cine is certified as medically necessary by such 
health care professional (except that the Secretary 
shall encourage to the maximum extent possible the 
substitution and use of lower-cost generics), up to 
the benefit limits specified in section 1860D–3; and 
‘‘(2) charging by pharmacies of the negotiated 
price— 
‘‘(A) for all covered prescription medicines, 
without regard to such benefit limit; and 
‘‘(B) established with respect to any drugs 
or classes of drugs described in subparagraphs 
(A), (B), (D), (E), or (F) of section 1927(d)(2) 
that are available to individuals receiving bene-
fits under this title. 
‘‘(b) COVERED PRESCRIPTION MEDICINES.— 
‘‘(1) IN GENERAL.—Covered prescription medi-
cines, for purposes of this part, include all prescrip-
tion medicines (as defined in section 1860D–10(1)), 
including smoking cessation agents, except as other-
wise provided in this subsection. 
‘‘(2) EXCLUSIONS FROM COVERAGE.—Covered 
prescription medicines shall not include drugs or 
classes of drugs described in subparagraphs (A) 
through (D) and (F) through (H) of section 
1927(d)(2) unless— 
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‘‘(A) specifically provided otherwise by the 
Secretary with respect to a drug in any of such 
classes; or 
‘‘(B) a drug in any of such classes is cer-
tified to be medically necessary by a health care 
professional. 
‘‘(3) EXCLUSION OF PRESCRIPTION MEDICINES 
TO THE EXTENT COVERED UNDER PART A OR B.— 
A medicine prescribed for an individual that would 
otherwise be a covered prescription medicine under 
this part shall not be so considered to the extent 
that payment for such medicine is available under 
part A or B, including all injectable drugs and 
biologicals for which payment was made or should 
have been made by a carrier under section 
1861(s)(2) (A) or (B) as of the date of enactment 
of the Medicare Drugs for Seniors (MEDS) Act of 
2008. Medicines otherwise covered under part A or 
B shall be covered under this part to the extent that 
benefits under part A or B are exhausted. 
‘‘(4) STUDY ON INCLUSION OF HOME INFUSION 
THERAPY SERVICES.—Not later than one year after 
the date of the enactment of the Medicare Drugs for 
Seniors (MEDS) Act of 2008, the Secretary shall 
submit to Congress a legislative proposal for the de-
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livery of home infusion therapy services under this 
title and for a system of payment for such a benefit 
that coordinates items and services furnished under 
part B and under this part. 
‘‘PAYMENT OF BENEFITS 
‘‘SEC. 1860D–3. 
‘‘There shall be paid from the Prescription Medicine 
Insurance Account within the Supplementary Medical In-
surance Trust Fund, in the case of each individual who 
is enrolled in the insurance program under this part and 
who purchases covered prescription medicines in a cal-
endar year, 100 percent of the negotiated price for each 
such covered prescription medicine. 
‘‘ELIGIBILITY AND ENROLLMENT 
‘‘SEC. 1860D–4. (a) ELIGIBILITY.—Every individual 
who, during or after 2009, is entitled to hospital insurance 
benefits under part A or enrolled in the medical insurance 
program under part B, whether or not the individual is 
enrolled in a Medicare Advantage plan under part C, is 
eligible to enroll, in accordance with the provisions of this 
section, in the insurance program under this part, during 
an enrollment period under this section, in such manner 
and form specified by the Secretary in regulations. 
‘‘(b) ENROLLMENT.— 
‘‘(1) IN GENERAL.—Each individual who satis-
fies subsection (a) shall be enrolled (or eligible to en-
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roll) in the program under this part in accordance 
with the provisions of section 1837, as if that section 
applied to this part, except as otherwise explicitly 
provided in this part. 
‘‘(2) SINGLE ENROLLMENT PERIOD.—Except as 
provided in section 1837(i) (as such section applies 
to this part) or 1860D–8(e), or as otherwise explic-
itly provided, no individual shall be entitled to enroll 
in the program under this part at any time after the 
initial enrollment period without penalty, and in the 
case of all other late enrollments, the Secretary shall 
develop a late enrollment penalty for the individual 
that fully recovers the additional actuarial risk in-
volved providing coverage for the individual. 
‘‘(3) 
SPECIAL
ENROLLMENT
PERIOD
FOR 
2009.— 
‘‘(A) IN
GENERAL.—An individual who 
first satisfies subsection (a) in 2009 may on or 
after the date on which they first become eligi-
ble and at any time on or before December 31, 
2009— 
‘‘(i) enroll in the program under this 
part; and 
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‘‘(ii) enroll or reenroll in such pro-
gram after having previously declined or 
terminated enrollment in such program. 
‘‘(B) EFFECTIVE DATE OF COVERAGE.— 
An individual who enrolls under the program 
under this part pursuant to subparagraph (A) 
shall be entitled to benefits under this part be-
ginning on the first day of the month following 
the month in which such enrollment occurs, but 
in no case earlier than January 1, 2010. 
‘‘(c) PERIOD OF COVERAGE.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this part, an individual’s coverage under the 
program under this part shall be effective for the pe-
riod provided in section 1838, as if that section ap-
plied to the program under this part. 
‘‘(2) PART D COVERAGE TERMINATED BY TER-
MINATION OF COVERAGE UNDER PARTS A AND B.— 
In addition to the causes of termination specified in 
section 1838, an individual’s coverage under this 
part shall be terminated if the individual retains cov-
erage under neither the program under part A nor 
the program under part B, effective on the effective 
date of termination of coverage under part A or (if 
later) under part B. 
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‘‘NO PREMIUM 
‘‘SEC. 1860D–5. There is no premium for enrollment 
under this part. 
‘‘PRESCRIPTION MEDICINE INSURANCE ACCOUNT 
‘‘SEC. 1860D–6. (a) ESTABLISHMENT.—There is 
created within the Federal Supplemental Medical Insur-
ance Trust Fund established by section 1841 an account 
to be known as the ‘Prescription Medicine Insurance Ac-
count’ (in this section referred to as the ‘Account’). 
‘‘(b) AMOUNTS IN ACCOUNT.— 
‘‘(1) IN GENERAL.—The Account shall consist 
of— 
‘‘(A) such amounts as may be deposited in, 
or appropriated to, such fund as provided in 
this part; and 
‘‘(B) such gifts and bequests as may be 
made as provided in section 201(i)(1). 
‘‘(2) SEPARATION OF FUNDS.—Funds provided 
under this part to the Account shall be kept sepa-
rate from all other funds within the Federal Supple-
mental Medical Insurance Trust Fund. 
‘‘(c) PAYMENTS FROM ACCOUNT.—The Managing 
Trustee shall pay from time to time from the Account such 
amounts as the Secretary certifies are necessary to make 
the payments provided for by this part, and the payments 
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with respect to administrative expenses in accordance with 
section 201(g). 
‘‘ADMINISTRATION OF BENEFITS 
‘‘SEC. 1860D–7. (a) THROUGH CMS.—The Sec-
retary shall provide for administration of the benefits 
under this part through the Centers for Medicare & Med-
icaid Services in accordance with the provisions of this sec-
tion. The Administrator of such Centers may enter into 
contracts with carriers to administer this part in the same 
manner as the Administrator enters into such contracts 
to administer part B. Any such contract shall be separate 
from any contract under section 1842. 
‘‘(b) ADMINISTRATION FUNCTIONS.—In carrying out 
this part, the Administrator (or a carrier under a contract 
with the Administrator) shall (or in the case of the func-
tion described in paragraph (9), may) perform the fol-
lowing functions: 
‘‘(1) PARTICIPATION
AGREEMENTS, 
PRICES, 
AND FEES.— 
‘‘(A) 
NEGOTIATED
PRICES.—Establish, 
through negotiations with medicine manufactur-
ers and wholesalers and pharmacies, a schedule 
of prices for covered prescription medicines. 
‘‘(B) AGREEMENTS WITH PHARMACIES.— 
Enter into participation agreements under sub-
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section (c) with pharmacies, that include terms 
that— 
‘‘(i) secure the participation of suffi-
cient numbers of pharmacies to ensure 
convenient 
access 
(including 
adequate 
emergency access); 
‘‘(ii) permit the participation of any 
pharmacy in the service area that meets 
the participation requirements described in 
subsection (c); and 
‘‘(iii) allow for reasonable dispensing 
and consultation fees for pharmacies. 
‘‘(C) LISTS OF PRICES AND PARTICIPATING 
PHARMACIES.—Ensure 
that 
the 
negotiated 
prices established under subparagraph (A) and 
the list of pharmacies with agreements under 
subsection (c) are regularly updated and readily 
available to health care professionals authorized 
to prescribe medicines, participating phar-
macies, and enrolled individuals. 
‘‘(2) TRACKING OF COVERED ENROLLED INDI-
VIDUALS.—Maintain accurate, updated records of all 
enrolled individuals (other than individuals enrolled 
in a plan under part C). 
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‘‘(3) PAYMENT AND COORDINATION OF BENE-
FITS.— 
‘‘(A) PAYMENT.— 
‘‘(i) Administer claims for payment of 
benefits under this part and encourage, to 
the maximum extent possible, use of elec-
tronic means for the submissions of claims. 
‘‘(ii) Determine amounts of benefit 
payments to be made. 
‘‘(iii) Receive, disburse, and account 
for funds used in making such payments, 
including through the activities specified in 
the provisions of this paragraph. 
‘‘(B) 
COORDINATION.—Coordinate 
with 
other private benefit providers, pharmacies, and 
other relevant entities as necessary to ensure 
appropriate coordination of benefits with re-
spect to enrolled individuals, including coordina-
tion of access to and payment for covered pre-
scription medicines according to an individual’s 
in-service area plan provisions, when such indi-
vidual is traveling outside the home service 
area, and under such other circumstances as 
the Secretary may specify. 
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‘‘(C) EXPLANATION OF BENEFITS.—Fur-
nish to enrolled individuals an explanation of 
benefits in accordance with section 1806(a), 
and a notice of the balance of benefits remain-
ing for the current year, whenever prescription 
medicine benefits are provided under this part 
(except that such notice need not be provided 
more often than monthly). 
‘‘(4) RULES RELATING TO PROVISION OF BENE-
FITS.— 
‘‘(A) IN GENERAL.—In providing benefits 
under this part, the Secretary (directly or 
through contracts) shall employ mechanisms to 
provide benefits economically, including the use 
of— 
‘‘(i) formularies (consistent with sub-
paragraph (B)); 
‘‘(ii) automatic generic medicine sub-
stitution (unless the physician specifies 
otherwise, in which case a 30-day prescrip-
tion may be dispensed pending a consulta-
tion with the physician on whether a ge-
neric substitute can be dispensed in the fu-
ture); and 
‘‘(iii) therapeutic interchange. 
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‘‘(B) REQUIREMENTS WITH RESPECT TO 
FORMULARIES.—If a formulary is used to con-
tain costs under this part— 
‘‘(i) use an advisory committee (or a 
therapeutics committee) comprised of li-
censed practicing physicians, pharmacists, 
and other health care practitioners to de-
velop and manage the formulary; 
‘‘(ii) include in the formulary at least 
one medicine from each therapeutic class 
and, if available, a generic equivalent 
thereof; and 
‘‘(iii) disclose to current and prospec-
tive enrollees and to participating providers 
and pharmacies, the nature of the for-
mulary restrictions, including information 
regarding the medicines included in the 
formulary. 
‘‘(C) CONSTRUCTION.—Nothing in this 
subsection shall be construed to prevent the 
Secretary (directly or through contracts) from 
using incentives to encourage enrollees to select 
generic or other cost-effective medicines, so long 
as— 
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‘‘(i) such incentives are designed not 
to result in any increase in the aggregate 
expenditures under the Federal Medicare 
Prescription Medicine Trust Fund; and 
‘‘(ii) the reimbursement for a pre-
scribed nonformulary medicine without a 
restrictive prescription in no case shall be 
more than the lowest reimbursement for a 
formulary medicine in the therapeutic class 
of the prescribed medicine. 
‘‘(D) RESTRICTIVE
PRESCRIPTION.—For 
purposes of this section: 
‘‘(i) WRITTEN
PRESCRIPTIONS.—In 
the case of a written prescription for a 
medicine, it is a restrictive prescription 
only if the prescription indicates, in the 
writing of the physician or other qualified 
person prescribing the medicine and with 
an appropriate phrase (such as ‘brand 
medically necessary’) recognized by the 
Secretary, that a particular medicine prod-
uct must be dispensed based upon a belief 
by the physician or person prescribing the 
medicine that the particular medicine will 
provide even marginally superior thera-
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peutic benefits to the individual for whom 
the medicine is prescribed or would have 
marginally fewer adverse reactions with re-
spect to such individual. Such written con-
firmation is required to refill the prescrip-
tion. 
‘‘(iii) REVIEW OF RESTRICTIVE PRE-
SCRIPTIONS.—The advisory committee (es-
tablished under subparagraph (B)(i)) may 
decide to review a restrictive prescription 
and, if so, it may approve or disapprove 
such restrictive prescription. It may not 
disapprove such restrictive prescription un-
less it finds that there is no literature ap-
proved by the Food and Drug Administra-
tion that supports a determination that the 
particular medicine provides even margin-
ally superior therapeutic benefits to the in-
dividual for whom the medicine is pre-
scribed or would have marginally fewer ad-
verse reactions with respect to such indi-
vidual. If it disapproves, upon request of 
the prescribing physician or the enrollee, 
the committee must provide for a review by 
an independent contractor of such decision 
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within 48 hours of the time of submission 
of the prescription, to determine whether 
the prescription is an eligible benefit under 
this part. The Secretary shall ensure that 
independent contractors so used are com-
pletely independent of the contractor or its 
advisory committee. 
‘‘(5) COST
AND
UTILIZATION
MANAGEMENT; 
QUALITY ASSURANCE.—Have in place effective cost 
and utilization management, drug utilization review, 
quality assurance measures, and systems to reduce 
medical errors, including at least the following, to-
gether with such additional measures as the Admin-
istrator may specify: 
‘‘(A) DRUG UTILIZATION REVIEW.—A drug 
utilization review program conforming to the 
standards provided in section 1927(g)(2) (with 
such modifications as the Administrator finds 
appropriate). 
‘‘(B) FRAUD AND ABUSE CONTROL.—Ac-
tivities to control fraud, abuse, and waste, in-
cluding prevention of diversion of pharma-
ceuticals to the illegal market. 
