[Congressional Record Volume 148, Number 86 (Tuesday, June 25, 2002)]
[Senate]
[Pages S6019-S6025]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER:
  S. 2677. A bill to improve consumer access to prescription drugs, and 
for other purposes; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today to introduce a bill that 
affects all of our lives. This bill gets to the heart of an issue that 
Congress has been talking about for years, access to prescription 
drugs. As the name implies, the Consumer Access to Prescription Drugs 
Improvement Act of 2002 seeks to improve access to prescription drugs 
for every person who needs medication.
  Today, people rely on prescription drugs for several different 
reasons. For some people, prescription drugs make life more 
comfortable. Some would not survive without them. Prescription drugs 
have become an intricate part of modern medicine, replacing procedures 
that once required an inpatient stay. Ailments that once could not be 
treated can now be cured with a little pill. The innovation that has 
been displayed is amazing and must continue.
  The problem, however, is that prescription drug manufacturers have 
been distorting the market. Drug manufacturers are exploiting loopholes 
in existing laws to further extend their monopolies and keep generic 
drugs off the market. The result, after years of paying monopoly 
prices, consumers continue to be cheated out of cost-effective 
alternatives. We've all heard the horror stories of people going 
without their medications, splitting pills, or making the choice 
between food and drugs. However, the consequences of actions taken by 
drug manufacturers are actually more global. They are taking a terrible 
toll on State budgets, forcing Medicaid to severely scale back their 
coverage of our most needed population. They are causing employer 
health care premiums to go through the roof. These pressures will cause 
the number of uninsured to increase and will ultimately limit access to 
health care.
  The group that suffers the most due to drug cost growth is seniors. 
Millions of seniors have no drug coverage today. Over the past five 
years, the 50 prescription drugs most commonly used by seniors have 
increased in price by nearly twice the rate of inflation. In fact, over 
25 percent of these drugs increased in price by three or more times the 
rate of inflation over that time period. According to the Kaiser Family 
Foundation, the average retail prescription price for brand name drugs 
has increased more than 58 percent in 10 years. Brandeis University 
recently released a report on this issue. The major conclusion of the 
report is that greater and appropriate use of generic medications can 
achieve $50-$100 billion in savings for any new Medicare drug benefit. 
This legislation will make a Medicare drug benefit affordable and 
sustainable into the future. Senators should be aware that I plan to 
offer this legislation as an amendment to any Medicare prescription 
drug benefit that the Senate considers.
  This legislation will stop pharmaceutical companies from 
circumventing the law and open the door to competition so that every 
consumer from West Virginia to California has access to reasonably 
priced prescription drugs. However, this legislation will also go 
further. It will provide crucial information to physicians, consumers, 
and health care purchasers about the cost-effective generics that are 
equivalent to brand names. According to the Federal Trade Commission, 
generic drugs typically cost 25 percent less than brand-name drugs when 
they first enter the market. After two years, the price difference 
grows to 60 percent. Every patient should have access to the drug 
prescribed by their doctor, but if there is a drug out there that is 
equivalent to the brand name but will cost you half as much, don't you 
want your physician to know about it? This bill will shine a spotlight 
on the real costs and the effects of issues we hear so much about, 
direct-to-consumer advertising, drug detailing, and sampling. We can no 
longer afford to talk about these issues in broad, hypothetical terms. 
Congress and the public need to understand these issues better so that 
we can be more prudent purchasers. This legislation will create the 
correct incentives, to innovate rather than litigate.

  Finally, this legislation will expand access to drugs under existing 
programs which are so crucial to those who rely on them. This 
legislation will expand Medicare's current drug benefit to include all 
cancer drugs, regardless of the method by which they are administered. 
It will allow public hospitals access to the drug prices they need to 
be able to continue in their mission to provide care to our neediest 
citizens. It will help states with their drug utilization review 
programs which we all know are cost effective. I urge my colleagues to 
join me in this effort.
  My efforts are supported by the Service Employees International 
Union, the American Federation of State, County and Municipal 
Employees, the AFL-CIO, Families USA, the Generic Pharmaceutical 
Association, the National Association of Chain Drug Stores, and 
Representative Waxman, the author of the original legislation.
  Representative Waxman stated:

       Now more than ever, as the cost of prescription drugs has 
     skyrocketed, access to low-cost generics is essential. At a 
     time when the brand-name companies have few innovative 
     products in their pipelines, we are seeing a disturbing 
     trend: a growing number of companies are choosing to protect 
     their profits through legal maneuvers to delay generic 
     competition on their existing products. The price of this 
     anti-competitive behavior to our nation's health care bill 
     and to the health of Americans is shockingly high. It is time 
     that Congress acted to stop unnecessary delays in the 
     marketing of generic drugs. The bill that Senator Rockefeller 
     is introducing today makes a real contribution to the effort 
     to combat these problems.

  This legislation is a commonsense step we can take to increase access 
to prescription drugs for all consumers. I urge Congress to consider 
and pass this legislation. I ask unanimous consent

[[Page S6020]]

that the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2677

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Consumer 
     Access to Prescription Drugs Improvement Act of 2002''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings; purposes.

     TITLE I--EXPANSION OF ACCESS THROUGH EDUCATION AND INFORMATION

Sec. 101. Pharmaceutical Advisory Committee.
Sec. 102. Guidance for payer and medical communities.
Sec. 103. Study of procedures and scientific standards for evaluating 
              generic biological products.
Sec. 104. Institute of Medicine study.

      TITLE II--EXPANSION OF ACCESS THROUGH INCREASED COMPETITION

Sec. 201. Drug Reimbursement Fund.
Sec. 202. Patent certification.
Sec. 203. Accelerated generic drug competition.
Sec. 204. Notice of agreements settling challenges to certifications 
              that a patent is invalid or will not be infringed.
Sec. 205. Publication of information in the Orange Book.
Sec. 206. No additional 30-month extension.

        TITLE III--EXPANSION OF ACCESS THROUGH EXISTING PROGRAMS

Sec. 301. Medicare coverage of all anticancer oral drugs.
Sec. 302. Removal of State restrictions.
Sec. 303. Medicaid drug use review program.
Sec. 304. Clarification of inclusion of inpatient drug prices charged 
              to certain public hospitals in the best price exemptions 
              established for purposes of the medicaid drug rebate 
              program.
Sec. 305. Upper payment limits for generic drugs under medicaid.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Report.

     SEC. 2. FINDINGS; PURPOSES.

