H. R. 3204 

One Hundred Thirteenth Congress 

of the 

United States of America 

AT THE FIRST SESSION 

Begun and held at the City of Washington on Thursday, 

the third day of January, two thousand and thirteen 

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. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Drug Quality and Security 

Act’’. 

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

(a) REFERENCES IN ACT.—Except as otherwise specified, amendments made by this Act to a section or other provision of law 

are amendments to such section or other provision of the Federal 

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

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

TITLE I—DRUG COMPOUNDING 

SEC. 101. SHORT TITLE. 

This Act may be cited as the ‘‘Compounding Quality Act’’. 

SEC. 102. VOLUNTARY OUTSOURCING FACILITIES. 

(a) IN GENERAL.—Subchapter A of chapter V (21 U.S.C. 351 

et seq.) is amended— 
H. R. 3204—2 

(1) by redesignating section 503B as section 503C; and 

(2) by inserting after section 503A the following new section: 

‘‘SEC. 503B. OUTSOURCING FACILITIES. 

‘‘(a) IN GENERAL.—Sections 502(f)(1), 505, and 582 shall not 

apply to a drug compounded by or under the direct supervision 

of a licensed pharmacist in a facility that elects to register as 

an outsourcing facility if each of the following conditions is met: 

‘‘(1) REGISTRATION AND REPORTING.—The drug is compounded in an outsourcing facility that is in compliance with 

the requirements of subsection (b). 

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

in an outsourcing facility that does not compound using bulk 

drug substances (as defined in section 207.3(a)(4) of title 21, 

Code of Federal Regulations (or any successor regulation)), 

unless— 

‘‘(A)(i) the bulk drug substance appears on a list established by the Secretary identifying bulk drug substances 

for which there is a clinical need, by— 

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

proposing bulk drug substances to be included on the 

list, including the rationale for such proposal; 

‘‘(II) providing a period of not less than 60 calendar 

days for comment on the notice; and 

‘‘(III) publishing a notice in the Federal Register 

designating bulk drug substances for inclusion on the 

list; or 

‘‘(ii) the drug compounded from such bulk drug substance appears on the drug shortage list in effect under 

section 506E at the time of compounding, distribution, 

and dispensing; 

‘‘(B) if an applicable monograph exists under the 

United States Pharmacopeia, the National Formulary, or 

another compendium or pharmacopeia recognized by the 

Secretary for purposes of this paragraph, the bulk drug 

substances each comply with the monograph; 

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

by an establishment that is registered under section 510 

(including a foreign establishment that is registered under 

section 510(i)); and 

‘‘(D) the bulk drug substances are each accompanied 

by a valid certificate of analysis. 

‘‘(3) INGREDIENTS (OTHER THAN BULK DRUG SUBSTANCES).— 

If any ingredients (other than bulk drug substances) are used 

in compounding the drug, such ingredients comply with the 

standards of the applicable United States Pharmacopeia or 

National Formulary monograph, if such monograph exists, or 

of another compendium or pharmacopeia recognized by the 

Secretary for purposes of this paragraph if any. 

‘‘(4) DRUGS WITHDRAWN OR REMOVED BECAUSE UNSAFE OR

NOT EFFECTIVE.—The drug does not appear on a list published 

by the Secretary of drugs that have been withdrawn or removed 

from the market because such drugs or components of such 

drugs have been found to be unsafe or not effective. 

‘‘(5) ESSENTIALLY A COPY OF AN APPROVED DRUG.—The drug 

is not essentially a copy of one or more approved drugs. 
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‘‘(6) DRUGS PRESENTING DEMONSTRABLE DIFFICULTIES FOR

COMPOUNDING.—The drug— 

‘‘(A) is not identified (directly or as part of a category 

of drugs) on a list published by the Secretary, through 

the process described in subsection (c), of drugs or categories of drugs that present demonstrable difficulties for 

compounding that are reasonably likely to lead to an 

adverse effect on the safety or effectiveness of the drug 

or category of drugs, taking into account the risks and 

benefits to patients; or 

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

conditions identified on the list described in subparagraph 

(A) as conditions that are necessary to prevent the drug 

or category of drugs from presenting the demonstrable 

difficulties described in subparagraph (A). 

‘‘(7) ELEMENTS TO ASSURE SAFE USE.—In the case of a 

drug that is compounded from a drug that is the subject of 

a risk evaluation and mitigation strategy approved with elements to assure safe use pursuant to section 505–1, or from 

a bulk drug substance that is a component of such drug, the 

outsourcing facility demonstrates to the Secretary prior to 

beginning compounding that such facility will utilize controls 

comparable to the controls applicable under the relevant risk 

evaluation and mitigation strategy. 

‘‘(8) PROHIBITION ON WHOLESALING.—The drug will not be 

sold or transferred by an entity other than the outsourcing 

facility that compounded such drug. This paragraph does not 

prohibit administration of a drug in a health care setting or 

dispensing a drug pursuant to a prescription executed in accordance with section 503(b)(1). 

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

facility that has paid all fees owed by such facility pursuant 

to section 744K. 

‘‘(10) LABELING OF DRUGS.— 

‘‘(A) LABEL.—The label of the drug includes— 

‘‘(i) the statement ‘This is a compounded drug.’ 

or a reasonable comparable alternative statement (as 

specified by the Secretary) that prominently identifies 

the drug as a compounded drug; 

‘‘(ii) the name, address, and phone number of the 

applicable outsourcing facility; and 

‘‘(iii) with respect to the drug— 

‘‘(I) the lot or batch number; 

‘‘(II) the established name of the drug; 

‘‘(III) the dosage form and strength; 

‘‘(IV) the statement of quantity or volume, as 

appropriate; 

‘‘(V) the date that the drug was compounded; 

‘‘(VI) the expiration date; 

‘‘(VII) storage and handling instructions; 

‘‘(VIII) the National Drug Code number, if 

available; 

‘‘(IX) the statement ‘Not for resale’, and, if 

the drug is dispensed or distributed other than 

pursuant to a prescription for an individual identified patient, the statement ‘Office Use Only’; and 
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‘‘(X) subject to subparagraph (B)(i), a list of 

active and inactive ingredients, identified by established name and the quantity or proportion of each 

ingredient. 

‘‘(B) CONTAINER.—The container from which the individual units of the drug are removed for dispensing or 

for administration (such as a plastic bag containing individual product syringes) shall include— 

‘‘(i) the information described under subparagraph 

(A)(iii)(X), if there is not space on the label for such 

information; 

‘‘(ii) the following information to facilitate adverse 

event reporting: www.fda.gov/medwatch and 1–800– 

FDA–1088 (or any successor Internet Web site or phone 

number); and 

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

dosage and administration. 

‘‘(C) ADDITIONAL INFORMATION.—The label and labeling 

of the drug shall include any other information as determined necessary and specified in regulations promulgated 

by the Secretary. 

‘‘(11) OUTSOURCING FACILITY REQUIREMENT.—The drug is 

compounded in an outsourcing facility in which the 

compounding of drugs occurs only in accordance with this section. 

‘‘(b) REGISTRATION OF OUTSOURCING FACILITIES AND REPORTING

OF DRUGS.— 

‘‘(1) REGISTRATION OF OUTSOURCING FACILITIES.— ‘‘(A) ANNUAL REGISTRATION.—Upon electing and in 

order to become an outsourcing facility, and during the 

period beginning on October 1 and ending on December 

31 of each year thereafter, a facility— 

‘‘(i) shall register with the Secretary its name, 

place of business, and unique facility identifier (which 

shall conform to the requirements for the unique 

facility identifier established under section 510), and 

a point of contact email address; and 

‘‘(ii) shall indicate whether the outsourcing facility 

intends to compound a drug that appears on the list 

in effect under section 506E during the subsequent 

calendar year. 

‘‘(B) AVAILABILITY OF REGISTRATION FOR INSPECTION; 

LIST.— 

‘‘(i) REGISTRATIONS.—The Secretary shall make 

available for inspection, to any person so requesting, 

any registration filed pursuant to this paragraph. 

‘‘(ii) LIST.—The Secretary shall make available on 

the public Internet Web site of the Food and Drug 

Administration a list of the name of each facility registered under this subsection as an outsourcing facility, 

the State in which each such facility is located, whether 

the facility compounds from bulk drug substances, and 

whether any such compounding from bulk drug substances is for sterile or nonsterile drugs. 

‘‘(2) DRUG REPORTING BY OUTSOURCING FACILITIES.— ‘‘(A) IN GENERAL.—Upon initially registering as an outsourcing facility, once during the month of June of each 
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year, and once during the month of December of each 

year, each outsourcing facility that registers with the Secretary under paragraph (1) shall submit to the Secretary 

a report— 

‘‘(i) identifying the drugs compounded by such outsourcing facility during the previous 6-month period; 

and 

‘‘(ii) with respect to each drug identified under 

clause (i), providing the active ingredient, the source 

of such active ingredient, the National Drug Code 

number of the source drug or bulk active ingredient, 

if available, the strength of the active ingredient per 

unit, the dosage form and route of administration, 

the package description, the number of individual units 

produced, and the National Drug Code number of the 

final product, if assigned. 

‘‘(B) FORM.—Each report under subparagraph (A) shall 

be prepared in such form and manner as the Secretary 

may prescribe by regulation or guidance. 

‘‘(C) CONFIDENTIALITY.—Reports submitted under this 

paragraph shall be exempt from inspection under paragraph (1)(B)(i), unless the Secretary finds that such an 

exemption would be inconsistent with the protection of 

the public health. 

‘‘(3) ELECTRONIC REGISTRATION AND REPORTING.—Registrations and drug reporting under this subsection (including the 

submission of updated information) shall be submitted to the 

Secretary by electronic means unless the Secretary grants a 

request for waiver of such requirement because use of electronic 

means is not reasonable for the person requesting waiver. 

‘‘(4) RISK-BASED INSPECTION FREQUENCY.— ‘‘(A) IN GENERAL.—Outsourcing facilities— 

‘‘(i) shall be subject to inspection pursuant to section 704; and 

‘‘(ii) shall not be eligible for the exemption under 

section 704(a)(2)(A). 

‘‘(B) RISK-BASED SCHEDULE.—The Secretary, acting 

through one or more officers or employees duly designated 

by the Secretary, shall inspect outsourcing facilities in 

accordance with a risk-based schedule established by the 

Secretary. 

‘‘(C) RISK FACTORS.—In establishing the risk-based 

schedule, the Secretary shall inspect outsourcing facilities 

according to the known safety risks of such outsourcing 

facilities, which shall be based on the following factors: 

‘‘(i) The compliance history of the outsourcing 

facility. 

‘‘(ii) The record, history, and nature of recalls 

linked to the outsourcing facility. 

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

at the outsourcing facility. 

‘‘(iv) The inspection frequency and history of the 

outsourcing facility, including whether the outsourcing 

facility has been inspected pursuant to section 704 

within the last 4 years. 

‘‘(v) Whether the outsourcing facility has registered 

under this paragraph as an entity that intends to 
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compound a drug that appears on the list in effect 

under section 506E. 

‘‘(vi) Any other criteria deemed necessary and 

appropriate by the Secretary for purposes of allocating 

inspection resources. 

‘‘(5) ADVERSE EVENT REPORTING.—Outsourcing facilities 

shall submit adverse event reports to the Secretary in accordance with the content and format requirements established 

through guidance or regulation under section 310.305 of title 

21, Code of Federal Regulations (or any successor regulations). 

‘‘(c) REGULATIONS.— 

‘‘(1) IN GENERAL.—The Secretary shall implement the list 

described in subsection (a)(6) through regulations. 

‘‘(2) ADVISORY COMMITTEE ON COMPOUNDING.—Before 

issuing regulations to implement subsection (a)(6), the Secretary shall convene and consult an advisory committee on 

compounding. The advisory committee shall include representatives from the National Association of Boards of Pharmacy, 

the United States Pharmacopeia, pharmacists with current 

experience and expertise in compounding, physicians with background and knowledge in compounding, and patient and public 

health advocacy organizations. 

‘‘(3) INTERIM LIST.— 

‘‘(A) IN GENERAL.—Before the effective date of the regulations finalized to implement subsection (a)(6), the Secretary may designate drugs, categories of drugs, or conditions as described such subsection by— 

‘‘(i) publishing a notice of such substances, drugs, 

categories of drugs, or conditions proposed for designation, including the rationale for such designation, in 

the Federal Register; 

‘‘(ii) providing a period of not less than 60 calendar 

days for comment on the notice; and 

‘‘(iii) publishing a notice in the Federal Register 

designating such drugs, categories of drugs, or conditions. 

‘‘(B) SUNSET OF NOTICE.—Any notice provided under 

subparagraph (A) shall not be effective after the earlier 

of— 

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

enactment of the Compounding Quality Act; or 

‘‘(ii) the effective date of the final regulations 

issued to implement subsection (a)(6). 

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

as necessary, the regulations containing the lists of drugs, 

categories of drugs, or conditions described in subsection (a)(6) 

regularly, but not less than once every 4 years. Nothing in 

the previous sentence prohibits submissions to the Secretary, 

before or during any 4-year period described in such sentence, 

requesting updates to such lists. 

‘‘(d) DEFINITIONS.—In this section: 

‘‘(1) The term ‘compounding’ includes the combining, 

admixing, mixing, diluting, pooling, reconstituting, or otherwise 

altering of a drug or bulk drug substance to create a drug. 

‘‘(2) The term ‘essentially a copy of an approved drug’ 

means— 
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‘‘(A) a drug that is identical or nearly identical to 

an approved drug, or a marketed drug not subject to section 

503(b) and not subject to approval in an application submitted under section 505, unless, in the case of an approved 

drug, the drug appears on the drug shortage list in effect 

under section 506E at the time of compounding, distribution, and dispensing; or 

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

substance that is a component of an approved drug or 

a marketed drug that is not subject to section 503(b) and 

not subject to approval in an application submitted under 

section 505, unless there is a change that produces for 

an individual patient a clinical difference, as determined 

by the prescribing practitioner, between the compounded 

drug and the comparable approved drug. 

‘‘(3) The term ‘approved drug’ means a drug that is 

approved under section 505 and does not appear on the list 

described in subsection (a)(4) of drugs that have been withdrawn or removed from the market because such drugs or 

components of such drugs have been found to be unsafe or 

not effective. 

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

one geographic location or address that— 

‘‘(i) is engaged in the compounding of sterile drugs; 

‘‘(ii) has elected to register as an outsourcing facility; 

and 

‘‘(iii) complies with all of the requirements of this section. 

‘‘(B) An outsourcing facility is not required to be a licensed 

pharmacy. 

‘‘(C) An outsourcing facility may or may not obtain prescriptions for identified individual patients. 

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

for parenteral administration, an ophthalmic or oral inhalation 

drug in aqueous format, or a drug that is required to be 

sterile under Federal or State law.’’. 

‘‘(d) OBLIGATION TO PAY FEES.—Payment of the fee under section 744K, as described in subsection (a)(9), shall not relieve an 

outsourcing facility that is licensed as a pharmacy in any State 

that requires pharmacy licensing fees of its obligation to pay such 

State fees.’’. 

(b) FEES.—Subchapter C of chapter VII (21 U.S.C. 379f et 

seq.) is amended by adding at the end the following: 

‘‘PART 9—FEES RELATING TO OUTSOURCING 

FACILITIES 

‘‘SEC. 744J. DEFINITIONS. 

‘‘In this part: 

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

in section 735(11). 

‘‘(2) The term ‘gross annual sales’ means the total worldwide gross annual sales, in United States dollars, for an outsourcing facility, including the sales of all the affiliates of 

the outsourcing facility. 

‘‘(3) The term ‘outsourcing facility’ has the meaning given 

to such term in section 503B(d)(4). 
H. R. 3204—8 

‘‘(4) The term ‘reinspection’ means, with respect to an outsourcing facility, 1 or more inspections conducted under section 

704 subsequent to an inspection conducted under such provision 

which identified noncompliance materially related to an 

applicable requirement of this Act, specifically to determine 

whether compliance has been achieved to the Secretary’s satisfaction. 

