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OLR Bill Analysis
sHB 6619
AN ACT CONCERNING PROHIBITING PAY FOR DELAY.
SUMMARY
This bill makes it easier for the state to bring an antitrust action for
“pay-for-delay” agreements between pharmaceutical companies in
which one company (the “reference drug holder”) compensates another
(the “nonreference drug filer”) to delay the introduction of a generic or
biosimilar drug into the market. The U.S. Supreme Court has held that
these agreements can violate antitrust laws (see BACKGROUND).
The bill establishes a presumption that the transfer of value from a
reference drug holder to a nonreference drug filer to settle patent
infringement litigation, combined with a delay of entry into the market,
has an anti-competitive effect. A patent infringement claim is an
allegation that a nonreference drug filer’s nonreference drug product or
associated application infringes a patent held by, or exclusively licensed
to, the reference drug holder.
The bill has various exceptions to the presumption, including
agreements that directly generate procompetitive benefits (i.e.,
favorable competitive consequences from resolving the agreement or
settling a patent infringement claim) that outweigh the agreement’s
anticompetitive effects.
Generally, a violation of the bill’s provisions (i.e., entering into an
anticompetitive pay-for-delay agreement) is punishable by a civil
penalty paid to the state. For parties to the agreement, the penalty is the
greater of up to three times the amount of compensation provided for
delayed market entry or $20 million.
The bill specifies that it does not modify, impair, limit, or supersede
a drug company applicant’s right to assert antitrust claims or 2023HB-06619-R000325-BA.DOCX
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counterclaims. It also has a severability clause specifying that if part of
the bill is held unconstitutional, the rest remains enforceable.
EFFECTIVE DATE: October 1, 2023
SCOPE OF THE BILL
Covered Agreements
The bill applies to agreements resolving or settling a patent
infringement claim on either a final or interim basis. These include
agreements that are (1) entered into within 30 days after a claim’s
resolution or settlement, or (2) contingent upon, provide a contingent
condition for, or are otherwise related to the claim’s resolution or
settlement. They also include those that are:
1. given to the Federal Trade Commission or Department of
Justice’s Antitrust Division under the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, which
allows for a review and challenge of anticompetitive settlements,
or
2. between a biosimilar or interchangeable biological product
applicant and a reference drug product sponsor to resolve patent
claims.
Parties to an Agreement
The bill applies to agreements between “reference drug holders” and
“nonreference drug filers.”
“Reference drug holders” are certain brand holders and biological
product license holders. Specifically, the:
1. holder of an approved (a) new drug application (NDA) for a drug
product application or (b) biological product license application
for a biological drug product, as filed under federal law, or
2. person owning or controlling enforcement of (a) the patent listed
in the “Approved Drug Products with Therapeutic Equivalence
Evaluations” (“FDA Orange Book”), in connection with the 2023HB-06619-R000325-BA.DOCX
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NDA, or (b) any patent that claims the biological product is the
subject of the approved biological patent license application.
A “reference drug holder” includes the predecessors, subsidiaries,
divisions, groups, and affiliates controlled by, controlling, or under
common control with any of the above-described brand or biological
product license holders, as well as these entities’ licensees, licensors,
successors, and assigns. Control is presumed by directly or indirectly
owning at least 50% of shares.
Under the bill, “nonreference drug filers” are filers of abbreviated
new drug applications (ANDA) or biosimilar biological product
applications (BBPA) with the federal Food and Drug Administration
(FDA). Specifically, “ANDA filers” are those that own or control an
ANDA or have exclusive rights under that ANDA to distribute the
ANDA product. (In practice, these filers seek approval of generic
drugs.) “BBPA filers” are those that own or control a BBPA or have the
exclusive rights under the BBPA to distribute the biosimilar biological
product.
Drug Products
Under the bill, a “reference drug product” is the product
manufactured by the reference drug holder and includes a (1) holder’s
branded drug and (2) biological product license applicant’s biological
drug product.
A “nonreference drug product” is the (1) product to be manufactured
under an ANDA that is the subject of the patent infringement claim or
(2) biosimilar biological product to be manufactured under a BBPA that
is the subject of the patent infringement claim, or both.
PRESUMPTION OF ANTIC OMPETITIVE EFFECTS
Under the bill, an agreement resolving or settling a patent
infringement claim is presumed to have anticompetitive effects if the
nonreference drug filer:
1. receives “anything of value” from the company claiming patent
infringement, such as an exclusive license or a promise that the 2023HB-06619-R000325-BA.DOCX
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brand company will not launch an authorized generic of its brand
drug, and
2. agrees to limit or forego research, development, manufacturing,
marketing, or sales of their product for any period of time.
The bill excludes several items from “anything of value,” as described
below.
