I 

109TH CONGRESS 

1ST SESSION H. R. 2599 

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

of health care in the United States. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 24, 2005 

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

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

Energy and Commerce and Judiciary, 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 2005’’. 

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 health savings accounts and Archer 

MSAs. 

TITLE II—MEDICAL PRIVACY 

Sec. 201. Findings. 

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

health information. 

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. Granting of exclusive or partially exclusive licenses regarding inventions made with Federal assistance. 

Sec. 304. 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 costs of both health insurance and health 

10 care services and fostered over use 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 bourn by 

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

20 (5) The tax code’s 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 at10 mosphere free of discriminatory tax pressures. High 

11 deductible low premium as well as catastrophic alter12 natives in health insurance should be viable options 

13 for all Americans. 

14 SEC. 102. DEDUCTION OF MEDICAL EXPENSES FOR INDI15 VIDUALS. 

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

17 the Internal Revenue Code of 1986 (relating to treatment 

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

19 follows: 

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

21 allowed as a deduction the expenses paid during the tax22 able year, not compensated for by insurance or otherwise, 

23 for medical care of the taxpayer, his spouse, or a depend24 ent (as defined by section 152, determined without regard 

25 to subsections (b)(1), (b)(2), and (d)(1)(B) thereof).’’. 
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1 (b) DEDUCTION ALLOWED IN COMPUTING AD2 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

3 such Code is amended by redesignating paragraph (19) 

4 (relating to costs involving discrimination suits, etc.) as 

5 paragraph (20) and by inserting after paragraph (20) the 

6 following new paragraph: 

7 ‘‘(21) MEDICAL CARE.—The deduction allowed 

8 by section 213.’’. 

9 (c) CONFORMING AMENDMENTS.— 

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

11 by striking subparagraph (B). 

12 (2) Section 67(b) of such Code is amended by 

13 striking paragraph (5). 

14 (3) Section 72(t)(2)(B) of such Code is amend15 ed by striking ‘‘to the extent such distributions do 

16 not exceed the amount’’ and inserting ‘‘which are’’. 

17 (4) Sections 104(a) and 105(b) of such Code 

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

19 of)’’. 

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2005. 
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1 SEC. 103. MEDICAL CHECKING ACCOUNTS. 

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

3 Internal Revenue Code of 1986 (relating to exempt organi4 zations) is amended by adding at the end the following: 

5 ‘‘PART IX—MEDICAL CHECKING ACCOUNTS 

‘‘Sec. 530A. Medical checking accounts. 

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

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

8 shall be exempt from taxation under this subtitle. Not9 withstanding the preceding sentence, any medical checking 

10 account shall be subject to the taxes imposed by section 

11 511 (relating to imposition of tax on unrelated business 

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

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

14 apply to medical checking accounts, and any amount treat15 ed as distributed under such rules shall be treated as not 

16 used to pay qualified medical expenses. 

17 ‘‘(b) DEDUCTION FOR CONTRIBUTIONS.— 

18 ‘‘(1) IN GENERAL.—In the case of an indi19 vidual, there shall be allowed as a deduction an 

20 amount equal to the aggregate amount paid in cash 

21 during the taxable year to a medical checking ac22 count of the taxpayer. 

23 ‘‘(2) LIMITATIONS.— 

24 ‘‘(A) MAXIMUM ANNUAL CONTRIBUTION.— 

25 The deduction under paragraph (1) for a tax-
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1 able year shall not exceed $1,000 ($2,000 in 

2 the case of a joint return). 

3 ‘‘(B) MAXIMUM ALLOWABLE DEDUCTION

4 BASED ON BALANCE IN ACCOUNT.—No deduc5 tion shall be allowed for a taxable year for any 

6 amount contributed to a medical checking ac7 count if the sum of such amount plus the bal8 ance in the account determined as of the end of 

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

10 in the case of married individuals filing a joint 

11 return, a surviving spouse, and a head of house12 hold). 

13 ‘‘(c) CREDIT FOR CONTRIBUTIONS.— 

14 ‘‘(1) IN GENERAL.—In the case of an indi15 vidual, there shall be allowed as a credit against the 

16 tax imposed by this chapter for the taxable year an 

17 amount equal to the credit amount with respect to 

18 contributions made during the taxable year to the 

19 medical checking account of the taxpayer. 

