Title: We PAID Act
Policy area: Health

Summary:
We Protect American Investment in Drugs Act or the We PAID Act
This bill limits the price of certain prescription drugs that rely on patents developed with federal support.
The bill requires the Department of Health and Human Services to contract with the National Academy of Medicine to conduct a study for determining the reasonableness of the price of such prescription drugs. The bill also establishes the Drug Affordability and Access Committee, which must use the study to develop a methodology and then determine whether the price of each applicable drug is reasonable after the drug enters the market.
Further, the bill establishes certain pricing requirements for such prescription drugs. First, the manufacturer must submit to the committee the list and retail prices for the drug as well as specified expenditure information. Second, after a drug is on the market for one year, the manufacture must set the drug’s list price at no more than the committee’s reasonable price determination. Third, subsequent price increases are capped at the annual percentage change in the medical care consumer price index for prescription drugs. The penalties for noncompliance with these requirements include expiration of marketing exclusivity, fines, and prohibitions on entering licensing agreements for the applicable drug.   Additionally, the bill revises the patent application requirements for drugs to include the disclosure of specified federal grants.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2387 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                S. 2387

     To establish a process by which reasonable drug prices may be 
                  determined, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 31, 2019

 Mr. Van Hollen (for himself and Mr. Scott of Florida) introduced the 
 following bill; which was read twice and referred to the Committee on 
                 Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
     To establish a process by which reasonable drug prices may be 
                  determined, and for other purposes.

    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 ``We Protect American Investment in 
Drugs Act'' or the ``We PAID Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In addition to spurring economic growth, the National 
        Institutes of Health supports some of the most significant 
        breakthroughs in biomedical innovation, including some that are 
        commercialized into new pharmaceutical products.
            (2) The National Institutes of Health funding contributed, 
        either directly or indirectly, to the development of all 210 
        new molecular entities approved by the Food and Drug 
        Administration between 2010 and 2016, according to an analysis 
        published in the Proceedings of the National Academy of 
        Sciences.
            (3) In fiscal year 2019, Congress provided $39,100,000,000 
        in funding for the National Institutes of Health.
            (4) According to a Kaiser Family Foundation health tracking 
        poll in February 2019--
                    (A) nearly 80 percent of people in the United 
                States say that the cost of prescription drugs is 
                ``unreasonable'' and only 25 percent trust 
                pharmaceutical companies to price their products 
                fairly; and
                    (B) one-fourth of people in the United States say 
                it is difficult to afford their prescription drugs, and 
                3 in 10 say they have not taken their medications as 
                prescribed due to costs.
            (5) According to a September 2018 report from the AARP--
                    (A) between 2016 and 2017, retail prices for 267 
                widely used brand name prescription drugs increased by 
                8.4 percent after 5 straight years of double-digit 
                average annual price increases;
                    (B) brand name drug prices increased 4 times faster 
                than general inflation in 2017; and
                    (C) retail prices increased in 2017 for 87 percent 
                (231 of 267) of the widely used brand name prescription 
                drugs reviewed, and all but 5 such increases exceeded 
                the rate of inflation.
            (6) In 2016, prescription drug spending in the United 
        States was $477,000,000,000, according to an estimate from the 
        Assistant Secretary for Planning and Evaluation of the 
        Department of Health and Human Services.
            (7) Prescription drugs account for nearly $1 out of every 
        $5 in overall spending under the Medicare program, as well as 
        21 percent of Medicare beneficiaries' out-of-pocket health 
        spending, not including premiums.
            (8)(A) A drug's list price has a significant impact on what 
        payors and patients pay to purchase prescription drugs.
            (B) In prescription drug plans under Medicare part D, and a 
        growing number of commercial health plans, seniors' and other 
        beneficiaries' cost-sharing is based on a percentage of a 
        drug's list price. As a result, higher drug list prices mean 
        higher out-of-pocket costs for Medicare beneficiaries for their 
        retail prescriptions.
            (C) For prescription drugs covered under Medicare part B, 
        beneficiaries are responsible for paying 20 percent of the 
        Medicare-approved amount for the drug, and the part B 
        deductible also applies. This can be a significant burden for 
        high-cost part B drugs.
            (D) A drug's list price is a factor in determining the 
        amount of the rebate paid to State Medicaid plans by the drug's 
        manufacturer under the Medicaid Drug Rebate Program, and an 
        increase in the drug's list price may result in increased 
        Medicaid costs.
            (E) In the private health insurance market, pharmacy 
        benefit manager and wholesaler fees are based on a percentage 
        of the list price. Higher list prices increase costs in this 
        part of the distribution chain.
            (F) From 2007 through 2017, enrollment in high-deductible 
        health plans with a health savings account (4.2 percent to 18.9 
        percent) and without a health savings account (10.6 percent to 
        24.5 percent) increased among adults between ages 18 and 64 
        with employment-based coverage, while enrollment in traditional 
        plans decreased, according to the Centers for Disease Control 
        and Prevention. Individuals with high-deductible health plans 
        pay more out of pocket for medical expenses until their 
        deductible is met, making high-cost drugs challenging to 
        afford.
            (G) A larger share of prescription drug plans under 
        Medicare part D charged a deductible in 2019 than in 2018 (71 
        percent in 2019, and 63 percent in 2018), according to the 
        Kaiser Family Foundation. Fifty-two percent of prescription 
        drug plans will require enrollees to satisfy the standard 
        deductible of $415 in 2019.