       (a) Findings.--Congress finds that--
       (1) prescription drugs are a crucial part of modern 
     medicine, serving as complements to medical procedures, 
     substitutes for surgery and other medical procedures, and new 
     forms of treatment;
       (2) a lack of access to prescription drugs can not only 
     cause discomfort, but can be life-threatening to a patient;
       (3)(A) by all accounts, double-digit prescription drug 
     price increases are forecast annually for the next 3 to 5 
     years; and
       (B) such increases would result in prescription drug costs 
     that would be prohibitive for many Americans;
       (4) the Congressional Budget Office estimates that--
       (A) the use of generic prescription drugs for brand-name 
     prescription drugs could save purchasers of prescription 
     drugs between $8,000,000,000 and $10,000,000,000 each year; 
     and
       (B) generic prescription drugs cost between 25 percent and 
     60 percent less than brand-name prescription drugs, resulting 
     in an estimated average saving of $15 to $30 on each 
     prescription;
       (5) expanding access to generic prescription drugs can help 
     consumers, especially seniors and the uninsured, have access 
     to more affordable prescription drugs;
       (6) policymakers should be better informed about issues 
     relating to prescription drugs, particularly issues 
     concerning barriers to patient access to prescription drugs;
       (7) health care purchasers should be more aware of safe, 
     cost-effective alternatives to brand-name prescription drugs; 
     and
       (8) prescription drug coverage provided under existing 
     programs should be expanded to better reflect modern 
     technology and provide drugs to the people who rely on them 
     most, yet who increasingly find themselves uninsured or with 
     coverage that is becoming more expensive and less meaningful.
       (b) Purposes.--The purposes of this Act are--
       (1) to better educate policymakers, purchasers, and the 
     public about safe and cost-effective generic alternatives, 
     barriers to market entry, and upcoming issues in the 
     pharmaceutical industry;
       (2) to increase consumer access to prescription drugs by--
       (A) decreasing price through increased competition; and
       (B) expanding coverage under the medicare and medicaid 
     programs.

     TITLE I--EXPANSION OF ACCESS THROUGH EDUCATION AND INFORMATION

     SEC. 101. PHARMACEUTICAL ADVISORY COMMITTEE.

       Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) is amended by inserting after section 1805 the 
     following:


                  ``pharmaceutical advisory committee

       ``Sec. 1805A. (a) Establishment.--There is established, as 
     part of the Medicare Payment Advisory Commission established 
     under section 1805, a committee to be known as the 
     `Pharmaceutical Advisory Committee' (referred to in this 
     section as the `Committee').
       ``(b) Membership.--
       ``(1) Composition.--The Committee shall be composed of 11 
     members appointed by the Comptroller General of the United 
     States.
       ``(2) Qualifications.--
       ``(A) In general.--The Committee members shall be selected 
     from among--
       ``(i) individuals with expertise in and knowledge of the 
     pharmaceutical industry (brand name and generic), including 
     expertise in and knowledge of pharmaceutical--

       ``(I) development;
       ``(II) pricing;
       ``(III) distribution;
       ``(IV) marketing;
       ``(V) reimbursement; and
       ``(VI) patent law; and

       ``(ii) providers of health and related services;
       ``(B) Representation.--The members of the Committee shall 
     include--
       ``(i) physicians and other health professionals;
       ``(ii) employers;
       ``(iii) third-party payers;
       ``(iv) representatives of consumers;
       ``(v) individuals having--

       ``(I) skill in the conduct and interpretation of 
     pharmaceutical and health economics research; and
       ``(II) expertise in outcomes, effectiveness research, and 
     technology assessment; and

       ``(vi) patent attorneys.
       ``(C) Conflicts of interest.--The members of the Committee 
     shall not include any individual who, within the 5-year 
     period preceding the date of appointment to the Committee, 
     has been an officer or employee of a drug manufacturer or has 
     been employed as a consultant to a drug manufacturer.
       ``(D) Representation.--The members of the Committee shall 
     be broadly representative of various professions, geographic 
     regions, and urban and rural areas.
       ``(E) Limitation.--Not more than \1/2\ of the members 
     appointed under this subsection may be directly involved in 
     the provision, management, or delivery of items and services 
     covered under this title.
       ``(F) Public disclosure.--As soon as practicable after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall establish rules for the public disclosure 
     of financial and other potential conflicts of interest by 
     members of the Committee.
       ``(3) Terms; vacancies.--
       ``(A) Terms.--
       ``(i) In general.--Except as provided in clause (ii), a 
     member of the Committee shall be appointed for a term of 3 
     years.
       ``(ii) Initial terms.--Of the members first appointed to 
     the Committee under this subsection--

       ``(I) 4 shall be appointed for a term of 1 year; and
       ``(II) 4 shall be appointed for a term of 2 years.

       ``(iii) Carryover.--After the term of a member of the 
     Committee has expired, the member may continue to serve until 
     a successor is appointed.
       ``(B) Vacancies.--
       ``(i) In general.--A vacancy on the Committee--

       ``(I) shall not affect the powers of the Committee; and
       ``(II) shall be filled in the same manner as the original 
     appointment was made.

       ``(ii) Filling of unexpired term.--An individual chosen to 
     fill a vacancy shall be appointed for the unexpired term of 
     the member replaced.
       ``(4) Meetings.--The Committee shall meet at the call of 
     the chairperson.
       ``(5) Chairperson; vice chairperson.--The Comptroller 
     General shall appoint 1 of the members as chairperson and 1 
     of the members as vice chairperson.
       ``(c) Duties.--
       ``(1) In general.--The Committee shall--
       ``(A) review payment policies for drugs under titles XVIII 
     and XIX of the Social Security Act (42 U.S.C. 1395 et seq.); 
     and
       ``(B) make recommendations to Congress with respect to the 
     payment policies.
       ``(2) Inclusions.--The matters to be studied by the 
     Committee under paragraph (1) include--
       ``(A) the effects of direct-to-consumer advertising, drug 
     detailing, and sampling;
       ``(B) the level of use of generic drugs as safe and cost-
     effective alternatives to brand name drugs;
       ``(C) the barriers to approval of generic drugs, including 
     consideration of all of the matters described in paragraph 
     (3);
       ``(D) the adequacy of drug price metrics, including the 
     average wholesale price and the average manufacturers price;
       ``(E) the effectiveness of various education methods on 
     changing clinical behavior;
       ``(F) the effectiveness of common drug management tools, 
     including drug use review and use of formularies;
       ``(G) the perception of patients, physicians, nurses, and 
     pharmacists of generic prescription drugs as safe and 
     effective substitutes for brand-name prescription drugs;
       ``(H) the costs of research and development and the costs 
     of clinical trials associated with producing a drug;
       ``(I) the relationship between pharmacy benefit managers 
     and prescription drug manufacturers;
       ``(J) best practices to increase medical safety and reduce 
     medical errors; and
       ``(K) polypharmacy and underutilization.

