1.This Act may be cited as the
Preserve Access to Affordable Generics
Act
.
2.Congressional findings and declaration of
purposes
(a)The Congress finds that—
(1)prescription drugs make up 10 percent of
the national health care spending but for the past decade have been one of the
fastest growing segments of health care expenditures;
(2)67 percent of all prescriptions dispensed
in the United States are generic drugs, yet they account for only 20 percent of
all expenditures;
(3)generic drugs, on average, cost 30 to 80
percent less than their brand-name counterparts;
(4)consumers and the health care system would
benefit from free and open competition in the pharmaceutical market and the
removal of obstacles to the introduction of generic drugs;
(5)full and free competition in the
pharmaceutical industry, and the full enforcement of antitrust law to prevent
anticompetitive practices in this industry, will lead to lower prices, greater
innovation, and inure to the general benefit of consumers;
(6)the Federal Trade Commission has determined
that some brand name pharmaceutical manufacturers collude with generic drug
manufacturers to delay the marketing of competing, low-cost, generic
drugs;
(7)collusion by pharmaceutical manufacturers
is contrary to free competition, to the interests of consumers, and to the
principles underlying antitrust law;
(8)in 2005, two appellate court decisions
reversed the Federal Trade Commission’s long-standing position, and upheld
settlements that include pay-offs by brand name pharmaceutical manufacturers to
generic manufacturers designed to keep generic competition off the
market;
(9)in the 6 months following the March 2005
court decisions, the Federal Trade Commission found there were three settlement
agreements in which the generic received compensation and agreed to a
restriction on its ability to market the product;
(10)the FTC found that 1/2
of the settlements made in 2006 and 2007 between brand name and generic
companies, and over 2/3 of the settlements with generic
companies with exclusivity rights that blocked other generic drug applicants,
included a pay-off from the brand name manufacturer in exchange for a promise
from the generic company to delay entry into the market; and
(11)settlements which include a payment from a
brand name manufacturer to a generic manufacturer to delay entry by generic
drugs are anti-competitive and contrary to the interests of consumers.
(b)The purposes of this Act are—
(1)to enhance competition in the
pharmaceutical market by prohibiting anticompetitive agreements and collusion
between brand name and generic drug manufacturers intended to keep generic
drugs off the market;
(2)to support the purpose and intent of
antitrust law by prohibiting anticompetitive agreements and collusion in the
pharmaceutical industry; and
(3)to clarify the law to prohibit payments
from brand name to generic drug manufacturers with the purpose to prevent or
delay the entry of competition from generic drugs.
3.Unlawful compensation for delay
(a)The Clayton Act (15 U.S.C. 12 et seq.) is amended by
inserting after section 28 the following:
29.Unlawful interference with generic
marketing
(a)It shall be unlawful under this Act for any
person, in connection with the sale of a drug product, to directly or
indirectly be a party to any agreement resolving or settling a patent
infringement claim in which—
(1)an ANDA filer receives anything of value;
and
(2)the ANDA filer agrees not to research,
develop, manufacture, market, or sell the ANDA product for any period of
time.
(b)Nothing in this section shall prohibit a
resolution or settlement of patent infringement claim in which the value paid
by the NDA holder to the ANDA filer as a part of the resolution or settlement
of the patent infringement claim includes no more than the right to market the
ANDA product prior to the expiration of the patent that is the basis for the
patent infringement claim.
(c)In this section:
(1)The term agreement means
anything that would constitute an agreement under section 1 of the Sherman Act
(15 U.S.C. 1) or section 5 of the Federal Trade Commission Act (15 U.S.C.
45).
(2)The term agreement resolving or
settling a patent infringement claim includes, any agreement that is
contingent upon, provides a contingent condition for, or is otherwise related
to the resolution or settlement of the claim.
(3)The term ANDA means an
abbreviated new drug application, as defined under section 505(j) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)).
(4)The term ANDA filer means a
party who has filed an ANDA with the Food and Drug Administration.
(5)The term ANDA product means
the product to be manufactured under the ANDA that is the subject of the patent
infringement claim.
(6)The term drug product means a
finished dosage form (e.g., tablet, capsule, or solution) that contains a drug
substance, generally, but not necessarily, in association with one or more
other ingredients, as defined in section 314.3(b) of title 21, Code of Federal
Regulations.
