[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2677 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2677

    To improve consumer access to prescription drugs, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 25, 2002

Mr. Rockefeller introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To improve consumer access to prescription drugs, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Consumer Access to 
Prescription Drugs Improvement Act of 2002''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings; purposes.
     TITLE I--EXPANSION OF ACCESS THROUGH EDUCATION AND INFORMATION

Sec. 101. Pharmaceutical Advisory Committee.
Sec. 102. Guidance for payer and medical communities.
Sec. 103. Study of procedures and scientific standards for evaluating 
                            generic biological products.
Sec. 104. Institute of Medicine study.
      TITLE II--EXPANSION OF ACCESS THROUGH INCREASED COMPETITION

Sec. 201. Drug Reimbursement Fund.
Sec. 202. Patent certification.
Sec. 203. Accelerated generic drug competition.
Sec. 204. Notice of agreements settling challenges to certifications 
                            that a patent is invalid or will not be 
                            infringed.
Sec. 205. Publication of information in the Orange Book.
Sec. 206. No additional 30-month extension.
        TITLE III--EXPANSION OF ACCESS THROUGH EXISTING PROGRAMS

Sec. 301. Medicare coverage of all anticancer oral drugs.
Sec. 302. Removal of State restrictions.
Sec. 303. Medicaid drug use review program.
Sec. 304. Clarification of inclusion of inpatient drug prices charged 
                            to certain public hospitals in the best 
                            price exemptions established for purposes 
                            of the medicaid drug rebate program.
Sec. 305. Upper payment limits for generic drugs under medicaid.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Report.

SEC. 2. FINDINGS; PURPOSES.

    (a) Findings.--Congress finds that--
            (1) prescription drugs are a crucial part of modern 
        medicine, serving as complements to medical procedures, 
        substitutes for surgery and other medical procedures, and new 
        forms of treatment;
            (2) a lack of access to prescription drugs can not only 
        cause discomfort, but can be life-threatening to a patient;
            (3)(A) by all accounts, double-digit prescription drug 
        price increases are forecast annually for the next 3 to 5 
        years; and
            (B) such increases would result in prescription drug costs 
        that would be prohibitive for many Americans;
            (4) the Congressional Budget Office estimates that--
                    (A) the use of generic prescription drugs for 
                brand-name prescription drugs could save purchasers of 
                prescription drugs between $8,000,000,000 and 
                $10,000,000,000 each year; and
                    (B) generic prescription drugs cost between 25 
                percent and 60 percent less than brand-name 
                prescription drugs, resulting in an estimated average 
                saving of $15 to $30 on each prescription;
            (5) expanding access to generic prescription drugs can help 
        consumers, especially seniors and the uninsured, have access to 
        more affordable prescription drugs;
            (6) policymakers should be better informed about issues 
        relating to prescription drugs, particularly issues concerning 
        barriers to patient access to prescription drugs;
            (7) health care purchasers should be more aware of safe, 
        cost-effective alternatives to brand-name prescription drugs; 
        and
            (8) prescription drug coverage provided under existing 
        programs should be expanded to better reflect modern technology 
        and provide drugs to the people who rely on them most, yet who 
        increasingly find themselves uninsured or with coverage that is 
        becoming more expensive and less meaningful.
    (b) Purposes.--The purposes of this Act are--
            (1) to better educate policymakers, purchasers, and the 
        public about safe and cost-effective generic alternatives, 
        barriers to market entry, and upcoming issues in the 
        pharmaceutical industry;
            (2) to increase consumer access to prescription drugs by--
                    (A) decreasing price through increased competition; 
                and
                    (B) expanding coverage under the medicare and 
                medicaid programs.

     TITLE I--EXPANSION OF ACCESS THROUGH EDUCATION AND INFORMATION

SEC. 101. PHARMACEUTICAL ADVISORY COMMITTEE.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by inserting after section 1805 the following:

                  ``pharmaceutical advisory committee

    ``Sec. 1805A. (a) Establishment.--There is established, as part of 
the Medicare Payment Advisory Commission established under section 
1805, a committee to be known as the `Pharmaceutical Advisory 
Committee' (referred to in this section as the `Committee').
    ``(b) Membership.--
            ``(1) Composition.--The Committee shall be composed of 11 
        members appointed by the Comptroller General of the United 
        States.
            ``(2) Qualifications.--
                    ``(A) In general.--The Committee members shall be 
                selected from among--
                            ``(i) individuals with expertise in and 
                        knowledge of the pharmaceutical industry (brand 
                        name and generic), including expertise in and 
                        knowledge of pharmaceutical--
                                    ``(I) development;
                                    ``(II) pricing;
                                    ``(III) distribution;
                                    ``(IV) marketing;
                                    ``(V) reimbursement; and
                                    ``(VI) patent law; and
                            ``(ii) providers of health and related 
                        services;
                    ``(B) Representation.--The members of the Committee 
                shall include--
                            ``(i) physicians and other health 
                        professionals;
                            ``(ii) employers;
                            ``(iii) third-party payers;
                            ``(iv) representatives of consumers;
                            ``(v) individuals having--
                                    ``(I) skill in the conduct and 
                                interpretation of pharmaceutical and 
                                health economics research; and
                                    ``(II) expertise in outcomes, 
                                effectiveness research, and technology 
                                assessment; and
                            ``(vi) patent attorneys.
                    ``(C) Conflicts of interest.--The members of the 
                Committee shall not include any individual who, within 
                the 5-year period preceding the date of appointment to 
                the Committee, has been an officer or employee of a 
                drug manufacturer or has been employed as a consultant 
                to a drug manufacturer.
                    ``(D) Representation.--The members of the Committee 
                shall be broadly representative of various professions, 
                geographic regions, and urban and rural areas.
                    ``(E) Limitation.--Not more than \1/2\ of the 
                members appointed under this subsection may be directly 
                involved in the provision, management, or delivery of 
                items and services covered under this title.
                    ``(F) Public disclosure.--As soon as practicable 
                after the date of enactment of this Act, the 
                Comptroller General of the United States shall 
                establish rules for the public disclosure of financial 
                and other potential conflicts of interest by members of 
                the Committee.
            ``(3) Terms; vacancies.--
                    ``(A) Terms.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a member of the Committee shall be 
                        appointed for a term of 3 years.
                            ``(ii) Initial terms.--Of the members first 
                        appointed to the Committee under this 
                        subsection--
                                    ``(I) 4 shall be appointed for a 
                                term of 1 year; and
                                    ``(II) 4 shall be appointed for a 
                                term of 2 years.
                            ``(iii) Carryover.--After the term of a 
                        member of the Committee has expired, the member 
                        may continue to serve until a successor is 
                        appointed.
                    ``(B) Vacancies.--
                            ``(i) In general.--A vacancy on the 
                        Committee--
                                    ``(I) shall not affect the powers 
                                of the Committee; and
                                    ``(II) shall be filled in the same 
                                manner as the original appointment was 
                                made.
                            ``(ii) Filling of unexpired term.--An 
                        individual chosen to fill a vacancy shall be 
                        appointed for the unexpired term of the member 
                        replaced.
            ``(4) Meetings.--The Committee shall meet at the call of 
        the chairperson.
            ``(5) Chairperson; vice chairperson.--The Comptroller 
        General shall appoint 1 of the members as chairperson and 1 of 
        the members as vice chairperson.
    ``(c) Duties.--
            ``(1) In general.--The Committee shall--
                    ``(A) review payment policies for drugs under 
                titles XVIII and XIX of the Social Security Act (42 
                U.S.C. 1395 et seq.); and
                    ``(B) make recommendations to Congress with respect 
                to the payment policies.
            ``(2) Inclusions.--The matters to be studied by the 
        Committee under paragraph (1) include--
                    ``(A) the effects of direct-to-consumer 
                advertising, drug detailing, and sampling;
                    ``(B) the level of use of generic drugs as safe and 
                cost-effective alternatives to brand name drugs;
                    ``(C) the barriers to approval of generic drugs, 
                including consideration of all of the matters described 
                in paragraph (3);
                    ``(D) the adequacy of drug price metrics, including 
                the average wholesale price and the average 
                manufacturers price;
                    ``(E) the effectiveness of various education 
                methods on changing clinical behavior;
                    ``(F) the effectiveness of common drug management 
                tools, including drug use review and use of 
                formularies;
                    ``(G) the perception of patients, physicians, 
                nurses, and pharmacists of generic prescription drugs 
                as safe and effective substitutes for brand-name 
                prescription drugs;
                    ``(H) the costs of research and development and the 
                costs of clinical trials associated with producing a 
                drug;
                    ``(I) the relationship between pharmacy benefit 
                managers and prescription drug manufacturers;
                    ``(J) best practices to increase medical safety and 
                reduce medical errors; and
                    ``(K) polypharmacy and underutilization.
            ``(3) Barriers to approval.--The matters for consideration 
        referred to in paragraph (2)(C) include--
                    ``(A) the appropriate balance between rewarding 
                scientific innovation and providing affordable access 
                to health care;
                    ``(B) features of the communication process and 
                grievance procedure of the Committee that provide 
                opportunities for tactics that unduly delay generic 
                market entry;
                    ``(C) the use of the citizen's petition process to 
                delay generic market entry;
                    ``(D) the use of changes to a drug product 
                (including a labeling change) timed to delay generic 
                approval; and
                    ``(E) the impact of granting patents on diagnostic 
                methods such as patents on genes and genetic testing 
                systems on access to affordable health care.
            ``(4) Report.--Not later than January 1 of each year, the 
        Committee shall submit to Congress a report on--
                    ``(A) the results of the reviews and 
                recommendations;
                    ``(B) issues affecting drug prices, including use 
                of and access to generic drugs; and
                    ``(C) the effect of drug prices on spending by 
                government-sponsored health care programs and health 
                care spending in general.
    ``(d) Powers.--
            ``(1) Information from federal agencies.--
                    ``(A) In general.--The Committee may secure 
                directly from a Federal department or agency such 
                information as the Committee considers necessary to 
                carry out this section.
                    ``(B) Provision of information.--On request of the 
                Chairperson of the Committee, the head of the Federal 
                department or agency shall provide the information to 
                the Committee.
            ``(2) Data collection.--To carry out the duties of the 
        Committee under subsection (c), the Committee shall--
                    ``(A) collect and assess published and unpublished 
                information that is available on the date of enactment 
                of this Act;
                    ``(B) if information available under subparagraph 
                (A) is inadequate, carry out, or award grants or 
                contracts for, original research and experimentation; 
                and
                    ``(C) adopt procedures to allow members of the 
                public to submit information to the Committee for 
                inclusion in the reports and recommendations of the 
                Committee.
            ``(3) Additional powers.--The Committee may--
                    ``(A) seek assistance and support from appropriate 
                Federal departments and agencies;
                    ``(B) enter into any contracts or agreements as are 
                necessary to carry out the duties of the Committee, 
                without regard to section 3709 of the Revised Statutes 
                (41 U.S.C. 5);
                    ``(C) make advance, progress, and other payments 
                that relate to the duties of the Committee;
                    ``(D) provide transportation and subsistence for 
                persons serving without compensation; and
                    ``(E) promulgate regulations for the internal 
                organization and operation of the Committee.
    ``(e) Committee Personnel Matters.--
            ``(1) Compensation of members.--
                    ``(A) In general.--A member of the Committee shall 
                be compensated at a rate equal to the daily equivalent 
                of the annual rate of basic pay prescribed for level IV 
                of the Executive Schedule under section 5315 of title 
                5, United States Code, for each day (including travel 
                time) during which the member is engaged in the 
                performance of the duties of the Board.
                    ``(B) Travel expenses.--A member of the Board shall 
                be allowed travel expenses, including per diem in lieu 
                of subsistence, at rates authorized for an employee of 
                an agency under subchapter I of chapter 57 of title 5, 
                United States Code, while away from the home or regular 
                place of business of the member in the performance of 
                the duties of the Board.
            ``(2) Staff.--
                    ``(A) In general.--The Committee may, without 
                regard to the civil service laws (including 
                regulations), appoint and terminate an executive 
                director and such other additional personnel as are 
                necessary to enable the Committee to perform the duties 
                of the Committee.
                    ``(B) Compensation.--The Chairperson of the 
                Committee may fix the compensation of the executive 
                director and other personnel without regard to the 
                provisions of chapter 51 and subchapter III of chapter 
                53 of title 5, United States Code, relating to 
                classification of positions and General Schedule pay 
                rates.
                    ``(C) Employees of the federal government.--For the 
                purposes of compensation, benefits, rights, and 
                privileges, the staff of the Committee shall be 
                considered employees of the Federal Government.
    ``(f) Request for Appropriations.--
            ``(1) In general.--The Committee shall submit requests for 
        appropriations in the same manner as the Comptroller General 
        submits requests for appropriations.
            ``(2) Separate amounts.--Notwithstanding paragraph (1), 
        amounts appropriated for the Committee shall be separate from 
        amounts appropriated for the Comptroller General.''.

SEC. 102. GUIDANCE FOR PAYER AND MEDICAL COMMUNITIES.

