S. 959, Pharmaceutical Quality, Security, and Accountability Act

Cost Estimate
July 15, 2013

As reported by the Senate Committee on Health, Education, Labor, and Pensions on June 19, 2013

S. 959 would broaden the regulatory authority of the Food and Drug Administration (FDA) over prescription drugs. Title I would expand FDA’s oversight role relating to compounded drugs. Traditionally, compounded drugs are those products that contain ingredients that have been combined, mixed, or altered by a pharmacist to create medications that are tailored to a specific patient’s needs. The bill would authorize FDA to collect and spend fees to cover the costs of registering and inspecting certain facilities that compound drugs for human use.

Title II would require FDA to establish national standards for monitoring the movement of prescription drugs through the “drug distribution system.” That drug distribution system encompasses the network of companies that produce, handle, distribute, and dispense drug products. The legislation would impose new regulatory requirements on such companies relating to handling drug products and maintaining records of transactions, and would create notification rules concerning drugs that are potentially unsuitable for distribution. The legislation also would authorize FDA to collect and spend fees to cover the costs of licensing programs for drug wholesalers and certain third parties that provide logistics services for pharmaceutical manufacturers, wholesalers, and dispensers.

CBO estimates that implementing S. 959 would have a net discretionary cost of $31 million over the 2014–2018 period, assuming appropriation actions consistent with the bill. In addition, S. 959 could increase revenues and direct spending from criminal and civil penalties; therefore, pay-as-you-go procedures apply. However, any such collections are estimated to be insignificant in each year.

S. 959 would impose mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on both public and private-sector entities by requiring them to comply with standards for compounding prescription drugs and for monitoring the movement of prescription drugs through the distribution system. Because few public entities manufacture, distribute, or dispense prescription drugs, CBO estimates that the intergovernmental costs of the mandates would be small and below the threshold established in UMRA ($75 million in 2013, adjusted annually for inflation). CBO estimates that the costs to private entities would exceed the threshold established in UMRA ($150 million in 2013, adjusted annually for inflation).