[Federal Register Volume 85, Number 191 (Thursday, October 1, 2020)]
[Rules and Regulations]
[Pages 62094-62140]
[FR Doc No: 2020-21522]

Vol. 85

Thursday,

No. 191

October 1, 2020

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; Final Rule

Federal Register / Vol. 85 , No. 191 / Thursday, October 1, 2020 /
Rules and Regulations

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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, Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: The Secretary of Health and Human Services (Secretary) is
issuing a final rule to implement a provision of the Federal Food,
Drug, and Cosmetic Act (FD&C Act) to allow importation of certain
prescription drugs from Canada. Under this final rule, States and
Indian Tribes, and in certain future circumstances pharmacists and
wholesalers, may submit importation program proposals to the Food and
Drug Administration (FDA, the Agency, or we) for review and
authorization. An importation program may be cosponsored by a State,
Indian Tribe, pharmacist, or wholesaler. The final rule contains all
requirements necessary for a sponsor to demonstrate that their
importation program will pose no additional risk to the public's health
and safety. In addition, the final rule requires that the sponsor
explain how they will ensure their program will result in a significant
reduction in the cost of covered products to the American consumer.

DATES: This final rule is effective November 30, 2020.

ADDRESSES: For access to the docket to read background documents or
comments received, go to https://www.regulations.gov and insert the
docket number found in brackets in the heading of this final rule into
the ``Search'' box and follow the prompts, and/or go to the Dockets
Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: With regard to the final rule: Lyndsay
Hennessey, Center for Drug Evaluation and Research, Food and Drug
Administration, 10903 New Hampshire Ave., Silver Spring, MD 20993, 301-
796-7605.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of the Final Rule
    B. Summary of the Major Provisions of the Final Rule
    C. Legal Authority
    D. Costs and Benefits
II. Table of Abbreviations/Commonly Used Acronyms in This Document
III. Background
    A. Need for the Regulation/History of the Rulemaking
    B. Summary of Comments to the Proposed Rule
IV. Legal Authority
V. Comments on the Proposed Rule and FDA Response
    A. Introduction
    B. Description of General Comments and FDA Response
    C. Comments on General Provisions
    D. Comments on SIP Proposals and Pre-Import Requests
    E. Comments on Certain Requirements for Section 804 Importation
Programs
    F. Certification
    G. FD&C Act Requirements
    H. First Amendment
    I. Fifth Amendment Takings
    J. Disclosure
    K. FDA Authority
    L. Procedural Requirements
    M. Technical Amendments
VI. Effective/Compliance Date(s)
VII. 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 Final Rule

    The Secretary is issuing this rule 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 final rule is to achieve a significant reduction in the
cost of covered products to the American consumer while posing no
additional risk to the public's health and safety.

B. Summary of the Major Provisions of the Final Rule

    Under the final rule, section 804 of the FD&C Act will be
implemented through time-limited Section 804 Importation Programs
(SIPs), which will be authorized by FDA and managed by States or Indian
Tribes, or in certain circumstances by pharmacists or wholesale
distributors (SIP Sponsors). A SIP can be cosponsored by a State,
Indian Tribe, pharmacist, or wholesale distributor.
    The final rule requires that a SIP Sponsor specify the eligible
prescription drugs that will be included in the SIP. To be eligible
under the final rule, a drug needs to be approved by the Government of
Canada's Health Canada's Health Products and Food Branch (HPFB) and,
but for the fact it bears the HPFB-approved labeling when marketed in
Canada, needs 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.
    The final rule also requires that the SIP Proposal 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.
Although the initial SIP Proposal will identify just one Foreign Seller
and one Importer, if a SIP can show that it has consistently imported
eligible prescription drug(s) in accordance with section 804 of the
FD&C Act and the rule, the SIP Sponsor will be able to submit a
supplemental proposal to add Foreign Sellers or Importers. Each supply
chain under a SIP must be limited to three entities, i.e., one
manufacturer, one Foreign Seller, and one Importer.
    The final rule requires that the Foreign Seller be licensed to
wholesale drugs by Health Canada and registered with FDA as a Foreign
Seller, and that the Importer be a wholesale distributor or pharmacist
licensed to operate in the United States. Both the Foreign Seller and
the Importer will be subject to the supply chain security requirements
set forth in this rulemaking and under the FD&C Act. Among other
things, the Foreign Seller has to ensure that a section 804 serial
identifier (SSI), which is an alphanumeric serial number unique to each
package or homogenous case, is affixed to or imprinted on each package
and homogenous case of the drugs. The Importer has 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 to or imprinted on each package and
homogenous case of eligible prescription drugs received from the
Foreign Seller. The final rule clarifies that the lot number that is
included as part of the product identifier is the number that was
assigned by the manufacturer of the eligible prescription drug;
separately, section 804(d)(1)(H) of the FD&C Act requires that the
Importer shall submit it to the Secretary. The Importer also has to
maintain records linking the product identifier affixed to or imprinted
on a package and

homogenous case to the SSI that the Foreign Seller assigned. The
Foreign Seller must maintain records associating the SSI with the drug
identification number (DIN) from the HPFB and all the records the
Foreign Seller received from the manufacturer upon receipt of the
original shipment intended for the Canadian market.
    After FDA has authorized a SIP Proposal, the Importer must submit a
Pre-Import Request to FDA at least 30 calendar days before the
scheduled date of arrival or entry for consumption of a shipment
containing an eligible prescription drug covered by the SIP, whichever
is earlier. ``Entered for consumption,'' as defined in 19 CFR
141.0a(f), is the most common entry type for FDA-regulated products and
is used when products are imported for use in the United States and go
directly into United States commerce without any restrictions of time
or use placed on them. Once the shipment arrives or is entered at a
port of entry, it may be examined by a government agency.
    Entry and arrival of a shipment containing an eligible prescription
drug is limited under the final rule to the U.S. Customs and Border
Protection (CBP) port of entry authorized by FDA. The Importer or its
authorized customs broker is 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 must be filed as formal entries. If an eligible
prescription drug that is imported or offered for import does not
comply with section 804 of the FD&C Act and the provisions of this
final rule, that drug will be subject to refusal under section 801 of
the FD&C Act (21 U.S.C. 381).
    In accordance with section 804(e)(1) of the FD&C Act, the final
rule requires the manufacturer or the Importer to conduct testing of
the eligible prescription drugs for authenticity, degradation, and to
ensure that the eligible prescription drugs are in compliance with
established specifications and standards (Statutory Testing). If the
manufacturer does not perform the Statutory Testing required under
section 804 of the FD&C Act, the Importer must arrange for Statutory
Testing by a qualifying laboratory in the United States and must also
ensure that the drug complies with all labeling requirements under the
FD&C Act. If such testing is performed by the Importer, section
804(e)(2) requires that the manufacturer of the eligible prescription
drug 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 final rule, FDA requires that
the manufacturer provide the Importer with, among other things,
protocols to support required testing, including a validated stability-
indicating assay so the drug can be tested for degradation.
    Under the final 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 and then conduct the required Statutory Testing and
relabeling; or alternatively, the Importer can file an entry for
consumption and request to recondition the drug or drugs, which would
include the required testing and relabeling. Under the final rule, the
results of this testing will be subject to review and acceptance by
FDA, and subsequently, the drug has to be relabeled to be consistent
with the FDA-approved labeling before the drug can be distributed in
the United States.
    Pursuant to section 804(c)(3) of the FD&C Act, the final rule also
sets forth post-importation requirements. Each SIP Sponsor is required
to provide FDA with data and information about its SIP, including the
SIP's cost savings to the American consumer. An Importer is required to
submit adverse event, 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 is responsible for
effectuating the recall. The final rule requires 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
those procedures.
    A SIP is eligible for extension by FDA before the end of its
authorization period. A SIP may also be terminated by FDA at any time
for the reasons outlined in this final rule.

C. Legal Authority

    Section 804(l)(1) of the FD&C Act provides that section 804 becomes
effective only if the Secretary certifies to Congress that the
implementation of this section will pose no additional risk to the
public's health and safety, and will result in a significant reduction
in the cost of covered products to the American consumer. The Secretary
is making this certification with regard to section 804(b) through (h)
to Congress concurrent with the issuance of this final rule. The
Secretary is issuing this final rule regarding importation of
prescription drugs under section 804(b) through (h) of the FD&C Act.
The final rule is also being issued pursuant to the Secretary'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); the Secretary's
authorities with regard to wholesale distribution under section 503(e)
of the FD&C Act (21 U.S.C. 353(e)); the Secretary's authority related
to new drugs under section 505 of the FD&C Act (21 U.S.C. 355); the
Secretary's authorities related to pharmaceutical supply chain security
in sections 581 and 582 of the FD&C Act (21 U.S.C. 360eee and 360eee-
1); the Secretary's authority related to inspection under section 704
of the FD&C Act (21 U.S.C. 374); and the Secretary's authority related
to rulemaking under section 701(a) of the FD&C Act (21 U.S.C. 371(a)).

D. Costs and Benefits

    The final rule allows commercial importation of certain
prescription drugs from Canada through time-limited programs sponsored
by a State or Indian Tribe, or in certain future circumstances by a
pharmacist or wholesale distributor, with possible cosponsorship by a
State, Indian Tribe, pharmacist, or wholesale distributor. If such
programs are authorized and implemented, allowing Importers to leverage
drug price differences between the United States and Canada for the
eligible prescription drugs identified in the SIP, these programs will
result in cost savings for the American consumer.
    Costs of the final rule may accrue to the Federal Government, SIP
Sponsors, Importers, and manufacturers of imported drugs. The Federal
Government will incur costs to implement the final rule and conduct
oversight of authorized programs. SIP Sponsors will face costs to
prepare proposals, implement authorized programs, and produce records
and program reports. Drug manufacturers will have to provide certain
information to Importers if their drugs are imported into the United
States from Canada by a SIP. SIPs may offer cost savings to patients,
as well as participating States, Indian Tribes, wholesale distributors,
pharmacies, hospitals, and third-party payers. As SIP Sponsors and
Importers realize savings in acquiring eligible prescription drugs and
pass some of these savings on to consumers, it is possible that U.S.-
based drug manufacturers may experience a transfer in U.S. sales
revenues to these parties.
    We are unable to estimate the cost savings from this final rule
because we lack information about the likely size and scope of SIPs,
the specific eligible prescription drugs that may be

imported, the degree to which these imported drugs will be less
expensive than non-imported drugs available in the United States, and
which eligible prescription drugs are produced by U.S.-based drug
manufacturers.

