II
Calendar No. 43
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
PRIL10, 2025
Reported by Mr. G
RASSLEY, with an amendment
[Omit the part struck through and insert the part printed in italic]
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
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SEC. 2. PRODUCT HOPPING. 1
(a) I
NGENERAL.—The Federal Trade Commission 2
Act (15 U.S.C. 41 et seq.) is amended by inserting after 3
section 26 (15 U.S.C. 57c–2) the following: 4
‘‘SEC. 27. PRODUCT HOPPING. 5
‘‘(a) D
EFINITIONS.—In this section: 6
‘‘(1) A
BBREVIATED NEW DRUG APPLICATION .— 7
The term ‘abbreviated new drug application’ means 8
any application under subsection (j) of section 505 9
of the Federal Food, Drug, and Cosmetic Act (21 10
U.S.C. 355) or an application under subsection 11
(b)(2) of such section 505 that seeks a therapeutic 12
equivalence rating to the reference product. 13
‘‘(2) B
IOSIMILAR BIOLOGICAL PRODUCT .—The 14
term ‘biosimilar biological product’ means a biologi-15
cal product licensed under section 351(k) of the 16
Public Health Service Act (42 U.S.C. 262(k)). 17
‘‘(3) B
IOSIMILAR BIOLOGICAL PRODUCT LI -18
CENSE APPLICATION.—The term ‘biosimilar biologi-19
cal product license application’ means an application 20
submitted under section 351(k) of the Public Health 21
Service Act (42 U.S.C. 262(k)). 22
‘‘(4) F
OLLOW-ON PRODUCT.—The term ‘follow- 23
on product’— 24
‘‘(A) means a drug approved through an 25
application or supplement to an application sub-26
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mitted under section 505(b) of the Federal 1
Food, Drug, and Cosmetic Act (21 U.S.C. 2
355(b)) or a biological product licensed through 3
an application or supplement to an application 4
submitted under section 351(a) of the Public 5
Health Service Act (42 U.S.C. 262(a)) for a 6
change or modification to, or reformulation of, 7
the same manufacturer’s previously approved 8
drug or biological product that has an indica-9
tion that is identical or substantively similar to 10
an indication of the same manufacturer’s pre-11
viously approved drug or biological product; and 12
‘‘(B) excludes such an application or sup-13
plement to an application for a change, modi-14
fication, or reformulation of a drug or biological 15
product that is requested by the Secretary or 16
necessary to comply with law, including sections 17
505A and 505B of the Federal Food, Drug, 18
and Cosmetic Act (21 U.S.C. 355a, 355c). 19
‘‘(5) G
ENERIC DRUG.—The term ‘generic drug’ 20
means any drug approved under an
applicationsub-21
mittedundersubsection(j)ofsection505ofthe 22
FederalFood,Drug,andCosmeticAct(21U.S.C. 23
355)oranapplicationundersubsection(b)(2)of 24
suchsection505thatseeksatherapeuticequiva-25
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lenceratingtothereferenceproductabbreviated new 1
drug application. 2
‘‘(6) L
ISTED DRUG.—The term ‘listed drug’ 3
means a drug listed under section 505(j)(7) of the 4
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 5
355(j)(7)). 6
‘‘(7) M
ANUFACTURER.—The term ‘manufac-7
turer’ means the holder, licensee, or assignee of— 8
‘‘(A) an approved application for a drug 9
under section 505(c) of the Federal Food, 10
Drug, and Cosmetic Act (21 U.S.C. 355(c)); or 11
‘‘(B) a biological product license under sec-12
tion 351(a) of the Public Health Service Act 13
(42 U.S.C. 262(a)). 14
‘‘(8) R
EFERENCE PRODUCT .—The term ‘ref-15
erence product’ has the meaning given the term in 16
section 351(i) of the Public Health Service Act (42 17
U.S.C. 262(i)). 18
‘‘(9) U
LTIMATE PARENT ENTITY .—The term 19
‘ultimate parent entity’ has the meaning given the 20
term in section 801.1 of title 16, Code of Federal 21
Regulations, or any successor regulation. 22
‘‘(b) P
ROHIBITION ONPRODUCTHOPPING.— 23
‘‘(1) P
RIMA FACIE.—A manufacturer of a ref-24
erence product or listed drug shall be considered to 25
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have engaged in an unfair method of competition in 1
or affecting commerce in violation of section 5(a) if 2
complaint counsel or the Commission demonstrates 3
in an action or proceeding initiated by the Commis-4
sion under subsection (c) that, during the period be-5
ginning on the date on which the manufacturer of 6
the reference product or listed drug first receives no-7
tice that an applicant has submitted to the Commis-8
sioner of Food and Drugs an abbreviated new drug 9
application or biosimilar biological product license 10
application referencing the reference product or list-11
ed drug and ending on the date that is the earlier 12
of 180 days after the date on which the generic drug 13
or biosimilar biological product that is the subject of 14
the abbreviated new drug application or biosimilar 15
biological product license application or another ge-16
neric drug or biosimilar biological product ref-17
erencing the listed drug or reference product is first 18
marketed or 3 years after the date on which the fol-19
low-on product is first marketed, the manufacturer 20
engaged in either of the following actions: 21
‘‘(A) The manufacturer engaged in a hard 22
switch, which shall be established by dem-23