‘‘SEC. 744K. AUTHORITY TO ASSESS AND USE OUTSOURCING FACILITY 

FEES. 

‘‘(a) ESTABLISHMENT AND REINSPECTION FEES.— 

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

fiscal year, the Secretary shall, in accordance with this subsection, assess and collect— 

‘‘(A) an annual establishment fee from each outsourcing 

facility; and 

‘‘(B) a reinspection fee from each outsourcing facility 

subject to a reinspection in such fiscal year. 

‘‘(2) MULTIPLE REINSPECTIONS.—An outsourcing facility 

subject to multiple reinspections in a fiscal year shall be subject 

to a reinspection fee for each reinspection. 

‘‘(b) ESTABLISHMENT AND REINSPECTION FEE SETTING.—The 

Secretary shall— 

‘‘(1) establish the amount of the establishment fee and 

reinspection fee to be collected under this section for each 

fiscal year based on the methodology described in subsection 

(c); and 

‘‘(2) publish such fee amounts in a Federal Register notice 

not later than 60 calendar days before the start of each such 

year. 

‘‘(c) AMOUNT OF ESTABLISHMENT FEE AND REINSPECTION FEE.— ‘‘(1) IN GENERAL.—For each outsourcing facility in a fiscal 

year— 

‘‘(A) except as provided in paragraph (4), the amount 

of the annual establishment fee under subsection (b) shall 

be equal to the sum of— 

‘‘(i) $15,000, multiplied by the inflation adjustment 

factor described in paragraph (2); plus 

‘‘(ii) the small business adjustment factor described 

in paragraph (3); and 

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

under subsection (b) shall be equal to $15,000, multiplied 

by the inflation adjustment factor described in paragraph 

(2). 

‘‘(2) INFLATION ADJUSTMENT FACTOR.— 

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

fiscal years, the fee amounts established in paragraph (1) 

shall be adjusted by the Secretary by notice, published 

in the Federal Register, for a fiscal year by the amount 

equal to the sum of— 

‘‘(i) 1; 

‘‘(ii) the average annual percent change in the 

cost, per full-time equivalent position of the Food and 

Drug Administration, of all personnel compensation 

and benefits paid with respect to such positions for 

the first 3 years of the preceding 4 fiscal years, multiplied by the proportion of personnel compensation and 
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benefits costs to total costs of an average full-time 

equivalent position of the Food and Drug Administration for the first 3 years of the preceding 4 fiscal 

years; plus 

‘‘(iii) the average annual percent change that 

occurred in the Consumer Price Index for urban consumers (U.S. City Average; Not Seasonally Adjusted; 

All items; Annual Index) for the first 3 years of the 

preceding 4 years of available data multiplied by the 

proportion of all costs other than personnel compensation and benefits costs to total costs of an average 

full-time equivalent position of the Food and Drug 

Administration for the first 3 years of the preceding 

4 fiscal years. 

‘‘(B) COMPOUNDED BASIS.—The adjustment made each 

fiscal year under subparagraph (A) shall be added on a 

compounded basis to the sum of all adjustments made 

each fiscal year after fiscal year 2014 under subparagraph 

(A). 

‘‘(3) SMALL BUSINESS ADJUSTMENT FACTOR.—The small business adjustment factor described in this paragraph shall be 

an amount established by the Secretary for each fiscal year 

based on the Secretary’s estimate of— 

‘‘(A) the number of small businesses that will pay 

a reduced establishment fee for such fiscal year; and 

‘‘(B) the adjustment to the establishment fee necessary 

to achieve total fees equaling the total fees that the Secretary would have collected if no entity qualified for the 

small business exception in paragraph (4). 

‘‘(4) EXCEPTION FOR SMALL BUSINESSES.— ‘‘(A) IN GENERAL.—In the case of an outsourcing facility with gross annual sales of $1,000,000 or less in the 12 

months ending April 1 of the fiscal year immediately preceding the fiscal year in which the fees under this section 

are assessed, the amount of the establishment fee under 

subsection (b) for a fiscal year shall be equal to \1/3\ of 

the amount calculated under paragraph (1)(A)(i) for such 

fiscal year. 

‘‘(B) APPLICATION.—To qualify for the exception under 

this paragraph, a small business shall submit to the Secretary a written request for such exception, in a format 

specified by the Secretary in guidance, certifying its gross 

annual sales for the 12 months ending April 1 of the 

fiscal year immediately preceding the fiscal year in which 

fees under this subsection are assessed. Any such application shall be submitted to the Secretary not later than 

April 30 of such immediately preceding fiscal year. 

‘‘(5) CREDITING OF FEES.—In establishing the small business adjustment factor under paragraph (3) for a fiscal year, 

the Secretary shall— 

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

year to the next year if the Secretary overestimated the 

amount of the small business adjustment factor for such 

previous fiscal year; and 

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

of fees and such other factors as the Secretary determines 

appropriate. 
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‘‘(d) USE OF FEES.—The Secretary shall make all of the fees 

collected pursuant to subparagraphs (A) and (B) of subsection (a)(1) 

available solely to pay for the costs of oversight of outsourcing 

facilities. 

‘‘(e) SUPPLEMENT NOT SUPPLANT.—Funds received by the Secretary pursuant to this section shall be used to supplement and 

not supplant any other Federal funds available to carry out the 

activities described in this section. 

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

under this section shall be collected and available for obligation 

only to the extent and in the amount provided in advance in 

appropriations Acts. Such fees are authorized to remain available 

until expended. Such sums as may be necessary may be transferred 

from the Food and Drug Administration salaries and expenses 

appropriation account without fiscal year limitation to such appropriation account for salaries and expenses with such fiscal year 

limitation. The sums transferred shall be available solely for the 

purpose of paying the costs of oversight of outsourcing facilities. 

‘‘(g) COLLECTION OF FEES.— 

‘‘(1) ESTABLISHMENT FEE.—An outsourcing facility shall 

remit the establishment fee due under this section in a fiscal 

year when submitting a registration pursuant to section 503B(b) 

for such fiscal year. 

‘‘(2) REINSPECTION FEE.—The Secretary shall specify in the 

Federal Register notice described in subsection (b)(2) the 

manner in which reinspection fees assessed under this section 

shall be collected and the timeline for payment of such fees. 

Such a fee shall be collected after the Secretary has conducted 

a reinspection of the outsourcing facility involved. 

‘‘(3) EFFECT OF FAILURE TO PAY FEES.— ‘‘(A) REGISTRATION.—An outsourcing facility shall not 

be considered registered under section 503B(b) in a fiscal 

year until the date that the outsourcing facility remits 

the establishment fee under this subsection for such fiscal 

year. 

‘‘(B) MISBRANDING.—All drugs manufactured, prepared, 

propagated, compounded, or processed by an outsourcing 

facility for which any establishment fee or reinspection 

fee has not been paid, as required by this section, shall 

be deemed misbranded under section 502 until the fees 

owed for such outsourcing facility under this section have 

been paid. 

‘‘(4) COLLECTION OF UNPAID FEES.—In any case where the 

Secretary does not receive payment of a fee assessed under 

this section within 30 calendar days after it is due, such fee 

shall be treated as a claim of the United States Government 

subject to provisions of subchapter II of chapter 37 of title 

31, United States Code. 

‘‘(h) ANNUAL REPORT TO CONGRESS.—Not later than 120 calendar days after each fiscal year in which fees are assessed and 

collected under this section, the Secretary shall submit a report 

to the Committee on Health, Education, Labor, and Pensions of 

the Senate and the Committee on Energy and Commerce of the 

House of Representatives, to include a description of fees assessed 

and collected for such year, a summary description of entities paying 

the fees, a description of the hiring and placement of new staff, 

a description of the use of fee resources to support inspecting 
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outsourcing facilities, and the number of inspections and reinspections of such facilities performed each year. 

‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—For fiscal year 2014 

and each subsequent fiscal year, there is authorized to be appropriated for fees under this section an amount equivalent to the 

total amount of fees assessed for such fiscal year under this section.’’. 

SEC. 103. PENALTIES. 

(a) PROHIBITED ACTS.—Section 301 (21 U.S.C. 331) is amended 

by adding at the end the following: 

‘‘(ccc)(1) The resale of a compounded drug that is labeled ‘not 

for resale’ in accordance with section 503B. 

‘‘(2) With respect to a drug to be compounded pursuant to 

section 503A or 503B, the intentional falsification of a prescription, 

as applicable. 

‘‘(3) The failure to report drugs or adverse events by an entity 

that is registered in accordance with subsection (b) of section 503B.’’. 

(b) MISBRANDED DRUGS.—Section 502 (21 U.S.C. 352) is 

amended by adding at the end the following: 

‘‘(bb) If the advertising or promotion of a compounded drug 

is false or misleading in any particular.’’. 

SEC. 104. REGULATIONS. 

In promulgating any regulations to implement this title (and 

the amendments made by this title), the Secretary of Health and 

Human Services shall— 

(1) issue a notice of proposed rulemaking that includes 

the proposed regulation; 

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

for comments on the proposed regulation; and 

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

following publication of the proposed rule and not less than 

30 calendar days before the effective date of such final regulation. 

SEC. 105. ENHANCED COMMUNICATION. 

(a) SUBMISSIONS FROM STATE BOARDS OF PHARMACY.—In a 

manner specified by the Secretary of Health and Human Services 

(referred to in this section as the ‘‘Secretary’’), the Secretary shall 

receive submissions from State boards of pharmacy— 

(1) describing actions taken against compounding pharmacies, as described in subsection (b); or 

(2) expressing concerns that a compounding pharmacy may 

be acting contrary to section 503A of the Federal Food, Drug, 

and Cosmetic Act (21 U.S.C. 353a). 

(b) CONTENT OF SUBMISSIONS FROM STATE BOARDS OF PHAR- MACY.—An action referred to in subsection (a)(1) is, with respect 

to a pharmacy that compounds drugs, any of the following: 

(1) The issuance of a warning letter, or the imposition 

of sanctions or penalties, by a State for violations of a State’s 

pharmacy regulations pertaining to compounding. 

(2) The suspension or revocation of a State-issued pharmacy 

license or registration for violations of a State’s pharmacy regulations pertaining to compounding. 

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

relating to the quality or purity of such drug. 
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(c) CONSULTATION.—The Secretary shall implement subsection 

(a) in consultation with the National Association of Boards of Pharmacy. 

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

shall immediately notify State boards of pharmacy when— 

(1) the Secretary receives a submission under subsection 

(a)(1); or 

(2) the Secretary makes a determination that a pharmacy 

is acting contrary to section 503A of the Federal Food, Drug, 

and Cosmetic Act. 

SEC. 106. SEVERABILITY. 

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

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

(1), by striking ‘‘unsolicited’’; 

(2) by striking subsection (c); 

(3) by redesignating subsections (d) through (f) as subsections (c) through (e), respectively; and 

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

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

(b) SEVERABILITY.—If any provision of this Act (including the 

amendments made by this Act) is declared unconstitutional, or 

the applicability of this Act (including the amendments made by 

this Act) to any person or circumstance is held invalid, the constitutionality of the remainder of this Act (including the amendments 

made by this Act) and the applicability thereof to other persons 

and circumstances shall not be affected. 

SEC. 107. GAO STUDY. 

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

enactment of this Act, the Comptroller General of the United States 

shall submit to Congress a report on pharmacy compounding and 

the adequacy of State and Federal efforts to assure the safety 

of compounded drugs. 

(b) CONTENTS.—The report required under this section shall 

include— 

(1) a review of pharmacy compounding in each State, and 

the settings in which such compounding occurs; 

(2) a review of the State laws and policies governing pharmacy compounding, including enforcement of State laws and 

policies; 

(3) an assessment of the available tools to permit purchasers of compounded drugs to determine the safety and 

quality of such drugs; 

(4) an evaluation of the effectiveness of the communication 

among States and between States and the Food and Drug 

Administration regarding compounding; and 

(5) an evaluation of the Food and Drug Administration’s 

implementation of sections 503A and 503B of the Federal Food, 

Drug, and Cosmetic Act. 
H. R. 3204—13 

TITLE II—DRUG SUPPLY CHAIN 

SECURITY 

SEC. 201. SHORT TITLE. 

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

Act’’. 

SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN. 

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

the end the following: 

‘‘Subchapter H—Pharmaceutical Distribution Supply Chain 

‘‘SEC. 581. DEFINITIONS. 

‘‘In this subchapter: 

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

entity that has a relationship with a second business entity 

if, directly or indirectly— 

‘‘(A) one business entity controls, or has the power 

to control, the other business entity; or 

‘‘(B) a third party controls, or has the power to control, 

both of the business entities. 

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

‘‘(A) in the case of a manufacturer or repackager, 

having a valid registration in accordance with section 510; 

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

a valid license under State law or section 583, in accordance 

with section 582(a)(6), and complying with the licensure 

reporting requirements under section 503(e), as amended 

by the Drug Supply Chain Security Act; 

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

having a valid license under State law or section 584(a)(1), 

in accordance with section 582(a)(7), and complying with 

the licensure reporting requirements under section 584(b); 

and 

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

under State law. 

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

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

group of chain pharmacies under common ownership and 

control that do not act as a wholesale distributor, or any 

other person authorized by law to dispense or administer 

prescription drugs, and the affiliated warehouses or distribution centers of such entities under common ownership 

and control that do not act as a wholesale distributor; 

and 

‘‘(B) does not include a person who dispenses only 

products to be used in animals in accordance with section 

512(a)(5). 

‘‘(4) DISPOSITION.—The term ‘disposition’, with respect to 

a product within the possession or control of an entity, means 

the removal of such product from the pharmaceutical distribution supply chain, which may include disposal or return of 

the product for disposal or other appropriate handling and 

other actions, such as retaining a sample of the product for 

further additional physical examination or laboratory analysis 
H. R. 3204—14 

of the product by a manufacturer or regulatory or law enforcement agency. 

‘‘(5) DISTRIBUTE OR DISTRIBUTION.—The term ‘distribute’ 

or ‘distribution’ means the sale, purchase, trade, delivery, handling, storage, or receipt of a product, and does not include 

the dispensing of a product pursuant to a prescription executed 

in accordance with section 503(b)(1) or the dispensing of a 

product approved under section 512(b). 

‘‘(6) EXCLUSIVE DISTRIBUTOR.—The term ‘exclusive distributor’ means the wholesale distributor that directly purchased the product from the manufacturer and is the sole 

distributor of that manufacturer’s product to a subsequent repackager, wholesale distributor, or dispenser. 

‘‘(7) HOMOGENEOUS CASE.—The term ‘homogeneous case’ 

means a sealed case containing only product that has a single 

National Drug Code number belonging to a single lot. 

‘‘(8) ILLEGITIMATE PRODUCT.—The term ‘illegitimate 

product’ means a product for which credible evidence shows 

that the product— 

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

‘‘(B) is intentionally adulterated such that the product 

would result in serious adverse health consequences or 

death to humans; 

‘‘(C) is the subject of a fraudulent transaction; or 

‘‘(D) appears otherwise unfit for distribution such that 

the product would be reasonably likely to result in serious 

adverse health consequences or death to humans. 

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

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

a valid license in accordance with section 503(e) or section 

582(a)(6), as applicable; 

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

having a valid license in accordance with section 584(a) 

or section 582(a)(7), as applicable; and 

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

under State law. 

‘‘(10) MANUFACTURER.—The term ‘manufacturer’ means, 

with respect to a product— 

‘‘(A) a person that holds an application approved under 

section 505 or a license issued under section 351 of the 

Public Health Service Act for such product, or if such 

product is not the subject of an approved application or 

license, the person who manufactured the product; 

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

subparagraph (A) that obtains the product directly from 

a person described in this subparagraph or subparagraph 

(A) or (C); or 

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

(A) or (B) that receives the product directly from a person 

described in this subparagraph or subparagraph (A) or 

(B). 

