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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4813 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4813

 To provide for insurance reform (including health insurance reform), 
    amend title XVIII of the Social Security Act to reform Medicare 
Advantage and reduce disparities in the Medicare Program, regulate the 
       importation of prescription drugs, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 10, 2010

  Mr. Berry introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committees on 
  the Judiciary, Oversight and Government Reform, Ways and Means, and 
Education and Labor, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To provide for insurance reform (including health insurance reform), 
    amend title XVIII of the Social Security Act to reform Medicare 
Advantage and reduce disparities in the Medicare Program, regulate the 
       importation of prescription drugs, 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. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Table of contents.
Sec. 2. Definitions.
                       TITLE I--INSURANCE REFORM

Sec. 101. Restoring application of antitrust laws to insurers.
Sec. 102. Premiums and prohibitions on exclusions.
Sec. 103. Guaranteed coverage availability and continuation.
Sec. 104. Increasing the medical loss ratio.
Sec. 105. Limitation of abortion funding.
Sec. 106. Access limited to lawful residents.
Sec. 107. Enforcement and treatment of Medicare, Medicaid, CHIP, and 
                            Tricare.
                 TITLE II--MEDICARE AND MEDICAID REFORM

Sec. 201. Medicare Advantage reforms.
Sec. 202. Medicare disparities.
Sec. 203. Establishment of Medicare operated prescription drug plan 
                            option.
Sec. 204. Application to pharmacies and pharmacists of the eligible 
                            professional exemption from certain 
                            Medicare accreditation requirements.
Sec. 205. Providing adequate pharmacy reimbursement.
                TITLE III--PRESCRIPTION DRUG IMPORTATION

Sec. 301. Repeal of certain section regarding importation of 
                            prescription drugs.
Sec. 302. Importation of prescription drugs; waiver of certain import 
                            restrictions.
Sec. 303. Disposition of certain drugs denied admission into United 
                            States.
Sec. 304. Wholesale distribution of drugs; statements regarding prior 
                            sale, purchase, or trade.
Sec. 305. Internet sales of prescription drugs.
Sec. 306. Prohibiting payments to unregistered foreign pharmacies.
Sec. 307. Importation exemption under Controlled Substances Import and 
                            Export Act.
Sec. 308. Severability.
           TITLE IV--ADDITIONAL PRESCRIPTION DRUGS PROVISIONS

Sec. 401. Disallowance of deduction for advertising and promotional 
                            expenses for prescription pharmaceuticals.
Sec. 402. Integrity for Pharmacy benefit managers.
Sec. 403. Price information under Medicaid.

SEC. 2. DEFINITIONS.

    For purposes of titles I and IV:
            (1) Health benefits plan.--The term ``health benefits 
        plan'' means health insurance coverage and an employment-based 
        health plan and includes the public health insurance option.
            (2) Health benefits plan offering entity.--The term 
        ``health benefits plan offering entity'' means, with respect to 
        a health benefits plan that is--
                    (A) a group health plan, the plan sponsor in 
                relation to such group health plan, except that, in the 
                case of a plan maintained jointly by 1 or more 
                employers and 1 or more employee organizations and with 
                respect to which an employer is the primary source of 
                financing, such term means such employer;
                    (B) health insurance coverage, the health insurance 
                issuer offering the coverage;
                    (C) a non-Federal governmental plan, the State or 
                political subdivision of a State (or agency or 
                instrumentality of such State or subdivision) which 
                establishes or maintains such plan; or
                    (D) a Federal governmental plan, the appropriate 
                Federal official.
            (3) Terms from erisa.--The terms ``employer'', 
        ``employer'', ``participant'', ``beneficiary'', ``person'', 
        ``plan sponsor'', and ``governmental plan'' have the meaning 
        given such terms in section 3 of the Employee Retirement Income 
        Security Act of 1974.
            (4) Terms from phsa.--The terms ``group health plan'', 
        ``health insurance coverage'', ``health insurance issuer'', 
        ``group health insurance coverage'', ``applicable State 
        authority'', ``Federal governmental plan'', ``non-Federal 
        governmental plan'', ``State'', ``individual market'', ``large 
        group market'', and ``small group market'' have the meaning 
        given such terms in section 2971 of the Public Health Service 
        Act.
            (5) Additional terms.--
                    (A) Family.--The term ``family'' means an 
                individual and includes the individual's dependents
                    (B) Secretary.--The term ``Secretary'' means the 
                Secretary of Health and Human Services.
                    (C) Dependent.--The term ``dependent'' has the 
                meaning given such term by the Secretary and includes a 
                spouse.
                    (D) Plan year.--The term ``plan year'' means--
                            (i) with respect to an employment-based 
                        health plan, a plan year as specified under 
                        such plan; or
                            (ii) with respect to a health benefits plan 
                        other than an employment-based health plan, a 
                        12-month period as specified by the Secretary.

                       TITLE I--INSURANCE REFORM

SEC. 101. RESTORING APPLICATION OF ANTITRUST LAWS TO INSURERS.

    (a) In General.--Section 3 of the Act of March 9, 1945 (15 U.S.C. 
1013), commonly known as the McCarran-Ferguson Act, is amended by 
adding at the end the following:
    ``(c)(1) Nothing contained in this Act shall modify, impair, or 
supersede the operation of any of the antitrust laws with respect to 
price fixing, market allocation, or monopolization (or attempting to 
monopolize) by a person engaged in the business of insurance.
    ``(2) For purposes of this subsection the term `antitrust laws' has 
the meaning given it in subsection (a) of the 1st section of the 
Clayton Act, except that such term includes section 5 of the Federal 
Trade Commission Act to the extent that such section 5 applies to 
unfair methods of competition.''.
    (b) Related Provision.--For purposes of section 5 of the Federal 
Trade Commission Act (15 U.S.C. 45) to the extent such section applies 
to unfair methods of competition, section 3(c) of the McCarran-Ferguson 
Act shall apply with respect to the business of insurance without 
regard to whether such business is carried on for profit, 
notwithstanding the definition of ``Corporation'' contained in section 
4 of the Federal Trade Commission Act.
    (c) Related Preservation of Antitrust Laws.--Except as provided in 
subsections (a) and (b), nothing in this Act, or in the amendments made 
by this Act, shall be construed to modify, impair, or supersede the 
operation of any of the antitrust laws. For purposes of the preceding 
sentence, the term ``antitrust laws'' has the meaning given it in 
subsection (a) of the 1st section of the Clayton Act, except that it 
includes section 5 of the Federal Trade commission Act to the extent 
that such section 5 applies to unfair methods of competition.

SEC. 102. PREMIUMS AND PROHIBITIONS ON EXCLUSIONS.

    (a) Premium Rate Variation.--The premium rate charged for a health 
benefits plan may not vary except as follows:
            (1) By geographic premium rating area (as permitted by 
        State insurance regulators).
            (2) By family enrollment (such as variations within 
        categories and compositions of families) so long as the ratio 
        of the premium for family enrollment (or enrollments) to the 
        premium for individual enrollment is uniform, as specified 
        under State law.
    (b) Prohibition of Preexisting Condition Exclusions.--A health 
benefits plan may not impose any preexisting condition exclusion (as 
defined in section 2701(b)(1)(A) of the Public Health Service Act) or 
otherwise impose any limit or condition on the coverage under the plan 
with respect to an individual or dependent based on any of the 
following: health status, medical condition, claims experience, receipt 
of health care, medical history, genetic information, evidence of 
insurability, disability, or source of injury (including conditions 
arising out of acts of domestic violence) or any similar factors.

SEC. 103. GUARANTEED COVERAGE AVAILABILITY AND CONTINUATION.

    (a) Availability of Coverage.--
            (1) In general.--Subject to paragraph (2), each health 
        benefits plan issuer that offers health insurance coverage in 
        the individual or group market in a State must accept every 
        employer and individual in the State that applies for such 
        coverage.
            (2) Enrollment.--
                    (A) Restriction.--A health benefits plan issuer 
                described in paragraph (1) may restrict enrollment in 
                coverage described in such subsection to open or 
                special enrollment periods.
                    (B) Establishment.--A health benefits plan issuer 
                described in paragraph (1) shall, in accordance with 
                the regulations promulgated under subparagraph (C), 
                establish special enrollment periods for qualifying 
                events (under section 603 of the Employee Retirement 
                Income Security Act of 1974).
                    (C) Regulations.--The Secretary shall promulgate 
                regulations with respect to enrollment periods under 
                subparagraphs (A) and (B).
    (b) Guaranteed Renewability of Coverage.--If a health benefits plan 
issuer offers health insurance coverage in the individual or group 
market, the issuer must renew or continue in force such coverage at the 
option of the plan sponsor or the individual, as applicable.
    (c) Prohibition of Rescission.--Rescissions of health insurance 
coverage offered by a health benefits plan issuer shall be prohibited 
except in cases of fraud as defined in section 2712(b)(2) of the Public 
Health Service Act.

SEC. 104. INCREASING THE MEDICAL LOSS RATIO.

    Each health benefits plan issuer that offers health insurance 
coverage in the small or large group market shall provide that for any 
plan year in which the coverage has a medical loss ratio below 92 
percent, the issuer shall provide for rebates to enrollees of the 
amount by which the issuer's medical loss ratio is less than the level 
so specified.

SEC. 105. LIMITATION OF ABORTION FUNDING.

    (a) In General.--No Federal funds may be used to pay for any 
abortion or to cover any part of the costs of any health plan that 
includes coverage of abortion, except in the case where a woman suffers 
from a physical disorder, physical injury, or physical illness that 
would, as certified by a physician, place the woman in danger of death 
unless an abortion is performed, including a life-endangering physical 
condition caused by or arising from the pregnancy itself, or unless the 
pregnancy is the result of an act of rape or incest.
    (b) Option To Purchase Separate Supplemental Coverage or Plan.--
Nothing in this section shall be construed as prohibiting any 
nonfederal entity (including an individual, a State government, and a 
local government) from purchasing separate supplemental coverage for 
abortions for which funding is prohibited under this section, or a plan 
that includes such abortions, so long as--
            (1) such coverage or plan is paid for entirely using only 
        nonfederal funds; and
            (2) such coverage or plan is not purchased using nonfederal 
        funds that are required to receive a federal payment, including 
        a State's or locality's contribution of Medicaid matching 
        funds.
    (c) Option To Offer Separate Supplemental Coverage or Plan.--
Nothing in this section shall restrict any nonfederal health benefits 
plan offering entity from offering separate supplemental coverage for 
abortions for which funding is prohibited under this section, or a plan 
that includes such abortions, so long as--
            (1) premiums for such separate supplemental coverage or 
        plan are paid for entirely with nonfederal funds; and
            (2) administrative costs and all services offered through 
        such supplemental coverage or plan are paid for using only 
        premiums collected for such coverage or plan.

SEC. 106. ACCESS LIMITED TO LAWFUL RESIDENTS.

    (a) Sale of Insurance.--A health benefits plan issuer may not sell 
health insurance coverage under a health benefits plan, if, at the time 
of such sale, a participant or beneficiary of such plan is not, or is 
not reasonably expected to be for the entire period for which 
enrollment is sought, a citizen or national of the United States or an 
alien lawfully present in the United States.
    (b) Enrollment.--A health benefits plan issuer may not enroll a 
participant or beneficiary in a health benefits plan, if, at the time 
of such enrollment, such participant or beneficiary is not, or is not 
reasonably expected to be for the entire period for which enrollment is 
sought, a citizen or national of the United States or an alien lawfully 
present in the United States.

SEC. 107. ENFORCEMENT AND TREATMENT OF MEDICARE, MEDICAID, CHIP, AND 
              TRICARE.

    (a) Enforcement.--For purposes of enforcement, the provisions of 
this title shall be treated as if included such provisions were 
included in title XXVII of the Public Health Service Act, title VII of 
the Employee Retirement Income Security Act of 1974, and chapter 89 of 
title 5, United States Code.
    (b) Treatment of Medicare, Medicaid, CHIP, and Tricare.--The 
provisions of sections 102, 103, and 104 shall not apply to the 
Medicare, Medicaid, and CHIP programs under titles XVIII, XIX, and XXI 
of the Social Security Act, respectively, or to Tricare.

                 TITLE II--MEDICARE AND MEDICAID REFORM

SEC. 201. MEDICARE ADVANTAGE REFORMS.

    (a) Phase-In of Payment Based on Fee-for-Service Costs.--Section 
1853 of the Social Security Act (42 U.S.C. 1395w-23) is amended--
            (1) in subsection (j)(1)(A)--
                    (A) by striking ``beginning with 2007'' and 
                inserting ``for 2007, 2008, 2009, and 2010''; and--
                    (B) by inserting after ``(k)(1)'' the following: 
                ``, or, beginning with 2011, \1/12\ of the blended 
                benchmark amount determined under subsection (n)(1)''; 
                and
            (2) by adding at the end the following new subsection: 
    ``(n) Determination of Blended Benchmark Amount.--
            ``(1) In general.--For purposes of subsection (j), subject 
        to paragraphs (3) and (4), the term `blended benchmark amount' 
        means for an area--
                    ``(A) for 2011 the sum of--
                            ``(i) \2/3\ of the applicable amount (as 
                        defined in subsection (k)) for the area and 
                        year; and
                            ``(ii) \1/3\ of the amount specified in 
                        paragraph (2) for the area and year;
                    ``(B) for 2012 the sum of--
                            ``(i) \1/3\ of the applicable amount for 
                        the area and year; and
                            ``(ii) \2/3\ of the amount specified in 
                        paragraph (2) for the area and year; and
                    ``(C) for a subsequent year the amount specified in 
                paragraph (2) for the area and year.
            ``(2) Specified amount.--The amount specified in this 
        paragraph for an area and year is the amount specified in 
        subsection (c)(1)(D)(i) for the area and year adjusted (in a 
        manner specified by the Secretary) to take into account the 
        phase-out in the indirect costs of medical education from 
        capitation rates described in subsection (k)(4).
            ``(3) Fee-for-service payment floor.--In no case shall the 
        blended benchmark amount for an area and year be less than the 
        amount specified in paragraph (2).
            ``(4) Exception for pace plans.--This subsection shall not 
        apply to payments to a PACE program under section 1894.''.
    (b) Elimination of Medicare Advantage Regional Stabilization 
Plan.--
            (1) In general.--Section 1858 of the Social Security Act 
        (42 U.S.C. 1395w-27a) is amended by striking subsection (e).
            (2) Transition.--Any amount contained in the MA Regional 
        Plan Stabilization Fund as of the date of the enactment of this 
        Act shall be transferred to the Federal Supplementary Medical 
        Insurance Trust Fund.

SEC. 202. MEDICARE DISPARITIES.

    (a) Floor on the Medicare Hospital Area Wage Index.--
            (1) In general.--Section 1886(d)(3)(E) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amended--
                    (A) in clause (i), by striking ``clause (ii)'' and 
                inserting ``clause (ii) or (iii)''; and--
                    (B) by adding at the end of the following new 
                clause:
                            ``(iii) Floor on area wage index.--For 
                        discharges occurring on or after October 1, 
                        2010, the area wage index applicable under this 
                        subparagraph to any hospital may not be less 
                        than 1.00.''.
    (b) Increase the Physician Fee Schedule Practice Expense Geographic 
Adjustment.--Section 1848(e)(1) is amended by adding after subparagraph 
(E) the following new subparagraph:
                    ``(F) Floor for practice expense geographic 
                index.--After calculating the practice expense 
                geographic index in subparagraph (A)(i), for purposes 
                of payment for services furnished on or after October 
                1, 2010, the Secretary shall increase the practice 
                expense geographic index to 1.00 for any locality for 
                which such practice expense geographic index is less 
                than 1.00.''.

SEC. 203. ESTABLISHMENT OF MEDICARE OPERATED PRESCRIPTION DRUG PLAN 
              OPTION.

    (a) In General.--Subpart 2 of part D of the Social Security Act is 
amended by inserting after section 1860D-11 (42 U.S.C. 1395w-111) the 
following new section:

