor of
the manufacturer, or a
repackager that purchased
directly from the manufacturer;
(iii) notwithstanding clause (ii), if
the wholesale distributor purchased the
prescription drug product directly from
the manufacturer, its exclusive
distributor, or a repackager that
purchased directly from the
manufacturer or its authorized
distributor of record--
(I) provide an initial
purchase transaction statement
on the invoice to the customer,
stating that the wholesale
distributor purchased the
prescription drug product
package directly from the
manufacturer, exclusive
distributor, or repackager;
(II) make available to the
immediate subsequent recipient
of such prescription drug
product the information
required under clause (ii)
through any combination of
self-generated paper,
electronic data, or
manufacturer-provided
information on the prescription
drug product package; and
(III) for purposes of
subclauses (I) and (II), need
not include any transactions
occurring before the transfer
of the prescription drug
product to the wholesale
distributor; and
(iv) maintain the transaction
information for each transaction
described in clauses (i) and (ii) for
not less than 3 years after the
transaction.
(B) Returns exception.--
(i) Saleable returns.--
Notwithstanding subparagraph (A), a
wholesale distributor may--
(I) accept returned
prescription drug product
without a transaction history
from a dispenser or repackager;
and
(II) distribute such returned
prescription drug product with
a transaction history that
begins with the wholesale
distributor that so accepted
the returned product.
(ii) Nonsaleable returns.--A
wholesale distributor may return a
nonsaleable prescription drug to the
manufacturer or repackager, to the
wholesale distributor from whom such
prescription drug was purchased, or to
a person acting on behalf of such a
person, including a returns processor,
without providing the information
required under subparagraph (A).
(C) Requests for information.--Upon a request
by the Secretary or other appropriate Federal
or State official, in the event of a recall or
for the purpose of investigating a suspect
prescription drug product or an illegitimate
prescription drug product a wholesale
distributor shall, not later than 2 business
days after receiving the request or in such
other reasonable time as determined by the
Secretary, provide the applicable transaction
history and transaction statements for the
prescription drug product.
(2) Prescription drug product identifier.--Beginning
not later than 7 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, a wholesale distributor may engage in
transactions involving a prescription drug product only
if such prescription drug product is encoded with a
prescription drug product identifier, except as
provided in subsection (a)(4).
(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a wholesale distributor shall
ensure that each of its trading partners is authorized.
(4) Verification.--Beginning not later than April 1,
2015, a wholesale distributor shall implement systems
to enable the wholesale distributor to comply with the
following requirements:
(A) Suspect prescription drug product.--
(i) In general.--Upon making a
determination that a prescription drug
product in the possession or control of
the wholesale distributor is a suspect
prescription drug product, or upon
receiving a request for verification
from the Secretary that a prescription
drug product within the possession or
control of a wholesale distributor is a
suspect prescription drug product, a
wholesale distributor shall promptly
conduct an investigation to determine
whether the prescription drug product
is an illegitimate prescription drug
product. Beginning not later than 7
years after the date of the enactment
of the Safeguarding America's
Pharmaceuticals Act of 2013, such
investigation shall include--
(I) verifying a package of
the prescription drug product;
(II) validating any
applicable transaction history
in the possession of the
wholesale distributor; and
(III) otherwise investigating
to determine whether the
prescription drug product is an
illegitimate prescription drug
product.
(ii) Cleared prescription drug
product.--If the wholesale distributor
determines that a suspect prescription
drug product is not an illegitimate
prescription drug product, the
wholesale distributor shall promptly
notify the Secretary of such
determination and such prescription
drug product may be further
distributed.
(iii) Records.--A wholesale
distributor shall keep records of its
investigation of a suspect prescription
drug product for not less than 3 years
after the conclusion of the
investigation.
(B) Illegitimate prescription drug product.--
(i) In general.--Upon receiving
notice that a manufacturer of a
prescription drug product has
determined that a prescription drug
product in the possession or control of
a wholesale distributor is an
illegitimate prescription drug product,
the wholesale distributor shall--
(I) quarantine such
prescription drug product
within the possession or
control of the wholesale
distributor from prescription
drug product intended for
distribution; and
(II) provide for the
disposition of the illegitimate
prescription drug product
within the possession or
control of the wholesale
distributor.
(ii) Trading partner.--Upon
determining that a prescription drug
product in the possession or control of
a trading partner is an illegitimate
prescription drug product, the
wholesale distributor shall take
reasonable steps to assist a trading
partner to provide for the disposition
of the illegitimate prescription drug
product.
(iii) Making a notification.--Upon
determining that a prescription drug
product in the possession or control of
the wholesale distributor is an
illegitimate prescription drug product,
the wholesale distributor shall notify
the Secretary of such determination not
later than 24 hours after making such
determination. The Secretary shall
determine whether additional trading
partner notification is appropriate.
(iv) Responding to a notification.--
Upon the receipt of a notification from
the Secretary that a determination has
been made that a prescription drug
product is an illegitimate prescription
drug product, a wholesale distributor
shall--
(I) identify all illegitimate
prescription drug product
subject to such notification
that is in the possession or
control of the wholesale
distributor, including any
prescription drug product that
is subsequently received; and
(II) perform the activities
described in clause (i).
(v) Records.--A wholesale distributor
shall keep records of the disposition
of an illegitimate prescription drug
product for not less than 3 years after
the conclusion of the disposition.
(C) Electronic database.--A wholesale
distributor may satisfy the requirements of
this paragraph through the use of a secure
electronic database developed and operated by
the manufacturer or another entity. The owner
of such database shall establish the
requirements and processes to respond to
requests and may provide for data access to
other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database
shall not relieve a wholesale distributor of
the requirement under this paragraph to respond
to a verification request submitted by means
other than a secure electronic database.
(D) Returned prescription drug product.--
Beginning not later than 7 years after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, upon receipt of a
returned prescription drug product that the
wholesale distributor intends to further
distribute, before further distributing such
prescription drug product, the wholesale
distributor shall--
(i) verify the prescription drug
product identifier for each sealed
homogeneous case of such prescription
drug product; or
(ii) if such prescription drug
product is not in a sealed homogeneous
case, verify the prescription drug
product identifier on each package.