[[Page S6021]]

       ``(3) Barriers to approval.--The matters for consideration 
     referred to in paragraph (2)(C) include--
       ``(A) the appropriate balance between rewarding scientific 
     innovation and providing affordable access to health care;
       ``(B) features of the communication process and grievance 
     procedure of the Committee that provide opportunities for 
     tactics that unduly delay generic market entry;
       ``(C) the use of the citizen's petition process to delay 
     generic market entry;
       ``(D) the use of changes to a drug product (including a 
     labeling change) timed to delay generic approval; and
       ``(E) the impact of granting patents on diagnostic methods 
     such as patents on genes and genetic testing systems on 
     access to affordable health care.
       ``(4) Report.--Not later than January 1 of each year, the 
     Committee shall submit to Congress a report on--
       ``(A) the results of the reviews and recommendations;
       ``(B) issues affecting drug prices, including use of and 
     access to generic drugs; and
       ``(C) the effect of drug prices on spending by government-
     sponsored health care programs and health care spending in 
     general.
       ``(d) Powers.--
       ``(1) Information from federal agencies.--
       ``(A) In general.--The Committee may secure directly from a 
     Federal department or agency such information as the 
     Committee considers necessary to carry out this section.
       ``(B) Provision of information.--On request of the 
     Chairperson of the Committee, the head of the Federal 
     department or agency shall provide the information to the 
     Committee.
       ``(2) Data collection.--To carry out the duties of the 
     Committee under subsection (c), the Committee shall--
       ``(A) collect and assess published and unpublished 
     information that is available on the date of enactment of 
     this Act;
       ``(B) if information available under subparagraph (A) is 
     inadequate, carry out, or award grants or contracts for, 
     original research and experimentation; and
       ``(C) adopt procedures to allow members of the public to 
     submit information to the Committee for inclusion in the 
     reports and recommendations of the Committee.
       ``(3) Additional powers.--The Committee may--
       ``(A) seek assistance and support from appropriate Federal 
     departments and agencies;
       ``(B) enter into any contracts or agreements as are 
     necessary to carry out the duties of the Committee, without 
     regard to section 3709 of the Revised Statutes (41 U.S.C. 5);
       ``(C) make advance, progress, and other payments that 
     relate to the duties of the Committee;
       ``(D) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(E) promulgate regulations for the internal organization 
     and operation of the Committee.
       ``(e) Committee Personnel Matters.--
       ``(1) Compensation of members.--
       ``(A) In general.--A member of the Committee shall be 
     compensated at a rate equal to the daily equivalent of the 
     annual rate of basic pay prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which the member is engaged in the performance of the duties 
     of the Board.
       ``(B) Travel expenses.--A member of the Board shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for an employee of an agency 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from the home or regular place of business 
     of the member in the performance of the duties of the Board.
       ``(2) Staff.--
       ``(A) In general.--The Committee may, without regard to the 
     civil service laws (including regulations), appoint and 
     terminate an executive director and such other additional 
     personnel as are necessary to enable the Committee to perform 
     the duties of the Committee.
       ``(B) Compensation.--The Chairperson of the Committee may 
     fix the compensation of the executive director and other 
     personnel without regard to the provisions of chapter 51 and 
     subchapter III of chapter 53 of title 5, United States Code, 
     relating to classification of positions and General Schedule 
     pay rates.
       ``(C) Employees of the federal government.--For the 
     purposes of compensation, benefits, rights, and privileges, 
     the staff of the Committee shall be considered employees of 
     the Federal Government.
       ``(f) Request for Appropriations.--
       ``(1) In general.--The Committee shall submit requests for 
     appropriations in the same manner as the Comptroller General 
     submits requests for appropriations.
       ``(2) Separate amounts.--Notwithstanding paragraph (1), 
     amounts appropriated for the Committee shall be separate from 
     amounts appropriated for the Comptroller General.''.

     SEC. 102. GUIDANCE FOR PAYER AND MEDICAL COMMUNITIES.

       (a) In General.--The Secretary of Health and Human Services 
     shall issue guidance for the payer community and the medical 
     community on--
       (1) how consumers, physicians, nurses, and pharmacists 
     should be educated on generic drugs; and
       (2) the need to potentially educate pharmacy technicians, 
     nurse practitioners, and physician assistants on generic 
     drugs.
       (b) Matters To Be Addressed.--The guidance shall include 
     such items as--
       (1) a recommendation for allotment of a portion of yearly 
     continuing education hours to the subject of generic drugs 
     similar to recommendations for continuing education already 
     in place for pharmacists in some States on pharmacy law and 
     AIDS;
       (2) a recommendation to all medical education governing 
     bodies regarding course curricula concerning generic drugs to 
     include in the course work of medical professionals;
       (3) a recommendation on how the Food and Drug 
     Administration could notify physicians and pharmacists when a 
     brand name drug becomes available as a generic drug and what 
     information could be included in the notification;
       (4) the establishment of a speaker's bureau available to 
     groups by geographic region to speak and provide technical 
     assistance on issues relating to generic drugs, to be 
     available to pharmacists, consumer groups, physicians, 
     nurses, and local media; and
       (5) the proposition of a survey on perception and awareness 
     of generic drugs at the beginning and end of an educational 
     campaign to test the effectiveness of the campaign on 
     different audiences.
       (c) Public Education.--The Secretary shall provide for the 
     education of the public on the availability and benefits of 
     generic drugs.
       (d) Notification of New Generic Prescription Drug 
     Approvals.--As soon as practicable after a new generic 
     prescription drug is approved, the Secretary shall--
       (1) notify physicians, pharmacists, and other health care 
     providers of the approval; and
       (2) inform health care providers of the brand-name 
     prescription drug for which the generic prescription drug is 
     a substitute.

     SEC. 103. STUDY OF PROCEDURES AND SCIENTIFIC STANDARDS FOR 
                   EVALUATING GENERIC BIOLOGICAL PRODUCTS.

       (a) In General.--The Institute of Medicine shall conduct a 
     study to evaluate--
       (1) the feasibility of producing generic versions of 
     biological products; and
       (2) the relevance of the source materials and the 
     manufacturing process to the production of the generic 
     versions.
       (b) Establishment of Process.--
       (1) In general.--If, as a result of the study under 
     subsection (a), the Institute of Medicine finds that it would 
     be feasible to produce generic versions of biological 
     products, not later than 3 years after the date of the 
     completion of the study, the Secretary, shall prescribe 
     procedures and conditions under which biological products 
     intended for human use may be approved under an abbreviated 
     application or license.
       (2) Application.--An abbreviated application or license 
     shall, at a minimum, contain--
       (A) information showing that the conditions of use 
     prescribed, recommended, or suggested in the labeling 
     proposed for the new biological product have been previously 
     approved for a drug subject to regulation under section 505 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) 
     or under section 351 of the Public Health Service Act (42 
     U.S.C. 262) (referred to in this subsection as a ``listed 
     drug'');
       (B) information to show that the new biological product has 
     chemical and biological characteristics comparable to the 
     characteristics of the listed drug; and
       (C) information showing that the new biological product has 
     a safety and efficacy profile comparable to that of the 
     listed drug.
       (3) Product standards.--The Secretary, on the initiative of 
     the Secretary or on petition, may by regulation promulgate 
     drug product standards, procedures, and conditions to 
     determine insignificant changes in a biological product that 
     do not affect the scientific and medical soundness of product 
     approval and interchangeability.

