II 

116TH CONGRESS 

2D SESSION S. 4439 

To require any COVID–19 drug developed in whole or in part with Federal 

support to be affordable and accessible by prohibiting monopolies and 

price gouging, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 5, 2020 

Ms. SMITH (for herself, Mr. MERKLEY, Ms. BALDWIN, Mrs. GILLIBRAND, and 

Ms. HARRIS) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To require any COVID–19 drug developed in whole or in 

part with Federal support to be affordable and accessible 

by prohibiting monopolies and price gouging, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Make Medications Af5 fordable by Preventing Pandemic Price-gouging Act of 

6 2020’’ or the ‘‘MMAPPP Act of 2020’’. 


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1 SEC. 2. REQUIREMENTS FOR LICENSING OF NEW COVID–19 

2 TREATMENT AND PREVENTION TECH3 NOLOGIES TO MEET DOMESTIC AND GLOBAL 

4 DEMAND. 

5 (a) NONEXCLUSIVE LICENSE REQUIRED.—Any cov6 ered license granted by the Federal Government shall be 

7 an open, nonexclusive license. 

8 (b) CONTRACTOR, ASSIGNEE, EXCLUSIVE LI9 CENSEE.—Notwithstanding any other provision of law, 

10 any contractor, assignee, or exclusive licensee to an inven11 tion developed in whole or in part in work performed 

12 under a covered transaction shall grant an open, non-ex13 clusive license. If any such contractor, assignee, or exclu14 sive licensee refuses to grant such license, the Federal 

15 Government shall grant the license. 

16 (c) REASONABLE ROYALTY.— 

17 (1) IN GENERAL.—Except as provided in para18 graph (4), an entity that accepts an open, nonexclu19 sive license under this section shall pay a reasonable 

20 royalty with respect to sales within the United 

21 States to— 

22 (A) the holder of a patent that claims the 

23 COVID–19 related invention; or 

24 (B) the holder of an application approved 

25 under section 505 of the Federal Food, Drug, 

26 and Cosmetic Act (21 U.S.C. 355) or section 


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1 351 of the Public Health Service Act (42 

2 U.S.C. 262) for which any FDA-granted exclu3 sivity with respect to a drug related to such in4 vention that was terminated under this section. 

5 (2) ROYALTY.—The reasonable royalty de6 scribed under paragraph (1) shall be a percentage of 

7 sales of the entity paying the royalty, where the per8 centage rate is no higher than the average royalty 

9 rate estimated from the data provided by the Inter10 nal Revenue Service for pharmaceutical manufac11 turer Federal income tax returns. 

12 (3) REQUIREMENTS.— 

13 (A) IN GENERAL.—The royalty described 

14 under paragraph (2) shall be subject to the ap15 plicable royalty rate requirements of section 

16 319B of the Public Health Service Act, as 

17 added by section 5 of this Act. 

18 (B) MULTIPLE AFFECTED PARTIES.—In 

19 the case of more than one recipient of a royalty, 

20 the royalty shall be divided among each such re21 cipient (including any manufacturer) in a man22 ner agreed upon by the manufacturer and other 

23 recipients, or, in the absence of such an agree24 ment, in a manner the Secretary determines to 

25 be appropriate. 


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1 (4) EXCEPTION FOR GOVERNMENT-OWNED IN2 VENTIONS.—An entity that accepts an open, non3 exclusive license for a federally owned invention de4 scribed under section 207 of title 35, United States 

5 Code, is not required to pay a royalty under this sec6 tion. 

7 (d) DEFINITIONS.—In this section: 

8 (1) COVERED LICENSE.—The term ‘‘covered li9 cense’’ means a license that allows a licensee to 

10 make, use, offer to sell, or sell, export, or import 

11 into the United States or any other country or terri12 tory a COVID–19 related invention pursuant to— 

13 (A) section 207 of title 35, United States 

14 Code; and 

15 (B) section 12 of the Stevenson-Wydler 

16 Technology Innovation Act of 1980 (15 U.S.C. 

17 3710a). 

