I 

115TH CONGRESS 

2D SESSION H. R. 7348 

To amend the Public Health Service Act to establish an Office of Drug 

Manufacturing. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 19, 2018 

Ms. SCHAKOWSKY introduced the following bill; which was referred to the 

Committee on Energy and Commerce 

A BILL 

To amend the Public Health Service Act to establish an 

Office of Drug Manufacturing. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Affordable Drug Man5 ufacturing Act of 2018’’. 

6 SEC. 2. PUBLIC MANUFACTURING OF PHARMACEUTICALS. 

7 Part A of title III of the Public Health Service Act 

8 (42 U.S.C. 241 et seq.) is amended by adding at the end 

9 the following: 


pbinns on DSK79D2C42PROD with BILLS
2 

•HR 7348 IH

1 ‘‘SEC. 310B. MANUFACTURING OF DRUGS. 

2 ‘‘(a) ESTABLISHMENT OF OFFICE OF DRUG MANU3 FACTURING.— 

4 ‘‘(1) IN GENERAL.—There is established within 

5 the Department of Health and Human Services an 

6 office to be known as the Office of Drug Manufac7 turing (referred to in this section as the ‘Office’). 

8 ‘‘(2) PURPOSE.—The purpose of the Office is— 

9 ‘‘(A) to increase competition, lower prices, 

10 and address shortages in the market for pre11 scription drugs, including insulin; 

12 ‘‘(B) to reduce the cost of prescription 

13 drugs to Federal and State health programs, 

14 taxpayers, and consumers; and 

15 ‘‘(C) to increase patient access to afford16 able drugs. 

17 ‘‘(3) PERSONNEL.— 

18 ‘‘(A) DIRECTOR.— 

19 ‘‘(i) IN GENERAL.—The Office shall 

20 be headed by a Director, who shall be ap21 pointed by the President, by and with the 

22 advice and consent of the Senate. 

23 ‘‘(ii) COMPENSATION.—The Director 

24 shall be compensated at the rate prescribed 

25 for level III of the Executive Schedule. 


pbinns on DSK79D2C42PROD with BILLS
3 

•HR 7348 IH

1 ‘‘(B) EMPLOYEES.—The Director of the 

2 Office, in consultation with the Secretary, may 

3 fix the number of, and appoint and direct, all 

4 employees of the Office. 

5 ‘‘(C) BANNED INDIVIDUALS.— 

6 ‘‘(i) DRUG COMPANY LOBBYISTS.—No 

7 former registered drug manufacturer lob8 byist— 

9 ‘‘(I) may be appointed to the po10 sition of Director of the Office; or 

11 ‘‘(II) may be employed by the Of12 fice during the 6-year period begin13 ning on the date on which the reg14 istered lobbyist terminates its reg15 istration in accordance with section 

16 4(d) of the Lobbying Disclosure Act 

17 of 1995 (2 U.S.C. 1603(d)) or the 

18 agent terminates its status, as appli19 cable. 

20 ‘‘(ii) SENIOR EXECUTIVES OF LAW21 BREAKING COMPANIES.—No former senior 

22 executive of a covered entity (as defined in 

23 clause (iii))— 

24 ‘‘(I) may be appointed to the po25 sition of Director of the Office; or 


pbinns on DSK79D2C42PROD with BILLS
4 

•HR 7348 IH

1 ‘‘(II) may be employed by the Of2 fice during the 6-year period begin3 ning on the later of— 

4 ‘‘(aa) the date of the settle5 ment; and 

6 ‘‘(bb) the date on which the 

7 enforcement action has con8 cluded. 

