I 
113TH CONGRESS 
1ST SESSION H. R. 3204 
To amend the Federal Food, Drug, and Cosmetic Act with respect to human 
drug compounding and drug supply chain security, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 27, 2013 
Mr. UPTON (for himself, Mr. WAXMAN, Mr. PITTS, Mr. PALLONE, Mr. MUR-
PHY of Pennsylvania, Mr. DINGELL, Mr. LATTA, Ms. DEGETTE, Mr. 
GRIFFITH of Virginia, Mr. GENE GREEN of Texas, and Mr. MATHESON) 
introduced the following bill; which was referred to the Committee on En-
ergy and Commerce 
A BILL 
To amend the Federal Food, Drug, and Cosmetic Act with 
respect to human drug compounding and drug supply 
chain security, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Drug Quality and Se-
curity Act’’. 
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS. 
(a) REFERENCES IN ACT.—Except as otherwise spec-
ified, amendments made by this Act to a section or other 
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provision of law are amendments to such section or other 
provision of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 301 et seq.). 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. References in Act; table of contents. 
TITLE I—DRUG COMPOUNDING 
Sec. 101. Short title. 
Sec. 102. Voluntary outsourcing facilities. 
Sec. 103. Penalties. 
Sec. 104. Regulations. 
Sec. 105. Enhanced communication. 
Sec. 106. Severability. 
Sec. 107. GAO study. 
TITLE II—DRUG SUPPLY CHAIN SECURITY 
Sec. 201. Short title. 
Sec. 202. Pharmaceutical distribution supply chain. 
Sec. 203. Enhanced drug distribution security. 
Sec. 204. National standards for prescription drug wholesale distributors. 
Sec. 205. National standards for third-party logistics providers; uniform na-
tional policy. 
Sec. 206. Penalties. 
Sec. 207. Conforming amendment. 
Sec. 208. Savings clause. 
TITLE I—DRUG COMPOUNDING 
SEC. 101. SHORT TITLE. 
This Act may be cited as the ‘‘Compounding Quality 
Act’’. 
SEC. 102. VOLUNTARY OUTSOURCING FACILITIES. 
(a) IN GENERAL.—Subchapter A of chapter V (21 
U.S.C. 351 et seq.) is amended— 
(1) by redesignating section 503B as section 
503C; and 
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(2) by inserting after section 503A the fol-
lowing new section: 
‘‘SEC. 503B. OUTSOURCING FACILITIES. 
‘‘(a) IN GENERAL.—Sections 502(f)(1), 505, and 582 
shall not apply to a drug compounded by or under the 
direct supervision of a licensed pharmacist in a facility 
that elects to register as an outsourcing facility if each 
of the following conditions is met: 
‘‘(1) REGISTRATION
AND
REPORTING.—The 
drug is compounded in an outsourcing facility that 
is in compliance with the requirements of subsection 
(b). 
‘‘(2) BULK DRUG SUBSTANCES.—The drug is 
compounded in an outsourcing facility that does not 
compound using bulk drug substances (as defined in 
section 207.3(a)(4) of title 21, Code of Federal Reg-
ulations (or any successor regulation)), unless— 
‘‘(A)(i) the bulk drug substance appears on 
a list established by the Secretary identifying 
bulk drug substances for which there is a clin-
ical need, by— 
‘‘(I) publishing a notice in the Federal 
Register proposing bulk drug substances to 
be included on the list, including the ra-
tionale for such proposal; 
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‘‘(II) providing a period of not less 
than 60 calendar days for comment on the 
notice; and 
‘‘(III) publishing a notice in the Fed-
eral Register designating bulk drug sub-
stances for inclusion on the list; or 
‘‘(ii) the drug compounded from such bulk 
drug substance appears on the drug shortage 
list in effect under section 506E at the time of 
compounding, distribution, and dispensing; 
‘‘(B) if an applicable monograph exists 
under the United States Pharmacopeia, the Na-
tional Formulary, or another compendium or 
pharmacopeia recognized by the Secretary for 
purposes of this paragraph, the bulk drug sub-
stances each comply with the monograph; 
‘‘(C) the bulk drug substances are each 
manufactured by an establishment that is reg-
istered under section 510 (including a foreign 
establishment that is registered under section 
510(i)); and 
‘‘(D) the bulk drug substances are each ac-
companied by a valid certificate of analysis. 
‘‘(3) INGREDIENTS (OTHER THAN BULK DRUG 
SUBSTANCES).—If any ingredients (other than bulk 
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drug substances) are used in compounding the drug, 
such ingredients comply with the standards of the 
applicable United States Pharmacopeia or National 
Formulary monograph, if such monograph exists, or 
of another compendium or pharmacopeia recognized 
by the Secretary for purposes of this paragraph if 
any. 
‘‘(4) DRUGS
WITHDRAWN
OR
REMOVED
BE-
CAUSE UNSAFE OR NOT EFFECTIVE.—The drug does 
not appear on a list published by the Secretary of 
drugs that have been withdrawn or removed from 
the market because such drugs or components of 
such drugs have been found to be unsafe or not ef-
fective. 
‘‘(5) ESSENTIALLY A COPY OF AN APPROVED 
DRUG.—The drug is not essentially a copy of one or 
more approved drugs. 
‘‘(6) DRUGS PRESENTING DEMONSTRABLE DIF-
FICULTIES FOR COMPOUNDING.—The drug— 
‘‘(A) is not identified (directly or as part 
of a category of drugs) on a list published by 
the Secretary, through the process described in 
subsection (c), of drugs or categories of drugs 
that 
present 
demonstrable 
difficulties 
for 
compounding that are reasonably likely to lead 
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to an adverse effect on the safety or effective-
ness of the drug or category of drugs, taking 
into account the risks and benefits to patients; 
or 
‘‘(B) is compounded in accordance with all 
applicable conditions identified on the list de-
scribed in subparagraph (A) as conditions that 
are necessary to prevent the drug or category of 
drugs from presenting the demonstrable dif-
ficulties described in subparagraph (A). 
‘‘(7) ELEMENTS TO ASSURE SAFE USE.—In the 
case of a drug that is compounded from a drug that 
is the subject of a risk evaluation and mitigation 
strategy approved with elements to assure safe use 
pursuant to section 505–1, or from a bulk drug sub-
stance that is a component of such drug, the out-
sourcing facility demonstrates to the Secretary prior 
to beginning compounding that such facility will uti-
lize controls comparable to the controls applicable 
under the relevant risk evaluation and mitigation 
strategy. 
‘‘(8) PROHIBITION
ON
WHOLESALING.—The 
drug will not be sold or transferred by an entity 
other than the outsourcing facility that compounded 
such drug. This paragraph does not prohibit admin-
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istration of a drug in a health care setting or dis-
pensing a drug pursuant to a prescription executed 
in accordance with section 503(b)(1). 
‘‘(9) FEES.—The drug is compounded in an 
outsourcing facility that has paid all fees owed by 
such facility pursuant to section 744K. 
