Drug Quality and Security Act
PL 113-54 (H.R.3204), enacted 11/27/2013

[113th Congress Public Law 54]
[From the U.S. Government Publishing Office]



[[Page 127 STAT. 587]]

Public Law 113-54
113th Congress

                                 An Act


 
To amend the Federal Food, Drug, and Cosmetic Act with respect to human 
     drug compounding and drug supply chain security, and for other 
            purposes. <<NOTE: Nov. 27, 2013 -  [H.R. 3204]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Drug Quality and 
Security Act. 21 USC 301 note.>> 
SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Drug Quality and Security Act''.
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS.

    (a) References in Act.--Except as otherwise specified, amendments 
made by this Act to a section or other provision of law are amendments 
to such section or other provision of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 301 et seq.).
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. References in Act; table of contents.

                        TITLE I--DRUG COMPOUNDING

Sec. 101. Short title.
Sec. 102. Voluntary outsourcing facilities.
Sec. 103. Penalties.
Sec. 104. Regulations.
Sec. 105. Enhanced communication.
Sec. 106. Severability.
Sec. 107. GAO study.

                  TITLE II--DRUG SUPPLY CHAIN SECURITY

Sec. 201. Short title.
Sec. 202. Pharmaceutical distribution supply chain.
Sec. 203. Enhanced drug distribution security.
Sec. 204. National standards for prescription drug wholesale 
           distributors.
Sec. 205. National standards for third-party logistics providers; 
           uniform national policy.
Sec. 206. Penalties.
Sec. 207. Conforming amendment.
Sec. 208. Savings clause.

TITLE <<NOTE: Compounding Quality Act.>>  I--DRUG COMPOUNDING
SEC. <<NOTE: 21 USC 301 note.>>  101. SHORT TITLE.

    This Act may be cited as the ``Compounding Quality Act''.
SEC. 102. VOLUNTARY OUTSOURCING FACILITIES.

    (a) In General.--Subchapter A of chapter V (21 U.S.C. 351 et seq.) 
is amended--

[[Page 127 STAT. 588]]

            (1) <<NOTE: 21 USC 353c.>>  by redesignating section 503B as 
        section 503C; and
            (2) by inserting after section 503A the following new 
        section:
``SEC. <<NOTE: 21 USC 353b.>>  503B. OUTSOURCING FACILITIES.

    ``(a) In General.--Sections 502(f)(1), 505, and 582 shall not apply 
to a drug compounded by or under the direct supervision of a licensed 
pharmacist in a facility that elects to register as an outsourcing 
facility if each of the following conditions is met:
            ``(1) Registration and reporting.--The drug is compounded in 
        an outsourcing facility that is in compliance with the 
        requirements of subsection (b).
            ``(2) Bulk drug substances.--The drug is compounded in an 
        outsourcing facility that does not compound using bulk drug 
        substances (as defined in section 207.3(a)(4) of title 21, Code 
        of Federal Regulations (or any successor regulation)), unless--
                    ``(A)(i) <<NOTE: Notice. Federal Register, 
                publication.>>  the bulk drug substance appears on a 
                list established by the Secretary identifying bulk drug 
                substances for which there is a clinical need, by--
                          ``(I) publishing a notice in the Federal 
                      Register proposing bulk drug substances to be 
                      included on the list, including the rationale for 
                      such proposal;
                          ``(II) <<NOTE: Time period. Public 
                      comments.>>  providing a period of not less than 
                      60 calendar days for comment on the notice; and
                          ``(III) publishing a notice in the Federal 
                      Register designating bulk drug substances for 
                      inclusion on the list; or
                    ``(ii) the drug compounded from such bulk drug 
                substance appears on the drug shortage list in effect 
                under section 506E at the time of compounding, 
                distribution, and dispensing;
                    ``(B) if an applicable monograph exists under the 
                United States Pharmacopeia, the National Formulary, or 
                another compendium or pharmacopeia recognized by the 
                Secretary for purposes of this paragraph, the bulk drug 
                substances each comply with the monograph;
                    ``(C) the bulk drug substances are each manufactured 
                by an establishment that is registered under section 510 
                (including a foreign establishment that is registered 
                under section 510(i)); and
                    ``(D) the bulk drug substances are each accompanied 
                by a valid certificate of analysis.
            ``(3) Ingredients (other than bulk drug substances).--If any 
        ingredients (other than bulk drug substances) are used in 
        compounding the drug, such ingredients comply with the standards 
        of the applicable United States Pharmacopeia or National 
        Formulary monograph, if such monograph exists, or of another 
        compendium or pharmacopeia recognized by the Secretary for 
        purposes of this paragraph if any.
            ``(4) Drugs withdrawn or removed because unsafe or not 
        effective.--The drug does not appear on a list published by the 
        Secretary of drugs that have been withdrawn or removed from the 
        market because such drugs or components of such drugs have been 
        found to be unsafe or not effective.
            ``(5) Essentially a copy of an approved drug.--The drug is 
        not essentially a copy of one or more approved drugs.

[[Page 127 STAT. 589]]

            ``(6) Drugs presenting demonstrable difficulties for 
        compounding.--The drug--
                    ``(A) is not identified (directly or as part of a 
                category of drugs) on a list published by the Secretary, 
                through the process described in subsection (c), of 
                drugs or categories of drugs that present demonstrable 
                difficulties for compounding that are reasonably likely 
                to lead to an adverse effect on the safety or 
                effectiveness of the drug or category of drugs, taking 
                into account the risks and benefits to patients; or
                    ``(B) is compounded in accordance with all 
                applicable conditions identified on the list described 
                in subparagraph (A) as conditions that are necessary to 
                prevent the drug or category of drugs from presenting 
                the demonstrable difficulties described in subparagraph 
                (A).
            ``(7) Elements to assure safe use.--In the case of a drug 
        that is compounded from a drug that is the subject of a risk 
        evaluation and mitigation strategy approved with elements to 
        assure safe use pursuant to section 505-1, or from a bulk drug 
        substance that is a component of such drug, the outsourcing 
        facility demonstrates to the Secretary prior to beginning 
        compounding that such facility will utilize controls comparable 
        to the controls applicable under the relevant risk evaluation 
        and mitigation strategy.
            ``(8) Prohibition on wholesaling.--The drug will not be sold 
        or transferred by an entity other than the outsourcing facility 
        that compounded such drug. This paragraph does not prohibit 
        administration of a drug in a health care setting or dispensing 
        a drug pursuant to a prescription executed in accordance with 
        section 503(b)(1).
            ``(9) Fees.--The drug is compounded in an outsourcing 
        facility that has paid all fees owed by such facility pursuant 
        to section 744K.
            ``(10) Labeling of drugs.--
                    ``(A) Label.--The label of the drug includes--
                          ``(i) the statement `This is a compounded 
                      drug.' or a reasonable comparable alternative 
                      statement (as specified by the Secretary) that 
                      prominently identifies the drug as a compounded 
                      drug;
                          ``(ii) the name, address, and phone number of 
                      the applicable outsourcing facility; and
                          ``(iii) with respect to the drug--
                                    ``(I) the lot or batch number;
                                    ``(II) the established name of the 
                                drug;
                                    ``(III) the dosage form and 
                                strength;
                                    ``(IV) the statement of quantity or 
                                volume, as appropriate;
                                    ``(V) the date that the drug was 
                                compounded;
                                    ``(VI) the expiration date;
                                    ``(VII) storage and handling 
                                instructions;
                                    ``(VIII) the National Drug Code 
                                number, if available;
                                    ``(IX) the statement `Not for 
                                resale', and, if the drug is dispensed 
                                or distributed other than pursuant to a 
                                prescription for an individual 
                                identified patient, the statement 
                                `Office Use Only'; and

[[Page 127 STAT. 590]]

                                    ``(X) subject to subparagraph 
                                (B)(i), a list of active and inactive 
                                ingredients, identified by established 
                                name and the quantity or proportion of 
                                each ingredient.
                    ``(B) Container.--The container from which the 
                individual units of the drug are removed for dispensing 
                or for administration (such as a plastic bag containing 
                individual product syringes) shall include--
                          ``(i) the information described under 
                      subparagraph (A)(iii)(X), if there is not space on 
                      the label for such information;
                          ``(ii) the following information to facilitate 
                      adverse event reporting: www.fda.gov/medwatch and 
                      1-800-FDA-1088 (or any successor Internet Web site 
                      or phone number); and
                          ``(iii) directions for use, including, as 
                      appropriate, dosage and administration.
                    ``(C) <<NOTE: Determination. Regulations.>>  
                Additional information.--The label and labeling of the 
                drug shall include any other information as determined 
                necessary and specified in regulations promulgated by 
                the Secretary.
            ``(11) Outsourcing facility requirement.--The drug is 
        compounded in an outsourcing facility in which the compounding 
        of drugs occurs only in accordance with this section.

    ``(b) Registration of Outsourcing Facilities and Reporting of 
Drugs.--
            ``(1) Registration of outsourcing facilities.--
                    ``(A) <<NOTE: Time period.>>  Annual registration.--
                Upon electing and in order to become an outsourcing 
                facility, and during the period beginning on October 1 
                and ending on December 31 of each year thereafter, a 
                facility--
                          ``(i) shall register with the Secretary its 
                      name, place of business, and unique facility 
                      identifier (which shall conform to the 
                      requirements for the unique facility identifier 
                      established under section 510), and a point of 
                      contact email address; and
                          ``(ii) shall indicate whether the outsourcing 
                      facility intends to compound a drug that appears 
                      on the list in effect under section 506E during 
                      the subsequent calendar year.
                    ``(B) Availability of registration for inspection; 
                list.--
                          ``(i) Registrations.--The Secretary shall make 
                      available for inspection, to any person so 
                      requesting, any registration filed pursuant to 
                      this paragraph.
                          ``(ii) <<NOTE: Public information. Web 
                      posting.>>  List.--The Secretary shall make 
                      available on the public Internet Web site of the 
                      Food and Drug Administration a list of the name of 
                      each facility registered under this subsection as 
                      an outsourcing facility, the State in which each 
                      such facility is located, whether the facility 
                      compounds from bulk drug substances, and whether 
                      any such compounding from bulk drug substances is 
                      for sterile or nonsterile drugs.
            ``(2) Drug reporting by outsourcing facilities.--
                    ``(A) In general.--Upon initially registering as an 
                outsourcing facility, once during the month of June of 
                each

[[Page 127 STAT. 591]]

                year, and once during the month of December of each 
                year, each outsourcing facility that registers with the 
                Secretary under paragraph (1) shall submit to the 
                Secretary a report--
                          ``(i) <<NOTE: Time period.>>  identifying the 
                      drugs compounded by such outsourcing facility 
                      during the previous 6-month period; and
                          ``(ii) with respect to each drug identified 
                      under clause (i), providing the active ingredient, 
                      the source of such active ingredient, the National 
                      Drug Code number of the source drug or bulk active 
                      ingredient, if available, the strength of the 
                      active ingredient per unit, the dosage form and 
                      route of administration, the package description, 
                      the number of individual units produced, and the 
                      National Drug Code number of the final product, if 
                      assigned.
                    ``(B) Form.--Each report under subparagraph (A) 
                shall be prepared in such form and manner as the 
                Secretary may prescribe by regulation or guidance.
                    ``(C) Confidentiality.--Reports submitted under this 
                paragraph shall be exempt from inspection under 
                paragraph (1)(B)(i), unless the Secretary finds that 
                such an exemption would be inconsistent with the 
                protection of the public health.
            ``(3) <<NOTE: Waiver.>>  Electronic registration and 
        reporting.--Registrations and drug reporting under this 
        subsection (including the submission of updated information) 
        shall be submitted to the Secretary by electronic means unless 
        the Secretary grants a request for waiver of such requirement 
        because use of electronic means is not reasonable for the person 
        requesting waiver.
            ``(4) Risk-based inspection frequency.--
                    ``(A) In general.--Outsourcing facilities--
                          ``(i) shall be subject to inspection pursuant 
                      to section 704; and
                          ``(ii) shall not be eligible for the exemption 
                      under section 704(a)(2)(A).
                    ``(B) Risk-based schedule.--The Secretary, acting 
                through one or more officers or employees duly 
                designated by the Secretary, shall inspect outsourcing 
                facilities in accordance with a risk-based schedule 
                established by the Secretary.
                    ``(C) Risk factors.--In establishing the risk-based 
                schedule, the Secretary shall inspect outsourcing 
                facilities according to the known safety risks of such 
                outsourcing facilities, which shall be based on the 
                following factors:
                          ``(i) The compliance history of the 
                      outsourcing facility.
                          ``(ii) The record, history, and nature of 
                      recalls linked to the outsourcing facility.
                          ``(iii) The inherent risk of the drugs 
                      compounded at the outsourcing facility.
                          ``(iv) The inspection frequency and history of 
                      the outsourcing facility, including whether the 
                      outsourcing facility has been inspected pursuant 
                      to section 704 within the last 4 years.
                          ``(v) Whether the outsourcing facility has 
                      registered under this paragraph as an entity that 
                      intends to

[[Page 127 STAT. 592]]

                      compound a drug that appears on the list in effect 
                      under section 506E.
                          ``(vi) Any other criteria deemed necessary and 
                      appropriate by the Secretary for purposes of 
                      allocating inspection resources.
            ``(5) Adverse event reporting.--Outsourcing facilities shall 
        submit adverse event reports to the Secretary in accordance with 
        the content and format requirements established through guidance 
        or regulation under section 310.305 of title 21, Code of Federal 
        Regulations (or any successor regulations).

    ``(c) Regulations.--
            ``(1) In general.--The Secretary shall implement the list 
        described in subsection (a)(6) through regulations.
            ``(2) <<NOTE: Establishment.>>  Advisory committee on 
        compounding.--Before issuing regulations to implement subsection 
        (a)(6), the Secretary shall convene and consult an advisory 
        committee on compounding. The advisory committee shall include 
        representatives from the National Association of Boards of 
        Pharmacy, the United States Pharmacopeia, pharmacists with 
        current experience and expertise in compounding, physicians with 
        background and knowledge in compounding, and patient and public 
        health advocacy organizations.
            ``(3) Interim list.--
                    ``(A) <<NOTE: Notice. Federal Register, 
                publication.>>  In general.--Before the effective date 
                of the regulations finalized to implement subsection 
                (a)(6), the Secretary may designate drugs, categories of 
                drugs, or conditions as described such subsection by--
                          ``(i) publishing a notice of such substances, 
                      drugs, categories of drugs, or conditions proposed 
                      for designation, including the rationale for such 
                      designation, in the Federal Register;
                          ``(ii) <<NOTE: Time period. Public comment.>>  
                      providing a period of not less than 60 calendar 
                      days for comment on the notice; and
                          ``(iii) publishing a notice in the Federal 
                      Register designating such drugs, categories of 
                      drugs, or conditions.
                    ``(B) Sunset of notice.--Any notice provided under 
                subparagraph (A) shall not be effective after the 
                earlier of--
                          ``(i) the date that is 5 years after the date 
                      of enactment of the Compounding Quality Act; or
                          ``(ii) the effective date of the final 
                      regulations issued to implement subsection (a)(6).
            ``(4) <<NOTE: Review.>>  Updates.--The Secretary shall 
        review, and update as necessary, the regulations containing the 
        lists of drugs, categories of drugs, or conditions described in 
        subsection (a)(6) regularly, but not less than once every 
        4 <<NOTE: Time period.>> years. Nothing in the previous sentence 
        prohibits submissions to the Secretary, before or during any 4-
        year period described in such sentence, requesting updates to 
        such lists.

