I 

116TH CONGRESS 

1ST SESSION H. R. 1344 

To prohibit brand name drug companies from compensating generic drug 

companies to delay the entry of a generic drug into the market, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2019 

Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. CARTWRIGHT, Ms. JUDY

CHU of California, Mr. CUMMINGS, Ms. DELAURO, Mr. DESAULNIER, 

Mr. GRIJALVA, Ms. HILL of California, Ms. KAPTUR, Mr. KHANNA, Ms. 

MOORE, Mrs. NAPOLITANO, Ms. OCASIO-CORTEZ, Ms. NORTON, Ms. PINGREE, Mr. POCAN, Ms. WATERS, Mr. WELCH, and Mr. LANGEVIN) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committees on Energy and Commerce, 

and the Judiciary, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

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 for other purposes. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Competitive Deals Re3 sulting in Unleashed Generics and Savings Act of 2019’’ 

4 or the ‘‘Competitive DRUGS Act of 2019’’. 

5 SEC. 2. CLAWBACK OF RESEARCH AND DEVELOPMENT TAX 

6 BENEFITS FOR MANUFACTURERS ENGAGING 

7 IN PAY-FOR-DELAY. 

8 (a) IN GENERAL.—Section 41 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following new subsection: 

11 ‘‘(i) RECAPTURE.— 

12 ‘‘(1) IN GENERAL.—If the Federal Trade Com13 mission determines under section 27 of the Federal 

14 Trade Commission Act that the taxpayer violated 

15 section 5 of such Act in connection with the sale of 

16 a drug product (as defined in such section), then the 

17 tax under this chapter for the taxable year which in18 cludes the date of such determination shall be in19 creased by the sum of the product for each of the 

20 2 relevant years of— 

21 ‘‘(A) the aggregate decrease in the credits 

22 allowed under section 38 for such relevant year 

23 which would have resulted solely from reducing 

24 to zero any credit determined under this sec25 tion, multiplied by 


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1 ‘‘(B) the sales ratio for such drug product 

2 for such relevant year. 

3 ‘‘(2) RELEVANT YEAR.—For purposes of this 

4 subsection, the term ‘relevant year’ means, with re5 spect to any determination by the Federal Trade 

6 Commission described in paragraph (1), a taxable 

7 year in which the aggregate decrease in the credits 

8 allowed under section 38 which would have resulted 

9 solely from reducing to zero any credit determined 

10 under this section is one of the two highest such de11 creases during the 10-year period ending with the 

12 last taxable year that ended before the date of such 

13 determination. 

14 ‘‘(3) SALES RATIO.—For purposes of this sub15 section, the term ‘sales ratio’ means, with respect to 

16 a drug product sold by a taxpayer in a taxable year, 

17 the ratio of— 

18 ‘‘(A) the revenue from sales of such drug 

19 product by such taxpayer during such taxable 

20 year, to 

21 ‘‘(B) the total revenue from sales of all 

22 drug products by such taxpayer during such 

23 taxable year. 

24 ‘‘(4) CONSENT DECREES DEEMED TO BE VIOLA25 TIONS.—If a taxpayer enters into a consent decree 


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1 with respect to any proceeding initiated by the Fed2 eral Trade Commission under section 27 of the Fed3 eral Trade Commission Act, such consent decree 

4 shall be treated for purposes of this subsection as if 

5 the Commission had determined under such section 

6 that the taxpayer violated section 5 of such Act in 

7 connection with the sale of the drug product to 

8 which such proceeding relates. 

9 ‘‘(5) RECAPTURE NOT TAKEN INTO ACCOUNT IN

10 DETERMINING MAXIMUM PENALTY.—The increase in 

11 tax under this subsection shall not be treated as a 

12 penalty for purposes of section 27(f) of the Federal 

13 Trade Commission Act.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to taxable years ending after the 

16 date of the enactment of this Act. 

