I 
117TH CONGRESS 
1ST SESSION H. R. 2870 
To amend the Public Health Service Act to provide for stockpiles to ensure 
that all Americans have access to generic drugs at risk of shortage, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 28, 2021 
Mr. CARTER of Georgia (for himself and Ms. BLUNT ROCHESTER) introduced 
the following bill; which was referred to the Committee on Energy and 
Commerce 
A BILL 
To amend the Public Health Service Act to provide for 
stockpiles to ensure that all Americans have access to 
generic drugs at risk of shortage, 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 ‘‘Essential Medicines 
Strategic Stockpile Act of 2021’’. 
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SEC. 2. PILOT PROGRAM ON ENSURING MEDICATION SUP-
PLY STABILITY. 
Part D of the Public Health Service Act (42 U.S.C. 
254b et seq.) is amended by adding at the end the fol-
lowing new subpart: 
‘‘Subpart XIII—Ensuring Medication Supply Stability 
‘‘SEC. 340J. ENSURING MEDICATION SUPPLY STABILITY. 
‘‘(a) AWARD OF CONTRACTS.—Beginning not later 
than January 1, 2022, the Secretary shall award contracts 
to eligible entities to each implement and test the effective-
ness of acquiring, maintaining, managing, and distrib-
uting a stockpile that— 
‘‘(1) consists of generic drugs at risk of short-
age; and 
‘‘(2) is of sufficient quantity to ensure that cus-
tomers in the United States have access to such 
drugs for at least 6 months (as specified by the Sec-
retary based on the historic demand for those 
drugs). 
‘‘(b) SELECTION OF DRUGS.— 
‘‘(1) IN GENERAL.—The Secretary shall— 
‘‘(A) select not more than 50 drugs that 
may be included by eligible entities in a stock-
pile pursuant to a contract under this section; 
and 
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‘‘(B) maintain an up-to-date list of such 
drugs; and 
‘‘(C) make such list publicly available. 
‘‘(2) CHOICE OF ELIGIBLE ENTITIES.—A con-
tract awarded to an eligible entity under this section 
need not require the stockpile of the eligible entity 
to include all 50 drugs listed pursuant to paragraph 
(1). 
‘‘(c) SUFFICIENT QUANTITY.—For each generic drug 
listed pursuant to subsection (b)(1), the Secretary shall 
specify the quantity of such drug that is sufficient to en-
sure that consumers in the United States have access to 
such drug for at least 6 months. 
‘‘(d) DURATION; LIQUIDATION OF INVENTORY.— 
‘‘(1) DURATION.—A contract awarded under 
this section shall be for a term of no more than 3 
years. 
‘‘(2) LIQUIDATION
OF
INVENTORY.—A drug 
held in a stockpile pursuant to a contract under this 
section may be liquidated by the eligible entity at the 
end of the period of the contract. 
‘‘(e) STOCKPILE REQUIREMENTS.— 
‘‘(1) ENSURING AVAILABILITY OF UNEXPIRED 
PRODUCTS.—Each eligible entity with a contract 
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under this section for a stockpile of generic drugs at 
risk of shortage shall— 
‘‘(A) ensure that each drug maintained in 
the stockpile has an expiration date at least 1 
year beyond the current date; and 
‘‘(B) to comply with subparagraph (A)— 
‘‘(i) sell drugs in the stockpile through 
normal commercial channels and replace 
those drugs; or 
‘‘(ii) if there is no commercial market 
for a drug in the stockpile, dispose of the 
drug and report such disposal to the Sec-
retary. 
‘‘(2) MANAGEMENT OF STOCKPILE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
ensure that— 
‘‘(i) collectively, the eligible entities 
with contracts under this section for a 
stockpile of generic drugs at risk of short-
age acquire, not later than 6 months fol-
lowing the date set in such contracts, and 
maintain thereafter, a 6-month supply of 
such drugs; and 
‘‘(ii) the 6-month supply required by 
clause (i) is in addition to the average lev-
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els of inventory held by eligible entities 
over the previous year for the respective 
drugs. 
‘‘(B) INVENTORY MANAGEMENT.—Each el-
igible entity with a contract under this section 
for a stockpile of generic drugs at risk of short-
age shall manage inventory to ensure that 
drugs in the stockpile are efficiently cycled to 
the commercial market. 
‘‘(C) ANNUAL
AUDITS.—Not more than 
annually, the Secretary may request a physical 
audit count of the inventories of all eligible enti-
ties with a contract under this section to vali-
date that each such entity is maintaining the 
appropriate amount of stockpiled inventory. 
‘‘(3) REPORTING.—Each eligible entity with a 
contract under this section shall submit reports at 
such time and in such manner as the Secretary may 
require regarding— 
‘‘(A) current inventory levels of stockpiled 
drugs at a drug level; 
‘‘(B) indicators of current inventory levels 
of stockpiled drugs relative to acceptable mini-
mums; and 
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‘‘(C) such other matters as the Secretary 
determines appropriate. 
‘‘(f) CONTRACT TERMS.— 
‘‘(1) PAYMENT OF MONTHLY FEES FOR MAN-
AGEMENT.—Subject to paragraph (2), the Secretary 
shall pay to each eligible entity with a contract 
under this section for a stockpile of generic drugs at 
risk of shortage appropriate monthly fees for the 
management of the stockpile. 
