‘‘(iv) the source and strength of the 
active ingredient in each drug; 
‘‘(v) the dosage form and route of ad-
ministration of each drug; 
‘‘(vi) the number of individual units 
produced of each drug; 
‘‘(vii) the States to which drugs were 
shipped; 
‘‘(viii) the number of individual units 
of each drug that are shipped to each 
State; and 
‘‘(ix) affirmation that the pharmacy 
or pharmacist is in compliance with State 
pharmacy licensing regulations; 
‘‘(B) the frequency in which information 
described in subparagraph (A) must be sub-
mitted; 
‘‘(C) the conditions of operation, including 
good manufacturing practices and requirements 
for third-party testing, applicable to the 
compounding of drugs; and 
‘‘(D) any limitations on the activities of 
such pharmacy or pharmacist. 
‘‘(3) TYPES OF PHARMACIES ELIGIBLE.—The 
Secretary shall specify separate requirements for 
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each type of pharmacy and pharmacist authorized to 
compound drug products pursuant to the exception 
under this subsection. The Secretary shall include 
separate requirements for— 
‘‘(A) any pharmacy or pharmacist within a 
hospital system that is compounding drug prod-
ucts exclusively for dispensing to patients with-
in that hospital system; and 
‘‘(B) any pharmacy or pharmacist that 
compounds sterile drug products. 
‘‘(4) MEMORANDUM OF UNDERSTANDING.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), the Secretary may enter into appro-
priate memoranda of understanding with States 
to address State implementation of the excep-
tion under this subsection— 
‘‘(i) ensuring, to the Secretary’s satis-
faction, that the State will implement the 
exception under this subsection in accord-
ance with the requirements of this section; 
and 
‘‘(ii) including such other information 
and assurances as the Secretary may re-
quire. 
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‘‘(B) PROCESS; CRITERIA.—The Secretary 
shall— 
‘‘(i) establish a process and criteria 
for entering into a memorandum of under-
standing under this paragraph, including 
the sharing of information between State 
and Federal authorities; and 
‘‘(ii) reevaluate each such memo-
randum of understanding not less than 
every 5 years to ensure, to the Secretary’s 
satisfaction, that the State’s implementa-
tion of the memorandum of understanding 
continues to conform to the requirements 
of this section. 
‘‘(C) EXCLUSIVE FEDERAL AUTHORITY.— 
The Secretary shall retain exclusive Federal au-
thority to implement the exception under this 
subsection with respect to pharmacies and 
pharmacists that— 
‘‘(i) 
perform 
high-risk 
sterile 
compounding; or 
‘‘(ii) compound drug products for 
shipment across State lines. 
‘‘(5) MAINTENANCE OF LIST.—The Secretary 
shall maintain a publically available list— 
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‘‘(A) identifying all pharmacies and phar-
macists registered under this subsection; and 
‘‘(B) indicating, for each such pharmacy 
and pharmacist, whether the pharmacy or phar-
macist is subject to regulation by a State pur-
suant to a memorandum of understanding in ef-
fect under paragraph (4). 
‘‘(e) EXCEPTIONS REGARDING COPIES OF COMMER-
CIALLY AVAILABLE DRUGS.—A drug that is a copy of a 
commercially available drug may be compounded pursuant 
to this section without regard to subsection (a)(7) if— 
‘‘(1)(A) the commercially available drug that is 
being compounded is at the time of distribution on 
the drug shortage list under section 506E, and the 
pharmacy has provided notice to the Secretary that 
such drug is being compounded not later than 5 
days after distributing such drug; or 
‘‘(B) the Secretary determines that compound-
ing the drug product is necessary to protect public 
health or wellbeing; and 
‘‘(2) in the case of a commercially available 
drug marketed pursuant to a risk evaluation and 
mitigation strategy approved under section 505–1 
and including one or more elements to assure safe 
use, the pharmacy or pharmacist compounding the 
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drug that is a copy of such commercially available 
drug demonstrates to the Secretary that controls will 
be used that are comparable to such elements to as-
sure safe use. 
‘‘(f) HIGH-RISK STERILE COMPOUNDING.—For pur-
poses of subsection (a)(8), the Secretary shall establish 
standards, processes, and procedures for high-risk sterile 
compounding. 
‘‘(g) 
INSPECTIONS.—Notwithstanding 
section 
704(a)(2)(A), the facilities of any pharmacy or pharmacist 
compounding drug products under this section— 
‘‘(1) shall be subject to inspection under section 
704; and 
‘‘(2) shall, upon request of an officer or em-
ployee designated by the Secretary, permit such offi-
cer or employee at all reasonable times to have ac-
cess to, and to copy and verify, records for purposes 
of determining compliance with the provisions of this 
Act applicable to such compounding. 
