[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1344 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 1344

 To prohibit brand name drug companies from compensating generic drug 
companies to delay the entry of a generic drug into the market, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 25, 2019

Mr. Doggett (for himself, Mr. Blumenauer, Mr. Cartwright, Ms. Judy Chu 
of California, Mr. Cummings, Ms. DeLauro, Mr. DeSaulnier, Mr. Grijalva, 
    Ms. Hill of California, Ms. Kaptur, Mr. Khanna, Ms. Moore, Mrs. 
Napolitano, Ms. Ocasio-Cortez, Ms. Norton, Ms. Pingree, Mr. Pocan, Ms. 
  Waters, Mr. Welch, and Mr. Langevin) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
  to the Committees on Energy and Commerce, 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 prohibit brand name drug companies from compensating generic drug 
companies to delay the entry of a generic drug into the market, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Competitive Deals Resulting in 
Unleashed Generics and Savings Act of 2019'' or the ``Competitive DRUGS 
Act of 2019''.

SEC. 2. CLAWBACK OF RESEARCH AND DEVELOPMENT TAX BENEFITS FOR 
              MANUFACTURERS ENGAGING IN PAY-FOR-DELAY.

    (a) In General.--Section 41 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(i) Recapture.--
            ``(1) In general.--If the Federal Trade Commission 
        determines under section 27 of the Federal Trade Commission Act 
        that the taxpayer violated section 5 of such Act in connection 
        with the sale of a drug product (as defined in such section), 
        then the tax under this chapter for the taxable year which 
        includes the date of such determination shall be increased by 
        the sum of the product for each of the 2 relevant years of--
                    ``(A) the aggregate decrease in the credits allowed 
                under section 38 for such relevant year which would 
                have resulted solely from reducing to zero any credit 
                determined under this section, multiplied by
                    ``(B) the sales ratio for such drug product for 
                such relevant year.
            ``(2) Relevant year.--For purposes of this subsection, the 
        term `relevant year' means, with respect to any determination 
        by the Federal Trade Commission described in paragraph (1), a 
        taxable year in which the aggregate decrease in the credits 
        allowed under section 38 which would have resulted solely from 
        reducing to zero any credit determined under this section is 
        one of the two highest such decreases during the 10-year period 
        ending with the last taxable year that ended before the date of 
        such determination.
            ``(3) Sales ratio.--For purposes of this subsection, the 
        term `sales ratio' means, with respect to a drug product sold 
        by a taxpayer in a taxable year, the ratio of--
                    ``(A) the revenue from sales of such drug product 
                by such taxpayer during such taxable year, to
                    ``(B) the total revenue from sales of all drug 
                products by such taxpayer during such taxable year.
            ``(4) Consent decrees deemed to be violations.--If a 
        taxpayer enters into a consent decree with respect to any 
        proceeding initiated by the Federal Trade Commission under 
        section 27 of the Federal Trade Commission Act, such consent 
        decree shall be treated for purposes of this subsection as if 
        the Commission had determined under such section that the 
        taxpayer violated section 5 of such Act in connection with the 
        sale of the drug product to which such proceeding relates.
            ``(5) Recapture not taken into account in determining 
        maximum penalty.--The increase in tax under this subsection 
        shall not be treated as a penalty for purposes of section 27(f) 
        of the Federal Trade Commission Act.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

SEC. 3. TAX ON RECEIPT OF PAY-FOR-DELAY PAYMENTS; DENIAL OF DEDUCTION 
              FOR PAY-FOR-DELAY PAYMENTS.

    (a) Receipt of Payment.--The Internal Revenue Code of 1986 is 
amended by inserting after chapter 36 the following new chapter:

                      ``CHAPTER 37--PAY-FOR-DELAY

``Sec. 4501. Imposition of tax.

``SEC. 4501. IMPOSITION OF TAX.

    ``There is hereby imposed, on each taxpayer who is party to an 
agreement that is determined by the Federal Trade Commission under 
section 27 of the Federal Trade Commission Act to be a violation of 
section 5 of such Act, a tax equal to 50 percent of the amount paid to 
such taxpayer under such agreement.''.
    (b) Denial of Deduction.--Section 162(c) is amended by adding at 
the end the following new paragraph:
            ``(4) Pay-for-delay payments.--No deduction shall be 
        allowed under subsection (a) for any payment under an agreement 
        that is determined by the Federal Trade Commission under 
        section 27 of the Federal Trade Commission Act to be a 
        violation of section 5 of such Act.''.
    (c) Conforming Amendment.--The table of chapters for the Internal 
Revenue Code of 1986 is amended by inserting after the item relating to 
chapter 36 the following new item:

                     ``Chapter 37--Pay-for-Delay''.

