I

108TH CONGRESS

1ST SESSION H. R. 2196

To improve the quality, availability, diversity, personal privacy, and innovation

of health care in the United States.

IN THE HOUSE OF REPRESENTATIVES

MAY 21, 2003

Mr. ROHRABACHER introduced the following bill; which was referred to the

Committee on Ways and Means, and in addition to the Committees on

Government Reform, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of

such provisions as fall within the jurisdiction of the committee concerned

A BILL

To improve the quality, availability, diversity, personal

privacy, and innovation of health care in the United States.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medical Independence, Privacy, and Innovation Act of

6 2003’’.

7 (b) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—TAX-RELATED PROVISIONS

Sec. 101. Findings.

Sec. 102. Deduction of medical expenses for individuals.

Sec. 103. Medical checking accounts.

Sec. 104. Decrease in minimum annual deductibles under a high deductible

health plan for purposes of Archer MSAs.

TITLE II—MEDICAL PRIVACY

Sec. 201. Findings.

Sec. 202. Modification of regulations on privacy of individually identifiable

health information.

Sec. 203. Restrictions on the use of the social security account number.

Sec. 204. Prohibition of governmentwide uniform identifying numbers.

Sec. 205. Prohibition of government-established identifiers.

TITLE III—MODIFICATIONS REGARDING REGULATION OF DRUGS

UNDER FEDERAL FOOD, DRUG, AND COSMETIC ACT

Sec. 301. Definition of drug.

Sec. 302. Striking of effectiveness requirement; modifications regarding patent

listings, patent certifications, and thirty-month rule.

Sec. 303. Importation of certain drugs.

1 TITLE I—TAX-RELATED

2 PROVISIONS

3 SEC. 101. FINDINGS.

4 The Congress finds the following:

5 (1) Current law confers tax benefits for health

6 insurance provided as an employee fringe benefit,

7 but no similar tax benefit for health insurance pur8 chased by individuals thus creating an unfair bias

9 toward employer provided medical insurance plans

10 and an unfair discrimination against individuals who

11 seek marketplace alternatives to health insurance.

12 (2) Current law confers a tax benefits for third

13 party payment of medical expenses but no similar

14 tax benefits for direct individual payment of medical

15 expenses. This has promoted employer-provided
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1 third party payment systems and discouraged direct

2 doctor-patient relationships.

3 (3) The current tax treatment of medical ex4 penses has resulted in a greatly distorted market5 place in medical insurance where decreased opportu6 nities for private personal health insurance has re7 duced competition both for medical insurance and

8 health care services. This has resulted in an in9 creased cost of both health insurance and health

10 care services and fostered overuse of low high pre11 mium health insurance plans.

12 (4) The current tax treatment of medical ex13 penses has restricted the freedom of individuals to

14 exercise direct control over their health care dollars.

15 The exclusion from gross income for employer-pro16 vided health care with no corresponding tax benefit

17 for health insurance and health care costs borne by

18 individuals represents a strong incentive toward em19 ployers group plans.

20 (5) The tax codes preferment of employer-pro21 vided group plans has triggered a marketplace re22 sponse reflected in the significant increases in large

23 health care delivery, and the creation of a relative

24 few health care conglomerates in lieu of thousands

25 of competitive providers of medical insurance and
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1 services. This has increasingly placed medical deci2 sions in the hands of health care bureaucracies and

3 has eroded doctor-patient relationships.

4 (6) The role of the marketplace in both medical

5 insurance and medical services should be strength6 ened. The discriminatory tax policies in the area of

7 health insurance and health care should be ended.

8 Private individuals should be able to contract for

9 their health insurance and health care delivery in an

10 atmosphere free of discriminatory tax pressures.

11 High deductible low premium as well as catastrophic

12 alternatives in health insurance should be viable op13 tions for all Americans.

14 (7) Consumers should have the freedom to pur15 chase the health insurance types of their own choice,

16 to choose their own doctors and to make their own

17 decisions about their health care. Elimination of the

18 discriminatory tax codes regarding health choices

19 will encourage greater choice and competition, there20 by reducing the cost of necessary insurance for all

21 Americans. This will enable millions more Americans

22 to obtain needed health coverage.
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1 SEC. 102. DEDUCTION OF MEDICAL EXPENSES FOR INDI2 VIDUALS.

3 (a) IN GENERAL.—Subsection (a) of section 213 of

4 the Internal Revenue Code of 1986 (relating to treatment

5 of medical, dental, etc., expenses) is amended to read as

6 follows:

7 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be

8 allowed as a deduction the expenses paid during the tax9 able year, not compensated for by insurance or otherwise,

10 for medical care of the taxpayer, his spouse, or a depend11 ent (as defined by section 152).’’.

12 (b) DEDUCTION ALLOWED IN COMPUTING AD13 JUSTED GROSS INCOME.—Subsection (a) of section 62 of

14 such Code is amended by inserting after paragraph (18)

15 the following new paragraph:

16 ‘‘(19) MEDICAL CARE.—The deduction allowed

17 by section 213.’’.

18 (c) CONFORMING AMENDMENTS.—

19 (1) Section 56(b)(1) of such Code is amended

20 by striking subparagraph (B).

21 (2) Section 67(b) is amended by striking para22 graph (5).