SEC. 3. DEFINITIONS.

    For purposes of this Act:
            (1) Applicable drug.--The term ``applicable drug'' means a 
        drug (as defined in section 201 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 321)) that--
                    (A) is approved under section 505(c) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)) or 
                section 351(a) of the Public Health Service Act (42 
                U.S.C. 262(a));
                    (B) is subject to section 503(b)(1) of such Act (21 
                U.S.C. 353(b)(1)); and
                    (C) is covered by a qualifying patent on the drug, 
                on a method of using such drug, or on a method or 
                machine used to manufacture or administer such drug 
                with respect to which the drug sponsor retained the 
                title to any subject invention under section 202 of 
                title 35, United States Code, or entered into a 
                licensing agreement after the date of enactment of this 
                Act.
            (2) Conflict of interest.--The term ``conflict of 
        interest'' means an association, including a financial or 
        personal association, or past employment, that has the 
        potential to bias or have the appearance of biasing an 
        individual's decisions in matters related to the Drug 
        Affordability and Access Committee or the conduct of other 
        activities under this Act.
            (3) Manufacturer list price.--The term ``manufacturer list 
        price'' means the national price for a prescription drug 
        established by the manufacturer or licensee found in a 
        catalogue or other public source that is the price from which 
        market discounts and price concessions are calculated.
            (4) Period of market exclusivity.--The term ``period of 
        market exclusivity'' means any period of market exclusivity 
        granted with respect to a prescription drug under clause (ii), 
        (iii), or (iv) of section 505(c)(3)(E) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(c)(3)(E)), clause (ii), 
        (iii), or (iv) of section 505(j)(5)(F) of such Act, section 527 
        of such Act (21 U.S.C. 360cc), or section 351(k)(7) of the 
        Public Health Service Act (42 U.S.C. 262(k)(7)), and any 
        extension of such period granted under section 505A or 505E of 
        the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355a, 
        355f).
            (5) Qualifying patent.--The term ``qualifying patent'' 
        means any patent--
                    (A) held by the Federal Government; or
                    (B) which the applicant with respect to the patent 
                was required to disclose under section 202(c)(6) of 
                title 35, United States Code, in the application for 
                the patent.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 4. NATIONAL ACADEMY OF MEDICINE STUDY ON DETERMINING A REASONABLE 
              DRUG PRICE.