    ``(d) Definitions.--In this section:
            ``(1) The term `compounding' includes the combining, 
        admixing, mixing, diluting, pooling, reconstituting, or 
        otherwise altering of a drug or bulk drug substance to create a 
        drug.
            ``(2) The term `essentially a copy of an approved drug' 
        means--

[[Page 127 STAT. 593]]

                    ``(A) a drug that is identical or nearly identical 
                to an approved drug, or a marketed drug not subject to 
                section 503(b) and not subject to approval in an 
                application submitted under section 505, unless, in the 
                case of an approved drug, the drug appears on the drug 
                shortage list in effect under section 506E at the time 
                of compounding, distribution, and dispensing; or
                    ``(B) a drug, a component of which is a bulk drug 
                substance that is a component of an approved drug or a 
                marketed drug that is not subject to section 503(b) and 
                not subject to approval in an application submitted 
                under section 505, unless there is a change that 
                produces for an individual patient a clinical 
                difference, as determined by the prescribing 
                practitioner, between the compounded drug and the 
                comparable approved drug.
            ``(3) The term `approved drug' means a drug that is approved 
        under section 505 and does not appear on the list described in 
        subsection (a)(4) of drugs that have been withdrawn or removed 
        from the market because such drugs or components of such drugs 
        have been found to be unsafe or not effective.
            ``(4)(A) The term `outsourcing facility' means a facility at 
        one geographic location or address that--
                    ``(i) is engaged in the compounding of sterile 
                drugs;
                    ``(ii) has elected to register as an outsourcing 
                facility; and
                    ``(iii) complies with all of the requirements of 
                this section.
            ``(B) An outsourcing facility is not required to be a 
        licensed pharmacy.
            ``(C) An outsourcing facility may or may not obtain 
        prescriptions for identified individual patients.
            ``(5) The term `sterile drug' means a drug that is intended 
        for parenteral administration, an ophthalmic or oral inhalation 
        drug in aqueous format, or a drug that is required to be sterile 
        under Federal or State law.''.

    ``(d) Obligation to Pay Fees.--Payment of the fee under section 
744K, as described in subsection (a)(9), shall not relieve an 
outsourcing facility that is licensed as a pharmacy in any State that 
requires pharmacy licensing fees of its obligation to pay such State 
fees.''.
    (b) Fees.--Subchapter C of chapter VII (21 U.S.C. 379f et seq.) is 
amended by adding at the end the following:

``PART <<NOTE: 21 USC prec. 379j-61.>>  9--FEES RELATING TO OUTSOURCING 
FACILITIES
``SEC. <<NOTE: 21 USC 379j-61.>>  744J. DEFINITIONS.

    ``In this part:
            ``(1) The term `affiliate' has the meaning given such term 
        in section 735(11).
            ``(2) The term `gross annual sales' means the total 
        worldwide gross annual sales, in United States dollars, for an 
        outsourcing facility, including the sales of all the affiliates 
        of the outsourcing facility.
            ``(3) The term `outsourcing facility' has the meaning given 
        to such term in section 503B(d)(4).

[[Page 127 STAT. 594]]

            ``(4) The term `reinspection' means, with respect to an 
        outsourcing facility, 1 or more inspections conducted under 
        section 704 subsequent to an inspection conducted under such 
        provision which identified noncompliance materially related to 
        an applicable requirement of this Act, specifically to determine 
        whether compliance has been achieved to the Secretary's 
        satisfaction.
``SEC. 744K. <<NOTE: 21 USC 379j-62.>>  AUTHORITY TO ASSESS AND 
                          USE OUTSOURCING FACILITY FEES.

    ``(a) Establishment and Reinspection Fees.--
            ``(1) In general.--For fiscal year 2015 and each subsequent 
        fiscal year, the Secretary shall, in accordance with this 
        subsection, assess and collect--
                    ``(A) an annual establishment fee from each 
                outsourcing facility; and
                    ``(B) a reinspection fee from each outsourcing 
                facility subject to a reinspection in such fiscal year.
            ``(2) Multiple reinspections.--An outsourcing facility 
        subject to multiple reinspections in a fiscal year shall be 
        subject to a reinspection fee for each reinspection.

    ``(b) Establishment and Reinspection Fee Setting.--The Secretary 
shall--
            ``(1) establish the amount of the establishment fee and 
        reinspection fee to be collected under this section for each 
        fiscal year based on the methodology described in subsection 
        (c); and
            ``(2) <<NOTE: Notice. Federal 
        Register, publication. Deadline.>>  publish such fee amounts in 
        a Federal Register notice not later than 60 calendar days before 
        the start of each such year.

    ``(c) Amount of Establishment Fee and Reinspection Fee.--
            ``(1) In general.--For each outsourcing facility in a fiscal 
        year--
                    ``(A) except as provided in paragraph (4), the 
                amount of the annual establishment fee under subsection 
                (b) shall be equal to the sum of--
                          ``(i) $15,000, multiplied by the inflation 
                      adjustment factor described in paragraph (2); plus
                          ``(ii) the small business adjustment factor 
                      described in paragraph (3); and
                    ``(B) the amount of any reinspection fee (if 
                applicable) under subsection (b) shall be equal to 
                $15,000, multiplied by the inflation adjustment factor 
                described in paragraph (2).
            ``(2) Inflation adjustment factor.--
                    ``(A) <<NOTE: Notice. Federal 
                Register, publication.>>  In general.--For fiscal year 
                2015 and subsequent fiscal years, the fee amounts 
                established in paragraph (1) shall be adjusted by the 
                Secretary by notice, published in the Federal Register, 
                for a fiscal year by the amount equal to the sum of--
                          ``(i) 1;
                          ``(ii) the average annual percent change in 
                      the cost, per full-time equivalent position of the 
                      Food and Drug Administration, of all personnel 
                      compensation and benefits paid with respect to 
                      such positions for the first 3 years of the 
                      preceding 4 fiscal years, multiplied by the 
                      proportion of personnel compensation and

[[Page 127 STAT. 595]]

                      benefits costs to total costs of an average full-
                      time equivalent position of the Food and Drug 
                      Administration for the first 3 years of the 
                      preceding 4 fiscal years; plus
                          ``(iii) the average annual percent change that 
                      occurred in the Consumer Price Index for urban 
                      consumers (U.S. City Average; Not Seasonally 
                      Adjusted; All items; Annual Index) for the first 3 
                      years of the preceding 4 years of available data 
                      multiplied by the proportion of all costs other 
                      than personnel compensation and benefits costs to 
                      total costs of an average full-time equivalent 
                      position of the Food and Drug Administration for 
                      the first 3 years of the preceding 4 fiscal years.
                    ``(B) Compounded basis.--The adjustment made each 
                fiscal year under subparagraph (A) shall be added on a 
                compounded basis to the sum of all adjustments made each 
                fiscal year after fiscal year 2014 under subparagraph 
                (A).
            ``(3) <<NOTE: Estimate.>>  Small business adjustment 
        factor.--The small business adjustment factor described in this 
        paragraph shall be an amount established by the Secretary for 
        each fiscal year based on the Secretary's estimate of--
                    ``(A) the number of small businesses that will pay a 
                reduced establishment fee for such fiscal year; and
                    ``(B) the adjustment to the establishment fee 
                necessary to achieve total fees equaling the total fees 
                that the Secretary would have collected if no entity 
                qualified for the small business exception in paragraph 
                (4).
            ``(4) Exception for small businesses.--
                    ``(A) <<NOTE: Time period.>>  In general.--In the 
                case of an outsourcing facility with gross annual sales 
                of $1,000,000 or less in the 12 months ending April 1 of 
                the fiscal year immediately preceding the fiscal year in 
                which the fees under this section are assessed, the 
                amount of the establishment fee under subsection (b) for 
                a fiscal year shall be equal to \1/3\ of the amount 
                calculated under paragraph (1)(A)(i) for such fiscal 
                year.
                    ``(B) <<NOTE: Certification. Time period.>>  
                Application.--To qualify for the exception 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 annual sales for the 12 months 
                ending April 1 of the fiscal year immediately preceding 
                the fiscal year in which fees under this subsection are 
                assessed. <<NOTE: Deadline.>> 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 Secretary 
                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.

[[Page 127 STAT. 596]]

    ``(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 section.
    ``(f) Crediting and Availability of Fees.--Fees authorized under 
this section shall be collected and available 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 appropriation account without 
fiscal year limitation to such appropriation 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 registration 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 conducted 
        a reinspection of the outsourcing facility involved.
            ``(3) Effect of failure to pay fees.--
                    ``(A) Registration.--An outsourcing facility shall 
                not be considered registered under section 503B(b) in a 
                fiscal year until the date that the outsourcing facility 
                remits the establishment fee under this subsection for 
                such fiscal year.
                    ``(B) Misbranding.--All drugs manufactured, 
                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.
            ``(4) <<NOTE: Deadline.>>  Collection of unpaid fees.--In 
        any case where the Secretary does not receive payment of a fee 
        assessed under this section within 30 calendar 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 Secretary 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 entities paying the fees, a description of the hiring and 
placement of new staff, a description of the use of fee resources to 
support inspecting

[[Page 127 STAT. 597]]

outsourcing facilities, and the number of inspections and reinspections 
of such facilities performed each year.
    ``(i) Authorization of Appropriations.--For fiscal 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.''.
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 pursuant 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 subsection (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 compounded drug is false 
or misleading in any particular.''.
SEC. <<NOTE: 21 USC 331 note.>>  104. REGULATIONS.

    In promulgating any regulations to implement this title (and the 
amendments made by this title), the Secretary of Health and Human 
Services shall--
            (1) issue a notice of proposed rulemaking that includes the 
        proposed regulation;
            (2) <<NOTE: Time period. Public comments.>>  provide a 
        period of not less than 60 calendar days for comments on the 
        proposed regulation; and
            (3) <<NOTE: Publication. Time period.>>  publish the final 
        regulation not more than 18 months following publication of the 
        proposed rule and not less than 30 calendar days before the 
        effective date of such final regulation.
SEC. <<NOTE: 21 USC 353a-1.>>  105. ENHANCED COMMUNICATION.

    (a) Submissions From State Boards of Pharmacy.--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 subsection (a)(1) is, with respect to a pharmacy that 
compounds drugs, any of the following:
            (1) The issuance of a warning letter, or the imposition of 
        sanctions or penalties, by a State for violations of a State's 
        pharmacy regulations pertaining to compounding.
            (2) The suspension or revocation of a State-issued pharmacy 
        license or registration for violations 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.

[[Page 127 STAT. 598]]

    (c) Consultation.--The Secretary shall implement subsection (a) in 
consultation with the National Association of Boards of Pharmacy.
    (d) Notifying State Boards of Pharmacy.--The Secretary shall 
immediately notify State boards of pharmacy when--
            (1) the Secretary receives a submission under subsection 
        (a)(1); or
            (2) <<NOTE: Determination.>>  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
            (4) in subsection (b)(1)(A)(i)(III), by striking 
        ``subsection (d)'' and inserting ``subsection (c)''.

    (b) <<NOTE: 21 USC 301 note.>>  Severability.--If any provision of 
this Act (including the amendments made by this Act) is declared 
unconstitutional, or the applicability of this Act (including the 
amendments made by this Act) to any person or circumstance is held 
invalid, the constitutionality of the remainder 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) <<NOTE: Deadline. Reports.>>  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 section 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 governing 
        pharmacy compounding, including enforcement of State laws and 
        policies;
            (3) an assessment of the available tools to permit 
        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 Administration's 
        implementation of sections 503A and 503B of the Federal Food, 
        Drug, and Cosmetic Act.

[[Page 127 STAT. 599]]

 TITLE <<NOTE: Drug Supply Chain Security Act.>>  II--DRUG SUPPLY CHAIN 
SECURITY
SEC. <<NOTE: 21 USC 301 note.>>  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 <<NOTE: 21 USC prec. 360eee.>>  H--Pharmaceutical 
Distribution Supply Chain
``SEC. <<NOTE: 21 USC 360eee.>>  581. DEFINITIONS.

    ``In this subchapter:
            ``(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 repackager, 
                having a valid registration in accordance with section 
                510;
                    ``(B) in the case of a wholesale distributor, having 
                a valid license under State law or section 583, in 
                accordance with section 582(a)(6), and complying with 
                the licensure reporting requirements 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 reporting requirements 
                under section 584(b); and
                    ``(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 
                warehouses 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 dispenses 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

[[Page 127 STAT. 600]]

        of the product by a manufacturer or regulatory or law 
        enforcement agency.
            ``(5) Distribute or distribution.--The term `distribute' or 
        `distribution' means the sale, purchase, trade, delivery, 
        handling, storage, or receipt of a product, and does not include 
        the dispensing of a product pursuant to a prescription executed 
        in accordance with section 503(b)(1) or the dispensing of a 
        product approved under section 512(b).
            ``(6) Exclusive distributor.--The term `exclusive 
        distributor' means the wholesale distributor that directly 
        purchased the product from the manufacturer and is the sole 
        distributor of that manufacturer's product to a subsequent 
        repackager, wholesale distributor, or dispenser.
            ``(7) Homogeneous case.--The term `homogeneous case' means a 
        sealed case containing only product that has a single National 
        Drug Code number belonging to a single lot.
            ``(8) Illegitimate product.--The term `illegitimate 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;
                    ``(C) is the subject of a fraudulent transaction; or
                    ``(D) appears otherwise unfit for distribution such 
                that the product would be reasonably likely to result in 
                serious adverse health consequences 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 applicable; and
                    ``(C) in the case of a dispenser, having a valid 
                license under State law.
            ``(10) Manufacturer.--The term `manufacturer' means, with 
        respect to a product--
                    ``(A) a person that holds an application approved 
                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 license, the person who manufactured the 
                product;
                    ``(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 product 
                directly from a person described in this subparagraph 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 manufacturer for ultimate sale to the 
                dispenser of such product.

[[Page 127 STAT. 601]]

                    ``(B) Individual saleable unit.--For purposes of 
                this paragraph, an `individual saleable unit' is the 
                smallest container of product introduced into commerce 
                by the manufacturer or repackager that is intended by 
                the manufacturer or repackager for individual sale to a 
                dispenser.
            ``(12) Prescription drug.--The term `prescription drug' 
        means a drug for human use subject to section 503(b)(1).
            ``(13) Product.--The term `product' means a prescription 
        drug in a finished dosage form for administration 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, radioactive drugs or 
        radioactive biological products (as defined in section 600.3(ee) 
        of title 21, Code of Federal 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 described in clause (xiv), (xv), or (xvi) of 
        paragraph (24)(B), any medical gas (as defined in section 575), 
        homeopathic drugs marketed in accordance with applicable 
        guidance under this Act, or a drug compounded in compliance with 
        section 503A or 503B.
            ``(14) Product identifier.--The term `product identifier' 
        means a standardized graphic that includes, in both human-
        readable form and on a machine-readable data carrier that 
        conforms to the standards developed by a widely recognized 
        international standards development organization, the 
        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 establishment that repacks and relabels a 
        product or package for--
                    ``(A) further sale; or
                    ``(B) distribution without a further transaction.
            ``(17) Return.--The term `return' means providing product to 
        the authorized immediate trading partner from which such product 
        was purchased or received, or to a returns processor or reverse 
        logistics provider for handling of such product.
            ``(18) Returns processor or reverse logistics 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 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 prescription for an identified patient. Such 
        term does not include the transfer of a product from one 
        pharmacy to another for the purpose of increasing or 
        replenishing stock in anticipation of a potential need.