23 (3) Section 72(t)(B) of such Code is amended

24 by striking ‘‘to the extent such distributions do not

25 exceed the amount’’ and inserting ‘‘which are’’.
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1 (4) Sections 104(a) and 105(b) of such Code

2 are both amended by striking ‘‘(and not in excess

3 of)’’.

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after

6 December 31, 2003.

7 SEC. 103. MEDICAL CHECKING ACCOUNTS.

8 (a) IN GENERAL.—Subchapter F of chapter 1 of the

9 Internal Revenue Code of 1986 (relating to exempt organi10 zations) is amended by adding at the end the following:

11 ‘‘PART IX—MEDICAL CHECKING ACCOUNTS

‘‘Sec. 530A. Medical checking accounts.

12 ‘‘SEC. 530A. MEDICAL CHECKING ACCOUNTS.

13 ‘‘(a) GENERAL RULE.—A medical checking account

14 shall be exempt from taxation under this subtitle. Not15 withstanding the preceding sentence, any medical checking

16 account shall be subject to the taxes imposed by section

17 511 (relating to imposition of tax on unrelated business

18 income of charitable, etc., organizations). Rules similar to

19 the rules of paragraphs (2) and (4) of section 408(e) shall

20 apply to medical checking accounts, and any amount treat21 ed as distributed under such rules shall be treated as not

22 used to pay qualified medical expenses.

23 ‘‘(b) DEDUCTION FOR CONTRIBUTIONS.—
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1 ‘‘(1) IN GENERAL.—In the case of an indi2 vidual, there shall be allowed as a deduction an

3 amount equal to the aggregate amount paid in cash

4 during the taxable year to a medical checking ac5 count of the taxpayer.

6 ‘‘(2) LIMITATIONS.—

7 ‘‘(A) MAXIMUM ANNUAL CONTRIBUTION.—

8 The deduction under paragraph (1) for a tax9 able year shall not exceed $1,000 ($2,000 in

10 the case of a joint return).

11 ‘‘(B) MAXIMUM ALLOWABLE DEDUCTION

12 BASED ON BALANCE IN ACCOUNT.—No deduc13 tion shall be allowed for a taxable year for any

14 amount contributed to a medical checking ac15 count if the sum of such amount plus the bal16 ance in the account determined as the end of

17 the taxable year would exceed $2,000 ($4,000

18 in the case of married individuals filing a joint

19 return, a surviving spouse, and a head of house20 hold).

21 ‘‘(c) CREDIT FOR CONTRIBUTIONS.—

22 ‘‘(1) IN GENERAL.—In the case of an indi23 vidual, there shall be allowed as a credit against the

24 tax imposed by this chapter for the taxable year an

25 amount equal to the credit amount with respect to
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1 contributions made during the taxable year to the

2 medical checking account of the taxpayer.

3 ‘‘(2) CREDIT AMOUNT.—For purposes of para4 graph (1), the credit amount is the lesser of—

5 ‘‘(A) the total amount of contributions to

6 the medical checking account for the taxable

7 year reduced by the amount of contributions al8 lowed as a deduction under subsection (b), and

9 ‘‘(B) $1,000.

10 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur11 poses of this section—

12 ‘‘(1) MEDICAL CHECKING ACCOUNT.—The term

13 ‘medical checking account’ means a trust created or

14 organized in the United States for the exclusive ben15 efit of a qualified individual or his beneficiaries, but

16 only if the written governing instrument creating the

17 trust meets the following requirements:

18 ‘‘(A) Except in the case of a rollover con19 tribution described in paragraph (4)(C), no con20 tribution will be accepted unless it is in cash, or

21 it exceeds $1,000 ($2,000 in the case of mar22 ried individuals filing a joint return, a surviving

23 spouse, and a head of household).

24 ‘‘(B) The trustee is a bank (as defined in

25 section 408(n)), an insurance company (as de-
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1 fined in section 816), or another person who

2 demonstrates to the satisfaction of the Sec3 retary that the manner in which such person

4 will administer the trust will be consistent with

5 the requirements of this section.

6 ‘‘(C) No part of the trust assets will be in7 vested in life insurance contracts.

8 ‘‘(D) The assets of the trust will not be

9 commingled with other property except in a

10 common trust fund or common investment

11 fund.

12 ‘‘(E) The interest of an individual in the

13 balance in his account is nonforfeitable.

14 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—The

15 term ‘qualified medical expenses’ means, with re16 spect to an account holder, amounts paid by such

17 holder for medical care (as defined in section

18 213(d)) for such individual, the spouse of such indi19 vidual, and any dependent (as defined in section

20 152) of such individual, but only to the extent such

21 amounts are not compensated for by insurance or

22 otherwise (including distributions from an Archer

23 MSA which are not includible in gross income by

24 reason of section 220(f)(1)).
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1 ‘‘(3) CHANGE IN FILING STATUS.—In the case

2 of a taxpayer whose filing status changes during the

3 taxable year, the limitation under subparagraph (B)

4 shall be apportioned among the filing statuses of the

5 taxpayer in accordance with regulations prescribed

6 by the Secretary.

7 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar

8 to the following rules shall apply for purposes of this

9 section:

10 ‘‘(A) Section 219(d)(2) (relating to no de11 duction for rollovers).

12 ‘‘(B) Section 219(f)(3) (relating to time

13 when contributions deemed made).

14 ‘‘(C) Section 219(f)(5) (relating to em15 ployer payments).

