Senate Judiciary Committee Adopts Amendment to Reverse Payment Bill

By Kurt R. Karst –      

At a September 24th Senate Judiciary Committee Executive Business Meeting, Senator Herb Kohl’s (D-WI) substitute amendment to S. 369, the Preserve Access to Affordable Generics Act, was adopted by unanimous consent.  As we previously reported, the amendment makes significant changes to the version of S. 369 Sen. Kohl introduced earlier this year. 

The new version of S. 369 would amend the Federal Trade Commission Act to permit the FTC to “initiate a proceeding to enforce the provisions of [new Sec. 28] against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product.”  In such a proceeding, “an agreement shall be presumed to have anticompetitive effects and be unlawful if – (i) an ANDA filer receives anything of value; and (ii) the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.”  However, the presumption of anticompetitive effects “shall not apply if the parties to such agreement demonstrate by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.”  Several “competitive factors” must be taken into consideration to determine whether the procompetitive benefits of the agreement outweigh its anticompetitive effects, including “the length of time remaining until the end of the life of the relevant patent, compared with the agreed upon entry date for the ANDA product,” “the value to consumers of the competition from the ANDA product allowed under the agreement,” and “the revenue the ANDA filer would have received by winning the patent litigation.”

In terms of penalties, the Kohl Amendment states that “[e]ach person, partnership or corporation that violates or assists in the violation of this section shall forfeit and pay to the United States a civil penalty of not more than 3 times the gross revenue of the NDA holder from sales of the drug product that is the subject of the patent infringement claim for the period of the violation, starting with the date of the agreement.”  Although the bill would generally apply to agreements “irrespective of whether such agreements are entered into before, on, or after the date of enactment of this Act,” the penalties provisions would “not apply to agreements entered into before the date of enactment of this Act.”