Preserve Access to Affordable Generics and Biosimilars Act

II Calendar No. 20 118TH CONGRESS 1ST SESSION S. 142 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 30, 2023 Ms. KLOBUCHAR (for herself, Mr. GRASSLEY, Mr. DURBIN, Mr. CRAMER, Mr. BLUMENTHAL, Mr. KELLY, Mr. VAN HOLLEN, Mr. BOOKER, Mr. OSSOFF, Ms. ERNST, and Mr. WELCH) introduced the following bill; which was read twice and referred to the Committee on the Judiciary MARCH 1, 2023 Reported by Mr. DURBIN, 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 inter- changeable companies to delay the entry of biosimilar biological products and interchangeable biological prod- ucts. VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 142 RS Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Preserve Access to Af- 4 fordable Generics and Biosimilars Act’’. 5 SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF 6 PURPOSES. 7 (a) FINDINGS.—Congress finds the following: 8 (1) In 1984, the Drug Price Competition and 9 Patent Term Restoration Act (Public Law 98–417) 10 (referred to in this Act as the ‘‘1984 Act’’), was en- 11 acted with the intent of facilitating the early entry 12 of generic drugs while preserving incentives for inno- 13 vation. 14 (2) Prescription drugs make up approximately 15 10 percent of the national health care spending. 16 (3) Initially, the 1984 Act was successful in fa- 17 cilitating generic competition to the benefit of con- 18 sumers and health care payers, although 88 percent 19 of all prescriptions dispensed in the United States 20 are generic drugs, they account for only 28 percent 21 of all expenditures. 22 (4) Generic drugs cost substantially less than 23 brand name drugs, with discounts off the brand 24 price averaging 80 to 85 percent. 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 142 RS (5) Federal dollars currently account for over 1 40 percent of the $325,000,000,000 spent on retail 2 prescription drugs, and this share is expected to rise 3 to 47 percent by 2025. 4 (6)(A) In recent years, the intent of the 1984 5 Act has been subverted by certain settlement agree- 6 ments in which brand name companies transfer 7 value to their potential generic competitors to settle 8 claims that the generic company is infringing the 9 branded company’s patents. 10 (B) These ‘‘reverse payment’’ settlement agree- 11 ments— 12 (i) allow a branded company to share its 13 monopoly profits with the generic company as a 14 way to protect the branded company’s monop- 15 oly; and 16 (ii) have unduly delayed the marketing of 17 low-cost generic drugs contrary to free competi- 18 tion, the interests of consumers, and the prin- 19 ciples underlying antitrust law. 20 (C) Because of the price disparity between 21 brand name and generic drugs, such agreements are 22 more profitable for both the brand and generic man- 23 ufacturers than competition and will become increas- 24 ingly common unless prohibited. 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 142 RS (D) These agreements result in consumers los- 1 ing the benefits that the 1984 Act was intended to 2 provide. 3 (7) In 2010, the Biologics Price Competition 4 and Innovation Act (Public Law 111–148) (referred 5 to in this Act as the ‘‘BPCIA’’), was enacted with 6 the intent of facilitating the early entry of biosimilar 7 and interchangeable follow-on versions of branded 8 biological products while preserving incentives for in- 9 novation. 10 (8) Biological drugs play an important role in 11 treating many serious illnesses, from cancers to ge- 12 netic disorders. They are also expensive, rep- 13 resenting more than 40 percent of all prescription 14 drug spending. 15 (9) Competition from biosimilar and inter- 16 changeable biological products promises to lower 17 drug costs and increase patient access to biological 18 medicines. But ‘‘reverse payment’’ settlement agree- 19 ments also threaten to delay the entry of biosimilar 20 and interchangeable biological products, which would 21 undermine the goals of BPCIA. 22 (b) PURPOSES.