I 

116TH CONGRESS 

1ST SESSION H. R. 5501 

To amend the Public Health Service Act to establish an Office of Drug 

Manufacturing. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 19, 2019 

Ms. SCHAKOWSKY introduced the following bill; which was referred to the 

Committee on Energy and Commerce 

A BILL 

To amend the Public Health Service Act to establish an 

Office of Drug Manufacturing. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Affordable Drug Man5 ufacturing Act of 2019’’. 

6 SEC. 2. PUBLIC MANUFACTURING OF PHARMACEUTICALS. 

7 Part A of title III of the Public Health Service Act 

8 (42 U.S.C. 241 et seq.) is amended by adding at the end 

9 the following: 


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1 ‘‘SEC. 310B. MANUFACTURING OF DRUGS. 

2 ‘‘(a) ESTABLISHMENT OF OFFICE OF DRUG MANU3 FACTURING.— 

4 ‘‘(1) IN GENERAL.—There is established within 

5 the Department of Health and Human Services an 

6 office to be known as the Office of Drug Manufac7 turing (referred to in this section as the ‘Office’). 

8 ‘‘(2) PURPOSE.—The purpose of the Office is— 

9 ‘‘(A) to increase competition, lower prices, 

10 and address shortages in the market for pre11 scription drugs, including insulin, naloxone, and 

12 antibiotics; 

13 ‘‘(B) to reduce the cost of prescription 

14 drugs to Federal and State health programs, 

15 taxpayers, and consumers; and 

16 ‘‘(C) to increase patient access to afford17 able drugs. 

18 ‘‘(3) PERSONNEL.— 

19 ‘‘(A) DIRECTOR.— 

20 ‘‘(i) IN GENERAL.—The Office shall 

21 be headed by a Director, who shall be ap22 pointed by the President, by and with the 

23 advice and consent of the Senate. 

24 ‘‘(ii) COMPENSATION.—The Director 

25 shall be compensated at the rate prescribed 

26 for level III of the Executive Schedule. 


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1 ‘‘(B) EMPLOYEES.—The Director of the 

2 Office, in consultation with the Secretary, may 

3 fix the number of, and appoint and direct, all 

4 employees of the Office. 

5 ‘‘(C) BANNED INDIVIDUALS.— 

6 ‘‘(i) DRUG COMPANY LOBBYISTS.—No 

7 former registered drug manufacturer lob8 byist— 

9 ‘‘(I) may be appointed to the po10 sition of Director of the Office; or 

11 ‘‘(II) may be employed by the Of12 fice during the 6-year period begin13 ning on the date on which the reg14 istered lobbyist terminates its reg15 istration in accordance with section 

16 4(d) of the Lobbying Disclosure Act 

17 of 1995 (2 U.S.C. 1603(d)) or the 

18 agent terminates its status, as appli19 cable. 

20 ‘‘(ii) SENIOR EXECUTIVES OF LAW21 BREAKING COMPANIES.—No former senior 

22 executive of a covered entity (as defined in 

23 clause (iii))— 

24 ‘‘(I) may be appointed to the po25 sition of Director of the Office; or 


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1 ‘‘(II) may be employed by the Of2 fice during the 6-year period begin3 ning on the later of— 

4 ‘‘(aa) the date of the settle5 ment; and 

6 ‘‘(bb) the date on which the 

7 enforcement action has con8 cluded. 

