Importation of Prescription Drugs, 62094-62140 [2020-21522]

Agencies

• Food and Drug Administration
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 85, Number 191 (Thursday, October 1, 2020)]
[Rules and Regulations]
[Pages 62094-62140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21522]



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Vol. 85

Thursday,

No. 191

October 1, 2020

Part IV





Department of Health and Human Services





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Food and Drug Administration





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21 CFR Parts 1 and 251





Importation of Prescription Drugs; Final Rule

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

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 1 and 251

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


Importation of Prescription Drugs

AGENCY: Food and Drug Administration, Health and Human Services (HHS).

ACTION: Final rule.

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

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

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

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

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of the Final Rule
    B. Summary of the Major Provisions of the Final Rule
    C. Legal Authority
    D. Costs and Benefits
II. Table of Abbreviations/Commonly Used Acronyms in This Document
III. Background
    A. Need for the Regulation/History of the Rulemaking
    B. Summary of Comments to the Proposed Rule
IV. Legal Authority
V. Comments on the Proposed Rule and FDA Response
    A. Introduction
    B. Description of General Comments and FDA Response
    C. Comments on General Provisions
    D. Comments on SIP Proposals and Pre-Import Requests
    E. Comments on Certain Requirements for Section 804 Importation 
Programs
    F. Certification
    G. FD&C Act Requirements
    H. First Amendment
    I. Fifth Amendment Takings
    J. Disclosure
    K. FDA Authority
    L. Procedural Requirements
    M. Technical Amendments
VI. Effective/Compliance Date(s)
VII. Economic Analysis of Impacts
VIII. Analysis of Environmental Impact
IX. Paperwork Reduction Act of 1995
X. Federalism
XI. Consultation and Coordination With Indian Tribal Governments
XII. References

I. Executive Summary

A. Purpose of the Final Rule

    The Secretary is issuing this rule to implement section 804(b) 
through (h) of the FD&C Act (21 U.S.C. 384(b) through (h)) to allow 
importation of certain prescription drugs shipped from Canada. The 
purpose of the final rule is to achieve a significant reduction in the 
cost of covered products to the American consumer while posing no 
additional risk to the public's health and safety.

B. Summary of the Major Provisions of the Final Rule

    Under the final rule, section 804 of the FD&C Act will be 
implemented through time-limited Section 804 Importation Programs 
(SIPs), which will be authorized by FDA and managed by States or Indian 
Tribes, or in certain circumstances by pharmacists or wholesale 
distributors (SIP Sponsors). A SIP can be cosponsored by a State, 
Indian Tribe, pharmacist, or wholesale distributor.
    The final rule requires that a SIP Sponsor specify the eligible 
prescription drugs that will be included in the SIP. To be eligible 
under the final rule, a drug needs to be approved by the Government of 
Canada's Health Canada's Health Products and Food Branch (HPFB) and, 
but for the fact it bears the HPFB-approved labeling when marketed in 
Canada, needs to otherwise meet the conditions in an FDA-approved new 
drug application (NDA) or abbreviated new drug application (ANDA). 
Essentially, eligible prescription drugs are those that could be sold 
legally on either the Canadian market or the American market with 
appropriate labeling.
    The final rule also requires that the SIP Proposal identify the 
Foreign Seller in Canada that will purchase the eligible prescription 
drug directly from its manufacturer, and the Importer in the United 
States that will buy the drug directly from the Foreign Seller. 
Although the initial SIP Proposal will identify just one Foreign Seller 
and one Importer, if a SIP can show that it has consistently imported 
eligible prescription drug(s) in accordance with section 804 of the 
FD&C Act and the rule, the SIP Sponsor will be able to submit a 
supplemental proposal to add Foreign Sellers or Importers. Each supply 
chain under a SIP must be limited to three entities, i.e., one 
manufacturer, one Foreign Seller, and one Importer.
    The final rule requires that the Foreign Seller be licensed to 
wholesale drugs by Health Canada and registered with FDA as a Foreign 
Seller, and that the Importer be a wholesale distributor or pharmacist 
licensed to operate in the United States. Both the Foreign Seller and 
the Importer will be subject to the supply chain security requirements 
set forth in this rulemaking and under the FD&C Act. Among other 
things, the Foreign Seller has to ensure that a section 804 serial 
identifier (SSI), which is an alphanumeric serial number unique to each 
package or homogenous case, is affixed to or imprinted on each package 
and homogenous case of the drugs. The Importer has to ensure that a 
product identifier meeting the requirements of section 582 of the FD&C 
Act (21 U.S.C. 360eee-1) (i.e., a product identifier that includes a 
National Drug Code, unique alphanumeric serial number of up to 20 
characters, lot number, and expiration date, in both human- and 
machine-readable format) is affixed to or imprinted on each package and 
homogenous case of eligible prescription drugs received from the 
Foreign Seller. The final rule clarifies that the lot number that is 
included as part of the product identifier is the number that was 
assigned by the manufacturer of the eligible prescription drug; 
separately, section 804(d)(1)(H) of the FD&C Act requires that the 
Importer shall submit it to the Secretary. The Importer also has to 
maintain records linking the product identifier affixed to or imprinted 
on a package and

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

C. Legal Authority

    Section 804(l)(1) of the FD&C Act provides that section 804 becomes 
effective only if the Secretary certifies to Congress that the 
implementation of this section will pose no additional risk to the 
public's health and safety, and will result in a significant reduction 
in the cost of covered products to the American consumer. The Secretary 
is making this certification with regard to section 804(b) through (h) 
to Congress concurrent with the issuance of this final rule. The 
Secretary is issuing this final rule regarding importation of 
prescription drugs under section 804(b) through (h) of the FD&C Act. 
The final rule is also being issued pursuant to the Secretary's 
authorities related to adulterated and misbranded drugs under sections 
501 and 502 of the FD&C Act (21 U.S.C. 351 and 352); the Secretary's 
authorities with regard to wholesale distribution under section 503(e) 
of the FD&C Act (21 U.S.C. 353(e)); the Secretary's authority related 
to new drugs under section 505 of the FD&C Act (21 U.S.C. 355); the 
Secretary's authorities related to pharmaceutical supply chain security 
in sections 581 and 582 of the FD&C Act (21 U.S.C. 360eee and 360eee-
1); the Secretary's authority related to inspection under section 704 
of the FD&C Act (21 U.S.C. 374); and the Secretary's authority related 
to rulemaking under section 701(a) of the FD&C Act (21 U.S.C. 371(a)).

D. Costs and Benefits

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

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

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

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

A. Need for the Regulation/History of the Rulemaking

    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) (Pub. L. 108-173) was signed into law on December 8, 
2003. Section 1121 of the MMA amended section 804 of the FD&C Act to 
its current version, which, among other things, authorizes the 
Secretary, after consultation with the U.S. Trade Representative and 
the Commissioner of Customs, to issue regulations permitting 
pharmacists and wholesalers to import certain prescription drugs from 
Canada under certain conditions and limitations. Since the passage of 
the MMA, the Commissioner of Customs is now known as the Commissioner 
of CBP. For section 804 of the FD&C Act to become effective, the 
Secretary must certify that its implementation will pose no additional 
risk to the public's health and safety, and that it will result in a 
significant reduction in the cost of covered products to the American 
consumer.
    As described in the notice of proposed rulemaking (NPRM), there has 
been interest for many years in allowing the importation of less 
expensive drugs from Canada to help American consumers benefit from 
these lower prices. However, no prior Health and Human Services (HHS) 
Secretary has made the certification required under section 804(l)(1) 
to begin implementing any part of section 804 of the FD&C Act.
    In the Federal Register of December 23, 2019 (84 FR 70796), FDA 
published a proposed rule to implement section 804(b) through (h) of 
the FD&C Act to allow importation of certain prescription drugs from 
Canada.
    Executive Order 13938 of July 24, 2020 (85 FR 45757), directs the 
Secretary, as appropriate and consistent with applicable law, to take 
action to expand safe access to lower-cost imported prescription drugs 
by, among other things, completing the rulemaking process regarding the 
proposed rule to implement section 804(b) through (h) of the FD&C Act 
to allow importation of certain prescription drugs from Canada.

B. Summary of Comments to the Proposed Rule

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

IV. Legal Authority

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

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

V. Comments on the Proposed Rule and FDA Response

A. Introduction

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

B. Description of General Comments and FDA Response

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

C. Comments on General Provisions

    (Comment 3) Several comments recommend expanding the definition of 
``eligible prescription drug,'' in particular to include biological 
products.
    (Response 3) Section 804(a)(3) of the FD&C Act excludes several 
categories of drug products from the definition of ``prescription 
drug'' that can potentially be imported from Canada pursuant to section 
804 of the FD&C Act, including controlled substances, biological 
products (as defined in section 351 of the Public Health Service Act 
(PHS Act) (42 U.S.C. 262)), infused drugs (including a peritoneal 
dialysis solution), intravenously injected drugs, and drugs that are 
inhaled during surgery.
    (Comment 4) Several comments suggest that some risk evaluation and 
mitigation strategies (REMS) could be implemented effectively under a 
SIP with no additional risk, so drugs that are subject to REMS should 
not be excluded from the definition of ``eligible prescription drug.''
    (Response 4) As discussed in the NPRM (84 FR 70796 at 70804), REMS 
drugs are high-risk products with known safety issues. REMS programs 
are mandated by FDA but implemented by manufacturers. In order to 
implement and assess a REMS, a manufacturer needs to have control over 
the drug that is the subject of the REMS. For example, for REMS that 
require tight controls on distribution of a drug in order to mitigate 
risks, use of Foreign Sellers will make it much more difficult to 
maintain those controls and could introduce gaps that have a 
significant impact on the safety of the drug.
    (Comment 5) Several comments recommend excluding certain other 
types of drug products from the definition of ``eligible prescription 
drug.'' One comment suggests that the definition of ``eligible 
prescription drug'' should be limited to sole-source drugs and exclude 
drugs with remaining patents or exclusivities, drugs subject to post-
marketing commitments or requirements, and drugs considered biologics 
in Canada. In addition, several comments request clarification 
regarding criteria FDA may use in determining whether a particular drug 
product can be imported safely in the context of a specific SIP 
Proposal.
    (Response 5) At this time, FDA is not excluding additional 
categories from the final rule. For products not excluded by the final 
rule, FDA will determine whether the product can be imported safely in 
the context of a specific SIP Proposal on a product-by-product basis, 
including, for example, sterile drugs; drugs requiring special storage 
conditions such as temperature controls; or drugs intended to be used 
solely with a specific, separately distributed delivery system (such as 
may be the case for drug constituent parts of cross-labeled combination 
products, see 21 CFR 3.2(e)(3), (4)). A SIP Sponsor would need to 
explain in its SIP Proposal how it will address any concerns arising 
from the manufacture, storage, and transport of each eligible 
prescription drug, including concerns related to controlling 
contamination, preserving sterility, and ensuring stability.
    (Comment 6) Several comments raise concerns about SIPs potentially 
turning to online pharmacies as Foreign Sellers.
    (Response 6) We are not changing the rule based on these comments, 
as the final rule includes provisions to safeguard against a SIP 
turning to rogue online pharmacies as Foreign Sellers. As discussed in 
the NPRM, while there are pharmacy websites that operate legally and 
offer convenience, privacy, and safeguards for purchasing medicines, we 
agree that there are many rogue online pharmacies that sell medicines 
at deeply discounted prices, often without requiring a prescription or 
adhering to other safeguards followed by pharmacies licensed by a State 
in the United States (Refs. 1 and 2). The final rule defines ``Foreign 
Seller'' to mean an

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establishment within Canada engaged in the distribution of an eligible 
prescription drug that is imported or offered for importation into the 
United States. The final rule further provides that a Foreign Seller 
must have an active drug establishment license to wholesale drugs by 
Health Canada and must be registered with provincial regulatory 
authorities to distribute HPFB-approved drugs. The final rule also 
requires that a Foreign Seller cannot be licensed by a provincial 
regulatory authority with an international pharmacy license that allows 
it to distribute drugs that are approved by countries other than Canada 
and that are not HPFB-approved for distribution in Canada. A Foreign 
Seller must also be registered with FDA under section 804 of the FD&C 
Act. The final rule also includes a number of supply chain requirements 
for Foreign Sellers. Moreover, FDA retains the authority not to approve 
a SIP, or to discontinue a SIP, absent a continued demonstration that 
the Foreign Seller meets all the relevant safety criteria.
    (Comment 7) One comment proposes that FDA revise the definition of 
the term ``manufacturer'' to include only an applicant, as defined in 
Sec.  314.3 (21 CFR 314.3), who owns an approved NDA or ANDA for an 
eligible prescription drug.
    (Response 7) As described in the NPRM, under the rule the term 
``manufacturer'' includes an applicant, as defined in Sec.  314.3, who 
owns an approved NDA or ANDA for an eligible prescription drug, or a 
person who owns or operates an establishment that manufactures an 
eligible prescription drug. ``Manufacturer'' also means a holder of a 
drug master file containing information necessary to conduct the 
Statutory Testing, prepare the manufacturer's attestation and 
information statement, or otherwise comply with section 804 of the FD&C 
Act or this part. We decline to change this definition because we 
continue to believe that a person that owns or operates an 
establishment that manufactures an eligible prescription drug or a 
holder of a drug master file containing information necessary to 
conduct the Statutory Testing or prepare the manufacturer's attestation 
and information statement may have information about eligible 
prescription drugs that will be needed to ensure that the drugs comply 
with the FD&C Act and the requirements in this final rule. An Importer 
will determine which manufacturer, as defined in the rule, has the 
information needed, in particular for the Pre-Import Request, and will 
send a request for information to the appropriate manufacturer, which 
might not be the applicant. For example, the Importer may send a 
request for batch and stability testing records to the facility that 
manufactured the eligible prescription drug and that entity would be 
required to provide those records if the records are in the facility's 
possession or control.
    (Comment 8) Several comments request that the definition of ``SIP 
Sponsor'' include a State agency that a State has authorized to submit 
a SIP Proposal even if the State agency does not otherwise oversee 
pharmacies and wholesaler distributors.
    (Response 8) FDA has revised the definition of the term ``SIP 
Sponsor'' to clarify that the term means a State or Indian Tribe that 
regulates wholesale drug distribution or the practice of pharmacy, 
submits a proposal to FDA that describes a program to facilitate the 
importation of prescription drugs from Canada under section 804 of the 
FD&C Act, and is responsible for oversight of the implementation of the 
program. Under section 201 of the FD&C Act (21 U.S.C. 321), the term 
``State'' generally means any State or Territory of the United States, 
the District of Columbia, and the Commonwealth of Puerto Rico. In 
certain circumstances, a pharmacist or wholesale distributor may be a 
SIP Sponsor. FDA has also added a separate definition for the term 
``SIP Co-Sponsor,'' which means any other State, Indian Tribe, 
pharmacist, or wholesale distributor that, with the SIP Sponsor, signs 
a SIP Proposal. A State agency that a State has authorized to submit a 
SIP Proposal may submit a SIP Proposal on behalf of the State, even if 
the State agency does not otherwise oversee pharmacists and wholesale 
distributors. We note that a SIP Proposal must, among other things, 
explain how the SIP Sponsor will ensure that all the participants in 
the SIP comply with the requirements of section 804 and this rule and 
describe the procedures the SIP Sponsor will use to ensure that 
requirements are met.
    (Comment 9) Several comments suggest that the rule be changed to 
allow pharmacists or wholesalers to be SIP Sponsors without a State or 
Indian Tribe as a cosponsor. Some of these comments assert, for 
example, that pharmacists and wholesalers operate under robust 
regulatory requirements and that oversight by a State or Tribe would be 
redundant and could lead to an increase in administrative costs that 
would decrease the savings to American consumers under the program. 
Some comments assert that State sponsorship could result in individual 
SIP differences that will complicate the distribution and tracking of 
drugs. Other comments oppose allowing pharmacists or wholesalers to be 
SIP Sponsors without a State or Indian Tribe as a cosponsor. Those 
comments suggest, for example, that pharmacists and wholesalers would 
not have adequate resources or authority to manage oversight functions 
effectively, and that involvement of a State or Indian Tribe is 
critical to facilitate a prompt response in the case of a recall or 
other event that requires a quick, coordinated response from 
practitioners, pharmacies, wholesalers, or other entities to protect 
the public health.
    (Response 9) In the NPRM, FDA sought comment on whether it could be 
possible for a pharmacist or wholesaler to be a SIP Sponsor without a 
State or Indian Tribe as a sponsor, while posing no additional risk to 
the public's health and safety. We believe oversight by a State or 
Indian Tribe is an important safeguard because these entities, which 
oversee pharmacies and wholesale distribution and have tools to protect 
public health, are uniquely positioned to provide independent oversight 
of importation activities. Although we could not foresee how this 
approach could be adopted without posing additional risk to the 
public's health and safety, we stated that if we received information 
that demonstrates how a proposal that does not include a State or 
Indian Tribe as a sponsor would provide the same level of assurance of 
safety as a proposal with such a sponsor, we would consider having the 
final rule allow for this possibility. We provided an alternative 
codified provision that appeared under ``Option 2'' in proposed Sec.  
251.2 (21 CFR 251.2). FDA declines to adopt the alternative codified 
provision. However, we are open to the possibility that a pharmacist or 
wholesaler, after actively participating in a SIP, may be able to 
demonstrate that their proposal that does not include a State or Indian 
Tribe as the SIP sponsor could provide the same level of assurance of 
safety. Further, we recognize that Agency experience with this novel 
program is necessary to determine how to appropriately evaluate whether 
a pharmacist or wholesaler has adequately supported such a 
demonstration. Accordingly, we have revised the rule to provide that, 
after an initial 2-year period beginning on the date of the first 
import entry under any SIP authorized under this rule, the Secretary 
may determine, based on experience under the program, that there is a 
sufficient likelihood that a proposal that does not include a State or 
Indian Tribe as the SIP sponsor could provide the same level of 
assurance of safety as a proposal that does include

[[Page 62099]]

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

D. Comments on SIP Proposals and Pre-Import Requests

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

[[Page 62100]]

because SIPs are new and unique programs which may be challenging to 
implement at first, they should begin with a single importer and single 
foreign seller. Based on FDA's experience with drug importation and 
implementation of new programs, we believe that an increase in the 
number of entities a SIP must oversee and, potentially, a corresponding 
increase in the volume of product, could multiply the opportunity for 
supply chain security problems. Absent a demonstrated track record of 
oversight capability and compliance, initially limiting a SIP to one 
Foreign Seller and one Importer is an important safeguard. With regard 
to the concern raised in some comments that a manufacturer could refuse 
to deal with participating Foreign Sellers, we do not intend to 
publicly disclose information from the SIP Proposal or authorization 
that is confidential business information where such disclosure is 
restricted by law, potentially including information about Foreign 
Sellers or the eligible prescription drugs that might be imported. 
Generally, information about suppliers and proposed business plans is 
confidential business information unless that information is made 
public by the information owner. However, this information might become 
public in other ways, such as through state open records laws. Even 
under such circumstances, the relationship between a manufacturer and a 
Foreign Seller will be subject to complex market dynamics, with many 
variables including relative market power, and it is difficult to 
predict what transactions might or might not occur.
    (Comment 14) One comment recommends that SIP Proposals describe a 
plan for ensuring that FDA-approved patient labeling is dispensed to 
patients. One comment asks that the FDA-approved patient labeling 
include additional information pertaining to importation under a SIP 
generally or under a particular SIP. For those eligible prescription 
drugs that do not have FDA-approved patient labeling, the comment asks 
that FDA require that they have patient labeling that is not specific 
to a particular product that includes information pertaining to 
importation under a SIP generally or under a particular SIP. The 
comment asks that this patient labeling include the labeling statement 
described in Sec.  251.13.
    (Response 14) We are not making changes to the final rule with 
regard to this comment. The final rule provides that Importers are 
responsible for, among other things, ensuring that eligible 
prescription drugs are relabeled with the required U.S. labeling, 
including patient labeling such as Medication Guides, Instruction for 
Use documents, and patient package inserts. As described in the NPRM, a 
SIP Proposal must identify the FDA-registered repackager or relabeler 
in the United States that will relabel the imported drugs with the 
required U.S. labeling, including the carton and container labeling, 
Prescribing Information, and any patient labeling, such as Medication 
Guides, Instruction for Use documents, and patient package inserts. The 
final rule requires that the SIP Proposal explain how the SIP Sponsor 
will educate pharmacists, healthcare providers, pharmacy benefit 
managers, health insurance issuers and plans, as appropriate, and 
patients about the eligible prescription drugs imported under its SIP. 
We do not believe it is necessary to add a requirement to provide 
patient labeling that is not specific to a particular product and that 
includes information pertaining to importation under a SIP generally or 
under a particular SIP.
    (Comment 15) Several comments address issues related to 
identification in a SIP Proposal of drugs that may meet program 
requirements, if some information about potentially eligible 
prescription drugs is not available to the SIP Sponsor at the time it 
submits a SIP Proposal. One comment suggests that manufacturers should 
not be required to disclose manufacturing information before SIP 
authorization.
    (Response 15) We decline to make changes in response to these 
comments. As noted in the NPRM (84 FR 70796 at 70807), we recognize 
that at the time of submission of a SIP Proposal the SIP Sponsor may 
not know whether a drug meets the conditions in an FDA-approved NDA or 
ANDA. FDA intends to review, among other things, the information that 
the SIP Sponsor is able to provide about each of the drugs that the SIP 
Sponsor seeks to import to confirm that each is approved by both HPFB 
and FDA, that each FDA-approved drug is currently marketed in the 
United States, and that none of the drugs falls into any of the 
exclusions from the definition of eligible prescription drug. Under the 
final rule, Sec.  251.3(d)(5)-(6), (e)(5) and (7), manufacturers are 
not required to disclose information before a SIP is authorized.
    (Comment 16) One comment claims that the rule would, if finalized 
as proposed, increase risks to the public health by assigning 
pharmacovigilance and recall responsibilities to States and other 
entities with little to no experience in conducting, or capability to 
conduct, these complex activities.
    (Response 16) The rule requires a SIP Sponsor to demonstrate that 
post-importation pharmacovigilance and other requirements of the FD&C 
Act and this final rule are met. As discussed in the NPRM, for example, 
States provide the primary oversight of wholesale distributors' 
storage, handling, and distribution practices to ensure the quality of 
drugs is maintained. States also ensure that pharmacies and pharmacists 
comply with statutes and regulations governing the practice of 
pharmacy, which includes dispensing of drugs to patients. States have 
the authority to inspect pharmacies and wholesale distributors, and, in 
some cases, other pharmaceutical supply chain participants the States 
license, and to take disciplinary action if warranted. States also have 
tools that they can use to respond rapidly should activities under 
their SIP adversely affect the public health. In addition, under the 
final rule, Importers will submit adverse event, field alert, and other 
reports to both FDA and the manufacturer. The reports will aid the 
manufacturer in its pharmacovigilance efforts and will provide FDA with 
information that may be relevant to its review of SIP Proposals and 
Pre-Import Requests, as well as to its oversight of drugs imported 
under section 804 of the FD&C Act and of section 804 in general. The 
SIP Proposal must include a written recall plan that will be reviewed 
for completeness and effectiveness by the Agency before the SIP is 
authorized. In addition, FDA assists firms with carrying out their 
recall responsibilities to protect the public health from distributed 
products in violation of the FD&C Act and other laws administered by 
FDA.
    (Comment 17) Several comments suggest that before FDA authorizes a 
SIP Proposal submitted by a State agency, a potential SIP Sponsor 
should need to show that the SIP and any necessary funding have been 
approved by the State's legislature and executive.
    (Response 17) We decline to make these changes in the final rule 
because it may not be feasible for a State to make a final funding 
determination for a SIP before FDA evaluates the SIP Proposal. Instead, 
the final rule requires that a SIP Proposal include, among other 
things, an explanation of how the SIP Sponsor will ensure that all the 
participants in the SIP comply with the requirements of section 804 of 
the FD&C Act and the rule, as well as a description of the procedures 
the SIP Sponsor will use to ensure that these requirements are met. In 
addition, the final rule provides that, among other reasons, FDA may 
decide not to authorize a SIP Proposal because

[[Page 62101]]

of potential safety concerns with the SIP, because there exists a 
degree of uncertainty that the SIP Proposal would adequately ensure the 
protection of public health, because of the relative likelihood that 
the SIP Proposal would not result in significant cost savings, or in 
order to limit the number of authorized SIPs so FDA can effectively and 
efficiently carry out its responsibilities under section 804 of the 
FD&C Act in light of the amount of resources allocated to carrying out 
such responsibilities.
    (Comment 18) Several comments suggest that various entities or 
persons participating in a SIP, including Foreign Sellers, Importers, 
repackagers, relabelers, and laboratories, should be inspected by FDA 
before the SIP could be authorized. One comment suggests that FDA 
should conduct periodic audits of shipments of eligible prescription 
drugs being imported.
    (Response 18) FDA is not making these changes because we believe 
the Agency's other mechanisms for oversight are sufficient. Although we 
decline to add a pre-authorization inspection requirement, we note, as 
discussed in the NPRM, that we retain our right to conduct inspections 
under section 704 of the FD&C Act. Inspections may occur before 
authorization or as part of FDA's risk-based inspection program. In 
addition, the final rule requires SIP Sponsors and other SIP 
participants to agree to submit to audits of their books and records 
and inspections of their facilities as a condition of participation in 
a SIP. If a SIP Sponsor, manufacturer, Foreign Seller, Importer, 
qualifying laboratory, or other participant in the supply chain that is 
subject to inspection, delays, denies, or limits that inspection, or 
refuses to permit entry or inspection of its facility or its records, 
any drug held by that entity would be deemed to be adulterated (see 
section 501(j) of the FD&C Act). In those circumstances, FDA could also 
suspend the SIP, in whole or in part, immediately. We also decline to 
add a provision for periodic audits of shipments of eligible 
prescription drugs. All shipments are subject to Statutory Testing and, 
under this rule, FDA will be provided with three sets of the samples of 
each imported drug to enable FDA to also conduct the Statutory Testing 
as FDA deems warranted. In addition, FDA already has the authority to 
collect samples of shipments under 21 CFR 1.90.
    (Comment 19) One comment proposes that SIP Proposals should be 
required to include background information for all entities or persons 
that are downstream of the SIP, in addition to the entities or persons 
in the SIP, if the SIP does not distribute drugs directly to patients.
    (Response 19) FDA declines to make this change. The final rule 
requires that SIP Proposals include, among other things, certain 
background information about Importers and Foreign Sellers. In the 
NPRM, we requested comment on whether the rule should require 
additional or alternative background information and on whether the 
background information requirement should cover additional or 
alternative individuals or entities. At this time, we do not believe 
that additional background information about downstream supply chain 
entities or persons is necessary to assure the security of the SIP 
supply chain or to assure that the requirements of the FD&C Act and 
this rule will be met because these entities and persons need to be in 
compliance with licensure and other Federal and State requirements.
    (Comment 20) Several comments discuss the important role a Foreign 
Seller would play in a SIP. One comment recommends that FDA take 
additional steps to ensure Foreign Sellers maintain robust controls and 
that FDA obtain additional information regarding compliance and 
business history, including through inspections. The comment also 
recommends that the Foreign Seller or the Importer be required to 
disclose any civil judgments against or settlements entered into by the 
Foreign Seller or Importer related to liability for violations of 
State, Federal, or Canadian laws regarding drugs or devices or the sale 
or distribution of drugs or devices. One comment suggests that FDA 
require SIP Proposals to include disciplinary actions imposed against 
the Foreign Seller or the Importer beyond just United States and 
Canadian borders. Several comments reference potential difficulties in 
vetting and regulating Foreign Sellers.
    (Response 20) FDA declines to make changes in response to these 
comments because we believe the final rule includes sufficient controls 
without these requirements. Under the final rule, Foreign Sellers must, 
among other things, be licensed by Health Canada as drug wholesalers 
and be registered with a provincial regulatory authority to distribute 
HPFB-approved drugs. The final rule also requires that the SIP 
Sponsor's importation plan include, among other things, a list of all 
disciplinary actions imposed against the Foreign Seller or the Importer 
by State, Federal, or Canadian regulatory bodies, including any such 
actions against the principals, owners, directors, officers, or any 
facility manager or designated representative of such manager for the 
previous 7 years before submission of the SIP Proposal.
    (Comment 21) Several comments suggest ways a SIP Proposal might 
account for costs and benefits associated with the SIP and determine 
whether the SIP would significantly reduce costs for American 
consumers. Several comments suggest that FDA should limit the ways in 
which a SIP Proposal should be able to meet this requirement. Several 
comments asked about how section 804 drugs will be treated under 
government programs, including Medicaid and the 340B Drug Pricing 
Program. One comment suggests that FDA should identify a threshold for 
whether a reduction in cost is significant.
    (Response 21) We decline to make any changes to the rule in 
response to these comments. As discussed in the NPRM, FDA intends to 
determine whether a reduction in cost is significant in the context of 
considering a specific proposal. The information needed to demonstrate 
anticipated cost savings to the American consumer will be dependent on 
the specific mechanisms which the SIP Proposal is using to reduce costs 
for American consumers. The SIP proposal should clearly articulate the 
mechanism by which the proposal will reduce costs to consumers and 
provide relevant information given that context. To demonstrate 
expected cost savings, a SIP Sponsor could compare anticipated 
acquisition costs or consumer prices per unit of each eligible 
prescription drug that the SIP Sponsor is seeking to import. A SIP 
Sponsor could also compare the current retail cash price of the drugs. 
If the cost savings do not go to consumers directly, because, for 
example, they accrue to a healthcare provider or payor, the SIP 
Proposal would need to show that the SIP will result in a significant 
reduction in the cost of covered products to the American consumer. We 
anticipate that some SIP Sponsors may seek to import drugs to be used 
by patients in State-run programs in which consumers do not directly 
pay the cost of drugs. In such cases, a SIP Sponsor could submit 
information about whether cost-sharing expenses are reduced for the 
participants, or whether the program will result in cost savings that 
are passed on to consumers in other ways, such as increasing the number 
of people covered by a State program, or increasing the availability of 
drugs covered by the program. A SIP proposal cannot demonstrate cost 
savings in connection with a government program if the eligible 
prescription drugs to be imported under the SIP do not meet the 
program's requirements. This rule is not intended to address how 
agencies other

