211 
‘‘(ii) OIG POLICY UPDATES AS NEC-
ESSARY.—The Inspector General of the 
Department of Health and Human Serv-
ices shall review and update, as necessary, 
any policies or guidelines of the Office of 
the Inspector General of the Department 
of Human Services (including policies re-
lated to the enforcement of section 1128B) 
to accommodate the use of risk-sharing 
value-based payment agreements in accord-
ance with this section. 
‘‘(9) RULES OF CONSTRUCTION.— 
‘‘(A) MODIFICATIONS.—Nothing in this 
subsection or any regulations promulgated 
under this subsection shall prohibit a State 
from requesting a modification from the Sec-
retary to the terms of a risk-sharing value- 
based payment agreement. A modification that 
is expected to result in any increase to pro-
jected net State or Federal spending under the 
agreement shall be subject to recertification by 
the Chief Actuary as described in paragraph 
(2)(A)(ii) before the modification may be ap-
proved. 
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‘‘(B) REBATE AGREEMENTS.—Nothing in 
this subsection shall be construed as requiring 
a State to enter into a risk-sharing value-based 
payment agreement or as limiting or super-
seding the ability of a State to enter into a sup-
plemental rebate agreement for a covered out-
patient drug. 
‘‘(C) FFP FOR PAYMENTS UNDER RISK- 
SHARING
VALUE-BASED
PAYMENT
AGREE-
MENTS.—Federal financial participation shall 
be available under this title for any payment 
made by a State to a manufacturer for a cov-
ered outpatient drug under a risk-sharing 
value-based payment agreement in accordance 
with this subsection, except that no Federal fi-
nancial participation shall be available for any 
payment made by a State to a manufacturer 
under such an agreement on and after the ef-
fective date of a disapproval of such agreement 
by the Secretary. 
‘‘(D) CONTINUED APPLICATION OF OTHER 
PROVISIONS.—Except as expressly provided in 
this subsection, nothing in this subsection or in 
any regulations promulgated under this sub-
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section shall affect the application of any other 
provision of this Act. 
‘‘(10) APPROPRIATIONS.—For fiscal year 2023 
and each fiscal year thereafter, there are appro-
priated to the Secretary $5,000,000 for the purpose 
of carrying out this subsection. 
‘‘(11) DEFINITIONS.—In this subsection: 
‘‘(A) CHIEF ACTUARY.—The term ‘Chief 
Actuary’ means the Chief Actuary of the Cen-
ters for Medicare & Medicaid Services. 
‘‘(B) INSTALLMENT YEAR.—The term ‘in-
stallment year’ means, with respect to a risk- 
sharing value-based payment agreement, a 12- 
month period during which a covered outpatient 
drug is administered under the agreement. 
‘‘(C) POTENTIALLY CURATIVE TREATMENT 
INTENDED FOR ONE-TIME USE.—The term ‘po-
tentially curative treatment intended for one- 
time use’ means a treatment that consists of 
the administration of a covered outpatient drug 
that— 
‘‘(i) is a form of gene therapy for a 
rare disease, as defined by the Commis-
sioner of Food and Drugs, designated 
under section 526 of the Federal Food, 
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Drug, and Cosmetics Act, and approved 
under section 505 of such Act or licensed 
under subsection (a) or (k) of section 351 
of the Public Health Service Act to treat 
a serious or life-threatening disease or con-
dition; 
‘‘(ii) if administered in accordance 
with the labeling of such drug, is expected 
to result in either— 
‘‘(I) the cure of such disease or 
condition; or 
‘‘(II) a reduction in the symp-
toms of such disease or condition to 
the extent that such disease or condi-
tion is not expected to lead to early 
mortality; and 
‘‘(iii) is expected to achieve a result 
described in clause (ii), which may be 
achieved over an extended period of time, 
after not more than 3 administrations. 
‘‘(D) RELEVANT CLINICAL PARAMETER.— 
The term ‘relevant clinical parameter’ means, 
with respect to a covered outpatient drug that 
is the subject of a risk-sharing value-based pay-
ment agreement— 
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‘‘(i) a clinical endpoint specified in the 
drug’s labeling or supported by one or 
more of the compendia described in section 
1861(t)(2)(B)(ii)(I) that— 
‘‘(I) is able to be measured or 
evaluated on an annual basis for each 
year of the agreement on an inde-
pendent basis by a provider or other 
entity; and 
‘‘(II) is required to be achieved 
(based on observed metrics in patient 
populations) under the terms of the 
agreement; or 
‘‘(ii) a surrogate endpoint (as defined 
in section 507(e)(9) of the Federal Food, 
Drug, and Cosmetic Act), including those 
developed by patient-focused drug develop-
ment tools, that— 
‘‘(I) is able to be measured or 
evaluated on an annual basis for each 
year of the agreement on an inde-
pendent basis by a provider or other 
entity; and 
‘‘(II) has been qualified by the 
Food and Drug Administration. 
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‘‘(E) RISK-SHARING
VALUE-BASED
PAY-
MENT
AGREEMENT.—The term ‘risk-sharing 
value-based payment agreement’ means an 
agreement between a State plan and a manu-
facturer— 
‘‘(i) for the purchase of a covered out-
patient drug of the manufacturer that is a 
potentially curative treatment intended for 
one-time use; 
‘‘(ii) under which payment for such 
drug shall be made pursuant to an install-
ment-based payment structure that meets 
the requirements of paragraph (3); 
‘‘(iii) which conditions payment on the 
achievement of at least 2 relevant clinical 
parameters (as defined in subparagraph 
(C)); 
‘‘(iv) which provides that— 
‘‘(I) the State plan will directly 
reimburse the manufacturer for the 
drug; or 
‘‘(II) a third party will reimburse 
the manufacture in a manner ap-
proved by the Secretary; and 
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‘‘(v) is approved by the Secretary in 
accordance with paragraph (2). 
‘‘(F) 
TOTAL
INSTALLMENT
YEAR 
AMOUNT.—The term ‘total installment year 
amount’ means, with respect to a risk-sharing 
value-based payment agreement for the pur-
chase of a covered outpatient drug and an in-
stallment year, an amount equal to the product 
of— 
‘‘(i) the unit price of the drug charged 
under the agreement; and 
‘‘(ii) the number of units of such drug 
administered under the agreement during 
such installment year.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1903(i)(10)(A) of the Social Secu-
rity Act (42 U.S.C. 1396b(i)(10)(A)) is amended by 
striking ‘‘or unless section 1927(a)(3) applies’’ and 
inserting ‘‘, section 1927(a)(3) applies with respect 
to such drugs, or such drugs are the subject of a 
risk-sharing value-based payment agreement under 
section 1927(l)’’. 
(2) Section 1927(b) of the Social Security Act 
(42 U.S.C. 1396r–8(b)) is amended— 
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(A) in paragraph (1)(A), by inserting ‘‘(ex-
cept for drugs for which payment is made by a 
State under a risk-sharing value-based payment 
agreement under subsection (l))’’ after ‘‘under 
the State plan for such period’’; and 
(B) in paragraph (3)— 
(i) in subparagraph (C)(i), by insert-
ing ‘‘or subsection (l)(2)(A)’’ after ‘‘sub-
paragraph (A)’’; and 
(ii) in subparagraph (D), in the mat-
ter preceding clause (i), by inserting ‘‘, 
under subsection (l)(2)(A),’’ after ‘‘under 
this paragraph’’. 
SEC. 307. MODIFICATION OF MAXIMUM REBATE AMOUNT 
UNDER MEDICAID DRUG REBATE PROGRAM. 
(a) IN GENERAL.—Subparagraph (D) of section 
1927(c)(2) of the Social Security Act (42 U.S.C. 1396r– 
8(c)(2)) is amended to read as follows: 
‘‘(D) MAXIMUM REBATE AMOUNT.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), in no case shall the 
sum of the amounts applied under para-
graph (1)(A)(ii) and this paragraph with 
respect to each dosage form and strength 
of a single source drug or an innovator 
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multiple source drug for a rebate period 
exceed— 
‘‘(I) for rebate periods beginning 
after December 31, 2009, and before 
September 30, 2025, 100 percent of 
the average manufacturer price of the 
drug; and 
‘‘(II) for rebate periods beginning 
on or after October 1, 2025, 125 per-
cent of the average manufacturer 
price of the drug. 
‘‘(ii) NO
MAXIMUM
AMOUNT
FOR 
DRUGS
IF
AMP
INCREASES
OUTPACE
IN-
FLATION.— 
‘‘(I) IN GENERAL.—If the aver-
age manufacturer price with respect 
to each dosage form and strength of 
a single source drug or an innovator 
multiple source drug increases on or 
after October 1, 2024, and such in-
creased average manufacturer price 
exceeds the inflation-adjusted average 
manufacturer price determined with 
respect to such drug under subclause 
(II) for the rebate period, clause (i) 
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shall not apply and there shall be no 
limitation on the sum of the amounts 
applied under paragraph (1)(A)(ii) 
and this paragraph for the rebate pe-
riod with respect to each dosage form 
and strength of the single source drug 
or innovator multiple source drug. 