[[Page 127 STAT. 602]]

            ``(20) Standardized numerical identifier.--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;
                    ``(B) is potentially intentionally adulterated such 
                that the product would result in serious adverse health 
                consequences or death to humans;
                    ``(C) is potentially the subject of a fraudulent 
                transaction; or
                    ``(D) appears otherwise unfit for distribution such 
                that the product would result in serious adverse health 
                consequences or death to humans.
            ``(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 responsibility to direct 
        the sale or disposition of the product.
            ``(23) Trading partner.--The term `trading partner' means--
                    ``(A) a manufacturer, repackager, wholesale 
                distributor, or dispenser from whom a manufacturer, 
                repackager, wholesale distributor, or dispenser accepts 
                direct ownership of a product or to whom a manufacturer, 
                repackager, wholesale distributor, or dispenser 
                transfers direct ownership of a product; or
                    ``(B) a third-party logistics provider from whom a 
                manufacturer, repackager, wholesale distributor, or 
                dispenser accepts direct possession of a product or to 
                whom a manufacturer, repackager, wholesale distributor, 
                or dispenser transfers direct possession of a product.
            ``(24) Transaction.--
                    ``(A) In general.--The term `transaction' means the 
                transfer of product between persons in which a change of 
                ownership occurs.
                    ``(B) Exemptions.--The term `transaction' does not 
                include--
                          ``(i) intracompany distribution of any product 
                      between members of an affiliate or within a 
                      manufacturer;
                          ``(ii) the distribution of a product among 
                      hospitals or other health care entities that are 
                      under common control;
                          ``(iii) the distribution of a product for 
                      emergency medical reasons including a public 
                      health emergency declaration pursuant to section 
                      319 of the Public Health Service Act, except that 
                      a drug shortage not caused by a public health 
                      emergency shall not constitute an emergency 
                      medical reason;

[[Page 127 STAT. 603]]

                          ``(iv) the dispensing of a product pursuant to 
                      a prescription executed in accordance with section 
                      503(b)(1);
                          ``(v) the distribution of product samples 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 office 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 Internal 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 pharmacy or pharmacies 
                      or a wholesale distributor 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 distributors;
                          ``(x) the dispensing of a product approved 
                      under section 512(c);
                          ``(xi) products transferred to or from any 
                      facility that is licensed 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);
                          ``(xii) a combination product that is not 
                      subject to approval under section 505 or licensure 
                      under section 351 of the Public Health Service 
                      Act, and that is--
                                    ``(I) a product comprised of a 
                                device and 1 or more other regulated 
                                components (such as a drug/device, 
                                biologic/device, or drug/device/
                                biologic) that are physically, 
                                chemically, or otherwise combined or 
                                mixed and produced as a single entity;
                                    ``(II) 2 or more separate products 
                                packaged together in a single package or 
                                as a unit and comprised of a drug and 
                                device or device and biological product; 
                                or
                                    ``(III) 2 or more finished medical 
                                devices plus one or more drug or 
                                biological products that are packaged 
                                together 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 include a 
                      product or biological product, assembled in kit 
                      form strictly for the convenience 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 manufacturer 
                                in accordance with section 510(b)(2);

[[Page 127 STAT. 604]]

                                    ``(II) the medical convenience kit 
                                does not contain a controlled substance 
                                that appears in a schedule contained in 
                                the Comprehensive Drug Abuse Prevention 
                                and Control Act of 1970;
                                    ``(III) in the case of a medical 
                                convenience kit that includes a product, 
                                the person that manufacturers the kit--
                                            ``(aa) purchased such 
                                        product directly from the 
                                        pharmaceutical manufacturer or 
                                        from a wholesale distributor 
                                        that purchased the product 
                                        directly from the pharmaceutical 
                                        manufacturer; and
                                            ``(bb) does not alter the 
                                        primary container or label of 
                                        the product as purchased from 
                                        the manufacturer or wholesale 
                                        distributor; and
                                    ``(IV) in the case of a medical 
                                convenience kit that includes a product, 
                                the product is--
                                            ``(aa) an intravenous 
                                        solution intended for the 
                                        replenishment 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 intravenous 
                      product that, by its formulation, is intended for 
                      the replenishment of fluids and electrolytes (such 
                      as sodium, chloride, and potassium) or calories 
                      (such as dextrose and amino acids);
                          ``(xv) the distribution of an intravenous 
                      product used to maintain the equilibrium of water 
                      and minerals in the body, such as dialysis 
                      solutions;
                          ``(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 information 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;
                    ``(F) the lot number of the product;

[[Page 127 STAT. 605]]

                    ``(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 transferred; and
                    ``(J) the business name and address of the person to 
                whom ownership is being transferred.
            ``(27) Transaction statement.--The `transaction statement' 
        is a statement, in paper or electronic 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;
                    ``(E) had systems and processes in place to comply 
                with verification requirements under section 582;
                    ``(F) did not knowingly provide false transaction 
                information; and
                    ``(G) did not knowingly alter the transaction 
                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 
        manufacturer or the repackager, as applicable in accordance 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) engaged in wholesale distribution (as 
        defined in section 503(e)(4), as amended by the Drug Supply 
        Chain Security Act).
``SEC. <<NOTE: Effective dates. 21 USC 360eee-1.>>  582. 
                        REQUIREMENTS.

    ``(a) In General.--
            ``(1) <<NOTE: Compliance.>>  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 manufacturer, 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) <<NOTE: Consultation.>>  In general.--The 
                Secretary shall, in consultation with other appropriate 
                Federal officials, manufacturers, repackagers, wholesale 
                distributors, dispensers, and other pharmaceutical 
                distribution supply chain stakeholders, issue a draft 
                guidance document that establishes standards for the 
                interoperable exchange of transaction information,

[[Page 127 STAT. 606]]

                transaction history, and transaction statements, in 
                paper or electronic format, for compliance with this 
                subsection and subsections (b), (c), (d), and (e). In 
                establishing such standards, the Secretary shall 
                consider the feasibility of establishing standardized 
                documentation to be used by members of the 
                pharmaceutical distribution supply chain to convey the 
                transaction information, transaction history, and 
                transaction statement to the subsequent purchaser of a 
                product and to facilitate the exchange of lot level 
                data. The <<NOTE: Compliance.>> 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 international standards development 
                organization.
                    ``(B) <<NOTE: Time period.>>  Public input.--Prior 
                to issuing the draft guidance under subparagraph (A), 
                the Secretary shall gather comments and information from 
                stakeholders and maintain such comments and information 
                in a public docket for at least 60 days prior to issuing 
                such guidance.
                    ``(C) <<NOTE: Deadline.>>  Publication.--The 
                Secretary shall publish the standards established under 
                subparagraph (A) not later than 1 year after the date of 
                enactment of the Drug Supply Chain Security Act.
            ``(3) Waivers, exceptions, and exemptions.--
                    ``(A) <<NOTE: Deadline. Guidance.>>  In general.--
                Not later than 2 years after the date of enactment of 
                the Drug Supply Chain Security Act, the Secretary shall, 
                by guidance--
                          ``(i) establish a process by which an 
                      authorized manufacturer, repackager, wholesale 
                      distributor, or dispenser may request a waiver 
                      from any of the requirements set forth in this 
                      section, which the Secretary may grant if the 
                      Secretary determines that such requirements would 
                      result in an undue economic hardship or for 
                      emergency medical reasons, including a public 
                      health emergency declaration pursuant 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 
                      compliance with this section; and
                          ``(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 applicable.
                    ``(C) Process.--In issuing the guidance under this 
                paragraph, the Secretary shall provide 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 identifier to each package and homogenous case 
                of product

[[Page 127 STAT. 607]]

                intended to be introduced in a transaction into commerce 
                consistent with this section.
            ``(4) Self-executing requirements.--Except where otherwise 
        specified, the requirements of this section may be enforced 
        without further regulations or guidance from the Secretary.
            ``(5) Grandfathering product.--
                    ``(A) <<NOTE: Deadline. Guidance.>>  Product 
                identifier.--Not later than 2 years after the date of 
                enactment of the 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 requirements of this section 
                shall be exempted from the requirements of this section.
                    ``(B) Tracing.--For a product that entered the 
                pharmaceutical distribution supply chain prior to 
                January 1, 2015--
                          ``(i) authorized trading partners shall be 
                      exempt from providing transaction information 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.
            ``(6) <<NOTE: Definition.>>  Wholesale distributor 
        licenses.--Notwithstanding section 581(9)(A), until the 
        effective date of the wholesale distributor licensing 
        regulations under section 583, the term `licensed' or 
        `authorized', 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) <<NOTE: Notice.>>  Third-party logistics provider 
        licenses.--Until the effective date of the third-party logistics 
        provider licensing regulations under section 584, a third-party 
        logistics provider shall be considered `licensed' under section 
        581(9)(B) unless the Secretary has made a finding that the 
        third-party logistics provider does not utilize good handling 
        and distribution practices and publishes notice thereof.
            ``(8) Label changes.--Changes made to package labels solely 
        to incorporate the product identifier may be submitted to the 
        Secretary in the annual report of an establishment, in 
        accordance with section 314.70(d) of chapter 21, Code of Federal 
        Regulations (or any successor regulation).
            ``(9) Product identifiers.--With respect to any requirement 
        relating to product identifiers under this subchapter--
                    ``(A) unless the Secretary allows, through guidance, 
                the use of other technologies for data instead of or in 
                addition to the technologies described in clauses (i) 
                and (ii), the applicable data--
                          ``(i) shall be included in a 2-dimensional 
                      data matrix barcode when affixed to, or imprinted 
                      upon, a package; and

[[Page 127 STAT. 608]]

                          ``(ii) shall be included in a linear or 2-
                      dimensional data matrix barcode when affixed to, 
                      or imprinted upon, a homogeneous case; and
                    ``(B) verification of the product identifier may 
                occur by using human-readable or machine-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 history, transaction 
                      information, and a transaction statement, in a 
                      single document in an paper or electronic format; 
                      and
                          ``(ii) <<NOTE: Time period.>>  capture the 
                      transaction information (including lot level 
                      information), transaction history, and transaction 
                      statement for each transaction and maintain such 
                      information, history, and statement for not less 
                      than 6 years after the date of the transaction.
                    ``(B) <<NOTE: Time period.>>  Requests for 
                information.--Upon a request by the Secretary or other 
                appropriate 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 circumstances of the request, provide the applicable 
                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 enactment of the Drug 
                      Supply Chain Security Act, except as provided 
                      under clause (ii), a manufacturer shall provide 
                      the transaction information, transaction history, 
                      and transaction statement required under 
                      subparagraph (A)(i) in electronic format.
                          ``(ii) Exception.--A manufacturer may continue 
                      to provide the transaction information, 
                      transaction history, and transaction statement 
                      required under subparagraph (A)(i) in a paper 
                      format to a licensed health care practitioner 
                      authorized to prescribe medication under State law 
                      or other licensed individual under the supervision 
                      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 manufacturer shall affix or imprint a 
                product identifier to each package and homogenous case 
                of a product intended to be introduced in a transaction 
                into commerce. <<NOTE: Time period.>> Such manufacturer 
                shall maintain the product identifier information for 
                such product for not less than 6 years after the date of 
                the transaction.

[[Page 127 STAT. 609]]

                    ``(B) Exception.--A package that is required to have 
                a standardized numerical identifier is not required to 
                have a unique device identifier.
            ``(3) Authorized trading partners.--Beginning 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) <<NOTE: Determination.>>  Suspect product.--
                          ``(i) In general.--Upon making a determination 
                      that a product in the possession or control of the 
                      manufacturer is a suspect product, or upon 
                      receiving a request 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--
                                    ``(I) <<NOTE: Quarantine.>>  
                                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) <<NOTE: Investigation.>>  
                                promptly conduct an investigation 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 
                                possession of the manufacturer and 
                                otherwise investigating to determine 
                                whether the product is an illegitimate 
                                product, 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) <<NOTE: Notification.>>  Cleared 
                      product.--If the manufacturer makes the 
                      determination that a suspect product is not an 
                      illegitimate product, the manufacturer shall 
                      promptly notify the Secretary, if applicable, of 
                      such determination and such product may be further 
                      distributed.
                          ``(iii) <<NOTE: Time period.>>  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) <<NOTE: Determination.>>  Illegitimate 
                product.--
                          ``(i) In general.--Upon determining that a 
                      product in the possession or control of a 
                      manufacturer is an illegitimate product, 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 control 
                                of the manufacturer;

[[Page 127 STAT. 610]]

                                    ``(III) take reasonable and 
                                appropriate steps to assist a trading 
                                partner to disposition an illegitimate 
                                product not in the possession or control 
                                of the manufacturer; and
                                    ``(IV) retain a sample of the 
                                product for further physical examination 
                                or laboratory analysis of the product by 
                                the manufacturer or Secretary (or other 
                                appropriate Federal or State official) 
                                upon request by the Secretary (or other 
                                appropriate Federal or State official), 
                                as necessary and appropriate.
                          ``(ii) Making a notification.--
                                    ``(I) <<NOTE: Deadline.>>  
                                Illegitimate product.--Upon determining 
                                that a product in the possession or 
                                control of the manufacturer is an 
                                illegitimate product, the manufacturer 
                                shall notify the Secretary and all 
                                immediate trading partners that the 
                                manufacturer has reason to believe may 
                                have received such illegitimate product 
                                of such determination not later than 24 
                                hours after making such determination.
                                    ``(II) High risk of illegitimacy.--A 
                                manufacturer shall notify 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 
                                manufacturer 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 purposes 
                                of this subclause, a `high risk' may 
                                include a specific high risk that could 
                                increase the likelihood that 
                                illegitimate product will enter the 
                                pharmaceutical distribution supply chain 
                                and other high risks as determined by 
                                the Secretary in guidance pursuant to 
                                subsection (h).
                          ``(iii) Responding to a notification.--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 
                      manufacturer shall identify all illegitimate 
                      product subject to such notification that is in 
                      the possession or control of the manufacturer, 
                      including any product that is subsequently 
                      received, and shall perform the activities 
                      described in subparagraph (A).
                          ``(iv) <<NOTE: Consultation.>>  Terminating a 
                      notification.--Upon making a determination, in 
                      consultation with the Secretary, that a 
                      notification is no longer necessary, a 
                      manufacturer shall promptly notify immediate 
                      trading partners that the manufacturer notified 
                      pursuant to clause (ii) that such notification has 
                      been terminated.
                          ``(v) <<NOTE: Time period.>>  Records.--A 
                      manufacturer shall keep records of the disposition 
                      of an illegitimate product for not less than 6 
                      years after the conclusion of the disposition.
                    ``(C) <<NOTE: Deadline. Timeline.>>  Requests for 
                verification.--Beginning 4 years after the date of 
                enactment of the Drug Supply Chain Security Act, upon 
                receiving a request for verification from

[[Page 127 STAT. 611]]

                an authorized repackager, wholesale distributor, or 
                dispenser that is in possession or control of a product 
                such person believes to be manufactured by such 
                manufacturer, a manufacturer shall, not later than 24 
                hours after receiving the request for verification or in 
                other such reasonable time as determined by the 
                Secretary, based on the circumstances of the request, 
                notify 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 affixed 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 conduct an investigation as described in 
                subparagraph (A). If the manufacturer has reason to 
                believe the product is an illegitimate product, the 
                manufacturer shall advise the person making the request 
                of such belief at the time such manufacturer responds to 
                the request for verification.
                    ``(D) Electronic database.--A manufacturer may 
                satisfy the requirements of this paragraph by developing 
                a secure electronic database or utilizing a secure 
                electronic database developed or operated by another 
                entity. The owner of such database shall establish the 
                requirements and processes to respond to requests and 
                may provide for data access to other members of the 
                pharmaceutical distribution supply chain, as 
                appropriate. The development and operation of such a 
                database shall not relieve a manufacturer of the 
                requirement under this paragraph to respond to a request 
                for verification submitted by means other than a secure 
                electronic database.
                    ``(E) <<NOTE: Verification.>>  Saleable returned 
                product.--Beginning 4 years after the date of enactment 
                of the Drug Supply Chain Security Act (except as 
                provided pursuant to subsection (a)(5)), upon receipt of 
                a returned product that the manufacturer intends to 
                further distribute, before further distributing such 
                product, the manufacturer shall verify the product 
                identifier, including the standardized numerical 
                identifier, for each sealed homogeneous case of such 
                product or, if such product is not in a sealed 
                homogeneous case, verify the product identifier, 
                including the standardized numerical identifier, on each 
                package.
                    ``(F) Nonsaleable returned product.--A manufacturer 
                may return a nonsaleable product to the manufacturer or 
                repackager, to the wholesale distributor from whom such 
                product was purchased, or to a person acting on behalf 
                of such a person, including a returns processor, without 
                providing the information described in paragraph 
                (1)(A)(i).

