[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3056 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 3056

 To provide for certain causes of action relating to delays of generic 
               drugs and biosimilar biological products.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2016

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

_______________________________________________________________________

                                 A BILL


 
 To provide for certain causes of action relating to delays of generic 
               drugs and biosimilar biological products.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Creating and Restoring Equal Access 
to Equivalent Samples Act of 2016'' or the ``CREATES Act of 2016''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) It is the policy of the United States to promote 
        competition in the market for drugs and biological products by 
        facilitating the timely entry of low-cost generic and 
        biosimilar versions of those drugs and biological products.
            (2) Since their enactment in 1984 and 2010, respectively, 
        the Drug Price Competition and Patent Term Restoration Act of 
        1984 (Public Law 98-417; 98 Stat. 1585) and the Biologics Price 
        Competition and Innovation Act of 2009 (Subtitle A of title VII 
        of Public Law 111-148; 124 Stat. 804), have provided pathways 
        for making lower-cost versions of previously approved drugs and 
        previously licensed biological products available to the people 
        of the United States in a timely manner, thereby lowering 
        overall prescription drug costs for patients and taxpayers by 
        billions of dollars each year.
            (3) In order for these pathways to function as intended, 
        developers of generic drugs and biosimilar biological products 
        (referred to in this section as ``generic product developers'') 
        must be able to obtain quantities of the reference listed drug 
        or biological product with which the generic drug or biosimilar 
        biological product is intended to compete (referred to in this 
        section as a ``covered product'') for purposes of supporting an 
        application for approval by the Food and Drug Administration, 
        including for testing to show that--
                    (A) a prospective generic drug is bioequivalent to 
                the covered product in accordance with subsection (j) 
                of section 505 of the Federal, Food, Drug, and Cosmetic 
                Act (21 U.S.C. 355), or meets the requirements for 
                approval of an application submitted under subsection 
                (b)(2) of that section; or
                    (B) a prospective biosimilar biological product is 
                biosimilar to or interchangeable with its reference 
                biological product under section 351(k) of the Public 
                Health Service Act (42 U.S.C. 262(k)), as applicable.
            (4) For drugs and biological products that are subject to a 
        risk evaluation and mitigation strategy, another essential 
        component in the creation of low-cost generic and biosimilar 
        versions of covered products is the ability of generic product 
        developers to join the manufacturer of the covered product 
        (referred to in this section as the ``license holder'') in a 
        single, shared system of elements to assure safe use and 
        supporting agreements, or secure a variance therefrom, as 
        required by section 505-1 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355-1).
            (5) Contrary to the policy of the United States to promote 
        competition in the market for drugs and biological products by 
        facilitating the timely entry of lower-cost generic and 
        biosimilar versions of those drugs and biological products, 
        certain license holders are preventing generic product 
        developers from obtaining quantities of the covered product 
        necessary for the generic product developer to support an 
        application for approval by the Food and Drug Administration, 
        including testing to show bioequivalence, biosimilarity, or 
        interchangeability to the covered product, in some instances 
        based on the justification that the covered product is subject 
        to a risk evaluation and mitigation strategy with elements to 
        assure safe use under section 505-1 of the Federal Food, Drug, 
        and Cosmetic Act (21 U.S.C. 355-1).
            (6) The Director of the Center for Drug Evaluation and 
        Research at the Food and Drug Administration has testified that 
        some manufacturers of covered products have used REMS and 
        distribution restrictions adopted by the manufacturer on their 
        own behalf as reasons to not sell quantities of a covered 
        product to generic product developers, causing barriers and 
        delays in getting generic products on the market. The Food and 
        Drug Administration has reported receiving significant numbers 
        of inquiries from generic product developers who were unable to 
        obtain samples of covered products to conduct necessary testing 
        and otherwise meet requirements for approval of generic drugs.
            (7) The Chairwoman of the Federal Trade Commission has 
        testified that the Federal Trade Commission continues to be 
        very concerned about potential abuses by manufacturers of brand 
        drugs of REMS or other closed distribution systems to impede 
        generic competition.
            (8) Also contrary to the policy of the United States to 
        promote competition in the market for drugs and biological 
        products by facilitating the timely entry of lower-cost generic 
        and biosimilar versions of those drugs and biological products, 
        certain license holders are impeding the prompt negotiation and 
        development on commercially reasonable terms of a single, 
        shared system of elements to assure safe use, which may be 
        necessary for the generic product developer to gain approval 
        for its drug or licensing for its biological product.
            (9) While the antitrust laws may address the refusal by 
        some license holders to provide quantities of a covered product 
        to a generic product developer, a more tailored legal pathway 
        would help ensure that generic product developers can obtain 
        necessary quantities of a covered product in a timely way for 
        purposes of developing a generic drug or biosimilar biological 
        product, facilitating competition in the marketplace for drugs 
        and biological products.
            (10) While the antitrust laws may address actions by 
        license holders who impede the prompt negotiation and 
        development on commercially reasonable terms of a single, 
        shared system of elements to assure safe use, a more tailored 
        legal pathway would help ensure that license holders negotiate 
        such agreements in good faith and in a timely manner, 
        facilitating competition in the marketplace for drugs and 
        biological products.

