S. 1096 — Preserve Access to Affordable Generics and Biosimilars Act

This section states congressional findings regarding the Drug Price Competition and Patent Term Restoration Act of 1984 and the Biologics Price Competition and Innovation Act of 2010, including that generic drugs comprise 91% of prescriptions but 18% of expenditures (with 80-85% average discounts off brand prices), federal spending accounts for over 40% of the $449.7 billion annual retail prescription drug market, biologics represent more than half of prescription drug spending, and reverse payment settlement agreements have delayed generic and biosimilar competition. The section declares the Act's purposes to enhance pharmaceutical market competition by prohibiting anticompetitive agreements between brand-name and generic or biosimilar manufacturers and to support antitrust law.

This section prohibits parties from entering into or participating in agreements resolving or settling patent claims related to the sale of drug products or biological products if such agreements have anticompetitive effects, treating violations as unfair methods of competition under section 5(a)(1) of the Federal Trade Commission Act and authorizing the Federal Trade Commission (FTC) to seek civil penalties up to three times the value received (or given, if none received), mandatory injunctions, and other equitable relief. (As background, such agreements—often called pay-for-delay settlements—typically involve a brand-name manufacturer providing value to a generic drug developer with an Abbreviated New Drug Application (ANDA) or biosimilar biological product application filer to delay market entry of lower-cost alternatives.) Violations are presumed anticompetitive if the ANDA or biosimilar filer receives anything of value (including an exclusive license) and agrees to limit or forgo research, development, manufacturing, marketing, or sales of its product for any period, unless the parties prove by a preponderance of the evidence that the value compensates solely for other goods or services provided or that procompetitive benefits outweigh anticompetitive effects. The prohibition excludes settlements providing only (1) the right to market the ANDA or biosimilar product before expiration of relevant patents or exclusivities; (2) payments for reasonable litigation expenses not exceeding $7.5 million in calendar year 2025 (adjusted annually thereafter by the Producer Price Index for Legal Services); or (3) a covenant not to sue for patent infringement.

This section amends reporting requirements under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) for agreements between brand-name drug manufacturers and generic or biosimilar applicants that could delay market entry (i.e., to enable FTC and DOJ antitrust review). Specifically, it (1) expands notice requirements under MMA §1111(7) to include owners of patents for which infringement could be asserted against makers of biological products subject to biosimilar biological product applications; and (2) requires the CEO or responsible company official to file a certification within 30 days after submitting an agreement under MMA §1112(c), attesting that the filing includes the complete agreement, any related ancillary agreements, and written descriptions of relevant oral agreements.

This section adds a new subsection (e) to Section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, establishing a rule of construction that reportable agreements between brand-name and generic drug manufacturers—which must be notified to the FTC and DOJ in connection with ANDA paragraph IV patent infringement litigation—include those resolving outstanding disputes, such as settlements of Patent Trial and Appeal Board (PTAB) proceedings. PTAB proceedings encompass (1) inter partes reviews under 35 U.S.C. chapter 31, (2) post-grant reviews under chapter 32 (including covered business method patent reviews under the Leahy-Smith America Invents Act), and (3) derivation proceedings under 35 U.S.C. §135.

This section expands the bases for forfeiture of the 180-day exclusivity period for the first abbreviated new drug application (ANDA) filer by adding violations of section 27 of the Federal Trade Commission Act as a trigger, in addition to violations of the antitrust laws under section 1 of the Sherman Act or other federal or state laws. (The 180-day exclusivity under the Hatch-Waxman Act allows the first ANDA applicant to successfully challenge brand-name drug patents to be the sole generic competitor for 180 days.)

This section adds civil actions under section 27 to the list of proceedings—previously limited to injunctive relief (FTC Act §13), consumer redress (§19), judicial review of Commission rules or cease-and-desist orders, subpoena enforcement, and certain consumer protection actions (§57b-2a)—in which the Federal Trade Commission has exclusive authority to commence, defend, and litigate in its own name, unless it authorizes the Attorney General to do so.

This section directs the Federal Trade Commission, not later than one year after the date of enactment, to submit to the Senate and House Judiciary Committees a recommendation, with basis, on amending section 27(b) of the Federal Trade Commission Act (as added by section 3) to include an additional exclusion for consideration granted by an NDA holder to an ANDA filer, or by a biological product license holder to a biosimilar biological product application filer, as part of resolving or settling, releasing, waiving, or limiting a claim for damages or other monetary relief. Terms such as ANDA filer, biological product license holder, biosimilar biological product application filer, and NDA holder have the meanings given in section 27(d) of such Act (as added by section 3).

This section establishes a six-year statute of limitations for the Federal Trade Commission to commence enforcement proceedings under section 27 of the Federal Trade Commission Act, as added by section 3. Such proceedings must begin not later than six years after the parties to the agreement file the certification required under sec. 1112(d) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (i.e., certification by parties to certain pharmaceutical patent settlement agreements of their compliance with reporting requirements to the FTC and Department of Justice).

This section provides a severability clause stating that if any provision of the Act or its amendments, or its application to any person or circumstance, is held unconstitutional, the remainder of the Act, its amendments, and their applications remain unaffected.