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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4439 Introduced in Senate (IS)]

<DOC>

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.

    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 ``Make Medications Affordable by 
Preventing Pandemic Price-gouging Act of 2020'' or the ``MMAPPP Act of 
2020''.

SEC. 2. REQUIREMENTS FOR LICENSING OF NEW COVID-19 TREATMENT AND 
              PREVENTION TECHNOLOGIES TO MEET DOMESTIC AND GLOBAL 
              DEMAND.

    (a) Nonexclusive License Required.--Any covered license granted by 
the Federal Government shall be an open, nonexclusive license.
    (b) Contractor, Assignee, Exclusive Licensee.--Notwithstanding any 
other provision of law, any contractor, assignee, or exclusive licensee 
to an invention developed in whole or in part in work performed under a 
covered transaction shall grant an open, non-exclusive license. If any 
such contractor, assignee, or exclusive licensee refuses to grant such 
license, the Federal Government shall grant the license.
    (c) Reasonable Royalty.--
            (1) In general.--Except as provided in paragraph (4), an 
        entity that accepts an open, nonexclusive license under this 
        section shall pay a reasonable royalty with respect to sales 
        within the United States to--
                    (A) the holder of a patent that claims the COVID-19 
                related invention; or
                    (B) the holder of an application approved under 
                section 505 of the Federal Food, Drug, and Cosmetic Act 
                (21 U.S.C. 355) or section 351 of the Public Health 
                Service Act (42 U.S.C. 262) for which any FDA-granted 
                exclusivity with respect to a drug related to such 
                invention that was terminated under this section.
            (2) Royalty.--The reasonable royalty described under 
        paragraph (1) shall be a percentage of sales of the entity 
        paying the royalty, where the percentage rate is no higher than 
        the average royalty rate estimated from the data provided by 
        the Internal Revenue Service for pharmaceutical manufacturer 
        Federal income tax returns.
            (3) Requirements.--
                    (A) In general.--The royalty described under 
                paragraph (2) shall be subject to the applicable 
                royalty rate requirements of section 319B of the Public 
                Health Service Act, as added by section 5 of this Act.
                    (B) Multiple affected parties.--In the case of more 
                than one recipient of a royalty, the royalty shall be 
                divided among each such recipient (including any 
                manufacturer) in a manner agreed upon by the 
                manufacturer and other recipients, or, in the absence 
                of such an agreement, in a manner the Secretary 
                determines to be appropriate.
            (4) Exception for government-owned inventions.--An entity 
        that accepts an open, nonexclusive license for a federally 
        owned invention described under section 207 of title 35, United 
        States Code, is not required to pay a royalty under this 
        section.
    (d) Definitions.--In this section:
            (1) Covered license.--The term ``covered license'' means a 
        license that allows a licensee to make, use, offer to sell, or 
        sell, export, or import into the United States or any other 
        country or territory a COVID-19 related invention pursuant to--
                    (A) section 207 of title 35, United States Code; 
                and
                    (B) section 12 of the Stevenson-Wydler Technology 
                Innovation Act of 1980 (15 U.S.C. 3710a).
            (2) Covered transaction.--The term ``covered transaction'' 
        means any contract, funding agreement, license, other 
        transaction, or other arrangement entered into between a party 
        and the Federal Government on or after the date of enactment of 
        this Act with respect to research and development regarding a 
        drug that--
                    (A) is intended or anticipated to be used to 
                diagnose, mitigate, prevent, or treat COVID-19; and
                    (B) consists of--
                            (i) a licensing agreement pursuant to 
                        section 207 of title 35, United States Code;
                            (ii) a cooperative research and development 
                        agreement and licensing agreement pursuant to 
                        section 12 of the Stevenson-Wydler Technology 
                        Innovation Act of 1980 (15 U.S.C. 3710a);
                            (iii) a funding agreement, as defined under 
                        section 201 of title 35, United States Code; or
                            (iv) any other transaction entered into 
                        pursuant to--
                                    (I) section 319L, 421, or 480 of 
                                the Public Health Service Act (42 
                                U.S.C. 247d-7e, 285b-3, 287a);
                                    (II) section 105 of the National 
                                Institutes of Health Reform Act of 2006 
                                (42 U.S.C. 284n); or
                                    (III) section 2371 of title 10, 
                                United States Code.
            (3) COVID-19 related invention.--The term ``COVID-19 
        related invention'' means any invention that claims a drug that 
        is manufactured, used, designed, developed, modified, licensed, 
        or procured to diagnose, mitigate, prevent, treat, or cure 
        COVID-19; a use of such drug; a form of such drug; a method of 
        use of such drug; or a method of manufacturing such drug.
            (4) FDA-granted exclusivity.--The term ``FDA-granted 
        exclusivity'' means prohibitions on the submission or approval 
        of drug applications granted under any of the following:
                    (A) Clauses (ii) through (v) of section 
                505(c)(3)(E) of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355(c)(3)(E)).
                    (B) Subsection (j)(5)(B)(iv) or clause (ii), (iii), 
                or (iv) of subsection (j)(5)(F) of such Act (21 U.S.C. 
                355(c)(3)(E)).
                    (C) Section 505A of such Act (21 U.S.C. 355a).
                    (D) Section 505E of such Act (21 U.S.C. 355f).
                    (E) Section 527 of such Act (21 U.S.C. 360cc).
                    (F) Section 351(k)(7) of the Public Health Service 
                Act (42 U.S.C. 262(k)(7)).
                    (G) Any other provision of law that provides for 
                marketing or data exclusivity (or extension of 
                exclusivity) with respect to a drug.
            (5) Open, nonexclusive license.--The term ``open, 
        nonexclusive license'' means a license that allows a qualified 
        licensee, subject to the provisions of the Federal Food, Drug, 
        and Cosmetic Act (21 U.S.C. 301 et seq.) and the Public Health 
        Service Act (42 U.S.C. 201 et seq.)--
                    (A) to make, use, offer to sell, sell, export, or 
                import into the United States and any other country and 
                territory an invention;
                    (B) to reference or rely upon earlier-submitted 
                regulatory test data or the earlier grant of marketing 
                approval of a treatment or vaccine related to such 
                invention; and
                    (C) to access and use otherwise confidential know-
                how relating to the manufacture of such invention.

