Pharmaceutical Supply Chain Defense and Enhancement Act
Bill: S.1366 | Sponsor: Sen. Warren, Elizabeth (D-MA)
Policy area: Health

Summary:
Pharmaceutical Supply Chain Defense and Enhancement Act
This bill requires the Department of Health and Human Services (HHS) to enter into contracts with U.S. entities to manufacture certain critical drugs within the United States.
The Food and Drug Administration (FDA) must periodically report to Congress a list of drugs that are critical to public health or national security. The Biomedical Advanced Research and Development Authority within HHS must enter into contracts for qualified U.S. entities to manufacture in the United States the drugs on this list (and ingredients for such drugs). Such contracts must impose certain conditions, such as requiring the manufacturing entity to (1) develop and maintain a redundancy risk management and continuity of business plan, and (2) commit to selling the drugs and ingredients manufactured under the contract at reasonable prices.
Beginning in FY2025, certain federal agencies, including the Department of Defense and the Bureau of Prisons, must give priority, in procuring drugs on the FDA critical drugs list, to those that are manufactured in the United States and of high quality.
The bill also requires the Federal Trade Commission to submit annually to Congress a report on foreign investment in the U.S. pharmaceutical industry. The report must address, among other topics, the effect of the industry's reliance on foreign manufacturing.

To secure the supply of drugs in the United States, 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 ``Pharmaceutical Supply Chain Defense 
and Enhancement Act''.

SEC. 2. LISTING OF CRITICAL DRUGS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary, acting through the Commissioner of Food and 
Drugs and in consultation with the Secretary of Defense, shall develop 
a confidential list of drugs such Secretary determines to be critical 
to the public health or national security. Such list shall include the 
name of each such drug, as well as all active pharmaceutical 
ingredients and starting materials required for the manufacture of the 
drug. In developing the list, the Secretary may consider the role of 
shortages in impeding access to drugs.
    (b) Updates.--The Secretary shall update the list described in 
subsection (a) not less frequently than once every 2 years.
    (c) Submission of List.--The Secretary shall submit the list 
described in subsection (a), including any updates to such list under 
subsection (b), as a classified matter, to the Committee on Health, 
Education, Labor, and Pensions, the Committee on Armed Services, the 
Committee on Foreign Relations, and the Committee on Banking, Housing, 
and Urban Affairs of the Senate, and to the Committee on Energy and 
Commerce, the Committee on Armed Services, the Committee on Foreign 
Affairs, and the Committee on Financial Services of the House of 
Representatives.
    (d) Interim List.--During the period between the date of enactment 
of this Act and the date on which the Secretary issues the first list 
under subsection (a), the Secretary, in consultation with the 
Commissioner of Food and Drugs, the Secretary of Defense, and the 
Assistant Secretary for Preparedness and Response, shall establish an 
interim list of drugs that will be deemed the list under subsection (a) 
until the Secretary develops the first list under subsection (a). Such 
interim list shall include not fewer than 30 drugs, as well as the 
active pharmaceutical ingredients and starting materials required for 
the manufacture of such drugs, that are--
            (1) included on the most recent list of essential medicines 
        issued by the World Health Organization; or
            (2) countermeasures and products that could replenish the 
        strategic national stockpile.
    (e) Comment Period.--Not later than 60 days prior to the submission 
of the list described in subsection (a), the Secretary shall establish 
a comment period during which the public may comment on which drugs 
should be included on the list under subsection (a).

SEC. 3. BOOSTING DOMESTIC DRUG AND ACTIVE INGREDIENT MANUFACTURING 
              CAPACITY.