16 ‘‘(D) Section 220(f)(5) (relating to rollover

17 contributions).

18 ‘‘(E) Section 220(f)(7) (relating to trans19 fer of account incident to divorce).

20 ‘‘(F) Section 220(f)(8) (relating to treat21 ment after death of account holder).

22 ‘‘(G) Section 408(g) (relating to commu23 nity property laws).

24 ‘‘(H) Section 408(h) (relating to custodial

25 accounts).
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1 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.—

2 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

3 EXPENSES.—Any amount paid or distributed out of

4 a medical checking account which is used exclusively

5 to pay qualified medical expenses of any account

6 holder shall not be includible in gross income.

7 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

8 QUALIFIED MEDICAL EXPENSES.—Any amount paid

9 or distributed out of a medical checking account

10 which is not used exclusively to pay the qualified

11 medical expenses of the account holder shall be in12 cluded in the gross income of such holder.

13 ‘‘(3) ADDITIONAL TAX ON DISTRIBUTIONS NOT

14 USED FOR QUALIFIED MEDICAL EXPENSES.—For

15 purposes of this section, rules similar to the rules of

16 section 220(f)(4) shall apply.

17 ‘‘(4) COORDINATION WITH MEDICAL EXPENSE

18 DEDUCTION.—For purposes of determining the

19 amount of the deduction under section 213, any pay20 ment or distribution out of a medical checking ac21 count for qualified medical expenses shall not be

22 treated as an expense paid for medical care.

23 ‘‘(f) REPORTS.—The Secretary may require the

24 trustee of a medical checking account to make such re25 ports regarding such account to the Secretary and to the
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1 account holder with respect to contributions, distributions,

2 and such other matters as the Secretary determines appro3 priate. The reports required by this subsection shall be

4 filed at such time and in such manner and furnished to

5 such individuals at such time and in such manner as may

6 be required by the Secretary.’’.

7 (b) TAX ON EXCESS CONTRIBUTIONS.—Section 4973

8 of such Code (relating to tax on excess contributions to

9 individual retirement accounts, certain section 403(b) con10 tracts, and certain individual retirement annuities) is

11 amended—

12 (1) in subsection (a) by striking ‘‘or’’ at the end

13 of paragraph (3), by inserting ‘‘or’’ at the end of

14 paragraph (4), and by inserting after paragraph (4)

15 the following:

16 ‘‘(5) a medical checking account (within the

17 meaning of section 530A(d)),’’, and

18 (2) by adding at the end the following new sub19 section:

20 ‘‘(g) EXCESS CONTRIBUTIONS TO MEDICAL CHECK21 ING ACCOUNTS.—For purposes of this section, in the case

22 of medical checking accounts (within the meaning of sec23 tion 530A(d)), the term ‘excess contributions’ means the

24 sum of—
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1 ‘‘(1) the aggregate amount contributed for the

2 taxable year to the accounts (other than rollover

3 contributions referred to in section 530A(d)(4)(C))

4 which is neither excludable from gross income under

5 section 106(b) nor allowable as a deduction or credit

6 under section 530A for such year, and

7 ‘‘(2) the amount determined under this sub8 section for the preceding taxable year, reduced by

9 the sum of—

10 ‘‘(A) the distributions out of the accounts

11 which were included in gross income under sec12 tion 530A(e)(2), and

13 ‘‘(B) the excess (if any) of—

14 ‘‘(i) the sum of the maximum amount

15 allowable as a deduction or credit under

16 section 530A (determined without regard

17 to section 106(b)) for the taxable year,

18 over

19 ‘‘(ii) the amount contributed to the

20 accounts for the taxable year.

21 For purposes of this subsection, any contribution which

22 is distributed out of the medical savings account in a dis23 tribution to which section 530A(d)(4)(B) applies shall be

24 treated as an amount not contributed.’’.

25 (c) TAX ON PROHIBITED TRANSACTIONS.—
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1 (1) Section 4975 of such Code (relating to tax

2 on prohibited transactions) is amended by adding at

3 the end of subsection (c) the following new para4 graph:

5 ‘‘(6) SPECIAL RULE FOR MEDICAL CHECKING

6 ACCOUNTS.—An individual for whose benefit a med7 ical checking account (within the meaning of section

8 530A(d)) is established shall be exempt from the tax

9 imposed by this section with respect to any trans10 action concerning such account (which would other11 wise be taxable under this section) if, with respect

12 to such transaction, the account ceases to be a med13 ical checking account by reason of the application of

14 section 530A(e)(2) to such account.’’.

15 (2) Paragraph (1) of section 4975(e) of such

16 Code is amended by striking ‘‘or’’ at the end of sub17 paragraph (E), by redesignating subparagraph (F)

18 as subparagraph (G), and by inserting after sub19 paragraph (E) the following new subparagraph:

20 ‘‘(F) a medical checking account described

21 in section 530A(d), or’’.

22 (d) FAILURE TO PROVIDE REPORTS ON MEDICAL

23 CHECKING ACCOUNTS.—Paragraph (2) of section 6693(a)

24 (relating to general rule on reports) is amended by strik25 ing ‘‘and’’ at the end of subparagraph (C), by striking the
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1 period at the end of subparagraph (D) and inserting

2 ‘‘, and’’, and by inserting after subparagraph (D) the fol3 lowing new subparagraph:

4 ‘‘(E) section 530A(g) (relating to medical

5 savings accounts).’’.