SEC. 3. REQUIREMENTS FOR REASONABLE PRICING OF FEDERALLY SUPPORTED 
              COVID-19 DRUGS.

    (a) Reasonable Pricing Requirements.--Any covered transaction shall 
include terms and conditions requiring that the pricing of the drug by 
the party referred to in section 2(d)(2) be fair and reasonable, and 
facilitate global access, taking into consideration--
            (1) the impact of the price on access to the drug in the 
        United States, taking into consideration racial disparities in 
        COVID-19 cases and fatalities and other socioeconomic 
        disparities;
            (2) the impact of the price on health program spending and 
        budgets in the United States;
            (3) the risk adjusted value of Federal subsidies and 
        investments related to the drug;
            (4) the costs associated with development and manufacturing 
        of the drug;
            (5) the size of the affected patient population in the 
        United States and globally; and
            (6) the therapeutic efficacy of the drug.
    (b) Definitions.--In this section:
            (1) Covered transaction.--The term ``covered transaction'' 
        has the meaning given to such term in section 2.
            (2) Drug.--The term ``drug'' has the meaning given to such 
        term in section 201 of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 321).

SEC. 4. REPORTING ON THE EXPENDITURES OF MANUFACTURERS WITH RESPECT TO 
              COVID-19 DRUGS.