‘‘(II) INFLATION-ADJUSTED
AV-
ERAGE
MANUFACTURER
PRICE
DE-
FINED.—In this clause, the term ‘in-
flation-adjusted average manufacturer 
price’ means, with respect to a single 
source drug or an innovator multiple 
source drug and a rebate period, the 
average manufacturer price for each 
dosage form and strength of the drug 
for the calendar quarter beginning 
July 1, 1990 (without regard to 
whether or not the drug has been sold 
or transferred to an entity, including 
a division or subsidiary of the manu-
facturer, after the first day of such 
quarter), increased by the percentage 
by which the consumer price index for 
all urban consumers (United States 
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city average) for the month before the 
month in which the rebate period be-
gins exceeds such index for September 
1990.’’. 
(b) TREATMENT
OF
SUBSEQUENTLY
APPROVED 
DRUGS.—Section 1927(c)(2)(B) of the Social Security Act 
(42 U.S.C. 1396r–8(c)(2)(B)) is amended by inserting 
‘‘and clause (ii)(II) of subparagraph (D)’’ after ‘‘clause 
(ii)(II) of subparagraph (A)’’. 
(c) 
TECHNICAL
AMENDMENTS.—Section 
1927(c)(3)(C)(ii)(IV) of the Social Security Act (42 
U.S.C. 1396r–9(c)(3)(C)(ii)(IV)) is amended— 
(1) by striking ‘‘subparagraph (A)’’ and insert-
ing ‘‘paragraph (3)(A)’’; and 
(2) by striking ‘‘this subparagraph’’ and insert-
ing ‘‘paragraph (3)(C)’’. 
SEC. 308. APPLYING MEDICAID DRUG REBATE REQUIRE-
MENT TO DRUGS PROVIDED AS PART OF OUT-
PATIENT HOSPITAL SERVICES. 
(a) IN GENERAL.—Section 1927(k)(3) of the Social 
Security Act (42 U.S.C. 1396r–8(k)(3)) is amended to 
read as follows: 
‘‘(3) LIMITING DEFINITION.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
outpatient drug’ does not include any drug, bio-
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logical product, or insulin provided as part of, 
or as incident to and in the same setting as, 
any of the following (and for which payment 
may be made under this title as part of pay-
ment for the following and not as direct reim-
bursement for the drug): 
‘‘(i) Inpatient hospital services. 
‘‘(ii) Hospice services. 
‘‘(iii) Dental services, except that 
drugs for which the State plan authorizes 
direct reimbursement to the dispensing 
dentist are covered outpatient drugs. 
‘‘(iv) Physicians’ services. 
‘‘(v) Outpatient hospital services. 
‘‘(vi) Nursing facility services and 
services provided by an intermediate care 
facility for the mentally retarded. 
‘‘(vii) Other laboratory and x-ray serv-
ices. 
‘‘(viii) Renal dialysis. 
‘‘(B) OTHER
EXCLUSIONS.—Such term 
also does not include any such drug or product 
for which a National Drug Code number is not 
required by the Food and Drug Administration 
or a drug or biological used for a medical indi-
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cation which is not a medically accepted indica-
tion. 
‘‘(C) STATE OPTION.—At the option of a 
State, such term may include any drug, biologi-
cal product, or insulin provided on an out-
patient basis as part of, or as incident to and 
in the same setting as, described in clause (iv) 
or (v) of subparagraph (A) (such as a drug, bi-
ological product, or insulin being provided as 
part of a bundled payment). 
‘‘(D) NO EFFECT ON BEST PRICE.—Any 
drug, biological product, or insulin excluded 
from the definition of such term as a result of 
this paragraph shall be treated as a covered 
outpatient drug for purposes of determining the 
best price (as defined in subsection (c)(1)(C)) 
for such drug, biological product, or insulin.’’. 
(b) EFFECTIVE
DATE; IMPLEMENTATION
GUID-
ANCE.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall take effect on the date that is 
1 year after the date of enactment of this Act. 
(2) IMPLEMENTATION
AND
GUIDANCE.—Not 
later than 1 year after the date of enactment of this 
Act, the Secretary of Health and Human Services 
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224 
shall issue guidance and relevant informational bul-
letins for States, manufacturers (as defined in sec-
tion 1927(k)(5) of the Social Security Act (42 
U.S.C. 1396r–8(k)(5)), and other relevant stake-
holders, including health care providers, regarding 
implementation of the amendment made by sub-
section (a). 
TITLE IV—ADDRESSING INTER-
MEDIARIES AND DRUG COM-
PETITION 
SEC. 401. HEALTH PLAN OVERSIGHT OF PHARMACY BEN-
EFIT MANAGER SERVICES. 
Subpart II of part A of title XXVII of the Public 
Health Service Act (42 U.S.C. 300gg–11 et seq.) is 
amended by adding at the end the following: 
‘‘SEC. 2729A. HEALTH PLAN OVERSIGHT OF PHARMACY 
BENEFIT MANAGER SERVICES. 
‘‘(a) IN GENERAL.—A group health plan or health 
insurance issuer offering group or individual health insur-
ance coverage or an entity or subsidiary providing phar-
macy benefits management services shall not enter into 
a contract with a drug manufacturer, distributor, whole-
saler, subcontractor, rebate aggregator, or any associated 
third party that limits the disclosure of information to 
plan sponsors in such a manner that prevents the plan 
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or coverage, or an entity or subsidiary providing pharmacy 
benefits management services on behalf of a plan or cov-
erage from making the reports described in subsection (b). 
‘‘(b) REPORTS TO GROUP PLAN SPONSORS.— 
‘‘(1) IN
GENERAL.—Beginning with the first 
plan year that begins after the date of enactment of 
this section, not less frequently than once every six 
months, a health insurance issuer offering group 
health insurance coverage or an entity providing 
pharmacy benefits management services on behalf of 
a group health plan shall submit to the self-funded 
group health plan and at the request of any other 
group health plan a report in accordance with this 
subsection and make such report available to the 
plan sponsor in a machine-readable format. Each 
such report shall include, with respect to the applica-
ble group health plan or health insurance coverage— 
‘‘(A) information collected from drug man-
ufacturers by such issuer or entity on the total 
amount of copayment assistance dollars paid, or 
copayment cards applied, that were funded by 
the drug manufacturer with respect to the en-
rollees in such plan or coverage; 
‘‘(B) a list of each covered drug dispensed 
during the reporting period, including, with re-
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spect to each such drug during the reporting 
period— 
‘‘(i) the brand name, chemical entity, 
and National Drug Code; 
‘‘(ii) the number of enrollees for 
whom the drug was filled during the plan 
year, the total number of prescription fills 
for the drug (including original prescrip-
tions and refills), and the total number of 
dosage units of the drug dispensed across 
the plan year, including whether the dis-
pensing channel was by retail, mail order, 
or specialty pharmacy; 
‘‘(iii) the wholesale acquisition cost, 
listed as cost per days supply and cost per 
pill, or in the case of a drug in another 
form, per dose; 
‘‘(iv) the total out-of-pocket spending 
by enrollees on such drug, including en-
rollee spending through copayments, coin-
surance, and deductibles; and 
‘‘(v) for any drug for which gross 
spending of the group health plan or 
health 
insurance 
coverage 
exceeded 
$10,000 during the reporting period— 
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‘‘(I) a list of all other available 
drugs in the same therapeutic cat-
egory or class, including brand name 
drugs and biological products and ge-
neric drugs or biosimilar biological 
products that are in the same thera-
peutic category or class; and 
‘‘(II) the rationale for preferred 
formulary placement of a particular 
drug or drugs in that therapeutic cat-
egory or class; 
‘‘(C) a list of each therapeutic category or 
class of drugs that were dispensed under the 
health plan or health insurance coverage during 
the reporting period, and, with respect to each 
such therapeutic category or class of drugs, 
during the reporting period— 
‘‘(i) total gross spending by the plan, 
before manufacturer rebates, fees, or other 
manufacturer remuneration; 
‘‘(ii) the number of enrollees who 
filled a prescription for a drug in that cat-
egory or class; 
‘‘(iii) if applicable to that category or 
class, a description of the formulary tiers 
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228 
and utilization mechanisms (such as prior 
authorization or step therapy) employed 
for drugs in that category or class; 
‘‘(iv) the total out-of-pocket spending 
by enrollees, including enrollee spending 
through copayments, coinsurance, and 
deductibles; and 
‘‘(v) for each therapeutic category or 
class under which three or more drugs are 
marketed and available— 
‘‘(I) the amount received, or ex-
pected to be received, from drug man-
ufacturers in rebates, fees, alternative 
discounts, or other remuneration— 
‘‘(aa) to be paid by drug 
manufacturers for claims in-
curred during the reporting pe-
riod; or 
‘‘(bb) that is related to utili-
zation of drugs, in such thera-
peutic category or class; 
‘‘(II) the total net spending by 
the health plan or health insurance 
coverage on that category or class of 
drugs; and 
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‘‘(III) the net price per dosage 
unit or course of treatment incurred 
by the health plan or health insurance 
coverage and its enrollees, after man-
ufacturer rebates, fees, and other re-
muneration for drugs dispensed within 
such therapeutic category or class 
during the reporting period; 
‘‘(D) total gross spending on prescription 
drugs by the plan or coverage during the re-
porting period, before rebates and other manu-
facturer fees or remuneration; 
‘‘(E) total amount received, or expected to 
be received, by the health plan or health insur-
ance coverage in drug manufacturer rebates, 
fees, alternative discounts, and all other remu-
neration received from the manufacturer or any 
third party related to utilization of drug or 
drug spending under that health plan or health 
insurance coverage during the reporting period; 
‘‘(F) the total net spending on prescription 
drugs by the health plan or health insurance 
coverage during the reporting period; and 
‘‘(G) amounts paid directly or indirectly in 
rebates, fees, or any other type of remuneration 
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to brokers, consultants, advisors, or any other 
individual or firm who referred the group health 
plan’s or health insurance issuer’s business to 
the pharmacy benefit manager. 