‘‘(11) PACKAGE.— ‘‘(A) IN GENERAL.—The term ‘package’ means the 

smallest individual saleable unit of product for distribution 

by a manufacturer or repackager that is intended by the 

manufacturer for ultimate sale to the dispenser of such 

product. 
H. R. 3204—15 

‘‘(B) INDIVIDUAL SALEABLE UNIT.—For purposes of this 

paragraph, an ‘individual saleable unit’ is the smallest 

container of product introduced into commerce by the 

manufacturer or repackager that is intended by the manufacturer or repackager for individual sale to a dispenser. 

‘‘(12) PRESCRIPTION DRUG.—The term ‘prescription drug’ 

means a drug for human use subject to section 503(b)(1). 

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

drug in a finished dosage form for administration to a patient 

without substantial further manufacturing (such as capsules, 

tablets, and lyophilized products before reconstitution), but for 

purposes of section 582, does not include blood or blood components intended for transfusion, radioactive drugs or radioactive 

biological products (as defined in section 600.3(ee) of title 21, 

Code of Federal Regulations) that are regulated by the Nuclear 

Regulatory Commission or by a State pursuant to an agreement 

with such Commission under section 274 of the Atomic Energy 

Act of 1954 (42 U.S.C. 2021), imaging drugs, an intravenous 

product described in clause (xiv), (xv), or (xvi) of paragraph 

(24)(B), any medical gas (as defined in section 575), homeopathic drugs marketed in accordance with applicable guidance 

under this Act, or a drug compounded in compliance with 

section 503A or 503B. 

‘‘(14) PRODUCT IDENTIFIER.—The term ‘product identifier’ 

means a standardized graphic that includes, in both humanreadable form and on a machine-readable data carrier that 

conforms to the standards developed by a widely recognized 

international standards development organization, the 

standardized numerical identifier, lot number, and expiration 

date of the product. 

‘‘(15) QUARANTINE.—The term ‘quarantine’ means the storage or identification of a product, to prevent distribution or 

transfer of the product, in a physically separate area clearly 

identified for such use or through other procedures. 

‘‘(16) REPACKAGER.—The term ‘repackager’ means a person 

who owns or operates an establishment that repacks and relabels a product or package for— 

‘‘(A) further sale; or 

‘‘(B) distribution without a further transaction. 

‘‘(17) RETURN.—The term ‘return’ means providing product 

to the authorized immediate trading partner from which such 

product was purchased or received, or to a returns processor 

or reverse logistics provider for handling of such product. 

‘‘(18) RETURNS PROCESSOR OR REVERSE LOGISTICS PROVIDER.—The term ‘returns processor’ or ‘reverse logistics provider’ means a person who owns or operates an establishment 

that dispositions or otherwise processes saleable or nonsaleable 

product received from an authorized trading partner such that 

the product may be processed for credit to the purchaser, manufacturer, or seller or disposed of for no further distribution. 

‘‘(19) SPECIFIC PATIENT NEED.—The term ‘specific patient 

need’ refers to the transfer of a product from one pharmacy 

to another to fill a prescription for an identified patient. Such 

term does not include the transfer of a product from one pharmacy to another for the purpose of increasing or replenishing 

stock in anticipation of a potential need. 
H. R. 3204—16 

‘‘(20) STANDARDIZED NUMERICAL IDENTIFIER.—The term 

‘standardized numerical identifier’ means a set of numbers 

or characters used to uniquely identify each package or homogenous case that is composed of the National Drug Code that 

corresponds to the specific product (including the particular 

package configuration) combined with a unique alphanumeric 

serial number of up to 20 characters. 

‘‘(21) SUSPECT PRODUCT.—The term ‘suspect product’ means 

a product for which there is reason to believe that such 

product— 

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

‘‘(B) is potentially intentionally adulterated such that 

the product would result in serious adverse health consequences or death to humans; 

‘‘(C) is potentially the subject of a fraudulent transaction; or 

‘‘(D) appears otherwise unfit for distribution such that 

the product would result in serious adverse health consequences or death to humans. 

‘‘(22) THIRD-PARTY LOGISTICS PROVIDER.—The term ‘thirdparty logistics provider’ means an entity that provides or coordinates warehousing, or other logistics services of a product in 

interstate commerce on behalf of a manufacturer, wholesale 

distributor, or dispenser of a product, but does not take ownership of the product, nor have responsibility to direct the sale 

or disposition of the product. 

‘‘(23) TRADING PARTNER.—The term ‘trading partner’ 

means— 

‘‘(A) a manufacturer, repackager, wholesale distributor, 

or dispenser from whom a manufacturer, repackager, 

wholesale distributor, or dispenser accepts direct ownership 

of a product or to whom a manufacturer, repackager, wholesale distributor, or dispenser transfers direct ownership 

of a product; or 

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

manufacturer, repackager, wholesale distributor, or dispenser accepts direct possession of a product or to whom 

a manufacturer, repackager, wholesale distributor, or dispenser transfers direct possession of a product. 

‘‘(24) TRANSACTION.— 

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

transfer of product between persons in which a change 

of ownership occurs. 

‘‘(B) EXEMPTIONS.—The term ‘transaction’ does not 

include— 

‘‘(i) intracompany distribution of any product 

between members of an affiliate or within a manufacturer; 

‘‘(ii) the distribution of a product among hospitals 

or other health care entities that are under common 

control; 

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

medical reasons including a public health emergency 

declaration pursuant to section 319 of the Public 

Health Service Act, except that a drug shortage not 

caused by a public health emergency shall not constitute an emergency medical reason; 
H. R. 3204—17 

‘‘(iv) the dispensing of a product pursuant to a 

prescription executed in accordance with section 

503(b)(1); 

‘‘(v) the distribution of product samples by a manufacturer or a licensed wholesale distributor in accordance with section 503(d); 

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

intended for transfusion; 

‘‘(vii) the distribution of minimal quantities of 

product by a licensed retail pharmacy to a licensed 

practitioner for office use; 

‘‘(viii) the sale, purchase, or trade of a drug or 

an offer to sell, purchase, or trade a drug by a charitable organization described in section 501(c)(3) of the 

Internal Revenue Code of 1986 to a nonprofit affiliate 

of the organization to the extent otherwise permitted 

by law; 

‘‘(ix) the distribution of a product pursuant to the 

sale or merger of a pharmacy or pharmacies or a 

wholesale distributor or wholesale distributors, except 

that any records required to be maintained for the 

product shall be transferred to the new owner of the 

pharmacy or pharmacies or wholesale distributor or 

wholesale distributors; 

‘‘(x) the dispensing of a product approved under 

section 512(c); 

‘‘(xi) products transferred to or from any facility 

that is licensed by the Nuclear Regulatory Commission 

or by a State pursuant to an agreement with such 

Commission under section 274 of the Atomic Energy 

Act of 1954 (42 U.S.C. 2021); 

‘‘(xii) a combination product that is not subject 

to approval under section 505 or licensure under section 351 of the Public Health Service Act, and that 

is— 

‘‘(I) a product comprised of a device and 1 

or more other regulated components (such as a 

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

that are physically, chemically, or otherwise combined or mixed and produced as a single entity; 

‘‘(II) 2 or more separate products packaged 

together in a single package or as a unit and 

comprised of a drug and device or device and 

biological product; or 

‘‘(III) 2 or more finished medical devices plus 

one or more drug or biological products that are 

packaged together in what is referred to as a ‘medical convenience kit’ as described in clause (xiii); 

‘‘(xiii) the distribution of a collection of finished 

medical devices, which may include a product or 

biological product, assembled in kit form strictly for 

the convenience of the purchaser or user (referred to 

in this clause as a ‘medical convenience kit’) if— 

‘‘(I) the medical convenience kit is assembled 

in an establishment that is registered with the 

Food and Drug Administration as a device manufacturer in accordance with section 510(b)(2); 
H. R. 3204—18 

‘‘(II) the medical convenience kit does not contain a controlled substance that appears in a 

schedule contained in the Comprehensive Drug 

Abuse Prevention and Control Act of 1970; 

‘‘(III) in the case of a medical convenience 

kit that includes a product, the person that manufacturers the kit— 

‘‘(aa) purchased such product directly from 

the pharmaceutical manufacturer or from a 

wholesale distributor that purchased the 

product directly from the pharmaceutical 

manufacturer; and 

‘‘(bb) does not alter the primary container 

or label of the product as purchased from the 

manufacturer or wholesale distributor; and 

‘‘(IV) in the case of a medical convenience kit 

that includes a product, the product is— 

‘‘(aa) an intravenous solution intended for 

the replenishment of fluids and electrolytes; 

‘‘(bb) a product intended to maintain the 

equilibrium of water and minerals in the body; 

‘‘(cc) a product intended for irrigation or 

reconstitution; 

‘‘(dd) an anesthetic; 

‘‘(ee) an anticoagulant; 

‘‘(ff) a vasopressor; or 

‘‘(gg) a sympathomimetic; 

‘‘(xiv) the distribution of an intravenous product 

that, by its formulation, is intended for the replenishment of fluids and electrolytes (such as sodium, chloride, and potassium) or calories (such as dextrose and 

amino acids); 

‘‘(xv) the distribution of an intravenous product 

used to maintain the equilibrium of water and minerals 

in the body, such as dialysis solutions; 

‘‘(xvi) the distribution of a product that is intended 

for irrigation, or sterile water, whether intended for 

such purposes or for injection; 

‘‘(xvii) the distribution of a medical gas (as defined 

in section 575); or 

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

product under section 351 of the Public Health Service 

Act that meets the definition of a device under section 

201(h). 

‘‘(25) TRANSACTION HISTORY.—The term ‘transaction history’ means a statement in paper or electronic form, including 

the transaction information for each prior transaction going 

back to the manufacturer of the product. 

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

information’ means— 

‘‘(A) the proprietary or established name or names 

of the product; 

‘‘(B) the strength and dosage form of the product; 

‘‘(C) the National Drug Code number of the product; 

‘‘(D) the container size; 

‘‘(E) the number of containers; 

‘‘(F) the lot number of the product; 
H. R. 3204—19 

‘‘(G) the date of the transaction; 

‘‘(H) the date of the shipment, if more than 24 hours 

after the date of the transaction; 

‘‘(I) the business name and address of the person from 

whom ownership is being transferred; and 

‘‘(J) the business name and address of the person to 

whom ownership is being transferred. 

‘‘(27) TRANSACTION STATEMENT.—The ‘transaction statement’ is a statement, in paper or electronic form, that the 

entity transferring ownership in a transaction— 

‘‘(A) is authorized as required under the Drug Supply 

Chain Security Act; 

‘‘(B) received the product from a person that is authorized as required under the Drug Supply Chain Security 

Act; 

‘‘(C) received transaction information and a transaction 

statement from the prior owner of the product, as required 

under section 582; 

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

product; 

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

with verification requirements under section 582; 

‘‘(F) did not knowingly provide false transaction 

information; and 

‘‘(G) did not knowingly alter the transaction history. 

‘‘(28) VERIFICATION OR VERIFY.—The term ‘verification’ or 

‘verify’ means determining whether the product identifier 

affixed to, or imprinted upon, a package or homogeneous case 

corresponds to the standardized numerical identifier or lot 

number and expiration date assigned to the product by the 

manufacturer or the repackager, as applicable in accordance 

with section 582. 

‘‘(29) WHOLESALE DISTRIBUTOR.—The term ‘wholesale distributor’ means a person (other than a manufacturer, a manufacturer’s co-licensed partner, a third-party logistics provider, 

or repackager) engaged in wholesale distribution (as defined 

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

Security Act). 

‘‘SEC. 582. REQUIREMENTS. 

‘‘(a) IN GENERAL.— 

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

wholesale distributor, and dispenser shall comply with the 

requirements set forth in this section with respect to the role 

of such manufacturer, repackager, wholesale distributor, or dispenser in a transaction involving product. If an entity meets 

the definition of more than one of the entities listed in the 

preceding sentence, such entity shall comply with all applicable 

requirements in this section, but shall not be required to duplicate requirements. 

‘‘(2) INITIAL STANDARDS.— ‘‘(A) IN GENERAL.—The Secretary shall, in consultation 

with other appropriate Federal officials, manufacturers, repackagers, wholesale distributors, dispensers, and other 

pharmaceutical distribution supply chain stakeholders, 

issue a draft guidance document that establishes standards 

for the interoperable exchange of transaction information, 
H. R. 3204—20 

transaction history, and transaction statements, in paper 

or electronic format, for compliance with this subsection 

and subsections (b), (c), (d), and (e). In establishing such 

standards, the Secretary shall consider the feasibility of 

establishing standardized documentation to be used by 

members of the pharmaceutical distribution supply chain 

to convey the transaction information, transaction history, 

and transaction statement to the subsequent purchaser 

of a product and to facilitate the exchange of lot level 

data. The standards established under this paragraph shall 

take into consideration the standards established under 

section 505D and shall comply with a form and format 

developed by a widely recognized international standards 

development organization. 

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

under subparagraph (A), the Secretary shall gather comments and information from stakeholders and maintain 

such comments and information in a public docket for 

at least 60 days prior to issuing such guidance. 

‘‘(C) PUBLICATION.—The Secretary shall publish the 

standards established under subparagraph (A) not later 

than 1 year after the date of enactment of the Drug Supply 

Chain Security Act. 

‘‘(3) WAIVERS, EXCEPTIONS, AND EXEMPTIONS.— 

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

date of enactment of the Drug Supply Chain Security Act, 

the Secretary shall, by guidance— 

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

manufacturer, repackager, wholesale distributor, or 

dispenser may request a waiver from any of the 

requirements set forth in this section, which the Secretary may grant if the Secretary determines that such 

requirements would result in an undue economic hardship or for emergency medical reasons, including a 

public health emergency declaration pursuant to section 319 of the Public Health Service Act; 

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

determines exceptions, and a process through which 

a manufacturer or repackager may request such an 

exception, to the requirements relating to product 

identifiers if a product is packaged in a container too 

small or otherwise unable to accommodate a label with 

sufficient space to bear the information required for 

compliance with this section; and 

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

may determine other products or transactions that 

shall be exempt from the requirements of this section. 

‘‘(B) CONTENT.—The guidance issued under subparagraph (A) shall include a process for the biennial review 

and renewal of such waivers, exceptions, and exemptions, 

as applicable. 

‘‘(C) PROCESS.—In issuing the guidance under this 

paragraph, the Secretary shall provide an effective date 

that is not later than 180 days prior to the date on which 

manufacturers are required to affix or imprint a product 

identifier to each package and homogenous case of product 
H. R. 3204—21 

intended to be introduced in a transaction into commerce 

consistent with this section. 

‘‘(4) SELF-EXECUTING REQUIREMENTS.—Except where otherwise specified, the requirements of this section may be enforced 

without further regulations or guidance from the Secretary. 

‘‘(5) GRANDFATHERING PRODUCT.— 

‘‘(A) PRODUCT IDENTIFIER.—Not later than 2 years after 

the date of enactment of the Drug Supply Chain Security 

Act, the Secretary shall finalize guidance specifying 

whether and under what circumstances product that is 

not labeled with a product identifier and that is in the 

pharmaceutical distribution supply chain at the time of 

the effective date of the requirements of this section shall 

be exempted from the requirements of this section. 

‘‘(B) TRACING.—For a product that entered the pharmaceutical distribution supply chain prior to January 1, 

2015— 

‘‘(i) authorized trading partners shall be exempt 

from providing transaction information as required 

under subsections (b)(1)(A)(i), (c)(1)(A)(ii), (d)(1)(A)(ii), 

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

‘‘(ii) transaction history required under this section 

shall begin with the owner of such product on such 

date; and 

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

shall be exempt from asserting receipt of transaction 

information and transaction statement from the prior 

owner as required under this section. 

‘‘(6) WHOLESALE DISTRIBUTOR LICENSES.—Notwithstanding 

section 581(9)(A), until the effective date of the wholesale distributor licensing regulations under section 583, the term 

‘licensed’ or ‘authorized’, as it relates to a wholesale distributor 

with respect to prescription drugs, shall mean a wholesale 

distributor with a valid license under State law. 

