Rep. Rush Re-Files Bill Prohibiting Reverse Payments in Patent Suits

Rep. Bobby L. Rush, D-Il., has re-introduced on the congressional floor a bill intended to eliminate perceived anticompetitive settlements of patent infringement litigation between generic and brand-name pharmaceutical manufacturers.

The bill, otherwise known as the “Protecting Consumer Access to generic Drugs Act of 2009,” reverse payments”—payments made to a generic manufacturer in return for a commitment to delay market entry—since such payments can defer legitimate competition by generic manufacturers; hence, the bill bears the title “To prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market, and for other purposes.”

The proposed legislation specifically prohibits, as an unfair and deceptive act or practice and an unfair method of competition in or affecting interstate commerce, any person from being a party to any agreement resolving or settling a patent infringement claim in which: (1) an abbreviated new drug (generic) application filer receives anything of value; and (2) such filer agrees not to research, develop, manufacture, market or sell the generic drug. The bill however excludes a resolution or settlement that includes no more than: (1) the right to market the generic drug before the expiration of the patent or other exclusivity period; or (2) the waiver of a patent infringement claim for damages.

The bill authorizes the Federal Trade Commission (“FTC”) to exempt agreements in furtherance of market competition and for the benefit of consumers.

The legislation amends the Federal Food, Drug, and Cosmetic Act (“Act”) to provide that a generic drug applicant forfeits market exclusivity for failing to market the drug 75 days after: (1) a court dismisses a declaratory judgment action for lack of subject matter jurisdiction; or (2) the applicant files with the Secretary of Health and Human Services a covenant that the patent owner will not sue the applicant for patent infringement. It also deems an applicant to have forfeited market exclusivity if the applicant enters into an agreement that violates this Act.

This bill was first introduced in May 2007 under the previous Congress (110th Congress) The last major action was its referral to the House subcommittee. Status: Referred to the Subcommittee on Courts, the Internet, and Intellectual Property.

Rep. Rush re-filed the bill on March 25, 2009.  On the same day, the House referred it to the Committee on Energy and Commerce, and in addition, to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

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