II 

116TH CONGRESS 

1ST SESSION S. 2387 

To establish a process by which reasonable drug prices may be determined, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 31, 2019 

Mr. VAN HOLLEN (for himself and Mr. SCOTT of Florida) introduced the following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

A BILL 

To establish a process by which reasonable drug prices may 

be determined, 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 ‘‘We Protect American 

5 Investment in Drugs Act’’ or the ‘‘We PAID Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) In addition to spurring economic growth, 

9 the National Institutes of Health supports some of 

10 the most significant breakthroughs in biomedical inVerDate Sep 11 2014 23:10 Aug 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2387.IS S2387

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1 novation, including some that are commercialized 

2 into new pharmaceutical products. 

3 (2) The National Institutes of Health funding 

4 contributed, either directly or indirectly, to the de5 velopment of all 210 new molecular entities approved 

6 by the Food and Drug Administration between 2010 

7 and 2016, according to an analysis published in the 

8 Proceedings of the National Academy of Sciences. 

9 (3) In fiscal year 2019, Congress provided 

10 $39,100,000,000 in funding for the National Insti11 tutes of Health. 

12 (4) According to a Kaiser Family Foundation 

13 health tracking poll in February 2019— 

14 (A) nearly 80 percent of people in the 

15 United States say that the cost of prescription 

16 drugs is ‘‘unreasonable’’ and only 25 percent 

17 trust pharmaceutical companies to price their 

18 products fairly; and 

19 (B) one-fourth of people in the United 

20 States say it is difficult to afford their prescrip21 tion drugs, and 3 in 10 say they have not taken 

22 their medications as prescribed due to costs. 

23 (5) According to a September 2018 report from 

24 the AARP— 


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1 (A) between 2016 and 2017, retail prices 

2 for 267 widely used brand name prescription 

3 drugs increased by 8.4 percent after 5 straight 

4 years of double-digit average annual price in5 creases; 

6 (B) brand name drug prices increased 4 

7 times faster than general inflation in 2017; and 

8 (C) retail prices increased in 2017 for 87 

9 percent (231 of 267) of the widely used brand 

10 name prescription drugs reviewed, and all but 5 

11 such increases exceeded the rate of inflation. 

12 (6) In 2016, prescription drug spending in the 

13 United States was $477,000,000,000, according to 

14 an estimate from the Assistant Secretary for Plan15 ning and Evaluation of the Department of Health 

16 and Human Services. 

17 (7) Prescription drugs account for nearly $1 

18 out of every $5 in overall spending under the Medi19 care program, as well as 21 percent of Medicare 

20 beneficiaries’ out-of-pocket health spending, not in21 cluding premiums. 

22 (8)(A) A drug’s list price has a significant im23 pact on what payors and patients pay to purchase 

24 prescription drugs. 


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1 (B) In prescription drug plans under Medicare 

2 part D, and a growing number of commercial health 

3 plans, seniors’ and other beneficiaries’ cost-sharing 

4 is based on a percentage of a drug’s list price. As 

5 a result, higher drug list prices mean higher out-of6 pocket costs for Medicare beneficiaries for their re7 tail prescriptions. 

8 (C) For prescription drugs covered under Medi9 care part B, beneficiaries are responsible for paying 

10 20 percent of the Medicare-approved amount for the 

11 drug, and the part B deductible also applies. This 

12 can be a significant burden for high-cost part B 

13 drugs. 

14 (D) A drug’s list price is a factor in deter15 mining the amount of the rebate paid to State Med16 icaid plans by the drug’s manufacturer under the 

17 Medicaid Drug Rebate Program, and an increase in 

18 the drug’s list price may result in increased Med19 icaid costs. 

20 (E) In the private health insurance market, 

21 pharmacy benefit manager and wholesaler fees are 

22 based on a percentage of the list price. Higher list 

23 prices increase costs in this part of the distribution 

24 chain. 


