[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1096 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1096
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 interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 24, 2025
Ms. Klobuchar (for herself, Mr. Grassley, Mr. Durbin, Mr. Cramer, Mr.
Blumenthal, Ms. Ernst, Mr. Welch, Mr. Kelly, and Mr. Booker) introduced
the following bill; which was read twice and referred to the Committee
on the Judiciary
_______________________________________________________________________
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 interchangeable companies to delay the entry of biosimilar
biological products and interchangeable biological products.
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 ``Preserve Access to Affordable
Generics and Biosimilars Act''.
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 approximately 11 percent of
the national health care spending.
(3) Initially, the 1984 Act was successful in facilitating
generic competition to the benefit of consumers and health care
payers. Although 91 percent of all prescriptions dispensed in
the United States are generic drugs, they account for only 18
percent of all expenditures.
(4) Generic drugs cost substantially less than brand name
drugs, with discounts off the brand price averaging 80 to 85
percent.
(5) Federal dollars currently account for over 40 percent
of the $449,700,000,000 spent on retail prescription drugs
annually.
(6)(A) In recent years, the intent of the 1984 Act has been
subverted by certain settlement agreements in which brand name
companies transfer value to their potential generic competitors
to settle claims that the generic company is infringing the
branded company's patents.
(B) These ``reverse payment'' settlement agreements--
(i) allow a branded company to share its monopoly
profits with the generic company as a way to protect
the branded company's monopoly; and
(ii) 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.
(7) In 2010, the Biologics Price Competition and Innovation
Act (Public Law 111-148) (referred to in this Act as the
``BPCIA''), was enacted with the intent of facilitating the
early entry of biosimilar and interchangeable follow-on
versions of branded biological products while preserving
incentives for innovation.
(8) Biological drugs play an important role in treating
many serious illnesses, from cancers to genetic disorders. They
are also expensive, representing more than half of all
prescription drug spending.
(9) Competition from biosimilar and interchangeable
biological products promises to lower drug costs and increase
patient access to biological medicines. But ``reverse payment''
settlement agreements also threaten to delay the entry of
biosimilar and interchangeable biological products, which would
undermine the goals of BPCIA.
(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 and biosimilar biological product manufacturers
that limit, delay, or otherwise prevent competition from
generic drugs and biosimilar biological products; and
(2) to support the purpose and intent of antitrust law by
prohibiting anticompetitive practices in the pharmaceutical
industry that harm consumers.
SEC. 3. UNLAWFUL COMPENSATION FOR DELAY.
(a) In General.--The Federal Trade Commission Act (15 U.S.C. 44 et
seq.) is amended by inserting after section 26 (15 U.S.C. 57c-2) the
following:
``SEC. 27. PRESERVING ACCESS TO AFFORDABLE GENERICS AND BIOSIMILARS.
``(a) Prohibition.--
``(1) In general.--It shall be a violation of this section
for a party to enter into, or be a participant to, an
agreement, resolving or settling, on a final or interim basis,
a patent claim in connection with the sale of a drug product or
biological product, that has anticompetitive effects.
``(2) Treatment.--A violation of this section shall be
treated as an unfair method of competition in violation of
section 5(a)(1).
``(3) Presumption.--
``(A) In general.--Subject to subparagraph (B), an
agreement described in paragraph (1) shall be presumed
to have anticompetitive effects for purposes of such
paragraph if--
``(i) an ANDA filer or a biosimilar
biological product application filer receives
anything of value, including an exclusive
license; and
``(ii) the ANDA filer or biosimilar
biological product application filer agrees to
limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product, as
applicable, for any period of time.
``(B) Exception.--Subparagraph (A) shall not apply
if the parties to such agreement demonstrate by a
preponderance of the evidence that--
``(i) the value described in subparagraph
(A)(i) is compensation solely for other goods
or services that the ANDA filer or biosimilar
biological product application filer has
promised to provide; or
``(ii) the procompetitive benefits of the
transfer of value described in subparagraph
(A)(i) and the agreement by the ANDA filer or
biosimilar biological product application filer
to limit or forgo research, development,
manufacturing, marketing, or sales of the ANDA
product or biosimilar biological product
described in subparagraph (A)(ii) outweigh the
anticompetitive effects of the transfer of
value described in subparagraph (A)(i) and the
agreement by the ANDA filer or biosimilar
biological product application filer to limit
or forgo research, development, manufacturing,
marketing, or sales of the ANDA product or
biosimilar biological product described in
subparagraph (A)(ii).
``(4) Civil action.--In addition to any proceeding under
section 5, if the Commission has reason to believe that a party
has violated this section, the Commission may bring, in its own
name by any of its attorneys designated by it for such purpose,
a civil action against the party in a district court of the
United States to seek to recover any of the remedies of civil
penalty, mandatory injunctions, and such other and further
equitable relief as the court deems appropriate.