(d) Dispenser Requirements.--
(1) Prescription drug product tracing.--
(A) In general.--Beginning not later than
July 1, 2015, a dispenser--
(i) shall not accept ownership of a
prescription drug product, unless the
previous owner prior to, or at the time
of, the transaction, provides
transaction history and a transaction
statement;
(ii) prior to, or at the time of,
each transaction in which the dispenser
transfers ownership of a prescription
drug product (but not including
dispensing to a patient or returns)
shall provide the subsequent owner with
transaction history and a transaction
statement for the prescription drug
product, except that the requirements
of this clause shall not apply to sales
by a dispenser to another dispenser to
fulfill a specific patient need; and
(iii) shall maintain transaction
information for a period of not less
than 3 years after the date of the
transaction.
(B) Agreements with third parties.--A
dispenser may enter into a written agreement
with a third party, including an authorized
wholesale distributor, under which the third
party confidentially maintains the transaction
information required to be maintained under
this subsection on behalf of the dispenser. If
a dispenser enters into such an agreement, the
dispenser shall maintain a copy of the written
agreement.
(C) Returns exception.--
(i) Saleable returns.--
Notwithstanding subparagraph (A)(ii), a
dispenser may return prescription drug
product to the trading partner from
which the dispenser obtained the
prescription drug product without
providing the information required
under such subparagraph.
(ii) Nonsaleable returns.--
Notwithstanding subparagraph (A)(ii), a
dispenser may return a nonsaleable
prescription drug to the manufacturer
or repackager, to the wholesale
distributor from whom such prescription
drug was purchased, to a returns
processor, or to a person acting on
behalf of such persons without
providing the information required
under such subparagraph.
(D) Requests for information.--Upon a request
by the Secretary or other appropriate Federal
or State official, in the event of a recall or
for the purpose of investigating a suspect
prescription drug product or an illegitimate
prescription drug product, a dispenser shall,
not later than 2 business days after receiving
the request or in another such reasonable time
as determined by the Secretary, provide lot
level transaction information.
(2) Prescription drug product identifier.--Beginning
not later than 8 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, a dispenser may engage in transactions involving
a prescription drug product only if such prescription
drug product is encoded with a prescription drug
product identifier, except as provided in subsection
(a)(4).
(3) Authorized trading partners.--Beginning not later
than January 1, 2015, a dispenser shall ensure that
each of its trading partners is authorized.
(4) Verification.--Beginning not later than January
1, 2015, a dispenser shall implement systems to enable
the dispenser to comply with the following
requirements:
(A) Suspect prescription drug product.--
(i) In general.--Upon making a
determination that a prescription drug
product in the possession or control of
the dispenser is a suspect prescription
drug product, or upon receiving a
request for verification from the
Secretary that a prescription drug
product within the possession or
control of a dispenser is a suspect
prescription drug product, a dispenser
shall promptly conduct an investigation
to determine whether the prescription
drug product is an illegitimate
prescription drug product. Such
investigation shall include--
(I) verifying whether the lot
number of a suspect
prescription drug product
corresponds with the lot number
for such prescription drug
product;
(II) beginning 8 years after
the date of the enactment of
the Safeguarding America's
Pharmaceuticals Act of 2013,
verifying that the product
identifier of at least 3
packages or 10 percent of such
suspect prescription drug
product, whichever is greater,
or all packages, if there are
fewer than 3, corresponds with
the prescription drug product
identifier for such product;
(III) validating any
applicable transaction history
in the possession of the
dispenser; and
(IV) otherwise investigating
to determine whether the
prescription drug product is an
illegitimate prescription drug
product.
(ii) Cleared prescription drug
product.--If the dispenser makes the
determination that a suspect
prescription drug product is not an
illegitimate prescription drug product,
the dispenser shall promptly notify the
Secretary of such determination and
such prescription drug product may be
further dispensed.
(iii) Records.--A dispenser shall
keep records of its investigation of a
suspect prescription drug product for
not less than 3 years after the
conclusion of the investigation.
(B) Illegitimate prescription drug product.--
(i) In general.--Upon receiving
notice that a manufacturer of a
prescription drug product has
determined that a prescription drug
product in the possession or control of
a dispenser is an illegitimate
prescription drug product, the
dispenser shall--
(I) quarantine such
prescription drug product
within the possession or
control of the dispenser from
prescription drug product
intended for distribution; and
(II) provide for the
disposition of the illegitimate
prescription drug product
within the possession or
control of the dispenser.
(ii) Trading partners.--Upon
determining that a prescription drug
product in the possession or control of
a trading partner is an illegitimate
prescription drug product, the
dispenser shall take reasonable steps
to assist a trading partner to provide
for the disposition of the illegitimate
prescription drug product.
(iii) Making a notification.--Upon
determining that a prescription drug
product in the possession or control of
the dispenser is an illegitimate
prescription drug product, the
dispenser shall notify the Secretary of
such determination not later than 24
hours after making such determination.
The Secretary shall determine whether
additional trading partner notification
is appropriate.
(iv) Responding to a notification.--
Upon the receipt of a notification from
the Secretary that a determination has
been made that a prescription drug
product is an illegitimate prescription
drug product, a dispenser shall--
(I) identify all illegitimate
prescription drug products that
are subject to such
notification and in the
possession or control of the
dispenser, including any
prescription drug product that
is subsequently received; and
(II) perform the activities
described in clause (i).
(v) Records.--A dispenser shall keep
records of the disposition of an
illegitimate prescription drug product
for not less than 3 years after the
conclusion of the disposition.
