H. R. 3204 
One Hundred Thirteenth Congress 
of the 
United States of America 
AT THE FIRST SESSION 
Begun and held at the City of Washington on Thursday, 
the third day of January, two thousand and thirteen 
An Act 
To amend the Federal Food, Drug, and Cosmetic Act with respect to human drug 
compounding and drug supply chain security, 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. SHORT TITLE. 
This Act may be cited as the ‘‘Drug Quality and Security 
Act’’. 
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS. 
(a) REFERENCES IN ACT.—Except as otherwise specified, amend-
ments made by this Act to a section or other provision of law 
are amendments to such section or other provision of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.). 
(b) TABLE OF CONTENTS.—The table of contents of this Act 
is as follows: 
Sec. 1. Short title. 
Sec. 2. References in Act; table of contents. 
TITLE I—DRUG COMPOUNDING 
Sec. 101. Short title. 
Sec. 102. Voluntary outsourcing facilities. 
Sec. 103. Penalties. 
Sec. 104. Regulations. 
Sec. 105. Enhanced communication. 
Sec. 106. Severability. 
Sec. 107. GAO study. 
TITLE II—DRUG SUPPLY CHAIN SECURITY 
Sec. 201. Short title. 
Sec. 202. Pharmaceutical distribution supply chain. 
Sec. 203. Enhanced drug distribution security. 
Sec. 204. National standards for prescription drug wholesale distributors. 
Sec. 205. National standards for third-party logistics providers; uniform national 
policy. 
Sec. 206. Penalties. 
Sec. 207. Conforming amendment. 
Sec. 208. Savings clause. 
TITLE I—DRUG COMPOUNDING 
SEC. 101. SHORT TITLE. 
This Act may be cited as the ‘‘Compounding Quality Act’’. 
SEC. 102. VOLUNTARY OUTSOURCING FACILITIES. 
(a) IN GENERAL.—Subchapter A of chapter V (21 U.S.C. 351 
et seq.) is amended—
H. R. 3204—2 
(1) by redesignating section 503B as section 503C; and 
(2) by inserting after section 503A the following new sec-
tion: 
‘‘SEC. 503B. OUTSOURCING FACILITIES. 
‘‘(a) IN GENERAL.—Sections 502(f)(1), 505, and 582 shall not 
apply to a drug compounded by or under the direct supervision 
of a licensed pharmacist in a facility that elects to register as 
an outsourcing facility if each of the following conditions is met: 
‘‘(1) REGISTRATION
AND
REPORTING.—The drug is com-
pounded in an outsourcing facility that is in compliance with 
the requirements of subsection (b). 
‘‘(2) BULK DRUG SUBSTANCES.—The drug is compounded 
in an outsourcing facility that does not compound using bulk 
drug substances (as defined in section 207.3(a)(4) of title 21, 
Code of Federal Regulations (or any successor regulation)), 
unless— 
‘‘(A)(i) the bulk drug substance appears on a list estab-
lished by the Secretary identifying bulk drug substances 
for which there is a clinical need, by— 
‘‘(I) publishing a notice in the Federal Register 
proposing bulk drug substances to be included on the 
list, including the rationale for such proposal; 
‘‘(II) providing a period of not less than 60 calendar 
days for comment on the notice; and 
‘‘(III) publishing a notice in the Federal Register 
designating bulk drug substances for inclusion on the 
list; or 
‘‘(ii) the drug compounded from such bulk drug sub-
stance appears on the drug shortage list in effect under 
section 506E at the time of compounding, distribution, 
and dispensing; 
‘‘(B) if an applicable monograph exists under the 
United States Pharmacopeia, the National Formulary, or 
another compendium or pharmacopeia recognized by the 
Secretary for purposes of this paragraph, the bulk drug 
substances each comply with the monograph; 
‘‘(C) the bulk drug substances are each manufactured 
by an establishment that is registered under section 510 
(including a foreign establishment that is registered under 
section 510(i)); and 
‘‘(D) the bulk drug substances are each accompanied 
by a valid certificate of analysis. 
‘‘(3) INGREDIENTS (OTHER THAN BULK DRUG SUBSTANCES).— 
If any ingredients (other than bulk drug substances) are used 
in compounding the drug, such ingredients comply with the 
standards of the applicable United States Pharmacopeia or 
National Formulary monograph, if such monograph exists, or 
of another compendium or pharmacopeia recognized by the 
Secretary for purposes of this paragraph if any. 
‘‘(4) DRUGS WITHDRAWN OR REMOVED BECAUSE UNSAFE OR 
NOT EFFECTIVE.—The drug does not appear on a list published 
by the Secretary of drugs that have been withdrawn or removed 
from the market because such drugs or components of such 
drugs have been found to be unsafe or not effective. 
‘‘(5) ESSENTIALLY A COPY OF AN APPROVED DRUG.—The drug 
is not essentially a copy of one or more approved drugs.
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‘‘(6) DRUGS PRESENTING DEMONSTRABLE DIFFICULTIES FOR 
COMPOUNDING.—The drug— 
‘‘(A) is not identified (directly or as part of a category 
of drugs) on a list published by the Secretary, through 
the process described in subsection (c), of drugs or cat-
egories of drugs that present demonstrable difficulties for 
compounding that are reasonably likely to lead to an 
adverse effect on the safety or effectiveness of the drug 
or category of drugs, taking into account the risks and 
benefits to patients; or 
‘‘(B) is compounded in accordance with all applicable 
conditions identified on the list described in subparagraph 
(A) as conditions that are necessary to prevent the drug 
or category of drugs from presenting the demonstrable 
difficulties described in subparagraph (A). 
‘‘(7) ELEMENTS
TO
ASSURE
SAFE
USE.—In the case of a 
drug that is compounded from a drug that is the subject of 
a risk evaluation and mitigation strategy approved with ele-
ments to assure safe use pursuant to section 505–1, or from 
a bulk drug substance that is a component of such drug, the 
outsourcing facility demonstrates to the Secretary prior to 
beginning compounding that such facility will utilize controls 
comparable to the controls applicable under the relevant risk 
evaluation and mitigation strategy. 
‘‘(8) PROHIBITION ON WHOLESALING.—The drug will not be 
sold or transferred by an entity other than the outsourcing 
facility that compounded such drug. This paragraph does not 
prohibit administration of a drug in a health care setting or 
dispensing a drug pursuant to a prescription executed in accord-
ance with section 503(b)(1). 
‘‘(9) FEES.—The drug is compounded in an outsourcing 
facility that has paid all fees owed by such facility pursuant 
to section 744K. 
‘‘(10) LABELING OF DRUGS.— 
‘‘(A) LABEL.—The label of the drug includes— 
‘‘(i) the statement ‘This is a compounded drug.’ 
or a reasonable comparable alternative statement (as 
specified by the Secretary) that prominently identifies 
the drug as a compounded drug; 
‘‘(ii) the name, address, and phone number of the 
applicable outsourcing facility; and 
‘‘(iii) with respect to the drug— 
‘‘(I) the lot or batch number; 
‘‘(II) the established name of the drug; 
‘‘(III) the dosage form and strength; 
‘‘(IV) the statement of quantity or volume, as 
appropriate; 
‘‘(V) the date that the drug was compounded; 
‘‘(VI) the expiration date; 
‘‘(VII) storage and handling instructions; 
‘‘(VIII) the National Drug Code number, if 
available; 
‘‘(IX) the statement ‘Not for resale’, and, if 
the drug is dispensed or distributed other than 
pursuant to a prescription for an individual identi-
fied patient, the statement ‘Office Use Only’; and
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‘‘(X) subject to subparagraph (B)(i), a list of 
active and inactive ingredients, identified by estab-
lished name and the quantity or proportion of each 
ingredient. 
‘‘(B) CONTAINER.—The container from which the indi-
vidual units of the drug are removed for dispensing or 
for administration (such as a plastic bag containing indi-
vidual product syringes) shall include— 
‘‘(i) the information described under subparagraph 
(A)(iii)(X), if there is not space on the label for such 
information; 
‘‘(ii) the following information to facilitate adverse 
event reporting: www.fda.gov/medwatch and 1–800– 
FDA–1088 (or any successor Internet Web site or phone 
number); and 
‘‘(iii) directions for use, including, as appropriate, 
dosage and administration. 
‘‘(C) ADDITIONAL INFORMATION.—The label and labeling 
of the drug shall include any other information as deter-
mined necessary and specified in regulations promulgated 
by the Secretary. 
‘‘(11) OUTSOURCING FACILITY REQUIREMENT.—The drug is 
compounded 
in 
an 
outsourcing 
facility 
in 
which 
the 
compounding of drugs occurs only in accordance with this sec-
tion. 
‘‘(b) REGISTRATION OF OUTSOURCING FACILITIES AND REPORTING 
OF DRUGS.— 
‘‘(1) REGISTRATION OF OUTSOURCING FACILITIES.— 
‘‘(A) ANNUAL
REGISTRATION.—Upon electing and in 
order to become an outsourcing facility, and during the 
period beginning on October 1 and ending on December 
31 of each year thereafter, a facility— 
‘‘(i) shall register with the Secretary its name, 
place of business, and unique facility identifier (which 
shall conform to the requirements for the unique 
facility identifier established under section 510), and 
a point of contact email address; and 
‘‘(ii) shall indicate whether the outsourcing facility 
intends to compound a drug that appears on the list 
in effect under section 506E during the subsequent 
calendar year. 
‘‘(B) AVAILABILITY OF REGISTRATION FOR INSPECTION; 
LIST.— 
‘‘(i) REGISTRATIONS.—The Secretary shall make 
available for inspection, to any person so requesting, 
any registration filed pursuant to this paragraph. 
‘‘(ii) LIST.—The Secretary shall make available on 
the public Internet Web site of the Food and Drug 
Administration a list of the name of each facility reg-
istered under this subsection as an outsourcing facility, 
the State in which each such facility is located, whether 
the facility compounds from bulk drug substances, and 
whether any such compounding from bulk drug sub-
stances is for sterile or nonsterile drugs. 
‘‘(2) DRUG REPORTING BY OUTSOURCING FACILITIES.— 
‘‘(A) IN GENERAL.—Upon initially registering as an out-
sourcing facility, once during the month of June of each
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year, and once during the month of December of each 
year, each outsourcing facility that registers with the Sec-
retary under paragraph (1) shall submit to the Secretary 
a report— 
‘‘(i) identifying the drugs compounded by such out-
sourcing facility during the previous 6-month period; 
and 
‘‘(ii) with respect to each drug identified under 
clause (i), providing the active ingredient, the source 
of such active ingredient, the National Drug Code 
number of the source drug or bulk active ingredient, 
if available, the strength of the active ingredient per 
unit, the dosage form and route of administration, 
the package description, the number of individual units 
produced, and the National Drug Code number of the 
final product, if assigned. 
‘‘(B) FORM.—Each report under subparagraph (A) shall 
be prepared in such form and manner as the Secretary 
may prescribe by regulation or guidance. 
‘‘(C) CONFIDENTIALITY.—Reports submitted under this 
paragraph shall be exempt from inspection under para-
graph (1)(B)(i), unless the Secretary finds that such an 
exemption would be inconsistent with the protection of 
the public health. 
‘‘(3) ELECTRONIC REGISTRATION AND REPORTING.—Registra-
tions and drug reporting under this subsection (including the 
submission of updated information) shall be submitted to the 
Secretary by electronic means unless the Secretary grants a 
request for waiver of such requirement because use of electronic 
means is not reasonable for the person requesting waiver. 
‘‘(4) RISK-BASED INSPECTION FREQUENCY.— 
‘‘(A) IN GENERAL.—Outsourcing facilities— 
‘‘(i) shall be subject to inspection pursuant to sec-
tion 704; and 
‘‘(ii) shall not be eligible for the exemption under 
section 704(a)(2)(A). 
‘‘(B) RISK-BASED
SCHEDULE.—The Secretary, acting 
through one or more officers or employees duly designated 
by the Secretary, shall inspect outsourcing facilities in 
accordance with a risk-based schedule established by the 
Secretary. 
‘‘(C) RISK
FACTORS.—In establishing the risk-based 
schedule, the Secretary shall inspect outsourcing facilities 
according to the known safety risks of such outsourcing 
facilities, which shall be based on the following factors: 
‘‘(i) The compliance history of the outsourcing 
facility. 
‘‘(ii) The record, history, and nature of recalls 
linked to the outsourcing facility. 
‘‘(iii) The inherent risk of the drugs compounded 
at the outsourcing facility. 
‘‘(iv) The inspection frequency and history of the 
outsourcing facility, including whether the outsourcing 
facility has been inspected pursuant to section 704 
within the last 4 years. 
‘‘(v) Whether the outsourcing facility has registered 
under this paragraph as an entity that intends to
H. R. 3204—6 
compound a drug that appears on the list in effect 
under section 506E. 
‘‘(vi) Any other criteria deemed necessary and 
appropriate by the Secretary for purposes of allocating 
inspection resources. 
‘‘(5) ADVERSE
EVENT
REPORTING.—Outsourcing facilities 
shall submit adverse event reports to the Secretary in accord-
ance with the content and format requirements established 
through guidance or regulation under section 310.305 of title 
21, Code of Federal Regulations (or any successor regulations). 
‘‘(c) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall implement the list 
described in subsection (a)(6) through regulations. 
‘‘(2) ADVISORY
COMMITTEE
ON
COMPOUNDING.—Before 
issuing regulations to implement subsection (a)(6), the Sec-
retary shall convene and consult an advisory committee on 
compounding. The advisory committee shall include representa-
tives from the National Association of Boards of Pharmacy, 
the United States Pharmacopeia, pharmacists with current 
experience and expertise in compounding, physicians with back-
ground and knowledge in compounding, and patient and public 
health advocacy organizations. 
‘‘(3) INTERIM LIST.— 
‘‘(A) IN GENERAL.—Before the effective date of the regu-
lations finalized to implement subsection (a)(6), the Sec-
retary may designate drugs, categories of drugs, or condi-
tions as described such subsection by— 
‘‘(i) publishing a notice of such substances, drugs, 
categories of drugs, or conditions proposed for designa-
tion, including the rationale for such designation, in 
the Federal Register; 
‘‘(ii) providing a period of not less than 60 calendar 
days for comment on the notice; and 
‘‘(iii) publishing a notice in the Federal Register 
designating such drugs, categories of drugs, or condi-
tions. 
‘‘(B) SUNSET OF NOTICE.—Any notice provided under 
subparagraph (A) shall not be effective after the earlier 
of— 
‘‘(i) the date that is 5 years after the date of 
enactment of the Compounding Quality Act; or 
‘‘(ii) the effective date of the final regulations 
issued to implement subsection (a)(6). 
‘‘(4) UPDATES.—The Secretary shall review, and update 
as necessary, the regulations containing the lists of drugs, 
categories of drugs, or conditions described in subsection (a)(6) 
regularly, but not less than once every 4 years. Nothing in 
the previous sentence prohibits submissions to the Secretary, 
before or during any 4-year period described in such sentence, 
requesting updates to such lists. 
‘‘(d) DEFINITIONS.—In this section: 
‘‘(1) The term ‘compounding’ includes the combining, 
admixing, mixing, diluting, pooling, reconstituting, or otherwise 
altering of a drug or bulk drug substance to create a drug. 
‘‘(2) The term ‘essentially a copy of an approved drug’ 
means—
H. R. 3204—7 
‘‘(A) a drug that is identical or nearly identical to 
an approved drug, or a marketed drug not subject to section 
503(b) and not subject to approval in an application sub-
mitted under section 505, unless, in the case of an approved 
drug, the drug appears on the drug shortage list in effect 
under section 506E at the time of compounding, distribu-
tion, and dispensing; or 
‘‘(B) a drug, a component of which is a bulk drug 
substance that is a component of an approved drug or 
a marketed drug that is not subject to section 503(b) and 
not subject to approval in an application submitted under 
section 505, unless there is a change that produces for 
an individual patient a clinical difference, as determined 
by the prescribing practitioner, between the compounded 
drug and the comparable approved drug. 
‘‘(3) The term ‘approved drug’ means a drug that is 
approved under section 505 and does not appear on the list 
described in subsection (a)(4) of drugs that have been with-
drawn or removed from the market because such drugs or 
components of such drugs have been found to be unsafe or 
not effective. 
‘‘(4)(A) The term ‘outsourcing facility’ means a facility at 
one geographic location or address that— 
‘‘(i) is engaged in the compounding of sterile drugs; 
‘‘(ii) has elected to register as an outsourcing facility; 
and 
‘‘(iii) complies with all of the requirements of this sec-
tion. 
‘‘(B) An outsourcing facility is not required to be a licensed 
pharmacy. 
‘‘(C) An outsourcing facility may or may not obtain prescrip-
tions for identified individual patients. 
‘‘(5) The term ‘sterile drug’ means a drug that is intended 
for parenteral administration, an ophthalmic or oral inhalation 
drug in aqueous format, or a drug that is required to be 
sterile under Federal or State law.’’. 
‘‘(d) OBLIGATION TO PAY FEES.—Payment of the fee under sec-
tion 744K, as described in subsection (a)(9), shall not relieve an 
outsourcing facility that is licensed as a pharmacy in any State 
that requires pharmacy licensing fees of its obligation to pay such 
State fees.’’. 
(b) FEES.—Subchapter C of chapter VII (21 U.S.C. 379f et 
seq.) is amended by adding at the end the following: 
‘‘PART 9—FEES RELATING TO OUTSOURCING 
FACILITIES 
‘‘SEC. 744J. DEFINITIONS. 
‘‘In this part: 
‘‘(1) The term ‘affiliate’ has the meaning given such term 
in section 735(11). 
‘‘(2) The term ‘gross annual sales’ means the total world-
wide gross annual sales, in United States dollars, for an out-
sourcing facility, including the sales of all the affiliates of 
the outsourcing facility. 
‘‘(3) The term ‘outsourcing facility’ has the meaning given 
to such term in section 503B(d)(4).
H. R. 3204—8 
‘‘(4) The term ‘reinspection’ means, with respect to an out-
sourcing facility, 1 or more inspections conducted under section 
704 subsequent to an inspection conducted under such provision 
which identified noncompliance materially related to an 
applicable requirement of this Act, specifically to determine 
whether compliance has been achieved to the Secretary’s satis-
faction. 
‘‘SEC. 744K. AUTHORITY TO ASSESS AND USE OUTSOURCING FACILITY 
FEES. 
‘‘(a) ESTABLISHMENT AND REINSPECTION FEES.— 
‘‘(1) IN GENERAL.—For fiscal year 2015 and each subsequent 
fiscal year, the Secretary shall, in accordance with this sub-
section, assess and collect— 
‘‘(A) an annual establishment fee from each outsourcing 
facility; and 
‘‘(B) a reinspection fee from each outsourcing facility 
subject to a reinspection in such fiscal year. 
‘‘(2) MULTIPLE
REINSPECTIONS.—An outsourcing facility 
subject to multiple reinspections in a fiscal year shall be subject 
to a reinspection fee for each reinspection. 
‘‘(b) ESTABLISHMENT
AND REINSPECTION FEE SETTING.—The 
Secretary shall— 
‘‘(1) establish the amount of the establishment fee and 
reinspection fee to be collected under this section for each 
fiscal year based on the methodology described in subsection 
(c); and 
‘‘(2) publish such fee amounts in a Federal Register notice 
not later than 60 calendar days before the start of each such 
year. 
‘‘(c) AMOUNT OF ESTABLISHMENT FEE AND REINSPECTION FEE.— 
‘‘(1) IN GENERAL.—For each outsourcing facility in a fiscal 
year— 
‘‘(A) except as provided in paragraph (4), the amount 
of the annual establishment fee under subsection (b) shall 
be equal to the sum of— 
‘‘(i) $15,000, multiplied by the inflation adjustment 
factor described in paragraph (2); plus 
‘‘(ii) the small business adjustment factor described 
in paragraph (3); and 
‘‘(B) the amount of any reinspection fee (if applicable) 
under subsection (b) shall be equal to $15,000, multiplied 
by the inflation adjustment factor described in paragraph 
(2). 
‘‘(2) INFLATION ADJUSTMENT FACTOR.— 
‘‘(A) IN GENERAL.—For fiscal year 2015 and subsequent 
fiscal years, the fee amounts established in paragraph (1) 
shall be adjusted by the Secretary by notice, published 
in the Federal Register, for a fiscal year by the amount 
equal to the sum of— 
‘‘(i) 1; 
‘‘(ii) the average annual percent change in the 
cost, per full-time equivalent position of the Food and 
Drug Administration, of all personnel compensation 
and benefits paid with respect to such positions for 
the first 3 years of the preceding 4 fiscal years, multi-
plied by the proportion of personnel compensation and
H. R. 3204—9 
benefits costs to total costs of an average full-time 
equivalent position of the Food and Drug Administra-
tion for the first 3 years of the preceding 4 fiscal 
years; plus 
‘‘(iii) the average annual percent change that 
occurred in the Consumer Price Index for urban con-
sumers (U.S. City Average; Not Seasonally Adjusted; 
All items; Annual Index) for the first 3 years of the 
preceding 4 years of available data multiplied by the 
proportion of all costs other than personnel compensa-
tion and benefits costs to total costs of an average 
full-time equivalent position of the Food and Drug 
Administration for the first 3 years of the preceding 
4 fiscal years. 
‘‘(B) COMPOUNDED BASIS.—The adjustment made each 
fiscal year under subparagraph (A) shall be added on a 
compounded basis to the sum of all adjustments made 
each fiscal year after fiscal year 2014 under subparagraph 
(A). 
‘‘(3) SMALL BUSINESS ADJUSTMENT FACTOR.—The small busi-
ness adjustment factor described in this paragraph shall be 
an amount established by the Secretary for each fiscal year 
based on the Secretary’s estimate of— 
‘‘(A) the number of small businesses that will pay 
a reduced establishment fee for such fiscal year; and 
‘‘(B) the adjustment to the establishment fee necessary 
to achieve total fees equaling the total fees that the Sec-
retary would have collected if no entity qualified for the 
small business exception in paragraph (4). 
‘‘(4) EXCEPTION FOR SMALL BUSINESSES.— 
‘‘(A) IN GENERAL.—In the case of an outsourcing facility 
with gross annual sales of $1,000,000 or less in the 12 
months ending April 1 of the fiscal year immediately pre-
ceding the fiscal year in which the fees under this section 
are assessed, the amount of the establishment fee under 
subsection (b) for a fiscal year shall be equal to \1/3\ of 
the amount calculated under paragraph (1)(A)(i) for such 
fiscal year. 
‘‘(B) APPLICATION.—To qualify for the exception under 
this paragraph, a small business shall submit to the Sec-
retary a written request for such exception, in a format 
specified by the Secretary in guidance, certifying its gross 
annual sales for the 12 months ending April 1 of the 
fiscal year immediately preceding the fiscal year in which 
fees under this subsection are assessed. Any such applica-
tion shall be submitted to the Secretary not later than 
April 30 of such immediately preceding fiscal year. 
‘‘(5) CREDITING OF FEES.—In establishing the small busi-
ness adjustment factor under paragraph (3) for a fiscal year, 
the Secretary shall— 
‘‘(A) provide for the crediting of fees from the previous 
year to the next year if the Secretary overestimated the 
amount of the small business adjustment factor for such 
previous fiscal year; and 
‘‘(B) consider the need to account for any adjustment 
of fees and such other factors as the Secretary determines 
appropriate.
H. R. 3204—10 
‘‘(d) USE OF FEES.—The Secretary shall make all of the fees 
collected pursuant to subparagraphs (A) and (B) of subsection (a)(1) 
available solely to pay for the costs of oversight of outsourcing 
facilities. 
‘‘(e) SUPPLEMENT NOT SUPPLANT.—Funds received by the Sec-
retary pursuant to this section shall be used to supplement and 
not supplant any other Federal funds available to carry out the 
activities described in this section. 
‘‘(f) CREDITING AND AVAILABILITY OF FEES.—Fees authorized 
under this section shall be collected and available for obligation 
only to the extent and in the amount provided in advance in 
appropriations Acts. Such fees are authorized to remain available 
until expended. Such sums as may be necessary may be transferred 
from the Food and Drug Administration salaries and expenses 
appropriation account without fiscal year limitation to such appro-
priation account for salaries and expenses with such fiscal year 
limitation. The sums transferred shall be available solely for the 
purpose of paying the costs of oversight of outsourcing facilities. 
‘‘(g) COLLECTION OF FEES.— 
‘‘(1) ESTABLISHMENT
FEE.—An outsourcing facility shall 
remit the establishment fee due under this section in a fiscal 
year when submitting a registration pursuant to section 503B(b) 
for such fiscal year. 
‘‘(2) REINSPECTION FEE.—The Secretary shall specify in the 
Federal Register notice described in subsection (b)(2) the 
manner in which reinspection fees assessed under this section 
shall be collected and the timeline for payment of such fees. 
Such a fee shall be collected after the Secretary has conducted 
a reinspection of the outsourcing facility involved. 
‘‘(3) EFFECT OF FAILURE TO PAY FEES.— 
‘‘(A) REGISTRATION.—An outsourcing facility shall not 
be considered registered under section 503B(b) in a fiscal 
year until the date that the outsourcing facility remits 
the establishment fee under this subsection for such fiscal 
year. 
‘‘(B) MISBRANDING.—All drugs manufactured, prepared, 
propagated, compounded, or processed by an outsourcing 
facility for which any establishment fee or reinspection 
fee has not been paid, as required by this section, shall 
be deemed misbranded under section 502 until the fees 
owed for such outsourcing facility under this section have 
been paid. 
‘‘(4) COLLECTION OF UNPAID FEES.—In any case where the 
Secretary does not receive payment of a fee assessed under 
this section within 30 calendar days after it is due, such fee 
shall be treated as a claim of the United States Government 
subject to provisions of subchapter II of chapter 37 of title 
31, United States Code. 
‘‘(h) ANNUAL REPORT TO CONGRESS.—Not later than 120 cal-
endar days after each fiscal year in which fees are assessed and 
collected under this section, the Secretary shall submit a report 
to the Committee on Health, Education, Labor, and Pensions of 
the Senate and the Committee on Energy and Commerce of the 
House of Representatives, to include a description of fees assessed 
and collected for such year, a summary description of entities paying 
the fees, a description of the hiring and placement of new staff, 
a description of the use of fee resources to support inspecting
H. R. 3204—11 
outsourcing facilities, and the number of inspections and reinspec-
tions of such facilities performed each year. 
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—For fiscal year 2014 
and each subsequent fiscal year, there is authorized to be appro-
priated for fees under this section an amount equivalent to the 
total amount of fees assessed for such fiscal year under this sec-
tion.’’. 
SEC. 103. PENALTIES. 
(a) PROHIBITED ACTS.—Section 301 (21 U.S.C. 331) is amended 
by adding at the end the following: 
‘‘(ccc)(1) The resale of a compounded drug that is labeled ‘not 
for resale’ in accordance with section 503B. 
‘‘(2) With respect to a drug to be compounded pursuant to 
section 503A or 503B, the intentional falsification of a prescription, 
as applicable. 
‘‘(3) The failure to report drugs or adverse events by an entity 
that is registered in accordance with subsection (b) of section 503B.’’. 
(b) MISBRANDED
DRUGS.—Section 502 (21 U.S.C. 352) is 
amended by adding at the end the following: 
‘‘(bb) If the advertising or promotion of a compounded drug 
is false or misleading in any particular.’’. 
SEC. 104. REGULATIONS. 
In promulgating any regulations to implement this title (and 
the amendments made by this title), the Secretary of Health and 
Human Services shall— 
(1) issue a notice of proposed rulemaking that includes 
the proposed regulation; 
(2) provide a period of not less than 60 calendar days 
for comments on the proposed regulation; and 
(3) publish the final regulation not more than 18 months 
following publication of the proposed rule and not less than 
30 calendar days before the effective date of such final regula-
tion. 
SEC. 105. ENHANCED COMMUNICATION. 
(a) SUBMISSIONS FROM STATE BOARDS
OF PHARMACY.—In a 
manner specified by the Secretary of Health and Human Services 
(referred to in this section as the ‘‘Secretary’’), the Secretary shall 
receive submissions from State boards of pharmacy— 
(1) describing actions taken against compounding phar-
macies, as described in subsection (b); or 
(2) expressing concerns that a compounding pharmacy may 
be acting contrary to section 503A of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 353a). 
(b) CONTENT OF SUBMISSIONS FROM STATE BOARDS OF PHAR-
MACY.—An action referred to in subsection (a)(1) is, with respect 
to a pharmacy that compounds drugs, any of the following: 
(1) The issuance of a warning letter, or the imposition 
of sanctions or penalties, by a State for violations of a State’s 
pharmacy regulations pertaining to compounding. 
(2) The suspension or revocation of a State-issued pharmacy 
license or registration for violations of a State’s pharmacy regu-
lations pertaining to compounding. 
(3) The recall of a compounded drug due to concerns 
relating to the quality or purity of such drug.
H. R. 3204—12 
(c) CONSULTATION.—The Secretary shall implement subsection 
(a) in consultation with the National Association of Boards of Phar-
macy. 
(d) NOTIFYING STATE BOARDS OF PHARMACY.—The Secretary 
shall immediately notify State boards of pharmacy when— 
(1) the Secretary receives a submission under subsection 
(a)(1); or 
(2) the Secretary makes a determination that a pharmacy 
is acting contrary to section 503A of the Federal Food, Drug, 
and Cosmetic Act. 
SEC. 106. SEVERABILITY. 
(a) IN GENERAL.—Section 503A (21 U.S.C. 353a) is amended— 
(1) in subsection (a), in the matter preceding paragraph 
(1), by striking ‘‘unsolicited’’; 
(2) by striking subsection (c); 
(3) by redesignating subsections (d) through (f) as sub-
sections (c) through (e), respectively; and 
(4) in subsection (b)(1)(A)(i)(III), by striking ‘‘subsection 
(d)’’ and inserting ‘‘subsection (c)’’. 
(b) SEVERABILITY.—If any provision of this Act (including the 
amendments made by this Act) is declared unconstitutional, or 
the applicability of this Act (including the amendments made by 
this Act) to any person or circumstance is held invalid, the constitu-
tionality of the remainder of this Act (including the amendments 
made by this Act) and the applicability thereof to other persons 
and circumstances shall not be affected. 
SEC. 107. GAO STUDY. 
(a) STUDY.—Not later than 36 months after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit to Congress a report on pharmacy compounding and 
the adequacy of State and Federal efforts to assure the safety 
of compounded drugs. 
(b) CONTENTS.—The report required under this section shall 
include— 
(1) a review of pharmacy compounding in each State, and 
the settings in which such compounding occurs; 
(2) a review of the State laws and policies governing phar-
macy compounding, including enforcement of State laws and 
policies; 
(3) an assessment of the available tools to permit pur-
chasers of compounded drugs to determine the safety and 
quality of such drugs; 
(4) an evaluation of the effectiveness of the communication 
among States and between States and the Food and Drug 
Administration regarding compounding; and 
(5) an evaluation of the Food and Drug Administration’s 
implementation of sections 503A and 503B of the Federal Food, 
Drug, and Cosmetic Act.
H. R. 3204—13 
TITLE II—DRUG SUPPLY CHAIN 
SECURITY 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘Drug Supply Chain Security 
Act’’. 
SEC. 202. PHARMACEUTICAL DISTRIBUTION SUPPLY CHAIN. 
Chapter V (21 U.S.C. 351 et seq.) is amended by adding at 
the end the following: 
‘‘Subchapter H—Pharmaceutical Distribution Supply Chain 
‘‘SEC. 581. DEFINITIONS. 
‘‘In this subchapter: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ means a business 
entity that has a relationship with a second business entity 
if, directly or indirectly— 
‘‘(A) one business entity controls, or has the power 
to control, the other business entity; or 
‘‘(B) a third party controls, or has the power to control, 
both of the business entities. 
‘‘(2) AUTHORIZED.—The term ‘authorized’ means— 
‘‘(A) in the case of a manufacturer or repackager, 
having a valid registration in accordance with section 510; 
‘‘(B) in the case of a wholesale distributor, having 
a valid license under State law or section 583, in accordance 
with section 582(a)(6), and complying with the licensure 
reporting requirements under section 503(e), as amended 
by the Drug Supply Chain Security Act; 
‘‘(C) in the case of a third-party logistics provider, 
having a valid license under State law or section 584(a)(1), 
in accordance with section 582(a)(7), and complying with 
the licensure reporting requirements under section 584(b); 
and 
‘‘(D) in the case of a dispenser, having a valid license 
under State law. 
‘‘(3) DISPENSER.—The term ‘dispenser’— 
‘‘(A) means a retail pharmacy, hospital pharmacy, a 
group of chain pharmacies under common ownership and 
control that do not act as a wholesale distributor, or any 
other person authorized by law to dispense or administer 
prescription drugs, and the affiliated warehouses or dis-
tribution centers of such entities under common ownership 
and control that do not act as a wholesale distributor; 
and 
‘‘(B) does not include a person who dispenses only 
products to be used in animals in accordance with section 
512(a)(5). 
‘‘(4) DISPOSITION.—The term ‘disposition’, with respect to 
a product within the possession or control of an entity, means 
the removal of such product from the pharmaceutical distribu-
tion supply chain, which may include disposal or return of 
the product for disposal or other appropriate handling and 
other actions, such as retaining a sample of the product for 
further additional physical examination or laboratory analysis
H. R. 3204—14 
of the product by a manufacturer or regulatory or law enforce-
ment agency. 
‘‘(5) DISTRIBUTE OR DISTRIBUTION.—The term ‘distribute’ 
or ‘distribution’ means the sale, purchase, trade, delivery, han-
dling, storage, or receipt of a product, and does not include 
the dispensing of a product pursuant to a prescription executed 
in accordance with section 503(b)(1) or the dispensing of a 
product approved under section 512(b). 
‘‘(6) EXCLUSIVE
DISTRIBUTOR.—The term ‘exclusive dis-
tributor’ means the wholesale distributor that directly pur-
chased the product from the manufacturer and is the sole 
distributor of that manufacturer’s product to a subsequent re-
packager, wholesale distributor, or dispenser. 
‘‘(7) HOMOGENEOUS CASE.—The term ‘homogeneous case’ 
means a sealed case containing only product that has a single 
National Drug Code number belonging to a single lot. 
‘‘(8) 
ILLEGITIMATE
PRODUCT.—The 
term 
‘illegitimate 
product’ means a product for which credible evidence shows 
that the product— 
‘‘(A) is counterfeit, diverted, or stolen; 
‘‘(B) is intentionally adulterated such that the product 
would result in serious adverse health consequences or 
death to humans; 
‘‘(C) is the subject of a fraudulent transaction; or 
‘‘(D) appears otherwise unfit for distribution such that 
the product would be reasonably likely to result in serious 
adverse health consequences or death to humans. 
‘‘(9) LICENSED.—The term ‘licensed’ means— 
‘‘(A) in the case of a wholesale distributor, having 
a valid license in accordance with section 503(e) or section 
582(a)(6), as applicable; 
‘‘(B) in the case of a third-party logistics provider, 
having a valid license in accordance with section 584(a) 
or section 582(a)(7), as applicable; and 
‘‘(C) in the case of a dispenser, having a valid license 
under State law. 
‘‘(10) MANUFACTURER.—The term ‘manufacturer’ means, 
with respect to a product— 
‘‘(A) a person that holds an application approved under 
section 505 or a license issued under section 351 of the 
Public Health Service Act for such product, or if such 
product is not the subject of an approved application or 
license, the person who manufactured the product; 
‘‘(B) a co-licensed partner of the person described in 
subparagraph (A) that obtains the product directly from 
a person described in this subparagraph or subparagraph 
(A) or (C); or 
‘‘(C) an affiliate of a person described in subparagraph 
(A) or (B) that receives the product directly from a person 
described in this subparagraph or subparagraph (A) or 
(B). 
‘‘(11) PACKAGE.— 
‘‘(A) IN
GENERAL.—The term ‘package’ means the 
smallest individual saleable unit of product for distribution 
by a manufacturer or repackager that is intended by the 
manufacturer for ultimate sale to the dispenser of such 
product.
H. R. 3204—15 
‘‘(B) INDIVIDUAL SALEABLE UNIT.—For purposes of this 
paragraph, an ‘individual saleable unit’ is the smallest 
container of product introduced into commerce by the 
manufacturer or repackager that is intended by the manu-
facturer or repackager for individual sale to a dispenser. 
‘‘(12) PRESCRIPTION
DRUG.—The term ‘prescription drug’ 
means a drug for human use subject to section 503(b)(1). 
‘‘(13) PRODUCT.—The term ‘product’ means a prescription 
drug in a finished dosage form for administration to a patient 
without substantial further manufacturing (such as capsules, 
tablets, and lyophilized products before reconstitution), but for 
purposes of section 582, does not include blood or blood compo-
nents intended for transfusion, radioactive drugs or radioactive 
biological products (as defined in section 600.3(ee) of title 21, 
Code of Federal Regulations) that are regulated by the Nuclear 
Regulatory Commission or by a State pursuant to an agreement 
with such Commission under section 274 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2021), imaging drugs, an intravenous 
product described in clause (xiv), (xv), or (xvi) of paragraph 
(24)(B), any medical gas (as defined in section 575), homeo-
pathic drugs marketed in accordance with applicable guidance 
under this Act, or a drug compounded in compliance with 
section 503A or 503B. 
‘‘(14) PRODUCT IDENTIFIER.—The term ‘product identifier’ 
means a standardized graphic that includes, in both human- 
readable form and on a machine-readable data carrier that 
conforms to the standards developed by a widely recognized 
international 
standards 
development 
organization, 
the 
standardized numerical identifier, lot number, and expiration 
date of the product. 
‘‘(15) QUARANTINE.—The term ‘quarantine’ means the stor-
age or identification of a product, to prevent distribution or 
transfer of the product, in a physically separate area clearly 
identified for such use or through other procedures. 
‘‘(16) REPACKAGER.—The term ‘repackager’ means a person 
who owns or operates an establishment that repacks and re-
labels a product or package for— 
‘‘(A) further sale; or 
‘‘(B) distribution without a further transaction. 
‘‘(17) RETURN.—The term ‘return’ means providing product 
to the authorized immediate trading partner from which such 
product was purchased or received, or to a returns processor 
or reverse logistics provider for handling of such product. 
‘‘(18) RETURNS
PROCESSOR
OR
REVERSE
LOGISTICS
PRO-
VIDER.—The term ‘returns processor’ or ‘reverse logistics pro-
vider’ means a person who owns or operates an establishment 
that dispositions or otherwise processes saleable or nonsaleable 
product received from an authorized trading partner such that 
the product may be processed for credit to the purchaser, manu-
facturer, or seller or disposed of for no further distribution. 
‘‘(19) SPECIFIC PATIENT NEED.—The term ‘specific patient 
need’ refers to the transfer of a product from one pharmacy 
to another to fill a prescription for an identified patient. Such 
term does not include the transfer of a product from one phar-
macy to another for the purpose of increasing or replenishing 
stock in anticipation of a potential need.
H. R. 3204—16 
‘‘(20) STANDARDIZED
NUMERICAL
IDENTIFIER.—The term 
‘standardized numerical identifier’ means a set of numbers 
or characters used to uniquely identify each package or homoge-
nous case that is composed of the National Drug Code that 
corresponds to the specific product (including the particular 
package configuration) combined with a unique alphanumeric 
serial number of up to 20 characters. 
‘‘(21) SUSPECT PRODUCT.—The term ‘suspect product’ means 
a product for which there is reason to believe that such 
product— 
‘‘(A) is potentially counterfeit, diverted, or stolen; 
‘‘(B) is potentially intentionally adulterated such that 
the product would result in serious adverse health con-
sequences or death to humans; 
‘‘(C) is potentially the subject of a fraudulent trans-
action; or 
‘‘(D) appears otherwise unfit for distribution such that 
the product would result in serious adverse health con-
sequences or death to humans. 
‘‘(22) THIRD-PARTY LOGISTICS PROVIDER.—The term ‘third- 
party logistics provider’ means an entity that provides or coordi-
nates warehousing, or other logistics services of a product in 
interstate commerce on behalf of a manufacturer, wholesale 
distributor, or dispenser of a product, but does not take owner-
ship of the product, nor have responsibility to direct the sale 
or disposition of the product. 
‘‘(23) TRADING
PARTNER.—The term ‘trading partner’ 
means— 
‘‘(A) a manufacturer, repackager, wholesale distributor, 
or dispenser from whom a manufacturer, repackager, 
wholesale distributor, or dispenser accepts direct ownership 
of a product or to whom a manufacturer, repackager, whole-
sale distributor, or dispenser transfers direct ownership 
of a product; or 
‘‘(B) a third-party logistics provider from whom a 
manufacturer, repackager, wholesale distributor, or dis-
penser accepts direct possession of a product or to whom 
a manufacturer, repackager, wholesale distributor, or dis-
penser transfers direct possession of a product. 
‘‘(24) TRANSACTION.— 
‘‘(A) IN GENERAL.—The term ‘transaction’ means the 
transfer of product between persons in which a change 
of ownership occurs. 
‘‘(B) EXEMPTIONS.—The term ‘transaction’ does not 
include— 
‘‘(i) intracompany distribution of any product 
between members of an affiliate or within a manufac-
turer; 
‘‘(ii) the distribution of a product among hospitals 
or other health care entities that are under common 
control; 
‘‘(iii) the distribution of a product for emergency 
medical reasons including a public health emergency 
declaration pursuant to section 319 of the Public 
Health Service Act, except that a drug shortage not 
caused by a public health emergency shall not con-
stitute an emergency medical reason;
H. R. 3204—17 
‘‘(iv) the dispensing of a product pursuant to a 
prescription executed in accordance with section 
503(b)(1); 
‘‘(v) the distribution of product samples by a manu-
facturer or a licensed wholesale distributor in accord-
ance with section 503(d); 
‘‘(vi) the distribution of blood or blood components 
intended for transfusion; 
‘‘(vii) the distribution of minimal quantities of 
product by a licensed retail pharmacy to a licensed 
practitioner for office use; 
‘‘(viii) the sale, purchase, or trade of a drug or 
an offer to sell, purchase, or trade a drug by a chari-
table organization described in section 501(c)(3) of the 
Internal Revenue Code of 1986 to a nonprofit affiliate 
of the organization to the extent otherwise permitted 
by law; 
‘‘(ix) the distribution of a product pursuant to the 
sale or merger of a pharmacy or pharmacies or a 
wholesale distributor or wholesale distributors, except 
that any records required to be maintained for the 
product shall be transferred to the new owner of the 
pharmacy or pharmacies or wholesale distributor or 
wholesale distributors; 
‘‘(x) the dispensing of a product approved under 
section 512(c); 
‘‘(xi) products transferred to or from any facility 
that is licensed by the Nuclear Regulatory Commission 
or by a State pursuant to an agreement with such 
Commission under section 274 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2021); 
‘‘(xii) a combination product that is not subject 
to approval under section 505 or licensure under sec-
tion 351 of the Public Health Service Act, and that 
is— 
‘‘(I) a product comprised of a device and 1 
or more other regulated components (such as a 
drug/device, biologic/device, or drug/device/biologic) 
that are physically, chemically, or otherwise com-
bined or mixed and produced as a single entity; 
‘‘(II) 2 or more separate products packaged 
together in a single package or as a unit and 
comprised of a drug and device or device and 
biological product; or 
‘‘(III) 2 or more finished medical devices plus 
one or more drug or biological products that are 
packaged together in what is referred to as a ‘med-
ical convenience kit’ as described in clause (xiii); 
‘‘(xiii) the distribution of a collection of finished 
medical devices, which may include a product or 
biological product, assembled in kit form strictly for 
the convenience of the purchaser or user (referred to 
in this clause as a ‘medical convenience kit’) if— 
‘‘(I) the medical convenience kit is assembled 
in an establishment that is registered with the 
Food and Drug Administration as a device manu-
facturer in accordance with section 510(b)(2);
H. R. 3204—18 
‘‘(II) the medical convenience kit does not con-
tain a controlled substance that appears in a 
schedule contained in the Comprehensive Drug 
Abuse Prevention and Control Act of 1970; 
‘‘(III) in the case of a medical convenience 
kit that includes a product, the person that manu-
facturers the kit— 
‘‘(aa) purchased such product directly from 
the pharmaceutical manufacturer or from a 
wholesale distributor that purchased the 
product directly from the pharmaceutical 
manufacturer; and 
‘‘(bb) does not alter the primary container 
or label of the product as purchased from the 
manufacturer or wholesale distributor; and 
‘‘(IV) in the case of a medical convenience kit 
that includes a product, the product is— 
‘‘(aa) an intravenous solution intended for 
the replenishment of fluids and electrolytes; 
‘‘(bb) a product intended to maintain the 
equilibrium of water and minerals in the body; 
‘‘(cc) a product intended for irrigation or 
reconstitution; 
‘‘(dd) an anesthetic; 
‘‘(ee) an anticoagulant; 
‘‘(ff) a vasopressor; or 
‘‘(gg) a sympathomimetic; 
‘‘(xiv) the distribution of an intravenous product 
that, by its formulation, is intended for the replenish-
ment of fluids and electrolytes (such as sodium, chlo-
ride, and potassium) or calories (such as dextrose and 
amino acids); 
‘‘(xv) the distribution of an intravenous product 
used to maintain the equilibrium of water and minerals 
in the body, such as dialysis solutions; 
‘‘(xvi) the distribution of a product that is intended 
for irrigation, or sterile water, whether intended for 
such purposes or for injection; 
‘‘(xvii) the distribution of a medical gas (as defined 
in section 575); or 
‘‘(xviii) the distribution or sale of any licensed 
product under section 351 of the Public Health Service 
Act that meets the definition of a device under section 
201(h). 
‘‘(25) TRANSACTION HISTORY.—The term ‘transaction his-
tory’ means a statement in paper or electronic form, including 
the transaction information for each prior transaction going 
back to the manufacturer of the product. 
‘‘(26) TRANSACTION INFORMATION.—The term ‘transaction 
information’ means— 
‘‘(A) the proprietary or established name or names 
of the product; 
‘‘(B) the strength and dosage form of the product; 
‘‘(C) the National Drug Code number of the product; 
‘‘(D) the container size; 
‘‘(E) the number of containers; 
‘‘(F) the lot number of the product;
H. R. 3204—19 
‘‘(G) the date of the transaction; 
‘‘(H) the date of the shipment, if more than 24 hours 
after the date of the transaction; 
‘‘(I) the business name and address of the person from 
whom ownership is being transferred; and 
‘‘(J) the business name and address of the person to 
whom ownership is being transferred. 
‘‘(27) TRANSACTION
STATEMENT.—The ‘transaction state-
ment’ is a statement, in paper or electronic form, that the 
entity transferring ownership in a transaction— 
‘‘(A) is authorized as required under the Drug Supply 
Chain Security Act; 
‘‘(B) received the product from a person that is author-
ized as required under the Drug Supply Chain Security 
Act; 
‘‘(C) received transaction information and a transaction 
statement from the prior owner of the product, as required 
under section 582; 
‘‘(D) did not knowingly ship a suspect or illegitimate 
product; 
‘‘(E) had systems and processes in place to comply 
with verification requirements under section 582; 
‘‘(F) did not knowingly provide false transaction 
information; and 
‘‘(G) did not knowingly alter the transaction history. 
‘‘(28) VERIFICATION OR VERIFY.—The term ‘verification’ or 
‘verify’ means determining whether the product identifier 
affixed to, or imprinted upon, a package or homogeneous case 
corresponds to the standardized numerical identifier or lot 
number and expiration date assigned to the product by the 
manufacturer or the repackager, as applicable in accordance 
with section 582. 
‘‘(29) WHOLESALE DISTRIBUTOR.—The term ‘wholesale dis-
tributor’ means a person (other than a manufacturer, a manu-
facturer’s co-licensed partner, a third-party logistics provider, 
or repackager) engaged in wholesale distribution (as defined 
in section 503(e)(4), as amended by the Drug Supply Chain 
Security Act). 
‘‘SEC. 582. REQUIREMENTS. 
‘‘(a) IN GENERAL.— 
‘‘(1) OTHER ACTIVITIES.—Each manufacturer, repackager, 
wholesale distributor, and dispenser shall comply with the 
requirements set forth in this section with respect to the role 
of such manufacturer, repackager, wholesale distributor, or dis-
penser in a transaction involving product. If an entity meets 
the definition of more than one of the entities listed in the 
preceding sentence, such entity shall comply with all applicable 
requirements in this section, but shall not be required to dupli-
cate requirements. 
‘‘(2) INITIAL STANDARDS.— 
‘‘(A) IN GENERAL.—The Secretary shall, in consultation 
with other appropriate Federal officials, manufacturers, re-
packagers, wholesale distributors, dispensers, and other 
pharmaceutical distribution supply chain stakeholders, 
issue a draft guidance document that establishes standards 
for the interoperable exchange of transaction information,
H. R. 3204—20 
transaction history, and transaction statements, in paper 
or electronic format, for compliance with this subsection 
and subsections (b), (c), (d), and (e). In establishing such 
standards, the Secretary shall consider the feasibility of 
establishing standardized documentation to be used by 
members of the pharmaceutical distribution supply chain 
to convey the transaction information, transaction history, 
and transaction statement to the subsequent purchaser 
of a product and to facilitate the exchange of lot level 
data. The standards established under this paragraph shall 
take into consideration the standards established under 
section 505D and shall comply with a form and format 
developed by a widely recognized international standards 
development organization. 
‘‘(B) PUBLIC INPUT.—Prior to issuing the draft guidance 
under subparagraph (A), the Secretary shall gather com-
ments and information from stakeholders and maintain 
such comments and information in a public docket for 
at least 60 days prior to issuing such guidance. 
‘‘(C) PUBLICATION.—The Secretary shall publish the 
standards established under subparagraph (A) not later 
than 1 year after the date of enactment of the Drug Supply 
Chain Security Act. 
‘‘(3) WAIVERS, EXCEPTIONS, AND EXEMPTIONS.— 
‘‘(A) IN GENERAL.—Not later than 2 years after the 
date of enactment of the Drug Supply Chain Security Act, 
the Secretary shall, by guidance— 
‘‘(i) establish a process by which an authorized 
manufacturer, repackager, wholesale distributor, or 
dispenser may request a waiver from any of the 
requirements set forth in this section, which the Sec-
retary may grant if the Secretary determines that such 
requirements would result in an undue economic hard-
ship or for emergency medical reasons, including a 
public health emergency declaration pursuant to sec-
tion 319 of the Public Health Service Act; 
‘‘(ii) establish a process by which the Secretary 
determines exceptions, and a process through which 
a manufacturer or repackager may request such an 
exception, to the requirements relating to product 
identifiers if a product is packaged in a container too 
small or otherwise unable to accommodate a label with 
sufficient space to bear the information required for 
compliance with this section; and 
‘‘(iii) establish a process by which the Secretary 
may determine other products or transactions that 
shall be exempt from the requirements of this section. 
‘‘(B) CONTENT.—The guidance issued under subpara-
graph (A) shall include a process for the biennial review 
and renewal of such waivers, exceptions, and exemptions, 
as applicable. 
‘‘(C) PROCESS.—In issuing the guidance under this 
paragraph, the Secretary shall provide an effective date 
that is not later than 180 days prior to the date on which 
manufacturers are required to affix or imprint a product 
identifier to each package and homogenous case of product
H. R. 3204—21 
intended to be introduced in a transaction into commerce 
consistent with this section. 
