[House Report 116-694]
[From the U.S. Government Publishing Office]


116th Congress }                                             { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                             { 116-694

=======================================================================



 
STOP SIGNIFICANT AND TIME-WASTING ABUSE LIMITING LEGITIMATE INNOVATION 
                          OF NEW GENERICS ACT

                                _______
                                

 December 24, 2020.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Nadler, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2374]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2374) to enable the Federal Trade Commission to 
deter filing of sham citizen petitions to cover an attempt to 
interfere with approval of a competing generic drug or 
biosimilar, to foster competition and facilitate the efficient 
review of petitions filed in good faith to raise legitimate 
public heath concerns, and for other purposes, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     4
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     6
New Budget Authority and Tax Expenditures........................     6
Congressional Budget Office Cost Estimate........................     6
Duplication of Federal Programs..................................     8
Performance Goals and Objectives.................................     8
Advisory on Earmarks.............................................     9
Section-by-Section Analysis......................................     9

                          Purpose and Summary

    H.R. 2374, the ``Stop Significant and Time-wasting Abuse 
Limiting Legitimate Innovation of New Generics Act,'' or the 
``Stop STALLING Act,'' is designed to address the soaring cost 
of prescription drugs by targeting misuse of the citizen 
petition process at the Food and Drug Administration (FDA) to 
block generic competitors from entering the market. The Stop 
STALLING Act establishes that the submission of objectively 
baseless citizen petitions to prevent or delay the approval of 
a covered drug product--sham petitions--is an unfair method of 
competition under section 5 of the Federal Trade Commission 
(FTC) Act. Furthermore, the legislation establishes that a 
petition is presumptively illegal when the Secretary of Health 
and Human Services determines that the petition was submitted 
with the primary purpose of delaying approval of a new drug, 
along with meeting additional criteria. H.R. 2374 is supported 
by a coalition of healthcare providers and public-interest 
organizations including Consumer Reports, Patients for 
Affordable Drugs Now, and Premier Inc., Healthcare Alliance.

