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General Assembly Substitute Bill No. 6619
January Session, 2023
AN ACT CONCERNING PROHIBITING 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 7
filed with the federal Food and Drug Administration or has the 8
exclusive 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 13
for, or is otherwise related to the resolution or settlement of the claim. 14
"Agreement resolving or settling a patent infringement claim" 15
includes, 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 Substitute Bill No. 6619
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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 27
that owns or controls a biosimilar biological product application filed 28
with the federal Food and Drug Administration under Section 351(k) 29
of the Public Health Service Act, 42 USC 262, for licensure of a 30
biological product as biosimilar to, or interchangeable with, a reference 31
drug product or that has the exclusive rights under the application to 32
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
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 Substitute Bill No. 6619
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with a court of law, that such nonreference drug filer's nonreference 48
drug product or application infringes any patent held by, or 49
exclusively 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 Section 505(b) of the federal Food, Drug and Cosmetic Act, 57
21 USC 355; 58
(ii) A person owning or controlling enforcement of the patent listed 59
in the Approved Drug Products With Therapeutic Equivalence 60
Evaluations, commonly known as the "FDA Orange Book" in 61
connection 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 subdivision, with control to be presumed by 65
direct or indirect share ownership of fifty per cent or greater, as well as 66
the licensees, licensors, successors and assigns of each such entity; or 67
(B) A biological product license holder, that includes any of the 68
following: 69
(i) The holder of an approved biological product license application 70
for a biological drug product under Section 351(a) of the Public Health 71
Service Act, 42 USC 262; 72
(ii) A person owning or controlling enforcement of any patents that 73
claim the biological product that is the subject of the approved 74
biological patent license application; or 75 Substitute Bill No. 6619
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(iii) The predecessors, subsidiaries, divisions, groups and affiliates 76
controlled by, controlling or under common control with, any of the 77
entities described in this subdivision, with such control to be 78
presumed by direct or indirect share ownership of fifty per cent or 79
greater, as well as the licensees, licensors, successors and assigns of 80
each such entity. 81
(14) "Reference drug product" means the product to be 82
manufactured by the reference drug holder and includes branded 83
drugs of the NDA holder and the biological drug product of the 84
biological product license applicant. 85
(15) "Statutory exclusivity" means prohibitions on the approval of 86
drug applications under Section 505(c), 527 or 505A of the federal 87
Food, Drug and Cosmetic Act, 21 USC 355, 360cc and 355a, or on the 88
licensing of biological product applications under Section 262(k) or (m) 89
of the Public Health Service Act, 42 USC 262. 90
Sec. 2. (NEW) (Effective October 1, 2023) (a) (1) Except as provided in 91
subdivision (3) of this subsection, an agreement resolving or settling, 92
on a final or interim basis, a patent infringement claim shall be 93
presumed to have anticompetitive effects and shall be a violation of 94
this section if both of the following apply: 95
(A) A nonreference drug filer receives anything of value from 96
another company asserting patent infringement, including, but not 97
limited to, an exclusive license or a promise that the brand company 98
will not launch an authorized generic version of such brand company's 99
brand drug; and 100
(B) The nonreference drug filer agrees to limit or forego research, 101
development, manufacturing, marketing or sales of the nonreference 102
drug filer's product for any period of time. 103
(2) As used in subparagraph (A) of subdivision (1) of this 104
subsection, "anything of value" does not include a settlement of a 105
patent infringement claim in which the consideration granted by the 106 Substitute Bill No. 6619
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brand or reference drug filer to the nonreference drug filer as part of 107
the resolution or settlement consists of one or more of the following: 108
(A) The right to market the competing product in the United States 109
before the expiration of either: 110
(i) A patent that is the basis for the patent infringement claim; or 111
(ii) A patent right or other statutory exclusivity that would prevent 112
the marketing of the drug; 113
(B) A covenant not to sue on a claim that the nonreference drug 114
product infringes a United States patent; 115
(C) Compensation for saved reasonable future litigation expenses of 116
the reference drug holder, but only if both of the following are true: 117
(i) The total compensation for saved litigation expenses is reflected 118
in budgets that the reference drug holder documented and adopted 119
not less than six months before the settlement; and 120
(ii) The compensation does not exceed the lesser of the following: 121
(I) Seven million five hundred thousand dollars, or 122
(II) Five per cent of the revenue that the nonreference drug holder 123
projected or forecasted such nonreference drug holder would receive 124
in the first three years of sales of such nonreference drug holder's 125
version of the reference drug documented not less than twelve months 126
before the settlement. If no such projections or forecasts are available, 127
the compensation shall not exceed two hundred fifty thousand dollars; 128
(D) An agreement resolving or settling a patent infringement claim 129
that permits a nonreference drug filer to begin selling, offering for sale 130
or distributing the nonreference drug product if the reference drug 131
holder seeks approval to launch, obtains approval to launch or 132