‘‘(10) LABELING OF DRUGS.— 
‘‘(A) LABEL.—The label of the drug in-
cludes— 
‘‘(i) the statement ‘This is a com-
pounded drug.’ or a reasonable comparable 
alternative statement (as specified by the 
Secretary) that prominently identifies the 
drug as a compounded drug; 
‘‘(ii) the name, address, and phone 
number of the applicable outsourcing facil-
ity; and 
‘‘(iii) with respect to the drug— 
‘‘(I) the lot or batch number; 
‘‘(II) the established name of the 
drug; 
‘‘(III) the dosage form and 
strength; 
‘‘(IV) the statement of quantity 
or volume, as appropriate; 
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‘‘(V) the date that the drug was 
compounded; 
‘‘(VI) the expiration date; 
‘‘(VII) storage and handling in-
structions; 
‘‘(VIII) the National Drug Code 
number, if available; 
‘‘(IX) the statement ‘Not for re-
sale’, and, if the drug is dispensed or 
distributed other than pursuant to a 
prescription for an individual identi-
fied patient, the statement ‘Office Use 
Only’; and 
‘‘(X) subject to subparagraph 
(B)(i), a list of active and inactive in-
gredients, identified by established 
name and the quantity or proportion 
of each ingredient. 
‘‘(B) CONTAINER.—The container from 
which the individual units of the drug are re-
moved for dispensing or for administration 
(such as a plastic bag containing individual 
product syringes) shall include— 
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‘‘(i) the information described under 
subparagraph (A)(iii)(X), if there is not 
space on the label for such information; 
‘‘(ii) the following information to fa-
cilitate 
adverse 
event 
reporting: 
www.fda.gov/medwatch and 1–800–FDA– 
1088 (or any successor Internet Web site 
or phone number); and 
‘‘(iii) directions for use, including, as 
appropriate, dosage and administration. 
‘‘(C) 
ADDITIONAL
INFORMATION.—The 
label and labeling of the drug shall include any 
other information as determined necessary and 
specified in regulations promulgated by the Sec-
retary. 
‘‘(11) 
OUTSOURCING
FACILITY
REQUIRE-
MENT.—The drug is compounded in an outsourcing 
facility in which the compounding of drugs occurs 
only in accordance with this section. 
‘‘(b) REGISTRATION OF OUTSOURCING FACILITIES 
AND REPORTING OF DRUGS.— 
‘‘(1) REGISTRATION OF OUTSOURCING FACILI-
TIES.— 
‘‘(A) 
ANNUAL
REGISTRATION.—Upon 
electing and in order to become an outsourcing 
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facility, and during the period beginning on Oc-
tober 1 and ending on December 31 of each 
year thereafter, a facility— 
‘‘(i) shall register with the Secretary 
its name, place of business, and unique fa-
cility identifier (which shall conform to the 
requirements for the unique facility identi-
fier established under section 510), and a 
point of contact email address; and 
‘‘(ii) shall indicate whether the out-
sourcing facility intends to compound a 
drug that appears on the list in effect 
under section 506E during the subsequent 
calendar year. 
‘‘(B) AVAILABILITY OF REGISTRATION FOR 
INSPECTION; LIST.— 
‘‘(i) REGISTRATIONS.—The Secretary 
shall make available for inspection, to any 
person so requesting, any registration filed 
pursuant to this paragraph. 
‘‘(ii) LIST.—The Secretary shall make 
available on the public Internet Web site of 
the Food and Drug Administration a list 
of the name of each facility registered 
under this subsection as an outsourcing fa-
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cility, the State in which each such facility 
is located, whether the facility compounds 
from bulk drug substances, and whether 
any such compounding from bulk drug 
substances is for sterile or nonsterile 
drugs. 
‘‘(2) DRUG REPORTING BY OUTSOURCING FA-
CILITIES.— 
‘‘(A) IN
GENERAL.—Upon initially reg-
istering as an outsourcing facility, once during 
the month of June of each year, and once dur-
ing the month of December of each year, each 
outsourcing facility that registers with the Sec-
retary under paragraph (1) shall submit to the 
Secretary a report— 
‘‘(i) identifying the drugs compounded 
by such outsourcing facility during the pre-
vious 6-month period; and 
‘‘(ii) with respect to each drug identi-
fied under clause (i), providing the active 
ingredient, the source of such active ingre-
dient, the National Drug Code number of 
the source drug or bulk active ingredient, 
if available, the strength of the active in-
gredient per unit, the dosage form and 
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route of administration, the package de-
scription, the number of individual units 
produced, and the National Drug Code 
number of the final product, if assigned. 
‘‘(B) FORM.—Each report under subpara-
graph (A) shall be prepared in such form and 
manner as the Secretary may prescribe by regu-
lation or guidance. 
‘‘(C) 
CONFIDENTIALITY.—Reports 
sub-
mitted under this paragraph shall be exempt 
from inspection under paragraph (1)(B)(i), un-
less the Secretary finds that such an exemption 
would be inconsistent with the protection of the 
public health. 
‘‘(3) ELECTRONIC REGISTRATION AND REPORT-
ING.—Registrations and drug reporting under this 
subsection (including the submission of updated in-
formation) shall be submitted to the Secretary by 
electronic means unless the Secretary grants a re-
quest for waiver of such requirement because use of 
electronic means is not reasonable for the person re-
questing waiver. 
‘‘(4) RISK-BASED INSPECTION FREQUENCY.— 
‘‘(A) IN
GENERAL.—Outsourcing facili-
ties— 
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‘‘(i) shall be subject to inspection pur-
suant to section 704; and 
‘‘(ii) shall not be eligible for the ex-
emption under section 704(a)(2)(A). 
‘‘(B) RISK-BASED
SCHEDULE.—The Sec-
retary, acting through one or more officers or 
employees duly designated by the Secretary, 
shall inspect outsourcing facilities in accordance 
with a risk-based schedule established by the 
Secretary. 
‘‘(C) RISK FACTORS.—In establishing the 
risk-based schedule, the Secretary shall inspect 
outsourcing facilities according to the known 
safety risks of such outsourcing facilities, which 
shall be based on the following factors: 
‘‘(i) The compliance history of the 
outsourcing facility. 
‘‘(ii) The record, history, and nature 
of recalls linked to the outsourcing facility. 
‘‘(iii) The inherent risk of the drugs 
compounded at the outsourcing facility. 
‘‘(iv) The inspection frequency and 
history of the outsourcing facility, includ-
ing whether the outsourcing facility has 
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been inspected pursuant to section 704 
within the last 4 years. 
‘‘(v) Whether the outsourcing facility 
has registered under this paragraph as an 
entity that intends to compound a drug 
that appears on the list in effect under sec-
tion 506E. 
‘‘(vi) Any other criteria deemed nec-
essary and appropriate by the Secretary 
for purposes of allocating inspection re-
sources. 
‘‘(5) ADVERSE EVENT REPORTING.—Outsourc-
ing facilities shall submit adverse event reports to 
the Secretary in accordance with the content and 
format requirements established through guidance or 
regulation under section 310.305 of title 21, Code of 
Federal Regulations (or any successor regulations). 
‘‘(c) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall imple-
ment the list described in subsection (a)(6) through 
regulations. 
