Drugs

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.).

 

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