Competitive DRUGS Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1344 To prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 25, 2019 Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. CARTWRIGHT, Ms. JUDY CHU of California, Mr. CUMMINGS, Ms. DELAURO, Mr. DESAULNIER, Mr. GRIJALVA, Ms. HILL of California, Ms. KAPTUR, Mr. KHANNA, Ms. MOORE, Mrs. NAPOLITANO, Ms. OCASIO-CORTEZ, Ms. NORTON, Ms. PIN- GREE, Mr. POCAN, Ms. WATERS, Mr. WELCH, and Mr. LANGEVIN) intro- duced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 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 for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 2 •HR 1344 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Competitive Deals Re- 2 sulting in Unleashed Generics and Savings Act of 2019’’ 3 or the ‘‘Competitive DRUGS Act of 2019’’. 4 SEC. 2. CLAWBACK OF RESEARCH AND DEVELOPMENT TAX 5 BENEFITS FOR MANUFACTURERS ENGAGING 6 IN PAY-FOR-DELAY. 7 (a) IN GENERAL.—Section 41 of the Internal Rev- 8 enue Code of 1986 is amended by adding at the end the 9 following new subsection: 10 ‘‘(i) RECAPTURE.— 11 ‘‘(1) IN GENERAL.—If the Federal Trade Com- 12 mission determines under section 27 of the Federal 13 Trade Commission Act that the taxpayer violated 14 section 5 of such Act in connection with the sale of 15 a drug product (as defined in such section), then the 16 tax under this chapter for the taxable year which in- 17 cludes the date of such determination shall be in- 18 creased by the sum of the product for each of the 19 2 relevant years of— 20 ‘‘(A) the aggregate decrease in the credits 21 allowed under section 38 for such relevant year 22 which would have resulted solely from reducing 23 to zero any credit determined under this sec- 24 tion, multiplied by 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 3 •HR 1344 IH ‘‘(B) the sales ratio for such drug product 1 for such relevant year. 2 ‘‘(2) RELEVANT YEAR.—For purposes of this 3 subsection, the term ‘relevant year’ means, with re- 4 spect to any determination by the Federal Trade 5 Commission described in paragraph (1), a taxable 6 year in which the aggregate decrease in the credits 7 allowed under section 38 which would have resulted 8 solely from reducing to zero any credit determined 9 under this section is one of the two highest such de- 10 creases during the 10-year period ending with the 11 last taxable year that ended before the date of such 12 determination. 13 ‘‘(3) SALES RATIO.—For purposes of this sub- 14 section, the term ‘sales ratio’ means, with respect to 15 a drug product sold by a taxpayer in a taxable year, 16 the ratio of— 17 ‘‘(A) the revenue from sales of such drug 18 product by such taxpayer during such taxable 19 year, to 20 ‘‘(B) the total revenue from sales of all 21 drug products by such taxpayer during such 22 taxable year. 23 ‘‘(4) CONSENT DECREES DEEMED TO BE VIOLA- 24 TIONS.—If a taxpayer enters into a consent decree 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 4 •HR 1344 IH with respect to any proceeding initiated by the Fed- 1 eral Trade Commission under section 27 of the Fed- 2 eral Trade Commission Act, such consent decree 3 shall be treated for purposes of this subsection as if 4 the Commission had determined under such section 5 that the taxpayer violated section 5 of such Act in 6 connection with the sale of the drug product to 7 which such proceeding relates. 8 ‘‘(5) RECAPTURE NOT TAKEN INTO ACCOUNT IN 9 DETERMINING MAXIMUM PENALTY.—The increase in 10 tax under this subsection shall not be treated as a 11 penalty for purposes of section 27(f) of the Federal 12 Trade Commission Act.’’. 13 (b) EFFECTIVE DATE.—The amendment made by 14 this section shall apply to taxable years ending after the 15 date of the enactment of this Act. 16 SEC. 3. TAX ON RECEIPT OF PAY-FOR-DELAY PAYMENTS; 17 DENIAL OF DEDUCTION FOR PAY-FOR-DELAY 18 PAYMENTS. 19 (a) RECEIPT OF PAYMENT.—The Internal Revenue 20 Code of 1986 is amended by inserting after chapter 36 21 the following new chapter: 22 ‘‘CHAPTER 37—PAY-FOR-DELAY 23 ‘‘Sec. 4501. Imposition of tax. VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6211 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 5 •HR 1344 IH ‘‘SEC. 4501. IMPOSITION OF TAX. 1 ‘‘There is hereby imposed, on each taxpayer who is 2 party to an agreement that is determined by the Federal 3 Trade Commission under section 27 of the Federal Trade 4 Commission Act to be a violation of section 5 of such Act, 5 a tax equal to 50 percent of the amount paid to such tax- 6 payer under such agreement.’’