II 

Calendar No. 89 

113TH CONGRESS 

1ST SESSION S. 959 

To amend the Federal Food, Drug, and Cosmetic Act with respect to 

compounding drugs. 

IN THE SENATE OF THE UNITED STATES 

MAY 15, 2013 

Mr. HARKIN (for himself, Mr. ALEXANDER, Mr. ROBERTS, Mr. FRANKEN, Ms. 

MIKULSKI, and Ms. WARREN) introduced the following bill; which was 

read twice and referred to the Committee on Health, Education, Labor, 

and Pensions 

JUNE 19, 2013 

Reported by Mr. HARKIN, with an amendment and an amendment to the title 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To amend the Federal Food, Drug, and Cosmetic Act with 

respect to compounding drugs. 

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; REFERENCES IN ACT. 

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

5 ‘‘Pharmaceutical Compounding Quality and Account6 ability Act’’. 


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1 (b) REFERENCES IN ACT.—Except as otherwise spec2 ified, amendments made by this Act to a section or other 

3 provision of law are amendments to such section or other 

4 provision of the Federal Food, Drug, and Cosmetic Act 

5 (21 U.S.C. 301 et seq.). 

6 SEC. 2. REGULATION OF HUMAN AND ANIMAL DRUG 

7 COMPOUNDING. 

8 (a) CLARIFICATION OF NEW DRUG AND NEW ANI9 MAL DRUG STATUS.—For purposes of the Federal Food, 

10 Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), the 

11 terms ‘‘new drug’’ (as defined in section 201(p) of such 

12 Act) and ‘‘new animal drug’’ (as defined in section 201(v) 

13 of such Act) shall include a compounded human drug and 

14 a compounded animal drug, respectively. 

15 (b) REGULATION OF HUMAN AND ANIMAL DRUG

16 COMPOUNDING.—Section 503A (21 U.S.C. 353a) is 

17 amended to read as follows: 

18 ‘‘SEC. 503A. HUMAN AND ANIMAL DRUG COMPOUNDING. 

19 ‘‘(a) SCOPE.— 

20 ‘‘(1) COMPOUNDING.—In this section, the terms 

21 ‘compounding’ and ‘compound’— 

22 ‘‘(A) include— 

23 ‘‘(i) the combining, admixing, mixing, 

24 diluting, reconstituting, or otherwise alter25 ing of a marketed drug; 


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1 ‘‘(ii) compounding a drug from a bulk 

2 drug substance; and 

3 ‘‘(iii) repackaging, as defined in sub4 section (b)(5); and 

5 ‘‘(B) exclude mixing, reconstituting, or 

6 other such acts with respect to a marketed drug 

7 that are limited to and performed solely in ac8 cordance with specific directions for such acts 

9 contained in approved labeling provided by a 

10 drug’s manufacturer, when performed upon re11 ceipt of a prescription order for an identified in12 dividual patient. 

13 ‘‘(2) DISPENSING NOT A SALE.—In this section, 

14 the terms ‘sell’ or ‘resale’ do not include dispensing 

15 to patients, or, in the case of animal drugs, to the 

16 individual responsible for providing care for the ani17 mal for which the drug is intended, in accordance 

18 with State law, including any fee associated with 

19 such dispensing. 

20 ‘‘(3) EXEMPTIONS.—This section shall not 

21 apply to— 

22 ‘‘(A) medical gases; 

23 ‘‘(B) animal drugs that are subject to reg24 ulation as biological products by the Secretary 


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1 of Agriculture under the Act commonly known 

2 as the Virus-Serum-Toxin Act; or 

3 ‘‘(C) human blood and blood components 

4 for transfusion. 

5 ‘‘(b) DEFINITIONS.—In this section: 

6 ‘‘(1) COMPOUNDING MANUFACTURER.— 

7 ‘‘(A) IN GENERAL.—The term 

8 ‘compounding manufacturer’ means a facility at 

9 one geographic location or address— 

10 ‘‘(i) that compounds any sterile drug 

11 product without receiving a prescription 

12 order for such sterile drug product prior to 

13 beginning compounding, and distributes or 

14 offers to sell such compounded sterile drug 

15 product in interstate commerce; or 

16 ‘‘(ii) that repackages any preservative17 free sterile drug product or pools any ster18 ile drug products, except as provided in 

19 paragraph (7)(B). 

20 ‘‘(B) EXCLUDED ACTIVITIES.—Notwith21 standing subparagraph (A)(ii), a facility shall 

22 not be considered a compounding manufacturer 

23 if such facility— 


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1 ‘‘(i) repackages drugs in accordance 

2 with section 506F or the final guidance de3 scribed in section 506F(d); and 

4 ‘‘(ii) does not otherwise meet the defi5 nition of compounding manufacturer under 

6 subparagraph (A). 

7 ‘‘(2) POOLING; POOLS.—The terms ‘pooling’ 

8 and ‘pool’— 

9 ‘‘(A) mean taking a single drug approved 

10 under section 505 or 512, conditionally ap11 proved under section 571, included on the index 

12 established under section 572(a)(1), or licensed 

13 under section 351 of the Public Health Service 

14 Act from the container in which it is distributed 

15 by the original manufacturer and combining it 

16 with the same drug from one or more other 

17 containers without or before further manipu18 lating the product (such as by diluting it or 

19 mixing it with another, different drug or 

20 drugs); 

21 ‘‘(B) do not include combining the drug 

22 from two or more separate containers of the 

23 same drug when a single container of the drug 

24 is not sufficient to prepare a single dose for ad25 ministration to an individual patient; and 


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1 ‘‘(C) do not include combining the drug 

2 from two or more separate containers of compo3 nent products of a total parenteral nutrition 

4 product, if such pooling, and labeling and use 

5 of the finished total parenteral nutrition prod6 uct, comply with State pharmacy law. 

7 ‘‘(3) PRACTITIONER.—The term ‘practitioner’ 

8 includes a physician, veterinarian, or any other per9 son that is authorized to prescribe medication under 

10 State law. 

11 ‘‘(4) PRESCRIPTION; PRESCRIPTION ORDER.— 

12 The term ‘prescription’ or ‘prescription order’ means 

13 a prescription or prescription order, as defined 

14 under applicable State law, that complies with re15 quirements applicable under such State law. 

16 ‘‘(5) REPACKAGE OR REPACKAGING.—The term 

17 ‘repackage’ or ‘repackaging’ means taking a drug 

18 approved under section 505 or 512, conditionally ap19 proved under section 571, included on the index es20 tablished under section 572(a)(1), or licensed under 

21 section 351 of the Public Health Service Act from 

22 the container in which it is distributed by the origi23 nal manufacturer and placing it in a different con24 tainer of the same or smaller size without further 

25 manipulating the drug (such as by diluting it or 


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1 mixing it with another, different drug or drugs), un2 less such repackaging is done pursuant to a pre3 scription for an identified individual patient. 

4 ‘‘(6) STERILE DRUG PRODUCT.—The term 

5 ‘sterile drug product’ means a drug that is— 

6 ‘‘(A) intended for parenteral administra7 tion; 

8 ‘‘(B) an ophthalmic or inhalation drug; or 

9 ‘‘(C) required to be sterile under Federal 

10 or State law. 

11 ‘‘(7) TRADITIONAL COMPOUNDER.— 

12 ‘‘(A) IN GENERAL.—The term ‘traditional 

13 compounder’ means an entity— 

14 ‘‘(i) wherein a drug is compounded 

15 by— 

16 ‘‘(I) a licensed pharmacist, or 

17 other pharmacy personnel (to the ex18 tent permitted under State law), in a 

19 State-licensed pharmacy or a Federal 

20 facility; or 

21 ‘‘(II) a licensed physician or li22 censed veterinarian, to the extent per23 mitted under State law; 

24 ‘‘(ii) that— 


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1 ‘‘(I) compounds a drug upon re2 ceipt of a prescription order for an 

3 identified individual patient; or 

4 ‘‘(II) compounds a drug in lim5 ited quantities before receipt of a pre6 scription order for an identified indi7 vidual patient, to the extent permitted 

8 under State law, if such compounding 

9 is based on a history of the licensed 

10 pharmacist, licensed physician, or li11 censed veterinarian receiving prescrip12 tion orders for the compounding of 

13 the drug, which orders have been gen14 erated solely within an established re15 lationship between the licensed phar16 macist, licensed physician, or licensed 

17 veterinarian and— 

18 ‘‘(aa) such individual patient 

19 for whom the prescription order 

20 will be provided, or, in the case 

21 of an animal drug, such indi22 vidual responsible for providing 

23 care for the animal for which the 

24 drug is ordered; or 


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1 ‘‘(bb) the licensed physician, 

2 licensed veterinarian, or other li3 censed practitioner who will write 

4 such prescription order; and 

5 ‘‘(iii) that does not meet the definition 

6 of a compounding manufacturer under 

7 paragraph (1). 

8 ‘‘(B) EXCEPTIONS.— 

9 ‘‘(i) HOSPITALS AND HEALTH SYS10 TEMS.— 

11 ‘‘(I) IN GENERAL.—A pharmacy 

12 within a hospital, veterinary hospital, 

13 or health system that compounds a 

14 drug and dispenses such drug (which 

15 may include interstate shipment) 

16 within such hospital or health system 

17 or ships such drug for dispensing to 

18 patients with an established relation19 ship with the hospital or health sys20 tem (which may include interstate 

21 shipment), or that repackages preserv22 ative-free sterile drug product or pools 

23 sterile drug products, shall be consid24 ered a traditional compounder if such 


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1 pharmacy otherwise meets the defini2 tion under subparagraph (A). 

3 ‘‘(II) HEALTH SYSTEM DE4 FINED.—For purposes of this sub5 paragraph, the term ‘health system’ 

6 means two or more hospitals or veteri7 nary hospitals that are owned and op8 erated by the same entity and that 

9 share access to databases with drug 

10 order information for patients or ani11 mals, as applicable. A health system 

12 includes both the inpatient and out13 patient facilities of hospitals within 

14 the health system. 

15 ‘‘(ii) PET AND RADIOPHARMA16 CEUTICALS.—A pharmacy that compounds 

17 positron emission tomography drugs or 

18 radiopharmaceuticals shall be considered a 

19 traditional compounder if it does not com20 pound other drugs that would cause it to 

21 be a compounding manufacturer described 

22 in paragraph (1)(A). 

23 ‘‘(c) EXEMPTIONS FROM CERTAIN REQUIRE24 MENTS.— 


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1 ‘‘(1) DRUGS COMPOUNDED BY TRADITIONAL

2 COMPOUNDERS.—Sections 501(a)(2)(B), 502(f)(1), 

3 505 (in the case of a human drug), section 512 (in 

4 the case of an animal drug), and section 351 of the 

5 Public Health Service Act (in the case of a biological 

6 product) shall not apply to a compounded drug if 

7 such drug— 

8 ‘‘(A) is compounded by a traditional 

9 compounder that is in compliance with this sec10 tion; and 

11 ‘‘(B) meets the requirements of this sec12 tion applicable to drugs compounded by tradi13 tional compounders. 

14 ‘‘(2) DRUGS COMPOUNDED BY COMPOUNDING

15 MANUFACTURERS.—Sections 502(f)(1), 505 (in the 

16 case of a human drug), section 512 (in the case of 

17 an animal drug), and section 351 of the Public 

18 Health Service Act (in the case of a biological prod19 uct) shall not apply to a compounded prescription 

20 drug if such drug— 

21 ‘‘(A) is compounded by a compounding 

22 manufacturer— 

23 ‘‘(i) that is not licensed as a phar24 macy in any State; and 


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1 ‘‘(ii) that is in compliance with this 

2 section; and 

3 ‘‘(B) meets the requirements of this sec4 tion applicable to drugs compounded by 

5 compounding manufacturers. 

6 ‘‘(d) DRUGS THAT MAY NOT BE COMPOUNDED.— 

7 ‘‘(1) IN GENERAL.—The following drugs may 

8 not be compounded, except under conditions speci9 fied by the Secretary: 

10 ‘‘(A) DRUGS THAT ARE DEMONSTRABLY

11 DIFFICULT TO COMPOUND.—A drug or category 

12 of drugs that presents demonstrable difficulties 

13 for compounding, which may include a complex 

14 dosage form or biological product, as designated 

15 by the Secretary pursuant to paragraph (2). 

16 ‘‘(B) MARKETED DRUGS.—A drug, other 

17 than a biological product, that is a copy of a 

18 marketed drug approved under 505 or 512, 

19 conditionally approved under section 571, or in20 cluded on the index established under section 

21 572(a)(1), except as provided in paragraph (3). 

22 ‘‘(C) BIOLOGICAL PRODUCTS.—A drug 

23 that is a biological product, except as provided 

24 in paragraph (4). 


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1 ‘‘(D) DRUGS REMOVED FOR SAFETY AND

2 EFFICACY.—A drug that appears on a list pub3 lished by the Secretary in the Federal Register 

4 of drugs that have been withdrawn or removed 

5 from the market because such drug or compo6 nents of such drug have been found to be un7 safe or not effective, subject to paragraph (5). 

8 ‘‘(2) DRUGS THAT ARE DEMONSTRABLY DIF9 FICULT TO COMPOUND.— 

10 ‘‘(A) IN GENERAL.—The Secretary may 

11 promulgate a regulation that designates drugs 

12 or categories of drugs that are demonstrably 

13 difficult to compound that may not be com14 pounded, or that may be compounded only 

15 under conditions specified by the Secretary. 

16 Such regulation— 

17 ‘‘(i) may include the designation of 

18 drugs or categories of drugs that are com19 plex dosage forms or biological products, 

20 such as extended release products, metered 

21 dose inhalers, transdermal patches, and 

22 sterile liposomal products; and 

23 ‘‘(ii) shall specify, for each drug in24 cluded on the list, whether the prohibition 


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1 or condition applies to the use of the drug 

2 in humans, animals, or both. 

3 ‘‘(B) INTERIM LIST.— 

4 ‘‘(i) IN GENERAL.—Before the effec5 tive date of the regulation promulgated 

6 under subparagraph (A), the Secretary 

7 may designate drugs that are complex dos8 age forms or biological products that can9 not be compounded by— 

10 ‘‘(I) publishing a notice of such 

11 drugs proposed for designation, in12 cluding the rationale for such designa13 tion, in the Federal Register; 

14 ‘‘(II) providing a period of not 

15 less than 60 days for comment on the 

16 notice; and 

17 ‘‘(III) publishing a notice in the 

18 Federal Register designating the 

19 drugs that are complex dosage forms 

20 and biological products that cannot be 

21 compounded. 

22 ‘‘(ii) SUNSET.—Any notice provided 

23 under clause (i) shall cease to have force or 

24 effect on the date that is 5 years after the 

25 date of enactment of the Pharmaceutical 


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1 Compounding Quality and Accountability 

2 Act or on the effective date of the final 

3 regulation under subparagraph (A), which4 ever is earlier. 

5 ‘‘(3) EXCEPTIONS REGARDING MARKETED

6 DRUGS.— 

7 ‘‘(A) IN GENERAL.—A drug (other than a 

8 biological product) that is a copy of a marketed 

9 drug approved under 505 or 512, conditionally 

10 approved under section 571, or included on the 

11 index established under section 572(a)(1), in12 cluding variations of such drug compounded 

13 from bulk substances, may be compounded only 

14 if— 

15 ‘‘(i)(I) the compounded variation pro16 duces for the patient a clinical difference 

17 between the compounded drug and such 

18 marketed drug, as determined by the pre19 scribing practitioner, and, prior to begin20 ning compounding a variation of such 

21 drug, the facility compounding the vari22 ation receives a prescription order speci23 fying that the variation may be com24 pounded; or 


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1 ‘‘(II)(aa) such marketed drug, at the 

2 time of compounding a copy of such drug 

3 and at the time of distribution of the com4 pounded drug, is on the drug shortage list 

5 under section 506E (in the case of a 

6 human drug), on the Current Drug Short7 ages list for veterinary products main8 tained on the Internet Web site of the 

9 Food and Drug Administration (in the 

10 case of an animal drug), or in the Sec11 retary’s sole discretion, has otherwise been 

12 identified by the Secretary as in shortage 

13 such as in a specific region or on a drug 

14 shortage list maintained by a private 

15 party; and 

16 ‘‘(bb) the traditional compounder or 

17 the compounding manufacturer notifies the 

18 Secretary not later than 3 calendar days 

19 after beginning the compounding, unless 

20 the Secretary waives the notice require21 ment; and 

22 ‘‘(ii) in the case of a marketed drug 

23 approved under section 505 that is subject 

24 to a risk evaluation and mitigation strat25 egy approved with elements to assure safe 


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1 use pursuant to section 505–1, the entity 

2 compounding the drug demonstrates to the 

3 Secretary that the entity will utilize con4 trols that are comparable to the controls 

5 applicable under the relevant risk evalua6 tion and mitigation strategy. 

7 ‘‘(B) EXCLUSION.—For purposes of this 

8 paragraph, repackaging a marketed drug ap9 proved under section 505, 512, conditionally ap10 proved under section 571, or included on the 

11 index established under section 572(a)(1), does 

12 not make the repackaged drug a copy of such 

13 marketed drug. 

14 ‘‘(4) EXCEPTIONS REGARDING BIOLOGICAL

15 PRODUCTS.—A drug that is a biological product may 

16 be compounded only if— 

17 ‘‘(A) such drug is compounded from a li18 censed biological product and the compounding 

19 does not involve combining or mixing the li20 censed biological product with— 

21 ‘‘(i) a bulk drug substance; or 

22 ‘‘(ii) another, different drug or drugs 

23 approved under 505 or 512, conditionally 

24 approved under section 571, included on 

25 the index established under section 


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1 572(a)(1), or licensed under section 351 of 

2 the Public Health Service Act, unless the 

3 compounding is limited to the combining, 

4 mixing, or diluting of licensed allergenic 

5 products; and 

6 ‘‘(B)(i) with respect to a traditional 

7 compounder, the compounded biological product 

8 produces for the patient a clinical difference be9 tween the compounded drug and the licensed bi10 ological product, as determined by the pre11 scribing practitioner, and, prior to beginning 

12 compounding such drug, the facility 

13 compounding the variation receives a prescrip14 tion order specifying that the biological product 

15 may be compounded; 

16 ‘‘(ii) with respect to a compounding manu17 facturer, the compounded variation biological 

18 product produces for the patient a clinical dif19 ference between the compounded drug and the 

20 licensed biological product, as determined by a 

21 licensed practitioner responsible for the pa22 tient’s care in a health care entity that provides 

23 medical services through licensed prescribers di24 rectly to patients, and, prior to beginning 

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1 ufacturer receives a duly authorized medical 

2 order from a hospital or health system speci3 fying that the biological product may be com4 pounded; or 

5 ‘‘(iii) the compounded biological product is 

6 an allergenic product. 

7 ‘‘(5) REQUIREMENT REGARDING DRUGS RE8 MOVED FOR SAFETY OR EFFICACY.—The list pub9 lished by the Secretary in the Federal Register of 

10 drugs that have been withdrawn or removed from 

11 the market, as described in paragraph (1)(D), shall 

12 specify whether a human drug on such list may, not13 withstanding the inclusion on such list, be com14 pounded for use in animals. The Secretary shall up15 date the lists described in subparagraphs (D) and 

16 (E) of subsection (e)(2), as appropriate, to conform 

17 with the list described in paragraph (1)(D). 

18 ‘‘(e) QUALITY OF DRUG INGREDIENTS.— 

19 ‘‘(1) HUMAN DRUGS.—A traditional 

20 compounder or a compounding manufacturer shall— 

21 ‘‘(A) compound a human drug using only 

22 bulk drug substances (as defined in regulations 

23 of the Secretary published at section 

24 207.3(a)(4) of title 21, Code of Federal Regula25 tions (or any successor regulations))— 


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1 ‘‘(i) that— 

2 ‘‘(I) comply with the standards of 

3 an applicable United States Pharma4 copoeia or National Formulary mono5 graph, if a monograph exists and has 

6 not been identified under paragraph 

7 (6), and the United States Pharma8 copoeia chapters on pharmacy 

9 compounding; 

10 ‘‘(II) if such a monograph does 

11 not exist, are drug substances that 

12 are components of drugs approved by 

13 the Secretary; or 

14 ‘‘(III) if such a monograph does 

15 not exist and the drug substance is 

16 not a component of a drug approved 

17 by the Secretary, that appear on a list 

18 developed by the Secretary through 

19 regulations issued by the Secretary; 

20 ‘‘(ii) that are manufactured by an es21 tablishment that is registered under sec22 tion 510 (including a foreign establishment 

23 that is registered under section 510(i)); 

24 and 


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1 ‘‘(iii) that are accompanied by valid 

2 certificates of analysis for each specific lot 

3 of bulk drug substance; and 

4 ‘‘(B) use ingredients (other than bulk drug 

5 substances) that comply with the standards of 

6 an applicable United States Pharmacopoeia or 

7 National Formulary monograph, if a mono8 graph exists and has not been identified under 

9 paragraph (6), and with the United States 

10 Pharmacopoeia chapter on pharmacy 

11 compounding. 

12 ‘‘(2) ANIMAL DRUGS.—A traditional 

13 compounder or a compounding manufacturer shall— 

14 ‘‘(A) compound an animal drug using only 

15 bulk drug substances (as defined in regulations 

16 of the Secretary published at section 

17 207.3(a)(4) of title 21, Code of Federal Regula18 tions (or any successor regulations)) that— 

19 ‘‘(i) are manufactured by an establish20 ment that is registered under section 510 

21 (including a foreign establishment that is 

22 registered under section 510(i)); and 

23 ‘‘(ii) are accompanied by valid certifi24 cates of analysis for each specific lot of 

25 bulk drug substance; 


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1 ‘‘(B) use ingredients (other than bulk drug 

2 substances) that comply with the standards of 

3 an applicable United States Pharmacopoeia or 

4 National Formulary monograph, if a mono5 graph exists and has not been identified under 

6 paragraph (6), and with the United States 

7 Pharmacopoeia chapters on pharmacy 

8 compounding; 

9 ‘‘(C) in the case of a compounded animal 

10 drug for use in non-food-producing minor spe11 cies, use bulk substances that— 

12 ‘‘(i) comply with the standards of an 

13 applicable United States Pharmacopoeia or 

14 National Formulary monograph, if a 

15 monograph exists and has not been identi16 fied under paragraph (6), and with the 

17 United States Pharmacopoeia chapters on 

18 pharmacy compounding; 

19 ‘‘(ii) if such a monograph does not 

20 exist, are drug substances that are compo21 nents of drugs approved by the Secretary; 

22 or 

23 ‘‘(iii) if such a monograph does not 

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1 retary, that appear on a list developed by 

2 the Secretary through regulations issued 

3 by the Secretary; 

4 ‘‘(D) in the case of a compounded animal 

5 drug for use in non-food-producing major spe6 cies, beginning on the date of publication of the 

7 list established in accordance with paragraph 

8 (3)(A), shall use bulk substances that are in9 cluded on such list, subject to paragraph 

10 (3)(C); and 

11 ‘‘(E) in the case of a compounded animal 

12 drug for use in food-producing major and minor 

13 species, shall use bulk substances that are in14 cluded on a list established by the Secretary of 

15 bulk substances acceptable for use in 

16 compounding a drug for one or more such spe17 cies, in accordance with paragraph (4). 

18 ‘‘(3) NON-FOOD-PRODUCING MAJOR SPECIES

19 LISTING PROCEDURE.— 

20 ‘‘(A) IN GENERAL.—Not later than 30 

21 days after the effective date of the Pharma22 ceutical Compounding Quality and Account23 ability Act, the Secretary shall establish a list 

24 of bulk substances acceptable for compounding 

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1 cies, and any conditions applicable to such use, 

2 and may also identify bulk substances that the 

3 Secretary has determined not acceptable for 

4 compounding with respect to a drug for use in 

5 such species. 

6 ‘‘(B) PROCEDURE.—In developing and up7 dating the list under subparagraph (A), the 

8 Secretary shall— 

9 ‘‘(i) publish a notice in the Federal 

10 Register identifying bulk substances pro11 posed as acceptable and any bulk sub12 stance determine to be unacceptable, and 

13 the rationale for such proposed designa14 tions; 

15 ‘‘(ii) provide a period of not less than 

16 30 days for comment on the notice; and 

17 ‘‘(iii) publish a notice in the Federal 

18 Register designating the bulk substances 

19 acceptable, and any bulk substances deter20 mined to be unacceptable, and the ration21 ale for such designations and determina22 tions. 

23 ‘‘(C) NOTIFICATION.—Upon initial publica24 tion of the list under subparagraph (B)(iii), any 

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1 facturer that has received and filled a prescrip2 tion in the 60 days prior to such publication for 

3 a compounded drug for a non-food-producing 

4 major species from a bulk substance not ad5 dressed in the notice (either as acceptable or 

6 unacceptable), and that reasonably expect to re7 ceive and fill another prescription for such a 

8 drug for such species within 60 days after such 

9 publication, may notify the Secretary of such 

10 bulk substance within 30 days of such publica11 tion, in a manner to be determined by the Sec12 retary and published in the Federal Register on 

13 or before publication of the list under subpara14 graph (B)(iii). A traditional compounder or 

15 compounding manufacturer that provides such 

16 notice shall not be subject to the restriction in 

17 paragraph (2)(D) until such time as the Sec18 retary designates such bulk substance as ac19 ceptable or determines it to be unacceptable 

20 pursuant to the process described in subpara21 graph (B)(iii). 

22 ‘‘(D) MODIFICATION OF LIST.—The Sec23 retary may amend the list at any time, in ac24 cordance with process described in subpara25 graph (B). 


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1 ‘‘(E) CRITERIA.—In evaluating bulk sub2 stances for purposes of subparagraph (B), the 

3 Secretary shall consider, among other factors— 

4 ‘‘(i) the safety of the bulk substance; 

5 ‘‘(ii) historical use of the substance in 

6 pharmacy compounding; 

7 ‘‘(iii) evidence of the effectiveness of 

8 the bulk substance or lack of effectiveness; 

9 ‘‘(iv) whether any drug approved 

10 under section 505 or 512, conditionally ap11 proved under section 571, or included on 

12 the index established under section 

13 572(a)(1), can be used on label, or any 

14 drug approved under section 505 or 512 

15 can be used in an extralabel manner in ac16 cordance with section paragraphs (4) and 

17 (5) of section 512(a), to treat the applica18 ble condition in the identified species; and 

19 ‘‘(v) whether a compounded drug ap20 propriate to treat the applicable condition 

21 in the identified species could be obtained 

22 by manipulating a drug approved under 

23 505 or 512, conditionally approved under 

24 section 571, or included on the index es25 tablished under section 572(a)(1). 


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1 ‘‘(4) FOOD-PRODUCING ANIMALS LISTING PRO2 CEDURE.—In establishing a list of designated bulk 

3 substances acceptable for use in compounding a 

4 drug for use in food-producing major and minor spe5 cies under paragraph (2), and any conditions appli6 cable to such use, the Secretary shall— 

7 ‘‘(A) publish a notice in the Federal Reg8 ister identifying bulk substances proposed as 

9 acceptable and any bulk substance determine to 

10 be unacceptable, and the rationale for such des11 ignations; 

12 ‘‘(B) provide a period of not less than 30 

13 days for comment on the notice; and 

14 ‘‘(C) publish a notice in the Federal Reg15 ister designating the bulk substances acceptable 

16 for use in compounding a drug for use in food17 producing major and minor species, and the ra18 tionale for such designations. 

19 ‘‘(5) WITHDRAWAL PERIODS.—The require20 ments for establishing substantially extended with21 drawal periods in accordance with section 530.20 of 

22 title 21, Code of Federal Regulations (or any suc23 cessor regulations) shall apply to compounded ani24 mal drugs for use in food-producing animals that 

25 are compounded using bulk substances. 


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1 ‘‘(6) IDENTIFICATION BY SECRETARY.— 

2 ‘‘(A) IN GENERAL.—Notwithstanding the 

3 existence of an applicable monograph under 

4 subparagraph (A)(i)(I) or (B) of paragraph (1) 

5 or subparagraph (B) or (C)(i) of paragraph (2), 

6 the Secretary may identify bulk substances that 

7 the Secretary determines, based on public 

8 health concerns, may not be used in 

9 compounding a drug. 

10 ‘‘(B) PROCEDURE.—In identifying the bulk 

11 substances that may not be used in 

12 compounding, the Secretary shall— 

13 ‘‘(i) publish a notice of such bulk sub14 stances proposed for identification in the 

15 Federal Register; 

16 ‘‘(ii) provide a period of not less than 

17 60 days for comment on the notice; 

18 ‘‘(iii) publish a notice in the Federal 

19 Register identifying the bulk substances 

20 that may not be used in compounding a 

21 drug; and 

22 ‘‘(iv) state whether the bulk is not 

23 suitable for compounding of human drugs, 

24 animal drugs, or both. 


