[Federal Register Volume 84, Number 246 (Monday, December 23, 2019)]
[Proposed Rules]
[Pages 70796-70839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27474]



[[Page 70795]]

Vol. 84

Monday,

No. 246

December 23, 2019

Part IV





Department of Health and Human Services





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Food and Drug Administration





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21 CFR Parts 1 and 251





Importation of Prescription Drugs; Proposed Rule

  Federal Register / Vol. 84, No. 246 / Monday, December 23, 2019 / 
Proposed Rules  

[[Page 70796]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 1 and 251

[Docket No. FDA-2019-N-5711]
RIN 0910-AI45


Importation of Prescription Drugs

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA, the Agency, or we) is 
proposing to amend its regulations to implement a provision of the 
Federal Food, Drug, and Cosmetic Act (FD&C Act) to allow importation of 
certain prescription drugs from Canada. If the rule is finalized as 
proposed, States or certain other non-federal governmental entities 
would be able to submit importation program proposals to FDA for review 
and authorization. An importation program could be co-sponsored by a 
pharmacist, a wholesaler, or another State or non-federal governmental 
entity. The rule, when finalized, would contain all requirements 
necessary for a State or other non-federal governmental entity and its 
co-sponsors, if any, to demonstrate that their importation program will 
pose no additional risk to the public's health and safety. In addition, 
the proposed rule would require that the State or non-federal 
governmental entity and its co-sponsors, if any, explain why their 
program would be expected to result in a significant reduction in the 
cost of covered products to the American consumer.

DATES: Submit either electronic or written comments on the proposed 
rule by March 9, 2020. Submit comments on information collection issues 
under the Paperwork Reduction Act of 1995 (PRA) by January 22, 2020.

ADDRESSES: You may submit comments as follows. Please note that late, 
untimely filed comments will not be considered. Electronic comments 
must be submitted on or before March 9, 2020. The https://www.regulations.gov electronic filing system will accept comments until 
11:59 p.m. Eastern Time at the end of March 9, 2020. Comments received 
by mail/hand delivery/courier (for written/paper submissions) will be 
considered timely if they are postmarked or the delivery service 
acceptance receipt is on or before that date.

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Comments submitted 
electronically, including attachments, to https://www.regulations.gov 
will be posted to the docket unchanged. Because your comment will be 
made public, you are solely responsible for ensuring that your comment 
does not include any confidential information that you or a third party 
may not wish to be posted, such as medical information, your or anyone 
else's Social Security number, or confidential business information, 
such as a manufacturing process. Please note that if you include your 
name, contact information, or other information that identifies you in 
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential 
information that you do not wish to be made available to the public, 
submit the comment as a written/paper submission and in the manner 
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper 
submissions): Dockets Management Staff (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets 
Management Staff, FDA will post your comment, as well as any 
attachments, except for information submitted, marked and identified, 
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No. 
FDA-2019-N-5711 for ``Importation of Prescription Drugs.'' Received 
comments, those filed in a timely manner (see ADDRESSES), will be 
placed in the docket and, except for those submitted as ``Confidential 
Submissions,'' publicly viewable at https://www.regulations.gov or at 
the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through 
Friday.
     Confidential Submissions--To submit a comment with 
confidential information that you do not wish to be made publicly 
available, submit your comments only as a written/paper submission. You 
should submit two copies total. One copy will include the information 
you claim to be confidential with a heading or cover note that states 
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will 
review this copy, including the claimed confidential information, in 
its consideration of comments. The second copy, which will have the 
claimed confidential information redacted/blacked out, will be 
available for public viewing and posted on https://www.regulations.gov. 
Submit both copies to the Dockets Management Staff. If you do not wish 
your name and contact information to be made publicly available, you 
can provide this information on the cover sheet and not in the body of 
your comments and you must identify this information as 
``confidential.'' Any information marked as ``confidential'' will not 
be disclosed except in accordance with 21 CFR 10.20 and other 
applicable disclosure law. For more information about FDA's posting of 
comments to public dockets, see 80 FR 56469, September 18, 2015, or 
access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or 
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in 
the heading of this document, into the ``Search'' box and follow the 
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, 
Rm. 1061, Rockville, MD 20852.
    Submit comments on information collection issues under the PRA to 
the Office of Management and Budget (OMB) in the following ways:
     Fax to the Office of Information and Regulatory Affairs, 
OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or email to 
oira_submission@omb.eop.gov. All comments should be identified with the 
title, Section 804 Importation Program Proposals--21 CFR part 251.

FOR FURTHER INFORMATION CONTACT: Lyndsay Hennessey, Center for Drug 
Evaluation and Research, Food and Drug Administration, 10903 New 
Hampshire Ave., Silver Spring, MD 20993, 301-796-7605. With regard to 
the information collection: Domini Bean, Office of Operations, Food and 
Drug Administration, Three White Flint North 10A-12M, 11601 Landsdown 
St., North Bethesda, MD 20852, 301-796-5733, PRAStaff@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of the Proposed Rule
    B. Summary of the Major Provisions of the Proposed Rule

[[Page 70797]]

    C. Legal Authority
    D. Costs and Benefits
II. Table of Abbreviations/Commonly Used Acronyms in This Document
III. Background
IV. Legal Authority
V. Description of the Proposed Rule
    A. Scope/Applicability
    B. Definitions
    C. Section 804 Importation Program Proposals and Section 804 
Pre-Import Requests
    D. Requirements for Foreign Sellers
    E. Requirements for Importers
    F. Supply Chain Requirements
    G. Requirements for Qualifying Laboratories
    H. Laboratory Testing Requirements
    I. Listing and Labeling of Eligible Prescription Drugs
    J. Information and Records
    K. Post-Importation Requirements
    L. Severability
VI. Proposed Effective/Compliance Dates
VII. Preliminary Economic Analysis of Impacts
VIII. Analysis of Environmental Impact
IX. Paperwork Reduction Act of 1995
X. Federalism
XI. Consultation and Coordination With Indian Tribal Governments
XII. References

I. Executive Summary

A. Purpose of the Proposed Rule

    FDA is proposing to amend its regulations to implement section 
804(b) through (h) of the FD&C Act (21 U.S.C. 384(b) through (h)) to 
allow importation of certain prescription drugs shipped from Canada. 
The purpose of the proposed rule is to lower prices and reduce out of 
pocket costs for American patients.

B. Summary of the Major Provisions of the Proposed Rule

    Under the proposed rule, section 804 of the FD&C Act would be 
implemented through time-limited Section 804 Importation Programs 
(SIPs), which would be authorized by FDA and managed by States or 
certain other non-federal governmental entities and by their co-
sponsors, if any (SIP Sponsors). A SIP could be co-sponsored by a 
pharmacist, a wholesaler, or another State or non-federal governmental 
entity.
    FDA proposes that a SIP Sponsor specify the eligible prescription 
drugs that would be included in the SIP. To be eligible under the 
proposed rule, a drug would need to be approved by Health Canada's 
Health Products and Food Branch (HPFB) and, but for the fact it bears 
the HPFB-approved labeling when marketed in Canada, it would need to 
otherwise meet the conditions in an FDA-approved new drug application 
(NDA) or abbreviated new drug application (ANDA). Essentially, eligible 
prescription drugs are those that could be sold legally on either the 
Canadian market or the American market with appropriate labeling.
    Under the proposed rule, the SIP Proposal would also need to 
identify the foreign seller in Canada that will purchase the eligible 
prescription drug directly from its manufacturer, and the importer in 
the United States that will buy the drug directly from the foreign 
seller. While the initial SIP Proposal would identify just one foreign 
seller and one importer, once the SIP can show that it has consistently 
imported eligible prescription drug(s) in accordance with section 804 
and the rule, the SIP Sponsor would be able to submit a supplemental 
proposal to add additional foreign sellers or importers. The supply 
chain for each drug under a SIP would be limited to three entities, 
i.e. one manufacturer, one foreign seller, and one importer.
    FDA proposes that the foreign seller be a party that is licensed by 
Health Canada as a wholesaler and registered with FDA as a foreign 
seller, and that the importer be a wholesaler or pharmacist licensed to 
operate in the United States. Both the foreign seller and the importer 
would be subject to the supply chain security requirements proposed in 
this rulemaking and under the FD&C Act. Among other things, the foreign 
seller would have to ensure that a section 804 serial identifier (SSI), 
which is an alphanumeric serial number unique to each package or 
homogeneous case, is affixed or imprinted to each package and 
homogenous case of the drugs, and the importer would have to ensure 
that a product identifier meeting the requirements of section 582 of 
the FD&C Act (21 U.S.C. 360eee-1) (i.e., a product identifier that 
includes a National Drug Code, unique alphanumeric serial number of up 
to 20 characters, lot number, and expiration date, in both human- and 
machine-readable format) is affixed or imprinted to each package or 
homogenous case of the drugs. The importer would also have to maintain 
records linking the product identifier affixed or imprinted on a 
package or homogenous case to the SSI that the foreign seller assigned.
    After FDA has authorized a SIP Proposal, the importer would submit 
a Pre-import Request to FDA at least 30 days prior to the scheduled 
date of arrival or entry for consumption of a shipment containing an 
eligible prescription drug covered by the SIP, whichever is earlier. 
Entry and arrival of a shipment containing an eligible prescription 
drug would be limited under the proposed rule to the U.S. Customs and 
Border Protection (CBP) port of entry authorized by FDA. The importer, 
or authorized customs broker, would be required to electronically file 
an entry for consumption in the Automated Commercial Environment (ACE) 
or other electronic data interchange system authorized by CBP for each 
eligible prescription drug imported or offered for import into the 
United States. These entries would be filed as formal entries. If an 
eligible prescription drug is imported or offered for import that does 
not comply with section 804 of the FD&C Act and the provisions of this 
proposed rule, that drug would be subject to refusal under section 801 
of the FD&C Act (21 U.S.C. 381).
    The importer would need to arrange for statutorily prescribed 
testing of the drug for authenticity, degradation, and other statutory 
testing requirements by a qualifying laboratory in the United States, 
if the manufacturer does not perform the testing required under section 
804, and would also need to ensure that the drug complies with all 
labeling requirements under the FD&C Act. Section 804 of the FD&C Act 
requires that the mandatory testing either be performed by the 
manufacturer of an eligible prescription drug or, if such testing is 
performed by the importer, that the manufacturer supply the information 
the importer needs to authenticate the drug and to confirm that its 
labeling complies with all labeling requirements under the FD&C Act. In 
the proposed rule, FDA specifies that this information includes, among 
other things, any relevant testing protocols that the manufacturer has 
developed.
    Under the proposed rule, the importer can choose to admit the drug 
or drugs specified in the section 804 pre-import request to an 
authorized Foreign Trade Zone (FTZ) and then conduct the required 
testing and relabeling, or alternatively, the importer can make an 
entry for consumption and request to recondition the drug or drug(s), 
which would entail the required testing and relabeling. Under the 
proposed rule, the results of this testing would be reviewed and 
accepted by FDA and subsequently the drug would have to be relabeled 
with labeling that complies with all labeling requirements under the 
FD&C Act before the drug can be distributed in the United States.
    Pursuant to section 804(c)(3) of the FD&C Act, the proposed rule 
also sets forth post-importation requirements. Each SIP Sponsor would 
be required to provide FDA with data and information about its SIP, 
including the SIP's cost savings to the American consumer. An importer 
would be required to submit

[[Page 70798]]

adverse event, medication error, field alert, and other reports to a 
drug's manufacturer and to FDA. If FDA or any participant in a SIP 
determines that a recall is warranted, the SIP Sponsor would be 
responsible for effectuating the recall. The proposed rule would 
require that each SIP have a written recall plan that describes the 
procedures to perform a recall of the product and specifies who will be 
responsible for performing the procedures.
    A SIP is eligible for extension by FDA before the end of its 
approval period. A SIP may also be terminated by FDA at any time for 
the reasons outlined in this proposed rule.

C. Legal Authority

    Section 804(l)(1) of the FD&C Act provides that section 804 shall 
become effective only if the Secretary certifies to the Congress that 
the implementation of this section will pose no additional risk to the 
public's health and safety, and result in a significant reduction in 
the cost of covered products to the American consumer. The Secretary of 
the Department of Health and Human Services (the Secretary or the 
Secretary of HHS) would make this certification to Congress upon 
issuance of a final rule based on this proposal. FDA is also issuing 
this proposed rule under FDA's rulemaking authority regarding 
importation of prescription drugs under section 804(b) through (h) of 
the FD&C Act. The proposed rule is also being issued pursuant to FDA's 
authorities related to adulterated and misbranded drugs under sections 
501 and 502 of the FD&C Act (21 U.S.C. 351 and 352); FDA's authorities 
with regard to wholesale distribution under section 503(e) of the FD&C 
Act (21 U.S.C. 353(e)); FDA's authority related to new drugs under 
section 505 of the FD&C Act (21 U.S.C. 355); as well as FDA's 
rulemaking, inspection, and importation authorities under sections 
701(a), 704, and 801(a) of the FD&C Act, respectively (21 U.S.C. 
371(a), 374, and 381).

D. Costs and Benefits

    The proposed rule, if finalized, would allow commercial importation 
of certain prescription drugs from Canada through time-limited programs 
sponsored by at least one non-federal governmental entity with possible 
co-sponsorship by a wholesaler or pharmacist. As we lack information 
about the expected scale or scope of such programs, we are unable to 
estimate how they may affect U.S. markets for prescription drugs. In 
particular, we are unable to estimate the volume or value of drugs that 
may be imported under the SIPs or the savings to U.S. consumers who may 
participate in such programs.
    Costs of the proposed rule may accrue to the Federal Government, 
SIP Sponsors, importers, and manufacturers of imported drugs. The 
Federal Government would incur one-time fixed costs to implement the 
rule as well as ongoing costs including those to review program 
proposals and periodic reports. SIP Sponsors would face costs to 
prepare SIP Proposals, implement approved SIPs, and produce SIP reports 
and records. If their drugs are imported into the United States from 
Canada, drug manufacturers may have to provide importers with certain 
information. These costs depend on the number and type of participating 
importation programs. We lack information to estimate these costs.
    Finally, U.S. patients, as well as wholesale drug distributors, 
pharmacies, hospitals, and third-party payers, may all experience 
savings, but we lack information necessary to estimate such savings. As 
drug distributors realize savings in acquiring imported drugs and pass 
some of these savings to consumers and other parties in the drug supply 
chain, it is possible that U.S. drug manufacturers may experience a 
transfer in U.S. sales revenues to these parties.

II. Table of Abbreviations/Commonly Used Acronyms in This Document

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                Abbreviation/acronym                                         What it means
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ACE.................................................  Automated Commercial Environment or any Other Electronic
                                                       Data Interchange System authorized by the U.S. Customs
                                                       and Border Protection.
ANDA................................................  Abbreviated New Drug Application.
CBP.................................................  U.S. Customs and Border Protection.
CGMP................................................  Current Good Manufacturing Practice.
COA.................................................  Certificate of Analysis.
DIN.................................................  Drug Identification Number.
DSCSA...............................................  Drug Supply Chain Security Act.
FD&C Act............................................  Federal Food, Drug, and Cosmetic Act.
FTZ.................................................  Foreign Trade Zone.
HPFB................................................  Health Canada Health Products and Food Branch.
NDA.................................................  New Drug Application.
OMB.................................................  Office of Management and Budget.
SIP.................................................  Section 804 Importation Program.
SSI.................................................  Section 804 Serial Identifier.
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III. Background

    Since 1938, the FD&C Act has required the submission of an 
application to FDA for a new drug before it is marketed in the United 
States. Under sections 301(d) and 505(a) of the FD&C Act (21 U.S.C. 
331(d) and 355(a)), a new drug may not be introduced or delivered for 
introduction into interstate commerce, which includes importation into 
the United States, unless an application approved by FDA under section 
505 is in effect for the drug. Unapproved new drugs include versions of 
FDA-approved drugs that are intended for sale outside of the United 
States, and which have not themselves been approved by FDA for 
marketing in the United States. (United States v. Genendo 
Pharmaceutical, N.V., 485 F.3d 958 (7th Cir. 2007); In Re Canadian Imp. 
Antitrust Litig., 470 F.3d 785, 789-90 (8th Cir. 2006).) Under section 
801(a)(3) of the FD&C Act, FDA has authority to refuse admission of a 
drug that is offered for import if, among other things, it appears to 
be an unapproved new drug and, therefore, in violation of section 505 
of the FD&C Act. Under section 801(d)(1)(A) of the FD&C Act, a 
prescription drug that is manufactured in a State and exported may only 
be imported into the United States by the manufacturer, except, in 
addition to another reason not relevant here, as provided in section 
804. Under section 801(d)(1)(B) of the FD&C Act,\1\ a

[[Page 70799]]

prescription drug manufactured outside the United States may be 
imported into the United States for commercial use only in situations 
where the manufacturer has authorized the drug to be marketed in the 
United States and has caused the drug to be labeled to be marketed in 
the United States, except, in addition to another reason not relevant 
here, as provided in section 804.
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    \1\ Elsewhere in this issue of the Federal Register, FDA is 
announcing the availability of a draft guidance that describes 
procedures to obtain an additional National Drug Code for an FDA-
approved prescription drug that is imported into the United States 
in compliance with section 801 of the FD&C Act.
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    In 2000, Congress enacted legislation known as the Medicine Equity 
and Drug Safety (MEDS) Act as part of the Fiscal Year 2001 
appropriations bill for the Department of Agriculture and related 
Agencies (Pub. L. 106-387). The MEDS Act added an earlier version of 
section 804 to the FD&C Act that, if implemented, would have allowed 
pharmacists or wholesalers in the United States to import certain 
prescription drugs without the authorization of the manufacturer. The 
MEDS Act was intended to ``empower pharmacists and wholesalers to 
purchase FDA-approved medicines in Canada and pass the discounts along 
to American patients[.]'' (146 Cong. Rec. S3692, 3693 (daily ed. May 9, 
2000)).\2\ The law required that, prior to implementation, the 
Secretary of HHS demonstrate that the importation of these drugs would 
pose no additional risk to the public's health and safety and would 
result in a significant reduction in the cost of covered products to 
the American consumer. HHS was not able to make such demonstration 
(Ref. 1).
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    \2\ While this statement seems to imply that these amendments 
were intended to only permit importation from Canada, the actual 
amendments contained no such restriction.
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    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173) was signed into law on December 8, 
2003. Section 1121 of the MMA amended section 804 of the FD&C Act to 
its current version, which, among other things, authorizes the 
Secretary of HHS, after consultation with the U.S. Trade Representative 
and the Commissioner of Customs, to issue regulations permitting 
pharmacists and wholesalers to import certain prescription drugs from 
Canada under certain conditions and limitations. For section 804 of the 
FD&C Act to become effective, the Secretary of HHS must certify that 
its implementation will ``pose no additional risk to the public's 
health and safety,'' and that it will ``result in a significant 
reduction in the cost of covered products to the American consumer.''
    There has been interest for many years in allowing the importation 
of less expensive drugs from Canada to help American consumers benefit 
from these lower prices. However, no prior HHS Secretary has made the 
certification required under section 804(l) to begin implementing any 
part of section 804 of the FD&C Act. Past efforts have been 
unsuccessful in part because of concerns that: (1) FDA could not ensure 
the safety and effectiveness of drugs imported via such a program, (2) 
an importation program that opened the ``closed'' U.S. drug 
distribution system for prescription drugs could increase the 
opportunity for counterfeit and other substandard drugs to enter the 
supply chain, and (3) an importation program would not result in a 
significant reduction in costs to American consumers (Refs. 1 to 4).
    In 2003, as part of the MMA, Congress directed HHS to conduct a 
study on the importation of prescription drugs. The results of this 
study were presented in a Task Force Report that was submitted to 
Congress in December 2004 (Ref. 5). The Task Force Report identified 
concerns about potential risks and challenges associated with 
implementing section 804, including, but not limited to:
     ``The current system of drug regulation in the U.S. has 
been very effective in protecting public safety, but is facing new 
threats. It should be modified only with great care to ensure continued 
high standards of safety and effectiveness of the U.S. drug supply.''
     ``Overall national savings from legalized commercial 
importation will likely be a small percentage of total drug spending 
and developing and implementing such a program would incur significant 
costs and require significant additional authorities.''
     ``The public expectation that most imported drugs are less 
expensive than American drugs is not generally true. Generic drugs 
account for most prescription drugs used in the U.S. and are usually 
less expensive in the U.S. than abroad.''
     ``The effects of legalized importation on intellectual 
property rights are uncertain but likely to be significant. . . . These 
effects could create additional disincentives to develop breakthrough 
medicines and further limit any potential savings that might have been 
realized.''
     ``Legalized importation raises liability concerns for 
consumers, manufacturers, distributors, pharmacies, and other entities. 
Consumers harmed by imported drugs may not have legal recourse against 
foreign pharmacies, distributors, or other suppliers. Entities in the 
pharmaceutical supply chain may take actions to protect themselves from 
liability that could ultimately raise the cost of drugs'' (Ref. 5).
    The continued rise of prescription drug prices since the issuance 
of the 2004 Task Force Report has raised concerns among policymakers, 
healthcare professionals, and American consumers. According to a 2017 
United States Government Accountability Office (GAO) report, ``[t]he 
amount of money people spend on prescription drugs has nearly doubled 
since the 1990s'' (Ref. 6). Additionally, the GAO found that ``[i]n 
2015, expenditures for prescription drugs sold through retail 
pharmacies were estimated to account for nearly 12 percent of total 
personal health care services spending in the United States, up from 
approximately 7 percent of such spending through the 1990s.'' The HHS 
Office of the Assistant Secretary for Planning and Evaluation (ASPE) 
estimates that the United States spent about $457 billion on 
prescription drugs in 2015 (Ref. 7). In 2009, by comparison, 
prescription drug spending in the United States was $354 billion. 
Prescription drug spending is projected to continue to rise faster than 
overall health spending (Ref. 7).
    FDA is committed to expanding Americans' access to high-quality, 
safe and effective, affordable medicines. Congress has given FDA, as 
part of the Agency's mission to promote and protect the public health, 
responsibility for implementing laws intended to strike a balance 
between encouraging and rewarding innovation in drug development and 
facilitating robust and timely market competition. The Agency takes 
seriously its responsibility to ensure that the medicines Americans use 
are safe and effective. FDA also recognizes that ``[a]ccess to 
affordable prescription drugs, many of which are needed to treat life-
threatening and serious conditions, is a daily concern and challenge 
for many Americans.'' (Ref. 5)
    Most Americans (79 percent) say the cost of prescription drugs is 
``unreasonable'' (Ref. 8). Prohibitive costs can lead to medication 
nonadherence, which negatively impacts health outcomes and contributes 
to increased healthcare costs in the United States (Ref. 9). In a 
recent national poll, almost one-third (29 percent) of U.S. adults have 
reported ``not taking their medicines as prescribed'' due to the 
expense, and almost 1 in 10 (8 percent) said this led to a decline in 
their condition (Ref. 8). National news outlets have reported on the 
dire consequences of patients rationing immunosuppressive medications 
needed after organ transplants or delaying cancer

[[Page 70800]]

treatments because of costs (Refs. 10 and 11).
    Contributing to public frustration on this issue is the disparity 
between prices that Americans pay for brand name medications as 
compared with other developed countries. The reasons for such price 
disparities are varied. Brand name prescription drugs (as distinct from 
generic drugs) often are more expensive in the United States than they 
are in other developed markets (Refs. 12 to 14). For instance, in 2017, 
Canada's Patented Medicine Prices Review Board (PMPRB) found that 
patented medicines (i.e., drug products to which patents apply) cost on 
average three times more in the United States than Canada (Refs. 15 and 
16). As a result of these price differentials, some American consumers 
have sought to import drugs from other countries in an effort to obtain 
treatments that may be otherwise inaccessible to them because of cost. 
According to a national poll, millions of Americans have purchased 
prescription drugs from other countries (Refs. 17 and 18).
    FDA has revisited the question of whether section 804 of the FD&C 
Act could be implemented so that the Secretary could make the required 
certification under section 804(l)(1). Past analyses regarding the 
feasibility of implementing section 804 did not consider the 
possibility of implementing section 804(b) through (h) of the FD&C Act 
solely through programs proposed by States or certain other non-federal 
governmental entities and their co-sponsors, if any, and authorized by 
FDA, as described in this proposed rule. FDA has reviewed these past 
analyses and proposes that while the concerns about public health and 
safety and the ability to achieve cost savings remain valid, section 
804 of the FD&C Act can be implemented in a manner consistent with the 
certification criteria through programs, overseen by States or certain 
other non-federal governmental entities and their co-sponsors, if any, 
that require authorization by and reporting to FDA. These programs 
would be required to demonstrate to FDA that they could import drugs 
from Canada at no additional risk to the public's health and safety 
consistent with the requirements in section 804 of the FD&C Act and 
this proposed rule. These include, among other requirements, 
requirements relating to the types of drugs eligible for importation, 
the distribution channels and methods used for product traceability, 
and the testing of eligible prescription drugs for authenticity and 
degradation. In addition, in accordance with section 804, the proposed 
rule would require that drugs imported under section 804 meet the 
specifications of an FDA-approved NDA or ANDA. These programs would 
also be expected to demonstrate significant cost reductions to the 
American consumer. Merely because an importation purports to be done 
pursuant to section 804, that does not mean it has been authorized 
under section 804 and is compliant with section 804 of the FD&C Act and 
this rule, if finalized.
    FDA is not proposing to implement the personal importation 
provisions in section 804(j) through this rulemaking. The internet 
provides consumers with instant access to information and services, 
including prescription medications. Medications that are purchased 
online and imported through international mail, express couriers, and 
other means pose significant challenges for FDA and its ability to 
adequately safeguard the quality and safety of drugs taken by U.S. 
consumers. While there are pharmacy websites that operate legally and 
offer convenience, privacy, and safeguards for purchasing medicines, 
there are many rogue online pharmacies that sell medicines at deeply 
discounted prices, often without requiring a prescription or adhering 
to other safeguards followed by pharmacies licensed by a State in the 
United States. These rogue online pharmacies are often run by 
sophisticated criminal networks that knowingly and unlawfully cause the 
importation of adulterated, counterfeit, misbranded and unapproved 
drugs into the United States. These criminals frequently use 
sophisticated technologies and are backed by larger enterprises intent 
on profiting from illegal drugs at the expense of American patients 
(Refs. 19 and 20). Consumers go to these websites believing they are 
buying safe and effective medications, but often they are being 
deceived and put at risk by individuals who put financial gain above 
patient safety.
    For example, Canada Drugs Ltd. (``Canada Drugs'') was an internet-
based pharmacy corporation located in Winnipeg, Manitoba, Canada, which 
purchased drugs from questionable sources that were outside FDA's 
closed supply chain (Refs. 21 and 22). Canada Drugs and its 
subsidiaries put the public health at risk through widespread sales of 
misbranded and unapproved drugs to U.S. consumers at discounted prices 
(Ref. 23). Moreover, in two instances, Canada Drugs, through a 
subsidiary, distributed counterfeit versions of the cancer drugs 
Avastin and Altuzan (the Turkish version of Avastin) to healthcare 
providers in the United States. The counterfeits contained no active 
ingredient. After Canada Drugs became aware that they had shipped 
counterfeit Avastin and Altuzan to medical clinics in the United 
States, they tried to conceal the problem. Canada Drugs never notified 
FDA or other U.S. authorities that it had shipped counterfeit cancer 
drugs containing no active ingredient to the United States (Ref. 22).
    Further, drugs promoted as being from Canada or approved by Health 
Canada's HPFB that are offered to U.S. citizens in many instances are 
not actually from Canada and not approved by HPFB. Instead, these drugs 
are obtained from ever-evolving illicit sources of supply. A 2005 FDA 
analysis of drugs imported through International Mail Facilities 
revealed that while nearly half of imported drugs claimed to be 
Canadian or from Canadian pharmacies, 85 percent of those drugs 
originated elsewhere and were fraudulently represented as Canadian 
(Refs. 24 and 25). Typically, these products are smuggled into the 
United States after being transshipped to third party countries, such 
as Canada, in an effort to avoid detection and create a more 
trustworthy appearance (Ref. 25). Given these risks, and other concerns 
discussed in the Task Force Report (Ref. 5), the proposed rule, if 
finalized, would not implement personal importation provisions under 
section 804(j) of the FD&C Act.
    In the intervening years since the Task Force Report was issued in 
2004, Canada has amended its regulations to strengthen its oversight of 
both pharmaceutical manufacturing practices (Ref. 26) and 
pharmaceutical supply chain participants (Ref. 27). Regulatory 
harmonization between Canada and the United States has also increased 
bilaterally through the U.S.-Canada Regulatory Cooperation Council and 
through international organizations such as the International Council 
for Harmonisation of Technical Requirements for Pharmaceuticals for 
Human Use (ICH) and Pharmaceutical Inspection Co-operation Scheme 
initiatives, of which both FDA and Health Canada are members. In August 
2019, FDA and Health Canada announced a series of joint meetings in 
advance of each bi-annual ICH face-to-face meeting to seek the public's 
input on areas where harmonized ICH guidelines would be beneficial 
(Ref. 28).
    Additionally, since the 2004 HHS Task Force report and efforts by 
Vermont and other States to implement importation programs in the early 
2000s, pharmaceutical supply chains have continued to mature and 
consolidate, and the ability of

[[Page 70801]]

companies engaged in the transaction of drugs to conduct business 
internationally and trace their products has strengthened. This 
maturation has further grown since 2013, following and due in part to 
the enactment of the Drug Supply Chain Security Act (DSCSA) (Title II 
of Pub. L. 113-54). Among other requirements, the DSCSA outlines steps 
to build an electronic, interoperable system to identify, trace, and 
verify certain prescription drugs as they are distributed among 
pharmaceutical supply chain trading partners.
    As wholesale drug distributors and pharmacists actively 
participate, along with manufacturers and other trading partners, in 
the development of an interoperable electronic system by 2023 in 
accordance with standards established by FDA, as required under DSCSA, 
they have developed processes and methods for complying with 
requirements in place since 2015 for exchanging transaction information 
and verifying products. Industry stakeholders have steadily marched 
toward these goals (Ref. 29). With the implementation of the DSCSA, 
supply chain security is maturing due in part to these technological 
solutions adopted by manufacturers, wholesale distributors, 
pharmacists, and other trading partners that serve as important links 
to help protect U.S. consumers from illegitimate products. In addition, 
under the DSCSA, FDA, along with the States, exercises oversight over 
wholesale drug distributors and pharmacists, in addition to 
manufacturers.
    To address the substantial public health risks associated with 
counterfeits of their prescription drugs, manufacturers around the 
world now use a number of technologies to detect whether a certain drug 
is legitimate or fake. These technologies include both overt and covert 
security technology to enable identification of their authentic drug. 
Technological advancements that support verification of these overt and 
covert security features have enhanced the ability to detect 
counterfeits at the border and prevent their introduction into U.S. 
commerce.
    Finally, FDA believes that at this time it can implement section 
804(b) through (h) of the FD&C Act because it proposes to do so through 
SIPs, which would be authorized by FDA and managed by States or certain 
other governmental entities and their co-sponsors, if any, and which 
would last for 2 years from the time a program imports its first 
eligible prescription drug, with the possibility of extensions for 2-
year periods. A State or other governmental entity and its co-sponsors, 
if any, would need to demonstrate to FDA that, in accordance with the 
requirements proposed here, the importation would pose no additional 
risk to the public's health and safety and would be expected to result 
in a significant reduction in the cost of covered products to the 
American consumer.

IV. Legal Authority

    Section 804(l)(1) of the FD&C Act provides that section 804 shall 
become effective only if the Secretary certifies to the Congress that 
the implementation of this section will pose no additional risk to the 
public's health and safety, and result in a significant reduction in 
the cost of covered products to the American consumer. The Secretary 
would make this certification to Congress upon issuance of a final rule 
based on this proposal. FDA is also issuing this proposed rule under 
FDA's rulemaking authority regarding importation of prescription drugs 
under section 804(b) through (h) of the FD&C Act. The proposed rule is 
also being issued pursuant to FDA's authorities related to adulterated 
and misbranded drugs under sections 501 and 502 of the FD&C Act; FDA's 
authorities with regard to wholesale distribution under section 503(e) 
of the FD&C Act; FDA's authority related to new drugs under section 505 
of the FD&C Act; as well as FDA's rulemaking, inspection, and 
importation authorities under sections 701(a), 704, and 801(a) of the 
FD&C Act.

