Make Medications Affordable by Preventing Pandemic Price gouging Act of 2020 or the MMAPPP Act of 2020
This bill imposes licensing and price restrictions on federally supported drugs and other medicines intended to address COVID-19 (i.e., coronavirus disease 2019) or other public health emergencies.
With respect to a COVID-19 drug patent developed using certain types of federal support, any license granted by the federal government shall be open and nonexclusive. Similarly, a licensee or assignee for such a patent shall grant open nonexclusive licenses for the patent. An entity that receives a license shall pay reasonable royalties to (1) the patent holder, or (2) the owner of marketing exclusivity rights granted by the Food and Drug Administration (FDA) that were terminated under this bill.
The bill requires that such drugs be offered at a fair and reasonable price based on certain considerations, such as access.
If the Department of Health and Human Services (HHS) finds that the price of any drug to address a public health emergency is excessive, HHS must void any FDA-granted exclusivity for the drug and grant open and nonexclusive licenses to other manufacturers. Such licenses are subject to reasonable royalty requirements.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4439 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
2d Session
S. 4439
To require any COVID-19 drug developed in whole or in part with
Federal support to be affordable and accessible by prohibiting
monopolies and price gouging, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 5, 2020
Ms. Smith (for herself, Mr. Merkley, Ms. Baldwin, Mrs. Gillibrand, and
Ms. Harris) introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To require any COVID-19 drug developed in whole or in part with
Federal support to be affordable and accessible by prohibiting
monopolies and price gouging, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Make Medications Affordable by
Preventing Pandemic Price-gouging Act of 2020'' or the ``MMAPPP Act of
2020''.
SEC. 2. REQUIREMENTS FOR LICENSING OF NEW COVID-19 TREATMENT AND
PREVENTION TECHNOLOGIES TO MEET DOMESTIC AND GLOBAL
DEMAND.
(a) Nonexclusive License Required.--Any covered license granted by
the Federal Government shall be an open, nonexclusive license.
(b) Contractor, Assignee, Exclusive Licensee.--Notwithstanding any
other provision of law, any contractor, assignee, or exclusive licensee
to an invention developed in whole or in part in work performed under a
covered transaction shall grant an open, non-exclusive license. If any
such contractor, assignee, or exclusive licensee refuses to grant such
license, the Federal Government shall grant the license.
(c) Reasonable Royalty.--
(1) In general.--Except as provided in paragraph (4), an
entity that accepts an open, nonexclusive license under this
section shall pay a reasonable royalty with respect to sales
within the United States to--
(A) the holder of a patent that claims the COVID-19
related invention; or
(B) the holder of an application approved under
section 505 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355) or section 351 of the Public Health
Service Act (42 U.S.C. 262) for which any FDA-granted
exclusivity with respect to a drug related to such
invention that was terminated under this section.
(2) Royalty.--The reasonable royalty described under
paragraph (1) shall be a percentage of sales of the entity
paying the royalty, where the percentage rate is no higher than
the average royalty rate estimated from the data provided by
the Internal Revenue Service for pharmaceutical manufacturer
Federal income tax returns.
(3) Requirements.--
(A) In general.--The royalty described under
paragraph (2) shall be subject to the applicable
royalty rate requirements of section 319B of the Public
Health Service Act, as added by section 5 of this Act.
(B) Multiple affected parties.--In the case of more
than one recipient of a royalty, the royalty shall be
divided among each such recipient (including any
manufacturer) in a manner agreed upon by the
manufacturer and other recipients, or, in the absence
of such an agreement, in a manner the Secretary
determines to be appropriate.
(4) Exception for government-owned inventions.--An entity
that accepts an open, nonexclusive license for a federally
owned invention described under section 207 of title 35, United
States Code, is not required to pay a royalty under this
section.
(d) Definitions.--In this section:
(1) Covered license.--The term ``covered license'' means a
license that allows a licensee to make, use, offer to sell, or
sell, export, or import into the United States or any other
country or territory a COVID-19 related invention pursuant to--
(A) section 207 of title 35, United States Code;
and
(B) section 12 of the Stevenson-Wydler Technology
Innovation Act of 1980 (15 U.S.C. 3710a).
(2) Covered transaction.--The term ``covered transaction''
means any contract, funding agreement, license, other
transaction, or other arrangement entered into between a party
and the Federal Government on or after the date of enactment of
this Act with respect to research and development regarding a
drug that--
(A) is intended or anticipated to be used to
diagnose, mitigate, prevent, or treat COVID-19; and
(B) consists of--
(i) a licensing agreement pursuant to
section 207 of title 35, United States Code;
(ii) a cooperative research and development
agreement and licensing agreement pursuant to
section 12 of the Stevenson-Wydler Technology
Innovation Act of 1980 (15 U.S.C. 3710a);
(iii) a funding agreement, as defined under
section 201 of title 35, United States Code; or
(iv) any other transaction entered into
pursuant to--
(I) section 319L, 421, or 480 of
the Public Health Service Act (42
U.S.C. 247d-7e, 285b-3, 287a);
(II) section 105 of the National
Institutes of Health Reform Act of 2006
(42 U.S.C. 284n); or
(III) section 2371 of title 10,
United States Code.
