MMAPPP Act of 2020

II 116TH CONGRESS 2D SESSION S. 4439 To require any COVID–19 drug developed in whole or in part with Federal support to be affordable and accessible by prohibiting monopolies and price gouging, and for other purposes. IN THE SENATE OF THE UNITED STATES AUGUST 5, 2020 Ms. SMITH (for herself, Mr. MERKLEY, Ms. BALDWIN, Mrs. GILLIBRAND, and Ms. HARRIS) introduced the following bill; which was read twice and re- ferred to the Committee on Health, Education, Labor, and Pensions A BILL To require any COVID–19 drug developed in whole or in part with Federal support to be affordable and accessible by prohibiting monopolies and price gouging, 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Make Medications Af- 4 fordable by Preventing Pandemic Price-gouging Act of 5 2020’’ or the ‘‘MMAPPP Act of 2020’’. 6 VerDate Sep 11 2014 20:32 Aug 27, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 2 •S 4439 IS SEC. 2. REQUIREMENTS FOR LICENSING OF NEW COVID–19 1 TREATMENT AND PREVENTION TECH- 2 NOLOGIES TO MEET DOMESTIC AND GLOBAL 3 DEMAND. 4 (a) NONEXCLUSIVE LICENSE REQUIRED.—Any cov- 5 ered license granted by the Federal Government shall be 6 an open, nonexclusive license. 7 (b) CONTRACTOR, ASSIGNEE, EXCLUSIVE LI- 8 CENSEE.—Notwithstanding any other provision of law, 9 any contractor, assignee, or exclusive licensee to an inven- 10 tion developed in whole or in part in work performed 11 under a covered transaction shall grant an open, non-ex- 12 clusive license. If any such contractor, assignee, or exclu- 13 sive licensee refuses to grant such license, the Federal 14 Government shall grant the license. 15 (c) REASONABLE ROYALTY.— 16 (1) IN GENERAL.—Except as provided in para- 17 graph (4), an entity that accepts an open, nonexclu- 18 sive license under this section shall pay a reasonable 19 royalty with respect to sales within the United 20 States to— 21 (A) the holder of a patent that claims the 22 COVID–19 related invention; or 23 (B) the holder of an application approved 24 under section 505 of the Federal Food, Drug, 25 and Cosmetic Act (21 U.S.C. 355) or section 26 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 3 •S 4439 IS 351 of the Public Health Service Act (42 1 U.S.C. 262) for which any FDA-granted exclu- 2 sivity with respect to a drug related to such in- 3 vention that was terminated under this section. 4 (2) ROYALTY.—The reasonable royalty de- 5 scribed under paragraph (1) shall be a percentage of 6 sales of the entity paying the royalty, where the per- 7 centage rate is no higher than the average royalty 8 rate estimated from the data provided by the Inter- 9 nal Revenue Service for pharmaceutical manufac- 10 turer Federal income tax returns. 11 (3) REQUIREMENTS.— 12 (A) IN GENERAL.—The royalty described 13 under paragraph (2) shall be subject to the ap- 14 plicable royalty rate requirements of section 15 319B of the Public Health Service Act, as 16 added by section 5 of this Act. 17 (B) MULTIPLE AFFECTED PARTIES.—In 18 the case of more than one recipient of a royalty, 19 the royalty shall be divided among each such re- 20 cipient (including any manufacturer) in a man- 21 ner agreed upon by the manufacturer and other 22 recipients, or, in the absence of such an agree- 23 ment, in a manner the Secretary determines to 24 be appropriate. 25 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 4 •S 4439 IS (4) EXCEPTION FOR GOVERNMENT-OWNED IN- 1 VENTIONS.—An entity that accepts an open, non- 2 exclusive license for a federally owned invention de- 3 scribed under section 207 of title 35, United States 4 Code, is not required to pay a royalty under this sec- 5 tion. 6 (d) DEFINITIONS.—In this section: 7 (1) COVERED LICENSE.—The term ‘‘covered li- 8 cense’’ means a license that allows a licensee to 9 make, use, offer to sell, or sell, export, or import 10 into the United States or any other country or terri- 11 tory a COVID–19 related invention pursuant to— 12 (A) section 207 of title 35, United States 13 Code; and 14 (B) section 12 of the Stevenson-Wydler 15 Technology Innovation Act of 1980 (15 U.S.C. 16 3710a). 17 (2) COVERED TRANSACTION.