Title: Affordable Prescriptions for Patients Through Promoting Competition Act of 2021
Policy area: Commerce

Summary:
Affordable Prescriptions for Patients Through Promoting Competition Act of 2021
This bill prohibits product hopping by drug manufacturers and authorizes the Federal Trade Commission to sue in court or institute administrative proceedings to enforce this prohibition.
Generally, product-hopping describes a situation where, when the patents on a reference drug (or biological product) expire, the manufacturer switches to a follow-on product that is covered by a later-expiring patent. Under this bill, a follow-on product is a changed, modified, or reformulated version of the reference drug that shares an indication (what the drug is used for) with the reference drug.
The bill presumes product hopping has occurred when a reference drug manufacturer engages in a hard switch or a soft switch. A hard switch occurs when, after receiving notice of an application for Food and Drug Administration (FDA) approval to market a generic (or biosimilar) version of the reference drug, the manufacturer markets a follow-on product and (1) the FDA withdraws approval of the reference drug at the manufacturer's request, or (2) the manufacturer announces the withdrawal or discontinuance of the reference drug or destroys the drug's inventory in a manner that impedes generic competitors.
Furthermore, the bill presumes that a soft switch occurred if a reference drug manufacturer (1) markets a follow-on product, and (2) takes actions that disadvantage the reference drug relative to that follow-on product in a way that impedes competition from a generic drug.
A drug manufacturer may rebut these presumptions by demonstrating that its conduct was not intended to limit competition.



[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2873 Introduced in House (IH)]

<DOC>






117th CONGRESS
  1st Session
                                H. R. 2873

To amend the Federal Trade Commission Act to prohibit product hopping, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 28, 2021

 Mr. Cicilline (for himself, Mr. Nadler, Mr. Buck, and Mrs. Carolyn B. 
Maloney of New York) introduced the following bill; which was referred 
                   to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To amend the Federal Trade Commission Act to prohibit product hopping, 
                        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 ``Affordable Prescriptions for 
Patients Through Promoting Competition Act of 2021''.