(3) COVID-19 related invention.--The term ``COVID-19
related invention'' means any invention that claims a drug that
is manufactured, used, designed, developed, modified, licensed,
or procured to diagnose, mitigate, prevent, treat, or cure
COVID-19; a use of such drug; a form of such drug; a method of
use of such drug; or a method of manufacturing such drug.
(4) FDA-granted exclusivity.--The term ``FDA-granted
exclusivity'' means prohibitions on the submission or approval
of drug applications granted under any of the following:
(A) Clauses (ii) through (v) of section
505(c)(3)(E) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(c)(3)(E)).
(B) Subsection (j)(5)(B)(iv) or clause (ii), (iii),
or (iv) of subsection (j)(5)(F) of such Act (21 U.S.C.
355(c)(3)(E)).
(C) Section 505A of such Act (21 U.S.C. 355a).
(D) Section 505E of such Act (21 U.S.C. 355f).
(E) Section 527 of such Act (21 U.S.C. 360cc).
(F) Section 351(k)(7) of the Public Health Service
Act (42 U.S.C. 262(k)(7)).
(G) Any other provision of law that provides for
marketing or data exclusivity (or extension of
exclusivity) with respect to a drug.
(5) Open, nonexclusive license.--The term ``open,
nonexclusive license'' means a license that allows a qualified
licensee, subject to the provisions of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.) and the Public Health
Service Act (42 U.S.C. 201 et seq.)--
(A) to make, use, offer to sell, sell, export, or
import into the United States and any other country and
territory an invention;
(B) to reference or rely upon earlier-submitted
regulatory test data or the earlier grant of marketing
approval of a treatment or vaccine related to such
invention; and
(C) to access and use otherwise confidential know-
how relating to the manufacture of such invention.
SEC. 3. REQUIREMENTS FOR REASONABLE PRICING OF FEDERALLY SUPPORTED
COVID-19 DRUGS.
(a) Reasonable Pricing Requirements.--Any covered transaction shall
include terms and conditions requiring that the pricing of the drug by
the party referred to in section 2(d)(2) be fair and reasonable, and
facilitate global access, taking into consideration--
(1) the impact of the price on access to the drug in the
United States, taking into consideration racial disparities in
COVID-19 cases and fatalities and other socioeconomic
disparities;
(2) the impact of the price on health program spending and
budgets in the United States;
(3) the risk adjusted value of Federal subsidies and
investments related to the drug;
(4) the costs associated with development and manufacturing
of the drug;
(5) the size of the affected patient population in the
United States and globally; and
(6) the therapeutic efficacy of the drug.
(b) Definitions.--In this section:
(1) Covered transaction.--The term ``covered transaction''
has the meaning given to such term in section 2.
(2) Drug.--The term ``drug'' has the meaning given to such
term in section 201 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 321).
SEC. 4. REPORTING ON THE EXPENDITURES OF MANUFACTURERS WITH RESPECT TO
COVID-19 DRUGS.
(a) Covered Drug.--For purposes of this section, the term ``covered
drug'' means a drug that is intended or anticipated to be used to
diagnose, mitigate, prevent, or treat COVID-19.
(b) Reporting Required.--The manufacturer of a covered drug shall
submit a report described in subsection (c) to the Secretary upon--
(1) the submission of an application for approval of the
drug under subsection (b) or (j) of section 505 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355);
(2) investigational use of the drug under section 505(i) of
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(i)) or
section 351(a)(3) of the Public Health Service Act (42 U.S.C.
262(a)(3));
(3) the submission of an application for licensing the drug
under subsection (a) or (k) of section 351 of the Public Health
Service Act (42 U.S.C. 262);
(4) the issuance of an authorization for emergency use of
the drug under section 564 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360bbb-3); or
(5) the marketing of the drug.