(7)The term NDA means a new drug
application, as defined under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
(8)The term NDA holder
means—
(A)the party that received FDA approval to
market a drug product pursuant to an NDA;
(B)a party owning or controlling enforcement
of the patent listed in the Approved Drug Products With Therapeutic Equivalence
Evaluations (commonly known as the FDA Orange Book
) in
connection with the NDA; or
(C)the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or under common control with
any of the entities described in subclauses (i) and (ii) (such control to be
presumed by direct or indirect share ownership of 50 percent or greater), as
well as the licensees, licensors, successors, and assigns of each of the
entities.
(9)The term patent infringement
means infringement of any patent or of any filed patent application, extension,
reissue, renewal, division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition and extensions thereof.
(10)The term patent infringement
claim means any allegation made to an ANDA filer, whether or not
included in a complaint filed with a court of law, that its ANDA or ANDA
product may infringe any patent held by, or exclusively licensed to, the NDA
holder of the drug
product.
.
(b)The
Federal Trade Commission may, by rule promulgated under section 553 of title 5,
United States Code, exempt certain agreements described in section 29 of the
Clayton Act, as added by subsection (a), if the Commission finds such
agreements to be in furtherance of market competition and for the benefit of
consumers. Consistent with the authority of the Commission, such rules may
include interpretive rules and general statements of policy with respect to the
practices prohibited under section 29 of the Clayton Act.
4.Notice and certification of
agreements
(a)Section 1112(c)(2) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 3155
note) is amended by—
(1)striking the Commission the
and inserting the Commission (1) the
; and
(2)inserting before the period at the end the
following: ; and (2) a description of the subject matter of any other
agreement the parties enter into within 30 days of an entering into an
agreement covered by subsection (a) or (b)
.
(b)Certification of agreementsSection 1112 of such Act is amended by
adding at the end the following:
(d)The Chief Executive Officer or the company
official responsible for negotiating any agreement required to be filed under
subsection (a), (b), or (c) shall execute and file with the Assistant Attorney
General and the Commission a certification as follows: I declare under
penalty of perjury that the following is true and correct: The materials filed
with the Federal Trade Commission and the Department of Justice under section
1112 of subtitle B of title XI of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, with respect to the agreement referenced in this
certification: (1) represent the complete, final, and exclusive agreement
between the parties; (2) include any ancillary agreements that are contingent
upon, provide a contingent condition for, or are otherwise related to, the
referenced agreement; and (3) include written descriptions of any oral
agreements, representations, commitments, or promises between the parties that
are responsive to subsection (a) or (b) of such section 1112 and have not been
reduced to
writing.
.
.
5.Forfeiture of 180-day exclusivity
periodSection 505 of the
Federal Food, Drug and Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(V)) is amended
by inserting section 29 of the Clayton Act or
after that
the agreement has violated
.
1.This Act may be cited as the
Preserve Access to Affordable Generics
Act
.
2.Congressional findings
and declaration of purposes
(a)Congress
finds the following:
(1)In 1984, the Drug Price
Competition and Patent Term Restoration Act (Public Law 98–417) (referred to in
this Act as the 1984 Act
), was enacted with the intent of
facilitating the early entry of generic drugs while preserving incentives for
innovation.
(2)Prescription drugs make
up 10 percent of the national health care spending but for the past decade have
been one of the fastest growing segments of health care expenditures.
(3)Until recently, the 1984
Act was successful in facilitating generic competition to the benefit of
consumers and health care payers – although 67 percent of all prescriptions
dispensed in the United States are generic drugs, they account for only 20
percent of all expenditures.
(4)Generic drugs cost
substantially less than brand name drugs, with discounts off the brand price
sometimes exceeding 90 percent.
(5)Federal dollars currently
account for an estimated 30 percent of the $235,000,000,000 spent on
prescription drugs in 2008, and this share is expected to rise to 40 percent by
2018.
(6)(A)In recent years, the
intent of the 1984 Act has been subverted by certain settlement agreements
between brand companies and their potential generic competitors that make
reverse payments
which are payments by the brand company to the
generic company.
(B)These settlement
agreements have unduly delayed the marketing of low-cost generic drugs contrary
to free competition, the interests of consumers, and the principles underlying
antitrust law.
