SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Affordable Prescription Drugs Act''.

SEC. 2. COMPULSORY LICENSING OF CERTAIN PATENTED MEDICAL INVENTIONS.

    (a) In General.--Chapter 14 of title 35, United States Code, is 
amended by adding at the end the following:
``Sec. 158. Compulsory licensing
    ``(a) Compulsory Licensing of Certain Patented Medical 
Inventions.--In the case of any subject invention relating to health in 
which a patent holder, contractor, exclusive licensee, or assignee has 
acquired title under this title, the Secretary of Health and Human 
Services shall have the right to establish other use of the subject 
matter of the patent without authorization of the right holder if the 
Secretary makes the determination described in subsection (b).
    ``(b) Determination.--The determination of the Secretary of Health 
and Human Services referred to in subsection (a) is a determination 
that--
            ``(1) the patent holder, contractor, licensee, or assignee 
        referred to in subsection (a) has not taken, or is not expected 
        to take within a reasonable time, effective steps to achieve 
        practical application of the subject invention in a field of 
        use;
            ``(2) such compulsory license is necessary to alleviate 
        health or safety needs which are not adequately satisfied by 
        the patent holder, contractor, licensee, or assignee; or
            ``(3) the patented material is priced higher than may be 
        reasonably expected based on criteria developed by the 
        Secretary of Commerce.
    ``(c) Factors in Authorizing Other Use.--In exercising the right 
under subsection (a) to authorize other use of the subject matter of a 
patent, the following shall apply:
            ``(1) Authorization of such use shall be considered on its 
        individual merits.
            ``(2) Such use may only be permitted if, prior to such use, 
        the proposed user has made efforts to obtain authorization from 
        the right holder on reasonable commercial terms and conditions 
        and that such efforts have not been successful within a 
        reasonable period of time. This requirement may be waived in 
        the case of a national emergency or other circumstances of 
        extreme urgency or in cases of public noncommercial use. In 
        situations of national emergency or other circumstances of 
        extreme urgency, the right holder shall, nevertheless, be 
        notified as soon as reasonably practicable. In the case of 
        public noncommercial use, where the Government or (if 
        applicable) a contractor of the Government, without making a 
        patent search, knows or has demonstrable grounds to know that a 
        valid patent is or will be used by or for the Government, the 
        right holder shall be informed promptly.
            ``(3) Such use shall be nonexclusive.
            ``(4) Such use shall be nonassignable, except with that 
        part of the enterprise or goodwill which enjoys such use.
            ``(5) Authorization for such use shall be liable, subject 
        to adequate protection of the legitimate interests of the 
        persons so authorized, to be terminated if and when the 
        circumstances which led to it cease to exist and are unlikely 
        to recur. The competent authority shall have the authority to 
        review, upon appropriate request, the continued existence of 
        such circumstances.
            ``(6) The right holder shall be paid adequate remuneration 
        in the circumstances of each case, taking into account the 
        economic value of the authorization.
            ``(7) The legal validity of any decision relating to the 
        authorization of such use shall be subject to judicial review 
        or other independent review by a distinct Federal authority.
            ``(8) Any decision relating to the remuneration provided in 
        respect of such use shall be subject to judicial review or 
        other independent review by a distinct Federal authority.
            ``(9) The condition set forth in paragraph (2) is not 
        applicable where such use is permitted to remedy a practice 
        determined after judicial or administrative process to be 
        anticompetitive. The need to correct anticompetitive practices 
        may be taken into account in determining the amount of 
        remuneration in such cases. The competent authorities shall 
        have the authority to refuse termination of authorization if 
        and when the conditions which led to such authorization are 
        likely to recur.
            ``(10) Where such use is authorized to permit the 
        exploitation of a patent (`the 2nd patent') which cannot be 
        exploited without infringing another patent (`the 1st patent'), 
        the following additional conditions shall apply:
                    ``(A) The invention claimed in the 2nd patent shall 
                involve an important technical advance of considerable 
                economic significance in relation to the invention 
                claimed in the 1st patent.
                    ``(B) The owner of the 1st patent shall be entitled 
                to a cross-license on reasonable terms to use the 
                invention claimed in the 2nd patent.
                    ``(C) The use authorized in respect of the 1st 
                patent shall be nonassignable except with the 
                assignment of the 2nd patent.
    ``(d) Consistency With TRIPS.--Regulations adopted under subsection 
(a) shall be consistent with provisions of the Agreement on Trade-
Related Aspects of Intellectual Property Rights referred to in section 
101(d)(15) of the Uruguay Round Agreements Act.''.
    (b) Conforming Amendment.--the table of contents for chapter 14 of 
title 35, United States Code, is amended by adding at the end the 
following new item:

``158. Compulsory licensing.''.

SEC. 3. REPORT ON PHARMACEUTICAL COSTS AND SALES.

    (a) Report Requirement.--Any person engaged in the manufacture and 
sale of any drug approved under section 505 or 512 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355, 360b) for which a patent is 
still in effect shall report to the Congress annually an audit of all 
financial information relevant to the pricing of that drug nationally 
and internationally, including the costs of research and development, 
sufficient to assess the reasonableness of that pricing, in accordance 
with specifications developed by the Secretary of Commerce in 
consultation with the Commissioner of Food and Drugs.
    (b) Disqualification From Participation in Federal Programs as 
Penalty for Noncompliance.--In the case of a person who the Secretary 
of Commerce determines has failed to submit a report required under 
subsection (a) on a timely basis, the person shall be ineligible to 
receive payment from the Federal Government or under any Federal 
program (including under the medicare and medicaid programs) for any 
prescription drug or biologic it manufactures or sells until the date 
the Secretary determines that such failure has ceased.
Requires any person engaged in the manufacture and sale of any new drug or new animal drug approved under the Federal Food, Drug, and Cosmetic Act, for which a patent is still in effect, to report annually to Congress an audit of all financial information relevant to that drug's pricing nationally and internationally, including research and development costs, sufficient to assess the reasonableness of that pricing. Requires disqualification from participation in Federal programs as a penalty for noncompliance with this reporting requirement.
Affordable Prescription Drugs Act