    (a) Covered Drug.--For purposes of this section, the term ``covered 
drug'' means a drug that is intended or anticipated to be used to 
diagnose, mitigate, prevent, or treat COVID-19.
    (b) Reporting Required.--The manufacturer of a covered drug shall 
submit a report described in subsection (c) to the Secretary upon--
            (1) the submission of an application for approval of the 
        drug under subsection (b) or (j) of section 505 of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 355);
            (2) investigational use of the drug under section 505(i) of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(i)) or 
        section 351(a)(3) of the Public Health Service Act (42 U.S.C. 
        262(a)(3));
            (3) the submission of an application for licensing the drug 
        under subsection (a) or (k) of section 351 of the Public Health 
        Service Act (42 U.S.C. 262);
            (4) the issuance of an authorization for emergency use of 
        the drug under section 564 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 360bbb-3); or
            (5) the marketing of the drug.
    (c) Contents.--A report under subsection (a), consistent with the 
standard for disclosures described in section 213.3(d) of title 12, 
Code of Federal Regulations (as in effect on the date of enactment of 
this Act), shall address the expenditures of the manufacturer with 
respect to the covered drug and include, at a minimum--
            (1) the sponsor or sponsors of the covered drug;
            (2) the current wholesale acquisition cost of the covered 
        drug when applicable;
            (3) the total expenditures of the manufacturer, specified 
        by individual costs, on--
                    (A) materials and manufacturing for the covered 
                drug; and
                    (B) acquiring patents and licensing for the covered 
                drug;
            (4) the total amount and percentage of research and 
        development expenditures for the covered drug that was derived 
        from Federal funds;
            (5) the total amount of any Federal benefits received by 
        the manufacturer with respect to the covered drug, including--
                    (A) the specific amounts and periods of impact for 
                each such benefit;
                    (B) the specific value of any tax credits, 
                including benefits from patient assistance programs and 
                donated samples;
                    (C) clinical and preclinical investments;
                    (D) any Federal benefit toward manufacturing costs, 
                including building or retrofitting facilities;
                    (E) Federal grants, including from the National 
                Institutes of Health, the Centers for Disease Control 
                and Prevention, the Department of Defense, the 
                Department of Energy, or other Federal departments or 
                agencies;
                    (F) patent applications that benefitted from such 
                grants;
                    (G) patent extensions;
                    (H) exclusivity periods; and
                    (I) waivers of fees;
            (6) the total expenditures of the manufacturer on research 
        and development, itemized by basic and preclinical research and 
        by clinical research, reported separately for each clinical 
        trial, for the covered drug to demonstrate that the covered 
        drug meets applicable statutory standards for approval under 
        section 505 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355), licensure under section 351 of the Public Health 
        Service Act (42 U.S.C. 262), an exemption for investigational 
        use under section 505(i) of the Federal Food, Drug, or Cosmetic 
        Act (21 U.S.C. 355(i)) or section 351(a)(3) of the Public 
        Health Service Act (42 U.S.C. 262(a)(3)), or authorization 
        under section 564 of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 360bbb-3), as applicable;
            (7) the total expenditures of the manufacturer on pursuing 
        new or expanded indications or dosage changes for the covered 
        drug under section 505 of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 355) or section 351 of the Public Health Service 
        Act (42 U.S.C. 262);
            (8) the total expenditures of the manufacturer on carrying 
        out postmarket requirements related to such drug, including 
        under section 505(o)(3) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 355(o)(3));
            (9) the specific expenditures associated with marketing and 
        advertising costs for the covered drug;
            (10) any anticipated royalty fees from licensing to other 
        manufacturers; and
            (11) with respect to the manufacturer--
                    (A) all stock-based performance metrics used by the 
                manufacturer to determine executive compensation over 
                the preceding 12 months; and
                    (B) any additional information the manufacturer 
                chooses to provide related to drug pricing decisions.
    (d) Civil Monetary Penalties.--
            (1) Failure to submit.--Any manufacturer of a covered drug 
        that fails to submit a report as required by this section, 
        following notification by the Secretary to the manufacturer 
        that the manufacturer is not in compliance with this section, 
        shall be subject to a civil monetary penalty of $100,000 for 
        each day on which the violation continues.
            (2) False information.--Any manufacturer of a covered drug 
        that knowingly provides false information in a report under 
        this section is subject to a civil monetary penalty in an 
        amount not to exceed $100,000 for each item of false 
        information.
    (e) Public Posting.--
            (1) In general.--Subject to paragraph (3), the Secretary 
        shall post each report submitted under subsection (b) on the 
        public website of the Department of Health and Human Services 
        no later than 30 days after the submission of the report.
            (2) Format.--The Secretary shall ensure that such reports 
        are--
                    (A) user-friendly to the public; and
                    (B) written in plain language that consumers can 
                readily understand.
            (3) Protected information.--Nothing in this section shall 
        be construed to authorize the public disclosure of information 
        submitted by a manufacturer that is prohibited from disclosure 
        by any applicable law concerning the protection of trade 
        secrets, commercial information, and other information.
    (f) Definition.--In this section, the term ``drug'' has the meaning 
given to such term in section 201 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 321).

