To prohibit brand name drug companies from compensating generic
drug companies to delay the entry of a generic drug into the market.
IN THE SENATE OF THE UNITED STATES
January 25 (legislative day, January 5), 2011
Mr. KOHL (for himself, Mr. GRASSLEY, Mr. DURBIN, Ms. COLLINS, Ms. KLOBUCHAR,
Mr. FRANKEN, Mr. BROWN of Ohio, and Mr. SANDERS) introduced the following
bill; which was read twice and referred to the Committee on the Judiciary
To prohibit brand name drug companies from compensating generic
drug companies to delay the entry of a generic drug into the market.
SECTION 1. SHORT TITLE.
This Act may be cited as the `Preserve Access to Affordable Generics
SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATION OF PURPOSES.
(a) Findings- Congress finds the following:
(1) In 1984, the Drug Price Competition and Patent Term Restoration
Act (Public Law 98-417) (referred to in this Act as the `1984 Act'),
was enacted with the intent of facilitating the early entry of generic
drugs while preserving incentives for innovation.
(2) Prescription drugs make up 10 percent of the national health care
spending but for the past decade have been one of the fastest growing
segments of health care expenditures.
(3) Until recently, the 1984 Act was successful in facilitating generic
competition to the benefit of consumers and health care payers--although
67 percent of all prescriptions dispensed in the United States are
generic drugs, they account for only 20 percent of all expenditures.
(4) Generic drugs cost substantially less than brand name drugs, with
discounts off the brand price sometimes exceeding 90 percent.
(5) Federal dollars currently account for an estimated 30 percent
of the $235,000,000,000 spent on prescription drugs in 2008, and this
share is expected to rise to 40 percent by 2018.
(6)(A) In recent years, the intent of the 1984 Act has been subverted
by certain settlement agreements between brand companies and their
potential generic competitors that make `reverse payments' which are
payments by the brand company to the generic company.
(B) These settlement agreements have unduly delayed the marketing
of low-cost generic drugs contrary to free competition, the interests
of consumers, and the principles underlying antitrust law.
(C) Because of the price disparity between brand name and generic
drugs, such agreements are more profitable for both the brand and
generic manufacturers than competition, and will become increasingly
common unless prohibited.
(D) These agreements result in consumers losing the benefits that
the 1984 Act was intended to provide.
(b) Purposes- The purposes of this Act are--
(1) to enhance competition in the pharmaceutical market by stopping
anticompetitive agreements between brand name and generic drug manufacturers
that limit, delay, or otherwise prevent competition from generic drugs;
(2) to support the purpose and intent of antitrust law by prohibiting
anticompetitive practices in the pharmaceutical industry that harm
SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.
(a) In General- The Federal Trade Commission Act (15 U.S.C. 44 et seq.)
is amended by--
(1) redesignating section 28 as section 29; and
(2) inserting before section 29, as redesignated, the following:
`SEC. 28. PRESERVING ACCESS TO AFFORDABLE GENERICS.
`(1) ENFORCEMENT PROCEEDING- The Federal Trade Commission may initiate
a proceeding to enforce the provisions of this section against the
parties to any agreement resolving or settling, on a final or interim
basis, a patent infringement claim, in connection with the sale of
a drug product.
`(A) IN GENERAL- Subject to subparagraph (B), in such a proceeding,
an agreement shall be presumed to have anticompetitive effects and
be unlawful if--
`(i) an ANDA filer receives anything of value; and
`(ii) the ANDA filer agrees to limit or forego research, development,
manufacturing, marketing, or sales of the ANDA product for any
period of time.
`(B) EXCEPTION- The presumption in subparagraph (A) shall not apply
if the parties to such agreement demonstrate by clear and convincing
evidence that the procompetitive benefits of the agreement outweigh
the anticompetitive effects of the agreement.
`(b) Competitive Factors- In determining whether the settling parties
have met their burden under subsection (a)(2)(B), the fact finder shall
`(1) the length of time remaining until the end of the life of the
relevant patent, compared with the agreed upon entry date for the
`(2) the value to consumers of the competition from the ANDA product
allowed under the agreement;
`(3) the form and amount of consideration received by the ANDA filer
in the agreement resolving or settling the patent infringement claim;
`(4) the revenue the ANDA filer would have received by winning the
`(5) the reduction in the NDA holder's revenues if it had lost the
`(6) the time period between the date of the agreement conveying value
to the ANDA filer and the date of the settlement of the patent infringement
`(7) any other factor that the fact finder, in its discretion, deems
relevant to its determination of competitive effects under this subsection.
`(c) Limitations- In determining whether the settling parties have met
their burden under subsection (a)(2)(B), the fact finder shall not presume--
`(1) that entry would not have occurred until the expiration of the
relevant patent or statutory exclusivity; or
`(2) that the agreement's provision for entry of the ANDA product
prior to the expiration of the relevant patent or statutory exclusivity
means that the agreement is pro-competitive, although such evidence
may be relevant to the fact finder's determination under this section.
