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IN THE SENATE OF THE UNITED STATES

Mr. Powell, with thanks to Ms. Klobuchar, Mr. Grassley, and Mr. Leahy, for himself and others, submits the following bill,

 

A BILL

 

To lower the price of prescription drugs, and for other purposes.

 

SECTION 1. SHORT TITLE

This bill shall be cited as the Lower Americans Healthcare Bills Act or LAHBA

 

SECTION 2. DEFINITIONS

(1) COMMISSION.—The term “Commission” means the Federal Trade Commission.

 

(2) COVERED APPLICATION.—The term “covered application” means an application filed pursuant to subsection (b)(2) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)).

 

(3) COVERED PETITION.—The term “covered petition” means a petition, or a supplement to a petition, filed under section 505(q) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(q)).

 

(4) PERSON.—The term “person”—

 

(A) means an individual or entity; and

 

(B) includes—

 

(i) a director, officer, employee, agent, representative, successor, and assign of an entity;

 

(ii) a joint venture, subsidiary, partnership, division, group, and affiliate controlled by an entity; and

 

(iii) a director, officer, employee, agent, representative, successor, and assign of a joint venture, subsidiary, partnership, division, group, and affiliate controlled by an entity.

 

(5) SERIES OF COVERED PETITIONS.—The term “series of covered petitions” means any group of more than 1 covered petition.

 

(6) SHAM.—The term “sham” means a covered petition that is objectively baseless and that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor, or a series of covered petitions that attempts to use a governmental process, as opposed to the outcome of that process, to interfere with the business of a competitor.

 

(b) Violation.—A person submitting or causing the submission of a covered petition or a series of covered petitions that is a sham shall be liable for engaging in an unfair method of competition under section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)).

 

(7) APPROPRIATE COMMITTEES OF CONGRESS.—The term “appropriate committees of Congress” means—

 

(A) the Committee on the Judiciary of the Senate; and

 

(B) the Committee on the Judiciary of the House of Representatives.

 

(8) the term “commercially reasonable, market-based terms” means—

 

(A) a non-discriminatory price for the sale of the covered product at or below, but not greater than, the most recent wholesale acquisition cost for the drug, as defined in section 1847A(c)(6)(B) of the Social Security Act (42 U.S.C. 1395w–3a(c)(6)(B));

 

(B) a schedule for delivery that results in the transfer of the covered product to the eligible product developer consistent with the timing under subsection (b)(2)(A)(iv); and

 

(C) no additional conditions are imposed on the sale of the covered product;

 

(9) the term “covered product”—

 

(A) means—

 

(i) any drug approved under subsection (c) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or biological product licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262);

 

(ii) any combination of a drug or biological product described in clause (i); or

 

(iii) when reasonably necessary to support approval of an application under section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355), or section 351 of the Public Health Service Act (42 U.S.C. 262), as applicable, or otherwise meet the requirements for approval under either such section, any product, including any device, that is marketed or intended for use with such a drug or biological product; and

 

(B) does not include any drug or biological product that appears on the drug shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 356e), unless the shortage will not be promptly resolved—

 

(i) as demonstrated by the fact that the drug or biological product has been in shortage for more than 6 months; or

 

(ii) as otherwise determined by the Secretary;

 

(10) the term “device” has the meaning given the term in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321);

 

(11) the term “eligible product developer” means a person that seeks to develop a product for approval pursuant to an application for approval under subsection (b)(2) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or for licensing pursuant to an application under section 351(k) of the Public Health Service Act (42 U.S.C. 262(k));

 

(12) the term “license holder” means the holder of an application approved under subsection (c) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or the holder of a license under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262) for a covered product;

 

(13) the term “REMS” means a risk evaluation and mitigation strategy under section 505–1 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355–1);

 

(14) the term “REMS with ETASU” means a REMS that contains elements to assure safe use under section 505–1(f) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355–1(f));

 

(15)  the term “Secretary” means the Secretary of Health and Human Services;

 

(16) the term “single, shared system of elements to assure safe use” means a single, shared system of elements to assure safe use under section 505–1(f) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355–1(f)); and

 

(17) the term “sufficient quantities” means an amount of a covered product that allows the eligible product developer to—

 

(A) conduct testing to support an application under—

 

(i) subsection (b)(2) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355); or

 

(ii) section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)); and

 

(B) fulfill any regulatory requirements relating to approval of such an application.