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1 (F) From 2007 through 2017, enrollment in 

2 high-deductible health plans with a health savings 

3 account (4.2 percent to 18.9 percent) and without a 

4 health savings account (10.6 percent to 24.5 per5 cent) increased among adults between ages 18 and 

6 64 with employment-based coverage, while enroll7 ment in traditional plans decreased, according to the 

8 Centers for Disease Control and Prevention. Individ9 uals with high-deductible health plans pay more out 

10 of pocket for medical expenses until their deductible 

11 is met, making high-cost drugs challenging to afford. 

12 (G) A larger share of prescription drug plans 

13 under Medicare part D charged a deductible in 2019 

14 than in 2018 (71 percent in 2019, and 63 percent 

15 in 2018), according to the Kaiser Family Founda16 tion. Fifty-two percent of prescription drug plans 

17 will require enrollees to satisfy the standard deduct18 ible of $415 in 2019. 

19 SEC. 3. DEFINITIONS. 

20 For purposes of this Act: 

21 (1) APPLICABLE DRUG.—The term ‘‘applicable 

22 drug’’ means a drug (as defined in section 201 of 

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

24 U.S.C. 321)) that— 


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1 (A) is approved under section 505(c) of the 

2 Federal Food, Drug, and Cosmetic Act (21 

3 U.S.C. 355(c)) or section 351(a) of the Public 

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

5 (B) is subject to section 503(b)(1) of such 

6 Act (21 U.S.C. 353(b)(1)); and 

7 (C) is covered by a qualifying patent on 

8 the drug, on a method of using such drug, or 

9 on a method or machine used to manufacture 

10 or administer such drug with respect to which 

11 the drug sponsor retained the title to any sub12 ject invention under section 202 of title 35, 

13 United States Code, or entered into a licensing 

14 agreement after the date of enactment of this 

15 Act. 

16 (2) CONFLICT OF INTEREST.—The term ‘‘con17 flict of interest’’ means an association, including a 

18 financial or personal association, or past employ19 ment, that has the potential to bias or have the ap20 pearance of biasing an individual’s decisions in mat21 ters related to the Drug Affordability and Access 

22 Committee or the conduct of other activities under 

23 this Act. 

24 (3) MANUFACTURER LIST PRICE.—The term 

25 ‘‘manufacturer list price’’ means the national price 


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1 for a prescription drug established by the manufac2 turer or licensee found in a catalogue or other public 

3 source that is the price from which market discounts 

4 and price concessions are calculated. 

5 (4) PERIOD OF MARKET EXCLUSIVITY.—The 

6 term ‘‘period of market exclusivity’’ means any pe7 riod of market exclusivity granted with respect to a 

8 prescription drug under clause (ii), (iii), or (iv) of 

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

10 Cosmetic Act (21 U.S.C. 355(c)(3)(E)), clause (ii), 

11 (iii), or (iv) of section 505(j)(5)(F) of such Act, sec12 tion 527 of such Act (21 U.S.C. 360cc), or section 

13 351(k)(7) of the Public Health Service Act (42 

14 U.S.C. 262(k)(7)), and any extension of such period 

15 granted under section 505A or 505E of the Federal 

16 Food, Drug, and Cosmetic Act (21 U.S.C. 355a, 

17 355f). 

18 (5) QUALIFYING PATENT.—The term ‘‘quali19 fying patent’’ means any patent— 

20 (A) held by the Federal Government; or 

21 (B) which the applicant with respect to the 

22 patent was required to disclose under section 

23 202(c)(6) of title 35, United States Code, in the 

24 application for the patent. 


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1 (6) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Health and Human Services. 