—The purposes of this Act are— 23 (1) to enhance competition in the pharma- 24 ceutical market by stopping anticompetitive agree- 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 142 RS ments between brand name and generic drug and 1 biosimilar biological product manufacturers that 2 limit, delay, or otherwise prevent competition from 3 generic drugs and biosimilar biological products; and 4 (2) to support the purpose and intent of anti- 5 trust law by prohibiting anticompetitive practices in 6 the pharmaceutical industry that harm consumers. 7 SEC. 3. UNLAWFUL COMPENSATION FOR DELAY. 8 (a) IN GENERAL.—The Federal Trade Commission 9 Act (15 U.S.C. 44 et seq.) is amended by inserting after 10 section 26 (15 U.S.C. 57c–2) the following: 11 ‘‘SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS 12 AND BIOSIMILARS. 13 ‘‘(a) IN GENERAL.— 14 ‘‘(1) ENFORCEMENT PROCEEDING.—The Com- 15 mission may initiate a proceeding to enforce the pro- 16 visions of this section against the parties to any 17 agreement resolving or settling, on a final or interim 18 basis, a patent claim, in connection with the sale of 19 a drug product or biological product. 20 ‘‘(2) PRESUMPTION AND VIOLATION.— 21 ‘‘(A) IN GENERAL.—Subject to subpara- 22 graph (B), in such a proceeding, an agreement 23 shall be presumed to have anticompetitive ef- 24 fects and shall be a violation of this section if— 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 142 RS ‘‘(i) an ANDA filer or a biosimilar bi- 1 ological product application filer receives 2 anything of value, including an exclusive li- 3 cense; and 4 ‘‘(ii) the ANDA filer or biosimilar bio- 5 logical product application filer agrees to 6 limit or forgo research, development, man- 7 ufacturing, marketing, or sales of the 8 ANDA product or biosimilar biological 9 product, as applicable, for any period of 10 time. 11 ‘‘(B) EXCEPTION.—Subparagraph (A) 12 shall not apply if the parties to such agreement 13 demonstrate by clear and convincing evidence 14 that— 15 ‘‘(i) the value described in subpara- 16 graph (A)(i) is compensation solely for 17 other goods or services that the ANDA 18 filer or biosimilar biological product appli- 19 cation filer has promised to provide; or 20 ‘‘(ii) the procompetitive benefits of the 21 agreement outweigh the anticompetitive ef- 22 fects of the agreement. 23 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 142 RS ‘‘(b) LIMITATIONS.—In determining whether the set- 1 tling parties have met their burden under subsection 2 (a)(2)(B), the fact finder shall not presume— 3 ‘‘(1) that entry would not have occurred until 4 the expiration of the relevant patent or statutory ex- 5 clusivity; or 6 ‘‘(2) that the agreement’s provision for entry of 7 the ANDA product or biosimilar biological product 8 prior to the expiration of the relevant patent or stat- 9 utory exclusivity means that the agreement is pro- 10 competitive. 11 ‘‘(c) EXCLUSIONS.—Nothing in this section shall pro- 12 hibit a resolution or settlement of a patent infringement 13 claim in which the consideration that the ANDA filer or 14 biosimilar biological product application filer, respectively, 15 receives as part of the resolution or settlement includes 16 only one or more of the following: 17 ‘‘(1) The right to market and secure final ap- 18 proval in the United States for the ANDA product 19 or biosimilar biological product at a date, whether 20 certain or contingent, prior to the expiration of— 21 ‘‘(A) any patent that is the basis for the 22 patent infringement claim; or 23 ‘‘(B) any patent right or other statutory 24 exclusivity that would prevent the marketing of 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 142 RS such ANDA product or biosimilar biological 1 product. 2 ‘‘(2) A payment for reasonable litigation ex- 3 penses not to exceed— 4 ‘‘(A) for calendar year 2023, $7,500,000; 5 or 6 ‘‘(B) for calendar year 2024 and each sub- 7 sequent calendar year, the amount determined 8 for the preceding calendar year adjusted to re- 9 flect the percentage increase (if any) in the 10 Producer Price Index for Legal Services pub- 11 lished by the Bureau of Labor Statistics of the 12 Department of Labor for the most recent cal- 13 endar year. 14 ‘‘(3) A covenant not to sue on any claim that 15 the ANDA product or biosimilar biological product 16 infringes a United States patent. 