‘‘(2) PRIVACY REQUIREMENTS.—Health insur-
ance issuers offering group health insurance cov-
erage and entities providing pharmacy benefits man-
agement services on behalf of a group health plan 
shall provide information under paragraph (1) in a 
manner consistent with the privacy, security, and 
breach notification regulations promulgated under 
section 264(c) of the Health Insurance Portability 
and Accountability Act of 1996 (or successor regula-
tions), and shall restrict the use and disclosure of 
such information according to such privacy regula-
tions. 
‘‘(3) DISCLOSURE AND REDISCLOSURE.— 
‘‘(A) LIMITATION
TO
BUSINESS
ASSOCI-
ATES.—A group health plan receiving a report 
under paragraph (1) may disclose such informa-
tion only to business associates of such plan as 
defined in section 160.103 of title 45, Code of 
Federal Regulations (or successor regulations). 
‘‘(B) CLARIFICATION REGARDING PUBLIC 
DISCLOSURE
OF
INFORMATION.—Nothing in 
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this section prevents a health insurance issuer 
offering group health insurance coverage or an 
entity providing pharmacy benefits management 
services on behalf of a group health plan from 
placing reasonable restrictions on the public dis-
closure of the information contained in a report 
described in paragraph (1). 
‘‘(c) ENFORCEMENT.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Labor and the Secretary 
of the Treasury, shall enforce this section. 
‘‘(2) FAILURE TO PROVIDE TIMELY INFORMA-
TION.—A health insurance issuer or an entity pro-
viding pharmacy benefit management services that 
violates subsection (a) or fails to provide information 
required under subsection (b) or a drug manufac-
turer that fails to provide information under sub-
section (b)(1)(A), in a timely manner shall be sub-
ject to a civil monetary penalty in the amount of 
$10,000 for each day during which such violation 
continues or such information is not disclosed or re-
ported. 
‘‘(3) FALSE INFORMATION.—A health insurance 
issuer, entity providing pharmacy benefit manage-
ment services, or drug manufacturer that knowingly 
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provides false information under this section shall be 
subject to a civil money penalty in an amount not 
to exceed $100,000 for each item of false informa-
tion. Such civil money penalty shall be in addition to 
other penalties as may be prescribed by law. 
‘‘(4) PROCEDURE.—The provisions of section 
1128A of the Social Security Act, other than sub-
sections (a) and (b) and the first sentence of sub-
section (c)(1) of such section shall apply to civil 
monetary penalties under this subsection in the 
same manner as such provisions apply to a penalty 
or proceeding under section 1128A of the Social Se-
curity Act. 
‘‘(5) SAFE HARBOR.—The Secretary may waive 
penalties under paragraph (2), or extend the period 
of time for compliance with a requirement of this 
section, for an entity in violation of this section that 
has made a good-faith effort to comply with this sec-
tion. 
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit entities providing phar-
macy benefits management services from retaining bona 
fide service fees, provided that such fees are transparent 
to group health plans and health insurance issuers and 
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are not linked directly to the price or formulary placement 
or position of a drug. 
‘‘(e) DEFINITIONS.—In this section— 
‘‘(1) the term ‘similarly situated pharmacy’ 
means, with respect to a particular pharmacy, an-
other pharmacy that is approximately the same size 
(as measured by the number of prescription drugs 
dispensed), and that serves patients in the same geo-
graphical area, whether through physical locations or 
mail order; 
‘‘(2) the term ‘wholesale acquisition cost’ has 
the 
meaning 
given 
such 
term 
in 
section 
1847A(c)(6)(B) of the Social Security Act; and 
‘‘(3) the term ‘bona fide service fees’ means 
fees paid by a manufacturer, customer, or client 
(other than a group health plan or health insurance 
issuer) of an entity providing pharmacy benefit man-
agement services, to an entity providing pharmacy 
benefit management services, that represent fair 
market value for bona fide, itemized services actually 
performed on behalf of the manufacturer, customer, 
or client would otherwise perform or contract for in 
the absence of the service arrangement, without 
prior consent for any specific arrangements.’’. 
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SEC. 402. STUDY OF PHARMACEUTICAL SUPPLY CHAIN 
INTERMEDIARIES AND MERGER ACTIVITY. 
(a) INITIAL REPORT.—Not later than 1 year after 
the date of enactment of this Act, the Commission shall 
submit to the appropriate committees of Congress a report 
that— 
(1) addresses at minimum— 
(A) whether pharmacy benefit managers— 
(i) charge payers a higher price than 
the reimbursement rate at which the phar-
macy benefit managers reimburse com-
peting pharmacies; 
(ii) steer patients for anticompetitive 
purposes to any pharmacies, including re-
tail, mail-order, or any other type of phar-
macy, in which the pharmacy benefit man-
ager has an ownership interest; 
(iii) audit or review proprietary data, 
including acquisition costs, patient infor-
mation, or dispensing information, of com-
peting pharmacies that can be used for 
anticompetitive purposes; or 
(iv) use formulary designs to increase 
the market share of higher cost prescrip-
tion drugs and depress the market share of 
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lower cost prescription drugs (each net of 
rebates and discounts); 
(B) how companies and payers assess the 
benefits, costs, and risks of contracting with 
intermediaries, including pharmacy services ad-
ministrative organizations, and whether more 
information about the roles of intermediaries 
should be available to consumers and payers; 
and 
(C) whether there are any specific legal or 
regulatory obstacles the Commission currently 
faces in ensuring a competitive and transparent 
marketplace in the pharmaceutical supply 
chain, including the pharmacy benefit manager 
marketplace and pharmacy services administra-
tive organizations; and 
(2) provides— 
(A) observations or conclusions drawn 
from the November 2017 roundtable entitled 
‘‘Understanding Competition in Prescription 
Drug Markets: Entry and Supply Chain Dy-
namics’’, and any similar efforts; 
(B) specific actions the Commission in-
tends to take as a result of the November 2017 
roundtable, and any similar efforts, including a 
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detailed description of relevant forthcoming ac-
tions, additional research or roundtable discus-
sions, consumer education efforts, or enforce-
ment actions; and 
(C) policy or legislative recommendations 
to— 
(i) improve transparency and competi-
tion in the pharmaceutical supply chain; 
(ii) prevent and deter anticompetitive 
behavior in the pharmaceutical supply 
chain; and 
(iii) best ensure that consumers ben-
efit from any cost savings or efficiencies 
that may result from mergers and consoli-
dations. 
(b) INTERIM REPORT.—Not later than 180 days 
after the date of enactment of this Act, the Commission 
shall submit to the appropriate committees of Congress 
an interim report on the progress of the report required 
by subsection (a), along with preliminary findings and 
conclusions based on information collected to that date. 
(c) DEFINITIONS.—In this section: 
(1) 
APPROPRIATE
COMMITTEES
OF
CON-
GRESS.—The term ‘‘appropriate committees of Con-
gress’’ means— 
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(A) the Committee on Energy and Com-
merce of the House of Representatives; 
(B) the Committee on the Judiciary of the 
Senate; and 
(C) the Committee on the Judiciary of the 
House of Representatives. 
(2) COMMISSION.—The term ‘‘Commission’’ 
means the Federal Trade Commission. 
SEC. 403. REQUIREMENT THAT DIRECT-TO-CONSUMER AD-
VERTISEMENTS FOR PRESCRIPTION DRUGS 
AND 
BIOLOGICAL 
PRODUCTS 
INCLUDE 
TRUTHFUL AND NON-MISLEADING PRICING 
INFORMATION. 
