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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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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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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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‘‘(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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‘‘(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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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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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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‘‘(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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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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‘‘(6) WHOLESALE
DISTRIBUTOR
LICENSES.— 
Notwithstanding section 581(9)(A), until the effec-
tive date of the wholesale distributor licensing regu-
lations under section 583, the term ‘licensed’ or ‘au-
thorized’, as it relates to a wholesale distributor with 
respect to prescription drugs, shall mean a wholesale 
distributor with a valid license under State law. 
‘‘(7) THIRD-PARTY
LOGISTICS
PROVIDER
LI-
CENSES.—Until the effective date of the third-party 
logistics provider licensing regulations under section 
584, a third-party logistics provider shall be consid-
ered ‘licensed’ under section 581(9)(B) unless the 
Secretary has made a finding that the third-party lo-
gistics provider does not utilize good handling and 
distribution practices and publishes notice thereof. 
‘‘(8) LABEL CHANGES.—Changes made to pack-
age labels solely to incorporate the product identifier 
may be submitted to the Secretary in the annual re-
port of an establishment, in accordance with section 
314.70(d) of chapter 21, Code of Federal Regula-
tions (or any successor regulation). 
‘‘(9) PRODUCT IDENTIFIERS.—With respect to 
any requirement relating to product identifiers under 
this subchapter— 
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‘‘(A) unless the Secretary allows, through 
guidance, the use of other technologies for data 
instead of or in addition to the technologies de-
scribed in clauses (i) and (ii), the applicable 
data— 
‘‘(i) shall be included in a 2-dimen-
sional data matrix barcode when affixed to, 
or imprinted upon, a package; and 
‘‘(ii) shall be included in a linear or 2- 
dimensional data matrix barcode when af-
fixed to, or imprinted upon, a homo-
geneous case; and 
‘‘(B) verification of the product identifier 
may occur by using human-readable or ma-
chine-readable methods. 
‘‘(b) MANUFACTURER REQUIREMENTS.— 
‘‘(1) PRODUCT TRACING.— 
‘‘(A) IN
GENERAL.—Beginning not later 
than January 1, 2015, a manufacturer shall— 
‘‘(i) prior to, or at the time of, each 
transaction in which such manufacturer 
transfers ownership of a product, provide 
the subsequent owner with transaction his-
tory, transaction information, and a trans-
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action statement, in a single document in 
an paper or electronic format; and 
‘‘(ii) capture the transaction informa-
tion (including lot level information), 
transaction history, and transaction state-
ment for each transaction and maintain 
such information, history, and statement 
for not less than 6 years after the date of 
the transaction. 
‘‘(B) REQUESTS
FOR
INFORMATION.— 
Upon a request by the Secretary or other ap-
propriate Federal or State official, in the event 
of a recall or for the purpose of investigating a 
suspect product or an illegitimate product, a 
manufacturer shall, not later than 1 business 
day, and not to exceed 48 hours, after receiving 
the request, or in other such reasonable time as 
determined by the Secretary, based on the cir-
cumstances of the request, provide the applica-
ble transaction information, transaction history, 
and transaction statement for the product. 
‘‘(C) ELECTRONIC FORMAT.— 
‘‘(i) IN
GENERAL.—Beginning not 
later than 4 years after the date of enact-
ment of the Drug Supply Chain Security 
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Act, except as provided under clause (ii), a 
manufacturer shall provide the transaction 
information, 
transaction 
history, 
and 
transaction statement required under sub-
paragraph (A)(i) in electronic format. 
‘‘(ii) EXCEPTION.—A manufacturer 
may continue to provide the transaction in-
formation, transaction history, and trans-
action statement required under subpara-
graph (A)(i) in a paper format to a li-
censed health care practitioner authorized 
to prescribe medication under State law or 
other licensed individual under the super-
vision or direction of such a practitioner 
who dispenses product in the usual course 
of professional practice. 
