Overview
Title
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.
ELI5 AI
The bill wants to stop big drug companies from paying to keep cheaper, similar drugs away so people can get them sooner and pay less. If companies break the rules, they might get in trouble with the people in charge.
Summary AI
The bill S. 1096, also known as the "Preserve Access to Affordable Generics and Biosimilars Act," aims to prevent brand-name drug companies from paying generic drug companies to delay their cheaper drugs from entering the market. This tactic, known as "reverse payment" settlement agreements, can delay access to less expensive drugs and increase costs for consumers. The bill intends to promote competition and reduce drug prices by prohibiting these anticompetitive practices, allowing for earlier market entry of generic and biosimilar drugs. It also empowers the Federal Trade Commission to take legal action and impose penalties on companies that violate these rules.
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Bill Statistics
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AnalysisAI
The bill titled "Preserve Access to Affordable Generics and Biosimilars Act" seeks to address concerns about high drug prices in the United States. It aims to do this by prohibiting brand name drug companies from compensating generic drug companies to delay the market entry of cheaper generic versions. Similarly, it disallows biological product manufacturers from paying biosimilar companies to delay the introduction of biosimilars, which are generally more affordable alternatives to brand-name biologics. Such practices, often called "reverse payment" settlements, have been criticized for maintaining higher drug prices at the expense of consumers.
Summary of Significant Issues
One major issue with the bill is its complexity. The language used includes technical terms like "ANDA filer" and legal references that might be hard for the general public and even some stakeholders in the pharmaceutical industry to fully grasp without expert legal knowledge. This complexity might hinder the accessibility and practical understanding of the bill's implications.
Additionally, the bill lacks clarity on how "anticompetitive effects" are defined, which can lead to broad interpretations and inconsistent enforcement. It also doesn't clearly outline the penalties for violations, which could weaken its impact in preventing the practices it aims to curb. There is also no indication of which government agency will be responsible for monitoring and enforcing the bill's provisions, leaving a void in accountability frameworks.
While the bill aims to foster competition and reduce drug prices, there's a concern about its potential impact on innovation in the pharmaceutical industry. Prohibiting certain types of agreements may affect the financial incentives required for developing new drugs. The bill does not address these considerations, which could be crucial for stakeholders weighing the long-term implications.
Impact on the Public
Broadly, if implemented effectively, the bill could benefit the general public by increasing access to more affordable medications. The reduction in drug costs would be particularly crucial for individuals relying on expensive medications for chronic conditions. However, the benefits depend on how well the bill is enforced and whether it can truly curb anticompetitive practices.
Impact on Specific Stakeholders
For consumers, especially those requiring regular and possibly costly medical treatments, the bill could dramatically decrease financial burdens. This would be a positive development, potentially improving healthcare accessibility and quality of life.
However, for pharmaceutical companies, especially smaller companies required to file certifications within strict timeframes, there could be a significant administrative burden. This could disproportionately affect these companies and limit their operations if resources are diverted to comply with the new requirements.
In conclusion, while the "Preserve Access to Affordable Generics and Biosimilars Act" presents a legislative effort to combat high drug prices through increased market competition, its effectiveness will depend heavily on the clarity of definitions, the precision of its enforcement mechanisms, and a balanced consideration of impacts on pharmaceutical innovation.
Financial Assessment
The bill S. 1096, titled the "Preserve Access to Affordable Generics and Biosimilars Act," references financial aspects primarily related to litigation expenses and the expenditure of federal dollars on prescription drugs. Here is a summary of the financial references found in the bill and how they connect to the identified issues:
Financial References:
- Federal Spending:
The bill notes that Federal dollars currently account for over 40 percent of the $449,700,000,000 spent annually on retail prescription drugs. This reference is significant because it underscores the substantial investment of federal funds in healthcare and the potential impact of drug pricing on government spending. Lowering drug prices through increased competition from generic and biosimilar drugs could reduce government expenditures.
Litigation Expenses:
- The bill sets a cap on litigation expenses related to patent settlements at $7,500,000 for the year 2025. This cap is subject to adjustment. Starting in 2026, the cap will increase based on the Producer Price Index for Legal Services. This system allows the adjustment of litigation costs to reflect inflationary pressures or changes in the legal service market, introducing unpredictability for companies as they plan financially for potential litigation.
Connection to Identified Issues:
- Complexity and Accessibility:
The adjustment of litigation payment caps using a complex index like the Producer Price Index may introduce unpredictability and confusion, especially for parties unfamiliar with such economic indicators. This connects directly to the issue of the bill's complexity noted in the issues section.
