[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 142 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  1st Session
                                 S. 142

 To prohibit brand name drug companies from compensating generic drug 
companies to delay the entry of a generic drug into the market, and to 
prohibit biological product manufacturers from compensating biosimilar 
    and interchangeable companies to delay the entry of biosimilar 
      biological products and interchangeable biological products.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 30, 2023

 Ms. Klobuchar (for herself, Mr. Grassley, Mr. Durbin, Mr. Cramer, Mr. 
 Blumenthal, Mr. Kelly, Mr. Van Hollen, and Mr. Booker) introduced the 
 following bill; which was read twice and referred to the Committee on 
                             the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To prohibit brand name drug companies from compensating generic drug 
companies to delay the entry of a generic drug into the market, and to 
prohibit biological product manufacturers from compensating biosimilar 
    and interchangeable companies to delay the entry of biosimilar 
      biological products and interchangeable 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 ``Preserve Access to Affordable 
Generics and Biosimilars Act''.

SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.

    (a) Findings.--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 approximately 10 percent of 
        the national health care spending.
            (3) Initially, the 1984 Act was successful in facilitating 
        generic competition to the benefit of consumers and health care 
        payers, although 88 percent of all prescriptions dispensed in 
        the United States are generic drugs, they account for only 28 
        percent of all expenditures.
            (4) Generic drugs cost substantially less than brand name 
        drugs, with discounts off the brand price averaging 80 to 85 
        percent.
            (5) Federal dollars currently account for over 40 percent 
        of the $325,000,000,000 spent on retail prescription drugs, and 
        this share is expected to rise to 47 percent by 2025.
            (6)(A) In recent years, the intent of the 1984 Act has been 
        subverted by certain settlement agreements in which brand name 
        companies transfer value to their potential generic competitors 
        to settle claims that the generic company is infringing the 
        branded company's patents.
            (B) These ``reverse payment'' settlement agreements--
                    (i) allow a branded company to share its monopoly 
                profits with the generic company as a way to protect 
                the branded company's monopoly; and
                    (ii) 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.
            (7) In 2010, the Biologics Price Competition and Innovation 
        Act (Public Law 111-148) (referred to in this Act as the 
        ``BPCIA''), was enacted with the intent of facilitating the 
        early entry of biosimilar and interchangeable follow-on 
        versions of branded biological products while preserving 
        incentives for innovation.
            (8) Biological drugs play an important role in treating 
        many serious illnesses, from cancers to genetic disorders. They 
        are also expensive, representing more than 40 percent of all 
        prescription drug spending.
            (9) Competition from biosimilar and interchangeable 
        biological products promises to lower drug costs and increase 
        patient access to biological medicines. But ``reverse payment'' 
        settlement agreements also threaten to delay the entry of 
        biosimilar and interchangeable biological products, which would 
        undermine the goals of BPCIA.
    (b) Purposes.--The purposes of this Act are--
            (1) to enhance competition in the pharmaceutical market by 
        stopping anticompetitive agreements between brand name and 
        generic drug and biosimilar biological product manufacturers 
        that limit, delay, or otherwise prevent competition from 
        generic drugs and biosimilar biological products; and
            (2) to support the purpose and intent of antitrust law by 
        prohibiting anticompetitive practices in the pharmaceutical 
        industry that harm consumers.

SEC. 3. 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 AND BIOSIMILARS.

