II 

112TH CONGRESS 

2D SESSION S. 3622 

To prohibit prescription drug price-gouging during states of market shortage. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 22 (legislative day, SEPTEMBER 21), 2012 

Mr. SCHUMER (for himself, Mr. MERKLEY, and Mr. BLUMENTHAL) introduced 

the following bill; which was read twice and referred to the Committee 

on Health, Education, Labor, and Pensions 

A BILL 

To prohibit prescription drug price-gouging during states 

of market shortage. 

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 ‘‘Protecting Patients 

5 and Hospitals From Price Gouging Act’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds that— 

8 (1) many pharmaceutical drugs are necessary to 

9 maintain the health and welfare of the American 

10 people; 


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1 (2) currently the Nation is facing a chronic 

2 shortage of vital drugs necessary in surgery, to treat 

3 cancer, and to fight other life-threatening illnesses; 

4 and 

5 (3) in order to prevent any party within the 

6 chain of distribution of any vital drugs from taking 

7 unfair advantage of consumers during market short8 ages, the public interest requires that such conduct 

9 be prohibited and made subject to criminal penalties. 

10 (b) PURPOSE.—The purpose of this Act is to prohibit 

11 excessive pricing during market shortages. 

12 SEC. 3. DEFINITIONS. 

13 As used in this Act— 

14 (1) the term ‘‘market shortage’’ means a situa15 tion in which the total supply of all clinically inter16 changeable versions of an FDA-regulated drug is in17 adequate to meet the current or projected demand at 

18 the user level; 

19 (2) the term ‘‘drug’’ means a drug intended for 

20 use by human beings, which— 

21 (A) because of its toxicity or other poten22 tiality for harmful effect, or the method of its 

23 use, or the collateral measures necessary to its 

24 use, is not safe for use except under the superVerDate Mar 15 2010 16:24 Sep 27, 2012 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3622.IS S3622

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1 vision of a practitioner licensed by law to ad2 minister such drug; or 

3 (B) is limited by an approved application 

4 under section 505 of the Federal Food, Drug, 

5 and Cosmetic Act (21 U.S.C. 355) to use under 

6 the professional supervision of a practitioner li7 censed by law to administer such drug; 

8 (3) the term ‘‘biologic’’ means a virus, thera9 peutic serum, toxin, antitoxin, vaccine, blood, blood 

10 component or derivative, allergenic product, or anal11 ogous product, or arsphenamine or derivative of ars12 phenamine (or any other trivalent organic arsenic 

13 compound), applicable to the prevention, treatment, 

14 or cure of a disease or condition of human beings; 

15 and 

16 (4) the term ‘‘vital drug’’ means any drug or 

17 biologic used to prevent or treat a serious or life18 threatening disease or medical condition, for which 

19 there is no other available source with sufficient sup20 ply of that drug or biologic or alternative drug or 

21 biologic available. 

22 SEC. 4. UNREASONABLY EXCESSIVE DRUG PRICING. 

23 (a) IN GENERAL.— 

24 (1) AUTHORITY.—The President may issue an 

25 Executive order declaring a market shortage for a 


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1 period of 6 months with regard to one or more vital 

2 drugs due to a market shortage under this Act. 

3 (2) UNLAWFUL ACT.—If the President issues 

4 an Executive order under paragraph (1), it shall be 

5 unlawful for any person to sell vital drugs at a price 

6 that is unreasonably excessive and indicates that the 

7 seller is taking unfair advantage of the cir8 cumstances related to a market shortage to unrea9 sonably increase prices during such period. 

10 (b) AUTHORITY.—The Attorney General is author11 ized to enforce penalties under this Act. 

12 SEC. 5. ENFORCEMENT. 

13 (a) ENFORCEMENT.— 

14 (1) IN GENERAL.—Whoever sells, or offers to 

15 sell, any vital drug during a declared market short16 age with the knowledge and intent to charge a price 

17 that is unreasonably excessive under the cir18 cumstances shall be guilty of an offense under this 

19 section and subject to injunction and penalties as 

20 provided in paragraphs (2) and (3). 

