Enhancing the Security of the U.S. Pharmaceutical Supply Chain Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8987 To amend the Public Health Service Act to incentivize the manufacture of certain medicines in the United States and to enhance the security of the United States pharmaceutical supply chain, and for other pur- poses. IN THE HOUSE OF REPRESENTATIVES DECEMBER 16, 2020 Mr. JOYCE of Pennsylvania introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Com- mittee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Public Health Service Act to incentivize the manufacture of certain medicines in the United States and to enhance the security of the United States phar- maceutical supply chain, 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 ‘‘Enhancing the Secu- 4 rity of the U.S. Pharmaceutical Supply Chain Act of 5 2020’’. 6 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 8987 IH SEC. 2. TABLE OF CONTENTS. 1 The table of contents for this Act is as follows: 2 Sec. 1. Short title. Sec. 2. Table of contents. Sec. 3. Identification, development, and procurement of priority medicines. Sec. 4. Priority medicine production credit. Sec. 5. Improving regulatory efficiencies for transfer of drugs. SEC. 3. IDENTIFICATION, DEVELOPMENT, AND PROCURE- 3 MENT OF PRIORITY MEDICINES. 4 (a) PRIORITY MEDICINES.—Title XXVIII of the Pub- 5 lic Health Service Act (42 U.S.C. 300hh et seq.) is amend- 6 ed by adding at the end the following: 7 ‘‘SEC. 2804. IDENTIFICATION OF PRIORITY MEDICINES. 8 ‘‘(a) PRIORITY MEDICINES.—The Secretary shall 9 designate as a priority medicine each covered product 10 that— 11 ‘‘(1)(A) is necessary for use in a public health 12 emergency declared under section 319; or 13 ‘‘(B) is at high risk of becoming in short sup- 14 ply; and 15 ‘‘(2) has a vulnerable global supply chain. 16 ‘‘(b) GLOBAL SUPPLY CHAIN VULNERABILITY.—In 17 determining whether a covered product has a vulnerable 18 global supply chain under subsection (a)(2), the Secretary 19 shall consider— 20 ‘‘(1) the findings of the National Academies of 21 Sciences, Engineering, and Medicine in the report 22 VerDate Sep 11 2014 20:49 Jan 12, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 8987 IH published pursuant to section 4111 of the CARES 1 Act (Public Law 116–136); 2 ‘‘(2) the number of manufacturers of each cov- 3 ered product; 4 ‘‘(3) the manufacturing locations, and amount 5 produced, of each covered product; 6 ‘‘(4) the history of the importation of each pri- 7 ority medicine; and 8 ‘‘(5) the probability of the imposition of duties 9 on the importation of each covered product. 10 ‘‘(c) CONSULTATION.—In carrying out subsection 11 (a), the Secretary shall consult with the Public Health 12 Emergency Medical Countermeasures Enterprise estab- 13 lished under section 2811–1. 14 ‘‘(d) PUBLICATION OF LIST.—The Secretary shall— 15 ‘‘(1) not later than 180 days after the date of 16 enactment of this section, publish a preliminary list 17 of priority medicines; 18 ‘‘(2) provide an opportunity for public comment 19 on such preliminary list; 20 ‘‘(3) not later than 1 year after such date of en- 21 actment, publish a final list of priority medicines; 22 and 23 ‘‘(4) on an annual basis, review and, as appro- 24 priate, update such list. 25 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 8987 IH ‘‘(e) DEFINITIONS.—In this section: 1 ‘‘(1) ACTIVE PHARMACEUTICAL INGREDIENT.— 2 The term ‘active pharmaceutical ingredient’— 3 ‘‘(A) means any component that is in- 4 tended to furnish pharmacological activity or 5 other direct effect in the diagnosis, cure, miti- 6 gation, treatment, or prevention of a disease, or 7 to affect the structure or any function of the 8 body of a human or animal; and 9 ‘‘(B) does not include— 10 ‘‘(i) intermediates used in the syn- 11 thesis of a drug product; or 12 ‘‘(ii) components that may undergo 13 chemical change in the manufacture of a 14 drug product and be present in a drug 15 product in a modified form that is in- 16 tended to furnish such activity or effect. 17 ‘‘(2) COVERED PRODUCT.—The term ‘covered 18 product’ means a drug (including a biological prod- 19 uct) or an active pharmaceutical ingredient. 20 ‘‘(3) PRIORITY MEDICINE.—The term ‘priority 21 medicine’ means a priority medicine for which a des- 22 ignation is in effect under subsection (a).’’. 23 (b) NATIONAL STRATEGIC HEALTH STRATEGY.— 24 Section 2802(b) of the Public Health Service Act (42 25 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 8987 IH U.S.C. 300hh–1(b)) is amended by adding at the end the 1 following: 2 ‘‘(11) PRIORITY MEDICINES.