    (a) In General.--Not later than 60 days after the date of enactment 
of this Act, the Secretary shall seek to enter into a contract with the 
National Academy of Medicine (referred to in this section as the 
``Academy'') under which the Academy agrees to study--
            (1) how best to determine the reasonableness of a drug's 
        manufacturer list price and retail price and develop at least 1 
        framework for determining the reasonableness of a drug's 
        manufacturer list price and retail price taking into 
        consideration--
                    (A) affordability of the drug to payers, 
                purchasers, and patients across wide market segments in 
                a manner that ensures equitable access;
                    (B) investment by the National Institutes of Health 
                or any other Federal Government entity in the 
                development of the drug;
                    (C) inclusion of research funded by the National 
                Institutes of Health or other Federal Government entity 
                in the development of the drug;
                    (D) manufacturer research and development costs as 
                shown on the manufacturer's Federal tax filing under 
                sections 41 and 174 of the Internal Revenue Code of 
                1986;
                    (E) investment and the rate of return needs for the 
                drug manufacturer;
                    (F) market for the drug;
                    (G) the cost of production and distribution of the 
                drug;
                    (H) the price of the drug in other similar, 
                industrialized countries;
                    (I) estimated global and domestic sales of the 
                drug;
                    (J) gross and net expenditures by public payers for 
                coverage of the drug under Federal health programs, to 
                the extent available; and
                    (K) any additional information the Academy 
                determines appropriate;
            (2) an appropriate timeline for the submission of 
        information to the Drug Affordability and Access Committee 
        required under section 6(a)(2) to determine the reasonableness 
        of a drug's manufacturer list price and retail price; and
            (3) an appropriate timeline for the Drug Affordability and 
        Access Committee to determine the reasonableness of a drug's 
        manufacturer list price and retail price to be in effect the 
        second year after coming to market.
    (b) Report.--Any contract between the Secretary and the Academy 
under this section shall include a requirement that the Academy submit 
a report on the results of the study described in subsection (a) to the 
Secretary, the Drug Affordability and Access Committee, and Congress.

SEC. 5. DRUG AFFORDABILITY AND ACCESS COMMITTEE.

