TITLE VII--IMPROVING ACCESS TO INNOVATIVE MEDICAL THERAPIES

  Subtitle A <<NOTE: Biologics Price Competition and Innovation Act of 
2009.>> --Biologics Price Competition and Innovation

SEC. 7001. <<NOTE: 42 USC 201 note.>> SHORT TITLE.

    (a) In General.--This subtitle may be cited as the ``Biologics Price 
Competition and Innovation Act of 2009''.
    (b) Sense of the Senate.--It is the sense of the Senate that a 
biosimilars pathway balancing innovation and consumer interests should 
be established.

SEC. 7002. APPROVAL PATHWAY FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

    (a) Licensure of Biological Products as Biosimilar or 
Interchangeable.--Section 351 of the Public Health Service Act (42 
U.S.C. 262) is amended--
            (1) in subsection (a)(1)(A), by inserting ``under this 
        subsection or subsection (k)'' after ``biologics license''; and
            (2) by adding at the end the following:

[[Page 124 STAT. 805]]

    ``(k) Licensure of Biological Products as Biosimilar or 
Interchangeable.--
            ``(1) In general.--Any person may submit an application for 
        licensure of a biological product under this subsection.
            ``(2) Content.--
                    ``(A) In general.--
                          ``(i) Required information.--An application 
                      submitted under this subsection shall include 
                      information demonstrating that--
                                    ``(I) the biological product is 
                                biosimilar to a reference product based 
                                upon data derived from--
                                            ``(aa) analytical studies 
                                        that demonstrate that the 
                                        biological product is highly 
                                        similar to the reference product 
                                        notwithstanding minor 
                                        differences in clinically 
                                        inactive components;
                                            ``(bb) animal studies 
                                        (including the assessment of 
                                        toxicity); and
                                            ``(cc) a clinical study or 
                                        studies (including the 
                                        assessment of immunogenicity and 
                                        pharmacokinetics or 
                                        pharmacodynamics) that are 
                                        sufficient to demonstrate 
                                        safety, purity, and potency in 1 
                                        or more appropriate conditions 
                                        of use for which the reference 
                                        product is licensed and intended 
                                        to be used and for which 
                                        licensure is sought for the 
                                        biological product;
                                    ``(II) the biological product and 
                                reference product utilize the same 
                                mechanism or mechanisms of action for 
                                the condition or conditions of use 
                                prescribed, recommended, or suggested in 
                                the proposed labeling, but only to the 
                                extent the mechanism or mechanisms of 
                                action are known for the reference 
                                product;
                                    ``(III) the condition or conditions 
                                of use prescribed, recommended, or 
                                suggested in the labeling proposed for 
                                the biological product have been 
                                previously approved for the reference 
                                product;
                                    ``(IV) the route of administration, 
                                the dosage form, and the strength of the 
                                biological product are the same as those 
                                of the reference product; and
                                    ``(V) the facility in which the 
                                biological product is manufactured, 
                                processed, packed, or held meets 
                                standards designed to assure that the 
                                biological product continues to be safe, 
                                pure, and potent.
                          ``(ii) Determination by secretary.--The 
                      Secretary may determine, in the Secretary's 
                      discretion, that an element described in clause 
                      (i)(I) is unnecessary in an application submitted 
                      under this subsection.
                          ``(iii) Additional information.--An 
                      application submitted under this subsection--
                                    ``(I) <<NOTE: Public 
                                information.>> shall include publicly-
                                available information regarding the 
                                Secretary's previous determination that 
                                the reference product is safe, pure, and 
                                potent; and

[[Page 124 STAT. 806]]