SEC. 2. 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 any application under 
        subsection (j) of section 505 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355) or an application under subsection 
        (b)(2) of such section 505 that seeks a therapeutic equivalence 
        rating to the reference product.
            ``(2) Biosimilar biological product.--The term `biosimilar 
        biological product' means a biological product licensed under 
        section 351(k) of the Public Health Service Act (42 U.S.C. 
        262(k)).
            ``(3) Biosimilar biological product license application.--
        The term `biosimilar biological 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 submitted 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 shares an indication, in whole or in part, 
                with the same manufacturer's previously approved drug 
                or biological product; and
                    ``(B) excludes such an application or supplement to 
                an application for a change, modification, 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 any drug 
        approved under an application submitted under subsection (j) of 
        section 505 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355) or an application under subsection (b)(2) of such 
        section 505 that seeks a therapeutic equivalence rating to the 
        reference product.
            ``(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 `manufacturer' 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 section 
                351(a) of the Public Health Service Act (42 U.S.C. 
                262(a)).
            ``(8) Reference product.--The term `reference product' has 
        the meaning given the term in 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.--A manufacturer of a reference product 
        or listed drug shall be considered to have engaged in an unfair 
        method of competition in or affecting commerce in violation of 
        section 5(a) if complaint counsel or the Commission 
        demonstrates in an action or proceeding initiated by the 
        Commission under subsection (c) 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 biological 
        product license application referencing the reference product 
        or listed drug and ending on the date that is the earlier of 
        180 days after the date on which that generic drug or 
        biosimilar biological product or another generic drug or 
        biosimilar biological product referencing the listed drug or 
        reference product is first marketed or 3 years after the date 
        on which the follow-on product is first marketed, the 
        manufacturer engaged in either of the following actions:
                    ``(A) The manufacturer engaged in a hard switch, 
                which shall be established by demonstrating that the 
                manufacturer engaged in either of the following 
                actions:
                            ``(i) Upon the request of the manufacturer 
                        of the listed drug or reference product, 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) withdrew, discontinued 
                                the manufacture of, or announced 
                                withdrawal of, discontinuance of the 
                                manufacture of, or intent to withdraw 
                                the application with respect to the 
                                drug or reference product in a manner 
                                that impedes competition from a generic 
                                drug or a biosimilar biological 
                                product, which may be established by 
                                objective circumstances, unless such 
                                actions were taken by the manufacturer 
                                pursuant to a request of the 
                                Commissioner of Food and Drugs; 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 
                                biological product, which may be 
                                established 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 demonstrating 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 subparagraph (A) 
                        that unfairly disadvantage the listed drug or 
                        reference product relative to the follow-on 
                        product described in clause (ii) in a manner 
                        that impedes competition from a generic drug or 
                        a biosimilar biological product, which may be 
                        established by objective circumstances.
                            ``(ii) The manufacturer marketed or sold a 
                        follow-on product.
            ``(2) Exclusions.--Nothing in this section shall prohibit 
        actions that consist solely of--
                    ``(A) truthful, non-misleading promotional 
                marketing; or
                    ``(B) ceasing promotional marketing for the listed 
                drug or reference product.
            ``(3) Justification.--
                    ``(A) In general.--Subject to paragraph (4), 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 the manufacturer demonstrates to 
                the Commission or a district court of the United 
                States, as applicable, in an action, suit or proceeding 
                initiated by the Commission under subsection (c)(1) 
                that--
                            ``(i) the manufacturer would have taken the 
                        actions regardless of whether a generic drug 
                        that references the listed drug or biosimilar 
                        biological product that references the 
                        reference product had already entered the 
                        market; and
                            ``(ii)(I) with respect to a hard switch 
                        under paragraph (1)(A), the manufacturer took 
                        the action for reasons relating to the safety 
                        risk to patients of the listed drug or 
                        reference product;
                            ``(II) with respect to an action described 
                        in item (aa) of paragraph (1)(A)(ii)(I), there 
                        is a supply disruption that--
                                    ``(aa) is outside of the control of 
                                the manufacturer;
                                    ``(bb) prevents the production or 
                                distribution of the applicable listed 
                                drug or reference product; and
                                    ``(cc) cannot be remedied by 
                                reasonable efforts; or
                            ``(III) with respect to a soft switch under 
                        paragraph (1)(B), the manufacturer had 
                        legitimate pro-competitive reasons, apart from 
                        the financial 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 otherwise obtain in 
                any proceeding or action instituted with respect to a 
                violation of this section.
            ``(4) Response.--With respect to a justification offered by 
        a manufacturer under paragraph (3), the Commission may--
                    ``(A) rebut any evidence presented by a 
                manufacturer during that justification; or
                    ``(B) establish by a preponderance of the evidence 
                that--
                            ``(i) on balance, the pro-competitive 
                        benefits from the conduct described in 
                        subparagraph (A) or (B) of paragraph (1), as 
                        applicable, do not outweigh any anticompetitive 
                        effects of the conduct, even in consideration 
                        of the justification so offered; or
                            ``(ii)(I) the conduct described in 
                        paragraph (1) is not reasonably necessary to 
                        address or achieve the justifications described 
                        in clause (ii) of paragraph (2)(A); or
                            ``(II) the justifications described in 
                        clause (ii) of paragraph (2)(A) could be 
                        reasonably addressed or achieved through less 
                        anticompetitive means.
    ``(c) Enforcement.--
            ``(1) In general.--If the Commission has reason to believe 
        that any manufacturer has violated, is violating, or is about 
        to violate this section, or a rule promulgated under this 
        section, the Commission may take any of the following actions:
                    ``(A) Institute a proceeding under section 5(b).
                    ``(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 temporarily 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, 
                        including ancillary equitable relief.
            ``(2) Judicial review.--
                    ``(A) In general.--Notwithstanding any provision of 
                section 5, any manufacturer that is subject to a final 
                cease and desist order issued in a proceeding to 
                enforce this section, or a rule promulgated under this 
                section, 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 Appeals 
                        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 review of a 
                final cease and desist order conducted 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.
                            ``(ii) Calculation.--Any disgorgement that 
                        is ordered with respect to a person under 
                        clause (i) shall be offset by any amount of 
                        restitution ordered under subparagraph (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 receives any unjust enrichment from the 
                        effects 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, restitution 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 receives any unjust enrichment from the 
                        effects 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 paragraph (1)(B) 
                before bringing a suit seeking a permanent injunction 
                under paragraph (1)(C); or
                    ``(B) affecting the authority of the Federal Trade 
                Commission under any other provision of law.''.
    (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.--Except to the extent subsection (a) 
establishes an additional basis for liability under the Federal Trade 
Commission Act (15 U.S.C. 41 et seq.), nothing in this section, or the 
amendments made by 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 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 Commission Act, as added by subsection (a), including 
by defining any terms used in such section 27 (other than terms that 
are defined in subsection (a) of such section 27).
                                 <all>