Technical corrections only. The diff includes minor wording adjustments to act titles and updates several U.S. Code cross-references. No substantive policy changes were made between v1 and v2.
Preserve Access to Affordable Generics and Biosimilars Act
- Sponsor
- Sen. Klobuchar, Amy [D-MN]
- Committees
- Judiciary Committee (primary)
- Last action
- Apr 10, 2025
Bottom line
This bill aims to accelerate the availability of lower-cost generic and biosimilar drugs by banning anticompetitive "pay-for-delay" deals, potentially lowering prescription drug costs for consumers and federal healthcare programs.
What it actually does
This bill prohibits "reverse payment" settlement agreements between brand-name and generic/biosimilar drug manufacturers that delay market entry. It establishes a strong presumption that such agreements are anticompetitive if the generic/biosimilar company receives value and agrees to delay, unless parties can prove procompetitive benefits outweigh anticompetitive effects or the value is solely for specific legitimate purposes. The bill also imposes civil penalties for violations and strengthens reporting requirements for these agreements.
Proponents argue
Supporters argue that "pay-for-delay" agreements are a clear abuse of patent law designed to stifle competition, keeping drug prices artificially high. They contend that this bill will restore the original intent of the 1984 Drug Price Competition and Patent Term Restoration Act and the Biologics Price Competition and Innovation Act by ensuring timely market entry of generics and biosimilars, leading to significant savings for consumers, patients, and federal healthcare budgets.
Opponents contend
Critics, often from the pharmaceutical industry, might argue that such prohibitions could discourage legitimate patent settlements, leading to more protracted and costly litigation. They may contend that some reverse payment settlements can be procompetitive by resolving disputes efficiently and providing certainty, and that a blanket prohibition or strong presumption could chill innovation incentives for brand-name drug developers by making patent enforcement more difficult or less predictable.
The bill is moderately complex due to its legal and technical language, requiring careful reading to understand the nuances of the prohibition and exceptions.
Section 3(a), adding new Section 27(a) to the Federal Trade Commission Act.
Prohibition on Unlawful Compensation for Delay
This core provision makes it illegal for drug companies to enter into agreements that settle patent claims if those agreements have anticompetitive effects. It specifically creates a strong presumption that an agreement is anticompetitive if a generic or biosimilar manufacturer receives "anything of value" (including an exclusive license) and, in return, agrees to limit or delay the market entry of their product.
Supporters argue
Supporters argue this provision directly targets the core problem of "pay-for-delay" schemes, which artificially inflate drug prices. By establishing a strong presumption of anticompetitiveness, it shifts the burden to companies to prove their settlements are legitimate, thereby deterring harmful agreements and fostering competition.
Critics contend
Opponents might argue that the broad definition of "anything of value" and the strong presumption could inadvertently capture legitimate settlement agreements, leading to more litigation and less certainty in patent disputes. They may contend it could chill innovation by making it harder for brand-name companies to protect their intellectual property.
Tradeoffs
Balances the desire to promote generic/biosimilar competition and lower drug costs against concerns about potentially disrupting legitimate patent settlements and the incentives for pharmaceutical innovation.
Section 3(a), adding new Section 27(a)(3)(B) and 27(b) to the Federal Trade Commission Act.
Legitimate Settlement Exclusions
The bill outlines specific circumstances where an agreement, even if it involves a transfer of value and a delay, will not be presumed anticompetitive or is explicitly permitted. These include compensation solely for other goods or services, procompetitive benefits outweighing anticompetitive effects, the right to market before patent expiration, payments for reasonable litigation expenses (capped at $7.5M in 2025, adjusted annually), or a covenant not to sue.
Section 3(a), adding new Section 27(a)(4) and 27(a)(5) to the Federal Trade Commission Act.
FTC Enforcement and Civil Penalties
Grants the Federal Trade Commission (FTC) authority to bring civil actions in district court against parties violating the prohibition. Violators face civil penalties up to three times the value received by the party attributable to the violation, or three times the value given if no value was received by the NDA holder/biological product license holder. The court considers factors like culpability, prior conduct, ability to pay, and profits earned when determining the penalty amount.
Section 4(b), amending Section 1112 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Enhanced Reporting and Certification of Settlements
Requires the Chief Executive Officer or the company official responsible for negotiating any patent settlement agreement to file a certification with the Assistant Attorney General and the FTC. This certification must declare that the filed materials represent the complete, final, and exclusive agreement, including any ancillary agreements or oral agreements, representations, commitments, or promises.
Section 6, amending Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug, and Cosmetic Act.
Loss of Generic Exclusivity for Violations
Amends existing law to specify that if an agreement is found to violate the new Section 27 of the Federal Trade Commission Act (the "pay-for-delay" prohibition), the generic drug company involved will forfeit its 180-day market exclusivity period. This exclusivity is a significant incentive for generic companies to challenge patents.
Defines "agreement resolving or settling a patent infringement claim" broadly to include any agreement entered into within 30 days of the resolution or settlement, or any other agreement contingent upon, providing a contingent condition for, or otherwise related to the resolution or settlement.
Section 3(a), adding new Section 27(d)(2) to the Federal Trade Commission Act.
Why it matters:Standard legislative practice to define terms precisely, but its breadth is substantively important for preventing circumvention.
Case for: Supporters argue this broad definition is essential to prevent companies from structuring multiple agreements to circumvent the "pay-for-delay" prohibition, ensuring that all related transactions are scrutinized.
Case against: No specific opposition is typically raised against this definitional breadth, as it's a standard anti-circumvention measure.
Estimated impact: Prevents evasion of the core prohibition through complex, multi-part agreements.
Clarifies that agreements required to be reported under existing law (and thus subject to the new certification requirements) include those resolving disputes before the Patent Trial and Appeal Board (PTAB), such as inter partes reviews.
Section 5, adding new Section 1112(e) to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Why it matters:Technical update to ensure comprehensive coverage of patent dispute resolutions across all relevant forums.
Case for: Supporters argue that including PTAB settlements is critical because these proceedings are increasingly used to challenge patents, and "pay-for-delay" tactics could easily shift to this forum if not covered.
Case against: No specific opposition is typically raised against this technical clarification.
Estimated impact: Closes a potential loophole for "pay-for-delay" agreements in alternative patent dispute forums.