V. Description of the Proposed Rule

    FDA is proposing to establish new part 251 of Title 21 of the Code 
of Federal Regulations (CFR) to implement section 804(b) through (h) of 
the FD&C Act to allow importation of certain prescription drugs from 
Canada. FDA proposes to implement section 804 through time-limited 
SIPs, which would be authorized by FDA in 2-year increments and managed 
by SIP Sponsors, with the possibility of extensions for 2-year periods. 
If the rule is finalized as proposed, SIP Sponsors that want to 
facilitate the importation of certain drugs from Canada would be able 
to submit a SIP Proposal to FDA for review and authorization, in FDA's 
discretion.
    We propose that every SIP be sponsored by a State, tribal, or 
territorial governmental entity. Under the proposed rule, a SIP could 
be co-sponsored by a pharmacist, wholesaler, or another State or other 
non-federal governmental entity. Co-sponsorship could introduce 
valuable flexibility (for example, multiple States could co-sponsor a 
plan with a large wholesaler) and allow SIPs to benefit from the 
experience of pharmacists and wholesalers, while preserving the 
advantages that accrue from sponsorship by at least one State or other 
governmental entity. We seek comments on this approach. We are 
specifically interested in receiving comments on what the division of 
responsibility between co-sponsors should be and whether there are 
certain arrangements that should not be permitted. For example, we seek 
comment on whether a pharmacist or wholesaler should be able to be both 
a SIP co-sponsor and an Importer within the same SIP. If yes, we seek 
comment on what safeguards a SIP could include to provide for 
sufficient oversight of a co-sponsor that is also acting as the 
Importer of the SIP. We also seek comment on whether non-governmental 
entities other than pharmacists and wholesalers, such as group 
purchasing organizations, pharmacy benefit managers, or union health 
and welfare benefit plans, should be permitted to co-sponsor SIPs.
    This notice of proposed rulemaking (NPRM) is not intended to 
address the applicability of the Medicaid drug rebate program for drugs 
under a SIP, which may be addressed in further guidance or rulemaking 
from HHS as appropriate.
    We considered whether to allow pharmacists or wholesalers to be SIP 
Sponsors without a State, tribal, or territorial governmental entity as 
a co-sponsor. We believe that a State, tribal, or territorial 
governmental entity should oversee each SIP because only a State, 
tribal, or territorial government entity would be in a position to 
demonstrate that it licenses or regulates pharmacists, wholesalers, and 
others in the prescription drug supply chain. For example, States 
provide the primary oversight of wholesale distributors' storage, 
handling, and distribution practices to ensure the quality of drugs is 
maintained. States also ensure that pharmacies and pharmacists comply 
with statutes and regulations governing the practice of pharmacy, which 
includes dispensing of drugs to patients. States have the authority to 
inspect pharmaceutical supply chain participants and to take 
disciplinary action against them if warranted. States also have tools 
that they can use to respond rapidly should activities under their SIP 
adversely affect the public health. We conclude that a plan that has at 
least one sponsor that is a State, tribal, or territorial governmental 
entity under which pharmacists or wholesalers import drugs would offer 
enhanced accountability and protect the public health.

[[Page 70802]]

    Although this NPRM proposes to require at least one SIP Sponsor 
that is a State, tribal, or territorial government for each SIP, we 
seek comment on whether it could be possible for a pharmacist or 
wholesaler to be a SIP Sponsor without a State, tribal, or territorial 
government co-sponsor, while posing no additional risk to the public's 
health and safety. Although we cannot foresee at this time how this 
approach could be adopted without posing additional risk to the 
public's health and safety, if we receive information that demonstrates 
how a proposal that does not include a State, tribal, or territorial 
government co-sponsor would provide the same level of assurance of 
safety as a proposal with such a co-sponsor, we would consider having 
the final rule account for this possibility. Accordingly, we have 
provided a proposed alternative codified provision for comment that 
would also allow pharmacists or wholesalers to sponsor a SIP without a 
co-sponsor. This alternative codified provision appears under ``Option 
2'' in proposed Sec.  251.2. If we do not receive comments containing 
adequate information for FDA to justify such an allowance, we intend to 
omit the ``Option 2'' provision when we finalize this rule. In 
addition, as with any other proposed codified provision, if we decide 
to provide for additional types of Sponsors, the proposed codified 
provision under ``Option 2'' may be modified when this rule is 
finalized. In addition, among other potential revisions that may be 
necessary, if the final rule were to permit a pharmacist or wholesaler 
to be a SIP Sponsor without a State, tribal, or territorial government 
co-sponsor, we would include in the final rule those additional 
safeguards that would be applicable to most, and perhaps all, proposals 
without a State, tribal, or territorial government co-sponsor.
    A SIP Sponsor could also be defined to include additional or 
different categories of sponsors and/or to exclude the possibility of 
co-sponsors where the SIP Sponsor is not a State, tribal, or 
territorial governmental entity. A co-sponsor could also be defined to 
include additional or different categories of co-sponsors. 
Additionally, we seek comment on what safeguards a SIP would need to 
include to provide for sufficient oversight of a SIP Sponsor who is 
also acting as the Importer for the SIP.
    In its SIP Proposal, the SIP Sponsor would need to show, in 
accordance with the requirements proposed in this rule, that its 
proposed importation will pose no additional risk to the public's 
health and safety. A SIP Proposal would also need to explain why the 
Sponsor expects the proposal would result in a significant reduction in 
the cost to the American consumer of the prescription drugs that the 
Sponsor seeks to import. The explanation regarding the significant 
reduction in the cost of covered products to the American consumer 
would need to include any assumptions and uncertainty, and it would 
need to be sufficiently detailed that it can be evaluated by another 
component of HHS, as directed by the Secretary, which would make a 
recommendation to FDA.
    Where a SIP Proposal meets the requirements of section 804(b) 
through (h) of the FD&C Act and this proposed rule, FDA may nonetheless 
decide, in its discretion, not to authorize the SIP Proposal. Among 
other reasons, FDA may decide not to authorize a SIP Proposal because 
of potential safety concerns with the program, because of the relative 
likelihood the program would not result in significant enough cost 
savings (based on the recommendation of another HHS component as 
directed by the Secretary), because FDA needs to limit the number of 
authorized programs to effectively and efficiently monitor the program, 
or in light of other resource demands.
    In its SIP Proposal, a State or other non-federal governmental 
entity and its co-sponsors, if any, would specify the eligible 
prescription drugs it seeks to import. To be eligible, a drug would 
need to be approved by Canada's HPFB and, but for the fact it bears the 
HPFB-approved labeling, it would need to meet the conditions in an FDA-
approved NDA or ANDA. The SIP Proposal would also need to identify the 
Foreign Seller in Canada that would purchase the drug directly from its 
manufacturer, and the Importer in the United States that would buy the 
drug directly from the Foreign Seller. FDA proposes that the Foreign 
Seller be registered with FDA as a Foreign Seller and be licensed by 
Health Canada as a wholesaler, and that the Importer be a wholesaler or 
pharmacist licensed in the United States.
    Due to resource constraints that limit FDA's ability to provide 
effective safety oversight, we considered placing a limit on the number 
of SIP Proposals that FDA would authorize and the number of SIPs that 
FDA would oversee. We considered limiting each State, tribal, or 
territorial governmental entity and its co-sponsors, if any, to 
submitting one SIP Proposal for one supply chain. However, there may be 
State, tribal, or territorial governmental entities and their co-
sponsors, if any, that wish to use more than one Foreign Seller or more 
than one Importer. Other State, tribal, or territorial governmental 
entities may not wish to submit a SIP Proposal. For this reason, we do 
not propose to perpetually limit the total number of Foreign Sellers or 
Importers with which a SIP Sponsor can work, although we do note that 
each Foreign Seller must buy the drugs to be imported directly from the 
manufacturer and sell those drugs directly to the Importer. After a 
State, tribal, or territorial governmental entity and its co-sponsors, 
if any, has an authorized SIP that has consistently imported eligible 
prescription drugs in accordance with section 804 of the FD&C Act and 
this rule, that State, tribal, or territorial governmental entity and 
its co-sponsors, if any, would be able to submit a supplement to the 
SIP Proposal to add a Foreign Seller or Importer. We do not expect to 
be able to find that a SIP Sponsor has consistently imported drugs in 
accordance with section 804 of the FD&C Act and this rule before it 
submits its first quarterly report to FDA.
    After FDA has authorized a SIP Proposal, the Importer would submit 
a request to FDA at least 30 days prior to the scheduled date of 
arrival or entry for consumption of a shipment containing an eligible 
prescription drug, whichever is earlier. Entry and arrival of a 
shipment containing an eligible prescription drug would be limited 
under the proposed rule to the CBP port of entry authorized by FDA. The 
Importer would be required to electronically file an entry for 
consumption, including the data elements that FDA requires, in ACE or 
other electronic data interchange system authorized by CBP for each 
eligible prescription drug imported or offered for import into the 
United States. These entries would be filed as formal entries. If an 
eligible prescription drug is imported or offered for import that does 
not comply with section 804 or the provisions of this proposed rule, 
that drug would be subject to refusal under section 801 of the FD&C 
Act.
    In accordance with section 804(e)(1) of the FD&C Act, the proposed 
rule would require the manufacturer or the Importer to conduct testing 
of the drugs to be imported for authenticity, degradation, and ``to 
ensure that the prescription drug is in compliance with established 
specifications and standards'' (Statutory Testing). Also, in accordance 
with section 804[euro](1), the proposed rule would require that the 
Statutory Testing be done at a qualifying laboratory in the United 
States. The Importer would also have to ensure that

[[Page 70803]]

the drug bears the required U.S. labeling.
    Under section 804(e)(2) of the FD&C Act, if the manufacturer of an 
eligible prescription drug does not test the drug itself, the testing 
would need to be performed by the Importer using information supplied 
by the manufacturer, including all the information needed to 
authenticate the drug and confirm that its labeling complies with 
labeling requirements under the FD&C Act. In the proposed rule, FDA 
specifies that this information includes, among other things, any 
testing methodologies and protocols that the manufacturer has developed 
that the Importer needs to conduct the Statutory Testing.
    Under the proposed rule, the Importer can choose to admit the drug 
or drugs specified in the section 804 Pre-Import Request to an 
authorized FTZ and then conduct the required testing and relabeling or, 
alternatively, the Importer, or an authorized customs broker, can make 
an entry for consumption and request to recondition the drug or drugs, 
which would entail the required testing and relabeling. Under the 
proposed rule, the results of the Statutory Testing would need to be 
reviewed and found acceptable by FDA, and the drug would have to bear 
the required U.S. labeling, before the drug is sold in the United 
States.
    Both the Foreign Seller and the Importer would be subject to the 
supply chain security requirements proposed in this rule. Among other 
things, the Foreign Seller would have to ensure that the product is 
serialized at the package level and adhere to applicable DSCSA 
obligations. The Importer would have to ensure that a product 
identifier meeting the requirements of section 582 of the FD&C Act is 
affixed or imprinted to each package and homogenous case of the drugs 
and adhere to other existing DSCSA obligations, as described below.
    The proposed rule also sets forth post-importation requirements. 
Each SIP Sponsor would be required to provide FDA with data and 
information about its SIP, including the SIP's cost savings to the 
American consumer. An Importer would be required to submit adverse 
event, medication error, field alert, and other reports to a drug's 
manufacturer and to FDA. If FDA or any participant in a SIP determines 
that a recall is warranted, the SIP Sponsor would be responsible for 
effectuating the recall. The proposed rule would require that SIPs have 
a written recall plan that describes the procedures to perform a recall 
of the product and specifies who will be responsible for performing the 
procedures.
    Once effective, section 804(b) of the FD&C Act directs the 
Secretary, after consultation with the U.S. Trade Representative and 
the Commissioner of Customs, to promulgate regulations permitting 
pharmacists and wholesalers to import prescription drugs from Canada 
into the United States. Section 804(c) specifies that the regulations 
shall require that safeguards be in place to ensure that each 
prescription drug imported under the regulations complies with section 
505 of the FD&C Act (including with respect to being safe and effective 
for the intended use of the prescription drug), with section 501 of the 
FD&C Act (relating to adulteration), with section 502 of the FD&C Act 
(relating to labeling and misbranding) and with other applicable 
requirements of the FD&C Act. The statute also provides that the 
regulations require that Importers comply with section 804(d)(1) of the 
FD&C Act, under which an Importer of a prescription drug under 804(b) 
must submit certain information and documentation relating to the drug 
to the Secretary. In addition, the regulations must require compliance 
with section 804(e), which requires that importers or manufacturers 
test drugs imported under section 804 at a qualifying laboratory.
    Eligible prescription drugs must be in compliance with section 804 
of the FD&C Act and with other applicable requirements of the FD&C Act, 
including sections 505 (including with respect to being safe and 
effective for the intended use of the prescription drug), 502, and 501 
of the FD&C Act, in order to be imported. This proposed regulation 
would create new exemptions from the statutory requirement of adequate 
directions for use under section 502(f)(1) of the FD&C Ac and from 
certain requirements in section 582 of the FD&C Act. Section 804(c)(3) 
of the FD&C Act provides the Secretary the authority to add regulatory 
requirements, as appropriate, as a safeguard to protect the public 
health or to facilitate the importation of prescription drugs. Under 
the authority of section 804(c) of the FD&C Act, we are proposing 
additional provisions that we have determined to be appropriate as a 
safeguard to protect the public health or as a means to facilitate the 
importation of eligible prescription drugs.
    Section 804(l)(1) of the FD&C Act provides that section 804 shall 
become effective only if the Secretary certifies to the Congress that 
the implementation of this section will pose no additional risk to the 
public's health and safety, and result in a significant reduction in 
the cost of covered products to the American consumer. After 
consideration of comments received on this NPRM, if warranted, the 
Secretary will make this certification to Congress concurrent with 
finalization of this rule. The Secretary's certification will be 
conditioned on each authorized SIP meeting the relevant requirements of 
section 804 of the FD&C Act and this rule, including the use of time-
limited importation programs as described in this document. If one or 
more of the provisions in this rule becomes invalid, in addition to the 
entire rule becoming invalid, the certification would become null and 
void because the certification is based on a finding that 
implementation of section 804 will pose no additional risk to the 
public's health and safety, and that finding would no longer be 
accurate because it would have been based on a final rule that contains 
all the requirements that were included when published. We are not 
implementing section 804(j) of the FD&C Act relating to importation by 
individuals at this time.

A. Scope/Applicability

    These proposed amendments to the regulations at part 251 would 
apply to eligible prescription drugs that are imported from Canada into 
the United States pursuant to an importation program authorized by FDA 
under section 804 of the FD&C Act.

B. Definitions

    The proposed rule contains a number of definitions for terms used 
in the rule. Some of these definitions are provided in section 804 of 
the FD&C Act or cross-reference definitions elsewhere in part 251. We 
seek comment on our proposed definitions.
    Subject to certain exclusions, section 804(a)(3) defines a 
``prescription drug'' as a drug subject to section 503(b) of the FD&C 
Act, which is the provision requiring a prescription for drugs that are 
not safe for use except under the supervision of a healthcare 
practitioner. For purposes of this regulation, we propose to define 
``eligible prescription drug'' to mean a drug subject to section 503(b) 
of the FD&C Act that has a marketing authorization from HPFB and, but 
for the fact it bears the HPFB-approved labeling, also meets the 
conditions in an FDA-approved NDA or ANDA, including those relating to 
the drug substance, drug product, production process, quality controls, 
equipment, and facilities. Essentially, eligible prescription drugs are 
those that could be sold legally on either the Canadian market or the 
American market with appropriate labeling. An eligible prescription 
drug would need to

[[Page 70804]]

be relabeled with the required U.S. labeling, including the carton and 
container labels, prescribing information, and any patient labeling, 
before it can be sold in the United States.
    In addition, to be eligible for importation under section 804 of 
the FD&C Act, the proposed rule would require that a prescription drug 
be marketed in the United States currently. We believe that FDA will be 
better able to determine if there is a safety issue with an imported 
HPFB-approved drug if the FDA-approved drug is currently marketed, 
because that will make it more likely that there will be current 
adverse event reports, medication error reports, and product quality 
complaints about the FDA-approved drug. In addition, a comparison 
between the cost of the HPFB-approved drug sold in Canada and the cost 
of the FDA-approved drug sold in the United States may be necessary to 
establish that importation has resulted in a significant reduction in 
the cost of covered products to the American consumer.
    Section 804(a)(3) of the FD&C Act excludes several categories from 
the definition of prescription drug, including controlled substances, 
biological products, infused drugs (including a peritoneal dialysis 
solution), intravenously injected drugs, and drugs that are inhaled 
during surgery. The proposed regulation excludes these categories from 
the definition of ``eligible prescription drug.'' In addition, we 
propose to exclude drugs that are subject to risk evaluation and 
mitigation strategies (REMS). Section 505-1 of the FD&C Act, which 
authorizes FDA to require REMS, was passed after section 804 of the 
FD&C Act. REMS drugs are high-risk products with known safety issues. 
REMS programs are mandated by FDA but implemented by manufacturers. In 
order to implement and assess a REMS, a manufacturer needs to have 
control over the drug that is the subject of the REMS. For example, a 
REMS could require that a medication's labeling include a Medication 
Guide for patients. The manufacturer would not be able to ensure that 
this is done for drugs imported under section 804 of the FD&C Act 
because these drugs are relabeled by the Importer. Similarly, if it is 
a requirement of a REMS that a manufacturer provide certain information 
about a drug to prescribers, this could be complicated by the presence 
in the supply chain of versions of that drug that are imported by SIPs 
and so have different NDC numbers. Finally, for REMS that require tight 
controls on distribution of the drug in order to mitigate risks, use of 
Foreign Sellers will make it much more difficult to maintain those 
restrictions and could introduce gaps that have a significant impact on 
the safety of the drug.
    The proposed regulation also excludes drugs that do not meet the 
definition of a ``product'' for purposes of section 582 of the FD&C 
Act. The DSCSA, which added section 582, was passed after section 804 
of the FD&C Act. As explained earlier, one reason that FDA believes 
that at this time it can implement section 804(b) through (h) of the 
FD&C Act is the DSCSA's electronic, interoperable system to identify, 
trace, and verify certain prescription drugs as they are distributed 
among pharmaceutical supply chain trading partners. Drugs that are 
imported under section 804 of the FD&C Act must meet the definition of 
a DSCSA ``product'' so that they are subject to all DSCSA 
identification, tracing, and verification requirements.
    Under the proposed rule, a SIP Sponsor would need to explain in its 
SIP Proposal how it will address any concerns arising from the 
manufacture, storage, and transport of each eligible prescription drug, 
including concerns related to controlling contamination, preserving 
sterility, and ensuring stability. We considered excluding other 
categories of products from eligibility for importation, including: (1) 
Drug-device combination products that are approved under section 505 of 
the FD&C Act, whether all such products or certain specific ones, such 
as dry powder inhalers, metered-dose inhalers, and transdermal patch 
products; (2) inhaled drugs; (3) modified-release drugs; (4) sterile 
drugs; (5) ophthalmic drugs; (6) narrow therapeutic index drugs; (7) 
drugs with boxed warnings; and (8) drugs requiring special storage 
conditions. While each of these categories of products could pose 
potentially heightened safety concerns, we did not exclude these 
categories of products from eligibility in this proposed rule. Instead, 
we propose that FDA will determine whether a product that falls into 
one of these categories can be imported safely in the context of a 
specific SIP Proposal on a product-by-product basis. If the product to 
be imported is a combination product, this would include whether 
requirements specific to combination products would be met. We request 
comments on this approach.
    The definition of ``prescription drug'' in section 804(a)(3) of the 
FD&C Act also excludes ``a drug which is a parenteral drug, the 
importation of which . . . is determined by the Secretary to pose a 
threat to the public health.'' We note that several categories of 
parenteral drugs--infused drugs, intravenously injected drugs, and 
drugs that are inhaled during surgery--are specifically excluded from 
importation under section 804 of the FD&C Act. We propose to exclude 
two other categories of parenteral drugs, intrathecally injected drugs 
and intraocularly injected drugs, from the definition of eligible 
prescription drug. Intrathecal and intraocular injection pose 
potentially significant risks because these routes of administration 
bypass some of the body's natural defenses. In fact, they pose more 
risks than intravenous injection, which is excluded by statute from 
importation under section 804 of the FD&C Act. We propose that other 
parenteral drugs that are not excluded from importation under section 
804 of the FD&C Act or this proposed rule be evaluated in the same way 
as drugs with other routes of administration. An importation program 
that seeks to import any eligible prescription drug would have to 
demonstrate that it can do so without posing additional risk to the 
public's health and safety.
    Consistent with section 804(f) of the FD&C Act, we propose to 
define ``Foreign Seller'' to mean an establishment within Canada 
engaged in the distribution of an eligible prescription drug that is 
imported or offered for importation into the United States. As 
discussed later in this document, under the proposed rule, Foreign 
Sellers would be required to be licensed by Health Canada as drug 
wholesalers and be registered with a provincial pharmacy regulatory 
authority to distribute HPFB-approved drugs. Under the proposed rule, a 
Foreign Seller could not be licensed to distribute drugs that are 
approved by countries other than Canada and that are not HPFB-approved 
for distribution in Canada. A Foreign Seller also must be registered 
with FDA as required by section 804 of the FD&C Act.
    We propose to define ``Importer'' to mean a U.S. distributor that 
is a State- or FDA-licensed wholesale drug distributor or a State-
licensed pharmacist and that is the U.S. owner of an eligible 
prescription drug at the time of importation of the drug into the 
United States.
    We propose to define ``manufacturer'' to include an applicant, as 
defined in 21 CFR 314.3, who owns an approved NDA or ANDA for an 
eligible prescription drug, or a person who owns or operates an 
establishment that manufactures an eligible prescription drug. 
Manufacturer also means a holder of a drug master file containing 
information necessary to authenticate an eligible prescription

[[Page 70805]]

drug. These entities are those that would have the necessary 
information required of manufacturers in section 804 and the 
requirements proposed in this rule.

C. Section 804 Importation Program Proposals and Section 804 Pre-Import 
Requests

    Subpart B of the proposed rule provides the procedures for the 
submission and evaluation of SIP Proposals for time-limited SIPs. 
Subpart B also covers the submission of Pre-Import Requests by the 
Importer, which would seek FDA's permission to begin importation of a 
particular eligible prescription drug(s). In addition, Subpart B 
outlines the procedures FDA proposes to use to authorize, revise, 
revoke, and extend SIPs.
    Under the proposed rule, once a SIP receives FDA authorization, the 
SIP's Foreign Seller can purchase eligible prescription drugs with the 
intent to sell them to the SIP's Importer for importation under section 
804 of the FD&C Act, and the SIP's Importer can seek FDA's permission 
to start importation of the drugs by submitting a section 804 Pre-
Import Request, as described later in this document. The Pre-Import 
Request would include, among other things, a detailed description of 
the plan for conducting the testing required under section 804 of the 
FD&C Act and an attestation from the manufacturer that, but for the 
fact that it bears the HPFB-approved labeling, the HPFB-approved drug 
meets the conditions in the FDA-approved drug's NDA or ANDA.
    Once FDA grants the section 804 Pre-Import Request, the Importer 
may start the process for the importation of an eligible prescription 
drug identified in the Pre-Import Request. The Agency's grant of the 
section 804 Pre-Import Request by itself does not confer any type of 
right to import. To be imported notwithstanding section 801(d)(1) of 
the FD&C Act, a particular importation would need to meet the 
requirements of section 804 and this regulation, including that the 
prescription drug comply with sections 501, 502, and 505 of the FD&C 
Act.
    The Importer can choose to admit the drug(s) specified in the 
Section 804 Pre-Import Request to an authorized FTZ and then conduct 
the required testing and relabeling before offering the drug for entry. 
Alternatively, the Importer can make an entry and request, under 
section 801(b) of the FD&C Act and Sec.  1.95 (21 CFR. 1.95), to 
recondition the drug(s), which would entail the required testing and 
relabeling. The results of the Statutory Testing would need to be 
reviewed and found acceptable by FDA before the drugs are relabeled and 
sold in the United States. We believe this is necessary to prevent 
having relabeled drugs refused entry and exported back to Canada where 
they may subsequently be sold illegally back into the United States or 
elsewhere.
1. The Section 804 Importation Program Proposal
    The proposed regulations provide that a SIP Sponsor that seeks to 
implement a SIP to import prescription drugs from Canada would need to 
submit a proposal to FDA in electronic form to FDA's Electronic 
Submissions Gateway (ESG) or to an alternative transmission point 
identified by the Agency.
    The proposal would need to include the following:
     A cover sheet with the name or names of the SIP Sponsor 
and co-sponsors, if any, and the name and contact information for the 
point of contact with FDA during its review of the proposal;
     A table of contents;
     An introductory statement that includes an overview of the 
SIP Sponsor's SIP Proposal; and
     The SIP Sponsor's importation plan.
    The overview in the introductory statement would need to identify 
the State or a tribal or territorial governmental entity that is going 
to sponsor the SIP, along with any co-sponsors. The overview would also 
list each of the eligible prescription drugs that the SIP Sponsor seeks 
to import and provide the name and address of the manufacturer of the 
finished dosage form for each drug, as well as the name and address of 
the manufacturer of the active pharmaceutical ingredient (API), if that 
information is available to the SIP Sponsor. If the API information is 
not available to the SIP Sponsor at the time their proposal is 
submitted, the Importer would need to provide it later in the process, 
when it submits a Pre-Import Request.
    The overview in the introductory statement would also need to 
provide the name and address of the Foreign Seller who will export the 
drug from Canada to the United States, as well as the name and address 
of the Importer in the United States. The overview would need to 
summarize how the SIP Sponsor will ensure (1) that the imported 
eligible prescription drugs meet the Statutory Testing requirements, 
(2) that the labeling requirements of the FD&C Act and this rule are 
met, (3) that the supply chain is secure, and (4) that the post-
importation pharmacovigilance and other requirements of the FD&C Act 
and this rule are met. Finally, the overview would need to summarize 
the proposer's reasons for expecting that the significant reduction in 
cost from the importation accrues to the American consumer.
    Under the proposed rule, the content of a SIP Proposal would 
include the following. The SIP Proposal would need to identify the 
State or tribal or territorial governmental entity that is going to 
sponsor the SIP, along with its co-sponsors, if any. The SIP Proposal 
would also need to identify the licensed wholesale drug distributor or 
licensed pharmacist that will act as the Importer and explain its legal 
relationship to the SIP Sponsor. Only a pharmacist or wholesaler could 
import drugs under section 804 of the FD&C Act and this rule. The SIP 
Proposal would need to identify each of the other entities in the 
supply chain and explain their legal relationship to the SIP Sponsor, 
if any, including the finished dosage form manufacturer and the Foreign 
Seller. The SIP Proposal would need to state and provide supporting 
evidence to establish that the Importer and the Foreign Seller meet all 
the requirements in section 804 and this proposed regulation.
    FDA proposes to require that a SIP Proposal include the Health 
Canada inspectional history for the previous 5 years, or if the Foreign 
Seller has been licensed for less than 5 years, for the duration of its 
period of licensure, and the State and Federal inspectional history for 
the Importer for the previous 5 years, or if the Foreign Seller has 
been licensed for less than 5 years, for the duration of its period of 
licensure. The SIP Sponsor would also need to provide an attestation 
containing a complete disclosure of any past or pending civil penalties 
or violation, or criminal convictions or violations, of applicable 
State, Federal, or Canadian laws regarding drugs or devices against the 
Foreign Seller or Importer or an affirmation and attestation that the 
Foreign Seller or Importer has not been involved in, or convicted of, 
any such criminal or prohibited acts. Such attestation would need to 
include principals, any shareholder who owns 10 percent or more of 
outstanding stock in any non-publicly held corporation, directors, 
officers, and any facility manager or designated representative of such 
manager. We also propose that the SIP Proposal include a list of all 
disciplinary actions, along with the date of and parties to any action, 
imposed against the Foreign Seller or the Importer by State, Federal, 
or Canadian regulatory bodies, including any such actions against the 
principals, owners,

[[Page 70806]]

directors, officers, or any facility manager or designated 
representative of such manager over the previous 7 years. We seek 
comment on whether the rule should require additional or alternative 
background information and on whether the background information 
requirement should cover additional or alternative individuals or 
entities.
    As part of demonstrating that the proposed importation will pose no 
additional risk to the public's health and safety, the SIP Proposal 
would need to set forth all the steps the SIP Sponsor would need to 
take to ensure that the supply chain is secure, including ensuring that 
the Foreign Seller is able to serialize the drugs to be imported with 
an SSI. The SIP Proposal would need to include the steps that the SIP 
Sponsor will take to ensure that the storage, handling, and 
distribution practices of supply chain participants, including 
transportation providers, maintain and ensure the quality and security 
of the drugs. The storage and handling conditions and practices must 
meet the minimum requirements of 21 CFR part 205. The SIP Proposal 
would also need to set forth the Importer's responsibility for 
screening the drug(s) that it imports for issues or problems, including 
whether they are adulterated, counterfeit, damaged, tampered with, or 
expired, and the Foreign Seller's and the Importer's responsibilities 
for adverse event, medication error, field alert reports, or other 
reporting, in addition to a detailed plan for effectuating any recalls. 
The SIP Sponsor would have to explain how it will obtain recall or 
market withdrawal information and how it will ensure that recall or 
market withdrawal information is shared among the SIP Sponsor, the 
Foreign Seller, the Importer, and FDA and provided to the manufacturer.
    The SIP Proposal would also need to identify the FDA-registered 
repackager or relabeler in the United States that will relabel the 
imported drugs with the required U.S. labeling, including the carton 
and container labels, prescribing information, and any patient 
labeling, such as medication guides, instruction for use documents, and 
patient package inserts. The proposed rule would also require that the 
SIP Proposal describe the ways in which the SIP Sponsor will educate 
pharmacists, healthcare providers, and patients about its SIP. We seek 
comment on whether a SIP Proposal should also be required to describe 
the SIP Sponsor's plan for ensuring that the FDA-approved patient 
labeling is dispensed to patients with the drug imported under section 
804 of the FD&C Act. In its proposal, the SIP would need to provide 
supporting evidence to establish that the repackager or relabeler is 
registered with FDA, as required by section 510(b) of the FD&C Act (21 
U.S.C. 360(b)) and in accordance with part 207 (21 CFR part 207), and 
that any objectionable conditions or practices identified during its 
most recent FDA inspection have been addressed satisfactorily. While an 
imported drug would need to be relabeled, it would need to remain in 
the manufacturer's original container-closure system and not be 
repackaged, except to the limited extent necessary to relabel it, as 
described in this proposed rule.
    Under the proposed rule, the SIP Proposal would be required to 
identify each HPFB-approved prescription drug that the SIP Sponsor 
seeks to import. The SIP Proposal would also be required to include the 
proprietary and established names of the HPFB-approved product and of 
its FDA-approved counterpart and confirm that the FDA-approved drug is 
currently marketed. It would need to provide a description of all the 
information that is available about the HPFB-approved product and its 
FDA-approved counterpart and would be required to include the name and 
quantity of the active pharmaceutical ingredient(s) of the two drug 
products, the inactive ingredients of the two products, and the dosage 
form of the two drug products. The proposal would also need to include 
the HPFB-approved product's drug identification number (DIN), and the 
FDA-approved product's National Drug Code (NDC) and NDA or ANDA 
numbers. The proposal would also need to include the HPFB-approved 
drug's labeling. Under the proposed rule, the proposal would be 
required to include the FDA-approved drug's labeling and the FDA-
approved labeling with the revisions necessary for the HPFB-approved 
drug to meet the requirements of this rule, as well as a side-by-side 
analysis of the FDA-approved drug's labeling and the proposed labeling 
to help demonstrate that the applicable FDA labeling requirements and 
the requirements of this rule are met.
    The proposed rule would also require that the proposal identify the 
establishment where the active ingredient for each drug is 
manufactured, if this information is available, and the establishment 
where the finished dosage form for each drug is manufactured, if this 
information is available. This information is important for FDA to 
adequately assess whether the eligible prescription drug meets the 
conditions in an approved NDA or ANDA. If this information is not 
available to the SIP Sponsor at the time that the proposal is 
submitted, it would need to be provided later by the Importer in the 
Pre-Import Request.
    The Statutory Testing that would be done under the proposed rule 
should be described in as much detail as possible in the SIP Proposal. 
The proposal would also need to explain how the SIP Sponsor will ensure 
that any information that the manufacturer provides to the Importer to 
allow the Importer to conduct the Statutory Testing would be kept in 
strict confidence and used only for purposes of testing or otherwise 
complying with the FD&C Act, as required by section 804(e)(2)(B). The 
information that the manufacturer provides must not be disseminated 
except to the qualified laboratory that will test the drug and to FDA, 
and the SIP Sponsor would need to explain how it will ensure that the 
information is not disseminated to any person by the qualified 
laboratory. If confidential manufacturer information is disclosed 
beyond the parameters described above, FDA will terminate the SIP. 
Moreover, a violation of any of these regulations, including this 
provision, is a prohibited act under section 301(aa) of the FD&C Act. 
An Importer that fails to comply with the requirement that the 
manufacturer's information be kept in strict confidence and be used 
only for testing or otherwise complying with the FD&C Act can be 
imprisoned for not more than 10 years under section 303(b)(6) of the 
FD&C Act (21 U.S.C. 333(b)(6)), fined under 18 U.S.C. 3571, or both. We 
seek comments on this approach.
    The proposal would also need to indicate which laboratory in the 
United States will conduct the testing described in section 
804(d)(1)(J) and (L) of the FD&C Act, which is discussed later in this 
document, and it would need to establish that the laboratory is located 
in the United States and is qualified to conduct the tests. As 
discussed later in this document, we propose that when FDA authorizes a 
SIP Proposal, FDA would thereby approve the laboratory identified in 
the proposal as a ``qualifying laboratory'' for purposes of section 
804, as required by section 804(a)(4) of the FD&C Act. To be approved 
as a qualifying laboratory, a laboratory would need to have ISO 17025 
accreditation and comply with the applicable elements of the 
pharmaceutical current good manufacturing practice (CGMP) requirements 
in parts 210 and 211 (21 CFR parts 210 and 211). It would need to have 
an FDA inspection history and satisfactorily addressed any 
objectionable conditions or practices

