[Federal Register Volume 84, Number 246 (Monday, December 23, 2019)]
[Proposed Rules]
[Pages 70796-70839]
[FR Doc No: 2019-27474]

Vol. 84

Monday,

No. 246

December 23, 2019

Part IV

Department of Health and Human Services

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Food and Drug Administration

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21 CFR Parts 1 and 251

Importation of Prescription Drugs; Proposed Rule

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

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 1 and 251

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

Importation of Prescription Drugs

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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

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

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

Electronic Submissions

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

Written/Paper Submissions

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

FOR FURTHER INFORMATION CONTACT: Lyndsay Hennessey, Center for Drug
Evaluation and Research, Food and Drug Administration, 10903 New
Hampshire Ave., Silver Spring, MD 20993,<PHONE_NUMBER>. With regard to
the information collection: Domini Bean, Office of Operations, Food and
Drug Administration, Three White Flint North 10A-12M, 11601 Landsdown
St., North Bethesda, MD 20852,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

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

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

I. Executive Summary

A. Purpose of the Proposed Rule

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

B. Summary of the Major Provisions of the Proposed Rule

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

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

C. Legal Authority

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

D. Costs and Benefits

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

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

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

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

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

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

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

IV. Legal Authority

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

V. Description of the Proposed Rule

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

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

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

A. Scope/Applicability

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

B. Definitions

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

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

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

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

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

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

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

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

products. This message set contains both required and optional data
elements to assist us in our admissibility review of FDA-regulated
articles. In the Federal Register of November 29, 2016 (81 FR 85854),
FDA published a final rule, effective December 29, 2016, entitled
``Submission of Food and Drug Administration Import Data in the
Automated Commercial Environment,'' which requires certain data
elements that are material to our import admissibility review be
submitted in ACE or any other EDI system authorized by CBP, at the time
of entry. The rule was intended to facilitate automated ``May Proceed''
determinations by the Agency for low-risk FDA-regulated products which,
in turn, allows the Agency to focus our limited resources on products
that may be associated with a greater public health risk. The final
rule is codified in subpart D, 21 CFR part 1.
    All shipments containing eligible prescription drugs to be imported
under an authorized SIP would need to arrive and be entered at the CBP
port of entry that is authorized by FDA. When an entry for consumption
containing an FDA-regulated product is processed by CBP, CBP relays the
data in the PGA Message Set to FDA using an electronic interface with
FDA's import processing system, currently the Operational and
Administrative System for Import Support (OASIS). The import filer need
only submit this entry information once in the ACE system, provided
that the information submitted in ACE is accurate. ACE entries are
electronically screened in OASIS against criteria developed by FDA.
FDA's Predictive Risk-based Evaluation for Dynamic Import Compliance
Targeting (PREDICT) is a risk-based electronic screening tool for OASIS
that performs this initial electronic screening to assist FDA entry
reviewers by evaluating the potential risks associated with each
article and identifying those articles that may present a higher public
health risk for further examination by FDA.
    As discussed, the drugs covered by a SIP can be imported using two
proposed pathways: Admission to an FTZ with later entry for consumption
and filing in ACE when compliant, or filing an entry for consumption in
ACE with a request to bring the eligible prescription drugs into
compliance with the FD&C Act under section 801(b) of the FD&C Act and
Sec.  1.95. The plan submitted under Sec. Sec.  1.95 and 1.96 for the
drugs would need to include the testing and relabeling required under
this proposed rule.
    FDA proposes that the testing and relabeling of a shipment, as
described in the Section 804 Pre-Import Request, take place after the
shipment has arrived in the United States, but before it can be
distributed in the United States. This will enable the Importer to
inspect the Canadian labeling and packaging as part of its screening
obligations. It will also place the responsibility on the Importer to
