II 

Calendar No. 236 

113TH CONGRESS 

1ST SESSION H. R. 3204 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 30, 2013 

Received 

NOVEMBER 4, 2013 

Read the first time 

NOVEMBER 5, 2013 

Read the second time and placed on the calendar 

AN ACT 

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

respect to human drug compounding and drug supply 

chain security, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Drug Quality and Se5 curity Act’’. 

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

2 (a) REFERENCES IN ACT.—Except as otherwise spec3 ified, amendments made by this Act to a section or other 

4 provision of law are amendments to such section or other 

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

6 (21 U.S.C. 301 et seq.). 

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

8 this Act is as follows: 

Sec. 1. Short title. 

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

TITLE I—DRUG COMPOUNDING 

Sec. 101. Short title. 

Sec. 102. Voluntary outsourcing facilities. 

Sec. 103. Penalties. 

Sec. 104. Regulations. 

Sec. 105. Enhanced communication. 

Sec. 106. Severability. 

Sec. 107. GAO study. 

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 standards for prescription drug wholesale distributors. 

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

Sec. 206. Penalties. 

Sec. 207. Conforming amendment. 

Sec. 208. Savings clause. 

9 TITLE I—DRUG COMPOUNDING 

10 SEC. 101. SHORT TITLE. 

11 This Act may be cited as the ‘‘Compounding Quality 

12 Act’’. 

13 SEC. 102. VOLUNTARY OUTSOURCING FACILITIES. 

14 (a) IN GENERAL.—Subchapter A of chapter V (21 

15 U.S.C. 351 et seq.) is amended— 

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1 (1) by redesignating section 503B as section 

2 503C; and 

3 (2) by inserting after section 503A the fol4 lowing new section: 

5 ‘‘SEC. 503B. OUTSOURCING FACILITIES. 

6 ‘‘(a) IN GENERAL.—Sections 502(f)(1), 505, and 582 

7 shall not apply to a drug compounded by or under the 

8 direct supervision of a licensed pharmacist in a facility 

9 that elects to register as an outsourcing facility if each 

10 of the following conditions is met: 

11 ‘‘(1) REGISTRATION AND REPORTING.—The 

12 drug is compounded in an outsourcing facility that 

13 is in compliance with the requirements of subsection 

14 (b). 

15 ‘‘(2) BULK DRUG SUBSTANCES.—The drug is 

16 compounded in an outsourcing facility that does not 

17 compound using bulk drug substances (as defined in 

18 section 207.3(a)(4) of title 21, Code of Federal Reg19 ulations (or any successor regulation)), unless— 

20 ‘‘(A)(i) the bulk drug substance appears on 

21 a list established by the Secretary identifying 

22 bulk drug substances for which there is a clin23 ical need, by— 

24 ‘‘(I) publishing a notice in the Federal 

25 Register proposing bulk drug substances to 

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1 be included on the list, including the ra2 tionale for such proposal; 

3 ‘‘(II) providing a period of not less 

4 than 60 calendar days for comment on the 

5 notice; and 

6 ‘‘(III) publishing a notice in the Fed7 eral Register designating bulk drug sub8 stances for inclusion on the list; or 

9 ‘‘(ii) the drug compounded from such bulk 

10 drug substance appears on the drug shortage 

11 list in effect under section 506E at the time of 

12 compounding, distribution, and dispensing; 

13 ‘‘(B) if an applicable monograph exists 

14 under the United States Pharmacopeia, the Na15 tional Formulary, or another compendium or 

16 pharmacopeia recognized by the Secretary for 

17 purposes of this paragraph, the bulk drug sub18 stances each comply with the monograph; 

19 ‘‘(C) the bulk drug substances are each 

20 manufactured by an establishment that is reg21 istered under section 510 (including a foreign 

22 establishment that is registered under section 

23 510(i)); and 

24 ‘‘(D) the bulk drug substances are each ac25 companied by a valid certificate of analysis. 

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1 ‘‘(3) INGREDIENTS (OTHER THAN BULK DRUG

2 SUBSTANCES).—If any ingredients (other than bulk 

3 drug substances) are used in compounding the drug, 

4 such ingredients comply with the standards of the 

5 applicable United States Pharmacopeia or National 

6 Formulary monograph, if such monograph exists, or 

7 of another compendium or pharmacopeia recognized 

8 by the Secretary for purposes of this paragraph if 

9 any. 

10 ‘‘(4) DRUGS WITHDRAWN OR REMOVED BE11 CAUSE UNSAFE OR NOT EFFECTIVE.—The drug does 

12 not appear on a list published by the Secretary of 

13 drugs that have been withdrawn or removed from 

14 the market because such drugs or components of 

15 such drugs have been found to be unsafe or not ef16 fective. 

17 ‘‘(5) ESSENTIALLY A COPY OF AN APPROVED

18 DRUG.—The drug is not essentially a copy of one or 

19 more approved drugs. 

20 ‘‘(6) DRUGS PRESENTING DEMONSTRABLE DIF21 FICULTIES FOR COMPOUNDING.—The drug— 

22 ‘‘(A) is not identified (directly or as part 

23 of a category of drugs) on a list published by 

24 the Secretary, through the process described in 

25 subsection (c), of drugs or categories of drugs 

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1 that present demonstrable difficulties for 

2 compounding that are reasonably likely to lead 

3 to an adverse effect on the safety or effective4 ness of the drug or category of drugs, taking 

5 into account the risks and benefits to patients; 

6 or 

7 ‘‘(B) is compounded in accordance with all 

8 applicable conditions identified on the list de9 scribed in subparagraph (A) as conditions that 

10 are necessary to prevent the drug or category of 

11 drugs from presenting the demonstrable dif12 ficulties described in subparagraph (A). 

13 ‘‘(7) ELEMENTS TO ASSURE SAFE USE.—In the 

14 case of a drug that is compounded from a drug that 

15 is the subject of a risk evaluation and mitigation 

16 strategy approved with elements to assure safe use 

17 pursuant to section 505–1, or from a bulk drug sub18 stance that is a component of such drug, the out19 sourcing facility demonstrates to the Secretary prior 

20 to beginning compounding that such facility will uti21 lize controls comparable to the controls applicable 

22 under the relevant risk evaluation and mitigation 

23 strategy. 

24 ‘‘(8) PROHIBITION ON WHOLESALING.—The 

25 drug will not be sold or transferred by an entity 

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1 other than the outsourcing facility that compounded 

2 such drug. This paragraph does not prohibit admin3 istration of a drug in a health care setting or dis4 pensing a drug pursuant to a prescription executed 

5 in accordance with section 503(b)(1). 

6 ‘‘(9) FEES.—The drug is compounded in an 

7 outsourcing facility that has paid all fees owed by 

8 such facility pursuant to section 744K. 

9 ‘‘(10) LABELING OF DRUGS.— 

10 ‘‘(A) LABEL.—The label of the drug in11 cludes— 

12 ‘‘(i) the statement ‘This is a com13 pounded drug.’ or a reasonable comparable 

14 alternative statement (as specified by the 

15 Secretary) that prominently identifies the 

16 drug as a compounded drug; 

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

18 number of the applicable outsourcing facil19 ity; and 

20 ‘‘(iii) with respect to the drug— 

21 ‘‘(I) the lot or batch number; 

22 ‘‘(II) the established name of the 

23 drug; 

24 ‘‘(III) the dosage form and 

25 strength; 

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1 ‘‘(IV) the statement of quantity 

2 or volume, as appropriate; 

3 ‘‘(V) the date that the drug was 

4 compounded; 

5 ‘‘(VI) the expiration date; 

6 ‘‘(VII) storage and handling in7 structions; 

8 ‘‘(VIII) the National Drug Code 

9 number, if available; 

10 ‘‘(IX) the statement ‘Not for re11 sale’, and, if the drug is dispensed or 

12 distributed other than pursuant to a 

13 prescription for an individual identi14 fied patient, the statement ‘Office Use 

15 Only’; and 

16 ‘‘(X) subject to subparagraph 

17 (B)(i), a list of active and inactive in18 gredients, identified by established 

19 name and the quantity or proportion 

20 of each ingredient. 

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

22 which the individual units of the drug are re23 moved for dispensing or for administration 

24 (such as a plastic bag containing individual 

25 product syringes) shall include— 

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1 ‘‘(i) the information described under 

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

3 space on the label for such information; 

4 ‘‘(ii) the following information to fa5 cilitate adverse event reporting: 

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

7 1088 (or any successor Internet Web site 

8 or phone number); and 

9 ‘‘(iii) directions for use, including, as 

10 appropriate, dosage and administration. 

11 ‘‘(C) ADDITIONAL INFORMATION.—The 

12 label and labeling of the drug shall include any 

13 other information as determined necessary and 

14 specified in regulations promulgated by the Sec15 retary. 

16 ‘‘(11) OUTSOURCING FACILITY REQUIRE17 MENT.—The drug is compounded in an outsourcing 

18 facility in which the compounding of drugs occurs 

19 only in accordance with this section. 

20 ‘‘(b) REGISTRATION OF OUTSOURCING FACILITIES

21 AND REPORTING OF DRUGS.— 

22 ‘‘(1) REGISTRATION OF OUTSOURCING FACILI23 TIES.— 

24 ‘‘(A) ANNUAL REGISTRATION.—Upon 

25 electing and in order to become an outsourcing 

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1 facility, and during the period beginning on Oc2 tober 1 and ending on December 31 of each 

3 year thereafter, a facility— 

4 ‘‘(i) shall register with the Secretary 

5 its name, place of business, and unique fa6 cility identifier (which shall conform to the 

7 requirements for the unique facility identi8 fier established under section 510), and a 

9 point of contact email address; and 

10 ‘‘(ii) shall indicate whether the out11 sourcing facility intends to compound a 

12 drug that appears on the list in effect 

13 under section 506E during the subsequent 

14 calendar year. 

15 ‘‘(B) AVAILABILITY OF REGISTRATION FOR

16 INSPECTION; LIST.— 

17 ‘‘(i) REGISTRATIONS.—The Secretary 

18 shall make available for inspection, to any 

19 person so requesting, any registration filed 

20 pursuant to this paragraph. 

21 ‘‘(ii) LIST.—The Secretary shall make 

22 available on the public Internet Web site of 

23 the Food and Drug Administration a list 

24 of the name of each facility registered 

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1 cility, the State in which each such facility 

2 is located, whether the facility compounds 

3 from bulk drug substances, and whether 

4 any such compounding from bulk drug 

5 substances is for sterile or nonsterile 

6 drugs. 

7 ‘‘(2) DRUG REPORTING BY OUTSOURCING FA8 CILITIES.— 

9 ‘‘(A) IN GENERAL.—Upon initially reg10 istering as an outsourcing facility, once during 

11 the month of June of each year, and once dur12 ing the month of December of each year, each 

13 outsourcing facility that registers with the Sec14 retary under paragraph (1) shall submit to the 

15 Secretary a report— 

16 ‘‘(i) identifying the drugs compounded 

17 by such outsourcing facility during the pre18 vious 6-month period; and 

19 ‘‘(ii) with respect to each drug identi20 fied under clause (i), providing the active 

21 ingredient, the source of such active ingre22 dient, the National Drug Code number of 

23 the source drug or bulk active ingredient, 

24 if available, the strength of the active in25 gredient per unit, the dosage form and 

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1 route of administration, the package de2 scription, the number of individual units 

3 produced, and the National Drug Code 

4 number of the final product, if assigned. 

5 ‘‘(B) FORM.—Each report under subpara6 graph (A) shall be prepared in such form and 

7 manner as the Secretary may prescribe by regu8 lation or guidance. 

9 ‘‘(C) CONFIDENTIALITY.—Reports sub10 mitted under this paragraph shall be exempt 

11 from inspection under paragraph (1)(B)(i), un12 less the Secretary finds that such an exemption 

13 would be inconsistent with the protection of the 

14 public health. 

15 ‘‘(3) ELECTRONIC REGISTRATION AND REPORT16 ING.—Registrations and drug reporting under this 

17 subsection (including the submission of updated in18 formation) shall be submitted to the Secretary by 

19 electronic means unless the Secretary grants a re20 quest for waiver of such requirement because use of 

21 electronic means is not reasonable for the person re22 questing waiver. 

23 ‘‘(4) RISK-BASED INSPECTION FREQUENCY.— 

24 ‘‘(A) IN GENERAL.—Outsourcing facili25 ties— 

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1 ‘‘(i) shall be subject to inspection pur2 suant to section 704; and 

3 ‘‘(ii) shall not be eligible for the ex4 emption under section 704(a)(2)(A). 

5 ‘‘(B) RISK-BASED SCHEDULE.—The Sec6 retary, acting through one or more officers or 

7 employees duly designated by the Secretary, 

8 shall inspect outsourcing facilities in accordance 

9 with a risk-based schedule established by the 

10 Secretary. 

11 ‘‘(C) RISK FACTORS.—In establishing the 

12 risk-based schedule, the Secretary shall inspect 

13 outsourcing facilities according to the known 

14 safety risks of such outsourcing facilities, which 

15 shall be based on the following factors: 

16 ‘‘(i) The compliance history of the 

17 outsourcing facility. 

18 ‘‘(ii) The record, history, and nature 

19 of recalls linked to the outsourcing facility. 

20 ‘‘(iii) The inherent risk of the drugs 

21 compounded at the outsourcing facility. 

22 ‘‘(iv) The inspection frequency and 

23 history of the outsourcing facility, includ24 ing whether the outsourcing facility has 

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1 been inspected pursuant to section 704 

2 within the last 4 years. 

3 ‘‘(v) Whether the outsourcing facility 

4 has registered under this paragraph as an 

5 entity that intends to compound a drug 

6 that appears on the list in effect under sec7 tion 506E. 

8 ‘‘(vi) Any other criteria deemed nec9 essary and appropriate by the Secretary 

10 for purposes of allocating inspection re11 sources. 

12 ‘‘(5) ADVERSE EVENT REPORTING.—Outsourc13 ing facilities shall submit adverse event reports to 

14 the Secretary in accordance with the content and 

15 format requirements established through guidance or 

16 regulation under section 310.305 of title 21, Code of 

17 Federal Regulations (or any successor regulations). 

18 ‘‘(c) REGULATIONS.— 

19 ‘‘(1) IN GENERAL.—The Secretary shall imple20 ment the list described in subsection (a)(6) through 

21 regulations. 

22 ‘‘(2) ADVISORY COMMITTEE ON

23 COMPOUNDING.—Before issuing regulations to im24 plement subsection (a)(6), the Secretary shall con25 vene and consult an advisory committee on 

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1 compounding. The advisory committee shall include 

2 representatives from the National Association of 

3 Boards of Pharmacy, the United States Pharma4 copeia, pharmacists with current experience and ex5 pertise in compounding, physicians with background 

6 and knowledge in compounding, and patient and 

7 public health advocacy organizations. 

8 ‘‘(3) INTERIM LIST.— 

9 ‘‘(A) IN GENERAL.—Before the effective 

10 date of the regulations finalized to implement 

11 subsection (a)(6), the Secretary may designate 

12 drugs, categories of drugs, or conditions as de13 scribed such subsection by— 

14 ‘‘(i) publishing a notice of such sub15 stances, drugs, categories of drugs, or con16 ditions proposed for designation, including 

17 the rationale for such designation, in the 

18 Federal Register; 

19 ‘‘(ii) providing a period of not less 

20 than 60 calendar days for comment on the 

21 notice; and 

22 ‘‘(iii) publishing a notice in the Fed23 eral Register designating such drugs, cat24 egories of drugs, or conditions. 

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1 ‘‘(B) SUNSET OF NOTICE.—Any notice 

2 provided under subparagraph (A) shall not be 

3 effective after the earlier of— 

4 ‘‘(i) the date that is 5 years after the 

5 date of enactment of the Compounding 

6 Quality Act; or 

7 ‘‘(ii) the effective date of the final reg8 ulations issued to implement subsection 

9 (a)(6). 

10 ‘‘(4) UPDATES.—The Secretary shall review, 

11 and update as necessary, the regulations containing 

12 the lists of drugs, categories of drugs, or conditions 

13 described in subsection (a)(6) regularly, but not less 

14 than once every 4 years. Nothing in the previous 

15 sentence prohibits submissions to the Secretary, be16 fore or during any 4-year period described in such 

17 sentence, requesting updates to such lists. 

18 ‘‘(d) DEFINITIONS.—In this section: 

19 ‘‘(1) The term ‘compounding’ includes the com20 bining, admixing, mixing, diluting, pooling, reconsti21 tuting, or otherwise altering of a drug or bulk drug 

22 substance to create a drug. 

23 ‘‘(2) The term ‘essentially a copy of an ap24 proved drug’ means— 

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1 ‘‘(A) a drug that is identical or nearly 

2 identical to an approved drug, or a marketed 

3 drug not subject to section 503(b) and not sub4 ject to approval in an application submitted 

5 under section 505, unless, in the case of an ap6 proved drug, the drug appears on the drug 

7 shortage list in effect under section 506E at the 

8 time of compounding, distribution, and dis9 pensing; or 

10 ‘‘(B) a drug, a component of which is a 

11 bulk drug substance that is a component of an 

12 approved drug or a marketed drug that is not 

13 subject to section 503(b) and not subject to ap14 proval in an application submitted under sec15 tion 505, unless there is a change that produces 

16 for an individual patient a clinical difference, as 

17 determined by the prescribing practitioner, be18 tween the compounded drug and the com19 parable approved drug. 

20 ‘‘(3) The term ‘approved drug’ means a drug 

21 that is approved under section 505 and does not ap22 pear on the list described in subsection (a)(4) of 

23 drugs that have been withdrawn or removed from 

24 the market because such drugs or components of 

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1 such drugs have been found to be unsafe or not ef2 fective. 

3 ‘‘(4)(A) The term ‘outsourcing facility’ means a 

4 facility at one geographic location or address that— 

5 ‘‘(i) is engaged in the compounding of ster6 ile drugs; 

7 ‘‘(ii) has elected to register as an outsourc8 ing facility; and 

9 ‘‘(iii) complies with all of the requirements 

10 of this section. 

11 ‘‘(B) An outsourcing facility is not required to 

12 be a licensed pharmacy. 

13 ‘‘(C) An outsourcing facility may or may not 

14 obtain prescriptions for identified individual pa15 tients. 

16 ‘‘(5) The term ‘sterile drug’ means a drug that 

17 is intended for parenteral administration, an oph18 thalmic or oral inhalation drug in aqueous format, 

19 or a drug that is required to be sterile under Federal 

20 or State law.’’. 

21 ‘‘(d) OBLIGATION TO PAY FEES.—Payment of the fee 

22 under section 744K, as described in subsection (a)(9), 

23 shall not relieve an outsourcing facility that is licensed as 

24 a pharmacy in any State that requires pharmacy licensing 

25 fees of its obligation to pay such State fees.’’. 

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1 (b) FEES.—Subchapter C of chapter VII (21 U.S.C. 

2 379f et seq.) is amended by adding at the end the fol3 lowing: 

4 ‘‘PART 9—FEES RELATING TO OUTSOURCING 

5 FACILITIES 

6 ‘‘SEC. 744J. DEFINITIONS. 

