[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 142 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 142
To prohibit brand name drug companies from compensating generic drug
companies to delay the entry of a generic drug into the market, and to
prohibit biological product manufacturers from compensating biosimilar
and interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 30, 2023
Ms. Klobuchar (for herself, Mr. Grassley, Mr. Durbin, Mr. Cramer, Mr.
Blumenthal, Mr. Kelly, Mr. Van Hollen, and Mr. Booker) introduced the
following bill; which was read twice and referred to the Committee on
the Judiciary
_______________________________________________________________________
A BILL
To prohibit brand name drug companies from compensating generic drug
companies to delay the entry of a generic drug into the market, and to
prohibit biological product manufacturers from compensating biosimilar
and interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preserve Access to Affordable
Generics and Biosimilars Act''.
SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.
(a) Findings.--Congress finds the following:
(1) In 1984, the Drug Price Competition and Patent Term
Restoration Act (Public Law 98-417) (referred to in this Act as
the ``1984 Act''), was enacted with the intent of facilitating
the early entry of generic drugs while preserving incentives
for innovation.
(2) Prescription drugs make up approximately 10 percent of
the national health care spending.
(3) Initially, the 1984 Act was successful in facilitating
generic competition to the benefit of consumers and health care
payers, although 88 percent of all prescriptions dispensed in
the United States are generic drugs, they account for only 28
percent of all expenditures.
(4) Generic drugs cost substantially less than brand name
drugs, with discounts off the brand price averaging 80 to 85
percent.
(5) Federal dollars currently account for over 40 percent
of the $325,000,000,000 spent on retail prescription drugs, and
this share is expected to rise to 47 percent by 2025.
(6)(A) In recent years, the intent of the 1984 Act has been
subverted by certain settlement agreements in which brand name
companies transfer value to their potential generic competitors
to settle claims that the generic company is infringing the
branded company's patents.
(B) These ``reverse payment'' settlement agreements--
(i) allow a branded company to share its monopoly
profits with the generic company as a way to protect
the branded company's monopoly; and
(ii) have unduly delayed the marketing of low-cost
generic drugs contrary to free competition, the
interests of consumers, and the principles underlying
antitrust law.
(C) Because of the price disparity between brand name and
generic drugs, such agreements are more profitable for both the
brand and generic manufacturers than competition and will
become increasingly common unless prohibited.
(D) These agreements result in consumers losing the
benefits that the 1984 Act was intended to provide.
(7) In 2010, the Biologics Price Competition and Innovation
Act (Public Law 111-148) (referred to in this Act as the
``BPCIA''), was enacted with the intent of facilitating the
early entry of biosimilar and interchangeable follow-on
versions of branded biological products while preserving
incentives for innovation.
(8) Biological drugs play an important role in treating
many serious illnesses, from cancers to genetic disorders. They
are also expensive, representing more than 40 percent of all
prescription drug spending.
(9) Competition from biosimilar and interchangeable
biological products promises to lower drug costs and increase
patient access to biological medicines. But ``reverse payment''
settlement agreements also threaten to delay the entry of
biosimilar and interchangeable biological products, which would
undermine the goals of BPCIA.
(b) Purposes.--The purposes of this Act are--
(1) to enhance competition in the pharmaceutical market by
stopping anticompetitive agreements between brand name and
generic drug and biosimilar biological product manufacturers
that limit, delay, or otherwise prevent competition from
generic drugs and biosimilar biological products; and
(2) to support the purpose and intent of antitrust law by
prohibiting anticompetitive practices in the pharmaceutical
industry that harm consumers.
SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.
(a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the
following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND BIOSIMILARS.
``(a) In General.--
``(1) Enforcement proceeding.--The Commission may initiate
a proceeding to enforce the provisions of this section against
the parties to any agreement resolving or settling, on a final
or interim basis, a patent claim, in connection with the sale
of a drug product or biological product.
``(2) Presumption and violation.--
``(A) In general.--Subject to subparagraph (B), in
such a proceeding, an agreement shall be presumed to
have anticompetitive effects and shall be a violation
of this section if--
``(i) an ANDA filer or a biosimilar
biological product application filer receives
anything of value, including an exclusive
license; and
``(ii) the ANDA filer or biosimilar
biological product application filer agrees to
limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product, as
applicable, for any period of time.
``(B) Exception.--Subparagraph (A) shall not apply
if the parties to such agreement demonstrate by clear
and convincing evidence that--
``(i) the value described in subparagraph
(A)(i) is compensation solely for other goods
or services that the ANDA filer or biosimilar
biological product application filer has
promised to provide; or
``(ii) the procompetitive benefits of the
agreement outweigh the anticompetitive effects
of the agreement.