3 SEC. 4. NATIONAL ACADEMY OF MEDICINE STUDY ON DE4 TERMINING A REASONABLE DRUG PRICE. 

5 (a) IN GENERAL.—Not later than 60 days after the 

6 date of enactment of this Act, the Secretary shall seek 

7 to enter into a contract with the National Academy of 

8 Medicine (referred to in this section as the ‘‘Academy’’) 

9 under which the Academy agrees to study— 

10 (1) how best to determine the reasonableness of 

11 a drug’s manufacturer list price and retail price and 

12 develop at least 1 framework for determining the 

13 reasonableness of a drug’s manufacturer list price 

14 and retail price taking into consideration— 

15 (A) affordability of the drug to payers, 

16 purchasers, and patients across wide market 

17 segments in a manner that ensures equitable 

18 access; 

19 (B) investment by the National Institutes 

20 of Health or any other Federal Government en21 tity in the development of the drug; 

22 (C) inclusion of research funded by the 

23 National Institutes of Health or other Federal 

24 Government entity in the development of the 

25 drug; 


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1 (D) manufacturer research and develop2 ment costs as shown on the manufacturer’s 

3 Federal tax filing under sections 41 and 174 of 

4 the Internal Revenue Code of 1986; 

5 (E) investment and the rate of return 

6 needs for the drug manufacturer; 

7 (F) market for the drug; 

8 (G) the cost of production and distribution 

9 of the drug; 

10 (H) the price of the drug in other similar, 

11 industrialized countries; 

12 (I) estimated global and domestic sales of 

13 the drug; 

14 (J) gross and net expenditures by public 

15 payers for coverage of the drug under Federal 

16 health programs, to the extent available; and 

17 (K) any additional information the Acad18 emy determines appropriate; 

19 (2) an appropriate timeline for the submission 

20 of information to the Drug Affordability and Access 

21 Committee required under section 6(a)(2) to deter22 mine the reasonableness of a drug’s manufacturer 

23 list price and retail price; and 

24 (3) an appropriate timeline for the Drug Af25 fordability and Access Committee to determine the 


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1 reasonableness of a drug’s manufacturer list price 

2 and retail price to be in effect the second year after 

3 coming to market. 

4 (b) REPORT.—Any contract between the Secretary 

5 and the Academy under this section shall include a re6 quirement that the Academy submit a report on the re7 sults of the study described in subsection (a) to the Sec8 retary, the Drug Affordability and Access Committee, and 

9 Congress. 

10 SEC. 5. DRUG AFFORDABILITY AND ACCESS COMMITTEE. 

11 (a) ESTABLISHMENT.—There is hereby authorized to 

12 be established a nonprofit corporation to be known as the 

13 Drug Affordability and Access Committee (referred to in 

14 this section as the ‘‘Committee’’), which is neither an 

15 agency nor establishment of the United States Govern16 ment. The Committee shall be headed by an Executive Di17 rector. 

18 (b) PURPOSE.—The purpose of the Committee is to 

19 determine a reasonable manufacturer list price and retail 

20 price for each applicable drug. 

21 (c) BOARD OF DIRECTORS.— 

22 (1) IN GENERAL.—The Committee shall have a 

23 Board of Directors, which shall be composed of ex 

24 officio and appointed members in accordance with 


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1 this subsection. All appointed members of the Board 

2 shall be voting members. 

3 (2) EX OFFICIO MEMBERS.—The non-voting ex 

4 officio members of the Committee shall be the fol5 lowing individuals or their designees: 

6 (A) The Secretary of Health and Human 

7 Services. 

8 (B) The Director of the National Institutes 

9 of Health. 

10 (C) The Commissioner of Food and Drugs. 

11 (D) The Director of the Agency for 

12 Healthcare Research and Quality. 

13 (E) The Director of the Centers for Dis14 ease Control and Prevention. 

15 (F) The Administrator of the Centers for 

16 Medicare & Medicaid Services. 

17 (G) The Assistant Secretary for Planning 

18 and Evaluation. 

19 (3) APPOINTED MEMBERS.— 

20 (A) IN GENERAL.—Ten additional mem21 bers shall be appointed to the Committee by the 

22 Comptroller General of the United States not 

23 later than 180 days after the date of enactment 

24 of this Act. Such members shall include— 


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1 (i) 2 patient and consumer represent2 atives not affiliated with any organization 

3 that receives funding from pharmaceutical 

4 manufacturers; 

5 (ii) 3 provider representatives, includ6 ing 1 hospital representative and 1 phar7 macist representative; 

8 (iii) 1 health services researcher; 

9 (iv) 1 health care economist; 

10 (v) 1 representative of a sponsor of a 

11 health plan or health insurance coverage; 

12 (vi) 1 pharmacy benefit management 

13 services representative; and 

14 (vii) 1 drug manufacturer representa15 tive. 

