Pharmaceutical Supply Chain Defense and Enhancement Act

II 116TH CONGRESS 2D SESSION S. 4175 To secure the supply of drugs in the United States, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 2, 2020 Ms. WARREN (for herself and Ms. SMITH) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To secure the supply of drugs in the United States, 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 ‘‘Pharmaceutical Supply 4 Chain Defense and Enhancement Act’’. 5 SEC. 2. LISTING OF CRITICAL DRUGS. 6 (a) IN GENERAL.—Not later than 1 year after the 7 date of enactment of this Act, the Secretary, acting 8 through the Commissioner of Food and Drugs and in con- 9 sultation with the Secretary of Defense, shall develop a 10 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 4175 IS confidential list of drugs such Secretary determines to be 1 critical to the public health or national security. Such list 2 shall include the name of each such drug, as well as all 3 active pharmaceutical ingredients and starting materials 4 required for the manufacture of the drug. In developing 5 the list, the Secretary may consider the role of shortages 6 in impeding access to drugs. 7 (b) UPDATES.—The Secretary shall update the list 8 described in subsection (a) not less frequently than once 9 every 2 years. 10 (c) SUBMISSION OF LIST.—The Secretary shall sub- 11 mit the list described in subsection (a), including any up- 12 dates to such list under subsection (b), as a classified mat- 13 ter, to the Committee on Health, Education, Labor, and 14 Pensions, the Committee on Armed Services, the Com- 15 mittee on Foreign Relations, and the Committee on Bank- 16 ing, Housing, and Urban Affairs of the Senate, and to 17 the Committee on Energy and Commerce, the Committee 18 on Armed Services, the Committee on Foreign Affairs, 19 and the Committee on Financial Services of the House of 20 Representatives. 21 (d) INTERIM LIST.—During the period between the 22 date of enactment of this Act and the date on which the 23 Secretary issues the first list under subsection (a), the 24 Secretary, in consultation with the Commissioner of Food 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 4175 IS and Drugs, the Secretary of Defense, and the Assistant 1 Secretary for Preparedness and Response, shall establish 2 an interim list of drugs that will be deemed the list under 3 subsection (a) until the Secretary develops the first list 4 under subsection (a). Such interim list shall include not 5 fewer than 30 drugs, as well as the active pharmaceutical 6 ingredients and starting materials required for the manu- 7 facture of such drugs, that are— 8 (1) included on the most recent list of essential 9 medicines issued by the World Health Organization; 10 or 11 (2) countermeasures and products that could 12 replenish the strategic national stockpile. 13 (e) COMMENT PERIOD.—Not later than 60 days prior 14 to the submission of the list described in subsection (a), 15 the Secretary shall establish a comment period during 16 which the public may comment on which drugs should be 17 included on the list under subsection (a). 18 SEC. 3. BOOSTING DOMESTIC DRUG AND ACTIVE INGRE- 19 DIENT MANUFACTURING CAPACITY. 20 (a) IN GENERAL.—The Secretary, acting through the 21 Director of the Biomedical Advanced Research and Devel- 22 opment Authority, shall increase the domestic capacity to 23 manufacture active pharmaceutical ingredients and start- 24 ing materials for drugs critical to the public health and 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 4175 IS national security by entering into the contracts described 1 in subsection (b). 2 (b) CONTRACTS.— 3 (1) IN GENERAL.—To carry out subsection (a), 4 the Secretary shall enter into contracts, not later 5 than 6 months after the date of enactment of this 6 Act, as follows: 7 (A) The Secretary shall enter into con- 8 tracts with companies and nonprofit entities 9 headquartered in the United States, under 10 which such companies use manufacturing estab- 11 lishments located in the United States to manu- 12 facture the drugs included on the list under sec- 13 tion 2, and the requisite active pharmaceutical 14 ingredients and starting materials of such 15 drugs, using advanced manufacturing, including 16 continuous manufacturing where applicable. 