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

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                    Abbreviation                                             What it means
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ACE.................................................  Automated Commercial Environment or any Other Electronic
                                                       Data Interchange System authorized by U.S. Customs and
                                                       Border Protection.
ANDA................................................  Abbreviated New Drug Application.
ANSI................................................  American National Standards Institute.
APA.................................................  Administrative Procedure Act.
API.................................................  Active Pharmaceutical Ingredient.
BLA.................................................  Biologics License Application.
BPCI Act............................................  Biologics Price Competition and Innovation Act of 2009.
CBP.................................................  U.S. Customs and Border Protection.
CDER................................................  Center for Drug Evaluation and Research.
CGMP................................................  Current Good Manufacturing Practice.
DIN.................................................  Drug Identification Number.
DSCSA...............................................  Drug Supply Chain Security Act.
ESG.................................................  Electronic Submissions Gateway.
FDA.................................................  Food and Drug Administration.
FD&C Act............................................  Federal Food, Drug, and Cosmetic Act.
HHS.................................................  Health and Human Services.
HPFB................................................  Health Canada Health Products and Food Branch.
ICSR................................................  Individual Case Safety Reports.
MMA.................................................  Medicare Prescription Drug, Improvement, and Modernization
                                                       Act of 2003.
NDA.................................................  New Drug Application.
NDC.................................................  National Drug Code.
NPRM................................................  Notice of Proposed Rulemaking.
OMB.................................................  Office of Management and Budget.
PHS Act.............................................  Public Health Service Act.
REMS................................................  Risk Evaluation and Mitigation Strategies.
RWD.................................................  Real-World Data.
RWE.................................................  Real-World Evidence.
SIP.................................................  Section 804 Importation Program.
SSI.................................................  Section 804 Serial Identifier.
TRIPS...............................................  Trade-Related Aspects of Intellectual Property Rights.
USP.................................................  United States Pharmacopeia.
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III. Background

A. Need for the Regulation/History of the Rulemaking

    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, 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. Since the passage of
the MMA, the Commissioner of Customs is now known as the Commissioner
of CBP. For section 804 of the FD&C Act to become effective, the
Secretary 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.
    As described in the notice of proposed rulemaking (NPRM), 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 Health and Human Services (HHS)
Secretary has made the certification required under section 804(l)(1)
to begin implementing any part of section 804 of the FD&C Act.
    In the Federal Register of December 23, 2019 (84 FR 70796), FDA
published a proposed rule to implement section 804(b) through (h) of
the FD&C Act to allow importation of certain prescription drugs from
Canada.
    Executive Order 13938 of July 24, 2020 (85 FR 45757), directs the
Secretary, as appropriate and consistent with applicable law, to take
action to expand safe access to lower-cost imported prescription drugs
by, among other things, completing the rulemaking process regarding the
proposed rule to implement section 804(b) through (h) of the FD&C Act
to allow importation of certain prescription drugs from Canada.

B. Summary of Comments to the Proposed Rule

    We received over 1,200 comment letters on the proposed rule by the
close of the comment period. We received comments from consumers,
consumer groups, trade organizations, industry, public health
organizations, public advocacy groups, States, Canadian entities
(including governmental agencies), and others. These comments addressed
nearly every aspect of the proposed rule and a number responded to
specific FDA requests for comment.

IV. Legal Authority

    Section 804(l)(1) of the FD&C Act provides that section 804 becomes
effective only if the Secretary certifies to Congress that the
implementation of this section will pose no additional risk to the
public's health and safety and will result in a significant reduction
in the cost of covered products to the American consumer. The Secretary
is making this certification with regard to section 804(b) through (h)
to Congress concurrent with the issuance of this final rule. The
Secretary is issuing this final rule under the Secretary's rulemaking
authority regarding importation of prescription drugs under section
804(b) through (h) of the FD&C Act. The final rule is also being issued
pursuant to the Secretary's authorities related to adulterated and
misbranded

drugs under sections 501 and 502 of the FD&C Act; the Secretary's
authorities with regard to wholesale distribution under section 503(e)
of the FD&C Act; the Secretary's authority related to new drugs under
section 505 of the FD&C Act; the Secretary's authorities related to
pharmaceutical supply chain security in sections 581 and 582 of the
FD&C Act; the Secretary's authority related to inspection under section
704 of the FD&C Act; and the Secretary's authority related to
rulemaking under section 701(a) of the FD&C Act (21 U.S.C. 371(a)).

V. Comments on the Proposed Rule and FDA Response

A. Introduction

    We describe and respond to comments on the proposed rule in
sections V.B through L. We have numbered each comment to help
distinguish between different comments. We have grouped similar
comments together under the same number, and, in some cases, we have
separated different issues discussed in the same comment and designated
them as distinct comments for purposes of our responses. The number
assigned to each comment or comment topic is purely for organizational
purposes and does not signify the comment's value or importance or the
order in which comments were received. The Agency also received a
number of comments that were outside the scope of the proposed rule and
therefore were not considered in its final development and are not
discussed here.

B. Description of General Comments and FDA Response

    Many comments made general remarks supporting or opposing the
proposed rule without focusing on a particular proposed provision. In
the following paragraphs, we discuss and respond to such general
comments.
    (Comment 1) Several comments assert that limitations on the volume
of eligible prescription drugs that could be imported, due to the
geographic restriction to Canada and supply of prescription drug
products in Canada, could limit the overall program's effectiveness in
reducing U.S. prescription drug costs.
    (Response 1) The final rule affords significant flexibility to SIPs
to choose which eligible prescription drugs to import and in what
quantities. This flexibility could allow SIPs to make adjustments in
response to the supply of eligible prescription drugs available for
importation. In addition, several potential SIP Sponsors have indicated
in comments that they believe they can implement a SIP that, if
authorized by FDA, will achieve a significant reduction in the cost of
covered products to the American consumer with no additional risk to
the public's health and safety.
    (Comment 2) Several comments ask FDA to expand the proposed rule to
implement section 804(j) of the FD&C Act to allow personal importation
of certain prescription drugs. Several comments support FDA's decision
not to address in this rulemaking personal importation under section
804(j).
    (Response 2) We are not implementing the personal importation
provisions in section 804(j) of the FD&C Act through this rulemaking.
We note that Executive Order 13938 of July 24, 2020, directs the
Secretary, as appropriate and consistent with applicable law, to take
action to expand safe access to lower-cost imported prescription drugs
by, among other things, facilitating grants to individuals of waivers
of the prohibition of importation of prescription drugs, provided such
importation poses no additional risk to public safety and results in
lower costs to American patients, pursuant to section 804(j)(2) of the
FD&C Act.

C. Comments on General Provisions

    (Comment 3) Several comments recommend expanding the definition of
``eligible prescription drug,'' in particular to include biological
products.
    (Response 3) Section 804(a)(3) of the FD&C Act excludes several
categories of drug products from the definition of ``prescription
drug'' that can potentially be imported from Canada pursuant to section
804 of the FD&C Act, including controlled substances, biological
products (as defined in section 351 of the Public Health Service Act
(PHS Act) (42 U.S.C. 262)), infused drugs (including a peritoneal
dialysis solution), intravenously injected drugs, and drugs that are
inhaled during surgery.
    (Comment 4) Several comments suggest that some risk evaluation and
mitigation strategies (REMS) could be implemented effectively under a
SIP with no additional risk, so drugs that are subject to REMS should
not be excluded from the definition of ``eligible prescription drug.''
    (Response 4) As discussed in the NPRM (84 FR 70796 at 70804), 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, for REMS that
require tight controls on distribution of a drug in order to mitigate
risks, use of Foreign Sellers will make it much more difficult to
maintain those controls and could introduce gaps that have a
significant impact on the safety of the drug.
    (Comment 5) Several comments recommend excluding certain other
types of drug products from the definition of ``eligible prescription
drug.'' One comment suggests that the definition of ``eligible
prescription drug'' should be limited to sole-source drugs and exclude
drugs with remaining patents or exclusivities, drugs subject to post-
marketing commitments or requirements, and drugs considered biologics
in Canada. In addition, several comments request clarification
regarding criteria FDA may use in determining whether a particular drug
product can be imported safely in the context of a specific SIP
Proposal.
    (Response 5) At this time, FDA is not excluding additional
categories from the final rule. For products not excluded by the final
rule, FDA will determine whether the product can be imported safely in
the context of a specific SIP Proposal on a product-by-product basis,
including, for example, sterile drugs; drugs requiring special storage
conditions such as temperature controls; or drugs intended to be used
solely with a specific, separately distributed delivery system (such as
may be the case for drug constituent parts of cross-labeled combination
products, see 21 CFR 3.2(e)(3), (4)). 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.
    (Comment 6) Several comments raise concerns about SIPs potentially
turning to online pharmacies as Foreign Sellers.
    (Response 6) We are not changing the rule based on these comments,
as the final rule includes provisions to safeguard against a SIP
turning to rogue online pharmacies as Foreign Sellers. As discussed in
the NPRM, while there are pharmacy websites that operate legally and
offer convenience, privacy, and safeguards for purchasing medicines, we
agree that 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 (Refs. 1 and 2). The final rule defines ``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. The final rule further provides that a Foreign Seller
must have an active drug establishment license to wholesale drugs by
Health Canada and must be registered with provincial regulatory
authorities to distribute HPFB-approved drugs. The final rule also
requires that a Foreign Seller cannot be licensed by a provincial
regulatory authority with an international pharmacy license that allows
it to distribute drugs that are 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 FD&C
Act. The final rule also includes a number of supply chain requirements
for Foreign Sellers. Moreover, FDA retains the authority not to approve
a SIP, or to discontinue a SIP, absent a continued demonstration that
the Foreign Seller meets all the relevant safety criteria.
    (Comment 7) One comment proposes that FDA revise the definition of
the term ``manufacturer'' to include only an applicant, as defined in
Sec.  314.3 (21 CFR 314.3), who owns an approved NDA or ANDA for an
eligible prescription drug.
    (Response 7) As described in the NPRM, under the rule the term
``manufacturer'' includes an applicant, as defined in Sec.  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 conduct the
Statutory Testing, prepare the manufacturer's attestation and
information statement, or otherwise comply with section 804 of the FD&C
Act or this part. We decline to change this definition because we
continue to believe that a person that owns or operates an
establishment that manufactures an eligible prescription drug or a
holder of a drug master file containing information necessary to
conduct the Statutory Testing or prepare the manufacturer's attestation
and information statement may have information about eligible
prescription drugs that will be needed to ensure that the drugs comply
with the FD&C Act and the requirements in this final rule. An Importer
will determine which manufacturer, as defined in the rule, has the
information needed, in particular for the Pre-Import Request, and will
send a request for information to the appropriate manufacturer, which
might not be the applicant. For example, the Importer may send a
request for batch and stability testing records to the facility that
manufactured the eligible prescription drug and that entity would be
required to provide those records if the records are in the facility's
possession or control.
    (Comment 8) Several comments request that the definition of ``SIP
Sponsor'' include a State agency that a State has authorized to submit
a SIP Proposal even if the State agency does not otherwise oversee
pharmacies and wholesaler distributors.
    (Response 8) FDA has revised the definition of the term ``SIP
Sponsor'' to clarify that the term means a State or Indian Tribe that
regulates wholesale drug distribution or the practice of pharmacy,
submits a proposal to FDA that describes a program to facilitate the
importation of prescription drugs from Canada under section 804 of the
FD&C Act, and is responsible for oversight of the implementation of the
program. Under section 201 of the FD&C Act (21 U.S.C. 321), the term
``State'' generally means any State or Territory of the United States,
the District of Columbia, and the Commonwealth of Puerto Rico. In
certain circumstances, a pharmacist or wholesale distributor may be a
SIP Sponsor. FDA has also added a separate definition for the term
``SIP Co-Sponsor,'' which means any other State, Indian Tribe,
pharmacist, or wholesale distributor that, with the SIP Sponsor, signs
a SIP Proposal. A State agency that a State has authorized to submit a
SIP Proposal may submit a SIP Proposal on behalf of the State, even if
the State agency does not otherwise oversee pharmacists and wholesale
distributors. We note that a SIP Proposal must, among other things,
explain how the SIP Sponsor will ensure that all the participants in
the SIP comply with the requirements of section 804 and this rule and
describe the procedures the SIP Sponsor will use to ensure that
requirements are met.
    (Comment 9) Several comments suggest that the rule be changed to
allow pharmacists or wholesalers to be SIP Sponsors without a State or
Indian Tribe as a cosponsor. Some of these comments assert, for
example, that pharmacists and wholesalers operate under robust
regulatory requirements and that oversight by a State or Tribe would be
redundant and could lead to an increase in administrative costs that
would decrease the savings to American consumers under the program.
Some comments assert that State sponsorship could result in individual
SIP differences that will complicate the distribution and tracking of
drugs. Other comments oppose allowing pharmacists or wholesalers to be
SIP Sponsors without a State or Indian Tribe as a cosponsor. Those
comments suggest, for example, that pharmacists and wholesalers would
not have adequate resources or authority to manage oversight functions
effectively, and that involvement of a State or Indian Tribe is
critical to facilitate a prompt response in the case of a recall or
other event that requires a quick, coordinated response from
practitioners, pharmacies, wholesalers, or other entities to protect
the public health.
    (Response 9) In the NPRM, FDA sought comment on whether it could be
possible for a pharmacist or wholesaler to be a SIP Sponsor without a
State or Indian Tribe as a sponsor, while posing no additional risk to
the public's health and safety. We believe oversight by a State or
Indian Tribe is an important safeguard because these entities, which
oversee pharmacies and wholesale distribution and have tools to protect
public health, are uniquely positioned to provide independent oversight
of importation activities. Although we could not foresee how this
approach could be adopted without posing additional risk to the
public's health and safety, we stated that if we received information
that demonstrates how a proposal that does not include a State or
Indian Tribe as a sponsor would provide the same level of assurance of
safety as a proposal with such a sponsor, we would consider having the
final rule allow for this possibility. We provided an alternative
codified provision that appeared under ``Option 2'' in proposed Sec.
251.2 (21 CFR 251.2). FDA declines to adopt the alternative codified
provision. However, we are open to the possibility that a pharmacist or
wholesaler, after actively participating in a SIP, may be able to
demonstrate that their proposal that does not include a State or Indian
Tribe as the SIP sponsor could provide the same level of assurance of
safety. Further, we recognize that Agency experience with this novel
program is necessary to determine how to appropriately evaluate whether
a pharmacist or wholesaler has adequately supported such a
demonstration. Accordingly, we have revised the rule to provide that,
after an initial 2-year period beginning on the date of the first
import entry under any SIP authorized under this rule, the Secretary
may determine, based on experience under the program, that there is a
sufficient likelihood that a proposal that does not include a State or
Indian Tribe as the SIP sponsor could provide the same level of
assurance of safety as a proposal that does include