    (a) Establishment.--There is hereby authorized to be established a 
nonprofit corporation to be known as the Drug Affordability and Access 
Committee (referred to in this section as the ``Committee''), which is 
neither an agency nor establishment of the United States Government. 
The Committee shall be headed by an Executive Director.
    (b) Purpose.--The purpose of the Committee is to determine a 
reasonable manufacturer list price and retail price for each applicable 
drug.
    (c) Board of Directors.--
            (1) In general.--The Committee shall have a Board of 
        Directors, which shall be composed of ex officio and appointed 
        members in accordance with this subsection. All appointed 
        members of the Board shall be voting members.
            (2) Ex officio members.--The non-voting ex officio members 
        of the Committee shall be the following individuals or their 
        designees:
                    (A) The Secretary of Health and Human Services.
                    (B) The Director of the National Institutes of 
                Health.
                    (C) The Commissioner of Food and Drugs.
                    (D) The Director of the Agency for Healthcare 
                Research and Quality.
                    (E) The Director of the Centers for Disease Control 
                and Prevention.
                    (F) The Administrator of the Centers for Medicare & 
                Medicaid Services.
                    (G) The Assistant Secretary for Planning and 
                Evaluation.
            (3) Appointed members.--
                    (A) In general.--Ten additional members shall be 
                appointed to the Committee by the Comptroller General 
                of the United States not later than 180 days after the 
                date of enactment of this Act. Such members shall 
                include--
                            (i) 2 patient and consumer representatives 
                        not affiliated with any organization that 
                        receives funding from pharmaceutical 
                        manufacturers;
                            (ii) 3 provider representatives, including 
                        1 hospital representative and 1 pharmacist 
                        representative;
                            (iii) 1 health services researcher;
                            (iv) 1 health care economist;
                            (v) 1 representative of a sponsor of a 
                        health plan or health insurance coverage;
                            (vi) 1 pharmacy benefit management services 
                        representative; and
                            (vii) 1 drug manufacturer representative.
                    (B) Duration of terms.--Members appointed to the 
                Committee under subparagraph (A) shall be appointed to 
                serve 5-year terms, which shall be staggered for the 
                members first appointed.
                    (C) Term limits.--Members appointed to the 
                Committee under subparagraph (A) may not be so 
                appointed for more than 2 terms.
                    (D) Conflicts of interest.--
                            (i) In general.--In appointing members 
                        under subparagraph (A), the Comptroller General 
                        of the United States shall consider and 
                        disclose any potential conflicts of interest. 
                        Members of the Board shall recuse themselves or 
                        be recused from relevant Committee activities 
                        in the case where the member (or an immediate 
                        family member of such member) has a conflict of 
                        interest.
                            (ii) Disclosure of conflicts of interest.--
                                    (I) In general.--A conflict of 
                                interest or potential conflict of 
                                interest shall be disclosed, as 
                                applicable--
                                            (aa) by the Committee, in 
                                        appointing members to an 
                                        advisory committee and for 
                                        employment as staff on the 
                                        Committee; and
                                            (bb) by the Comptroller 
                                        General of the United States, 
                                        in appointing members of the 
                                        Committee.
                                    (II) Manner of disclosure.--
                                Conflicts of interests shall be 
                                disclosed as soon as practicable on the 
                                internet websites of the Committee and 
                                of the Government Accountability 
                                Office. The information so disclosed 
                                shall include the type, nature, and 
                                magnitude of the interests of the 
                                individual involved, except to the 
                                extent that the individual recuses 
                                himself or herself from participating 
                                in the consideration of activity in 
                                which the potential conflict exists.
                    (E) Confidentiality.--The Committee shall maintain 
                the confidentiality of any information provided to the 
                Committee under this section that is a trade secret or 
                confidential information.
                    (F) Vacancies.--Vacancies on the Board shall be 
                filled in the same manner as the original appointment 
                was made. Any vacancy in the membership of the Board 
                shall not affect the power of the remaining members to 
                execute the duties of the Board.
                    (G) Compensation.--While serving on the business of 
                the Committee (including travel time), a member of the 
                Committee shall be entitled to compensation at the per 
                diem equivalent of the rate provided for level IV of 
                the Executive Schedule under section 5315 of title 5, 
                United States Code, and while so serving away from home 
                and the member's regular place of business, a member 
                may be allowed travel expenses, as authorized by the 
                Chairman of the Committee.
                    (H) No federal employees.--No employee of the 
                Federal Government shall be an appointed member of the 
                Committee.
    (d) Executive Director.--
            (1) Appointment.--The Board shall appoint an Executive 
        Director who shall serve at the pleasure of the Board. The 
