Drug companies would face limits on settlements that restrict rivals

Drug companies could not give rivals value through patent settlements that restrict competing medicines, with exceptions. The limits cover work on and sales of the medicine involved in the patent dispute. Payments solely for other promised goods or services would be exempt if backed by clear and convincing evidence, meaning strong proof. A separate exception would allow deals giving only early sales rights, reasonable lawsuit costs up to $7.5 million total, promises not to sue over claims that the medicine infringes a patent, or a combination. The Federal Trade Commission could exempt agreements that promote competition and benefit consumers. The restriction would apply to agreements entered into on or after the bill becomes law.

The Federal Trade Commission could sue companies that violate the settlement rules and seek financial penalties. Penalties would apply to parties that enter into prohibited settlements. A payer’s maximum penalty would be three times the greater of its gains or payments tied to the violation. A recipient’s maximum penalty would be three times the value it received from the violation. Most cases would need to begin within six years after the parties file notice. A timely proceeding leading to a stop order could support later civil suits, including penalty suits within one year after that order becomes final.

A company’s chief executive or official responsible for negotiations would certify that its agreement filing is complete and correct to their knowledge. This requirement covers agreements that companies must report under the referenced federal drug agreement reporting law. Filings would need to include related side agreements and written descriptions of unwritten promises covered by the reporting rules. The official would file the certification with the Federal Trade Commission and Justice Department within 30 days after filing the agreement.