9 ‘‘(iii) COVERED ENTITY.—The term 

10 ‘covered entity’ means any entity that is— 

11 ‘‘(I) a drug manufacturer; and 

12 ‘‘(II)(aa) operating under Fed13 eral settlement, including a Federal 

14 consent decree; or 

15 ‘‘(bb) the subject of an enforce16 ment action in a court of the United 

17 States or by an agency. 

18 ‘‘(4) DUTIES.— 

19 ‘‘(A) IN GENERAL.—The Office shall— 

20 ‘‘(i) prepare and submit applications 

21 for approval to the Food and Drug Admin22 istration, or enter into contracts for such 

23 submission, for the manufacture of appli24 cable drugs when authorized under this 

25 section; 


pbinns on DSK79D2C42PROD with BILLS
5 

•HR 7348 IH

1 ‘‘(ii) acquire rights to manufacture 

2 applicable drugs as authorized under this 

3 section; 

4 ‘‘(iii) manufacture, or enter into con5 tracts with entities to manufacture, appli6 cable drugs as authorized under this sec7 tion; 

8 ‘‘(iv) determine a fair price for each 

9 applicable drug, in accordance with sub10 paragraph (B); 

11 ‘‘(v) sell manufactured applicable 

12 drugs at a fair price as authorized under 

13 this section; and 

14 ‘‘(vi) manufacture, or enter into con15 tracts with entities to manufacture, active 

16 pharmaceutical ingredients for use by the 

17 Office or for sale to other entities. 

18 ‘‘(B) FAIR PRICE.—In determining a fair 

19 price for an applicable drug under subpara20 graph (A)(iv) the Office shall consider— 

21 ‘‘(i) the impact of price on patient ac22 cess to the applicable drug; 

23 ‘‘(ii) the cost of the applicable drug to 

24 Federal or State health care programs; 


pbinns on DSK79D2C42PROD with BILLS
6 

•HR 7348 IH

1 ‘‘(iii) the cost to the Federal Govern2 ment of manufacturing the applicable 

3 drug; 

4 ‘‘(iv) the administrative costs of oper5 ating the Office; 

6 ‘‘(v) the cost to acquire or manufac7 ture applicable drugs under this section; 

8 and 

9 ‘‘(vi) the impact of price on market 

10 competition for the applicable drug. 

11 ‘‘(C) ACQUIRING RIGHT TO MANUFACTURE

12 AND MARKET.—The Office may acquire the 

13 rights to manufacture and market applicable 

14 drugs as authorized under this section. 

15 ‘‘(D) ACTIVE PHARMACEUTICAL INGREDI16 ENTS.— 

17 ‘‘(i) IN GENERAL.—The Office shall 

18 manufacture, or enter into contracts with 

19 entities to manufacture, an active pharma20 ceutical ingredient if— 

21 ‘‘(I) the Office determines that 

22 such ingredient is not readily available 

23 from existing suppliers; 

24 ‘‘(II) the manufacture of such in25 gredient would improve the ability of 


pbinns on DSK79D2C42PROD with BILLS
7 

•HR 7348 IH

1 other entities to enter the market for 

2 the manufacture of generic drugs or 

3 otherwise expand the manufacture of 

4 generic drugs; or 

5 ‘‘(III) the manufacture of such 

6 ingredient is necessary for the Office 

7 to carry out its duties under this sec8 tion. 

9 ‘‘(ii) PRICE DETERMINATIONS.—In 

10 determining what price at which to sell an 

11 active pharmaceutical ingredient under 

12 clause (i), the Office shall consider the cost 

13 to manufacture the ingredient, the admin14 istrative costs of the Office with respect to 

15 the ingredient, and the impact of such 

16 price on market competition for the ingre17 dient. 