17 SEC. 3. TAX ON RECEIPT OF PAY-FOR-DELAY PAYMENTS; 

18 DENIAL OF DEDUCTION FOR PAY-FOR-DELAY 

19 PAYMENTS. 

20 (a) RECEIPT OF PAYMENT.—The Internal Revenue 

21 Code of 1986 is amended by inserting after chapter 36 

22 the following new chapter: 

23 ‘‘CHAPTER 37—PAY-FOR-DELAY 

‘‘Sec. 4501. Imposition of tax. 


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1 ‘‘SEC. 4501. IMPOSITION OF TAX. 

2 ‘‘There is hereby imposed, on each taxpayer who is 

3 party to an agreement that is determined by the Federal 

4 Trade Commission under section 27 of the Federal Trade 

5 Commission Act to be a violation of section 5 of such Act, 

6 a tax equal to 50 percent of the amount paid to such tax7 payer under such agreement.’’. 

8 (b) DENIAL OF DEDUCTION.—Section 162(c) is 

9 amended by adding at the end the following new para10 graph: 

11 ‘‘(4) PAY-FOR-DELAY PAYMENTS.—No deduc12 tion shall be allowed under subsection (a) for any 

13 payment under an agreement that is determined by 

14 the Federal Trade Commission under section 27 of 

15 the Federal Trade Commission Act to be a violation 

16 of section 5 of such Act.’’. 

17 (c) CONFORMING AMENDMENT.—The table of chap18 ters for the Internal Revenue Code of 1986 is amended 

19 by inserting after the item relating to chapter 36 the fol20 lowing new item: 

‘‘CHAPTER 37—PAY-FOR-DELAY’’. 

21 SEC. 4. UNLAWFUL COMPENSATION FOR DELAY. 

22 (a) IN GENERAL.—The Federal Trade Commission 

23 Act (15 U.S.C. 44 et seq.) is amended by inserting after 

24 section 26 (15 U.S.C. 57c–2) the following: 


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1 ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE 

2 GENERICS. 

3 ‘‘(a) IN GENERAL.— 

4 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com5 mission may initiate a proceeding to enforce the pro6 visions of this section against the parties to any 

7 agreement resolving or settling, on a final or interim 

8 basis, a patent infringement claim, in connection 

9 with the sale of a drug product. 

10 ‘‘(2) VIOLATION.— 

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), in such a proceeding, an agreement 

13 shall be an unfair method of competition in or 

14 affecting commerce and be a violation of section 

15 5 if pursuant to the agreement— 

16 ‘‘(i) an ANDA filer receives anything 

17 of value, including an exclusive or non-ex18 clusive license, an agreement regarding the 

19 marketing of a product, or any other com20 mercial opportunity or benefit; and 

21 ‘‘(ii) the ANDA filer agrees to limit or 

22 forgo research, development, manufac23 turing, marketing, or sales of the ANDA 

24 product for any period of time. 

25 ‘‘(B) EXCEPTION.—Subparagraph (A) 

26 shall not apply if the parties to such agreement 


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1 demonstrate by clear and convincing evidence 

2 that— 

3 ‘‘(i) the value described in subpara4 graph (A)(i) is compensation solely for 

5 other goods or services that the ANDA 

6 filer has promised to provide; or 

7 ‘‘(ii) the procompetitive benefits of the 

8 agreement outweigh the anticompetitive ef9 fects of the agreement. 

10 ‘‘(b) LIMITATIONS.—In determining whether the set11 tling parties have met their burden under subsection 

12 (a)(2)(B), the fact finder may not presume— 

13 ‘‘(1) that entry of the ANDA product into 

14 interstate commerce would not have occurred until 

15 the expiration of the relevant patent or statutory ex16 clusivity; or 

17 ‘‘(2) that the agreement’s provision for entry of 

18 the ANDA product into interstate commerce prior to 

19 the expiration of the relevant patent or statutory ex20 clusivity means that the agreement is procom21 petitive. 

