Title II of the Drug Quality and Security Act
DRUG SUPPLY CHAIN SECURITY
SEC. 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 H--Pharmaceutical Distribution Supply Chain
``SEC. 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 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.
``(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.
``(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;
``(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);
``(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;
``(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. 582. REQUIREMENTS.
``(a) In General.--
``(1) 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) 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, 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 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) 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) 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) 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
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) 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) 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) 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
``(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) 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) 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. Such manufacturer
shall maintain the product identifier information for such
product for not less than 6 years after the date of the
transaction.
``(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) 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) 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) 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) 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) 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) 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;
``(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) 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) 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) 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) 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 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) 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) 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,
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--
``(I) 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) 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) 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 processor, without
providing the information required under subparagraph
(A)(i).
``(C) 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) 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) 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) 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)),
verifying the product at the package level, including
the standardized numerical identifier.
``(ii) 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) 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) 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) 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) 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
distributor shall promptly notify immediate trading
partners that the wholesale distributor notified pursuant
to clause (ii) that such notification has been terminated.
``(v) 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. 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) 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 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. 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) 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.
``(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) 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) 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) 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) 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) 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) 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;
``(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) 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) 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
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) 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) 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
``(iv) 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) 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) 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) 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) 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) 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) 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) quarantine such product within the possession
or control of the repackager from product 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) 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) 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) 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) 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 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) 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, as added by section 202, is amended by adding at the
end the following:
``(g) Enhanced Drug Distribution Security.--
``(1) 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.
``(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. 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) 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 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) 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) 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) 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) 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--
``(i) not requiring the adoption of specific business
systems for the maintenance and transmission of data;
``(ii) 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) 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) issue a notice of proposed rulemaking that includes a
copy of the proposed regulation;
``(C) provide a period of not less than 60 days for
comments on the proposed regulation; and
``(D) 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) 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 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) 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) 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 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) 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) 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) 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 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.
``(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.--
``(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) 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) 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
``(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) 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) 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) 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) 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 (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) 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;
``(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;
``(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) 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. 583. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE
DISTRIBUTORS.
``(a) 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) 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:
``(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) issue a notice of proposed rulemaking that includes a
copy of the proposed regulation;
``(2) 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) In this subsection, the term `authorized distributors of
record' means those distributors with whom a manufacturer has
established an ongoing relationship to distribute such
manufacturer's products.''.
(c) 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. 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) 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) 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 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) 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;
``(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) issue a notice of proposed rulemaking that includes a
copy of the proposed regulation;
``(B) provide a period of not less than 60 days for
comments on the proposed regulation; and
``(C) provide that the final regulation takes effect upon
the expiration of 1 year after the date that such final
regulation is issued.
``(e) 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. 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
``(2) any restrictions specified in section 582.
``(b) Wholesale Distributor and Third-Party Logistics Provider
Standards.--
``(1) 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:
``(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) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2015.
SEC. 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.).