[[Page 70807]]

identified during its most recent FDA inspection.
    We recognize that not all data and information needed to show that 
a HPFB-approved drug meets the conditions in an FDA-approved NDA or 
ANDA may be available to a SIP Sponsor at the time that it submits its 
SIP Proposal. For example, testing results would not be available until 
the Importer receives a shipment of an eligible prescription drug and 
conducts the Statutory Testing. FDA may authorize a SIP based on the 
available information about a drug. An Importer will not be able to 
sell a drug imported under section 804 of the FD&C Act in the United 
States until the testing described in section 804(d) is completed 
satisfactorily, and the Importer has secured the information from the 
manufacturer described in section 804(e) that is needed to show that 
the drug meets the conditions of an approved NDA or ANDA and poses no 
additional risks to the public's health and safety.
    Finally, the SIP Proposal would need to explain how the SIP Sponsor 
expects that the SIP would result in a significant reduction in the 
cost to the American consumer of the prescription drugs that the SIP 
Sponsor seeks to import. The explanation would need to include any 
assumptions and uncertainty, and it would need to be sufficiently 
detailed to allow for a meaningful evaluation. We propose that whether 
a reduction in cost is significant be determined in the context of 
considering a specific proposal. We seek comment on the factors that 
should be considered in determining whether a reduction in the cost of 
covered products is significant.
    To demonstrate expected cost savings, a SIP Sponsor could compare 
anticipated acquisition costs or consumer prices per unit of each drug 
that the SIP Sponsor is seeking to import. For example, a SIP Sponsor 
could compare the anticipated acquisition cost per unit of the HPFB-
approved drug to the acquisition cost per unit of the FDA-approved 
drug. A SIP Sponsor could also compare the current retail cash price of 
the drugs. We seek comment on these and other relevant measures that 
may be available to SIP Sponsors during proposal development.
    We also seek comments on what mechanisms SIPs could use to ensure 
that there is a significant reduction in the cost of covered products 
to the American consumer and comments on what, if any, additional 
showing SIP Sponsors would need to make if the cost savings do not go 
directly to consumers. If the cost savings do not go directly to 
consumers directly because, for example, they accrue to a healthcare 
provider or payor, the SIP Proposal would need to show that there is a 
significant reduction in the cost of covered products to the American 
consumer.
    We anticipate that some SIP Sponsors may seek to import drugs to be 
used by patients in State-run programs in which participants do not 
directly pay the cost of drugs. In such cases, a SIP Sponsor could 
submit information about whether cost-sharing expenses are reduced for 
the participants, or whether the program will result in cost savings 
that are passed on to consumers in other ways, such as increasing the 
number of people who can be covered by a State program, or increasing 
the availability of drugs covered by the program. We seek comment on 
this and on what other cost-related information SIP Sponsors could 
provide where drugs would be imported for use by patients in State-run 
programs.
    The SIP Sponsor would be responsible for ensuring that the SIP and 
each entity that participates in the SIP complies with section 804, 
with other applicable sections of the FD&C Act, and with this and other 
applicable regulations for the entire length of the approval period. 
The SIP Sponsor should explain in detail how it will do so in the SIP 
Proposal.
2. Review and Authorization of Section 804 Importation Program 
Proposals
    FDA will review and approve or deny SIP Proposals. We solicit 
comments on what the timeline for such review should be, and on what 
type and frequency of communication between FDA and SIP Sponsors would 
be helpful and efficient. We also seek comment on whether SIP Proposals 
should be addressed on a first-come, first-served basis, or whether 
they should be prioritized. If they should be prioritized, we seek 
comment on what the basis for prioritization should be.
    As noted previously, we recognize that at the time of submission, 
the SIP Sponsor may not know whether a drug meets the conditions in an 
FDA-approved NDA or ANDA. FDA will review, among other things, the 
information that the SIP Sponsor is able to provide about each of the 
drugs that the SIP Sponsor seeks to import to confirm that each is 
approved by both HPFB and FDA, that each FDA-approved drug is currently 
marketed in the United States, and that none of the drugs fall into any 
of the exclusions from the definition of eligible prescription drug. 
FDA will also review the proposal to ensure that the requirements of 
the FD&C Act and this rule are met, and specifically that the proposed 
supply chain, the proposed plan to relabel the eligible prescription 
drugs, and the proposed pharmacovigilance measures meet the 
requirements of the FD&C Act and this rule. FDA intends to call on 
other divisions of HHS, such as ASPE, to assist with the review and 
evaluation of the components of the proposal, and to refer questions to 
such divisions as appropriate, that relate to the price of the drugs to 
be imported and to the steps that will be taken to ensure that there is 
a significant reduction in the cost of drugs to consumers. FDA and/or 
HHS may issue guidance on this topic as appropriate.
    Where a SIP Proposal meets the requirements of section 804(b) 
through (h) of the FD&C Act and the requirements in the proposed rule, 
FDA may nonetheless decide, in its discretion, not to authorize the SIP 
Proposal. Among other reasons, FDA may decide not to authorize a SIP 
Proposal because of potential safety concerns with the SIP, because of 
the relative likelihood the SIP would not result in significant enough 
cost savings, or because FDA needs to limit the number of authorized 
SIPs to effectively and efficiently run the program or in light of 
other resource demands.
3. The Section 804 Pre-Import Request
    After FDA authorizes a SIP, the Foreign Seller can proceed to 
purchase one or more of the eligible prescription drugs included in the 
SIP Proposal directly from the manufacturer with the intent to sell 
them to the Importer. The Importer can then request that the 
manufacturer agree to conduct the testing set forth in section 
804(d)(1)(J) and (L) of the FD&C Act. If the manufacturer declines to 
do so, the manufacturer must provide the information needed to conduct 
the testing, as required by section 804(e)(2) of the FD&C Act. The 
Importer can then submit a section 804 Pre-Import Request to the ESG or 
other transmission point identified by the Agency.
    The Importer would need to submit a section 804 Pre-Import Request 
at least 30 days prior to the scheduled date of arrival of a shipment 
containing an eligible prescription drug(s) at the CBP port of entry 
authorized by FDA, or entry for consumption in ACE of one or more 
batches of an eligible prescription drug(s) covered by a SIP, whichever 
occurs first. FDA believes at least 30 days will be needed for FDA to 
sufficiently review the information provided. Under the proposed 
process, the Importer would not be permitted to

[[Page 70808]]

ship an eligible prescription drug into the United States until a 
section 804 Pre-Import Request that includes that specific drug was 
granted by FDA.
    Under the proposed rule (Sec.  251.5), a complete Pre-Import 
Request would include, at a minimum: Identification of the Importer, 
including Importer name, business type (wholesale distributor or 
pharmacist), U.S. license number or numbers and State or States of 
license, business address, unique facility identifier if required to 
register with FDA as an establishment under section 510 of the FD&C Act 
or FDA establishment identification number if not required to register 
as an establishment, and name of a contact person with their email and 
phone number; identification of the FDA-authorized SIP Proposal 
including the name of the SIP, the name or names of the SIP Sponsor and 
co-sponsors, if any, business address, and name of a contact person, 
with their email and phone number; identification of the Foreign 
Seller, including the name of the Foreign Seller, business address, 
unique facility identifier, any license numbers issued by Health Canada 
or a provincial pharmacy regulatory body, and the name of a contact 
person with their email and phone number; and identification and 
description of the eligible prescription drug or drugs covered by the 
Pre-Import Request including the following information: Name of the 
HPFB-approved drug or drugs (established and/or trade), DIN, and 
complete product description including strength, description of dosage 
form, and route of administration; API information, including name of 
API, manufacturer of API and its unique facility identifier, and amount 
of API and unit measure in each eligible prescription drug; name 
(established and/or trade) of the FDA-approved counterpart drug or 
drugs and their NDA or ANDA number or numbers; manufacturer of the 
eligible prescription drug with the business address and unique 
facility identifier; copies of the invoice and any other documents 
related to the manufacturer's sale of the drugs to the Foreign Seller 
provided by the manufacturer to the Importer and copies of the same 
documents provided by the Foreign Seller to the Importer; quantity, 
listed separately by dosage form, strength, batch and lot or control 
number assigned by the manufacturer to each eligible prescription drug 
intended to be imported under this Pre-Import Request compared to the 
quantity of each batch and lot or control number originally received by 
the Foreign Seller from the manufacturer and the date of such receipt; 
expiration date of each HPFB-approved drug, listed by lot or control 
number; expiration date to be assigned to each eligible prescription 
drug when relabeled by the Importer with a complete description of how 
that expiration date was calculated to comply with the FDA-approved 
drug's NDA or ANDA; NDC proposed for assignment by the Importer for 
each eligible prescription drug to be imported; and FDA product code 
for each eligible prescription drugs to be imported.
    A Statutory Testing plan would also be part of the request, 
including: A description of how the samples will be selected from a 
shipment for the Statutory Testing; the name and location of the 
qualifying laboratory in the United States that will conduct the 
Statutory Testing; and if the importer will be conducting the Statutory 
Testing, or a description of the testing method(s) that will be used to 
conduct the Statutory Testing. If the manufacturer will be conducting 
the Statutory Testing, the description of the testing methods can be 
submitted by the manufacturer to FDA directly, as discussed later in 
this document. An attestation from the manufacturer, which is described 
in more detail later in this document, that, but for the fact that it 
bears the HPFB-approved labeling, the eligible prescription drug meets 
the conditions in the FDA-approved drug's NDA or ANDA, would also be 
included. If the manufacturer conducts the Statutory Testing, the 
manufacturer would need to provide the attestation to FDA. If the 
Importer conducts the Statutory Testing, the manufacturer would need to 
provide the attestation to the Importer.
    Information related to the Importation would be provided, including 
the location of the eligible prescription drugs in Canada and 
anticipated date of shipment (date eligible prescription drug or drugs 
will leave their location in Canada); name, address, email, and 
telephone number of the foreign shipper; anticipated date of export 
from Canada and Canadian port of exportation; anticipated date of 
arrival at port(s) authorized by FDA to import eligible prescription 
drugs under section 804; the name, address, FDA establishment 
identification number, and telephone number of the warehouse, location 
within a specific FTZ, or other secure distribution facility controlled 
by or under contract with the Importer where the eligible prescription 
drug(s) will be stored pending testing, relabeling, and FDA 
determination of admissibility; and information regarding the facility 
where the relabeling and any limited repackaging activities will occur 
for all eligible prescription drug(s) covered by this Pre-Import 
Request, including: (1) The facility's unique facility identifier; (2) 
the facility's name, address, and FDA establishment identification 
number; (3) the anticipated date the relabeling and any limited 
repackaging will be completed; and (4) information about where the 
relabeled drug will be stored pending distribution, including the FDA 
establishment identification number of the storage facility, if 
available.
    FDA's grant of a section 804 Pre-Import Request does not constitute 
an admissibility determination by the Agency of any of the drugs 
covered by the Request. When a Pre-Import Request is granted by FDA, 
that Pre-import Request would cover subsequent shipments of the 
eligible prescription drug(s) identified in the Agency's grant of that 
Request provided that the rest of the information contained in the Pre-
Import Request, with the exception of the anticipated dates of shipment 
and export, is the same. We seek comment on this approach.
    When the Agency grants a section 804 Pre-Import Request, it will 
specify an FDA field laboratory to which the Importer would need to 
submit three sets of the samples that the Importer sends to the 
qualifying laboratory to enable FDA to conduct the Statutory Testing as 
FDA deems warranted.
4. Importation
    When goods are imported into the United States, they must be 
entered at one of the CBP ports of entry (sea, land, rail, and air). 
The term entry generally refers to the information or documentation 
that an importer of record, or an authorized customs broker, must file 
with CBP for importing merchandise into the United States. A SIP 
Importer will be, and must qualify as, the importer of record for 
eligible prescription drugs imported under section 804.
    The proposed rule would require that an entry for consumption of an 
eligible prescription drug under an authorized SIP be filed 
electronically in ACE, or any other Electronic Data Interchange (EDI) 
system authorized by CBP. Currently, ACE is the sole EDI system 
authorized by CBP for electronic entry of FDA-regulated products. ACE 
serves as the ``single window'' through which an import filer submits 
the data elements required for an import entry, including data elements 
designated by a Partner Government Agency (PGA). As a PGA, FDA has 
designated a PGA Message Set in ACE for FDA-regulated

[[Page 70809]]

products. This message set contains both required and optional data 
elements to assist us in our admissibility review of FDA-regulated 
articles. In the Federal Register of November 29, 2016 (81 FR 85854), 
FDA published a final rule, effective December 29, 2016, entitled 
``Submission of Food and Drug Administration Import Data in the 
Automated Commercial Environment,'' which requires certain data 
elements that are material to our import admissibility review be 
submitted in ACE or any other EDI system authorized by CBP, at the time 
of entry. The rule was intended to facilitate automated ``May Proceed'' 
determinations by the Agency for low-risk FDA-regulated products which, 
in turn, allows the Agency to focus our limited resources on products 
that may be associated with a greater public health risk. The final 
rule is codified in subpart D, 21 CFR part 1.
    All shipments containing eligible prescription drugs to be imported 
under an authorized SIP would need to arrive and be entered at the CBP 
port of entry that is authorized by FDA. When an entry for consumption 
containing an FDA-regulated product is processed by CBP, CBP relays the 
data in the PGA Message Set to FDA using an electronic interface with 
FDA's import processing system, currently the Operational and 
Administrative System for Import Support (OASIS). The import filer need 
only submit this entry information once in the ACE system, provided 
that the information submitted in ACE is accurate. ACE entries are 
electronically screened in OASIS against criteria developed by FDA. 
FDA's Predictive Risk-based Evaluation for Dynamic Import Compliance 
Targeting (PREDICT) is a risk-based electronic screening tool for OASIS 
that performs this initial electronic screening to assist FDA entry 
reviewers by evaluating the potential risks associated with each 
article and identifying those articles that may present a higher public 
health risk for further examination by FDA.
    As discussed, the drugs covered by a SIP can be imported using two 
proposed pathways: Admission to an FTZ with later entry for consumption 
and filing in ACE when compliant, or filing an entry for consumption in 
ACE with a request to bring the eligible prescription drugs into 
compliance with the FD&C Act under section 801(b) of the FD&C Act and 
Sec.  1.95. The plan submitted under Sec. Sec.  1.95 and 1.96 for the 
drugs would need to include the testing and relabeling required under 
this proposed rule.
    FDA proposes that the testing and relabeling of a shipment, as 
described in the Section 804 Pre-Import Request, take place after the 
shipment has arrived in the United States, but before it can be 
distributed in the United States. This will enable the Importer to 
inspect the Canadian labeling and packaging as part of its screening 
obligations. It will also place the responsibility on the Importer to 
ensure that the samples submitted for testing are representative of the 
actual shipment. The Importer will also be responsible for ensuring 
that the relabeling and the product identifier are compliant with U.S. 
laws and regulations after FDA has determined that the testing results 
are acceptable and before an eligible prescription drug is sold in the 
United States. Placing these responsibilities on Importers will aid FDA 
in its efforts to monitor compliance with and enforce the requirements 
of the FD&C Act and this proposed rule when it is finalized.
    As discussed earlier, under the proposed rule, an Importer could 
admit an eligible prescription drug to an FTZ in the United States for 
the purpose of completing the required testing and relabeling. An FTZ 
is a secure area under the supervision of CBP. FTZs were established in 
the United States under the Foreign Trade Zones Act of 1934 (19 U.S.C. 
81a-81u) for importers to hold or otherwise manipulate goods without 
being subject to certain CBP requirements including customs entry 
(articles are ``admitted'' to an FTZ and not entered), payment of duty, 
tax, or bond. Since these FTZ Act exclusions only affect the 
application of certain CBP laws, FDA-regulated articles that are 
brought into an FTZ remain subject to other U.S. laws and regulations 
affecting imported goods. Therefore, placement of eligible prescription 
drugs in an FTZ does not affect FDA's jurisdiction and inspectional 
authority over them. Samples of the eligible prescription drug or drugs 
can be removed from the FTZ for the purpose of the required testing by 
a qualifying laboratory and for providing samples to FDA as proposed in 
this rule.\3\
---------------------------------------------------------------------------

    \3\ Any such samples removed from the FTZ for testing in the 
customs territory of the United States will have to be entered using 
normal Customs procedures.
---------------------------------------------------------------------------

    If the Importer pursues the second pathway, filing an entry for 
consumption in ACE and requesting to bring the drugs into compliance, 
under section 801(b) of the FD&C Act, the Importer would submit Form 
FDA 766, to the relevant FDA Imports Division Director. After review, 
the Director would notify the Importer of FDA's approval or disapproval 
of the plan to bring the drugs into compliance. If approved, the FDA 
notice of approval will specify the conditions to be fulfilled and the 
time limit for fulfilling them (see Sec.  1.96). Under the proposed 
rule, the Importer would need to keep the product at a designated 
secured warehouse, and under appropriate environmental conditions to 
maintain the integrity of the products, until FDA issues an 
admissibility decision. The secured warehouse would need to be within 
30 miles of the authorized Port of Entry to facilitate FDA oversight, 
including the collection and examination of samples.
    After the authorized plan has been completed, the Importer will 
complete the section entitled ``Importer's Certificate'' on Form FDA 
766 and provide that certification to the relevant FDA Imports Division 
Director. At this point, FDA may choose to conduct a followup 
inspection and/or sampling to determine compliance with the terms of 
the authorized plan. If FDA determines that the conditions of the 
authorized plan have been fulfilled, the Agency will notify the 
Importer through a Notice of Release indicating that the admissible 
portion of the shipment is no longer subject to detention or refusal of 
admission. This Notice is usually identified as ``Originally Detained 
and Now Released.'' A copy of the Notice is sent to the owner or 
consignee; CBP would then be notified electronically of FDA's ``May 
Proceed'' determination. If there is a non-admissible portion of the 
shipment, that portion can be destroyed, or re-exported by the Importer 
under FDA or CBP supervision (21 U.S.C. 381(a)). A Notice of Refusal of 
Admission will be issued to the Importer for the rejected portion.
    Under the proposed rule, FDA would intend to refuse admission into 
the United States under section 801(a)(3) of the FD&C Act if: (1) 6 
Months have passed since the entry date of the shipment; (2) the 
conditions of the SIP or the section 804 Pre-Import Request are not 
met; or (3) the drug otherwise appears to be adulterated, misbranded or 
unapproved in violation of section 505 of the FD&C Act. If FDA refuses 
admission into the United States under section 801(a)(3) of the FD&C 
Act, the drug should be exported or destroyed by the Importer within 90 
days of the refusal.
    The proposed rule would require that an entry for consumption be 
made electronically in ACE for any shipment containing an eligible 
prescription drug. The port of arrival and port of entry would be 
limited to a CBP port that is authorized by FDA, so that FDA can

[[Page 70810]]

ensure that it has adequate resources at the port to process the 
arrival and entry of shipments that contain an eligible prescription 
drug and to perform sampling of any such shipment, if necessary. The 
following data elements would be required to be submitted in ACE at the 
time of entry:
    a. The unique facility identifier of the Foreign Seller;
    b. The Importer's NDC for each eligible prescription drug;
    c. The NDA or ANDA number of each eligible prescription drug's FDA-
approved counterpart;
    d. The lot or control number assigned by the manufacturer for each 
eligible prescription drug;
    e. The FDA Quantity, which is the quantity of the eligible 
prescription drug or drugs in an import line delineated by packaging 
level, including the type of package from the largest packaging unit to 
the smallest packaging unit; the quantity of each packaging unit; and 
the volume and/or weight of each of the smallest of the packaging 
units; and
    f. The Pre-Import Request number.
    FDA would require submission of these data elements in ACE at the 
time of entry to facilitate the importation of eligible prescription 
drugs as part of a SIP. The proposed rule would clarify that for 
eligible prescription drugs the unique facility identifier of the 
registered Foreign Seller and the NDC proposed for assignment by the 
Importer be submitted in ACE at the time of entry. The application 
number of the NDA or ANDA for the FDA-approved drug that is the 
counterpart of the eligible prescription drug would also be submitted 
in ACE. This information will help FDA to verify that an entry for 
consumption contains eligible prescription drugs. The lot or control 
number of each eligible prescription drug would be required to be 
submitted by the Importer to FDA under this proposed rule, in 
accordance with section 804(d)(1)(H) of the FD&C Act.
    In accordance with section 804(d)(1)(D) of the FD&C Act, we propose 
to require the Importer submit information on the quantity of the 
eligible prescription drug that is shipped in ACE at the time of entry. 
FDA is proposing to require that quantity include the quantity of each 
layer/level of packaging of the eligible prescription drug(s); the unit 
of measure, which is the description of each type of package; and the 
volume and/or weight of each of the smallest of the packaging units. 
The quantity would be required to be submitted in decreasing size of 
packing unit (starting with the outermost/largest package and ending 
with the innermost/smallest package).
    Information on the quantity of each layer or level of packaging 
will help the Agency identify an article being imported or offered for 
import as an eligible prescription drug. Although CBP and FDA utilize 
Harmonized Tariff Schedule codes to generally identify which imports 
are subject to an FDA admissibility review, these codes are often not 
sufficient to specifically identify a product for FDA decision making. 
There may be instances in which a drug's packaging does not meet the 
conditions of the approved NDA or ANDA. Packaging can affect the safety 
of an FDA-regulated product, for example, where an article is 
represented as ``sterile.'' Submission of the quantity, including of 
each layer or level of packaging, in ACE at the time of entry would 
assist the Agency should it need to perform field examinations, label 
examinations, sample collections, detentions, or refusals.
    Finally, the Pre-Import Request number, which FDA would provide to 
the Importer when we grant the Pre-Import Request, would allow FDA's 
review staff to verify that a Pre-import Request covering the eligible 
prescription drugs in the shipment has been approved by FDA.
5. Submission and Review of Testing Results
    Once the testing described in section 804(d)(1)(J) and (L) of the 
FD&C Act is complete, the results would be submitted to FDA, along with 
a Certificate of Analysis (COA), selection method for the samples, the 
testing methods used, laboratory records required by the proposed rule 
in accordance with section 804(d)(1)(L), and any other documentation 
demonstrating that the testing was conducted at a qualifying laboratory 
and otherwise meets the requirements in section 804(e)(1) of the FD&C 
Act. If the Importer performs the Statutory Testing after the shipment 
has been admitted to an FTZ but before filing entry for consumption, 
the Importer would be required to submit the required testing results 
and records to FDA in electronic form to the ESG or to an alternative 
transmission point identified by FDA, prior to relabeling the drugs. If 
the Importer performs the testing at a qualifying laboratory as part of 
an FDA-approved plan under Sec. Sec.  1.95 and 1.96, the Importer would 
be required to submit the required testing results and records as part 
of the Importer's plan prior to relabeling of the drugs. If a 
manufacturer performs the Statutory Testing, the manufacturer would 
submit the test results and records to FDA directly in electronic form 
to the ESG or to an alternative transmission point identified by FDA. 
FDA would review the test results and records and notify the Importer 
whether the test results are acceptable to the Agency and then the 
Importer would cause the drugs to be relabeled in accordance with the 
proposed rule. Under the proposed rule, if the data and information 
that the manufacturer or Importer submits do not establish that the 
drug the SIP Sponsor seeks to import is authentic, not degraded, and 
meets the conditions of an FDA-approved NDA or ANDA, the drug cannot be 
relabeled, and FDA would refuse admission of the drug. FDA proposes to 
require that the relabeling only take place after the Agency has 
accepted the test results to avoid potential diversion that could occur 
if eligible prescription drugs are relabeled for the U.S. market and 
then fail the testing requirements, which could happen before or after 
export of the refused drugs to Canada.
6. Period of Authorization of Section 804 Importation Programs
    Under the proposed rule, SIPs would initially be authorized for a 
2-year period, with the possibility of extensions for additional 2-year 
periods. Each 2-year period would begin when the Importer files an 
electronic import entry for consumption for its first shipment of 
drugs. If the Importer does not file an electronic import entry for 
consumption for a shipment of eligible prescription drugs within 1 year 
of the date the SIP is authorized by FDA, the SIP Sponsor would have to 
submit, and FDA would have to authorize, a new SIP Proposal before it 
could begin the importation process.
    We believe that SIPs should be given a 2-year period before re-
authorization is required to continue in the program because we believe 
that this will provide sufficient time for SIP Sponsors to demonstrate 
that they can in fact import drugs from Canada with no additional risk 
to the public's health and safety and that such importation in fact 
results in a significant reduction in the cost of covered products to 
the American consumer. We believe that SIPs should terminate after 2 
years unless re-authorized because importation under section 804 is 
novel. After 2 years, we will have the data necessary to evaluate a 
SIP's success. We will be able to determine if the safeguards in 
section 804 of the FD&C Act and in this rule, should it be finalized, 
are working and, if they are, if there are requirements that could be 
amended or streamlined. We will be

[[Page 70811]]

able to compare and contrast the approaches taken by different SIP 
Sponsors. FDA will also take the opportunity to assess any changes in 
the marketplace that result from section 804 importation. For example, 
we will be able to determine whether section 804 importation resulted 
in changes in the price or supply of drugs in Canada or the United 
States, whether there are newly erected or existing barriers to section 
804 importation, and whether and how bad actors respond to section 804 
importation. FDA seeks comment on this approach, including whether 2 
years is the appropriate initial period of time for a SIP, whether 2-
year re-authorization periods are appropriate, and whether there should 
be a limit on the number of re-authorization periods.
7. Modification or Extension of Section 804 Importation Programs
    Under the proposed rule, if a SIP Sponsor wishes to make a change 
to an authorized SIP (for example, to amend the list of eligible drugs 
it seeks to import or to work with a different Foreign Seller, 
Importer, or qualifying laboratory), the SIP Sponsor would be required 
to submit a supplemental proposal for FDA's consideration. As noted 
earlier, if a SIP Sponsor wishes to work with more than one Foreign 
Seller or Importer, it must first demonstrate that it has consistently 
imported eligible prescription drug(s) in accordance with section 804 
and this rule. We generally expect that a SIP Sponsor would have 
submitted its first quarterly report to FDA before it submits a 
supplement to the SIP Proposal seeking to add an additional Foreign 
Seller or Importer.
    If FDA authorizes the supplemental proposal, a new Pre-Import 
Request would be required for the next shipment. Under the proposed 
rule, a SIP Sponsor would not be permitted to make any changes or 
permit any changes to be made to the SIP without first securing FDA's 
authorization.
    Under the proposed rule, an authorized SIP Sponsor would be able to 
submit a proposal asking for authorization to extend the SIP for 
additional 2-year-long periods beyond the initial 2-year long 
implementation period. To be eligible for extension, a SIP would need 
to be up to date on all the information and records-related 
requirements of section 804 and this rule. A request for authorization 
to extend a SIP should be submitted at least 3 months before the SIP's 
2-year-long authorization period expires.
8. Denial, Suspension, or Revocation of Authorization of Section 804 
Importation Programs
    If at any point in the course of its review of a SIP Proposal, FDA 
finds minor, correctable deficiencies, the Agency intends to make a 
reasonable effort to promptly communicate them to the SIP Sponsor so 
that they can be corrected in a timely way. However, FDA may deny a 
request for authorization, modification, or extension of a SIP in its 
discretion, as described elsewhere in this proposed rule, including if 
a proposed SIP does not meet the standard for authorizing a SIP under 
this proposed rule.
    Under the proposed rule, FDA can revoke the authorization of a SIP 
in whole or in part, including with respect to one or more drugs in the 
SIP, at any time for any reason in FDA's discretion, including if, for 
example: (1) FDA finds that the SIP Proposal contained an untrue 
statement of material fact or omitted material information required by 
this part; (2) the SIP no longer meets the requirements of section 804 
of the FD&C Act or the standard for authorizing a program under this 
proposed rule; (3) continued implementation of the SIP will pose 
additional risk to the public's health and safety; (4) continued 
implementation of the SIP will not result in a significant reduction in 
the cost of covered products to the American consumer; or (5) continued 
monitoring of the SIP imposes too much of a drain on Agency resources 
or is inconsistent with the Agency's prioritization of resources.
    Under the proposed rule, if at any point a SIP Sponsor has reason 
to suspect that a drug, manufacturer, Foreign Seller, Importer, 
qualifying laboratory, or other participant in or element of the supply 
chain that FDA initially authorized does not in fact meet the 
requirements of section 804 or any other applicable requirements of the 
FD&C Act, or of any applicable regulation, including this rule, the SIP 
Sponsor would be required to stop importation immediately, notify FDA, 
and demonstrate to FDA that importation has in fact been stopped 
pending an investigation. In addition, FDA may also suspend a SIP under 
such circumstances, or under other circumstances in FDA's discretion, 
which would prevent further importation of drugs under it. Under 
certain circumstances set forth in section 804(g) of the FD&C Act, FDA 
is required to suspend importation. Section 804(g) provides that the 
Secretary shall require that importations of a specific prescription 
drug or importations by a specific importer under subsection (b) be 
immediately suspended on discovery of a pattern of importation of that 
specific prescription drug or by that specific importer of drugs that 
are counterfeit or in violation of any requirement under this section, 
until an investigation is completed and the Secretary determines that 
the public is adequately protected from counterfeit and violative 
prescription drugs being imported under subsection (b).
    In addition, under the proposed rule, where a SIP Sponsor fails to 
timely extend its authorized SIP, the SIP would be considered expired. 
The sponsor of an expired SIP would need to submit a new SIP Proposal 
because FDA may be unable to confirm that the SIP Sponsor continues to 
meet all the necessary requirements. FDA is also proposing to terminate 
a SIP upon request from the SIP Sponsor when the request includes a 
notice of the SIP Sponsor's intent to discontinue its activities. The 
sponsor of an expired SIP would be required to submit a new SIP 
Proposal should it decide to resume section 804 importation activities.
9. Monitoring and Compliance
    SIP Sponsors will be responsible for ensuring that all the 
participants in a SIP comply with the requirements of section 804 of 
the FD&C Act and this rule. As noted earlier, a SIP Sponsor would need 
to develop a compliance plan and describe it in detail in their SIP 
Proposal for FDA's review and authorization. We ask for comment on what 
elements should be included in a SIP's compliance plan. Among other 
things, such a plan could require: (1) A description of the division of 
responsibilities between co-sponsors, if any, (2) the creation of 
written compliance policies, procedures, and protocols; (3) the 
provision of education and training to ensure that Foreign Sellers, 
Importers, qualifying laboratories, and their employees understand 
their compliance-related obligations; (4) the creation and maintenance 
of effective lines of communication, including a process to protect the 
anonymity of complainants and to protect whistleblowers; and/or (5) the 
adoption of processes and procedures for uncovering and addressing 
noncompliance or misconduct. We seek comment on what alternate or 
additional requirements might be appropriate if a SIP is co-sponsored.
    FDA's usual compliance and enforcement tools apply to SIP 
participants. We will retain our usual rights to conduct pre-
authorization,

[[Page 70812]]

surveillance, and risk-based inspections under section 704 of the FD&C 
Act. In addition, the proposed rule would require that SIP Sponsors and 
other SIP participants agree to submit to audits of their books and 
records and inspections of their facilities as a condition of 
participation in a SIP. If a SIP Sponsor, manufacturer, Foreign Seller, 
Importer, qualifying laboratory, or other participant in or element of 
the supply chain delays, denies, or limits an inspection, or refuses to 
permit entry or inspection of their facility or their records, any drug 
that they have held would be deemed to be adulterated (FDA, 2014. 
``Guidance for Industry: Circumstances that Constitute Delaying, 
Denying, Limiting, or Refusing a Drug Inspection.'' (Available at 
https://www.fda.gov/regulatory-information/search-fda-guidance-documents/circumstances-constitute-delaying-denying-limiting-or-refusing-drug-inspection). FDA could also suspend the SIP, in whole or 
in part, immediately in that circumstance.
    FDA can take action through, e.g., warning letters, seizure, and 
detention, to address failure to abide by applicable requirements, 
including requirements in this rule, when finalized, and requirements 
concerning product quality. FDA would also retain the authority under 
section 801 of the FD&C Act to refuse admission to a drug that does not 
comply with the FD&C Act or the rule, including, under section 
801(a)(3) of the FD&C Act, the authority to refuse entries of drugs 
that appear to be adulterated, misbranded, including if it does not 
comply with the product identifier requirement of section 582 of the 
FD&C Act, or in violation of section 505 of the FD&C Act.