7 ‘‘In this part: 

8 ‘‘(1) The term ‘affiliate’ has the meaning given 

9 such term in section 735(11). 

10 ‘‘(2) The term ‘gross annual sales’ means the 

11 total worldwide gross annual sales, in United States 

12 dollars, for an outsourcing facility, including the 

13 sales of all the affiliates of the outsourcing facility. 

14 ‘‘(3) The term ‘outsourcing facility’ has the 

15 meaning given to such term in section 503B(d)(4). 

16 ‘‘(4) The term ‘reinspection’ means, with re17 spect to an outsourcing facility, 1 or more inspec18 tions conducted under section 704 subsequent to an 

19 inspection conducted under such provision which 

20 identified noncompliance materially related to an ap21 plicable requirement of this Act, specifically to deter22 mine whether compliance has been achieved to the 

23 Secretary’s satisfaction. 

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1 ‘‘SEC. 744K. AUTHORITY TO ASSESS AND USE OUTSOURC2 ING FACILITY FEES. 

3 ‘‘(a) ESTABLISHMENT AND REINSPECTION FEES.— 

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

5 each subsequent fiscal year, the Secretary shall, in 

6 accordance with this subsection, assess and collect— 

7 ‘‘(A) an annual establishment fee from 

8 each outsourcing facility; and 

9 ‘‘(B) a reinspection fee from each out10 sourcing facility subject to a reinspection in 

11 such fiscal year. 

12 ‘‘(2) MULTIPLE REINSPECTIONS.—An outsourc13 ing facility subject to multiple reinspections in a fis14 cal year shall be subject to a reinspection fee for 

15 each reinspection. 

16 ‘‘(b) ESTABLISHMENT AND REINSPECTION FEE SET17 TING.—The Secretary shall— 

18 ‘‘(1) establish the amount of the establishment 

19 fee and reinspection fee to be collected under this 

20 section for each fiscal year based on the method21 ology described in subsection (c); and 

22 ‘‘(2) publish such fee amounts in a Federal 

23 Register notice not later than 60 calendar days be24 fore the start of each such year. 

25 ‘‘(c) AMOUNT OF ESTABLISHMENT FEE AND REIN26 SPECTION FEE.— 

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1 ‘‘(1) IN GENERAL.—For each outsourcing facil2 ity in a fiscal year— 

3 ‘‘(A) except as provided in paragraph (4), 

4 the amount of the annual establishment fee 

5 under subsection (b) shall be equal to the sum 

6 of— 

7 ‘‘(i) $15,000, multiplied by the infla8 tion adjustment factor described in para9 graph (2); plus 

10 ‘‘(ii) the small business adjustment 

11 factor described in paragraph (3); and 

12 ‘‘(B) the amount of any reinspection fee (if 

13 applicable) under subsection (b) shall be equal 

14 to $15,000, multiplied by the inflation adjust15 ment factor described in paragraph (2). 

16 ‘‘(2) INFLATION ADJUSTMENT FACTOR.— 

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

18 and subsequent fiscal years, the fee amounts es19 tablished in paragraph (1) shall be adjusted by 

20 the Secretary by notice, published in the Fed21 eral Register, for a fiscal year by the amount 

22 equal to the sum of— 

23 ‘‘(i) 1; 

24 ‘‘(ii) the average annual percent 

25 change in the cost, per full-time equivalent 

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1 position of the Food and Drug Administra2 tion, of all personnel compensation and 

3 benefits paid with respect to such positions 

4 for the first 3 years of the preceding 4 fis5 cal years, multiplied by the proportion of 

6 personnel compensation and benefits costs 

7 to total costs of an average full-time equiv8 alent position of the Food and Drug Ad9 ministration for the first 3 years of the 

10 preceding 4 fiscal years; plus 

11 ‘‘(iii) the average annual percent 

12 change that occurred in the Consumer 

13 Price Index for urban consumers (U.S. 

14 City Average; Not Seasonally Adjusted; All 

15 items; Annual Index) for the first 3 years 

16 of the preceding 4 years of available data 

17 multiplied by the proportion of all costs 

18 other than personnel compensation and 

19 benefits costs to total costs of an average 

20 full-time equivalent position of the Food 

21 and Drug Administration for the first 3 

22 years of the preceding 4 fiscal years. 

23 ‘‘(B) COMPOUNDED BASIS.—The adjust24 ment made each fiscal year under subparagraph 

25 (A) shall be added on a compounded basis to 

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1 the sum of all adjustments made each fiscal 

2 year after fiscal year 2014 under subparagraph 

3 (A). 

4 ‘‘(3) SMALL BUSINESS ADJUSTMENT FACTOR.— 

5 The small business adjustment factor described in 

6 this paragraph shall be an amount established by 

7 the Secretary for each fiscal year based on the Sec8 retary’s estimate of— 

9 ‘‘(A) the number of small businesses that 

10 will pay a reduced establishment fee for such 

11 fiscal year; and 

12 ‘‘(B) the adjustment to the establishment 

13 fee necessary to achieve total fees equaling the 

14 total fees that the Secretary would have col15 lected if no entity qualified for the small busi16 ness exception in paragraph (4). 

17 ‘‘(4) EXCEPTION FOR SMALL BUSINESSES.— 

18 ‘‘(A) IN GENERAL.—In the case of an out19 sourcing facility with gross annual sales of 

20 $1,000,000 or less in the 12 months ending 

21 April 1 of the fiscal year immediately preceding 

22 the fiscal year in which the fees under this sec23 tion are assessed, the amount of the establish24 ment fee under subsection (b) for a fiscal year 

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1 shall be equal to \1/3\ of the amount calculated 

2 under paragraph (1)(A)(i) for such fiscal year. 

3 ‘‘(B) APPLICATION.—To qualify for the ex4 ception under this paragraph, a small business 

5 shall submit to the Secretary a written request 

6 for such exception, in a format specified by the 

7 Secretary in guidance, certifying its gross an8 nual sales for the 12 months ending April 1 of 

9 the fiscal year immediately preceding the fiscal 

10 year in which fees under this subsection are as11 sessed. Any such application shall be submitted 

12 to the Secretary not later than April 30 of such 

13 immediately preceding fiscal year. 

14 ‘‘(5) CREDITING OF FEES.—In establishing the 

15 small business adjustment factor under paragraph 

16 (3) for a fiscal year, the Secretary shall— 

17 ‘‘(A) provide for the crediting of fees from 

18 the previous year to the next year if the Sec19 retary overestimated the amount of the small 

20 business adjustment factor for such previous 

21 fiscal year; and 

22 ‘‘(B) consider the need to account for any 

23 adjustment of fees and such other factors as 

24 the Secretary determines appropriate. 

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1 ‘‘(d) USE OF FEES.—The Secretary shall make all 

2 of the fees collected pursuant to subparagraphs (A) and 

3 (B) of subsection (a)(1) available solely to pay for the 

4 costs of oversight of outsourcing facilities. 

5 ‘‘(e) SUPPLEMENT NOT SUPPLANT.—Funds received 

6 by the Secretary pursuant to this section shall be used 

7 to supplement and not supplant any other Federal funds 

8 available to carry out the activities described in this sec9 tion. 

10 ‘‘(f) CREDITING AND AVAILABILITY OF FEES.—Fees 

11 authorized under this section shall be collected and avail12 able for obligation only to the extent and in the amount 

13 provided in advance in appropriations Acts. Such fees are 

14 authorized to remain available until expended. Such sums 

15 as may be necessary may be transferred from the Food 

16 and Drug Administration salaries and expenses appropria17 tion account without fiscal year limitation to such appro18 priation account for salaries and expenses with such fiscal 

19 year limitation. The sums transferred shall be available 

20 solely for the purpose of paying the costs of oversight of 

21 outsourcing facilities. 

22 ‘‘(g) COLLECTION OF FEES.— 

23 ‘‘(1) ESTABLISHMENT FEE.—An outsourcing 

24 facility shall remit the establishment fee due under 

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1 istration pursuant to section 503B(b) for such fiscal 

2 year. 

3 ‘‘(2) REINSPECTION FEE.—The Secretary shall 

4 specify in the Federal Register notice described in 

5 subsection (b)(2) the manner in which reinspection 

6 fees assessed under this section shall be collected 

7 and the timeline for payment of such fees. Such a 

8 fee shall be collected after the Secretary has con9 ducted a reinspection of the outsourcing facility in10 volved. 

11 ‘‘(3) EFFECT OF FAILURE TO PAY FEES.— 

12 ‘‘(A) REGISTRATION.—An outsourcing fa13 cility shall not be considered registered under 

14 section 503B(b) in a fiscal year until the date 

15 that the outsourcing facility remits the estab16 lishment fee under this subsection for such fis17 cal year. 

18 ‘‘(B) MISBRANDING.—All drugs manufac19 tured, prepared, propagated, compounded, or 

20 processed by an outsourcing facility for which 

21 any establishment fee or reinspection fee has 

22 not been paid, as required by this section, shall 

23 be deemed misbranded under section 502 until 

24 the fees owed for such outsourcing facility 

25 under this section have been paid. 

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1 ‘‘(4) COLLECTION OF UNPAID FEES.—In any 

2 case where the Secretary does not receive payment 

3 of a fee assessed under this section within 30 cal4 endar days after it is due, such fee shall be treated 

5 as a claim of the United States Government subject 

6 to provisions of subchapter II of chapter 37 of title 

7 31, United States Code. 

8 ‘‘(h) ANNUAL REPORT TO CONGRESS.—Not later 

9 than 120 calendar days after each fiscal year in which fees 

10 are assessed and collected under this section, the Sec11 retary shall submit a report to the Committee on Health, 

12 Education, Labor, and Pensions of the Senate and the 

13 Committee on Energy and Commerce of the House of 

14 Representatives, to include a description of fees assessed 

15 and collected for such year, a summary description of enti16 ties paying the fees, a description of the hiring and place17 ment of new staff, a description of the use of fee resources 

18 to support inspecting outsourcing facilities, and the num19 ber of inspections and reinspections of such facilities per20 formed each year. 

21 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—For fis22 cal year 2014 and each subsequent fiscal year, there is 

23 authorized to be appropriated for fees under this section 

24 an amount equivalent to the total amount of fees assessed 

25 for such fiscal year under this section.’’. 

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1 SEC. 103. PENALTIES. 

2 (a) PROHIBITED ACTS.—Section 301 (21 U.S.C. 

3 331) is amended by adding at the end the following: 

4 ‘‘(ccc)(1) The resale of a compounded drug that is 

5 labeled ‘not for resale’ in accordance with section 503B. 

6 ‘‘(2) With respect to a drug to be compounded pursu7 ant to section 503A or 503B, the intentional falsification 

8 of a prescription, as applicable. 

9 ‘‘(3) The failure to report drugs or adverse events 

10 by an entity that is registered in accordance with sub11 section (b) of section 503B.’’. 

12 (b) MISBRANDED DRUGS.—Section 502 (21 U.S.C. 

13 352) is amended by adding at the end the following: 

14 ‘‘(bb) If the advertising or promotion of a com15 pounded drug is false or misleading in any particular.’’. 

16 SEC. 104. REGULATIONS. 

17 In promulgating any regulations to implement this 

18 title (and the amendments made by this title), the Sec19 retary of Health and Human Services shall— 

20 (1) issue a notice of proposed rulemaking that 

21 includes the proposed regulation; 

22 (2) provide a period of not less than 60 cal23 endar days for comments on the proposed regula24 tion; and 

25 (3) publish the final regulation not more than 

26 18 months following publication of the proposed rule 

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1 and not less than 30 calendar days before the effec2 tive date of such final regulation. 

3 SEC. 105. ENHANCED COMMUNICATION. 

4 (a) SUBMISSIONS FROM STATE BOARDS OF PHAR5 MACY.—In a manner specified by the Secretary of Health 

6 and Human Services (referred to in this section as the 

7 ‘‘Secretary’’), the Secretary shall receive submissions from 

8 State boards of pharmacy— 

9 (1) describing actions taken against 

10 compounding pharmacies, as described in subsection 

11 (b); or 

12 (2) expressing concerns that a compounding 

13 pharmacy may be acting contrary to section 503A of 

14 the Federal Food, Drug, and Cosmetic Act (21 

15 U.S.C. 353a). 

16 (b) CONTENT OF SUBMISSIONS FROM STATE

17 BOARDS OF PHARMACY.—An action referred to in sub18 section (a)(1) is, with respect to a pharmacy that com19 pounds drugs, any of the following: 

20 (1) The issuance of a warning letter, or the im21 position of sanctions or penalties, by a State for vio22 lations of a State’s pharmacy regulations pertaining 

23 to compounding. 

24 (2) The suspension or revocation of a State25 issued pharmacy license or registration for violations 

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1 of a State’s pharmacy regulations pertaining to 

2 compounding. 

3 (3) The recall of a compounded drug due to 

4 concerns relating to the quality or purity of such 

5 drug. 

6 (c) CONSULTATION.—The Secretary shall implement 

7 subsection (a) in consultation with the National Associa8 tion of Boards of Pharmacy. 

9 (d) NOTIFYING STATE BOARDS OF PHARMACY.—The 

10 Secretary shall immediately notify State boards of phar11 macy when— 

12 (1) the Secretary receives a submission under 

13 subsection (a)(1); or 

14 (2) the Secretary makes a determination that a 

15 pharmacy is acting contrary to section 503A of the 

16 Federal Food, Drug, and Cosmetic Act. 

17 SEC. 106. SEVERABILITY. 

18 (a) IN GENERAL.—Section 503A (21 U.S.C. 353a) 

19 is amended — 

20 (1) in subsection (a), in the matter preceding 

21 paragraph (1), by striking ‘‘unsolicited’’; 

22 (2) by striking subsection (c); 

23 (3) by redesignating subsections (d) through (f) 

24 as subsections (c) through (e), respectively; and 

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1 (4) in subsection (b)(1)(A)(i)(III), by striking 

2 ‘‘subsection (d)’’ and inserting ‘‘subsection (c)’’. 

3 (b) SEVERABILITY.—If any provision of this Act (in4 cluding the amendments made by this Act) is declared un5 constitutional, or the applicability of this Act (including 

6 the amendments made by this Act) to any person or cir7 cumstance is held invalid, the constitutionality of the re8 mainder of this Act (including the amendments made by 

9 this Act) and the applicability thereof to other persons and 

10 circumstances shall not be affected. 

11 SEC. 107. GAO STUDY. 

12 (a) STUDY.—Not later than 36 months after the date 

13 of the enactment of this Act, the Comptroller General of 

14 the United States shall submit to Congress a report on 

15 pharmacy compounding and the adequacy of State and 

16 Federal efforts to assure the safety of compounded drugs. 

17 (b) CONTENTS.—The report required under this sec18 tion shall include— 

19 (1) a review of pharmacy compounding in each 

20 State, and the settings in which such compounding 

21 occurs; 

22 (2) a review of the State laws and policies gov23 erning pharmacy compounding, including enforce24 ment of State laws and policies; 

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1 (3) an assessment of the available tools to per2 mit purchasers of compounded drugs to determine 

3 the safety and quality of such drugs; 

4 (4) an evaluation of the effectiveness of the 

5 communication among States and between States 

6 and the Food and Drug Administration regarding 

7 compounding; and 

8 (5) an evaluation of the Food and Drug Admin9 istration’s implementation of sections 503A and 

10 503B of the Federal Food, Drug, and Cosmetic Act. 

11 TITLE II—DRUG SUPPLY CHAIN 

12 SECURITY 

13 SEC. 201. SHORT TITLE. 

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

15 Security Act’’. 

16 SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY 

17 CHAIN. 

18 Chapter V (21 U.S.C. 351 et seq.) is amended by 

19 adding at the end the following: 

20 ‘‘Subchapter H—Pharmaceutical Distribution 

21 Supply Chain 

22 ‘‘SEC. 581. DEFINITIONS. 

23 ‘‘In this subchapter: 

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1 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means a 

2 business entity that has a relationship with a second 

3 business entity if, directly or indirectly— 

4 ‘‘(A) one business entity controls, or has 

5 the power to control, the other business entity; 

6 or 

7 ‘‘(B) a third party controls, or has the 

8 power to control, both of the business entities. 

9 ‘‘(2) AUTHORIZED.—The term ‘authorized’ 

10 means— 

11 ‘‘(A) in the case of a manufacturer or re12 packager, having a valid registration in accord13 ance with section 510; 

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

15 having a valid license under State law or sec16 tion 583, in accordance with section 582(a)(6), 

17 and complying with the licensure reporting re18 quirements under section 503(e), as amended 

19 by the Drug Supply Chain Security Act; 

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

21 provider, having a valid license under State law 

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

23 582(a)(7), and complying with the licensure re24 porting requirements under section 584(b); and 

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

2 valid license under State law. 

3 ‘‘(3) DISPENSER.—The term ‘dispenser’— 

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

5 pharmacy, a group of chain pharmacies under 

6 common ownership and control that do not act 

7 as a wholesale distributor, or any other person 

8 authorized by law to dispense or administer 

9 prescription drugs, and the affiliated ware10 houses or distribution centers of such entities 

11 under common ownership and control that do 

12 not act as a wholesale distributor; and 

13 ‘‘(B) does not include a person who dis14 penses only products to be used in animals in 

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

16 ‘‘(4) DISPOSITION.—The term ‘disposition’, 

17 with respect to a product within the possession or 

18 control of an entity, means the removal of such 

19 product from the pharmaceutical distribution supply 

20 chain, which may include disposal or return of the 

21 product for disposal or other appropriate handling 

22 and other actions, such as retaining a sample of the 

23 product for further additional physical examination 

24 or laboratory analysis of the product by a manufac25 turer or regulatory or law enforcement agency. 

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1 ‘‘(5) DISTRIBUTE OR DISTRIBUTION.—The 

2 term ‘distribute’ or ‘distribution’ means the sale, 

3 purchase, trade, delivery, handling, storage, or re4 ceipt of a product, and does not include the dis5 pensing of a product pursuant to a prescription exe6 cuted in accordance with section 503(b)(1) or the 

7 dispensing of a product approved under section 

8 512(b). 

9 ‘‘(6) EXCLUSIVE DISTRIBUTOR.—The term ‘ex10 clusive distributor’ means the wholesale distributor 

11 that directly purchased the product from the manu12 facturer and is the sole distributor of that manufac13 turer’s product to a subsequent repackager, whole14 sale distributor, or dispenser. 

15 ‘‘(7) HOMOGENEOUS CASE.—The term ‘homo16 geneous case’ means a sealed case containing only 

17 product that has a single National Drug Code num18 ber belonging to a single lot. 

19 ‘‘(8) ILLEGITIMATE PRODUCT.—The term ‘ille20 gitimate product’ means a product for which credible 

21 evidence shows that the product— 

22 ‘‘(A) is counterfeit, diverted, or stolen; 

23 ‘‘(B) is intentionally adulterated such that 

24 the product would result in serious adverse 

25 health consequences or death to humans; 

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1 ‘‘(C) is the subject of a fraudulent trans2 action; or 

3 ‘‘(D) appears otherwise unfit for distribu4 tion such that the product would be reasonably 

5 likely to result in serious adverse health con6 sequences or death to humans. 