—The term ‘‘cov- 18 ered transaction’’ means any contract, funding 19 agreement, license, other transaction, or other ar- 20 rangement entered into between a party and the 21 Federal Government on or after the date of enact- 22 ment of this Act with respect to research and devel- 23 opment regarding a drug that— 24 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 5 •S 4439 IS (A) is intended or anticipated to be used to 1 diagnose, mitigate, prevent, or treat COVID– 2 19; and 3 (B) consists of— 4 (i) a licensing agreement pursuant to 5 section 207 of title 35, United States 6 Code; 7 (ii) a cooperative research and devel- 8 opment agreement and licensing agreement 9 pursuant to section 12 of the Stevenson- 10 Wydler Technology Innovation Act of 1980 11 (15 U.S.C. 3710a); 12 (iii) a funding agreement, as defined 13 under section 201 of title 35, United 14 States Code; or 15 (iv) any other transaction entered into 16 pursuant to— 17 (I) section 319L, 421, or 480 of 18 the Public Health Service Act (42 19 U.S.C. 247d–7e, 285b–3, 287a); 20 (II) section 105 of the National 21 Institutes of Health Reform Act of 22 2006 (42 U.S.C. 284n); or 23 (III) section 2371 of title 10, 24 United States Code. 25 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 6 •S 4439 IS (3) COVID–19 RELATED INVENTION.—The 1 term ‘‘COVID–19 related invention’’ means any in- 2 vention that claims a drug that is manufactured, 3 used, designed, developed, modified, licensed, or pro- 4 cured to diagnose, mitigate, prevent, treat, or cure 5 COVID–19; a use of such drug; a form of such 6 drug; a method of use of such drug; or a method of 7 manufacturing such drug. 8 (4) FDA-GRANTED EXCLUSIVITY.—The term 9 ‘‘FDA-granted exclusivity’’ means prohibitions on 10 the submission or approval of drug applications 11 granted under any of the following: 12 (A) Clauses (ii) through (v) of section 13 505(c)(3)(E) of the Federal Food, Drug, and 14 Cosmetic Act (21 U.S.C. 355(c)(3)(E)). 15 (B) Subsection (j)(5)(B)(iv) or clause (ii), 16 (iii), or (iv) of subsection (j)(5)(F) of such Act 17 (21 U.S.C. 355(c)(3)(E)). 18 (C) Section 505A of such Act (21 U.S.C. 19 355a). 20 (D) Section 505E of such Act (21 U.S.C. 21 355f). 22 (E) Section 527 of such Act (21 U.S.C. 23 360cc). 24 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 7 •S 4439 IS (F) Section 351(k)(7) of the Public Health 1 Service Act (42 U.S.C. 262(k)(7)). 2 (G) Any other provision of law that pro- 3 vides for marketing or data exclusivity (or ex- 4 tension of exclusivity) with respect to a drug. 5 (5) OPEN, NONEXCLUSIVE LICENSE.—The term 6 ‘‘open, nonexclusive license’’ means a license that al- 7 lows a qualified licensee, subject to the provisions of 8 the Federal Food, Drug, and Cosmetic Act (21 9 U.S.C. 301 et seq.) and the Public Health Service 10 Act (42 U.S.C. 201 et seq.)— 11 (A) to make, use, offer to sell, sell, export, 12 or import into the United States and any other 13 country and territory an invention; 14 (B) to reference or rely upon earlier-sub- 15 mitted regulatory test data or the earlier grant 16 of marketing approval of a treatment or vaccine 17 related to such invention; and 18 (C) to access and use otherwise confiden- 19 tial know-how relating to the manufacture of 20 such invention. 21 SEC. 3. REQUIREMENTS FOR REASONABLE PRICING OF 22 FEDERALLY SUPPORTED COVID–19 DRUGS. 23 (a) REASONABLE PRICING REQUIREMENTS.—Any 24 covered transaction shall include terms and conditions re- 25 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 8 •S 4439 IS quiring that the pricing of the drug by the party referred 1 to in section 2(d)(2) be fair and reasonable, and facilitate 2 global access, taking into consideration— 3 (1) the impact of the price on access to the 4 drug in the United States, taking into consideration 5 racial disparities in COVID–19 cases and fatalities 6 and other socioeconomic disparities; 7 (2) the impact of the price on health program 8 spending and budgets in the United States; 9 (3) the risk adjusted value of Federal subsidies 10 and investments related to the drug; 11 (4) the costs associated with development and 12 manufacturing of the drug; 13 (5) the size of the affected patient population in 14 the United States and globally; and 15 (6) the therapeutic efficacy of the drug. 16 (b) DEFINITIONS.—In this section: 17 (1) COVERED TRANSACTION.—The term ‘‘cov- 18 ered transaction’’ has the meaning given to such 19 term in section 2. 20 (2) DRUG.—The term ‘‘drug’’ has the meaning 21 given to such term in section 201 of the Federal 22 Food, Drug, and Cosmetic Act (21 U.S.C. 321). 23 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 9 •S 4439 IS SEC. 4. REPORTING ON THE EXPENDITURES OF MANUFAC- 1 TURERS WITH RESPECT TO COVID–19 DRUGS. 2 (a) COVERED DRUG.—For purposes of this section, 3 the term ‘‘covered drug’’ means a drug that is intended 4 or anticipated to be used to diagnose, mitigate, prevent, 5 or treat COVID–19. 6 (b) REPORTING REQUIRED.