``(5) Civil penalty.--
``(A) In general.--Each party that violates or
assists in the violation of paragraph (1) shall forfeit
and pay to the United States a civil penalty sufficient
to deter violations of paragraph (1), but in no event
greater than 3 times the value received by the party
that is reasonably attributable to the violation of
paragraph (1). If no such value has been received by
the NDA holder, the biological product license holder,
the ANDA filer, or the biosimilar biological product
application filer, the penalty to the NDA holder, the
biological product license holder, the ANDA filer, or
the biosimilar biological product application filer
shall be sufficient to deter violations, but in no
event shall be greater than 3 times the value given to
an ANDA filer or biosimilar biological product
application filer reasonably attributable to the
violation of this section.
``(B) Amount.--In determining the amount of the
civil penalty described in subparagraph (A), the court
shall take into account--
``(i) the nature, circumstances, extent,
and gravity of the violation;
``(ii) with respect to the violator, the
degree of culpability, any history of prior
such conduct, including other agreements
resolving or settling a patent infringement
claim, the ability to pay, any effect on the
ability to continue doing business, profits
earned by the NDA holder, the biological
product license holder, the ANDA filer, or the
biosimilar biological product application
filer, compensation received by the ANDA filer
or biosimilar biological product application
filer, and the amount of commerce affected; and
``(iii) other matters that justice
requires.
``(C) Remedies in addition.--Remedies provided in
this paragraph are in addition to, and not in lieu of,
any other remedy provided by Federal law. Nothing in
this section shall be construed to limit any authority
of the Commission under any other provision of law.
``(b) Exclusions.--Nothing in this section shall prohibit a
resolution or settlement of a patent infringement claim in which the
consideration that the ANDA filer or biosimilar biological product
application filer, respectively, receives as part of the resolution or
settlement includes only one or more of the following:
``(1) The right to market and secure final approval in the
United States for the ANDA product or biosimilar biological
product at a date, whether certain or contingent, prior to the
expiration of--
``(A) any patent that is the basis for the patent
infringement claim; or
``(B) any patent right or other statutory
exclusivity that would prevent the marketing of such
ANDA product or biosimilar biological product.
``(2) A payment for reasonable litigation expenses not to
exceed--
``(A) for calendar year 2025, $7,500,000; or
``(B) for calendar year 2026 and each subsequent
calendar year, the amount determined for the preceding
calendar year adjusted to reflect the percentage
increase (if any) in the Producer Price Index for Legal
Services published by the Bureau of Labor Statistics of
the Department of Labor for the most recent calendar
year.
``(3) A covenant not to sue on any claim that the ANDA
product or biosimilar biological product infringes a United
States patent.
``(c) Antitrust Laws.--Except to the extent this section
establishes an additional basis of liability, nothing in 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(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 or biosimilar biological product application filer to
assert claims or counterclaims against any person, under the antitrust
laws or other laws relating to unfair competition.
``(d) 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 filed under section 505(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)) or a new drug
application submitted pursuant to section 505(b)(2) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)).
``(4) ANDA filer.--The term `ANDA filer' means a party that
owns or controls an ANDA filed with the Secretary of Health and
Human Services or has the exclusive rights under such ANDA to
distribute the ANDA product.
``(5) ANDA product.--The term `ANDA product' means the
product to be manufactured under the ANDA that is the subject
of the patent infringement claim.
``(6) Biological product.--The term `biological product'
has the meaning given such term in section 351(i)(1) of the
Public Health Service Act (42 U.S.C. 262(i)(1)).
``(7) Biological product license application.--The term
`biological product license application' means an application
under section 351(a) of the Public Health Service Act (42
U.S.C. 262(a)).
``(8) Biological product license holder.--The term
`biological product license holder' means--
``(A) the holder of an approved biological product
license application for a biological product;
``(B) a person owning or controlling enforcement of
any patents that claim the biological product that is
the subject of such approved application; or
``(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) Biosimilar biological product.--The term `biosimilar
biological product' means the product to be manufactured under
the biosimilar biological product application that is the
subject of the patent infringement claim.
``(10) Biosimilar biological product application.--The term
`biosimilar biological product application' means an
application under section 351(k) of the Public Health Service
Act (42 U.S.C. 262(k)) for licensure of a biological product as
biosimilar to, or interchangeable with, a reference product.
``(11) Biosimilar biological product application filer.--
The term `biosimilar biological product application filer'
means a party that owns or controls a biosimilar biological
product application filed with the Secretary of Health and
Human Services or has the exclusive rights under such
application to distribute the biosimilar biological product.
``(12) Drug product.--The term `drug product' has the
meaning given such term in section 314.3(b) of title 21, Code
of Federal Regulations (or any successor regulation).
``(13) Market.--The term `market' means the promotion,
offering for sale, selling, or distribution of a drug product.
``(14) NDA.--The term `NDA' means a new drug application
filed under section 505(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(b)).
``(15) NDA holder.--The term `NDA holder' means--
``(A) the holder of an approved NDA application for
a drug product;
``(B) a person 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 NDA; or
``(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
ent