6 (e) CLERICAL AMENDMENT.—The table of parts for

7 subchapter F of chapter 1 of such Code is amended by

8 adding at the end the following new item:

‘‘PART IX. MEDICAL CHECKING ACCOUNTS.’’.

9 (f) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 December 31, 2003.

12 SEC. 104. DECREASE IN MINIMUM ANNUAL DEDUCTIBLES

13 UNDER A HIGH DEDUCTIBLE HEALTH PLAN

14 FOR PURPOSES OF ARCHER MSAS.

15 (a) IN GENERAL.—Subparagraph (A) of section

16 220(c)(2) of the Internal Revenue Code of 1986 (defining

17 high deductible health plan) is amended—

18 (1) in clause (i) by striking ‘‘$1,500’’ and in19 serting ‘‘$1,000’’, and

20 (2) in clause (ii) by striking ‘‘$3,000’’ and in21 serting ‘‘$2,000’’.

22 (b) MINIMUM NOT INCREASED BY INFLATION.—Sec23 tion 220(g) of such Code is amended by inserting ‘‘(other

24 than the $1,000 amount in subparagraph (A)(i) and the
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1 $2,000 amount in subparagraph (A)(ii) thereof)’’ after

2 ‘‘subsection (c)(2)’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 2003.

6 TITLE II—MEDICAL PRIVACY

7 SEC. 201. FINDINGS.

8 The Congress finds the following:

9 (1) Medical privacy is an issue that concerns a

10 growing number of people in the United States. The

11 culture of the United States has always strongly fa12 vored a close physician-patient relationship. One of

13 the key elements of this relationship is the trust that

14 a patient has that their personal information will be

15 treated as confidential by medical personnel and will

16 not be made public or accessible to other persons

17 without their permission.

18 (2) In our increasingly complex times, two

19 trends are combining to exert pressure on maintain20 ing the confidentiality of health care information.

21 First, public policy favors an increased ability to

22 provide protection against harmful prescription

23 interactions and for the reporting of medications’ se24 rious side effects. Second, health care insurers desire

25 to take advantage of economies of scale in control-
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1 ling health care costs. These trends have greatly re2 duced expectations for the privacy of health care in3 formation.

4 (3) For the first time in our Nation’s history,

5 serious loopholes have been written into privacy pro6 tections that were created to protect the right of in7 dividuals. Positive changes in privacy law have been

8 made in recent years to guarantee that patients are

9 notified regarding the use of their health informa10 tion, have access to their own medical records, and

11 are able to request corrections of such records.

12 These protections must be maintained and strength13 ened.

14 (4) One of the greatest needs in the area of

15 health privacy is to protect individuals against the

16 use of their confidential health information for prof17 it-generating consumer marketing. Patients justifi18 ably have objections to this use of their information

19 without their consent.

20 (5) There recently have been implemented a se21 ries of alarming modifications to the standards pre22 viously finalized to protect the privacy of individually

23 identifiable health information. These include

24 changes in important definitions, additions to the

25 category of health care operations for which patient
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1 consent for the use of their information is not re2 quired, and changes in permitted use of patient in3 formation without consent for public health pur4 poses.

5 (6) Recent rollbacks in health privacy need to

6 be reversed, and the individuals’ confidence that

7 their private conversations with medical personnel

8 will remain private needs to be strengthened.

9 (7) There is also a need to protect the integrity

10 and confidentiality of social security account num11 bers and to prohibit Federal agencies from imposing

12 national standards for identification of individuals.

13 SEC. 202. MODIFICATION OF REGULATIONS ON PRIVACY OF

14 INDIVIDUALLY IDENTIFIABLE HEALTH IN15 FORMATION.

16 (a) MARKETING.—

17 (1) IN GENERAL.—The modifications made by

18 the August 2002 medical privacy rule to the defini19 tion of the term ‘‘marketing’’ in section 164.501 of

20 title 45, Code of Federal Regulations, shall have no

21 force or effect.

22 (2) AUTHORIZATIONS FOR MARKETING.—Sec23 tion 164.508 of title 45, Code of Federal Regula24 tions, shall be construed and applied so as to require

25 that, if an authorization is required for a use or dis-
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1 closure of protected health information for mar2 keting, the authorization shall be considered invalid

3 unless it—

4 (A) uses the term ‘‘marketing’’;

5 (B) states that the purpose of the use or

6 disclosure involved is marketing; and

7 (C) describes the specific marketing uses

8 and disclosures authorized.

9 (b) CONSENT FOR USES OR DISCLOSURES TO CARRY

10 OUT TREATMENT, PAYMENT, OR HEALTH CARE OPER11 ATIONS.—

12 (1) IN GENERAL.—The modifications made to

13 section 164.506 of title 45, Code of Federal Regula14 tions, by the August 2002 medical privacy rule shall

15 have no force or effect.

16 (2) USE OR DISCLOSURE WITHOUT CONSENT.—

17 (A) IN GENERAL.—Section 164.506 of title

18 45, Code of Federal Regulations, insofar as it

19 permits any use or disclosure of protected

20 health information without consent, shall have

21 no force or effect.