18 ‘‘(5) REPORTS TO CONGRESS.—The Director 

19 shall prepare and submit to the President, the Com20 mittee on Health, Education, Labor, and Pensions 

21 of the Senate, and the Committee on Energy and 

22 Commerce of the House of Representatives, an an23 nual report that includes— 


pbinns on DSK79D2C42PROD with BILLS
8 

•HR 7348 IH

1 ‘‘(A) an assessment of the major problems 

2 faced by patients in accessing affordable generic 

3 medications; 

4 ‘‘(B) a description of the status of all 

5 medications for which manufacturing has been 

6 authorized under this section, including medica7 tions being manufactured, medications for 

8 which the Office has submitted an application 

9 to the Food and Drug Administration but has 

10 not yet received approval, and medications for 

11 which the Office has received approval from the 

12 Food and Drug Administration but are not 

13 being manufactured; and 

14 ‘‘(C) an analysis of how the public manu15 facture of drugs meeting the conditions de16 scribed in paragraph (6) would impact, or has 

17 already impacted, competition, access to such 

18 drugs, the costs of such drugs, the costs of pre19 scription drugs to Federal and State health pro20 grams, and public health. 

21 ‘‘(6) PRIORITY MANUFACTURING.—The Office 

22 shall prioritize the manufacturing of those applicable 

23 drugs that would have the greatest impact on— 

24 ‘‘(A) lowering drug costs to patients; 


pbinns on DSK79D2C42PROD with BILLS
9 

•HR 7348 IH

1 ‘‘(B) increasing competition and address2 ing shortages in the prescription drug market; 

3 ‘‘(C) improving public health; or 

4 ‘‘(D) reducing the cost of prescription 

5 drugs to Federal and State health programs. 

6 ‘‘(7) MANUFACTURING LEVELS.—Not later 

7 than 1 year after the date of enactment of this sec8 tion, the Office shall manufacture, or enter into con9 tracts with entities for the manufacture, of not less 

10 than 15 applicable drugs. Not later than 3 years 

11 after such date of enactment, the Office shall manu12 facture, or enter into contracts with entities for the 

13 manufacture, of not less than 25 applicable drugs. 

14 ‘‘(b) SUBMISSION OF APPLICATIONS.—For each ap15 plicable drug that the Office determines should be manu16 factured, as provided for under this section, the Secretary 

17 shall— 

18 ‘‘(1) submit an application under section 505(j) 

19 or 515 of the Federal Food, Drug, and Cosmetic Act 

20 or section 351(k) of the Public Health Service Act 

21 or submit a notification under section 510(k) of the 

22 Federal Food, Drug, and Cosmetic Act (or enter 

23 into a contract with another entity to submit such 

24 an application or notification); or 


pbinns on DSK79D2C42PROD with BILLS
10 

•HR 7348 IH

1 ‘‘(2) acquire from the holder of an application 

2 approved under subsection (c) or (j) of section 505 

3 or section 515 of the Federal Food, Drug, and Cos4 metic Act or section 351 of the Public Health Serv5 ice Act, or cleared under section 510(k) of the Fed6 eral Food, Drug, and Cosmetic Act, rights to manu7 facture such applicable drug. 

8 ‘‘(c) USE.— 

9 ‘‘(1) IN GENERAL.—The Secretary shall sell a 

10 drug produced under this section at a fair price to 

11 other entities. Amounts received from the sale of 

12 such drugs shall be used for the activities of the Of13 fice. 

14 ‘‘(2) SALE OF APPROVED APPLICATION.— 

15 ‘‘(A) IN GENERAL.—For any applicable 

16 drug that the Office is manufacturing, the Sec17 retary shall, beginning 3 years after the date on 

18 which the Office first undertakes manufacturing 

19 of such drug and annually thereafter, make 

20 available for sale, to any person who commits to 

21 manufacturing and marketing the applicable 

22 drug, the approved application for the drug. 

23 ‘‘(B) FAILURE TO USE.—If a person pur24 chasing an approved application under subpara25 graph (A)— 


pbinns on DSK79D2C42PROD with BILLS
11 

•HR 7348 IH

1 ‘‘(i) fails to market the applicable 

2 drug within 6 months of the date of such 

3 purchase; or 

4 ‘‘(ii) increases the average manufac5 turer price for the applicable drug above 

6 the fair price (increased by the consumer 

7 price index for all urban consumers (as 

8 published by the Bureau of Labor Statis9 tics) for that year), 

10 the Secretary shall revoke the purchaser’s ap11 proved application and resume production of 

12 the applicable drug. 

