[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4138 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 4138

   To amend title XVIII of the Social Security Act to provide for an 
update under the Medicare physician fee schedule, to be fully paid for 
 through medical liability reform, a pathway for biosimilar biological 
                       products, and other means.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 19, 2009

  Mr. Gingrey of Georgia (for himself, Mr. Cassidy, Mr. Fleming, Mr. 
 Boozman, Mr. Herger, Mr. Sessions, Mr. Culberson, Mr. Hall of Texas, 
 Mr. Whitfield, Mr. Shimkus, Mr. Buyer, Mrs. Myrick, Mr. Paulsen, Mr. 
Rooney, Ms. Granger, Mr. Roskam, Mrs. Blackburn, Mr. Price of Georgia, 
  and Mr. Roe of Tennessee) introduced the following bill; which was 
 referred to the Committee on Energy and Commerce, and in addition to 
the Committees on Ways and Means and the Judiciary, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
   To amend title XVIII of the Social Security Act to provide for an 
update under the Medicare physician fee schedule, to be fully paid for 
 through medical liability reform, a pathway for biosimilar biological 
                       products, and other means.

    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 ``Medicare SGR 
Improvement and Reform Act of 2009''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
      TITLE I--ENSURING CONTINUED ACCESS TO PHYSICIANS IN MEDICARE

Sec. 101. Improving Medicare physician payments.
Sec. 102. Statement of policy.
         TITLE II--DEFICIT PROTECTION AND FISCAL RESPONSIBILITY

           Subtitle A--Enacting Real Medical Liability Reform

Sec. 201. Encouraging speedy resolution of claims.
Sec. 202. Compensating patient injury.
Sec. 203. Maximizing patient recovery.
Sec. 204. Additional health benefits.
Sec. 205. Punitive damages.
Sec. 206. Authorization of payment of future damages to claimants in 
                            health care lawsuits.
Sec. 207. Definitions.
Sec. 208. Effect on other laws.
Sec. 209. State flexibility and protection of states' rights.
Sec. 210. Applicability; effective date.
          Subtitle B--Application of Medicare Improvement Fund

Sec. 211. Application of Medicare Improvement Fund.
         Subtitle C--Pathway for Biosimilar Biological Products

Sec. 221. Licensure pathway for biosimilar biological products.
Sec. 222. Fees relating to biosimilar biological products.
Sec. 223. Amendments to certain patent provisions.
               Subtitle D--Administrative Simplification

Sec. 231. Administrative simplification.

      TITLE I--ENSURING CONTINUED ACCESS TO PHYSICIANS IN MEDICARE

SEC. 101. IMPROVING MEDICARE PHYSICIAN PAYMENTS.

    Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)) 
is amended by adding at the end the following new paragraphs:
            ``(10) 2 percent annual update for years 2010 through 
        2013.--
                    ``(A) In general.--Subject to paragraphs (7)(B), 
                (8)(B), and (9)(B) and subparagraph (B), in lieu of the 
                update to the single conversion factor established in 
                paragraph (1)(C) that would otherwise apply for each of 
                2010, 2011, 2012, and 2013, the update to the single 
                conversion factor shall be 2 percent.
                    ``(B) No effect on computation of conversion factor 
                for 2014 and subsequent years.--The conversion factor 
                under this subsection shall be computed under paragraph 
                (1)(A) for 2014 and subsequent years as if subparagraph 
                (A) had never applied, subject to paragraph (11).
            ``(11) Update for 2014 and possible subsequent years 
        through 2019.--
                    ``(A) In general.--Subject to paragraphs (7)(B), 
                (8)(B), and (9)(B) and subparagraph (B), in lieu of the 
                update to the single conversion factor established in 
                paragraph (1)(C) that would otherwise apply for 2014 
                and, at the Secretary's discretion, for subsequent 
                years ending not later than 2019, the update to the 
                single conversion factor shall be such percentage for 
                each such year as the Secretary determines will result 
                in additional expenditures under this title in the 
                aggregate for all such years of $26,400,000,000. Not 
                later than October 1, 2013, the Secretary shall 
                establish by regulation the method the Secretary will 
                use in allocating the $26,400,000,000 under the 
                previous sentence between 2014 and subsequent years. 
                Such allocation shall be designed in a manner so that 
                the single conversion factor for a year is not less 
                than 79 percent of the conversion factor for the 
                previous year.
                    ``(B) Limited effect on computation of conversion 
                factor for subsequent years.--The conversion factor 
                under this subsection shall be computed under paragraph 
                (1)(A) for subsequent years as if subparagraph (A) had 
                never applied, but taking into account the aggregate 
                additional increase in expenditures permitted under 
                such subparagraph.''.

SEC. 102. STATEMENT OF POLICY.

    It is the policy of the Federal Government that the sustainable 
growth rate formula, upon which physician payments are based for the 
Medicare program, should be permanently repealed and replaced with a 
reimbursement policy that pays doctors an amount reflecting the true 
cost of services provided in a high-quality and efficient manner and 
uses a fiscally responsibly funding mechanism.

         TITLE II--DEFICIT PROTECTION AND FISCAL RESPONSIBILITY

           Subtitle A--Enacting Real Medical Liability Reform

SEC. 201. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

    The time for the commencement of a health care lawsuit shall be 3 
years after the date of manifestation of injury or 1 year after the 
claimant discovers, or through the use of reasonable diligence should 
have discovered, the injury, whichever occurs first. In no event shall 
the time for commencement of a health care lawsuit exceed 3 years after 
the date of manifestation of injury unless tolled for any of the 
following--
            (1) upon proof of fraud;
            (2) intentional concealment; or
            (3) the presence of a foreign body, which has no 
        therapeutic or diagnostic purpose or effect, in the person of 
        the injured person.
Actions by a minor shall be commenced within 3 years from the date of 
the alleged manifestation of injury except that actions by a minor 
under the full age of 6 years shall be commenced within 3 years of 
manifestation of injury or prior to the minor's 8th birthday, whichever 
provides a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian and a health 
care provider or health care organization have committed fraud or 
collusion in the failure to bring an action on behalf of the injured 
minor.

SEC. 202. COMPENSATING PATIENT INJURY.

    (a) Unlimited Amount of Damages for Actual Economic Losses in 
Health Care Lawsuits.--In any health care lawsuit, nothing in this 
subtitle shall limit a claimant's recovery of the full amount of the 
available economic damages, notwithstanding the limitation in 
subsection (b).
    (b) Additional Noneconomic Damages.--In any health care lawsuit, 
the amount of noneconomic damages, if available, may be as much as 
$250,000, regardless of the number of parties against whom the action 
is brought or the number of separate claims or actions brought with 
respect to the same injury.
    (c) No Discount of Award for Noneconomic Damages.--For purposes of 
applying the limitation in subsection (b), future noneconomic damages 
shall not be discounted to present value. The jury shall not be 
informed about the maximum award for noneconomic damages. An award for 
noneconomic damages in excess of $250,000 shall be reduced either 
before the entry of judgment, or by amendment of the judgment after 
entry of judgment, and such reduction shall be made before accounting 
for any other reduction in damages required by law. If separate awards 
are rendered for past and future noneconomic damages and the combined 
awards exceed $250,000, the future noneconomic damages shall be reduced 
first.
    (d) Fair Share Rule.--In any health care lawsuit, each party shall 
be liable for that party's several share of any damages only and not 
for the share of any other person. Each party shall be liable only for 
the amount of damages allocated to such party in direct proportion to 
such party's percentage of responsibility. Whenever a judgment of 
liability is rendered as to any party, a separate judgment shall be 
rendered against each such party for the amount allocated to such 
party. For purposes of this section, the trier of fact shall determine 
the proportion of responsibility of each party for the claimant's harm.

SEC. 203. MAXIMIZING PATIENT RECOVERY.

    (a) Court Supervision of Share of Damages Actually Paid to 
Claimants.--In any health care lawsuit, the court shall supervise the 
arrangements for payment of damages to protect against conflicts of 
interest that may have the effect of reducing the amount of damages 
awarded that are actually paid to claimants. In particular, in any 
health care lawsuit in which the attorney for a party claims a 
financial stake in the outcome by virtue of a contingent fee, the court 
shall have the power to restrict the payment of a claimant's damage 
recovery to such attorney, and to redirect such damages to the claimant 
based upon the interests of justice and principles of equity. In no 
event shall the total of all contingent fees for representing all 
claimants in a health care lawsuit exceed the following limits--
            (1) 40 percent of the first $50,000 recovered by the 
        claimant(s).
            (2) 33\1/3\ percent of the next $50,000 recovered by the 
        claimant(s).
            (3) 25 percent of the next $500,000 recovered by the 
        claimant(s).
            (4) 15 percent of any amount by which the recovery by the 
        claimant(s) is in excess of $600,000.
    (b) Applicability.--The limitations in this section shall apply 
whether the recovery is by judgment, settlement, mediation, 
arbitration, or any other form of alternative dispute resolution. In a 
health care lawsuit involving a minor or incompetent person, a court 
retains the authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The requirement for court 
supervision in the first two sentences of subsection (a) applies only 
in civil actions.

