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H.R. 1499: Protecting Consumer Access to Generic Drugs Act of 2019

The text of the bill below is as of May 10, 2019 (Reported by House Committee).


IB

Union Calendar No. 30

116th CONGRESS

1st Session

H. R. 1499

[Report No. 116–52, Part I]

IN THE HOUSE OF REPRESENTATIVES

March 5, 2019

introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

May 10, 2019

Additional sponsors: Mr. Pallone, Mr. Ruiz, Mrs. Dingell, Mrs. Craig, Ms. Eshoo, Mr. Kennedy, Ms. Matsui, Mr. Van Drew, Ms. Clarke of New York, Mr. Khanna, Ms. Schakowsky, Mr. Pappas, Mr. Cohen, Mr. Welch, Mr. Larson of Connecticut, Mr. Hastings, Mr. Neguse, Ms. Finkenauer, Mr. Case, Mr. Quigley, Ms. Wild, Mr. Langevin, Mr. Cooper, Mr. Raskin, Mr. David Scott of Georgia, Ms. Mucarsel-Powell, Mr. Thompson of Mississippi, Ms. Stevens, Mr. Cisneros, Ms. Kelly of Illinois, Mr. Casten of Illinois, Ms. Houlahan, Mr. Carson of Indiana, Mr. Carbajal, Ms. Davids of Kansas, Mr. Smith of Washington, Mr. Connolly, and Ms. Underwood


May 10, 2019

Reported from the Committee on Energy and Commerce with an amendment

Strike out all after the enacting clause and insert the part printed in italic

May 10, 2019

Committee on the Judiciary discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed

For text of introduced bill, see copy of bill as introduced on March 5, 2019

A BILL

To prohibit brand name drug manufacturers from compensating generic drug manufacturers to delay the entry of a generic drug into the market, and to prohibit biological product manufacturers from compensating biosimilar and interchangeable product manufacturers to delay entry of biosimilar and interchangeable products, and for other purposes.


1.

Short title

This Act may be cited as the Protecting Consumer Access to Generic Drugs Act of 2019.

2.

Unlawful agreements

(a)

Agreements prohibited

Subject to subsections (b) and (c), it shall be unlawful for an NDA or BLA holder and a subsequent filer (or for two subsequent filers) to enter into, or carry out, an agreement resolving or settling a covered patent infringement claim on a final or interim basis if under such agreement—

(1)

a subsequent filer directly or indirectly receives from such holder (or in the case of such an agreement between two subsequent filers, the other subsequent filer) anything of value, including a license; and

(2)

the subsequent filer agrees to limit or forego research on, or development, manufacturing, marketing, or sales, for any period of time, of the covered product that is the subject of the application described in subparagraph (A) or (B) of subsection (g)(8).

(b)

Exclusion

It shall not be unlawful under subsection (a) if a party to an agreement described in such subsection demonstrates by clear and convincing evidence that the value described in subsection (a)(1) is compensation solely for other goods or services that the subsequent filer has promised to provide.

(c)

Limitation

Nothing in this section shall prohibit an agreement resolving or settling a covered patent infringement claim in which the consideration granted by the NDA or BLA holder to the subsequent filer (or from one subsequent filer to another) as part of the resolution or settlement includes only one or more of the following:

(1)

The right to market the covered product that is the subject of the application described in subparagraph (A) or (B) of subsection (g)(8) in the United States before the expiration of—

(A)

any patent that is the basis of the covered patent infringement claim; or

(B)

any patent right or other statutory exclusivity that would prevent the marketing of such covered product.

(2)

A payment for reasonable litigation expenses not to exceed $7,500,000 in the aggregate.

(3)

A covenant not to sue on any claim that such covered product infringes a patent.

(d)

Enforcement by Federal Trade Commission

(1)

General application

The requirements of this section apply, according to their terms, to an NDA or BLA holder or subsequent filer that is—

(A)

a person, partnership, or corporation over which the Commission has authority pursuant to section 5(a)(2) of the Federal Trade Commission Act (15 U.S.C. 45(a)(2)); or

(B)

a person, partnership, or corporation over which the Commission would have authority pursuant to such section but for the fact that such person, partnership, or corporation is not organized to carry on business for its own profit or that of its members.

(2)

Unfair or deceptive acts or practices enforcement authority

(A)

In general

A violation of this section shall be treated as an unfair or deceptive act or practice in violation of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)).

(B)

Powers of Commission

Except as provided in subparagraph (C) and paragraphs (1)(B) and (3)—

(i)

the Commission shall enforce this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this section; and

(ii)

any NDA or BLA holder or subsequent filer that violates this section shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act.