 

(18)

 

SECTION 3. FEDERAL TRADE COMMISSION ENFORCEMENT AGAINST SHAM PETITIONS

 

(a) Civil Action.—

 

(1) IN GENERAL.—If the Commission has reason to believe that the submission of a covered petition or a series of covered petitions constitutes a violation of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), the Commission may commence a civil action to recover a civil penalty and seek other appropriate relief in a district court of the United States against any person that submitted or caused to be submitted such covered petition or such series of covered petitions, including successors or assigns.

 

(2) PRESUMPTION.—In a civil action under paragraph (1), a covered petition shall be presumed to be part of a series of covered petitions that is a sham under subsection (b) of this section if the Secretary of Health and Human Services has determined that the covered petition was submitted with the primary purpose of delaying the approval of a covered application and was part of a series of covered petitions, and has referred such determination to the Federal Trade Commission in writing, with a reasoned basis for the determination.

 

(3) EXCEPTION.—The presumption in paragraph (2) shall not apply if the defendant establishes, by a preponderance of the evidence, that the series of covered petitions that includes the covered petition referred to the Commission by the Secretary of Health and Human Services is not a sham.

 

(4) CIVIL PENALTY.—In an action under paragraph (1), any person that has been found liable for a violation of section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) shall be subject to a civil penalty for each violation of not more than the greater of—

 

(A) any revenue earned from the sale by such person of any drug product, referenced in a covered application that was the subject of a covered petition or a series of covered petitions that is a sham, during the period in which the covered petition or series of covered petitions was under review by the Secretary of Health and Human Services; or

 

(B) $50,000 for each calendar day that each covered petition that is a sham or that was part of a series of covered petitions that is a sham was under review by the Secretary of Health and Human Services.

 

(5) 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 it applies to unfair methods of competition.

 

(6) RULE OF CONSTRUCTION.—The civil penalty provided in this subsection is in addition to, and not in lieu of, any other remedies provided by Federal law, including under section 16 of the Clayton Act (15 U.S.C. 26) or under section 13(b) of the Federal Trade Commission Act (15 U.S.C. 53(b)). Nothing in this paragraph shall be construed to affect any authority of the Commission under any other provision of law.

 

(b) Applicability.—This section shall apply to any covered petition submitted on or after the date of enactment of this Act.

 

SECTION 4. SEVERABILITY

If any provision of this Act or the application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this Act and the application of the provisions of such Act to any person or circumstance shall not be affected.

 

SECTION 5. STUDY OF PHARMACEUTICAL SUPPLY CHAIN INTERMEDIARIES AND MERGER ACTIVITY.

 

(a) Report.—Not later than 1 year after the date of enactment of this Act, the Commission shall submit to the appropriate committees of Congress a report that—

 

(1) addresses at minimum—

 

(A) whether pharmacy benefit managers—

 

(i) charge payers (including Medicare and Medicaid) a higher price than the reimbursement rate at which the pharmacy benefit managers reimburses competing pharmacies while reimbursing pharmacies in which the pharmacy benefit managers have an ownership interest at the rate charged to payers;

 

(ii) steer patients to pharmacies in which the pharmacy benefit managers have an ownership interest;

 

(iii) audit or review proprietary data, including acquisition costs, patient information, or dispensing information, of competing pharmacies that can be used for anticompetitive purposes; or

 

(iv) use formulary designs to depress the market share of low-cost, lower-rebate prescription drugs;

 

(B) the current state of competition in the pharmaceutical supply chain, particularly with regard to intermediaries and the recent vertical integrations of pharmacy benefit managers with insurance companies or other payers of prescription drug benefits;