16 (B) DURATION OF TERMS.—Members ap17 pointed to the Committee under subparagraph 

18 (A) shall be appointed to serve 5-year terms, 

19 which shall be staggered for the members first 

20 appointed. 

21 (C) TERM LIMITS.—Members appointed to 

22 the Committee under subparagraph (A) may 

23 not be so appointed for more than 2 terms. 

24 (D) CONFLICTS OF INTEREST.— 


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1 (i) IN GENERAL.—In appointing mem2 bers under subparagraph (A), the Comp3 troller General of the United States shall 

4 consider and disclose any potential con5 flicts of interest. Members of the Board 

6 shall recuse themselves or be recused from 

7 relevant Committee activities in the case 

8 where the member (or an immediate family 

9 member of such member) has a conflict of 

10 interest. 

11 (ii) DISCLOSURE OF CONFLICTS OF

12 INTEREST.— 

13 (I) IN GENERAL.—A conflict of 

14 interest or potential conflict of inter15 est shall be disclosed, as applicable— 

16 (aa) by the Committee, in 

17 appointing members to an advi18 sory committee and for employ19 ment as staff on the Committee; 

20 and 

21 (bb) by the Comptroller 

22 General of the United States, in 

23 appointing members of the Com24 mittee. 


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1 (II) MANNER OF DISCLOSURE.— 

2 Conflicts of interests shall be disclosed 

3 as soon as practicable on the internet 

4 websites of the Committee and of the 

5 Government Accountability Office. 

6 The information so disclosed shall in7 clude the type, nature, and magnitude 

8 of the interests of the individual in9 volved, except to the extent that the 

10 individual recuses himself or herself 

11 from participating in the consider12 ation of activity in which the potential 

13 conflict exists. 

14 (E) CONFIDENTIALITY.—The Committee 

15 shall maintain the confidentiality of any infor16 mation provided to the Committee under this 

17 section that is a trade secret or confidential in18 formation. 

19 (F) VACANCIES.—Vacancies on the Board 

20 shall be filled in the same manner as the origi21 nal appointment was made. Any vacancy in the 

22 membership of the Board shall not affect the 

23 power of the remaining members to execute the 

24 duties of the Board. 


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1 (G) COMPENSATION.—While serving on 

2 the business of the Committee (including travel 

3 time), a member of the Committee shall be enti4 tled to compensation at the per diem equivalent 

5 of the rate provided for level IV of the Execu6 tive Schedule under section 5315 of title 5, 

7 United States Code, and while so serving away 

8 from home and the member’s regular place of 

9 business, a member may be allowed travel ex10 penses, as authorized by the Chairman of the 

11 Committee. 

12 (H) NO FEDERAL EMPLOYEES.—No em13 ployee of the Federal Government shall be an 

14 appointed member of the Committee. 

15 (d) EXECUTIVE DIRECTOR.— 

16 (1) APPOINTMENT.—The Board shall appoint 

17 an Executive Director who shall serve at the pleas18 ure of the Board. The Executive Director shall be 

19 responsible for the day-to-day operations of the 

20 Committee and shall have such specific duties and 

21 responsibilities as the Board shall prescribe, includ22 ing to identify, recruit, and hire staff. 

23 (2) COMPENSATION.—The compensation of the 

24 Executive Director shall be fixed by the Board. 


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1 (3) CONFLICTS OF INTEREST AND CONFIDEN2 TIALITY.—The Executive Director and all staff of 

3 the Committee shall be subject to the same conflict 

4 of interest and confidentiality requirements as the 

5 Board members, as described in subparagraphs (D) 

6 and (E) of subsection (c)(3). 

7 (e) INITIAL MEETING.—The initial meeting of the 

8 Committee shall take place within 60 days of all members 

9 being appointed. In the initial meeting, the Committee 

10 shall— 

11 (1) incorporate the Committee; 

12 (2) designate a Chair; and 

13 (3) appoint the Executive Director. 