such a sponsor, such that FDA may begin receiving, reviewing, and
potentially authorizing applications for SIPs without such a sponsor.
After the Secretary makes such a determination, a pharmacist or
wholesaler may propose a SIP that does not include a State or Indian
Tribe as a sponsor, and FDA may authorize such a SIP if the sponsor
demonstrates that the SIP meets the criteria for authorization with the
same level of assurance of safety as a proposal that includes a State
or Indian Tribe as the SIP sponsor, which FDA shall evaluate consistent
with any considerations described in the Secretary's determination,
including by evaluating whether the application demonstrates that the
proposed sponsor has sufficient relevant experience, such as
participating in a SIP and demonstrating compliance with the
requirements of the FD&C Act and the rule.
    (Comment 10) Several comments suggest that a pharmacist or
wholesaler should not be allowed to be both a SIP cosponsor and an
Importer in the same SIP, because it could remove a key layer of
oversight and result in conflicts of interest. One comment suggests
that entities and individuals receiving imported drugs should fall
within the jurisdiction of the State sponsoring each SIP.
    (Response 10) We are not changing the final rule in response to
these comments. We continue to believe, as discussed in the NPRM (84 FR
70796 at 70801), that cosponsorship could introduce valuable
flexibility (for example, multiple States could cosponsor a plan with a
wholesale distributor) and allow SIPs to benefit from the experience of
pharmacists and wholesale distributors, while generally preserving the
advantages that accrue from sponsorship by at least one State or Indian
Tribe. SIP Sponsors need to explain in their SIP Proposals how they
will address conflicts of interest and ensure that there is sufficient
oversight of the SIP participants. We have clarified in the rule that
FDA may decide not to authorize a SIP Proposal or supplemental proposal
because of, among other reasons, the potential for conflicts of
interest. Likewise, if a SIP Sponsor chooses to allow for the
distribution of the eligible prescription drugs it imports to entities
or individuals outside of the State's jurisdiction, it should explain
in the SIP Proposal how it will address any issues that might arise
from this distribution.
    (Comment 11) Several comments suggest that non-governmental
entities other than pharmacists and wholesalers, such as group
purchasing organizations and pharmacy benefit managers, should be
permitted to cosponsor SIPs. One comment, for example, says the
inclusion of pharmacy benefit managers would allow SIP Sponsors to more
adequately trace the origins and disposition of imported products.
Several comments oppose such a change, referencing, for example, a lack
of accountability and transparency and a negative effect that the
business practices of pharmacy benefit managers have on patients'
ability to access medications. In addition, some comments oppose
cosponsorship by any non-governmental entity.
    (Response 11) As noted above, FDA continues to believe that
cosponsorship could introduce valuable flexibility and allow SIPs to
benefit from the experience of pharmacists and wholesale distributors,
while generally preserving the advantages that accrue from sponsorship
by at least one State or Indian Tribe. We decline to change the final
rule, at this time, to expand or limit this provision. Section 804 of
the FD&C Act specifically provides for the participation of a
pharmacist or wholesaler, but not any other non-government entity. If a
non-government entity is a licensed pharmacist or wholesaler and meets
the requirements of this rule, the entity can cosponsor a SIP.

D. Comments on SIP Proposals and Pre-Import Requests

    (Comment 12) Several comments request that FDA amend the proposed
rule to allow submission of SIP Proposals without identifying or
providing certain information about participating entities or persons
and provide for ``conditional approval'' of SIPs before those specific
participating entities or persons are identified, followed by ``final
approval'' when participation agreements are in place. According to
these comments, entities or persons such as a potential Foreign Seller
or Importer may be unwilling to commit to participating in a SIP until
they are assured that a prospective SIP Sponsor has received FDA
authorization. The comments also assert that a SIP Sponsor would need
sufficient time to determine and finalize contracts or other
arrangements with the entities or persons that will be participating in
a SIP.
    (Response 12) In response to these comments and related concerns,
in particular about finding a Foreign Seller to obtain the eligible
prescriptions drugs identified in the SIP Proposal, we are revising the
final rule to provide that FDA may use a phased review process to
review a SIP Proposal that does not identify a Foreign Seller in an
initial submission but otherwise meets the requirements of this part.
Importers, relabelers, and repackagers still need to be identified and
the required information regarding these participating persons must be
included in the initial submission of the SIP Proposal. A Foreign
Seller must be identified within 6 months of the initial submission
date of the SIP Proposal. This change to allow for phased review
reflects the importance of finding a well-qualified Foreign Seller for
a short supply chain. The 6-month period helps ensure that the
information provided in the SIP Proposal to FDA for consideration is
current and FDA is able to better handle the workload of reviewing SIP
proposals. A Foreign Seller will still need to be identified and
registered with FDA, and FDA will still review information about the
Foreign Seller, before FDA will authorize a SIP.
    (Comment 13) Several comments recommend that the proposed rule be
changed to allow an initial SIP Proposal to identify more than one
Foreign Seller and more than one Importer. Several comments also
support allowing a longer supply chain, to include multiple Foreign
Sellers. These comments assert, for example, that a short supply chain
would allow drug manufacturers to discriminate against a Foreign Seller
specified in a SIP, preventing the SIP from demonstrating to FDA that
the SIP can consistently and successfully import eligible prescription
drugs. Other comments express support for the rule as proposed, noting
among other things that more complex supply chains may be less secure.
    (Response 13) As described in the NPRM (84 FR 70796 at 70797), the
rule provides that a SIP Proposal needs to identify the Foreign Seller
in Canada that will purchase the eligible prescription drug directly
from its manufacturer, and identify the Importer in the United States
that will buy the drug directly from the Foreign Seller before FDA will
authorize the SIP. We have revised the rule to clarify that each supply
chain under a SIP must still be limited to one manufacturer, one
Foreign Seller, and one Importer. Although the initial SIP Proposal
would be authorized to allow just one Foreign Seller and one Importer,
if the SIP can show that it has consistently imported eligible
prescription drugs in accordance with section 804 of the FD&C Act and
the rule, the SIP Sponsor can submit a supplemental proposal to add
supply chains, which would each consist of one or more eligible
prescription drugs, one Foreign Seller, and one Importer. We believe
that