9 ‘‘(iii) COVERED ENTITY.—The term 

10 ‘covered entity’ means any entity that is— 

11 ‘‘(I) a drug manufacturer; and 

12 ‘‘(II)(aa) operating under Fed13 eral settlement, including a Federal 

14 consent decree; or 

15 ‘‘(bb) the subject of an enforce16 ment action in a court of the United 

17 States or by an agency. 

18 ‘‘(4) DUTIES.— 

19 ‘‘(A) IN GENERAL.—The Office shall— 

20 ‘‘(i) prepare and submit applications 

21 for approval to the Food and Drug Admin22 istration, or enter into contracts for such 

23 submission, for the manufacture of appli24 cable drugs when authorized under this 

25 section; 


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1 ‘‘(ii) acquire rights to manufacture 

2 applicable drugs as authorized under this 

3 section; 

4 ‘‘(iii) manufacture, or enter into con5 tracts with entities to manufacture, appli6 cable drugs as authorized under this sec7 tion; 

8 ‘‘(iv) determine a fair price for each 

9 applicable drugs, in accordance with sub10 paragraph (B); 

11 ‘‘(v) sell manufactured applicable 

12 drugs at a fair price as authorized under 

13 this section; and 

14 ‘‘(vi) manufacture, or enter into con15 tracts with entities to manufacture, active 

16 pharmaceutical ingredients for use by the 

17 Office or for sale to other entities. 

18 ‘‘(B) FAIR PRICE.—In determining a fair 

19 price for an applicable drug under subpara20 graph (A)(iv) the Office shall consider— 

21 ‘‘(i) the impact of price on patient ac22 cess to the applicable drug; 

23 ‘‘(ii) the cost of the applicable drug to 

24 Federal or State health care programs; 


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1 ‘‘(iii) the cost to the Federal Govern2 ment of manufacturing the applicable 

3 drug; 

4 ‘‘(iv) the administrative costs of oper5 ating the Office; 

6 ‘‘(v) the cost to acquire or manufac7 ture applicable drugs under this section; 

8 and 

9 ‘‘(vi) the impact of price on market 

10 competition for the applicable drug. 

11 ‘‘(C) ACQUIRING RIGHT TO MANUFACTURE

12 AND MARKET.—The Office may acquire the 

13 rights to manufacture and market applicable 

14 drugs as authorized under this section. 

15 ‘‘(D) ACTIVE PHARMACEUTICAL INGREDI16 ENTS.— 

17 ‘‘(i) IN GENERAL.—The Office shall 

18 manufacture, or enter into contracts with 

19 entities to manufacture, an active pharma20 ceutical ingredient if— 

21 ‘‘(I) the Office determines that 

22 such ingredient is not readily available 

23 from existing suppliers; 

24 ‘‘(II) the manufacture of such in25 gredient would improve the ability of 


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1 other entities to enter the market for 

2 the manufacture of generic drugs or 

3 otherwise expand the manufacture of 

4 generic drugs; or 

5 ‘‘(III) the manufacture of such 

6 ingredient is necessary for the Office 

7 to carry out its duties under this sec8 tion. 

9 ‘‘(ii) PRICE DETERMINATIONS.—In 

10 determining what price at which to sell an 

11 active pharmaceutical ingredient under 

12 clause (i), the Office shall consider the cost 

13 to manufacture the ingredient, the admin14 istrative costs of the Office with respect to 

15 the ingredient, and the impact of such 

16 price on market competition for the ingre17 dient. 

18 ‘‘(5) REPORTS TO CONGRESS.—The Director 

19 shall prepare and submit to the President, the Com20 mittee on Health, Education, Labor, and Pensions 

21 of the Senate, and the Committee on Energy and 

22 Commerce of the House of Representatives, an an23 nual report that includes— 


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1 ‘‘(A) an assessment of the major problems 

2 faced by patients in accessing affordable generic 

3 medications; 

4 ‘‘(B) a description of the status of all 

5 medications for which manufacturing has been 

6 authorized under this section, including medica7 tions being manufactured, medications for 

8 which the Office has submitted an application 

9 to the Food and Drug Administration but has 

10 not yet received approval, and medications for 

11 which the Office has received approval from the 

12 Food and Drug Administration but are not 

13 being manufactured; 

14 ‘‘(C) in the case of antibiotics manufac15 tured under this section, an assessment from 

16 the Centers for Disease Control and Prevention 

17 and the Food and Drug Administration on the 

18 impact of the manufacturing of antibiotics on 

19 antimicrobial resistance; and 

20 ‘‘(D) an analysis of how the public manu21 facture of drugs meeting the conditions de22 scribed in paragraph (6) would impact, or has 

23 already impacted, competition, access to such 

24 drugs, the costs of such drugs, the costs of preVerDate Sep 11 2014 20:16 Jan 06, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5501.IH H5501

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1 scription drugs to Federal and State health pro2 grams, and public health. 