‘‘(2) 
ADVISORY
COMMITTEE
ON 
COMPOUNDING.—Before issuing regulations to im-
plement subsection (a)(6), the Secretary shall con-
vene and consult an advisory committee on 
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compounding. The advisory committee shall include 
representatives from the National Association of 
Boards of Pharmacy, the United States Pharma-
copeia, pharmacists with current experience and ex-
pertise in compounding, physicians with background 
and knowledge in compounding, and patient and 
public health advocacy organizations. 
‘‘(3) INTERIM LIST.— 
‘‘(A) IN
GENERAL.—Before the effective 
date of the regulations finalized to implement 
subsection (a)(6), the Secretary may designate 
drugs, categories of drugs, or conditions as de-
scribed such subsection by— 
‘‘(i) publishing a notice of such sub-
stances, drugs, categories of drugs, or con-
ditions proposed for designation, including 
the rationale for such designation, in the 
Federal Register; 
‘‘(ii) providing a period of not less 
than 60 calendar days for comment on the 
notice; and 
‘‘(iii) publishing a notice in the Fed-
eral Register designating such drugs, cat-
egories of drugs, or conditions. 
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‘‘(B) SUNSET
OF
NOTICE.—Any notice 
provided under subparagraph (A) shall not be 
effective after the earlier of— 
‘‘(i) the date that is 5 years after the 
date of enactment of the Compounding 
Quality Act; or 
‘‘(ii) the effective date of the final reg-
ulations issued to implement subsection 
(a)(6). 
‘‘(4) UPDATES.—The Secretary shall review, 
and update as necessary, the regulations containing 
the lists of drugs, categories of drugs, or conditions 
described in subsection (a)(6) regularly, but not less 
than once every 4 years. Nothing in the previous 
sentence prohibits submissions to the Secretary, be-
fore or during any 4-year period described in such 
sentence, requesting updates to such lists. 
‘‘(d) DEFINITIONS.—In this section: 
‘‘(1) The term ‘compounding’ includes the com-
bining, admixing, mixing, diluting, pooling, reconsti-
tuting, or otherwise altering of a drug or bulk drug 
substance to create a drug. 
‘‘(2) The term ‘essentially a copy of an ap-
proved drug’ means— 
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‘‘(A) a drug that is identical or nearly 
identical to an approved drug, or a marketed 
drug not subject to section 503(b) and not sub-
ject to approval in an application submitted 
under section 505, unless, in the case of an ap-
proved drug, the drug appears on the drug 
shortage list in effect under section 506E at the 
time of compounding, distribution, and dis-
pensing; or 
‘‘(B) a drug, a component of which is a 
bulk drug substance that is a component of an 
approved drug or a marketed drug that is not 
subject to section 503(b) and not subject to ap-
proval in an application submitted under sec-
tion 505, unless there is a change that produces 
for an individual patient a clinical difference, as 
determined by the prescribing practitioner, be-
tween the compounded drug and the com-
parable approved drug. 
‘‘(3) The term ‘approved drug’ means a drug 
that is approved under section 505 and does not ap-
pear on the list described in subsection (a)(4) of 
drugs that have been withdrawn or removed from 
the market because such drugs or components of 
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such drugs have been found to be unsafe or not ef-
fective. 
‘‘(4)(A) The term ‘outsourcing facility’ means a 
facility at one geographic location or address that— 
‘‘(i) is engaged in the compounding of ster-
ile drugs; 
‘‘(ii) has elected to register as an outsourc-
ing facility; and 
‘‘(iii) complies with all of the requirements 
of this section. 
‘‘(B) An outsourcing facility is not required to 
be a licensed pharmacy. 
‘‘(C) An outsourcing facility may or may not 
obtain prescriptions for identified individual pa-
tients. 
‘‘(5) The term ‘sterile drug’ means a drug that 
is intended for parenteral administration, an oph-
thalmic or oral inhalation drug in aqueous format, 
or a drug that is required to be sterile under Federal 
or State law.’’. 
‘‘(d) OBLIGATION TO PAY FEES.—Payment of the 
fee under section 744K, as described in subsection (a)(9), 
shall not relieve an outsourcing facility that is licensed as 
a pharmacy in any State that requires pharmacy licensing 
fees of its obligation to pay such State fees.’’. 
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(b) FEES.—Subchapter C of chapter VII (21 U.S.C. 
379f et seq.) is amended by adding at the end the fol-
lowing: 
‘‘PART 9—FEES RELATING TO OUTSOURCING 
FACILITIES 
‘‘SEC. 744J. DEFINITIONS. 
‘‘In this part: 
‘‘(1) The term ‘affiliate’ has the meaning given 
such term in section 735(11). 
‘‘(2) The term ‘gross annual sales’ means the 
total worldwide gross annual sales, in United States 
dollars, for an outsourcing facility, including the 
sales of all the affiliates of the outsourcing facility. 
‘‘(3) The term ‘outsourcing facility’ has the 
meaning given to such term in section 503B(d)(4). 
‘‘(4) The term ‘reinspection’ means, with re-
spect to an outsourcing facility, 1 or more inspec-
tions conducted under section 704 subsequent to an 
inspection conducted under such provision which 
identified noncompliance materially related to an ap-
plicable requirement of this Act, specifically to deter-
mine whether compliance has been achieved to the 
Secretary’s satisfaction. 
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‘‘SEC. 744K. AUTHORITY TO ASSESS AND USE OUTSOURC-
ING FACILITY FEES. 
‘‘(a) ESTABLISHMENT AND REINSPECTION FEES.— 
‘‘(1) IN GENERAL.—For fiscal year 2015 and 
each subsequent fiscal year, the Secretary shall, in 
accordance with this subsection, assess and collect— 
‘‘(A) an annual establishment fee from 
each outsourcing facility; and 
‘‘(B) a reinspection fee from each out-
sourcing facility subject to a reinspection in 
such fiscal year. 
‘‘(2) MULTIPLE REINSPECTIONS.—An outsourc-
ing facility subject to multiple reinspections in a fis-
cal year shall be subject to a reinspection fee for 
each reinspection. 
‘‘(b) ESTABLISHMENT AND REINSPECTION FEE SET-
TING.—The Secretary shall— 
‘‘(1) establish the amount of the establishment 
fee and reinspection fee to be collected under this 
section for each fiscal year based on the method-
ology described in subsection (c); and 
‘‘(2) publish such fee amounts in a Federal 
Register notice not later than 60 calendar days be-
fore the start of each such year. 
‘‘(c) AMOUNT OF ESTABLISHMENT FEE AND REIN-
SPECTION FEE.— 
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‘‘(1) IN GENERAL.—For each outsourcing facil-
ity in a fiscal year— 
‘‘(A) except as provided in paragraph (4), 
the amount of the annual establishment fee 
under subsection (b) shall be equal to the sum 
of— 
‘‘(i) $15,000, multiplied by the infla-
tion adjustment factor described in para-
graph (2); plus 
‘‘(ii) the small business adjustment 
factor described in paragraph (3); and 
‘‘(B) the amount of any reinspection fee (if 
applicable) under subsection (b) shall be equal 
to $15,000, multiplied by the inflation adjust-
ment factor described in paragraph (2). 