 

(C) how companies and payers assess the benefits, costs, and risks of contracting with intermediaries, including pharmacy services administrative organizations, and whether more information about the roles of intermediaries should be available to consumers and payers; and

 

(D) whether there are any specific legal or regulatory obstacles the Commission currently faces in ensuring a competitive and transparent marketplace in the pharmaceutical supply chain, including the pharmacy benefit manager marketplace and pharmacy services administrative organizations

 

(b) Interim Report.—Not later than 180 days after the date of enactment of this Act, the Commission shall submit to the appropriate committees of Congress an interim report on the progress of the report required by subsection (a), along with preliminary findings and conclusions based on information collected to that date.

 

SECTION 6. ACTIONS FOR DELAYS OF GENERIC DRUGS AND BIOSIMILAR BIOLOGICAL PRODUCTS.

(1) IN GENERAL.—An eligible product developer may bring a civil action against the license holder for a covered product seeking relief under this subsection in an appropriate district court of the United States alleging that the license holder has declined to provide sufficient quantities of the covered product to the eligible product developer on commercially reasonable, market-based terms.

 

(2) ELEMENTS.—

 

(A) IN GENERAL.—To prevail in a civil action brought under paragraph (1), an eligible product developer shall prove, by a preponderance of the evidence—

 

(i) that—

 

(I) the covered product is not subject to a REMS with ETASU; or

 

(II) if the covered product is subject to a REMS with ETASU—

 

(aa) the eligible product developer has obtained a covered product authorization from the Secretary in accordance with subparagraph (B); and

 

(bb) the eligible product developer has provided a copy of the covered product authorization to the license holder;

 

(ii) that, as of the date on which the civil action is filed, the product developer has not obtained sufficient quantities of the covered product on commercially reasonable, market-based terms;

 

(iii) that the eligible product developer has requested to purchase sufficient quantities of the covered product from the license holder; and

 

(iv) that the license holder has not delivered to the eligible product developer sufficient quantities of the covered product on commercially reasonable, market-based terms—

 

(I) for a covered product that is not subject to a REMS with ETASU, by the date that is 31 days after the date on which the license holder received the request for the covered product; and

 

(II) for a covered product that is subject to a REMS with ETASU, by 31 days after the later of—

 

(aa) the date on which the license holder received the request for the covered product; or

 

(bb) the date on which the license holder received a copy of the covered product authorization issued by the Secretary in accordance with subparagraph (B).

 

(B) AUTHORIZATION FOR COVERED PRODUCT SUBJECT TO A REMS WITH ETASU.—

 

(i) REQUEST.—An eligible product developer may submit to the Secretary a written request for the eligible product developer to be authorized to obtain sufficient quantities of an individual covered product subject to a REMS with ETASU.

 

(ii) AUTHORIZATION.—Not later than 120 days after the date on which a request under clause (i) is received, the Secretary shall, by written notice, authorize the eligible product developer to obtain sufficient quantities of an individual covered product subject to a REMS with ETASU for purposes of—

 

(I) development and testing that does not involve human clinical trials, if the eligible product developer has agreed to comply with any conditions the Secretary determines necessary; or

 

(II) development and testing that involves human clinical trials, if the eligible product developer has—

 

(aa)(AA) submitted protocols, informed consent documents, and informational materials for testing that include protections that provide safety protections comparable to those provided by the REMS for the covered product; or

 

(BB) otherwise satisfied the Secretary that such protections will be provided; and

 

(bb) met any other requirements the Secretary may establish.

 

(iii) NOTICE.—A covered product authorization issued under this subparagraph shall state that the provision of the covered product by the license holder under the terms of the authorization will not be a violation of the REMS for the covered product.

