Bill Text: IL HB4822 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2020-06-23 - Rule 19(b) / Re-referred to Rules Committee [HB4822 Detail]

Download: Illinois-2019-HB4822-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB4822 Introduced , 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.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning health.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Preserving Access to Affordable Drugs Act.
Section 5. Definitions. In this Act:
"ANDA" means abbreviated new drug application.
"ANDA filer" means a party that owns or controls an ANDA
filed with the Food and Drug Administration or has the
exclusive rights under that ANDA to distribute the ANDA
product.
"Agreement" means anything that would constitute an
agreement or a trust under Illinois law.
"Agreement resolving or settling a patent infringement
claim" includes any agreement that is entered into within 30
days of the resolution or the settlement of the claim or any
other agreement that is contingent upon, provides a contingent
condition for, or is otherwise related to the resolution or
settlement of the claim. "Agreement resolving or settling a
patent infringement claim" includes, but is not limited to, the
following:
(1) Any agreement required to be provided to the
Federal Trade Commission or the Antitrust Division of the

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United States Department of Justice under the federal
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (Public Law 108-173).
(2) Any agreement between a biosimilar or
interchangeable product applicant and a reference product
sponsor that resolves patent claims between the applicant
and sponsor.
"Biosimilar biological product application filer" means a
party that owns or controls a biosimilar biological product
application filed with the Food and Drug Administration under
Section 351(k) of the federal Public Health Service Act (42
U.S.C. 262(k)) for licensure of a biological product as
biosimilar to, or interchangeable with, a reference product, or
that has the exclusive rights under the application to
distribute the biosimilar biological product.
"NDA" means new drug application.
"Nonreference drug filer" means either:
(1) an ANDA filer; or
(2) a biosimilar biological product application filer.
"Nonreference drug product" means the product to be
manufactured under an ANDA that is the subject of the patent
infringement claim, a biosimilar biological product that is the
product to be manufactured under the biosimilar biological
product application that is the subject of the patent
infringement claim, or both.
"Patent infringement" means infringement of any patent or

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

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

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and Cosmetic Act (21 U.S.C. 355(c)(3)(E), 360cc, and 355a,
respectively) or on the licensing of biological product
applications under Section 262(k)(7) of Title 42 of the United
States Code (12-year exclusivity) or Section 262(m)(2) or (3)
of Title 42 of the United States Code (pediatric exclusivity).
Section 10. Patent infringement claim.
(a) Except as provided in subsection (b), 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 this Act if both of the following
apply:
(1) A nonreference drug filer receives anything of
value from another company asserting patent infringement,
including, but not limited to, an exclusive license or a
promise that the brand company will not launch an
authorized generic version of its brand drug.
(2) The nonreference drug filer agrees to limit or
forgo research, development, manufacturing, marketing, or
sales of the nonreference drug filer's product for any
period of time.
As used in this subsection, "anything of value" does not
include a settlement of a patent infringement claim in which
the consideration granted by the brand or reference drug filer
to the nonreference drug filer as part of the resolution or

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

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

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

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

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

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