    (a) In General.--The Secretary of Health and Human Services shall 
issue guidance for the payer community and the medical community on--
            (1) how consumers, physicians, nurses, and pharmacists 
        should be educated on generic drugs; and
            (2) the need to potentially educate pharmacy technicians, 
        nurse practitioners, and physician assistants on generic drugs.
    (b) Matters To Be Addressed.--The guidance shall include such items 
as--
            (1) a recommendation for allotment of a portion of yearly 
        continuing education hours to the subject of generic drugs 
        similar to recommendations for continuing education already in 
        place for pharmacists in some States on pharmacy law and AIDS;
            (2) a recommendation to all medical education governing 
        bodies regarding course curricula concerning generic drugs to 
        include in the course work of medical professionals;
            (3) a recommendation on how the Food and Drug 
        Administration could notify physicians and pharmacists when a 
        brand name drug becomes available as a generic drug and what 
        information could be included in the notification;
            (4) the establishment of a speaker's bureau available to 
        groups by geographic region to speak and provide technical 
        assistance on issues relating to generic drugs, to be available 
        to pharmacists, consumer groups, physicians, nurses, and local 
        media; and
            (5) the proposition of a survey on perception and awareness 
        of generic drugs at the beginning and end of an educational 
        campaign to test the effectiveness of the campaign on different 
        audiences.
    (c) Public Education.--The Secretary shall provide for the 
education of the public on the availability and benefits of generic 
drugs.
    (d) Notification of New Generic Prescription Drug Approvals.--As 
soon as practicable after a new generic prescription drug is approved, 
the Secretary shall--
            (1) notify physicians, pharmacists, and other health care 
        providers of the approval; and
            (2) inform health care providers of the brand-name 
        prescription drug for which the generic prescription drug is a 
        substitute.

SEC. 103. STUDY OF PROCEDURES AND SCIENTIFIC STANDARDS FOR EVALUATING 
              GENERIC BIOLOGICAL PRODUCTS.

    (a) In General.--The Institute of Medicine shall conduct a study to 
evaluate--
            (1) the feasibility of producing generic versions of 
        biological products; and
            (2) the relevance of the source materials and the 
        manufacturing process to the production of the generic 
        versions.
    (b) Establishment of Process.--
            (1) In general.--If, as a result of the study under 
        subsection (a), the Institute of Medicine finds that it would 
        be feasible to produce generic versions of biological products, 
        not later than 3 years after the date of the completion of the 
        study, the Secretary, shall prescribe procedures and conditions 
        under which biological products intended for human use may be 
        approved under an abbreviated application or license.
            (2) Application.--An abbreviated application or license 
        shall, at a minimum, contain--
                    (A) information showing that the conditions of use 
                prescribed, recommended, or suggested in the labeling 
                proposed for the new biological product have been 
                previously approved for a drug subject to regulation 
                under section 505 of the Federal Food, Drug, and 
                Cosmetic Act (21 U.S.C. 355) or under section 351 of 
                the Public Health Service Act (42 U.S.C. 262) (referred 
                to in this subsection as a ``listed drug'');
                    (B) information to show that the new biological 
                product has chemical and biological characteristics 
                comparable to the characteristics of the listed drug; 
                and
                    (C) information showing that the new biological 
                product has a safety and efficacy profile comparable to 
                that of the listed drug.
            (3) Product standards.--The Secretary, on the initiative of 
        the Secretary or on petition, may by regulation promulgate drug 
        product standards, procedures, and conditions to determine 
        insignificant changes in a biological product that do not 
        affect the scientific and medical soundness of product approval 
        and interchangeability.

SEC. 104. INSTITUTE OF MEDICINE STUDY.

    (a) In General.--The Institute of Medicine shall convene a 
committee to conduct a study to determine--
            (1) whether information regarding the relative efficacy and 
        effectiveness of drugs (as defined in section 201 of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321)) and 
        biological products (as defined in section 351(i) of the Public 
        Health Service Act (42 U.S.C. 262(i))) is available to the 
        public for independent and external review;
            (2) whether the benefits of drugs and biological products, 
        and particularly the relative benefits of similar drugs and 
        biological products, are understood by physicians and patients; 
        and
            (3) whether prescribing and use patterns are unduly or 
        inappropriately influenced by marketing to physicians and 
        direct advertising to patients.
    (b) Recommendations.--If problems are identified by the study 
conducted under subsection (a), the committee shall make 
recommendations to the Commissioner of Food and Drugs for improvement, 
including recommendations regarding--
            (1) ways to better review the relative efficacy and 
        effectiveness of drugs approved for use by the Food and Drug 
        Administration;
            (2) the appropriate governmental or nongovernmental body to 
        conduct the review described under paragraph (1); and
            (3) ways to improve communication and dissemination of the 
        information reviewed in paragraph (1).
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

      TITLE II--EXPANSION OF ACCESS THROUGH INCREASED COMPETITION

SEC. 201. DRUG REIMBURSEMENT FUND.

    Subchapter A of chapter V of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 501 et seq.) is amended by adding at the end the 
following:

``SEC. 524. DRUG REIMBURSEMENT FUND.

    ``(a) Definitions.--In this section:
            ``(1) Drug patent.--The term `drug patent' means a patent 
        described in section 505(b)(1).
            ``(2) Fund.--The term `Fund' means the Drug Reimbursement 
        Fund established under subsection (b).
    ``(b) Establishment.--There is established in the Treasury of the 
United States a separate fund to be known as the `Drug Reimbursement 
Fund'.
    ``(c) Comptroller.--The Secretary shall appoint a comptroller to 
administer the Fund.
    ``(d) Regulations.--
            ``(1) In general.--The Secretary shall promulgate 
        regulations for the operation of the Fund, including the method 
        of payments from the Fund and designation of beneficiaries of 
        the Fund.
            ``(2) Administrative determinations.--The regulations under 
        paragraph (1) may permit the administrative determination of 
        the claims of health insurers, State and Federal Government 
        programs, and third-party payers or other parties that are 
        disadvantaged by the conduct of drug manufacturers that seek to 
        bring spurious civil actions for infringement of drug patents 
        in order to block the production and marketing of lower-cost 
        drug alternatives.
    ``(e) Contributions to the Fund.--
            ``(1) In general.--In any civil action under section 505 or 
        512 or in a civil action for infringement of a drug patent (as 
        defined in section 524(a)) under chapters 28 and 29 of title 
        35, United States Code--
                    ``(A) if the Court determines that the drug patent 
                is invalid or that the drug patent is not otherwise 
                infringed, but that the plaintiff obtained an 
                injunction against the defendant for the production or 
                marketing of the drug to which the drug patent relates, 
                the Court shall order the plaintiff to pay to the Fund 
                the amount that is equal to--
                            ``(i) the amount that is equal to the 
                        amount of net revenues generated by the 
                        plaintiff from the production or marketing of 
                        the drug during the period in which the 
                        injunction was in effect, plus an additional 
                        period of 12 months; minus
                            ``(ii) the amount of any special damages 
                        paid by the plaintiff under section 524(m); or
                    ``(B) if the defendant enters into a settlement 
                agreement or any other arrangement under which the 
                defendant agrees to withdraw an application under 
                section 505 or 512, the Court shall order the defendant 
                to pay to the Fund the amount that is equal to 50 
                percent of the amount (including the value of any form 
                of property) that the defendant receives from the 
                plaintiff under the arrangement.
            ``(2) Collection.--The United States may seek to enforce 
        collection of a contribution required to be made to the Fund by 
        bringing a civil action in United States district court.''.

