[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 316 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                 S. 316

 To prohibit brand name drug companies from compensating generic drug 
    companies to delay the entry of a generic drug into the market.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 17, 2007

 Mr. Kohl (for himself, Mr. Grassley, Mr. Leahy, Mr. Schumer, and Mr. 
   Feingold) introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To prohibit brand name drug companies from compensating generic drug 
    companies to delay the entry of a generic drug into the market.

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

SECTION 1. SHORT TITLE.

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

SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) prescription drugs make up 11 percent of the national 
        health care spending but are 1 of the largest and fastest 
        growing health care expenditures;
            (2) 56 percent of all prescriptions dispensed in the United 
        States are generic drugs, yet they account for only 13percent 
        of all expenditures;
            (3) generic drugs, on average, cost 63 percent less than 
        their brand-name counterparts;
            (4) consumers and the health care system would benefit from 
        free and open competition in the pharmaceutical market and the 
        removal of obstacles to the introduction of generic drugs;
            (5) full and free competition in the pharmaceutical 
        industry, and the full enforcement of antitrust law to prevent 
        anticompetitive practices in this industry, will lead to lower 
        prices, greater innovation, and inure to the general benefit of 
        consumers.
            (6) the Federal Trade Commission has determined that some 
        brand name pharmaceutical manufacturers collude with generic 
        drug manufacturers to delay the marketing of competing, low-
        cost, generic drugs;
            (7) collusion by the brand name pharmaceutical 
        manufacturers is contrary to free competition, to the interests 
        of consumers, and to the principles underlying antitrust law;
            (8) in 2005, 2 appellate court decisions reversed the 
        Federal Trade Commission's long-standing position, and upheld 
        settlements that include pay-offs by brand name pharmaceutical 
        manufacturers to generic manufacturers designed to keep generic 
        competition off the market;
            (9) in the 6 months following the March 2005 court 
        decisions, the Federal Trade Commission found there were three 
        settlement agreements in which the generic received 
        compensation and agreed to a restriction on its ability to 
        market the product;
            (10) the FTC found that more than \2/3\ of the 
        approximately ten settlement agreements made in 2006 include a 
        pay-off from the brand in exchange for a promise by the generic 
        company to delay entry into the market; and
            (11) settlements which include a payment from a brand name 
        manufacturer to a generic manufacturer to delay entry by 
        generic drugs are anti-competitive and contrary to the 
        interests of consumers.
    (b) Purposes.--The purposes of this Act are--
            (1) to enhance competition in the pharmaceutical market by 
        prohibiting anticompetitive agreements and collusion between 
        brand name and generic drug manufacturers intended to keep 
        generic drugs off the market;
            (2) to support the purpose and intent of antitrust law by 
        prohibiting anticompetitive agreements and collusion in the 
        pharmaceutical industry; and
            (3) to clarify the law to prohibit payments from brand name 
        to generic drug manufacturers with the purpose to prevent or 
        delay the entry of competition from generic drugs.

SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.

    The Clayton Act (15 U.S.C. 12 et seq.) is amended--
            (1) by redesignating section 25 as section 29; and
            (2) by inserting after section 27 the following:

``SEC. 28. UNLAWFUL INTERFERENCE WITH GENERIC MARKETING.

    ``(a) It shall be unlawful under this Act for any person, in 
connection with the sale of a drug product, to directly or indirectly 
be a party to any agreement resolving or settling a patent infringement 
claim which--
            ``(1) an ANDA filer receives anything of value; and
            ``(2) the ANDA filer agrees not to research, develop, 
        manufacture, market, or sell the ANDA product for any period of 
        time.
    ``(b) Nothing in this section shall prohibit a resolution or 
settlement of patent infringement claim in which the value paid by the 
NDA holder to the ANDA filer as a part of the resolution or settlement 
of the patent infringement claim includes no more than the right to 
market the ANDA product prior to the expiration of the patent that is 
the basis for the patent infringement claim.
    ``(c) In this section:
            ``(1) The term `agreement' means anything that would 
        constitute an agreement under section 1 of the Sherman Act (15 
        U.S.C. 1) or section 5 of the Federal Trade Commission Act (15 
        U.S.C. 45).
            ``(2) The term `agreement resolving or settling a patent 
        infringement claim' includes, any agreement that is contingent 
        upon, provides a contingent condition for, or is otherwise 
        related to the resolution or settlement of the claim.
            ``(3) The term `ANDA' means an abbreviated new drug 
        application, as defined under section 505(j) of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)).
            ``(4) The term `ANDA filer' means a party who has filed an 
        ANDA with the Federal Drug Administration.
            ``(5) The term `ANDA product' means the product to be 
        manufactured under the ANDA that is the subject of the patent 
        infringement claim.
            ``(6) The term `drug product' means a finished dosage form 
        (e.g., tablet, capsule, or solution) that contains a drug 
        substance, generally, but not necessarily, in association with 
        1 or more other ingredients, as defined in section 314.3(b) of 
        title 21, Code of Federal Regulations.
            ``(7) The term `NDA' means a new drug application, as 
        defined under section 505(b) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355(b)).
            ``(8) The term `NDA holder' means--
                    ``(A) the party that received FDA approval to 
                market a drug product pursuant to an NDA;
                    ``(B) a party owning or controlling enforcement of 
                the patent listed in the Approved Drug Products With 
                Therapeutic Equivalence Evaluations (commonly known as 
                the `FDA Orange Book') in connection with the NDA; or
                    ``(C) the predecessors, subsidiaries, divisions, 
                groups, and affiliates controlled by, controlling, or 
                under common control with any of the entities described 
                in subclauses (i) and (ii) (such control to be presumed 
                by direct or indirect share ownership of 50 percent or 
                greater), as well as the licensees, licensors, 
                successors, and assigns of each of the entities.
            ``(9) The term `patent infringement' means infringement of 
        any patent or of any filed patent application, extension, 
        reissue, renewal, division, continuation, continuation in part, 
        reexamination, patent term restoration, patents of addition and 
        extensions thereof.
            ``(10) The term `patent infringement claim' means any 
        allegation made to an ANDA filer, whether or not included in a 
        complaint filed with a court of law, that its ANDA or ANDA 
        product may infringe any patent held by, or exclusively 
        licensed to, the NDA holder of the drug product.''.