        Executive Director shall be responsible for the day-to-day 
        operations of the Committee and shall have such specific duties 
        and responsibilities as the Board shall prescribe, including to 
        identify, recruit, and hire staff.
            (2) Compensation.--The compensation of the Executive 
        Director shall be fixed by the Board.
            (3) Conflicts of interest and confidentiality.--The 
        Executive Director and all staff of the Committee shall be 
        subject to the same conflict of interest and confidentiality 
        requirements as the Board members, as described in 
        subparagraphs (D) and (E) of subsection (c)(3).
    (e) Initial Meeting.--The initial meeting of the Committee shall 
take place within 60 days of all members being appointed. In the 
initial meeting, the Committee shall--
            (1) incorporate the Committee;
            (2) designate a Chair; and
            (3) appoint the Executive Director.
    (f) Duties and Authorities.--The duties and authorities of the 
Committee are as follows:
            (1) Administrative duties.--The Committee shall establish 
        administrative guidelines for the Committee, including--
                    (A) establishing bylaws for the Committee that are 
                published in the Federal Register and made available 
                for public comment;
                    (B) establishing policies for the selection of 
                officers, employees, agents, and contractors of the 
                Committee;
                    (C) establishing policies that would subject all 
                employees, fellows, and trainees of the Committee to 
                the conflict of interest standards under subsection 
                (c)(3)(D);
                    (D) specifying a process for annual Board review of 
                the operations of the Committee;
                    (E) establishing specific duties of the Executive 
                Director;
                    (F) evaluating the performance of the Executive 
                Director; and
                    (G) carrying out other necessary activities 
                regarding the functioning of the Committee.
            (2) Process, methodology, and timeline for determining 
        reasonable prices.--
                    (A) In general.--Not later than 2 years after 
                receipt of the report of the National Academy of 
                Medicine under section 4, the Committee shall--
                            (i) outline the process and methodology by 
                        which the Committee will determine, based on 
                        such report, whether the manufacturer list 
                        price and retail price is reasonable for each 
                        applicable drug;
                            (ii) outline the timeline under which the 
                        manufacturer, based on such report, is required 
                        to submit the information required under 
                        section 6(a)(2) to the Committee;
                            (iii) outline the timeline under which the 
                        Committee is required to determine, based on 
                        such report, whether the manufacturer list 
                        price and retail price is reasonable for each 
                        applicable drug; and
                            (iv) publish such proposed process, 
                        methodology, and timeline on the internet 
                        website of the Committee.
                    (B) Public input.--Not later than 60 days after 
                publication of the proposed process, methodology, and 
                timeline under subparagraph (A), the Committee shall 
                hold a minimum of 2 public stakeholder meetings to 
                solicit feedback on such proposed process, methodology, 
                and timeline.
                    (C) Publication of final process, methodology, and 
                timeline.--Not later than 30 months after receipt of 
                the report under section 4, the Committee shall publish 
                a final process, methodology, and timeline on the 
                Committee's internet website.
                    (D) Updates to process, methodology, and 
                timeline.--The Committee may make changes and updates 
                to the final process, methodology, and timeline as 
                necessary. Any such changes or updates shall be 
                published on the internet website of the Committee.
            (3) Issuance of reasonable pricing determination.--
                    (A) Determinations.--The Committee shall issue a 
                reasonable pricing determination for each applicable 
                drug that--
                            (i) is based on a review of the information 
                        submitted under section 6(a); and
                            (ii) uses the process, methodology, and 
                        timeline developed by the Committee under 
                        paragraph (2).
                    (B) Timeframe.--The Committee shall issue a 
                reasonable pricing determination under subparagraph (A) 
                for a drug that, upon approval of an application under 
                section 505(b) of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355(b)) or section 351(a) of the Public 
                Health Service Act (42 U.S.C. 262(a)), will be an 
                applicable drug, taking into consideration the 
                recommended timeframe under section 4(a)(2).
                    (C) Reports to drug manufacturers.--For each 
                reasonable pricing determination made under 
                subparagraph (A), the Committee shall submit a report 
                in writing to the applicable drug manufacturer 
                outlining such determination. Each such report shall be 
                made public, excluding any proprietary information.
            (4) Appointment of advisory committees.--The Committee may 
        appoint permanent or ad hoc advisory committees as determined 
        appropriate to assist in the work of the Committee. All members 
        of any such advisory committee shall be subject to the same 
        conflict of interest requirements as Committee members.
    (g) Annual Reports.--The Committee shall submit an annual report to 
Congress and to the Secretary, and shall make the annual report 
available to the public. Each such report shall include--
            (1) a description of the activities conducted under this 
        Act;
            (2) the budget of the Committee for the following year; and
            (3) any other relevant information, including information 
        on the membership of the Board, advisory committees, and the 
        executive staff of the Committee, any conflicts of interest 
        with respect to such individuals, and any bylaws adopted by the 
        Board during the preceding year.

