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107TH CONGRESS

1ST SESSION H. R. 1708

To amend title 35, United States Code, to provide for compulsory licensing

of certain patented inventions relating to health.

IN THE HOUSE OF REPRESENTATIVES

MAY 3, 2001

Mr. BROWN of Ohio (for himself, Mr. BERRY, Mr. STARK, Mr. ALLEN, Mr.

SANDERS, Mr. BONIOR, Ms. LEE, Mr. LATOURETTE, Mr. WYNN, Mr.

LANGEVIN, Mr. DAVIS of Illinois, Mr. BARRETT, Mr. BALDACCI, Ms.

SCHAKOWSKY, Mr. GREEN of Texas, Mrs. JONES of Ohio, Mr. NADLER,

Mr. LEWIS of Georgia, Mr. GEORGE MILLER of California, and Mr.

DEFAZIO) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Energy and

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

to health.

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 ‘‘Affordable Prescription

5 Drugs and Medical Inventions Act’’.
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1 SEC. 2. COMPULSORY LICENSING OF PATENTED INVEN2 TIONS.

3 (a) IN GENERAL.—Chapter 14 of title 35, United

4 States Code, is amended by adding at the end the fol5 lowing:

6 ‘‘§ 158. Compulsory licensing

7 ‘‘(a) COMPULSORY LICENSING OF PATENTED INVEN8 TIONS.—In the case of any invention relating to health

9 care, in which a patent holder, contractor, exclusive li10 censee, or assignee has acquired title under this title, the

11 Secretary of Health and Human Services and the Federal

12 Trade Commission shall each have the right to establish

13 other use of the subject matter of the patent without au14 thorization of the right holder if the Secretary or the Com15 mission (as the case may be) makes the determination de16 scribed in subsection (b).

17 ‘‘(b) DETERMINATION.—The determination referred

18 to in subsection (a) with respect to an invention claimed

19 in a patent is a determination that one or more of the

20 following applies:

21 ‘‘(1) The patent holder, contractor, licensee, or

22 assignee referred to in subsection (a) has not taken,

23 or is not expected to take within a reasonable time,

24 effective steps to achieve practical application of the

25 subject invention in a field of use.
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1 ‘‘(2) Establishing other use of the subject mat2 ter of the patent is necessary to alleviate health or

3 safety needs which are not adequately satisfied by

4 the patent holder, contractor, licensee, or assignee.

5 ‘‘(3) The patent holder has engaged in anti6 competitive behavior. Such determination may in7 clude, but is not limited to, a determination that—

8 ‘‘(A) the patented invention is priced ex9 cessively relative to the median price for devel10 oped countries or by other reasonable stand11 ards, and that such pricing contravenes the

12 public interest; or

13 ‘‘(B) the patented invention is an essential

14 component of a health care product that in15 volves patents, and the licensing terms for the

16 patent on the invention are not reasonable and

17 deter innovation or product development, con18 trary to the public interest.

19 ‘‘(4) An invention covered by a patent (the ‘sec20 ond patent’) cannot be exploited without infringing

21 upon the patent described in subsection (a) (the

22 ‘first patent’), insofar as the invention claimed in

23 the second patent involves an important technical

24 advance.
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1 ‘‘(5) The invention claimed in the patent is

2 needed for research purposes that would benefit the

3 public health, and is not licensed on reasonable

4 terms and conditions.

5 ‘‘(c) FACTORS IN AUTHORIZING OTHER USE.—In ex6 ercising the right under subsection (a) to authorize other

7 use of the subject matter of a patent, the following shall

8 apply:

9 ‘‘(1) In cases involving commercial use, such

10 use may be permitted only if, prior to such use, the

11 proposed user has made efforts to obtain authoriza12 tion from the right holder on reasonable commercial

13 terms and conditions and such efforts have not been

14 successful within a reasonable period of time.

15 ‘‘(2) The right holder shall be paid adequate re16 muneration for the use of the patent.

17 ‘‘(3) Where such use is authorized under sub18 section (b)(4), the owner of the first patent shall be

19 entitled to a license on reasonable terms to use the

20 invention claimed in the second patent.

