Pharmaceutical Supply Chain Security

Susan Thaul
Specialist in Drug Safety and Effectiveness

The drug package that a community pharmacist hands to a patient, or a hospital pharmacist sends to a patient’s bedside, or a physician administers in the medical office has reached the end of a complicated path. That path is called a supply or distribution chain. The upstream portion of the chain includes the journey of each active and inactive ingredient and their chemical components to the manufacturer that creates the finished drug product. The downstream chain, which this report addresses, includes the repackagers, wholesale distributors, associated storage and transport companies, and, finally, the dispenser. Dispensers include independent community or chain pharmacies, hospitals or other health care facilities, and physicians’ offices.

Usually the supply chain provides consumers with unadulterated prescription drugs. However, the chain is potentially vulnerable, and when it breaks, a dispenser might provide a counterfeit product containing no active ingredient, less-than-labeled dosage, or a dangerous substitution. The dispenser might also provide a mishandled or diverted drug that has become sub- or superpotent or has gone past its expiration date. In addition to the potential harm to patients, these security breaches can affect a manufacturer’s reputation and financial bottom line.

Congress has addressed pharmaceutical supply chain security several times over the past 107 years. The 1906 Food and Drugs Act focused on labeling; the 1938 Federal Food, Drug, and Cosmetics Act (FFDCA) addressed adulteration, misbranding, and the registration and inspection of manufacturing establishments; and the Prescription Drug Marketing Act (PDMA, P.L. 100- 293) required that wholesale distributors be licensed by the states and required that a wholesale distributor, except one in a specified ongoing relationship with the manufacturer, provide to the purchasing distributor or dispenser a statement—called a pedigree—“identifying each prior sale, purchase, or trade of such drug.” More recently, the Food and Drug Administration Amendments Act of 2007 (FDAAA, P.L. 110-85) required the Secretary to “develop standards and identify and validate effective technologies for the purpose of securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs”; and, in 2012, the Food and Drug Administration Safety and Innovation Act (FDASIA, P.L. 112-144) expanded registration and reporting requirements. Despite current federal law and actions by state legislatures, opportunities for breaches of the supply chain continue to exist. The 112th and 113th Congresses have worked to craft a set of national requirements that would protect both patient and manufacturer, and allow the assignment of accountability for identified problems, while attempting to manage cost and avoiding a confusing patchwork of state legislation.

In their work, House and Senate policymakers are considering many decisions. These include, for example, definitions; pedigrees; track-and-trace technologies; serialization; lot- and unit-level requirements; authentication; interoperable data collection and systems; data confidentiality and access; requirements for transaction reporting and notification regarding suspect deliveries; implementation timing; licensure, registration, and accreditation standards for entities in the supply chain; accountability; cost; and the relationship between federal and state laws. The House has passed H.R. 1919, the Safeguarding America’s Pharmaceuticals Act of 2013, reported by the Committee on Energy and Commerce. Although supporting House passage of the bill, several Members have urged the addition of provisions during conference negotiations with the Senate. The Senate Committee on Health, Education, Labor, and Pensions has ordered favorably reported a manager’s amendment to S. 957, the Drug Supply Chain Security Act. This report provides background on pharmaceutical supply chain security and a discussion of policy considerations. It does not track current legislation. .


Date of Report: June 12, 2013
Number of Pages: 22
Order Number: R43106
Price: $29.95

To Order:

R43106.pdf   to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

The Supplemental Nutrition Assistance Program: Categorical Eligibility

Gene Falk
Specialist in Social Policy

Randy Alison Aussenberg
Analyst in Nutrition Assistance Policy

The Supplemental Nutrition Assistance Program (SNAP) provides benefits to low-income, eligible households on an electronic benefit transfer (EBT) card; benefits can then be exchanged for foods at authorized retailers. SNAP reaches a large share of low-income households. In March 2013, there were 47.7 million persons in 23.1 million households benefitting from SNAP.

Federal SNAP law provides two basic pathways for financial eligibility to the program: (1) meeting program-specific federal eligibility requirements; or (2) being automatically or “categorically” eligible for SNAP based on being eligible for or receiving benefits from other specified low-income assistance programs. Categorical eligibility eliminated the requirement that households who already met financial eligibility rules in one specified low-income program go through another financial eligibility determination in SNAP.

In its traditional form, categorical eligibility conveys SNAP eligibility based on household receipt of cash assistance from Supplemental Security Income (SSI), the Temporary Assistance for Needy Families (TANF) block grant, or state-run General Assistance (GA) programs. However, since the 1996 welfare reform law, states have been able to expand categorical eligibility beyond its traditional bounds. That law created TANF to replace the Aid to Families with Dependent Children (AFDC) program, which was a traditional cash assistance program. TANF is a broadpurpose block grant that finances a wide range of social and human services. TANF gives states flexibility in meeting its goals, resulting in a wide variation of benefits and services offered among the states. SNAP allows states to convey categorical eligibility based on receipt of a TANF “benefit,” not just TANF cash welfare. This provides states with the ability to convey categorical eligibility based on a wide range of benefits and services. TANF benefits other than cash assistance typically are available to a broader range of households and at higher levels of income than are TANF cash assistance benefits.