[[Page 62102]]

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

[[Page 62103]]

contains must explain how the SIP will ensure that drugs are not 
misbranded.
    (Comment 25) Several comments suggest that FDA should establish 
specific timeframes for reviewing and authorizing SIP Proposals. One 
comment recommends that SIP Proposals should be addressed on a first-
come, first-served basis. One comment recommends that SIPs be limited 
at first to ensure FDA can effectively and efficiently carry out its 
responsibilities in connection with the SIP, there are no adverse 
impacts on Canada, and cost savings for consumers are achieved.
    (Response 25) Because this program is novel, we do not have 
sufficient information to estimate a timeframe for the review of a SIP 
Proposal. Review times may depend on factors such as the quality and 
complexity of proposals and Agency resource constraints. FDA plans to 
establish internal processes for its review of SIPs, rather than 
specifying details, such as the order of its review, in this 
regulation.
    (Comment 26) One comment proposes that each reauthorization of a 
SIP be accompanied by a new assessment of whether the SIP would ``pose 
no additional risk to the public's health and safety.''
    (Response 26) We decline to change the rule in response to this 
comment. The final rule provides that FDA may deny a request for 
authorization, modification, or extension of a SIP including if a 
proposed SIP does not meet the standard for authorizing a SIP. The 
final rule further provides that if a SIP Proposal meets the 
requirements of the rule, FDA may nonetheless decide not to authorize 
the SIP Proposal. The final rule also provides that FDA may decide not 
to authorize a SIP Proposal because of potential safety concerns with 
the SIP or because of the degree of uncertainty that the SIP Proposal 
would adequately ensure the protection of public health.
    (Comment 27) Several comments support requirements on Importers to 
provide certain manufacturing information, including the source of the 
imported product and active pharmaceutical ingredient (API) 
information, and to maintain records of transactions.
    (Response 27) The final rule provides that a prescription drug may 
not be imported or offered for import under this part unless the 
Importer has filed a Pre-Import Request for that drug that has been 
granted by FDA. The Pre-Import Request must identify and include a 
description of the eligible prescription drug(s) covered by the Pre-
Import Request, including among other things, the established and 
proprietary name of the drug, API information, and manufacturer 
information. Additionally, the final rule provides that Importers would 
need to maintain records, for not less than 6 years, that allow the 
Importer to associate the product identifier it affixed or imprinted to 
each package and homogenous case of product it received from the 
Foreign Seller, with the SSI that had been assigned by the Foreign 
Seller, and the Canadian DIN that was on the package when the Foreign 
Seller received the product from the original manufacturer.
    (Comment 28) Several comments assert that the final rule should 
rely as little as possible on requiring manufacturers to take certain 
actions and make certain disclosures. The comments say that because 
manufacturers may oppose those requirements, the final rule should 
primarily rely on other measures where possible to achieve the same 
aims. The comments assert that FDA must also be prepared to provide any 
necessary information that a manufacturer refuses to provide and to 
take any other action against the manufacturer as appropriate.
    (Response 28) The obligations on manufacturers under section 804 
and this rule are enforceable under section 301(aa) of the FD&C Act (21 
U.S.C. 331(aa)), which provides that, among other things, a violation 
of the regulations implementing section 804 is a prohibited act. 
Furthermore, section 303(b)(6) of the FD&C Act (21 U.S.C. 333(b)(6)) 
provides for a prison term of up to 10 years for manufacturers or 
Importers that knowingly fail to comply with a requirement of section 
804(e) of the FD&C Act, including that: (1) The manufacturer or 
Importer conduct the Statutory Testing at a qualifying laboratory; (2) 
if the Importer conducts the testing, the manufacturer supply the 
information needed to authenticate the drug being tested and to confirm 
that the labeling is in compliance with the FD&C Act; and (3) if the 
manufacturer supplies this information to the Importer, the Importer 
keep it in strict confidence and only use it for testing and complying 
with the FD&C Act. Violators are also subject to fines under 18 U.S.C. 
3571. Because of these provisions, we have determined that it is not 
necessary to include proposed Sec.  251.16(i) in the final rule. That 
provision stated that ``FDA may transmit information that the 
manufacturer is required to provide to an Importer under this section 
on the manufacturer's behalf if the manufacturer has not transmitted 
such information to the Importer in a timely fashion and if such 
information is available to FDA in the NDA or ANDA.''
    (Comment 29) One comment recommends that FDA shorten the pre-import 
notification period to give SIPs more flexibility to respond to 
emerging needs based on demand for certain products, and to avoid 
having to forecast demand far in advance of importation.
    (Response 29) The NPRM provided that after FDA has authorized a SIP 
Proposal, the Importer would submit a Pre-Import Request to FDA at 
least 30 calendar days before the scheduled date of arrival or entry 
for consumption for a shipment containing an eligible prescription drug 
covered by the SIP, whichever is earlier. FDA declines to change this 
provision because the Agency will need sufficient time to review the 
Pre-Import Request and determine if the Importer will meet all the 
requirements for importation. FDA may consider expediting reviews of 
Pre-Import Requests, if appropriate, and depending on resources.
    (Comment 30) Several comments recommend that the final rule require 
an Importer to file a separate Pre-Import Request for each shipment of 
eligible prescription drugs.
    (Response 30) FDA is not making changes in response to these 
comments. As discussed in the NPRM, when a Pre-Import Request is 
granted by FDA, that Pre-Import Request covers subsequent shipments of 
the eligible prescription drug(s) identified in the Agency's grant of 
that Request, provided that all of the information contained in the 
Pre-Import Request, with the exception of the anticipated dates of 
shipment, is the same for each subsequent shipment covered by the Pre-
Import Request when the shipment arrives in the United States. We 
believe that Importers should have the flexibility to decide how many 
shipments should be covered by a Pre-Import Request. An Importer could 
choose to send each eligible prescription drug covered by a Pre-Import 
Request in a separate shipment, for example. An Importer could also 
choose to send one eligible prescription drug covered by a Pre-Import 
Request in multiple shipments. Requiring an Importer to file a separate 
Pre-Import Request for each shipment would not facilitate the 
importation of eligible prescription drugs and would unnecessarily 
burden both the Importer and the Agency.
    (Comment 31) One comment recommends that FDA clarify that a 
manufacturer is not required to provide an attestation unless it has 
received formal notification from FDA that an applicable SIP has been 
authorized. The

[[Page 62104]]

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

E. Comments on Certain Requirements for Section 804 Importation 
Programs

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

[[Page 62105]]

will need to display a National Drug Code (NDC) and serial number that 
is unique to the eligible prescription drug, it will need to provide 
information about the Importer, and it will need to include the 
labeling statement required by this rule. If the SIP maintains a 
website, the labeling statement could also include the website address. 
As discussed below, we have revised the required labeling statement as 
follows: ``[This drug was/These drugs were] imported from Canada 
without the authorization of [Name of Applicant] under the [Name of SIP 
Sponsor] Section 804 Importation Program.'' We have also revised the 
rule to provide that NDC(s) must be included on the immediate container 
label and outside package. Also, as discussed in the NPRM, if an 
eligible prescription drug's container is too small to fit the 
additional information required by this rule, FDA would consider a 
supplemental proposal to modify the labeling of an eligible 
prescription drug.
    (Comment 36) One comment requests that FDA amend the rule to not 
allow identification of the manufacturer on the labeling of a drug 
imported and distributed via a SIP unless the manufacturer consents to 
such identification.
    (Response 36) We decline to make this change. In the NPRM, we 
proposed to require that if the FDA-approved labeling of a drug 
imported and distributed via a SIP did not include the name and place 
of business of the manufacturer, that the name and place of business of 
the manufacturer be added. We have decided that it is not necessary to 
add the name and place of business of the manufacturer if that 
information is not already included on the FDA-approved labeling. The 
labeling will include the name and place of business of the 
manufacturer, packer or distributor that appears on the FDA-approved 
labeling and it will also include the name and place of business of the 
Importer. This will ensure that those responsible for the product can 
be identified. We note that the final rule includes the addition of a 
phrase in the labeling statement explaining that the drug is imported 
without the manufacturer's authorization, which will help to prevent 
potential misperceptions regarding whether the manufacturer authorized 
the product to be imported.
    (Comment 37) Comments ask that the proposed labeling statement that 
Importers are required to add to the labeling of a section 804 drug not 
include the phrase ``to reduce its cost to the American consumer.'' A 
comment says that this statement would not be consistent with FDA 
regulations and the purpose of labeling, which the comment says is to 
provide safety and effectiveness and use information. Another comment 
notes that generic drugs typically are not permitted to be labeled with 
comparative cost information.
    (Response 37) We have determined that it is not necessary to 
include the phrase ``to reduce its costs to the American consumer'' in 
the labeling statement that Sec.  251.13(b)(4)(iv) requires Importers 
to add to the labeling of a section 804 drug. In the proposed rule, we 
explained that the purposes of the labeling statement are to help avoid 
potential confusion between products with the same name and to help 
pharmacists distinguish a section 804 product when selecting the 
product on the pharmacy shelf (84 FR 70796 at 70819). The labeling 
statement may also aid in pharmacovigilance (84 FR 70796 at 70820). The 
phrase ``to reduce its costs to the American consumer'' is not 
necessary to achieve these ends.
    (Comment 38) One comment seeks clarification regarding whether, if 
a manufacturer updates the labeling or packaging of a product, the 
labeling for an eligible prescription drug would also need to be 
updated. The comment also requests clarification regarding whether 
paper labeling will be included in the package of the imported 
prescription drug. Another comment questions who would be responsible 
for ensuring that labeling of drugs imported under the rule reflects 
safety labeling updates.
    (Response 38) As discussed in the NPRM, an Importer is responsible 
for relabeling a drug, or arranging for it to be relabeled, to meet the 
requirements of the final rule. The relabeling and associated limited 
repackaging activities must meet applicable requirements, including 
applicable current good manufacturing practice (CGMP) requirements 
under parts 210 and 211 (21 CFR parts 210 and 211). Consistent with the 
NPRM, we have clarified in the final rule that at the time an eligible 
prescription drug is sold or dispensed by the Importer, it has to have 
been relabeled to be consistent with the FDA-approved labeling, 
including the carton and container labeling, Prescribing Information, 
and patient labeling, such as Medication Guides, Instructions for Use, 
and patient package inserts. In addition, the eligible prescription 
drug needs to have been assigned a product identifier in compliance 
with section 582 of the FD&C Act. The relabeled eligible prescription 
drug will be considered consistent with the FDA-approved labeling if it 
varies from the FDA-approved labeling, including carton and container 
labeling, Prescribing Information, and patient labeling, solely to the 
extent described in this final rule.
    (Comment 39) One comment says that failure to relabel a container 
closure system, such as a blister pack, could lead to consumer 
confusion or medication errors, but relabeling could breach or 
otherwise damage the container system.
    (Response 39) If it is not possible to relabel a product without 
affecting the container closure system, such as a blister pack, then 
the product cannot be imported under a SIP. Certain repackaging that is 
necessary to perform the relabeling described in the final rule is 
permissible under this rule, but the rule does not allow repackaging of 
drugs that breaches the container closure system, such as a blister 
pack, which would introduce unnecessary risk of adulteration, 
degradation, and fraud for drugs imported under a SIP.
    (Comment 40) Several comments express concern about the 
availability of new NDC numbers.
    (Response 40) FDA is considering options to address potential 
demand for new labeler codes for NDC numbers to ensure availability.
    (Comment 41) Several comments recommend that FDA assign a Canadian 
NDC as a unique labeler code and maintain the U.S. NDC product code and 
package size code. One comment also recommends that the use and 
assignment of NDC labeler codes under this rule be aligned with FDA's 
draft guidance for industry titled ``Importation of Certain FDA-
Approved Human Prescription Drugs, Including Biological Products, under 
Section 801(d)(1)(B) of the Federal Food, Drug, and Cosmetic Act,'' 
available at https://www.fda.gov/media/133646/download.\1\ One comment 
suggests that different NDCs for imported drugs sharing the same 
proprietary name as FDA-approved drugs may help in accurately capturing 
reports on counterfeits or suspect products for the imported drug.
---------------------------------------------------------------------------

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

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

[[Page 62106]]

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

[[Page 62107]]

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

[[Page 62108]]

accordance with section 501(a)(2)(B) of the FD&C Act and part 211. In 
addition, as noted in the NPRM (84 FR 70796 at 70814), the Foreign 
Seller must maintain records associating the SSI with the DIN and all 
the records it received from the manufacturer upon receipt of the 
original shipment intended for the Canadian market.
    (Comment 47) Several comments address a Foreign Seller's 
responsibilities with regard to the SSI. One comment asserts that 
although the rule states that the SSI should be ``unique,'' the SSI 
could be duplicated between Foreign Sellers. The comment further 
suggests that the SSI would not allow traceability back to a 
manufacturer because, unlike a product identifier, the SSI does not 
contain the serial number of the manufacturer. One comment seeks 
clarification about what information a Foreign Seller needs to maintain 
about products received from a manufacturer.
    (Response 47) Although FDA acknowledges the possibility that SSIs 
could be duplicated between Foreign Sellers, we have revised the rule 
to require, as described in the NPRM (84 FR 70796 at 70814), that the 
Foreign Seller maintain records associating the SSI with the Canadian 
DIN and all the records it received from the manufacturer upon receipt 
of the original shipment intended for the Canadian market. Those 
records received from the manufacturer upon receipt of the original 
shipment are the same as those that the manufacturer is required to 
submit to the importer under Sec.  251.14(b).
    FDA also notes that while the SSI is required to be affixed by the 
Foreign Seller on the portion of drugs received from the manufacturer 
that it intends to place into U.S. commerce in a transaction with the 
Importer, this requirement in intended to work in complementary fashion 
to other safeguards in the rule, including a requirement for a direct 
purchase between the Foreign Seller and manufacturer, and requirements 
on the Importer to ensure that the records received from the Foreign 
Seller accord with those the manufacturer provided to the Foreign 
Seller upon sale of the product for the Canadian market, to ensure that 
the product has come directly from the original manufacturer.
    FDA believes that the SSI requirement is necessary as an additional 
safeguard in the rule to allow for Importers and Foreign Sellers to 
verify the product that they transacted at the package level; such a 
requirement helps foster the ability of Importers and Foreign Sellers 
to quickly identify potentially suspect or illegitimate foreign 
products.
    (Comment 48) Several comments suggest that the rule should allow 
relabeling of drugs to occur in Canada.
    (Response 48) FDA declines to make this change. The final rule 
requires that relabeling only take place after the Agency has accepted 
the results of the Statutory Testing, which takes place at a qualifying 
laboratory in the United States. This avoids the potential diversion 
that could occur if eligible prescription drugs are relabeled for the 
U.S. market prior to import, and then fail the testing requirements. If 
eligible prescription drugs were relabeled in Canada before they were 
tested in the United States, diversion could happen before or after 
export of the refused drugs to Canada. Eligible prescription drugs 
cannot be relabeled in Canada after they are tested in the United 
States, because, as explained later, sampling upon arrival in the 
United States helps ensure that the sample is selected from the actual 
shipment of drugs that arrives in the United States. In addition, if 
the drugs are counterfeit, they would be counterfeits of the Canadian 
drug. Relabeling the drugs in Canada would destroy the evidence of 
counterfeiting which is often found on the label. The Importer and FDA 
would, therefore, be impeded in our efforts to detect that a drug being 
imported under a SIP is a counterfeit.
    (Comment 49) Several comments raise concerns about whether the 
product identifier that would be affixed or imprinted by an Importer, 
if the Importer intends to place the product into further transactions 
in commerce, provides sufficient information about the product's 
origin.
    (Response 49) The final rule provides that once the Importer 
receives an eligible prescription drug from the Foreign Seller, 
relabeling would need to include affixing or imprinting a product 
identifier that is associated with the SSI that the Foreign Seller 
assigned to the product before sending it to the Importer. As noted in 
the NPRM (84 FR 70796 at 70815), a relabeler who contracts with the 
Importer to affix a product identifier on the Importer's behalf must, 
even if not engaged in a repackaging operation with respect to the 
eligible prescription drug, have systems and processes in place to meet 
applicable requirements of a ``repackager'' under section 582(e) of the 
FD&C Act for any transaction involving the eligible prescription drug.
    As described in the NPRM (84 FR 70796 at 70815), per section 
581(14) of the FD&C Act, the product identifier must include a 
``standardized numerical identifier'' (SNI), as that term is defined in 
section 581(20) of the FD&C Act; the lot number assigned by the 
manufacturer; and expiration date of the product and be in human and 
machine-readable form encoded in a two-dimensional barcode. An SNI 
consists of an alphanumeric serial number and NDC under section 581(20) 
of the FD&C Act. With regard to the serial number component of the SNI, 
the Importer may elect to use the same serial number (i.e., the SSI) 
that the Foreign Seller had previously assigned to the product, or the 
Importer may elect to assign a new serial number. Under the final rule, 
the Importer would need to maintain records, for not less than 6 years, 
that allow the Importer to associate the product identifier it affixed 
or imprinted to each package and homogenous case of product it received 
from the Foreign Seller, with the SSI that had been assigned by the 
Foreign Seller, and the Canadian DIN that was on the package when the 
Foreign Seller received the product from the original manufacturer. The 
Foreign Seller in turn is required to maintain records associating the 
SSI to the Canadian DIN. As noted in the NPRM (84 FR 70796 at 70816), 
this recordkeeping is analogous to the record retention requirement in 
section 582(e)(2)(A)(iv) of the FD&C Act for a repackager that 
associates a product identifier with a manufacturer-affixed product 
identifier. Furthermore, the final rule clarifies that the lot number 
that is included in the product identifier is that assigned by the 
manufacturer of the eligible prescription drug.
    (Comment 50) Several comments urge FDA to require product 
identifiers to be affixed on all products imported pursuant to the 
final rule, including where an Importer intends to directly dispense 
the product to patients.
    (Response 50) We agree with these comments and have accordingly 
modified the rule to clarify that the requirement to affix or imprint a 
product identifier applies to all eligible prescription drugs. The 
final rule provides that an Importer must facilitate affixation or 
imprinting of a product identifier on each package or homogenous case 
of an eligible prescription drug upon receiving it from the Foreign 
Seller. In the NPRM (84 FR 70796 at 707815), we had signaled that if an 
Importer is a pharmacist who directly dispenses the product to 
patients, a product identifier would not be required to be affixed or 
imprinted on each package and homogenous case of the eligible 
prescription drug. However, after consideration of comments, we agree 
that in the context of the section 804 program, all eligible

[[Page 62109]]

prescription drugs (which must meet the definition of ``product'' under 
the DSCSA) warrant a product identifier that is affixed or imprinted by 
the Importer or by a relabeler that the Importer authorizes. Even in 
the instances of an Importer who is a pharmacist intending to dispense 
the product directly to patients, the affixing or imprinting of a 
product identifier is needed in order to facilitate verification 
activities through the Importer's maintenance of records associating 
the product identifier at the package level with the SSI that had been 
placed by the Foreign Seller, thus enhancing supply chain security.
    (Comment 51) Several comments oppose providing exemptions to 
Importers from certain DSCSA requirements, citing concerns about 
opening a path for counterfeit and unsafe drugs into the U.S. supply 
chain.
    (Response 51) The final rule identifies specific exemptions from 
DSCSA requirements in section 582 of the FD&C Act, as permitted by 
section 582(a)(3)(iii), because they would be difficult or impossible 
to apply to eligible prescription drugs imported under a SIP. FDA 
understands and agrees with the importance of the underlying statutory 
requirements to supply chain security and considered potential effects 
on supply chain security in identifying such exemptions. To ensure the 
exemptions from section 582 of the FD&C Act do not compromise the 
security of the supply chain for drugs imported under section 804 of 
the FD&C Act, the final rule includes additional safeguards to protect 
the public health. For example, under the final rule, an Importer is 
exempt from the prohibition on receiving a product for which the 
previous owner did not provide the transaction history, transaction 
information, and transaction statement, under section 582(c)(1)(A) or 
(d)(1)(A) of the FD&C Act as applicable, provided the Importer receives 
from the Foreign Seller certain transaction-related information that is 
adequate to ensure no additional risk to supply chain security. These 
additional safeguards are authorized under section 804(c)(3) of the 
FD&C Act and are necessary for the Secretary to certify that 
implementation of section 804 of the FD&C Act would pose no additional 
risk to the public's health and safety.
    (Comment 52) Some comments question FDA's authority to allow 
exemptions from DSCSA through rulemaking, because the provisions have 
been established by Congress through statute.
    (Response 52) Congress established in DSCSA that exemptions from 
section 582 of the FD&C Act are permissible; indeed, the Secretary was 
given explicit authority to identify such exemptions through a process 
established by the Agency in guidance (see section 582(a)(3)(A)(iii) of 
the FD&C Act). The exemptions that were proposed in the NPRM, which is 
being finalized here, are established in accordance with this statutory 
authority. Although FDA is establishing these exemptions through 
rulemaking rather than guidance, we believe this is an appropriate 
exercise of the section 582 authority because the statute does not 
foreclose FDA from establishing exemptions through notice-and-comment 
rulemaking. Because the exemptions identified by FDA in the final rule 
would apply to SIP participants generally, and because we believe that 
these exemptions are appropriate only in the context of the 
requirements established by this rule, including safeguards to protect 
supply chain security, providing these exemptions concurrently with 
establishing such safeguards is a sensible and appropriate exercise of 
FDA's statutory authority in this circumstance. FDA intends to continue 
to consider and, as appropriate, grant other exemptions consistent with 
the statutory authority provided in section 582 of the FD&C Act.
    (Comment 53) Several comments ask about the availability of 
laboratories that would meet the statutory and regulatory criteria to 
become approved qualifying laboratories. In particular, some comments 
express concerns that the requirement that a qualifying laboratory have 
an FDA inspection history could result in insufficient options for 
laboratory partners for SIPs.
    (Response 53) We believe there is a sufficient number of FDA-
inspected laboratories across the United States capable of doing this 
testing. About 200 domestic, FDA-inspected laboratories offer CGMP-
related contract testing services. Independent laboratories that are 
contracted to act as a CGMP quality control lab (i.e., laboratories 
that test samples to satisfy the CGMP regulations (including, for 
example, Sec. Sec.  211.165, 211.166, and 211.167 regarding batch 
testing before distribution) are required to register with FDA and are 
subject to inspection to verify conformance with the CGMP regulations 
applicable to laboratory testing and quality control (including, for 
example, Sec. Sec.  211.160, 211.194, and 211.22). FDA publishes 
inspection status information on its website where you can search names 
of contract laboratories to see their inspection history and FDA 
classification of compliance status (see the Inspection Classification 
Database at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/inspection-classification-database. You can 
also search FDA's website to see if a warning letter has been issued to 
a firm at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/compliance-actions-and-activities/warning-letters. As we stated in the NPRM, we intend to approve qualifying 
laboratories for use by a SIP on a case-by-case basis as part of our 
review and authorization of a SIP Proposal. In addition, we intend to 
consider publishing a list of approved qualifying laboratories for the 
benefit of developing a SIP Proposal.
    (Comment 54) One comment opposes requiring qualifying laboratories 
to hold CGMP certification.
    (Response 54) The final rule does not require qualifying 
laboratories to hold CGMP certification. Qualifying laboratories need 
to comply with the applicable elements of the CGMP requirements, 
including provisions regarding laboratory controls in Sec.  211.160 and 
regarding laboratory records in Sec.  211.194.
    (Comment 55) One comment suggests that because the proposed rule 
allows the potential for multiple SIP Proposals that include a 
particular eligible prescription drug, it is important to have clear 
and consistent quality standards to help ensure that medications have 
the correct identity, strength, and purity when consumed by patients.
    (Response 55) Section 804 of the FD&C Act and the final rule 
contain numerous provisions that work together to help ensure the 
quality of products imported under this rule. Among other things, the 
statute and this final rule require that Statutory Testing either be 
performed by the manufacturer of an eligible prescription drug or, if 
such testing is performed by the Importer, that the manufacturer supply 
the information the Importer needs to authenticate the drug. The final 
rule specifies that this information includes, among other things, any 
relevant testing protocols that the manufacturer has developed.
    (Comment 56) Several comments suggest that, if a manufacturer does 
not conduct testing itself, Importers should be allowed to conduct 
Statutory Testing, or sampling for that testing, in Canada before 
importation.
    (Response 56) FDA declines to make the requested change. Section 
804 of the FD&C Act provides that Statutory Testing must be conducted 
by a qualifying laboratory, and a qualifying laboratory must be in the 
United States