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1 ‘‘(f) REQUIREMENTS REGARDING WHOLESALING

2 AND LABELING APPLICABLE TO TRADITIONAL

3 COMPOUNDERS AND COMPOUNDING MANUFACTURERS.— 

4 ‘‘(1) IN GENERAL.—A compounded drug— 

5 ‘‘(A) may not be sold by an entity other 

6 than the compounding manufacturer or tradi7 tional compounder that compounded the drug; 

8 ‘‘(B) compounded by a compounding man9 ufacturer may not be sold to an entity other 

10 than a health care entity that provides medical 

11 services through licensed prescribers directly to 

12 patients or animals, or a network of such pro13 viders, except that a compounding manufac14 turer may transfer without profit a compounded 

15 sterile drug to a licensed pharmacy if— 

16 ‘‘(i) the licensed pharmacy falls under 

17 the same corporate ownership as the 

18 compounding manufacturer; 

19 ‘‘(ii) the transfer of such compounded 

20 sterile drug is solely for the purpose of dis21 pensing the compounded sterile drug to the 

22 end user, who has been instructed by the 

23 prescribing physician to self-administer 

24 such compounded sterile drug; 


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1 ‘‘(iii) as of the date of enactment of 

2 the Pharmaceutical Compounding Quality 

3 and Accountability Act, the compounding 

4 manufacturer is an entity that provides 

5 pharmacy benefits management services on 

6 behalf of a health benefits plan; 

7 ‘‘(iv) the compounding manufacturer 

8 identifies itself to the Secretary upon reg9 istering under subsection (g)(2) as an enti10 ty that qualifies for the exemption under 

11 this subparagraph, and provides docu12 mentation of the compounding of such 

13 drugs as of the date of enactment of the 

14 Pharmaceutical Compounding Quality and 

15 Accountability Act, in a manner described 

16 by the Secretary; and 

17 ‘‘(v) the compounding manufacturer 

18 receives confirmation from the Secretary 

19 that the compounding manufacturer quali20 fies for the exemption under this subpara21 graph and the sterile drug or drugs for 

22 which the exemption applies; and 

23 ‘‘(C) in the case of a compounded drug 

24 sold to a health care entity described in sub25 paragraph (B), shall be labeled ‘not for resale’. 


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1 ‘‘(2) ADVERTISING AND PROMOTION.—The ad2 vertising and promotion of compounded drugs shall 

3 not be false or misleading in any particular. 

4 ‘‘(g) OTHER REQUIREMENTS APPLICABLE TO

5 COMPOUNDING MANUFACTURERS.— 

6 ‘‘(1) LICENSED PHARMACIST OVERSIGHT.—A 

7 compounding manufacturer shall ensure that a phar8 macist licensed in the State where the compounding 

9 manufacturer is located exercises direct supervision 

10 over the operations of the compounding manufac11 turer. 

12 ‘‘(2) REGISTRATION OF COMPOUNDING MANU13 FACTURERS AND REPORTING OF DRUGS.— 

14 ‘‘(A) REGISTRATION OF COMPOUNDING

15 MANUFACTURERS.— 

16 ‘‘(i) ANNUAL REGISTRATION.—During 

17 the period beginning on October 1 and 

18 ending on December 31 each year, each 

19 compounding manufacturer shall register 

20 with the Secretary its name, place of busi21 ness, and unique facility identifier (which 

22 shall conform to the requirements for the 

23 unique facility identifier established under 

24 section 510), and a point of contact e-mail 

25 address. 


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1 ‘‘(ii) NEW COMPOUNDING MANUFAC2 TURERS.—Each compounding manufac3 turer, upon first engaging in the oper4 ations described in subsection (b)(1), shall 

5 immediately register with the Secretary 

6 and provide the information described 

7 under clause (i). The Secretary shall estab8 lish a timeline for registration for the first 

9 year following the effective date of the 

10 Pharmaceutical Compounding Quality and 

11 Accountability Act. In no case may reg12 istration be required until at least 60 days 

13 following publication of the timeline in the 

14 Federal Register. 

15 ‘‘(iii) ADDITIONAL FACILITIES.—Each 

16 compounding manufacturer duly registered 

17 in accordance with clauses (i) and (ii) shall 

18 immediately identify to the Secretary any 

19 additional facility that engages in the ac20 tivities described in subsection (b)(1) and 

21 that is owned or operated in any State by 

22 the person that owns or operates the 

23 compounding manufacturer. 

24 ‘‘(iv) AVAILABILITY OF REGISTRATION

25 FOR INSPECTION.—The Secretary shall 


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1 make available for inspection, to any per2 son so requesting, any registration filed 

3 pursuant to this subparagraph, except that 

4 any drug reporting information submitted 

5 pursuant to this subparagraph and the in6 formation accompanying such reporting 

7 shall be exempt from such inspection, un8 less the Secretary finds that such an ex9 emption would be inconsistent with the 

10 protection of the public health. 

11 ‘‘(B) DRUG REPORTING BY COMPOUNDING

12 MANUFACTURERS.— 

13 ‘‘(i) IN GENERAL.—Each compound14 ing manufacturer who registers with the 

15 Secretary under subparagraph (A) shall 

16 submit to the Secretary, once during the 

17 month of June of each year and once dur18 ing the month of December of each year, 

19 a report— 

20 ‘‘(I) identifying the drugs com21 pounded by such compounding manu22 facturer during the previous 6-month 

23 period; and 

24 ‘‘(II) with respect to each drug 

25 identified under subclause (I), proVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6401 E:\BILLS\S959.RS S959

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1 viding the active ingredient, the 

2 source of such active ingredient, the 

3 National Drug Code number of the 

4 source drug or bulk active ingredient, 

5 the strength of the active ingredient 

6 per unit, the dosage form and route of 

7 administration, the package descrip8 tion, the number of individual units 

9 produced, the National Drug Code 

10 number of the final product, and 

11 which conforms to other applicable re12 quirements identified by the Secretary 

13 in accordance with clause (ii). 

14 ‘‘(ii) FORM.—Each report under 

15 clause (i) shall be prepared in such form 

16 and manner as the Secretary may pre17 scribe by regulation or guidance. 

18 ‘‘(C) ELECTRONIC REGISTRATION AND RE19 PORTING.—Registrations and drug reporting 

20 under this paragraph (including the submission 

21 of updated information) shall be submitted to 

22 the Secretary by electronic means unless the 

23 Secretary grants a request for waiver of such 

24 requirement because use of electronic means is 

25 not reasonable for the person requesting waiver. 


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1 ‘‘(D) RISK-BASED INSPECTION FRE2 QUENCY.— 

3 ‘‘(i) IN GENERAL.—Compounding 

4 manufacturers shall be subject to inspec5 tion pursuant to section 704. 

6 ‘‘(ii) RISK-BASED SCHEDULE.—The 

7 Secretary, acting through one or more offi8 cers or employees duly designated by the 

9 Secretary, shall inspect compounding man10 ufacturers described in clause (i) in accord11 ance with a risk-based schedule established 

12 by the Secretary. 

13 ‘‘(iii) RISK FACTORS.—In establishing 

14 the risk-based schedule under clause (ii), 

15 the Secretary shall inspect compounding 

16 manufacturers according to the known 

17 safety risks of such compounding manufac18 turers, which shall be based on the fol19 lowing factors: 

20 ‘‘(I) The compliance history of 

21 the compounding manufacturer. 

22 ‘‘(II) The record, history, and na23 ture of recalls linked to the 

24 compounding manufacturer. 


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1 ‘‘(III) The inherent risk of the 

2 drug compounded at the compounding 

3 manufacturer. 

4 ‘‘(IV) The inspection frequency 

5 and history of the compounding man6 ufacturer, including whether the 

7 compounding manufacturer has been 

8 inspected pursuant to section 704 

9 within the last 4 years. 

10 ‘‘(V) Any other criteria deemed 

11 necessary and appropriate by the Sec12 retary for purposes of allocating in13 spection resources. 

14 ‘‘(3) ADVERSE EVENT REPORTING.— 

15 ‘‘(A) DEFINITIONS.—In this paragraph: 

16 ‘‘(i) ADVERSE EVENT.—The term ‘ad17 verse event’ means any health-related event 

18 associated with the use of a compounded 

19 drug that is adverse, including— 

20 ‘‘(I) an event occurring in the 

21 course of the use of the drug in pro22 fessional practice; 

23 ‘‘(II) an event occurring from an 

24 overdose of the drug, whether acci25 dental or intentional; 


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1 ‘‘(III) an event occurring from 

2 abuse of the drug; 

3 ‘‘(IV) an event occurring from 

4 withdrawal of the drug; and 

5 ‘‘(V) any failure of expected 

6 pharmacological action of the drug. 

7 ‘‘(ii) SERIOUS ADVERSE EVENT.—The 

8 term ‘serious adverse event’ means an ad9 verse event that— 

10 ‘‘(I) results in— 

11 ‘‘(aa) death; 

12 ‘‘(bb) an adverse drug event 

13 that places the patient at imme14 diate risk of death from the ad15 verse drug event as it occurred 

16 (not including an adverse drug 

17 event that might have caused 

18 death had it occurred in a more 

19 severe form); 

20 ‘‘(cc) inpatient hospitaliza21 tion or prolongation of existing 

22 hospitalization; 

23 ‘‘(dd) a persistent or signifi24 cant incapacity or substantial 


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1 disruption of the ability to con2 duct normal life functions; or 

3 ‘‘(ee) a congenital anomaly 

4 or birth defect; or 

5 ‘‘(II) based on appropriate med6 ical judgment, may jeopardize the pa7 tient and may require a medical or 

8 surgical intervention to prevent an 

9 outcome described in subclause (I). 

10 ‘‘(B) REPORTS.— 

11 ‘‘(i) ADVERSE EVENT REPORTING RE12 QUIREMENT.— 

13 ‘‘(I) 15-DAY REPORT.—If a 

14 compounding manufacturer becomes 

15 aware of any serious adverse event, 

16 such manufacturer shall submit re17 ports of each instance to the Sec18 retary as soon as practicable, but in 

19 no case later than 15 calendar days 

20 after the initial receipt of the applica21 ble information. Such manufacturer 

22 shall investigate and submit to the 

23 Secretary followup reports for each 

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1 mation or as requested by the Sec2 retary. Unless and until the Secretary 

3 establishes the content and format of 

4 adverse event reports by guidance or 

5 regulation, reports shall be submitted 

6 in accordance with the content and 

7 format requirements under section 

8 310.305 of title 21, Code of Federal 

9 Regulations (or any successor regula10 tions) (in the case of human drugs), 

11 section 600.80 of title 21, Code of 

12 Federal Regulations (or any successor 

13 regulations) (in the case of biological 

14 products), or section 514.80 of title 

15 21, Code of Federal Regulations (or 

16 any successor regulations) (in the case 

17 of animal drugs). 

18 ‘‘(II) ANNUAL REPORT.— 

19 Compounding manufacturers that re20 port serious adverse events shall sub21 mit in December of each year a nar22 rative summary of any analysis of 

23 each report submitted under subclause 

24 (I), including a history of actions 

25 taken during the year because of each 


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1 report, using the content, format, and 

2 manner established by the Secretary 

3 by guidance or regulation. Until such 

4 time as the Secretary publishes such 

5 guidance or regulation, each 

6 compounding manufacturer shall re7 tain such summaries as part of the 

8 records to be maintained in accord9 ance with subparagraph (C). 

10 ‘‘(ii) PRODUCT QUALITY REPORTING

11 REQUIREMENT.—Not later than 3 calendar 

12 days after the compounding manufacturer 

13 becomes aware of information pertaining 

14 to sterility, stability, or other product qual15 ity concerns that could result in serious 

16 adverse events, the compounding manufac17 turer shall submit to the Secretary a prod18 uct quality report, in a form and manner 

19 established by the Secretary by guidance or 

20 regulation. 

21 ‘‘(C) MAINTENANCE OF RECORDS.—A 

22 compounding manufacturer shall maintain for a 

23 period of 10 years records of all serious adverse 

24 drug events known to the compound manufac25 turer in accordance with section 314.80(i) of 


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1 title 21, Code of Federal Regulations (or any 

2 successor regulation), or as otherwise directed 

3 by the Secretary in regulations. 

4 ‘‘(4) LABELING OF DRUGS.— 

5 ‘‘(A) LABEL.—The label of a drug com6 pounded by a compounding manufacturer shall 

7 include— 

8 ‘‘(i) the statement ‘This is a com9 pounded drug.’ or a reasonable comparable 

10 alternative statement (as specified by the 

11 Secretary) that identifies the drug as a 

12 compounded drug; 

13 ‘‘(ii) the name, address, and phone 

14 number of the applicable compounding 

15 manufacturer; and 

16 ‘‘(iii) with respect to the compounded 

17 drug— 

18 ‘‘(I) the lot or batch number; 

19 ‘‘(II) the established name of the 

20 medication; 

21 ‘‘(III) the dosage form and 

22 strength; 

23 ‘‘(IV) the statement of quantity 

24 or volume, as appropriate; 


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1 ‘‘(V) in the case of a drug in2 tended for use in a food-producing 

3 animal, the withdrawal period estab4 lished pursuant to subsection (e)(5) to 

5 ensure that no residues from the com6 pounded drug can be detected in edi7 ble tissues of the treated animal; 

8 ‘‘(VI) the date that the drug was 

9 compounded; 

10 ‘‘(VII) the expiration date; 

11 ‘‘(VIII) storage and handling in12 structions; 

13 ‘‘(IX) the National Drug Code 

14 number, if available; 

15 ‘‘(X) the ‘not for resale’ state16 ment required as required by sub17 section (f)(1)(C); and 

18 ‘‘(XI) subject to subparagraph 

19 (B)(i), a list of active and inactive in20 gredients, identified by established 

21 name and the quantity or proportion 

22 of each ingredient. 

23 ‘‘(B) CONTAINER.—The container from 

24 which the individual units of a drug com25 pounded by a compounding manufacturer are 


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1 removed for dispensing or for administration 

2 (such as a plastic bag containing individual 

3 product syringes) shall include— 

4 ‘‘(i) the information described under 

5 subparagraph (A)(iii)(XI), if there is not 

6 space on the label for such information; 

7 ‘‘(ii) the following information to fa8 cilitate adverse event reporting: 

9 www.fda.gov/medwatch and 1–800–FDA– 

10 1088; and 

11 ‘‘(iii) the directions for use, including 

12 dosage and administration, as appropriate. 

13 ‘‘(C) ADDITIONAL INFORMATION.—The 

14 label and labeling of a drug compounded by a 

15 compounding manufacturer shall include any 

16 other information as determined necessary and 

17 specified in regulations promulgated by the Sec18 retary. 

19 ‘‘(h) COMPOUNDING MANUFACTURER ESTABLISH20 MENT AND REINSPECTION FEES.— 

21 ‘‘(1) DEFINITIONS.—In this subsection— 

22 ‘‘(A) the term ‘affiliate’ has the meaning 

23 given such term in section 735(11); 

24 ‘‘(B) the term ‘gross annual sales’ means 

25 the total worldwide gross annual sales, in 


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1 United States dollars, for a compounding man2 ufacturer, including the sales of all the affiliates 

3 of the compounding manufacturer; and 

4 ‘‘(C) the term ‘reinspection’ means, with 

5 respect to a compounding manufacturer, one or 

6 more inspections conducted under section 704 

7 subsequent to an inspection conducted under 

8 such provision which identified noncompliance 

9 materially related to an applicable requirement 

10 of this Act, specifically to determine whether 

11 compliance has been achieved to the Secretary’s 

12 satisfaction. 

13 ‘‘(2) ESTABLISHMENT AND REINSPECTION

14 FEES.—For fiscal year 2015 and each subsequent 

15 fiscal year, the Secretary shall, in accordance with 

16 this subsection, assess and collect— 

17 ‘‘(A) an annual establishment fee from 

18 each compounding manufacturer to cover in19 spection-related costs relating to inspections of 

20 drug compounders for such year; and 

21 ‘‘(B) a reinspection fee from each 

22 compounding manufacturer subject to a rein23 spection in such fiscal year. 

24 ‘‘(3) ESTABLISHMENT AND REINSPECTION FEE

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1 lishment and reinspection fee to be collected under 

2 this subsection for each fiscal year, based on the 

3 methodology described in paragraph (4) and shall 

4 publish such fee in a Federal Register notice not 

5 later than 60 days before the start of each such 

6 year. 

7 ‘‘(4) AMOUNT OF ESTABLISHMENT AND REIN8 SPECTION FEE.— 

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 subparagraph (D), the amount of the annual 

11 establishment fee and the reinspection fee (if 

12 applicable) under paragraph (2) for each 

13 compounding manufacturer in a fiscal year 

14 shall be equal to the sum of— 

15 ‘‘(i)(I) $15,000 per compounding 

16 manufacturer, multiplied by 

17 ‘‘(II) the inflation adjustment factor 

18 described in subparagraph (B); plus 

19 ‘‘(ii) the small business adjustment 

20 factor described in subparagraph (C). 

21 ‘‘(B) INFLATION ADJUSTMENT FACTOR.— 

22 ‘‘(i) IN GENERAL.—For fiscal year 

23 2015 and subsequent fiscal years, the reve24 nues established in subparagraph (A) shall 

25 be adjusted by the Secretary by notice, 


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1 published in the Federal Register, for a 

2 fiscal year by the amount equal to the sum 

3 of— 

4 ‘‘(I) one; 

5 ‘‘(II) the average annual percent 

6 change in the cost, per full-time equiv7 alent position of the Food and Drug 

8 Administration, of all personnel com9 pensation and benefits paid with re10 spect to such positions for the first 3 

11 years of the preceding 4 fiscal years, 

12 multiplied by the proportion of per13 sonnel compensation and benefits 

14 costs to total costs of an average full15 time equivalent position of the Food 

16 and Drug Administration for the first 

17 3 years of the preceding 4 fiscal 

18 years, and 

19 ‘‘(III) the average annual percent 

20 change that occurred in the Consumer 

21 Price Index for urban consumers 

22 (U.S. City Average; Not Seasonally 

23 Adjusted; All items; Annual Index) for 

24 the first 3 years of the preceding 4 

25 years of available data multiplied by 


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1 the proportion of all costs other than 

2 personnel compensation and benefits 

3 costs to total costs of an average full4 time equivalent position of the Food 

5 and Drug Administration for the first 

6 3 years of the preceding 4 fiscal 

7 years. 

8 ‘‘(ii) COMPOUNDED BASIS.—The ad9 justment made each fiscal year under 

10 clause (i) shall be added on a compounded 

11 basis to the sum of all adjustments made 

12 each fiscal year after fiscal year 2014 

13 under clause (i). 

14 ‘‘(C) SMALL BUSINESS ADJUSTMENT FAC15 TOR.—The small business adjustment factor de16 scribed in subparagraph (A)(ii) shall be an 

17 amount established by the Secretary for each 

18 fiscal year based on the Secretary’s estimate 

19 of— 

20 ‘‘(i) the number of small businesses 

21 that will pay a reduced establishment fee 

22 for such fiscal year; and 

23 ‘‘(ii) the adjustment to the establish24 ment fee necessary to achieve total fees 

25 equaling the total fees that the Secretary 


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1 would have collected if no entity qualified 

2 for the small business exception in sub3 paragraph (D). 

4 ‘‘(D) EXCEPTION FOR SMALL BUSI5 NESSES.— 

6 ‘‘(i) IN GENERAL.—In the case of a 

7 compounding manufacturer with gross an8 nual sales of $1,000,000 or less in the 12 

9 months ending June 1 of the fiscal year 

10 immediately preceding the fiscal year in 

11 which the fees under this subsection are 

12 assessed, the amount of the establishment 

13 fee and reinspection fee under paragraph 

(2) for a fiscal year shall be equal to 1 14 ⁄3 of 

15 the amount calculated under subparagraph 

16 (A)(i) in such fiscal year. 

17 ‘‘(ii) APPLICATION.—The Secretary 

18 may require a small business to apply for 

19 the exception under this subparagraph by 

20 certifying its gross annual sales for the 12 

21 months ending June 1 of the fiscal year 

22 immediately preceding the fiscal year in 

23 which fees under this subsection are as24 sessed. Any such application must be sub25 mitted to the Secretary prior to August 1 


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1 for the following fiscal year. Any statement 

2 or representation made to the Secretary 

3 shall be subject to section 1001 of title 18, 

4 United States Code. 

5 ‘‘(E) CREDITING OF FEES.—In estab6 lishing the small business adjustment factor 

7 under subparagraph (C) for a fiscal year, the 

8 Secretary shall provide for the crediting of fees 

9 from the previous year to the next year if the 

10 Secretary overestimated the amount of the 

11 small business adjustment factor for such pre12 vious fiscal year, and consider the need to ac13 count for any adjustment of fees and such other 

14 factors as the Secretary determines appropriate. 

15 ‘‘(5) USE OF FEES.—The Secretary shall make 

16 all of the fees collected pursuant to subparagraph 

17 (A) and (B) of paragraph (2) available solely to pay 

18 for the inspection-related costs (including re-inspec19 tion) for the oversight of drug compounding. 

20 ‘‘(6) SUPPLEMENT NOT SUPPLANT.—Funds re21 ceived by the Secretary pursuant to this subsection 

22 shall be used to supplement and not supplant any 

23 other Federal funds available to carry out the activi24 ties described in this subsection. 


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1 ‘‘(7) CREDITING AND AVAILABILITY OF FEES.— 

2 Fees authorized under this subsection shall be col3 lected and available for obligation only to the extent 

4 and in the amount provided in advance in appropria5 tions Acts. Such fees are authorized to remain avail6 able until expended. Such sums as may be necessary 

7 may be transferred from the Food and Drug Admin8 istration salaries and expenses appropriation account 

9 without fiscal year limitation to such appropriation 

10 account for salaries and expenses with such fiscal 

11 year limitation. The sums transferred shall be avail12 able solely for the purpose of paying the inspection13 related costs (including reinspection) for the over14 sight of drug compounding. 

15 ‘‘(8) COLLECTION OF FEES.— 

16 ‘‘(A) ESTABLISHMENT FEE.—A 

17 compounding manufacturer shall remit the es18 tablishment fee due under this subsection in a 

19 fiscal year when submitting a registration pur20 suant to subsection (g) for such fiscal year. 

21 ‘‘(B) REINSPECTION FEE.—The Secretary 

22 shall specify in the Federal Register notice de23 scribed in paragraph (3) the manner in which 

24 reinspection fees assessed under this subsection 

25 shall be collected and the timeline for payment 


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1 of such fees. Such a fee shall be collected after 

2 the Secretary has conducted a reinspection of 

3 the compounding manufacturer involved. 

4 ‘‘(C) EFFECT OF FAILURE TO PAY FEES.— 

5 ‘‘(i) REGISTRATION.—A compounding 

6 manufacturer shall not be considered reg7 istered under subsection (g) in a fiscal year 

8 until the date that the compounding manu9 facturer remits the establishment fee under 

10 this subsection for such fiscal year. 

11 ‘‘(ii) MISBRANDING.—All drugs com12 pounded by a compounding manufacturer 

13 for which any establishment fee or rein14 spection fee has not been paid as required 

15 by this subsection shall be deemed mis16 branded under section 502(cc) until the 

17 fees owed for such compounding manufac18 turer under this subsection have been paid. 

19 ‘‘(D) COLLECTION OF UNPAID FEES.—In 

20 any case where the Secretary does not receive 

21 payment of a fee assessed under this subsection 

22 within 30 days after it is due, such fee shall be 

23 treated as a claim of the United States Govern24 ment subject to provisions of subchapter II of 

25 chapter 37 of title 31, United States Code. 


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1 ‘‘(9) ANNUAL REPORT TO CONGRESS.—Not 

2 later than 120 days after each fiscal year in which 

3 fees are assessed and collected under this subsection, 

4 the Secretary shall submit a report to the Com5 mittee on Health, Education, Labor, and Pensions 

6 of the Senate and the Committee on Energy and 

7 Commerce of the House of Representatives, to in8 clude a description of fees assessed and collected for 

9 each year, a summary description of entities paying 

10 the fees, and the number of inspections and re11 inspections of such entities performed each year. 

12 ‘‘(10) AUTHORIZATION OF APPROPRIATIONS.— 

13 For fiscal year 2015 and each subsequent fiscal 

14 year, there is authorized to be appropriated for fees 

15 under this subsection an amount equivalent to the 

16 total amount of fees assessed for such fiscal year 

17 under this subsection. 

18 ‘‘(i) ACTION BY SECRETARY REGARDING COM19 PLAINTS FROM STATE BOARDS OF PHARMACY.— 

20 ‘‘(1) DESIGNATION.—The Secretary shall des21 ignate a point of contact and establish a format and 

22 procedure for a State Board of Pharmacy to notify 

23 the Secretary if it appears to a State Board of Phar24 macy that an entity licensed by a State as a pharVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6401 E:\BILLS\S959.RS S959

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1 macy is required to be registered with the Secretary 

2 as a compounding manufacturer. 

3 ‘‘(2) DETERMINATION.—If the Secretary deter4 mines that such an entity described in paragraph (1) 

5 is required to be registered with the Secretary as a 

6 compounding manufacturer, the Secretary shall 

7 transmit such determination to the State Board of 

8 Pharmacy in the State in which the entity is located, 

9 and to the State Board of Pharmacy in the notifying 

10 State, if different, within 15 days of such determina11 tion. 

12 ‘‘(3) EFFECT.—The Secretary shall encourage 

13 direct communications between States regarding tra14 ditional compounders. Nothing in this subsection 

15 shall expand the Secretary’s authority over or re16 sponsibility for traditional compounding. 

17 ‘‘(j) PRESCRIPTION ORDER REFERENCE.—For pur18 poses of this section, reference to a prescription order for 

19 an identified individual patient includes, in the case of ani20 mal drugs, a prescription order for a specific herd or flock 

21 (or other identified group) of animals.’’. 

22 (c) PROHIBITED ACT.—Section 301 (21 U.S.C. 331) 

23 is amended— 

24 (1) in subsection (e), by striking ‘‘417, 416, 

25 504’’ and inserting ‘‘417, 416, 503A(g), 504’’; and 


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1 (2) by adding at the end the following: 

2 ‘‘(ccc) The resale of a compounded drug that is la3 beled ‘not for resale’ as required by section 503A.’’. 

4 (d) REPORT BY GAO.—Not later than November 1, 

5 2016, the Comptroller General of the United States shall 

6 conduct study and submit to Congress a report regarding 

7 the impact of this Act (and the amendments made by this 

8 Act) on the safety of animal drug compounding and the 

9 availability of safe and effective drugs for animals. 

10 SEC. 3. OTHER REQUIREMENTS RELATING TO 

11 COMPOUNDING MANUFACTURERS. 

12 (a) LABELING.—Section 502 (21 U.S.C. 352) is 

13 amended by adding at the end the following: 

14 ‘‘(bb) If it is a compounded drug and the labeling 

15 does not include the information as required by sub16 sections (f)(1)(C) and (g)(4) of section 503A, as applica17 ble. 

18 ‘‘(cc) If it is a drug, and it was compounded by a 

19 compounding manufacturer for which fees have not been 

20 paid as required by section 503A(g).’’. 

21 (b) APPLICATION OF INSPECTION REQUIREMENTS TO

22 COMPOUNDING MANUFACTURERS.—Section 704(a)(2) 

23 (21 U.S.C. 374(a)(2)) is amended by adding at the end 

24 the following flush text: 


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1 ‘‘The exemption in subparagraph (A) does not apply with 

2 respect to compounding manufacturers (as such term is 

3 defined in section 503A).’’. 

4 (c) ADULTERATION OF COMPOUNDED ANIMAL

5 DRUGS CONTAINING DRUG RESIDUES.—Section 

6 402(a)(2)(C) is amended by striking ‘‘512;’’ and inserting 

7 ‘‘512; or (iii) any residue from a compounded animal 

8 drug;’’. 

9 SEC. 4. IMPLEMENTATION. 

10 In promulgating any regulations to implement this 

11 Act (and the amendments made by this Act), the Sec12 retary of Health and Human Services shall— 

13 (1) issue a notice of proposed rulemaking that 

14 includes the proposed regulation; 

15 (2) provide a period of not less than 60 days 

16 for comments on the proposed regulation; and 

17 (3) publish the final regulation not more than 

18 18 months following publication of the proposed rule 

19 and not less than 30 days before the effective date 

20 of such final regulation. 

21 SEC. 5. EFFECTIVE DATE. 

22 This Act (and the amendments made by this Act) 

23 shall take effect on the date that is 1 year after the date 

24 of enactment of this Act. 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Pharmaceutical Quality, 

3 Security, and Accountability Act’’. 

4 SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS. 

5 (a) REFERENCES IN ACT.—Except as otherwise speci6 fied, amendments made by this Act to a section or other 

7 provision of law are amendments to such section or other 

8 provision of the Federal Food, Drug, and Cosmetic Act (21 

9 U.S.C. 301 et seq.). 

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

11 Act is as follows: 

Sec. 1. Short title. 