SEC. 202. PATENT CERTIFICATION.

    (a) In General.--Section 505(j)(5) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(j)(5)) is amended--
            (1) in subparagraph (B)--
                    (A) by striking ``(B) The approval'' and inserting 
                the following:
                    ``(B) Effective date of approval.--Except as 
                provided in subparagraph (C), the approval''; and
                    (B) by striking clause (iii) and inserting the 
                following:
                            ``(iii) Certification that patent is 
                        invalid or will not otherwise be infringed.--
                                    ``(I) No civil action for patent 
                                infringement or declaratory judgment, 
                                or no motion for preliminary 
                                injunction.--Except as provided in 
                                subclause (II), if--
                                            ``(aa) the applicant made a 
                                        certification described in 
                                        paragraph (2)(A)(vii)(IV);
                                            ``(bb) none of the 
                                        conditions for denial of 
                                        approval stated in paragraph 
                                        (4) applies;
                                            ``(cc)(AA) no civil action 
                                        for infringement of a patent 
                                        that is the subject of the 
                                        certification is brought before 
                                        the expiration of the 45-day 
                                        period beginning on the date on 
                                        which the notice provided under 
                                        paragraph (2)(B)(ii) was 
                                        received; or
                                            ``(BB) a civil action is 
                                        brought as described in subitem 
                                        (AA), but no motion for 
                                        preliminary injunction is filed 
                                        within 90 days of commencement 
                                        of the civil action; and
                                            ``(dd) the applicant does 
                                        not bring a civil action for 
                                        declaratory judgment of 
                                        invalidity or other 
                                        noninfringement of the patent 
                                        before the expiration of the 
                                        60-day period beginning on the 
                                        date on which the notice 
                                        provided under paragraph 
                                        (2)(B)(ii) was received;
                                the approval shall be made effective on 
                                the expiration of 60 days after the 
                                date on which the notice provided under 
                                paragraph (2)(B)(ii) was received.
                                    ``(II) Civil action for patent 
                                infringement or declaratory judgment.--
                                If--
                                            ``(aa)(AA) a civil action 
                                        for infringement of a patent 
                                        that is the subject of the 
                                        certification is brought before 
                                        the 45-day period beginning on 
                                        the date on which the notice 
                                        provided under paragraph 
                                        (2)(B)(ii) was received; or
                                            ``(BB) the applicant brings 
                                        a civil action for declaratory 
                                        judgment of invalidity or other 
                                        noninfringement of the patent 
                                        before the expiration of the 
                                        60-day period beginning on the 
                                        date on which the notice under 
                                        paragraph (2)(B)(ii) was 
                                        received;
                                            ``(bb) the holder of the 
                                        approved application or the 
                                        owner of the patent seeks a 
                                        preliminary injunction 
                                        prohibiting the applicant from 
                                        engaging in the commercial 
                                        manufacture and sale of the 
                                        drug; and
                                            ``(cc) none of the 
                                        conditions for denial of 
                                        approval stated in paragraph 
                                        (4) applies;
                                the approval shall be made effective on 
                                issuance by a United States district 
                                court of a decision and order that 
                                denies a preliminary injunction, or, in 
                                a case in which a preliminary 
                                injunction has been granted by a United 
                                States district court prohibiting the 
                                applicant from engaging in the 
                                commercial manufacture or sale of the 
                                drug, a decision and order that 
                                determines that the drug patent is 
                                invalid or that the drug patent is not 
                                otherwise infringed.
                                    ``(III) Procedure.--In a civil 
                                action brought as described in 
                                subclause (II)--
                                            ``(aa) the civil action 
                                        shall be brought in the 
                                        judicial district in which the 
                                        defendant has its principal 
                                        place of business or a regular 
                                        and established place of 
                                        business;
                                            ``(bb) each of the parties 
                                        shall reasonably cooperate in 
                                        expediting the civil action;
                                            ``(cc) the court shall not 
                                        consider a motion for 
                                        preliminary injunction unless 
                                        the motion is filed within 90 
                                        days of commencement of the 
                                        civil action; and
                                            ``(dd) the holder of the 
                                        approved application or the 
                                        owner of the patent shall be 
                                        entitled to a preliminary 
                                        injunction if the holder or 
                                        owner demonstrates a likelihood 
                                        of success on the merits and 
                                        without regard to whether the 
                                        holder or owner would suffer 
                                        immediate or irreparable harm 
                                        or to any other factor.'';
            (2) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (F) and (G), respectively; and
            (3) by inserting after subparagraph (B) the following:
                    ``(C) Effectiveness on condition.--
                            ``(i) Notice.--The applicant of an 
                        application that has been approved under 
                        subparagraph (A) but for which the approval has 
                        not yet been made effective under subparagraph 
                        (B) (referred to in this subparagraph as the 
                        `previous application') and with respect to 
                        which a preliminary injunction has been issued 
                        prohibiting the commercial manufacture or sale 
                        of the drug subject to the previous application 
                        may submit to the Secretary a notice stating 
                        that--
                                    ``(I) the applicant expects to 
                                receive, within 180 days, a United 
                                States district court decision and 
                                order that vacates the preliminary 
                                injunction and denies a permanent 
                                injunction or determines that the 
                                patent is invalid or is otherwise not 
                                infringed (referred to in this 
                                subparagraph as a `noninfringement 
                                decision');
                                    ``(II) requests the immediate 
                                issuance of an approval of the 
                                application conditioned on a 
                                noninfringement decision within the 
                                specified time;
                                    ``(III) agrees that--
                                            ``(aa) the applicant will 
                                        not settle or otherwise 
                                        compromise the noninfringement 
                                        decision in any manner that 
                                        would prevent or delay the 
                                        immediate marketing of the drug 
                                        under the approved application; 
                                        and
                                            ``(bb) the applicant will 
                                        notify the Secretary of the 
                                        noninfringement decision (or if 
                                        a decision is rendered that is 
                                        not a noninfringement decision, 
                                        will notify the Secretary of 
                                        that decision) not later than 5 
                                        days after the date of entry of 
                                        judgment; and
                                    ``(IV) consents to the immediate 
                                withdrawal of the approval, without 
                                opportunity for a hearing, if the 
                                applicant fails to comply with the 
                                agreement under subclause (III) or if 
                                the noninfringement decision is vacated 
                                by the district court or reversed on 
                                appeal.
                            ``(ii) Approval.--On receipt of a notice 
                        under clause (i), if none of the conditions for 
                        denial of approval stated in paragraph (4) 
                        applies, the Secretary shall immediately issue 
                        an effective approval of the application 
                        conditioned on the receipt of a noninfringement 
                        decision within the specified time, subject to 
                        immediate withdrawal if the applicant fails to 
                        comply with the agreement under clause 
                        (i)(III).
                            ``(iii) Effect.--If a noninfringement 
                        decision is rendered, the date of the final 
                        decision of a court referred to in subparagraph 
                        (B)(iv)(II)(aa) shall be the date of the 
                        noninfringement decision, notwithstanding that 
                        the noninfringement decision may be, or has 
                        been, appealed.
                    ``(D) Civil action for declaratory judgment.--A 
                person that files an abbreviated application for a new 
                drug under this section containing information showing 
                that the conditions of use prescribed, recommended, or 
                suggested in the labeling proposed for the new drug 
                have been previously approved for a listed drug may 
                bring a civil action--
                            ``(i) against the holder of an approved 
                        application for the listed drug, for a 
                        declaratory judgment declaring that the 
                        certification made by the holder of the 
                        approved drug application under subsection 
                        (b)(5)(C) relating to the listed drug was not 
                        properly made; or
                            ``(ii) against the owner of a patent that 
                        claims the listed drug, a method of using the 
                        listed drug, or the active ingredient in the 
                        listed drug, for a declaratory judgment 
                        declaring that the patent is invalid or will 
                        not otherwise be infringed by the new drug for 
                        which the applicant seeks approval.''.
    (b) Conforming Amendments.--Section 505A of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 355a) is amended--
            (1) in subsections (b)(1)(A)(i) and (c)(1)(A)(i), by 
        striking ``(j)(5)(D)(ii)'' each place it appears and inserting 
        ``(j)(5)(G)(ii)'';
            (2) in subsections (b)(1)(A)(ii) and (c)(1)(A)(ii), by 
        striking ``(j)(5)(D)'' each place it appears and inserting 
        ``(j)(5)(G)''; and
            (3) in subsections (e) and (l), by striking 
        ``505(j)(5)(D)'' each place it appears and inserting 
        ``505(j)(5)(G)''.

