Preserve Access to Affordable Generics and Biosimilars Act
Bill: H.R.2891 | Sponsor: Rep. Nadler, Jerrold (D-NY)
Policy area: Health

Summary:
Preserve Access to Affordable Generics and Biosimilars Act
This bill authorizes the Federal Trade Commission (FTC) to initiate proceedings against parties to any agreement resolving or settling a patent infringement claim in connection with the sale of a drug or biological product. Such an agreement is presumed to have anticompetitive effects and is a violation of this bill if the filer of the generic drug or biosimilar application receives anything of value and agrees to limit or forego research, development, manufacturing, marketing, or sales of the generic drug or biosimilar.
An agreement is exempted if the only consideration granted to the generic manufacturer is (1) the right to market its product prior to the expiration of any statutory exclusivity, (2) a payment for reasonable litigation expenses, or (3) a covenant not to sue on any claim that the generic drug or biosimilar infringes a patent. An agreement is also exempt if the agreement's pro-competitive benefits outweigh the anticompetitive effects.
When a generic or biosimilar drug manufacturer enters into an agreement with another drug manufacturer related to the manufacturing, marketing, or sale of a drug, the manufacturers must certify that the material they have given the FTC concerning the agreement contains the complete agreement and any agreements related to that main agreement, including descriptions of any oral agreements or representations.
The bill imposes penalties for violations of this bill, including the forfeiture of the 180-day marketing exclusivity period for a generic drug.

To prohibit prescription drug companies from compensating other 
   prescription drug companies to delay the entry of a generic drug, 
 biosimilar biological product, or interchangeable biological product 
                            into the market.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserve Access to Affordable 
Generics and Biosimilars Act''.

SEC. 2. DECLARATION OF PURPOSES.

    The purposes of this Act are--
            (1) to enhance competition in the pharmaceutical market by 
        stopping anticompetitive agreements between manufacturers of 
        brand name and generic drug products or biosimilar biological 
        products, or among manufacturers of generic drug products or 
        biosimilar biological products, that limit, delay, or otherwise 
        prevent competition from generic drugs and biosimilar 
        biological products; and
            (2) to support the purpose and intent of antitrust law by 
        prohibiting anticompetitive practices in the pharmaceutical 
        industry that harm consumers.

SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.

    (a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et 
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the 
following:

``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND BIOSIMILARS.