7 ‘‘(9) LICENSED.—The term ‘licensed’ means— 

8 ‘‘(A) in the case of a wholesale distributor, 

9 having a valid license in accordance with section 

10 503(e) or section 582(a)(6), as applicable; 

11 ‘‘(B) in the case of a third-party logistics 

12 provider, having a valid license in accordance 

13 with section 584(a) or section 582(a)(7), as ap14 plicable; and 

15 ‘‘(C) in the case of a dispenser, having a 

16 valid license under State law. 

17 ‘‘(10) MANUFACTURER.—The term ‘manufac18 turer’ means, with respect to a product— 

19 ‘‘(A) a person that holds an application ap20 proved under section 505 or a license issued 

21 under section 351 of the Public Health Service 

22 Act for such product, or if such product is not 

23 the subject of an approved application or li24 cense, the person who manufactured the prod25 uct; 

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1 ‘‘(B) a co-licensed partner of the person 

2 described in subparagraph (A) that obtains the 

3 product directly from a person described in this 

4 subparagraph or subparagraph (A) or (C); or 

5 ‘‘(C) an affiliate of a person described in 

6 subparagraph (A) or (B) that receives the prod7 uct directly from a person described in this sub8 paragraph or subparagraph (A) or (B). 

9 ‘‘(11) PACKAGE.— 

10 ‘‘(A) IN GENERAL.—The term ‘package’ 

11 means the smallest individual saleable unit of 

12 product for distribution by a manufacturer or 

13 repackager that is intended by the manufac14 turer for ultimate sale to the dispenser of such 

15 product. 

16 ‘‘(B) INDIVIDUAL SALEABLE UNIT.—For 

17 purposes of this paragraph, an ‘individual sale18 able unit’ is the smallest container of product 

19 introduced into commerce by the manufacturer 

20 or repackager that is intended by the manufac21 turer or repackager for individual sale to a dis22 penser. 

23 ‘‘(12) PRESCRIPTION DRUG.—The term ‘pre24 scription drug’ means a drug for human use subject 

25 to section 503(b)(1). 

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1 ‘‘(13) PRODUCT.—The term ‘product’ means a 

2 prescription drug in a finished dosage form for ad3 ministration to a patient without substantial further 

4 manufacturing (such as capsules, tablets, and 

5 lyophilized products before reconstitution), but for 

6 purposes of section 582, does not include blood or 

7 blood components intended for transfusion, radio8 active drugs or radioactive biological products (as 

9 defined in section 600.3(ee) of title 21, Code of Fed10 eral Regulations) that are regulated by the Nuclear 

11 Regulatory Commission or by a State pursuant to 

12 an agreement with such Commission under section 

13 274 of the Atomic Energy Act of 1954 (42 U.S.C. 

14 2021), imaging drugs, an intravenous product de15 scribed in clause (xiv), (xv), or (xvi) of paragraph 

16 (24)(B), any medical gas (as defined in section 575), 

17 homeopathic drugs marketed in accordance with ap18 plicable guidance under this Act, or a drug com19 pounded in compliance with section 503A or 503B. 

20 ‘‘(14) PRODUCT IDENTIFIER.—The term ‘prod21 uct identifier’ means a standardized graphic that in22 cludes, in both human-readable form and on a ma23 chine-readable data carrier that conforms to the 

24 standards developed by a widely recognized inter25 national standards development organization, the 

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1 standardized numerical identifier, lot number, and 

2 expiration date of the product. 

3 ‘‘(15) QUARANTINE.—The term ‘quarantine’ 

4 means the storage or identification of a product, to 

5 prevent distribution or transfer of the product, in a 

6 physically separate area clearly identified for such 

7 use or through other procedures. 

8 ‘‘(16) REPACKAGER.—The term ‘repackager’ 

9 means a person who owns or operates an establish10 ment that repacks and relabels a product or package 

11 for— 

12 ‘‘(A) further sale; or 

13 ‘‘(B) distribution without a further trans14 action. 

15 ‘‘(17) RETURN.—The term ‘return’ means pro16 viding product to the authorized immediate trading 

17 partner from which such product was purchased or 

18 received, or to a returns processor or reverse logis19 tics provider for handling of such product. 

20 ‘‘(18) RETURNS PROCESSOR OR REVERSE LO21 GISTICS PROVIDER.—The term ‘returns processor’ or 

22 ‘reverse logistics provider’ means a person who owns 

23 or operates an establishment that dispositions or 

24 otherwise processes saleable or nonsaleable product 

25 received from an authorized trading partner such 

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1 that the product may be processed for credit to the 

2 purchaser, manufacturer, or seller or disposed of for 

3 no further distribution. 

4 ‘‘(19) SPECIFIC PATIENT NEED.—The term 

5 ‘specific patient need’ refers to the transfer of a 

6 product from one pharmacy to another to fill a pre7 scription for an identified patient. Such term does 

8 not include the transfer of a product from one phar9 macy to another for the purpose of increasing or re10 plenishing stock in anticipation of a potential need. 

11 ‘‘(20) STANDARDIZED NUMERICAL IDENTI12 FIER.—The term ‘standardized numerical identifier’ 

13 means a set of numbers or characters used to 

14 uniquely identify each package or homogenous case 

15 that is composed of the National Drug Code that 

16 corresponds to the specific product (including the 

17 particular package configuration) combined with a 

18 unique alphanumeric serial number of up to 20 

19 characters. 

20 ‘‘(21) SUSPECT PRODUCT.—The term ‘suspect 

21 product’ means a product for which there is reason 

22 to believe that such product— 

23 ‘‘(A) is potentially counterfeit, diverted, or 

24 stolen; 

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1 ‘‘(B) is potentially intentionally adulterated 

2 such that the product would result in serious 

3 adverse health consequences or death to hu4 mans; 

5 ‘‘(C) is potentially the subject of a fraudu6 lent transaction; or 

7 ‘‘(D) appears otherwise unfit for distribu8 tion such that the product would result in seri9 ous adverse health consequences or death to hu10 mans. 

11 ‘‘(22) THIRD-PARTY LOGISTICS PROVIDER.— 

12 The term ‘third-party logistics provider’ means an 

13 entity that provides or coordinates warehousing, or 

14 other logistics services of a product in interstate 

15 commerce on behalf of a manufacturer, wholesale 

16 distributor, or dispenser of a product, but does not 

17 take ownership of the product, nor have responsi18 bility to direct the sale or disposition of the product. 

19 ‘‘(23) TRADING PARTNER.—The term ‘trading 

20 partner’ means— 

21 ‘‘(A) a manufacturer, repackager, whole22 sale distributor, or dispenser from whom a 

23 manufacturer, repackager, wholesale dis24 tributor, or dispenser accepts direct ownership 

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1 packager, wholesale distributor, or dispenser 

2 transfers direct ownership of a product; or 

3 ‘‘(B) a third-party logistics provider from 

4 whom a manufacturer, repackager, wholesale 

5 distributor, or dispenser accepts direct posses6 sion of a product or to whom a manufacturer, 

7 repackager, wholesale distributor, or dispenser 

8 transfers direct possession of a product. 

9 ‘‘(24) TRANSACTION.— 

10 ‘‘(A) IN GENERAL.—The term ‘transaction’ 

11 means the transfer of product between persons 

12 in which a change of ownership occurs. 

13 ‘‘(B) EXEMPTIONS.—The term ‘trans14 action’ does not include— 

15 ‘‘(i) intracompany distribution of any 

16 product between members of an affiliate or 

17 within a manufacturer; 

18 ‘‘(ii) the distribution of a product 

19 among hospitals or other health care enti20 ties that are under common control; 

21 ‘‘(iii) the distribution of a product for 

22 emergency medical reasons including a 

23 public health emergency declaration pursu24 ant to section 319 of the Public Health 

25 Service Act, except that a drug shortage 

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1 not caused by a public health emergency 

2 shall not constitute an emergency medical 

3 reason; 

4 ‘‘(iv) the dispensing of a product pur5 suant to a prescription executed in accord6 ance with section 503(b)(1); 

7 ‘‘(v) the distribution of product sam8 ples by a manufacturer or a licensed 

9 wholesale distributor in accordance with 

10 section 503(d); 

11 ‘‘(vi) the distribution of blood or blood 

12 components intended for transfusion; 

13 ‘‘(vii) the distribution of minimal 

14 quantities of product by a licensed retail 

15 pharmacy to a licensed practitioner for of16 fice use; 

17 ‘‘(viii) the sale, purchase, or trade of 

18 a drug or an offer to sell, purchase, or 

19 trade a drug by a charitable organization 

20 described in section 501(c)(3) of the Inter21 nal Revenue Code of 1986 to a nonprofit 

22 affiliate of the organization to the extent 

23 otherwise permitted by law; 

24 ‘‘(ix) the distribution of a product 

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1 macy or pharmacies or a wholesale dis2 tributor or wholesale distributors, except 

3 that any records required to be maintained 

4 for the product shall be transferred to the 

5 new owner of the pharmacy or pharmacies 

6 or wholesale distributor or wholesale dis7 tributors; 

8 ‘‘(x) the dispensing of a product ap9 proved under section 512(c); 

10 ‘‘(xi) products transferred to or from 

11 any facility that is licensed by the Nuclear 

12 Regulatory Commission or by a State pur13 suant to an agreement with such Commis14 sion under section 274 of the Atomic En15 ergy Act of 1954 (42 U.S.C. 2021); 

16 ‘‘(xii) a combination product that is 

17 not subject to approval under section 505 

18 or licensure under section 351 of the Pub19 lic Health Service Act, and that is— 

20 ‘‘(I) a product comprised of a de21 vice and 1 or more other regulated 

22 components (such as a drug/device, 

23 biologic/device, or drug/device/biologic) 

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1 erwise combined or mixed and pro2 duced as a single entity; 

3 ‘‘(II) 2 or more separate prod4 ucts packaged together in a single 

5 package or as a unit and comprised of 

6 a drug and device or device and bio7 logical product; or 

8 ‘‘(III) 2 or more finished medical 

9 devices plus one or more drug or bio10 logical products that are packaged to11 gether in what is referred to as a 

12 ‘medical convenience kit’ as described 

13 in clause (xiii); 

14 ‘‘(xiii) the distribution of a collection 

15 of finished medical devices, which may in16 clude a product or biological product, as17 sembled in kit form strictly for the conven18 ience of the purchaser or user (referred to 

19 in this clause as a ‘medical convenience 

20 kit’) if— 

21 ‘‘(I) the medical convenience kit 

22 is assembled in an establishment that 

23 is registered with the Food and Drug 

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1 turer in accordance with section 

2 510(b)(2); 

3 ‘‘(II) the medical convenience kit 

4 does not contain a controlled sub5 stance that appears in a schedule con6 tained in the Comprehensive Drug 

7 Abuse Prevention and Control Act of 

8 1970; 

9 ‘‘(III) in the case of a medical 

10 convenience kit that includes a prod11 uct, the person that manufacturers 

12 the kit— 

13 ‘‘(aa) purchased such prod14 uct directly from the pharma15 ceutical manufacturer or from a 

16 wholesale distributor that pur17 chased the product directly from 

18 the pharmaceutical manufac19 turer; and 

20 ‘‘(bb) does not alter the pri21 mary container or label of the 

22 product as purchased from the 

23 manufacturer or wholesale dis24 tributor; and 

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1 ‘‘(IV) in the case of a medical 

2 convenience kit that includes a prod3 uct, the product is— 

4 ‘‘(aa) an intravenous solu5 tion intended for the replenish6 ment of fluids and electrolytes; 

7 ‘‘(bb) a product intended to 

8 maintain the equilibrium of water 

9 and minerals in the body; 

10 ‘‘(cc) a product intended for 

11 irrigation or reconstitution; 

12 ‘‘(dd) an anesthetic; 

13 ‘‘(ee) an anticoagulant; 

14 ‘‘(ff) a vasopressor; or 

15 ‘‘(gg) a sympathomimetic; 

16 ‘‘(xiv) the distribution of an intra17 venous product that, by its formulation, is 

18 intended for the replenishment of fluids 

19 and electrolytes (such as sodium, chloride, 

20 and potassium) or calories (such as dex21 trose and amino acids); 

22 ‘‘(xv) the distribution of an intra23 venous product used to maintain the equi24 librium of water and minerals in the body, 

25 such as dialysis solutions; 

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1 ‘‘(xvi) the distribution of a product 

2 that is intended for irrigation, or sterile 

3 water, whether intended for such purposes 

4 or for injection; 

5 ‘‘(xvii) the distribution of a medical 

6 gas (as defined in section 575); or 

7 ‘‘(xviii) the distribution or sale of any 

8 licensed product under section 351 of the 

9 Public Health Service Act that meets the 

10 definition of a device under section 201(h). 

11 ‘‘(25) TRANSACTION HISTORY.—The term 

12 ‘transaction history’ means a statement in paper or 

13 electronic form, including the transaction informa14 tion for each prior transaction going back to the 

15 manufacturer of the product. 

16 ‘‘(26) TRANSACTION INFORMATION.—The term 

17 ‘transaction information’ means— 

18 ‘‘(A) the proprietary or established name 

19 or names of the product; 

20 ‘‘(B) the strength and dosage form of the 

21 product; 

22 ‘‘(C) the National Drug Code number of 

23 the product; 

24 ‘‘(D) the container size; 

25 ‘‘(E) the number of containers; 

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1 ‘‘(F) the lot number of the product; 

2 ‘‘(G) the date of the transaction; 

3 ‘‘(H) the date of the shipment, if more 

4 than 24 hours after the date of the transaction; 

5 ‘‘(I) the business name and address of the 

6 person from whom ownership is being trans7 ferred; and 

8 ‘‘(J) the business name and address of the 

9 person to whom ownership is being transferred. 

10 ‘‘(27) TRANSACTION STATEMENT.—The ‘trans11 action statement’ is a statement, in paper or elec12 tronic form, that the entity transferring ownership 

13 in a transaction— 

14 ‘‘(A) is authorized as required under the 

15 Drug Supply Chain Security Act; 

16 ‘‘(B) received the product from a person 

17 that is authorized as required under the Drug 

18 Supply Chain Security Act; 

19 ‘‘(C) received transaction information and 

20 a transaction statement from the prior owner of 

21 the product, as required under section 582; 

22 ‘‘(D) did not knowingly ship a suspect or 

23 illegitimate product; 

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1 ‘‘(E) had systems and processes in place to 

2 comply with verification requirements under 

3 section 582; 

4 ‘‘(F) did not knowingly provide false trans5 action information; and 

6 ‘‘(G) did not knowingly alter the trans7 action history. 

8 ‘‘(28) VERIFICATION OR VERIFY.—The term 

9 ‘verification’ or ‘verify’ means determining whether 

10 the product identifier affixed to, or imprinted upon, 

11 a package or homogeneous case corresponds to the 

12 standardized numerical identifier or lot number and 

13 expiration date assigned to the product by the man14 ufacturer or the repackager, as applicable in accord15 ance with section 582. 

16 ‘‘(29) WHOLESALE DISTRIBUTOR.—The term 

17 ‘wholesale distributor’ means a person (other than a 

18 manufacturer, a manufacturer’s co-licensed partner, 

19 a third-party logistics provider, or repackager) en20 gaged in wholesale distribution (as defined in section 

21 503(e)(4), as amended by the Drug Supply Chain 

22 Security Act). 

23 ‘‘SEC. 582. REQUIREMENTS. 

24 ‘‘(a) IN GENERAL.— 

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1 ‘‘(1) OTHER ACTIVITIES.—Each manufacturer, 

2 repackager, wholesale distributor, and dispenser 

3 shall comply with the requirements set forth in this 

4 section with respect to the role of such manufac5 turer, repackager, wholesale distributor, or dispenser 

6 in a transaction involving product. If an entity meets 

7 the definition of more than one of the entities listed 

8 in the preceding sentence, such entity shall comply 

9 with all applicable requirements in this section, but 

10 shall not be required to duplicate requirements. 

11 ‘‘(2) INITIAL STANDARDS.— 

12 ‘‘(A) IN GENERAL.—The Secretary shall, 

13 in consultation with other appropriate Federal 

14 officials, manufacturers, repackagers, wholesale 

15 distributors, dispensers, and other pharma16 ceutical distribution supply chain stakeholders, 

17 issue a draft guidance document that estab18 lishes standards for the interoperable exchange 

19 of transaction information, transaction history, 

20 and transaction statements, in paper or elec21 tronic format, for compliance with this sub22 section and subsections (b), (c), (d), and (e). In 

23 establishing such standards, the Secretary shall 

24 consider the feasibility of establishing standard25 ized documentation to be used by members of 

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1 the pharmaceutical distribution supply chain to 

2 convey the transaction information, transaction 

3 history, and transaction statement to the subse4 quent purchaser of a product and to facilitate 

5 the exchange of lot level data. The standards 

6 established under this paragraph shall take into 

7 consideration the standards established under 

8 section 505D and shall comply with a form and 

9 format developed by a widely recognized inter10 national standards development organization. 

11 ‘‘(B) PUBLIC INPUT.—Prior to issuing the 

12 draft guidance under subparagraph (A), the 

13 Secretary shall gather comments and informa14 tion from stakeholders and maintain such com15 ments and information in a public docket for at 

16 least 60 days prior to issuing such guidance. 

17 ‘‘(C) PUBLICATION.—The Secretary shall 

18 publish the standards established under sub19 paragraph (A) not later than 1 year after the 

20 date of enactment of the Drug Supply Chain 

21 Security Act. 

22 ‘‘(3) WAIVERS, EXCEPTIONS, AND EXEMP23 TIONS.— 

24 ‘‘(A) IN GENERAL.—Not later than 2 years 

25 after the date of enactment of the Drug Supply 

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1 Chain Security Act, the Secretary shall, by 

2 guidance— 

3 ‘‘(i) establish a process by which an 

4 authorized manufacturer, repackager, 

5 wholesale distributor, or dispenser may re6 quest a waiver from any of the require7 ments set forth in this section, which the 

8 Secretary may grant if the Secretary deter9 mines that such requirements would result 

10 in an undue economic hardship or for 

11 emergency medical reasons, including a 

12 public health emergency declaration pursu13 ant to section 319 of the Public Health 

14 Service Act; 

15 ‘‘(ii) establish a process by which the 

16 Secretary determines exceptions, and a 

17 process through which a manufacturer or 

18 repackager may request such an exception, 

19 to the requirements relating to product 

20 identifiers if a product is packaged in a 

21 container too small or otherwise unable to 

22 accommodate a label with sufficient space 

23 to bear the information required for com24 pliance with this section; and 

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1 ‘‘(iii) establish a process by which the 

2 Secretary may determine other products or 

3 transactions that shall be exempt from the 

4 requirements of this section. 

5 ‘‘(B) CONTENT.—The guidance issued 

6 under subparagraph (A) shall include a process 

7 for the biennial review and renewal of such 

8 waivers, exceptions, and exemptions, as applica9 ble. 