[[Page 62110]]

and approved by the Secretary. Sampling upon arrival in the United 
States helps ensure that the sample is selected from the actual 
shipment of drugs that arrives in the United States.
    (Comment 57) One comment urges FDA to clarify that manufacturers 
cannot satisfy the Statutory Testing requirements through preexisting 
release or conformance testing. The comment also recommends that, if 
drug products have already undergone release or conformance testing at 
a qualifying laboratory in the United States, Statutory Testing should 
be conducted at a separate, independent laboratory to ensure thorough 
analysis before the products enter the U.S. market.
    (Response 57) Section 804 of the FD&C Act and the rule provide that 
the manufacturer or the Importer must arrange for samples from 
shipments of eligible prescription drugs to be tested by a qualifying 
laboratory. We believe it is sufficiently clear that the statute and 
this regulation do not allow manufacturers to provide testing results, 
such as those from the manufacturer's batch release or conformance 
testing. If the manufacturer performs the testing required under 
section 804(e)(1) of the FD&C Act, the following information must be 
submitted in electronic format directly to FDA via the Electronic 
Submissions Gateway (ESG) or to an alternative transmission point 
identified by FDA: (1) The testing results, (2) a complete set of 
laboratory records, (3) a detailed description of the selection method 
for the samples, (4) the testing methods used, (5) complete data 
derived from all tests necessary to ensure that the eligible 
prescription drug meets the specifications of the FDA-approved drug 
that are established in the NDA or ANDA, (6) a Certificate of Analysis, 
and (7) any other documentation demonstrating that the testing meets 
the requirements under section 804(e)(1) of the FD&C Act. We do not 
believe that it is necessary to require in the final rule, for drug 
products that have undergone release or conformance testing at a 
qualifying laboratory in the United States, that Statutory Testing be 
conducted at another, independent laboratory, as long as the approved 
and CGMP-compliant methods are used.
    (Comment 58) One comment recommends that FDA require that sampling 
be done according to standards issued by the American National 
Standards Institute (ANSI).
    (Response 58) The NPRM proposed to require that a statistical 
sample of a batch or shipment of section 804 drugs be randomly selected 
from the batch or shipment being tested or, in the alternative, that 
the sample be representative of the batch or shipment. We sought 
comment on whether we should specify a sampling method. We also sought 
comment on whether we should require that sampling be done according to 
an established standard such as those issued by the ANSI or by ASTM 
International. We did not conclude that the comments received provided 
adequate support for specifying a standard. At this time, we are not 
specifying a standard in the final rule but may consider providing 
future guidance on this subject.
    (Comment 59) One comment recommends that a manufacturer be allowed 
no more than 10 calendar days to provide required information to an 
Importer.
    (Response 59) We agree with the comment that a set timeframe for 
providing required information is appropriate but disagree with the 
proposed 10-day schedule. We have revised the final rule to require a 
manufacturer to supply to an Importer, within 30 calendar days of 
receiving a request, the required attestation and information 
statement, batch records, transaction information, Statutory Testing 
information, and authorization to use the FDA-approved labeling for the 
manufacturer's drug. The 30-day deadline aligns with the timeline for 
the Importer to submit a Pre-Import Request, which must be submitted 30 
days prior to the entry or arrival of a shipment of eligible 
prescription drugs into the United States.
    (Comment 60) One comment contends that drugs refused admission to 
the United States should be destroyed at the foreign trade zone or at 
the secured warehouse, and Importers should not be permitted to export 
them.
    (Response 60) We decline to make these changes. The NPRM proposed 
that if FDA refuses admission into the United States the drug must be 
exported or destroyed by the Importer within 90 calendar days of the 
refusal. This is consistent with section 801(a) and (d)(1) of the FD&C 
Act, neither of which bar exportation.
    In response to the suggestion in the comment that FDA prohibit 
export for all refused drugs offered for import under a SIP, we 
recognize that there may be some circumstances where export could be 
appropriate. For example, in the NPRM we stated that FDA would intend 
to refuse admission if 6 months have passed from the entry date of the 
shipment. It is possible that these drugs would not have been relabeled 
for the U.S. market and may be saleable in Canada. Destruction could 
prevent the SIP from recouping their loss by exporting the drugs back 
to the Foreign Seller and add additional cost to the SIP.
    Finally, if we have concerns regarding drugs offered for import 
under a SIP that are refused admission being exported back to Canada or 
another country, FDA and CBP have tools to address this, such as 
pursuing destruction of the drugs or notifying the country to which the 
product would be exported.
    (Comment 61) Several comments suggest that if a SIP Sponsor 
determines that a drug, manufacturer, Foreign Seller, Importer, 
qualifying laboratory, or other participant in or element of the supply 
chain in the authorized SIP does not meet all applicable requirements 
of the FD&C Act, FDA regulations, and the authorized SIP, the SIP 
Sponsor should not need to immediately stop importation of all drugs 
under the SIP. One comment asserts that identification of an 
illegitimate product in the SIP should be grounds for automatic, 
temporary suspension and potential full revocation of the SIP. One 
comment notes that if identification of illegitimate product introduced 
by a SIP were to lead to automatic revocation of the SIP's 
authorization, it could have the counterproductive result of making 
trading partners less inclined to identify and report the illegitimate 
product.
    (Response 61) As discussed in the NPRM, under certain circumstances 
set forth in section 804(g) of the FD&C Act, FDA is required to suspend 
importation. Section 804(g) of the FD&C Act provides that the Secretary 
must require that importations of a specific prescription drug or 
importations by a specific Importer under section 804(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 section 804, until 
an investigation is completed and the Secretary determines that the 
public is adequately protected from counterfeit and violative 
prescription drugs being imported under section 804(b). In some 
circumstances, as described in the NPRM, FDA may suspend a SIP in whole 
or in part or FDA may revoke authorization of a SIP, in whole or in 
part. To ensure that FDA has current relevant information about SIP 
participants, we have revised the rule to require a SIP Sponsor to 
inform FDA of any new applicable criminal conviction, violation of law, 
or disciplinary action.
    (Comment 62) Several comments ask FDA to limit requirements that 
they characterize as duplicative or redundant, citing adverse event 
reports, individual case safety reports (ICSRs),

[[Page 62111]]

and recall requirements. In addition, one comment suggests that 
patients might not know whom to contact regarding an adverse event or a 
question about medication.
    (Response 62) FDA declines to make substantive changes in response 
to these comments. We have made some minor revisions from the 
provisions in the NPRM for clarity. For example, in one instance we 
have revised the wording to align with existing comparable requirements 
in 21 CFR 314.80 (under Sec.  251.18(d)(9), an Importer must 
``develop'' written procedures to meet their obligations under that 
subpart because this encompasses the requirement to ``maintain'' and 
``follow'' such written procedures), but such clarifications do not 
change FDA's interpretation of the scope of existing responsibilities 
under Sec.  314.80 or other existing safety reporting requirements.
    We do not believe the reporting requirements in the final rule are 
duplicative or redundant. The rule requires an Importer to establish 
and maintain records and submit to FDA and the manufacturer reports of 
all adverse events associated with the use of the drug products it 
imports under section 804 of the FD&C Act and this final rule. An ICSR 
is a description of an adverse event related to an individual patient 
or subject. The final rule outlines when and how an Importer must 
submit ICSRs for domestic adverse events, and follow up reports, to FDA 
and the manufacturer. As described in the NPRM (84 FR 70796 at 70821), 
these reports will aid the manufacturer in its pharmacovigilance 
efforts, and it will provide FDA with information that may be relevant 
to its review of SIP Proposals and Pre-Import Requests as well as to 
its oversight of drugs imported under section 804 of the FD&C Act and 
section 804 in general. In the event of a recall, Importers must, upon 
request by FDA, provide to FDA the transaction history, information, 
and statement, as those terms are defined in section 581(25), (26), and 
(27) of the FD&C Act, for the recalled drugs. We have clarified in the 
final rule that, in the event of a recall, Foreign Sellers must also 
provide certain transaction information to FDA upon request.
    (Comment 63) Several comments assert that it is inappropriate to 
establish ``medication error'' reporting requirements only for SIPs.
    (Response 63) We have decided not to establish medication error 
reporting requirements for SIPs at this time, before establishing such 
requirements for prescription drugs generally, and have revised the 
final rule to remove requirements related to reporting medication 
errors. FDA might at a later time consider whether it should establish 
medication error reporting requirements for SIPs.
    (Comment 64) Several comments request clarification regarding 
recall responsibilities. One comment says that the timeframe for 
adverse event reporting could lead to significant delays in recalls.
    (Response 64) The rule requires that each SIP proposal include a 
recall plan that explains how the SIP Sponsor will obtain additional 
recall or market withdrawal information, such as by obtaining recall 
information from an Importer, and how the SIP Sponsor 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. In addition, the rule requires that each SIP must have a 
written recall plan that describes the procedures to perform a recall 
of the product and specifies who will be responsible for performing the 
procedures. The recall plan must cover recalls mandated or requested by 
FDA and recalls initiated by the SIP Sponsor, as well as recalls in 
Canada or the United States initiated by a drug's manufacturer that 
implicate a drug imported under a SIP, with which the Foreign Seller or 
Importer must cooperate. If FDA or any participant in a SIP determines 
that a recall is warranted, the SIP Sponsor must effectuate the recall 
in accordance with its written recall plan. We have revised the rule to 
clarify an Importer's and a Foreign Seller's responsibilities in a 
recall. We do not believe that the timeframes for adverse event 
reporting, which are consistent with other FDA requirements for adverse 
event reporting, would lead to significant delays in effectuating a 
recall.
    (Comment 65) One comment suggests that allowing section 804-
imported drugs to coexist on the market with manufacturers' drugs would 
introduce confusion to real-world data (RWD) collection and bias real-
world evidence (RWE) analyses.
    (Response 65) The comment assumes that an eligible prescription 
drug will have quality concerns that could not be accounted for in RWD 
sources and RWE analysis. However, an eligible prescription drug would 
need to meet the conditions in an FDA-approved NDA or ANDA, including 
quality specifications. In addition, there may be ways of 
distinguishing eligible prescription drugs imported under section 804 
of the FD&C Act in RWD sources, for example, by NDC.

F. Certification

    (Comment 66) Several comments address the certification that is 
required under section 804(l) of the FD&C Act. One comment argues that 
the certification cannot become null and void for any reason once it is 
made. Instead, the comment argues that the proper way to address 
problematic importations is to adopt a proposed new codified provision 
that would give the Secretary the authority to order the cessation of a 
particular SIP under certain specified circumstances.
    (Response 66) As stated in the NPRM (84 FR 70796 at 70803), the 
Secretary's certification rests on the authorities and requirements 
outlined in the regulation issued to implement section 804. If any one 
of those provisions is invalidated, certification would become null and 
void because it was based on an understanding regarding how section 804 
would be implemented that, under this scenario, would be factually 
incorrect and legally invalid. We decline to add the codified provision 
proposed in the comment because this final rule includes Sec.  251.7, 
also included in the proposed rule, which provides FDA the authority to 
suspend or revoke a SIP under the circumstances set forth in that 
section or Sec.  251.18.
    (Comment 67) Several comments assert that the NPRM contained no 
assessment of whether importation under section 804 of the FD&C Act 
would result in a significant reduction in the cost of covered products 
to the American consumer and that section 804(l) requires factual 
findings on cost savings before the certification can be made.
    (Response 67) We disagree. For section 804 to become effective, 
subsection (l) requires the Secretary to certify 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. Through this 
final rule, implementation of section 804(b) through (h) will result in 
a significant reduction in the cost of covered products to the American 
consumer. In particular, Sec.  251.3(e)(9), as revised, requires the 
SIP Sponsor's importation plan to explain, in a manner sufficiently 
detailed to allow for a meaningful evaluation, how the Sponsor will 
ensure that the SIP will result in a significant reduction in the cost 
to the American consumer; and Sec.  251.7(c) provides that FDA may 
revoke the authorization of a SIP if, among other reasons, the Agency 
determines that continued implementation of the SIP will not

[[Page 62112]]

result in a significant reduction in the cost of drugs covered by the 
SIP to the American consumer. Together, these provisions will ensure 
that there is a meaningful assessment of whether drugs imported under a 
particular SIP will result, and are resulting, in a significant 
reduction in the cost of covered products to the American consumer, 
which, in turn, allows the Secretary to make the cost-related finding 
for the certification under section 804(l).
    (Comment 68) One comment contends that the Secretary is 
impermissibly relying on States and Indian Tribes to support his 
certification decision under section 804(l) because such reliance on 
third parties to make the certification findings is contrary to the 
plain language of section 804 of the FD&C Act. The comment further 
contends that this rule would effectively subdelegate HHS's fact-
finding role to SIP Sponsors and cites U.S. Telecom Ass'n v. FCC, 359 
F.3d 554 (DC Cir. 2004) for the proposition that delegating fact-
finding to the states is unlawful absent congressional authorization.
    (Response 68) In conjunction with this final rule, the Secretary is 
certifying that implementation of section 804(b)-(h) 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 final rule is designed to ensure that FDA and other 
components of HHS receive the necessary information to ensure this 
certification applies to a particular SIP. Ultimately, it will be the 
Secretary, acting through FDA, who will find that a particular SIP 
proposal meets the certification requirements based on the information 
received as part of the proposal. We note that it is a prohibited act 
under section 301(aa) of the FD&C Act to import a prescription drug in 
violation of section 804, falsify any record required to be maintained 
or provided to the Secretary under such section, or violate the 
regulations issued under such section. Accordingly, unless the 
Secretary has reason not to do so, he may consider the information he 
receives pursuant to this final rule and FDA's evaluation of such 
information to ensure that a SIP 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 
has not delegated the certification decision or any other finding to 
the states or any other third party. Consequently, the comment's 
reference to U.S. Telecom Ass'n v. FCC is inapposite because in that 
case the court considered, in relevant part, whether a federal agency 
delegated its authority to make certain determinations to a state.
    (Comment 69) One comment argues that in order to make the 
certification under section 804(l), the Secretary must find that 
implementation of all of section 804 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 comment 
argues that if the Secretary cannot make this finding with regard to 
section 804(j), then the certification cannot be made solely with 
regard to section 804(b)-(h) of the FD&C Act. The comment cites Vermont 
v. Leavitt, 405 F. Supp. 2d 466 (D. Vt. 2006), in which the court 
stated that interpreting section 804(l)(1) to apply to only section 
804(b)-(h) is ``a convoluted and implausible interpretation'' and ``is 
undermined by the fact that Congress used the term `subsection' in 
other provisions of section [804].'' The comment also cites Montgomery 
County. v. Leavitt, 445 F.Supp.2d 505, 508 (D. Md. 2006) to support the 
assertion that FDA has concluded that the certification requirement in 
section 804 applies to the entire section and does not authorize a 
specific waiver for a discrete state pilot program.
    (Response 69) We disagree that a certification under section 804(l) 
must cover all of section 804 of the FD&C Act. In general, section 804 
contains two importation pathways: (1) Commercial importation of drugs 
from Canada under subsections (b)-(h), and (2) personal importation 
under subsection (j). Each importation pathway must be certified by the 
Secretary under section 804(l) to be effective. However, section 804 
does not explicitly require a certification to cover both pathways. In 
stating that this section only becomes effective if the implementation 
of the section meets the certification criteria, section 804(l) 
accomplishes two objectives: (1) Ensuring that any provision in section 
804 does not take effect unless the Secretary certifies that 
implementation of the provision would meet the certification criteria; 
and (2) providing for the possibility that implementation could take 
different forms, including implementing section 804 in a way that only 
pertains to the commercial importation pathway or the personal 
importation pathway.
    The court's decision in Vermont v. Leavitt does not support the 
comment's assertion. In that case, the state of Vermont argued that the 
personal importation provisions in section 804(j) of the FD&C Act could 
be implemented without a certification because the certification 
provision in section 804(l) only applies to the commercial importation 
pathway outlined in section 804(b)-(h). The court found this 
interpretation implausible. We agree with the court's decision that for 
any provision in section 804 to be in effect, it must be covered by a 
certification from the Secretary in accordance with section 804(l). The 
court did not also hold that any certification under section 804(l) 
must cover all of section 804. In fact, the court expressly did not 
reach this decision. See Vermont v. Leavitt, 405 F. Supp. 2d at 479.
    Similarly, in Montgomery County. v. Leavitt, the plaintiff argued 
that the certification requirement in section 804(l) of the FD&C Act 
did not apply to all of section 804, and that FDA could authorize a 
specific waiver for the proposed importation program before any 
certification is made. The court held that the certification provision 
applies to all of section 804 and, therefore, FDA's denial of the 
county's waiver request for its proposed importation program was 
mandated by Federal law because no certification had yet been made. 
Again, we agree with the court's decision that the certification 
provision applies to all of the provisions of section 804; accordingly, 
there must be a certification in place for the commercial importation 
pathway, the personal importation pathway, or both pathways, prior to 
implementation of such pathway(s).
    (Comment 70) One comment argues that the certification under 
section 804(l) of the FD&C Act can only be made broadly and not with 
regard to only specific approved SIPs because section 804 contemplates 
a broad certification finding before the section goes into effect. In 
support of this argument, the comment states that: (1) Section 804 does 
not provide that certification can be based on state-specific plans for 
only certain state residents, and if that was the Congressional intent, 
it could have been so limited; (2) the certification provision refers 
to the American consumer, not specific American consumers under 
particular plans; and (3) section 804 permits the opening of the closed 
U.S. drug distribution system that protects patients from counterfeit 
and substandard drugs. In addition, the comment cites Montgomery County 
v. Leavitt and a letter from FDA to Montgomery County to support the 
proposition that the certification provision in section 804 does not 
authorize a specific waiver for a discrete state pilot program. The 
comment also cites to a government brief filed in the Vermont v. 
Leavitt litigation that it argues is inconsistent with the Agency's 
position on this issue in this final rule.

[[Page 62113]]

    (Response 70) The Secretary's certification is based on the 
requirements and safeguards in this final rule. Through this 
implementation, the certification can be made because importation of 
drugs under section 804(b)-(h) of the FD&C Act will not increase the 
risk to the public's health and safety, and will lead to a significant 
reduction in the cost of covered products to the American consumer. 
Although the certification provision in section 804(l) does not 
expressly address the review of sponsored plans for importation, there 
is nothing in the provision that precludes the Secretary from basing 
the certification on an implementing regulation that ensures any 
importations made under section 804 meet appropriate standards, 
including a requirement that importation plans be sponsored by certain 
entities and reviewed and authorized by the Secretary. In fact, the 
certification provision contemplates that the Secretary will base his 
decision on certain requirements or other policies established by him 
because the provision asks whether implementation of section 804 will 
lead to the findings necessary to make the certification.
    With regard to the argument that because the certification 
provision refers to the American consumer, the certification must be 
broad, it is not clear what is meant by the term broad. We do not 
believe that reference to the American consumer means that before a 
certification can be made, there must be a finding that all American 
consumers will benefit from a significant reduction in the cost of 
covered products. In any case, the Secretary's certification does not 
limit the number of American consumers who could benefit from 
importation of drugs under section 804. A SIP or combination of SIPs 
could be broad in scope and provide significant cost savings to 
numerous Americans.
    It is not clear how the argument that section 804 opens the closed 
U.S. distribution system supports the assertion that the certification 
in section 804(l) of the FD&C Act must be broad. In any case, this 
final rule does not open the closed U.S. distribution system; instead, 
it expands it. The SIP Sponsor must demonstrate, among other things, 
how it will ensure that the supply chain in the SIP is secure, as 
required by Sec.  251.3(e)(11).
    The references to Montgomery County v. Leavitt and the letter from 
FDA to Montgomery County mentioned in that decision do not support this 
comment's arguments. The court's decision and the cited letter from FDA 
refer to the ability of FDA to authorize a specific waiver for a 
discrete state pilot program in the absence of a certification under 
section 804(l). This case, along with the decision in Vermont v. 
Leavitt, agreed with FDA's position and found that such a program could 
not be authorized before the Secretary makes the required certification 
under section 804(l) of the FD&C Act.
    As noted in the comment, the government's brief in the Vermont v. 
Leavitt litigation (Federal Defendants' Motion to Dismiss Plaintiffs' 
Complaint and Memorandum in Support) stated that section 804(l) asks 
the Secretary to certify whether the law should be effective for all 
Americans, not just those in one particular state. Similar statements 
were made in the government's brief in the Montgomery County v. Leavitt 
litigation. In contrast, as stated above, the Secretary's certification 
and this final rule do not limit the number of American consumers who 
could benefit from importation of drugs under section 804 of the FD&C 
Act. All states can participate under the rule and, as noted elsewhere, 
pharmacists or wholesalers may, under certain circumstances, be able to 
sponsor a SIP without the cosponsorship of a State or Indian Tribe. The 
involvement of a sponsor does not limit the scope of imports; instead 
it is meant to provide additional oversight to ensure that any such 
imports are safe.
    As stated above, although section 804(l) does not expressly address 
importation plans that are submitted to the Secretary for review and 
overseen by sponsors, it does not preclude them either. Instead, the 
certification provision asks whether implementation of section 804 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. Section 804(l), itself, does not impose any 
requirements on how implementation of section 804 of the FD&C Act would 
be done in order to enable those findings under the certification. This 
rule is designed to ensure that any authorized SIP poses no additional 
risk to the public's health and safety and results in a significant 
reduction in the cost of covered products to the American consumer, in 
accordance with the Secretary's certification.
    (Comment 71) One comment notes that the proposed rule cites section 
804 of the FD&C Act as part of the legal authority for the rule, and 
that section 804 is not in effect until the Secretary makes the 
certification required under section 804(l). The comment argues that 
the proposed rule must be withdrawn because it was issued without an 
effective statutory basis.
    (Response 71) In accordance with the Administrative Procedure Act 
(APA) (5 U.S.C. 553(b)), the proposed rule includes reference to the 
legal authorities under which it was proposed. As noted by the comment, 
the referenced legal authorities in the proposed rule include section 
804 of the FD&C Act. At the proposed rule stage, the rule is proposed 
to be issued under one or more legal authorities. The proposed rule 
does not have legal effect at the time it is issued; therefore, the 
cited legal authorities do not necessarily need to be in effect at that 
time. The Secretary is making the required certification under section 
804(l) concurrent with this final rule. Therefore, section 804 is in 
effect as a legal authority for this final rule. Furthermore, the 
certification requirement was included in section 804 so that the 
section would not be implemented before a certification is made. We do 
not believe that Congress intended for the provision to preclude the 
issuance of a proposed rule proposing how the section could be 
implemented in a manner that meets the basis for a certification, once 
that certification is made. Moreover, under the comment's reasoning, 
section 804(l) effectively repeals by implication the notice and 
comment provision of the APA. The Court has consistently noted that 
repeal by implication is disfavored. See Morton v. Mancari, 417 U.S. 
535, 549-550 (1974).
    (Comment 72) One comment contends that the certification required 
under section 804(l) of the FD&C Act is a rule within the meaning of 
the APA and is not subject to any exception from notice and comment 
requirements in that act. The comment argues that the notice and 
comment requirements were not met because the public did not have 
access to the information the Secretary relied on to make the 
certification and, therefore, could not meaningfully comment on it. The 
comment goes on to state that FDA should withdraw the proposed rule, 
place in the public record any basis the Secretary has for 
certification, and allow the public to comment.
    (Response 72) A rule, as defined in the APA, 5 U.S.C. 551(4), is 
the whole or a part of an agency statement of general or particular 
applicability and future effect designed to implement, interpret, or 
prescribe law or policy or describing the organization, procedure, or 
practice requirements of an agency and includes the approval or 
prescription for the future of rates, wages, corporate or financial 
structures or reorganizations thereof, prices, facilities, appliances, 
services or

[[Page 62114]]

allowances therefor or of valuations, costs, or accounting, or 
practices bearing on any of the foregoing. We do not agree that the 
certification under section 804(l) of the FD&C Act is a rule that must 
undergo notice and comment rulemaking in accordance with the APA. The 
certification is a finding that functions as a procedural step that 
does not itself affect the rights or interests of outside parties. Cf. 
Batterton v. Marshall, 648 F.2d 694, 707-08 (D.C. Cir. 1980). In 
accordance with section 804(l), the certification is made to Congress. 
While the certification made by the Secretary leads to section 804(b)-
(h) becoming effective, the only consequence of making section 804(b)-
(h) effective is that, per section 804(b), the Agency can issue a 
regulation that was subject to the very process requested by the 
commenter (notice and comment rulemaking). Thus, the certification has 
no independent effect on outside parties that warrants notice and 
comment under section 553 of the APA. Moreover, because this rulemaking 
constitutes the basis for the certification, the certification is 
effectively undergoing notice and comment in the context of the 
rulemaking, and any additional notice and comment process for the 
certification would be duplicative. We also note that, even if the 
certification were an agency action under the APA, it is more in the 
nature of a declaratory order that clarifies FDA's position on the 
matters presented in section 804. See 5 U.S.C. 554(e) (``the agency, 
with like effect as in the case of other orders, and in its sound 
discretion, may issue a declaratory order to terminate a controversy or 
remove uncertainty''); Wilson v. A.H. Belo Corp., 87 F.3d 393, 397 (9th 
Cir. 1996) (upholding a declaratory order that was issued sua sponte, 
in the absence of any parties before the Agency); Time Warner Entm't 
Co., L.P. v. FCC, 240 F.3d 1126, 1141 (2001) (an agency has ``very 
broad discretion whether to proceed by way of adjudication or 
rulemaking''). Finally, unlike other provisions of section 804, section 
804(l) does not direct the Secretary to implement the provision by 
issuing a regulation. The lack of such direction indicates that 
Congress did not intend for the notice and comment requirements to 
apply.
    In any case, we do not agree that the public did not have an 
opportunity to meaningfully comment on the Secretary's certification. 
As stated above, the public did have an opportunity to comment on the 
certification in that it had an opportunity to comment on the rule, 
which constitutes the basis for the certification. Section 804(l) 
states that section 804 of the FD&C Act will become effective only if 
the Secretary certifies to Congress that the implementation of this 
section will pose no additional risk to the public's health and safety 
and result in a significant reduction in the cost of covered products 
to the American consumer. The Secretary is making this certification on 
the basis of this final rule, which contains provisions and safeguards 
to ensure that any SIP that is authorized by FDA will be consistent 
with the certification. As stated in response to Comment 67, 
implementation of section 804(b)-(h) through this rule will result in a 
significant reduction in the cost of covered products to the American 
consumer because it requires, among other things, that the SIP 
Sponsor's importation plan explain, in a manner sufficiently detailed 
to allow for a meaningful evaluation, how the Sponsor will ensure that 
the SIP will result in a significant reduction in the cost to the 
American consumer. Other provisions of this rule ensure that a SIP will 
not pose an additional risk to the public's health and safety. The 
Agency sought and received comments on the proposed rule and is issuing 
this final rule after considering these comments. Because the 
certification relies on this final rule, the public had an opportunity 
to meaningfully comment on it.

G. FD&C Act Requirements

    (Comment 73) One comment says that the proposed rule would not 
ensure that each prescription drug imported under section 804 complies 
with sections 501, 502, and 505 of the FD&C Act, as is required by 
section 804(c)(1) of FD&C Act. The comment says that as a result FDA 
will be required to refuse admission to section 804 drugs under section 
801(a). The comment says that a drug imported under this rule will be 
unapproved because it will differ from the drug approved in the NDA and 
ANDA. Manufacturing information, specifically information about the 
relabeler and about the relabeling of a section 804 drug, will not be 
in the NDA or ANDA of its FDA-approved counterpart, and there will be 
certain differences set forth in the rule between the labeling of a 
section 804 drug and the labeling in an FDA-approved NDA or ANDA. The 
comment says that FDA should apply its procedures for drug approval to 
each drug imported under section 804.
    The comment also says that drugs imported under this rule will be 
misbranded because their labeling will falsely represent that they are 
FDA-approved and because the labeling could lead a consumer to 
mistakenly attribute the drug to the drug's manufacturer. Finally, the 
comment says that the rule will increase the likelihood that 
adulterated drugs will enter the U.S. market.
    (Response 73) We agree with the comment that for drugs imported 
under section 804 there will not be ``an approval of an application'' 
under section 505(a) of the FD&C Act. Section 804 drugs will not 
themselves be the subject of an approved NDA or ANDA. They will, 
however, meet the requirement in section 804(c)(1) of the FD&C Act that 
they ``compl[y] with section 505 (including with respect to being safe 
and effective for the intended use of the prescription drug).'' 
Specifically, FDA interprets compliance with section 505 to mean that 
the HPFB-approved drug meets the conditions in an FDA-approved NDA or 
ANDA. Before a section 804 drug is imported pursuant to this rule, FDA 
must make a determination, on the basis of the Statutory Testing and 
information provided by the drug's manufacturer, that the drug meets 
the conditions in an approved NDA or ANDA.
    The comment's alternative interpretation, requiring approval of an 
application under section 505 of the FD&C Act for drugs imported under 
section 804 of the FD&C Act, would render section 804 superfluous. If 
an Importer sought and obtained FDA approval of a drug that was 
previously only approved for sale in Canada, it would not need to 
import the drug under section 804. Instead, it could simply import the 
drug under section 801 of the FD&C Act without meeting any of the 
additional safeguards imposed under section 804. Thus, it is reasonable 
for FDA to interpret ``complies with section 505 (including with 
respect to being safe and effective for the intended use of the 
prescription drug)'' to mean that the HPFB-approved drug meets the 
conditions in an FDA-approved NDA or ANDA, without itself having an 
approved NDA or ANDA.
    Section 804 drugs generally will bear the labeling of their FDA-
approved counterparts, with certain exceptions set forth in this rule. 
Specifically, the labeling of a section 804 drug may differ from the 
approved labeling to the extent that it includes: (1) The section 804 
drug's NDC number, which will help with supply chain management and 
security, among other things, (2) the name of the Importer, which will 
ensure that the persons responsible for the product can be identified, 
(3) the labeling statement required by

[[Page 62115]]

Sec.  251.13(b)(4)(iv), which will help avoid confusion between 
products with the same name, help pharmacists distinguish a section 804 
product when selecting the product on the pharmacy shelf, and, 
potentially, help with pharmacovigilance, and (4) the SIP's website 
address, which will also help avoid confusion by educating pharmacists, 
healthcare providers, pharmacy benefit managers, health insurance 
issuers and plans, as appropriate, and patients.
    We disagree with the comment's assertion that section 804 drugs 
will be misbranded under section 502 of the FD&C Act because they are 
not FDA-approved. Section 804(h) of the FD&C Act requires that the 
manufacturer of a section 804 drug authorize the Importer to use the 
approved labeling for the drug, while section 804(c)(3) provides that 
the regulations implementing section 804 must require that safeguards 
be in place to ensure that section 804 drugs comply with section 502, 
among other provisions. Section 804 would not require that Importers be 
authorized to use the approved labeling if doing so would make section 
804 drugs misbranded and so not comply with section 502. In addition, 
the labeling will not mislead consumers about the manufacturer's role 
in the importation of a section 804 drug because of the labeling 
statement required by Sec.  251.13(b)(4)(iv), which will make clear 
that the drug was imported under a SIP without the manufacturer's 
authorization. Likewise, there is not an increased likelihood that 
section 804 drugs will be adulterated in violation of section 501 of 
the FD&C Act, because of the supply chain security, Statutory Testing, 
and other protections in section 804 and this rule. For these reasons, 
we disagree with the comment that FDA will be required to refuse 
admission to section 804 drugs under section 801(a)(3) of the FD&C Act, 
which provides that articles shall be refused admission if, among other 
things, they are ``adulterated, misbranded, or in violation of section 
505.''