    ``(c) Wholesale Distributor Requirements.--
            ``(1) Product tracing.--
                    ``(A) <<NOTE: Applicability.>>  In general.--
                Beginning not later than January 1, 2015, the following 
                requirements shall apply to wholesale distributors:
                          ``(i) A wholesale distributor shall not accept 
                      ownership of a product unless the previous owner 
                      prior to,

[[Page 127 STAT. 612]]

                      or at the time of, the transaction provides the 
                      transaction history, transaction information, and 
                      a transaction statement for the product, as 
                      applicable under this subparagraph.
                          ``(ii)(I)(aa) If the wholesale distributor 
                      purchased a product directly from the 
                      manufacturer, the exclusive distributor of the 
                      manufacturer, or a repackager that purchased 
                      directly from the manufacturer, then prior to, or 
                      at the time of, each transaction in which the 
                      wholesale distributor transfers ownership of a 
                      product, the wholesale distributor shall provide 
                      to the subsequent purchaser--
                                    ``(AA) a transaction statement, 
                                which shall state that such wholesale 
                                distributor, or a member of the 
                                affiliate of such wholesale distributor, 
                                purchased the product directly from the 
                                manufacturer, exclusive distributor of 
                                the manufacturer, or repackager that 
                                purchased the product directly from the 
                                manufacturer; and
                                    ``(BB) subject to subclause (II), 
                                the transaction history and transaction 
                                information.
                          ``(bb) The wholesale distributor shall provide 
                      the transaction history, transaction information, 
                      and transaction statement under item (aa)--
                                            ``(AA) if provided to a 
                                        dispenser, on a single document 
                                        in a paper or electronic format; 
                                        and
                                            ``(BB) if provided to a 
                                        wholesale distributor, through 
                                        any combination of self-
                                        generated paper, electronic 
                                        data, or manufacturer-provided 
                                        information on the product 
                                        package.
                          ``(II) For purposes of transactions described 
                      in subclause (I), transaction history and 
                      transaction information shall not be required to 
                      include the lot number of the product, the initial 
                      transaction date, or the initial shipment date 
                      from the manufacturer (as defined in subparagraphs 
                      (F), (G), and (H) of section 581(26)).
                          ``(iii) If the wholesale distributor did not 
                      purchase a product directly from the manufacturer, 
                      the exclusive distributor of the manufacturer, or 
                      a repackager that purchased directly from the 
                      manufacturer, as described in clause (ii), then 
                      prior to, or at the time of, each transaction or 
                      subsequent transaction, the wholesale distributor 
                      shall provide to the subsequent purchaser a 
                      transaction statement, transaction history, and 
                      transaction information, in a paper or electronic 
                      format that complies with the guidance document 
                      issued under subsection (a)(2).
                          ``(iv) For the purposes of clause (iii), the 
                      transaction history supplied shall begin only with 
                      the wholesale distributor described in clause 
                      (ii)(I), but the wholesale distributor described 
                      in clause (iii) shall inform the subsequent 
                      purchaser that such wholesale distributor received 
                      a direct purchase statement from a wholesale 
                      distributor described in clause (ii)(I).
                          ``(v) A wholesale distributor shall--

[[Page 127 STAT. 613]]

                                    ``(I) <<NOTE: Time period.>>  
                                capture the transaction information 
                                (including lot level information) 
                                consistent with the requirements of this 
                                section, transaction history, and 
                                transaction statement for each 
                                transaction described in clauses (i), 
                                (ii), and (iii) and maintain such 
                                information, history, and statement for 
                                not less than 6 years after the date of 
                                the transaction; and
                                    ``(II) <<NOTE: Confidentiality.>>  
                                maintain the confidentiality of the 
                                transaction information (including any 
                                lot level information consistent with 
                                the requirements of this section), 
                                transaction history, and transaction 
                                statement for a product in a manner that 
                                prohibits disclosure to any person other 
                                than the Secretary or other appropriate 
                                Federal or State official, except to 
                                comply with clauses (ii) and (iii), and, 
                                as applicable, pursuant to an agreement 
                                under subparagraph (D).
                    ``(B) Returns.--
                          ``(i) <<NOTE: Applicability.>>  Saleable 
                      returns.--Notwithstanding subparagraph (A)(i), the 
                      following shall apply:
                                    ``(I) Requirements.--Until the date 
                                that is 6 years after the date of 
                                enactment of the Drug Supply Chain 
                                Security Act (except as provided 
                                pursuant to subsection (a)(5)), a 
                                wholesale distributor may accept 
                                returned product from a dispenser or 
                                repackager pursuant to the terms and 
                                conditions of any agreement between the 
                                parties, and, notwithstanding 
                                subparagraph (A)(ii), may distribute 
                                such returned product without providing 
                                the transaction history. For 
                                transactions subsequent to the return, 
                                the transaction history of such product 
                                shall begin with the wholesale 
                                distributor that accepted the returned 
                                product, consistent with the 
                                requirements of this subsection.
                                    ``(II) Enhanced requirements.--
                                Beginning 6 years after the date of 
                                enactment of the Drug Supply Chain 
                                Security Act (except as provided 
                                pursuant to subsection (a)(5)), a 
                                wholesale distributor may accept 
                                returned product from a dispenser or 
                                repackager only if the wholesale 
                                distributor can associate returned 
                                product with the transaction information 
                                and transaction statement associated 
                                with that product. For all transactions 
                                after such date, the transaction 
                                history, as applicable, of such product 
                                shall begin with the wholesale 
                                distributor that accepted and verified 
                                the returned product. For purposes of 
                                this subparagraph, the transaction 
                                information and transaction history, as 
                                applicable, need not include transaction 
                                dates if it is not reasonably 
                                practicable to obtain such dates.
                          ``(ii) Nonsaleable returns.--A wholesale 
                      distributor may return a nonsaleable product to 
                      the manufacturer or repackager, to the wholesale 
                      distributor from whom such product was purchased, 
                      or to a person acting on behalf of such a person, 
                      including a returns

[[Page 127 STAT. 614]]

                      processor, without providing the information 
                      required under subparagraph (A)(i).
                    ``(C) <<NOTE: Time period.>>  Requests for 
                information.--Upon a request by the Secretary or other 
                appropriate Federal or State official, in the event of a 
                recall or for the purpose of investigating a suspect 
                product or an illegitimate product, a wholesale 
                distributor 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 circumstances of the request, 
                provide the applicable transaction information, 
                transaction history, and transaction statement for the 
                product.
                    ``(D) Trading partner agreements.--Beginning 6 years 
                after the date of enactment of the Drug Supply Chain 
                Security Act, a wholesale distributor may disclose the 
                transaction information, including lot level 
                information, transaction history, or transaction 
                statement of a product to the subsequent purchaser of 
                the product, pursuant to a written agreement between 
                such wholesale distributor and such subsequent 
                purchaser. Nothing in this subparagraph shall be 
                construed to limit the applicability of subparagraphs 
                (A) through (C).
            ``(2) Product identifier.--Beginning 6 years after the date 
        of enactment of the Drug Supply Chain Security Act, a wholesale 
        distributor may engage in transactions involving a product only 
        if such product is encoded with a product identifier (except as 
        provided pursuant to subsection (a)(5)).
            ``(3) Authorized trading partners.--Beginning not later than 
        January 1, 2015, the trading partners of a wholesale distributor 
        may be only authorized trading partners.
            ``(4) Verification.--Beginning not later than January 1, 
        2015, a wholesale distributor shall have systems in place to 
        enable the wholesale distributor to comply with the following 
        requirements:
                    ``(A) <<NOTE: Determination.>>  Suspect product.--
                          ``(i) In general.--Upon making a determination 
                      that a product in the possession or control of a 
                      wholesale distributor is a suspect product, or 
                      upon receiving a request for verification from the 
                      Secretary that has made a determination that a 
                      product within the possession or control of a 
                      wholesale distributor is a suspect product, a 
                      wholesale distributor shall--
                                    ``(I) <<NOTE: Quarantine.>>  
                                quarantine such product within the 
                                possession or control of the wholesale 
                                distributor from product intended for 
                                distribution until such product is 
                                cleared or dispositioned; and
                                    ``(II) <<NOTE: Investigation.>>  
                                promptly conduct an investigation 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 
                                possession of the wholesale distributor 
                                and otherwise investigating to determine 
                                whether the product is an illegitimate 
                                product, and, beginning 6 years after 
                                the date of enactment of the Drug Supply 
                                Chain Security Act (except as provided 
                                pursuant to subsection (a)(5)),

[[Page 127 STAT. 615]]

                                verifying the product at the package 
                                level, including the standardized 
                                numerical identifier.
                          ``(ii) <<NOTE: Notification.>>  Cleared 
                      product.--If the wholesale distributor determines 
                      that a suspect product is not an illegitimate 
                      product, the wholesale distributor shall promptly 
                      notify the Secretary, if applicable, of such 
                      determination and such product may be further 
                      distributed.
                          ``(iii) <<NOTE: Time period.>>  Records.--A 
                      wholesale distributor shall keep records of the 
                      investigation of a suspect product for not less 
                      than 6 years after the conclusion of the 
                      investigation.
                    ``(B) <<NOTE: Determination.>>  Illegitimate 
                product.--
                          ``(i) In general.--Upon determining, in 
                      coordination with the manufacturer, that a product 
                      in the possession or control of a wholesale 
                      distributor is an illegitimate product, the 
                      wholesale distributor shall, in a manner that is 
                      consistent with the systems and processes of such 
                      wholesale distributor--
                                    ``(I) <<NOTE: Quarantine.>>  
                                quarantine such product within the 
                                possession or control of the wholesale 
                                distributor from product intended for 
                                distribution until such product is 
                                dispositioned;
                                    ``(II) disposition the illegitimate 
                                product within the possession or control 
                                of the wholesale distributor;
                                    ``(III) take reasonable and 
                                appropriate steps to assist a trading 
                                partner to disposition an illegitimate 
                                product not in the possession or control 
                                of the wholesale distributor; and
                                    ``(IV) retain a sample of the 
                                product for further physical examination 
                                or laboratory analysis of the product by 
                                the manufacturer or Secretary (or other 
                                appropriate Federal or State official) 
                                upon request by the manufacturer or 
                                Secretary (or other appropriate Federal 
                                or State official), as necessary and 
                                appropriate.
                          ``(ii) <<NOTE: Deadline.>>  Making a 
                      notification.--Upon determining that a product in 
                      the possession or control of the wholesale 
                      distributor is an illegitimate product, the 
                      wholesale distributor shall notify the Secretary 
                      and all immediate trading partners that the 
                      wholesale distributor has reason to believe may 
                      have received such illegitimate product of such 
                      determination not later than 24 hours after making 
                      such determination.
                          ``(iii) Responding to a notification.--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 
                      wholesale distributor shall identify all 
                      illegitimate product subject to such notification 
                      that is in the possession or control of the 
                      wholesale distributor, including any product that 
                      is subsequently received, and shall perform the 
                      activities described in subparagraph (A).
                          ``(iv) Terminating a notification.--Upon 
                      making a determination, in consultation with the 
                      Secretary, that a notification is no longer 
                      necessary, a wholesale

[[Page 127 STAT. 616]]

                      distributor shall promptly notify immediate 
                      trading partners that the wholesale distributor 
                      notified pursuant to clause (ii) that such 
                      notification has been terminated.
                          ``(v) <<NOTE: Time period.>>  Records.--A 
                      wholesale distributor shall keep records of the 
                      disposition of an illegitimate product for not 
                      less than 6 years after the conclusion of the 
                      disposition.
                    ``(C) Electronic database.--A wholesale distributor 
                may satisfy the requirements of this paragraph by 
                developing a secure electronic database or utilizing a 
                secure electronic database developed or operated by 
                another entity. <<NOTE: Requirements.>> The owner of 
                such database shall establish the requirements and 
                processes to respond to requests and may provide for 
                data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a wholesale distributor of the requirement under 
                this paragraph to respond to a verification request 
                submitted by means other than a secure electronic 
                database.
                    ``(D) Verification of saleable returned product.--
                Beginning 6 years after the date of enactment of the 
                Drug Supply Chain Security Act, upon receipt of a 
                returned product that the wholesale distributor intends 
                to further distribute, before further distributing such 
                product, the wholesale distributor shall verify the 
                product identifier, including the standardized numerical 
                identifier, for each sealed homogeneous case of such 
                product or, if such product is not in a sealed 
                homogeneous case, verify the product identifier, 
                including the standardized numerical identifier, on each 
                package.