                Background and Need for the Legislation

    The FDA's citizen petition procedures were established to 
provide concerned citizens with an opportunity to solicit 
agency action regarding health and safety policy.\1\ The 
process, which is open to anyone, allows individuals to request 
that the FDA ``issue, amend, or revoke a regulation, or order 
or take or refrain from taking any other form of administrative 
action.''\2\
---------------------------------------------------------------------------
    \1\See, e.g., 21 C.F.R. Sec.  10.30(b)(3) (2019).
    \2\Id.
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    While various entities have used the citizen petition 
process to raise a variety of necessary health and safety 
issues, certain brand-name drug manufacturers have manipulated 
the process to stifle generic competition. For example, some 
branded manufacturers have responded to applications for drug 
approval by generic competitors by filing citizen petitions 
that question the safety, efficacy, and bioequivalence 
standards for approving generic drugs.\3\ Because the FDA must 
review and respond to every citizen petition it receives, 
including supplements or amendments to petitions,\4\ makers of 
generic drugs accordingly report that unwarranted petitions may 
cause manufacturing stoppages or significant delays in the FDA 
approval process.\5\ Studies have concluded that while these 
petitions often lack merit, they can be very effective at 
delaying the entry of lower-cost generic competitors.\6\ 
According to the FTC, abuse of this system allows some drug 
companies to unlawfully maintain a monopoly by delaying generic 
entry.\7\ For example, this abusive tactic has allegedly been 
used to delay life-saving treatments for opioid addiction and 
gastrointestinal infections.\8\
---------------------------------------------------------------------------
    \3\See, e.g., In re Flonase Antitrust Litig., 795 F. Supp. 2d 300 
(E.D. Pa. 2011) (brand-name manufacturer filed citizen petitions 
requesting that the FDA issue final guidance and impose more stringent 
testing standards before approving any abbreviated new drug 
applications (ANDAs)); La. Wholesale Drug Co. v. Sanofi-Aventis, No. 
07-cv-7343, 2009 WL 2708110 (S.D.N.Y. Aug. 28, 2009) (brand-name 
manufacturer filed citizen petition requesting that the FDA require 
certain bioequivalence studies before approving any ANDA filed for a 
competing generic drug).
    \4\21 C.F.R. Sec.  10.30(e)(1)-(2), (g)(2019).
    \5\See, e.g., In re Flonase, 795 F. Supp. 2d at 302.
    \6\See, e.g., Michael A. Carrier & Carl Minniti, Citizen Petitions: 
Long, Late-Filed, and At-Last Denied, 66 Am. Univ. L. Rev. 305, 352 
(2016) (finding that the FDA denied ``more than 9 out of every 10 
petitions'' filed between 2011 and 2015 and that citizen petitions 
``play an increasingly important role in delaying generic 
competition'').
    \7\See, e.g., Press Release, Fed. Trade Comm'n, FTC Submits Comment 
on FDA Guidance Aimed at Deterring Abuse of Citizen Petition Process 
(Dec. 4, 2018) (stating that the ``FTC has investigated complaints of 
citizen petition abuse as potential violations of federal antitrust 
law'' and that ``[i]n 2017, the agency filed a complaint in federal 
district court charging that branded pharmaceutical company Shire 
ViroPharma illegally maintained its monopoly power by abusing . . . the 
citizen petition process''), https://www.ftc.gov/news-events/press-
releases/2018/12/ftc-
submits-comment-fda-guidance-aimed-deterring-abuse-citizen.
    \8\See Complaint, Fed. Trade Comm'n v. Shire ViroPharma, Inc., No. 
17-cv-0131 (D. Del. Feb. 7, 2017), https://www.ftc.gov/system/files/
documents/cases/170216viropharma_unredacted_sealed _complaint_.pdf; 
Complaint, Wisconsin v. Indivior, Inc., No. 16-cv-5072 (E.D. Pa. Sept. 
22, 2016).
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    Leading healthcare experts also agree that sham petitions 
are a significant driver of high prescription drug prices. Dr. 
Aaron Kesselheim of Harvard Medical School testified last 
Congress that this abusive conduct can ``substantially delay[] 
entry of a more affordable generic product.''\9\ Professor 
Robin Feldman of the University of California at Hastings also 
found ``empirical evidence that the citizen petition process at 
the FDA has become a key avenue for strategic behavior by 
pharmaceutical companies to delay entry of generic 
competition.''\10\ Several witnesses discussed this problem at 
a Subcommittee on Antitrust, Commercial, and Administrative Law 
hearing this Congress.\11\
---------------------------------------------------------------------------
    \9\Examining the Actions of Drug Companies in Raising Prescription 
Drug Prices: Hearing Before the H. Comm. on Oversight and Reform, 116th 
Cong. (2019) (written testimony of Aaron S. Kesselheim, Associate 
Professor of Medicine, Harvard Medical School, at 8), https://
docs.house.gov/meetings/GO/GO00/20190129/108817/HHRG-116-GO00-Wstate-
KesselheimA-20190129.pdf.
    \10\Robin Feldman et al., Empirical Evidence of Drug Companies 
Using Citizen Petitions To Hold Off Competition (Univ. Cal. Hastings 
Research Paper No. 269, Feb. 14, 2018).
    \11\Diagnosing the Problem: Exploring the Effects of Consolidation 
and Anticompetitive Conduct in Health Care Markets: Hearing Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm. on 
the Judiciary, 116th Cong. (2019); see also Antitrust Concerns and the 
FDA Approval Process: Hearing Before the Subcomm. on Regulatory Reform, 
Commercial, and Antitrust Law of the H. Comm. on the Judiciary, 115th 
Cong. (2017) (written testimony of Scott Gottlieb, Commissioner of Food 
and Drugs, Food and Drug Administration, at 2, 8-10), https://
docs.house.gov/meetings/JU/JU05/20170727/106333/HHRG-115-JU05-Wstate-
GottliebS-20170727.pdf.
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    Congress previously attempted to stem the abuse of the 