SEC. 3. ACTIONS FOR DELAYS OF GENERIC DRUGS AND BIOSIMILAR BIOLOGICAL 
              PRODUCTS.

    (a) Definitions.--In this section--
            (1) the term ``covered product''--
                    (A) means--
                            (i) any drug approved under subsection (b) 
                        or (j) of section 505 of the Federal Food, 
                        Drug, and Cosmetic Act (21 U.S.C. 355) or 
                        biological product licensed under subsection 
                        (a) or (k) of section 351 of the Public Health 
                        Service Act (42 U.S.C. 262);
                            (ii) any combination of a drug or 
                        biological product described in clause (i); or
                            (iii) when reasonably necessary to 
                        demonstrate sameness, biosimilarity, or 
                        interchangeability for purposes of section 505 
                        of the Federal Food, Drug, and Cosmetic Act (21 
                        U.S.C. 355), or section 351 of the Public 
                        Health Service Act (42 U.S.C. 262), as 
                        applicable, any product, including any device, 
                        that is marketed or intended for use with such 
                        drug or biological product; and
                    (B) does not include any drug or biological product 
                that the Secretary has determined to be currently in 
                shortage and that appears on the drug shortage list in 
                effect under section 506E of the Federal Food, Drug, 
                and Cosmetic Act (21 U.S.C. 356e), unless the shortage 
                will not be promptly resolved--
                            (i) as demonstrated by the fact that the 
                        drug or biological product has been in shortage 
                        for more than 6 months; or
                            (ii) as otherwise determined by the 
                        Secretary;
            (2) the term ``device'' has the meaning given the term in 
        section 201 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321);
            (3) the term ``eligible product developer'' means a person 
        that seeks to develop a product for approval pursuant to an 
        application for approval under subsection (b)(2) or (j) of 
        section 505 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355) or for licensing pursuant to an application under 
        section 351(k) of the Public Health Service Act (42 U.S.C. 
        262(k));
            (4) the term ``license holder'' means the holder of an 
        application approved under subsection (c) or (j) of section 505 
        of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or 
        the holder of a license under subsection (a) or (k) of section 
        351 of the Public Health Service Act (42 U.S.C. 262) for a 
        covered product;
            (5) the term ``REMS'' means a risk evaluation and 
        mitigation strategy under section 505-1 of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355-1);
            (6) the term ``REMS with ETASU'' means a REMS that contains 
        elements to assure safe use under section 505-1 of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 355-1);
            (7) the term ``Secretary'' means the Secretary of Health 
        and Human Services;
            (8) the term ``single, shared system of elements to assure 
        safe use'' means a single, shared system of elements to assure 
        safe use under section 505-1 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355-1); and
            (9) the term ``sufficient quantities'' means an amount of a 
        covered product that allows the eligible product developer to--
                    (A) conduct testing to support an application--
                            (i) for approval under subsection (b)(2) or 
                        (j) of section 505 of the Federal Food, Drug, 
                        and Cosmetic Act (21 U.S.C. 355); or
                            (ii) for licensing under section 351(k) of 
                        the Public Health Service Act (42 U.S.C. 
                        262(k)); and
                    (B) fulfill any regulatory requirements relating to 
                such an application for approval or licensing.
    (b) Civil Actions.--
            (1) Failure to provide sufficient quantities of a covered 
        product.--
                    (A) In general.--An eligible product developer may 
                bring a civil action against the license holder for a 
                covered product seeking relief under this paragraph in 
                an appropriate district court of the United States 
                alleging that the license holder has declined to 
                provide sufficient quantities of the covered product to 
                the eligible product developer on commercially 
                reasonable, market-based terms.
                    (B) Elements.--
                            (i) In general.--To prevail in a civil 
                        action brought under subparagraph (A), an 
                        eligible product developer shall prove, by a 
                        preponderance of the evidence--
                                    (I) that--
                                            (aa) the covered product is 
                                        not subject to a REMS with 
                                        ETASU; or
                                            (bb) if the covered product 
                                        is subject to a REMS with 
                                        ETASU--