    ``(d) Dispenser Requirements.--
            ``(1) Product tracing.--
                    ``(A) In general.--Beginning July 1, 2015, a 
                dispenser--
                          ``(i) shall not accept ownership of a product, 
                      unless the previous owner prior to, or at the time 
                      of, the transaction, provides transaction history, 
                      transaction information, and a transaction 
                      statement;
                          ``(ii) prior to, or at the time of, each 
                      transaction in which the dispenser transfers 
                      ownership of a product (but not including 
                      dispensing to a patient or returns) shall provide 
                      the subsequent owner with transaction history, 
                      transaction information, and a transaction 
                      statement for the product, except that the 
                      requirements of this clause shall not apply to 
                      sales by a dispenser to another dispenser to 
                      fulfill a specific patient need; and
                          ``(iii) <<NOTE: Time period.>>  shall capture 
                      transaction information (including lot level 
                      information, if provided), transaction history, 
                      and transaction statements, as necessary to 
                      investigate a suspect product, and maintain such 
                      information, history, and statements for not less 
                      than 6 years after the transaction.
                    ``(B) Agreements with third parties.--A dispenser 
                may enter into a written agreement with a third party, 
                including an authorized wholesale distributor, under 
                which

[[Page 127 STAT. 617]]

                the third party confidentially maintains the transaction 
                information, transaction history, and transaction 
                statements required to be maintained under this 
                subsection on behalf of the 
                dispenser. <<NOTE: Records.>>  If a dispenser enters 
                into such an agreement, the dispenser shall maintain a 
                copy of the written agreement and shall not be relieved 
                of the obligations of the dispenser under this 
                subsection.
                    ``(C) Returns.--
                          ``(i) Saleable returns.--A dispenser may 
                      return product to the trading partner from which 
                      the dispenser obtained the product without 
                      providing the information required under 
                      subparagraph (A).
                          ``(ii) Nonsaleable returns.--A dispenser may 
                      return a nonsaleable product to the manufacturer 
                      or repackager, to the wholesale distributor from 
                      whom such product was purchased, to a returns 
                      processor, or to a person acting on behalf of such 
                      a person without providing the information 
                      required under subparagraph (A).
                    ``(D) <<NOTE: Time periods.>>  Requests for 
                information.--Upon a request by the Secretary or other 
                appropriate Federal or State official, in the event of a 
                recall or for the purpose of investigating a suspect or 
                an illegitimate product, a dispenser shall, not later 
                than 2 business days after receiving the request or in 
                another such reasonable time as determined by the 
                Secretary, based on the circumstances of the request, 
                provide the applicable transaction information, 
                transaction statement, and transaction history which the 
                dispenser received from the previous owner, which shall 
                not include the lot number of the product, the initial 
                transaction date, or the initial shipment date from the 
                manufacturer unless such information was included in the 
                transaction information, transaction statement, and 
                transaction history provided by the manufacturer or 
                wholesale distributor to the dispenser. The dispenser 
                may respond to the request by providing the applicable 
                information in either paper or electronic format. Until 
                the date that is 4 years after the date of enactment of 
                the Drug Supply Chain Security Act, the Secretary or 
                other appropriate Federal or State official shall grant 
                a dispenser additional time, as necessary, only with 
                respect to a request to provide lot level information 
                described in subparagraph (F) of section 581(26) that 
                was provided to the dispenser in paper format, limit the 
                request time period to the 6 months preceding the 
                request or other relevant date, and, in the event of a 
                recall, the Secretary, or other appropriate Federal or 
                State official may request information only if such 
                recall involves a serious adverse health consequence or 
                death to humans.
            ``(2) Product identifier.--Beginning not later than 7 years 
        after the date of enactment of the Drug Supply Chain Security 
        Act, a dispenser may engage in transactions involving a product 
        only if such product is encoded with a product identifier 
        (except as provided pursuant to subsection (a)(5)).
            ``(3) Authorized trading partners.--Beginning not later than 
        January 1, 2015, the trading partners of a dispenser may be only 
        authorized trading partners.

[[Page 127 STAT. 618]]

            ``(4) Verification.--Beginning not later than January 1, 
        2015, a dispenser shall have systems in place to enable the 
        dispenser to comply with the following requirements:
                    ``(A) Suspect product.--
                          ``(i) <<NOTE: Determination.>>  In general.--
                      Upon making a determination that a product in the 
                      possession or control of the dispenser is a 
                      suspect product, or upon receiving a request for 
                      verification from the Secretary that has made a 
                      determination that a product within the possession 
                      or control of a dispenser is a suspect product, a 
                      dispenser shall--
                                    ``(I) <<NOTE: Quarantine.>>  
                                quarantine such product within the 
                                possession or control of the dispenser 
                                from product intended for distribution 
                                until such product is cleared or 
                                dispositioned; and
                                    ``(II) <<NOTE: Investigation.>>  
                                promptly conduct an investigation in 
                                coordination with trading partners, as 
                                applicable, to determine whether the 
                                product is an illegitimate product.
                          ``(ii) Investigation.--An investigation 
                      conducted under clause (i)(II) shall include--
                                    ``(I) beginning 7 years after the 
                                date of enactment of the Drug Supply 
                                Chain Security Act, verifying whether 
                                the lot number of a suspect product 
                                corresponds with the lot number for such 
                                product;
                                    ``(II) beginning 7 years after the 
                                date of enactment of such Act, verifying 
                                that the product identifier, including 
                                the standardized numerical identifier, 
                                of at least 3 packages or 10 percent of 
                                such suspect product, whichever is 
                                greater, or all packages, if there are 
                                fewer than 3, corresponds with the 
                                product identifier for such product;
                                    ``(III) validating any applicable 
                                transaction history and transaction 
                                information in the possession of the 
                                dispenser; and
                                    ``(IV) otherwise investigating to 
                                determine whether the product is an 
                                illegitimate product.
                          ``(iii) <<NOTE: Notification.>>  Cleared 
                      product.--If the dispenser makes the determination 
                      that a suspect product is not an illegitimate 
                      product, the dispenser shall promptly notify the 
                      Secretary, if applicable, of such determination 
                      and such product may be further distributed or 
                      dispensed.
                          ``(iv) <<NOTE: Time period.>>  Records.--A 
                      dispenser shall keep records of the investigation 
                      of a suspect product for not less than 6 years 
                      after the conclusion of the investigation.
                    ``(B) <<NOTE: Determination.>>  Illegitimate 
                product.--
                          ``(i) In general.--Upon determining, in 
                      coordination with the manufacturer, that a product 
                      in the possession or control of a dispenser is an 
                      illegitimate product, the dispenser shall--
                                    ``(I) disposition the illegitimate 
                                product within the possession or control 
                                of the dispenser;

[[Page 127 STAT. 619]]

                                    ``(II) take reasonable and 
                                appropriate steps to assist a trading 
                                partner to disposition an illegitimate 
                                product not in the possession or control 
                                of the dispenser; and
                                    ``(III) retain a sample of the 
                                product for further physical examination 
                                or laboratory analysis of the product by 
                                the manufacturer or Secretary (or other 
                                appropriate Federal or State official) 
                                upon request by the manufacturer or 
                                Secretary (or other appropriate Federal 
                                or State official), as necessary and 
                                appropriate.
                          ``(ii) <<NOTE: Deadline.>>  Making a 
                      notification.--Upon determining that a product in 
                      the possession or control of the dispenser is an 
                      illegitimate product, the dispenser shall notify 
                      the Secretary and all immediate trading partners 
                      that the dispenser has reason to believe may have 
                      received such illegitimate product of such 
                      determination not later than 24 hours after making 
                      such determination.
                          ``(iii) Responding to a notification.--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 
                      dispenser shall identify all illegitimate product 
                      subject to such notification that is in the 
                      possession or control of the dispenser, including 
                      any product that is subsequently received, and 
                      shall perform the activities described in 
                      subparagraph (A).
                          ``(iv) Terminating a notification.--Upon 
                      making a determination, in consultation with the 
                      Secretary, that a notification is no longer 
                      necessary, a dispenser shall promptly notify 
                      immediate trading partners that the dispenser 
                      notified pursuant to clause (ii) that such 
                      notification has been terminated.
                          ``(v) <<NOTE: Time period.>>  Records.--A 
                      dispenser shall keep records of the disposition of 
                      an illegitimate product for not less than 6 years 
                      after the conclusion of the disposition.
                    ``(C) Electronic database.--A dispenser may satisfy 
                the requirements of this paragraph by developing a 
                secure electronic database or utilizing a secure 
                electronic database developed or operated by another 
                entity.
            ``(5) Exception.--Notwithstanding any other provision of 
        law, the requirements under paragraphs (1) and (4) shall not 
        apply to licensed health care practitioners authorized to 
        prescribe or administer medication under State law or other 
        licensed individuals under the supervision or direction of such 
        practitioners who dispense or administer product in the usual 
        course of professional practice.

    ``(e) Repackager Requirements.--
            ``(1) Product tracing.--
                    ``(A) In general.--Beginning not later than January 
                1, 2015, a repackager described in section 581(16)(A) 
                shall--
                          ``(i) not accept ownership of a product unless 
                      the previous owner, prior to, or at the time of, 
                      the transaction, provides transaction history, 
                      transaction

[[Page 127 STAT. 620]]

                      information, and a transaction statement for the 
                      product;
                          ``(ii) prior to, or at the time of, each 
                      transaction in which the repackager transfers 
                      ownership of a product, provide the subsequent 
                      owner with transaction history, transaction 
                      information, and a transaction statement for the 
                      product; and
                          ``(iii) capture the transaction information 
                      (including lot level information), transaction 
                      history, and transaction statement for each 
                      transaction described in clauses (i) and (ii) and 
                      maintain such information, history, and statement 
                      for not less than 6 years after the transaction.
                    ``(B) Returns.--
                          ``(i) Nonsaleable product.--A repackager 
                      described in section 581(16)(A) may return a 
                      nonsaleable product to the manufacturer or 
                      repackager, or to the wholesale distributor from 
                      whom such product was purchased, or to a person 
                      acting on behalf of such a person, including a 
                      returns processor, without providing the 
                      information required under subparagraph (A)(ii).
                          ``(ii) Saleable or nonsaleable product.--A 
                      repackager described in section 581(16)(B) may 
                      return a saleable or nonsaleable product to the 
                      manufacturer, repackager, or to the wholesale 
                      distributor from whom such product was received 
                      without providing the information required under 
                      subparagraph (A)(ii) on behalf of the hospital or 
                      other health care entity that took ownership of 
                      such product pursuant to the terms and conditions 
                      of any agreement between such repackager and the 
                      entity that owns the product.
                    ``(C) <<NOTE: Time period.>>  Requests for 
                information.--Upon a request by the Secretary or other 
                appropriate Federal or State official, in the event of a 
                recall or for the purpose of investigating a suspect 
                product or an illegitimate product, a repackager 
                described in section 581(16)(A) 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, provide the applicable 
                transaction information, transaction history, and 
                transaction statement for the product.
            ``(2) Product identifier.--
                    ``(A) In general.--Beginning not later than 5 years 
                after the date of enactment of the Drug Supply Chain 
                Security Act, a repackager described in section 
                581(16)(A)--
                          ``(i) shall affix or imprint a product 
                      identifier to each package and homogenous case of 
                      product intended to be introduced in a transaction 
                      in commerce;
                          ``(ii) <<NOTE: Time period.>>  shall maintain 
                      the product identifier information for such 
                      product for not less than 6 years after the date 
                      of the transaction;
                          ``(iii) may engage in transactions involving a 
                      product only if such product is encoded with a 
                      product identifier (except as provided pursuant to 
                      subsection (a)(5)); and

[[Page 127 STAT. 621]]

                          ``(iv) <<NOTE: Records. Time period.>>  shall 
                      maintain records for not less than 6 years to 
                      allow the repackager to associate the product 
                      identifier the repackager affixes or imprints with 
                      the product identifier assigned by the original 
                      manufacturer of the product.
                    ``(B) Exception.--A package that is required to have 
                a standardized numerical identifier is not required to 
                have a unique device identifier.
            ``(3) Authorized trading partners.--Beginning January 1, 
        2015, the trading partners of a repackager described in section 
        581(16) may be only authorized trading partners.
            ``(4) Verification.--Beginning not later than January 1, 
        2015, a repackager described in section 581(16)(A) shall have 
        systems in place to enable the repackager to comply with the 
        following requirements:
                    ``(A) <<NOTE: Determination.>>  Suspect product.--
                          ``(i) In general.--Upon making a determination 
                      that a product in the possession or control of the 
                      repackager is a suspect product, or upon receiving 
                      a request for verification from the Secretary that 
                      has made a determination that a product within the 
                      possession or control of a repackager is a suspect 
                      product, a repackager shall--
                                    ``(I) <<NOTE: Quarantine.>>  
                                quarantine such product within the 
                                possession or control of the repackager 
                                from product intended for distribution 
                                until such product is cleared or 
                                dispositioned; and
                                    ``(II) <<NOTE: Investigation.>>  
                                promptly conduct an investigation 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 
                                possession of the repackager and 
                                otherwise investigating to determine 
                                whether the product is an illegitimate 
                                product, and, beginning 5 years after 
                                the date of enactment of the Drug Supply 
                                Chain Security Act (except as provided 
                                pursuant to subsection (a)(5)), 
                                verifying the product at the package 
                                level, including the standardized 
                                numerical identifier.
                          ``(ii) <<NOTE: Notification.>>  Cleared 
                      product.--If the repackager makes the 
                      determination that a suspect product is not an 
                      illegitimate product, the repackager shall 
                      promptly notify the Secretary, if applicable, of 
                      such determination and such product may be further 
                      distributed.
                          ``(iii) <<NOTE: Time period.>>  Records.--A 
                      repackager shall keep records of the investigation 
                      of a suspect product for not less than 6 years 
                      after the conclusion of the investigation.
                    ``(B) <<NOTE: Determination.>>  Illegitimate 
                product.--
                          ``(i) In general.--Upon determining, in 
                      coordination with the manufacturer, that a product 
                      in the possession or control of a repackager is an 
                      illegitimate product, the repackager shall, in a 
                      manner that is consistent with the systems and 
                      processes of such repackager--
                                    ``(I) <<NOTE: Quarantine.>>  
                                quarantine such product within the 
                                possession or control of the repackager 
                                from product

[[Page 127 STAT. 622]]

                                intended for distribution until such 
                                product is dispositioned;
                                    ``(II) disposition the illegitimate 
                                product within the possession or control 
                                of the repackager;
                                    ``(III) take reasonable and 
                                appropriate steps to assist a trading 
                                partner to disposition an illegitimate 
                                product not in the possession or control 
                                of the repackager; and
                                    ``(IV) retain a sample of the 
                                product for further physical examination 
                                or laboratory analysis of the product by 
                                the manufacturer or Secretary (or other 
                                appropriate Federal or State official) 
                                upon request by the manufacturer or 
                                Secretary (or other appropriate Federal 
                                or State official), as necessary and 
                                appropriate.
                          ``(ii) <<NOTE: Deadline.>>  Making a 
                      notification.--Upon determining that a product in 
                      the possession or control of the repackager is an 
                      illegitimate product, the repackager shall notify 
                      the Secretary and all immediate trading partners 
                      that the repackager has reason to believe may have 
                      received the illegitimate product of such 
                      determination not later than 24 hours after making 
                      such determination.
                          ``(iii) Responding to a notification.--Upon 
                      the receipt of a notification from the Secretary 
                      or a trading partner, a repackager shall identify 
                      all illegitimate product subject to such 
                      notification that is in the possession or control 
                      of the repackager, including any product that is 
                      subsequently received, and shall perform the 
                      activities described in subparagraph (A).
                          ``(iv) <<NOTE: Consultation.>>  Terminating a 
                      notification.--Upon making a determination, in 
                      consultation with the Secretary, that a 
                      notification is no longer necessary, a repackager 
                      shall promptly notify immediate trading partners 
                      that the repackager notified pursuant to clause 
                      (ii) that such notification has been terminated.
                          ``(v) <<NOTE: Time period.>>  Records.--A 
                      repackager shall keep records of the disposition 
                      of an illegitimate product for not less than 6 
                      years after the conclusion of the disposition.
                    ``(C) <<NOTE: Deadline.>>  Requests for 
                verification.--Beginning 5 years after the date of 
                enactment of the Drug Supply Chain Security Act, upon 
                receiving a request for verification from an authorized 
                manufacturer, wholesale distributor, or dispenser that 
                is in possession or control of a product they believe to 
                be repackaged by such repackager, a repackager shall, 
                not later than 24 hours after receiving the verification 
                request or in other such reasonable time as determined 
                by the Secretary, based on the circumstances of the 
                request, notify 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 affixed or 
                imprinted by the repackager. If a repackager responding 
                to a verification request identifies a product 
                identifier that does not correspond to that affixed or 
                imprinted by the repackager, the repackager shall treat 
                such product as suspect product and conduct an 
                investigation as described in subparagraph (A). If the 
                repackager

[[Page 127 STAT. 623]]

                has reason to believe the product is an illegitimate 
                product, the repackager shall advise the person making 
                the request of such belief at the time such repackager 
                responds to the verification request.
                    ``(D) <<NOTE: Requirements. Procedures.>>  
                Electronic database.--A repackager may satisfy the 
                requirements of paragraph (4) by developing a secure 
                electronic database or utilizing a secure electronic 
                database developed or operated by another entity. The 
                owner of such database shall establish the requirements 
                and processes to respond to requests and may provide for 
                data access to other members of the pharmaceutical 
                distribution supply chain, as appropriate. The 
                development and operation of such a database shall not 
                relieve a repackager of the requirement under 
                subparagraph (C) to respond to a verification request 
                submitted by means other than a secure electronic 
                database.
                    ``(E) Verification of saleable returned product.--
                Beginning 5 years after 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 wholesale 
        distributor that distributes the product to the dispenser by 
        means of a drop shipment for such wholesale distributor includes 
        on the transaction information and transaction history to the 
        dispenser the contact information of such wholesale distributor 
        and provides the transaction information, transaction history, 
        and transaction statement directly to the dispenser.
            ``(2) Clarification.--For purposes of this subsection, 
        providing administrative services, including processing of 
        orders and payments, shall not by itself, be construed as being 
        involved in the handling, distribution, or storage of a 
        product.''.
SEC. 203. ENHANCED DRUG DISTRIBUTION SECURITY.