    ``(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 claim, in connection with the sale 
        of a drug product or biological product.
            ``(2) Presumption and violation.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                such a proceeding, an agreement shall be presumed to 
                have anticompetitive effects and shall be a violation 
                of this section if--
                            ``(i) an ANDA filer or a biosimilar 
                        biological product application filer receives 
                        anything of value, including an exclusive 
                        license; and
                            ``(ii) the ANDA filer or biosimilar 
                        biological product application filer agrees to 
                        limit or forgo research, development, 
                        manufacturing, marketing, or sales of the ANDA 
                        product or biosimilar biological product, as 
                        applicable, 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 or biosimilar 
                        biological product application 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 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 or biosimilar biological product 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 that the ANDA filer or biosimilar biological product 
application filer, respectively, receives as part of the resolution or 
settlement includes only one or more of the following:
            ``(1) The right to market and secure final approval in the 
        United States for the ANDA product or biosimilar biological 
        product at a date, whether certain or contingent, 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 
                ANDA product or biosimilar biological product.
            ``(2) A payment for reasonable litigation expenses not to 
        exceed--
                    ``(A) for calendar year 2023, $7,500,000; or
                    ``(B) for calendar year 2024 and each subsequent 
                calendar year, the amount determined for the preceding 
                calendar year adjusted to reflect the percentage 
                increase (if any) in the Producer Price Index for Legal 
                Services published by the Bureau of Labor Statistics of 
                the Department of Labor for the most recent calendar 
                year.
            ``(3) A covenant not to sue on any claim that the ANDA 
        product or biosimilar biological product infringes a United 
        States patent.
    ``(d) Enforcement.--
            ``(1) Enforcement.--A violation of this section shall be 
        treated as an unfair method of competition under section 
        5(a)(1).
            ``(2) Judicial review.--
                    ``(A) 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 of 
                the issuance of such order, petition for review of such 
                order in--
                            ``(i) the United States Court of Appeals 
                        for the District of Columbia Circuit;
                            ``(ii) the United States Court of Appeals 
                        for the circuit in which the ultimate parent 
                        entity, as defined in section 801.1(a)(3) of 
                        title 16, Code of Federal Regulations, or any 
                        successor thereto, of the NDA holder or 
                        biological product license holder is 
                        incorporated as of the date that the NDA or 
                        biological product license application, as 
                        applicable, is filed with the Commissioner of 
                        Food and Drugs; or
                            ``(iii) the United States Court of Appeals 
                        for the circuit in which the ultimate parent 
                        entity of the ANDA filer or biosimilar 
                        biological product application filer is 
                        incorporated as of the date that the ANDA or 
                        biosimilar biological product application is 
                        filed with the Commissioner of Food and Drugs.
                    ``(B) 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) Antitrust Laws.--Nothing in this section shall modify, 
impair, limit, or supersede the applicability of the antitrust laws as 
defined in subsection (a) of the first 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 or 
biosimilar biological product application filer to assert claims or 
counterclaims against any person, under the antitrust laws or other 
laws relating to unfair competition.
    ``(f) Penalties.--
            ``(1) Forfeiture.--Each party 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 the 
        violation of this section. If no such value has been received 
        by the NDA holder, the biological product license holder, the 
        ANDA filer, or the biosimilar biological product application 
        filer, the penalty to the NDA holder, the biological product 
        license holder, the ANDA filer, or the biosimilar biological 
        product application filer shall be sufficient to deter 
        violations, but in no event shall be greater than 3 times the 
        value given to an ANDA filer or biosimilar biological product 
        application 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 
        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 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) 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 the violation of this section 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;
                    ``(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, the 
                biological product license holder, the ANDA filer, or 
                the biosimilar biological product application filer, 
                compensation received by the ANDA filer or biosimilar 
                biological product application filer, and the amount of 
                commerce affected; and
                    ``(C) other matters that justice requires.
            ``(4) Remedies in addition.--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.
    ``(g) Definitions.--In this section:
            ``(1) Agreement.--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 
        claim.--The 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) 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)).
            ``(4) ANDA filer.--The term `ANDA filer' means a party that 
        owns or controls an ANDA filed with the Food and Drug 
        Administration or has the exclusive rights under such ANDA to 
        distribute the ANDA product.
            ``(5) ANDA product.--The term `ANDA product' means the 
        product to be manufactured under the ANDA that is the subject 
        of the patent infringement claim.
            ``(6) Biological product.--The term `biological product' 
        has the meaning given such term in section 351(i)(1) of the 
        Public Health Service Act (42 U.S.C. 262(i)(1)).
            ``(7) Biological product license application.--The term 
        `biological product license application' means an application 
        under section 351(a) of the Public Health Service Act (42 
        U.S.C. 262(a)).
            ``(8) Biological product license holder.--The term 
        `biological product license holder' means--
                    ``(A) the holder of an approved biological product 
                license application for a biological product;
                    ``(B) a person owning or controlling enforcement of 
                any patents that claim the biological product that is 
                the subject of such approved application; 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) Biosimilar biological product.--The term `biosimilar 
        biological product' means the product to be manufactured under 
        the biosimilar biological product application that is the 
        subject of the patent infringement claim.
            ``(10) Biosimilar biological product application.--The term 
        `biosimilar biological product application' means an 
        application under section 351(k) of the Public Health Service 
        Act (42 U.S.C. 262(k)) for licensure of a biological product as 
        biosimilar to, or interchangeable with, a reference product.
            ``(11) Biosimilar biological product application filer.--
        The term `biosimilar biological product application filer' 
        means a party that owns or controls a biosimilar biological 
        product application filed with the Food and Drug Administration 
        or has the exclusive rights under such application to 
        distribute the biosimilar biological product.
            ``(12) 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).
            ``(13) Market.--The term `market' means the promotion, 
        offering for sale, selling, or distribution of a drug product.
            ``(14) 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)).
            ``(15) NDA holder.--The term `NDA holder' means--
                    ``(A) the holder of an approved NDA application for 
                a drug product;
                    ``(B) a person 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.
            ``(16) Party.--The term `party' means any person, 
        partnership, corporation, or other legal entity.
            ``(17) Patent infringement.--The term `patent infringement' 
        means infringement of any patent or of any filed patent 
        application, including any extension, reissue, renewal, 
        division, continuation, continuation in part, reexamination, 
        patent term restoration, patents of addition, and extensions 
        thereof.
            ``(18) Patent infringement claim.--The term `patent 
        infringement claim' means any allegation made to an ANDA filer 
        or biosimilar biological product application filer, whether or 
        not included in a complaint filed with a court of law, that its 
        ANDA or ANDA product, or biosimilar biological product license 
        application or biosimilar biological product, may infringe any 
        patent held by, or exclusively licensed to, the NDA holder, 
        biological product license holder, ANDA filer, or biosimilar 
        biological product application filer of the drug product or 
        biological product, as applicable.
            ``(19) 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), or section 505A (pediatric 
        exclusivity) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355(c)(3)(E), 360cc, 355a), or on the licensing of 
        biological product applications under section 351(k)(7) (12-
        year exclusivity) or paragraph (2) or (3) of section 351(m) 
        (pediatric exclusivity) of the Public Health Service Act (42 
        U.S.C. 262) or under section 527 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 360cc) (orphan drug exclusivity).''.
    (b) Effective Date.--Section 27 of the Federal Trade Commission 
Act, as added by this section, shall apply to all agreements described 
in section 27(a)(1) of that Act entered into on or after the date of 
enactment of this Act.