because SIPs are new and unique programs which may be challenging to
implement at first, they should begin with a single importer and single
foreign seller. Based on FDA's experience with drug importation and
implementation of new programs, we believe that an increase in the
number of entities a SIP must oversee and, potentially, a corresponding
increase in the volume of product, could multiply the opportunity for
supply chain security problems. Absent a demonstrated track record of
oversight capability and compliance, initially limiting a SIP to one
Foreign Seller and one Importer is an important safeguard. With regard
to the concern raised in some comments that a manufacturer could refuse
to deal with participating Foreign Sellers, we do not intend to
publicly disclose information from the SIP Proposal or authorization
that is confidential business information where such disclosure is
restricted by law, potentially including information about Foreign
Sellers or the eligible prescription drugs that might be imported.
Generally, information about suppliers and proposed business plans is
confidential business information unless that information is made
public by the information owner. However, this information might become
public in other ways, such as through state open records laws. Even
under such circumstances, the relationship between a manufacturer and a
Foreign Seller will be subject to complex market dynamics, with many
variables including relative market power, and it is difficult to
predict what transactions might or might not occur.
    (Comment 14) One comment recommends that SIP Proposals describe a
plan for ensuring that FDA-approved patient labeling is dispensed to
patients. One comment asks that the FDA-approved patient labeling
include additional information pertaining to importation under a SIP
generally or under a particular SIP. For those eligible prescription
drugs that do not have FDA-approved patient labeling, the comment asks
that FDA require that they have patient labeling that is not specific
to a particular product that includes information pertaining to
importation under a SIP generally or under a particular SIP. The
comment asks that this patient labeling include the labeling statement
described in Sec.  251.13.
    (Response 14) We are not making changes to the final rule with
regard to this comment. The final rule provides that Importers are
responsible for, among other things, ensuring that eligible
prescription drugs are relabeled with the required U.S. labeling,
including patient labeling such as Medication Guides, Instruction for
Use documents, and patient package inserts. As described in the NPRM, a
SIP Proposal must 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 labeling,
Prescribing Information, and any patient labeling, such as Medication
Guides, Instruction for Use documents, and patient package inserts. The
final rule requires that the SIP Proposal explain how the SIP Sponsor
will educate pharmacists, healthcare providers, pharmacy benefit
managers, health insurance issuers and plans, as appropriate, and
patients about the eligible prescription drugs imported under its SIP.
We do not believe it is necessary to add a requirement to provide
patient labeling that is not specific to a particular product and that
includes information pertaining to importation under a SIP generally or
under a particular SIP.
    (Comment 15) Several comments address issues related to
identification in a SIP Proposal of drugs that may meet program
requirements, if some information about potentially eligible
prescription drugs is not available to the SIP Sponsor at the time it
submits a SIP Proposal. One comment suggests that manufacturers should
not be required to disclose manufacturing information before SIP
authorization.
    (Response 15) We decline to make changes in response to these
comments. As noted in the NPRM (84 FR 70796 at 70807), we recognize
that at the time of submission of a SIP Proposal the SIP Sponsor may
not know whether a drug meets the conditions in an FDA-approved NDA or
ANDA. FDA intends to 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 falls into any of the
exclusions from the definition of eligible prescription drug. Under the
final rule, Sec.  251.3(d)(5)-(6), (e)(5) and (7), manufacturers are
not required to disclose information before a SIP is authorized.
    (Comment 16) One comment claims that the rule would, if finalized
as proposed, increase risks to the public health by assigning
pharmacovigilance and recall responsibilities to States and other
entities with little to no experience in conducting, or capability to
conduct, these complex activities.
    (Response 16) The rule requires a SIP Sponsor to demonstrate that
post-importation pharmacovigilance and other requirements of the FD&C
Act and this final rule are met. As discussed in the NPRM, 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 pharmacies and wholesale distributors, and, in
some cases, other pharmaceutical supply chain participants the States
license, and to take disciplinary action if warranted. States also have
tools that they can use to respond rapidly should activities under
their SIP adversely affect the public health. In addition, under the
final rule, Importers will submit adverse event, field alert, and other
reports to both FDA and the manufacturer. The reports will aid the
manufacturer in its pharmacovigilance efforts and 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 of section 804 in general. The
SIP Proposal must include a written recall plan that will be reviewed
for completeness and effectiveness by the Agency before the SIP is
authorized. In addition, FDA assists firms with carrying out their
recall responsibilities to protect the public health from distributed
products in violation of the FD&C Act and other laws administered by
FDA.
    (Comment 17) Several comments suggest that before FDA authorizes a
SIP Proposal submitted by a State agency, a potential SIP Sponsor
should need to show that the SIP and any necessary funding have been
approved by the State's legislature and executive.
    (Response 17) We decline to make these changes in the final rule
because it may not be feasible for a State to make a final funding
determination for a SIP before FDA evaluates the SIP Proposal. Instead,
the final rule requires that a SIP Proposal include, among other
things, an explanation of how the SIP Sponsor will ensure that all the
participants in the SIP comply with the requirements of section 804 of
the FD&C Act and the rule, as well as a description of the procedures
the SIP Sponsor will use to ensure that these requirements are met. In
addition, the final rule provides that, among other reasons, FDA may
decide not to authorize a SIP Proposal because

of potential safety concerns with the SIP, because there exists a
degree of uncertainty that the SIP Proposal would adequately ensure the
protection of public health, because of the relative likelihood that
the SIP Proposal would not result in significant cost savings, or in
order to limit the number of authorized SIPs so FDA can effectively and
efficiently carry out its responsibilities under section 804 of the
FD&C Act in light of the amount of resources allocated to carrying out
such responsibilities.
    (Comment 18) Several comments suggest that various entities or
persons participating in a SIP, including Foreign Sellers, Importers,
repackagers, relabelers, and laboratories, should be inspected by FDA
before the SIP could be authorized. One comment suggests that FDA
should conduct periodic audits of shipments of eligible prescription
drugs being imported.
    (Response 18) FDA is not making these changes because we believe
the Agency's other mechanisms for oversight are sufficient. Although we
decline to add a pre-authorization inspection requirement, we note, as
discussed in the NPRM, that we retain our right to conduct inspections
under section 704 of the FD&C Act. Inspections may occur before
authorization or as part of FDA's risk-based inspection program. In
addition, the final rule requires SIP Sponsors and other SIP
participants to 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 that is
subject to inspection, delays, denies, or limits that inspection, or
refuses to permit entry or inspection of its facility or its records,
any drug held by that entity would be deemed to be adulterated (see
section 501(j) of the FD&C Act). In those circumstances, FDA could also
suspend the SIP, in whole or in part, immediately. We also decline to
add a provision for periodic audits of shipments of eligible
prescription drugs. All shipments are subject to Statutory Testing and,
under this rule, FDA will be provided with three sets of the samples of
each imported drug to enable FDA to also conduct the Statutory Testing
as FDA deems warranted. In addition, FDA already has the authority to
collect samples of shipments under 21 CFR 1.90.
    (Comment 19) One comment proposes that SIP Proposals should be
required to include background information for all entities or persons
that are downstream of the SIP, in addition to the entities or persons
in the SIP, if the SIP does not distribute drugs directly to patients.
    (Response 19) FDA declines to make this change. The final rule
requires that SIP Proposals include, among other things, certain
background information about Importers and Foreign Sellers. In the
NPRM, we requested 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. At this time, we do not believe
that additional background information about downstream supply chain
entities or persons is necessary to assure the security of the SIP
supply chain or to assure that the requirements of the FD&C Act and
this rule will be met because these entities and persons need to be in
compliance with licensure and other Federal and State requirements.
    (Comment 20) Several comments discuss the important role a Foreign
Seller would play in a SIP. One comment recommends that FDA take
additional steps to ensure Foreign Sellers maintain robust controls and
that FDA obtain additional information regarding compliance and
business history, including through inspections. The comment also
recommends that the Foreign Seller or the Importer be required to
disclose any civil judgments against or settlements entered into by the
Foreign Seller or Importer related to liability for violations of
State, Federal, or Canadian laws regarding drugs or devices or the sale
or distribution of drugs or devices. One comment suggests that FDA
require SIP Proposals to include disciplinary actions imposed against
the Foreign Seller or the Importer beyond just United States and
Canadian borders. Several comments reference potential difficulties in
vetting and regulating Foreign Sellers.
    (Response 20) FDA declines to make changes in response to these
comments because we believe the final rule includes sufficient controls
without these requirements. Under the final rule, Foreign Sellers must,
among other things, be licensed by Health Canada as drug wholesalers
and be registered with a provincial regulatory authority to distribute
HPFB-approved drugs. The final rule also requires that the SIP
Sponsor's importation plan include, among other things, a list of all
disciplinary actions 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 before submission of the SIP Proposal.
    (Comment 21) Several comments suggest ways a SIP Proposal might
account for costs and benefits associated with the SIP and determine
whether the SIP would significantly reduce costs for American
consumers. Several comments suggest that FDA should limit the ways in
which a SIP Proposal should be able to meet this requirement. Several
comments asked about how section 804 drugs will be treated under
government programs, including Medicaid and the 340B Drug Pricing
Program. One comment suggests that FDA should identify a threshold for
whether a reduction in cost is significant.
    (Response 21) We decline to make any changes to the rule in
response to these comments. As discussed in the NPRM, FDA intends to
determine whether a reduction in cost is significant in the context of
considering a specific proposal. The information needed to demonstrate
anticipated cost savings to the American consumer will be dependent on
the specific mechanisms which the SIP Proposal is using to reduce costs
for American consumers. The SIP proposal should clearly articulate the
mechanism by which the proposal will reduce costs to consumers and
provide relevant information given that context. To demonstrate
expected cost savings, a SIP Sponsor could compare anticipated
acquisition costs or consumer prices per unit of each eligible
prescription drug that the SIP Sponsor is seeking to import. A SIP
Sponsor could also compare the current retail cash price of the drugs.
If the cost savings do not go to consumers directly, because, for
example, they accrue to a healthcare provider or payor, the SIP
Proposal would need to show that the SIP will result in 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 consumers 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 covered by a State program, or increasing the availability of
drugs covered by the program. A SIP proposal cannot demonstrate cost
savings in connection with a government program if the eligible
prescription drugs to be imported under the SIP do not meet the
program's requirements. This rule is not intended to address how
agencies other

than FDA, such as those that administer Medicaid or other government
programs, may apply their authorities to drugs imported under a SIP.
HHS may issue further guidance or rulemaking as appropriate. HHS
guidance, including the relevant Medicaid guidance for drugs imported
under a SIP, can be found at https://www.hhs.gov/ guidance/.
    (Comment 22) One comment recommends that SIP Sponsors be required
to demonstrate to FDA that participants in the SIP, including Importers
and Foreign Sellers, are capable of meeting program requirements, such
as for serialization and monitoring for counterfeit drugs. Several
comments express concern that entities or persons involved in the SIP
might lack capacity, experience, and resources to demonstrate that they
could meet all the requirements under the proposed rule.
    (Response 22) We are not making changes based on these comments
because we believe the final rule includes sufficient mechanisms for
FDA to evaluate participants in a SIP. The final rule requires a SIP
Sponsor, in its proposal, to explain how the SIP Sponsor will ensure
that all the participants in the SIP comply with the requirements of
section 804 of the FD&C Act and the rule, and describe the procedures
the SIP Sponsor will use to ensure requirements are met, including
steps regarding storage, handling, and distribution practices; supply
chain security; and screening eligible prescription drugs for evidence
that they are adulterated, counterfeit, damaged, tampered with,
expired, suspect foreign product, or illegitimate foreign product.
Under the final rule, a Foreign Seller is responsible for relabeling
drug products to affix the SSI to or imprint the SSI on each package
and homogenous case of the eligible prescription drug(s). In addition,
the Foreign Seller must maintain records associating the SSI with the
DIN from the HPFB and all the records it received from the manufacturer
upon receipt of the original shipment intended for the Canadian market.
The Importer is also responsible for ensuring compliance with
requirements for serialization and identifying suspect or illegitimate
product when the drugs arrive in the United States.
    (Comment 23) Several comments asked whether eligible prescription
drugs imported under a SIP could be returned, and how those returns
would be handled.
    (Response 23) We have revised the rule to provide that a SIP
Sponsor's importation plan must include the SIP's return plan,
including an explanation of how the SIP Sponsor will ensure that a
product that is returned after being in U.S. distribution is properly
dispositioned in the United States if it is a non-saleable return in
order to protect U.S. patients from expired or unsafe drugs. We are
requiring that returned products be dispositioned in the United States,
as appropriate, to prevent these products, which have been in U.S.
distribution with the FDA-approved labeling prior to their return, from
possible distribution in Canada with the U.S. labeling or from being
re-imported into the U.S. as a non-SIP drug. In addition, it is unclear
whether such products, which will have been relabeled to comply with
U.S. requirements, could be returned to the Foreign Seller under
Canadian law. Therefore, as an additional safeguard under section
804(c)(3) of the FD&C Act and to reduce opportunities for diversion and
other forms of fraud, the return plan must explain how the SIP Sponsor
will ensure that returned eligible prescription drugs, which have been
relabeled for the U.S. market, are not exported from the United States.
If the SIP Sponsor anticipates that its program will have returned
product that may be considered as saleable and therefore re-distributed
in the United States, the return plan should address how returned
eligible prescription drugs will be determined to be saleable and how
those products will be handled.
    (Comment 24) One comment proposes several additional elements to be
included in a SIP compliance plan, which must be submitted as part of
the SIP Proposal. The comment suggests that a SIP compliance plan
should include: (1) A compliance committee, (2) a program for internal
monitoring and auditing, and (3) well-established processes for
disciplinary actions for noncompliance. The comment also suggests that
SIPs have promotion compliance programs that address interactions with
healthcare professionals, patient advocacy organizations, and others.
The comment further recommends that FDA adopt certain submission
requirements for promotional materials.
    (Response 24) As discussed in the NPRM (84 FR 70796 at 70811), SIP
Sponsors need to develop a compliance plan and describe it in detail in
their SIP Proposal for FDA's review and authorization. We have revised
the rule to provide that a SIP Sponsor's importation plan must include
the SIP's compliance plan, including: (1) A description of the division
of responsibilities among cosponsors, if any, which includes a plan for
timely communication of any compliance issues to the SIP sponsor; (2)
identification of responsible individual(s) and a description of the
respective area(s) of compliance that will be monitored by each
responsible individual; (3) the creation of written compliance
policies, procedures, and protocols; (4) the provision of education and
training to ensure that Foreign Sellers, Importers, qualifying
laboratories, and their employees understand their compliance-related
obligations; (5) the creation and maintenance of effective lines of
communication, including a process to protect the anonymity of
complainants and to protect whistleblowers; and (6) the adoption of
processes and procedures for uncovering and addressing noncompliance or
misconduct. At this time, we decline to require that every SIP
compliance plan include each element proposed in the comment. In
recognition of the SIP Sponsors' and cosponsors' responsibilities, we
have also revised the SIP Proposal provisions to require the signature
of the SIP Sponsor and cosponsors, if any, or an authorized
representative. In addition to the compliance plan, a SIP sponsor's
importation plan must explain how the SIP Sponsor will ensure that all
the participants in the SIP comply with the requirements of section 804
of the FD&C Act and the rule. In addition, the final rule requires the
SIP Sponsor to describe the procedures it will use to ensure that,
among other things: (1) The storage, handling, and distribution
practices of supply chain participants, including transportation
providers, meet certain requirements and do not affect the quality or
impinge on the security of the eligible prescription drugs; (2) the
supply chain is secure; (3) the Importer screens the eligible
prescription drugs it imports for evidence that they are adulterated,
counterfeit, damaged, tampered with, expired, suspect foreign product,
or illegitimate foreign product; and (4) the Importer fulfills its
responsibilities to submit adverse event, field alert, and other
reports. The SIP Proposal must also explain how the SIP Sponsor will
educate pharmacists, healthcare providers, pharmacy benefit managers,
health insurance issuers and plans, as appropriate, and patients about
the drugs imported under its SIP. With regard to requirements for
promotional materials, under the FD&C Act and the final rule, imported
eligible prescription drugs cannot be misbranded and must meet
applicable labeling requirements. As with other aspects of compliance,
the SIP Proposal and the compliance plan it