     SEC. 104. INSTITUTE OF MEDICINE STUDY.

       (a) In General.--The Institute of Medicine shall convene a 
     committee to conduct a study to determine--
       (1) whether information regarding the relative efficacy and 
     effectiveness of drugs (as defined in section 201 of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321)) and 
     biological products (as defined in section 351(i) of the 
     Public Health Service Act (42 U.S.C. 262(i))) is available to 
     the public for independent and external review;
       (2) whether the benefits of drugs and biological products, 
     and particularly the relative benefits of similar drugs and 
     biological products, are understood by physicians and 
     patients; and
       (3) whether prescribing and use patterns are unduly or 
     inappropriately influenced by marketing to physicians and 
     direct advertising to patients.
       (b) Recommendations.--If problems are identified by the 
     study conducted under subsection (a), the committee shall 
     make recommendations to the Commissioner of Food and Drugs 
     for improvement, including recommendations regarding--
       (1) ways to better review the relative efficacy and 
     effectiveness of drugs approved for use by the Food and Drug 
     Administration;
       (2) the appropriate governmental or nongovernmental body to 
     conduct the review described under paragraph (1); and

[[Page S6022]]

       (3) ways to improve communication and dissemination of the 
     information reviewed in paragraph (1).
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section.

      TITLE II--EXPANSION OF ACCESS THROUGH INCREASED COMPETITION

     SEC. 201. DRUG REIMBURSEMENT FUND.

       Subchapter A of chapter V of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 501 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 524. DRUG REIMBURSEMENT FUND.

       ``(a) Definitions.--In this section:
       ``(1) Drug patent.--The term `drug patent' means a patent 
     described in section 505(b)(1).
       ``(2) Fund.--The term `Fund' means the Drug Reimbursement 
     Fund established under subsection (b).
       ``(b) Establishment.--There is established in the Treasury 
     of the United States a separate fund to be known as the `Drug 
     Reimbursement Fund'.
       ``(c) Comptroller.--The Secretary shall appoint a 
     comptroller to administer the Fund.
       ``(d) Regulations.--
       ``(1) In general.--The Secretary shall promulgate 
     regulations for the operation of the Fund, including the 
     method of payments from the Fund and designation of 
     beneficiaries of the Fund.
       ``(2) Administrative determinations.--The regulations under 
     paragraph (1) may permit the administrative determination of 
     the claims of health insurers, State and Federal Government 
     programs, and third-party payers or other parties that are 
     disadvantaged by the conduct of drug manufacturers that seek 
     to bring spurious civil actions for infringement of drug 
     patents in order to block the production and marketing of 
     lower-cost drug alternatives.
       ``(e) Contributions to the Fund.--
       ``(1) In general.--In any civil action under section 505 or 
     512 or in a civil action for infringement of a drug patent 
     (as defined in section 524(a)) under chapters 28 and 29 of 
     title 35, United States Code--
       ``(A) if the Court determines that the drug patent is 
     invalid or that the drug patent is not otherwise infringed, 
     but that the plaintiff obtained an injunction against the 
     defendant for the production or marketing of the drug to 
     which the drug patent relates, the Court shall order the 
     plaintiff to pay to the Fund the amount that is equal to--
       ``(i) the amount that is equal to the amount of net 
     revenues generated by the plaintiff from the production or 
     marketing of the drug during the period in which the 
     injunction was in effect, plus an additional period of 12 
     months; minus
       ``(ii) the amount of any special damages paid by the 
     plaintiff under section 524(m); or
       ``(B) if the defendant enters into a settlement agreement 
     or any other arrangement under which the defendant agrees to 
     withdraw an application under section 505 or 512, the Court 
     shall order the defendant to pay to the Fund the amount that 
     is equal to 50 percent of the amount (including the value of 
     any form of property) that the defendant receives from the 
     plaintiff under the arrangement.
       ``(2) Collection.--The United States may seek to enforce 
     collection of a contribution required to be made to the Fund 
     by bringing a civil action in United States district 
     court.''.

     SEC. 202. PATENT CERTIFICATION.

       (a) In General.--Section 505(j)(5) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)) is amended--
       (1) in subparagraph (B)--
       (A) by striking ``(B) The approval'' and inserting the 
     following:
       ``(B) Effective date of approval.--Except as provided in 
     subparagraph (C), the approval''; and
       (B) by striking clause (iii) and inserting the following:
       ``(iii) Certification that patent is invalid or will not 
     otherwise be infringed.--

       ``(I) No civil action for patent infringement or 
     declaratory judgment, or no motion for preliminary 
     injunction.--Except as provided in subclause (II), if--

       ``(aa) the applicant made a certification described in 
     paragraph (2)(A)(vii)(IV);
       ``(bb) none of the conditions for denial of approval stated 
     in paragraph (4) applies;
       ``(cc)(AA) no civil action for infringement of a patent 
     that is the subject of the certification is brought before 
     the expiration of the 45-day period beginning on the date on 
     which the notice provided under paragraph (2)(B)(ii) was 
     received; or
       ``(BB) a civil action is brought as described in subitem 
     (AA), but no motion for preliminary injunction is filed 
     within 90 days of commencement of the civil action; and
       ``(dd) the applicant does not bring a civil action for 
     declaratory judgment of invalidity or other noninfringement 
     of the patent before the expiration of the 60-day period 
     beginning on the date on which the notice provided under 
     paragraph (2)(B)(ii) was received;

     the approval shall be made effective on the expiration of 60 
     days after the date on which the notice provided under 
     paragraph (2)(B)(ii) was received.
       ``(II) Civil action for patent infringement or declaratory 
     judgment.--If--

       ``(aa)(AA) a civil action for infringement of a patent that 
     is the subject of the certification is brought before the 45-
     day period beginning on the date on which the notice provided 
     under paragraph (2)(B)(ii) was received; or
       ``(BB) the applicant brings a civil action for declaratory 
     judgment of invalidity or other noninfringement of the patent 
     before the expiration of the 60-day period beginning on the 
     date on which the notice under paragraph (2)(B)(ii) was 
     received;
       ``(bb) the holder of the approved application or the owner 
     of the patent seeks a preliminary injunction prohibiting the 
     applicant from engaging in the commercial manufacture and 
     sale of the drug; and
       ``(cc) none of the conditions for denial of approval stated 
     in paragraph (4) applies;

     the approval shall be made effective on issuance by a United 
     States district court of a decision and order that denies a 
     preliminary injunction, or, in a case in which a preliminary 
     injunction has been granted by a United States district court 
     prohibiting the applicant from engaging in the commercial 
     manufacture or sale of the drug, a decision and order that 
     determines that the drug patent is invalid or that the drug 
     patent is not otherwise infringed.
       ``(III) Procedure.--In a civil action brought as described 
     in subclause (II)--