D. Requirements for Foreign Sellers

    A ``Foreign Seller'' under section 804 and this proposed rule is an 
establishment within Canada engaged in the distribution of an eligible 
prescription drug that is imported into the United States. Under the 
proposed rule, the Foreign Seller would buy eligible prescription drugs 
directly from the manufacturers and then sell them directly to the 
Importer. The Foreign Seller would also be responsible for relabeling 
the drug product solely to affix or imprint the SSI on each package and 
homogenous case of the eligible prescription drug(s).
    The SIP Sponsor would be required to ensure that the Foreign Seller 
meets all the licensing and registration requirements set forth in the 
statute and this proposed rule. We propose to require that Foreign 
Sellers have an active drug establishment license as a wholesaler from 
Health Canada. We also propose to require that they be registered with 
provincial pharmacy regulatory authority to distribute HPFB-approved 
drugs. In addition, we propose that a Foreign Seller could not be 
licensed to distribute drugs that are approved by countries other than 
Canada and that are not HPFB-approved for distribution in Canada. We 
believe that this is an important safeguard that will help ensure that 
only HPFB-approved drugs are imported to the United States under SIPs. 
We seek comment on what additional standards should be imposed or 
qualifications required of Foreign Sellers.
    The proposed rule would also require Foreign Sellers to register 
with FDA. Section 804(f) of the FD&C Act requires that any 
establishment within Canada engaged in the distribution of a 
prescription drug that is imported or offered for importation into the 
United States shall register with the Secretary the name and place of 
business of the establishment and the name of the U.S. agent for the 
establishment. This proposed rule implements that provision and largely 
tracks the registration requirements for foreign establishments set 
forth in 21 CFR 207.21, 207.25, and 207.29.
    Facilities that register with FDA as Foreign Sellers should do so 
using the existing structured product labeling (SPL) format used by 
establishments required to register under section 510 of the FD&C Act. 
FDA intends to create a new business operation code for Foreign 
Sellers, ``Section 804 Foreign Seller.'' After the initial 
registration, a facility registered with FDA as a Foreign Seller would 
also be required to register annually for each year thereafter in which 
it wishes to remain a Foreign Seller, during the registration period 
between October 1 and December 31. We propose to require in this rule 
that a Foreign Seller's registration include its name, place of 
business, unique facility identifier, Health Canada Drug Establishment 
License number, point of contact email address and telephone number, 
the name of its U.S. agent, the name of each SIP with which it works, 
and any other information that FDA may decide is necessary.
    U.S. agents of Foreign Sellers would be subject to the same 
requirements as agents of foreign registrants are under 21 CFR 
207.69(b). Their responsibilities would include responding to 
communications and questions from FDA and helping FDA to schedule 
inspections. Under the proposed rule, in certain circumstances, FDA may 
provide information and/or documents to the U.S. agent, which would be 
considered equivalent to providing the same information and/or 
documents to the Foreign Seller.
    We note that as an entity that holds drugs, the Foreign Seller 
would be subject to FDA inspection under section 704 of the FD&C Act.

E. Requirements for Importers

    Under section 804, an Importer is defined as a pharmacist or a 
wholesaler. Under the proposed rule, if finalized, to be part of a SIP, 
an Importer would need to be duly licensed as a pharmacist by the State 
in which the Importer is located and in which it does business, or duly 
licensed as a wholesaler. In addition, the Importer's pharmacist or 
wholesaler licenses would need to be in effect (i.e., not expired), and 
the Importer must be in good standing with the licensor. Furthermore, 
the Importer would need to be the U.S. owner of an eligible 
prescription drug at the time of entry or arrival of the drug into the 
United States.
    We note that the Importer has a number of responsibilities under 
section 804 and this rule, including screening eligible prescription 
drugs for evidence regarding whether or not they are adulterated, 
counterfeit, damaged, tampered with, or expired; arranging for each 
shipment of eligible prescription drugs to be tested by a qualifying 
laboratory; and arranging for them to be relabeled with the FDA-
approved labeling, including the carton and container labels, 
prescribing information, and any patient labeling, such as medication 
guides, instruction for use documents, and patient package inserts. The 
Importer is also responsible for facilitating the affixation or 
imprinting of a product identifier at the same time that the eligible 
prescription drugs are relabeled with the FDA-approved labeling.
    We propose that the screening conducted by the Importer would 
include examination of the Canadian labeling of a sample of each 
shipment of section 804 drugs to verify that the labeling is consistent 
with that of an HPFB-approved drug and that the drugs have been 
serialized as prescribed in the proposed rule, when finalized. The 
screening could also include a visual comparison of a sample of the 
section 804 drug to a sample of the HPFB-approved drug. We seek comment 
on the feasibility and sufficiency of this screening, as well as on 
what additional or alternative screenings that the Importer could do to 
ensure that imported eligible prescription drugs are not adulterated, 
counterfeit, damaged, tampered with, or expired.

[[Page 70813]]

    If an Importer will be relabeling the drug itself, the Importer 
must also be registered with FDA under section 510(b) of the FD&C Act 
and obtain a labeler code from FDA under Sec.  207.33(c) (21 CFR 
207.33(c)). If the Importer chooses to contract with a separate entity 
(e.g., a repackager or relabeler) to relabel the drug on its behalf, 
the Importer will be a private label distributor, as that term is 
defined in Sec.  207.1 (21 CFR 207.1), because it will be commercially 
distributing under its own label drugs that it did not itself 
manufacture, repackage, or relabel. As noted elsewhere in this proposed 
rule, a repackager or relabeler acting on an Importer's behalf would 
only repackage to the extent it is required to label the drug. As a 
private label distributor, the Importer will not be required to 
register with FDA, but it must obtain its own labeler code from FDA, 
under Sec.  207.33(c). Under the proposed rule, the NDCs for the 
section 804 drugs that are relabeled by an entity other than the 
Importer would nonetheless incorporate the Importer's labeler code. 
Among other requirements, before an eligible prescription drug can be 
released into interstate commerce it will need a new NDC and will need 
to be listed. We note that a drug imported under section 804 of the 
FD&C Act will have a different NDC than its FDA-approved counterpart. 
Under the requirements proposed in this rule, if the Importer is also a 
repackager or relabeler, it will be the Importer's responsibility to 
propose an NDC for assignment for each eligible prescription drug under 
Sec.  207.33. Under these circumstances, the Importer will also be 
responsible for listing each eligible prescription drug under Sec.  
207.53 (21 CFR 207.53). If the Importer is a private label distributor, 
it would be the Importer's responsibility to ensure that the entity 
relabeling an eligible prescription drug on its behalf proposes an NDC 
under Sec.  207.33 and lists each eligible prescription drug under 
Sec.  207.53.
    The Importer, or authorized customs broker, would also be 
responsible for filing an entry for consumption in ACE for the drugs to 
be imported through a CBP port of entry designated in a SIP Proposal 
authorized by FDA. In addition, Importers would be required to collect 
and submit to FDA the information and documentation about the imported 
drug that is set forth in section 804(d) of the FD&C Act as discussed 
later. Importers also would have responsibilities related to adverse 
event, medication error, field alert reports, and other reports, and 
related to drug recalls.
    We seek comment on whether there are qualifications Importers 
should be required to have, beyond being licensed as a pharmacist or 
wholesaler, given their responsibilities.

F. Supply Chain Requirements

    When Congress enacted section 804 of the FD&C Act in 2003, FDA's 
authority with respect to drug supply chain security was more limited 
than it is today. In 2013, Congress enacted the DSCSA, which 
strengthened FDA's authority to protect the security and integrity of 
the drug supply chain. Specifically, section 582 of the FD&C Act, as 
added by the DSCSA, establishes the product identification, 
verification, and tracing requirements that manufacturers, wholesale 
distributors, pharmacists, and other trading partners must adhere to 
for covered transactions involving certain prescription drugs. Because 
the DSCSA did not include an exemption for drugs imported under section 
804 of the FD&C Act, such drugs are subject to the requirements in 
section 582 of the FD&C Act. We recognize, however, that certain 
requirements in section 582 may be difficult or impossible for such 
drugs to meet. Accordingly, under the authority provided by section 
582(a)(3)(A)(iii) of the FD&C Act, FDA proposes to exempt from section 
582 certain transactions for drugs imported under section 804 of the 
FD&C Act.
    Under section 804(c)(3), this proposed rule may contain ``any 
additional provisions determined by the Secretary to be appropriate as 
a safeguard to protect the public health or as a means to facilitate 
the importation of prescription drugs.'' To ensure the proposed 
exemptions from section 582 of the FD&C Act do not compromise the 
security of the supply chain for drugs imported under section 804 of 
the FD&C Act, this rule also proposes additional provisions to 
safeguard the public health. These additional safeguards are necessary 
for the Secretary to certify that implementation of section 804 of the 
FD&C Act would pose no additional risk to the public's health and 
safety.
    First, if an eligible prescription drug is manufactured outside of 
Canada, it would need to be exported commercially into Canada by the 
manufacturer and labeled for the Canadian market. It could not be 
transshipped through Canada for sale in another country because this 
could create opportunities for counterfeiting or other forms of fraud.
    Second, an eligible prescription drug would need to be sold by the 
manufacturer directly to a Foreign Seller in Canada. FDA has determined 
that this requirement is critical because FDA would generally not 
possess information needed to trace drug products labeled for the 
Canadian market back to the original manufacturer. As discussed further 
in the ``Supply Chain Security Requirements'' section below, for 
products and transactions that are subject to the DSCSA, supply chain 
protections are in place to allow for tracing products up to the 
manufacturer at the package and homogenous case level.
    Under FDA's general proposed approach, a Foreign Seller would then 
ship the drug directly to the Importer in the United States. We 
considered whether to propose allowing more than one Foreign Seller in 
the Canadian supply chain but decided against this approach because we 
do not believe it would be possible for a SIP Sponsor to demonstrate 
that the same level of safety would be assured. For a SIP to pose no 
additional risk, it would have to match the protections of the DSCSA 
through other means. The short supply chain, coupled with this proposed 
rule's other provisions like serialization and testing, would permit 
control over and transparency into the supply chain to help ensure 
comparable safety. Therefore, we propose to require that each Foreign 
Seller buy the drug directly from the manufacturer and then sell it 
directly to the Importer in the United States because this would 
minimize supply chain security risks, including the risks posed by 
increased opportunities for counterfeiting and other forms of fraud 
that obscure the origin of drugs imported under section 804 of the FD&C 
Act. As the number of entities outside the United States that handle 
the drugs increases, the supply chain becomes progressively less 
transparent and more vulnerable to risk. The proposed short supply 
chains would also allow FDA and States to supervise the supply chain 
participants more closely. This rule proposes additional safeguards on 
tracing products through the pre-U.S. supply chain, which we believe 
will result in a level of supply chain security that poses no 
additional risk to the public's health and safety, but these proposed 
provisions are premised on the presence of just one Foreign Seller per 
supply chain. Allowing for additional Foreign Sellers in a supply chain 
would undermine our ability to ensure that our proposed approach poses 
no additional risk.
    Although we cannot foresee at this time how a longer supply chain 
would not pose additional risk to the public's health and safety, we 
seek comment on whether there actually are safeguards

[[Page 70814]]

that could be put in place that would enable FDA to authorize a SIP 
with multiple Foreign Sellers in a single supply chain in Canada. Such 
comments should provide specific details regarding the additional 
safeguards and how they would provide the same level of protection to 
the supply chain. If, in response to comments, we determine that FDA 
could authorize a SIP with more than one Foreign Seller in a single 
supply chain because we are able to adopt additional safeguards such 
that the SIP would pose no additional risk to the public's health and 
safety, we would consider having the final rule account for this 
possibility. For example, we could revise Sec. Sec.  251.3, 
251.14(a)(4), 251.19(c), and 251.19(d)(2), as follows.
     Section 251.3 could be revised to state that, in its 
initial proposal, a SIP Sponsor must only designate one Foreign Seller 
and one Importer that may engage in the distribution of any drug 
specified in the proposal, unless the SIP Sponsor demonstrates that the 
SIP will meet additional safeguards, which would be detailed in the 
final rule, necessary to ensure that the inclusion of subsequent 
specified Foreign Sellers would pose no additional risk to the public's 
health and safety.
     Section 251.14(a)(4) could be revised to state: ``For each 
drug imported under the SIP, the drug is only shipped by the entities 
that are specified in the SIP.''
     Section 251.19(c) could be revised to state: ``The 
Importer must also confirm that the eligible prescription drug was 
bought directly from the manufacturer by a Foreign Seller, and that all 
subsequent sales of that eligible prescription drug, up to and 
including the sale to the Importer, were made only among Foreign 
Sellers described in the SIP.''
     Section 251.19(d)(2) could be revised to state: 
``documentation demonstrating that the eligible prescription drug was 
only handled by the manufacturer and Foreign Seller(s) described in the 
SIP before the Importer received the drug;''.
    In addition, among other potential revisions that may be necessary, 
if the final rule were to permit longer supply chains, we would include 
in the final rule those additional safeguards--submitted in comments 
justifying an allowance for multiple Foreign Sellers in a single supply 
chain--that would be applicable to most, and perhaps all, proposals 
that include multiple Foreign Sellers. We note that other requirements 
would apply as well that would need to be specified in the final rule, 
including the testing requirements described in section 
804(d)(1)(J)(ii).
    Under the proposed rule, following the shipment into the United 
States, the Importer would be responsible for: (1) Sending FDA 
information about the drug, including information it receives from the 
Foreign Seller and the test results from the qualifying laboratory and 
also for (2) ensuring that the drug is relabeled with the required U.S. 
labeling and DSCSA product identifier. The Importer would then sell the 
product to either another entity in the United States (if it is a 
wholesaler) or dispense the product itself to patients (if it is a 
pharmacist).
    We acknowledge that there are certain assurances regarding 
authenticity and quality when a manufacturer manufactures drugs 
intended for sale in the United States. We seek comment on the approach 
in this proposed rule and whether it contains sufficient safeguards to 
ensure that the proposed importation poses no additional risk to health 
or safety.
1. Foreign Seller's Supply Chain Security Obligations
    Once the Foreign Seller receives product from a foreign 
manufacturer, which would be entirely intended and labeled for sale in 
the Canadian market, the Foreign Seller would need to separate the 
portion of product it intends to sell to the Importer in the United 
States under section 804, and maintain that portion in a separate area 
in its facility from the portion intended for the Canadian market. We 
anticipate that the volume of drug included in the portion intended for 
the U.S. market will be agreed upon between the Foreign Seller and the 
Importer to whom it will sell the drug, and that such volume will be 
identified in a contract agreement and in records that the Importer is 
obligated to send to FDA under section 804(d) of the FD&C Act.
    Under the proposed rule, for the portion of drug that will be 
transacted between the Foreign Seller and the Importer under section 
804, the Foreign Seller would need to assign an SSI to each package and 
homogenous case of drug in that portion. The rule proposes that 
``package'' means the smallest individual salable unit of product for 
distribution that is intended by the Foreign Seller for sale to the 
Importer located in the United States, and that ``individual saleable 
unit'' means the smallest container of product sold by the Foreign 
Seller to the Importer. The rule proposes that an ``SSI'' consists of a 
unique alphanumeric serial number of up to 20 characters. Using a stamp 
or adhesive sticker, the Foreign Seller would be required to place the 
SSI on each package and homogenous case, but would not otherwise 
repackage or relabel the drug. If the product already contained a 
manufacturer-affixed DSCSA-compliant product identifier at the time the 
Foreign Seller receives it, the Foreign Seller would not be required to 
assign an SSI to the product before further engaging in a transaction 
with the Importer.
    Under the proposed rule, the Foreign Seller would need to maintain 
records identifying its process for serializing and affixing the SSI 
onto each package and homogenous case, including an explanation of the 
controls in place to ensure the stamp or adhesive sticker is properly 
affixed. The Foreign Seller would also be required to adhere to all 
applicable good manufacturing practice requirements in accordance with 
section 501(a)(2)(B) of the FD&C Act and part 211. The SSI would need 
to occupy blank space on the package and homogenous case, and not 
obscure any other labeling information, including the manufacturer-
labeled Canadian DIN that was on the package and homogenous case at the 
time the Foreign Seller received the product from the manufacturer. 
Therefore, a drug without a DIN would not be an eligible prescription 
drug that could be imported into the United States. Finally, the 
Foreign Seller would need to maintain records associating the SSI with 
the DIN and all the records it received from the manufacturer upon 
receipt of the original shipment intended for the Canadian market.
    The rule also proposes that various verification requirements on a 
Foreign Seller, that correspond, where applicable, with those 
provisions pertaining to a ``manufacturer'' under the DSCSA in section 
582(b)(4)(A) through (C) of the FD&C Act. Specifically, the Foreign 
Seller would need to verify that a drug was not a suspect or 
illegitimate foreign product and would need to send information to the 
Importer about the purchase of the drug. ``Suspect foreign product'' 
and ``illegitimate foreign product'' are proposed in the rule as 
defined terms relating to the product that the foreign seller purchases 
from the manufacturer and align with the definitions of ``suspect 
product'' and ``illegitimate product'' in DSCSA. In addition, the 
Foreign Seller would need to be able to respond to requests for 
verification from FDA or others within 24 hours or in other such 
reasonable time as determined by FDA based on the circumstances of the 
request. We seek comment on the scope of the foreign seller's proposed 
verification

[[Page 70815]]

responsibilities, and the extent to which Foreign Sellers currently or 
in the future may have systems or processes in place to meet such 
requirements.
    Under the proposed rule, the Foreign Seller would not be engaged in 
repackaging, only relabeling, and it would be receiving a product from 
the original manufacturer that is not DSCSA-compliant, since that 
product would have been intended and labeled entirely for the Canadian 
market. To address potential risks, this rule proposes to impose 
several requirements on Foreign Sellers. For example, as noted above, 
the Foreign Seller would need to be registered with FDA under section 
804 of the FD&C Act. Additionally, the rule proposes that, prior to or 
at the time of each transaction with the Importer in which the Foreign 
Seller transfers ownership of the product to the Importer, the Foreign 
Seller would need to provide the Importer with a statement and 
information that is comparable with transaction information and 
transaction statement as defined in section 581(26) and (27) of the 
FD&C Act, respectively. Specifically, the Foreign Seller would be 
required to provide to the Importer:
     The proprietary or established name of the product;
     Strength and dosage form of the product;
     The container size;
     The number of containers;
     The lot number of the product;
     The date of the transaction;
     The date of the shipment, if more than 24 hours after the 
date of the transaction;
     The business name and address of the person associated 
with the Foreign Seller from whom ownership is being transferred;
     The business name and address of the person associated 
with the Importer to whom ownership is being transferred;
     The SSI for each package and homogenous case of product; 
and
     The Canadian DIN for each product transferred.
    These requirements would be in addition to the statutory 
requirement under section 804(d)(1)(G) of the FD&C Act that the 
Importer obtain from the Foreign Seller, and submit to FDA, 
documentation specifying the original source of the prescription drug 
(i.e., identifying the original foreign manufacturer) and the quantity 
of each lot of the drug the Foreign Seller originally received from the 
manufacturer. The rule also proposes that the Foreign Seller would be 
required to send information to FDA and other officials as appropriate 
and upon request. For example, upon a request by FDA, or other 
appropriate Federal or State official, in the event of a recall or for 
purpose of investigating a suspect product or an illegitimate product, 
the Foreign Seller would need to promptly provide the official with the 
information about the transaction with the Importer. This is comparable 
to the requirement for repackagers under section 582(e)(1)(C) of the 
FD&C Act; other DSCSA trading partners currently have similar 
obligations.
    The required activities of the Foreign Seller proposed in this 
rule, as described above, presume a single Foreign Seller between the 
manufacturer and Importer in a particular supply chain. However, as 
noted above, if in response to comments, we determine that additional 
safeguards exist such that a SIP with a subsequent Foreign Seller or 
Foreign Sellers in a supply chain could be proposed to ensure that the 
longer supply chain would not pose additional risk to the public's 
health and safety, we would consider having the final rule account for 
this possibility. Our analysis of comments received will include a 
consideration of how the requirements described above on the single 
Foreign Seller (e.g., to place an SSI on products, send transaction 
information to the Importer, verify products, and maintain records) 
would be applied to subsequent Foreign Sellers in a supply chain.
    In sum, we have determined that a Foreign Seller would need to be 
capable not only of registering with FDA per section 804(f) of the FD&C 
Act and sharing relevant information and records with the Importer per 
section 804(d)(1)(G) of the FD&C Act, but also of preserving supply 
chain security and sending package-level information about the product 
they are selling to the Importer in a format that enables 
interoperability. This is consistent with section 804(c) of the FD&C 
Act, which permits the Secretary to include any additional requirements 
determined to be appropriate as a safeguard to protect the public 
health. Without these requirements, the Secretary would not be able to 
make the certification required under 804(l) that importation poses 
``no additional risk to the public's health and safety.''
2. Importer's Supply Chain Security Obligations
    Under the proposed rule, when the Foreign Seller sends a shipment 
of the product to the Importer, the product would need to include the 
Foreign Seller-affixed SSI, and, as noted earlier, contain the original 
Canadian labeling that the manufacturer had applied to the drug. The 
Importer would be responsible for relabeling the product with the 
required U.S. labeling.
    If the Importer intends to place the product into further 
transactions in commerce, that relabeling would also need to include 
placing or affixing a product identifier that is associated with the 
SSI that the Foreign Seller assigned to the product prior to sending it 
to the Importer. Therefore, as part of the relabeling, this rule 
proposes that the Importer is responsible for affixing or placing a 
product identifier, as that term is defined in section 581(14) of the 
FD&C Act, on each package and homogenous case of product that it 
receives from the Foreign Seller. If, however, the Importer intends to 
directly administer the product to patients, as may be the case if the 
Importer intends to dispense the drug as a pharmacist, a product 
identifier would not be required to be affixed or imprinted on each 
package and homogenous case of the eligible prescription drug.
    To avoid unnecessary steps in the supply chain, the product 
identifier would need to be affixed or imprinted at the same time at 
which the drug is being relabeled with the required U.S. labeling. As 
proposed, the Importer may relabel the product itself, or may choose to 
contract with a separate entity to relabel on its behalf. In either 
case, the entity that relabels the product must be registered with FDA 
as a relabeler, or a repackager if limited repackaging will occur as 
permitted in this proposed rule, under section 510(b) of the FD&C Act, 
in accordance with part 207, and also list the drug as required. We 
note that an entity that is a ``repackager'' as defined in the DSCSA 
under section 581(16) of the FD&C Act is likely to already have 
facilities and capabilities in place to affix or imprint a product 
identifier based on existing DSCSA requirements. A relabeler who 
contracts with the Importer to affix a product identifier on the 
Importer's behalf must, even if not engaged in a repackaging operation 
with respect to the eligible prescription drug, have systems and 
processes in place to meet applicable requirements of a ``repackager'' 
under section 582(e) of the FD&C Act for any transaction involving the 
eligible prescription drug.
    Per section 581(14) of the FD&C Act, the product identifier must 
include a standardized numerical identifier (SNI), as that term is 
defined in section 581(20) of the FD&C Act, the lot number, and 
expiration date of the product and be in human and machine-readable 
form encoded in a 2-dimensional barcode. An SNI consists of an 
alphanumeric serial number and

[[Page 70816]]

NDC under section 581(20). For a product imported under section 804 of 
the FD&C Act, the Importer is responsible for obtaining an NDC for the 
product (as described elsewhere in this proposed rule). With regard to 
the serial number component of the SNI, the Importer may elect to use 
the same serial number (i.e., the SSI) that the Foreign Seller had 
previously assigned to the product, or it may elect to assign a new 
serial number. Under the proposed rule, the Importer would need to 
maintain records, for no less than 6 years, that allow the Importer to 
associate the product identifier it affixed on each package and 
homogenous case of product it received from the Foreign Seller, with 
the SSI that had been assigned by the Foreign Seller, and the Canadian 
DIN that was on the package when the Foreign Seller received the 
product from the original manufacturer. This is analogous to the record 
retention requirement in section 582(e)(2)(A)(iv) of the FD&C Act for a 
repackager that associates a product identifier with a manufacturer-
affixed product identifier.
    In addition to the requirements proposed in the rule, the Importer 
is required to comply with any applicable existing requirement of the 
DSCSA for subsequent transactions to trading partners in the supply 
chain once the product has been relabeled with the required U.S. 
labeling (including the product identifier). For example, any Importer 
of eligible drugs under a SIP who is a ``pharmacist'' as defined in 
section 804(a)(2) of the FD&C Act (i.e., a person licensed by a State 
to practice pharmacy, including the dispensing and selling of 
prescription drugs), is also considered to be a ``dispenser'' under the 
DSCSA, as defined in section 581(3) of the FD&C Act. Such dispenser 
must be ``authorized'' under the DSCSA, i.e., have a valid license 
under State law (as defined in section 581(2)(D) of the FD&C Act). Such 
dispenser must also comply with all applicable requirements pertaining 
to a dispenser under section 582(d) of the FD&C Act. Furthermore, any 
Importer of eligible drugs under section 804 who is a ``wholesaler'' as 
defined in section 804(a)(5)(A) of the FD&C Act, is also considered to 
be a ``wholesale distributor'' under the DSCSA, as defined in section 
581(29) of the FD&C Act. Such wholesale distributor must be 
``authorized'' under the DSCSA, i.e., have a valid license under State 
law or section 583, in accordance with section 582(a)(6) of the FD&C 
Act, and otherwise meet the definition in section 581(2)(C) of the FD&C 
Act. Such wholesale distributor must also comply with all applicable 
requirements pertaining to a wholesale distributor under section 582(c) 
of the FD&C Act.
3. Exemptions From Certain DSCSA Requirements
    We propose to exempt certain transactions from DSCSA requirements 
in section 582 of the FD&C Act, as permitted by section 582(a)(3)(iii), 
because they would be difficult or impossible for section 804 imported 
drugs to meet, and the proposed rule includes other safeguards to 
maintain supply chain security:
     Section 582(c)(1)(A) and (d)(1)(A): For an Importer that 
is a wholesale distributor receiving the product from a Foreign Seller 
in Canada, the proposed rule would exempt the Importer from the 
requirement not to accept ownership unless the previous owner provides 
the transaction history, transaction information, and a transaction 
statement for the product. Similarly, if the Importer is a pharmacist 
receiving the product from a Foreign Seller in Canada, the proposed 
rule would exempt the Importer from the requirement on dispensers to 
not accept ownership unless the previous owner provides the transaction 
history, transaction information, and a transaction statement for the 
product. Instead, as previously described, this rule proposes to 
require the Foreign Seller to provide certain transaction-related 
information to the Importer that is adequate to ensure no additional 
risk to supply chain security.
     Section 582(c)(2) and (d)(2): The proposed rule would 
exempt Importers that are wholesale distributors and dispensers from 
the prohibition on receiving products that are not encoded with a 
product identifier. Instead, as previously described, products received 
from the Foreign Seller would be required to have an SSI. Wholesale 
distributors and dispensers would otherwise be required to engage only 
in transactions of products encoded with a product identifier, as 
defined in DSCSA.
     Section 582(c)(3) and (d)(3): Importers that are wholesale 
distributors and dispensers would be permitted to conduct transactions 
with Foreign Sellers even though they are not ``authorized trading 
partners'' under section 581. Wholesale distributors and dispensers 
would otherwise be required to transact only with authorized trading 
partners, as defined in the DSCSA.
     Section 582(c)(4)(A)(i)(II) and (d)(4)(A)(ii)(II): For 
section 804 imported products, the proposed rule would exempt an 
Importer from the requirement to verify that a product in the 
Importer's possession or control contains a ``standardized numerical 
identifier.'' Instead, the Importer would be required to verify that 
the section 804 imported product at the package level includes the SSI 
that the Foreign Seller had previously assigned to the product.
    Note that FDA would not consider a drug imported under section 804 
to have been diverted solely as a result of being imported under a SIP. 
A drug imported under section 804 may meet the definition of suspect or 
illegitimate product for other reasons, however (e.g., counterfeit or 
stolen products), and entities that are obligated to identify such 
products under the DSCSA would be obligated to do so for drugs imported 
under section 804 in the same manner as they would for any other drugs 
subject to the same requirement.
    We welcome comments on whether FDA should include exemptions from 
additional DSCSA requirements. We also note that manufacturers, 
repackagers, wholesale distributors, or dispensers may request waivers 
or exceptions at any time, under section 582(a)(3)(i) and (ii) of the 
FD&C Act.
4. Manufacturer's Supply Chain Security Obligations
    Pursuant to section 804(d)(1) of the FD&C Act, this regulation, 
once finalized, would require the Importer to submit to FDA certain 
information and records about the imported drug. Under section 
804(d)(1)(J) of the FD&C Act, such information would include the 
results of testing for authenticity and degradation, to be done per 
section 804(e) by either the Importer or the manufacturer. In the case 
of testing that is done by the Importer, other parts of this regulation 
specify information that the manufacturer is required to share in 
confidence with the Importer in order for the testing to occur, but in 
this section we further propose that the manufacturer would also need 
to provide to the Importer information it has about the transaction of 
the drug to the Foreign Seller located in Canada. Such information is 
necessary, along with other testing and laboratory record information 
specified elsewhere in this proposed rule, to ensure that the imported 
drug is authentic, as required in section 804(d)(1)(J) of the FD&C Act. 
Furthermore, under section 804(d)(1)(N) of the FD&C Act, we consider 
such information pertaining to drug's transactions in the pre-U.S. 
supply chain to be necessary to ensure the protection of public health.
    Manufacturers would also need to be able to provide sufficient 
information to the Importer about the imported drug's movements in the 
pre-U.S. supply chain. To this end, this rule proposes to

[[Page 70817]]

require, under section 804(e) of the FD&C Act, that the manufacturer 
provide to the Importer all relevant documentation about the 
transaction that it provided to the Foreign Seller, upon its transfer 
of ownership of the product for the Canadian market. The rule does not 
propose to require any additional information about this transaction 
that is otherwise not maintained or submitted in accordance with 
Canadian law, or in the normal course of business for products the 
manufacturer intends to introduce to the Canadian market. The Importer 
would be required to use this information obtained from manufacturers 
under section 804(e) of the FD&C Act to help determine whether the 
supply chain was intact, by comparing the information about the 
transaction between the manufacturer and Foreign Seller to that 
received by the Importer from the Foreign Seller, as required under 
this rule.
    We seek comments on this approach, including whether different or 
additional safeguards are necessary to ensure the integrity of the 
supply chain with respect to drugs imported under section 804 of the 
FD&C Act.

G. Requirements for Qualifying Laboratories

    Section 804 of the FD&C Act requires that imported drugs be tested 
by a ``qualifying laboratory,'' which is defined as ``a laboratory in 
the United States that has been approved by the Secretary for the 
purposes of this section.'' As indicated earlier in this document, a 
SIP Proposal would need to indicate which laboratory the SIP will use 
to test the drugs it imports. The SIP Proposal would also need to 
explain why that laboratory is qualified to do the testing and so 
should be approved by FDA for use by a SIP.
    To be considered qualified, we propose that a laboratory would need 
to comply with the applicable elements of the CGMP requirements, 
including provisions regarding laboratory controls in 21 CFR 211.160 
and regarding laboratory records in 21 CFR 211.194. In addition, a 
laboratory would need to have ISO 17025 accreditation. Finally, we 
propose that it also would need to have an FDA inspection history and 
it would need to have satisfactorily addressed any objectionable 
conditions or practices identified during its most recent FDA 
inspection.
    We seek comment on whether there are other requirements that all 
laboratories should meet before FDA approves them for use by a SIP. For 
example, we seek comment on whether we should require accreditation 
different from or in addition to ISO 17025.
    If the rule is finalized as proposed, FDA would approve qualifying 
laboratories for use by a SIP on a case-by-case basis as part of its 
review and authorization of a SIP Proposal. FDA would also consider 
publishing a list of approved qualifying laboratories for the benefit 
of States or other non-federal governmental entities and their co-
sponsors, if any, that may be developing a SIP Proposal.