    (a) In General.--The Secretary, acting through the Director of the 
Biomedical Advanced Research and Development Authority, shall increase 
the domestic capacity to manufacture active pharmaceutical ingredients 
and starting materials for drugs critical to the public health and 
national security by entering into the contracts described in 
subsection (b).
    (b) Contracts.--
            (1) In general.--To carry out subsection (a), the Secretary 
        shall enter into contracts, not later than 6 months after the 
        date of enactment of this Act, as follows:
                    (A) The Secretary shall enter into contracts with 
                companies and nonprofit entities headquartered in the 
                United States, under which such companies use 
                manufacturing establishments located in the United 
                States to manufacture the drugs included on the list 
                under section 2, and the requisite active 
                pharmaceutical ingredients and starting materials of 
                such drugs, using advanced manufacturing, including 
                continuous manufacturing where applicable.
                    (B) As a condition for entering into contracts with 
                the Secretary to manufacture drugs, companies and 
                nonprofit entities shall--
                            (i) develop and maintain a redundancy risk 
                        management and continuity of business plan 
                        (reviewed and approved by the Secretary) that 
                        identifies and evaluates risks to the supply of 
                        the drug, as applicable, for each establishment 
                        in which such drug, and the requisite active 
                        pharmaceutical ingredients and starting 
                        materials of such drug, is manufactured;
                            (ii) commit to implementing, as 
                        appropriate, risk management and other 
                        strategies to ensure that, in the case of 
                        potential supply chain disruptions, the entity 
                        can continue normal production of the drug, and 
                        the requisite active pharmaceutical ingredients 
                        and starting materials of such drug, for 18 
                        months;
                            (iii) commit to maintaining, to the extent 
                        practicable (as determined by the Secretary) 
                        for each drug, and the requisite active 
                        pharmaceutical ingredients and starting 
                        materials of such drug, a 3-month supply in 
                        order to mitigate the impact of supply chain 
                        disruptions and shortages;
                            (iv) commit to selling drugs, or the 
                        requisite active pharmaceutical ingredients and 
                        starting materials of such drugs, developed 
                        under contract with the Secretary at fair and 
                        reasonable prices, as determined by the 
                        Secretary, taking into consideration--
                                    (I) the impact of price on patient 
                                access to the drug;
                                    (II) the cost of the drug to 
                                Federal or State health programs;
                                    (III) the cost of manufacturing the 
                                drug; and
                                    (IV) the impact of price on market 
                                competition for the drug; and
                            (v) commit to making the prices described 
                        in clause (iv) public.
                    (C) The contracts described in this paragraph shall 
                contain continuity of business agreements 
                demonstrating, in advance of receiving a contract, the 
                company's ability to rapidly begin production.
                    (D) The Secretary shall enter into contracts only 
                with companies headquartered in the United States that 
                use manufacturing establishments located in the United 
                States, under which such companies expand the 
                capabilities of continuous manufacturing and other 
                advanced manufacturing for the production of the active 
                pharmaceutical ingredients and starting materials for 
                the drugs included on the list under section 2.
                    (E) In issuing contracts under this section, the 
                Secretary shall prioritize--