onstrating that the manufacturer engaged in ei-24
ther of the following actions: 25
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‘‘(i) Upon the request of the manufac-1
turer of the listed drug or reference prod-2
uct, the Commissioner of Food and Drugs 3
withdrew the approval of the application 4
for the listed drug or reference product or 5
placed the listed drug or reference product 6
on the discontinued products list and the 7
manufacturer marketed or sold a follow-on 8
product. 9
‘‘(ii) The manufacturer of the listed 10
drug or reference product— 11
‘‘(I)(aa) withdrew, discontinued 12
the manufacture of, or announced 13
withdrawal of, discontinuance of the 14
manufacture of, or intent to withdraw 15
the application with respect to the 16
drug or reference product in a manner 17
that impedes competition from a ge-18
neric drug or a biosimilar biological 19
product, which may be established by 20
objective circumstances, unless such 21
actions were taken by the manufac-22
turer pursuant to a request of the 23
Commissioner of Food and Drugs; or 24
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‘‘(bb) destroyed the inventory of 1
the listed drug or reference product in 2
a manner that impedes competition 3
from a generic drug or a biosimilar bi-4
ological product, which may be estab-5
lished by objective circumstances; and 6
‘‘(II) marketed or sold a follow- 7
on product. 8
‘‘(B) The manufacturer engaged in a soft 9
switch, which shall be established by dem-10
onstrating that the manufacturer engaged in 11
both of the following actions: 12
‘‘(i) The manufacturer took actions 13
with respect to the listed drug or reference 14
product other than those described in sub-15
paragraph (A) that unfairly disadvantage 16
the listed drug or reference product rel-17
ative to the follow-on product described in 18
clause (ii) in a manner that impedes com-19
petition from a generic drug or a bio-20
similar biological product, which may be 21
established by objective circumstances. 22
‘‘(ii) The manufacturer marketed or 23
sold a follow-on product. 24
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‘‘(2) EXCLUSIONS.—Nothing in this section 1
shall prohibit actions that consist solely of— 2
‘‘(A) truthful, non-misleading promotional 3
marketing; or 4
‘‘(B) ceasing promotional marketing for 5
the listed drug or reference product. 6
‘‘(3) J
USTIFICATION.— 7
‘‘(A) I
N GENERAL.—Subject to paragraph 8
(4), the actions described in paragraph (1) by 9
a manufacturer of a listed drug or reference 10
product shall not be considered to be an unfair 11
method of competition in or affecting commerce 12
if the manufacturer demonstrates to the Com-13
mission or a district court of the United States, 14
as applicable, in an action, suit, or proceeding 15
initiated by the Commission under subsection 16
(c)(1) that— 17
‘‘(i) the manufacturer would have 18
taken the actions regardless of whether a 19
generic drug that references the listed drug 20
or biosimilar biological product that ref-21
erences the reference product had already 22
entered the market; and 23
‘‘(ii)(I) with respect to a hard switch 24
under paragraph (1)(A), the manufacturer 25
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took the action for reasons relating to the 1
safety risk to patients of the listed drug or 2
reference product; 3
‘‘(II) with respect to an action de-4
scribed in paragraph (1)(A)(ii)(I)(aa), 5
there is a supply disruption that— 6
‘‘(aa) is outside of the control of 7
the manufacturer; 8
‘‘(bb) prevents the production or 9
distribution of the applicable listed 10
drug or reference product; and 11
‘‘(cc) cannot be remedied by rea-12
sonable efforts; or 13
‘‘(III) with respect to a soft switch 14
under paragraph (1)(B), the manufacturer 15
had legitimate pro-competitive reasons, 16
apart from the financial effects of reduced 17
competition, to take the action. 18
‘‘(B) R
ULE OF CONSTRUCTION .—Nothing 19
in subparagraph (A) may be construed to limit 20
the information that the Commission may oth-21
erwise obtain in any proceeding or action insti-22
tuted with respect to a violation of this section. 23
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‘‘(4) RESPONSE.—With respect to a justifica-1
tion offered by a manufacturer under paragraph (3), 2
the Commission may— 3
‘‘(A) rebut any evidence presented by a 4
manufacturer during that justification; or 5
‘‘(B) establish by a preponderance of the 6
evidence that— 7
‘‘(i) on balance, the pro-competitive 8
benefits from the conduct described in sub-9
paragraph (A) or (B) of paragraph (1), as 10
applicable, do not outweigh any anti-11
competitive effects of the conduct, even in 12
consideration of the justification so offered; 13
or 14
‘‘(ii)(I) the conduct described in para-15
graph (1) is not reasonably necessary to 16
address or achieve the justifications de-17
scribed in clause (ii) of paragraph (3)(A); 18
or 19
‘‘(II) the justifications described in 20
clause (ii) of paragraph (3)(A) could be 21
reasonably addressed or achieved through 22
less anticompetitive means. 23
‘‘(c) E
NFORCEMENT.— 24
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‘‘(1) IN GENERAL.—If the Commission has rea-1
