Preserve Access to Affordable Generics and Biosimilars Act

II 116TH CONGRESS 1ST SESSION S. 64 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 bio- similar and interchangeable companies to delay the entry of biosimilar biological products and interchangeable biological products. IN THE SENATE OF THE UNITED STATES JANUARY 9, 2019 Ms. KLOBUCHAR (for herself and Mr. GRASSLEY) introduced the following bill; which was read twice and referred to the Committee on the Judiciary 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 inter- changeable companies to delay the entry of biosimilar biological products and interchangeable biological prod- ucts. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Preserve Access to Af- 4 fordable Generics and Biosimilars Act’’. 5 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 2 •S 64 IS SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF 1 PURPOSES. 2 (a) FINDINGS.—Congress finds the following: 3 (1) In 1984, the Drug Price Competition and 4 Patent Term Restoration Act (Public Law 98–417) 5 (referred to in this Act as the ‘‘1984 Act’’), was en- 6 acted with the intent of facilitating the early entry 7 of generic drugs while preserving incentives for inno- 8 vation. 9 (2) Prescription drugs make up approximately 10 10 percent of the national health care spending. 11 (3) Initially, the 1984 Act was successful in fa- 12 cilitating generic competition to the benefit of con- 13 sumers and health care payers, although 88 percent 14 of all prescriptions dispensed in the United States 15 are generic drugs, they account for only 28 percent 16 of all expenditures. 17 (4) Generic drugs cost substantially less than 18 brand name drugs, with discounts off the brand 19 price averaging 80 to 85 percent. 20 (5) Federal dollars currently account for over 21 40 percent of the $325,000,000,000 spent on retail 22 prescription drugs, and this share is expected to rise 23 to 47 percent by 2025. 24 (6)(A) In recent years, the intent of the 1984 25 Act has been subverted by certain settlement agree- 26 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 3 •S 64 IS ments in which brand name companies transfer 1 value to their potential generic competitors to settle 2 claims that the generic company is infringing the 3 branded company’s patents. 4 (B) These ‘‘reverse payment’’ settlement agree- 5 ments— 6 (i) allow a branded company to share its 7 monopoly profits with the generic company as a 8 way to protect the branded company’s monop- 9 oly; and 10 (ii) have unduly delayed the marketing of 11 low-cost generic drugs contrary to free competi- 12 tion, the interests of consumers, and the prin- 13 ciples underlying antitrust law. 14 (C) Because of the price disparity between 15 brand name and generic drugs, such agreements are 16 more profitable for both the brand and generic man- 17 ufacturers than competition and will become increas- 18 ingly common unless prohibited. 19 (D) These agreements result in consumers los- 20 ing the benefits that the 1984 Act was intended to 21 provide. 22 (7) In 2010, the Biologics Price Competition 23 and Innovation Act (Public Law 111–148) (referred 24 to in this Act as the ‘‘BPCIA’’), was enacted with 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 4 •S 64 IS the intent of facilitating the early entry of biosimilar 1 and interchangeable follow-on versions of branded 2 biological products while preserving incentives for in- 3 novation. 4 (8) Biological drugs play an important role in 5 treating many serious illnesses, from cancers to ge- 6 netic disorders. They are also expensive, rep- 7 resenting more than 40 percent of all prescription 8 drug spending. 9 (9) Competition from biosimilar and inter- 10 changeable biological products promises to lower 11 drug costs and increase patient access to biological 12 medicines. But ‘‘reverse payment’’ settlement agree- 13 ments also threaten to delay the entry of biosimilar 14 and interchangeable biological products, which would 15 undermine the goals of BPCIA. 16 (b) PURPOSES.—The purposes of this Act are— 17 (1) to enhance competition in the pharma- 18 ceutical market by stopping anticompetitive agree- 19 ments between brand name and generic drug and 20 biosimilar biological product manufacturers that 21 limit, delay, or otherwise prevent competition from 22 generic drugs and biosimilar biological products; and 23 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 5 •S 64 IS (2) to support the purpose and intent of anti- 1 trust law by prohibiting anticompetitive practices in 2 the pharmaceutical industry that harm consumers. 