SEC. 5. PRICING REQUIREMENTS FOR EXISTING TREATMENTS AND VACCINES IN A 
              PUBLIC HEALTH EMERGENCY.

    Title III of the Public Health Service Act is amended by inserting 
after section 319A (42 U.S.C. 247d-1) the following new section:

``SEC. 319B. PRICING REQUIREMENTS FOR TREATMENTS AND VACCINES IN A 
              PUBLIC HEALTH EMERGENCY.

    ``(a) Definitions.--For purposes of this section:
            ``(1) The term `covered drug' means a drug (including any 
        vaccine) used to diagnose, mitigate, prevent, or treat a 
        disease or disorder with respect to which there is or was in 
        effect a declaration of a public health emergency under section 
        319.
            ``(2) The term `covered period' means the period ending if 
        and when the circumstances which led to an applicable public 
        health emergency cease to exist and are unlikely to recur.
            ``(3) The term `FDA-granted exclusivity' means prohibitions 
        on the submission or approval of drug applications granted 
        under any of the following:
                    ``(A) Clauses (ii) through (v) of section 
                505(c)(3)(E) of the Federal Food, Drug, and Cosmetic 
                Act.
                    ``(B) Subsection (j)(5)(B)(iv) or clause (ii), 
                (iii), or (iv) of subsection (j)(5)(F) of such Act.
                    ``(C) Section 505A of such Act.
                    ``(D) Section 505E of such Act.
                    ``(E) Section 527 of such Act.
                    ``(F) Section 351(k)(7) of this Act.
                    ``(G) Any other provision of law that provides for 
                marketing or data exclusivity (or extension of 
                exclusivity) with respect to a drug.
            ``(4) The term `wholesale acquisition cost' has the meaning 
        given that term in section 1847A(c)(6)(B) of the Social 
        Security Act.
    ``(b) Determination of Excessive Price.--During any covered period 
with respect to a covered drug, the Secretary shall determine that the 
price of a covered drug is excessive if the wholesale acquisition cost 
(or a more relevant measure of price) of the covered drug is not fair 
and reasonable, or does not facilitate global access, taking into 
consideration--
            ``(1) the impact of the price on access to the covered drug 
        in the United States, taking into consideration racial 
        disparities and other socioeconomic disparities;
            ``(2) the impact of the price on health program spending 
        and budgets in the United States;
            ``(3) the risk adjusted value of Federal subsidies and 
        investments related to the covered drug;
            ``(4) the costs associated with development and 
        manufacturing of the covered drug;
            ``(5) the size of the affected patient population in the 
        United States and globally; and
            ``(6) the therapeutic efficacy of the covered drug.
    ``(c) Excessive Pricing Remedy.--If the Secretary determines 
pursuant to subsection (b) that the price of a covered drug is 
excessive, the Secretary--
            ``(1) shall waive or void any FDA-granted exclusivities 
        with respect to the covered drug, effective on the date that 
        the excessive price determination is made; and
            ``(2) shall grant open, nonexclusive licenses allowing any 
        person to make, use, offer to sell, or sell, or import into the 
        United States such drug, and to rely upon the regulatory test 
        data of such drug, and to access and use otherwise confidential 
        information, including know-how, related to the manufacture of 
        such drug in accordance with subsection (d).
    ``(d) Reasonable Royalty.--
            ``(1) In general.--An entity accepting an open, 
        nonexclusive license under subsection (c)(2) shall pay a 
        reasonable royalty with respect to sales within the United 
        States to the holder of a patent that claims the covered drug 
        or that claims a use of the covered drug or to the holder of an 