Sec. 2. References in Act; table of contents. 

TITLE I—HUMAN DRUG COMPOUNDING 

Sec. 101. Short title. 

Sec. 102. Regulation of human drug compounding. 

Sec. 103. Other requirements. 

Sec. 104. Implementation. 

Sec. 105. Effective date. 

TITLE II—DRUG SUPPLY CHAIN SECURITY 

Sec. 201. Short title. 

Sec. 202. Pharmaceutical distribution supply chain. 

Sec. 203. Enhanced drug distribution security. 

Sec. 204. National licensure standards for prescription drug wholesale distributors. 

Sec. 205. National licensure standards for third-party logistics providers; uniform 

national policy. 

Sec. 206. Penalties. 

Sec. 207. Conforming amendment. 

Sec. 208. Savings clause. 


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1 TITLE I—HUMAN DRUG 

2 COMPOUNDING 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘Pharmaceutical 

5 Compounding Quality and Accountability Act’’. 

6 SEC. 102. REGULATION OF HUMAN DRUG COMPOUNDING. 

7 (a) CLARIFICATION OF NEW DRUG STATUS.—For pur8 poses of the Federal Food, Drug and Cosmetic Act (21 

9 U.S.C. 301 et seq.), the term ‘‘new drug’’ (as defined in 

10 section 201(p) of such Act) shall include a compounded 

11 human drug. 

12 (b) REGULATION OF HUMAN DRUG COMPOUNDING.— 

13 Section 503A (21 U.S.C. 353a) is amended to read as fol14 lows: 

15 ‘‘SEC. 503A. HUMAN DRUG COMPOUNDING. 

16 ‘‘(a) SCOPE.— 

17 ‘‘(1) COMPOUNDING.—In this section, the terms 

18 ‘compounding’ and ‘compound’— 

19 ‘‘(A) include— 

20 ‘‘(i) the combining, admixing, mixing, 

21 diluting, reconstituting, or otherwise alter22 ing of a marketed drug; 

23 ‘‘(ii) compounding a drug from a bulk 

24 drug substance; and 

25 ‘‘(iii) repackaging; and 


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1 ‘‘(B) exclude mixing, reconstituting, or 

2 other such acts with respect to a marketed drug 

3 that are limited to and performed in accordance 

4 with specific directions for such acts contained 

5 in approved labeling provided by a drug’s manu6 facturer, when performed based upon a prescrip7 tion order for an identified individual patient. 

8 ‘‘(2) ADMINISTRATION AND DISPENSING NOT A

9 SALE.—In this section, the terms ‘sell’ or ‘resale’ do 

10 not include— 

11 ‘‘(A) circumstances in which drug is ad12 ministered to a patient or provided to a patient 

13 who has been instructed to self-administer the 

14 drug; 

15 ‘‘(B) the dispensing of a drug pursuant to 

16 a prescription executed in accordance with sec17 tion 503(b)(1); or 

18 ‘‘(C) any fee associated with such adminis19 tration, provision, or dispensing of the drug. 

20 ‘‘(3) INAPPLICABILITY TO CERTAIN DRUGS.— 

21 ‘‘(A) IN GENERAL.—For purposes of this 

22 section, the activities described in paragraph (1) 

23 shall not be considered ‘compounding’ if such ac24 tivities are conducted in whole or in part with 

25 respect to a drug described in subparagraph (B). 


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1 ‘‘(B) EXCLUDED DRUGS.—The drugs de2 scribed in this subparagraph are the following: 

3 ‘‘(i) Blood and blood components for 

4 transfusion. 

5 ‘‘(ii) Medical gases, as defined in sec6 tion 575. 

7 ‘‘(4) ANIMAL DRUGS FOR HUMAN USE.—Nothing 

8 in this section shall be construed to permit the use of 

9 animal drugs in compounding a drug for human use. 

10 ‘‘(b) DEFINITIONS.—In this section: 

11 ‘‘(1) COMPOUNDING MANUFACTURER.— 

12 ‘‘(A) IN GENERAL.—The term ‘compounding 

13 manufacturer’ means a facility at one geo14 graphic location or address— 

15 ‘‘(i) that compounds any sterile drug 

16 without receiving a prescription order for 

17 an identified individual patient for such 

18 sterile drug prior to beginning 

19 compounding, and distributes or offers to 

20 sell such compounded sterile drug in inter21 state commerce; or 

22 ‘‘(ii) that repackages any preservative23 free sterile drug or engages in sterile pool24 ing. 

25 ‘‘(B) EXCLUSIONS.— 


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1 ‘‘(i) EXCLUDED ACTIVITIES.—Notwith2 standing subparagraph (A)(ii), a facility 

3 shall not be considered a compounding 

4 manufacturer if such facility— 

5 ‘‘(I) repackages drugs in accord6 ance with section 506F or the final 

7 guidance described in section 506F(d) 

8 once the final guidance is published; 

9 and 

10 ‘‘(II) does not otherwise meet the 

11 definition of compounding manufac12 turer under subparagraph (A). 

13 ‘‘(ii) COMPOUNDING NUCLEAR PHAR14 MACY.—The term ‘compounding manufac15 turer’ shall not include a compounding nu16 clear pharmacy. 

17 ‘‘(2) COMPOUNDING NUCLEAR PHARMACY.—The 

18 term ‘compounding nuclear pharmacy’ means an en19 tity that— 

20 ‘‘(A) is a State-licensed pharmacy or a Fed21 eral facility; 

22 ‘‘(B) holds a license currently in effect from 

23 the Nuclear Regulatory Commission or from a 

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1 mission under section 274 of the Atomic Energy 

2 Act of 1954; and 

3 ‘‘(C) does not compound non-radioactive 

4 drugs that would cause the entity to be a 

5 compounding manufacturer described in para6 graph (1)(A). 

7 ‘‘(3) COPY.—The term ‘copy’ means an identical 

8 or nearly identical version of a drug. 

9 ‘‘(4) PRACTITIONER.—The term ‘practitioner’ in10 cludes a physician or any other person that is author11 ized to prescribe medication under State law. 

12 ‘‘(5) RADIOACTIVE DRUG.—The term ‘radioactive 

13 drug’— 

14 ‘‘(A) means any substance defined as a drug 

15 in section 201(g)(1) that exhibits spontaneous 

16 disintegration of unstable nuclei with the emis17 sion of nuclear particles or photons and includes 

18 any nonradioactive reagent kit or nuclide regen19 erator which is intended to be used in the prepa20 ration of any such substance but does not include 

21 drugs such as carbon-containing compounds or 

22 potassium-containing salts which contain trace 

23 quantities of naturally occurring radionuclides; 

24 and 


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1 ‘‘(B) includes a ‘radioactive biological prod2 uct,’ which means a biological product which is 

3 labeled with a radionuclide or intended solely to 

4 be labeled with a radionuclide. 

5 ‘‘(6) REPACKAGE OR REPACKAGING.—The term 

6 ‘repackage’ or ‘repackaging’— 

7 ‘‘(A) means taking a drug approved under 

8 section 505 or licensed under section 351 of the 

9 Public Health Service Act from the container in 

10 which it is distributed by the original manufac11 turer and placing it in a different container of 

12 the same or smaller size without further manipu13 lating the drug (such as by diluting it or mixing 

14 it with another, different drug or drugs); and 

15 ‘‘(B) does not include removing the drug 

16 from its original container for immediate ad17 ministration to an identified individual patient, 

18 such as withdrawing a drug into a syringe for 

19 immediate injection or filling a cassette for im20 mediate use within a drug delivery device. 

21 ‘‘(7) STERILE DRUG.—The term ‘sterile drug’ 

22 means a drug that is— 

23 ‘‘(A) intended for parenteral administra24 tion; 


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1 ‘‘(B) an ophthalmic or oral inhalation drug 

2 in aqueous format; or 

3 ‘‘(C) required to be sterile under Federal or 

4 State law. 

5 ‘‘(8) STERILE POOLING.—The term ‘sterile pool6 ing’— 

7 ‘‘(A) means taking a single sterile drug ap8 proved under section 505 from the container in 

9 which it is distributed by the original manufac10 turer and combining it with the same sterile 

11 drug from one or more other containers without 

12 or before further manipulating the product (such 

13 as by diluting it or mixing it with another, dif14 ferent drug or drugs); 

15 ‘‘(B) does not include combining the drug 

16 from two or more separate containers of the same 

17 drug when a single container of the drug is not 

18 sufficient to prepare a single dose for adminis19 tration to an individual patient; and 

20 ‘‘(C) does not include combining a single 

21 drug from two or more separate containers of 

22 component products of a parenteral nutrition 

23 product, if such pooling, labeling, and use of the 

24 finished parenteral nutrition product, comply 

25 with State pharmacy law. 


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1 ‘‘(9) TRADITIONAL COMPOUNDER.— 

2 ‘‘(A) IN GENERAL.—The term ‘traditional 

3 compounder’ means a facility operating pursu4 ant to State law— 

5 ‘‘(i) wherein a drug is compounded 

6 by— 

7 ‘‘(I) a licensed pharmacist in a 

8 State-licensed pharmacy or a licensed 

9 Federal facility; or 

10 ‘‘(II) a licensed physician; 

11 ‘‘(ii) that— 

12 ‘‘(I) compounds a drug upon re13 ceipt of a prescription order for an 

14 identified individual patient; or 

15 ‘‘(II) compounds a drug in lim16 ited quantities before receipt of a pre17 scription order for an identified indi18 vidual patient, if such compounding is 

19 based on a history of the licensed phar20 macist or licensed physician receiving 

21 prescription orders for the 

22 compounding of the drug, which orders 

23 have been generated solely within an 

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1 censed pharmacist or licensed physi2 cian and— 

3 ‘‘(aa) such individual pa4 tient for whom the prescription 

5 order will be provided; or 

6 ‘‘(bb) the licensed physician 

7 or other licensed practitioner who 

8 will write such prescription order; 

9 and 

10 ‘‘(iii) that does not meet the definition 

11 of a compounding manufacturer under 

12 paragraph (1). 

13 ‘‘(B) EXCEPTIONS.— 

14 ‘‘(i) HOSPITALS AND HEALTH SYS15 TEMS.—A pharmacy within a hospital or 

16 health system shall be considered a tradi17 tional compounder if such pharmacy other18 wise meets the definition under subpara19 graph (A) and if, with respect to a drug 

20 compounded by such pharmacy, the only ac21 tivity conducted by the pharmacy is to dis22 pense or administer such drug (which may 

23 include interstate shipment) solely to a pa24 tient of such hospital or health system. 


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1 ‘‘(ii) HEALTH SYSTEM DEFINED.—The 

2 term ‘health system’— 

3 ‘‘(I) means an entity that owns 

4 and operates— 

5 ‘‘(aa) one hospital; or 

6 ‘‘(bb) two or more hospitals 

7 that have common access to data8 bases with drug order information 

9 for patients; and 

10 ‘‘(II) includes only the inpatient, 

11 outpatient, and ambulatory facilities 

12 wholly owned and operated by such en13 tity, and accredited by a national ac14 creditation body recognized by the Sec15 retary. 

16 ‘‘(c) EXEMPTIONS FROM CERTAIN REQUIREMENTS.— 

17 ‘‘(1) IN GENERAL.—Except as otherwise provided 

18 in paragraphs (2), (3), and (4), a compounded drug 

19 shall be subject to all the requirements of this Act ap20 plicable to new drugs. 

21 ‘‘(2) DRUGS COMPOUNDED BY TRADITIONAL

22 COMPOUNDERS.—Sections 501(a)(2)(B), 502(f)(1), 

23 and 505 of this Act and section 351 of the Public 

24 Health Service Act shall not apply to a compounded 

25 drug if such drug— 


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1 ‘‘(A) is compounded by a traditional 

2 compounder that is in compliance with this sec3 tion; and 

4 ‘‘(B) meets the requirements of this section 

5 applicable to drugs compounded by traditional 

6 compounders. 

7 ‘‘(3) DRUGS COMPOUNDED BY COMPOUNDING

8 MANUFACTURERS.—Sections 502(f)(1) and 505 of this 

9 Act and section 351 of the Public Health Service Act 

10 shall not apply to a compounded prescription drug, 

11 if such prescription drug— 

12 ‘‘(A) is compounded by a compounding 

13 manufacturer— 

14 ‘‘(i) that is not licensed as a pharmacy 

15 in any State; and 

16 ‘‘(ii) that is in compliance with this 

17 section; and 

18 ‘‘(B) meets the requirements of this section 

19 applicable to drugs compounded by compounding 

20 manufacturers. 

21 ‘‘(4) DRUGS COMPOUNDED BY COMPOUNDING NU22 CLEAR PHARMACIES.—Sections 501(a)(2)(B), 

23 502(f)(1), and 505 of this Act and section 351 of the 

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1 pounded radioactive drug if such drug is com2 pounded— 

3 ‘‘(A) by a licensed pharmacist in a 

4 compounding nuclear pharmacy; 

5 ‘‘(B) solely using a radioactive drug ap6 proved under section 505 or licensed under sec7 tion 351 of the Public Health Service Act, and 

8 one or more ingredients in compliance with sub9 section (e)(1)(B); and 

10 ‘‘(C) in compliance with the United States 

11 Pharmacopoeia chapters on pharmacy 

12 compounding. 

13 ‘‘(d) DRUGS THAT MAY NOT BE COMPOUNDED.— 

14 ‘‘(1) IN GENERAL.—The following drugs may not 

15 be compounded: 

16 ‘‘(A) DRUGS THAT ARE DEMONSTRABLY

17 DIFFICULT TO COMPOUND.—A drug or category 

18 of drugs that presents demonstrable difficulties 

19 for compounding, which may include a complex 

20 dosage form or biological product, as designated 

21 by the Secretary pursuant to paragraph (2). 

22 ‘‘(B) MARKETED DRUGS.—A drug (other 

23 than a biological product) that is a copy of a 

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1 ation of such drug compounded from bulk drug 

2 substances, except as provided in paragraph (3). 

3 ‘‘(C) BIOLOGICAL PRODUCTS.—A drug that 

4 is a biological product, except as provided in 

5 paragraph (4). 

6 ‘‘(D) DRUGS SUBJECT TO RISK EVALUATION

7 AND MITIGATION STRATEGY.—A copy or vari8 ation of a drug approved under section 505 or 

9 licensed under section 351 of the Public Health 

10 Service Act that is the subject of a risk evalua11 tion and mitigation strategy approved with ele12 ments to assure safe use pursuant to section 

13 505–1, except provided in paragraph (5). 

14 ‘‘(E) DRUGS REMOVED FOR SAFETY AND

15 EFFICACY.—A drug that appears on a list pub16 lished by the Secretary in the Federal Register of 

17 drugs that have been withdrawn or removed from 

18 the market because such drug or components of 

19 such drug have been found to be unsafe or not ef20 fective. 

21 ‘‘(2) DRUGS THAT ARE DEMONSTRABLY DIF22 FICULT TO COMPOUND.— 

23 ‘‘(A) IN GENERAL.—The Secretary may 

24 promulgate a regulation that designates drugs or 

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1 ficult to compound that may not be compounded, 

2 or that may be compounded only under condi3 tions specified by the Secretary. Such regulation 

4 may include the designation of drugs or cat5 egories of drugs that are complex dosage forms or 

6 biological products, such as extended release 

7 products, metered dose inhalers, transdermal 

8 patches, and sterile liposomal products. 

9 ‘‘(B) INTERIM LIST.— 

10 ‘‘(i) IN GENERAL.—Before the effective 

11 date of the regulation promulgated under 

12 subparagraph (A), the Secretary may des13 ignate drugs or categories of drugs that 

14 present demonstrable difficulties for 

15 compounding, which may include complex 

16 dosage forms or biological products that 

17 cannot be compounded, except under condi18 tions specified by the Secretary, by— 

19 ‘‘(I) publishing a notice of such 

20 drugs or categories of drugs proposed 

21 for designation, including the rationale 

22 for such designation, in the Federal 

23 Register; 


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1 ‘‘(II) providing a period of not 

2 less than 60 calendar days for com3 ment on the notice; and 

4 ‘‘(III) publishing a notice in the 

5 Federal Register designating such 

6 drugs or categories of drugs that can7 not be compounded, including the ra8 tionale for such designation. 

9 ‘‘(ii) SUNSET.—Any notice provided 

10 under clause (i) shall cease to have force or 

11 effect on the date that is 5 years after the 

12 date of enactment of the Pharmaceutical 

13 Compounding Quality and Accountability 

14 Act or on the effective date of the final regu15 lation under subparagraph (A), whichever 

16 is earlier. 

17 ‘‘(C) CONSULTATION WITH STAKE18 HOLDERS.—Prior to establishing the lists de19 scribed in this paragraph, the Secretary shall 

20 consult with relevant stakeholders including 

21 pharmacists, professional associations, patient 

22 and public health advocacy groups, manufactur23 ers and physicians about the need for the com24 pounded drugs to be included or excluded from 

25 the lists. 


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1 ‘‘(D) UPDATES TO DIFFICULT TO COM2 POUND LIST.—Five years after the effective date 

3 of the regulation described in subparagraph (A), 

4 and every 5 years thereafter, the Secretary shall 

5 publish a Federal Register notice seeking public 

6 input about the need for the compounded drugs 

7 to be included or excluded from the list described 

8 in subparagraph (A). Nothing in the previous 

9 sentence prohibits notifications or submissions 

10 before or during any 5-year period described 

11 under such sentence regarding the need for the 

12 compounded drugs to be included or excluded 

13 from the list. 

14 ‘‘(3) EXCEPTIONS REGARDING MARKETED

15 DRUGS.— 

16 ‘‘(A) IN GENERAL.—A drug (other than a 

17 biological product) that is a copy of a marketed 

18 drug approved under 505, including variations 

19 of such drug compounded from bulk drug sub20 stances, may be compounded only if— 

21 ‘‘(i) the compounded variation pro22 duces for the individually identified patient 

23 a clinical difference between the com24 pounded drug and such marketed drug, as 

25 determined by the prescribing practitioner, 


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1 and, prior to beginning compounding such 

2 variation, the traditional compounder 

3 compounding the variation receives a pre4 scription order for an identified individual 

5 patient specifying that the variation may be 

6 compounded; or 

7 ‘‘(ii)(I) such marketed drug, at the 

8 time of compounding a copy of such drug 

9 and at the time of distribution of the com10 pounded drug, is on the drug shortage list 

11 under section 506E, or has otherwise been 

12 identified by the Secretary, in the Sec13 retary’s sole discretion, as in shortage, such 

14 as in a specific region or on a drug shortage 

15 list maintained by a private party; 

16 ‘‘(II) the facility compounding the 

17 drug notifies the Secretary not later than 3 

18 calendar days after beginning the 

19 compounding; and 

20 ‘‘(III) in the case of a compounding 

21 manufacturer, the compounding manufac22 turer has registered under subsection (g)(2) 

23 as an entity that intends to compound pur24 suant to this paragraph and notifies the 


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1 Secretary at least 14 calendar days prior to 

2 beginning the compounding. 

3 ‘‘(B) NOTICE WAIVER.—The Secretary may 

4 waive a notice required under subparagraph 

5 (A)(ii). 

6 ‘‘(C) EXCLUSION.—For purposes of this 

7 paragraph, repackaging a marketed drug ap8 proved under section 505 does not make the re9 packaged drug a copy of such marketed drug, 

10 unless the repackaged drug is also a marketed 

11 drug approved under section 505. 

12 ‘‘(4) EXCEPTIONS REGARDING BIOLOGICAL PROD13 UCTS.— 

14 ‘‘(A) IN GENERAL.—A drug that is a vari15 ation of a licensed biological product may be 

16 compounded only if— 

17 ‘‘(i)(I) such compounded variation is 

18 compounded solely using a licensed biologi19 cal product, or solely using a licensed bio20 logical product and one or more ingredients 

21 in compliance with subsection (e)(1)(B); or 

22 ‘‘(II) in the case of a licensed aller23 genic product, such variation is com24 pounded solely using one or more licensed 

25 allergenic products, or solely using one or 


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1 more licensed allergenic products and one or 

2 more ingredients in compliance with sub3 section (e)(1)(B); 

4 ‘‘(ii) such compounded variation pro5 duces for the patient a clinical difference be6 tween such compounded variation and the 

7 licensed biological product, as determined 

8 by— 

9 ‘‘(I) the prescribing practitioner 

10 (in the case of a variation compounded 

11 by a traditional compounder); or 

12 ‘‘(II) a licensed practitioner re13 sponsible for the patient’s care in a 

14 health care entity that provides med15 ical services through licensed practi16 tioners directly to patients (in the case 

17 of a variation compounded by a 

18 compounding manufacturer); 

19 ‘‘(iii) prior to beginning 

20 compounding— 

21 ‘‘(I) except as provided in sub22 paragraph (B), the traditional 

23 compounder receives a prescription 

24 order for an identified individual pa25 tient specifying that the biological 


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1 product may be compounded for an 

2 identified individual patient; or 

3 ‘‘(II) the compounding manufac4 turer receives a duly authorized med5 ical order from a health care entity 

6 that provides medical services through 

7 licensed practitioners directly to pa8 tients, specifying that the biological 

9 product may be compounded based on 

10 such order for an identified patient or 

11 patients; and 

12 ‘‘(iv) in the case of a radioactive bio13 logical product, the compounded variation 

14 is compounded by a compounding nuclear 

15 pharmacy in accordance with subsection 

16 (b)(2). 

17 ‘‘(B) SPECIAL RULE FOR PEDIATRIC

18 USES.—A traditional compounder that is a hos19 pital or health system may begin compounding 

20 a drug that is a variation of a licensed biological 

21 product prior to receiving a prescription order 

22 as required under subparagraph (A)(iii) if— 

23 ‘‘(i) such compounded variation is a 

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1 censed biological product for emergent use 

2 in pediatric patients; and 

3 ‘‘(ii) such compounded variation pro4 duces for the patient a clinical difference be5 tween such compounded variation and the 

6 licensed biological product, as determined 

7 by a licensed practitioner responsible for the 

8 patient’s care in the hospital or health sys9 tem. 

10 ‘‘(C) INAPPLICABILITY.—Clauses (ii) and 

11 (iii) of subparagraph (A) shall not apply to a 

12 compounded allergenic product. 

13 ‘‘(D) POOLING.—Notwithstanding any other 

14 provision of this section, sterile pooling of a bio15 logical product is not permitted. 

16 ‘‘(5) REQUIREMENT FOR DRUGS THAT HAVE

17 RISK EVALUATION AND MITIGATION STRATEGIES.— 

18 ‘‘(A) IN GENERAL.—A copy or variation of 

19 a drug approved under section 505 or biological 

20 product licensed under section 351 of the Public 

21 Health Service Act that is the subject of a risk 

22 evaluation and mitigation strategy approved 

23 with elements to assure safe use pursuant to sec24 tion 505–1, may be compounded only if— 


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1 ‘‘(i) the entity compounding the copy 

2 or variation receives a prescription order 

3 for an identified individual patient speci4 fying that the drug or biological product 

5 may be compounded; and 

6 ‘‘(ii) the entity compounding the copy 

7 or variation demonstrates to the Secretary, 

8 prior to beginning compounding, that the 

9 entity will utilize controls that are com10 parable to the controls applicable under the 

11 relevant risk evaluation and mitigation 

12 strategy for the approved drug or licensed 

13 biological product. 

14 ‘‘(B) EFFECT.—Nothing in this paragraph 

15 shall be construed to permit compounding a copy 

16 or variation of a drug other than as permitted 

17 in paragraphs (3) and (4). 

18 ‘‘(e) QUALITY OF DRUG INGREDIENTS.— 

19 ‘‘(1) HUMAN DRUGS.—A traditional compounder 

20 or a compounding manufacturer shall— 

21 ‘‘(A) if compounding a drug from bulk drug 

22 substances (as defined in regulations of the Sec23 retary published at section 207.3(a)(4) of title 

24 21, Code of Federal Regulations (or any suc25 cessor regulations)), use only bulk substances— 


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1 ‘‘(i) that— 

2 ‘‘(I) comply with the standards of 

3 an applicable United States Pharma4 copoeia or National Formulary mono5 graph, if a monograph exists and has 

6 not been identified under paragraph 

7 (2); 

8 ‘‘(II) if such a monograph does 

9 not exist, are drug substances that are 

10 components of drugs approved by the 

11 Secretary; or 

12 ‘‘(III) if such a monograph does 

13 not exist and the drug substance is not 

14 a component of a drug approved by the 

15 Secretary, that appear on a list devel16 oped by the Secretary through regula17 tions issued by the Secretary; 

18 ‘‘(ii) that are manufactured by an es19 tablishment that is registered under section 

20 510 (including a foreign establishment that 

21 is registered under section 510(i)); and 

22 ‘‘(iii) that are accompanied by valid 

23 certificates of analysis for each specific lot 

24 of bulk drug substance; 


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1 ‘‘(B) use ingredients (other than bulk drug 

2 substances) that comply with the standards of an 

3 applicable United States Pharmacopoeia or Na4 tional Formulary monograph, if a monograph 

5 exists and has not been identified under para6 graph (2); and 

7 ‘‘(C) in the case of a traditional 

8 compounder, comply with the standards of the 

9 United States Pharmacopoeia chapters on phar10 macy compounding. 

11 ‘‘(2) IDENTIFICATION BY SECRETARY.— 

12 ‘‘(A) IN GENERAL.—Notwithstanding the 

13 existence of an applicable monograph under sub14 paragraph (A)(i)(I) or (B) of paragraph (1), the 

15 Secretary may identify bulk substances that the 

16 Secretary determines, based on public health con17 cerns, may not be used in compounding a drug. 

18 ‘‘(B) PROCEDURE.—In identifying the bulk 

19 substances that may not be used in 

20 compounding, the Secretary shall— 

21 ‘‘(i) publish a notice of such bulk sub22 stances proposed for identification in the 

23 Federal Register, including the rationale for 

24 such proposal; 


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1 ‘‘(ii) provide a period of not less than 

2 60 calendar days for comment on the notice; 

3 and 

4 ‘‘(iii) publish a notice in the Federal 

5 Register identifying the bulk substances that 

6 may not be used in compounding a drug. 

7 ‘‘(f) REQUIREMENTS REGARDING WHOLESALING AND

8 LABELING APPLICABLE TO TRADITIONAL COMPOUNDERS

9 AND COMPOUNDING MANUFACTURERS.—A compounded 

10 drug— 

11 ‘‘(1) may not be sold by an entity other than the 

12 compounding manufacturer or traditional 

13 compounder that compounded the drug; 

14 ‘‘(2) compounded by a compounding manufac15 turer may not be sold or transferred to an entity 

16 other than a health care entity that provides medical 

17 services through licensed practitioners directly to pa18 tients, or a network of such providers, except that a 

19 compounding manufacturer may transfer without 

20 profit a compounded sterile drug to a licensed phar21 macy if— 

22 ‘‘(A) as of the date of enactment of the 

23 Pharmaceutical Compounding Quality and Ac24 countability Act, and at the time of such trans25 fer, the licensed pharmacy falls under the same 


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1 corporate ownership as the compounding manu2 facturer; 

3 ‘‘(B) the transfer of such compounded sterile 

4 drug is solely for the purpose of dispensing the 

5 compounded sterile drug to the end user, who has 

6 been instructed by the prescribing physician to 

7 self-administer such compounded sterile drug; 

8 ‘‘(C) as of the date of enactment of the 

9 Pharmaceutical Compounding Quality and Ac10 countability Act, and at the time of such trans11 fer, the compounding manufacturer is an entity 

12 wholly owned by an entity that provides phar13 macy benefits management services on behalf of 

14 a health benefits plan; 

15 ‘‘(D) the compounding manufacturer identi16 fies itself to the Secretary upon registering under 

17 subsection (g)(2) as an entity that qualifies for 

18 the exception under this paragraph, and provides 

19 documentation of the compounding of such drugs 

20 as of the date of enactment of the Pharma21 ceutical Compounding Quality and Account22 ability Act, in a manner described by the Sec23 retary; and 

24 ‘‘(E) the compounding manufacturer re25 ceives confirmation from the Secretary that the 


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1 compounding manufacturer qualifies for the ex2 ception under this paragraph and the sterile 

3 drug or drugs for which the exemption applies; 

4 and 

5 ‘‘(3) in the case of a compounded drug offered for 

6 sale, shall be labeled ‘not for resale’. 

7 ‘‘(g) OTHER REQUIREMENTS APPLICABLE TO

8 COMPOUNDING MANUFACTURERS.— 

9 ‘‘(1) LICENSED PHARMACIST OVERSIGHT.—A 

10 compounding manufacturer shall ensure that a phar11 macist licensed in the State where the compounding 

12 manufacturer is located exercises direct supervision 

13 over the operations of the compounding manufacturer. 