       ``(aa) the civil action shall be brought in the judicial 
     district in which the defendant has its principal place of 
     business or a regular and established place of business;
       ``(bb) each of the parties shall reasonably cooperate in 
     expediting the civil action;
       ``(cc) the court shall not consider a motion for 
     preliminary injunction unless the motion is filed within 90 
     days of commencement of the civil action; and
       ``(dd) the holder of the approved application or the owner 
     of the patent shall be entitled to a preliminary injunction 
     if the holder or owner demonstrates a likelihood of success 
     on the merits and without regard to whether the holder or 
     owner would suffer immediate or irreparable harm or to any 
     other factor.'';
       (2) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (F) and (G), respectively; and
       (3) by inserting after subparagraph (B) the following:
       ``(C) Effectiveness on condition.--
       ``(i) Notice.--The applicant of an application that has 
     been approved under subparagraph (A) but for which the 
     approval has not yet been made effective under subparagraph 
     (B) (referred to in this subparagraph as the `previous 
     application') and with respect to which a preliminary 
     injunction has been issued prohibiting the commercial 
     manufacture or sale of the drug subject to the previous 
     application may submit to the Secretary a notice stating 
     that--

       ``(I) the applicant expects to receive, within 180 days, a 
     United States district court decision and order that vacates 
     the preliminary injunction and denies a permanent injunction 
     or determines that the patent is invalid or is otherwise not 
     infringed (referred to in this subparagraph as a 
     `noninfringement decision');
       ``(II) requests the immediate issuance of an approval of 
     the application conditioned on a noninfringement decision 
     within the specified time;
       ``(III) agrees that--

       ``(aa) the applicant will not settle or otherwise 
     compromise the noninfringement decision in any manner that 
     would prevent or delay the immediate marketing of the drug 
     under the approved application; and
       ``(bb) the applicant will notify the Secretary of the 
     noninfringement decision (or if a decision is rendered that 
     is not a noninfringement decision, will notify the Secretary 
     of that decision) not later than 5 days after the date of 
     entry of judgment; and

       ``(IV) consents to the immediate withdrawal of the 
     approval, without opportunity for a hearing, if the applicant 
     fails to comply with the agreement under subclause (III) or 
     if the noninfringement decision is vacated by the district 
     court or reversed on appeal.

       ``(ii) Approval.--On receipt of a notice under clause (i), 
     if none of the conditions for denial of approval stated in 
     paragraph (4) applies, the Secretary shall immediately issue 
     an effective approval of the application conditioned on the 
     receipt of a noninfringement decision within the specified 
     time, subject to immediate withdrawal if the applicant fails 
     to comply with the agreement under clause (i)(III).
       ``(iii) Effect.--If a noninfringement decision is rendered, 
     the date of the final decision of a court referred to in 
     subparagraph (B)(iv)(II)(aa) shall be the date of the 
     noninfringement decision, notwithstanding that the 
     noninfringement decision may be, or has been, appealed.
       ``(D) Civil action for declaratory judgment.--A person that 
     files an abbreviated application for a new drug under this 
     section containing information showing that the conditions of 
     use prescribed, recommended, or suggested in the labeling 
     proposed for the new drug have been previously approved for a 
     listed drug may bring a civil action--
       ``(i) against the holder of an approved application for the 
     listed drug, for a declaratory judgment declaring that the 
     certification made by the holder of the approved drug 
     application under subsection (b)(5)(C) relating to the listed 
     drug was not properly made; or
       ``(ii) against the owner of a patent that claims the listed 
     drug, a method of using the listed drug, or the active 
     ingredient in the listed drug, for a declaratory judgment 
     declaring that the patent is invalid or will not otherwise be 
     infringed by the new drug for which the applicant seeks 
     approval.''.

[[Page S6023]]

       (b) Conforming Amendments.--Section 505A of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 355a) is amended--
       (1) in subsections (b)(1)(A)(i) and (c)(1)(A)(i), by 
     striking ``(j)(5)(D)(ii)'' each place it appears and 
     inserting ``(j)(5)(G)(ii)'';
       (2) in subsections (b)(1)(A)(ii) and (c)(1)(A)(ii), by 
     striking ``(j)(5)(D)'' each place it appears and inserting 
     ``(j)(5)(G)''; and
       (3) in subsections (e) and (l), by striking 
     ``505(j)(5)(D)'' each place it appears and inserting 
     ``505(j)(5)(G)''.

     SEC. 203. ACCELERATED GENERIC DRUG COMPETITION.

       (a) In General.--Section 505(j)(5) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)) (as amended by 
     section 203) is amended--
       (1) in subparagraph (B)(iv), by striking subclause (II) and 
     inserting the following:
       ``(II) the earlier of--
       ``(aa) the date of a final decision of a court in an action 
     described in clause (iii)(II) (from which no appeal has been 
     or can be taken, other than a petition to the Supreme Court 
     for a writ of certiorari) holding that the patent that is the 
     subject of the certification is invalid or not otherwise 
     infringed; or
       ``(bb) the date of a settlement order or consent decree 
     signed by a Federal judge that enters a final judgment and 
     includes a finding that the patent that is the subject of the 
     certification is invalid or not otherwise infringed;''; and
       (2) by inserting after subparagraph (D) the following:
       ``(E) Forfeiture of 180-day period.--
       ``(i) Definitions.--In this subparagraph:

       ``(I) Forfeiture event.--The term `forfeiture event' means 
     the occurrence of any of the following:

       ``(aa) Failure to market.--An applicant fails to market the 
     drug by the later of--
       ``(AA) the date that is 60 days after the date on which the 
     approval of the application for the drug is made effective 
     under subparagraph (B)(iii) (unless the Secretary extends the 
     date because of the existence of extraordinary or unusual 
     circumstances); or
       ``(BB) if the approval has been made effective and a civil 
     action has been brought against the applicant for 
     infringement of a patent subject to a certification under 
     paragraph (2)(A)(vii)(IV) or a civil action has been brought 
     by the applicant for a declaratory judgment that such a 
     patent is invalid or not otherwise infringed, and if there is 
     no other such civil action pending by or against the 
     applicant, the date that is 60 days after the date of a final 
     decision in the civil action, (unless the Secretary extends 
     the date because of the existence of extraordinary or unusual 
     circumstances).
       ``(bb) Withdrawal of application.--An applicant withdraws 
     an application.
       ``(cc) Amendment of certification.--An applicant, 
     voluntarily or as a result of a settlement or defeat in 
     patent litigation, amends the certification from a 
     certification under paragraph (2)(A)(vii)(IV) to a 
     certification under paragraph (2)(A)(vii)(III).
       ``(dd) Failure to obtain approval.--An applicant fails to 
     obtain tentative approval of an application within 30 months 
     after the date on which the application is filed, unless the 
     failure is caused by--
       ``(AA) a change in the requirements for approval of the 
     application imposed after the date on which the application 
     is filed; or
       ``(BB) other extraordinary circumstances warranting an 
     exception, as determined by the Secretary.
       ``(ee) Failure to challenge patent.--In a case in which, 
     after the date on which an applicant submitted an application 
     under this subsection, new patent information is submitted 
     under subsection (c)(2) for the listed drug for a patent for 
     which certification is required under paragraph (2)(A), the 
     applicant fails to submit, not later than 60 days after the 
     date on which the applicant receives notice from the 
     Secretary under paragraph (7)(A)(iii) of the submission of 
     the new patent information either a certification described 
     in paragraph (2)(A)(vii)(IV) or a statement that the method 
     of use patent does not claim a use for which the applicant is 
     seeking approval under this subsection in accordance with 
     paragraph (2)(A)(viii) (unless the Secretary extends the date 
     because of extraordinary or unusual circumstances).
       ``(ff) Monopolization.--The Secretary, after a fair and 
     sufficient hearing, in consultation with the Federal Trade 
     Commission, and based on standards used by the Federal Trade 
     Commission in the enforcement of Acts enforced by the Federal 
     Trade Commission, determines that the applicant at any time 
     engaged in--
       ``(AA) anticompetitive or collusive conduct; or
       ``(BB) any other conduct intended to unlawfully monopolize 
     the commercial manufacturing of the drug that is the subject 
     of the application.