20 ‘‘(2) CREDIT AMOUNT.—For purposes of para21 graph (1), the credit amount is the lesser of— 

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

23 the medical checking account for the taxable 

24 year reduced by the amount of contributions al25 lowed as a deduction under subsection (b), and 
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1 ‘‘(B) $1,000. 

2 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur3 poses of this section— 

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

5 ‘medical checking account’ means a trust created or 

6 organized in the United States for the exclusive ben7 efit of a qualified individual or his beneficiaries, but 

8 only if the written governing instrument creating the 

9 trust meets the following requirements: 

10 ‘‘(A) Except in the case of a rollover con11 tribution described in paragraph (4)(D), no 

12 contribution will be accepted unless it is in 

13 cash, or it exceeds $1,000 ($2,000 in the case 

14 of married individuals filing a joint return, a 

15 surviving spouse, and a head of household). 

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

17 section 408(n), an insurance company (as de18 fined in section 816), or another person who 

19 demonstrates to the satisfaction of the Sec20 retary that the manner in which such person 

21 will administer the trust will be consistent with 

22 the requirements of this section. 

23 ‘‘(C) No part of the trust assets will be in24 vested in life insurance contracts. 
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1 ‘‘(D) The assets of the trust will not be 

2 commingled with other property except in a 

3 common trust fund or common investment 

4 fund. 

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

6 balance in his account is nonforfeitable. 

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

8 term ‘qualified medical expenses’ means, with re9 spect to an account holder, amounts paid by such 

10 holder for medical care (as defined in section 

11 213(d)) for such individual, the spouse of such indi12 vidual, and any dependent (as defined in section 

13 152, determined without regard to subsections 

14 (b)(1), (b)(2), and (d)(1)(B) thereof) of such indi15 vidual, but only to the extent such amounts are not 

16 compensated for by insurance or otherwise (includ17 ing distributions from an Archer MSA which are not 

18 includible in gross income by reason of section 

19 220(f)(1) or from a health savings account which 

20 are not includible in gross income by reason of sec21 tion 223(f)(1)). 

22 ‘‘(3) CHANGE IN FILING STATUS.—In the case 

23 of a taxpayer whose filing status changes during the 

24 taxable year, the limitation under paragraph (1)(A) 

25 shall be apportioned among the filing statuses of the 
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1 taxpayer in accordance with regulations prescribed 

2 by the Secretary. 

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

4 to the following rules shall apply for purposes of this 

5 section: 

6 ‘‘(A) Section 219(d)(2) (relating to no de7 duction for rollovers). 

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

9 when contributions deemed made). 

10 ‘‘(C) Section 219(f)(5) (relating to em11 ployer payments). 

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

13 contributions). 

14 ‘‘(E) Section 220(f)(7) (relating to trans15 fer of account incident to divorce). 

16 ‘‘(F) Section 220(f)(8) (relating to treat17 ment after death of account holder). 

18 ‘‘(G) Section 408(g) (relating to commu19 nity property laws). 

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

21 accounts). 

22 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

23 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

24 EXPENSES.—Any amount paid or distributed out of 

25 a medical checking account which is used exclusively 
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1 to pay qualified medical expenses of any account 

2 holder shall not be includible in gross income. 

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

4 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

5 or distributed out of a medical checking account 

6 which is not used exclusively to pay the qualified 

7 medical expenses of the account holder shall be in8 cluded in the gross income of such holder. 

9 ‘‘(3) ADDITIONAL TAX ON DISTRIBUTIONS NOT

10 USED FOR QUALIFIED MEDICAL EXPENSES.—For 

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

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

13 ‘‘(4) COORDINATION WITH MEDICAL EXPENSE

14 DEDUCTION.—For purposes of determining the 

15 amount of the deduction under section 213, any pay16 ment or distribution out of a medical checking ac17 count for qualified medical expenses shall not be 

18 treated as an expense paid for medical care. 

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

20 trustee of a medical checking account to make such re21 ports regarding such account to the Secretary and to the 

22 account holder with respect to contributions, distributions, 

23 and such other matters as the Secretary determines appro24 priate. The reports required by this subsection shall be 

25 filed at such time and in such manner and furnished to 
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1 such individuals at such time and in such manner as may 

2 be required by the Secretary.’’. 