18 (2) COVERED TRANSACTION.—The term ‘‘cov19 ered transaction’’ means any contract, funding 

20 agreement, license, other transaction, or other ar21 rangement entered into between a party and the 

22 Federal Government on or after the date of enact23 ment of this Act with respect to research and devel24 opment regarding a drug that— 


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1 (A) is intended or anticipated to be used to 

2 diagnose, mitigate, prevent, or treat COVID– 

3 19; and 

4 (B) consists of— 

5 (i) a licensing agreement pursuant to 

6 section 207 of title 35, United States 

7 Code; 

8 (ii) a cooperative research and devel9 opment agreement and licensing agreement 

10 pursuant to section 12 of the Stevenson11 Wydler Technology Innovation Act of 1980 

12 (15 U.S.C. 3710a); 

13 (iii) a funding agreement, as defined 

14 under section 201 of title 35, United 

15 States Code; or 

16 (iv) any other transaction entered into 

17 pursuant to— 

18 (I) section 319L, 421, or 480 of 

19 the Public Health Service Act (42 

20 U.S.C. 247d–7e, 285b–3, 287a); 

21 (II) section 105 of the National 

22 Institutes of Health Reform Act of 

23 2006 (42 U.S.C. 284n); or 

24 (III) section 2371 of title 10, 

25 United States Code. 


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1 (3) COVID–19 RELATED INVENTION.—The 

2 term ‘‘COVID–19 related invention’’ means any in3 vention that claims a drug that is manufactured, 

4 used, designed, developed, modified, licensed, or pro5 cured to diagnose, mitigate, prevent, treat, or cure 

6 COVID–19; a use of such drug; a form of such 

7 drug; a method of use of such drug; or a method of 

8 manufacturing such drug. 

9 (4) FDA-GRANTED EXCLUSIVITY.—The term 

10 ‘‘FDA-granted exclusivity’’ means prohibitions on 

11 the submission or approval of drug applications 

12 granted under any of the following: 

13 (A) Clauses (ii) through (v) of section 

14 505(c)(3)(E) of the Federal Food, Drug, and 

15 Cosmetic Act (21 U.S.C. 355(c)(3)(E)). 

16 (B) Subsection (j)(5)(B)(iv) or clause (ii), 

17 (iii), or (iv) of subsection (j)(5)(F) of such Act 

18 (21 U.S.C. 355(c)(3)(E)). 

19 (C) Section 505A of such Act (21 U.S.C. 

20 355a). 

21 (D) Section 505E of such Act (21 U.S.C. 

22 355f). 

23 (E) Section 527 of such Act (21 U.S.C. 

24 360cc). 


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1 (F) Section 351(k)(7) of the Public Health 

2 Service Act (42 U.S.C. 262(k)(7)). 

3 (G) Any other provision of law that pro4 vides for marketing or data exclusivity (or ex5 tension of exclusivity) with respect to a drug. 

6 (5) OPEN, NONEXCLUSIVE LICENSE.—The term 

7 ‘‘open, nonexclusive license’’ means a license that al8 lows a qualified licensee, subject to the provisions of 

9 the Federal Food, Drug, and Cosmetic Act (21 

10 U.S.C. 301 et seq.) and the Public Health Service 

11 Act (42 U.S.C. 201 et seq.)— 

12 (A) to make, use, offer to sell, sell, export, 

13 or import into the United States and any other 

14 country and territory an invention; 

15 (B) to reference or rely upon earlier-sub16 mitted regulatory test data or the earlier grant 

17 of marketing approval of a treatment or vaccine 

18 related to such invention; and 

19 (C) to access and use otherwise confiden20 tial know-how relating to the manufacture of 

21 such invention. 