14 (f) DUTIES AND AUTHORITIES.—The duties and au15 thorities of the Committee are as follows: 

16 (1) ADMINISTRATIVE DUTIES.—The Committee 

17 shall establish administrative guidelines for the 

18 Committee, including— 

19 (A) establishing bylaws for the Committee 

20 that are published in the Federal Register and 

21 made available for public comment; 

22 (B) establishing policies for the selection of 

23 officers, employees, agents, and contractors of 

24 the Committee; 


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1 (C) establishing policies that would subject 

2 all employees, fellows, and trainees of the Com3 mittee to the conflict of interest standards 

4 under subsection (c)(3)(D); 

5 (D) specifying a process for annual Board 

6 review of the operations of the Committee; 

7 (E) establishing specific duties of the Ex8 ecutive Director; 

9 (F) evaluating the performance of the Ex10 ecutive Director; and 

11 (G) carrying out other necessary activities 

12 regarding the functioning of the Committee. 

13 (2) PROCESS, METHODOLOGY, AND TIMELINE

14 FOR DETERMINING REASONABLE PRICES.— 

15 (A) IN GENERAL.—Not later than 2 years 

16 after receipt of the report of the National Acad17 emy of Medicine under section 4, the Com18 mittee shall— 

19 (i) outline the process and method20 ology by which the Committee will deter21 mine, based on such report, whether the 

22 manufacturer list price and retail price is 

23 reasonable for each applicable drug; 

24 (ii) outline the timeline under which 

25 the manufacturer, based on such report, is 


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1 required to submit the information re2 quired under section 6(a)(2) to the Com3 mittee; 

4 (iii) outline the timeline under which 

5 the Committee is required to determine, 

6 based on such report, whether the manu7 facturer list price and retail price is rea8 sonable for each applicable drug; and 

9 (iv) publish such proposed process, 

10 methodology, and timeline on the internet 

11 website of the Committee. 

12 (B) PUBLIC INPUT.—Not later than 60 

13 days after publication of the proposed process, 

14 methodology, and timeline under subparagraph 

15 (A), the Committee shall hold a minimum of 2 

16 public stakeholder meetings to solicit feedback 

17 on such proposed process, methodology, and 

18 timeline. 

19 (C) PUBLICATION OF FINAL PROCESS, 

20 METHODOLOGY, AND TIMELINE.—Not later 

21 than 30 months after receipt of the report 

22 under section 4, the Committee shall publish a 

23 final process, methodology, and timeline on the 

24 Committee’s internet website. 


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1 (D) UPDATES TO PROCESS, METHOD2 OLOGY, AND TIMELINE.—The Committee may 

3 make changes and updates to the final process, 

4 methodology, and timeline as necessary. Any 

5 such changes or updates shall be published on 

6 the internet website of the Committee. 

7 (3) ISSUANCE OF REASONABLE PRICING DETER8 MINATION.— 

9 (A) DETERMINATIONS.—The Committee 

10 shall issue a reasonable pricing determination 

11 for each applicable drug that— 

12 (i) is based on a review of the infor13 mation submitted under section 6(a); and 

14 (ii) uses the process, methodology, 

15 and timeline developed by the Committee 

16 under paragraph (2). 

17 (B) TIMEFRAME.—The Committee shall 

18 issue a reasonable pricing determination under 

19 subparagraph (A) for a drug that, upon ap20 proval of an application under section 505(b) of 

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

22 U.S.C. 355(b)) or section 351(a) of the Public 

23 Health Service Act (42 U.S.C. 262(a)), will be 

24 an applicable drug, taking into consideration 


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1 the recommended timeframe under section 

2 4(a)(2). 

3 (C) REPORTS TO DRUG MANUFACTUR4 ERS.—For each reasonable pricing determina5 tion made under subparagraph (A), the Com6 mittee shall submit a report in writing to the 

7 applicable drug manufacturer outlining such de8 termination. Each such report shall be made 

9 public, excluding any proprietary information. 