‘‘(2) INFLATION ADJUSTMENT FACTOR.— 
‘‘(A) IN GENERAL.—For fiscal year 2015 
and subsequent fiscal years, the fee amounts es-
tablished in paragraph (1) shall be adjusted by 
the Secretary by notice, published in the Fed-
eral Register, for a fiscal year by the amount 
equal to the sum of— 
‘‘(i) 1; 
‘‘(ii) the average annual percent 
change in the cost, per full-time equivalent 
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position of the Food and Drug Administra-
tion, of all personnel compensation and 
benefits paid with respect to such positions 
for the first 3 years of the preceding 4 fis-
cal years, multiplied by the proportion of 
personnel compensation and benefits costs 
to total costs of an average full-time equiv-
alent position of the Food and Drug Ad-
ministration for the first 3 years of the 
preceding 4 fiscal years; plus 
‘‘(iii) the average annual percent 
change that occurred in the Consumer 
Price Index for urban consumers (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. 
‘‘(B) COMPOUNDED
BASIS.—The adjust-
ment made each fiscal year under subparagraph 
(A) shall be added on a compounded basis to 
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the sum of all adjustments made each fiscal 
year after fiscal year 2014 under subparagraph 
(A). 
‘‘(3) SMALL BUSINESS ADJUSTMENT FACTOR.— 
The small business adjustment factor described in 
this paragraph shall be an amount established by 
the Secretary for each fiscal year based on the Sec-
retary’s estimate of— 
‘‘(A) the number of small businesses that 
will pay a reduced establishment fee for such 
fiscal year; and 
‘‘(B) the adjustment to the establishment 
fee necessary to achieve total fees equaling the 
total fees that the Secretary would have col-
lected if no entity qualified for the small busi-
ness exception in paragraph (4). 
‘‘(4) EXCEPTION FOR SMALL BUSINESSES.— 
‘‘(A) IN GENERAL.—In the case of an out-
sourcing facility 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 sec-
tion are assessed, the amount of the establish-
ment fee under subsection (b) for a fiscal year 
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shall be equal to 1⁄3 of the amount calculated 
under paragraph (1)(A)(i) for such fiscal year. 
‘‘(B) APPLICATION.—To qualify for the ex-
ception under this paragraph, a small business 
shall submit to the Secretary a written request 
for such exception, in a format specified by the 
Secretary in guidance, certifying its gross an-
nual sales for the 12 months ending April 1 of 
the fiscal year immediately preceding the fiscal 
year in which fees under this subsection are as-
sessed. Any such application shall be submitted 
to the Secretary not later than April 30 of such 
immediately preceding fiscal year. 
‘‘(5) CREDITING OF FEES.—In establishing the 
small business adjustment factor under paragraph 
(3) for a fiscal year, the Secretary shall— 
‘‘(A) provide for the crediting of fees from 
the previous year to the next year if the Sec-
retary overestimated the amount of the small 
business adjustment factor for such previous 
fiscal year; and 
‘‘(B) consider the need to account for any 
adjustment of fees and such other factors as 
the Secretary determines appropriate. 
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‘‘(d) USE OF FEES.—The Secretary shall make all 
of the fees collected pursuant to subparagraphs (A) and 
(B) of subsection (a)(1) available solely to pay for the 
costs of oversight of outsourcing facilities. 
‘‘(e) SUPPLEMENT NOT SUPPLANT.—Funds received 
by the Secretary pursuant to this section shall be used 
to supplement and not supplant any other Federal funds 
available to carry out the activities described in this sec-
tion. 
‘‘(f) CREDITING AND AVAILABILITY OF FEES.—Fees 
authorized under this section shall be collected and avail-
able for obligation only to the extent and in the amount 
provided in advance in appropriations Acts. Such fees are 
authorized to remain available until expended. Such sums 
as may be necessary may be transferred from the Food 
and Drug Administration salaries and expenses appropria-
tion account without fiscal year limitation to such appro-
priation account for salaries and expenses with such fiscal 
year limitation. The sums transferred shall be available 
solely for the purpose of paying the costs of oversight of 
outsourcing facilities. 
‘‘(g) COLLECTION OF FEES.— 
‘‘(1) ESTABLISHMENT
FEE.—An outsourcing 
facility shall remit the establishment fee due under 
this section in a fiscal year when submitting a reg-
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istration pursuant to section 503B(b) for such fiscal 
year. 
‘‘(2) REINSPECTION FEE.—The Secretary shall 
specify in the Federal Register notice described in 
subsection (b)(2) the manner in which reinspection 
fees assessed under this section shall be collected 
and the timeline for payment of such fees. Such a 
fee shall be collected after the Secretary has con-
ducted a reinspection of the outsourcing facility in-
volved. 
‘‘(3) EFFECT OF FAILURE TO PAY FEES.— 
‘‘(A) REGISTRATION.—An outsourcing fa-
cility shall not be considered registered under 
section 503B(b) in a fiscal year until the date 
that the outsourcing facility remits the estab-
lishment fee under this subsection for such fis-
cal year. 
‘‘(B) MISBRANDING.—All drugs manufac-
tured, prepared, propagated, compounded, or 
processed by an outsourcing facility for which 
any establishment fee or reinspection fee has 
not been paid, as required by this section, shall 
be deemed misbranded under section 502 until 
the fees owed for such outsourcing facility 
under this section have been paid. 
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‘‘(4) COLLECTION OF UNPAID FEES.—In any 
case where the Secretary does not receive payment 
of a fee assessed under this section within 30 cal-
endar days after it is due, such fee shall be treated 
as a claim of the United States Government subject 
to provisions of subchapter II of chapter 37 of title 
31, United States Code. 
‘‘(h) ANNUAL REPORT
TO CONGRESS.—Not later 
than 120 calendar days after each fiscal year in which fees 
are assessed and collected under this section, the Sec-
retary shall submit a report to the Committee on Health, 
Education, Labor, and Pensions of the Senate and the 
Committee on Energy and Commerce of the House of 
Representatives, to include a description of fees assessed 
and collected for such year, a summary description of enti-
ties paying the fees, a description of the hiring and place-
ment of new staff, a description of the use of fee resources 
to support inspecting outsourcing facilities, and the num-
ber of inspections and reinspections of such facilities per-
formed each year. 
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—For fis-
cal year 2014 and each subsequent fiscal year, there is 
authorized to be appropriated for fees under this section 
an amount equivalent to the total amount of fees assessed 
for such fiscal year under this section.’’. 
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SEC. 103. PENALTIES. 
(a) PROHIBITED ACTS.—Section 301 (21 U.S.C. 
331) is amended by adding at the end the following: 
‘‘(ccc)(1) The resale of a compounded drug that is 
labeled ‘not for resale’ in accordance with section 503B. 
‘‘(2) With respect to a drug to be compounded pursu-
ant to section 503A or 503B, the intentional falsification 
of a prescription, as applicable. 
‘‘(3) The failure to report drugs or adverse events 
by an entity that is registered in accordance with sub-
section (b) of section 503B.’’. 
(b) MISBRANDED DRUGS.—Section 502 (21 U.S.C. 
352) is amended by adding at the end the following: 
‘‘(bb) If the advertising or promotion of a com-
pounded drug is false or misleading in any particular.’’. 