`(d) Exclusions- Nothing in this section shall prohibit a resolution
or settlement of a patent infringement claim in which the consideration
granted by the NDA holder to the ANDA filer as part of the resolution
or settlement includes only one or more of the following:
`(1) The right to market the ANDA product in the United States prior
to the expiration of--
`(A) any patent that is the basis for the patent infringement claim;
`(B) any patent right or other statutory exclusivity that would
prevent the marketing of such drug.
`(2) A payment for reasonable litigation expenses not to exceed $7,500,000.
`(3) A covenant not to sue on any claim that the ANDA product infringes
a United States patent.
`(e) Regulations and Enforcement-
`(1) REGULATIONS- The Federal Trade Commission may issue, in accordance
with section 553 of title 5, United States Code, regulations implementing
and interpreting this section. These regulations may exempt certain
types of agreements described in subsection (a) if the Commission
determines such agreements will further market competition and benefit
consumers. Judicial review of any such regulation shall be in the
United States District Court for the District of Columbia pursuant
to section 706 of title 5, United States Code.
`(2) ENFORCEMENT- A violation of this section shall be treated as
a violation of section 5.
`(3) JUDICIAL REVIEW- Any person, partnership or corporation that
is subject to a final order of the Commission, issued in an administrative
adjudicative proceeding under the authority of subsection (a)(1),
may, within 30 days of the issuance of such order, petition for review
of such order in the United States Court of Appeals for the District
of Columbia Circuit or the United States Court of Appeals for the
circuit in which the ultimate parent entity, as defined at 16 CFR
801.1(a)(3), of the NDA holder is incorporated as of the date that
the NDA is filed with the Secretary of the Food and Drug Administration,
or the United States Court of Appeals for the circuit in which the
ultimate parent entity of the ANDA filer is incorporated as of the
date that the ANDA is filed with the Secretary of the Food and Drug
Administration. In such a review proceeding, the findings of the Commission
as to the facts, if supported by evidence, shall be conclusive.
`(f) Antitrust Laws- Nothing in this section shall be construed to modify,
impair or supersede the applicability of the antitrust laws as defined
in subsection (a) of the 1st section of the Clayton Act (15 U.S.C. 12(a))
and of section 5 of this Act to the extent that section 5 applies to
unfair methods of competition. Nothing in this section shall modify,
impair, limit or supersede the right of an ANDA filer to assert claims
or counterclaims against any person, under the antitrust laws or other
laws relating to unfair competition.
`(1) FORFEITURE- Each person, partnership or corporation that violates
or assists in the violation of this section shall forfeit and pay
to the United States a civil penalty sufficient to deter violations
of this section, but in no event greater than 3 times the value received
by the party that is reasonably attributable to a violation of this
section. If no such value has been received by the NDA holder, the
penalty to the NDA holder shall be shall be sufficient to deter violations,
but in no event greater than 3 times the value given to the ANDA filer
reasonably attributable to the violation of this section. Such penalty
shall accrue to the United States and may be recovered in a civil
action brought by the Federal Trade Commission, in its own name by
any of its attorneys designated by it for such purpose, in a district
court of the United States against any person, partnership or corporation
that violates this section. In such actions, the United States district
courts are empowered to grant mandatory injunctions and such other
and further equitable relief as they deem appropriate.
`(A) IN GENERAL- If the Commission has issued a cease and desist
order with respect to a person, partnership or corporation in an
administrative adjudicative proceeding under the authority of subsection
(a)(1), an action brought pursuant to paragraph (1) may be commenced
against such person, partnership or corporation at any time before
the expiration of one year after such order becomes final pursuant
to section 5(g).
`(B) EXCEPTION- In an action under subparagraph (A), the findings
of the Commission as to the material facts in the administrative
adjudicative proceeding with respect to such person's, partnership's
or corporation's violation of this section shall be conclusive unless--
`(i) the terms of such cease and desist order expressly provide
that the Commission's findings shall not be conclusive; or
`(ii) the order became final by reason of section 5(g)(1), in
which case such finding shall be conclusive if supported by evidence.
`(3) CIVIL PENALTY- In determining the amount of the civil penalty
described in this section, the court shall take into account--
`(A) the nature, circumstances, extent, and gravity of the violation;
`(B) with respect to the violator, the degree of culpability, any
history of violations, the ability to pay, any effect on the ability
to continue doing business, profits earned by the NDA holder, compensation
received by the ANDA filer, and the amount of commerce affected;
`(C) other matters that justice requires.
`(4) REMEDIES IN ADDITION- Remedies provided in this subsection are
in addition to, and not in lieu of, any other remedy provided by Federal
law. Nothing in this paragraph shall be construed to affect any authority
of the Commission under any other provision of law.
`(h) Definitions- In this section:
`(1) AGREEMENT- The term `agreement' means anything that would constitute
an agreement under section 1 of the Sherman Act (15 U.S.C. 1) or section
5 of this Act.
`(2) AGREEMENT RESOLVING OR SETTLING A PATENT INFRINGEMENT CLAIM-
The term `agreement resolving or settling a patent infringement claim'
includes any agreement that is entered into within 30 days of the
resolution or the settlement of the claim, or any other agreement
that is contingent upon, provides a contingent condition for, or is
otherwise related to the resolution or settlement of the claim.
