I 

117TH CONGRESS 

1ST SESSION H. R. 2870 

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

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

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 28, 2021 

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

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

Commerce 

A BILL 

To amend the Public Health Service Act to provide for 

stockpiles to ensure that all Americans have access to 

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

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

3 SECTION 1. SHORT TITLE. 

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

5 Strategic Stockpile Act of 2021’’. 


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

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

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

6 ‘‘Subpart XIII—Ensuring Medication Supply Stability 

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

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

9 than January 1, 2022, the Secretary shall award contracts 

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

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

15 ‘‘(2) is of sufficient quantity to ensure that cus16 tomers in the United States have access to such 

17 drugs for at least 6 months (as specified by the Sec18 retary based on the historic demand for those 

19 drugs). 

20 ‘‘(b) SELECTION OF DRUGS.— 

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

22 ‘‘(A) select not more than 50 drugs that 

23 may be included by eligible entities in a stock24 pile pursuant to a contract under this section; 

25 and 


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

2 drugs; and 

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

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

6 need not require the stockpile of the eligible entity 

7 to include all 50 drugs listed pursuant to paragraph 

8 (1). 

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

10 listed pursuant to subsection (b)(1), the Secretary shall 

11 specify the quantity of such drug that is sufficient to en12 sure that consumers in the United States have access to 

13 such drug for at least 6 months. 

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

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

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

17 years. 

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

19 held in a stockpile pursuant to a contract under this 

20 section may be liquidated by the eligible entity at the 

21 end of the period of the contract. 

22 ‘‘(e) STOCKPILE REQUIREMENTS.— 

23 ‘‘(1) ENSURING AVAILABILITY OF UNEXPIRED

24 PRODUCTS.—Each eligible entity with a contract 


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1 under this section for a stockpile of generic drugs at 

2 risk of shortage shall— 

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

4 the stockpile has an expiration date at least 1 

5 year beyond the current date; and 

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

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

8 normal commercial channels and replace 

9 those drugs; or 

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

11 for a drug in the stockpile, dispose of the 

12 drug and report such disposal to the Sec13 retary. 

14 ‘‘(2) MANAGEMENT OF STOCKPILE.— 

15 ‘‘(A) IN GENERAL.—The Secretary shall 

16 ensure that— 

17 ‘‘(i) collectively, the eligible entities 

18 with contracts under this section for a 

19 stockpile of generic drugs at risk of short20 age acquire, not later than 6 months fol21 lowing the date set in such contracts, and 

22 maintain thereafter, a 6-month supply of 

23 such drugs; and 

24 ‘‘(ii) the 6-month supply required by 

25 clause (i) is in addition to the average levVerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870

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1 els of inventory held by eligible entities 

2 over the previous year for the respective 

3 drugs. 

4 ‘‘(B) INVENTORY MANAGEMENT.—Each el5 igible entity with a contract under this section 

6 for a stockpile of generic drugs at risk of short7 age shall manage inventory to ensure that 

8 drugs in the stockpile are efficiently cycled to 

9 the commercial market. 

10 ‘‘(C) ANNUAL AUDITS.—Not more than 

11 annually, the Secretary may request a physical 

12 audit count of the inventories of all eligible enti13 ties with a contract under this section to vali14 date that each such entity is maintaining the 

15 appropriate amount of stockpiled inventory. 

16 ‘‘(3) REPORTING.—Each eligible entity with a 

17 contract under this section shall submit reports at 

18 such time and in such manner as the Secretary may 

19 require regarding— 

20 ‘‘(A) current inventory levels of stockpiled 

21 drugs at a drug level; 

22 ‘‘(B) indicators of current inventory levels 

23 of stockpiled drugs relative to acceptable mini24 mums; and 


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

2 determines appropriate. 

3 ‘‘(f) CONTRACT TERMS.— 

4 ‘‘(1) PAYMENT OF MONTHLY FEES FOR MAN5 AGEMENT.—Subject to paragraph (2), the Secretary 

6 shall pay to each eligible entity with a contract 

7 under this section for a stockpile of generic drugs at 

8 risk of shortage appropriate monthly fees for the 

9 management of the stockpile. 

10 ‘‘(2) PAYMENT CONDITIONED ON STOCKPILE

11 ADEQUACY.— 

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

13 subparagraph (B), each contract with an eligi14 ble entity under this section shall provide that 

15 no payment under the contract may be made 

16 until the entity demonstrates to the Secretary 

17 that the entity has stockpiled such portion of 

18 the total quantity of drugs to be stockpiled 

19 under the contract as the Secretary determines 

20 to be acceptable for payment. 