(C) Electronic database.--A dispenser may
satisfy the requirements of this paragraph
through the use of a secure electronic database
developed and operated by the manufacturer or
another entity. The owner of such database
shall establish the requirements and processes
to enable responding to requests and may
provide for data access to other members of the
pharmaceutical distribution supply chain, as
appropriate. The development and operation of
such a database shall not relieve a dispenser
of the requirement under this paragraph to
respond to a verification request submitted by
means other than a secure electronic database.
(e) Repackager Requirements.--
(1) Prescription drug product tracing.--
(A) In general.--Beginning not later than
April 1, 2015, with respect to a prescription
drug product received by a repackager from a
wholesale distributor, and beginning not later
than January 1, 2015, with respect to any other
prescription drug product, a repackager shall--
(i) not accept ownership of a
prescription drug product unless the
previous owner, prior to, or at the
time of, the transaction, provides
transaction history and a transaction
statement for the prescription drug
product;
(ii) prior to, or at the time of,
each transaction in which the
repackager transfers ownership of a
prescription drug product, provide the
subsequent owner with transaction
history and a transaction statement;
(iii) maintain the transaction
information for each transaction
described in clause (i) or (ii) for not
less than 3 years after the
transaction; and
(iv) maintain records that allow the
repackager to associate the
prescription drug product identifier
the repackager affixes or imprints with
the prescription drug product
identifier assigned by the original
manufacturer of the prescription drug
product.
(B) Nonsaleable returns.--Notwithstanding
subparagraph (A)(ii), a repackager may return
prescription drug product to the trading
partner from whom the repackager obtained the
prescription drug product without providing the
information required under such subparagraph.
(C) Requests for information.--Upon a request
by the Secretary or other appropriate Federal
or State official, in the event of a recall or
for the purpose of investigating a suspect
prescription drug product or an illegitimate
prescription drug product, a repackager shall,
not later than 2 business days after receiving
the request or in such other reasonable time as
determined by the Secretary, provide the
applicable transaction history and transaction
statement for the prescription drug product.
(2) Prescription drug product identifier.--Beginning
not later than 6 years after the date of the enactment
of the Safeguarding America's Pharmaceuticals Act of
2013, a repackager--
(A) shall affix or imprint a prescription
drug product identifier to each package and
homogenous case of prescription drug product
intended to be introduced in a transaction;
(B) shall maintain the prescription drug
product identifier for such prescription drug
product for not less than 3 years after the
date of the transaction; and
(C) may engage in transactions involving a
prescription drug product only if such
prescription drug product is encoded with a
prescription drug product identifier except as
provided in subsection (a)(4).
(3) Authorized trading partners.--Beginning on
January 1, 2015, a repackager shall ensure that each of
its trading partners is authorized.
(4) Verification.--Beginning not later than January
1, 2015, a repackager shall implement systems to enable
the repackager to comply with the following
requirements:
(A) Suspect prescription drug product.--
(i) In general.--Upon making a
determination that a prescription drug
product in the possession or control of
the repackager is a suspect
prescription drug product, or upon
receiving a request for verification
from the Secretary that a prescription
drug product within the possession or
control of a repackager is a suspect
prescription drug product, a repackager
shall promptly conduct an investigation
to determine whether the prescription
drug product is an illegitimate
prescription drug product, including--
(I) beginning not later than
6 years after the date of the
enactment of the Safeguarding
America's Pharmaceuticals Act
of 2013, verifying the
prescription drug product at
the package level;
(II) validating any
applicable transaction
information in the possession
of the repackager; and
(III) otherwise investigating
to determine whether the
prescription drug product is an
illegitimate prescription drug
product.
(ii) Cleared prescription drug
product.--If the repackager determines
that a suspect prescription drug
product is not an illegitimate
prescription drug product, the
repackager shall promptly notify the
Secretary of such determination and
such prescription drug product may be
further distributed.
(iii) Records.--A repackager shall
keep records of its investigation of a
suspect prescription drug product for
not less than 3 years after the
conclusion of the investigation.
(B) Illegitimate prescription drug product.--
(i) In general.--Upon receiving
notice that a manufacturer of a
prescription drug product has
determined that a prescription drug
product in the possession or control of
a repackager is an illegitimate
prescription drug product, the
repackager shall--
(I) quarantine such
prescription drug product
within the possession or
control of the repackager from
prescription drug product
intended for distribution; and
(II) provide for the
disposition of the illegitimate
prescription drug product
within the possession or
control of the repackager.
(ii) Trading partner.--Upon
determining that a prescription drug
product in the possession or control of
a trading partner is an illegitimate
prescription drug product, the
repackagers shall take reasonable steps
to assist the trading partner to
provide for the disposition of the
illegitimate prescription drug product.
(iii) Making a notification.--Upon
determining that a prescription drug
product in the possession or control of
the repackager is an illegitimate
prescription drug product, the
repackager shall notify the Secretary
of such determination not later than 24
hours after making such determination.
The Secretary shall determine whether
additional trading partner notification
is appropriate.
(iv) Responding to a notification.--
Upon the receipt of a notification from
the Secretary that a determination has
been made that a prescription drug
product is an illegitimate prescription
drug product, a repackager shall--
(I) identify all illegitimate
prescription drug products that
are subject to such
notification and in the
possession or control of the
repackager, including any
prescription drug product that
is subsequently received; and
(II) perform the activities
described in clause (i).
(v) Records.--A repackager shall keep
records of the disposition of an
illegitimate prescription drug product
for not less than 3 years after the
conclusion of the disposition.
(C) Electronic database.--A repackager may
satisfy the requirements of this paragraph
through the use of a secure electronic database
developed and operated by the manufacturer or
another entity. The owner of such database
shall establish the requirements and processes
to respond to requests and may provide for data
access to other members of the pharmaceutical
distribution supply chain, as appropriate. The
development and operation of such a database
shall not relieve a repackager of the
requirement under this paragraph to respond to
a verification request submitted by means other
than a secure electronic database.