(C)

Judicial review

In the case of a cease and desist order issued by the Commission under section 5 of the Federal Trade Commission Act (15 U.S.C. 45) for violation of this section, a party to such order may obtain judicial review of such order as provided in such section 5, except that—

(i)

such review may only be obtained in—

(I)

the United States Court of Appeals for the District of Columbia Circuit;

(II)

the United States Court of Appeals for the circuit in which the ultimate parent entity, as defined in section 801.1(a)(3) of title 16, Code of Federal Regulations, or any successor thereto, of the NDA or BLA holder (if any such holder is a party to such order) is incorporated as of the date that the application described in subparagraph (A) or (B) of subsection (g)(8) or an approved application that is deemed to be a license for a biological product under section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)) pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 (Public Law 111–148; 124 Stat. 817) is submitted to the Commissioner of Food and Drugs; or

(III)

the United States Court of Appeals for the circuit in which the ultimate parent entity, as so defined, of any subsequent filer that is a party to such order is incorporated as of the date that the application described in subparagraph (A) or (B) of subsection (g)(8) is submitted to the Commissioner of Food and Drugs; and

(ii)

the petition for review shall be filed in the court not later than 30 days after such order is served on the party seeking review.

(3)

Additional enforcement authority

(A)

Civil penalty

The Commission may commence a civil action to recover a civil penalty in a district court of the United States against any NDA or BLA holder or subsequent filer that violates this section.

(B)

Special rule for recovery of penalty if cease and desist order issued

(i)

In general

If the Commission has issued a cease and desist order in a proceeding under section 5 of the Federal Trade Commission Act (15 U.S.C. 45) for violation of this section—

(I)

the Commission may commence a civil action under subparagraph (A) to recover a civil penalty against any party to such order at any time before the expiration of the 1-year period beginning on the date on which such order becomes final under section 5(g) of such Act (15 U.S.C. 45(g)); and

(II)

in such civil action, the findings of the Commission as to the material facts in such proceeding shall be conclusive, unless—

(aa)

the terms of such order expressly provide that the Commission’s findings shall not be conclusive; or

(bb)

such order became final by reason of section 5(g)(1) of such Act (15 U.S.C. 45(g)(1)), in which case such findings shall be conclusive if supported by evidence.

(ii)

Relationship to penalty for violation of an order

The penalty provided in clause (i) for violation of this section is separate from and in addition to any penalty that may be incurred for violation of an order of the Commission under section 5(l) of the Federal Trade Commission Act (15 U.S.C. 45(l)).

(C)

Amount of penalty

(i)

In general

The amount of a civil penalty imposed in a civil action under subparagraph (A) on a party to an agreement described in subsection (a) shall be sufficient to deter violations of this section, but in no event greater than—

(I)

if such party is the NDA or BLA holder (or, in the case of an agreement between two subsequent filers, the subsequent filer who gave the value described in subsection (a)(1)), the greater of—

(aa)

3 times the value received by such NDA or BLA holder (or by such subsequent filer) that is reasonably attributable to the violation of this section; or

(bb)

3 times the value given to the subsequent filer (or to the other subsequent filer) reasonably attributable to the violation of this section; and

(II)

if such party is the subsequent filer (or, in the case of an agreement between two subsequent filers, the subsequent filer who received the value described in subsection (a)(1)), 3 times the value received by such subsequent filer that is reasonably attributable to the violation of this section.

(ii)

Factors for consideration

In determining such amount, 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 violations, the ability to pay, any effect on the ability to continue doing business, profits earned by the NDA or BLA holder (or, in the case of an agreement between two subsequent filers, the subsequent filer who gave the value described in subsection (a)(1)), compensation received by the subsequent filer (or, in the case of an agreement between two subsequent filers, the subsequent filer who received the value described in subsection (a)(1)), and the amount of commerce affected; and

(III)

other matters that justice requires.

(D)

Injunctions and other equitable relief

In a civil action under subparagraph (A), the United States district courts are empowered to grant mandatory injunctions and such other and further equitable relief as they deem appropriate.

(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.

(5)

Preservation of authority of Commission

Nothing in this section shall be construed to affect any authority of the Commission under any other provision of law.

(e)

Federal Trade Commission rulemaking

The Commission may, in its discretion, by rule promulgated under section 553 of title 5, United States Code, exempt from this section certain agreements described in subsection (a) if the Commission finds such agreements to be in furtherance of market competition and for the benefit of consumers.

(f)

Antitrust laws

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 the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition. Nothing in this section shall modify, impair, limit, or supersede the right of a subsequent filer to assert claims or counterclaims against any person, under the antitrust laws or other laws relating to unfair competition.

(g)

Definitions

In this section:

(1)

Agreement resolving or settling a covered patent infringement claim

The term agreement resolving or settling a covered patent infringement claim means any agreement that—

(A)

resolves or settles a covered patent infringement claim; or

(B)

is contingent upon, provides for a contingent condition for, or is otherwise related to the resolution or settlement of a covered patent infringement claim.

(2)

Commission

The term Commission means the Federal Trade Commission.