SEC. 204. ADDITIONAL HEALTH BENEFITS.

    In any health care lawsuit involving injury or wrongful death, any 
party may introduce evidence of collateral source benefits. If a party 
elects to introduce such evidence, any opposing party may introduce 
evidence of any amount paid or contributed or reasonably likely to be 
paid or contributed in the future by or on behalf of the opposing party 
to secure the right to such collateral source benefits. No provider of 
collateral source benefits shall recover any amount against the 
claimant or receive any lien or credit against the claimant's recovery 
or be equitably or legally subrogated to the right of the claimant in a 
health care lawsuit involving injury or wrongful death. This section 
shall apply to any health care lawsuit that is settled as well as a 
health care lawsuit that is resolved by a fact finder. This section 
shall not apply to section 1862(b) (42 U.S.C. 1395y(b)) or section 
1902(a)(25) (42 U.S.C. 1396a(a)(25)) of the Social Security Act.

SEC. 205. PUNITIVE DAMAGES.

    (a) In General.--Punitive damages may, if otherwise permitted by 
applicable State or Federal law, be awarded against any person in a 
health care lawsuit only if it is proven by clear and convincing 
evidence that such person acted with malicious intent to injure the 
claimant, or that such person deliberately failed to avoid unnecessary 
injury that such person knew the claimant was substantially certain to 
suffer. In any health care lawsuit where no judgment for compensatory 
damages is rendered against such person, no punitive damages may be 
awarded with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit as 
initially filed. A court may allow a claimant to file an amended 
pleading for punitive damages only upon a motion by the claimant and 
after a finding by the court, upon review of supporting and opposing 
affidavits or after a hearing, after weighing the evidence, that the 
claimant has established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the request of any 
party in a health care lawsuit, the trier of fact shall consider in a 
separate proceeding--
            (1) whether punitive damages are to be awarded and the 
        amount of such award; and
            (2) the amount of punitive damages following a 
        determination of punitive liability.
If a separate proceeding is requested, evidence relevant only to the 
claim for punitive damages, as determined by applicable State law, 
shall be inadmissible in any proceeding to determine whether 
compensatory damages are to be awarded.
    (b) Determining Amount of Punitive Damages.--
            (1) Factors considered.--In determining the amount of 
        punitive damages, if awarded, in a health care lawsuit, the 
        trier of fact shall consider only the following--
                    (A) the severity of the harm caused by the conduct 
                of such party;
                    (B) the duration of the conduct or any concealment 
                of it by such party;
                    (C) the profitability of the conduct to such party;
                    (D) the number of products sold or medical 
                procedures rendered for compensation, as the case may 
                be, by such party, of the kind causing the harm 
                complained of by the claimant;
                    (E) any criminal penalties imposed on such party, 
                as a result of the conduct complained of by the 
                claimant; and
                    (F) the amount of any civil fines assessed against 
                such party as a result of the conduct complained of by 
                the claimant.
            (2) Maximum award.--The amount of punitive damages, if 
        awarded, in a health care lawsuit may be as much as $250,000 or 
        as much as two times the amount of economic damages awarded, 
        whichever is greater. The jury shall not be informed of this 
        limitation.

SEC. 206. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN 
              HEALTH CARE LAWSUITS.

    (a) In General.--In any health care lawsuit, if an award of future 
damages, without reduction to present value, equaling or exceeding 
$50,000 is made against a party with sufficient insurance or other 
assets to fund a periodic payment of such a judgment, the court shall, 
at the request of any party, enter a judgment ordering that the future 
damages be paid by periodic payments. In any health care lawsuit, the 
court may be guided by the Uniform Periodic Payment of Judgments Act 
promulgated by the National Conference of Commissioners on Uniform 
State Laws.
    (b) Applicability.--This section applies to all actions which have 
not been first set for trial or retrial before the effective date of 
this subtitle.

SEC. 207. DEFINITIONS.

    In this subtitle:
            (1) Alternative dispute resolution system; adr.--The term 
        ``alternative dispute resolution system'' or ``ADR'' means a 
        system that provides for the resolution of health care lawsuits 
        in a manner other than through a civil action brought in a 
        State or Federal court.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care lawsuit, including a person who asserts or 
        claims a right to legal or equitable contribution, indemnity, 
        or subrogation, arising out of a health care liability claim or 
        action, and any person on whose behalf such a claim is asserted 
        or such an action is brought, whether deceased, incompetent, or 
        a minor.
            (3) Collateral source benefits.--The term ``collateral 
        source benefits'' means any amount paid or reasonably likely to 
        be paid in the future to or on behalf of the claimant, or any 
        service, product, or other benefit provided or reasonably 
        likely to be provided in the future to or on behalf of the 
        claimant, as a result of the injury or wrongful death, pursuant 
        to--
                    (A) any State or Federal health, sickness, income-
                disability, accident, or workers' compensation law;
                    (B) any health, sickness, income-disability, or 
                accident insurance that provides health benefits or 
                income-disability coverage;
                    (C) any contract or agreement of any group, 
                organization, partnership, or corporation to provide, 
                pay for, or reimburse the cost of medical, hospital, 
                dental, or income-disability benefits; and
                    (D) any other publicly or privately funded program.
            (4) Compensatory damages.--The term ``compensatory 
        damages'' means objectively verifiable monetary losses incurred 
        as a result of the provision of, use of, or payment for (or 
        failure to provide, use, or pay for) health care services or 
        medical products, such as past and future medical expenses, 
        loss of past and future earnings, cost of obtaining domestic 
        services, loss of employment, and loss of business or 
        employment opportunities, damages for physical and emotional 
        pain, suffering, inconvenience, physical impairment, mental 
        anguish, disfigurement, loss of enjoyment of life, loss of 
        society and companionship, loss of consortium (other than loss 
        of domestic service), hedonic damages, injury to reputation, 
        and all other nonpecuniary losses of any kind or nature. The 
        term ``compensatory damages'' includes economic damages and 
        noneconomic damages, as such terms are defined in this section.
            (5) Contingent fee.--The term ``contingent fee'' includes 
        all compensation to any person or persons which is payable only 
        if a recovery is effected on behalf of one or more claimants.
            (6) Economic damages.--The term ``economic damages'' means 
        objectively verifiable monetary losses incurred as a result of 
        the provision of, use of, or payment for (or failure to 
        provide, use, or pay for) health care services or medical 
        products, such as past and future medical expenses, loss of 
        past and future earnings, cost of obtaining domestic services, 
        loss of employment, and loss of business or employment 
        opportunities.
            (7) Health care lawsuit.--The term ``health care lawsuit'' 
        means any health care liability claim concerning the provision 
        of health care goods or services or any medical product 
        affecting interstate commerce, or any health care liability 
        action concerning the provision of health care goods or 
        services or any medical product affecting interstate commerce, 
        brought in a State or Federal court or pursuant to an 
        alternative dispute resolution system, against a health care 
        provider, a health care organization, or the manufacturer, 
        distributor, supplier, marketer, promoter, or seller of a 
        medical product, regardless of the theory of liability on which 
        the claim is based, or the number of claimants, plaintiffs, 
        defendants, or other parties, or the number of claims or causes 
        of action, in which the claimant alleges a health care 
        liability claim. Such term does not include a claim or action 
        which is based on criminal liability; which seeks civil fines 
        or penalties paid to Federal, State, or local government; or 
        which is grounded in antitrust.
            (8) Health care liability action.--The term ``health care 
        liability action'' means a civil action brought in a State or 
        Federal court or pursuant to an alternative dispute resolution 
        system, against a health care provider, a health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, regardless 
        of the theory of liability on which the claim is based, or the 
        number of plaintiffs, defendants, or other parties, or the 
        number of causes of action, in which the claimant alleges a 
        health care liability claim.
            (9) Health care liability claim.--The term ``health care 
        liability claim'' means a demand by any person, whether or not 
        pursuant to ADR, against a health care provider, health care 
        organization, or the manufacturer, distributor, supplier, 
        marketer, promoter, or seller of a medical product, including, 
        but not limited to, third-party claims, cross-claims, counter-
        claims, or contribution claims, which are based upon the 
        provision of, use of, or payment for (or the failure to 
        provide, use, or pay for) health care services or medical 
        products, regardless of the theory of liability on which the 
        claim is based, or the number of plaintiffs, defendants, or 
        other parties, or the number of causes of action.
            (10) Health care organization.--The term ``health care 
        organization'' means any person or entity which is obligated to 
        provide or pay for health benefits under any health plan, 
        including any person or entity acting under a contract or 
        arrangement with a health care organization to provide or 
        administer any health benefit.
            (11) Health care provider.--The term ``health care 
        provider'' means any person or entity required by State or 
        Federal laws or regulations to be licensed, registered, or 
        certified to provide health care services, and being either so 
        licensed, registered, or certified, or exempted from such 
        requirement by other statute or regulation.
            (12) Health care goods or services.--The term ``health care 
        goods or services'' means any goods or services provided by a 
        health care organization, provider, or by any individual 
        working under the supervision of a health care provider, that 
        relates to the diagnosis, prevention, or treatment of any human 
        disease or impairment, or the assessment or care of the health 
        of human beings.
            (13) Malicious intent to injure.--The term ``malicious 
        intent to injure'' means intentionally causing or attempting to 
        cause physical injury other than providing health care goods or 
        services.
            (14) Medical product.--The term ``medical product'' means a 
        drug, device, or biological product intended for humans, and 
        the terms ``drug'', ``device'', and ``biological product'' have 
        the meanings given such terms in sections 201(g)(1) and 201(h) 
        of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(g)(1) 
        and (h)) and section 351(a) of the Public Health Service Act 
        (42 U.S.C. 262(a)), respectively, including any component or 
        raw material used therein, but excluding health care services.
            (15) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages for physical and emotional pain, suffering, 
        inconvenience, physical impairment, mental anguish, 
        disfigurement, loss of enjoyment of life, loss of society and 
        companionship, loss of consortium (other than loss of domestic 
        service), hedonic damages, injury to reputation, and all other 
        nonpecuniary losses of any kind or nature.
            (16) Punitive damages.--The term ``punitive damages'' means 
        damages awarded, for the purpose of punishment or deterrence, 
        and not solely for compensatory purposes, against a health care 
        provider, health care organization, or a manufacturer, 
        distributor, or supplier of a medical product. Punitive damages 
        are neither economic nor noneconomic damages.
            (17) Recovery.--The term ``recovery'' means the net sum 
        recovered after deducting any disbursements or costs incurred 
        in connection with prosecution or settlement of the claim, 
        including all costs paid or advanced by any person. Costs of 
        health care incurred by the plaintiff and the attorneys' office 
        overhead costs or charges for legal services are not deductible 
        disbursements or costs for such purpose.
            (18) State.--The term ``State'' means each of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the Northern 
        Mariana Islands, the Trust Territory of the Pacific Islands, 
        and any other territory or possession of the United States, or 
        any political subdivision thereof.