14 ‘‘(2) REGISTRATION OF COMPOUNDING MANUFAC15 TURERS AND REPORTING OF DRUGS.— 

16 ‘‘(A) REGISTRATION OF COMPOUNDING MAN17 UFACTURERS.— 

18 ‘‘(i) ANNUAL REGISTRATION.—During 

19 the period beginning on October 1 and end20 ing on December 31 each year, each 

21 compounding manufacturer shall register 

22 with the Secretary its name, place of busi23 ness, and unique facility identifier (which 

24 shall conform to the requirements for the 

25 unique facility identifier established under 


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1 section 510), and a point of contact e-mail 

2 address, and shall indicate whether the 

3 compounding manufacturer intends to com4 pound drug in shortage pursuant to sub5 section (d)(3)(A)(ii). 

6 ‘‘(ii) NEW COMPOUNDING MANUFAC7 TURERS.—Each compounding manufac8 turer, upon first engaging in the operations 

9 described in subsection (b)(1), shall imme10 diately register with the Secretary and pro11 vide the information described under clause 

12 (i). The Secretary shall establish a timeline 

13 for registration for the first year following 

14 the effective date of the Pharmaceutical 

15 Compounding Quality and Accountability 

16 Act. In no case may registration be required 

17 until at least 60 calendar days following 

18 publication of the timeline in the Federal 

19 Register. 

20 ‘‘(iii) AVAILABILITY OF REGISTRATION

21 FOR INSPECTION.—The Secretary shall 

22 make available for inspection, to any person 

23 so requesting, any registration filed pursu24 ant to this subparagraph. 


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1 ‘‘(B) DRUG REPORTING BY COMPOUNDING

2 MANUFACTURERS.— 

3 ‘‘(i) IN GENERAL.—Each compounding 

4 manufacturer who registers with the Sec5 retary under subparagraph (A) shall submit 

6 to the Secretary, once during the month of 

7 June of each year and once during the 

8 month of December of each year, a report— 

9 ‘‘(I) identifying the drugs com10 pounded by such compounding manu11 facturer during the previous 6-month 

12 period; and 

13 ‘‘(II) with respect to each drug 

14 identified under subclause (I), pro15 viding the active ingredient, the source 

16 of such active ingredient, the National 

17 Drug Code number, if available, of the 

18 source drug or bulk active ingredient, 

19 the strength of the active ingredient per 

20 unit, the dosage form and route of ad21 ministration, the package description, 

22 the number of individual units pro23 duced, the National Drug Code number 

24 of the final product, if assigned. 


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1 ‘‘(ii) FORM.—Each report under clause 

2 (i) shall be prepared in such form and man3 ner as the Secretary may prescribe by regu4 lation or guidance. 

5 ‘‘(iii) CONFIDENTIALITY.—Reports sub6 mitted pursuant to this subparagraph shall 

7 be exempt from inspection under subpara8 graph (A)(iii), unless the Secretary finds 

9 that such an exemption would be incon10 sistent with the protection of the public 

11 health. 

12 ‘‘(C) ELECTRONIC REGISTRATION AND RE13 PORTING.—Registrations and drug reporting 

14 under this paragraph (including the submission 

15 of updated information) shall be submitted to the 

16 Secretary by electronic means unless the Sec17 retary grants a request for waiver of such re18 quirement because use of electronic means is not 

19 reasonable for the person requesting waiver. 

20 ‘‘(D) RISK-BASED INSPECTION FRE21 QUENCY.— 

22 ‘‘(i) IN GENERAL.—Compounding 

23 manufacturers shall be subject to inspection 

24 pursuant to section 704. 


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1 ‘‘(ii) RISK-BASED SCHEDULE.—The 

2 Secretary, acting through one or more offi3 cers or employees duly designated by the 

4 Secretary, shall inspect compounding man5 ufacturers described in clause (i) in accord6 ance with a risk-based schedule established 

7 by the Secretary. 

8 ‘‘(iii) RISK FACTORS.—In establishing 

9 the risk-based schedule under clause (ii), the 

10 Secretary shall inspect compounding manu11 facturers according to the known safety 

12 risks of such compounding manufacturers, 

13 which shall be based on the following fac14 tors: 

15 ‘‘(I) The compliance history of the 

16 compounding manufacturer. 

17 ‘‘(II) The record, history, and na18 ture of recalls linked to the 

19 compounding manufacturer. 

20 ‘‘(III) The inherent risk of the 

21 drug compounded at the compounding 

22 manufacturer. 

23 ‘‘(IV) The inspection frequency 

24 and history of the compounding manu25 facturer, including whether the 


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1 compounding manufacturer has been 

2 inspected pursuant to section 704 with3 in the last 4 years. 

4 ‘‘(V) Whether the compounding 

5 manufacturer has registered under sub6 section (g)(2) as an entity that intends 

7 to compound pursuant to subsection 

8 (d)(3)(A)(ii). 

9 ‘‘(VI) Any other criteria deemed 

10 necessary and appropriate by the Sec11 retary for purposes of allocating in12 spection resources. 

13 ‘‘(3) ADVERSE EVENT REPORTING.— 

14 ‘‘(A) DEFINITIONS.—In this paragraph: 

15 ‘‘(i) ADVERSE EVENT.—The term ‘ad16 verse event’ means any health-related event 

17 associated with the use of a compounded 

18 drug that is adverse, including— 

19 ‘‘(I) an event occurring in the 

20 course of the use of the drug in profes21 sional practice; 

22 ‘‘(II) an event occurring from an 

23 overdose of the drug, whether acci24 dental or intentional; 


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1 ‘‘(III) an event occurring from 

2 abuse of the drug; 

3 ‘‘(IV) an event occurring from 

4 withdrawal of the drug; and 

5 ‘‘(V) any failure of expected phar6 macological action of the drug. 

7 ‘‘(ii) SERIOUS ADVERSE EVENT.—The 

8 term ‘serious adverse event’ means an ad9 verse event that— 

10 ‘‘(I) results in— 

11 ‘‘(aa) death; 

12 ‘‘(bb) an adverse drug event 

13 that places the patient at imme14 diate risk of death from the ad15 verse drug event as it occurred 

16 (not including an adverse drug 

17 event that might have caused 

18 death had it occurred in a more 

19 severe form); 

20 ‘‘(cc) inpatient hospitaliza21 tion or prolongation of existing 

22 hospitalization; 

23 ‘‘(dd) a persistent or signifi24 cant incapacity or substantial 


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1 disruption of the ability to con2 duct normal life functions; or 

3 ‘‘(ee) a congenital anomaly 

4 or birth defect; or 

5 ‘‘(II) based on appropriate med6 ical judgment, may jeopardize the pa7 tient and may require a medical or 

8 surgical intervention to prevent an 

9 outcome described in subclause (I). 

10 ‘‘(B) REPORTS.— 

11 ‘‘(i) ADVERSE EVENT REPORTING RE12 QUIREMENT.— 

13 ‘‘(I) 15-DAY REPORT.—If a 

14 compounding manufacturer becomes 

15 aware of any serious adverse event, 

16 such manufacturer shall submit reports 

17 of each instance to the Secretary as 

18 soon as practicable, but in no case 

19 later than 15 calendar days after the 

20 initial receipt of the applicable infor21 mation. Such manufacturer shall in22 vestigate and submit to the Secretary 

23 followup reports for each such instance 

24 not later than 15 calendar days after 

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1 quested by the Secretary. Unless and 

2 until the Secretary establishes the con3 tent and format of adverse event re4 ports by guidance or regulation, re5 ports shall be submitted in accordance 

6 with the content and format require7 ments under section 310.305 of title 21, 

8 Code of Federal Regulations (or any 

9 successor regulations) or section 600.80 

10 of title 21, Code of Federal Regulations 

11 (or any successor regulations). 

12 ‘‘(II) ANNUAL REPORT.— 

13 Compounding manufacturers that re14 port serious adverse events shall submit 

15 in December of each year a narrative 

16 summary of any analysis of each re17 port submitted under subclause (I), in18 cluding a history of actions taken dur19 ing the year because of each report, 

20 using the content, format, and manner 

21 established by the Secretary by guid22 ance or regulation. Until such time as 

23 the Secretary publishes such guidance 

24 or regulation, each compounding man25 ufacturer shall retain such summaries 


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1 as part of the records to be maintained 

2 in accordance with subparagraph (C). 

3 ‘‘(ii) PRODUCT QUALITY REPORTING

4 REQUIREMENT.—Not later than 3 calendar 

5 days after the compounding manufacturer 

6 becomes aware of information pertaining to 

7 sterility, stability, or other product quality 

8 concerns that could result in serious adverse 

9 events, the compounding manufacturer shall 

10 submit to the Secretary a product quality 

11 report, in a form and manner established 

12 by the Secretary by guidance or regulation. 

13 ‘‘(C) MAINTENANCE OF RECORDS.—A 

14 compounding manufacturer shall maintain for a 

15 period of 10 years records of all serious adverse 

16 drug events known to the compound manufac17 turer in accordance with section 314.80(i) of title 

18 21, Code of Federal Regulations (or any suc19 cessor regulation), or as otherwise directed by the 

20 Secretary in regulations. 

21 ‘‘(4) LABELING OF DRUGS.— 

22 ‘‘(A) LABEL.—The label of a drug com23 pounded by a compounding manufacturer shall 

24 include— 


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1 ‘‘(i) the statement ‘This is a com2 pounded drug.’ or a reasonable comparable 

3 alternative statement (as specified by the 

4 Secretary) that prominently identifies the 

5 drug as a compounded drug; 

6 ‘‘(ii) the name, address, and phone 

7 number of the applicable compounding 

8 manufacturer; and 

9 ‘‘(iii) with respect to the compounded 

10 drug— 

11 ‘‘(I) the lot or batch number; 

12 ‘‘(II) the established name of the 

13 medication; 

14 ‘‘(III) the dosage form and 

15 strength; 

16 ‘‘(IV) the statement of quantity or 

17 volume, as appropriate; 

18 ‘‘(V) the date that the drug was 

19 compounded; 

20 ‘‘(VI) the expiration date; 

21 ‘‘(VII) storage and handling in22 structions; 

23 ‘‘(VIII) the National Drug Code 

24 number, if available; 


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1 ‘‘(IX) the ‘not for resale’ statement 

2 as required by subsection (f)(3); and 

3 ‘‘(X) subject to subparagraph 

4 (B)(i), a list of active and inactive in5 gredients, identified by established 

6 name and the quantity or proportion 

7 of each ingredient. 

8 ‘‘(B) CONTAINER.—The container from 

9 which the individual units of a drug com10 pounded by a compounding manufacturer are re11 moved for dispensing or for administration (such 

12 as a plastic bag containing individual product 

13 syringes) shall include— 

14 ‘‘(i) the information described under 

15 subparagraph (A)(iii)(X), if there is not 

16 space on the label for such information; 

17 ‘‘(ii) the following information to fa18 cilitate adverse event reporting: 

19 www.fda.gov/medwatch and 1–800-FDA20 1088; and 

21 ‘‘(iii) the directions for use, including, 

22 as appropriate, dosage and administration. 

23 ‘‘(C) ADDITIONAL INFORMATION.—The label 

24 and labeling of a drug compounded by a 

25 compounding manufacturer shall include any 


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1 other information as determined necessary and 

2 specified in regulations promulgated by the Sec3 retary. 

4 ‘‘(h) COMPOUNDING MANUFACTURER ESTABLISHMENT

5 AND REINSPECTION FEES.— 

6 ‘‘(1) DEFINITIONS.—In this subsection— 

7 ‘‘(A) the term ‘affiliate’ has the meaning 

8 given such term in section 735(11); 

9 ‘‘(B) the term ‘gross annual sales’ means the 

10 total worldwide gross annual sales, in United 

11 States dollars, for a compounding manufacturer, 

12 including the sales of all the affiliates of the 

13 compounding manufacturer; and 

14 ‘‘(C) the term ‘reinspection’ means, with re15 spect to a compounding manufacturer, 1 or more 

16 inspections conducted under section 704 subse17 quent to an inspection conducted under such 

18 provision which identified noncompliance mate19 rially related to an applicable requirement of 

20 this Act, specifically to determine whether com21 pliance has been achieved to the Secretary’s sat22 isfaction. 

23 ‘‘(2) ESTABLISHMENT AND REINSPECTION

24 FEES.— 


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1 ‘‘(A) IN GENERAL.—For fiscal year 2015 

2 and each subsequent fiscal year, the Secretary 

3 shall, in accordance with this subsection, assess 

4 and collect— 

5 ‘‘(i) an annual establishment fee from 

6 each compounding manufacturer; and 

7 ‘‘(ii) a reinspection fee from each 

8 compounding manufacturer subject to a re9 inspection in such fiscal year. 

10 ‘‘(B) MULTIPLE REINSPECTIONS.—A 

11 compounding manufacturer subject to multiple 

12 reinspections in a fiscal year shall be subject to 

13 a reinspection fee for each reinspection. 

14 ‘‘(3) ESTABLISHMENT AND REINSPECTION FEE

15 SETTING.—The Secretary shall establish the establish16 ment and reinspection fee to be collected under this 

17 subsection for each fiscal year, based on the method18 ology described in paragraph (4) and shall publish 

19 such fee in a Federal Register notice not later than 

20 60 calendar days before the start of each such year. 

21 ‘‘(4) AMOUNT OF ESTABLISHMENT FEE AND RE22 INSPECTION FEE.— 

23 ‘‘(A) IN GENERAL.—For each compounding 

24 manufacturer in a fiscal year— 


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1 ‘‘(i) except as provided in subpara2 graph (D), the amount of the annual estab3 lishment fee under paragraph (2) shall be 

4 equal to the sum of— 

5 ‘‘(I) $15,000, multiplied by the 

6 inflation adjustment factor described 

7 in subparagraph (B); plus 

8 ‘‘(II) the small business adjust9 ment factor described in subparagraph 

10 (C); and 

11 ‘‘(ii) the amount of any reinspection 

12 fee (if applicable) under paragraph (2) shall 

13 be equal to $15,000, multiplied by the infla14 tion adjustment factor described in subpara15 graph (B). 

16 ‘‘(B) INFLATION ADJUSTMENT FACTOR.— 

17 ‘‘(i) IN GENERAL.—For fiscal year 

18 2015 and subsequent fiscal years, the fee 

19 amounts established in subparagraph (A) 

20 shall be adjusted by the Secretary by notice, 

21 published in the Federal Register, for a fis22 cal year by the amount equal to the sum 

23 of— 

24 ‘‘(I) one; 


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1 ‘‘(II) the average annual percent 

2 change in the cost, per full-time equiv3 alent position of the Food and Drug 

4 Administration, of all personnel com5 pensation and benefits paid with re6 spect to such positions for the first 3 

7 years of the preceding 4 fiscal years, 

8 multiplied by the proportion of per9 sonnel compensation and benefits costs 

10 to total costs of an average full-time 

11 equivalent position of the Food and 

12 Drug Administration for the first 3 

13 years of the preceding 4 fiscal years; 

14 and 

15 ‘‘(III) the average annual percent 

16 change that occurred in the Consumer 

17 Price Index for urban consumers (U.S. 

18 City Average; Not Seasonally Adjusted; 

19 All items; Annual Index) for the first 

20 3 years of the preceding 4 years of 

21 available data multiplied by the pro22 portion of all costs other than per23 sonnel compensation and benefits costs 

24 to total costs of an average full-time 

25 equivalent position of the Food and 


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1 Drug Administration for the first 3 

2 years of the preceding 4 fiscal years. 

3 ‘‘(ii) COMPOUNDED BASIS.—The ad4 justment made each fiscal year under clause 

5 (i) shall be added on a compounded basis to 

6 the sum of all adjustments made each fiscal 

7 year after fiscal year 2014 under clause (i). 

8 ‘‘(C) SMALL BUSINESS ADJUSTMENT FAC9 TOR.—The small business adjustment factor re10 ferred to subparagraph (A)(i)(II) shall be an 

11 amount established by the Secretary for each fis12 cal year based on the Secretary’s estimate of— 

13 ‘‘(i) the number of small businesses 

14 that will pay a reduced establishment fee for 

15 such fiscal year; and 

16 ‘‘(ii) the adjustment to the establish17 ment fee necessary to achieve total fees 

18 equaling the total fees that the Secretary 

19 would have collected if no entity qualified 

20 for the small business exception in subpara21 graph (D). 

22 ‘‘(D) EXCEPTION FOR SMALL BUSI23 NESSES.— 

24 ‘‘(i) IN GENERAL.—In the case of a 

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1 nual sales of $1,000,000 or less in the 12 

2 months ending April 1 of the fiscal year im3 mediately preceding the fiscal year in which 

4 the fees under this subsection are assessed, 

5 the amount of the establishment fee under 

6 paragraph (2) for a fiscal year shall be 

equal to 1 7 ⁄3 of the amount calculated under 

8 subparagraph (A)(i)(I) in such fiscal year. 

9 ‘‘(ii) APPLICATION.—To qualify for the 

10 exception under this subparagraph, a small 

11 business shall submit to the Secretary a 

12 written request for such exception, in a for13 mat specified by the Secretary in guidance, 

14 certifying its gross annual sales for the 12 

15 months ending April 1 of the fiscal year im16 mediately preceding the fiscal year in which 

17 fees under this subsection are assessed. Any 

18 such application must be submitted to the 

19 Secretary not later than April 30 for the 

20 following fiscal year. Any statement or rep21 resentation made to the Secretary shall be 

22 subject to section 1001 of title 18, United 

23 States Code. 

24 ‘‘(E) CREDITING OF FEES.—In establishing 

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1 paragraph (C) for a fiscal year, the Secretary 

2 shall provide for the crediting of fees from the 

3 previous year to the next year if the Secretary 

4 overestimated the amount of the small business 

5 adjustment factor for such previous fiscal year, 

6 and consider the need to account for any adjust7 ment of fees and such other factors as the Sec8 retary determines appropriate. 

9 ‘‘(5) USE OF FEES.—The Secretary shall make 

10 all of the fees collected pursuant to clauses (i) and (ii) 

11 of paragraph (2)(A) available solely to pay for the 

12 costs of oversight of compounding manufacturers. 

13 ‘‘(6) SUPPLEMENT NOT SUPPLANT.—Funds re14 ceived by the Secretary pursuant to this subsection 

15 shall be used to supplement and not supplant any 

16 other Federal funds available to carry out the activi17 ties described in this section. 

18 ‘‘(7) CREDITING AND AVAILABILITY OF FEES.— 

19 Fees authorized under this subsection shall be collected 

20 and available for obligation only to the extent and in 

21 the amount provided in advance in appropriations 

22 Acts. Such fees are authorized to remain available 

23 until expended. Such sums as may be necessary may 

24 be transferred from the Food and Drug Administra25 tion salaries and expenses appropriation account 


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1 without fiscal year limitation to such appropriation 

2 account for salaries and expenses with such fiscal 

3 year limitation. The sums transferred shall be avail4 able solely for the purpose of paying the costs of over5 sight of compounding manufacturers. 

6 ‘‘(8) COLLECTION OF FEES.— 

7 ‘‘(A) ESTABLISHMENT FEE.—A 

8 compounding manufacturer shall remit the es9 tablishment fee due under this subsection in a 

10 fiscal year when submitting a registration pur11 suant to subsection (g) for such fiscal year. 

12 ‘‘(B) REINSPECTION FEE.—The Secretary 

13 shall specify in the Federal Register notice de14 scribed in paragraph (3) the manner in which 

15 reinspection fees assessed under this subsection 

16 shall be collected and the timeline for payment of 

17 such fees. Such a fee shall be collected after the 

18 Secretary has conducted a reinspection of the 

19 compounding manufacturer involved. 

20 ‘‘(C) EFFECT OF FAILURE TO PAY FEES.— 

21 ‘‘(i) REGISTRATION.—A compounding 

22 manufacturer shall not be considered reg23 istered under subsection (g) in a fiscal year 

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1 facturer remits the establishment fee under 

2 this subsection for such fiscal year. 

3 ‘‘(ii) MISBRANDING.—All drugs manu4 factured, prepared, propagated, com5 pounded, or processed by a compounding 

6 manufacturer for which any establishment 

7 fee or reinspection fee has not been paid as 

8 required by this subsection shall be deemed 

9 misbranded under section 502(cc) until the 

10 fees owed for such compounding manufac11 turer under this subsection have been paid. 

12 ‘‘(D) COLLECTION OF UNPAID FEES.—In 

13 any case where the Secretary does not receive 

14 payment of a fee assessed under this subsection 

15 within 30 calendar days after it is due, such fee 

16 shall be treated as a claim of the United States 

17 Government subject to provisions of subchapter 

18 II of chapter 37 of title 31, United States Code. 

19 ‘‘(9) ANNUAL REPORT TO CONGRESS.—Not later 

20 than 120 calendar days after each fiscal year in 

21 which fees are assessed and collected under this sub22 section, the Secretary shall submit a report to the 

23 Committee on Health Education Labor and Pensions 

24 of the Senate and the Committee on Energy and Com25 merce of the House of Representatives, to include a 


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1 description of fees assessed and collected for each year, 

2 a summary description of entities paying the fees, 

3 and the number of inspections and reinspections of 

4 such entities performed each year. 

5 ‘‘(10) AUTHORIZATION OF APPROPRIATIONS.— 

6 For fiscal year 2015 and each subsequent fiscal year, 

7 there is authorized to be appropriated for fees under 

8 this subsection an amount equivalent to the total 

9 amount of fees assessed for such fiscal year under this 

10 subsection. 

11 ‘‘(i) ACTION BY SECRETARY REGARDING COMPLAINTS

12 FROM STATE BOARDS OF PHARMACY.— 

13 ‘‘(1) IDENTIFICATION OF COMPOUNDING MANU14 FACTURERS.—The Secretary shall encourage States to 

15 identify to the Secretary facilities that are licensed by 

16 a State as a pharmacy that appear to be entities that 

17 are required to be registered with the Secretary as a 

18 compounding manufacturer. 

19 ‘‘(2) DESIGNATION.—The Secretary shall des20 ignate a point of contact and establish a format and 

21 procedure for a State Board of Pharmacy to notify 

22 the Secretary if it appears to a State Board of Phar23 macy that an entity licensed by a State as a phar24 macy is required to be registered with the Secretary 

25 as a compounding manufacturer. 


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1 ‘‘(3) DETERMINATION.—If the Secretary deter2 mines that such an entity described in paragraph (2) 

3 is required to be registered with the Secretary as a 

4 compounding manufacturer, the Secretary shall 

5 transmit such determination to the State Board of 

6 Pharmacy in the State in which the entity is located, 

7 and to the State Board of Pharmacy in the notifying 

8 State, if different, within 15 calendar days of such de9 termination and shall make such determination pub10 licly available on the Internet Web site of the Food 

11 and Drug Administration. 

12 ‘‘(4) EFFECT.—The Secretary shall encourage di13 rect communications between States regarding tradi14 tional compounders. Nothing in this subsection shall 

15 expand the Secretary’s authority over or responsi16 bility for traditional compounders.’’. 

17 (c) PROHIBITED ACT.—Section 301 (21 U.S.C. 331) 

18 is amended— 

19 (1) in subsection (e), by striking ‘‘417, 416, 504’’ 

20 and inserting ‘‘417, 416, 503A(g), 504’’; and 

21 (2) by adding at the end the following: 

22 ‘‘(ccc)(1) The resale of a compounded drug that is la23 beled ‘not for resale’ as required by section 503A. 

24 ‘‘(2) The failure to register in accordance with sub25 section (g) of section 503A or the failure to submit a report 


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1 as required by subsection (g)(2)(B) or (g)(3) of such sec2 tion.’’. 

3 (d) REPORT BY GAO.—Not later than November 1, 

4 2016, the Comptroller General of the United States shall 

5 conduct a study and submit to Congress a report on the 

6 safety of animal drug compounding and the availability of 

7 safe and effective drugs for animals. 

8 SEC. 103. OTHER REQUIREMENTS. 

9 (a) LABELING.—Section 502 (21 U.S.C. 352) is 

10 amended by adding at the end the following: 

11 ‘‘(bb) If it is a compounded drug and the labeling does 

12 not include the information as required by subsections (f)(3) 

13 and (g)(4) of section 503A, as applicable. 

14 ‘‘(cc) If the advertising or promotion of a compounded 

15 drug is false or misleading in any particular. 

16 ‘‘(dd) If it is a drug, and it was manufactured, pre17 pared, propagated, compounded, or processed by a 

18 compounding manufacturer for which fees have not been 

19 paid as required by section 503A(g).’’. 

20 (b) APPLICATION OF INSPECTION REQUIREMENTS TO

21 COMPOUNDING MANUFACTURERS.—Section 704(a)(2) (21 

22 U.S.C. 374(a)(2)) is amended by adding at the end the fol23 lowing flush text: 


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1 ‘‘The exemption in subparagraph (A) does not apply with 

2 respect to compounding manufacturers (as such term is de3 fined in section 503A).’’. 

4 SEC. 104. IMPLEMENTATION. 

5 (a) CONSULTATION WITH STAKEHOLDERS.—In imple6 menting this title (and the amendments made by this title), 

7 the Secretary of Health and Human Services shall consult 

8 with relevant stakeholders including pharmacists, profes9 sional associations, patient and public health advocacy 

10 groups, manufacturers and physicians. 

11 (b) REGULATIONS.—In promulgating any regulations 

12 to implement this title (and the amendments made by this 

13 title), the Secretary of Health and Human Services shall— 

14 (1) issue a notice of proposed rulemaking that 

15 includes the proposed regulation; 

16 (2) provide a period of not less than 60 calendar 

17 days for comments on the proposed regulation; and 

18 (3) publish the final regulation not more than 18 

19 months following publication of the proposed rule and 

20 not less than 30 calendar days before the effective date 

21 of such final regulation. 

22 SEC. 105. EFFECTIVE DATE. 

23 This title (and the amendments made by this title) 

24 shall take effect on the date that is 1 year after the date 

25 of enactment of this Act. 


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1 TITLE II—DRUG SUPPLY CHAIN 

2 SECURITY 

3 SEC. 201. SHORT TITLE. 

4 This title may be cited as the ‘‘Drug Supply Chain 

5 Security Act’’. 

6 SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN. 

7 Chapter V (21 U.S.C. 351 et seq.) is amended by add8 ing at the end the following: 

9 ‘‘Subchapter H—Pharmaceutical Distribution 

10 Supply Chain 

11 ‘‘SEC. 581. DEFINITIONS. 

12 ‘‘In this subchapter: 

13 ‘‘(1) AUTHORIZED.—The term ‘authorized’ 

14 means— 

15 ‘‘(A) in the case of a manufacturer or re16 packager, having a valid registration in accord17 ance with section 510; 

18 ‘‘(B) in the case of a wholesale distributor, 

19 having a valid license under State law or section 

20 583, in accordance with section 582(a)(6) and 

21 complying with the licensure reporting require22 ments under section 503(e), as amended by the 

23 Drug Supply Chain Security Act; 

24 ‘‘(C) in the case of a third-party logistics 

25 provider, having a valid license under State law 


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1 or section 584(a)(1), in accordance with section 

2 582(a)(7) and complying with the licensure re3 porting requirements under section 584(b); and 

4 ‘‘(D) in the case of a dispenser, having a 

5 valid license under State law. 

6 ‘‘(2) DISPENSER.—The term ‘dispenser’— 

7 ‘‘(A) means a retail pharmacy, hospital 

8 pharmacy, a group of chain pharmacies under 

9 common ownership and control that do not act 

10 as a wholesale distributor, or any other person 

11 authorized by law to dispense or administer pre12 scription drugs, and the affiliated warehouses or 

13 distribution centers of such entities under com14 mon ownership and control that do not act as a 

15 wholesale distributor; and 

16 ‘‘(B) does not include a person who dis17 penses only products to be used in animals in 

18 accordance with section 512(a)(5). 

19 ‘‘(3) DISPOSITION.—The term ‘disposition’, with 

20 respect to a product within the possession or control 

21 of an entity, means the removal of such product from 

22 the pharmaceutical distribution supply chain, which 

23 may include disposal or return of the product for dis24 posal or other appropriate handling and other ac25 tions, such as retaining a sample of the product for 


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1 further additional physical examination or laboratory 

2 analysis of the product by a manufacturer or regu3 latory or law enforcement agency. 

4 ‘‘(4) DISTRIBUTE OR DISTRIBUTION.—The term 

5 ‘distribute’ or ‘distribution’ means the sale, purchase, 

6 trade, delivery, handling, storage, or receipt of a 

7 product, and does not include the dispensing of a 

8 product pursuant to a prescription executed in ac9 cordance with section 503(b)(1) or the dispensing of 

10 a product approved under section 512(b). 

