[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\
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\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\
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\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\
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\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\
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\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.
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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\
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\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.
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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\
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\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).
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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).
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\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.
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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\
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\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
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By fiscal year, millions of dollars--
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2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2019-2024 2019-2029
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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
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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.
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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.