``(b) Limitations.--In determining whether the settling parties
have met their burden under subsection (a)(2)(B), the fact finder shall
not presume--
``(1) that entry would not have occurred until the
expiration of the relevant patent or statutory exclusivity; or
``(2) that the agreement's provision for entry of the ANDA
product or biosimilar biological product prior to the
expiration of the relevant patent or statutory exclusivity
means that the agreement is procompetitive.
``(c) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in which the
consideration that the ANDA filer or biosimilar biological product
application filer, respectively, receives as part of the resolution or
settlement includes only one or more of the following:
``(1) The right to market and secure final approval in the
United States for the ANDA product or biosimilar biological
product at a date, whether certain or contingent, prior to the
expiration of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
ANDA product or biosimilar biological product.
``(2) A payment for reasonable litigation expenses not to
exceed--
``(A) for calendar year 2023, $7,500,000; or
``(B) for calendar year 2024 and each subsequent
calendar year, the amount determined for the preceding
calendar year adjusted to reflect the percentage
increase (if any) in the Producer Price Index for Legal
Services published by the Bureau of Labor Statistics of
the Department of Labor for the most recent calendar
year.
``(3) A covenant not to sue on any claim that the ANDA
product or biosimilar biological product infringes a United
States patent.
``(d) Enforcement.--
``(1) Enforcement.--A violation of this section shall be
treated as an unfair method of competition under section
5(a)(1).
``(2) Judicial review.--
``(A) In general.--Any party that is subject to a
final order of the Commission, issued in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), may, within 30 days of
the issuance of such order, petition for review of such
order in--
``(i) the United States Court of Appeals
for the District of Columbia Circuit;
``(ii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity, as defined in section 801.1(a)(3) of
title 16, Code of Federal Regulations, or any
successor thereto, of the NDA holder or
biological product license holder is
incorporated as of the date that the NDA or
biological product license application, as
applicable, is filed with the Commissioner of
Food and Drugs; or
``(iii) the United States Court of Appeals
for the circuit in which the ultimate parent
entity of the ANDA filer or biosimilar
biological product application filer is
incorporated as of the date that the ANDA or
biosimilar biological product application is
filed with the Commissioner of Food and Drugs.
``(B) Treatment of findings.--In a proceeding for
judicial review of a final order of the Commission, the
findings of the Commission as to the facts, if
supported by evidence, shall be conclusive.
``(e) Antitrust Laws.--Nothing in this section shall modify,
impair, limit, or supersede the applicability of the antitrust laws as
defined in subsection (a) of the first section of the Clayton Act (15
U.S.C. 12(a)), and of section 5 of this Act to the extent that section
5 applies to unfair methods of competition. Nothing in this section
shall modify, impair, limit, or supersede the right of an ANDA filer or
biosimilar biological product application filer to assert claims or
counterclaims against any person, under the antitrust laws or other
laws relating to unfair competition.
``(f) Penalties.--
``(1) Forfeiture.--Each party that violates or assists in
the violation of this section shall forfeit and pay to the
United States a civil penalty sufficient to deter violations of
this section, but in no event greater than 3 times the value
received by the party that is reasonably attributable to the
violation of this section. If no such value has been received
by the NDA holder, the biological product license holder, the
ANDA filer, or the biosimilar biological product application
filer, the penalty to the NDA holder, the biological product
license holder, the ANDA filer, or the biosimilar biological
product application filer shall be sufficient to deter
violations, but in no event shall be greater than 3 times the
value given to an ANDA filer or biosimilar biological product
application filer reasonably attributable to the violation of
this section. Such penalty shall accrue to the United States
and may be recovered in a civil action brought by the
Commission, in its own name by any of its attorneys designated
by it for such purpose, in a district court of the United
States against any party that violates this section. In such
actions, the United States district courts are empowered to
grant mandatory injunctions and such other and further
equitable relief as they deem appropriate.
``(2) Cease and desist.--
``(A) In general.--If the Commission has issued a
cease and desist order with respect to a party in an
administrative adjudicative proceeding under the
authority of subsection (a)(1), an action brought
pursuant to paragraph (1) may be commenced against such
party at any time before the expiration of 1 year after
such order becomes final pursuant to section 5(g).
``(B) Exception.--In an action under subparagraph
(A), the findings of the Commission as to the material
facts in the administrative adjudicative proceeding
with respect to the violation of this section by a
party shall be conclusive unless--
``(i) the terms of such cease and desist
order expressly provide that the Commission's
findings shall not be conclusive; or
``(ii) the order became final by reason of
section 5(g)(1), in which case such finding
shall be conclusive if supported by evidence.