SEC. 4. NOTICE AND CERTIFICATION OF AGREEMENTS.

    (a) Notice of All Agreements.--Section 1112(c)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (21 
U.S.C. 3155 note) is amended by--
            (1) striking ``the Commission the'' and inserting ``the 
        Commission (1) the''; and
            (2) inserting before the period at the end the following: 
        ``; and (2) a description of the subject matter of any other 
        agreement the parties enter into within 30 days of an entering 
        into an agreement covered by subsection (a) or (b)''.
    (b) Certification of Agreements.--Section 1112 of such Act is 
amended by adding at the end the following:
    ``(d) Certification.--The Chief Executive Officer or the company 
official responsible for negotiating any agreement required to be filed 
under subsection (a), (b), or (c) shall execute and file with the 
Assistant Attorney General and the Commission a certification as 
follows: `I declare under penalty of perjury that the following is true 
and correct: The materials filed with the Federal Trade Commission and 
the Department of Justice under section 1112 of subtitle B of title XI 
of the Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, with respect to the agreement referenced in this 
certification: (1) represent the complete, final, and exclusive 
agreement between the parties; (2) include any ancillary agreements 
that are contingent upon, provide a contingent condition for, or are 
otherwise related to, the referenced agreement; and (3) include written 
descriptions of any oral agreements, representations, commitments, or 
promises between the parties that are responsive to subsection (a) or 
(b) of such section 1112 and have not been reduced to writing.'.''.

SEC. 5. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.

    Section 505 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 
355(j)(5)(D)(i)(V)) is amended by inserting ``section 28 of the Clayton 
Act or'' after ``that the agreement has violated''.

SEC. 6. STUDY BY THE FEDERAL TRADE COMMISSION.

    (a) Requirement for a Study.--Not later than 180 days after the 
date of enactment of this Act and pursuant to its authority under 
section 6(a) of the Federal Trade Commission Act (15 U.S.C. 46(a)) and 
its jurisdiction to prevent unfair methods of competition, the Federal 
Trade Commission shall conduct a study regarding--
            (1) the prevalence of agreements in patent infringement 
        suits of the type described in section 28 of the Clayton Act, 
        as added by this Act, during the last 5 years;
            (2) the impact of such agreements on competition in the 
        pharmaceutical market; and
            (3) the prevalence in the pharmaceutical industry of other 
        anticompetitive agreements among competitors or other practices 
        that are contrary to the antitrust laws, and the impact of such 
        agreements or practices on competition in the pharmaceutical 
        market during the last 5 years.
    (b) Consultation.--In conducting the study required under this 
section, the Federal Trade Commission shall consult with the Antitrust 
Division of the Department of Justice regarding the Justice 
Department's findings and investigations regarding anticompetitive 
practices in the pharmaceutical market, including criminal antitrust 
investigations completed by the Justice Department with respect to 
practices or conduct in the pharmaceutical market.
    (c) Requirement for a Report.--Not later than 1 year after the date 
of enactment of this Act, the Federal Trade Commission shall submit a 
report to the Judiciary Committees of Senate and House of 
Representatives, and to the Department of Justice regarding the 
findings of the study conducted under subsection (a). This report shall 
contain the Federal Trade Commission's recommendation as to whether any 
amendment to the antitrust laws should be enacted to correct any 
substantial lessening of competition found during the study.
    (d) Federal Agency Consideration.--Upon receipt of the report 
required by subsection (c), the Attorney General or the Chairman of the 
Federal Trade Commission, as appropriate, shall consider whether any 
additional enforcement action is required to restore competition or 
prevent a substantial lessening of competition occurring as a result of 
the conduct or practices that were the subject of the study conducted 
under subsection (b).

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Federal Trade 
Commission such sums as may be necessary to carry out the provisions of 
this Act.
                                 <all>