(D) Returned prescription drug product.--
Beginning not later than 6 years after the date
of the enactment of the Safeguarding America's
Pharmaceuticals Act of 2013, upon receipt of a
returned prescription drug product that the
repackager intends to further distribute,
before further distributing such prescription
drug product, the repackager shall--
(i) verify the prescription drug
product identifier for each sealed
homogeneous case of such prescription
drug product; or
(ii) if such prescription drug
product is not in a sealed homogeneous
case, verify the prescription drug
product identifier on each package.
(f) Third-Party Logistics Provider Requirements.--
(1) Authorized trading partners.--Beginning on
January 1, 2015, a third-party logistics provider shall
ensure that each of its trading partners is authorized.
(2) Verification.--Beginning not later than January
1, 2015, a third-party logistics provider shall
implement systems to enable the third-party logistics
provider to comply with the following requirements:
(A) Suspect prescription drug product.--
(i) In general.--Upon making a
determination that a prescription drug
product in the possession or control of
a third-party logistics provider is a
suspect prescription drug product, a
third-party logistics provider shall
promptly notify the owner of such
prescription drug product of the need
to conduct an investigation to
determine whether the prescription drug
product is an illegitimate prescription
drug product.
(ii) Cleared prescription drug
product.--If the owner of the
prescription drug product notifies the
third-party logistics provider of the
determination that a suspect
prescription drug product is not an
illegitimate prescription drug product,
such prescription drug product may be
further distributed.
(iii) Records.--A third-party
logistics provider shall keep records
of the activities described in clauses
(i) and (ii) with respect to a suspect
prescription drug product for not less
than 3 years after the conclusion of
the investigation.
(B) Illegitimate prescription drug product.--
(i) In general.--Upon receiving
notice that a manufacturer of a
prescription drug product has
determined that a prescription drug
product in the possession or control of
a third-party logistics provider is an
illegitimate prescription drug product,
the third-party logistics provider
shall--
(I) quarantine such
prescription drug product
within the possession or
control of the third-party
logistics provider from
prescription drug product
intended for distribution;
(II) promptly notify the
owner of such prescription drug
product of the need to provide
for the disposition of such
prescription drug product; and
(III) promptly transfer
possession of the prescription
drug product to the owner of
such prescription drug product
to provide for the disposition
of the prescription drug
product.
(ii) Making a notification.--Upon
determining that a prescription drug
product in the possession or control of
the third-party logistics provider is
an illegitimate prescription drug
product, the third-party logistics
provider shall notify the Secretary not
later than 24 hours after making such
determination. The Secretary shall
determine whether additional trading
partner notification is appropriate.
(iii) Responding to a notification.--
Upon the receipt of a notification from
the Secretary, a third-party logistics
provider shall--
(I) identify all illegitimate
prescription drug product
subject to such notification
that is in the possession or
control of the third-party
logistics provider, including
any prescription drug product
that is subsequently received;
and
(II) perform the activities
described in clause (i).
(iv) Records.--A third-party
logistics provider shall keep records
of the activities described in clauses
(i) and (ii) with respect to an
illegitimate prescription drug product
for not less than 3 years after the
conclusion of the disposition.
(g) Drop Shipments.--This section does not apply to any
entity, notwithstanding its status as a wholesale distributor
or repackager, or other status that is not involved in the
physical handling, distribution, or storage of a prescription
drug product. For purposes of this subsection, facilitating the
distribution of a prescription drug product by providing
various administrative services, including processing of orders
and payments, shall not, by itself, be construed as being
involved in the handling, distribution, or storage of a
prescription drug product.
SEC. 583. NATIONAL STANDARDS FOR WHOLESALE DISTRIBUTORS.
(a) Standards.--
(1) In general.--The Secretary shall establish, by
regulation, standards for the licensing of persons that
make wholesale distributions.
(2) Requirements.--The standards under paragraph (1)
shall, with respect to wholesale distributions, include
requirements for--
(A) the storage and handling of drugs subject
to section 503(b)(1), including facility
requirements;
(B) the establishment and maintenance of
records of the distributions of such drugs;
(C) the furnishing of a bond or other
equivalent means of security in accordance with
paragraph (3);
(D) mandatory background checks and
fingerprinting of facility managers or
designated representatives;
(E) the establishment and implementation of
qualifications for key personnel;
(F) the mandatory physical inspection of any
facility to be used in wholesale distribution
within a reasonable timeframe from the initial
application for licensure of the wholesale
distributor; and
(G) in accordance with paragraph (5), the
prohibition of certain persons from engaging in
wholesale distribution.
(3) Bond or other security.--The requirements under
paragraph (2)(C) shall provide for the following:
(A) An applicant that is not a government-
owned-and-operated wholesale distributor, for
the issuance or renewal of a wholesale
distributor license, shall submit a surety bond
of $100,000 or other equivalent means of
security acceptable to the applicable licensing
authority.
(B) For purposes of subparagraph (A), the
applicable licensing authority may accept a
surety bond less than $100,000 if the annual
gross receipts of the previous tax year for the
wholesale distributor is $10,000,000 or less,
in which case the surety bond may not be less
than $25,000.
(C) If a wholesale distributor can provide
evidence that it possesses the required bond in
a State, the requirement for a bond in another
State is waived.
(4) Inspections.--To satisfy the inspection
requirement under paragraph (2)(F), the Secretary may
conduct the inspection, or may accept an inspection
by--
(A) the government of the State in which the
facility is located; or
(B) a third-party accreditation or inspection
service approved by the Secretary.
(5) Prohibited persons.--The requirements under
paragraph (2) shall include requirements to prohibit a
person from receiving or maintaining licensure for
wholesale distribution if the person--
(A) has been convicted of any felony for
conduct relating to wholesale distribution; any
felony violation of section 301(i) or 301(k);
or any felony violation of section 1365 of
title 18, United States Code, relating to
prescription drug product tampering; or
(B) has engaged in a pattern of violating the
requirements of this section that presents a
threat of serious adverse health consequences
or death to humans.