10 (4) APPOINTMENT OF ADVISORY COMMIT11 TEES.—The Committee may appoint permanent or 

12 ad hoc advisory committees as determined appro13 priate to assist in the work of the Committee. All 

14 members of any such advisory committee shall be 

15 subject to the same conflict of interest requirements 

16 as Committee members. 

17 (g) ANNUAL REPORTS.—The Committee shall submit 

18 an annual report to Congress and to the Secretary, and 

19 shall make the annual report available to the public. Each 

20 such report shall include— 

21 (1) a description of the activities conducted 

22 under this Act; 

23 (2) the budget of the Committee for the fol24 lowing year; and 


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1 (3) any other relevant information, including in2 formation on the membership of the Board, advisory 

3 committees, and the executive staff of the Com4 mittee, any conflicts of interest with respect to such 

5 individuals, and any bylaws adopted by the Board 

6 during the preceding year. 

7 SEC. 6. REQUIREMENTS FOR ENTERING INTO A LICENSING 

8 AGREEMENT. 

9 (a) IN GENERAL.—Upon retaining the title to any 

10 subject invention under section 202 of title 35, United 

11 States Code, or entering into a partial or exclusive licens12 ing agreement relating to an applicable drug, the drug 

13 manufacturer shall agree to— 

14 (1) beginning one year after an applicable drug 

15 first comes to market, limit the annual price in16 crease on such drug to the percentage by which the 

17 medical care consumer price index detailed expendi18 ture category for all urban consumers for that year 

19 exceed such index for the preceding calendar year; 

20 (2) submit to the Drug Affordability and Access 

21 Committee, on a good faith timeline that is con22 sistent with the recommendation under section 

23 5(f)(2)(A)(ii)— 

24 (A) the manufacturer list price for the 

25 drug; 


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1 (B) the retail price for the drug; 

2 (C) information on expenditures, includ3 ing— 

4 (i) the total annual expenditures of 

5 the manufacturer on materials and manu6 facturing for the drug; 

7 (ii) the total expenditures of the man8 ufacturer on acquiring patents and licens9 ing for the drug, including expected royalty 

10 payments; 

11 (iii) the total expenditures of the man12 ufacturer on research and development as 

13 shown on the manufacturer’s Federal tax 

14 returns under sections 41 and 174 of the 

15 Internal Revenue Code of 1986; 

16 (iv) the amount of the manufacturer’s 

17 total expenditures derived from any Fed18 eral funding source, including tax deduc19 tions or credits claimed; and 

20 (v) total expected expenditures for 

21 marketing and advertising for the drug in 

22 the first 3 years that the drug is on the 

23 market; 

24 (D) the anticipated number of patients 

25 who will be treated with the drug; 


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1 (E) a copy of the application submitted 

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

3 Drug, and Cosmetic Act (21 U.S.C. 355(b)) or 

4 section 351(a) of the Public Health Service Act 

5 (42 U.S.C. 262(a)) and any subsequent infor6 mation or data requested by, or submitted to, 

7 the Food and Drug Administration during the 

8 approval process; 

9 (F) any additional information requested 

10 by the Drug Affordability and Access Com11 mittee; and 

12 (G) any additional information the manu13 facturer chooses to provide related to drug pric14 ing decisions; 

15 (3) submit the manufacturer list price and re16 tail price of an applicable drug to the Drug Afford17 ability and Access Committee for a reasonable price 

18 determination; and 

19 (4) beginning one year after an applicable drug 

20 first comes to market, not exceed the reasonable 

21 price, as determined by such Committee, for the 

22 drug’s manufacturer list price. 

23 (b) PENALTIES.— 

24 (1) LOSS OF PERIOD OF MARKET EXCLU25 SIVITY.—In the case of a drug manufacturer subject 


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1 to this section who increases the price of an applica2 ble drug to an amount that exceeds the amount 

3 under subsection (a)(1) or exceeds the reasonable 

4 price as required under subsection (a)(4), any period 

5 of market exclusivity with respect to the applicable 

6 drug shall be deemed expired, effective on the date 

7 of such price increase or launch price. 