‘‘(2) PRODUCT IDENTIFIER.— 
‘‘(A) IN
GENERAL.—Beginning not later 
than 4 years after the date of enactment of the 
Drug Supply Chain Security Act, a manufac-
turer shall affix or imprint a product identifier 
to each package and homogenous case of a 
product intended to be introduced in a trans-
action into commerce. Such manufacturer shall 
maintain the product identifier information for 
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such product for not less than 6 years after the 
date of the transaction. 
‘‘(B) EXCEPTION.—A package that is re-
quired to have a standardized numerical identi-
fier is not required to have a unique device 
identifier. 
‘‘(3) AUTHORIZED
TRADING
PARTNERS.—Be-
ginning not later than January 1, 2015, the trading 
partners of a manufacturer may be only authorized 
trading partners. 
‘‘(4) VERIFICATION.—Beginning not later than 
January 1, 2015, a manufacturer shall have systems 
in place to enable the manufacturer to comply with 
the following requirements: 
‘‘(A) SUSPECT PRODUCT.— 
‘‘(i) IN
GENERAL.—Upon making a 
determination that a product in the posses-
sion or control of the manufacturer is a 
suspect product, or upon receiving a re-
quest for verification from the Secretary 
that has made a determination that a 
product within the possession or control of 
a manufacturer is a suspect product, a 
manufacturer shall— 
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‘‘(I) quarantine such product 
within the possession or control of the 
manufacturer from product intended 
for distribution until such product is 
cleared or dispositioned; and 
‘‘(II) promptly conduct an inves-
tigation in coordination with trading 
partners, as applicable, to determine 
whether the product is an illegitimate 
product, which shall include validating 
any applicable transaction history and 
transaction information in the posses-
sion of the manufacturer and other-
wise investigating to determine wheth-
er the product is an illegitimate prod-
uct, and, beginning 4 years after the 
date of enactment of the Drug Supply 
Chain Security Act, verifying the 
product at the package level, including 
the standardized numerical identifier. 
‘‘(ii) 
CLEARED
PRODUCT.—If 
the 
manufacturer makes the determination 
that a suspect product is not an illegit-
imate product, the manufacturer shall 
promptly notify the Secretary, if applica-
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ble, of such determination and such prod-
uct may be further distributed. 
‘‘(iii) 
RECORDS.—A 
manufacturer 
shall keep records of the investigation of a 
suspect product for not less than 6 years 
after the conclusion of the investigation. 
‘‘(B) ILLEGITIMATE PRODUCT.— 
‘‘(i) IN GENERAL.—Upon determining 
that a product in the possession or control 
of a manufacturer is an illegitimate prod-
uct, the manufacturer shall, in a manner 
consistent with the systems and processes 
of such manufacturer— 
‘‘(I) quarantine such product 
within the possession or control of the 
manufacturer from product intended 
for distribution until such product is 
dispositioned; 
‘‘(II) disposition the illegitimate 
product within the possession or con-
trol of the manufacturer; 
‘‘(III) take reasonable and appro-
priate steps to assist a trading part-
ner to disposition an illegitimate prod-
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uct not in the possession or control of 
the manufacturer; and 
‘‘(IV) retain a sample of the 
product for further physical examina-
tion or laboratory analysis of the 
product by the manufacturer or Sec-
retary (or other appropriate Federal 
or State official) upon request by the 
Secretary (or other appropriate Fed-
eral or State official), as necessary 
and appropriate. 
‘‘(ii) MAKING A NOTIFICATION.— 
‘‘(I) ILLEGITIMATE
PRODUCT.— 
Upon determining that a product in 
the possession or control of the manu-
facturer is an illegitimate product, the 
manufacturer shall notify the Sec-
retary and all immediate trading part-
ners that the manufacturer has reason 
to believe may have received such ille-
gitimate product of such determina-
tion not later than 24 hours after 
making such determination. 