contains must explain how the SIP will ensure that drugs are not
misbranded.
    (Comment 25) Several comments suggest that FDA should establish
specific timeframes for reviewing and authorizing SIP Proposals. One
comment recommends that SIP Proposals should be addressed on a first-
come, first-served basis. One comment recommends that SIPs be limited
at first to ensure FDA can effectively and efficiently carry out its
responsibilities in connection with the SIP, there are no adverse
impacts on Canada, and cost savings for consumers are achieved.
    (Response 25) Because this program is novel, we do not have
sufficient information to estimate a timeframe for the review of a SIP
Proposal. Review times may depend on factors such as the quality and
complexity of proposals and Agency resource constraints. FDA plans to
establish internal processes for its review of SIPs, rather than
specifying details, such as the order of its review, in this
regulation.
    (Comment 26) One comment proposes that each reauthorization of a
SIP be accompanied by a new assessment of whether the SIP would ``pose
no additional risk to the public's health and safety.''
    (Response 26) We decline to change the rule in response to this
comment. The final rule provides that FDA may deny a request for
authorization, modification, or extension of a SIP including if a
proposed SIP does not meet the standard for authorizing a SIP. The
final rule further provides that if a SIP Proposal meets the
requirements of the rule, FDA may nonetheless decide not to authorize
the SIP Proposal. The final rule also provides that FDA may decide not
to authorize a SIP Proposal because of potential safety concerns with
the SIP or because of the degree of uncertainty that the SIP Proposal
would adequately ensure the protection of public health.
    (Comment 27) Several comments support requirements on Importers to
provide certain manufacturing information, including the source of the
imported product and active pharmaceutical ingredient (API)
information, and to maintain records of transactions.
    (Response 27) The final rule provides that 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 that has been
granted by FDA. The Pre-Import Request must identify and include a
description of the eligible prescription drug(s) covered by the Pre-
Import Request, including among other things, the established and
proprietary name of the drug, API information, and manufacturer
information. Additionally, the final rule provides that Importers would
need to maintain records, for not less than 6 years, that allow the
Importer to associate the product identifier it affixed or imprinted to
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.
    (Comment 28) Several comments assert that the final rule should
rely as little as possible on requiring manufacturers to take certain
actions and make certain disclosures. The comments say that because
manufacturers may oppose those requirements, the final rule should
primarily rely on other measures where possible to achieve the same
aims. The comments assert that FDA must also be prepared to provide any
necessary information that a manufacturer refuses to provide and to
take any other action against the manufacturer as appropriate.
    (Response 28) The obligations on manufacturers under section 804
and this rule are enforceable under section 301(aa) of the FD&C Act (21
U.S.C. 331(aa)), 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 (21 U.S.C. 333(b)(6))
provides for a prison term of up to 10 years for manufacturers or
Importers that knowingly fail to comply with a requirement of section
804(e) of the FD&C Act, including 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; and (3) if the
manufacturer supplies this information to the Importer, the Importer
keep it in strict confidence and only use it for testing and complying
with the FD&C Act. Violators are also subject to fines under 18 U.S.C.
3571. Because of these provisions, we have determined that it is not
necessary to include proposed Sec.  251.16(i) in the final rule. That
provision stated that ``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.''
    (Comment 29) One comment recommends that FDA shorten the pre-import
notification period to give SIPs more flexibility to respond to
emerging needs based on demand for certain products, and to avoid
having to forecast demand far in advance of importation.
    (Response 29) The NPRM provided that after FDA has authorized a SIP
Proposal, the Importer would submit a Pre-Import Request to FDA at
least 30 calendar days before the scheduled date of arrival or entry
for consumption for a shipment containing an eligible prescription drug
covered by the SIP, whichever is earlier. FDA declines to change this
provision because the Agency will need sufficient time to review the
Pre-Import Request and determine if the Importer will meet all the
requirements for importation. FDA may consider expediting reviews of
Pre-Import Requests, if appropriate, and depending on resources.
    (Comment 30) Several comments recommend that the final rule require
an Importer to file a separate Pre-Import Request for each shipment of
eligible prescription drugs.
    (Response 30) FDA is not making changes in response to these
comments. As discussed in the NPRM, when a Pre-Import Request is
granted by FDA, that Pre-Import Request covers subsequent shipments of
the eligible prescription drug(s) identified in the Agency's grant of
that Request, provided that all of the information contained in the
Pre-Import Request, with the exception of the anticipated dates of
shipment, is the same for each subsequent shipment covered by the Pre-
Import Request when the shipment arrives in the United States. We
believe that Importers should have the flexibility to decide how many
shipments should be covered by a Pre-Import Request. An Importer could
choose to send each eligible prescription drug covered by a Pre-Import
Request in a separate shipment, for example. An Importer could also
choose to send one eligible prescription drug covered by a Pre-Import
Request in multiple shipments. Requiring an Importer to file a separate
Pre-Import Request for each shipment would not facilitate the
importation of eligible prescription drugs and would unnecessarily
burden both the Importer and the Agency.
    (Comment 31) One comment recommends that FDA clarify that a
manufacturer is not required to provide an attestation unless it has
received formal notification from FDA that an applicable SIP has been
authorized. The

comment further recommends that FDA clarify that a manufacturer may
decline to provide an attestation if, in the manufacturer's opinion,
the Canadian version of the drug fails to meet any of the conditions in
the FDA-approved NDA or ANDA, including process-related and
manufacturing specifications. The comment also asks FDA to clarify that
the refusal or failure to provide an attestation under such
circumstances is not a violation of section 804 of the FD&C Act or the
final rule. The comment requests that FDA clarify that a manufacturer
has the initial option to conduct such testing and that the Importer
may conduct it only if the manufacturer declines, because such testing
requires the disclosure of sensitive information.
    (Response 31) We decline to change the rule in the manner
suggested. We intend to provide updates on SIP authorizations and do
not believe it is necessary to provide additional, formal notification
to manufacturers. We further believe that the rule is sufficiently
clear that a manufacturer does not need to provide an attestation and
information statement if the drug proposed for import does not, except
for the fact that it bears the HPFB-approved labeling, meet 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. To facilitate importation, the
final rule clarifies that the manufacturer must notify the Importer and
FDA if it cannot provide the required attestation and information
statement and articulate with specificity the reasons it cannot provide
that attestation and information statement. We do not believe that it
is necessary to revise the rule to clarify that a manufacturer has the
initial option to conduct the Statutory Testing and that the Importer
may conduct it only if the manufacturer declines to do so. Under the
final rule, the manufacturer must notify the Importer and FDA of the
manufacturer's intent to perform the Statutory Testing within 30
calendar days of receipt of a request from the Importer.
    (Comment 32) The proposed rule provided that unless an extension is
granted, 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. Several comments assert
that this limitation could discourage participation.
    (Response 32) As discussed in the NPRM (84 FR 70796 at 70810), we
believe that the initial 2-year period will provide sufficient time for
SIP Sponsors to implement the authorized SIP. The 2-year authorization
period for a SIP would begin when the Importer, or its authorized
customs broker, files an electronic import entry for consumption for
its first shipment of eligible prescription drugs under the SIP. We
further believe, as we explained in the NPRM, that SIPs should
terminate after 2 years unless re-authorized because importation under
section 804 of the FD&C Act is novel and by the end of a 2-year period
we can evaluate how the SIP performed, such as the extent to which it
resulted in cost savings. The final rule provides that an authorized
SIP Sponsor would be able to submit a proposal asking for authorization
to extend the SIP for additional 2-year periods.
    (Comment 33) One comment recommends that FDA clarify what kinds of
changes warrant submission of an amendment to an authorized SIP. The
comment also recommends that FDA allow the SIP to continue to operate
while an amendment to the SIP is under consideration. The comment
further recommends that FDA include a prompt and reasonable timeframe
for responding to amendment requests.
    (Response 33) A SIP Sponsor must not make any changes or permit any
changes to be made to a SIP without first securing FDA's authorization
of a supplemental proposal. For example, as described in the NPRM, if a
SIP Sponsor wishes to amend the list of eligible prescription drugs it
seeks to import or to work with a different Foreign Seller, Importer,
or qualifying laboratory, the SIP Sponsor must submit a supplemental
proposal. The final rule provides that a SIP Sponsor can propose to add
Foreign Sellers or Importers to an authorized SIP once it has
consistently imported eligible prescription drugs in accordance with
section 804 of the FD&C Act and the final rule. The final rule also
provides that a SIP Sponsor may request that FDA extend the
authorization period of an authorized SIP. Consistent with responses to
comments above, we decline to set a timeframe given that this depends
on, among other factors, the quality and complexity of submissions and
Agency resource constraints. Moreover, because this program is novel,
we do not have sufficient information to estimate a timeframe for these
reviews.