8 (2) PROHIBITION ON ENTERING INTO FUTURE

9 LICENSING AGREEMENTS.—If a drug manufacturer 

10 fails to adhere to the limit on annual price increases 

11 under subsection (a)(1), such drug manufacturer, 

12 and its president, chief executive officer, chief oper13 ating officer, and general counsel employed at the 

14 time of the violation, shall be ineligible for future li15 censing agreements for qualifying patented tech16 nology. 

17 (3) PROHIBITION ON ENTERING INTO FUTURE

18 LICENSING AGREEMENTS.—If a drug manufacturer 

19 fails to adhere to the reasonable price as required 

20 under subsection (a)(4), the drug manufacturer, and 

21 its president, chief executive officer, chief operating 

22 officer, and general counsel, shall be ineligible for fu23 ture licensing agreements for qualifying patented 

24 technology. 


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1 (4) FAILURE TO SUBMIT INFORMATION OR SUB2 MITTING FALSE INFORMATION TO THE DRUG AF3 FORDABILITY AND ACCESS COMMITTEE.—Any manu4 facturer that fails to submit information required 

5 under subsection (a)(2) to be submitted to the Drug 

6 Affordability and Access Committee, or who submits 

7 false information to such Committee shall be subject 

8 to a civil monetary penalty of $500,000 and if a vio9 lation is not corrected within 30 days following noti10 fication of such violation, $1,000,000 for each day 

11 that the violation continues after such period until 

12 the violation is corrected. 

13 (5) EXCESSIVE PRICE IN THE FIRST YEAR OF

14 LAUNCH.—If a drug manufacturer’s launch price in 

15 the first year for an applicable drug is at least 50 

16 percent higher than the reasonable price as required 

17 under subsection (a)(4) to be in effect for the second 

18 year, the drug manufacturer shall be subject to a 

19 civil monetary penalty of the cost of the drug in ex20 cess of 50 percent multiplied by the number of doses 

21 of the drug sold in the United States in the first 

22 year on the market. 

23 (6) DISTRIBUTION OF PAYMENTS TO THE NA24 TIONAL INSTITUTES OF HEALTH.— 


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1 (A) IN GENERAL.—Each fiscal year, there 

2 shall be transferred, out of funds in the Treas3 ury not otherwise obligated, to the Director of 

4 the National Institutes of Health, an amount 

5 equal to the amount collected in civil penalties 

6 under this subsection during the previous fiscal 

7 year, unless the amount otherwise appropriated 

8 to the National Institutes of Health for the fis9 cal year in which such transfer would occur is 

10 less than the amount so appropriated for the 

11 previous fiscal year. 

12 (B) DELAYED DISTRIBUTION.—If, in ac13 cordance with clause (i), the Secretary of the 

14 Treasury does not transfer amounts under such 

15 clause during any portion of a fiscal year, and, 

16 at a later date in such fiscal year, the appro17 priations to the National Institutes of Health 

18 becomes equal to or greater than the amount of 

19 appropriations for the previous fiscal year, such 

20 Secretary shall transfer such amount at any 

21 time in such fiscal year. 

22 SEC. 7. PROPER DISCLOSURE OF GOVERNMENT SUPPORT. 

23 (a) DEFINITIONS.—In this section— 

24 (1) the term ‘‘contractor’’— 


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1 (A) has the meaning given the term in sec2 tion 201 of title 35, United States Code; and 

3 (B) includes an assignee of a contractor to 

4 the extent that the assignee is the entity that 

5 files an application described in section 

6 202(c)(6); 

7 (2) the term ‘‘covered contractor’’ means a con8 tractor that— 

9 (A) is a party to a funding agreement that 

10 contains an appropriate provision to effectuate 

11 the requirement under section 202(c)(6); and 

12 (B) files a United States patent applica13 tion with respect to a subject invention that the 

14 contractor conceived or first actually reduced to 

15 practice in the performance of work under the 

16 funding agreement described in subparagraph 

17 (A); 