           ``medicare operated prescription drug plan option

    ``Sec. 1860D-11A.  (a) In General.--Notwithstanding any other 
provision of this part, for each year (beginning with 2011), in 
addition to any plans offered under section 1860D-11, the Secretary--
            ``(1) shall offer one or more Medicare operated 
        prescription drug plans (as defined in subsection (c)) with a 
        service area that consists of the entire United States; and
            ``(2) shall enter into negotiations, in accordance with 
        subsection (b), with pharmaceutical manufacturers to reduce the 
        purchase cost of covered part D drugs for eligible part D 
        individuals who enroll in such a plan.
    ``(b) Negotiations.--Notwithstanding section 1860D-11(i), for 
purposes of offering a medicare operated prescription drug plan under 
this section, the Secretary shall negotiate with pharmaceutical 
manufacturers with respect to the purchase price of covered part D 
drugs for a Medicare operated prescription drug plan and shall 
encourage the use of more affordable therapeutic equivalents to the 
extent such practices do not override medical necessity as determined 
by the prescribing physician. To the extent practicable and consistent 
with the previous sentence, the Secretary shall implement strategies 
similar to those used by other Federal purchasers of prescription 
drugs, and other strategies, including the use of a formulary and 
formulary incentives in subsection (e), to reduce the purchase cost of 
covered part D drugs.
    ``(c) Medicare Operated Prescription Drug Plan Defined.--For 
purposes of this part, the term `medicare operated prescription drug 
plan' means a prescription drug plan that offers qualified prescription 
drug coverage and access to negotiated prices described in section 
1860D-2(a)(1)(A). Such a plan may offer supplemental prescription drug 
coverage in the same manner as other qualified prescription drug 
coverage offered by other prescription drug plans.
    ``(d) Monthly Beneficiary Premium.--
            ``(1) Qualified prescription drug coverage.--The monthly 
        beneficiary premium for qualified prescription drug coverage 
        and access to negotiated prices described in section 1860D-
        2(a)(1)(A) to be charged under a medicare operated prescription 
        drug plan shall be uniform nationally. Such premium for months 
        in 2010 and each succeeding year shall be based on the average 
        monthly per capita actuarial cost of offering the medicare 
        operated prescription drug plan for the year involved, 
        including administrative expenses.
            ``(2) Supplemental prescription drug coverage.--Insofar as 
        a medicare operated prescription drug plan offers supplemental 
        prescription drug coverage, the Secretary may adjust the amount 
        of the premium charged under paragraph (1).
    ``(e) Use of a Formulary and Formulary Incentives.--
            ``(1) In general.--With respect to the operation of a 
        medicare operated prescription drug plan, the Secretary shall 
        establish and apply a formulary (and may include formulary 
        incentives described in paragraph (2)(C)(ii)) in accordance 
        with this subsection in order to--
                    ``(A) increase patient safety;
                    ``(B) increase appropriate use and reduce 
                inappropriate use of drugs; and
                    ``(C) reward value.
            ``(2) Development of initial formulary.--
                    ``(A) In general.--In selecting covered part D 
                drugs for inclusion in a formulary, the Secretary shall 
                consider clinical benefit and price of such drug.
                    ``(B) Role of ahrq.--The Director of the Agency for 
                Healthcare Research and Quality shall be responsible 
                for assessing the clinical benefit of covered part D 
                drugs and making recommendations to the Secretary 
                regarding which drugs should be included in the 
                formulary. In conducting such assessments and making 
                such recommendations, the Director shall--
                            ``(i) consider safety concerns, including 
                        those identified by the Federal Food and Drug 
                        Administration;
                            ``(ii) use available data and evaluations, 
                        with priority given to randomized controlled 
                        trials, to examine clinical effectiveness, 
                        comparative effectiveness, safety, and enhanced 
                        compliance with a drug regimen;
                            ``(iii) use the same classes of drugs 
                        developed by United States Pharmacopeia for 
                        this part;
                            ``(iv) consider evaluations made by--
                                    ``(I) the Director under section 
                                1013 of Medicare Prescription Drug, 
                                Improvement, and Modernization Act of 
                                2003;
                                    ``(II) other Federal entities, such 
                                as the Secretary of Veterans Affairs; 
                                and
                                    ``(III) other private and public 
                                entities, such as the Drug 
                                Effectiveness Review Project and 
                                Medicaid programs; and
                            ``(v) recommend to the Secretary--
                                    ``(I) those drugs in a class that 
                                provide a greater clinical benefit, 
                                including fewer safety concerns or less 
                                risk of side-effects, than another drug 
                                in the same class that should be 
                                included in the formulary;
                                    ``(II) those drugs in a class that 
                                provide less clinical benefit, 
                                including greater safety concerns or a 
                                greater risk of side-effects, than 
                                another drug in the same class that 
                                should be excluded from the formulary; 
                                and
                                    ``(III) drugs in a class with same 
                                or similar clinical benefit for which 
                                it would be appropriate for the 
                                Secretary to competitively bid (or 
                                negotiate) for placement on the 
                                formulary.
                    ``(C) Consideration of ahrq recommendations.--
                            ``(i) In general.--The Secretary, after 
                        taking into consideration the recommendations 
                        under subparagraph (B)(v), shall establish a 
                        formulary, and formulary incentives, to 
                        encourage use of covered part D drugs that--
                                    ``(I) have a lower cost and provide 
                                a greater clinical benefit than other 
                                drugs;
                                    ``(II) have a lower cost than other 
                                drugs with same or similar clinical 
                                benefit; and
                                    ``(III) drugs that have the same 
                                cost but provide greater clinical 
                                benefit than other drugs.
                            ``(ii) Formulary incentives.--The formulary 
                        incentives under clause (i) may be in the form 
                        of one or more of the following: 
                                    ``(I) Tiered copayments.
                                    ``(II) Reference pricing.
                                    ``(III) Prior authorization.
                                    ``(IV) Step therapy.
                                    ``(V) Medication therapy 
                                management.
                                    ``(VI) Generic drug substitution.
                            ``(iii) Flexibility.--In applying such 
                        formulary incentives the Secretary may decide 
                        not to impose any cost-sharing for a covered 
                        part D drug for which--
                                    ``(I) the elimination of cost 
                                sharing would be expected to increase 
                                compliance with a drug regimen; and
                                    ``(II) compliance would be expected 
                                to produce savings under part A or B or 
                                both.
            ``(3) Limitations on formulary.--In any formulary 
        established under this subsection, the formulary may not be 
        changed during a year, except--
                    ``(A) to add a generic version of a covered part D 
                drug that entered the market;
                    ``(B) to remove a drug for which a safety problem 
                is found; and
                    ``(C) to add a drug that the Secretary identifies 
                as a drug which treats a condition for which there has 
                not previously been a treatment option or for which a 
                clear and significant benefit has been demonstrated 
                over other covered part D drugs.
            ``(4) Adding drugs to the initial formulary.--
                    ``(A) Use of advisory committee.--The Secretary 
                shall establish and appoint an advisory committee (in 
                this paragraph referred to as the `advisory 
                committee')--
                            ``(i) to review petitions from drug 
                        manufacturers, health care provider 
                        organizations, patient groups, and other 
                        entities for inclusion of a drug in, or other 
                        changes to, such formulary; and
                            ``(ii) to recommend any changes to the 
                        formulary established under this subsection.
                    ``(B) Composition.--The advisory committee shall be 
                composed of 9 members and shall include representatives 
                of physicians, pharmacists, and consumers and others 
                with expertise in evaluating prescription drugs. The 
                Secretary shall select members based on their knowledge 
                of pharmaceuticals and the Medicare population. Members 
                shall be deemed to be special Government employees for 
                purposes of applying the conflict of interest 
                provisions under section 208 of title 18, United States 
                Code, and no waiver of such provisions for such a 
                member shall be permitted.
                    ``(C) Consultation.--The advisory committee shall 
                consult, as necessary, with physicians who are 
                specialists in treating the disease for which a drug is 
                being considered.
                    ``(D) Request for studies.--The advisory committee 
                may request the Agency for Healthcare Research and 
                Quality or an academic or research institution to study 
                and make a report on a petition described in 
                subparagraph (A)(ii) in order to assess--
                            ``(i) clinical effectiveness;
                            ``(ii) comparative effectiveness;
                            ``(iii) safety; and
                            ``(iv) enhanced compliance with a drug 
                        regimen.
                    ``(E) Recommendations.--The advisory committee 
                shall make recommendations to the Secretary regarding--
                            ``(i) whether a covered part D drug is 
                        found to provide a greater clinical benefit, 
                        including fewer safety concerns or less risk of 
                        side-effects, than another drug in the same 
                        class that is currently included in the 
                        formulary and should be included in the 
                        formulary;
                            ``(ii) whether a covered part D drug is 
                        found to provide less clinical benefit, 
                        including greater safety concerns or a greater 
                        risk of side-effects, than another drug in the 
                        same class that is currently included in the 
                        formulary and should not be included in the 
                        formulary; and
                            ``(iii) whether a covered part D drug has 
                        the same or similar clinical benefit to a drug 
                        in the same class that is currently included in 
                        the formulary and whether the drug should be 
                        included in the formulary.
                    ``(F) Limitations on review of manufacturer 
                petitions.--The advisory committee shall not review a 
                petition of a drug manufacturer under subparagraph 
                (A)(ii) with respect to a covered part D drug unless 
                the petition is accompanied by the following:
                            ``(i) Raw data from clinical trials on the 
                        safety and effectiveness of the drug.
                            ``(ii) Any data from clinical trials 
                        conducted using active controls on the drug or 
                        drugs that are the current standard of care.
                            ``(iii) Any available data on comparative 
                        effectiveness of the drug.
                            ``(iv) Any other information the Secretary 
                        requires for the advisory committee to complete 
                        its review.
                    ``(G) Response to recommendations.--The Secretary 
                shall review the recommendations of the advisory 
                committee and if the Secretary accepts such 
                recommendations the Secretary shall modify the 
                formulary established under this subsection 
                accordingly. Nothing in this section shall preclude the 
                Secretary from adding to the formulary a drug for which 
                the Director of the Agency for Healthcare Research and 
                Quality or the advisory committee has not made a 
                recommendation.
                    ``(H) Notice of changes.--The Secretary shall 
                provide timely notice to beneficiaries and health 
                professionals about changes to the formulary or 
                formulary incentives.
    ``(f) Informing Beneficiaries.--The Secretary shall take steps to 
inform beneficiaries about the availability of a Medicare operated drug 
plan or plans including providing information in the annual handbook 
distributed to all beneficiaries and adding information to the official 
public Medicare website related to prescription drug coverage available 
through this part.
    ``(g) Application of All Other Requirements for Prescription Drug 
Plans.--Except as specifically provided in this section, any Medicare 
operated drug plan shall meet the same requirements as apply to any 
other prescription drug plan, including the requirements of section 
1860D-4(b)(1) relating to assuring pharmacy access).''.
    (b) Conforming Amendments.--
            (1) Section 1860D-3(a) of the Social Security Act (42 
        U.S.C. 1395w-103(a)) is amended by adding at the end the 
        following new paragraph:
            ``(4) Availability of the medicare operated prescription 
        drug plan.--A medicare operated prescription drug plan (as 
        defined in section 1860D-11A(c)) shall be offered nationally in 
        accordance with section 1860D-11A.''.
            (2)(A) Section 1860D-3 of the Social Security Act (42 
        U.S.C. 1395w-103) is amended by adding at the end the following 
        new subsection:
    ``(c) Provisions Only Applicable in 2006, 2007, 2008, and 2009.--
The provisions of this section shall only apply with respect to 2006, 
2007, 2008, and 2009.''.
            (B) Section 1860D-11(g) of such Act (42 U.S.C. 1395w-
        111(g)) is amended by adding at the end the following new 
        paragraph:
            ``(8) No authority for fallback plans after 2009.--A 
        fallback prescription drug plan shall not be available after 
        December 31, 2009.''.
            (3) Section 1860D-13(c)(3) of such Act (42 U.S.C. 1395w-
        113(c)(3)) is amended--
                    (A) in the heading, by inserting ``and medicare 
                operated prescription drug plans'' after ``Fallback 
                plans''; and
                    (B) by inserting ``or a medicare operated 
                prescription drug plan'' after ``a fallback 
                prescription drug plan''.
            (4) Section 1860D-16(b)(1) of such Act (42 U.S.C.1395w-
        116(b)(1)) is amended--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon at the end;
                    (B) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(E) payments for expenses incurred with respect 
                to the operation of medicare operated prescription drug 
                plans under section 1860D-11A.''.
            (5) Section 1860D-41(a) of such Act (42 U.S.C. 1395w-
        151(a)) is amended by adding at the end the following new 
        paragraph:
            ``(19) Medicare operated prescription drug plan.--The term 
        `medicare operated prescription drug plan' has the meaning 
        given such term in section 1860D-11A(c).''.
    (c) Improved Appeals Process Under the Medicare Operated 
Prescription Drug Plan.--Section 1860D-4(h) of the Social Security Act 
(42 U.S.C. 1305w-104(h)) is amended by adding at the end the following 
new paragraph:
            ``(4) Appeals process for medicare operated prescription 
        drug plan.--
                    ``(A) In general.--The Secretary shall develop a 
                well-defined process for appeals for denials of 
                benefits under this part under the Medicare operated 
                prescription drug plan. Such process shall be 
                efficient, impose minimal administrative burdens, and 
                ensure the timely procurement of non-formulary drugs or 
                exemption from formulary incentives when medically 
                necessary. Medical necessity shall be based on 
                professional medical judgment, the medical condition of 
                the beneficiary, and other medical evidence. Such 
                appeals process shall include--
                            ``(i) an initial review and determination 
                        made by the Secretary; and
                            ``(ii) for appeals denied during the 
                        initial review and determination, the option of 
                        an external review and determination by an 
                        independent entity selected by the Secretary.
                    ``(B) Consultation in development of process.--In 
                developing the appeals process under subparagraph (A), 
                the Secretary shall consult with consumer and patient 
                groups, as well as other key stakeholders to ensure the 
                goals described in subparagraph (A) are achieved.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2011.

SEC. 204. APPLICATION TO PHARMACIES AND PHARMACISTS OF THE ELIGIBLE 
              PROFESSIONAL EXEMPTION FROM CERTAIN MEDICARE 
              ACCREDITATION REQUIREMENTS.

    Section 1834(a)(20)(F)(ii) of the Social Security Act (42 U.S.C. 
1395m(a)(20)(F)(ii)) is amended--
            (1) by inserting ``pharmacies, and pharmacists,'' after 
        ``eligible professionals (as defined in section 
        1848(k)(3)(B)),''; and
            (2) by inserting ``, pharmacies, pharmacists,'' after 
        ``such professionals'' each place it appears.

SEC. 205. PROVIDING ADEQUATE PHARMACY REIMBURSEMENT.

    (a) Pharmacy Reimbursement Limits.--
            (1) In general.--Section 1927(e) of the Social Security Act 
        (42 U.S.C. 1396r-8(e)) is amended--
                    (A) in paragraph (4), by striking ``(or, effective 
                January 1, 2007, two or more)''; and
                    (B) by striking paragraph (5) and inserting the 
                following:
            ``(5) Use of amp in upper payment limits.--The Secretary 
        shall calculate the Federal upper reimbursement limit 
        established under paragraph (4) as no less than 300 percent of 
        the weighted average (determined on the basis of utilization) 
        of the most recently reported monthly average manufacturer 
        prices for pharmaceutically and therapeutically equivalent 
        multiple source drug products that are available for purchase 
        by retail community pharmacies on a nationwide basis. The 
        Secretary shall implement a process using rolling averages to 
        calculate average manufacturer prices. Such process shall be 
        similar to the process used in determining the average sales 
        price of a drug or biological under section 1847A(c)(5)(A).''.
            (2) Definition of amp.--Section 1927(k)(1) of such Act (42 
        U.S.C. 1396r-8(k)(1)) is amended--
                    (A) in subparagraph (A), by striking ``by'' and all 
                that follows through the period and inserting ``by--''
                            ``(i) wholesalers for drugs distributed to 
                        retail community pharmacies; and
                            ``(ii) retail community pharmacies that 
                        purchase drugs directly from the 
                        manufacturer.'';
                    (B) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) Exclusion of customary prompt pay discounts 
                and other payments.--
                            ``(i) In general.--The average manufacturer 
                        price for a covered outpatient drug shall 
                        exclude--
                                    ``(I) customary prompt pay 
                                discounts extended to wholesalers;
                                    ``(II) bona fide service fees paid 
                                by manufacturers to wholesalers or 
                                retail community pharmacies, including 
                                (but not limited to) distribution 
                                service fees, inventory management 
                                fees, product stocking allowances, and 
                                fees associated with administrative 
                                services agreements and patient care 
                                programs (such as medication compliance 
                                programs and patient education 
                                programs);
                                    ``(III) reimbursement by 
                                manufacturers for recalled, damaged, 
                                expired, or otherwise unsalable 
                                returned goods, including (but not 
                                limited to) reimbursement for the cost 
                                of the goods and any reimbursement of 
                                costs associated with return goods 
                                handling and processing, reverse 
                                logistics, and drug destruction; and
                                    ``(IV) payments received from, and 
                                rebates or discounts provided to, 
                                pharmacy benefit managers, managed care 
                                organizations, health maintenance 
                                organizations, insurers, hospitals, 
                                clinics, mail order pharmacies, long 
                                term care providers, manufacturers, or 
                                any other entity that does not conduct 
                                business as a wholesaler or a retail 
                                community pharmacy.
                            ``(ii) Inclusion of other discounts and 
                        payments.--Notwithstanding clause (i), any 
                        other discounts, rebates, payments, or other 
                        financial transactions that are received by, 
                        paid by, or passed through to, retail community 
                        pharmacies shall be included in the average 
                        manufacturer price for a covered outpatient 
                        drug.''; and
                    (C) in subparagraph (C), by striking ``the retail 
                pharmacy class of trade'' and inserting ``retail 
                community pharmacies''.
            (3) Definition of a multiple source drug.--Section 
        1927(k)(7) of such Act (42 U.S.C. 1396r-8(k)(7)) is amended--
                    (A) in subparagraph (A)(i)(III), by striking ``the 
                State'' and inserting ``the United States''; and
                    (B) in subparagraph (C)--
                            (i) in clause (i), by inserting ``and'' 
                        after the semicolon;
                            (ii) in clause (ii), by striking ``; and'' 
                        and inserting a period; and
                            (iii) by striking clause (iii).
            (4) Definition of retail community pharmacy.--Section 
        1927(k) of such Act (42 U.S.C. 1396r-8(k)) is amended by adding 
        at the end the following new paragraphs:
            ``(10) Retail community pharmacy.--The term `retail 
        community pharmacy' means an independent pharmacy, a chain 
        pharmacy, a supermarket pharmacy, or a mass merchandiser 
        pharmacy that is licensed as a pharmacy by the State and that 
        dispenses medications to the general public at retail prices. 
        Such term does not include a pharmacy that dispenses 
        prescription medications to patients primarily through the 
        mail, nursing home pharmacies, long-term care facility 
        pharmacies, hospital pharmacies, clinics, charitable or not-
        for-profit pharmacies, government pharmacies, or pharmacy 
        benefit managers.
            ``(11) Wholesaler.--The term `wholesaler' means a drug 
        wholesaler that is engaged in wholesale distribution of 
        prescription drugs to retail community pharmacies, including 
        (but not limited to) manufacturers, repackers, distributors, 
        own-label distributors, private-label distributors, jobbers, 
        brokers, warehouses (including manufacturer's and distributor's 
        warehouses, chain drug warehouses, and wholesale drug 
        warehouses) independent wholesale drug traders, and retail 
        community pharmacies that conduct wholesale distributions.''.

                TITLE III--PRESCRIPTION DRUG IMPORTATION

SEC. 301. REPEAL OF CERTAIN SECTION REGARDING IMPORTATION OF 
              PRESCRIPTION DRUGS.

    Chapter VIII of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
381 et seq.) is amended by striking section 804.

SEC. 302. IMPORTATION OF PRESCRIPTION DRUGS; WAIVER OF CERTAIN IMPORT 
              RESTRICTIONS.

    (a) In General.--Chapter VIII of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 381 et seq.), as amended by section 301, is 
further amended by inserting after section 803 the following:

``SEC. 804. COMMERCIAL AND PERSONAL IMPORTATION OF PRESCRIPTION DRUGS.