H. Laboratory Testing Requirements

    Section 804(d)(1)(J)(i) of the FD&C Act sets forth testing 
requirements for shipments of imported drugs that are shipped directly 
to the Importer from the first foreign recipient of the prescription 
drug from the manufacturer and section 804(d)(1)(J)(ii) sets forth 
testing requirements for shipments that are not shipped directly to the 
Importer from the first foreign recipient of the prescription drug from 
the manufacturer. Because we are proposing to require that all 
shipments under a SIP be shipped directly from the Foreign Seller, 
which is the first foreign recipient of the prescription drug from the 
manufacturer, to the Importer, this rule focuses on the testing 
requirements in section 804(d)(1)(J)(i) and does not address the 
requirements in section 804(d)(1)(J)(ii) of the FD&C Act. In addition, 
section 804(d)(1)(L) of the FD&C Act requires that the Importer provide 
laboratory records to FDA that include ``complete data derived from all 
tests necessary to ensure that the prescription drug is in compliance 
with established specifications and standards.''
    Section 804(d)(1)(J)(i) of the FD&C Act provides that, in the case 
of an initial imported shipment, an Importer must provide documentation 
to FDA demonstrating that the drug ``was received by the recipient from 
the manufacturer and subsequently shipped by the first foreign 
recipient to the importer,'' that ``the quantity being imported into 
the United States is not more than the quantity that was received by 
the first foreign recipient,'' and that ``each batch of the 
prescription drug in the shipment was statistically sampled and tested 
for authenticity and degradation.'' For any subsequent shipments from 
the same batch of a drug, section 804(d)(1)(J)(i)(III)(bb) of the FD&C 
Act allows for more limited testing, of ``a statistically valid sample 
of the shipment.'' For an initial imported shipment, the testing would 
have to be done on a statistical sample of ``each batch of the 
prescription drug in the shipment.'' For example, if a shipment 
contained drugs from two batches, Batch A and Batch B, the testing 
would have to be done on a statistical sample of all of the drugs that 
came from Batch A and on a separate statistical sample of all the drugs 
that came from Batch B. For a subsequent shipment, the testing could be 
done on a statistical sample of the shipment as a whole, unless, for 
example, there are drugs from a third batch, Batch C, in the shipment. 
In that case, the testing would need to be done on a statistical sample 
of all the drugs that came from Batch A and Batch B, as a whole, and on 
a separate statistical sample of all the drugs that came from Batch C.
    We propose to require that a statistical sample of a batch or 
shipment of section 804 drugs be randomly selected from the batch or 
shipment being tested or, in the alternative, that the sample be 
representative of the batch or shipment. We seek comment on whether we 
should specify a sampling method. We also seek comment on whether we 
should require that sampling be done according to an established 
standard such as those issued by the American National Standards 
Institute (ANSI) or by ASTM International.
    Regarding the size of the sample, the number of packaged units in 
the sample would need to be large enough to enable a statistically 
valid statement to be made regarding the authenticity and stability of 
the entire batch or entire shipment. We seek comment on whether we 
should require that the sample size be determined using an established 
standard such as ASTM International's E122-17 ``Standard Practice for 
Calculating Sample Size to Estimate, With Specified Precision, the 
Average for a Characteristic of a Lot or Process'' (Ref. 30).
    As noted previously, we propose that the testing done on the sample 
of the batch or shipment be sufficiently thorough to establish, in 
conjunction with data and information from the manufacturer, that the 
batch or shipment is eligible for importation under a SIP. The proposed 
rule would require the sample of the HPFB-approved drug to be tested to 
confirm that the HPFB-approved drug meets the FDA-approved drug's 
specifications, including the analytical procedures and methods and the 
acceptance criteria. In addition, to meet the statutory requirement 
that shipments be tested for degradation, a stability-indicating assay 
provided by the manufacturer would be required to be conducted on the 
sample of the drug that is proposed for import. Pursuant to section 
804, the proposed rule would require all testing to be done

[[Page 70818]]

in a qualifying laboratory in the United States.
    The testing required under section 804(d)(1)(J) of the FD&C Act can 
be conducted ``by the importer or by the manufacturer.'' If the 
Importer conducts the testing, section 804(e)(2)(A) of the FD&C Act 
requires the manufacturer to provide the Importer with the information 
needed to authenticate the prescription drug. Under the proposed rule, 
specifically, the manufacturer would be required to provide the 
Importer with formulation information about the HPFB-approved drug and 
the FDA-approved drug and any testing methodologies and protocols that 
the manufacturer has developed that the Importer needs to conduct the 
Statutory Testing.
    In addition, under the proposed rule, the manufacturer would be 
required to provide an attestation to the Importer, or alternatively to 
FDA if the manufacturer conducts the testing itself, to establish that, 
but for the fact that it bore the HPFB-approved labeling, the drug that 
the manufacturer sold to the Foreign Seller in fact met the conditions 
in the FDA-approved NDA or ANDA. This would include any process-related 
or other requirements for which compliance cannot be established 
through laboratory testing. If the manufacturer does the testing, the 
manufacturer would be required to provide the attestation to FDA under 
the proposed rule. We propose that the attestation would need to 
include confirmation that the HPFB-approved drug has the active 
ingredient(s), active ingredient source(s) (including manufacturing 
facility or facilities), inactive ingredient(s), dosage form, 
strength(s), route(s) of administration, etc., described in the FDA-
approved drug's NDA or ANDA. The attestation would also need to confirm 
that the HPFB-approved drug conforms to the specifications in the FDA-
approved drug's NDA or ANDA regarding the quality of the drug 
substance(s), drug product, intermediates, raw materials, reagents, 
components, in-process materials, container closure systems, and other 
materials used in the production of the drug. In addition, the 
attestation would need to confirm that the HPFB-approved drug was 
manufactured in accordance with the specifications described in the 
FDA-approved drug's NDA or ANDA, including with regard to the 
facilities and manufacturing lines that are used, and in compliance 
with CGMP requirements set forth in section 501(a)(2)(B) of the FD&C 
Act and 21 CFR parts 4 (if a combination product), 210, and 211. The 
attestation would also need to include the original date of manufacture 
or whatever date was used in calculating the labeled expiration date 
based on the HPFB-approved or scientifically validated expiration 
period, the expiration period set forth in the FDA-approved drug's NDA 
or ANDA, and any other information needed to label the drug with an 
expiration date that meets the specifications of the FDA-approved 
drug's NDA or ANDA.
    The attestation would also need to include information needed to 
confirm that the labeling of the prescription drug complies with 
labeling requirements of the FD&C Act. Finally, as discussed elsewhere 
in this proposed rule, the attestation would need to include 
information about the transaction of the eligible prescription drug to 
the Foreign Seller.
    In addition to the attestation, the manufacturer would need to 
provide the Importer with the executed batch record, including the 
executed COA, for at least one recently manufactured, commercial-scale 
batch of the HPFB-approved drug and for at least one recently 
manufactured commercial-scale batch of the FDA-approved drug that was 
produced for and released for distribution to the U.S. market under an 
NDA or ANDA. The manufacturer would need to provide these analyses for 
each manufacturing line that the manufacturer used to produce either or 
both of the drugs.
    As discussed earlier in this document, section 804(e)(2)(B) of the 
FD&C Act states that the information that a manufacturer provides to an 
Importer under section 804(e)(2)(A) must be kept in strict confidence 
and used only for purposes of testing or otherwise complying with this 
Act.'' The statute goes on to state that the regulations implementing 
section 804 of the FD&C Act can include provisions to provide for the 
protection of trade secrets and commercial or financial information 
that is privileged or confidential. We have proposed in Sec.  251.15(g) 
and (h) additional provisions regarding the protection of information 
that may be supplied by a manufacturer to an Importer under this rule. 
We seek comment on whether any other provisions are needed to protect 
the information that manufacturers would need to provide to Importers 
under this rule. We note that instead of providing its proprietary test 
methods to an Importer, a manufacturer can do the testing itself in a 
qualifying laboratory in the United States.
    As discussed above, for subsequent shipments of drugs from a batch, 
drugs from which have already been imported under a SIP, section 
804(d)(1)(J)(i)(III)(bb) of the FD&C Act allows Importers to test a 
statistically valid sample of each shipment, as opposed to a 
statistically valid sample of each batch within a shipment. We seek 
comment on whether a different approach to testing subsequent shipments 
should be permitted. For example, it may be appropriate to use 
vibrational spectroscopic tests to test drugs in subsequent shipments. 
We note, however, that formulation-related physical stability and other 
quality issues cannot be tested by using spectroscopy. For that reason, 
a stability-indicating assay developed by USP or the manufacturer would 
have to be conducted as well. We seek comment on what testing would be 
appropriate at this stage.
    The obligations on manufacturers under section 804(e) of the FD&C 
Act are enforceable under section 301(aa) of the FD&C Act, which 
provides that, among other things, a violation of the regulations 
implementing section 804 is a prohibited act. Furthermore, section 
303(b)(6) of the FD&C Act sets forth penalties for manufacturers or 
Importers that knowingly fail to comply with a requirement of section 
804(e) of the FD&C Act. These requirements include that: (1) The 
manufacturer or Importer conduct the Statutory Testing at a qualifying 
laboratory; (2) if the Importer conducts the testing, the manufacturer 
supply the information needed to authenticate the drug being tested and 
to confirm that the labeling is in compliance with the FD&C Act in a 
timely fashion, and (3) if the manufacturer supplies information to the 
Importer, the Importer keep it in strict confidence and only use it for 
testing and complying with the FD&C Act. A manufacturer or Importer 
that fails to comply with these requirements can be imprisoned for not 
more than 10 years under section 303(b)(6) of the FD&C Act, fined under 
18 U.S.C.3571, or both.
    In the event that a manufacturer fails to provide information 
required by this proposed rule in a timely fashion, including 
information necessary for the Importer to conduct the Statutory 
Testing, authenticate the drug being tested, or confirm that the 
labeling is in compliance with the FD&C Act, FDA may provide such 
information to an Importer if the information is contained in the 
manufacturer's approved NDA or ANDA. We seek comment on what would be 
considered a timely fashion that would provide the manufacturer 
adequate time to provide the necessary information and that would not 
create excessive difficulty for the Importer

[[Page 70819]]

who needs that information to import the drugs.

I. Listing and Labeling of Eligible Prescription Drugs

    Section 804(d)(1)(K)(ii) of the FD&C Act requires that a drug 
covered by section 804 meets all labeling requirements of the FD&C Act. 
Additionally, section 804(c) of the FD&C Act requires that each 
prescription drug imported under this importation program comply with 
sections 501, 502, and 505 of the FD&C Act. Under section 804(h) of the 
FD&C Act, the manufacturer of a prescription drug is required to 
provide the Importer with written authorization to use the drug's 
approved labeling at no cost. If the manufacturer fails to do so in a 
timely fashion, FDA will deem this authorization to have been given. In 
addition, under the proposed rule, as required by section 
804(e)(2)(A)(ii) of the FD&C Act, the manufacturer would need to supply 
the Importer, in a timely fashion, with information needed to confirm 
that the labeling of the prescription drug complies with the labeling 
requirements of the FD&C Act. Furthermore, under the requirements 
proposed by this rule, before a drug can be introduced into interstate 
commerce under section 804 of the FD&C Act, it would be required to be 
listed in accordance with part 207, and it would be relabeled so that 
it bears certain information that is unique to the eligible 
prescription drug. Specifically, the labeling will need to display an 
NDC that is unique to the eligible prescription drug, and it will need 
to provide information about the Importer. This section describes the 
proposed requirements for obtaining an NDC, listing, and relabeling an 
eligible prescription drug.
    The rule proposes that before an eligible prescription drug can be 
sold it would need to bear a new NDC and be listed. We note that drugs 
imported under section 804 will have the same name but will have a 
different NDC than do their FDA-approved counterparts. As stated above, 
the Importer of an eligible prescription drug would need to either: (1) 
Propose an NDC for the drug, following the procedures in Sec.  207.33, 
and it would need to list the drug, following the procedures in Sec.  
207.53 or (2) if the Importer is a private label distributor, take 
responsibility to ensure that the entity performing relabeling on its 
behalf proposes an NDC and lists each eligible prescription drug in 
accordance with the applicable requirements of part 207.
    Additionally, we propose to make the Importer responsible for 
relabeling the drug, or arranging for it to be relabeled, to meet the 
requirements of this proposed rule. The relabeling and associated 
limited repackaging activities must meet applicable requirements, 
including applicable CGMP requirements under parts 210 and 211. At the 
time that an eligible prescription drug is sold or dispensed it would 
need to have been relabeled to be consistent with the FDA-approved the 
carton and container labels, prescribing information, and any patient 
labeling, such as medication guides, instruction for use documents, and 
patient package inserts. In addition, the eligible prescription drug 
would need to have been assigned a product identifier in compliance 
with section 582 of the FD&C Act. The relabeled eligible prescription 
drug will be considered consistent if it varies from the FDA-approved 
carton and container labels, prescribing information, and patient 
labeling solely to the extent described in this rule.
    Except for repackaging that is necessary to perform the relabeling 
described in this proposed rule, the proposed rule would not allow 
further repackaging of drugs imported pursuant to a SIP. ``Repack'' or 
``repackage'' is defined in Sec.  207.1 as ``the act of taking a 
finished drug product or unfinished drug from the container in which it 
was placed in commercial distribution and placing it into a different 
container without manipulating, changing, or affecting the composition 
or formulation of the drug.'' We believe that allowing repackaging that 
breaches the immediate container closure system introduces unnecessary 
risk of adulteration, degradation, and fraud for drugs subject to a 
SIP. We also note that some container closure systems include a tamper-
evident seal, which would be disturbed if repackaging were allowed. In 
addition, if a drug is repackaged from its immediate container closure, 
the expiration period set forth in the NDA or ANDA may no longer be 
valid because the expiration period in an approved NDA or ANDA is based 
on stability studies involving the particular container closure system 
into which a drug is placed without opening it to expose the contents 
to the outside environment. Additional stability studies would 
generally be required to establish a new expiration period.
    The proposed rule would require that the prescribing information of 
an eligible prescription drug would need to include that drug's NDC in 
the HOW SUPPLIED/STORAGE AND HANDLING section for products with 
Physician Labeling Rule (PLR) labeling (see Sec.  201.57(c)(17)(iii) 
(21 CFR 201.57(c)(17)(iii))) or the HOW SUPPLIED section for products 
with ``old'' (non-PLR) format labeling (see Sec.  201.80(k)(3) (21 CFR 
201.80(k)(3))) in place of any NDCs assigned to the FDA-approved U.S. 
versions of the drug. The proposed rule would also require that the 
eligible drug's new NDC be added to the container label and the carton 
labeling. If applicable, the new NDC would replace any NDC otherwise 
appearing on the label and carton labeling of the FDA-approved version 
of the drug. We seek comment on whether having multiple otherwise 
identical drugs in the marketplace with different NDCs will create any 
issues, such as with pharmacy dispensing or otherwise, and, if so, if 
there are steps that can be taken to mitigate such issues.
    In addition to the names and places of businesses of entities that 
appear on the FDA-approved labeling, in this rule we propose to require 
that the label and labeling of an eligible prescription drug also bear 
conspicuously the name and place of business of the Importer. If the 
FDA-approved labeling does not include the name and place of business 
of the manufacturer, the name and place of business of the manufacturer 
should be added as well.
    We also propose to require that the labeling on or within the 
package from which the drug is dispensed include the following 
statement: ``This drug was imported from Canada under the [Name of 
State or Other Governmental Entity and of Its Co-Sponsors, If Any] 
Section 804 Importation Program to reduce its cost to the American 
consumer.'' If the SIP maintains a website, the statement could also 
include the website address. To help avoid potential confusion between 
products with the same name, we propose that this statement would be 
included after the PATIENT COUNSELING INFORMATION section for products 
subject to Sec.  201.56(d) (21 CFR 201.56(d)) and Sec.  201.57, or 
after the HOW SUPPLIED section (or after the last section of labeling) 
for products subject to Sec. Sec.  201.56(e) and 201.80. The statement 
also would be included on the immediate container and outside package 
to help pharmacists distinguish a section 804 product when selecting 
the product on the pharmacy shelf. The statement would be sufficiently 
prominent to help a pharmacist readily distinguish the eligible 
prescription drug without obscuring required or recommended information 
(e.g., information that will reduce the risk of medication errors and 
ensure safe administration of the drug) (see FDA, 2013, ``Draft 
Guidance for Industry: Safety Considerations for Container Labels and 
Carton Labeling Design to

[[Page 70820]]

Minimize Medication Errors.'' Available at https://www.fda.gov/regulatory-information/search-fda-guidance-documents/safety-considerations-container-labels-and-carton-labeling-design-minimize-medication-errors). The statement may also aid in pharmacovigilance by 
increasing the likelihood that adverse event, medication error, field 
alert, and other reports include the fact that the drug was imported 
under a SIP. We seek comments on the content of the disclosure 
statement, in particular whether such a statement is necessary, whether 
it will be understandable and meaningful to prescribers, pharmacists, 
and patients, and whether more or less information is needed. We seek 
comment on whether it is necessary to provide the name of the SIP or 
whether it would be sufficient to state that the drug was imported 
under a SIP.
    If an eligible prescription drug's container is too small to fit 
the additional information required by this proposed rule, FDA would 
consider a proposal for supplementary labeling from the SIP Sponsor. 
The container label would need to include at minimum the product's 
proprietary and established name (if any); product strength; lot 
number; and the name of the manufacturer and the Importer (see FDA, 
2013, ``Draft Guidance for Industry: Safety Considerations for 
Container Labels and Carton Labeling Design to Minimize Medication 
Errors.'' Available at https://www.fda.gov/regulatory-information/search-fda-guidance-documents/safety-considerations-container-labels-and-carton-labeling-design-minimize-medication-errors).
    In addition to the required statement on the labeling, the proposed 
regulation also would require the SIP Sponsor to describe in the SIP 
Proposal how it will educate pharmacists, healthcare providers, and 
patients about its SIP. If pharmacists, healthcare providers, and 
patients know that a drug was originally intended for sale in Canada, 
they will have the ability to include this information if they 
subsequently report any adverse events or quality concerns. It may also 
help ensure that a recall is effective if healthcare providers and 
patients have this knowledge.
    Among other things, a SIP could create and maintain a website that 
would set forth the name and NDC number of each drug that it imports. 
This would allow pharmacists, healthcare providers, and patients to use 
the NDC number to determine at any time whether a drug was originally 
intended for sale in Canada. The website could also include any 
relevant adverse event, medication error, field alert reports, or other 
reports or recall information. As stated earlier, the website address 
could be included along with the disclosure statement in the labeling 
of an eligible prescription drug.
    A SIP could also distribute a Dear Healthcare Provider letter to 
physicians and pharmacists by United States mail, by email, by posting 
the letter on the Importer's website, or by other effective means, 
explaining that the drugs will have a different NDC because they were 
originally intended for sale in Canada. The letter could recommend that 
patients be counseled that the drugs were originally intended for sale 
in Canada, that they have different NDCs than their FDA-approved 
counterparts, and that they can use the NDCs to find out pertinent new 
information regarding the HPFB-approved drug or its FDA-approved 
counterpart, including information about recalls. A SIP could also 
propose to distribute a Dear Consumer letter (similar to a Dear 
Healthcare Provider letter) that pharmacists could dispense along with 
eligible prescription drugs and that consumers could access on the 
SIP's website.

J. Information and Records

    Section 804(d) of the FD&C Act lists information and documentation, 
to be required in the regulations under section 804(b), that Importers 
of eligible prescription drugs must submit to the Secretary. The rule 
proposes that section 804(d) information would be submitted to FDA each 
quarter by SIP Sponsors. SIP Sponsors would be required to submit a 
report to FDA each quarter containing the information set forth in 
section 804(d) of the FD&C Act, beginning after the SIP Sponsor files 
an electronic import entry for consumption for its first shipment of 
drugs.
    Consistent with the statute, the proposed rule would require that 
Importers collect and submit to FDA the information listed here, but 
also clarifies that the Importer's submission obligations are met if 
the SIP sponsor submits a report to FDA as described above: (1) The 
name, address, telephone number, and professional license number (if 
any) of the Importer; (2) the name and quantity of the active 
ingredient of the prescription drug; (3) a description of the dosage 
form of the prescription drug; (4) the date on which the prescription 
drug is shipped; (5) the quantity of the prescription drug that is 
shipped; (6) the lot or control number assigned to the prescription 
drug by the manufacturer of the prescription drug; (7) the point of 
origin and destination of the prescription drug; and (8) the per unit 
price paid by the Importer for the prescription drug in U.S. dollars, 
as well as any other information that FDA determines is necessary to 
ensure the protection of the public health. We propose to require that 
Importers submit to FDA, in addition to the point of origin (i.e., the 
manufacturer of the finished dosage form) and the destination (i.e., 
the wholesaler, pharmacy, or patient to whom the Importer sells or 
dispenses the drug), information regarding the rest of the supply 
chain, which this rule proposes would consist solely of the Foreign 
Seller in Canada.
    Section 804(d) of the FD&C Act also requires the Importer to 
collect and submit to FDA certain documentation, including: (1) 
Documentation from the Foreign Seller specifying the original source of 
the prescription drug (which under this rule would be the manufacturer 
of the eligible prescription drug) and the quantity of each lot of the 
prescription drug originally received by the seller from that source 
and (2) in the case of a prescription drug that is shipped directly 
from the first foreign recipient of the prescription drug from the 
manufacturer (which, under this rule, would be the Foreign Seller), 
documentation demonstrating that the prescription drug was received by 
the first foreign recipient from the manufacturer and subsequently 
shipped by the first foreign recipient to the Importer. The Importer 
must also collect and submit documentation of the quantity of each lot 
of the prescription drug received by the first foreign recipient 
demonstrating that the quantity being imported into the United States 
is not more than the quantity that was received by the first foreign 
recipient. While the Importer does not need to submit records 
associating the eligible prescription drugs' SSIs with their U.S. 
product identifiers, the Importer would need to maintain such records 
and make them available to FDA upon request. In the case of an initial 
imported shipment, Importers would also need to submit documentation 
demonstrating that each batch of the prescription drug in the shipment 
was statistically sampled and tested for authenticity and degradation, 
and in the case of any subsequent shipment, they would need to submit 
documentation demonstrating that a statistically valid sample of the 
shipment was tested for authenticity and degradation.
    Importers also would need to submit a certification from the 
Importer or the manufacturer of an imported drug that the drug is 
approved for marketing in the United States and is not adulterated or 
misbranded, and meets all labeling

[[Page 70821]]

requirements under the FD&C Act. In this rule, we propose to require 
that the certification include: (1) That there is an approved SIP; (2) 
that the drug is covered by the SIP; (3) that the drug is an eligible 
prescription drug as defined in this rule; (4) that the FDA-approved 
counterpart of the drug is currently commercially marketed in the 
United States; (5) that the drug is approved for marketing in Canada; 
and (6) that the drug is not adulterated or misbranded and meets all 
labeling requirements under the FD&C Act. Importers would need to 
collect and submit laboratory records, including complete data derived 
from all tests necessary to ensure that the prescription drug is in 
compliance with established specifications and standards, and 
documentation demonstrating that the Statutory Testing was conducted at 
a qualifying laboratory, unless the manufacturer conducted the 
Statutory Testing and submitted the relevant information directly to 
FDA.
    In addition, SIP Sponsors would be required to provide FDA with 
data and information on the SIP's cost savings to the American 
consumer. We recognize a SIP's scope will influence the appropriate 
cost savings calculation methodology. SIPs should, therefore, report 
their total cost savings to consumers as well as the methodology used 
to calculate this measure. Cost savings calculations should be based on 
savings to the American consumer. Calculations should therefore rely, 
to the greatest extent possible, on prices paid by the intended 
consumer population. Average price measures by drug may be appropriate 
if drugs are dispensed through multiple channels or if the imported 
drugs' prices fluctuate throughout the reporting period. Calculation 
methods should also account for factors that may influence cost savings 
over time, such as changes in drug utilization, the price of domestic 
drugs, and exchange rates. As mentioned above, we anticipate that some 
SIP Sponsors may seek to import drugs to be used by patients in State-
run programs. In such cases, a SIP Sponsor could submit information 
about whether cost-sharing expenses are reduced for the participants, 
or whether the program will result in cost savings that are passed on 
to consumers in other ways, such as increasing the number of people who 
can be covered by a State program, or increasing the availability of 
drugs covered by the program. We seek comments on these and other 
factors relevant to the reporting of cost savings.

K. Post-Importation Requirements

    Under proposed Sec.  251.18, SIP Sponsors and Importers would be 
required to take certain actions regarding eligible prescription drugs 
if they are violative of an applicable requirement. Under the proposed 
rule, the SIP Sponsor would be required to immediately stop importation 
of eligible prescription drugs under a SIP if it determines that a drug 
or entity in the supply chain does not meet all applicable requirements 
of the FD&C Act, FDA regulations, and the authorized SIP. The Importer 
must establish and maintain records and submit reports to FDA and to 
the manufacturer of all domestic adverse events and medication errors 
associated with the use of their imported eligible prescription drugs 
about which they obtain or otherwise receive information. These reports 
would be required to help inform whether there are safety concerns with 
imported eligible prescription drugs, generally, and also specifically 
in relation to the handling of these drugs. The Importer must also 
develop written procedures for the surveillance, receipt, evaluation, 
and reporting of adverse events and medication errors to FDA and to the 
relevant manufacturer.
    The Importer must submit expedited reports on adverse events that 
are both serious and unexpected to FDA and the manufacturer as soon as 
possible but no later than 15 calendar days from initial receipt of the 
information by the Importer. The Importer must also submit expedited 
reports on medication errors to FDA and the manufacturer within the 
same timeframe.
    The Importer must promptly investigate all adverse events and 
medication errors that are the subject of these expedited reports and 
must submit follow-up reports within 15 calendar days of receipt of new 
information or as requested by FDA. If additional information is not 
obtainable, the Importer should maintain records of the unsuccessful 
steps taken to seek additional information. Furthermore, the Importer 
must submit reports on adverse events that are both serious and 
expected or that are nonserious, whether expected or unexpected, to FDA 
and the manufacturer within a 90-calendar day timeline.
    FDA may require the Importer to submit certain adverse events 
within 15 calendar days, even though the events do not meet the 
criteria for expedited reporting. FDA will specify these adverse events 
in advance and will provide the reason for requiring that they be 
reported to the Agency on an expedited basis.
    While Sec.  314.80(c)(1)(iii) (21 CFR 314.80(c)(1)(iii)) gives 
distributors of approved drugs the choice of submitting reports to 
either FDA or the applicant, we propose to require that Importers of 
section 804 drugs be required to submit reports to both FDA and the 
manufacturer. This will aid the manufacturer in its pharmacovigilance 
efforts, and it will provide FDA with information that may be relevant 
to its review of SIP Proposals and Pre-Import Requests as well as to 
its oversight of drugs imported under section 804 of the FD&C Act and 
section 804 in general.
    FDA proposes to require submission of individual case safety 
reports (ICSRs) and ICSR attachments in electronic format, as described 
in Sec.  314.80(g)(1). Importers may request in writing a temporary 
waiver of the electronic reporting requirements as described in Sec.  
314.80(g)(2). Such waivers will be granted on a limited basis and for 
good cause.
    The Importer would also be required to submit to the manufacturer 
and to FDA field alert reports about the products it distributes. These 
reports would need to be made when the Importer becomes aware of 
information concerning any incident that causes the drug product or its 
labeling to be mistaken for, or applied to, another article, or 
information concerning any bacteriological contamination, or any 
significant chemical, physical, or other change or deterioration in the 
distributed drug product, or any failure of one or more distributed 
batches of the drug product to meet the specification established for 
it in the FDA-approved NDA or ANDA. If a SIP imports a drug-device 
combination product, the Importer would also need to submit to the 
manufacturer and to FDA the reports described in 21 CFR 4.102(c)(1) for 
combination products containing a device constituent part, in the 
manner and by the deadlines provided in part 4. The Importer would also 
need to maintain the records described in 21 CFR 4.102(c)(1) and 
4.105(b).
    An Importer should notify the Foreign Seller and the SIP Sponsor 
any time it makes an adverse event, medication error, field alert 
report, or other report to FDA and the manufacturer. Notification to 
Health Canada would be done by the Foreign Seller in accordance with 
Health Canada requirements. FDA would share adverse event, medication 
error, field alert report, or other report information it receives with 
Health Canada as appropriate.

[[Page 70822]]

    The SIP Sponsor would be required to establish a procedure to track 
the public announcements of the manufacturer of each of the drugs that 
they import and they must also monitor FDA's recall website at https://www.fda.gov/safety/recalls-market-withdrawals-safety-alerts, and Health 
Canada's recall website at https://healthycanadians.gc.ca/recall-alert-rappel-avis/index-eng.php?cat=3, for any recall or market withdrawal 
information relevant to the drugs that they import under section 804 of 
the FD&C Act. The SIP Sponsor would have to explain in its SIP Proposal 
how it will ensure that information about recalls or market withdrawals 
will be shared among the SIP Sponsor, the Foreign Seller, the Importer, 
and FDA and provided to the manufacturer.
    If FDA or a SIP Sponsor determines that a recall is necessary, the 
SIP Sponsor must ensure that the recall is carried out effectively 
based on the classification and depth determined by FDA or the SIP 
Sponsor. A SIP must have a written recall plan that describes the 
procedures to perform a recall of the product and specifies who will be 
responsible for performing the procedures. The recall plan must cover 
recalls initiated by FDA and recalls initiated by the SIP Sponsor, as 
well as recalls in Canada or the United States initiated by a drug's 
manufacturer that implicate a drug imported under a SIP, with which the 
Foreign Seller and/or Importer must cooperate. The recall plan must 
include sufficient procedures for the SIP Sponsor, Foreign Seller and/
or Importer to:
     Immediately cease distribution of the drugs affected by 
the recall;
     directly notify consignees of the drug or drugs included 
in the recall, including how to return or dispose of the recalled 
drugs;
     specify the depth to which the recall will extend (e.g., 
wholesale, intermediate wholesale, retail, or consumer level);
     notify the public about any hazard or hazards presented by 
the recalled drug when appropriate to protect the public health;
     conduct effectiveness checks to verify that all consignees 
at the specified recall depth have received notification about the 
recall and have taken appropriate action;
     appropriately dispose of recalled product; and
     notify FDA of the recall.
    In addition, in the event of a recall, Importers and Foreign 
Sellers would be required, upon request by FDA, to provide the 
transaction history, information, and statement, as those terms are 
defined in sections 581(25), 581(26), and 581(27) of the FD&C Act, 
respectively, of the FD&C Act. We seek comment on how a SIP Sponsor and 
co-sponsor, if any, Foreign Seller, or Importer would effectuate a 
recall in the United States, given that this will be a new 
responsibility for these entities.

L. Severability

    Proposed Sec.  251.20 contains a severability provision clarifying 
the Agency's intent regarding whether the provisions of part 251 are 
severable from the rest of the regulation if one or more of the 
provisions are stayed or determined to be invalid by a court. The 
provisions of part 251 contain requirements that are either expressly 
mandated by section 804 of the FD&C Act, or are otherwise necessary 
pursuant to section 804(c)(3) because they have been determined by the 
Secretary to be appropriate as a safeguard to protect the public health 
or as a means to facilitate the importation of prescriptions drugs 
under section 804. Each of the requirements that will be included in 
the final rule will address significant potential safety concerns 
associated with drugs imported under section 804 and would be necessary 
to protect public health. If one or more of these provisions becomes 
invalid, the rule, as a whole, would no longer adequately protect 
public health and therefore should be invalid in its entirety.
    In addition, section 804 of the FD&C Act, and by extension, this 
regulation, which is promulgated in part pursuant to that authority, 
only becomes effective if the Secretary certifies to Congress that 
implementation of section 804 will pose no additional risk to the 
public's health and safety. This certification is contingent upon this 
rule becoming effective with all the requirements that are included 
when finalized. If one or more of the provisions in this rule becomes 
invalid, in addition to the entire rule becoming invalid, the 
certification would become null and void because the certification is 
based on a finding that implementation of section 804 will pose no 
additional risk to the public's health and safety, and that finding 
would no longer be accurate because it would have been based on a final 
rule that contains all the requirements that were included when 
published.

VI. Proposed Effective and/or Compliance Dates

    FDA proposes that any final rule that issues based on this proposal 
become effective 30 days after the final rule publishes in the Federal 
Register.

VII. Preliminary Economic Analysis of Impacts

    We have examined the impacts of the proposed rule under Executive 
Order 12866, Executive Order 13563, Executive Order 13771, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 
13563 direct us to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). Executive Order 13771 
requires that the costs associated with significant new regulations 
``shall, to the extent permitted by law, be offset by the elimination 
of existing costs associated with at least two prior regulations.'' We 
believe that this proposed rule is a significant regulatory action as 
defined by Executive Order 12866.
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that would minimize any significant impact of a rule on small 
entities. We cannot anticipate if sponsors will contract with small 
entities to implement their authorized SIP proposals and request 
comment on the impact the proposed rule may have on small entities. We 
also lack information to quantify the total impacts of the proposed 
rule. Therefore, we propose to certify that the proposed rule will not 
have a significant economic impact on a substantial number of small 
entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $154 million, using the most current (2018) Implicit 
Price Deflator for the Gross Domestic Product. This proposed rule would 
not result in an expenditure in any year that meets or exceeds this 
amount.
1. Summary of Costs and Benefits
    The proposed rule, if finalized, would allow commercial importation 
of certain prescription drugs from Canada through time-limited 
programs, SIPs, sponsored by at least one non-federal governmental 
entity with possible co-sponsorship by a

[[Page 70823]]

wholesaler or pharmacist. If such programs allow Importers to leverage 
drug price differences between the United States and Canada, they will 
result in cost savings for U.S. consumers.
    Expected costs of the proposed rule accrue to the Federal 
Government, SIP Sponsors, Importers, and manufacturers of imported 
drugs. The Federal Government would incur one-time fixed costs as well 
as ongoing costs to implement the rule, if finalized, and to review SIP 
Proposals and reports. SIP Sponsors would face costs to prepare 
proposals, implement approved SIPs, and produce SIP reports and 
records. SIPs may offer cost savings to consumers, as well as other 
parties in the drug supply chain including participating wholesale drug 
distributors, pharmacies, hospitals, and third-party payers. If their 
drugs are imported into the United States from Canada, drug 
manufacturers will have to provide importers with certain information. 
As drug distributors realize savings in acquiring imported drugs and 
pass some of these savings to consumers, it is possible that U.S. drug 
manufacturers may experience a transfer in U.S. sales revenues to these 
parties.
    We are unable to estimate the cost savings from this proposed rule, 
as we lack information about the likely size and scope of SIP programs 
and about the specific drug products that may become eligible for 
importation, the degree to which imported drugs would be less expensive 
than non-imported drugs available in the United States, and which SIP 
eligible products are produced by U.S. drug manufacturers.
    Table 1 summarizes the benefits and costs of the proposed rule.