—Supporting the 3 identification, production, and procurement of pri- 4 ority medicines designated under section 2804.’’. 5 (c) PUBLIC HEALTH EMERGENCY MEDICAL COUN- 6 TERMEASURES ENTERPRISE RECOMMENDATIONS.—Sec- 7 tion 2811–1(c)(1) of the Public Health Service Act (42 8 U.S.C. 300hh–10a(c)) is amended by adding at the end 9 the following: 10 ‘‘(E) Provide recommendations to the Sec- 11 retary with respect to the priority medicines 12 designated under section 2804.’’. 13 (d) STRATEGIC PLAN FOR COUNTERMEASURE RE- 14 SEARCH, DEVELOPMENT, AND PROCUREMENT.—Section 15 319L(b) of the Public Health Service Act (42 U.S.C. 16 247d–7e(b)) is amended— 17 (1) in paragraph (2)— 18 (A) in subparagraph (B), by striking 19 ‘‘and’’ at the end; 20 (B) in subparagraph (C), by striking the 21 period at the end and inserting ‘‘; and’’; and 22 (C) by adding at the end the following: 23 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 8987 IH ‘‘(D) the development and procurement of 1 priority medicines designated under section 2 2804.’’; and 3 (2) by adding at the end the following: 4 ‘‘(3) PRIORITY MEDICINES.—With respect to 5 the development and procurement of priority medi- 6 cines, the Secretary shall promote a diverse and sus- 7 tainable supply chain, including through grants and 8 purchases.’’. 9 (e) CRITICAL DRUG CONSIDERATION.—Section 3101 10 of the CARES Act (Public Law 116–136) is amended— 11 (1) by redesignating subsection (d) as sub- 12 section (e); and 13 (2) after executing the redesignation in para- 14 graph (1), by inserting after subsection (c) the fol- 15 lowing: 16 ‘‘(d) CONSIDERATION.—With respect to any analysis 17 of a critical drug under subsection (b)(1), the Secretary 18 shall consider the vulnerability of such drug with respect 19 to the global supply chain, including an analysis of— 20 ‘‘(1) the number of manufacturers of such 21 drug; 22 ‘‘(2) the manufacturing locations, and amounts 23 produced, of such drug; 24 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 8987 IH ‘‘(3) the history of the importation of such 1 drug; and 2 ‘‘(4) the probability of the imposition of duties 3 on the importation of such drug.’’. 4 SEC. 4. PRIORITY MEDICINE PRODUCTION CREDIT. 5 (a) IN GENERAL.—Subpart D of part IV of sub- 6 chapter A of chapter 1 of the Internal Revenue Code of 7 1986 is amended by adding at the end the following new 8 section: 9 ‘‘SEC. 45U. PRIORITY MEDICINE PRODUCTION CREDIT. 10 ‘‘(a) GENERAL RULE.—For purposes of section 38, 11 the priority medicine production credit determined under 12 this section for the taxable year is an amount equal to 13 50 percent of the qualified priority medicine expenses for 14 the taxable year. 15 ‘‘(b) QUALIFIED PRIORITY MEDICINE EXPENSES.— 16 ‘‘(1) QUALIFIED PRIORITY MEDICINE EX- 17 PENSES.—The term ‘qualified priority medicine ex- 18 penses’ means direct and indirect costs paid or in- 19 curred by the taxpayer during the taxable year for 20 the production of priority medicines. 21 ‘‘(2) PRIORITY MEDICINES.—For purposes of 22 this section, a ‘priority medicine’ is a medicine that 23 was included, within the 5 calendar years imme- 24 diately preceding the taxable year, on the list devel- 25 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 8987 IH oped and published by the Secretary of Health and 1 Human Services pursuant to section 2804(d) of the 2 Public Health Service Act. 3 ‘‘(3) COORDINATION WITH SECTION 263A.— 4 ‘‘(A) COORDINATION WITH SECTION 5 263A.—In applying section 263A, indirect costs 6 shall be allocated between the production of pri- 7 ority medicines and the production of other 8 medicines based on the ratio in which the num- 9 ber of doses of the priority medicines produced 10 in the taxable year bears to the total number of 11 doses of all medicines produced by the taxpayer 12 in that taxable year to which the expense is at- 13 tributable. 14 ‘‘(B) REGULATIONS AND GUIDANCE.—The 15 Secretary shall by regulation or other guidance 16 prescribe rules for the proper allocation of indi- 17 rect costs described in subparagraph (A).’’. 18 (b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec- 19 tion 38(b) of the Internal Revenue Code of 1986 (relating 20 to current year business credit) is amended by striking 21 ‘‘plus’’ at the end of paragraph (32), by striking the period 22 at the end of paragraph (33) and inserting ‘‘, plus’’, and 23 adding at the end the following new paragraph: 24 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 8987 IH ‘‘(34) the priority medicine production credit 1 determined under section 45U.’’