E. Comments on Certain Requirements for Section 804 Importation
Programs

    (Comment 34) Several comments suggest that Importers' screening of
eligible prescription drugs for evidence regarding whether they are
adulterated, counterfeit, damaged, tampered with, or expired is not
sufficient. One comment notes that visual inspection does not replace
the need for Statutory Testing.
    (Response 34) The final rule, like the proposed rule, sets out a
number of steps, including Statutory Testing, that a SIP Sponsor and
others would need to take to ensure that the supply chain is secure and
importation will pose no additional risk to the public's health and
safety. Visual inspection does not replace the need for Statutory
Testing in accordance with the requirements of section 804 and the
rule. Additionally, FDA reviews import entries to ensure that they do
not contain articles that appear to violate the FD&C Act and takes
samples of FDA-regulated products for examination when appropriate.
Arrivals and entries of eligible prescription drugs under a SIP will be
limited to a port authorized by FDA in order to facilitate our
admissibility review of entries containing eligible prescription drugs.
    (Comment 35) Several comments address whether the labeling for an
eligible prescription drug needs to be the same as the manufacturer's
FDA-approved labeling. For example, one comment suggests that because
Canadian drug packaging and instructions are written in English
already, relabeling is unnecessary. Another comment asserts that
differentiation between eligible prescription drugs and other drugs
could inadvertently lead to the misperception that eligible
prescription drugs are less safe. Several comments agree with
conspicuous label requirements; some comments suggest additional ways
to distinguish eligible prescription drugs. One comment says that under
the FD&C Act, if a United States Pharmacopeia (USP) monograph exists
for an eligible prescription drug, the labeling requirements in the
monograph play a role in ensuring that the drug is labeled according to
U.S. labeling requirements.
    (Response 35) Pursuant to section 804(d)(1)(K)(ii) of the FD&C Act,
this final rule requires that an eligible prescription drug imported in
accordance with this rule meet all labeling requirements under the FD&C
Act. Additionally, pursuant to section 804(c)(1) of the FD&C Act, this
final rule requires that each eligible prescription drug imported under
this rule comply with sections 501, 502, and 505 of the FD&C Act.
Generally, even if there is a USP monograph, the labeling for an
imported eligible prescription drug will be the same as the FDA-
approved prescription drug labeling under the NDA or the ANDA, except
the labeling

will need to display a National Drug Code (NDC) and serial number that
is unique to the eligible prescription drug, it will need to provide
information about the Importer, and it will need to include the
labeling statement required by this rule. If the SIP maintains a
website, the labeling statement could also include the website address.
As discussed below, we have revised the required labeling statement as
follows: ``[This drug was/These drugs were] imported from Canada
without the authorization of [Name of Applicant] under the [Name of SIP
Sponsor] Section 804 Importation Program.'' We have also revised the
rule to provide that NDC(s) must be included on the immediate container
label and outside package. Also, as discussed in the NPRM, if an
eligible prescription drug's container is too small to fit the
additional information required by this rule, FDA would consider a
supplemental proposal to modify the labeling of an eligible
prescription drug.
    (Comment 36) One comment requests that FDA amend the rule to not
allow identification of the manufacturer on the labeling of a drug
imported and distributed via a SIP unless the manufacturer consents to
such identification.
    (Response 36) We decline to make this change. In the NPRM, we
proposed to require that if the FDA-approved labeling of a drug
imported and distributed via a SIP did not include the name and place
of business of the manufacturer, that the name and place of business of
the manufacturer be added. We have decided that it is not necessary to
add the name and place of business of the manufacturer if that
information is not already included on the FDA-approved labeling. The
labeling will include the name and place of business of the
manufacturer, packer or distributor that appears on the FDA-approved
labeling and it will also include the name and place of business of the
Importer. This will ensure that those responsible for the product can
be identified. We note that the final rule includes the addition of a
phrase in the labeling statement explaining that the drug is imported
without the manufacturer's authorization, which will help to prevent
potential misperceptions regarding whether the manufacturer authorized
the product to be imported.
    (Comment 37) Comments ask that the proposed labeling statement that
Importers are required to add to the labeling of a section 804 drug not
include the phrase ``to reduce its cost to the American consumer.'' A
comment says that this statement would not be consistent with FDA
regulations and the purpose of labeling, which the comment says is to
provide safety and effectiveness and use information. Another comment
notes that generic drugs typically are not permitted to be labeled with
comparative cost information.
    (Response 37) We have determined that it is not necessary to
include the phrase ``to reduce its costs to the American consumer'' in
the labeling statement that Sec.  251.13(b)(4)(iv) requires Importers
to add to the labeling of a section 804 drug. In the proposed rule, we
explained that the purposes of the labeling statement are to help avoid
potential confusion between products with the same name and to help
pharmacists distinguish a section 804 product when selecting the
product on the pharmacy shelf (84 FR 70796 at 70819). The labeling
statement may also aid in pharmacovigilance (84 FR 70796 at 70820). The
phrase ``to reduce its costs to the American consumer'' is not
necessary to achieve these ends.
    (Comment 38) One comment seeks clarification regarding whether, if
a manufacturer updates the labeling or packaging of a product, the
labeling for an eligible prescription drug would also need to be
updated. The comment also requests clarification regarding whether
paper labeling will be included in the package of the imported
prescription drug. Another comment questions who would be responsible
for ensuring that labeling of drugs imported under the rule reflects
safety labeling updates.
    (Response 38) As discussed in the NPRM, an Importer is responsible
for relabeling a drug, or arranging for it to be relabeled, to meet the
requirements of the final rule. The relabeling and associated limited
repackaging activities must meet applicable requirements, including
applicable current good manufacturing practice (CGMP) requirements
under parts 210 and 211 (21 CFR parts 210 and 211). Consistent with the
NPRM, we have clarified in the final rule that at the time an eligible
prescription drug is sold or dispensed by the Importer, it has to have
been relabeled to be consistent with the FDA-approved labeling,
including the carton and container labeling, Prescribing Information,
and patient labeling, such as Medication Guides, Instructions for Use,
and patient package inserts. In addition, the eligible prescription
drug needs 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 with the FDA-approved labeling if it
varies from the FDA-approved labeling, including carton and container
labeling, Prescribing Information, and patient labeling, solely to the
extent described in this final rule.
    (Comment 39) One comment says that failure to relabel a container
closure system, such as a blister pack, could lead to consumer
confusion or medication errors, but relabeling could breach or
otherwise damage the container system.
    (Response 39) If it is not possible to relabel a product without
affecting the container closure system, such as a blister pack, then
the product cannot be imported under a SIP. Certain repackaging that is
necessary to perform the relabeling described in the final rule is
permissible under this rule, but the rule does not allow repackaging of
drugs that breaches the container closure system, such as a blister
pack, which would introduce unnecessary risk of adulteration,
degradation, and fraud for drugs imported under a SIP.
    (Comment 40) Several comments express concern about the
availability of new NDC numbers.
    (Response 40) FDA is considering options to address potential
demand for new labeler codes for NDC numbers to ensure availability.
    (Comment 41) Several comments recommend that FDA assign a Canadian
NDC as a unique labeler code and maintain the U.S. NDC product code and
package size code. One comment also recommends that the use and
assignment of NDC labeler codes under this rule be aligned with FDA's
draft guidance for industry titled ``Importation of Certain FDA-
Approved Human Prescription Drugs, Including Biological Products, under
Section 801(d)(1)(B) of the Federal Food, Drug, and Cosmetic Act,''
available at https://www.fda.gov/media/133646/download.\1\ One comment
suggests that different NDCs for imported drugs sharing the same
proprietary name as FDA-approved drugs may help in accurately capturing
reports on counterfeits or suspect products for the imported drug.
---------------------------------------------------------------------------

    \1\ When final, this guidance will represent FDA's current
thinking on this topic.
---------------------------------------------------------------------------

    (Response 41) Generally, FDA does not mandate the use of particular
NDC numbers. The final rule provides that imported drugs sharing the
same proprietary name as FDA-approved drugs will have different NDCs
from their FDA-approved counterparts.
    (Comment 42) Several comments express concerns that the rule, as
proposed, would open the ``closed'' U.S. drug distribution system for
prescription drugs and could increase the opportunity for counterfeit
and