. 7 (b) DENIAL OF DEDUCTION.—Section 162(c) is 8 amended by adding at the end the following new para- 9 graph: 10 ‘‘(4) PAY-FOR-DELAY PAYMENTS.—No deduc- 11 tion shall be allowed under subsection (a) for any 12 payment under an agreement that is determined by 13 the Federal Trade Commission under section 27 of 14 the Federal Trade Commission Act to be a violation 15 of section 5 of such Act.’’. 16 (c) CONFORMING AMENDMENT.—The table of chap- 17 ters for the Internal Revenue Code of 1986 is amended 18 by inserting after the item relating to chapter 36 the fol- 19 lowing new item: 20 ‘‘CHAPTER 37—PAY-FOR-DELAY’’. SEC. 4. UNLAWFUL COMPENSATION FOR DELAY. 21 (a) IN GENERAL.—The Federal Trade Commission 22 Act (15 U.S.C. 44 et seq.) is amended by inserting after 23 section 26 (15 U.S.C. 57c–2) the following: 24 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 6 •HR 1344 IH ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE 1 GENERICS. 2 ‘‘(a) IN GENERAL.— 3 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com- 4 mission may initiate a proceeding to enforce the pro- 5 visions of this section against the parties to any 6 agreement resolving or settling, on a final or interim 7 basis, a patent infringement claim, in connection 8 with the sale of a drug product. 9 ‘‘(2) VIOLATION.— 10 ‘‘(A) IN GENERAL.—Subject to subpara- 11 graph (B), in such a proceeding, an agreement 12 shall be an unfair method of competition in or 13 affecting commerce and be a violation of section 14 5 if pursuant to the agreement— 15 ‘‘(i) an ANDA filer receives anything 16 of value, including an exclusive or non-ex- 17 clusive license, an agreement regarding the 18 marketing of a product, or any other com- 19 mercial opportunity or benefit; and 20 ‘‘(ii) the ANDA filer agrees to limit or 21 forgo research, development, manufac- 22 turing, marketing, or sales of the ANDA 23 product for any period of time. 24 ‘‘(B) EXCEPTION.—Subparagraph (A) 25 shall not apply if the parties to such agreement 26 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 7 •HR 1344 IH demonstrate by clear and convincing evidence 1 that— 2 ‘‘(i) the value described in subpara- 3 graph (A)(i) is compensation solely for 4 other goods or services that the ANDA 5 filer has promised to provide; or 6 ‘‘(ii) the procompetitive benefits of the 7 agreement outweigh the anticompetitive ef- 8 fects of the agreement. 9 ‘‘(b) LIMITATIONS.—In determining whether the set- 10 tling parties have met their burden under subsection 11 (a)(2)(B), the fact finder may not presume— 12 ‘‘(1) that entry of the ANDA product into 13 interstate commerce would not have occurred until 14 the expiration of the relevant patent or statutory ex- 15 clusivity; or 16 ‘‘(2) that the agreement’s provision for entry of 17 the ANDA product into interstate commerce prior to 18 the expiration of the relevant patent or statutory ex- 19 clusivity means that the agreement is procom- 20 petitive. 21 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro- 22 hibit a resolution or settlement of a patent infringement 23 claim in which the consideration granted to the ANDA 24 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 8 •HR 1344 IH filer as part of the resolution or settlement includes one 1 or more of the following and nothing else: 2 ‘‘(1) The right to market the ANDA product in 3 the United States prior to the expiration of— 4 ‘‘(A) any patent that is the basis for the 5 patent infringement claim; or 6 ‘‘(B) any patent right or other statutory 7 exclusivity that would prevent the marketing of 8 such drug. 9 ‘‘(2) A payment, not to exceed $7,500,000, if 10 based on reasonable litigation expenses. 11 ‘‘(3) A covenant not to sue (including any 12 agreement to dismiss) on any claim that the ANDA 13 product infringes a United States patent. 14 ‘‘(d) JUDICIAL REVIEW.— 15 ‘‘(1) IN GENERAL.—Any party that is subject 16 to a final order of the Commission, issued in an ad- 17 ministrative adjudicative proceeding under the au- 18 thority of subsection (a)(1), may, within 30 days 19 after the issuance of such order, petition for review 20 of such order in— 21 ‘‘(A) the United States Court of Appeals 22 for the District of Columbia Circuit; or 23 ‘‘(B) the United States Court of Appeals 24 for the circuit in which any party subject to 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 9 •HR 1344 IH such final order is incorporated on the date that 1 the petition for review is filed. 