                                    ``(II) may include any additional 
                                information in support of the 
                                application, including publicly-
                                available information with respect to 
                                the reference product or another 
                                biological product.
                    ``(B) Interchangeability.--An application (or a 
                supplement to an application) submitted under this 
                subsection may include information demonstrating that 
                the biological product meets the standards described in 
                paragraph (4).
            ``(3) Evaluation by secretary.--Upon review of an 
        application (or a supplement to an application) submitted under 
        this subsection, the Secretary shall license the biological 
        product under this subsection if--
                    ``(A) <<NOTE: Determination.>> the Secretary 
                determines that the information submitted in the 
                application (or the supplement) is sufficient to show 
                that the biological product--
                          ``(i) is biosimilar to the reference product; 
                      or
                          ``(ii) meets the standards described in 
                      paragraph (4), and therefore is interchangeable 
                      with the reference product; and
                    ``(B) the applicant (or other appropriate person) 
                consents to the inspection of the facility that is the 
                subject of the application, in accordance with 
                subsection (c).
            ``(4) Safety standards for determining interchangeability.--
        Upon review of an application submitted under this subsection or 
        any supplement to such application, the Secretary shall 
        determine the biological product to be interchangeable with the 
        reference product if the Secretary determines that the 
        information submitted in the application (or a supplement to 
        such application) is sufficient to show that--
                    ``(A) the biological product--
                          ``(i) is biosimilar to the reference product; 
                      and
                          ``(ii) can be expected to produce the same 
                      clinical result as the reference product in any 
                      given patient; and
                    ``(B) for a biological product that is administered 
                more than once to an individual, the risk in terms of 
                safety or diminished efficacy of alternating or 
                switching between use of the biological product and the 
                reference product is not greater than the risk of using 
                the reference product without such alternation or 
                switch.
            ``(5) General rules.--
                    ``(A) One reference product per application.--A 
                biological product, in an application submitted under 
                this subsection, may not be evaluated against more than 
                1 reference product.
                    ``(B) Review.--An application submitted under this 
                subsection shall be reviewed by the division within the 
                Food and Drug Administration that is responsible for the 
                review and approval of the application under which the 
                reference product is licensed.
                    ``(C) Risk evaluation and mitigation 
                strategies. <<NOTE: Applicability.>> --The authority of 
                the Secretary with respect to risk evaluation and 
                mitigation strategies under the Federal Food, Drug, and 
                Cosmetic Act shall apply to biological products licensed 
                under this subsection in the same manner as

[[Page 124 STAT. 807]]

                such authority applies to biological products licensed 
                under subsection (a).
            ``(6) Exclusivity for first interchangeable biological 
        product.--Upon review of an application submitted under this 
        subsection relying on the same reference product for which a 
        prior biological product has received a determination of 
        interchangeability for any condition of use, the Secretary shall 
        not make a determination under paragraph (4) that the second or 
        subsequent biological product is interchangeable for any 
        condition of use until the earlier of--
                    ``(A) 1 year after the first commercial marketing of 
                the first interchangeable biosimilar biological product 
                to be approved as interchangeable for that reference 
                product;
                    ``(B) 18 months after--
                          ``(i) a final court decision on all patents in 
                      suit in an action instituted under subsection 
                      (l)(6) against the applicant that submitted the 
                      application for the first approved interchangeable 
                      biosimilar biological product; or
                          ``(ii) the dismissal with or without prejudice 
                      of an action instituted under subsection (l)(6) 
                      against the applicant that submitted the 
                      application for the first approved interchangeable 
                      biosimilar biological product; or
                    ``(C)(i) 42 months after approval of the first 
                interchangeable biosimilar biological product if the 
                applicant that submitted such application has been sued 
                under subsection (l)(6) and such litigation is still 
                ongoing within such 42-month period; or
                    ``(ii) 18 months after approval of the first 
                interchangeable biosimilar biological product if the 
                applicant that submitted such application has not been 
                sued under subsection (l)(6).
        <<NOTE: Definition.>> For purposes of this paragraph, the term 
        `final court decision' means a final decision of a court from 
        which no appeal (other than a petition to the United States 
        Supreme Court for a writ of certiorari) has been or can be 
        taken.
            ``(7) Exclusivity for reference product.--
                    ``(A) Effective date of biosimilar application 
                approval.--Approval of an application under this 
                subsection may not be made effective by the Secretary 
                until the date that is 12 years after the date on which 
                the reference product was first licensed under 
                subsection (a).
                    ``(B) Filing period.--An application under this 
                subsection may not be submitted to the Secretary until 
                the date that is 4 years after the date on which the 
                reference product was first licensed under subsection 
                (a).
                    ``(C) First licensure.--Subparagraphs (A) and (B) 
                shall not apply to a license for or approval of--
                          ``(i) a supplement for the biological product 
                      that is the reference product; or
                          ``(ii) a subsequent application filed by the 
                      same sponsor or manufacturer of the biological 
                      product that is the reference product (or a 
                      licensor, predecessor in interest, or other 
                      related entity) for--
                                    ``(I) a change (not including a 
                                modification to the structure of the 
                                biological product) that results