22 (B) CIRCUMSTANCES WHERE CONSENT

23 NOT REQUIRED.—A health care provider may

24 use or disclose an individual’s protected health

25 information without obtaining the prior consent
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1 of the individual only in the following cir2 cumstances:

3 (i) To fill or dispense a prescription,

4 and to search for drug interactions related

5 to that prescription, if the health care pro6 vider obtains written consent from the in7 dividual as soon as practicable.

8 (ii) To carry out treatment of that in9 dividual if—

10 (I) the individual has not exe11 cuted a Universal Health Privacy

12 Declaration promulgated under sub13 paragraph (C);

14 (II) the individual and the health

15 care provider have not had in-person

16 communication regarding such treat17 ment; and

18 (III) obtaining consent would be

19 impracticable.

20 (C) UNIVERSAL HEALTH PRIVACY DEC21 LARATION.—

22 (i) IN GENERAL.—The Secretary of

23 Health and Human Services shall promul24 gate a document which shall be known as
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1 the ‘‘Universal Health Privacy Declara2 tion’’.

3 (ii) ELIGIBILITY.—A Universal

4 Health Privacy Declaration may be exe5 cuted by any individual who is a citizen of

6 the United States or an alien lawfully ad7 mitted to the United States for permanent

8 residence.

9 (iii) PURPOSE.—A Universal Health

10 Privacy Declaration, once executed by an

11 individual described in clause (ii) and not

12 revoked, shall be considered to prohibit, as

13 provided under subparagraph (B), a health

14 care provider from using or disclosing the

15 individual’s protected health information

16 for treatment without obtaining the prior

17 consent of the individual.

18 (iv) ENFORCEMENT.—There is estab19 lished in the Department of Health and

20 Human Services an Office of the Health

21 Privacy Ombudsman, which shall be head22 ed by an individual known as the ‘‘Health

23 Privacy Ombudsman’’. The Health Privacy

24 Ombudsman shall be charged with inves25 tigating complaints submitted by individ-
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1 uals described in clause (ii) regarding a

2 use or disclosure of protected health infor3 mation in violation of their Universal

4 Health Privacy Declaration.

5 (c) DISCLOSURES FOR LAW ENFORCEMENT PUR6 POSES.—Subparagraph (C) of section 164.506(f)(1)(ii) of

7 title 45, Code of Federal Regulations shall have no force

8 or effect.

9 (d) DEFINITIONS.—

10 (1) IN GENERAL.—For purposes of this section:

11 (A) DECEMBER 2000 MEDICAL PRIVACY

12 RULE.—The term ‘‘December 2000 medical pri13 vacy rule’’ means the final rule on standards

14 for privacy of individually identifiable health in15 formation published on December 28, 2000, in

16 the Federal Register (65 Fed. Reg. 82462), in17 cluding the provisions of title 45, Code of Fed18 eral Regulations, revised or added by such rule.

19 (B) AUGUST 2002 MEDICAL PRIVACY

20 RULE.—The term ‘‘August 2002 medical pri21 vacy rule’’ means the final rule, published on

22 August 14, 2002, in the Federal Register (67

23 Fed. Reg. 53182), that modified the December

24 2000 medical privacy rule.
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1 (2) OTHER TERMS DEFINED.—For purposes of

2 this section:

3 (A) HEALTH CARE PROVIDER.—The term

4 ‘‘health care provider’’ shall have the meaning

5 given such term in section 160.103 of title 45,

6 Code of Federal Regulations, as contained in

7 the December 2000 medical privacy rule.

8 (B) DISCLOSURE; INDIVIDUAL; PROTECTED

9 HEALTH INFORMATION; TREATMENT; USE.—

10 The terms ‘‘disclosure’’, ‘‘individual’’, ‘‘pro11 tected health information’’, ‘‘treatment’’, and

12 ‘‘use’’ shall have the meaning given such terms

13 in section 164.501 of title 45, Code of Federal

14 Regulations, as contained in the December

15 2000 medical privacy rule.

16 SEC. 203. RESTRICTIONS ON THE USE OF THE SOCIAL SE17 CURITY ACCOUNT NUMBER.

18 (a) REPEAL OF PROVISIONS AUTHORIZING CERTAIN

19 USAGES OF THE SOCIAL SECURITY ACCOUNT NUMBER.—

20 Section 205(c)(2) of the Social Security Act (42 U.S.C.

21 405(c)(2)) is amended—

22 (1) in subparagraph (C), by striking ‘‘(C)(i) It

23 is the policy’’ and all that follows through clause

24 (vi);
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1 (2) by striking clause (ix) of subparagraph (C)

2 and redesignating clauses (vii) and (viii) of subpara3 graph (C) as clauses (iv) and (v), respectively;

4 (3) by striking subparagraphs (E) and (H);

5 (4) by redesignating subparagraphs (F) and

6 (G) as subparagraphs (E) and (F), respectively; and

7 (5) in subparagraph (E) (as redesignated by

8 paragraph (4)), by inserting ‘‘(i)’’ after ‘‘(E)’’, and

9 by adding at the end the following new clause:

10 ‘‘(ii) No individual shall be treated under any provi11 sion of law, rule, or regulation as required for any purpose

12 to apply for assignment of a social security account num13 ber for himself or herself or on behalf of any other indi14 vidual, except as a condition for receipt of benefits under

15 this title as provided in clause (i).’’.