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

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

5 individual retirement accounts, certain section 403(b) con6 tracts, and certain individual retirement annuities) is 

7 amended— 

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

9 of paragraph (4), by inserting ‘‘or’’ at the end of 

10 paragraph (5), and by inserting after paragraph (5) 

11 the following: 

12 ‘‘(6) a medical checking account (within the 

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

14 (2) by adding at the end the following new sub15 section: 

16 ‘‘(h) EXCESS CONTRIBUTIONS TO MEDICAL CHECK17 ING ACCOUNTS.—For purposes of this section, in the case 

18 of medical checking accounts (within the meaning of sec19 tion 530A(d)), the term ‘excess contributions’ means the 

20 sum of— 

21 ‘‘(1) the aggregate amount contributed for the 

22 taxable year to such accounts (other than rollover 

23 contributions referred to in section 530A(d)(4)(D)) 

24 which is not allowable as a deduction or credit under 

25 section 530A for such year, and 
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1 ‘‘(2) the amount determined under this sub2 section for the preceding taxable year, reduced by 

3 the sum of— 

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

5 which were included in gross income under sec6 tion 530A(e)(2), and 

7 ‘‘(B) the excess (if any) of— 

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

9 allowable as a deduction or credit under 

10 section 530A for the taxable year, over 

11 ‘‘(ii) the amount contributed to such 

12 accounts for the taxable year. 

13 For purposes of this subsection, any contribution which 

14 is distributed out of the medical checking account in a dis15 tribution to which section 530A(d)(4)(B) applies shall be 

16 treated as an amount not contributed.’’. 

17 (c) TAX ON PROHIBITED TRANSACTIONS.— 

18 (1) Subsection (c) of section 4975 of such Code 

19 (relating to tax on prohibited transactions) is 

20 amended by adding at the end the following new 

21 paragraph: 

22 ‘‘(6) SPECIAL RULE FOR MEDICAL CHECKING

23 ACCOUNTS.—An individual for whose benefit a med24 ical checking account (within the meaning of section 

25 530A(d)) is established shall be exempt from the tax 
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1 imposed by this section with respect to any trans2 action concerning such account (which would other3 wise be taxable under this section) if, with respect 

4 to such transaction, the account ceases to be a med5 ical checking account by reason of the application of 

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

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

8 Code is amended by striking ‘‘or’’ at the end of sub9 paragraph (F), by redesignating subparagraph (G) 

10 as subparagraph (H), and by inserting after sub11 paragraph (F) the following new subparagraph: 

12 ‘‘(G) a medical checking account described 

13 in section 530A(d), or’’. 

14 (d) FAILURE TO PROVIDE REPORTS ON MEDICAL

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

16 of such Code (relating to general rule on reports) is 

17 amended by striking ‘‘and’’ at the end of subparagraph 

18 (D), by striking the period at the end of subparagraph 

19 (E) and inserting ‘‘, and’’, and by inserting after subpara20 graph (E) the following new subparagraph: 

21 ‘‘(F) section 530A(g) (relating to medical 

22 savings accounts).’’. 

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

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

25 adding at the end the following new item: 

‘‘PART IX. MEDICAL CHECKING ACCOUNTS’’. 
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1 (f) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2005. 

4 SEC. 104. DECREASE IN MINIMUM ANNUAL DEDUCTIBLES 

5 UNDER A HIGH DEDUCTIBLE HEALTH PLAN 

6 FOR PURPOSES OF HEALTH SAVINGS AC7 COUNTS AND ARCHER MSAS. 

8 (a) ANNUAL DEDUCTIBLE AND OUT-OF-POCKET EX9 PENSES WITH RESPECT TO HEALTH SAVINGS AC10 COUNTS.— 

11 (1) IN GENERAL.—Subclause (I) of section 

12 223(c)(2)(A) (ii) of the Internal Revenue Code of 

13 1986 (defining high deductible health plan) is 

14 amended by striking ‘‘$5,000’’ and inserting 

15 ‘‘$4,000’’. 