    ``(a) Importation of Prescription Drugs.--
            ``(1) In general.--In the case of qualifying drugs imported 
        or offered for import into the United States from registered 
        exporters or by registered importers--
                    ``(A) the limitation on importation that is 
                established in section 801(d)(1) is waived; and
                    ``(B) the standards referred to in section 801(a) 
                regarding admission of the drugs are subject to 
                subsection (g) of this section (including with respect 
                to qualifying drugs to which section 801(d)(1) does not 
                apply).
            ``(2) Importers.--A qualifying drug may not be imported 
        under paragraph (1) unless--
                    ``(A) the drug is imported by a pharmacy, group of 
                pharmacies, or a wholesaler that is a registered 
                importer; or
                    ``(B) the drug is imported by an individual for 
                personal use or for the use of a family member of the 
                individual (not for resale) from a registered exporter.
            ``(3) Rule of construction.--This section shall apply only 
        with respect to a drug that is imported or offered for import 
        into the United States--
                    ``(A) by a registered importer; or
                    ``(B) from a registered exporter to an individual.
            ``(4) Definitions.--
                    ``(A) Registered exporter; registered importer.--
                For purposes of this section:
                            ``(i) The term `registered exporter' means 
                        an exporter for which a registration under 
                        subsection (b) has been approved and is in 
                        effect.
                            ``(ii) The term `registered importer' means 
                        a pharmacy, group of pharmacies, or a 
                        wholesaler for which a registration under 
                        subsection (b) has been approved and is in 
                        effect.
                            ``(iii) The term `registration condition' 
                        means a condition that must exist for a 
                        registration under subsection (b) to be 
                        approved.
                    ``(B) Qualifying drug.--For purposes of this 
                section, the term `qualifying drug' means a drug for 
                which there is a corresponding U.S. label drug.
                    ``(C) U.S. label drug.--For purposes of this 
                section, the term `U.S. label drug' means a 
                prescription drug that--
                            ``(i) with respect to a qualifying drug, 
                        has the same active ingredient or ingredients, 
                        route of administration, dosage form, and 
                        strength as the qualifying drug;
                            ``(ii) with respect to the qualifying drug, 
                        is manufactured by or for the person that 
                        manufactures the qualifying drug;
                            ``(iii) is approved under section 505(c); 
                        and
                            ``(iv) is not--
                                    ``(I) a controlled substance, as 
                                defined in section 102 of the 
                                Controlled Substances Act (21 U.S.C. 
                                802);
                                    ``(II) a biological product, as 
                                defined in section 351 of the Public 
                                Health Service Act (42 U.S.C. 262), 
                                including--
                                            ``(aa) a therapeutic DNA 
                                        plasmid product;
                                            ``(bb) a therapeutic 
                                        synthetic peptide product;
                                            ``(cc) a monoclonal 
                                        antibody product for in vivo 
                                        use; and
                                            ``(dd) a therapeutic 
                                        recombinant DNA-derived 
                                        product;
                                    ``(III) an infused drug, including 
                                a peritoneal dialysis solution;
                                    ``(IV) an injected drug;
                                    ``(V) a drug that is inhaled during 
                                surgery;
                                    ``(VI) a drug that is the listed 
                                drug referred to in 2 or more 
                                abbreviated new drug applications under 
                                which the drug is commercially 
                                marketed; or
                                    ``(VII) a sterile opthlamic drug 
                                intended for topical use on or in the 
                                eye.
                    ``(D) Other definitions.--For purposes of this 
                section:
                            ``(i)(I) The term `exporter' means a person 
                        that is in the business of exporting a drug to 
                        individuals in the United States from Canada or 
                        from a permitted country designated by the 
                        Secretary under subclause (II), or that, 
                        pursuant to submitting a registration under 
                        subsection (b), seeks to be in such business.
                            ``(II) The Secretary shall designate a 
                        permitted country under subparagraph (E) (other 
                        than Canada) as a country from which an 
                        exporter may export a drug to individuals in 
                        the United States if the Secretary determines 
                        that--
                                    ``(aa) the country has statutory or 
                                regulatory standards that are 
                                equivalent to the standards in the 
                                United States and Canada with respect 
                                to--
                                            ``(AA) the training of 
                                        pharmacists;
                                            ``(BB) the practice of 
                                        pharmacy; and
                                            ``(CC) the protection of 
                                        the privacy of personal medical 
                                        information; and
                                    ``(bb) the importation of drugs to 
                                individuals in the United States from 
                                the country will not adversely affect 
                                public health.
                            ``(ii) The term `importer' means a 
                        pharmacy, a group of pharmacies, or a 
                        wholesaler that is in the business of importing 
                        a drug into the United States or that, pursuant 
                        to submitting a registration under subsection 
                        (b), seeks to be in such business.
                            ``(iii) The term `pharmacist' means a 
                        person licensed by a State to practice 
                        pharmacy, including the dispensing and selling 
                        of prescription drugs.
                            ``(iv) The term `pharmacy' means a person 
                        that--
                                    ``(I) is licensed by a State to 
                                engage in the business of selling 
                                prescription drugs at retail; and
                                    ``(II) employs 1 or more 
                                pharmacists.
                            ``(v) The term `prescription drug' means a 
                        drug that is described in section 503(b)(1).
                            ``(vi) The term `wholesaler'--
                                    ``(I) means a person licensed as a 
                                wholesaler or distributor of 
                                prescription drugs in the United States 
                                under section 503(e)(2)(A); and
                                    ``(II) does not include a person 
                                authorized to import drugs under 
                                section 801(d)(1).
                    ``(E) Permitted country.--The term `permitted 
                country' means--
                            ``(i) Australia;
                            ``(ii) Canada;
                            ``(iii) a member country of the European 
                        Union, but does not include a member country 
                        with respect to which--
                                    ``(I) the country's Annex to the 
                                Treaty of Accession to the European 
                                Union 2003 includes a transitional 
                                measure for the regulation of human 
                                pharmaceutical products that has not 
                                expired; or
                                    ``(II) the Secretary determines 
                                that the requirements described in 
                                subclauses (I) and (II) of clause (vii) 
                                will not be met by the date on which 
                                such transitional measure for the 
                                regulation of human pharmaceutical 
                                products expires;
                            ``(iv) Japan;
                            ``(v) New Zealand;
                            ``(vi) Switzerland; and
                            ``(vii) a country in which the Secretary 
                        determines the following requirements are met:
                                    ``(I) The country has statutory or 
                                regulatory requirements--
                                            ``(aa) that require the 
                                        review of drugs for safety and 
                                        effectiveness by an entity of 
                                        the government of the country;
                                            ``(bb) that authorize the 
                                        approval of only those drugs 
                                        that have been determined to be 
                                        safe and effective by experts 
                                        employed by or acting on behalf 
                                        of such entity and qualified by 
                                        scientific training and 
                                        experience to evaluate the 
                                        safety and effectiveness of 
                                        drugs on the basis of adequate 
                                        and well-controlled 
                                        investigations, including 
                                        clinical investigations, 
                                        conducted by experts qualified 
                                        by scientific training and 
                                        experience to evaluate the 
                                        safety and effectiveness of 
                                        drugs;
                                            ``(cc) that require the 
                                        methods used in, and the 
                                        facilities and controls used 
                                        for the manufacture, 
                                        processing, and packing of 
                                        drugs in the country to be 
                                        adequate to preserve their 
                                        identity, quality, purity, and 
                                        strength;
                                            ``(dd) for the reporting of 
                                        adverse reactions to drugs and 
                                        procedures to withdraw approval 
                                        and remove drugs found not to 
                                        be safe or effective; and
                                            ``(ee) that require the 
                                        labeling and promotion of drugs 
                                        to be in accordance with the 
                                        approval of the drug.
                                    ``(II) The valid marketing 
                                authorization system in the country is 
                                equivalent to the systems in the 
                                countries described in clauses (i) 
                                through (vi).
                                    ``(III) The importation of drugs to 
                                the United States from the country will 
                                not adversely affect public health.
    ``(b) Registration of Importers and Exporters.--
            ``(1) Registration of importers and exporters.--A 
        registration condition is that the importer or exporter 
        involved (referred to in this subsection as a `registrant') 
        submits to the Secretary a registration containing the 
        following:
                    ``(A)(i) In the case of an exporter, the name of 
                the exporter and an identification of all places of 
                business of the exporter that relate to qualifying 
                drugs, including each warehouse or other facility owned 
                or controlled by, or operated for, the exporter.
                    ``(ii) In the case of an importer, the name of the 
                importer and an identification of the places of 
                business of the importer at which the importer 
                initially receives a qualifying drug after importation 
                (which shall not exceed 3 places of business except by 
                permission of the Secretary).
                    ``(B) Such information as the Secretary determines 
                to be necessary to demonstrate that the registrant is 
                in compliance with registration conditions under--
                            ``(i) in the case of an importer, 
                        subsections (c), (d), (e), (g), and (j) 
                        (relating to the sources of imported qualifying 
                        drugs; the inspection of facilities of the 
                        importer; the payment of fees; compliance with 
                        the standards referred to in section 801(a); 
                        and maintenance of records and samples); or
                            ``(ii) in the case of an exporter, 
                        subsections (c), (d), (f), (g), (h), (i), and 
                        (j) (relating to the sources of exported 
                        qualifying drugs; the inspection of facilities 
                        of the exporter and the marking of compliant 
                        shipments; the payment of fees; and compliance 
                        with the standards referred to in section 
                        801(a); being licensed as a pharmacist; 
                        conditions for individual importation; and 
                        maintenance of records and samples).
                    ``(C) An agreement by the registrant that the 
                registrant will not under subsection (a) import or 
                export any drug that is not a qualifying drug.
                    ``(D) An agreement by the registrant to--
                            ``(i) notify the Secretary of a recall or 
                        withdrawal of a qualifying drug distributed in 
                        a permitted country that the registrant has 
                        exported or imported, or intends to export or 
                        import, to the United States under subsection 
                        (a);
                            ``(ii) provide for the return to the 
                        registrant of such drug; and
                            ``(iii) cease, or not begin, the 
                        exportation or importation of such drug unless 
                        the Secretary has notified the registrant that 
                        exportation or importation of such drug may 
                        proceed.
                    ``(E) An agreement by the registrant to ensure and 
                monitor compliance with each registration condition, to 
                promptly correct any noncompliance with such a 
                condition, and to promptly report to the Secretary any 
                such noncompliance.
                    ``(F) A plan describing the manner in which the 
                registrant will comply with the agreement under 
                subparagraph (E).
                    ``(G) An agreement by the registrant to enforce a 
                contract under subsection (c)(3)(B) against a party in 
                the chain of custody of a qualifying drug with respect 
                to the authority of the Secretary under clauses (ii) 
                and (iii) of that subsection.
                    ``(H) An agreement by the registrant to notify the 
                Secretary not more than 30 days before the registrant 
                intends to make the change, of--
                            ``(i) any change that the registrant 
                        intends to make regarding information provided 
                        under subparagraph (A) or (B); and
                            ``(ii) any change that the registrant 
                        intends to make in the compliance plan under 
                        subparagraph (F).
                    ``(I) In the case of an exporter:
                            ``(i) An agreement by the exporter that a 
                        qualifying drug will not under subsection (a) 
                        be exported to any individual not authorized 
                        pursuant to subsection (a)(2)(B) to be an 
                        importer of such drug.
                            ``(ii) An agreement to post a bond, payable 
                        to the Treasury of the United States that is 
                        equal in value to the lesser of--
                                    ``(I) the value of drugs exported 
                                by the exporter to the United States in 
                                a typical 4-week period over the course 
                                of a year under this section; or
                                    ``(II) $1,000,000.
                            ``(iii) An agreement by the exporter to 
                        comply with applicable provisions of Canadian 
                        law, or the law of the permitted country 
                        designated under subsection (a)(4)(D)(i)(II) in 
                        which the exporter is located, that protect the 
                        privacy of personal information with respect to 
                        each individual importing a prescription drug 
                        from the exporter under subsection (a)(2)(B).
                            ``(iv) An agreement by the exporter to 
                        report to the Secretary--
                                    ``(I) not later than August 1 of 
                                each fiscal year, the total price and 
                                the total volume of drugs exported to 
                                the United States by the exporter 
                                during the 6-month period from January 
                                1 through June 30 of that year; and
                                    ``(II) not later than January 1 of 
                                each fiscal year, the total price and 
                                the total volume of drugs exported to 
                                the United States by the exporter 
                                during the previous fiscal year.
                    ``(J) In the case of an importer, an agreement by 
                the importer to report to the Secretary--
                            ``(i) not later than August 1 of each 
                        fiscal year, the total price and the total 
                        volume of drugs imported to the United States 
                        by the importer during the 6-month period from 
                        January 1 through June 30 of that fiscal year; 
                        and
                            ``(ii) not later than January 1 of each 
                        fiscal year, the total price and the total 
                        volume of drugs imported to the United States 
                        by the importer during the previous fiscal 
                        year.
                    ``(K) Such other provisions as the Secretary may 
                require by regulation to protect the public health 
                while permitting--
                            ``(i) the importation by pharmacies, groups 
                        of pharmacies, and wholesalers as registered 
                        importers of qualifying drugs under subsection 
                        (a); and
                            ``(ii) importation by individuals of 
                        qualifying drugs under subsection (a).
            ``(2) Approval or disapproval of registration.--
                    ``(A) In general.--Not later than 90 days after the 
                date on which a registrant submits to the Secretary a 
                registration under paragraph (1), the Secretary shall 
                notify the registrant whether the registration is 
                approved or is disapproved. The Secretary shall 
                disapprove a registration if there is reason to believe 
                that the registrant is not in compliance with one or 
                more registration conditions, and shall notify the 
                registrant of such reason. In the case of a disapproved 
                registration, the Secretary shall subsequently notify 
                the registrant that the registration is approved if the 
                Secretary determines that the registrant is in 
                compliance with such conditions.
                    ``(B) Changes in registration information.--Not 
                later than 30 days after receiving a notice under 
                paragraph (1)(H) from a registrant, the Secretary shall 
                determine whether the change involved affects the 
                approval of the registration of the registrant under 
                paragraph (1), and shall inform the registrant of the 
                determination.
            ``(3) Publication of contact information for registered 
        exporters.--Through the Internet website of the Food and Drug 
        Administration and a toll-free telephone number, the Secretary 
        shall make readily available to the public a list of registered 
        exporters, including contact information for the exporters. 
        Promptly after the approval of a registration submitted under 
        paragraph (1), the Secretary shall update the Internet website 
        and the information provided through the toll-free telephone 
        number accordingly.
            ``(4) Suspension and termination.--
                    ``(A) Suspension.--With respect to the 
                effectiveness of a registration submitted under 
                paragraph (1):
                            ``(i) Subject to clause (ii), the Secretary 
                        may suspend the registration if the Secretary 
                        determines, after notice and opportunity for a 
                        hearing, that the registrant has failed to 
                        maintain substantial compliance with a 
                        registration condition.
                            ``(ii) If the Secretary determines that, 
                        under color of the registration, the exporter 
                        has exported a drug or the importer has 
                        imported a drug that is not a qualifying drug, 
                        or a drug that does not comply with subsection 
                        (g)(2)(A) or (g)(4), or has exported a 
                        qualifying drug to an individual in violation 
                        of subsection (i)(2)(F), the Secretary shall 
                        immediately suspend the registration. A 
                        suspension under the preceding sentence is not 
                        subject to the provision by the Secretary of 
                        prior notice, and the Secretary shall provide 
                        to the registrant an opportunity for a hearing 
                        not later than 10 days after the date on which 
                        the registration is suspended.
                            ``(iii) The Secretary may reinstate the 
                        registration, whether suspended under clause 
                        (i) or (ii), if the Secretary determines that 
                        the registrant has demonstrated that further 
                        violations of registration conditions will not 
                        occur.
                    ``(B) Termination.--The Secretary, after notice and 
                opportunity for a hearing, may terminate the 
                registration under paragraph (1) of a registrant if the 
                Secretary determines that the registrant has engaged in 
                a pattern or practice of violating 1 or more 
                registration conditions, or if on 1 or more occasions 
                the Secretary has under subparagraph (A)(ii) suspended 
                the registration of the registrant. The Secretary may 
                make the termination permanent, or for a fixed period 
                of not less than 1 year. During the period in which the 
                registration is terminated, any registration submitted 
                under paragraph (1) by the registrant, or a person that 
                is a partner in the export or import enterprise, or a 
                principal officer in such enterprise, and any 
                registration prepared with the assistance of the 
                registrant or such a person, has no legal effect under 
                this section.
            ``(5) Default of bond.--A bond required to be posted by an 
        exporter under paragraph (1)(I)(ii) shall be defaulted and paid 
        to the Treasury of the United States if, after opportunity for 
        an informal hearing, the Secretary determines that the exporter 
        has--
                    ``(A) exported a drug to the United States that is 
                not a qualifying drug or that is not in compliance with 
                subsection (g)(2)(A), (g)(4), or (i); or
                    ``(B) failed to permit the Secretary to conduct an 
                inspection described under subsection (d).
    ``(c) Sources of Qualifying Drugs.--A registration condition is 
that the exporter or importer involved agrees that a qualifying drug 
will under subsection (a) be exported or imported into the United 
States only if there is compliance with the following:
            ``(1) The drug was manufactured in an establishment--
                    ``(A) required to register under subsection (h) or 
                (i) of section 510; and
                    ``(B)(i) inspected by the Secretary; or
                    ``(ii) for which the Secretary has elected to rely 
                on a satisfactory report of a good manufacturing 
                practice inspection of the establishment from a 
                permitted country whose regulatory system the Secretary 
                recognizes as equivalent under a mutual recognition 
                agreement, as provided for under section 510(i)(3), 
                section 803, or part 26 of title 21, Code of Federal 
                Regulations (or any corresponding successor rule or 
                regulation).
            ``(2) The establishment is located in any country, and the 
        establishment manufactured the drug for distribution in the 
        United States or for distribution in 1 or more of the permitted 
        countries (without regard to whether in addition the drug is 
        manufactured for distribution in a foreign country that is not 
        a permitted country).
            ``(3) The exporter or importer obtained the drug--
                    ``(A) directly from the establishment; or
                    ``(B) directly from an entity that, by contract 
                with the exporter or importer--
                            ``(i) provides to the exporter or importer 
                        a statement (in such form and containing such 
                        information as the Secretary may require) that, 
                        for the chain of custody from the 
                        establishment, identifies each prior sale, 
                        purchase, or trade of the drug (including the 
                        date of the transaction and the names and 
                        addresses of all parties to the transaction);
                            ``(ii) agrees to permit the Secretary to 
                        inspect such statements and related records to 
                        determine their accuracy;
                            ``(iii) agrees, with respect to the 
                        qualifying drugs involved, to permit the 
                        Secretary to inspect warehouses and other 
                        facilities, including records, of the entity 
                        for purposes of determining whether the 
                        facilities are in compliance with any standards 
                        under this Act that are applicable to 
                        facilities of that type in the United States; 
                        and
                            ``(iv) has ensured, through such 
                        contractual relationships as may be necessary, 
                        that the Secretary has the same authority 
                        regarding other parties in the chain of custody 
                        from the establishment that the Secretary has 
                        under clauses (ii) and (iii) regarding such 
                        entity.
            ``(4)(A) The foreign country from which the importer will 
        import the drug is a permitted country; or
            ``(B) The foreign country from which the exporter will 
        export the drug is the permitted country in which the exporter 
        is located.
            ``(5) During any period in which the drug was not in the 
        control of the manufacturer of the drug, the drug did not enter 
        any country that is not a permitted country.
            ``(6) The exporter or importer retains a sample of each lot 
        of the drug for testing by the Secretary.
    ``(d) Inspection of Facilities; Marking of Shipments.--
            ``(1) Inspection of facilities.--A registration condition 
        is that, for the purpose of assisting the Secretary in 
        determining whether the exporter involved is in compliance with 
        all other registration conditions--
                    ``(A) the exporter agrees to permit the Secretary--
                            ``(i) to conduct onsite inspections, 
                        including monitoring on a day-to-day basis, of 
                        places of business of the exporter that relate 
                        to qualifying drugs, including each warehouse 
                        or other facility owned or controlled by, or 
                        operated for, the exporter;
                            ``(ii) to have access, including on a day-
                        to-day basis, to--
                                    ``(I) records of the exporter that 
                                relate to the export of such drugs, 
                                including financial records; and
                                    ``(II) samples of such drugs;
                            ``(iii) to carry out the duties described 
                        in paragraph (3); and
                            ``(iv) to carry out any other functions 
                        determined by the Secretary to be necessary 
                        regarding the compliance of the exporter; and
                    ``(B) the Secretary has assigned 1 or more 
                employees of the Secretary to carry out the functions 
                described in this subsection for the Secretary 
                randomly, but not less than 12 times annually, on the 
                premises of places of businesses referred to in 
                subparagraph (A)(i), and such an assignment remains in 
                effect on a continuous basis.
            ``(2) Marking of compliant shipments.--A registration 
        condition is that the exporter involved agrees to affix to each 
        shipping container of qualifying drugs exported under 
        subsection (a) such markings as the Secretary determines to be 
        necessary to identify the shipment as being in compliance with 
        all registration conditions. Markings under the preceding 
        sentence shall--
                    ``(A) be designed to prevent affixation of the 
                markings to any shipping container that is not 
                authorized to bear the markings; and
                    ``(B) include anticounterfeiting or track-and-trace 
                technologies, taking into account the economic and 
                technical feasibility of those technologies.
            ``(3) Certain duties relating to exporters.--Duties of the 
        Secretary with respect to an exporter include the following:
                    ``(A) Inspecting, randomly, but not less than 12 
                times annually, the places of business of the exporter 
                at which qualifying drugs are stored and from which 
                qualifying drugs are shipped.
                    ``(B) During the inspections under subparagraph 
                (A), verifying the chain of custody of a statistically 
                significant sample of qualifying drugs from the 
                establishment in which the drug was manufactured to the 
                exporter, which shall be accomplished or supplemented 
                by the use of anticounterfeiting or track-and-trace 
                technologies, taking into account the economic and 
                technical feasibility of those technologies, except 
                that a drug that lacks such technologies from the point 
                of manufacture shall not for that reason be excluded 
                from importation by an exporter.
                    ``(C) Randomly reviewing records of exports to 
                individuals for the purpose of determining whether the 
                drugs are being imported by the individuals in 
                accordance with the conditions under subsection (i). 
                Such reviews shall be conducted in a manner that will 
                result in a statistically significant determination of 
                compliance with all such conditions.
                    ``(D) Monitoring the affixing of markings under 
                paragraph (2).
                    ``(E) Inspecting as the Secretary determines is 
                necessary the warehouses and other facilities, 
                including records, of other parties in the chain of 
                custody of qualifying drugs.
                    ``(F) Determining whether the exporter is in 
                compliance with all other registration conditions.
            ``(4) Prior notice of shipments.--A registration condition 
        is that, not less than 8 hours and not more than 5 days in 
        advance of the time of the importation of a shipment of 
        qualifying drugs, the importer involved agrees to submit to the 
        Secretary a notice with respect to the shipment of drugs to be 
        imported or offered for import into the United States under 
        subsection (a). A notice under the preceding sentence shall 
        include--
                    ``(A) the name and complete contact information of 
                the person submitting the notice;
                    ``(B) the name and complete contact information of 