launches a different dosage, strength or form of the reference drug 133
having the same active ingredient before the date set by the agreement 134 Substitute Bill No. 6619
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for entry of the nonreference drug filer. A different form of the 135
reference drug does not include an authorized generic version of the 136
reference drug; 137
(E) An agreement by the reference drug holder not to interfere with 138
the nonreference drug filer's ability to secure and maintain regulatory 139
approval to market the nonreference drug product or an agreement to 140
facilitate the nonreference drug filer's ability to secure and maintain 141
regulatory approval to market the nonreference drug product; or 142
(F) An agreement resolving a patent infringement claim in which 143
the reference drug holder forgives the potential damages accrued by a 144
nonreference drug holder for an at-risk launch of the nonreference 145
drug product that is the subject of such patent infringement claim. 146
(3) Parties to an agreement are not in violation of subdivision (1) of 147
this subsection if they can demonstrate by a preponderance of the 148
evidence that either of the following are met: 149
(A) The value received by the nonreference drug filer described in 150
subparagraph (A) of subdivision (1) of this subsection is a fair and 151
reasonable compensation solely for other goods or services that the 152
nonreference drug filer has promised to provide; or 153
(B) The agreement has directly generated procompetitive benefits 154
and the procompetitive benefits of the agreement outweigh the 155
anticompetitive effects of the agreement. 156
(b) (1) In determining whether the parties to the agreement have 157
met their burden under subdivision (3) of subsection (a) of this section, 158
the factfinder in any action brought by the state to enforce the 159
provisions of this section shall not presume any of the following: 160
(A) That entry into the marketplace could not have occurred until 161
the expiration of the relevant patent exclusivity or that the agreement's 162
provision for entry of the nonreference drug product before the 163
expiration of any patent exclusivity means that the agreement is 164 Substitute Bill No. 6619
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procompetitive within the meaning of subparagraph (B) of subdivision 165
(3) of subsection (a) of this section; 166
(B) That any patent is enforceable and infringed by the nonreference 167
drug filer in the absence of a final adjudication binding on the filer of 168
such issues; 169
(C) That the agreement caused no delay in entry of the nonreference 170
drug filer's drug product because of the lack of federal Food and Drug 171
Administration approval of such drug product or of another 172
nonreference drug product; or 173
(D) That the agreement caused no harm or delay due to the 174
possibility that the nonreference drug filer's drug product may infringe 175
some patent that has not been asserted against the nonreference drug 176
filer or that is not subject to a final and binding adjudication on such 177
nonreference drug filer as to the patent's scope, enforceability and 178
infringement. 179
(2) This subsection shall not be construed to preclude a party from 180
introducing evidence regarding subparagraphs (A) to (D), inclusive, of 181
this subdivision and shall not be construed to preclude the factfinder 182
from making a determination regarding said subparagraphs based on 183
the full scope of the evidence. 184
(c) In determining whether the parties to the agreement have met 185
their burden under subdivision (3) of subsection (a) of this section, the 186
factfinder in any action brought by the state to enforce the provisions 187
of this section shall presume that the relevant product market is such 188
product market consisting of the brand or reference drug of the 189
company alleging patent infringement and the drug product of the 190
nonreference company accused of infringement and any other 191
biological product that is licensed as biosimilar or is an AB-rated 192
generic to the reference product. 193
(d) (1) The provisions of this section shall not modify, impair, limit 194
or supersede the right of any drug company applicant to assert claims 195 Substitute Bill No. 6619
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or counterclaims against any person under the antitrust laws or other 196
laws relating to unfair competition of the federal antitrust law or state 197
law. 198
(2) If any provision of this section, an amendment made to this 199
section or the application of any provision or amendment to any 200
person or circumstance is held to be unconstitutional, the remainder of 201
this section, the amendments made to this section and the application 202
of the provisions of this section or amendments to any person or 203
circumstance 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 206
deter 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 213
the value given to other parties to the agreement reasonably 214
attributable to the violation of this section, or twenty million dollars, 215
whichever is greater. 216
For purposes of this subparagraph, "reasonably attributable to the 217
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 222
that violates this section. 223
(2) Each party that violates or assists in the violation of this section 224
shall be liable for any damages, penalties, costs, fees, injunctions or 225 Substitute Bill No. 6619
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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 230
subdivision shall not be construed to foreclose the state's ability to 231
claim any other relief or damages available in subdivision (2) of this 232
subsection. 233
(4) An action to enforce a cause of action for a violation of this 234
section shall be commenced not later than four years after the cause of 235
action accrued. 236
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 Legislative Commissioners:
In Section 2(a)(2)(C)(ii)(II), "its" was changed to "such nonreference
drug holder's" for clarity, and the title was changed.
INS Joint Favorable Subst. -LCO