SEC. 208. EFFECT ON OTHER LAWS.

    (a) Vaccine Injury.--
            (1) To the extent that title XXI of the Public Health 
        Service Act establishes a Federal rule of law applicable to a 
        civil action brought for a vaccine-related injury or death--
                    (A) this subtitle does not affect the application 
                of the rule of law to such an action; and
                    (B) any rule of law prescribed by this subtitle in 
                conflict with a rule of law of such title XXI shall not 
                apply to such action.
            (2) If there is an aspect of a civil action brought for a 
        vaccine-related injury or death to which a Federal rule of law 
        under title XXI of the Public Health Service Act does not 
        apply, then this subtitle or otherwise applicable law (as 
        determined under this subtitle) will apply to such aspect of 
        such action.
    (b) Other Federal Law.--Except as provided in this section, nothing 
in this subtitle shall be deemed to affect any defense available to a 
defendant in a health care lawsuit or action under any other provision 
of Federal law.

SEC. 209. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.

    (a) Health Care Lawsuits.--The provisions governing health care 
lawsuits set forth in this subtitle preempt, subject to subsections (b) 
and (c), State law to the extent that State law prevents the 
application of any provisions of law established by or under this 
subtitle. The provisions governing health care lawsuits set forth in 
this subtitle supersede chapter 171 of title 28, United States Code, to 
the extent that such chapter--
            (1) provides for a greater amount of damages or contingent 
        fees, a longer period in which a health care lawsuit may be 
        commenced, or a reduced applicability or scope of periodic 
        payment of future damages, than provided in this subtitle; or
            (2) prohibits the introduction of evidence regarding 
        collateral source benefits, or mandates or permits subrogation 
        or a lien on collateral source benefits.
    (b) Protection of States' Rights and Other Laws.--(1) Any issue 
that is not governed by any provision of law established by or under 
this subtitle (including State standards of negligence) shall be 
governed by otherwise applicable State or Federal law.
    (2) This subtitle shall not preempt or supersede any State or 
Federal law that imposes greater procedural or substantive protections 
for health care providers and health care organizations from liability, 
loss, or damages than those provided by this subtitle or create a cause 
of action.
    (c) State Flexibility.--No provision of this subtitle shall be 
construed to preempt--
            (1) any State law (whether effective before, on, or after 
        the date of the enactment of this Act) that specifies a 
        particular monetary amount of compensatory or punitive damages 
        (or the total amount of damages) that may be awarded in a 
        health care lawsuit, regardless of whether such monetary amount 
        is greater or lesser than is provided for under this subtitle, 
        notwithstanding section 202(a); or
            (2) any defense available to a party in a health care 
        lawsuit under any other provision of State or Federal law.

SEC. 210. APPLICABILITY; EFFECTIVE DATE.

    This subtitle shall apply to any health care lawsuit brought in a 
Federal or State court, or subject to an alternative dispute resolution 
system, that is initiated on or after the date of the enactment of this 
Act, except that any health care lawsuit arising from an injury 
occurring prior to the date of the enactment of this Act shall be 
governed by the applicable statute of limitations provisions in effect 
at the time the injury occurred.

          Subtitle B--Application of Medicare Improvement Fund

SEC. 211. APPLICATION OF MEDICARE IMPROVEMENT FUND.

    Section 1898(b)(1) of the Social Security Act (42 U.S.C. 
1395iii(b)(1)) is amended by striking ``for services furnished'' and 
all that follows and inserting ``for services furnished on or after 
January 1, 2010, $0.''.

