SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National All Schedules Prescription 
Electronic Reporting Act of 2004''.

SEC. 2. CONTROLLED SUBSTANCE MONITORING PROGRAM.

    Part P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding after section 399N the following:

``SEC. 399O. CONTROLLED SUBSTANCE MONITORING PROGRAM.

    ``(a) Formula Grants.--
            ``(1) In general.--Each fiscal year, the Secretary shall 
        make a payment to each State with an application approved under 
        this section for the purpose of establishing and implementing a 
        controlled substance monitoring program under this section.
            ``(2) Determination of amount.--In making payments under 
        paragraph (1) for a fiscal year, the Secretary shall allocate 
        to each State with an application approved under this section 
        an amount which bears the same ratio to the amount appropriated 
        to carry out this section for that fiscal year as the number of 
        pharmacies of the State bears to the number of pharmacies of 
        all States with applications approved under this section (as 
        determined by the Secretary), except that the Secretary may 
        adjust the amount allocated to a State under this paragraph 
        after taking into consideration the budget cost estimate for 
        the State's controlled substance monitoring program.
    ``(b) Application Approval Process.--
            ``(1) In general.--To seek a grant under this section, a 
        State shall submit an application at such time, in such manner, 
        and containing such assurances and information as the Secretary 
        may reasonably require. Each such application shall include--
                    ``(A) a budget cost estimate for the State's 
                controlled substance monitoring program;
                    ``(B) proposed standards for security for 
                information handling and for the database maintained by 
                the State under subsection (d) generally including 
                efforts to use appropriate encryption technology or 
                other such technology;
                    ``(C) proposed standards for meeting the uniform 
                electronic format requirement of subsection (g);
                    ``(D) proposed standards for availability of 
                information and limitation on access to program 
                personnel;
                    ``(E) proposed standards for access to the 
                database, and procedures to ensure database accuracy;
                    ``(F) proposed standards for redisclosure of 
                information;
                    ``(G) proposed penalties for illegal redisclosure 
                of information; and
                    ``(H) assurances of compliance with all other 
                requirements of this section.
            ``(2) Approval or disapproval.--Not later than 90 days 
        after the submission by a State of an application under 
        paragraph (1), the Secretary shall approve or disapprove the 
        application. The Secretary shall approve the application if the 
        State demonstrates to the Secretary that the State will 
        establish and implement or operate a controlled substance 
        monitoring program in accordance with this section.
            ``(3) Withdrawal of authorization.--If a State fails to 
        implement a controlled substance monitoring program in 
        accordance with this section--
                    ``(A) the Secretary shall give notice of the 
                failure to the State; and
                    ``(B) if the State fails to take corrective action 
                within a reasonable period of time, the Secretary shall 
                withdraw any approval of the State's application under 
                this section.
            ``(4) Voluntary discontinuance.--A funding agreement for 
        the receipt of a payment under this section is that the State 
        involved will give a reasonable period of notice to the 
        Secretary before ceasing to implement or operate a controlled 
        substance monitoring program under this section. The Secretary 
        shall determine the period of notice that is reasonable for 
        purposes of this paragraph.
            ``(5) Return of funds.--If the Secretary withdraws approval 
        of a State's application under this section, or the State 
        chooses to cease to implement a controlled substance monitoring 
        program under this section, a funding agreement for the receipt 
        of a payment under this section is that the State will return 
        to the Secretary an amount which bears the same ratio to the 
        overall payment as the remaining time period for expending the 
        payment bears to the overall time period for expending the 
        payment (as specified by the Secretary at the time of the 
        payment).
    ``(c) Reporting Requirements.--In implementing a controlled 
substance monitoring program under this section, a State shall comply 
with the following:
            ``(1) The State shall require dispensers to report to such 
        State each dispensing in the State of a controlled substance to 
        an ultimate user or research subject not later than 1 week 
        after the date of such dispensing.
            ``(2) The State may exclude from the reporting requirement 
        of this subsection--
                    ``(A) the direct administration of a controlled 
                substance to the body of an ultimate user or research 
                subject;
                    ``(B) the dispensing of a controlled substance in a 
                quantity limited to an amount adequate to treat the 
                ultimate user or research subject involved for 48 hours 
                or less; or
                    ``(C) the administration or dispensing of a 
                controlled substance in accordance with any other 
                exclusion identified by the Secretary for purposes of 
                this paragraph.
            ``(3) The information to be reported under this subsection 
        with respect to the dispensing of a controlled substance shall 
        include the following:
                    ``(A) Drug Enforcement Administration Registration 
                Number of the dispenser.
                    ``(B) Drug Enforcement Administration Registration 
                Number and name of the practitioner who prescribed the 
                drug.
                    ``(C) Name, address, and telephone number of the 
                ultimate user or research subject.
                    ``(D) Identification of the drug by a national drug 
                code number.
                    ``(E) Quantity dispensed.
                    ``(F) Estimated number of days for which such 
                quantity should last.
                    ``(G) Number of refills ordered.
                    ``(H) Whether the drug was dispensed as a refill of 
                a prescription or as a first-time request.
                    ``(I) Date of the dispensing.
                    ``(J) Date of origin of the prescription.
            ``(4) The State shall require dispensers to report 
        information under this section in accordance with the 
        electronic format specified by the Secretary under subsection 
        (g), except that the State may waive the requirement of such 
        format with respect to an individual dispenser.
            ``(5) The State shall automatically share information 
        reported under this subsection with another State with an 
        application approved under this section if the information 
        concerns--
                    ``(A) the dispensing of a controlled substance to 
                an ultimate user or research subject who resides in 
                such other State; or
                    ``(B) the dispensing of a controlled substance 
                prescribed by a practitioner whose principal place of 
                business is located in such other State.
            ``(6) The State may notify the appropriate authorities 
        responsible for drug diversion investigation if information in 
        the database maintained by the State under subsection (d) 
        indicates an unlawful diversion or misuse of a controlled 
        substance.
    ``(d) Database.--In implementing a controlled substance monitoring 
program under this section, a State shall comply with the following:
            ``(1) The State shall establish and maintain an electronic 
        database containing the information reported to the State under 
        subsection (c).
            ``(2) The database must be searchable by any field or 
        combination of fields.