3 ‘‘(6) PRIORITY MANUFACTURING.—The Office 

4 shall prioritize the manufacturing of those applicable 

5 drugs that would have the greatest impact on— 

6 ‘‘(A) lowering drug costs to patients; 

7 ‘‘(B) increasing competition and address8 ing shortages in the prescription drug market; 

9 ‘‘(C) improving public health; or 

10 ‘‘(D) reducing the cost of prescription 

11 drugs to Federal and State health programs. 

12 ‘‘(7) MANUFACTURING LEVELS.—Not later 

13 than 1 year after the date of enactment of this sec14 tion, the Office shall manufacture, or enter into con15 tracts with entities for the manufacture of, not less 

16 than 15 applicable drugs. Not later than 3 years 

17 after such date of enactment, the Office shall manu18 facture, or enter into contracts with entities for the 

19 manufacture of, not less than 25 applicable drugs. 

20 ‘‘(b) SUBMISSION OF APPLICATIONS.—For each ap21 plicable drug that the Office determines should be manu22 factured, as provided for under this section, the Secretary 

23 shall— 

24 ‘‘(1) submit an application under section 505(j) 

25 or 515 of the Federal Food, Drug, and Cosmetic Act 


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1 or section 351(k) of the Public Health Service Act 

2 or submit a notification under section 510(k) of the 

3 Federal Food, Drug, and Cosmetic Act (or enter 

4 into a contract with another entity to submit such 

5 an application or notification); or 

6 ‘‘(2) acquire from the holder of an application 

7 approved under subsection (c) or (j) of section 505 

8 or section 515 of the Federal Food, Drug, and Cos9 metic Act or section 351 of the Public Health Serv10 ice Act, or cleared under section 510(k) of the Fed11 eral Food, Drug, and Cosmetic Act, rights to manu12 facture such applicable drug. 

13 ‘‘(c) USE.— 

14 ‘‘(1) IN GENERAL.—The Secretary shall sell a 

15 drug produced under this section at a fair price to 

16 other entities. Amounts received from the sale of 

17 such drugs shall be used for the activities of the Of18 fice. 

19 ‘‘(2) SALE OF APPROVED APPLICATION.— 

20 ‘‘(A) IN GENERAL.—For any applicable 

21 drug that the Office is manufacturing, the Sec22 retary shall, beginning 3 years after the date on 

23 which the Office first undertakes manufacturing 

24 of such drug and annually thereafter, make 

25 available for sale, to any person who commits to 


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1 manufacturing and marketing the applicable 

2 drug, the approved application for the drug. 

3 ‘‘(B) FAILURE TO USE.—If a person pur4 chasing an approved application under subpara5 graph (A)— 

6 ‘‘(i) fails to market the applicable 

7 drug within 6 months of the date of such 

8 purchase; or 

9 ‘‘(ii) increases the average manufac10 turer price for the applicable drug above 

11 the fair price (increased by the consumer 

12 price index for all urban consumers (as 

13 published by the Bureau of Labor Statis14 tics) for that year); 

15 the Secretary shall revoke the purchaser’s ap16 proved application and resume production of 

17 the applicable drug. 

18 ‘‘(d) INSULIN.—Not later than 1 year after the date 

19 of enactment of this section, the Secretary shall begin the 

20 public manufacturing of insulin within a delivery device 

21 that does not violate active patents, meeting the definition 

22 of applicable drug and in accordance with this section. 