         Subtitle C--Pathway for Biosimilar Biological Products

SEC. 221. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

    (a) Licensure of Biological Products as Biosimilar or 
Interchangeable.--Section 351 of the Public Health Service Act (42 
U.S.C. 262) is amended--
            (1) in subsection (a)(1)(A), by inserting ``under this 
        subsection or subsection (k)'' after ``biologics license''; and
            (2) by adding at the end the following:
    ``(k) Licensure of Biological Products as Biosimilar or 
Interchangeable.--
            ``(1) In general.--Any person may submit an application for 
        licensure of a biological product under this subsection.
            ``(2) Content.--
                    ``(A) In general.--
                            ``(i) Required information.--An application 
                        submitted under this subsection shall include 
                        information demonstrating that--
                                    ``(I) the biological product is 
                                biosimilar to a reference product based 
                                upon data derived from--
                                            ``(aa) analytical studies 
                                        that demonstrate that the 
                                        biological product is highly 
                                        similar to the reference 
                                        product notwithstanding minor 
                                        differences in clinically 
                                        inactive components;
                                            ``(bb) animal studies 
                                        (including the assessment of 
                                        toxicity); and
                                            ``(cc) a clinical study or 
                                        studies (including the 
                                        assessment of immunogenicity 
                                        and pharmacokinetics or 
                                        pharmacodynamics) that are 
                                        sufficient to demonstrate 
                                        safety, purity, and potency in 
                                        1 or more appropriate 
                                        conditions of use for which the 
                                        reference product is licensed 
                                        and intended to be used and for 
                                        which licensure is sought for 
                                        the biological product;
                                    ``(II) the biological product and 
                                reference product utilize the same 
                                mechanism or mechanisms of action for 
                                the condition or conditions of use 
                                prescribed, recommended, or suggested 
                                in the proposed labeling, but only to 
                                the extent the mechanism or mechanisms 
                                of action are known for the reference 
                                product;
                                    ``(III) the condition or conditions 
                                of use prescribed, recommended, or 
                                suggested in the labeling proposed for 
                                the biological product have been 
                                previously approved for the reference 
                                product;
                                    ``(IV) the route of administration, 
                                the dosage form, and the strength of 
                                the biological product are the same as 
                                those of the reference product; and
                                    ``(V) the facility in which the 
                                biological product is manufactured, 
                                processed, packed, or held meets 
                                standards designed to assure that the 
                                biological product continues to be 
                                safe, pure, and potent.
                            ``(ii) Determination by secretary.--The 
                        Secretary may determine, in the Secretary's 
                        discretion, that an element described in clause 
                        (i)(I) is unnecessary in an application 
                        submitted under this subsection.
                            ``(iii) Additional information.--An 
                        application submitted under this subsection--
                                    ``(I) shall include publicly 
                                available information regarding the 
                                Secretary's previous determination that 
                                the reference product is safe, pure, 
                                and potent; and
                                    ``(II) may include any additional 
                                information in support of the 
                                application, including publicly 
                                available information with respect to 
                                the reference product or another 
                                biological product.
                    ``(B) Interchangeability.--An application (or a 
                supplement to an application) submitted under this 
                subsection may include information demonstrating that 
                the biological product meets the standards described in 
                paragraph (4).
            ``(3) Evaluation by secretary.--Upon review of an 
        application (or a supplement to an application) submitted under 
        this subsection, the Secretary shall license the biological 
        product under this subsection if--
                    ``(A) the Secretary determines that the information 
                submitted in the application (or the supplement) is 
                sufficient to show that the biological product--
                            ``(i) is biosimilar to the reference 
                        product; or
                            ``(ii) meets the standards described in 
                        paragraph (4), and therefore is interchangeable 
                        with the reference product; and
                    ``(B) the applicant (or other appropriate person) 
                consents to the inspection of the facility that is the 
                subject of the application, in accordance with 
                subsection (c).
            ``(4) Safety standards for determining 
        interchangeability.--Upon review of an application submitted 
        under this subsection or any supplement to such application, 
        the Secretary shall determine the biological product to be 
        interchangeable with the reference product if the Secretary 
        determines that the information submitted in the application 
        (or a supplement to such application) is sufficient to show 
        that--
                    ``(A) the biological product--
                            ``(i) is biosimilar to the reference 
                        product; and
                            ``(ii) can be expected to produce the same 
                        clinical result as the reference product in any 
                        given patient; and
                    ``(B) for a biological product that is administered 
                more than once to an individual, the risk in terms of 
                safety or diminished efficacy of alternating or 
                switching between use of the biological product and the 
                reference product is not greater than the risk of using 
                the reference product without such alternation or 
                switch.
            ``(5) General rules.--
                    ``(A) One reference product per application.--A 
                biological product, in an application submitted under 
                this subsection, may not be evaluated against more than 
                1 reference product.
                    ``(B) Review.--An application submitted under this 
                subsection shall be reviewed by the division within the 
                Food and Drug Administration that is responsible for 
                the review and approval of the application under which 
                the reference product is licensed.
                    ``(C) Risk evaluation and mitigation strategies.--
                The authority of the Secretary with respect to risk 
                evaluation and mitigation strategies under the Federal 
                Food, Drug, and Cosmetic Act shall apply to biological 
                products licensed under this subsection in the same 
                manner as such authority applies to biological products 
                licensed under subsection (a).
                    ``(D) Restrictions on biological products 
                containing dangerous ingredients.--If information in an 
                application submitted under this subsection, in a 
                supplement to such an application, or otherwise 
                available to the Secretary shows that a biological 
                product--
                            ``(i) is, bears, or contains a select agent 
                        or toxin listed in section 73.3 or 73.4 of 
                        title 42, section 121.3 or 121.4 of title 9, or 
                        section 331.3 of title 7, Code of Federal 
                        Regulations (or any successor regulations); or
                            ``(ii) is, bears, or contains a controlled 
                        substance in schedule I or II of section 202 of 
                        the Controlled Substances Act, as listed in 
                        part 1308 of title 21, Code of Federal 
                        Regulations (or any successor regulations);
                the Secretary shall not license the biological product 
                under this subsection unless the Secretary determines, 
                after consultation with appropriate national security 
                and drug enforcement agencies, that there would be no 
                increased risk to the security or health of the public 
                from licensing such biological product under this 
                subsection.
            ``(6) Exclusivity for first interchangeable biological 
        product.--Upon review of an application submitted under this 
        subsection relying on the same reference product for which a 
        prior biological product has received a determination of 
        interchangeability for any condition of use, the Secretary 
        shall not make a determination under paragraph (4) that the 
        second or subsequent biological product is interchangeable for 
        any condition of use until the earlier of--
                    ``(A) 1 year after the first commercial marketing 
                of the first interchangeable biosimilar biological 
                product to be approved as interchangeable for that 
                reference product;
                    ``(B) 18 months after--
                            ``(i) a final court decision on all patents 
                        in suit in an action instituted under 
                        subsection (l)(5) against the applicant that 
                        submitted the application for the first 
                        approved interchangeable biosimilar biological 
                        product; or
                            ``(ii) the dismissal with or without 
                        prejudice of an action instituted under 
                        subsection (l)(5) against the applicant that 
                        submitted the application for the first 
                        approved interchangeable biosimilar biological 
                        product; or
                    ``(C)(i) 42 months after approval of the first 
                interchangeable biosimilar biological product if the 
                applicant that submitted such application has been sued 
                under subsection (l)(5) and such litigation is still 
                ongoing within such 42-month period; or
                    ``(ii) 18 months after approval of the first 
                interchangeable biosimilar biological product if the 
                applicant that submitted such application has not been 
                sued under subsection (l)(5).
        For purposes of this paragraph, the term `final court decision' 
        means a final decision of a court from which no appeal (other 
        than a petition to the United States Supreme Court for a writ 
        of certiorari) has been or can be taken.
            ``(7) Exclusivity for reference product.--
                    ``(A) Effective date of biosimilar application 
                approval.--Approval of an application under this 
                subsection may not be made effective by the Secretary 
                until the date that is 12 years after the date on which 
                the reference product was first licensed under 
                subsection (a).
                    ``(B) Filing period.--An application under this 
                subsection may not be submitted to the Secretary until 
                the date that is 4 years after the date on which the 
                reference product was first licensed under subsection 
                (a).
                    ``(C) First licensure.--Subparagraphs (A) and (B) 
                shall not apply to a license for or approval of--
                            ``(i) a supplement for the biological 
                        product that is the reference product; or
                            ``(ii) a subsequent application filed by 
                        the same sponsor or manufacturer of the 
                        biological product that is the reference 
                        product (or a licensor, predecessor in 
                        interest, or other related entity) for--
                                    ``(I) a change (not including a 
                                modification to the structure of the 
                                biological product) that results in a 
                                new indication, route of 
                                administration, dosing schedule, dosage 
                                form, delivery system, delivery device, 
                                or strength; or
                                    ``(II) a modification to the 
                                structure of the biological product 
                                that does not result in a change in 
                                safety, purity, or potency.
            ``(8) Pediatric studies.--
                    ``(A) Exclusivity.--If, before or after licensure 
                of the reference product under subsection (a) of this 
                section, the Secretary determines that information 