‘‘(C) 
MEDICATION
THERAPY
MANAGE-
MENT.— 
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‘‘(i) IN
GENERAL.—A program of 
medicine therapy management and medica-
tion administration that is designed to as-
sure that covered outpatient medicines are 
appropriately used to achieve therapeutic 
goals and reduce the risk of adverse 
events, including adverse drug interactions. 
‘‘(ii) ELEMENTS.—Such program may 
include— 
‘‘(I) enhanced beneficiary under-
standing of such appropriate use 
through beneficiary education, coun-
seling, and other appropriate means; 
and 
‘‘(II) increased beneficiary adher-
ence with prescription medication 
regimens through medication refill re-
minders, special packaging, and other 
appropriate means. 
‘‘(iii) DEVELOPMENT OF PROGRAM IN 
COOPERATION
WITH
LICENSED
PHAR-
MACISTS.—The program shall be developed 
in cooperation with licensed pharmacists 
and physicians. 
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‘‘(iv) CONSIDERATIONS IN PHARMACY 
FEES.—There shall be taken into account, 
in establishing fees for pharmacists and 
others providing services under the medica-
tion therapy management program, the re-
sources and time used in implementing the 
program. 
‘‘(6) EDUCATION
AND
INFORMATION
ACTIVI-
TIES.—Have in place mechanisms for disseminating 
educational and informational materials to enrolled 
individuals and health care providers designed to en-
courage effective and cost-effective use of prescrip-
tion medicine benefits and to ensure that enrolled in-
dividuals understand their rights and obligations 
under the program. 
‘‘(7) BENEFICIARY PROTECTIONS.— 
‘‘(A) CONFIDENTIALITY
OF
HEALTH
IN-
FORMATION.—Have in effect systems to safe-
guard the confidentiality of health care infor-
mation on enrolled individuals, which comply 
with section 1106 and with section 552a of title 
5, United States Code, and meet such addi-
tional standards as the Administrator may pre-
scribe. 
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‘‘(B) GRIEVANCE
AND
APPEAL
PROCE-
DURES.—Have in place such procedures as the 
Administrator may specify for hearing and re-
solving grievances and appeals, including expe-
dited appeals, brought by enrolled individuals 
against the Administrator or a pharmacy con-
cerning benefits under this part, which shall in-
clude procedures equivalent to those specified in 
subsections (f) and (g) of section 1852. 
‘‘(8) RECORDS, REPORTS, AND AUDITS.— 
‘‘(A) RECORDS
AND
AUDITS.—Maintain 
adequate records, and afford the Administrator 
access to such records (including for audit pur-
poses). 
‘‘(B) REPORTS.—Make such reports and 
submissions of financial and utilization data as 
the Administrator may require taking into ac-
count standard commercial practices. 
‘‘(9) PROPOSAL
FOR
ALTERNATIVE
COINSUR-
ANCE AMOUNT.— 
‘‘(A) 
SUBMISSION.—The 
Administrator 
may provide for increased Government cost- 
sharing for generic prescription medicines, pre-
scription medicines on a formulary, or prescrip-
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tion medicines obtained through mail order 
pharmacies. 
‘‘(B) CONTENTS.—The proposal submitted 
under subparagraph (A) shall contain evidence 
that such increased cost-sharing would not re-
sult in an increase in aggregate costs to the Ac-
count, including an analysis of differences in 
projected drug utilization patterns by bene-
ficiaries whose cost-sharing would be reduced 
under the proposal and those making the cost- 
sharing payments that would otherwise apply. 
‘‘(10) OTHER
REQUIREMENTS.—Meet such 
other requirements as the Secretary may specify. 
The Administrator shall negotiate a schedule of prices 
under paragraph (1)(A), except that nothing in this sen-
tence shall prevent a carrier under a contract with the Ad-
ministrator from negotiating a lower schedule of prices for 
covered prescription medicines. 
‘‘(c) PHARMACY PARTICIPATION AGREEMENTS.— 
‘‘(1) IN GENERAL.—A pharmacy that meets the 
requirements of this subsection shall be eligible to 
enter an agreement with the Administrator to fur-
nish covered prescription medicines and pharmacists’ 
services to enrolled individuals. 
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‘‘(2) TERMS OF AGREEMENT.—An agreement 
under this subsection shall include the following 
terms and requirements: 
‘‘(A) LICENSING.—The pharmacy and 
pharmacists shall meet (and throughout the 
contract period will continue to meet) all appli-
cable State and local licensing requirements. 
‘‘(B) LIMITATION
ON
CHARGES.—Phar-
macies participating under this part shall not 
charge an enrolled individual more than the ne-
gotiated price for an individual medicine as es-
tablished under subsection (b)(1), regardless of 
whether such individual has attained the benefit 
limit under section 1860D–3(b), and shall not 
charge an enrolled individual more than the in-
dividual’s share of the negotiated price as deter-
mined under the provisions of this part. 
‘‘(C) 
PERFORMANCE
STANDARDS.—The 
pharmacy and the pharmacist shall comply with 
performance standards relating to— 
‘‘(i) measures for quality assurance, 
reduction of medical errors, and participa-
tion in the drug utilization review program 
described in subsection (b)(3)(A); 
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‘‘(ii) systems to ensure compliance 
with the confidentiality standards applica-
ble under subsection (b)(5)(A); and 
‘‘(iii) other requirements as the Sec-
retary may impose to ensure integrity, effi-
ciency, and the quality of the program. 
‘‘(D) DISCLOSURE OF PRICE OF GENERIC 
MEDICINE.—A pharmacy participating under 
this part shall inform an enrollee of the dif-
ference in price between generic and non-ge-
neric equivalents. 
‘‘(d) SPECIAL ATTENTION TO RURAL AND HARD-TO- 
SERVE AREAS.— 
‘‘(1) IN GENERAL.—The Secretary shall ensure 
that all beneficiaries have access to the full range of 
pharmaceuticals under this part, and shall give spe-
cial attention to access, pharmacist counseling, and 
delivery in rural and hard-to-serve areas (as the Sec-
retary may define by regulation). 
‘‘(2) SPECIAL ATTENTION DEFINED.—For pur-
poses of paragraph (1), the term ‘special attention’ 
may include bonus payments to retail pharmacists in 
rural areas and any other actions the Secretary de-
termines are necessary to ensure full access to rural 
and hard-to-serve beneficiaries. 
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‘‘(3) GAO REPORT.—Not later than two years 
after the implementation of this part the Comp-
troller General of the United States shall submit to 
Congress a report on the access of medicare bene-
ficiaries to pharmaceuticals and pharmacists’ serv-
ices in rural and hard-to-serve areas under this part 
together with any recommendations of the Comp-
troller General regarding any additional steps the 
Secretary may need to take to ensure the access of 
medicare beneficiaries to pharmaceuticals and phar-
macists’ services in such areas under this part. 
‘‘(e) INCENTIVES FOR COST AND UTILIZATION MAN-
AGEMENT AND QUALITY IMPROVEMENT.—The Secretary 
is authorized to include in a contract awarded under sub-
section (b) with a carrier such incentives for cost and utili-
zation management and quality improvement as the Sec-
retary may deem appropriate, including— 
‘‘(1) bonus and penalty incentives to encourage 
administrative efficiency; 
‘‘(2) incentives under which carriers share in 
any benefit savings achieved; 
‘‘(3) risk-sharing arrangements related to ini-
tiatives to encourage savings in benefit payments; 
‘‘(4) financial incentives under which savings 
derived from the substitution of generic medicines in 
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lieu of non-generic medicines are made available to 
carriers, pharmacies, and the Prescription Medicine 
Insurance Account; and 
‘‘(5) any other incentive that the Secretary 
deems appropriate and likely to be effective in man-
aging costs or utilization. 
‘‘PROMOTION
OF
PHARMACEUTICAL
RESEARCH
ON 
BREAK-THROUGH
MEDICINES
WHILE
PROVIDING 
PROGRAM COST CONTAINMENT 
‘‘SEC. 
1860D–8. 
(a) 
MONITORING
EXPENDI-
TURES.—The Secretary shall monitor expenditures under 
this part. On October 1, 2009, the Secretary shall esti-
mate total expenditures under this part for 2010. 
‘‘(b) ESTABLISHMENT
OF SUSTAINABLE GROWTH 
RATE.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a sustainable growth rate prescription medicine 
target system for expenditures under this part for 
each year after 2010. 
‘‘(2) INITIAL COMPUTATION.—Such target shall 
equal the amount of total expenditures estimated for 
2010 adjusted by the Secretary’s estimate of a sus-
tainable growth rate (in this section referred to as 
an ‘SGR’) percentage between 2010 and 2011. Such 
SGR shall be estimated based on the following: 
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‘‘(A) Reasonable changes in the cost of 
production or price of covered pharmaceuticals, 
but in no event more than the rate of increase 
in the consumer price index for all urban con-
sumers for the period involved. 
‘‘(B) Population enrolled in this part, both 
in numbers and in average age and severity of 
chronic and acute illnesses. 
‘‘(C) Appropriate changes in utilization of 
pharmaceuticals, as determined by the Drug 
Review Board (established under subsection 
(c)(3)) and based on best estimates of utiliza-
tion change if there were no direct-to-consumer 
advertising or promotions to providers. 
‘‘(D) Productivity index of manufacturers 
and distributors. 
‘‘(E) Percentage of products with patent 
and market exclusivity protection versus prod-
ucts without patent protection and changes in 
the availability of generic substitutes. 
‘‘(F) Such other factors as the Secretary 
may determine are appropriate. 
In no event may the sustainable growth rate exceed 
120 percent of the estimated per capita growth in 
total spending under this title. 
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‘‘(ii) more than the target amount, 
the Secretary shall notify all pharma-
ceutical manufacturers with sales of phar-
maceutical prescription medicine products 
to medicare beneficiaries under this part, 
of a rebate requirement (except as pro-
vided in this subparagraph) to be deposited 
in the Federal Medicare Prescription Medi-
cine Trust Fund. 
‘‘(D) 
REBATE
DETERMINATION.—The 
amount of the rebate described in subparagraph 
(C)(ii) may vary among manufacturers and 
shall be based on the manufacturer’s estimated 
contribution to the expenditure above the target 
amount, taking into consideration such factors 
as— 
‘‘(i) above average increases in the 
cost of the manufacturer’s product; 
‘‘(ii) increases in utilization due to 
promotion activities of the manufacturer, 
wholesaler, or retailer; 
‘‘(iii) launch prices of new drugs at 
the same or higher prices as similar drugs 
already in the marketplace (so-called ‘me 
too’ or ‘copy-cat’ drugs); 
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‘‘(iv) the role of the manufacturer in 
delaying the entry of generic products into 
the market; and 
‘‘(v) such other actions by the manu-
facturer that the Secretary may determine 
has contributed to the failure to meet the 
SGR target. 
The rebates shall be established under such 
subparagraph so that the total amount of the 
rebates is estimated to ensure that the amount 
the target for the current year is estimated to 
be exceeded is recovered in lower spending in 
the subsequent year; except that, no rebate 
shall be made in any manufacturer’s product 
which the Food and Drug Administration has 
determined is a breakthrough medicine (as de-
termined under subsection (c)) or an orphan 
medicine. 
‘‘(c) BREAKTHROUGH MEDICINES.— 
‘‘(1) DETERMINATION.—For purposes of this 
section, a medicine is a ‘breakthrough medicine’ if 
the Drug Review Board (established under para-
graph (3)) determines— 
‘‘(A) it is a new product that will make a 
significant and major improvement by reducing 
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physical or mental illness, reducing mortality, 
or reducing disability; and 
‘‘(B) that no other product is available to 
beneficiaries that achieves similar results for 
the same condition at a lower cost. 
‘‘(2) CONDITION.—An exemption from rebates 
under subsection (b)(3) for a breakthrough medicine 
shall continue as long as the medicine is certified as 
a breakthrough medicine but shall be limited to 
seven calendar years from 2007 or seven calendar 
years from the date of the initial determination 
under paragraph (1), whichever is later. 
‘‘(3) DRUG REVIEW BOARD.—The Drug Review 
Board under this paragraph shall consist of the 
Commissioner of Food and Drugs, the Directors of 
the National Institutes of Health, the Director of 
the National Science Foundation, and 10 experts in 
pharmaceuticals, medical research, and clinical care, 
selected by the Commissioner of Food and Drugs 
from the faculty of academic medical centers, except 
that no person who has (or who has an immediate 
family member that has) any conflict of interest with 
any pharmaceutical manufacturer shall serve on the 
Board. 
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‘‘(d) NO REVIEW.—The Secretary’s determination of 
the rebate amounts under this section, and the Drug Re-
view Board’s determination of what is a breakthrough 
drug, are not subject to administrative or judicial review. 
‘‘APPROPRIATIONS TO COVER GOVERNMENT 
CONTRIBUTIONS 
‘‘SEC. 1860D–9. 
‘‘There are authorized to be appropriated from time 
to time, out of any moneys in the Treasury not otherwise 
appropriated, to the Prescription Medicine Insurance Ac-
count, a Government contribution equal to the aggregate 
costs payable under this part. 
‘‘PRESCRIPTION MEDICINE DEFINED 
‘‘SEC. 1860D–10. As used in this part, the term ‘pre-
scription medicine’ means— 
‘‘(1) a drug that may be dispensed only upon 
a prescription, and that is described in subpara-
graph (A)(i), (A)(ii), or (B) of section 1927(k)(2); 
and 
‘‘(2) insulin certified under section 506 of the 
Federal Food, Drug, and Cosmetic Act, and needles, 
syringes, and disposable pumps for the administra-
tion of such insulin.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) 
AMENDMENTS
TO
FEDERAL
SUPPLE-
MENTARY HEALTH INSURANCE TRUST FUND.—Sec-
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tion 1841 of the Social Security Act (42 U.S.C. 
1395t) is amended— 
(A) in the last sentence of subsection (a)— 
(i) by striking ‘‘and’’ after ‘‘section 
201(i)(1)’’; and 
(ii) by inserting before the period the 
following: ‘‘, and such amounts as may be 
deposited in, or appropriated to, the Pre-
scription Medicine Insurance Account es-
tablished by section 1860D–6’’; 
(B) in subsection (g), by inserting after 
‘‘by this part,’’ the following: ‘‘the payments 
provided for under part D (in which case the 
payments shall come from the Prescription 
Medicine Insurance Account in the Supple-
mentary Medical Insurance Trust Fund),’’; 
(C) in the first sentence of subsection (h), 
by inserting before the period the following: 
‘‘and section 1860D–5(b)(4) (in which case the 
payments shall come from the Prescription 
Medicine Insurance Account in the Supple-
mentary Medical Insurance Trust Fund)’’; and 
(D) in the first sentence of subsection 
(i)— 
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(i) by striking ‘‘and’’ after ‘‘section 
1840(b)(1)’’; and 
(ii) by inserting before the period the 
following: ‘‘, section 1860D–5(b)(2) (in 
which case the payments shall come from 
the Prescription Medicine Insurance Ac-
count in the Supplementary Medical Insur-
ance Trust Fund)’’. 
