[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1096 Reported in Senate (RS)]
<DOC>
Calendar No. 46
119th CONGRESS
1st Session
S. 1096
To prohibit brand name drug companies from compensating generic drug
companies to delay the entry of a generic drug into the market, and to
prohibit biological product manufacturers from compensating biosimilar
and interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 24, 2025
Ms. Klobuchar (for herself, Mr. Grassley, Mr. Durbin, Mr. Cramer, Mr.
Blumenthal, Ms. Ernst, Mr. Welch, Mr. Kelly, and Mr. Booker) introduced
the following bill; which was read twice and referred to the Committee
on the Judiciary
April 10, 2025
Reported by Mr. Grassley, with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
A BILL
To prohibit brand name drug companies from compensating generic drug
companies to delay the entry of a generic drug into the market, and to
prohibit biological product manufacturers from compensating biosimilar
and interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``Preserve Access to
Affordable Generics and Biosimilars Act''.</DELETED>
<DELETED>SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF
PURPOSES.</DELETED>
<DELETED> (a) Findings.--Congress finds the following:</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (2) Prescription drugs make up approximately 11
percent of the national health care spending.</DELETED>
<DELETED> (3) Initially, the 1984 Act was successful in
facilitating generic competition to the benefit of consumers
and health care payers. Although 91 percent of all
prescriptions dispensed in the United States are generic drugs,
they account for only 18 percent of all expenditures.</DELETED>
<DELETED> (4) Generic drugs cost substantially less than
brand name drugs, with discounts off the brand price averaging
80 to 85 percent.</DELETED>
<DELETED> (5) Federal dollars currently account for over 40
percent of the $449,700,000,000 spent on retail prescription
drugs annually.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (B) These ``reverse payment'' settlement
agreements--</DELETED>
<DELETED> (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</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (D) These agreements result in consumers losing
the benefits that the 1984 Act was intended to
provide.</DELETED>
<DELETED> (7) In 2010, the Biologics Price Competition and
Innovation Act (Public Law 111-148) (referred to in this Act as
the ``BPCIA''), was enacted with the intent of facilitating the
early entry of biosimilar and interchangeable follow-on
versions of branded biological products while preserving
incentives for innovation.</DELETED>
<DELETED> (8) Biological drugs play an important role in
treating many serious illnesses, from cancers to genetic
disorders. They are also expensive, representing more than half
of all prescription drug spending.</DELETED>
<DELETED> (9) Competition from biosimilar and
interchangeable biological products promises to lower drug
costs and increase patient access to biological medicines. But
``reverse payment'' settlement agreements also threaten to
delay the entry of biosimilar and interchangeable biological
products, which would undermine the goals of BPCIA.</DELETED>
<DELETED> (b) Purposes.--The purposes of this Act are--</DELETED>
<DELETED> (1) to enhance competition in the pharmaceutical
market by stopping anticompetitive agreements between brand
name and generic drug and biosimilar biological product
manufacturers that limit, delay, or otherwise prevent
competition from generic drugs and biosimilar biological
products; and</DELETED>
<DELETED> (2) to support the purpose and intent of antitrust
law by prohibiting anticompetitive practices in the
pharmaceutical industry that harm consumers.</DELETED>
<DELETED>SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.</DELETED>
<DELETED> (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:</DELETED>
<DELETED>``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND
BIOSIMILARS.</DELETED>
<DELETED> ``(a) Prohibition.--</DELETED>
<DELETED> ``(1) In general.--It shall be a violation of this
section for a party to enter into, or be a participant to, an
agreement, resolving or settling, on a final or interim basis,
a patent claim in connection with the sale of a drug product or
biological product, that has anticompetitive effects.</DELETED>
<DELETED> ``(2) Treatment.--A violation of this section
shall be treated as an unfair method of competition in
violation of section 5(a)(1).</DELETED>
<DELETED> ``(3) Presumption.--</DELETED>
<DELETED> ``(A) In general.--Subject to subparagraph
(B), an agreement described in paragraph (1) shall be
presumed to have anticompetitive effects for purposes
of such paragraph if--</DELETED>
<DELETED> ``(i) an ANDA filer or a
biosimilar biological product application filer
receives anything of value, including an
exclusive license; and</DELETED>
<DELETED> ``(ii) the ANDA filer or
biosimilar biological product application filer
agrees to limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product, as
applicable, for any period of time.</DELETED>
<DELETED> ``(B) Exception.--Subparagraph (A) shall
not apply if the parties to such agreement demonstrate
by a preponderance of the evidence that--</DELETED>
<DELETED> ``(i) the value described in
subparagraph (A)(i) is compensation solely for
other goods or services that the ANDA filer or