21 (2) ACTION IN DISTRICT COURT FOR INJUNC22 TION.—Whenever it shall appear to the Attorney 

23 General that any person is engaged in or about to 

24 engage in acts or practices constituting a violation 

25 of any provision of this section and until such comVerDate Mar 15 2010 23:06 Sep 28, 2012 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3622.IS S3622

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1 plaint is dismissed by the Attorney General or set 

2 aside by a court on review, the Attorney General 

3 may in his or her discretion bring an action in the 

4 proper district court of the United States, the 

5 United States District Court for the District of Co6 lumbia, or the United States courts of any territory 

7 or other place subject to the jurisdiction of the 

8 United States to enjoin such acts or practices, and 

9 upon a proper showing a permanent or temporary 

10 injunction or restraining order shall be granted with11 out bond in the interest of the public. 

12 (3) CRIMINAL PENALTIES.—Any person acting 

13 with the knowledge and intent to charge a price that 

14 is unreasonably excessive under the circumstances 

15 shall be guilty of an offense under this section and 

16 title 18, United States Code, and subject to impris17 onment for a term not to exceed 3 years, fined an 

18 amount not to exceed $5,000,000, or both. 

19 (b) ENFORCEMENT.—The criminal penalty provided 

20 by subsection (a) may be imposed only pursuant to a 

21 criminal action brought by the Attorney General or other 

22 officer of the Department of Justice. 

23 (c) MULTIPLE OFFENSES.—In assessing the penalty 

24 provided by subsection (a) each day of a continuing viola25 tion shall be considered a separate violation. 


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1 (d) APPLICATION.— 

2 (1) IN GENERAL.—This section shall apply— 

3 (A) in the geographical area where the 

4 vital drug market shortage has been declared; 

5 and 

6 (B) to all wholesalers and distributors in 

7 the chain of distribution. 

8 (2) INAPPLICABLE.—This section shall not 

9 apply to a hospital (as defined in section 1861(e) of 

10 the Social Security Act (42 U.S.C. 1395x(e)) or a 

11 physician (as defined in section 1861(q) of the So12 cial Security Act (42 U.S.C. 1395x(q)). 

13 SEC. 6. DETERMINATION OF UNREASONABLY EXCESSIVE. 

14 (a) IN GENERAL.—The Attorney General, in deter15 mining whether an alleged violator’s price was unreason16 ably excessive, shall consider whether— 

17 (1) the price reasonably reflected additional 

18 costs, not within the control of that person or com19 pany, that were paid, incurred, or reasonably antici20 pated by that person or company; 

21 (2) the price reasonably reflected additional 

22 risks taken by that person or company to produce, 

23 distribute, obtain, or sell such product under the cir24 cumstances; 


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1 (3) there is a gross disparity between the chal2 lenged price and the price at which the same or 

3 similar goods were readily available in the same re4 gion and during the same Presidentially declared 

5 market shortage; 

6 (4) the marginal benefit received by the whole7 saler or distributor is significantly changed in com8 parison with marginal earnings in the year before a 

9 market shortage was declared; 

10 (5) the price charged was comparable to the 

11 price at which the goods were generally available in 

12 the trade area if the wholesaler or distributor did 

13 not sell or offer to sell the prescription drug in ques14 tion prior to the time a market shortage was de15 clared; and 

16 (6) the price was substantially attributable to 

17 local, regional, national, or international market con18 ditions. 

19 (b) CONSULTATION.—Not later than 1 year after the 

20 date of enactment of this Act and annually thereafter, the 

21 Attorney General or designee, shall consult with represent22 atives of the National Association of Wholesalers, Group 

23 Purchasing Organizations, Pharmaceutical Distributors, 

24 Hospitals, Manufacturers, patients, and other interested 

25 community organizations to reassess the criteria set forth 


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1 in subsection (a) in determining unreasonably excessive 

2 and prepare and submit to Congress a report on the re3 sults of the reassessment. 

4 SEC. 7. DURATION. 

5 (a) IN GENERAL.—Any market shortage declared by 

6 the President in accordance with this Act shall be in effect 

7 for a period of not to exceed 6 months from the date on 

8 which the President issues the Executive order. 

9 (b) TERMINATION.—Any market shortage declared 

10 by the President in accordance with this Act shall termi11 nate if— 

12 (1) there is enacted a law terminating the mar13 ket shortage which shall be passed by Congress after 

14 a national market shortage is declared; or 

15 (2) the President issues a proclamation termi16 nating the market shortage; 

17 whichever comes first. 

18 (c) DECLARATION RENEWAL.—The President may 

19 renew the state of market shortage declared under sub20 section (a), if the President declares that the severe short21 age continues to affect the health and well being of citizens 

22 beyond the initial 6-month period. 

Æ 


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