22 SEC. 3. REQUIREMENTS FOR REASONABLE PRICING OF 

23 FEDERALLY SUPPORTED COVID–19 DRUGS. 

24 (a) REASONABLE PRICING REQUIREMENTS.—Any 

25 covered transaction shall include terms and conditions reVerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439

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1 quiring that the pricing of the drug by the party referred 

2 to in section 2(d)(2) be fair and reasonable, and facilitate 

3 global access, taking into consideration— 

4 (1) the impact of the price on access to the 

5 drug in the United States, taking into consideration 

6 racial disparities in COVID–19 cases and fatalities 

7 and other socioeconomic disparities; 

8 (2) the impact of the price on health program 

9 spending and budgets in the United States; 

10 (3) the risk adjusted value of Federal subsidies 

11 and investments related to the drug; 

12 (4) the costs associated with development and 

13 manufacturing of the drug; 

14 (5) the size of the affected patient population in 

15 the United States and globally; and 

16 (6) the therapeutic efficacy of the drug. 

17 (b) DEFINITIONS.—In this section: 

18 (1) COVERED TRANSACTION.—The term ‘‘cov19 ered transaction’’ has the meaning given to such 

20 term in section 2. 

21 (2) DRUG.—The term ‘‘drug’’ has the meaning 

22 given to such term in section 201 of the Federal 

23 Food, Drug, and Cosmetic Act (21 U.S.C. 321). 


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1 SEC. 4. REPORTING ON THE EXPENDITURES OF MANUFAC2 TURERS WITH RESPECT TO COVID–19 DRUGS. 

3 (a) COVERED DRUG.—For purposes of this section, 

4 the term ‘‘covered drug’’ means a drug that is intended 

5 or anticipated to be used to diagnose, mitigate, prevent, 

6 or treat COVID–19. 

7 (b) REPORTING REQUIRED.—The manufacturer of a 

8 covered drug shall submit a report described in subsection 

9 (c) to the Secretary upon— 

10 (1) the submission of an application for ap11 proval of the drug under subsection (b) or (j) of sec12 tion 505 of the Federal Food, Drug, and Cosmetic 

13 Act (21 U.S.C. 355); 

14 (2) investigational use of the drug under section 

15 505(i) of the Federal Food, Drug, and Cosmetic Act 

16 (21 U.S.C. 355(i)) or section 351(a)(3) of the Public 

17 Health Service Act (42 U.S.C. 262(a)(3)); 

18 (3) the submission of an application for licens19 ing the drug under subsection (a) or (k) of section 

20 351 of the Public Health Service Act (42 U.S.C. 

21 262); 

22 (4) the issuance of an authorization for emer23 gency use of the drug under section 564 of the Fed24 eral Food, Drug, and Cosmetic Act (21 U.S.C. 

25 360bbb–3); or 

26 (5) the marketing of the drug. 


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1 (c) CONTENTS.—A report under subsection (a), con2 sistent with the standard for disclosures described in sec3 tion 213.3(d) of title 12, Code of Federal Regulations (as 

4 in effect on the date of enactment of this Act), shall ad5 dress the expenditures of the manufacturer with respect 

6 to the covered drug and include, at a minimum— 

7 (1) the sponsor or sponsors of the covered drug; 

8 (2) the current wholesale acquisition cost of the 

9 covered drug when applicable; 

10 (3) the total expenditures of the manufacturer, 

11 specified by individual costs, on— 

12 (A) materials and manufacturing for the 

13 covered drug; and 

14 (B) acquiring patents and licensing for the 

15 covered drug; 

16 (4) the total amount and percentage of research 

17 and development expenditures for the covered drug 

18 that was derived from Federal funds; 

19 (5) the total amount of any Federal benefits re20 ceived by the manufacturer with respect to the cov21 ered drug, including— 

22 (A) the specific amounts and periods of 

23 impact for each such benefit; 


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1 (B) the specific value of any tax credits, 