‘‘(2) PAYMENT
CONDITIONED
ON
STOCKPILE 
ADEQUACY.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), each contract with an eligi-
ble entity under this section shall provide that 
no payment under the contract may be made 
until the entity demonstrates to the Secretary 
that the entity has stockpiled such portion of 
the total quantity of drugs to be stockpiled 
under the contract as the Secretary determines 
to be acceptable for payment. 
‘‘(B) EXCEPTIONS
FOR
ADVANCE
PAY-
MENTS.— 
‘‘(i) IN GENERAL.—A contract under 
this section may provide that, if the Sec-
retary determines (in the Secretary’s dis-
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cretion) that an advance payment, partial 
payment for significant milestones, or pay-
ment to increase capacity is necessary to 
ensure success of the terms of the con-
tract, the Secretary shall pay, in advance 
of delivery, an amount not to exceed 10 
percent of the total contract amount to be 
paid to the eligible entity by the Secretary 
pursuant to the contract over the full pe-
riod of the contract. 
‘‘(ii) COST OF CAPITAL.—A contract 
under this section may provide for pay-
ments to compensate the contracting eligi-
ble entity for additional capital require-
ments related to the additional inventory 
to be maintained. 
‘‘(iii) TIMING.—The Secretary shall, 
to the extent practicable, make any deter-
mination under clause (i) to make an ad-
vance payment at the same time as the 
issuance of a solicitation. 
‘‘(iv) REPAYMENT.—If the Secretary 
makes an advance payment pursuant to 
clause (i), the Secretary shall require the 
eligible entity receiving such advance pay-
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ment to repay it if there is a failure to per-
form by the eligible entity. 
‘‘(3) TERMINATION.—Nothing in this section 
shall be construed as affecting the rights of eligible 
entities under provisions of statute or regulation (in-
cluding the Federal Acquisition Regulation) relating 
to the termination of contracts for the convenience 
of the Government. 
‘‘(g) CONGRESSIONAL OVERSIGHT.— 
‘‘(1) INDEPENDENT
EVALUATION
AND
RE-
PORT.—Not later than 1 year after the date of en-
actment of this section and annually thereafter, the 
Comptroller General of the United States shall con-
duct an independent evaluation, and submit to the 
appropriate congressional committees a report, con-
cerning the program under this section. 
‘‘(2) CONTENTS OF REPORT.—The report under 
paragraph (1) shall review, assess, and provide rec-
ommendations, as appropriate, on the following: 
‘‘(A) Details on likely costs and resultant 
savings as compared to a stockpiling method 
that does not incorporate perpetual inventory 
cycling. 
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‘‘(B) Identification of drawdowns from the 
stockpile, as evidence of market shortage avoid-
ance. 
‘‘(C) The allocation of drugs included in 
the stockpiles funded pursuant to this section to 
the customers of the eligible entities with con-
tracts under this section. 
‘‘(D) The degree to which eligible entities 
with contracts under this section fulfilled their 
obligations under such contracts. 
‘‘(h) DEFINITIONS.—In this section: 
‘‘(1) The term ‘eligible entity’ means an entity 
that meets each of the following criteria: 
‘‘(A) The entity is licensed or registered in 
accordance with applicable Federal and State 
law and in good standing with respect to such 
licensure or registration. 
‘‘(B) If the entity is not a manufacturer, 
the entity agrees— 
‘‘(i) to purchase all drugs to be main-
tained in its stockpile funded under this 
section directly from the manufacturers of 
the drugs or the exclusive distributors of 
such manufacturers; or 
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‘‘(ii) in the case of an entity that is a 
co-op or chain pharmacy warehouse— 
‘‘(I) to purchase drugs to be 
maintained in its stockpile funded 
under this section from an authorized 
distributor; and 
‘‘(II) distribute those drugs only 
to its member pharmacies. 
‘‘(C) The entity sells more than 90 percent 
of its drugs to dispensers. 
‘‘(D) The entity agrees to distribute inven-
tory from its stockpile funded under this section 
only to wholesale distributors or dispensers that 
are customers of the entity. 
‘‘(2) The term ‘generic drug at risk of shortage’ 
means a drug (as defined in section 201 of the Fed-
eral Food, Drug, and Cosmetic Act) that— 
‘‘(A) is approved pursuant to section 
505(j) of such Act; 
‘‘(B) is included in the list of essential 
medicines published by the Food and Drug Ad-
ministration; 
‘‘(C) is included, at any point during the 
preceding 36 months, on the drug shortage list 
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in effect under section 506E of the Federal 
Food, Drug, and Cosmetic Act; and 
‘‘(D) is manufactured by 3 or fewer per-
sons that are registered under section 510 of 
the Federal Food, Drug, and Cosmetic Act for 
purposes of such manufacture. 
‘‘(i) AUTHORIZATION
OF
APPROPRIATIONS.—To 
carry out this section, there is authorized to be appro-
priated $120,000,000 for fiscal years 2022 through 2024, 
to remain available until expended.’’. 
Æ 
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