Essential Medicines Strategic Stockpile Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2870 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 APRIL 28, 2021 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 2021’’. 5 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2870 IH SEC. 2. PILOT PROGRAM ON ENSURING MEDICATION SUP- 1 PLY STABILITY. 2 Part D of the Public Health Service Act (42 U.S.C. 3 254b et seq.) is amended by adding at the end the fol- 4 lowing new subpart: 5 ‘‘Subpart XIII—Ensuring Medication Supply Stability 6 ‘‘SEC. 340J. ENSURING MEDICATION SUPPLY STABILITY. 7 ‘‘(a) AWARD OF CONTRACTS.—Beginning not later 8 than January 1, 2022, 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 and 25 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2870 IH ‘‘(B) maintain an up-to-date list of such 1 drugs; and 2 ‘‘(C) make such list publicly available. 3 ‘‘(2) CHOICE OF ELIGIBLE ENTITIES.—A con- 4 tract awarded to an eligible entity under this section 5 need not require the stockpile of the eligible entity 6 to include all 50 drugs listed pursuant to paragraph 7 (1). 8 ‘‘(c) SUFFICIENT QUANTITY.—For each generic drug 9 listed pursuant to subsection (b)(1), the Secretary shall 10 specify the quantity of such drug that is sufficient to en- 11 sure that consumers in the United States have access to 12 such drug for at least 6 months. 13 ‘‘(d) DURATION; LIQUIDATION OF INVENTORY.— 14 ‘‘(1) DURATION.—A contract awarded under 15 this section shall be for a term of no more than 3 16 years. 17 ‘‘(2) LIQUIDATION OF INVENTORY.—A drug 18 held in a stockpile pursuant to a contract under this 19 section may be liquidated by the eligible entity at the 20 end of the period of the contract. 21 ‘‘(e) STOCKPILE REQUIREMENTS.— 22 ‘‘(1) ENSURING AVAILABILITY OF UNEXPIRED 23 PRODUCTS.—Each eligible entity with a contract 24 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2870 IH under this section for a stockpile of generic drugs at 1 risk of shortage shall— 2 ‘‘(A) ensure that each drug maintained in 3 the stockpile has an expiration date at least 1 4 year beyond the current date; and 5 ‘‘(B) to comply with subparagraph (A)— 6 ‘‘(i) sell drugs in the stockpile through 7 normal commercial channels and replace 8 those drugs; or 9 ‘‘(ii) if there is no commercial market 10 for a drug in the stockpile, dispose of the 11 drug and report such disposal to the Sec- 12 retary. 13 ‘‘(2) MANAGEMENT OF STOCKPILE.— 14 ‘‘(A) IN GENERAL.—The Secretary shall 15 ensure that— 16 ‘‘(i) collectively, the eligible entities 17 with contracts under this section for a 18 stockpile of generic drugs at risk of short- 19 age acquire, not later than 6 months fol- 20 lowing the date set in such contracts, and 21 maintain thereafter, a 6-month supply of 22 such drugs; and 23 ‘‘(ii) the 6-month supply required by 24 clause (i) is in addition to the average lev- 25 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2870 IH els of inventory held by eligible entities 1 over the previous year for the respective 2 drugs. 3 ‘‘(B) INVENTORY MANAGEMENT.—Each el- 4 igible entity with a contract under this section 5 for a stockpile of generic drugs at risk of short- 6 age shall manage inventory to ensure that 7 drugs in the stockpile are efficiently cycled to 8 the commercial market. 9 ‘‘(C) ANNUAL AUDITS.—Not more than 10 annually, the Secretary may request a physical 11 audit count of the inventories of all eligible enti- 12 ties with a contract under this section to vali- 13 date that each such entity is maintaining the 14 appropriate amount of stockpiled inventory. 15 ‘‘(3) REPORTING.—Each eligible entity with a 16 contract under this section shall submit reports at 17 such time and in such manner as the Secretary may 18 require regarding— 19 ‘‘(A) current inventory levels of stockpiled 20 drugs at a drug level; 21 ‘‘(B) indicators of current inventory levels 22 of stockpiled drugs relative to acceptable mini- 23 mums; and 24 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2870 IH ‘‘(C) such other matters as the Secretary 1 determines appropriate. 2 ‘‘(f) CONTRACT TERMS.— 3 ‘‘(1) PAYMENT OF MONTHLY FEES FOR MAN- 4 AGEMENT.—Subject to paragraph (2), the Secretary 5 shall pay to each eligible entity with a contract 6 under this section for a stockpile of generic drugs at 7 risk of shortage appropriate monthly fees for the 8 management of the stockpile. 9 ‘‘(2) PAYMENT CONDITIONED ON STOCKPILE 10 ADEQUACY.— 11 ‘‘(A) IN GENERAL.—Except as provided in 12 subparagraph (B), each contract with an eligi- 13 ble entity under this section shall provide that 14 no payment under the contract may be made 15 until the entity demonstrates to the Secretary 16 that the entity has stockpiled such portion of 17 the total quantity of drugs to be stockpiled 18 under the contract as the Secretary determines 19 to be acceptable for payment. 20 ‘‘(B) EXCEPTIONS FOR ADVANCE PAY- 21 MENTS.— 22 ‘‘(i) IN GENERAL.