(2) NO PART D PRESCRIPTION MEDICINE COV-
ERAGE UNDER MA PLANS.—Section 1852(a)(1)(A) 
of the Social Security Act (42 U.S.C. 1395w– 
22(a)(1)(A)) is amended by adding at the end the 
following: ‘‘No Medicare Advantage plan shall pro-
vide benefits for coverage provided under part D.’’ 
(3) EXCLUSIONS FROM COVERAGE.— 
(A) APPLICATION
TO
PART
D.—Section 
1862(a) of the Social Security Act (42 U.S.C. 
1395y(a)) is amended in the matter preceding 
paragraph (1) by striking ‘‘part A or part B’’ 
and inserting ‘‘part A, B, or D’’. 
(B) PRESCRIPTION
MEDICINES
NOT
EX-
CLUDED FROM COVERAGE IF APPROPRIATELY 
PRESCRIBED.—Section 1862(a)(1) of such Act 
(42 U.S.C. 1395y(a)(1)) is amended— 
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(i) in subparagraph (N), by striking 
‘‘and’’ at the end; 
(ii) in subparagraph (O), by striking 
the semicolon at the end and inserting ‘‘, 
and’’; and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(P) in the case of prescription medicines 
covered under part D, which are not prescribed 
in accordance with such part;’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2010, and the 
Secretary of Health and Human Services shall administer 
the Social Security Act in accordance with such amend-
ments on and after such date. 
SEC. 5. SUBSTANTIAL REDUCTIONS IN THE PRICE OF PRE-
SCRIPTION DRUGS FOR MEDICARE BENE-
FICIARIES. 
(a) PARTICIPATING MANUFACTURERS.— 
(1) IN GENERAL.—Each participating manufac-
turer of a covered outpatient drug shall make avail-
able for purchase by each pharmacy such covered 
outpatient drug in the amount described in para-
graph (2) at the price described in paragraph (3). 
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(2) DESCRIPTION OF AMOUNT OF DRUGS.—The 
amount of a covered outpatient drug that a partici-
pating manufacturer shall make available for pur-
chase by a pharmacy is an amount equal to the ag-
gregate amount of the covered outpatient drug sold 
or distributed by the pharmacy to medicare bene-
ficiaries. 
(3) DESCRIPTION
OF
PRICE.—The price at 
which a participating manufacturer shall make a 
covered outpatient drug available for purchase by a 
pharmacy is the price equal to the lowest of the fol-
lowing: 
(A) The lowest price paid for the covered 
outpatient drug by any agency or department of 
the United States. 
(B) The manufacturer’s best price for the 
covered outpatient drug, as defined in section 
1927(c)(1)(C) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)). 
(C) The lowest price at which the drug is 
available (as determined by the Secretary) 
through importation consistent with the provi-
sions of section 804 of the Federal Food, Drug, 
and Cosmetic Act. 
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(b) SPECIAL PROVISION WITH RESPECT TO HOSPICE 
PROGRAMS.—For purposes of determining the amount of 
a covered outpatient drug that a participating manufac-
turer shall make available for purchase by a pharmacy 
under subsection (a), there shall be included in the cal-
culation of such amount the amount of the covered out-
patient drug sold or distributed by a pharmacy to a hos-
pice program. In calculating such amount, only amounts 
of the covered outpatient drug furnished to a medicare 
beneficiary enrolled in the hospice program shall be in-
cluded. 
(c) ADMINISTRATION.—The Secretary shall issue 
such regulations as may be necessary to implement this 
section. 
(d) REPORTS TO CONGRESS REGARDING EFFECTIVE-
NESS OF SECTION.— 
(1) IN
GENERAL.—Not later than two years 
after the date of the enactment of this Act, and an-
nually thereafter, the Secretary shall report to Con-
gress regarding the effectiveness of this section in— 
(A) protecting medicare beneficiaries from 
discriminatory pricing by drug manufacturers; 
and 
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(B) making prescription drugs available to 
medicare beneficiaries at substantially reduced 
prices. 
(2) CONSULTATION.—In preparing such re-
ports, the Secretary shall consult with public health 
experts, affected industries, organizations rep-
resenting consumers and older Americans, and other 
interested persons. 
(3) RECOMMENDATIONS.—The Secretary shall 
include in such reports any recommendations they 
consider appropriate for changes in this section to 
further reduce the cost of covered outpatient drugs 
to medicare beneficiaries. 
(e) DEFINITIONS.—For purposes of this section: 
(1) 
PARTICIPATING
MANUFACTURER.—The 
term ‘‘participating manufacturer’’ means any man-
ufacturer of drugs or biologicals that, on or after the 
date of the enactment of this Act, enters into a con-
tract or agreement with the United States for the 
sale or distribution of covered outpatient drugs to 
the United States. 
(2) COVERED OUTPATIENT DRUG.—The term 
‘‘covered outpatient drug’’ has the meaning given 
that term in section 1927(k)(2) of the Social Secu-
rity Act (42 U.S.C. 1396r–8(k)(2)). 
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(3) 
MEDICARE
BENEFICIARY.—The 
term 
‘‘medicare beneficiary’’ means an individual entitled 
to benefits under part A of title XVIII of the Social 
Security Act or enrolled under part B of such title, 
or both. 
(4) HOSPICE
PROGRAM.—The term ‘‘hospice 
program’’ has the meaning given that term under 
section 1861(dd)(2) of the Social Security Act (42 
U.S.C. 1395x(dd)(2)). 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(f) EFFECTIVE DATE.—This section shall take effect 
on January 1, 2010, and the Secretary shall implement 
this section in a manner consistent with the obligations 
of the United States. 
SEC. 6. IMPORTATION OF CERTAIN PRESCRIPTION DRUGS. 
(a) REPEAL OF CERTAIN SECTION REGARDING IM-
PORTATION OF PRESCRIPTION DRUGS.—Chapter VIII of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 381 
et seq.) is amended by striking section 804. 
(b) IMPORTATION OF PRESCRIPTION DRUGS; WAIVER 
OF CERTAIN IMPORT RESTRICTIONS.— 
(1) IN GENERAL.—Chapter VIII of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 381 et 
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seq.), as amended by section 3, is further amended 
by inserting after section 803 the following: 
‘‘SEC. 804. COMMERCIAL AND PERSONAL IMPORTATION OF 
PRESCRIPTION DRUGS. 
‘‘(a) IMPORTATION OF PRESCRIPTION DRUGS.— 
‘‘(1) IN GENERAL.—In the case of qualifying 
drugs imported or offered for import into the United 
States from registered exporters or by registered im-
porters— 
‘‘(A) the limitation on importation that is 
established in section 801(d)(1) is waived; and 
‘‘(B) the standards referred to in section 
801(a) regarding admission of the drugs are 
subject to subsection (g) of this section (includ-
ing with respect to qualifying drugs to which 
section 801(d)(1) does not apply). 
‘‘(2) IMPORTERS.—A qualifying drug may not 
be imported under paragraph (1) unless— 
‘‘(A) the drug is imported by a pharmacy, 
group of pharmacies, or a wholesaler that is a 
registered importer; or 
‘‘(B) the drug is imported by an individual 
for personal use or for the use of a family mem-
ber of the individual (not for resale) from a reg-
istered exporter. 
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‘‘(3) RULE
OF
CONSTRUCTION.—This section 
shall apply only with respect to a drug that is im-
ported or offered for import into the United 
States— 
‘‘(A) by a registered importer; or 
‘‘(B) from a registered exporter to an indi-
vidual. 
‘‘(4) DEFINITIONS.— 
‘‘(A) 
REGISTERED
EXPORTER; 
REG-
ISTERED IMPORTER.—For purposes of this sec-
tion: 
‘‘(i) The term ‘registered exporter’ 
means an exporter for which a registration 
under subsection (b) has been approved 
and is in effect. 
‘‘(ii) The term ‘registered importer’ 
means a pharmacy, group of pharmacies, 
or a wholesaler for which a registration 
under subsection (b) has been approved 
and is in effect. 
‘‘(iii) The term ‘registration condition’ 
means a condition that must exist for a 
registration under subsection (b) to be ap-
proved. 
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‘‘(B) QUALIFYING DRUG.—For purposes 
of this section, the term ‘qualifying drug’ means 
a drug for which there is a corresponding U.S. 
label drug. 
‘‘(C) U.S. LABEL DRUG.—For purposes of 
this section, the term ‘U.S. label drug’ means 
a prescription drug that— 
‘‘(i) with respect to a qualifying drug, 
has the same active ingredient or ingredi-
ents, route of administration, dosage form, 
and strength as the qualifying drug; 
‘‘(ii) with respect to the qualifying 
drug, is manufactured by or for the person 
that manufactures the qualifying drug; 
‘‘(iii) 
is 
approved 
under 
section 
505(c); and 
‘‘(iv) is not— 
‘‘(I) a controlled substance, as 
defined in section 102 of the Con-
trolled Substances Act (21 U.S.C. 
802); 
‘‘(II) a biological product, as de-
fined in section 351 of the Public 
Health Service Act (42 U.S.C. 262), 
including— 
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‘‘(aa) a therapeutic DNA 
plasmid product; 
‘‘(bb) a therapeutic synthetic 
peptide product; 
‘‘(cc) a monoclonal antibody 
product for in vivo use; and 
‘‘(dd) a therapeutic recom-
binant DNA-derived product; 
‘‘(III) an infused drug, including 
a peritoneal dialysis solution; 
‘‘(IV) an injected drug; 
‘‘(V) a drug that is inhaled dur-
ing surgery; or 
‘‘(VI) a drug that is the listed 
drug referred to in 2 or more abbre-
viated new drug applications under 
which the drug is commercially mar-
keted. 
‘‘(D) OTHER DEFINITIONS.—For purposes 
of this section: 
‘‘(i)(I) The term ‘exporter’ means a 
person that is in the business of exporting 
a drug to individuals in the United States 
from Canada or from a permitted country 
designated by the Secretary under sub-
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clause (II), or that, pursuant to submitting 
a registration under subsection (b), seeks 
to be in such business. 
‘‘(II) The Secretary shall designate a 
permitted country under subparagraph (E) 
(other than Canada) as a country from 
which an exporter may export a drug to in-
dividuals in the United States if the Sec-
retary determines that— 
‘‘(aa) the country has statutory 
or regulatory standards that are 
equivalent to the standards in the 
United States and Canada with re-
spect to— 
‘‘(AA) the training of phar-
macists; 
‘‘(BB) the practice of phar-
macy; and 
‘‘(CC) the protection of the 
privacy of personal medical infor-
mation; and 
‘‘(bb) the importation of drugs to 
individuals in the United States from 
the country will not adversely affect 
public health. 
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‘‘(ii) The term ‘importer’ means a 
pharmacy, a group of pharmacies, or a 
wholesaler that is in the business of im-
porting a drug into the United States or 
that, pursuant to submitting a registration 
under subsection (b), seeks to be in such 
business. 
‘‘(iii) The term ‘pharmacist’ means a 
person licensed by a State to practice 
pharmacy, including the dispensing and 
selling of prescription drugs. 
‘‘(iv) The term ‘pharmacy’ means a 
person that— 
‘‘(I) is licensed by a State to en-
gage in the business of selling pre-
scription drugs at retail; and 
‘‘(II) employs 1 or more phar-
macists. 
‘‘(v) The term ‘prescription drug’ means a drug 
that is described in section 503(b)(1). 
‘‘(vi) The term ‘wholesaler’— 
‘‘(I) means a person licensed as a whole-
saler or distributor of prescription drugs in the 
United States under section 503(e)(2)(A); and 
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‘‘(II) does not include a person authorized 
to import drugs under section 801(d)(1). 
‘‘(E) PERMITTED COUNTRY.—The term ‘permitted 
country’ means— 
‘‘(i) Australia; 
‘‘(ii) Canada; 
‘‘(iii) a member country of the European 
Union, but does not include a member country with 
respect to which— 
‘‘(I) the country’s Annex to the Treaty of 
Accession to the European Union 2003 includes 
a transitional measure for the regulation of 
human pharmaceutical products that has not 
expired; or 
‘‘(II) the Secretary determines that the re-
quirements described in subclauses (I) and (II) 
of clause (vii) will not be met by the date on 
which such transitional measure for the regula-
tion of human pharmaceutial products expires; 
‘‘(iv) Japan; 
‘‘(v) New Zealand; 
‘‘(vi) Switzerland; and 
‘‘(vii) a country in which the Secretary deter-
mines the following requirements are met: 
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draw approval and remove drugs found not 
to be safe or effective; and 
‘‘(ee) that require the labeling and 
promotion of drugs to be in accordance 
with the approval of the drug. 
‘‘(II) The valid marketing authorization 
system in the country is equivalent to the sys-
tems in the countries described in clauses (i) 
through (vi). 
‘‘(III) The importation of drugs to the 
United States from the country will not ad-
versely affect public health. 
‘‘(b) REGISTRATION OF IMPORTERS AND EXPORT-
ERS.— 
‘‘(1) REGISTRATION
OF
IMPORTERS
AND
EX-
PORTERS.—A registration condition is that the im-
porter or exporter involved (referred to in this sub-
section as a ‘registrant’) submits to the Secretary a 
registration containing the following: 
‘‘(A)(i) In the case of an exporter, the 
name of the exporter and an identification of all 
places of business of the exporter that relate to 
qualifying drugs, including each warehouse or 
other facility owned or controlled by, or oper-
ated for, the exporter. 
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‘‘(ii) In the case of an importer, the name 
of the importer and an identification of the 
places of business of the importer at which the 
importer initially receives a qualifying drug 
after importation (which shall not exceed 3 
places of business except by permission of the 
Secretary). 
‘‘(B) Such information as the Secretary 
determines to be necessary to demonstrate that 
the registrant is in compliance with registration 
conditions under— 
‘‘(i) in the case of an importer, sub-
sections (c), (d), (e), (g), and (j) (relating 
to the sources of imported qualifying 
drugs; the inspection of facilities of the im-
porter; the payment of fees; compliance 
with the standards referred to in section 
801(a); and maintenance of records and 
samples); or 
‘‘(ii) in the case of an exporter, sub-
sections (c), (d), (f), (g), (h), (i), and (j) 
(relating to the sources of exported quali-
fying drugs; the inspection of facilities of 
the exporter and the marking of compliant 
shipments; the payment of fees; and com-
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pliance with the standards referred to in 
section 801(a); being licensed as a phar-
macist; conditions for individual importa-
tion; and maintenance of records and sam-
ples). 
