Bill Summary – FastDemocracy

General Assembly                    Raised Bill No. 251
       February Session, 2020             LCO No. 2073
     Referred to Committee on GENERAL LAW
     Introduced by:
       (GL)
 AN ACT CONCERNING THE AVAILABILITY OF GENERIC
 PHARMACEUTICALS.
 Be it enacted by the Senate and House of Representatives in General
 Assembly convened:
       Section 1. (NEW) (Effective October 1, 2020) For purposes of this
    section and section 2 of this act:
       (1) "ANDA" means abbreviated new drug application.
      (2) "ANDA filer" means a party that owns or controls an ANDA filed
    with the Food and Drug Administration or has the exclusive rights
    under that ANDA to distribute the ANDA product.
      (3) "Agreement resolving or settling a patent infringement claim"
   includes any agreement that is entered into not later than thirty days
   after 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.
   "Agreement resolving or settling a patent infringement claim" includes,
   but is not limited to, the following:
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    (A) Any agreement required to be provided to the Federal Trade
 Commission or the Antitrust Division of the United States Department
 of Justice under the Medicare Prescription Drug, Improvement, and
 Modernization Act of 2003.
    (B) Any agreement between a biosimilar or interchangeable
 biological product applicant and a reference drug product sponsor that
 resolves patent claims between the applicant and sponsor.
    (4) "Biosimilar biological product application filer" means a party that
 owns or controls a biosimilar biological product application filed with
 the Food and Drug Administration under subsection (k) of section 351
 of the Public Health Service Act, 42 USC 262, for licensure of a biological
 product as biosimilar to, or interchangeable with, a reference drug
 product or that has the exclusive rights under the application to
 distribute the biosimilar biological product.
   (5) "NDA" means new drug application.
    (6) "Nonreference drug filer" means (A) an ANDA filer, or (B) a
 biosimilar biological product application filer.
    (7) "Nonreference drug product" means the product to be
 manufactured under an ANDA that is the subject of the patent
 infringement claim, a biosimilar biological product that is the product
 to be manufactured under the biosimilar biological product application
 that is the subject of the patent infringement claim, or both.
     (8) "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.
    (9) "Patent infringement claim" means any allegation made to a
 nonreference drug filer, whether or not included in a complaint filed
 with a court of law, that its nonreference drug product or application
 infringes any patent held by, or exclusively licensed to, the reference
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 drug holder.
   (10) "Reference drug holder" means:
   (A) A brand holder that is any of the following:
     (i) The holder of an approved NDA for a drug product application
 filed under subsection (b) of section 505 of the Federal Food, Drug, and
 Cosmetic Act, 21 USC 355,
   (ii) 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
   (iii) The predecessors, subsidiaries, divisions, groups and affiliates
 controlled by, controlling or under common control with, any of the
 entities described in this subparagraph or subparagraph (B) of this
 subdivision, with control to be presumed by direct or indirect share
 ownership of fifty per cent or greater, as well as the licensees, licensors,
 successors and assigns of each of those entities, or
    (B) A biological product license holder, which includes any of the
 following:
    (i) The holder of an approved biological product license application
 for a biological drug product under subsection (a) of section 351 of the
 Public Health Service Act, 42 USC 262,
    (ii) A person owning or controlling enforcement of any patents that
 claim the biological product that is the subject of the approved biological
 patent license application, or
   (iii) The predecessors, subsidiaries, divisions, groups and affiliates
 controlled by, controlling or under common control with, any of the
 entities described in this subparagraph or subparagraph (A) of this
 subdivision, with control to be presumed by direct or indirect share
 ownership of fifty per cent or greater, as well as the licensees, licensors,
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 successors and assigns of each of those entities.
   (11) "Reference drug product" means the product to be manufactured
 by the reference drug holder and includes branded drugs of the NDA
 holder and the biological drug product of the biological product license
 applicant.
    (12) "Statutory exclusivity" means those prohibitions on the approval
 of drug applications under subsection (c) of section 505, section 527 or
 505A of the Federal Food, Drug, and Cosmetic Act, 21 USC 355, 360cc
 and 355a, or on the licensing of biological product applications under
 subsection (k) or (m) of section 262 of the Public Health Service Act, 42
 USC 262.
    Sec. 2. (NEW) (Effective October 1, 2020) (a) (1) Except as provided in
 subdivision (3) of this subsection, an agreement resolving or settling, on
 a final or interim basis, a patent infringement claim, shall be presumed
 to have anticompetitive effects and shall be a violation of this section if
 both of the following apply:
    (A) A nonreference drug filer receives anything of value from
 another company asserting patent infringement, including, but not
 limited to, an exclusive license or a promise that the brand company will
 not launch an authorized generic version of its brand drug; and
   (B) The nonreference drug filer agrees to limit or forego research,
 development, manufacturing, marketing or sales of the nonreference
 drug filer's product for any period of time.