16 (2) MINIMUM DEDUCTIBLE DECREASED; 

17 AMOUNTS NOT INCREASED BY INFLATION.—Para18 graph (1) of section 223(g) of such Code is amend19 ed— 

20 (A) in the matter preceding subparagraph 

21 (A) by striking ‘‘subsections (b)(2) and 

22 (c)(2)(A)’’ and inserting ‘‘subsection (b)(2)’’, 

23 and 

24 (B) in subparagraph (B) by striking ‘‘sub25 stituting’’ and all that follows and inserting 
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1 ‘‘substituting calendar year 1997 for ‘calendar 

2 year 1992’ in subparagraph (B) thereof.’’. 

3 (b) ARCHER MSAS.— 

4 (1) DECREASE IN MINIMUM DEDUCTIBLE.— 

5 Subparagraph (A) of section 220(c)(2) of the Inter6 nal Revenue Code of 1986 (defining high deductible 

7 health plan) is amended— 

8 (A) in clause (i) by striking ‘‘$1,500’’ and 

9 inserting ‘‘$1,000’’, and 

10 (B) in clause (ii) by striking ‘‘$3,000’’ and 

11 inserting ‘‘$2,000’’. 

12 (2) MINIMUM NOT INCREASED BY INFLA13 TION.—Section 220(g) of such Code is amended by 

14 inserting ‘‘(other than the $1,000 amount in sub15 paragraph (A)(i) and the $2,000 amount in sub16 paragraph (A)(ii) thereof)’’ after ‘‘subsection 

17 (c)(2)’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2005. 

21 TITLE II—MEDICAL PRIVACY 

22 SEC. 201. FINDINGS. 

23 The Congress finds the following: 

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

25 growing number of people in the United States. The 
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1 culture of the United States has always strongly fa2 vored a close physician-patient relationship. One of 

3 the key elements of this relationship is the trust that 

4 a patient has that their personal information will be 

5 treated as confidential by medical personnel and will 

6 not be made public or accessible to other persons 

7 without their permission. 

8 (2) In our increasingly complex times, two 

9 trends are combining to exert pressure on maintain10 ing the confidentiality of health care information. 

11 First, public policy favors an increased ability to 

12 provide protection against harmful prescription 

13 interactions and for the reporting of medications’ se14 rious side effects. Second, health care insurers desire 

15 to take advantage of economies of scale in control16 ling health care costs. These trends have greatly re17 duced expectations for the privacy of health care in18 formation. 

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

20 serious loopholes have been written into privacy pro21 tections that were created to protect the right of in22 dividuals. Positive changes in privacy law have been 

23 made in recent years to guarantee that patients are 

24 notified regarding the use of their health informa25 tion, have access to their own medical records, and 
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1 are able to request corrections of such records. 

2 These protections must be maintained and strength3 ened. 

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

5 health privacy is to protect individuals against the 

6 use of their confidential health information for prof7 it-generating consumer marketing. Patients justifi8 ably have objections to this use of their information 

9 without their consent. 

10 (5) There recently have been implemented a se11 ries of alarming modifications to the standards pre12 viously finalized to protect the privacy of individually 

13 identifiable health information. These include 

14 changes in important definitions, additions to the 

15 category of health care operations for which patient 

16 consent for the use of their information is not re17 quired, and changes in permitted use of patient in18 formation without consent for public health pur19 poses. 

20 (6) Recent rollbacks in health privacy need to 

21 be reversed, and the individuals’ confidence that 

22 their private conversations with medical personnel 

23 will remain private needs to be strengthened. 

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

25 and confidentiality of social security account num-
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1 bers and to prohibit Federal agencies from imposing 

2 national standards for identification of individuals. 

3 SEC. 202. MODIFICATION OF REGULATIONS ON PRIVACY OF 

4 INDIVIDUALLY IDENTIFIABLE HEALTH IN5 FORMATION. 

6 (a) MARKETING.— 

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

8 the August 2002 medical privacy rule to the defini9 tion of the term ‘‘marketing’’ in section 164.501 of 

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

11 force or effect. 

12 (2) AUTHORIZATIONS FOR MARKETING.—Sec13 tion 164.508 of title 45, Code of Federal Regula14 tions, shall be construed and applied so as to require 

15 that, if an authorization is required for a use or dis16 closure of protected health information for mar17 keting, the authorization shall be considered invalid 

18 unless it— 

19 (A) uses the term ‘‘marketing’’; 

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

21 disclosure involved is marketing; and 

22 (C) describes the specific marketing uses 

23 and disclosures authorized. 
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1 (b) CONSENT FOR USES OR DISCLOSURES TO CARRY

2 OUT TREATMENT, PAYMENT, OR HEALTH CARE OPER3 ATIONS.— 

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

5 section 164.506 of title 45, Code of Federal Regula6 tions, by the August 2002 medical privacy rule shall 

7 have no force or effect. 