11 ‘‘(5) EXCLUSIVE DISTRIBUTOR.—The term ‘ex12 clusive distributor’ means the wholesale distributor 

13 that directly purchased the product from the manu14 facturer and is the sole distributor of that manufac15 turer’s product to a subsequent repackager, wholesale 

16 distributor, or dispenser. 

17 ‘‘(6) HOMOGENEOUS CASE.—The term ‘homo18 geneous case’ means a sealed case containing only 

19 product that has a single National Drug Code number 

20 belonging to a single lot. 

21 ‘‘(7) ILLEGITIMATE PRODUCT.—The term ‘illegit22 imate product’ means a product for which credible 

23 evidence shows that the product— 

24 ‘‘(A) is counterfeit, diverted, or stolen; 


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1 ‘‘(B) is intentionally adulterated such that 

2 the product would result in serious adverse 

3 health consequences or death to humans; 

4 ‘‘(C) is the subject of a fraudulent trans5 action; or 

6 ‘‘(D) appears otherwise unfit for distribu7 tion such that the product could result in serious 

8 adverse health consequence or death to humans. 

9 ‘‘(8) LICENSED.—The term ‘licensed’ means— 

10 ‘‘(A) in the case of a wholesale distributor, 

11 having a valid license in accordance with section 

12 503(e) or section 582(a)(6), as applicable; 

13 ‘‘(B) in the case of a third-party logistics 

14 provider, having a valid license in accordance 

15 with section 584(a) or section 582(a)(7), as ap16 plicable; and 

17 ‘‘(C) in the case of a dispenser, having a 

18 valid license under State law. 

19 ‘‘(9) MANUFACTURER.— 

20 ‘‘(A) IN GENERAL.—The term ‘manufac21 turer’ means, with respect to a product— 

22 ‘‘(i) a person that holds an application 

23 approved under section 505 or a license 

24 issued under section 351 of the Public 

25 Health Service Act for such product, or if 


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1 such product is not the subject of an ap2 proved application or license, the person 

3 who manufactured the product; 

4 ‘‘(ii) a co-licensed partner of the per5 son described in clause (i) that obtains the 

6 product directly from a person described in 

7 this clause or clause (i) or (iii); or 

8 ‘‘(iii) an affiliate of a person described 

9 in clause (i) or (ii) that receives the product 

10 directly from a person described in this 

11 clause or clause (i) or (ii). 

12 ‘‘(B) AFFILIATE.—For purposes of this 

13 paragraph, the term ‘affiliate’ means a member 

14 of an affiliated group, as that term is defined in 

15 section 1504(a) of the Internal Revenue Code, or 

16 a member of a group of corporations that would 

17 constitute an affiliated group, as so defined, but 

18 for the fact that one or more members of the 

19 group is a corporation described in section 

20 1504(b)(3) of the Internal Revenue Code. 

21 ‘‘(10) PACKAGE.— 

22 ‘‘(A) IN GENERAL.—The term ‘package’ 

23 means the smallest individual saleable unit of 

24 product for distribution by a manufacturer or 


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1 repackager that is intended by the manufacturer 

2 for ultimate sale to the dispenser of such product. 

3 ‘‘(B) INDIVIDUAL SALEABLE UNIT.—For 

4 purposes of this paragraph, an ‘individual sale5 able unit’ is the smallest container of product in6 troduced into commerce by the manufacturer or 

7 repackager that is intended by the manufacturer 

8 or repackager for individual sale to a dispenser. 

9 ‘‘(11) PRESCRIPTION DRUG.—The term ‘prescrip10 tion drug’ means a drug for human use subject to sec11 tion 503(b)(1). 

12 ‘‘(12) PRODUCT.—The term ‘product’ means a 

13 prescription drug in a finished dosage form for ad14 ministration to a patient without substantial further 

15 manufacturing (such as capsules, tablets, and 

16 lyophilized products before reconstitution), but for 

17 purposes of section 582, does not include blood or 

18 blood components intended for transfusion, radio19 active drugs or radioactive biological products (as de20 fined in section 600.3(ee) of title 21, Code of Federal 

21 Regulations) that are regulated by the Nuclear Regu22 latory Commission or by a State pursuant to an 

23 agreement with such Commission under section 274 of 

24 the Atomic Energy Act of 1954 (42 U.S.C. 2021), an 

25 intravenous product described in clause xiv, xv, or xvi 


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1 of paragraph (23), any medical gas (as defined in 

2 section 575), or a drug compounded in compliance 

3 with section 503A. 

4 ‘‘(13) PRODUCT IDENTIFIER.—The term ‘product 

5 identifier’ means a standardized graphic that in6 cludes, in both human-readable form and on a ma7 chine-readable data carrier that conforms to the 

8 standards developed by a widely-recognized inter9 national standards development organization, the 

10 standardized numerical identifier, lot number, and 

11 expiration date of the product. 

12 ‘‘(14) QUARANTINE.—The term ‘quarantine’ 

13 means the storage or identification of a product, to 

14 prevent distribution or transfer of the product, in a 

15 physically separate area clearly identified for such 

16 use or through other procedures. 

17 ‘‘(15) REPACKAGER.—The term ‘repackager’ 

18 means a person who owns or operates an establish19 ment that repacks and relabels a product or package 

20 for further sale. 

21 ‘‘(16) RETURN.—The term ‘return’ means pro22 viding product to the authorized immediate trading 

23 partner from which such product was purchased, or 

24 to a returns processor or reverse logistics provider for 

25 handling of such product. 


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1 ‘‘(17) RETURNS PROCESSOR OR REVERSE LOGIS2 TICS PROVIDER.—The term ‘returns processor’ or ‘re3 verse logistics provider’ means a person who owns or 

4 operates an establishment that dispositions or other5 wise processes saleable or nonsaleable product received 

6 from an authorized trading partner such that the 

7 product may be processed for credit to the purchaser, 

8 manufacturer, or seller or disposed of for no further 

9 distribution. 

10 ‘‘(18) SPECIFIC PATIENT NEED.—The term ‘spe11 cific patient need’ refers to the transfer of a product 

12 from one pharmacy to another to fill a prescription 

13 for an identified patient. Such term does not include 

14 the transfer of a product from one pharmacy to an15 other for the purpose of increasing or replenishing 

16 stock in anticipation of a potential need. 

17 ‘‘(19) STANDARDIZED NUMERICAL IDENTIFIER.— 

18 The term ‘standardized numerical identifier’ means a 

19 set of numbers or characters used to uniquely identify 

20 each package or homogenous case that is composed of 

21 the National Drug Code that corresponds to the spe22 cific product (including the particular package con23 figuration) combined with a unique alphanumeric se24 rial number of up to 20 characters. 


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1 ‘‘(20) SUSPECT PRODUCT.—The term ‘suspect 

2 product’ means a product for which there is reason to 

3 believe that such product— 

4 ‘‘(A) is potentially counterfeit, diverted, or 

5 stolen; 

6 ‘‘(B) is potentially intentionally adulterated 

7 such that the product would result in serious ad8 verse health consequences or death to humans; 

9 ‘‘(C) is potentially the subject of a fraudu10 lent transaction; or 

11 ‘‘(D) appears otherwise unfit for distribu12 tion such that the product would result in seri13 ous adverse health consequences or death to hu14 mans. 

15 ‘‘(21) THIRD-PARTY LOGISTICS PROVIDER.—The 

16 term ‘third-party logistics provider’ means an entity 

17 that provides or coordinates warehousing, or other lo18 gistics services of a product in interstate commerce on 

19 behalf of a manufacturer, wholesale distributor, or 

20 dispenser of a product, but does not take ownership 

21 of the product, nor have responsibility to direct the 

22 sale or disposition of the product. 

23 ‘‘(22) TRADING PARTNER.—The term ‘trading 

24 partner’ means— 


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1 ‘‘(A) a manufacturer, repackager, wholesale 

2 distributor, or dispenser from whom a manufac3 turer, repackager, wholesale distributor, or dis4 penser accepts direct ownership of a product or 

5 to whom a manufacturer, repackager, wholesale 

6 distributor, or dispenser transfers direct owner7 ship of a product; or 

8 ‘‘(B) a third-party logistics provider from 

9 whom a manufacturer, repackager, wholesale dis10 tributor, or dispenser accepts direct possession of 

11 a product or to whom a manufacturer, repack12 ager, wholesale distributor, or dispenser transfers 

13 direct possession of a product. 

14 ‘‘(23) TRANSACTION.— 

15 ‘‘(A) IN GENERAL.—The term ‘transaction’ 

16 means the transfer of product between persons in 

17 which a change of ownership occurs. 

18 ‘‘(B) EXEMPTIONS.—The term ‘transaction’ 

19 does not include— 

20 ‘‘(i) intracompany distribution of any 

21 product between members of an affiliated 

22 group (as defined in section 1504(a) of the 

23 Internal Revenue Code of 1986) or within a 

24 manufacturer; 


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1 ‘‘(ii) the distribution of a product 

2 among hospitals or other health care entities 

3 that are under common control; 

4 ‘‘(iii) the distribution of a product for 

5 emergency medical reasons including a pub6 lic health emergency declaration pursuant 

7 to section 319 of the Public Health Service 

8 Act, except that a drug shortage not caused 

9 by a public health emergency shall not con10 stitute an emergency medical reason; 

11 ‘‘(iv) the dispensing of a product pur12 suant to a valid prescription executed in ac13 cordance with section 503(b)(1); 

14 ‘‘(v) the distribution of product sam15 ples by a manufacturer or a licensed whole16 sale distributor in accordance with section 

17 503(d); 

18 ‘‘(vi) the distribution of blood or blood 

19 components intended for transfusion; 

20 ‘‘(vii) the distribution of minimal 

21 quantities of product by a licensed retail 

22 pharmacy to a licensed practitioner for of23 fice use; 

24 ‘‘(viii) the sale, purchase, or trade of a 

25 drug or an offer to sell, purchase, or trade 


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1 a drug by a charitable organization de2 scribed in section 501(c)(3) of the Internal 

3 Revenue Code of 1954 to a nonprofit affil4 iate of the organization to the extent other5 wise permitted by law; 

6 ‘‘(ix) the distribution of a product pur7 suant to the sale or merger of a pharmacy 

8 or pharmacies or a wholesale distributor or 

9 wholesale distributors, except that any 

10 records required to be maintained for the 

11 product shall be transferred to the new 

12 owner of the pharmacy or pharmacies or 

13 wholesale distributor or wholesale distribu14 tors; 

15 ‘‘(x) the dispensing of a product ap16 proved under section 512(b); 

17 ‘‘(xi) products transferred to or from 

18 any facility that is licensed by the Nuclear 

19 Regulatory Commission or by a State pur20 suant to an agreement with such Commis21 sion under section 274 of the Atomic En22 ergy Act of 1954 (42 U.S.C. 2021); 

23 ‘‘(xii) a combination product that is— 

24 ‘‘(I) a product comprised of a de25 vice and 1 or more other regulated 


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1 components (such as a drug/device, bio2 logic/device, or drug/device/biologic) 

3 that are physically, chemically, or oth4 erwise combined or mixed and pro5 duced as a single entity; 

6 ‘‘(II) 2 or more separate products 

7 packaged together in a single package 

8 or as a unit and comprised of a drug 

9 and device or device and biological 

10 product; or 

11 ‘‘(III) 2 or more finished medical 

12 devices plus one or more drug or bio13 logical products which are packaged to14 gether in what is referred to as a ‘med15 ical convenience kit’ as described in 

16 clause (xiii); 

17 ‘‘(xiii) the distribution of a collection 

18 of finished medical devices or a collection of 

19 finished drug or biological products assem20 bled in kit form strictly for the convenience 

21 of the purchaser or user (to be known as a 

22 ‘medical convenience kit’) if— 

23 ‘‘(I) the medical convenience kit is 

24 assembled in an establishment that is 

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1 ministration as a device manufacturer 

2 in accordance with section 510(b)(2); 

3 ‘‘(II) the person who manufactur4 ers a medical convenience kit pur5 chased the product contained in the 

6 medical convenience kit directly from 

7 the pharmaceutical manufacturer or 

8 from a wholesale distributor that pur9 chased the product directly from the 

10 pharmaceutical manufacturer; 

11 ‘‘(III) the person who manufac12 turers a medical convenience kit does 

13 not alter the primary container or 

14 label of the product as purchased from 

15 the manufacturer or wholesale dis16 tributor; 

17 ‘‘(IV) the medical convenience kit 

18 does not contain a controlled substance 

19 that appears in a schedule contained 

20 in the Comprehensive Drug Abuse Pre21 vention and Control Act of 1970; and 

22 ‘‘(V) the products contained in the 

23 medical convenience kit are— 


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1 ‘‘(aa) intravenous solutions 

2 intended for the replenishment of 

3 fluids and electrolytes; 

4 ‘‘(bb) products intended to 

5 maintain the equilibrium of water 

6 and minerals in the body; 

7 ‘‘(cc) products intended for 

8 irrigation or reconstitution; 

9 ‘‘(dd) anesthetics; 

10 ‘‘(ee) anticoagulants; 

11 ‘‘(ff) vasopressors; or 

12 ‘‘(gg) sympathicomimetics; 

13 ‘‘(xiv) the distribution of an intra14 venous product that, by its formulation, is 

15 intended for the replenishment of fluids and 

16 electrolytes (such as sodium, chloride, and 

17 potassium) or calories (such as dextrose and 

18 amino acids); 

19 ‘‘(xv) the distribution of an intra20 venous product used to maintain the equi21 librium of water and minerals in the body, 

22 such as dialysis solutions; 

23 ‘‘(xvi) the distribution of a product 

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1 tion, or sterile water, whether intended for 

2 such purposes or for injection; 

3 ‘‘(xvii) the distribution of a medical 

4 gas (as defined in section 575); or 

5 ‘‘(xviii) the distribution or sale of any 

6 licensed product under section 351 of the 

7 Public Health Service Act that meets the 

8 definition of a device under section 201(h). 

9 ‘‘(24) TRANSACTION HISTORY.—The term ‘trans10 action history’ means a statement in paper or elec11 tronic form, including the transaction information for 

12 each prior transaction going back to the manufacturer 

13 of the product. 

14 ‘‘(25) TRANSACTION INFORMATION.—The term 

15 ‘transaction information’ means— 

16 ‘‘(A) the proprietary or established name or 

17 names of the product; 

18 ‘‘(B) the strength and dosage form of the 

19 product; 

20 ‘‘(C) the National Drug Code number of the 

21 product; 

22 ‘‘(D) the container size; 

23 ‘‘(E) the number of containers; 

24 ‘‘(F) the lot number of the product; 

25 ‘‘(G) the date of the transaction; 


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1 ‘‘(H) the date of the shipment, if different 

2 from the date of the transaction; 

3 ‘‘(I) the business name and address of the 

4 person from whom ownership is being trans5 ferred; and 

6 ‘‘(J) the business name and address of the 

7 person to whom ownership is being transferred. 

8 ‘‘(26) TRANSACTION STATEMENT.—The ‘trans9 action statement’ is a statement, in paper or elec10 tronic form, that the entity transferring ownership in 

11 a transaction— 

12 ‘‘(A) is authorized as required under the 

13 Drug Supply Chain Security Act; 

14 ‘‘(B) received the product from a person 

15 that is authorized as required under the Drug 

16 Supply Chain Security Act; 

17 ‘‘(C) received transaction information and 

18 a transaction statement from the prior owner of 

19 the product, as required under section 582; 

20 ‘‘(D) did not knowingly ship a suspect or il21 legitimate product; 

22 ‘‘(E) had systems and processes in place to 

23 comply with verification requirements under sec24 tion 582; 


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1 ‘‘(F) did not knowingly provide false trans2 action information; and 

3 ‘‘(G) did not knowingly alter the trans4 action history. 

5 ‘‘(27) VERIFICATION OR VERIFY.—The term 

6 ‘verification’ or ‘verify’ means determining whether 

7 the product identifier affixed to, or imprinted upon, 

8 a package or homogeneous case corresponds to the 

9 standardized numerical identifier or lot number and 

10 expiration date assigned to the product by the manu11 facturer or the repackager, as applicable in accord12 ance with section 582. 

13 ‘‘(28) WHOLESALE DISTRIBUTOR.—The term 

14 ‘wholesale distributor’ means a person (other than a 

15 manufacturer, a manufacturer’s co-licensed partner, a 

16 third-party logistics provider, or repackager) engaged 

17 in wholesale distribution (as defined in section 

18 503(e)(4), as amended by the Drug Supply Chain Se19 curity Act). 

20 ‘‘SEC. 582. REQUIREMENTS. 

21 ‘‘(a) IN GENERAL.— 

22 ‘‘(1) OTHER ACTIVITIES.—Each manufacturer, 

23 repackager, wholesale distributor, third-party logistics 

24 provider, and dispenser shall comply with the require25 ments set forth in this section with respect to the role 


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1 of such manufacturer, repackager, wholesale dis2 tributor, third-party logistics provider, or dispenser 

3 in a transaction involving product. If an entity meets 

4 the definition of more than one of the entities listed 

5 in the preceding sentence, such entity shall comply 

6 with all applicable requirements in this section, but 

7 shall not be required to duplicate requirements. 

8 ‘‘(2) INITIAL STANDARDS.— 

9 ‘‘(A) IN GENERAL.—The Secretary shall, in 

10 consultation with other appropriate Federal offi11 cials, manufacturers, repackagers, wholesale dis12 tributors, third-party logistics providers, dis13 pensers, and other pharmaceutical distribution 

14 supply chain stakeholders, issue a draft guidance 

15 document that establishes standards for the inter16 operable exchange of transaction information, 

17 transaction history, and transaction statements, 

18 in paper or electronic format, for compliance 

19 with subsections (a), (b), (c), (d), (e), and (f). In 

20 establishing such standards, the Secretary shall 

21 consider the feasibility of establishing standard22 ized documentation to be used by members of the 

23 pharmaceutical distribution supply chain to con24 vey the transaction information, transaction his25 tory, and transaction statement to the subsequent 


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1 purchaser of a product and to facilitate the ex2 change of lot level data. The standards estab3 lished under this paragraph shall take into con4 sideration the standards established under sec5 tion 505D and shall comply with a form and 

6 format developed by a widely recognized inter7 national standards development organization. 

8 ‘‘(B) PUBLIC INPUT.—Prior to issuing the 

9 draft guidance under subparagraph (A), the Sec10 retary shall gather comments and information 

11 from stakeholders and maintain such comments 

12 and information in a public docket for at least 

13 60 days prior to issuing such guidance. 

14 ‘‘(C) PUBLICATION.—The Secretary shall 

15 publish the standards established under subpara16 graph (A) not later than 1 year after the date 

17 of enactment of the Drug Supply Chain Security 

18 Act. 

19 ‘‘(3) WAIVERS, EXCEPTIONS, AND EXEMP20 TIONS.— 

21 ‘‘(A) IN GENERAL.—Not later than 2 years 

22 after the date of enactment of the Drug Supply 

23 Chain Security Act, the Secretary shall, by guid24 ance— 


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1 ‘‘(i) establish a process by which an 

2 authorized manufacturer, repackager, whole3 sale distributor, or dispenser may request a 

4 waiver from any of the requirements set 

5 forth in this section if the Secretary deter6 mines that such requirements would result 

7 in an undue economic hardship or for emer8 gency medical reasons, including a public 

9 health emergency declaration pursuant to 

10 section 319 of the Public Health Service 

11 Act; 

12 ‘‘(ii) establish a process by which the 

13 Secretary determines exceptions, and a 

14 process through which a manufacturer or 

15 repackager may request such an exception, 

16 to the requirements relating to product 

17 identifiers if a product is packaged in a 

18 container too small or otherwise unable to 

19 accommodate a label with sufficient space to 

20 bear the information required for compli21 ance with this section; and 

22 ‘‘(iii) establish a process by which the 

23 Secretary may determine other products or 

24 transactions that shall be exempt from the 

25 requirements of this section. 


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1 ‘‘(B) CONTENT.—The guidance issued under 

2 subparagraph (A) shall include a process for the 

3 biennial review and renewal of such waivers, ex4 ceptions, and exemptions, as applicable. 

5 ‘‘(C) PROCESS.—In issuing the guidance 

6 under this paragraph, the Secretary shall pro7 vide an effective date that is not later than 180 

8 days prior to the date on which manufacturers 

9 are required to affix or imprint a product iden10 tifier to each package and homogenous case of 

11 product intended to be introduced in a trans12 action into commerce consistent with this sec13 tion. 

14 ‘‘(4) SELF-EXECUTING REQUIREMENTS.—Except 

15 where otherwise specified, the requirements of this sec16 tion may be enforced without further regulations or 

17 guidance from the Secretary. 

18 ‘‘(5) GRANDFATHERING PRODUCT.— 

19 ‘‘(A) PRODUCT IDENTIFIER.—Not later than 

20 2 years after the date of enactment of the Drug 

21 Supply Chain Security Act, the Secretary shall 

22 finalize guidance specifying whether and under 

23 what circumstances product that is not labeled 

24 with a product identifier and that is in the 

25 pharmaceutical distribution supply chain at the 


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1 time of the effective date of the requirements of 

2 this section shall be exempted from the require3 ments of this section. 

4 ‘‘(B) TRACING.—For a product that entered 

5 the pharmaceutical distribution supply chain 

6 prior to the date that is 1 year after the date of 

7 enactment of the Drug Supply Chain Security 

8 Act— 

9 ‘‘(i) authorized trading partners shall 

10 be exempt from providing transaction infor11 mation as required under subsections 

12 (b)(1)(A)(i), (c)(1)(A)(ii), (d)(1)(A)(ii), and 

13 (e)(1)(A)(ii); 

14 ‘‘(ii) transaction history required 

15 under this section shall begin with the 

16 owner of such product on such date; and 

17 ‘‘(iii) the owners of such product on 

18 such date shall be exempt from asserting re19 ceipt of transaction information and trans20 action statement from the prior owner as 

21 required under this section. 

22 ‘‘(6) WHOLESALE DISTRIBUTOR LICENSES.—Not23 withstanding section 581(8)(A), until the effective 

24 date of the wholesale distributor licensing regulations 

25 under section 583, the term ‘licensed’ or ‘authorized’, 


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1 as it relates to a wholesale distributor with respect to 

2 prescription drugs, shall mean a wholesale distributor 

3 with a valid license under State law. 

4 ‘‘(7) THIRD-PARTY LOGISTICS PROVIDER LI5 CENSES.—Until the effective date of the third-party 

6 logistics provider licensing regulations under section 

7 584, a third-party logistics provider shall be consid8 ered ‘licensed’ under section 581(8)(B) unless the Sec9 retary has made a finding that the third-party logis10 tics provider does not utilize good handling and dis11 tribution practices and publishes notice thereof. 

12 ‘‘(8) LABEL CHANGES.—Changes made to pack13 age labels solely to incorporate the product identifier 

14 may be submitted to the Secretary in the annual re15 port of an establishment, in accordance with section 

16 314.70(d) of chapter 21, Code of Federal Regulations 

17 (or any successor regulation). 

18 ‘‘(9) PRODUCT IDENTIFIERS.—With respect to 

19 any requirement relating to product identifiers under 

20 this subchapter— 

21 ‘‘(A) unless the Secretary allows, through 

22 guidance, the use of other technologies for data 

23 instead of or in addition to the technologies de24 scribed in clauses (i) and (ii), the applicable 

25 data— 


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1 ‘‘(i) shall be included in a 2-dimen2 sional data matrix barcode when affixed to, 

3 or imprinted upon, a package; and 

4 ‘‘(ii) shall be included in a linear or 2- 

5 dimensional data matrix barcode when af6 fixed to, or imprinted upon, a homogeneous 

7 case; and 

8 ‘‘(B) verification of the product identifier 

9 may occur by using human-readable or machine10 readable methods. 

11 ‘‘(b) MANUFACTURER REQUIREMENTS.— 

12 ‘‘(1) PRODUCT TRACING.— 

13 ‘‘(A) IN GENERAL.—Beginning not later 

14 than 1 year after the date of enactment of the 

15 Drug Supply Chain Security Act, a manufac16 turer shall— 

17 ‘‘(i) prior to, or at the time of, each 

18 transaction in which such manufacturer 

19 transfers— 

20 ‘‘(I) ownership of a product, pro21 vide the subsequent recipient with 

22 transaction history, transaction infor23 mation, and a transaction statement, 

24 in a single document in an electronic 

25 or paper format; or 


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1 ‘‘(II) possession of a product to a 

2 third-party logistics provider for the 

3 purpose of transferring ownership as 

4 part of a transaction to a subsequent 

5 recipient, provide to the third-party lo6 gistics provider the transaction history, 

7 transaction information, and a trans8 action statement for such transaction 

9 to a subsequent recipient; and 

10 ‘‘(ii) maintain the transaction infor11 mation, transaction history, and trans12 action statement for each transaction for 

13 not less than 6 years after the date of the 

14 transaction. 

15 ‘‘(B) REQUESTS FOR INFORMATION.—Upon 

16 a request by the Secretary or other appropriate 

17 Federal or State official, in the event of a recall 

18 or for the purpose of investigating a suspect 

19 product or an illegitimate product, a manufac20 turer shall, not later than 24 hours after receiv21 ing the request or in other such reasonable time 

22 as determined by the Secretary, based on the cir23 cumstances of the request, provide the applicable 

24 transaction information, transaction history, 

25 and transaction statement for the product. 


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1 ‘‘(2) PRODUCT IDENTIFIER.—Beginning not 

2 later than 4 years after the date of enactment of the 

3 Drug Supply Chain Security Act, a manufacturer 

4 shall affix or imprint a product identifier to each 

5 package and homogenous case of a product intended 

6 to be introduced in a transaction into commerce. 

7 Such manufacturer shall maintain the product iden8 tifier information for such product for not less than 

9 6 years after the date of the transaction. 

10 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Begin11 ning not later than 1 year after the date of enactment 

12 of the Drug Supply Chain Security Act, the trading 

13 partners of a manufacturer may be only authorized 

14 trading partners. 

15 ‘‘(4) VERIFICATION.—Beginning not later than 1 

16 year after the date of enactment of the Drug Supply 

17 Chain Security Act, a manufacturer shall have sys18 tems in place to enable the manufacturer to comply 

19 with the following requirements: 

20 ‘‘(A) SUSPECT PRODUCT.— 

21 ‘‘(i) IN GENERAL.—Upon making a de22 termination that a product in the possession 

23 or control of the manufacturer is a suspect 

24 product, or upon receiving a request for 

25 verification from the Secretary that has 


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1 made a determination that a product with2 in the possession or control of a manufac3 turer is a suspect product, a manufacturer 

4 shall— 

5 ‘‘(I) quarantine such product 

6 within the possession or control of the 

7 manufacturer from product intended 

8 for distribution until such product is 

9 cleared or dispositioned; and 

10 ‘‘(II) promptly conduct an inves11 tigation in coordination with trading 

12 partners, as applicable, to determine 

13 whether the product is an illegitimate 

14 product, which shall include validating 

15 any applicable transaction history and 

16 transaction information in the posses17 sion of the manufacturer and otherwise 

18 investigating to determine whether the 

19 product is an illegitimate product, 

20 and, beginning 4 years after the date 

21 of enactment of the Drug Supply 

22 Chain Security Act, verifying the prod23 uct at the package level, including the 

24 standardized numerical identifier. 


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1 ‘‘(ii) CLEARED PRODUCT.—If the man2 ufacturer makes the determination that a 

3 suspect product is not an illegitimate prod4 uct, the manufacturer shall promptly notify 

5 the Secretary, if applicable, of such deter6 mination and such product may be further 

7 distributed. 

8 ‘‘(iii) RECORDS.—A manufacturer 

9 shall keep records of the investigation of a 

10 suspect product for not less than 6 years 

11 after the conclusion of the investigation. 

12 ‘‘(B) ILLEGITIMATE PRODUCT.— 

13 ‘‘(i) IN GENERAL.—Upon determining 

14 that a product in the possession or control 

15 of a manufacturer is an illegitimate prod16 uct, the manufacturer shall, in a manner 

17 consistent with the systems and processes of 

18 such manufacturer— 

19 ‘‘(I) quarantine such product 

20 within the possession or control of the 

21 manufacturer from product intended 

22 for distribution until such product is 

23 dispositioned; 


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1 ‘‘(II) disposition the illegitimate 

2 product within the possession or con3 trol of the manufacturer; 

4 ‘‘(III) take reasonable and appro5 priate steps to assist a trading partner 

6 to disposition an illegitimate product 

7 not in the possession or control of the 

8 manufacturer; and 

9 ‘‘(IV) retain a sample of the prod10 uct for further physical examination or 

11 laboratory analysis of the product by 

12 the manufacturer or Secretary (or 

13 other appropriate Federal or State offi14 cial) upon request by the Secretary (or 

15 other appropriate Federal or State offi16 cial), as necessary and appropriate. 

