[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1040 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1040
To amend the Federal Trade Commission Act to prohibit product hopping,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 13, 2025
Mr. Cornyn (for himself, Mr. Blumenthal, Mr. Grassley, and Mr. Durbin)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend the Federal Trade Commission Act to prohibit product hopping,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Drug Competition Enhancement Act''.
SEC. 2. PRODUCT HOPPING.
(a) In General.--The Federal Trade Commission Act (15 U.S.C. 41 et
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the
following:
``SEC. 27. PRODUCT HOPPING.
``(a) Definitions.--In this section:
``(1) Abbreviated new drug application.--The term
`abbreviated new drug application' means any application under
subsection (j) of section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) or an application under subsection
(b)(2) of such section 505 that seeks a therapeutic equivalence
rating to the reference product.
``(2) Biosimilar biological product.--The term `biosimilar
biological product' means a biological product licensed under
section 351(k) of the Public Health Service Act (42 U.S.C.
262(k)).
``(3) Biosimilar biological product license application.--
The term `biosimilar biological product license application'
means an application submitted under section 351(k) of the
Public Health Service Act (42 U.S.C. 262(k)).
``(4) Follow-on product.--The term `follow-on product'--
``(A) means a drug approved through an application
or supplement to an application submitted under section
505(b) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355(b)) or a biological product licensed through
an application or supplement to an application
submitted under section 351(a) of the Public Health
Service Act (42 U.S.C. 262(a)) for a change or
modification to, or reformulation of, the same
manufacturer's previously approved drug or biological
product that has an indication that is identical or
substantively similar to an indication of the same
manufacturer's previously approved drug or biological
product; and
``(B) excludes such an application or supplement to
an application for a change, modification, or
reformulation of a drug or biological product that is
requested by the Secretary or necessary to comply with
law, including sections 505A and 505B of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355a, 355c).
``(5) Generic drug.--The term `generic drug' means any drug
approved under an application submitted under subsection (j) of
section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355) or an application under subsection (b)(2) of such
section 505 that seeks a therapeutic equivalence rating to the
reference product.
``(6) Listed drug.--The term `listed drug' means a drug
listed under section 505(j)(7) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(j)(7)).
``(7) Manufacturer.--The term `manufacturer' means the
holder, licensee, or assignee of--
``(A) an approved application for a drug under
section 505(c) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(c)); or
``(B) a biological product license under section
351(a) of the Public Health Service Act (42 U.S.C.
262(a)).
``(8) Reference product.--The term `reference product' has
the meaning given the term in section 351(i) of the Public
Health Service Act (42 U.S.C. 262(i)).
``(9) Ultimate parent entity.--The term `ultimate parent
entity' has the meaning given the term in section 801.1 of
title 16, Code of Federal Regulations, or any successor
regulation.
``(b) Prohibition on Product Hopping.--
``(1) Prima facie.--A manufacturer of a reference product
or listed drug shall be considered to have engaged in an unfair
method of competition in or affecting commerce in violation of
section 5(a) if complaint counsel or the Commission
demonstrates in an action or proceeding initiated by the
Commission under subsection (c) that, during the period
beginning on the date on which the manufacturer of the
reference product or listed drug first receives notice that an
applicant has submitted to the Commissioner of Food and Drugs
an abbreviated new drug application or biosimilar biological
product license application referencing the reference product
or listed drug and ending on the date that is the earlier of
180 days after the date on which the generic drug or biosimilar
biological product that is the subject of the abbreviated new
drug application or biosimilar biological product license
application or another generic drug or biosimilar biological
product referencing the listed drug or reference product is
first marketed or 3 years after the date on which the follow-on
product is first marketed, the manufacturer engaged in either
of the following actions:
``(A) The manufacturer engaged in a hard switch,
which shall be established by demonstrating that the
manufacturer engaged in either of the following
actions:
``(i) Upon the request of the manufacturer
of the listed drug or reference product, the
Commissioner of Food and Drugs withdrew the
approval of the application for the listed drug
or reference product or placed the listed drug
or reference product on the discontinued
products list and the manufacturer marketed or
sold a follow-on product.
``(ii) The manufacturer of the listed drug
or reference product--
``(I)(aa) withdrew, discontinued
the manufacture of, or announced
withdrawal of, discontinuance of the
manufacture of, or intent to withdraw
the application with respect to the
drug or reference product in a manner
that impedes competition from a generic
drug or a biosimilar biological
product, which may be established by
objective circumstances, unless such
actions were taken by the manufacturer
pursuant to a request of the
Commissioner of Food and Drugs; or
``(bb) destroyed the inventory of
the listed drug or reference product in
a manner that impedes competition from
a generic drug or a biosimilar
biological product, which may be
established by objective circumstances;
and
``(II) marketed or sold a follow-on
product.
``(B) The manufacturer engaged in a soft switch,
which shall be established by demonstrating that the
manufacturer engaged in both of the following actions:
``(i) The manufacturer took actions with
respect to the listed drug or reference product
other than those described in subparagraph (A)
that unfairly disadvantage the listed drug or
reference product relative to the follow-on
product described in clause (ii) in a manner
that impedes competition from a generic drug or
a biosimilar biological product, which may be
established by objective circumstances.
``(ii) The manufacturer marketed or sold a
follow-on product.
``(2) Exclusions.--Nothing in this section shall prohibit
actions that consist solely of--
``(A) truthful, non-misleading promotional
marketing; or
``(B) ceasing promotional marketing for the listed
drug or reference product.