‘‘(7) THIRD-PARTY LOGISTICS PROVIDER LICENSES.—Until the 

effective date of the third-party logistics provider licensing regulations under section 584, a third-party logistics provider shall 

be considered ‘licensed’ under section 581(9)(B) unless the Secretary has made a finding that the third-party logistics provider 

does not utilize good handling and distribution practices and 

publishes notice thereof. 

‘‘(8) LABEL CHANGES.—Changes made to package labels 

solely to incorporate the product identifier may be submitted 

to the Secretary in the annual report of an establishment, 

in accordance with section 314.70(d) of chapter 21, Code of 

Federal Regulations (or any successor regulation). 

‘‘(9) PRODUCT IDENTIFIERS.—With respect to any requirement relating to product identifiers under this subchapter— 

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

the use of other technologies for data instead of or in 

addition to the technologies described in clauses (i) and 

(ii), the applicable data— 

‘‘(i) shall be included in a 2-dimensional data 

matrix barcode when affixed to, or imprinted upon, 

a package; and 
H. R. 3204—22 

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

data matrix barcode when affixed to, or imprinted 

upon, a homogeneous case; and 

‘‘(B) verification of the product identifier may occur 

by using human-readable or machine-readable methods. 

‘‘(b) MANUFACTURER REQUIREMENTS.— 

‘‘(1) PRODUCT TRACING.— 

‘‘(A) IN GENERAL.—Beginning not later than January 

1, 2015, a manufacturer shall— 

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

in which such manufacturer transfers ownership of 

a product, provide the subsequent owner with transaction history, transaction information, and a transaction statement, in a single document in an paper 

or electronic format; and 

‘‘(ii) capture the transaction information (including 

lot level information), transaction history, and transaction statement for each transaction and maintain 

such information, history, and statement for not less 

than 6 years after the date of the transaction. 

‘‘(B) REQUESTS FOR INFORMATION.—Upon a request by 

the Secretary or other appropriate Federal or State official, 

in the event of a recall or for the purpose of investigating 

a suspect product or an illegitimate product, a manufacturer shall, not later than 1 business day, and not to 

exceed 48 hours, after receiving the request, or in other 

such reasonable time as determined by the Secretary, based 

on the circumstances of the request, provide the applicable 

transaction information, transaction history, and transaction statement for the product. 

‘‘(C) ELECTRONIC FORMAT.— 

‘‘(i) IN GENERAL.—Beginning not later than 4 years 

after the date of enactment of the Drug Supply Chain 

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

manufacturer shall provide the transaction information, transaction history, and transaction statement 

required under subparagraph (A)(i) in electronic format. 

‘‘(ii) EXCEPTION.—A manufacturer may continue 

to provide the transaction information, transaction history, and transaction statement required under 

subparagraph (A)(i) in a paper format to a licensed 

health care practitioner authorized to prescribe medication under State law or other licensed individual under 

the supervision or direction of such a practitioner who 

dispenses product in the usual course of professional 

practice. 

‘‘(2) PRODUCT IDENTIFIER.— 

‘‘(A) IN GENERAL.—Beginning not later than 4 years 

after the date of enactment of the Drug Supply Chain 

Security Act, a manufacturer shall affix or imprint a 

product identifier to each package and homogenous case 

of a product intended to be introduced in a transaction 

into commerce. Such manufacturer shall maintain the 

product identifier information for such product for not less 

than 6 years after the date of the transaction. 
H. R. 3204—23 

‘‘(B) EXCEPTION.—A package that is required to have 

a standardized numerical identifier is not required to have 

a unique device identifier. 

‘‘(3) AUTHORIZED TRADING PARTNERS.—Beginning not later 

than January 1, 2015, the trading partners of a manufacturer 

may be only authorized trading partners. 

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

2015, a manufacturer shall have systems in place to enable 

the manufacturer to comply with the following requirements: 

‘‘(A) SUSPECT PRODUCT.— 

‘‘(i) IN GENERAL.—Upon making a determination 

that a product in the possession or control of the manufacturer is a suspect product, or upon receiving a 

request for verification from the Secretary that has 

made a determination that a product within the possession or control of a manufacturer is a suspect product, 

a manufacturer shall— 

‘‘(I) quarantine such product within the possession or control of the manufacturer from product 

intended for distribution until such product is 

cleared or dispositioned; and 

‘‘(II) promptly conduct an investigation in 

coordination with trading partners, as applicable, 

to determine whether the product is an illegitimate 

product, which shall include validating any 

applicable transaction history and transaction 

information in the possession of the manufacturer 

and otherwise investigating to determine whether 

the product is an illegitimate product, and, beginning 4 years after the date of enactment of the 

Drug Supply Chain Security Act, verifying the 

product at the package level, including the 

standardized numerical identifier. 

‘‘(ii) CLEARED PRODUCT.—If the manufacturer 

makes the determination that a suspect product is 

not an illegitimate product, the manufacturer shall 

promptly notify the Secretary, if applicable, of such 

determination and such product may be further distributed. 

‘‘(iii) RECORDS.—A manufacturer shall keep records 

of the investigation of a suspect product for not less 

than 6 years after the conclusion of the investigation. 

‘‘(B) ILLEGITIMATE PRODUCT.— 

‘‘(i) IN GENERAL.—Upon determining that a product 

in the possession or control of a manufacturer is an 

illegitimate product, the manufacturer shall, in a 

manner consistent with the systems and processes of 

such manufacturer— 

‘‘(I) quarantine such product within the possession or control of the manufacturer from product 

intended for distribution until such product is 

dispositioned; 

‘‘(II) disposition the illegitimate product within 

the possession or control of the manufacturer; 
H. R. 3204—24 

‘‘(III) take reasonable and appropriate steps 

to assist a trading partner to disposition an illegitimate product not in the possession or control of 

the manufacturer; and 

‘‘(IV) retain a sample of the product for further 

physical examination or laboratory analysis of the 

product by the manufacturer or Secretary (or other 

appropriate Federal or State official) upon request 

by the Secretary (or other appropriate Federal or 

State official), as necessary and appropriate. 

‘‘(ii) MAKING A NOTIFICATION.— 

‘‘(I) ILLEGITIMATE PRODUCT.—Upon determining that a product in the possession or control 

of the manufacturer is an illegitimate product, the 

manufacturer shall notify the Secretary and all 

immediate trading partners that the manufacturer 

has reason to believe may have received such 

illegitimate product of such determination not later 

than 24 hours after making such determination. 

‘‘(II) HIGH RISK OF ILLEGITIMACY.—A manufacturer shall notify the Secretary and immediate 

trading partners that the manufacturer has reason 

to believe may have in the trading partner’s 

possession a product manufactured by, or purported to be a product manufactured by, the manufacturer not later than 24 hours after determining 

or being notified by the Secretary or a trading 

partner that there is a high risk that such product 

is an illegitimate product. For purposes of this 

subclause, a ‘high risk’ may include a specific high 

risk that could increase the likelihood that illegitimate product will enter the pharmaceutical distribution supply chain and other high risks as 

determined by the Secretary in guidance pursuant 

to subsection (h). 

‘‘(iii) RESPONDING TO A NOTIFICATION.—Upon the 

receipt of a notification from the Secretary or a trading 

partner that a determination has been made that a 

product is an illegitimate product, a manufacturer shall 

identify all illegitimate product subject to such notification that is in the possession or control of the manufacturer, including any product that is subsequently 

received, and shall perform the activities described 

in subparagraph (A). 

‘‘(iv) TERMINATING A NOTIFICATION.—Upon making 

a determination, in consultation with the Secretary, 

that a notification is no longer necessary, a manufacturer shall promptly notify immediate trading partners 

that the manufacturer notified pursuant to clause (ii) 

that such notification has been terminated. 

‘‘(v) RECORDS.—A manufacturer shall keep records 

of the disposition of an illegitimate product for not 

less than 6 years after the conclusion of the disposition. 

‘‘(C) REQUESTS FOR VERIFICATION.—Beginning 4 years 

after the date of enactment of the Drug Supply Chain 

Security Act, upon receiving a request for verification from 
H. R. 3204—25 

an authorized repackager, wholesale distributor, or dispenser that is in possession or control of a product such 

person believes to be manufactured by such manufacturer, 

a manufacturer shall, not later than 24 hours after 

receiving the request for verification or in other such 

reasonable time as determined by the Secretary, based 

on the circumstances of the request, notify the person 

making the request whether the product identifier, 

including the standardized numerical identifier, that is 

the subject of the request corresponds to the product identifier affixed or imprinted by the manufacturer. If a manufacturer responding to a request for verification identifies 

a product identifier that does not correspond to that affixed 

or imprinted by the manufacturer, the manufacturer shall 

treat such product as suspect product and conduct an investigation as described in subparagraph (A). If the manufacturer has reason to believe the product is an illegitimate 

product, the manufacturer shall advise the person making 

the request of such belief at the time such manufacturer 

responds to the request for verification. 

‘‘(D) ELECTRONIC DATABASE.—A manufacturer may satisfy the requirements of this paragraph by developing a 

secure electronic database or utilizing a secure electronic 

database developed or operated by another entity. The 

owner of such database shall establish the requirements 

and processes to respond to requests and may provide 

for data access to other members of the pharmaceutical 

distribution supply chain, as appropriate. The development 

and operation of such a database shall not relieve a manufacturer of the requirement under this paragraph to 

respond to a request for verification submitted by means 

other than a secure electronic database. 

‘‘(E) SALEABLE RETURNED PRODUCT.—Beginning 4 years 

after the date of enactment of the Drug Supply Chain 

Security Act (except as provided pursuant to subsection 

(a)(5)), upon receipt of a returned product that the manufacturer intends to further distribute, before further distributing such product, the manufacturer shall verify the 

product identifier, including the standardized numerical 

identifier, for each sealed homogeneous case of such product 

or, if such product is not in a sealed homogeneous case, 

verify the product identifier, including the standardized 

numerical identifier, on each package. 

‘‘(F) NONSALEABLE RETURNED PRODUCT.—A manufacturer may return a nonsaleable product to the manufacturer or repackager, to the wholesale distributor from 

whom such product was purchased, or to a person acting 

on behalf of such a person, including a returns processor, 

without providing the information described in paragraph 

(1)(A)(i). 

‘‘(c) WHOLESALE DISTRIBUTOR REQUIREMENTS.— ‘‘(1) PRODUCT TRACING.— ‘‘(A) IN GENERAL.—Beginning not later than January 

1, 2015, the following requirements shall apply to wholesale 

distributors: 

‘‘(i) A wholesale distributor shall not accept ownership of a product unless the previous owner prior to, 
H. R. 3204—26 

or at the time of, the transaction provides the transaction history, transaction information, and a transaction statement for the product, as applicable under 

this subparagraph. 

‘‘(ii)(I)(aa) If the wholesale distributor purchased 

a product directly from the manufacturer, the exclusive 

distributor of the manufacturer, or a repackager that 

purchased directly from the manufacturer, then prior 

to, or at the time of, each transaction in which the 

wholesale distributor transfers ownership of a product, 

the wholesale distributor shall provide to the subsequent purchaser— 

‘‘(AA) a transaction statement, which shall 

state that such wholesale distributor, or a member 

of the affiliate of such wholesale distributor, purchased the product directly from the manufacturer, 

exclusive distributor of the manufacturer, or repackager that purchased the product directly from 

the manufacturer; and 

‘‘(BB) subject to subclause (II), the transaction 

history and transaction information. 

‘‘(bb) The wholesale distributor shall provide the 

transaction history, transaction information, and transaction statement under item (aa)— 

‘‘(AA) if provided to a dispenser, on a 

single document in a paper or electronic format; and 

‘‘(BB) if provided to a wholesale distributor, through any combination of self-generated paper, electronic data, or manufacturerprovided information on the product package. 

‘‘(II) For purposes of transactions described in subclause (I), transaction history and transaction information shall not be required to include the lot number 

of the product, the initial transaction date, or the initial 

shipment date from the manufacturer (as defined in 

subparagraphs (F), (G), and (H) of section 581(26)). 

‘‘(iii) If the wholesale distributor did not purchase 

a product directly from the manufacturer, the exclusive 

distributor of the manufacturer, or a repackager that 

purchased directly from the manufacturer, as described 

in clause (ii), then prior to, or at the time of, each 

transaction or subsequent transaction, the wholesale 

distributor shall provide to the subsequent purchaser 

a transaction statement, transaction history, and transaction information, in a paper or electronic format 

that complies with the guidance document issued under 

subsection (a)(2). 

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

history supplied shall begin only with the wholesale 

distributor described in clause (ii)(I), but the wholesale 

distributor described in clause (iii) shall inform the 

subsequent purchaser that such wholesale distributor 

received a direct purchase statement from a wholesale 

distributor described in clause (ii)(I). 

‘‘(v) A wholesale distributor shall— 
H. R. 3204—27 

‘‘(I) capture the transaction information 

(including lot level information) consistent with 

the requirements of this section, transaction history, and transaction statement for each transaction described in clauses (i), (ii), and (iii) and 

maintain such information, history, and statement 

for not less than 6 years after the date of the 

transaction; and 

‘‘(II) maintain the confidentiality of the transaction information (including any lot level information consistent with the requirements of this section), transaction history, and transaction statement for a product in a manner that prohibits 

disclosure to any person other than the Secretary 

or other appropriate Federal or State official, 

except to comply with clauses (ii) and (iii), and, 

as applicable, pursuant to an agreement under 

subparagraph (D). 

‘‘(B) RETURNS.— 

‘‘(i) SALEABLE RETURNS.—Notwithstanding 

subparagraph (A)(i), the following shall apply: 

‘‘(I) REQUIREMENTS.—Until the date that is 

6 years after the date of enactment of the Drug 

Supply Chain Security Act (except as provided 

pursuant to subsection (a)(5)), a wholesale distributor may accept returned product from a dispenser or repackager pursuant to the terms and 

conditions of any agreement between the parties, 

and, notwithstanding subparagraph (A)(ii), may 

distribute such returned product without providing 

the transaction history. For transactions subsequent to the return, the transaction history of 

such product shall begin with the wholesale distributor that accepted the returned product, consistent with the requirements of this subsection. 

‘‘(II) ENHANCED REQUIREMENTS.—Beginning 6 

years after the date of enactment of the Drug 

Supply Chain Security Act (except as provided 

pursuant to subsection (a)(5)), a wholesale distributor may accept returned product from a dispenser or repackager only if the wholesale distributor can associate returned product with the 

transaction information and transaction statement 

associated with that product. For all transactions 

after such date, the transaction history, as 

applicable, of such product shall begin with the 

wholesale distributor that accepted and verified 

the returned product. For purposes of this subparagraph, the transaction information and transaction 

history, as applicable, need not include transaction 

dates if it is not reasonably practicable to obtain 

such dates. 

‘‘(ii) NONSALEABLE RETURNS.—A wholesale distributor may return a nonsaleable product to the manufacturer or repackager, to the wholesale distributor 

from whom such product was purchased, or to a person 

acting on behalf of such a person, including a returns 
H. R. 3204—28 

processor, without providing the information required 

under subparagraph (A)(i). 

‘‘(C) REQUESTS FOR INFORMATION.—Upon a request by 

the Secretary or other appropriate Federal or State official, 

in the event of a recall or for the purpose of investigating 

a suspect product or an illegitimate product, a wholesale 

distributor shall, not later than 1 business day, and not 

to exceed 48 hours, after receiving the request or in other 

such reasonable time as determined by the Secretary, based 

on the circumstances of the request, provide the applicable 

transaction information, transaction history, and transaction statement for the product. 

‘‘(D) TRADING PARTNER AGREEMENTS.—Beginning 6 

years after the date of enactment of the Drug Supply 

Chain Security Act, a wholesale distributor may disclose 

the transaction information, including lot level information, 

transaction history, or transaction statement of a product 

to the subsequent purchaser of the product, pursuant to 

a written agreement between such wholesale distributor 

and such subsequent purchaser. Nothing in this subparagraph shall be construed to limit the applicability of subparagraphs (A) through (C). 