                                     Table 1--Summary of Benefits, Costs and Distributional Effects of Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Units
                                                                           ------------------------------------
               Category                   Primary       Low        High                               Period                      Notes
                                         estimate    estimate    estimate      Year      Discount     covered
                                                                              dollars    rate (%)     (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized $millions/     ..........  ..........  ..........        2019           7          10  ........................................
     year.                                                                        2019           3          10
    Annualized Quantified.............  ..........  ..........  ..........        2019           7          10  ........................................
                                                                                  2019           3          10
                                       -----------------------------------------------------------------------------------------------------------------
    Qualitative.......................  Potential cost savings to           ..........  ..........          10  ........................................
                                        consumers and third-party payers
                                        or entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized $millions/     ..........  ..........  ..........        2019           7          10
     year.                                                                        2019           3          10
    Annualized Quantified.............  ..........  ..........  ..........        2019           7          10  ........................................
                                                                                  2019           3          10
                                       -----------------------------------------------------------------------------------------------------------------
    Qualitative.......................  Potential costs to Federal          ..........  ..........          10  ........................................
                                        Government, SIP sponsors,
                                        importers, and manufacturers of
                                        imported drugs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
    Federal Annualized Monetized        ..........  ..........  ..........        2019           7          10  ........................................
     $millions/year.                                                              2019           3          10
                                       -----------------------------------------------------------------------------------------------------------------
    From/To...........................  ..........  From:
                                        To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Other Annualized Monetized          ..........  ..........  ..........        2019           7          10  ........................................
     $millions/year.                                                              2019           3          10
                                       -----------------------------------------------------------------------------------------------------------------
    From/To...........................  From: U.S. drug manufacturers
                                        To: Importers and U.S. consumers           Not
                                                                            Quantified
                                                                                     .
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
    State, Local or Tribal Government: Potential costs and cost savings to State, tribal, and territorial government entities from sponsoring SIPs......
    Small Business:.....................................................................................................................................
    Wages:..............................................................................................................................................
    Growth:.............................................................................................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We lack information about the likely size and scope of SIP 
programs, the specific drug products that may become eligible for 
importation, the degree to which drugs imported under section 804 would 
be less expensive than drugs not imported under section 804, and which 
SIP eligible products are produced by U.S. drug manufacturers to 
estimate the present and annualized values of the costs and cost 
savings of the proposed rule over an infinite time horizon. The 
designation under Executive Order 13771 of any final rule resulting 
from this proposal will be informed by comments received and subsequent 
analysis at the final rule stage. Thus, we exclude the Executive Order 
13771 summary table from this analysis.
    We have developed a comprehensive Preliminary Economic Analysis of 
Impacts that assesses the impacts of the proposed rule. The full 
preliminary analysis of economic impacts is available in the docket for 
this proposed rule (Ref. 31) and at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

VIII. Analysis of Environmental Impact

    We have determined under 21 CFR 25.30(h) and 25.31(a) that this 
action is of a type that does not individually or cumulatively have a 
significant effect on the human environment. Therefore, neither an 
environmental assessment nor an environmental impact statement is 
required.

IX. Paperwork Reduction Act of 1995

    This proposed rule contains information collection provisions that 
are subject to review by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995

[[Page 70824]]

(44 U.S.C. 3501-3521). A description of these provisions is given below 
under the Description heading with an estimate of the annual reporting, 
recordkeeping, and third-party disclosure burden. Included in the 
estimate is the time for reviewing instructions, searching existing 
data sources, gathering and maintaining the data needed, and completing 
and reviewing each collection of information.
    FDA invites comments on these topics: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
FDA's functions, including whether the information will have practical 
utility; (2) the accuracy of FDA's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques, when 
appropriate, and other forms of information technology.
    Title: Section 804 Importation Program Proposals--21 CFR part 251.
    Description: The proposed regulations provide that a SIP Sponsor 
that seeks to implement a SIP to import prescription drugs from Canada 
must submit a proposal that includes, among other things, information 
about the SIP Sponsor and the SIP Sponsor's importation plan. In 
addition, SIP Sponsors must provide FDA with data and information on 
the drugs the SIP imports and on the SIP's cost savings to the American 
consumer. Importers would have a number of responsibilities related to 
submitting a Pre-Import Request, screening eligible prescription drugs 
and arranging for importation, testing, and relabeling. Manufacturers 
would provide information needed to authenticate eligible prescription 
drugs.
    Description of Respondents: Respondents would include SIP Sponsors 
(State, tribal, or territorial governmental entities), Importers 
(pharmacists or wholesalers), and manufacturers of eligible 
prescription drugs.
    FDA anticipates submissions will be made through the Electronic 
Submissions Gateway.
    FDA estimates that there will be 10 SIP Sponsors requiring 360 
hours each to research, prepare, and administer requirements annually; 
10 Pre-Import Requests requiring 24 hours each annually; and 20 
manufacturers also requiring 24 hours each annually to participate in 
the program. In addition, FDA estimates that a recordkeeping burden of 
52 hours will be imposed annually on the 10 SIP Sponsors; and a 
recordkeeping burden of 24 hours will be imposed annually on each of 
the 10 Importers and the 20 manufacturers. The 20 manufacturers 
anticipated to participate in the program will also incur an estimated 
burden of 24 hours each for copying and providing records to SIP 
Sponsors and Importers of foreign transactions.
    FDA estimates the burden of this collection of information as 
follows:

                                                     Table 2--Estimated Annual Reporting Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Number of
         Type of information collection activity/respondent             Number of      responses per     Total annual    Average burden    Total hours
                                                                       respondents       respondent       responses       per response
--------------------------------------------------------------------------------------------------------------------------------------------------------
SIP Sponsor 251.3; 251.8; 251.14--SIP Proposal Submission                         10                1               10              360            3,600
 Requirements; 251.18--Post-Importation Requirements; 251.19--
 Reports to FDA....................................................
Importer 251.5; 251.12; 251.13; 251.17--Pre-Import Request and                    10                1               10               24              240
 Importation Requirements..........................................
Manufacturer 251.16 Lab Testing Requirements.......................               20                1               20               24              480
                                                                    ------------------------------------------------------------------------------------
    Total..........................................................  ...............  ...............  ...............  ...............            4,320
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.


                                                   Table 3--Estimated Annual Recordkeeping Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Number of                       Average burden
         Type of information collection activity/respondent             Number of       records per      Total annual         per          Total hours
                                                                      recordkeepers     recordkeeper       records       recordkeeping
--------------------------------------------------------------------------------------------------------------------------------------------------------
SIP sponsor 251.8--Modification or Extension of Authorized                        10                1               10               52              520
 Importation Programs..............................................
Importer 251.14(d)--Supply Chain Security Requirements; 251.17--                  10                1               10               24              240
 Importation Requirements; 251.18 Post-Importation Requirements....
Manufacturer 251.14(b)--Supply Chain Security Requirements.........               20                1               20               24              480
                                                                    ------------------------------------------------------------------------------------
    Total..........................................................  ...............  ...............  ...............  ...............            1,240
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.


                                               Table 4--Estimated Annual Third-Party Disclosure Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Number of
 Type of information collection activity/respondent        Number of        disclosures per      Total annual     Average burden per      Total hours
                                                          respondents         respondent          disclosures         disclosure
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer 251.14(b)--Supply Chain Security                        20                   1                  20                  24                 480
 Requirements.......................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of information.


[[Page 70825]]

    To ensure that comments on information collection are received, OMB 
recommends that written comments be faxed to the Office of Information 
and Regulatory Affairs, OMB (see ADDRESSES). All comments should be 
identified with the title of the information collection.
    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3407(d)), we have submitted the information collection provisions of 
this proposed rule to OMB for review. These information collection 
requirements will not be effective until FDA publishes a final rule, 
OMB approves the information collection requirements, and the rule goes 
into effect. FDA will announce OMB approval of these requirements in 
the Federal Register.

X. Federalism

    We have analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. We have determined that 
this proposed rule does not contain policies that have substantial 
direct effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Accordingly, 
we conclude that the rule does not contain policies that have 
federalism implications as defined in the Executive Order and, 
consequently, a federalism summary impact statement is not required.

XI. Consultation and Coordination With Indian Tribal Governments

    We have analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13175. We have tentatively 
determined that the rule does not contain policies that would have a 
substantial direct effect on one or more Indian Tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes. The Agency solicits comments from tribal 
officials on any potential impact on Indian Tribes from this proposed 
action.

XII. References

    The following references marked with an asterisk (*) are on display 
at the Dockets Management Staff (see ADDRESSES) and are available for 
viewing by interested persons between 9 a.m. and 4 p.m., Monday through 
Friday; they also are available electronically at https://www.regulations.gov. References without asterisks are not on public 
display at https://www.regulations.gov because they have copyright 
restriction. Some may be available at the website address, if listed. 
References without asterisks are available for viewing only at the 
Dockets Management Staff. FDA has verified the website addresses, as of 
the date this document publishes in the Federal Register, but websites 
are subject to change over time.

*1. Donna Shalala, Secretary of Health and Human Services, 2000, 
Letter to President Clinton, accessed September 27, 2019, https://www.congress.gov/congressional-record/2002/7/17/senate-section/article/s6906-2?q={%22search%22:[%22Shalala+\%22flaws+and+loopholes\%22%22]{time} &
s=1&r=3.
*2. Mark B. McClellan, FDA Commissioner, 2003, Letter to Senator 
Thad Cochran, accessed September 27, 2019, https://www.congress.gov/congressional-record/2003/6/19/senate-section/article/s8202-2?r=73.
*3. Randall W. Lutter, Acting Associate Commissioner for Policy and 
Planning, 2005, Letter to Theodore R. Kulongoski, Governor of 
Oregon, Requested Waiver for Certification of Oregon's Pioneer 
Prescription Drug Program, accessed September 27, 2019, https://wayback.archive-it.org/7993/20170112030500/http:/www.fda.gov/Drugs/DrugSafety/ucm179372.htm.
*4. Nomination of Robert Califf to Serve as FDA Commissioner, 2015, 
Hearing Before the Committee on Health, Education, Labor and 
Pensions, S Hrg 114-717 at 47, accessed September 27, 2019, https://www.govinfo.gov/content/pkg/CHRG-114shrg97694/pdf/CHRG-114shrg97694.pdf.
*5. HHS Task Force on Drug Importation, 2004, Report on Prescription 
Drug Importation, accessed September 27, 2019, http://www.safemedicines.org/wp-content/uploads/2018/03/HHS-Report1220.pdf.
*6. United States Government Accountability Office (GAO), 2017, 
``Fast Facts--Drug Industry: Profits, Research and Development 
Spending, and Merger and Acquisition Deals,'' GAO-18-40, accessed 
July 31, 2019, https://www.gao.gov/assets/690/688472.pdf.
*7. HHS, 2016, Office of The Assistant Secretary for Planning and 
Evaluation (ASPE) Issue Brief: Observations on Trends in 
Prescription Drug Spending, accessed July 31, 2019, https://aspe.hhs.gov/system/files/pdf/187586/Drugspending.pdf.
*8. Kaiser Family Foundation, 2019, Kaiser Family Foundation (KFF) 
Health Tracking Poll--February 2019: Prescription Drugs, accessed 
September 26, 2019, https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-february-2019-prescription-drugs/view/footnotes/.
*9. Iuga, A.O. and M.J. McGuire, 2014, ``Adherence and Health Care 
Costs,'' Risk Management and Healthcare Policy, 7:35-44, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3934668/pdf/rmhp-7-035.pdf.
*10. Jonel Aleccia, 2019, ``Lawmakers, Advocates Push To Extend 
Medicare's Coverage of Kidney Transplant Drugs,'' National Public 
Radio, accessed October 15, 2019, https://www.npr.org/sections/health-shots/2019/07/17/742349066/lawmakers-advocates-push-to-extend-medicares-coverage-of-kidney-transplant-drugs.
*11. Liz Szabo, 2017, ``As Drug Costs Soar, People Delay or Skip 
Cancer Treatments,'' National Public Radio, accessed July 31, 2019, 
https://www.npr.org/sections/health-shots/2017/03/15/520110742/as-drug-costs-soar-people-delay-or-skip-cancer-treatments.
*12. John R. Thomas, 2016, Congressional Research Service, ``Patents 
and Prescription Drug Importation,'' accessed September 27, 2019, 
https://fas.org/sgp/crs/misc/R44640.pdf.
*13. Ben Hirschler, 2015, ``How the U.S. Pays 3 Times More for 
Drugs,'' Scientific American, accessed July 31, 2019, https://www.scientificamerican.com/article/how-the-u-s-pays-3-times-more-for-drugs/.
*14. Gagnon, M.-A. and S. Wolfe, 2015, ``Mirror, Mirror on the Wall: 
Medicare Part D Pays Needlessly High Brand-Name Drug Prices Compared 
with Other OECD Countries and with U.S. Government Programs,'' 
Carleton University, School of Public Policy and Administration, 
accessed July 31, 2019, https://carleton.ca/sppa/wp-content/uploads/Mirror-Mirror-Medicare-Part-D-Released.pdf.
*15. Patented Medicine Prices Review Board (PMPRB), 2017, ``Annual 
Report 2017: Regulating Prices of Patented Medicines: Continued 
Vigilance Necessary, Bilateral Price Comparisons, Average Foreign-
to-Canadian Price Ratios, Bilateral Comparisons,'' accessed July 31, 
2019, http://www.pmprb-cepmb.gc.ca/view.asp?ccid=1380⟨=en.
*16. PMPRB, 2018, ``About Us: Mandate and Jurisdiction,'' http://pmprb-cepmb.gc.ca/about-us/mandate-and-jurisdiction, accessed July 
31, 2019.
*17. Rachel Bluth, 2016, ``Faced with Unaffordable Drug Prices, Tens 
of Millions Buy Medicine Outside U.S.,'' Kaiser Health News, 
accessed September 27, 2019, https://khn.org/news/faced-with-unaffordable-drug-prices-tens-of-millions-buy-medicine-outside-u-s/.
*18. Kaiser Family Foundation, 2016, ``Kaiser Health Tracking Poll--
November 2016,'' accessed September 27, 2019, http://files.kff.org/attachment/Kaiser-Health-Tracking-Poll-November-2016-Topline.
*19. FDA, 2018, ``FDA Launches Global Operation to Crack Down on 
websites Selling Illegal, Potentially Dangerous Drugs; Including 
Opioids,'' accessed September 3, 2019, https://www.fda.gov/news-events/press-announcements/fda-launches-global-operation-crack-down-websites-selling-illegal-potentially-dangerous-drugs.
*20. U.S. Department of Justice, 2017, ``September 25, 2017: 
Millions of

[[Page 70826]]

Medicines Seized in Largest INTERPOL Operation Against Illicit 
Online Pharmacies,'' accessed September 27, 2019, https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/press-releases/september-25-2017-millions-medicines-seized-largest-interpol-operation-against-illicit-online.
*21. U.S. Department of Justice, 2013, ``April 24, 2013: Paul Daniel 
Bottomley Pleads Guilty in U.S. Federal Court,'' accessed August 19, 
2019, https://wayback.archive-it.org/7993/20170723081601/https://www.fda.gov/ICECI/CriminalInvestigations/ucm349880.htm.
*22. U.S. Department of Justice, 2018, ``April 13, 2018: Canadian 
Drug Firm Admits Selling. Counterfeit and Misbranded Prescription 
Drugs Throughout the United States,'' accessed September 3, 2019, 
https://wayback.archive-it.org/7993/20180725182130/https://www.fda.gov/ICECI/CriminalInvestigations/ucm605139.htm.
*23. FDA, 2012, FDA Warning Letter to Canadadrugs, accessed 
September 27, 2019, https://wayback.archive-it.org/7993/20170723020703/ https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2012/ucm321068.htm.
*24. FDA, 2005, ``FDA Operation Reveals Many Drugs Promoted as 
`Canadian' Products Really Originate From Other Countries,'' 
accessed September 27, 2019, https://wayback.archive-it.org/7993/20170112030444/http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm108534.htm.
* 25. Ashley, D. D., 2017, ``Letter to the Editor: The Price of 
Crossing the Border for Medications,'' New England Journal of 
Medicine, October 26, 2017, 377:1699-1700, doi: 10.1056/NEJMc1711278 
(referencing Fralick, M., J. Avorn, A.S. Kesselheim, 2017, ``The 
Price of Crossing the Border for Medications,'' New England Journal 
of Medicine, July 27, 2017, 377:311-313, doi: 10.1056/NEJMp1704489), 
https://www.nejm.org/doi/full/10.1056/NEJMp1704489#article_letters.
* 26. Government of Canada, Archived, ``Consultation: Regulations 
Amending the Food and Drug Regulations 1447-Good Manufacturing 
Practices,'' accessed September 27, 2019, https://www.canada.ca/en/health-canada/services/drugs-health-products/public-involvement-consultations/compliance-enforcement/regulations-amending-food-drug-regulations-1447.html.
* 27. Government of Canada, Health Canada, ``GMP Drug Establishment 
Good Manufacturing Practices Pre-Application Package: Importers, 
Distributors and Wholesalers,'' accessed September 27, 2019, https://www.canada.ca/content/dam/hc-sc/migration/hc-sc/dhp-mps/alt_formats/pdf/compli-conform/gmp-bpf/docs/gmp-package-bpf-eng.pdf.
* 28. Government of Canada, Health Canada, 2019, ``Health Canada and 
United States Food and Drug Administration Joint Public Consultation 
on ICH Guidelines--Update,'' accessed December 10, 2019, https://www.canada.ca/en/health-canada/services/drugs-health-products/public-involvement-consultations/drug-products/notice-international-council-harmonisation-registration-pharmaceuticals-human-use-consultation-update.html.
29. Joanne S. Eglovitch, 2019, ``GS1 Standard Would Speed the Sale 
of Returned Drugs After November Deadline,'' Pink Sheet, accessed 
September 27, 2019, https://pink.pharmaintelligence.informa.com/PS140811/GS1-Standard-Would-Speed-The-Sale-Of-Returned-Drugs-After-November-Deadline.
30. ASTM E122-17, 2017, Standard Practice for Calculating Sample 
Size to Estimate, With Specified Precision, the Average for a 
Characteristic of a Lot or Process, www.astm.org.
* 31. FDA, Preliminary Regulatory Impact Analysis: Importation of 
Prescription Drugs, http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

List of Subjects

21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting and recordkeeping requirements.

21 CFR Part 251

    Exports, Labeling, Packaging and containers, Prescription drugs, 
Reporting and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, the Food and 
Drug Administration proposes to amend 21 CFR chapter I as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for part 1 continues to read as follow:

    Authority:  15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C. 
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 342, 343, 350c, 
350d, 350e, 350j, 350k, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2, 
362, 371, 373, 374, 379j-31, 381, 382, 384a, 384b, 384d, 387, 387a, 
387c, 393; 42 U.S.C. 216, 241, 243, 262, 264, 271; Pub. L. 107-188, 
116 Stat. 594, 668-69; Pub. L. 111-353, 124 Stat. 3885, 3889.

0
2. Revise Sec.  1.74 to read as follows:


Sec.  1.74   Human drugs.

    In addition to the data required to be submitted in Sec.  1.72, an 
ACE filer must submit the following information at the time of filing 
entry in ACE for drugs, including biological products and eligible 
prescription drugs as defined in Sec.  251.2 of this chapter that are 
imported or offered for import under section 804 of the Federal Food, 
Drug, and Cosmetic Act, intended for human use that are regulated by 
the FDA Center for Drug Evaluation and Research.
    (a) For a drug intended for human use that is not an eligible 
prescription drug covered under paragraph (b) of this section:
    (1) Registration and listing. The Drug Registration Number and the 
Drug Listing Number if the foreign establishment where the human drug 
was manufactured, prepared, propagated, compounded, or processed before 
being imported or offered for import into the United States is required 
to register and list the drug under part 207 of this chapter. For the 
purposes of this section, the Drug Registration Number that must be 
submitted at the time of entry in ACE is the unique facility identifier 
of the foreign establishment where the human drug was manufactured, 
prepared, propagated, compounded, or processed before being imported or 
offered for import into the United States. The unique facility 
identifier is the identifier submitted by a registrant in accordance 
with the system specified under section 510(b) of the Federal Food, 
Drug, and Cosmetic Act. For the purposes of this section, the Drug 
Listing Number is the National Drug Code number of the human drug 
article being imported or offered for import.
    (2) Drug application number. For a drug intended for human use that 
is the subject of an approved application under section 505(b) or 
505(j) of the Federal Food, Drug, and Cosmetic Act, the number of the 
new drug application or abbreviated new drug application. For a 
biological product regulated by the FDA Center for Drug Evaluation and 
Research that is required to have an approved new drug application or 
an approved biologics license application, the number of the applicable 
application.
    (3) Investigational new drug application number. For a drug 
intended for human use that is the subject of an investigational new 
drug application under section 505(i) of the Federal Food, Drug, and 
Cosmetic Act, the number of the investigational new drug application.
    (b) For an eligible prescription drug as defined in Sec.  251.2 of 
this chapter that is imported or offered for import under section 804 
of the Federal Food, Drug, and Cosmetic Act:
    (1) Registration and listing. The Drug Registration Number and the 
Drug Listing Number. For the purposes of this section, the Drug 
Registration Number that must be submitted in ACE is the unique 
facility identifier of the Foreign

[[Page 70827]]

Seller. The unique facility identifier is the identifier submitted by a 
Foreign Seller registrant under Sec.  251.5 of this chapter. For the 
purposes of this section, the Drug Listing Number is the National Drug 
Code that the Importer will use when relabeling the eligible 
prescription drug as required in Sec.  251.13 of this chapter.
    (2) Drug application number. The number of the new drug application 
or abbreviated new drug application for the corresponding FDA-approved 
drug.
    (3) Lot or control number. The lot or control number assigned by 
the manufacturer of the eligible prescription drug.
    (4) FDA Quantity. FDA Quantity, which is the quantity of each 
eligible prescription drug in an import line delineated by packaging 
level, including the type of package from the largest packaging unit to 
the smallest packaging unit; the quantity of each packaging unit; and 
the volume and/or weight of each of the smallest of the packaging 
units.
    (5) Pre-Import Request number. The Pre-Import Request number 
assigned by FDA.
0
3. Add part 251 to read as follows:

PART 251--SECTION 804 IMPORTATION PROGRAM PROPOSAL

Subpart A--General Provisions
Sec.
251.1 Scope of the part.
251.2 Definitions.
Subpart B--Section 804 Importation Program Proposals and Pre-Import 
Requests
251.3 SIPproposal submission requirements.
251.4 Review and authorization of importation program proposals.
251.5 Pre-Import Request.
251.6 Limitations on authorized importation programs.
251.7 Suspension and revocation of authorized importation programs.
251.8 Modification or extension of authorized importation programs.
Subpart C--Certain Requirements for Section 804 Importation Programs
251.9 Registration of Foreign Sellers.
251.10 Reviewing and updating registration information for Foreign 
Sellers.
251.11 Official contact and U.S. agent for Foreign Sellers.
251.12 Importer responsibilities.
251.13 Labeling of eligible prescription drugs.
251.14 Supply chain security requirements for eligible prescription 
drugs.
251.15 Qualifying laboratory requirements.
251.16 Laboratory testing requirements.
251.17 Importation requirements.
251.18 Post-importation requirements.
251.19 Reports to FDA.
251.20 Severability.
251.21 Consequences for violations.

    Authority:  21 U.S.C. 351, 352, 353, 355, 371, 374, 381, 384.

Subpart A--General Provisions


Sec.  251.1   Scope of the part.

    (a) This part sets forth the procedures that Section 804 
Importation Program sponsors (SIP Sponsors) must follow when submitting 
plans to implement time-limited programs to begin importation of drugs 
from Canada under section 804 of the Federal Food, Drug, and Cosmetic 
Act. This part also sets forth certain requirements that are necessary 
for such programs to be authorized by FDA. Additionally, this part sets 
forth requirements for eligible prescription drugs and requirements for 
entities that engage in importation of eligible prescription drugs.
    (b) This part includes provisions that exempt eligible prescription 
drugs that meet certain requirements from section 502(f)(1) of the 
Federal Food, Drug, and Cosmetic Act. It also includes provisions that 
exempt certain transactions involving eligible prescription drugs from 
certain requirements in section 582 of the Federal Food, Drug, and 
Cosmetic Act.


Sec.  251.2   Definitions.

    The definitions of terms in section 804 of the Federal Food, Drug, 
and Cosmetic Act apply to the terms used in this part, if not otherwise 
defined in this section. The following definitions apply to this part:
    Active ingredient means any component that is intended to furnish 
pharmacological activity or other direct effect in the diagnosis, cure, 
mitigation, treatment, or prevention of disease, or to affect the 
structure or any function of the body of man or other animals. The term 
includes those components that may undergo chemical change in the 
manufacture of the drug product and be present in the drug product in a 
modified form intended to furnish the specified activity or effect.
    Adverse event means any untoward medical occurrence associated with 
the use of a drug product in humans, whether or not it is considered 
related to the drug product. An adverse event can occur in the course 
of the use of a drug product; from overdose of a drug product, whether 
accidental or intentional; from abuse of a drug product (e.g., 
physiological withdrawal); and includes any failure of expected 
pharmacological action.
    Combination product has the meaning set forth in Sec.  3.2(e) of 
this chapter.
    Constituent part has the meaning set forth in Sec.  4.2 of this 
chapter.
    Disability means a substantial disruption of a person's ability to 
conduct normal life functions.
    Eligible prescription drug means a drug subject to section 503(b) 
of the Federal Food, Drug, and Cosmetic Act that has been approved and 
has received a Notice of Compliance and a Drug Identification Number 
(DIN) from the Health Products and Food Branch of Health Canada (HPFB) 
and, but for the fact that it deviates from the required U.S. labeling, 
also meets the conditions in an FDA-approved new drug application (NDA) 
or abbreviated new drug application (ANDA) for a drug that is currently 
marketed in the United States, including those relating to the drug 
substance, drug product, production process, quality controls, 
equipment, and facilities.
    Exclusion. The term eligible prescription drug does not include:
    (1) A controlled substance (as defined in section 102 of the 
Controlled Substances Act (21 U.S.C. 802));
    (2) A biological product (as defined in section 351 of the Public 
Health Service Act (42 U.S.C. 262));
    (3) An infused drug (including a peritoneal dialysis solution);
    (4) An intravenously injected drug;
    (5) A drug that is inhaled during surgery;
    (6) An intrathecally or intraocularly injected drug;
    (7) A drug that is subject to a risk evaluation and mitigation 
strategy under section 505-1 of the Federal Food, Drug, and Cosmetic 
Act;
    (8) A drug that is not a ``product'' for purposes of section 582 as 
defined in section 581(13) of the Federal Food, Drug, and Cosmetic Act;
    Entry means the information or data filed electronically to the 
Automated Commercial Environment (ACE) or any other U.S. Customs and 
Border Protection (CBP)-authorized electronic data interchange system 
to secure the release of imported merchandise from CBP, or the act of 
filing that information or data.
    Foreign Seller means an establishment within Canada engaged in the 
distribution of an eligible prescription drug that is imported or 
offered for importation into the United States. A Foreign Seller must 
have an active drug establishment license as a drug wholesaler by 
Health Canada. A Foreign Seller must be registered with provincial 
pharmacy regulatory authorities to distribute HPFB-approved drugs. A 
Foreign Seller must not be licensed by a provincial pharmacy regulatory 
authority with an international pharmacy license that allows it to 
distribute drugs that are

[[Page 70828]]

approved by countries other than Canada and that are not HPFB-approved 
for distribution in Canada. A Foreign Seller must also be registered 
with FDA under section 804 of the Federal Food Drug and Cosmetic Act in 
accordance with the requirements described in this part.
    Illegitimate foreign product means a drug purchased by a Foreign 
Seller from a manufacturer, and intended for sale to the Importer in 
the United States, where the Foreign Seller has credible evidence that 
the product:
    (1) Is counterfeit, diverted, or stolen;
    (2) Is intentionally adulterated such that the product would result 
in serious adverse health consequences or death to humans;
    (3) Is the subject of a fraudulent transaction; or
    (4) Appears otherwise unfit for distribution such that the product 
would be reasonably likely to result in serious adverse health 
consequences or death to humans.
    Importer means a pharmacist or wholesaler. An Importer must be a 
State-licensed pharmacist, or a State or FDA-licensed wholesaler, who 
is the U.S. owner of an eligible prescription drug at the time of entry 
into the United States. An Importer's pharmacist or wholesaler license 
must be in effect (i.e., not expired) and the Importer must be in good 
standing with the licensor.
    Individual case safety report (ICSR) means a description of an 
adverse event related to an individual patient or subject and/or a 
description of a medication error.
    ICSR attachments means any document related to the adverse event or 
medication error described in an ICSR, such as medical records, 
hospital discharge summaries, or other documentation.
    Life-threatening adverse event means any adverse event that places 
the patient, in the view of the initial reporter, at immediate risk of 
death from the adverse event as it occurred, i.e., it does not include 
an adverse event that, had it occurred in a more severe form, might 
have caused death.
    Manufacturer means an applicant, as defined in Sec.  314.3 of this 
chapter, or a person who owns or operates an establishment that 
manufactures an eligible prescription drug. Manufacturer also means a 
holder of a drug master file containing information necessary to 
authenticate an eligible prescription drug.
    Medication error means any preventable event that may cause or lead 
to inappropriate medication use or patient harm while the medication is 
in the control of a healthcare professional, patient, or consumer. The 
medication error may or may not result in an adverse event.
    Minimum data set for an adverse event means the minimum four 
elements required for reporting an ICSR of an adverse event: An 
identifiable patient, an identifiable reporter, a suspect drug product, 
and an adverse event.
    Minimum data set for a medication error means the minimum three 
elements required for reporting an ICSR of a medication error: An 
identifiable reporter, a suspect drug product, and a medication error.
    Pre-Import Request means a request made to FDA by an Importer that 
must be granted by FDA before the Importer can start importation under 
a Section 804 Importation Program.
    Qualifying laboratory means a laboratory in the United States that 
has been approved by FDA for the purposes of section 804 of the Federal 
Food, Drug, and Cosmetic Act.
    Relabel has the meaning set forth in Sec.  207.1 of this chapter.
    Relabeler has the meaning set forth in Sec.  207.1 of this chapter.
    Repack or repackage has the meaning set forth in Sec.  207.1 of 
this chapter.
    Section 804 Importation Program (``SIP'') means a program under 
section 804 of the Federal Food, Drug, and Cosmetic Act that has been 
authorized by FDA for the importation of eligible prescription drugs 
from Canada.
    Section 804 Importation Program Sponsor (``SIP Sponsor''): (Option 
1): Means a State, tribal, or territorial governmental entity that 
regulates wholesale drug distribution and/or the practice of pharmacy, 
and a co-sponsor or co-sponsors, if any, that submits a proposal to FDA 
that describes a program to facilitate the importation of prescription 
drugs from Canada under section 804 of the Federal Food, Drug, and 
Cosmetic Act. A co-sponsor must be a State, tribal, or territorial 
governmental entity, a pharmacist, or a wholesaler.
    Section 804 Importation Program Sponsor (``SIP Sponsor''): (Option 
2): Means a State, tribal, or territorial governmental entity that 
regulates wholesale drug distribution and/or the practice of pharmacy, 
a wholesaler, or a pharmacist, and a co-sponsor or co-sponsors, if any, 
that submits a proposal to FDA that describes a program to facilitate 
the importation of prescription drugs from Canada under section 804 of 
the Federal Food, Drug, and Cosmetic Act. A co-sponsor must be a State, 
tribal, or territorial governmental entity, a wholesaler, or a 
pharmacist.
    Section 804 Serial Identifier (``SSI'') means a unique alphanumeric 
serial number of up to 20 characters that is assigned and affixed by 
the Foreign Seller to each package and homogenous case of the product 
that it intends to sell to the Importer. For purposes of the SSI, 
``package'' means the smallest individual saleable unit of product for 
distribution that is intended by the Foreign Seller for sale to the 
Importer located in the United States, and ``individual saleable unit'' 
means the smallest container of product sold by the Foreign Seller to 
the Importer.
    Serious adverse event. (1) An adverse event is considered 
``serious'' if it results in any of the following outcomes:
    (i) Death;
    (ii) A life-threatening adverse event where the patient was at 
immediate risk of death at the time of the event; it does not include 
an adverse event that might have caused death had it occurred in a more 
severe form;
    (iii) Inpatient hospitalization or prolongation of existing 
hospitalization;
    (iv) A persistent or significant incapacity or substantial 
disruption of the ability to conduct normal life functions; and/or
    (v) A congenital anomaly/birth defect.
    (2) Other events that may be considered serious adverse events: 
Important medical events that may not result in one of the listed 
outcomes in this definition may be considered serious adverse events 
when, based upon appropriate medical judgment, they may jeopardize the 
patient or study subject and may require medical or surgical 
intervention to prevent one of the outcomes listed in this definition. 
Examples include: Allergic bronchospasm requiring intensive treatment 
in an emergency department or at home, blood dyscrasias, or convulsions 
that do not result in inpatient hospitalization, or the development of 
product dependency or product abuse.
    Statutory Testing means the testing of an eligible prescription 
drug for authenticity, degradation, and to ensure that the prescription 
drug is in compliance with established specifications and standards, as 
required by section 804(d)(1)(J) and (L) of the Federal Food, Drug, and 
Cosmetic Act.
    Suspect foreign product means a drug purchased by the Foreign 
Seller from the manufacturer, and intended for sale to the Importer in 
the United States, that the Foreign Seller has reason to believe is:
    (1) Potentially counterfeit, diverted, or stolen;

[[Page 70829]]

    (2) Potentially intentionally adulterated such that the product 
would result in serious adverse health consequences or death to humans;
    (3) Is potentially the subject of a fraudulent transaction; or
    (4) Appears otherwise unfit for distribution such that the product 
would result in serious adverse health consequences or death to humans.
    Transaction means the transfer of product between persons in which 
a change of ownership occurs.
    Unexpected adverse event means an adverse event that is not 
included in the current U.S. labeling for the drug product. Events that 
may be symptomatically and pathophysiologically related to an adverse 
event included in the labeling but differ from the labeled event 
because of greater severity or specificity, would be considered 
unexpected. ``Unexpected,'' as used in this definition, also refers to 
adverse events that are mentioned in the product labeling as occurring 
with a class of products or anticipated from the pharmacological 
properties of the product but are not specifically mentioned as 
occurring with the particular product.
    (1) Example of greater severity. Under this definition, hepatic 
necrosis would be unexpected if the labeling referred only to elevated 
hepatic enzymes or hepatitis.
    (2) Example of greater specificity. Cerebral thromboembolism and 
cerebral hemorrhage would be unexpected if the labeling included only 
cerebrovascular accidents.
    Unique facility identifier means the identifier required to be 
submitted by the registrant for drug establishment registration under 
section 510(b) of the Federal Food, Drug, and Cosmetic Act in 
accordance with Sec.  207.25 of this chapter.
    Wholesaler means a person licensed as a wholesaler or distributor 
of prescription drugs in the United States under section 503(e)(1) of 
the Federal Food, Drug, and Cosmetic Act. The term ``wholesaler'' does 
not include a person authorized to import drugs under section 
801(d)(1).