``(3) Justification.--
``(A) In general.--Subject to paragraph (4), the
actions described in paragraph (1) by a manufacturer of
a listed drug or reference product shall not be
considered to be an unfair method of competition in or
affecting commerce if the manufacturer demonstrates to
the Commission or a district court of the United
States, as applicable, in an action, suit or proceeding
initiated by the Commission under subsection (c)(1)
that--
``(i) the manufacturer would have taken the
actions regardless of whether a generic drug
that references the listed drug or biosimilar
biological product that references the
reference product had already entered the
market; and
``(ii)(I) with respect to a hard switch
under paragraph (1)(A), the manufacturer took
the action for reasons relating to the safety
risk to patients of the listed drug or
reference product;
``(II) with respect to an action described
in paragraph (1)(A)(ii)(I)(aa), there is a
supply disruption that--
``(aa) is outside of the control of
the manufacturer;
``(bb) prevents the production or
distribution of the applicable listed
drug or reference product; and
``(cc) cannot be remedied by
reasonable efforts; or
``(III) with respect to a soft switch under
paragraph (1)(B), the manufacturer had
legitimate pro-competitive reasons, apart from
the financial effects of reduced competition,
to take the action.
``(B) Rule of construction.--Nothing in
subparagraph (A) may be construed to limit the
information that the Commission may otherwise obtain in
any proceeding or action instituted with respect to a
violation of this section.
``(4) Response.--With respect to a justification offered by
a manufacturer under paragraph (3), the Commission may--
``(A) rebut any evidence presented by a
manufacturer during that justification; or
``(B) establish by a preponderance of the evidence
that--
``(i) on balance, the pro-competitive
benefits from the conduct described in
subparagraph (A) or (B) of paragraph (1), as
applicable, do not outweigh any anticompetitive
effects of the conduct, even in consideration
of the justification so offered; or
``(ii)(I) the conduct described in
paragraph (1) is not reasonably necessary to
address or achieve the justifications described
in clause (ii) of paragraph (3)(A); or
``(II) the justifications described in
clause (ii) of paragraph (3)(A) could be
reasonably addressed or achieved through less
anticompetitive means.
``(c) Enforcement.--
``(1) In general.--If the Commission has reason to believe
that any manufacturer has violated, is violating, or is about
to violate this section, or a rule promulgated under this
section, the Commission may take any of the following actions:
``(A) Institute a proceeding under section 5(b).
``(B) In the same manner and to the same extent as
provided in section 13(b), bring suit in a district
court of the United States to temporarily enjoin the
action of the manufacturer.
``(C) Bring suit in a district court of the United
States, in which the Commission may seek--
``(i) to permanently enjoin the action of
the manufacturer;
``(ii) any of the remedies described in
paragraph (3); and
``(iii) any other equitable remedy,
including ancillary equitable relief.
``(2) Judicial review.--
``(A) In general.--Notwithstanding any provision of
section 5, any manufacturer that is subject to a final
cease and desist order issued in a proceeding to
enforce this section, or a rule promulgated under this
section, may, not later than 30 days after the date on
which the Commission issues the order, petition for
review of the order in--
``(i) the United States Court of Appeals
for the District of Columbia Circuit; or
``(ii) the court of appeals of the United
States for the circuit in which the ultimate
parent entity of the manufacturer is
incorporated.
``(B) Treatment of findings.--In a review of a
final cease and desist order conducted by a court of
appeals of the United States under subparagraph (A),
the factual findings of the Commission shall be
conclusive if those facts are supported by the
evidence.
``(3) Equitable remedies.--
``(A) Disgorgement.--
``(i) In general.--In a suit brought under
paragraph (1)(C), the Commission may seek, and
the court may order, disgorgement of any unjust
enrichment that a person obtained as a result
of the violation that gives rise to the suit.
``(ii) Calculation.--Any disgorgement that
is ordered with respect to a person under
clause (i) shall be offset by any amount of
restitution ordered under subparagraph (B).
``(iii) Limitations period.--The Commission
may seek disgorgement under this subparagraph
not later than 5 years after the latest date on
which the person from which the disgorgement is
sought receives any unjust enrichment from the
effects of the violation that gives rise to the
suit in which the Commission seeks the
disgorgement.
``(B) Restitution.--
``(i) In general.--In a suit brought under
paragraph (1)(C), the Commission may seek, and
the court may order, restitution with respect
to the violation that gives rise to the suit.
``(ii) Limitations period.--The Commission
may seek restitution under this subparagraph
not later than 5 years after the latest date on
which the person from which the restitution is
sought receives any unjust enrichment from the
effects of the violation that gives rise to the
suit in which the Commission seeks the
restitution.
``(4) Rules of construction.--Nothing in this subsection
may be construed as--
``(A) requiring the Commission to bring a suit
seeking a temporary injunction under paragraph (1)(B)
before bringing a suit seeking a permanent injunction
under paragraph (1)(C); or
``(B) affecting the authority of the Federal Trade
Commission under any other provision of law.''.
(b) Applicability.--Section 27 of the Federal Trade Commission Act,
as added by subsection (a), shall apply with respect to any--
(1) conduct that occurs on or after the date of enactment
of this Act; and
(2) action or proceeding that is commenced on or after the
date of enactment of this Act.
(c) Antitrust Laws.--Except to the extent subsection (a)
establishes an additional basis for liability under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), nothing in this section, or the
amendments made by this section, shall modify, impair, limit, or
supersede the applicability of the antitrust laws, as defined in
subsection (a) of the first section of the Clayton Act (15 U.S.C. 12),
or of section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to
the extent that it applies to unfair methods of competition.
(d) Rulemaking.--The Federal Trade Commission may issue rules under
section 553 of title 5, United States Code, to define any terms used in
section 27 of the Federal Trad