SEC. 203. ACCELERATED GENERIC DRUG COMPETITION.

    (a) In General.--Section 505(j)(5) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(j)(5)) (as amended by section 203) is 
amended--
            (1) in subparagraph (B)(iv), by striking subclause (II) and 
        inserting the following:
                    ``(II) the earlier of--
                            ``(aa) the date of a final decision of a 
                        court in an action described in clause 
                        (iii)(II) (from which no appeal has been or can 
                        be taken, other than a petition to the Supreme 
                        Court for a writ of certiorari) holding that 
                        the patent that is the subject of the 
                        certification is invalid or not otherwise 
                        infringed; or
                            ``(bb) the date of a settlement order or 
                        consent decree signed by a Federal judge that 
                        enters a final judgment and includes a finding 
                        that the patent that is the subject of the 
                        certification is invalid or not otherwise 
                        infringed;''; and
            (2) by inserting after subparagraph (D) the following:
                    ``(E) Forfeiture of 180-day period.--
                            ``(i) Definitions.--In this subparagraph:
                                    ``(I) Forfeiture event.--The term 
                                `forfeiture event' means the occurrence 
                                of any of the following:
                                            ``(aa) Failure to market.--
                                        An applicant fails to market 
                                        the drug by the later of--

                                                    ``(AA) the date 
                                                that is 60 days after 
                                                the date on which the 
                                                approval of the 
                                                application for the 
                                                drug is made effective 
                                                under subparagraph 
                                                (B)(iii) (unless the 
                                                Secretary extends the 
                                                date because of the 
                                                existence of 
                                                extraordinary or 
                                                unusual circumstances); 
                                                or

                                                    ``(BB) if the 
                                                approval has been made 
                                                effective and a civil 
                                                action has been brought 
                                                against the applicant 
                                                for infringement of a 
                                                patent subject to a 
                                                certification under 
                                                paragraph 
                                                (2)(A)(vii)(IV) or a 
                                                civil action has been 
                                                brought by the 
                                                applicant for a 
                                                declaratory judgment 
                                                that such a patent is 
                                                invalid or not 
                                                otherwise infringed, 
                                                and if there is no 
                                                other such civil action 
                                                pending by or against 
                                                the applicant, the date 
                                                that is 60 days after 
                                                the date of a final 
                                                decision in the civil 
                                                action, (unless the 
                                                Secretary extends the 
                                                date because of the 
                                                existence of 
                                                extraordinary or 
                                                unusual circumstances).

                                            ``(bb) Withdrawal of 
                                        application.--An applicant 
                                        withdraws an application.
                                            ``(cc) Amendment of 
                                        certification.--An applicant, 
                                        voluntarily or as a result of a 
                                        settlement or defeat in patent 
                                        litigation, amends the 
                                        certification from a 
                                        certification under paragraph 
                                        (2)(A)(vii)(IV) to a 
                                        certification under paragraph 
                                        (2)(A)(vii)(III).
                                            ``(dd) Failure to obtain 
                                        approval.--An applicant fails 
                                        to obtain tentative approval of 
                                        an application within 30 months 
                                        after the date on which the 
                                        application is filed, unless 
                                        the failure is caused by--

                                                    ``(AA) a change in 
                                                the requirements for 
                                                approval of the 
                                                application imposed 
                                                after the date on which 
                                                the application is 
                                                filed; or

                                                    ``(BB) other 
                                                extraordinary 
                                                circumstances 
                                                warranting an 
                                                exception, as 
                                                determined by the 
                                                Secretary.

                                            ``(ee) Failure to challenge 
                                        patent.--In a case in which, 
                                        after the date on which 
an applicant submitted an application under this subsection, new patent 
information is submitted under subsection (c)(2) for the listed drug 
for a patent for which certification is required under paragraph 
(2)(A), the applicant fails to submit, not later than 60 days after the 
date on which the applicant receives notice from the Secretary under 
paragraph (7)(A)(iii) of the submission of the new patent information 
either a certification described in paragraph (2)(A)(vii)(IV) or a 
statement that the method of use patent does not claim a use for which 
the applicant is seeking approval under this subsection in accordance 
with paragraph (2)(A)(viii) (unless the Secretary extends the date 
because of extraordinary or unusual circumstances).
                                            ``(ff) Monopolization.--The 
                                        Secretary, after a fair and 
                                        sufficient hearing, in 
                                        consultation with the Federal 
                                        Trade Commission, and based on 
                                        standards used by the Federal 
                                        Trade Commission in the 
                                        enforcement of Acts enforced by 
                                        the Federal Trade Commission, 
                                        determines that the applicant 
                                        at any time engaged in--

                                                    ``(AA) 
                                                anticompetitive or 
                                                collusive conduct; or

                                                    ``(BB) any other 
                                                conduct intended to 
                                                unlawfully monopolize 
                                                the commercial 
                                                manufacturing of the 
                                                drug that is the 
                                                subject of the 
                                                application.