18 (3) the term ‘‘covered patentee’’ means the pat19 entee with respect to a patent issuing from an appli20 cation described in paragraph (2)(B); 

21 (4) the term ‘‘drug’’ has the meaning given that 

22 term in section 201 of the Federal Food, Drug, and 

23 Cosmetic Act; 


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1 (5) the terms ‘‘funding agreement’’ and ‘‘sub2 ject invention’’ have the meanings given the terms in 

3 section 201 of title 35, United States Code; 

4 (6) the term ‘‘patentee’’ has the meaning given 

5 the term in section 100 of title 35, United States 

6 Code; and 

7 (7) the term ‘‘section 202(c)(6)’’ means section 

8 202(c)(6) of title 35, United States Code. 

9 (b) ACTIONS FOR FAILURE TO DISCLOSE GOVERN10 MENT SUPPORT.— 

11 (1) PRIVATE RIGHT OF ACTION.— 

12 (A) IN GENERAL.—A person (including a 

13 government entity) may bring a civil action in 

14 an appropriate district court of the United 

15 States against a covered patentee— 

16 (i) on the ground that the application 

17 for the patent with respect to which the 

18 covered patentee holds title failed to com19 ply with the requirement under section 

20 202(c)(6); and 

21 (ii) if the person is injured by the fail22 ure to comply described in clause (i). 

23 (B) SCOPE.—In an action brought under 

24 subparagraph (A), if the court finds by a pre25 ponderance of the evidence that the application 


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1 described in that subparagraph failed to comply 

2 with the requirement under section 202(c)(6), 

3 the court shall cancel as unpatentable any claim 

4 of the patent issuing from that application. 

5 (2) INTER PARTES REVIEW.—Section 311 of 

6 title 35, United States Code, is amended by striking 

7 subsection (b) and inserting the following: 

8 ‘‘(b) SCOPE.—A petitioner in an inter partes review 

9 may request to cancel as unpatentable 1 or more claims 

10 of a patent— 

11 ‘‘(1)(A) on a ground that could be raised under 

12 section 102 or 103; and 

13 ‘‘(B) on the basis of prior art consisting of pat14 ents or printed publications; or 

15 ‘‘(2) on the ground that the application with re16 spect to the patent was subject to the requirement 

17 in section 202(c)(6) and failed to comply with that 

18 requirement.’’. 

19 (c) DISCLOSURE OF GRANTS.—Section 111(a)(2) of 

20 title 35, United States Code, is amended— 

21 (1) in subparagraph (B), by striking ‘‘and’’ at 

22 the end; 

23 (2) in subparagraph (C), by striking the period 

24 and inserting ‘‘; and’’; and 

25 (3) by adding at the end the following: 


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1 ‘‘(D) with respect to a drug (as defined in 

2 section 201 of the Federal Food, Drug, and 

3 Cosmetic Act) covered by a qualifying patent on 

4 the drug, on a method of using such drug, or 

5 on a method or machine used to manufacture 

6 or administer such drug, a disclosure of any 

7 Federal grant received in the 10-year period 

8 prior to submitting the application, in which the 

9 applicant is listed as the principal investigator 

10 or co-investigator with respect to the grant.’’. 

11 (d) GAO REPORT.—Not later than 5 years after the 

12 date of enactment of this Act, and once every 5 years 

13 thereafter, the Comptroller General of the United States 

14 shall— 

15 (1) conduct a study that reviews— 

16 (A) the compliance by covered contractors 

17 with the requirement under section 202(c)(6); 

18 and 

19 (B) the effectiveness of the National Insti20 tutes of Health in conducting oversight of the 

21 extent to which covered contractors are com22 plying with the requirement under section 

23 202(c)(6); and 

24 (2) submit to Congress the results of each 

25 study conducted under paragraph (1), which shall 


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1 include, in each case, recommendations for addi2 tional practices and policies to improve the effective3 ness of the requirement under section 202(c)(6), in4 cluding any mechanism to better enforce that re5 quirement. 

Æ 


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