What This Bill Does
This bill creates a pilot program to build stockpiles of generic drugs that are at risk of running out so Americans can access these medicines. The Secretary (the head of a federal health agency) will award contracts to eligible businesses to buy, store, manage and distribute these drugs to customers across the country.
Who It Affects
• The Secretary of Health and Human Services
• Eligible entities (manufacturers, wholesale distributors, pharmacy co-ops and chain pharmacy warehouses) that enter contracts
• Wholesale distributors and dispensers (pharmacies) that receive drugs from stockpiles
• Consumers in the United States who need access to generic drugs
Key Provisions
• The Secretary must award contracts to eligible entities starting no later than January 1, 2024, to create and manage stockpiles of up to 50 selected generic drugs that have faced shortages (Sec. 340J(a) and (b)).
• Each stockpile must contain enough drugs to supply American customers for at least 6 months based on historic demand, and the Secretary will specify the exact quantity needed for each drug (Sec. 340J(a) and (c)).
• Contracts can last no more than 3 years, and eligible entities can sell off their stockpiled drugs through regular commercial channels when the contract ends (Sec. 340J(d)).
• The Secretary will pay eligible entities monthly fees to manage their stockpiles, but payment only begins after the entity proves it has stockpiled an acceptable amount as determined by the Secretary (Sec. 340J(f)).
• The Secretary may pay advance amounts up to 10 percent of the total contract value if needed to help the entity succeed, and can also pay for additional capital costs related to storing the extra inventory (Sec. 340J(f)(1)(B)).
• The Comptroller General (an independent government auditor) must evaluate the program 1 year after it starts and every year after, then report to Congress on costs, savings, whether shortages were prevented, and how well eligible entities followed their contracts (Sec. 340J(g)).
What Changes
If this bill becomes law, the federal government will create a new system where private businesses store extra supplies of certain generic drugs that frequently run out. These businesses will receive monthly payments to maintain these stockpiles and must keep drugs in stock for at least 6 months. When the private sector normally sells these drugs through their usual business channels, it helps prevent shortages without the government building its own storage facilities.
Important Definitions
• Eligible entity: A business that is licensed under federal and state law, sells more than 90 percent of its drugs to pharmacies or other dispensers, and agrees to buy drugs directly from manufacturers or authorized distributors and only sell them to its regular customers (Sec. 340J(h)(1)).
• Generic drug at risk of shortage: A drug approved through a specific federal process, listed as essential by the Food and Drug Administration, that appeared on the federal drug shortage list sometime in the last 3 years, and is made by 3 or fewer manufacturers (Sec. 340J(h)(2)).
Effective Date
Not specified in bill text
I
118TH CONGRESS
1ST SESSION
H. R. 405
To amend the Public Health Service Act to provide for stockpiles to ensure
that all Americans have access to generic drugs at risk of shortage,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 20, 2023
Mr. CARTER of Georgia (for himself and Ms. BLUNT ROCHESTER) introduced
the following bill; which was referred to the Committee on Energy and
Commerce
A BILL
To amend the Public Health Service Act to provide for
stockpiles to ensure that all Americans have access to
generic drugs at risk of shortage, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Essential Medicines
4
Strategic Stockpile Act of 2023’’.
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SEC. 2. PILOT PROGRAM ON ENSURING MEDICATION SUP-
1
PLY STABILITY.
2
Part D of title III of the Public Health Service Act
3
(42 U.S.C. 254b et seq.) is amended by adding at the end
4
the following new subpart:
5
‘‘Subpart XIII—Ensuring Medication Supply Stability
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‘‘SEC. 340J. ENSURING MEDICATION SUPPLY STABILITY.
7
‘‘(a) AWARD OF CONTRACTS.—Beginning not later
8
than January 1, 2024, the Secretary shall award contracts
9
to eligible entities to each implement and test the effective-
10
ness of acquiring, maintaining, managing, and distrib-
11
uting a stockpile that—
12
‘‘(1) consists of generic drugs at risk of short-
13
age; and
14
‘‘(2) is of sufficient quantity to ensure that cus-
15
tomers in the United States have access to such
16
drugs for at least 6 months (as specified by the Sec-
17
retary based on the historic demand for those
18
drugs).
19
‘‘(b) SELECTION OF DRUGS.—
20
‘‘(1) IN GENERAL.—The Secretary shall—
21
‘‘(A) select not more than 50 drugs that
22
may be included by eligible entities in a stock-
23
pile pursuant to a contract under this section;
24
‘‘(B) maintain an up-to-date list of such
25
drugs; and
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‘‘(C) make such list publicly available.