21 ‘‘(d) CONSIDERATIONS FOR DETERMINING REMU22 NERATION FOR USE OF A PATENT.—In determining the

23 reasonableness of licensing terms and the remuneration

24 for the use of a patent under subsection (c), the Secretary
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1 of Health and Human Services or the Federal Trade Com2 mission (as the case may be) shall consider—

3 ‘‘(1) the risks and costs associated with the in4 vention claimed in the patent and the commercial

5 development of products that use the invention;

6 ‘‘(2) the efficacy and innovative nature and im7 portance to the public health of the invention or

8 products using the invention;

9 ‘‘(3) the degree to which the invention benefited

10 from publicly funded research;

11 ‘‘(4) the need for adequate incentives for the

12 creation and commercialization of new inventions;

13 ‘‘(5) the interests of the public as patients and

14 payers for health care services; and

15 ‘‘(6) the public health benefits of expanded ac16 cess to the invention.

17 ‘‘(e) CONSISTENCY WITH TRIPS.—The Secretary of

18 Health and Human Services and the Federal Trade Com19 mission may adopt regulations jointly to implement the

20 purposes of this section, consistent with the Agreement

21 on Trade-Related Aspects of Intellectual Property Rights

22 referred to in section 101(d)(15) of the Uruguay Round

23 Agreements Act.

24 ‘‘(f) DEFINITION.—In this section, the term ‘health

25 care product’ means any drug or device (as those terms
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1 are defined in section 201 of the Federal Food, Drug, and

2 Cosmetic Act), any biological product (as defined in sec3 tion 351 of the Public Health Service Act), or any tech4 nology or process to the extent the technology or process

5 is applied to health or health care.’’.

6 (b) CONFORMING AMENDMENT.—The table of con7 tents for chapter 14 of title 35, United States Code, is

8 amended by adding at the end the following new item:

‘‘158. Compulsory licensing.’’.

9 SEC. 3. REPORT ON PHARMACEUTICAL COSTS AND SALES.

10 (a) REPORT REQUIREMENT.—Any person engaged in

11 the manufacture and sale of any drug approved under sec12 tion 505 or 512 of the Federal Food, Drug, and Cosmetic

13 Act (21 U.S.C. 355, 360b) for which a patent is still in

14 effect shall report to the Secretary of Health and Human

15 Services annually an audit of all financial information rel16 evant to the pricing of that drug nationally and inter17 nationally, including, in formats specified by the Sec18 retary, an accounting of the costs allocated to research

19 and development of that drug, as well as costs allocated

20 to other research and development activities. The Sec21 retary shall transmit the reports filed under this sub22 section to the Congress.

23 (b) CIVIL PENALTY.—

24 (1) PENALTY.—Any person who fails to submit

25 a report under subsection (a) by the date specified
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1 pursuant to subsection (c) shall be liable to the

2 United States for a civil penalty in an amount not

3 to exceed $25,000 for each such violation. Each day

4 such a violation continues shall, for purposes of this

5 subsection, constitute a separate violation of sub6 section (a).

7 (2) PROCEDURES.—A civil penalty for a viola8 tion of subsection (a) shall be assessed by order of

9 the Secretary of Health and Human Services after

10 opportunity (provided in accordance with this para11 graph) for a hearing in accordance with section 554

12 of title 5, United States Code. Before issuing such

13 an order, the Secretary shall give written notice to

14 the person to be assessed a civil penalty under such

15 order of the Secretary’s proposal to issue such order

16 and provide such person an opportunity to request,

17 within 15 days of the date the notice is received by

18 such person, such a hearing on the order.

19 (3) JUDICIAL REVIEW.—Any person who re20 quested a hearing in accordance with paragraph (2)

21 a hearing and who is aggrieved by an order assess22 ing a civil penalty pursuant to the hearing may seek

23 judicial review of the order by filing a petition for

24 judicial review in the appropriate United States dis-
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1 trict court not later than 30 days after the date on

2 which the order was issued.

3 (4) FAILURE TO PAY PENALTY.—If any person

4 fails to pay an assessment of a civil penalty—

5 (A) after the order making the assessment

6 has become a final order and if such person

7 does not file a petition for judicial review of the

8 order, or

9 (B) after a court in an action for judicial

10 review of the order has entered a final judg11 ment in favor of the Secretary of Health and

12 Human Services,

13 the Attorney General shall recover the amount as14 sessed (plus interest at currently prevailing rates

15 from the date of the expiration of the 30-day period

16 referred to in paragraph (3) or the date of such final

17 judgment, as the case may be) in an action brought

18 in any appropriate district court of the United

19 States. In such an action, the validity, amount, and

20 appropriateness of such penalty shall not be subject

21 to review.

22 (c) REGULATIONS.—The Secretary of Health and

23 Human Services shall issue such regulations as are nec24 essary to carry out this section, including specifying the
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1 dates by which the reports under subsection (a) must be

2 submitted.

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