                the importer involved;
                    ``(C) the identity of the drug, including the 
                established name of the drug, the quantity of the drug, 
                and the lot number assigned by the manufacturer;
                    ``(D) the identity of the manufacturer of the drug, 
                including the identity of the establishment at which 
                the drug was manufactured;
                    ``(E) the country from which the drug is shipped;
                    ``(F) the name and complete contact information for 
                the shipper of the drug;
                    ``(G) anticipated arrival information, including 
                the port of arrival and crossing location within that 
                port, and the date and time;
                    ``(H) a summary of the chain of custody of the drug 
                from the establishment in which the drug was 
                manufactured to the importer;
                    ``(I) a declaration as to whether the Secretary has 
                ordered that importation of the drug from the permitted 
                country cease under subsection (g)(2) (C) or (D); and
                    ``(J) such other information as the Secretary may 
                require by regulation.
            ``(5) Marking of compliant shipments.--A registration 
        condition is that the importer involved agrees, before 
        wholesale distribution (as defined in section 503(e)) of a 
        qualifying drug that has been imported under subsection (a), to 
        affix to each container of such drug such markings or other 
        technology as the Secretary determines necessary to identify 
        the shipment as being in compliance with all registration 
        conditions, except that the markings or other technology shall 
        not be required on a drug that bears comparable, compatible 
        markings or technology from the manufacturer of the drug. 
        Markings or other technology under the preceding sentence 
        shall--
                    ``(A) be designed to prevent affixation of the 
                markings or other technology to any container that is 
                not authorized to bear the markings; and
                    ``(B) shall include anticounterfeiting or track-
                and-trace technologies, taking into account the 
                economic and technical feasibility of such 
                technologies.
            ``(6) Certain duties relating to importers.--Duties of the 
        Secretary with respect to an importer include the following:
                    ``(A) Inspecting, randomly, but not less than 12 
                times annually, the places of business of the importer 
                at which a qualifying drug is initially received after 
                importation.
                    ``(B) During the inspections under subparagraph 
                (A), verifying the chain of custody of a statistically 
                significant sample of qualifying drugs from the 
                establishment in which the drug was manufactured to the 
                importer, which shall be accomplished or supplemented 
                by the use of anticounterfeiting or track-and-trace 
                technologies, taking into account the economic and 
                technical feasibility of those technologies, except 
                that a drug that lacks such technologies from the point 
                of manufacture shall not for that reason be excluded 
                from importation by an importer.
                    ``(C) Reviewing notices under paragraph (4).
                    ``(D) Inspecting as the Secretary determines is 
                necessary the warehouses and other facilities, 
                including records of other parties in the chain of 
                custody of qualifying drugs.
                    ``(E) Determining whether the importer is in 
                compliance with all other registration conditions.
    ``(e) Importer Fees.--
            ``(1) Registration fee.--A registration condition is that 
        the importer involved pays to the Secretary a fee of $10,000 
        due on the date on which the importer first submits the 
        registration to the Secretary under subsection (b).
            ``(2) Inspection fee.--A registration condition is that the 
        importer involved pays a fee to the Secretary in accordance 
        with this subsection. Such fee shall be paid not later than 
        October 1 and April 1 of each fiscal year in the amount 
        provided for under paragraph (3).
            ``(3) Amount of inspection fee.--
                    ``(A) Aggregate total of fees.--Not later than 30 
                days before the start of each fiscal year, the 
                Secretary, in consultation with the Secretary of 
                Homeland Security and the Secretary of the Treasury, 
                shall establish an aggregate total of fees to be 
                collected under paragraph (2) for importers for that 
                fiscal year that is sufficient, and not more than 
                necessary, to pay the costs for that fiscal year of 
                administering this section with respect to registered 
                importers, including the costs associated with--
                            ``(i) inspecting the facilities of 
                        registered importers, and of other entities in 
                        the chain of custody of a qualifying drug as 
                        necessary, under subsection (d)(6);
                            ``(ii) developing, implementing, and 
                        operating under such subsection an electronic 
                        system for submission and review of the notices 
                        required under subsection (d)(4) with respect 
                        to shipments of qualifying drugs under 
                        subsection (a) to assess compliance with all 
                        registration conditions when such shipments are 
                        offered for import into the United States; and
                            ``(iii) inspecting such shipments as 
                        necessary, when offered for import into the 
                        United States to determine if such a shipment 
                        should be refused admission under subsection 
                        (g)(5).
                    ``(B) Limitation.--Subject to subparagraph (C), the 
                aggregate total of fees collected under paragraph (2) 
                for a fiscal year shall not exceed 2.5 percent of the 
                total price of qualifying drugs imported during that 
                fiscal year into the United States by registered 
                importers under subsection (a).
                    ``(C) Total price of drugs.--
                            ``(i) Estimate.--For the purposes of 
                        complying with the limitation described in 
                        subparagraph (B) when establishing under 
                        subparagraph (A) the aggregate total of fees to 
                        be collected under paragraph (2) for a fiscal 
                        year, the Secretary shall estimate the total 
                        price of qualifying drugs imported into the 
                        United States by registered importers during 
                        that fiscal year by adding the total price of 
                        qualifying drugs imported by each registered 
                        importer during the 6-month period from January 
                        1 through June 30 of the previous fiscal year, 
                        as reported to the Secretary by each registered 
                        importer under subsection (b)(1)(J).
                            ``(ii) Calculation.--Not later than March 1 
                        of the fiscal year that follows the fiscal year 
                        for which the estimate under clause (i) is 
                        made, the Secretary shall calculate the total 
                        price of qualifying drugs imported into the 
                        United States by registered importers during 
                        that fiscal year by adding the total price of 
                        qualifying drugs imported by each registered 
                        importer during that fiscal year, as reported 
                        to the Secretary by each registered importer 
                        under subsection (b)(1)(J).
                            ``(iii) Adjustment.--If the total price of 
                        qualifying drugs imported into the United 
                        States by registered importers during a fiscal 
                        year as calculated under clause (ii) is less 
                        than the aggregate total of fees collected 
                        under paragraph (2) for that fiscal year, the 
                        Secretary shall provide for a pro-rata 
                        reduction in the fee due from each registered 
                        importer on April 1 of the subsequent fiscal 
                        year so that the limitation described in 
                        subparagraph (B) is observed.
                    ``(D) Individual importer fee.--Subject to the 
                limitation described in subparagraph (B), the fee under 
                paragraph (2) to be paid on October 1 and April 1 by an 
                importer shall be an amount that is proportional to a 
                reasonable estimate by the Secretary of the semiannual 
                share of the importer of the volume of qualifying drugs 
                imported by importers under subsection (a).
            ``(4) Use of fees.--
                    ``(A) In general.--Subject to appropriations Acts, 
                fees collected by the Secretary under paragraphs (1) 
                and (2) shall be credited to the appropriation account 
                for salaries and expenses of the Food and Drug 
                Administration until expended (without fiscal year 
                limitation), and the Secretary may, in consultation 
                with the Secretary of Homeland Security and the 
                Secretary of the Treasury, transfer some proportion of 
                such fees to the appropriation account for salaries and 
                expenses of the Bureau of Customs and Border Protection 
                until expended (without fiscal year limitation).
                    ``(B) Sole purpose.--Fees collected by the 
                Secretary under paragraphs (1) and (2) are only 
                available to the Secretary and, if transferred, to the 
                Secretary of Homeland Security, and are for the sole 
                purpose of paying the costs referred to in paragraph 
                (3)(A).
            ``(5) Collection of fees.--In any case where the Secretary 
        does not receive payment of a fee assessed under paragraph (1) 
        or (2) within 30 days after it is due, such fee shall be 
        treated as a claim of the United States Government subject to 
        subchapter II of chapter 37 of title 31, United States Code.
    ``(f) Exporter Fees.--
            ``(1) Registration fee.--A registration condition is that 
        the exporter involved pays to the Secretary a fee of $10,000 
        due on the date on which the exporter first submits that 
        registration to the Secretary under subsection (b).
            ``(2) Inspection fee.--A registration condition is that the 
        exporter involved pays a fee to the Secretary in accordance 
        with this subsection. Such fee shall be paid not later than 
        October 1 and April 1 of each fiscal year in the amount 
        provided for under paragraph (3).
            ``(3) Amount of inspection fee.--
                    ``(A) Aggregate total of fees.--Not later than 30 
                days before the start of each fiscal year, the 
                Secretary, in consultation with the Secretary of 
                Homeland Security and the Secretary of the Treasury, 
                shall establish an aggregate total of fees to be 
                collected under paragraph (2) for exporters for that 
                fiscal year that is sufficient, and not more than 
                necessary, to pay the costs for that fiscal year of 
                administering this section with respect to registered 
                exporters, including the costs associated with--
                            ``(i) inspecting the facilities of 
                        registered exporters, and of other entities in 
                        the chain of custody of a qualifying drug as 
                        necessary, under subsection (d)(3);
                            ``(ii) developing, implementing, and 
                        operating under such subsection a system to 
                        screen marks on shipments of qualifying drugs 
                        under subsection (a) that indicate compliance 
                        with all registration conditions, when such 
                        shipments are offered for import into the 
                        United States; and
                            ``(iii) screening such markings, and 
                        inspecting such shipments as necessary, when 
                        offered for import into the United States to 
                        determine if such a shipment should be refused 
                        admission under subsection (g)(5).
                    ``(B) Limitation.--Subject to subparagraph (C), the 
                aggregate total of fees collected under paragraph (2) 
                for a fiscal year shall not exceed 2.5 percent of the 
                total price of qualifying drugs imported during that 
                fiscal year into the United States by registered 
                exporters under subsection (a).
                    ``(C) Total price of drugs.--
                            ``(i) Estimate.--For the purposes of 
                        complying with the limitation described in 
                        subparagraph (B) when establishing under 
                        subparagraph (A) the aggregate total of fees to 
                        be collected under paragraph (2) for a fiscal 
                        year, the Secretary shall estimate the total 
                        price of qualifying drugs imported into the 
                        United States by registered exporters during 
                        that fiscal year by adding the total price of 
                        qualifying drugs exported by each registered 
                        exporter during the 6-month period from January 
                        1 through June 30 of the previous fiscal year, 
                        as reported to the Secretary by each registered 
                        exporter under subsection (b)(1)(I)(iv).
                            ``(ii) Calculation.--Not later than March 1 
                        of the fiscal year that follows the fiscal year 
                        for which the estimate under clause (i) is 
                        made, the Secretary shall calculate the total 
                        price of qualifying drugs imported into the 
                        United States by registered exporters during 
                        that fiscal year by adding the total price of 
                        qualifying drugs exported by each registered 
                        exporter during that fiscal year, as reported 
                        to the Secretary by each registered exporter 
                        under subsection (b)(1)(I)(iv).
                            ``(iii) Adjustment.--If the total price of 
                        qualifying drugs imported into the United 
                        States by registered exporters during a fiscal 
                        year as calculated under clause (ii) is less 
                        than the aggregate total of fees collected 
                        under paragraph (2) for that fiscal year, the 
                        Secretary shall provide for a pro-rata 
                        reduction in the fee due from each registered 
                        exporter on April 1 of the subsequent fiscal 
                        year so that the limitation described in 
                        subparagraph (B) is observed.
                    ``(D) Individual exporter fee.--Subject to the 
                limitation described in subparagraph (B), the fee under 
                paragraph (2) to be paid on October 1 and April 1 by an 
                exporter shall be an amount that is proportional to a 
                reasonable estimate by the Secretary of the semiannual 
                share of the exporter of the volume of qualifying drugs 
                exported by exporters under subsection (a).
            ``(4) Use of fees.--
                    ``(A) In general.--Subject to appropriations Acts, 
                fees collected by the Secretary under paragraphs (1) 
                and (2) shall be credited to the appropriation account 
                for salaries and expenses of the Food and Drug 
                Administration until expended (without fiscal year 
                limitation), and the Secretary may, in consultation 
                with the Secretary of Homeland Security and the 
                Secretary of the Treasury, transfer some proportion of 
                such fees to the appropriation account for salaries and 
                expenses of the Bureau of Customs and Border Protection 
                until expended (without fiscal year limitation).
                    ``(B) Sole purpose.--Fees collected by the 
                Secretary under paragraphs (1) and (2) are only 
                available to the Secretary and, if transferred, to the 
                Secretary of Homeland Security, and are for the sole 
                purpose of paying the costs referred to in paragraph 
                (3)(A).
            ``(5) Collection of fees.--In any case where the Secretary 
        does not receive payment of a fee assessed under paragraph (1) 
        or (2) within 30 days after it is due, such fee shall be 
        treated as a claim of the United States Government subject to 
        subchapter II of chapter 37 of title 31, United States Code.
    ``(g) Compliance With Section 801(a).--
            ``(1) In general.--A registration condition is that each 
        qualifying drug exported under subsection (a) by the registered 
        exporter involved or imported under subsection (a) by the 
        registered importer involved is in compliance with the 
        standards referred to in section 801(a) regarding admission of 
        the drug into the United States, subject to paragraphs (2), 
        (3), and (4).
            ``(2) Section 505; approval status.--
                    ``(A) In general.--A qualifying drug that is 
                imported or offered for import under subsection (a) 
                shall comply with the conditions established in the 
                approved application under section 505(b) for the U.S. 
                label drug as described under this subsection.
                    ``(B) Notice by manufacturer; general provisions.--
                            ``(i) In general.--The person that 
                        manufactures a qualifying drug that is, or will 
                        be, introduced for commercial distribution in a 
                        permitted country shall in accordance with this 
                        paragraph submit to the Secretary a notice 
                        that--
                                    ``(I) includes each difference in 
                                the qualifying drug from a condition 
                                established in the approved application 
                                for the U.S. label drug beyond--
                                            ``(aa) the variations 
                                        provided for in the 
                                        application; and
                                            ``(bb) any difference in 
                                        labeling (except ingredient 
                                        labeling); or
                                    ``(II) states that there is no 
                                difference in the qualifying drug from 
                                a condition established in the approved 
                                application for the U.S. label drug 
                                beyond--
                                            ``(aa) the variations 
                                        provided for in the 
                                        application; and
                                            ``(bb) any difference in 
                                        labeling (except ingredient 
                                        labeling).
                            ``(ii) Information in notice.--A notice 
                        under clause (i)(I) shall include the 
                        information that the Secretary may require 
                        under section 506A, any additional information 
                        the Secretary may require (which may include 
                        data on bioequivalence if such data are not 
                        required under section 506A), and, with respect 
                        to the permitted country that approved the 
                        qualifying drug for commercial distribution, or 
                        with respect to which such approval is sought, 
                        include the following:
                                    ``(I) The date on which the 
                                qualifying drug with such difference 
                                was, or will be, introduced for 
                                commercial distribution in the 
                                permitted country.
                                    ``(II) Information demonstrating 
                                that the person submitting the notice 
                                has also notified the government of the 
                                permitted country in writing that the 
                                person is submitting to the Secretary a 
                                notice under clause (i)(I), which 
                                notice describes the difference in the 
                                qualifying drug from a condition 
                                established in the approved application 
                                for the U.S. label drug.
                                    ``(III) The information that the 
                                person submitted or will submit to the 
                                government of the permitted country for 
                                purposes of obtaining approval for 
                                commercial distribution of the drug in 
                                the country which, if in a language 
                                other than English, shall be 
                                accompanied by an English translation 
                                verified to be complete and accurate, 
                                with the name, address, and a brief 
                                statement of the qualifications of the 
                                person that made the translation.
                            ``(iii) Certifications.--The chief 
                        executive officer and the chief medical officer 
                        of the manufacturer involved shall each certify 
                        in the notice under clause (i) that--
                                    ``(I) the information provided in 
                                the notice is complete and true; and
                                    ``(II) a copy of the notice has 
                                been provided to the Federal Trade 
                                Commission and to the State attorneys 
                                general.
                            ``(iv) Fee.--If a notice submitted under 
                        clause (i) includes a difference that would, 
                        under section 506A, require the submission of a 
                        supplemental application if made as a change to 
                        the U.S. label drug, the person that submits 
                        the notice shall pay to the Secretary a fee in 
                        the same amount as would apply if the person 
                        were paying a fee pursuant to section 
                        736(a)(1)(A)(ii). Subject to appropriations 
                        Acts, fees collected by the Secretary under the 
                        preceding sentence are available only to the 
                        Secretary and are for the sole purpose of 
                        paying the costs of reviewing notices submitted 
                        under clause (i).
                            ``(v) Timing of submission of notices.--
                                    ``(I) Prior approval notices.--A 
                                notice under clause (i) to which 
                                subparagraph (C) applies shall be 
                                submitted to the Secretary not later 
                                than 120 days before the qualifying 
                                drug with the difference is introduced 
                                for commercial distribution in a 
                                permitted country, unless the country 
                                requires that distribution of the 
                                qualifying drug with the difference 
                                begin less than 120 days after the 
                                country requires the difference.
                                    ``(II) Other approval notices.--A 
                                notice under clause (i) to which 
                                subparagraph (D) applies shall be 
                                submitted to the Secretary not later 
                                than the day on which the qualifying 
                                drug with the difference is introduced 
                                for commercial distribution in a 
                                permitted country.
                                    ``(III) Other notices.--A notice 
                                under clause (i) to which subparagraph 
                                (E) applies shall be submitted to the 
                                Secretary on the date that the 
                                qualifying drug is first introduced for 
                                commercial distribution in a permitted 
                                country and annually thereafter.
                            ``(vi) Review by secretary.--
                                    ``(I) In general.--In this 
                                paragraph, the difference in a 
                                qualifying drug that is submitted in a 
                                notice under clause (i) from the U.S. 
                                label drug shall be treated by the 
                                Secretary as if it were a manufacturing 
                                change to the U.S. label drug under 
                                section 506A.
                                    ``(II) Standard of review.--Except 
                                as provided in subclause (III), the 
                                Secretary shall review and approve or 
                                disapprove the difference in a notice 
                                submitted under clause (i), if required 
                                under section 506A, using the safe and 
                                effective standard for approving or 
                                disapproving a manufacturing change 
                                under section 506A.
                                    ``(III) Bioequivalence.--If the 
                                Secretary would approve the difference 
                                in a notice submitted under clause (i) 
                                using the safe and effective standard 
                                under section 506A and if the Secretary 
                                determines that the qualifying drug is 
                                not bioequivalent to the U.S. label 
                                drug, the Secretary shall--
                                            ``(aa) include in the 
                                        labeling provided under 
                                        paragraph (3) a prominent 
                                        advisory that the qualifying 
                                        drug is safe and effective but 
                                        is not bioequivalent to the 
                                        U.S. label drug if the 
                                        Secretary determines that such 
                                        an advisory is necessary for 
                                        health care practitioners and 
                                        patients to use the qualifying 
                                        drug safely and effectively; or
                                            ``(bb) decline to approve 
                                        the difference if the Secretary 
                                        determines that the 
                                        availability of both the 
                                        qualifying drug and the U.S. 
                                        label drug would pose a threat 
                                        to the public health.
                                    ``(IV) Review by the secretary.--
                                The Secretary shall review and approve 
                                or disapprove the difference in a 
                                notice submitted under clause (i), if 
                                required under section 506A, not later 
                                than 120 days after the date on which 
                                the notice is submitted.
                                    ``(V) Establishment inspection.--If 
                                review of such difference would require 
                                an inspection of the establishment in 
                                which the qualifying drug is 
                                manufactured--
                                            ``(aa) such inspection by 
                                        the Secretary shall be 
                                        authorized; and
                                            ``(bb) the Secretary may 
                                        rely on a satisfactory report 
                                        of a good manufacturing 
                                        practice inspection of the 
                                        establishment from a permitted 
                                        country whose regulatory system 
                                        the Secretary recognizes as 
                                        equivalent under a mutual 
                                        recognition agreement, as 
                                        provided under section 
                                        510(i)(3), section 803, or part 
                                        26 of title 21, Code of Federal 
                                        Regulations (or any 
                                        corresponding successor rule or 
                                        regulation).
                            ``(vii) Publication of information on 
                        notices.--
                                    ``(I) In general.--Through the 
                                Internet website of the Food and Drug 
                                Administration and a toll-free 
                                telephone number, the Secretary shall 
                                readily make available to the public a 
                                list of notices submitted under clause 
                                (i).
                                    ``(II) Contents.--The list under 
                                subclause (I) shall include the date on 
                                which a notice is submitted and 
                                whether--
                                            ``(aa) a notice is under 
                                        review;
                                            ``(bb) the Secretary has 
                                        ordered that importation of the 
                                        qualifying drug from a 
                                        permitted country cease; or
                                            ``(cc) the importation of 
                                        the drug is permitted under 
                                        subsection (a).
                                    ``(III) Update.--The Secretary 
                                shall promptly update the Internet 
                                website with any changes to the list.
                    ``(C) Notice; drug difference requiring prior 
                approval.--In the case of a notice under subparagraph 
                (B)(i) that includes a difference that would, under 
                section 506A(c) or (d)(3)(B)(i), require the approval 
                of a supplemental application before the difference 
                could be made to the U.S. label drug the following 
                shall occur:
                            ``(i) Promptly after the notice is 
                        submitted, the Secretary shall notify 
                        registered exporters, registered importers, the 
                        Federal Trade Commission, and the State 
                        attorneys general that the notice has been 
                        submitted with respect to the qualifying drug 
                        involved.
                            ``(ii) If the Secretary has not made a 
                        determination whether such a supplemental 
                        application regarding the U.S. label drug would 
                        be approved or disapproved by the date on which 
                        the qualifying drug involved is to be 
                        introduced for commercial distribution in a 
                        permitted country, the Secretary shall--
                                    ``(I) order that the importation of 
                                the qualifying drug involved from the 
                                permitted country not begin until the 
                                Secretary completes review of the 
                                notice; and
                                    ``(II) promptly notify registered 
                                exporters, registered importers, the 
                                Federal Trade Commission, and the State 
                                attorneys general of the order.
                            ``(iii) If the Secretary determines that 
                        such a supplemental application regarding the 
                        U.S. label drug would not be approved, the 
                        Secretary shall--
                                    ``(I) order that the importation of 
                                the qualifying drug involved from the 
                                permitted country cease, or provide 
                                that an order under clause (ii), if 
                                any, remains in effect;
                                    ``(II) notify the permitted country 
                                that approved the qualifying drug for 
                                commercial distribution of the 
                                determination; and
                                    ``(III) promptly notify registered 
                                exporters, registered importers, the 
                                Federal Trade Commission, and the State 
                                attorneys general of the determination.
                            ``(iv) If the Secretary determines that 
                        such a supplemental application regarding the 
                        U.S. label drug would be approved, the 
                        Secretary shall--
                                    ``(I) vacate the order under clause 
                                (ii), if any;
                                    ``(II) consider the difference to 
                                be a variation provided for in the 