16 (b) NEW RULES APPLICABLE TO SOCIAL SECURITY

17 ACCOUNT NUMBERS.—Section 205(c)(2) of such Act is

18 amended further—

19 (1) by inserting after subparagraph (B) the fol20 lowing:

21 ‘‘(C)(i) All social security account numbers

22 issued under this subsection shall be randomly

23 generated.

24 ‘‘(ii) Except as otherwise provided in this

25 paragraph—
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1 ‘‘(I) the social security account num2 ber issued under this subsection to any in3 dividual shall be the exclusive property of

4 such individual, and

5 ‘‘(II) the Social Security Administra6 tion shall not divulge the social security ac7 count number issued to any individual

8 under this subsection to any agency or in9 strumentality of the Federal Government,

10 to any State, political subdivision of a

11 State, or agency or instrumentality of a

12 State or political subdivision thereof, or to

13 any other individual.

14 ‘‘(iii) Clause (ii) shall not apply with re15 spect to the use of the social security account

16 number as an identifying number to the extent

17 provided in section 6109(d) of the Internal Rev18 enue Code of 1986 (relating to use of the social

19 security account number for social security and

20 related purposes).’’.

21 (c) EFFECTIVE DATES AND RELATED RULES.—

22 (1) EFFECTIVE DATES.—Not later than 60

23 days after the date of the enactment of this Act, the

24 Commissioner of Social Security shall publish in the

25 Federal Register the date determined by the Com-
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1 missioner, in consultation with the Secretary of the

2 Treasury, to be the earliest date thereafter by which

3 implementation of the amendments made by this

4 section is practicable. The amendments made by

5 subsection (a) shall take effect on the earlier of such

6 date or the date which occurs 5 years after the date

7 of the enactment of this Act. The amendments made

8 by subsection (b) shall apply with respect to social

9 security account numbers issued on or after such

10 earlier date. The amendments made by subsection

11 (c) shall apply with respect to calendar quarters and

12 taxable years beginning on or after such earlier date.

13 (2) REISSUANCE OF NUMBERS.—The Commis14 sioner of Social Security shall ensure that, not later

15 than 5 years after the date of the enactment of this

16 Act, all individuals who have been issued social secu17 rity account numbers under section 205(c) of the

18 Social Security Act as of the date prior to the earlier

19 date specified in paragraph (1) can request new so20 cial security account numbers in accordance with

21 such section as amended by this section. Upon

22 issuance of such new social security account num23 bers, any social security account numbers issued to

24 such individuals prior to such earlier date specified

25 in paragraph (1) shall be null and void and subject
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1 to the requirements of section 205(c)(2)(C)(ii)(II) of

2 such Act, as amended by this section. Any individual

3 to whom, or on behalf of whom, such a new social

4 security account number has been issued pursuant

5 to a request made under this paragraph shall be ex6 empt from any requirement under the laws of the

7 United States or of any State or political subdivision

8 thereof, or under the rules and regulations of any

9 agency or instrumentality of the United States or

10 any State or political subdivision thereof, to divulge,

11 use, or acknowledge any social security account

12 number previously issued to such individual. All per13 sons who obtain new social security account numbers

14 under this Act are granted lawful immunity from

15 any Federal, State, or local government agency re16 quirement to divulge, use, or acknowledge previously

17 issued social security account numbers. Nothing in

18 this section or the amendments made thereby shall

19 be construed to preclude the Social Security Admin20 istration and the Secretary of the Treasury from

21 cross-referencing such social security account num22 bers newly issued to individuals pursuant to this

23 paragraph to the former social security account

24 numbers of such individuals for purposes of admin25 istering title II or title XVI of such Act or admin-
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1 istering the Internal Revenue Code of 1986 in con2 nection with section 86, chapter 2, and subtitle C

3 thereof.

4 SEC. 204. PROHIBITION OF GOVERNMENTWIDE UNIFORM

5 IDENTIFYING NUMBERS.

6 (a) IN GENERAL.—Except as authorized under sec7 tion 205(c)(2) of the Social Security Act, any two agencies

8 or instrumentalities of the Federal Government may not

9 implement the same identifying number with respect to

10 any individual.

11 (b) IDENTIFYING NUMBERS.—For purposes of this

12 section—

13 (1) the term ‘‘identifying number’’, with respect

14 to an individual means any combination of alpha-nu15 meric symbols which serves to identify such indi16 vidual; and

17 (2) any identifying number and any one or

18 more derivatives of such number shall be treated as

19 the same identifying number.

20 (c) EFFECTIVE DATE.—The provisions of this section

21 shall take effect January 1, 2005.

22 SEC. 205. PROHIBITION OF GOVERNMENT-ESTABLISHED

23 IDENTIFIERS.

24 (a) IN GENERAL.—Subject to subsection (b), a Fed25 eral agency may not—
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1 (1) establish or mandate a uniform standard

2 for identification of an individual that is required to

3 be used by any other Federal agency, a State agen4 cy, or a private person for any purpose other than

5 the purpose of conducting the authorized activities

6 of the Federal agency establishing or mandating the

7 standard; or

8 (2) condition receipt of any Federal grant or

9 contract or other Federal funding on the adoption,

10 by a State, a State agency, or a political subdivision

11 of a State, of a uniform standard for identification

12 of an individual.