17 (B) As a condition for entering into con- 18 tracts with the Secretary to manufacture drugs, 19 companies and nonprofit entities shall— 20 (i) develop and maintain a redun- 21 dancy risk management and continuity of 22 business plan (reviewed and approved by 23 the Secretary) that identifies and evaluates 24 risks to the supply of the drug, as applica- 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 4175 IS ble, for each establishment in which such 1 drug, and the requisite active pharma- 2 ceutical ingredients and starting materials 3 of such drug, is manufactured; 4 (ii) commit to implementing, as ap- 5 propriate, risk management and other 6 strategies to ensure that, in the case of po- 7 tential supply chain disruptions, the entity 8 can continue normal production of the 9 drug, and the requisite active pharma- 10 ceutical ingredients and starting materials 11 of such drug, for 18 months; 12 (iii) commit to maintaining, to the ex- 13 tent practicable (as determined by the Sec- 14 retary) for each drug, and the requisite ac- 15 tive pharmaceutical ingredients and start- 16 ing materials of such drug, a 3-month sup- 17 ply in order to mitigate the impact of sup- 18 ply chain disruptions and shortages; 19 (iv) commit to selling drugs, or the 20 requisite active pharmaceutical ingredients 21 and starting materials of such drugs, de- 22 veloped under contract with the Secretary 23 at fair and reasonable prices, as deter- 24 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 4175 IS mined by the Secretary, taking into consid- 1 eration— 2 (I) the impact of price on patient 3 access to the drug; 4 (II) the cost of the drug to Fed- 5 eral or State health programs; 6 (III) the cost of manufacturing 7 the drug; and 8 (IV) the impact of price on mar- 9 ket competition for the drug; and 10 (v) commit to making the prices de- 11 scribed in clause (iv) public. 12 (C) The contracts described in this para- 13 graph shall contain continuity of business 14 agreements demonstrating, in advance of receiv- 15 ing a contract, the company’s ability to rapidly 16 begin production. 17 (D) The Secretary shall enter into con- 18 tracts only with companies headquartered in the 19 United States that use manufacturing establish- 20 ments located in the United States, under 21 which such companies expand the capabilities of 22 continuous manufacturing and other advanced 23 manufacturing for the production of the active 24 pharmaceutical ingredients and starting mate- 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 4175 IS rials for the drugs included on the list under 1 section 2. 2 (E) In issuing contracts under this section, 3 the Secretary shall prioritize— 4 (i) contracts designed to enhance the 5 supply of generic drugs and biosimilar bio- 6 logical products and the requisite active 7 pharmaceutical ingredients and starting 8 materials of such generic drugs and bio- 9 similar products; and 10 (ii) contracts designed to enhance the 11 supply of drugs, and the requisite active 12 pharmaceutical ingredients and starting 13 materials of such drugs, that are not cur- 14 rently manufactured in the United States. 15 (2) INSPECTOR GENERAL REVIEW.—The In- 16 spector General of the Department of Health and 17 Human Services shall conduct a review of not fewer 18 than 1 of every 3 contracts entered into under this 19 section, and of the entities entering into such con- 20 tracts, to ensure that contracts are being issued 21 under fair and reasonable terms and conditions, in- 22 cluding facilitating the procurement by the Federal 23 Government of applicable products under section 2 24 and applicable drugs, biological products, and med- 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 4175 IS ical devices at fair and reasonable prices. The In- 1 spector General shall make each such review public 2 and, in cases where such a review identifies unrea- 3 sonable prices, submit recommendations to Congress 4 on how the Office should improve its contracting 5 systems to ensure reasonable pricing. 6 (3) FUNDING.—To carry out this section, there 7 are authorized to be appropriated $5,000,000,000 8 for the period of fiscal years 2020 and 2024. Not 9 later than April 1, 2024, the Secretary shall report 10 to the congressional committees listed under section 11 2(c) of this Act, and provide a recommendation for 12 renewal of funding under this paragraph. 13 (c) FEDERAL PROCUREMENT OF DOMESTICALLY 14 MANUFACTURED DRUGS.— 15 (1) PROCUREMENT OF DRUGS.— 16 (A) IN GENERAL.