                                approved application for the U.S. label 
                                drug;
                                    ``(III) permit importation of the 
                                qualifying drug under subsection (a); 
                                and
                                    ``(IV) promptly notify registered 
                                exporters, registered importers, the 
                                Federal Trade Commission, and the State 
                                attorneys general of the determination.
                    ``(D) Notice; drug difference not requiring prior 
                approval.--In the case of a notice under subparagraph 
                (B)(i) that includes a difference that would, under 
                section 506A(d)(3)(B)(ii), not require the approval of 
                a supplemental application before the difference could 
                be made to the U.S. label drug the following shall 
                occur:
                            ``(i) During the period in which the notice 
                        is being reviewed by the Secretary, the 
                        authority under this subsection to import the 
                        qualifying drug involved continues in effect.
                            ``(ii) If the Secretary determines that 
                        such a supplemental application regarding the 
                        U.S. label drug would not be approved, the 
                        Secretary shall--
                                    ``(I) order that the importation of 
                                the qualifying drug involved from the 
                                permitted country cease;
                                    ``(II) notify the permitted country 
                                that approved the qualifying drug for 
                                commercial distribution of the 
                                determination; and
                                    ``(III) promptly notify registered 
                                exporters, registered importers, the 
                                Federal Trade Commission, and the State 
                                attorneys general of the determination.
                            ``(iii) If the Secretary determines that 
                        such a supplemental application regarding the 
                        U.S. label drug would be approved, the 
                        difference shall be considered to be a 
                        variation provided for in the approved 
                        application for the U.S. label drug.
                    ``(E) Notice; drug difference not requiring 
                approval; no difference.--In the case of a notice under 
                subparagraph (B)(i) that includes a difference for 
                which, under section 506A(d)(1)(A), a supplemental 
                application would not be required for the difference to 
                be made to the U.S. label drug, or that states that 
                there is no difference, the Secretary--
                            ``(i) shall consider such difference to be 
                        a variation provided for in the approved 
                        application for the U.S. label drug;
                            ``(ii) may not order that the importation 
                        of the qualifying drug involved cease; and
                            ``(iii) shall promptly notify registered 
                        exporters and registered importers.
                    ``(F) Differences in active ingredient, route of 
                administration, dosage form, or strength.--
                            ``(i) In general.--A person who 
                        manufactures a drug approved under section 
                        505(b) shall submit an application under 
                        section 505(b) for approval of another drug 
                        that is manufactured for distribution in a 
                        permitted country by or for the person that 
                        manufactures the drug approved under section 
                        505(b) if--
                                    ``(I) there is no qualifying drug 
                                in commercial distribution in permitted 
                                countries whose combined population 
                                represents at least 50 percent of the 
                                total population of all permitted 
                                countries with the same active 
                                ingredient or ingredients, route of 
                                administration, dosage form, and 
                                strength as the drug approved under 
                                section 505(b); and
                                    ``(II) each active ingredient of 
                                the other drug is related to an active 
                                ingredient of the drug approved under 
                                section 505(b), as defined in clause 
                                (v).
                            ``(ii) Application under section 505(b).--
                        The application under section 505(b) required 
                        under clause (i) shall--
                                    ``(I) request approval of the other 
                                drug for the indication or indications 
                                for which the drug approved under 
                                section 505(b) is labeled;
                                    ``(II) include the information that 
                                the person submitted to the government 
                                of the permitted country for purposes 
                                of obtaining approval for commercial 
                                distribution of the other drug in that 
                                country, which if in a language other 
                                than English, shall be accompanied by 
                                an English translation verified to be 
                                complete and accurate, with the name, 
                                address, and a brief statement of the 
                                qualifications of the person that made 
                                the translation;
                                    ``(III) include a right of 
                                reference to the application for the 
                                drug approved under section 505(b); and
                                    ``(IV) include such additional 
                                information as the Secretary may 
                                require.
                            ``(iii) Timing of submission of 
                        application.--An application under section 
                        505(b) required under clause (i) shall be 
                        submitted to the Secretary not later than the 
                        day on which the information referred to in 
                        clause (ii)(II) is submitted to the government 
                        of the permitted country.
                            ``(iv) Notice of decision on application.--
                        The Secretary shall promptly notify registered 
                        exporters, registered importers, the Federal 
                        Trade Commission, and the State attorneys 
                        general of a determination to approve or to 
                        disapprove an application under section 505(b) 
                        required under clause (i).
                            ``(v) Related active ingredients.--For 
                        purposes of clause (i)(II), 2 active 
                        ingredients are related if they are--
                                    ``(I) the same; or
                                    ``(II) different salts, esters, or 
                                complexes of the same moiety.
            ``(3) Section 502; labeling.--
                    ``(A) Importation by registered importer.--
                            ``(i) In general.--In the case of a 
                        qualifying drug that is imported or offered for 
                        import by a registered importer, such drug 
                        shall be considered to be in compliance with 
                        section 502 and the labeling requirements under 
                        the approved application for the U.S. label 
                        drug if the qualifying drug bears--
                                    ``(I) a copy of the labeling 
                                approved for the U.S. label drug under 
                                section 505, without regard to whether 
                                the copy bears any trademark involved;
                                    ``(II) the name of the manufacturer 
                                and location of the manufacturer;
                                    ``(III) the lot number assigned by 
                                the manufacturer;
                                    ``(IV) the name, location, and 
                                registration number of the importer; 
                                and
                                    ``(V) the National Drug Code number 
                                assigned to the qualifying drug by the 
                                Secretary.
                            ``(ii) Request for copy of the labeling.--
                        The Secretary shall provide such copy to the 
                        registered importer involved, upon request of 
                        the importer.
                            ``(iii) Requested labeling.--The labeling 
                        provided by the Secretary under clause (ii) 
                        shall--
                                    ``(I) include the established name, 
                                as defined in section 502(e)(3), for 
                                each active ingredient in the 
                                qualifying drug;
                                    ``(II) not include the proprietary 
                                name of the U.S. label drug or any 
                                active ingredient thereof;
                                    ``(III) if required under paragraph 
                                (2)(B)(vi)(III), a prominent advisory 
                                that the qualifying drug is safe and 
                                effective but not bioequivalent to the 
                                U.S. label drug; and
                                    ``(IV) if the inactive ingredients 
                                of the qualifying drug are different 
                                from the inactive ingredients for the 
                                U.S. label drug, include--
                                            ``(aa) a prominent notice 
                                        that the ingredients of the 
                                        qualifying drug differ from the 
                                        ingredients of the U.S. label 
                                        drug and that the qualifying 
                                        drug must be dispensed with an 
                                        advisory to people with 
                                        allergies about this difference 
                                        and a list of ingredients; and
                                            ``(bb) a list of the 
                                        ingredients of the qualifying 
                                        drug as would be required under 
                                        section 502(e).
                    ``(B) Importation by individual.--
                            ``(i) In general.--In the case of a 
                        qualifying drug that is imported or offered for 
                        import by a registered exporter to an 
                        individual, such drug shall be considered to be 
                        in compliance with section 502 and the labeling 
                        requirements under the approved application for 
                        the U.S. label drug if the packaging and 
                        labeling of the qualifying drug complies with 
                        all applicable regulations promulgated under 
                        sections 3 and 4 of the Poison Prevention 
                        Packaging Act of 1970 (15 U.S.C. 1471 et seq.) 
                        and the labeling of the qualifying drug 
                        includes--
                                    ``(I) directions for use by the 
                                consumer;
                                    ``(II) the lot number assigned by 
                                the manufacturer;
                                    ``(III) the name and registration 
                                number of the exporter;
                                    ``(IV) if required under paragraph 
                                (2)(B)(vi)(III), a prominent advisory 
                                that the drug is safe and effective but 
                                not bioequivalent to the U.S. label 
                                drug;
                                    ``(V) if the inactive ingredients 
                                of the drug are different from the 
                                inactive ingredients for the U.S. label 
                                drug--
                                            ``(aa) a prominent advisory 
                                        that persons with an allergy 
                                        should check the ingredient 
                                        list of the drug because the 
                                        ingredients of the drug differ 
                                        from the ingredients of the 
                                        U.S. label drug; and
                                            ``(bb) a list of the 
                                        ingredients of the drug as 
                                        would be required under section 
                                        502(e); and
                                    ``(VI) a copy of any special 
                                labeling that would be required by the 
                                Secretary had the U.S. label drug been 
                                dispensed by a pharmacist in the United 
                                States, without regard to whether the 
                                special labeling bears any trademark 
                                involved.
                            ``(ii) Packaging.--A qualifying drug 
                        offered for import to an individual by an 
                        exporter under this section that is packaged in 
                        a unit-of-use container (as those items are 
                        defined in the United States Pharmacopeia and 
                        National Formulary) shall not be repackaged, 
                        provided that--
                                    ``(I) the packaging complies with 
                                all applicable regulations under 
                                sections 3 and 4 of the Poison 
                                Prevention Packaging Act of 1970 (15 
                                U.S.C. 1471 et seq.); or
                                    ``(II) the consumer consents to 
                                waive the requirements of such Act, 
                                after being informed that the packaging 
                                does not comply with such Act and that 
                                the exporter will provide the drug in 
                                packaging that is compliant at no 
                                additional cost.
                            ``(iii) Request for copy of special 
                        labeling and ingredient list.--The Secretary 
                        shall provide to the registered exporter 
                        involved a copy of the special labeling, the 
                        advisory, and the ingredient list described 
                        under clause (i), upon request of the exporter.
                            ``(iv) Requested labeling and ingredient 
                        list.--The labeling and ingredient list 
                        provided by the Secretary under clause (iii) 
                        shall--
                                    ``(I) include the established name, 
                                as defined in section 502(e)(3), for 
                                each active ingredient in the drug; and
                                    ``(II) not include the proprietary 
                                name of the U.S. label drug or any 
                                active ingredient thereof.
            ``(4) Section 501; adulteration.--A qualifying drug that is 
        imported or offered for import under subsection (a) shall be 
        considered to be in compliance with section 501 if the drug is 
        in compliance with subsection (c).
            ``(5) Standards for refusing admission.--A drug exported 
        under subsection (a) from a registered exporter or imported by 
        a registered importer may be refused admission into the United 
        States if 1 or more of the following applies:
                    ``(A) The drug is not a qualifying drug.
                    ``(B) A notice for the drug required under 
                paragraph (2)(B) has not been submitted to the 
                Secretary.
                    ``(C) The Secretary has ordered that importation of 
                the drug from the permitted country cease under 
                paragraph (2) (C) or (D).
                    ``(D) The drug does not comply with paragraph (3) 
                or (4).
                    ``(E) The shipping container appears damaged in a 
                way that may affect the strength, quality, or purity of 
                the drug.
                    ``(F) The Secretary becomes aware that--
                            ``(i) the drug may be counterfeit;
                            ``(ii) the drug may have been prepared, 
                        packed, or held under insanitary conditions; or
                            ``(iii) the methods used in, or the 
                        facilities or controls used for, the 
                        manufacturing, processing, packing, or holding 
                        of the drug do not conform to good 
                        manufacturing practice.
                    ``(G) The Secretary has obtained an injunction 
                under section 302 that prohibits the distribution of 
                the drug in interstate commerce.
                    ``(H) The Secretary has under section 505(e) 
                withdrawn approval of the drug.
                    ``(I) The manufacturer of the drug has instituted a 
                recall of the drug.
                    ``(J) If the drug is imported or offered for import 
                by a registered importer without submission of a notice 
                in accordance with subsection (d)(4).
                    ``(K) If the drug is imported or offered for import 
                from a registered exporter to an individual and 1 or 
                more of the following applies:
                            ``(i) The shipping container for such drug 
                        does not bear the markings required under 
                        subsection (d)(2).
                            ``(ii) The markings on the shipping 
                        container appear to be counterfeit.
                            ``(iii) The shipping container or markings 
                        appear to have been tampered with.
    ``(h) Exporter Licensure in Permitted Country.--A registration 
condition is that the exporter involved agrees that a qualifying drug 
will be exported to an individual only if the Secretary has verified 
that--
            ``(1) the exporter is authorized under the law of the 
        permitted country in which the exporter is located to dispense 
        prescription drugs; and
            ``(2) the exporter employs persons that are licensed under 
        the law of the permitted country in which the exporter is 
        located to dispense prescription drugs in sufficient number to 
        dispense safely the drugs exported by the exporter to 
        individuals, and the exporter assigns to those persons 
        responsibility for dispensing such drugs to individuals.
    ``(i) Individuals; Conditions for Importation.--
            ``(1) In general.--For purposes of subsection (a)(2)(B), 
        the importation of a qualifying drug by an individual is in 
        accordance with this subsection if the following conditions are 
        met:
                    ``(A) The drug is accompanied by a copy of a 
                prescription for the drug, which prescription--
                            ``(i) is valid under applicable Federal and 
                        State laws; and
                            ``(ii) was issued by a practitioner who, 
                        under the law of a State of which the 
                        individual is a resident, or in which the 
                        individual receives care from the practitioner 
                        who issues the prescription, is authorized to 
                        administer prescription drugs.
                    ``(B) The drug is accompanied by a copy of the 
                documentation that was required under the law or 
                regulations of the permitted country in which the 
                exporter is located, as a condition of dispensing the 
                drug to the individual.
                    ``(C) The copies referred to in subparagraphs 
                (A)(i) and (B) are marked in a manner sufficient--
                            ``(i) to indicate that the prescription, 
                        and the equivalent document in the permitted 
                        country in which the exporter is located, have 
                        been filled; and
                            ``(ii) to prevent a duplicative filling by 
                        another pharmacist.
                    ``(D) The individual has provided to the registered 
                exporter a complete list of all drugs used by the 
                individual for review by the individuals who dispense 
                the drug.
                    ``(E) The quantity of the drug does not exceed a 
                90-day supply.
                    ``(F) The drug is not an ineligible subpart H drug. 
                For purposes of this section, a prescription drug is an 
                `ineligible subpart H drug' if the drug was approved by 
                the Secretary under subpart H of part 314 of title 21, 
                Code of Federal Regulations (relating to accelerated 
                approval), with restrictions under section 520 of such 
                part to assure safe use, and the Secretary has 
                published in the Federal Register a notice that the 
                Secretary has determined that good cause exists to 
                prohibit the drug from being imported pursuant to this 
                subsection.
            ``(2) Notice regarding drug refused admission.--If a 
        registered exporter ships a drug to an individual pursuant to 
        subsection (a)(2)(B) and the drug is refused admission to the 
        United States, a written notice shall be sent to the individual 
        and to the exporter that informs the individual and the 
        exporter of such refusal and the reason for the refusal.
    ``(j) Maintenance of Records and Samples.--
            ``(1) In general.--A registration condition is that the 
        importer or exporter involved shall--
                    ``(A) maintain records required under this section 
                for not less than 2 years; and
                    ``(B) maintain samples of each lot of a qualifying 
                drug required under this section for not more than 2 
                years.
            ``(2) Place of record maintenance.--The records described 
        under paragraph (1) shall be maintained--
                    ``(A) in the case of an importer, at the place of 
                business of the importer at which the importer 
                initially receives the qualifying drug after 
                importation; or
                    ``(B) in the case of an exporter, at the facility 
                from which the exporter ships the qualifying drug to 
                the United States.
    ``(k) Drug Recalls.--
            ``(1) Manufacturers.--A person that manufactures a 
        qualifying drug imported from a permitted country under this 
        section shall promptly inform the Secretary--
                    ``(A) if the drug is recalled or withdrawn from the 
                market in a permitted country;
                    ``(B) how the drug may be identified, including lot 
                number; and
                    ``(C) the reason for the recall or withdrawal.
            ``(2) Secretary.--With respect to each permitted country, 
        the Secretary shall--
                    ``(A) enter into an agreement with the government 
                of the country to receive information about recalls and 
                withdrawals of qualifying drugs in the country; or
                    ``(B) monitor recalls and withdrawals of qualifying 
                drugs in the country using any information that is 
                available to the public in any media.
            ``(3) Notice.--The Secretary may notify, as appropriate, 
        registered exporters, registered importers, wholesalers, 
        pharmacies, or the public of a recall or withdrawal of a 
        qualifying drug in a permitted country.
    ``(l) Drug Labeling and Packaging.--
            ``(1) In general.--When a qualifying drug that is imported 
        into the United States by an importer under subsection (a) is 
        dispensed by a pharmacist to an individual, the pharmacist 
        shall provide that the packaging and labeling of the drug 
        complies with all applicable regulations promulgated under 
        sections 3 and 4 of the Poison Prevention Packaging Act of 1970 
        (15 U.S.C. 1471 et seq.) and shall include with any other 
        labeling provided to the individual the following:
                    ``(A) The lot number assigned by the manufacturer.
                    ``(B) The name and registration number of the 
                importer.
                    ``(C) If required under paragraph (2)(B)(vi)(III) 
                of subsection (g), a prominent advisory that the drug 
                is safe and effective but not bioequivalent to the U.S. 
                label drug.
                    ``(D) If the inactive ingredients of the drug are 
                different from the inactive ingredients for the U.S. 
                label drug--
                            ``(i) a prominent advisory that persons 
                        with allergies should check the ingredient list 
                        of the drug because the ingredients of the drug 
                        differ from the ingredients of the U.S. label 
                        drug; and
                            ``(ii) a list of the ingredients of the 
                        drug as would be required under section 502(e).
            ``(2) Packaging.--A qualifying drug that is packaged in a 
        unit-of-use container (as those terms are defined in the United 
        States Pharmacopeia and National Formulary) shall not be 
        repackaged, provided that--
                    ``(A) the packaging complies with all applicable 
                regulations under sections 3 and 4 of the Poison 
                Prevention Packaging Act of 1970 (15 U.S.C. 1471 et 
                seq.); or
                    ``(B) the consumer consents to waive the 
                requirements of such Act, after being informed that the 
                packaging does not comply with such Act and that the 
                pharmacist will provide the drug in packaging that is 
                compliant at no additional cost.
    ``(m) Charitable Contributions.--Notwithstanding any other 
provision of this section, this section does not authorize the 
importation into the United States of a qualifying drug donated or 
otherwise supplied for free or at nominal cost by the manufacturer of 
the drug to a charitable or humanitarian organization, including the 
United Nations and affiliates, or to a government of a foreign country.
    ``(n) Unfair and Discriminatory Acts and Practices.--
            ``(1) In general.--It is unlawful for a manufacturer, 
        directly or indirectly (including by being a party to a 
        licensing agreement or other agreement), to--
                    ``(A) discriminate by charging a higher price for a 
                prescription drug sold to a registered exporter or 
                other person in a permitted country that exports a 
                qualifying drug to the United States under this section 
                than the price that is charged, inclusive of rebates or 
                other incentives to the permitted country or other 
                person, to another person that is in the same country 
                and that does not export a qualifying drug into the 
                United States under this section;
                    ``(B) discriminate by charging a higher price for a 
                prescription drug sold to a registered importer or 
                other person that distributes, sells, or uses a 
                qualifying drug imported into the United States under 
                this section than the price that is charged to another 
                person in the United States that does not import a 
                qualifying drug under this section, or that does not 
                distribute, sell, or use such a drug;
                    ``(C) discriminate by denying, restricting, or 
                delaying supplies of a prescription drug to a 
                registered exporter or other person in a permitted 
                country that exports a qualifying drug to the United 
                States under this section or to a registered importer 
                or other person that distributes, sells, or uses a 
                qualifying drug imported into the United States under 
                this section;
                    ``(D) discriminate by publicly, privately, or 
                otherwise refusing to do business with a registered 
                exporter or other person in a permitted country that 
                exports a qualifying drug to the United States under 
                this section or with a registered importer or other 
                person that distributes, sells, or uses a qualifying 
                drug imported into the United States under this 
                section;
                    ``(E) knowingly fail to submit a notice under 
                subsection (g)(2)(B)(i), knowingly fail to submit such 
                a notice on or before the date specified in subsection 
                (g)(2)(B)(v) or as otherwise required under subsection 
                (e) (3), (4), and (5) of section 4 of the 
                Pharmaceutical Market Access and Drug Safety Act of 
                2009, knowingly submit such a notice that makes a 
                materially false, fictitious, or fraudulent statement, 
                or knowingly fail to provide promptly any information 
                requested by the Secretary to review such a notice;
                    ``(F) knowingly fail to submit an application 
                required under subsection (g)(2)(F), knowingly fail to 
                submit such an application on or before the date 
                specified in subsection (g)(2)(F)(ii), knowingly submit 
                such an application that makes a materially false, 
                fictitious, or fraudulent statement, or knowingly fail 
                to provide promptly any information requested by the 
                Secretary to review such an application;
                    ``(G) cause there to be a difference (including a 
                difference in active ingredient, route of 
                administration, dosage form, strength, formulation, 
                manufacturing establishment, manufacturing process, or 
                person that manufactures the drug) between a 
                prescription drug for distribution in the United States 
                and the drug for distribution in a permitted country;
                    ``(H) refuse to allow an inspection authorized 
                under this section of an establishment that 
                manufactures a qualifying drug that is, or will be, 
                introduced for commercial distribution in a permitted 
                country;
                    ``(I) fail to conform to the methods used in, or 
                the facilities used for, the manufacturing, processing, 
                packing, or holding of a qualifying drug that is, or 
                will be, introduced for commercial distribution in a 
                permitted country to good manufacturing practice under 
                this Act;
                    ``(J) become a party to a licensing agreement or 
                other agreement related to a qualifying drug that fails 
                to provide for compliance with all requirements of this 
                section with respect to such drug;
                    ``(K) enter into a contract that restricts, 
                prohibits, or delays the importation of a qualifying 
                drug under this section;
                    ``(L) engage in any other action to restrict, 
                prohibit, or delay the importation of a qualifying drug 
                under this section; or
                    ``(M) engage in any other action that the Federal 
                Trade Commission determines to discriminate against a 
                person that engages or attempts to engage in the 
                importation of a qualifying drug under this section.
            ``(2) Referral of potential violations.--The Secretary 
        shall promptly refer to the Federal Trade Commission each 
        potential violation of subparagraph (E), (F), (G), (H), or (I) 
        of paragraph (1) that becomes known to the Secretary.
            ``(3) Affirmative defense.--
                    ``(A) Discrimination.--It shall be an affirmative 
                defense to a charge that a manufacturer has 
                discriminated under subparagraph (A), (B), (C), (D), or 
                (M) of paragraph (1) that the higher price charged for 
                a prescription drug sold to a person, the denial, 
                restriction, or delay of supplies of a prescription 
                drug to a person, the refusal to do business with a 
                person, or other discriminatory activity against a 
                person, is not based, in whole or in part, on--
                            ``(i) the person exporting or importing a 
                        qualifying drug into the United States under 
                        this section; or
                            ``(ii) the person distributing, selling, or 
                        using a qualifying drug imported into the 
                        United States under this section.
                    ``(B) Drug differences.--It shall be an affirmative 
                defense to a charge that a manufacturer has caused 
                there to be a difference described in subparagraph (G) 
                of paragraph (1) that--
                            ``(i) the difference was required by the 
                        country in which the drug is distributed;
                            ``(ii) the Secretary has determined that 
                        the difference was necessary to improve the 
                        safety or effectiveness of the drug;
                            ``(iii) the person manufacturing the drug 
                        for distribution in the United States has given 
                        notice to the Secretary under subsection 
                        (g)(2)(B)(i) that the drug for distribution in 
                        the United States is not different from a drug 
                        for distribution in permitted countries whose 
                        combined population represents at least 50 
                        percent of the total population of all 
                        permitted countries; or
                            ``(iv) the difference was not caused, in 
                        whole or in part, for the purpose of 
                        restricting importation of the drug into the 
