I 

116TH CONGRESS 

2D SESSION H. R. 8479 

To amend the Public Health Service Act to provide for stockpiles to ensure 

that all Americans have access to generic drugs at risk of shortage, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 1, 2020 

Mr. CARTER of Georgia (for himself and Ms. BLUNT ROCHESTER) introduced 

the following bill; which was referred to the Committee on Energy and 

Commerce 

A BILL 

To amend the Public Health Service Act to provide for 

stockpiles to ensure that all Americans have access to 

generic drugs at risk of shortage, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Essential Medicines 

5 Strategic Stockpile Act of 2020’’. 


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1 SEC. 2. PILOT PROGRAM ON ENSURING MEDICATION SUP2 PLY STABILITY. 

3 Part D of the Public Health Service Act (42 U.S.C. 

4 254b et seq.) is amended by adding at the end the fol5 lowing new subpart: 

6 ‘‘Subpart XIII—Ensuring Medication Supply Stability 

7 ‘‘SEC. 340J. ENSURING MEDICATION SUPPLY STABILITY. 

8 ‘‘(a) AWARD OF CONTRACTS.—Beginning not later 

9 than January 1, 2021, the Secretary shall award contracts 

10 to eligible entities to each implement and test the effective11 ness of acquiring, maintaining, managing, and distrib12 uting a stockpile that— 

13 ‘‘(1) consists of generic drugs at risk of short14 age; and 

15 ‘‘(2) is of sufficient quantity to ensure that cus16 tomers in the United States of the respective eligible 

17 entity have access to such drugs for at least 6 

18 months (as specified by the Secretary based on the 

19 historic demand for those drugs). 

20 ‘‘(b) SELECTION OF DRUGS.— 

21 ‘‘(1) IN GENERAL.—The Secretary shall— 

22 ‘‘(A) select not more than 50 types of 

23 drugs that may be included by eligible entities 

24 in a stockpile pursuant to a contract under this 

25 section; and 


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1 ‘‘(B) maintain an up-to-date list of such 

2 drugs; and 

3 ‘‘(C) make such list publicly available. 

4 ‘‘(2) CHOICE OF ELIGIBLE ENTITIES.—A con5 tract awarded to an eligible entity under this section 

6 need not require the stockpile of the eligible entity 

7 to include all 50 types of drugs listed pursuant to 

8 paragraph (1). 

9 ‘‘(c) SUFFICIENT QUANTITY.—For each generic drug 

10 in a stockpile maintained pursuant to subsection (a), the 

11 Secretary shall specify the quantity of such drug that is 

12 sufficient for purposes of such subsection to ensure that 

13 consumers in the United States of the respective eligible 

14 entity have access to such drug for at least 6 months. 

15 ‘‘(d) DURATION; LIQUIDATION OF INVENTORY.— 

16 ‘‘(1) DURATION.—A contract awarded under 

17 this section shall be for a term of no more than 3 

18 years. 

19 ‘‘(2) LIQUIDATION OF INVENTORY.—A drug 

20 held in a stockpile pursuant to a contract under this 

21 section may be liquidated by the eligible entity at the 

22 end of the period of the contract. 

23 ‘‘(e) STOCKPILE REQUIREMENTS.— 

24 ‘‘(1) ENSURING AVAILABILITY OF UNEXPIRED

25 PRODUCTS.—Each eligible entity with a contract 


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1 under this section for a stockpile of generic drugs at 

2 risk of shortage shall— 

3 ‘‘(A) ensure that each drug maintained in 

4 the stockpile has an expiration date at least 1 

5 year beyond the current date; and 

6 ‘‘(B) to comply with subparagraph (A)— 

7 ‘‘(i) sell drugs in the stockpile through 

8 normal commercial channels and replace 

9 those drugs; or 

10 ‘‘(ii) if there is no commercial market 

11 for a drug in the stockpile, dispose of the 

12 drug, report such disposal to the Secretary, 

13 and replace the drug. 

14 ‘‘(2) MANAGEMENT OF STOCKPILE.— 

15 ‘‘(A) IN GENERAL.—Each eligible entity 

16 with a contract under this section for a stock17 pile of generic drugs at risk of shortage shall— 

18 ‘‘(i) acquire not later than 6 months 

19 following the date the contract is awarded, 

20 and maintain thereafter, a 6-month supply 

21 of each type of drug the eligible entity has 

22 contracted to stockpile, which 6-month 

23 supply shall be in addition to the average 

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1 tity over the previous year for such drug; 

2 and 

3 ‘‘(ii) if it is not possible to comply 

4 with clause (i), notify the Secretary, citing 

5 the reason why it is not possible and the 

6 expected time of acquisition of the drug. 

