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General Assembly Raised Bill No. 6619
January Session, 2023
LCO No. 3052
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
AN ACT CONCERNING BANNING PAY FOR DELAY.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective October 1, 2023) For purposes of this 1
section and section 2 of this act: 2
(1) "AB-rated generic" means a drug product determined by the 3
federal Food and Drug Administration to be pharmaceutically and 4
therapeutically bioequivalent to a reference drug product. 5
(2) "ANDA" means abbreviated new drug application. 6
(3) "ANDA filer" means a party that owns or controls an ANDA filed 7
with the federal Food and Drug Administration or has the exclusive 8
rights under such ANDA to distribute the ANDA product. 9
(4) "Agreement resolving or settling a patent infringement claim" 10
includes any agreement that is entered into not later than thirty days 11
after the resolution or the settlement of the claim, or any other 12
agreement that is contingent upon, provides a contingent condition for, 13
or is otherwise related to the resolution or settlement of the claim. 14 Raised Bill No. 6619
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"Agreement resolving or settling a patent infringement claim" includes, 15
but is not limited to, the following: 16
(A) Any agreement required to be provided to the Federal Trade 17
Commission or the Antitrust Division of the United States Department 18
of Justice under the Medicare Prescription Drug, Improvement, and 19
Modernization Act of 2003; and 20
(B) Any agreement between a biosimilar or interchangeable 21
biological product applicant and a reference drug product sponsor that 22
resolves patent claims between the applicant and sponsor. 23
(5) "At-risk launch" means launching a nonreference drug product 24
before the resolution of a nonappealable court decision or patent 25
expiration involving such generic drug product. 26
(6) "Biosimilar biological product application filer" means a party that 27
owns or controls a biosimilar biological product application filed with 28
the federal Food and Drug Administration under subsection (k) of 29
section 351 of the Public Health Service Act, 42 USC 262, for licensure of 30
a biological product as biosimilar to, or interchangeable with, a 31
reference drug product or that has the exclusive rights under the 32
application to distribute the biosimilar biological product. 33
(7) "NDA" means new drug application. 34
(8) "Nonreference drug filer" means (A) an ANDA filer, or (B) a 35
biosimilar biological product application filer. 36
(9) "Nonreference drug product" means the product to be 37
manufactured under an ANDA that is the subject of the patent 38
infringement claim, a biosimilar biological product that is the product 39
to be manufactured under the biosimilar biological product application 40
that is the subject of the patent infringement claim, or both. 41
(10) "Patent infringement" means infringement of any patent or of 42
any filed patent application, extension, reissue, renewal, division, 43
continuation, continuation in part, reexamination, patent term 44 Raised Bill No. 6619
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restoration, patents of addition and extensions thereof. 45
(11) "Patent infringement claim" means any allegation made to a 46
nonreference drug filer, whether or not included in a complaint filed 47
with a court of law, that such nonreference drug filer's nonreference 48
drug product or application infringes any patent held by, or exclusively 49
licensed to, the reference drug holder. 50
(12) "Procompetitive benefit" means the favorable competitive 51
consequences resulting from the agreement resolving or settling a 52
patent infringement claim. 53
(13) "Reference drug holder" means: 54
(A) A brand holder that is any of the following: 55
(i) The holder of an approved NDA for a drug product application 56
filed under subsection (b) of section 505 of the federal Food, Drug and 57
Cosmetic Act, 21 USC 355; 58
(ii) A person owning or controlling enforcement of the patent listed 59
in the Approved Drug Products With Therapeutic Equiva lence 60
Evaluations, commonly known as the "FDA Orange Book" in connection 61
with the NDA; or 62
(iii) The predecessors, subsidiaries, divisions, groups and affiliates 63
controlled by, controlling or under common control with, any of the 64
entities described in this subparagraph or subparagraph (B) of this 65
subdivision, with control to be presumed by direct or indirect share 66
ownership of fifty per cent or greater, as well as the licensees, licensors, 67
successors and assigns of each such entity; or 68
(B) A biological product license holder, that includes any of the 69
following: 70
(i) The holder of an approved biological product license application 71
for a biological drug product under subsection (a) of section 351 of the 72
Public Health Service Act, 42 USC 262; 73 Raised Bill No. 6619
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(ii) A person owning or controlling enforcement of any patents that 74
claim the biological product that is the subject of the approved biological 75
patent license application; or 76
(iii) The predecessors, subsidiaries, divisions, groups and affiliates 77
controlled by, controlling or under common control with, any of the 78
entities described in this subparagraph or subparagraph (A) of this 79
