II
119THCONGRESS
1
STSESSION S. 1040
To amend the Federal Trade Commission Act to prohibit product hopping,
and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH13, 2025
Mr. C
ORNYN(for himself, Mr. BLUMENTHAL, Mr. GRASSLEY, and Mr. DUR-
BIN) introduced the following bill; which was read twice and referred to
the Committee on the Judiciary
A BILL
To amend the Federal Trade Commission Act to prohibit
product hopping, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Drug Competition En-4
hancement Act’’. 5
SEC. 2. PRODUCT HOPPING. 6
(a) I
NGENERAL.—The Federal Trade Commission 7
Act (15 U.S.C. 41 et seq.) is amended by inserting after 8
section 26 (15 U.S.C. 57c–2) the following: 9
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‘‘SEC. 27. PRODUCT HOPPING. 1
‘‘(a) D
EFINITIONS.—In this section: 2
‘‘(1) A
BBREVIATED NEW DRUG APPLICATION .— 3
The term ‘abbreviated new drug application’ means 4
any application under subsection (j) of section 505 5
of the Federal Food, Drug, and Cosmetic Act (21 6
U.S.C. 355) or an application under subsection 7
(b)(2) of such section 505 that seeks a therapeutic 8
equivalence rating to the reference product. 9
‘‘(2) B
IOSIMILAR BIOLOGICAL PRODUCT .—The 10
term ‘biosimilar biological product’ means a biologi-11
cal product licensed under section 351(k) of the 12
Public Health Service Act (42 U.S.C. 262(k)). 13
‘‘(3) B
IOSIMILAR BIOLOGICAL PRODUCT LI -14
CENSE APPLICATION.—The term ‘biosimilar biologi-15
cal product license application’ means an application 16
submitted under section 351(k) of the Public Health 17
Service Act (42 U.S.C. 262(k)). 18
‘‘(4) F
OLLOW-ON PRODUCT.—The term ‘follow- 19
on product’— 20
‘‘(A) means a drug approved through an 21
application or supplement to an application sub-22
mitted under section 505(b) of the Federal 23
Food, Drug, and Cosmetic Act (21 U.S.C. 24
355(b)) or a biological product licensed through 25
an application or supplement to an application 26
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submitted under section 351(a) of the Public 1
Health Service Act (42 U.S.C. 262(a)) for a 2
change or modification to, or reformulation of, 3
the same manufacturer’s previously approved 4
drug or biological product that has an indica-5
tion that is identical or substantively similar to 6
an indication of the same manufacturer’s pre-7
viously approved drug or biological product; and 8
‘‘(B) excludes such an application or sup-9
plement to an application for a change, modi-10
fication, or reformulation of a drug or biological 11
product that is requested by the Secretary or 12
necessary to comply with law, including sections 13
505A and 505B of the Federal Food, Drug, 14
and Cosmetic Act (21 U.S.C. 355a, 355c). 15
‘‘(5) G
ENERIC DRUG.—The term ‘generic drug’ 16
means any drug approved under an application sub-17
mitted under subsection (j) of section 505 of the 18
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 19
355) or an application under subsection (b)(2) of 20
such section 505 that seeks a therapeutic equiva-21
lence rating to the reference product. 22
‘‘(6) L
ISTED DRUG.—The term ‘listed drug’ 23
means a drug listed under section 505(j)(7) of the 24
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Federal Food, Drug, and Cosmetic Act (21 U.S.C. 1
355(j)(7)). 2
‘‘(7) M
ANUFACTURER.—The term ‘manufac-3
turer’ means the holder, licensee, or assignee of— 4
‘‘(A) an approved application for a drug 5
under section 505(c) of the Federal Food, 6
Drug, and Cosmetic Act (21 U.S.C. 355(c)); or 7
‘‘(B) a biological product license under sec-8
tion 351(a) of the Public Health Service Act 9
(42 U.S.C. 262(a)). 10
‘‘(8) R
EFERENCE PRODUCT .—The term ‘ref-11
erence product’ has the meaning given the term in 12
section 351(i) of the Public Health Service Act (42 13
U.S.C. 262(i)). 14
‘‘(9) U
LTIMATE PARENT ENTITY .—The term 15
‘ultimate parent entity’ has the meaning given the 16