Part A of title XI of the Social Security Act is 
amended by adding at the end the following new section: 
‘‘SEC. 1150D. REQUIREMENT THAT DIRECT-TO-CONSUMER 
ADVERTISEMENTS 
FOR 
PRESCRIPTION 
DRUGS 
AND 
BIOLOGICAL 
PRODUCTS 
IN-
CLUDE 
TRUTHFUL 
AND 
NON-MISLEADING 
PRICING INFORMATION. 
‘‘(a) IN GENERAL.—The Secretary shall require that 
each direct-to-consumer advertisement for a prescription 
drug or biological product for which payment is available 
under title XVIII or XIX includes an appropriate disclo-
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sure of truthful and non-misleading pricing information 
with respect to the drug or product. 
‘‘(b) DETERMINATION BY CMS.—The Secretary, act-
ing through the Administrator of the Centers for Medicare 
& Medicaid Services, shall determine the components of 
the requirement under subsection (a), such as the forms 
of advertising, the manner of disclosure, the price point 
listing, and the price information for disclosure.’’. 
SEC. 404. CHANGE CONDITIONS OF FIRST GENERIC EXCLU-
SIVITY TO SPUR ACCESS AND COMPETITION. 
Clause (iv) of section 505(j)(5)(B) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)(B)) 
is amended— 
(1) in subclause (I), after ‘‘180 days after the 
date of the first commercial marketing of the drug 
(including the commercial marketing of the listed 
drug) by any first applicant’’ by inserting ‘‘or by an 
applicant whose application is approved pursuant to 
subclause (III)’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(III) APPLICANT APPROVAL.—An applica-
tion containing a certification described in para-
graph (2)(A)(vii)(IV) that is for a drug for 
which a first applicant has submitted an appli-
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cation containing such a certification can be ap-
proved notwithstanding the eligibility of a first 
applicant for the 180-day exclusivity period de-
scribed in subclause (II)(aa) if each of the fol-
lowing conditions is met: 
‘‘(aa) The approval of such an appli-
cation could be made effective, but for the 
eligibility of a first applicant for 180-day 
exclusivity under this clause. 
‘‘(bb) At least 30 months have passed 
since the date of submission of an applica-
tion for the drug by at least one first ap-
plicant. 
‘‘(cc) Approval of an application for 
the drug submitted by at least one first ap-
plicant is not precluded under clause (iii). 
‘‘(dd) No application for the drug 
submitted by any first applicant is ap-
proved at the time the conditions under 
items (aa), (bb), and (cc) are all met, re-
gardless of whether such an application is 
subsequently approved.’’. 
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SEC. 405. ENDING THE PRACTICE PREVENTING MARKET 
COMPETITION KNOWN AS ‘‘PAY-FOR-DELAY’’. 
(a) CONGRESSIONAL FINDINGS AND DECLARATION 
OF PURPOSES.— 
(1) FINDINGS.—Congress finds the following: 
(A) In 1984, the Drug Price Competition 
and Patent Term Restoration Act (Public Law 
98–417) (referred to in this Act as the ‘‘1984 
Act’’), was enacted with the intent of facili-
tating the early entry of generic drugs while 
preserving incentives for innovation. 
(B) Prescription drugs make up approxi-
mately 10 percent of the national health care 
spending. 
(C) Initially, the 1984 Act was successful 
in facilitating generic competition to the benefit 
of consumers and health care payers, although 
88 percent of all prescriptions dispensed in the 
United States are generic drugs, they account 
for only 28 percent of all expenditures. 
(D) Generic drugs cost substantially less 
than brand name drugs, with discounts off the 
brand price averaging 80 to 85 percent. 
(E) Federal dollars currently account for 
over 40 percent of the $325,000,000,000 spent 
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on retail prescription drugs, and this share is 
expected to rise to 47 percent by 2025. 
(F)(i) In recent years, the intent of the 
1984 Act has been subverted by certain settle-
ment agreements in which brand name compa-
nies transfer value to their potential generic 
competitors to settle claims that the generic 
company is infringing the branded company’s 
patents. 
(ii) These ‘‘reverse payment’’ settlement 
agreements— 
(I) allow a branded company to share 
its monopoly profits with the generic com-
pany as a way to protect the branded com-
pany’s monopoly; and 
(II) have unduly delayed the mar-
keting of low-cost generic drugs contrary 
to free competition, the interests of con-
sumers, and the principles underlying anti-
trust law. 
(iii) Because of the price disparity between 
brand name and generic drugs, such agree-
ments are more profitable for both the brand 
and generic manufacturers than competition 
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and will become increasingly common unless 
prohibited. 
(iv) These agreements result in consumers 
losing the benefits that the 1984 Act was in-
tended to provide. 
(G) In 2010, the Biologics Price Competi-
tion and Innovation Act (Public Law 111–148) 
(referred to in this Act as the ‘‘BPCIA’’), was 
enacted with the intent of facilitating the early 
entry of biosimilar and interchangeable follow- 
on versions of branded biological products while 
preserving incentives for innovation. 
(H) Biological drugs play an important 
role in treating many serious illnesses, from 
cancers to genetic disorders. They are also ex-
pensive, representing more than 40 percent of 
all prescription drug spending. 
(I) Competition from biosimilar and inter-
changeable biological products promises to 
lower drug costs and increase patient access to 
biological medicines. But ‘‘reverse payment’’ 
settlement agreements also threaten to delay 
the entry of biosimilar and interchangeable bio-
logical products, which would undermine the 
goals of BPCIA. 
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(2) PURPOSES.—The purposes of this Act 
are— 
(A) to enhance competition in the pharma-
ceutical market by stopping anticompetitive 
agreements between brand name and generic 
drug and biosimilar biological product manufac-
turers that limit, delay, or otherwise prevent 
competition from generic drugs and biosimilar 
biological products; and 
(B) to support the purpose and intent of 
antitrust law by prohibiting anticompetitive 
practices in the pharmaceutical industry that 
harm consumers. 
(b) UNLAWFUL COMPENSATION FOR DELAY.— 
(1) IN GENERAL.—The Federal Trade Commis-
sion Act (15 U.S.C. 44 et seq.) is amended by in-
serting after section 26 (15 U.S.C. 57c–2) the fol-
lowing: 
‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS 
AND BIOSIMILARS. 
‘‘(a) IN GENERAL.— 
‘‘(1) ENFORCEMENT PROCEEDING.—The Com-
mission may initiate a proceeding to enforce the pro-
visions of this section against the parties to any 
agreement resolving or settling, on a final or interim 
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basis, a patent claim, in connection with the sale of 
a drug product or biological product. 
‘‘(2) PRESUMPTION AND VIOLATION.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), in such a proceeding, an agreement 
shall be presumed to have anticompetitive ef-
fects and shall be a violation of this section if— 
‘‘(i) an ANDA filer or a biosimilar bi-
ological product application filer receives 
anything of value, including an exclusive li-
cense; and 
‘‘(ii) the ANDA filer or biosimilar bio-
logical product application filer agrees to 
limit or forgo research, development, man-
ufacturing, marketing, or sales of the 
ANDA product or biosimilar biological 
product, as applicable, for any period of 
time. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply if the parties to such agreement 
demonstrate by clear and convincing evidence 
that— 
‘‘(i) the value described in subpara-
graph (A)(i) is compensation solely for 
other goods or services that the ANDA 
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245 
filer or biosimilar biological product appli-
cation filer has promised to provide; or 
‘‘(ii) the procompetitive benefits of the 
agreement outweigh the anticompetitive ef-
fects of the agreement. 
‘‘(b) LIMITATIONS.—In determining whether the set-
tling parties have met their burden under subsection 
(a)(2)(B), the fact finder shall not presume— 
‘‘(1) that entry would not have occurred until 
the expiration of the relevant patent or statutory ex-
clusivity; or 
‘‘(2) that the agreement’s provision for entry of 
the ANDA product or biosimilar biological product 
prior to the expiration of the relevant patent or stat-
utory exclusivity means that the agreement is pro-
competitive. 
‘‘(c) EXCLUSIONS.—Nothing in this section shall pro-
hibit a resolution or settlement of a patent infringement 
claim in which the consideration that the ANDA filer or 
biosimilar biological product application filer, respectively, 
receives as part of the resolution or settlement includes 
only one or more of the following: 
‘‘(1) The right to market and secure final ap-
proval in the United States for the ANDA product 
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246 
or biosimilar biological product at a date, whether 
certain or contingent, prior to the expiration of— 
‘‘(A) any patent that is the basis for the 
patent infringement claim; or 
‘‘(B) any patent right or other statutory 
exclusivity that would prevent the marketing of 
such ANDA product or biosimilar biological 
product. 
‘‘(2) A payment for reasonable litigation ex-
penses not to exceed— 
‘‘(A) for calendar year 2021, $7,500,000; 
or 
‘‘(B) for calendar year 2022 and each sub-
sequent calendar year, the amount determined 
for the preceding calendar year adjusted to re-
flect the percentage increase (if any) in the 
Producer Price Index for Legal Services pub-
lished by the Bureau of Labor Statistics of the 
Department of Labor for the most recent cal-
endar year. 