10 ‘‘(C) PROCESS.—In issuing the guidance 

11 under this paragraph, the Secretary shall pro12 vide an effective date that is not later than 180 

13 days prior to the date on which manufacturers 

14 are required to affix or imprint a product iden15 tifier to each package and homogenous case of 

16 product intended to be introduced in a trans17 action into commerce consistent with this sec18 tion. 

19 ‘‘(4) SELF-EXECUTING REQUIREMENTS.—Ex20 cept where otherwise specified, the requirements of 

21 this section may be enforced without further regula22 tions or guidance from the Secretary. 

23 ‘‘(5) GRANDFATHERING PRODUCT.— 

24 ‘‘(A) PRODUCT IDENTIFIER.—Not later 

25 than 2 years after the date of enactment of the 

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1 Drug Supply Chain Security Act, the Secretary 

2 shall finalize guidance specifying whether and 

3 under what circumstances product that is not 

4 labeled with a product identifier and that is in 

5 the pharmaceutical distribution supply chain at 

6 the time of the effective date of the require7 ments of this section shall be exempted from 

8 the requirements of this section. 

9 ‘‘(B) TRACING.—For a product that en10 tered the pharmaceutical distribution supply 

11 chain prior to January 1, 2015— 

12 ‘‘(i) authorized trading partners shall 

13 be exempt from providing transaction in14 formation as required under subsections 

15 (b)(1)(A)(i), (c)(1)(A)(ii), (d)(1)(A)(ii), 

16 and (e)(1)(A)(ii); 

17 ‘‘(ii) transaction history required 

18 under this section shall begin with the 

19 owner of such product on such date; and 

20 ‘‘(iii) the owners of such product on 

21 such date shall be exempt from asserting 

22 receipt of transaction information and 

23 transaction statement from the prior owner 

24 as required under this section. 

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1 ‘‘(6) WHOLESALE DISTRIBUTOR LICENSES.— 

2 Notwithstanding section 581(9)(A), until the effec3 tive date of the wholesale distributor licensing regu4 lations under section 583, the term ‘licensed’ or ‘au5 thorized’, as it relates to a wholesale distributor with 

6 respect to prescription drugs, shall mean a wholesale 

7 distributor with a valid license under State law. 

8 ‘‘(7) THIRD-PARTY LOGISTICS PROVIDER LI9 CENSES.—Until the effective date of the third-party 

10 logistics provider licensing regulations under section 

11 584, a third-party logistics provider shall be consid12 ered ‘licensed’ under section 581(9)(B) unless the 

13 Secretary has made a finding that the third-party lo14 gistics provider does not utilize good handling and 

15 distribution practices and publishes notice thereof. 

16 ‘‘(8) LABEL CHANGES.—Changes made to pack17 age labels solely to incorporate the product identifier 

18 may be submitted to the Secretary in the annual re19 port of an establishment, in accordance with section 

20 314.70(d) of chapter 21, Code of Federal Regula21 tions (or any successor regulation). 

22 ‘‘(9) PRODUCT IDENTIFIERS.—With respect to 

23 any requirement relating to product identifiers under 

24 this subchapter— 

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1 ‘‘(A) unless the Secretary allows, through 

2 guidance, the use of other technologies for data 

3 instead of or in addition to the technologies de4 scribed in clauses (i) and (ii), the applicable 

5 data— 

6 ‘‘(i) shall be included in a 2-dimen7 sional data matrix barcode when affixed to, 

8 or imprinted upon, a package; and 

9 ‘‘(ii) shall be included in a linear or 2- 

10 dimensional data matrix barcode when af11 fixed to, or imprinted upon, a homo12 geneous case; and 

13 ‘‘(B) verification of the product identifier 

14 may occur by using human-readable or ma15 chine-readable methods. 

16 ‘‘(b) MANUFACTURER REQUIREMENTS.— 

17 ‘‘(1) PRODUCT TRACING.— 

18 ‘‘(A) IN GENERAL.—Beginning not later 

19 than January 1, 2015, a manufacturer shall— 

20 ‘‘(i) prior to, or at the time of, each 

21 transaction in which such manufacturer 

22 transfers ownership of a product, provide 

23 the subsequent owner with transaction his24 tory, transaction information, and a transmstockstill on DSK4VPTVN1PROD with BILLS

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1 action statement, in a single document in 

2 an paper or electronic format; and 

3 ‘‘(ii) capture the transaction informa4 tion (including lot level information), 

5 transaction history, and transaction state6 ment for each transaction and maintain 

7 such information, history, and statement 

8 for not less than 6 years after the date of 

9 the transaction. 

10 ‘‘(B) REQUESTS FOR INFORMATION.— 

11 Upon a request by the Secretary or other ap12 propriate Federal or State official, in the event 

13 of a recall or for the purpose of investigating a 

14 suspect product or an illegitimate product, a 

15 manufacturer shall, not later than 1 business 

16 day, and not to exceed 48 hours, after receiving 

17 the request, or in other such reasonable time as 

18 determined by the Secretary, based on the cir19 cumstances of the request, provide the applica20 ble transaction information, transaction history, 

21 and transaction statement for the product. 

22 ‘‘(C) ELECTRONIC FORMAT.— 

23 ‘‘(i) IN GENERAL.—Beginning not 

24 later than 4 years after the date of enact25 ment of the Drug Supply Chain Security 

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1 Act, except as provided under clause (ii), a 

2 manufacturer shall provide the transaction 

3 information, transaction history, and 

4 transaction statement required under sub5 paragraph (A)(i) in electronic format. 

6 ‘‘(ii) EXCEPTION.—A manufacturer 

7 may continue to provide the transaction in8 formation, transaction history, and trans9 action statement required under subpara10 graph (A)(i) in a paper format to a li11 censed health care practitioner authorized 

12 to prescribe medication under State law or 

13 other licensed individual under the super14 vision or direction of such a practitioner 

15 who dispenses product in the usual course 

16 of professional practice. 

17 ‘‘(2) PRODUCT IDENTIFIER.— 

18 ‘‘(A) IN GENERAL.—Beginning not later 

19 than 4 years after the date of enactment of the 

20 Drug Supply Chain Security Act, a manufac21 turer shall affix or imprint a product identifier 

22 to each package and homogenous case of a 

23 product intended to be introduced in a trans24 action into commerce. Such manufacturer shall 

25 maintain the product identifier information for 

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1 such product for not less than 6 years after the 

2 date of the transaction. 

3 ‘‘(B) EXCEPTION.—A package that is re4 quired to have a standardized numerical identi5 fier is not required to have a unique device 

6 identifier. 

7 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Be8 ginning not later than January 1, 2015, the trading 

9 partners of a manufacturer may be only authorized 

10 trading partners. 

11 ‘‘(4) VERIFICATION.—Beginning not later than 

12 January 1, 2015, a manufacturer shall have systems 

13 in place to enable the manufacturer to comply with 

14 the following requirements: 

15 ‘‘(A) SUSPECT PRODUCT.— 

16 ‘‘(i) IN GENERAL.—Upon making a 

17 determination that a product in the posses18 sion or control of the manufacturer is a 

19 suspect product, or upon receiving a re20 quest for verification from the Secretary 

21 that has made a determination that a 

22 product within the possession or control of 

23 a manufacturer is a suspect product, a 

24 manufacturer shall— 

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1 ‘‘(I) quarantine such product 

2 within the possession or control of the 

3 manufacturer from product intended 

4 for distribution until such product is 

5 cleared or dispositioned; and 

6 ‘‘(II) promptly conduct an inves7 tigation in coordination with trading 

8 partners, as applicable, to determine 

9 whether the product is an illegitimate 

10 product, which shall include validating 

11 any applicable transaction history and 

12 transaction information in the posses13 sion of the manufacturer and other14 wise investigating to determine wheth15 er the product is an illegitimate prod16 uct, and, beginning 4 years after the 

17 date of enactment of the Drug Supply 

18 Chain Security Act, verifying the 

19 product at the package level, including 

20 the standardized numerical identifier. 

21 ‘‘(ii) CLEARED PRODUCT.—If the 

22 manufacturer makes the determination 

23 that a suspect product is not an illegit24 imate product, the manufacturer shall 

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1 ble, of such determination and such prod2 uct may be further distributed. 

3 ‘‘(iii) RECORDS.—A manufacturer 

4 shall keep records of the investigation of a 

5 suspect product for not less than 6 years 

6 after the conclusion of the investigation. 

7 ‘‘(B) ILLEGITIMATE PRODUCT.— 

8 ‘‘(i) IN GENERAL.—Upon determining 

9 that a product in the possession or control 

10 of a manufacturer is an illegitimate prod11 uct, the manufacturer shall, in a manner 

12 consistent with the systems and processes 

13 of such manufacturer— 

14 ‘‘(I) quarantine such product 

15 within the possession or control of the 

16 manufacturer from product intended 

17 for distribution until such product is 

18 dispositioned; 

19 ‘‘(II) disposition the illegitimate 

20 product within the possession or con21 trol of the manufacturer; 

22 ‘‘(III) take reasonable and appro23 priate steps to assist a trading part24 ner to disposition an illegitimate prodmstockstill on DSK4VPTVN1PROD with BILLS

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1 uct not in the possession or control of 

2 the manufacturer; and 

3 ‘‘(IV) retain a sample of the 

4 product for further physical examina5 tion or laboratory analysis of the 

6 product by the manufacturer or Sec7 retary (or other appropriate Federal 

8 or State official) upon request by the 

9 Secretary (or other appropriate Fed10 eral or State official), as necessary 

11 and appropriate. 

12 ‘‘(ii) MAKING A NOTIFICATION.— 

13 ‘‘(I) ILLEGITIMATE PRODUCT.— 

14 Upon determining that a product in 

15 the possession or control of the manu16 facturer is an illegitimate product, the 

17 manufacturer shall notify the Sec18 retary and all immediate trading part19 ners that the manufacturer has reason 

20 to believe may have received such ille21 gitimate product of such determina22 tion not later than 24 hours after 

23 making such determination. 

24 ‘‘(II) HIGH RISK OF ILLEGIT25 IMACY.—A manufacturer shall notify 

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1 the Secretary and immediate trading 

2 partners that the manufacturer has 

3 reason to believe may have in the 

4 trading partner’s possession a product 

5 manufactured by, or purported to be a 

6 product manufactured by, the manu7 facturer not later than 24 hours after 

8 determining or being notified by the 

9 Secretary or a trading partner that 

10 there is a high risk that such product 

11 is an illegitimate product. For pur12 poses of this subclause, a ‘high risk’ 

13 may include a specific high risk that 

14 could increase the likelihood that ille15 gitimate product will enter the phar16 maceutical distribution supply chain 

17 and other high risks as determined by 

18 the Secretary in guidance pursuant to 

19 subsection (h). 

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 manu25 facturer shall identify all illegitimate prodmstockstill on DSK4VPTVN1PROD with BILLS

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1 uct subject to such notification that is in 

2 the possession or control of the manufac3 turer, including any product that is subse4 quently received, and shall perform the ac5 tivities described in subparagraph (A). 

6 ‘‘(iv) TERMINATING A NOTIFICA7 TION.—Upon making a determination, in 

8 consultation with the Secretary, that a no9 tification is no longer necessary, a manu10 facturer shall promptly notify immediate 

11 trading partners that the manufacturer no12 tified pursuant to clause (ii) that such no13 tification has been terminated. 

14 ‘‘(v) RECORDS.—A manufacturer shall 

15 keep records of the disposition of an illegit16 imate product for not less than 6 years 

17 after the conclusion of the disposition. 

18 ‘‘(C) REQUESTS FOR VERIFICATION.—Be19 ginning 4 years after the date of enactment of 

20 the Drug Supply Chain Security Act, upon re21 ceiving a request for verification from an au22 thorized repackager, wholesale distributor, or 

23 dispenser that is in possession or control of a 

24 product such person believes to be manufac25 tured by such manufacturer, a manufacturer 

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1 shall, not later than 24 hours after receiving 

2 the request for verification or in other such rea3 sonable time as determined by the Secretary, 

4 based on the circumstances of the request, no5 tify the person making the request whether the 

6 product identifier, including the standardized 

7 numerical identifier, that is the subject of the 

8 request corresponds to the product identifier af9 fixed or imprinted by the manufacturer. If a 

10 manufacturer responding to a request for 

11 verification identifies a product identifier that 

12 does not correspond to that affixed or imprinted 

13 by the manufacturer, the manufacturer shall 

14 treat such product as suspect product and con15 duct an investigation as described in subpara16 graph (A). If the manufacturer has reason to 

17 believe the product is an illegitimate product, 

18 the manufacturer shall advise the person mak19 ing the request of such belief at the time such 

20 manufacturer responds to the request for 

21 verification. 

22 ‘‘(D) ELECTRONIC DATABASE.—A manu23 facturer may satisfy the requirements of this 

24 paragraph by developing a secure electronic 

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1 base developed or operated by another entity. 

2 The owner of such database shall establish the 

3 requirements and processes to respond to re4 quests and may provide for data access to other 

5 members of the pharmaceutical distribution 

6 supply chain, as appropriate. The development 

7 and operation of such a database shall not re8 lieve a manufacturer of the requirement under 

9 this paragraph to respond to a request for 

10 verification submitted by means other than a 

11 secure electronic database. 

12 ‘‘(E) SALEABLE RETURNED PRODUCT.— 

13 Beginning 4 years after the date of enactment 

14 of the Drug Supply Chain Security Act (except 

15 as provided pursuant to subsection (a)(5)), 

16 upon receipt of a returned product that the 

17 manufacturer intends to further distribute, be18 fore further distributing such product, the man19 ufacturer shall verify the product identifier, in20 cluding the standardized numerical identifier, 

21 for each sealed homogeneous case of such prod22 uct or, if such product is not in a sealed homo23 geneous case, verify the product identifier, in24 cluding the standardized numerical identifier, 

25 on each package. 

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1 ‘‘(F) NONSALEABLE RETURNED PROD2 UCT.—A manufacturer may return a nonsale3 able product to the manufacturer or repack4 ager, to the wholesale distributor from whom 

5 such product was purchased, or to a person act6 ing on behalf of such a person, including a re7 turns processor, without providing the informa8 tion described in paragraph (1)(A)(i). 

9 ‘‘(c) WHOLESALE DISTRIBUTOR REQUIREMENTS.— 

10 ‘‘(1) PRODUCT TRACING.— 

11 ‘‘(A) IN GENERAL.—Beginning not later 

12 than January 1, 2015, the following require13 ments shall apply to wholesale distributors: 

14 ‘‘(i) A wholesale distributor shall not 

15 accept ownership of a product unless the 

16 previous owner prior to, or at the time of, 

17 the transaction provides the transaction 

18 history, transaction information, and a 

19 transaction statement for the product, as 

20 applicable under this subparagraph. 

21 ‘‘(ii)(I)(aa) If the wholesale dis22 tributor purchased a product directly from 

23 the manufacturer, the exclusive distributor 

24 of the manufacturer, or a repackager that 

25 purchased directly from the manufacturer, 

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1 then prior to, or at the time of, each trans2 action in which the wholesale distributor 

3 transfers ownership of a product, the 

4 wholesale distributor shall provide to the 

5 subsequent purchaser— 

6 ‘‘(AA) a transaction statement, 

7 which shall state that such wholesale 

8 distributor, or a member of the affil9 iate of such wholesale distributor, pur10 chased the product directly from the 

11 manufacturer, exclusive distributor of 

12 the manufacturer, or repackager that 

13 purchased the product directly from 

14 the manufacturer; and 

15 ‘‘(BB) subject to subclause (II), 

16 the transaction history and trans17 action information. 

18 ‘‘(bb) The wholesale distributor shall 

19 provide the transaction history, transaction 

20 information, and transaction statement 

21 under item (aa)— 

22 ‘‘(AA) if provided to a dis23 penser, on a single document in a 

24 paper or electronic format; and 

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1 ‘‘(BB) if provided to a 

2 wholesale distributor, through 

3 any combination of self-generated 

4 paper, electronic data, or manu5 facturer-provided information on 

6 the product package. 

7 ‘‘(II) For purposes of transactions de8 scribed in subclause (I), transaction his9 tory and transaction information shall not 

10 be required to include the lot number of 

11 the product, the initial transaction date, or 

12 the initial shipment date from the manu13 facturer (as defined in subparagraphs (F), 

14 (G), and (H) of section 581(26)). 

15 ‘‘(iii) If the wholesale distributor did 

16 not purchase a product directly from the 

17 manufacturer, the exclusive distributor of 

18 the manufacturer, or a repackager that 

19 purchased directly from the manufacturer, 

20 as described in clause (ii), then prior to, or 

21 at the time of, each transaction or subse22 quent transaction, the wholesale distributor 

23 shall provide to the subsequent purchaser a 

24 transaction statement, transaction history, 

25 and transaction information, in a paper or 

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1 electronic format that complies with the 

2 guidance document issued under sub3 section (a)(2). 

4 ‘‘(iv) For the purposes of clause (iii), 

5 the transaction history supplied shall begin 

6 only with the wholesale distributor de7 scribed in clause (ii)(I), but the wholesale 

8 distributor described in clause (iii) shall in9 form the subsequent purchaser that such 

10 wholesale distributor received a direct pur11 chase statement from a wholesale dis12 tributor described in clause (ii)(I). 

13 ‘‘(v) A wholesale distributor shall— 

14 ‘‘(I) capture the transaction in15 formation (including lot level informa16 tion) consistent with the requirements 

17 of this section, transaction history, 

18 and transaction statement for each 

19 transaction described in clauses (i), 

20 (ii), and (iii) and maintain such infor21 mation, history, and statement for not 

22 less than 6 years after the date of the 

23 transaction; and 

24 ‘‘(II) maintain the confidentiality 

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1 ing any lot level information con2 sistent with the requirements of this 

3 section), transaction history, and 

4 transaction statement for a product in 

5 a manner that prohibits disclosure to 

6 any person other than the Secretary 

7 or other appropriate Federal or State 

8 official, except to comply with clauses 

9 (ii) and (iii), and, as applicable, pur10 suant to an agreement under subpara11 graph (D). 

12 ‘‘(B) RETURNS.— 

13 ‘‘(i) SALEABLE RETURNS.—Notwith14 standing subparagraph (A)(i), the fol15 lowing shall apply: 

16 ‘‘(I) REQUIREMENTS.—Until the 

17 date that is 6 years after the date of 

18 enactment of the Drug Supply Chain 

19 Security Act (except as provided pur20 suant to subsection (a)(5)), a whole21 sale distributor may accept returned 

22 product from a dispenser or repack23 ager pursuant to the terms and condi24 tions of any agreement between the 

25 parties, and, notwithstanding submstockstill on DSK4VPTVN1PROD with BILLS

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1 paragraph (A)(ii), may distribute such 

2 returned product without providing 

3 the transaction history. For trans4 actions subsequent to the return, the 

5 transaction history of such product 

6 shall begin with the wholesale dis7 tributor that accepted the returned 

8 product, consistent with the require9 ments of this subsection. 