23 ‘‘(e) NALOXONE.—Not later than 1 year after the 

24 date of enactment of this section, the Secretary shall begin 

25 the public manufacturing of naloxone, including naloxone 


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1 indicated for community use, meeting the definition of ap2 plicable drug and in accordance with this section. 

3 ‘‘(f) ANTIBIOTICS.—Not later than 1 year after the 

4 date of enactment of this section, and in consultation with 

5 the Centers for Disease Control and Prevention and the 

6 Food and Drug Administration to ensure the appropriate 

7 use of manufactured antibiotics, the Secretary shall begin 

8 the public manufacturing of no fewer than three discrete 

9 antibiotics meeting the definition of applicable drug in ac10 cordance with this section. 

11 ‘‘(g) APPLICABLE DRUG.—In this section, the term 

12 ‘applicable drug’ means a drug (as defined in section 201 

13 of the Federal Food, Drug, and Cosmetic Act), biological 

14 product (as defined in section 351 of the Public Health 

15 Service Act), or combination product (as described in sec16 tion 503(g) of the Federal Food, Drug, and Cosmetic Act) 

17 for which an approved application under section 505 or 

18 515 of the Federal Food, Drug, and Cosmetic Act or sec19 tion 351 of the Public Health Service Act, or clearance 

20 under section 510(k) of the Federal Food, Drug, and Cos21 metic Act, is in effect, and— 

22 ‘‘(1)(A) for which, with respect to a drug in23 cluded in the list described in section 505(j)(7) of 

24 the Federal Food, Drug, and Cosmetic Act, each 

25 patent included with respect to such drug in such 


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1 list has expired, or each patent that claims a biologi2 cal product has expired; 

3 ‘‘(B) any period of regulatory exclusivity grant4 ed under— 

5 ‘‘(i) clause (ii), (iii), or (iv) of section 

6 505(c)(3)(E) of the Federal Food, Drug, and 

7 Cosmetic Act, section 505(j)(5)(B)(iv) of such 

8 Act, clause (ii), (iii), or (iv) of section 

9 505(j)(5)(F) of such Act, section 527 of such 

10 Act, and any extension of such a period granted 

11 under section 505A or 505E of such Act, has 

12 expired; or 

13 ‘‘(ii) paragraph (6) or (7) of section 351(k) 

14 of the Public Health Service Act, and any ex15 tension of such a period granted under para16 graph (2) or (3) of section 351(m) of such Act, 

17 has expired; and 

18 ‘‘(C)(i) that is not being marketed in the 

19 United States; or 

20 ‘‘(ii) that is being marketed in the United 

21 States by fewer than 3 manufacturers, and that— 

22 ‘‘(I) in the previous 5-year period, has ex23 perienced an increase in the wholesale acquisi24 tion cost by at least one of its manufacturers 

25 that is greater than the consumer price index 


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1 for all urban consumers (as published by the 

2 Bureau of Labor Statistics) for one of the years 

3 in that the same period; 

4 ‘‘(II) is included in the drug shortage list 

5 under section 506E of the Federal Food, Drug, 

6 and Cosmetic Act; or 

7 ‘‘(III)(aa) has an average wholesale acqui8 sition cost that the Secretary determines to be 

9 a barrier to patient access; and 

10 ‘‘(bb) is listed by the World Health Orga11 nization as an essential medicine; or 

12 ‘‘(2) for which there is in effect a license, or 

13 patent use is authorized, under— 

14 ‘‘(A) section 1498 of title 28, United 

15 States Code; 

16 ‘‘(B) section 202 of title 35, United States 

17 Code; 

18 ‘‘(C) section 203 of title 35, United States 

19 Code (march-in rights); 

20 ‘‘(D) section 209 of title 35, United States 

21 Code; or 

22 ‘‘(E) any other licensing authority of the 

23 Federal Government. 


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1 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated such sums as may be 

3 necessary to carry out this section.’’. 

Æ 


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