 

(3) AFFIRMATIVE DEFENSE.—In a civil action brought under paragraph (1), it shall be an affirmative defense, on which the defendant has the burden of persuasion by a preponderance of the evidence—

 

(A) that, on the date on which the eligible product developer requested to purchase sufficient quantities of the covered product from the license holder—

 

(i) neither the license holder nor any of its agents, wholesalers, or distributors was engaged in the manufacturing or commercial marketing of the covered product; and

 

(ii) neither the license holder nor any of its agents, wholesalers, or distributors otherwise had access to inventory of the covered product to supply to the eligible product developer on commercially reasonable, market-based terms; or

 

(B) that—

 

(i) the license holder sells the covered product through agents, distributors, or wholesalers;

 

(ii) the license holder has placed no restrictions, explicit or implicit, on its agents, distributors, or wholesalers to sell covered products to eligible product developers; and

 

(iii) the covered product can be purchased by the eligible product developer in sufficient quantities on commercially reasonable, market-based terms from the agents, distributors, or wholesalers of the license holder.

 

(4) REMEDIES.—

 

(A) IN GENERAL.—If an eligible product developer prevails in a civil action brought under paragraph (1), the court shall—

 

(i) order the license holder to provide to the eligible product developer without delay sufficient quantities of the covered product on commercially reasonable, market-based terms;

 

(ii) award to the eligible product developer reasonable attorney's fees and costs of the civil action; and

 

(iii) award to the eligible product developer a monetary amount sufficient to deter the license holder from failing to provide other eligible product developers with sufficient quantities of a covered product on commercially reasonable, market-based terms, if the court finds, by a preponderance of the evidence—

 

(I) that the license holder delayed providing sufficient quantities of the covered product to the eligible product developer without a legitimate business justification; or

 

(II) that the license holder failed to comply with an order issued under clause (i).

 

(B) MAXIMUM MONETARY AMOUNT.—A monetary amount awarded under subparagraph (A)(iii) shall not be greater than the revenue that the license holder earned on the covered product during the period—

 

(i) beginning on—

 

(I) for a covered product that is not subject to a REMS with ETASU, the date that is 31 days after the date on which the license holder received the request; or

 

(II) for a covered product that is subject to a REMS with ETASU, the date that is 31 days after the later of—

 

(aa) the date on which the license holder received the request; or

 

(bb) the date on which the license holder received a copy of the covered product authorization issued by the Secretary in accordance with paragraph (2)(B); and

 

(ii) ending on the date on which the eligible product developer received sufficient quantities of the covered product.

 

(C) AVOIDANCE OF DELAY.—The court may issue an order under subparagraph (A)(i) before conducting further proceedings that may be necessary to determine whether the eligible product developer is entitled to an award under clause (ii) or (iii) of subparagraph (A), or the amount of any such award.

 

(c) Limitation Of Liability.—A license holder for a covered product shall not be liable for any claim under Federal, State, or local law arising out of the failure of an eligible product developer to follow adequate safeguards to assure safe use of the covered product during development or testing activities described in this section, including transportation, handling, use, or disposal of the covered product by the eligible product developer.

 

(d) No Violation Of REMS.—The provision of samples of a drug pursuant to an authorization under subsection (b)(2)(B) shall not be considered a violation of the requirements of any risk evaluation and mitigation strategy that may be in place under section 505–1 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355–1) for such drug.

 

SECTION 7. REMS APPROVAL PROCESS FOR SUBSEQUENT FILERS.

Section 505–1 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355–1) is amended—

 

(1) in subsection (g)(4)(B)—

 

(A) in clause (i) by striking “or” after the semicolon;

 

(B) in clause (ii) by striking the period at the end and inserting “; or”; and

 

(C) by adding at the end the following:

 

“(iii) accommodate different, comparable approved risk evaluation and mitigation strategies for a drug that is the subject of an application under section 505(j), and the applicable listed drug.”;

 

(2) in subsection (i)(1), by striking subparagraph (C) and inserting the following:

 

“(C) (i) Elements to assure safe use, if required under subsection (f) for the listed drug, which, subject to clause (ii), for a drug that is the subject of an application under section 505(j) may use—

 

“(I) a single, shared system with the listed drug under subsection (f); or

 

“(II) a different, comparable aspect of the elements to assure safe use under subsection (f).