term in section 801.1 of title 16, Code of Federal 17
Regulations, or any successor regulation. 18
‘‘(b) P
ROHIBITION ONPRODUCTHOPPING.— 19
‘‘(1) P
RIMA FACIE.—A manufacturer of a ref-20
erence product or listed drug shall be considered to 21
have engaged in an unfair method of competition in 22
or affecting commerce in violation of section 5(a) if 23
complaint counsel or the Commission demonstrates 24
in an action or proceeding initiated by the Commis-25
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sion under subsection (c) that, during the period be-1
ginning on the date on which the manufacturer of 2
the reference product or listed drug first receives no-3
tice that an applicant has submitted to the Commis-4
sioner of Food and Drugs an abbreviated new drug 5
application or biosimilar biological product license 6
application referencing the reference product or list-7
ed drug and ending on the date that is the earlier 8
of 180 days after the date on which the generic drug 9
or biosimilar biological product that is the subject of 10
the abbreviated new drug application or biosimilar 11
biological product license application or another ge-12
neric drug or biosimilar biological product ref-13
erencing the listed drug or reference product is first 14
marketed or 3 years after the date on which the fol-15
low-on product is first marketed, the manufacturer 16
engaged in either of the following actions: 17
‘‘(A) The manufacturer engaged in a hard 18
switch, which shall be established by dem-19
onstrating that the manufacturer engaged in ei-20
ther of the following actions: 21
‘‘(i) Upon the request of the manufac-22
turer of the listed drug or reference prod-23
uct, the Commissioner of Food and Drugs 24
withdrew the approval of the application 25
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for the listed drug or reference product or 1
placed the listed drug or reference product 2
on the discontinued products list and the 3
manufacturer marketed or sold a follow-on 4
product. 5
‘‘(ii) The manufacturer of the listed 6
drug or reference product— 7
‘‘(I)(aa) withdrew, discontinued 8
the manufacture of, or announced 9
withdrawal of, discontinuance of the 10
manufacture of, or intent to withdraw 11
the application with respect to the 12
drug or reference product in a manner 13
that impedes competition from a ge-14
neric drug or a biosimilar biological 15
product, which may be established by 16
objective circumstances, unless such 17
actions were taken by the manufac-18
turer pursuant to a request of the 19
Commissioner of Food and Drugs; or 20
‘‘(bb) destroyed the inventory of 21
the listed drug or reference product in 22
a manner that impedes competition 23
from a generic drug or a biosimilar bi-24
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ological product, which may be estab-1
lished by objective circumstances; and 2
‘‘(II) marketed or sold a follow- 3
on product. 4
‘‘(B) The manufacturer engaged in a soft 5
switch, which shall be established by dem-6
onstrating that the manufacturer engaged in 7
both of the following actions: 8
‘‘(i) The manufacturer took actions 9
with respect to the listed drug or reference 10
product other than those described in sub-11
paragraph (A) that unfairly disadvantage 12
the listed drug or reference product rel-13
ative to the follow-on product described in 14
clause (ii) in a manner that impedes com-15
petition from a generic drug or a bio-16
similar biological product, which may be 17
established by objective circumstances. 18
‘‘(ii) The manufacturer marketed or 19
sold a follow-on product. 20
‘‘(2) E
XCLUSIONS.—Nothing in this section 21
shall prohibit actions that consist solely of— 22
‘‘(A) truthful, non-misleading promotional 23
marketing; or 24
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‘‘(B) ceasing promotional marketing for 1