H. First Amendment

    (Comment 74) One comment asserted that the proposed rule, if 
finalized, would violate the First Amendment on two grounds: (1) The 
manufacturer's attestation and information statement and Statutory 
Testing requirements amount to compelled speech and a compelled subsidy 
and (2) compelled authorization to use the labeling amounts to 
compelled speech and a compelled subsidy. The comment asserts that, 
because the speech at issue does not propose any commercial 
transaction, strict scrutiny applies and the rule would fail under that 
standard. The comment also asserts that the proposed rule would fail to 
pass muster under the four-part Central Hudson test applied to 
government regulation of commercial speech.
    (Response 74) We disagree with the comment's premise that these 
provisions should be understood as speech regulations that implicate 
the First Amendment. ``[I]t has never been deemed an abridgment of 
freedom of speech . . . to make a course of conduct illegal merely 
because the conduct was in part initiated, evidenced, or carried out by 
means of language, either spoken, written, or printed.'' Rumsfeld v. 
Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 62 
(2006) (citation omitted); see also Nicopure Labs, LLC v. FDA, 944 F.3d 
267, 291 (D.C. Cir. 2019) (A ``kernel of expression . . . is not 
sufficient to bring the activity within the protection of the First 
Amendment.'') (quoting City of Dallas v. Stanglin, 490 U.S. 19, 25 
(1989)). The final rule requires manufacturers to engage in the 
authentication and quality assurance process for drugs imported under a 
SIP. Manufacturers can participate directly, by conducting the 
Statutory Testing themselves, or they can facilitate the process by 
providing the necessary testing information to the Importer. 
Manufacturers must also provide the attestation and information 
statement and the executed batch records required by Sec.  
251.5(c)(4)(xii), to establish that a section 804 drug meets the 
conditions in the FDA-approved NDA or ANDA, including any process-
related or other requirements for which compliance cannot be 
established through laboratory testing. Participating in and 
facilitating authentication and quality assurance are not fundamentally 
expressive activities, even though there is necessarily information 
exchanged. Similarly, authorizing the use of FDA-approved labeling 
neither restricts a manufacturer's speech nor compels it to express 
ideas with which it disagrees.
    A market regulation that ``applies to conduct and is imposed `for 
reasons unrelated to the communication of ideas''' does not implicate 
the First Amendment and is subject to rational-basis review. Nicopure 
Labs, 944 F.3d 267 at 291-92 (quoting Lorillard Tobacco Co. v. Reilly, 
533 U.S. 525, 569 (2001)). As described earlier, these provisions 
easily survive rational-basis review because they are needed to ensure 
that drugs imported under a SIP comply with sections 501, 502, and 505 
of the FD&C Act, as required by section 804, in addition to other 
provisions, such as section 804(e) of the FD&C Act. The testing 
results, attestation and information statement, and executed batch 
records are needed to ensure that the drugs are authentic, not 
degraded, and are in compliance with established specifications and 
standards, and to confirm compliance with any process-related or other 
requirements that cannot be established through laboratory testing (84 
FR 70796 at 70817-70818). The FDA-approved labeling is necessary to 
ensure that prescribers, pharmacists, and patients have the information 
they need to prescribe, dispense, and use the drugs appropriately. 
Without these provisions, it would not be possible to ensure that drugs 
imported under section 804 meet U.S. legal and regulatory requirements 
and thus pose no additional risk to the public's health and safety.
    Moreover, compelled-speech cases that are subject to review under 
the First Amendment typically involve a requirement that a speaker 
``must personally speak the government's message'' or ``host or 
accommodate another speaker's message.'' Rumsfeld, 547 U.S. at 63. The 
fundamental First Amendment concern in such cases is that the 
government will compel the speaker ``to voice ideas with which [it] 
disagree[s].'' Janus v. AFSCME, Council 31, 138 S. Ct. 2448, 2464 
(2018). That is not the case here, where there is no message being 
compelled. Manufacturers are simply being called upon to help with the 
process of product authentication, quality control, and product 
identification.
    For example, the comment asserts that the regulatory program as set 
out in the proposed rule--requiring the manufacturer to make available 
its product labeling, to provide an attestation and information 
statement and executed batch records, and to either conduct testing or 
disclose testing information--would amount to a significant economic 
subsidy from the manufacturer to the importer. The comment claims, 
citing Janus v. AFSCME, Council 31, that this economic subsidy is 
impermissible under the First Amendment unless the government can show 
that the compelled subsidy serves a compelling state interest that 
cannot be achieved through means significantly less restrictive of 
associational freedoms. This caselaw, however, is inapposite. First, as 
the comment admits, under this rule, there is no direct monetary 
payment from the manufacturer to the importer. Moreover, the Court in 
Janus found that the subsidies at issue meant that individuals were 
``coerced into betraying their convictions'' by ``endors[ing] ideas 
they find

[[Page 62116]]

objectionable.'' 138 S. Ct. at 2464. See also United States v. United 
Foods, 533 U.S. 405, 410-411 (2001) (finding First Amendment implicated 
where producers were required to ``subsidize speech with which they 
disagree.'') (emphasis added). By contrast, here, the manufacturer is 
not compelled to itself convey any ideas or subsidize the conveyance of 
ideas by others.
    While the requirement that a drug's manufacturer authorize an 
Importer to use the drug's FDA-approved labeling does not equate to a 
requirement that the manufacturer convey or subsidize the conveyance of 
an idea, the comment argues that consumers could mistakenly conclude 
from the inclusion of a manufacturer's name and trademarks on the 
labeling that, among other things, the manufacturer vouches for the 
safety, efficacy, and quality of its drug when imported by a SIP. The 
comment also argues that consumers could mistakenly assume that a 
manufacturer authorized the importation of its drug by the SIP. The 
comment contends that such mistakes could occur despite the labeling 
statement required by proposed Sec.  251.13(b)(6)(i): ``This drug was 
imported from Canada under the [Name of State or Other Governmental 
Entity and of Its Co-Sponsors, If Any] Section 804 Importation Program 
to reduce its cost to the American consumer.'' To address the concern 
that the use of the FDA-approved labeling might create the misleading 
impression that the manufacturer is conveying or subsidizing the 
conveyance of ideas through the labeling of a section 804 drug, we have 
revised Sec.  251.13(b)(4)(iv) to require the following disclosure: 
``[This drug was/These drugs were] imported from Canada without the 
authorization of [Name of Applicant] under the [Name of SIP Sponsor] 
Section 804 Importation Program.'' As explained earlier, we have 
determined that it is not necessary to require the addition of the 
manufacturer's name and place of business if they do not already appear 
on the FDA-approved labeling. We have also determined that it is not 
necessary to include the phrase ``to reduce its costs to the American 
consumer'' in the labeling statement.
    Even if the First Amendment were implicated, any minimal burdens on 
speech are more than adequately justified by the purposes served by 
this program. The comment appears to suggest that, because this program 
does not regulate communications in the realm of commercial marketing, 
neither Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) 
nor Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557 
(1980) apply, and instead the requirements of this program should be 
analyzed under strict scrutiny. We disagree. The Supreme Court has 
applied strict scrutiny in First Amendment cases involving compelled 
speech on matters of conscience, and it ``trivializes the freedom 
protected'' by those cases to assert that incidental burdens on speech 
are subject to the same protections. Rumsfeld, 547 U.S. at 62.
    Accordingly, to the extent a court were to analyze this program 
under the First Amendment, it would likely apply, instead of strict 
scrutiny, the test for compelled speech established by Zauderer or one 
of the other more relaxed frameworks under which courts compare the 
burden on speech to the asserted government interest. See S.F. Arts & 
Athletics, Inc. v. USOC, 483 U.S. 522, 537 n.16 (1987). Under the 
framework set out in Zauderer and its progeny, which describe the test 
generally applied to required disclosures of factual and 
uncontroversial information related to commercial marketing, the 
Government may require disclosures that are justified by a governmental 
interest and do not unduly burden protected speech. The provisions at 
issue here--attesting that a product meets the conditions in its 
approved NDA or ANDA and supplying related information, supplying 
testing protocols and executed batch records, and authorizing the use 
of labeling--all relate to the conveyance of factual and 
uncontroversial information. The government interest is clear. 
Prescription drug spending in the United States has increased 
dramatically in recent years and is projected to account for an 
increasing share of the country's health care spending. This program is 
designed to address that problem by allowing for the importation of 
lower cost prescription drugs from Canada into the United States. And 
there is no burden on protected speech--nothing in any of these 
provisions limits manufacturers' ability to speak freely about their 
products.
    The comment asserts that the regulations would compel the 
manufacturer to provide a false or misleading attestation. We disagree. 
The rule does not require a manufacturer to attest to anything that the 
manufacturer does not know or cannot attest to truthfully. If, for 
example, the drug that the manufacturer manufactures for sale in Canada 
does not meet the conditions in the FDA-approved NDA or ANDA, a 
manufacturer could not and should not attest that ``but for the fact 
that [a drug] bears the HPFB-labeling,'' the drug ``meets the 
conditions in the FDA-approved NDA or ANDA.'' This is clarified in the 
final rule in Sec.  251.5(d), which states that if the manufacturer 
cannot provide the attestation and information statement, it must 
notify FDA and the Importer of its inability and articulate with 
specificity the reason or reasons for it. In addition, a manufacturer's 
attestation and information statement would be as of the date that the 
drug in question left the manufacturer's control. A manufacturer could 
not and should not attest, for example, that the Foreign Seller held 
the manufacturer's drug in compliance with CGMP.
    The program also would be constitutional if reviewed under 
intermediate scrutiny. Under the test for restrictions on commercial 
speech articulated in Central Hudson, agencies can regulate commercial 
speech where the regulation directly advances a substantial Government 
interest and is not more extensive than necessary to serve that 
interest. Central Hudson does not require that the means chosen by the 
Government be the least restrictive means available for addressing an 
issue, see Boards of Trustees. v. Fox, 492 U.S. 469, 480 (1989), but 
the Supreme Court has in any event observed that required factual 
disclosures are less intrusive from a First Amendment perspective than 
are restrictions on speech. Zauderer, 471 U.S. at 651. Because the 
Government's interest in the goals of this program is substantial and 
the regulation is no more extensive than necessary to directly advance 
that interest, the rule withstands review under Central Hudson. The 
increasing cost of prescription drugs is causing hardship to American 
consumers (84 FR 70796 at 70798-70801). The regulation would directly 
address this by providing for the importation of lower cost 
prescription drugs from Canada to significantly reduce the cost of 
covered products to the American consumer, while posing no additional 
risk to the public's health and safety. The information that the 
manufacturer is required to supply is no more extensive than necessary 
to ensure that section 804 drugs are authentic, not degraded, and meet 
the conditions in an FDA-approved NDA or ANDA, all of which serves to 
ensure that the drugs are safe and effective. Likewise, the FDA-
approved labeling is necessary to ensure that prescribers, pharmacists, 
and patients have the information they need to prescribe, dispense, and 
use the drugs appropriately. As noted earlier, the required labeling 
statement will help avoid potential confusion between

[[Page 62117]]

products with the same name and help pharmacists distinguish a section 
804 product when selecting the product on the pharmacy shelf (84 FR 
70796 at 70819). The labeling statement may also aid in 
pharmacovigilance (84 FR 70709 at 70820). Finally, the addition of the 
explanation that the drug was imported from Canada without the 
manufacturer's authorization will prevent prescribers, pharmacists, or 
patients from mistakenly concluding that the manufacturer is conveying 
an idea or subsidizing the conveyance of an idea.

I. Fifth Amendment Takings

    (Comment 75) Some comments say that certain provisions in section 
804 and this rule would take manufacturers' private property for public 
use, entitling manufacturers to just compensation under the Fifth 
Amendment of the U.S. Constitution. The comments contend that the 
information that manufacturers would be required to disclose to 
Importers and qualifying laboratories, including information to be used 
to conduct the Statutory Testing, could include confidential commercial 
information and trade secrets in which manufacturers have a 
constitutionally cognizable property interest. Comments also contend 
that the provisions of section 804 of the FD&C Act and this rule that 
require manufacturers to authorize Importers to use the FDA-approved 
labeling for drugs imported under this rule would effect an 
unconstitutional taking if the labeling included trademarks such as 
brand names, company names, logos, and the trade dress reflected in the 
overall packaging design.
    One comment says that because the statute explicitly provides in 
section 804(h) that manufacturers must provide authorization to use the 
labeling at no cost, but does not include similar language elsewhere, 
section 804 of the FD&C Act must be interpreted to permit manufacturers 
to charge Importers for information (such as the attestation and 
information statement, the executed batch records, and the Statutory 
Testing information) or services (such as conducting Statutory Testing) 
that section 804 and this rule require them to provide. The comment 
says that this interpretation is necessary to avoid a Fifth Amendment 
Takings Clause issue.
    (Response 75) ``The focus of the regulatory takings analysis is on 
fundamental fairness--is it fair for the government to impose the cost 
of a regulation on private parties rather than on the public as a whole 
through public spending?'' (Cienega Gardens v. United States, 503 F.3d 
1266, 1278 (Fed. Cir. 2007) (citing Palazzolo v. Rhode Island, 533 U.S. 
606, 618 (2001); Penn Central Transp. Co. v. New York City, 438 U.S. 
104, 123 (1978)). ``[T]he touchstone of the economic impact question is 
proportionality: the size of a liability only weighs in favor of 
finding a taking insofar as it is out of proportion to the legitimate 
obligations society may impose on individual entities.'' (B&G Constr. 
Co. v. Dir., OWCP, 662 F.3d 233, 260 (3d Cir. 2011) (citation and 
internal quotations omitted)). Indeed, courts have rejected regulatory 
takings claims even where the government's actions ``impose 
considerable costs on private actors in the regulated industry.'' 
(Mobile Relay Assocs. v. FCC, 457 F.3d 1, 12 (D.C. Cir. 2006)). In 
addition, as a general rule, the government is not required to pay for 
the incidental effects of its laws and regulations. (See Penn Central, 
438 U.S. at 124. ``Government hardly could go on if to some extent 
values incident to property could not be diminished without paying for 
every such change in the general law.'' (Pennsylvania Coal Co. v. 
Mahon, 260 U.S. 393, 413 (1922)).
    In this case, the pharmaceutical industry operating in the United 
States has benefitted from Federal laws and regulations that allow 
manufacturers to recoup the costs of pharmaceutical research and 
development and to be rewarded for their investments in it. As 
explained in the preamble to the proposed rule, however, the increasing 
cost of prescription drugs is placing a heavy burden on American 
consumers (84 FR 70796 at 70798-70801). That Congress chose to place an 
incidental burden on the pharmaceutical industry to reduce the cost of 
prescription drugs does not offend any principle of fundamental 
fairness.
    The Supreme Court has explained that a takings analysis involves 
``essentially [an] ad hoc, factual inquir[y].'' (See Penn Central, 438 
U.S. at 124). A threshold step in that analysis is determining whether 
the claimant possesses a property interest protected by the Taking 
Clause. (Ruckelshaus v. Monsanto, 467 U.S. 986, 1000 (1984)). The 
comments assert that manufacturers have property interests in trade 
secrets and trademarks. The Supreme Court found in Ruckelshaus v. 
Monsanto (467 U.S. at 1003-04) that in certain circumstances there can 
be a property interest in trade secrets for purposes of the Fifth 
Amendment's Takings Clause (``the property right [in a trade secret] is 
defined by the extent to which the owner of the secret protects his 
interest from disclosure to others''). We will assume for purposes of 
this discussion that some of the information that manufacturers are 
required to disclose under section 804 and this rule would meet the 
relevant state law definition of a trade secret. The comments did not 
cite, and we have not found, a case in which a court has held that a 
manufacturer has a cognizable property interest in a trademark for 
purposes of the Fifth Amendment Takings Clause, and courts have found 
that other forms of intellectual property, namely copyrights and 
patents, do not create cognizable property interests for Takings Clause 
purposes (Univ. of Hous. Sys. v. Jim Olive Photography, 580 SW3d 360, 
377 (Tex. App. 2019); Christy, Inc. v. U.S., 141 Fed. Cl. 641, 660 
(2019). The question arises whether trademarks are more akin to trade 
secrets or to copyrights and patents for Fifth Amendment Takings Clause 
purposes. We find it unnecessary to answer this question here because, 
even if trademarks were private property protected under the Takings 
Clause, there has been no taking.
    The Supreme Court has held that two categories of regulatory action 
are generally per se takings: (1) When the government ``requires an 
owner to suffer a permanent physical invasion of her property;'' and 
(2) when regulations ``completely deprive an owner of `all economically 
beneficial us[e]' of her property'' (Lingle v. Chevron U.S.A. Inc., 544 
U.S. 528, 538 (2005) (quoting Lucas v. S.C. Coastal Council, 505 U.S. 
1003, 1019 (1992)). Neither of those circumstances is present here.
    In other circumstances, the Supreme Court has held that ``when a 
regulation impedes the use of property without depriving the owner of 
all economically beneficial use, a taking still may be found based on 
`a complex of factors,' including: (1) The economic impact of the 
regulation on the claimant; (2) the extent to which the regulation has 
interfered with distinct investment-backed expectations; and (3) the 
character of the governmental action'' (Murr v. Wisconsin, 137 S. Ct. 
1933, 1943 (2017) (citing Palazzolo v. Rhode Island, 533 U.S. at 617) 
(citing Penn Central, 438 U.S. at 124)). The force of any one of these 
three Penn Central factors may be ``so overwhelming . . . that it 
disposes of the taking question'' (Ruckelshaus, 467 U.S. at 1005).
1. Provision of Trade Secrets and Confidential Commercial Information
    With regard to the first Penn Central factor, the economic impact 
of section 804 of the FD&C Act and this regulation on manufacturers, we 
note that the government action here is limited. The Supreme Court has 
explained that ``where an owner possesses a full `bundle' of property 
rights, the

[[Page 62118]]

destruction of one `strand' of the bundle is not a taking because the 
aggregate must be viewed in its entirety'' (Andrus v. Allard, 444 U.S. 
51, 65-66 (1979)). (See also Village of Euclid v. Ambler Realty Co., 
272 U.S. 365, 384 (1926) (75 percent diminution in value insufficient 
to prove taking); Hadacheck v. Sebastian, 239 U.S. 394, 405 (1915) 
(92.5 percent diminution insufficient to prove taking)). Because 
manufacturers will retain the right to exclude everyone except 
Importers and qualifying laboratories from the use of their trade 
secrets and commercial or financial information that is privileged or 
confidential, their trade secrets and commercial or financial 
information that is privileged or confidential will retain significant 
value. An Importer or qualifying laboratory's use of a manufacturer's 
trade secrets or commercial or financial information that is privileged 
or confidential will be limited to conducting the Statutory Testing and 
establishing that an eligible prescription drug meets the requirements 
of the FD&C Act and the rule. Consistent with section 804 of the FD&C 
Act, the rule mandates that the trade secrets and commercial or 
financial information that is privileged or confidential that the 
manufacturer provides be used only for purposes of testing or otherwise 
complying with the FD&C Act and the rule. Moreover, the government 
action here may be further constrained by the fact that there will be a 
limited number of SIPs working with a limited number of Importers and 
qualifying laboratories, and by the fact that the SIPs will be time-
limited.
    The economic impact of the rule will also be constrained by the 
fact that manufacturers will retain their right to protect their trade 
secrets against disclosure (Pharm. Care Mgmt. Ass'n v. Rowe, 307 F. 
Supp. 2d 164, 179 (D. Me. 2004) (holding that a ``statute's protection 
from further disclosure inoculates it from constitutional infirmity''). 
As required by section 804(e)(2) of the FD&C Act, the final rule 
mandates in Sec.  251.16(g) that the Importer keep any information that 
the manufacturer provides to authenticate a prescription drug being 
tested and confirm that the labeling of the prescription drug complies 
with labeling requirements under the FD&C Act in strict confidence. The 
final rule also requires that any trade secrets or commercial or 
financial information that is privileged or confidential that the 
manufacturer supplies for the purposes of testing or otherwise 
complying with the FD&C Act be kept in strict confidence. Moreover, 
manufacturers have the option of conducting the Statutory Testing 
themselves, which would obviate the need to disclose the Statutory 
Testing information to the Importer. While the manufacturer would still 
need to disclose the Statutory Testing information and results to FDA, 
FDA would ensure that any trade secrets or confidential commercial 
information remain confidential consistent with the law (Full Value 
Advisors, LLC v. Securities & Exchange Comm., 633 F.3d 1101, 1110 (D.C. 
Cir. 2011) (finding that disclosure to the Securities & Exchange 
Commission produced no economic harm because the Commission ensured 
that the information remained confidential).
    Turning to the second Penn Central factor--interference with 
distinct investment-backed expectations--regulated industry has been on 
notice since at least October 28, 2000, when the predecessor to the 
current section 804 of the FD&C Act was signed into law as part of the 
Medicine Equity and Drug Safety (MEDS) Act of 2000, that they could be 
required to disclose information needed for safe importation. Thus, 
sponsors of NDAs or ANDAs submitted after that date could not have a 
reasonable investment-backed expectation that is inconsistent with 
section 804. While a comment points to the fact that prior HHS 
Secretaries did not make the section 804(l) certification to Congress, 
it would not be reasonable for manufacturers to expect that such a 
certification could never be made, especially given the widely-known 
developments described in the preamble to the proposed rule, including 
the continued rise of prescription drug prices which has raised 
concerns among policymakers, healthcare professionals, and American 
consumers (84 FR 70796 at 70798-70801). With regard to drugs the 
applications for which were submitted before October 28, 2000, it still 
would not have been reasonable for manufacturers to expect that a 
provision like section 804 would not be enacted. Courts have held that 
those who do business in highly regulated fields are on notice that 
changes are possible (Maine Educ. Ass'n Benefits Trust v. Cioppa, 695 
F.3d 145, 154 (1st Cir. 2012) (finding that ``[g]iven the historically 
heavy and continuous regulation of insurance in Maine, the [Plaintiff], 
in choosing how and where to allocate its resources, ought to at least 
be aware of the heightened possibility that new insurance regulations 
might hinder the use or value of its loss information'' (internal 
citations omitted)); Connolly v. Pension Ben. Guar. Corp., 475 U.S. 
211, 226-227 (1986)). The prescription drug industry is such a highly 
regulated field (New York v. Actavis PLC, 787 F.3d 638, 643 (2d Cir. 
2015) (describing the pharmaceutical industry as ``complex and highly-
regulated'').
    One comment contends that the protections against disclosure of 
certain information in the Federal Trade Secrets Act at 18 U.S.C. 1905, 
in sections 301(j) and 505(l) of the FD&C Act, and in FDA's regulations 
at 21 CFR 20.61 and 314.430 support manufacturers' expectation that 
they would not have to supply the information specified in section 804 
and this rule. In Ruckelshaus v. Monsanto, the Supreme Court held that 
an explicit guarantee of exclusive use created a reasonable investment-
backed expectation that EPA would not consider the data when evaluating 
the application of a subsequent applicant (Ruckelshaus, 467 U.S. at 
1011). None of the provisions that the comment cites creates an 
explicit or implicit guarantee that section 804 would not be 
implemented or that regulations would not be issued requiring 
manufacturers to provide testing and other information to Importers. We 
note that we have determined that it is not necessary for FDA to 
provide Statutory Testing information to Importers, and so we are not 
finalizing proposed Sec.  251.16(i), which would have provided that 
``FDA may transmit information that the manufacturer is required to 
provide to an Importer under this section on the manufacturer's behalf 
if the manufacturer has not transmitted such information to the 
Importer in a timely fashion and if such information is available to 
FDA in the NDA or ANDA.'' Manufacturers that choose not to conduct the 
Statutory Testing are required to provide the Statutory Testing 
information covered by Sec.  251.16(i) to Importers themselves.
    The Supreme Court has described the final Penn Central factor, the 
``character of the governmental action,'' as a way to assess whether 
the challenged action ``amounts to a physical invasion or instead 
merely affects property interests through `some public program 
adjusting the benefits and burdens of economic life to promote the 
common good' '' (Lingle, 544 U.S. at 539 (quoting Penn Central, 438 
U.S. at 124)). Here, section 804 of the FD&C Act and the rule do not 
amount to a physical invasion and they have a legitimate public 
purpose, to significantly reduce the cost of covered products to the 
American consumer without any additional risk to the public's health 
and safety. As noted earlier, the increasing cost of

[[Page 62119]]

prescription drugs is placing a heavy burden on American consumers. To 
promote the common good, section 804 and the rule would require 
manufacturers of certain drugs--those imported under SIPs--to provide 
limited information to Importers or qualified laboratories under 
limited circumstances. For these reasons, the third factor of the 
takings analysis, like the first two factors, compels the conclusion 
that neither section 804 nor this rule amounts to a regulatory taking 
of manufacturers' property that requires compensation under the Fifth 
Amendment.
    We do not agree that section 804 of the FD&C Act is best 
interpreted to permit manufacturers to charge Importers for information 
(such as the attestation and information statement, the executed batch 
records, and the Statutory Testing information) or services (such as 
conducting Statutory Testing) that section 804 and this rule require 
them to provide. Section 804(h) explicitly requires manufacturers to 
authorize Importers to use a drug's approved labeling at no cost. This 
does not mean that manufacturers can charge for information or services 
that they are required to provide. If manufacturers were permitted to 
charge it would directly undermine section 804's cost-reducing goal. 
Moreover, interpreting section 804 to permit manufacturers to charge 
Importers is not necessary to avoid a Fifth Amendment Takings Clause 
issue because, as explained earlier, neither section 804 nor this rule 
effects a taking under the Fifth Amendment.
2. Authorization To Use FDA-Approved Labeling
    With regard to the first Penn Central factor, the requirement in 
section 804 of the FD&C Act and this regulation that a manufacturer 
authorize an Importer to use the FDA-approved labeling for an eligible 
prescription drug is likely to have little to no impact on the value of 
the manufacturer's trademarks. Trademarks do not have inherent value 
(Marshak v. Green, 746 F.2d 927, 929 (2d Cir. 1984)). Their only value 
is in the goodwill with which they are associated. Under this rule, 
there will be little or no diminution in the goodwill associated with 
manufacturers' trademarks because section 804 drugs will meet the 
conditions of the relevant FDA-approved NDA or ANDA. In addition, as 
discussed earlier, the labeling statement will make it clear that the 
section 804 drug was imported without the manufacturer's authorization. 
Turning to the second Penn Central factor, a manufacturer could not 
have a reasonable investment-backed expectation that it would not have 
to authorize an Importer to use its labeling. Such an expectation would 
be inconsistent with the current version of section 804. With regard to 
drugs developed before December 8, 2003, it still would not have been 
reasonable for manufacturers to expect that a provision like section 
804(h) requiring that the manufacturer of a section 804 drug authorize 
the use of the FDA-approved labeling would not be enacted. Finally, as 
explained earlier, the third Penn Central factor also weighs against a 
finding that section 804 and this rule effect a regulatory taking, 
because significantly reducing the cost of covered products to the 
American consumer without any additional risk to the public's health 
and safety ``promote[s] the common good'' (Lingle, 544 U.S. at 539 
(quoting Penn Central, 438 U.S. at 124)).
    (Comment 76) One comment says that section 804 of the FD&C Act and 
this rule violate provisions of the World Trade Organization's 
Agreement on Trade-Related Aspects of Intellectual Property Rights 
(TRIPS. Specifically, the comment says that section 804 and this rule 
violate Article 39 of the TRIPS Agreement by requiring manufacturers to 
disclose trade secrets and confidential commercial information and 
Article 21 of the TRIPS Agreement by requiring manufacturers to 
authorize the use of labeling that could include trademarks.
    (Response 76) We disagree that section 804 of the FD&C Act and this 
rule violate the TRIPS Agreement. As a general matter, we note that the 
United States is in full compliance with its international obligations 
under the TRIPS Agreement. Article 39 of TRIPS provides that member 
countries ``shall protect undisclosed information in accordance with 
paragraph 2 and data submitted to governments or governmental agencies 
in accordance with paragraph 3.'' Under section 804 and this rule, 
Importers and qualified laboratories obtain information from 
manufacturers under the authority of a statute and implementing 
regulation. The final rule provides in Sec.  251.16(g), that 
information supplied by the manufacturer to authenticate the 
prescription drug being tested and confirm that the labeling of the 
prescription drug complies with labeling requirements under the FD&C 
Act, and any trade secrets or commercial or financial information that 
is privileged or confidential that the manufacturer supplies for the 
purposes of testing or otherwise complying with the FD&C Act and this 
rule, must be kept in strict confidence and used only for the purposes 
of testing or otherwise complying with the FD&C Act and this rule.
    With regard to data submitted to governments or governmental 
agencies, as discussed earlier, we have determined that it is not 
necessary for FDA to provide Statutory Testing information to 
Importers, and so we are not finalizing Sec.  251.16(i) from the 
proposed rule, which would have provided that FDA may transmit 
information that the manufacturer is required to provide to an Importer 
under this section on the manufacturer's behalf if the manufacturer has 
not transmitted such information to the Importer in a timely fashion 
and if such information is available to FDA in the NDA or ANDA.
    We also disagree that section 804 of the FD&C Act and this rule 
violate Article 21 of TRIPS, which states that ``compulsory licensing 
of trademarks shall not be permitted.'' The requirement that a 
manufacturer of a prescription drug authorize an Importer to use the 
drug's FDA-approved labeling does not constitute compulsory licensing 
of trademarks. This is at least because the labeling is only used 
referentially and does not associate the trademark with the Importer. 
As noted above, the United States is in full compliance with its 
international obligations under the TRIPS Agreement.