biosimilar biological product application filer
has promised to provide; or</DELETED>
<DELETED> ``(ii) the procompetitive benefits
of the transfer of value described in
subparagraph (A)(i) and the agreement by the
ANDA filer or biosimilar biological product
application filer to limit or forgo research,
development, manufacturing, marketing, or sales
of the ANDA product or biosimilar biological
product described in subparagraph (A)(ii)
outweigh the anticompetitive effects of the
transfer of value described in subparagraph
(A)(i) and the agreement by the ANDA filer or
biosimilar biological product application filer
to limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product
described in subparagraph (A)(ii).</DELETED>
<DELETED> ``(4) Civil action.--In addition to any proceeding
under section 5, if the Commission has reason to believe that a
party has violated this section, the Commission may bring, in
its own name by any of its attorneys designated by it for such
purpose, a civil action against the party in a district court
of the United States to seek to recover any of the remedies of
civil penalty, mandatory injunctions, and such other and
further equitable relief as the court deems
appropriate.</DELETED>
<DELETED> ``(5) Civil penalty.--</DELETED>
<DELETED> ``(A) In general.--Each party that
violates or assists in the violation of paragraph (1)
shall forfeit and pay to the United States a civil
penalty sufficient to deter violations of paragraph
(1), but in no event greater than 3 times the value
received by the party that is reasonably attributable
to the violation of paragraph (1). If no such value has
been received by the NDA holder, the biological product
license holder, the ANDA filer, or the biosimilar
biological product application filer, the penalty to
the NDA holder, the biological product license holder,
the ANDA filer, or the biosimilar biological product
application filer shall be sufficient to deter
violations, but in no event shall be greater than 3
times the value given to an ANDA filer or biosimilar
biological product application filer reasonably
attributable to the violation of this
section.</DELETED>
<DELETED> ``(B) Amount.--In determining the amount
of the civil penalty described in subparagraph (A), the
court shall take into account--</DELETED>
<DELETED> ``(i) the nature, circumstances,
extent, and gravity of the violation;</DELETED>
<DELETED> ``(ii) with respect to the
violator, the degree of culpability, any
history of prior such conduct, including other
agreements resolving or settling a patent
infringement claim, the ability to pay, any
effect on the ability to continue doing
business, profits earned by the NDA holder, the
biological product license holder, the ANDA
filer, or the biosimilar biological product
application filer, compensation received by the
ANDA filer or biosimilar biological product
application filer, and the amount of commerce
affected; and</DELETED>
<DELETED> ``(iii) other matters that justice
requires.</DELETED>
<DELETED> ``(C) Remedies in addition.--Remedies
provided in this paragraph are in addition to, and not
in lieu of, any other remedy provided by Federal law.
Nothing in this section shall be construed to limit any
authority of the Commission under any other provision
of law.</DELETED>
<DELETED> ``(b) Exclusions.--Nothing in this section shall prohibit
a resolution or settlement of a patent infringement claim in which the
consideration that the ANDA filer or biosimilar biological product
application filer, respectively, receives as part of the resolution or
settlement includes only one or more of the following:</DELETED>
<DELETED> ``(1) The right to market and secure final
approval in the United States for the ANDA product or
biosimilar biological product at a date, whether certain or
contingent, prior to the expiration of--</DELETED>
<DELETED> ``(A) any patent that is the basis for the
patent infringement claim; or</DELETED>
<DELETED> ``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
ANDA product or biosimilar biological
product.</DELETED>
<DELETED> ``(2) A payment for reasonable litigation expenses
not to exceed--</DELETED>
<DELETED> ``(A) for calendar year 2025, $7,500,000;
or</DELETED>
<DELETED> ``(B) for calendar year 2026 and each
subsequent calendar year, the amount determined for the
preceding calendar year adjusted to reflect the
percentage increase (if any) in the Producer Price
Index for Legal Services published by the Bureau of
Labor Statistics of the Department of Labor for the
most recent calendar year.</DELETED>
<DELETED> ``(3) A covenant not to sue on any claim that the
ANDA product or biosimilar biological product infringes a
United States patent.</DELETED>
<DELETED> ``(c) Antitrust Laws.--Except to the extent this section
establishes an additional basis of liability, nothing in this section
shall modify, impair, limit, or supersede the applicability of the
antitrust laws as defined in subsection (a) of the first section of the
Clayton Act (15 U.S.C. 12(a)), and of section 5 of this Act to the
extent that section 5 applies to unfair methods of competition. Nothing
in this section shall modify, impair, limit, or supersede the right of
an ANDA filer or biosimilar biological product application filer to
assert claims or counterclaims against any person, under the antitrust
laws or other laws relating to unfair competition.</DELETED>