FDA's citizen petition process. In 2007, Congress amended the 
Federal Food, Drug, and Cosmetic Act (FDCA) to help prevent 
citizen petitions from being used to delay generic entry.\12\ 
The 2007 amendments authorized new regulations and required the 
FDA to respond to citizen petitions concerning generic 
applications within 180 days (shortened to 150 days in 
2012);\13\ required that petition filers certify the petition's 
submission was not intentionally delayed; and authorized the 
FDA to summarily deny such petitions in certain 
circumstances.\14\
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    \12\See Food and Drug Administration Amendments Act of 2007, Pub. 
L. No. 110-85, Sec.  914, 21 Stat. 823 (codified as amended at 21 
U.S.C. Sec.  355(q) (2018)).
    \13\See Food and Drug Administration Safety and Innovation Act, 
Pub. L. No. 112-144, Sec.  1135, 126 Stat. 993 (codified as amended at 
21 U.S.C. Sec.  355(q) (2018)).
    \14\See Food and Drug Administration Amendments Act of 2007, Pub. 
L. No. 110-85, Sec.  914, 21 Stat. 823 (codified as amended at 21 
U.S.C. Sec.  355(q) (2018)).
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    Although imposing a 150-day deadline for the FDA to respond 
may have reduced the length of delay, it--and other changes 
described above--have arguably failed with respect to deterring 
the behavior. The FDA recently reported to Congress that it 
``continues to be concerned that section 505(q) does not 
discourage the submission of petitions that are intended 
primarily to delay the approval of competing drug products and 
do not raise valid scientific issues.''\15\ In support of this 
concern, based on data available in 2017, then-FDA Commissioner 
Scott Gottlieb suggested that the imposition of the 150-day 
deadline ``had limited impact in discouraging the submission of 
petitions intended primarily to block or delay generic 
competition.''\16\
---------------------------------------------------------------------------
    \15\U.S. Food & Drug Admin., Twelfth Annual Report on Delays in 
Approvals of Applications Related to Citizen Petitions and Petitions 
for Stay of Agency Action for Fiscal Year 2019, at 1, 5 (2020), https:/
/www.fda.gov/media/143518/download.
    \16\Antitrust Concerns and the FDA Approval Process: Hearing Before 
the Subcomm. on Regulatory Reform, Commercial, and Admin. Law of the H. 
Comm. on the Judiciary, 115th Cong. 10 (2017) (written testimony of 
Scott Gottlieb, Commissioner of Food and Drugs, Food and Drug 
Administration), https://docs.house.gov/meetings/JU/JU05/20170727/
106333/HHRG-115-JU05-Wstate-GottliebS-20170727.pdf.
---------------------------------------------------------------------------
    The FTC has also tried to address the problem of sham 
citizen petitions. In 2017, the FTC filed a complaint alleging 
that Shire ViroPharma Inc. abused the citizen petition process 
to illegally maintain a monopoly on Vancocin Capsules, a drug 
used to treat a potentially life-threatening gastrointestinal 
infection.\17\ According to the FTC, ``[f]acing the threat of 
generic competition to its lucrative franchise, ViroPharma 
inundated the FDA with regulatory and court filings--forty-six 
in all--to delay the FDA's approval of generic Vancocin 
Capsules.''\18\ The FTC complaint further states that these 
``repetitive, serial, and meritless filings lacked any 
supporting clinical data,'' but, nonetheless, ``succeeded in 
delaying generic entry at a cost of hundreds of millions of 
dollars to patients and other purchasers.''\19\
---------------------------------------------------------------------------
    \17\Complaint, Fed. Trade Comm'n v. Shire ViroPharma, Inc., No. 17-
cv-0131 (D. Del. dismissed Mar. 20, 2018), aff'd, 917 F.3d 147 (3d Cir. 
2019), https://www.ftc.gov/system/files/documents/cases/
170216viropharma_unredacted_sealed_complaint_.pdf.
    \18\Id. at para.1.
    \19\Id.
---------------------------------------------------------------------------
    On March 20, 2018, the district court dismissed the 
complaint and, according to the FTC's appellate brief, ``held 
that no matter how egregious a defendant's past violation, the 
FTC cannot sue to enforce [section 13 of] the FTC Act unless it 
alleges facts showing that a further violation is not just 
reasonably likely but imminent.''\20\ On appeal, the Third 
Circuit Court of Appeals affirmed the district court's order of 
dismissal.\21\ The courts' narrow reading of section 13(b) 
could make it harder for the FTC to address wrongdoing by drug 
companies that have filed sham petitions. Notably, neither the 
district court nor the court of appeals reached the merits of 
whether ViroPharma's conduct violated antitrust law beyond the 
district court finding that the allegations, taken as true, 
were sufficient to overcome the Noerr-Pennington presumption of 
antitrust immunity for government petitions.\22\
---------------------------------------------------------------------------
    \20\Brief for Plaintiff-Appellant at 2, Fed. Trade Comm'n v. Shire 
ViroPharma, Inc., 917 F.3d 147 (3rd Cir. 2019) (No. 18-1807), https://
www.ftc.gov/system/files/documents/cases/
shire_viropharma_inc_ftc_opening_brief_and_appendix_vol_1_6-19-18.pdf.
    \21\Fed. Trade Comm'n v. Shire ViroPharma, Inc., 917 F.3d 147 (3rd 
Cir. 2019).
    \22\Fed. Trade Comm'n v. Shire ViroPharma Inc., No. CV 17-131-RGA, 
2018 WL 1401329, at *7 (D. Del. Mar. 20, 2018), aff'd, 917 F.3d 147 (3d 
Cir. 2019).
---------------------------------------------------------------------------
    The Stop STALLING Act seeks to end abuse of the citizen 
petition process by establishing that, under certain 
circumstances, using sham petitions to block generic 
competition is presumptively illegal under the FTC Act. H.R. 
2374 strengthens the FTC's ability to challenge citizen 
petition abuse in court, striking the right balance by 
deterring anti-competitive delays while protecting the 
legitimate use of citizen petitions.