22 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro23 hibit a resolution or settlement of a patent infringement 

24 claim in which the consideration granted to the ANDA 


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1 filer as part of the resolution or settlement includes one 

2 or more of the following and nothing else: 

3 ‘‘(1) The right to market the ANDA product in 

4 the United States prior to the expiration of— 

5 ‘‘(A) any patent that is the basis for the 

6 patent infringement claim; or 

7 ‘‘(B) any patent right or other statutory 

8 exclusivity that would prevent the marketing of 

9 such drug. 

10 ‘‘(2) A payment, not to exceed $7,500,000, if 

11 based on reasonable litigation expenses. 

12 ‘‘(3) A covenant not to sue (including any 

13 agreement to dismiss) on any claim that the ANDA 

14 product infringes a United States patent. 

15 ‘‘(d) JUDICIAL REVIEW.— 

16 ‘‘(1) IN GENERAL.—Any party that is subject 

17 to a final order of the Commission, issued in an ad18 ministrative adjudicative proceeding under the au19 thority of subsection (a)(1), may, within 30 days 

20 after the issuance of such order, petition for review 

21 of such order in— 

22 ‘‘(A) the United States Court of Appeals 

23 for the District of Columbia Circuit; or 

24 ‘‘(B) the United States Court of Appeals 

25 for the circuit in which any party subject to 


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1 such final order is incorporated on the date that 

2 the petition for review is filed. 

3 ‘‘(2) TREATMENT OF FINDINGS.—In a pro4 ceeding for judicial review of a final order of the 

5 Commission, the findings of the Commission as to 

6 the facts, if supported by evidence, shall be conclu7 sive. 

8 ‘‘(e) CONSTRUCTION.— 

9 ‘‘(1) ANTITRUST LAWS AND CONSUMER PRO10 TECTION LAWS.—Nothing in this section shall be 

11 construed to modify, impair, or supersede the oper12 ation of— 

13 ‘‘(A) the antitrust laws as defined in sub14 section (a) of the first section of the Clayton 

15 Act (15 U.S.C. 12(a)), or any State law sub16 stantially similar to any of such antitrust laws; 

17 or 

18 ‘‘(B) section 5 of this Act or any substan19 tially similar State law. 

20 ‘‘(2) CLAIMS AND COUNTERCLAIMS.—Nothing 

21 in this section shall modify, impair, or supersede the 

22 right of an ANDA filer to assert a claim or counter23 claim against any person under any law referred to 

24 in paragraph (1). 

25 ‘‘(f) PENALTIES.— 


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1 ‘‘(1) FORFEITURE.—Each party that violates 

2 subsection (a)(2)(A) shall forfeit and pay to the 

3 United States a civil penalty sufficient to deter such 

4 violation, but in no event greater than 3 times the 

5 value received by the party that is reasonably attrib6 utable to such violation. Such penalty shall accrue to 

7 the United States and may be recovered in a civil 

8 action brought by the Commission, in its own name 

9 by any of its attorneys designated by it for such pur10 pose, in a district court of the United States against 

11 any party that commits such violation. In such ac12 tions, the United States district courts are empow13 ered to grant mandatory injunctions and such other 

14 and further equitable relief as the courts determine 

15 to be appropriate. 

16 ‘‘(2) CEASE AND DESIST.— 

17 ‘‘(A) IN GENERAL.—If the Commission has 

18 issued a cease and desist order with respect to 

19 a party in an administrative adjudicative pro20 ceeding under the authority of subsection 

21 (a)(1), an action brought pursuant to para22 graph (1) may be commenced against such 

23 party at any time before the expiration of 1 

24 year after such order becomes final pursuant to 

25 section 5(g). 


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1 ‘‘(B) EXCEPTION.—In an action under 

2 subparagraph (A), the findings of the Commis3 sion as to the material facts in the administra4 tive adjudicative proceeding with respect to a 

5 violation described in subsection (a)(2)(A) by a 

6 party shall be conclusive unless— 

7 ‘‘(i) the terms of such cease and de8 sist order expressly provide that the Com9 mission’s findings shall not be conclusive; 

10 or 

11 ‘‘(ii) the order became final by reason 

12 of section 5(g)(1), in which case such find13 ing shall be conclusive if supported by evi14 dence. 