 

“(ii) The Secretary may require a drug that is the subject of an application under section 505(j) and the listed drug to use a single, shared system under subsection (f), if the Secretary determines that no different, comparable aspect of the elements to assure safe use could satisfy the requirements of subsection (f).”; and

 

(3) by adding at the end the following:

 

“(l) Separate REMS.—When used in this section, the terms “different, comparable aspect of the elements to assure safe use” or “different, comparable approved risk evaluation and mitigation strategies” means a risk evaluation and mitigation strategy for a drug that is the subject of an application under section 505(j) that uses different methods or operational means than the strategy required under subsection (a) for the applicable listed drug, or other application under section 505(j) with the same such listed drug, but achieves the same level of safety as such strategy.”.

SECTION 8. IDENTIFICATION OF EXCESSIVELY PRICED DRUGS.

(a) In General.—The Secretary, not later than 1 year after the date of enactment of this Act, shall establish a process to conduct a review of all brand name drugs, not less frequently than once per calendar year, under which the Secretary determines under subsection (b) whether the price of each such drug is excessive.

 

(b) Excessive Price Determinations.—

 

(1) INTERNATIONAL REFERENCE PRICE.—

 

(A) IN GENERAL.—The Secretary of Health and Human Services shall determine that any brand name drug for which the domestic average manufacturing price exceeds the median price charged for such drug in the 5 reference countries to have an excessive price. In assessing the extent to which the price is excessive, the Secretary shall consider the factors described in paragraph (2).

 

(B) REFERENCE COUNTRIES.—In this Act, the term “reference countries” means Canada, the United Kingdom, Germany, France, and Japan.

 

(C) REQUIREMENT WITH RESPECT TO DRUGS FOR WHICH CERTAIN REFERENCE COUNTRY INFORMATION IS NOT AVAILABLE.—The Secretary shall make a determination under paragraph (1) for every brand name drug for which pricing information is available for at least 3 of the 5 reference countries.

 

(2) DETERMINATIONS BASED ON OTHER FACTORS.—With respect to any brand name drug that is not determined to have an excessive price by operation of paragraph (1) (including any drug for which there is insufficient data to make such a determination under such paragraph), the Secretary shall determine that such drug has an excessive price if the price of the drug is higher than reasonable taking into account the following factors:

 

(A) The size of the affected patient population.

 

(B) The value of the drug to patients, including the impact of the price on access to the drug and the relationship of the price of the drug to its therapeutic health benefits.

 

(C) The risk adjusted value of Federal Government subsidies and investments related to the drug.

 

(D) The costs associated with development of the drug.

 

(E) Whether the drug provided a significant improvement in health outcomes, compared to other therapies available at the time of its approval.

 

(F) The cumulative global revenues generated by the drug.

 

(G) Whether the domestic average manufacturer price of the drug increased during any annual quarter by a percentage that is more than the percentage increase in the consumer price index for all urban consumers for the respective annual quarter.

 

(H) Other factors the Secretary determines appropriate.

 

(c) Petition For Determination.—

 

(1) IN GENERAL.—Any person may petition the Secretary, in accordance with section 553(e) of title 5, United States Code, to make an excessive drug price determination for an applicable drug under subsection (b)(2). Not later than 90 days after the date of receipt of such a petition, subject to paragraph (2), the Secretary shall—

 

(A) make a determination under subsection (b)(2) regarding such drug; or

 

(B) (i) decline to make such a determination; and

 

(ii) make public the reasons why the Secretary has declined to make such a determination.

 

(2) EXCEPTION.—The Secretary shall not make a determination under subsection (b)(2) for a drug in response to a petition under this section more frequently than once per calendar year.

 

(3) PUBLIC AVAILABILITY.—The Secretary shall make any petitions submitted under this subsection, together with any documentation related to the petitions and the Secretary's determinations on such petitions and rationale for such determinations, publicly available, including by posting such information on the database under section 11.