‘‘(II) HIGH
RISK
OF
ILLEGIT-
IMACY.—A manufacturer shall notify 
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the Secretary and immediate trading 
partners that the manufacturer has 
reason to believe may have in the 
trading partner’s possession a product 
manufactured by, or purported to be a 
product manufactured by, the manu-
facturer not later than 24 hours after 
determining or being notified by the 
Secretary or a trading partner that 
there is a high risk that such product 
is an illegitimate product. For pur-
poses of this subclause, a ‘high risk’ 
may include a specific high risk that 
could increase the likelihood that ille-
gitimate product will enter the phar-
maceutical distribution supply chain 
and other high risks as determined by 
the Secretary in guidance pursuant to 
subsection (h). 
‘‘(iii) RESPONDING
TO
A
NOTIFICA-
TION.—Upon the receipt of a notification 
from the Secretary or a trading partner 
that a determination has been made that a 
product is an illegitimate product, a manu-
facturer shall identify all illegitimate prod-
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uct subject to such notification that is in 
the possession or control of the manufac-
turer, including any product that is subse-
quently received, and shall perform the ac-
tivities described in subparagraph (A). 
‘‘(iv) 
TERMINATING
A
NOTIFICA-
TION.—Upon making a determination, in 
consultation with the Secretary, that a no-
tification is no longer necessary, a manu-
facturer shall promptly notify immediate 
trading partners that the manufacturer no-
tified pursuant to clause (ii) that such no-
tification has been terminated. 
‘‘(v) RECORDS.—A manufacturer shall 
keep records of the disposition of an illegit-
imate product for not less than 6 years 
after the conclusion of the disposition. 
‘‘(C) REQUESTS FOR VERIFICATION.—Be-
ginning 4 years after the date of enactment of 
the Drug Supply Chain Security Act, upon re-
ceiving a request for verification from an au-
thorized repackager, wholesale distributor, or 
dispenser that is in possession or control of a 
product such person believes to be manufac-
tured by such manufacturer, a manufacturer 
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shall, not later than 24 hours after receiving 
the request for verification or in other such rea-
sonable time as determined by the Secretary, 
based on the circumstances of the request, no-
tify the person making the request whether the 
product identifier, including the standardized 
numerical identifier, that is the subject of the 
request corresponds to the product identifier af-
fixed or imprinted by the manufacturer. If a 
manufacturer responding to a request for 
verification identifies a product identifier that 
does not correspond to that affixed or imprinted 
by the manufacturer, the manufacturer shall 
treat such product as suspect product and con-
duct an investigation as described in subpara-
graph (A). If the manufacturer has reason to 
believe the product is an illegitimate product, 
the manufacturer shall advise the person mak-
ing the request of such belief at the time such 
manufacturer responds to the request for 
verification. 
‘‘(D) ELECTRONIC DATABASE.—A manu-
facturer may satisfy the requirements of this 
paragraph by developing a secure electronic 
database or utilizing a secure electronic data-
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101 
HR 3204 PCS 
the date of enactment of the Drug Supply 
Chain Security Act, upon receipt of a returned 
product that the repackager intends to further 
distribute, before further distributing such 
product, the repackager shall verify the product 
identifier for each sealed homogeneous case of 
such product or, if such product is not in a 
sealed homogeneous case, verify the product 
identifier on each package. 
‘‘(f) DROP SHIPMENTS.— 
‘‘(1) IN
GENERAL.—A wholesale distributor 
that does not physically handle or store product 
shall be exempt from the provisions of this section, 
except the notification requirements under clauses 
(ii), (iii), and (iv) of subsection (c)(4)(B), provided 
that the manufacturer, repackager, or other whole-
sale distributor that distributes the product to the 
dispenser by means of a drop shipment for such 
wholesale distributor includes on the transaction in-
formation and transaction history to the dispenser 
the contact information of such wholesale distributor 
and provides the transaction information, trans-
action history, and transaction statement directly to 
the dispenser. 
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