‘‘(h) SHARING OF INFORMATION.—If during an in-
spection of the facilities of a pharmacy or pharmacist 
under this section the Secretary discovers a violation of 
this Act, the Secretary shall give notice of the violation— 
‘‘(1) to the State in which the facilities are lo-
cated; and 
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‘‘(2) to any State to which the pharmacy or 
pharmacist has shipped a drug product during the 
preceding 30 days. 
‘‘(i) LABELING.—The labeling of any drug product 
compounded pursuant to this section shall include— 
‘‘(1) the name of each drug and ingredient in-
cluded; 
‘‘(2) the name, address, and phone number of 
the licensed compounding pharmacy, pharmacist, or 
physician; 
‘‘(3) the date on which the drug was com-
pounded; 
‘‘(4) instructions for storage and use; 
‘‘(5) the following statement: ‘This drug has 
not been tested for safety and effectiveness and is 
not approved by the FDA. This drug was made spe-
cifically for you because your health care provider 
determined that no FDA-approved product would 
suit your needs. Serious adverse reactions to this 
drug 
should 
be 
reported 
to 
the 
FDA 
at 
llllllllllllllll, to the phar-
macy where the drug was received, and to your 
health care provider.’ (The blank shall specify a 
phone number and a Web site, to be provided by the 
Secretary for purposes of this subsection.); and 
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‘‘(6) such other information as the Secretary 
may require. 
‘‘(j) REPORTING
BY
PHARMACISTS
AND
PHYSI-
CIANS.— 
‘‘(1) ADVERSE
EVENT.—If a pharmacist or 
physician compounding a drug product pursuant to 
this section becomes aware of any adverse event as-
sociated with the use of such product, not later than 
10 calendar days after becoming so aware, the phar-
macist or physician shall report such adverse event 
to the Secretary. 
‘‘(2) INFORMATION RELATED TO RISK OF IN-
JURY
OR
DEATH.—If a pharmacist or physician 
compounding a drug product pursuant to this sec-
tion becomes aware of information concerning any 
bacteriological, fungal, or other contamination; any 
significant chemical, physical, or other change; or 
any deterioration of a compounded drug product 
that has already been distributed by the pharmacist 
or physician, that could cause serious injury or 
death, not later than 2 calendar days after becoming 
so aware, the pharmacist or physician shall report 
such information to the Secretary. 
‘‘(k) COMPOUNDING ESTABLISHMENT
AND REIN-
SPECTION FEES.— 
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‘‘(1) DEFINITIONS.—In this subsection— 
‘‘(A) the term ‘affiliate’ has the meaning 
given such term in section 735(11); 
‘‘(B) the term ‘covered compounding phar-
macy’ means a pharmacy that, pursuant to sub-
section (d) (the exception to the requirement of 
an identified individual patient)— 
‘‘(i) 
performs 
high-risk 
sterile 
compounding; 
‘‘(ii) compounds drug products for 
shipment across State lines; or 
‘‘(iii) otherwise performs compounding 
pursuant to subsection (d) that is not reg-
ulated by a State pursuant to a memo-
randum of understanding under subsection 
(d)(4); 
‘‘(C) the term ‘gross annual sales’ means 
the total worldwide gross annual sales, in 
United States dollars, for a covered compound-
ing pharmacy, including the sales of all the af-
filiates of the covered compounding pharmacy; 
and 
‘‘(D) the term ‘reinspection’ means, with 
respect to a covered compounding pharmacy, 
one or more inspections conducted under sec-
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tion 704 subsequent to an inspection conducted 
under such provision which identified non-
compliance materially related to an applicable 
requirement of this Act, specifically to deter-
mine whether compliance has been achieved to 
the Secretary’s satisfaction. 
‘‘(2) 
ESTABLISHMENT
AND
REINSPECTION 
FEES.— 
‘‘(A) IN GENERAL.—For fiscal year 2015 
and each subsequent fiscal year, the Secretary 
shall, in accordance with this subsection, assess 
and collect— 
‘‘(i) an annual establishment fee from 
each covered compounding pharmacy; and 
‘‘(ii) a reinspection fee from each cov-
ered compounding pharmacy subject to a 
reinspection in such fiscal year. 
‘‘(B) MULTIPLE REINSPECTIONS.—A cov-
ered compounding pharmacy subject to multiple 
reinspections in a fiscal year shall be subject to 
a reinspection fee for each reinspection. 