                                    ``(II) Subsequent applicant.--The 
                                term `subsequent applicant' means an 
                                applicant that submits a subsequent 
                                application under clause (ii).
                            ``(ii) Forfeiture event occurs.--If--
                                    ``(I) a forfeiture event occurs;
                                    ``(II) no action described in 
                                subparagraph (B)(iii)(II) was brought 
                                against or by the previous applicant, 
                                or such an action was brought but did 
                                not result in a final judgment that 
                                included a finding that the patent is 
                                invalid; and
                                    ``(III) an action described in 
                                subparagraph (B)(iii)(II) is brought 
                                against or by the next applicant, and 
                                the action results in a final judgment 
                                that includes a finding that the patent 
                                is invalid;
                        the 180-day period under subparagraph (B)(iv) 
                        shall be forfeited by the applicant and shall 
                        become available to an applicant that submits a 
                        subsequent application containing a 
                        certification described in paragraph 
                        (2)(A)(vii)(IV).
                            ``(iii) Forfeiture event does not occur.--
                        If a forfeiture event does not occur, the 
                        application submitted subsequent to the 
                        previous application shall be treated as the 
                        previous application under subparagraph 
                        (B)(iv).
                            ``(iv) Availability.--The 180-day period 
                        under subparagraph (B)(iv) shall be available 
                        only to--
                                    ``(I) the previous applicant 
                                submitting an application for a drug 
                                under this subsection containing a 
                                certification described in paragraph 
                                (2)(A)(vii)(IV) with respect to any 
                                patent; or
                                    ``(II) under clause (i), a 
                                subsequent applicant submitting an 
                                application for a drug under this 
                                subsection containing such a 
                                certification with respect to any 
                                patent;
                        without regard to whether an application has 
                        been submitted for the drug under this 
                        subsection containing such a certification with 
                        respect to a different patent.
                            ``(v) Applicability.--The 180-day period 
                        described in subparagraph (B)(iv) shall apply 
                        only if--
                                    ``(I) the application contains a 
                                certification described in paragraph 
                                (2)(A)(vii)(IV); and
                                    ``(II)(aa) an action is brought for 
                                infringement of a patent that is the 
                                subject of the certification; or
                                    ``(bb) not later than 60 days after 
                                the date on which the notice provided 
                                under paragraph (2)(B)(ii) is received, 
                                the applicant brings an action against 
                                the holder of the approved application 
                                for the listed drug.''.
    (b) Applicability.--The amendment made by subsection (a) shall be 
effective only with respect to an application filed under section 
505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) 
after the date of enactment of this Act for a listed drug for which no 
certification under section 505(j)(2)(A)(vii)(IV) of that Act was made 
before June 7, 2002.

SEC. 204. NOTICE OF AGREEMENTS SETTLING CHALLENGES TO CERTIFICATIONS 
              THAT A PATENT IS INVALID OR WILL NOT BE INFRINGED.

    (a) Definitions.--Section 201 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 321) is amended by adding at the end the 
following:
    ``(kk) Brand Name Drug Company.--The term `brand name drug company' 
means a person engaged in the manufacture or marketing of a drug 
approved under section 505(b).
    ``(ll) Generic Drug Applicant.--The term `generic drug applicant' 
means a person that has filed for approval or received approval of an 
abbreviated new drug application under section 505(j).''.
    (b) Notice of Agreements Settling Challenges to Certifications That 
a Patent Is Invalid or Will Not Otherwise Be Infringed.--Section 505 of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) is amended by 
adding at the end the following:
    ``(o) Notice of Agreements Settling Challenges to Certifications 
That a Patent Is Invalid or Will Not Otherwise Be Infringed.--
            ``(1) In general.--A brand name drug company and a generic 
        drug applicant that enter into an agreement regarding the 
        settlement of a challenge to a certification with respect to a 
        patent on a drug under subsection 505(b)(2)(A)(iv) shall submit 
to the Secretary and the Attorney General a notice that includes--
                    ``(A) a copy of the agreement;
                    ``(B) an explanation of the purpose and scope of 
                the agreement; and
                    ``(C) an explanation whether there is any 
                possibility that the agreement could delay, restrain, 
                limit, or otherwise interfere with the production, 
                manufacture, or sale of the generic version of the 
                drug.
            ``(2) Filing deadlines.--A notice required under paragraph 
        (1) shall be submitted not later than 10 business days after 
        the date on which the agreement described in paragraph (1) is 
        entered into.
            ``(3) Enforcement.--
                    ``(A) Civil penalty.--
                            ``(i) In general.--A person that fails to 
                        comply with paragraph (1) shall be liable for a 
                        civil penalty of not more than $20,000 for each 
                        day of failure to comply.
                            ``(ii) Procedure.--A civil penalty under 
                        clause (i) may be recovered in a civil action 
                        brought by the Secretary or the Attorney 
                        General in accordance with section 16(a)(1) of 
                        the Federal Trade Commission Act (15 U.S.C. 
                        56(a)(1)).
                    ``(B) Compliance and equitable relief.--If a person 
                fails to comply with paragraph (1), on application of 
                the Secretary or the Attorney General, a United States 
                district court may order compliance and grant such 
                other equitable relief as the court determines to be 
                appropriate.
            ``(4) Regulations.--The Secretary, with the concurrence of 
        the Attorney General, may by regulation--
                    ``(A) require that a notice required under 
                paragraph (1) be submitted in such form and contain 
                such documentary material and information relevant to 
                the agreement as is appropriate to enable the Secretary 
                and the Attorney General to determine whether the 
                agreement may violate the antitrust laws; and
                    ``(B) prescribe such other rules as are appropriate 
                to carry out this subsection.''.

SEC. 205. PUBLICATION OF INFORMATION IN THE ORANGE BOOK.