       ``(II) Subsequent applicant.--The term `subsequent 
     applicant' means an applicant that submits a subsequent 
     application under clause (ii).

       ``(ii) Forfeiture event occurs.--If--

       ``(I) a forfeiture event occurs;
       ``(II) no action described in subparagraph (B)(iii)(II) was 
     brought against or by the previous applicant, or such an 
     action was brought but did not result in a final judgment 
     that included a finding that the patent is invalid; and
       ``(III) an action described in subparagraph (B)(iii)(II) is 
     brought against or by the next applicant, and the action 
     results in a final judgment that includes a finding that the 
     patent is invalid;

     the 180-day period under subparagraph (B)(iv) shall be 
     forfeited by the applicant and shall become available to an 
     applicant that submits a subsequent application containing a 
     certification described in paragraph (2)(A)(vii)(IV).
       ``(iii) Forfeiture event does not occur.--If a forfeiture 
     event does not occur, the application submitted subsequent to 
     the previous application shall be treated as the previous 
     application under subparagraph (B)(iv).
       ``(iv) Availability.--The 180-day period under subparagraph 
     (B)(iv) shall be available only to--

       ``(I) the previous applicant submitting an application for 
     a drug under this subsection containing a certification 
     described in paragraph (2)(A)(vii)(IV) with respect to any 
     patent; or
       ``(II) under clause (i), a subsequent applicant submitting 
     an application for a drug under this subsection containing 
     such a certification with respect to any patent;

     without regard to whether an application has been submitted 
     for the drug under this subsection containing such a 
     certification with respect to a different patent.
       ``(v) Applicability.--The 180-day period described in 
     subparagraph (B)(iv) shall apply only if--

       ``(I) the application contains a certification described in 
     paragraph (2)(A)(vii)(IV); and
       ``(II)(aa) an action is brought for infringement of a 
     patent that is the subject of the certification; or
       ``(bb) not later than 60 days after the date on which the 
     notice provided under paragraph (2)(B)(ii) is received, the 
     applicant brings an action against the holder of the approved 
     application for the listed drug.''.

       (b) Applicability.--The amendment made by subsection (a) 
     shall be effective only with respect to an application filed 
     under section 505(j) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 355(j)) after the date of enactment of this 
     Act for a listed drug for which no certification under 
     section 505(j)(2)(A)(vii)(IV) of that Act was made before 
     June 7, 2002.

     SEC. 204. NOTICE OF AGREEMENTS SETTLING CHALLENGES TO 
                   CERTIFICATIONS THAT A PATENT IS INVALID OR WILL 
                   NOT BE INFRINGED.

       (a) Definitions.--Section 201 of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 321) is amended by adding at the 
     end the following:
       ``(kk) Brand Name Drug Company.--The term `brand name drug 
     company' means a person engaged in the manufacture or 
     marketing of a drug approved under section 505(b).
       ``(ll) Generic Drug Applicant.--The term `generic drug 
     applicant' means a person that has filed for approval or 
     received approval of an abbreviated new drug application 
     under section 505(j).''.
       (b) Notice of Agreements Settling Challenges to 
     Certifications That a Patent Is Invalid or Will Not Otherwise 
     Be Infringed.--Section 505 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355) is amended by adding at the end 
     the following:
       ``(o) Notice of Agreements Settling Challenges to 
     Certifications That a Patent Is Invalid or Will Not Otherwise 
     Be Infringed.--
       ``(1) In general.--A brand name drug company and a generic 
     drug applicant that enter into an agreement regarding the 
     settlement of a challenge to a certification with respect to 
     a patent on a drug under subsection 505(b)(2)(A)(iv) shall 
     submit to the Secretary and the Attorney General a notice 
     that includes--
       ``(A) a copy of the agreement;
       ``(B) an explanation of the purpose and scope of the 
     agreement; and
       ``(C) an explanation whether there is any possibility that 
     the agreement could delay, restrain, limit, or otherwise 
     interfere with the production, manufacture, or sale of the 
     generic version of the drug.
       ``(2) Filing deadlines.--A notice required under paragraph 
     (1) shall be submitted not later than 10 business days after 
     the date on which the agreement described in paragraph (1) is 
     entered into.
       ``(3) Enforcement.--
       ``(A) Civil penalty.--
       ``(i) In general.--A person that fails to comply with 
     paragraph (1) shall be liable for a civil penalty of not more 
     than $20,000 for each day of failure to comply.
       ``(ii) Procedure.--A civil penalty under clause (i) may be 
     recovered in a civil action brought by the Secretary or the 
     Attorney General in accordance with section 16(a)(1) of the 
     Federal Trade Commission Act (15 U.S.C. 56(a)(1)).
       ``(B) Compliance and equitable relief.--If a person fails 
     to comply with paragraph (1), on application of the Secretary 
     or the Attorney General, a United States district court may 
     order compliance and grant such other equitable relief as the 
     court determines to be appropriate.
       ``(4) Regulations.--The Secretary, with the concurrence of 
     the Attorney General, may by regulation--
       ``(A) require that a notice required under paragraph (1) be 
     submitted in such form and contain such documentary material 
     and information relevant to the agreement as is appropriate 
     to enable the Secretary and the Attorney General to determine 
     whether the agreement may violate the antitrust laws; and
       ``(B) prescribe such other rules as are appropriate to 
     carry out this subsection.''.

[[Page S6024]]

     SEC. 205. PUBLICATION OF INFORMATION IN THE ORANGE BOOK.