As of October 1, 2012, 43 jurisdictions have implemented what the U.S. Department of Agriculture (USDA) has called “broad-based” categorical eligibility. These jurisdictions generally make all households with incomes below a state-determined income threshold eligible for SNAP. States do this by providing households with a low-cost TANF-funded benefit or service such as a brochure or referral to an “800” number telephone hotline. There are varying income eligibility thresholds within states that convey “broad-based” categorical eligibility, though no state has a gross income limit above 200% of the federal poverty guidelines. In all but five of these jurisdictions, there is no asset test required for SNAP eligibility. Categorically eligible families bypass the regular SNAP asset limits. However, their net incomes (income after deductions for expenses) must still be low enough to qualify for a SNAP benefit. That is, it is possible to be categorically eligible for SNAP but have net income too high to actually receive a benefit. The exception to this is one- or two-person households that would still receive the minimum benefit.

The omnibus “farm bill” approved by the Senate on June 10, 2013 (S. 954), reauthorizes and makes certain changes to SNAP, but does not make changes affecting categorical eligibility. On the other hand, the “farm bill” reported from the House Agriculture Committee (H.R. 1947) would restrict SNAP categorical eligibility to only those households receiving need-tested cash assistance (the traditional form of categorical eligibility), ending the state option to have “broadbased” categorical eligibility.


Date of Report: June 12, 2013
Number of Pages: 21
Order Number: R42054
Price: $29.95

To Order:

R42054.pdf   to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Medicare: Part B Premiums

Patricia A. Davis
Specialist in Health Care Financing

Medicare is a federal insurance program that pays for covered health care services of most individuals aged 65 and over and certain disabled persons. In 2013, the program is expected to cover 52 million persons (43 million aged and 9 million disabled) at a total cost of $594 billion. Most individuals (or their spouses) who are 65 and older, and have worked in covered employment and paid Medicare payroll taxes for 40 quarters receive premium-free Medicare Part A (Hospital Insurance). Those entitled to Medicare Part A (regardless of whether they are eligible for premium-free Part A), have the option of enrolling in Part B, which covers such things as physician and outpatient services and medical equipment.

Beneficiaries have a seven-month initial enrollment period, but those who enroll in Part B after their initial enrollment period and/or reenroll after a termination of coverage may be subject to a “delayed enrollment penalty” which is equal to a 10% surcharge for each 12 months of delay in enrollment and/or reenrollment. Under certain conditions, select beneficiaries are exempt from the delayed enrollment penalty; these include working individuals (and their spouses) with group coverage, some military retirees, and some international volunteers.

While Part A is financed primarily by payroll taxes paid by current workers, Part B is financed through a combination of beneficiary premiums and federal general revenues. The standard Part B premiums are set to cover 25% of projected per capita Part B program costs for the aged, with federal general revenues accounting for the remaining amount. In general, if projected Part B costs increase or decrease, the premium rises or falls proportionately.

Most Part B participants must pay monthly premiums, which do not vary with a beneficiary’s age, health status or place of residence. However, since 2007, higher-income enrollees pay higher premiums to cover a higher percentage of Part B costs. Premiums of those receiving benefits through Social Security are deducted from their monthly payments. Additionally, certain lowincome beneficiaries may qualify for Medicare cost-sharing and/or premium assistance from Medicaid through a Medicare Savings Program. The Social Security Act includes a provision that holds most Social Security beneficiaries harmless for increases in the Medicare Part B premium; affected beneficiaries’ Part B premiums are reduced to ensure that their Social Security checks do not decline from one year to the next.

Each year, the Centers for Medicare & Medicaid Services (CMS) determines the Medicare Part B premiums for the following year. The standard monthly Part B premium for 2013 is $104.90. Higher-income beneficiaries, currently defined as those with incomes over $85,000 a year, or couples with incomes over $170,000 per year, pay $146.90, $209.80, $272.70, or $335.70 per month, depending on their income levels.

Current issues related to the Part B premium that may come before Congress include the amount of the premium and the rate of increase in recent years (and the potential net impact on Social Security benefits), modifications to the late enrollment penalty, and possible increases in Medicare premiums as a means to reduce federal spending and deficits.