2 including benefits from patient assistance pro3 grams and donated samples; 

4 (C) clinical and preclinical investments; 

5 (D) any Federal benefit toward manufac6 turing costs, including building or retrofitting 

7 facilities; 

8 (E) Federal grants, including from the Na9 tional Institutes of Health, the Centers for Dis10 ease Control and Prevention, the Department of 

11 Defense, the Department of Energy, or other 

12 Federal departments or agencies; 

13 (F) patent applications that benefitted 

14 from such grants; 

15 (G) patent extensions; 

16 (H) exclusivity periods; and 

17 (I) waivers of fees; 

18 (6) the total expenditures of the manufacturer 

19 on research and development, itemized by basic and 

20 preclinical research and by clinical research, re21 ported separately for each clinical trial, for the cov22 ered drug to demonstrate that the covered drug 

23 meets applicable statutory standards for approval 

24 under section 505 of the Federal Food, Drug, and 

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1 tion 351 of the Public Health Service Act (42 

2 U.S.C. 262), an exemption for investigational use 

3 under section 505(i) of the Federal Food, Drug, or 

4 Cosmetic Act (21 U.S.C. 355(i)) or section 

5 351(a)(3) of the Public Health Service Act (42 

6 U.S.C. 262(a)(3)), or authorization under section 

7 564 of the Federal Food, Drug, and Cosmetic Act 

8 (21 U.S.C. 360bbb–3), as applicable; 

9 (7) the total expenditures of the manufacturer 

10 on pursuing new or expanded indications or dosage 

11 changes for the covered drug under section 505 of 

12 the Federal Food, Drug, and Cosmetic Act (21 

13 U.S.C. 355) or section 351 of the Public Health 

14 Service Act (42 U.S.C. 262); 

15 (8) the total expenditures of the manufacturer 

16 on carrying out postmarket requirements related to 

17 such drug, including under section 505(o)(3) of the 

18 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 

19 355(o)(3)); 

20 (9) the specific expenditures associated with 

21 marketing and advertising costs for the covered 

22 drug; 

23 (10) any anticipated royalty fees from licensing 

24 to other manufacturers; and 

25 (11) with respect to the manufacturer— 


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1 (A) all stock-based performance metrics 

2 used by the manufacturer to determine execu3 tive compensation over the preceding 12 

4 months; and 

5 (B) any additional information the manu6 facturer chooses to provide related to drug pric7 ing decisions. 

8 (d) CIVIL MONETARY PENALTIES.— 

9 (1) FAILURE TO SUBMIT.—Any manufacturer 

10 of a covered drug that fails to submit a report as 

11 required by this section, following notification by the 

12 Secretary to the manufacturer that the manufac13 turer is not in compliance with this section, shall be 

14 subject to a civil monetary penalty of $100,000 for 

15 each day on which the violation continues. 

16 (2) FALSE INFORMATION.—Any manufacturer 

17 of a covered drug that knowingly provides false in18 formation in a report under this section is subject to 

19 a civil monetary penalty in an amount not to exceed 

20 $100,000 for each item of false information. 

21 (e) PUBLIC POSTING.— 

22 (1) IN GENERAL.—Subject to paragraph (3), 

23 the Secretary shall post each report submitted under 

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1 ment of Health and Human Services no later than 

2 30 days after the submission of the report. 

3 (2) FORMAT.—The Secretary shall ensure that 

4 such reports are— 

5 (A) user-friendly to the public; and 

6 (B) written in plain language that con7 sumers can readily understand. 

8 (3) PROTECTED INFORMATION.—Nothing in 

9 this section shall be construed to authorize the pub10 lic disclosure of information submitted by a manu11 facturer that is prohibited from disclosure by any 

12 applicable law concerning the protection of trade se13 crets, commercial information, and other informa14 tion. 

15 (f) DEFINITION.—In this section, the term ‘‘drug’’ 

16 has the meaning given to such term in section 201 of the 

17 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321). 