                        United States under this section.
            ``(4) Effect of subsection.--
                    ``(A) Sales in other countries.--This subsection 
                applies only to the sale or distribution of a 
                prescription drug in a country if the manufacturer of 
                the drug chooses to sell or distribute the drug in the 
                country. Nothing in this subsection shall be construed 
                to compel the manufacturer of a drug to distribute or 
                sell the drug in a country.
                    ``(B) Discounts to insurers, health plans, pharmacy 
                benefit managers, and covered entities.--Nothing in 
                this subsection shall be construed to--
                            ``(i) prevent or restrict a manufacturer of 
                        a prescription drug from providing discounts to 
                        an insurer, health plan, pharmacy benefit 
                        manager in the United States, or covered entity 
                        in the drug discount program under section 340B 
                        of the Public Health Service Act (42 U.S.C. 
                        256b) in return for inclusion of the drug on a 
                        formulary;
                            ``(ii) require that such discounts be made 
                        available to other purchasers of the 
                        prescription drug; or
                            ``(iii) prevent or restrict any other 
                        measures taken by an insurer, health plan, or 
                        pharmacy benefit manager to encourage 
                        consumption of such prescription drug.
                    ``(C) Charitable contributions.--Nothing in this 
                subsection shall be construed to--
                            ``(i) prevent a manufacturer from donating 
                        a prescription drug, or supplying a 
                        prescription drug at nominal cost, to a 
                        charitable or humanitarian organization, 
                        including the United Nations and affiliates, or 
                        to a government of a foreign country; or
                            ``(ii) apply to such donations or supplying 
                        of a prescription drug.
            ``(5) Enforcement.--
                    ``(A) Unfair or deceptive act or practice.--A 
                violation of this subsection shall be treated as a 
                violation of a rule defining an unfair or deceptive act 
                or practice prescribed under section 18(a)(1)(B) of the 
                Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
                    ``(B) Actions by the commission.--The Federal Trade 
                Commission--
                            ``(i) shall enforce this subsection in the 
                        same manner, by the same means, and with the 
                        same jurisdiction, powers, and duties as though 
                        all applicable terms and provisions of the 
                        Federal Trade Commission Act (15 U.S.C. 41 et 
                        seq.) were incorporated into and made a part of 
                        this section; and
                            ``(ii) may seek monetary relief threefold 
                        the damages sustained, in addition to any other 
                        remedy available to the Federal Trade 
                        Commission under the Federal Trade Commission 
                        Act (15 U.S.C. 41 et seq.).
            ``(6) Actions by states.--
                    ``(A) In general.--
                            ``(i) Civil actions.--In any case in which 
                        the attorney general of a State has reason to 
                        believe that an interest of the residents of 
                        that State have been adversely affected by any 
                        manufacturer that violates paragraph (1), the 
                        attorney general of a State may bring a civil 
                        action on behalf of the residents of the State, 
                        and persons doing business in the State, in a 
                        district court of the United States of 
                        appropriate jurisdiction to--
                                    ``(I) enjoin that practice;
                                    ``(II) enforce compliance with this 
                                subsection;
                                    ``(III) obtain damages, 
                                restitution, or other compensation on 
                                behalf of residents of the State and 
                                persons doing business in the State, 
                                including threefold the damages; or
                                    ``(IV) obtain such other relief as 
                                the court may consider to be 
                                appropriate.
                            ``(ii) Notice.--
                                    ``(I) In general.--Before filing an 
                                action under clause (i), the attorney 
                                general of the State involved shall 
                                provide to the Federal Trade 
                                Commission--
                                            ``(aa) written notice of 
                                        that action; and
                                            ``(bb) a copy of the 
                                        complaint for that action.
                                    ``(II) Exemption.--Subclause (I) 
                                shall not apply with respect to the 
                                filing of an action by an attorney 
                                general of a State under this 
                                paragraph, if the attorney general 
                                determines that it is not feasible to 
                                provide the notice described in that 
                                subclause before filing of the action. 
                                In such case, the attorney general of a 
                                State shall provide notice and a copy 
                                of the complaint to the Federal Trade 
                                Commission at the same time as the 
                                attorney general files the action.
                    ``(B) Intervention.--
                            ``(i) In general.--On receiving notice 
                        under subparagraph (A)(ii), the Federal Trade 
                        Commission shall have the right to intervene in 
                        the action that is the subject of the notice.
                            ``(ii) Effect of intervention.--If the 
                        Federal Trade Commission intervenes in an 
                        action under subparagraph (A), it shall have 
                        the right--
                                    ``(I) to be heard with respect to 
                                any matter that arises in that action; 
                                and
                                    ``(II) to file a petition for 
                                appeal.
                    ``(C) Construction.--For purposes of bringing any 
                civil action under subparagraph (A), nothing in this 
                subsection shall be construed to prevent an attorney 
                general of a State from exercising the powers conferred 
                on the attorney general by the laws of that State to--
                            ``(i) conduct investigations;
                            ``(ii) administer oaths or affirmations; or
                            ``(iii) compel the attendance of witnesses 
                        or the production of documentary and other 
                        evidence.
                    ``(D) Actions by the commission.--In any case in 
                which an action is instituted by or on behalf of the 
                Federal Trade Commission for a violation of paragraph 
                (1), a State may not, during the pendency of that 
                action, institute an action under subparagraph (A) for 
                the same violation against any defendant named in the 
                complaint in that action.
                    ``(E) Venue.--Any action brought under subparagraph 
                (A) may be brought in the district court of the United 
                States that meets applicable requirements relating to 
                venue under section 1391 of title 28, United States 
                Code.
                    ``(F) Service of process.--In an action brought 
                under subparagraph (A), process may be served in any 
                district in which the defendant--
                            ``(i) is an inhabitant; or
                            ``(ii) may be found.
                    ``(G) Measurement of damages.--In any action under 
                this paragraph to enforce a cause of action under this 
                subsection in which there has been a determination that 
                a defendant has violated a provision of this 
                subsection, damages may be proved and assessed in the 
                aggregate by statistical or sampling methods, by the 
                computation of illegal overcharges or by such other 
                reasonable system of estimating aggregate damages as 
                the court in its discretion may permit without the 
                necessity of separately proving the individual claim 
                of, or amount of damage to, persons on whose behalf the 
                suit was brought.
                    ``(H) Exclusion on duplicative relief.--The 
                district court shall exclude from the amount of 
                monetary relief awarded in an action under this 
                paragraph brought by the attorney general of a State 
                any amount of monetary relief which duplicates amounts 
                which have been awarded for the same injury.
            ``(7) Effect on antitrust laws.--Nothing in this subsection 
        shall be construed to modify, impair, or supersede the 
        operation of the antitrust laws. For the purpose of this 
        subsection, the term `antitrust laws' has the meaning given it 
        in the first section of the Clayton Act, except that it 
        includes section 5 of the Federal Trade Commission Act to the 
        extent that such section 5 applies to unfair methods of 
        competition.
            ``(8) Manufacturer.--In this subsection, the term 
        `manufacturer' means any entity, including any affiliate or 
        licensee of that entity, that is engaged in--
                    ``(A) the production, preparation, propagation, 
                compounding, conversion, or processing of a 
                prescription drug, either directly or indirectly by 
                extraction from substances of natural origin, or 
                independently by means of chemical synthesis, or by a 
                combination of extraction and chemical synthesis; or
                    ``(B) the packaging, repackaging, labeling, 
                relabeling, or distribution of a prescription drug.''.
    (b) Prohibited Acts.--The Federal Food, Drug, and Cosmetic Act is 
amended--
            (1) in section 301 (21 U.S.C. 331), by striking paragraph 
        (aa) and inserting the following:
    ``(aa)(1) The sale or trade by a pharmacist, or by a business 
organization of which the pharmacist is a part, of a qualifying drug 
that under section 804(a)(2)(A) was imported by the pharmacist, other 
than--
            ``(A) a sale at retail made pursuant to dispensing the drug 
        to a customer of the pharmacist or organization; or
            ``(B) a sale or trade of the drug to a pharmacy or a 
        wholesaler registered to import drugs under section 804.
    ``(2) The sale or trade by an individual of a qualifying drug that 
under section 804(a)(2)(B) was imported by the individual.
    ``(3) The making of a materially false, fictitious, or fraudulent 
statement or representation, or a material omission, in a notice under 
clause (i) of section 804(g)(2)(B) or in an application required under 
section 804(g)(2)(F), or the failure to submit such a notice or 
application.
    ``(4) The importation of a drug in violation of a registration 
condition or other requirement under section 804, the falsification of 
any record required to be maintained, or provided to the Secretary, 
under such section, or the violation of any registration condition or 
other requirement under such section.''; and
            (2) in section 303(b) (21 U.S.C. 333(b), by striking 
        paragraph (6) and inserting the following: 
    ``(6) Notwithstanding subsection (a), any person that knowingly 
violates section 301(i) (2) or (3) or section 301(aa)(4) shall be 
imprisoned not more than 10 years, or fined in accordance with title 
18, United States Code, or both.''.
    (c) Amendment of Certain Provisions.--
            (1) In general.--Section 801 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 381) is amended by striking subsection 
        (g) and inserting the following:
    ``(g) With respect to a prescription drug that is imported or 
offered for import into the United States by an individual who is not 
in the business of such importation, that is not shipped by a 
registered exporter under section 804, and that is refused admission 
under subsection (a), the Secretary shall notify the individual that--
            ``(1) the drug has been refused admission because the drug 
        was not a lawful import under section 804;
            ``(2) the drug is not otherwise subject to a waiver of the 
        requirements of subsection (a);
            ``(3) the individual may under section 804 lawfully import 
        certain prescription drugs from exporters registered with the 
        Secretary under section 804; and
            ``(4) the individual can find information about such 
        importation, including a list of registered exporters, on the 
        Internet website of the Food and Drug Administration or through 
        a toll-free telephone number required under section 804.''.
            (2) Establishment registration.--Section 510(i) of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(i)) is 
        amended in paragraph (1) by inserting after ``import into the 
        United States'' the following: ``, including a drug that is, or 
        may be, imported or offered for import into the United States 
        under section 804,''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date that is 90 days after the date of 
        enactment of this Act.
    (d) Exhaustion.--
            (1) In general.--Section 271 of title 35, United States 
        Code, is amended--
                    (A) by redesignating subsections (h) and (i) as (i) 
                and (j), respectively; and
                    (B) by inserting after subsection (g) the 
                following:
    ``(h) It shall not be an act of infringement to use, offer to sell, 
or sell within the United States or to import into the United States 
any patented invention under section 804 of the Federal Food, Drug, and 
Cosmetic Act that was first sold abroad by or under authority of the 
owner or licensee of such patent.''.
            (2) Rule of construction.--Nothing in the amendment made by 
        paragraph (1) shall be construed to affect the ability of the 
        owner or licensee of a patent to enforce such patent, subject 
        to such amendment.
    (e) Effect of Section 804.--
            (1) In general.--Section 804 of the Federal Food, Drug, and 
        Cosmetic Act, as added by subsection (a), shall permit the 
        importation of qualifying drugs (as defined in such section 
        804) into the United States without regard to the status of the 
        issuance of implementing regulations--
                    (A) from exporters registered under such section 
                804 on the date that is 90 days after the date of 
                enactment of this Act; and
                    (B) from permitted countries, as defined in such 
                section 804, by importers registered under such section 
                804 on the date that is 1 year after the date of 
                enactment of this Act.
            (2) Review of registration by certain exporters.--
                    (A) Review priority.--In the review of 
                registrations submitted under subsection (b) of such 
                section 804, registrations submitted by entities in 
                Canada that are significant exporters of prescription 
                drugs to individuals in the United States as of the 
                date of enactment of this Act will have priority during 
                the 90-day period that begins on such date of 
                enactment.
                    (B) Period for review.--During such 90-day period, 
                the reference in subsection (b)(2)(A) of such section 
                804 to 90 days (relating to approval or disapproval of 
                registrations) is, as applied to such entities, deemed 
                to be 30 days.
                    (C) Limitation.--That an exporter in Canada 
                exports, or has exported, prescription drugs to 
                individuals in the United States on or before the date 
                that is 90 days after the date of enactment of this Act 
                shall not serve as a basis, in whole or in part, for 
                disapproving a registration under such section 804 from 
                the exporter.
                    (D) First year limit on number of exporters.--
                During the 1-year period beginning on the date of 
                enactment of this Act, the Secretary of Health and 
                Human Services (referred to in this section as the 
                ``Secretary'') may limit the number of registered 
                exporters under such section 804 to not less than 50, 
                so long as the Secretary gives priority to those 
                exporters with demonstrated ability to process a high 
                volume of shipments of drugs to individuals in the 
                United States.
                    (E) Second year limit on number of exporters.--
                During the 1-year period beginning on the date that is 
                1 year after the date of enactment of this Act, the 
                Secretary may limit the number of registered exporters 
                under such section 804 to not less than 100, so long as 
                the Secretary gives priority to those exporters with 
                demonstrated ability to process a high volume of 
                shipments of drugs to individuals in the United States.
                    (F) Further limit on number of exporters.--During 
                any 1-year period beginning on a date that is 2 or more 
                years after the date of enactment of this Act, the 
                Secretary may limit the number of registered exporters 
                under such section 804 to not less than 25 more than 
                the number of such exporters during the previous 1-year 
                period, so long as the Secretary gives priority to 
                those exporters with demonstrated ability to process a 
                high volume of shipments of drugs to individuals in the 
                United States.
            (3) Limits on number of importers.--
                    (A) First year limit on number of importers.--
                During the 1-year period beginning on the date that is 
                1 year after the date of enactment of this Act, the 
                Secretary may limit the number of registered importers 
                under such section 804 to not less than 100 (of which 
                at least a significant number shall be groups of 
                pharmacies, to the extent feasible given the 
                applications submitted by such groups), so long as the 
                Secretary gives priority to those importers with 
                demonstrated ability to process a high volume of 
                shipments of drugs imported into the United States.
                    (B) Second year limit on number of importers.--
                During the 1-year period beginning on the date that is 
                2 years after the date of enactment of this Act, the 
                Secretary may limit the number of registered importers 
                under such section 804 to not less than 200 (of which 
                at least a significant number shall be groups of 
                pharmacies, to the extent feasible given the 
                applications submitted by such groups), so long as the 
                Secretary gives priority to those importers with 
                demonstrated ability to process a high volume of 
                shipments of drugs into the United States.
                    (C) Further limit on number of importers.--During 
                any 1-year period beginning on a date that is 3 or more 
                years after the date of enactment of this Act, the 
                Secretary may limit the number of registered importers 
                under such section 804 to not less than 50 more (of 
                which at least a significant number shall be groups of 
                pharmacies, to the extent feasible given the 
                applications submitted by such groups) than the number 
                of such importers during the previous 1-year period, so 
                long as the Secretary gives priority to those importers 
                with demonstrated ability to process a high volume of 
                shipments of drugs to the United States.
            (4) Notices for drugs for import from canada.--The notice 
        with respect to a qualifying drug introduced for commercial 
        distribution in Canada as of the date of enactment of this Act 
        that is required under subsection (g)(2)(B)(i) of such section 
        804 shall be submitted to the Secretary not later than 30 days 
        after the date of enactment of this Act if--
                    (A) the U.S. label drug (as defined in such section 
                804) for the qualifying drug is 1 of the 100 
                prescription drugs with the highest dollar volume of 
                sales in the United States based on the 12-calendar-
                month period most recently completed before the date of 
                enactment of this Act; or
                    (B) the notice is a notice under subsection 
                (g)(2)(B)(i)(II) of such section 804.
            (5) Notice for drugs for import from other countries.--The 
        notice with respect to a qualifying drug introduced for 
        commercial distribution in a permitted country other than 
        Canada as of the date of enactment of this Act that is required 
        under subsection (g)(2)(B)(i) of such section 804 shall be 
        submitted to the Secretary not later than 180 days after the 
        date of enactment of this Act if--
                    (A) the U.S. label drug for the qualifying drug is 
                1 of the 100 prescription drugs with the highest dollar 
                volume of sales in the United States based on the 12-
                calendar-month period that is first completed on the 
                date that is 120 days after the date of enactment of 
                this Act; or
                    (B) the notice is a notice under subsection 
                (g)(2)(B)(i)(II) of such section 804.
            (6) Notice for other drugs for import.--
                    (A) Guidance on submission dates.--The Secretary 
                shall by guidance establish a series of submission 
                dates for the notices under subsection (g)(2)(B)(i) of 
                such section 804 with respect to qualifying drugs 
                introduced for commercial distribution as of the date 
                of enactment of this Act and that are not required to 
                be submitted under paragraph (4) or (5).
                    (B) Consistent and efficient use of resources.--The 
                Secretary shall establish the dates described under 
                subparagraph (A) so that such notices described under 
                subparagraph (A) are submitted and reviewed at a rate 
                that allows consistent and efficient use of the 
                resources and staff available to the Secretary for such 
                reviews. The Secretary may condition the requirement to 
                submit such a notice, and the review of such a notice, 
                on the submission by a registered exporter or a 
                registered importer to the Secretary of a notice that 
                such exporter or importer intends to import such 
                qualifying drug to the United States under such section 
                804.
                    (C) Priority for drugs with higher sales.--The 
                Secretary shall establish the dates described under 
                subparagraph (A) so that the Secretary reviews the 
                notices described under such subparagraph with respect 
                to qualifying drugs with higher dollar volume of sales 
                in the United States before the notices with respect to 
                drugs with lower sales in the United States.
            (7) Notices for drugs approved after effective date.--The 
        notice required under subsection (g)(2)(B)(i) of such section 
        804 for a qualifying drug first introduced for commercial 
        distribution in a permitted country (as defined in such section 
        804) after the date of enactment of this Act shall be submitted 
        to and reviewed by the Secretary as provided under subsection 
        (g)(2)(B) of such section 804, without regard to paragraph (4), 
        (5), or (6).
            (8) Report.--Beginning with the first full fiscal year 
        after the date of enactment of this Act, not later than 90 days 
        after the end of each fiscal year during which the Secretary 
        reviews a notice referred to in paragraph (4), (5), or (6), the 
        Secretary shall submit a report to Congress concerning the 
        progress of the Food and Drug Administration in reviewing the 
        notices referred to in paragraphs (4), (5), and (6).
            (9) User fees.--
                    (A) Exporters.--When establishing an aggregate 
                total of fees to be collected from exporters under 
                subsection (f)(2) of such section 804, the Secretary 
                shall, under subsection (f)(3)(C)(i) of such section 
                804, estimate the total price of drugs imported under 
                subsection (a) of such section 804 into the United 
                States by registered exporters during the first fiscal 
                year in which this Act takes effect to be an amount 
                equal to the amount which bears the same ratio to 
                $1,000,000,000 as the number of days in such fiscal 
                year during which this Act is effective bears to 365.
                    (B) Importers.--When establishing an aggregate 
                total of fees to be collected from importers under 
                subsection (e)(2) of such section 804, the Secretary 
                shall, under subsection (e)(3)(C)(i) of such section 
                804, estimate the total price of drugs imported under 
                subsection (a) of such section 804 into the United 
                States by registered importers during--
                            (i) the first fiscal year in which this Act 
                        takes effect to be an amount equal to the 
                        amount which bears the same ratio to 
                        $1,000,000,000 as the number of days in such 
                        fiscal year during which this Act is effective 
                        bears to 365; and
                            (ii) the second fiscal year in which this 
                        Act is in effect to be $3,000,000,000.
                    (C) Second year adjustment.--
                            (i) Reports.--Not later than February 20 of 
                        the second fiscal year in which this Act is in 
                        effect, registered importers shall report to 
                        the Secretary the total price and the total 
                        volume of drugs imported to the United States 
                        by the importer during the 4-month period from 
                        October 1 through January 31 of such fiscal 
                        year.
                            (ii) Reestimate.--Notwithstanding 
                        subsection (e)(3)(C)(ii) of such section 804 or 
                        subparagraph (B), the Secretary shall 
                        reestimate the total price of qualifying drugs 
                        imported under subsection (a) of such section 
                        804 into the United States by registered 
                        importers during the second fiscal year in 
                        which this Act is in effect. Such reestimate 
                        shall be equal to--
                                    (I) the total price of qualifying 
                                drugs imported by each importer as 
                                reported under clause (i); multiplied 
                                by
                                    (II) 3.
                            (iii) Adjustment.--The Secretary shall 
                        adjust the fee due on April 1 of the second 
                        fiscal year in which this Act is in effect, 
                        from each importer so that the aggregate total 
                        of fees collected under subsection (e)(2) for 
                        such fiscal year does not exceed the total 
                        price of qualifying drugs imported under 
                        subsection (a) of such section 804 into the 
                        United States by registered importers during 
                        such fiscal year as reestimated under clause 
                        (ii).
                    (D) Failure to pay fees.--Notwithstanding any other 
                provision of this section, the Secretary may prohibit a 
                registered importer or exporter that is required to pay 
                user fees under subsection (e) or (f) of such section 
                804 and that fails to pay such fees within 30 days 
                after the date on which it is due, from importing or 
                offering for importation a qualifying drug under such 
                section 804 until such fee is paid.
                    (E) Annual report.--
                            (i) Food and drug administration.--Not 
                        later than 180 days after the end of each 
                        fiscal year during which fees are collected 
                        under subsection (e), (f), or (g)(2)(B)(iv) of 
                        such section 804, the Secretary shall prepare 
                        and submit to the House of Representatives and 
                        the Senate a report on the implementation of 
                        the authority for such fees during such fiscal 
                        year and the use, by the Food and Drug 
                        Administration, of the fees collected for the 
                        fiscal year for which the report is made and 
                        credited to the Food and Drug Administration.
                            (ii) Customs and border control.--Not later 
                        than 180 days after the end of each fiscal year 
                        during which fees are collected under 
                        subsection (e) or (f) of such section 804, the 
                        Secretary of Homeland Security, in consultation 
                        with the Secretary of the Treasury, shall 
                        prepare and submit to the House of 
                        Representatives and the Senate a report on the 
                        use, by the Bureau of Customs and Border 
                        Protection, of the fees, if any, transferred by 
                        the Secretary to the Bureau of Customs and 
                        Border Protection for the fiscal year for which 
                        the report is made.
            (10) Special rule regarding importation by individuals.--
                    (A) In general.--Notwithstanding any provision of 
                this Act (or an amendment made by this Act), the 
                Secretary shall expedite the designation of any 
                additional countries from which an individual may 
                import a qualifying drug into the United States under 
                such section 804 if any action implemented by the 
                Government of Canada has the effect of limiting or 
                prohibiting the importation of qualifying drugs into 
                the United States from Canada.
                    (B) Timing and criteria.--The Secretary shall 
                designate such additional countries under subparagraph 
                (A)--
                            (i) not later than 6 months after the date 
                        of the action by the Government of Canada 
                        described under such subparagraph; and
                            (ii) using the criteria described under 
                        subsection (a)(4)(D)(i)(II) of such section 
                        804.
    (f) Implementation of Section 804.--
            (1) Interim rule.--The Secretary may promulgate an interim 
        rule for implementing section 804 of the Federal Food, Drug, 
        and Cosmetic Act, as added by subsection (a) of this section.
            (2) No notice of proposed rulemaking.--The interim rule 
        described under paragraph (1) may be developed and promulgated 
        by the Secretary without providing general notice of proposed 
        rulemaking.
            (3) Final rule.--Not later than 1 year after the date on 
        which the Secretary promulgates an interim rule under paragraph 
        (1), the Secretary shall, in accordance with procedures under 
        section 553 of title 5, United States Code, promulgate a final 
        rule for implementing such section 804, which may incorporate 
        by reference provisions of the interim rule provided for under 
        paragraph (1), to the extent that such provisions are not 
        modified.
    (g) Consumer Education.--The Secretary shall carry out activities 
that educate consumers--
            (1) with regard to the availability of qualifying drugs for 
        import for personal use from an exporter registered with and 
        approved by the Food and Drug Administration under section 804 
        of the Federal Food, Drug, and Cosmetic Act, as added by this 
        section, including information on how to verify whether an 
        exporter is registered and approved by use of the Internet 
        website of the Food and Drug Administration and the toll-free 
        telephone number required by this Act;
            (2) that drugs that consumers attempt to import from an 
        exporter that is not registered with and approved by the Food 
        and Drug Administration can be seized by the United States 
        Customs Service and destroyed, and that such drugs may be 
        counterfeit, unapproved, unsafe, or ineffective;
            (3) with regard to the suspension and termination of any 
        registration of a registered importer or exporter under such 
        section 804; and
            (4) with regard to the availability at domestic retail 
        pharmacies of qualifying drugs imported under such section 804 
        by domestic wholesalers and pharmacies registered with and 
        approved by the Food and Drug Administration.
    (h) Effect on Administration Practices.--Notwithstanding any 
provision of this Act (and the amendments made by this Act), the 
practices and policies of the Food and Drug Administration and Bureau 
of Customs and Border Protection, in effect on January 1, 2004, with 
respect to the importation of prescription drugs into the United States 
by an individual, on the person of such individual, for personal use, 
shall remain in effect.
    (i) Report to Congress.--The Federal Trade Commission shall, on an 
annual basis, submit to Congress a report that describes any action 
taken during the period for which the report is being prepared to 
enforce the provisions of section 804(n) of the Federal Food, Drug, and 
Cosmetic Act (as added by this Act), including any pending 
investigations or civil actions under such section.