SEC. 4. UNLAWFUL COMPENSATION FOR DELAY.

    (a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et 
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the 
following:

``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS.

    ``(a) In General.--
            ``(1) Enforcement proceeding.--The 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) Violation.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                such a proceeding, an agreement shall be an unfair 
                method of competition in or affecting commerce and be a 
                violation of section 5 if pursuant to the agreement--
                            ``(i) an ANDA filer receives anything of 
                        value, including an exclusive or non-exclusive 
                        license, an agreement regarding the marketing 
                        of a product, or any other commercial 
                        opportunity or benefit; and
                            ``(ii) the ANDA filer agrees to limit or 
                        forgo research, development, manufacturing, 
                        marketing, or sales of the ANDA product for any 
                        period of time.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if the parties to such agreement demonstrate by clear 
                and convincing evidence that--
                            ``(i) the value described in subparagraph 
                        (A)(i) is compensation solely for other goods 
                        or services that the ANDA filer has promised to 
                        provide; or
                            ``(ii) the procompetitive benefits of the 
                        agreement outweigh the anticompetitive effects 
                        of the agreement.
    ``(b) Limitations.--In determining whether the settling parties 
have met their burden under subsection (a)(2)(B), the fact finder may 
not presume--
            ``(1) that entry of the ANDA product into interstate 
        commerce 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 into interstate commerce prior to the expiration of the 
        relevant patent or statutory exclusivity means that the 
        agreement is procompetitive.
    ``(c) Exclusions.--Nothing in this section shall prohibit a 
resolution or settlement of a patent infringement claim in which the 
consideration granted to the ANDA filer as part of the resolution or 
settlement includes one or more of the following and nothing else:
            ``(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, not to exceed $7,500,000, if based on 
        reasonable litigation expenses.
            ``(3) A covenant not to sue (including any agreement to 
        dismiss) on any claim that the ANDA product infringes a United 
        States patent.
    ``(d) Judicial Review.--
            ``(1) In general.--Any party 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 after the issuance of such order, 
        petition for review of such order in--
                    ``(A) the United States Court of Appeals for the 
                District of Columbia Circuit; or
                    ``(B) the United States Court of Appeals for the 
                circuit in which any party subject to such final order 
                is incorporated on the date that the petition for 
                review is filed.
            ``(2) Treatment of findings.--In a proceeding for judicial 
        review of a final order of the Commission, the findings of the 
        Commission as to the facts, if supported by evidence, shall be 
        conclusive.
    ``(e) Construction.--
            ``(1) Antitrust laws and consumer protection laws.--Nothing 
        in this section shall be construed to modify, impair, or 
        supersede the operation of--
                    ``(A) the antitrust laws as defined in subsection 
                (a) of the first section of the Clayton Act (15 U.S.C. 
                12(a)), or any State law substantially similar to any 
                of such antitrust laws; or
                    ``(B) section 5 of this Act or any substantially 
                similar State law.
            ``(2) Claims and counterclaims.--Nothing in this section 
        shall modify, impair, or supersede the right of an ANDA filer 
        to assert a claim or counterclaim against any person under any 
        law referred to in paragraph (1).
    ``(f) Penalties.--
            ``(1) Forfeiture.--Each party that violates subsection 
        (a)(2)(A) shall forfeit and pay to the United States a civil 
        penalty sufficient to deter such violation, but in no event 
        greater than 3 times the value received by the party that is 
        reasonably attributable to such violation. Such penalty shall 
        accrue to the United States and may be recovered in a civil 
        action brought by the 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 party that commits such 
        violation. In such actions, the United States district courts 
        are empowered to grant mandatory injunctions and such other and 
        further equitable relief as the courts determine to be 
        appropriate.
            ``(2) Cease and desist.--
                    ``(A) In general.--If the Commission has issued a 
                cease and desist order with respect to a party in an 
                administrative adjudicative proceeding under the 
                authority of subsection (a)(1), an action brought 
                pursuant to paragraph (1) may be commenced against such 
                party at any time before the expiration of 1 year after 
                such order becomes final pursuant to section 5(g).
                    ``(B) Exception.--In an action under subparagraph 
                (A), the findings of the Commission as to the material 
                facts in the administrative adjudicative proceeding 
                with respect to a violation described in subsection 
                (a)(2)(A) by a party 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) Civil penalty.--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, including the amount of 
                commerce affected;
                    ``(B) with respect to the violator, in addition to 
                the value received, the degree of culpability, any 
                history of violations, the ability to pay, and any 
                effect on the ability to continue doing business; and
                    ``(C) other matters that justice requires.
            ``(4) Remedies in addition.--Remedies provided in this 
        subsection are in addition to any other remedy provided by 
        Federal or State law. Nothing in this paragraph shall be 
        construed to affect any authority of the Commission under any 
        other provision of law.
    ``(g) Definitions.--In this section:
            ``(1) Agreement resolving or settling a patent infringement 
        claim.--The term `agreement resolving or settling a patent 
        infringement claim' includes any agreement that is entered into 
        within 30 days before or after the resolution or the settlement 
        of a patent infringement claim, or any other agreement that can 
        be shown to be contingent upon, to provide a contingent 
        condition for, or to be otherwise related to the resolution or 
        settlement of the claim.
            ``(2) ANDA.--The term `ANDA' means an abbreviated new drug 
        application filed under section 505(j) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug 
        application filed under section 505(b)(2) of the Federal Food, 
        Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
            ``(3) ANDA filer.--The term `ANDA filer' means a party that 
        owns or controls an ANDA filed with the Commissioner of Food 
        and Drugs or has the exclusive rights under such ANDA to 
        distribute the ANDA product.
            ``(4) ANDA product.--The term `ANDA product' means the 
        product to be manufactured under the ANDA that is the subject 
        of the patent infringement claim.
            ``(5) Drug product.--The term `drug product' has the 
        meaning given such term in section 314.3(b) of title 21, Code 
        of Federal Regulations (or any successor regulation).
            ``(6) NDA.--The term `NDA' means a new drug application 
        filed under section 505(b) of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355(b)).
            ``(7) Patent infringement claim.--The term `patent 
        infringement claim' means any allegation made to an ANDA filer, 
        whether or not included in a complaint filed with a court, that 
        the ANDA filer's ANDA or ANDA product may infringe any of the 
        following held by, or exclusively licensed to, the NDA holder 
        of the drug product:
                    ``(A) Any patent.
                    ``(B) Any filed patent application.
                    ``(C) Any extension, reissue, renewal, division, 
                continuation, continuation in part, or reexamination of 
                a patent.
                    ``(D) Any patent term restoration, patents of 
                addition, or extensions thereof.
                    ``(E) Any other patent interest.
            ``(8) Statutory exclusivity.--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), section 505A (pediatric 
        exclusivity), or section 505E (qualified infectious disease 
        product exclusivity) of the Federal Food, Drug, and Cosmetic 
        Act (21 U.S.C. 355(c)(3)(E), 360cc, 355a, 355f).''.
    (b) Applicability.--Section 27 of the Federal Trade Commission Act, 
as added by this section, shall apply to any agreement described in 
section 27(a)(2)(A) of that Act entered into after June 17, 2013. 
Section 27(f) of the Federal Trade Commission Act, as added by this 
section, shall apply to agreements entered into on or after the date of 
enactment of this Act.