REBUTTING THE PRESUM PTION
Parties can rebut the presumption of anticompetitive effects by
showing, by a preponderance of the evidence, that either the:
1. value received by the nonreference drug filer is fair and
reasonable compensation solely for other goods or services that
it promised to provide, or
2. agreement directly generated procompetitive benefits that
outweigh the agreement’s anticompetitive effects.
Factfinder’s Presumptions
Under the bill, when determining if the parties have met their
burden, the factfinder must presume that the relevant product market
is the market for:
1. the brand or reference drug of the company alleging patent
infringement;
2. the drug product of the nonreference company accused of
infringement; and
3. any other biological product that is licensed as biosimilar or has
a therapeutic equivalency rating of AB-rated generic (i.e., a
pharmaceutically and therapeutically bioequivalent) to the
reference product.
Prohibited Presumptions. The bill lists several conditions that the
factfinder cannot presume when determining if the parties met their
burden. But it allows parties to introduce evidence on these conditions 2023HB-06619-R000325-BA.DOCX
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and the factfinder to decide based on the full scope of the evidence.
Under the bill, the conditions that cannot be presumed are:
1. entry into the marketplace could not have occurred until the
relevant patent exclusivity expired or that the agreement’s
allowance for the nonreference drug product’s entry before
expiration means the agreement is “procompetitive,” as required
to rebut the presumption;
2. a patent is enforceable and infringed by the nonreference drug
filer absent a final judgement binding on the filer of those issues;
3. the agreement did not delay the entry of the nonreference drug
filer’s drug product because of the lack of FDA approval of that
or of another nonreference drug product; and
4. the agreement caused no harm or delay from the possibility that
the nonreference drug filer’s drug product might infringe a
patent that (a) has not been asserted against the nonreference
drug filer or (b) is not subject to a judgement on that filer as to the
patent’s scope, enforceability, and infringement.
“ANYTHING OF VALUE” EXCLUSIONS
Under the bill, “anything of value” does not include an agreement to:
1. resolve or settle a patent infringement claim that permits a
nonreference drug filer, before the agreement’s date for entry of
the nonreference drug filer, to begin selling, offering for sale, or
distributing their product, if the reference drug holder seeks or
obtains approval to launch, or launches a different dosage,
strength, or form of the reference drug having the same active
ingredient, but a different form does not include an authorized
generic version;
2. not interfere with or facilitate the nonreference drug filer’s ability
to secure and maintain regulatory approval to market their
product; or 2023HB-06619-R000325-BA.DOCX
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3. resolve a patent infringement claim in which the reference drug
holder forgives the potential damages accrued by a nonreference
drug holder for an at-risk launch of the nonreference drug
product that is the subject of that claim. (An “at-risk launch” is a
launch of a nonreference drug before a nonappealable court
decision is resolved or a patent expires.)
The bill also excludes from “anything of value”:
1. the right to market the competing product in the United States
before the expiration of either (a) a patent that is the basis for the
infringement claim or (b) a patent right or other federal statutory
exclusivity that would prevent marketing the drug;
2. a covenant not to sue on a claim that the product infringes a
United States patent; and
3. compensation for the reference drug holder’s saved reasonable
future litigation expenses, subject to certain parameters.
To qualify as excluded consideration, compensation for saved
litigation expenses must be:
1. documented and adopted in the reference drug holder‘s budgets
at least six months before the settlement; and
2. capped at the lesser of (a) $7,500,000 or (b) 5% of the nonreference
drug holder’s projected revenue for the first three years of sales
that is documented at least 12 months before the settlement (but
if no projections are available, then the compensation does not
exceed $250,000).
LIABILITY
The bill’s ban on anticompetitive agreements to resolve or settle a
patent infringement claim is enforceable against any party to the
agreement and those who assist in the violation. Under the bill, the
statute of limitations for bringing a claim is four years.
A violation is punishable by a civil penalty, paid to the state. The bill’s 2023HB-06619-R000325-BA.DOCX
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penalty amount, which is “sufficient to deter violations,” is the greater
of (1) up to three times the value received or given as a party to the
agreement that is reasonably attributable to the violation, based on the
state’s market share for the brand drug at issue, or (2) $20 million. This
penalty is recoverable only in an action brought by the Connecticut
attorney general against a party to an agreement.
Violators and those who help them are also generally liable for
damages, penalties, costs, fees, injunctions, or other remedies that the
court determines are just and reasonable. The state cannot recover these
penalties if it is awarded the bill’s primary penalty, described above.
BACKGROUND
Related Case
In a case concerning pay-for-delay agreements between name brand
manufacturers and prospective generic manufacturers, the U.S.
Supreme Court held that while these agreements are not presumptively
illegal, they could have anticompetitive effects and a brand
manufacturer’s reverse payment settlements may violate antitrust laws
(FTC v. Actavis, Inc., 570 U.S. 136 (2013)).
COMMITTEE ACTION
Insurance and Real Estate Committee
Joint Favorable
Yea 12 Nay 0 (03/14/2023)