(C)Because of the price
disparity between brand name and generic drugs, such agreements are more
profitable for both the brand and generic manufacturers than competition, and
will become increasingly common unless prohibited.
(D)These agreements result
in consumers losing the benefits that the 1984 Act was intended to
provide.
(b)The
purposes of this Act are—
(1)to enhance competition in
the pharmaceutical market by stopping anticompetitive agreements between brand
name and generic drug manufacturers that limit, delay, or otherwise prevent
competition from generic drugs; and
(2)to support the purpose
and intent of antitrust law by prohibiting anticompetitive practices in the
pharmaceutical industry that harm consumers.
3.Unlawful compensation
for delay
(a)The Federal Trade Commission Act (15 U.S.C. 44 et seq.)
is amended by—
(1)redesignating section 28
as section 29; and
(2)inserting before section
29, as redesignated, the following:
28.Preserving access to
affordable generics
(a)
(1)The Federal Trade Commission may initiate a proceeding
to enforce the provisions of this section against the parties to any agreement
resolving or settling, on a final or interim basis, a patent infringement
claim, in connection with the sale of a drug product.
(2)
(A)Subject to subparagraph (B), in such a proceeding, an
agreement shall be presumed to have anticompetitive effects and be unlawful
if—
(i)an ANDA filer receives
anything of value; and
(ii)the ANDA filer agrees to
limit or forego research, development, manufacturing, marketing, or sales of
the ANDA product for any period of time.
(B)The
presumption in subparagraph (A) shall not apply if the parties to such
agreement demonstrate by clear and convincing evidence that the procompetitive
benefits of the agreement outweigh the anticompetitive effects of the
agreement.
(b)In determining whether the settling parties have met
their burden under subsection (a)(2)(B), the fact finder shall consider—
(1)the length of time
remaining until the end of the life of the relevant patent, compared with the
agreed upon entry date for the ANDA product;
(2)the value to consumers of
the competition from the ANDA product allowed under the agreement;
(3)the form and amount of
consideration received by the ANDA filer in the agreement resolving or settling
the patent infringement claim;
(4)the revenue the ANDA
filer would have received by winning the patent litigation;
(5)the reduction in the NDA
holder's revenues if it had lost the patent litigation;
(6)the time period between
the date of the agreement conveying value to the ANDA filer and the date of the
settlement of the patent infringement claim; and
(7)any other factor that the
fact finder, in its discretion, deems relevant to its determination of
competitive effects under this subsection.
(c)In
determining whether the settling parties have met their burden under subsection
(a)(2)(B), the fact finder shall not presume—
(1)that entry would not have
occurred until the expiration of the relevant patent or statutory exclusivity;
or
(2)that the agreement's
provision for entry of the ANDA product prior to the expiration of the relevant
patent or statutory exclusivity means that the agreement is pro-competitive,
although such evidence may be relevant to the fact finder's determination under
this section.
(d)Nothing
in this section shall prohibit a resolution or settlement of a patent
infringement claim in which the consideration granted by the NDA holder to the
ANDA filer as part of the resolution or settlement includes only one or more of
the following:
(1)The right to market the
ANDA product in the United States prior to the expiration of—
(A)any patent that is the
basis for the patent infringement claim; or
(B)any patent right or other
statutory exclusivity that would prevent the marketing of such drug.
(2)A payment for reasonable
litigation expenses not to exceed $7,500,000.
(3)A covenant not to sue on
any claim that the ANDA product infringes a United States patent.
(e)Regulations and
enforcement
(1)The
Federal Trade Commission may issue, in accordance with section 553 of title 5,
United States Code, regulations implementing and interpreting this section.
These regulations may exempt certain types of agreements described in
subsection (a) if the Commission determines such agreements will further market
competition and benefit consumers. Judicial review of any such regulation shall
be in the United States District Court for the District of Columbia pursuant to
section 706 of title 5, United States Code.
(2)A
violation of this section shall be treated as a violation of section 5.