13 (b) TRANSACTIONS BETWEEN PRIVATE PERSONS.—

14 Notwithstanding subsection (a), a Federal agency may not

15 establish, mandate, or encourage the use of a uniform

16 standard for identification of an individual that is required

17 to be used within the agency, or by any other Federal

18 agency, a State agency, or a private person, for the pur19 pose of—

20 (1) investigating, monitoring, overseeing, or

21 otherwise regulating a transaction to which the Fed22 eral Government is not a party; or

23 (2) administrative simplification.
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1 (c) AMENDMENT OF PRIVACY ACT OF 1974.—(1)

2 Section 7 of the Privacy Act of 1974 (5 U.S.C. 552a note)

3 is amended—

4 (A) in subsection (a)(2), by striking ‘‘respect

5 to—’’ and all that follows through the end of sub6 paragraph (B) and inserting ‘‘respect to any disclo7 sure which is required by Federal statute.’’; and

8 (B) in subsection (b), by inserting ‘‘Federal’’

9 before ‘‘statutory’’.

10 (2) Section 205(c)(2)(C)(ii) of the Social Security Act

11 (42 U.S.C. 405(c)(2)(C)(ii)) is amended by striking ‘‘, un12 less section 7(a)’’ and all that follows through the end of

13 the section and inserting a period.

14 (d) ENFORCEMENT.—

15 (1) AMENDMENTS RELATING TO PRIVACY ACT

16 OF 1974.—Subsection (g) of section 552a of title 5,

17 United States Code, is amended—

18 (A) in subparagraph (D), by inserting

19 after ‘‘this section,’’ the following: ‘‘subsection

20 (a) or (b) of section 207 of the Medical Inde21 pendence, Privacy, and Innovation Act of 2003,

22 or section 7 of the Privacy Act of 1974,’’; and

23 (B) by adding at the end the following new

24 paragraph:
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1 ‘‘(6) For purposes of any suit brought under the pro2 visions of subsection (g)(1)(D) for failure to comply with

3 any provision of section 7 of the Privacy Act of 1974, the

4 term ‘agency’ shall include an agency of a State or local

5 government.’’.

6 (2) CRIMINAL PENALTIES FOR MISUSE OF SO7 CIAL SECURITY ACCOUNT NUMBERS.—Section

8 208(a) of the Social Security Act (42 U.S.C. 408(a))

9 is amended—

10 (A) by adding ‘‘or’’ at the end of para11 graph (8); and

12 (B) by inserting after paragraph (8) the

13 following new paragraph:

14 ‘‘(9) is a medical service provider or health in15 surance issuer and—

16 ‘‘(A) uses a social security account number

17 as a medical patient tracking number, patient

18 record number, or prescription tracking num19 ber; or

20 ‘‘(B) denies any person medical care or

21 health insurance coverage based upon such per22 son’s refusal to disclose his or her social secu23 rity account number;’’.
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1 TITLE III—MODIFICATIONS RE2 GARDING REGULATION OF

3 DRUGS UNDER FEDERAL

4 FOOD, DRUG, AND COSMETIC

5 ACT

6 SEC. 301. DEFINITION OF DRUG.

7 Section 201(g)(1) of the Federal Food, Drug, and

8 Cosmetic Act (21 U.S.C. 321(g)(1)) is amended in the

9 first sentence by striking ‘‘and (B) articles intended’’ and

10 all that follows and inserting the following: ‘‘and (B) arti11 cles intended for use in the diagnosis, cure, or treatment

12 (but not mitigation or prevention) of disease in man or

13 other animals.’’.

14 SEC. 302. STRIKING OF EFFECTIVENESS REQUIREMENT;

15 MODIFICATIONS REGARDING PATENT LIST16 INGS, PATENT CERTIFICATIONS, AND THIRTY17 MONTH RULE.

18 (a) STRIKING OF EFFECTIVENESS REQUIREMENT;

19 PROHIBITION AGAINST LISTING OF CERTAIN PATENTS.—

20 (1) IN GENERAL.—Section 505(b) of the Fed21 eral Food, Drug, and Cosmetic Act (21 U.S.C.

22 355(b)) is amended by striking ‘‘(b)(1)’’ and all that

23 follows through ‘‘clinical trials required by clause

24 (A).’’ and inserting the following:

25 ‘‘(b) APPLICATION.—
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1 ‘‘(1) CONTENTS.—

2 ‘‘(A) IN GENERAL.—Any person may file

3 with the Secretary an application with respect

4 to any drug subject to the provisions of sub5 section (a). Such persons shall submit to the

6 Secretary as a part of the application—

7 ‘‘(i) full reports of investigations

8 which have been made to show whether or

9 not such drug is safe for use;

10 ‘‘(ii) a full list of the articles used as

11 components of such drug;

12 ‘‘(iii) a full statement of the composi13 tion of such drug;

14 ‘‘(iv) a full description of the methods

15 used in, and the facilities and controls

16 used for, the manufacture, processing, and

17 packing of such drug;

18 ‘‘(v) such samples of such drug and of

19 the articles used as components thereof as

20 the Secretary may require; and

21 ‘‘(vi) specimens of the labeling pro22 posed to be used for such drug.

23 ‘‘(B) PATENT INFORMATION.—

24 ‘‘(i) REQUIREMENT.—The applicant

25 shall file with the application the patent
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1 number and the expiration date of any pat2 ent which claims the drug for which the

3 applicant submitted the application or

4 which claims a method of using such drug

5 and with respect to which a claim of patent

6 infringement could reasonably be asserted

7 if a person not licensed by the owner en8 gaged in the manufacture use, or sale of

9 the drug.