                                Hearings

    In the 116th Congress, the Subcommittee on Antitrust, 
Commercial, and Administrative Law held a hearing on 
``Diagnosing the Problem: Exploring the Effects of 
Consolidation and Anticompetitive Conduct in Health Care 
Markets.''\23\ At this hearing, several witnesses testified 
about competition issues in health care markets, including Dr. 
Fiona Scott Morton, Professor of Economics at Yale School of 
Management; Dr. Martin Gaynor, Professor of Economics and 
Health Policy at Carnegie Mellon University; Michael Kades, 
Director of Markets and Competition Policy at Washington Center 
for Equitable Growth; and Dr. Craig Garthwaite, Herman R. Smith 
Research Professor at Northwestern University's Kellogg School 
of Management. Professor Scott Morton, Professor Garthwaite, 
and Mr. Kades mentioned or highlighted citizen petition abuse 
as a problematic anti-competitive business practice and 
testified about the need for Congress to address the issue.\24\ 
This hearing satisfies the requirement of H. Res. 6, sec. 
103(i).
---------------------------------------------------------------------------
    \23\Diagnosing the Problem: Exploring the Effects of Consolidation 
and Anticompetitive Conduct in Health Care Markets: Hearing Before the 
Subcomm. on Antitrust, Commercial, and Admin. Law of the H. Comm. on 
the Judiciary, 116th Cong. (2019).
    \24\Id. (written testimony of Michael Kades, Director of Markets 
and Competition Policy, Washington Center for Equitable Growth, at 15-
16), https://docs.house.gov/meetings/JU/JU05/20190307/109024/HHRG-116-
JU05-Wstate-KadesM-20190307-U1.pdf; id. (written testimony of Fiona 
Scott Morton, Professor of Economics, Yale School of Management, at 3), 
https://docs.house.gov/meetings/JU/JU05/20190307/109024/HHRG-116-JU05-
Wstate-MortonF-20190307.pdf; id. (written testimony of Craig 
Garthwaite, Herman R. Smith Research Professor, Northwestern University 
Kellogg School of Management, at 7), https://docs.house.gov/meetings/
JU/JU05/20190307/109024/HHRG-116-JU05-Wstate-GarthwaiteC-20190307.pdf.
---------------------------------------------------------------------------
    In the 115th Congress, the Subcommittee on Regulatory 
Reform, Commercial, and Antitrust Law held a two-paneled 
hearing on ``Antitrust Concerns and the FDA Approval 
Process.''\25\ On the first panel, the Subcommittee heard 
testimony from Dr. Scott Gottlieb, M.D., Commissioner of the 
FDA, and Markus Meier, Acting Director, Bureau of Competition 
at the FTC. On the second panel, the Subcommittee heard 
testimony from Professor David Olson, Boston College Law 
School; Professor Erika Lietzan, University of Missouri School 
of Law; Alden Abbott, Deputy Director and Senior Legal Fellow, 
the Heritage Foundation; and Professor Aaron Kesselheim, M.D., 
M.P.H., Harvard Medical School. At the hearing, Messrs. Meier 
and Abbott, and Dr. Kesselheim testified that citizen petition 
abuse remains a problem in need of congressional attention.\26\
---------------------------------------------------------------------------
    \25\Antitrust Concerns and the FDA Approval Process: Hearing Before 
the Subcomm. on Regulatory Reform, Commercial, and Antitrust Law of the 
H. Comm. on the Judiciary, 115th Cong. (2017), https://docs.house.gov/
meetings/JU/JU05/20170727/106333/HHRG-115-JU05-Transcript-20170727.pdf.
    \26\See generally id. at 11 (testimony of Markus Meier, Acting 
Director, Bureau of Competition, Federal Trade Commission); id. at 31-
32 (testimony of Alden Abbott, Deputy Director and Senior Legal Fellow, 
The Heritage Foundation); id. at 33-34 (testimony of Aaron S. 
Kesselheim, Associate Professor of Medicine, Harvard Medical School).
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                        Committee Consideration