21 ‘‘(B) EXCEPTIONS FOR ADVANCE PAY22 MENTS.— 

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

24 this section may provide that, if the Sec25 retary determines (in the Secretary’s disVerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870

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1 cretion) that an advance payment, partial 

2 payment for significant milestones, or pay3 ment to increase capacity is necessary to 

4 ensure success of the terms of the con5 tract, the Secretary shall pay, in advance 

6 of delivery, an amount not to exceed 10 

7 percent of the total contract amount to be 

8 paid to the eligible entity by the Secretary 

9 pursuant to the contract over the full pe10 riod of the contract. 

11 ‘‘(ii) COST OF CAPITAL.—A contract 

12 under this section may provide for pay13 ments to compensate the contracting eligi14 ble entity for additional capital require15 ments related to the additional inventory 

16 to be maintained. 

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

18 to the extent practicable, make any deter19 mination under clause (i) to make an ad20 vance payment at the same time as the 

21 issuance of a solicitation. 

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

23 makes an advance payment pursuant to 

24 clause (i), the Secretary shall require the 

25 eligible entity receiving such advance payVerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870

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1 ment to repay it if there is a failure to per2 form by the eligible entity. 

3 ‘‘(3) TERMINATION.—Nothing in this section 

4 shall be construed as affecting the rights of eligible 

5 entities under provisions of statute or regulation (in6 cluding the Federal Acquisition Regulation) relating 

7 to the termination of contracts for the convenience 

8 of the Government. 

9 ‘‘(g) CONGRESSIONAL OVERSIGHT.— 

10 ‘‘(1) INDEPENDENT EVALUATION AND RE11 PORT.—Not later than 1 year after the date of en12 actment of this section and annually thereafter, the 

13 Comptroller General of the United States shall con14 duct an independent evaluation, and submit to the 

15 appropriate congressional committees a report, con16 cerning the program under this section. 

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

18 paragraph (1) shall review, assess, and provide rec19 ommendations, as appropriate, on the following: 

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

21 savings as compared to a stockpiling method 

22 that does not incorporate perpetual inventory 

23 cycling. 


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1 ‘‘(B) Identification of drawdowns from the 

2 stockpile, as evidence of market shortage avoid3 ance. 

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

5 the stockpiles funded pursuant to this section to 

6 the customers of the eligible entities with con7 tracts under this section. 

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

9 with contracts under this section fulfilled their 

10 obligations under such contracts. 

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

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

13 that meets each of the following criteria: 

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

15 accordance with applicable Federal and State 

16 law and in good standing with respect to such 

17 licensure or registration. 

18 ‘‘(B) If the entity is not a manufacturer, 

19 the entity agrees— 

20 ‘‘(i) to purchase all drugs to be main21 tained in its stockpile funded under this 

22 section directly from the manufacturers of 

23 the drugs or the exclusive distributors of 

24 such manufacturers; or 


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

2 co-op or chain pharmacy warehouse— 

3 ‘‘(I) to purchase drugs to be 

4 maintained in its stockpile funded 

5 under this section from an authorized 

6 distributor; and 

7 ‘‘(II) distribute those drugs only 

8 to its member pharmacies. 

9 ‘‘(C) The entity sells more than 90 percent 

10 of its drugs to dispensers. 

11 ‘‘(D) The entity agrees to distribute inven12 tory from its stockpile funded under this section 

13 only to wholesale distributors or dispensers that 

14 are customers of the entity. 

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

16 means a drug (as defined in section 201 of the Fed17 eral Food, Drug, and Cosmetic Act) that— 

18 ‘‘(A) is approved pursuant to section 

19 505(j) of such Act; 

20 ‘‘(B) is included in the list of essential 

21 medicines published by the Food and Drug Ad22 ministration; 

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

24 preceding 36 months, on the drug shortage list 


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1 in effect under section 506E of the Federal 

2 Food, Drug, and Cosmetic Act; and 

3 ‘‘(D) is manufactured by 3 or fewer per4 sons that are registered under section 510 of 

5 the Federal Food, Drug, and Cosmetic Act for 

6 purposes of such manufacture. 

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

8 carry out this section, there is authorized to be appro9 priated $120,000,000 for fiscal years 2022 through 2024, 

10 to remain available until expended.’’. 

Æ 


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