—A contract under 23 this section may provide that, if the Sec- 24 retary determines (in the Secretary’s dis- 25 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2870 IH cretion) that an advance payment, partial 1 payment for significant milestones, or pay- 2 ment to increase capacity is necessary to 3 ensure success of the terms of the con- 4 tract, the Secretary shall pay, in advance 5 of delivery, an amount not to exceed 10 6 percent of the total contract amount to be 7 paid to the eligible entity by the Secretary 8 pursuant to the contract over the full pe- 9 riod of the contract. 10 ‘‘(ii) COST OF CAPITAL.—A contract 11 under this section may provide for pay- 12 ments to compensate the contracting eligi- 13 ble entity for additional capital require- 14 ments related to the additional inventory 15 to be maintained. 16 ‘‘(iii) TIMING.—The Secretary shall, 17 to the extent practicable, make any deter- 18 mination under clause (i) to make an ad- 19 vance payment at the same time as the 20 issuance of a solicitation. 21 ‘‘(iv) REPAYMENT.—If the Secretary 22 makes an advance payment pursuant to 23 clause (i), the Secretary shall require the 24 eligible entity receiving such advance pay- 25 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2870 IH ment to repay it if there is a failure to per- 1 form by the eligible entity. 2 ‘‘(3) TERMINATION.—Nothing in this section 3 shall be construed as affecting the rights of eligible 4 entities under provisions of statute or regulation (in- 5 cluding the Federal Acquisition Regulation) relating 6 to the termination of contracts for the convenience 7 of the Government. 8 ‘‘(g) CONGRESSIONAL OVERSIGHT.— 9 ‘‘(1) INDEPENDENT EVALUATION AND RE- 10 PORT.—Not later than 1 year after the date of en- 11 actment of this section and annually thereafter, the 12 Comptroller General of the United States shall con- 13 duct an independent evaluation, and submit to the 14 appropriate congressional committees a report, con- 15 cerning the program under this section. 16 ‘‘(2) CONTENTS OF REPORT.—The report under 17 paragraph (1) shall review, assess, and provide rec- 18 ommendations, as appropriate, on the following: 19 ‘‘(A) Details on likely costs and resultant 20 savings as compared to a stockpiling method 21 that does not incorporate perpetual inventory 22 cycling. 23 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2870 IH ‘‘(B) Identification of drawdowns from the 1 stockpile, as evidence of market shortage avoid- 2 ance. 3 ‘‘(C) The allocation of drugs included in 4 the stockpiles funded pursuant to this section to 5 the customers of the eligible entities with con- 6 tracts under this section. 7 ‘‘(D) The degree to which eligible entities 8 with contracts under this section fulfilled their 9 obligations under such contracts. 10 ‘‘(h) DEFINITIONS.—In this section: 11 ‘‘(1) The term ‘eligible entity’ means an entity 12 that meets each of the following criteria: 13 ‘‘(A) The entity is licensed or registered in 14 accordance with applicable Federal and State 15 law and in good standing with respect to such 16 licensure or registration. 17 ‘‘(B) If the entity is not a manufacturer, 18 the entity agrees— 19 ‘‘(i) to purchase all drugs to be main- 20 tained in its stockpile funded under this 21 section directly from the manufacturers of 22 the drugs or the exclusive distributors of 23 such manufacturers; or 24 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2870 IH ‘‘(ii) in the case of an entity that is a 1 co-op or chain pharmacy warehouse— 2 ‘‘(I) to purchase drugs to be 3 maintained in its stockpile funded 4 under this section from an authorized 5 distributor; and 6 ‘‘(II) distribute those drugs only 7 to its member pharmacies. 8 ‘‘(C) The entity sells more than 90 percent 9 of its drugs to dispensers. 10 ‘‘(D) The entity agrees to distribute inven- 11 tory from its stockpile funded under this section 12 only to wholesale distributors or dispensers that 13 are customers of the entity. 14 ‘‘(2) The term ‘generic drug at risk of shortage’ 15 means a drug (as defined in section 201 of the Fed- 16 eral Food, Drug, and Cosmetic Act) that— 17 ‘‘(A) is approved pursuant to section 18 505(j) of such Act; 19 ‘‘(B) is included in the list of essential 20 medicines published by the Food and Drug Ad- 21 ministration; 22 ‘‘(C) is included, at any point during the 23 preceding 36 months, on the drug shortage list 24 VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 2870 IH in effect under section 506E of the Federal 1 Food, Drug, and Cosmetic Act; and 2 ‘‘(D) is manufactured by 3 or fewer per- 3 sons that are registered under section 510 of 4 the Federal Food, Drug, and Cosmetic Act for 5 purposes of such manufacture. 6 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—To 7 carry out this section, there is authorized to be appro- 8 priated $120,000,000 for fiscal years 2022 through 2024, 9 to remain available until expended.’’. 10 Æ VerDate Sep 11 2014 02:51 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H2870.IH H2870 kjohnson on DSK79L0C42PROD with BILLS