‘‘(C) An agreement by the registrant that 
the registrant will not under subsection (a) im-
port or export any drug that is not a qualifying 
drug. 
‘‘(D) An agreement by the registrant to— 
‘‘(i) notify the Secretary of a recall or 
withdrawal of a qualifying drug distributed 
in a permitted country that the registrant 
has exported or imported, or intends to ex-
port or import, to the United States under 
subsection (a); 
‘‘(ii) provide for the return to the reg-
istrant of such drug; and 
‘‘(iii) cease, or not begin, the expor-
tation or importation of such drug unless 
the Secretary has notified the registrant 
that exportation or importation of such 
drug may proceed. 
‘‘(E) An agreement by the registrant to 
ensure and monitor compliance with each reg-
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istration condition, to promptly correct any 
noncompliance with such a condition, and to 
promptly report to the Secretary any such non-
compliance. 
‘‘(F) A plan describing the manner in 
which the registrant will comply with the agree-
ment under subparagraph (E). 
‘‘(G) An agreement by the registrant to 
enforce a contract under subsection (c)(3)(B) 
against a party in the chain of custody of a 
qualifying drug with respect to the authority of 
the Secretary under clauses (ii) and (iii) of that 
subsection. 
‘‘(H) An agreement by the registrant to 
notify the Secretary not more than 30 days be-
fore the registrant intends to make the change, 
of— 
‘‘(i) any change that the registrant in-
tends to make regarding information pro-
vided under subparagraph (A) or (B); and 
‘‘(ii) any change that the registrant 
intends to make in the compliance plan 
under subparagraph (F). 
‘‘(I) In the case of an exporter— 
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‘‘(i) An agreement by the exporter 
that a qualifying drug will not under sub-
section (a) be exported to any individual 
not authorized pursuant to subsection 
(a)(2)(B) to be an importer of such drug. 
‘‘(ii) An agreement to post a bond, 
payable to the Treasury of the United 
States that is equal in value to the lesser 
of— 
‘‘(I) the value of drugs exported 
by the exporter to the United States 
in a typical 4-week period over the 
course of a year under this section; or 
‘‘(II) $1,000,000; 
‘‘(iii) An agreement by the exporter to 
comply with applicable provisions of Cana-
dian law, or the law of the permitted coun-
try 
designated 
under 
subsection 
(a)(4)(D)(i)(II) in which the exporter is lo-
cated, that protect the privacy of personal 
information with respect to each individual 
importing a prescription drug from the ex-
porter under subsection (a)(2)(B). 
‘‘(iv) An agreement by the exporter to 
report to the Secretary— 
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‘‘(I) not later than August 1 of 
each fiscal year, the total price and 
the total volume of drugs exported to 
the United States by the exporter dur-
ing the 6-month period from January 
1 through June 30 of that year; and 
‘‘(II) not later than January 1 of 
each fiscal year, the total price and 
the total volume of drugs exported to 
the United States by the exporter dur-
ing the previous fiscal year. 
‘‘(J) In the case of an importer, an agree-
ment by the importer to report to the Sec-
retary— 
‘‘(i) not later than August 1 of each 
fiscal year, the total price and the total 
volume of drugs imported to the United 
States by the importer during the 6-month 
period from January 1 through June 30 of 
that fiscal year; and 
‘‘(ii) not later than January 1 of each 
fiscal year, the total price and the total 
volume of drugs imported to the United 
States by the importer during the previous 
fiscal year. 
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‘‘(K) Such other provisions as the Sec-
retary may require by regulation to protect the 
public health while permitting— 
‘‘(i) the importation by pharmacies, 
groups of pharmacies, and wholesalers as 
registered importers of qualifying drugs 
under subsection (a); and 
‘‘(ii) importation by individuals of 
qualifying drugs under subsection (a). 
‘‘(2) APPROVAL OR DISAPPROVAL OF REGISTRA-
TION.— 
‘‘(A) IN
GENERAL.—Not later than 90 
days after the date on which a registrant sub-
mits to the Secretary a registration under para-
graph (1), the Secretary shall notify the reg-
istrant whether the registration is approved or 
is disapproved. The Secretary shall disapprove 
a registration if there is reason to believe that 
the registrant is not in compliance with one or 
more registration conditions, and shall notify 
the registrant of such reason. In the case of a 
disapproved registration, the Secretary shall 
subsequently notify the registrant that the reg-
istration is approved if the Secretary deter-
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mines that the registrant is in compliance with 
such conditions. 
‘‘(B) CHANGES IN REGISTRATION INFOR-
MATION.—Not later than 30 days after receiv-
ing a notice under paragraph (1)(H) from a 
registrant, the Secretary shall determine wheth-
er the change involved affects the approval of 
the registration of the registrant under para-
graph (1), and shall inform the registrant of 
the determination. 
‘‘(3) PUBLICATION OF CONTACT INFORMATION 
FOR REGISTERED EXPORTERS.—Through the Inter-
net website of the Food and Drug Administration 
and a toll-free telephone number, the Secretary shall 
make readily available to the public a list of reg-
istered exporters, including contact information for 
the exporters. Promptly after the approval of a reg-
istration submitted under paragraph (1), the Sec-
retary shall update the Internet website and the in-
formation provided through the toll-free telephone 
number accordingly. 
‘‘(4) SUSPENSION AND TERMINATION.— 
‘‘(A) SUSPENSION.—With respect to the 
effectiveness of a registration submitted under 
paragraph (1): 
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‘‘(i) Subject to clause (ii), the Sec-
retary may suspend the registration if the 
Secretary determines, after notice and op-
portunity for a hearing, that the registrant 
has failed to maintain substantial compli-
ance with a registration condition. 
‘‘(ii) If the Secretary determines that, 
under color of the registration, the ex-
porter has exported a drug or the importer 
has imported a drug that is not a quali-
fying drug, or a drug that does not comply 
with subsection (g)(2)(A) or (g)(4), or has 
exported a qualifying drug to an individual 
in violation of subsection (i)(2)(F), the 
Secretary shall immediately suspend the 
registration. A suspension under the pre-
ceding sentence is not subject to the provi-
sion by the Secretary of prior notice, and 
the Secretary shall provide to the reg-
istrant an opportunity for a hearing not 
later than 10 days after the date on which 
the registration is suspended. 
‘‘(iii) The Secretary may reinstate the 
registration, whether suspended under 
clause (i) or (ii), if the Secretary deter-
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mines that the registrant has demonstrated 
that further violations of registration con-
ditions will not occur. 
‘‘(B) TERMINATION.—The Secretary, after 
notice and opportunity for a hearing, may ter-
minate the registration under paragraph (1) of 
a registrant if the Secretary determines that 
the registrant has engaged in a pattern or prac-
tice of violating 1 or more registration condi-
tions, or if on 1 or more occasions the Secretary 
has under subparagraph (A)(ii) suspended the 
registration of the registrant. The Secretary 
may make the termination permanent, or for a 
fixed period of not less than 1 year. During the 
period in which the registration is terminated, 
any registration submitted under paragraph (1) 
by the registrant, or a person that is a partner 
in the export or import enterprise, or a prin-
cipal officer in such enterprise, and any reg-
istration prepared with the assistance of the 
registrant or such a person, has no legal effect 
under this section. 
‘‘(5) DEFAULT OF BOND.—A bond required to 
be posted by an exporter under paragraph (1)(I)(ii) 
shall be defaulted and paid to the Treasury of the 
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United States if, after opportunity for an informal 
hearing, the Secretary determines that the exporter 
has— 
‘‘(A) exported a drug to the United States 
that is not a qualifying drug or that is not in 
compliance with subsection (g)(2)(A), (g)(4), or 
(i); or 
‘‘(B) failed to permit the Secretary to con-
duct an inspection described under subsection 
(d). 
‘‘(c) SOURCES OF QUALIFYING DRUGS.—A registra-
tion condition is that the exporter or importer involved 
agrees that a qualifying drug will under subsection (a) be 
exported or imported into the United States only if there 
is compliance with the following: 
‘‘(1) The drug was manufactured in an estab-
lishment— 
‘‘(A) required to register under subsection 
(h) or (i) of section 510; and 
‘‘(B)(i) inspected by the Secretary; or 
‘‘(ii) for which the Secretary has elected to 
rely on a satisfactory report of a good manufac-
turing practice inspection of the establishment 
from a permitted country whose regulatory sys-
tem the Secretary recognizes as equivalent 
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under a mutual recognition agreement, as pro-
vided for under section 510(i)(3), section 803, 
or part 26 of title 21, Code of Federal Regula-
tions (or any corresponding successor rule or 
regulation). 
‘‘(2) The establishment is located in any coun-
try, and the establishment manufactured the drug 
for distribution in the United States or for distribu-
tion in 1 or more of the permitted countries (without 
regard to whether in addition the drug is manufac-
tured for distribution in a foreign country that is 
not a permitted country). 
‘‘(3) The exporter or importer obtained the 
drug— 
‘‘(A) directly from the establishment; or 
‘‘(B) directly from an entity that, by con-
tract with the exporter or importer— 
‘‘(i) provides to the exporter or im-
porter a statement (in such form and con-
taining such information as the Secretary 
may require) that, for the chain of custody 
from the establishment, identifies each 
prior sale, purchase, or trade of the drug 
(including the date of the transaction and 
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the names and addresses of all parties to 
the transaction); 
‘‘(ii) agrees to permit the Secretary to 
inspect 
such 
statements 
and 
related 
records to determine their accuracy; 
‘‘(iii) agrees, with respect to the quali-
fying drugs involved, to permit the Sec-
retary to inspect warehouses and other fa-
cilities, including records, of the entity for 
purposes of determining whether the facili-
ties are in compliance with any standards 
under this Act that are applicable to facili-
ties of that type in the United States; and 
‘‘(iv) has ensured, through such con-
tractual relationships as may be necessary, 
that the Secretary has the same authority 
regarding other parties in the chain of cus-
tody from the establishment that the Sec-
retary has under clauses (ii) and (iii) re-
garding such entity. 
‘‘(4)(A) The foreign country from which the im-
porter will import the drug is a permitted country; 
or 
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‘‘(B) The foreign country from which the ex-
porter will export the drug is the permitted country 
in which the exporter is located. 
‘‘(5) During any period in which the drug was 
not in the control of the manufacturer of the drug, 
the drug did not enter any country that is not a per-
mitted country. 
‘‘(6) The exporter or importer retains a sample 
of each lot of the drug sufficient for testing by the 
Secretary. 
‘‘(d) INSPECTION OF FACILITIES; MARKING OF SHIP-
MENTS.— 
‘‘(1) INSPECTION OF FACILITIES.—A registra-
tion condition is that, for the purpose of assisting 
the Secretary in determining whether the exporter 
involved is in compliance with all other registration 
conditions— 
‘‘(A) the exporter agrees to permit the Sec-
retary— 
‘‘(i) to conduct onsite inspections, in-
cluding monitoring on a day-to-day basis, 
of places of business of the exporter that 
relate to qualifying drugs, including each 
warehouse or other facility owned or con-
trolled by, or operated for, the exporter; 
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‘‘(ii) to have access, including on a 
day-to-day basis, to— 
‘‘(I) records of the exporter that 
relate to the export of such drugs, in-
cluding financial records; and 
‘‘(II) samples of such drugs; 
‘‘(iii) to carry out the duties described 
in paragraph (3); and 
‘‘(iv) to carry out any other functions 
determined by the Secretary to be nec-
essary regarding the compliance of the ex-
porter; and 
‘‘(B) the Secretary has assigned 1 or more 
employees of the Secretary to carry out the 
functions described in this subsection for the 
Secretary randomly, but not less than 12 times 
annually, on the premises of places of busi-
nesses referred to in subparagraph (A)(i), and 
such an assignment remains in effect on a con-
tinuous basis. 
‘‘(2) MARKING OF COMPLIANT SHIPMENTS.—A 
registration condition is that the exporter involved 
agrees to affix to each shipping container of quali-
fying drugs exported under subsection (a) such 
markings as the Secretary determines to be nec-
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essary to identify the shipment as being in compli-
ance with all registration conditions. Markings under 
the preceding sentence shall— 
‘‘(A) be designed to prevent affixation of 
the markings to any shipping container that is 
not authorized to bear the markings; and 
‘‘(B) include anticounterfeiting or track- 
and-trace technologies, taking into account the 
economic and technical feasibility of those tech-
nologies. 
‘‘(3) CERTAIN DUTIES RELATING TO EXPORT-
ERS.—Duties of the Secretary with respect to an ex-
porter include the following: 
‘‘(A) Inspecting, randomly, but not less 
than 12 times annually, the places of business 
of the exporter at which qualifying drugs are 
stored and from which qualifying drugs are 
shipped. 
‘‘(B) During the inspections under sub-
paragraph (A), verifying the chain of custody of 
a statistically significant sample of qualifying 
drugs from the establishment in which the drug 
was manufactured to the exporter, which shall 
be accomplished or supplemented by the use of 
anticounterfeiting 
or 
track-and-trace 
tech-
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nologies, taking into account the economic and 
technical feasibility of those technologies, except 
that a drug that lacks such technologies from 
the point of manufacture shall not for that rea-
son be excluded from importation by an ex-
porter. 
‘‘(C) Randomly reviewing records of ex-
ports to individuals for the purpose of deter-
mining whether the drugs are being imported 
by the individuals in accordance with the condi-
tions under subsection (i). Such reviews shall be 
conducted in a manner that will result in a sta-
tistically significant determination of compli-
ance with all such conditions. 
‘‘(D) Monitoring the affixing of markings 
under paragraph (2). 
‘‘(E) Inspecting as the Secretary deter-
mines is necessary the warehouses and other fa-
cilities, including records, of other parties in the 
chain of custody of qualifying drugs. 
‘‘(F) Determining whether the exporter is 
in compliance with all other registration condi-
tions. 