other substandard drugs to enter the supply chain. Several comments
also assert that the proposed rule would undermine developments in
supply chain security in the United States. Several comments express
concerns about law enforcement resources. One comment suggests that the
HHS Task Force Report regarding importation of prescription drugs that
was submitted to Congress in December 2004 (Ref. 3) is still relevant
today because there is still no Canadian system in place to ensure the
pedigree of a product originally intended for Canada that becomes
intended for the United States, nor are there any new international
authorities to address the pedigree of the imported product and
international recalls. Several comments support the proposed supply
chain security requirements.
    (Response 42) As described in the NPRM, we believe that section 804
of the FD&C Act can be implemented in a manner consistent with the
section 804(l)(1) certification criteria through programs, overseen by
States or Indian Tribes, or in certain future circumstances by
pharmacists or wholesale distributors, and their cosponsors, if any,
that require authorization by and reporting to FDA. The final rule
includes 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 of the FD&C Act, the final rule requires that drugs imported under
section 804 meet the specifications of an FDA-approved NDA or ANDA.
These programs must also demonstrate significant cost reductions to the
American consumer. In addition, as described in the NPRM (84 FR 70796
at 70800), 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. 4) and
pharmaceutical supply chain participants (Ref. 5), and regulatory
harmonization between Canada and the United States has increased. As
noted elsewhere, the final rule does not open the closed U.S.
distribution system; instead, it expands it. The SIP Sponsor must
demonstrate, among other things, how it will ensure that the supply
chain in the SIP is secure, as required by Sec.  251.3(d)(11).
    (Comment 43) Several comments express concern that some product
tracing provisions of the FD&C Act could strengthen the rule's safety
requirements, but those provisions will not be widely implemented for
several years. Several comments recommend that the final rule should
not be implemented before the development of national standards for
wholesale distribution licensure and State adoption of those standards
because those standards will be a key element of FDA and State
oversight over wholesale drug distributors and pharmacists, in addition
to manufacturers.
    (Response 43) Key traceability requirements added by the DSCSA,
including product tracing, product identification (which involves
serialization), and verification for handling of suspect and
illegitimate product, have been in effect for several years and have
been implemented by trading partners in the U.S. pharmaceutical
distribution system. FDA acknowledges and agrees that there are other
important DSCSA supply chain security requirements that will be phased-
in over the next several years, including national standards for
licensure of wholesale distributors and third-party logistics
operators, that will be vital to further securing the pharmaceutical
supply chain, once implemented. However, FDA believes the final rule
includes sufficient provisions to secure the supply chain, including
requirements on direct purchasing of drugs and recordkeeping.
    With regard to the comments recommending that the final rule should
not be implemented before the development of national standards for
wholesale distribution licensure and State adoption of those standards,
as described in the NPRM (84 FR 70796 at 70801), 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 a SIP adversely affect
the public health.
    However, in considering these and other comments regarding
licensure of wholesale distributors as discussed in the NPRM, we have
modified the definition of ``wholesaler'' in the final rule. Section
804(a)(5) of the FD&C Act states that ``wholesaler'' means, in general,
``a person licensed as a wholesaler or distributor of prescription
drugs in the United States under section 503(e)(2)(A).'' Several years
after the addition of section 804(a)(5), the DSCSA amended section
503(e) of the FD&C Act such that section 503(e)(2)(A) no longer
addressed the licensure of wholesalers or distributors (section
503(e)(2)(A) currently sets forth reporting obligations for persons
engaged in wholesale distribution). Accordingly, in the NPRM, FDA
defined ``wholesaler'' as, in general, ``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.''
Upon further consideration, and in light of comments received on
wholesale distribution licensure, FDA has further modified the
definition of ``wholesaler'' in the final rule to mean a licensed
wholesale distributor, as the terms ``licensed'' and ``wholesale
distributor'' are defined in sections 581(9)(A) and (29) of the FD&C
Act, respectively, of the FD&C Act. This modification is consistent
with section 804(a)(5) of the FD&C Act, which incorporates section
503(e)(2)(A) as it had applied prior to DSCSA. At the time it was
incorporated into part 804, section 503(e)(2)(A) had required that, in
accordance with FDA regulations that were later established in 21 CFR
part 205, ``no person may engage in the wholesale distribution in
interstate commerce of drugs subject to [section 503(b)] in a State
unless such person is licensed by the State.'' (See Prescription Drug
Marketing Act of 1987, Public Law 100-293, Sec. 6). The incorporation
into this rule of definitions in sections 581(9)(A) and 581(29) added
by DSCSA clarifies that even prior to Federal standards being
effective, a wholesale distributor must have a license under either
section 503(e) or section 582(a)(6), as applicable. Section 582(a)(6)
provides that having a valid license under State law is sufficient for
a wholesale distributor to be considered ``licensed'' or ``authorized''
for purposes of meeting the DSCSA requirements that this rule
incorporates.
    This clarifies our intent, as expressed in the NPRM, that
wholesalers participating in a SIP as Importers are subject to all
applicable DSCSA requirements in section 582 of the FD&C Act. This
modification also ensures that such wholesale distributors are
considered to be ``authorized'' for purposes of DSCSA in advance of
FDA's establishment of national standards for wholesale distributor
licensure, as prescribed in section 583 of the FD&C Act.
    Finally, we also conclude that defining ``wholesaler'' through use
of the term ``wholesale distributor,'' rather than ``wholesaler or
distributor'' as stated in section 804, aligns with DSCSA, and, because
it is more in line

with current terminology and usage in the supply chain industry, adds
clarity and consistency.
    (Comment 44) Several comments say that it is not uncommon for
prescription drugs to be purchased and imported directly into Canada in
bulk by a manufacturer and then be repackaged and relabeled by a third
party. The comments therefore recommend allowing the importation,
repackaging, and relabeling of ``bulk'' eligible prescription drugs
that lack finished packaging and labeling. One comment suggests that
the final rule should allow importation of drugs that have not been
approved in Canada. Other comments express concern about risks posed by
transshipments and counterfeits from or through Canada.
    (Response 44) We decline to make these changes in the final rule.
The final rule provides that a SIP Sponsor must ensure that 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. To
help ensure that drugs imported under a SIP are not transshipped
through Canada and to reduce opportunities for counterfeiting or other
forms of fraud, the final rule requires that each drug imported under
the SIP and manufactured outside Canada must be authorized for import
into Canada by the manufacturer, labeled by the manufacturer for the
Canadian market, and imported into Canada before importation under the
SIP. In addition, each drug imported under the SIP must be sold by the
manufacturer directly to a Foreign Seller, which ships the drug
directly to the Importer in the United States. The Importer(s) and
Foreign Seller(s) identified in the SIP must meet the applicable
requirements of the final rule and section 582(c) and (d) of the FD&C
Act.
    (Comment 45) Several comments address whether imported eligible
prescription drugs might be considered suspect. One comment asks what a
Foreign Seller should do with suspect products. One comment suggests
additional reporting requirements. One comment recommends adding a
requirement for a Foreign Seller to report to FDA and trading partners
any suspect product and any product that is at a high risk of
illegitimacy. One comment supports adding provisions in the proposed
rule requiring notification of illegitimate products based on
requirements in the FD&C Act.
    (Response 45) We decline to make changes in response to these
comments. Section 581 of the FD&C Act defines various terms for
purposes of meeting the requirements of the DSCSA. Although imported
eligible prescription drugs, like other products that enter the U.S.
drug supply chain, may be considered ``suspect'' or ``illegitimate''
for a variety of reasons per section 581(21) and (8), respectively, as
noted in the NPRM (84 FR 70796 at 70816), the Agency would not consider
the eligible prescription drugs imported in accordance with the
requirements of this rule to be ``diverted'' for the purpose of meeting
verification obligations under DSCSA, solely as a result of being
imported under section 804 of the FD&C Act and this final rule.
However, such a product could still be found to be ``suspect'' or
``illegitimate'' for having other characteristics listed in section
581(21) and (8) of the FD&C Act (e.g., counterfeit or stolen).
    We also note that separate from the definitions of ``suspect
product'' and ``illegitimate product,'' as those terms are used for the
purposes of meeting verification requirements under the DSCSA, the NPRM
introduced, and this rule establishes, the terms ``suspect foreign
product'' and ``illegitimate foreign product'' with regard to
obligations that the Foreign Seller must meet for the drugs it receives
from the manufacturer and intends to send to the Importer under a SIP.
Under the final rule, a Foreign Seller must have systems in place to
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. If
the Foreign Seller determines that a drug in its possession or control
is a suspect foreign product, or if the Foreign Seller receives 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: (1) Quarantine the product
within its possession or control until the product is cleared or
dispositioned; (2) 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 (3) if the Foreign
Seller makes the determination that a suspect foreign product is not an
illegitimate foreign product, promptly notify FDA of the determination
for those products that FDA has requested verification (the product may
be further distributed). The final rule requires steps for the Foreign
Seller to quarantine and properly disposition illegitimate foreign
product to ensure that the product is not further distributed, in
addition to notifying FDA and the Importer of products determined to be
illegitimate foreign products.
    We also note that the definitions of ``suspect foreign product''
and ``illegitimate foreign product'' proposed in the NPRM, and
finalized here, include the use of the term ``diverted.'' In
investigating a potentially suspect foreign product or identifying an
illegitimate foreign product, a Foreign Seller may conclude a drug it
receives is ``diverted,'' which for the purposes of these obligations
means that there was not a direct transaction of the drug from the
manufacturer to the Foreign Seller as required under this rule. For
example, a Foreign Seller may conclude that a drug it receives from the
manufacturer is ``diverted,'' if the product left the Canadian
pharmaceutical supply chain and is reintroduced in Canada in a
transaction with the manufacturer or other supply chain entity; or the
product is labeled for sale in a non-Canadian and non-U.S. market and
is introduced into the Canadian pharmaceutical distribution supply
chain through a transaction with the manufacturer or other supply chain
entity.
    Finally, the requirement in the DSCSA that a covered drug that is
at high risk of illegitimacy be reported to the FDA and immediate
trading partners is an obligation limited to manufacturers who may have
specific programs in place that could generate such information. We
believe that the final rule includes sufficient additional provisions
to secure the supply chain without a ``high risk of illegitimacy''
provision that is similar to that which pertains only to manufacturers
under DSCSA.
    (Comment 46) Several comments suggest that Foreign Sellers should
be required to comply with all requirements for relabelers in the
United States. Some of these comments highlight the importance of a
short, secure supply chain. One comment proposes that Foreign Sellers
be subject to the requirements of repackagers.
    (Response 46) FDA declines to make changes in response to these
comments, because we believe the final rule's requirements (which
include requirements to ensure a short, secure supply chain) are
sufficient to maintain supply chain security. Specifically, under the
final rule, a Foreign Seller is responsible for relabeling drug
products solely to affix the SSI to or imprint the SSI on each package
and homogenous case of the eligible prescription drug(s). The Foreign
Seller is required to adhere to all applicable CGMP requirements in

accordance with section 501(a)(2)(B) of the FD&C Act and part 211. In
addition, as noted in the NPRM (84 FR 70796 at 70814), the Foreign
Seller must 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.
    (Comment 47) Several comments address a Foreign Seller's
responsibilities with regard to the SSI. One comment asserts that
although the rule states that the SSI should be ``unique,'' the SSI
could be duplicated between Foreign Sellers. The comment further
suggests that the SSI would not allow traceability back to a
manufacturer because, unlike a product identifier, the SSI does not
contain the serial number of the manufacturer. One comment seeks
clarification about what information a Foreign Seller needs to maintain
about products received from a manufacturer.
    (Response 47) Although FDA acknowledges the possibility that SSIs
could be duplicated between Foreign Sellers, we have revised the rule
to require, as described in the NPRM (84 FR 70796 at 70814), that the
Foreign Seller maintain records associating the SSI with the Canadian
DIN and all the records it received from the manufacturer upon receipt
of the original shipment intended for the Canadian market. Those
records received from the manufacturer upon receipt of the original
shipment are the same as those that the manufacturer is required to
submit to the importer under Sec.  251.14(b).
    FDA also notes that while the SSI is required to be affixed by the
Foreign Seller on the portion of drugs received from the manufacturer
that it intends to place into U.S. commerce in a transaction with the
Importer, this requirement in intended to work in complementary fashion
to other safeguards in the rule, including a requirement for a direct
purchase between the Foreign Seller and manufacturer, and requirements
on the Importer to ensure that the records received from the Foreign
Seller accord with those the manufacturer provided to the Foreign
Seller upon sale of the product for the Canadian market, to ensure that
the product has come directly from the original manufacturer.
    FDA believes that the SSI requirement is necessary as an additional
safeguard in the rule to allow for Importers and Foreign Sellers to
verify the product that they transacted at the package level; such a
requirement helps foster the ability of Importers and Foreign Sellers
to quickly identify potentially suspect or illegitimate foreign
products.
    (Comment 48) Several comments suggest that the rule should allow
relabeling of drugs to occur in Canada.
    (Response 48) FDA declines to make this change. The final rule
requires that relabeling only take place after the Agency has accepted
the results of the Statutory Testing, which takes place at a qualifying
laboratory in the United States. This avoids the potential diversion
that could occur if eligible prescription drugs are relabeled for the
U.S. market prior to import, and then fail the testing requirements. If
eligible prescription drugs were relabeled in Canada before they were
tested in the United States, diversion could happen before or after
export of the refused drugs to Canada. Eligible prescription drugs
cannot be relabeled in Canada after they are tested in the United
States, because, as explained later, sampling upon arrival in the
United States helps ensure that the sample is selected from the actual
shipment of drugs that arrives in the United States. In addition, if
the drugs are counterfeit, they would be counterfeits of the Canadian
drug. Relabeling the drugs in Canada would destroy the evidence of
counterfeiting which is often found on the label. The Importer and FDA
would, therefore, be impeded in our efforts to detect that a drug being
imported under a SIP is a counterfeit.
    (Comment 49) Several comments raise concerns about whether the
product identifier that would be affixed or imprinted by an Importer,
if the Importer intends to place the product into further transactions
in commerce, provides sufficient information about the product's
origin.
    (Response 49) The final rule provides that once the Importer
receives an eligible prescription drug from the Foreign Seller,
relabeling would need to include affixing or imprinting a product
identifier that is associated with the SSI that the Foreign Seller
assigned to the product before sending it to the Importer. As noted in
the NPRM (84 FR 70796 at 70815), 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.
    As described in the NPRM (84 FR 70796 at 70815), 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 assigned by the
manufacturer; and expiration date of the product and be in human and
machine-readable form encoded in a two-dimensional barcode. An SNI
consists of an alphanumeric serial number and NDC under section 581(20)
of the FD&C Act. 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 the
Importer may elect to assign a new serial number. Under the final rule,
the Importer would need to maintain records, for not less than 6 years,
that allow the Importer to associate the product identifier it affixed
or imprinted to 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. The
Foreign Seller in turn is required to maintain records associating the
SSI to the Canadian DIN. As noted in the NPRM (84 FR 70796 at 70816),
this recordkeeping 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. Furthermore, the final rule clarifies that the lot number
that is included in the product identifier is that assigned by the
manufacturer of the eligible prescription drug.
    (Comment 50) Several comments urge FDA to require product
identifiers to be affixed on all products imported pursuant to the
final rule, including where an Importer intends to directly dispense
the product to patients.
    (Response 50) We agree with these comments and have accordingly
modified the rule to clarify that the requirement to affix or imprint a
product identifier applies to all eligible prescription drugs. The
final rule provides that an Importer must facilitate affixation or
imprinting of a product identifier on each package or homogenous case
of an eligible prescription drug upon receiving it from the Foreign
Seller. In the NPRM (84 FR 70796 at 707815), we had signaled that if an
Importer is a pharmacist who directly dispenses the product to
patients, a product identifier would not be required to be affixed or
imprinted on each package and homogenous case of the eligible
prescription drug. However, after consideration of comments, we agree
that in the context of the section 804 program, all eligible