‘‘(3) A covenant not to sue on any claim that 
the ANDA product or biosimilar biological product 
infringes a United States patent. 
‘‘(d) ENFORCEMENT.— 
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‘‘(1) ENFORCEMENT.—A violation of this sec-
tion shall be treated as an unfair method of competi-
tion under section 5(a)(1). 
‘‘(2) JUDICIAL REVIEW.— 
‘‘(A) IN GENERAL.—Any party that is sub-
ject to a final order of the Commission, issued 
in an administrative adjudicative proceeding 
under the authority of subsection (a)(1), may, 
within 30 days of the issuance of such order, 
petition for review of such order in— 
‘‘(i) the United States Court of Ap-
peals for the District of Columbia Circuit; 
‘‘(ii) the United States Court of Ap-
peals for the circuit in which the ultimate 
parent entity, as defined in section 
801.1(a)(3) of title 16, Code of Federal 
Regulations, or any successor thereto, of 
the NDA holder or biological product li-
cense holder is incorporated as of the date 
that the NDA or biological product license 
application, as applicable, is filed with the 
Commissioner of Food and Drugs; or 
‘‘(iii) the United States Court of Ap-
peals for the circuit in which the ultimate 
parent entity of the ANDA filer or bio-
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248 
similar biological product application filer 
is incorporated as of the date that the 
ANDA or biosimilar biological product ap-
plication is filed with the Commissioner of 
Food and Drugs. 
‘‘(B) TREATMENT
OF
FINDINGS.—In a 
proceeding for judicial review of a final order of 
the Commission, the findings of the Commis-
sion as to the facts, if supported by evidence, 
shall be conclusive. 
‘‘(e) ANTITRUST LAWS.—Nothing in this section 
shall modify, impair, limit, or supersede the applicability 
of the antitrust laws as defined in subsection (a) of the 
first section of the Clayton Act (15 U.S.C. 12(a)), and 
of section 5 of this Act to the extent that section 5 applies 
to unfair methods of competition. Nothing in this section 
shall modify, impair, limit, or supersede the right of an 
ANDA filer or biosimilar biological product application 
filer to assert claims or counterclaims against any person, 
under the antitrust laws or other laws relating to unfair 
competition. 
‘‘(f) PENALTIES.— 
‘‘(1) FORFEITURE.—Each party that violates or 
assists in the violation of this section shall forfeit 
and pay to the United States a civil penalty suffi-
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249 
cient to deter violations of this section, but in no 
event greater than 3 times the value received by the 
party that is reasonably attributable to the violation 
of this section. If no such value has been received by 
the NDA holder, the biological product license hold-
er, the ANDA filer, or the biosimilar biological prod-
uct application filer, the penalty to the NDA holder, 
the biological product license holder, the ANDA 
filer, or the biosimilar biological product application 
filer shall be sufficient to deter violations, but in no 
event shall be greater than 3 times the value given 
to an ANDA filer or biosimilar biological product 
application filer reasonably attributable to the viola-
tion of this section. Such penalty shall accrue to the 
United States and may be recovered in a civil action 
brought by the Commission, in its own name by any 
of its attorneys designated by it for such purpose, in 
a district court of the United States against any 
party that violates this section. In such actions, the 
United States district courts are empowered to grant 
mandatory injunctions and such other and further 
equitable relief as they deem appropriate. 
‘‘(2) CEASE AND DESIST.— 
‘‘(A) IN GENERAL.—If the Commission has 
issued a cease and desist order with respect to 
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a party in an administrative adjudicative pro-
ceeding under the authority of subsection 
(a)(1), an action brought pursuant to para-
graph (1) may be commenced against such 
party at any time before the expiration of 1 
year after such order becomes final pursuant to 
section 5(g). 
‘‘(B) EXCEPTION.—In an action under 
subparagraph (A), the findings of the Commis-
sion as to the material facts in the administra-
tive adjudicative proceeding with respect to the 
violation of this section by a party shall be con-
clusive unless— 
‘‘(i) the terms of such cease and de-
sist order expressly provide that the Com-
mission’s findings shall not be conclusive; 
or 
‘‘(ii) the order became final by reason 
of section 5(g)(1), in which case such find-
ing shall be conclusive if supported by evi-
dence. 
‘‘(3) CIVIL
PENALTY.—In determining the 
amount of the civil penalty described in this section, 
the court shall take into account— 
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‘‘(A) the nature, circumstances, extent, 
and gravity of the violation; 
‘‘(B) with respect to the violator, the de-
gree of culpability, any history of violations, the 
ability to pay, any effect on the ability to con-
tinue doing business, profits earned by the 
NDA holder, the biological product license hold-
er, the ANDA filer, or the biosimilar biological 
product application filer, compensation received 
by the ANDA filer or biosimilar biological prod-
uct application filer, and the amount of com-
merce affected; and 
‘‘(C) other matters that justice requires. 
‘‘(4) REMEDIES IN ADDITION.—Remedies pro-
vided in this subsection are in addition to, and not 
in lieu of, any other remedy provided by Federal 
law. Nothing in this paragraph shall be construed to 
affect any authority of the Commission under any 
other provision of law. 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) 
AGREEMENT.—The 
term 
‘agreement’ 
means anything that would constitute an agreement 
under section 1 of the Sherman Act (15 U.S.C. 1) 
or section 5 of this Act. 
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‘‘(2) AGREEMENT RESOLVING OR SETTLING A 
PATENT INFRINGEMENT CLAIM.—The term ‘agree-
ment resolving or settling a patent infringement 
claim’ includes any agreement that is entered into 
within 30 days of the resolution or the settlement of 
the claim, or any other agreement that is contingent 
upon, provides a contingent condition for, or is oth-
erwise related to the resolution or settlement of the 
claim. 
‘‘(3) ANDA.—The term ‘ANDA’ means an ab-
breviated new drug application filed under section 
505(j) of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 355(j)) or a new drug application filed 
under section 505(b)(2) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355(b)(2)). 
‘‘(4) ANDA FILER.—The term ‘ANDA filer’ 
means a party that owns or controls an ANDA filed 
with the Food and Drug Administration or has the 
exclusive rights under such ANDA to distribute the 
ANDA product. 
‘‘(5) ANDA 
PRODUCT.—The term ‘ANDA 
product’ means the product to be manufactured 
under the ANDA that is the subject of the patent 
infringement claim. 
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‘‘(6) BIOLOGICAL
PRODUCT.—The term ‘bio-
logical product’ has the meaning given such term in 
section 351(i)(1) of the Public Health Service Act 
(42 U.S.C. 262(i)(1)). 
‘‘(7) BIOLOGICAL PRODUCT LICENSE APPLICA-
TION.—The term ‘biological product license applica-
tion’ means an application under section 351(a) of 
the Public Health Service Act (42 U.S.C. 262(a)). 
‘‘(8) BIOLOGICAL
PRODUCT
LICENSE
HOLD-
ER.—The term ‘biological product license holder’ 
means— 
‘‘(A) the holder of an approved biological 
product license application for a biological prod-
uct; 
‘‘(B) a person owning or controlling en-
forcement of any patents that claim the biologi-
cal product that is the subject of such approved 
application; or 
‘‘(C) the predecessors, subsidiaries, divi-
sions, groups, and affiliates controlled by, con-
trolling, or under common control with any of 
the entities described in subparagraphs (A) and 
(B) (such control to be presumed by direct or 
indirect share ownership of 50 percent or great-
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er), as well as the licensees, licensors, succes-
sors, and assigns of each of the entities. 
‘‘(9) BIOSIMILAR BIOLOGICAL PRODUCT.—The 
term ‘biosimilar biological product’ means the prod-
uct to be manufactured under the biosimilar biologi-
cal product application that is the subject of the pat-
ent infringement claim. 
‘‘(10) BIOSIMILAR BIOLOGICAL PRODUCT APPLI-
CATION.—The term ‘biosimilar biological product ap-
plication’ means an application under section 351(k) 
of the Public Health Service Act (42 U.S.C. 262(k)) 
for licensure of a biological product as biosimilar to, 
or interchangeable with, a reference product. 
‘‘(11) BIOSIMILAR BIOLOGICAL PRODUCT APPLI-
CATION
FILER.—The term ‘biosimilar biological 
product application filer’ means a party that owns or 
controls a biosimilar biological product application 
filed with the Food and Drug Administration or has 
the exclusive rights under such application to dis-
tribute the biosimilar biological product. 
‘‘(12) DRUG PRODUCT.—The term ‘drug prod-
uct’ has the meaning given such term in section 
314.3(b) of title 21, Code of Federal Regulations (or 
any successor regulation). 
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‘‘(13) MARKET.—The term ‘market’ means the 
promotion, offering for sale, selling, or distribution 
of a drug product. 
‘‘(14) NDA.—The term ‘NDA’ means a new 
drug application filed under section 505(b) of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355(b)). 