‘‘(4) PRIOR
NOTICE
OF
SHIPMENTS.—A reg-
istration condition is that, not less than 8 hours and 
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not more than 5 days in advance of the time of the 
importation of a shipment of qualifying drugs, the 
importer involved agrees to submit to the Secretary 
a notice with respect to the shipment of drugs to be 
imported or offered for import into the United 
States under subsection (a). A notice under the pre-
ceding sentence shall include— 
‘‘(A) the name and complete contact infor-
mation of the person submitting the notice; 
‘‘(B) the name and complete contact infor-
mation of the importer involved; 
‘‘(C) the identity of the drug, including the 
established name of the drug, the quantity of 
the drug, and the lot number assigned by the 
manufacturer; 
‘‘(D) the identity of the manufacturer of 
the drug, including the identity of the establish-
ment at which the drug was manufactured; 
‘‘(E) the country from which the drug is 
shipped; 
‘‘(F) the name and complete contact infor-
mation for the shipper of the drug; 
‘‘(G) anticipated arrival information, in-
cluding the port of arrival and crossing location 
within that port, and the date and time; 
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‘‘(H) a summary of the chain of custody of 
the drug from the establishment in which the 
drug was manufactured to the importer; 
‘‘(I) a declaration as to whether the Sec-
retary has ordered that importation of the drug 
from the permitted country cease under sub-
section (g)(2)(C) or (D); and 
‘‘(J) such other information as the Sec-
retary may require by regulation. 
‘‘(5) MARKING OF COMPLIANT SHIPMENTS.—A 
registration condition is that the importer involved 
agrees, before wholesale distribution (as defined in 
section 503(e)) of a qualifying drug that has been 
imported under subsection (a), to affix to each con-
tainer of such drug such markings or other tech-
nology as the Secretary determines necessary to 
identify the shipment as being in compliance with all 
registration conditions, except that the markings or 
other technology shall not be required on a drug 
that bears comparable, compatible markings or tech-
nology from the manufacturer of the drug. Markings 
or other technology under the preceding sentence 
shall— 
‘‘(A) be designed to prevent affixation of 
the markings or other technology to any con-
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tainer that is not authorized to bear the mark-
ings; and 
‘‘(B) shall include anticounterfeiting or 
track-and-trace technologies, taking into ac-
count the economic and technical feasibility of 
such technologies. 
‘‘(6) CERTAIN DUTIES RELATING TO IMPORT-
ERS.—Duties of the Secretary with respect to an im-
porter include the following: 
‘‘(A) Inspecting, randomly, but not less 
than 12 times annually, the places of business 
of the importer at which a qualifying drug is 
initially received after importation. 
‘‘(B) During the inspections under sub-
paragraph (A), verifying the chain of custody of 
a statistically significant sample of qualifying 
drugs from the establishment in which the drug 
was manufactured to the importer, which shall 
be accomplished or supplemented by the use of 
anticounterfeiting 
or 
track-and-trace 
tech-
nologies, taking into account the economic and 
technical feasibility of those technologies, except 
that a drug that lacks such technologies from 
the point of manufacture shall not for that rea-
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son be excluded from importation by an im-
porter. 
‘‘(C) Reviewing notices under paragraph 
(4). 
‘‘(D) Inspecting as the Secretary deter-
mines is necessary the warehouses and other fa-
cilities, including records of other parties in the 
chain of custody of qualifying drugs. 
‘‘(E) Determining whether the importer is 
in compliance with all other registration condi-
tions. 
‘‘(e) IMPORTER FEES.— 
‘‘(1) REGISTRATION FEE.—A registration con-
dition is that the importer involved pays to the Sec-
retary a fee of $10,000 due on the date on which 
the importer first submits the registration to the 
Secretary under subsection (b). 
‘‘(2) INSPECTION FEE.—A registration condi-
tion is that the importer involved pays a fee to the 
Secretary in accordance with this subsection. Such 
fee shall be paid not later than October 1 and April 
1 of each fiscal year in the amount provided for 
under paragraph (3). 
‘‘(3) AMOUNT OF INSPECTION FEE.— 
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‘‘(A) AGGREGATE TOTAL OF FEES.—Not 
later than 30 days before the start of each fis-
cal year, the Secretary, in consultation with the 
Secretary of Homeland Security and the Sec-
retary of the Treasury, shall establish an aggre-
gate total of fees to be collected under para-
graph (2) for importers for that fiscal year that 
is sufficient, and not more than necessary, to 
pay the costs for that fiscal year of admin-
istering this section with respect to registered 
importers, including the costs associated with— 
‘‘(i) inspecting the facilities of reg-
istered importers, and of other entities in 
the chain of custody of a qualifying drug 
as necessary, under subsection (d)(6); 
‘‘(ii) developing, implementing, and 
operating under such subsection an elec-
tronic system for submission and review of 
the notices required under subsection 
(d)(4) with respect to shipments of quali-
fying drugs under subsection (a) to assess 
compliance with all registration conditions 
when such shipments are offered for im-
port into the United States; and 
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‘‘(iii) inspecting such shipments as 
necessary, when offered for import into the 
United States to determine if such a ship-
ment should be refused admission under 
subsection (g)(5). 
‘‘(B) LIMITATION.—Subject to subpara-
graph (C), the aggregate total of fees collected 
under paragraph (2) for a fiscal year shall not 
exceed 1 percent of the total price of qualifying 
drugs imported during that fiscal year into the 
United States by registered importers under 
subsection (a). 
‘‘(C) TOTAL PRICE OF DRUGS.— 
‘‘(i) ESTIMATE.—For the purposes of 
complying with the limitation described in 
subparagraph (B) when establishing under 
subparagraph (A) the aggregate total of 
fees to be collected under paragraph (2) 
for a fiscal year, the Secretary shall esti-
mate the total price of qualifying drugs im-
ported into the United States by registered 
importers during that fiscal year by adding 
the total price of qualifying drugs imported 
by each registered importer during the 6- 
month period from January 1 through 
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June 30 of the previous fiscal year, as re-
ported to the Secretary by each registered 
importer under subsection (b)(1)(J). 
‘‘(ii) CALCULATION.—Not later than 
March 1 of the fiscal year that follows the 
fiscal year for which the estimate under 
clause (i) is made, the Secretary shall cal-
culate the total price of qualifying drugs 
imported into the United States by reg-
istered importers during that fiscal year by 
adding the total price of qualifying drugs 
imported by each registered importer dur-
ing that fiscal year, as reported to the Sec-
retary by each registered importer under 
subsection (b)(1)(J). 
‘‘(iii) 
ADJUSTMENT.—If 
the 
total 
price of qualifying drugs imported into the 
United States by registered importers dur-
ing a fiscal year as calculated under clause 
(ii) is less than the aggregate total of fees 
collected under paragraph (2) for that fis-
cal year, the Secretary shall provide for a 
pro-rata reduction in the fee due from each 
registered importer on April 1 of the sub-
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sequent fiscal year so that the limitation 
described in subparagraph (B) is observed. 
‘‘(D) INDIVIDUAL
IMPORTER
FEE.—Sub-
ject to the limitation described in subparagraph 
(B), the fee under paragraph (2) to be paid on 
October 1 and April 1 by an importer shall be 
an amount that is proportional to a reasonable 
estimate by the Secretary of the semiannual 
share of the importer of the volume of quali-
fying drugs imported by importers under sub-
section (a). 
‘‘(4) USE OF FEES.— 
‘‘(A) IN GENERAL.—Subject to appropria-
tions Acts, fees collected by the Secretary under 
paragraphs (1) and (2) shall be credited to the 
appropriation account for salaries and expenses 
of the Food and Drug Administration until ex-
pended (without fiscal year limitation), and the 
Secretary may, in consultation with the Sec-
retary of Homeland Security and the Secretary 
of the Treasury, transfer some proportion of 
such fees to the appropriation account for sala-
ries and expenses of the Bureau of Customs 
and Border Protection until expended (without 
fiscal year limitation). 
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‘‘(B) SOLE
PURPOSE.—Fees collected by 
the Secretary under paragraphs (1) and (2) are 
only available to the Secretary and, if trans-
ferred, to the Secretary of Homeland Security, 
and are for the sole purpose of paying the costs 
referred to in paragraph (3)(A). 
‘‘(5) COLLECTION OF FEES.—In any case where 
the Secretary does not receive payment of a fee as-
sessed under paragraph (1) or (2) within 30 days 
after it is due, such fee shall be treated as a claim 
of the United States Government subject to sub-
chapter II of chapter 37 of title 31, United States 
Code. 
‘‘(f) EXPORTER FEES.— 
‘‘(1) REGISTRATION FEE.—A registration con-
dition is that the exporter involved pays to the Sec-
retary a fee of $10,000 due on the date on which 
the exporter first submits that registration to the 
Secretary under subsection (b). 
‘‘(2) INSPECTION FEE.—A registration condi-
tion is that the exporter involved pays a fee to the 
Secretary in accordance with this subsection. Such 
fee shall be paid not later than October 1 and April 
1 of each fiscal year in the amount provided for 
under paragraph (3). 
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‘‘(3) AMOUNT OF INSPECTION FEE.— 
‘‘(A) AGGREGATE TOTAL OF FEES.—Not 
later than 30 days before the start of each fis-
cal year, the Secretary, in consultation with the 
Secretary of Homeland Security and the Sec-
retary of the Treasury, shall establish an aggre-
gate total of fees to be collected under para-
graph (2) for exporters for that fiscal year that 
is sufficient, and not more than necessary, to 
pay the costs for that fiscal year of admin-
istering this section with respect to registered 
exporters, including the costs associated with— 
‘‘(i) inspecting the facilities of reg-
istered exporters, and of other entities in 
the chain of custody of a qualifying drug 
as necessary, under subsection (d)(3); 
‘‘(ii) developing, implementing, and 
operating under such subsection a system 
to screen marks on shipments of qualifying 
drugs under subsection (a) that indicate 
compliance with all registration conditions, 
when such shipments are offered for im-
port into the United States; and 
‘‘(iii) screening such markings, and 
inspecting such shipments as necessary, 
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when offered for import into the United 
States to determine if such a shipment 
should be refused admission under sub-
section (g)(5). 
‘‘(B) LIMITATION.—Subject to subpara-
graph (C), the aggregate total of fees collected 
under paragraph (2) for a fiscal year shall not 
exceed 1 percent of the total price of qualifying 
drugs imported during that fiscal year into the 
United States by registered exporters under 
subsection (a). 
‘‘(C) TOTAL PRICE OF DRUGS.— 
‘‘(i) ESTIMATE.—For the purposes of 
complying with the limitation described in 
subparagraph (B) when establishing under 
subparagraph (A) the aggregate total of 
fees to be collected under paragraph (2) 
for a fiscal year, the Secretary shall esti-
mate the total price of qualifying drugs im-
ported into the United States by registered 
exporters during that fiscal year by adding 
the total price of qualifying drugs exported 
by each registered exporter during the 6- 
month period from January 1 through 
June 30 of the previous fiscal year, as re-
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ported to the Secretary by each registered 
exporter under subsection (b)(1)(I)(iv). 
‘‘(ii) CALCULATION.—Not later than 
March 1 of the fiscal year that follows the 
fiscal year for which the estimate under 
clause (i) is made, the Secretary shall cal-
culate the total price of qualifying drugs 
imported into the United States by reg-
istered exporters during that fiscal year by 
adding the total price of qualifying drugs 
exported by each registered exporter dur-
ing that fiscal year, as reported to the Sec-
retary by each registered exporter under 
subsection (b)(1)(I)(iv). 
‘‘(iii) 
ADJUSTMENT.—If 
the 
total 
price of qualifying drugs imported into the 
United States by registered exporters dur-
ing a fiscal year as calculated under clause 
(ii) is less than the aggregate total of fees 
collected under paragraph (2) for that fis-
cal year, the Secretary shall provide for a 
pro-rata reduction in the fee due from each 
registered exporter on April 1 of the subse-
quent fiscal year so that the limitation de-
scribed in subparagraph (B) is observed. 
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‘‘(D) INDIVIDUAL EXPORTER FEE.—Sub-
ject to the limitation described in subparagraph 
(B), the fee under paragraph (2) to be paid on 
October 1 and April 1 by an exporter shall be 
an amount that is proportional to a reasonable 
estimate by the Secretary of the semiannual 
share of the exporter of the volume of quali-
fying drugs exported by exporters under sub-
section (a). 
‘‘(4) USE OF FEES.— 
‘‘(A) IN GENERAL.—Subject to appropria-
tions Acts, fees collected by the Secretary under 
paragraphs (1) and (2) shall be credited to the 
appropriation account for salaries and expenses 
of the Food and Drug Administration until ex-
pended (without fiscal year limitation), and the 
Secretary may, in consultation with the Sec-
retary of Homeland Security and the Secretary 
of the Treasury, transfer some proportion of 
such fees to the appropriation account for sala-
ries and expenses of the Bureau of Customs 
and Border Protection until expended (without 
fiscal year limitation). 
‘‘(B) SOLE
PURPOSE.—Fees collected by 
the Secretary under paragraphs (1) and (2) are 
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only available to the Secretary and, if trans-
ferred, to the Secretary of Homeland Security, 
and are for the sole purpose of paying the costs 
referred to in paragraph (3)(A). 
‘‘(5) COLLECTION OF FEES.—In any case where 
the Secretary does not receive payment of a fee as-
sessed under paragraph (1) or (2) within 30 days 
after it is due, such fee shall be treated as a claim 
of the United States Government subject to sub-
chapter II of chapter 37 of title 31, United States 
Code. 
‘‘(g) COMPLIANCE WITH SECTION 801(a).— 
‘‘(1) IN GENERAL.—A registration condition is 
that each qualifying drug exported under subsection 
(a) by the registered exporter involved or imported 
under subsection (a) by the registered importer in-
volved is in compliance with the standards referred 
to in section 801(a) regarding admission of the drug 
into the United States, subject to paragraphs (2), 
(3), and (4). 
‘‘(2) SECTION 505; APPROVAL STATUS.— 
‘‘(A) IN GENERAL.—A qualifying drug that 
is imported or offered for import under sub-
section (a) shall comply with the conditions es-
tablished in the approved application under sec-
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tion 505(b) for the U.S. label drug as described 
under this subsection. 
‘‘(B) NOTICE
BY
MANUFACTURER; GEN-
ERAL PROVISIONS.— 
‘‘(i) IN GENERAL.—The person that 
manufactures a qualifying drug that is, or 
will be, introduced for commercial distribu-
tion in a permitted country shall in accord-
ance with this paragraph submit to the 
Secretary a notice that— 
‘‘(I) includes each difference in 
the qualifying drug from a condition 
established in the approved applica-
tion for the U.S. label drug beyond— 
‘‘(aa) the variations provided 
for in the application; and 
‘‘(bb) any difference in label-
ing (except ingredient labeling); 
or 
‘‘(II) states that there is no dif-
ference in the qualifying drug from a 
condition established in the approved 
application for the U.S. label drug be-
yond— 
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‘‘(aa) the variations provided 
for in the application; and 
‘‘(bb) any difference in label-
ing (except ingredient labeling). 
