Affordable Drug Manufacturing Act of 2020

II 116TH CONGRESS 2D SESSION S. 3162 To amend the Public Health Service Act to establish an Office of Drug Manufacturing. IN THE SENATE OF THE UNITED STATES JANUARY 8, 2020 Ms. WARREN introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Public Health Service Act to establish an Office of Drug Manufacturing. 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 ‘‘Affordable Drug Man- 4 ufacturing Act of 2020’’. 5 SEC. 2. PUBLIC MANUFACTURING OF PHARMACEUTICALS. 6 Part A of title III of the Public Health Service Act 7 (42 U.S.C. 241 et seq.) is amended by adding at the end 8 the following: 9 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 2 •S 3162 IS ‘‘SEC. 310B. MANUFACTURING OF DRUGS. 1 ‘‘(a) ESTABLISHMENT OF OFFICE OF DRUG MANU- 2 FACTURING.— 3 ‘‘(1) IN GENERAL.—There is established within 4 the Department of Health and Human Services an 5 office to be known as the Office of Drug Manufac- 6 turing (referred to in this section as the ‘Office’). 7 ‘‘(2) PURPOSE.—The purpose of the Office is— 8 ‘‘(A) to increase competition, lower prices, 9 and address shortages in the market for pre- 10 scription drugs, including insulin, naloxone, and 11 antibiotics; 12 ‘‘(B) to reduce the cost of prescription 13 drugs to Federal and State health programs, 14 taxpayers, and consumers; and 15 ‘‘(C) to increase patient access to afford- 16 able drugs. 17 ‘‘(3) PERSONNEL.— 18 ‘‘(A) DIRECTOR.— 19 ‘‘(i) IN GENERAL.—The Office shall 20 be headed by a Director, who shall be ap- 21 pointed by the President, by and with the 22 advice and consent of the Senate. 23 ‘‘(ii) COMPENSATION.—The Director 24 shall be compensated at the rate prescribed 25 for level III of the Executive Schedule. 26 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 3 •S 3162 IS ‘‘(B) EMPLOYEES.—The Director of the 1 Office, in consultation with the Secretary, may 2 fix the number of, and appoint and direct, all 3 employees of the Office. 4 ‘‘(C) BANNED INDIVIDUALS.— 5 ‘‘(i) DRUG COMPANY LOBBYISTS.—No 6 former registered drug manufacturer lob- 7 byist— 8 ‘‘(I) may be appointed to the po- 9 sition of Director of the Office; or 10 ‘‘(II) may be employed by the Of- 11 fice during the 6-year period begin- 12 ning on the date on which the reg- 13 istered lobbyist terminates its reg- 14 istration in accordance with section 15 4(d) of the Lobbying Disclosure Act 16 of 1995 (2 U.S.C. 1603(d)) or the 17 agent terminates its status, as appli- 18 cable. 19 ‘‘(ii) SENIOR EXECUTIVES OF LAW- 20 BREAKING COMPANIES.—No former senior 21 executive of a covered entity (as defined in 22 clause (iii))— 23 ‘‘(I) may be appointed to the po- 24 sition of Director of the Office; or 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 4 •S 3162 IS ‘‘(II) may be employed by the Of- 1 fice during the 6-year period begin- 2 ning on the later of— 3 ‘‘(aa) the date of the settle- 4 ment; and 5 ‘‘(bb) the date on which the 6 enforcement action has con- 7 cluded. 8 ‘‘(iii) COVERED ENTITY.—The term 9 ‘covered entity’ means any entity that is— 10 ‘‘(I) a drug manufacturer; and 11 ‘‘(II)(aa) operating under Fed- 12 eral settlement, including a Federal 13 consent decree; or 14 ‘‘(bb) the subject of an enforce- 15 ment action in a court of the United 16 States or by an agency. 17 ‘‘(4) DUTIES.— 18 ‘‘(A) IN GENERAL.—The Office shall— 19 ‘‘(i) prepare and submit applications 20 for approval to the Food and Drug Admin- 21 istration, or enter into contracts for such 22 submission, for the manufacture of appli- 23 cable drugs when authorized under this 24 section; 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 5 •S 3162 IS ‘‘(ii) acquire rights to manufacture 1 applicable drugs as authorized under this 2 section; 3 ‘‘(iii) manufacture, or enter into con- 4 tracts with entities to manufacture, appli- 5 cable drugs as authorized under this sec- 6 tion; 7 ‘‘(iv) determine a fair price for each 8 applicable drugs, in accordance with sub- 9 paragraph (B); 10 ‘‘(v) sell manufactured applicable 11 drugs at a fair price as authorized under 12 this section; and 13 ‘‘(vi) manufacture, or enter into con- 14 tracts with entities to manufacture, active 15 pharmaceutical ingredients for use by the 16 Office or for sale to other entities. 17 ‘‘(B) FAIR PRICE.