‘‘(15) NDA HOLDER.—The term ‘NDA holder’ 
means— 
‘‘(A) the holder of an approved NDA appli-
cation for a drug product; 
‘‘(B) a person owning or controlling en-
forcement of the patent listed in the Approved 
Drug Products With Therapeutic Equivalence 
Evaluations (commonly known as the ‘FDA Or-
ange Book’) in connection with the NDA; or 
‘‘(C) the predecessors, subsidiaries, divi-
sions, groups, and affiliates controlled by, con-
trolling, or under common control with any of 
the entities described in subparagraphs (A) and 
(B) (such control to be presumed by direct or 
indirect share ownership of 50 percent or great-
er), as well as the licensees, licensors, succes-
sors, and assigns of each of the entities. 
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‘‘(16) PARTY.—The term ‘party’ means any 
person, partnership, corporation, or other legal enti-
ty. 
‘‘(17) 
PATENT
INFRINGEMENT.—The 
term 
‘patent infringement’ means infringement of any 
patent or of any filed patent application, including 
any extension, reissue, renewal, division, continu-
ation, continuation in part, reexamination, patent 
term restoration, patents of addition, and extensions 
thereof. 
‘‘(18) PATENT
INFRINGEMENT
CLAIM.—The 
term ‘patent infringement claim’ means any allega-
tion made to an ANDA filer or biosimilar biological 
product application filer, whether or not included in 
a complaint filed with a court of law, that its ANDA 
or ANDA product, or biosimilar biological product li-
cense application or biosimilar biological product, 
may infringe any patent held by, or exclusively li-
censed to, the NDA holder, biological product license 
holder, ANDA filer, or biosimilar biological product 
application filer of the drug product or biological 
product, as applicable. 
‘‘(19) STATUTORY
EXCLUSIVITY.—The term 
‘statutory exclusivity’ means those prohibitions on 
the approval of drug applications under clauses (ii) 
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through (iv) of section 505(c)(3)(E) (5- and 3-year 
data exclusivity), section 527 (orphan drug exclu-
sivity), or section 505A (pediatric exclusivity) of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355(c)(3)(E), 360cc, 355a), or on the licensing of 
biological 
product 
applications 
under 
section 
351(k)(7) (12-year exclusivity) or paragraph (2) or 
(3) of section 351(m) (pediatric exclusivity) of the 
Public Health Service Act (42 U.S.C. 262) or under 
section 527 of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 360cc) (orphan drug exclu-
sivity).’’. 
(2) EFFECTIVE DATE.—Section 27 of the Fed-
eral Trade Commission Act, as added by this sec-
tion, shall apply to all agreements described in sec-
tion 27(a)(1) of that Act entered into on or after the 
date of enactment of this Act. 
(c) CERTIFICATION OF AGREEMENTS.— 
(1) NOTICE
OF
ALL
AGREEMENTS.—Section 
1111(7) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (21 
U.S.C. 355 note) is amended by inserting ‘‘, or the 
owner of a patent for which a claim of infringement 
could reasonably be asserted against any person for 
making, using, offering to sell, selling, or importing 
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into the United States a biological product that is 
the subject of a biosimilar biological product applica-
tion’’ before the period at the end. 
(2) CERTIFICATION OF AGREEMENTS.—Section 
1112 of the Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 (21 U.S.C. 
355 note) is amended by adding at the end the fol-
lowing: 
‘‘(d) CERTIFICATION.—The Chief Executive Officer 
or the company official responsible for negotiating any 
agreement under subsection (a) or (b) that is required to 
be filed under subsection (c), within 30 days after such 
filing, shall execute and file with the Assistant Attorney 
General and the Commission a certification as follows: ‘I 
declare that the following is true, correct, and complete 
to the best of my knowledge: The materials filed with the 
Federal Trade Commission and the Department of Justice 
under section 1112 of subtitle B of title XI of the Medi-
care Prescription Drug, Improvement, and Modernization 
Act of 2003, with respect to the agreement referenced in 
this certification— 
‘‘ ‘(1) represent the complete, final, and exclu-
sive agreement between the parties; 
‘‘ ‘(2) include any ancillary agreements that are 
contingent upon, provide a contingent condition for, 
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or are otherwise related to, the referenced agree-
ment; and 
‘‘ ‘(3) include written descriptions of any oral 
agreements, representations, commitments, or prom-
ises between the parties that are responsive to sub-
section (a) or (b) of such section 1112 and have not 
been reduced to writing.’.’’. 
(d) NOTIFICATION OF AGREEMENTS.—Section 1112 
of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (21 U.S.C. 355 note), as 
amended by section 4(b), is further amended by adding 
at the end the following: 
‘‘(e) RULE OF CONSTRUCTION.— 
‘‘(1) IN GENERAL.—An agreement that is re-
quired under subsection (a) or (b) shall include 
agreements resolving any outstanding disputes, in-
cluding agreements resolving or settling a Patent 
Trial and Appeal Board proceeding. 
‘‘(2) DEFINITION.—For purposes of subpara-
graph (A), the term ‘Patent Trial and Appeal Board 
proceeding’ means a proceeding conducted by the 
Patent Trial and Appeal Board of the United States 
Patent and Trademark Office, including an inter 
partes review instituted under chapter 31 of title 35, 
United States Code, a post-grant review instituted 
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260 
under chapter 32 of that title (including a pro-
ceeding instituted pursuant to the transitional pro-
gram for covered business method patents, as de-
scribed in section 18 of the Leahy-Smith America 
Invents Act (35 U.S.C. 321 note)), and a derivation 
proceeding instituted under section 135 of that 
title.’’. 
(e) FORFEITURE
OF 180-DAY EXCLUSIVITY PE-
RIOD.—Section 505(j)(5)(D)(i)(V) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(V)) 
is amended by inserting ‘‘section 27 of the Federal Trade 
Commission Act or’’ after ‘‘that the agreement has vio-
lated’’. 
(f) COMMISSION LITIGATION AUTHORITY.—Section 
16(a)(2) of the Federal Trade Commission Act (15 U.S.C. 
56(a)(2)) is amended— 
(1) in subparagraph (D), by striking ‘‘or’’ after 
the semicolon; 
(2) in subparagraph (E), by inserting ‘‘or’’ 
after the semicolon; and 
(3) inserting after subparagraph (E) the fol-
lowing: 
‘‘(F) under section 27,’’. 
(g) REPORT ON ADDITIONAL EXCLUSION.— 
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261 
(1) IN GENERAL.—Not later than 1 year after 
the date of enactment of this Act, the Federal Trade 
Commission shall submit to the Committee on the 
Judiciary of the Senate and the Committee on the 
Judiciary of the House of Representatives a rec-
ommendation, and the Commission’s basis for such 
recommendation, regarding a potential amendment 
to include in section 27(c) of the Federal Trade 
Commission Act (as added by section 3 of this Act) 
an additional exclusion for consideration granted by 
an NDA holder to a ANDA filer or by a biological 
product license holder to a biosimilar biological prod-
uct application filer as part of the resolution or set-
tlement, a release, waiver, or limitation of a claim 
for damages or other monetary relief. 
(2) DEFINITIONS.—In this section, the terms 
‘‘ANDA filer’’, ‘‘biological product license holder’’, 
‘‘biosimilar biological product application filer’’, and 
‘‘NDA holder’’ have the meanings given such terms 
in section 27(g) of the Federal Trade Commission 
Act (as added by section 3 of this Act). 
(h) STATUTE OF LIMITATIONS.—The Federal Trade 
Commission shall commence any enforcement proceeding 
described in section 27 of the Federal Trade Commission 
Act, as added by section 3, except for an action described 
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in section 27(f)(2) of the Federal Trade Commission Act, 
not later than 6 years after the date on which the parties 
to the agreement file the certification under section 
1112(d) of the Medicare Prescription Drug Improvement 
and Modernization Act of 2003 (21 U.S.C. 355 note). 
(i) SEVERABILITY.—If any provision of this Act, an 
amendment made by this Act, or the application of such 
provision or amendment to any person or circumstance is 
held to be unconstitutional, the remainder of this Act, the 
amendments made by this Act, and the application of the 
provisions of such Act or amendments to any person or 
circumstance shall not be affected. 
SEC. 406. EMPOWERING THE FTC TO PREVENT ‘‘PRODUCT 
HOPPING’’. 
(a) IN GENERAL.—The Federal Trade Commission 
Act (15 U.S.C. 41 et seq.) is amended by inserting after 
section 26 (15 U.S.C. 57c–2) the following: 
‘‘SEC. 27. PRODUCT HOPPING. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ABBREVIATED NEW DRUG APPLICATION.— 
The term ‘abbreviated new drug application’ means 
an application under subsection (b)(2) or (j) of sec-
tion 505 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355). 
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263 
‘‘(2) BIOSIMILAR BIOLOGICAL PRODUCT.—The 
term ‘biosimilar biological product’ means a biologi-
cal product licensed under section 351(k) of the 
Public Health Service Act (42 U.S.C. 262(k)). 