    On April 30, 2019, the Committee met in open session and 
ordered the bill, H.R. 2374, favorably reported, without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that no 
rollcall votes occurred during the Committee's consideration of 
H.R. 2374.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 2374, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 2374 would authorize the Federal Trade Commission 
(FTC) to initiate a civil action against any persons involved 
with submitting certain petitions to the Food and Drug 
Administration (FDA) that are objectively without merit and who 
use the agency's administrative review process for the purpose 
of interfering with the business of a competitor. Such persons 
would be liable for violating the FTC Act. (Under the bill, the 
term ``persons'' includes individuals or entities.)
    Under current law, section 505(q) of the Federal Food, 
Drug, and Cosmetic Act governs how certain petitions submitted 
to FDA are treated. Such petitions request FDA to take or 
refrain from taking an action by the agency that could delay 
approval of pending marketing applications, including 
applications for lower priced generic and biosimilar drugs. 
FDA's draft guidance details how FDA assesses whether a 
petition is submitted with the primary purpose of delaying the 
approval of an application. If such a determination is made, 
FDA may summarily deny the petition if it also does not on its 
face raise valid scientific or regulatory issues. FDA may refer 
such cases to the FTC, although a recent appellate court ruling 
limits FTC's litigation authority in this area.
    In addition to establishing a statutory framework for FTC's 
litigation authority, the bill also would allow FTC to impose 
civil penalties and seek other appropriate relief in district 
court from parties that violate antitrust law in this area. If 
FDA determines that a petition was submitted primarily to delay 
approval of a marketing application and refers it to the FTC, 
the bill would make such petitions presumptively illegal under 
the FTC Act, unless the defendant proves by preponderance of 
the evidence that the petition is not a sham.
    Enacting H.R. 2374 would make it easier for the FTC to 
bring cases alleging that certain petitions are unlawful and to 
impose penalties. CBO expects the threat of substantial 
penalties would deter some parties from submitting petitions to 
FDA that would otherwise delay marketing of lower priced drugs.
    To estimate the effects of reducing the number of sham 
petitions, CBO examined information about past cases involving 
petitions that potentially delayed the marketing approval for a 
competitor's drug. CBO estimates that the bill would affect 
between $1 billion and $2 billion of brand-name sales for drugs 
over the 2019-2029 period and would accelerate initial 
competition from generic or biosimilar products for affected 
drugs by six months, on average. Because CBO expects the bill 
would accelerate the availability of lower-priced drugs that 
would otherwise have been delayed, enacting H.R. 2374 would 
reduce the average price of drugs paid by federal health 
programs that purchase drugs or provide health insurance that 
covers drugs. As result, CBO estimates that the legislation 
would reduce mandatory spending by $98 million over the 2019-
2029 period. By lowering the average cost for prescription 
drugs, we also estimate that premiums for some private health 
insurance plans would decrease under the bill. Lower premiums 
would reduce federal subsidies for insurance purchased through 
the marketplaces and shift compensation from tax-favored health 
insurance to taxable wages. Taken together, such changes would 
increase federal revenues by $18 million over the 2019-2029 
period. In total, CBO estimates that enacting H.R. 2374 would 
decrease the deficit by $117 million over the 2019-2029 period.
    CBO also estimates that implementing H.R. 2374 would 
decrease spending subject to appropriation by $7 million over 
the 2019-2024 period, assuming appropriation actions consistent 
with the bill. That decrease would result primarily because 
lower estimated drug prices would reduce costs for 
discretionary health programs.
    The uncertainty in this estimate is driven primarily by the 
difficulty in predicting the number of frivolous petitions that 
are likely to be submitted to FDA through 2029 under current 
law and under the bill and estimating the amount of brand-name 
sales for drugs facing competition affected by such petitions. 
If fewer sham petitions were submitted to the FDA under the 
bill, its enactment could lead to earlier market entry by 
lower-priced drugs when both approval of the generic or 
biosimilar application and marketing of the drug hinge on the 
date that a petition is adjudicated by FDA. If patent-related 
issues would delay entry of generic or biosimilar drugs 
regardless of the date on which a petition is resolved, such 
cases would not be affected by the bill. The timing and results 
of those legal proceedings are inherently uncertain. Such 
effects could differ from those included in CBO's analyses, 
depending on pharmaceutical companies' decisionmaking and the 
outcome of court proceedings.
    Details of the estimated budgetary effect of H.R 2374 are 
shown in Table 1. Those effects fall primarily within budget 
functions 370 (commerce and housing credit), 550 (health), and 
570 (Medicare).