J. Disclosure

    (Comment 77) A comment says that FDA's determination that a drug is 
an eligible prescription drug that can be imported by a SIP discloses 
trade secrets and confidential commercial information about that drug. 
When FDA determines that a drug can be imported, FDA has determined 
that, but for the fact that the drug bears the HPFB-approved labeling 
when marketed in Canada, it meets the conditions in an FDA-approved NDA 
or ANDA. The comment says that the information upon which FDA's 
determination is based--whether a drug manufactured for sale in Canada 
meets the conditions in an FDA-approved NDA or ANDA--is confidential. 
Another comment says that FDA should specify that when a manufacturer 
notifies an Importer that it cannot or will not make the Sec.  
251.5(c)(4)(xii) attestation, because its drug does not meet the 
conditions in an FDA-approved NDA or ANDA or for some other reason, 
that is confidential information that the Importer should not be able 
to disseminate or use.
    (Response 77) Section 804 of the FD&C Act directs the Secretary to 
issue regulations permitting pharmacists and

[[Page 62120]]

wholesalers to import from Canada drugs that, among other requirements, 
comply with section 505 of the FD&C Act. FDA interprets compliance with 
section 505 to mean that the HPFB-approved drug meets the conditions in 
an FDA-approved NDA or ANDA. Through its labeling requirements, the 
statute also directs that FDA's determination that a Canadian drug 
complies with section 505 will be publicly available information, as 
reflected, for example, in product labeling.
    The final rule clarifies in Sec.  251.5(d) that if a manufacturer 
cannot provide the attestation and information statement, the 
manufacturer must notify FDA and the Importer and articulate with 
specificity the reason or reasons why it cannot provide the attestation 
and information statement. The final rule also requires, in Sec.  
251.16(g), that importers keep any trade secrets or commercial or 
financial information that is privileged or confidential, that the 
manufacturer supplies for the purposes of testing or otherwise 
complying with the Federal Food, Drug, and Cosmetic Act and this part, 
in strict confidence. We note that manufacturers can choose to mark any 
trade secrets or commercial or financial information that is privileged 
or confidential that is contained in any of the information that they 
are required to provide.
    We do not believe that the fact that the manufacturer cannot or 
will not provide the attestation and information statement is likely to 
be a trade secret or commercial or financial information that is 
privileged or confidential. The reasons that the manufacturer gives for 
not providing the attestation and information statement, by contrast, 
may be trade secrets or commercial or financial information that is 
privileged or confidential, which would mean that the Importer would be 
legally obligated to keep them in ``strict confidence'' under Sec.  
251.16(g).

K. FDA Authority

    (Comment 78) A comment states that FDA lacks the authority under 
section 804 to issue certain provisions regarding manufacturers' 
information and manufacturers' participation in the importation of 
their drugs by SIPs. The comment states that FDA cannot provide the 
Importer with the information contained in an approved NDA or ANDA as 
is provided for by proposed Sec.  251.16(i). The comment also states 
that FDA cannot require the manufacturer to supply ``testing 
methodologies and protocols that the manufacturer has developed'' as 
FDA proposed in Sec.  251.16(b). The comment states that FDA lacks the 
authority to issue Sec.  251.5(c)(4)(xii), which requires manufacturers 
to provide an attestation and information statement that establishes 
that the drug proposed for import, but for the fact that it bears the 
HPFB-approved labeling, meets the conditions in the FDA-approved NDA or 
ANDA. The comment also states that, with regard to Sec.  251.13(a), FDA 
lacks the authority to deem the manufacturer to have provided 
authorization to use the FDA-approved labeling for the manufacturer's 
drug, if the manufacturer does not provide written authorization to the 
Importer in a timely fashion. Finally, the comment asks FDA to clarify 
that section 804(e) of the FD&C Act, which, the comment states, relates 
to testing, not supply chain information, does not give FDA the 
authority to issue proposed Sec.  251.14, which requires a manufacturer 
to provide an Importer with transaction information.
    (Response 78) We have determined that it is not necessary to 
include proposed Sec.  251.16(i) in the final rule. That provision 
stated that FDA may transmit information that the manufacturer is 
required to provide to an Importer under this section on the 
manufacturer's behalf if the manufacturer has not transmitted such 
information to the Importer in a timely fashion and if such information 
is available to FDA in the NDA or ANDA. Manufacturers are required to 
provide the Statutory Testing information covered by Sec.  251.16(i) 
themselves. If they fail to do so, they will have committed a 
prohibited act under section 301(aa) of the FD&C Act. In addition, as 
discussed earlier, violations of section 804(e) of the FD&C Act are 
subject to a penalty under section 303(b)(6) of the FD&C Act.
    It is necessary, however, and within FDA's authority under section 
804 of the FD&C Act, to issue Sec. Sec.  251.16(b) and (d), which 
require that the manufacturer provide the Importer with the information 
that the Importer needs to conduct the Statutory Testing. Section 
804(b) requires that the Secretary issue regulations permitting the 
importation of certain drugs under section 804. Section 804(e) 
specifies that these regulations shall require the manufacturer to 
provide the Importer with the ``information needed to authenticate the 
prescription drug being tested.'' Sections 804(d)(1)(J)(i)(III) and 
804(d)(1)(L) specify that the regulations shall require the Importer to 
submit to FDA documentation demonstrating that section 804 drugs were 
tested ``for authenticity and degradation'' and that the Importer 
submit to FDA laboratory records including complete data derived from 
all tests necessary to ensure that the prescription drug is in 
compliance with established specifications and standards. While 
sections 804(d)(1)(J)(i)(III) and 804(d)(1)(L) do not state that the 
regulations must require manufacturers to provide the information 
needed to conduct these tests, FDA has the authority to require this 
under section 804(c)(1), which directs the Secretary to issue 
regulations that require that safeguards be in place to ensure that 
section 804 drugs comply with section 501, 502, and 505 of the FD&C 
Act, and under section 804(c)(3), which directs the Secretary to issue 
regulations that contain any additional provisions determined by the 
Secretary to be a means to facilitate the importation of prescription 
drugs.
    With regard to the manufacturer's attestation and information 
statement described in Sec.  251.5(c)(4)(xii), section 804(c)(1) of the 
FD&C Act specifies that the regulations must require that safeguards be 
in place to ensure that each drug imported under the regulations 
complies with the FD&C Act, including sections 501, 502 and 505. It 
would not be possible to ensure that each drug imported under the 
regulations complies with sections 501, 502, and 505, as required by 
section 804(c)(1), without the information from the manufacturer that 
is captured in the attestation and information statement. For example, 
only the manufacturer knows whether a drug that was originally intended 
for the Canadian market was manufactured ``in conformity with current 
good manufacturing practice,'' as required by section 501. The comment 
notes that another provision, section 804(d)(1)(K), does not state that 
the regulations must require the manufacturer to provide the Importer 
with the information captured in the attestation and information 
statement. Under section 804(d)(1)(K), the regulations under section 
804(b) must require the Importer to submit to FDA a certification from 
the Importer or the manufacturer that the imported drugs are approved 
for marketing in the United States and are not adulterated or 
misbranded, and that they meet all the labeling requirements under the 
FD&C Act. If the Importer provides the section 804(d)(1)(K) 
certification, the Importer will need information from the 
manufacturer, including information about how the drug was 
manufactured. While section 804(d)(1)(K) does not expressly mandate 
that the Secretary require the manufacturer to provide the Importer 
with the information it needs for certification, it is implied because 
the Importer could not make the

[[Page 62121]]

certification without certain information from the manufacturer. In any 
case, the Secretary clearly has the authority to do so under section 
804(c)(1) and under section 804(c)(3), which authorizes the Secretary 
to include regulatory provisions that the Secretary determines to be 
appropriate as a safeguard to protect the public health or as a means 
to facilitate importation of prescription drugs.
    With regard to Sec.  251.13(a), the comment contends that FDA would 
need express statutory authority to deem the manufacturer to have 
provided authorization to use the FDA-approved labeling for the 
manufacturer's drug, if the manufacturer does not provide such 
authorization in a timely fashion. We disagree. While section 804(h) of 
the FD&C Act, which requires manufacturers to authorize Importers to 
use their drugs' FDA-approved labeling, does not expressly state that 
FDA can deem manufacturers to have given their authorization if they 
fail to do so in a timeframe that FDA determines is reasonable under 
the circumstances, other provisions of section 804 give FDA the 
necessary authority. Section 804(c)(1) specifies that the regulations 
that the Secretary issues must require that safeguards be in place to 
ensure that each drug imported under the regulations complies with the 
FD&C Act and section 804(c)(3) directs the Secretary to issue 
regulatory provisions that it determines will facilitate importation. 
The provision at issue here will help ensure that section 804 drugs 
comply with the FD&C Act's labeling requirements and are not 
misbranded, and will facilitate importation because it will prevent 
manufacturers from causing unwarranted delay by withholding their 
authorization to use the FDA-approved labeling.
    With regard to Sec.  251.14(b), which requires the manufacturer to 
provide to the Importer a copy of any transaction documents that were 
provided from the manufacturer to the Foreign Seller, FDA's authority 
to require this derives from section 804(c)(3) and (e) of the FD&C Act. 
Under section 804(e)(2)(A)(i), if the Importer does the Statutory 
Testing, the manufacturer has to provide certain information, including 
``information needed to . . . authenticate the prescription drug being 
tested.'' The information needed to authenticate a section 804 drug 
includes the transaction documents that the manufacturer provides to 
the Importer under Sec.  251.14(b). These documents enable the Importer 
and FDA to conduct a cross check of the transaction documents that the 
Foreign Seller provides to the Importer under Sec.  251.14(c)(6). This 
cross check is valuable supporting evidence of the authenticity of the 
drug, helping to ensure that importation under section 804 poses no 
additional risk to the public's health and safety.
    Under Sec.  251.14(b), manufacturers must provide the transaction 
documents needed for the cross check regardless of whether the Importer 
or the manufacturer conducts the Statutory Testing. FDA's authority to 
require this when the manufacturer conducts the testing derives from 
section 804(c)(3) of the FD&C Act, which provides that the regulations 
``shall contain any additional provisions determined by the Secretary 
to be appropriate as a safeguard to protect the public health or as a 
means to facilitate the importation of prescription drugs.'' As noted 
earlier, the cross check of the transaction documents from the sale of 
the drug by the manufacturer to the Foreign Seller is a valuable 
safeguard that protects the public health by providing evidence of the 
drug's authenticity.

L. Procedural Requirements

    (Comment 79) One comment states that the proposed ruled failed to 
comply with certain procedural requirements set forth in statute and 
Executive orders, including the Regulatory Flexibility Act, the 
Unfunded Mandates Reform Act, the E-Government Act of 2002, and 
Executive Orders 12866, 13175, 12630, and 13045.
    (Response 79) FDA disagrees with this comment. This rulemaking 
adheres to procedural provisions set forth in statutes and Executive 
orders. For example, as noted in the Final Regulatory Impact Analysis, 
FDA conducted economic analysis under the Unfunded Mandates Reform Act 
and the Regulatory Flexibility Act. Further, we do not believe the 
final rule establishes a new collection of information under the E-
Government Act of 2002. In addition, the final rule describes FDA's 
Economic Analysis of Impacts under Executive Order 12866, the 
solicitation of comment from Indian Tribes in accordance with Executive 
Order 13175 and from States in accordance with Executive Order 13132, 
and FDA considered the applicability of other Executive orders in the 
development of the rule.
    (Comment 80) One comment states that former Acting Commissioner 
Brett Giroir did not have authority to sign the proposed rule because 
he was not the Acting Commissioner on December 18, 2019, which is the 
date on which the comment asserts the rule was filed with the Federal 
Register.
    (Response 80) This statement is incorrect. Acting Commissioner 
Giroir had signing authority for the proposed rule because he served in 
the role of Acting Commissioner at the time he signed the rule on 
December 11, 2019. The date of filing with the Federal Register is 
determined by the time the signed, original, clear and legible copies 
of a document are received (1 CFR 18.3(c)).
    (Comment 81) A comment says that under the Administrative Procedure 
Act and the Due Process Clause of the U.S. Constitution, NDA or ANDA 
holders listed in a SIP Proposal must have an opportunity to comment on 
the SIP Proposal before FDA authorizes it. The comment says that a SIP 
Proposal is either a rule or an informal adjudication and that, as a 
result, authorization should not proceed before NDA or ANDA holders 
have the opportunity to seek judicial review. The comment says that 
allowing NDA or ANDA holders to comment on SIP Proposals would allow 
FDA to receive input on appropriate drugs and conserve resources that 
might otherwise be spent on unworkable or dangerous SIP Proposals.
    (Response 81) We disagree with the comment that FDA's authorization 
of a SIP Proposal is a rule. Such an authorization would be an order. 
Under the Administrative Procedure Act (5 U.S.C. 551(4)), a rule is 
defined as ``the whole or a part of an agency statement of general or 
particular applicability and future effect designed to implement, 
interpret, or prescribe law or policy or describing the organization, 
procedure, or practice requirements of an agency.'' An order is the 
whole or a part of a final disposition, whether affirmative, negative, 
injunctive, or declaratory in form, of an agency in a matter other than 
rulemaking but including licensing. 5 U.S.C 551(6). Thus, ``[t]he term 
`order' is defined to exclude rules.'' S. Rep. 79-752 at 11 (November 
19, 1945). While this final rule interprets and implements section 804 
of the FD&C Act, when FDA authorizes a SIP Proposal, it will be 
applying this rule.
    We also disagree that the manufacturers that hold the NDAs or ANDAs 
of the FDA-approved counterparts of the eligible prescription drugs 
that a SIP seeks to import would necessarily be entitled to participate 
in FDA's review of the SIP Proposal or to seek judicial review of FDA's 
authorization of a SIP Proposal before it proceeds. Under 21 CFR 10.25, 
``[a]n interested person may petition the Commissioner [of the FDA] to 
issue, amend, or revoke a regulation or order, or to take or refrain 
from taking any other form of administrative action.''

[[Page 62122]]

Under 21 CFR 10.35, an interested person may also ``request the 
Commissioner to stay the effective date of any administrative action.'' 
FDA's regulations further provide that a final administrative decision 
on such a petition or request for a stay is a prerequisite to filing 
suit in court (21 CFR 10.45). A manufacturer can follow the procedures 
set forth in these regulations to petition FDA with regard to, or seek 
a stay of, the authorization of a SIP.
    Finally, we do not believe that FDA's review of a SIP Proposal 
would necessarily benefit from input from NDA or ANDA holders. The 
comment says that NDA or ANDA holders could offer information such as 
that antimicrobial, antiviral, or oncology drugs could have a high 
potential for resistance or death if misbranded or adulterated. We do 
not think that this is necessary because drugs imported under section 
804 of the FD&C Act and this rule will not be any more likely to be 
adulterated or misbranded than drugs imported with their manufacturer's 
authorization.

M. Technical Amendments

    We are revising Sec.  1.74(a)(2) (21 CFR 1.74(a)(2)) to remove the 
reference to a biological product regulated by FDA's Center for Drug 
Evaluation and Research (CDER) that is required to have an approved 
NDA. In the NPRM, we proposed that information filed in ACE must 
include, for a biological product regulated by FDA's CDER that is 
required to have an approved new drug application or an approved 
biologics license application (BLA), the number of the applicable 
application. As revised, the text refers to a biological product 
regulated by FDA's CDER that is required to have an approved BLA. This 
amendment reflects that after March 23, 2020, a marketing application 
for a biological product (that previously could have been submitted 
under section 505 of the FD&C Act) must be submitted in a BLA under 
section 351 of the PHS Act (see section 7002(e) of the Biologics Price 
Competition and Innovation Act of 2009 (BPCI Act), enacted as part of 
the Patient Protection and Affordable Care Act (Pub. L. 111-148)). On 
March 23, 2020, an approved application for a biological product under 
section 505 of the FD&C Act was deemed to be a license for the 
biological product (i.e., an approved BLA) under section 351 of the PHS 
Act (see section 7002(e)(4)(A) of the BPCI Act; see also section 
7002(e)(4)(B) of the BPCI Act). As proposed in the NPRM, we are also 
adding Sec.  1.74(b), which sets forth the information that ACE filers 
must submit when they file entry in ACE for drugs that are imported or 
offered for import under section 804. This information will facilitate 
the importation of drugs under section 804 and is a safeguard to ensure 
that FDA's review of such importation is as protective of the public's 
health and safety as the Agency's review of entries for other drugs. We 
have revised the authority citation for part 1 to reflect that fact 
that we added Sec.  1.74(b) pursuant to our authority in section 
804(c)(3).
    In Sec.  251.9(b), we are including language to clarify that when 
Foreign Sellers register with FDA under section 804 of the FD&C Act, 
they must submit a unique facility identifier in accordance with the 
system specified under section 510 of the FD&C Act (21 U.S.C. 360). We 
have made conforming revisions to Sec.  1.74(b)(1) and the definitions 
in proposed Sec.  251.2. These revisions align the Foreign Seller 
registration requirements under section 804 of the FD&C Act with drug 
establishment registration requirements under section 510 of the FD&C 
Act.
    The definition of ``eligible prescription drug'' in Sec.  251.2 
includes revisions from the definition proposed in the NPRM to clarify 
that the drug is currently commercially marketed in the United States. 
This revision aligns the definition with the certification requirement 
in proposed Sec.  251.19(e). We have made a conforming revision to 
proposed Sec.  251.3(d)(6).
    In Sec.  251.14 we clarify, as discussed in the NPRM, that a 
Foreign Seller, upon receiving a shipment of eligible prescription 
drugs from the manufacturer, must, among other things, maintain records 
associating the SSI with the Canadian DIN and all the records it 
received from the manufacturer upon receipt of the original shipment 
intended for the Canadian market for not less than 6 years.
    We are making a number of changes throughout the rule for clarity 
and readability.

VI. Effective/Compliance Date(s)

    This rule is effective November 30, 2020.

VII. Economic Analysis of Impacts

    We have examined the impacts of the final rule under Executive 
Order 12866, Executive Order 13563, Executive Order 13771, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 
13563 direct us to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). Executive Order 13771 
requires that the costs associated with significant new regulations 
``shall, to the extent permitted by law, be offset by the elimination 
of existing costs associated with at least two prior regulations.'' 
This final rule has been designated as a significant regulatory action 
as defined by Executive Order 12866.
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that would minimize any significant impact of a rule on small 
entities. This rule does not impose new regulatory requirements on 
small entities that do not participate in SIPs, however we cannot 
anticipate whether sponsors will contract with small entities to 
implement their authorized SIP Proposals or whether, under certain 
circumstances, a small pharmacist or wholesaler might become a sponsor. 
We also lack information to quantify the total impacts of the final 
rule. Because we do not have enough information about the effect of the 
final rule on small entities, we are not certifying that the final rule 
will not have a significant economic impact on a substantial number of 
small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before issuing ``any rule that includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted annually for inflation) in any one 
year.'' The current threshold after adjustment for inflation is $156 
million, using the most current (2019) Implicit Price Deflator for the 
Gross Domestic Product. This final rule would not result in an 
expenditure in any year that meets or exceeds this amount. This final 
rule allows commercial importation of certain prescription drugs from 
Canada through time-limited SIPs, sponsored by a State or Indian Tribe, 
or in certain future circumstances by a pharmacist or wholesale 
distributor, with possible cosponsorship by a State, Indian Tribe, 
pharmacist, or wholesale distributor. If such programs allow Importers 
to leverage drug price differences between the United States and 
Canada, they may result in cost savings for U.S. consumers.
    We received a number of comments on the preliminary economic 
analysis,

[[Page 62123]]

including general comments on the analysis as well as comments on 
costs, benefits, distributional effects, international effects, and 
effects on small entities. We respond to these comments in the final 
economic analysis.
    Costs of the final rule may accrue to the Federal Government, SIP 
Sponsors, Importers, and manufacturers of imported eligible 
prescription drugs. The Federal Government will incur costs to 
implement the final rule and conduct oversight of authorized programs. 
SIP sponsors will face costs to prepare proposals, implement approved 
programs, and produce records and program reports. Drug manufacturers 
will have to provide certain information to Importers if their drugs 
are imported into the United States from Canada. SIPs may offer cost 
savings to patients, as well as participating wholesale drug 
distributors, pharmacies, hospitals, and third-party payers. As drug 
distributors realize savings in acquiring imported eligible 
prescription drugs and pass some of these savings to consumers and 
other payors, it is possible that U.S.-based drug manufacturers may 
experience a transfer in U.S. sales revenues to these parties.
    We are unable to estimate the cost savings from this final rule, 
because we lack information about the likely size and scope of SIPs, 
the specific eligible prescription drugs that may be imported, the 
degree to which these imported drugs will be less expensive than non-
imported drugs available in the United States, and which eligible 
prescription drugs are produced by U.S.-based drug manufacturers.

                                      Table 1--Summary of Benefits, Costs, and Distributional Effects of Final Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Units
                                       Primary        Low          High    ---------------------------------------
              Category                 estimate     estimate     estimate       Year       Discount      Period                    Notes
                                                                              dollars      rate  %      covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized $millions/  ...........  ...........  ...........  ...........            7
     year.                                                                                         3
    Annualized Quantified..........  ...........  ...........  ...........  ...........            7
                                                                                                   3
                                    --------------------------------------------------------------------------------------------------------------------
    Qualitative....................   Potential cost savings to consumers
                                       and third-party payers or entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized $millions/  ...........  ...........  ...........  ...........            7
     year.                                                                                         3
    Annualized Quantified..........  ...........  ...........  ...........  ...........            7
                                                                                                   3
                                    --------------------------------------------------------------------------------------------------------------------
    Qualitative....................        Potential costs to Federal
                                      Government, SIP Sponsors, Importers,
                                         and manufacturers of imported
                                       eligible prescription drugs. This
                                        framework does not consider the
                                     potential implications of private and
                                            government insurance and
                                         reimbursement as well as other
                                         purchasers in the supply chain
                                      including hospitals and physicians.
                                        We cannot predict the types and
                                        volumes of eligible prescription
                                     drugs that will be imported under the
                                        final rule, which will influence
                                       these payors. Moreover, the prices
                                       paid by multiple payors, including
                                      those affected by discounts, may be
                                       different, unobservable, or both.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
    Federal Annualized Monetized     ...........  ...........  ...........  ...........            7
     $millions/year.                                                                               3
                                    --------------------------------------------------------------------------------------------------------------------
    From/To........................                  From:
                                                      To:                   ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Other Annualized Monetized       ...........  ...........  ...........  ...........            7
     $millions/year.                                                                               3
                                    --------------------------------------------------------------------------------------------------------------------
    From/To........................      From: U.S. drug manufacturers
                                        To: Importers and U.S. consumers            Not
                                                                            Quantified.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
    State, Local or Tribal Government: Potential costs and cost savings to
     States and Indian Tribes from sponsoring SIPs.
    Small Business: Potential costs to drug manufacturers; potential costs
     and cost savings to pharmacists and wholesale distributors.
    Wages:
    Growth:
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We lack information about the likely size and scope of SIPs, the 
specific prescription drug products that may become eligible for 
importation, which eligible prescription drugs are produced by U.S.-
based drug manufacturers, and the degree to which these imported drugs 
will be less expensive than non-imported drugs available in the United 
States, to estimate the present and annualized values of the costs and 
cost savings of the final rule over an infinite

[[Page 62124]]

time horizon. Therefore, we exclude the Executive Order 13771 summary 
table from this analysis. This is a deregulatory action because the 
rule is opening a pathway for legal importation that is not currently 
allowed.
    We have developed a comprehensive Economic Analysis of Impacts that 
assesses the impacts of the final rule. The full analysis of economic 
impacts, including responses to public comments submitted, is available 
in the docket for this final rule (Ref. 6) and at https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

VIII. Analysis of Environmental Impact

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

IX. Paperwork Reduction Act of 1995

    This final rule contains information collection provisions that are 
subject to review by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The title, 
description, and respondent description of the information collection 
provisions are shown in the following paragraphs with an estimate of 
the annual reporting and recordkeeping burden. Included in the estimate 
is the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing each collection of information.
    Title: Section 804 Importation Program Proposals--21 CFR part 251.
    Description: The final rule provides that a SIP Sponsor that seeks 
to implement a SIP to import eligible prescription drugs from Canada 
must submit a proposal that includes, among other things, information 
about the SIP Sponsor, cosponsors if any, and the SIP Sponsor's 
importation plan including the SIP's compliance plan. In addition, SIP 
Sponsors must provide FDA with data and information on the eligible 
prescription drugs the SIP imports and on the SIP's cost savings to the 
American consumer. Importers have a number of responsibilities related 
to submitting a Pre-Import Request; screening eligible prescription 
drugs; and arranging for importation, testing, and relabeling. 
Manufacturers provide an attestation and information statement, batch 
records, transaction information, and information needed to test 
eligible prescription drugs for compliance with section 804 of the FD&C 
Act and the rule.
    Description of Respondents: Respondents would include SIP Sponsors 
(States or Indian Tribes, or in certain future circumstances 
pharmacists or wholesale distributors, and any cosponsor(s)); Importers 
(pharmacists or wholesaler distributors); and manufacturers of eligible 
prescription drugs.
    FDA anticipates submissions will be made in electronic format 
through the ESG or to an alternative transmission point identified by 
FDA.
    FDA estimates that there will be 10 SIP Sponsors requiring 360 
hours each to research, prepare, and administer requirements annually; 
10 Pre-Import Requests requiring 24 hours each annually; and 20 
manufacturers also requiring 24 hours each annually to participate in 
the program. In addition, FDA estimates that a recordkeeping burden of 
52 hours will be imposed annually on the 10 SIP Sponsors, and a 
recordkeeping burden of 24 hours will be imposed annually on each of 
the 10 Importers and the 20 manufacturers. The 20 manufacturers 
anticipated to participate in the program will also incur an estimated 
burden of 24 hours each for copying and providing records to SIP 
Sponsors and Importers of foreign transactions.
    FDA estimates the burden of this collection of information as 
follows:

                                  Table 2--Estimated Annual Reporting Burden 1
----------------------------------------------------------------------------------------------------------------
                                                     Number of                        Average
 Type of information collection      Number of     responses per   Total annual     burden per      Total hours
       activity/respondent          respondents     respondent       responses       response
----------------------------------------------------------------------------------------------------------------
SIP Sponsor Sec.  Sec.   251.3;               10               1              10             392           3,920
 251.8; 251.14--SIP Proposal
 Submission Requirements;
 251.18--Post-Importation
 Requirements; 251.19--Reports
 to FDA.........................
Importer Sec.  Sec.   251.5;                  10               1              10              20             200
 251.12; 251.13; 251.17--Pre-
 Import Request and Importation
 Requirements...................
Manufacturer Sec.   251.16                    20               1              20              28             560
 Laboratory Testing Requirements
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............           4,680
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.