<DELETED> ``(d) Definitions.--In this section:</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(2) Agreement resolving or settling a patent
infringement claim.--The term `agreement resolving or settling
a patent infringement claim' includes any agreement that is
entered into within 30 days of the resolution or the settlement
of the claim, or any other agreement that is contingent upon,
provides a contingent condition for, or is otherwise related to
the resolution or settlement of the claim.</DELETED>
<DELETED> ``(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 submitted pursuant to section 505(b)(2) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355(b)(2)).</DELETED>
<DELETED> ``(4) ANDA filer.--The term `ANDA filer' means a
party that owns or controls an ANDA filed with the Secretary of
Health and Human Services or has the exclusive rights under
such ANDA to distribute the ANDA product.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(6) Biological product.--The term `biological
product' has the meaning given such term in section 351(i)(1)
of the Public Health Service Act (42 U.S.C.
262(i)(1)).</DELETED>
<DELETED> ``(7) Biological product license application.--The
term `biological product license application' means an
application under section 351(a) of the Public Health Service
Act (42 U.S.C. 262(a)).</DELETED>
<DELETED> ``(8) Biological product license holder.--The term
`biological product license holder' means--</DELETED>
<DELETED> ``(A) the holder of an approved biological
product license application for a biological
product;</DELETED>
<DELETED> ``(B) a person owning or controlling
enforcement of any patents that claim the biological
product that is the subject of such approved
application; or</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(9) Biosimilar biological product.--The term
`biosimilar biological product' means the product to be
manufactured under the biosimilar biological product
application that is the subject of the patent infringement
claim.</DELETED>
<DELETED> ``(10) Biosimilar biological product
application.--The term `biosimilar biological product
application' means an application under section 351(k) of the
Public Health Service Act (42 U.S.C. 262(k)) for licensure of a
biological product as biosimilar to, or interchangeable with, a
reference product.</DELETED>
<DELETED> ``(11) Biosimilar biological product application
filer.--The term `biosimilar biological product application
filer' means a party that owns or controls a biosimilar
biological product application filed with the Secretary of
Health and Human Services or has the exclusive rights under
such application to distribute the biosimilar biological
product.</DELETED>
<DELETED> ``(12) Drug product.--The term `drug product' has
the meaning given such term in section 314.3(b) of title 21,
Code of Federal Regulations (or any successor
regulation).</DELETED>
<DELETED> ``(13) Market.--The term `market' means the
promotion, offering for sale, selling, or distribution of a
drug product.</DELETED>
<DELETED> ``(14) NDA.--The term `NDA' means a new drug
application filed under section 505(b) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(b)).</DELETED>
<DELETED> ``(15) NDA holder.--The term `NDA holder' means--
</DELETED>
<DELETED> ``(A) the holder of an approved NDA
application for a drug product;</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(16) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.</DELETED>
<DELETED> ``(17) Patent infringement.--The term `patent
infringement' means infringement of any patent or of any filed
patent application, including any extension, reissue, renewal,
division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition, and extensions
thereof.</DELETED>
<DELETED> ``(18) Patent infringement claim.--The term
`patent infringement claim' means any allegation made to an
ANDA filer or biosimilar biological product application filer,
whether or not included in a complaint filed with a court of
law, that its ANDA or ANDA product, or biosimilar biological
product application or biosimilar biological product, may
infringe any patent held by, or exclusively licensed to, the
NDA holder or biological product license holder of the drug
product or biological product, as applicable.</DELETED>
<DELETED> ``(19) Statutory exclusivity.--The term `statutory
exclusivity' means those prohibitions on the submission or the
approval of drug applications under clauses (ii) through (iv)
of section 505(c)(3)(E), clauses (ii) through (iv) of section
505(j)(5)(F), section 527, section 505A, or section 505E of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)(3)(E),
360cc, 355a, 355f), or on the submission or licensing of
biological product applications under section 351(k)(7) or
paragraph (2) or (3) of section 351(m) of the Public Health
Service Act (42 U.S.C. 262) or under section 527 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 360cc).''.</DELETED>
<DELETED> (b) Effective Date.--Section 27 of the Federal Trade
Commission Act, as added by this section, shall apply to all agreements
described in section 27(a)(1) of that Act entered into on or after the
date of enactment of this Act.</DELETED>
<DELETED>SEC. 4. CERTIFICATION OF AGREEMENTS.</DELETED>
<DELETED> (a) Notice of All Agreements.--Section 1111(7) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(21 U.S.C. 355 note) is amended by inserting ``, or the owner of a