—Beginning in fiscal year 17 2024, when purchasing any drug included on 18 the list under section 2, the Secretary of De- 19 fense, the Secretary of Veterans Affairs, the Di- 20 rector of the Bureau of Prisons, and, for pur- 21 poses of maintaining the strategic national 22 stockpile, the Secretary of Health and Human 23 Services, shall give priority to supplies of the 24 drug manufactured in the United States (in- 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 4175 IS cluding all active pharmaceutical ingredient and 1 starting materials of the drug) that is of high 2 quality. 3 (B) USE OF REMAINING FUNDS.—In the 4 case that a Federal agency described in this 5 paragraph that, after purchasing all drugs on 6 the list under section 2 needed by such agency 7 for a fiscal year, has funds appropriated under 8 paragraph (2) for that fiscal year remaining, 9 such Federal agency may use the remaining 10 funds to purchase drugs wholly manufactured 11 in the United States that are not included on 12 the list under section 2. 13 (2) FUNDING.— 14 (A) IN GENERAL.—There are authorized to 15 be appropriated to each of the Secretary of De- 16 fense, the Secretary of Veterans Affairs, the 17 Bureau of Prisons, and the Secretary of Health 18 and Human Services, $1,000,000,000 for the 19 period of fiscal years 2024 and 2028, to be 20 used to purchase drugs manufactured in the 21 United States, as described in paragraph (1). 22 (B) REVERSION.—All funds that are ap- 23 propriated under this paragraph for a fiscal 24 year, but not expended by the end of the fiscal 25 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 4175 IS year, shall revert to the General Fund of the 1 Treasury. 2 (C) NO DIVERSION OR TRANSFER OF 3 FUNDS.—No funding appropriated under this 4 section shall be diverted, transferred, or other- 5 wise made available for purposes beyond what 6 is described in this Act. 7 (3) NIH AUTHORIZATION.—There are author- 8 ized to be appropriated to the Director of the Na- 9 tional Institutes of Health, for each fiscal year for 10 which amounts are appropriated under paragraph 11 (2) but not expended in full, an amount equal to the 12 amount that reverts to the Treasury for such year, 13 as described in paragraph (2). Such amounts shall 14 be used by the Director of the National Institutes of 15 Health to carry out biomedical research. 16 SEC. 4. SUPPLY CHAIN TRANSPARENCY. 17 (a) DOMESTIC SUPPLIERS TO FEDERAL PRO- 18 GRAMS.—Each domestic manufacturer of a drug that sup- 19 plies such drug to the Department of Defense, the Depart- 20 ment of Veterans Affairs, the Department of Health and 21 Human Services, or the Bureau of Prisons, or a domestic 22 manufacturer of an active ingredient of a drug so supplied, 23 shall— 24 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 4175 IS (1) report annually to the Secretary and the 1 agency receiving such drug on— 2 (A) whether any ingredients of such drug 3 is sourced, either wholly or in part, from a for- 4 eign country; 5 (B) in the case of an active pharmaceutical 6 ingredient or key starting material that the 7 manufacturer procures from a single source in 8 a single foreign country, as applicable— 9 (i) not less than 2 alternative sources 10 of any active pharmaceutical ingredient or 11 key starting material; 12 (ii) 1 such alternative source, if only 13 1 such alternative source is available; or 14 (iii) a statement that no such alter- 15 native sources are available; and 16 (C) an assessment of the resilience and ca- 17 pacity of the alternate sources identified under 18 subparagraph (B); and 19 (2) develop continuity of business plans to pre- 20 vent the disruption of any drug listed under section 21 2, including any active or inactive ingredients of 22 such drug, which the Secretary may audit. 23 (b) FOREIGN DRUG SUPPLIERS.— 24 VerDate Sep 11 2014 19:46 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4175.IS S4175 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 4175 IS (1) ESTABLISHMENTS IN A FOREIGN COUN- 1 TRY.—Section 510(i) of the Federal Food, Drug, 2 and Cosmetic Act (21 U.S.C. 360(i)) is amended by 3 inserting at the end the following: 4 ‘‘(5) The requirements of paragraphs (1) and (2) 5 shall apply to establishments within a foreign country en- 6 gaged in the manufacture, preparation, propagation, 7 compounding, or processing of any drug that is required 8 to be listed pursuant to subsection (j), or of any active 9 pharmaceutical ingredient of such a drug. Such require- 10 ments shall apply regardless of whether the drug or active 11 pharmaceutical ingredient undergoes further manufacture, 12 preparation, propagation, compounding, or processing at [Text truncated for display. Full text available on Congress.gov.]