SEC. 6. REQUIREMENTS FOR ENTERING INTO A LICENSING AGREEMENT.

    (a) In General.--Upon retaining the title to any subject invention 
under section 202 of title 35, United States Code, or entering into a 
partial or exclusive licensing agreement relating to an applicable 
drug, the drug manufacturer shall agree to--
            (1) beginning one year after an applicable drug first comes 
        to market, limit the annual price increase on such drug to the 
        percentage by which the medical care consumer price index 
        detailed expenditure category for all urban consumers for that 
        year exceed such index for the preceding calendar year;
            (2) submit to the Drug Affordability and Access Committee, 
        on a good faith timeline that is consistent with the 
        recommendation under section 5(f)(2)(A)(ii)--
                    (A) the manufacturer list price for the drug;
                    (B) the retail price for the drug;
                    (C) information on expenditures, including--
                            (i) the total annual expenditures of the 
                        manufacturer on materials and manufacturing for 
                        the drug;
                            (ii) the total expenditures of the 
                        manufacturer on acquiring patents and licensing 
                        for the drug, including expected royalty 
                        payments;
                            (iii) the total expenditures of the 
                        manufacturer on research and development as 
                        shown on the manufacturer's Federal tax returns 
                        under sections 41 and 174 of the Internal 
                        Revenue Code of 1986;
                            (iv) the amount of the manufacturer's total 
                        expenditures derived from any Federal funding 
                        source, including tax deductions or credits 
                        claimed; and
                            (v) total expected expenditures for 
                        marketing and advertising for the drug in the 
                        first 3 years that the drug is on the market;
                    (D) the anticipated number of patients who will be 
                treated with the drug;
                    (E) a copy of the application submitted under 
                section 505(b) of the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355(b)) or section 351(a) of the Public 
                Health Service Act (42 U.S.C. 262(a)) and any 
                subsequent information or data requested by, or 
                submitted to, the Food and Drug Administration during 
                the approval process;
                    (F) any additional information requested by the 
                Drug Affordability and Access Committee; and
                    (G) any additional information the manufacturer 
                chooses to provide related to drug pricing decisions;
            (3) submit the manufacturer list price and retail price of 
        an applicable drug to the Drug Affordability and Access 
        Committee for a reasonable price determination; and
            (4) beginning one year after an applicable drug first comes 
        to market, not exceed the reasonable price, as determined by 
        such Committee, for the drug's manufacturer list price.
    (b) Penalties.--
            (1) Loss of period of market exclusivity.--In the case of a 
        drug manufacturer subject to this section who increases the 
        price of an applicable drug to an amount that exceeds the 
        amount under subsection (a)(1) or exceeds the reasonable price 
        as required under subsection (a)(4), any period of market 
        exclusivity with respect to the applicable drug shall be deemed 
        expired, effective on the date of such price increase or launch 
        price.
            (2) Prohibition on entering into future licensing 
        agreements.--If a drug manufacturer fails to adhere to the 
        limit on annual price increases under subsection (a)(1), such 
        drug manufacturer, and its president, chief executive officer, 
        chief operating officer, and general counsel employed at the 
        time of the violation, shall be ineligible for future licensing 
        agreements for qualifying patented technology.
            (3) Prohibition on entering into future licensing 
        agreements.--If a drug manufacturer fails to adhere to the 
        reasonable price as required under subsection (a)(4), the drug 
        manufacturer, and its president, chief executive officer, chief 
        operating officer, and general counsel, shall be ineligible for 
        future licensing agreements for qualifying patented technology.
            (4) Failure to submit information or submitting false 
        information to the drug affordability and access committee.--
        Any manufacturer that fails to submit information required 
        under subsection (a)(2) to be submitted to the Drug 
        Affordability and Access Committee, or who submits false 
        information to such Committee shall be subject to a civil 
        monetary penalty of $500,000 and if a violation is not 
        corrected within 30 days following notification of such 
        violation, $1,000,000 for each day that the violation continues 
        after such period until the violation is corrected.
            (5) Excessive price in the first year of launch.--If a drug 
        manufacturer's launch price in the first year for an applicable 
        drug is at least 50 percent higher than the reasonable price as 
        required under subsection (a)(4) to be in effect for the second 
        year, the drug manufacturer shall be subject to a civil 
        monetary penalty of the cost of the drug in excess of 50 
        percent multiplied by the number of doses of the drug sold in 
        the United States in the first year on the market.
            (6) Distribution of payments to the national institutes of 
        health.--
                    (A) In general.--Each fiscal year, there shall be 
                transferred, out of funds in the Treasury not otherwise 
                obligated, to the Director of the National Institutes 
                of Health, an amount equal to the amount collected in 
                civil penalties under this subsection during the 
                previous fiscal year, unless the amount otherwise 
                appropriated to the National Institutes of Health for 
                the fiscal year in which such transfer would occur is 
                less than the amount so appropriated for the previous 
                fiscal year.
                    (B) Delayed distribution.--If, in accordance with 
                clause (i), the Secretary of the Treasury does not 
                transfer amounts under such clause during any portion 
                of a fiscal year, and, at a later date in such fiscal 
                year, the appropriations to the National Institutes of 
                Health becomes equal to or greater than the amount of 
                appropriations for the previous fiscal year, such 
                Secretary shall transfer such amount at any time in 
                such fiscal year.