patent for which a claim of infringement could reasonably be asserted
against any person for making, using, offering to sell, selling, or
importing into the United States a biological product that is the
subject of a biosimilar biological product application'' before the
period at the end.</DELETED>
<DELETED> (b) Certification of Agreements.--Section 1112 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(21 U.S.C. 355 note) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(d) Certification.--The Chief Executive Officer or the
company official responsible for negotiating any agreement under
subsection (a) or (b) that is required to be filed under subsection
(c), within 30 days after such filing, shall execute and file with the
Assistant Attorney General and the Commission a certification as
follows: `I declare that the following is true, correct, and complete
to the best of my knowledge: The materials filed with the Federal Trade
Commission and the Department of Justice under section 1112 of subtitle
B of title XI of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, with respect to the agreement referenced in
this certification--</DELETED>
<DELETED> ``(1) represent the complete, final, and exclusive
agreement between the parties;</DELETED>
<DELETED> ``(2) include any ancillary agreements that are
contingent upon, provide a contingent condition for, or are
otherwise related to, the referenced agreement; and</DELETED>
<DELETED> ``(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.'''.</DELETED>
<DELETED>SEC. 5. NOTIFICATION OF AGREEMENTS.</DELETED>
<DELETED> Section 1112 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note), as
amended by section 4(b), is further amended by adding at the end the
following:</DELETED>
<DELETED> ``(e) Rule of Construction.--</DELETED>
<DELETED> ``(1) In general.--An agreement that is required
under subsection (a) or (b) shall include agreements resolving
any outstanding disputes, including agreements resolving or
settling a Patent Trial and Appeal Board proceeding.</DELETED>
<DELETED> ``(2) Definition.--For purposes of subparagraph
(A), the term `Patent Trial and Appeal Board proceeding' means
a proceeding conducted by the Patent Trial and Appeal Board of
the United States Patent and Trademark Office, including an
inter partes review instituted under chapter 31 of title 35,
United States Code, a post-grant review instituted under
chapter 32 of that title (including a proceeding instituted
pursuant to the transitional program for covered business
method patents, as described in section 18 of the Leahy-Smith
America Invents Act (35 U.S.C. 321 note)), and a derivation
proceeding instituted under section 135 of that
title.''.</DELETED>
<DELETED>SEC. 6. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.</DELETED>
<DELETED> 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''.</DELETED>
<DELETED>SEC. 7. COMMISSION LITIGATION AUTHORITY.</DELETED>
<DELETED> Section 16(a)(2) of the Federal Trade Commission Act (15
U.S.C. 56(a)(2)) is amended--</DELETED>
<DELETED> (1) in subparagraph (D), by striking ``or'' after
the semicolon;</DELETED>
<DELETED> (2) in subparagraph (E)--</DELETED>
<DELETED> (A) by moving the margin 2 ems to the
left; and</DELETED>
<DELETED> (B) by inserting ``or'' after the
semicolon; and</DELETED>
<DELETED> (3) inserting after subparagraph (E) the
following:</DELETED>
<DELETED> ``(F) under section 27,''.</DELETED>
<DELETED>SEC. 8. REPORT ON ADDITIONAL EXCLUSION.</DELETED>
<DELETED> (1) In general.--Not later than 1 year after the
date of enactment of this Act, the Federal Trade Commission
shall submit to the Committee on the Judiciary of the Senate
and the Committee on the Judiciary of the House of
Representatives a recommendation, and the Commission's basis
for such recommendation, regarding a potential amendment to
include in section 27(b) of the Federal Trade Commission Act
(as added by section 3) an additional exclusion for
consideration granted by an NDA holder to a ANDA filer or by a
biological product license holder to a biosimilar biological
product application filer as part of the resolution or
settlement, a release, waiver, or limitation of a claim for
damages or other monetary relief.</DELETED>
<DELETED> (2) Definitions.--In this section, the terms
``ANDA filer'', ``biological product license holder'',
``biosimilar biological product application filer'', and ``NDA
holder'' have the meanings given such terms in section 27(d) of
the Federal Trade Commission Act (as added by section
3).</DELETED>
<DELETED>SEC. 9. STATUTE OF LIMITATIONS.</DELETED>
<DELETED> The Federal Trade Commission shall commence any
enforcement proceeding described in section 27 of the Federal Trade
Commission Act, as added by section 3, not later than 6 years after the
date on which the parties to the agreement file the certification under
section 1112(d) of the Medicare Prescription Drug Improvement and
Modernization Act of 2003 (21 U.S.C. 355 note).</DELETED>
<DELETED>SEC. 10. SEVERABILITY.</DELETED>
<DELETED> If any provision of this Act, an amendment made by this
Act, or the application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such Act or amendments to any person or circumstance shall not be
affected.</DELETED>
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preserve Access to Affordable
Generics and Biosimilars Act''.
SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.
(a) Findings.--Congress finds the following:
(1) In 1984, the Drug Price Competition and Patent Term
Restoration Act of 1984 (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 11 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 91 percent of all prescriptions dispensed in
the United States are generic drugs, they account for only 18
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 $449,700,000,000 spent on retail prescription drugs
annually.
(6)(A) In recent years, the intent of the 1984 Act has been
subverted by certain settlement agreements in which brand name
companies transfer value to their potential generic competitors
to settle claims that the generic company is infringing the
branded company's patents.
(B) These ``reverse payment'' settlement agreements--
(i) allow a branded company to share its monopoly
profits with the generic company as a way to protect
the branded company's monopoly; and
(ii) have unduly delayed the marketing of low-cost
generic drugs contrary to free competition, the
interests of consumers, and the principles underlying
antitrust law.
(C) Because of the price disparity between brand name and
generic drugs, such agreements are more profitable for both the
brand and generic manufacturers than competition and will
become increasingly common unless prohibited.
(D) These agreements result in consumers losing the
benefits that the 1984 Act was intended to provide.
(7) In 2010, the Biologics Price Competition and Innovation
Act of 2009 (Public Law 111-148) (referred to in this Act as
the ``BPCIA''), was enacted with the intent of facilitating the
early entry of biosimilar and interchangeable follow-on
versions of branded biological products while preserving
incentives for innovation.
(8) Biological drugs play an important role in treating
many serious illnesses, from cancers to genetic disorders. They
are also expensive, representing more than half of all
prescription drug spending.
(9) Competition from biosimilar and interchangeable
biological products promises to lower drug costs and increase
patient access to biological medicines. But ``reverse payment''
settlement agreements also threaten to delay the entry of
biosimilar and interchangeable biological products, which would
undermine the goals of the BPCIA.
(b) Purposes.--The purposes of this Act are--
(1) to enhance competition in the pharmaceutical market by
stopping anticompetitive agreements between brand name and
generic drug and biosimilar biological product manufacturers
that limit, delay, or otherwise prevent competition from
generic drugs and biosimilar biological products; and
(2) to support the purpose and intent of antitrust law by
prohibiting anticompetitive practices in the pharmaceutical
industry that harm consumers.
SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.
(a) In General.--The Federal Trade Commission Act (15 U.S.C. 41 et
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the
following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND BIOSIMILARS.
``(a) Prohibition.--
``(1) In general.--It shall be a violation of this section
for a party to enter into, or be a participant to, an
agreement, resolving or settling, on a final or interim basis,
a patent claim in connection with the sale of a drug product or
biological product, that has anticompetitive effects.
``(2) Treatment.--A violation of this section shall be
treated as an unfair method of competition in violation of
section 5(a)(1).
``(3) Presumption.--
``(A) In general.--Subject to subparagraph (B), an
agreement described in paragraph (1) shall be presumed
to have anticompetitive effects for purposes of such
paragraph if--
``(i) an ANDA filer or a biosimilar
biological product application filer receives
anything of value, including an exclusive
license; and
``(ii) the ANDA filer or biosimilar
biological product application filer agrees to
limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product, as
applicable, for any period of time.