                                                    (AA) the eligible 
                                                product developer has 
                                                obtained a covered 
                                                product authorization 
                                                from the Secretary in 
                                                accordance with clause 
                                                (ii); and

                                                    (BB) the eligible 
                                                product developer has 
                                                provided a copy of the 
                                                covered product 
                                                authorization to the 
                                                license holder;

                                    (II) that, as of the date on which 
                                the civil action is filed, the product 
                                developer has not obtained sufficient 
                                quantities of the covered product on 
                                commercially reasonable, market-based 
                                terms;
                                    (III) that the eligible product 
                                developer has requested to purchase 
                                sufficient quantities of the covered 
                                product from the license holder; and
                                    (IV) that the license holder has 
                                not delivered to the eligible product 
                                developer sufficient quantities of the 
                                covered product on commercially 
                                reasonable, market-based terms--
                                            (aa) for a covered product 
                                        that is not subject to a REMS 
                                        with ETASU, by the date that is 
                                        31 days after the date on which 
                                        the license holder received the 
                                        request for the covered 
                                        product; and
                                            (bb) for a covered product 
                                        that is subject to a REMS with 
                                        ETASU, by 31 days after the 
                                        later of--

                                                    (AA) the date on 
                                                which the license 
                                                holder received the 
                                                request for the covered 
                                                product; or

                                                    (BB) the date on 
                                                which the license 
                                                holder received a copy 
                                                of the covered product 
                                                authorization issued by 
                                                the Secretary in 
                                                accordance with clause 
                                                (ii).

                            (ii) Authorization for covered product 
                        subject to a rems with etasu.--
                                    (I) Request.--An eligible product 
                                developer may submit to the Secretary a 
                                written request for the eligible 
                                product developer to be authorized to 
                                obtain sufficient quantities of an 
                                individual covered product subject to a 
                                REMS with ETASU.
                                    (II) Authorization.--Not later than 
                                90 days after the date on which a 
                                request under subclause (I) is 
                                received, the Secretary shall, by 
                                written notice, authorize the eligible 
                                product developer to obtain sufficient 
                                quantities of an individual covered 
                                product subject to a REMS with ETASU 
                                for purposes of--
                                            (aa) development and 
                                        testing that does not involve 
                                        human clinical trials, if the 
                                        eligible product developer has 
                                        agreed to comply with any 
                                        conditions the Secretary 
                                        determines necessary; or
                                            (bb) development and 
                                        testing that involves human 
                                        clinical trials, if the 
                                        eligible product developer 
                                        has--

                                                    (AA) submitted 
                                                protocols, informed 
                                                consent documents, and 
                                                informational materials 
                                                for testing that 
                                                include protections 
                                                that provide safety 
                                                protections comparable 
                                                to those provided by 
                                                the REMS for the 
                                                covered product; or

                                                    (BB) otherwise 
                                                satisfied the Secretary 
                                                that such protections 
                                                will be provided.