[[Page 124 STAT. 808]]

                                in a new indication, route of 
                                administration, dosing schedule, dosage 
                                form, delivery system, delivery device, 
                                or strength; or
                                    ``(II) a modification to the 
                                structure of the biological product that 
                                does not result in a change in safety, 
                                purity, or potency.
            ``(8) Guidance documents.--
                    ``(A) In general.--The Secretary may, after 
                opportunity for public comment, issue guidance in 
                accordance, except as provided in subparagraph (B)(i), 
                with section 701(h) of the Federal Food, Drug, and 
                Cosmetic Act with respect to the licensure of a 
                biological product under this subsection. Any such 
                guidance may be general or specific.
                    ``(B) Public comment.--
                          ``(i) In general.--The Secretary shall provide 
                      the public an opportunity to comment on any 
                      proposed guidance issued under subparagraph (A) 
                      before issuing final guidance.
                          ``(ii) Input regarding most valuable 
                      guidance.--The Secretary shall establish a process 
                      through which the public may provide the Secretary 
                      with input regarding priorities for issuing 
                      guidance.
                    ``(C) No requirement for application 
                consideration.--The issuance (or non-issuance) of 
                guidance under subparagraph (A) shall not preclude the 
                review of, or action on, an application submitted under 
                this subsection.
                    ``(D) Requirement for product class-specific 
                guidance.--If the Secretary issues product class-
                specific guidance under subparagraph (A), such guidance 
                shall include a description of--
                           <<NOTE: Criteria.>> ``(i) the criteria that 
                      the Secretary will use to determine whether a 
                      biological product is highly similar to a 
                      reference product in such product class; and
                          ``(ii) the criteria, if available, that the 
                      Secretary will use to determine whether a 
                      biological product meets the standards described 
                      in paragraph (4).
                    ``(E) Certain product classes.--
                          ``(i) Guidance.--The Secretary may indicate in 
                      a guidance document that the science and 
                      experience, as of the date of such guidance, with 
                      respect to a product or product class (not 
                      including any recombinant protein) does not allow 
                      approval of an application for a license as 
                      provided under this subsection for such product or 
                      product class.
                          ``(ii) Modification or reversal.--The 
                      Secretary may issue a subsequent guidance document 
                      under subparagraph (A) to modify or reverse a 
                      guidance document under clause (i).
                          ``(iii) No effect on ability to deny 
                      license.--Clause (i) shall not be construed to 
                      require the Secretary to approve a product with 
                      respect to which the Secretary has not indicated 
                      in a guidance document that the science and 
                      experience, as described in clause (i), does not 
                      allow approval of such an application.

    ``(l) Patents.--
            ``(1) Confidential access to subsection (k) application.--

[[Page 124 STAT. 809]]

                    ``(A) Application of paragraph.--Unless otherwise 
                agreed to by a person that submits an application under 
                subsection (k) (referred to in this subsection as the 
                `subsection (k) applicant') and the sponsor of the 
                application for the reference product (referred to in 
                this subsection as the `reference product sponsor'), the 
                provisions of this paragraph shall apply to the exchange 
                of information described in this subsection.
                    ``(B) In general.--
                          ``(i) Provision of confidential information.--
                      When a subsection (k) applicant submits an 
                      application under subsection (k), such applicant 
                      shall provide to the persons described in clause 
                      (ii), subject to the terms of this paragraph, 
                      confidential access to the information required to 
                      be produced pursuant to paragraph (2) and any 
                      other information that the subsection (k) 
                      applicant determines, in its sole discretion, to 
                      be appropriate (referred to in this subsection as 
                      the `confidential information').
                          ``(ii) Recipients of information.--The persons 
                      described in this clause are the following:
                                    ``(I) Outside counsel.--One or more 
                                attorneys designated by the reference 
                                product sponsor who are employees of an 
                                entity other than the reference product 
                                sponsor (referred to in this paragraph 
                                as the `outside counsel'), provided that 
                                such attorneys do not engage, formally 
                                or informally, in patent prosecution 
                                relevant or related to the reference 
                                product.
                                    ``(II) In-house counsel.--One 
                                attorney that represents the reference 
                                product sponsor who is an employee of 
                                the reference product sponsor, provided 
                                that such attorney does not engage, 
                                formally or informally, in patent 
                                prosecution relevant or related to the 
                                reference product.
                          ``(iii) Patent owner access.--A representative 
                      of the owner of a patent exclusively licensed to a 
                      reference product sponsor with respect to the 
                      reference product and who has retained a right to 
                      assert the patent or participate in litigation 
                      concerning the patent may be provided the 
                      confidential information, provided that the 
                      representative informs the reference product 
                      sponsor and the subsection (k) applicant of his or 
                      her agreement to be subject to the confidentiality 
                      provisions set forth in this paragraph, including 
                      those under clause (ii).
                    ``(C) Limitation on disclosure.--No person that 
                receives confidential information pursuant to 
                subparagraph (B) shall disclose any confidential 
                information to any other person or entity, including the 
                reference product sponsor employees, outside scientific 
                consultants, or other outside counsel retained by the 
                reference product sponsor, without the prior written 
                consent of the subsection (k) applicant, which shall not 
                be unreasonably withheld.
                    ``(D) Use of confidential information.--Confidential 
                information shall be used for the sole and exclusive 
                purpose of determining, with respect to each patent 
                assigned to