2 ‘‘(2) TREATMENT OF FINDINGS.—In a pro- 3 ceeding for judicial review of a final order of the 4 Commission, the findings of the Commission as to 5 the facts, if supported by evidence, shall be conclu- 6 sive. 7 ‘‘(e) CONSTRUCTION.— 8 ‘‘(1) ANTITRUST LAWS AND CONSUMER PRO- 9 TECTION LAWS.—Nothing in this section shall be 10 construed to modify, impair, or supersede the oper- 11 ation of— 12 ‘‘(A) the antitrust laws as defined in sub- 13 section (a) of the first section of the Clayton 14 Act (15 U.S.C. 12(a)), or any State law sub- 15 stantially similar to any of such antitrust laws; 16 or 17 ‘‘(B) section 5 of this Act or any substan- 18 tially similar State law. 19 ‘‘(2) CLAIMS AND COUNTERCLAIMS.—Nothing 20 in this section shall modify, impair, or supersede the 21 right of an ANDA filer to assert a claim or counter- 22 claim against any person under any law referred to 23 in paragraph (1). 24 ‘‘(f) PENALTIES.— 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 10 •HR 1344 IH ‘‘(1) FORFEITURE.—Each party that violates 1 subsection (a)(2)(A) shall forfeit and pay to the 2 United States a civil penalty sufficient to deter such 3 violation, but in no event greater than 3 times the 4 value received by the party that is reasonably attrib- 5 utable to such violation. Such penalty shall accrue to 6 the United States and may be recovered in a civil 7 action brought by the Commission, in its own name 8 by any of its attorneys designated by it for such pur- 9 pose, in a district court of the United States against 10 any party that commits such violation. In such ac- 11 tions, the United States district courts are empow- 12 ered to grant mandatory injunctions and such other 13 and further equitable relief as the courts determine 14 to be appropriate. 15 ‘‘(2) CEASE AND DESIST.— 16 ‘‘(A) IN GENERAL.—If the Commission has 17 issued a cease and desist order with respect to 18 a party in an administrative adjudicative pro- 19 ceeding under the authority of subsection 20 (a)(1), an action brought pursuant to para- 21 graph (1) may be commenced against such 22 party at any time before the expiration of 1 23 year after such order becomes final pursuant to 24 section 5(g). 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 11 •HR 1344 IH ‘‘(B) EXCEPTION.—In an action under 1 subparagraph (A), the findings of the Commis- 2 sion as to the material facts in the administra- 3 tive adjudicative proceeding with respect to a 4 violation described in subsection (a)(2)(A) by a 5 party shall be conclusive unless— 6 ‘‘(i) the terms of such cease and de- 7 sist order expressly provide that the Com- 8 mission’s findings shall not be conclusive; 9 or 10 ‘‘(ii) the order became final by reason 11 of section 5(g)(1), in which case such find- 12 ing shall be conclusive if supported by evi- 13 dence. 14 ‘‘(3) CIVIL PENALTY.—In determining the 15 amount of the civil penalty described in this section, 16 the court shall take into account— 17 ‘‘(A) the nature, circumstances, extent, 18 and gravity of the violation, including the 19 amount of commerce affected; 20 ‘‘(B) with respect to the violator, in addi- 21 tion to the value received, the degree of culpa- 22 bility, any history of violations, the ability to 23 pay, and any effect on the ability to continue 24 doing business; and 25 VerDate Sep 11 2014 21:03 Mar 06, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1344.IH H1344 khammond on DSKBBV9HB2PROD with BILLS 12 •HR 1344 IH ‘‘(C) other matters that justice requires. 1 ‘‘(4) REMEDIES IN ADDITION.—Remedies pro- 2 vided in this subsection are in addition to any other 3 remedy provided by Federal or State law. Nothing in 4 this paragraph shall be construed to affect any au- 5 thority of the Commission under any other provision 6 of law. 7 ‘‘(g) DEFINITIONS.—In this section: 8 ‘‘(1) AGREEMENT RESOLVING OR SETTLING A 9 PATENT INFRINGEMENT CLAIM.—The term ‘agree- 10 ment resolving or settling a patent infringement 11 claim’ includes any agreement that is entered into 12 within 30 days before or after the resolution or the 13 settlement of a patent infringement claim, or any 14 other agreement that can be shown to be contingent 15 upon, to provide a contingent co [Text truncated for display. Full text available on Congress.gov.]