SEC. 104. REGULATIONS. 
In promulgating any regulations to implement this 
title (and the amendments made by this title), the Sec-
retary of Health and Human Services shall— 
(1) issue a notice of proposed rulemaking that 
includes the proposed regulation; 
(2) provide a period of not less than 60 cal-
endar days for comments on the proposed regula-
tion; and 
(3) publish the final regulation not more than 
18 months following publication of the proposed rule 
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and not less than 30 calendar days before the effec-
tive date of such final regulation. 
SEC. 105. ENHANCED COMMUNICATION. 
(a) SUBMISSIONS FROM STATE BOARDS OF PHAR-
MACY.—In a manner specified by the Secretary of Health 
and Human Services (referred to in this section as the 
‘‘Secretary’’), the Secretary shall receive submissions from 
State boards of pharmacy— 
(1) 
describing 
actions 
taken 
against 
compounding pharmacies, as described in subsection 
(b); or 
(2) expressing concerns that a compounding 
pharmacy may be acting contrary to section 503A of 
the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 353a). 
(b) CONTENT
OF
SUBMISSIONS
FROM
STATE 
BOARDS OF PHARMACY.—An action referred to in sub-
section (a)(1) is, with respect to a pharmacy that com-
pounds drugs, any of the following: 
(1) The issuance of a warning letter, or the im-
position of sanctions or penalties, by a State for vio-
lations of a State’s pharmacy regulations pertaining 
to compounding. 
(2) The suspension or revocation of a State- 
issued pharmacy license or registration for violations 
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of a State’s pharmacy regulations pertaining to 
compounding. 
(3) The recall of a compounded drug due to 
concerns relating to the quality or purity of such 
drug. 
(c) CONSULTATION.—The Secretary shall implement 
subsection (a) in consultation with the National Associa-
tion of Boards of Pharmacy. 
(d) NOTIFYING STATE BOARDS OF PHARMACY.—The 
Secretary shall immediately notify State boards of phar-
macy when— 
(1) the Secretary receives a submission under 
subsection (a)(1); or 
(2) the Secretary makes a determination that a 
pharmacy is acting contrary to section 503A of the 
Federal Food, Drug, and Cosmetic Act. 
SEC. 106. SEVERABILITY. 
(a) IN GENERAL.—Section 503A (21 U.S.C. 353a) 
is amended — 
(1) in subsection (a), in the matter preceding 
paragraph (1), by striking ‘‘unsolicited’’; 
(2) by striking subsection (c); 
(3) by redesignating subsections (d) through (f) 
as subsections (c) through (e), respectively; and 
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(4) in subsection (b)(1)(A)(i)(III), by striking 
‘‘subsection (d)’’ and inserting ‘‘subsection (c)’’. 
(b) SEVERABILITY.—If any provision of this Act (in-
cluding the amendments made by this Act) is declared un-
constitutional, or the applicability of this Act (including 
the amendments made by this Act) to any person or cir-
cumstance is held invalid, the constitutionality of the re-
mainder of this Act (including the amendments made by 
this Act) and the applicability thereof to other persons and 
circumstances shall not be affected. 
SEC. 107. GAO STUDY. 
(a) STUDY.—Not later than 36 months after the date 
of the enactment of this Act, the Comptroller General of 
the United States shall submit to Congress a report on 
pharmacy compounding and the adequacy of State and 
Federal efforts to assure the safety of compounded drugs. 
(b) CONTENTS.—The report required under this sec-
tion shall include— 
(1) a review of pharmacy compounding in each 
State, and the settings in which such compounding 
occurs; 
(2) a review of the State laws and policies gov-
erning pharmacy compounding, including enforce-
ment of State laws and policies; 
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(3) an assessment of the available tools to per-
mit purchasers of compounded drugs to determine 
the safety and quality of such drugs; 
(4) an evaluation of the effectiveness of the 
communication among States and between States 
and the Food and Drug Administration regarding 
compounding; and 
(5) an evaluation of the Food and Drug Admin-
istration’s implementation of sections 503A and 
503B of the Federal Food, Drug, and Cosmetic Act. 
TITLE II—DRUG SUPPLY CHAIN 
SECURITY 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘Drug Supply Chain 
Security Act’’. 
SEC. 
202. 
PHARMACEUTICAL 
DISTRIBUTION 
SUPPLY 
CHAIN. 
Chapter V (21 U.S.C. 351 et seq.) is amended by 
adding at the end the following: 
‘‘Subchapter H—Pharmaceutical Distribution 
Supply Chain 
‘‘SEC. 581. DEFINITIONS. 
‘‘In this subchapter: 
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‘‘(1) AFFILIATE.—The term ‘affiliate’ means a 
business entity that has a relationship with a second 
business entity if, directly or indirectly— 
‘‘(A) one business entity controls, or has 
the power to control, the other business entity; 
or 
‘‘(B) a third party controls, or has the 
power to control, both of the business entities. 
‘‘(2) AUTHORIZED.—The term ‘authorized’ 
means— 
‘‘(A) in the case of a manufacturer or re-
packager, having a valid registration in accord-
ance with section 510; 
‘‘(B) in the case of a wholesale distributor, 
having a valid license under State law or sec-
tion 583, in accordance with section 582(a)(6), 
and complying with the licensure reporting re-
quirements under section 503(e), as amended 
by the Drug Supply Chain Security Act; 
‘‘(C) in the case of a third-party logistics 
provider, having a valid license under State law 
or section 584(a)(1), in accordance with section 
582(a)(7), and complying with the licensure re-
porting requirements under section 584(b); and 
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‘‘(D) in the case of a dispenser, having a 
valid license under State law. 
‘‘(3) DISPENSER.—The term ‘dispenser’— 
‘‘(A) means a retail pharmacy, hospital 
pharmacy, a group of chain pharmacies under 
common ownership and control that do not act 
as a wholesale distributor, or any other person 
authorized by law to dispense or administer 
prescription drugs, and the affiliated ware-
houses or distribution centers of such entities 
under common ownership and control that do 
not act as a wholesale distributor; and 
‘‘(B) does not include a person who dis-
penses only products to be used in animals in 
accordance with section 512(a)(5). 
‘‘(4) DISPOSITION.—The term ‘disposition’, 
with respect to a product within the possession or 
control of an entity, means the removal of such 
product from the pharmaceutical distribution supply 
chain, which may include disposal or return of the 
product for disposal or other appropriate handling 
and other actions, such as retaining a sample of the 
product for further additional physical examination 
or laboratory analysis of the product by a manufac-
turer or regulatory or law enforcement agency. 
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‘‘(5) 
DISTRIBUTE
OR
DISTRIBUTION.—The 
term ‘distribute’ or ‘distribution’ means the sale, 
purchase, trade, delivery, handling, storage, or re-
ceipt of a product, and does not include the dis-
pensing of a product pursuant to a prescription exe-
cuted in accordance with section 503(b)(1) or the 
dispensing of a product approved under section 
512(b). 
‘‘(6) EXCLUSIVE DISTRIBUTOR.—The term ‘ex-
clusive distributor’ means the wholesale distributor 
that directly purchased the product from the manu-
facturer and is the sole distributor of that manufac-
turer’s product to a subsequent repackager, whole-
sale distributor, or dispenser. 