                relating to the use of such product in the pediatric 
                population may produce health benefits in that 
                population, the Secretary makes a written request for 
                pediatric studies (which shall include a timeframe for 
                completing such studies), the applicant or holder of 
                the approved application agrees to the request, such 
                studies are completed using appropriate formulations 
                for each age group for which the study is requested 
                within any such timeframe, and the reports thereof are 
                submitted and accepted in accordance with section 
                505A(d)(3) of the Federal Food, Drug, and Cosmetic Act 
                the period referred to in paragraph (7)(A) of this 
                subsection is deemed to be 12 years and 6 months rather 
                than 12 years.
                    ``(B) Exception.--The Secretary shall not extend 
                the period referred to in subparagraph (A) of this 
                paragraph if the determination under section 505A(d)(3) 
                of the Federal Food, Drug, and Cosmetic Act is made 
                later than 9 months prior to the expiration of such 
                period.
                    ``(C) Application of certain provisions.--The 
                provisions of subsections (a), (d), (e), (f), (h), (j), 
                (k), and (l) of section 505A of the Federal Food, Drug, 
                and Cosmetic Act shall apply with respect to the 
                extension of a period under subparagraph (A) of this 
                paragraph to the same extent and in the same manner as 
                such provisions apply with respect to the extension of 
                a period under subsection (b) or (c) of section 505A of 
                the Federal Food, Drug, and Cosmetic Act.
            ``(9) Guidance documents.--
                    ``(A) In general.--The Secretary may, after 
                opportunity for public comment, issue guidance in 
                accordance, except as provided in subparagraph (B)(i), 
                with section 701(h) of the Federal Food, Drug, and 
                Cosmetic Act with respect to the licensure of a 
                biological product under this subsection. Any such 
                guidance may be general or specific.
                    ``(B) Public comment.--
                            ``(i) In general.--The Secretary shall 
                        provide the public an opportunity to comment on 
                        any proposed guidance issued under subparagraph 
                        (A) before issuing final guidance.
                            ``(ii) Input regarding most valuable 
                        guidance.--The Secretary shall establish a 
                        process through which the public may provide 
                        the Secretary with input regarding priorities 
                        for issuing guidance.
                    ``(C) No requirement for application 
                consideration.--The issuance (or non-issuance) of 
                guidance under subparagraph (A) shall not preclude the 
                review of, or action on, an application submitted under 
                this subsection.
                    ``(D) Requirement for product class-specific 
                guidance.--If the Secretary issues product class-
                specific guidance under subparagraph (A), such guidance 
                shall include a description of--
                            ``(i) the criteria that the Secretary will 
                        use to determine whether a biological product 
                        is highly similar to a reference product in 
                        such product class; and
                            ``(ii) the criteria, if available, that the 
                        Secretary will use to determine whether a 
                        biological product meets the standards 
                        described in paragraph (4).
                    ``(E) Certain product classes.--
                            ``(i) Guidance.--The Secretary may indicate 
                        in a guidance document that the science and 
                        experience, as of the date of such guidance, 
                        with respect to a product or product class (not 
                        including any recombinant protein) does not 
                        allow approval of an application for a license 
                        as provided under this subsection for such 
                        product or product class.
                            ``(ii) Modification or reversal.--The 
                        Secretary may issue a subsequent guidance 
                        document under subparagraph (A) to modify or 
                        reverse a guidance document under clause (i).
                            ``(iii) No effect on ability to deny 
                        license.--Clause (i) shall not be construed to 
                        require the Secretary to approve a product with 
                        respect to which the Secretary has not 
                        indicated in a guidance document that the 
                        science and experience, as described in clause 
                        (i), does not allow approval of such an 
                        application.
            ``(10) Naming.--The Secretary shall ensure that the 
        labeling and packaging of each biological product licensed 
        under this subsection bears a name that uniquely identifies the 
        biological product and distinguishes it from the reference 
        product and any other biological products licensed under this 
        subsection following evaluation against such reference product.
    ``(l) Patent Notices; Relationship to Final Approval.--
            ``(1) Definitions.--For the purposes of this subsection, 
        the term--
                    ``(A) `biosimilar product' means the biological 
                product that is the subject of the application under 
                subsection (k);
                    ``(B) `relevant patent' means a patent that--
                            ``(i) expires after the date specified in 
                        subsection (k)(7)(A) that applies to the 
                        reference product; and
                            ``(ii) could reasonably be asserted against 
                        the applicant due to the unauthorized making, 
                        use, sale, or offer for sale within the United 
                        States, or the importation into the United 
                        States of the biosimilar product, or materials 
                        used in the manufacture of the biosimilar 
                        product, or due to a use of the biosimilar 
                        product in a method of treatment that is 
                        indicated in the application;
                    ``(C) `reference product sponsor' means the holder 
                of an approved application or license for the reference 
                product; and
                    ``(D) `interested third party' means a person other 
                than the reference product sponsor that owns a relevant 
                patent, or has the right to commence or participate in 
                an action for infringement of a relevant patent.
            ``(2) Handling of confidential information.--Any entity 
        receiving confidential information pursuant to this subsection 
        shall designate one or more individuals to receive such 
        information. Each individual so designated shall execute an 
        agreement in accordance with regulations promulgated by the 
        Secretary. The regulations shall require each such individual 
        to take reasonable steps to maintain the confidentiality of 
        information received pursuant to this subsection and use the 
        information solely for purposes authorized by this subsection. 
        The obligations imposed on an individual who has received 
        confidential information pursuant to this subsection shall 
        continue until the individual returns or destroys the 
        confidential information, a court imposes a protective order 
        that governs the use or handling of the confidential 
        information, or the party providing the confidential 
        information agrees to other terms or conditions regarding the 
        handling or use of the confidential information.
            ``(3) Public notice by secretary.--Within 30 days of 
        acceptance by the Secretary of an application filed under 
        subsection (k), the Secretary shall publish a notice 
        identifying--
                    ``(A) the reference product identified in the 
                application; and
                    ``(B) the name and address of an agent designated 
                by the applicant to receive notices pursuant to 
                paragraph (4)(B).
            ``(4) Exchanges concerning patents.--
                    ``(A) Exchanges with reference product sponsor.--
                            ``(i) Within 30 days of the date of 
                        acceptance of the application by the Secretary, 
                        the applicant shall provide the reference 
                        product sponsor with a copy of the application 
                        and information concerning the biosimilar 
                        product and its production. This information 
                        shall include a detailed description of the 
                        biosimilar product, its method of manufacture, 
                        and the materials used in the manufacture of 
                        the product.
                            ``(ii) Within 60 days of the date of 
                        receipt of the information required to be 
                        provided under clause (i), the reference 
                        product sponsor shall provide to the applicant 
                        a list of relevant patents owned by the 
                        reference product sponsor, or in respect of 
                        which the reference product sponsor has the 
                        right to commence an action of infringement or 
                        otherwise has an interest in the patent as such 
                        patent concerns the biosimilar product.
                            ``(iii) If the reference product sponsor is 
                        issued or acquires an interest in a relevant 
                        patent after the date on which the reference 
                        product sponsor provides the list required by 
                        clause (ii) to the applicant, the reference 
                        product sponsor shall identify that patent to 
                        the applicant within 30 days of the date of 
                        issue of the patent, or the date of acquisition 
                        of the interest in the patent, as applicable.
                    ``(B) Exchanges with interested third parties.--
                            ``(i) At any time after the date on which 
                        the Secretary publishes a notice for an 
                        application under paragraph (3), any interested 
                        third party may provide notice to the 
                        designated agent of the applicant that the 
                        interested third party owns or has rights under 
                        1 or more patents that may be relevant patents. 
                        The notice shall identify at least 1 patent and 
                        shall designate an individual who has executed 
                        an agreement in accordance with paragraph (2) 
                        to receive confidential information from the 
                        applicant.
                            ``(ii) Within 30 days of the date of 
                        receiving notice pursuant to clause (i), the 
                        applicant shall send to the individual 
                        designated by the interested third party the 
                        information specified in subparagraph (A)(i), 
                        unless the applicant and interested third party 
                        otherwise agree.
                            ``(iii) Within 90 days of the date of 
                        receiving information pursuant to clause (ii), 
                        the interested third party shall provide to the 
                        applicant a list of relevant patents which the 
                        interested third party owns, or in respect of 
                        which the interested third party has the right 
                        to commence or participate in an action for 
                        infringement.
                            ``(iv) If the interested third party is 
                        issued or acquires an interest in a relevant 
                        patent after the date on which the interested 
                        third party provides the list required by 
                        clause (iii), the interested third party shall 
                        identify that patent within 30 days of the date 
                        of issue of the patent, or the date of 
                        acquisition of the interest in the patent, as 
                        applicable.
                    ``(C) Identification of basis for infringement.--
                For any patent identified under clause (ii) or (iii) of 
                subparagraph (A) or under clause (iii) or (iv) of 
                subparagraph (B), the reference product sponsor or the 
                interested third party, as applicable--
                            ``(i) shall explain in writing why the 
                        sponsor or the interested third party believes 
                        the relevant patent would be infringed by the 
                        making, use, sale, or offer for sale within the 
                        United States, or importation into the United 
                        States, of the biosimilar product or by a use 
                        of the biosimilar product in treatment that is 
                        indicated in the application;
                            ``(ii) may specify whether the relevant 
                        patent is available for licensing; and
                            ``(iii) shall specify the number and date 
                        of expiration of the relevant patent.
                    ``(D) Certification by applicant concerning 
                identified relevant patents.--Not later than 45 days 
                after the date on which a patent is identified under 
                clause (ii) or (iii) of subparagraph (A) or under 
                clause (iii) or (iv) of subparagraph (B), the applicant 
                shall send a written statement regarding each 
                identified patent to the party that identified the 
                patent. Such statement shall either--
                            ``(i) state that the applicant will not 