‘‘(2) PRODUCT IDENTIFIER.—Beginning 6 years after the date 

of enactment of the Drug Supply Chain Security Act, a wholesale distributor may engage in transactions involving a product 

only if such product is encoded with a product identifier (except 

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

‘‘(3) AUTHORIZED TRADING PARTNERS.—Beginning not later 

than January 1, 2015, the trading partners of a wholesale 

distributor may be only authorized trading partners. 

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

2015, a wholesale distributor shall have systems in place to 

enable the wholesale distributor to comply with the following 

requirements: 

‘‘(A) SUSPECT PRODUCT.— ‘‘(i) IN GENERAL.—Upon making a determination 

that a product in the possession or control of a wholesale distributor is a suspect product, or upon receiving 

a request for verification from the Secretary that has 

made a determination that a product within the possession or control of a wholesale distributor is a suspect 

product, a wholesale distributor shall— 

‘‘(I) quarantine such product within the possession or control of the wholesale distributor from 

product intended for distribution until such 

product is cleared or dispositioned; and 

‘‘(II) promptly conduct an investigation in 

coordination with trading partners, as applicable, 

to determine whether the product is an illegitimate 

product, which shall include validating any 

applicable transaction history and transaction 

information in the possession of the wholesale distributor and otherwise investigating to determine 

whether the product is an illegitimate product, 

and, beginning 6 years after the date of enactment 

of the Drug Supply Chain Security Act (except 

as provided pursuant to subsection (a)(5)), 
H. R. 3204—29 

verifying the product at the package level, 

including the standardized numerical identifier. 

‘‘(ii) CLEARED PRODUCT.—If the wholesale distributor determines that a suspect product is not an 

illegitimate product, the wholesale distributor shall 

promptly notify the Secretary, if applicable, of such 

determination and such product may be further distributed. 

‘‘(iii) RECORDS.—A wholesale distributor shall keep 

records of the investigation of a suspect product for 

not less than 6 years after the conclusion of the investigation. 

‘‘(B) ILLEGITIMATE PRODUCT.— 

‘‘(i) IN GENERAL.—Upon determining, in coordination with the manufacturer, that a product in the 

possession or control of a wholesale distributor is an 

illegitimate product, the wholesale distributor shall, 

in a manner that is consistent with the systems and 

processes of such wholesale distributor— 

‘‘(I) quarantine such product within the possession or control of the wholesale distributor from 

product intended for distribution until such 

product is dispositioned; 

‘‘(II) disposition the illegitimate product within 

the possession or control of the wholesale distributor; 

‘‘(III) take reasonable and appropriate steps 

to assist a trading partner to disposition an illegitimate product not in the possession or control of 

the wholesale distributor; and 

‘‘(IV) retain a sample of the product for further 

physical examination or laboratory analysis of the 

product by the manufacturer or Secretary (or other 

appropriate Federal or State official) upon request 

by the manufacturer or Secretary (or other appropriate Federal or State official), as necessary and 

appropriate. 

‘‘(ii) MAKING A NOTIFICATION.—Upon determining 

that a product in the possession or control of the wholesale distributor is an illegitimate product, the wholesale distributor shall notify the Secretary and all immediate trading partners that the wholesale distributor 

has reason to believe may have received such illegitimate product of such determination not later than 

24 hours after making such determination. 

‘‘(iii) RESPONDING TO A NOTIFICATION.—Upon the 

receipt of a notification from the Secretary or a trading 

partner that a determination has been made that a 

product is an illegitimate product, a wholesale distributor shall identify all illegitimate product subject 

to such notification that is in the possession or control 

of the wholesale distributor, including any product that 

is subsequently received, and shall perform the activities described in subparagraph (A). 

‘‘(iv) TERMINATING A NOTIFICATION.—Upon making 

a determination, in consultation with the Secretary, 

that a notification is no longer necessary, a wholesale 
H. R. 3204—30 

distributor shall promptly notify immediate trading 

partners that the wholesale distributor notified pursuant to clause (ii) that such notification has been terminated. 

‘‘(v) RECORDS.—A wholesale distributor shall keep 

records of the disposition of an illegitimate product 

for not less than 6 years after the conclusion of the 

disposition. 

‘‘(C) ELECTRONIC DATABASE.—A wholesale distributor 

may satisfy the requirements of this paragraph by developing a secure electronic database or utilizing a secure 

electronic database developed or operated by another 

entity. The owner of such database shall establish the 

requirements and processes to respond to requests and 

may provide for data access to other members of the 

pharmaceutical distribution supply chain, as appropriate. 

The development and operation of such a database shall 

not relieve a wholesale distributor of the requirement under 

this paragraph to respond to a verification request submitted by means other than a secure electronic database. 

‘‘(D) VERIFICATION OF SALEABLE RETURNED PRODUCT.— 

Beginning 6 years after the date of enactment of the Drug 

Supply Chain Security Act, upon receipt of a returned 

product that the wholesale distributor intends to further 

distribute, before further distributing such product, the 

wholesale distributor shall verify the product identifier, 

including the standardized numerical identifier, for each 

sealed homogeneous case of such product or, if such product 

is not in a sealed homogeneous case, verify the product 

identifier, including the standardized numerical identifier, 

on each package. 

‘‘(d) DISPENSER REQUIREMENTS.— 

‘‘(1) PRODUCT TRACING.— ‘‘(A) IN GENERAL.—Beginning July 1, 2015, a dispenser— 

‘‘(i) shall not accept ownership of a product, unless 

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

transaction, provides transaction history, transaction 

information, and a transaction statement; 

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

in which the dispenser transfers ownership of a product 

(but not including dispensing to a patient or returns) 

shall provide the subsequent owner with transaction 

history, transaction information, and a transaction 

statement for the product, except that the requirements of this clause shall not apply to sales by a 

dispenser to another dispenser to fulfill a specific 

patient need; and 

‘‘(iii) shall capture transaction information 

(including lot level information, if provided), transaction history, and transaction statements, as necessary to investigate a suspect product, and maintain 

such information, history, and statements for not less 

than 6 years after the transaction. 

‘‘(B) AGREEMENTS WITH THIRD PARTIES.—A dispenser 

may enter into a written agreement with a third party, 

including an authorized wholesale distributor, under which 
H. R. 3204—31 

the third party confidentially maintains the transaction 

information, transaction history, and transaction statements required to be maintained under this subsection 

on behalf of the dispenser. If a dispenser enters into such 

an agreement, the dispenser shall maintain a copy of the 

written agreement and shall not be relieved of the obligations of the dispenser under this subsection. 

‘‘(C) RETURNS.— 

‘‘(i) SALEABLE RETURNS.—A dispenser may return 

product to the trading partner from which the dispenser obtained the product without providing the 

information required under subparagraph (A). 

‘‘(ii) NONSALEABLE RETURNS.—A dispenser may 

return a nonsaleable product to the manufacturer or 

repackager, to the wholesale distributor from whom 

such product was purchased, to a returns processor, 

or to a person acting on behalf of such a person without 

providing the information required under subparagraph (A). 

‘‘(D) REQUESTS FOR INFORMATION.—Upon a request by 

the Secretary or other appropriate Federal or State official, 

in the event of a recall or for the purpose of investigating 

a suspect or an illegitimate product, a dispenser shall, 

not later than 2 business days after receiving the request 

or in another such reasonable time as determined by the 

Secretary, based on the circumstances of the request, provide the applicable transaction information, transaction 

statement, and transaction history which the dispenser 

received from the previous owner, which shall not include 

the lot number of the product, the initial transaction date, 

or the initial shipment date from the manufacturer unless 

such information was included in the transaction information, transaction statement, and transaction history provided by the manufacturer or wholesale distributor to the 

dispenser. The dispenser may respond to the request by 

providing the applicable information in either paper or 

electronic format. Until the date that is 4 years after the 

date of enactment of the Drug Supply Chain Security Act, 

the Secretary or other appropriate Federal or State official 

shall grant a dispenser additional time, as necessary, only 

with respect to a request to provide lot level information 

described in subparagraph (F) of section 581(26) that was 

provided to the dispenser in paper format, limit the request 

time period to the 6 months preceding the request or other 

relevant date, and, in the event of a recall, the Secretary, 

or other appropriate Federal or State official may request 

information only if such recall involves a serious adverse 

health consequence or death to humans. 

‘‘(2) PRODUCT IDENTIFIER.—Beginning not later than 7 

years after the date of enactment of the Drug Supply Chain 

Security Act, a dispenser may engage in transactions involving 

a product only if such product is encoded with a product identifier (except as provided pursuant to subsection (a)(5)). 

‘‘(3) AUTHORIZED TRADING PARTNERS.—Beginning not later 

than January 1, 2015, the trading partners of a dispenser 

may be only authorized trading partners. 
H. R. 3204—32 

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

2015, a dispenser shall have systems in place to enable the 

dispenser to comply with the following requirements: 

‘‘(A) SUSPECT PRODUCT.— 

‘‘(i) IN GENERAL.—Upon making a determination 

that a product in the possession or control of the dispenser is a suspect product, or upon receiving a request 

for verification from the Secretary that has made a 

determination that a product within the possession 

or control of a dispenser is a suspect product, a dispenser shall— 

‘‘(I) quarantine such product within the possession or control of the dispenser from product 

intended for distribution until such product is 

cleared or dispositioned; and 

‘‘(II) promptly conduct an investigation in 

coordination with trading partners, as applicable, 

to determine whether the product is an illegitimate 

product. 

‘‘(ii) INVESTIGATION.—An investigation conducted 

under clause (i)(II) shall include— 

‘‘(I) beginning 7 years after the date of enactment of the Drug Supply Chain Security Act, 

verifying whether the lot number of a suspect 

product corresponds with the lot number for such 

product; 

‘‘(II) beginning 7 years after the date of enactment of such Act, verifying that the product identifier, including the standardized numerical identifier, of at least 3 packages or 10 percent of such 

suspect product, whichever is greater, or all packages, if there are fewer than 3, corresponds with 

the product identifier for such product; 

‘‘(III) validating any applicable transaction history and transaction information in the possession 

of the dispenser; and 

‘‘(IV) otherwise investigating to determine 

whether the product is an illegitimate product. 

‘‘(iii) CLEARED PRODUCT.—If the dispenser makes 

the determination that a suspect product is not an 

illegitimate product, the dispenser shall promptly 

notify the Secretary, if applicable, of such determination and such product may be further distributed or 

dispensed. 

‘‘(iv) RECORDS.—A dispenser shall keep records of 

the investigation of a suspect product for not less than 

6 years after the conclusion of the investigation. 

‘‘(B) ILLEGITIMATE PRODUCT.— 

‘‘(i) IN GENERAL.—Upon determining, in coordination with the manufacturer, that a product in the 

possession or control of a dispenser is an illegitimate 

product, the dispenser shall— 

‘‘(I) disposition the illegitimate product within 

the possession or control of the dispenser; 
H. R. 3204—33 

‘‘(II) take reasonable and appropriate steps to 

assist a trading partner to disposition an illegitimate product not in the possession or control of 

the dispenser; and 

‘‘(III) retain a sample of the product for further 

physical examination or laboratory analysis of the 

product by the manufacturer or Secretary (or other 

appropriate Federal or State official) upon request 

by the manufacturer or Secretary (or other appropriate Federal or State official), as necessary and 

appropriate. 

‘‘(ii) MAKING A NOTIFICATION.—Upon determining 

that a product in the possession or control of the dispenser is an illegitimate product, the dispenser shall 

notify the Secretary and all immediate trading partners that the dispenser has reason to believe may 

have received such illegitimate product of such determination not later than 24 hours after making such 

determination. 

‘‘(iii) RESPONDING TO A NOTIFICATION.—Upon the 

receipt of a notification from the Secretary or a trading 

partner that a determination has been made that a 

product is an illegitimate product, a dispenser shall 

identify all illegitimate product subject to such notification that is in the possession or control of the dispenser, 

including any product that is subsequently received, 

and shall perform the activities described in subparagraph (A). 

‘‘(iv) TERMINATING A NOTIFICATION.—Upon making 

a determination, in consultation with the Secretary, 

that a notification is no longer necessary, a dispenser 

shall promptly notify immediate trading partners that 

the dispenser notified pursuant to clause (ii) that such 

notification has been terminated. 

‘‘(v) RECORDS.—A dispenser shall keep records of 

the disposition of an illegitimate product for not less 

than 6 years after the conclusion of the disposition. 

‘‘(C) ELECTRONIC DATABASE.—A dispenser may satisfy 

the requirements of this paragraph by developing a secure 

electronic database or utilizing a secure electronic database 

developed or operated by another entity. 

‘‘(5) EXCEPTION.—Notwithstanding any other provision of 

law, the requirements under paragraphs (1) and (4) shall not 

apply to licensed health care practitioners authorized to prescribe or administer medication under State law or other 

licensed individuals under the supervision or direction of such 

practitioners who dispense or administer product in the usual 

course of professional practice. 

‘‘(e) REPACKAGER REQUIREMENTS.— 

‘‘(1) PRODUCT TRACING.— 

‘‘(A) IN GENERAL.—Beginning not later than January 

1, 2015, a repackager described in section 581(16)(A) 

shall— 

‘‘(i) not accept ownership of a product unless the 

previous owner, prior to, or at the time of, the transaction, provides transaction history, transaction 
H. R. 3204—34 

information, and a transaction statement for the 

product; 

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

in which the repackager transfers ownership of a 

product, provide the subsequent owner with transaction history, transaction information, and a transaction statement for the product; and 

‘‘(iii) capture the transaction information 

(including lot level information), transaction history, 

and transaction statement for each transaction 

described in clauses (i) and (ii) and maintain such 

information, history, and statement for not less than 

6 years after the transaction. 

‘‘(B) RETURNS.— 

‘‘(i) NONSALEABLE PRODUCT.—A repackager 

described in section 581(16)(A) may return a nonsaleable product to the manufacturer or repackager, or 

to the wholesale distributor from whom such product 

was purchased, or to a person acting on behalf of 

such a person, including a returns processor, without 

providing the information required under subparagraph (A)(ii). 

‘‘(ii) SALEABLE OR NONSALEABLE PRODUCT.—A repackager described in section 581(16)(B) may return 

a saleable or nonsaleable product to the manufacturer, 

repackager, or to the wholesale distributor from whom 

such product was received without providing the 

information required under subparagraph (A)(ii) on 

behalf of the hospital or other health care entity that 

took ownership of such product pursuant to the terms 

and conditions of any agreement between such repackager and the entity that owns the product. 

‘‘(C) REQUESTS FOR INFORMATION.—Upon a request by 

the Secretary or other appropriate Federal or State official, 

in the event of a recall or for the purpose of investigating 

a suspect product or an illegitimate product, a repackager 

described in section 581(16)(A) shall, not later than 1 business day, and not to exceed 48 hours, after receiving the 

request or in other such reasonable time as determined 

by the Secretary, provide the applicable transaction 

information, transaction history, and transaction statement 

for the product. 

‘‘(2) PRODUCT IDENTIFIER.— 

‘‘(A) IN GENERAL.—Beginning not later than 5 years 

after the date of enactment of the Drug Supply Chain 

Security Act, a repackager described in section 581(16)(A)— 

‘‘(i) shall affix or imprint a product identifier to 

each package and homogenous case of product intended 

to be introduced in a transaction in commerce; 

‘‘(ii) shall maintain the product identifier information for such product for not less than 6 years after 

the date of the transaction; 

‘‘(iii) may engage in transactions involving a 

product only if such product is encoded with a product 

identifier (except as provided pursuant to subsection 

(a)(5)); and 
H. R. 3204—35 

‘‘(iv) shall maintain records for not less than 6 

years to allow the repackager to associate the product 

identifier the repackager affixes or imprints with the 

product identifier assigned by the original manufacturer of the product. 

‘‘(B) EXCEPTION.—A package that is required to have 

a standardized numerical identifier is not required to have 

a unique device identifier. 

‘‘(3) AUTHORIZED TRADING PARTNERS.—Beginning January 

1, 2015, the trading partners of a repackager described in 

section 581(16) may be only authorized trading partners. 

