[Congressional Record Volume 164, Number 139 (Tuesday, August 21, 2018)]
[Senate]
[Pages S5779-S5781]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 3873. Ms. KLOBUCHAR (for herself and Mr. Grassley) submitted an
amendment intended to be proposed to amendment SA 3695 proposed by Mr.
Shelby to the bill H.R. 6157, making appropriations for the Department
of Defense for the fiscal year ending September 30, 2019, and for other
purposes; which was ordered to lie on the table; as follows:
[[Page S5780]]
At the appropriate place, insert the following:
TITLE ___
SEC. __. 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.
(b) Purposes.--The purposes of this title are--
(1) to enhance competition in the pharmaceutical market by
stopping anticompetitive agreements between brand name and
generic drug manufacturers that limit, delay, or otherwise
prevent competition from generic drugs; and
(2) to support the purpose and intent of antitrust law by
prohibiting anticompetitive practices in the pharmaceutical
industry that harm consumers.
SEC. __. UNLAWFUL COMPENSATION FOR DELAY.
(a) In General.--The Federal Trade Commission Act (15
U.S.C. 44 et seq.) is amended by inserting after section 26
(15 U.S.C. 57c-2) the following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS.
``(a) In General.--
``(1) Enforcement proceeding.--The Commission may initiate
a proceeding to enforce the provisions of this section
against the parties to any agreement resolving or settling,
on a final or interim basis, a patent infringement claim, in
connection with the sale of a drug product.
``(2) 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 receives anything of value, including
an exclusive license; and
``(ii) the ANDA filer agrees to limit or forego research,
development, manufacturing, marketing, or sales of the ANDA
product for any period of time.
``(B) Exception.--Subparagraph (A) shall not apply if the
parties to such agreement demonstrate by clear and convincing
evidence that--
``(i) the value described in subparagraph (A)(i) is
compensation solely for other goods or services that the ANDA
filer has promised to provide; or
``(ii) the procompetitive benefits of the agreement
outweigh the anticompetitive effects of the agreement.
``(b) Limitations.--In determining whether the settling
parties have met their burden under subsection (a)(2)(B), the
fact finder shall not presume--
``(1) that entry would not have occurred until the
expiration of the relevant patent or statutory exclusivity;
or
``(2) that the agreement's provision for entry of the ANDA
product prior to the expiration of the relevant patent or
statutory exclusivity means that the agreement is
procompetitive.
``(c) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in
which the consideration granted by the NDA holder to the ANDA
filer as part of the resolution or settlement includes only
one or more of the following:
``(1) The right to market the ANDA product in the United
States prior to the expiration of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory exclusivity that
would prevent the marketing of such drug.
``(2) A payment for reasonable litigation expenses not to
exceed $7,500,000.
``(3) A covenant not to sue on any claim that the ANDA
product infringes a United States patent.
``(d) Enforcement.--
``(1) Enforcement.--A violation of this section shall be
treated as a violation of section 5.
``(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 is incorporated as of
the date that the NDA 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 is
incorporated as of the date that the ANDA 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 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 penalty to the NDA holder
shall be sufficient to deter violations, but in no event
greater than 3 times the value given to the ANDA filer
reasonably attributable to the violation of this section.
Such penalty shall accrue to the United States and may be
recovered in a civil action brought by the 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, compensation received by the ANDA
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
[[Page S5781]]
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 Commission of Food
and Drugs 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) 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).
``(7) 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)).
``(8) 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.
``(9) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.
``(10) Patent infringement.--The term `patent infringement'
means infringement of any patent or of any filed patent
application, extension, reissue, renewal, division,
continuation, continuation in part, reexamination, patent
term restoration, patents of addition, and extensions
thereof.
``(11) Patent infringement claim.--The term `patent
infringement claim' means any allegation made to an ANDA
filer, whether or not included in a complaint filed with a
court of law, that its ANDA or ANDA product may infringe any
patent held by, or exclusively licensed to, the NDA holder of
the drug product.
``(12) 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).''.
(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 after June 17, 2013. Section 27(f) of the Federal Trade
Commission Act, as added by this section, shall apply to
agreements entered into on or after the date of enactment of
this Act.
SEC. ___. NOTICE AND CERTIFICATION OF AGREEMENTS.
(a) Notice of All Agreements.--Section 1112(c)(2) of the
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (21 U.S.C. 355 note) is amended by--
(1) striking ``the Commission the'' and inserting the
following: ``the Commission--
``(A) the'';
(2) striking the period and inserting ``; and''; and
(3) inserting at the end the following:
``(B) any other agreement the parties enter into within 30
days of entering into an agreement covered by subsection (a)
or (b).''.
(b) Certification of Agreements.--Section 1112 of such Act
is amended by adding at the end the following:
``(d) Certification.--The Chief Executive Officer or the
company official responsible for negotiating any agreement
under subsection (a) or (b) that is required to be filed
under subsection (c) shall execute and file with the
Assistant Attorney General and the Commission a certification
as follows: `I declare that the following is true, correct,
and complete to the best of my knowledge: The materials filed
with the Federal Trade Commission and the Department of
Justice under section 1112 of subtitle B of title XI of the
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, with respect to the agreement referenced in this
certification--
`` `(1) represent the complete, final, and exclusive
agreement between the parties;
`` `(2) include any ancillary agreements that are
contingent upon, provide a contingent condition for, or are
otherwise related to, the referenced agreement; and
`` `(3) include written descriptions of any oral
agreements, representations, commitments, or promises between
the parties that are responsive to subsection (a) or (b) of
such section 1112 and have not been reduced to writing.'.''.
SEC. ___. 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. ___. COMMISSION LITIGATION AUTHORITY.
Section 16(a)(2) of the Federal Trade Commission Act (15
U.S.C. 56(a)(2)) is amended--
(1) in subparagraph (D), by striking ``or'' after the
semicolon;
(2) in subparagraph (E), by inserting ``or'' after the
semicolon; and
(3) inserting after subparagraph (E) the following:
``(F) under section 27;''.
SEC. ___. 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 __, 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 Notice of Agreement as
provided by section 1112(c)(2) and (d) of the Medicare
Prescription Drug Improvement and Modernization Act of 2003
(21 U.S.C. 355 note).
SEC. __. SEVERABILITY.
If any provision of this title, an amendment made by this
title, or the application of such provision or amendment to
any person or circumstance is held to be unconstitutional,
the remainder of this title, the amendments made by this
title, and the application of the provisions of such title or
amendments to any person or circumstance shall not be
affected.
______