Unaddressed Concerns on Innovation:
While not directly financial, the optionality around reverse payment settlements that involve significant financial transfers is linked to concerns about innovation. The bill addresses financial settlements but does not reconcile these provisions with maintaining strong incentives for pharmaceutical innovation.
Administrative Burdens:
Companies are required to file certifications of their settlement agreements, which may include financial details and costs. The burden of meeting these requirements within specified timeframes can impose additional indirect financial costs, particularly affecting smaller companies.
Monitoring and Enforcement Challenges:
- Although the bill references federal monetary involvement in prescription drug expenditures, it does not specifically allocate resources or define financial responsibilities for monitoring and enforcement activities. This lack of clarity may hinder effective implementation and enforcement of the bill's provisions.
Overall, while the bill critically addresses financial transactions in the pharmaceutical industry aimed at preventing market delays, the financial references also bring forth complexities and potential challenges, especially concerning the bill's enforceability and its implications on market and innovation dynamics.
Issues
The bill lacks clarity on the enforcement measures and penalties for companies engaged in reverse payment settlement agreements, which could undermine the efficacy of the legislative intent to curb anticompetitive practices. This is highlighted in Sections 2 and 3.
The complexity of the language, including technical terms like 'ANDA filer', 'biosimilar biological product application filer', and references to various specific legal sections, might hinder comprehension and accessibility for the general public and stakeholders not versed in pharmaceutical regulations. This is particularly evident in Sections 3 and 27.
There is no clear definition of what constitutes 'anticompetitive effects', which might lead to broad interpretations and inconsistent enforcement of the law. This issue is found in Section 27.
The potential impact on innovation incentives due to the prohibition of certain agreements remains unaddressed, raising concerns among stakeholders about the bill's long-term effects on pharmaceutical innovation, as noted in Section 2.
The bill does not clearly delineate which government agency or entity will be responsible for monitoring and enforcing its provisions, creating potential implementation challenges. This issue is predominantly associated with Section 2.
The adjustment of litigation payment caps based on the 'Producer Price Index for Legal Services' adds complexity and unpredictability to financial planning for involved parties. This concern arises in Section 27.
There is a significant administrative burden imposed on companies required to file certifications of their agreements within a specific timeframe, which could disproportionately affect smaller organizations. This is outlined in Section 4.
The bill does not specify how the Federal Trade Commission's recommendations will be utilized or actioned upon by the Committees on the Judiciary, leaving a gap in the legislative follow-through process. This is identified in Section 8.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act states that it will be known as the "Preserve Access to Affordable Generics and Biosimilars Act."
2. Congressional findings and declaration of purposes Read Opens in new tab
Summary AI
Congress recognizes that while the 1984 Act and the 2010 BPCIA aimed to promote competition by enabling generic and biosimilar drugs to enter the market sooner, "reverse payment" settlement agreements are delaying this competitive process. These agreements allow brand name drug companies to pay generic manufacturers to delay selling cheaper versions of drugs, which ultimately hurts consumers by keeping drug prices high. The purpose of the new Act is to stop these anticompetitive practices, ensuring that generic and biosimilar drugs can compete fairly and benefit consumers.
Money References
- (5) Federal dollars currently account for over 40 percent of the $449,700,000,000 spent on retail prescription drugs annually.
3. Unlawful compensation for delay Read Opens in new tab
Summary AI
The section explains that it is illegal for parties to make agreements that negatively impact competition in the sale of drugs or biological products, especially if these agreements involve delaying generic or biosimilar versions of a drug. If such agreements are made, they can be penalized, and the Federal Trade Commission can take action to stop them. However, certain types of agreements, like those that allow generic drugs to be sold sooner or reasonable litigation expenses, are still allowed.
Money References
- “(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.
27. Preserving access to affordable generics and biosimilars Read Opens in new tab
Summary AI
The section in question aims to ensure access to affordable generic and biosimilar drugs by prohibiting agreements that settle patent claims and create anticompetitive effects. Agreements presumed to be anticompetitive include those where a generic or biosimilar company receives compensation in exchange for delaying market entry, unless justified by evidence of procompetitive benefits. Violations may result in civil penalties and other legal actions.
Money References
- (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.
4. Certification of agreements Read Opens in new tab
Summary AI
The section amends the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to require that agreements related to biosimilar biological products be certified by a company official. This official must declare that the agreement is complete and inclusive of all related deals and promises, both written and oral, and then submit this certification to the Federal Trade Commission and the Department of Justice.
5. Notification of agreements Read Opens in new tab
Summary AI
The section amends a law to require that agreements about prescription drug plans include those that settle any disputes, such as those involving the Patent Trial and Appeal Board. It also explains that these disputes include specific types of legal processes like inter partes reviews and post-grant reviews handled by this Board.