15 ‘‘(3) CIVIL PENALTY.—In determining the 

16 amount of the civil penalty described in this section, 

17 the court shall take into account— 

18 ‘‘(A) the nature, circumstances, extent, 

19 and gravity of the violation, including the 

20 amount of commerce affected; 

21 ‘‘(B) with respect to the violator, in addi22 tion to the value received, the degree of culpa23 bility, any history of violations, the ability to 

24 pay, and any effect on the ability to continue 

25 doing business; and 


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1 ‘‘(C) other matters that justice requires. 

2 ‘‘(4) REMEDIES IN ADDITION.—Remedies pro3 vided in this subsection are in addition to any other 

4 remedy provided by Federal or State law. Nothing in 

5 this paragraph shall be construed to affect any au6 thority of the Commission under any other provision 

7 of law. 

8 ‘‘(g) DEFINITIONS.—In this section: 

9 ‘‘(1) AGREEMENT RESOLVING OR SETTLING A

10 PATENT INFRINGEMENT CLAIM.—The term ‘agree11 ment resolving or settling a patent infringement 

12 claim’ includes any agreement that is entered into 

13 within 30 days before or after the resolution or the 

14 settlement of a patent infringement claim, or any 

15 other agreement that can be shown to be contingent 

16 upon, to provide a contingent condition for, or to be 

17 otherwise related to the resolution or settlement of 

18 the claim. 

19 ‘‘(2) ANDA.—The term ‘ANDA’ means an ab20 breviated new drug application filed under section 

21 505(j) of the Federal Food, Drug, and Cosmetic Act 

22 (21 U.S.C. 355(j)) or a new drug application filed 

23 under section 505(b)(2) of the Federal Food, Drug, 

24 and Cosmetic Act (21 U.S.C. 355(b)(2)). 


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1 ‘‘(3) ANDA FILER.—The term ‘ANDA filer’ 

2 means a party that owns or controls an ANDA filed 

3 with the Commissioner of Food and Drugs or has 

4 the exclusive rights under such ANDA to distribute 

5 the ANDA product. 

6 ‘‘(4) ANDA PRODUCT.—The term ‘ANDA 

7 product’ means the product to be manufactured 

8 under the ANDA that is the subject of the patent 

9 infringement claim. 

10 ‘‘(5) DRUG PRODUCT.—The term ‘drug prod11 uct’ has the meaning given such term in section 

12 314.3(b) of title 21, Code of Federal Regulations (or 

13 any successor regulation). 

14 ‘‘(6) NDA.—The term ‘NDA’ means a new 

15 drug application filed under section 505(b) of the 

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

17 355(b)). 

18 ‘‘(7) PATENT INFRINGEMENT CLAIM.—The 

19 term ‘patent infringement claim’ means any allega20 tion made to an ANDA filer, whether or not in21 cluded in a complaint filed with a court, that the 

22 ANDA filer’s ANDA or ANDA product may infringe 

23 any of the following held by, or exclusively licensed 

24 to, the NDA holder of the drug product: 

25 ‘‘(A) Any patent. 


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1 ‘‘(B) Any filed patent application. 

2 ‘‘(C) Any extension, reissue, renewal, divi3 sion, continuation, continuation in part, or reex4 amination of a patent. 

5 ‘‘(D) Any patent term restoration, patents 

6 of addition, or extensions thereof. 

7 ‘‘(E) Any other patent interest. 