‘‘(ii) INFORMATION
IN
NOTICE.—A 
notice under clause (i)(I) shall include the 
information that the Secretary may require 
under section 506A, any additional infor-
mation the Secretary may require (which 
may include data on bioequivalence if such 
data are not required under section 506A), 
and, with respect to the permitted country 
that approved the qualifying drug for com-
mercial distribution, or with respect to 
which such approval is sought, include the 
following: 
‘‘(I) The date on which the quali-
fying drug with such difference was, 
or will be, introduced for commercial 
distribution in the permitted country. 
‘‘(II) Information demonstrating 
that the person submitting the notice 
has also notified the government of 
the permitted country in writing that 
the person is submitting to the Sec-
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retary a notice under clause (i)(I), 
which notice describes the difference 
in the qualifying drug from a condi-
tion established in the approved appli-
cation for the U.S. label drug. 
‘‘(III) The information that the 
person submitted or will submit to the 
government of the permitted country 
for purposes of obtaining approval for 
commercial distribution of the drug in 
the country which, if in a language 
other than English, shall be accom-
panied by an English translation 
verified to be complete and accurate, 
with the name, address, and a brief 
statement of the qualifications of the 
person that made the translation. 
‘‘(iii) CERTIFICATIONS.—The chief ex-
ecutive officer and the chief medical officer 
of the manufacturer involved shall each 
certify in the notice under clause (i) that— 
‘‘(I) the information provided in 
the notice is complete and true; and 
‘‘(II) a copy of the notice has 
been provided to the Federal Trade 
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Commission and to the State attor-
neys general. 
‘‘(iv) FEE.—If a notice submitted 
under clause (i) includes a difference that 
would, under section 506A, require the 
submission of a supplemental application if 
made as a change to the U.S. label drug, 
the person that submits the notice shall 
pay to the Secretary a fee in the same 
amount as would apply if the person were 
paying 
a 
fee 
pursuant 
to 
section 
736(a)(1)(A)(ii). Subject to appropriations 
Acts, fees collected by the Secretary under 
the preceding sentence are available only to 
the Secretary and are for the sole purpose 
of paying the costs of reviewing notices 
submitted under clause (i). 
‘‘(v) TIMING OF SUBMISSION OF NO-
TICES.— 
‘‘(I) 
PRIOR
APPROVAL
NO-
TICES.—A notice under clause (i) to 
which subparagraph (C) applies shall 
be submitted to the Secretary not 
later than 120 days before the quali-
fying drug with the difference is intro-
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duced for commercial distribution in a 
permitted country, unless the country 
requires that distribution of the quali-
fying drug with the difference begin 
less than 120 days after the country 
requires the difference. 
‘‘(II) 
OTHER
APPROVAL
NO-
TICES.—A notice under clause (i) to 
which subparagraph (D) applies shall 
be submitted to the Secretary not 
later than the day on which the quali-
fying drug with the difference is intro-
duced for commercial distribution in a 
permitted country. 
‘‘(III) OTHER
NOTICES.—A no-
tice under clause (i) to which subpara-
graph (E) applies shall be submitted 
to the Secretary on the date that the 
qualifying drug is first introduced for 
commercial distribution in a permitted 
country and annually thereafter. 
‘‘(vi) REVIEW BY SECRETARY.— 
‘‘(I) IN GENERAL.—In this para-
graph, the difference in a qualifying 
drug that is submitted in a notice 
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under clause (i) from the U.S. label 
drug shall be treated by the Secretary 
as if it were a manufacturing change 
to the U.S. label drug under section 
506A. 
‘‘(II) STANDARD
OF
REVIEW.— 
Except as provided in subclause (III), 
the Secretary shall review and approve 
or disapprove the difference in a no-
tice submitted under clause (i), if re-
quired under section 506A, using the 
safe and effective standard for ap-
proving or disapproving a manufac-
turing change under section 506A. 
‘‘(III) BIOEQUIVALENCE.—If the 
Secretary would approve the dif-
ference in a notice submitted under 
clause (i) using the safe and effective 
standard under section 506A and if 
the Secretary determines that the 
qualifying drug is not bioequivalent to 
the U.S. label drug, the Secretary 
may— 
‘‘(aa) include in the labeling 
provided under paragraph (3) a 
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prominent 
advisory 
that 
the 
qualifying drug is safe and effec-
tive but is not bioequivalent to 
the U.S. label drug if the Sec-
retary determines that such an 
advisory is necessary for health 
care practitioners and patients to 
use the qualifying drug safely 
and effectively; or 
‘‘(bb) decline to approve the 
difference if the Secretary deter-
mines that the availability of 
both the qualifying drug and the 
U.S. label drug would pose a 
threat to the public health. 
‘‘(IV) REVIEW
BY
THE
SEC-
RETARY.—The Secretary shall review 
and approve or disapprove the dif-
ference in a notice submitted under 
clause (i), if required under section 
506A, not later than 120 days after 
the date on which the notice is sub-
mitted. 
‘‘(V) ESTABLISHMENT
INSPEC-
TION.—If review of such difference 
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would require an inspection of the es-
tablishment in which the qualifying 
drug is manufactured— 
‘‘(aa) such inspection by the 
Secretary shall be authorized; 
and 
‘‘(bb) the Secretary may rely 
on a satisfactory report of a good 
manufacturing practice inspec-
tion of the establishment from a 
permitted country whose regu-
latory system the Secretary rec-
ognizes as equivalent under a 
mutual recognition agreement, as 
provided under section 510(i)(3), 
section 803, or part 26 of title 
21, Code of Federal Regulations 
(or any corresponding successor 
rule or regulation). 
‘‘(vii) PUBLICATION OF INFORMATION 
ON NOTICES.— 
‘‘(I) IN GENERAL.—Through the 
Internet website of the Food and 
Drug Administration and a toll-free 
telephone number, the Secretary shall 
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readily make available to the public a 
list of notices submitted under clause 
(i). 
‘‘(II) CONTENTS.—The list under 
subclause (I) shall include the date on 
which a notice is submitted and 
whether— 
‘‘(aa) a notice is under re-
view; 
‘‘(bb) the Secretary has or-
dered that importation of the 
qualifying drug from a permitted 
country cease; or 
‘‘(cc) the importation of the 
drug is permitted under sub-
section (a). 
‘‘(III) UPDATE.—The Secretary 
shall promptly update the Internet 
website with any changes to the list. 
‘‘(C) NOTICE; DRUG DIFFERENCE REQUIR-
ING PRIOR APPROVAL.—In the case of a notice 
under subparagraph (B)(i) that includes a dif-
ference that would, under section 506A(c) or 
(d)(3)(B)(i), require the approval of a supple-
mental application before the difference could 
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be made to the U.S. label drug the following 
shall occur: 
‘‘(i) Promptly after the notice is sub-
mitted, the Secretary shall notify reg-
istered exporters, registered importers, the 
Federal Trade Commission, and the State 
attorneys general that the notice has been 
submitted with respect to the qualifying 
drug involved. 
‘‘(ii) If the Secretary has not made a 
determination whether such a supple-
mental application regarding the U.S. label 
drug would be approved or disapproved by 
the date on which the qualifying drug in-
volved is to be introduced for commercial 
distribution in a permitted country, the 
Secretary shall— 
‘‘(I) order that the importation of 
the qualifying drug involved from the 
permitted country not begin until the 
Secretary completes review of the no-
tice; and 
‘‘(II) promptly notify registered 
exporters, registered importers, the 
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‘‘(I) vacate the order under 
clause (ii), if any; 
‘‘(II) consider the difference to 
be a variation provided for in the ap-
proved application for the U.S. label 
drug; 
‘‘(III) permit importation of the 
qualifying drug under subsection (a); 
and 
‘‘(IV) promptly notify registered 
exporters, registered importers, the 
Federal Trade Commission, and the 
State attorneys general of the deter-
mination. 
‘‘(D) NOTICE; DRUG DIFFERENCE NOT RE-
QUIRING PRIOR APPROVAL.—In the case of a 
notice under subparagraph (B)(i) that includes 
a 
difference 
that 
would, 
under 
section 
506A(d)(3)(B)(ii), not require the approval of a 
supplemental application before the difference 
could be made to the U.S. label drug the fol-
lowing shall occur: 
‘‘(i) During the period in which the 
notice is being reviewed by the Secretary, 
the authority under this subsection to im-
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port the qualifying drug involved continues 
in effect. 
‘‘(ii) If the Secretary determines that 
such a supplemental application regarding 
the U.S. label drug would not be approved, 
the Secretary shall— 
‘‘(I) order that the importation of 
the qualifying drug involved from the 
permitted country cease; 
‘‘(II) notify the permitted coun-
try that approved the qualifying drug 
for commercial distribution of the de-
termination; and 
‘‘(III) promptly notify registered 
exporters, registered importers, the 
Federal Trade Commission, and the 
State attorneys general of the deter-
mination. 
‘‘(iii) If the Secretary determines that 
such a supplemental application regarding 
the U.S. label drug would be approved, the 
difference shall be considered to be a vari-
ation provided for in the approved applica-
tion for the U.S. label drug. 
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‘‘(E) NOTICE; DRUG DIFFERENCE NOT RE-
QUIRING APPROVAL; NO DIFFERENCE.—In the 
case of a notice under subparagraph (B)(i) that 
includes a difference for which, under section 
506A(d)(1)(A), 
a 
supplemental 
application 
would not be required for the difference to be 
made to the U.S. label drug, or that states that 
there is no difference, the Secretary— 
‘‘(i) shall consider such difference to 
be a variation provided for in the approved 
application for the U.S. label drug; 
‘‘(ii) may not order that the importa-
tion of the qualifying drug involved cease; 
and 
‘‘(iii) shall promptly notify registered 
exporters and registered importers. 
‘‘(F) DIFFERENCES
IN
ACTIVE
INGRE-
DIENT, ROUTE
OF
ADMINISTRATION, DOSAGE 
FORM, OR STRENGTH.— 
‘‘(i) IN
GENERAL.—A person who 
manufactures a drug approved under sec-
tion 505(b) shall submit an application 
under section 505(b) for approval of an-
other drug that is manufactured for dis-
tribution in a permitted country by or for 
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the person that manufactures the drug ap-
proved under section 505(b) if— 
‘‘(I) there is no qualifying drug 
in commercial distribution in per-
mitted countries whose combined pop-
ulation represents at least 50 percent 
of the total population of all permitted 
countries with the same active ingre-
dient or ingredients, route of adminis-
tration, dosage form, and strength as 
the drug approved under section 
505(b); and 
‘‘(II) each active ingredient of 
the other drug is related to an active 
ingredient of the drug approved under 
section 505(b), as defined in clause 
(v). 
‘‘(ii) APPLICATION
UNDER
SECTION 
505(b).—The application under section 
505(b) required under clause (i) shall— 
‘‘(I) request approval of the other 
drug for the indication or indications 
for which the drug approved under 
section 505(b) is labeled; 
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‘‘(II) include the information that 
the person submitted to the govern-
ment of the permitted country for 
purposes of obtaining approval for 
commercial distribution of the other 
drug in that country, which if in a 
language other than English, shall be 
accompanied by an English trans-
lation verified to be complete and ac-
curate, with the name, address, and a 
brief statement of the qualifications of 
the person that made the translation; 
‘‘(III) include a right of reference 
to the application for the drug ap-
proved under section 505(b); and 
‘‘(IV) include such additional in-
formation as the Secretary may re-
quire. 
‘‘(iii) TIMING OF SUBMISSION OF AP-
PLICATION.—An application under section 
505(b) required under clause (i) shall be 
submitted to the Secretary not later than 
the day on which the information referred 
to in clause (ii)(II) is submitted to the gov-
ernment of the permitted country. 
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‘‘(iv) NOTICE OF DECISION ON APPLI-
CATION.—The Secretary shall promptly no-
tify registered exporters, registered import-
ers, the Federal Trade Commission, and 
the State attorneys general of a determina-
tion to approve or to disapprove an appli-
cation under section 505(b) required under 
clause (i). 
‘‘(v) 
RELATED
ACTIVE
INGREDI-
ENTS.—For purposes of clause (i)(II), 2 
active ingredients are related if they are— 
‘‘(I) the same; or 
‘‘(II) different salts, esters, or 
complexes of the same moiety. 
‘‘(3) SECTION 502; LABELING.— 
‘‘(A) IMPORTATION
BY
REGISTERED
IM-
PORTER.— 
‘‘(i) IN GENERAL.—In the case of a 
qualifying drug that is imported or offered 
for import by a registered importer, such 
drug shall be considered to be in compli-
ance with section 502 and the labeling re-
quirements under the approved application 
for the U.S. label drug if the qualifying 
drug bears— 
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‘‘(I) a copy of the labeling ap-
proved for the U.S. label drug under 
section 505, without regard to wheth-
er the copy bears any trademark in-
volved; 
‘‘(II) the name of the manufac-
turer and location of the manufac-
turer; 
‘‘(III) the lot number assigned by 
the manufacturer; 
‘‘(IV) the name, location, and 
registration number of the importer; 
and 
‘‘(V) the National Drug Code 
number assigned to the qualifying 
drug by the Secretary. 
‘‘(ii) REQUEST FOR COPY OF THE LA-
BELING.—The Secretary shall provide such 
copy to the registered importer involved, 
upon request of the importer. 
‘‘(iii) REQUESTED
LABELING.—The 
labeling provided by the Secretary under 
clause (ii) shall— 
‘‘(I) 
include 
the 
established 
name, as defined in section 502(e)(3), 
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100 
for each active ingredient in the quali-
fying drug; 
‘‘(II) not include the proprietary 
name of the U.S. label drug or any 
active ingredient thereof; 
‘‘(III) if required under para-
graph (2)(B)(vi)(III), a prominent ad-
visory that the qualifying drug is safe 
and effective but not bioequivalent to 
the U.S. label drug; and 
‘‘(IV) if the inactive ingredients 
of the qualifying drug are different 
from the inactive ingredients for the 
U.S. label drug, include— 
‘‘(aa) a prominent notice 
that the ingredients of the quali-
fying drug differ from the ingre-
dients of the U.S. label drug and 
that the qualifying drug must be 
dispensed with an advisory to 
people with allergies about this 
difference and a list of ingredi-
ents; and 
‘‘(bb) a list of the ingredi-
ents of the qualifying drug as 
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101 
would be required under section 
502(e). 