‘‘(7) HOMOGENEOUS CASE.—The term ‘homo-
geneous case’ means a sealed case containing only 
product that has a single National Drug Code num-
ber belonging to a single lot. 
‘‘(8) ILLEGITIMATE PRODUCT.—The term ‘ille-
gitimate product’ means a product for which credible 
evidence shows that the product— 
‘‘(A) is counterfeit, diverted, or stolen; 
‘‘(B) is intentionally adulterated such that 
the product would result in serious adverse 
health consequences or death to humans; 
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‘‘(C) is the subject of a fraudulent trans-
action; or 
‘‘(D) appears otherwise unfit for distribu-
tion such that the product would be reasonably 
likely to result in serious adverse health con-
sequences or death to humans. 
‘‘(9) LICENSED.—The term ‘licensed’ means— 
‘‘(A) in the case of a wholesale distributor, 
having a valid license in accordance with section 
503(e) or section 582(a)(6), as applicable; 
‘‘(B) in the case of a third-party logistics 
provider, having a valid license in accordance 
with section 584(a) or section 582(a)(7), as ap-
plicable; and 
‘‘(C) in the case of a dispenser, having a 
valid license under State law. 
‘‘(10) MANUFACTURER.—The term ‘manufac-
turer’ means, with respect to a product— 
‘‘(A) a person that holds an application ap-
proved under section 505 or a license issued 
under section 351 of the Public Health Service 
Act for such product, or if such product is not 
the subject of an approved application or li-
cense, the person who manufactured the prod-
uct; 
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‘‘(B) a co-licensed partner of the person 
described in subparagraph (A) that obtains the 
product directly from a person described in this 
subparagraph or subparagraph (A) or (C); or 
‘‘(C) an affiliate of a person described in 
subparagraph (A) or (B) that receives the prod-
uct directly from a person described in this sub-
paragraph or subparagraph (A) or (B). 
‘‘(11) PACKAGE.— 
‘‘(A) IN
GENERAL.—The term ‘package’ 
means the smallest individual saleable unit of 
product for distribution by a manufacturer or 
repackager that is intended by the manufac-
turer for ultimate sale to the dispenser of such 
product. 
‘‘(B) INDIVIDUAL
SALEABLE
UNIT.—For 
purposes of this paragraph, an ‘individual sale-
able unit’ is the smallest container of product 
introduced into commerce by the manufacturer 
or repackager that is intended by the manufac-
turer or repackager for individual sale to a dis-
penser. 
‘‘(12) PRESCRIPTION
DRUG.—The term ‘pre-
scription drug’ means a drug for human use subject 
to section 503(b)(1). 
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‘‘(13) PRODUCT.—The term ‘product’ means a 
prescription drug in a finished dosage form for ad-
ministration to a patient without substantial further 
manufacturing (such as capsules, tablets, and 
lyophilized products before reconstitution), but for 
purposes of section 582, does not include blood or 
blood components intended for transfusion, radio-
active drugs or radioactive biological products (as 
defined in section 600.3(ee) of title 21, Code of Fed-
eral Regulations) that are regulated by the Nuclear 
Regulatory Commission or by a State pursuant to 
an agreement with such Commission under section 
274 of the Atomic Energy Act of 1954 (42 U.S.C. 
2021), imaging drugs, an intravenous product de-
scribed in clause (xiv), (xv), or (xvi) of paragraph 
(24)(B), any medical gas (as defined in section 575), 
homeopathic drugs marketed in accordance with ap-
plicable guidance under this Act, or a drug com-
pounded in compliance with section 503A or 503B. 
‘‘(14) PRODUCT IDENTIFIER.—The term ‘prod-
uct identifier’ means a standardized graphic that in-
cludes, in both human-readable form and on a ma-
chine-readable data carrier that conforms to the 
standards developed by a widely recognized inter-
national standards development organization, the 
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standardized numerical identifier, lot number, and 
expiration date of the product. 
‘‘(15) QUARANTINE.—The term ‘quarantine’ 
means the storage or identification of a product, to 
prevent distribution or transfer of the product, in a 
physically separate area clearly identified for such 
use or through other procedures. 
‘‘(16) REPACKAGER.—The term ‘repackager’ 
means a person who owns or operates an establish-
ment that repacks and relabels a product or package 
for— 
‘‘(A) further sale; or 
‘‘(B) distribution without a further trans-
action. 
‘‘(17) RETURN.—The term ‘return’ means pro-
viding product to the authorized immediate trading 
partner from which such product was purchased or 
received, or to a returns processor or reverse logis-
tics provider for handling of such product. 
‘‘(18) RETURNS PROCESSOR OR REVERSE LO-
GISTICS PROVIDER.—The term ‘returns processor’ or 
‘reverse logistics provider’ means a person who owns 
or operates an establishment that dispositions or 
otherwise processes saleable or nonsaleable product 
received from an authorized trading partner such 
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that the product may be processed for credit to the 
purchaser, manufacturer, or seller or disposed of for 
no further distribution. 
‘‘(19) SPECIFIC
PATIENT
NEED.—The term 
‘specific patient need’ refers to the transfer of a 
product from one pharmacy to another to fill a pre-
scription for an identified patient. Such term does 
not include the transfer of a product from one phar-
macy to another for the purpose of increasing or re-
plenishing stock in anticipation of a potential need. 
‘‘(20) 
STANDARDIZED
NUMERICAL
IDENTI-
FIER.—The term ‘standardized numerical identifier’ 
means a set of numbers or characters used to 
uniquely identify each package or homogenous case 
that is composed of the National Drug Code that 
corresponds to the specific product (including the 
particular package configuration) combined with a 
unique alphanumeric serial number of up to 20 
characters. 
‘‘(21) SUSPECT PRODUCT.—The term ‘suspect 
product’ means a product for which there is reason 
to believe that such product— 
‘‘(A) is potentially counterfeit, diverted, or 
stolen; 
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‘‘(B) is potentially intentionally adulterated 
such that the product would result in serious 
adverse health consequences or death to hu-
mans; 
‘‘(C) is potentially the subject of a fraudu-
lent transaction; or 
‘‘(D) appears otherwise unfit for distribu-
tion such that the product would result in seri-
ous adverse health consequences or death to hu-
mans. 
‘‘(22) THIRD-PARTY
LOGISTICS
PROVIDER.— 
The term ‘third-party logistics provider’ means an 
entity that provides or coordinates warehousing, or 
other logistics services of a product in interstate 
commerce on behalf of a manufacturer, wholesale 
distributor, or dispenser of a product, but does not 
take ownership of the product, nor have responsi-
bility to direct the sale or disposition of the product. 
‘‘(23) TRADING PARTNER.—The term ‘trading 
partner’ means— 
‘‘(A) a manufacturer, repackager, whole-
sale distributor, or dispenser from whom a 
manufacturer, 
repackager, 
wholesale 
dis-
tributor, or dispenser accepts direct ownership 
of a product or to whom a manufacturer, re-
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packager, wholesale distributor, or dispenser 
transfers direct ownership of a product; or 
‘‘(B) a third-party logistics provider from 
whom a manufacturer, repackager, wholesale 
distributor, or dispenser accepts direct posses-
sion of a product or to whom a manufacturer, 
repackager, wholesale distributor, or dispenser 
transfers direct possession of a product. 