                                    (III) Notice.--A covered product 
                                authorization issued under this clause 
                                shall state that the provision of the 
                                covered product by the license holder 
                                under the terms of the authorization 
                                will not be a violation of the REMS for 
                                the covered product.
                    (C) Affirmative defense.--In a civil action brought 
                under subparagraph (A), it shall be an affirmative 
                defense, on which the defendant has the burden of 
                persuasion by a preponderance of the evidence--
                            (i) that, on the date on which the eligible 
                        product developer requested to purchase 
                        sufficient quantities of the covered product 
                        from the license holder--
                                    (I) neither the license holder nor 
                                any of its agents, wholesalers, or 
                                distributors was engaged in the 
                                manufacturing or commercial marketing 
                                of the covered product; and
                                    (II) neither the license holder nor 
                                any of its agents, wholesalers, or 
                                distributors otherwise had access to 
                                inventory of the covered product to 
                                supply to the eligible product 
                                developer on commercially reasonable, 
                                market-based terms; or
                            (ii) that--
                                    (I) the license holder sells the 
                                covered product through agents, 
                                distributors, or wholesalers;
                                    (II) the license holder has placed 
                                no restrictions, explicit or implicit, 
                                on its agents, distributors, or 
                                wholesalers to sell covered products to 
                                eligible product developers; and
                                    (III) the covered product can be 
                                purchased by the eligible product 
                                developer in sufficient quantities on 
                                commercially reasonable, market-based 
                                terms from the agents, distributors, or 
                                wholesalers of the license holder.
                    (D) Remedies.--
                            (i) In general.--If an eligible product 
                        developer prevails in a civil action brought 
                        under subparagraph (A), the court shall--
                                    (I) order the license holder to 
                                provide to the eligible product 
                                developer without delay sufficient 
                                quantities of the covered product on 
                                commercially reasonable, market-based 
                                terms;
                                    (II) award to the eligible product 
                                developer reasonable attorney fees and 
                                costs of the civil action; and
                                    (III) award to the eligible product 
                                developer a monetary amount sufficient 
                                to deter the license holder from 
                                failing to provide other eligible 
                                product developers with sufficient 
                                quantities of a covered product on 
                                commercially reasonable, market-based 
                                terms, if the court finds, by a 
                                preponderance of the evidence--
                                            (aa) that the license 
                                        holder delayed providing 
                                        sufficient quantities of the 
                                        covered product to the eligible 
                                        product developer without a 
                                        legitimate business 
                                        justification; or
                                            (bb) that the license 
                                        holder failed to comply with an 
                                        order issued under subclause 
                                        (I).
                            (ii) Maximum monetary amount.--A monetary 
                        amount awarded under clause (i)(III) shall not 
                        be greater than the revenue that the license 
                        holder earned on the covered product during the 
                        period--
                                    (I) beginning on--
                                            (aa) for a covered product 
                                        that is not subject to a REMS 
                                        with ETASU, the date that is 31 
                                        days after the date on which 
                                        the license holder received the 
                                        request; or
                                            (bb) for a covered product 
                                        that is subject to a REMS with 
                                        ETASU, the date that is 31 days 
                                        after the later of--

                                                    (AA) the date on 
                                                which the license 
                                                holder received the 
                                                request; or

                                                    (BB) the date on 
                                                which the license 
                                                holder received a copy 
                                                of the covered product 
                                                authorization issued by 
                                                the Secretary in 
                                                accordance with 
                                                subparagraph (B)(ii); 
                                                and