(3)Any person, partnership or corporation that is subject to
a final order of the Commission, issued in an administrative adjudicative
proceeding under the authority of subsection (a)(1), may, within 30 days of the
issuance of such order, petition for review of such order in the United States
Court of Appeals for the District of Columbia Circuit or the United States
Court of Appeals for the circuit in which the ultimate parent entity, as
defined at 16 C.F.R. 801.1(a)(3), of the NDA holder is incorporated as of the
date that the NDA is filed with the Secretary of the Food and Drug
Administration, or the United States Court of Appeals for the circuit in which
the ultimate parent entity of the ANDA filer is incorporated as of the date
that the ANDA is filed with the Secretary of the Food and Drug Administration.
In such a review proceeding, the findings of the Commission as to the facts, if
supported by evidence, shall be conclusive.
(f)Nothing in this section shall be construed to modify, impair
or supersede the applicability of the antitrust laws as defined in subsection
(a) of the 1st section of the Clayton Act (15 U.S.C. 12(a)) and of section 5 of
this Act to the extent that section 5 applies to unfair methods of competition.
Nothing in this section shall modify, impair, limit or supersede the right of
an ANDA filer to assert claims or counterclaims against any person, under the
antitrust laws or other laws relating to unfair competition.
(g)
(1)Each
person, partnership or corporation that violates or assists in the violation of
this section shall forfeit and pay to the United States a civil penalty
sufficient to deter violations of this section, but in no event greater than 3
times the value received by the party that is reasonably attributable to a
violation of this section. If no such value has been received by the NDA
holder, the penalty to the NDA holder shall be shall be sufficient to deter
violations, but in no event greater than 3 times the value given to the ANDA
filer reasonably attributable to the violation of this section. Such penalty
shall accrue to the United States and may be recovered in a civil action
brought by the Federal Trade Commission, in its own name by any of its
attorneys designated by it for such purpose, in a district court of the United
States against any person, partnership or corporation that violates this
section. In such actions, the United States district courts are empowered to
grant mandatory injunctions and such other and further equitable relief as they
deem appropriate.
(2)
(A)If the Commission has issued a cease and desist order
with respect to a person, partnership or corporation in an administrative
adjudicative proceeding under the authority of subsection (a)(1), an action
brought pursuant to paragraph (1) may be commenced against such person,
partnership or corporation at any time before the expiration of one year after
such order becomes final pursuant to section 5(g).
(B)In
an action under subparagraph (A), the findings of the Commission as to the
material facts in the administrative adjudicative proceeding with respect to
such person's, partnership's or corporation's violation of this section shall
be conclusive unless—
(i)the terms of such cease
and desist order expressly provide that the Commission's findings shall not be
conclusive; or
(ii)the order became final
by reason of section 5(g)(1), in which case such finding shall be conclusive if
supported by evidence.
(3)In determining the amount of the civil penalty described
in this section, the court shall take into account—
(A)the nature,
circumstances, extent, and gravity of the violation;
(B)with respect to
the violator, the degree of culpability, any history of violations, the ability
to pay, any effect on the ability to continue doing business, profits earned by
the NDA holder, compensation received by the ANDA filer, and the amount of
commerce affected; and
(C)other matters
that justice requires.
(4)Remedies provided in this subsection are in addition to,
and not in lieu of, any other remedy provided by Federal law. Nothing in this
paragraph shall be construed to affect any authority of the Commission under
any other provision of law.
(h)In this section:
(1)The
term agreement means anything that would constitute an agreement
under section 1 of the Sherman Act (15 U.S.C. 1) or section 5 of this
Act.
(2)Agreement resolving or
settling a patent infringement claimThe term agreement
resolving or settling a patent infringement claim includes any agreement
that is entered into within 30 days of the resolution or the settlement of the
claim, or any other agreement that is contingent upon, provides a contingent
condition for, or is otherwise related to the resolution or settlement of the
claim.
(3)The
term ANDA means an abbreviated new drug application, as defined
under section 505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(j)).
(4)The term ANDA filer means a party who has
filed an ANDA with the Food and Drug Administration.
(5)The term ANDA product means the product to
be manufactured under the ANDA that is the subject of the patent infringement
claim.
(6)The term drug product means a finished
dosage form (e.g., tablet, capsule, or solution) that contains a drug
substance, generally, but not necessarily, in association with 1 or more other
ingredients, as defined in section 314.3(b) of title 21, Code of Federal
Regulations.
(7)The
term NDA means a new drug application, as defined under section
505(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)).