(b) Reporting by Licensed Wholesale Distributors.--
(1) Annual report.--Beginning not later than 1 year
after the date of the enactment of this section, each
person engaged in wholesale distribution in interstate
commerce shall submit on an annual basis, and update as
necessary, a report to the Secretary including--
(A) the wholesale distributor's name;
(B) the wholesale distributor's address;
(C) a listing of each State in which the
wholesale distributor is licensed for wholesale
distribution; and
(D) any disciplinary actions taken by a
State, the Federal Government, or a foreign
government during the reporting period against
the wholesale distributor.
(2) Posting on internet.--The Secretary shall post on
the public Internet Website of the Food and Drug
Administration the name of each wholesale distributor,
and the State in which each such distributor is
licensed, based on reports under paragraph (1).
(c) Preservation of State Authority.--This subchapter does
not prohibit a State from--
(1) licensing wholesale distributors for the conduct
of wholesale distribution activities in the State in
accordance with this subchapter; and
(2) collecting fees from wholesale distributors in
connection with such licensing,
so long as the State does not require such licensure to the
extent to which an entity is engaged in third-party logistics
provider activities.
(d) Definition.--In this section, the term ``wholesale
distribution'' means the distribution of a drug subject to
section 503(b)(1) to a person other than a consumer or patient,
but does not include--
(1) intracompany distribution of any drug between
members of an affiliated group (as defined in section
1504(a) of the Internal Revenue Code of 1986);
(2) the distribution of a drug, or an offer to
distribute a drug among hospitals or other health care
entities which are under common control;
(3) the distribution of a drug or an offer to
distribute a drug for emergency medical reasons,
including a public health emergency declaration
pursuant to section 319 of the Public Health Service
Act, except that a drug shortage not caused by a public
health emergency shall not constitute such an emergency
medical reason;
(4) dispensing of a drug pursuant to a valid
prescription executed in accordance with subsection
503(b)(1);
(5) the distribution of minimal quantities of drug by
a licensed retail pharmacy to a licensed practitioner
for office use;
(6) the distribution of a drug or an offer to
distribute a drug by a charitable organization to a
nonprofit affiliate of the organization to the extent
otherwise permitted by law;
(7) the purchase or other acquisition by a dispenser,
hospital, or other health care entity of a drug for use
by such dispenser, hospital, or other health care
entity;
(8) the distribution of a drug by the manufacturer of
such drug;
(9) the receipt or transfer of a drug by an
authorized third-party logistics provider provided that
such third-party logistics provider does not take
ownership of the drug;
(10) the transport of a drug by a common carrier,
provided that the common carrier does not take
ownership of the drug;
(11) the distribution of a drug, or an offer to
distribute a drug, by an authorized repackager that has
taken ownership of the drug and repacked it in
accordance with section 582(e);
(12) saleable drug returns when conducted by a
dispenser in accordance with section 203.23 of title
21, Code of Federal Regulations (or any successor
regulation);
(13) the distribution of a combination prescription
drug product described in section 581(20)(B)(xiii);
(14) the distribution of a medical convenience kit
described in section 581(21)(B)(xiv);
(15) the distribution of an intravenous drug that, by
its formulation, is intended for the replenishment of
fluids and electrolytes (such as sodium, chloride, and
potassium) or calories (such as dextrose and amino
acids);
(16) the distribution of an intravenous drug used to
maintain the equilibrium of water and minerals in the
body, such as dialysis solutions;
(17) the distribution of a drug that is intended for
irrigation or reconstitution, or sterile water, whether
intended for such purposes or for injection;
(18) the distribution of compressed medical gas (as
defined in section 581(21)(C));
(19) facilitating the distribution of a prescription
drug product by providing administrative services, such
as processing of orders and payments, without physical
handling, distribution, or storage of a prescription
drug product; or
(20)(A) the distribution of a product by a dispenser,
or a wholesale distributor acting at the direction of
the dispenser, to a repackager registered under section
510 for the purpose of repackaging the drug for use by
that dispenser or another health care entity that is
under the dispenser's ownership or control, so long as
the dispenser retains ownership of the prescription
drug product; and
(B) the saleable or nonsaleable return by such
repackager of such prescription drug product.
(e) Effective Date.--The standards required by subsection (a)
shall take effect not later than 2 years after the date of the
enactment of this section. The Secretary shall issue the
regulations required by subsection (a) not later than 1 year
after the date of the enactment of this Act.
SEC. 584. NATIONAL LICENSURE STANDARDS FOR THIRD-PARTY LOGISTICS
PROVIDERS.
(a) License Requirement.--No facility may engage in the
activities of a third-party logistics provider in any State
unless--
(1) the facility is licensed--
(A) by the State from which the drug is
distributed by the third-party logistics
provider in accordance with a qualified
licensing program, if the State has such a
program; or
(B) by the Secretary under this section, if
the State from which the drug is distributed
does not have such a program; and
(2) if the drug is distributed interstate and the
facility is not licensed by the Secretary under
paragraph (1)(B), registers with the State into which
the drug is distributed if such State requires such
registration.
(b) Reporting by Licensed Third-Party Logistics Providers.--
(1) Annual report.--Beginning not later than 1 year
after the date of the enactment of this section, each
facility engaged in the activities of a third-party
logistics provider shall submit on an annual basis, and
update as necessary, a report to the Secretary
including--
(A) the facility's name;
(B) the facility's address;
(C) a listing of each jurisdiction (whether
State or Federal) in which the facility is
licensed for third-party logistics provider
activities; and
(D) any disciplinary actions taken by a State
or Federal licensing authority during the
reporting period against the facility.
(2) Posting on internet.--The Secretary shall post on
the public Internet Website of the Food and Drug
Administration the name of each third-party logistics
provider, and each jurisdiction (whether State or
Federal) in which the provider is licensed, based on
reports under paragraph (1).
(c) Preservation of State Authority.--This subchapter does
not prohibit a State from--
(1) licensing third-party logistic providers for the
conduct of third-party logistics provider activities in
the State in accordance with this subchapter; and
(2) collecting fees from third-party logistics
providers in connection with such licensing,
so long as the State does not require such licensure to the
extent to which an entity is engaged in wholesale distribution.