 

SECTION 9. ENDING GOVERNMENT-GRANTED MONOPOLIES FOR EXCESSIVELY PRICED DRUGS.

(a) Excessive Drug Price Authority.—With respect to any brand name drug, if the Secretary determines under section 8 that the price of the drug is excessive, the Secretary—

 

(1) shall waive or void any government-granted exclusivities with respect to such drug, effective on the date that the excessive price determination under section 8 is made for such drug; and

 

(2) shall grant open, non-exclusive licenses allowing any person to make, use, offer to sell or sell, or import into the United States such drug, and to rely upon the regulatory test data of such drug, in accordance with section 10.

 

(b) Expedited Review.—The Secretary shall prioritize the review of, and act within 8 months of the date of the submission of a generic drug application or a biosimilar biological product application if such application references a drug licensed under subsection (a)(2).

 

(c) Civil Actions.—If the Secretary determines that the manufacturer of an excessively priced drug (as determined under section 8(a)) has increased the price of such drug during the period beginning on the date on which such price determination is made and ending on the date on which an entity begins manufacturing the drug under an open, non-exclusive license under subsection (a)(2), the Secretary may file a civil action in the United States district court for the district in which the manufacturer is located, or in the United States district court for the District of Columbia, to recover damages in an amount equal to not less than the total amount of revenue derived by the manufacturer as a result of any such price increase during such period. In actions brought under this subsection, the district courts shall have jurisdiction to grant all appropriate relief including, but not limited to, injunctive relief and compensatory damages.

 

SECTION 10. EXCESSIVE DRUG PRICE LICENSE.

(a) Reasonable Royalty.—

 

(1) IN GENERAL.—An entity accepting an open, non-exclusive license under section 9(a)(2) shall pay a reasonable royalty to the holder of a patent that claims the drug or that claims a use of the drug or to the holder of an application approved under subsection 505(c) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the Public Health Service Act for which any government-granted exclusivity with respect to the drug was terminated under section 11(a)(1).

 

(2) ROYALTY RATE.—Such royalty rate shall be—

 

(A) a percentage of sales, where the percentage rate is no higher than the average royalty rate estimated from the data provided by the Internal Revenue Service for pharmaceutical manufacturer Federal income tax returns; or

 

(B) an amount as determined by the Secretary, taking into account—

 

(i) the value of the drug to patients;

 

(ii) the size of the affected patient population;

 

(iii) the risk adjusted value of the Federal Government subsidies and investments related to the drug;

 

(iv) whether the drug provided a significant improvement in health outcomes, compared to other therapies available at the time of the approval;

 

(v) the extent to which the brand name drug manufacturer has recovered risk adjusted investments related to the drug, including the investments related to the invention, regulatory test data and any other relevant research and development costs; and

 

(vi) any other information the Secretary determines appropriate.

 

(b) Requirements.—

 

(1) IN GENERAL.—A royalty rate under subsection (a) shall be consistent with making drugs available to purchasers, including Federal, State, local, and nongovernmental purchasers and individuals, at prices that are affordable and reasonable. Under no condition shall a royalty be set at a rate that would cause a product for which an open, non-exclusive license was issued under section 9 to be sold at an excessive price, as determined under section 8.

 

(2) MULTIPLE AFFECTED PARTIES.—In the case that there is one or more holders or investors in the patented inventions related to the drug in addition to the brand name manufacturer, the royalty rate shall be divided among the holders or investors (including such manufacturer) in a manner agreed upon by the manufacturer and other holders or investors, or, in the absence of such an agreement, in a manner the Secretary determines to be appropriate.

 

(3) PRICE.—An entity accepting an open, non-exclusive license under section 9(a)(2) shall sell the drug at a price not higher than the excessive price determined for that drug under section 8(b).

 

SECTION 11. PUBLIC EXCESSIVE DRUG PRICE DATABASE.