            ``(3) The State shall include reported information in the 
        database at such time and in such manner as the Secretary 
        determines appropriate, with appropriate safeguards for 
        ensuring the accuracy and completeness of the database.
            ``(4) The State shall take appropriate security measures to 
        protect the integrity of, and access to, the database.
    ``(e) Provision of Information.--Subject to subsection (f), in 
implementing a controlled substance monitoring program under this 
section, a State may provide information from the database established 
under subsection (d) and, in the case of a request under paragraph (3), 
summary statistics of such information, in response to a request by--
            ``(1) a practitioner (or the agent thereof) who certifies, 
        under the procedures determined by the State, that the 
        requested information is for the purpose of providing medical 
        or pharmaceutical treatment or evaluating the need for such 
        treatment to a bona fide current patient;
            ``(2) any local, State, or Federal law enforcement, 
        narcotics control, licensure, disciplinary, or program 
        authority, who certifies, under the procedures determined by 
        the State, that the requested information is related to an 
        individual investigation or proceeding involving the unlawful 
        diversion or misuse of a schedule II, III, or IV substance, and 
        such information will further the purpose of the investigation 
        or assist in the proceeding;
            ``(3) any agent of the Department of Health and Human 
        Services, a State medicaid program, a State health department, 
        or the Drug Enforcement Administration who certifies that the 
        requested information is necessary for research to be conducted 
        by such department, program, or administration, respectively, 
        and the intended purpose of the research is related to a 
        function committed to such department, program, or 
        administration by law that is not investigative in nature; or
            ``(4) any agent of another State, who certifies that the 
        State has an application approved under this section and the 
        requested information is for the purpose of implementing the 
        State's controlled substance monitoring program under this 
        section.
    ``(f) Limitations.--In implementing a controlled substance 
monitoring program under this section, a State--
            ``(1) shall make reasonable efforts to limit the 
        information provided pursuant to a valid request under 
        subsection (e) to the minimum necessary to accomplish the 
        intended purpose of the request; and
            ``(2) shall not provide any individually identifiable 
        information in response to a request under subsection (e)(3).
    ``(g) Electronic Format.--The Secretary shall specify a uniform 
electronic format for the reporting, sharing, and provision of 
information under this section.
    ``(h) Rules of Construction.--
            ``(1) Functions otherwise authorized by law.--Nothing in 
        this section shall be construed to restrict the ability of any 
        authority, including any local, State, or Federal law 
        enforcement, narcotics control, licensure, disciplinary, or 
        program authority, to perform functions otherwise authorized by 
        law.
            ``(2) No preemption.--Nothing in this section shall be 
        construed as preempting any State law, except that no such law 
        may relieve any person of a requirement otherwise applicable 
        under this Act.
            ``(3) Additional privacy protections.--Nothing in this 
        section shall be construed as preempting any State from 
        imposing any additional privacy protections.
            ``(4) Certain confidentiality requirements.--Nothing in 
        this section shall be construed as superceding the 
        confidentiality requirements of programs defined by and subject 
        to part 2 of title 42, Code of Federal Regulations.
            ``(5) No federal private cause of action.--Nothing in this 
        section shall be construed to create a Federal private cause of 
        action.
    ``(i) Relation to HIPAA.--Except to the extent inconsistent with 
this section, the provision of information pursuant to subsection 
(c)(5), (c)(6), or (e) and the subsequent transfer of such information 
are subject to any requirement that would otherwise apply under the 
regulations promulgated pursuant to section 264(c) of the Health 
Insurance Portability and Accountability Act of 1996.
    ``(j) Preference.--Beginning January 1, 2007, the Secretary, in 
awarding any competitive grant that is related to drug abuse (as 
determined by the Secretary) to a State, shall give preference to any 
State with an application approved under this section.
    ``(k) Study.--Not later than 2 years after the date of the 
enactment of this section, the Secretary shall--
            ``(1) complete a study that--
                    ``(A) determines the progress of States in 
                establishing and implementing controlled substance 
                monitoring programs under this section;
                    ``(B) determines the feasibility of implementing a 
                real-time electronic controlled substance monitoring 
                program, including the costs associated with 
                establishing such a program; and
                    ``(C) provides an analysis of the privacy 
                protections in place for the information reported to 
                the controlled substance monitoring program in each 
                State receiving a grant for the establishment or 
                operation of such program, and a comparison to the 
                privacy requirements that apply to covered entities 
                under regulations promulgated pursuant to section 
                264(c) of the Health Insurance Portability and 
                Accountability Act of 1996, along with any 
                recommendations for additional requirements for 
                protection of this information; and
            ``(2) submit a report to the Congress on the results of the 
        study.
    ``(l) Advisory Council.--
            ``(1) Establishment.--A State may establish an advisory 
        council to assist in the establishment and implementation of a 
        controlled substance monitoring program under this section.
            ``(2) Sense of congress.--It is the sense of the Congress 
        that, in establishing an advisory council under this 
        subsection, a State should consult with appropriate 
        professional boards and other interested parties.
    ``(m) Definitions.--For purposes of this section:
            ``(1) The term `bona fide patient' means an individual who 
        is a patient of the dispenser or practitioner involved.
            ``(2) The term `controlled substance' means a drug that is 
        included in schedule II, III, or IV of section 202(c) of the 
        Controlled Substance Act.
            ``(3) The term `dispense' means to deliver a controlled 
        substance to an ultimate user or research subject by, or 
        pursuant to the lawful order of, a practitioner, irrespective 
        of whether the dispenser uses the Internet or other means to 
        effect such delivery.
            ``(4) The term `dispenser' means a physician, pharmacist, 
        or other individual who dispenses a controlled substance to an 
        ultimate user or research subject.
            ``(5) The term `practitioner' means a physician, dentist, 
        veterinarian, scientific investigator, pharmacy, hospital, or 
        other person licensed, registered, or otherwise permitted, by 
        the United States or the jurisdiction in which he or she 
        practices or does research, to distribute, dispense, conduct 
        research with respect to, administer, or use in teaching or 
        chemical analysis, a controlled substance in the course of 
        professional practice or research.
            ``(6) The term `State' means each of the 50 States and the 
        District of Columbia.
            ``(7) The term `ultimate user' means a person who has 
        lawfully obtained, and who possesses, a controlled substance 
        for his or her own use, for the use of a member of his or her 
        household, or for the use of an animal owned by him or her or 
        by a member of his or her household.
    ``(n) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated--
            ``(1) $25,000,000 for each of fiscal years 2006 and 2007; 
        and
            ``(2) $15,000,000 for each of fiscal years 2008, 2009, and 
        2010.''.