‘‘(3) ESTABLISHMENT AND REINSPECTION FEE 
SETTING.—The Secretary shall establish the estab-
lishment and reinspection fee to be collected under 
this subsection for each fiscal year, based on the 
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methodology described in paragraph (4) and shall 
publish such fee in a Federal Register notice not 
later than 60 days before the start of each such 
year. 
‘‘(4) AMOUNT
OF
ESTABLISHMENT
FEE
AND 
REINSPECTION FEE.— 
‘‘(A) IN
GENERAL.—For each covered 
compounding pharmacy in a fiscal year— 
‘‘(i) except as provided in subpara-
graph (D), the amount of the annual es-
tablishment fee under paragraph (2) shall 
be equal to the sum of— 
‘‘(I) $15,000, multiplied by the 
inflation adjustment factor described 
in subparagraph (B); plus 
‘‘(II) the small business adjust-
ment factor described in subpara-
graph (C); and 
‘‘(ii) the amount of any reinspection 
fee (if applicable) under paragraph (2) 
shall be equal to $15,000, multiplied by 
the inflation adjustment factor described in 
subparagraph (B). 
‘‘(B) INFLATION ADJUSTMENT FACTOR.— 
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‘‘(i) IN
GENERAL.—For fiscal year 
2015 and subsequent fiscal years, the fee 
amounts established in subparagraph (A) 
shall be adjusted by the Secretary by no-
tice, published in the Federal Register, for 
a fiscal year by the amount equal to the 
sum of— 
‘‘(I) one; 
‘‘(II) the average annual percent 
change in the cost, per full-time equiv-
alent position of the Food and Drug 
Administration, of all personnel com-
pensation and benefits paid with re-
spect to such positions for the first 3 
years of the preceding 4 fiscal years, 
multiplied by the proportion of per-
sonnel 
compensation 
and 
benefits 
costs to total costs of an average full- 
time equivalent position of the Food 
and Drug Administration for the first 
3 years of the preceding 4 fiscal 
years; and 
‘‘(III) the average annual percent 
change that occurred in the Consumer 
Price Index for urban consumers 
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(U.S. City Average; Not Seasonally 
Adjusted; All items; Annual Index) for 
the first 3 years of the preceding 4 
years of available data multiplied by 
the proportion of all costs other than 
personnel compensation and benefits 
costs to total costs of an average full- 
time equivalent position of the Food 
and Drug Administration for the first 
3 years of the preceding 4 fiscal 
years. 
‘‘(ii) COMPOUNDED
BASIS.—The ad-
justment made each fiscal year under 
clause (i) shall be added on a compounded 
basis to the sum of all adjustments made 
each fiscal year after fiscal year 2014 
under clause (i). 
‘‘(C) SMALL BUSINESS ADJUSTMENT FAC-
TOR.—The small business adjustment factor re-
ferred to subparagraph (A)(i)(II) shall be an 
amount established by the Secretary for each 
fiscal year based on the Secretary’s estimate 
of— 
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‘‘(i) the number of small businesses 
that will pay a reduced establishment fee 
for such fiscal year; and 
‘‘(ii) the adjustment to the establish-
ment fee necessary to achieve total fees 
equaling the total fees that the Secretary 
would have collected if no entity qualified 
for the small business exception in sub-
paragraph (D). 
‘‘(D) 
EXCEPTION
FOR
SMALL
BUSI-
NESSES.— 
‘‘(i) IN GENERAL.—In the case of a 
covered compounding pharmacy with gross 
annual sales of $1,000,000 or less in the 
12 months ending April 1 of the fiscal year 
immediately preceding the fiscal year in 
which the fees under this subsection are 
assessed, the amount of the establishment 
fee under paragraph (2) for a fiscal year 
shall be equal to 1⁄3 of the amount cal-
culated under subparagraph (A)(i)(I) in 
such fiscal year. 
‘‘(ii) APPLICATION.—To qualify for 
the exception under this subparagraph, a 
small business shall submit to the Sec-
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retary a written request for such exception, 
in a format specified by the Secretary in 
guidance, certifying its gross annual sales 
for the 12 months ending April 1 of the 
fiscal year immediately preceding the fiscal 
year in which fees under this subsection 
are assessed. Any such application must be 
submitted to the Secretary not later than 
April 30 for the following fiscal year. Any 
statement or representation made to the 
Secretary shall be subject to section 1001 
of title 18, United States Code. 
‘‘(E) CREDITING
OF
FEES.—In estab-
lishing the small business adjustment factor 
under subparagraph (C) for a fiscal year, the 
Secretary shall provide for the crediting of fees 
from the previous year to the next year if the 
Secretary overestimated the amount of the 
small business adjustment factor for such pre-
vious fiscal year, and consider the need to ac-
count for any adjustment of fees and such other 
factors as the Secretary determines appropriate. 
