To amend the Federal Food, Drug, and Cosmetic Act to establish recall authority regarding drugs, to increase criminal penalties for the sale or trade of prescription drugs knowingly caused to be adulterated or misbranded, and for other purposes.

Summary: Counterfeit Drug Enforcement Act - Amends the Federal Food, Drug, and Cosmetic Act to direct the Secretary of Health and Human Services, upon a finding of reasonable probability that a drug intended for human use would cause serious health consequences or death, to issue an order requiring the appropriate person (including the manufacturers, importers, distributors, or retailers of the drug) to: (1) cease distribution of the drug; (2) notify health professionals of the order and instruct such professionals to cease administering or prescribing the drug; and (3) amend the order to include a recall if necessary.

Establishes a criminal fine and/or imprisonment for a person who: (1) knowingly causes a prescription drug to be adulterated or misbranded and sells or trades the drug; or (2) purchases or trades for such drug knowing or having reason to know that the drug was knowingly adulterated or misbranded. Requires a manufacturer of a drug to notify the Secretary within 48 hours after first receiving or becoming aware of information that reasonably suggests that such a violation may have occurred.

Increases funding for Food and Drug Administration (FDA) inspections, examinations, and investigations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Counterfeit Drug Enforcement Act''.

SEC. 2. RECALL AUTHORITY REGARDING DRUGS.

    Subchapter A of chapter V of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 351 et seq.) is amended by inserting after section 506C 
the following section:

``SEC. 506D. RECALL AUTHORITY.

    ``(a) Order to Cease Distribution of Drug; Notification of Health 
Professionals.--
            ``(1) In general.--If the Secretary finds that there is a 
        reasonable probability that a drug intended for human use would 
        cause serious, adverse health consequences or death, the 
        Secretary shall issue an order requiring the appropriate person 
        (including the manufacturers, importers, distributors, or 
        retailers of the drug)--
                    ``(A) to immediately cease distribution of the 
                drug; and
                    ``(B) to immediately notify health professionals of 
                the order and to instruct such professionals to cease 
                administering or prescribing the drug.
            ``(2) Informal hearing.--An order under paragraph (1) shall 
        provide the person subject to the order with an opportunity for 
        an informal hearing, to be held not later than 10 days after 
        the date of the issuance of the order, on the actions required 
        by the order and on whether the order should be amended to 
        require a recall of the drug involved. If, after providing an 
        opportunity for such a hearing, the Secretary determines that 
        inadequate grounds exist to support the actions required by the 
        order, the Secretary shall vacate the order.
    ``(b) Order to Recall Drug.--
            ``(1) In general.--If, after providing an opportunity for 
        an informal hearing under subsection (a)(2), the Secretary 
        determines that the order should be amended to include a recall 
        of the drug with respect to which the order was issued, the 
        Secretary shall, except as provided in paragraphs (2) and (3), 
        amend the order to require a recall. The Secretary shall 
        specify a timetable in which the drug recall will occur and 
        shall require periodic reports to the Secretary describing the 
        progress of the recall.
            ``(2) Certain actions.--An amended order under paragraph 
        (1)--
                    ``(A) shall not include recall of a drug from 
                individuals; and
                    ``(B) shall provide for notice to individuals 
                subject to the risks associated with the use of the 
                drug.
            ``(3) Assistance of health professionals.--In providing the 
        notice required by paragraph (2)(B), the Secretary may use the 
        assistance of health professionals who administered the drug 
        involved to individuals or prescribed the drug for individuals. 
        If a significant number of such individuals cannot be 
        identified, the Secretary shall notify such individuals 
        pursuant to section 705(b).''.

SEC. 3. SALE OR TRADE OF PRESCRIPTION DRUGS KNOWINGLY CAUSED TO BE 
              ADULTERATED OR MISBRANDED; KNOWING PURCHASE OR TRADE.

    (a) Criminal Penalty.--Section 303(a) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 333(a)) is amended by adding at the end the 
following paragraph:
    ``(3) Notwithstanding paragraph (1) or (2), in the case of a person 
who violates section 301(a), 301(b), or 301(c) with respect to a drug 
that is subject to section 503(b)(1)(B), if the person knowingly caused 
the drug to be adulterated or misbranded and sells or trades the drug, 
or the person purchases or trades for the drug knowing or having reason 
to know that the drug was knowingly caused to be adulterated or 
misbranded, the person shall be fined in accordance with title 18, 
United States Code, or imprisoned for any term of years or for life, or 
both.''.
    (b) Notification of Food and Drug Administration by 
Manufacturers.--Section 505(k) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355(k)) is amended by adding at the end the following 
paragraph:
    ``(3) A manufacturer of a drug that receives or otherwise becomes 
aware of information that reasonably suggests that a violation 
described in section 303(a)(3) may have occurred with respect to the 
drug shall report such information to the Secretary not later than 48 
hours after first receiving or otherwise becoming aware of the 
information.''.
    (c) Increased Funding for Inspections, Examinations, and 
Investigations.--For the purpose of increasing the capacity of the Food 
and Drug Administration to conduct inspections, examinations, and 
investigations under the Federal Food, Drug, and Cosmetic Act with 
respect to violations described in section 303(a)(3) of such Act, there 
is authorized to be appropriated $60,000,000 for each of the fiscal 
years 2006 through 2010, in addition to other authorizations of 
appropriations that are available for such purpose.