7 ‘‘(B) INVENTORY MANAGEMENT.—Each el8 igible entity with a contract under this section 

9 for a stockpile of generic drugs at risk of short10 age shall manage inventory to ensure that 

11 drugs in the stockpile are efficiently cycled to 

12 the commercial market and— 

13 ‘‘(i) may stockpile inventory at the eli14 gible entity’s distribution center with speci15 fied inventory amounts virtually reserved 

16 for the Federal Government with constant 

17 cycling to reduce product expiration; or 

18 ‘‘(ii) may store stockpiled inventory 

19 separately in a different location and re20 place drugs in the stockpile inventory with 

21 the same drug with newer dating. 

22 ‘‘(C) INSUFFICIENT FUNDS.—If amounts 

23 available to an eligible entity through contracts 

24 under this section are not sufficient to acquire 

25 or maintain a 6-month supply of any drug in 


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1 the stockpile of the eligible entity funded under 

2 this section, the eligible entity— 

3 ‘‘(i) may acquire and maintain less 

4 than a 6-month supply, but in no case less 

5 than a 3-month supply; and 

6 ‘‘(ii) shall submit a report to the Sec7 retary identifying— 

8 ‘‘(I) each such drug; and 

9 ‘‘(II) the reasons why such 

10 amounts are not sufficient to acquire 

11 or maintain a 6-month supply. 

12 ‘‘(D) ANNUAL AUDITS.—Not more than 

13 annually, the Secretary may request a physical 

14 audit count of the inventories of all eligible enti15 ties with a contract under this section to vali16 date that each such entity is maintaining the 

17 appropriate amount of stockpiled inventory. 

18 ‘‘(3) PERIODIC PRODUCT REVIEW.— 

19 ‘‘(A) USE OF PROCEEDS.—An eligible enti20 ty with a contract under this section for a 

21 stockpile of generic drugs at risk of shortage 

22 shall use the proceeds of the sale of any drugs 

23 in the stockpile to purchase drugs for the stock24 pile in accordance with this section. 


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1 ‘‘(B) MARKET INFLATION OR DEFLA2 TION.—In the case of market inflation or defla3 tion affecting the price of a drug in the stock4 pile of an eligible entity maintained pursuant to 

5 a contract under this section, the contract shall 

6 ensure that the Federal Government does not 

7 profit or suffer loss on items of such drug as 

8 a result of such inflation or deflation. 

9 ‘‘(4) REPORTING.—Each eligible entity with a 

10 contract under this section shall submit reports at 

11 such time and in such manner as the Secretary may 

12 require regarding— 

13 ‘‘(A) current inventory levels of stockpiled 

14 drugs at a drug level; 

15 ‘‘(B) indicators of current inventory levels 

16 of stockpiled drugs relative to acceptable mini17 mums; and 

18 ‘‘(C) such other matters as the Secretary 

19 determines appropriate. 

20 ‘‘(f) CONTRACT TERMS.— 

21 ‘‘(1) PAYMENT OF MONTHLY FEES FOR MAN22 AGEMENT.—Subject to paragraph (2), the Secretary 

23 shall pay to each eligible entity with a contract 

24 under this section for a stockpile of generic drugs at 


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1 risk of shortage appropriate monthly fees for the 

2 management of the stockpile. 

3 ‘‘(2) PAYMENT CONDITIONED ON STOCKPILE

4 ADEQUACY.— 

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

6 subparagraph (B), each contract with an eligi7 ble entity under this section shall provide that 

8 no payment under the contract may be made 

9 until the entity demonstrates to the Secretary 

10 that the entity has stockpiled such portion of 

11 the total quantity of drugs to be stockpiled 

12 under the contract as the Secretary determines 

13 to be acceptable for payment. 

14 ‘‘(B) EXCEPTIONS FOR ADVANCE PAY15 MENTS.— 

16 ‘‘(i) IN GENERAL.—A contract under 

17 this section may provide that, if the Sec18 retary determines (in the Secretary’s dis19 cretion) that an advance payment, partial 

20 payment for significant milestones, or pay21 ment to increase capacity is necessary to 

22 ensure success of the terms of the con23 tract, the Secretary shall pay, in advance 

24 of delivery, an amount not to exceed 10 

25 percent of the total contract amount to be 


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1 paid to the eligible entity by the Secretary 

2 pursuant to the contract over the full pe3 riod of the contract. 

4 ‘‘(ii) COST OF CAPITAL.—A contract 

5 under this section may provide for pay6 ments to compensate the contracting eligi7 ble entity for additional capital require8 ments related to the additional inventory 

9 to be maintained. 