                            (i) contracts designed to enhance the 
                        supply of generic drugs and biosimilar 
                        biological products and the requisite active 
                        pharmaceutical ingredients and starting 
                        materials of such generic drugs and biosimilar 
                        products; and
                            (ii) contracts designed to enhance the 
                        supply of drugs, and the requisite active 
                        pharmaceutical ingredients and starting 
                        materials of such drugs, that are not currently 
                        manufactured in the United States.
            (2) Inspector general review.--The Inspector General of the 
        Department of Health and Human Services shall conduct a review 
        of not fewer than 1 of every 3 contracts entered into under 
        this section, and of the entities entering into such contracts, 
        to ensure that contracts are being issued under fair and 
        reasonable terms and conditions, including facilitating the 
        procurement by the Federal Government of applicable products 
        under section 2 and applicable drugs, biological products, and 
        medical devices at fair and reasonable prices. The Inspector 
        General shall make each such review public and, in cases where 
        such a review identifies unreasonable prices, submit 
        recommendations to Congress on how the Office should improve 
        its contracting systems to ensure reasonable pricing.
            (3) Funding.--To carry out this section, there are 
        authorized to be appropriated $5,000,000,000 for the period of 
        fiscal years 2021 and 2025. Not later than April 1, 2025, the 
        Secretary shall report to the congressional committees listed 
        under section 2(c) of this Act, and provide a recommendation 
        for renewal of funding under this paragraph.
    (c) Federal Procurement of Domestically Manufactured Drugs.--
            (1) Procurement of drugs.--
                    (A) In general.--Beginning in fiscal year 2025, 
                when purchasing any drug included on the list under 
                section 2, the Secretary of Defense, the Secretary of 
                Veterans Affairs, the Director of the Bureau of 
                Prisons, and, for purposes of maintaining the strategic 
                national stockpile, the Secretary of Health and Human 
                Services, shall give priority to supplies of the drug 
                manufactured in the United States (including all active 
                pharmaceutical ingredient and starting materials of the 
                drug) that is of high quality.
                    (B) Use of remaining funds.--In the case that a 
                Federal agency described in this paragraph that, after 
                purchasing all drugs on the list under section 2 needed 
                by such agency for a fiscal year, has funds 
                appropriated under paragraph (2) for that fiscal year 
                remaining, such Federal agency may use the remaining 
                funds to purchase drugs wholly manufactured in the 
                United States that are not included on the list under 
                section 2.
            (2) Funding.--
                    (A) In general.--There are authorized to be 
                appropriated to each of the Secretary of Defense, the 
                Secretary of Veterans Affairs, the Bureau of Prisons, 
                and the Secretary of Health and Human Services, 
                $1,000,000,000 for the period of fiscal years 2025 and 
                2029, to be used to purchase drugs manufactured in the 
                United States, as described in paragraph (1).
                    (B) Reversion.--All funds that are appropriated 
                under this paragraph for a fiscal year, but not 
                expended by the end of the fiscal year, shall revert to 
                the General Fund of the Treasury.
                    (C) No diversion or transfer of funds.--No funding 
                appropriated under this section shall be diverted, 
                transferred, or otherwise made available for purposes 
                beyond what is described in this Act.
            (3) NIH authorization.--There are authorized to be 
        appropriated to the Director of the National Institutes of 
        Health, for each fiscal year for which amounts are appropriated 
        under paragraph (2) but not expended in full, an amount equal 
        to the amount that reverts to the Treasury for such year, as 
        described in paragraph (2). Such amounts shall be used by the 
        Director of the National Institutes of Health to carry out 
        biomedical research.