SEC. 7. PROPER DISCLOSURE OF GOVERNMENT SUPPORT.

    (a) Definitions.--In this section--
            (1) the term ``contractor''--
                    (A) has the meaning given the term in section 201 
                of title 35, United States Code; and
                    (B) includes an assignee of a contractor to the 
                extent that the assignee is the entity that files an 
                application described in section 202(c)(6);
            (2) the term ``covered contractor'' means a contractor 
        that--
                    (A) is a party to a funding agreement that contains 
                an appropriate provision to effectuate the requirement 
                under section 202(c)(6); and
                    (B) files a United States patent application with 
                respect to a subject invention that the contractor 
                conceived or first actually reduced to practice in the 
                performance of work under the funding agreement 
                described in subparagraph (A);
            (3) the term ``covered patentee'' means the patentee with 
        respect to a patent issuing from an application described in 
        paragraph (2)(B);
            (4) the term ``drug'' has the meaning given that term in 
        section 201 of the Federal Food, Drug, and Cosmetic Act;
            (5) the terms ``funding agreement'' and ``subject 
        invention'' have the meanings given the terms in section 201 of 
        title 35, United States Code;
            (6) the term ``patentee'' has the meaning given the term in 
        section 100 of title 35, United States Code; and
            (7) the term ``section 202(c)(6)'' means section 202(c)(6) 
        of title 35, United States Code.
    (b) Actions for Failure To Disclose Government Support.--
            (1) Private right of action.--
                    (A) In general.--A person (including a government 
                entity) may bring a civil action in an appropriate 
                district court of the United States against a covered 
                patentee--
                            (i) on the ground that the application for 
                        the patent with respect to which the covered 
                        patentee holds title failed to comply with the 
                        requirement under section 202(c)(6); and
                            (ii) if the person is injured by the 
                        failure to comply described in clause (i).
                    (B) Scope.--In an action brought under subparagraph 
                (A), if the court finds by a preponderance of the 
                evidence that the application described in that 
                subparagraph failed to comply with the requirement 
                under section 202(c)(6), the court shall cancel as 
                unpatentable any claim of the patent issuing from that 
                application.
            (2) Inter partes review.--Section 311 of title 35, United 
        States Code, is amended by striking subsection (b) and 
        inserting the following:
    ``(b) Scope.--A petitioner in an inter partes review may request to 
cancel as unpatentable 1 or more claims of a patent--
            ``(1)(A) on a ground that could be raised under section 102 
        or 103; and
            ``(B) on the basis of prior art consisting of patents or 
        printed publications; or
            ``(2) on the ground that the application with respect to 
        the patent was subject to the requirement in section 202(c)(6) 
        and failed to comply with that requirement.''.
    (c) Disclosure of Grants.--Section 111(a)(2) of title 35, United 
States Code, is amended--
            (1) in subparagraph (B), by striking ``and'' at the end;
            (2) in subparagraph (C), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(D) with respect to a drug (as defined in section 
                201 of the Federal Food, Drug, and Cosmetic Act) 
                covered by a qualifying patent on the drug, on a method 
                of using such drug, or on a method or machine used to 
                manufacture or administer such drug, a disclosure of 
                any Federal grant received in the 10-year period prior 
                to submitting the application, in which the applicant 
                is listed as the principal investigator or co-
                investigator with respect to the grant.''.
    (d) GAO Report.--Not later than 5 years after the date of enactment 
of this Act, and once every 5 years thereafter, the Comptroller General 
of the United States shall--
            (1) conduct a study that reviews--
                    (A) the compliance by covered contractors with the 
                requirement under section 202(c)(6); and
                    (B) the effectiveness of the National Institutes of 
                Health in conducting oversight of the extent to which 
                covered contractors are complying with the requirement 
                under section 202(c)(6); and
            (2) submit to Congress the results of each study conducted 
        under paragraph (1), which shall include, in each case, 
        recommendations for additional practices and policies to 
        improve the effectiveness of the requirement under section 
        202(c)(6), including any mechanism to better enforce that 
        requirement.
                                 <all>