10 ‘‘(II) ENHANCED REQUIRE11 MENTS.—Beginning 6 years after the 

12 date of enactment of the Drug Supply 

13 Chain Security Act (except as pro14 vided pursuant to subsection (a)(5)), 

15 a wholesale distributor may accept re16 turned product from a dispenser or 

17 repackager only if the wholesale dis18 tributor can associate returned prod19 uct with the transaction information 

20 and transaction statement associated 

21 with that product. For all trans22 actions after such date, the trans23 action history, as applicable, of such 

24 product shall begin with the wholesale 

25 distributor that accepted and verified 

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1 the returned product. For purposes of 

2 this subparagraph, the transaction in3 formation and transaction history, as 

4 applicable, need not include trans5 action dates if it is not reasonably 

6 practicable to obtain such dates. 

7 ‘‘(ii) NONSALEABLE RETURNS.—A 

8 wholesale distributor may return a non9 saleable product to the manufacturer or re10 packager, to the wholesale distributor from 

11 whom such product was purchased, or to a 

12 person acting on behalf of such a person, 

13 including a returns processor, without pro14 viding the information required under sub15 paragraph (A)(i). 

16 ‘‘(C) REQUESTS FOR INFORMATION.— 

17 Upon a request by the Secretary or other ap18 propriate Federal or State official, in the event 

19 of a recall or for the purpose of investigating a 

20 suspect product or an illegitimate product, a 

21 wholesale distributor shall, not later than 1 

22 business day, and not to exceed 48 hours, after 

23 receiving the request or in other such reason24 able time as determined by the Secretary, based 

25 on the circumstances of the request, provide the 

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1 applicable transaction information, transaction 

2 history, and transaction statement for the prod3 uct. 

4 ‘‘(D) TRADING PARTNER AGREEMENTS.— 

5 Beginning 6 years after the date of enactment 

6 of the Drug Supply Chain Security Act, a 

7 wholesale distributor may disclose the trans8 action information, including lot level informa9 tion, transaction history, or transaction state10 ment of a product to the subsequent purchaser 

11 of the product, pursuant to a written agreement 

12 between such wholesale distributor and such 

13 subsequent purchaser. Nothing in this subpara14 graph shall be construed to limit the applica15 bility of subparagraphs (A) through (C). 

16 ‘‘(2) PRODUCT IDENTIFIER.—Beginning 6 

17 years after the date of enactment of the Drug Sup18 ply Chain Security Act, a wholesale distributor may 

19 engage in transactions involving a product only if 

20 such product is encoded with a product identifier 

21 (except as provided pursuant to subsection (a)(5)). 

22 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Be23 ginning not later than January 1, 2015, the trading 

24 partners of a wholesale distributor may be only au25 thorized trading partners. 

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1 ‘‘(4) VERIFICATION.—Beginning not later than 

2 January 1, 2015, a wholesale distributor shall have 

3 systems in place to enable the wholesale distributor 

4 to comply with the following requirements: 

5 ‘‘(A) SUSPECT PRODUCT.— 

6 ‘‘(i) IN GENERAL.—Upon making a 

7 determination that a product in the posses8 sion or control of a wholesale distributor is 

9 a suspect product, or upon receiving a re10 quest for verification from the Secretary 

11 that has made a determination that a 

12 product within the possession or control of 

13 a wholesale distributor is a suspect prod14 uct, a wholesale distributor shall— 

15 ‘‘(I) quarantine such product 

16 within the possession or control of the 

17 wholesale distributor from product in18 tended for distribution until such 

19 product is cleared or dispositioned; 

20 and 

21 ‘‘(II) promptly conduct an inves22 tigation in coordination with trading 

23 partners, as applicable, to determine 

24 whether the product is an illegitimate 

25 product, which shall include validating 

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1 any applicable transaction history and 

2 transaction information in the posses3 sion of the wholesale distributor and 

4 otherwise investigating to determine 

5 whether the product is an illegitimate 

6 product, and, beginning 6 years after 

7 the date of enactment of the Drug 

8 Supply Chain Security Act (except as 

9 provided pursuant to subsection 

10 (a)(5)), verifying the product at the 

11 package level, including the standard12 ized numerical identifier. 

13 ‘‘(ii) CLEARED PRODUCT.—If the 

14 wholesale distributor determines that a 

15 suspect product is not an illegitimate prod16 uct, the wholesale distributor shall prompt17 ly notify the Secretary, if applicable, of 

18 such determination and such product may 

19 be further distributed. 

20 ‘‘(iii) RECORDS.—A wholesale dis21 tributor shall keep records of the investiga22 tion of a suspect product for not less than 

23 6 years after the conclusion of the inves24 tigation. 

25 ‘‘(B) ILLEGITIMATE PRODUCT.— 

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1 ‘‘(i) IN GENERAL.—Upon deter2 mining, in coordination with the manufac3 turer, that a product in the possession or 

4 control of a wholesale distributor is an ille5 gitimate product, the wholesale distributor 

6 shall, in a manner that is consistent with 

7 the systems and processes of such whole8 sale distributor— 

9 ‘‘(I) quarantine such product 

10 within the possession or control of the 

11 wholesale distributor from product in12 tended for distribution until such 

13 product is dispositioned; 

14 ‘‘(II) disposition the illegitimate 

15 product within the possession or con16 trol of the wholesale distributor; 

17 ‘‘(III) take reasonable and appro18 priate steps to assist a trading part19 ner to disposition an illegitimate prod20 uct not in the possession or control of 

21 the wholesale distributor; and 

22 ‘‘(IV) retain a sample of the 

23 product for further physical examina24 tion or laboratory analysis of the 

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1 retary (or other appropriate Federal 

2 or State official) upon request by the 

3 manufacturer or Secretary (or other 

4 appropriate Federal or State official), 

5 as necessary and appropriate. 

6 ‘‘(ii) MAKING A NOTIFICATION.— 

7 Upon determining that a product in the 

8 possession or control of the wholesale dis9 tributor is an illegitimate product, the 

10 wholesale distributor shall notify the Sec11 retary and all immediate trading partners 

12 that the wholesale distributor has reason 

13 to believe may have received such illegit14 imate product of such determination not 

15 later than 24 hours after making such de16 termination. 

17 ‘‘(iii) RESPONDING TO A NOTIFICA18 TION.—Upon the receipt of a notification 

19 from the Secretary or a trading partner 

20 that a determination has been made that a 

21 product is an illegitimate product, a whole22 sale distributor shall identify all illegit23 imate product subject to such notification 

24 that is in the possession or control of the 

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1 uct that is subsequently received, and shall 

2 perform the activities described in subpara3 graph (A). 

4 ‘‘(iv) TERMINATING A NOTIFICA5 TION.—Upon making a determination, in 

6 consultation with the Secretary, that a no7 tification is no longer necessary, a whole8 sale distributor shall promptly notify im9 mediate trading partners that the whole10 sale distributor notified pursuant to clause 

11 (ii) that such notification has been termi12 nated. 

13 ‘‘(v) RECORDS.—A wholesale dis14 tributor shall keep records of the disposi15 tion of an illegitimate product for not less 

16 than 6 years after the conclusion of the 

17 disposition. 

18 ‘‘(C) ELECTRONIC DATABASE.—A whole19 sale distributor may satisfy the requirements of 

20 this paragraph by developing a secure electronic 

21 database or utilizing a secure electronic data22 base developed or operated by another entity. 

23 The owner of such database shall establish the 

24 requirements and processes to respond to re25 quests and may provide for data access to other 

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1 members of the pharmaceutical distribution 

2 supply chain, as appropriate. The development 

3 and operation of such a database shall not re4 lieve a wholesale distributor of the requirement 

5 under this paragraph to respond to a 

6 verification request submitted by means other 

7 than a secure electronic database. 

8 ‘‘(D) VERIFICATION OF SALEABLE RE9 TURNED PRODUCT.—Beginning 6 years after 

10 the date of enactment of the Drug Supply 

11 Chain Security Act, upon receipt of a returned 

12 product that the wholesale distributor intends 

13 to further distribute, before further distributing 

14 such product, the wholesale distributor shall 

15 verify the product identifier, including the 

16 standardized numerical identifier, for each 

17 sealed homogeneous case of such product or, if 

18 such product is not in a sealed homogeneous 

19 case, verify the product identifier, including the 

20 standardized numerical identifier, on each pack21 age. 

22 ‘‘(d) DISPENSER REQUIREMENTS.— 

23 ‘‘(1) PRODUCT TRACING.— 

24 ‘‘(A) IN GENERAL.—Beginning July 1, 

25 2015, a dispenser— 

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1 ‘‘(i) shall not accept ownership of a 

2 product, unless the previous owner prior 

3 to, or at the time of, the transaction, pro4 vides transaction history, transaction infor5 mation, and a transaction statement; 

6 ‘‘(ii) prior to, or at the time of, each 

7 transaction in which the dispenser trans8 fers ownership of a product (but not in9 cluding dispensing to a patient or returns) 

10 shall provide the subsequent owner with 

11 transaction history, transaction informa12 tion, and a transaction statement for the 

13 product, except that the requirements of 

14 this clause shall not apply to sales by a 

15 dispenser to another dispenser to fulfill a 

16 specific patient need; and 

17 ‘‘(iii) shall capture transaction infor18 mation (including lot level information, if 

19 provided), transaction history, and trans20 action statements, as necessary to inves21 tigate a suspect product, and maintain 

22 such information, history, and statements 

23 for not less than 6 years after the trans24 action. 

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1 ‘‘(B) AGREEMENTS WITH THIRD PAR2 TIES.—A dispenser may enter into a written 

3 agreement with a third party, including an au4 thorized wholesale distributor, under which the 

5 third party confidentially maintains the trans6 action information, transaction history, and 

7 transaction statements required to be main8 tained under this subsection on behalf of the 

9 dispenser. If a dispenser enters into such an 

10 agreement, the dispenser shall maintain a copy 

11 of the written agreement and shall not be re12 lieved of the obligations of the dispenser under 

13 this subsection. 

14 ‘‘(C) RETURNS.— 

15 ‘‘(i) SALEABLE RETURNS.—A dis16 penser may return product to the trading 

17 partner from which the dispenser obtained 

18 the product without providing the informa19 tion required under subparagraph (A). 

20 ‘‘(ii) NONSALEABLE RETURNS.—A 

21 dispenser may return a nonsaleable prod22 uct to the manufacturer or repackager, to 

23 the wholesale distributor from whom such 

24 product was purchased, to a returns proc25 essor, or to a person acting on behalf of 

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1 such a person without providing the infor2 mation required under subparagraph (A). 

3 ‘‘(D) REQUESTS FOR INFORMATION.— 

4 Upon a request by the Secretary or other ap5 propriate Federal or State official, in the event 

6 of a recall or for the purpose of investigating a 

7 suspect or an illegitimate product, a dispenser 

8 shall, not later than 2 business days after re9 ceiving the request or in another such reason10 able time as determined by the Secretary, based 

11 on the circumstances of the request, provide the 

12 applicable transaction information, transaction 

13 statement, and transaction history which the 

14 dispenser received from the previous owner, 

15 which shall not include the lot number of the 

16 product, the initial transaction date, or the ini17 tial shipment date from the manufacturer un18 less such information was included in the trans19 action information, transaction statement, and 

20 transaction history provided by the manufac21 turer or wholesale distributor to the dispenser. 

22 The dispenser may respond to the request by 

23 providing the applicable information in either 

24 paper or electronic format. Until the date that 

25 is 4 years after the date of enactment of the 

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1 Drug Supply Chain Security Act, the Secretary 

2 or other appropriate Federal or State official 

3 shall grant a dispenser additional time, as nec4 essary, only with respect to a request to provide 

5 lot level information described in subparagraph 

6 (F) of section 581(26) that was provided to the 

7 dispenser in paper format, limit the request 

8 time period to the 6 months preceding the re9 quest or other relevant date, and, in the event 

10 of a recall, the Secretary, or other appropriate 

11 Federal or State official may request informa12 tion only if such recall involves a serious ad13 verse health consequence or death to humans. 

14 ‘‘(2) PRODUCT IDENTIFIER.—Beginning not 

15 later than 7 years after the date of enactment of the 

16 Drug Supply Chain Security Act, a dispenser may 

17 engage in transactions involving a product only if 

18 such product is encoded with a product identifier 

19 (except as provided pursuant to subsection (a)(5)). 

20 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Be21 ginning not later than January 1, 2015, the trading 

22 partners of a dispenser may be only authorized trad23 ing partners. 

24 ‘‘(4) VERIFICATION.—Beginning not later than 

25 January 1, 2015, a dispenser shall have systems in 

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1 place to enable the dispenser to comply with the fol2 lowing requirements: 

3 ‘‘(A) SUSPECT PRODUCT.— 

4 ‘‘(i) IN GENERAL.—Upon making a 

5 determination that a product in the posses6 sion or control of the dispenser is a suspect 

7 product, or upon receiving a request for 

8 verification from the Secretary that has 

9 made a determination that a product with10 in the possession or control of a dispenser 

11 is a suspect product, a dispenser shall— 

12 ‘‘(I) quarantine such product 

13 within the possession or control of the 

14 dispenser from product intended for 

15 distribution until such product is 

16 cleared or dispositioned; and 

17 ‘‘(II) promptly conduct an inves18 tigation in coordination with trading 

19 partners, as applicable, to determine 

20 whether the product is an illegitimate 

21 product. 

22 ‘‘(ii) INVESTIGATION.—An investiga23 tion conducted under clause (i)(II) shall in24 clude— 

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1 ‘‘(I) beginning 7 years after the 

2 date of enactment of the Drug Supply 

3 Chain Security Act, verifying whether 

4 the lot number of a suspect product 

5 corresponds with the lot number for 

6 such product; 

7 ‘‘(II) beginning 7 years after the 

8 date of enactment of such Act, 

9 verifying that the product identifier, 

10 including the standardized numerical 

11 identifier, of at least 3 packages or 10 

12 percent of such suspect product, 

13 whichever is greater, or all packages, 

14 if there are fewer than 3, corresponds 

15 with the product identifier for such 

16 product; 

17 ‘‘(III) validating any applicable 

18 transaction history and transaction in19 formation in the possession of the dis20 penser; and 

21 ‘‘(IV) otherwise investigating to 

22 determine whether the product is an 

23 illegitimate product. 

24 ‘‘(iii) CLEARED PRODUCT.—If the dis25 penser makes the determination that a susmstockstill on DSK4VPTVN1PROD with BILLS

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1 pect product is not an illegitimate product, 

2 the dispenser shall promptly notify the 

3 Secretary, if applicable, of such determina4 tion and such product may be further dis5 tributed or dispensed. 

6 ‘‘(iv) RECORDS.—A dispenser shall 

7 keep records of the investigation of a sus8 pect product for not less than 6 years after 

9 the conclusion of the investigation. 

10 ‘‘(B) ILLEGITIMATE PRODUCT.— 

11 ‘‘(i) IN GENERAL.—Upon deter12 mining, in coordination with the manufac13 turer, that a product in the possession or 

14 control of a dispenser is an illegitimate 

15 product, the dispenser shall— 

16 ‘‘(I) disposition the illegitimate 

17 product within the possession or con18 trol of the dispenser; 

19 ‘‘(II) take reasonable and appro20 priate steps to assist a trading part21 ner to disposition an illegitimate prod22 uct not in the possession or control of 

23 the dispenser; and 

24 ‘‘(III) retain a sample of the 

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1 tion or laboratory analysis of the 

2 product by the manufacturer or Sec3 retary (or other appropriate Federal 

4 or State official) upon request by the 

5 manufacturer or Secretary (or other 

6 appropriate Federal or State official), 

7 as necessary and appropriate. 

8 ‘‘(ii) MAKING A NOTIFICATION.— 

9 Upon determining that a product in the 

10 possession or control of the dispenser is an 

11 illegitimate product, the dispenser shall no12 tify the Secretary and all immediate trad13 ing partners that the dispenser has reason 

14 to believe may have received such illegit15 imate product of such determination not 

16 later than 24 hours after making such de17 termination. 

18 ‘‘(iii) RESPONDING TO A NOTIFICA19 TION.—Upon the receipt of a notification 

20 from the Secretary or a trading partner 

21 that a determination has been made that a 

22 product is an illegitimate product, a dis23 penser shall identify all illegitimate product 

24 subject to such notification that is in the 

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1 cluding any product that is subsequently 

2 received, and shall perform the activities 

3 described in subparagraph (A). 

4 ‘‘(iv) TERMINATING A NOTIFICA5 TION.—Upon making a determination, in 

6 consultation with the Secretary, that a no7 tification is no longer necessary, a dis8 penser shall promptly notify immediate 

9 trading partners that the dispenser notified 

10 pursuant to clause (ii) that such notifica11 tion has been terminated. 

12 ‘‘(v) RECORDS.—A dispenser shall 

13 keep records of the disposition of an illegit14 imate product for not less than 6 years 

15 after the conclusion of the disposition. 

16 ‘‘(C) ELECTRONIC DATABASE.—A dis17 penser may satisfy the requirements of this 

18 paragraph by developing a secure electronic 

19 database or utilizing a secure electronic data20 base developed or operated by another entity. 

21 ‘‘(5) EXCEPTION.—Notwithstanding any other 

22 provision of law, the requirements under paragraphs 

23 (1) and (4) shall not apply to licensed health care 

24 practitioners authorized to prescribe or administer 

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1 uals under the supervision or direction of such prac2 titioners who dispense or administer product in the 

3 usual course of professional practice. 

4 ‘‘(e) REPACKAGER REQUIREMENTS.— 

5 ‘‘(1) PRODUCT TRACING.— 

6 ‘‘(A) IN GENERAL.—Beginning not later 

7 than January 1, 2015, a repackager described 

8 in section 581(16)(A) shall— 

9 ‘‘(i) not accept ownership of a product 

10 unless the previous owner, prior to, or at 

11 the time of, the transaction, provides 

12 transaction history, transaction informa13 tion, and a transaction statement for the 

14 product; 

15 ‘‘(ii) prior to, or at the time of, each 

16 transaction in which the repackager trans17 fers ownership of a product, provide the 

18 subsequent owner with transaction history, 

19 transaction information, and a transaction 

20 statement for the product; and 

21 ‘‘(iii) capture the transaction informa22 tion (including lot level information), 

23 transaction history, and transaction state24 ment for each transaction described in 

25 clauses (i) and (ii) and maintain such inmstockstill on DSK4VPTVN1PROD with BILLS

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1 formation, history, and statement for not 

2 less than 6 years after the transaction. 

3 ‘‘(B) RETURNS.— 

4 ‘‘(i) NONSALEABLE PRODUCT.—A re5 packager described in section 581(16)(A) 

6 may return a nonsaleable product to the 

7 manufacturer or repackager, or to the 

8 wholesale distributor from whom such 

9 product was purchased, or to a person act10 ing on behalf of such a person, including 

11 a returns processor, without providing the 

12 information required under subparagraph 

13 (A)(ii). 

14 ‘‘(ii) SALEABLE OR NONSALEABLE

15 PRODUCT.—A repackager described in sec16 tion 581(16)(B) may return a saleable or 

17 nonsaleable product to the manufacturer, 

18 repackager, or to the wholesale distributor 

19 from whom such product was received 

20 without providing the information required 

21 under subparagraph (A)(ii) on behalf of 

22 the hospital or other health care entity 

23 that took ownership of such product pursu24 ant to the terms and conditions of any 

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1 agreement between such repackager and 

2 the entity that owns the product. 