3 SEC. 3. UNLAWFUL COMPENSATION FOR DELAY. 4 (a) IN GENERAL.—The Federal Trade Commission 5 Act (15 U.S.C. 44 et seq.) is amended by inserting after 6 section 26 (15 U.S.C. 57c–2) the following: 7 ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS 8 AND BIOSIMILARS. 9 ‘‘(a) IN GENERAL.— 10 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com- 11 mission may initiate a proceeding to enforce the pro- 12 visions of this section against the parties to any 13 agreement resolving or settling, on a final or interim 14 basis, a patent infringement claim, in connection 15 with the sale of a drug product or biological product. 16 ‘‘(2) PRESUMPTION AND VIOLATION.— 17 ‘‘(A) IN GENERAL.—Subject to subpara- 18 graph (B), in such a proceeding, an agreement 19 shall be presumed to have anticompetitive ef- 20 fects and shall be a violation of this section if— 21 ‘‘(i) an ANDA filer or a biosimilar bi- 22 ological product application filer receives 23 anything of value, including an exclusive li- 24 cense; and 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 6 •S 64 IS ‘‘(ii) the ANDA filer or biosimilar bio- 1 logical product application filer agrees to 2 limit or forego research, development, 3 manufacturing, marketing, or sales of the 4 ANDA product or biosimilar biological 5 product, as applicable, for any period of 6 time. 7 ‘‘(B) EXCEPTION.—Subparagraph (A) 8 shall not apply if the parties to such agreement 9 demonstrate by clear and convincing evidence 10 that— 11 ‘‘(i) the value described in subpara- 12 graph (A)(i) is compensation solely for 13 other goods or services that the ANDA 14 filer or biosimilar biological product appli- 15 cation filer has promised to provide; or 16 ‘‘(ii) the procompetitive benefits of the 17 agreement outweigh the anticompetitive ef- 18 fects of the agreement. 19 ‘‘(b) LIMITATIONS.—In determining whether the set- 20 tling parties have met their burden under subsection 21 (a)(2)(B), the fact finder shall not presume— 22 ‘‘(1) that entry would not have occurred until 23 the expiration of the relevant patent or statutory ex- 24 clusivity; or 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 7 •S 64 IS ‘‘(2) that the agreement’s provision for entry of 1 the ANDA product or biosimilar biological product 2 prior to the expiration of the relevant patent or stat- 3 utory exclusivity means that the agreement is pro- 4 competitive. 5 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro- 6 hibit a resolution or settlement of a patent infringement 7 claim in which the consideration granted by the NDA 8 holder or biological product license holder to the ANDA 9 filer or biosimilar biological product application filer, re- 10 spectively, as part of the resolution or settlement includes 11 only one or more of the following: 12 ‘‘(1) The right to market the ANDA product or 13 biosimilar biological product in the United States 14 prior to the expiration of— 15 ‘‘(A) any patent that is the basis for the 16 patent infringement claim; or 17 ‘‘(B) any patent right or other statutory 18 exclusivity that would prevent the marketing of 19 such ANDA product or biosimilar biological 20 product. 21 ‘‘(2) A payment for reasonable litigation ex- 22 penses not to exceed $7,500,000. 23 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 8 •S 64 IS ‘‘(3) A covenant not to sue on any claim that 1 the ANDA product or biosimilar biological product 2 infringes a United States patent. 3 ‘‘(d) ENFORCEMENT.— 4 ‘‘(1) ENFORCEMENT.—A violation of this sec- 5 tion shall be treated as a violation of section 5. 6 ‘‘(2) JUDICIAL REVIEW.— 7 ‘‘(A) IN GENERAL.—Any party that is sub- 8 ject to a final order of the Commission, issued 9 in an administrative adjudicative proceeding 10 under the authority of subsection (a)(1), may, 11 within 30 days of the issuance of such order, 12 petition for review of such order in— 13 ‘‘(i) the United States Court of Ap- 14 peals for the District of Columbia Circuit; 15 ‘‘(ii) the United States Court of Ap- 16 peals for the circuit in which the ultimate 17 parent entity, as defined in section 18 801.1(a)(3) of title 16, Code of Federal 19 Regulations, or any successor thereto, of 20 the NDA holder or biological product li- 21 cense holder is incorporated as of the date 22 that the NDA or biological product license 23 application, as applicable, is filed with the 24 Commissioner of Food and Drugs; or 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 9 •S 64 IS ‘‘(iii) the United States Court of Ap- 1 peals for the circuit in which the ultimate 2 parent entity of the ANDA filer or bio- 3 similar biological product application filer 4 is incorporated as of the date that the 5 ANDA or biosimilar biological product ap- 6 plication is filed with the Commissioner of 7 Food and Drugs. 