Essential Medicines Strategic Stockpile Act of 2021
Bill: H.R.2870 | Sponsor: Rep. Carter, Earl L. "Buddy" (R-GA)
Policy area: Health

Summary:
Essential Medicines Strategic Stockpile Act of 2021
This bill requires the Department of Health and Human Services (HHS) to create a pilot program with private entities to test the effectiveness of acquiring, maintaining, managing, and distributing a stockpile of generic drugs at risk of shortage.
Specifically, HHS must enter into contracts of up to three years for entities to create a six-month stockpile of up to 50 types of such drugs.
The bill establishes various program requirements, including annual evaluations by the Government Accountability Office.

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 Representatives 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''.

SEC. 2. PILOT PROGRAM ON ENSURING MEDICATION SUPPLY STABILITY.

    Part D of the Public Health Service Act (42 U.S.C. 254b et seq.) is 
amended by adding at the end the following 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 effectiveness of acquiring, maintaining, 
managing, and distributing a stockpile that--
            ``(1) consists of generic drugs at risk of shortage; and
            ``(2) is of sufficient quantity to ensure that customers in 
        the United States have access to such drugs for at least 6 
        months (as specified by the Secretary 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 stockpile pursuant 
                to a contract under this section; and
                    ``(B) maintain an up-to-date list of such drugs; 
                and
                    ``(C) make such list publicly available.
            ``(2) Choice of eligible entities.--A contract 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 ensure 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 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 Secretary.
            ``(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 shortage 
                        acquire, not later than 6 months following 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 levels 
                        of inventory held by eligible entities over the 
                        previous year for the respective drugs.
                    ``(B) Inventory management.--Each eligible entity 
                with a contract under this section for a stockpile of 
                generic drugs at risk of shortage 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 entities with a contract 
                under this section to validate 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 minimums; and
                    ``(C) such other matters as the Secretary 
                determines appropriate.
    ``(f) Contract Terms.--
            ``(1) Payment of monthly fees for management.--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 eligible 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 payments.--
                            ``(i) In general.--A contract under this 
                        section may provide that, if the Secretary 
                        determines (in the Secretary's discretion) that 
                        an advance payment, partial payment for 
                        significant milestones, or payment to increase 
                        capacity is necessary to ensure success of the 
                        terms of the contract, 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 period 
                        of the contract.
                            ``(ii) Cost of capital.--A contract under 
                        this section may provide for payments to 
                        compensate the contracting eligible entity for 
                        additional capital requirements related to the 
                        additional inventory to be maintained.
                            ``(iii) Timing.--The Secretary shall, to 
                        the extent practicable, make any determination 
                        under clause (i) to make an advance 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 payment to repay it if 
                        there is a failure to perform 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 (including the Federal 
        Acquisition Regulation) relating to the termination of 
        contracts for the convenience of the Government.
    ``(g) Congressional Oversight.--
            ``(1) Independent evaluation and report.--Not later than 1 
        year after the date of enactment of this section and annually 
        thereafter, the Comptroller General of the United States shall 
        conduct an independent evaluation, and submit to the 
        appropriate congressional committees a report, concerning the 
        program under this section.
            ``(2) Contents of report.--The report under paragraph (1) 
        shall review, assess, and provide recommendations, 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.
                    ``(B) Identification of drawdowns from the 
                stockpile, as evidence of market shortage avoidance.
                    ``(C) The allocation of drugs included in the 
                stockpiles funded pursuant to this section to the 
                customers of the eligible entities with contracts 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 
                        maintained in its stockpile funded under this 
                        section directly from the manufacturers of the 
                        drugs or the exclusive distributors of such 
                        manufacturers; or
                            ``(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 inventory 
                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 Federal 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 
                Administration;
                    ``(C) is included, at any point during the 
                preceding 36 months, on the drug shortage list in 
                effect under section 506E of the Federal Food, Drug, 
                and Cosmetic Act; and
                    ``(D) is manufactured by 3 or fewer persons 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 appropriated $120,000,000 for fiscal years 
2022 through 2024, to remain available until expended.''.
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