‘‘(B) IMPORTATION BY INDIVIDUAL.— 
‘‘(i) IN GENERAL.—In the case of a 
qualifying drug that is imported or offered 
for import by a registered exporter to an 
individual, such drug shall be considered to 
be in compliance with section 502 and the 
labeling requirements under the approved 
application for the U.S. label drug if the 
packaging and labeling of the qualifying 
drug complies with all applicable regula-
tions promulgated under sections 3 and 4 
of the Poison Prevention Packaging Act of 
1970 (15 U.S.C. 1471 et seq.) and the la-
beling of the qualifying drug includes— 
‘‘(I) directions for use by the 
consumer; 
‘‘(II) the lot number assigned by 
the manufacturer; 
‘‘(III) the name and registration 
number of the exporter; 
‘‘(IV) if required under para-
graph (2)(B)(vi)(III), a prominent ad-
visory that the drug is safe and effec-
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102 
tive but not bioequivalent to the U.S. 
label drug; 
‘‘(V) if the inactive ingredients of 
the drug are different from the inac-
tive ingredients for the U.S. label 
drug— 
‘‘(aa) a prominent advisory 
that persons with an allergy 
should check the ingredient list 
of the drug because the ingredi-
ents of the drug differ from the 
ingredients of the U.S. label 
drug; and 
‘‘(bb) a list of the ingredi-
ents of the drug as would be re-
quired under section 502(e); and 
‘‘(VI) a copy of any special label-
ing that would be required by the Sec-
retary had the U.S. label drug been 
dispensed by a pharmacist in the 
United States, without regard to 
whether the special labeling bears any 
trademark involved. 
‘‘(ii) REQUEST FOR COPY OF SPECIAL 
LABELING
AND
INGREDIENT
LIST.—The 
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103 
Secretary shall provide to the registered 
exporter involved a copy of the special la-
beling, the advisory, and the ingredient list 
of the drug, upon request of the exporter. 
‘‘(iii) REQUESTED LABELING AND IN-
GREDIENT LIST.—The labeling and ingre-
dient list provided by the Secretary under 
clause (ii) shall— 
‘‘(I) 
include 
the 
established 
name, as defined in section 502(e)(3), 
for each active ingredient in the drug; 
and 
‘‘(II) not include the proprietary 
name of the U.S. label drug or any 
active ingredient thereof. 
‘‘(4) SECTION 501; ADULTERATION.—A quali-
fying drug that is imported or offered for import 
under subsection (a) shall be considered to be in 
compliance with section 501 if the drug is in compli-
ance with subsection (c). 
‘‘(5) STANDARDS FOR REFUSING ADMISSION.— 
A drug exported under subsection (a) from a reg-
istered exporter or imported by a registered importer 
may be refused admission into the United States if 
1 or more of the following applies: 
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104 
‘‘(A) The drug is not a qualifying drug. 
‘‘(B) A notice for the drug required under 
paragraph (2)(B) has not been submitted to the 
Secretary. 
‘‘(C) The Secretary has ordered that im-
portation of the drug from the permitted coun-
try cease under paragraph (2) (C) or (D). 
‘‘(D) The drug does not comply with para-
graph (3) or (4). 
‘‘(E) The shipping container appears dam-
aged in a way that may affect the strength, 
quality, or purity of the drug. 
‘‘(F) The Secretary becomes aware that— 
‘‘(i) the drug may be counterfeit; 
‘‘(ii) the drug may have been pre-
pared, packed, or held under insanitary 
conditions; or 
‘‘(iii) the methods used in, or the fa-
cilities or controls used for, the manufac-
turing, processing, packing, or holding of 
the drug do not conform to good manufac-
turing practice. 
‘‘(G) The Secretary has obtained an in-
junction under section 302 that prohibits the 
distribution of the drug in interstate commerce. 
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105 
‘‘(H) The Secretary has under section 
505(e) withdrawn approval of the drug. 
‘‘(I) The manufacturer of the drug has in-
stituted a recall of the drug. 
‘‘(J) If the drug is imported or offered for 
import by a registered importer without submis-
sion of a notice in accordance with subsection 
(d)(4). 
‘‘(K) If the drug is imported or offered for 
import from a registered exporter to an indi-
vidual and 1 or more of the following applies: 
‘‘(i) The shipping container for such 
drug does not bear the markings required 
under subsection (d)(2). 
‘‘(ii) The markings on the shipping 
container appear to be counterfeit. 
‘‘(iii) The shipping container or mark-
ings appear to have been tampered with. 
‘‘(h) LICENSING
AS PHARMACIST.—A registration 
condition is that the exporter involved agrees that a quali-
fying drug will be exported to an individual only if the 
Secretary has verified that— 
‘‘(1) the exporter is authorized under the law of 
the permitted country in which the exporter is lo-
cated to dispense prescription drugs; and 
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106 
‘‘(2) the exporter employs persons that are li-
censed under the law of the permitted country in 
which the exporter is located to dispense prescription 
drugs in sufficient number to dispense safely the 
drugs exported by the exporter to individuals, and 
the exporter assigns to those persons responsibility 
for dispensing such drugs to individuals. 
‘‘(i) INDIVIDUALS; CONDITIONS
FOR
IMPORTA-
TION.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(2)(B), the importation of a qualifying drug by 
an individual is in accordance with this subsection if 
the following conditions are met: 
‘‘(A) The drug is accompanied by a copy of 
a prescription for the drug, which prescrip-
tion— 
‘‘(i) is valid under applicable Federal 
and State laws; and 
‘‘(ii) was issued by a practitioner who, 
under the law of a State of which the indi-
vidual is a resident, or in which the indi-
vidual receives care from the practitioner 
who issues the prescription, is authorized 
to administer prescription drugs. 
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107 
‘‘(B) The drug is accompanied by a copy 
of the documentation that was required under 
the law or regulations of the permitted country 
in which the exporter is located, as a condition 
of dispensing the drug to the individual. 
‘‘(C) The copies referred to in subpara-
graphs (A)(i) and (B) are marked in a manner 
sufficient— 
‘‘(i) to indicate that the prescription, 
and the equivalent document in the per-
mitted country in which the exporter is lo-
cated, have been filled; and 
‘‘(ii) to prevent a duplicative filling by 
another pharmacist. 
‘‘(D) The individual has provided to the 
registered exporter a complete list of all drugs 
used by the individual for review by the individ-
uals who dispense the drug. 
‘‘(E) The quantity of the drug does not ex-
ceed a 90-day supply. 
‘‘(F) The drug is not an ineligible subpart 
H drug. For purposes of this section, a pre-
scription drug is an ‘ineligible subpart H drug’ 
if the drug was approved by the Secretary 
under subpart H of part 314 of title 21, Code 
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108 
of Federal Regulations (relating to accelerated 
approval), with restrictions under section 520 of 
such part to assure safe use, and the Secretary 
has published in the Federal Register a notice 
that the Secretary has determined that good 
cause exists to prohibit the drug from being im-
ported pursuant to this subsection. 
‘‘(2) NOTICE REGARDING DRUG REFUSED AD-
MISSION.—If a registered exporter ships a drug to 
an individual pursuant to subsection (a)(2)(B) and 
the drug is refused admission to the United States, 
a written notice shall be sent to the individual and 
to the exporter that informs the individual and the 
exporter of such refusal and the reason for the re-
fusal. 
‘‘(j) MAINTENANCE OF RECORDS AND SAMPLES.— 
‘‘(1) IN GENERAL.—A registration condition is 
that the importer or exporter involved shall— 
‘‘(A) maintain records required under this 
section for not less than 2 years; and 
‘‘(B) maintain samples of each lot of a 
qualifying drug required under this section for 
not less than 2 years. 
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109 
‘‘(2) PLACE OF RECORD MAINTENANCE.—The 
records described under paragraph (1) shall be 
maintained— 
‘‘(A) in the case of an importer, at the 
place of business of the importer at which the 
importer initially receives the qualifying drug 
after importation; or 
‘‘(B) in the case of an exporter, at the fa-
cility from which the exporter ships the quali-
fying drug to the United States. 
‘‘(k) DRUG RECALLS.— 
‘‘(1) MANUFACTURERS.—A person that manu-
factures a qualifying drug imported from a per-
mitted country under this section shall promptly in-
form the Secretary— 
‘‘(A) if the drug is recalled or withdrawn 
from the market in a permitted country; 
‘‘(B) how the drug may be identified, in-
cluding lot number; and 
‘‘(C) the reason for the recall or with-
drawal. 
‘‘(2) SECRETARY.—With respect to each per-
mitted country, the Secretary shall— 
‘‘(A) enter into an agreement with the gov-
ernment of the country to receive information 
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110 
about recalls and withdrawals of qualifying 
drugs in the country; or 
‘‘(B) monitor recalls and withdrawals of 
qualifying drugs in the country using any infor-
mation that is available to the public in any 
media. 
‘‘(3) NOTICE.—The Secretary may notify, as 
appropriate, registered exporters, registered import-
ers, wholesalers, pharmacies, or the public of a recall 
or withdrawal of a qualifying drug in a permitted 
country. 
‘‘(l) DRUG LABELING.—When a qualifying drug that 
is imported into the United States by an importer under 
subsection (a) is dispensed by a pharmacist to an indi-
vidual, the pharmacist shall provide that the packaging 
and labeling of the drug complies with all applicable regu-
lations promulgated under sections 3 and 4 of the Poison 
Prevention Packaging Act of 1970 (15 U.S.C. 1471 et 
seq.) and include with any other labeling provided to the 
individual the following: 
‘‘(1) The lot number assigned by the manufac-
turer. 
‘‘(2) The name and registration number of the 
importer. 
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111 
‘‘(3) If the inactive ingredients of the drug are 
different from the inactive ingredients for the U.S. 
label drug— 
‘‘(A) a prominent advisory that persons 
with allergies should check the ingredient list of 
the drug because the ingredients of the drug 
differ from the ingredients of the U.S. label 
drug; and 
‘‘(B) a list of the ingredients of the drug 
as would be required under section 502(e). 
‘‘(4) 
If 
required 
under 
paragraph 
(2)(B)(vi)(III) of subsection (g), a prominent advi-
sory that the drug is safe and effective but not bio-
equivalent to the U.S. label drug. 
‘‘(m) 
CHARITABLE
CONTRIBUTIONS.—Notwith-
standing any other provision of this section, this section 
does not authorize the importation into the United States 
of a qualifying drug donated or otherwise supplied for free 
or at nominal cost by the manufacturer of the drug to 
a charitable or humanitarian organization, including the 
United Nations and affiliates, or to a government of a for-
eign country. 
‘‘(n) UNFAIR AND DISCRIMINATORY ACTS AND PRAC-
TICES.— 
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114 
tion requested by the Secretary to review such 
a notice; 
‘‘(F) knowingly fail to submit an applica-
tion required under subsection (g)(2)(F), know-
ingly fail to submit such an application on or 
before 
the 
date 
specified 
in 
subsection 
(g)(2)(F)(ii), knowingly submit such an applica-
tion that makes a materially false, fictitious, or 
fraudulent statement, or knowingly fail to pro-
vide promptly any information requested by the 
Secretary to review such an application; 
‘‘(G) cause there to be a difference (includ-
ing a difference in active ingredient, route of 
administration, dosage form, strength, formula-
tion, manufacturing establishment, manufac-
turing process, or person that manufactures the 
drug) between a prescription drug for distribu-
tion in the United States and the drug for dis-
tribution in a permitted country; 
‘‘(H) refuse to allow an inspection author-
ized under this section of an establishment that 
manufactures a qualifying drug that is, or will 
be, introduced for commercial distribution in a 
permitted country; 
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115 
‘‘(I) fail to conform to the methods used 
in, or the facilities used for, the manufacturing, 
processing, packing, or holding of a qualifying 
drug that is, or will be, introduced for commer-
cial distribution in a permitted country to good 
manufacturing practice under this Act; 
‘‘(J) become a party to a licensing agree-
ment or other agreement related to a qualifying 
drug that fails to provide for compliance with 
all requirements of this section with respect to 
such drug; 
‘‘(K) enter into a contract that restricts, 
prohibits, or delays the importation of a quali-
fying drug under this section; 
‘‘(L) engage in any other action to restrict, 
prohibit, or delay the importation of a quali-
fying drug under this section; or 
‘‘(M) engage in any other action that the 
Federal Trade Commission determines to dis-
criminate against a person that engages or at-
tempts to engage in the importation of a quali-
fying drug under this section. 
‘‘(2) AFFIRMATIVE DEFENSE.— 
‘‘(A) DISCRIMINATION.—It shall be an af-
firmative defense to a charge that a manufac-
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turer has discriminated under subparagraph 
(A), (B), (C), (D), or (M) of paragraph (1) that 
the higher price charged for a prescription drug 
sold to a person, the denial, restriction, or delay 
of supplies of a prescription drug to a person, 
the refusal to do business with a person, or 
other discriminatory activity against a person, 
is not based, in whole or in part, on— 
‘‘(i) the person exporting or importing 
a qualifying drug into the United States 
under this section; or 
‘‘(ii) the person distributing, selling, 
or using a qualifying drug imported into 
the United States under this section. 
‘‘(B) DRUG DIFFERENCES.—It shall be an 
affirmative defense to a charge that a manufac-
turer has caused there to be a difference de-
scribed in subparagraph (G) of paragraph (1) 
that— 
‘‘(i) the difference was required by the 
country in which the drug is distributed; 
‘‘(ii) the Secretary has determined 
that the difference was necessary to im-
prove the safety or effectiveness of the 
drug; 
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‘‘(iii) the person manufacturing the 
drug for distribution in the United States 
has given notice to the Secretary under 
subsection (g)(2)(B)(i) that the drug for 
distribution in the United States is not dif-
ferent from a drug for distribution in per-
mitted countries whose combined popu-
lation represents at least 50 percent of the 
total population of all permitted countries; 
or 
‘‘(iv) the difference was not caused, in 
whole or in part, for the purpose of re-
stricting importation of the drug into the 
United States under this section. 
‘‘(3) EFFECT OF SUBSECTION.— 
‘‘(A) SALES IN OTHER COUNTRIES.—This 
subsection applies only to the sale or distribu-
tion of a prescription drug in a country if the 
manufacturer of the drug chooses to sell or dis-
tribute the drug in the country. Nothing in this 
subsection shall be construed to compel the 
manufacturer of a drug to distribute or sell the 
drug in a country. 