18 SEC. 5. PRICING REQUIREMENTS FOR EXISTING TREAT19 MENTS AND VACCINES IN A PUBLIC HEALTH 

20 EMERGENCY. 

21 Title III of the Public Health Service Act is amended 

22 by inserting after section 319A (42 U.S.C. 247d–1) the 

23 following new section: 


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1 ‘‘SEC. 319B. PRICING REQUIREMENTS FOR TREATMENTS 

2 AND VACCINES IN A PUBLIC HEALTH EMER3 GENCY. 

4 ‘‘(a) DEFINITIONS.—For purposes of this section: 

5 ‘‘(1) The term ‘covered drug’ means a drug (in6 cluding any vaccine) used to diagnose, mitigate, pre7 vent, or treat a disease or disorder with respect to 

8 which there is or was in effect a declaration of a 

9 public health emergency under section 319. 

10 ‘‘(2) The term ‘covered period’ means the pe11 riod ending if and when the circumstances which led 

12 to an applicable public health emergency cease to 

13 exist and are unlikely to recur. 

14 ‘‘(3) The term ‘FDA-granted exclusivity’ means 

15 prohibitions on the submission or approval of drug 

16 applications granted under any of the following: 

17 ‘‘(A) Clauses (ii) through (v) of section 

18 505(c)(3)(E) of the Federal Food, Drug, and 

19 Cosmetic Act. 

20 ‘‘(B) Subsection (j)(5)(B)(iv) or clause (ii), 

21 (iii), or (iv) of subsection (j)(5)(F) of such Act. 

22 ‘‘(C) Section 505A of such Act. 

23 ‘‘(D) Section 505E of such Act. 

24 ‘‘(E) Section 527 of such Act. 

25 ‘‘(F) Section 351(k)(7) of this Act. 


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1 ‘‘(G) Any other provision of law that pro2 vides for marketing or data exclusivity (or ex3 tension of exclusivity) with respect to a drug. 

4 ‘‘(4) The term ‘wholesale acquisition cost’ has 

5 the meaning given that term in section 

6 1847A(c)(6)(B) of the Social Security Act. 

7 ‘‘(b) DETERMINATION OF EXCESSIVE PRICE.—Dur8 ing any covered period with respect to a covered drug, the 

9 Secretary shall determine that the price of a covered drug 

10 is excessive if the wholesale acquisition cost (or a more 

11 relevant measure of price) of the covered drug is not fair 

12 and reasonable, or does not facilitate global access, taking 

13 into consideration— 

14 ‘‘(1) the impact of the price on access to the 

15 covered drug in the United States, taking into con16 sideration racial disparities and other socioeconomic 

17 disparities; 

18 ‘‘(2) the impact of the price on health program 

19 spending and budgets in the United States; 

20 ‘‘(3) the risk adjusted value of Federal sub21 sidies and investments related to the covered drug; 

22 ‘‘(4) the costs associated with development and 

23 manufacturing of the covered drug; 

24 ‘‘(5) the size of the affected patient population 

25 in the United States and globally; and 


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1 ‘‘(6) the therapeutic efficacy of the covered 

2 drug. 

3 ‘‘(c) EXCESSIVE PRICING REMEDY.—If the Secretary 

4 determines pursuant to subsection (b) that the price of 

5 a covered drug is excessive, the Secretary— 

6 ‘‘(1) shall waive or void any FDA-granted 

7 exclusivities with respect to the covered drug, effec8 tive on the date that the excessive price determina9 tion is made; and 

10 ‘‘(2) shall grant open, nonexclusive licenses al11 lowing any person to make, use, offer to sell, or sell, 

12 or import into the United States such drug, and to 

13 rely upon the regulatory test data of such drug, and 

14 to access and use otherwise confidential information, 

15 including know-how, related to the manufacture of 

16 such drug in accordance with subsection (d). 