SEC. 4. CERTIFICATION OF AGREEMENTS.

    (a) Notice of All Agreements.--Section 1111(7) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (21 
U.S.C. 355 note) is amended by inserting ``, or the owner of a patent 
for which a claim of infringement could reasonably be asserted against 
any person for making, using, offering to sell, selling, or importing 
into the United States a biological product that is the subject of a 
biosimilar biological product application'' before the period at the 
end.
    (b) Certification of Agreements.--Section 1112 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (21 
U.S.C. 355 note) is amended by adding at the end the following:
    ``(d) Certification.--The Chief Executive Officer or the company 
official responsible for negotiating any agreement under subsection (a) 
or (b) that is required to be filed under subsection (c), within 30 
days after such filing, 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. 5. NOTIFICATION OF AGREEMENTS.

    Section 1112 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (21 U.S.C. 355 note), as amended by section 
4(b), is further amended by adding at the end the following:
    ``(e) Rule of Construction.--
            ``(1) In general.--An agreement that is required under 
        subsection (a) or (b) shall include agreements resolving any 
        outstanding disputes, including agreements resolving or 
        settling a Patent Trial and Appeal Board proceeding.
            ``(2) Definition.--For purposes of subparagraph (A), the 
        term `Patent Trial and Appeal Board proceeding' means a 
        proceeding conducted by the Patent Trial and Appeal Board of 
        the United States Patent and Trademark Office, including an 
        inter partes review instituted under chapter 31 of title 35, 
        United States Code, a post-grant review instituted under 
        chapter 32 of that title (including a proceeding instituted 
        pursuant to the transitional program for covered business 
        method patents, as described in section 18 of the Leahy-Smith 
        America Invents Act (35 U.S.C. 321 note)), and a derivation 
        proceeding instituted under section 135 of that title.''.

SEC. 6. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.

    Section 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 27 
of the Federal Trade Commission Act or'' after ``that the agreement has 
violated''.

SEC. 7. 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)--
                    (A) by moving the margin 2 ems to the left; and
                    (B) by inserting ``or'' after the semicolon; and
            (3) inserting after subparagraph (E) the following:
            ``(F) under section 27,''.

SEC. 8. REPORT ON ADDITIONAL EXCLUSION.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Federal Trade Commission shall submit to the Committee 
on the Judiciary of the Senate and the Committee on the Judiciary of 
the House of Representatives a recommendation, and the Commission's 
basis for such recommendation, regarding a potential amendment to 
include in section 27(c) of the Federal Trade Commission Act (as added 
by section 3 of this Act) an additional exclusion for consideration 
granted by an NDA holder to a ANDA filer or by a biological product 
license holder to a biosimilar biological product application filer as 
part of the resolution or settlement, a release, waiver, or limitation 
of a claim for damages or other monetary relief.
    (b) Definitions.--In this section, the terms ``ANDA filer'', 
``biological product license holder'', ``biosimilar biological product 
application filer'', and ``NDA holder'' have the meanings given such 
terms in section 27(g) of the Federal Trade Commission Act (as added by 
section 3 of this Act).

SEC. 9. 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 the Federal Trade Commission Act, not later than 6 years 
after the date on which the parties to the agreement file the 
certification under section 1112(d) of the Medicare Prescription Drug 
Improvement and Modernization Act of 2003 (21 U.S.C. 355 note).

SEC. 10. SEVERABILITY.

    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.
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