17 ‘‘(ii) MAKING A NOTIFICATION.— 

18 ‘‘(I) ILLEGITIMATE PRODUCT.— 

19 Upon determining that a product in 

20 the possession or control of the manu21 facturer is an illegitimate product, the 

22 manufacturer shall notify the Sec23 retary and all immediate trading part24 ners that the manufacturer has reason 

25 to believe may have received such illeVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00137 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 gitimate product of such determination 

2 not later than 24 hours after making 

3 such determination. 

4 ‘‘(II) HIGH RISK OF ILLEGIT5 IMACY.—A manufacturer shall notify 

6 the Secretary and immediate trading 

7 partners that the manufacturer has 

8 reason to believe may have in the trad9 ing partner’s possession a product 

10 manufactured by, or purported to be a 

11 product manufactured by, the manu12 facturer not later than 24 hours after 

13 determining or being notified by the 

14 Secretary or a trading partner that 

15 there is a high risk that such product 

16 is an illegitimate product. For pur17 poses of this subclause, a ‘high risk’ 

18 may include a specific high-risk that 

19 could increase the likelihood that ille20 gitimate product will enter the phar21 maceutical distribution supply chain 

22 and other high risks as determined by 

23 the Secretary in guidance pursuant to 

24 subsection (i). 


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1 ‘‘(iii) RESPONDING TO A NOTIFICA2 TION.—Upon the receipt of a notification 

3 from the Secretary or a trading partner 

4 that a determination has been made that a 

5 product is an illegitimate product, a manu6 facturer shall identify all illegitimate prod7 uct subject to such notification that is in the 

8 possession or control of the manufacturer, 

9 including any product that is subsequently 

10 received, and shall perform the activities de11 scribed in subparagraph (A). 

12 ‘‘(iv) TERMINATING A NOTIFICATION.— 

13 Upon making a determination, in consulta14 tion with the Secretary, that a notification 

15 is no longer necessary, a manufacturer shall 

16 promptly notify immediate trading part17 ners that the manufacturer notified pursu18 ant to clause (ii) that such notification has 

19 been terminated. 

20 ‘‘(v) RECORDS.—A manufacturer shall 

21 keep records of the disposition of an illegit22 imate product for not less than 6 years after 

23 the conclusion of the disposition. 

24 ‘‘(C) REQUESTS FOR VERIFICATION.—Be25 ginning 4 years after the date of enactment of 


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1 the Drug Supply Chain Security Act, upon re2 ceiving a request for verification from an author3 ized repackager, wholesale distributor, or dis4 penser that is in possession or control of a prod5 uct such person believes to be manufactured by 

6 such manufacturer, a manufacturer shall, not 

7 later than 24 hours after receiving the 

8 verification request or in other such reasonable 

9 time as determined by the Secretary, based on 

10 the circumstances of the request, notify the per11 son making the request whether the product iden12 tifier, including the standardized numerical 

13 identifier, that is the subject of the request cor14 responds to the product identifier affixed or im15 printed by the manufacturer. If a manufacturer 

16 responding to a verification request identifies a 

17 product identifier that does not correspond to 

18 that affixed or imprinted by the manufacturer, 

19 the manufacturer shall treat such product as sus20 pect product and conduct an investigation as de21 scribed in subparagraph (A). If the manufac22 turer has reason to believe the product is an ille23 gitimate product, the manufacturer shall advise 

24 the person making the request of such belief at 


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1 the time such manufacturer responds to the 

2 verification request. 

3 ‘‘(D) ELECTRONIC DATABASE.—A manufac4 turer may satisfy the requirements of this para5 graph by developing a secure electronic database 

6 or utilizing a secure electronic database devel7 oped or operated by another entity. The owner of 

8 such database shall establish the requirements 

9 and processes to respond to requests and may 

10 provide for data access to other members of the 

11 pharmaceutical distribution supply chain, as ap12 propriate. The development and operation of 

13 such a database shall not relieve a manufacturer 

14 of the requirement under this paragraph to re15 spond to a verification request submitted by 

16 means other than a secure electronic database. 

17 ‘‘(E) SALEABLE RETURNED PRODUCT.—Be18 ginning 4 years after the date of enactment of 

19 the Drug Supply Chain Security Act (except as 

20 provided pursuant to subsection (a)(5)), upon re21 ceipt of a returned product that the manufac22 turer intends to further distribute, before further 

23 distributing such product, the manufacturer 

24 shall verify the product identifier, including the 

25 standardized numerical identifier, for each 


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1 sealed homogeneous case of such product or, if 

2 such product is not in a sealed homogeneous 

3 case, verify the product identifier, including the 

4 standardized numerical identifier, on each pack5 age. 

6 ‘‘(F) NONSALEABLE RETURNED PRODUCT.— 

7 A manufacturer may return a nonsaleable prod8 uct to the manufacturer or repackager, to the 

9 wholesale distributor from whom such product 

10 was purchased, or to a person acting on behalf 

11 of such a person, including a returns processor, 

12 without providing the information described in 

13 paragraph (1)(A)(i). 

14 ‘‘(c) WHOLESALE DISTRIBUTOR REQUIREMENTS.— 

15 ‘‘(1) PRODUCT TRACING.— 

16 ‘‘(A) IN GENERAL.—Beginning not later 

17 than 1 year after the date of enactment of the 

18 Drug Supply Chain Security Act, the following 

19 requirements shall apply to wholesale distribu20 tors: 

21 ‘‘(i) A wholesale distributor shall not 

22 accept ownership of a product unless the 

23 previous owner prior to, or at the time of, 

24 the transaction provides the transaction his25 tory, transaction information, and a transVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00142 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 action statement for the product, as appli2 cable under this subparagraph. 

3 ‘‘(ii)(I)(aa) If the wholesale distributor 

4 purchased a product directly from the man5 ufacturer, the exclusive distributor of the 

6 manufacturer, or a repackager that pur7 chased directly from the manufacturer, then 

8 prior to, or at the time of, each transaction 

9 in which the wholesale distributor transfers 

10 ownership of a product, the wholesale dis11 tributor shall provide to the subsequent pur12 chaser— 

13 ‘‘(AA) a transaction statement, 

14 which shall state that such wholesale 

15 distributor, or a member of the affili16 ated group of such wholesale dis17 tributor, purchased the product di18 rectly from the manufacturer, exclusive 

19 distributor of the manufacturer, or re20 packager that purchased directly from 

21 the manufacturer; and 

22 ‘‘(BB) subject to subclause (II), 

23 the transaction history and transaction 

24 information. 


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1 ‘‘(bb) The wholesale distributor shall 

2 provide the transaction history, transaction 

3 information, and transaction statement 

4 under item (aa)— 

5 ‘‘(AA) if provided to a dis6 penser, on a single document in 

7 an electronic or paper format; 

8 and 

9 ‘‘(BB) if provided to a whole10 sale distributor, through any com11 bination of self-generated paper, 

12 electronic data, or manufacturer13 provided information on the prod14 uct package. 

15 ‘‘(II) For purposes of transactions de16 scribed in subclause (I), transaction history 

17 and transaction information shall not be re18 quired to include the lot number of the 

19 product, the initial transaction date, or the 

20 initial shipment date from the manufac21 turer (as defined in subparagraphs (F), (G), 

22 and (H) of section 581(25)). 

23 ‘‘(iii) If the wholesale distributor did 

24 not purchase a product directly from the 

25 manufacturer, the exclusive distributor of 


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1 the manufacturer, or a repackager that pur2 chased directly from the manufacturer, as 

3 described in clause (ii), then prior to, or at 

4 the time of, each transaction or subsequent 

5 transaction, the wholesale distributor shall 

6 provide to the subsequent purchaser a trans7 action statement, transaction history, and 

8 transaction information, in a paper or elec9 tronic format that complies with the guid10 ance document issued under subsection 

11 (a)(2). 

12 ‘‘(iv) For the purposes of clause (iii), 

13 the transaction history supplied shall begin 

14 only with the wholesale distributor described 

15 in clause (ii)(I), but the wholesale dis16 tributor described in clause (iii) shall in17 form the subsequent purchaser that such 

18 wholesale distributor received a direct pur19 chase statement from a wholesale distributor 

20 described in clause (ii)(I). 

21 ‘‘(v) A wholesale distributor shall 

22 maintain the transaction information, 

23 transaction history, and transaction state24 ment for each transaction described in 


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1 clauses (i), (ii), and (iii) for not less than 

2 6 years after the date of the transaction. 

3 ‘‘(B) RETURNS.— 

4 ‘‘(i) SALEABLE RETURNS.—Notwith5 standing subparagraph (A)(i), the following 

6 shall apply: 

7 ‘‘(I) REQUIREMENTS.—Until the 

8 date that is 6 years after the date of 

9 enactment of the Drug Supply Chain 

10 Security Act (except as provided pur11 suant to subsection (a)(5)), a wholesale 

12 distributor may accept returned prod13 uct from a dispenser pursuant to the 

14 terms and conditions of any agreement 

15 between the parties, and, notwith16 standing subparagraph (A)(ii), may 

17 distribute such returned product with18 out providing the transaction history. 

19 For transactions subsequent to the re20 turn, the transaction history of such 

21 product shall begin with the wholesale 

22 distributor that accepted the returned 

23 product, consistent with the require24 ments of this subsection. 


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1 ‘‘(II) ENHANCED REQUIRE2 MENTS.—Beginning 6 years after the 

3 date of enactment of the Drug Supply 

4 Chain Security Act (except as provided 

5 pursuant to subsection (a)(5)), a 

6 wholesale distributor may accept re7 turned product from a dispenser only 

8 if the wholesale distributor can asso9 ciate returned product with the trans10 action information and transaction 

11 statement associated with that product. 

12 For all transactions after such date, 

13 the transaction history, as applicable, 

14 of such product shall begin with the 

15 wholesale distributor that accepted and 

16 verified the returned product. For pur17 poses of this subparagraph, the trans18 action information and transaction 

19 history, as applicable, need not include 

20 transaction dates if it is not reason21 ably practicable to obtain such dates. 

22 ‘‘(ii) NONSALEABLE RETURNS.—A 

23 wholesale distributor may return a nonsale24 able prescription drug to the manufacturer 

25 or repackager, to the wholesale distributor 


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1 from whom such prescription drug was pur2 chased, or to a person acting on behalf of 

3 such a person, including a returns proc4 essor, without providing the information re5 quired under subparagraph (A)(i). 

6 ‘‘(C) REQUESTS FOR INFORMATION.—Upon 

7 a request by the Secretary or other appropriate 

8 Federal or State official, in the event of a recall 

9 or for the purpose of investigating a suspect 

10 product or an illegitimate product a wholesale 

11 distributor shall, not later than 24 hours after 

12 receiving the request or in other such reasonable 

13 time as determined by the Secretary, based on 

14 the circumstances of the request, provide the ap15 plicable transaction information, transaction 

16 history, and transaction statement for the prod17 uct. 

18 ‘‘(2) PRODUCT IDENTIFIER.—Beginning 6 years 

19 after the date of enactment of the Drug Supply Chain 

20 Security Act, a wholesale distributor may engage in 

21 transactions involving a product only if such product 

22 is encoded with a product identifier (except as pro23 vided pursuant to subsection (a)(5)). 

24 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Begin25 ning not later than 1 year after the date of enactment 


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1 of the Drug Supply Chain Security Act, the trading 

2 partners of a wholesale distributor may be only au3 thorized trading partners. 

4 ‘‘(4) VERIFICATION.—Beginning not later than 1 

5 year after the date of enactment of the Drug Supply 

6 Chain Security Act, a wholesale distributor shall have 

7 systems in place to enable the wholesale distributor to 

8 comply with the following requirements: 

9 ‘‘(A) SUSPECT PRODUCT.— 

10 ‘‘(i) IN GENERAL.—Upon making a de11 termination that a product in the possession 

12 or control of the wholesale distributor is a 

13 suspect product, or upon receiving a request 

14 for verification from the Secretary that has 

15 made a determination that a product with16 in the possession or control of a wholesale 

17 distributor is a suspect product, a wholesale 

18 distributor shall— 

19 ‘‘(I) quarantine such product 

20 within the possession or control of the 

21 wholesale distributor from product in22 tended for distribution until such prod23 uct is cleared or dispositioned; and 

24 ‘‘(II) promptly conduct an inves25 tigation in coordination with trading 


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1 partners, as applicable, to determine 

2 whether the product is an illegitimate 

3 product, which shall include validating 

4 any applicable transaction history and 

5 transaction information in the posses6 sion of the wholesale distributor and 

7 otherwise investigating to determine 

8 whether the product is an illegitimate 

9 product, and, beginning 6 years after 

10 the date of enactment of the Drug Sup11 ply Chain Security Act (except as pro12 vided pursuant to subsection (a)(5)), 

13 verifying the product at the package 

14 level, including the standardized nu15 merical identifier. 

16 ‘‘(ii) CLEARED PRODUCT.—If the 

17 wholesale distributor determines that a sus18 pect product is not an illegitimate product, 

19 the wholesale distributor shall promptly no20 tify the Secretary, if applicable, of such de21 termination and such product may be fur22 ther distributed. 

23 ‘‘(iii) RECORDS.—A wholesale dis24 tributor shall keep records of the investiga25 tion of a suspect product for not less than 


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1 6 years after the conclusion of the investiga2 tion. 

3 ‘‘(B) ILLEGITIMATE PRODUCT.— 

4 ‘‘(i) IN GENERAL.—Upon determining, 

5 in coordination with the manufacturer, that 

6 a product in the possession or control of a 

7 wholesale distributor is an illegitimate 

8 product, the wholesale distributor shall, in a 

9 manner that is consistent with the systems 

10 and processes of such wholesale dis11 tributor— 

12 ‘‘(I) quarantine such product 

13 within the possession or control of the 

14 wholesale distributor from product in15 tended for distribution until such prod16 uct is dispositioned; 

17 ‘‘(II) disposition the illegitimate 

18 product within the possession or con19 trol of the wholesale distributor; 

20 ‘‘(III) take reasonable and appro21 priate steps to assist a trading partner 

22 to disposition an illegitimate product 

23 not in the possession or control of the 

24 wholesale distributor; and 


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1 ‘‘(IV) retain a sample of the prod2 uct for further physical examination or 

3 laboratory analysis of the product by 

4 the manufacturer or Secretary (or 

5 other appropriate Federal or State offi6 cial) upon request by the manufacturer 

7 or Secretary (or other appropriate 

8 Federal or State official), as necessary 

9 and appropriate. 

10 ‘‘(ii) MAKING A NOTIFICATION.—Upon 

11 determining that a product in the posses12 sion or control of the wholesale distributor 

13 is an illegitimate product, the wholesale dis14 tributor shall notify the Secretary and all 

15 immediate trading partners that the whole16 sale distributor has reason to believe may 

17 have received such illegitimate product of 

18 such determination not later than 24 hours 

19 after making such determination. 

20 ‘‘(iii) RESPONDING TO A NOTIFICA21 TION.—Upon the receipt of a notification 

22 from the Secretary or a trading partner 

23 that a determination has been made that a 

24 product is an illegitimate product, a whole25 sale distributor shall identify all illegitVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00152 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 imate product subject to such notification 

2 that is in the possession or control of the 

3 wholesale distributor, including any product 

4 that is subsequently received, and shall per5 form the activities described in subpara6 graph (A). 

7 ‘‘(iv) TERMINATING A NOTIFICATION.— 

8 Upon a determination, in consultation with 

9 the Secretary, that a notification is no 

10 longer necessary, a wholesale distributor 

11 shall promptly notify immediate trading 

12 partners that the wholesale distributor noti13 fied pursuant to clause (ii) that such notifi14 cation has been terminated. 

15 ‘‘(v) RECORDS.—A wholesale dis16 tributor shall keep records of the disposition 

17 of an illegitimate product for not less than 

18 6 years after the conclusion of the disposi19 tion. 

20 ‘‘(C) ELECTRONIC DATABASE.—A wholesale 

21 distributor may satisfy the requirements of this 

22 paragraph by developing a secure electronic 

23 database or utilizing a secure electronic database 

24 developed or operated by another entity. The 

25 owner of such database shall establish the reVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00153 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 quirements and processes to respond to requests 

2 and may provide for data access to other mem3 bers of the pharmaceutical distribution supply 

4 chain, as appropriate. The development and op5 eration of such a database shall not relieve a 

6 wholesale distributor of the requirement under 

7 this paragraph to respond to a verification re8 quest submitted by means other than a secure 

9 electronic database. 

10 ‘‘(D) VERIFICATION OF SALEABLE RE11 TURNED PRODUCT.—Beginning 6 years after the 

12 date of enactment of the Drug Supply Chain Se13 curity Act, upon receipt of a returned product 

14 that the wholesale distributor intends to further 

15 distribute, before further distributing such prod16 uct, the wholesale distributor shall verify the 

17 product identifier, including the standardized 

18 numerical identifier, for each sealed homogeneous 

19 case of such product or, if such product is not in 

20 a sealed homogeneous case, verify the product 

21 identifier, including the standardized numerical 

22 identifier, on each package. 

23 ‘‘(d) DISPENSER REQUIREMENTS.— 

24 ‘‘(1) PRODUCT TRACING.— 


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1 ‘‘(A) IN GENERAL.—Beginning 1 year after 

2 the date of enactment of the Drug Supply Chain 

3 Security Act, a dispenser— 

4 ‘‘(i) shall not accept ownership of a 

5 product, unless the previous owner prior to, 

6 or at the time of, the transaction, provides 

7 transaction history, transaction informa8 tion, and a transaction statement; 

9 ‘‘(ii) prior to, or at the time of, each 

10 transaction in which the dispenser transfers 

11 ownership of a product (but not including 

12 dispensing to a patient or returns) shall 

13 provide the subsequent owner with trans14 action history, transaction information, 

15 and a transaction statement for the product, 

16 except that the requirements of this clause 

17 shall not apply to sales by a dispenser to 

18 another dispenser to fulfill a specific patient 

19 need; and 

20 ‘‘(iii) shall maintain transaction infor21 mation, transaction history, and trans22 action statements, as necessary to inves23 tigate a suspect product, for not less than 6 

24 years after the transaction. 


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1 ‘‘(B) AGREEMENTS WITH THIRD PARTIES.— 

2 A dispenser may enter into a written agreement 

3 with a third party, including an authorized 

4 wholesale distributor, under which the third 

5 party confidentially maintains the transaction 

6 information, transaction history, and trans7 action statements required to be maintained 

8 under this subsection on behalf of the dispenser. 

9 If a dispenser enters into such an agreement, the 

10 dispenser shall maintain a copy of the written 

11 agreement and shall not be relieved of the obliga12 tions of the dispenser under this subsection. 

13 ‘‘(C) RETURNS.— 

14 ‘‘(i) SALEABLE RETURNS.—A dispenser 

15 may return product to the trading partner 

16 from which the dispenser obtained the prod17 uct without providing the information re18 quired under subparagraph (A). 

19 ‘‘(ii) NONSALEABLE RETURNS.—A dis20 penser may return a nonsaleable product to 

21 the manufacturer or repackager, to the 

22 wholesale distributor from whom such prod23 uct was purchased, to a returns processor, 

24 or to a person acting on behalf of such a 


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1 person without providing the information 

2 required under subparagraph (A)(i). 

3 ‘‘(D) REQUESTS FOR INFORMATION.—Upon 

4 a request by the Secretary or other appropriate 

5 Federal or State official, in the event of a recall 

6 or for the purpose of investigating a suspect or 

7 an illegitimate product, a dispenser shall, not 

8 later than 2 business days after receiving the re9 quest or in another such reasonable time as de10 termined by the Secretary, based on the cir11 cumstances of the request, provide the applicable 

12 transaction information, transaction statement, 

13 and transaction history which the dispenser re14 ceived from the previous owner, which shall not 

15 include the lot number of the product, the initial 

16 transaction date, or the initial shipment date 

17 from the manufacturer unless such information 

18 was included in the transaction information, 

19 transaction statement, and transaction history 

20 provided by the manufacturer or wholesale dis21 tributor to the dispenser. The dispenser may re22 spond to the request by providing the applicable 

23 information in either paper or electronic format. 

24 ‘‘(2) PRODUCT IDENTIFIER.—Beginning not 

25 later than 7 years after the date of enactment of the 


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1 Drug Supply Chain Security Act, a dispenser may 

2 engage in transactions involving a product only if 

3 such product is encoded with a product identifier (ex4 cept as provided pursuant to subsection (a)(5)). 

5 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Begin6 ning not later than 1 year after the date of enactment 

7 of the Drug Supply Chain Security Act, the trading 

8 partners of a dispenser may be only authorized trad9 ing partners. 

10 ‘‘(4) VERIFICATION.—Beginning not later than 1 

11 year after the date of enactment of the Drug Supply 

12 Chain Security Act, a dispenser shall have systems in 

13 place to enable the dispenser to comply with the fol14 lowing requirements: 

15 ‘‘(A) SUSPECT PRODUCT.— 

16 ‘‘(i) IN GENERAL.—Upon making a de17 termination that a product in the possession 

18 or control of the dispenser is a suspect prod19 uct, or upon receiving a request for 

20 verification from the Secretary that has 

21 made a determination that a product with22 in the possession or control of a dispenser is 

23 a suspect product, a dispenser shall— 

24 ‘‘(I) quarantine such product 

25 within the possession or control of the 


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1 dispenser from product intended for 

2 distribution until such product is 

3 cleared or dispositioned; and 

4 ‘‘(II) promptly conduct an inves5 tigation in coordination with trading 

6 partners, as applicable, to determine 

7 whether the product is an illegitimate 

8 product. 

9 ‘‘(ii) INVESTIGATION.—An investiga10 tion conducted under clause (i)(II) shall in11 clude— 

12 ‘‘(I) beginning 7 years after the 

13 date of enactment of the Drug Supply 

14 Chain Security Act, verifying whether 

15 the lot number of a suspect product 

16 corresponds with the lot number for 

17 such product; 

18 ‘‘(II) beginning 7 years after the 

19 date of enactment of such Act, 

20 verifying that the product identifier, 

21 including the standardized numerical 

22 identifier, of at least 3 packages or 10 

23 percent of such suspect product, which24 ever is greater, or all packages, if there 


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1 are fewer than 3, corresponds with the 

2 product identifier for such product; 

3 ‘‘(III) validating any applicable 

4 transaction history and transaction in5 formation in the possession of the dis6 penser; and 

7 ‘‘(IV) otherwise investigating to 

8 determine whether the product is an il9 legitimate product. 

10 ‘‘(iii) CLEARED PRODUCT.—If the dis11 penser makes the determination that a sus12 pect product is not an illegitimate product, 

13 the dispenser shall promptly notify the Sec14 retary, if applicable, of such determination 

15 and such product may be further distributed 

16 or dispensed. 

17 ‘‘(iv) RECORDS.—A dispenser shall 

18 keep records of the investigation of a suspect 

19 product for not less than 6 years after the 

20 conclusion of the investigation. 

21 ‘‘(B) ILLEGITIMATE PRODUCT.— 

22 ‘‘(i) IN GENERAL.—Upon determining, 

23 in coordination with the manufacturer, that 

24 a product in the possession or control of a 


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1 dispenser is an illegitimate product, the dis2 penser shall— 

3 ‘‘(I) disposition the illegitimate 

4 product within the possession or con5 trol of the dispenser; 

6 ‘‘(II) take reasonable and appro7 priate steps to assist a trading partner 

8 to disposition an illegitimate product 

9 not in the possession or control of the 

10 dispenser; and 

11 ‘‘(III) retain a sample of the 

12 product for further physical examina13 tion or laboratory analysis of the prod14 uct by the manufacturer or Secretary 

15 (or other appropriate Federal or State 

16 official) upon request by the manufac17 turer or Secretary (or other appro18 priate Federal or State official), as 

19 necessary and appropriate. 

20 ‘‘(ii) MAKING A NOTIFICATION.—Upon 

21 determining that a product in the posses22 sion or control of the dispenser is an illegit23 imate product, the dispenser shall notify the 

24 Secretary and all immediate trading part25 ners that the dispenser has reason to believe 


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1 may have received such illegitimate product 

2 of such determination not later than 24 

3 hours after making such determination. 

4 ‘‘(iii) RESPONDING TO A NOTIFICA5 TION.—Upon the receipt of a notification 

6 from the Secretary or a trading partner 

7 that a determination has been made that a 

8 product is an illegitimate product, a dis9 penser shall identify all illegitimate product 

10 subject to such notification that is in the 

11 possession or control of the dispenser, in12 cluding any product that is subsequently re13 ceived, and shall perform the activities de14 scribed in subparagraph (A). 

15 ‘‘(iv) TERMINATING A NOTIFICATION.— 

16 Upon making a determination, in consulta17 tion with the Secretary, that a notification 

18 is no longer necessary, a dispenser shall 

19 promptly notify immediate trading part20 ners that the dispenser notified pursuant to 

21 clause (ii) that such notification has been 

22 terminated. 

23 ‘‘(v) RECORDS.—A dispenser shall keep 

24 records of the disposition of an illegitimate 


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1 product for not less than 6 years after the 

2 conclusion of the disposition. 

3 ‘‘(C) ELECTRONIC DATABASE.—A dispenser 

4 may satisfy the requirements of this paragraph 

5 by developing a secure electronic database or uti6 lizing a secure electronic database developed or 

7 operated by another entity. 

8 ‘‘(e) REPACKAGER REQUIREMENTS.— 

9 ‘‘(1) PRODUCT TRACING.— 

10 ‘‘(A) IN GENERAL.—Beginning not later 

11 than 1 year after the date of enactment of the 

12 Drug Supply Chain Security Act, a repackager 

13 shall— 

14 ‘‘(i) not accept ownership of a product 

15 unless the previous owner, prior to, or at 

16 the time of, the transaction, provides trans17 action history, transaction information, 

18 and a transaction statement for the product; 

19 ‘‘(ii) prior to, or at the time of, each 

20 transaction in which the repackager trans21 fers ownership of a product, or transfers 

22 possession of a product to a third-party lo23 gistics provider, provide the subsequent 

24 owner with transaction history, transaction 


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1 information, and a transaction statement; 

2 and 

3 ‘‘(iii) maintain the transaction infor4 mation, transaction history, and trans5 action statement for each transaction de6 scribed in clauses (i) and (ii) for not less 

7 than 6 years after the transaction. 

8 ‘‘(B) NONSALEABLE RETURNS.—A repack9 ager may return a nonsaleable product to the 

10 manufacturer or repackager, or to the wholesale 

11 distributor from whom such product was pur12 chased, or to a person acting on behalf of such 

13 a person, including a returns processor, without 

14 providing the information required under sub15 paragraph (A)(ii). 

16 ‘‘(C) REQUESTS FOR INFORMATION.—Upon 

17 a request by the Secretary or other appropriate 

18 Federal or State official, in the event of a recall 

19 or for the purpose of investigating a suspect 

20 product or an illegitimate product, a repackager 

21 shall, not later than 24 hours after receiving the 

22 request or in other such reasonable time as deter23 mined by the Secretary, based on the cir24 cumstances of the request, provide the applicable 


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1 transaction information, transaction history and 

2 transaction statement for the product. 

3 ‘‘(2) PRODUCT IDENTIFIER.—Beginning not 

4 later than 5 years after the date of enactment of the 

5 Drug Supply Chain Security Act, a repackager— 

6 ‘‘(A) shall affix or imprint a product iden7 tifier to each package and homogenous case of 

8 product intended to be introduced in a trans9 action in commerce; 

10 ‘‘(B) shall maintain the product identifier 

11 information for such product for not less than 6 

12 years after the date of the transaction; 

13 ‘‘(C) may engage in transactions involving 

14 a product only if such product is encoded with 

15 a product identifier (except as provided pursu16 ant to subsection (a)(5)); and 

17 ‘‘(D) maintain records for not less than 6 

18 years to allow the repackager to associate the 

19 product identifier the repackager affixes or im20 prints with the product identifier assigned by the 

21 original manufacturer of the product. 

22 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Begin23 ning 1 year after the date of enactment of the Drug 

24 Supply Chain Security Act, the trading partners of 


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1 a repackager may be only authorized trading part2 ners. 

3 ‘‘(4) VERIFICATION.—Beginning not later than 1 

4 year after the date of enactment of the Drug Supply 

5 Chain Security Act, a repackager shall have systems 

6 in place to enable the repackager to comply with the 

7 following requirements: 

8 ‘‘(A) SUSPECT PRODUCT.— 

9 ‘‘(i) IN GENERAL.—Upon making a de10 termination that a product in the possession 

11 or control of the repackager is a suspect 

12 product, or upon receiving a request for 

13 verification from the Secretary that has 

14 made a determination that a product with15 in the possession or control of a repackager 

16 is a suspect product, a repackager shall— 

17 ‘‘(I) quarantine such product 

18 within the possession or control of the 

19 repackager from product intended for 

20 distribution until such product is 

21 cleared or dispositioned; and 

22 ‘‘(II) promptly conduct an inves23 tigation in coordination with trading 

24 partners, as applicable, to determine 

25 whether the product is an illegitimate 


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1 product, which shall include validating 

2 any applicable transaction history and 

3 transaction information in the posses4 sion of the repackager and otherwise 

5 investigating to determine whether the 

6 product is an illegitimate product, 

7 and, beginning 5 years after the date 

8 of enactment of the Drug Supply 

9 Chain Security Act (except as provided 

10 pursuant to subsection (a)(5)), 

11 verifying the product at the package 

12 level, including the standardized nu13 merical identifier. 