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

2015, a repackager described in section 581(16)(A) shall have 

systems in place to enable the repackager to comply with the 

following requirements: 

‘‘(A) SUSPECT PRODUCT.— 

‘‘(i) IN GENERAL.—Upon making a determination 

that a product in the possession or control of the repackager is a suspect product, or upon receiving a 

request for verification from the Secretary that has 

made a determination that a product within the possession or control of a repackager is a suspect product, 

a repackager shall— 

‘‘(I) quarantine such product within the possession or control of the repackager from product 

intended for distribution until such product is 

cleared or dispositioned; and 

‘‘(II) promptly conduct an investigation in 

coordination with trading partners, as applicable, 

to determine whether the product is an illegitimate 

product, which shall include validating any 

applicable transaction history and transaction 

information in the possession of the repackager 

and otherwise investigating to determine whether 

the product is an illegitimate product, and, beginning 5 years after the date of enactment of the 

Drug Supply Chain Security Act (except as provided pursuant to subsection (a)(5)), verifying the 

product at the package level, including the 

standardized numerical identifier. 

‘‘(ii) CLEARED PRODUCT.—If the repackager makes 

the determination that a suspect product is not an 

illegitimate product, the repackager shall promptly 

notify the Secretary, if applicable, of such determination and such product may be further distributed. 

‘‘(iii) RECORDS.—A repackager shall keep records 

of the investigation of a suspect product for not less 

than 6 years after the conclusion of the investigation. 

‘‘(B) ILLEGITIMATE PRODUCT.— ‘‘(i) IN GENERAL.—Upon determining, in coordination with the manufacturer, that a product in the 

possession or control of a repackager is an illegitimate 

product, the repackager shall, in a manner that is 

consistent with the systems and processes of such repackager— 

‘‘(I) quarantine such product within the possession or control of the repackager from product 
H. R. 3204—36 

intended for distribution until such product is 

dispositioned; 

‘‘(II) disposition the illegitimate product within 

the possession or control of the repackager; 

‘‘(III) take reasonable and appropriate steps 

to assist a trading partner to disposition an illegitimate product not in the possession or control of 

the repackager; and 

‘‘(IV) retain a sample of the product for further 

physical examination or laboratory analysis of the 

product by the manufacturer or Secretary (or other 

appropriate Federal or State official) upon request 

by the manufacturer or Secretary (or other appropriate Federal or State official), as necessary and 

appropriate. 

‘‘(ii) MAKING A NOTIFICATION.—Upon determining 

that a product in the possession or control of the repackager is an illegitimate product, the repackager 

shall notify the Secretary and all immediate trading 

partners that the repackager has reason to believe 

may have received the illegitimate product of such 

determination not later than 24 hours after making 

such determination. 

‘‘(iii) RESPONDING TO A NOTIFICATION.—Upon the 

receipt of a notification from the Secretary or a trading 

partner, a repackager shall identify all illegitimate 

product subject to such notification that is in the 

possession or control of the repackager, including any 

product that is subsequently received, and shall perform the activities described in subparagraph (A). 

‘‘(iv) TERMINATING A NOTIFICATION.—Upon making 

a determination, in consultation with the Secretary, 

that a notification is no longer necessary, a repackager 

shall promptly notify immediate trading partners that 

the repackager notified pursuant to clause (ii) that 

such notification has been terminated. 

‘‘(v) RECORDS.—A repackager shall keep records 

of the disposition of an illegitimate product for not 

less than 6 years after the conclusion of the disposition. 

‘‘(C) REQUESTS FOR VERIFICATION.—Beginning 5 years 

after the date of enactment of the Drug Supply Chain 

Security Act, upon receiving a request for verification from 

an authorized manufacturer, wholesale distributor, or dispenser that is in possession or control of a product they 

believe to be repackaged by such repackager, a repackager 

shall, not later than 24 hours after receiving the verification 

request or in other such reasonable time as determined 

by the Secretary, based on the circumstances of the request, 

notify the person making the request whether the product 

identifier, including the standardized numerical identifier, 

that is the subject of the request corresponds to the product 

identifier affixed or imprinted by the repackager. If a repackager responding to a verification request identifies a 

product identifier that does not correspond to that affixed 

or imprinted by the repackager, the repackager shall treat 

such product as suspect product and conduct an investigation as described in subparagraph (A). If the repackager 
H. R. 3204—37 

has reason to believe the product is an illegitimate product, 

the repackager shall advise the person making the request 

of such belief at the time such repackager responds to 

the verification request. 

‘‘(D) ELECTRONIC DATABASE.—A repackager may satisfy 

the requirements of paragraph (4) by developing a secure 

electronic database or utilizing a secure electronic database 

developed or operated by another entity. The owner of 

such database shall establish the requirements and processes to respond to requests and may provide for data 

access to other members of the pharmaceutical distribution 

supply chain, as appropriate. The development and operation of such a database shall not relieve a repackager 

of the requirement under subparagraph (C) to respond 

to a verification request submitted by means other than 

a secure electronic database. 

‘‘(E) VERIFICATION OF SALEABLE RETURNED PRODUCT.— 

Beginning 5 years after the date of enactment of the Drug 

Supply Chain Security Act, upon receipt of a returned 

product that the repackager intends to further distribute, 

before further distributing such product, the repackager 

shall verify the product identifier for each sealed homogeneous case of such product or, if such product is not 

in a sealed homogeneous case, verify the product identifier 

on each package. 

‘‘(f) DROP SHIPMENTS.— 

‘‘(1) IN GENERAL.—A wholesale distributor that does not 

physically handle or store product shall be exempt from the 

provisions of this section, except the notification requirements 

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

that the manufacturer, repackager, or other wholesale distributor that distributes the product to the dispenser by means 

of a drop shipment for such wholesale distributor includes 

on the transaction information and transaction history to the 

dispenser the contact information of such wholesale distributor 

and provides the transaction information, transaction history, 

and transaction statement directly to the dispenser. 

‘‘(2) CLARIFICATION.—For purposes of this subsection, providing administrative services, including processing of orders 

and payments, shall not by itself, be construed as being involved 

in the handling, distribution, or storage of a product.’’. 

SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY. 

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

at the end the following: 

‘‘(g) ENHANCED DRUG DISTRIBUTION SECURITY.— 

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

date of enactment of the Drug Supply Chain Security Act, 

the following interoperable, electronic tracing of product at 

the package level requirements shall go into effect: 

‘‘(A) The transaction information and the transaction 

statements as required under this section shall be 

exchanged in a secure, interoperable, electronic manner 

in accordance with the standards established under the 

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

subsection (h), including any revision of such guidance 

issued in accordance with paragraph (5) of such subsection. 
H. R. 3204—38 

‘‘(B) The transaction information required under this 

section shall include the product identifier at the package 

level for each package included in the transaction. 

‘‘(C) Systems and processes for verification of product 

at the package level, including the standardized numerical 

identifier, shall be required in accordance with the standards established under the guidance issued pursuant to 

subsection (a)(2) and the guidances issued pursuant to 

paragraphs (2), (3), and (4) of subsection (h), including 

any revision of such guidances issued in accordance with 

paragraph (5) of such subsection, which may include the 

use of aggregation and inference as necessary. 

‘‘(D) The systems and processes necessary to promptly 

respond with the transaction information and transaction 

statement for a product upon a request by the Secretary 

(or other appropriate Federal or State official) in the event 

of a recall or for the purposes of investigating a suspect 

product or an illegitimate product shall be required. 

‘‘(E) The systems and processes necessary to promptly 

facilitate gathering the information necessary to produce 

the transaction information for each transaction going back 

to the manufacturer, as applicable, shall be required— 

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

(or other appropriate Federal or State official), on 

account of a recall or for the purposes of investigating 

a suspect product or an illegitimate product; or 

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

trading partner, in a secure manner that ensures the 

protection of confidential commercial information and 

trade secrets, for purposes of investigating a suspect 

product or assisting the Secretary (or other appropriate 

Federal or State official) with a request described in 

clause (i). 

‘‘(F) Each person accepting a saleable return shall have 

systems and processes in place to allow acceptance of such 

product and may accept saleable returns only if such person 

can associate the saleable return product with the transaction information and transaction statement associated 

with that product. 

‘‘(2) COMPLIANCE.— 

‘‘(A) INFORMATION MAINTENANCE AGREEMENT.—A dispenser may enter into a written agreement with a third 

party, including an authorized wholesale distributor, under 

which the third party shall confidentially maintain any 

information and statements required to be maintained 

under this section. If a dispenser enters into such an agreement, the dispenser shall maintain a copy of the written 

agreement and shall not be relieved of the obligations 

of the dispenser under this subsection. 

‘‘(B) ALTERNATIVE METHODS.—The Secretary, taking 

into consideration the assessment conducted under paragraph (3), shall provide for alternative methods of compliance with any of the requirements set forth in paragraph 

(1), including— 

‘‘(i) establishing timelines for compliance by small 

businesses (including small business dispensers with 
H. R. 3204—39 

25 or fewer full-time employees) with such requirements, in order to ensure that such requirements do 

not impose undue economic hardship for small 

businesses, including small business dispensers for 

whom the criteria set forth in the assessment under 

paragraph (3) is not met, if the Secretary determines 

that such requirements under paragraph (1) would 

result in undue economic hardship; and 

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

may request a waiver from any of the requirements 

set forth in paragraph (1) if the Secretary determines 

that such requirements would result in an undue economic hardship, which shall include a process for the 

biennial review and renewal of any such waiver. 

‘‘(3) ASSESSMENT.— 

‘‘(A) IN GENERAL.—Not later than the date that is 

18 months after the Secretary issues the final guidance 

required under subsection (h), the Secretary shall enter 

into a contract with a private, independent consulting firm 

with expertise to conduct a technology and software assessment that looks at the feasibility of dispensers with 25 

or fewer full-time employees conducting interoperable, electronic tracing of products at the package level. Such assessment shall be completed not later than 81⁄2 years after 

the date of enactment of the Drug Supply Chain Security 

Act. 

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

contract under subparagraph (A), the private, independent 

consulting firm shall agree to consult with dispensers with 

25 or fewer full-time employees when conducting the 

assessment under such subparagraph. 

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

(A) shall assess whether— 

‘‘(i) the necessary software and hardware is readily 

accessible to such dispensers; 

‘‘(ii) the necessary software and hardware is 

prohibitively expensive to obtain, install, and maintain 

for such dispensers; and 

‘‘(iii) the necessary hardware and software can be 

integrated into business practices, such as interoperability with wholesale distributors, for such dispensers. 

‘‘(D) PUBLICATION.—The Secretary shall— 

‘‘(i) publish the statement of work for the assessment under subparagraph (A) for public comment prior 

to beginning the assessment; 

‘‘(ii) publish the final assessment for public comment not later than 30 calendar days after receiving 

such assessment; and 

‘‘(iii) hold a public meeting not later than 180 

calendar days after receiving the final assessment at 

which public stakeholders may present their views on 

the assessment. 

‘‘(4) PROCEDURE.—Notwithstanding section 553 of title 5, 

United States Code, the Secretary, in promulgating any regulation pursuant to this section, shall— 

‘‘(A) provide appropriate flexibility by— 
H. R. 3204—40 

‘‘(i) not requiring the adoption of specific business 

systems for the maintenance and transmission of data; 

‘‘(ii) prescribing alternative methods of compliance 

for any of the requirements set forth in paragraph 

(1) or set forth in regulations implementing such 

requirements, including— 

‘‘(I) timelines for small businesses to comply 

with the requirements set forth in the regulations 

in order to ensure that such requirements do not 

impose undue economic hardship for small 

businesses (including small business dispensers for 

whom the criteria set forth in the assessment 

under paragraph (3) is not met), if the Secretary 

determines that such requirements would result 

in undue economic hardship; and 

‘‘(II) the establishment of a process by which 

a dispenser may request a waiver from any of 

the requirements set forth in such regulations if 

the Secretary determines that such requirements 

would result in an undue economic hardship; and 

‘‘(iii) taking into consideration— 

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

projects pursuant to this section and private sector 

pilot projects, including those involving the use 

of aggregation and inference; 

‘‘(II) the public meetings held and related guidance documents issued under this section; 

‘‘(III) the public health benefits of any additional regulations in comparison to the cost of 

compliance with such requirements, including on 

entities of varying sizes and capabilities; 

‘‘(IV) the diversity of the pharmaceutical distribution supply chain by providing appropriate 

flexibility for each sector, including both large and 

small businesses; and 

‘‘(V) the assessment pursuant to paragraph 

(3) with respect to small business dispensers, 

including related public comment and the public 

meeting, and requirements under this section; 

‘‘(B) issue a notice of proposed rulemaking that includes 

a copy of the proposed regulation; 

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

comments on the proposed regulation; and 

‘‘(D) publish in the Federal Register the final regulation 

not less than 2 years prior to the effective date of the 

regulation. 

‘‘(h) GUIDANCE DOCUMENTS.— ‘‘(1) IN GENERAL.—For the purposes of facilitating the 

successful and efficient adoption of secure, interoperable 

product tracing at the package level in order to enhance drug 

distribution security and further protect the public health, the 

Secretary shall issue the guidance documents as provided for 

in this subsection. 

‘‘(2) SUSPECT AND ILLEGITIMATE PRODUCT.— ‘‘(A) IN GENERAL.—Not later than 180 days after the 

date of enactment of the Drug Supply Chain Security Act, 

the Secretary shall issue a guidance document to aid 
H. R. 3204—41 

trading partners in the identification of a suspect product 

and notification termination. Such guidance document 

shall— 

‘‘(i) identify specific scenarios that could significantly increase the risk of a suspect product entering 

the pharmaceutical distribution supply chain; 

‘‘(ii) provide recommendation on how trading partners may identify such product and make a determination on whether the product is a suspect product as 

soon as practicable; and 

‘‘(iii) set forth the process by which manufacturers, 

repackagers, wholesale distributors, and dispensers 

shall terminate notifications in consultation with the 

Secretary regarding illegitimate product pursuant to 

subsections (b)(4)(B), (c)(4)(B), (d)(4)(B), and (e)(4)(B). 

‘‘(B) REVISED GUIDANCE.—If the Secretary revises the 

guidance issued under subparagraph (A), the Secretary 

shall follow the procedure set forth in paragraph (5). 

‘‘(3) UNIT LEVEL TRACING.— 

‘‘(A) IN GENERAL.—In order to enhance drug distribution security at the package level, not later than 18 months 

after conducting a public meeting on the system attributes 

necessary to enable secure tracing of product at the package 

level, including allowing for the use of verification, 

inference, and aggregation, as necessary, the Secretary 

shall issue a final guidance document that outlines and 

makes recommendations with respect to the system 

attributes necessary to enable secure tracing at the package 

level as required under the requirements established under 

subsection (g). Such guidance document shall— 

‘‘(i) define the circumstances under which the sectors within the pharmaceutical distribution supply 

chain may, in the most efficient manner practicable, 

infer the contents of a case, pallet, tote, or other aggregate of individual packages or containers of product, 

from a product identifier associated with the case, 

pallet, tote, or other aggregate, without opening each 

case, pallet, tote, or other aggregate or otherwise 

individually scanning each package; 

‘‘(ii) identify methods and processes to enhance 

secure tracing of product at the package level, such 

as secure processes to facilitate the use of inference, 

enhanced verification activities, the use of aggregation 

and inference, processes that utilize the product identifiers to enhance tracing of product at the package 

level, including the standardized numerical identifier, 

or package security features; and 

‘‘(iii) ensure the protection of confidential commercial information and trade secrets. 

‘‘(B) PROCEDURE.—In issuing the guidance under 

subparagraph (A), and in revising such guidance, if 

applicable, the Secretary shall follow the procedure set 

forth in paragraph (5). 