‘‘(24) TRANSACTION.— 
‘‘(A) IN GENERAL.—The term ‘transaction’ 
means the transfer of product between persons 
in which a change of ownership occurs. 
‘‘(B) EXEMPTIONS.—The term ‘trans-
action’ does not include— 
‘‘(i) intracompany distribution of any 
product between members of an affiliate or 
within a manufacturer; 
‘‘(ii) the distribution of a product 
among hospitals or other health care enti-
ties that are under common control; 
‘‘(iii) the distribution of a product for 
emergency medical reasons including a 
public health emergency declaration pursu-
ant to section 319 of the Public Health 
Service Act, except that a drug shortage 
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not caused by a public health emergency 
shall not constitute an emergency medical 
reason; 
‘‘(iv) the dispensing of a product pur-
suant to a prescription executed in accord-
ance with section 503(b)(1); 
‘‘(v) the distribution of product sam-
ples by a manufacturer or a licensed 
wholesale distributor in accordance with 
section 503(d); 
‘‘(vi) the distribution of blood or blood 
components intended for transfusion; 
‘‘(vii) the distribution of minimal 
quantities of product by a licensed retail 
pharmacy to a licensed practitioner for of-
fice use; 
‘‘(viii) the sale, purchase, or trade of 
a drug or an offer to sell, purchase, or 
trade a drug by a charitable organization 
described in section 501(c)(3) of the Inter-
nal Revenue Code of 1986 to a nonprofit 
affiliate of the organization to the extent 
otherwise permitted by law; 
‘‘(ix) the distribution of a product 
pursuant to the sale or merger of a phar-
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macy or pharmacies or a wholesale dis-
tributor or wholesale distributors, except 
that any records required to be maintained 
for the product shall be transferred to the 
new owner of the pharmacy or pharmacies 
or wholesale distributor or wholesale dis-
tributors; 
‘‘(x) the dispensing of a product ap-
proved under section 512(c); 
‘‘(xi) products transferred to or from 
any facility that is licensed by the Nuclear 
Regulatory Commission or by a State pur-
suant to an agreement with such Commis-
sion under section 274 of the Atomic En-
ergy Act of 1954 (42 U.S.C. 2021); 
‘‘(xii) a combination product that is 
not subject to approval under section 505 
or licensure under section 351 of the Pub-
lic Health Service Act, and that is— 
‘‘(I) a product comprised of a de-
vice and 1 or more other regulated 
components (such as a drug/device, 
biologic/device, or drug/device/biologic) 
that are physically, chemically, or oth-
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erwise combined or mixed and pro-
duced as a single entity; 
‘‘(II) 2 or more separate prod-
ucts packaged together in a single 
package or as a unit and comprised of 
a drug and device or device and bio-
logical product; or 
‘‘(III) 2 or more finished medical 
devices plus one or more drug or bio-
logical products that are packaged to-
gether in what is referred to as a 
‘medical convenience kit’ as described 
in clause (xiii); 
‘‘(xiii) the distribution of a collection 
of finished medical devices, which may in-
clude a product or biological product, as-
sembled in kit form strictly for the conven-
ience of the purchaser or user (referred to 
in this clause as a ‘medical convenience 
kit’) if— 
‘‘(I) the medical convenience kit 
is assembled in an establishment that 
is registered with the Food and Drug 
Administration as a device manufac-
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PWALKER on DSK7TPTVN1PROD with BILLS
turer in accordance with section 
510(b)(2); 
‘‘(II) the medical convenience kit 
does not contain a controlled sub-
stance that appears in a schedule con-
tained in the Comprehensive Drug 
Abuse Prevention and Control Act of 
1970; 
‘‘(III) in the case of a medical 
convenience kit that includes a prod-
uct, the person that manufacturers 
the kit— 
‘‘(aa) purchased such prod-
uct directly from the pharma-
ceutical manufacturer or from a 
wholesale distributor that pur-
chased the product directly from 
the 
pharmaceutical 
manufac-
turer; and 
‘‘(bb) does not alter the pri-
mary container or label of the 
product as purchased from the 
manufacturer or wholesale dis-
tributor; and 
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‘‘(IV) in the case of a medical 
convenience kit that includes a prod-
uct, the product is— 
‘‘(aa) an intravenous solu-
tion intended for the replenish-
ment of fluids and electrolytes; 
‘‘(bb) a product intended to 
maintain the equilibrium of water 
and minerals in the body; 
‘‘(cc) a product intended for 
irrigation or reconstitution; 
‘‘(dd) an anesthetic; 
‘‘(ee) an anticoagulant; 
‘‘(ff) a vasopressor; or 
‘‘(gg) a sympathomimetic; 
‘‘(xiv) the distribution of an intra-
venous product that, by its formulation, is 
intended for the replenishment of fluids 
and electrolytes (such as sodium, chloride, 
and potassium) or calories (such as dex-
trose and amino acids); 
‘‘(xv) the distribution of an intra-
venous product used to maintain the equi-
librium of water and minerals in the body, 
such as dialysis solutions; 
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‘‘(xvi) the distribution of a product 
that is intended for irrigation, or sterile 
water, whether intended for such purposes 
or for injection; 
‘‘(xvii) the distribution of a medical 
gas (as defined in section 575); or 
‘‘(xviii) the distribution or sale of any 
licensed product under section 351 of the 
Public Health Service Act that meets the 
definition of a device under section 201(h). 
‘‘(25) 
TRANSACTION
HISTORY.—The 
term 
‘transaction history’ means a statement in paper or 
electronic form, including the transaction informa-
tion for each prior transaction going back to the 
manufacturer of the product. 
‘‘(26) TRANSACTION INFORMATION.—The term 
‘transaction information’ means— 
‘‘(A) the proprietary or established name 
or names of the product; 
‘‘(B) the strength and dosage form of the 
product; 
‘‘(C) the National Drug Code number of 
the product; 
‘‘(D) the container size; 
‘‘(E) the number of containers; 
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PWALKER on DSK7TPTVN1PROD with BILLS
‘‘(F) the lot number of the product; 
‘‘(G) the date of the transaction; 
‘‘(H) the date of the shipment, if more 
than 24 hours after the date of the transaction; 
‘‘(I) the business name and address of the 
person from whom ownership is being trans-
ferred; and 
‘‘(J) the business name and address of the 
person to whom ownership is being transferred. 
‘‘(27) TRANSACTION STATEMENT.—The ‘trans-
action statement’ is a statement, in paper or elec-
tronic form, that the entity transferring ownership 
in a transaction— 
‘‘(A) is authorized as required under the 
Drug Supply Chain Security Act; 
‘‘(B) received the product from a person 
that is authorized as required under the Drug 
Supply Chain Security Act; 
‘‘(C) received transaction information and 
a transaction statement from the prior owner of 
the product, as required under section 582; 
‘‘(D) did not knowingly ship a suspect or 
illegitimate product; 
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PWALKER on DSK7TPTVN1PROD with BILLS
‘‘(E) had systems and processes in place to 
comply with verification requirements under 
section 582; 
‘‘(F) did not knowingly provide false trans-
action information; and 
‘‘(G) did not knowingly alter the trans-
action history. 