SEC. 5. NOTICE AND CERTIFICATION OF AGREEMENTS.

    (a) Notice of All Agreements.--Section 1112(c)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (21 
U.S.C. 355 note) is amended by--
            (1) striking ``the Commission the'' and inserting the 
        following: ``the Commission--
                    ``(A) the'';
            (2) striking the period and inserting ``; and''; and
            (3) inserting at the end the following:
                    ``(B) any other agreement the parties enter into 
                within 30 days after entering into an agreement covered 
                by subsection (a) or (b).''.
    (b) Certification of Agreements.--Section 1112 of such Act is 
amended by adding at the end the following:
    ``(d) Certification.--The Chief Executive Officer or the company 
official with primary responsibility for negotiating any agreement 
under subsection (a) or (b) that is required to be filed under 
subsection (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.'.''.

SEC. 6. COMMISSION LITIGATION AUTHORITY.

    Section 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) by inserting after subparagraph (E) the following new 
        subparagraph:
                    ``(F) under section 27;''.

SEC. 7. STATUTE OF LIMITATIONS.

    The Federal Trade Commission shall commence any enforcement 
proceeding described in section 27 of the Federal Trade Commission Act, 
as added by section 3, except for an action described in section 
27(f)(2) of such Act, not later than 6 years after the date on which 
the parties to the agreement file the other agreements under section 
1112(c)(2) or the certification required by section 1112(d) of the 
Medicare Prescription Drug Improvement and Modernization Act of 2003 
(21 U.S.C. 355 note).
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