(c) Contents.--A report under subsection (a), consistent with the
standard for disclosures described in section 213.3(d) of title 12,
Code of Federal Regulations (as in effect on the date of enactment of
this Act), shall address the expenditures of the manufacturer with
respect to the covered drug and include, at a minimum--
(1) the sponsor or sponsors of the covered drug;
(2) the current wholesale acquisition cost of the covered
drug when applicable;
(3) the total expenditures of the manufacturer, specified
by individual costs, on--
(A) materials and manufacturing for the covered
drug; and
(B) acquiring patents and licensing for the covered
drug;
(4) the total amount and percentage of research and
development expenditures for the covered drug that was derived
from Federal funds;
(5) the total amount of any Federal benefits received by
the manufacturer with respect to the covered drug, including--
(A) the specific amounts and periods of impact for
each such benefit;
(B) the specific value of any tax credits,
including benefits from patient assistance programs and
donated samples;
(C) clinical and preclinical investments;
(D) any Federal benefit toward manufacturing costs,
including building or retrofitting facilities;
(E) Federal grants, including from the National
Institutes of Health, the Centers for Disease Control
and Prevention, the Department of Defense, the
Department of Energy, or other Federal departments or
agencies;
(F) patent applications that benefitted from such
grants;
(G) patent extensions;
(H) exclusivity periods; and
(I) waivers of fees;
(6) the total expenditures of the manufacturer on research
and development, itemized by basic and preclinical research and
by clinical research, reported separately for each clinical
trial, for the covered drug to demonstrate that the covered
drug meets applicable statutory standards for approval under
section 505 of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 355), licensure under section 351 of the Public Health
Service Act (42 U.S.C. 262), an exemption for investigational
use under section 505(i) of the Federal Food, Drug, or Cosmetic
Act (21 U.S.C. 355(i)) or section 351(a)(3) of the Public
Health Service Act (42 U.S.C. 262(a)(3)), or authorization
under section 564 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360bbb-3), as applicable;
(7) the total expenditures of the manufacturer on pursuing
new or expanded indications or dosage changes for the covered
drug under section 505 of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355) or section 351 of the Public Health Service
Act (42 U.S.C. 262);
(8) the total expenditures of the manufacturer on carrying
out postmarket requirements related to such drug, including
under section 505(o)(3) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355(o)(3));
(9) the specific expenditures associated with marketing and
advertising costs for the covered drug;
(10) any anticipated royalty fees from licensing to other
manufacturers; and
(11) with respect to the manufacturer--
(A) all stock-based performance metrics used by the
manufacturer to determine executive compensation over
the preceding 12 months; and
(B) any additional information the manufacturer
chooses to provide related to drug pricing decisions.
(d) Civil Monetary Penalties.--
(1) Failure to submit.--Any manufacturer of a covered drug
that fails to submit a report as required by this section,
following notification by the Secretary to the manufacturer
that the manufacturer is not in compliance with this section,
shall be subject to a civil monetary penalty of $100,000 for
each day on which the violation continues.
(2) False information.--Any manufacturer of a covered drug
that knowingly provides false information in a report under
this section is subject to a civil monetary penalty in an
amount not to exceed $100,000 for each item of false
information.
(e) Public Posting.--
(1) In general.--Subject to paragraph (3), the Secretary
shall post each report submitted under subsection (b) on the
public website of the Department of Health and Human Services
no later than 30 days after the submission of the report.
(2) Format.--The Secretary shall ensure that such reports
are--
(A) user-friendly to the public; and
(B) written in plain language that consumers can
readily understand.
(3) Protected information.--Nothing in this section shall
be construed to authorize the public disclosure of information
submitted by a manufacturer that is prohibited from disclosure
by any applicable law concerning the protection of trade
secrets, commercial information, and other information.
(f) Definition.--In this section, the term ``drug'' has the meaning
given to such term in section 201 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321).
SEC. 5. PRICING REQUIREMENTS FOR EXISTING TREATMENTS AND VACCINES IN A
PUBLIC HEALTH EMERGENCY.
Title III of the Public Health Service Act is amended by inserting
after section 319A (42 U.S.C. 247d-1) the following new section:
``SEC. 319B. PRICING REQUIREMENTS FOR TREATMENTS AND VACCINES IN A
PUBLIC HEALTH EMERGENCY.
``(a) Definitions.--For purposes of this section:
``(1) The term `covered drug' means a drug (including any
vaccine) used to diagnose, mitigate, prevent, or treat a
disease or disorder with respect to which there is or was in
effect a declaration of a public health emergency under section
319.
``(2) The term `covered period' means the period ending if
and when the circumstances which led to an applicable public
health emergency cease to exist and are unlikely to recur.
``(3) The term `FDA-granted exclusivity' means prohibitions
on the submission or approval of drug applications granted
under any of the following:
``(A) Clauses (ii) through (v) of section
505(c)(3)(E) of the Federal Food, Drug, and Cosmetic
Act.
``(B) Subsection (j)(5)(B)(iv) or clause (ii),
(iii), or (iv) of subsection (j)(5)(F) of such Act.
