,i #aafth ,,congress #b;d ,session ,h4 ,r4 #hdgi ,,in ,,the ,,house ,,of ,,representatives ,october #a1 #bjbj,mr4 ,carter of ,georgia 7for himself and ,ms4 ,blunt ,rochester7 introduced the following bill2 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 shortage1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,essential ,medicines ,strategic ,stockpile ,act of #bjbj4 #b4 ,pilot program on ensuring medication supply stability ,part ,d of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bed;b et seq47 is amended by adding at the end the following new subpart3 ,,xiii ,ensuring ,medication ,supply ,stability #cdj;,j4 ,ensuring medication supply stability 7a7 ,award of contracts ,beginning not later than ,january #a1 #bjba1 the ,secretary shall award contracts to eligible entities to each implement and test the effectiveness of acquiring1 maintaining1 managing1 and distributing a stockpile that-- 7#a7 consists of generic drugs at risk of shortage2 and 7#b7 is of sufficient quantity to ensure that customers in the ,united ,states of the respective eligible entity have access to such drugs for at least #f months 7as specified by the ,secretary based on the historic demand for those drugs74 7b7 ,selection of drugs 7#a7 ,in general ,the ,secretary shall-- 7,a7 select not more than #ej types of drugs that may be included by eligible entities in a stockpile pursuant to a contract under this section2 and 7,b7 maintain an up-to-date list of such drugs2 and 7,c7 make such list publicly available4 7#b7 ,choice of eligible entities ,a contract awarded to an eligible entity under this section need not require the stockpile of the eligible entity to include all #ej types of drugs listed pursuant to paragraph 7#a74 7c7 ,sufficient quantity ,for each generic drug in a stockpile maintained pursuant to subsection 7a71 the ,secretary shall specify the quantity of such drug that is sufficient for purposes of such subsection to ensure that consumers in the ,united ,states of the respective eligible entity have access to such drug for at least #f months4 7d7 ,duration2 liquidation of inventory 7#a7 ,duration ,a contract awarded under this section shall be for a term of no more than #c years4 7#b7 ,liquidation of inventory ,a drug held in a stockpile pursuant to a contract under this section may be liquidated by the eligible entity at the end of the period of the contract4 7e7 ,stockpile requirements 7#a7 ,ensuring availability of unexpired products ,each eligible entity with a contract under this section for a stockpile of generic drugs at risk of shortage shall-- 7,a7 ensure that each drug maintained in the stockpile has an expiration date at least #a year beyond the current date2 and 7,b7 to comply with subparagraph 7,a7-- 7i7 sell drugs in the stockpile through normal commercial channels and replace those drugs2 or 7ii7 if there is no commercial market for a drug in the stockpile1 dispose of the drug1 report such disposal to the ,secretary1 and replace the drug4 7#b7 ,management of stockpile 7,a7 ,in general ,each eligible entity with a contract under this section for a stockpile of generic drugs at risk of shortage shall-- 7i7 acquire not later than #f months following the date the contract is awarded1 and maintain thereafter1 a #f-month supply of each type of drug the eligible entity has contracted to stockpile1 which #f-month supply shall be in addition to the average levels of inventory held by such eligible entity over the previous year for such drug2 and 7ii7 if it is not possible to comply with clause 7i71 notify the ,secretary1 citing the reason why it is not possible and the expected time of acquisition of the drug4 7,b7 ,inventory management ,each eligible entity with a contract under this section for a stockpile of generic drugs at risk of shortage shall manage inventory to ensure that drugs in the stockpile are efficiently cycled to the commercial market and-- 7i7 may stockpile inventory at the eligible entity's distribution center with specified inventory amounts virtually reserved for the ,federal ,government with constant cycling to reduce product expiration2 or 7ii7 may store stockpiled inventory separately in a different location and replace drugs in the stockpile inventory with the same drug with newer dating4 7,c7 ,insufficient funds ,if amounts available to an eligible entity through contracts under this section are not sufficient to acquire or maintain a #f-month supply of any drug in the stockpile of the eligible entity funded under this section1 the eligible entity-- 7i7 may acquire and maintain less than a #f-month supply1 but in no case less than a #c-month supply2 and 7ii7 shall submit a report to the ,secretary identifying-- 7,i7 each such drug2 and 7,,ii7 the reasons why such amounts are not sufficient to acquire or maintain a #f-month supply4 7,d7 ,annual audits ,not more than annually1 the ,secretary may request a physical audit count of the inventories of all eligible entities with a contract under this section to validate that each such entity is maintaining the appropriate amount of stockpiled inventory4 7#c7 ,periodic product review 7,a7 ,use of proceeds ,an eligible entity with a contract under this section for a stockpile of generic drugs at risk of shortage shall use the proceeds of the sale of any drugs in the stockpile to purchase drugs for the stockpile in accordance with this section4 7,b7 ,market inflation or deflation ,in the case of market inflation or deflation affecting the price of a drug in the stockpile of an eligible entity maintained pursuant to a contract under this section1 the contract shall ensure that the ,federal ,government does not profit or suffer loss on items of such drug as a result of such inflation or deflation4 7#d7 ,reporting ,each eligible entity with a contract under this section shall submit reports at such time and