``(B) Exception.--Subparagraph (A) shall not apply
if the parties to such agreement demonstrate by a
preponderance of the evidence that--
``(i) the value described in subparagraph
(A)(i) is compensation solely for other goods
or services that the ANDA filer or biosimilar
biological product application filer has
promised to provide; or
``(ii) the procompetitive benefits of the
transfer of value described in subparagraph
(A)(i) and the agreement by the ANDA filer or
biosimilar biological product application filer
to limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product
described in subparagraph (A)(ii) outweigh the
anticompetitive effects of the transfer of
value described in subparagraph (A)(i) and the
agreement by the ANDA filer or biosimilar
biological product application filer to limit
or forgo research, development, manufacturing,
marketing, or sales of the ANDA product or
biosimilar biological product described in
subparagraph (A)(ii).
``(4) Civil action.--In addition to any proceeding under
section 5, if the Commission has reason to believe that a party
has violated this section, the Commission may bring, in its own
name by any of its attorneys designated by it for such purpose,
a civil action against the party in a district court of the
United States to seek to recover any of the remedies of civil
penalty, mandatory injunctions, and such other and further
equitable relief as the court deems appropriate.
``(5) Civil penalty.--
``(A) In general.--Each party that violates or
assists in the violation of paragraph (1) shall forfeit
and pay to the United States a civil penalty sufficient
to deter violations of paragraph (1), but in no event
greater than 3 times the value received by the party
that is reasonably attributable to the violation of
paragraph (1). If no such value has been received by
the NDA holder, the biological product license holder,
the ANDA filer, or the biosimilar biological product
application filer, the penalty to the NDA holder, the
biological product license holder, the ANDA filer, or
the biosimilar biological product application filer
shall be sufficient to deter violations, but in no
event shall be greater than 3 times the value given to
an ANDA filer or biosimilar biological product
application filer reasonably attributable to the
violation of this section.
``(B) Amount.--In determining the amount of the
civil penalty described in subparagraph (A), the court
shall take into account--
``(i) the nature, circumstances, extent,
and gravity of the violation;
``(ii) with respect to the violator, the
degree of culpability, any history of prior
such conduct, including other agreements
resolving or settling a patent infringement
claim, the ability to pay, any effect on the
ability to continue doing business, profits
earned by the NDA holder, the biological
product license holder, the ANDA filer, or the
biosimilar biological product application
filer, compensation received by the ANDA filer
or biosimilar biological product application
filer, and the amount of commerce affected; and
``(iii) other matters that justice
requires.
``(C) Remedies in addition.--Remedies provided in
this paragraph are in addition to, and not in lieu of,
any other remedy provided by Federal law. Nothing in
this section shall be construed to limit any authority
of the Commission under any other provision of law.
``(b) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in which the
consideration that the ANDA filer or biosimilar biological product
application filer, respectively, receives as part of the resolution or
settlement includes only one or more of the following:
``(1) The right to market and secure final approval in the
United States for the ANDA product or biosimilar biological
product at a date, whether certain or contingent, prior to the
expiration of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
ANDA product or biosimilar biological product.
``(2) A payment for reasonable litigation expenses not to
exceed--
``(A) for calendar year 2025, $7,500,000; or
``(B) for calendar year 2026 and each subsequent
calendar year, the amount determined for the preceding
calendar year adjusted to reflect the percentage
increase (if any) in the Producer Price Index for Legal
Services published by the Bureau of Labor Statistics of
the Department of Labor for the most recent calendar
year.
``(3) A covenant not to sue on any claim that the ANDA
product or biosimilar biological product infringes a United
States patent.
``(c) Antitrust Laws.--Except to the extent this section
establishes an additional basis of liability, nothing in this section
shall modify, impair, limit, or supersede the applicability of the
antitrust laws as defined in subsection (a) of the first section of the
Clayton Act (15 U.S.C. 12(a)), and of section 5 of this Act to the
extent that section 5 applies to unfair methods of competition. Nothing
in this section shall modify, impair, limit, or supersede the right of
an ANDA filer or biosimilar biological product application filer to
assert claims or counterclaims against any person, under the antitrust
laws or other laws relating to unfair competition.
``(d) Definitions.--In this section:
``(1) Agreement.--The term `agreement' means anything that
would constitute an agreement under section 1 of the Sherman
Act (15 U.S.C. 1) or section 5 of this Act.