            Passed the House of Representatives October 5, 2004.

            Attest:

                                                 JEFF TRANDAHL,

                                                                 Clerk.
Output: National All Schedules Prescription Electronic Reporting Act of 2004 - Amends the Public Health Service Act to require the Secretary of Health and Human Services to award grants to approved States to establish a controlled substance monitoring program. Bases the amount of each grant on the ratio of pharmacies in the State receiving such a grant to the number of pharmacies in all approved States.

Requires a State to submit a grant application that shall include proposed penalties for illegal redisclosure of information and proposed standards for: (1) information security; (2) availability of information and limitation on access to program personnel; (3) database access and integrity; and (4) redisclosure of information. Requires the Secretary to approve such an application if the State demonstrates that it will establish or operate a controlled substance monitoring program in accordance with this Act.

Requires an approved State to give notice if it fails to implement such a program. Requires the Secretary to withdrawal approval if the State fails to take corrective action within a reasonable period of time.

Requires an approved State to give the Secretary notice before ceasing to implement or operate such a program.

Requires an approved State to: (1) require dispensers to report within one week of each dispensing of a controlled substance to an ultimate user or research subject; (2) report information in accordance with the specified electronic format; (3) automatically share with another approved State information concerning the dispensing of a controlled substance to a user or subject who resides in such other State or by a practitioner whose principal place of business is in such other State.

Allows a State to notify the appropriate authorities responsible for drug diversion investigations if information in the database indicates an unlawful diversion or misuse of a controlled substance.

Requires the State to establish and maintain an electronic searchable database containing the information reported.

Allows a State to provide information from the database in response to certain requests by practitioners, law enforcement, narcotics control, licensure, disciplinary, or program authorities, the controlled substance monitoring program of another State, and agents of the Department of Health and Human Services (HHS), State Medicaid programs, State health departments, or the Drug Enforcement Administration (DEA). Requires a State to make reasonable efforts to limit the information provided to the minimum necessary and to withhold all individually identifiable information from requests by HHS, State Medicaid programs, State health departments, or DEA.

Requires the Secretary to: (1) specify a uniform electronic format for the reporting, sharing, and provision of information; (2) give preference to approved States in awarding competitive grants related to drug use beginning January 1, 2007; (3) study and report to Congress on such programs, including the progress of States in establishing such programs, the feasibility of implementing a real-time electronic controlled substance monitoring program, and privacy protections.

Authorizes appropriations.