ensure that the samples submitted for testing are representative of the
actual shipment. The Importer will also be responsible for ensuring
that the relabeling and the product identifier are compliant with U.S.
laws and regulations after FDA has determined that the testing results
are acceptable and before an eligible prescription drug is sold in the
United States. Placing these responsibilities on Importers will aid FDA
in its efforts to monitor compliance with and enforce the requirements
of the FD&C Act and this proposed rule when it is finalized.
    As discussed earlier, under the proposed rule, an Importer could
admit an eligible prescription drug to an FTZ in the United States for
the purpose of completing the required testing and relabeling. An FTZ
is a secure area under the supervision of CBP. FTZs were established in
the United States under the Foreign Trade Zones Act of 1934 (19 U.S.C.
81a-81u) for importers to hold or otherwise manipulate goods without
being subject to certain CBP requirements including customs entry
(articles are ``admitted'' to an FTZ and not entered), payment of duty,
tax, or bond. Since these FTZ Act exclusions only affect the
application of certain CBP laws, FDA-regulated articles that are
brought into an FTZ remain subject to other U.S. laws and regulations
affecting imported goods. Therefore, placement of eligible prescription
drugs in an FTZ does not affect FDA's jurisdiction and inspectional
authority over them. Samples of the eligible prescription drug or drugs
can be removed from the FTZ for the purpose of the required testing by
a qualifying laboratory and for providing samples to FDA as proposed in
this rule.\3\
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    \3\ Any such samples removed from the FTZ for testing in the
customs territory of the United States will have to be entered using
normal Customs procedures.
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    If the Importer pursues the second pathway, filing an entry for
consumption in ACE and requesting to bring the drugs into compliance,
under section 801(b) of the FD&C Act, the Importer would submit Form
FDA 766, to the relevant FDA Imports Division Director. After review,
the Director would notify the Importer of FDA's approval or disapproval
of the plan to bring the drugs into compliance. If approved, the FDA
notice of approval will specify the conditions to be fulfilled and the
time limit for fulfilling them (see Sec.  1.96). Under the proposed
rule, the Importer would need to keep the product at a designated
secured warehouse, and under appropriate environmental conditions to
maintain the integrity of the products, until FDA issues an
admissibility decision. The secured warehouse would need to be within
30 miles of the authorized Port of Entry to facilitate FDA oversight,
including the collection and examination of samples.
    After the authorized plan has been completed, the Importer will
complete the section entitled ``Importer's Certificate'' on Form FDA
766 and provide that certification to the relevant FDA Imports Division
Director. At this point, FDA may choose to conduct a followup
inspection and/or sampling to determine compliance with the terms of
the authorized plan. If FDA determines that the conditions of the
authorized plan have been fulfilled, the Agency will notify the
Importer through a Notice of Release indicating that the admissible
portion of the shipment is no longer subject to detention or refusal of
admission. This Notice is usually identified as ``Originally Detained
and Now Released.'' A copy of the Notice is sent to the owner or
consignee; CBP would then be notified electronically of FDA's ``May
Proceed'' determination. If there is a non-admissible portion of the
shipment, that portion can be destroyed, or re-exported by the Importer
under FDA or CBP supervision (21 U.S.C. 381(a)). A Notice of Refusal of
Admission will be issued to the Importer for the rejected portion.
    Under the proposed rule, FDA would intend to refuse admission into
the United States under section 801(a)(3) of the FD&C Act if: (1) 6
Months have passed since the entry date of the shipment; (2) the
conditions of the SIP or the section 804 Pre-Import Request are not
met; or (3) the drug otherwise appears to be adulterated, misbranded or
unapproved in violation of section 505 of the FD&C Act. If FDA refuses
admission into the United States under section 801(a)(3) of the FD&C
Act, the drug should be exported or destroyed by the Importer within 90
days of the refusal.
    The proposed rule would require that an entry for consumption be
made electronically in ACE for any shipment containing an eligible
prescription drug. The port of arrival and port of entry would be
limited to a CBP port that is authorized by FDA, so that FDA can

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

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

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

D. Requirements for Foreign Sellers

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

E. Requirements for Importers

    Under section 804, an Importer is defined as a pharmacist or a
wholesaler. Under the proposed rule, if finalized, to be part of a SIP,
an Importer would need to be duly licensed as a pharmacist by the State
in which the Importer is located and in which it does business, or duly
licensed as a wholesaler. In addition, the Importer's pharmacist or
wholesaler licenses would need to be in effect (i.e., not expired), and
the Importer must be in good standing with the licensor. Furthermore,
the Importer would need to be the U.S. owner of an eligible
prescription drug at the time of entry or arrival of the drug into the
United States.
    We note that the Importer has a number of responsibilities under
section 804 and this rule, including screening eligible prescription
drugs for evidence regarding whether or not they are adulterated,