                        commence marketing of the biosimilar product 
                        and has requested the Secretary to not grant 
                        final approval of the application before the 
                        date of expiration of the noticed patent; or
                            ``(ii) provide a detailed written 
                        explanation setting forth the reasons why the 
                        applicant believes--
                                    ``(I) the making, use, sale, or 
                                offer for sale within the United 
                                States, or the importation into the 
                                United States, of the biosimilar 
                                product, or the use of the biosimilar 
                                product in a treatment indicated in the 
                                application, would not infringe the 
                                patent; or
                                    ``(II) the patent is invalid or 
                                unenforceable.
            ``(5) Action for infringement involving reference product 
        sponsor.--If an action for infringement concerning a relevant 
        patent identified by the reference product sponsor under clause 
        (ii) or (iii) of paragraph (4)(A), or by an interested third 
        party under clause (iii) or (iv) of paragraph (4)(B), is 
        brought within 60 days of the date of receipt of a statement 
        under paragraph (4)(D)(ii), and the court in which such action 
        has been commenced determines the patent is infringed prior to 
        the date applicable under subsection (k)(7)(A) or (k)(8), the 
        Secretary shall make approval of the application effective on 
        the day after the date of expiration of the patent that has 
        been found to be infringed. If more than one such patent is 
        found to be infringed by the court, the approval of the 
        application shall be made effective on the day after the date 
        that the last such patent expires.
            ``(6) Notification of agreements.--
                    ``(A) Requirements.--
                            ``(i) Agreement between biosimilar product 
                        applicant and reference product sponsor.--If a 
                        biosimilar product applicant under subsection 
                        (k) and the reference product sponsor enter 
                        into an agreement described in subparagraph 
                        (B), the applicant and sponsor shall each file 
                        the agreement in accordance with subparagraph 
                        (C).
                            ``(ii) Agreement between biosimilar product 
                        applicants.--If 2 or more biosimilar product 
                        applicants submit an application under 
                        subsection (k) for biosimilar products with the 
                        same reference product and enter into an 
                        agreement described in subparagraph (B), the 
                        applicants shall each file the agreement in 
                        accordance with subparagraph (C).
                    ``(B) Subject matter of agreement.--An agreement 
                described in this subparagraph--
                            ``(i) is an agreement between the 
                        biosimilar product applicant under subsection 
                        (k) and the reference product sponsor or 
                        between 2 or more biosimilar product applicants 
                        under subsection (k) regarding the manufacture, 
                        marketing, or sale of--
                                    ``(I) the biosimilar product (or 
                                biosimilar products) for which an 
                                application was submitted; or
                                    ``(II) the reference product;
                            ``(ii) includes any agreement between the 
                        biosimilar product applicant under subsection 
                        (k) and the reference product sponsor or 
                        between 2 or more biosimilar product applicants 
                        under subsection (k) that is contingent upon, 
                        provides a contingent condition for, or 
                        otherwise relates to an agreement described in 
                        clause (i); and
                            ``(iii) excludes any agreement that solely 
                        concerns--
                                    ``(I) purchase orders for raw 
                                material supplies;
                                    ``(II) equipment and facility 
                                contracts;
                                    ``(III) employment or consulting 
                                contracts; or
                                    ``(IV) packaging and labeling 
                                contracts.
                    ``(C) Filing.--
                            ``(i) In general.--The text of an agreement 
                        required to be filed by subparagraph (A) shall 
                        be filed with the Assistant Attorney General 
                        and the Federal Trade Commission not later 
                        than--
                                    ``(I) 10 business days after the 
                                date on which the agreement is 
                                executed; and
                                    ``(II) prior to the date of the 
                                first commercial marketing of, for 
                                agreements described in subparagraph 
                                (A)(i), the biosimilar product that is 
                                the subject of the application or, for 
                                agreements described in subparagraph 
                                (A)(ii), any biosimilar product that is 
                                the subject of an application described 
                                in such subparagraph.
                            ``(ii) If agreement not reduced to text.--
                        If an agreement required to be filed by 
                        subparagraph (A) has not been reduced to text, 
                        the persons required to file the agreement 
                        shall each file written descriptions of the 
                        agreement that are sufficient to disclose all 
                        the terms and conditions of the agreement.
                            ``(iii) Certification.--The chief executive 
                        officer or the company official responsible for 
                        negotiating any agreement required to be filed 
                        by subparagraph (A) shall include in any filing 
                        under this paragraph 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 351(l)(6) of the Public Health Service 
                        Act, 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 such section and have not been 
                        reduced to writing.'.
                    ``(D) Disclosure exemption.--Any information or 
                documentary material filed with the Assistant Attorney 
                General or the Federal Trade Commission pursuant to 
                this paragraph shall be exempt from disclosure under 
                section 552 of title 5, United States Code, and no such 
                information or documentary material may be made public, 
                except as may be relevant to any administrative or 
                judicial action or proceeding. Nothing in this 
                subparagraph prevents disclosure of information or 
                documentary material to either body of the Congress or 
                to any duly authorized committee or subcommittee of the 
                Congress.
                    ``(E) Enforcement.--
                            ``(i) Civil penalty.--Any person that 
                        violates a provision of this paragraph shall be 
                        liable for a civil penalty of not more than 
                        $11,000 for each day on which the violation 
                        occurs. Such penalty may be recovered in a 
                        civil action--
                                    ``(I) brought by the United States; 
                                or
                                    ``(II) brought by the Federal Trade 
                                Commission in accordance with the 
                                procedures established in section 
                                16(a)(1) of the Federal Trade 
                                Commission Act.
                            ``(ii) Compliance and equitable relief.--If 
                        any person violates any provision of this 
                        paragraph, the United States district court may 
                        order compliance, and may grant such other 
                        equitable relief as the court in its discretion 
                        determines necessary or appropriate, upon 
                        application of the Assistant Attorney General 
                        or the Federal Trade Commission.
                    ``(F) Rulemaking.--The Federal Trade Commission, 
                with the concurrence of the Assistant Attorney General 
                and by rule in accordance with section 553 of title 5, 
                United States Code, consistent with the purposes of 
                this paragraph--
                            ``(i) may define the terms used in this 
                        paragraph;
                            ``(ii) may exempt classes of persons or 
                        agreements from the requirements of this 
                        paragraph; and
                            ``(iii) may prescribe such other rules as 
                        may be necessary and appropriate to carry out 
                        the purposes of this paragraph.
                    ``(G) Savings clause.--Any action taken by the 
                Assistant Attorney General or the Federal Trade 
                Commission, or any failure of the Assistant Attorney 
                General or the Commission to take action, under this 
                paragraph shall not at any time bar any proceeding or 
                any action with respect to any agreement between a 
                biosimilar product applicant under subsection (k) and 
                the reference product sponsor, or any agreement between 
                biosimilar product applicants under subsection (k), 
                under any other provision of law, nor shall any filing 
                under this paragraph constitute or create a presumption 
                of any violation of any competition laws.''.
    (b) Definitions.--Section 351(i) of the Public Health Service Act 
(42 U.S.C. 262(i)) is amended--
            (1) by striking ``In this section, the term `biological 
        product' means'' and inserting the following: ``In this 
        section:
            ``(1) The term `biological product' means'';
            (2) in paragraph (1), as so designated, by inserting 
        ``protein (except any chemically synthesized polypeptide),'' 
        after ``allergenic product,''; and
            (3) by adding at the end the following:
            ``(2) The term `biosimilar' or `biosimilarity', in 
        reference to a biological product that is the subject of an 
        application under subsection (k), means--
                    ``(A) that the biological product is highly similar 
                to the reference product notwithstanding minor 
                differences in clinically inactive components; and
                    ``(B) there are no clinically meaningful 
                differences between the biological product and the 
                reference product in terms of the safety, purity, and 
                potency of the product.
            ``(3) The term `interchangeable' or `interchangeability', 
        in reference to a biological product that is shown to meet the 
        standards described in subsection (k)(4), means that the 
        biological product may be substituted for the reference product 
        without the intervention of the health care provider who 
        prescribed the reference product.
            ``(4) The term `reference product' means the single 
        biological product licensed under subsection (a) against which 
        a biological product is evaluated in an application submitted 
        under subsection (k).''.
    (c) Products Previously Approved Under Section 505.--
            (1) Requirement to follow section 351.--Except as provided 
        in paragraph (2), an application for a biological product shall 
        be submitted under section 351 of the Public Health Service Act 
        (42 U.S.C. 262) (as amended by this Act).
            (2) Exception.--An application for a biological product may 
        be submitted under section 505 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355) if--
                    (A) such biological product is in a product class 
                for which a biological product in such product class is 
                the subject of an application approved under such 
                section 505 not later than the date of enactment of 
                this Act; and
                    (B) such application--
                            (i) has been submitted to the Secretary of 
                        Health and Human Services (referred to in this 
                        Act as the ``Secretary'') before the date of 
                        enactment of this Act; or
                            (ii) is submitted to the Secretary not 
                        later than the date that is 10 years after the 
                        date of enactment of this Act.
            (3) Limitation.--Notwithstanding paragraph (2), an 
        application for a biological product may not be submitted under 
        section 505 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355) if there is another biological product approved 
        under subsection (a) of section 351 of the Public Health 
        Service Act that could be a reference product with respect to 
        such application (within the meaning of such section 351) if 
        such application were submitted under subsection (k) of such 
        section 351.
            (4) Deemed approved under section 351.--An approved 
        application for a biological product under section 505 of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) shall be 
        deemed to be a license for the biological product under such 
        section 351 on the date that is 10 years after the date of 
        enactment of this Act.
            (5) Definitions.--For purposes of this subsection, the term 
        ``biological product'' has the meaning given such term under 
        section 351 of the Public Health Service Act (42 U.S.C. 262) 
        (as amended by this Act).