‘‘(5) USE OF FEES.—The Secretary shall make 
all of the fees collected pursuant to clauses (i) and 
(ii) of paragraph (2)(A) available solely to pay for 
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the costs of oversight of covered compounding phar-
macies. 
‘‘(6) SUPPLEMENT NOT SUPPLANT.—Funds re-
ceived by the Secretary pursuant to this subsection 
shall be used to supplement and not supplant any 
other Federal funds available to carry out the activi-
ties described in this section. 
‘‘(7) CREDITING AND AVAILABILITY OF FEES.— 
Fees authorized under this subsection shall be col-
lected and available for obligation only to the extent 
and in the amount provided in advance in appropria-
tions Acts. Such fees are authorized to remain avail-
able until expended. Such sums as may be necessary 
may be transferred from the Food and Drug Admin-
istration salaries and expenses appropriation account 
without fiscal year limitation to such appropriation 
account for salaries and expenses with such fiscal 
year limitation. The sums transferred shall be avail-
able solely for the purpose of paying the costs of 
oversight of covered compounding pharmacies. 
‘‘(8) COLLECTION OF FEES.— 
‘‘(A) ESTABLISHMENT
FEE.—A covered 
compounding pharmacy shall remit the estab-
lishment fee due under this subsection in a fis-
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cal year when submitting a registration pursu-
ant to subsection (d) for such fiscal year. 
‘‘(B) REINSPECTION FEE.—The Secretary 
shall specify in the Federal Register notice de-
scribed in paragraph (3) the manner in which 
reinspection fees assessed under this subsection 
shall be collected and the timeline for payment 
of such fees. Such a fee shall be collected after 
the Secretary has conducted a reinspection of 
the covered compounding pharmacy involved. 
‘‘(C) EFFECT OF FAILURE TO PAY FEES.— 
‘‘(i) 
REGISTRATION.—A 
covered 
compounding pharmacy shall not be con-
sidered registered under subsection (d) in 
a fiscal year until the date that the covered 
compounding pharmacy remits the estab-
lishment fee under this subsection for such 
fiscal year. 
‘‘(ii) MISBRANDING.—All drugs manu-
factured, 
prepared, 
propagated, 
com-
pounded, or processed by a covered 
compounding pharmacy for which any es-
tablishment fee or reinspection fee has not 
been paid as required by this subsection 
shall be deemed misbranded under section 
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502(cc) until the fees owed for such cov-
ered compounding pharmacy under this 
subsection have been paid. 
‘‘(D) COLLECTION OF UNPAID FEES.—In 
any case where the Secretary does not receive 
payment of a fee assessed under this subsection 
within 30 days after it is due, such fee shall be 
treated as a claim of the United States Govern-
ment subject to provisions of subchapter II of 
chapter 37 of title 31, United States Code. 
‘‘(9) ANNUAL
REPORT
TO
CONGRESS.—Not 
later than 120 days after each fiscal year in which 
fees are assessed and collected under this subsection, 
the Secretary shall submit a report to the Com-
mittee on Energy and Commerce of the House of 
Representatives and the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate, to in-
clude a description of fees assessed and collected for 
each year, a summary description of entities paying 
the fees, and the number of inspections and re-
inspections of such entities performed each year. 
‘‘(10) AUTHORIZATION OF APPROPRIATIONS.— 
For fiscal year 2015 and each subsequent fiscal 
year, there is authorized to be appropriated for fees 
under this subsection an amount equivalent to the 
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total amount of fees assessed for such fiscal year 
under this subsection. 
‘‘(l) DEFINITIONS.—In this section: 
‘‘(1) The terms ‘compound’ and ‘compound-
ing’— 
‘‘(A) do not include mixing, reconstituting, 
or other such acts that are performed in ac-
cordance with directions contained in approved 
labeling provided by the product’s manufacturer 
and other manufacturer directions consistent 
with that labeling; and 
‘‘(B) in the case of a radioactive drug (as 
defined in section 310.3(n) of title 21, Code of 
Federal Regulations (or any successor regula-
tions)), also do not include a minor deviation 
from such directions with regard to radioac-
tivity, volume, or stability, that is made by or 
under the direct supervision of an ‘authorized 
nuclear pharmacist’ or a physician who is an 
‘authorized user’ (as such terms are defined in 
section 35.2 of title 10, Code of Federal Regu-
lations, (or any successor regulations)). 
‘‘(2) The term ‘copy of a commercially available 
drug product’ does not include a drug product in 
which there is a change, made for an identified indi-
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