14 ‘‘(ii) CLEARED PRODUCT.—If the re15 packager makes the determination that a 

16 suspect product is not an illegitimate prod17 uct, the repackager shall promptly notify 

18 the Secretary, if applicable, of such deter19 mination and such product may be further 

20 distributed. 

21 ‘‘(iii) RECORDS.—A repackager shall 

22 keep records of the investigation of a suspect 

23 product for not less than 6 years after the 

24 conclusion of the investigation. 

25 ‘‘(B) ILLEGITIMATE PRODUCT.— 


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1 ‘‘(i) IN GENERAL.—Upon determining, 

2 in coordination with the manufacturer, that 

3 a product in the possession or control of a 

4 repackager is an illegitimate product, the 

5 repackager shall, in a manner that is con6 sistent with the systems and processes of 

7 such repackager— 

8 ‘‘(I) quarantine such product 

9 within the possession or control of the 

10 repackager from product intended for 

11 distribution until such product is 

12 dispositioned; 

13 ‘‘(II) disposition the illegitimate 

14 product within the possession or con15 trol of the repackager; 

16 ‘‘(III) take reasonable and appro17 priate steps to assist a trading partner 

18 to disposition an illegitimate product 

19 not in the possession or control of the 

20 repackager; and 

21 ‘‘(IV) retain a sample of the prod22 uct for further physical examination or 

23 laboratory analysis of the product by 

24 the manufacturer or Secretary (or 

25 other appropriate Federal or State offiVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00168 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 cial) upon request by the manufacturer 

2 or Secretary (or other appropriate 

3 Federal or State official), as necessary 

4 and appropriate. 

5 ‘‘(ii) MAKING A NOTIFICATION.—Upon 

6 determining that a product in the posses7 sion or control of the repackager is an ille8 gitimate product, the repackager shall no9 tify the Secretary and all immediate trad10 ing partners that the repackager has reason 

11 to believe may have received the illegitimate 

12 product of such determination not later 

13 than 24 hours after making such determina14 tion. 

15 ‘‘(iii) RESPONDING TO A NOTIFICA16 TION.—Upon the receipt of a notification 

17 from the Secretary or a trading partner, a 

18 repackager shall identify all illegitimate 

19 product subject to such notification that is 

20 in the possession or control of the repack21 ager, including any product that is subse22 quently received, and shall perform the ac23 tivities described in subparagraph (A). 

24 ‘‘(iv) TERMINATING A NOTIFICATION.— 

25 Upon a determination, in consultation with 


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1 the Secretary, that a notification is no 

2 longer necessary, a repackager shall 

3 promptly notify immediate trading part4 ners that the repackager notified pursuant 

5 to clause (ii) that such notification has been 

6 terminated. 

7 ‘‘(v) RECORDS.—A repackager shall 

8 keep records of the disposition of an illegit9 imate product for not less than 6 years after 

10 the conclusion of the disposition. 

11 ‘‘(C) REQUESTS FOR VERIFICATION.—Be12 ginning 5 years after the date of enactment of 

13 the Drug Supply Chain Security Act, upon re14 ceiving a request for verification from an author15 ized manufacturer, wholesale distributor, or dis16 penser that is in possession or control of a prod17 uct they believe to be repackaged by such repack18 ager, a repackager shall, not later than 24 hours 

19 after receiving the verification request or in other 

20 such reasonable time as determined by the Sec21 retary, based on the circumstances of the request, 

22 notify the person making the request whether the 

23 product identifier, including the standardized 

24 numerical identifier, that is the subject of the re25 quest corresponds to the product identifier afVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00170 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 fixed or imprinted by the repackager. If a re2 packager responding to a verification request 

3 identifies a product identifier that does not cor4 respond to that affixed or imprinted by the re5 packager, the repackager shall treat such product 

6 as suspect product and conduct an investigation 

7 as described in subparagraph (A). If the repack8 ager has reason to believe the product is an ille9 gitimate product, the repackager shall advise the 

10 person making the request of such belief at the 

11 time such manufacturer responds to the 

12 verification request. 

13 ‘‘(D) ELECTRONIC DATABASE.—A repack14 ager may satisfy the requirements of paragraph 

15 (4) by developing a secure electronic database or 

16 utilizing a secure electronic database developed 

17 or operated by another entity. The owner of such 

18 database shall establish the requirements and 

19 processes to respond to requests and may provide 

20 for data access to other members of the pharma21 ceutical distribution supply chain, as appro22 priate. The development and operation of such a 

23 database shall not relieve a repackager of the re24 quirement under subparagraph (C) to respond to 


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1 a verification request submitted by means other 

2 than a secure electronic database. 

3 ‘‘(E) VERIFICATION OF SALEABLE RE4 TURNED PRODUCT.—Beginning 5 years after the 

5 date of enactment of the Drug Supply Chain Se6 curity Act, upon receipt of a returned product 

7 that the repackager intends to further distribute, 

8 before further distributing such product, the re9 packager shall verify the product identifier for 

10 each sealed homogeneous case of such product or, 

11 if such product is not in a sealed homogeneous 

12 case, verify the product identifier on each pack13 age. 

14 ‘‘(f) THIRD-PARTY LOGISTICS PROVIDER REQUIRE15 MENTS.— 

16 ‘‘(1) IN GENERAL.—Beginning not later than 1 

17 year after the date of enactment of the Drug Supply 

18 Chain Security Act, a third-party logistics provider 

19 shall— 

20 ‘‘(A) not accept possession of a product un21 less the owner of the product provides the trans22 action history, transaction information, and a 

23 transaction statement for the product; 


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1 ‘‘(B) maintain a copy of the information 

2 described in subparagraph (A) for not less than 

3 6 years after the transfer of possession; and 

4 ‘‘(C) upon a request by the Secretary or 

5 other appropriate Federal or State official, in 

6 the event of a recall or for the purpose of inves7 tigating a suspect product or an illegitimate 

8 product, not later than 24 hours after receiving 

9 the request or in other such reasonable time as 

10 determined by the Secretary based on the cir11 cumstances of the request, provide the applicable 

12 transaction information, transaction history, 

13 and transaction statement for the product. 

14 ‘‘(2) PRODUCT TRACING.—Beginning not later 

15 than 6 years after the date of enactment of the Drug 

16 Supply Chain Security Act, a third-party logistics 

17 provider may accept possession of product only if 

18 such product is encoded with a product identifier (ex19 cept as provided pursuant to subsection (a)(5)). 

20 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Begin21 ning 1 year after the date of enactment of the Drug 

22 Supply Chain Security Act, the trading partners of 

23 a third-party logistics provider may be only author24 ized trading partners. 


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1 ‘‘(4) VERIFICATION.—Beginning not later than 1 

2 year after the date of enactment of the Drug Supply 

3 Chain Security Act, a third-party logistics provider 

4 shall have systems in place to enable the third-party 

5 logistics provider to comply with the following re6 quirements: 

7 ‘‘(A) SUSPECT PRODUCT.— 

8 ‘‘(i) IN GENERAL.—Upon making a de9 termination that a product in the possession 

10 or control of a third-party logistics provider 

11 is a suspect product, a third-party logistics 

12 provider shall— 

13 ‘‘(I) quarantine such product 

14 within the possession or control of the 

15 third-party logistics provider from 

16 product intended for distribution until 

17 such product is cleared or transferred 

18 to the owner of such product for dis19 position of the product; and 

20 ‘‘(II) promptly notify the owner of 

21 such product of the need to conduct an 

22 investigation to determine whether the 

23 product is an illegitimate product. 

24 ‘‘(ii) CLEARED PRODUCT.—If the 

25 owner of the product notifies the third-party 


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1 logistics provider of the determination that 

2 a suspect product is not an illegitimate 

3 product, such product may be further dis4 tributed. 

5 ‘‘(iii) RECORDS.—A third-party logis6 tics provider shall keep records of the activi7 ties described in subclauses (I) and (II) of 

8 clause (i), as such subclauses relate to a sus9 pect product, for not less than 6 years after 

10 the conclusion of the investigation. 

11 ‘‘(B) ILLEGITIMATE PRODUCT.— 

12 ‘‘(i) IN GENERAL.—Upon determining, 

13 in coordination with the manufacturer, that 

14 a product in the possession or control of a 

15 third-party logistics provider is an illegit16 imate product, the third-party logistics pro17 vider shall— 

18 ‘‘(I) promptly notify the owner of 

19 such product of the need to disposition 

20 such product; and 

21 ‘‘(II) promptly transfer possession 

22 of the product to the owner of such 

23 product to disposition the product. 

24 ‘‘(ii) MAKING A NOTIFICATION.—Upon 

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1 sion or control of the third-party logistics 

2 provider is an illegitimate product, the 

3 third-party logistics provider shall notify 

4 the Secretary not later than 24 hours after 

5 making such determination. 

6 ‘‘(iii) RESPONDING TO A NOTIFICA7 TION.—Upon the receipt of a notification 

8 from the Secretary, a third-party logistics 

9 provider shall identify all illegitimate prod10 uct subject to such notification that is in the 

11 possession or control of the third-party lo12 gistics provider, including any product that 

13 is subsequently received, and shall perform 

14 the activities described in subparagraph 

15 (A). 

16 ‘‘(iv) TERMINATING A NOTIFICATION.— 

17 Upon making a determination, in consulta18 tion with the Secretary and the owner of 

19 such product, that a notification is no 

20 longer necessary, a third-party logistics pro21 vider shall promptly terminate such notifi22 cation. 

23 ‘‘(v) RECORDS.—A third-party logis24 tics provider shall keep records of the activi25 ties described in subclauses (I) and (II) of 


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1 clause (i) as such subclauses relate to an il2 legitimate product for not less than 6 years 

3 after the conclusion of the disposition. 

4 ‘‘(g) DROP SHIPMENTS.— 

5 ‘‘(1) IN GENERAL.—A wholesale distributor that 

6 does not physically handle or store product shall be 

7 exempt from the provisions of this section, except the 

8 notification requirements under clauses (ii), (iii), and 

9 (iv) of subsection (c)(4)(B), provided that the manu10 facturer, repackager, or other wholesale distributor 

11 that distributes the product to the dispenser by means 

12 of drop shipment for such wholesale distributor in13 cludes on the transaction information and trans14 action history to the dispenser the contact informa15 tion of such wholesale distributor and provides the 

16 transaction information, transaction history, and 

17 transaction statement directly to the dispenser. 

18 ‘‘(2) CLARIFICATION.—For purposes of this sub19 section, providing administrative services, including 

20 processing of orders and payments, shall not by itself, 

21 be construed as being involved in the handling, dis22 tribution, or storage of a product.’’. 

23 SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY. 

24 Section 582, as added by section 202, is amended by 

25 adding at the end the following: 


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1 ‘‘(h) ENHANCED DRUG DISTRIBUTION SECURITY.— 

2 ‘‘(1) IN GENERAL.—On the date that is 10 years 

3 after the date of enactment of the Drug Supply Chain 

4 Security Act, the following interoperable, electronic 

5 tracing of product at the package level requirements 

6 shall go into effect: 

7 ‘‘(A) The transaction information and the 

8 transaction statements as required under this 

9 section shall be exchanged in a secure, interoper10 able, electronic manner in accordance with the 

11 standards established under the guidance issued 

12 pursuant to paragraphs (3) and (4) of subsection 

13 (i), including any revision of such guidance 

14 issued in accordance with paragraph (5) of such 

15 subsection. 

16 ‘‘(B) The transaction information required 

17 under this section shall include the product iden18 tifier at the package level for each package in19 cluded in the transaction. 

20 ‘‘(C) Systems and processes for verification 

21 of product at the package level, including the 

22 standardized numerical identifier, shall be re23 quired in accordance with the standards estab24 lished under the guidance issued pursuant to 

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1 suant to paragraphs (2), (3), and (4) of sub2 section (i), including any revision of such guid3 ances issued in accordance with paragraph (5) of 

4 such subsection, which may include the use of ag5 gregation and inference as necessary. 

6 ‘‘(D) The systems and processes necessary to 

7 promptly respond with the transaction informa8 tion and transaction statement for a product 

9 upon a request by the Secretary (or other appro10 priate Federal or State official) in the event of 

11 a recall or for the purposes of investigating a 

12 suspect product or an illegitimate product shall 

13 be required. 

14 ‘‘(E) The systems and processes necessary to 

15 promptly facilitate gathering the information 

16 necessary to produce the transaction information 

17 for each transaction going back to the manufac18 turer, as applicable, shall be required— 

19 ‘‘(i) in the event of a request by the 

20 Secretary (or other appropriate Federal or 

21 State official), on account of a recall or for 

22 the purposes of investigating a suspect prod23 uct or an illegitimate product; or 

24 ‘‘(ii) in the event of a request by an 

25 authorized trading partner, in a secure 


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1 manner that ensures the protection of con2 fidential commercial information and trade 

3 secrets, for purposes of investigating a sus4 pect product or assisting the Secretary (or 

5 other appropriate Federal or State official) 

6 with a request described in clause (i). 

7 ‘‘(F) Each person accepting a saleable re8 turn shall have systems and processes in place to 

9 allow acceptance of such product and may accept 

10 saleable returns only if such person can associate 

11 the saleable return product with the transaction 

12 information and transaction statement associ13 ated with that product. 

14 ‘‘(2) COMPLIANCE.— 

15 ‘‘(A) INFORMATION MAINTENANCE AGREE16 MENT.—A dispenser may enter into a written 

17 agreement with a third party, including an au18 thorized wholesale distributor, under which the 

19 third party shall confidentially maintain any 

20 information and statements required to be main21 tained under this section. If a dispenser enters 

22 into such an agreement, the dispenser shall 

23 maintain a copy of the written agreement and 

24 shall not be relieved of the obligations of the dis25 penser under this subsection. 


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1 ‘‘(B) ALTERNATIVE METHODS.—The Sec2 retary, taking into consideration the assessment 

3 conducted under paragraph (3), shall provide for 

4 alternative methods of compliance with any of 

5 the requirements set forth in paragraph (1), in6 cluding— 

7 ‘‘(i) establishing timelines for compli8 ance by small businesses (including small 

9 business dispensers with 25 or fewer full 

10 time employees) with such requirements, in 

11 order to ensure that such requirements do 

12 not impose undue economic hardship for 

13 small businesses, including small business 

14 dispensers for whom the criteria set forth in 

15 the assessment under paragraph (3) is not 

16 met, if the Secretary determines that such 

17 requirements under paragraph (1) would 

18 result in undue economic hardship; and 

19 ‘‘(ii) establishing a process by which a 

20 dispenser may request a waiver from any of 

21 the requirements set forth in paragraph (1) 

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1 ess for the biennial review and renewal of 

2 any such waiver. 

3 ‘‘(3) ASSESSMENT.— 

4 ‘‘(A) IN GENERAL.—Not later than the date 

5 that is 18 months after the Secretary issues the 

6 final guidance required under subsection (i), the 

7 Secretary shall enter into contract with a pri8 vate, independent consulting firm with expertise 

9 to conduct a technology and software assessment 

10 that looks at the feasibility of dispensers with 25 

11 or fewer full-time employees conducting inter12 operable, electronic tracing of products at the 

13 package level. In no case may such assessment 

commence later than 71 14 ⁄2 years after the date of 

15 enactment of the Drug Supply Chain Security 

16 Act. 

17 ‘‘(B) CONDITION.—As a condition of the 

18 award of the contract under subparagraph (A), 

19 the private, independent consulting firm shall 

20 agree to consult with dispensers with 25 or fewer 

21 full-time employees when conducting the assess22 ment under such subparagraph. 

23 ‘‘(C) CONTENT.—The assessment conducted 

24 under subparagraph (A) shall assess whether— 


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1 ‘‘(i) the necessary software and hard2 ware is readily accessible to such dispensers; 

3 ‘‘(ii) the necessary software and hard4 ware is prohibitively expensive to obtain, 

5 install, and maintain for such dispensers; 

6 and 

7 ‘‘(iii) the necessary hardware and soft8 ware can be integrated into business prac9 tices, such as interoperability with whole10 sale distributors, for such dispensers. 

11 ‘‘(D) PUBLICATION.—The Secretary shall— 

12 ‘‘(i) publish the statement of work for 

13 the assessment conducted under subpara14 graph (A) for public comment prior to be15 ginning the assessment; 

16 ‘‘(ii) publish the final assessment for 

17 public comment not later than 30 calendar 

18 days after receiving such assessment; and 

19 ‘‘(iii) hold a public meeting not later 

20 than 180 calendar days after receiving the 

21 final assessment at which public stake22 holders may present their views on the as23 sessment. 

24 ‘‘(4) PROCEDURE.—Notwithstanding section 553 

25 of title 5, United States Code, the Secretary, in proVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00183 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 mulgating any regulation pursuant to this section, 

2 shall— 

3 ‘‘(A) provide appropriate flexibility by— 

4 ‘‘(i) not requiring the adoption of spe5 cific business systems for the maintenance 

6 and transmission of data; 

7 ‘‘(ii) prescribing alternative methods of 

8 compliance for any of the requirements set 

9 forth in paragraph (1) or set forth in regu10 lations implementing such requirements, in11 cluding timelines— 

12 ‘‘(I) for small businesses to com13 ply with the requirements set forth in 

14 the regulations in order to ensure that 

15 such requirements do not impose undue 

16 economic hardship for small businesses 

17 (including small business dispensers 

18 for whom the criteria set forth in the 

19 assessment under paragraph (3) is not 

20 met), if the Secretary determines that 

21 such requirements would result in 

22 undue economic hardship; and 

23 ‘‘(II) which shall include estab24 lishing a process by which a dispenser 

25 may request a waiver from any of the 


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1 requirements set forth in such regula2 tions if the Secretary determines that 

3 such requirements would result in an 

4 undue economic hardship; and 

5 ‘‘(iii) taking into consideration— 

6 ‘‘(I) the results of pilot projects, 

7 including pilot projects pursuant to 

8 this section; 

9 ‘‘(II) the public meetings held and 

10 related guidance documents issued 

11 under this section; 

12 ‘‘(III) the public health benefits of 

13 any additional regulations in compari14 son to the cost of compliance with such 

15 requirements, including on entities of 

16 varying sizes and capabilities; 

17 ‘‘(IV) the diversity of the pharma18 ceutical distribution supply chain by 

19 providing appropriate flexibility for 

20 each sector, including both large and 

21 small businesses; and 

22 ‘‘(V) the assessment pursuant to 

23 paragraph (3) with respect to small 

24 business dispensers, including related 

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1 ing, and requirements under this sec2 tion; 

3 ‘‘(B) issue a notice of proposed rulemaking 

4 that includes a copy of the proposed regulation; 

5 ‘‘(C) provide a period of not less than 60 

6 days for comments on the proposed regulation; 

7 and 

8 ‘‘(D) publish the final regulation not less 

9 than 2 years prior to the effective date of the reg10 ulation. 

11 ‘‘(i) GUIDANCE DOCUMENTS.— 

12 ‘‘(1) IN GENERAL.—For the purposes of facili13 tating the successful and efficient adoption of secure, 

14 interoperable product tracing at the package level in 

15 order to enhance drug distribution security and fur16 ther protect the public health, the Secretary shall issue 

17 the guidance documents as provided for in this sub18 section. 

19 ‘‘(2) SUSPECT AND ILLEGITIMATE PRODUCT.— 

20 ‘‘(A) IN GENERAL.—Not later than 180 

21 days after the date of enactment of the Drug 

22 Supply Chain Security Act, the Secretary shall 

23 issue a guidance document to aid trading part24 ners in the identification of a suspect product 


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1 and notification termination. Such guidance 

2 document shall— 

3 ‘‘(i) identify specific scenarios that 

4 could significantly increase the risk of a 

5 suspect product entering the pharmaceutical 

6 distribution supply chain; 

7 ‘‘(ii) provide recommendation on how 

8 trading partners may identify such product 

9 and make a determination if the product is 

10 a suspect product as soon as practicable; 

11 and 

12 ‘‘(iii) set forth the process by which 

13 manufacturers, repackagers, wholesale dis14 tributors, dispensers, and third-party logis15 tics providers shall terminate notifications 

16 in consultation with the Secretary regard17 ing illegitimate product pursuant to sub18 sections (b)(4)(B), (c)(4)(B), (d)(4)(B), 

19 (e)(4)(B), and (f)(4)(B). 

20 ‘‘(B) REVISED GUIDANCE.—If the Secretary 

21 revises the guidance issued under subparagraph 

22 (A), the Secretary shall follow the procedure set 

23 forth in paragraph (5). 

24 ‘‘(3) UNIT LEVEL TRACING.— 


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1 ‘‘(A) IN GENERAL.—In order to enhance 

2 drug distribution security at the package level, 

3 not later than 18 months after conducting a pub4 lic meeting on the system attributes necessary to 

5 enable secure tracing of product at the package 

6 level, including allowing for the use of 

7 verification, inference, and aggregation, as nec8 essary, the Secretary shall issue a final guidance 

9 document that outlines and makes recommenda10 tions with respect to the system attributes nec11 essary to enable secure tracing at the package 

12 level as required under the requirements estab13 lished under subsection (h). Such guidance docu14 ment shall— 

15 ‘‘(i) define the circumstances under 

16 which the sectors within the pharmaceutical 

17 distribution supply chain may, in the most 

18 efficient manner practicable, infer the con19 tents of a case, pallet, tote, or other aggre20 gate of individual packages or containers of 

21 product, from a product identifier associ22 ated with the case, pallet, tote, or other ag23 gregate, without opening each case, pallet, 

24 tote, or other aggregate or otherwise individ25 ually scanning each package; 


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1 ‘‘(ii) identify methods and processes to 

2 enhance secure tracing of product at the 

3 package level, such as secure processes to fa4 cilitate the use of inference, enhanced 

5 verification activities, the use of aggregation 

6 and inference, processes that utilize the 

7 product identifiers to enhance tracing of 

8 product at the package level, including the 

9 standardized numerical identifier, or pack10 age security features; and 

11 ‘‘(iii) ensure the protection of confiden12 tial commercial information and trade se13 crets. 

14 ‘‘(B) PROCEDURE.—In issuing the guidance 

15 under subparagraph (A), and in revising such 

16 guidance, if applicable, the Secretary shall follow 

17 the procedure set forth in paragraph (5). 

18 ‘‘(4) STANDARDS FOR INTEROPERABLE DATA EX19 CHANGE.— 

20 ‘‘(A) IN GENERAL.—In order to enhance se21 cure tracing of a product at the package level, 

22 the Secretary, not later than 18 months after 

23 conducting a public meeting on the interoperable 

24 standards necessary to enhance the security of 

25 the pharmaceutical distribution supply chain, 


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1 shall update the guidance issued pursuant to 

2 subsection (a)(2), as necessary and appropriate, 

3 and finalize such guidance document so that the 

4 guidance document— 

5 ‘‘(i) identifies and makes recommenda6 tions with respect to the standards nec7 essary for adoption in order to support the 

8 secure, interoperable electronic data ex9 change among the pharmaceutical distribu10 tion supply chain that comply with a form 

11 and format developed by a widely recog12 nized international standards development 

13 organization; 

14 ‘‘(ii) takes into consideration stand15 ards established pursuant to subsection 

16 (a)(2) and section 505D; 

17 ‘‘(iii) facilitates the creation of a uni18 form process or methodology for product 

19 tracing; and 

20 ‘‘(iv) ensures the protection of con21 fidential commercial information and trade 

22 secrets. 

23 ‘‘(B) PROCEDURE.—In issuing the guidance 

24 under subparagraph (A), and in revising such 


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1 guidance, if applicable, the Secretary shall follow 

2 the procedure set forth in paragraph (5). 

3 ‘‘(5) PROCEDURE.—In issuing or revising any 

4 guidance issued pursuant to this subsection or sub5 section (h), except the initial guidance issued under 

6 paragraph (2)(A), the Secretary shall— 

7 ‘‘(A) publish a notice in the Federal Reg8 ister for a period not less than 30 days announc9 ing that the draft or revised draft guidance is 

10 available; 

11 ‘‘(B) post the draft guidance document on 

12 the Internet Web site of the Food and Drug Ad13 ministration and make such draft guidance doc14 ument available in hard copy; 

15 ‘‘(C) provide an opportunity for comment 

16 and review and take into consideration any com17 ments received; 

18 ‘‘(D) revise the draft guidance, as appro19 priate; 

20 ‘‘(E) publish a notice in the Federal Reg21 ister for a period not less than 30 days announc22 ing that the final guidance or final revised guid23 ance is available; 

24 ‘‘(F) post the final guidance document on 

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1 ministration and make such final guidance doc2 ument available in hard copy; and 

3 ‘‘(G) provide for an effective date of not ear4 lier than 1 year after such guidance becomes 

5 final. 

6 ‘‘(j) PUBLIC MEETINGS.— 

7 ‘‘(1) IN GENERAL.—The Secretary shall hold not 

8 less than 3 public meetings to enhance the safety and 

9 security of the pharmaceutical distribution supply 

10 chain and provide for comment. The Secretary may 

11 hold the first such public meeting not earlier than 1 

12 year after the date of enactment of the Drug Supply 

13 Chain Security Act. In carrying out the public meet14 ings described in this paragraph, the Secretary 

15 shall— 

16 ‘‘(A) prioritize topics necessary to inform 

17 the issuance of the guidance described in para18 graphs (3) and (4) of subsection (i); and 

19 ‘‘(B) take all measures reasonable and prac20 ticable to ensure the protection of confidential 

21 commercial information and trade secrets. 

22 ‘‘(2) CONTENT.—Each of the following topics 

23 shall be addressed in at least one of the public meet24 ings described in paragraph (1): 


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1 ‘‘(A) An assessment of the steps taken under 

2 subsections (b) through (f) to build capacity for 

3 a unit-level system, including the impact of the 

4 requirements of such subsections on— 

5 ‘‘(i) the ability of the health care sys6 tem collectively to maintain patient access 

7 to medicines; 

8 ‘‘(ii) the scalability of such require9 ments, including as it relates to product 

10 lines; and 

11 ‘‘(iii) the capability of different sectors 

12 and subsectors, including both large and 

13 small businesses, to affix and utilize the 

14 product identifier. 

15 ‘‘(B) The system attributes necessary to sup16 port the requirements set forth under subsection 

17 (h), including the standards necessary for adop18 tion in order to support the secure, interoperable 

19 electronic data exchange among sectors within 

20 the pharmaceutical distribution supply chain. 

21 ‘‘(C) Best practices in each of the different 

22 sectors within the pharmaceutical distribution 

23 supply chain to implement the requirements of 

24 this section. 


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1 ‘‘(D) The costs and benefits of the imple2 mentation of this section, including the impact 

3 on each pharmaceutical distribution supply 

4 chain sector and on public health. 

5 ‘‘(E) Whether electronic tracing require6 ments, including tracing of product at the pack7 age level, are feasible, cost-effective, and needed 

8 to protect the public health. 

9 ‘‘(F) The systems and processes needed to 

10 utilize the product identifiers to enhance tracing 

11 of product at the package level, including allow12 ing for verification, aggregation, and inference, 

13 as necessary. 

14 ‘‘(G) The technical capabilities and legal 

15 authorities, if any, needed to establish an inter16 operable, electronic system that provides for trac17 ing of product at the package level. 

18 ‘‘(H) The impact that such additional re19 quirements would have on patient safety, the 

20 drug supply, cost and regulatory burden, and 

21 timely patient access to prescription drugs. 

22 ‘‘(I) Other topics, as determined appro23 priate by the Secretary. 

24 ‘‘(k) PILOT PROJECTS.— 


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1 ‘‘(1) IN GENERAL.—The Secretary shall establish 

2 1 or more pilot projects, in coordination with author3 ized manufacturers, repackagers, wholesale distribu4 tors, third-party logistics providers, and dispensers, to 

5 explore and evaluate methods to enhance the safety 

6 and security of the pharmaceutical distribution sup7 ply chain. Such projects shall build upon efforts, in 

8 existence as of the date of enactment of the Drug Sup9 ply Chain Security Act, to enhance the safety and se10 curity of the pharmaceutical distribution supply 

11 chain, take into consideration any pilot projects con12 ducted prior to such date of enactment, and inform 

13 the draft and final guidance under paragraphs (3) 

14 and (4) of subsection (i). 