the listed drug or reference product. 2
‘‘(3) J
USTIFICATION.— 3
‘‘(A) I
N GENERAL.—Subject to paragraph 4
(4), the actions described in paragraph (1) by 5
a manufacturer of a listed drug or reference 6
product shall not be considered to be an unfair 7
method of competition in or affecting commerce 8
if the manufacturer demonstrates to the Com-9
mission or a district court of the United States, 10
as applicable, in an action, suit or proceeding 11
initiated by the Commission under subsection 12
(c)(1) that— 13
‘‘(i) the manufacturer would have 14
taken the actions regardless of whether a 15
generic drug that references the listed drug 16
or biosimilar biological product that ref-17
erences the reference product had already 18
entered the market; and 19
‘‘(ii)(I) with respect to a hard switch 20
under paragraph (1)(A), the manufacturer 21
took the action for reasons relating to the 22
safety risk to patients of the listed drug or 23
reference product; 24
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‘‘(II) with respect to an action de-1
scribed in paragraph (1)(A)(ii)(I)(aa), 2
there is a supply disruption that— 3
‘‘(aa) is outside of the control of 4
the manufacturer; 5
‘‘(bb) prevents the production or 6
distribution of the applicable listed 7
drug or reference product; and 8
‘‘(cc) cannot be remedied by rea-9
sonable efforts; or 10
‘‘(III) with respect to a soft switch 11
under paragraph (1)(B), the manufacturer 12
had legitimate pro-competitive reasons, 13
apart from the financial effects of reduced 14
competition, to take the action. 15
‘‘(B) R
ULE OF CONSTRUCTION .—Nothing 16
in subparagraph (A) may be construed to limit 17
the information that the Commission may oth-18
erwise obtain in any proceeding or action insti-19
tuted with respect to a violation of this section. 20
‘‘(4) R
ESPONSE.—With respect to a justifica-21
tion offered by a manufacturer under paragraph (3), 22
the Commission may— 23
‘‘(A) rebut any evidence presented by a 24
manufacturer during that justification; or 25
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‘‘(B) establish by a preponderance of the 1
evidence that— 2
‘‘(i) on balance, the pro-competitive 3
benefits from the conduct described in sub-4
paragraph (A) or (B) of paragraph (1), as 5
applicable, do not outweigh any anti-6
competitive effects of the conduct, even in 7
consideration of the justification so offered; 8
or 9
‘‘(ii)(I) the conduct described in para-10
graph (1) is not reasonably necessary to 11
address or achieve the justifications de-12
scribed in clause (ii) of paragraph (3)(A); 13
or 14
‘‘(II) the justifications described in 15
clause (ii) of paragraph (3)(A) could be 16
reasonably addressed or achieved through 17
less anticompetitive means. 18
‘‘(c) E
NFORCEMENT.— 19
‘‘(1) I
N GENERAL.—If the Commission has rea-20
son to believe that any manufacturer has violated, is 21
violating, or is about to violate this section, or a rule 22
promulgated under this section, the Commission 23
may take any of the following actions: 24
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‘‘(A) Institute a proceeding under section 1
5(b). 2
‘‘(B) In the same manner and to the same 3
extent as provided in section 13(b), bring suit 4
in a district court of the United States to tem-5
porarily enjoin the action of the manufacturer. 6
‘‘(C) Bring suit in a district court of the 7
United States, in which the Commission may 8
seek— 9
‘‘(i) to permanently enjoin the action 10
of the manufacturer; 11
‘‘(ii) any of the remedies described in 12
paragraph (3); and 13
‘‘(iii) any other equitable remedy, in-14
cluding ancillary equitable relief. 15
‘‘(2) J
UDICIAL REVIEW.— 16
‘‘(A) I
N GENERAL.—Notwithstanding any 17
provision of section 5, any manufacturer that is 18
subject to a final cease and desist order issued 19
in a proceeding to enforce this section, or a rule 20
promulgated under this section, may, not later 21