prescription drugs (which must meet the definition of ``product'' under
the DSCSA) warrant a product identifier that is affixed or imprinted by
the Importer or by a relabeler that the Importer authorizes. Even in
the instances of an Importer who is a pharmacist intending to dispense
the product directly to patients, the affixing or imprinting of a
product identifier is needed in order to facilitate verification
activities through the Importer's maintenance of records associating
the product identifier at the package level with the SSI that had been
placed by the Foreign Seller, thus enhancing supply chain security.
    (Comment 51) Several comments oppose providing exemptions to
Importers from certain DSCSA requirements, citing concerns about
opening a path for counterfeit and unsafe drugs into the U.S. supply
chain.
    (Response 51) The final rule identifies specific exemptions 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
to apply to eligible prescription drugs imported under a SIP. FDA
understands and agrees with the importance of the underlying statutory
requirements to supply chain security and considered potential effects
on supply chain security in identifying such exemptions. To ensure the
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, the final rule includes additional safeguards to protect
the public health. For example, under the final rule, 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 FD&C Act as applicable, provided the Importer receives
from the Foreign Seller certain transaction-related information that is
adequate to ensure no additional risk to supply chain security. These
additional safeguards are authorized under section 804(c)(3) of the
FD&C Act and 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.
    (Comment 52) Some comments question FDA's authority to allow
exemptions from DSCSA through rulemaking, because the provisions have
been established by Congress through statute.
    (Response 52) Congress established in DSCSA that exemptions from
section 582 of the FD&C Act are permissible; indeed, the Secretary was
given explicit authority to identify such exemptions through a process
established by the Agency in guidance (see section 582(a)(3)(A)(iii) of
the FD&C Act). The exemptions that were proposed in the NPRM, which is
being finalized here, are established in accordance with this statutory
authority. Although FDA is establishing these exemptions through
rulemaking rather than guidance, we believe this is an appropriate
exercise of the section 582 authority because the statute does not
foreclose FDA from establishing exemptions through notice-and-comment
rulemaking. Because the exemptions identified by FDA in the final rule
would apply to SIP participants generally, and because we believe that
these exemptions are appropriate only in the context of the
requirements established by this rule, including safeguards to protect
supply chain security, providing these exemptions concurrently with
establishing such safeguards is a sensible and appropriate exercise of
FDA's statutory authority in this circumstance. FDA intends to continue
to consider and, as appropriate, grant other exemptions consistent with
the statutory authority provided in section 582 of the FD&C Act.
    (Comment 53) Several comments ask about the availability of
laboratories that would meet the statutory and regulatory criteria to
become approved qualifying laboratories. In particular, some comments
express concerns that the requirement that a qualifying laboratory have
an FDA inspection history could result in insufficient options for
laboratory partners for SIPs.
    (Response 53) We believe there is a sufficient number of FDA-
inspected laboratories across the United States capable of doing this
testing. About 200 domestic, FDA-inspected laboratories offer CGMP-
related contract testing services. Independent laboratories that are
contracted to act as a CGMP quality control lab (i.e., laboratories
that test samples to satisfy the CGMP regulations (including, for
example, Sec. Sec.  211.165, 211.166, and 211.167 regarding batch
testing before distribution) are required to register with FDA and are
subject to inspection to verify conformance with the CGMP regulations
applicable to laboratory testing and quality control (including, for
example, Sec. Sec.  211.160, 211.194, and 211.22). FDA publishes
inspection status information on its website where you can search names
of contract laboratories to see their inspection history and FDA
classification of compliance status (see the Inspection Classification
Database at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/inspection-classification-database. You can
also search FDA's website to see if a warning letter has been issued to
a firm at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters. As we stated in the NPRM, we intend to approve qualifying
laboratories for use by a SIP on a case-by-case basis as part of our
review and authorization of a SIP Proposal. In addition, we intend to
consider publishing a list of approved qualifying laboratories for the
benefit of developing a SIP Proposal.
    (Comment 54) One comment opposes requiring qualifying laboratories
to hold CGMP certification.
    (Response 54) The final rule does not require qualifying
laboratories to hold CGMP certification. Qualifying laboratories need
to comply with the applicable elements of the CGMP requirements,
including provisions regarding laboratory controls in Sec.  211.160 and
regarding laboratory records in Sec.  211.194.
    (Comment 55) One comment suggests that because the proposed rule
allows the potential for multiple SIP Proposals that include a
particular eligible prescription drug, it is important to have clear
and consistent quality standards to help ensure that medications have
the correct identity, strength, and purity when consumed by patients.
    (Response 55) Section 804 of the FD&C Act and the final rule
contain numerous provisions that work together to help ensure the
quality of products imported under this rule. Among other things, the
statute and this final rule require that Statutory 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. The final
rule specifies that this information includes, among other things, any
relevant testing protocols that the manufacturer has developed.
    (Comment 56) Several comments suggest that, if a manufacturer does
not conduct testing itself, Importers should be allowed to conduct
Statutory Testing, or sampling for that testing, in Canada before
importation.
    (Response 56) FDA declines to make the requested change. Section
804 of the FD&C Act provides that Statutory Testing must be conducted
by a qualifying laboratory, and a qualifying laboratory must be in the
United States

and approved by the Secretary. Sampling upon arrival in the United
States helps ensure that the sample is selected from the actual
shipment of drugs that arrives in the United States.
    (Comment 57) One comment urges FDA to clarify that manufacturers
cannot satisfy the Statutory Testing requirements through preexisting
release or conformance testing. The comment also recommends that, if
drug products have already undergone release or conformance testing at
a qualifying laboratory in the United States, Statutory Testing should
be conducted at a separate, independent laboratory to ensure thorough
analysis before the products enter the U.S. market.
    (Response 57) Section 804 of the FD&C Act and the rule provide that
the manufacturer or the Importer must arrange for samples from
shipments of eligible prescription drugs to be tested by a qualifying
laboratory. We believe it is sufficiently clear that the statute and
this regulation do not allow manufacturers to provide testing results,
such as those from the manufacturer's batch release or conformance
testing. If the manufacturer performs the testing required under
section 804(e)(1) of the FD&C Act, the following information must be
submitted in electronic format directly to FDA via the Electronic
Submissions Gateway (ESG) or to an alternative transmission point
identified by FDA: (1) The testing results, (2) a complete set of
laboratory records, (3) a detailed description of the selection method
for the samples, (4) the testing methods used, (5) 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, (6) a Certificate of Analysis,
and (7) any other documentation demonstrating that the testing meets
the requirements under section 804(e)(1) of the FD&C Act. We do not
believe that it is necessary to require in the final rule, for drug
products that have undergone release or conformance testing at a
qualifying laboratory in the United States, that Statutory Testing be
conducted at another, independent laboratory, as long as the approved
and CGMP-compliant methods are used.
    (Comment 58) One comment recommends that FDA require that sampling
be done according to standards issued by the American National
Standards Institute (ANSI).
    (Response 58) The NPRM proposed 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 sought
comment on whether we should specify a sampling method. We also sought
comment on whether we should require that sampling be done according to
an established standard such as those issued by the ANSI or by ASTM
International. We did not conclude that the comments received provided
adequate support for specifying a standard. At this time, we are not
specifying a standard in the final rule but may consider providing
future guidance on this subject.
    (Comment 59) One comment recommends that a manufacturer be allowed
no more than 10 calendar days to provide required information to an
Importer.
    (Response 59) We agree with the comment that a set timeframe for
providing required information is appropriate but disagree with the
proposed 10-day schedule. We have revised the final rule to require a
manufacturer to supply to an Importer, within 30 calendar days of
receiving a request, the required attestation and information
statement, batch records, transaction information, Statutory Testing
information, and authorization to use the FDA-approved labeling for the
manufacturer's drug. The 30-day deadline aligns with the timeline for
the Importer to submit a Pre-Import Request, which must be submitted 30
days prior to the entry or arrival of a shipment of eligible
prescription drugs into the United States.
    (Comment 60) One comment contends that drugs refused admission to
the United States should be destroyed at the foreign trade zone or at
the secured warehouse, and Importers should not be permitted to export
them.
    (Response 60) We decline to make these changes. The NPRM proposed
that if FDA refuses admission into the United States the drug must be
exported or destroyed by the Importer within 90 calendar days of the
refusal. This is consistent with section 801(a) and (d)(1) of the FD&C
Act, neither of which bar exportation.
    In response to the suggestion in the comment that FDA prohibit
export for all refused drugs offered for import under a SIP, we
recognize that there may be some circumstances where export could be
appropriate. For example, in the NPRM we stated that FDA would intend
to refuse admission if 6 months have passed from the entry date of the
shipment. It is possible that these drugs would not have been relabeled
for the U.S. market and may be saleable in Canada. Destruction could
prevent the SIP from recouping their loss by exporting the drugs back
to the Foreign Seller and add additional cost to the SIP.
    Finally, if we have concerns regarding drugs offered for import
under a SIP that are refused admission being exported back to Canada or
another country, FDA and CBP have tools to address this, such as
pursuing destruction of the drugs or notifying the country to which the
product would be exported.
    (Comment 61) Several comments suggest that if 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 meet all applicable requirements