(3)

Covered patent infringement claim

The term covered patent infringement claim means an allegation made by the NDA or BLA holder to a subsequent filer (or, in the case of an agreement between two subsequent filers, by one subsequent filer to another), whether or not included in a complaint filed with a court of law, that—

(A)

the submission of the application described in subparagraph (A) or (B) of paragraph (9), or the manufacture, use, offering for sale, sale, or importation into the United States of a covered product that is the subject of such an application—

(i)

in the case of an agreement between an NDA or BLA holder and a subsequent filer, infringes any patent owned by, or exclusively licensed to, the NDA or BLA holder of the covered product; or

(ii)

in the case of an agreement between two subsequent filers, infringes any patent owned by the subsequent filer; or

(B)

in the case of an agreement between an NDA or BLA holder and a subsequent filer, the covered product to be manufactured under such application uses a covered product as claimed in a published patent application.

(4)

Covered product

The term covered product means a drug (as defined in section 201(g) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(g))), including a biological product (as defined in section 351(i) of the Public Health Service Act (42 U.S.C. 262(i)).

(5)

NDA or BLA holder

The term NDA or BLA holder means—

(A)

the holder of—

(i)

an approved new drug application filed under section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)(1)) for a covered product; or

(ii)

a biologics license application filed under section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)) with respect to a biological product;

(B)

a person owning or controlling enforcement of the patent on—

(i)

the list published under section 505(j)(7) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(7)) in connection with the application described in subparagraph (A)(i); or

(ii)

any list published under section 351 of the Public Health Service Act (42 U.S.C. 262) comprised of patents associated with biologics license applications filed under section 351(a) of such Act (42 U.S.C. 262(a)); or

(C)

the predecessors, subsidiaries, divisions, groups, and affiliates controlled by, controlling, or under common control with any entity described in subparagraph (A) or (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.

(6)

Patent

The term patent means a patent issued by the United States Patent and Trademark Office.

(7)

Statutory exclusivity

The term statutory exclusivity means those prohibitions on the submission or approval of drug applications under clauses (ii) through (iv) of section 505(c)(3)(E) (5- and 3-year exclusivity), clauses (ii) through (iv) of section 505(j)(5)(F) (5-year and 3-year exclusivity), section 505(j)(5)(B)(iv) (180-day exclusivity), section 527 (orphan drug exclusivity), section 505A (pediatric exclusivity), or section 505E (qualified infectious disease product exclusivity) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)(3)(E), 355(j)(5)(B)(iv), 355(j)(5)(F), 360cc, 355a, 355f), or prohibitions on the submission or licensing of biologics license applications under section 351(k)(6) (interchangeable biological product exclusivity) or section 351(k)(7) (biological product reference product exclusivity) of the Public Health Service Act (42 U.S.C. 262(k)(6), (7)).

(8)

Subsequent filer

The term subsequent filer means—

(A)

in the case of a drug, a party that owns or controls an abbreviated new drug application submitted pursuant to 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 (21U.S.C. 355(b)(2)) and filed under section 505(b)(1) of such Act (21 U.S.C. 355(b)(1)) or has the exclusive rights to distribute the covered product that is the subject of such application; or

(B)

in the case of a biological product, a party that owns or controls an application filed with the Food and Drug Administration under section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)) or has the exclusive rights to distribute the biological product that is the subject of such application.

(h)

Effective date

This section applies with respect to agreements described in subsection (a) entered into on or after the date of the enactment of this Act.

3.

Notice and certification of agreements

(a)

Notice of all agreements

Section 1111(7) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note) is amended by inserting or the owner of a patent for which a claim of infringement could reasonably be asserted against any person for making, using, offering to sell, selling, or importing into the United States a biological product that is the subject of a biosimilar biological product application before the period at the end.

(b)

Certification of agreements

Section 1112 of such Act (21 U.S.C. 355 note) is amended by adding at the end the following:

(d)

Certification

The Chief Executive Officer or the company official responsible for negotiating any agreement under subsection (a) or (b) that is required to be filed under subsection (c) shall, within 30 days of such filing, 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 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, were entered into within 30 days of, 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.

.

.

4.

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 2 of the Protecting Consumer Access to Generic Drugs Act of 2019 or after that the agreement has violated.

5.

Commission litigation authority

Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C. 56(a)(2)) is amended—

(1)

in subparagraph (D), by striking or after the semicolon;

(2)

in subparagraph (E), by inserting or after the semicolon; and

(3)

by inserting after subparagraph (E) the following:

(F)

under section 2(d)(3)(A) of the Protecting Consumer Access to Generic Drugs Act of 2019;

.

6.

Statute of limitations

(a)

In general

Except as provided in subsection (b), the Commission shall commence any administrative proceeding or civil action to enforce section 2 of this Act not later than 6 years after the date on which the parties to the agreement file the Notice of Agreement as provided by section 1112(c)(2) and (d) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (21 U.S.C. 355 note).

(b)

Civil action after issuance of cease and desist order

If the Commission has issued a cease and desist order under section 5 of the Federal Trade Commission Act (15 U.S.C. 45) for violation of section 2 of this Act and the proceeding for the issuance of such order was commenced within the period required by subsection (a) of this section, such subsection does not prohibit the commencement, after such period, of a civil action under section 2(d)(3)(A) against a party to such order or a civil action under subsection (l) of such section 5 for violation of such order.

May 10, 2019

Reported from the Committee on Energy and Commerce with an amendment

May 10, 2019

Committee on the Judiciary discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed