‘‘(ii) MAKING A NOTIFICATION.—Upon 
determining that a prescription drug prod-
uct in the possession or control of the third- 
party logistics provider is an illegitimate 
prescription drug product, the third-party 
logistics provider shall notify the Secretary 
not later than 24 hours after making such 
determination. The Secretary shall deter-
mine whether additional trading partner 
notification is appropriate. 
‘‘(iii) RESPONDING
TO
A
NOTIFICA-
TION.—Upon the receipt of a notification 
from the Secretary, a third-party logistics 
provider shall— 
‘‘(I) identify all illegitimate pre-
scription drug product subject to such 
notification that is in the possession or 
control of the third-party logistics pro-
vider, including any prescription drug 
product that is subsequently received; 
and 
‘‘(II) perform the activities de-
scribed in clause (i). 
‘‘(iv) RECORDS.—A third-party logis-
tics provider shall keep records of the activi-
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ties described in clauses (i) and (ii) with re-
spect to an illegitimate prescription drug 
product for not less than 3 years after the 
conclusion of the disposition. 
‘‘(g) DROP SHIPMENTS.—This section does not apply 
to any entity, notwithstanding its status as a wholesale dis-
tributor or repackager, or other status that is not involved 
in the physical handling, distribution, or storage of a pre-
scription drug product. For purposes of this subsection, fa-
cilitating the distribution of a prescription drug product 
by providing various administrative services, including 
processing of orders and payments, shall not, by itself, be 
construed as being involved in the handling, distribution, 
or storage of a prescription drug product.’’. 
SEC. 3. ENHANCED DRUG DISTRIBUTION SECURITY. 
(a) PILOT PROJECTS.— 
(1) IN GENERAL.—Not later than 2 years after 
the date of the enactment of this Act, the Secretary 
shall establish one or more pilot projects in coordina-
tion with manufacturers, repackagers, wholesale dis-
tributors, third-party logistics providers, and dis-
pensers to explore and evaluate methods to enhance 
the safety and security of the pharmaceutical dis-
tribution supply chain. 
(2) CONTENT.— 
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(A) IN GENERAL.—The Secretary shall en-
sure that the pilot projects under paragraph (1) 
collectively— 
(i) reflect the diversity of the pharma-
ceutical distribution supply chain; and 
(ii) include participants representative 
of every sector within the pharmaceutical 
distribution supply chain, including par-
ticipants representative of small businesses. 
(B) PROJECT DESIGN.—The pilot projects 
shall be designed to— 
(i) utilize the prescription drug prod-
uct identifier for tracing of a prescription 
drug product, which utilization may in-
clude— 
(I) verification of the prescription 
drug product identifier of a prescrip-
tion drug product; and 
(II) the use of aggregation and in-
ference; 
(ii) improve the technical capabilities 
of each sector within the pharmaceutical 
supply chain to comply with systems and 
processes needed to utilize the prescription 
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drug product identifiers to enhance tracing 
of a prescription drug product; and 
(iii) conduct such other activities as 
the Secretary determines appropriate to ex-
plore and evaluate methods to enhance the 
safety and security of the pharmaceutical 
distribution supply chain. 
(b) PUBLIC MEETINGS.— 
(1) IN GENERAL.—Not later than 6 months after 
the date of the enactment of this Act, and at least 
every 6 months thereafter until the submission of the 
report required by subsection (e)(2), the Secretary 
shall hold a public meeting to enhance the safety and 
security of the pharmaceutical distribution supply 
chain. In conducting such meetings, the Secretary 
shall take all measures reasonable and practicable to 
ensure the protection of confidential commercial in-
formation and trade secrets. 
(2) CONTENT.—In conducting meetings under 
this subsection, the Secretary shall seek to address, in 
at least one such meeting, each of the following topics: 
(A) Best practices in each of the sectors 
within the pharmaceutical distribution supply 
chain to implement the requirements of section 
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582 of the Federal Food, Drug, and Cosmetic 
Act, as added by section 2. 
(B) The costs and benefits of implementa-
tion of such section 582, including the impact on 
each pharmaceutical distribution supply chain 
sector and on public health. 
(C) 
Whether 
additional 
electronic 
traceability requirements, including tracing of 
prescription drug product at the package level, 
are feasible, cost effective, overly burdensome on 
small businesses, and needed to protect public 
health. 
(D) The systems and processes needed to 
utilize the prescription drug product identifiers 
to enhance tracing of prescription drug product 
at the package level. 
(E) The technical capabilities and legal au-
thorities, if any, needed to establish an electronic 
system that provides for enhanced tracing of pre-
scription drug product at the package level. 
(F) The impact that the requirements, sys-
tems, processes, capabilities, and legal authori-
ties referred to in subparagraphs (C), (D), and 
(E) would have on patient safety, the drug sup-
ply, cost and regulatory burden, the timeliness of 
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patient access to prescription drugs, and small 
businesses. 
(c) STUDY OF THE PHARMACEUTICAL DISTRIBUTION 
SUPPLY CHAIN.— 
(1) IN GENERAL.—The Comptroller General of 
the United States shall conduct a study to examine 
implementation of the requirements established under 
subchapter H of chapter V of the Federal Food, Drug, 
and Cosmetic Act, as added by section 2, in order to 
inform the regulations promulgated under this sec-
tion. 
(2) CONSIDERATION.—In conducting the study 
under this subsection, the Comptroller General shall 
provide for stakeholder input and shall consider the 
following: 
(A) The implementation of the requirements 
established under such subchapter H with respect 
to— 
(i) the ability of the health care system 
collectively to maintain patient access to 
medicines; 
(ii) the scalability of such require-
ments, including with respect to prescrip-
tion drug product lines; and 
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(iii) the capability of different sectors 
within the pharmaceutical distribution sup-
ply chain, including small businesses, to 
affix and utilize the prescription drug prod-
uct identifier. 
(B) The need for additional legal authori-
ties and activities to address additional gaps in 
the pharmaceutical distribution supply chain, if 
any, after the implementation of the require-
ments established under such subchapter H with 
respect to— 
(i) the systems and processes needed to 
enhance tracing of prescription drug prod-
uct at the package level; 
(ii) the impact, feasibility, and cost ef-
fectiveness that additional requirements 
pursuant to this section would have on each 
pharmaceutical distribution supply chain 
sector and the public health; and 
(iii) the systems and processes needed 
to enhance interoperability among trading 
partners. 
(C) Risks to the security and privacy of 
data collected, maintained, or exchanged pursu-
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ant to the requirements established under such 
subchapter H. 
(d) SMALL DISPENSERS.— 
(1) IN GENERAL.—Not later than 10 years after 
the date of the enactment of this Act, the Secretary 
shall enter into a contract with a private, inde-
pendent consulting firm with relevant expertise to 
conduct a technology and software study on the feasi-
bility of dispensers that have 25 or fewer full-time 
employees conducting interoperable, electronic tracing 
of prescription drug products at the package level. 
(2) CONDITION.—As a condition of the award of 
a contract under paragraph (1), the private inde-
pendent consulting firm awarded such contract shall 
agree to consult with dispensers that have 25 or fewer 
full-time employees when conducting the study under 
such subparagraph. 
(3) STUDY
CONTENT.—The study conducted 
under paragraph (1) shall assess whether, with re-
spect to conducting interoperable, electronic tracing of 
prescription drug products at the package level, the 
necessary hardware and software— 
(A) is readily accessible to such dispensers; 
(B) is not prohibitively expensive to obtain, 
install, and maintain for such dispensers; and 
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(C) can be integrated into business prac-
tices, such as interoperability with wholesale dis-
tributors, for such dispensers. 
(4) PUBLICATION.—The Secretary shall pub-
lish— 
(A) the statement of work for the study con-
ducted under paragraph (1) for public comment 
not later than 30 days before commencing the 
study; and 
(B) the final version of such study for pub-
lic comment not later than 30 days after such 
study is completed. 
(5) REPORT TO CONGRESS.—Not later than 30 
days after the date on which the study conducted 
under paragraph (1) is completed, the Secretary shall 
submit to the Committee on Energy and Commerce of 
the House of Representatives and the Committee on 
Health, Education, Labor, and Pensions of the Sen-
ate, a report on the findings of the study and any rec-
ommendations to improve the technology and software 
available to small dispensers for purposes of con-
ducting electronic, interoperable tracing of prescrip-
tion drug products at the package level. 
(6) PUBLIC MEETING.—Not later than 180 days 
after the date on which the study conducted under 
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paragraph (1) is completed, the Secretary shall hold 
a public meeting at which members of the public, in-
cluding stakeholders, may present their views on the 
study. 
(e) REPORTS.— 
(1) GAO REPORT.—Not later than 12 years after 
the date of the enactment of this Act, the Comptroller 
General shall submit to the Committee on Energy and 
Commerce of the House of Representatives and the 
Committee on Health, Education, Labor, and Pen-
sions of the Senate a report on the results of the study 
conducted under subsection (c). 
(2) FDA REPORT.—Not later than 12 years after 
the date of the enactment of this Act, the Secretary 
shall submit to the Committee on Energy and Com-
merce of the House of Representatives and the Com-
mittee on Health, Education, Labor, and Pensions of 
the Senate a report on the results of the pilot program 
conducted under subsection (a), taking into consider-
ation— 
(A) the comments received during the public 
meetings conducted under subsection (b); and 
(B) the results of the study conducted, and 
the public comments received during the public 
meeting held, under subsection (d). 
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(f) 
ESTABLISHMENT
OF
ADDITIONAL
REQUIRE-
MENTS.— 
(1) IN
GENERAL.—Notwithstanding any other 
provision of this Act, including the amendments made 
by this Act, not earlier than January 1, 2027, and 
not later than March 1, 2027, the Secretary shall 
issue proposed regulations that establish additional 
requirements to prevent a suspect product, illegit-
imate product, or a product that is counterfeit, stolen, 
diverted, or otherwise unfit for distribution from en-
tering into or being further distributed in the supply 
chain, including— 
(A) requirements related to the use of inter-
operable electronic systems and technologies for 
enhanced tracing of prescription drug product at 
the package level, which may include verification 
of the prescription drug product identifier of a 
package of prescription drug product and en-
hanced verification of saleable returns; 
(B) requirements related to the use of addi-
tional prescription drug product identifiers or 
prescription drug product identifier technology 
that meet the standards developed under section 
582(a)(2) of the Federal Food, Drug, and Cos-
metic Act, as added by section 2; 
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(C) requirements related to the use of aggre-
gation, inference, and other methods, if deter-
mined to be necessary components of the systems 
and technologies referred to in subparagraph (A); 
and 
(D) other data transmission and mainte-
nance requirements and interoperability stand-
ards. 
(2) FLEXIBILITY.—The requirements described in 
paragraph (1) shall provide for flexibility for a mem-
ber of the pharmaceutical supply chain, by— 
(A) with respect to dispensers, allowing a 
dispenser to enter into a written agreement with 
a third party, including an authorized wholesale 
distributor, under which— 
(i) the third party confidentially 
maintains any information required to be 
maintained under such requirements for the 
dispenser; and 
(ii) the dispenser maintains a copy of 
the written agreement and is not relieved of 
the other obligations of the dispenser under 
such requirements; 
(B) establishing a process by which an au-
thorized manufacturer, repackager, wholesale dis-
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tributor, or dispenser may request a waiver from 
any such requirements if the Secretary deter-
mines that such requirements would result in an 
undue economic hardship on the manufacturer, 
wholesale distributor, or dispenser; 
(C) not requiring the adoption of specific 
business systems by a member of the pharma-
ceutical supply chain for the maintenance and 
transmission of prescription drug product trac-
ing data; and 
(D) prescribing alternative methods of com-
pliance for small businesses, as specified in 
paragraph (4). 
(3) CONSIDERATIONS.—In issuing proposed reg-
ulations under paragraph (1), the Secretary shall 
consider— 
(A) the results of the pilot project conducted 
under subsection (a); 
(B) the public meetings held under sub-
section (b); 
(C) the studies conducted under subsections 
(c) and (d); 
(D) the reports submitted under subsection 
(e); 
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(E) the public health benefits of such regula-
tions compared with the cost of compliance with 
the requirements contained in such regulations, 
including with respect to entities of varying sizes 
and capabilities; and 
(F) the diversity of the pharmaceutical dis-
tribution supply chain by providing appropriate 
flexibility for each sector in the supply chain, in-
cluding small businesses. 
(4) SMALL
BUSINESS
PROTECTION.—The Sec-
retary, taking into consideration the study conducted 
under paragraph (d), shall, if the Secretary deter-
mines that the requirements established pursuant to 
paragraph (1) would result in an undue economic 
hardship on small businesses, provide for alternative 
methods of compliance with any such requirement by 
small businesses, including— 
(A) establishing timelines for such compli-
ance (including compliance by dispensers with 
25 or fewer full-time employees) that do not im-
pose undue economic hardship for small busi-
nesses, including dispensers with respect to 
which the study concluded has insufficient hard-
ware and software to conduct interoperable, elec-
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tronic tracing of prescription drug products at 
the package level; and 
(B) establishing a process by which a dis-
penser may request a waiver from any such re-
quirement. 
(5) REGULATIONS.—In issuing regulations to 
carry out this subsection, the Secretary shall— 
(A) issue a notice of proposed rulemaking 
that includes a copy of the proposed rule; 
(B) provide for a period of not less than 60 
days for comments on the proposed rule; and 
(C) provide for an effective date of the final 
rule that is 2 years after the date on which such 
final rule is published. 
(6) SUNSET.—The requirements regarding the 
provision and receipt of transaction history and 
transaction statements under section 582 of the Fed-
eral Food, Drug, and Cosmetic Act, as added by sec-
tion 2, shall cease to be effective on the date on which 
the regulations issued under this section are fully im-
plemented. 
(g) DEFINITIONS.—In this section: 
(1) The terms defined in section 581 of the Fed-
eral Food, Drug, and Cosmetic Act, as added by sec-
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tion 2, shall have the same meanings in this section 
as such terms are given in such section 581. 
(2) The term ‘‘Secretary’’ means the Secretary of 
Health and Human Services, acting through the Com-
missioner of Food and Drugs. 
SEC. 4. NATIONAL STANDARDS FOR WHOLESALE DISTRIBU-
TORS. 
(a) STANDARDS.—Chapter V of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amend-
ed— 
(1) in section 503 (21 U.S.C. 353), by striking 
‘‘(e)(1)(A)’’ and all that follows through ‘‘(3) For the 
purposes of this subsection and subsection (d)—’’ and 
inserting the following: 
‘‘(e) For purposes of subsection (d)—’’; 
(2) in section 503(e) (21 U.S.C. 353(e)), by re-
designating subparagraphs (A) and (B) as para-
graphs (1) and (2), respectively; and 
(3) in subchapter H, as added by section 2, by 
adding at the end the following: 
‘‘SEC. 583. NATIONAL STANDARDS FOR WHOLESALE DIS-
TRIBUTORS. 
‘‘(a) STANDARDS.— 
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‘‘(1) IN GENERAL.—The Secretary shall establish, 
by regulation, standards for the licensing of persons 
that make wholesale distributions. 
‘‘(2) REQUIREMENTS.—The standards under 
paragraph (1) shall, with respect to wholesale dis-
tributions, include requirements for— 
‘‘(A) the storage and handling of drugs sub-
ject to section 503(b)(1), including facility re-
quirements; 
‘‘(B) the establishment and maintenance of 
records of the distributions of such drugs; 
‘‘(C) the furnishing of a bond or other 
equivalent means of security in accordance with 
paragraph (3); 
‘‘(D) mandatory background checks and 
fingerprinting of facility managers or designated 
representatives; 
‘‘(E) the establishment and implementation 
of qualifications for key personnel; 
‘‘(F) the mandatory physical inspection of 
any facility to be used in wholesale distribution 
within a reasonable timeframe from the initial 
application for licensure of the wholesale dis-
tributor; and 
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‘‘(G) in accordance with paragraph (5), the 
prohibition of certain persons from engaging in 
wholesale distribution. 
‘‘(3) BOND OR OTHER SECURITY.—The require-
ments under paragraph (2)(C) shall provide for the 
following: 
‘‘(A) An applicant that is not a govern-
ment-owned-and-operated wholesale distributor, 
for the issuance or renewal of a wholesale dis-
tributor license, shall submit a surety bond of 
$100,000 or other equivalent means of security 
acceptable to the applicable licensing authority. 
‘‘(B) For purposes of subparagraph (A), the 
applicable licensing authority may accept a sur-
ety bond less than $100,000 if the annual gross 
receipts of the previous tax year for the wholesale 
distributor is $10,000,000 or less, in which case 
the surety bond may not be less than $25,000. 
‘‘(C) If a wholesale distributor can provide 
evidence that it possesses the required bond in a 
State, the requirement for a bond in another 
State is waived. 
‘‘(4) INSPECTIONS.—To satisfy the inspection re-
quirement under paragraph (2)(F), the Secretary 
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may conduct the inspection, or may accept an inspec-
tion by— 
‘‘(A) the government of the State in which 
the facility is located; or 
‘‘(B) a third-party accreditation or inspec-
tion service approved by the Secretary. 
‘‘(5) PROHIBITED PERSONS.—The requirements 
under paragraph (2) shall include requirements to 
prohibit a person from receiving or maintaining li-
censure for wholesale distribution if the person— 
‘‘(A) has been convicted of any felony for 
conduct relating to wholesale distribution; any 
felony violation of section 301(i) or 301(k); or 
any felony violation of section 1365 of title 18, 
United States Code, relating to prescription drug 
product tampering; or 
‘‘(B) has engaged in a pattern of violating 
the requirements of this section that presents a 
threat of serious adverse health consequences or 
death to humans. 
‘‘(b) REPORTING
BY LICENSED WHOLESALE DIS-
TRIBUTORS.— 
‘‘(1) ANNUAL
REPORT.—Beginning not later 
than 1 year after the date of the enactment of this sec-
tion, each person engaged in wholesale distribution in 
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interstate commerce shall submit on an annual basis, 
and update as necessary, a report to the Secretary in-
cluding— 
‘‘(A) the wholesale distributor’s name; 
‘‘(B) the wholesale distributor’s address; 
‘‘(C) a listing of each State in which the 
wholesale distributor is licensed for wholesale 
distribution; and 
‘‘(D) any disciplinary actions taken by a 
State, the Federal Government, or a foreign gov-
ernment during the reporting period against the 
wholesale distributor. 
‘‘(2) POSTING
ON
INTERNET.—The Secretary 
shall post on the public Internet Website of the Food 
and Drug Administration the name of each wholesale 
distributor, and the State in which each such dis-
tributor is licensed, based on reports under paragraph 
(1). 
‘‘(c) PRESERVATION
OF STATE AUTHORITY.—This 
subchapter does not prohibit a State from— 
‘‘(1) licensing wholesale distributors for the con-
duct of wholesale distribution activities in the State 
in accordance with this subchapter; and 
‘‘(2) collecting fees from wholesale distributors in 
connection with such licensing, 
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so long as the State does not require such licensure to the 
extent to which an entity is engaged in third-party logistics 
provider activities. 
‘‘(d) DEFINITION.—In this section, the term ‘wholesale 
distribution’ means the distribution of a drug subject to sec-
tion 503(b)(1) to a person other than a consumer or patient, 
but does not include— 
‘‘(1) intracompany distribution of any drug be-
tween members of an affiliated group (as defined in 
section 1504(a) of the Internal Revenue Code of 
1986); 
‘‘(2) the distribution of a drug, or an offer to 
distribute a drug among hospitals or other health care 
entities which are under common control; 
‘‘(3) the distribution of a drug or an offer to dis-
tribute a drug for emergency medical reasons, includ-
ing 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 constitute such an emergency 
medical reason; 
‘‘(4) dispensing of a drug pursuant to a valid 
prescription executed in accordance with subsection 
503(b)(1); 
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‘‘(5) the distribution of minimal quantities of 
drug by a licensed retail pharmacy to a licensed 
practitioner for office use; 
‘‘(6) the distribution of a drug or an offer to dis-
tribute a drug by a charitable organization to a non-
profit affiliate of the organization to the extent other-
wise permitted by law; 
‘‘(7) the purchase or other acquisition by a dis-
penser, hospital, or other health care entity of a drug 
for use by such dispenser, hospital, or other health 
care entity; 
‘‘(8) the distribution of a drug by the manufac-
turer of such drug; 
‘‘(9) the receipt or transfer of a drug by an au-
thorized third-party logistics provider provided that 
such third-party logistics provider does not take own-
ership of the drug; 
‘‘(10) the transport of a drug by a common car-
rier, provided that the common carrier does not take 
ownership of the drug; 
‘‘(11) the distribution of a drug, or an offer to 
distribute a drug, by an authorized repackager that 
has taken ownership of the drug and repacked it in 
accordance with section 582(e); 
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‘‘(12) saleable drug returns when conducted by a 
dispenser in accordance with section 203.23 of title 
21, Code of Federal Regulations (or any successor reg-
ulation); 
‘‘(13) the distribution of a combination prescrip-
tion 
drug 
product 
described 
in 
section 
581(20)(B)(xiii); 
‘‘(14) the distribution of a medical convenience 
kit described in section 581(21)(B)(xiv); 
‘‘(15) the distribution of an intravenous drug 
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); 
‘‘(16) the distribution of an intravenous drug 
used to maintain the equilibrium of water and min-
erals in the body, such as dialysis solutions; 
‘‘(17) the distribution of a drug that is intended 
for irrigation or reconstitution, or sterile water, 
whether intended for such purposes or for injection; 
‘‘(18) the distribution of compressed medical gas 
(as defined in section 581(21)(C)); 
‘‘(19) facilitating the distribution of a prescrip-
tion drug product by providing administrative serv-
ices, such as processing of orders and payments, with-
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out physical handling, distribution, or storage of a 
prescription drug product; or 
‘‘(20)(A) the distribution of a product by a dis-
penser, or a wholesale distributor acting at the direc-
tion of the dispenser, to a repackager registered under 
section 510 for the purpose of repackaging the drug 
for use by that dispenser or another health care entity 
that is under the dispenser’s ownership or control, so 
long as the dispenser retains ownership of the pre-
scription drug product; and 
‘‘(B) the saleable or nonsaleable return by such 
repackager of such prescription drug product. 
‘‘(e) EFFECTIVE DATE.—The standards required by 
subsection (a) shall take effect not later than 2 years after 
the date of the enactment of this section. The Secretary shall 
issue the regulations required by subsection (a) not later 
than 1 year after the date of the enactment of this Act.’’. 
(b) CONFORMING AMENDMENT.—Section 804(a)(5)(A) 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
384(a)(5)(A)) is amended by striking ‘‘503(e)(2)(A)’’ and 
inserting ‘‘583(a)’’. 
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