``(C) Section 505A of such Act.
``(D) Section 505E of such Act.
``(E) Section 527 of such Act.
``(F) Section 351(k)(7) of this Act.
``(G) Any other provision of law that provides for
marketing or data exclusivity (or extension of
exclusivity) with respect to a drug.
``(4) The term `wholesale acquisition cost' has the meaning
given that term in section 1847A(c)(6)(B) of the Social
Security Act.
``(b) Determination of Excessive Price.--During any covered period
with respect to a covered drug, the Secretary shall determine that the
price of a covered drug is excessive if the wholesale acquisition cost
(or a more relevant measure of price) of the covered drug is not fair
and reasonable, or does not facilitate global access, taking into
consideration--
``(1) the impact of the price on access to the covered drug
in the United States, taking into consideration racial
disparities and other socioeconomic disparities;
``(2) the impact of the price on health program spending
and budgets in the United States;
``(3) the risk adjusted value of Federal subsidies and
investments related to the covered drug;
``(4) the costs associated with development and
manufacturing of the covered drug;
``(5) the size of the affected patient population in the
United States and globally; and
``(6) the therapeutic efficacy of the covered drug.
``(c) Excessive Pricing Remedy.--If the Secretary determines
pursuant to subsection (b) that the price of a covered drug is
excessive, the Secretary--
``(1) shall waive or void any FDA-granted exclusivities
with respect to the covered drug, effective on the date that
the excessive price determination is made; and
``(2) shall grant open, nonexclusive licenses allowing any
person to make, use, offer to sell, or sell, or import into the
United States such drug, and to rely upon the regulatory test
data of such drug, and to access and use otherwise confidential
information, including know-how, related to the manufacture of
such drug in accordance with subsection (d).
``(d) Reasonable Royalty.--
``(1) In general.--An entity accepting an open,
nonexclusive license under subsection (c)(2) shall pay a
reasonable royalty with respect to sales within the United
States to the holder of a patent that claims the covered drug
or that claims a use of the covered drug or to the holder of an
application approved under section 505 of the Federal Food,
Drug, and Cosmetic Act or section 351 of the Public Health
Service Act for which any FDA-granted exclusivity with respect
to the covered drug was terminated under subsection (c)(1).
``(2) Royalty rate.--Such royalty rate shall be--
``(A) a percentage of sales, where the percentage
rate is no higher than the average royalty rate
estimated from the data provided by the Internal
Revenue Service for pharmaceutical manufacturer Federal
income tax returns; or
``(B) an amount as determined by the Secretary,
taking into account--
``(i) the therapeutic efficacy of the
covered drug;
``(ii) the size of the affected patient
population in the United States and globally;
``(iii) the risk adjusted value of Federal
subsidies and investments related to the
covered drug;
``(iv) the extent to which the manufacturer
of the covered drug has recovered risk adjusted
investments related to the covered drug,
including the investments related to the
invention, regulatory test data, and any other
relevant research and development costs; and
``(v) any other information the Secretary
determines appropriate.
``(3) Sales within other countries.--An entity accepting an
open, nonexclusive license under subsection (c)(2) shall pay a
reasonable royalty with respect to sales within other countries
based on the royalty rate paid in the United States times the
ratio between that country's gross domestic product per capita
divided by the United States gross domestic product per capita
in the last year such data was available for both countries,
but such royalty shall be due only if there are granted patents
or data exclusivity rights in that country at the time of sale.
``(e) Requirements.--
``(1) In general.--A royalty rate under subsection (d)
shall be consistent with making the covered drug available to
purchasers, including governmental and nongovernmental
purchasers and individuals, at prices that are affordable and
reasonable. Under no condition shall a royalty be set at a rate
that would cause a covered drug for which an open, nonexclusive
license was issued under subsection (c) to be sold at an
excessive price, as determined under subsection (b).
``(2) Multiple affected parties.--In the case that there is
one or more holders or investors in the patented inventions
related to the covered drug, the royalty rate shall be divided
among the holders or investors (including such manufacturer) in
a manner agreed upon by the manufacturer and other holders or
investors, or, in the absence of such an agreement, in a manner
the Secretary determines to be appropriate.
``(3) Price.--An entity accepting an open, nonexclusive
license under subsection (c)(2) shall sell the covered drug at
a price not higher than the excessive price determined for the
covered drug under subsection (b).
``(f) Clarification.--An open, nonexclusive license under
subsection (c)(2) shall be liable, subject to adequate protection of
the legitimate interests of any party utilizing the license, to be
terminated only if the circumstances which led to the granting of the
open, nonexclusive license cease to exist and are unlikely to recur.
The Secretary may review, upon request, the continued existence of
these circumstances.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
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