SEC. 222. FEES RELATING TO BIOSIMILAR BIOLOGICAL PRODUCTS.

    Subparagraph (B) of section 735(1) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 379g(1)) is amended by inserting ``, including 
licensure of a biological product under section 351(k) of such Act'' 
before the period at the end.

SEC. 223. AMENDMENTS TO CERTAIN PATENT PROVISIONS.

    (a) Section 271(e)(2) of title 35, United States Code is amended--
            (1) in subparagraph (A), by striking ``or'' after 
        ``patent,'';
            (2) in subparagraph (B), by adding ``or'' after the comma 
        at the end;
            (3) by inserting the following after subparagraph (B):
                    ``(C) a statement under section 351(l)(4)(D)(ii) of 
                the Public Health Service Act,''; and
            (4) in the matter following subparagraph (C) (as added by 
        paragraph (3)), by inserting before the period the following: 
        ``, or if the statement described in subparagraph (C) is 
        provided in connection with an application to obtain a license 
        to engage in the commercial manufacture, use, or sale of a 
        biological product claimed in a patent or the use of which is 
        claimed in a patent before the expiration of such patent''.
    (b) Section 271(e)(4) of title 35, United States Code, is amended 
by striking ``in paragraph (2)'' in both places it appears and 
inserting ``in paragraph (2)(A) or (2)(B)''.

               Subtitle D--Administrative Simplification

SEC. 231. ADMINISTRATIVE SIMPLIFICATION.