8 ‘‘(8) STATUTORY EXCLUSIVITY.—The term 

9 ‘statutory exclusivity’ means those prohibitions on 

10 the approval of drug applications under clauses (ii) 

11 through (iv) of section 505(c)(3)(E) (5- and 3-year 

12 data exclusivity), section 527 (orphan drug exclu13 sivity), section 505A (pediatric exclusivity), or sec14 tion 505E (qualified infectious disease product ex15 clusivity) of the Federal Food, Drug, and Cosmetic 

16 Act (21 U.S.C. 355(c)(3)(E), 360cc, 355a, 355f).’’. 

17 (b) APPLICABILITY.—Section 27 of the Federal 

18 Trade Commission Act, as added by this section, shall 

19 apply to any agreement described in section 27(a)(2)(A) 

20 of that Act entered into after June 17, 2013. Section 27(f) 

21 of the Federal Trade Commission Act, as added by this 

22 section, shall apply to agreements entered into on or after 

23 the date of enactment of this Act. 


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1 SEC. 5. NOTICE AND CERTIFICATION OF AGREEMENTS. 

2 (a) NOTICE OF ALL AGREEMENTS.—Section 

3 1112(c)(2) of the Medicare Prescription Drug, Improve4 ment, and Modernization Act of 2003 (21 U.S.C. 355 

5 note) is amended by— 

6 (1) striking ‘‘the Commission the’’ and insert7 ing the following: ‘‘the Commission— 

8 ‘‘(A) the’’; 

9 (2) striking the period and inserting ‘‘; and’’; 

10 and 

11 (3) inserting at the end the following: 

12 ‘‘(B) any other agreement the parties enter 

13 into within 30 days after entering into an 

14 agreement covered by subsection (a) or (b).’’. 

15 (b) CERTIFICATION OF AGREEMENTS.—Section 1112 

16 of such Act is amended by adding at the end the following: 

17 ‘‘(d) CERTIFICATION.—The Chief Executive Officer 

18 or the company official with primary responsibility for ne19 gotiating any agreement under subsection (a) or (b) that 

20 is required to be filed under subsection (c) shall execute 

21 and file with the Assistant Attorney General and the Com22 mission a certification as follows: ‘I declare that the fol23 lowing is true, correct, and complete to the best of my 

24 knowledge: The materials filed with the Federal Trade 

25 Commission and the Department of Justice under section 

26 1112 of subtitle B of title XI of the Medicare Prescription 


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1 Drug, Improvement, and Modernization Act of 2003, with 

2 respect to the agreement referenced in this certification— 

3 ‘‘ ‘(1) represent the complete, final, and exclu4 sive agreement between the parties; 

5 ‘‘ ‘(2) include any ancillary agreements that are 

6 contingent upon, provide a contingent condition for, 

7 or are otherwise related to, the referenced agree8 ment; and 

9 ‘‘ ‘(3) include written descriptions of any oral 

10 agreements, representations, commitments, or prom11 ises between the parties that are responsive to sub12 section (a) or (b) of such section 1112 and have not 

13 been reduced to writing.’.’’. 

14 SEC. 6. COMMISSION LITIGATION AUTHORITY. 

15 Section 16(a)(2) of the Federal Trade Commission 

16 Act (15 U.S.C. 56(a)(2)) is amended— 

17 (1) in subparagraph (D), by striking ‘‘or’’ after 

18 the semicolon; 

19 (2) in subparagraph (E), by inserting ‘‘or’’ 

20 after the semicolon; and 

21 (3) by inserting after subparagraph (E) the fol22 lowing new subparagraph: 

23 ‘‘(F) under section 27;’’. 


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1 SEC. 7. STATUTE OF LIMITATIONS. 

2 The Federal Trade Commission shall commence any 

3 enforcement proceeding described in section 27 of the 

4 Federal Trade Commission Act, as added by section 3, ex5 cept for an action described in section 27(f)(2) of such 

6 Act, not later than 6 years after the date on which the 

7 parties to the agreement file the other agreements under 

8 section 1112(c)(2) or the certification required by section 

9 1112(d) of the Medicare Prescription Drug Improvement 

10 and Modernization Act of 2003 (21 U.S.C. 355 note). 

Æ 


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