8 (2) USE OR DISCLOSURE WITHOUT CONSENT.— 

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

10 45, Code of Federal Regulations, insofar as it 

11 permits any use or disclosure of protected 

12 health information without consent, shall have 

13 no force or effect. 

14 (B) CIRCUMSTANCES WHERE CONSENT

15 NOT REQUIRED.—A health care provider may 

16 use or disclose an individual’s protected health 

17 information without obtaining the prior consent 

18 of the individual only in the following cir19 cumstances: 

20 (i) To fill or dispense a prescription, 

21 and to search for drug interactions related 

22 to that prescription, if the health care pro23 vider obtains written consent from the in24 dividual as soon as practicable. 
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1 (ii) To carry out treatment of that in2 dividual if— 

3 (I) the individual has not exe4 cuted a Universal Health Privacy 

5 Declaration promulgated under sub6 paragraph (C); 

7 (II) the individual and the health 

8 care provider have not had in-person 

9 communication regarding such treat10 ment; and 

11 (III) obtaining consent would be 

12 impracticable. 

13 (C) UNIVERSAL HEALTH PRIVACY DEC14 LARATION.— 

15 (i) IN GENERAL.—The Secretary of 

16 Health and Human Services shall promul17 gate a document which shall be known as 

18 the ‘‘Universal Health Privacy Declara19 tion’’. 

20 (ii) ELIGIBILITY.—A Universal 

21 Health Privacy Declaration may be exe22 cuted by any individual who is a citizen of 

23 the United States or an alien lawfully ad24 mitted to the United States for permanent 

25 residence. 
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1 (iii) PURPOSE.—A Universal Health 

2 Privacy Declaration, once executed by an 

3 individual described in clause (ii) and not 

4 revoked, shall be considered to prohibit, as 

5 provided under subparagraph (B), a health 

6 care provider from using or disclosing the 

7 individual’s protected health information 

8 for treatment without obtaining the prior 

9 consent of the individual. 

10 (iv) ENFORCEMENT.—There is estab11 lished in the Department of Health and 

12 Human Services an Office of the Health 

13 Privacy Ombudsman, which shall be head14 ed by an individual known as the ‘‘Health 

15 Privacy Ombudsman’’. The Health Privacy 

16 Ombudsman shall be charged with inves17 tigating complaints submitted by individ18 uals described in clause (ii) regarding a 

19 use or disclosure of protected health infor20 mation in violation of their Universal 

21 Health Privacy Declaration. 

22 (c) DISCLOSURES FOR LAW ENFORCEMENT PUR23 POSES.—Subparagraph (C) of section 164.506(f)(1)(ii) of 

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

25 or effect. 
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1 (d) DEFINITIONS.— 

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

3 (A) DECEMBER 2000 MEDICAL PRIVACY

4 RULE.—The term ‘‘December 2000 medical pri5 vacy rule’’ means the final rule on standards 

6 for privacy of individually identifiable health in7 formation published on December 28, 2000, in 

8 the Federal Register (65 Fed. Reg. 82462), in9 cluding the provisions of title 45, Code of Fed10 eral Regulations, revised or added by such rule. 

11 (B) AUGUST 2002 MEDICAL PRIVACY

12 RULE.—The term ‘‘August 2002 medical pri13 vacy rule’’ means the final rule, published on 

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

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

16 2000 medical privacy rule. 

17 (2) OTHER TERMS DEFINED.—For purposes of 

18 this section: 

19 (A) HEALTH CARE PROVIDER.—The term 

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

21 given such term in section 160.103 of title 45, 

22 Code of Federal Regulations, as contained in 

23 the December 2000 medical privacy rule. 

24 (B) DISCLOSURE; INDIVIDUAL; PROTECTED

25 HEALTH INFORMATION; TREATMENT; USE.— 
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1 The terms ‘‘disclosure’’, ‘‘individual’’, ‘‘pro2 tected health information’’, ‘‘treatment’’, and 

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

4 in section 164.501 of title 45, Code of Federal 

5 Regulations, as contained in the December 

6 2000 medical privacy rule. 

