Sec. 204. NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE DISTRIBUTORS
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## 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 **[**[21 U.S.C. 353 note](/us/usc/t21/s353)**]** The amendments made by subsections
(a)and
(b)shall take effect on January 1, 2015.
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Sec. 204
NATIONAL STANDARDS FOR PRESCRIPTION DRUG WHOLESALE DISTRIBUTORS
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