(8)The term NDA holder means—
(A)the party that received
FDA approval to market a drug product pursuant to an NDA;
(B)a party owning or
controlling enforcement of the patent listed in the Approved Drug Products With
Therapeutic Equivalence Evaluations (commonly known as the FDA Orange
Book
) in connection with the NDA; or
(C)the predecessors,
subsidiaries, divisions, groups, and affiliates controlled by, controlling, or
under common control with any of the entities described in subparagraphs (A)
and (B) (such control to be presumed by direct or indirect share ownership of
50 percent or greater), as well as the licensees, licensors, successors, and
assigns of each of the entities.
(9)The term patent infringement means
infringement of any patent or of any filed patent application, extension,
reissue, renewal, division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition and extensions thereof.
(10)Patent infringement
claimThe term patent infringement claim means any
allegation made to an ANDA filer, whether or not included in a complaint filed
with a court of law, that its ANDA or ANDA product may infringe any patent held
by, or exclusively licensed to, the NDA holder of the drug product.
(11)The term statutory exclusivity means
those prohibitions on the approval of drug applications under clauses (ii)
through (iv) of section 505(c)(3)(E) (5- and 3-year data exclusivity), section
527 (orphan drug exclusivity), or section 505A (pediatric exclusivity) of the
Federal Food, Drug, and Cosmetic Act
.
.
(b)Section 28 of the Federal Trade Commission Act, as added by
this section, shall apply to all agreements described in section 28(a)(1) of
that Act entered into after November 15, 2009. Section 28(g) of the Federal
Trade Commission Act, as added by this section, shall not apply to agreements
entered into before the date of enactment of this Act.
4.Notice and certification
of agreements
(a)Section 1112(c)(2) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note) is amended
by—
(1)striking the
Commission the
and inserting the following: “the Commission—
(1)the
;
(2)striking the period and
inserting ; and
; and
(3)inserting at the end the
following:
(2)any other agreement the
parties enter into within 30 days of entering into an agreement covered by
subsection (a) or
(b).
.
(b)Certification of
agreementsSection 1112 of such Act is amended by adding at the
end the following:
(d)The
Chief Executive Officer or the company official responsible for negotiating any
agreement required to be filed under subsection (a), (b), or (c) shall execute
and file with the Assistant Attorney General and the Commission a certification
as follows: I declare that the following is true, correct, and complete
to the best of my knowledge: The materials filed with the Federal Trade
Commission and the Department of Justice under section 1112 of subtitle B of
title XI of the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, with respect to the agreement referenced in this certification: (1)
represent the complete, final, and exclusive agreement between the parties; (2)
include any ancillary agreements that are contingent upon, provide a contingent
condition for, or are otherwise related to, the referenced agreement; and (3)
include written descriptions of any oral agreements, representations,
commitments, or promises between the parties that are responsive to subsection
(a) or (b) of such section 1112 and have not been reduced to
writing.
.
.
5.Forfeiture of 180-day
exclusivity periodSection
505(j)(5)(D)(i)(V) of the Federal Food, Drug and Cosmetic Act (21 U.S.C.
355(j)(5)(D)(i)(V)) is amended by inserting section 28 of the Federal
Trade Commission Act or
after that the agreement has
violated
.
6.Commission litigation
authoritySection 16(a)(2) of
the Federal Trade Commission Act (15 U.S.C. 56(a)(2)) is amended—
(1)in subparagraph (D), by striking
or
after the semicolon;
(2)in subparagraph (E), by inserting
or
after the semicolon; and
(3)inserting after subparagraph (E) the
following:
(F)under section
28;
.
7.The Commission
shall commence any enforcement proceeding described in section 28 of the
Federal Trade Commission Act, as added by section 3, except for an action
described in section 28(g)(2) of the Federal Trade Commission Act, not later
than 3 years after the date on which the parties to the agreement file the
Notice of Agreement as provided by sections 1112(c)(2) and (d) of the Medicare
Prescription Drug Improvement and Modernization Act of 2003 (21 U.S.C. 355
note).
8.If any provision of this Act, an amendment
made by this Act, or the application of such provision or amendment to any
person or circumstance is held to be unconstitutional, the remainder of this
Act, the amendments made by this Act, and the application of the provisions of
such Act or amendments to any person or circumstance shall not be affected
thereby.
October 15, 2009
Reported with an amendment