``(2) Agreement resolving or settling a patent infringement
claim.--The term `agreement resolving or settling a patent
infringement claim' includes any agreement that is entered into
within 30 days of the resolution or the settlement of the
claim, or any other agreement that is contingent upon, provides
a contingent condition for, or is otherwise related to the
resolution or settlement of the claim.
``(3) ANDA.--The term `ANDA' means an abbreviated new drug
application filed under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug
application submitted pursuant to 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 Secretary of Health and
Human Services or has the exclusive rights under such ANDA to
distribute the ANDA product.
``(5) ANDA product.--The term `ANDA product' means the
product to be manufactured under the ANDA that is the subject
of the patent infringement claim.
``(6) Biological product.--The term `biological product'
has the meaning given such term in section 351(i)(1) of the
Public Health Service Act (42 U.S.C. 262(i)(1)).
``(7) Biological product license application.--The term
`biological product license application' means an application
under section 351(a) of the Public Health Service Act (42
U.S.C. 262(a)).
``(8) Biological product license holder.--The term
`biological product license holder' means--
``(A) the holder of an approved biological product
license application for a biological product;
``(B) a person owning or controlling enforcement of
any patents that claim the biological product that is
the subject of such approved application; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(9) Biosimilar biological product.--The term `biosimilar
biological product' means the product to be manufactured under
the biosimilar biological product application that is the
subject of the patent infringement claim.
``(10) Biosimilar biological product application.--The term
`biosimilar biological product application' means an
application under section 351(k) of the Public Health Service
Act (42 U.S.C. 262(k)) for licensure of a biological product as
biosimilar to, or interchangeable with, a reference product.
``(11) Biosimilar biological product application filer.--
The term `biosimilar biological product application filer'
means a party that owns or controls a biosimilar biological
product application filed with the Secretary of Health and
Human Services or has the exclusive rights under such
application to distribute the biosimilar biological product.
``(12) Drug product.--The term `drug product' has the
meaning given such term in section 314.3(b) of title 21, Code
of Federal Regulations (or any successor regulation).
``(13) Market.--The term `market' means the promotion,
offering for sale, selling, or distribution of a drug product.
``(14) NDA.--The term `NDA' means a new drug application
filed under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
``(15) NDA holder.--The term `NDA holder' means--
``(A) the holder of an approved NDA application for
a drug product;
``(B) a person owning or controlling enforcement of
the patent listed in the Approved Drug Products With
Therapeutic Equivalence Evaluations (commonly known as
the `FDA Orange Book') in connection with the NDA; or
``(C) the predecessors, subsidiaries, divisions,
groups, and affiliates controlled by, controlling, or
under common control with any of the entities described
in subparagraphs (A) and (B) (such control to be
presumed by direct or indirect share ownership of 50
percent or greater), as well as the licensees,
licensors, successors, and assigns of each of the
entities.
``(16) Party.--The term `party' means any person,
partnership, corporation, or other legal entity.
``(17) Patent infringement.--The term `patent infringement'
means infringement of any patent or of any filed patent
application, including any extension, reissue, renewal,
division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition, and extensions
thereof.
``(18) Patent infringement claim.--The term `patent
infringement claim' means any allegation made to an ANDA filer
or biosimilar biological product application filer, whether or
not included in a complaint filed with a court of law, that its
ANDA or ANDA product, or biosimilar biological product
application or biosimilar biological product, may infringe any
patent held by, or exclusively licensed to, the NDA holder or
biological product license holder of the drug product or
biological product, as applicable.
``(19) Statutory exclusivity.--The term `statutory
exclusivity' means those prohibitions on the submission or the
approval of drug applications under clauses (ii) through (iv)
of section 505(c)(3)(E), clauses (ii) through (iv) of section
505(j)(5)(F), section 527, section 505A, or section 505E of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)(3)(E),
355(j)(5)(F), 360cc, 355a, 355f), or on the submission or
licensing of biological product applications under section
351(k)(7) or paragraph (2) or (3) of section 351(m) of the
Public Health Service Act (42 U.S.C. 262) or under section 527
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
360cc).''.
(b) Effective Date.--Section 27 of the Federal Trade Commission
Act, as added by this section, shall apply to all agreements described
in section 27(a)(1) of that Act entered into on or after the date of
enactment of this Act.
SEC. 4. CERTIFICATION OF AGREEMENTS.