    (a) Operating Rules for Health Information Transactions.--
            (1) Definition of operating rules.--Section 1171 of the 
        Social Security Act (42 U.S.C. 1320d) is amended by adding at 
        the end the following:
            ``(9) Operating rules.--The term `operating rules' means 
        the necessary business rules and guidelines for the electronic 
        exchange of information that are not defined by a standard or 
        its implementation specifications as adopted for purposes of 
        this part.''.
            (2) Operating rules and compliance.--Section 1173 of the 
        Social Security Act (42 U.S.C. 1320d-2) is amended--
                    (A) in subsection (a)(2), by adding at the end the 
                following new subparagraph:
                    ``(J) Electronic funds transfers.''; and
                    (B) by adding at the end the following new 
                subsections:
    ``(g) Operating Rules.--
            ``(1) In general.--The Secretary shall adopt a single set 
        of operating rules for each transaction described in subsection 
        (a)(2) with the goal of creating as much uniformity in the 
        implementation of the electronic standards as possible. Such 
        operating rules shall be consensus-based and reflect the 
        necessary business rules affecting health plans and health care 
        providers and the manner in which they operate pursuant to 
        standards issued under Health Insurance Portability and 
        Accountability Act of 1996.
            ``(2) Operating rules development.--In adopting operating 
        rules under this subsection, the Secretary shall rely on 
        recommendations for operating rules developed by a qualified 
        nonprofit entity, as selected by the Secretary, that meets the 
        following requirements:
                    ``(A) The entity focuses its mission on 
                administrative simplification.
                    ``(B) The entity demonstrates an established multi-
                stakeholder and consensus-based process for development 
                of operating rules, including representation by or 
                participation from health plans, health care providers, 
                vendors, relevant Federal agencies, and other standard 
                development organizations.
                    ``(C) The entity has established a public set of 
                guiding principles that ensure the operating rules and 
                process are open and transparent.
                    ``(D) The entity coordinates its activities with 
                the HIT Policy Committee and the HIT Standards 
                Committee (as established under title XXX of the Public 
                Health Service Act) and complements the efforts of the 
                Office of the National Healthcare Coordinator and its 
                related health information exchange goals.
                    ``(E) The entity incorporates national standards, 
                including the transaction standards issued under Health 
                Insurance Portability and Accountability Act of 1996.
                    ``(F) The entity supports nondiscrimination and 
                conflict of interest policies that demonstrate a 
                commitment to open, fair, and nondiscriminatory 
                practices.
                    ``(G) The entity allows for public review and 
                updates of the operating rules.
            ``(3) Review and recommendations.--The National Committee 
        on Vital and Health Statistics shall--
                    ``(A) review the operating rules developed by a 
                nonprofit entity described under paragraph (2);
                    ``(B) determine whether such rules represent a 
                consensus view of the health care industry and are 
                consistent with and do not alter current standards;
                    ``(C) evaluate whether such rules are consistent 
                with electronic standards adopted for health 
                information technology; and
                    ``(D) submit to the Secretary a recommendation as 
                to whether the Secretary should adopt such rules.
            ``(4) Implementation.--
                    ``(A) In general.--The Secretary shall adopt 
                operating rules under this subsection, by regulation in 
                accordance with subparagraph (C), following 
                consideration of the rules developed by the non-profit 
                entity described in paragraph (2) and the 
                recommendation submitted by the National Committee on 
                Vital and Health Statistics under paragraph (3)(D) and 
                having ensured consultation with providers.
                    ``(B) Adoption requirements; effective dates.--
                            ``(i) Eligibility for a health plan and 
                        health claim status.--The set of operating 
                        rules for transactions for eligibility for a 
                        health plan and health claim status shall be 
                        adopted not later than July 1, 2011, in a 
                        manner ensuring that such rules are effective 
                        not later than January 1, 2013, and may allow 
                        for the use of a machine readable 
                        identification card.
                            ``(ii) Electronic funds transfers and 
                        health care payment and remittance advice.--The 
                        set of operating rules for electronic funds 
                        transfers and health care payment and 
                        remittance advice shall be adopted not later 
                        than July 1, 2012, in a manner ensuring that 
                        such rules are effective not later than January 
                        1, 2014.
                            ``(iii) Other completed transactions.--The 
                        set of operating rules for the remainder of the 
                        completed transactions described in subsection 
                        (a)(2), including health claims or equivalent 
                        encounter information, enrollment and 
                        disenrollment in a health plan, health plan 
                        premium payments, and referral certification 
                        and authorization, shall be adopted not later 
                        than July 1, 2014, in a manner ensuring that 
                        such rules are effective not later than January 
                        1, 2016.
                    ``(C) Expedited rulemaking.--The Secretary shall 
                promulgate an interim final rule applying any standard 
                or operating rule recommended by the National Committee 
                on Vital and Health Statistics pursuant to paragraph 
                (3). The Secretary shall accept public comments on any 
                interim final rule published under this subparagraph 
                for 60 days after the date of such publication.
    ``(h) Compliance.--
            ``(1) Health plan certification.--
                    ``(A) Eligibility for a health plan, health claim 
                status, electronic funds transfers, health care payment 
                and remittance advice.--Not later than December 31, 
                2013, a health plan shall file a statement with the 
                Secretary, in such form as the Secretary may require, 
                certifying that the data and information systems for 
                such plan are in compliance with any applicable 
                standards (as described under paragraph (7) of section 
                1171) and operating rules (as described under paragraph 
                (9) of such section) for electronic funds transfers, 
                eligibility for a health plan, health claim status, and 
                health care payment and remittance advice, 
                respectively.
                    ``(B) Other completed transactions.--Not later than 
                December 31, 2015, a health plan shall file a statement 
                with the Secretary, in such form as the Secretary may 
                require, certifying that the data and information 
                systems for such plan are in compliance with any 
                applicable standards and operating rules for the 
                remainder of the completed transactions described in 
                subsection (a)(2), including health claims or 
                equivalent encounter information, enrollment and 
                disenrollment in a health plan, health plan premium 
                payments, and referral certification and authorization, 
                respectively. A health plan shall provide the same 
                level of documentation to certify compliance with such 
                transactions as is required to certify compliance with 
                the transactions specified in subparagraph (A).
            ``(2) Documentation of compliance.--A health plan shall 
        provide the Secretary, in such form as the Secretary may 
        require, with adequate documentation of compliance with the 
        standards and operating rules described under paragraph (1). A 
        health plan shall not be considered to have provided adequate 
        documentation and shall not be certified as being in compliance 
        with such standards, unless the health plan--
                    ``(A) demonstrates to the Secretary that the plan 
                conducts the electronic transactions specified in 
                paragraph (1) in a manner that fully complies with the 
                regulations of the Secretary; and
                    ``(B) provides documentation showing that the plan 
                has completed end-to-end testing for such transactions 
                with their partners, such as hospitals and physicians.
            ``(3) Service contracts.--A health plan shall be required 
        to comply with any applicable certification and compliance 
        requirements (and provide the Secretary with adequate 
        documentation of such compliance) under this subsection for any 
        entities that provide services pursuant to a contract with such 
        health plan.
            ``(4) Certification by outside entity.--The Secretary may 
        contract with an independent, outside entity to certify that a 
        health plan has complied with the requirements under this 
        subsection, provided that the certification standards employed 
        by such entities are in accordance with any standards or rules 
        issued by the Secretary.
            ``(5) Compliance with revised standards and rules.--A 
        health plan (including entities described under paragraph (3)) 
        shall comply with the certification and documentation 
        requirements under this subsection for any interim final rule 
        promulgated by the Secretary under subsection (i) that amends 
        any standard or operating rule described under paragraph (1) of 
        this subsection. A health plan shall comply with such 
        requirements not later than the effective date of the 
        applicable interim final rule.
            ``(6) Audits of health plans.--The Secretary shall conduct 
        periodic audits to ensure that health plans (including entities 
        described under paragraph (3)) are in compliance with any 
        standards and operating rules that are described under 
        paragraph (1).
    ``(i) Review and Amendment of Standards and Rules.--
            ``(1) Establishment.--Not later than January 1, 2014, the 
        Secretary shall establish a review committee (as described 
        under paragraph (4)).
            ``(2) Evaluations and reports.--
                    ``(A) Hearings.--Not later than April 1, 2014, and 
                not less than biennially thereafter, the Secretary, 
                acting through the review committee, shall conduct 
                hearings to evaluate and review the existing standards 
                and operating rules established under this section.
                    ``(B) Report.--Not later than July 1, 2014, and not 
                less than biennially thereafter, the review committee 
                shall provide recommendations for updating and 
                improving such standards and rules. The review 
                committee shall recommend a single set of operating 
                rules per transaction standard and maintain the goal of 
                creating as much uniformity as possible in the 
                implementation of the electronic standards.
            ``(3) Interim final rulemaking.--
                    ``(A) In general.--Any recommendations to amend 
                existing standards and operating rules that have been 
                approved by the review committee and reported to the 
                Secretary under paragraph (2)(B) shall be adopted by 
                the Secretary through promulgation of an interim final 
                rule not later than 90 days after receipt of the 
                committee's report.
                    ``(B) Public comment.--
                            ``(i) Public comment period.--The Secretary 
                        shall accept public comments on any interim 
                        final rule published under this paragraph for 
                        60 days after the date of such publication.
                            ``(ii) Effective date.--The effective date 
                        of any amendment to existing standards or 
                        operating rules that is adopted through an 
                        interim final rule published under this 
                        paragraph shall be 25 months following the 
                        close of such public comment period.
            ``(4) Review committee.--
                    ``(A) Definition.--For the purposes of this 
                subsection, the term `review committee' means a 
                committee within the Department of Health and Human 
                services that has been designated by the Secretary to 
                carry out this subsection, including--
                            ``(i) the National Committee on Vital and 
                        Health Statistics; or
                            ``(ii) any appropriate committee as 
                        determined by the Secretary.
                    ``(B) Coordination of hit standards.--In developing 
                recommendations under this subsection, the review 
                committee shall consider the standards approved by the 
                Office of the National Coordinator for Health 
                Information Technology.
    ``(j) Penalties.--
            ``(1) Penalty fee.--
                    ``(A) In general.--Not later than April 1, 2014, 
                and annually thereafter, the Secretary shall assess a 
                penalty fee (as determined under subparagraph (B)) 
                against a health plan that has failed to meet the 
                requirements under subsection (h) with respect to 
                certification and documentation of compliance with the 
                standards (and their operating rules) as described 
                under paragraph (1) of such subsection.
                    ``(B) Fee amount.--Subject to subparagraphs (C), 
                (D), and (E), the Secretary shall assess a penalty fee 
                against a health plan in the amount of $1 per covered 
                life until certification is complete. The penalty shall 
                be assessed per person covered by the plan for which 
                its data systems for major medical policies are not in 
                compliance and shall be imposed against the health plan 
                for each day that the plan is not in compliance with 
                the requirements under subsection (h).
                    ``(C) Additional penalty for misrepresentation.--A 
                health plan that knowingly provides inaccurate or 
                incomplete information in a statement of certification 
                or documentation of compliance under subsection (h) 
                shall be subject to a penalty fee that is double the 
                amount that would otherwise be imposed under this 
                subsection.
                    ``(D) Annual fee increase.--The amount of the 
                penalty fee imposed under this subsection shall be 
                increased on an annual basis by the annual percentage 
                increase in total national health care expenditures, as 
                determined by the Secretary.
                    ``(E) Penalty limit.--A penalty fee assessed 
                against a health plan under this subsection shall not 
                exceed, on an annual basis--
                            ``(i) an amount equal to $20 per covered 
                        life under such plan; or
                            ``(ii) an amount equal to $40 per covered 
                        life under the plan if such plan has knowingly 
                        provided inaccurate or incomplete information 
                        (as described under subparagraph (C)).
                    ``(F) Determination of covered individuals.--The 
                Secretary shall determine the number of covered lives 
                under a health plan based upon the most recent 
                statements and filings that have been submitted by such 
                plan to the Securities and Exchange Commission.
            ``(2) Notice and dispute procedure.--The Secretary shall 
        establish a procedure for assessment of penalty fees under this 
        subsection that provides a health plan with reasonable notice 
        and a dispute resolution procedure prior to provision of a 
        notice of assessment by the Secretary of the Treasury (as 
        described under paragraph (4)(B)).
            ``(3) Penalty fee report.--Not later than May 1, 2014, and 
        annually thereafter, the Secretary shall provide the Secretary 
        of the Treasury with a report identifying those health plans 
        that have been assessed a penalty fee under this subsection.
            ``(4) Collection of penalty fee.--
                    ``(A) In general.--The Secretary of the Treasury, 
                acting through the Financial Management Service, shall 
                administer the collection of penalty fees from health 
                plans that have been identified by the Secretary in the 
                penalty fee report provided under paragraph (3).
                    ``(B) Notice.--Not later than August 1, 2014, and 
                annually thereafter, the Secretary of the Treasury 
                shall provide notice to each health plan that has been 
                assessed a penalty fee by the Secretary under this 
                subsection. Such notice shall include the amount of the 
                penalty fee assessed by the Secretary and the due date 
                for payment of such fee to the Secretary of the 
                Treasury (as described in subparagraph (C)).
                    ``(C) Payment due date.--Payment by a health plan 
                for a penalty fee assessed under this subsection shall 
                be made to the Secretary of the Treasury not later than 
                November 1, 2014, and annually thereafter.
                    ``(D) Unpaid penalty fees.--Any amount of a penalty 
                fee assessed against a health plan under this 
                subsection for which payment has not been made by the 
                due date provided under subparagraph (C) shall be--
                            ``(i) increased by the interest accrued on 
                        such amount, as determined pursuant to the 
                        underpayment rate established under section 
                        6601 of the Internal Revenue Code of 1986; and
                            ``(ii) treated as a past-due, legally 
                        enforceable debt owed to a Federal agency for 
                        purposes of section 6402(d) of the Internal 
                        Revenue Code of 1986.
                    ``(E) Administrative fees.--Any fee charged or 
                allocated for collection activities conducted by the 
                Financial Management Service will be passed on to a 
                health plan on a pro-rata basis and added to any 
                penalty fee collected from the plan.''.
    (b) Promulgation of Rules.--
            (1) Unique health plan identifier.--The Secretary shall 
        promulgate a final rule to establish a unique health plan 
        identifier (as described in section 1173(b) of the Social 
        Security Act (42 U.S.C. 1320d-2(b))) based on the input of the 
        National Committee of Vital and Health Statistics. The 
        Secretary may do so on an interim final basis and such rule 
        shall be effective not later than October 1, 2012.
            (2) Electronic funds transfer.--The Secretary shall 
        promulgate a final rule to establish a standard for electronic 
        funds transfers (as described in section 1173(a)(2)(J) of the 
        Social Security Act, as added by subsection (a)(2)(A)). The 
        Secretary may do so on an interim final basis and shall adopt 
        such standard not later than January 1, 2012, in a manner 
        ensuring that such standard is effective not later than January 
        1, 2014.
    (c) Expansion of Electronic Transactions in Medicare.--Section 
1862(a) of the Social Security Act (42 U.S.C. 1395y(a)) is amended--
            (1) in paragraph (23), by striking the ``or'' at the end;
            (2) in paragraph (24), by striking the period and inserting 
        ``; or''; and
            (3) by inserting after paragraph (24) the following new 
        paragraph:
            ``(25) not later than January 1, 2014, for which the 
        payment is other than by electronic funds transfer (EFT) or an 
        electronic remittance in a form as specified in ASC X12 835 
        Health Care Payment and Remittance Advice or subsequent 
        standard.''.
    (d) Medicare and Medicaid Compliance Reports.--Not later than July 
1, 2013, the Secretary of Health and Human Services shall submit a 
report to the Chairs and Ranking Members of the Committee on Ways and 
Means and the Committee on Energy and Commerce of the House of 
Representatives and the Chairs and Ranking Members of the Committee on 
Health, Education, Labor, and Pensions and the Committee on Finance of 
the Senate on the extent to which the Medicare program and providers 
that serve beneficiaries under that program, and State Medicaid 
programs and providers that serve beneficiaries under those programs, 
transact electronically in accordance with transaction standards issued 
under the Health Insurance Portability and Accountability Act of 1996, 
part C of title XI of the Social Security Act, and regulations 
promulgated under such Acts.
                                 <all>