Date of Report: June 11, 2013
Number of Pages: 36
Order Number: R40082
Price: $29.95

To Order:

R40082.pdf   to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Public Health, Workforce, Quality, and Related Provisions in ACA: Summary and Timeline

C. Stephen Redhead, Coordinator
Specialist in Health Policy


Elayne J. Heisler, Coordinator
Analyst in Health Services

In March 2010, President Obama signed into law a comprehensive health reform bill, the Patient Protection and Affordable Care Act (ACA; P.L. 111-148), and a package of amendments to ACA, the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152). Health reform was one of President Obama’s top domestic policy priorities during his first term, driven by concerns about the growing ranks of the uninsured and the unsustainable growth in spending on health care and health insurance. Improving access to care and controlling rising costs were seen to require changes to both the financing and delivery of health care. This report—one of a series of CRS products on ACA, as amended—focuses on the law’s workforce, public health, health care quality, and related provisions. It includes summaries of these provisions, explores some of their implications for health policy, and contains an associated timeline. 

This report is primarily for reference purposes. The material in it is intended to provide context to help the reader better understand the intent of ACA’s individual provisions at the time of enactment. The report does not track or discuss ongoing ACA-related regulatory and other implementation activities. 

ACA includes numerous provisions intended to increase the primary care and public health workforce, promote preventive services, and strengthen quality measurement, among other things. It amends and expands many of the existing health workforce programs authorized under Title VII (health professions) and Title VIII (nursing) of the Public Health Service Act (PHSA); creates a Public Health Services Track to train health care professionals emphasizing team-based service, public health, epidemiology, and emergency preparedness and response; and makes a number of changes to the Medicare graduate medical education (GME) payments to teaching hospitals, in part to encourage the training of more primary care physicians. The new law also establishes a national commission to study projected health workforce needs.

In addition, ACA creates an interagency council to promote healthy policies and prepare a national prevention and health promotion strategy. It establishes a Prevention and Public Health Fund to boost funding for prevention and public health; increases access to clinical preventive services under Medicare and Medicaid; promotes healthier communities; and funds research on optimizing the delivery of public health services. Funding also is provided for maternal and child health services, including abstinence education and a new home visitation program. ACA also establishes a national strategy for quality improvement; creates an interagency working group to advance quality efforts at the national level; develops a comprehensive repertoire of quality measures; and formalizes processes for quality measure selection, endorsement, data collection, and public reporting of quality information. It creates and funds a new private, nonprofit comparative effectiveness research institute.

Other key provisions in ACA include new requirements for the collection and reporting of health data by race, ethnicity, and primary language to detect and monitor trends in health disparities; and electronic format and data standards to improve the efficiency of administrative and financial transactions between health care providers and health plans; programs to prevent elder abuse, neglect, and exploitation; a new regulatory pathway for licensing biological drugs shown to be biosimilar or interchangeable with a licensed biologic; new nutrition labeling requirements for chain restaurant menus and vending machines.


Date of Report: May 17, 2013
Number of Pages: 137
Order Number: R41278
Price: $29.95

To Order:

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.

Compounded Drugs

Judith M. Glassgold
Specialist in Health Policy

Compounding has been traditionally defined as a process where a pharmacist or a physician combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Traditionally compounded drugs (CDs) are made in response to an individual prescription from a licensed health provider in the context of a pharmacist’s and health care professional’s relationship with a specific patient.

Some have suggested that certain activities not traditionally associated with compounding be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals, and to supply physicianadministered drugs. Nontraditional compounding may include (1) the production and shipping of large volumes of drugs across state lines; (2) production of drugs that are copies of FDAapproved commercially available drugs; (3) provision of CD without a prescription for an individual patient to receive a compounded version and outside of a professional relationship; and (4) production of products to third parties, such as hospitals, clinics, physician offices, and home health providers. These activities could be considered more akin to manufacturing than traditional compounding, which is considered part of the traditional practice of pharmacy.

Adverse events involving contaminated compounded drugs have drawn attention to the growing use of nontraditionally compounded drugs in health care delivery. Shortages of sterile generic drugs and hospital outsourcing are cited as causes of increased numbers of CDs produced by nontraditional compounders. Efforts to assess the risks and benefits of CDs on public health and safety are complicated by the lack of publicly available information, including the absence of a federal adverse event reporting requirement and the lack of information about the number of drugs compounded, the types of drugs compounded, and the number of businesses in this market.

Policymakers have raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed medications. Drug compounding has historically been the focus of state governments through their regulation of pharmacies. Recently, questions have arisen regarding the extent to which the federal government can regulate the practice of compounding through the Federal Food, Drug, and Cosmetic Act (FFDCA). Policy discussions include proposals to modify federal oversight of high-risk activities and products, to improve federal and state coordination, and to increase use of existing federal authorities.

This report provides background information on CDs and nontraditional compounding pharmacies relevant to policy discussions. This includes an overview of the 2012 fungal meningitis outbreak; recent recalls of compounded drugs; definitions of traditional compounding and nontraditional compounding; information on the CDs produced and by whom; information on the demand for nontraditional compounding, including the role of shortages of sterile injectable drugs, hospital outsourcing, and patient and provider demand; and information on adverse events involving compounded drugs.


Date of Report: May 23, 2013
Number of Pages: 33
Order Number: R43082
Price: $29.95

To Order:

R43082.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.