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


[[Page 62125]]


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

    The information collection provisions in this final rule have been 
submitted to OMB for review as required by section 3507(d) of the 
Paperwork Reduction Act of 1995. Before the effective date of this 
final rule, FDA will publish a notice in the Federal Register 
announcing OMB's decision to approve, modify, or disapprove the 
information collection provisions in this final rule. An Agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.

X. Federalism

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

XI. Consultation and Coordination With Indian Tribal Governments

    We have analyzed this rule in accordance with the principles set 
forth in Executive Order 13175. We have determined that the rule does 
not contain policies that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes. Accordingly, we 
conclude that the rule does not contain policies that have tribal 
implications as defined in the Executive Order and, consequently, a 
tribal summary impact statement is not required.

XII. References

    The following references are on display at the Dockets Management 
Staff (see ADDRESSES) and are available for viewing by interested 
persons between 9 a.m. and 4 p.m., Monday through Friday; they are also 
available electronically at https://www.regulations.gov/. FDA has 
verified the website addresses, as of the date this document publishes 
in the Federal Register, but websites are subject to change over time.

1. FDA, 2018, ``FDA Launches Global Operation to Crack Down on 
websites Selling Illegal, Potentially Dangerous Drugs; Including 
Opioids,'' accessed September 21, 2020, https://www.fda.gov/news-events/press-announcements/fda-launches-global-operation-crack-down-websites-selling-illegal-potentially-dangerous-drugs.
2. FDA, 2020, ``Internet Pharmacy Warning Letters,'' accessed 
September 21, 2020, https://www.fda.gov/drugs/drug-supply-chain-integrity/internet-pharmacy-warning-letters.
    3. HHS Task Force on Drug Importation, 2004, Report on 
Prescription Drug Importation, accessed September 21, 2020, https://www.safemedicines.org/wp-content/uploads/2018/03/HHS-Report1220.pdf.
    4. Government of Canada, Archived, ``Consultation: Regulations 
Amending the Food and Drug Regulations 1447--Good Manufacturing 
Practices,'' accessed September 21, 2020, https://www.canada.ca/en/health-canada/services/drugs-health-products/public-involvement-consultations/compliance-enforcement/regulations-amending-food-drug-regulations-1447.html.
    5. Government of Canada, Health Canada, ``GMP Drug Establishment 
Good Manufacturing Practices Pre-Application Package: Importers, 
Distributors and Wholesalers,'' accessed September 21, 2020, https://www.canada.ca/content/dam/hc-sc/migration/hc-sc/dhp-mps/alt_formats/pdf/compli-conform/gmp-bpf/docs/gmp-package-bpf-eng.pdf.
    6. FDA, Regulatory Impact Analysis: Importation of Prescription 
Drugs, https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

List of Subjects

21 CFR Part 1

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

21 CFR Part 251

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

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 
1 and 251 are amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for part 1 is revised to read as follows:

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


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


Sec.  1.74  Human drugs.

    In addition to the data required to be submitted in Sec.  1.72, an 
ACE filer must submit the following information at the time of filing 
entry in ACE for drugs, including biological products and eligible 
prescription drugs as defined in Sec.  251.2 of this chapter that are 
imported or offered for import under section 804 of the Federal Food, 
Drug, and Cosmetic Act, intended for human use that are regulated by 
the FDA Center for Drug Evaluation and Research.
    (a) For a drug intended for human use that is not an eligible 
prescription drug covered under paragraph (b) of this section:
    (1) Registration and listing. The Drug Registration Number and the 
Drug Listing Number of the foreign establishment where the human drug 
was manufactured, prepared, propagated, compounded, or processed before 
being imported or offered for import into the United States is required 
to register and list the drug under part 207 of this chapter. For the 
purposes of this section, the Drug Registration Number that must be 
submitted at the time of entry filing in ACE is the unique

[[Page 62126]]

facility identifier of the foreign establishment where the human drug 
was manufactured, prepared, propagated, compounded, or processed before 
being imported or offered for import into the United States. The unique 
facility identifier is the identifier submitted by a registrant in 
accordance with the system specified under section 510(b) of the 
Federal Food, Drug, and Cosmetic Act. For the purposes of this section, 
the Drug Listing Number is the National Drug Code number of the human 
drug article being imported or offered for import.
    (2) Drug application number. For a drug intended for human use that 
is the subject of an approved application under section 505(b) or 
505(j) of the Federal Food, Drug, and Cosmetic Act, the number of the 
new drug application or abbreviated new drug application. For a 
biological product regulated by the FDA Center for Drug Evaluation and 
Research that is required to have an approved biologics license 
application, the number of the applicable application.
    (3) Investigational new drug application number. For a drug 
intended for human use that is the subject of an investigational new 
drug application under section 505(i) of the Federal Food, Drug, and 
Cosmetic Act, the number of the investigational new drug application.
    (b) For an eligible prescription drug as defined in Sec.  251.2 of 
this chapter that is imported or offered for import under section 804 
of the Federal Food, Drug, and Cosmetic Act:
    (1) Registration and listing. The Drug Registration Number and the 
Drug Listing Number. For the purposes of this section, the Drug 
Registration Number that must be submitted in ACE is the unique 
facility identifier submitted by the Foreign Seller registrant under 
Sec.  251.9 of this chapter in accordance with the system specified 
under section 510 of the Federal Food, Drug, and Cosmetic Act. For the 
purposes of this section, the Drug Listing Number is the National Drug 
Code number that the Importer will use when relabeling the eligible 
prescription drug as required in Sec.  251.13 of this chapter.
    (2) Drug application number. The number of the new drug application 
or abbreviated new drug application for the counterpart FDA-approved 
drug.
    (3) Lot or control number. The lot or control number assigned by 
the manufacturer of the eligible prescription drug.
    (4) FDA Quantity. FDA Quantity, which is the quantity of each 
eligible prescription drug in an import line delineated by packaging 
level, including the type of package from the largest packaging unit to 
the smallest packaging unit; the quantity of each packaging unit; and 
the volume and/or weight of each of the smallest of the packaging 
units.
    (5) Pre-Import Request number. The Pre-Import Request number 
assigned by FDA.

0
3. Add part 251 to read as follows:

PART 251--SECTION 804 IMPORTATION PROGRAM

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

    Authority: 21 U.S.C. 351, 352, 353, 355, 360, 360eee-1, 371, 
374, 381, 384.

Subpart A--General Provisions


Sec.  251.1  Scope of the part.

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


Sec.  251.2  Definitions.

    The definitions of terms in section 804 of the Federal Food, Drug, 
and Cosmetic Act apply to the terms used in this part, if not otherwise 
defined in this section. The following definitions apply to this part:
    Active ingredient has the meaning set forth in Sec.  314.3 of this 
chapter.
    Adverse event means any untoward medical occurrence associated with 
the use of a drug product in humans, whether or not it is considered 
related to the drug product. An adverse event can occur in the course 
of the use of a drug product; from overdose of a drug product, whether 
accidental or intentional; from abuse of a drug product; from 
discontinuation of the drug product (e.g., physiological withdrawal); 
and it includes any failure of expected pharmacological action.
    Combination product has the meaning set forth in Sec.  3.2(e) of 
this chapter.
    Constituent part has the meaning set forth in Sec.  4.2 of this 
chapter.
    Disability means a substantial disruption of a person's ability to 
conduct normal life functions.
    Eligible prescription drug:
    (1) Means a drug subject to section 503(b) of the Federal Food, 
Drug, and Cosmetic Act that has been approved and has received a Notice 
of Compliance and a Drug Identification Number (DIN) from the Health 
Products and Food Branch of Health Canada (HPFB) and, but for the fact 
that it deviates from the required U.S. labeling, also meets the 
conditions in an FDA-approved new drug application (NDA) or abbreviated 
new drug application (ANDA) for a drug that is currently commercially 
marketed in the United States, including those relating to the drug 
substance, drug product, production process, quality controls, 
equipment, and facilities.
    (2) The term eligible prescription drug does not include:
    (i) A controlled substance (as defined in section 102 of the 
Controlled Substances Act (21 U.S.C. 802));

[[Page 62127]]

    (ii) A biological product (as defined in section 351(i)(1) of the 
Public Health Service Act (42 U.S.C. 262(i)(1)));
    (iii) An infused drug (including a peritoneal dialysis solution);
    (iv) An intravenously injected drug;
    (v) A drug that is inhaled during surgery;
    (vi) An intrathecally or intraocularly injected drug;
    (vii) A drug that is subject to a risk evaluation and mitigation 
strategy under section 505-1 of the Federal Food, Drug, and Cosmetic 
Act; or
    (viii) A drug that is not a ``product'' for purposes of section 582 
as defined in section 581(13) of the Federal Food, Drug, and Cosmetic 
Act.
    Entered (or entry) for consumption has the meaning set forth in 19 
CFR 141.0a(f).
    Entry means the information or data filed electronically in the 
Automated Commercial Environment (ACE) or any other U.S. Customs and 
Border Protection (CBP)-authorized electronic data interchange system 
to secure the release of imported merchandise from CBP, or the act of 
filing that information or data.
    Foreign Seller means an establishment within Canada engaged in the 
distribution of an eligible prescription drug that is imported or 
offered for importation into the United States. A Foreign Seller must 
have an active Drug Establishment License to wholesale drugs by Health 
Canada. A Foreign Seller must be registered with provincial regulatory 
authorities to distribute HPFB-approved drugs. A Foreign Seller must 
not be licensed by a provincial regulatory authority with an 
international pharmacy license that allows it to distribute drugs that 
are approved by countries other than Canada and that are not HPFB-
approved for distribution in Canada. A Foreign Seller must also be 
registered with FDA under section 804 of the Federal Food, Drug, and 
Cosmetic Act in accordance with the requirements described in this 
part.
    Illegitimate foreign product means a drug purchased by a Foreign 
Seller from a manufacturer, and intended for sale to the Importer in 
the United States, where the Foreign Seller has credible evidence that 
shows that the product:
    (1) Is counterfeit, diverted, or stolen;
    (2) Is intentionally adulterated such that the product would result 
in serious adverse health consequences or death to humans;
    (3) Is the subject of a fraudulent transaction; or
    (4) Appears otherwise unfit for distribution such that the product 
would be reasonably likely to result in serious adverse health 
consequences or death to humans.
    Importer means a pharmacist or wholesaler. An Importer must be a 
State-licensed pharmacist, or a State- or FDA-licensed wholesale 
distributor, who is the U.S. owner of an eligible prescription drug at 
the time of entry into the United States. The Importer's pharmacist 
license or wholesale distributor license (if issued by a State and not 
FDA) must be issued by a State that is a SIP Sponsor or SIP Co-Sponsor. 
An Importer's pharmacist or wholesale distributor license must be in 
effect (i.e., not expired) and the Importer's license must be in good 
standing with the licensor.
    Individual case safety report (ICSR) means a description of an 
adverse event related to an individual patient or subject.
    ICSR attachments means any document related to the adverse event 
described in an ICSR, such as medical records, hospital discharge 
summaries, or other documentation.
    Life-threatening adverse event means any adverse event that places 
the patient, in the view of the initial reporter, at immediate risk of 
death from the adverse event as it occurred, i.e., it does not include 
an adverse event that, had it occurred in a more severe form, might 
have caused death.
    Manufacturer means an applicant, as defined in Sec.  314.3 of this 
chapter, or a person who owns or operates an establishment that 
manufactures an eligible prescription drug. Manufacturer also means a 
holder of a drug master file containing information necessary to 
conduct the Statutory Testing, prepare the manufacturer's attestation 
and information statement, or otherwise comply with section 804 of the 
Federal Food, Drug, and Cosmetic Act or this part.
    Minimum data set for an adverse event means the minimum four 
elements required for reporting an ICSR of an adverse event: An 
identifiable patient, an identifiable reporter, a suspect drug product, 
and an adverse event.
    Pharmacist means a person licensed by a State to practice pharmacy, 
including the dispensing and selling of prescription drugs.
    Pre-Import Request means a request made to FDA by an Importer that 
must be granted by FDA before the Importer can start importation under 
a Section 804 Importation Program.
    Qualifying laboratory means a laboratory in the United States that 
has been approved by FDA for the purposes of section 804 of the Federal 
Food, Drug, and Cosmetic Act.
    Relabel has the meaning set forth in Sec.  207.1 of this chapter.
    Relabeler has the meaning set forth in Sec.  207.1 of this chapter.
    Repack or repackage has the meaning set forth in Sec.  207.1 of 
this chapter.
    Responsible individual(s) means an individual or individuals who 
are designated in the Section 804 Importation Program compliance plan. 
Such individuals are responsible for ensuring compliance with the 
requirements of the Section 804 Importation Program under their 
oversight and with the applicable provisions of the Federal Food, Drug, 
and Cosmetic Act and this part.
    Section 804 Importation Program (``SIP'') means a program under 
section 804 of the Federal Food, Drug, and Cosmetic Act, and this part, 
that has been authorized by FDA for the importation of eligible 
prescription drugs from Canada.
    Section 804 Importation Program Sponsor (``SIP Sponsor'') means a 
State or Indian Tribe that regulates wholesale drug distribution and 
the practice of pharmacy that submits a proposal to FDA that describes 
a program to facilitate the importation of prescription drugs from 
Canada under section 804 of the Federal Food, Drug, and Cosmetic Act 
and is responsible for oversight of the implementation of the program. 
After an initial 2-year period beginning on the date of the first 
import entry under any SIP authorized under this part, the Secretary 
may determine, based on experience under the program, that there is a 
sufficient likelihood that a proposal that does not include a State or 
Indian Tribe as the SIP sponsor could provide the same level of 
assurance of safety as a proposal that does include such a sponsor, 
such that FDA may begin receiving, reviewing, and potentially 
authorizing applications for SIPs without such a sponsor. After the 
Secretary makes such a determination, a pharmacist or wholesaler may 
propose a SIP that does not include a State or Indian Tribe as a 
sponsor, and FDA may authorize such a SIP if the sponsor demonstrates 
that the SIP meets the criteria for authorization with the same level 
of assurance of safety as a proposal that includes a State or Indian 
Tribe as the SIP sponsor, which FDA shall evaluate consistent with any 
considerations described in the Secretary's determination, including by 
evaluating whether the application demonstrates that the proposed 
sponsor has sufficient relevant experience, such as participating in a 
SIP and demonstrating compliance with the requirements of the Federal 
Food, Drug, and Cosmetic Act and this part.

[[Page 62128]]

    Section 804 Importation Program Co-Sponsor (``SIP Co-Sponsor'') 
means any other State or Indian Tribe, or a pharmacist or a wholesale 
distributor that, with the SIP Sponsor, signs a proposal to FDA that 
describes a program to facilitate the importation of prescription drugs 
from Canada under section 804 of the Federal Food, Drug, and Cosmetic 
Act.
    Section 804 Serial Identifier (``SSI'') means a unique alphanumeric 
serial number of up to 20 characters that is assigned and placed on or 
affixed by the Foreign Seller to each package and homogenous case of 
the product that the Foreign Seller intends to sell to an Importer. For 
purposes of the SSI, ``package'' means the smallest individual saleable 
unit of product for distribution that is intended by the Foreign Seller 
for sale to an Importer located in the United States, and ``individual 
saleable unit'' means the smallest container of product sold by the 
Foreign Seller to the Importer.
    Serious adverse event means:
    (1) An adverse event is considered ``serious'' if it results in any 
of the following outcomes:
    (i) Death;
    (ii) A life-threatening adverse event;
    (iii) Inpatient hospitalization or prolongation of existing 
hospitalization;
    (iv) A persistent or significant incapacity or substantial 
disruption of the ability to conduct normal life functions; and/or
    (v) A congenital anomaly/birth defect.
    (2) Other events that may be considered serious adverse events: 
Important medical events that may not result in one of the listed 
outcomes in this definition may be considered serious adverse events 
when, based upon appropriate medical judgment, they may jeopardize the 
patient or study subject and may require medical or surgical 
intervention to prevent one of the outcomes listed in this definition. 
Examples include: Allergic bronchospasm requiring intensive treatment 
in an emergency department or at home, blood dyscrasias or convulsions 
that do not result in inpatient hospitalization, or the development of 
product dependency or product abuse.
    Statutory Testing means the testing of an eligible prescription 
drug as required by section 804(d)(1)(J) and (L) and section 804(e) of 
the Federal Food, Drug, and Cosmetic Act, including for authenticity, 
for degradation, and to ensure that the prescription drug is in 
compliance with established specifications and standards.
    Suspect foreign product means a drug purchased by a Foreign Seller 
from a manufacturer, and intended for sale to an Importer in the United 
States, for which the Foreign Seller has reason to believe that such 
product:
    (1) Is potentially counterfeit, diverted, or stolen;
    (2) Is potentially intentionally adulterated such that the product 
would result in serious adverse health consequences or death to humans;
    (3) Is potentially the subject of a fraudulent transaction; or
    (4) Appears otherwise unfit for distribution such that the product 
would result in serious adverse health consequences or death to humans.
    Transaction means the transfer of product between persons in which 
a change of ownership occurs, in accordance with section 581(24) of the 
Federal Food, Drug, and Cosmetic Act. For the purposes of this part, 
``transaction'' includes the sale and transfer of product between the 
manufacturer and Foreign Seller. The sale and transfer of product 
between Foreign Seller and Importer also constitutes a ``transaction.''
    Unexpected adverse event means an adverse event that is not 
included in the current U.S. labeling for the drug product. Events that 
may be symptomatically or pathophysiologically related to an adverse 
event included in the labeling but differ from the labeled event 
because of greater severity or specificity would be considered 
unexpected. ``Unexpected,'' as used in this definition, also refers to 
adverse events that are mentioned in the product labeling as occurring 
with a class of products or anticipated from the pharmacological 
properties of the product but are not specifically mentioned as 
occurring with the particular product.
    (1) Example of greater severity. Under this definition, hepatic 
necrosis would be unexpected if the labeling referred only to elevated 
hepatic enzymes or hepatitis.
    (2) Example of greater specificity. Cerebral thromboembolism and 
cerebral hemorrhage would be unexpected if the labeling included only 
cerebrovascular accidents.
    Unique facility identifier means the identifier required to be 
submitted by the registrant for drug establishment registration under 
section 510 of the Federal Food, Drug, and Cosmetic Act in accordance 
with Sec.  207.25 of this chapter. For Foreign Sellers registering 
under section 804 of the Federal Food, Drug, and Cosmetic Act, the term 
``unique facility identifier'' means the identifier required to be 
submitted under Sec.  251.9 in accordance with the system specified 
under section 510 of the Federal Food, Drug, and Cosmetic Act.
    Wholesaler means a person licensed as a wholesale distributor, as 
the terms ``licensed'' and ``wholesale distributor'' are defined in 
section 581(9)(A) and 581(29), respectively. The term ``wholesaler'' 
does not include a person authorized to import drugs under section 
801(d)(1).

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


Sec.  251.3  SIP proposal submission requirements.

    (a) A SIP Sponsor may delegate implementation activities to a SIP 
co-sponsor but the SIP Sponsor remains responsible for oversight of the 
implementation of the program.
    (b) A SIP Sponsor must only designate one Foreign Seller and one 
Importer per initial proposal. Additional Foreign Sellers and Importers 
may be added to an authorized SIP through a supplemental proposal under 
Sec.  251.8.
    (c) A SIP Sponsor that intends to implement a SIP under this part 
must submit a proposal to FDA in electronic format via FDA's Electronic 
Submissions Gateway (ESG) or to an alternative transmission point 
identified by FDA. The proposal must include:
    (1) A cover sheet containing the following:
    (i) Name or names of SIP Sponsor and co-sponsors, if any;
    (ii) Name and contact information for a person authorized to serve 
as the point of contact with FDA during its review of the proposal; and
    (iii) The signature of the SIP Sponsor and co-sponsors, if any, or 
authorized representative who is an employee or agent of the Sponsor or 
co-sponsor and has been authorized to sign the proposal for the Sponsor 
or co-sponsor. The signatory must reside or have a place of business 
within the United States, and the proposal cover sheet must contain the 
name, title, and business address of the signatory.
    (2) A table of contents;
    (3) An introductory statement that includes an overview of the SIP 
Sponsor's SIP Proposal; and
    (4) The SIP Sponsor's importation plan.
    (d) The overview of the SIP Proposal must include:
    (1) The name of the SIP, if any, and the name or names and address 
or addresses of the SIP Sponsor and co-sponsors, if any;
    (2) The name, email address, and telephone number of the 
responsible individual(s);

[[Page 62129]]

    (3) The name and DIN of each eligible prescription drug that the 
SIP Sponsor seeks to include in the SIP;
    (4) The name and address of the applicant that holds the approved 
NDA or ANDA for each eligible prescription drug's FDA-approved 
counterpart, and the approved NDA or ANDA number;
    (5) The name and address of the manufacturer of the finished dosage 
form of the eligible prescription drug, if known or reasonably known;
    (6) The name and address of the manufacturer of the active 
ingredient or ingredients of the eligible prescription drugs, if known 
or reasonably known;
    (7) The name and address of the Foreign Seller;
    (8) A copy of the Foreign Seller's Health Canada Drug Establishment 
License;
    (9) The name and address of the Importer;
    (10) The name and address of the FDA-registered repackager or 
relabeler, if different from the Importer, that will relabel the 
eligible prescription drugs (including any limited repackaging in 
accordance with the requirements in this part), along with adequate 
evidence of registration and of satisfactory resolution of any 
objectionable conditions or practices identified during its most recent 
FDA inspection, if applicable; and
    (11) A summary of how the SIP Sponsor will ensure that:
    (i) The imported eligible prescription drugs meet the Statutory 
Testing requirements;
    (ii) The supply chain is secure;
    (iii) The labeling requirements of the Federal Food, Drug, and 
Cosmetic Act and this part are met;
    (iv) The post-importation pharmacovigilance and other requirements 
of the Federal Food, Drug, and Cosmetic Act and this part are met; and
    (v) The SIP will result in a significant reduction in the cost to 
the American consumer of the eligible prescription drugs that the SIP 
Sponsor seeks to import.
    (e) The SIP Sponsor's importation plan must:
    (1) Identify the SIP Sponsor, including any co-sponsors, identify 
the responsible individual(s), and identify the applicant that holds 
the approved NDA or ANDA for each eligible prescription drug's FDA-
approved counterpart, the manufacturer(s) of the finished dosage form 
and the active ingredient or ingredients of each eligible prescription 
drug that the SIP Sponsor seeks to import, if known or reasonably 
known, the Foreign Seller, if known or reasonably known, and the 
Importer, and explain the legal relationship, if any, of each of these 
entities to the SIP Sponsor.
    (2) Include an attestation and information statement containing a 
complete disclosure of any past criminal convictions or violations of 
State, Federal, or Canadian laws regarding drugs or devices against or 
by the responsible individual(s), Foreign Seller, or Importer or an 
attestation that the responsible individual(s), Foreign Seller, or 
Importer has not been involved in, or convicted of, any such 
violations. Such attestation and information statement must include 
principals, any shareholder who owns 10 percent or more of outstanding 
stock in any non-publicly held corporation, directors, officers, and 
any facility manager or designated representative of such manager.
    (3) Include a list of all disciplinary actions, to include the date 
of and parties to any action imposed against the responsible 
individual(s), Foreign Seller, or Importer by State, Federal, or 
Canadian regulatory bodies, including any such actions against the 
principals, owners, directors, officers, quality unit, or any facility 
manager or designated representative of such manager for the previous 7 
years prior to submission of the SIP Proposal.
    (4) Include:
    (i) The Health Canada inspectional history for the Foreign Seller 
for the previous 5 years or, if the Foreign Seller has been licensed 
for less than 5 years, for the duration of its period of licensure; and
    (ii) The State and Federal inspectional history for the Importer 
for the previous 5 years or, if the Importer has been licensed for less 
than 5 years, for the duration of its period of licensure.
    (5) Include the proprietary name (if any), the established name, 
the approved application numbers, and the DIN and National Drug Code 
(NDC) for each eligible prescription drug that the SIP Sponsor seeks to 
import from Canada and for its FDA-approved counterpart. The SIP 
Sponsor's importation plan must also include as much of the information 
that is required by Sec.  251.5 about the HPFB-approved product and its 
FDA-approved counterpart as is available, including the name and 
quantity of the active ingredient, the inactive ingredients, and the 
dosage form.
    (6) Provide adequate evidence that each HPFB-approved drug's FDA-
approved counterpart drug is currently commercially marketed in the 
United States.
    (7) Describe, to the extent possible, the testing that will be done 
to establish that the HPFB-approved drug meets the conditions in the 
NDA or ANDA for the HPFB-approved drug's FDA-approved counterpart. The 
SIP Sponsor's importation plan must also identify the qualifying 
laboratory that will conduct the Statutory Testing for the Importer, if 
the Importer is responsible for conducting the Statutory Testing, and 
it must establish that the laboratory is qualified in accordance with 
Sec.  251.15 to conduct the tests.
    (8) Include a copy of the FDA-approved drug labeling for the FDA-
approved counterpart of the eligible prescription drug, a copy of the 
proposed labeling that will be used for the eligible prescription drug, 
and a side-by-side comparison of the FDA-approved labeling and the 
proposed labeling, including the Prescribing Information, carton and 
container labeling, and patient labeling (e.g., Medication Guide, 
Instructions for Use, patient package inserts), with all differences 
annotated and explained. The SIP Proposal must also include a copy of 
the HPFB-approved labeling.
    (9) Explain how the SIP Sponsor will ensure that the SIP will 
result in a significant reduction in the cost to the American consumer 
of the eligible prescription drugs that the SIP Sponsor seeks to 
import. The explanation must include any assumptions and uncertainty, 
and it must be sufficiently detailed to allow for a meaningful 
evaluation.
    (10) Explain how the SIP Sponsor will ensure that all the 
participants in the SIP comply with the requirements of section 804 of 
the Federal Food, Drug, and Cosmetic Act and this part.
    (11) Describe the procedures the SIP Sponsor will use to ensure 
that the requirements of this part are met, including the steps that 
will be taken to ensure that the:
    (i) Storage, handling, and distribution practices of supply chain 
participants, including transportation providers, meet the requirements 
of part 205 of this chapter and do not affect the quality or impinge on 
the security of the eligible prescription drugs;
    (ii) Supply chain is secure;
    (iii) Importer screens the eligible prescription drugs it imports 
for evidence that they are adulterated, counterfeit, damaged, tampered 
with, expired, suspect foreign product, or illegitimate foreign 
product; and
    (iv) Importer fulfills its responsibilities to submit adverse 
event, field alert, and other reports required by the SIP, the Federal 
Food, Drug, and Cosmetic Act, or this part.
    (12) Explain how the SIP Sponsor will educate pharmacists, 
healthcare

[[Page 62130]]

providers, pharmacy benefit managers, health insurance issuers and 
plans, as appropriate, and patients about the eligible prescription 
drugs imported under its SIP.
    (13) Include the SIP's recall plan, including an explanation of how 
the SIP Sponsor will obtain recall or market withdrawal information and 
how it will ensure that recall or market withdrawal information is 
shared among the SIP Sponsor, the Foreign Seller, the Importer, and FDA 
and provided to the manufacturer.
    (14) Include the SIP's return plan, including an explanation of how 
the SIP Sponsor will ensure that product that is returned after 
distribution in the United States is properly dispositioned in the 
United States, if it is a non-saleable return, in order to protect 
patients from expired or unsafe drugs, and an explanation of how the 
SIP Sponsor will prevent the non-saleable returned eligible 
prescription drugs from being exported from the United States. In the 
event that a returned eligible prescription drug may be considered 
saleable, include an explanation for how the returned product will be 
determined to be saleable and under what circumstances such eligible 
prescription drugs may be re-distributed in the United States.
    (15) Include the SIP's compliance plan, which must include:
    (i) A description of the division of responsibilities among co-
sponsors, if any, which includes a plan for timely communication of any 
compliance issues to the SIP Sponsor;
    (ii) Identification of responsible individual(s) and a description 
of the respective area(s) of the SIP, the Federal Food, Drug, and 
Cosmetic Act, or this part that will be under each responsible 
individual's oversight;
    (iii) The creation of written compliance policies, procedures, and 
protocols;
    (iv) The provision of education and training to ensure that Foreign 
Sellers, Importers, qualifying laboratories, and their employees 
understand their compliance-related obligations;
    (v) The creation and maintenance of effective lines of 
communication, including a process to protect the anonymity of 
complainants and to protect whistleblowers; and
    (vi) The adoption of processes and procedures for uncovering and 
addressing noncompliance, misconduct, or conflicts of interest.
    (16) Explain how the SIP Sponsor will ensure that any information 
that the manufacturer supplies to authenticate a prescription drug 
being tested and confirm that the labeling of the prescription drug 
complies with labeling requirements under the Federal Food, Drug, and 
Cosmetic Act, and any trade secrets or commercial or financial 
information that is privileged or confidential that the manufacturer 
supplies for the purposes of testing or otherwise complying with the 
Federal Food, Drug, and Cosmetic Act and this part, are kept in strict 
confidence and used only for the purposes of testing or otherwise 
complying with the Federal Food, Drug, and Cosmetic Act and this part.