SEC. 4. SUPPLY CHAIN TRANSPARENCY.

    (a) Domestic Suppliers to Federal Programs.--Each domestic 
manufacturer of a drug that supplies such drug to the Department of 
Defense, the Department of Veterans Affairs, the Department of Health 
and Human Services, or the Bureau of Prisons, or a domestic 
manufacturer of an active ingredient of a drug so supplied, shall--
            (1) report annually to the Secretary and the agency 
        receiving such drug on--
                    (A) whether any ingredients of such drug is 
                sourced, either wholly or in part, from a foreign 
                country;
                    (B) in the case of an active pharmaceutical 
                ingredient or key starting material that the 
                manufacturer procures from a single source in a single 
                foreign country, as applicable--
                            (i) not less than 2 alternative sources of 
                        any active pharmaceutical ingredient or key 
                        starting material;
                            (ii) 1 such alternative source, if only 1 
                        such alternative source is available; or
                            (iii) a statement that no such alternative 
                        sources are available; and
                    (C) an assessment of the resilience and capacity of 
                the alternate sources identified under subparagraph 
                (B); and
            (2) develop continuity of business plans to prevent the 
        disruption of any drug listed under section 2, including any 
        active or inactive ingredients of such drug, which the 
        Secretary may audit.
    (b) Foreign Drug Suppliers.--
            (1) Establishments in a foreign country.--Section 510(i) of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360(i)) is 
        amended by inserting at the end the following:
    ``(5) The requirements of paragraphs (1) and (2) shall apply to 
establishments within a foreign country engaged in the manufacture, 
preparation, propagation, compounding, or processing of any drug that 
is required to be listed pursuant to subsection (j), or of any active 
pharmaceutical ingredient of such a drug. Such requirements shall apply 
regardless of whether the drug or active pharmaceutical ingredient 
undergoes further manufacture, preparation, propagation, compounding, 
or processing at a separate establishment or establishments outside the 
United States prior to being imported or offered for import into the 
United States.''.
            (2) Listing of drugs.--Section 510(j)(1) of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 360(j)(1)) is amended--
                    (A) in subparagraph (D), by striking ``and'' at the 
                end;
                    (B) in subparagraph (E), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
            ``(F) in the case of a drug contained in the applicable 
        list, a certification that the registrant has--
                    ``(i) identified every other establishment where 
                manufacturing is performed for the drug by the 
                registrant; and
                    ``(ii) notified each known foreign establishment 
                engaged in the manufacture, preparation, propagation, 
                compounding, or processing of the drug or the active 
                pharmaceutical ingredient of the drug of the inclusion 
                of the drug in the list and the obligation to register 
                pursuant to subsection (i)(5).''.
    (c) Reports to Congress and the Public.--
            (1) Classified report to congress.--Not later than 1 year 
        after the date of enactment of this Act and annually 
        thereafter, the Secretary, in consultation with the Secretary 
        of Defense, shall submit a classified report to Congress on the 
        Nation's reliance on importation of active and inactive 
        ingredients of drugs included on the list under section 2.
            (2) Public reports.--Not later than 1 year after the date 
        of enactment of this Act and annually thereafter, the 
        Secretary, in consultation with the Secretary of Defense, shall 
        prepare an unclassified summary of the report described in 
        paragraph (1), and shall make such summary publicly available 
        on the internet websites of the Department of Health and Human 
        Services and the Department of Defense for purposes of 
        understanding the Nation's dependency on foreign manufacturers 
        of drugs. Such summaries shall not include the names of any 
        drugs, active pharmaceutical ingredients, or starting 
        materials.
            (3) Content.--The reports under paragraph (1) shall 
        include--
                    (A) all brand name and generic drugs, and the 
                active and inactive ingredients of such drugs that--
                            (i) are not wholly produced in the United 
                        States;
                            (ii) are exclusively produced, or utilize 
                        active or inactive ingredients produced abroad;
                            (iii) are critical to the public health and 
                        national security of the people of the United 
                        States, as determined by the Secretary, in 
                        consultation with the Secretary of Defense, and 
                        including any drugs included in the list under 
                        section 2; or
                            (iv) are procured in any quantity by the 
                        Department of Defense for use by service 
                        members or veterans or by the Department of 
                        Health and Human Services for the strategic 
                        national stockpile;
                    (B) a list of potential, alternative sources for 
                any finished drug or active or inactive ingredient of a 
                drug, that is sourced from a single manufacturer with 
                establishments in the United States; and
                    (C) assess the resiliency and capacity of 
                alternative sources of any drug described in 
                subparagraph (A), and whether any such alternative 
                source could be relied on to support domestic demand 
                for such drug.
    (d) Manufacturer Compliance.--
            (1) Failure to notify of a permanent discontinuance or an 
        interruption.--Section 301 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 331) is amended by adding at the end 
        the following:
    ``(fff) The failure of a manufacturer of a drug described in 
section 506C(a), or an active pharmaceutical ingredient of such a drug, 
to notify the Secretary of a permanent discontinuance or an 
interruption, and the reasons for such discontinuance or interruption, 
as required by section 506C.''.
            (2) Exemption from penalty.--Section 303(c) of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 333(c)) is amended by 
        inserting before the period at the end the following: ``or (6) 
        for having violated section 301(fff) if such person made a good 
        faith determination that the discontinuance or interruption was 
        not likely to lead to a meaningful disruption in the supply of 
        that drug in the United States''.
    (e) Registry of Active Ingredients.--There is authorized to be 
appropriated to the Secretary of Health and Human Services $20,000,000 
for fiscal year 2022, for purposes of establishing, in consultation 
with the Commissioner of Food and Drugs, an online registry of active 
pharmaceutical ingredients and key starting materials using information 
reported under subsection (a) and pursuant to a registration under 
section 510(i) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360(i)).
    (f) Food and Drug Administration Inspections.--There are authorized 
to be appropriated such funds as may be necessary to ensure that the 
Commissioner of Food and Drugs is able to conduct inspections and 
evaluations of new establishments established using funds made 
available under this Act.