    (a) Definition of Orange Book.--Section 201 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 321) (as amended by section 205(a)) 
is amended by adding at the end the following:
    ``(mm) Orange Book.--The term `Orange Book' means the publication 
published by the Secretary under section 505(b)(1).''.
    (b) Publication of Information in the Orange Book.--Section 505(b) 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)) is 
amended--
            (1) in the fourth sentence of paragraph (1), by inserting 
        before the period at the end the following: ``in a publication 
        entitled `Approved Drug Products With Therapeutic Equivalence 
        Indications' (commonly known as the `Orange Book')''; and
            (2) by adding at the end the following:
            ``(5) Publication of information in the orange book.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Interested person.--The term 
                        `interested person' includes--
                                    ``(I) an applicant under paragraph 
                                (1);
                                    ``(II) any person that is 
                                considering engaging in the 
                                manufacture, production, or marketing 
                                of a drug with respect to which there 
                                may be a question whether the drug 
                                infringes the patent to which 
                                information submitted under the second 
                                sentence of paragraph (1) pertains;
                                    ``(III) the Federal Trade 
                                Commission; and
                                    ``(IV) a representative of 
                                consumers.
                            ``(ii) Qualified patent information.--The 
                        term `qualified patent information' means 
                        information that meets the requirement of the 
                        second sentence of paragraph (1) that a patent 
                        with respect to which information is submitted 
                        under that sentence be a patent with respect to 
                        which a claim of patent infringement could 
                        reasonably be asserted if a person not licensed 
                        by the owner engaged in the manufacture, use, 
                        or sale of the drug that is the subject of an 
                        application under paragraph (1).
                    ``(B) Duty of the secretary.--The Secretary shall 
                publish in the Orange Book only information that is 
                qualified patent information.
                    ``(C) Certification.--
                            ``(i) In general.--Information submitted 
                        under the second sentence of paragraph (1) 
                        shall not be published in the Orange Book 
                        unless the applicant files a certification, 
                        subject to section 1001 of title 18, United 
                        States Code, and sworn in accordance with 
                        section 1746 of title 28, United States Code, 
                        that discloses the patent data or information 
                        that forms the basis of the entry.
                            ``(ii) Contents.--A certification under 
                        clause (i) shall--
                                    ``(I)(aa) identify all relevant 
                                claims in the patent information for 
                                which publication in the Orange Book is 
                                sought; and
                                    ``(bb) with respect to each such 
                                claim, a statement whether the claim 
                                covers an approved drug, an approved 
                                method of using the approved drug, or 
                                the active ingredient in the approved 
                                drug (in the same physical form as the 
                                active ingredient is present in the 
                                approved drug);
                                    ``(II) state the approval date for 
                                the drug;
                                    ``(III) state an objectively 
                                reasonable basis on which a person 
                                could conclude that each relevant claim 
                                of the patent covers an approved drug, 
                                an approved method of using the 
                                approved drug, or the active ingredient 
                                in the approved drug (in the same 
                                physical form as the active ingredients 
                                is present in the approved drug);
                                    ``(IV) state that the information 
                                submitted conforms with law; and
                                    ``(V) state that the submission is 
                                not made for the purpose of delay or 
                                for any improper purpose.
                            ``(iii) Regulations.--
                                    ``(I) In general.--Not later than 
                                16 months after the date of enactment 
                                of this paragraph, the Secretary, in 
                                consultation with the United States 
                                Patent and Trademark Office, shall 
promulgate regulations governing certifications under clause (i).
                                    ``(II) Civil penalties.--The 
                                regulations under subclause (I) shall 
                                prescribe civil penalties for the 
                                making of a fraudulent or misleading 
                                statement in a certification under 
                                clause (i).
                    ``(D) Consultation.--For the purpose of deciding 
                whether information should be published in Orange Book, 
                the Secretary may consult with the United States Patent 
                and Trademark Office.
                    ``(E) Publication of determination.--The Secretary 
                shall publish in the Federal Register notice of a 
                determination by the Secretary whether information 
                submitted by an applicant under the second sentence of 
                paragraph (1) is or is not qualified patent 
                information.
                    ``(F) Petition to reconsider determination.--
                            ``(i) In general.--An interested person may 
                        file with the Secretary a petition to 
                        reconsider the determination.
                            ``(ii) Contents.--A petition under clause 
                        (i) shall describe in detail all evidence and 
                        present all reasons relied on by the petitioner 
                        in support of the petition.
                            ``(iii) Notice.--The Secretary shall 
                        publish in the Federal Register notice of the 
                        filing of a petition under clause (i).
                            ``(iv) Response.--Not later than 30 days 
                        after publication of a notice under clause 
                        (iii), any interested person may file with the 
                        Secretary a response to the petition.
                            ``(v) Reply.--Not later than 15 days after 
                        the filing of a response under clause (iv), the 
                        petitioner may file with the Secretary a reply 
                        to the response.
                            ``(vi) Regulations.--The Secretary may 
                        promulgate regulations providing for any 
                        additional procedures for the conduct of 
                        challenges under this subparagraph.''.
    (c) Expedited Review of the Orange Book.--
            (1) Use of defined terms.--Terms used in this subsection 
        that are defined in the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 201 et seq.) (as amended by this section) having the 
        meanings given the terms in that Act.
            (2) Expedited review.--As soon as practicable after the 
        date of enactment of this Act, the Secretary shall--
                    (A) complete a review of the Orange Book to 
                identify any information in the Orange Book that is not 
                qualified patent information; and
                    (B) delete any such information from the Orange 
                Book.
            (3) Priority.--In conducting the review under paragraph 
        (2), the Secretary shall give priority to making determinations 
        concerning information in the Orange Book with respect to which 
        any interested person may file a petition for reconsideration 
        under paragraph (5)(F) of section 505(b) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(b)), as added by 
        subsection (b).
    (d) Differences in Labeling.--Section 505(j)(2) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)) is amended--
            (1) in subparagraph (A)(v)--
                    (A) by striking ``subparagraph (C) or because'' and 
                inserting ``subparagraph (C), because''; and
                    (B) by inserting after ``manufacturers'' the 
                following: ``, or because of the omission of an 
                indication or other aspect of labeling that is required 
                by patent protection or exclusivity accorded under 
                paragraph (5)(D)''; and
            (2) by adding at the end the following:
                    ``(D) Labeling consistent with labeling for earlier 
                version of listed drug.--For the purposes of 
                subparagraph (A)(v), information showing that labeling 
                proposed for the new drug that is the same as the 
                labeling previously approved for the listed drug, 
                although not for the current version of the listed 
                drug, shall be deemed to be the same labeling as that 
                approved for the listed drug so long as the previously 
                approved labeling is not incompatible with a safe and 
                effective new drug.''.

SEC. 206. NO ADDITIONAL 30-MONTH EXTENSION.

    Section 505(j)(5)(B)(iii) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355 (j)(5)(B)(iii) is amended by inserting after the 
fourth sentence the following: ``Once a thirty-month period begins 
under the second sentence of this clause with respect to any 
application under this subsection, there shall be no additional thirty-
month period or extension of the thirty-month period with respect to 
the application by reason of the making of any additional certification 
described in subclause (IV) of paragraph (2)(A)(vii) or for any other 
reason.''.

        TITLE III--EXPANSION OF ACCESS THROUGH EXISTING PROGRAMS

SEC. 301. MEDICARE COVERAGE OF ALL ANTICANCER ORAL DRUGS.

    (a) In General.--Section 1861(s)(2)(Q) of the Social Security Act 
(42 U.S.C. 1395x(s)(2)(Q)) is amended by striking ``anticancer 
chemotherapeutic agent for a given indication,'' and all that follows 
and inserting ``anticancer agent for a medically accepted indication 
(as defined in subsection (t)(2)(B));''.
    (b) Conforming Amendment.--Section 1834(j)(5)(F)(iv) of the Social 
Security Act (42 U.S.C. 1395m(j)(5)(F)(iv)) is amended by striking 
``therapeutic''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to drugs furnished on or after the date that is 90 
days after the date of enactment of this Act.