—In determining a fair 18 price for an applicable drug under subpara- 19 graph (A)(iv) the Office shall consider— 20 ‘‘(i) the impact of price on patient ac- 21 cess to the applicable drug; 22 ‘‘(ii) the cost of the applicable drug to 23 Federal or State health care programs; 24 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 6 •S 3162 IS ‘‘(iii) the cost to the Federal Govern- 1 ment of manufacturing the applicable 2 drug; 3 ‘‘(iv) the administrative costs of oper- 4 ating the Office; 5 ‘‘(v) the cost to acquire or manufac- 6 ture applicable drugs under this section; 7 and 8 ‘‘(vi) the impact of price on market 9 competition for the applicable drug. 10 ‘‘(C) ACQUIRING RIGHT TO MANUFACTURE 11 AND MARKET.—The Office may acquire the 12 rights to manufacture and market applicable 13 drugs as authorized under this section. 14 ‘‘(D) ACTIVE PHARMACEUTICAL INGREDI- 15 ENTS.— 16 ‘‘(i) IN GENERAL.—The Office shall 17 manufacture, or enter into contracts with 18 entities to manufacture, an active pharma- 19 ceutical ingredient if— 20 ‘‘(I) the Office determines that 21 such ingredient is not readily available 22 from existing suppliers; 23 ‘‘(II) the manufacture of such in- 24 gredient would improve the ability of 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 7 •S 3162 IS other entities to enter the market for 1 the manufacture of generic drugs or 2 otherwise expand the manufacture of 3 generic drugs; or 4 ‘‘(III) the manufacture of such 5 ingredient is necessary for the Office 6 to carry out its duties under this sec- 7 tion. 8 ‘‘(ii) PRICE DETERMINATIONS.—In 9 determining what price at which to sell an 10 active pharmaceutical ingredient under 11 clause (i), the Office shall consider the cost 12 to manufacture the ingredient, the admin- 13 istrative costs of the Office with respect to 14 the ingredient, and the impact of such 15 price on market competition for the ingre- 16 dient. 17 ‘‘(5) REPORTS TO CONGRESS.—The Director 18 shall prepare and submit to the President, the Com- 19 mittee on Health, Education, Labor, and Pensions 20 of the Senate, and the Committee on Energy and 21 Commerce of the House of Representatives, an an- 22 nual report that includes— 23 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 8 •S 3162 IS ‘‘(A) an assessment of the major problems 1 faced by patients in accessing affordable generic 2 medications; 3 ‘‘(B) a description of the status of all 4 medications for which manufacturing has been 5 authorized under this section, including medica- 6 tions being manufactured, medications for 7 which the Office has submitted an application 8 to the Food and Drug Administration but has 9 not yet received approval, and medications for 10 which the Office has received approval from the 11 Food and Drug Administration but are not 12 being manufactured; 13 ‘‘(C) in the case of antibiotics manufac- 14 tured under this section, an assessment from 15 the Centers for Disease Control and Prevention 16 and the Food and Drug Administration on the 17 impact of the manufacturing of antibiotics on 18 antimicrobial resistance; and 19 ‘‘(D) an analysis of how the public manu- 20 facture of drugs meeting the conditions de- 21 scribed in paragraph (6) would impact, or has 22 already impacted, competition, access to such 23 drugs, the costs of such drugs, the costs of pre- 24 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 9 •S 3162 IS scription drugs to Federal and State health pro- 1 grams, and public health. 2 ‘‘(6) PRIORITY MANUFACTURING.—The Office 3 shall prioritize the manufacturing of those applicable 4 drugs that would have the greatest impact on— 5 ‘‘(A) lowering drug costs to patients; 6 ‘‘(B) increasing competition and address- 7 ing shortages in the prescription drug market; 8 ‘‘(C) improving public health; or 9 ‘‘(D) reducing the cost of prescription 10 drugs to Federal and State health programs. 11 ‘‘(7) MANUFACTURING LEVELS.—Not later 12 than 1 year after the date of enactment of this sec- 13 tion, the Office shall manufacture, or enter into con- 14 tracts with entities for the manufacture of, not less 15 than 15 applicable drugs. Not later than 3 years 16 after such date of enactment, the Office shall manu- 17 facture, or enter into contracts with entities for the 18 manufacture of, not less than 25 applicable drugs. 19 ‘‘(b) SUBMISSION OF APPLICATIONS.