(d) Costs.--
(1) Authorized licensure fees.--In the case of a
facility engaging in the activities of a third-party
logistics provider licensed by the Secretary under this
section, the Secretary may assess and collect a
reasonable fee in an amount equal to the costs to the
Federal Government of establishing and administering
the licensure program established, and conducting
period inspections, under this section.
(2) Adjustment.--The Secretary shall adjust the
amount of the fee under paragraph (1) on an annual
basis, if necessary, to generate an amount of revenue
equal to the costs referred to in such paragraph.
(3) Availability.--Fees assessed and collected under
this subsection shall be available for obligation only
to the extent and in the amount provided in advance in
appropriations Acts. Such fees shall remain available
until expended.
(e) License Regulations.--
(1) In general.--The Secretary shall establish, by
regulation, standards, terms, and conditions for
licensing persons to engage in third-party logistics
provider activities.
(2) Content.--The regulations under paragraph (1)
shall--
(A) include standards relating to eligibility
for, and revocation and reissuance of,
licenses;
(B) establish a process by which the
applicable licensing authority will, upon
request by a third-party logistics provider
that is accredited by a third-party
accreditation program approved by the
Secretary, issue a license to the provider;
(C) establish a process by which the
Secretary shall issue a license to a third-
party logistics provider if the Secretary is
not able to approve a third-party accreditation
program because no such program meets the
Secretary's requirements necessary for approval
of such a third-party accreditation program;
(D) require that the third-party logistics
provider comply with storage practices, as
determined by the Secretary, at the provider's
facilities, including--
(i) maintaining access to warehouse
space of suitable size to facilitate
safe operations, including a suitable
area to quarantine suspect prescription
drug product;
(ii) maintaining adequate security;
and
(iii) having written policies and
procedures to--
(I) address receipt,
security, storage, inventory,
shipment, and distribution of a
prescription drug product;
(II) identify, record, and
report confirmed losses or
thefts in the United States;
(III) correct errors and
inaccuracies in inventories;
(IV) provide support for
manufacturer recalls;
(V) prepare for, protect
against, and address any
reasonably foreseeable crisis
that affects security or
operation at the facility, such
as a strike, fire, or flood;
(VI) ensure that any expired
prescription drug product is
segregated from other
prescription drug products and
returned to the manufacturer or
repackager or destroyed;
(VII) maintain the capability
to electronically trace the
receipt and outbound
distribution of a prescription
drug product, and supplies and
records of inventory; and
(VIII) quarantine or destroy
a suspect prescription drug
product if directed to do so by
the respective manufacturer,
wholesale distributor,
dispenser, or an authorized
government agency;
(E) provide for periodic inspection, as
determined by the Secretary, of such facility
warehouse space to ensure compliance with this
section;
(F) prohibit a facility from having as a
manager or designated representative anyone
convicted of any felony violation of section
301(i) or 301(k) or any felony violation of
section 1365 of title 18, United States Code,
relating to prescription drug product
tampering;
(G) perform mandatory background checks of
the provider's facility managers or designated
representatives of such managers;
(H) require a third-party logistics provider
to provide to the applicable licensing
authority, upon the authority's request, a list
of all prescription drug product manufacturers,
wholesale distributors, and dispensers for whom
the third-party logistics provider provides
services at the provider's facilities; and
(I) include procedures under which any third-
party logistics provider license--
(i) will expire on the date that is 3
years after issuance of the license;
and
(ii) may be renewed for additional 3-
year periods.
(f) Validity of License.--A license issued under this section
shall remain valid as long as such third-party logistics
provider remains accredited by the Secretary, subject to
renewal under subsection (d). If the Secretary finds that the
third-party accreditation program demonstrates that all
applicable requirements for licensure under this section are
met, the Secretary shall issue a license under this section to
a third-party logistics provider receiving accreditation.
(g) Qualified Licensing Program Defined.--In this section,
the term ``qualified licensing program'' means a program
meeting the requirements of this section and the regulations
thereunder.
(h) Effective Date.--The requirements of this section shall
take effect not later than 1 year after the date of the
enactment of this section. The Secretary shall issue the
regulations required by subsection (d) not later than 180 days
after the date of the enactment of this section.
SEC. 585. UNIFORM NATIONAL POLICY.
(a) Preemption of State Prescription Drug Product Tracing and
other Requirements.--Beginning on the date of the enactment of
the Safeguarding America's Pharmaceuticals Act of 2013, no
State or political subdivision of a State may establish or
continue in effect any requirements for tracing drugs through
the distribution system (including any requirements with
respect to paper or electronic pedigrees, track and trace,
statements of distribution history, transaction history, or
transaction statements, or verification, investigation,
disposition, alerts, or recordkeeping relating to the
pharmaceutical distribution supply chain system) that--
(1) are inconsistent with, more stringent than, or in
addition to any requirements applicable under this Act;
or
(2) are inconsistent with any applicable waiver,
exception, or exemption issued by the Secretary under
section 582(a).
(b) Standards or Licensure.--
(1) In general.--Beginning on the date of the
enactment of Safeguarding America's Pharmaceuticals Act
of 2013, no State or political subdivision of a State
may establish or continue any standards, requirements,
or regulations with respect to wholesale drug
distributor or third-party logistics provider licensure
which are inconsistent with, less stringent than, in
addition to, or more stringent than, the standards and
requirements under this Act.
(2) Licensing fees.--Paragraph (1) does not affect
the authority of a State to collect fees from wholesale
drug distributors or third-party logistics providers in
connection with State licensing under section 583 or
584 pursuant to a licensing program meeting the
requirements of such sections.