SEC. 302. REMOVAL OF STATE RESTRICTIONS.

    (a) Therapeutic Equivalence.--Section 505(j) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355(j)) is amended--
            (1) in paragraph (5)(A)--
                    (A) by striking ``(5)(A) Within one hundred and 
                eighty days of the'' and inserting the following:
            ``(5) Time periods.--
                    ``(A) Approval or disapproval.--
                            ``(i) In general.--Not later than 180 days 
                        after the date of''; and
                    (B) by adding at the end the following:
                            ``(ii) Finding regarding therapeutic 
                        equivalence.--When the Secretary approves an 
                        application submitted under paragraph (1), the 
                        Secretary shall include in the approval a 
                        finding whether the drug for which the 
                        application is approved (referred to in this 
                        paragraph as the `subject drug') is the 
                        therapeutic equivalent of a listed drug.
                            ``(iii) Therapeutic equivalence.--For 
                        purposes of clause (ii), a subject drug is the 
                        therapeutic equivalent of a listed drug if--
                                    ``(I) all active ingredients of the 
                                subject drug, the dosage form of the 
                                subject drug, the route of 
                                administration of the subject drug, and 
                                the strength or concentration of the 
                                subject drug are the same as those of 
                                the listed drug and the compendial or 
                                other applicable standard met by the 
                                subject drug is the same as that met by 
                                the listed drug (even though the 
                                subject drug may differ in shape, 
                                scoring, configuration, packaging, 
                                excipients, expiration time, or (within 
                                the limits established by paragraph 
                                (2)(A)(v)) labeling);
                                    ``(II) the subject drug is expected 
                                to have the same clinical effect and 
                                safety profile as the listed drug when 
                                the subject drug is administered to 
                                patients under conditions specified in 
                                the labeling; and
                                    ``(III) the subject drug--
                                            ``(aa)(AA) does not present 
                                        a known or potential 
                                        bioequivalence problem; and
                                            ``(BB) meets an acceptable 
                                        in vitro standard; or
                                            ``(bb) if the subject drug 
                                        presents a known or potential 
                                        bioequivalence problem, is 
                                        shown to meet an appropriate 
                                        bioequivalence standard.
                            ``(iv) Finding.--If Secretary finds that 
                        the subject drug meets the requirements of 
                        clause (iii) with respect to a listed drug, the 
                        Secretary shall include in the approval of the 
                        application for the subject drug a finding that 
                        the subject drug is the therapeutic equivalent 
                        of the listed drug.''; and
            (2) in paragraph (7)(A)(i)(II), by striking ``and the 
        number of the application which was approved'' and inserting 
        ``, the number of the application that was approved, and a 
        statement whether a finding of therapeutic equivalence was made 
        under paragraph (5)(A)(iv), and if so the name of the listed 
        drug to which the drug is a therapeutic bioequivalent''.
    (b) State Laws.--Section 505(j) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(j)) is amended by adding at the end the 
following:
            ``(10) State laws.--No State or political subdivision of a 
        State may establish or continue in effect with respect to a 
        drug that is the subject of an application under paragraph (5) 
        any requirement that is different from, or in addition to, any 
        requirement relating to therapeutic equivalence applicable to 
        the drug under paragraph (5).''.

SEC. 303. MEDICAID DRUG USE REVIEW PROGRAM.

    (a) In General.--Section 1927(g)(2) of the Social Security Act (42 
U.S.C. 1396r-8(g)(2)) is amended by adding at the end the following:
                    ``(E) Generic drug samples.--The program shall 
                provide for the distribution of generic drug samples of 
                covered outpatient drugs to physicians and other 
                prescribers.''.
    (b) Federal Percentage of Expenditures.--Section 1903(a)(3)(D) of 
the Social Security Act (42 U.S.C. 1396b(a)(3)(D)) is amended by 
striking ``in 1991, 1992, or 1993,'' and inserting ``(beginning with 
fiscal year 2003)''.
    (c) Effective Date.--The amendments made by this section take 
effect on October 1, 2002.

SEC. 304. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES CHARGED 
              TO CERTAIN PUBLIC HOSPITALS IN THE BEST PRICE EXEMPTIONS 
              ESTABLISHED FOR PURPOSES OF THE MEDICAID DRUG REBATE 
              PROGRAM.

    Section 1927(c)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
1396r-8(c)(1)(C)(ii)) is amended--
            (1) in subclause (II), by striking ``and'' at the end;
            (2) in subclause (III), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                                    ``(IV) with respect to a covered 
                                entity described in section 
                                340B(a)(4)(L) of the Public Health 
                                Service Act, shall, in addition to any 
                                prices excluded under clause (i)(I), 
                                exclude any price charged on or after 
                                the date of enactment of this 
                                subparagraph, for any drug, biological 
                                product, or insulin provided as part 
                                of, or as incident to and in the same 
                                setting as, inpatient hospital services 
                                (and for which payment may be made 
                                under this title as part of payment for 
                                and not as direct reimbursement for the 
drug).''.

SEC. 305. UPPER PAYMENT LIMITS FOR GENERIC DRUGS UNDER MEDICAID.

    Section 1927(e) of the Social Security Act (42 U.S.C. 1396r-8(e)) 
is amended by striking paragraph (4) and inserting the following:
            ``(4) Establishment of upper payment limits.--
                    ``(A) In general.--The Administrator of the Centers 
                for Medicare & Medicaid Services shall establish a 
                upper payment limit for each multiple source drug for 
                which the FDA has rated 3 or more products 
                therapeutically and pharmaceutically equivalent.
                    ``(B) Public availability of national drug code.--
                The Administrator of the Centers for Medicare & 
                Medicaid Services shall make publicly available, at 
                such time and together with the publication of the 
                upper payment limits established in accordance with 
                subparagraph (A), the national drug code (commonly 
                referred to as the `NDC') for each drug used as the 
                reference product to establish the upper payment limit 
                for a particular multiple source drug.
                    ``(C) Definition of reference product.--In 
                subparagraph (B), the term `reference product' means 
                the specific drug product, the price of which is used 
                by the Administrator of the Centers for Medicare & 
                Medicaid Services to calculate the upper payment limit 
                for a particular multiple source drug.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. REPORT.

    (a) In General.--Not later than the date that is 5 years after the 
date of enactment of this Act, the Federal Trade Commission shall 
submit to Congress a report describing the extent to which 
implementation of the amendments made by this Act--
            (1) has enabled products to come to market in a fair and 
        expeditious manner, consistent with the rights of patent owners 
        under intellectual property law; and
            (2) has promoted lower prices of drugs and greater access 
        to drugs through price competition.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000.
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