‘‘(B) DISCOUNTS TO INSURERS, HEALTH 
PLANS, PHARMACY
BENEFIT
MANAGERS, AND 
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118 
COVERED
ENTITIES.—Nothing in this sub-
section shall be construed to— 
‘‘(i) prevent or restrict a manufac-
turer of a prescription drug from providing 
discounts to an insurer, health plan, phar-
macy benefit manager in the United 
States, or covered entity in the drug dis-
count program under section 340B of the 
Public Health Service Act (42 U.S.C. 
256b) in return for inclusion of the drug 
on a formulary; 
‘‘(ii) require that such discounts be 
made available to other purchasers of the 
prescription drug; or 
‘‘(iii) prevent or restrict any other 
measures taken by an insurer, health plan, 
or pharmacy benefit manager to encourage 
consumption of such prescription drug. 
‘‘(C) 
CHARITABLE
CONTRIBUTIONS.— 
Nothing in this subsection shall be construed 
to— 
‘‘(i) prevent a manufacturer from do-
nating a prescription drug, or supplying a 
prescription drug at nominal cost, to a 
charitable or humanitarian organization, 
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119 
including the United Nations and affili-
ates, or to a government of a foreign coun-
try; or 
‘‘(ii) apply to such donations or sup-
plying of a prescription drug. 
‘‘(4) ENFORCEMENT.— 
‘‘(A) UNFAIR OR DECEPTIVE ACT OR PRAC-
TICE.—A violation of this subsection shall be 
treated as a violation of a rule defining an un-
fair or deceptive act or practice prescribed 
under section 18(a)(1)(B) of the Federal Trade 
Commission Act (15 U.S.C. 57a(a)(1)(B)). 
‘‘(B) ACTIONS BY THE COMMISSION.—The 
Federal Trade Commission— 
‘‘(i) shall enforce this subsection in 
the same manner, by the same means, and 
with the same jurisdiction, powers, and du-
ties as though all applicable terms and pro-
visions of the Federal Trade Commission 
Act (15 U.S.C. 41 et seq.) were incor-
porated into and made a part of this sec-
tion; and 
‘‘(ii) may seek monetary relief three-
fold the damages sustained, in addition to 
any other remedy available to the Federal 
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120 
Trade Commission under the Federal 
Trade Commission Act (15 U.S.C. 41 et 
seq.). 
‘‘(5) ACTIONS BY STATES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) CIVIL ACTIONS.—In any case in 
which the attorney general of a State has 
reason to believe that an interest of the 
residents of that State have been adversely 
affected by any manufacturer that violates 
paragraph (1), the attorney general of a 
State may bring a civil action on behalf of 
the residents of the State, and persons 
doing business in the State, in a district 
court of the United States of appropriate 
jurisdiction to— 
‘‘(I) enjoin that practice; 
‘‘(II) enforce compliance with 
this subsection; 
‘‘(III) obtain damages, restitu-
tion, or other compensation on behalf 
of residents of the State and persons 
doing business in the State, including 
threefold the damages; or 
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121 
‘‘(IV) obtain such other relief as 
the court may consider to be appro-
priate. 
‘‘(ii) NOTICE.— 
‘‘(I) IN GENERAL.—Before filing 
an action under clause (i), the attor-
ney general of the State involved shall 
provide to the Federal Trade Commis-
sion— 
‘‘(aa) written notice of that 
action; and 
‘‘(bb) a copy of the com-
plaint for that action. 
‘‘(II) 
EXEMPTION.—Subclause 
(I) shall not apply with respect to the 
filing of an action by an attorney gen-
eral of a State under this paragraph, 
if the attorney general determines 
that it is not feasible to provide the 
notice described in that subclause be-
fore filing of the action. In such case, 
the attorney general of a State shall 
provide notice and a copy of the com-
plaint to the Federal Trade Commis-
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122 
sion at the same time as the attorney 
general files the action. 
‘‘(B) INTERVENTION.— 
‘‘(i) IN GENERAL.—On receiving no-
tice under subparagraph (A)(ii), the Fed-
eral Trade Commission shall have the right 
to intervene in the action that is the sub-
ject of the notice. 
‘‘(ii) EFFECT OF INTERVENTION.—If 
the Federal Trade Commission intervenes 
in an action under subparagraph (A), it 
shall have the right— 
‘‘(I) to be heard with respect to 
any matter that arises in that action; 
and 
‘‘(II) to file a petition for appeal. 
‘‘(C) CONSTRUCTION.—For purposes of 
bringing any civil action under subparagraph 
(A), nothing in this subsection shall be con-
strued to prevent an attorney general of a State 
from exercising the powers conferred on the at-
torney general by the laws of that State to— 
‘‘(i) conduct investigations; 
‘‘(ii) administer oaths or affirmations; 
or 
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123 
‘‘(iii) compel the attendance of wit-
nesses or the production of documentary 
and other evidence. 
‘‘(D) ACTIONS BY THE COMMISSION.—In 
any case in which an action is instituted by or 
on behalf of the Federal Trade Commission for 
a violation of paragraph (1), a State may not, 
during the pendency of that action, institute an 
action under subparagraph (A) for the same 
violation against any defendant named in the 
complaint in that action. 
‘‘(E) VENUE.—Any action brought under 
subparagraph (A) may be brought in the dis-
trict court of the United States that meets ap-
plicable requirements relating to venue under 
section 1391 of title 28, United States Code. 
‘‘(F) SERVICE OF PROCESS.—In an action 
brought under subparagraph (A), process may 
be served in any district in which the defend-
ant— 
‘‘(i) is an inhabitant; or 
‘‘(ii) may be found. 
‘‘(G) MEASUREMENT
OF
DAMAGES.—In 
any action under this paragraph to enforce a 
cause of action under this subsection in which 
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124 
there has been a determination that a defend-
ant has violated a provision of this subsection, 
damages may be proved and assessed in the ag-
gregate by statistical or sampling methods, by 
the computation of illegal overcharges or by 
such other reasonable system of estimating ag-
gregate damages as the court in its discretion 
may permit without the necessity of separately 
proving the individual claim of, or amount of 
damage to, persons on whose behalf the suit 
was brought. 
‘‘(H) EXCLUSION
ON
DUPLICATIVE
RE-
LIEF.—The district court shall exclude from the 
amount of monetary relief awarded in an action 
under this paragraph brought by the attorney 
general of a State any amount of monetary re-
lief which duplicates amounts which have been 
awarded for the same injury. 
‘‘(6) EFFECT ON ANTITRUST LAWS.—Nothing 
in this subsection shall be construed to modify, im-
pair, or supersede the operation of the antitrust 
laws. For the purpose of this subsection, the term 
‘antitrust laws’ has the meaning given it in the first 
section of the Clayton Act, except that it includes 
section 5 of the Federal Trade Commission Act to 
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125 
the extent that such section 5 applies to unfair 
methods of competition. 
‘‘(7) MANUFACTURER.—In this subsection, the 
term ‘manufacturer’ means any entity, including any 
affiliate or licensee of that entity, that is engaged 
in— 
‘‘(A) the production, preparation, propaga-
tion, compounding, conversion, or processing of 
a prescription drug, either directly or indirectly 
by extraction from substances of natural origin, 
or independently by means of chemical syn-
thesis, or by a combination of extraction and 
chemical synthesis; or 
‘‘(B) the packaging, repackaging, labeling, 
relabeling, or distribution of a prescription 
drug.’’. 
(2) PROHIBITED
ACTS.—The Federal Food, 
Drug, and Cosmetic Act is amended— 
(A) in section 301 (21 U.S.C. 331), by 
striking paragraph (aa) and inserting the fol-
lowing: 
‘‘(aa)(1) The sale or trade by a pharmacist, or by 
a business organization of which the pharmacist is a part, 
of a qualifying drug that under section 804(a)(2)(A) was 
imported by the pharmacist, other than— 
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126 
‘‘(A) a sale at retail made pursuant to dis-
pensing the drug to a customer of the pharmacist or 
organization; or 
‘‘(B) a sale or trade of the drug to a pharmacy 
or a wholesaler registered to import drugs under sec-
tion 804. 
‘‘(2) The sale or trade by an individual of a qualifying 
drug that under section 804(a)(2)(B) was imported by the 
individual. 
‘‘(3) The making of a materially false, fictitious, or 
fraudulent statement or representation, or a material 
omission, in a notice under clause (i) of section 
804(g)(2)(B) or in an application required under section 
804(g)(2)(F), or the failure to submit such a notice or 
application. 
‘‘(4) The importation of a drug in violation of a reg-
istration condition or other requirement under section 
804, the falsification of any record required to be main-
tained, or provided to the Secretary, under such section, 
or the violation of any registration condition or other re-
quirement under such section.’’; and 
(B) in section 303(a) (21 U.S.C. 333(a)), 
by striking paragraph (6) and inserting the fol-
lowing: 
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127 
‘‘(6) Notwithstanding subsection (a), any person that 
knowingly violates section 301(i) (2) or (3) or section 
301(aa)(4) shall be imprisoned not more than 10 years, 
or fined in accordance with title 18, United States Code, 
or both.’’. 
(3) AMENDMENT OF CERTAIN PROVISIONS.— 
(A) IN GENERAL.—Section 801 of the Fed-
eral Food, Drug, and Cosmetic Act (21 U.S.C. 
381) is amended by striking subsection (g) and 
inserting the following: 
‘‘(g) With respect to a prescription drug that is im-
ported or offered for import into the United States by an 
individual who is not in the business of such importation, 
that is not shipped by a registered exporter under section 
804, and that is refused admission under subsection (a), 
the Secretary shall notify the individual that— 
‘‘(1) the drug has been refused admission be-
cause the drug was not a lawful import under sec-
tion 804; 
‘‘(2) the drug is not otherwise subject to a 
waiver of the requirements of subsection (a); 
‘‘(3) the individual may under section 804 law-
fully import certain prescription drugs from export-
ers registered with the Secretary under section 804; 
and 
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128 
‘‘(4) the individual can find information about 
such importation, including a list of registered ex-
porters, on the Internet website of the Food and 
Drug Administration or through a toll-free telephone 
number required under section 804.’’. 
(B) 
ESTABLISHMENT
REGISTRATION.— 
Section 510(i) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 360(i)) is amended in 
paragraph (1) by inserting after ‘‘import into 
the United States’’ the following: ‘‘, including a 
drug that is, or may be, imported or offered for 
import into the United States under section 
804,’’. 
(C) EFFECTIVE DATE.—The amendments 
made by this subsection shall take effect on the 
date that is 90 days after the date of enactment 
of this Act. 
(4) EXHAUSTION.— 
(A) IN GENERAL.—Section 271 of title 35, 
United States Code, is amended— 
(i) by redesignating subsections (h) 
and (i) as (i) and (j), respectively; and 
(ii) by inserting after subsection (g) 
the following: 
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129 
‘‘(h) It shall not be an act of infringement to use, 
offer to sell, or sell within the United States or to import 
into the United States any patented invention under sec-
tion 804 of the Federal Food, Drug, and Cosmetic Act 
that was first sold abroad by or under authority of the 
owner or licensee of such patent.’’. 
(B) RULE OF CONSTRUCTION.—Nothing in 
the amendment made by paragraph (1) shall be 
construed to affect the ability of a patent owner 
or licensee to enforce their patent, subject to 
such amendment. 
(5) EFFECT OF SECTION 804.— 
(A) IN GENERAL.—Section 804 of the Fed-
eral Food, Drug, and Cosmetic Act, as added 
by subsection (a), shall permit the importation 
of qualifying drugs (as defined in such section 
804) into the United States without regard to 
the status of the issuance of implementing reg-
ulations— 
(i) from exporters registered under 
such section 804 on the date that is 90 
days after the date of enactment of this 
Act; and 
(ii) from permitted countries, as de-
fined in such section 804, by importers 
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130 
registered under such section 804 on the 
date that is 1 year after the date of enact-
ment of this Act. 
(B) REVIEW OF REGISTRATION BY CER-
TAIN EXPORTERS.— 
(i) REVIEW PRIORITY.—In the review 
of registrations submitted under subsection 
(b) of such section 804, registrations sub-
mitted by entities in Canada that are sig-
nificant exporters of prescription drugs to 
individuals in the United States as of the 
date of enactment of this Act will have pri-
ority during the 90-day period that begins 
on such date of enactment. 
(ii) PERIOD
FOR
REVIEW.—During 
such 90-day period, the reference in sub-
section (b)(2)(A) of such section 804 to 90 
days (relating to approval or disapproval of 
registrations) is, as applied to such enti-
ties, deemed to be 30 days. 
(iii) LIMITATION.—That an exporter 
in Canada exports, or has exported, pre-
scription drugs to individuals in the United 
States on or before the date that is 90 
days after the date of enactment of this 
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131 
Act shall not serve as a basis, in whole or 
in part, for disapproving a registration 
under such section 804 from the exporter. 
(iv) FIRST YEAR LIMIT ON NUMBER 
OF EXPORTERS.—During the 1-year period 
beginning on the date of enactment of this 
Act, the Secretary of Health and Human 
Services (referred to in this section as the 
‘‘Secretary’’) may limit the number of reg-
istered exporters under such section 804 to 
not less than 50, so long as the Secretary 
gives priority to those exporters with dem-
onstrated ability to process a high volume 
of shipments of drugs to individuals in the 
United States. 
(v) SECOND YEAR LIMIT ON NUMBER 
OF EXPORTERS.—During the 1-year period 
beginning on the date that is 1 year after 
the date of enactment of this Act, the Sec-
retary may limit the number of registered 
exporters under such section 804 to not 
less than 100, so long as the Secretary 
gives priority to those exporters with dem-
onstrated ability to process a high volume 
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169 
(b) CONSIDERATION OF COMPETITIVE BIDDING.—In 
cases where the Federal Government conveys or licenses 
exclusive rights to federally funded research under sub-
section (a), consideration shall be given to mechanisms for 
determining reasonable prices which are based upon a 
competitive bidding process. When appropriate, the mech-
anisms should be considered where— 
(1) qualified bidders compete on the basis of 
the lowest prices that will be charged to consumers; 
(2) qualified bidders compete on the basis of 
the least sales revenues before prices are adjusted in 
accordance with a cost based reasonable pricing for-
mula; 
(3) qualified bidders compete on the basis of 
the least period of time before prices are adjusted in 
accordance with a cost based reasonable pricing for-
mula; 
(4) qualified bidders compete on the basis of 
the shortest period of exclusivity; or 
(5) qualified bidders compete under other com-
petitive bidding systems. 
Such competitive bidding process may incorporate require-
ments for minimum levels of expenditures on research, 
marketing, maximum price, or other factors. 
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