10 ‘‘(iii) TIMING.—The Secretary shall, 

11 to the extent practicable, make any deter12 mination under clause (i) to make an ad13 vance payment at the same time as the 

14 issuance of a solicitation. 

15 ‘‘(iv) REPAYMENT.—If the Secretary 

16 makes an advance payment pursuant to 

17 clause (i), the Secretary shall require the 

18 eligible entity receiving such advance pay19 ment to repay it if there is a failure to per20 form by the eligible entity. 

21 ‘‘(3) TERMINATION.— 

22 ‘‘(A) IN GENERAL.—Subject to subpara23 graph (B), nothing in this section shall be con24 strued as affecting the rights of eligible entities 

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1 cluding the Federal Acquisition Regulation) re2 lating to the termination of contracts for the 

3 convenience of the Government. 

4 ‘‘(B) LIQUIDATION OF STOCKPILE.—If a 

5 contract under this section is terminated, the 

6 eligible entity with the contract shall liquidate 

7 the drugs comprising the stockpile funded 

8 through the contract and return to the Govern9 ment any amounts owed in relation to such 

10 drugs, but shall collect the management fees as11 sociated with such liquidation. 

12 ‘‘(g) CONGRESSIONAL OVERSIGHT.— 

13 ‘‘(1) INDEPENDENT EVALUATION AND RE14 PORT.—Not later than 1 year after the date of en15 actment of this section and annually thereafter, the 

16 Comptroller General of the United States shall con17 duct an independent evaluation, and submit to the 

18 appropriate congressional committees a report, con19 cerning the program under this section. 

20 ‘‘(2) CONTENTS OF REPORT.—The report under 

21 paragraph (1) shall review, assess, and provide rec22 ommendations, as appropriate, on the following: 

23 ‘‘(A) Details on likely costs and resultant 

24 savings as compared to a stockpiling method 


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1 that does not incorporate perpetual inventory 

2 cycling. 

3 ‘‘(B) Identification of drawdowns from the 

4 stockpile, as evidence of market shortage avoid5 ance. 

6 ‘‘(C) The allocation of drugs included in 

7 the stockpiles funded pursuant to this section to 

8 the customers of the eligible entities with con9 tracts under this section. 

10 ‘‘(D) The degree to which eligible entities 

11 with contracts under this section fulfilled their 

12 obligations under such contracts. 

13 ‘‘(h) DEFINITIONS.—In this section: 

14 ‘‘(1) The term ‘eligible entity’ means an entity 

15 that meets each of the following criteria: 

16 ‘‘(A) The entity is licensed or registered in 

17 accordance with applicable Federal and State 

18 law and in good standing with respect to such 

19 licensure or registration. 

20 ‘‘(B) The entity agrees— 

21 ‘‘(i) to purchase all drugs to be main22 tained in its stockpile funded under this 

23 section directly from the manufacturers of 

24 the drugs or the exclusive distributors of 

25 such manufacturers; or 


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1 ‘‘(ii) in the case of an entity that is a 

2 co-op or chain pharmacy warehouse— 

3 ‘‘(I) to purchase drugs to be 

4 maintained in its stockpile funded 

5 under this section from an authorized 

6 distributor; and 

7 ‘‘(II) distribute those drugs only 

8 to its member pharmacies. 

9 ‘‘(C) The entity holds a verified authorized 

10 wholesale distributor certification issued by the 

11 National Association of Boards of Pharmacy. 

12 ‘‘(D) The entity sells more than 90 percent 

13 of its drugs to dispensers. 

14 ‘‘(E) The entity agrees to distribute inven15 tory from its stockpile funded under this section 

16 only to dispensers that are customers of the en17 tity. 

18 ‘‘(2) The term ‘generic drug at risk of shortage’ 

19 means a drug (as defined in section 201 of the Fed20 eral Food, Drug, and Cosmetic Act) that— 

21 ‘‘(A) is approved pursuant to section 

22 505(j) of such Act; 

23 ‘‘(B) is included in the World Health Or24 ganization’s most recent Model List of Essen25 tial Medicines; 


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1 ‘‘(C) is included, at any point during the 

2 preceding 36 months, on the drug shortage list 

3 in effect under section 506E of the Federal 

4 Food, Drug, and Cosmetic Act; and 

5 ‘‘(D) is manufactured by 3 or fewer per6 sons that are registered under section 510 of 

7 the Federal Food, Drug, and Cosmetic Act for 

8 purposes of such manufacture. 

9 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—To 

10 carry out this section, there is authorized to be appro11 priated $120,000,000 for fiscal years 2021 through 2023, 

12 to remain available until expended.’’. 

Æ 


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