Sec.  251.4  Review and authorization of importation program proposals.

    Based on a review of a SIP Proposal or supplemental proposal 
submitted under this part, FDA may authorize a SIP, modify a SIP, or 
extend the authorization period of a SIP, that meets the requirements 
of this part. FDA may use a phased review process to review a SIP 
Proposal that does not identify a Foreign Seller in an initial 
submission, under which FDA may notify the Sponsor of such a SIP 
Proposal whether the Sponsor's SIP Proposal otherwise meets the 
requirements of this part. In such a case, the required information 
regarding importers, relabelers, and repackagers still must be included 
in the initial submission of the SIP Proposal, and the SIP Proposal 
will be denied if a Foreign Seller is not identified within 6 months of 
the initial submission date of the SIP Proposal.
    (a) FDA may deny a request for authorization, modification, or 
extension of a SIP, including if a SIP Proposal or supplemental 
proposal does not meet the requirements of this part. When a SIP 
Proposal or supplemental proposal meets the requirements of this part, 
FDA may nonetheless decide not to authorize the SIP Proposal or 
supplemental proposal. For example, FDA may decide not to authorize a 
SIP Proposal or supplemental proposal because of potential safety 
concerns with the SIP; because a Foreign Seller is not identified 
within 6 months of the initial submission of the SIP Proposal; because 
of the degree of uncertainty that the SIP Proposal or supplemental 
proposal would adequately ensure the protection of public health; 
because of, based on the recommendation of another Department of Health 
and Human Services (HHS) component as directed by the Secretary, the 
relative likelihood that the SIP Proposal or supplemental proposal 
would not result in significant cost savings to the American consumer; 
because of the potential for conflicts of interest; or in order to 
limit the number of authorized SIPs so FDA can effectively and 
efficiently carry out its responsibilities under section 804 of the 
Federal Food, Drug, and Cosmetic Act in light of the amount of 
resources allocated to carrying out such responsibilities.
    (b) FDA will notify a SIP Sponsor in writing when FDA receives the 
SIP Sponsor's SIP Proposal or supplemental proposal.
    (c) FDA will make a reasonable effort to promptly communicate to a 
SIP Sponsor about any information required by Sec.  251.3 that was not 
submitted in a SIP Proposal.
    (1) FDA may notify a SIP Sponsor if FDA believes additional 
information would help FDA's review of a SIP Proposal or supplemental 
proposal.
    (2) FDA will notify a SIP Sponsor in writing whether FDA has 
decided to authorize or not to authorize the SIP Sponsor's SIP Proposal 
or supplemental proposal.


Sec.  251.5  Pre-Import Request.

    (a) An eligible prescription drug may not be imported or offered 
for import under this part unless the Importer has filed a Pre-Import 
Request for that drug in accordance with this section and FDA has 
granted the Pre-Import Request.
    (b) The Importer must submit a complete Pre-Import Request in 
electronic format via the ESG, or to an alternative transmission point 
identified by FDA, at least 30 calendar days prior to the scheduled 
date of arrival or entry for consumption, whichever occurs first, of an 
eligible prescription drug covered under an authorized SIP.
    (c) A complete Pre-Import Request must include, at a minimum:
    (1) Identification of the Importer, including Importer name; 
business type (wholesale distributor or pharmacist); U.S. license 
number(s) and State(s) of license; business address; unique facility 
identifier if required to register with FDA as an establishment under 
section 510 of the Federal Food, Drug, and Cosmetic Act or FDA 
establishment identification number if not required to register under 
section 510 of the Federal Food, Drug, and Cosmetic Act; and the name, 
email address, and phone number of a contact person.
    (2) Identification of the FDA-authorized SIP, including the name of 
the SIP, if any; the name or names of the SIP Sponsor and co-sponsors, 
if any; business address; and the name, email address, and phone number 
of a contact person.
    (3) Identification of the Foreign Seller, including the name of the 
Foreign Seller; business address; unique facility identifier; any 
license numbers issued by Health Canada or a provincial

[[Page 62131]]

regulatory body; and the name, email address, and phone number of a 
contact person.
    (4) Identification and description of each drug covered by the Pre-
Import Request, including, for each drug, the following information:
    (i) Established and proprietary name of the HPFB-approved drug, as 
applicable; DIN; and complete product description, including strength, 
description of dosage form, and route(s) of administration.
    (ii) Active pharmaceutical ingredient (API) information, including:
    (A) Name of API;
    (B) Manufacturer of API and its unique facility identifier; and
    (C) Amount of API and unit measure in the eligible prescription 
drug;
    (iii) Established name and proprietary name, as applicable, of the 
FDA-approved counterpart drug and NDA or ANDA number.
    (iv) Manufacturer of the eligible prescription drug with the 
business address and unique facility identifier.
    (v) Copies of the invoice and any other documents related to the 
manufacturer's sale of the drug to the Foreign Seller that was provided 
by the manufacturer to the Importer, and copies of the same documents 
provided by the Foreign Seller to the Importer.
    (vi) Quantity, listed separately by dosage form, strength, batch 
and lot or control number assigned by the manufacturer to the eligible 
prescription drug intended to be imported under this Pre-Import 
Request, compared to the quantity of each batch and lot or control 
number originally received by the Foreign Seller from the manufacturer, 
and the date of such receipt.
    (vii) Expiration date of the HFPB-approved drug, listed by lot or 
control number assigned by the manufacturer.
    (viii) Expiration date to be assigned to the eligible prescription 
drug when relabeled by the Importer with a complete description of how 
that expiration date was determined using the manufacturer's stability 
studies in accordance with the FDA-approved NDA or ANDA.
    (ix) NDC proposed for assignment by the Importer.
    (x) FDA product code for the eligible prescription drug(s) to be 
imported.
    (xi) Unless the manufacturer has notified the Importer that it 
intends to conduct the required testing as provided in Sec.  251.16(e), 
a Statutory Testing plan that includes:
    (A) A description of how the samples will be selected from a 
shipment for the Statutory Testing;
    (B) The name and location of the qualifying laboratory in the 
United States that will conduct the Statutory Testing; and
    (C) A description of the testing method(s) that will be used to 
conduct the Statutory Testing.
    (xii) Attestation and information statement from the manufacturer 
that establishes that the drug proposed for import, but for the fact 
that it bears the HPFB-approved labeling, meets the conditions in the 
FDA-approved NDA or ANDA, including any process-related or other 
requirements for which compliance cannot be established through 
laboratory testing. Accordingly, the attestation and information 
statement must include, at a minimum:
    (A) Confirmation that the HPFB-approved drug has the active 
ingredient(s), active ingredient source(s) (including manufacturing 
facility or facilities), inactive ingredient(s), dosage form, 
strength(s), and route(s) of administration described in the FDA-
approved drug's NDA or ANDA.
    (B) Confirmation that the HPFB-approved drug conforms to the 
specifications in the FDA-approved drug's NDA or ANDA regarding the 
quality of the drug substance(s), drug product, intermediates, raw 
materials, reagents, components, in-process materials, container 
closure systems, and other materials used in the production of the 
drug.
    (C) Confirmation that the HPFB-approved drug was manufactured in 
accordance with the conditions described in the FDA-approved drug's NDA 
or ANDA, including with regard to the facilities and manufacturing 
lines that are used, and in compliance with current good manufacturing 
practice requirements set forth in section 501 of the Federal Food, 
Drug, and Cosmetic Act and parts 4 (if a combination product), 210, and 
211 of this chapter.
    (D) Original date of manufacture or the date used to calculate the 
labeled expiration date based on the HPFB-approved or scientifically 
validated expiration period, the expiration period set forth in the 
FDA-approved drug's NDA or ANDA, and any other information needed to 
label the drug with an expiration date within the expiration dating 
period determined by stability studies in the FDA-approved NDA or ANDA.
    (E) Information needed to confirm that the labeling of the 
prescription drug complies with labeling requirements under the Federal 
Food, Drug, and Cosmetic Act.
    (xiii) Information related to the importation, including:
    (A) Location of the eligible prescription drugs in Canada and 
anticipated date of shipment (date the eligible prescription drug(s) 
leave their location in Canada);
    (B) Name, address, email address, and telephone number of the 
Foreign Seller;
    (C) Anticipated date of export from Canada and Canadian port of 
exportation;
    (D) Anticipated date and approximate time of arrival at the port 
authorized by FDA to import eligible prescription drugs under section 
804 of the Federal Food, Drug, and Cosmetic Act;
    (E) The name, address, unique facility identifier or FDA 
establishment identification number, and telephone number of the 
secured warehouse, location within a specific foreign trade zone, or 
other secure distribution facility controlled by or under contract with 
the Importer where the eligible prescription drug will be stored 
pending testing, relabeling, and FDA determination of admissibility;
    (F) Information regarding the facility where the relabeling and any 
repackaging allowed under the authorized SIP will occur for the 
eligible prescription drug, including:
    (1) The facility's unique facility identifier;
    (2) The facility's name, address, and FDA establishment identifier 
number;
    (3) The anticipated date the relabeling and any limited repackaging 
will be completed; and
    (4) Information about where the relabeled drug will be stored 
pending distribution, including the FDA establishment identification 
number of the storage facility, if available.
    (d) The manufacturer must provide the attestation and information 
statement described in paragraph (c)(4)(xii) of this section to the 
Importer within 30 calendar days of receiving the Importer's request. 
If the manufacturer cannot provide the attestation and information 
statement, it must notify FDA and the Importer of its inability to 
provide the attestation and information statement and articulate with 
specificity the reason(s) why it cannot provide the attestation and 
information statement.
    (e)(1) The Importer must provide the executed batch record, 
including the certificate of analysis, for at least one recently 
manufactured, commercial-scale batch of the HPFB-approved drug, and at 
least one recently manufactured, commercial-scale batch of the FDA-
approved drug that was produced for and released for distribution to 
the U.S. market under an NDA or ANDA.
    (2) The manufacturer must provide these records to the Importer, 
within 30 calendar days of receiving the Importer's request, for each 
manufacturing line that the

[[Page 62132]]

manufacturer used to produce either or both of the drugs.


Sec.  251.6  Termination of authorized importation programs.

    (a) Unless an extension is granted under this part, authorization 
for a SIP automatically terminates after 2 years, or a shorter period 
of time if a shorter period of time is specified in the authorization 
for the SIP.
    (b) The authorization period for a SIP begins when the Importer, or 
its authorized customs broker, files an electronic import entry for 
consumption for its first shipment of drugs under the SIP.
    (c) Notwithstanding paragraph (a) of this section, authorization 
for a SIP terminates if the Importer, or its authorized customs broker, 
does not file an electronic import entry for consumption for a shipment 
of eligible prescription drugs under the SIP within 1 year of the date 
that the SIP was authorized.
    (d) FDA will terminate authorization of a SIP upon request from the 
SIP Sponsor.
    (e) An eligible prescription drug cannot be shipped into the United 
States under this part, and is subject to refusal of admission into the 
United States, if the authorization of the SIP has terminated.


Sec.  251.7  Suspension and revocation of authorized importation 
programs.

    (a) FDA may suspend a SIP under any of the circumstances set forth 
in Sec.  251.18, or under any other circumstances in FDA's discretion. 
An eligible prescription drug cannot be shipped into the United States 
under this part, and is subject to refusal of admission into the United 
States, if FDA has suspended the SIP or revoked its authorization.
    (b) SIP Sponsors and other SIP participants must agree to submit to 
audits of their books and records and inspections of their facilities 
as a condition of participation in a SIP. If a SIP Sponsor, 
manufacturer, Foreign Seller, Importer, qualifying laboratory, or other 
participant in the supply chain delays, denies, or limits an 
inspection, or refuses to permit entry, inspection, or audit of its 
facility or its records, FDA may suspend the SIP, in whole or in part, 
immediately.
    (c) FDA may revoke authorization of a SIP, in whole or in part, 
including with respect to one or more drugs in the SIP, at any time if 
FDA determines that:
    (1) The SIP Proposal contained an untrue statement of material 
fact;
    (2) The SIP Proposal omitted material information;
    (3) The SIP no longer meets the requirements of section 804 of the 
Federal Food, Drug, and Cosmetic Act, this part, or the SIP, including, 
among other things, if FDA finds that the manufacturer, the Foreign 
Seller, the Importer, or any other supply chain participant is found to 
be not compliant with section 501(a)(2)(A) or (B) of the Federal Food, 
Drug, and Cosmetic Act;
    (4) Continued implementation of the SIP is reasonably likely to 
pose additional risk to the public's health and safety;
    (5) Confidential manufacturer information was disclosed in 
violation of Sec.  251.16;
    (6) Continued implementation of the SIP is not reasonably likely to 
result in a significant reduction in the cost of the drugs covered by 
the SIP to the American consumer;
    (7) Continued monitoring of the SIP imposes too much of a burden on 
FDA or HHS resources for carrying out this part or is inconsistent with 
FDA or HHS prioritization of resources;
    (8) Continued implementation of the SIP is otherwise inappropriate; 
or
    (9) Grounds exist for suspension under paragraph (a) or (b) of this 
section and FDA determines it should revoke, either instead of, or 
after, suspension.


Sec.  251.8  Modification or extension of authorized importation 
programs.

    (a) A supplemental proposal to modify or extend an authorized SIP 
must be submitted in electronic format via the ESG, or to an 
alternative transmission point identified by FDA, for FDA's 
consideration.
    (b) FDA's review and authorization of a supplemental proposal to 
modify or extend an authorized SIP is governed by this part. In 
reviewing a supplemental proposal, FDA may take into account 
information learned subsequent to authorization of the SIP.
    (c) FDA may authorize a supplemental proposal from a SIP Sponsor to 
add additional Foreign Sellers or additional Importers to an authorized 
SIP if FDA determines the SIP Sponsor has adequately demonstrated that 
the SIP has consistently imported eligible prescription drugs in 
accordance with section 804 of the Federal Food, Drug, and Cosmetic Act 
and this part. Each supply chain under a SIP must be limited to one 
manufacturer, one Foreign Seller, and one Importer.
    (d) If FDA authorizes changes to a SIP, the Importer must submit a 
new Pre-Import Request in accordance with Sec.  251.5.
    (e) A SIP Sponsor must not make any changes or permit any changes 
to be made to a SIP without first securing FDA's authorization.
    (f) A SIP Sponsor may request that FDA extend the authorization 
period of an authorized SIP. Such a request must be submitted at least 
90 calendar days before the SIP's authorization period will expire. To 
be eligible for an extension of the authorized SIP, a SIP must be up to 
date on all of the information and records-related requirements of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part. 
FDA may extend the authorization period for up to 2 years at a time.

Subpart C--Certain Requirements for Section 804 Importation 
Programs


Sec.  251.9  Registration of Foreign Sellers.

    (a) Any Foreign Seller(s) designated in a SIP Proposal must be 
registered with FDA before FDA will authorize the SIP Proposal.
    (b) To register, a Foreign Seller must provide the following 
information:
    (1) Name of the owner or operator; if a partnership, the name of 
each partner; if a corporation, the name of each corporate officer and 
director, and the place of incorporation;
    (2) All names of the Foreign Seller, including names under which 
the Foreign Seller conducts business or names by which the Foreign 
Seller is known;
    (3) Physical address and telephone number(s) of the Foreign Seller;
    (4) Registration number, if previously assigned by FDA;
    (5) A unique facility identifier in accordance with the system 
specified under section 510 of the Federal Food, Drug, and Cosmetic 
Act;
    (6) All types of operations performed by the Foreign Seller;
    (7) Name, mailing address, telephone number, and email address of 
the official contact for the establishment; and
    (8) Name, mailing address, telephone number, and email address of:
    (i) The U.S. agent;
    (ii) The Importer to which the Foreign Seller plans to sell 
eligible prescription drugs; and
    (iii) Each SIP Sponsor with which the Foreign Seller works.


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

    (a) Expedited updates. A Foreign Seller must update its 
registration information no later than 30 calendar days after:
    (1) Closing or being sold;
    (2) Changing its name or physical address; or

[[Page 62133]]

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


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

    (a) Official contact. A Foreign Seller subject to the registration 
requirements of this part must designate an official contact. The 
official contact is responsible for:
    (1) Ensuring the accuracy of registration information as required 
by Sec.  251.9; and
    (2) Reviewing, disseminating, routing, and responding to all 
communications from FDA, including emergency communications.
    (b) U.S. agent. (1) A Foreign Seller must designate a single U.S. 
agent. The U.S. agent must reside or maintain a place of business in 
the United States and may not be a mailbox, answering machine or 
service, or other place where a person acting as the U.S. agent is not 
physically present. The U.S. agent is responsible for:
    (i) Reviewing, disseminating, routing, and responding to all 
communications from FDA, including emergency communications;
    (ii) Responding to questions concerning those drugs that are 
imported or offered for import to the United States; and
    (iii) Assisting FDA in scheduling inspections.
    (2) FDA may provide certain information and/or documents to the 
U.S. agent. The provision of information and/or documents by FDA to the 
U.S. agent is equivalent to providing the same information and/or 
documents to the Foreign Seller.


Sec.  251.12  Importer responsibilities.

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


Sec.  251.13   Labeling of eligible prescription drugs.

    (a) Upon the request of a SIP Sponsor or Importer, the manufacturer 
of an eligible prescription drug must provide an Importer written 
authorization for the Importer to use, at no cost, the FDA-approved 
labeling for the drug. If the manufacturer fails to do so within 30 
calendar days of receiving the Importer's request, FDA may deem this 
authorization to have been given.
    (b) In addition to the exemption provided in subpart D of part 201 
of this chapter, an eligible prescription drug imported for purposes of 
this part is exempt from section 502(f)(1) of the Federal Food, Drug, 
and Cosmetic Act if all the following conditions are met:
    (1) The Importer or the manufacturer certifies that the drug meets 
all labeling requirements under the Federal Food, Drug, and Cosmetic 
Act, including the requirements of this part. The Importer of an 
eligible prescription drug must either:
    (i) Propose an NDC for the drug following the procedures in Sec.  
207.33 of this chapter and list the drug following the procedures in 
Sec.  207.53 of this chapter; or
    (ii) Take responsibility to ensure that the entity performing 
relabeling on its behalf lists each eligible prescription drug and 
incorporates the NDC the Importer proposed for assignment in accordance 
with the applicable requirements of part 207 of this chapter.
    (2) The drug must be:
    (i) In the possession of a person (or his or her agents or 
employees), including Foreign Sellers and Importers, regularly and 
lawfully engaged in the manufacture, transportation, storage, or 
wholesale distribution of prescription drugs;
    (ii) In the possession of a retail, hospital, or clinic pharmacy, 
or a public health agency, regularly and lawfully engaged in dispensing 
prescription drugs; or
    (iii) In the possession of a practitioner licensed by law to 
administer or prescribe such drugs.
    (3) The drug is to be dispensed in accordance with section 503(b) 
of the Federal Food, Drug, and Cosmetic Act.

[[Page 62134]]

    (4) At the time the drug is sold or dispensed, the labeling of the 
drug must be the same as the FDA-approved labeling under the applicable 
NDA or ANDA, except that the labeling must bear conspicuously:
    (i) The Importer's NDC for the eligible prescription drug, and such 
NDC must replace any other NDC otherwise appearing on the label of the 
FDA-approved drug;
    (ii) The lot number assigned by the manufacturer of the eligible 
prescription drug, on the carton labeling and on the container label;
    (iii) The name and place of business of the Importer;
    (iv) The statement: ``[This drug was/These drugs were] imported 
from Canada without the authorization of [Name of Applicant] under the 
[Name of SIP Sponsor] Section 804 Importation Program.'' If the SIP 
maintains a website, the statement could also include the website 
address. This statement must appear in the HOW SUPPLIED/STORAGE AND 
HANDLING section for products subject to Sec. Sec.  201.56(d) and 
201.57 of this chapter, or in the HOW SUPPLIED section for products 
subject to Sec. Sec.  201.56(e) and 201.80 of this chapter. The 
statement also must be included on the immediate container label and 
outside package;
    (v) For products subject to Sec. Sec.  201.56(d) and 
201.57(c)(17)(iii) of this chapter, the NDC(s) assigned to the eligible 
prescription drug in accordance with the procedures in Sec.  207.33 of 
this chapter must be included in the HOW SUPPLIED/STORAGE AND HANDLING 
section in place of the NDC(s) assigned to the FDA-approved versions of 
the drug. The NDC(s) also must be included on the immediate container 
label and outside package;
    (vi) For products subject to Sec. Sec.  201.56(d) and 
201.57(a)(11)(ii) of this chapter, the Adverse Reaction Contact 
Reporting Statement under the Adverse Reactions heading in the 
Highlights of Prescribing Information. This statement must include the 
Importer's name and the telephone number of the firm to provide a 
structured process for reporting suspected adverse events; and
    (vii) For products subject to Sec. Sec.  201.56(e) and 201.80(k)(3) 
of this chapter, the NDC(s) assigned to the eligible prescription drug 
in accordance with the procedures in Sec.  207.33 of this chapter. The 
NDC(s) must be included in the HOW SUPPLIED section in place of the 
NDC(s) assigned to the FDA-approved versions of the drug. The NDC(s) 
also must be included on the immediate container label and outside 
package.
    (c) The Importer is responsible for relabeling the drug, or 
arranging for it to be relabeled, to meet the requirements of this 
part. The relabeling and associated limited repackaging activities must 
meet applicable requirements, including applicable current good 
manufacturing practice requirements under parts 210 and 211 of this 
chapter. Except for repackaging that is necessary to perform the 
relabeling described in this part, further repackaging of drugs 
imported pursuant to a SIP is prohibited. Repackaging the container 
closure of a drug is not permitted under this part.
    (d) The Importer may submit to FDA, in electronic format via the 
ESG or to an alternative transmission point identified by FDA, under 
Sec.  251.8, a supplemental proposal to modify the labeling of an 
eligible prescription drug, for example if the eligible prescription 
drug's container is too small to fit the additional information 
required by this section.


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

    (a) SIP Sponsor. A sponsor of an authorized SIP must ensure that:
    (1) Each drug imported under the SIP is HPFB-approved and labeled 
for sale in Canada by the manufacturer before it reaches the Foreign 
Seller;
    (2) For each drug that is imported under the SIP and that is 
manufactured outside Canada, the drug was authorized for import into 
Canada by the manufacturer and was not transshipped through Canada for 
sale in another country;
    (3) For each drug imported under the SIP, the drug was sold by the 
manufacturer directly to a Foreign Seller;
    (4) For each drug imported under the SIP, the Foreign Seller ships 
the drug directly to the Importer in the United States;
    (5) For each drug imported under the SIP, the Foreign Seller 
identified in the SIP meets applicable supply chain security 
requirements of this part;
    (6) The Importer identified in the SIP meets the applicable 
requirements of this part and in sections 582(c) and (d) of the Federal 
Food, Drug, and Cosmetic Act; and
    (7) Returned eligible prescription drugs are properly dispositioned 
in, and not exported from, the United States.
    (b) Manufacturer. For each transaction of the eligible prescription 
drug, the manufacturer must provide to the Importer, within 30 calendar 
days of receiving the Importer's request, a copy of all transaction 
documents that were provided from the manufacturer to the Foreign 
Seller.
    (c) Foreign Seller. (1) A Foreign Seller must have systems in place 
to:
    (i) Determine whether a drug in its possession or control that it 
intends to sell to the Importer under a SIP is a suspect foreign 
product. Upon making a determination that a drug in its possession or 
control is a suspect foreign product, or upon receiving a request for 
verification from FDA that the Foreign Seller has determined that a 
product within its possession or control is a suspect foreign product, 
a Foreign Seller must:
    (A) Quarantine such product within its possession or control until 
such product is cleared or dispositioned;
    (B) Promptly conduct an investigation, in coordination with the 
Importer and the manufacturer, as applicable, to determine whether the 
product is an illegitimate foreign product, and verify the product at 
the package level, including the SSI; and
    (C) If the Foreign Seller makes the determination that a suspect 
foreign product is not an illegitimate foreign product, promptly notify 
FDA of such determination for those products that FDA has requested 
verification.
    (ii) Determine whether a drug in its possession or control that it 
intends to sell to the Importer under a SIP is an illegitimate foreign 
product. Upon making a determination that a drug in its possession or 
control is an illegitimate foreign product, the Foreign Seller must:
    (A) Quarantine such product within the possession or control of the 
Foreign Seller from product intended for distribution until such 
product is dispositioned;
    (B) Disposition the illegitimate foreign product within the 
possession or control of the Foreign Seller;
    (C) Take reasonable and appropriate steps to assist a manufacturer 
or Importer to disposition an illegitimate product not in the 
possession or control of the Foreign Seller; and
    (D) Retain a sample of the product for further physical examination 
or laboratory analysis of the product by the manufacturer or FDA (or 
other appropriate Federal or State official) upon request by FDA (or 
other appropriate Federal or State official), as necessary and 
appropriate.
    (2)(i) Upon determining that a product in the possession or control 
of the Foreign Seller is an illegitimate foreign product, the Foreign 
Seller must notify FDA and the Importer that the Foreign Seller 
received such illegitimate product not later than 24 hours after making 
such determination.