17 ‘‘(d) ENFORCEMENT.— 18 ‘‘(1) ENFORCEMENT.—A violation of this sec- 19 tion shall be treated as an unfair method of competi- 20 tion under section 5(a)(1). 21 ‘‘(2) JUDICIAL REVIEW.— 22 ‘‘(A) IN GENERAL.—Any party that is sub- 23 ject to a final order of the Commission, issued 24 in an administrative adjudicative proceeding 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 142 RS under the authority of subsection (a)(1), may, 1 within 30 days of the issuance of such order, 2 petition for review of such order in— 3 ‘‘(i) the United States Court of Ap- 4 peals for the District of Columbia Circuit; 5 ‘‘(ii) the United States Court of Ap- 6 peals for the circuit in which the ultimate 7 parent entity, as defined in section 8 801.1(a)(3) of title 16, Code of Federal 9 Regulations, or any successor thereto, of 10 the NDA holder or biological product li- 11 cense holder is incorporated as of the date 12 that the NDA or biological product license 13 application, as applicable, is filed with the 14 Commissioner of Food and Drugs; or 15 ‘‘(iii) the United States Court of Ap- 16 peals for the circuit in which the ultimate 17 parent entity of the ANDA filer or bio- 18 similar biological product application filer 19 is incorporated as of the date that the 20 ANDA or biosimilar biological product ap- 21 plication is filed with the Commissioner of 22 Food and Drugs. 23 ‘‘(B) TREATMENT OF FINDINGS.—In a 24 proceeding for judicial review of a final order of 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 142 RS the Commission, the findings of the Commis- 1 sion as to the facts, if supported by evidence, 2 shall be conclusive. 3 ‘‘(e) ANTITRUST LAWS.—Nothing in this section 4 shall modify, impair, limit, or supersede the applicability 5 of the antitrust laws as defined in subsection (a) of the 6 first section of the Clayton Act (15 U.S.C. 12(a)), and 7 of section 5 of this Act to the extent that section 5 applies 8 to unfair methods of competition. Nothing in this section 9 shall modify, impair, limit, or supersede the right of an 10 ANDA filer or biosimilar biological product application 11 filer to assert claims or counterclaims against any person, 12 under the antitrust laws or other laws relating to unfair 13 competition. 14 ‘‘(f) PENALTIES.— 15 ‘‘(1) FORFEITURE.—Each party that violates or 16 assists in the violation of this section shall forfeit 17 and pay to the United States a civil penalty suffi- 18 cient to deter violations of this section, but in no 19 event greater than 3 times the value received by the 20 party that is reasonably attributable to the violation 21 of this section. If no such value has been received by 22 the NDA holder, the biological product license hold- 23 er, the ANDA filer, or the biosimilar biological prod- 24 uct application filer, the penalty to the NDA holder, 25 VerDate Sep 11 2014 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 142 RS the biological product license holder, the ANDA 1 filer, or the biosimilar biological product application 2 filer shall be sufficient to deter violations, but in no 3 event shall be greater than 3 times the value given 4 to an ANDA filer or biosimilar biological product 5 application filer reasonably attributable to the viola- 6 tion of this section. Such penalty shall accrue to the 7 United States and may be recovered in a civil action 8 brought by the Commission, in its own name by any 9 of its attorneys designated by it for such purpose, in 10 a district court of the United States against any 11 party that violates this section. In such actions, the 12 United States district courts are empowered to grant 13 mandatory injunctions and such other and further 14 equitable relief as they deem 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 23:43 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6401 E:\BILLS\S142.RS S142 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •S 142 RS ‘‘(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 the 4 violation of this section by a party shall be con- 5 clusive 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 [Text truncated for display. 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