        application approved under section 505 of the Federal Food, 
        Drug, and Cosmetic Act or section 351 of the Public Health 
        Service Act for which any FDA-granted exclusivity with respect 
        to the covered drug was terminated under subsection (c)(1).
            ``(2) Royalty rate.--Such royalty rate shall be--
                    ``(A) a percentage of sales, where the percentage 
                rate is no higher than the average royalty rate 
                estimated from the data provided by the Internal 
                Revenue Service for pharmaceutical manufacturer Federal 
                income tax returns; or
                    ``(B) an amount as determined by the Secretary, 
                taking into account--
                            ``(i) the therapeutic efficacy of the 
                        covered drug;
                            ``(ii) the size of the affected patient 
                        population in the United States and globally;
                            ``(iii) the risk adjusted value of Federal 
                        subsidies and investments related to the 
                        covered drug;
                            ``(iv) the extent to which the manufacturer 
                        of the covered drug has recovered risk adjusted 
                        investments related to the covered drug, 
                        including the investments related to the 
                        invention, regulatory test data, and any other 
                        relevant research and development costs; and
                            ``(v) any other information the Secretary 
                        determines appropriate.
            ``(3) Sales within other countries.--An entity accepting an 
        open, nonexclusive license under subsection (c)(2) shall pay a 
        reasonable royalty with respect to sales within other countries 
        based on the royalty rate paid in the United States times the 
        ratio between that country's gross domestic product per capita 
        divided by the United States gross domestic product per capita 
        in the last year such data was available for both countries, 
        but such royalty shall be due only if there are granted patents 
        or data exclusivity rights in that country at the time of sale.
    ``(e) Requirements.--
            ``(1) In general.--A royalty rate under subsection (d) 
        shall be consistent with making the covered drug available to 
        purchasers, including governmental and nongovernmental 
        purchasers and individuals, at prices that are affordable and 
        reasonable. Under no condition shall a royalty be set at a rate 
        that would cause a covered drug for which an open, nonexclusive 
        license was issued under subsection (c) to be sold at an 
        excessive price, as determined under subsection (b).
            ``(2) Multiple affected parties.--In the case that there is 
        one or more holders or investors in the patented inventions 
        related to the covered drug, the royalty rate shall be divided 
        among the holders or investors (including such manufacturer) in 
        a manner agreed upon by the manufacturer and other holders or 
        investors, or, in the absence of such an agreement, in a manner 
        the Secretary determines to be appropriate.
            ``(3) Price.--An entity accepting an open, nonexclusive 
        license under subsection (c)(2) shall sell the covered drug at 
        a price not higher than the excessive price determined for the 
        covered drug under subsection (b).
    ``(f) Clarification.--An open, nonexclusive license under 
subsection (c)(2) shall be liable, subject to adequate protection of 
the legitimate interests of any party utilizing the license, to be 
terminated only if the circumstances which led to the granting of the 
open, nonexclusive license cease to exist and are unlikely to recur. 
The Secretary may review, upon request, the continued existence of 
these circumstances.''.
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