       (a) Definition of Orange Book.--Section 201 of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 321) (as amended by 
     section 205(a)) is amended by adding at the end the 
     following:
       ``(mm) Orange Book.--The term `Orange Book' means the 
     publication published by the Secretary under section 
     505(b)(1).''.
       (b) Publication of Information in the Orange Book.--Section 
     505(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
     355(b)) is amended--
       (1) in the fourth sentence of paragraph (1), by inserting 
     before the period at the end the following: ``in a 
     publication entitled `Approved Drug Products With Therapeutic 
     Equivalence Indications' (commonly known as the `Orange 
     Book')''; and
       (2) by adding at the end the following:
       ``(5) Publication of information in the orange book.--
       ``(A) Definitions.--In this paragraph:
       ``(i) Interested person.--The term `interested person' 
     includes--

       ``(I) an applicant under paragraph (1);
       ``(II) any person that is considering engaging in the 
     manufacture, production, or marketing of a drug with respect 
     to which there may be a question whether the drug infringes 
     the patent to which information submitted under the second 
     sentence of paragraph (1) pertains;
       ``(III) the Federal Trade Commission; and
       ``(IV) a representative of consumers.

       ``(ii) Qualified patent information.--The term `qualified 
     patent information' means information that meets the 
     requirement of the second sentence of paragraph (1) that a 
     patent with respect to which information is submitted under 
     that sentence be a patent with respect to which a claim of 
     patent infringement could reasonably be asserted if a person 
     not licensed by the owner engaged in the manufacture, use, or 
     sale of the drug that is the subject of an application under 
     paragraph (1).
       ``(B) Duty of the secretary.--The Secretary shall publish 
     in the Orange Book only information that is qualified patent 
     information.
       ``(C) Certification.--
       ``(i) In general.--Information submitted under the second 
     sentence of paragraph (1) shall not be published in the 
     Orange Book unless the applicant files a certification, 
     subject to section 1001 of title 18, United States Code, and 
     sworn in accordance with section 1746 of title 28, United 
     States Code, that discloses the patent data or information 
     that forms the basis of the entry.
       ``(ii) Contents.--A certification under clause (i) shall--

       ``(I)(aa) identify all relevant claims in the patent 
     information for which publication in the Orange Book is 
     sought; and
       ``(bb) with respect to each such claim, a statement whether 
     the claim covers an approved drug, an approved method of 
     using the approved drug, or the active ingredient in the 
     approved drug (in the same physical form as the active 
     ingredient is present in the approved drug);
       ``(II) state the approval date for the drug;
       ``(III) state an objectively reasonable basis on which a 
     person could conclude that each relevant claim of the patent 
     covers an approved drug, an approved method of using the 
     approved drug, or the active ingredient in the approved drug 
     (in the same physical form as the active ingredients is 
     present in the approved drug);
       ``(IV) state that the information submitted conforms with 
     law; and
       ``(V) state that the submission is not made for the purpose 
     of delay or for any improper purpose.

       ``(iii) Regulations.--

       ``(I) In general.--Not later than 16 months after the date 
     of enactment of this paragraph, the Secretary, in 
     consultation with the United States Patent and Trademark 
     Office, shall promulgate regulations governing certifications 
     under clause (i).
       ``(II) Civil penalties.--The regulations under subclause 
     (I) shall prescribe civil penalties for the making of a 
     fraudulent or misleading statement in a certification under 
     clause (i).

       ``(D) Consultation.--For the purpose of deciding whether 
     information should be published in Orange Book, the Secretary 
     may consult with the United States Patent and Trademark 
     Office.
       ``(E) Publication of determination.--The Secretary shall 
     publish in the Federal Register notice of a determination by 
     the Secretary whether information submitted by an applicant 
     under the second sentence of paragraph (1) is or is not 
     qualified patent information.
       ``(F) Petition to reconsider determination.--
       ``(i) In general.--An interested person may file with the 
     Secretary a petition to reconsider the determination.
       ``(ii) Contents.--A petition under clause (i) shall 
     describe in detail all evidence and present all reasons 
     relied on by the petitioner in support of the petition.
       ``(iii) Notice.--The Secretary shall publish in the Federal 
     Register notice of the filing of a petition under clause (i).
       ``(iv) Response.--Not later than 30 days after publication 
     of a notice under clause (iii), any interested person may 
     file with the Secretary a response to the petition.
       ``(v) Reply.--Not later than 15 days after the filing of a 
     response under clause (iv), the petitioner may file with the 
     Secretary a reply to the response.
       ``(vi) Regulations.--The Secretary may promulgate 
     regulations providing for any additional procedures for the 
     conduct of challenges under this subparagraph.''.
       (c) Expedited Review of the Orange Book.--
       (1) Use of defined terms.--Terms used in this subsection 
     that are defined in the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 201 et seq.) (as amended by this section) having 
     the meanings given the terms in that Act.
       (2) Expedited review.--As soon as practicable after the 
     date of enactment of this Act, the Secretary shall--
       (A) complete a review of the Orange Book to identify any 
     information in the Orange Book that is not qualified patent 
     information; and
       (B) delete any such information from the Orange Book.
       (3) Priority.--In conducting the review under paragraph 
     (2), the Secretary shall give priority to making 
     determinations concerning information in the Orange Book with 
     respect to which any interested person may file a petition 
     for reconsideration under paragraph (5)(F) of section 505(b) 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
     355(b)), as added by subsection (b).
       (d) Differences in Labeling.--Section 505(j)(2) of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(2)) is 
     amended--
       (1) in subparagraph (A)(v)--
       (A) by striking ``subparagraph (C) or because'' and 
     inserting ``subparagraph (C), because''; and
       (B) by inserting after ``manufacturers'' the following: ``, 
     or because of the omission of an indication or other aspect 
     of labeling that is required by patent protection or 
     exclusivity accorded under paragraph (5)(D)''; and
       (2) by adding at the end the following:
       ``(D) Labeling consistent with labeling for earlier version 
     of listed drug.--For the purposes of subparagraph (A)(v), 
     information showing that labeling proposed for the new drug 
     that is the same as the labeling previously approved for the 
     listed drug, although not for the current version of the 
     listed drug, shall be deemed to be the same labeling as that 
     approved for the listed drug so long as the previously 
     approved labeling is not incompatible with a safe and 
     effective new drug.''.

     SEC. 206. NO ADDITIONAL 30-MONTH EXTENSION.

       Section 505(j)(5)(B)(iii) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355 (j)(5)(B)(iii) is amended by 
     inserting after the fourth sentence the following: ``Once a 
     thirty-month period begins under the second sentence of this 
     clause with respect to any application under this subsection, 
     there shall be no additional thirty-month period or extension 
     of the thirty-month period with respect to the application by 
     reason of the making of any additional certification 
     described in subclause (IV) of paragraph (2)(A)(vii) or for 
     any other reason.''.

        TITLE III--EXPANSION OF ACCESS THROUGH EXISTING PROGRAMS

     SEC. 301. MEDICARE COVERAGE OF ALL ANTICANCER ORAL DRUGS.