    ``(a) In General.--
            ``(1) Enforcement proceeding.--The Commission may initiate 
        a proceeding to enforce the provisions of this section against 
        the parties to any agreement resolving or settling, on a final 
        or interim 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 subparagraph (B), in 
                such a proceeding, an agreement shall be presumed to 
                have anticompetitive effects and shall be a violation 
                of this section if--
                            ``(i) an ANDA filer or a biosimilar 
                        biological product application filer receives 
                        anything of value, including an exclusive 
                        license; and
                            ``(ii) the ANDA filer or biosimilar 
                        biological product application filer agrees to 
                        limit or forgo research, development, 
                        manufacturing, 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 subparagraph 
                        (A)(i) is compensation solely for other goods 
                        or services that the ANDA filer or biosimilar 
                        biological product application filer has 
                        promised to provide; or
                            ``(ii) the procompetitive benefits of the 
                        agreement outweigh the anticompetitive effects 
                        of the agreement.
    ``(b) Limitations.--In determining whether the settling 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 exclusivity; 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 statutory exclusivity 
        means that the agreement is procompetitive.
    ``(c) Exclusions.--Nothing in this section shall prohibit a 
resolution or settlement of a patent infringement claim in which the 
consideration that the ANDA filer or biosimilar biological product 
application filer receives as part of the resolution or settlement 
includes only one or more of the following:
            ``(1) The right to market and secure final regulatory 
        approval for the ANDA product or biosimilar biological product 
        at a date, whether certain or contingent, in the United States 
        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 expenses not to 
        exceed--
                    ``(A) for calendar year 2019, $7,500,000; and
                    ``(B) for calendar year 2020 and each calendar year 
                thereafter, the amount determined for the preceding 
                calendar year adjusted to reflect the percentage 
                increase (if any) in the Producer Price Index for Legal 
                Services published by the Bureau of Labor Statistics of 
                the Department of Labor for the then most recent 12-
                month period ending December 31.
            ``(3) A covenant not to sue on any claim that the ANDA 
        product or biosimilar biological product infringes a United 
        States patent.
    ``(d) Enforcement.--
            ``(1) Enforcement.--A violation of this section shall be 
        treated as an unfair method of competition under section 
        5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 
        45(a)(1)).
            ``(2) Judicial review.--
                    ``(A) In general.--Any party that is subject 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 Appeals 
                        for the District of Columbia Circuit;
                            ``(ii) the United States Court of Appeals 
                        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 license 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 Appeals 
                        for the circuit in which the ultimate parent 
                        entity of the ANDA filer or biosimilar 
                        biological product application filer is 
                        incorporated as of the date that the ANDA or 
                        biosimilar biological product application 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 Commission 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 sufficient 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, biological product license holder, the ANDA 
        filer, or biosimilar biological product application filer the 
        penalty to the NDA holder, biological product license holder, 
        the ANDA filer, or biosimilar biological product application 
        filer shall be sufficient to deter violations, but in no event 
        greater than 3 times the value given to an ANDA filer or 
        biosimilar biological product application filer reasonably 
        attributable to the violation 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 a party in an 
                administrative adjudicative proceeding under the 
                authority of subsection (a)(1), an action brought 
                pursuant to paragraph (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 Commission as to the material 
                facts in the administrative adjudicative proceeding 
                with respect to the violation of this section by a 
                party shall be conclusive unless--
                            ``(i) the terms of such cease and desist 
                        order expressly provide that the Commission's 
                        findings shall not be conclusive; or
                            ``(ii) the order became final by reason of 
                        section 5(g)(1), in which case such finding 
                        shall be conclusive if supported by evidence.
            ``(3) Civil penalty.--In determining the amount of the 
        civil penalty described in this section, the court shall take 
        into account--
                    ``(A) the nature, circumstances, extent, and 
                gravity of the violation;
                    ``(B) with respect to the violator, the degree of 
                culpability, any history of violations, the ability to 
                pay, any effect on the ability to continue doing 
                business, profits earned by the NDA holder, biological 
                product license holder, the ANDA filer, or biosimilar 
                biological product application filer, compensation 
                received by the ANDA filer or biosimilar biological 
                product application filer, and the amount of commerce 
                affected; and
                    ``(C) other matters that justice requires.
            ``(4) Remedies in addition.--Remedies provided 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.
            ``(2) Agreement resolving or settling a patent infringement 
        claim.--The term `agreement 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 otherwise related to the 
        resolution or settlement of the claim.
            ``(3) ANDA.--The term `ANDA' means an abbreviated 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.
            ``(6) Biological product.--The term `biological 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 application.--The term 
        `biological product license application' means an application 
        under section 351(a) of the Public Health Service Act (42 
        U.S.C. 262(a)).
            ``(8) Biological product license holder.--The term 
        `biological product license holder' means--
                    ``(A) the holder of an approved biological product 
                license application for a biological product;
                    ``(B) a person owning or controlling enforcement of 
                any patents that claim the biological product that is 
                the subject of such approved application; or
                    ``(C) the predecessors, subsidiaries, divisions, 
                groups, and affiliates controlled by, controlling, 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 greater), as well as the licensees, 
                licensors, successors, and assigns of each of the 
                entities.
            ``(9) Biosimilar biological product.--The term `biosimilar 
        biological product' means the product to be manufactured under 
        the biosimilar biological product application that is the 
        subject of the patent infringement claim.
            ``(10) Biosimilar biological product application.--The term 
        `biosimilar biological product application' 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 application 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 
        distribute the biosimilar biological product.
            ``(12) Drug product.--The term `drug product' has the 
        meaning given such term in section 314.3(b) of title 21, Code 
        of Federal Regulations (or any successor regulation).
            ``(13) Market.--The term `market' means the promote, offer 
        for sale, sell, or distribute 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 application for 
                a drug product;
                    ``(B) a person owning or controlling enforcement of 
                the patent listed in the Approved Drug Products With 
                Therapeutic Equivalence Evaluations (commonly known as 
                the `FDA Orange Book') in connection with the NDA; or
                    ``(C) the predecessors, subsidiaries, divisions, 
                groups, and affiliates controlled by, controlling, 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 greater), as well as the licensees, 
                licensors, successors, and assigns of each of the 
                entities.
            ``(16) Party.--The term `party' means any person, 
        partnership, corporation, or other legal entity.
            ``(17) Patent infringement.--The term `patent infringement' 
        means infringement of any patent or of any filed patent 
        application, including any extension, reissue, renewal, 
        division, continuation, continuation in part, reexamination, 
        patent term restoration, patents of addition, and extensions 
        thereof.
            ``(18) Patent infringement claim.--The term `patent 
        infringement claim' means any allegation 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 biological product license application 
        or biological product, may infringe any patent held by, or 
        exclusively licensed to, the NDA holder or biological product 
        license holder, biological product license holder, the 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) through (iv) of section 
        505(c)(3)(E) (5- and 3-year data exclusivity), section 527 
        (orphan drug exclusivity), 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 
        Cosmetic Act (orphan drug exclusivity).''.
    (b) Effective Date.--Section 27 of the Federal Trade Commission 
Act, as added by this section, shall apply to all agreements described 
in section 27(a)(1) of that Act entered into on or after the date of 
enactment of this Act.