Subpart B--Section 804 Importation Program Proposals and Pre-Import 
Requests


Sec.  251.3   SIP proposal submission requirements.

    (a) A SIP Sponsor must only designate one Foreign Seller and one 
Importer per initial proposal. Additional Foreign Sellers and Importers 
may be added to an authorized SIP through a supplement under Sec.  
251.8.
    (b) A SIP Sponsor that intends to implement a SIP under this part 
must submit a proposal to FDA in electronic form to FDA's Electronic 
Submissions Gateway (ESG) or to an alternative transmission point 
identified by FDA. The proposal must include:
    (1) A cover sheet containing the following:
    (i) Name or names of SIP Sponsor and co-sponsors, if any; and
    (ii) Name and contact information for a person authorized to serve 
as the point of contact with FDA during its review of the proposal;
    (2) A table of contents;
    (3) An introductory statement that includes an overview of the SIP 
Sponsor's SIP Proposal; and
    (4) The SIP Sponsor's importation plan.
    (c) The overview of the SIP Proposal must include:
    (1) The name or names and address or addresses of the SIP Sponsor 
and co-sponsors, if any;
    (2) The name and DIN of each eligible prescription drug that the 
SIP Sponsor seeks to include in the SIP;
    (3) The name and address of the applicant that owns the approved 
NDA or ANDA for each eligible prescription drug's FDA-approved 
counterpart, and the approved NDA or ANDA number;
    (4) The name and address of the manufacturer of the finished dosage 
form of the drug, if available;
    (5) The name and address of the manufacturer of the active 
ingredient or ingredients of the drugs, if available;
    (6) The name and address of the Foreign Seller;
    (7) The name and address of the Importer;
    (8) The name and address of the FDA-registered repackager or 
relabeler, if different from the Importer, that will relabel the 
eligible prescription drugs (including any limited repackaging in 
accordance with the requirements in this part), along with evidence of 
registration and of satisfactory resolution of any objectionable 
conditions or practices identified during its most recent FDA 
inspection, if applicable;
    (9) A summary of how the SIP Sponsor will ensure:
    (i) That the imported eligible prescription drugs meet the 
Statutory Testing requirements;
    (ii) That the supply chain is secure;
    (iii) That the labeling requirements of the Federal Food, Drug, and 
Cosmetic Act and this part are met;
    (iv) That the post-importation pharmacovigilance and other 
requirements of the Federal Food, Drug, and Cosmetic Act and this part 
are met; and
    (v) That the SIP Proposal would result in a significant reduction 
in the cost to the American consumer of the prescription drugs that the 
SIP Sponsor seeks to import.
    (d) The SIP Sponsor's importation plan must:
    (1) Identify the SIP Sponsor, including any co-sponsors, and 
identify the finished dosage form manufacturer of each prescription 
drug that the SIP Sponsor seeks to include in the SIP, the Foreign 
Seller, and the Importer, and explain the legal relationship of each of 
these entities to the SIP Sponsor, if any.
    (2) Include an attestation containing a complete disclosure of any 
past criminal convictions or violations of the State, Federal, or 
Canadian laws regarding drugs or devices against the Foreign Seller or 
Importer or an attestation that the Foreign Seller or Importer has not 
been involved in, or convicted of, any such criminal or prohibited 
acts. Such attestation must include principals, any shareholder who 
owns 10 percent or more of outstanding stock in any non-publicly held 
corporation, directors, officers, and any facility manager or 
designated representative of such manager.
    (3) Include a list of all disciplinary actions, to include the date 
of, and parties to, any action imposed against the Foreign Seller or 
the Importer by State, Federal, or Canadian regulatory bodies, 
including any such actions against the principals, owners, directors, 
officers, or any facility manager or designated representative of such 
manager for the previous 7 years prior to submission of the SIP 
Proposal.
    (4) Include:
    (i) The Health Canada inspectional history for the previous 5 
years, or if the Foreign Seller has been licensed for less than 5 
years, for the duration of its period of licensure; and
    (ii) the State and Federal inspectional history for the Importer 
for the previous 5 years, or if the Foreign Seller has been licensed 
for less than 5 years, for the duration of its period of licensure.
    (5) Include the proprietary and established names, the approved 
application numbers, and the DIN and National Drug Code (NDC), for each 
eligible prescription drug that the SIP Sponsor seeks to import from 
Canada and for its FDA-approved counterpart. It must also include as 
much of the information that is required by Sec.  251.5 about the HPFB-
approved product and its FDA-approved counterpart as is available, 
including the name and quantity of the active ingredient, the inactive 
ingredients, and the dosage form.

[[Page 70830]]

    (6) Confirm that each HPFB-approved drug's FDA-approved counterpart 
drug is currently marketed in the United States.
    (7) Describe, to the extent possible, the testing that will be done 
to establish that the HPFB-approved drug meets the conditions in the 
NDA or ANDA for the HPFB-approved drug's FDA-approved counterpart. It 
must also identify the qualifying laboratory that will conduct the 
testing, and it must establish that the laboratory is qualified in 
accordance with Sec.  251.15 to conduct the tests.
    (8) Include a copy of the FDA-approved labeling for the FDA-
approved version of the eligible prescription drug, a copy of the 
proposed labeling that will be used for the eligible prescription drug, 
and a side-by-side comparison of the FDA-approved labeling and the 
proposed labeling including, if applicable, any patient labeling, with 
all differences annotated and explained. The SIP Proposal must also 
include a copy of the HPFB-approved labeling.
    (9) Explain how the SIP Sponsor expects that the SIP will result in 
a significant reduction in the cost to the American consumer of the 
prescription drugs that the SIP Sponsor seeks to import. The 
explanation must include any assumptions and uncertainty, and it must 
be sufficiently detailed to allow for a meaningful evaluation.
    (10) Explain how the SIP Sponsor will ensure that all of the 
participants in the SIP comply with the requirements of section 804 of 
the Federal Food, Drug, and Cosmetic Act and this part.
    (11) Describe the procedures the SIP Sponsor will use to ensure 
that the requirements of this part are met, including the steps that 
will be taken to ensure that the:
    (i) Storage, handling, and distribution practices of supply chain 
participants, including transportation providers, meet the minimum 
requirements of part 205 of this chapter and do not affect the quality 
or impinge on the security of the eligible prescription drugs;
    (ii) Supply chain is secure;
    (iii) Importer screens the eligible prescription drugs it imports 
for evidence that they are adulterated, counterfeit, damaged, tampered 
with, or expired; and
    (iv) Importer fulfills its responsibilities to submit adverse 
event, medication error, field alert, and other reports.
    (12) Explain how the SIP Sponsor will educate pharmacists, 
healthcare providers, and patients about the drugs imported under its 
SIP.
    (13) Include the SIP's recall plan, including an explanation of how 
the SIP Sponsor will obtain recall or market withdrawal information and 
how it will ensure that recall or market withdrawal information is 
shared among the SIP Sponsor, the Foreign Seller, the Importer, and FDA 
and provided to the manufacturer; and
    (14) Explain how the SIP Sponsor will ensure that any information 
that the manufacturer provides to the Importer to allow the Importer to 
conduct the Statutory Testing, or information otherwise obtained by the 
Importer for such purposes, would be kept in strict confidence and used 
only for purposes of testing or otherwise complying with the Federal 
Food, Drug, and Cosmetic Act, as required by section 804(e)(2)(B).


Sec.  251.4   Review and authorization of importation program 
proposals.

    Based on a review of a SIP Proposal submitted under this part, FDA 
may authorize, modify, or extend the authorization period of a SIP that 
meets the requirements of this part. FDA may deny a request for 
authorization, modification, or extension of a SIP in its discretion, 
including if a proposed SIP does not meet the standard for authorizing 
a SIP under this part. Where a SIP Proposal meets the requirements of 
this part, FDA may nonetheless decide, in its discretion, not to 
authorize the SIP Proposal.
    (a) Among other reasons, FDA may decide not to authorize a SIP 
Proposal because of potential safety concerns with the SIP, because of 
the degree of uncertainty that the SIP Proposal would adequately ensure 
the protection of public health, because, based on the recommendation 
of another Health and Human Services (HHS) component as directed by the 
Secretary, the relative likelihood that the SIP Proposal would not 
result in significant cost savings, or in order to limit the number of 
authorized SIP programs so FDA can effectively and efficiently carry 
out its responsibilities under section 804 of the Federal Food, Drug, 
and Cosmetic Act in light of the amount of resources allocated to 
carrying out such responsibilities.
    (b) FDA will notify a SIP Sponsor in writing, including through 
electronic means, when FDA receives the SIP Sponsor's SIP Proposal.
    (c) FDA will make a reasonable effort to promptly communicate to a 
SIP Sponsor about any information required by Sec.  251.3 that was not 
submitted in a SIP Proposal.
    (1) FDA may notify a SIP Sponsor if FDA believes additional 
information would help FDA's review of a SIP Proposal.
    (2) FDA will notify a SIP Sponsor in writing, including through 
electronic means, whether FDA has decided to authorize or not to 
authorize the SIP Sponsor's SIP Proposal.


Sec.  251.5   Pre-Import Request.

    (a) A prescription drug may not be imported or offered for import 
under this part unless the Importer has filed a Pre-Import Request for 
that drug, which has been granted by FDA.
    (b) The Importer must submit a complete Pre-Import Request at least 
30 days prior to scheduled date of arrival or entry for consumption, 
whichever occurs first, of an eligible prescription drug covered under 
an authorized SIP.
    (c) A complete Pre-Import Request must include, at a minimum:
    (1) Identification of the Importer including Importer name, 
business type (wholesale distributor or pharmacist), U.S. license 
number(s) and State(s) of license, business address, unique facility 
identifier if required to register with FDA as an establishment under 
section 510 of the Federal Food, Drug, and Cosmetic Act or FDA 
establishment identification number if not required to register under 
section 510 of the Federal Food, Drug, and Cosmetic Act, and name of a 
contact person with their email and phone number.
    (2) Identification of the FDA-authorized SIP including the name of 
the SIP; the name or names of the SIP Sponsor and co-sponsors, if any; 
business address; and the name, email address, and phone number of a 
contact person.
    (3) Identification of the Foreign Seller, including the name of the 
Foreign Seller, business address, unique facility identifier, any 
license numbers issued by Health Canada or a provincial pharmacy 
regulatory body, and the name, email address, and phone number of a 
contact person.
    (4) Identification and description of the drug(s) covered by the 
Pre-Import Request, including the following information:
    (i) Established and trade name of the HPFB-approved drug(s), as 
applicable, DIN, and complete product description including strength, 
description of dosage form, and route of administration.
    (ii) Active pharmaceutical ingredient (API) information, including:
    (A) Name of API;
    (B) Manufacturer of API and its unique facility identifier; and
    (C) Amount of API and unit measure in each eligible prescription 
drug;
    (iii) Established name and trade name, as applicable, of FDA-
approved counterpart drug(s) and NDA or ANDA number.

[[Page 70831]]

    (iv) Manufacturer of the eligible prescription drug with the 
business address and unique facility identifier.
    (v) Copies of the invoice and any other documents related to the 
manufacturer's sale of the drugs to the Foreign Seller provided by the 
manufacturer to the Importer, and copies of the same documents provided 
by the Foreign Seller to the Importer.
    (vi) Quantity, listed separately by dosage form, strength, batch 
and lot or control number assigned by the manufacturer to each eligible 
prescription drug intended to be imported under this Pre-Import Request 
compared to the quantity of each batch and lot or control number 
originally received by the Foreign Seller from the manufacturer, and 
the date of such receipt.
    (vii) Expiration date of each HFPB-approved drug, listed by lot or 
control number.
    (viii) Expiration date to be assigned to the eligible prescription 
drug when relabeled by the Importer with a complete description of how 
that expiration date was calculated to comply with the FDA-approved NDA 
or ANDA.
    (ix) NDC proposed for assignment by the Importer.
    (x) FDA product code for the eligible prescription drug(s) to be 
imported.
    (xi) A Statutory Testing plan that includes:
    (A) A description of how the samples will be selected from a 
shipment for the Statutory Testing;
    (B) The name and location of the qualifying laboratory in the 
United States that will conduct the Statutory Testing; and
    (C) A description of the testing method(s) that will be used to 
conduct the Statutory Testing, if the Importer will be conducting the 
Statutory Testing, or the description of the testing methods must be 
submitted by the manufacturer to FDA directly under Sec.  251.17 if the 
manufacturer will be conducting the Statutory Testing.
    (xii) Attestation from the manufacturer that must establish that 
the drug proposed for import, but for the fact that it bears the HPFB-
approved labeling, meets the conditions in the FDA-approved NDA or 
ANDA, including any process-related or other requirements for which 
compliance cannot be established through laboratory testing. 
Accordingly, the attestation must include:
    (A) Confirmation that the HPFB-approved drug has the active 
ingredient(s), active ingredient source(s) (including manufacturing 
facility or facilities), inactive ingredient(s), dosage form, 
strength(s), and route(s) of administration, described in the FDA-
approved drug's NDA or ANDA.
    (B) Confirmation that the HPFB-approved drug conforms to the 
specifications in the FDA-approved drug's NDA or ANDA regarding the 
quality of the drug substance(s), drug product, intermediates, raw 
materials, reagents, components, in-process materials, container 
closure systems, and other materials used in the production of the 
drug.
    (C) Confirmation that the HPFB-approved drug was manufactured in 
accordance with the specifications described in the FDA-approved drug's 
NDA or ANDA, including with regard to the facilities and manufacturing 
lines that are used, and in compliance with current good manufacturing 
practice requirements set forth in section 501(a)(2)(B) of the Federal 
Food, Drug, and Cosmetic Act and parts 4 (if a combination product), 
210, and 211 of this chapter.
    (D) Original date of manufacture or the date used to calculate the 
labeled expiration date based on the HPFB-approved or scientifically 
validated expiration period, the expiration period set forth in the 
FDA-approved drug's NDA or ANDA, and any other information needed to 
label the drug with an expiration date that meets the specifications of 
the FDA-approved drug's NDA or ANDA.
    (E) Information needed to confirm that the labeling of the 
prescription drug complies with labeling requirements of the Federal 
Food, Drug, and Cosmetic Act.
    (xiii) Information related to the Importation, including:
    (A) Location of the eligible prescription drugs in Canada and 
anticipated date of shipment (date eligible prescription drug(s) will 
leave their location in Canada);
    (B) Name, address, email, and telephone number of the Foreign 
Shipper;
    (C) Anticipated date of export from Canada and Canadian port of 
exportation;
    (D) Anticipated date and approximate time of arrival at a port 
authorized by FDA to import eligible prescription drugs under section 
804 of the Federal Food, Drug, and Cosmetic Act;
    (E) The name, address, unique facility identifier or FDA 
establishment identification number, and telephone number of the 
warehouse, location within a specific foreign trade zone, or other 
secure distribution facility controlled by or under contract with the 
Importer where the eligible prescription drug(s) will be stored pending 
testing, relabeling, and FDA determination of admissibility;
    (F) Information regarding the facility where the relabeling and any 
limited repackaging activities will occur for all eligible prescription 
drugs covered by this Pre-Import Request, including:
    (1) The facility's unique facility identifier;
    (2) The facility's name, address, and FDA establishment identifier 
number;
    (3) The anticipated date the relabeling and any limited repackaging 
will be completed; and
    (4) Information about where the relabeled drug will be stored 
pending distribution, including the FDA establishment identification 
number of the storage facility, if available.
    (d) If the manufacturer conducts the Statutory Testing, the 
manufacturer must provide the attestation to FDA. If the Importer 
conducts the Statutory Testing, the manufacturer must provide the 
attestation to the Importer.
    (e)(1) The Importer must provide the executed batch record, 
including the executed certificate of analysis for at least one 
recently manufactured, commercial-scale batch of the HPFB-approved 
drug; and at least one recently manufactured, commercial-scale batch of 
the FDA-approved drug that was produced for and released for 
distribution to the U.S. market under an NDA or ANDA.
    (2) The manufacturer must provide these analyses for each 
manufacturing line that the manufacturer used to produce either or both 
of the drugs.


Sec.  251.6  Limitations on authorized importation programs.

    (a) Unless an extension is granted under this section, 
authorization for a SIP automatically terminates after 2 years, or a 
shorter period of time if a shorter period of time is specified in the 
authorization for the SIP.
    (b) The 2-year authorization period for a SIP begins when the 
Importer files an electronic import entry for consumption for its first 
shipment of drugs under the SIP.
    (c) Notwithstanding paragraph (a) of this section, authorization 
for a SIP terminates if the Importer does not file an electronic import 
entry for consumption for a shipment of eligible prescription drugs 
under the SIP within 1 year of the date that the SIP was authorized.
    (d) FDA will terminate authorization of a SIP upon request from the 
SIP Sponsor that includes a notice of the SIP Sponsor's intent to 
discontinue its activities.

[[Page 70832]]

Sec.  251.7  Suspension and revocation of authorized importation 
programs.

    (a) FDA may suspend a SIP under the circumstances set forth in 
Sec.  251.18, or under other circumstances in FDA's discretion. 
Importation of drugs under a SIP that has been suspended is prohibited.
    (b) SIP Sponsors and other SIP participants must agree to submit to 
audits of their books and records and inspections of their facilities 
as a condition of participation in a SIP. If a SIP Sponsor, 
manufacturer, Foreign Seller, Importer, qualifying laboratory, or other 
participant in the supply chain delays, denies, or limits an 
inspection, or refuses to permit entry or inspection of their facility 
or their records, any drug that has been held by such entity will be 
deemed to be adulterated and the SIP may be suspended, in whole or in 
part, immediately.
    (c) FDA may revoke authorization of a SIP, in whole or in part, 
including with respect to one or more drugs in the SIP, at any time for 
any reason if FDA determines, in its discretion, or on the 
recommendation of another HHS component as directed by the Secretary, 
that:
    (1) The SIP Proposal contained an untrue statement of material 
fact;
    (2) The SIP Proposal omitted material information;
    (3) The SIP no longer meets the requirements of section 804 of the 
Federal Food, Drug, and Cosmetic Act, this part, or the SIP, including, 
among other things, if the manufacturer, the Foreign Seller, the 
Importer, or any other SIP entity is found to be not compliant with 
section 501(a)(2)(A) or (B) of the FD&C Act;
    (4) Continued implementation of the SIP is likely to pose 
additional risk to the public's health and safety;
    (5) Confidential manufacturer information was disclosed in 
violation of Sec.  251.16;
    (6) Continued implementation of the SIP will not result in a 
significant reduction in the cost of the drugs covered by the SIP to 
the American consumer;
    (7) Continued monitoring of the SIP imposes too much of a drain on 
FDA or HHS resources or is inconsistent with FDA or HHS prioritization 
of resources; or
    (8) Continued implementation of the SIP is otherwise inappropriate.


Sec.  251.8  Modification or extension of authorized importation 
programs.

    (a) A supplement to modify or extend an authorized SIP must be 
submitted via the ESG for FDA's consideration.
    (b) A SIP Sponsor can propose to add additional Foreign Sellers or 
additional Importers to an authorized SIP once it has consistently 
imported eligible prescription drugs in accordance with section 804 of 
the Federal Food, Drug, and Cosmetic Act and this part.
    (c) If FDA authorizes changes to the SIP, the Importer must submit 
a new Pre-Import Request in accordance with Sec.  251.5.
    (d) A SIP Sponsor must not make any changes or permit any changes 
to be made to a SIP without first securing FDA's authorization. If FDA 
authorizes changes to a SIP under this section, such authorization does 
not change the authorization of the original SIP.
    (e) A SIP Sponsor may request that FDA extend the authorization 
period of an authorized SIP. Such a request must be submitted via the 
ESG for FDA's consideration at least 3 months before the SIP's 
authorization period will expire. To be eligible for an extension of 
the authorized SIP, a SIP must be up to date on all of the information 
and records-related requirements of section 804 of the Federal Food, 
Drug, and Cosmetic Act and this part. FDA may, in its sole discretion, 
extend the authorization period for up to 2 years at a time.

Subpart C--Certain Requirements for Section 804 Importation 
Programs


Sec.  251.9  Registration of Foreign Sellers.

    (a) Foreign Sellers must be registered with FDA before FDA will 
authorize a SIP Proposal.
    (b) To register, a Foreign Seller must provide the following 
information:
    (1) Name of the owner or operator; if a partnership, the name of 
each partner; if a corporation, the name of each corporate officer and 
director, and the place of incorporation;
    (2) All names of the Foreign Seller, including names under which 
the Foreign Seller conducts business or names by which the Foreign 
Seller is known;
    (3) Physical address, telephone number(s), and email address of the 
Foreign Seller;
    (4) Registration number, if previously assigned by FDA;
    (5) A copy of the Foreign Seller's Health-Canada Drug Establishment 
License;
    (6) All types of operations performed by the Foreign Seller;
    (7) Name, mailing address, telephone number, and email address of 
the official contact for the establishment; and
    (8) Name, mailing address, telephone number, and email address of:
    (i) The U.S. agent;
    (ii) The Importer to which the Foreign Seller plans to sell 
eligible prescription drugs; and
    (iii) Each SIP Sponsor with which the Foreign Seller works.


Sec.  251.10  Reviewing and updating registration information for 
Foreign Sellers.

    (a) Expedited updates. A Foreign Seller must update its 
registration information no later than 30 calendar days after:
    (1) Closing or being sold;
    (2) Changing their name or physical address; or
    (3) Changing the name, mailing address, telephone number, or email 
address of the official contact or the U.S. agent. A Foreign Seller, 
official contact, or U.S. agent may notify FDA about a change of 
information for the designated official contact or U.S. agent, but only 
a Foreign Seller is permitted to designate a new official contact or 
U.S. agent.
    (b) Annual review and update of registration information. A Foreign 
Seller must review and update all registration information required 
under Sec.  251.9.
    (1) The first review and update must occur during the period 
beginning on October 1 and ending December 31 of the year of initial 
registration, if the initial registration occurs prior to October 1. 
Subsequent reviews and updates must occur annually, during the period 
beginning on October 1 and ending December 31 of each calendar year.
    (2) The updates must reflect new changes not previously required to 
be reported along with a summary of the registration updates that were 
provided to FDA as required during the calendar year.
    (3) If no changes have occurred since the last registration, a 
Foreign Seller must certify that no changes have occurred.


Sec.  251.11  Official contact and U.S. agent for Foreign Sellers.

    (a) Official contact. A Foreign Seller subject to the registration 
requirements of this part must designate an official contact. The 
official contact is responsible for:
    (1) Ensuring the accuracy of registration information as required 
by Sec.  251.9; and
    (2) Reviewing, disseminating, routing, and responding to all 
communications from FDA, including emergency communications.
    (b) U.S. agent. (1) A Foreign Seller must designate a single U.S. 
agent. The U.S. agent must reside or maintain a place of business in 
the United States

[[Page 70833]]

and may not be a mailbox, answering machine or service, or other place 
where a person acting as the U.S. agent is not physically present. The 
U.S. agent is responsible for:
    (i) Reviewing, disseminating, routing, and responding to all 
communications from FDA, including emergency communications;
    (ii) Responding to questions concerning those drugs that are 
imported or offered for import to the United States; and
    (iii) Assisting FDA in scheduling inspections.
    (2) FDA may provide certain information and/or documents to the 
U.S. agent. The provision of information and/or documents by FDA to the 
U.S. agent is equivalent to providing the same information and/or 
documents to the Foreign Seller.


Sec.  251.12  Importer responsibilities.

    (a) The Importer is responsible for:
    (1) In accordance with the procedures set forth in Sec.  207.33 of 
this chapter, proposing an NDC for assignment for each eligible 
prescription drug imported pursuant to this part;
    (2) Examining the Canadian labeling of a sample of each shipment of 
eligible prescription drugs to verify that the labeling is consistent 
with that of an HPFB-approved drug, and attesting that such examination 
has been conducted through reports to FDA required under this part;
    (3) Screening eligible prescription drugs for evidence that they 
are adulterated, counterfeit, damaged, tampered with, or expired;
    (4) Ensuring the eligible prescription drug is relabeled with the 
required U.S. labeling, including the container and carton labels; 
prescribing information; and patient labeling, such as medication 
guides, instruction for use documents, and patient package inserts, in 
accordance with Sec. Sec.  251.13 and 251.14(d);
    (5) Arranging for an entry to be submitted in accordance with Sec.  
251.17;
    (6) Collecting and submitting the information and documentation to 
FDA about the imported drug(s) pursuant to section 804(d) of the 
Federal Food, Drug, and Cosmetic Act, in addition to information about 
the Foreign Seller, as set forth in Sec.  251.19; and
    (7) Submitting the adverse event, medication error, field alert, 
and other reports, and complying with drug recalls, in accordance with 
Sec.  251.18.
    (b) If the Importer is also relabeling the eligible prescription 
drug, the Importer must also:
    (1) Register with FDA as a repackager or relabeler under section 
510(b) of the Federal Food, Drug, and Cosmetic Act, in accordance with 
Sec.  207.25 of this chapter;
    (2) Obtain a labeler code from FDA and propose an NDC for each 
eligible prescription drug pursuant to Sec.  207.33 of this chapter; 
and
    (3) List each eligible prescription drug pursuant to Sec.  207.53 
of this chapter.
    (c) If the Importer is not itself relabeling the eligible 
prescription drug, the Importer must:
    (1) Obtain its own labeler code from FDA under Sec.  207.33(c) of 
this chapter;
    (2) Ensure that the eligible prescription drug incorporates the NDC 
the Importer proposed for assignment, which must include the Importer's 
labeler code; and
    (3) Ensure that the entity relabeling an eligible prescription drug 
on its behalf proposes an NDC pursuant to Sec.  207.33 of this chapter 
and lists each eligible prescription drug pursuant to Sec.  207.53 of 
this chapter.


Sec.  251.13  Labeling of eligible prescription drugs.

    (a) Upon the request of a SIP Sponsor or Importer, the manufacturer 
of a prescription drug must provide an Importer written authorization 
for the Importer to use, at no cost, the FDA-approved labeling for the 
prescription drug. If the manufacturer fails to do so within a timely 
fashion, FDA may deem this authorization to have been given.
    (b) In addition to the exemption provided in subpart D of part 201 
of this chapter, an eligible prescription drug imported for purposes of 
this part is exempt from section 502(f)(1) of the Federal Food, Drug, 
and Cosmetic Act if all the following conditions are met:
    (1) The Importer or the manufacturer certifies that the drug meets 
all labeling requirements under the Federal Food, Drug, and Cosmetic 
Act, including the requirements of this part. The Importer of an 
eligible prescription drug must either:
    (i) Propose an NDC for the drug following the procedures in Sec.  
207.33 of this chapter and list the drug following the procedures in 
Sec.  207.53 of this chapter, or
    (ii) If the Importer is a private label distributor, take 
responsibility to ensure that the entity performing relabeling on its 
behalf proposes an NDC and lists each eligible prescription drug in 
accordance with the applicable requirements of part 207 of this 
chapter.
    (2) The drug must be:
    (i) In the possession of a person (or his agents or employees), 
including Foreign Sellers and Importers, regularly and lawfully engaged 
in the manufacture, transportation, storage, or wholesale distribution 
of prescription drugs;
    (ii) In the possession of a retail, hospital, or clinic pharmacy, 
or a public health agency, regularly and lawfully engaged in dispensing 
prescription drugs; or
    (iii) In the possession of a practitioner licensed by law to 
administer or prescribe such drugs.
    (3) The drug is to be dispensed in accordance with section 503(b) 
of the Federal Food, Drug, and Cosmetic Act.
    (4) The label of the drug must be the same as the label authorized 
by the approved NDA or ANDA of the FDA-approved drug, except that the 
label must bear conspicuously:
    (i) The Importer's NDC for the eligible prescription drug, and such 
NDC must replace any other NDC otherwise appearing on the label of the 
FDA-approved drug; and
    (ii) The name and place of business of the manufacturer and the 
Importer.
    (5) The container label must include at a minimum the product's 
proprietary and established name (if any); product strength; lot 
number; and the name of the manufacturer and the Importer.
    (6) Labeling on or within the package from which the eligible 
prescription drug is to be dispensed is the same as the labeling 
authorized by the NDA or the ANDA of the FDA-approved drug, except 
that:
    (i) The labeling must bear the statement: ``This drug was imported 
from Canada under the [Name of State or Other Governmental Entity and 
of Its Co-Sponsors, If Any] Section 804 Importation Program to reduce 
its cost to the American consumer.'' If the SIP maintains a website, 
the statement could also include the website address. This statement 
must be included after the PATIENT COUNSELING INFORMATION section for 
products subject to Sec. Sec.  201.56(d) and 201.57 of this chapter, or 
after the HOW SUPPLIED section (or after the last section of labeling) 
for products subject to Sec. Sec.  201.56(e) and 201.80 of this 
chapter. The statement also must be included on the immediate container 
and outside package;
    (ii) For products subject to Sec. Sec.  201.56(d) and 
201.57(c)(17)(iii) of this chapter, the NDC(s) assigned to the eligible 
prescription drug in accordance with the procedures in Sec.  207.33 of 
this chapter must be included in the HOW SUPPLIED/STORAGE AND HANDLING 
section in place of the NDC(s) assigned to the FDA-approved U.S. 
versions of the drug; and
    (iii) For products subject to Sec. Sec.  201.56(e) and 201.80(k)(3) 
of this chapter, the NDC(s) assigned to the

[[Page 70834]]

eligible prescription drug in accordance with the procedures in Sec.  
207.33 of this chapter must be included in the HOW SUPPLIED section in 
place of the NDC(s) assigned to the FDA-approved U.S. versions of the 
drug.
    (c) The Importer is responsible for relabeling the drug, or 
arranging for it to be relabeled, to meet the requirements of this 
part. The relabeling and associated limited repackaging activities must 
meet applicable requirements, including applicable current good 
manufacturing practice requirements under parts 210 and 211 of this 
chapter. Except for repackaging that is necessary to perform the 
relabeling described in this part, further repackaging of drugs 
imported pursuant to a SIP is prohibited.


Sec.  251.14   Supply chain security requirements for eligible 
prescription drugs.