‘‘(28) VERIFICATION
OR
VERIFY.—The term 
‘verification’ or ‘verify’ means determining whether 
the product identifier affixed to, or imprinted upon, 
a package or homogeneous case corresponds to the 
standardized numerical identifier or lot number and 
expiration date assigned to the product by the man-
ufacturer or the repackager, as applicable in accord-
ance with section 582. 
‘‘(29) WHOLESALE
DISTRIBUTOR.—The term 
‘wholesale distributor’ means a person (other than a 
manufacturer, a manufacturer’s co-licensed partner, 
a third-party logistics provider, or repackager) en-
gaged in wholesale distribution (as defined in section 
503(e)(4), as amended by the Drug Supply Chain 
Security Act). 
‘‘SEC. 582. REQUIREMENTS. 
‘‘(a) IN GENERAL.— 
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‘‘(1) OTHER ACTIVITIES.—Each manufacturer, 
repackager, wholesale distributor, and dispenser 
shall comply with the requirements set forth in this 
section with respect to the role of such manufac-
turer, repackager, wholesale distributor, or dispenser 
in a transaction involving product. If an entity meets 
the definition of more than one of the entities listed 
in the preceding sentence, such entity shall comply 
with all applicable requirements in this section, but 
shall not be required to duplicate requirements. 
‘‘(2) INITIAL STANDARDS.— 
‘‘(A) IN GENERAL.—The Secretary shall, 
in consultation with other appropriate Federal 
officials, manufacturers, repackagers, wholesale 
distributors, dispensers, and other pharma-
ceutical distribution supply chain stakeholders, 
issue a draft guidance document that estab-
lishes standards for the interoperable exchange 
of transaction information, transaction history, 
and transaction statements, in paper or elec-
tronic format, for compliance with this sub-
section and subsections (b), (c), (d), and (e). In 
establishing such standards, the Secretary shall 
consider the feasibility of establishing standard-
ized documentation to be used by members of 
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PWALKER on DSK7TPTVN1PROD with BILLS
the pharmaceutical distribution supply chain to 
convey the transaction information, transaction 
history, and transaction statement to the subse-
quent purchaser of a product and to facilitate 
the exchange of lot level data. The standards 
established under this paragraph shall take into 
consideration the standards established under 
section 505D and shall comply with a form and 
format developed by a widely recognized inter-
national standards development organization. 
‘‘(B) PUBLIC INPUT.—Prior to issuing the 
draft guidance under subparagraph (A), the 
Secretary shall gather comments and informa-
tion from stakeholders and maintain such com-
ments and information in a public docket for at 
least 60 days prior to issuing such guidance. 
‘‘(C) PUBLICATION.—The Secretary shall 
publish the standards established under sub-
paragraph (A) not later than 1 year after the 
date of enactment of the Drug Supply Chain 
Security Act. 
‘‘(3) WAIVERS, 
EXCEPTIONS, 
AND
EXEMP-
TIONS.— 
‘‘(A) IN GENERAL.—Not later than 2 years 
after the date of enactment of the Drug Supply 
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PWALKER on DSK7TPTVN1PROD with BILLS
Chain Security Act, the Secretary shall, by 
guidance— 
‘‘(i) establish a process by which an 
authorized 
manufacturer, 
repackager, 
wholesale distributor, or dispenser may re-
quest a waiver from any of the require-
ments set forth in this section, which the 
Secretary may grant if the Secretary deter-
mines that such requirements would result 
in an undue economic hardship or for 
emergency medical reasons, including a 
public health emergency declaration pursu-
ant to section 319 of the Public Health 
Service Act; 
‘‘(ii) establish a process by which the 
Secretary determines exceptions, and a 
process through which a manufacturer or 
repackager may request such an exception, 
to the requirements relating to product 
identifiers if a product is packaged in a 
container too small or otherwise unable to 
accommodate a label with sufficient space 
to bear the information required for com-
pliance with this section; and 
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PWALKER on DSK7TPTVN1PROD with BILLS
‘‘(iii) establish a process by which the 
Secretary may determine other products or 
transactions that shall be exempt from the 
requirements of this section. 
‘‘(B) CONTENT.—The guidance issued 
under subparagraph (A) shall include a process 
for the biennial review and renewal of such 
waivers, exceptions, and exemptions, as applica-
ble. 
‘‘(C) PROCESS.—In issuing the guidance 
under this paragraph, the Secretary shall pro-
vide an effective date that is not later than 180 
days prior to the date on which manufacturers 
are required to affix or imprint a product iden-
tifier to each package and homogenous case of 
product intended to be introduced in a trans-
action into commerce consistent with this sec-
tion. 
‘‘(4) SELF-EXECUTING
REQUIREMENTS.—Ex-
cept where otherwise specified, the requirements of 
this section may be enforced without further regula-
tions or guidance from the Secretary. 
‘‘(5) GRANDFATHERING PRODUCT.— 
‘‘(A) PRODUCT
IDENTIFIER.—Not later 
than 2 years after the date of enactment of the 
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PWALKER on DSK7TPTVN1PROD with BILLS
Drug Supply Chain Security Act, the Secretary 
shall finalize guidance specifying whether and 
under what circumstances product that is not 
labeled with a product identifier and that is in 
the pharmaceutical distribution supply chain at 
the time of the effective date of the require-
ments of this section shall be exempted from 
the requirements of this section. 
‘‘(B) TRACING.—For a product that en-
tered the pharmaceutical distribution supply 
chain prior to January 1, 2015— 
‘‘(i) authorized trading partners shall 
be exempt from providing transaction in-
formation as required under subsections 
(b)(1)(A)(i), 
(c)(1)(A)(ii), 
(d)(1)(A)(ii), 
and (e)(1)(A)(ii); 
‘‘(ii) 
transaction 
history 
required 
under this section shall begin with the 
owner of such product on such date; and 
‘‘(iii) the owners of such product on 
such date shall be exempt from asserting 
receipt of transaction information and 
transaction statement from the prior owner 
as required under this section. 
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PWALKER on DSK7TPTVN1PROD with BILLS
pect product is not an illegitimate product, 
the dispenser shall promptly notify the 
Secretary, if applicable, of such determina-
tion and such product may be further dis-
tributed or dispensed. 
‘‘(iv) RECORDS.—A dispenser shall 
keep records of the investigation of a sus-
pect product for not less than 6 years after 
the conclusion of the investigation. 
‘‘(B) ILLEGITIMATE PRODUCT.— 
‘‘(i) 
IN
GENERAL.—Upon 
deter-
mining, in coordination with the manufac-
turer, that a product in the possession or 
control of a dispenser is an illegitimate 
product, the dispenser shall— 
‘‘(I) disposition the illegitimate 
product within the possession or con-
trol of the dispenser; 
‘‘(II) take reasonable and appro-
priate steps to assist a trading part-
ner to disposition an illegitimate prod-
uct not in the possession or control of 
the dispenser; and 
‘‘(III) retain a sample of the 
product for further physical examina-
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