7 TITLE III—MODIFICATIONS RE8 GARDING REGULATION OF 

9 DRUGS UNDER FEDERAL 

10 FOOD, DRUG, AND COSMETIC 

11 ACT 

12 SEC. 301. DEFINITION OF DRUG. 

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

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

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

16 all that follows and inserting the following: ‘‘and (B) arti17 cles intended for use in the diagnosis, cure, or treatment 

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

19 other animals.’’. 

20 SEC. 302. STRIKING OF EFFECTIVENESS REQUIREMENT; 

21 MODIFICATIONS REGARDING PATENT LIST22 INGS, PATENT CERTIFICATIONS, AND THIRTY23 MONTH RULE. 

24 (a) STRIKING OF EFFECTIVENESS REQUIREMENT; 

25 PROHIBITION AGAINST LISTING OF CERTAIN PATENTS.— 
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1 (1) IN GENERAL.—Section 505(b) of the Fed2 eral Food, Drug, and Cosmetic Act (21 U.S.C. 

3 355(b)) is amended by striking ‘‘(b)(1)’’ and all that 

4 follows through ‘‘clinical trials required by clause 

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

6 ‘‘(b) APPLICATION.— 

7 ‘‘(1) CONTENTS.— 

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

9 with the Secretary an application with respect 

10 to any drug subject to the provisions of sub11 section (a). Such persons shall submit to the 

12 Secretary as a part of the application— 

13 ‘‘(i) full reports of investigations 

14 which have been made to show whether or 

15 not such drug is safe for use; 

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

17 components of such drug; 

18 ‘‘(iii) a full statement of the composi19 tion of such drug; 

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

21 used in, and the facilities and controls 

22 used for, the manufacture, processing, and 

23 packing of such drug; 
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1 ‘‘(v) such samples of such drug and of 

2 the articles used as components thereof as 

3 the Secretary may require; and 

4 ‘‘(vi) specimens of the labeling pro5 posed to be used for such drug. 

6 ‘‘(B) PATENT INFORMATION.— 

7 ‘‘(i) REQUIREMENT.—The applicant 

8 shall file with the application the patent 

9 number and the expiration date of any pat10 ent which claims the drug for which the 

11 applicant submitted the application or 

12 which claims a method of using such drug 

13 and with respect to which a claim of patent 

14 infringement could reasonably be asserted 

15 if a person not licensed by the owner en16 gaged in the manufacture use, or sale of 

17 the drug. 

18 ‘‘(ii) TYPES OF PATENTS.— 

19 ‘‘(I) PATENTS SUBJECT TO RE20 QUIREMENT.—The patents for which 

21 information under clause (i) is re22 quired to be filed with the Secretary 

23 are drug substance (ingredient) pat24 ents, drug product (formulation and 

25 composition) patents, product by proc-
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1 ess patents, and method of use pat2 ents. 

3 ‘‘(II) PROHIBITION REGARDING

4 CERTAIN PATENTS.—Process patents, 

5 patents claiming packaging, patents 

6 claiming metabolites, and patents 

7 claiming intermediates are not patents 

8 described in subclause (I), and infor9 mation on such patents may not be 

10 filed with the Secretary. 

11 ‘‘(III) PATENT REGARDING DRUG

12 SUBSTANCE.—For patents that claim 

13 the drug substance, the applicant 

14 shall submit information only on pat15 ents that claim the drug substance 

16 that is the subject of the pending or 

17 approved application or that claim a 

18 drug substance that is the same as 

19 the active ingredient that is the sub20 ject of an approved or pending appli21 cation within the meaning of sub22 section (j)(2)(A)(ii). 

23 ‘‘(IV) PATENT REGARDING DRUG

24 PRODUCT.—For patents that claim a 

25 drug product, the applicant shall sub-
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1 mit information only on those patents 

2 that claim a drug product that is the 

3 subject of a pending or approved ap4 plication. 

5 ‘‘(V) PATENT REGARDING METH6 OD OF USE.—For patents that claim a 

7 method of use, the applicant shall 

8 submit information only on those pat9 ents that claim indications or other 

10 conditions of use that are the subject 

11 of a pending or approved application. 

