Congressional findings and declaration of purposes

(a) Findings Congress finds the following: (1) In 1984, the Drug Price Competition and Patent Term Restoration Act (Public Law 98–417) (referred to in this Act as the 1984 Act), was enacted with the intent of facilitating the early entry of generic drugs while preserving incentives for innovation. (2) Prescription drugs make up approximately 11 percent of the national health care spending. (3) Initially, the 1984 Act was successful in facilitating generic competition to the benefit of consumers and health care payers. Although 91 percent of all prescriptions dispensed in the United States are generic drugs, they account for only 18 percent of all expenditures. (4) Generic drugs cost substantially less than brand name drugs, with discounts off the brand price averaging 80 to 85 percent. (5) Federal dollars currently account for over 40 percent of the $449,700,000,000 spent on retail prescription drugs annually. (6) (A) In recent years, the intent of the 1984 Act has been subverted by certain settlement agreements in which brand name companies transfer value to their potential generic competitors to settle claims that the generic company is infringing the branded company’s patents. (B) These reverse payment settlement agreements— (i) allow a branded company to share its monopoly profits with the generic company as a way to protect the branded company’s monopoly; and (ii) have unduly delayed the marketing of low-cost generic drugs contrary to free competition, the interests of consumers, and the principles underlying antitrust law. (C) Because of the price disparity between brand name and generic drugs, such agreements are more profitable for both the brand and generic manufacturers than competition and will become increasingly common unless prohibited. (D) These agreements result in consumers losing the benefits that the 1984 Act was intended to provide. (7) In 2010, the Biologics Price Competition and Innovation Act (Public Law 111–148) (referred to in this Act as the BPCIA), was enacted with the intent of facilitating the early entry of biosimilar and interchangeable follow-on versions of branded biological products while preserving incentives for innovation. (8) Biological drugs play an important role in treating many serious illnesses, from cancers to genetic disorders. They are also expensive, representing more than half of all prescription drug spending. (9) Competition from biosimilar and interchangeable biological products promises to lower drug costs and increase patient access to biological medicines. But reverse payment settlement agreements also threaten to delay the entry of biosimilar and interchangeable biological products, which would undermine the goals of BPCIA. (b) Purposes The purposes of this Act are— (1) to enhance competition in the pharmaceutical market by stopping anticompetitive agreements between brand name and generic drug and biosimilar biological product manufacturers that limit, delay, or otherwise prevent competition from generic drugs and biosimilar biological products; and (2) to support the purpose and intent of antitrust law by prohibiting anticompetitive practices in the pharmaceutical industry that harm consumers.