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‘‘(2) CHOICE OF ELIGIBLE ENTITIES.—A con-
2
tract awarded to an eligible entity under this section
3
need not require the stockpile of the eligible entity
4
to include all 50 drugs listed pursuant to paragraph
5
(1).
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‘‘(c) SUFFICIENT QUANTITY.—For each generic drug
7
listed pursuant to subsection (b)(1), the Secretary shall
8
specify the quantity of such drug that is sufficient to en-
9
sure that consumers in the United States have access to
10
such drug for at least 6 months.
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‘‘(d) DURATION; LIQUIDATION OF INVENTORY.—
12
‘‘(1) DURATION.—A contract awarded under
13
this section shall be for a term of no more than 3
14
years.
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‘‘(2) LIQUIDATION
OF
INVENTORY.—A drug
16
held in a stockpile pursuant to a contract under this
17
section may be liquidated by the eligible entity at the
18
end of the period of the contract.
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‘‘(e) STOCKPILE REQUIREMENTS.—
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‘‘(1) ENSURING AVAILABILITY OF UNEXPIRED
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PRODUCTS.—Each eligible entity with a contract
22
under this section for a stockpile of generic drugs at
23
risk of shortage shall—
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‘‘(A) ensure that each drug maintained in
1
the stockpile has an expiration date at least 1
2
year beyond the current date; and
3
‘‘(B) to comply with subparagraph (A)—
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‘‘(i) sell drugs in the stockpile through
5
normal commercial channels and replace
6
those drugs; or
7
‘‘(ii) if there is no commercial market
8
for a drug in the stockpile, dispose of the
9
drug and report such disposal to the Sec-
10
retary.
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‘‘(2) MANAGEMENT OF STOCKPILE.—
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‘‘(A) IN
GENERAL.—The Secretary shall
13
ensure that—
14
‘‘(i) collectively, the eligible entities
15
with contracts under this section for a
16
stockpile of generic drugs at risk of short-
17
age acquire, not later than 6 months fol-
18
lowing the date set in such contracts, and
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maintain thereafter, a 6-month supply of
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such drugs; and
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‘‘(ii) the 6-month supply required by
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clause (i) is in addition to the average lev-
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els of inventory held by eligible entities
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over the previous year for the respective
1
drugs.
2
‘‘(B) INVENTORY MANAGEMENT.—Each el-
3
igible entity with a contract under this section
4
for a stockpile of generic drugs at risk of short-
5
age shall manage inventory to ensure that
6
drugs in the stockpile are efficiently cycled to
7
the commercial market.
8
‘‘(C) ANNUAL
AUDITS.—Not more than
9
annually, the Secretary may request a physical
10
audit count of the inventories of all eligible enti-
11
ties with a contract under this section to vali-
12
date that each such entity is maintaining the
13
appropriate amount of stockpiled inventory.
14
‘‘(3) REPORTING.—Each eligible entity with a
15
contract under this section shall submit reports at
16
such time and in such manner as the Secretary may
17
require regarding—
18
‘‘(A) current inventory levels of stockpiled
19
drugs at a drug level;
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‘‘(B) indicators of current inventory levels
21
of stockpiled drugs relative to acceptable mini-
22
mums; and
23
‘‘(C) such other matters as the Secretary
24
determines appropriate.
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‘‘(f) CONTRACT TERMS.—
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‘‘(1) PAYMENT OF MONTHLY FEES FOR MAN-
2
AGEMENT.—Subject to paragraph (2), the Secretary
3
shall pay to each eligible entity with a contract
4
under this section for a stockpile of generic drugs at
5
risk of shortage appropriate monthly fees for the
6
management of the stockpile.
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‘‘(2) PAYMENT
CONDITIONED
ON
STOCKPILE
8
ADEQUACY.—
9
‘‘(A) IN GENERAL.—Except as provided in
10
subparagraph (B), each contract with an eligi-
11
ble entity under this section shall provide that
12
no payment under the contract may be made
13
until the entity demonstrates to the Secretary
14
that the entity has stockpiled such portion of
15
the total quantity of drugs to be stockpiled
16
under the contract as the Secretary determines
17
to be acceptable for payment.
18
‘‘(B) EXCEPTIONS
FOR
ADVANCE
PAY-
19
MENTS.—
20
‘‘(i) IN GENERAL.—A contract under
21
this section may provide that, if the Sec-
22
retary determines (in the Secretary’s dis-
23
cretion) that an advance payment, partial
24
payment for significant milestones, or pay-
25
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•HR 405 IH
ment to increase capacity is necessary to
1
ensure success of the terms of the con-
2
tract, the Secretary shall pay, in advance
3
of delivery, an amount not to exceed 10
4
percent of the total contract amount to be
5
paid to the eligible entity by the Secretary
6
pursuant to the contract over the full pe-
7
riod of the contract.