13 ‘‘(d) INSULIN.—Not later than 1 year after the date 

14 of enactment of this section, the Secretary shall begin the 

15 public manufacturing of insulin meeting the definition of 

16 applicable drug and in accordance with this section. 

17 ‘‘(e) APPLICABLE DRUG.—In this section, the term 

18 ‘applicable drug’ means a drug (as defined in section 201 

19 of the Federal Food, Drug, and Cosmetic Act), biological 

20 product (as defined in section 351 of the Public Health 

21 Service Act), or combination product (as described in sec22 tion 503(g) of the Federal Food, Drug, and Cosmetic Act) 

23 for which an approved application under section 505 or 

24 515 of the Federal Food, Drug, and Cosmetic Act or sec25 tion 351 of the Public Health Service Act, or clearance 


pbinns on DSK79D2C42PROD with BILLS
12 

•HR 7348 IH

1 under section 510(k) of the Federal Food, Drug, and Cos2 metic Act, is in effect, and— 

3 ‘‘(1)(A) for which, with respect to a drug in4 cluded in the list described in section 505(j)(7) of 

5 the Federal Food, Drug, and Cosmetic Act, each 

6 patent included with respect to such drug in such 

7 list has expired, or each patent that claims a biologi8 cal product has expired; 

9 ‘‘(B) any period of regulatory exclusivity grant10 ed under— 

11 ‘‘(i) clause (ii), (iii), or (iv) of section 

12 505(c)(3)(E) of the Federal Food, Drug, and 

13 Cosmetic Act, section 505(j)(5)(B)(iv) of such 

14 Act, clause (ii), (iii), or (iv) of section 

15 505(j)(5)(F) of such Act, section 527 of such 

16 Act, and any extension of such a period granted 

17 under section 505A or 505E of such Act, has 

18 expired; or 

19 ‘‘(ii) paragraph (6) or (7) of section 351(k) 

20 of the Public Health Service Act, and any ex21 tension of such a period granted under para22 graph (2) or (3) of section 351(m) of such Act, 

23 has expired; and 

24 ‘‘(C)(i) that is not being marketed in the 

25 United States; or 


pbinns on DSK79D2C42PROD with BILLS
13 

•HR 7348 IH

1 ‘‘(ii) that is being marketed in the United 

2 States by fewer than 3 manufacturers, and that— 

3 ‘‘(I) in the previous 1-year period, has ex4 perienced a price increase that is greater than 

5 the medical component of the consumer price 

6 index for the same period; 

7 ‘‘(II) is included in the drug shortage list 

8 under section 506E of the Federal Food, Drug, 

9 and Cosmetic Act; or 

10 ‘‘(III)(aa) has an average manufacturer 

11 price that the Secretary determines to be a bar12 rier to patient access; and 

13 ‘‘(bb) is listed by the World Health Orga14 nization as an essential medicine; or 

15 ‘‘(2) for which there is in effect a license, or 

16 patent use is authorized, under— 

17 ‘‘(A) section 1498 of title 28, United 

18 States Code; 

19 ‘‘(B) section 202 of title 35, United States 

20 Code; 

21 ‘‘(C) section 203 of title 35, United States 

22 Code (march-in rights); 

23 ‘‘(D) section 209 of title 35, United States 

24 Code; or 


pbinns on DSK79D2C42PROD with BILLS
14 

•HR 7348 IH

1 ‘‘(E) any other licensing authority of the 

2 Federal Government. 

3 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

4 are authorized to be appropriated such sums as may be 

5 necessary to carry out this section.’’. 

Æ 


pbinns on DSK79D2C42PROD with BILLS