Drug Competition Enhancement Act
Drug Competition Enhancement Act
Plain Language Summary
# Drug Competition Enhancement Act (S 1040) - Plain Language Summary **What the Bill Would Do** This bill aims to prevent drug manufacturers from using a strategy called "product hopping" to block cheaper generic drugs from reaching the market. Product hopping occurs when a company stops selling an expiring drug and replaces it with a slightly modified version covered by a new patent—forcing patients and insurers to stick with the expensive brand-name drug instead of switching to a cheaper generic alternative. The bill would give the Federal Trade Commission (FTC) power to stop this practice and take legal action against companies that engage in it. **Who It Affects and Key Provisions** The bill primarily affects pharmaceutical manufacturers, patients, and insurance companies paying for prescription drugs. It creates a legal presumption that product hopping has occurred when a manufacturer withdraws their original drug from the market after learning that a generic competitor is coming.
However, drug companies would have the opportunity to defend their actions in court by arguing their new product serves a legitimate purpose beyond blocking competition. The bill treats both traditional drugs and biologics (drugs made from living organisms) the same way. **Current Status** The bill is currently in committee and has not yet been voted on by the full Senate. It was introduced by Senator John Cornyn (R-TX) in the 119th Congress.
CRS Official Summary
Drug Competition Enhancement Act This bill prohibits product hopping by drug manufacturers and authorizes the Federal Trade Commission (FTC) to enforce this prohibition.Generally, product hopping describes a situation where, when the patents on a reference drug (or biological product) expire, the manufacturer switches to a follow-on product that is covered by a later-expiring patent. Under this bill, a follow-on product is a modified version of the reference drug that has an indication (what the drug is used for) that is identical or substantively similar to an indication of the reference drug.The bill establishes a presumption that product hopping has occurred when a reference drug manufacturer, after receiving notice that the Food and Drug Administration has received an application to market a competing generic (or biosimilar) version, takes certain actions such as withdrawing the reference drug from the market and selling a follow-on product.A drug manufacturer may rebut these presumptions by demonstrating that its conduct was not intended to limit competition.The bill makes product hopping an unfair method of competition and provides for enforcement by the FTC. If the FTC has reason to believe a manufacturer has violated or is about to violate this prohibition on product hopping, the FTC may institute an administrative proceeding or bring suit in federal court to stop the manufacturer’s action and seek equitable remedies, including disgorgement of unjust profits or paying restitution to those harmed.
Latest Action
Placed on Senate Legislative Calendar under General Orders. Calendar No. 43.