in such manner as the ,secretary may require regarding-- 7,a7 current inventory levels of stockpiled drugs at a drug level2 7,b7 indicators of current inventory levels of stockpiled drugs relative to acceptable minimums2 and 7,c7 such other matters as the ,secretary determines appropriate4 7f7 ,contract terms 7#a7 ,payment of monthly fees for management ,subject to paragraph 7#b71 the ,secretary shall pay to each eligible entity with a contract under this section for a stockpile of generic drugs at risk of shortage appropriate monthly fees for the management of the stockpile4 7#b7 ,payment conditioned on stockpile adequacy 7,a7 ,in general ,except as provided in subparagraph 7,b71 each contract with an eligible entity under this section shall provide that no payment under the contract may be made until the entity demonstrates to the ,secretary that the entity has stockpiled such portion of the total quantity of drugs to be stockpiled under the contract as the ,secretary determines to be acceptable for payment4 7,b7 ,exceptions for advance payments 7i7 ,in general ,a contract under this section may provide that1 if the ,secretary determines 7in the ,secretary's discretion7 that an advance payment1 partial payment for significant milestones1 or payment to increase capacity is necessary to ensure success of the terms of the contract1 the ,secretary shall pay1 in advance of delivery1 an amount not to exceed #aj percent of the total contract amount to be paid to the eligible entity by the ,secretary pursuant to the contract over the full period of the contract4 7ii7 ,cost of capital ,a contract under this section may provide for payments to compensate the contracting eligible entity for additional capital requirements related to the additional inventory to be maintained4 7iii7 ,timing ,the ,secretary shall1 to the extent practicable1 make any determination under clause 7i7 to make an advance payment at the same time as the issuance of a solicitation4 7iv7 ,repayment ,if the ,secretary makes an advance payment pursuant to clause 7i71 the ,secretary shall require the eligible entity receiving such advance payment to repay it if there is a failure to perform by the eligible entity4 7#c7 ,termination 7,a7 ,in general ,subject to subparagraph 7,b71 nothing in this section shall be construed as affecting the rights of eligible entities under provisions of statute or regulation 7including the ,federal ,acquisition ,regulation7 relating to the termination of contracts for the convenience of the ,government4 7,b7 ,liquidation of stockpile ,if a contract under this section is terminated1 the eligible entity with the contract shall liquidate the drugs comprising the stockpile funded through the contract and return to the ,government any amounts owed in relation to such drugs1 but shall collect the management fees associated with such liquidation4 7g7 ,congressional oversight 7#a7 ,independent evaluation and report ,not later than #a year after the date of enactment of this section and annually thereafter1 the ,comptroller ,general of the ,united ,states shall conduct an independent evaluation1 and submit to the appropriate congressional committees a report1 concerning the program under this section4 7#b7 ,contents of report ,the report under paragraph 7#a7 shall review1 assess1 and provide recommendations1 as appropriate1 on the following3 7,a7 ,details on likely costs and resultant savings as compared to a stockpiling method that does not incorporate perpetual inventory cycling4 7,b7 ,identification of drawdowns from the stockpile1 as evidence of market shortage avoidance4 7,c7 ,the allocation of drugs included in the stockpiles funded pursuant to this section to the customers of the eligible entities with contracts under this section4 7,d7 ,the degree to which eligible entities with contracts under this section fulfilled their obligations under such contracts4 7h7 ,definitions ,in this section3 7#a7 ,the term eligible entity means an entity that meets each of the following criteria3 7,a7 ,the entity is licensed or registered in accordance with applicable ,federal and ,state law and in good standing with respect to such licensure or registration4 7,b7 ,the entity agrees-- 7i7 to purchase all drugs to be maintained in its stockpile funded under this section directly from the manufacturers of the drugs or the exclusive distributors of such manufacturers2 or 7ii7 in the case of an entity that is a co-op or chain pharmacy warehouse-- 7,i7 to purchase drugs to be maintained in its stockpile funded under this section from an authorized distributor2 and 7,,ii7 distribute those drugs only to its member pharmacies4 7,c7 ,the entity holds a verified authorized wholesale distributor certification issued by the ,national ,association of ,boards of ,pharmacy4 7,d7 ,the entity sells more than #ij percent of its drugs to dispensers4 7,e7 ,the entity agrees to distribute inventory from its stockpile funded under this section only to dispensers that are customers of the entity4 7#b7 ,the term generic drug at risk of shortage means a drug 7as defined in section #bja of the ,federal ,food1 ,drug1 and ,cosmetic ,act7 that-- 7,a7 is approved pursuant to section #eje7;j7 of such ,act2 7,b7 is included in the ,world ,health ,organization's most recent ,model ,list of ,essential ,medicines2 7,c7 is included1 at any point during the preceding #cf months1 on the drug shortage list in effect under section #ejf;,e of the ,federal ,food1 ,drug1 and ,cosmetic ,act2 and 7,d7 is manufactured by #c or fewer persons that are registered under section #eaj of the ,federal ,food1 ,drug1 and ,cosmetic ,act for purposes of such manufacture4 7i7 ,authorization of appropriations ,to carry out this section1 there is authorized to be appropriated #abj1jjj1jjj for fiscal years #bjba through #bjbc1 to remain available until expended4 4