12 For approved applications, the appli13 cant shall identify the indication or 

14 other condition of use in the approved 

15 labeling that corresponds to the listed 

16 patent and claim identified. 

17 ‘‘(iii) FILING OF PATENT AFTER SUB18 MISSION OF APPLICATION.—If an applica19 tion is filed under this subsection for a 

20 drug and a patent which claims such drug 

21 or a method of using such drug is issued 

22 after the filing date but before approval of 

23 the application, the applicant shall amend 

24 the application to include the information 

25 required by clauses (i) and (ii). 
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1 ‘‘(iv) PUBLICATION OF PATENT IN2 FORMATION.—Upon approval of the appli3 cation, the Secretary shall publish informa4 tion submitted under clauses (i) through 

5 (iii). 

6 ‘‘(C) GUIDANCE REGARDING INCLUSION OF

7 WOMEN AND MINORITIES IN CLINICAL

8 TRIALS.—The Secretary shall, in consultation 

9 with the Director of the National Institutes of 

10 Health and with representatives of the drug 

11 manufacturing industry, review and develop 

12 guidance, as appropriate, on the inclusion of 

13 women and minorities in clinical trials required 

14 by subparagraph (A)(i).’’. 

15 (2) CONFORMING AMENDMENTS.—The Federal 

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

17 seq.) is amended— 

18 (A) in section 201(p)— 

19 (i) by striking ‘‘safety and effective20 ness of’’ and inserting ‘‘safety of’’; and 

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

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

23 (B) in section 505— 
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1 (i) by striking ‘‘safety and effective2 ness’’ each place such term appears and 

3 inserting ‘‘safety’’; 

4 (ii) by striking ‘‘safety or effective5 ness’’ each place such term appears and 

6 inserting ‘‘safety’’; and 

7 (iii) in subsection (i)(1)(D), by strik8 ing ‘‘pediatric safety and efficacy’’ and in9 serting ‘‘pediatric safety’’. 

10 (b) ABBREVIATED APPLICATIONS; AMENDMENTS RE11 GARDING THIRTY-MONTH DELAY IN APPROVAL.—Section 

12 505 of the Federal Food, Drug, and Cosmetic Act (21 

13 U.S.C. 355(j)) is amended— 

14 (1) in subsection (c)(3)— 

15 (A) in subparagraph (C), in the matter 

16 preceding clause (i), by striking ‘‘thirty-month 

17 period’’ and inserting ‘‘twenty-month period’’; 

18 and 

19 (B) in subparagraph (E)(ii), by striking 

20 ‘‘thirty-month period’’ and inserting ‘‘twenty21 month period’’; and 

22 (2) in subsection (j)(5)— 

23 (A) in subparagraph (B)(iii), in the matter 

24 preceding subclause (I), by striking ‘‘thirty- 
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1 month period’’ and inserting ‘‘twenty-month pe2 riod’’; and 

3 (B) in subparagraph (F)(ii), by striking 

4 ‘‘thirty-month period’’ and inserting ‘‘twenty5 month period’’. 

6 SEC. 303. GRANTING OF EXCLUSIVE OR PARTIALLY EXCLU7 SIVE LICENSES REGARDING INVENTIONS 

8 MADE WITH FEDERAL ASSISTANCE. 

9 No grant of an exclusive or partially exclusive license 

10 pursuant to chapter 18 of title 35, United States Code, 

11 may be made, except in accordance with section 209 of 

12 such title (relating to the availability to the public of an 

13 invention and its benefits on reasonable terms). 

14 SEC. 304. IMPORTATION OF CERTAIN DRUGS. 

15 Chapter VIII of the Federal Food, Drug, and Cos16 metic Act (21 U.S.C. 381 et seq.) is amended by striking 

17 section 804 and inserting the following: 

18 ‘‘IMPORTATION OF CERTAIN DRUGS

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

20 consultation with the United States Trade Representative 

21 and the Commissioner of Customs, shall promulgate regu22 lations permitting pharmacists and wholesalers to import 

23 prescription drugs from foreign nations. 

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

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

26 each prescription drug imported under the regulations 
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1 complies with section 505 (including being safe for the in2 tended use of the prescription drug) with sections 501 and 

3 502 and with other applicable requirements of this Act.’’. 

Æ