3 ‘‘(C) REQUESTS FOR INFORMATION.— 

4 Upon a request by the Secretary or other ap5 propriate Federal or State official, in the event 

6 of a recall or for the purpose of investigating a 

7 suspect product or an illegitimate product, a re8 packager described in section 581(16)(A) shall, 

9 not later than 1 business day, and not to exceed 

10 48 hours, after receiving the request or in other 

11 such reasonable time as determined by the Sec12 retary, provide the applicable transaction infor13 mation, transaction history, and transaction 

14 statement for the product. 

15 ‘‘(2) PRODUCT IDENTIFIER.— 

16 ‘‘(A) IN GENERAL.—Beginning not later 

17 than 5 years after the date of enactment of the 

18 Drug Supply Chain Security Act, a repackager 

19 described in section 581(16)(A)— 

20 ‘‘(i) shall affix or imprint a product 

21 identifier to each package and homogenous 

22 case of product intended to be introduced 

23 in a transaction in commerce; 

24 ‘‘(ii) shall maintain the product iden25 tifier information for such product for not 

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1 less than 6 years after the date of the 

2 transaction; 

3 ‘‘(iii) may engage in transactions in4 volving a product only if such product is 

5 encoded with a product identifier (except 

6 as provided pursuant to subsection (a)(5)); 

7 and 

8 ‘‘(iv) shall maintain records for not 

9 less than 6 years to allow the repackager 

10 to associate the product identifier the re11 packager affixes or imprints with the prod12 uct identifier assigned by the original man13 ufacturer of the product. 

14 ‘‘(B) EXCEPTION.—A package that is re15 quired to have a standardized numerical identi16 fier is not required to have a unique device 

17 identifier. 

18 ‘‘(3) AUTHORIZED TRADING PARTNERS.—Be19 ginning January 1, 2015, the trading partners of a 

20 repackager described in section 581(16) may be only 

21 authorized trading partners. 

22 ‘‘(4) VERIFICATION.—Beginning not later than 

23 January 1, 2015, a repackager described in section 

24 581(16)(A) shall have systems in place to enable the 

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1 repackager to comply with the following require2 ments: 

3 ‘‘(A) SUSPECT PRODUCT.— 

4 ‘‘(i) IN GENERAL.—Upon making a 

5 determination that a product in the posses6 sion or control of the repackager is a sus7 pect product, or upon receiving a request 

8 for verification from the Secretary that has 

9 made a determination that a product with10 in the possession or control of a repack11 ager is a suspect product, a repackager 

12 shall— 

13 ‘‘(I) quarantine such product 

14 within the possession or control of the 

15 repackager from product intended for 

16 distribution until such product is 

17 cleared or dispositioned; and 

18 ‘‘(II) promptly conduct an inves19 tigation in coordination with trading 

20 partners, as applicable, to determine 

21 whether the product is an illegitimate 

22 product, which shall include validating 

23 any applicable transaction history and 

24 transaction information in the posses25 sion of the repackager and otherwise 

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1 investigating to determine whether the 

2 product is an illegitimate product, 

3 and, beginning 5 years after the date 

4 of enactment of the Drug Supply 

5 Chain Security Act (except as pro6 vided pursuant to subsection (a)(5)), 

7 verifying the product at the package 

8 level, including the standardized nu9 merical identifier. 

10 ‘‘(ii) CLEARED PRODUCT.—If the re11 packager makes the determination that a 

12 suspect product is not an illegitimate prod13 uct, the repackager shall promptly notify 

14 the Secretary, if applicable, of such deter15 mination and such product may be further 

16 distributed. 

17 ‘‘(iii) RECORDS.—A repackager shall 

18 keep records of the investigation of a sus19 pect product for not less than 6 years after 

20 the conclusion of the investigation. 

21 ‘‘(B) ILLEGITIMATE PRODUCT.— 

22 ‘‘(i) IN GENERAL.—Upon deter23 mining, in coordination with the manufac24 turer, that a product in the possession or 

25 control of a repackager is an illegitimate 

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1 product, the repackager shall, in a manner 

2 that is consistent with the systems and 

3 processes of such repackager— 

4 ‘‘(I) quarantine such product 

5 within the possession or control of the 

6 repackager from product intended for 

7 distribution until such product is 

8 dispositioned; 

9 ‘‘(II) disposition the illegitimate 

10 product within the possession or con11 trol of the repackager; 

12 ‘‘(III) take reasonable and appro13 priate steps to assist a trading part14 ner to disposition an illegitimate prod15 uct not in the possession or control of 

16 the repackager; and 

17 ‘‘(IV) retain a sample of the 

18 product for further physical examina19 tion or laboratory analysis of the 

20 product by the manufacturer or Sec21 retary (or other appropriate Federal 

22 or State official) upon request by the 

23 manufacturer or Secretary (or other 

24 appropriate Federal or State official), 

25 as necessary and appropriate. 

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1 ‘‘(ii) MAKING A NOTIFICATION.— 

2 Upon determining that a product in the 

3 possession or control of the repackager is 

4 an illegitimate product, the repackager 

5 shall notify the Secretary and all imme6 diate trading partners that the repackager 

7 has reason to believe may have received the 

8 illegitimate product of such determination 

9 not later than 24 hours after making such 

10 determination. 

11 ‘‘(iii) RESPONDING TO A NOTIFICA12 TION.—Upon the receipt of a notification 

13 from the Secretary or a trading partner, a 

14 repackager shall identify all illegitimate 

15 product subject to such notification that is 

16 in the possession or control of the repack17 ager, including any product that is subse18 quently received, and shall perform the ac19 tivities described in subparagraph (A). 

20 ‘‘(iv) TERMINATING A NOTIFICA21 TION.—Upon making a determination, in 

22 consultation with the Secretary, that a no23 tification is no longer necessary, a repack24 ager shall promptly notify immediate trad25 ing partners that the repackager notified 

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1 pursuant to clause (ii) that such notifica2 tion has been terminated. 

3 ‘‘(v) RECORDS.—A repackager shall 

4 keep records of the disposition of an illegit5 imate product for not less than 6 years 

6 after the conclusion of the disposition. 

7 ‘‘(C) REQUESTS FOR VERIFICATION.—Be8 ginning 5 years after the date of enactment of 

9 the Drug Supply Chain Security Act, upon re10 ceiving a request for verification from an au11 thorized manufacturer, wholesale distributor, or 

12 dispenser that is in possession or control of a 

13 product they believe to be repackaged by such 

14 repackager, a repackager shall, not later than 

15 24 hours after receiving the verification request 

16 or in other such reasonable time as determined 

17 by the Secretary, based on the circumstances of 

18 the request, notify the person making the re19 quest whether the product identifier, including 

20 the standardized numerical identifier, that is 

21 the subject of the request corresponds to the 

22 product identifier affixed or imprinted by the 

23 repackager. If a repackager responding to a 

24 verification request identifies a product identi25 fier that does not correspond to that affixed or 

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1 imprinted by the repackager, the repackager 

2 shall treat such product as suspect product and 

3 conduct an investigation as described in sub4 paragraph (A). If the repackager has reason to 

5 believe the product is an illegitimate product, 

6 the repackager shall advise the person making 

7 the request of such belief at the time such re8 packager responds to the verification request. 

9 ‘‘(D) ELECTRONIC DATABASE.—A repack10 ager may satisfy the requirements of paragraph 

11 (4) by developing a secure electronic database 

12 or utilizing a secure electronic database devel13 oped or operated by another entity. The owner 

14 of such database shall establish the require15 ments and processes to respond to requests and 

16 may provide for data access to other members 

17 of the pharmaceutical distribution supply chain, 

18 as appropriate. The development and operation 

19 of such a database shall not relieve a repack20 ager of the requirement under subparagraph 

21 (C) to respond to a verification request sub22 mitted by means other than a secure electronic 

23 database. 

24 ‘‘(E) VERIFICATION OF SALEABLE RE25 TURNED PRODUCT.—Beginning 5 years after 

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1 the date of enactment of the Drug Supply 

2 Chain Security Act, upon receipt of a returned 

3 product that the repackager intends to further 

4 distribute, before further distributing such 

5 product, the repackager shall verify the product 

6 identifier for each sealed homogeneous case of 

7 such product or, if such product is not in a 

8 sealed homogeneous case, verify the product 

9 identifier on each package. 

10 ‘‘(f) DROP SHIPMENTS.— 

11 ‘‘(1) IN GENERAL.—A wholesale distributor 

12 that does not physically handle or store product 

13 shall be exempt from the provisions of this section, 

14 except the notification requirements under clauses 

15 (ii), (iii), and (iv) of subsection (c)(4)(B), provided 

16 that the manufacturer, repackager, or other whole17 sale distributor that distributes the product to the 

18 dispenser by means of a drop shipment for such 

19 wholesale distributor includes on the transaction in20 formation and transaction history to the dispenser 

21 the contact information of such wholesale distributor 

22 and provides the transaction information, trans23 action history, and transaction statement directly to 

24 the dispenser. 

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1 ‘‘(2) CLARIFICATION.—For purposes of this 

2 subsection, providing administrative services, includ3 ing processing of orders and payments, shall not by 

4 itself, be construed as being involved in the han5 dling, distribution, or storage of a product.’’. 

6 SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY. 

7 Section 582, as added by section 202, is amended by 

8 adding at the end the following: 

9 ‘‘(g) ENHANCED DRUG DISTRIBUTION SECURITY.— 

10 ‘‘(1) IN GENERAL.—On the date that is 10 

11 years after the date of enactment of the Drug Sup12 ply Chain Security Act, the following interoperable, 

13 electronic tracing of product at the package level re14 quirements shall go into effect: 

15 ‘‘(A) The transaction information and the 

16 transaction statements as required under this 

17 section shall be exchanged in a secure, inter18 operable, electronic manner in accordance with 

19 the standards established under the guidance 

20 issued pursuant to paragraphs (3) and (4) of 

21 subsection (h), including any revision of such 

22 guidance issued in accordance with paragraph 

23 (5) of such subsection. 

24 ‘‘(B) The transaction information required 

25 under this section shall include the product 

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1 identifier at the package level for each package 

2 included in the transaction. 

3 ‘‘(C) Systems and processes for verification 

4 of product at the package level, including the 

5 standardized numerical identifier, shall be re6 quired in accordance with the standards estab7 lished under the guidance issued pursuant to 

8 subsection (a)(2) and the guidances issued pur9 suant to paragraphs (2), (3), and (4) of sub10 section (h), including any revision of such guid11 ances issued in accordance with paragraph (5) 

12 of such subsection, which may include the use 

13 of aggregation and inference as necessary. 

14 ‘‘(D) The systems and processes necessary 

15 to promptly respond with the transaction infor16 mation and transaction statement for a product 

17 upon a request by the Secretary (or other ap18 propriate Federal or State official) in the event 

19 of a recall or for the purposes of investigating 

20 a suspect product or an illegitimate product 

21 shall be required. 

22 ‘‘(E) The systems and processes necessary 

23 to promptly facilitate gathering the information 

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1 tion for each transaction going back to the 

2 manufacturer, as applicable, shall be required— 

3 ‘‘(i) in the event of a request by the 

4 Secretary (or other appropriate Federal or 

5 State official), on account of a recall or for 

6 the purposes of investigating a suspect 

7 product or an illegitimate product; or 

8 ‘‘(ii) in the event of a request by an 

9 authorized trading partner, in a secure 

10 manner that ensures the protection of con11 fidential commercial information and trade 

12 secrets, for purposes of investigating a sus13 pect product or assisting the Secretary (or 

14 other appropriate Federal or State official) 

15 with a request described in clause (i). 

16 ‘‘(F) Each person accepting a saleable re17 turn shall have systems and processes in place 

18 to allow acceptance of such product and may 

19 accept saleable returns only if such person can 

20 associate the saleable return product with the 

21 transaction information and transaction state22 ment associated with that product. 

23 ‘‘(2) COMPLIANCE.— 

24 ‘‘(A) INFORMATION MAINTENANCE AGREE25 MENT.—A dispenser may enter into a written 

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1 agreement with a third party, including an au2 thorized wholesale distributor, under which the 

3 third party shall confidentially maintain any in4 formation and statements required to be main5 tained under this section. If a dispenser enters 

6 into such an agreement, the dispenser shall 

7 maintain a copy of the written agreement and 

8 shall not be relieved of the obligations of the 

9 dispenser under this subsection. 

10 ‘‘(B) ALTERNATIVE METHODS.—The Sec11 retary, taking into consideration the assessment 

12 conducted under paragraph (3), shall provide 

13 for alternative methods of compliance with any 

14 of the requirements set forth in paragraph (1), 

15 including— 

16 ‘‘(i) establishing timelines for compli17 ance by small businesses (including small 

18 business dispensers with 25 or fewer full19 time employees) with such requirements, in 

20 order to ensure that such requirements do 

21 not impose undue economic hardship for 

22 small businesses, including small business 

23 dispensers for whom the criteria set forth 

24 in the assessment under paragraph (3) is 

25 not met, if the Secretary determines that 

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1 such requirements under paragraph (1) 

2 would result in undue economic hardship; 

3 and 

4 ‘‘(ii) establishing a process by which a 

5 dispenser may request a waiver from any 

6 of the requirements set forth in paragraph 

7 (1) if the Secretary determines that such 

8 requirements would result in an undue eco9 nomic hardship, which shall include a proc10 ess for the biennial review and renewal of 

11 any such waiver. 

12 ‘‘(3) ASSESSMENT.— 

13 ‘‘(A) IN GENERAL.—Not later than the 

14 date that is 18 months after the Secretary 

15 issues the final guidance required under sub16 section (h), the Secretary shall enter into a con17 tract with a private, independent consulting 

18 firm with expertise to conduct a technology and 

19 software assessment that looks at the feasibility 

20 of dispensers with 25 or fewer full-time employ21 ees conducting interoperable, electronic tracing 

22 of products at the package level. Such assessment shall be completed not later than 81 23 ⁄2

24 years after the date of enactment of the Drug 

25 Supply Chain Security Act. 

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1 ‘‘(B) CONDITION.—As a condition of the 

2 award of the contract under subparagraph (A), 

3 the private, independent consulting firm shall 

4 agree to consult with dispensers with 25 or 

5 fewer full-time employees when conducting the 

6 assessment under such subparagraph. 

7 ‘‘(C) CONTENT.—The assessment under 

8 subparagraph (A) shall assess whether— 

9 ‘‘(i) the necessary software and hard10 ware is readily accessible to such dis11 pensers; 

12 ‘‘(ii) the necessary software and hard13 ware is prohibitively expensive to obtain, 

14 install, and maintain for such dispensers; 

15 and 

16 ‘‘(iii) the necessary hardware and 

17 software can be integrated into business 

18 practices, such as interoperability with 

19 wholesale distributors, for such dispensers. 

20 ‘‘(D) PUBLICATION.—The Secretary 

21 shall— 

22 ‘‘(i) publish the statement of work for 

23 the assessment under subparagraph (A) 

24 for public comment prior to beginning the 

25 assessment; 

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1 ‘‘(ii) publish the final assessment for 

2 public comment not later than 30 calendar 

3 days after receiving such assessment; and 

4 ‘‘(iii) hold a public meeting not later 

5 than 180 calendar days after receiving the 

6 final assessment at which public stake7 holders may present their views on the as8 sessment. 

9 ‘‘(4) PROCEDURE.—Notwithstanding section 

10 553 of title 5, United States Code, the Secretary, in 

11 promulgating any regulation pursuant to this sec12 tion, shall— 

13 ‘‘(A) provide appropriate flexibility by— 

14 ‘‘(i) not requiring the adoption of spe15 cific business systems for the maintenance 

16 and transmission of data; 

17 ‘‘(ii) prescribing alternative methods 

18 of compliance for any of the requirements 

19 set forth in paragraph (1) or set forth in 

20 regulations implementing such require21 ments, including— 

22 ‘‘(I) timelines for small busi23 nesses to comply with the require24 ments set forth in the regulations in 

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1 ments do not impose undue economic 

2 hardship for small businesses (includ3 ing small business dispensers for 

4 whom the criteria set forth in the as5 sessment under paragraph (3) is not 

6 met), if the Secretary determines that 

7 such requirements would result in 

8 undue economic hardship; and 

9 ‘‘(II) the establishment of a proc10 ess by which a dispenser may request 

11 a waiver from any of the requirements 

12 set forth in such regulations if the 

13 Secretary determines that such re14 quirements would result in an undue 

15 economic hardship; and 

16 ‘‘(iii) taking into consideration— 

17 ‘‘(I) the results of pilot projects, 

18 including pilot projects pursuant to 

19 this section and private sector pilot 

20 projects, including those involving the 

21 use of aggregation and inference; 

22 ‘‘(II) the public meetings held 

23 and related guidance documents 

24 issued under this section; 

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1 ‘‘(III) the public health benefits 

2 of any additional regulations in com3 parison to the cost of compliance with 

4 such requirements, including on enti5 ties of varying sizes and capabilities; 

6 ‘‘(IV) the diversity of the phar7 maceutical distribution supply chain 

8 by providing appropriate flexibility for 

9 each sector, including both large and 

10 small businesses; and 

11 ‘‘(V) the assessment pursuant to 

12 paragraph (3) with respect to small 

13 business dispensers, including related 

14 public comment and the public meet15 ing, and requirements under this sec16 tion; 

17 ‘‘(B) issue a notice of proposed rulemaking 

18 that includes a copy of the proposed regulation; 

19 ‘‘(C) provide a period of not less than 60 

20 days for comments on the proposed regulation; 

21 and 

22 ‘‘(D) publish in the Federal Register the 

23 final regulation not less than 2 years prior to 

24 the effective date of the regulation. 

25 ‘‘(h) GUIDANCE DOCUMENTS.— 

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1 ‘‘(1) IN GENERAL.—For the purposes of facili2 tating the successful and efficient adoption of se3 cure, interoperable product tracing at the package 

4 level in order to enhance drug distribution security 

5 and further protect the public health, the Secretary 

6 shall issue the guidance documents as provided for 

7 in this subsection. 

8 ‘‘(2) SUSPECT AND ILLEGITIMATE PRODUCT.— 

9 ‘‘(A) IN GENERAL.—Not later than 180 

10 days after the date of enactment of the Drug 

11 Supply Chain Security Act, the Secretary shall 

12 issue a guidance document to aid trading part13 ners in the identification of a suspect product 

14 and notification termination. Such guidance 

15 document shall— 

16 ‘‘(i) identify specific scenarios that 

17 could significantly increase the risk of a 

18 suspect product entering the pharma19 ceutical distribution supply chain; 

20 ‘‘(ii) provide recommendation on how 

21 trading partners may identify such product 

22 and make a determination on whether the 

23 product is a suspect product as soon as 

24 practicable; and 

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1 ‘‘(iii) set forth the process by which 

2 manufacturers, repackagers, wholesale dis3 tributors, and dispensers shall terminate 

4 notifications in consultation with the Sec5 retary regarding illegitimate product pur6 suant to subsections (b)(4)(B), (c)(4)(B), 

7 (d)(4)(B), and (e)(4)(B). 