than 30 days after the date on which the Com-22
mission issues the order, petition for review of 23
the order in— 24
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‘‘(i) the United States Court of Ap-1
peals for the District of Columbia Circuit; 2
or 3
‘‘(ii) the court of appeals of the 4
United States for the circuit in which the 5
ultimate parent entity of the manufacturer 6
is incorporated. 7
‘‘(B) T
REATMENT OF FINDINGS .—In a re-8
view of a final cease and desist order conducted 9
by a court of appeals of the United States 10
under subparagraph (A), the factual findings of 11
the Commission shall be conclusive if those 12
facts are supported by the evidence. 13
‘‘(3) E
QUITABLE REMEDIES.— 14
‘‘(A) D
ISGORGEMENT.— 15
‘‘(i) I
N GENERAL.—In a suit brought 16
under paragraph (1)(C), the Commission 17
may seek, and the court may order, 18
disgorgement of any unjust enrichment 19
that a person obtained as a result of the 20
violation that gives rise to the suit. 21
‘‘(ii) C
ALCULATION.—Any 22
disgorgement that is ordered with respect 23
to a person under clause (i) shall be offset 24
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by any amount of restitution ordered 1
under subparagraph (B). 2
‘‘(iii) L
IMITATIONS PERIOD .—The 3
Commission may seek disgorgement under 4
this subparagraph not later than 5 years 5
after the latest date on which the person 6
from which the disgorgement is sought re-7
ceives any unjust enrichment from the ef-8
fects of the violation that gives rise to the 9
suit in which the Commission seeks the 10
disgorgement. 11
‘‘(B) R
ESTITUTION.— 12
‘‘(i) I
N GENERAL.—In a suit brought 13
under paragraph (1)(C), the Commission 14
may seek, and the court may order, res-15
titution with respect to the violation that 16
gives rise to the suit. 17
‘‘(ii) L
IMITATIONS PERIOD .—The 18
Commission may seek restitution under 19
this subparagraph not later than 5 years 20
after the latest date on which the person 21
from which the restitution is sought re-22
ceives any unjust enrichment from the ef-23
fects of the violation that gives rise to the 24
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suit in which the Commission seeks the 1
restitution. 2
‘‘(4) R
ULES OF CONSTRUCTION .—Nothing in 3
this subsection may be construed as— 4
‘‘(A) requiring the Commission to bring a 5
suit seeking a temporary injunction under para-6
graph (1)(B) before bringing a suit seeking a 7
permanent injunction under paragraph (1)(C); 8
or 9
‘‘(B) affecting the authority of the Federal 10
Trade Commission under any other provision of 11
law.’’. 12
(b) A
PPLICABILITY.—Section 27 of the Federal 13
Trade Commission Act, as added by subsection (a), shall 14
apply with respect to any— 15
(1) conduct that occurs on or after the date of 16
enactment of this Act; and 17
(2) action or proceeding that is commenced on 18
or after the date of enactment of this Act. 19
(c) A
NTITRUSTLAWS.—Except to the extent sub-20
section (a) establishes an additional basis for liability 21
under the Federal Trade Commission Act (15 U.S.C. 41 22
et seq.), nothing in this section, or the amendments made 23
by this section, shall modify, impair, limit, or supersede 24
the applicability of the antitrust laws, as defined in sub-25
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section (a) of the first section of the Clayton Act (15 1
U.S.C. 12), or of section 5 of the Federal Trade Commis-2
sion Act (15 U.S.C. 45) to the extent that it applies to 3
unfair methods of competition. 4
(d) R
ULEMAKING.—The Federal Trade Commission 5
may issue rules under section 553 of title 5, United States 6
Code, to define any terms used in section 27 of the Fed-7
eral Trade Commission Act, as added by subsection (a) 8
(other than terms that are defined in subsection (a) of 9
such section 27). 10
Æ
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