(a) Excessive Drug Price Database.—

 

(1) IN GENERAL.—The Secretary shall establish and maintain a comprehensive, up-to-date database of brand name drugs and the excessive price determinations for such drugs under section 8.

 

(2) CONTENTS.—The database shall include, at a minimum, for each brand name drug, for the applicable calendar year—

 

(A) the name of the drug;

 

(B) the manufacturer;

 

(C) whether the drug was determined under section 2(b) to have an excessive price;

 

(D) the number of petitions the Secretary received under section 8(c) to make an excessive price determination for the drug, together with the information described in section 8(c)(3);

 

(E) the number of open, non-exclusive licenses the Secretary has granted under section 9(a)(2) for generic drug or biosimilar biological product versions of the drug; and

 

(F) the number of applications under subsection (b)(2) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act or under section 351(k) of the Public Health Service Act submitted to the Secretary, pursuant to such a license granted under section 3(a)(2), and the number of such applications that have been approved.

 

(3) CERTAIN DETERMINATIONS.—With respect to a determination made under section 8(b)(1), the Secretary shall publish on the database such determination in accordance with paragraph (1) within 30 days of receiving domestic and international pricing information from manufacturers under section 6.

 

(b) Annual Reports To Congress.—Not later than 60 days after the first excessive price review under section 8 is complete, and annually thereafter, the Secretary shall submit to Congress a report describing the excessive drug price review for the preceding year. The report shall contain summary data regarding—

 

(1) the total number of drugs that were reviewed;

 

(2) the total number of drugs determined to be excessively priced under each of paragraphs (1) and (2) of section 8(b), and the name and manufacturer of each such drug;

 

(3) the total number of drugs determined to be excessively priced, listed by manufacturer;

 

(4) the extent to which the prices of the drugs identified under section 8 were higher than reasonable, on average;

 

(5) the total number of drugs for which an open-non-exclusive license has been granted under section 9(a)(2);

 

(6) the total number of generic drug or biosimilar biological product applications received and approved that reference a drug so licensed;

 

(7) the median approval time for generic drug or biosimilar biological product applications that reference a drug so licensed;

 

(8) the total number of petitions the Secretary received under section 8(c) to make excessive price determinations for drugs;

 

(9) a list of any manufacturers who failed to report information as required under section 12; and

 

(10) other appropriate information, as the Secretary determines or as Congress requests.

 

(c) Public Availability.—The Secretary shall make the information in the database described in subsection (a) and the report in subsection (b) publicly available, including on the internet website of the Food and Drug Administration, in a manner that is easy to find and understand.

 

SECTION 12. DRUG MANUFACTURER REPORTING

(a) In General.—Each manufacturer shall submit to the Secretary, in such format as the Secretary may require, an annual report that includes the following information for each brand name drug of the manufacturer, with respect to the previous calendar year:

 

(1) The average manufacturer price of the drug in the United States and in the reference countries, for the entire year, and broken down for each quarter of the year.

 

(2) The wholesale acquisition cost of the drug in the United States and in the reference countries, for the entire year, and broken down for each quarter of the year.

 

(3) Cumulative global revenues generated by the drug.

 

(4) Annual net sales revenue generated by the drug in the United States and in the reference countries, for the entire year, and broken down for each quarter of the year.

 

(5) Total expenditures on domestic and foreign drug research and development related to the drug, itemized by—

 

(A) basic and preclinical research;

 

(B) clinical research, reported separately for each clinical trial;

 

(C) development of alternative dosage forms and strengths for the drug molecule or combinations, including the molecule;

 

(D) other drug development activities, such as nonclinical laboratory studies and record and report maintenance;

 

(E) pursuing new or expanded indications for such drug through supplemental applications under section 505 of the Federal Food, Drug, and Cosmetic Act; and

 

(F) carrying out postmarket requirements related to such drug, including under section 505(o)(3) of the Federal Food, Drug, and Cosmetic Act.

 

(6) Total expenditures on domestic and foreign marketing and advertising related to the drug.