    Section 582, <<NOTE: 21 USC 360eee-1.>>  as added by section 202, is 
amended by adding at the end the following:

    ``(g) Enhanced Drug Distribution Security.--
            ``(1) <<NOTE: Effective date.>>  In general.--On the date 
        that is 10 years after the date of enactment of the Drug Supply 
        Chain Security Act, the following interoperable, electronic 
        tracing of product at the package level requirements shall go 
        into effect:
                    ``(A) The transaction information and the 
                transaction statements as required under this section 
                shall be exchanged in a secure, interoperable, 
                electronic manner in accordance with the standards 
                established under the guidance issued pursuant to 
                paragraphs (3) and (4) of subsection (h), including any 
                revision of such guidance issued in accordance with 
                paragraph (5) of such subsection.

[[Page 127 STAT. 624]]

                    ``(B) The transaction information required under 
                this section shall include the product identifier at the 
                package level for each package included in the 
                transaction.
                    ``(C) Systems and processes for verification of 
                product at the package level, including the standardized 
                numerical identifier, shall be required in accordance 
                with the standards established under the guidance issued 
                pursuant to subsection (a)(2) and the guidances issued 
                pursuant to paragraphs (2), (3), and (4) of subsection 
                (h), including any revision of such guidances issued in 
                accordance with paragraph (5) of such subsection, which 
                may include the use of aggregation and inference as 
                necessary.
                    ``(D) The systems and processes necessary to 
                promptly respond with the transaction information and 
                transaction statement for a product upon a request by 
                the Secretary (or other appropriate Federal or State 
                official) in the event of a recall or for the purposes 
                of investigating a suspect product or an illegitimate 
                product shall be required.
                    ``(E) The systems and processes necessary to 
                promptly facilitate gathering the information necessary 
                to produce the transaction information for each 
                transaction going back to the manufacturer, as 
                applicable, shall be required--
                          ``(i) in the event of a request by the 
                      Secretary (or other appropriate Federal or State 
                      official), on account of a recall or for the 
                      purposes of investigating a suspect product or an 
                      illegitimate product; or
                          ``(ii) in the event of a request by an 
                      authorized trading partner, in a secure manner 
                      that ensures the protection of confidential 
                      commercial information and trade secrets, for 
                      purposes of investigating a suspect product or 
                      assisting the Secretary (or other appropriate 
                      Federal or State official) with a request 
                      described in clause (i).
                    ``(F) Each person accepting a saleable return shall 
                have systems and processes in place to allow acceptance 
                of such product and may accept saleable returns only if 
                such person can associate the saleable return product 
                with the transaction information and transaction 
                statement associated with that product.
            ``(2) Compliance.--
                    ``(A) Information maintenance agreement.--A 
                dispenser may enter into a written agreement with a 
                third party, including an authorized wholesale 
                distributor, under which the third party shall 
                confidentially maintain any information and statements 
                required to be maintained under this 
                section. <<NOTE: Records.>>  If a dispenser enters into 
                such an agreement, the dispenser shall maintain a copy 
                of the written agreement and shall not be relieved of 
                the obligations of the dispenser under this subsection.
                    ``(B) <<NOTE: Determinations.>>  Alternative 
                methods.--The Secretary, taking into consideration the 
                assessment conducted under paragraph (3), shall provide 
                for alternative methods of compliance with any of the 
                requirements set forth in paragraph (1), including--
                          ``(i) establishing timelines for compliance by 
                      small businesses (including small business 
                      dispensers with

[[Page 127 STAT. 625]]

                      25 or fewer full-time employees) with such 
                      requirements, in order to ensure that such 
                      requirements do not impose undue economic hardship 
                      for small businesses, including small business 
                      dispensers for whom the criteria set forth in the 
                      assessment under paragraph (3) is not met, if the 
                      Secretary determines that such requirements under 
                      paragraph (1) would result in undue economic 
                      hardship; and
                          ``(ii) <<NOTE: Waiver.>>  establishing a 
                      process by which a dispenser may request a waiver 
                      from any of the requirements set forth in 
                      paragraph (1) if the Secretary determines that 
                      such requirements would result in an undue 
                      economic hardship, which shall include a process 
                      for the biennial review and renewal of any such 
                      waiver.
            ``(3) Assessment.--
                    ``(A) <<NOTE: Deadlines. Guidance.>>  In general.--
                Not later than the date that is 18 months after the 
                Secretary issues the final guidance required under 
                subsection (h), the Secretary shall enter into a 
                contract with a private, independent consulting firm 
                with expertise to conduct a technology and software 
                assessment that looks at the feasibility of dispensers 
                with 25 or fewer full-time employees conducting 
                interoperable, electronic tracing of products at the 
                package level. Such assessment shall be completed not 
                later than 8\1/2\ years after the date of enactment of 
                the Drug Supply Chain Security Act.
                    ``(B) Condition.--As a condition of the award of the 
                contract under subparagraph (A), the private, 
                independent consulting firm shall agree to consult with 
                dispensers with 25 or fewer full-time employees when 
                conducting the assessment under such subparagraph.
                    ``(C) Content.--The assessment under subparagraph 
                (A) shall assess whether--
                          ``(i) the necessary software and hardware is 
                      readily accessible to such dispensers;
                          ``(ii) the necessary software and hardware is 
                      prohibitively expensive to obtain, install, and 
                      maintain for such dispensers; and
                          ``(iii) the necessary hardware and software 
                      can be integrated into business practices, such as 
                      interoperability with wholesale distributors, for 
                      such dispensers.
                    ``(D) <<NOTE: Public information. Deadlines.>>  
                Publication.--The Secretary shall--
                          ``(i) publish the statement of work for the 
                      assessment under subparagraph (A) for public 
                      comment prior to beginning the assessment;
                          ``(ii) publish the final assessment for public 
                      comment not later than 30 calendar days after 
                      receiving such assessment; and
                          ``(iii) hold a public meeting not later than 
                      180 calendar days after receiving the final 
                      assessment at which public stakeholders may 
                      present their views on the assessment.
            ``(4) <<NOTE: Regulations.>>  Procedure.--Notwithstanding 
        section 553 of title 5, United States Code, the Secretary, in 
        promulgating any regulation pursuant to this section, shall--
                    ``(A) provide appropriate flexibility by--

[[Page 127 STAT. 626]]

                          ``(i) not requiring the adoption of specific 
                      business systems for the maintenance and 
                      transmission of data;
                          ``(ii) <<NOTE: Determination.>>  prescribing 
                      alternative methods of compliance for any of the 
                      requirements set forth in paragraph (1) or set 
                      forth in regulations implementing such 
                      requirements, including--
                                    ``(I) timelines for small businesses 
                                to comply with the requirements set 
                                forth in the regulations in order to 
                                ensure that such requirements do not 
                                impose undue economic hardship for small 
                                businesses (including small business 
                                dispensers for whom the criteria set 
                                forth in the assessment under paragraph 
                                (3) is not met), if the Secretary 
                                determines that such requirements would 
                                result in undue economic hardship; and
                                    ``(II) <<NOTE: Waiver.>>  the 
                                establishment of a process by which a 
                                dispenser may request a waiver from any 
                                of the requirements set forth in such 
                                regulations if the Secretary determines 
                                that such requirements would result in 
                                an undue economic hardship; and
                          ``(iii) taking into consideration--
                                    ``(I) the results of pilot projects, 
                                including pilot projects pursuant to 
                                this section and private sector pilot 
                                projects, including those involving the 
                                use of aggregation and inference;
                                    ``(II) the public meetings held and 
                                related guidance documents issued under 
                                this section;
                                    ``(III) the public health benefits 
                                of any additional regulations in 
                                comparison to the cost of compliance 
                                with such requirements, including on 
                                entities of varying sizes and 
                                capabilities;
                                    ``(IV) the diversity of the 
                                pharmaceutical distribution supply chain 
                                by providing appropriate flexibility for 
                                each sector, including both large and 
                                small businesses; and
                                    ``(V) the assessment pursuant to 
                                paragraph (3) with respect to small 
                                business dispensers, including related 
                                public comment and the public meeting, 
                                and requirements under this section;
                    ``(B) <<NOTE: Notice. Records.>>  issue a notice of 
                proposed rulemaking that includes a copy of the proposed 
                regulation;
                    ``(C) <<NOTE: Time period. Public comments.>>  
                provide a period of not less than 60 days for comments 
                on the proposed regulation; and
                    ``(D) <<NOTE: Federal Register, 
                publication. Deadline.>>  publish in the Federal 
                Register the final regulation not less than 2 years 
                prior to the effective date of the regulation.

    ``(h) Guidance Documents.--
            ``(1) In general.--For the purposes of facilitating the 
        successful and efficient adoption of secure, interoperable 
        product tracing at the package level in order to enhance drug 
        distribution security and further protect the public health, the 
        Secretary shall issue the guidance documents as provided for in 
        this subsection.
            ``(2) Suspect and illegitimate product.--
                    ``(A) <<NOTE: Deadline.>>  In general.--Not later 
                than 180 days after the date of enactment of the Drug 
                Supply Chain Security Act, the Secretary shall issue a 
                guidance document to aid

[[Page 127 STAT. 627]]

                trading partners in the identification of a suspect 
                product and notification termination. Such guidance 
                document shall--
                          ``(i) identify specific scenarios that could 
                      significantly increase the risk of a suspect 
                      product entering the pharmaceutical distribution 
                      supply chain;
                          ``(ii) provide recommendation on how trading 
                      partners may identify such product and make a 
                      determination on whether the product is a suspect 
                      product as soon as practicable; and
                          ``(iii) set forth the process by which 
                      manufacturers, repackagers, wholesale 
                      distributors, and dispensers shall terminate 
                      notifications in consultation with the Secretary 
                      regarding illegitimate product pursuant to 
                      subsections (b)(4)(B), (c)(4)(B), (d)(4)(B), and 
                      (e)(4)(B).
                    ``(B) Revised guidance.--If the Secretary revises 
                the guidance issued under subparagraph (A), the 
                Secretary shall follow the procedure set forth in 
                paragraph (5).
            ``(3) Unit level tracing.--
                    ``(A) <<NOTE: Deadline.>>  In general.--In order to 
                enhance drug distribution security at the package level, 
                not later than 18 months after conducting a public 
                meeting on the system attributes necessary to enable 
                secure tracing of product at the package level, 
                including allowing for the use of verification, 
                inference, and aggregation, as necessary, the Secretary 
                shall issue a final guidance document that outlines and 
                makes recommendations with respect to the system 
                attributes necessary to enable secure tracing at the 
                package level as required under the requirements 
                established under subsection (g). Such guidance document 
                shall--
                          ``(i) define the circumstances under which the 
                      sectors within the pharmaceutical distribution 
                      supply chain may, in the most efficient manner 
                      practicable, infer the contents of a case, pallet, 
                      tote, or other aggregate of individual packages or 
                      containers of product, from a product identifier 
                      associated with the case, pallet, tote, or other 
                      aggregate, without opening each case, pallet, 
                      tote, or other aggregate or otherwise individually 
                      scanning each package;
                          ``(ii) identify methods and processes to 
                      enhance secure tracing of product at the package 
                      level, such as secure processes to facilitate the 
                      use of inference, enhanced verification 
                      activities, the use of aggregation and inference, 
                      processes that utilize the product identifiers to 
                      enhance tracing of product at the package level, 
                      including the standardized numerical identifier, 
                      or package security features; and
                          ``(iii) ensure the protection of confidential 
                      commercial information and trade secrets.
                    ``(B) Procedure.--In issuing the guidance under 
                subparagraph (A), and in revising such guidance, if 
                applicable, the Secretary shall follow the procedure set 
                forth in paragraph (5).
            ``(4) Standards for interoperable data exchange.--
                    ``(A) <<NOTE: Deadline.>>  In general.--In order to 
                enhance secure tracing of a product at the package 
                level, the Secretary, not later than 18 months after 
                conducting a public meeting on the

[[Page 127 STAT. 628]]

                interoperable standards necessary to enhance the 
                security of the pharmaceutical distribution supply 
                chain, shall update the guidance issued pursuant to 
                subsection (a)(2), as necessary and appropriate, and 
                finalize such guidance document so that the guidance 
                document--
                          ``(i) identifies and makes recommendations 
                      with respect to the standards necessary for 
                      adoption in order to support the secure, 
                      interoperable electronic data exchange among the 
                      pharmaceutical distribution supply chain that 
                      comply with a form and format developed by a 
                      widely recognized international standards 
                      development organization;
                          ``(ii) takes into consideration standards 
                      established pursuant to subsection (a)(2) and 
                      section 505D;
                          ``(iii) facilitates the creation of a uniform 
                      process or methodology for product tracing; and
                          ``(iv) ensures the protection of confidential 
                      commercial information and trade secrets.
                    ``(B) Procedure.--In issuing the guidance under 
                subparagraph (A), and in revising such guidance, if 
                applicable, the Secretary shall follow the procedure set 
                forth in paragraph (5).
            ``(5) Procedure.--In issuing or revising any guidance issued 
        pursuant to this subsection or subsection (g), except the 
        initial guidance issued under paragraph (2)(A), the Secretary 
        shall--
                    ``(A) <<NOTE: Notice. Federal 
                Register, publication. Time period. Web posting.>>  
                publish a notice in the Federal Register for a period 
                not less than 30 days announcing that the draft or 
                revised draft guidance is available;
                    ``(B) post the draft guidance document on the 
                Internet Web site of the Food and Drug Administration 
                and make such draft guidance document available in hard 
                copy;
                    ``(C) provide an opportunity for comment and review 
                and take into consideration any comments received;
                    ``(D) revise the draft guidance, as appropriate;
                    ``(E) <<NOTE: Notice. Federal 
                Register, publication. Time period. Web posting.>>  
                publish a notice in the Federal Register for a period 
                not less than 30 days announcing that the final guidance 
                or final revised guidance is available;
                    ``(F) post the final guidance document on the 
                Internet Web site of the Food and Drug Administration 
                and make such final guidance document available in hard 
                copy; and
                    ``(G) <<NOTE: Effective date.>>  provide for an 
                effective date of not earlier than 1 year after such 
                guidance becomes final.

    ``(i) Public Meetings.--
            ``(1) In general.--The Secretary shall hold not less than 5 
        public meetings to enhance the safety and security of the 
        pharmaceutical distribution supply chain and provide for 
        comment. The Secretary <<NOTE: Deadline.>>  may hold the first 
        such public meeting not earlier than 1 year after the date of 
        enactment of the Drug Supply Chain Security Act. In carrying out 
        the public meetings described in this paragraph, the Secretary 
        shall--
                    ``(A) prioritize topics necessary to inform the 
                issuance of the guidance described in paragraphs (3) and 
                (4) of subsection (h); and
                    ``(B) take all measures reasonable and practicable 
                to ensure the protection of confidential commercial 
                information and trade secrets.