    (a) SIP Sponsors. A sponsor of an authorized SIP must ensure that:
    (1) Each drug imported under the SIP is HPFB-approved and labeled 
for sale in Canada from the point of manufacture until it reaches the 
Foreign Seller;
    (2) For each drug that is imported under the SIP and that is 
manufactured outside Canada, the drug was authorized for import into 
Canada by the manufacturer and labeled by the manufacturer for the 
Canadian market before importation under the SIP (i.e. the drug was not 
transshipped through Canada for sale in another country);
    (3) For each drug imported under the SIP, the drug was sold by the 
manufacturer directly to a Foreign Seller;
    (4) For each drug imported under the SIP, the Foreign Seller ships 
the drug directly to the Importer in the United States; and
    (5) The Importer(s) and Foreign Seller(s) identified in the SIP 
meet the applicable requirements of this part and in section 582(c) and 
(d) of the Federal Food, Drug, and Cosmetic Act.
    (b) Manufacturer. The manufacturer must provide to the Importer a 
copy of any transaction documents that were provided from the 
manufacturer to the Foreign Seller.
    (c) Foreign Seller.
    (1) A Foreign Seller must have systems in place to:
    (i) Determine whether a drug in its possession or control that it 
intends to sell to the Importer under a SIP is a suspect foreign 
product. Upon making a determination that a drug in its possession or 
control is a suspect foreign product, or upon receiving a request for 
verification from FDA that the Foreign Seller has determined that a 
product within its possession or control is a suspect foreign product, 
a Foreign Seller must:
    (A) Quarantine such product within its possession or control until 
such product is cleared or dispositioned;
    (B) Promptly conduct an investigation, in coordination with the 
Importer and the manufacturer, as applicable, to determine whether the 
product is an illegitimate foreign product, and verify the product at 
the package level, including the SSI; and
    (C) If the Foreign Seller makes the determination that a suspect 
foreign product is not an illegitimate foreign product, promptly notify 
FDA of such determination (such product may be further distributed).
    (ii) Determine whether a drug in its possession or control that it 
intends to sell to the Importer under a SIP is an illegitimate foreign 
product. Upon making a determination that a drug in its possession or 
control is an illegitimate foreign product, the Foreign Seller must:
    (A) Quarantine such product within the possession or control of the 
Foreign Seller from product intended for distribution until such 
product is dispositioned;
    (B) Disposition the illegitimate foreign product within the 
possession or control of the Foreign Seller;
    (C) Take reasonable and appropriate steps to assist a manufacturer 
or Importer to disposition an illegitimate product not in the 
possession or control of the Foreign Seller; and
    (D) Retain a sample of the product for further physical examination 
or laboratory analysis of the product by the manufacturer or the 
Secretary (or other appropriate Federal or State official) upon request 
by the Secretary (or other appropriate Federal or State official), as 
necessary and appropriate.
    (2)(i) Upon determining that a product in the possession or control 
of the Foreign Seller is an illegitimate foreign product, the Foreign 
Seller must notify FDA and the Importer that the Foreign Seller 
received such illegitimate product not later than 24 hours after making 
such determination.
    (ii) Upon the receipt of a notification from FDA, the Importer, or 
other authorized repackager, wholesale distributor, or dispenser that a 
determination has been made that a product that had been sold by the 
Foreign Seller is an illegitimate foreign product, a Foreign Seller 
must identify all illegitimate foreign product subject to such 
notification that is in the possession or control of the Foreign 
Seller, including any product that is subsequently received, and 
perform the activities to investigate the product described in 
paragraph (c)(1) of this section.
    (iii) Upon making a determination, in consultation with FDA, that a 
notification is no longer necessary, a Foreign Seller must promptly 
notify the Importer and person who sent the notification that the 
notification is terminated.
    (iv) A Foreign Seller must keep records of the disposition of an 
illegitimate foreign product for not less than 6 years after the 
conclusion of the disposition.
    (3) Upon request by FDA, or other appropriate Federal or State 
official, in the event of a recall or for purposes of investigating a 
suspect foreign product or an illegitimate foreign product, a Foreign 
Seller must promptly provide the official with information about its 
transactions with the manufacturer and the Importer.
    (4) A Foreign Seller, upon receiving a shipment of eligible 
prescription drugs from the manufacturer, must:
    (i) Separate the portion of drugs intended for sale to the Importer 
located in the United States, and store such portion separately from 
that portion of product intended for sale in the Canadian market;
    (ii) Assign a SSI to each package and homogenous case intended for 
sale to the Importer in the United States, unless each such package and 
homogenous case contains a manufacturer-affixed or imprinted product 
identifier, as such term is defined in section 581(14) of the Federal 
Food, Drug, and Cosmetic Act, at the time of receipt by the Foreign 
Seller; and
    (iii) Affix or imprint the SSI on each package and homogenous case 
intended for sale to the Importer in the United States. Such SSI must 
be located on blank space on the package or homogenous case and must 
not obscure any labeling for the Canadian market, including the DIN.
    (5) Upon receiving a request for verification from the Importer or 
other authorized repackager, wholesale distributor, or dispenser that 
is in possession or control of a product such person believes to be 
distributed by such Foreign Seller, a Foreign Seller must, not later 
than 24 hours after receiving the request for verification or in other 
such reasonable time as determined by the Secretary, based on the 
circumstances of the request, notify the person making the request 
whether the product identifier, including the standardized numerical 
identifier, that is the subject of the request corresponds to the SSI 
affixed or imprinted by the

[[Page 70835]]

Foreign Seller. If a Foreign Seller responding to a request for 
verification identifies a product identifier that does not correspond 
to that SSI affixed or imprinted by the Foreign Seller, the Foreign 
Seller must treat such product as suspect foreign product and conduct 
an investigation as described in paragraph (c)(1) of this section. If 
the Foreign Seller has reason to believe the product is an illegitimate 
foreign product, the Foreign Seller must advise the person making the 
request of such belief at the time such Foreign Seller responds to the 
request for verification.
    (6) For each transaction between the Foreign Seller and the 
Importer for an eligible prescription drug, the Foreign Seller must 
provide:
    (i) A statement that the Foreign Seller received the product from 
an FDA-registered manufacturer;
    (ii) The proprietary or established name of the product;
    (iii) The strength and dosage form of the product;
    (iv) The container size;
    (v) The number of containers;
    (vi) The lot number of the product;
    (vii) The date of the transaction;
    (viii) The date of the shipment, if more than 24 hours after the 
date of the transaction;
    (ix) The business name and address of the person associated with 
the Foreign Seller from whom ownership is being transferred;
    (x) The business name and address of the person associated with the 
Importer to whom ownership is being transferred;
    (xi) The SSI for each package and homogenous case of product; and
    (xii) The Canadian DIN for each product transferred.
    (7) Upon a request by FDA, or other appropriate Federal or State 
official, in the event of a recall or for purposes of investigating a 
suspect foreign product or an illegitimate foreign product, the Foreign 
Seller must promptly provide the official with information about its 
transactions with the manufacturer and the Importer.
    (d) Importers. (1) An Importer of an eligible prescription drug 
must purchase the drug directly from a Foreign Seller in Canada.
    (2) Upon receipt of a product from the Foreign Seller, an Importer 
must facilitate the affixation or imprinting of a product identifier, 
as defined in section 581(14) of the Federal Food, Drug, and Cosmetic 
Act. The Importer must ensure that such affixation or imprinting occurs 
at the same time the product is relabeled with the required U.S.-
approved labeling for the drug product and, except for repackaging 
necessary to perform the relabeling described in this part, cannot 
otherwise relabel or repackage the product. The Importer may contract 
with an entity registered with FDA under part 207 of this chapter to 
accomplish such relabeling, provided that the entity does not otherwise 
relabel or repackage the product, except for repackaging that is 
necessary to perform the relabeling described in this part.
    (3) The repackager or relabeler that affixes or imprints the 
product identifier to each package and homogenous case of an eligible 
prescription drug in accordance with section 582 of the Federal Food, 
Drug, and Cosmetic Act--
    (i) May affix or imprint a product identifier only on a package of 
an eligible prescription drug that has a serial number that was 
assigned and affixed by the Foreign Seller;
    (ii) Must maintain the product identifier information for such drug 
for not less than 6 years; and
    (iii) Must maintain records for not less than 6 years that 
associate the product identifier the repackager affixes or imprints 
with the serial number assigned by the Foreign Seller and the Canadian 
DIN.
    (4) An Importer must retain records, for no less than 6 years, that 
allow the Importer to associate the product identifier affixed or 
imprinted on each package or homogenous case of product it received 
from the Foreign Seller, with the SSI that had been assigned by the 
Foreign Seller, and the Canadian DIN that was on the package when the 
Foreign Seller received the product from the original manufacturer. An 
Importer must also have processes in place to, upon receipt of a drug 
and records from a Foreign Seller, compare such information with 
information the Importer received from the manufacturer, including 
relevant documentation about the transaction that the manufacturer 
provided to the Foreign Seller upon its transfer of ownership of the 
product for the Canadian market.
    (5) An Importer must comply with all applicable requirements of 
section 582 of the Federal Food, Drug, and Cosmetic Act, including 
requirements that apply to subsequent transactions with trading 
partners, unless a waiver, exception, or exemption applies.
    (6) For transactions of eligible prescription drugs between 
Importers and Foreign Sellers, an Importer is exempt from the following 
supply chain security requirements that are otherwise applicable:
    (i) An Importer is exempt from the prohibition on receiving a 
product for which the previous owner did not provide the transaction 
history, transaction information, and transaction statement, under 
section 582(c)(1)(A) or (d)(1)(A) of the Federal Food, Drug, and 
Cosmetic Act as applicable; provided that the Importer receives from 
the Foreign Seller the information required under paragraph (c) of this 
section.
    (ii) An Importer is exempt from the prohibition on receiving a 
product that is not encoded with a product identifier, under section 
582(c)(2) or (d)(2) of the Federal Food, Drug, and Cosmetic Act as 
applicable, provided that the product the Importer received from the 
Foreign Seller has an SSI.
    (iii) An Importer is exempt from the prohibition on conducting a 
transaction with an entity that is not an ``authorized trading 
partner,'' under section 582(c)(3) or (d)(3) of the Federal Food, Drug, 
and Cosmetic Act as applicable.
    (iv) An Importer is exempt from the requirement to verify that a 
product in the Importer's possession or control contains a 
``standardized numerical identifier'' at the package level, under 
section 582(c)(4)(A)(i)(II) or (d)(4)(A)(ii)(II) of the Federal Food, 
Drug, and Cosmetic Act as applicable, provided that the Importer 
verifies that each package and homogenous case of the product includes 
the SSI affixed or imprinted by the Foreign Seller.


Sec.  251.15   Qualifying laboratory requirements.

    (a) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must have ISO 17025 accreditation.
    (b) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must have an FDA inspection history and it must have 
satisfactorily addressed any objectionable conditions or practices 
identified during its most recent FDA inspection, if applicable.
    (c) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must comply with the applicable elements of current good 
manufacturing practice requirements, including but not limited to 
provisions regarding laboratory controls in Sec.  211.160 of this 
chapter and laboratory records in Sec.  211.194 of this chapter.


Sec.  251.16   Laboratory testing requirements.

    (a) The manufacturer or the Importer must arrange for eligible 
prescription drugs to be tested by a qualifying laboratory.
    (b) If the tests are conducted by the Importer, the manufacturer of 
the

[[Page 70836]]

prescription drug must supply to the Importer all information needed to 
authenticate the prescription drug being tested, including any 
necessary testing methodologies and protocols that the manufacturer has 
developed. The manufacturer must also provide the Importer with 
formulation information about the HPFB-approved drug and the FDA-
approved drug to facilitate authentication.
    (c) Testing done on a statistically valid sample of the batch or 
shipment, as applicable, must be sufficiently thorough to establish, in 
conjunction with data and information from the manufacturer, that the 
batch or shipment is eligible for importation under a SIP. The size of 
the sample must be large enough to enable a statistically valid 
statement to be made regarding the authenticity and stability of the 
quantity of the batch in the shipment or the entire shipment, as 
applicable.
    (d) The statistically valid sample of the HPFB-approved drug must 
be subjected to testing to confirm that the HPFB-approved drug meets 
the FDA-approved drug's specifications, including the analytical 
procedures and methods and the acceptance criteria. In addition, to 
testing for degradation, a stability-indicating assay provided by the 
manufacturer must be conducted on the sample of the drug that is 
proposed for import.
    (e) If the manufacturer performs the testing required under section 
804(e)(1) of the Federal Food, Drug, and Cosmetic Act at a qualifying 
laboratory, the testing results, a complete set of laboratory records, 
a detailed description of the selection method for the samples, the 
testing methods used, complete data derived from all tests necessary to 
ensure that the eligible prescription drug meets the specifications of 
the FDA-approved drug that are established in the NDA or ANDA, a 
Certificate of Analysis, and any other documentation demonstrating that 
the testing meets the requirements under section 804(e)(1) of the 
Federal Food, Drug, and Cosmetic Act must be submitted in electronic 
form directly to FDA via the ESG or to an alternative transmission 
point identified by FDA.
    (f) Regardless of whether testing under this section is performed 
by the manufacturer or Importer, the sample of a batch or shipment of 
drugs must be randomly selected for testing or, in the alternative, the 
sample must be selected to be representative of the quantity of the 
batch in a shipment or of a shipment, as applicable.
    (g) Information supplied under this part must be kept in strict 
confidence by the recipient and only for the purpose of testing or 
otherwise complying with this part.
    (h) To ensure that trade secret and commercial or financial 
information is protected:
    (1) The information that the manufacturer provides must not be 
disseminated except to the qualifying laboratory and to FDA; and
    (2) The SIP Sponsor must explain how it will ensure that the 
information is not disseminated beyond the qualifying laboratory.
    (i) FDA may transmit information that the manufacturer is required 
to provide to an Importer under this section on the manufacturer's 
behalf if the manufacturer has not transmitted such information to the 
Importer in a timely fashion and if such information is available to 
FDA in the NDA or ANDA.


Sec.  251.17   Importation requirements.

    (a) Importers must ensure that each shipment of eligible 
prescription drugs imported or offered for import pursuant to this part 
is accompanied by an import entry for consumption filed electronically 
as a formal entry in ACE, or another CBP-authorized electronic data 
interchange system, and designated in such a system as a drug imported 
pursuant to this part.
    (b) The Importer may make entry for consumption and arrival of 
shipments containing eligible prescription drugs only at the CBP port 
of entry authorized by FDA to import eligible prescription drugs under 
section 804 of the Federal Food, Drug, and Cosmetic Act. The Importer 
must keep the product at a designated secured warehouse, and under 
appropriate environmental conditions to maintain the integrity of the 
products, until FDA issues an admissibility decision. The secured 
warehouse must be within 30 miles of the authorized Port of Entry for 
examination.
    (c) If the entry for consumption is filed in ACE before the testing 
and relabeling of the eligible prescription drug, the Importer must 
submit an application to bring the drug into compliance and must 
relabel and test the drug in accordance with the plan approved by FDA 
pursuant to Sec. Sec.  1.95 and 1.96 of this chapter.
    (d) Upon arrival in the United States of an initial shipment that 
contains a batch of an eligible prescription drug identified in a Pre-
Import Request that has been granted by FDA, the Importer must select a 
statistically valid sample of that batch to send to a qualifying 
laboratory for Statutory Testing, unless the manufacturer conducts the 
Statutory Testing at a qualifying laboratory.
    (1) In the case of any subsequent shipment composed entirely of a 
batch of an eligible prescription drug that has already been tested in 
accordance with this part, the Importer must select a statistically 
valid sample of the shipment to send to a qualifying laboratory for 
Statutory Testing.
    (2) The Importer must send three sets of the samples sent to the 
qualifying laboratory in accordance with Sec.  251.16 to the FDA field 
lab identified by FDA when the Agency granted the Pre-Import Request.
    (3) The Importer must submit to FDA a complete set of laboratory 
records, a detailed description of the selection method for the sample 
of the eligible prescription drug sent to the qualifying laboratory, 
the testing methods used, complete data derived from all tests 
necessary to ensure that the eligible prescription drug meets the 
specifications of the FDA-approved drug that are established in the NDA 
or ANDA, a complete Certificate of Analysis, and all relevant 
documentation demonstrating that the testing meets the requirements 
under section 804(e)(1) of the Federal Food, Drug, and Cosmetic Act, as 
well as any additional information FDA deems necessary to evaluate 
whether the drug meets manufacturing, quality, and safety standards.
    (e) If the manufacturer conducts the Statutory Testing, upon 
arrival in the United States of an initial shipment that contains a 
batch of an eligible prescription drug identified in a Pre-Import 
Request that has been granted by FDA, the manufacturer must select a 
statistically valid sample of that batch to send to a qualifying 
laboratory for the Statutory Testing.
    (1) In the case of any subsequent shipment composed entirely of a 
batch or batches of an eligible prescription drug that has already been 
tested in accordance with this part, the manufacturer must select a 
statistically valid sample of that shipment to send to a qualifying 
laboratory for that Statutory Testing.
    (2) The manufacturer must send three sets of the samples the 
manufacturer sent to the qualifying laboratory in accordance with Sec.  
251.16 to the FDA field lab identified by FDA when the Agency granted 
the Pre-Import Request.
    (3) The manufacturer must submit to FDA, directly in electronic 
form to the ESG or to an alternative transmission point identified by 
FDA, a complete set of laboratory records, a detailed description of 
the selection method for the sample of the eligible prescription drug 
sent to the qualifying laboratory, the testing methods used, complete 
data

[[Page 70837]]

derived from all tests necessary to ensure that the eligible 
prescription drug meets the conditions in the FDA-approved drug's NDA 
or ANDA, a complete Certificate of Analysis, and all relevant 
documentation demonstrating that the testing meets the requirements 
under section 804(e)(1) of the Federal Food, Drug, and Cosmetic Act, as 
well as any additional information FDA deems necessary to evaluate 
whether the drug meets manufacturing, quality, and safety standards.
    (f) After FDA has reviewed the testing results provided by the 
Importer or manufacturer and determined that they are acceptable, FDA 
will notify the Importer and then the Importer must cause the eligible 
prescription drug to be relabeled with the required U.S. labeling.
    (g) After the eligible prescription drug has been shown by testing 
and relabeling to meet the requirements of section 804 of the Federal 
Food, Drug, and Cosmetic Act and this part, the Importer or the 
manufacturer must provide the written certification described in 
section 804(d)(1)(K) of the Federal Food, Drug, and Cosmetic Act to 
FDA.


Sec.  251.18   Post-importation requirements.

    (a) Stopping importation. If at any point a SIP Sponsor determines 
that a drug, manufacturer, Foreign Seller, Importer, qualifying 
laboratory, or other participant in or element of the supply chain in 
the authorized SIP does not in fact meet all applicable requirements of 
the Federal Food, Drug, and Cosmetic Act, FDA regulations, and the 
authorized SIP, the SIP Sponsor immediately must stop importation of 
all drugs under the SIP, notify FDA, and demonstrate to FDA that 
importation has in fact been stopped.
    (b) Field alert reports. Importers must submit NDA and ANDA field 
alert reports, as described in Sec. Sec.  314.81(b)(1) and 314.98 of 
this chapter, to the manufacturer and to FDA.
    (c) Additional reporting requirements for combination products. For 
combination products containing a device constituent part, Importers 
must submit the reports to the manufacturer and to FDA described in 
Sec.  4.102(c)(1) of this chapter and maintain the records described in 
Sec. Sec.  4.102(c)(1) and 4.105(b) of this chapter.
    (d) Adverse event and medication error reports. (1) Scope. An 
Importer must establish and maintain records and submit reports to FDA 
and the manufacturer of all adverse events and medication errors 
associated with the use of their drug products imported under this 
part.
    (2) Review of safety information. The Importer must promptly review 
all domestic safety information for the eligible prescription drugs 
obtained or otherwise received by the Importer.
    (3) Expedited ICSRs. The Importer must submit expedited ICSRs for 
each domestic adverse event or medication error to FDA and the 
manufacturer as soon as possible but no later than 15 calendar days 
from the date when the Importer has both met the reporting criteria 
described in this paragraph (d) and acquired a minimum data set for 
that adverse event or medication error.
    (i) Serious, unexpected adverse events. The Importer must submit 
expedited ICSRs for domestic adverse events reported to the Importer 
spontaneously (such as reports initiated by a patient, consumer, or 
healthcare professional) that are both serious and unexpected, whether 
or not the Importer believes the events are related to the product.
    (ii) Other adverse event reports to be expedited upon notification 
by FDA. Upon notification by FDA, the Importer must submit as expedited 
ICSRs any adverse event reports that do not qualify for expedited 
reporting under paragraph (d)(3)(i) of this section. The notice will 
specify the adverse events to be reported and the reason for requiring 
the expedited reports.
    (iii) ICSRs for medication errors. The Importer must submit an 
expedited ICSR for each domestic medication error. If the report also 
involves one or more adverse events, the Importer must comply with all 
adverse event reporting requirements in this section and submit one 
ICSR describing both the medication error and the adverse event(s).
    (4) Followup reports for expedited ICSRs. The Importer must 
actively seek any missing data elements under paragraph (d)(7) of this 
section or updated information for any previously submitted expedited 
ICSR under paragraph (d)(3) of this section. The Importer must also 
investigate any new information it obtains or otherwise receives about 
previously submitted expedited ICSRs. The Importer must submit followup 
reports for expedited ICSRs to FDA and the manufacturer, as soon as 
possible, but no later than 15 calendar days after obtaining the new 
information. The Importer must document and maintain records of their 
efforts to obtain missing or incomplete information.
    (5) Nonexpedited ICSRs. The Importer must submit an ICSR for each 
domestic adverse event not reported under paragraph (d)(3)(i) of this 
section (all serious, expected and nonserious adverse drug experiences) 
to FDA and the manufacturer within 90 days from the date when the 
Importer has both met the reporting criteria described in this 
paragraph (d) and acquired a minimum data set for that adverse event.
    (6) Completing and submitting safety reports. This paragraph (d)(6) 
describes how to complete and submit expedited ICSRs required under 
this section. Additionally, upon written notice, FDA may require the 
Importer to submit any of this section's adverse event and medication 
error safety reports at a different time period than identified in 
other paragraphs.
    (i) Electronic format for submissions. (A) ICSR and ICSR 
attachments must be submitted in an electronic format that FDA can 
process, review, and archive, as described in Sec.  314.80(g)(1) of 
this chapter.
    (B) The Importer may request, in writing, a temporary waiver of the 
requirements in paragraph (d)(6)(i)(A) of this section, as described in 
Sec.  314.80(g)(2) of this chapter. These waivers will be granted on a 
limited basis for good cause shown.
    (ii) Completing and submitting ICSRs.
    (A) Single submission. Submit each ICSR only once.
    (B) Labeling. Each ICSR must be accompanied by a copy of the 
current U.S. labeling as an ICSR attachment unless it is already on 
file at FDA as part of the SIP.
    (C) Separate ICSR. The Importer must submit a separate ICSR for:
    (1) Each patient who experiences an adverse event reportable under 
paragraphs (d)(3)(i) or (ii), (d)(4), or (d)(5) of this section.
    (2) Each medication error reportable under paragraph (d)(3)(iii) of 
this section. For reports that include both a medication error and an 
adverse event, the Importer need only submit one ICSR describing both 
the medication error and the adverse event.
    (D) Coding terms. The adverse event and medication error terms 
described in the ICSR must be coded using standardized medical 
terminology.
    (E) Minimum data set. All ICSRs submitted under this section must 
contain at least the minimum data set appropriate to the type of report 
(adverse event or medication error). The Importer must actively seek 
the minimum data set in a manner consistent with its written procedures 
under paragraph (d)(9) of this section. The Importer must document and 
maintain records of their efforts to obtain the minimum data set.
    (F) ICSR elements. The Importer must complete all available 
elements of an

[[Page 70838]]

ICSR as specified in paragraph (d)(7) of this section.
    (1) The Importer must actively seek any information needed to 
complete all applicable elements, consistent with their written 
procedures under paragraph (d)(9) of this section.
    (2) The Importer must document and maintain records of their 
efforts to obtain the missing information.
    (G) Supporting documentation. When submitting supporting 
documentation for expedited ICSRs of adverse events, the Importer must:
    (1) Submit for each ICSR for a domestic adverse event, if 
available, a copy of the autopsy report if the patient died, or a copy 
of the hospital discharge summary if the patient was hospitalized. The 
Importer must submit each document as an ICSR attachment. The ICSR 
attachment must be submitted either with the initial ICSR or no later 
than 15 calendar days after obtaining the document.
    (2) Include in the ICSR a list of available, relevant documents 
(such as medical records, laboratory results, death certificates) that 
are held in their drug product safety files. Upon written notice from 
FDA, the Importer must submit a copy of these documents within 5 
calendar days of the FDA notice.
    (7) Information reported on ICSRs. ICSRs must include the following 
information:
    (i) Patient information, which includes:
    (A) Patient identification code;
    (B) Patient age at the time of adverse event or medication error, 
or date of birth;
    (C) Patient gender; and
    (D) Patient weight.
    (ii) Adverse event or medication error.
    (A) Outcome attributed to adverse event or medication error;
    (B) Date of adverse event or medication error;
    (C) Date of ICSR submission;
    (D) Description of adverse event or medication error (including a 
concise medical narrative);
    (E) Adverse drug event or medication error terms(s);
    (F) Description of relevant tests, including dates and laboratory 
data; and
    (G) Other relevant patient history, including preexisting medical 
conditions.
    (iii) Suspect medical product(s), which includes:
    (A) Name;
    (B) Dose, frequency, and route of administration used;
    (C) Therapy dates;
    (D) Diagnosis for use (indication);
    (E) Whether the product is a combination product;
    (F) Whether adverse event abated after drug use stopped or dose 
reduced;
    (G) Whether adverse event reappeared after reintroduction of drug;
    (H) Lot number;
    (I) Expiration date;
    (J) NDC; and
    (K) Concomitant medical products and therapy dates.
    (iv) Initial reporter information.
    (A) Name, address, and telephone number;
    (B) Whether the initial reporter is a healthcare professional; and
    (C) Occupation, if a healthcare professional.
    (v) Importer information, which includes:
    (A) Importer name and contact office address;
    (B) Importer telephone number;
    (C) Date the report was received by the Importer;
    (D) Whether the ICSR is an expedited report;
    (E) Whether the ICSR is an initial report or followup report; and
    (F) Unique case identification number, which must be the same in 
the initial report and any subsequent followup report(s).
    (8) Recordkeeping.
    (i) For a period of 10 years from the initial receipt of 
information, the Importer must maintain records of information relating 
to adverse events and medication error safety reports under this 
section, whether or not submitted to FDA.
    (ii) These records must include raw data, correspondence, and any 
other information relating to the evaluation and reporting of adverse 
events and medication error safety information that is obtained by the 
Importer.
    (iii) Upon written notice by FDA, the Importer must submit any or 
all of these records to FDA within 5 calendar days after receipt of the 
notice. The Importer must permit any authorized FDA employee, at 
reasonable times, to access, copy, and verify its established and 
maintained records described in this section.
    (9) Written procedures. The Importer must develop, maintain, and 
follow written procedures needed to fulfill the requirements in this 
section for the surveillance, receipt, evaluation, and reporting to FDA 
and the manufacturer of adverse events and medication error safety 
information, including procedures for employee training, and for 
obtaining and processing safety information from the Foreign Seller.
    (10) Patient privacy. The Importer must not include in reports 
under this section the names and addresses of individual patients; 
instead, the Importer must assign a unique code for identification of 
the patient. The Importer must include the name of the reporter from 
whom the information was received as part of the initial reporter 
information, even when the reporter is the patient. The names of 
patients, individual reporters, healthcare professionals, hospitals, 
and geographical identifiers in reports are not releasable to the 
public under FDA's public information regulations in part 20 of this 
chapter.
    (11) Safety reporting disclaimer. (i) A report or information 
submitted by the Importer under this section (and any release by FDA of 
that report or information) does not necessarily reflect a conclusion 
by the Importer or by FDA that the report or information constitutes an 
admission that the eligible prescription drug imported under section 
804 of the Federal Food, Drug, and Cosmetic Act caused or contributed 
to an adverse event or a medication error.
    (ii) The Importer need not admit, and may deny, that the report or 
information submitted as described in this section constitutes an 
admission that the drug product caused or contributed to an adverse 
event or a medication error.
    (e) Drug recalls. (1) The SIP Sponsor must establish a procedure to 
track the public announcements of the manufacturer of each drug they 
import under section 804 of the Federal Food, Drug, and Cosmetic Act 
and they must also monitor FDA's recall website for recall or market 
withdrawal information relevant to the drugs that they import under 
section 804.
    (2) If FDA or any participant in a SIP determines that a recall is 
warranted, the SIP Sponsor must effectuate the recall in accordance 
with its written recall plan under paragraph (e)(3) of this section.
    (3) A SIP must have a written recall plan that describes the 
procedures to perform a recall of the product and specifies who will be 
responsible for performing the procedures. The recall plan must cover 
recalls initiated by FDA, recalls initiated by the Foreign Seller or by 
the Importer, and recalls initiated by a drug's manufacturer, with 
which the Foreign Seller and/or Importer must cooperate. The recall 
plan must include sufficient procedures for the SIP to:
    (i) Immediately cease distribution of the drugs affected by the 
recall;
    (ii) Directly notify consignees of the drug(s) included in the 
recall, including how to return or dispose of the recalled drugs;
    (iii) Specify the depth to which the recall will extend (e.g., 
wholesale,

[[Page 70839]]

intermediate wholesale, retail or consumer level);
    (iv) Notify the public about any hazard(s) presented by the 
recalled drug when appropriate to protect the public health;
    (v) Conduct effectiveness checks to verify that all consignees at 
the specified recall depth have received notification about the recall 
and have taken appropriate action;
    (vi) Appropriately dispose of recalled product; and
    (vii) Notify FDA of the recall.
    (4) In the event of a recall, Importers and Foreign sellers must, 
upon request by FDA, provide transaction history, information, and 
statement (as these terms are defined in sections 581(25), 581(26), and 
581(27) of the Federal Food, Drug, and Cosmetic Act).


Sec.  251.19   Reports to FDA.

    (a) A SIP Sponsor must submit a report to FDA each quarter 
containing the information set forth in this section, beginning after 
the SIP Sponsor files an electronic import entry for consumption for 
its first shipment of drugs under the SIP. If the SIP Sponsor specifies 
in such report that the information contained in the report is being 
transmitted on behalf of the Importer and in order to fulfill the 
Importer's obligation under Sec.  251.12, the Importer need not 
separately submit such information to FDA.
    (b) The report must contain the following information:
    (1) The name, address, telephone number, and professional license 
number (if any) of the Importer;
    (2) The name and quantity of the active ingredient of the imported 
eligible prescription drug(s);
    (3) A description of the dosage form of the eligible prescription 
drugs;
    (4) The date(s) on which the eligible prescription drug(s) were 
shipped;
    (5) The quantity of the eligible prescription drug(s) that was 
shipped;
    (6) The lot or control number assigned to the eligible prescription 
drug(s) by the manufacturer of the eligible prescription drug(s);
    (7) The point of origin (i.e., the manufacturer) and the 
destination (i.e., the wholesaler, pharmacy, or patient to whom the 
Importer sells the drug) of the eligible prescription drug(s);
    (8) The per unit price paid by the Importer for the prescription 
drug(s) in U.S. dollars; and
    (9) Any other information that FDA determines is necessary for the 
protection of the public health.
    (c) The Importer must also confirm that the eligible prescription 
drugs was bought directly from the manufacturer by the Foreign Seller 
and that the Foreign Seller sold the eligible prescription drug(s) 
directly to the Importer.
    (d) The report must include the following documentation:
    (1) Documentation from the Foreign Seller specifying the 
manufacturer of each eligible prescription drug and the quantity of 
each lot of the eligible prescription drug(s) received by the Foreign 
Seller from that manufacturer;
    (2) Documentation demonstrating that the eligible prescription drug 
was received by the Foreign Seller from the manufacturer and 
subsequently shipped by the Foreign Seller to the Importer;
    (3) Documentation of the quantity of each lot of the eligible 
prescription drug(s) received by the Foreign Seller demonstrating that 
the quantity being imported into the United States is not more than the 
quantity that was received by the Foreign Seller;
    (4) Documentation demonstrating that the sampling and testing 
requirements described in section 804(d)(1)(J)(i)(III) of the Federal 
Food, Drug, and Cosmetic Act were met for each shipment of each 
eligible prescription drug.
    (e) The report must include certifications from the Importer for 
each shipment of each eligible prescription drug that the drug is 
approved for marketing in the United States and is not adulterated or 
misbranded and meets all labeling requirements under the Federal Food, 
Drug, and Cosmetic Act. This certification must include:
    (1) That there is an authorized SIP.
    (2) That the imported drug is covered by the authorized SIP.
    (3) That the drug is an eligible prescription drug as defined in 
this part.
    (4) That the FDA-approved counterpart of the drug is currently 
commercially marketed in the United States.
    (5) That the drug is approved for marketing in Canada.
    (6) That the drug is not adulterated or misbranded and meets all 
labeling requirements under the Federal Food, Drug, and Cosmetic Act.
    (f) The report must include laboratory records, including complete 
data derived from all tests necessary to ensure that each eligible 
prescription drug is in compliance with established specifications and 
standards, and documentation demonstrating that the Statutory Testing 
was conducted at a qualifying laboratory, unless the manufacturer 
conducted the testing and submitted this information directly to FDA.
    (g) The report must include data, information, and analysis on the 
SIP's cost savings to the American consumer for the drugs imported 
under the SIP.


Sec.  251.20   Severability.

    The provisions of this part are not separate and are not severable 
from one another. If any provision is stayed or determined to be 
invalid, the remaining provisions shall not continue in effect.


Sec.  251.21   Consequences for violations.

    (a) An article that is imported or offered for import into the 
United States in violation of section 804 of the Federal Food, Drug, 
and Cosmetic Act or this part is subject to refusal under section 801 
of the Federal Food, Drug, and Cosmetic Act.
    (b) The importation of a prescription drug in violation of section 
804 of the Federal Food, Drug, and Cosmetic Act, the falsification of 
any record required to be maintained or provided to FDA under such 
section, or any other violation of this part is a prohibited act under 
section 301(aa) of the Federal Food, Drug, and Cosmetic Act.

    Dated: December 11, 2019.
Brett P. Giroir,
Acting Commissioner of Food and Drugs.
[FR Doc. 2019-27474 Filed 12-18-19; 8:45 am]
 BILLING CODE 4164-01-P