15 ‘‘(2) CONTENT.— 

16 ‘‘(A) IN GENERAL.—The Secretary shall en17 sure that the pilot projects under paragraph (1) 

18 reflect the diversity of the pharmaceutical dis19 tribution supply chain and that the pilot 

20 projects, when taken as a whole, include partici21 pants representative of every sector, including 

22 both large and small businesses. 

23 ‘‘(B) PROJECT DESIGN.—The pilot projects 

24 under paragraph (1) shall be designed to— 


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1 ‘‘(i) utilize the product identifier for 

2 tracing of a product, which may include 

3 verification of the product identifier of a 

4 product, including the use of aggregation 

5 and inference; 

6 ‘‘(ii) improve the technical capabilities 

7 of each sector and subsector to comply with 

8 systems and processes needed to utilize the 

9 product identifiers to enhance tracing of a 

10 product; 

11 ‘‘(iii) identify system attributes that 

12 are necessary to implement the requirements 

13 established under this section; and 

14 ‘‘(iv) complete other activities as deter15 mined by the Secretary. 

16 ‘‘(l) SUNSET.—The following requirements shall have 

17 no force or effect beginning on the date that is 10 years 

18 after the date of enactment of the Drug Supply Chain Secu19 rity Act: 

20 ‘‘(1) The provision and receipt of transaction 

21 history under this section. 

22 ‘‘(2) The requirements set forth for returns under 

23 subsections (b)(4)(E), (c)(1)(B)(i), (d)(1)(C)(i), and 

24 (e)(4)(E). 


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1 ‘‘(m) RULE OF CONSTRUCTION.—The requirements set 

2 forth in subsections (h)(4), (j), and (k) shall not be con3 strued as a condition, prohibition, or precedent for pre4 cluding or delaying the provisions becoming effective pursu5 ant to subsection (h).’’. 

6 SEC. 204. NATIONAL LICENSURE STANDARDS FOR PRE7 SCRIPTION DRUG WHOLESALE DISTRIBU8 TORS. 

9 (a) AMENDMENTS.— 

10 (1) LICENSE REQUIREMENT.—Section 503(e) (21 

11 U.S.C. 353(e)) is amended by striking paragraphs 

12 (1), (2), and (3) and inserting the following: 

13 ‘‘(1) LICENSE REQUIREMENT.—Subject to section 

14 583: 

15 ‘‘(A) IN GENERAL.—No person may engage 

16 in wholesale distribution of a drug subject to 

17 subsection (b)(1) in any State unless such per18 son— 

19 ‘‘(i)(I) is licensed by the State from 

20 which the drug is distributed; or 

21 ‘‘(II) if the State from which the drug 

22 distributed has not established a licensure 

23 requirement, is licensed by the Secretary; 

24 and 


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1 ‘‘(ii) if the drug is distributed inter2 state, is licensed by the State into which the 

3 drug is distributed if the State into which 

4 the drug is distributed requires the licensure 

5 of a person that distributes drugs into the 

6 State. 

7 ‘‘(B) LICENSE STANDARDS.—Each Federal 

8 and State license described in subparagraph (A) 

9 shall meet the standards, terms, and conditions 

10 established by the Secretary under section 583. 

11 ‘‘(2) LICENSURE REPORTING AND DATABASE.— 

12 ‘‘(A) LICENSURE REPORTING.—Beginning 1 

13 year after the date of enactment of the Drug 

14 Supply Chain Security Act, any person who 

15 owns or operates an establishment that engages 

16 in wholesale distribution shall report to the Sec17 retary, on an annual basis pursuant to a sched18 ule determined by the Secretary— 

19 ‘‘(i) each State by which the person is 

20 licensed and the appropriate identification 

21 number of each such license; and 

22 ‘‘(ii) the name, address, and contact 

23 information of each facility at which, and 

24 all trade names under which, the person 

25 conducts business. 


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1 ‘‘(B) DATABASE.—Not later than 1 year 

2 after the date of enactment of the Drug Supply 

3 Chain Security Act, the Secretary shall establish 

4 a database of licensed wholesale distributors. 

5 Such database shall— 

6 ‘‘(i) identify each wholesale distributor 

7 by name, contact information, and each 

8 State where such wholesale distributor is 

9 appropriately licensed to engage in whole10 sale distribution; 

11 ‘‘(ii) be available to the public on the 

12 Internet Web site of the Food and Drug Ad13 ministration; and 

14 ‘‘(iii) be regularly updated on a sched15 ule determined by the Secretary. 

16 ‘‘(3) COSTS.— 

17 ‘‘(A) AUTHORIZED LICENSURE FEES OF

18 SECRETARY.—If a State does not establish a li19 censing program for persons engaged in the 

20 wholesale distribution of a drug subject to sub21 section (b), the Secretary shall license a person 

22 engaged in wholesale distribution located in such 

23 State and may collect a reasonable fee in such 

24 amount necessary to reimburse the Secretary for 

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1 istering the licensure program and conducting 

2 periodic inspections under this section. The Sec3 retary shall adjust fee rates as needed on an an4 nual basis to generate only the amount of rev5 enue needed to perform this service. Fees author6 ized under this paragraph shall be collected and 

7 available for obligation only to the extent and in 

8 the amount provided in advance in appropria9 tions Acts. Such fees are authorized to remain 

10 available until expended. 

11 ‘‘(B) STATE LICENSING FEES.—Nothing in 

12 this Act shall prohibit States from collecting fees 

13 from wholesale distributors in connection with 

14 State licensing of such distributors.’’. 

15 (2) WHOLESALE DISTRIBUTION.—Section 503(e) 

16 (21 U.S.C. 353(e)), as amended by paragraph (1), is 

17 further amended by adding at the end the following: 

18 ‘‘(4) For the purposes of this subsection and sub19 section (d), the term ‘wholesale distribution’ means 

20 the distribution of a drug subject to subsection (b) to 

21 a person other than a consumer or patient, or receipt 

22 of a drug subject to subsection (b) by a person other 

23 than the consumer or patient, but does not include— 

24 ‘‘(A) intracompany distribution of any 

25 drug between members of an affiliated group (as 


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1 defined in section 1504(a) of the Internal Rev2 enue Code of 1986) or within a manufacturer; 

3 ‘‘(B) the distribution of a drug, or an offer 

4 to distribute a drug among hospitals or other 

5 health care entities which are under common 

6 control; 

7 ‘‘(C) the distribution of a drug or an offer 

8 to distribute a drug for emergency medical rea9 sons, including a public health emergency dec10 laration pursuant to section 319 of the Public 

11 Health Service Act, except that, for purposes of 

12 this paragraph, a drug shortage not caused by a 

13 public health emergency shall not constitute an 

14 emergency medical reason; 

15 ‘‘(D) the dispensing of a drug pursuant to 

16 a valid prescription executed in accordance with 

17 section 503(b)(1); 

18 ‘‘(E) the distribution of minimal quantities 

19 of drug by a licensed retail pharmacy to a li20 censed practitioner for office use; 

21 ‘‘(F) the distribution of a drug or an offer 

22 to distribute a drug by a charitable organization 

23 to a nonprofit affiliate of the organization to the 

24 extent otherwise permitted by law; 


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1 ‘‘(G) the purchase or other acquisition by a 

2 dispenser, hospital, or other health care entity of 

3 a drug for use by such dispenser, hospital, or 

4 other health care entity; 

5 ‘‘(H) the distribution of a drug by the man6 ufacturer of such drug; 

7 ‘‘(I) the receipt or transfer of a drug by an 

8 authorized third-party logistics provider pro9 vided that such third-party logistics provider 

10 does not take ownership of the drug; 

11 ‘‘(J) a common carrier that transports a 

12 drug, provided that the common carrier does not 

13 take ownership of the drug; 

14 ‘‘(K) the distribution of a drug, or an offer 

15 to distribute a drug by an authorized repackager 

16 that has taken ownership or possession of the 

17 drug and repacks it in accordance with section 

18 582(e); 

19 ‘‘(L) salable drug returns when conducted 

20 by a dispenser; 

21 ‘‘(M) the distribution of a medical conven22 ience kit which is a collection of finished medical 

23 devices or a collection of drug or biologic prod24 ucts assembled in kit form strictly for the con25 venience of the purchaser or user if— 


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1 ‘‘(i) the medical convenience kit is as2 sembled in an establishment that is reg3 istered with the Food and Drug Adminis4 tration as a device manufacturer in accord5 ance with section 510(b)(2); 

6 ‘‘(ii) the person who manufacturers the 

7 medical convenience kit purchased the fin8 ished drug or biologic product contained in 

9 the medical convenience kit directly from 

10 the pharmaceutical manufacturer or from a 

11 wholesale distributor that purchased the 

12 product directly from the pharmaceutical 

13 manufacturer; 

14 ‘‘(iii) the person who manufacturers a 

15 medical convenience kit does not alter the 

16 primary container or label of the product as 

17 purchased from the manufacturer or whole18 sale distributor; 

19 ‘‘(iv) the medical convenience kit does 

20 not contain a controlled substance that ap21 pears in a schedule contained in the Com22 prehensive Drug Abuse Prevention and Con23 trol Act of 1970 (21 U.S.C. 801, et seq); and 

24 ‘‘(v) the products contained in the 

25 medical convenience kit are— 


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1 ‘‘(I) intravenous solutions in2 tended for the replenishment of fluids 

3 and electrolytes; 

4 ‘‘(II) drugs intended to maintain 

5 the equilibrium of water and minerals 

6 in the body; 

7 ‘‘(III) drugs intended for irriga8 tion or reconstitution; 

9 ‘‘(IV) anesthetics; 

10 ‘‘(V) anticoagulants; 

11 ‘‘(VI) vasopressors; or 

12 ‘‘(VII) sympathicomimetics; 

13 ‘‘(N) the distribution of an intravenous 

14 drug that, by its formulation, is intended for the 

15 replenishment of fluids and electrolytes (such as 

16 sodium, chloride, and potassium) or calories 

17 (such as dextrose and amino acids); 

18 ‘‘(O) the distribution of an intravenous 

19 drug used to maintain the equilibrium of water 

20 and minerals in the body, such as dialysis solu21 tions; 

22 ‘‘(P) the distribution of a drug that is in23 tended for irrigation or reconstitution, or sterile 

24 water, whether intended for such purposes or for 

25 injection; 


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1 ‘‘(Q) the distribution of medical gas, as de2 fined in section 575; 

3 ‘‘(R) facilitating the distribution of a prod4 uct by providing solely administrative services, 

5 including processing of orders and payments; or 

6 ‘‘(S) the transfer of a product by a hospital 

7 or other health care entity to a repackager reg8 istered under section 510 for the purpose of re9 packaging the drug for use by that hospital, or 

10 other health care entity and other health care en11 tities that are under common control, if owner12 ship of the drug remains with the hospital or 

13 other health care entity at all times.’’. 

14 (3) THIRD-PARTY LOGISTICS PROVIDERS.—Sec15 tion 503(e)(21 U.S.C. 353(e)), as amended by para16 graph (2), is further amended by adding at the end 

17 the following: 

18 ‘‘(5) THIRD-PARTY LOGISTICS PROVIDERS.—Not19 withstanding paragraphs (1) through (4), each entity 

20 that meets the definition of a third-party logistics 

21 provider under section 581(21) shall obtain a license 

22 as a third-party logistics provider as described in sec23 tion 584(a) and is not required to obtain a license as 

24 a wholesale distributor if the entity never assumes an 

25 ownership interest in the product it handles.’’. 


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1 (4) LICENSURE STANDARDS.—Subchapter H of 

2 chapter V, as added by section 202, is amended by 

3 adding at the end the following: 

4 ‘‘SEC. 583. NATIONAL LICENSURE STANDARDS FOR PRE5 SCRIPTION DRUG WHOLESALE DISTRIBU6 TORS. 

7 ‘‘(a) IN GENERAL.—The Secretary shall, not later than 

8 2 years after the date of enactment of the Drug Supply 

9 Chain Security Act, establish by regulation minimum 

10 standards, terms, and conditions for the licensing of persons 

11 under section 503(e)(1) (as amended by the Drug Supply 

12 Chain Security Act), including the revocation, reissuance, 

13 and renewal of such license. 

14 ‘‘(b) CONTENT.—The standards established under sub15 section (a) shall apply to all State and Federal licenses de16 scribed under section 503(e)(1) (as amended by the Drug 

17 Supply Chain Security Act) and shall prescribe minimum 

18 requirements for the following: 

19 ‘‘(1) The storage and handling of such drugs, in20 cluding facility requirements. 

21 ‘‘(2) The establishment and maintenance of 

22 records of the distributions of such drugs. 

23 ‘‘(3) The furnishing of a bond or other equivalent 

24 means of security, as follows: 


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1 ‘‘(A)(i) For the issuance or renewal of a 

2 wholesale distributor license, an applicant that 

3 is not a government owned and operated whole4 sale distributor shall submit a surety bond of 

5 $100,000 or other equivalent means of security 

6 acceptable to the State. 

7 ‘‘(ii) For purposes of clause (i), the State or 

8 other applicable authority may accept a surety 

9 bond in the amount of $25,000 if the annual 

10 gross receipts of the previous tax year for the 

11 wholesaler is $10,000,000 or less. 

12 ‘‘(B) If a wholesale distributor can provide 

13 evidence that it possesses the required bond in a 

14 State, the requirement for a bond in another 

15 State shall be waived. 

16 ‘‘(4) Mandatory background checks and 

17 fingerprinting of facility managers or designated rep18 resentatives. 

19 ‘‘(5) The establishment and implementation of 

20 qualifications for key personnel. 

21 ‘‘(6) The mandatory physical inspection of any 

22 facility to be used in wholesale distribution within a 

23 reasonable time frame from the initial application of 

24 the facility and to be conducted by the licensing au25 thority or by the State, consistent with subsection (c). 


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1 ‘‘(7) In accordance with subsection (d), the pro2 hibition of certain persons from receiving or main3 taining licensure for wholesale distribution. 

4 ‘‘(c) INSPECTIONS.—To satisfy the inspection require5 ment under subsection (b)(6), the Federal or State licensing 

6 authority may conduct the inspection or may accept an in7 spection by the State in which the facility is located, or 

8 by a third-party accreditation or inspection service ap9 proved by the Secretary or the State licensing such whole10 sale distributor. 

11 ‘‘(d) PROHIBITED PERSONS.—The standards estab12 lished under subsection (a) shall include requirements to 

13 prohibit a person from receiving or maintaining licensure 

14 for wholesale distribution if the person— 

15 ‘‘(1) has been convicted of any felony for conduct 

16 relating to wholesale distribution, any felony viola17 tion of subsection (i) or (k) of section 301, or any fel18 ony violation of section 1365 of title 18, United 

19 States Code, relating to product tampering; or 

20 ‘‘(2) has engaged in a pattern of violating the re21 quirements of this section, or State requirements for 

22 licensure, that presents a threat of serious adverse 

23 health consequences or death to humans. 


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1 ‘‘(e) REQUIREMENTS.—The Secretary, in promul2 gating any regulation pursuant to this section, shall, not3 withstanding section 553 of title 5, United States Code— 

4 ‘‘(1) issue a notice of proposed rulemaking that 

5 includes a copy of the proposed regulation; 

6 ‘‘(2) provide a period of not less than 60 days 

7 for comments on the proposed regulation; and 

8 ‘‘(3) provide that the final regulation take effect 

9 on the date that is 2 years after the date such final 

10 regulation is published.’’. 

11 (b) AUTHORIZED DISTRIBUTORS OF RECORD.—Sec12 tion 503(d) (21 U.S.C. 353(d)) is amended by adding at 

13 the end the following: 

14 ‘‘(4) In this subsection, the term ‘authorized dis15 tributors of record’ means those distributors with 

16 whom a manufacturer has established an ongoing re17 lationship to distribute such manufacturer’s prod18 ucts.’’. 

19 (c) EFFECTIVE DATE.—The amendments made by sub20 sections (a) and (b) shall take effect on the day that is 1 

21 year after the date of enactment of this Act. 


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1 SEC. 205. NATIONAL LICENSURE STANDARDS FOR THIRD2 PARTY LOGISTICS PROVIDERS; UNIFORM NA3 TIONAL POLICY. 

4 Subchapter H of chapter V, as amended by section 204, 

5 is further amended by adding at the end the following: 

6 ‘‘SEC. 584. NATIONAL LICENSURE STANDARDS FOR THIRD7 PARTY LOGISTICS PROVIDERS. 

8 ‘‘(a) LICENSE REQUIREMENTS.—No third-party logis9 tics provider in any State may conduct activities in any 

10 State unless each facility of such third-party logistics pro11 vider— 

12 ‘‘(1)(A) is licensed by the State from which the 

13 drug is distributed by the third-party logistics pro14 vider, in accordance with the regulations promulgated 

15 under subsection (d); or 

16 ‘‘(B) if the State from which the drug distributed 

17 by the third-party logistics provider has not estab18 lished a licensure requirement, is licensed by the Sec19 retary, in accordance with the regulations promul20 gated under subsection (d); and 

21 ‘‘(2) if the drug is distributed interstate, is li22 censed by the State into which the drug is distributed 

23 by the third-party logistics provider if such State li24 censes third-party logistics providers that distribute 

25 drugs into the State and the third-party logistics proVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00210 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 vider is not licensed by the Secretary as described in 

2 paragraph (1)(B). 

3 ‘‘(b) LICENSURE REPORTING.—Beginning 1 year after 

4 the date of enactment of the Drug Supply Chain Security 

5 Act, a facility of a third-party logistics provider shall re6 port to the Secretary, on an annual basis pursuant to a 

7 schedule determined by the Secretary— 

8 ‘‘(1) the State by which the facility is licensed 

9 and the appropriate identification number of such li10 cense; and 

11 ‘‘(2) the name and address of the facility, and all 

12 trade names under which, such facility conducts busi13 ness. 

14 ‘‘(c) COSTS.— 

15 ‘‘(1) AUTHORIZED LICENSURE FEES OF SEC16 RETARY.—If a State does not establish a licensing 

17 program for a third-party logistics provider, the Sec18 retary shall license the third-party logistics provider 

19 located in such State and may collect a reasonable fee 

20 in such amount necessary to reimburse the Secretary 

21 for costs associated with establishing and admin22 istering the licensure program and conducting peri23 odic inspections under this section. The Secretary 

24 shall adjust fee rates as needed on an annual basis to 

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1 form this service. Fees authorized under this para2 graph shall be collected and available for obligation 

3 only to the extent and in the amount provided in ad4 vance in appropriations Acts. Such fees are author5 ized to remain available until expended. 

6 ‘‘(2) STATE LICENSING FEES.— 

7 ‘‘(A) STATE ESTABLISHED PROGRAM.— 

8 Nothing in this Act shall prohibit a State that 

9 has established a program to license a third10 party logistics provider from collecting fees from 

11 a third-party logistics provider for such a li12 cense. 

13 ‘‘(B) NO STATE ESTABLISHED PROGRAM.— 

14 A State that does not establish a program to li15 cense a third-party logistics provider in accord16 ance with this section shall be prohibited from 

17 collecting a State licensing fee from a third18 party logistics provider. 

19 ‘‘(d) LICENSE REGULATIONS.— 

20 ‘‘(1) IN GENERAL.—Not later than 2 years after 

21 the date of enactment of the Drug Supply Chain Se22 curity Act, the Secretary shall issue regulations re23 garding the minimum issuance and eligibility re24 quirements for licensing under subsection (a), includVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00212 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 ing the revocation and reissuance of such license, to 

2 third-party logistics providers under this section. 

3 ‘‘(2) CONTENT.—Such regulations shall— 

4 ‘‘(A) establish a process by which a third5 party accreditation program approved by the 

6 Secretary shall, upon request by a third-party 

7 logistics provider, issue a license to each third8 party logistics provider that meets the minimum 

9 requirements set forth in this section; 

10 ‘‘(B) establish a process by which the Sec11 retary shall issue a license to each third-party 

12 logistics provider that meets the minimum re13 quirements set forth in this section if the Sec14 retary is not able to approve a third-party ac15 creditation program because no such program 

16 meets the Secretary’s requirements necessary for 

17 approval of such a third-party accreditation pro18 gram; 

19 ‘‘(C) require that the entity complies with 

20 storage practices, as determined by the Secretary 

21 for such facility, including— 

22 ‘‘(i) maintaining access to warehouse 

23 space of suitable size to facilitate safe oper24 ations, including a suitable area to quar25 antine suspect product; 


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1 ‘‘(ii) maintaining adequate security; 

2 and 

3 ‘‘(iii) having written policies and pro4 cedures to— 

5 ‘‘(I) address receipt, security, stor6 age, inventory, shipment, and distribu7 tion of a product; 

8 ‘‘(II) identify, record, and report 

9 confirmed losses or thefts in the United 

10 States; 

11 ‘‘(III) correct errors and inac12 curacies in inventories; 

13 ‘‘(IV) provide support for manu14 facturer recalls; 

15 ‘‘(V) prepare for, protect against, 

16 and address any reasonably foreseeable 

17 crisis that affects security or operation 

18 at the facility, such as a strike, fire, or 

19 flood; 

20 ‘‘(VI) ensure that any expired 

21 product is segregated from other prod22 ucts and returned to the manufacturer 

23 or re-packager or destroyed; 

24 ‘‘(VII) maintain the capability to 

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1 tribution of a product, and supplies 

2 and records of inventory; and 

3 ‘‘(VIII) quarantine or destroy a 

4 suspect product if directed to do so by 

5 the respective manufacturer, wholesale 

6 distributor, dispenser or an authorized 

7 government agency; 

8 ‘‘(D) provide for periodic inspection by the 

9 licensing authority, as determined by the Sec10 retary, of such facility warehouse space to ensure 

11 compliance with this section; 

12 ‘‘(E) prohibit a facility from having as a 

13 manager or designated representative anyone 

14 convicted of any felony violation of subsection (i) 

15 or (k) of section 301 or any violation of section 

16 1365 of title 18, United States Code relating to 

17 product tampering; 

18 ‘‘(F) provide for mandatory background 

19 checks of a facility manager or a designated rep20 resentative of such manager; and 

21 ‘‘(G) require a third-party logistics provider 

22 to provide the Secretary, upon a request by the 

23 Secretary, a list of all product manufacturers, 

24 wholesale distributors, and dispensers for whom 


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1 the third-party logistics provider provides serv2 ices at such facility. 

3 ‘‘(3) PROCEDURE.—In promulgating the regula4 tions under this subsection, the Secretary shall, not5 withstanding section 553 of title 5, United States 

6 Code— 

7 ‘‘(A) issue a notice of proposed rulemaking 

8 that includes a copy of the proposed regulation; 

9 ‘‘(B) provide a period of not less than 60 

10 days for comments on the proposed regulation; 

11 and 

12 ‘‘(C) provide that the final regulation takes 

13 effect upon the expiration of 1 year after the date 

14 that such final regulation is issued. 

15 ‘‘(e) RENEWAL OF LICENSES.—The Secretary shall de16 velop procedures for license renewal. Licenses issued under 

17 this section shall expire on the date that is 3 years after 

18 issuance of the license. Such an expired license may be re19 newed for additional 3-year periods according to procedures 

20 developed by the Secretary. 

21 ‘‘SEC. 585. UNIFORM NATIONAL POLICY. 

22 ‘‘(a) PRODUCT TRACING AND OTHER REQUIRE23 MENTS.—Beginning on the date of enactment of the Drug 

24 Supply Chain Security Act, no State or political subdivi25 sion of a State may establish or continue in effect any reVerDate Mar 15 2010 23:08 Jun 19, 2013 Jkt 029200 PO 00000 Frm 00216 Fmt 6652 Sfmt 6203 E:\BILLS\S959.RS S959

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1 quirements for tracing products through the distribution 

2 system (including any requirements with respect to state3 ments of distribution history, transaction history, trans4 action information, or transaction statement of a product 

5 as such product changes ownership in the supply chain, or 

6 verification, investigation, disposition, notification, or 

7 record-keeping relating to such systems, including paper or 

8 electronic pedigree systems or for tracking and tracing 

9 drugs throughout the distribution system) which are incon10 sistent with, more stringent than, or in addition to, any 

11 requirements applicable under section 503(e) (as amended 

12 by such Act) or this subchapter (or regulations issued there13 under), or which are inconsistent with— 

14 ‘‘(1) any waiver, exception, or exemption pursu15 ant to section 581 or 582; or 

16 ‘‘(2) any restrictions specified in section 582. 

17 ‘‘(b) DISTRIBUTION AND LICENSING STANDARDS.— 

18 ‘‘(1) IN GENERAL.—Beginning on the date of en19 actment of the Drug Supply Chain Security Act, no 

20 State or political subdivision of a State may establish 

21 or continue any standards, requirements, or regula22 tions with respect to wholesale prescription drug dis23 tributor or third-party logistics provider licensure 

24 that are less stringent than the standards and re25 quirements applicable under section 503(e) (as 


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1 amended by such Act), in the case of a wholesale dis2 tributor, or section 584, in the case of a third-party 

3 logistics provider. 

4 ‘‘(2) STATE REGULATION OF THIRD-PARTY LO5 GISTICS PROVIDERS.—No State shall regulate third6 party logistics providers as wholesale distributors. 

7 ‘‘(3) ADMINISTRATION FEES.—Notwithstanding 

8 paragraph (1), a State may administer fee collections 

9 for effectuating the wholesale drug distributor and 

10 third-party logistics provider licensure requirements 

11 under sections 503(e) (as amended by the Drug Sup12 ply Chain Security Act), 583, and 584. 

13 ‘‘(4) ENFORCEMENT, SUSPENSION, AND REVOCA14 TION OF LICENSES.—Notwithstanding paragraph (1), 

15 a State— 

16 ‘‘(A) may take administrative action, in17 cluding fines, to enforce a licensure requirement 

18 promulgated by the State in accordance with sec19 tion 503(e) (as amended by the Drug Supply 

20 Chain Security Act) or this subchapter; 

21 ‘‘(B) may provide for the suspension or rev22 ocation of licenses issued by the State for viola23 tions of the laws of such State; 

24 ‘‘(C) upon conviction of violations of Fed25 eral, State, or local drug laws or regulations, 


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1 may provide for fines, imprisonment, or civil 

2 penalties; and 

3 ‘‘(D) may regulate activities of licensed en4 tities in a manner that is consistent with prod5 uct tracing requirements under section 582. 

6 ‘‘(c) EXCEPTION.—Nothing in subsection (a) or (b) 

7 shall be construed to preempt State requirements related to 

8 the distribution of prescription drugs if such requirements 

9 are not related to product tracing as described in subsection 

10 (a), including any requirements applicable under section 

11 503(e) (as amended by the Drug Supply Chain Security 

12 Act) or this subchapter (or regulations issued thereunder).’’. 

13 SEC. 206. PENALTIES. 

14 (a) PROHIBITED ACT.—Section 301(t)(21 U.S.C. 

15 331(t)), is amended— 

16 (1) by striking ‘‘or’’ after ‘‘the requirements of 

17 section 503(d),’’; and 

18 (2) by inserting ‘‘, failure to comply with the re19 quirements under section 582, the failure to comply 

20 with the requirements under section 584, as applica21 ble,’’ after ‘‘in violation of section 503(e)’’. 

22 (b) MISBRANDING.—Section 502 (21 U.S.C. 352), as 

23 amended by section 103, is further amended by adding at 

24 the end the following: 


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1 ‘‘(ee) If it is a drug and it fails to bear the product 

2 identifier as required by section 582.’’. 

3 SEC. 207. CONFORMING AMENDMENT. 

4 (a) IN GENERAL.—Section 303(b)(1)(D)(21 U.S.C. 

5 333(b)(1)(D)) is amended by striking ‘‘503(e)(2)(A)’’ and 

6 inserting ‘‘503(e)(1)’’. 

7 (b) EFFECTIVE DATE.—The amendment made by sub8 section (a) shall take effect on the day that is 1 year after 

9 the date of enactment of this Act. 

10 SEC. 208. SAVINGS CLAUSE. 

11 Except as provided in the amendments made by para12 graphs (1), (2), and (3) of section 204(a) and by section 

13 206(a), nothing in this title (including the amendments 

14 made by this title) shall be construed as altering any au15 thority of the Secretary of Health and Human Services with 

16 respect to a drug subject to section 503(b)(1) of the Federal 

17 Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)) under 

18 any other provision of such Act or the Public Health Service 

19 Act (42 U.S.C. 201 et seq.). 

Amend the title so as to read: ‘‘A bill to amend the 

Federal Food, Drug, and Cosmetic Act with respect to 

compounding drugs and the pharmaceutical distribution 

supply chain.’’. 


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Calendar No. 89 

113TH CONGRESS 

1ST SESSION S. 959 

A BILL 

To amend the Federal Food, Drug, and Cosmetic 

Act with respect to compounding drugs. 

JUNE 19, 2013 

Reported with an amendment and an amendment to the 

title 


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