``(3) Civil penalty.--In determining the amount of the
civil penalty described in this section, the court shall take
into account--
``(A) the nature, circumstances, extent, and
gravity of the violation;
``(B) with respect to the violator, the degree of
culpability, any history of violations, the ability to
pay, any effect on the ability to continue doing
business, profits earned by the NDA holder, the
biological product license holder, the ANDA filer, or
the biosimilar biological product application filer,
compensation received by the ANDA filer or biosimilar
biological product application filer, and the amount of
commerce affected; and
``(C) other matters that justice requires.
``(4) Remedies in addition.--Remedies provided in this
subsection are in addition to, and not in lieu of, any other
remedy provided by Federal law. Nothing in this paragraph shall
be construed to affect any authority of the Commission under
any other provision of law.
``(g) Definitions.--In this section:
``(1) Agreement.--The term `agreement' means anything that
would constitute an agreement under section 1 of the Sherman
Act (15 U.S.C. 1) or section 5 of this Act.
``(2) Agreement resolving or settling a patent infringement
claim.--The term `agreement resolving or settling a patent
infringement claim' includes any agreement that is entered into
within 30 days of the resolution or the settlement of the
claim, or any other agreement that is contingent upon, provides
a contingent condition for, or is otherwise related to the
resolution or settlement of the claim.
``(3) ANDA.--The term `ANDA' means an abbreviated new drug
application filed under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug
application filed under section 505(b)(2) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
``(4) ANDA filer.--The term `ANDA filer' means a party that
owns or controls an ANDA filed with the Food and Drug
Administration or has the exclusive rights under such ANDA to
distribute the ANDA product.
``(5) ANDA product.--The term `ANDA product' means the
product to be manufactured under the ANDA that is the subject
of the patent infringement claim.
``(6) Biological product.--The term `biological product'
has the meaning given such term in section 351(i)(1) of the
Public Health Service Act (42 U.S.C. 262(i)(1)).
``(7) Biological product license application.--The term
`biological product license application' means an application
under section 351(a) of the Public Health Service Act (42
U.S.C. 262(a)).
``(8) Biological product license holder.--The term
`biological product license holder' means--
``(A) the holder of an approved biological product
license application for a biological product;
``(B) a person owning or controlling enforcement of
any patents that claim the biological product that is
the subject of such approved application; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(9) Biosimilar biological product.--The term `biosimilar
biological product' means the product to be manufactured under
the biosimilar biological product application that is the
subject of the patent infringement claim.
``(10) Biosimilar biological product application.--The term
`biosimilar biological product application' means an
application under section 351(k) of the Public Health Service
Act (42 U.S.C. 262(k)) for licensure of a biological product as
biosimilar to, or interchangeable with, a reference product.
``(11) Biosimilar biological product application filer.--
The term `biosimilar biological product application filer'
means a party that owns or controls a biosimilar biological
product application filed with the Food and Drug Administration
or has the exclusive rights under such application to
distribute the biosimilar biological product.
``(12) Drug product.--The term `drug product' has the
meaning given such term in section 314.3(b) of title 21, Code
of Federal Regulations (or any successor regulation).
``(13) Market.--The term `market' means the promotion,
offering for sale, selling, or distribution of a drug product.
``(14) NDA.--The term `NDA' means a new drug application
filed under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
``(15) NDA holder.--The term `NDA holder' means--
``(A) the holder of an approved NDA application for
a drug product;
``(B) a person owning or controlling enforcement of
the patent listed in the Approved Drug Products With
Therapeutic Equivalence Evaluations (commonly known as
the `FDA Orange Book') in connection with the NDA; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(16) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.
``(17) Patent infringement.--The term `patent infringement'
means infringement of any patent or of any filed patent
application, including any extension, reissue, renewal,
division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition, and extensions
thereof.
``(18) Patent infringement claim.--The term `patent
infringement claim' means any allegation made to an ANDA filer
or biosimilar biological product application filer, whether or
not included in a complaint filed with a court of law, that its
ANDA or ANDA product, or biosimilar biological product license
application or biosimilar biological product, may infringe any
patent held by, or exclusively licensed to, the NDA holder,
biological product license holder, ANDA filer, or biosimilar
biological product application filer of the drug product or
biological product, as applicable.
``(19) Statutory exclusivity.--The term `statutory
exclusivity' means those prohibitions on the approval of drug
applications under clauses (ii) through (iv) of section
505(c)(3)(E) (5- and 3-year data exclusivity), section 527
(orphan drug exclusivity), or section 505A (pediatric
exclusivity) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(c)(3)(E), 360cc, 355a), or on the licensing of
biological product applications under section 351(k)(7) (12-
year exclusivity) or paragraph (2) or (3) of section 351(m)
(pediatric exclusivity) of the Public Health Service Act (42
U.S.C. 262) or under section 527 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360cc) (orphan drug exclusivity).''.