 

(7) Investments in human clinical trials related to the drug, by each trial and each year, including grants, research contracts, tax credits or deductions, and reimbursements from public or private health plans or insurance, and any other public sector subsidies or incentives, such as the fair market value or priority review vouchers or other considerations.

 

(8) The estimated size of the affected patient population.

 

(9) Additional information the manufacturer chooses to provide related to drug pricing decisions, such as information related to the methodology used to set the price of the drug.

 

(10) Additional information as the Secretary determines necessary to carry out this Act, including information for previous years.

 

(b) Report Due Date.—Applicable manufacturers shall submit the reports described in subsection (a) not later than January 15 of the year following the date of enactment of this Act, and of each year thereafter.

 

(c) Penalty For Noncompliance.—

 

(1) IN GENERAL.—Any manufacturer that fails to submit information for a drug as required by this section on a timely basis or that knowingly provides false information shall be liable for a civil monetary penalty, as determined by the Secretary under paragraph (2), in addition to any other penalty under other applicable provisions of law.

 

(2) AMOUNT OF PENALTY.—The amount of a civil penalty under paragraph (1) shall be equal to the product of—

 

(A) an amount, as determined appropriate by the Secretary, which is—

 

(i) not less than 0.5 percent of the gross revenues from sales for the previous calendar year of the drug for which the information was not submitted; and

 

(ii) not greater than 1 percent of the gross revenues from sales for the previous calendar year of such drug; and

 

(B) the number of days in the period between—

 

(i) the report due date under subsection (b); and

 

(ii) the date on which the Secretary receives the information required to be reported by the manufacturer under this section.

 

(3) USE OF CIVIL PENALTY.—The Secretary shall collect the civil penalties under this subsection and shall use such funds to support competitive research grant programs of the National Institutes of Health.

 

SECTION 13. PROHIBITION OF ANTICOMPETITIVE BEHAVIOR.

No manufacturer may engage in anticompetitive behavior violating section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)) with another manufacturer that may interfere with the issuance and implementation of open, non-exclusive licenses under this Act or otherwise run contrary to the public interest in the availability of affordable prescription drugs.

 

SECTION 14. ENACTMENT

This act shall go into effect following its constitutional passage

 

PES: 

Section 1. Title

Section 2. Definitions

Section 3. Enables FTC to deter filing of sham citizen petitions to cover an attempt to interfere with approval of a generic or biosimilar drugs

Section 4. Protects parts of act if other parts ruled unconstitutional 

Section 5. Directs the Federal Trade Commission to report to Congress on the effect of certain anticompetitive practices in the pharmaceutical supply chain.

Section 6 & 7. Permits the developer of a drug or biological product to bring a civil action against the license holder of an approved drug or biological product if the holder has declined to make available sufficient quantities of the approved drug or product for the developer's testing.

Sections 8-13. establishes a series of oversight and disclosure requirements relating to the prices of brand-name drugs. Specifically, requires the Department of Health and Human Services (HHS) to review at least annually all brand-name drugs for excessive pricing; HHS must also review prices upon petition. If any such drugs are found to be excessively priced, HHS must (1) void any government-granted exclusivity; (2) issue open, nonexclusive licenses for the drugs; and (3) expedite the review of corresponding applications for generic drugs and biosimilar biological products. HHS must also create a public database with its determinations for each drug.

 

Under the sections, a price is considered excessive if the domestic average manufacturing price exceeds the median price for the drug in Canada, the United Kingdom, Germany, France, and Japan. If a price does not meet this criteria, or if pricing information is unavailable in at least three of the aforementioned countries, the price is still considered excessive if it is higher than reasonable in light of specified factors, including cost, revenue, and the size of the affected patient population.

 

The sections also requires drug manufacturers to report specified financial information for brand-name drugs, including research and advertising expenditures.

Section 14. Enactment upon passage

William C. Motter D-CO-02 (Boulder, Fort Collins, Broomfield)

 

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