‘‘(4) SELF-EXECUTING REQUIREMENTS.—Except where other-
wise specified, the requirements of this section may be enforced 
without further regulations or guidance from the Secretary. 
‘‘(5) GRANDFATHERING PRODUCT.— 
‘‘(A) PRODUCT IDENTIFIER.—Not later than 2 years after 
the date of enactment of the Drug Supply Chain Security 
Act, the Secretary shall finalize guidance specifying 
whether and under what circumstances product that is 
not labeled with a product identifier and that is in the 
pharmaceutical distribution supply chain at the time of 
the effective date of the requirements of this section shall 
be exempted from the requirements of this section. 
‘‘(B) TRACING.—For a product that entered the pharma-
ceutical distribution supply chain prior to January 1, 
2015— 
‘‘(i) authorized trading partners shall be exempt 
from providing transaction information as required 
under subsections (b)(1)(A)(i), (c)(1)(A)(ii), (d)(1)(A)(ii), 
and (e)(1)(A)(ii); 
‘‘(ii) transaction history required under this section 
shall begin with the owner of such product on such 
date; and 
‘‘(iii) the owners of such product on such date 
shall be exempt from asserting receipt of transaction 
information and transaction statement from the prior 
owner as required under this section. 
‘‘(6) WHOLESALE DISTRIBUTOR LICENSES.—Notwithstanding 
section 581(9)(A), until the effective date of the wholesale dis-
tributor licensing regulations under section 583, the term 
‘licensed’ or ‘authorized’, as it relates to a wholesale distributor 
with respect to prescription drugs, shall mean a wholesale 
distributor with a valid license under State law. 
‘‘(7) THIRD-PARTY LOGISTICS PROVIDER LICENSES.—Until the 
effective date of the third-party logistics provider licensing regu-
lations under section 584, a third-party logistics provider shall 
be considered ‘licensed’ under section 581(9)(B) unless the Sec-
retary has made a finding that the third-party logistics provider 
does not utilize good handling and distribution practices and 
publishes notice thereof. 
‘‘(8) LABEL
CHANGES.—Changes made to package labels 
solely to incorporate the product identifier may be submitted 
to the Secretary in the annual report of an establishment, 
in accordance with section 314.70(d) of chapter 21, Code of 
Federal Regulations (or any successor regulation). 
‘‘(9) PRODUCT IDENTIFIERS.—With respect to any require-
ment relating to product identifiers under this subchapter— 
‘‘(A) unless the Secretary allows, through guidance, 
the use of other technologies for data instead of or in 
addition to the technologies described in clauses (i) and 
(ii), the applicable data— 
‘‘(i) shall be included in a 2-dimensional data 
matrix barcode when affixed to, or imprinted upon, 
a package; and
H. R. 3204—22 
‘‘(ii) shall be included in a linear or 2-dimensional 
data matrix barcode when affixed to, or imprinted 
upon, a homogeneous case; and 
‘‘(B) verification of the product identifier may occur 
by using human-readable or machine-readable methods. 
‘‘(b) MANUFACTURER REQUIREMENTS.— 
‘‘(1) PRODUCT TRACING.— 
‘‘(A) IN GENERAL.—Beginning not later than January 
1, 2015, a manufacturer shall— 
‘‘(i) prior to, or at the time of, each transaction 
in which such manufacturer transfers ownership of 
a product, provide the subsequent owner with trans-
action history, transaction information, and a trans-
action statement, in a single document in an paper 
or electronic format; and 
‘‘(ii) capture the transaction information (including 
lot level information), transaction history, and trans-
action statement for each transaction and maintain 
such information, history, and statement for not less 
than 6 years after the date of the transaction. 
‘‘(B) REQUESTS FOR INFORMATION.—Upon a request by 
the Secretary or other appropriate Federal or State official, 
in the event of a recall or for the purpose of investigating 
a suspect product or an illegitimate product, a manufac-
turer shall, not later than 1 business day, and not to 
exceed 48 hours, after receiving the request, or in other 
such reasonable time as determined by the Secretary, based 
on the circumstances of the request, provide the applicable 
transaction information, transaction history, and trans-
action statement for the product. 
‘‘(C) ELECTRONIC FORMAT.— 
‘‘(i) IN GENERAL.—Beginning not later than 4 years 
after the date of enactment of the Drug Supply Chain 
Security Act, except as provided under clause (ii), a 
manufacturer shall provide the transaction informa-
tion, transaction history, and transaction statement 
required under subparagraph (A)(i) in electronic for-
mat. 
‘‘(ii) EXCEPTION.—A manufacturer may continue 
to provide the transaction information, transaction his-
tory, and transaction statement required under 
subparagraph (A)(i) in a paper format to a licensed 
health care practitioner authorized to prescribe medica-
tion under State law or other licensed individual under 
the supervision or direction of such a practitioner who 
dispenses product in the usual course of professional 
practice. 
‘‘(2) PRODUCT IDENTIFIER.— 
‘‘(A) IN GENERAL.—Beginning not later than 4 years 
after the date of enactment of the Drug Supply Chain 
Security Act, a manufacturer shall affix or imprint a 
product identifier to each package and homogenous case 
of a product intended to be introduced in a transaction 
into commerce. Such manufacturer shall maintain the 
product identifier information for such product for not less 
than 6 years after the date of the transaction.
H. R. 3204—23 
‘‘(B) EXCEPTION.—A package that is required to have 
a standardized numerical identifier is not required to have 
a unique device identifier. 
‘‘(3) AUTHORIZED TRADING PARTNERS.—Beginning not later 
than January 1, 2015, the trading partners of a manufacturer 
may be only authorized trading partners. 
‘‘(4) VERIFICATION.—Beginning not later than January 1, 
2015, a manufacturer shall have systems in place to enable 
the manufacturer to comply with the following requirements: 
‘‘(A) SUSPECT PRODUCT.— 
‘‘(i) IN GENERAL.—Upon making a determination 
that a product in the possession or control of the manu-
facturer is a suspect product, or upon receiving a 
request for verification from the Secretary that has 
made a determination that a product within the posses-
sion or control of a manufacturer is a suspect product, 
a manufacturer shall— 
‘‘(I) quarantine such product within the posses-
sion or control of the manufacturer from product 
intended for distribution until such product is 
cleared or dispositioned; and 
‘‘(II) promptly conduct an investigation in 
coordination with trading partners, as applicable, 
to determine whether the product is an illegitimate 
product, which shall include validating any 
applicable transaction history and transaction 
information in the possession of the manufacturer 
and otherwise investigating to determine whether 
the product is an illegitimate product, and, begin-
ning 4 years after the date of enactment of the 
Drug Supply Chain Security Act, verifying the 
product at the package level, including the 
standardized numerical identifier. 
‘‘(ii) CLEARED
PRODUCT.—If the manufacturer 
makes the determination that a suspect product is 
not an illegitimate product, the manufacturer shall 
promptly notify the Secretary, if applicable, of such 
determination and such product may be further distrib-
uted. 
‘‘(iii) RECORDS.—A manufacturer shall keep records 
of the investigation of a suspect product for not less 
than 6 years after the conclusion of the investigation. 
‘‘(B) ILLEGITIMATE PRODUCT.— 
‘‘(i) IN GENERAL.—Upon determining that a product 
in the possession or control of a manufacturer is an 
illegitimate product, the manufacturer shall, in a 
manner consistent with the systems and processes of 
such manufacturer— 
‘‘(I) quarantine such product within the posses-
sion or control of the manufacturer from product 
intended for distribution until such product is 
dispositioned; 
‘‘(II) disposition the illegitimate product within 
the possession or control of the manufacturer;
H. R. 3204—24 
‘‘(III) take reasonable and appropriate steps 
to assist a trading partner to disposition an illegit-
imate product not in the possession or control of 
the manufacturer; and 
‘‘(IV) retain a sample of the product for further 
physical examination or laboratory analysis of the 
product by the manufacturer or Secretary (or other 
appropriate Federal or State official) upon request 
by the Secretary (or other appropriate Federal or 
State official), as necessary and appropriate. 
‘‘(ii) MAKING A NOTIFICATION.— 
‘‘(I) 
ILLEGITIMATE
PRODUCT.—Upon 
deter-
mining that a product in the possession or control 
of the manufacturer is an illegitimate product, the 
manufacturer shall notify the Secretary and all 
immediate trading partners that the manufacturer 
has reason to believe may have received such 
illegitimate product of such determination not later 
than 24 hours after making such determination. 
‘‘(II) HIGH RISK OF ILLEGITIMACY.—A manufac-
turer shall notify the Secretary and immediate 
trading partners that the manufacturer has reason 
to believe may have in the trading partner’s 
possession a product manufactured by, or pur-
ported to be a product manufactured by, the manu-
facturer not later than 24 hours after determining 
or being notified by the Secretary or a trading 
partner that there is a high risk that such product 
is an illegitimate product. For purposes of this 
subclause, a ‘high risk’ may include a specific high 
risk that could increase the likelihood that illegit-
imate product will enter the pharmaceutical dis-
tribution supply chain and other high risks as 
determined by the Secretary in guidance pursuant 
to subsection (h). 