SEC. 303. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION INTO UNITED 
              STATES.

    (a) In General.--Chapter VIII of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 381 et seq.), as amended by section 302, is 
further amended by adding at the end the following section:

``SEC. 805. DISPOSITION OF CERTAIN DRUGS DENIED ADMISSION.

    ``(a) In General.--The Secretary of Homeland Security shall deliver 
to the Secretary a shipment of drugs that is imported or offered for 
import into the United States if--
            ``(1) the shipment has a declared value of less than 
        $10,000; and
            ``(2)(A) the shipping container for such drugs does not 
        bear the markings required under section 804(d)(2); or
            ``(B) the Secretary has requested delivery of such shipment 
        of drugs.
    ``(b) No Bond or Export.--Section 801(b) does not authorize the 
delivery to the owner or consignee of drugs delivered to the Secretary 
under subsection (a) pursuant to the execution of a bond, and such 
drugs may not be exported.
    ``(c) Destruction of Violative Shipment.--The Secretary shall 
destroy a shipment of drugs delivered by the Secretary of Homeland 
Security to the Secretary under subsection (a) if--
            ``(1) in the case of drugs that are imported or offered for 
        import from a registered exporter under section 804, the drugs 
        are in violation of any standard described in section 
        804(g)(5); or
            ``(2) in the case of drugs that are not imported or offered 
        for import from a registered exporter under section 804, the 
        drugs are in violation of a standard referred to in section 
        801(a) or 801(d)(1).
    ``(d) Certain Procedures.--
            ``(1) In general.--The delivery and destruction of drugs 
        under this section may be carried out without notice to the 
        importer, owner, or consignee of the drugs except as required 
        by section 801(g) or section 804(i)(2). The issuance of 
        receipts for the drugs, and recordkeeping activities regarding 
        the drugs, may be carried out on a summary basis.
            ``(2) Objective of procedures.--Procedures promulgated 
        under paragraph (1) shall be designed toward the objective of 
        ensuring that, with respect to efficiently utilizing Federal 
        resources available for carrying out this section, a 
        substantial majority of shipments of drugs subject to described 
        in subsection (c) are identified and destroyed.
    ``(e) Evidence Exception.--Drugs may not be destroyed under 
subsection (c) to the extent that the Attorney General of the United 
States determines that the drugs should be preserved as evidence or 
potential evidence with respect to an offense against the United 
States.
    ``(f) Rule of Construction.--This section may not be construed as 
having any legal effect on applicable law with respect to a shipment of 
drugs that is imported or offered for import into the United States and 
has a declared value equal to or greater than $10,000.''.
    (b) Procedures.--Procedures for carrying out section 805 of the 
Federal Food, Drug, and Cosmetic Act, as added by subsection (a), shall 
be established not later than 90 days after the date of the enactment 
of this Act.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date that is 90 days after the date of enactment of this 
Act.

SEC. 304. WHOLESALE DISTRIBUTION OF DRUGS; STATEMENTS REGARDING PRIOR 
              SALE, PURCHASE, OR TRADE.

    (a) Striking of Exemptions; Applicability to Registered 
Exporters.--Section 503(e) of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 353(e)) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``and who is not the manufacturer 
                or an authorized distributor of record of such drug'';
                    (B) by striking ``to an authorized distributor of 
                record or''; and
                    (C) by striking subparagraph (B) and inserting the 
                following:
    ``(B) The fact that a drug subject to subsection (b) is exported 
from the United States does not with respect to such drug exempt any 
person that is engaged in the business of the wholesale distribution of 
the drug from providing the statement described in subparagraph (A) to 
the person that receives the drug pursuant to the export of the drug.
    ``(C)(i) The Secretary shall by regulation establish requirements 
that supersede subparagraph (A) (referred to in this subparagraph as 
`alternative requirements') to identify the chain of custody of a drug 
subject to subsection (b) from the manufacturer of the drug throughout 
the wholesale distribution of the drug to a pharmacist who intends to 
sell the drug at retail if the Secretary determines that the 
alternative requirements, which may include standardized anti-
counterfeiting or track-and-trace technologies, will identify such 
chain of custody or the identity of the discrete package of the drug 
from which the drug is dispensed with equal or greater certainty to the 
requirements of subparagraph (A), and that the alternative requirements 
are economically and technically feasible.
    ``(ii) When the Secretary promulgates a final rule to establish 
such alternative requirements, the final rule in addition shall, with 
respect to the registration condition established in clause (i) of 
section 804(c)(3)(B), establish a condition equivalent to the 
alternative requirements, and such equivalent condition may be met in 
lieu of the registration condition established in such clause (i).'';
            (2) in paragraph (2)(A), by adding at the end the 
        following: ``The preceding sentence may not be construed as 
        having any applicability with respect to a registered exporter 
        under section 804.''; and
            (3) in paragraph (3), by striking ``and subsection (d)--'' 
        in the matter preceding subparagraph (A) and all that follows 
        through ``the term `wholesale distribution' means'' in 
        subparagraph (B) and inserting the following: ``and subsection 
        (d), the term `wholesale distribution' means''.
    (b) Conforming Amendment.--Section 503(d) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 353(d)) is amended by adding at the 
end the following:
    ``(4) Each manufacturer of a drug subject to subsection (b) shall 
maintain at its corporate offices a current list of the authorized 
distributors of record of such drug.
    ``(5) For purposes of this subsection, the term `authorized 
distributors of record' means those distributors with whom a 
manufacturer has established an ongoing relationship to distribute such 
manufacturer's products.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by paragraphs (1) and 
        (3) of subsection (a) and by subsection (b) shall take effect 
        on January 1, 2012.
            (2) Drugs imported by registered importers under section 
        804.--Notwithstanding paragraph (1), the amendments made by 
        paragraphs (1) and (3) of subsection (a) and by subsection (b) 
        shall take effect on the date that is 90 days after the date of 
        enactment of this Act with respect to qualifying drugs imported 
        under section 804 of the Federal Food, Drug, and Cosmetic Act, 
        as added by section 303.
            (3) Effect with respect to registered exporters.--The 
        amendment made by subsection (a)(2) shall take effect on the 
        date that is 90 days after the date of enactment of this Act.
            (4) Alternative requirements.--The Secretary shall issue 
        regulations to establish the alternative requirements, referred 
        to in the amendment made by subsection (a)(1), that take effect 
        not later than January 1, 2012.
            (5) Intermediate requirements.--The Secretary shall by 
        regulation require the use of standardized anti-counterfeiting 
        or track-and-trace technologies on prescription drugs at the 
        case and pallet level effective not later than 1 year after the 
        date of enactment of this Act.
            (6) Additional requirements.--
                    (A) In general.--Notwithstanding any other 
                provision of this section, the Secretary shall, not 
                later than 18 months after the date of enactment of 
                this Act, require that the packaging of any 
                prescription drug incorporates--
                            (i) a standardized numerical identifier 
                        unique to each package of such drug, applied at 
                        the point of manufacturing and repackaging (in 
                        which case the numerical identifier shall be 
                        linked to the numerical identifier applied at 
                        the point of manufacturing); and
                            (ii)(I) overt optically variable 
                        counterfeit-resistant technologies that--
                                    (aa) are visible to the naked eye, 
                                providing for visual identification of 
                                product authenticity without the need 
                                for readers, microscopes, lighting 
                                devices, or scanners;
                                    (bb) are similar to that used by 
                                the Bureau of Engraving and Printing to 
                                secure United States currency;
                                    (cc) are manufactured and 
                                distributed in a highly secure, tightly 
                                controlled environment; and
                                    (dd) incorporate additional layers 
                                of nonvisible convert security features 
                                up to and including forensic 
                                capability, as described in 
                                subparagraph (B); or
                            (II) technologies that have a function of 
                        security comparable to that described in 
                        subclause (I), as determined by the Secretary.
                    (B) Standards for packaging.--For the purpose of 
                making it more difficult to counterfeit the packaging 
                of drugs subject to this paragraph, the manufacturers 
                of such drugs shall incorporate the technologies 
                described in subparagraph (A) into at least 1 
                additional element of the physical packaging of the 
                drugs, including blister packs, shrink wrap, package 
                labels, package seals, bottles, and boxes.

SEC. 305. INTERNET SALES OF PRESCRIPTION DRUGS.

    (a) In General.--Chapter V of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 351 et seq.) is amended by inserting after section 503B 
the following:

``SEC. 503C. INTERNET SALES OF PRESCRIPTION DRUGS.

    ``(a) Requirements Regarding Information on Internet Site.--
            ``(1) In general.--A person may not dispense a prescription 
        drug pursuant to a sale of the drug by such person if--
                    ``(A) the purchaser of the drug submitted the 
                purchase order for the drug, or conducted any other 
                part of the sales transaction for the drug, through an 
                Internet site;
                    ``(B) the person dispenses the drug to the 
                purchaser by mailing or shipping the drug to the 
                purchaser; and
                    ``(C) such site, or any other Internet site used by 
                such person for purposes of sales of a prescription 
                drug, fails to meet each of the requirements specified 
                in paragraph (2), other than a site or pages on a site 
                that--
                            ``(i) are not intended to be accessed by 
                        purchasers or prospective purchasers; or
                            ``(ii) provide an Internet information 
                        location tool within the meaning of section 
                        231(e)(5) of the Communications Act of 1934 (47 
                        U.S.C. 231(e)(5)).
            ``(2) Requirements.--With respect to an Internet site, the 
        requirements referred to in subparagraph (C) of paragraph (1) 
        for a person to whom such paragraph applies are as follows:
                    ``(A) Each page of the site shall include either 
                the following information or a link to a page that 
                provides the following information:
                            ``(i) The name of such person.
                            ``(ii) Each State in which the person is 
                        authorized by law to dispense prescription 
                        drugs.
                            ``(iii) The address and telephone number of 
                        each place of business of the person with 
                        respect to sales of prescription drugs through 
                        the Internet, other than a place of business 
                        that does not mail or ship prescription drugs 
                        to purchasers.
                            ``(iv) The name of each individual who 
                        serves as a pharmacist for prescription drugs 
                        that are mailed or shipped pursuant to the 
                        site, and each State in which the individual is 
                        authorized by law to dispense prescription 
                        drugs.
                            ``(v) If the person provides for medical 
                        consultations through the site for purposes of 
                        providing prescriptions, the name of each 
                        individual who provides such consultations; 
                        each State in which the individual is licensed 
                        or otherwise authorized by law to provide such 
                        consultations or practice medicine; and the 
                        type or types of health professions for which 
                        the individual holds such licenses or other 
                        authorizations.
                    ``(B) A link to which paragraph (1) applies shall 
                be displayed in a clear and prominent place and manner, 
                and shall include in the caption for the link the words 
                `licensing and contact information'.
    ``(b) Internet Sales Without Appropriate Medical Relationships.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        person may not dispense a prescription drug, or sell such a 
        drug, if--
                    ``(A) for purposes of such dispensing or sale, the 
                purchaser communicated with the person through the 
                Internet;
                    ``(B) the patient for whom the drug was dispensed 
                or purchased did not, when such communications began, 
                have a prescription for the drug that is valid in the 
                United States;
                    ``(C) pursuant to such communications, the person 
                provided for the involvement of a practitioner, or an 
                individual represented by the person as a practitioner, 
                and the practitioner or such individual issued a 
                prescription for the drug that was purchased;
                    ``(D) the person knew, or had reason to know, that 
                the practitioner or the individual referred to in 
                subparagraph (C) did not, when issuing the 
                prescription, have a qualifying medical relationship 
                with the patient; and
                    ``(E) the person received payment for the 
                dispensing or sale of the drug.
        For purposes of subparagraph (E), payment is received if money 
        or other valuable consideration is received.
            ``(2) Exceptions.--Paragraph (1) does not apply to--
                    ``(A) the dispensing or selling of a prescription 
                drug pursuant to telemedicine practices sponsored by--
                            ``(i) a hospital that has in effect a 
                        provider agreement under title XVIII of the 
                        Social Security Act (relating to the Medicare 
                        program); or
                            ``(ii) a group practice that has not fewer 
                        than 100 physicians who have in effect provider 
                        agreements under such title; or
                    ``(B) the dispensing or selling of a prescription 
                drug pursuant to practices that promote the public 
                health, as determined by the Secretary by regulation.
            ``(3) Qualifying medical relationship.--
                    ``(A) In general.--With respect to issuing a 
                prescription for a drug for a patient, a practitioner 
                has a qualifying medical relationship with the patient 
                for purposes of this section if--
                            ``(i) at least one in-person medical 
                        evaluation of the patient has been conducted by 
                        the practitioner; or
                            ``(ii) the practitioner conducts a medical 
                        evaluation of the patient as a covering 
                        practitioner.
                    ``(B) In-person medical evaluation.--A medical 
                evaluation by a practitioner is an in-person medical 
                evaluation for purposes of this section if the 
                practitioner is in the physical presence of the patient 
                as part of conducting the evaluation, without regard to 
                whether portions of the evaluation are conducted by 
                other health professionals.
                    ``(C) Covering practitioner.--With respect to a 
                patient, a practitioner is a covering practitioner for 
                purposes of this section if the practitioner conducts a 
                medical evaluation of the patient at the request of a 
                practitioner who has conducted at least one in-person 
                medical evaluation of the patient and is temporarily 
                unavailable to conduct the evaluation of the patient. A 
                practitioner is a covering practitioner without regard 
                to whether the practitioner has conducted any in-person 
                medical evaluation of the patient involved.
            ``(4) Rules of construction.--
                    ``(A) Individuals represented as practitioners.--A 
                person who is not a practitioner (as defined in 
                subsection (e)(1)) lacks legal capacity under this 
                section to have a qualifying medical relationship with 
                any patient.
                    ``(B) Standard practice of pharmacy.--Paragraph (1) 
                may not be construed as prohibiting any conduct that is 
                a standard practice in the practice of pharmacy.
                    ``(C) Applicability of requirements.--Paragraph (3) 
                may not be construed as having any applicability beyond 
                this section, and does not affect any State law, or 
                interpretation of State law, concerning the practice of 
                medicine.
    ``(c) Actions by States.--
            ``(1) In general.--Whenever an attorney general of any 
        State has reason to believe that the interests of the residents 
        of that State have been or are being threatened or adversely 
        affected because any person has engaged or is engaging in a 
        pattern or practice that violates section 301(l), the State may 
        bring a civil action on behalf of its residents in an 
        appropriate district court of the United States to enjoin such 
        practice, to enforce compliance with such section (including a 
        nationwide injunction), to obtain damages, restitution, or 
        other compensation on behalf of residents of such State, to 
        obtain reasonable attorneys fees and costs if the State 
        prevails in the civil action, or to obtain such further and 
        other relief as the court may deem appropriate.
            ``(2) Notice.--The State shall serve prior written notice 
        of any civil action under paragraph (1) or (5)(B) upon the 
        Secretary and provide the Secretary with a copy of its 
        complaint, except that if it is not feasible for the State to 
        provide such prior notice, the State shall serve such notice 
        immediately upon instituting such action. Upon receiving a 
        notice respecting a civil action, the Secretary shall have the 
        right--
                    ``(A) to intervene in such action;
                    ``(B) upon so intervening, to be heard on all 
                matters arising therein; and
                    ``(C) to file petitions for appeal.
            ``(3) Construction.--For purposes of bringing any civil 
        action under paragraph (1), nothing in this chapter shall 
        prevent an attorney general of a State from exercising the 
        powers conferred on the attorney general by the laws of such 
        State to conduct investigations or to administer oaths or 
        affirmations or to compel the attendance of witnesses or the 
        production of documentary and other evidence.
            ``(4) Venue; service of process.--Any civil action brought 
        under paragraph (1) in a district court of the United States 
        may be brought in the district in which the defendant is found, 
        is an inhabitant, or transacts business or wherever venue is 
        proper under section 1391 of title 28, United States Code. 
        Process in such an action may be served in any district in 
        which the defendant is an inhabitant or in which the defendant 
        may be found.
            ``(5) Actions by other state officials.--
                    ``(A) Nothing contained in this section shall 
                prohibit an authorized State official from proceeding 
                in State court on the basis of an alleged violation of 
                any civil or criminal statute of such State.
                    ``(B) In addition to actions brought by an attorney 
                general of a State under paragraph (1), such an action 
                may be brought by officers of such State who are 
                authorized by the State to bring actions in such State 
                on behalf of its residents.
    ``(d) Effect of Section.--This section shall not apply to a person 
that is a registered exporter under section 804.
    ``(e) General Definitions.--For purposes of this section:
            ``(1) The term `practitioner' means a practitioner referred 
        to in section 503(b)(1) with respect to issuing a written or 
        oral prescription.
            ``(2) The term `prescription drug' means a drug that is 
        described in section 503(b)(1).
            ``(3) The term `qualifying medical relationship', with 
        respect to a practitioner and a patient, has the meaning 
        indicated for such term in subsection (b).
    ``(f) Internet-Related Definitions.--
            ``(1) In general.--For purposes of this section:
                    ``(A) The term `Internet' means collectively the 
                myriad of computer and telecommunications facilities, 
                including equipment and operating software, which 
                comprise the interconnected world-wide network of 
                networks that employ the transmission control protocol/
                internet protocol, or any predecessor or successor 
                protocols to such protocol, to communicate information 
                of all kinds by wire or radio.
                    ``(B) The term `link', with respect to the 
                Internet, means one or more letters, words, numbers, 
                symbols, or graphic items that appear on a page of an 
                Internet site for the purpose of serving, when 
                activated, as a method for executing an electronic 
                command--
                            ``(i) to move from viewing one portion of a 
                        page on such site to another portion of the 
                        page;
                            ``(ii) to move from viewing one page on 
                        such site to another page on such site; or
                            ``(iii) to move from viewing a page on one 
                        Internet site to a page on another Internet 
                        site.
                    ``(C) The term `page', with respect to the 
                Internet, means a document or other file accessed at an 
                Internet site.
                    ``(D)(i) The terms `site' and `address', with 
                respect to the Internet, mean a specific location on 
                the Internet that is determined by Internet Protocol 
                numbers. Such term includes the domain name, if any.
                    ``(ii) The term `domain name' means a method of 
                representing an Internet address without direct 
                reference to the Internet Protocol numbers for the 
                address, including methods that use designations such 
                as `.com', `.edu', `.gov', `.net', or `.org'.
                    ``(iii) The term `Internet Protocol numbers' 
                includes any successor protocol for determining a 
                specific location on the Internet.
            ``(2) Authority of secretary.--The Secretary may by 
        regulation modify any definition under paragraph (1) to take 
        into account changes in technology.
    ``(g) Interactive Computer Service; Advertising.--No provider of an 
interactive computer service, as defined in section 230(f)(2) of the 
Communications Act of 1934 (47 U.S.C. 230(f)(2)), or of advertising 
services shall be liable under this section for dispensing or selling 
prescription drugs in violation of this section on account of another 
person's selling or dispensing such drugs, provided that the provider 
of the interactive computer service or of advertising services does not 
own or exercise corporate control over such person.''.
    (b) Inclusion as Prohibited Act.--Section 301 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 331) is amended by inserting after 
paragraph (k) the following:
    ``(l) The dispensing or selling of a prescription drug in violation 
of section 503C.''.
    (c) Internet Sales of Prescription Drugs; Consideration by 
Secretary of Practices and Procedures for Certification of Legitimate 
Businesses.--In carrying out section 503C of the Federal Food, Drug, 
and Cosmetic Act (as added by subsection (a) of this section), the 
Secretary of Health and Human Services shall take into consideration 
the practices and procedures of public or private entities that certify 
that businesses selling prescription drugs through Internet sites are 
legitimate businesses, including practices and procedures regarding 
disclosure formats and verification programs.
    (d) Reports Regarding Internet-Related Violations of Federal and 
State Laws on Dispensing of Drugs.--
            (1) In general.--The Secretary of Health and Human Services 
        (referred to in this subsection as the ``Secretary'') shall, 
        pursuant to the submission of an application meeting the 
        criteria of the Secretary, make an award of a grant or contract 
        to the National Clearinghouse on Internet Prescribing (operated 
        by the Federation of State Medical Boards) for the purpose of--
                    (A) identifying Internet sites that appear to be in 
                violation of Federal or State laws concerning the 
                dispensing of drugs;
                    (B) reporting such sites to State medical licensing 
                boards and State pharmacy licensing boards, and to the 
                Attorney General and the Secretary, for further 
                investigation; and
                    (C) submitting, for each fiscal year for which the 
                award under this subsection is made, a report to the 
                Secretary describing investigations undertaken with 
                respect to violations described in subparagraph (A).
            (2) Authorization of appropriations.--For the purpose of 
        carrying out paragraph (1), there is authorized to be 
        appropriated $100,000 for each of the first 3 fiscal years in 
        which this section is in effect.
    (e) Effective Date.--The amendments made by subsections (a) and (b) 
take effect 90 days after the date of enactment of this Act, without 
regard to whether a final rule to implement such amendments has been 
promulgated by the Secretary of Health and Human Services under section 
701(a) of the Federal Food, Drug, and Cosmetic Act. The preceding 
sentence may not be construed as affecting the authority of such 
Secretary to promulgate such a final rule.