son to believe that any manufacturer has violated, is 2
violating, or is about to violate this section, or a rule 3
promulgated under this section, the Commission 4
may take any of the following actions: 5
‘‘(A) Institute a proceeding under section 6
5(b). 7
‘‘(B) In the same manner and to the same 8
extent as provided in section 13(b), bring suit 9
in a district court of the United States to tem-10
porarily enjoin the action of the manufacturer. 11
‘‘(C) Bring suit in a district court of the 12
United States, in which the Commission may 13
seek— 14
‘‘(i) to permanently enjoin the action 15
of the manufacturer; 16
‘‘(ii) any of the remedies described in 17
paragraph (3); and 18
‘‘(iii) any other equitable remedy, in-19
cluding ancillary equitable relief. 20
‘‘(2) J
UDICIAL REVIEW.— 21
‘‘(A) I
N GENERAL.—Notwithstanding any 22
provision of section 5, any manufacturer that is 23
subject to a final cease and desist order issued 24
in a proceeding to enforce this section, or a rule 25
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promulgated under this section, may, not later 1
than 30 days after the date on which the Com-2
mission issues the order, petition for review of 3
the order in— 4
‘‘(i) the United States Court of Ap-5
peals for the District of Columbia Circuit; 6
or 7
‘‘(ii) the court of appeals of the 8
United States for the circuit in which the 9
ultimate parent entity of the manufacturer 10
is incorporated. 11
‘‘(B) T
REATMENT OF FINDINGS .—In a re-12
view of a final cease and desist order conducted 13
by a court of appeals of the United States 14
under subparagraph (A), the factual findings of 15
the Commission shall be conclusive if those 16
facts are supported by the evidence. 17
‘‘(3) E
QUITABLE REMEDIES.— 18
‘‘(A) D
ISGORGEMENT.— 19
‘‘(i) I
N GENERAL.—In a suit brought 20
under paragraph (1)(C), the Commission 21
may seek, and the court may order, 22
disgorgement of any unjust enrichment 23
that a person obtained as a result of the 24
violation that gives rise to the suit. 25
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‘‘(ii) C ALCULATION.—Any 1
disgorgement that is ordered with respect 2
to a person under clause (i) shall be offset 3
by any amount of restitution ordered 4
under subparagraph (B). 5
‘‘(iii) L
IMITATIONS PERIOD .—The 6
Commission may seek disgorgement under 7
this subparagraph not later than 5 years 8
after the latest date on which the person 9
from which the disgorgement is sought re-10
ceives any unjust enrichment from the ef-11
fects of the violation that gives rise to the 12
suit in which the Commission seeks the 13
disgorgement. 14
‘‘(B) R
ESTITUTION.— 15
‘‘(i) I
N GENERAL.—In a suit brought 16
under paragraph (1)(C), the Commission 17
may seek, and the court may order, res-18
titution with respect to the violation that 19
gives rise to the suit. 20
‘‘(ii) L
IMITATIONS PERIOD .—The 21
Commission may seek restitution under 22
this subparagraph not later than 5 years 23
after the latest date on which the person 24
from which the restitution is sought re-25
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ceives any unjust enrichment from the ef-1
fects of the violation that gives rise to the 2
suit in which the Commission seeks the 3
restitution. 4
‘‘(4) R
ULES OF CONSTRUCTION .—Nothing in 5
this subsection may be construed as— 6
‘‘(A) requiring the Commission to bring a 7
suit seeking a temporary injunction under para-8
graph (1)(B) before bringing a suit seeking a 9
permanent injunction under paragraph (1)(C); 10
or 11
‘‘(B) affecting the authority of the Federal 12
Trade Commission under any other provision of 13
law.’’. 14
(b) A
PPLICABILITY.—Section 27 of the Federal 15
Trade Commission Act, as added by subsection (a), shall 16
apply with respect to any— 17
(1) conduct that occurs on or after the date of 18
enactment of this Act; and 19
(2) action or proceeding that is commenced on 20
or after the date of enactment of this Act. 21
(c) A
NTITRUSTLAWS.—Except to the extent sub-22
section (a) establishes an additional basis for liability 23
under the Federal Trade Commission Act (15 U.S.C. 41 24
et seq.), nothing in this section, or the amendments made 25
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by this section, shall modify, impair, limit, or supersede 1
the applicability of the antitrust laws, as defined in sub-2
section (a) of the first section of the Clayton Act (15 3
U.S.C. 12), or of section 5 of the Federal Trade Commis-4
sion Act (15 U.S.C. 45) to the extent that it applies to 5
unfair methods of competition. 6
(d) R
ULEMAKING.—The Federal Trade Commission 7
may issue rules under section 553 of title 5, United States 8
Code, to define any terms used in section 27 of the Fed-9
eral Trade Commission Act, as added by subsection (a) 10
(other than terms that are defined in subsection (a) of 11
such section 27). 12
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43
119
TH
CONGRESS
1
ST
S
ESSION
S. 1040 A BILL
To amend the Federal Trade Commission Act to
prohibit product hopping, and for other purposes.
A
PRIL
10, 2025
Reported with an amendment
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