(3) Enforcement, suspension, and revocation of
licenses.--Notwithstanding paragraph (1), a State--
(A) may take administrative action, including
fines, to enforce a licensure requirement
promulgated by the State in accordance with
this Act;
(B) may provide for the suspension or
revocation of licenses issued by the State for
violations of the laws of such State;
(C) upon conviction of a person for a
violation of Federal, State, or local
controlled substance laws or regulations, may
provide for fines, imprisonment, or civil
penalties; and
(D) may regulate activities of entities
licensed pursuant to section 583 or 584 in a
manner that is consistent with the provisions
of this subchapter.
* * * * * * *
CHAPTER VIII--IMPORTS AND EXPORTS
* * * * * * *
SEC. 804. IMPORTATION OF PRESCRIPTION DRUGS.
(a) Definitions.--In this section:
(1) * * *
* * * * * * *
(5) Wholesaler.--
(A) In general.--The term ``wholesaler''
means a person licensed as a wholesaler or
distributor of prescription drugs in the United
States under section [503(e)(2)(A)] 583(a).
* * * * * * *
DISSENTING VIEWS
We, the undersigned members of the Committee on Energy and
Commerce, oppose passage of H.R. 1919, the Safeguarding
America's Pharmaceuticals Act of 2013. Accordingly, we submit
the following comments to express our concerns about this
inadequate legislation.
INTRODUCTION
Although we share the goals of the supporters of H.R.
1919--to enact legislation that will better secure our drug
supply chain--we do not believe that H.R. 1919 will ultimately
accomplish that goal. H.R. 1919 does not provide any assurance
that an effective system for tracking and tracing drugs through
the supply chain will ultimately be put into place. Instead,
the bill requires only that Food and Drug Administration (FDA)
issue proposed regulations designed to establish such a
system--these regulations may never be issued, become final, or
go into effect. We believe that any legislation on this issue
should give Americans certainty that an effective system will
be put into place.
BACKGROUND AND OVERVIEW
There is an increasing prevalence of falsified and
substandard drugs in the legitimate drug supply, both in the
U.S. and the world over.\1\ These drugs pose a public health
threat in a variety of ways. Some may contain toxic
ingredients, while others may simply not work.\2\ Poor quality
medicines cause treatment failures, but in many cases,
physicians may not suspect medicines as a cause of such
failure.\3\
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\1\G. J. Buckley and L. O. Goslin, Countering the Problem of
Falsified and Substandard Drugs. Institute of Medicine (Feb. 13, 2013)
(online at http://www.iom.edu/Reports/2013/Countering-the-Problem-of-
Falsified-and-Substandard-Drugs.aspx).
\2\Id.
\3\Id.
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In recent years, there have been several high-profile
instances of counterfeit and substandard medicines entering the
supply chain. For example:
In July 2012, federal prosecutors in New
York charged 48 people in a fraud involving HIV
medications purchased from Medicaid recipients and sold
to other patients for cash.\4\
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\4\C. Boyette, New York Authorities Charge 48 in Massive Medicaid
Fraud, CNN (July 18, 2012) (online at http://www.cnn.com/2012/07/18/
justice/new-york-drug-scheme).
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Between 2012 and 2013, FDA warned about
three instances of counterfeit and substandard versions
of the cancer drug, Avastin, circulating in the supply
chain.\5\
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\5\FDA Warns of New Fake Batch of Cancer Drug Avastin, Associated
Press (Feb. 6, 2013) (online at http://news.yahoo.com/fda-warns-fake-
batch-cancer-drug-avastin09155524363-finance.html).
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In 2009, FDA reported that 129,000 vials of
insulin were stolen and were being sold in the U.S.
market. FDA indicated that the vials may not have been
stored and handled properly which posed a threat for
patients who might use them.\6\
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\6\Food and Drug Administration, FDA Advisory About Levemir Insulin
(June 18, 2009) (online at http://www.fda.gov/ForConsumers/
ConsumerUpdates/ucm167600.htm).
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In 2010, $75 million worth of drugs were
stolen from an Eli Lilly and Company warehouse in
Connecticut.\7\
---------------------------------------------------------------------------
\7\Lilly Drugs Stolen in Warehouse Heist, Wall Street Journal (Mar.
17, 2010) (online at http://online.wsj.com/article/
SB10001424052748704688604575125522684707974.html).
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In 2003, counterfeit Lipitor from Central
America was sold into the U.S. supply chain.\8\
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\8\Pew Health Group, After Heparin: Protecting Consumers From the
Risks of Substandard and Counterfeit Drugs, 65 (online at: http://
www.pewhealth.org/uploadedFiles/PHG/Content_ Level_Pages/Reports/
Pew_Heparin_Final_.pdf).
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In 2001, counterfeit Serostim, which is a
human growth hormone used to treat AIDS-related
wasting, was found in at least seven states and passed
through multiple wholesalers.\9\
---------------------------------------------------------------------------
\9\Pew Health Group, After Heparin: Protecting Consumers From the
Risks of Substandard and Counterfeit Drugs, 64 (online at http://
www.pewhealth.org/uploadedFiles/PHG/Content_ Level_Pages/Reports/
Pew_Heparin_Final_.pdf).
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There is widespread agreement that, if the goal is to
protect American patients from substandard and falsified
medicines, the best way to protect the supply chain is to
establish a unit-level, interoperable system that involves all
members of the supply chain. H.R. 1919 fails to assure the
establishment of this system and falls short in other
significant ways of protecting patients from the entry of
unsafe and substandard drugs into the supply chain. The
following describes those shortcomings:
A. Section 2 (Pharmaceutical Distribution Supply Chain) Fails To
Provide Adequate Assurance That Illegitimate Product Will Not
Enter the Supply Chain Through Returns Exemptions
One issue that is reflected in Section 2 is the problem of
how to handle ``returns,'' which generally refers to entities
in the supply chain having the ability to return unused stock
to the previous seller from which they obtained the product.
Returns create a significant problem because they create the
potential for entry of illegitimate product. For example,
pharmacies could obtain counterfeit or substandard medicines
and sell them back to the wholesaler at a profit, and then the
wholesaler could redistribute that product into the supply
chain.