8 ‘‘(B) TREATMENT OF FINDINGS.—In a 9 proceeding for judicial review of a final order of 10 the Commission, the findings of the Commis- 11 sion as to the facts, if supported by evidence, 12 shall be conclusive. 13 ‘‘(e) ANTITRUST LAWS.—Nothing in this section 14 shall modify, impair, limit, or supersede the applicability 15 of the antitrust laws as defined in subsection (a) of the 16 first section of the Clayton Act (15 U.S.C. 12(a)), and 17 of section 5 of this Act to the extent that section 5 applies 18 to unfair methods of competition. Nothing in this section 19 shall modify, impair, limit, or supersede the right of an 20 ANDA filer or biosimilar biological product application 21 filer to assert claims or counterclaims against any person, 22 under the antitrust laws or other laws relating to unfair 23 competition. 24 ‘‘(f) PENALTIES.— 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 10 •S 64 IS ‘‘(1) FORFEITURE.—Each party that violates or 1 assists in the violation of this section shall forfeit 2 and pay to the United States a civil penalty suffi- 3 cient to deter violations of this section, but in no 4 event greater than 3 times the value received by the 5 party that is reasonably attributable to the violation 6 of this section. If no such value has been received by 7 the NDA holder or biological product license holder, 8 the penalty to the NDA holder or biological product 9 license holder shall be sufficient to deter violations, 10 but in no event greater than 3 times the value given 11 to the ANDA filer or biosimilar biological product 12 application filer reasonably attributable to the viola- 13 tion of this section. Such penalty shall accrue to the 14 United States and may be recovered in a civil action 15 brought by the Commission, in its own name by any 16 of its attorneys designated by it for such purpose, in 17 a district court of the United States against any 18 party that violates this section. In such actions, the 19 United States district courts are empowered to grant 20 mandatory injunctions and such other and further 21 equitable relief as they deem appropriate. 22 ‘‘(2) CEASE AND DESIST.— 23 ‘‘(A) IN GENERAL.—If the Commission has 24 issued a cease and desist order with respect to 25 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 11 •S 64 IS a party in an administrative adjudicative pro- 1 ceeding under the authority of subsection 2 (a)(1), an action brought pursuant to para- 3 graph (1) may be commenced against such 4 party at any time before the expiration of 1 5 year after such order becomes final pursuant to 6 section 5(g). 7 ‘‘(B) EXCEPTION.—In an action under 8 subparagraph (A), the findings of the Commis- 9 sion as to the material facts in the administra- 10 tive adjudicative proceeding with respect to the 11 violation of this section by a party shall be con- 12 clusive unless— 13 ‘‘(i) the terms of such cease and de- 14 sist order expressly provide that the Com- 15 mission’s findings shall not be conclusive; 16 or 17 ‘‘(ii) the order became final by reason 18 of section 5(g)(1), in which case such find- 19 ing shall be conclusive if supported by evi- 20 dence. 21 ‘‘(3) CIVIL PENALTY.—In determining the 22 amount of the civil penalty described in this section, 23 the court shall take into account— 24 VerDate Sep 11 2014 03:24 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S64.IS S64 kjohnson on DSK79L0C42 with BILLS 12 •S 64 IS ‘‘(A) the nature, circumstances, extent, 1 and gravity of the violation; 2 ‘‘(B) with respect to the violator, the de- 3 gree of culpability, any history of violations, the 4 ability to pay, any effect on the ability to con- 5 tinue doing business, profits earned by the 6 NDA holder or biological product license holder, 7 compensation received by the ANDA filer or 8 biosimilar biological product application filer, 9 and the amount of commerce affected; and 10 ‘‘(C) other matters that justice requires. 11 ‘‘(4) REMEDIES IN ADDITION.—Remedies pro- 12 vided in this subsection are in addition to, and not 13 in lieu of, any other remedy provi [Text truncated for display. 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