[[Page 127 STAT. 629]]

            ``(2) Content.--Each of the following topics shall be 
        addressed in at least one of the public meetings described in 
        paragraph (1):
                    ``(A) An assessment of the steps taken under 
                subsections (b) through (e) to build capacity for a 
                unit-level system, including the impact of the 
                requirements of such subsections on--
                          ``(i) the ability of the health care system 
                      collectively to maintain patient access to 
                      medicines;
                          ``(ii) the scalability of such requirements, 
                      including as it relates to product lines; and
                          ``(iii) the capability of different sectors 
                      and subsectors, including both large and small 
                      businesses, to affix and utilize the product 
                      identifier.
                    ``(B) The system attributes necessary to support the 
                requirements set forth under subsection (g), including 
                the standards necessary for adoption in order to support 
                the secure, interoperable electronic data exchange among 
                sectors within the pharmaceutical distribution supply 
                chain.
                    ``(C) Best practices in each of the different 
                sectors within the pharmaceutical distribution supply 
                chain to implement the requirements of this section.
                    ``(D) The costs and benefits of the implementation 
                of this section, including the impact on each 
                pharmaceutical distribution supply chain sector and on 
                public health.
                    ``(E) Whether electronic tracing requirements, 
                including tracing of product at the package level, are 
                feasible, cost effective, and needed to protect the 
                public health.
                    ``(F) The systems and processes needed to utilize 
                the product identifiers to enhance tracing of product at 
                the package level, including allowing for verification, 
                aggregation, and inference, as necessary.
                    ``(G) The technical capabilities and legal 
                authorities, if any, needed to establish an 
                interoperable, electronic system that provides for 
                tracing of product at the package level.
                    ``(H) The impact that such additional requirements 
                would have on patient safety, the drug supply, cost and 
                regulatory burden, and timely patient access to 
                prescription drugs.
                    ``(I) Other topics, as determined appropriate by the 
                Secretary.

    ``(j) Pilot Projects.--
            ``(1) In general.--The Secretary shall establish 1 or more 
        pilot projects, in coordination with authorized manufacturers, 
        repackagers, wholesale distributors, and dispensers, to explore 
        and evaluate methods to enhance the safety and security of the 
        pharmaceutical distribution supply chain. Such projects shall 
        build upon efforts, in existence as of the date of enactment of 
        the Drug Supply Chain Security Act, to enhance the safety and 
        security of the pharmaceutical distribution supply chain, take 
        into consideration any pilot projects conducted prior to such 
        date of enactment, including any pilot projects that use 
        aggregation and inference, and inform the draft and final 
        guidance under paragraphs (3) and (4) of subsection (h).
            ``(2) Content.--

[[Page 127 STAT. 630]]

                    ``(A) In general.--The Secretary shall ensure that 
                the pilot projects under paragraph (1) reflect the 
                diversity of the pharmaceutical distribution supply 
                chain and that the pilot projects, when taken as a 
                whole, include participants representative of every 
                sector, including both large and small businesses.
                    ``(B) Project design.--The pilot projects under 
                paragraph (1) shall be designed to--
                          ``(i) utilize the product identifier for 
                      tracing of a product, which may include 
                      verification of the product identifier of a 
                      product, including the use of aggregation and 
                      inference;
                          ``(ii) improve the technical capabilities of 
                      each sector and subsector to comply with systems 
                      and processes needed to utilize the product 
                      identifiers to enhance tracing of a product;
                          ``(iii) identify system attributes that are 
                      necessary to implement the requirements 
                      established under this section; and
                          ``(iv) complete other activities as determined 
                      by the Secretary.

    ``(k) Sunset.--The following requirements shall have no force or 
effect beginning on the date that is 10 years after the date of 
enactment of the Drug Supply Chain Security Act:
            ``(1) The provision and receipt of transaction history under 
        this section.
            ``(2) The requirements set forth for returns under 
        subsections (b)(4)(E), (c)(1)(B)(i), (d)(1)(C)(i), and 
        (e)(4)(E).
            ``(3) <<NOTE: Applicability.>>  The requirements set forth 
        under subparagraphs (A)(v)(II) and (D) of subsection (c)(1), as 
        applied to lot level information only.

    ``(l) Rule of Construction.--The requirements set forth in 
subsections (g)(4), (i), and (j) shall not be construed as a condition, 
prohibition, or precedent for precluding or delaying the provisions 
becoming effective pursuant to subsection (g).
    ``(m) <<NOTE: Effective date. Time period.>>  Requests for 
Information.--On the date that is 10 years after the date of enactment 
of the Drug Supply Chain Security Act, the timeline for responses to 
requests for information from the Secretary, or other appropriate 
Federal or State official, as applicable, under subsections (b)(1)(B), 
(c)(1)(C), and (e)(1)(C) shall be not later than 24 hours after 
receiving the request from the Secretary or other appropriate Federal or 
State official, as applicable, or in such other reasonable time as 
determined by the Secretary based on the circumstances of the 
request.''.
SEC. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE 
                        DISTRIBUTORS.

    (a) Amendments.--
            (1) Requirement.--Section 503(e) (21 U.S.C. 353(e)) is 
        amended by striking paragraphs (1), (2), and (3) and inserting 
        the following:
            ``(1) Requirement.--Subject to section 583:
                    ``(A) In general.--No person may engage in wholesale 
                distribution of a drug subject to subsection (b)(1) in 
                any State unless such person--
                          ``(i)(I) is licensed by the State from which 
                      the drug is distributed; or

[[Page 127 STAT. 631]]

                          ``(II) if the State from which the drug is 
                      distributed has not established a licensure 
                      requirement, is licensed by the Secretary; and
                          ``(ii) if the drug is distributed interstate, 
                      is licensed by the State into which the drug is 
                      distributed if the State into which the drug is 
                      distributed requires the licensure of a person 
                      that distributes drugs into the State.
                    ``(B) Standards.--Each Federal and State license 
                described in subparagraph (A) shall meet the standards, 
                terms, and conditions established by the Secretary under 
                section 583.
            ``(2) Reporting and database.--
                    ``(A) <<NOTE: Effective date.>>  Reporting.--
                Beginning January 1, 2015, any person who owns or 
                operates an establishment that engages in wholesale 
                distribution shall--
                          ``(i) report to the Secretary, on an annual 
                      basis pursuant to a schedule determined by the 
                      Secretary--
                                    ``(I) each State by which the person 
                                is licensed and the appropriate 
                                identification number of each such 
                                license; and
                                    ``(II) the name, address, and 
                                contact information of each facility at 
                                which, and all trade names under which, 
                                the person conducts business; and
                          ``(ii) report to the Secretary within a 
                      reasonable period of time and in a reasonable 
                      manner, as determined by the Secretary, any 
                      significant disciplinary actions, such as the 
                      revocation or suspension of a wholesale 
                      distributor license, taken by a State or the 
                      Federal Government during the reporting period 
                      against the wholesale distributor.
                    ``(B) Database.--Not later than January 1, 2015, the 
                Secretary shall establish a database of authorized 
                wholesale distributors. Such database shall--
                          ``(i) identify each authorized wholesale 
                      distributor by name, contact information, and each 
                      State where such wholesale distributor is 
                      appropriately licensed to engage in wholesale 
                      distribution;
                          ``(ii) <<NOTE: Public information. Web 
                      posting.>>  be available to the public on the 
                      Internet Web site of the Food and Drug 
                      Administration; and
                          ``(iii) be regularly updated on a schedule 
                      determined by the Secretary.
                    ``(C) <<NOTE: Procedure.>>  Coordination.--The 
                Secretary shall establish a format and procedure for 
                appropriate State officials to access the information 
                provided pursuant to subparagraph (A) in a prompt and 
                secure manner.
                    ``(D) Confidentiality.--Nothing in this paragraph 
                shall be construed as authorizing the Secretary to 
                disclose any information that is a trade secret or 
                confidential information subject to section 552(b)(4) of 
                title 5, United States Code, or section 1905 of title 
                18, United States Code.
            ``(3) Costs.--
                    ``(A) <<NOTE: License.>>  Authorized fees of 
                secretary.--If a State does not establish a licensing 
                program for persons engaged in the wholesale 
                distribution of a drug subject to subsection

[[Page 127 STAT. 632]]

                (b), the Secretary shall license a person engaged in 
                wholesale distribution located in such State and may 
                collect a reasonable fee in such amount necessary to 
                reimburse the Secretary for costs associated with 
                establishing and administering the licensure program and 
                conducting periodic inspections under this section. The 
                Secretary shall adjust fee rates as needed on an annual 
                basis to generate only the amount of revenue needed to 
                perform this service. Fees authorized under this 
                paragraph shall be collected and available 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 appropriation 
                account without fiscal year limitation to such 
                appropriation account for salaries and expenses with 
                such fiscal year limitation.
                    ``(B) State licensing fees.--Nothing in this Act 
                shall prohibit States from collecting fees from 
                wholesale distributors in connection with State 
                licensing of such distributors.''.
            (2) Wholesale distribution.--Section 503(e) (21 U.S.C. 
        353(e)), as amended by paragraph (1), is further amended by 
        adding at the end the following:
            ``(4) <<NOTE: Definition.>>  For the purposes of this 
        subsection and subsection (d), the term `wholesale distribution' 
        means the distribution of a drug subject to subsection (b) to a 
        person other than a consumer or patient, or receipt of a drug 
        subject to subsection (b) by a person other than the consumer or 
        patient, but does not include--
                    ``(A) intracompany distribution of any drug between 
                members of an affiliate or within a manufacturer;
                    ``(B) the distribution of a drug, or an offer to 
                distribute a drug among hospitals or other health care 
                entities which are under common control;
                    ``(C) the distribution of a drug or an offer to 
                distribute a drug for emergency medical reasons, 
                including a public health emergency declaration pursuant 
                to section 319 of the Public Health Service Act, except 
                that, for purposes of this paragraph, a drug shortage 
                not caused by a public health emergency shall not 
                constitute an emergency medical reason;
                    ``(D) the dispensing of a drug pursuant to a 
                prescription executed in accordance with subsection 
                (b)(1);
                    ``(E) the distribution of minimal quantities of drug 
                by a licensed retail pharmacy to a licensed practitioner 
                for office use;
                    ``(F) the distribution of a drug or an offer to 
                distribute a drug by a charitable organization to a 
                nonprofit affiliate of the organization to the extent 
                otherwise permitted by law;
                    ``(G) the purchase or other acquisition by a 
                dispenser, hospital, or other health care entity of a 
                drug for use by such dispenser, hospital, or other 
                health care entity;
                    ``(H) the distribution of a drug by the manufacturer 
                of such drug;

[[Page 127 STAT. 633]]

                    ``(I) the receipt or transfer of a drug by an 
                authorized third-party logistics provider provided that 
                such third-party logistics provider does not take 
                ownership of the drug;
                    ``(J) a common carrier that transports a drug, 
                provided that the common carrier does not take ownership 
                of the drug;
                    ``(K) the distribution of a drug, or an offer to 
                distribute a drug by an authorized repackager that has 
                taken ownership or possession of the drug and repacks it 
                in accordance with section 582(e);
                    ``(L) salable drug returns when conducted by a 
                dispenser;
                    ``(M) the distribution of a collection of finished 
                medical devices, which may include a product or 
                biological product, assembled in kit form strictly for 
                the convenience of the purchaser or user (referred to in 
                this subparagraph 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 
                      manufacturer in accordance with section 510(b)(2);
                          ``(ii) the medical convenience kit does not 
                      contain a controlled substance that appears in a 
                      schedule contained in the Comprehensive Drug Abuse 
                      Prevention and Control Act of 1970;
                          ``(iii) in the case of a medical convenience 
                      kit that includes a product, the person that 
                      manufacturers the kit--
                                    ``(I) purchased such product 
                                directly from the pharmaceutical 
                                manufacturer or from a wholesale 
                                distributor that purchased the product 
                                directly from the pharmaceutical 
                                manufacturer; and
                                    ``(II) does not alter the primary 
                                container or label of the product as 
                                purchased from the manufacturer or 
                                wholesale distributor; and
                          ``(iv) in the case of a medical convenience 
                      kit that includes a product, the product is--
                                    ``(I) an intravenous solution 
                                intended for the replenishment of fluids 
                                and electrolytes;
                                    ``(II) a product intended to 
                                maintain the equilibrium of water and 
                                minerals in the body;
                                    ``(III) a product intended for 
                                irrigation or reconstitution;
                                    ``(IV) an anesthetic;
                                    ``(V) an anticoagulant;
                                    ``(VI) a vasopressor; or
                                    ``(VII) a sympathomimetic;
                    ``(N) the distribution of an intravenous drug that, 
                by its formulation, is intended for the replenishment of 
                fluids and electrolytes (such as sodium, chloride, and 
                potassium) or calories (such as dextrose and amino 
                acids);
                    ``(O) the distribution of an intravenous drug used 
                to maintain the equilibrium of water and minerals in the 
                body, such as dialysis solutions;
                    ``(P) the distribution of a drug that is intended 
                for irrigation, or sterile water, whether intended for 
                such purposes or for injection;

[[Page 127 STAT. 634]]

                    ``(Q) the distribution of medical gas, as defined in 
                section 575;
                    ``(R) facilitating the distribution of a product by 
                providing solely administrative services, including 
                processing of orders and payments; or
                    ``(S) the transfer of a product by a hospital or 
                other health care entity, or by a wholesale distributor 
                or manufacturer operating at the direction of the 
                hospital or other health care entity, to a repackager 
                described in section 581(16)(B) and registered under 
                section 510 for the purpose of repackaging the drug for 
                use by that hospital, or other health care entity and 
                other health care entities that are under common 
                control, if ownership of the drug remains with the 
                hospital or other health care entity at all times.''.
            (3) Third-party logistics providers.--Section 503(e) (21 
        U.S.C. 353(e)), as amended by paragraph (2), is further amended 
        by adding at the end the following:
            ``(5) Third-party logistics providers.--Notwithstanding 
        paragraphs (1) through (4), each entity that meets the 
        definition of a third-party logistics provider under section 
        581(22) shall obtain a license as a third-party logistics 
        provider as described in section 584(a) and is not required to 
        obtain a license as a wholesale distributor if the entity never 
        assumes an ownership interest in the product it handles.''.
            (4) Affiliate.--Section 503(e) (21 U.S.C. 353(e)), as 
        amended by paragraph (3), is further amended by adding at the 
        end the following:
            ``(6) <<NOTE: Definition.>>  Affiliate.--For purposes of 
        this subsection, 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.''.
            (5) Standards.--Subchapter H of chapter V, as added by 
        section 202, is amended by adding at the end the following:
``SEC. <<NOTE: Regulations. 21 USC 360eee-2.>>  583. NATIONAL 
                        STANDARDS FOR PRESCRIPTION DRUG WHOLESALE 
                        DISTRIBUTORS.

    ``(a) <<NOTE: Deadline.>>  In General.--The Secretary shall, not 
later than 2 years after the date of enactment of the Drug Supply Chain 
Security Act, establish by regulation standards for the licensing of 
persons under section 503(e)(1) (as amended by the Drug Supply Chain 
Security Act), including the revocation, reissuance, and renewal of such 
license.