       (a) In General.--Section 1861(s)(2)(Q) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)(Q)) is amended by 
     striking ``anticancer chemotherapeutic agent for a given 
     indication,'' and all that follows and inserting ``anticancer 
     agent for a medically accepted indication (as defined in 
     subsection (t)(2)(B));''.
       (b) Conforming Amendment.--Section 1834(j)(5)(F)(iv) of the 
     Social Security Act (42 U.S.C. 1395m(j)(5)(F)(iv)) is amended 
     by striking ``therapeutic''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to drugs furnished on or after the 
     date that is 90 days after the date of enactment of this Act.

     SEC. 302. REMOVAL OF STATE RESTRICTIONS.

       (a) Therapeutic Equivalence.--Section 505(j) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) is amended--
       (1) in paragraph (5)(A)--
       (A) by striking ``(5)(A) Within one hundred and eighty days 
     of the'' and inserting the following:
       ``(5) Time periods.--
       ``(A) Approval or disapproval.--
       ``(i) In general.--Not later than 180 days after the date 
     of''; and
       (B) by adding at the end the following:
       ``(ii) Finding regarding therapeutic equivalence.--When the 
     Secretary approves an application submitted under paragraph 
     (1), the Secretary shall include in the approval a finding 
     whether the drug for which the application is approved 
     (referred to in this paragraph as the `subject drug') is the 
     therapeutic equivalent of a listed drug.
       ``(iii) Therapeutic equivalence.--For purposes of clause 
     (ii), a subject drug is the therapeutic equivalent of a 
     listed drug if--

       ``(I) all active ingredients of the subject drug, the 
     dosage form of the subject drug, the route of administration 
     of the subject drug, and the strength or concentration of the 
     subject drug are the same as those of the listed drug and the 
     compendial or other applicable standard met by the subject 
     drug is the same as that met by the listed drug (even though 
     the subject drug may differ in shape, scoring, configuration, 
     packaging, excipients, expiration time, or (within the limits 
     established by paragraph (2)(A)(v)) labeling);
       ``(II) the subject drug is expected to have the same 
     clinical effect and safety profile as

[[Page S6025]]

     the listed drug when the subject drug is administered to 
     patients under conditions specified in the labeling; and
       ``(III) the subject drug--

       ``(aa)(AA) does not present a known or potential 
     bioequivalence problem; and
       ``(BB) meets an acceptable in vitro standard; or
       ``(bb) if the subject drug presents a known or potential 
     bioequivalence problem, is shown to meet an appropriate 
     bioequivalence standard.
       ``(iv) Finding.--If Secretary finds that the subject drug 
     meets the requirements of clause (iii) with respect to a 
     listed drug, the Secretary shall include in the approval of 
     the application for the subject drug a finding that the 
     subject drug is the therapeutic equivalent of the listed 
     drug.''; and
       (2) in paragraph (7)(A)(i)(II), by striking ``and the 
     number of the application which was approved'' and inserting 
     ``, the number of the application that was approved, and a 
     statement whether a finding of therapeutic equivalence was 
     made under paragraph (5)(A)(iv), and if so the name of the 
     listed drug to which the drug is a therapeutic 
     bioequivalent''.
       (b) State Laws.--Section 505(j) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(j)) is amended by adding at 
     the end the following:
       ``(10) State laws.--No State or political subdivision of a 
     State may establish or continue in effect with respect to a 
     drug that is the subject of an application under paragraph 
     (5) any requirement that is different from, or in addition 
     to, any requirement relating to therapeutic equivalence 
     applicable to the drug under paragraph (5).''.

     SEC. 303. MEDICAID DRUG USE REVIEW PROGRAM.

       (a) In General.--Section 1927(g)(2) of the Social Security 
     Act (42 U.S.C. 1396r-8(g)(2)) is amended by adding at the end 
     the following:
       ``(E) Generic drug samples.--The program shall provide for 
     the distribution of generic drug samples of covered 
     outpatient drugs to physicians and other prescribers.''.
       (b) Federal Percentage of Expenditures.--Section 
     1903(a)(3)(D) of the Social Security Act (42 U.S.C. 
     1396b(a)(3)(D)) is amended by striking ``in 1991, 1992, or 
     1993,'' and inserting ``(beginning with fiscal year 2003)''.
       (c) Effective Date.--The amendments made by this section 
     take effect on October 1, 2002.

     SEC. 304. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES 
                   CHARGED TO CERTAIN PUBLIC HOSPITALS IN THE BEST 
                   PRICE EXEMPTIONS ESTABLISHED FOR PURPOSES OF 
                   THE MEDICAID DRUG REBATE PROGRAM.

       Section 1927(c)(1)(C)(ii) of the Social Security Act (42 
     U.S.C. 1396r-8(c)(1)(C)(ii)) is amended--
       (1) in subclause (II), by striking ``and'' at the end;
       (2) in subclause (III), by striking the period and 
     inserting ``; and''; and
       (3) by adding at the end the following:

       ``(IV) with respect to a covered entity described in 
     section 340B(a)(4)(L) of the Public Health Service Act, 
     shall, in addition to any prices excluded under clause 
     (i)(I), exclude any price charged on or after the date of 
     enactment of this subparagraph, for any drug, biological 
     product, or insulin provided as part of, or as incident to 
     and in the same setting as, inpatient hospital services (and 
     for which payment may be made under this title as part of 
     payment for and not as direct reimbursement for the drug).''.

     SEC. 305. UPPER PAYMENT LIMITS FOR GENERIC DRUGS UNDER 
                   MEDICAID.

       Section 1927(e) of the Social Security Act (42 U.S.C. 
     1396r-8(e)) is amended by striking paragraph (4) and 
     inserting the following:
       ``(4) Establishment of upper payment limits.--
       ``(A) In general.--The Administrator of the Centers for 
     Medicare & Medicaid Services shall establish a upper payment 
     limit for each multiple source drug for which the FDA has 
     rated 3 or more products therapeutically and pharmaceutically 
     equivalent.
       ``(B) Public availability of national drug code.--The 
     Administrator of the Centers for Medicare & Medicaid Services 
     shall make publicly available, at such time and together with 
     the publication of the upper payment limits established in 
     accordance with subparagraph (A), the national drug code 
     (commonly referred to as the `NDC') for each drug used as the 
     reference product to establish the upper payment limit for a 
     particular multiple source drug.
       ``(C) Definition of reference product.--In subparagraph 
     (B), the term `reference product' means the specific drug 
     product, the price of which is used by the Administrator of 
     the Centers for Medicare & Medicaid Services to calculate the 
     upper payment limit for a particular multiple source drug.''.

                      TITLE IV--GENERAL PROVISIONS

     SEC. 401. REPORT.

       (a) In General.--Not later than the date that is 5 years 
     after the date of enactment of this Act, the Federal Trade 
     Commission shall submit to Congress a report describing the 
     extent to which implementation of the amendments made by this 
     Act--
       (1) has enabled products to come to market in a fair and 
     expeditious manner, consistent with the rights of patent 
     owners under intellectual property law; and
       (2) has promoted lower prices of drugs and greater access 
     to drugs through price competition.
       (b) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $1,000,000.
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