8
‘‘(ii) COST OF CAPITAL.—A contract
9
under this section may provide for pay-
10
ments to compensate the contracting eligi-
11
ble entity for additional capital require-
12
ments related to the additional inventory
13
to be maintained.
14
‘‘(iii) TIMING.—The Secretary shall,
15
to the extent practicable, make any deter-
16
mination under clause (i) to make an ad-
17
vance payment at the same time as the
18
issuance of a solicitation.
19
‘‘(iv) REPAYMENT.—If the Secretary
20
makes an advance payment pursuant to
21
clause (i), the Secretary shall require the
22
eligible entity receiving such advance pay-
23
ment to repay it if there is a failure to per-
24
form by the eligible entity.
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•HR 405 IH
‘‘(3) TERMINATION.—Nothing in this section
1
shall be construed as affecting the rights of eligible
2
entities under provisions of statute or regulation (in-
3
cluding the Federal Acquisition Regulation) relating
4
to the termination of contracts for the convenience
5
of the Government.
6
‘‘(g) CONGRESSIONAL OVERSIGHT.—
7
‘‘(1) INDEPENDENT
EVALUATION
AND
RE-
8
PORT.—Not later than 1 year after the date of en-
9
actment of this section and annually thereafter, the
10
Comptroller General of the United States shall con-
11
duct an independent evaluation, and submit to the
12
appropriate congressional committees a report, con-
13
cerning the program under this section.
14
‘‘(2) CONTENTS OF REPORT.—The report under
15
paragraph (1) shall review, assess, and provide rec-
16
ommendations, as appropriate, on the following:
17
‘‘(A) Details on likely costs and resultant
18
savings as compared to a stockpiling method
19
that does not incorporate perpetual inventory
20
cycling.
21
‘‘(B) Identification of drawdowns from the
22
stockpile, as evidence of market shortage avoid-
23
ance.
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•HR 405 IH
‘‘(C) The allocation of drugs included in
1
the stockpiles funded pursuant to this section to
2
the customers of the eligible entities with con-
3
tracts under this section.
4
‘‘(D) The degree to which eligible entities
5
with contracts under this section fulfilled their
6
obligations under such contracts.
7
‘‘(h) DEFINITIONS.—In this section:
8
‘‘(1) The term ‘eligible entity’ means an entity
9
that meets each of the following criteria:
10
‘‘(A) The entity is licensed or registered in
11
accordance with applicable Federal and State
12
law and in good standing with respect to such
13
licensure or registration.
14
‘‘(B) If the entity is not a manufacturer,
15
the entity agrees—
16
‘‘(i) to purchase all drugs to be main-
17
tained in its stockpile funded under this
18
section directly from the manufacturers of
19
the drugs or the exclusive distributors of
20
such manufacturers; or
21
‘‘(ii) in the case of an entity that is a
22
co-op or chain pharmacy warehouse—
23
‘‘(I) to purchase drugs to be
24
maintained in its stockpile funded
25
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•HR 405 IH
under this section from an authorized
1
distributor; and
2
‘‘(II) distribute those drugs only
3
to its member pharmacies.
4
‘‘(C) The entity sells more than 90 percent
5
of its drugs to dispensers.
6
‘‘(D) The entity agrees to distribute inven-
7
tory from its stockpile funded under this section
8
only to wholesale distributors or dispensers that
9
are customers of the entity.
10
‘‘(2) The term ‘generic drug at risk of shortage’
11
means a drug (as defined in section 201 of the Fed-
12
eral Food, Drug, and Cosmetic Act) that—
13
‘‘(A) is approved pursuant to section
14
505(j) of such Act;
15
‘‘(B) is included in the list of essential
16
medicines published by the Food and Drug Ad-
17
ministration;
18
‘‘(C) is included, at any point during the
19
preceding 36 months, on the drug shortage list
20
in effect under section 506E of the Federal
21
Food, Drug, and Cosmetic Act; and
22
‘‘(D) is manufactured by 3 or fewer per-
23
sons that are registered under section 510 of
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•HR 405 IH
the Federal Food, Drug, and Cosmetic Act for
1
purposes of such manufacture.
2
‘‘(i) AUTHORIZATION
OF
APPROPRIATIONS.—To
3
carry out this section, there is authorized to be appro-
4
priated $120,000,000 for fiscal years 2024 through 2026,
5
to remain available until expended.’’.
6
Æ
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