    ``(b) <<NOTE: Applicability.>>  Content.--For the purpose of 
ensuring uniformity with respect to standards set forth in this section, 
the standards established under subsection (a) shall apply to all State 
and Federal licenses described under section 503(e)(1) (as amended by 
the Drug Supply Chain Security Act) and shall include standards for the 
following:
            ``(1) The storage and handling of prescription drugs, 
        including facility requirements.
            ``(2) The establishment and maintenance of records of the 
        distributions of such drugs.
            ``(3) The furnishing of a bond or other equivalent means of 
        security, as follows:

[[Page 127 STAT. 635]]

                    ``(A)(i) For the issuance or renewal of a wholesale 
                distributor license, an applicant that is not a 
                government owned and operated wholesale distributor 
                shall submit a surety bond of $100,000 or other 
                equivalent means of security acceptable to the State.
                    ``(ii) For purposes of clause (i), the State or 
                other applicable authority may accept a surety bond in 
                the amount of $25,000 if the annual gross receipts of 
                the previous tax year for the wholesaler is $10,000,000 
                or less.
                    ``(B) If a wholesale distributor can provide 
                evidence that it possesses the required bond in a State, 
                the requirement for a bond in another State shall be 
                waived.
            ``(4) Mandatory background checks and fingerprinting of 
        facility managers or designated representatives.
            ``(5) The establishment and implementation of qualifications 
        for key personnel.
            ``(6) The mandatory physical inspection of any facility to 
        be used in wholesale distribution within a reasonable time frame 
        from the initial application of the facility and to be conducted 
        by the licensing authority or by the State, consistent with 
        subsection (c).
            ``(7) In accordance with subsection (d), the prohibition of 
        certain persons from receiving or maintaining licensure for 
        wholesale distribution.

    ``(c) Inspections.--To satisfy the inspection requirement under 
subsection (b)(6), the Federal or State licensing authority may conduct 
the inspection or may accept an inspection by the State in which the 
facility is located, or by a third-party accreditation or inspection 
service approved by the Secretary or the State licensing such wholesale 
distributor.
    ``(d) Prohibited Persons.--The standards established under 
subsection (a) shall include requirements to prohibit a person from 
receiving or maintaining licensure for wholesale distribution if the 
person--
            ``(1) has been convicted of any felony for conduct relating 
        to wholesale distribution, any felony violation of subsection 
        (i) or (k) of section 301, or any felony violation of section 
        1365 of title 18, United States Code, relating to product 
        tampering; or
            ``(2) has engaged in a pattern of violating the requirements 
        of this section, or State requirements for licensure, that 
        presents a threat of serious adverse health consequences or 
        death to humans.

    ``(e) Requirements.--The Secretary, in promulgating any regulation 
pursuant to this section, shall, notwithstanding section 553 of title 5, 
United States Code--
            ``(1) <<NOTE: Notice.>>  issue a notice of proposed 
        rulemaking that includes a copy of the proposed regulation;
            ``(2) <<NOTE: Time period.>>  provide a period of not less 
        than 60 days for comments on the proposed regulation; and
            ``(3) provide that the final regulation take effect on the 
        date that is 2 years after the date such final regulation is 
        published.''.

    (b) Authorized Distributors of Record.--Section 503(d) (21 U.S.C. 
353(d)) is amended by adding at the end the following:
            ``(4) <<NOTE: Definition.>>  In this subsection, the term 
        `authorized distributors of record' means those distributors 
        with whom a manufacturer

[[Page 127 STAT. 636]]

        has established an ongoing relationship to distribute such 
        manufacturer's products.''.

    (c) <<NOTE: 21 USC 353 note.>>  Effective Date.--The amendments made 
by subsections (a) and (b) shall take effect on January 1, 2015.
SEC. 205. NATIONAL STANDARDS FOR THIRD-PARTY LOGISTICS PROVIDERS; 
                        UNIFORM NATIONAL POLICY.

    Subchapter H of chapter V, as amended by section 204, is further 
amended by adding at the end the following:
``SEC. <<NOTE: 21 USC 360eee-3.>>  584. NATIONAL STANDARDS FOR 
                        THIRD-PARTY LOGISTICS PROVIDERS.

    ``(a) Requirements.--No third-party logistics provider in any State 
may conduct activities in any State unless each facility of such third-
party logistics provider--
            ``(1)(A) is licensed by the State from which the drug is 
        distributed by the third-party logistics provider, in accordance 
        with the regulations promulgated under subsection (d); or
            ``(B) if the State from which the drug distributed by the 
        third-party logistics provider has not established a licensure 
        requirement, is licensed by the Secretary, in accordance with 
        the regulations promulgated under subsection (d); and
            ``(2) if the drug is distributed interstate, is licensed by 
        the State into which the drug is distributed by the third-party 
        logistics provider if such State licenses third-party logistics 
        providers that distribute drugs into the State and the third-
        party logistics provider is not licensed by the Secretary as 
        described in paragraph (1)(B).

    ``(b) <<NOTE: Effective date.>>  Reporting.--Beginning 1 year after 
the date of enactment of the Drug Supply Chain Security Act, a facility 
of a third-party logistics provider shall report to the Secretary, on an 
annual basis pursuant to a schedule determined by the Secretary--
            ``(1) the State by which the facility is licensed and the 
        appropriate identification number of such license; and
            ``(2) the name and address of the facility and all trade 
        names under which such facility conducts business.

    ``(c) Costs.--
            ``(1) <<NOTE: License.>>  Authorized fees of secretary.--If 
        a State does not establish a licensing program for a third-party 
        logistics provider, the Secretary shall license the third-party 
        logistics provider located in such State and may collect a 
        reasonable fee in such amount necessary to reimburse the 
        Secretary for costs associated with establishing and 
        administering the licensure program and conducting periodic 
        inspections under this section. The Secretary shall adjust fee 
        rates as needed on an annual basis to generate only the amount 
        of revenue needed to perform this service. Fees authorized under 
        this paragraph shall be collected and available 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 appropriation account without fiscal year limitation to 
        such appropriation account for salaries and expenses with such 
        fiscal year limitation.
            ``(2) State licensing fees.--
                    ``(A) State established program.--Nothing in this 
                Act shall prohibit a State that has established a 
                program

[[Page 127 STAT. 637]]

                to license a third-party logistics provider from 
                collecting fees from a third-party logistics provider 
                for such a license.
                    ``(B) No state established program.--A State that 
                does not establish a program to license a third-party 
                logistics provider in accordance with this section shall 
                be prohibited from collecting a State licensing fee from 
                a third-party logistics provider.

    ``(d) Regulations.--
            ``(1) <<NOTE: Deadline.>>  In general.--Not later than 2 
        years after the date of enactment of the Drug Supply Chain 
        Security Act, the Secretary shall issue regulations regarding 
        the standards for licensing under subsection (a), including the 
        revocation and reissuance of such license, to third-party 
        logistics providers under this section.
            ``(2) Content.--Such regulations shall--
                    ``(A) establish a process by which a third-party 
                accreditation program approved by the Secretary shall, 
                upon request by a third-party logistics provider, issue 
                a license to each third-party logistics provider that 
                meets the requirements set forth in this section;
                    ``(B) establish a process by which the Secretary 
                shall issue a license to each third-party logistics 
                provider that meets the requirements set forth in this 
                section if the Secretary is not able to approve a third-
                party accreditation program because no such program 
                meets the Secretary's requirements necessary for 
                approval of such a third-party accreditation program;
                    ``(C) require that the entity complies with storage 
                practices, as determined by the Secretary for such 
                facility, including--
                          ``(i) maintaining access to warehouse space of 
                      suitable size to facilitate safe operations, 
                      including a suitable area to quarantine suspect 
                      product;
                          ``(ii) maintaining adequate security; and
                          ``(iii) having written policies and procedures 
                      to--
                                    ``(I) address receipt, security, 
                                storage, inventory, shipment, and 
                                distribution of a product;
                                    ``(II) identify, record, and report 
                                confirmed losses or thefts in the United 
                                States;
                                    ``(III) correct errors and 
                                inaccuracies in inventories;
                                    ``(IV) provide support for 
                                manufacturer recalls;
                                    ``(V) prepare for, protect against, 
                                and address any reasonably foreseeable 
                                crisis that affects security or 
                                operation at the facility, such as a 
                                strike, fire, or flood;
                                    ``(VI) ensure that any expired 
                                product is segregated from other 
                                products and returned to the 
                                manufacturer or repackager or destroyed;
                                    ``(VII) maintain the capability to 
                                trace the receipt and outbound 
                                distribution of a product, and supplies 
                                and records of inventory; and
                                    ``(VIII) quarantine or destroy a 
                                suspect product if directed to do so by 
                                the respective manufacturer, wholesale 
                                distributor, dispenser, or an authorized 
                                government agency;

[[Page 127 STAT. 638]]

                    ``(D) provide for periodic inspection by the 
                licensing authority, as determined by the Secretary, of 
                such facility warehouse space to ensure compliance with 
                this section;
                    ``(E) prohibit a facility from having as a manager 
                or designated representative anyone convicted of any 
                felony violation of subsection (i) or (k) of section 301 
                or any violation of section 1365 of title 18, United 
                States Code relating to product tampering;
                    ``(F) provide for mandatory background checks of a 
                facility manager or a designated representative of such 
                manager;
                    ``(G) require a third-party logistics provider to 
                provide the applicable licensing authority, upon a 
                request by such authority, a list of all product 
                manufacturers, wholesale distributors, and dispensers 
                for whom the third-party logistics provider provides 
                services at such facility; and
                    ``(H) include procedures under which any third-party 
                logistics provider license--
                          ``(i) expires on the date that is 3 years 
                      after issuance of the license; and
                          ``(ii) may be renewed for additional 3-year 
                      periods.
            ``(3) Procedure.--In promulgating the regulations under this 
        subsection, the Secretary shall, notwithstanding section 553 of 
        title 5, United States Code--
                    ``(A) <<NOTE: Notice. Records.>>  issue a notice of 
                proposed rulemaking that includes a copy of the proposed 
                regulation;
                    ``(B) <<NOTE: Time period. Public comments.>>  
                provide a period of not less than 60 days for comments 
                on the proposed regulation; and
                    ``(C) <<NOTE: Effective date.>>  provide that the 
                final regulation takes effect upon the expiration of 1 
                year after the date that such final regulation is 
                issued.

    ``(e) <<NOTE: License.>>  Validity.--A license issued under this 
section shall remain valid as long as such third-party logistics 
provider remains licensed consistent with this section. If the Secretary 
finds that the third-party accreditation program demonstrates that all 
applicable requirements for licensure under this section are met, the 
Secretary shall issue a license under this section to a third-party 
logistics provider receiving accreditation, pursuant to subsection 
(d)(2)(A).
``SEC. <<NOTE: 21 USC 360eee-4. Effective date.>>  585. UNIFORM 
                        NATIONAL POLICY.

    ``(a) Product Tracing and Other Requirements.--Beginning on the date 
of enactment of the Drug Supply Chain Security Act, no State or 
political subdivision of a State may establish or continue in effect any 
requirements for tracing products through the distribution system 
(including any requirements with respect to statements of distribution 
history, transaction history, transaction information, or transaction 
statement of a product as such product changes ownership in the supply 
chain, or verification, investigation, disposition, notification, or 
recordkeeping relating to such systems, including paper or electronic 
pedigree systems or for tracking and tracing drugs throughout the 
distribution system) which are inconsistent with, more stringent than, 
or in addition to, any requirements applicable under section 503(e) (as 
amended by such Act) or this subchapter (or regulations issued 
thereunder), or which are inconsistent with--
            ``(1) any waiver, exception, or exemption pursuant to 
        section 581 or 582; or

[[Page 127 STAT. 639]]

            ``(2) any restrictions specified in section 582.

    ``(b) Wholesale Distributor and Third-Party Logistics Provider 
Standards.--
            ``(1) <<NOTE: Effective date.>>  In general.--Beginning on 
        the date of enactment of the Drug Supply Chain Security Act, no 
        State or political subdivision of a State may establish or 
        continue any standards, requirements, or regulations with 
        respect to wholesale prescription drug distributor or third-
        party logistics provider licensure that are inconsistent with, 
        less stringent than, directly related to, or covered by the 
        standards and requirements applicable under section 503(e) (as 
        amended by such Act), in the case of a wholesale distributor, or 
        section 584, in the case of a third-party logistics provider.
            ``(2) State regulation of third-party logistics providers.--
        No State shall regulate third-party logistics providers as 
        wholesale distributors.
            ``(3) Administration fees.--Notwithstanding paragraph (1), a 
        State may administer fee collections for effectuating the 
        wholesale drug distributor and third-party logistics provider 
        licensure requirements under sections 503(e) (as amended by the 
        Drug Supply Chain Security Act), 583, and 584.
            ``(4) Enforcement, suspension, and revocation.--
        Notwithstanding paragraph (1), a State--
                    ``(A) may take administrative action, including 
                fines, to enforce a requirement promulgated by the State 
                in accordance with section 503(e) (as amended by the 
                Drug Supply Chain Security Act) or this subchapter;
                    ``(B) may provide for the suspension or revocation 
                of licenses issued by the State for violations of the 
                laws of such State;
                    ``(C) upon conviction of violations of Federal, 
                State, or local drug laws or regulations, may provide 
                for fines, imprisonment, or civil penalties; and
                    ``(D) may regulate activities of licensed entities 
                in a manner that is consistent with product tracing 
                requirements under section 582.

    ``(c) Exception.--Nothing in this section shall be construed to 
preempt State requirements related to the distribution of prescription 
drugs if such requirements are not related to product tracing as 
described in subsection (a) or wholesale distributor and third-party 
logistics provider licensure as described in subsection (b) applicable 
under section 503(e) (as amended by the Drug Supply Chain Security Act) 
or this subchapter (or regulations issued thereunder).''.
SEC. 206. PENALTIES.

    (a) Prohibited Act.--Section 301(t) (21 U.S.C. 331(t)), is amended--
            (1) by striking ``or'' after ``the requirements of section 
        503(d),''; and
            (2) by inserting ``, failure to comply with the requirements 
        under section 582, the failure to comply with the requirements 
        under section 584, as applicable,'' after ``in violation of 
        section 503(e)''.

    (b) Misbranding.--Section 502 (21 U.S.C. 352), as amended by section 
103, is further amended by adding at the end the following:

[[Page 127 STAT. 640]]

    ``(cc) If it is a drug and it fails to bear the product identifier 
as required by section 582.''.
SEC. 207. CONFORMING AMENDMENT.

    (a) In General.--Section 303(b)(1)(D) (21 U.S.C. 333(b)(1)(D)) is 
amended by striking ``503(e)(2)(A)'' and inserting ``503(e)(1)''.
    (b) <<NOTE: 21 USC 333 note.>>  Effective Date.--The amendment made 
by subsection (a) shall take effect on January 1, 2015.
SEC. <<NOTE: 21 USC 331 note.>>  208. SAVINGS CLAUSE.

    Except as provided in the amendments made by paragraphs (1), (2), 
and (3) of section 204(a) and by section 206(a), nothing in this title 
(including the amendments made by this title) shall be construed as 
altering any authority of the Secretary of Health and Human Services 
with respect to a drug subject to section 503(b)(1) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)) under any other provision 
of such Act or the Public Health Service Act (42 U.S.C. 201 et seq.).

    Approved November 27, 2013.

LEGISLATIVE HISTORY--H.R. 3204:
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 159 (2013):
            Sept. 28, considered and passed House.
            Nov. 14, 18, considered and passed Senate.

                                  <all>