SEC. 5. OVERSIGHT OF FOREIGN PHARMACEUTICAL INVESTMENT.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, and annually thereafter, the Federal Trade 
Commission, in consultation with the Secretary of the Treasury acting 
through the Committee on Foreign Investment in the United States 
(referred to in this section as the ``Committee''), shall submit to the 
appropriate congressional committees, the Secretary of Health and Human 
Services, and the Commissioner of Food and Drugs, a report on foreign 
investment in the pharmaceutical industry of the United States.
    (b) Elements.--The report required by subsection (a) shall include 
the following:
            (1) An assessment of--
                    (A) the supply chain of the pharmaceutical industry 
                of the United States and the effect of concentration 
                and reliance on foreign manufacturing within that 
                industry;
                    (B) the effect of foreign investment in the 
                pharmaceutical industry of the United States on 
                domestic capacity to produce drugs and active and 
                inactive ingredients of drugs; and
                    (C) the effect of foreign investment in 
                technologies or other products for sequencing or 
                storage of DNA, including genome and exome analysis, in 
                the United States, including the effect of such 
                investment on the capacity to sequence or store DNA in 
                the United States.
            (2) The number of reviews and investigations conducted by 
        the Committee, in each of the 10 fiscal years preceding the 
        year in which the study is conducted, with respect to covered 
        transactions (as defined in section 721(a) of the Defense 
        Production Act of 1950 (50 U.S.C. 4565(a)))--
                    (A) in the pharmaceutical industry of the United 
                States; or
                    (B) relating to the sequencing or storage of DNA in 
                the United States.
            (3) A short description of each such review or 
        investigation, including whether the transaction was approved 
        or prohibited.
    (c) Authority.--The Federal Trade Commission shall have authority 
under section 6 of the Federal Trade Commission Act (15 U.S.C. 46) to 
conduct the studies required to prepare the report required by 
subsection (a).
    (d) Publication.--The Federal Trade Commission shall publish an 
unclassified summary of the report required by subsection (a) on a 
publicly available internet website of the Commission.
    (e) Appropriate Congressional Committees Defined.--In this section, 
the term ``appropriate congressional committees'' means--
            (1) the Committee on Banking, Housing, and Urban Affairs, 
        the Committee on Health, Education, Labor, and Pensions, the 
        Committee on Armed Services, the Committee on Foreign 
        Relations, the Committee on Commerce, Science, and 
        Transportation, and the Committee on Appropriations of the 
        Senate; and
            (2) the Committee on Financial Services, the Committee on 
        Energy and Commerce, the Committee on Armed Services, the 
        Committee on Foreign Affairs, and the Committee on 
        Appropriations of the House of Representatives.

SEC. 6. DEFINITIONS.

    In this Act--
            (1) ``advanced manufacturing'' means an approach for the 
        manufacturing of pharmaceuticals that incorporates novel 
        technology, or uses an established technique or technology in a 
        new or innovative way (such as continuous manufacturing where 
        the input materials are continuously transformed within the 
        process by 2 or more unit operations), that enhances drug 
        quality or improves the manufacturing process;
            (2) the term ``continuous manufacturing''--
                    (A) means a process where the input materials are 
                continuously fed into and transformed within the 
                process, and the processed output materials are 
                continuously removed from the system; and
                    (B) consists of an integrated process that consists 
                of a series of 2 or more unit operations;
            (3) the term ``drug'' has the meaning given such term in 
        section 201(g) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321(g));
            (4) the term ``Secretary'', unless otherwise specified, 
        means the Secretary of Health and Human Services;
            (5) the term ``starting material'' means a raw material, 
        intermediate, or a drug substance that is used in the 
        production of a drug substance and that is incorporated as a 
        significant structural fragment into the structure of the drug 
        substance; and
            (6) the term ``strategic national stockpile'' means the 
        stockpile maintained by the Secretary under section 319F-2 of 
        the Public Health Service Act (42 U.S.C. 247d-6b).
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