‘‘(4) STANDARDS FOR INTEROPERABLE DATA EXCHANGE.— ‘‘(A) IN GENERAL.—In order to enhance secure tracing 

of a product at the package level, the Secretary, not later 

than 18 months after conducting a public meeting on the 
H. R. 3204—42 

interoperable standards necessary to enhance the security 

of the pharmaceutical distribution supply chain, shall 

update the guidance issued pursuant to subsection (a)(2), 

as necessary and appropriate, and finalize such guidance 

document so that the guidance document— 

‘‘(i) identifies and makes recommendations with 

respect to the standards necessary for adoption in order 

to support the secure, interoperable electronic data 

exchange among the pharmaceutical distribution 

supply chain that comply with a form and format developed by a widely recognized international standards 

development organization; 

‘‘(ii) takes into consideration standards established 

pursuant to subsection (a)(2) and section 505D; 

‘‘(iii) facilitates the creation of a uniform process 

or methodology for product tracing; and 

‘‘(iv) ensures the protection of confidential commercial information and trade secrets. 

‘‘(B) PROCEDURE.—In issuing the guidance under 

subparagraph (A), and in revising such guidance, if 

applicable, the Secretary shall follow the procedure set 

forth in paragraph (5). 

‘‘(5) PROCEDURE.—In issuing or revising any guidance 

issued pursuant to this subsection or subsection (g), except 

the initial guidance issued under paragraph (2)(A), the Secretary shall— 

‘‘(A) publish a notice in the Federal Register for a 

period not less than 30 days announcing that the draft 

or revised draft guidance is available; 

‘‘(B) post the draft guidance document on the Internet 

Web site of the Food and Drug Administration and make 

such draft guidance document available in hard copy; 

‘‘(C) provide an opportunity for comment and review 

and take into consideration any comments received; 

‘‘(D) revise the draft guidance, as appropriate; 

‘‘(E) publish a notice in the Federal Register for a 

period not less than 30 days announcing that the final 

guidance or final revised guidance is available; 

‘‘(F) post the final guidance document on the Internet 

Web site of the Food and Drug Administration and make 

such final guidance document available in hard copy; and 

‘‘(G) provide for an effective date of not earlier than 

1 year after such guidance becomes final. 

‘‘(i) PUBLIC MEETINGS.— 

‘‘(1) IN GENERAL.—The Secretary shall hold not less than 

5 public meetings to enhance the safety and security of the 

pharmaceutical distribution supply chain and provide for comment. The Secretary may hold the first such public meeting 

not earlier than 1 year after the date of enactment of the 

Drug Supply Chain Security Act. In carrying out the public 

meetings described in this paragraph, the Secretary shall— 

‘‘(A) prioritize topics necessary to inform the issuance 

of the guidance described in paragraphs (3) and (4) of 

subsection (h); and 

‘‘(B) take all measures reasonable and practicable to 

ensure the protection of confidential commercial information and trade secrets. 
H. R. 3204—43 

‘‘(2) CONTENT.—Each of the following topics shall be 

addressed in at least one of the public meetings described 

in paragraph (1): 

‘‘(A) An assessment of the steps taken under subsections (b) through (e) to build capacity for a unit-level 

system, including the impact of the requirements of such 

subsections on— 

‘‘(i) the ability of the health care system collectively 

to maintain patient access to medicines; 

‘‘(ii) the scalability of such requirements, including 

as it relates to product lines; and 

‘‘(iii) the capability of different sectors and subsectors, including both large and small businesses, to 

affix and utilize the product identifier. 

‘‘(B) The system attributes necessary to support the 

requirements set forth under subsection (g), including the 

standards necessary for adoption in order to support the 

secure, interoperable electronic data exchange among sectors within the pharmaceutical distribution supply chain. 

‘‘(C) Best practices in each of the different sectors 

within the pharmaceutical distribution supply chain to 

implement the requirements of this section. 

‘‘(D) The costs and benefits of the implementation of 

this section, including the impact on each pharmaceutical 

distribution supply chain sector and on public health. 

‘‘(E) Whether electronic tracing requirements, including 

tracing of product at the package level, are feasible, cost 

effective, and needed to protect the public health. 

‘‘(F) The systems and processes needed to utilize the 

product identifiers to enhance tracing of product at the 

package level, including allowing for verification, aggregation, and inference, as necessary. 

‘‘(G) The technical capabilities and legal authorities, 

if any, needed to establish an interoperable, electronic 

system that provides for tracing of product at the package 

level. 

‘‘(H) The impact that such additional requirements 

would have on patient safety, the drug supply, cost and 

regulatory burden, and timely patient access to prescription 

drugs. 

‘‘(I) Other topics, as determined appropriate by the 

Secretary. 

‘‘(j) PILOT PROJECTS.— 

‘‘(1) IN GENERAL.—The Secretary shall establish 1 or more 

pilot projects, in coordination with authorized manufacturers, 

repackagers, wholesale distributors, and dispensers, to explore 

and evaluate methods to enhance the safety and security of 

the pharmaceutical distribution supply chain. Such projects 

shall build upon efforts, in existence as of the date of enactment 

of the Drug Supply Chain Security Act, to enhance the safety 

and security of the pharmaceutical distribution supply chain, 

take into consideration any pilot projects conducted prior to 

such date of enactment, including any pilot projects that use 

aggregation and inference, and inform the draft and final guidance under paragraphs (3) and (4) of subsection (h). 

‘‘(2) CONTENT.— 
H. R. 3204—44 

‘‘(A) IN GENERAL.—The Secretary shall ensure that the 

pilot projects under paragraph (1) reflect the diversity of 

the pharmaceutical distribution supply chain and that the 

pilot projects, when taken as a whole, include participants 

representative of every sector, including both large and 

small businesses. 

‘‘(B) PROJECT DESIGN.—The pilot projects under paragraph (1) shall be designed to— 

‘‘(i) utilize the product identifier for tracing of a 

product, which may include verification of the product 

identifier of a product, including the use of aggregation 

and inference; 

‘‘(ii) improve the technical capabilities of each 

sector and subsector to comply with systems and processes needed to utilize the product identifiers to 

enhance tracing of a product; 

‘‘(iii) identify system attributes that are necessary 

to implement the requirements established under this 

section; and 

‘‘(iv) complete other activities as determined by 

the Secretary. 

‘‘(k) SUNSET.—The following requirements shall have no force 

or effect beginning on the date that is 10 years after the date 

of enactment of the Drug Supply Chain Security Act: 

‘‘(1) The provision and receipt of transaction history under 

this section. 

‘‘(2) The requirements set forth for returns under subsections (b)(4)(E), (c)(1)(B)(i), (d)(1)(C)(i), and (e)(4)(E). 

‘‘(3) The requirements set forth under subparagraphs 

(A)(v)(II) and (D) of subsection (c)(1), as applied to lot level 

information only. 

‘‘(l) RULE OF CONSTRUCTION.—The requirements set forth in 

subsections (g)(4), (i), and (j) shall not be construed as a condition, 

prohibition, or precedent for precluding or delaying the provisions 

becoming effective pursuant to subsection (g). 

‘‘(m) REQUESTS FOR INFORMATION.—On the date that is 10 

years after the date of enactment of the Drug Supply Chain Security 

Act, the timeline for responses to requests for information from 

the Secretary, or other appropriate Federal or State official, as 

applicable, under subsections (b)(1)(B), (c)(1)(C), and (e)(1)(C) shall 

be not later than 24 hours after receiving the request from the 

Secretary or other appropriate Federal or State official, as 

applicable, or in such other reasonable time as determined by 

the Secretary based on the circumstances of the request.’’. 

SEC. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE DISTRIBUTORS. 

(a) AMENDMENTS.— (1) REQUIREMENT.—Section 503(e) (21 U.S.C. 353(e)) is 

amended by striking paragraphs (1), (2), and (3) and inserting 

the following: 

‘‘(1) REQUIREMENT.—Subject to section 583: 

‘‘(A) IN GENERAL.—No person may engage in wholesale 

distribution of a drug subject to subsection (b)(1) in any 

State unless such person— 

‘‘(i)(I) is licensed by the State from which the drug 

is distributed; or 
H. R. 3204—45 

‘‘(II) if the State from which the drug is distributed 

has not established a licensure requirement, is licensed 

by the Secretary; and 

‘‘(ii) if the drug is distributed interstate, is licensed 

by the State into which the drug is distributed if the 

State into which the drug is distributed requires the 

licensure of a person that distributes drugs into the 

State. 

‘‘(B) STANDARDS.—Each Federal and State license 

described in subparagraph (A) shall meet the standards, 

terms, and conditions established by the Secretary under 

section 583. 

‘‘(2) REPORTING AND DATABASE.— 

‘‘(A) REPORTING.—Beginning January 1, 2015, any person who owns or operates an establishment that engages 

in wholesale distribution shall— 

‘‘(i) report to the Secretary, on an annual basis 

pursuant to a schedule determined by the Secretary— 

‘‘(I) each State by which the person is licensed 

and the appropriate identification number of each 

such license; and 

‘‘(II) the name, address, and contact information of each facility at which, and all trade names 

under which, the person conducts business; and 

‘‘(ii) report to the Secretary within a reasonable 

period of time and in a reasonable manner, as determined by the Secretary, any significant disciplinary 

actions, such as the revocation or suspension of a 

wholesale distributor license, taken by a State or the 

Federal Government during the reporting period 

against the wholesale distributor. 

‘‘(B) DATABASE.—Not later than January 1, 2015, the 

Secretary shall establish a database of authorized wholesale distributors. Such database shall— 

‘‘(i) identify each authorized wholesale distributor 

by name, contact information, and each State where 

such wholesale distributor is appropriately licensed to 

engage in wholesale distribution; 

‘‘(ii) be available to the public on the Internet 

Web site of the Food and Drug Administration; and 

‘‘(iii) be regularly updated on a schedule determined by the Secretary. 

‘‘(C) COORDINATION.—The Secretary shall establish a 

format and procedure for appropriate State officials to 

access the information provided pursuant to subparagraph 

(A) in a prompt and secure manner. 

‘‘(D) CONFIDENTIALITY.—Nothing in this paragraph 

shall be construed as authorizing the Secretary to disclose 

any information that is a trade secret or confidential 

information subject to section 552(b)(4) of title 5, United 

States Code, or section 1905 of title 18, United States 

Code. 

‘‘(3) COSTS.— 

‘‘(A) AUTHORIZED FEES OF SECRETARY.—If a State does 

not establish a licensing program for persons engaged in 

the wholesale distribution of a drug subject to subsection 
H. R. 3204—46 

(b), the Secretary shall license a person engaged in wholesale distribution located in such State and may collect 

a reasonable fee in such amount necessary to reimburse 

the Secretary for costs associated with establishing and 

administering the licensure program and conducting periodic inspections under this section. The Secretary shall 

adjust fee rates as needed on an annual basis to generate 

only the amount of revenue needed to perform this service. 

Fees authorized under this paragraph shall be collected 

and available for obligation only to the extent and in the 

amount provided in advance in appropriations Acts. Such 

fees are authorized to remain available until expended. 

Such sums as may be necessary may be transferred from 

the Food and Drug Administration salaries and expenses 

appropriation account without fiscal year limitation to such 

appropriation account for salaries and expenses with such 

fiscal year limitation. 

‘‘(B) STATE LICENSING FEES.—Nothing in this Act shall 

prohibit States from collecting fees from wholesale distributors in connection with State licensing of such distributors.’’. 

(2) WHOLESALE DISTRIBUTION.—Section 503(e) (21 U.S.C. 

353(e)), as amended by paragraph (1), is further amended by 

adding at the end the following: 

‘‘(4) For the purposes of this subsection and subsection 

(d), the term ‘wholesale distribution’ means the distribution 

of a drug subject to subsection (b) to a person other than 

a consumer or patient, or receipt of a drug subject to subsection 

(b) by a person other than the consumer or patient, but does 

not include— 

‘‘(A) intracompany distribution of any drug between 

members of an affiliate or within a manufacturer; 

‘‘(B) the distribution of a drug, or an offer to distribute 

a drug among hospitals or other health care entities which 

are under common control; 

‘‘(C) the distribution of a drug or an offer to distribute 

a drug for emergency medical reasons, including a public 

health emergency declaration pursuant to section 319 of 

the Public Health Service Act, except that, for purposes 

of this paragraph, a drug shortage not caused by a public 

health emergency shall not constitute an emergency medical reason; 

‘‘(D) the dispensing of a drug pursuant to a prescription 

executed in accordance with subsection (b)(1); 

‘‘(E) the distribution of minimal quantities of drug 

by a licensed retail pharmacy to a licensed practitioner 

for office use; 

‘‘(F) the distribution of a drug or an offer to distribute 

a drug by a charitable organization to a nonprofit affiliate 

of the organization to the extent otherwise permitted by 

law; 

‘‘(G) the purchase or other acquisition by a dispenser, 

hospital, or other health care entity of a drug for use 

by such dispenser, hospital, or other health care entity; 

‘‘(H) the distribution of a drug by the manufacturer 

of such drug; 
H. R. 3204—47 

‘‘(I) the receipt or transfer of a drug by an authorized 

third-party logistics provider provided that such third-party 

logistics provider does not take ownership of the drug; 

‘‘(J) a common carrier that transports a drug, provided 

that the common carrier does not take ownership of the 

drug; 

‘‘(K) the distribution of a drug, or an offer to distribute 

a drug by an authorized repackager that has taken ownership or possession of the drug and repacks it in accordance 

with section 582(e); 

‘‘(L) salable drug returns when conducted by a dispenser; 

‘‘(M) the distribution of a collection of finished medical 

devices, which may include a product or biological product, 

assembled in kit form strictly for the convenience of the 

purchaser or user (referred to in this subparagraph as 

a ‘medical convenience kit’) if— 

‘‘(i) the medical convenience kit is assembled in 

an establishment that is registered with the Food and 

Drug Administration as a device manufacturer in 

accordance with section 510(b)(2); 

‘‘(ii) the medical convenience kit does not contain 

a controlled substance that appears in a schedule contained in the Comprehensive Drug Abuse Prevention 

and Control Act of 1970; 

‘‘(iii) in the case of a medical convenience kit that 

includes a product, the person that manufacturers the 

kit— 

‘‘(I) purchased such product directly from the 

pharmaceutical manufacturer or from a wholesale 

distributor that purchased the product directly 

from the pharmaceutical manufacturer; and 

‘‘(II) does not alter the primary container or 

label of the product as purchased from the manufacturer or wholesale distributor; and 

‘‘(iv) in the case of a medical convenience kit that 

includes a product, the product is— 

‘‘(I) an intravenous solution intended for the 

replenishment of fluids and electrolytes; 

‘‘(II) a product intended to maintain the equilibrium of water and minerals in the body; 

‘‘(III) a product intended for irrigation or 

reconstitution; 

‘‘(IV) an anesthetic; 

‘‘(V) an anticoagulant; 

‘‘(VI) a vasopressor; or 

‘‘(VII) a sympathomimetic; 

‘‘(N) the distribution of an intravenous drug that, by 

its formulation, is intended for the replenishment of fluids 

and electrolytes (such as sodium, chloride, and potassium) 

or calories (such as dextrose and amino acids); 

‘‘(O) the distribution of an intravenous drug used to 

maintain the equilibrium of water and minerals in the 

body, such as dialysis solutions; 

‘‘(P) the distribution of a drug that is intended for 

irrigation, or sterile water, whether intended for such purposes or for injection; 
H. R. 3204—48 

‘‘(Q) the distribution of medical gas, as defined in section 575; 

‘‘(R) facilitating the distribution of a product by providing solely administrative services, including processing 

of orders and payments; or 

‘‘(S) the transfer of a product by a hospital or other 

health care entity, or by a wholesale distributor or manufacturer operating at the direction of the hospital or other 

health care entity, to a repackager described in section 

581(16)(B) and registered under section 510 for the purpose 

of repackaging the drug for use by that hospital, or other 

health care entity and other health care entities that are 

under common control, if ownership of the drug remains 

with the hospital or other health care entity at all times.’’. 