(b) Effective Date.--Section 27 of the Federal Trade Commission
Act, as added by this section, shall apply to all agreements described
in section 27(a)(1) of that Act entered into on or after the date of
enactment of this Act.
SEC. 4. CERTIFICATION OF AGREEMENTS.
(a) Notice of All Agreements.--Section 1111(7) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (21
U.S.C. 355 note) is amended by inserting ``, or the owner of a patent
for which a claim of infringement could reasonably be asserted against
any person for making, using, offering to sell, selling, or importing
into the United States a biological product that is the subject of a
biosimilar biological product application'' before the period at the
end.
(b) Certification of Agreements.--Section 1112 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (21
U.S.C. 355 note) is amended by adding at the end the following:
``(d) Certification.--The Chief Executive Officer or the company
official responsible for negotiating any agreement under subsection (a)
or (b) that is required to be filed under subsection (c), within 30
days after such filing, shall execute and file with the Assistant
Attorney General and the Commission a certification as follows: `I
declare that the following is true, correct, and complete to the best
of my knowledge: The materials filed with the Federal Trade Commission
and the Department of Justice under section 1112 of subtitle B of title
XI of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, with respect to the agreement referenced in this
certification--'
``(1) represent the complete, final, and exclusive
agreement between the parties;
``(2) include any ancillary agreements that are contingent
upon, provide a contingent condition for, or are otherwise
related to, the referenced agreement; and
``(3) include written descriptions of any oral agreements,
representations, commitments, or promises between the parties
that are responsive to subsection (a) or (b) of such section
1112 and have not been reduced to writing.''.
SEC. 5. NOTIFICATION OF AGREEMENTS.
Section 1112 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (21 U.S.C. 355 note), as amended by section
4(b), is further amended by adding at the end the following:
``(e) Rule of Construction.--
``(1) In general.--An agreement that is required under
subsection (a) or (b) shall include agreements resolving any
outstanding disputes, including agreements resolving or
settling a Patent Trial and Appeal Board proceeding.
``(2) Definition.--For purposes of subparagraph (A), the
term `Patent Trial and Appeal Board proceeding' means a
proceeding conducted by the Patent Trial and Appeal Board of
the United States Patent and Trademark Office, including an
inter partes review instituted under chapter 31 of title 35,
United States Code, a post-grant review instituted under
chapter 32 of that title (including a proceeding instituted
pursuant to the transitional program for covered business
method patents, as described in section 18 of the Leahy-Smith
America Invents Act (35 U.S.C. 321 note)), and a derivation
proceeding instituted under section 135 of that title.''.
SEC. 6. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.
Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting ``section 27
of the Federal Trade Commission Act or'' after ``that the agreement has
violated''.
SEC. 7. COMMISSION LITIGATION AUTHORITY.
Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C.
56(a)(2)) is amended--
(1) in subparagraph (D), by striking ``or'' after the
semicolon;
(2) in subparagraph (E)--
(A) by moving the margin 2 ems to the left; and
(B) by inserting ``or'' after the semicolon; and
(3) inserting after subparagraph (E) the following:
``(F) under section 27,''.
SEC. 8. REPORT ON ADDITIONAL EXCLUSION.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Federal Trade Commission shall submit to the Committee
on the Judiciary of the Senate and the Committee on the Judiciary of
the House of Representatives a recommendation, and the Commission's
basis for such recommendation, regarding a potential amendment to
include in section 27(c) of the Federal Trade Commission Act (as added
by section 3 of this Act) an additional exclusion for consideration
granted by an NDA holder to a ANDA filer or by a biological product
license holder to a biosimilar biological product application filer as
part of the resolution or settlement, a release, waiver, or limitation
of a claim for damages or other monetary relief.
(b) Definitions.--In this section, the terms ``ANDA filer'',
``biological product license holder'', ``biosimilar biological product
application filer'', and ``NDA holder'' have the meanings given such
terms in section 27(g) of the Federal Trade Commission Act (as added by
section 3 of this Act).
SEC. 9. STATUTE OF LIMITATIONS.
The Federal Trade Commission shall commence any enforcement
proceeding described in section 27 of the Federal Trade Commission Act,
as added by section 3, except for an action described in section
27(f)(2) of the Federal Trade Commission Act, not later than 6 years
after the date on which the parties to the agreement file the
certification under section 1112(d) of the Medicare Prescription Drug
Improvement and Modernization Act of 2003 (21 U.S.C. 355 note).
SEC. 10. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such Act or amendments to any person or circumstance shall not be
affected.
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