`(3) ANDA- The term `ANDA' means an abbreviated new drug application,
as defined under section 505(j) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(j)).
`(4) ANDA FILER- The term `ANDA filer' means a party who has filed
an ANDA with the Food and Drug Administration.
`(5) ANDA PRODUCT- The term `ANDA product' means the product to be
manufactured under the ANDA that is the subject of the patent infringement
`(6) DRUG PRODUCT- The term `drug product' means a finished dosage
form (e.g., tablet, capsule, or solution) that contains a drug substance,
generally, but not necessarily, in association with 1 or more other
ingredients, as defined in section 314.3(b) of title 21, Code of Federal
`(7) NDA- The term `NDA' means a new drug application, as defined
under section 505(b) of the Federal Food, Drug, and Cosmetic Act (21
`(8) NDA HOLDER- The term `NDA holder' means--
`(A) the party that received FDA approval to market a drug product
pursuant to an NDA;
`(B) a party owning or controlling enforcement of the patent listed
in the Approved Drug Products With Therapeutic Equivalence Evaluations
(commonly known as the `FDA Orange Book') in connection with the
`(C) the predecessors, subsidiaries, divisions, groups, and affiliates
controlled by, controlling, or under common control with any of
the entities described in subparagraphs (A) and (B) (such control
to be presumed by direct or indirect share ownership of 50 percent
or greater), as well as the licensees, licensors, successors, and
assigns of each of the entities.
`(9) PATENT INFRINGEMENT- The term `patent infringement' means infringement
of any patent or of any filed patent application, extension, reissue,
renewal, division, continuation, continuation in part, reexamination,
patent term restoration, patents of addition and extensions thereof.
`(10) PATENT INFRINGEMENT CLAIM- The term `patent infringement claim'
means any allegation made to an ANDA filer, whether or not included
in a complaint filed with a court of law, that its ANDA or ANDA product
may infringe any patent held by, or exclusively licensed to, the NDA
holder of the drug product.
`(11) STATUTORY EXCLUSIVITY- The term `statutory exclusivity' means
those prohibitions on the approval of drug applications under clauses
(ii) through (iv) of section 505(c)(3)(E) (5- and 3-year data exclusivity),
section 527 (orphan drug exclusivity), or section 505A (pediatric
exclusivity) of the Federal Food, Drug, and Cosmetic Act.'.
(b) Effective Date- Section 28 of the Federal Trade Commission Act,
as added by this section, shall apply to all agreements described in
section 28(a)(1) of that Act entered into after November 15, 2009. Section
28(g) of the Federal Trade Commission Act, as added by this section,
shall not apply to agreements entered into before the date of enactment
of this Act.
SEC. 4. NOTICE AND CERTIFICATION OF AGREEMENTS.
(a) Notice of All Agreements- Section 1112(c)(2) of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note)
is amended by--
(1) striking `the Commission the' and inserting the following: `the
(2) striking the period and inserting `; and'; and
(3) inserting at the end the following:
`(2) any other agreement the parties enter into within 30 days of
entering into an agreement covered by subsection (a) or (b).'.
(b) Certification of Agreements- Section 1112 of such Act is amended
by adding at the end the following:
`(d) Certification- The Chief Executive Officer or the company official
responsible for negotiating any agreement required to be filed under
subsection (a), (b), or (c) shall execute and file with the Assistant
Attorney General and the Commission a certification as follows: `I declare
that the following is true, correct, and complete to the best of my
knowledge: The materials filed with the Federal Trade Commission and
the Department of Justice under section 1112 of subtitle B of title
XI of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, with respect to the agreement referenced in this certification:
(1) represent the complete, final, and exclusive agreement between the
parties; (2) include any ancillary agreements that are contingent upon,
provide a contingent condition for, or are otherwise related to, the
referenced agreement; and (3) include written descriptions of any oral
agreements, representations, commitments, or promises between the parties
that are responsive to subsection (a) or (b) of such section 1112 and
have not been reduced to writing.'.'.
SEC. 5. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.
Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug and Cosmetic Act
(21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting `section 28 of
the Federal Trade Commission Act or' after `that the agreement has violated'.
SEC. 6. COMMISSION LITIGATION AUTHORITY.
Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C. 56(a)(2))
(1) in subparagraph (D), by striking `or' after the semicolon;
(2) in subparagraph (E), by inserting `or' after the semicolon; and
(3) inserting after subparagraph (E) the following:
SEC. 7. STATUTE OF LIMITATIONS.
The Commission shall commence any enforcement proceeding described in
section 28 of the Federal Trade Commission Act, as added by section
3, except for an action described in section 28(g)(2) of the Federal
Trade Commission Act, not later than 3 years after the date on which
the parties to the agreement file the Notice of Agreement as provided
by sections 1112(c)(2) and (d) of the Medicare Prescription Drug Improvement
and Modernization Act of 2003 (21 U.S.C. 355 note).
SEC. 8. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or circumstance
is held to be unconstitutional, the remainder of this Act, the amendments
made by this Act, and the application of the provisions of such Act
or amendments to any person or circumstance shall not be affected thereby.