subdivision, with such control to be presumed by direct or indirect share 80
ownership of fifty per cent or greater, as well as the licensees, licensors, 81
successors and assigns of each such entity. 82
(14) "Reference drug product" means the product to be manufactured 83
by the reference drug holder and includes branded drugs of the NDA 84
holder and the biological drug product of the biological product license 85
applicant. 86
(15) "Statutory exclusivity" means prohibitions on the approval of 87
drug applications under subsection (c) of section 505, section 527 or 88
505A of the federal Food, Drug and Cosmetic Act, 21 USC 355, 360cc and 89
355a, or on the licensing of biological product applications under 90
subsection (k) or (m) of section 262 of the Public Health Service Act, 42 91
USC 262. 92
Sec. 2. (NEW) (Effective October 1, 2023) (a) (1) Except as provided in 93
subdivision (3) of this subsection, an agreement resolving or settling, on 94
a final or interim basis, a patent infringement claim, shall be presumed 95
to have anticompetitive effects and shall be a violation of this section if 96
both of the following apply: 97
(A) A nonreference drug filer receives anything of value from another 98
company asserting patent infringement, including, but not limited to, 99
an exclusive license or a promise that the brand company will not 100
launch an authorized generic version of such brand company's brand 101
drug; and 102
(B) The nonreference drug filer agrees to limit or forego research, 103
development, manufacturing, marketing or sales of the nonreference 104 Raised Bill No. 6619
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drug filer's product for any period of time. 105
(2) As used in subparagraph (A) of subdivision (1) of this subsection, 106
"anything of value" does not include a settlement of a patent 107
infringement claim in which the consideration granted by the brand or 108
reference drug filer to the nonreference drug filer as part of the 109
resolution or settlement consists of one or more of the following: 110
(A) The right to market the competing product in the United States 111
before the expiration of either: 112
(i) A patent that is the basis for the patent infringement claim; or 113
(ii) A patent right or other statutory exclusivity that would prevent 114
the marketing of the drug; 115
(B) A covenant not to sue on a claim that the nonreference drug 116
product infringes a United States patent; 117
(C) Compensation for saved reasonable future litigation expenses of 118
the reference drug holder, but only if both of the following are true: 119
(i) The total compensation for saved litigation expenses is reflected in 120
budgets that the reference drug holder documented and adopted not 121
less than six months before the settlement; and 122
(ii) The compensation does not exceed the lesser of the following: 123
(I) Seven million five hundred thousand dollars, or 124
(II) Five per cent of the revenue that the nonreference drug holder 125
projected or forecasted such nonreference drug holder would receive in 126
the first three years of sales of its version of the reference drug 127
documented not less than twelve months before the settlement. If no 128
such projections or forecasts are available, the compensation shall not 129
exceed two hundred fifty thousand dollars; 130
(D) An agreement resolving or settling a patent infringement claim 131
that permits a nonreference drug filer to begin selling, offering for sale 132 Raised Bill No. 6619
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or distributing the nonreference drug product if the reference drug 133
holder seeks approval to launch, obtains approval to launch or launches 134
a different dosage, strength or form of the reference drug having the 135
same active ingredient before the date set by the agreement for entry of 136
the nonreference drug filer. A different form of the reference drug does 137
not include an authorized generic version of the reference drug; 138
(E) An agreement by the reference drug holder not to interfere with 139
the nonreference drug filer's ability to secure and maintain regulatory 140
approval to market the nonreference drug product or an agreement to 141
facilitate the nonreference drug filer's ability to secure and maintain 142
regulatory approval to market the nonreference drug product; or 143
(F) An agreement resolving a patent infringement claim in which the 144
reference drug holder forgives the potential damages accrued by a 145
nonreference drug holder for an at-risk launch of the nonreference drug 146
product that is the subject of such patent infringement claim. 147
(3) Parties to an agreement are not in violation of subdivision (1) of 148
this subsection if they can demonstrate by a preponderance of the 149
evidence that either of the following are met: 150
(A) The value received by the nonreference drug filer described in 151
subparagraph (A) of subdivision (1) of this subsection is a fair and 152
reasonable compensation solely for other goods or services that the 153
nonreference drug filer has promised to provide; or 154
(B) The agreement has directly generated procompetitive benefits 155
and the procompetitive benefits of the agreement outweigh the 156
anticompetitive effects of the agreement. 157
(b) (1) In determining whether the parties to the agreement have met 158
their burden under subdivision (3) of subsection (a) of this section, the 159