                                    (II) ending on the date on which 
                                the eligible product developer received 
                                sufficient quantities of the covered 
                                product.
                            (iii) Avoidance of delay.--The court may 
                        issue an order under clause (i)(I) before 
                        conducting further proceedings that may be 
                        necessary to determine whether the eligible 
                        product developer is entitled to an award under 
                        subclause (II) or (III) of clause (i), or the 
                        amount of any such award.
            (2) Failure to reach agreement on shared system.--
                    (A) In general.--An eligible product developer may 
                bring a civil action against the license holder for a 
                covered product seeking relief under this paragraph in 
                an appropriate district court of the United States 
                alleging the license holder--
                            (i) failed to reach agreement with respect 
                        to a single, shared system of elements to 
                        assure safe use with respect to the covered 
                        product; or
                            (ii) refused to allow the eligible product 
                        developer to join a previously approved system 
                        of elements to assure safe use with respect to 
                        that product.
                    (B) Elements.--To prevail in a civil action brought 
                under subparagraph (A), an eligible product developer 
                shall prove, by a preponderance of the evidence, that--
                            (i) the eligible product developer has 
                        sought approval of an application for approval 
                        under subsection (b)(2) or (j) of section 505 
                        of the Federal Food, Drug, and Cosmetic Act (21 
                        U.S.C. 355) or has sought a license for a 
                        biological product under section 351(k) of the 
                        Public Health Service Act (42 U.S.C. 262(k)) 
                        referencing a covered product subject to a REMS 
                        with ETASU;
                            (ii) the covered product is subject to a 
                        REMS with ETASU that requires a single, shared 
                        system of elements to assure safe use with 
                        respect to the covered product;
                            (iii) at least 120 days have elapsed since 
                        the developer first initiated an attempt to 
                        reach an agreement with the license holder that 
                        would allow the product developer to 
                        participate in a single, shared system of 
                        elements to assure safe use;
                            (iv) the license holder and eligible 
                        product developer have not reached an agreement 
                        that would allow the eligible product developer 
                        to participate in a single, shared system of 
                        elements to assure safe use on commercially 
                        reasonable terms; and
                            (v) the Secretary has not waived the 
                        requirement for the covered product to be part 
                        of such a single, shared system.
                    (C) Remedies.--
                            (i) In general.--If an eligible product 
                        developer prevails in a civil action brought 
                        under subparagraph (A), the court shall--
                                    (I) order the license holder to--
                                            (aa) with the approval of 
                                        the Secretary, enter into a 
                                        single, shared system of 
                                        elements to assure safe use 
                                        with the eligible product 
                                        developer on commercially 
                                        reasonable terms;
                                            (bb) with the approval of 
                                        the Secretary, allow the 
                                        eligible product developer to 
                                        join a previously approved 
                                        system of elements to assure 
                                        safe use with respect to the 
                                        covered product on commercially 
                                        reasonable terms; or
                                            (cc) demonstrate that the 
                                        Secretary has waived the 
                                        requirement for the covered 
                                        product to be part of a single, 
                                        shared system of elements to 
                                        assure safe use;
                                    (II) award to the eligible product 
                                developer reasonable attorney fees and 
                                costs of the civil action; and
                                    (III) award to the eligible product 
                                developer a monetary amount sufficient 
                                to deter the license holder from 
                                failing to reach agreements that would 
                                allow other eligible product developers 
                                to participate in a single, shared 
                                system of elements to assure safe use 
                                on commercially reasonable terms if the 
                                court finds, by a preponderance of the 
                                evidence--
                                            (aa) that the license 
                                        holder, without a legitimate 
                                        business justification, 
                                        delayed--

                                                    (AA) the entry of 
                                                the eligible product 
                                                developer into a 
                                                single, shared system 
                                                of elements to assure 
                                                safe use with respect 
                                                to the covered product; 
                                                or

                                                    (BB) the securing 
                                                of a waiver of the 
                                                requirement of a 
                                                single, shared system 
                                                of elements to assure 
                                                safe use with respect 
                                                to the covered product; 
                                                or

                                            (bb) that the license 
                                        holder failed to comply with an 
                                        order issued under subclause 
                                        (I).
                            (ii) Maximum monetary amount.--A monetary 
                        amount awarded under clause (i)(III) shall not 
                        be greater than the revenue that the license 
                        holder earned on the covered product during the 
                        period--
                                    (I) beginning on the date that is 
                                121 days after the date on which the 
                                product developer first initiated an 
                                attempt to reach an agreement with the 
                                license holder that would allow the 
                                product developer to participate in a 
                                single, shared system of elements to 
                                assure safe use with respect to the 
                                covered product; and
                                    (II) ending on the date on which 
                                the eligible product developer and 
                                license holder reached an agreement 
                                that would allow the product developer 
                                to participate in a single, shared 
                                system of elements to assure safe use 
                                with respect to the covered product.
                            (iii) Avoidance of delay.--The court may 
                        issue an order under clause (i)(I) before 
                        conducting further proceedings that may be 
                        necessary to determine whether the eligible 
                        product developer is entitled to an award under 
                        subclause (II) or (III) of clause (i), or the 
                        amount of any such award.
    (c) Limitation of Liability.--A license holder shall not be liable 
for any claim arising out of the failure of an eligible product 
developer to follow adequate safeguards to assure safe use of the 
covered product during development or testing activities described in 
this section, including transportation, handling, use, or disposal of 
the covered product by the eligible product developer.
    (d) Rule of Construction.--
            (1) Definition.--In this subsection, the term ``antitrust 
        laws''--
                    (A) has the meaning given the term in subsection 
                (a) of the first section of the Clayton Act (15 U.S.C. 
                12); and
                    (B) includes section 5 of the Federal Trade 
                Commission Act (15 U.S.C. 45) to the extent that such 
                section applies to unfair methods of competition.
            (2) Antitrust laws.--Nothing in this section shall be 
        construed to limit the operation of any provision of the 
        antitrust laws.
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