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 2374
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 By fiscal year, millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                               2019   2020   2021    2022    2023    2024    2025    2026    2027    2028    2029   2019-2024  2019-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Decreases in Direct Spending
 
Estimated Outlaysa..........................      0     -5      -9     -10      -9      -9     -10     -11     -11     -13     -12       -42        -98
    On-Budget...............................      0     -5      -9     -10      -9      -9     -10     -11     -11     -13     -12       -42        -98
    Off-Budgetb.............................      0      *       *       *       *       *       *       *       *       *       *         *          *
                                                                  Increases in Revenues
 
Estimated Revenues..........................      0      1       2       2       2       2       2       2       2       2       2         8         18
    On-Budget...............................      0      1       1       1       1       1       1       1       2       2       2         6         13
    Off-Budget..............................      0      *       *       *       *       *       *       1       1       1       1         2          5
                                        Net Decrease in the Deficit From Changes in Direct Spending and Revenues
 
Effect on the Deficit.......................      0     -6     -11     -11     -11     -10     -12     -13     -13     -15     -14       -50       -117
    On-Budget...............................      0     -6     -11     -11     -10     -10     -11     -12     -13     -14     -14       -48       -111
    Off-Budget..............................      0      *      -1      -1      -1      -1      -1      -1      -1      -1      -1        -2         -5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Increases or Decreases (-) in Spending Subject to Appropriation
 
Estimated Authorization.....................      0     -1      -1      -1      -1      -1    n.e.    n.e.    n.e.    n.e.    n.e.        -7       n.e.
Estimated Outlays...........................      0     -1      -1      -1      -1      -1    n.e.    n.e.    n.e.    n.e.    n.e.        -7      n.e.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; n.e. = not estimated; * = between -$500,000 and $500,000.
aBudget authority equals outlays.
bIncludes off-budget effects on the operating costs of the U.S. Postal Service.