10 ‘‘(ii) TYPES OF PATENTS.—

11 ‘‘(I) PATENTS SUBJECT TO RE12 QUIREMENT.—The patents for which

13 information under clause (i) is re14 quired to be filed with the Secretary

15 are drug substance (ingredient) pat16 ents, drug product (formulation and

17 composition) patents, product by proc18 ess patents, and method of use pat19 ents.

20 ‘‘(II) PROHIBITION REGARDING

21 CERTAIN PATENTS.—Process patents,

22 patents claiming packaging, patents

23 claiming metabolites, and patents

24 claiming intermediates are not patents

25 described in subclause (I), and infor-
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1 mation on such patents may not be

2 filed with the Secretary.

3 ‘‘(III) PATENT REGARDING DRUG

4 SUBSTANCE.—For patents that claim

5 the drug substance, the applicant

6 shall submit information only on pat7 ents that claim the drug substance

8 that is the subject of the pending or

9 approved application or that claim a

10 drug substance that is the same as

11 the active ingredient that is the sub12 ject of an approved or pending appli13 cation within the meaning of sub14 section (j)(2)(A)(ii).

15 ‘‘(IV) PATENT REGARDING DRUG

16 PRODUCT.—For patents that claim a

17 drug product, the applicant shall sub18 mit information only on those patents

19 that claim a drug product that is the

20 subject of a pending or approved ap21 plication.

22 ‘‘(V) PATENT REGARDING METH23 OD OF USE.—For patents that claim a

24 method of use, the applicant shall

25 submit information only on those pat-
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1 ents that claim indications or other

2 conditions of use that are the subject

3 of a pending or approved application.

4 For approved applications, the appli5 cant shall identify the indication or

6 other condition of use in the approved

7 labeling that corresponds to the listed

8 patent and claim identified.

9 ‘‘(iii) FILING OF PATENT AFTER SUB10 MISSION OF APPLICATION.—If a applica11 tion is filed under this subsection for a

12 drug and a patent which claims such drug

13 or a method of using such drug is issued

14 after the filing date but before approval of

15 the application, the applicant shall amend

16 the application to include the information

17 required by clauses (i) and (ii).

18 ‘‘(iv) PUBLICATION OF PATENT IN19 FORMATION.—Upon approval of the appli20 cation, the Secretary shall publish informa21 tion submitted under clauses (i) through

22 (iii).

23 ‘‘(C) GUIDANCE REGARDING INCLUSION OF

24 WOMEN AND MINORITIES IN CLINICAL

25 TRIALS.—The Secretary shall, in consultation
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1 with the Director of the National Institutes of

2 Health and with representatives of the drug

3 manufacturing industry, review and develop

4 guidance, as appropriate, on the inclusion of

5 women and minorities in clinical trials required

6 by subparagraph (A)(i).’’.

7 (2) CONFORMING AMENDMENTS.—The Federal

8 Food, Drug, and Cosmetic Act (21 U.S.C. 301 et

9 seq.) is amended—

10 (A) in section 201(p)—

11 (i) by striking ‘‘safety and effective12 ness of’’ and inserting ‘‘safety of’’; and

13 (ii) by striking ‘‘safe and effective for

14 use’’ and inserting ‘‘safe for use’’; and

15 (B) in section 505—

16 (i) by striking ‘‘safety and effective17 ness’’ each place such term appears and

18 inserting ‘‘safety’’;

19 (ii) by striking ‘‘safety or effective20 ness’’ each place such term appears and

21 inserting ‘‘safety’’; and

22 (iii) in subsection (i)(1)(D), by strik23 ing ‘‘pediatric safety and efficacy’’ and in24 serting ‘‘pediatric safety’’.
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1 (b) ABBREVIATED APPLICATIONS; SINGLE CERTIFI2 CATION REGARDING PATENT INVALIDITY OR NON3 INFRINGEMENT; SINGLE THIRTY-MONTH DELAY IN AP4 PROVAL.—Section 505(j)(2)(A) of the Federal Food,

5 Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)(A)) is

6 amended in the matter after and below clause (viii) by

7 adding at the end the following sentence: ‘‘With respect

8 to a certification under clause (vii)(IV), an abbreviated ap9 plication (whether or not amended) may not contain more

10 than one such certification, without regard to patents filed

11 after the date of the certification.’’.

12 SEC. 303. IMPORTATION OF CERTAIN DRUGS.

13 Chapter VIII of the Federal Food, Drug, and Cos14 metic Act (21 U.S.C. 381 et seq.) is amended by striking

15 section 804 and inserting the following:

16 ‘‘IMPORTATION OF CERTAIN DRUGS

17 ‘‘SEC. 804. (a) REGULATIONS.—The Secretary, after

18 consultation with the United States Trade Representative

19 and the Commissioner of Customs, shall promulgate regu20 lations permitting pharmacists and wholesalers to import

21 prescription drugs from foreign nations.

22 ‘‘(b) LIMITATION.—The regulations under subsection

23 (a) shall require that safeguards be in place to ensure that

24 each prescription drug imported under the regulations

25 complies with section 505 (including being safe for the in-
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1 tended use of the prescription drug) with sections 501 and

2 502 and with other applicable requirements of this Act.’’.

Æ