To amend title 35, United States Code, to provide for compulsory licensing of certain patented inventions relating to health.

SECTION 1. SHORT TITLE.

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

SEC. 2. COMPULSORY LICENSING OF PATENTED 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 Patented Inventions.--In the case of 
any invention relating to health care, in which a patent holder, 
contractor, exclusive licensee, or assignee has acquired title under 
this title, the Secretary of Health and Human Services and the Federal 
Trade Commission shall each have the right to establish other use of 
the subject matter of the patent without authorization of the right 
holder if the Secretary or the Commission (as the case may be) makes 
the determination described in subsection (b).
    ``(b) Determination.--The determination referred to in subsection 
(a) with respect to an invention claimed in a patent is a determination 
that one or more of the following applies:
            ``(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) Establishing other use of the subject matter of the 
        patent is necessary to alleviate health or safety needs which 
        are not adequately satisfied by the patent holder, contractor, 
        licensee, or assignee.
            ``(3) The patent holder has engaged in anti-competitive 
        behavior. Such determination may include, but is not limited 
        to, a determination that--
                    ``(A) the patented invention is priced excessively 
                relative to the median price for developed countries or 
                by other reasonable standards, and that such pricing 
                contravenes the public interest; or
                    ``(B) the patented invention is an essential 
                component of a health care product that involves 
                patents, and the licensing terms for the patent on the 
                invention are not reasonable and deter innovation or 
                product development, contrary to the public interest.
            ``(4) An invention covered by a patent (the `second 
        patent') cannot be exploited without infringing upon the patent 
        described in subsection (a) (the `first patent'), insofar as 
        the invention claimed in the second patent involves an 
        important technical advance.
            ``(5) The invention claimed in the patent is needed for 
        research purposes that would benefit the public health, and is 
        not licensed on reasonable terms and conditions.
    ``(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) In cases involving commercial use, such use may be 
        permitted only 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 such efforts 
        have not been successful within a reasonable period of time.
            ``(2) The right holder shall be paid adequate remuneration 
        for the use of the patent.
            ``(3) Where such use is authorized under subsection (b)(4), 
        the owner of the first patent shall be entitled to a license on 
        reasonable terms to use the invention claimed in the second 
        patent.
    ``(d) Considerations for Determining Remuneration for Use of a 
Patent.--In determining the reasonableness of licensing terms and the 
remuneration for the use of a patent under subsection (c), the 
Secretary of Health and Human Services or the Federal Trade Commission 
(as the case may be) shall consider--
            ``(1) the risks and costs associated with the invention 
        claimed in the patent and the commercial development of 
        products that use the invention;
            ``(2) the efficacy and innovative nature and importance to 
        the public health of the invention or products using the 
        invention;
            ``(3) the degree to which the invention benefited from 
        publicly funded research;
            ``(4) the need for adequate incentives for the creation and 
        commercialization of new inventions;
            ``(5) the interests of the public as patients and payers 
        for health care services; and
            ``(6) the public health benefits of expanded access to the 
        invention.
    ``(e) Consistency With TRIPS.--The Secretary of Health and Human 
Services and the Federal Trade Commission may adopt regulations jointly 
to implement the purposes of this section, consistent with the 
Agreement on Trade-Related Aspects of Intellectual Property Rights 
referred to in section 101(d)(15) of the Uruguay Round Agreements Act.
    ``(f) Definition.--In this section, the term `health care product' 
means any drug or device (as those terms are defined in section 201 of 
the Federal Food, Drug, and Cosmetic Act), any biological product (as 
defined in section 351 of the Public Health Service Act), or any 
technology or process to the extent the technology or process is 
applied to health or health care.''.
    (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 Secretary of Health and Human 
Services annually an audit of all financial information relevant to the 
pricing of that drug nationally and internationally, including, in 
formats specified by the Secretary, an accounting of the costs 
allocated to research and development of that drug, as well as costs 
allocated to other research and development activities. The Secretary 
shall transmit the reports filed under this subsection to the Congress.
          (b) Civil Penalty.--
            (1) Penalty.--Any person who fails to submit a report under 
        subsection (a) by the date specified pursuant to subsection (c) 
        shall be liable to the United States for a civil penalty in an 
        amount not to exceed $25,000 for each such violation. Each day 
        such a violation continues shall, for purposes of this 
        subsection, constitute a separate violation of subsection (a).
            (2) Procedures.--A civil penalty for a violation of 
        subsection (a) shall be assessed by order of the Secretary of 
        Health and Human Services after opportunity (provided in 
        accordance with this paragraph) for a hearing in accordance 
        with section 554 of title 5, United States Code. Before issuing 
        such an order, the Secretary shall give written notice to the 
        person to be assessed a civil penalty under such order of the 
        Secretary's proposal to issue such order and provide such 
        person an opportunity to request, within 15 days of the date 
        the notice is received by such person, such a hearing on the 
        order.
            (3) Judicial review.--Any person who requested a hearing in 
        accordance with paragraph (2) a hearing and who is aggrieved by 
        an order assessing a civil penalty pursuant to the hearing may 
        seek judicial review of the order by filing a petition for 
        judicial review in the appropriate United States district court 
        not later than 30 days after the date on which the order was 
        issued.
            (4) Failure to pay penalty.--If any person fails to pay an 
        assessment of a civil penalty--
                    (A) after the order making the assessment has 
                become a final order and if such person does not file a 
                petition for judicial review of the order, or
                    (B) after a court in an action for judicial review 
                of the order has entered a final judgment in favor of 
                the Secretary of Health and Human Services,
        the Attorney General shall recover the amount assessed (plus 
        interest at currently prevailing rates from the date of the 
        expiration of the 30-day period referred to in paragraph (3) or 
        the date of such final judgment, as the case may be) in an 
        action brought in any appropriate district court of the United 
        States. In such an action, the validity, amount, and 
        appropriateness of such penalty shall not be subject to review.
    (c) Regulations.--The Secretary of Health and Human Services shall 
issue such regulations as are necessary to carry out this section, 
including specifying the dates by which the reports under subsection 
(a) must be submitted.

Summary: Affordable Prescription Drugs and Medical Inventions Act - Amends Federal patent law to grant the Secretary of Health and Human Services and the Federal Trade Commission the right to establish compulsory licensing for use of patented inventions relating to health care upon a determination that: (1) the patent holder, contractor, licensee, or assignee 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) establishing other use of the subject matter of the patent is necessary to alleviate health or safety needs which are not adequately satisfied by the patent holder, contractor, licensee, or assignee. (3) the patent holder has engaged in specified anticompetitive behavior, including excessive pricing. (4) an invention covered by a patent cannot be exploited without infringing upon the first patent, insofar as the invention claimed in the second patent involves an important technical advance. Or (5) the invention claimed in the patent is needed for research purposes that would benefit the public health, and is not licensed on reasonable terms and conditions. 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, and for which a patent is still in effect, to report annually to the Secretary of Health and Human Services an audit of all financial information relevant to that drug's pricing nationally and internationally, including research and development costs. Establishes civil penalties for noncompliance.