SEC. 4. NOTICE AND CERTIFICATION OF AGREEMENTS.

    (a) Notice of All Agreements.--Section 1111(7) of the Medicare 
Prescription Drug, Improvement, 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 into 
the United States a biological product that is the subject of a 
biosimilar biological product application'' before the period at the 
end.
    (b) Certification of Agreements.--Section 1112 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (21 
U.S.C. 355 note) is amended by adding at the end the following:
    ``(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 Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003, with respect to the agreement referenced in this 
certification--
            ```(1) represent the complete, final, and exclusive 
        agreement between the parties;
            ```(2) include any ancillary agreements that are contingent 
        upon, provide a contingent condition for, or are otherwise 
        related to, the referenced agreement; and
            ```(3) include written descriptions of any oral agreements, 
        representations, commitments, or promises between the parties 
        that are responsive to subsection (a) or (b) of such section 
        1112 and have not been reduced to writing.'.''.

SEC. 5. NOTIFICATION OF AGREEMENTS.

    Section 1112 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (21 U.S.C. 355 note) is amended by adding at 
the end the following:
            ``(4) Rule of construction.--
                    ``(A) An agreement that is required in subsection 
                (a) or (b) shall include agreements resolving any 
                outstanding disputes, including agreements resolving or 
                settling a Patent Trial and Appeal Board proceeding.
                    ``(B) For purposes of subparagraph (A), the term 
                `Patent Trial and Appeal Board proceeding' means a 
                proceeding conducted by the United States Patent and 
                Trademark Office Patent Trial and Appeal Board, 
                including but not limited to inter parties review, 
                post-grant review, the transitional program for covered 
                business method patents, and derivation proceedings.''.

SEC. 6. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.

    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 
violated''.

SEC. 7. 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 following:
                    ``(F) under section 27;''.

SEC. 8. REPORT ON ADDITIONAL EXCLUSION.

    Within 1 year of enactment, the Federal Trade Commission shall 
provide a recommendation, and the Commission's basis for it, to the 
Committee on the Judiciary of the House of Representatives and the 
Committee on the Judiciary of the Senate regarding a potential 
amendment to include in section 27(c) of the Federal Trade Commission 
Act, an additional exclusion for consideration granted by an NDA holder 
or biological product license holder to the ANDA filer or biosimilar 
biological product application filer, respectively, as part of the 
resolution or settlement, a release, waiver, or limitation of a claim 
for damages or other monetary relief.

SEC. 9. 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 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).

SEC. 10. 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.
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