‘‘(3) BIOSIMILAR
BIOLOGICAL
PRODUCT
LI-
CENSE APPLICATION.—The term ‘biosimilar biologi-
cal product license application’ means an application 
submitted under section 351(k) of the Public Health 
Service Act (42 U.S.C. 262(k)). 
‘‘(4) FOLLOW-ON PRODUCT.—The term ‘follow- 
on product’— 
‘‘(A) means a drug approved through an 
application or supplement to an application sub-
mitted under section 505(b) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 
355(b)) or a biological product licensed through 
an application or supplement to an application 
submitted under section 351(a) of the Public 
Health Service Act (42 U.S.C. 262(a)) for a 
change, modification, or reformulation to the 
same manufacturer’s previously approved drug 
or biological product that treats the same med-
ical condition; and 
‘‘(B) excludes such an application or sup-
plement to an application for a change, modi-
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fication, or reformulation of a drug or biological 
product that is requested by the Secretary or 
necessary to comply with law, including sections 
505A and 505B of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355a, 355c). 
‘‘(5) GENERIC DRUG.—The term ‘generic drug’ 
means a drug approved under an application sub-
mitted under subsection (b)(2) or (j) of section 505 
of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 355). 
‘‘(6) LISTED
DRUG.—The term ‘listed drug’ 
means a drug listed under section 505(j)(7) of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
355(j)(7)). 
‘‘(7) MANUFACTURER.—The term ‘manufac-
turer’ means the holder, licensee, or assignee of— 
‘‘(A) an approved application for a drug 
under section 505(c) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355(c)); or 
‘‘(B) a biological product license under sec-
tion 351(a) of the Public Health Service Act 
(42 U.S.C. 262(a)). 
‘‘(8) REFERENCE
PRODUCT.—The term ‘ref-
erence product’ has the meaning given the term in 
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section 351(i) of the Public Health Service Act (42 
U.S.C. 262(i)). 
‘‘(9) ULTIMATE
PARENT
ENTITY.—The term 
‘ultimate parent entity’ has the meaning given the 
term in section 801.1 of title 16, Code of Federal 
Regulations, or any successor regulation. 
‘‘(b) PROHIBITION ON PRODUCT HOPPING.— 
‘‘(1) PRIMA
FACIE.—Except as provided in 
paragraph (2), a manufacturer of a reference prod-
uct or listed drug shall be considered to have en-
gaged in an unfair method of competition in or af-
fecting commerce in violation of section 5(a) if the 
Commission demonstrates by a preponderance of the 
evidence in a proceeding initiated by the Commission 
under subsection (c)(1)(A), or in a suit brought 
under subparagraph (B) or (C) of subsection (c)(1), 
that, during the period beginning on the date on 
which the manufacturer of the reference product or 
listed drug first receives notice that an applicant has 
submitted to the Commissioner of Food and Drugs 
an abbreviated new drug application or biosimilar bi-
ological product license application and ending on 
the date that is 180 days after the date on which 
that generic drug or biosimilar biological product is 
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first marketed, the manufacturer engaged in either 
of the following actions: 
‘‘(A) The manufacturer engaged in a hard 
switch, which shall be established by dem-
onstrating that the manufacturer engaged in ei-
ther of the following actions: 
‘‘(i) Upon the request of the manufac-
turer of the listed drug or reference prod-
uct, the Commissioner of Food and Drugs 
withdrew the approval of the application 
for the listed drug or reference product or 
placed the listed drug or reference product 
on the discontinued products list and the 
manufacturer marketed or sold a follow-on 
product. 
‘‘(ii) The manufacturer of the listed 
drug or reference product— 
‘‘(I)(aa) announced withdrawal 
of, discontinuance of the manufacture 
of, or intent to withdraw the applica-
tion with respect to the drug or ref-
erence product in a manner that im-
pedes competition from a generic drug 
or a biosimilar biological product, as 
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established by objective circumstances; 
or 
‘‘(bb) destroyed the inventory of 
the listed drug or reference product in 
a manner that impedes competition 
from a generic drug or a biosimilar bi-
ological product, which may be estab-
lished by objective circumstances; and 
‘‘(II) marketed or sold a follow- 
on product. 
‘‘(B) The manufacturer engaged in a soft 
switch, which shall be established by dem-
onstrating that the manufacturer engaged in 
both of the following actions: 
‘‘(i) The manufacturer took actions 
with respect to the listed drug or reference 
product other than those described in sub-
paragraph (A) that unfairly disadvantage 
the listed drug or reference product rel-
ative to the follow-on product described in 
clause (ii) in a manner that impedes com-
petition from a generic drug or a bio-
similar biological product that is highly 
similar to, and has no clinically meaningful 
difference with respect to safety, purity, 
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and potency from, the reference product, 
which may be established by objective cir-
cumstances. 
‘‘(ii) The manufacturer marketed or 
sold a follow-on product. 
‘‘(2) JUSTIFICATION.— 
‘‘(A) IN GENERAL.—Subject to paragraph 
(3), the actions described in paragraph (1) by 
a manufacturer of a listed drug or reference 
product shall not be considered to be an unfair 
method of competition in or affecting commerce 
if— 
‘‘(i) the manufacturer demonstrates to 
the Commission or a district court of the 
United States, as applicable, by a prepon-
derance of the evidence in a proceeding ini-
tiated by the Commission under subsection 
(c)(1)(A), or in a suit brought under sub-
paragraph (B) or (C) of subsection (c)(1), 
that— 
‘‘(I) the manufacturer would 
have taken the actions regardless of 
whether a generic drug that ref-
erences the listed drug or biosimilar 
biological product that references the 
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reference product had already entered 
the market; and 
‘‘(II)(aa) with respect to a hard 
switch under paragraph (1)(A), the 
manufacturer took the action for rea-
sons relating to the safety risk to pa-
tients of the listed drug or reference 
product; 
‘‘(bb) with respect to an action 
described in item (aa) or (bb) of para-
graph (1)(A)(ii)(I), there is a supply 
disruption that— 
‘‘(AA) is outside of the con-
trol of the manufacturer; 
‘‘(BB) prevents the produc-
tion or distribution of the appli-
cable listed drug or reference 
product; and 
‘‘(CC) cannot be remedied 
by reasonable efforts; or 
‘‘(cc) with respect to a soft 
switch under paragraph (1)(B), the 
manufacturer had legitimate pro-com-
petitive reasons, apart from the finan-
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270 
cial effects of reduced competition, to 
take the action. 
‘‘(B) RULE OF CONSTRUCTION.—Nothing 
in subparagraph (A) may be construed to limit 
the information that the Commission may oth-
erwise obtain in any proceeding or action insti-
tuted with respect to a violation of this section. 
‘‘(3) RESPONSE.—With respect to a justifica-
tion offered by a manufacturer under paragraph (2), 
the Commission may— 
‘‘(A) rebut any evidence presented by a 
manufacturer during that justification; or 
‘‘(B) establish by a preponderance of the 
evidence that, on balance, the pro-competitive 
benefits from the conduct described in subpara-
graph (A) or (B) of paragraph (1), as applica-
ble, do not outweigh any anticompetitive effects 
of the conduct, even in consideration of the jus-
tification so offered. 
‘‘(c) ENFORCEMENT.— 
‘‘(1) IN GENERAL.—If the Commission has rea-
son to believe that any manufacturer has violated, is 
violating, or is about to violate this section, the 
Commission may take any of the following actions: 
‘‘(A) Institute a proceeding— 
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‘‘(i) that, except as provided in para-
graph (2), complies with the requirements 
under section 5(b); and 
‘‘(ii) in which the Commission may 
impose on the manufacturer any penalty 
that the Commission may impose for a vio-
lation of section 5. 
‘‘(B) In the same manner and to the same 
extent as provided in section 13(b), bring suit 
in a district court of the United States to tem-
porarily enjoin the action of the manufacturer. 
‘‘(C) Bring suit in a district court of the 
United States, in which the Commission may 
seek— 
‘‘(i) to permanently enjoin the action 
of the manufacturer; 
‘‘(ii) any of the remedies described in 
paragraph (3); and 
‘‘(iii) any other equitable remedy, in-
cluding ancillary equitable relief. 
‘‘(2) JUDICIAL REVIEW.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
provision of section 5, any manufacturer that is 
subject to a final order of the Commission that 
is issued in a proceeding instituted under para-
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272 
graph (1)(A) may, not later than 30 days after 
the date on which the Commission issues the 
order, petition for review of the order in— 
‘‘(i) the United States Court of Ap-
peals for the District of Columbia Circuit; 
or 
‘‘(ii) the court of appeals of the 
United States for the circuit in which the 
ultimate parent entity of the manufacturer 
is incorporated. 
‘‘(B) TREATMENT OF FINDINGS.—In a re-
view of an order issued by the Commission con-
ducted by a court of appeals of the United 
States under subparagraph (A), the factual 
findings of the Commission shall be conclusive 
if those facts are supported by the evidence. 