6. Forfeiture of 180-day exclusivity period Read Opens in new tab
Summary AI
The section modifies the Federal Food, Drug, and Cosmetic Act by adding a reference to the Federal Trade Commission Act. Specifically, it allows the forfeiture of a 180-day exclusivity period if an agreement is found to violate section 27 of the Federal Trade Commission Act.
7. Commission litigation authority Read Opens in new tab
Summary AI
The amendment changes a part of the Federal Trade Commission Act by adjusting the formatting and adding a new item, allowing the Commission more authority under a different section of the law.
8. Report on additional exclusion Read Opens in new tab
Summary AI
The Federal Trade Commission is required to send a recommendation to certain Congressional committees within a year of the Act's passage. This recommendation should address the possibility of changing the Federal Trade Commission Act to add a new exclusion that involves settlements or claims related to drugs and biosimilar products.
9. Statute of limitations Read Opens in new tab
Summary AI
The statute of limitations section mandates that the Federal Trade Commission must start any enforcement actions related to certain agreements within six years from when the involved parties submit a required certification, according to specified federal laws.
10. Severability Read Opens in new tab
Summary AI
If a part of this law or its amendments is found to be unconstitutional, the rest of the law and its amendments will still remain in effect and can continue to be applied.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states that the official name of this legislation is the "Preserve Access to Affordable Generics and Biosimilars Act."
2. Congressional findings and declaration of purposes Read Opens in new tab
Summary AI
Congress finds that settlement agreements between brand and generic drug makers have been blocking competition and delaying cheaper drugs, harming consumers. This Act aims to stop these anticompetitive practices to help lower drug prices and support fair competition in the pharmaceutical industry.
Money References
- (5) Federal dollars currently account for over 40 percent of the $449,700,000,000 spent on retail prescription drugs annually.
3. Unlawful compensation for delay Read Opens in new tab
Summary AI
Under Section 27 of the Federal Trade Commission Act, it's illegal for parties involved in the pharmaceutical industry to make agreements that unfairly delay the sale of generic or biosimilar drugs, as these agreements are considered to be anticompetitive. Violators can face civil penalties up to three times the value gained from the violation, while certain lawful settlements, which do not have anticompetitive effects, are permitted.
Money References
- “(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.
27. Preserving access to affordable generics and biosimilars Read Opens in new tab
Summary AI
The text explains that it is illegal for companies to make agreements that limit competition related to the sale of generic and biosimilar drug products. These agreements are presumed harmful if they involve value exchanges and restrict product development or sales, unless proven to have more benefits than harm. Violations can lead to civil penalties and actions, but the section allows for certain types of agreements, like those granting marketing rights or covering litigation costs, without breaching this rule. It also emphasizes that existing antitrust laws remain applicable.
Money References
- (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.
4. Certification of agreements Read Opens in new tab
Summary AI
The section amends the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, requiring the CEO or company official to certify agreements about biosimilar biological products. This certification must confirm that all agreements are complete, include any related agreements, and provide details of any unwritten promises or agreements.
5. Notification of agreements Read Opens in new tab
Summary AI
The section amends the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to specify that agreements required under it must include those resolving any outstanding disputes, such as proceedings from the Patent Trial and Appeal Board. These proceedings include inter partes reviews, post-grant reviews, and derivation proceedings conducted by the United States Patent and Trademark Office.
6. Forfeiture of 180-day exclusivity period Read Opens in new tab
Summary AI
The section amends a part of the Federal Food, Drug, and Cosmetic Act by adding a reference to section 27 of the Federal Trade Commission Act when determining if an agreement has been violated, affecting the forfeiture of the 180-day exclusivity period for drug approval.
7. Commission litigation authority Read Opens in new tab
Summary AI
The amendment to Section 16(a)(2) of the Federal Trade Commission Act updates the formatting of subparagraphs and adds a new subparagraph (F), which refers to section 27.
8. Report on additional exclusion Read Opens in new tab
Summary AI
The Federal Trade Commission is required to deliver a recommendation within one year about adding a new exclusion amendment to the Federal Trade Commission Act. This amendment concerns an exemption for certain agreements between drug companies and applicants, specifically related to resolving legal claims or settlements.
9. Statute of limitations Read Opens in new tab
Summary AI
The Federal Trade Commission must start any enforcement actions related to section 27 of the Federal Trade Commission Act within 6 years after the parties involved file the required certification under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
10. Severability Read Opens in new tab
Summary AI
If any part of the Act or its amendments are found to be unconstitutional, the rest of the Act and its amendments will still remain in effect and be applied to other people and circumstances.