Illinois General Assembly - Full Text of HB3729
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Full Text of HB3729  102nd General Assembly

HB3729 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB3729

 

Introduced 2/22/2021, by Rep. Tom Demmer

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Preserving Access to Affordable Drugs Act. Provides that an agreement resolving or settling, on a final or interim basis, a patent infringement claim in connection with the sale of a pharmaceutical product is presumed to have anticompetitive effects and is a violation of the Act if certain circumstances apply. Provides other requirements for patent infringement claims in connection with the sale of a pharmaceutical product. Contains provisions regarding presumptions in an action under the Act. Provides civil penalties for violating the Act. Provides that any penalty shall accrue only to the State of Illinois and shall be recovered in a civil action brought by the Attorney General against any party to an agreement that violates this Act. Requires an action to enforce a cause of action for a violation of the Act to be commenced within 4 years after the cause of action accrued. Contains other provisions.


LRB102 13949 CPF 19301 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3729LRB102 13949 CPF 19301 b

1    AN ACT concerning health.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Preserving Access to Affordable Drugs Act.
 
6    Section 5. Definitions. In this Act:
7    "ANDA" means abbreviated new drug application.
8    "ANDA filer" means a party that owns or controls an ANDA
9filed with the Food and Drug Administration or has the
10exclusive rights under that ANDA to distribute the ANDA
11product.
12    "Agreement" means anything that would constitute an
13agreement or a trust under Illinois law.
14    "Agreement resolving or settling a patent infringement
15claim" includes any agreement that is entered into within 30
16days of the resolution or the settlement of the claim or any
17other agreement that is contingent upon, provides a contingent
18condition for, or is otherwise related to the resolution or
19settlement of the claim. "Agreement resolving or settling a
20patent infringement claim" includes, but is not limited to,
21the following:
22        (1) Any agreement required to be provided to the
23    Federal Trade Commission or the Antitrust Division of the

 

 

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1    United States Department of Justice under the federal
2    Medicare Prescription Drug, Improvement, and Modernization
3    Act of 2003 (Public Law 108-173).
4        (2) Any agreement between a biosimilar or
5    interchangeable product applicant and a reference product
6    sponsor that resolves patent claims between the applicant
7    and sponsor.
8    "Biosimilar biological product application filer" means a
9party that owns or controls a biosimilar biological product
10application filed with the Food and Drug Administration under
11Section 351(k) of the federal Public Health Service Act (42
12U.S.C. 262(k)) for licensure of a biological product as
13biosimilar to, or interchangeable with, a reference product,
14or that has the exclusive rights under the application to
15distribute the biosimilar biological product.
16    "NDA" means new drug application.
17    "Nonreference drug filer" means either:
18        (1) an ANDA filer; or
19        (2) a biosimilar biological product application filer.
20    "Nonreference drug product" means the product to be
21manufactured under an ANDA that is the subject of the patent
22infringement claim, a biosimilar biological product that is
23the product to be manufactured under the biosimilar biological
24product application that is the subject of the patent
25infringement claim, or both.
26    "Patent infringement" means infringement of any patent or

 

 

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1of any filed patent application, extension, reissue, renewal,
2division, continuation, continuation in part, reexamination,
3patent term restoration, patent of addition, and any extension
4thereof.
5    "Patent infringement claim" means any allegation made
6against a nonreference drug filer, whether or not included in
7a complaint filed with a court of law, that its nonreference
8drug product or application infringes any patent held by, or
9exclusively licensed to, the reference drug holder.
10    "Reference drug holder" means either:
11        (1) A brand holder that is any of the following:
12            (A) The holder of an approved NDA for a drug
13        product application filed under Section 505(b) of the
14        federal Food, Drug, and Cosmetic Act (21 U.S.C.
15        355(b)).
16            (B) A person owning or controlling enforcement of
17        the patent listed in the Approved Drug Products With
18        Therapeutic Equivalence Evaluations (commonly known as
19        the "FDA Orange Book") in connection with the NDA.
20            (C) The predecessors, subsidiaries, divisions,
21        groups, and affiliates controlled by, controlling, or
22        under common control with, any of the entities
23        described in subparagraph (A) or (B), with control to
24        be presumed by direct or indirect share ownership of
25        50% or greater, as well as the licensees, licensors,
26        successors, and assigns of each of those entities.

 

 

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1        (2) A biological product license holder, which means
2    any of the following:
3            (A) The holder of an approved biological product
4        license application for a biological drug product
5        under Section 351(a) of the federal Public Health
6        Service Act (42 U.S.C. 262(a)).
7            (B) A person owning or controlling enforcement of
8        any patents that claim the biological product that is
9        the subject of the approved biological patent license
10        application.
11            (C) The predecessors, subsidiaries, divisions,
12        groups, and affiliates controlled by, controlling, or
13        under common control with, any of the entities
14        described in subparagraph (A) or (B), with control to
15        be presumed by direct or indirect share ownership of
16        50% or greater, as well as the licensees, licensors,
17        successors, and assigns of each of those entities.
18    "Reference drug product" means the product to be
19manufactured by the reference drug holder and includes both
20branded drugs of the NDA holder and the biologic drug product
21of the biologic product license applicant.
22    "Statutory exclusivity" means those prohibitions on the
23approval of drug applications under clauses (ii) through (iv),
24inclusive, of Section 505(c)(3)(E) (5-year and 3-year data
25exclusivity), Section 527 (orphan drug exclusivity), or
26Section 505A (pediatric exclusivity) of the federal Food,

 

 

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1Drug, and Cosmetic Act (21 U.S.C. 355(c)(3)(E), 360cc, and
2355a, respectively) or on the licensing of biological product
3applications under Section 262(k)(7) of Title 42 of the United
4States Code (12-year exclusivity) or Section 262(m)(2) or (3)
5of Title 42 of the United States Code (pediatric exclusivity).
 
6    Section 10. Patent infringement claim.
7    (a) Except as provided in subsection (b), an agreement
8resolving or settling, on a final or interim basis, a patent
9infringement claim, in connection with the sale of a
10pharmaceutical product, is presumed to have anticompetitive
11effects and is a violation of this Act if both of the following
12apply:
13        (1) A nonreference drug filer receives anything of
14    value from another company asserting patent infringement,
15    including, but not limited to, an exclusive license or a
16    promise that the brand company will not launch an
17    authorized generic version of its brand drug.
18        (2) The nonreference drug filer agrees to limit or
19    forgo research, development, manufacturing, marketing, or
20    sales of the nonreference drug filer's product for any
21    period of time.
22    As used in this subsection, "anything of value" does not
23include a settlement of a patent infringement claim in which
24the consideration granted by the brand or reference drug filer
25to the nonreference drug filer as part of the resolution or

 

 

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1settlement consists of only one or more of the following:
2        (1) The right to market the competing product in the
3    United States before the expiration of either:
4            (A) a patent that is the basis for the patent
5        infringement claim; or
6            (B) a patent right or other statutory exclusivity
7        that would prevent the marketing of the drug.
8        (2) A covenant not to sue on a claim that the
9    nonreference drug product infringes a United States
10    patent.
11        (3) Compensation for saved reasonable future
12    litigation expenses of the reference drug holder, but only
13    if both of the following are true:
14            (A) The total compensation for saved litigation
15        expenses is reflected in budgets that the reference
16        drug holder documented and adopted at least 6 months
17        before the settlement.
18            (B) The compensation does not exceed the lower of
19        the following:
20                (i) $7,500,000.
21                (ii) 5% of the revenue that the nonreference
22            drug holder projected or forecasted it would
23            receive in the first 3 years of sales of its
24            version of the reference drug documented at least
25            12 months before the settlement. If no projections
26            or forecasts are available, the compensation does

 

 

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1            not exceed $250,000.
2        (4) An agreement resolving or settling a patent
3    infringement claim that permits a nonreference drug filer
4    to begin selling, offering for sale, or distributing the
5    nonreference drug product if the reference drug holder
6    seeks approval to launch, obtains approval to launch, or
7    launches a different dosage, strength, or form of the
8    reference drug having the same active ingredient before
9    the date set by the agreement for entry of the
10    nonreference drug filer. A different form of the reference
11    drug does not include an authorized generic version of the
12    reference drug.
13        (5) An agreement by the reference drug holder not to
14    interfere with the nonreference drug filer's ability to
15    secure and maintain regulatory approval to market the
16    nonreference drug product or an agreement to facilitate
17    the nonreference drug filer's ability to secure and
18    maintain regulatory approval to market the nonreference
19    drug product.
20        (6) An agreement resolving a patent infringement claim
21    in which the reference drug holder forgives the potential
22    damages accrued by a nonreference drug holder for an
23    at-risk launch of the nonreference drug product that is
24    the subject of that claim.
25    (b) Parties to an agreement are not in violation of
26subsection (a) if they can demonstrate by a preponderance of

 

 

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1the evidence that either of the following are met:
2        (1) The value received by the nonreference drug filer
3    described in paragraph (1) of subsection (a) is a fair and
4    reasonable compensation solely for other goods or services
5    that the nonreference drug filer has promised to provide.
6        (2) The agreement has directly generated
7    procompetitive benefits and the procompetitive benefits of
8    the agreement outweigh the anticompetitive effects of the
9    agreement.
 
10    Section 15. Presumptions.
11    (a) In determining whether the parties to the agreement
12have met their burden under subsection (b) of Section 10, the
13fact-finder shall not presume any of the following:
14        (1) That entry into the marketplace could not have
15    occurred until the expiration of the relevant patent
16    exclusivity or that the agreement's provision for entry of
17    the nonreference drug product before the expiration of any
18    patent exclusivity means that the agreement is
19    procompetitive within the meaning of paragraph (2) of
20    subsection (b) of Section 10.
21        (2) That any patent is enforceable and infringed by
22    the nonreference drug filer in the absence of a final
23    adjudication binding on the filer of those issues.
24        (3) That the agreement caused no delay in entry of the
25    nonreference drug filer's drug product because of the lack

 

 

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1    of United States Food and Drug Administration approval of
2    that or of another nonreference drug product.
3        (4) That the agreement caused no harm or delay due to
4    the possibility that the nonreference drug filer's drug
5    product might infringe some patent that has not been
6    asserted against the nonreference drug filer or that is
7    not subject to a final and binding adjudication on that
8    filer as to the patent's scope, enforceability, and
9    infringement.
10    This subsection shall not be construed to preclude a party
11from introducing evidence regarding paragraphs (1) through
12(4), inclusive, and shall not be construed to preclude the
13fact-finder from making a determination regarding paragraphs
14(1) through (4), based on the full scope of the evidence.
15    (b) In determining whether the parties to the agreement
16have met their burden under subsection (b) of Section 10, the
17fact-finder shall presume that the relevant product market is
18that market consisting of the brand or reference drug of the
19company alleging patent infringement and the drug product of
20the nonreference company accused of infringement and any other
21biological product that is licensed as biosimilar or is an
22AB-rated generic to the reference product.
23    (c) This Act does not modify, impair, limit, or supersede
24the right of any drug company applicant to assert claims or
25counterclaims against any person under the antitrust laws or
26other laws relating to unfair competition of the federal

 

 

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1antitrust law or State law.
 
2    Section 20. Violations; commencing an action.
3    (a) Each person that violates or assists in the violation
4of this Act shall forfeit and pay to the State of Illinois a
5civil penalty sufficient to deter violations of this Act, as
6follows:
7        (1) If the person who violated this Section received
8    any value due to that violation, an amount up to 3 times
9    the value received by the party that is reasonably
10    attributable to the violation of this Section, or
11    $20,000,000, whichever is greater.
12        (2) If the violator has not received anything of value
13    due to that violation, an amount up to 3 times the value
14    given to other parties to the agreement reasonably
15    attributable to the violation of this Act, or $20,000,000,
16    whichever is greater.
17    For purposes of this subsection, "reasonably attributable
18to the violation" shall be determined by Illinois' share of
19the market for the brand drug at issue in the agreement.
20    (b) Any penalty described in subsection (a) shall accrue
21only to the State of Illinois and shall be recovered in a civil
22action brought by the Attorney General in his or her own name,
23or by any of his or her attorneys designated by him or her for
24that purpose, against any party to an agreement that violates
25this Act.

 

 

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1    (c) An action to enforce a cause of action for a violation
2of this Act shall be commenced within 4 years after the cause
3of action accrued.