(3) THIRD-PARTY LOGISTICS PROVIDERS.—Section 503(e) (21 

U.S.C. 353(e)), as amended by paragraph (2), is further 

amended by adding at the end the following: 

‘‘(5) THIRD-PARTY LOGISTICS PROVIDERS.—Notwithstanding 

paragraphs (1) through (4), each entity that meets the definition 

of a third-party logistics provider under section 581(22) shall 

obtain a license as a third-party logistics provider as described 

in section 584(a) and is not required to obtain a license as 

a wholesale distributor if the entity never assumes an ownership interest in the product it handles.’’. 

(4) AFFILIATE.—Section 503(e) (21 U.S.C. 353(e)), as 

amended by paragraph (3), is further amended by adding at 

the end the following: 

‘‘(6) AFFILIATE.—For purposes of this subsection, the term 

‘affiliate’ means a business entity that has a relationship with 

a second business entity if, directly or indirectly— 

‘‘(A) one business entity controls, or has the power 

to control, the other business entity; or 

‘‘(B) a third party controls, or has the power to control, 

both of the business entities.’’. 

(5) STANDARDS.—Subchapter H of chapter V, as added by 

section 202, is amended by adding at the end the following: 

‘‘SEC. 583. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE DISTRIBUTORS. 

‘‘(a) IN GENERAL.—The Secretary shall, not later than 2 years 

after the date of enactment of the Drug Supply Chain Security 

Act, establish by regulation standards for the licensing of persons 

under section 503(e)(1) (as amended by the Drug Supply Chain 

Security Act), including the revocation, reissuance, and renewal 

of such license. 

‘‘(b) CONTENT.—For the purpose of ensuring uniformity with 

respect to standards set forth in this section, the standards established under subsection (a) shall apply to all State and Federal 

licenses described under section 503(e)(1) (as amended by the Drug 

Supply Chain Security Act) and shall include standards for the 

following: 

‘‘(1) The storage and handling of prescription drugs, 

including facility requirements. 

‘‘(2) The establishment and maintenance of records of the 

distributions of such drugs. 

‘‘(3) The furnishing of a bond or other equivalent means 

of security, as follows: 
H. R. 3204—49 

‘‘(A)(i) For the issuance or renewal of a wholesale distributor license, an applicant that is not a government 

owned and operated wholesale distributor shall submit a 

surety bond of $100,000 or other equivalent means of security acceptable to the State. 

‘‘(ii) For purposes of clause (i), the State or other 

applicable authority may accept a surety bond in the 

amount of $25,000 if the annual gross receipts of the previous tax year for the wholesaler is $10,000,000 or less. 

‘‘(B) If a wholesale distributor can provide evidence 

that it possesses the required bond in a State, the requirement for a bond in another State shall be waived. 

‘‘(4) Mandatory background checks and fingerprinting of 

facility managers or designated representatives. 

‘‘(5) The establishment and implementation of qualifications for key personnel. 

‘‘(6) The mandatory physical inspection of any facility to 

be used in wholesale distribution within a reasonable time 

frame from the initial application of the facility and to be 

conducted by the licensing authority or by the State, consistent 

with subsection (c). 

‘‘(7) In accordance with subsection (d), the prohibition of 

certain persons from receiving or maintaining licensure for 

wholesale distribution. 

‘‘(c) INSPECTIONS.—To satisfy the inspection requirement under 

subsection (b)(6), the Federal or State licensing authority may conduct the inspection or may accept an inspection by the State in 

which the facility is located, or by a third-party accreditation or 

inspection service approved by the Secretary or the State licensing 

such wholesale distributor. 

‘‘(d) PROHIBITED PERSONS.—The standards established under 

subsection (a) shall include requirements to prohibit a person from 

receiving or maintaining licensure for wholesale distribution if the 

person— 

‘‘(1) has been convicted of any felony for conduct relating 

to wholesale distribution, any felony violation of subsection 

(i) or (k) of section 301, or any felony violation of section 

1365 of title 18, United States Code, relating to product tampering; or 

‘‘(2) has engaged in a pattern of violating the requirements 

of this section, or State requirements for licensure, that presents a threat of serious adverse health consequences or death 

to humans. 

‘‘(e) REQUIREMENTS.—The Secretary, in promulgating any regulation pursuant to this section, shall, notwithstanding section 553 

of title 5, United States Code— 

‘‘(1) issue a notice of proposed rulemaking that includes 

a copy of the proposed regulation; 

‘‘(2) provide a period of not less than 60 days for comments 

on the proposed regulation; and 

‘‘(3) provide that the final regulation take effect on the 

date that is 2 years after the date such final regulation is 

published.’’. 

(b) AUTHORIZED DISTRIBUTORS OF RECORD.—Section 503(d) (21 

U.S.C. 353(d)) is amended by adding at the end the following: 

‘‘(4) In this subsection, the term ‘authorized distributors 

of record’ means those distributors with whom a manufacturer 
H. R. 3204—50 

has established an ongoing relationship to distribute such 

manufacturer’s products.’’. 

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

(a) and (b) shall take effect on January 1, 2015. 

SEC. 205. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS; UNIFORM NATIONAL POLICY. 

Subchapter H of chapter V, as amended by section 204, is 

further amended by adding at the end the following: 

‘‘SEC. 584. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS. 

‘‘(a) REQUIREMENTS.—No third-party logistics provider in any 

State may conduct activities in any State unless each facility of 

such third-party logistics provider— 

‘‘(1)(A) is licensed by the State from which the drug is 

distributed by the third-party logistics provider, in accordance 

with the regulations promulgated under subsection (d); or 

‘‘(B) if the State from which the drug distributed by the 

third-party logistics provider has not established a licensure 

requirement, is licensed by the Secretary, in accordance with 

the regulations promulgated under subsection (d); and 

‘‘(2) if the drug is distributed interstate, is licensed by 

the State into which the drug is distributed by the thirdparty logistics provider if such State licenses third-party logistics providers that distribute drugs into the State and the 

third-party logistics provider is not licensed by the Secretary 

as described in paragraph (1)(B). 

‘‘(b) REPORTING.—Beginning 1 year after the date of enactment 

of the Drug Supply Chain Security Act, a facility of a third-party 

logistics provider shall report to the Secretary, on an annual basis 

pursuant to a schedule determined by the Secretary— 

‘‘(1) the State by which the facility is licensed and the 

appropriate identification number of such license; and 

‘‘(2) the name and address of the facility and all trade 

names under which such facility conducts business. 

‘‘(c) COSTS.— ‘‘(1) AUTHORIZED FEES OF SECRETARY.—If a State does not 

establish a licensing program for a third-party logistics provider, the Secretary shall license the third-party logistics provider located in such State and may collect a reasonable fee 

in such amount necessary to reimburse the Secretary for costs 

associated with establishing and administering the licensure 

program and conducting periodic inspections under this section. 

The Secretary shall adjust fee rates as needed on an annual 

basis to generate only the amount of revenue needed to perform 

this service. Fees authorized under this paragraph shall be 

collected and available for obligation only to the extent and 

in the amount provided in advance in appropriations Acts. 

Such fees are authorized to remain available until expended. 

Such sums as may be necessary may be transferred from the 

Food and Drug Administration salaries and expenses appropriation account without fiscal year limitation to such appropriation 

account for salaries and expenses with such fiscal year limitation. 

‘‘(2) STATE LICENSING FEES.— ‘‘(A) STATE ESTABLISHED PROGRAM.—Nothing in this 

Act shall prohibit a State that has established a program 
H. R. 3204—51 

to license a third-party logistics provider from collecting 

fees from a third-party logistics provider for such a license. 

‘‘(B) NO STATE ESTABLISHED PROGRAM.—A State that 

does not establish a program to license a third-party logistics provider in accordance with this section shall be prohibited from collecting a State licensing fee from a thirdparty logistics provider. 

‘‘(d) REGULATIONS.— 

‘‘(1) IN GENERAL.—Not later than 2 years after the date 

of enactment of the Drug Supply Chain Security Act, the Secretary shall issue regulations regarding the standards for 

licensing under subsection (a), including the revocation and 

reissuance of such license, to third-party logistics providers 

under this section. 

‘‘(2) CONTENT.—Such regulations shall— 

‘‘(A) establish a process by which a third-party accreditation program approved by the Secretary shall, upon 

request by a third-party logistics provider, issue a license 

to each third-party logistics provider that meets the 

requirements set forth in this section; 

‘‘(B) establish a process by which the Secretary shall 

issue a license to each third-party logistics provider that 

meets the requirements set forth in this section if the 

Secretary is not able to approve a third-party accreditation 

program because no such program meets the Secretary’s 

requirements necessary for approval of such a third-party 

accreditation program; 

‘‘(C) require that the entity complies with storage practices, as determined by the Secretary for such facility, 

including— 

‘‘(i) maintaining access to warehouse space of suitable size to facilitate safe operations, including a suitable area to quarantine suspect product; 

‘‘(ii) maintaining adequate security; and 

‘‘(iii) having written policies and procedures to— 

‘‘(I) address receipt, security, storage, inventory, shipment, and distribution of a product; 

‘‘(II) identify, record, and report confirmed 

losses or thefts in the United States; 

‘‘(III) correct errors and inaccuracies in inventories; 

‘‘(IV) provide support for manufacturer recalls; 

‘‘(V) prepare for, protect against, and address 

any reasonably foreseeable crisis that affects security or operation at the facility, such as a strike, 

fire, or flood; 

‘‘(VI) ensure that any expired product is segregated from other products and returned to the 

manufacturer or repackager or destroyed; 

‘‘(VII) maintain the capability to trace the 

receipt and outbound distribution of a product, 

and supplies and records of inventory; and 

‘‘(VIII) quarantine or destroy a suspect product 

if directed to do so by the respective manufacturer, 

wholesale distributor, dispenser, or an authorized 

government agency; 
H. R. 3204—52 

‘‘(D) provide for periodic inspection by the licensing 

authority, as determined by the Secretary, of such facility 

warehouse space to ensure compliance with this section; 

‘‘(E) prohibit a facility from having as a manager or 

designated representative anyone convicted of any felony 

violation of subsection (i) or (k) of section 301 or any 

violation of section 1365 of title 18, United States Code 

relating to product tampering; 

‘‘(F) provide for mandatory background checks of a 

facility manager or a designated representative of such 

manager; 

‘‘(G) require a third-party logistics provider to provide 

the applicable licensing authority, upon a request by such 

authority, a list of all product manufacturers, wholesale 

distributors, and dispensers for whom the third-party logistics provider provides services at such facility; and 

‘‘(H) include procedures under which any third-party 

logistics provider license— 

‘‘(i) expires on the date that is 3 years after 

issuance of the license; and 

‘‘(ii) may be renewed for additional 3-year periods. 

‘‘(3) PROCEDURE.—In promulgating the regulations under 

this subsection, the Secretary shall, notwithstanding section 

553 of title 5, United States Code— 

‘‘(A) issue a notice of proposed rulemaking that includes 

a copy of the proposed regulation; 

‘‘(B) provide a period of not less than 60 days for 

comments on the proposed regulation; and 

‘‘(C) provide that the final regulation takes effect upon 

the expiration of 1 year after the date that such final 

regulation is issued. 

‘‘(e) VALIDITY.—A license issued under this section shall remain 

valid as long as such third-party logistics provider remains licensed 

consistent with this section. If the Secretary finds that the thirdparty accreditation program demonstrates that all applicable 

requirements for licensure under this section are met, the Secretary 

shall issue a license under this section to a third-party logistics 

provider receiving accreditation, pursuant to subsection (d)(2)(A). 

‘‘SEC. 585. UNIFORM NATIONAL POLICY. 

‘‘(a) PRODUCT TRACING AND OTHER REQUIREMENTS.—Beginning 

on the date of enactment of the Drug Supply Chain Security Act, 

no State or political subdivision of a State may establish or continue 

in effect any requirements for tracing products through the distribution system (including any requirements with respect to statements 

of distribution history, transaction history, transaction information, 

or transaction statement of a product as such product changes 

ownership in the supply chain, or verification, investigation, disposition, notification, or recordkeeping relating to such systems, 

including paper or electronic pedigree systems or for tracking and 

tracing drugs throughout the distribution system) which are inconsistent with, more stringent than, or in addition to, any requirements applicable under section 503(e) (as amended by such Act) 

or this subchapter (or regulations issued thereunder), or which 

are inconsistent with— 

‘‘(1) any waiver, exception, or exemption pursuant to section 

581 or 582; or 
H. R. 3204—53 

‘‘(2) any restrictions specified in section 582. 

‘‘(b) WHOLESALE DISTRIBUTOR AND THIRD-PARTY LOGISTICS PROVIDER STANDARDS.— 

‘‘(1) IN GENERAL.—Beginning on the date of enactment 

of the Drug Supply Chain Security Act, no State or political 

subdivision of a State may establish or continue any standards, 

requirements, or regulations with respect to wholesale prescription drug distributor or third-party logistics provider licensure 

that are inconsistent with, less stringent than, directly related 

to, or covered by the standards and requirements applicable 

under section 503(e) (as amended by such Act), in the case 

of a wholesale distributor, or section 584, in the case of a 

third-party logistics provider. 

‘‘(2) STATE REGULATION OF THIRD-PARTY LOGISTICS PROVIDERS.—No State shall regulate third-party logistics providers 

as wholesale distributors. 

‘‘(3) ADMINISTRATION FEES.—Notwithstanding paragraph 

(1), a State may administer fee collections for effectuating the 

wholesale drug distributor and third-party logistics provider 

licensure requirements under sections 503(e) (as amended by 

the Drug Supply Chain Security Act), 583, and 584. 

‘‘(4) ENFORCEMENT, SUSPENSION, AND REVOCATION.—Notwithstanding paragraph (1), a State— 

‘‘(A) may take administrative action, including fines, 

to enforce a requirement promulgated by the State in 

accordance with section 503(e) (as amended by the Drug 

Supply Chain Security Act) or this subchapter; 

‘‘(B) may provide for the suspension or revocation of 

licenses issued by the State for violations of the laws of 

such State; 

‘‘(C) upon conviction of violations of Federal, State, 

or local drug laws or regulations, may provide for fines, 

imprisonment, or civil penalties; and 

‘‘(D) may regulate activities of licensed entities in a 

manner that is consistent with product tracing requirements under section 582. 

‘‘(c) EXCEPTION.—Nothing in this section shall be construed 

to preempt State requirements related to the distribution of 

prescription drugs if such requirements are not related to product 

tracing as described in subsection (a) or wholesale distributor and 

third-party logistics provider licensure as described in subsection 

(b) applicable under section 503(e) (as amended by the Drug Supply 

Chain Security Act) or this subchapter (or regulations issued thereunder).’’. 

SEC. 206. PENALTIES. 

(a) PROHIBITED ACT.—Section 301(t) (21 U.S.C. 331(t)), is 

amended— 

(1) by striking ‘‘or’’ after ‘‘the requirements of section 

503(d),’’; and 

(2) by inserting ‘‘, failure to comply with the requirements 

under section 582, the failure to comply with the requirements 

under section 584, as applicable,’’ after ‘‘in violation of section 

503(e)’’. 

(b) MISBRANDING.—Section 502 (21 U.S.C. 352), as amended 

by section 103, is further amended by adding at the end the following: 
H. R. 3204—54 

‘‘(cc) If it is a drug and it fails to bear the product identifier 

as required by section 582.’’. 

SEC. 207. CONFORMING AMENDMENT. 

(a) IN GENERAL.—Section 303(b)(1)(D) (21 U.S.C. 333(b)(1)(D)) 

is amended by striking ‘‘503(e)(2)(A)’’ and inserting ‘‘503(e)(1)’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 

shall take effect on January 1, 2015. 

SEC. 208. SAVINGS CLAUSE. 

Except as provided in the amendments made by paragraphs 

(1), (2), and (3) of section 204(a) and by section 206(a), nothing 

in this title (including the amendments made by this title) shall 

be construed as altering any authority of the Secretary of Health 

and Human Services with respect to a drug subject to section 

503(b)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

353(b)(1)) under any other provision of such Act or the Public 

Health Service Act (42 U.S.C. 201 et seq.). 

Speaker of the House of Representatives. 

Vice President of the United States and

President of the Senate.