. 2 (c) CONFORMING AMENDMENTS.— 3 (1) COORDINATION WITH SECTION 59.— 4 (A) Section 59A(b)(1)(B)(ii) is amended— 5 (i) in subclause (I), by striking 6 ‘‘plus,’’ at the end; 7 (ii) in subclause (II), by striking the 8 period at the end, and inserting ‘‘, plus’’; 9 and 10 (iii) by adding at the end the fol- 11 lowing: 12 ‘‘(III) the credit allowed under 13 section 38 for the taxable year which 14 is properly allocable to the priority 15 medicine production credit determined 16 under section 45U.’’. 17 (B) Section 59A(b)(2)(B) is amended to 18 read as follows: 19 ‘‘(B) by reducing (but not below zero) the 20 regular tax liability (as defined in section 21 26(b)) for purposes of subparagraph (B) there- 22 of by the excess (if any) of the aggregate 23 amount of the credits allowed under this chap- 24 ter against such regular tax liability over the 25 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 8987 IH credit allowed under section 38 for the taxable 1 year which is properly allocable to the priority 2 medicine production credit determined under 3 section 45U, rather than the excess described in 4 such paragraph.’’. 5 (2) COORDINATION WITH RESEARCH CREDIT.— 6 Section 41(c)(4)(A) is amended by striking ‘‘14’’ 7 and inserting ‘‘20’’. 8 (d) CLERICAL AMENDMENT.—The table of sections 9 for subpart D of part IV of subchapter A of part IV of 10 subchapter A of chapter 1 of the Internal Revenue Code 11 of 1986 is amended by inserting after the item relating 12 to section 45T the following new item: 13 ‘‘Sec. 45U. Priority medicine production credit.’’ (e) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to qualified priority medicine ex- 15 penses paid or incurred after December 31, 2020. 16 SEC. 5. IMPROVING REGULATORY EFFICIENCIES FOR 17 TRANSFER OF DRUGS. 18 The Federal Food, Drug, and Cosmetic Act (21 19 U.S.C. 301 et seq.) is amended by inserting after section 20 505–1 of such Act (21 U.S.C. 355–1) the following: 21 ‘‘SEC. 505–2. TRANSFER OF DRUGS TO DOMESTIC ESTAB- 22 LISHMENTS. 23 ‘‘(a) IN GENERAL.—Beginning not later than 90 24 days after the date of the enactment of this section, the 25 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 8987 IH Secretary shall expedite the review and approval of a sup- 1 plemental application to an abbreviated new drug applica- 2 tion approved under section 505(j) or a new drug applica- 3 tion approved under section 505(c) that seeks to transfer 4 manufacturing of one or more finished dosage forms of 5 a drug or one or more active pharmaceutical ingredients 6 therein from one or more foreign establishments to one 7 or more new or existing domestic establishments. 8 ‘‘(b) BEFORE SUPPLEMENTAL APPLICATION SUB- 9 MISSION.— 10 ‘‘(1) DEVELOPMENT AND PRE-SUBMISSION.— 11 After an applicant submits a meeting request with 12 respect to expedited review and approval of a supple- 13 mental application pursuant to subsection (a), the 14 Secretary shall— 15 ‘‘(A) not later than 30 days after receiving 16 such request, conduct a meeting with the appli- 17 cant to— 18 ‘‘(i) discuss the information necessary 19 to approve the supplemental application; 20 and 21 ‘‘(ii) if applicable, schedule a pre-ap- 22 proval inspection; and 23 VerDate Sep 11 2014 04:16 Jan 08, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8987.IH H8987 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 8987 IH ‘‘(B) not later than 60 days after receiving 1 such request, conduct a meeting with the appli- 2 cant to— 3 ‘‘(i) provide advice to the applicant 4 with respect to the supplemental applica- 5 tion; and 6 ‘‘(ii) if applicable, select a first drug 7 to be identified in accordance with sub- 8 section (c). 9 ‘‘(2) REVIEW AND APPROVAL.—In carrying out 10 subsection (a), the Secretary shall— 11 ‘‘(A) review and take action with respect to 12 a supplemental application not later than 6 13 months after the date of submission or resub- 14 mission of such application; and 15 ‘‘(B) where the Secretary recommends a 16 change to a domestic establishment following an 17 inspection of such establishment, reinspect the 18 establishment not later than 90 days after re- 19 ceiving a request from the applicant for rein- 20 spection. 21 ‘‘(3) RELATION TO FEE PERFORMANCE 22 GOALS.—The deadlines specified in paragra [Text truncated for display. 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