H.R. 1919 provides that upon redistributing returned
product, the wholesaler must include a transaction history
(which details the drug's trip through the supply chain) that
begins with that wholesaler.\10\ In other words, upon
redistributing the product, the pedigree starts anew with the
wholesaler.
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\10\See H.R. 1919 at 35, lines 18-36, line 5.
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We support an alternative approach that would prohibit
wholesalers from accepting product from dispensers unless the
wholesaler could associate the returned product with the
transaction history and information linked to that product.
This requirement would ensure that the wholesaler will verify
that the returned product from the dispenser was indeed the
product that wholesaler sold to that dispenser. As a result,
the likelihood of counterfeit or substandard product entering
the supply chain is diminished.
B. Section 3 (Enhanced Drug Distribution Security) Does Not Mandate the
Establishment of an Electronic, Interoperable Unit-Level System
In general, section 2 of H.R. 1919 sets up a so-called
``phase I'' in which certain aspects of an electronic,
interoperable unit-level system are gradually put into
place.\11\ Section 3 represents the so-called ``phase II'' in
which the goal is to establish this system. However, for the
following reasons, there is a concern that this goal will not
fully be realized based on the current language of the bill.
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\11\See H.R. 1919, at 3, line 8.
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H.R. 1919 would require FDA to issue proposed regulations,
no sooner than January 1, 2027 and no later than March 1,
2027.\12\ These proposed regulations would establish additional
requirements ``to prevent a suspect product, illegitimate
product, or a product that is counterfeit, stolen, diverted, or
otherwise unfit for distribution from entering into or being
further distributed in the supply chain.''\13\ Such
requirements would include those ``related to the use of
interoperable electronic systems and technologies for enhanced
tracing of prescription drug product at the package level''
among other things.\14\
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\12\See H.R. 1919, at 71, line 1.
\13\See H.R. 1919, at 71, lines 7-12.
\14\See H.R. 1919, at 71, lines 13-16.
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However, H.R. 1919 does not set a deadline for the issuance
of final regulations. It also does not explicitly require that
the proposed regulations shall establish requirements for the
implementation of an electronic, unit-level interoperable
system. Further, it mandates that, if and when final
regulations are issued, there is an additional two year delay
in the effective date of those regulations.\15\ Thus, not only
is the timeline for issuing proposed regulations inordinately
long, but there is no assurance that final regulations will
ever be issued. When--or if--final regulations are ever issued,
there is even more delay. This kind of delay and uncertainty
about whether we will ever get to the best system for
protecting consumers is unacceptable to us, and should be
unacceptable to all members.
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\15\See H.R. 1919, at 75, lines 12-14.
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We support an alternative approach that would set a
reasonable date-certain for the establishment of a unit-level
interoperable tracking and tracing system that includes all
entities in the supply chain. This approach would also permit
FDA to establish this system based on requirements set forth in
the statute; it would not be contingent upon the issuance of
FDA regulations. We assume and expect, however, that even
though this approach would reflect a self-effectuating system
based on the statutory requirements, FDA would still issue
guidance to industry stakeholders in the form of regulations
and guidance documents.
C. Section 4 (National Standards for Wholesale Distributors) Will
Prevent States From Responding to the Particular Needs of Their
Own States
H.R. 1919 requires FDA to set national standards for the
licensing of wholesale distributors\16\ and preempts all state
laws governing such licensure that are ``inconsistent with,
less stringent than, in addition to, or more stringent than''
the standard that FDA will set.\17\ In other words, the draft
would make the FDA standards both a ``ceiling and a floor'' for
state licensing laws. This can be a concern for states that
have a high number of wholesalers and, consequently, strong
licensing schemes. We support an alternative approach of
requiring FDA to set standards, but permitting states to go
beyond those standards when appropriate.
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\16\See H.R. 1919, at 76, line 6.
\17\See H.R. 1919, at 94, line 16-17.
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D. Section 7 (Uniform National Policy) Immediately Preempts Important
Safeguards Without Requiring an Acceptable Substitute
On the date of enactment, H.R. 1919 would preempt all state
requirements for tracing drugs through the distribution system,
as well as current federal requirements that were set forth in
Section 503(e) of the Federal Food, Drug, and Cosmetic Act, as
part of the Prescription Drug Marketing Act of 1987. For
example, Florida requires that a pedigree identifying each
previous sale of a drug back to the manufacturer be passed with
most drug transactions. Under H.R. 1919, there would be no
federal requirement to pass transaction information and history
until January 1, 2015 for manufacturers and repackagers,\18\
April 1, 2015 for wholesalers,\19\ and July 1, 2015 for
dispensers.\20\ Thus, state and federal requirements would be
preempted before any federal requirements to pass transaction
information and history have kicked in. Assuming H.R. 1919 were
to be enacted during 2013, this would leave a significant gap
in the current level of information about a drug's path through
the supply chain--information that is important to law
enforcement efforts to stop the entry of counterfeit and
substandard drugs into the supply chain.
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\18\See H.R. 1919, at 25, lines 21-23; 50, lines 16-51, line 20.
\19\See H.R. 1919, at 33, line 1-35, line 17.
\20\See H.R. 1919, at 42, lines 20-43, line 16.
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E. FDA Technical Assistance Was Not Addressed in H.R. 1919
FDA provided extensive technical assistance raising
additional concerns about the workability of H.R. 1919 and
describing various unintended consequences that could pose
patient safety concerns. However, H.R. 1919 failed to
incorporate much of this technical assistance. We are concerned
that the expertise of the regulatory agency that would
ultimately be tasked with implementing this legislation was not
taken into account.
In sum, we believe that H.R. 1919 will fail to meet the
goal of better securing our drug supply chain and protecting
Americans from unsafe and substandard drugs. As it moves
through the legislative process, significant improvements to
this legislation will be necessary in order for it to meet this
goal.
Henry A. Waxman,
Ranking Member, Committee on
Energy and Commerce.
Frank Pallone, Jr.,
Ranking Member, Subcommittee
on Health, Committee on
Energy and Commerce.