factfinder in any action brought by the state to enforce the provisions of 160
this section shall not presume any of the following: 161
(A) That entry into the marketplace could not have occurred until the 162 Raised Bill No. 6619
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expiration of the relevant patent exclusivity or that the agreement's 163
provision for entry of the nonreference drug product before the 164
expiration of any patent exclusivity means that the agreement is 165
procompetitive within the meaning of subparagraph (B) of subdivision 166
(3) of subsection (a) of this section; 167
(B) That any patent is enforceable and infringed by the nonreference 168
drug filer in the absence of a final adjudication binding on the filer of 169
such issues; 170
(C) That the agreement caused no delay in entry of the nonreference 171
drug filer's drug product because of the lack of federal Food and Drug 172
Administration approval of such drug product or of another 173
nonreference drug product; or 174
(D) That the agreement caused no harm or delay due to the possibility 175
that the nonreference drug filer's drug product may infringe some 176
patent that has not been asserted against the nonreference drug filer or 177
that is not subject to a final and binding adjudication on such 178
nonreference drug filer as to the patent's scope, enforceability and 179
infringement. 180
(2) This subsection shall not be construed to preclude a party from 181
introducing evidence regarding subparagraphs (A) to (D), inclusive, of 182
this subdivision and shall not be construed to preclude the factfinder 183
from making a determination regarding said subparagraphs based on 184
the full scope of the evidence. 185
(c) In determining whether the parties to the agreement have met 186
their burden under subdivision (3) of subsection (a) of this section, the 187
factfinder in any action brought by the state to enforce the provisions of 188
this section shall presume that the relevant product market is such 189
product market consisting of the brand or reference drug of the 190
company alleging patent infringement and the drug product of the 191
nonreference company accused of infringement and any other 192
biological product that is licensed as biosimilar or is an AB-rated generic 193
to the reference product. 194 Raised Bill No. 6619
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(d) (1) The provisions of this section shall not modify, impair, limit or 195
supersede the right of any drug company applicant to assert claims or 196
counterclaims against any person under the antitrust laws or other laws 197
relating to unfair competition of the federal antitrust law or state law. 198
(2) If any provision of this section, an amendment made to this section 199
or the application of any provision or amendment to any person or 200
circumstance is held to be unconstitutional, the remainder of this 201
section, the amendments made to this section and the application of the 202
provisions of this section or amendments to any person or circumstance 203
shall not be affected. 204
(e) (1) (A) Each person that violates or assists in a violation of this 205
section shall forfeit and pay to the state a civil penalty sufficient to deter 206
violations of this section, as follows: 207
(i) If the person who violated this section received any value due to 208
such violation, an amount up to three times the value received by the 209
party that is reasonably attributable to the violation of this section, or 210
twenty million dollars, whichever is greater; or 211
(ii) If the violator has not received anything of value as described in 212
subparagraph (A)(i) of this subdivision, an amount up to three times the 213
value given to other parties to the agreement reasonably attributable to 214
the violation of this section, or twenty million dollars, whichever is 215
greater. 216
(iii) For purposes of this subparagraph, "reasonably attributable to 217
the violation" shall be determined by the effect on the state's share of the 218
market for the brand drug at issue in the agreement. 219
(B) Any penalty described in subparagraph (A) of this subdivision 220
shall accrue only to the state and shall be recovered in a civil action 221
brought by the Attorney General against any party to an agreement that 222
violates this section. 223
(2) Each party that violates or assists in the violation of this section 224 Raised Bill No. 6619
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shall be liable for any damages, penalties, costs, fees, injunctions, or 225
other remedies that may be just and reasonable, as determined by the 226
court. 227
(3) If the state is awarded penalties under subparagraph (A) of 228
subdivision (1) of this subsection, the state may not recover penalties 229
pursuant to subdivision (2) of this subsection, provided this subdivision 230
shall not be construed to foreclose the state's ability to claim any other 231
relief or damages available in subdivision (2) of this subsection. 232
(4) An action to enforce a cause of action for a violation of this section 233
shall be commenced not later than four years after the cause of action 234
accrued. 235
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2023 New section
Sec. 2 October 1, 2023 New section
Statement of Purpose:
To preserve consumer access to affordable generic drugs.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]