I
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 Com-
mittee 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 juris-
diction of the committee concerned
A BILL
To amend title 35, United States Code, to provide for com-
pulsory licensing of certain patented inventions relating
to health.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Affordable Prescription
Drugs and Medical Inventions Act’’.
SEC. 2. COMPULSORY LICENSING OF PATENTED INVEN-
TIONS.
(a) IN GENERAL.—Chapter 14 of title 35, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 158. Compulsory licensing
‘‘(a) COMPULSORY LICENSING OF PATENTED INVEN-
TIONS.—In the case of any invention relating to health
care, in which a patent holder, contractor, exclusive li-
censee, or assignee has acquired title under this title, the
Secretary of Health and Human Services and the Federal
Trade Commission shall each have the right to establish
other use of the subject matter of the patent without au-
thorization of the right holder if the Secretary or the Com-
mission (as the case may be) makes the determination de-
scribed in subsection (b).
‘‘(b) DETERMINATION.—The determination referred
to in subsection (a) with respect to an invention claimed
in a patent is a determination that one or more of the
following applies:
‘‘(1) The patent holder, contractor, licensee, or
assignee referred to in subsection (a) has not taken,
or is not expected to take within a reasonable time,
effective steps to achieve practical application of the
subject invention in a field of use.
‘‘(2) Establishing other use of the subject mat-
ter of the patent is necessary to alleviate health or
safety needs which are not adequately satisfied by
the patent holder, contractor, licensee, or assignee.
‘‘(3) The patent holder has engaged in anti-
competitive behavior. Such determination may in-
clude, but is not limited to, a determination that—
‘‘(A) the patented invention is priced ex-
cessively relative to the median price for devel-
oped countries or by other reasonable stand-
ards, and that such pricing contravenes the
public interest; or
‘‘(B) the patented invention is an essential
component of a health care product that in-
volves patents, and the licensing terms for the
patent on the invention are not reasonable and
deter innovation or product development, con-
trary to the public interest.
‘‘(4) An invention covered by a patent (the ‘sec-
ond patent’) cannot be exploited without infringing
upon the patent described in subsection (a) (the
‘first patent’), insofar as the invention claimed in
the second patent involves an important technical
advance.
‘‘(5) The invention claimed in the patent is
needed for research purposes that would benefit the
public health, and is not licensed on reasonable
terms and conditions.
‘‘(c) FACTORS IN AUTHORIZING OTHER USE.—In ex-
ercising the right under subsection (a) to authorize other
use of the subject matter of a patent, the following shall
apply:
‘‘(1) In cases involving commercial use, such
use may be permitted only if, prior to such use, the
proposed user has made efforts to obtain authoriza-
tion from the right holder on reasonable commercial
terms and conditions and such efforts have not been
successful within a reasonable period of time.
‘‘(2) The right holder shall be paid adequate re-
muneration for the use of the patent.
‘‘(3) Where such use is authorized under sub-
section (b)(4), the owner of the first patent shall be
entitled to a license on reasonable terms to use the
invention claimed in the second patent.
‘‘(d) CONSIDERATIONS
FOR DETERMINING REMU-
NERATION FOR USE OF A PATENT.—In determining the
reasonableness of licensing terms and the remuneration
for the use of a patent under subsection (c), the Secretary
of Health and Human Services or the Federal Trade Com-
mission (as the case may be) shall consider—
‘‘(1) the risks and costs associated with the in-
vention claimed in the patent and the commercial
development of products that use the invention;
‘‘(2) the efficacy and innovative nature and im-
portance to the public health of the invention or
products using the invention;
‘‘(3) the degree to which the invention benefited
from publicly funded research;
‘‘(4) the need for adequate incentives for the
creation and commercialization of new inventions;
‘‘(5) the interests of the public as patients and
payers for health care services; and
‘‘(6) the public health benefits of expanded ac-
cess to the invention.
‘‘(e) CONSISTENCY WITH TRIPS.—The Secretary of
Health and Human Services and the Federal Trade Com-
mission may adopt regulations jointly to implement the
purposes of this section, consistent with the Agreement
on Trade-Related Aspects of Intellectual Property Rights
referred to in section 101(d)(15) of the Uruguay Round
Agreements Act.
‘‘(f) DEFINITION.—In this section, the term ‘health
care product’ means any drug or device (as those terms
are defined in section 201 of the Federal Food, Drug, and
Cosmetic Act), any biological product (as defined in sec-
tion 351 of the Public Health Service Act), or any tech-
nology or process to the extent the technology or process
is applied to health or health care.’’.
(b) CONFORMING AMENDMENT.—The table of con-
tents for chapter 14 of title 35, United States Code, is
amended by adding at the end the following new item:
‘‘158. Compulsory licensing.’’.
SEC. 3. REPORT ON PHARMACEUTICAL COSTS AND SALES.
(a) REPORT REQUIREMENT.—Any person engaged in
the manufacture and sale of any drug approved under sec-
tion 505 or 512 of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355, 360b) for which a patent is still in
effect shall report to the Secretary of Health and Human
Services annually an audit of all financial information rel-
evant to the pricing of that drug nationally and inter-
nationally, including, in formats specified by the Sec-
retary, an accounting of the costs allocated to research
and development of that drug, as well as costs allocated
to other research and development activities. The Sec-
retary shall transmit the reports filed under this sub-
section to the Congress.
(b) CIVIL PENALTY.—
(1) PENALTY.—Any person who fails to submit
a report under subsection (a) by the date specified
pursuant to subsection (c) shall be liable to the
United States for a civil penalty in an amount not
to exceed $25,000 for each such violation. Each day
such a violation continues shall, for purposes of this
subsection, constitute a separate violation of sub-
section (a).
(2) PROCEDURES.—A civil penalty for a viola-
tion of subsection (a) shall be assessed by order of
the Secretary of Health and Human Services after
opportunity (provided in accordance with this para-
graph) for a hearing in accordance with section 554
of title 5, United States Code. Before issuing such
an order, the Secretary shall give written notice to
the person to be assessed a civil penalty under such
order of the Secretary’s proposal to issue such order
and provide such person an opportunity to request,
within 15 days of the date the notice is received by
such person, such a hearing on the order.
(3) JUDICIAL
REVIEW.—Any person who re-
quested a hearing in accordance with paragraph (2)
a hearing and who is aggrieved by an order assess-
ing a civil penalty pursuant to the hearing may seek
judicial review of the order by filing a petition for
judicial review in the appropriate United States dis-
trict court not later than 30 days after the date on
which the order was issued.
(4) FAILURE TO PAY PENALTY.—If any person
fails to pay an assessment of a civil penalty—
(A) after the order making the assessment
has become a final order and if such person
does not file a petition for judicial review of the
order, or
(B) after a court in an action for judicial
review of the order has entered a final judg-
ment in favor of the Secretary of Health and
Human Services,
the Attorney General shall recover the amount as-
sessed (plus interest at currently prevailing rates
from the date of the expiration of the 30-day period
referred to in paragraph (3) or the date of such final
judgment, as the case may be) in an action brought
in any appropriate district court of the United
States. In such an action, the validity, amount, and
appropriateness of such penalty shall not be subject
to review.
(c) REGULATIONS.—The Secretary of Health and
Human Services shall issue such regulations as are nec-
essary to carry out this section, including specifying the
dates by which the reports under subsection (a) must be
submitted.
Æ