[[Page 62135]]

    (ii) Upon the receipt of a notification from the manufacturer, FDA, 
the Importer or other wholesale distributor, or dispenser that a 
determination has been made that a product that had been sold by the 
Foreign Seller is an illegitimate foreign product, a Foreign Seller 
must identify all illegitimate foreign product subject to such 
notification that is in the possession or control of the Foreign 
Seller, including any product that is subsequently received, and 
perform the activities to investigate the product described in 
paragraph (c)(1) of this section.
    (iii) Upon making a determination, in consultation with FDA, that a 
notification is no longer necessary, a Foreign Seller must promptly 
notify the Importer and person who sent the notification that the 
notification is terminated.
    (iv) A Foreign Seller must keep records of the disposition of an 
illegitimate foreign product for not less than 6 years after the 
conclusion of the disposition.
    (3) Upon request by FDA, or other appropriate Federal or State 
official, in the event of a recall or for purposes of investigating a 
suspect foreign product or an illegitimate foreign product, a Foreign 
Seller must promptly provide the official with information about its 
transactions with the manufacturer and the Importer.
    (4) A Foreign Seller, upon receiving a shipment of eligible 
prescription drugs from the manufacturer, must:
    (i) Separate the portion of drugs intended for sale to the Importer 
located in the United States, and store such portion separately from 
that portion of product intended for sale in the Canadian market;
    (ii) Assign an SSI to each package and homogenous case intended for 
sale to the Importer in the United States, unless each such package and 
homogenous case displayed a manufacturer-affixed or imprinted product 
identifier, as such term is defined in section 581(14) of the Federal 
Food, Drug, and Cosmetic Act, at the time of receipt by the Foreign 
Seller;
    (iii) Affix or imprint the SSI on each package and homogenous case 
intended for sale to the Importer in the United States. Such SSI must 
be located on blank space on the package or homogenous case and must 
not obscure any labeling for the Canadian market, including the DIN; 
and
    (iv) Keep records associating the SSI with the DIN and all the 
records the Foreign Seller received from the manufacturer upon receipt 
of the original shipment intended for the Canadian market for not less 
than 6 years.
    (5) Upon receiving a request for verification from the Importer or 
other authorized repackager, wholesale distributor, or dispenser that 
is in possession or control of a product such person believes to be 
distributed by such Foreign Seller, a Foreign Seller must, not later 
than 24 hours after receiving the request for verification, or in such 
other reasonable time as determined by the FDA based on the 
circumstances of the request, notify the person making the request 
whether the SSI that is the subject of the request corresponds to the 
SSI affixed or imprinted by the Foreign Seller. If a Foreign Seller 
responding to a request for verification identifies an SSI that does 
not correspond to that SSI affixed or imprinted by the Foreign Seller, 
the Foreign Seller must treat such product as suspect foreign product 
and conduct an investigation as described in paragraph (c)(1) of this 
section. If the Foreign Seller determines the product is an 
illegitimate foreign product, the Foreign Seller must advise the person 
making the request of such determination at the time such Foreign 
Seller responds to the request for verification.
    (6) For each transaction between the Foreign Seller and the 
Importer for an eligible prescription drug, the Foreign Seller must 
provide:
    (i) A statement that the Foreign Seller purchased the product 
directly from the manufacturer;
    (ii) The proprietary name (if any) and the established name of the 
product;
    (iii) The strength and dosage form of the product;
    (iv) The container size;
    (v) The number of containers;
    (vi) The lot number of the product assigned by the manufacturer;
    (vii) The date of the transaction;
    (viii) The date of the shipment, if more than 24 hours after the 
date of the transaction;
    (ix) The business name and address of the person associated with 
the Foreign Seller from whom ownership is being transferred;
    (x) The business name and address of the person associated with the 
Importer to whom ownership is being transferred;
    (xi) The SSI for each package and homogenous case of product; and
    (xii) The Canadian DIN for each product transferred.
    (7) Upon a request by FDA, or other appropriate Federal or State 
official, in the event of a recall or for purposes of investigating a 
suspect foreign product or an illegitimate foreign product, the Foreign 
Seller must promptly provide the official with information about its 
transactions with the manufacturer and the Importer.
    (d) Importers. (1) An Importer of an eligible prescription drug 
must purchase the drug directly from a Foreign Seller in Canada.
    (2) Upon receipt of an eligible prescription drug in a transaction 
from the Foreign Seller, an Importer must facilitate the affixation or 
imprinting of a product identifier, as defined in section 581(14) of 
the Federal Food, Drug, and Cosmetic Act, for all eligible prescription 
drugs. The Importer must ensure that such affixation or imprinting 
occurs at the same time the product is relabeled with the required 
U.S.-approved labeling for the drug product and, except for repackaging 
necessary to perform the relabeling described in this part, cannot 
otherwise relabel or repackage the product. The Importer may affix or 
imprint the product identifier, or the Importer may contract with an 
entity registered with FDA under part 207 of this chapter to accomplish 
such relabeling, provided that the entity does not otherwise relabel or 
repackage the product, except for repackaging that is necessary to 
perform the relabeling described in this part. Any entity with which 
the Importer contracts to accomplish such labeling must, even if not 
engaged in a repackaging operation with respect to the eligible 
prescription drug, have systems and processes in place to meet 
applicable requirements of a ``repackager'' under section 582(e) of the 
Federal Food, Drug, and Cosmetic Act for any transaction involving the 
eligible prescription drug.
    (3) The repackager that affixes or imprints the product identifier 
on each package and homogenous case of an eligible prescription drug in 
accordance with section 582 of the Federal Food, Drug, and Cosmetic 
Act, which may be the Importer or the Importer's authorized 
repackager--
    (i) May affix or imprint a product identifier only on a package of 
an eligible prescription drug that has a serial number that was 
assigned and affixed by the Foreign Seller;
    (ii) Must maintain the product identifier information for such drug 
for not less than 6 years; and
    (iii) Must maintain records for not less than 6 years that 
associate the product identifier the repackager affixes or imprints 
with the serial number assigned by the Foreign Seller and the Canadian 
DIN.
    (4) An Importer must retain records, for not less than 6 years, 
that allow the Importer to associate the product identifier affixed or 
imprinted on each

[[Page 62136]]

package or homogenous case of product it received from the Foreign 
Seller, with the SSI that had been assigned by the Foreign Seller, and 
the Canadian DIN that was on the package when the Foreign Seller 
received the product from the manufacturer.
    (5) An Importer must, upon receipt of an eligible prescription drug 
and records from a Foreign Seller, compare such information with 
information the Importer received from the manufacturer, including 
relevant documentation about the transaction that the manufacturer 
provided to the Foreign Seller upon its transfer of ownership of the 
product for the Canadian market.
    (6) An Importer must comply with all applicable requirements of 
section 582 of the Federal Food, Drug, and Cosmetic Act, including 
requirements that apply to subsequent transactions with trading 
partners, unless a waiver, exception, or exemption applies.
    (7) For transactions of eligible prescription drugs between 
Importers and Foreign Sellers under a SIP, an Importer is exempt from 
the following specific supply chain security requirements that are 
otherwise applicable:
    (i) An Importer is exempt from the prohibition on receiving a 
product for which the previous owner did not provide the transaction 
history, transaction information, and transaction statement, under 
sections 582(c)(1)(A) or (d)(1)(A) of the Federal Food, Drug, and 
Cosmetic Act, as applicable, provided that the Importer receives from 
the Foreign Seller the information required under paragraph (c) of this 
section.
    (ii) An Importer is exempt from the prohibition on receiving a 
product that is not encoded with a product identifier, under sections 
582(c)(2) or (d)(2) of the Federal Food, Drug, and Cosmetic Act, as 
applicable, provided that the product the Importer received from the 
Foreign Seller has an SSI.
    (iii) An Importer is exempt from the prohibition on conducting a 
transaction with an entity that is not an ``authorized trading 
partner,'' under sections 582(c)(3) or (d)(3) of the Federal Food, 
Drug, and Cosmetic Act, as applicable.
    (iv) An Importer is exempt from the requirement to verify that a 
product in the Importer's possession or control contains a 
``standardized numerical identifier'' at the package level, under 
sections 582(c)(4)(A)(i)(II) or (d)(4)(A)(ii)(II) of the Federal Food, 
Drug, and Cosmetic Act as applicable, provided that the Importer 
verifies that each package and homogenous case of the product includes 
the SSI affixed or imprinted by the Foreign Seller.


Sec.  251.15  Qualifying laboratory requirements.

    (a) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must have ISO 17025 accreditation.
    (b) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must have an FDA inspection history and it must have 
satisfactorily addressed any objectionable conditions or practices 
identified during its most recent FDA inspection, if applicable.
    (c) To be considered a qualifying laboratory for purposes of 
section 804 of the Federal Food, Drug, and Cosmetic Act and this part, 
a laboratory must comply with the applicable current good manufacturing 
practice requirements, including provisions regarding laboratory 
controls in Sec.  211.160 of this chapter and laboratory records in 
Sec.  211.194 of this chapter.


Sec.  251.16  Laboratory testing requirements.

    (a) The manufacturer or the Importer must arrange for drugs 
imported under an authorized SIP to be tested by a qualifying 
laboratory.
    (b) Unless the manufacturer conducts the Statutory Testing, in 
accordance with this part, the manufacturer of the drugs imported under 
an authorized SIP must supply to the Importer, within 30 calendar days 
of receiving the Importer's request, all information needed to conduct 
the Statutory Testing, including any testing protocols, Certificate of 
Analysis, and samples of analytical reference standards that the 
manufacturer has developed. The manufacturer must also provide the 
Importer, within 30 calendar days of receiving the Importer's request, 
with formulation information about the HPFB-approved drug, a stability-
indicating assay, and the FDA-approved drug to facilitate 
authentication.
    (c) Testing done on a statistically valid sample of the batch or 
shipment, as applicable, must be sufficiently thorough to establish, in 
conjunction with data and information from the manufacturer, that the 
batch or shipment is eligible for importation under a SIP. The size of 
the sample must be large enough to enable a statistically valid 
statement to be made regarding the authenticity and stability of the 
quantity of the batch in the shipment or the entire shipment, as 
applicable.
    (d) The statistically valid sample of the HPFB-approved drug must 
be subjected to testing to confirm that the HPFB-approved drug meets 
the FDA-approved drug's specifications and standards, which include the 
analytical procedures and methods and the acceptance criteria. In 
addition, to test for degradation, a stability-indicating assay 
provided by the manufacturer must be conducted on the sample of the 
drug that is proposed for import.
    (e) If the manufacturer performs the Statutory Testing at a 
qualifying laboratory, the testing results, a complete set of 
laboratory records, a detailed description of the selection method for 
the samples, the testing methods used, complete data derived from all 
tests necessary to ensure that the eligible prescription drug meets the 
specifications and standards of the FDA-approved drug that are 
established in the NDA or ANDA, a Certificate of Analysis, and any 
other documentation demonstrating that the testing meets the 
requirements under section 804 must be submitted in electronic format 
directly to FDA via the ESG or to an alternative transmission point 
identified by FDA. The manufacturer must notify the Importer and FDA of 
the manufacturer's intent to perform the Statutory Testing, and 
identify the qualifying laboratory for FDA review and approval pursuant 
to section 804 of the Federal Food, Drug, and Cosmetic Act, within 30 
calendar days of receipt of the request from the Importer described in 
paragraph (b) of this section.
    (f) Regardless of whether testing under this section is performed 
by the manufacturer or Importer, the sample of a batch or shipment of 
drugs must be randomly selected for testing or, in the alternative, the 
sample must be selected to be representative of the quantity of the 
batch in a shipment or of a shipment, as applicable.
    (g) Information supplied by the manufacturer to authenticate the 
prescription drug being tested and confirm that the labeling of the 
prescription drug complies with labeling requirements under the Federal 
Food, Drug, and Cosmetic Act, and any trade secrets or commercial or 
financial information that is privileged or confidential that the 
manufacturer supplies for the purposes of testing or otherwise 
complying with the Federal Food, Drug, and Cosmetic Act and this part, 
must be kept in strict confidence and used only for the purposes of 
testing or otherwise complying with the Federal Food, Drug, and 
Cosmetic Act and this part.

[[Page 62137]]

    (h) To ensure that the information described in paragraph (g) of 
this section is protected:
    (1) The information that the manufacturer supplies about a 
prescription drug must not be disseminated except for the purpose of 
testing or otherwise complying with the Federal Food, Drug, and 
Cosmetic Act and this part; and
    (2) The SIP Sponsor must take all of the steps set out in the 
authorized SIP Proposal to ensure that the information is kept in 
strict confidence and used only for the purpose of testing or otherwise 
complying with the Federal Food, Drug, and Cosmetic Act and this part.


Sec.  251.17  Importation requirements.

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


Sec.  251.18  Post-importation requirements.

    (a) Stopping importation. If at any point a SIP Sponsor determines 
that a drug, manufacturer, Foreign Seller, Importer, qualifying 
laboratory, or other participant in or element of the supply chain in 
the authorized SIP does not meet all applicable requirements of the 
Federal Food, Drug, and Cosmetic Act, FDA regulations, and the 
authorized SIP, the SIP Sponsor must immediately stop importation of 
all drugs under the SIP, notify FDA, and demonstrate to FDA that 
importation has in fact been stopped.
    (b) Field alert reports. Importers must submit NDA and ANDA field 
alert reports, as described in Sec. Sec.  314.81(b)(1) and 314.98 of 
this chapter, to the manufacturer and to FDA.
    (c) Additional reporting requirements for combination products. For 
combination products containing a device constituent part, Importers 
must submit the reports to the manufacturer and to FDA described in 
Sec.  4.102(c)(1) of this chapter and maintain the records described in 
Sec. Sec.  4.102(c)(1) and 4.105(b) of this chapter.
    (d) Adverse event reports--(1) Scope. An Importer must establish 
and maintain records and submit to FDA and the manufacturer reports of 
all adverse events associated with the use of its drug products 
imported under this part.

[[Page 62138]]

    (2) Review of safety information. The Importer must promptly review 
all domestic safety information for the eligible prescription drugs 
obtained or otherwise received by the Importer.
    (3) Expedited ICSRs. The Importer must submit expedited ICSRs for 
each domestic adverse event to FDA and the manufacturer as soon as 
possible but no later than 15 calendar days from the date when the 
Importer has both met the reporting criteria described in this 
paragraph (d) and acquired a minimum data set for that adverse event.
    (i) Serious, unexpected adverse events. The Importer must submit 
expedited ICSRs for domestic adverse events reported to the Importer 
spontaneously (such as reports initiated by a patient, consumer, or 
healthcare professional) that are both serious and unexpected, whether 
or not the Importer believes the events are related to the product.
    (ii) Other adverse event reports to be expedited upon notification 
by FDA. Upon notification by FDA, the Importer must submit as expedited 
ICSRs any adverse event reports that do not qualify for expedited 
reporting under paragraph (d)(3)(i) of this section. The notice will 
specify the adverse events to be reported and the reason for requiring 
the expedited reports.
    (4) Followup reports for expedited ICSRs. The Importer must 
actively seek any missing data elements under paragraph (d)(7) of this 
section or updated information for any previously submitted expedited 
ICSR under paragraph (d)(3) of this section. The Importer must also 
investigate any new information it obtains or otherwise receives about 
previously submitted expedited ICSRs. The Importer must submit followup 
reports for expedited ICSRs to FDA and the manufacturer as soon as 
possible but no later than 15 calendar days after obtaining the new 
information. The Importer must document and maintain records of its 
efforts to obtain missing or incomplete information.
    (5) Nonexpedited ICSRs. The Importer must submit to FDA and the 
manufacturer an ICSR for each domestic adverse event not reported under 
paragraph (d)(3)(i) of this section (all serious, expected adverse 
events and nonserious adverse events) within 90 calendar days from the 
date when the Importer has both met the reporting criteria described in 
this paragraph (d) and acquired a minimum data set for that adverse 
event.
    (6) Completing and submitting safety reports. This paragraph (d)(6) 
describes how to complete and submit ICSRs required under this section. 
Additionally, upon written notice, FDA may require the Importer to 
submit any of this section's adverse event reports at a different time 
period than identified in paragraphs (d)(1) through (5) and (7) through 
(11) of this section.
    (i) Electronic format for submissions. (A) ICSR and ICSR 
attachments must be submitted in an electronic format that FDA can 
process, review, and archive, as described in Sec.  314.80(g)(1) of 
this chapter.
    (B) The Importer may request, in writing, a temporary waiver of the 
requirements in paragraph (d)(6)(i)(A) of this section, as described in 
Sec.  314.80(g)(2) of this chapter. These waivers will be granted on a 
limited basis for good cause shown.
    (ii) Completing and submitting ICSRs--(A) Single submission. Submit 
each ICSR only once.
    (B) Separate ICSR. The Importer must submit a separate ICSR for 
each patient who experiences an adverse event reportable under 
paragraph (d)(3)(i) or (ii) or (d)(4) or (5) of this section.
    (C) Coding terms. The adverse event terms described in the ICSR 
must be coded using standardized medical terminology.
    (D) Minimum data set. All ICSRs submitted under this section must 
contain at least the minimum data set for an adverse event. The 
Importer must actively seek the minimum data set in a manner consistent 
with its written procedures under paragraph (d)(9) of this section. The 
Importer must document and maintain records of its efforts to obtain 
the minimum data set.
    (E) ICSR elements. The Importer must complete all available 
elements of an ICSR as specified in paragraph (d)(7) of this section.
    (1) The Importer must actively seek any information needed to 
complete all applicable elements, consistent with its written 
procedures under paragraph (d)(9) of this section.
    (2) The Importer must document and maintain records of its efforts 
to obtain the missing information.
    (F) Supporting documentation. When submitting supporting 
documentation for expedited ICSRs of adverse events, the Importer must:
    (1) Submit for each ICSR for a domestic adverse event, if 
available, a copy of the autopsy report if the patient died, or a copy 
of the hospital discharge summary if the patient was hospitalized. The 
Importer must submit each document as an ICSR attachment. The ICSR 
attachment must be submitted either with the initial ICSR or no later 
than 15 calendar days after obtaining the document.
    (2) Include in the ICSR a list of available, relevant documents 
(such as medical records, laboratory results, death certificates) that 
are held in its drug product safety files. Upon written notice from 
FDA, the Importer must submit a copy of these documents within 5 
calendar days of the FDA notice.
    (7) Information reported on ICSRs. ICSRs must include the following 
information:
    (i) Patient information, which includes:
    (A) Patient identification code;
    (B) Patient age at the time of adverse event, or date of birth;
    (C) Patient gender; and
    (D) Patient weight.
    (ii) Adverse event, which includes:
    (A) Outcome attributed to adverse event;
    (B) Date of adverse event;
    (C) Date of ICSR submission;
    (D) Description of adverse event (including a concise medical 
narrative);
    (E) Adverse drug event term(s);
    (F) Description of relevant tests, including dates and laboratory 
data; and
    (G) Other relevant patient history, including preexisting medical 
conditions.
    (iii) Suspect medical product(s), which includes:
    (A) Name;
    (B) Dose, frequency, and route of administration used;
    (C) Therapy dates;
    (D) Diagnosis for use (indication);
    (E) Whether the product is a combination product;
    (F) Whether adverse event abated after drug use stopped or dose 
reduced;
    (G) Whether adverse event reappeared after reintroduction of drug;
    (H) Lot number;
    (I) Expiration date;
    (J) NDC; and
    (K) Concomitant medical products and therapy dates.
    (iv) Initial reporter information, which includes:
    (A) Name, address, and telephone number;
    (B) Whether the initial reporter is a healthcare professional; and
    (C) Occupation, if a healthcare professional.
    (v) Importer information, which includes:
    (A) Importer name and contact office address;
    (B) Importer telephone number;
    (C) Date the report was received by the Importer;
    (D) Whether the ICSR is an expedited report;
    (E) Whether the ICSR is an initial report or followup report; and

[[Page 62139]]

    (F) Unique case identification number, which must be the same in 
the initial report and any subsequent followup report(s).
    (8) Recordkeeping. (i) For a period of 10 years from the initial 
receipt of information, the Importer must maintain records of 
information relating to adverse event reports under this section, 
whether or not submitted to FDA.
    (ii) These records must include raw data, correspondence, and any 
other information relating to the evaluation and reporting of adverse 
event information that is obtained by the Importer.
    (iii) Upon written notice by FDA, the Importer must submit any or 
all of these records to FDA within 5 calendar days after receipt of the 
notice. The Importer must permit any authorized FDA employee, at 
reasonable times, to access, copy, and verify its established and 
maintained records described in this section.
    (9) Written procedures. The Importer must develop written 
procedures needed to fulfill the requirements in this section for the 
surveillance, receipt, evaluation, and reporting to FDA and the 
manufacturer of adverse event information, including procedures for 
employee training, and for obtaining and processing safety information 
from the Foreign Seller.
    (10) Patient privacy. The Importer must not include in reports 
under this section the names and addresses of individual patients; 
instead, the Importer must assign a unique code for identification of 
the patient. The Importer must include the name of the reporter from 
whom the information was received as part of the initial reporter 
information, even when the reporter is the patient. As set forth in 
FDA's public information regulations in part 20 of this chapter, FDA 
generally may not disclose the names of patients, individual reporters, 
healthcare professionals, hospitals, and geographical identifiers 
submitted to FDA in adverse event reports.
    (11) Safety reporting disclaimer. (i) A report or information 
submitted by the Importer under this section (and any release by FDA of 
that report or information) does not necessarily reflect a conclusion 
by the Importer or by FDA that the report or information constitutes an 
admission that the eligible prescription drug imported under section 
804 of the Federal Food, Drug, and Cosmetic Act caused or contributed 
to an adverse event.
    (ii) The Importer need not admit, and may deny, that the report or 
information submitted as described in this section constitutes an 
admission that the drug product caused or contributed to an adverse 
event.
    (e) Drug recalls. (1) The SIP Sponsor must establish a procedure to 
track the public announcements of the manufacturer of each drug it 
imports under section 804 of the Federal Food, Drug, and Cosmetic Act, 
and the SIP Sponsor must also monitor FDA's recall website for recall 
or market withdrawal information relevant to the drugs that it imports 
under section 804.
    (2) If FDA, the SIP Sponsor, the Foreign Seller, the Importer, or 
the manufacturer determines that a recall is warranted, the SIP Sponsor 
must effectuate the recall in accordance with its written recall plan 
under paragraph (e)(3) of this section.
    (3) A SIP must have a written recall plan that describes the 
procedures to perform a recall of the product and specifies who will be 
responsible for performing the procedures. The recall plan must cover 
recalls mandated or requested by FDA and recalls initiated by the SIP 
Sponsor, the Foreign Seller, the Importer, or the manufacturer. The 
recall plan must include sufficient procedures for the SIP Sponsor to:
    (i) Immediately cease distribution of the drugs affected by the 
recall;
    (ii) Directly notify consignees of the drug(s) included in the 
recall, including how to return or dispose of the recalled drugs;
    (iii) Specify the depth to which the recall will extend (e.g., 
wholesale, intermediate wholesale, retail or consumer level) if not 
specified by FDA;
    (iv) Notify the public about any hazard(s) presented by the 
recalled drug when appropriate to protect the public health;
    (v) Conduct effectiveness checks to verify that all consignees at 
the specified recall depth have received notification about the recall 
and have taken appropriate action;
    (vi) Appropriately dispose of recalled product; and
    (vii) Notify FDA of the recall.
    (4) In the event of a recall, the Importer must, upon request by 
FDA, provide transaction history, information, and statement (as these 
terms are defined in sections 581(25), 581(26), and 581(27) of the 
Federal Food, Drug, and Cosmetic Act), in accordance with applicable 
requirements under sections 582(c)(1)(C) and 582(d)(1)(D).
    (i) The Importer must also provide to FDA, upon request, 
information given by the manufacturer under Sec.  251.14(a)(6), 
including transaction documents that were provided from the 
manufacturer to the Foreign Seller.
    (ii) The Foreign Seller must provide to FDA, upon request, 
information about its transactions of the recalled drug with the 
manufacturer and the Importer.
    (5) The Foreign Seller and Importer must cooperate with any 
recalls, including recalls initiated by the SIP Sponsor, FDA, the 
Foreign Seller, the Importer, or the drug's manufacturer.


Sec.  251.19  Reports to FDA.

    (a) A SIP Sponsor must submit a report to FDA each quarter in 
electronic format via the ESG or to an alternative transmission point 
identified by FDA containing the information set forth in this section, 
beginning after the SIP Sponsor files an electronic import entry for 
consumption for its first shipment of drugs under the SIP. If the SIP 
Sponsor specifies in such report that the information contained in the 
report is being transmitted on behalf of the Importer and in order to 
fulfill the Importer's obligation under Sec.  251.12, the Importer need 
not separately submit such information to FDA.
    (b) The report in paragraph (a) of this section must contain the 
following information:
    (1) The name, address, telephone number, and professional license 
number (if any) of the Importer;
    (2) The name and quantity of the active ingredient of the imported 
eligible prescription drug(s);
    (3) A description of the dosage form of the eligible prescription 
drug(s);
    (4) The date(s) on which the eligible prescription drug(s) were 
shipped;
    (5) The quantity of the eligible prescription drug(s) that was 
shipped;
    (6) The lot or control number assigned to the eligible prescription 
drug(s) by the manufacturer of the eligible prescription drug(s);
    (7) The point of origin (i.e., the manufacturer) and the 
destination (i.e., the wholesaler, pharmacy, or patient to whom the 
Importer sells the drug) of the eligible prescription drug(s);
    (8) The per unit price paid by the Importer for the prescription 
drug(s) in U.S. dollars; and
    (9) Any other information that FDA determines is necessary for the 
protection of the public health.
    (c) The Importer must also confirm as part of the report in 
paragraph (a) of this section that the eligible prescription drug(s) 
were bought directly from the manufacturer by the Foreign Seller and 
that the Foreign Seller sold the eligible prescription drug(s) directly 
to the Importer.
    (d) The report in paragraph (a) of this section must include the 
following documentation:
    (1) Documentation from the Foreign Seller specifying the 
manufacturer of

[[Page 62140]]

each eligible prescription drug and the quantity of each lot of the 
eligible prescription drug(s) received by the Foreign Seller from that 
manufacturer;
    (2) Documentation demonstrating that the eligible prescription drug 
was received by the Foreign Seller from the manufacturer and 
subsequently shipped by the Foreign Seller to the Importer;
    (3) Documentation of the quantity of each lot of the eligible 
prescription drug(s) received by the Foreign Seller, demonstrating that 
the quantity being imported into the United States is not more than the 
quantity that was received by the Foreign Seller; and
    (4) Documentation demonstrating that the sampling and testing 
requirements described in section 804(d)(1)(J)(i)(III) of the Federal 
Food, Drug, and Cosmetic Act were met for each shipment of each 
eligible prescription drug.
    (e) The report in paragraph (a) of this section must include 
certifications from the Importer for each shipment of each eligible 
prescription drug that the drug is approved for marketing in the United 
States and is not adulterated or misbranded and meets all labeling 
requirements under the Federal Food, Drug, and Cosmetic Act. This 
certification must include:
    (1) That there is an authorized SIP;
    (2) That the imported drug is covered by the authorized SIP;
    (3) That the drug is an eligible prescription drug as defined in 
this part;
    (4) That the FDA-approved counterpart of the drug is currently 
commercially marketed in the United States;
    (5) That the drug is approved for marketing in Canada; and
    (6) That the drug is not adulterated or misbranded and meets all 
labeling requirements under the Federal Food, Drug, and Cosmetic Act.
    (f) The report in paragraph (a) of this section must include 
laboratory records, including complete data derived from all tests 
necessary to ensure that each eligible prescription drug is in 
compliance with established specifications and standards, and 
documentation demonstrating that the Statutory Testing was conducted at 
a qualifying laboratory, unless the manufacturer conducted the testing 
and submitted this information directly to FDA.
    (g) The report in paragraph (a) of this section must include data, 
information, and analysis on the SIP's cost savings to the American 
consumer for the drugs imported under the SIP.
    (h) A SIP Sponsor must submit a report to FDA within 10 calendar 
days, in electronic format via the ESG or to an alternative 
transmission point identified by FDA, regarding any applicable criminal 
conviction, violation of law, or disciplinary action as described in 
Sec.  251.3(e)(2) and (3).


Sec.  251.20  Severability.

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


Sec.  251.21  Consequences for violations.

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

    Dated: September 23, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-21522 Filed 9-25-20; 4:15 pm]
 BILLING CODE 4164-01-P