17 ‘‘(d) REASONABLE ROYALTY.— 

18 ‘‘(1) IN GENERAL.—An entity accepting an 

19 open, nonexclusive license under subsection (c)(2) 

20 shall pay a reasonable royalty with respect to sales 

21 within the United States to the holder of a patent 

22 that claims the covered drug or that claims a use of 

23 the covered drug or to the holder of an application 

24 approved under section 505 of the Federal Food, 

25 Drug, and Cosmetic Act or section 351 of the Public 


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1 Health Service Act for which any FDA-granted ex2 clusivity with respect to the covered drug was termi3 nated under subsection (c)(1). 

4 ‘‘(2) ROYALTY RATE.—Such royalty rate shall 

5 be— 

6 ‘‘(A) a percentage of sales, where the per7 centage rate is no higher than the average roy8 alty rate estimated from the data provided by 

9 the Internal Revenue Service for pharma10 ceutical manufacturer Federal income tax re11 turns; or 

12 ‘‘(B) an amount as determined by the Sec13 retary, taking into account— 

14 ‘‘(i) the therapeutic efficacy of the 

15 covered drug; 

16 ‘‘(ii) the size of the affected patient 

17 population in the United States and glob18 ally; 

19 ‘‘(iii) the risk adjusted value of Fed20 eral subsidies and investments related to 

21 the covered drug; 

22 ‘‘(iv) the extent to which the manufac23 turer of the covered drug has recovered 

24 risk adjusted investments related to the 

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1 lated to the invention, regulatory test data, 

2 and any other relevant research and devel3 opment costs; and 

4 ‘‘(v) any other information the Sec5 retary determines appropriate. 

6 ‘‘(3) SALES WITHIN OTHER COUNTRIES.—An 

7 entity accepting an open, nonexclusive license under 

8 subsection (c)(2) shall pay a reasonable royalty with 

9 respect to sales within other countries based on the 

10 royalty rate paid in the United States times the 

11 ratio between that country’s gross domestic product 

12 per capita divided by the United States gross domes13 tic product per capita in the last year such data was 

14 available for both countries, but such royalty shall 

15 be due only if there are granted patents or data ex16 clusivity rights in that country at the time of sale. 

17 ‘‘(e) REQUIREMENTS.— 

18 ‘‘(1) IN GENERAL.—A royalty rate under sub19 section (d) shall be consistent with making the cov20 ered drug available to purchasers, including govern21 mental and nongovernmental purchasers and individ22 uals, at prices that are affordable and reasonable. 

23 Under no condition shall a royalty be set at a rate 

24 that would cause a covered drug for which an open, 

25 nonexclusive license was issued under subsection (c) 


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1 to be sold at an excessive price, as determined under 

2 subsection (b). 

3 ‘‘(2) MULTIPLE AFFECTED PARTIES.—In the 

4 case that there is one or more holders or investors 

5 in the patented inventions related to the covered 

6 drug, the royalty rate shall be divided among the 

7 holders or investors (including such manufacturer) 

8 in a manner agreed upon by the manufacturer and 

9 other holders or investors, or, in the absence of such 

10 an agreement, in a manner the Secretary determines 

11 to be appropriate. 

12 ‘‘(3) PRICE.—An entity accepting an open, non13 exclusive license under subsection (c)(2) shall sell 

14 the covered drug at a price not higher than the ex15 cessive price determined for the covered drug under 

16 subsection (b). 

17 ‘‘(f) CLARIFICATION.—An open, nonexclusive license 

18 under subsection (c)(2) shall be liable, subject to adequate 

19 protection of the legitimate interests of any party utilizing 

20 the license, to be terminated only if the circumstances 

21 which led to the granting of the open, nonexclusive license 

22 cease to exist and are unlikely to recur. The Secretary may 

23 review, upon request, the continued existence of these cir24 cumstances.’’. 

Æ 


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