—For each ap- 20 plicable drug that the Office determines should be manu- 21 factured, as provided for under this section, the Secretary 22 shall— 23 ‘‘(1) submit an application under section 505(j) 24 or 515 of the Federal Food, Drug, and Cosmetic Act 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 10 •S 3162 IS or section 351(k) of the Public Health Service Act 1 or submit a notification under section 510(k) of the 2 Federal Food, Drug, and Cosmetic Act (or enter 3 into a contract with another entity to submit such 4 an application or notification); or 5 ‘‘(2) acquire from the holder of an application 6 approved under subsection (c) or (j) of section 505 7 or section 515 of the Federal Food, Drug, and Cos- 8 metic Act or section 351 of the Public Health Serv- 9 ice Act, or cleared under section 510(k) of the Fed- 10 eral Food, Drug, and Cosmetic Act, rights to manu- 11 facture such applicable drug. 12 ‘‘(c) USE.— 13 ‘‘(1) IN GENERAL.—The Secretary shall sell a 14 drug produced under this section at a fair price to 15 other entities. Amounts received from the sale of 16 such drugs shall be used for the activities of the Of- 17 fice. 18 ‘‘(2) SALE OF APPROVED APPLICATION.— 19 ‘‘(A) IN GENERAL.—For any applicable 20 drug that the Office is manufacturing, the Sec- 21 retary shall, beginning 3 years after the date on 22 which the Office first undertakes manufacturing 23 of such drug and annually thereafter, make 24 available for sale, to any person who commits to 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 11 •S 3162 IS manufacturing and marketing the applicable 1 drug, the approved application for the drug. 2 ‘‘(B) FAILURE TO USE.—If a person pur- 3 chasing an approved application under subpara- 4 graph (A)— 5 ‘‘(i) fails to market the applicable 6 drug within 6 months of the date of such 7 purchase; or 8 ‘‘(ii) increases the average manufac- 9 turer price for the applicable drug above 10 the fair price (increased by the consumer 11 price index for all urban consumers (as 12 published by the Bureau of Labor Statis- 13 tics) for that year), 14 the Secretary shall revoke the purchaser’s ap- 15 proved application and resume production of 16 the applicable drug. 17 ‘‘(d) INSULIN.—Not later than 1 year after the date 18 of enactment of this section, the Secretary shall begin the 19 public manufacturing of insulin within a delivery device 20 that does not violate active patents, meeting the definition 21 of applicable drug and in accordance with this section. 22 ‘‘(e) NALOXONE.—Not later than 1 year after the 23 date of enactment of this section, the Secretary shall begin 24 the public manufacturing of naloxone, including naloxone 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 12 •S 3162 IS indicated for community use, meeting the definition of ap- 1 plicable drug and in accordance with this section. 2 ‘‘(f) ANTIBIOTICS.—Not later than 1 year after the 3 date of enactment of this section, and in consultation with 4 the Centers for Disease Control and Prevention and the 5 Food and Drug Administration to ensure the appropriate 6 use of manufactured antibiotics, the Secretary shall begin 7 the public manufacturing of no fewer than three discrete 8 antibiotics meeting the definition of applicable drug in ac- 9 cordance with this section. 10 ‘‘(g) APPLICABLE DRUG.—In this section, the term 11 ‘applicable drug’ means a drug (as defined in section 201 12 of the Federal Food, Drug, and Cosmetic Act), biological 13 product (as defined in section 351 of the Public Health 14 Service Act), or combination product (as described in sec- 15 tion 503(g) of the Federal Food, Drug, and Cosmetic Act) 16 for which an approved application under section 505 or 17 515 of the Federal Food, Drug, and Cosmetic Act or sec- 18 tion 351 of the Public Health Service Act, or clearance 19 under section 510(k) of the Federal Food, Drug, and Cos- 20 metic Act, is in effect, and— 21 ‘‘(1)(A) for which, with respect to a drug in- 22 cluded in the list described in section 505(j)(7) of 23 the Federal Food, Drug, and Cosmetic Act, each 24 patent included with respect to such drug in such 25 VerDate Sep 11 2014 03:16 Jan 09, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S3162.IS S3162 kjohnson on DSK79L0C42PROD with BILLS 13 •S 3162 IS list has expired, or each patent that claims a biologi- 1 cal product has expired; 2 ‘‘(B) any period of regulatory exclusivity grant- 3 ed under— 4 ‘‘(i) clause (ii), (iii), or (iv) of section 5 505(c)(3)(E) of the Federal Food, Drug, and 6 Cosmetic Act, section 505(j)(5)(B)(iv) of such 7 Act, clause (ii), (iii), or (iv) of section 8 505(j)(5)(F) of such Act, section 527 of such 9 Act, and any extension of such a period granted 10 under section 505A or 505E of such Act, has 11 expired; or 12 ‘‘(ii) paragraph (6) or (7) of secti [Text truncated for display. 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