8 ‘‘(B) REVISED GUIDANCE.—If the Sec9 retary revises the guidance issued under sub10 paragraph (A), the Secretary shall follow the 

11 procedure set forth in paragraph (5). 

12 ‘‘(3) UNIT LEVEL TRACING.— 

13 ‘‘(A) IN GENERAL.—In order to enhance 

14 drug distribution security at the package level, 

15 not later than 18 months after conducting a 

16 public meeting on the system attributes nec17 essary to enable secure tracing of product at 

18 the package level, including allowing for the use 

19 of verification, inference, and aggregation, as 

20 necessary, the Secretary shall issue a final guid21 ance document that outlines and makes rec22 ommendations with respect to the system at23 tributes necessary to enable secure tracing at 

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1 ments established under subsection (g). Such 

2 guidance document shall— 

3 ‘‘(i) define the circumstances under 

4 which the sectors within the pharma5 ceutical distribution supply chain may, in 

6 the most efficient manner practicable, infer 

7 the contents of a case, pallet, tote, or other 

8 aggregate of individual packages or con9 tainers of product, from a product identi10 fier associated with the case, pallet, tote, 

11 or other aggregate, without opening each 

12 case, pallet, tote, or other aggregate or 

13 otherwise individually scanning each pack14 age; 

15 ‘‘(ii) identify methods and processes 

16 to enhance secure tracing of product at the 

17 package level, such as secure processes to 

18 facilitate the use of inference, enhanced 

19 verification activities, the use of aggrega20 tion and inference, processes that utilize 

21 the product identifiers to enhance tracing 

22 of product at the package level, including 

23 the standardized numerical identifier, or 

24 package security features; and 

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1 ‘‘(iii) ensure the protection of con2 fidential commercial information and trade 

3 secrets. 

4 ‘‘(B) PROCEDURE.—In issuing the guid5 ance under subparagraph (A), and in revising 

6 such guidance, if applicable, the Secretary shall 

7 follow the procedure set forth in paragraph (5). 

8 ‘‘(4) STANDARDS FOR INTEROPERABLE DATA

9 EXCHANGE.— 

10 ‘‘(A) IN GENERAL.—In order to enhance 

11 secure tracing of a product at the package level, 

12 the Secretary, not later than 18 months after 

13 conducting a public meeting on the interoper14 able standards necessary to enhance the secu15 rity of the pharmaceutical distribution supply 

16 chain, shall update the guidance issued pursu17 ant to subsection (a)(2), as necessary and ap18 propriate, and finalize such guidance document 

19 so that the guidance document— 

20 ‘‘(i) identifies and makes rec21 ommendations with respect to the stand22 ards necessary for adoption in order to 

23 support the secure, interoperable electronic 

24 data exchange among the pharmaceutical 

25 distribution supply chain that comply with 

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1 a form and format developed by a widely 

2 recognized international standards develop3 ment organization; 

4 ‘‘(ii) takes into consideration stand5 ards established pursuant to subsection 

6 (a)(2) and section 505D; 

7 ‘‘(iii) facilitates the creation of a uni8 form process or methodology for product 

9 tracing; and 

10 ‘‘(iv) ensures the protection of con11 fidential commercial information and trade 

12 secrets. 

13 ‘‘(B) PROCEDURE.—In issuing the guid14 ance under subparagraph (A), and in revising 

15 such guidance, if applicable, the Secretary shall 

16 follow the procedure set forth in paragraph (5). 

17 ‘‘(5) PROCEDURE.—In issuing or revising any 

18 guidance issued pursuant to this subsection or sub19 section (g), except the initial guidance issued under 

20 paragraph (2)(A), the Secretary shall— 

21 ‘‘(A) publish a notice in the Federal Reg22 ister for a period not less than 30 days an23 nouncing that the draft or revised draft guid24 ance is available; 

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1 ‘‘(B) post the draft guidance document on 

2 the Internet Web site of the Food and Drug 

3 Administration and make such draft guidance 

4 document available in hard copy; 

5 ‘‘(C) provide an opportunity for comment 

6 and review and take into consideration any 

7 comments received; 

8 ‘‘(D) revise the draft guidance, as appro9 priate; 

10 ‘‘(E) publish a notice in the Federal Reg11 ister for a period not less than 30 days an12 nouncing that the final guidance or final revised 

13 guidance is available; 

14 ‘‘(F) post the final guidance document on 

15 the Internet Web site of the Food and Drug 

16 Administration and make such final guidance 

17 document available in hard copy; and 

18 ‘‘(G) provide for an effective date of not 

19 earlier than 1 year after such guidance becomes 

20 final. 

21 ‘‘(i) PUBLIC MEETINGS.— 

22 ‘‘(1) IN GENERAL.—The Secretary shall hold 

23 not less than 5 public meetings to enhance the safe24 ty and security of the pharmaceutical distribution 

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1 retary may hold the first such public meeting not 

2 earlier than 1 year after the date of enactment of 

3 the Drug Supply Chain Security Act. In carrying 

4 out the public meetings described in this paragraph, 

5 the Secretary shall— 

6 ‘‘(A) prioritize topics necessary to inform 

7 the issuance of the guidance described in para8 graphs (3) and (4) of subsection (h); and 

9 ‘‘(B) take all measures reasonable and 

10 practicable to ensure the protection of confiden11 tial commercial information and trade secrets. 

12 ‘‘(2) CONTENT.—Each of the following topics 

13 shall be addressed in at least one of the public meet14 ings described in paragraph (1): 

15 ‘‘(A) An assessment of the steps taken 

16 under subsections (b) through (e) to build ca17 pacity for a unit-level system, including the im18 pact of the requirements of such subsections 

19 on— 

20 ‘‘(i) the ability of the health care sys21 tem collectively to maintain patient access 

22 to medicines; 

23 ‘‘(ii) the scalability of such require24 ments, including as it relates to product 

25 lines; and 

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1 ‘‘(iii) the capability of different sec2 tors and subsectors, including both large 

3 and small businesses, to affix and utilize 

4 the product identifier. 

5 ‘‘(B) The system attributes necessary to 

6 support the requirements set forth under sub7 section (g), including the standards necessary 

8 for adoption in order to support the secure, 

9 interoperable electronic data exchange among 

10 sectors within the pharmaceutical distribution 

11 supply chain. 

12 ‘‘(C) Best practices in each of the different 

13 sectors within the pharmaceutical distribution 

14 supply chain to implement the requirements of 

15 this section. 

16 ‘‘(D) The costs and benefits of the imple17 mentation of this section, including the impact 

18 on each pharmaceutical distribution supply 

19 chain sector and on public health. 

20 ‘‘(E) Whether electronic tracing require21 ments, including tracing of product at the pack22 age level, are feasible, cost effective, and needed 

23 to protect the public health. 

24 ‘‘(F) The systems and processes needed to 

25 utilize the product identifiers to enhance tracing 

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1 of product at the package level, including allow2 ing for verification, aggregation, and inference, 

3 as necessary. 

4 ‘‘(G) The technical capabilities and legal 

5 authorities, if any, needed to establish an inter6 operable, electronic system that provides for 

7 tracing of product at the package level. 

8 ‘‘(H) The impact that such additional re9 quirements would have on patient safety, the 

10 drug supply, cost and regulatory burden, and 

11 timely patient access to prescription drugs. 

12 ‘‘(I) Other topics, as determined appro13 priate by the Secretary. 

14 ‘‘(j) PILOT PROJECTS.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall estab16 lish 1 or more pilot projects, in coordination with 

17 authorized manufacturers, repackagers, wholesale 

18 distributors, and dispensers, to explore and evaluate 

19 methods to enhance the safety and security of the 

20 pharmaceutical distribution supply chain. Such 

21 projects shall build upon efforts, in existence as of 

22 the date of enactment of the Drug Supply Chain Se23 curity Act, to enhance the safety and security of the 

24 pharmaceutical distribution supply chain, take into 

25 consideration any pilot projects conducted prior to 

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1 such date of enactment, including any pilot projects 

2 that use aggregation and inference, and inform the 

3 draft and final guidance under paragraphs (3) and 

4 (4) of subsection (h). 

5 ‘‘(2) CONTENT.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall 

7 ensure that the pilot projects under paragraph 

8 (1) reflect the diversity of the pharmaceutical 

9 distribution supply chain and that the pilot 

10 projects, when taken as a whole, include partici11 pants representative of every sector, including 

12 both large and small businesses. 

13 ‘‘(B) PROJECT DESIGN.—The pilot 

14 projects under paragraph (1) shall be designed 

15 to— 

16 ‘‘(i) utilize the product identifier for 

17 tracing of a product, which may include 

18 verification of the product identifier of a 

19 product, including the use of aggregation 

20 and inference; 

21 ‘‘(ii) improve the technical capabilities 

22 of each sector and subsector to comply 

23 with systems and processes needed to uti24 lize the product identifiers to enhance trac25 ing of a product; 

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1 ‘‘(iii) identify system attributes that 

2 are necessary to implement the require3 ments established under this section; and 

4 ‘‘(iv) complete other activities as de5 termined by the Secretary. 

6 ‘‘(k) SUNSET.—The following requirements shall 

7 have no force or effect beginning on the date that is 10 

8 years after the date of enactment of the Drug Supply 

9 Chain Security Act: 

10 ‘‘(1) The provision and receipt of transaction 

11 history under this section. 

12 ‘‘(2) The requirements set forth for returns 

13 under subsections (b)(4)(E), (c)(1)(B)(i), 

14 (d)(1)(C)(i), and (e)(4)(E). 

15 ‘‘(3) The requirements set forth under subpara16 graphs (A)(v)(II) and (D) of subsection (c)(1), as 

17 applied to lot level information only. 

18 ‘‘(l) RULE OF CONSTRUCTION.—The requirements 

19 set forth in subsections (g)(4), (i), and (j) shall not be 

20 construed as a condition, prohibition, or precedent for pre21 cluding or delaying the provisions becoming effective pur22 suant to subsection (g). 

23 ‘‘(m) REQUESTS FOR INFORMATION.—On the date 

24 that is 10 years after the date of enactment of the Drug 

25 Supply Chain Security Act, the timeline for responses to 

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1 requests for information from the Secretary, or other ap2 propriate Federal or State official, as applicable, under 

3 subsections (b)(1)(B), (c)(1)(C), and (e)(1)(C) shall be 

4 not later than 24 hours after receiving the request from 

5 the Secretary or other appropriate Federal or State offi6 cial, as applicable, or in such other reasonable time as de7 termined by the Secretary based on the circumstances of 

8 the request.’’. 

9 SEC. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG 

10 WHOLESALE DISTRIBUTORS. 

11 (a) AMENDMENTS.— 

12 (1) REQUIREMENT.—Section 503(e) (21 U.S.C. 

13 353(e)) is amended by striking paragraphs (1), (2), 

14 and (3) and inserting the following: 

15 ‘‘(1) REQUIREMENT.—Subject to section 583: 

16 ‘‘(A) IN GENERAL.—No person may en17 gage in wholesale distribution of a drug subject 

18 to subsection (b)(1) in any State unless such 

19 person— 

20 ‘‘(i)(I) is licensed by the State from 

21 which the drug is distributed; or 

22 ‘‘(II) if the State from which the drug 

23 is distributed has not established a licen24 sure requirement, is licensed by the Sec25 retary; and 

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1 ‘‘(ii) if the drug is distributed inter2 state, is licensed by the State into which 

3 the drug is distributed if the State into 

4 which the drug is distributed requires the 

5 licensure of a person that distributes drugs 

6 into the State. 

7 ‘‘(B) STANDARDS.—Each Federal and 

8 State license described in subparagraph (A) 

9 shall meet the standards, terms, and conditions 

10 established by the Secretary under section 583. 

11 ‘‘(2) REPORTING AND DATABASE.— 

12 ‘‘(A) REPORTING.—Beginning January 1, 

13 2015, any person who owns or operates an es14 tablishment that engages in wholesale distribu15 tion shall— 

16 ‘‘(i) report to the Secretary, on an an17 nual basis pursuant to a schedule deter18 mined by the Secretary— 

19 ‘‘(I) each State by which the per20 son is licensed and the appropriate 

21 identification number of each such li22 cense; and 

23 ‘‘(II) the name, address, and con24 tact information of each facility at 

25 which, and all trade names under 

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1 which, the person conducts business; 

2 and 

3 ‘‘(ii) report to the Secretary within a 

4 reasonable period of time and in a reason5 able manner, as determined by the Sec6 retary, any significant disciplinary actions, 

7 such as the revocation or suspension of a 

8 wholesale distributor license, taken by a 

9 State or the Federal Government during 

10 the reporting period against the wholesale 

11 distributor. 

12 ‘‘(B) DATABASE.—Not later than January 

13 1, 2015, the Secretary shall establish a data14 base of authorized wholesale distributors. Such 

15 database shall— 

16 ‘‘(i) identify each authorized wholesale 

17 distributor by name, contact information, 

18 and each State where such wholesale dis19 tributor is appropriately licensed to engage 

20 in wholesale distribution; 

21 ‘‘(ii) be available to the public on the 

22 Internet Web site of the Food and Drug 

23 Administration; and 

24 ‘‘(iii) be regularly updated on a sched25 ule determined by the Secretary. 

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1 ‘‘(C) COORDINATION.—The Secretary shall 

2 establish a format and procedure for appro3 priate State officials to access the information 

4 provided pursuant to subparagraph (A) in a 

5 prompt and secure manner. 

6 ‘‘(D) CONFIDENTIALITY.—Nothing in this 

7 paragraph shall be construed as authorizing the 

8 Secretary to disclose any information that is a 

9 trade secret or confidential information subject 

10 to section 552(b)(4) of title 5, United States 

11 Code, or section 1905 of title 18, United States 

12 Code. 

13 ‘‘(3) COSTS.— 

14 ‘‘(A) AUTHORIZED FEES OF SECRETARY.— 

15 If a State does not establish a licensing pro16 gram for persons engaged in the wholesale dis17 tribution of a drug subject to subsection (b), 

18 the Secretary shall license a person engaged in 

19 wholesale distribution located in such State and 

20 may collect a reasonable fee in such amount 

21 necessary to reimburse the Secretary for costs 

22 associated with establishing and administering 

23 the licensure program and conducting periodic 

24 inspections under this section. The Secretary 

25 shall adjust fee rates as needed on an annual 

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1 basis to generate only the amount of revenue 

2 needed to perform this service. Fees authorized 

3 under this paragraph shall be collected and 

4 available for obligation only to the extent and in 

5 the amount provided in advance in appropria6 tions Acts. Such fees are authorized to remain 

7 available until expended. Such sums as may be 

8 necessary may be transferred from the Food 

9 and Drug Administration salaries and expenses 

10 appropriation account without fiscal year limi11 tation to such appropriation account for sala12 ries and expenses with such fiscal year limita13 tion. 

14 ‘‘(B) STATE LICENSING FEES.—Nothing in 

15 this Act shall prohibit States from collecting 

16 fees from wholesale distributors in connection 

17 with State licensing of such distributors.’’. 

18 (2) WHOLESALE DISTRIBUTION.—Section 

19 503(e) (21 U.S.C. 353(e)), as amended by para20 graph (1), is further amended by adding at the end 

21 the following: 

22 ‘‘(4) For the purposes of this subsection and 

23 subsection (d), the term ‘wholesale distribution’ 

24 means the distribution of a drug subject to sub25 section (b) to a person other than a consumer or pamstockstill on DSK4VPTVN1PROD with BILLS

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1 tient, or receipt of a drug subject to subsection (b) 

2 by a person other than the consumer or patient, but 

3 does not include— 

4 ‘‘(A) intracompany distribution of any 

5 drug between members of an affiliate or within 

6 a manufacturer; 

7 ‘‘(B) the distribution of a drug, or an offer 

8 to distribute a drug among hospitals or other 

9 health care entities which are under common 

10 control; 

11 ‘‘(C) the distribution of a drug or an offer 

12 to distribute a drug for emergency medical rea13 sons, including a public health emergency dec14 laration pursuant to section 319 of the Public 

15 Health Service Act, except that, for purposes of 

16 this paragraph, a drug shortage not caused by 

17 a public health emergency shall not constitute 

18 an emergency medical reason; 

19 ‘‘(D) the dispensing of a drug pursuant to 

20 a prescription executed in accordance with sub21 section (b)(1); 

22 ‘‘(E) the distribution of minimal quantities 

23 of drug by a licensed retail pharmacy to a li24 censed practitioner for office use; 

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1 ‘‘(F) the distribution of a drug or an offer 

2 to distribute a drug by a charitable organization 

3 to a nonprofit affiliate of the organization to 

4 the extent otherwise permitted by law; 

5 ‘‘(G) the purchase or other acquisition by 

6 a dispenser, hospital, or other health care entity 

7 of a drug for use by such dispenser, hospital, or 

8 other health care entity; 

9 ‘‘(H) the distribution of a drug by the 

10 manufacturer of such drug; 

11 ‘‘(I) the receipt or transfer of a drug by an 

12 authorized third-party logistics provider pro13 vided that such third-party logistics provider 

14 does not take ownership of the drug; 

15 ‘‘(J) a common carrier that transports a 

16 drug, provided that the common carrier does 

17 not take ownership of the drug; 

18 ‘‘(K) the distribution of a drug, or an offer 

19 to distribute a drug by an authorized repack20 ager that has taken ownership or possession of 

21 the drug and repacks it in accordance with sec22 tion 582(e); 

23 ‘‘(L) salable drug returns when conducted 

24 by a dispenser; 

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1 ‘‘(M) the distribution of a collection of fin2 ished medical devices, which may include a 

3 product or biological product, assembled in kit 

4 form strictly for the convenience of the pur5 chaser or user (referred to in this subparagraph 

6 as a ‘medical convenience kit’) if— 

7 ‘‘(i) the medical convenience kit is as8 sembled in an establishment that is reg9 istered with the Food and Drug Adminis10 tration as a device manufacturer in accord11 ance with section 510(b)(2); 

12 ‘‘(ii) the medical convenience kit does 

13 not contain a controlled substance that ap14 pears in a schedule contained in the Com15 prehensive Drug Abuse Prevention and 

16 Control Act of 1970; 

17 ‘‘(iii) in the case of a medical conven18 ience kit that includes a product, the per19 son that manufacturers the kit— 

20 ‘‘(I) purchased such product di21 rectly from the pharmaceutical manu22 facturer or from a wholesale dis23 tributor that purchased the product 

24 directly from the pharmaceutical man25 ufacturer; and 

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1 ‘‘(II) does not alter the primary 

2 container or label of the product as 

3 purchased from the manufacturer or 

4 wholesale distributor; and 

5 ‘‘(iv) in the case of a medical conven6 ience kit that includes a product, the prod7 uct is— 

8 ‘‘(I) an intravenous solution in9 tended for the replenishment of fluids 

10 and electrolytes; 

11 ‘‘(II) a product intended to main12 tain the equilibrium of water and min13 erals in the body; 

14 ‘‘(III) a product intended for irri15 gation or reconstitution; 

16 ‘‘(IV) an anesthetic; 

17 ‘‘(V) an anticoagulant; 

18 ‘‘(VI) a vasopressor; or 

19 ‘‘(VII) a sympathomimetic; 

20 ‘‘(N) the distribution of an intravenous 

21 drug that, by its formulation, is intended for 

22 the replenishment of fluids and electrolytes 

23 (such as sodium, chloride, and potassium) or 

24 calories (such as dextrose and amino acids); 

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1 ‘‘(O) the distribution of an intravenous 

2 drug used to maintain the equilibrium of water 

3 and minerals in the body, such as dialysis solu4 tions; 

5 ‘‘(P) the distribution of a drug that is in6 tended for irrigation, or sterile water, whether 

7 intended for such purposes or for injection; 

8 ‘‘(Q) the distribution of medical gas, as de9 fined in section 575; 

10 ‘‘(R) facilitating the distribution of a prod11 uct by providing solely administrative services, 

12 including processing of orders and payments; or 

13 ‘‘(S) the transfer of a product by a hos14 pital or other health care entity, or by a whole15 sale distributor or manufacturer operating at 

16 the direction of the hospital or other health care 

17 entity, to a repackager described in section 

18 581(16)(B) and registered under section 510 

19 for the purpose of repackaging the drug for use 

20 by that hospital, or other health care entity and 

21 other health care entities that are under com22 mon control, if ownership of the drug remains 

23 with the hospital or other health care entity at 

24 all times.’’. 