‘‘(iii) RESPONDING TO A NOTIFICATION.—Upon the 
receipt of a notification from the Secretary or a trading 
partner that a determination has been made that a 
product is an illegitimate product, a manufacturer shall 
identify all illegitimate product subject to such notifica-
tion that is in the possession or control of the manufac-
turer, including any product that is subsequently 
received, and shall perform the activities described 
in subparagraph (A). 
‘‘(iv) TERMINATING A NOTIFICATION.—Upon making 
a determination, in consultation with the Secretary, 
that a notification is no longer necessary, a manufac-
turer shall promptly notify immediate trading partners 
that the manufacturer notified pursuant to clause (ii) 
that such notification has been terminated. 
‘‘(v) RECORDS.—A manufacturer shall keep records 
of the disposition of an illegitimate product for not 
less than 6 years after the conclusion of the disposition. 
‘‘(C) REQUESTS FOR VERIFICATION.—Beginning 4 years 
after the date of enactment of the Drug Supply Chain 
Security Act, upon receiving a request for verification from
H. R. 3204—25 
an authorized repackager, wholesale distributor, or dis-
penser that is in possession or control of a product such 
person believes to be manufactured by such manufacturer, 
a manufacturer shall, not later than 24 hours after 
receiving the request for verification or in other such 
reasonable time as determined by the Secretary, based 
on the circumstances of the request, notify the person 
making the request whether the product identifier, 
including the standardized numerical identifier, that is 
the subject of the request corresponds to the product identi-
fier affixed or imprinted by the manufacturer. If a manufac-
turer responding to a request for verification identifies 
a product identifier that does not correspond to that affixed 
or imprinted by the manufacturer, the manufacturer shall 
treat such product as suspect product and conduct an inves-
tigation as described in subparagraph (A). If the manufac-
turer has reason to believe the product is an illegitimate 
product, the manufacturer shall advise the person making 
the request of such belief at the time such manufacturer 
responds to the request for verification. 
‘‘(D) ELECTRONIC DATABASE.—A manufacturer may sat-
isfy the requirements of this paragraph by developing a 
secure electronic database or utilizing a secure electronic 
database developed or operated by another entity. The 
owner of such database shall establish the requirements 
and processes to respond to requests and may provide 
for data access to other members of the pharmaceutical 
distribution supply chain, as appropriate. The development 
and operation of such a database shall not relieve a manu-
facturer of the requirement under this paragraph to 
respond to a request for verification submitted by means 
other than a secure electronic database. 
‘‘(E) SALEABLE RETURNED PRODUCT.—Beginning 4 years 
after the date of enactment of the Drug Supply Chain 
Security Act (except as provided pursuant to subsection 
(a)(5)), upon receipt of a returned product that the manufac-
turer intends to further distribute, before further distrib-
uting such product, the manufacturer shall verify the 
product identifier, including the standardized numerical 
identifier, for each sealed homogeneous case of such product 
or, if such product is not in a sealed homogeneous case, 
verify the product identifier, including the standardized 
numerical identifier, on each package. 
‘‘(F) NONSALEABLE RETURNED PRODUCT.—A manufac-
turer may return a nonsaleable product to the manufac-
turer or repackager, to the wholesale distributor from 
whom such product was purchased, or to a person acting 
on behalf of such a person, including a returns processor, 
without providing the information described in paragraph 
(1)(A)(i). 
‘‘(c) WHOLESALE DISTRIBUTOR REQUIREMENTS.— 
‘‘(1) PRODUCT TRACING.— 
‘‘(A) IN GENERAL.—Beginning not later than January 
1, 2015, the following requirements shall apply to wholesale 
distributors: 
‘‘(i) A wholesale distributor shall not accept owner-
ship of a product unless the previous owner prior to,
H. R. 3204—26 
or at the time of, the transaction provides the trans-
action history, transaction information, and a trans-
action statement for the product, as applicable under 
this subparagraph. 
‘‘(ii)(I)(aa) If the wholesale distributor purchased 
a product directly from the manufacturer, the exclusive 
distributor of the manufacturer, or a repackager that 
purchased directly from the manufacturer, then prior 
to, or at the time of, each transaction in which the 
wholesale distributor transfers ownership of a product, 
the wholesale distributor shall provide to the subse-
quent purchaser— 
‘‘(AA) a transaction statement, which shall 
state that such wholesale distributor, or a member 
of the affiliate of such wholesale distributor, pur-
chased the product directly from the manufacturer, 
exclusive distributor of the manufacturer, or re-
packager that purchased the product directly from 
the manufacturer; and 
‘‘(BB) subject to subclause (II), the transaction 
history and transaction information. 
‘‘(bb) The wholesale distributor shall provide the 
transaction history, transaction information, and trans-
action statement under item (aa)— 
‘‘(AA) if provided to a dispenser, on a 
single document in a paper or electronic for-
mat; and 
‘‘(BB) if provided to a wholesale dis-
tributor, through any combination of self-gen-
erated paper, electronic data, or manufacturer- 
provided information on the product package. 
‘‘(II) For purposes of transactions described in sub-
clause (I), transaction history and transaction informa-
tion shall not be required to include the lot number 
of the product, the initial transaction date, or the initial 
shipment date from the manufacturer (as defined in 
subparagraphs (F), (G), and (H) of section 581(26)). 
‘‘(iii) If the wholesale distributor did not purchase 
a product directly from the manufacturer, the exclusive 
distributor of the manufacturer, or a repackager that 
purchased directly from the manufacturer, as described 
in clause (ii), then prior to, or at the time of, each 
transaction or subsequent transaction, the wholesale 
distributor shall provide to the subsequent purchaser 
a transaction statement, transaction history, and trans-
action information, in a paper or electronic format 
that complies with the guidance document issued under 
subsection (a)(2). 
‘‘(iv) For the purposes of clause (iii), the transaction 
history supplied shall begin only with the wholesale 
distributor described in clause (ii)(I), but the wholesale 
distributor described in clause (iii) shall inform the 
subsequent purchaser that such wholesale distributor 
received a direct purchase statement from a wholesale 
distributor described in clause (ii)(I). 
‘‘(v) A wholesale distributor shall—
H. R. 3204—27 
‘‘(I) 
capture 
the 
transaction 
information 
(including lot level information) consistent with 
the requirements of this section, transaction his-
tory, and transaction statement for each trans-
action described in clauses (i), (ii), and (iii) and 
maintain such information, history, and statement 
for not less than 6 years after the date of the 
transaction; and 
‘‘(II) maintain the confidentiality of the trans-
action information (including any lot level informa-
tion consistent with the requirements of this sec-
tion), transaction history, and transaction state-
ment for a product in a manner that prohibits 
disclosure to any person other than the Secretary 
or other appropriate Federal or State official, 
except to comply with clauses (ii) and (iii), and, 
as applicable, pursuant to an agreement under 
subparagraph (D). 
‘‘(B) RETURNS.— 
‘‘(i) 
SALEABLE
RETURNS.—Notwithstanding 
subparagraph (A)(i), the following shall apply: 
‘‘(I) REQUIREMENTS.—Until the date that is 
6 years after the date of enactment of the Drug 
Supply Chain Security Act (except as provided 
pursuant to subsection (a)(5)), a wholesale dis-
tributor may accept returned product from a dis-
penser or repackager pursuant to the terms and 
conditions of any agreement between the parties, 
and, notwithstanding subparagraph (A)(ii), may 
distribute such returned product without providing 
the transaction history. For transactions subse-
quent to the return, the transaction history of 
such product shall begin with the wholesale dis-
tributor that accepted the returned product, con-
sistent with the requirements of this subsection. 
‘‘(II) ENHANCED REQUIREMENTS.—Beginning 6 
years after the date of enactment of the Drug 
Supply Chain Security Act (except as provided 
pursuant to subsection (a)(5)), a wholesale dis-
tributor may accept returned product from a dis-
penser or repackager only if the wholesale dis-
tributor can associate returned product with the 
transaction information and transaction statement 
associated with that product. For all transactions 
after such date, the transaction history, as 
applicable, of such product shall begin with the 
wholesale distributor that accepted and verified 
the returned product. For purposes of this subpara-
graph, the transaction information and transaction 
history, as applicable, need not include transaction 
dates if it is not reasonably practicable to obtain 
such dates. 
‘‘(ii) NONSALEABLE
RETURNS.—A wholesale dis-
tributor may return a nonsaleable product to the manu-
facturer or repackager, to the wholesale distributor 
from whom such product was purchased, or to a person 
acting on behalf of such a person, including a returns