    (2) As used in subparagraph (A) of subdivision (1) of this subsection,
 "anything of value" does not include a settlement of a patent
 infringement claim in which the consideration granted by the brand or
 reference drug filer to the nonreference drug filer as part of the
 resolution or settlement consists of one or more of the following:
    (A) The right to market the competing product in the United States
 before the expiration of either:
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   (i) A patent that is the basis for the patent infringement claim, or
    (ii) A patent right or other statutory exclusivity that would prevent
 the marketing of the drug,
   (B) A covenant not to sue on a claim that the nonreference drug
 product infringes a United States patent;
    (C) Compensation for saved reasonable future litigation expenses of
 the reference drug holder but only if both of the following are true:
    (i) The total compensation for saved litigation expenses is reflected in
 budgets that the reference drug holder documented and adopted at least
 six months before the settlement, and
   (ii) The compensation does not exceed the lower of the following:
   (I) Seven million five hundred thousand dollars, or
    (II) Five per cent of the revenue that the nonreference drug holder
 projected or forecasted it would receive in the first three years of sales
 of its version of the reference drug documented at least twelve months
 before the settlement. If no projections or forecasts are available, the
 compensation does not exceed two hundred fifty thousand dollars;
    (D) An agreement resolving or settling a patent infringement claim
 that permits a nonreference drug filer to begin selling, offering for sale
 or distributing the nonreference drug product if the reference drug
 holder seeks approval to launch, obtains approval to launch or launches
 a different dosage, strength or form of the reference drug having the
 same active ingredient before the date set by the agreement for entry of
 the nonreference drug filer. A different form of the reference drug does
 not include an authorized generic version of the reference drug;
    (E) An agreement by the reference drug holder not to interfere with
 the nonreference drug filer's ability to secure and maintain regulatory
 approval to market the nonreference drug product or an agreement to
 facilitate the nonreference drug filer's ability to secure and maintain
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 regulatory approval to market the nonreference drug product; or
    (F) An agreement resolving a patent infringement claim in which the
 reference drug holder forgives the potential damages accrued by a
 nonreference drug holder for an at-risk launch of the nonreference drug
 product that is the subject of that claim.
    (3) Parties to an agreement are not in violation of subdivision (1) of
 this subsection if they can demonstrate by a preponderance of the
 evidence that either of the following are met:
    (A) The value received by the nonreference drug filer described in
 subparagraph (A) of subdivision (1) of this subsection is a fair and
 reasonable compensation solely for other goods or services that the
 nonreference drug filer has promised to provide, or
   (B) The agreement has directly generated procompetitive benefits
 and the procompetitive benefits of the agreement outweigh the
 anticompetitive effects of the agreement.
    (b) In determining whether the parties to the agreement have met
 their burden under subdivision (3) of subsection (a) of this section, the
 factfinder shall not presume any of the following:
    (1) That entry into the marketplace could not have occurred until the
 expiration of the relevant patent exclusivity or that the agreement's
 provision for entry of the nonreference drug product before the
 expiration of any patent exclusivity means that the agreement is
 procompetitive within the meaning of subparagraph (B) of subdivision
 (3) of subsection (a) of this section,
    (2) That any patent is enforceable and infringed by the nonreference
 drug filer in the absence of a final adjudication binding on the filer of
 those issues,
   (3) That the agreement caused no delay in entry of the nonreference
 drug filer's drug product because of the lack of federal Food and Drug
 Administration approval of that or of another nonreference drug
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 product, or
    (4) That the agreement caused no harm or delay due to the possibility
 that the nonreference drug filer's drug product might infringe some
 patent that has not been asserted against the nonreference drug filer or
 that is not subject to a final and binding adjudication on that filer as to
 the patent's scope, enforceability and infringement.
    This subsection shall not be construed to preclude a party from
 introducing evidence regarding subdivisions (1) to (4), inclusive, of this
 subsection and shall not be construed to preclude the factfinder from
 making a determination regarding said subdivisions based on the full
 scope of the evidence.
    (c) In determining whether the parties to the agreement have met
 their burden under subdivision (3) of subsection (a) of this section, the
 factfinder shall presume that the relevant product market is that market
 consisting of the brand or reference drug of the company alleging patent
 infringement and the drug product of the nonreference company
 accused of infringement and any other biological product that is
 licensed as biosimilar or is an AB-rated generic to the reference product.
    (d) (1) The provisions of this section shall not modify, impair, limit or
 supersede the right of any drug company applicant to assert claims or
 counterclaims against any person under the antitrust laws or other laws
 relating to unfair competition of the federal antitrust law or state law.
    (2) If any provision of this section, an amendment made to this
 section or the application of any provision or amendment to any person
 or circumstance is held to be unconstitutional, the remainder of this
 section, the amendments made to this section and the application of the
 provisions of this section or amendments to any person or circumstance
 shall not be affected.
   (e) (1) (A) Each person that violates or assists in the violation of this
 section shall forfeit and pay to the state a civil penalty sufficient to deter
 violations of this section, as follows:
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    (i) If the person who violated this section received any value due to
 that violation, an amount up to three times the value received by the
 party that is reasonably attributable to the violation of this section, or
 twenty million dollars, whichever is greater.
    (ii) If the violator has not received anything of value as described in
 subparagraph (A)(i), an amount up to three times the value given to
 other parties to the agreement reasonably attributable to the violation of
 this section, or twenty million dollars, whichever is greater.
    (iii) For purposes of this subdivision, "reasonably attributable to the
 violation" shall be determined by the state's share of the market for the
 brand drug at issue in the agreement.
    (B) Any penalty described in subparagraph (A) of this subdivision
 shall accrue only to the state and shall be recovered in a civil action
 brought by the Attorney General against any party to an agreement that
 violates this section.
    (2) Each party that violates or assists in the violation of this section
 shall be liable for any damages, penalties, costs, fees, injunctions, or
 other remedies that may be just and reasonable, as determined by the
 court.
    (3) If the state is awarded penalties under subparagraph (A) of
 subdivision (1) of this subsection, it may not recover penalties pursuant
 to subdivision (2) of this subsection. This section shall not be construed
 to foreclose the state's ability to claim any relief or damages available in
 subdivision (2) of this subsection, other than those that are penalties.
   (4) An action to enforce a cause of action for a violation of this section
 shall be commenced within four years after the cause of action accrued.
       This act shall take effect as follows and shall amend the following
       sections:
       Section 1     October 1, 2020              New section
       Sec. 2        October 1, 2020              New section
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Statement of Purpose:
To preserve consumer access to affordable generic drugs.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]
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