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1 (3) THIRD-PARTY LOGISTICS PROVIDERS.—Sec2 tion 503(e) (21 U.S.C. 353(e)), as amended by para3 graph (2), is further amended by adding at the end 

4 the following: 

5 ‘‘(5) THIRD-PARTY LOGISTICS PROVIDERS.— 

6 Notwithstanding paragraphs (1) through (4), each 

7 entity that meets the definition of a third-party lo8 gistics provider under section 581(22) shall obtain a 

9 license as a third-party logistics provider as de10 scribed in section 584(a) and is not required to ob11 tain a license as a wholesale distributor if the entity 

12 never assumes an ownership interest in the product 

13 it handles.’’. 

14 (4) AFFILIATE.—Section 503(e) (21 U.S.C. 

15 353(e)), as amended by paragraph (3), is further 

16 amended by adding at the end the following: 

17 ‘‘(6) AFFILIATE.—For purposes of this sub18 section, the term ‘affiliate’ means a business entity 

19 that has a relationship with a second business entity 

20 if, directly or indirectly— 

21 ‘‘(A) one business entity controls, or has 

22 the power to control, the other business entity; 

23 or 

24 ‘‘(B) a third party controls, or has the 

25 power to control, both of the business entities.’’. 

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1 (5) STANDARDS.—Subchapter H of chapter V, 

2 as added by section 202, is amended by adding at 

3 the end the following: 

4 ‘‘SEC. 583. NATIONAL STANDARDS FOR PRESCRIPTION 

5 DRUG WHOLESALE DISTRIBUTORS. 

6 ‘‘(a) IN GENERAL.—The Secretary shall, not later 

7 than 2 years after the date of enactment of the Drug Sup8 ply Chain Security Act, establish by regulation standards 

9 for the licensing of persons under section 503(e)(1) (as 

10 amended by the Drug Supply Chain Security Act), includ11 ing the revocation, reissuance, and renewal of such license. 

12 ‘‘(b) CONTENT.—For the purpose of ensuring uni13 formity with respect to standards set forth in this section, 

14 the standards established under subsection (a) shall apply 

15 to all State and Federal licenses described under section 

16 503(e)(1) (as amended by the Drug Supply Chain Secu17 rity Act) and shall include standards for the following: 

18 ‘‘(1) The storage and handling of prescription 

19 drugs, including facility requirements. 

20 ‘‘(2) The establishment and maintenance of 

21 records of the distributions of such drugs. 

22 ‘‘(3) The furnishing of a bond or other equiva23 lent means of security, as follows: 

24 ‘‘(A)(i) For the issuance or renewal of a 

25 wholesale distributor license, an applicant that 

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1 is not a government owned and operated whole2 sale distributor shall submit a surety bond of 

3 $100,000 or other equivalent means of security 

4 acceptable to the State. 

5 ‘‘(ii) For purposes of clause (i), the State 

6 or other applicable authority may accept a sur7 ety bond in the amount of $25,000 if the an8 nual gross receipts of the previous tax year for 

9 the wholesaler is $10,000,000 or less. 

10 ‘‘(B) If a wholesale distributor can provide 

11 evidence that it possesses the required bond in 

12 a State, the requirement for a bond in another 

13 State shall be waived. 

14 ‘‘(4) Mandatory background checks and 

15 fingerprinting of facility managers or designated 

16 representatives. 

17 ‘‘(5) The establishment and implementation of 

18 qualifications for key personnel. 

19 ‘‘(6) The mandatory physical inspection of any 

20 facility to be used in wholesale distribution within a 

21 reasonable time frame from the initial application of 

22 the facility and to be conducted by the licensing au23 thority or by the State, consistent with subsection 

24 (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 re5 quirement under subsection (b)(6), the Federal or State 

6 licensing authority may conduct the inspection or may ac7 cept an inspection by the State in which the facility is lo8 cated, or by a third-party accreditation or inspection serv9 ice approved by the Secretary or the State licensing such 

10 wholesale 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 con16 duct relating to wholesale distribution, any felony 

17 violation of subsection (i) or (k) of section 301, or 

18 any felony violation of section 1365 of title 18, 

19 United States Code, relating to product tampering; 

20 or 

21 ‘‘(2) has engaged in a pattern of violating the 

22 requirements of this section, or State requirements 

23 for licensure, that presents a threat of serious ad24 verse 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 

15 distributors 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 

20 subsections (a) and (b) shall take effect on January 1, 

21 2015. 

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1 SEC. 205. NATIONAL STANDARDS FOR THIRD-PARTY LOGIS2 TICS PROVIDERS; UNIFORM NATIONAL POL3 ICY. 

4 Subchapter H of chapter V, as amended by section 

5 204, is further amended by adding at the end the fol6 lowing: 

7 ‘‘SEC. 584. NATIONAL STANDARDS FOR THIRD-PARTY LO8 GISTICS PROVIDERS. 

9 ‘‘(a) REQUIREMENTS.—No third-party logistics pro10 vider in any State may conduct activities in any State un11 less each facility of such third-party logistics provider— 

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 promul15 gated under subsection (d); or 

16 ‘‘(B) if the State from which the drug distrib17 uted by the third-party logistics provider has not es18 tablished a licensure requirement, is licensed by the 

19 Secretary, in accordance with the regulations pro20 mulgated under subsection (d); and 

21 ‘‘(2) if the drug is distributed interstate, is li22 censed by the State into which the drug is distrib23 uted by the third-party logistics provider if such 

24 State licenses third-party logistics providers that dis25 tribute drugs into the State and the third-party lomstockstill on DSK4VPTVN1PROD with BILLS

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1 gistics provider is not licensed by the Secretary as 

2 described in paragraph (1)(B). 

3 ‘‘(b) REPORTING.—Beginning 1 year after the date 

4 of enactment of the Drug Supply Chain Security Act, a 

5 facility of a third-party logistics provider shall report to 

6 the Secretary, on an annual basis pursuant to a schedule 

7 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 

12 all trade names under which such facility conducts 

13 business. 

14 ‘‘(c) COSTS.— 

15 ‘‘(1) AUTHORIZED FEES OF SECRETARY.—If a 

16 State does not establish a licensing program for a 

17 third-party logistics provider, the Secretary shall li18 cense the third-party logistics provider located in 

19 such State and may collect a reasonable fee in such 

20 amount necessary to reimburse the Secretary for 

21 costs associated with establishing and administering 

22 the licensure program and conducting periodic in23 spections under this section. The Secretary shall ad24 just fee rates as needed on an annual basis to gen25 erate only the amount of revenue needed to perform 

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1 this service. Fees authorized under this paragraph 

2 shall be collected and available for obligation only to 

3 the extent and in the amount provided in advance in 

4 appropriations Acts. Such fees are authorized to re5 main available until expended. Such sums as may be 

6 necessary may be transferred from the Food and 

7 Drug Administration salaries and expenses appro8 priation account without fiscal year limitation to 

9 such appropriation account for salaries and expenses 

10 with such fiscal year limitation. 

11 ‘‘(2) STATE LICENSING FEES.— 

12 ‘‘(A) STATE ESTABLISHED PROGRAM.— 

13 Nothing in this Act shall prohibit a State that 

14 has established a program to license a third15 party logistics provider from collecting fees 

16 from a third-party logistics provider for such a 

17 license. 

18 ‘‘(B) NO STATE ESTABLISHED PRO19 GRAM.—A State that does not establish a pro20 gram to license a third-party logistics provider 

21 in accordance with this section shall be prohib22 ited from collecting a State licensing fee from 

23 a third-party logistics provider. 

24 ‘‘(d) REGULATIONS.— 

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1 ‘‘(1) IN GENERAL.—Not later than 2 years 

2 after the date of enactment of the Drug Supply 

3 Chain Security Act, the Secretary shall issue regula4 tions regarding the standards for licensing under 

5 subsection (a), including the revocation and 

6 reissuance of such license, to third-party logistics 

7 providers under this section. 

8 ‘‘(2) CONTENT.—Such regulations shall— 

9 ‘‘(A) establish a process by which a third10 party accreditation program approved by the 

11 Secretary shall, upon request by a third-party 

12 logistics provider, issue a license to each third13 party logistics provider that meets the require14 ments set forth in this section; 

15 ‘‘(B) establish a process by which the Sec16 retary shall issue a license to each third-party 

17 logistics provider that meets the requirements 

18 set forth in this section if the Secretary is not 

19 able to approve a third-party accreditation pro20 gram because no such program meets the Sec21 retary’s requirements necessary for approval of 

22 such a third-party accreditation program; 

23 ‘‘(C) require that the entity complies with 

24 storage practices, as determined by the Sec25 retary for such facility, including— 

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1 ‘‘(i) maintaining access to warehouse 

2 space of suitable size to facilitate safe op3 erations, including a suitable area to quar4 antine suspect product; 

5 ‘‘(ii) maintaining adequate security; 

6 and 

7 ‘‘(iii) having written policies and pro8 cedures to— 

9 ‘‘(I) address receipt, security, 

10 storage, inventory, shipment, and dis11 tribution of a product; 

12 ‘‘(II) identify, record, and report 

13 confirmed losses or thefts in the 

14 United States; 

15 ‘‘(III) correct errors and inac16 curacies in inventories; 

17 ‘‘(IV) provide support for manu18 facturer recalls; 

19 ‘‘(V) prepare for, protect against, 

20 and address any reasonably foresee21 able crisis that affects security or op22 eration at the facility, such as a 

23 strike, fire, or flood; 

24 ‘‘(VI) ensure that any expired 

25 product is segregated from other 

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1 products and returned to the manu2 facturer or repackager or destroyed; 

3 ‘‘(VII) maintain the capability to 

4 trace the receipt and outbound dis5 tribution of a product, and supplies 

6 and records of inventory; and 

7 ‘‘(VIII) quarantine or destroy a 

8 suspect product if directed to do so by 

9 the respective manufacturer, wholesale 

10 distributor, dispenser, or an author11 ized government agency; 

12 ‘‘(D) provide for periodic inspection by the 

13 licensing authority, as determined by the Sec14 retary, of such facility warehouse space to en15 sure compliance with this section; 

16 ‘‘(E) prohibit a facility from having as a 

17 manager or designated representative anyone 

18 convicted of any felony violation of subsection 

19 (i) or (k) of section 301 or any violation of sec20 tion 1365 of title 18, United States Code relat21 ing to product tampering; 

22 ‘‘(F) provide for mandatory background 

23 checks of a facility manager or a designated 

24 representative of such manager; 

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1 ‘‘(G) require a third-party logistics pro2 vider to provide the applicable licensing author3 ity, upon a request by such authority, a list of 

4 all product manufacturers, wholesale distribu5 tors, and dispensers for whom the third-party 

6 logistics provider provides services at such facil7 ity; and 

8 ‘‘(H) include procedures under which any 

9 third-party logistics provider license— 

10 ‘‘(i) expires on the date that is 3 

11 years after issuance of the license; and 

12 ‘‘(ii) may be renewed for additional 3- 

13 year periods. 

14 ‘‘(3) PROCEDURE.—In promulgating the regula15 tions under this subsection, the Secretary shall, not16 withstanding section 553 of title 5, United States 

17 Code— 

18 ‘‘(A) issue a notice of proposed rulemaking 

19 that includes a copy of the proposed regulation; 

20 ‘‘(B) provide a period of not less than 60 

21 days for comments on the proposed regulation; 

22 and 

23 ‘‘(C) provide that the final regulation takes 

24 effect upon the expiration of 1 year after the 

25 date that such final regulation is issued. 

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1 ‘‘(e) VALIDITY.—A license issued under this section 

2 shall remain valid as long as such third-party logistics pro3 vider remains licensed consistent with this section. If the 

4 Secretary finds that the third-party accreditation program 

5 demonstrates that all applicable requirements for licensure 

6 under this section are met, the Secretary shall issue a li7 cense under this section to a third-party logistics provider 

8 receiving accreditation, pursuant to subsection (d)(2)(A). 

9 ‘‘SEC. 585. UNIFORM NATIONAL POLICY. 

10 ‘‘(a) PRODUCT TRACING AND OTHER REQUIRE11 MENTS.—Beginning on the date of enactment of the Drug 

12 Supply Chain Security Act, no State or political subdivi13 sion of a State may establish or continue in effect any 

14 requirements for tracing products through the distribution 

15 system (including any requirements with respect to state16 ments of distribution history, transaction history, trans17 action information, or transaction statement of a product 

18 as such product changes ownership in the supply chain, 

19 or verification, investigation, disposition, notification, or 

20 recordkeeping relating to such systems, including paper or 

21 electronic pedigree systems or for tracking and tracing 

22 drugs throughout the distribution system) which are in23 consistent with, more stringent than, or in addition to, any 

24 requirements applicable under section 503(e) (as amended 

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1 by such Act) or this subchapter (or regulations issued 

2 thereunder), or which are inconsistent with— 

3 ‘‘(1) any waiver, exception, or exemption pursu4 ant to section 581 or 582; or 

5 ‘‘(2) any restrictions specified in section 582. 

6 ‘‘(b) WHOLESALE DISTRIBUTOR AND THIRD-PARTY

7 LOGISTICS PROVIDER STANDARDS.— 

8 ‘‘(1) IN GENERAL.—Beginning on the date of 

9 enactment of the Drug Supply Chain Security Act, 

10 no State or political subdivision of a State may es11 tablish or continue any standards, requirements, or 

12 regulations with respect to wholesale prescription 

13 drug distributor or third-party logistics provider li14 censure that are inconsistent with, less stringent 

15 than, directly related to, or covered by the standards 

16 and requirements applicable under section 503(e) 

17 (as amended by such Act), in the case of a wholesale 

18 distributor, or section 584, in the case of a third19 party logistics provider. 

20 ‘‘(2) STATE REGULATION OF THIRD-PARTY LO21 GISTICS PROVIDERS.—No State shall regulate third22 party logistics providers as wholesale distributors. 

23 ‘‘(3) ADMINISTRATION FEES.—Notwithstanding 

24 paragraph (1), a State may administer fee collec25 tions for effectuating the wholesale drug distributor 

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1 and third-party logistics provider licensure require2 ments under sections 503(e) (as amended by the 

3 Drug Supply Chain Security Act), 583, and 584. 

4 ‘‘(4) ENFORCEMENT, SUSPENSION, AND REV5 OCATION.—Notwithstanding paragraph (1), a 

6 State— 

7 ‘‘(A) may take administrative action, in8 cluding fines, to enforce a requirement promul9 gated by the State in accordance with section 

10 503(e) (as amended by the Drug Supply Chain 

11 Security Act) or this subchapter; 

12 ‘‘(B) may provide for the suspension or 

13 revocation of licenses issued by the State for 

14 violations of the laws of such State; 

15 ‘‘(C) upon conviction of violations of Fed16 eral, State, or local drug laws or regulations, 

17 may provide for fines, imprisonment, or civil 

18 penalties; and 

19 ‘‘(D) may regulate activities of licensed en20 tities in a manner that is consistent with prod21 uct tracing requirements under section 582. 

22 ‘‘(c) EXCEPTION.—Nothing in this section shall be 

23 construed to preempt State requirements related to the 

24 distribution of prescription drugs if such requirements are 

25 not related to product tracing as described in subsection 

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1 (a) or wholesale distributor and third-party logistics pro2 vider licensure as described in subsection (b) applicable 

3 under section 503(e) (as amended by the Drug Supply 

4 Chain Security Act) or this subchapter (or regulations 

5 issued thereunder).’’. 

6 SEC. 206. PENALTIES. 

7 (a) PROHIBITED ACT.—Section 301(t) (21 U.S.C. 

8 331(t)), is amended— 

9 (1) by striking ‘‘or’’ after ‘‘the requirements of 

10 section 503(d),’’; and 

11 (2) by inserting ‘‘, failure to comply with the 

12 requirements under section 582, the failure to com13 ply with the requirements under section 584, as ap14 plicable,’’ after ‘‘in violation of section 503(e)’’. 

15 (b) MISBRANDING.—Section 502 (21 U.S.C. 352), as 

16 amended by section 103, is further amended by adding 

17 at the end the following: 

18 ‘‘(cc) If it is a drug and it fails to bear the product 

19 identifier as required by section 582.’’. 

20 SEC. 207. CONFORMING AMENDMENT. 

21 (a) IN GENERAL.—Section 303(b)(1)(D) (21 U.S.C. 

22 333(b)(1)(D)) is amended by striking ‘‘503(e)(2)(A)’’ and 

23 inserting ‘‘503(e)(1)’’. 

24 (b) EFFECTIVE DATE.—The amendment made by 

25 subsection (a) shall take effect on January 1, 2015. 

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1 SEC. 208. SAVINGS CLAUSE. 

2 Except as provided in the amendments made by para3 graphs (1), (2), and (3) of section 204(a) and by section 

4 206(a), nothing in this title (including the amendments 

5 made by this title) shall be construed as altering any au6 thority of the Secretary of Health and Human Services 

7 with respect to a drug subject to section 503(b)(1) of the 

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

9 353(b)(1)) under any other provision of such Act or the 

10 Public Health Service Act (42 U.S.C. 201 et seq.). 

Passed the House of Representatives September 28, 

2013. 

Attest: KAREN L. HAAS, 

Clerk. 

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Calendar No. 236 

113TH CONGRESS 

1ST SESSION H. R. 3204 

AN ACT 

To amend the Federal Food, Drug, and Cosmetic 

purposes. and drug supply chain security, and for other Act with respect to human drug compounding 

NOVEMBER 5, 2013 

Read the second time and placed on the calendar 

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