‘‘(3) EQUITABLE REMEDIES.— 
‘‘(A) DISGORGEMENT.— 
‘‘(i) IN GENERAL.—In a suit brought 
under paragraph (1)(C), the Commission 
may seek, and the court may order, 
disgorgement of any unjust enrichment 
that a person obtained as a result of the 
violation that gives rise to the suit. 
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273 
‘‘(ii) CALCULATION.—Any disgorge-
ment that is ordered with respect to a per-
son under clause (i) shall be offset by any 
amount of restitution ordered under sub-
paragraph (B). 
‘‘(iii) 
LIMITATIONS
PERIOD.—The 
Commission may seek disgorgement under 
this subparagraph not later than 5 years 
after the latest date on which the person 
from which the disgorgement is sought re-
ceives any unjust enrichment from the ef-
fects of the violation that gives rise to the 
suit in which the Commission seeks the 
disgorgement. 
‘‘(B) RESTITUTION.— 
‘‘(i) IN GENERAL.—In a suit brought 
under paragraph (1)(C), the Commission 
may seek, and the court may order, res-
titution with respect to the violation that 
gives rise to the suit. 
‘‘(ii) 
LIMITATIONS
PERIOD.—The 
Commission may seek restitution under 
this subparagraph not later than 5 years 
after the latest date on which the person 
from which the restitution is sought re-
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274 
ceives any unjust enrichment from the ef-
fects of the violation that gives rise to the 
suit in which the Commission seeks the 
restitution. 
‘‘(4) RULES
OF
CONSTRUCTION.—Nothing in 
this subsection may be construed as— 
‘‘(A) requiring the Commission to bring a 
suit seeking a temporary injunction under para-
graph (1)(B) before bringing a suit seeking a 
permanent injunction under paragraph (1)(C); 
or 
‘‘(B) affecting any other authority of the 
Commission under this Act to seek relief or ob-
tain a remedy with respect to a violation of this 
Act.’’. 
(b) APPLICABILITY.—Section 27 of the Federal 
Trade Commission Act, as added by subsection (a), shall 
apply with respect to any— 
(1) conduct that occurs on or after the date of 
enactment of this Act; and 
(2) action or proceeding that is commenced on 
or after the date of enactment of this Act. 
(c) ANTITRUST LAWS.—Nothing in this section, or 
the amendments made by this section, shall modify, im-
pair, limit, or supersede the applicability of the antitrust 
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laws as defined in subsection (a) of the first section of 
the Clayton Act (15 U.S.C. 12(a)), and of section 5 of 
the Federal Trade Commission Act (15 U.S.C. 45) to the 
extent that it applies to unfair methods of competition. 
(d) RULEMAKING.—The Federal Trade Commission 
may issue rules under section 553 of title 5, United States 
Code, to carry out section 27 of the Federal Trade Com-
mission Act, as added by subsection (a), including by de-
fining any terms used in such section 27 (other than terms 
that are defined in subsection (a) of such section 27). 
SEC. 407. PROMOTING COMPETITION BY LIMITING PATENT 
THICKETS. 
(a) IN GENERAL.—Section 271(e) of title 35, United 
States Code, is amended— 
(1) in paragraph (2)(C), in the flush text fol-
lowing clause (ii), by adding at the end the fol-
lowing: ‘‘With respect to a submission described in 
clause (ii), the act of infringement shall extend to 
any patent that claims the biological product, a 
method of using the biological product, or a method 
or product used to manufacture the biological prod-
uct.’’; and 
(2) by adding at the end the following: 
‘‘(7)(A) Subject to subparagraphs (C), (D), and (E), 
if the sponsor of an approved application for a reference 
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product, as defined in section 351(i) of the Public Health 
Service Act (42 U.S.C. 262(i)) (referred to in this para-
graph as the ‘reference product sponsor’), brings an action 
for infringement under this section against an applicant 
for approval of a biological product under section 351(k) 
of such Act that references that reference product (re-
ferred to in this paragraph as the ‘subsection (k) appli-
cant’), the reference product sponsor may assert in the 
action a total of not more than 20 patents of the type 
described in subparagraph (B), not more than 10 of which 
shall have issued after the date specified in section 
351(l)(7)(A) of such Act. 
‘‘(B) The patents described in this subparagraph are 
patents that satisfy each of the following requirements: 
‘‘(i) Patents that claim the biological product 
that is the subject of an application under section 
351(k) of the Public Health Service Act (42 U.S.C. 
262(k)) (or a use of that product) or a method or 
product used in the manufacture of such biological 
product. 
‘‘(ii) Patents that are included on the list of 
patents described in section 351(l)(3)(A) of the Pub-
lic Health Service Act (42 U.S.C. 262(l)(3)(A)), in-
cluding as provided under section 351(l)(7) of such 
Act. 
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‘‘(iii) Patents that— 
‘‘(I) have an actual filing date of more 
than 4 years after the date on which the ref-
erence product is approved; or 
‘‘(II) include a claim to a method in a 
manufacturing process that is not used by the 
reference product sponsor. 
‘‘(C) The court in which an action described in sub-
paragraph (A) is brought may increase the number of pat-
ents limited under that subparagraph— 
‘‘(i) if the request to increase that number is 
made without undue delay; and 
‘‘(ii)(I) if the interest of justice so requires; or 
‘‘(II) for good cause shown, which— 
‘‘(aa) shall be established if the subsection 
(k) applicant fails to provide information re-
quired under section 351(l)(2)(A) of the Public 
Health Service Act (42 U.S.C. 262(l)(2)(A)) 
that would enable the reference product sponsor 
to form a reasonable belief with respect to 
whether a claim of infringement under this sec-
tion could reasonably be asserted; and 
‘‘(bb) may be established— 
‘‘(AA) if there is a material change to 
the biological product (or process with re-
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spect to the biological product) of the sub-
section (k) applicant that is the subject of 
the application; 
‘‘(BB) if, with respect to a patent on 
the supplemental list described in section 
351(l)(7)(A) of Public Health Service Act 
(42 U.S.C. 262(l)(7)(A)), the patent would 
have issued before the date specified in 
such section 351(l)(7)(A) but for the fail-
ure of the Office to issue the patent or a 
delay in the issuance of the patent, as de-
scribed in paragraph (1) of section 154(b) 
and subject to the limitations under para-
graph (2) of such section 154(b); or 
‘‘(CC) for another reason that shows 
good cause, as determined appropriate by 
the court. 
‘‘(D) In determining whether good cause has been 
shown for the purposes of subparagraph (C)(ii)(II), a 
court may consider whether the reference product sponsor 
has provided a reasonable description of the identity and 
relevance of any information beyond the subsection (k) ap-
plication that the court believes is necessary to enable the 
court to form a belief with respect to whether a claim of 
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infringement under this section could reasonably be as-
serted. 
‘‘(E) The limitation imposed under subparagraph 
(A)— 
‘‘(i) shall apply only if the subsection (k) appli-
cant completes all actions required under paragraphs 
(2)(A), (3)(B)(ii), (5), (6)(C)(i), (7), and (8)(A) of 
section 351(l) of the Public Health Service Act (42 
U.S.C. 262(l)); and 
‘‘(ii) shall not apply with respect to any patent 
that claims, with respect to a biological product, a 
method for using that product in therapy, diagnosis, 
or prophylaxis, such as an indication or method of 
treatment or other condition of use.’’. 
(b) APPLICABILITY.—The amendments made by sub-
section (a) shall apply with respect to an application sub-
mitted under section 351(k) of the Public Health Service 
Act (42 U.S.C. 262(k)) on or after the date of enactment 
of this Act. 
TITLE V—BENEFICIARY COST 
SHARING FAIRNESS 
SEC. 501. REPEALING OF RULE BY THE DEPARTMENT OF 
HEALTH AND HUMAN SERVICES. 
The final rule of the Department of Health and 
Human Services titled ‘‘Fraud And Abuse; Removal of 
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Safe Harbor Protection for Rebates Involving Prescription 
Pharmaceuticals And Creation of New Safe Harbor Pro-
tection for Certain Point-of-Sale Reductions in Price on 
Prescription Pharmaceuticals and Certain Pharmacy Ben-
efit Manager Service Fees; Additional Delayed Effective 
Date’’ published on November 30, 2020 (85 Fed. Reg. 
76666–76731), shall have no force or effect of law. 
SEC. 502. DEFINING COST UNDER PRESCRIPTION DRUG 
PLANS UNDER PART D OF MEDICARE. 
Section 1860D–2(b)(2)(A) of the Social Security Act 
(42 U.S.C. 1395w–102(b)(2)(A)) is amended— 
(1) in clause (i), by inserting ‘‘of the net costs 
to the plan, inclusive of all direct and indirect remu-
neration, including rebates paid by manufacturers to 
the plan sponsor, either directly or through a phar-
macy benefit manager or other third party’’ before 
the semicolon; and 
(2) in clause (ii), by inserting ‘‘net’’ before 
‘‘costs’’. 
Æ 
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