(a) Notice of All Agreements.--Section 1111(7) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (21
U.S.C. 355 note) is amended by inserting ``, or the owner of a patent
for which a claim of infringement could reasonably be asserted against
any person for making, using, offering to sell, selling, or importing
into the United States a biological product that is the subject of a
biosimilar biological product application'' before the period at the
end.
(b) Certification of Agreements.--Section 1112 of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (21
U.S.C. 355 note) is amended by adding at the end the following:
``(d) Certification.--The Chief Executive Officer or the company
official responsible for negotiating any agreement under subsection (a)
or (b) that is required to be filed under subsection (c), within 30
days after such filing, shall execute and file with the Assistant
Attorney General and the Commission a certification as follows: `I
declare that the following is true, correct, and complete to the best
of my knowledge: The materials filed with the Federal Trade Commission
and the Department of Justice under section 1112 of subtitle B of title
XI of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, with respect to the agreement referenced in this
certification--
``(1) represent the complete, final, and exclusive
agreement between the parties;
``(2) include any ancillary agreements that are contingent
upon, provide a contingent condition for, or are otherwise
related to, the referenced agreement; and
``(3) include written descriptions of any oral agreements,
representations, commitments, or promises between the parties
that are responsive to subsection (a) or (b) of such section
1112 and have not been reduced to writing.'''.
SEC. 5. NOTIFICATION OF AGREEMENTS.
Section 1112 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (21 U.S.C. 355 note), as amended by section
4(b), is further amended by adding at the end the following:
``(e) Rule of Construction.--
``(1) In general.--An agreement that is required under
subsection (a) or (b) shall include agreements resolving any
outstanding disputes, including agreements resolving or
settling a Patent Trial and Appeal Board proceeding.
``(2) Definition.--For purposes of subparagraph (A), the
term `Patent Trial and Appeal Board proceeding' means a
proceeding conducted by the Patent Trial and Appeal Board of
the United States Patent and Trademark Office, including an
inter partes review instituted under chapter 31 of title 35,
United States Code, a post-grant review instituted under
chapter 32 of that title (including a proceeding instituted
pursuant to the transitional program for covered business
method patents, as described in section 18 of the Leahy-Smith
America Invents Act (35 U.S.C. 321 note)), and a derivation
proceeding instituted under section 135 of that title.''.
SEC. 6. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.
Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting ``section 27
of the Federal Trade Commission Act or'' after ``that the agreement has
violated''.
SEC. 7. COMMISSION LITIGATION AUTHORITY.
Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C.
56(a)(2)) is amended--
(1) in subparagraph (D), by striking ``or'' after the
semicolon;
(2) in subparagraph (E)--
(A) by moving the margin 2 ems to the left; and
(B) by inserting ``or'' after the semicolon; and
(3) by inserting after subparagraph (E) the following:
``(F) under section 27,''.
SEC. 8. REPORT ON ADDITIONAL EXCLUSION.
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Federal Trade Commission shall
submit to the Committee on the Judiciary of the Senate and the
Committee on the Judiciary of the House of Representatives a
recommendation, and the Commission's basis for such
recommendation, regarding a potential amendment to include in
section 27(b) of the Federal Trade Commission Act (as added by
section 3) an additional exclusion for consideration granted by
an NDA holder to a ANDA filer or by a biological product
license holder to a biosimilar biological product application
filer as part of the resolution or settlement, a release,
waiver, or limitation of a claim for damages or other monetary
relief.
(2) Definitions.--In this section, the terms ``ANDA
filer'', ``biological product license holder'', ``biosimilar
biological product application filer'', and ``NDA holder'' have
the meanings given such terms in section 27(d) of the Federal
Trade Commission Act (as added by section 3).
SEC. 9. STATUTE OF LIMITATIONS.
The Federal Trade Commission shall commence any enforcement
proceeding described in section 27 of the Federal Trade Commission Act,
as added by section 3, not later than 6 years after the date on which
the parties to the agreement file the certification under section
1112(d) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (21 U.S.C. 355 note).
SEC. 10. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such Act or amendments to any person or circumstance shall not be
affected.
Calendar No. 46
119th CONGRESS
1st Session
S. 1096
_______________________________________________________________________
A BILL
To prohibit brand name drug companies from compensating generic drug
companies to delay the entry of a generic drug into the market, and to
prohibit biological product manufacturers from compensating biosimilar
and interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
_______________________________________________________________________
April 10, 2025
Reported with an amendment