SEC. 306. PROHIBITING PAYMENTS TO UNREGISTERED FOREIGN PHARMACIES.

    (a) In General.--Section 303 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 333) is amended by adding at the end the 
following:
    ``(h) Restricted Transactions.--
            ``(1) In general.--The introduction of restricted 
        transactions into a payment system or the completion of 
        restricted transactions using a payment system is prohibited.
            ``(2) Payment system.--
                    ``(A) In general.--The term `payment system' means 
                a system used by a person described in subparagraph (B) 
                to effect a credit transaction, electronic fund 
                transfer, or money transmitting service that may be 
                used in connection with, or to facilitate, a restricted 
                transaction, and includes--
                            ``(i) a credit card system;
                            ``(ii) an international, national, 
                        regional, or local network used to effect a 
                        credit transaction, an electronic fund 
                        transfer, or a money transmitting service; and
                            ``(iii) any other system that is centrally 
                        managed and is primarily engaged in the 
                        transmission and settlement of credit 
                        transactions, electronic fund transfers, or 
                        money transmitting services.
                    ``(B) Persons described.--A person referred to in 
                subparagraph (A) is--
                            ``(i) a creditor;
                            ``(ii) a credit card issuer;
                            ``(iii) a financial institution;
                            ``(iv) an operator of a terminal at which 
                        an electronic fund transfer may be initiated;
                            ``(v) a money transmitting business; or
                            ``(vi) a participant in an international, 
                        national, regional, or local network used to 
                        effect a credit transaction, electronic fund 
                        transfer, or money transmitting service.
            ``(3) Restricted transaction.--The term `restricted 
        transaction' means a transaction or transmittal, on behalf of 
        an individual who places an unlawful drug importation request 
        to any person engaged in the operation of an unregistered 
        foreign pharmacy, of--
                    ``(A) credit, or the proceeds of credit, extended 
                to or on behalf of the individual for the purpose of 
                the unlawful drug importation request (including credit 
                extended through the use of a credit card);
                    ``(B) an electronic fund transfer or funds 
                transmitted by or through a money transmitting 
                business, or the proceeds of an electronic fund 
                transfer or money transmitting service, from or on 
                behalf of the individual for the purpose of the 
                unlawful drug importation request;
                    ``(C) a check, draft, or similar instrument which 
                is drawn by or on behalf of the individual for the 
                purpose of the unlawful drug importation request and is 
                drawn on or payable at or through any financial 
                institution; or
                    ``(D) the proceeds of any other form of financial 
                transaction (identified by the Board by regulation) 
                that involves a financial institution as a payor or 
                financial intermediary on behalf of or for the benefit 
                of the individual for the purpose of the unlawful drug 
                importation request.
            ``(4) Unlawful drug importation request.--The term 
        `unlawful drug importation request' means the request, or 
        transmittal of a request, made to an unregistered foreign 
        pharmacy for a prescription drug by mail (including a private 
        carrier), facsimile, phone, or electronic mail, or by a means 
        that involves the use, in whole or in part, of the Internet.
            ``(5) Unregistered foreign pharmacy.--The term 
        `unregistered foreign pharmacy' means a person in a country 
        other than the United States that is not a registered exporter 
        under section 804.
            ``(6) Other definitions.--
                    ``(A) Credit; creditor; credit card.--The terms 
                `credit', `creditor', and `credit card' have the 
                meanings given the terms in section 103 of the Truth in 
                Lending Act (15 U.S.C. 1602).
                    ``(B) Access device; electronic fund transfer.--The 
                terms `access device' and `electronic fund transfer'--
                            ``(i) have the meaning given the term in 
                        section 903 of the Electronic Fund Transfer Act 
                        (15 U.S.C. 1693a); and
                            ``(ii) the term `electronic fund transfer' 
                        also includes any fund transfer covered under 
                        Article 4A of the Uniform Commercial Code, as 
                        in effect in any State.
                    ``(C) Financial institution.--The term `financial 
                institution'--
                            ``(i) has the meaning given the term in 
                        section 903 of the Electronic Transfer Fund Act 
                        (15 U.S.C. 1693a); and
                            ``(ii) includes a financial institution (as 
                        defined in section 509 of the Gramm-Leach-
                        Bliley Act (15 U.S.C. 6809)).
                    ``(D) Money transmitting business; money 
                transmitting service.--The terms `money transmitting 
                business' and `money transmitting service' have the 
                meaning given the terms in section 5330(d) of title 31, 
                United States Code.
                    ``(E) Board.--The term `Board' means the Board of 
                Governors of the Federal Reserve System.
            ``(7) Policies and procedures required to prevent 
        restricted transactions.--
                    ``(A) Regulations.--The Board shall promulgate 
                regulations requiring--
                            ``(i) an operator of a credit card system;
                            ``(ii) an operator of an international, 
                        national, regional, or local network used to 
                        effect a credit transaction, an electronic fund 
                        transfer, or a money transmitting service;
                            ``(iii) an operator of any other payment 
                        system that is centrally managed and is 
                        primarily engaged in the transmission and 
                        settlement of credit transactions, electronic 
                        transfers or money transmitting services where 
                        at least one party to the transaction or 
                        transfer is an individual; and
                            ``(iv) any other person described in 
                        paragraph (2)(B) and specified by the Board in 
                        such regulations,
                to establish policies and procedures that are 
                reasonably designed to prevent the introduction of a 
                restricted transaction into a payment system or the 
                completion of a restricted transaction using a payment 
                system.
                    ``(B) Requirements for policies and procedures.--In 
                promulgating regulations under subparagraph (A), the 
                Board shall--
                            ``(i) identify types of policies and 
                        procedures, including nonexclusive examples, 
                        that shall be considered to be reasonably 
                        designed to prevent the introduction of 
                        restricted transactions into a payment system 
                        or the completion of restricted transactions 
                        using a payment system; and
                            ``(ii) to the extent practicable, permit 
                        any payment system, or person described in 
                        paragraph (2)(B), as applicable, to choose 
                        among alternative means of preventing the 
                        introduction or completion of restricted 
                        transactions.
                    ``(C) No liability for blocking or refusing to 
                honor restricted transaction.--
                            ``(i) In general.--A payment system, or a 
                        person described in paragraph (2)(B) that is 
                        subject to a regulation issued under this 
                        subsection, and any participant in such payment 
                        system that prevents or otherwise refuses to 
                        honor transactions in an effort to implement 
                        the policies and procedures required under this 
                        subsection or to otherwise comply with this 
                        subsection shall not be liable to any party for 
                        such action.
                            ``(ii) Compliance.--A person described in 
                        paragraph (2)(B) meets the requirements of this 
                        subsection if the person relies on and complies 
                        with the policies and procedures of a payment 
                        system of which the person is a member or in 
                        which the person is a participant, and such 
                        policies and procedures of the payment system 
                        comply with the requirements of the regulations 
                        promulgated under subparagraph (A).
                    ``(D) Enforcement.--
                            ``(i) In general.--This section shall be 
                        enforced by the Federal functional regulators 
                        and the Federal Trade Commission under 
                        applicable law in the manner provided in 
                        section 505(a) of the Gramm-Leach-Bliley Act 
                        (15 U.S.C. 6805(a)).
                            ``(ii) Factors to be considered.--In 
                        considering any enforcement action under this 
                        subsection against a payment system or person 
                        described in paragraph (2)(B), the Federal 
                        functional regulators and the Federal Trade 
                        Commission shall consider the following 
                        factors:
                                    ``(I) The extent to which the 
                                payment system or person knowingly 
                                permits restricted transactions.
                                    ``(II) The history of the payment 
                                system or person in connection with 
                                permitting restricted transactions.
                                    ``(III) The extent to which the 
                                payment system or person has 
                                established and is maintaining policies 
                                and procedures in compliance with 
                                regulations prescribed under this 
                                subsection.
            ``(8) Transactions permitted.--A payment system, or a 
        person described in paragraph (2)(B) that is subject to a 
        regulation issued under this subsection, is authorized to 
        engage in transactions with foreign pharmacies in connection 
        with investigating violations or potential violations of any 
        rule or requirement adopted by the payment system or person in 
        connection with complying with paragraph (7). A payment system, 
        or such a person, and its agents and employees shall not be 
        found to be in violation of, or liable under, any Federal, 
        State or other law by virtue of engaging in any such 
        transaction.
            ``(9) Relation to state laws.--No requirement, prohibition, 
        or liability may be imposed on a payment system, or a person 
        described in paragraph (2)(B) that is subject to a regulation 
        issued under this subsection, under the laws of any State with 
        respect to any payment transaction by an individual because the 
        payment transaction involves a payment to a foreign pharmacy.
            ``(10) Timing of requirements.--A payment system, or a 
        person described in paragraph (2)(B) that is subject to a 
        regulation issued under this subsection, must adopt policies 
        and procedures reasonably designed to comply with any 
        regulations required under paragraph (7) within 60 days after 
        such regulations are issued in final form.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the day that is 90 days after the date of enactment of this 
Act.
    (c) Implementation.--The Board of Governors of the Federal Reserve 
System shall promulgate regulations as required by subsection (h)(7) of 
section 303 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
333), as added by subsection (a), not later than 90 days after the date 
of enactment of this Act.

SEC. 307. IMPORTATION EXEMPTION UNDER CONTROLLED SUBSTANCES IMPORT AND 
              EXPORT ACT.

    Section 1006(a)(2) of the Controlled Substances Import and Export 
Act (21 U.S.C. 956(a)(2)) is amended by striking ``not import the 
controlled substance into the United States in an amount that exceeds 
50 dosage units of the controlled substance.'' and inserting ``import 
into the United States not more than 10 dosage units combined of all 
such controlled substances.''.

SEC. 308. SEVERABILITY.

    If any provision of this Act, an amendment by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of the provisions 
of such to any person or circumstance shall not affected thereby.

           TITLE IV--ADDITIONAL PRESCRIPTION DRUGS PROVISIONS

SEC. 401. DISALLOWANCE OF DEDUCTION FOR ADVERTISING AND PROMOTIONAL 
              EXPENSES FOR PRESCRIPTION PHARMACEUTICALS.

    (a) In General.--Part IX of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items not deductible) is 
amended by adding at the end the following new section:

``SEC. 280I. DISALLOWANCE OF DEDUCTION FOR PRESCRIPTION PHARMACEUTICALS 
              ADVERTISING AND PROMOTIONAL EXPENSES.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for expenses relating to advertising or promoting the sale and use of 
prescription pharmaceuticals for any taxable year.
    ``(b) Advertising or Promoting.--For purposes of this section, the 
term `advertising or promoting' includes direct to consumer advertising 
in any media and any activity designed to promote the use of a 
prescription pharmaceutical directed to providers or others who may 
make decisions about the use of prescription pharmaceuticals (including 
the provision of product samples, free trials, and starter kits).''.
    (b) Conforming Amendment.--The table of sections for such part IX 
is amended by adding after the item relating to section 280H the 
following new item:

``Sec. 280I. Disallowance of deduction for prescription pharmaceuticals 
                            advertising and promotional expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act, in taxable years ending after such date.

SEC. 402. INTEGRITY FOR PHARMACY BENEFIT MANAGERS.

    (a) Standards.--A pharmacy benefit manager with a contract with a 
health benefits plan (as such term is defined in section 101) shall, 
with respect to such plan, comply with fiduciary standards established, 
by regulation, by the Secretary of Health and Human Services, that are 
consistent with the provisions of this section.
    (b) Disclosure.--Under such standards, a pharmacy benefit manager 
shall, upon request by the health benefits plan--
            (1) provide all available financial information to such 
        plan regarding its enrollees; and
            (2) disclose to the sponsor of such plan all the rebates 
        and other discounts that the pharmacy benefit manager receives 
        from drug manufacturers, with respect to drugs dispensed to 
        enrollees of such plan.
    (c) Non-disclosure.--A pharmacy benefit manager that is owned by, 
owns, or is otherwise affiliated with a retail pharmacy may not share 
with such affiliated retail pharmacy data on plan enrollees or other 
individuals that is obtained from claims submitted by other pharmacies.
    (d) Notice of Drug Interchanges.--
            (1) In general.--Under the standards under subsection (a), 
        pharmacy benefit manager shall provide notice to a plan 
        enrollee if the pharmacy benefit manager is switching the 
        enrollee from a lower cost drug to a higher cost drug.
            (2) Contents.--Such notice shall contain--
                    (A) an explanation of the reason for the switch;
                    (B) the difference in cost between the 2 drugs; and
                    (C) whether a lower cost generic is available.
    (e) Additional Disclosures.--Under the standards under subsection 
(a), a pharmacy benefit manager shall disclose to the health benefits 
plan the actual reimbursement amount that is paid to the pharmacy for a 
prescription or service by the pharmacy benefit manager that is covered 
under such plan.
    (f) Equal Reimbursements for Mail Order and Retail.--Under the 
standards under subsection (a), a pharmacy benefit manager shall 
reimburse mail order and retail pharmacies at the same rates--
            (1) for identical prescription drugs; and
            (2) for identical services.
    (g) Elimination of Spread Pricing.--Under the standards under 
subsection (a), with respect to a prescription drug that is covered by 
a health benefits plan and dispensed to a plan participant or 
beneficiary, a pharmacy benefit manager may not pay such pharmacy an 
amount that is less than the amount that is paid to the pharmacy 
benefit manager by such plan for such drug and any related dispensing 
fee.
    (h) Equal Copays.--Under the standards under subsection (a), a 
pharmacy benefit manager may not require that a participant or 
beneficiary of a health benefits plan pay a different co-payment amount 
for a drug dispensed at a retail pharmacy, compared to the co-payment 
amount that would be charged to such participant or beneficiary for the 
same amount of that drug at a mail order pharmacy.
    (i) Computation of Co-Payment Amounts.--Under the standards under 
subsection (a), a pharmacy benefit manager shall determine the co-
payment amount charged a participant or beneficiary of a health 
benefits plan for a drug covered by the plan based on the amount that 
the plan or pharmacy benefit manager reimburses the pharmacy for such 
drug (including any applicable dispensing fee). Such co-payment amount 
may not be determined based on the amount that the plan pays to the 
pharmacy benefit manager for such drug.
    (j) Enforcement.--In the regulations issued under subsection (a), 
the Secretary shall specify the sanctions which shall apply to health 
benefits plans and issuers of health insurance coverage under such 
plans that contract with pharmacy benefit managers that fail to comply 
with the standards under subsection (a). Such sanctions shall include 
the following:
            (1) Restriction on federal contracting.--The health 
        benefits plan issuer shall not be eligible to contract with a 
        Federal program, including Medicare under title XVIII of the 
        Social Security Act and the Federal Employees Health Benefits 
        Plan under chapter 89 of title 5, United States Code.
            (2) Civil monetary penalties.--A health benefits plan or an 
        issuer of such plan may be subject to a civil monetary penalty 
        not to exceed $1,000.00 for each day that the pharmacy benefit 
        manager is in an contract with the health benefits plan or 
        issuer and such pharmacy benefit manager fails to comply with 
        the standards under subsection (a).
    (k) Pharmacy Benefit Manager Defined.--The term ``pharmacy benefit 
manager'' means any entity that provides pharmacy benefit management 
services on behalf of a health benefits plan.
    (l) Effective Date.--This section shall take effect on January 1, 
2011.

SEC. 403. PRICE INFORMATION UNDER MEDICAID.

    (a) Disclosure of Information to the Secretary.--Section 1927(b)(3) 
of such Act (42 U.S.C. 1396r-8(b)(3)) is amended--
            (1) in subparagraph (A)--
                    (A) in the first sentence, by inserting after 
                clause (iii) the following clause:
                            ``(iv) not later than 30 days after the 
                        last day of each month of a rebate period under 
                        the agreement, on the manufacturer's total 
                        number of units that are used to calculate the 
                        monthly average manufacturer price for each 
                        covered outpatient drug;''; and
                    (B) in the second sentence, by inserting 
                ``(relating to the weighted average of the most 
                recently reported monthly average manufacturer 
                prices)'' after ``(D)(v)''; and
            (2) in subparagraph (D)(v), by striking ``average 
        manufacturer prices'' and inserting ``the weighted average of 
        the most recently reported monthly average manufacturer prices 
        and the average retail survey price determined for each 
        multiple source drug in accordance with subsection (f)''.
    (b) Clarification of Application of Survey of Retail Prices.--
Section 1927(f)(1) of such Act (4222 U.S.C. 1396r-8(b)(1)) is amended--
            (1) in subparagraph (A)(i), by inserting ``with respect to 
        a retail community pharmacy,'' before ``the determination''; 
        and
            (2) in subparagraph (C)(ii), by striking ``retail 
        pharmacies'' and inserting ``retail community pharmacies''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the first day of the first calendar year quarter that begins 
at least 180 days after the date of enactment of this Act, without 
regard to whether or not final regulations to carry out such amendments 
have been promulgated by such date.
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