—The manufacturer of a 7 covered drug shall submit a report described in subsection 8 (c) to the Secretary upon— 9 (1) the submission of an application for ap- 10 proval of the drug under subsection (b) or (j) of sec- 11 tion 505 of the Federal Food, Drug, and Cosmetic 12 Act (21 U.S.C. 355); 13 (2) investigational use of the drug under section 14 505(i) of the Federal Food, Drug, and Cosmetic Act 15 (21 U.S.C. 355(i)) or section 351(a)(3) of the Public 16 Health Service Act (42 U.S.C. 262(a)(3)); 17 (3) the submission of an application for licens- 18 ing the drug under subsection (a) or (k) of section 19 351 of the Public Health Service Act (42 U.S.C. 20 262); 21 (4) the issuance of an authorization for emer- 22 gency use of the drug under section 564 of the Fed- 23 eral Food, Drug, and Cosmetic Act (21 U.S.C. 24 360bbb–3); or 25 (5) the marketing of the drug. 26 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 10 •S 4439 IS (c) CONTENTS.—A report under subsection (a), con- 1 sistent with the standard for disclosures described in sec- 2 tion 213.3(d) of title 12, Code of Federal Regulations (as 3 in effect on the date of enactment of this Act), shall ad- 4 dress the expenditures of the manufacturer with respect 5 to the covered drug and include, at a minimum— 6 (1) the sponsor or sponsors of the covered drug; 7 (2) the current wholesale acquisition cost of the 8 covered drug when applicable; 9 (3) the total expenditures of the manufacturer, 10 specified by individual costs, on— 11 (A) materials and manufacturing for the 12 covered drug; and 13 (B) acquiring patents and licensing for the 14 covered drug; 15 (4) the total amount and percentage of research 16 and development expenditures for the covered drug 17 that was derived from Federal funds; 18 (5) the total amount of any Federal benefits re- 19 ceived by the manufacturer with respect to the cov- 20 ered drug, including— 21 (A) the specific amounts and periods of 22 impact for each such benefit; 23 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 11 •S 4439 IS (B) the specific value of any tax credits, 1 including benefits from patient assistance pro- 2 grams and donated samples; 3 (C) clinical and preclinical investments; 4 (D) any Federal benefit toward manufac- 5 turing costs, including building or retrofitting 6 facilities; 7 (E) Federal grants, including from the Na- 8 tional Institutes of Health, the Centers for Dis- 9 ease Control and Prevention, the Department of 10 Defense, the Department of Energy, or other 11 Federal departments or agencies; 12 (F) patent applications that benefitted 13 from such grants; 14 (G) patent extensions; 15 (H) exclusivity periods; and 16 (I) waivers of fees; 17 (6) the total expenditures of the manufacturer 18 on research and development, itemized by basic and 19 preclinical research and by clinical research, re- 20 ported separately for each clinical trial, for the cov- 21 ered drug to demonstrate that the covered drug 22 meets applicable statutory standards for approval 23 under section 505 of the Federal Food, Drug, and 24 Cosmetic Act (21 U.S.C. 355), licensure under sec- 25 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 khammond on DSKJM1Z7X2PROD with BILLS 12 •S 4439 IS tion 351 of the Public Health Service Act (42 1 U.S.C. 262), an exemption for investigational use 2 under section 505(i) of the Federal Food, Drug, or 3 Cosmetic Act (21 U.S.C. 355(i)) or section 4 351(a)(3) of the Public Health Service Act (42 5 U.S.C. 262(a)(3)), or authorization under section 6 564 of the Federal Food, Drug, and Cosmetic Act 7 (21 U.S.C. 360bbb–3), as applicable; 8 (7) the total expenditures of the manufacturer 9 on pursuing new or expanded indications or dosage 10 changes for the covered drug under section 505 of 11 the Federal Food, Drug, and Cosmetic Act (21 12 U.S.C. 355) or section 351 of the Public Health 13 Service Act (42 U.S.C. 262); 14 (8) the total expenditures of the manufacturer 15 on carrying out postmarket requirements related to 16 such drug, including under section 505(o)(3) of the 17 Federal Food, Drug, and Cosmetic Act (21 U.S.C. 18 355(o)(3)); 19 (9) the specific expenditures associated with 20 marketing and advertising costs for the covered 21 drug; 22 (10) any anticipated royalty fees from licensing 23 to other manufacturers; and 24 (11) with respect to the manufacturer— 25 VerDate Sep 11 2014 22:09 Aug 25, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4439.IS S4439 kham [Text truncated for display. 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