    The CBO staff contact for this estimate is Julia 
Christensen. The estimate was reviewed by Leo Lex, Deputy 
Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 2374 establishes or reauthorizes a 
program of the Federal government known to be duplicative of 
another federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
2374 would lower drug prices by ending abuse of the citizen 
petition process by prescription drug companies or third 
parties acting on their behalf. The Stop STALLING Act would 
establish that using sham petitions to block generic 
competition is illegal under the FTC Act and establish a 
presumption of illegality when certain criteria are met--one of 
which is an HHS determination that the petition was submitted 
with the primary purpose of delaying approval of a new drug. 
The bill aims to strengthen the ability of the FTC to challenge 
citizen petition abuse in court. The legislation also seeks to 
strengthen the FDA's ability to safely approve new drug 
applications by eliminating the diversion and waste of FDA 
resources spent on responding to sham petitions.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 2374 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Section 1. Short Title. Section 1 sets forth the short 
title of the bill as the ``Stop Significant and Time-wasting 
Abuse Limiting Legitimate Innovation of New Generics Act'' or 
the ``Stop STALLING Act.''
    Section 2. Federal Trade Commission Enforcement Against 
Sham Petitions. Section 2 establishes that the submission of a 
covered petition or a series of covered petitions that is a 
sham is an unfair method of competition under section 5(a)(1) 
of the FTC Act (15 U.S.C. 45(a)(1)) and sets forth the 
circumstances when a covered petition is presumed to be part of 
a series of covered petitions that is a sham.
    Subsection 2(a) sets forth various definitions.
    Subsection 2(b)(1) provides that a person submitting or 
causing the submission of a covered petition or a series of 
covered petitions that is a sham shall be liable for engaging 
in an unfair method of competition under section 5(a)(1) of the 
FTC Act.
    Subsection 2(c)(1) authorizes the FTC to initiate a civil 
action to recover a civil penalty and seek other appropriate 
relief in a U.S. district court if the FTC has reason to 
believe the submission of a covered petition or a series of 
covered petitions violates section 5(a)(1) of the FTC Act.
    Subsection 2(c)(2) provides that, in a civil action under 
subsection 2(c)(1), a petition shall be presumed to be part of 
a series of covered petitions that is a sham if the Secretary 
of Health and Human Services has determined that the covered 
petition was submitted with the primary purpose of delaying the 
approval of a covered application, was part of a series of 
covered petitions, and has referred such determination to the 
FTC in writing with a reasoned basis for the determination.
    Subsection 2(c)(3) provides that the presumption under 
subsection 2(c)(2) shall not apply if the defendant establishes 
by a preponderance of the evidence that the series of covered 
petitions that includes the covered petition referred by the 
Secretary of Health and Human Services to the FTC is not a 
sham.
    Section 2(c)(4) provides for penalties. A civil penalty 
shall not be greater than the greater of: (A) any revenue 
earned from the sale of any drug referenced in a covered 
application that was the subject of a covered petition or a 
series of covered petitions that is a sham while the petition 
or petitions were under HHS review; or (B) $50,000 for each 
calendar day that each covered petition that is a sham or that 
was part of a series of covered petitions that is a sham was 
under HHS review.
    Section 2(c)(5) provides that nothing in this Act shall 
modify, impair, limit, or supersede the applicability of the 
antitrust laws.
    Subsection 2(c)(6) provides that the civil penalty is in 
addition to, not in lieu of, any other remedies provided by 
federal law and that nothing in this subsection shall be 
construed to affect the FTC's authority under any other law.
    Section 2(d) sets the Act's effective date, providing that 
it applies to all citizen petitions submitted on or after the 
date of enactment of the Act.
    Section 3. Severability. Section 3 provides that if a 
provision of the Act is held unconstitutional the remainder of 
the Act will not be affected.