[[Page 124 STAT. 810]]

                or exclusively licensed by the reference product 
                sponsor, whether a claim of patent infringement could 
                reasonably be asserted if the subsection (k) applicant 
                engaged in the manufacture, use, offering for sale, 
                sale, or importation into the United States of the 
                biological product that is the subject of the 
                application under subsection (k).
                    ``(E) Ownership of confidential information.--The 
                confidential information disclosed under this paragraph 
                is, and shall remain, the property of the subsection (k) 
                applicant. By providing the confidential information 
                pursuant to this paragraph, the subsection (k) applicant 
                does not provide the reference product sponsor or the 
                outside counsel any interest in or license to use the 
                confidential information, for purposes other than those 
                specified in subparagraph (D).
                    ``(F) Effect of infringement action.--In the event 
                that the reference product sponsor files a patent 
                infringement suit, the use of confidential information 
                shall continue to be governed by the terms of this 
                paragraph until such time as a court enters a protective 
                order regarding the information. Upon entry of such 
                order, the subsection (k) applicant may redesignate 
                confidential information in accordance with the terms of 
                that order. No confidential information shall be 
                included in any publicly-available complaint or other 
                pleading. In the event that the reference product 
                sponsor does not file an infringement action by the date 
                specified in paragraph (6), the reference product 
                sponsor shall return or destroy all confidential 
                information received under this paragraph, provided that 
                if the reference product sponsor opts to destroy such 
                information, it will confirm destruction in writing to 
                the subsection (k) applicant.
                    ``(G) Rule of construction.--Nothing in this 
                paragraph shall be construed--
                          ``(i) as an admission by the subsection (k) 
                      applicant regarding the validity, enforceability, 
                      or infringement of any patent; or
                          ``(ii) as an agreement or admission by the 
                      subsection (k) applicant with respect to the 
                      competency, relevance, or materiality of any 
                      confidential information.
                    ``(H) Effect of violation.--The disclosure of any 
                confidential information in violation of this paragraph 
                shall be deemed to cause the subsection (k) applicant to 
                suffer irreparable harm for which there is no adequate 
                legal remedy and the court shall consider immediate 
                injunctive relief to be an appropriate and necessary 
                remedy for any violation or threatened violation of this 
                paragraph.
            ``(2) Subsection (k) application information.-- 
        <<NOTE: Deadline. Notification.>> Not later than 20 days after 
        the Secretary notifies the subsection (k) applicant that the 
        application has been accepted for review, the subsection (k) 
        applicant--
                    ``(A) shall provide to the reference product sponsor 
                a copy of the application submitted to the Secretary 
                under subsection (k), and such other information that 
                describes the process or processes used to manufacture 
                the biological product that is the subject of such 
                application; and

[[Page 124 STAT. 811]]

                    ``(B) may provide to the reference product sponsor 
                additional information requested by or on behalf of the 
                reference product sponsor.
            ``(3) <<NOTE: Deadlines.>> List and description of 
        patents.--
                    ``(A) List by reference product sponsor.--Not later 
                than 60 days after the receipt of the application and 
                information under paragraph (2), the reference product 
                sponsor shall provide to the subsection (k) applicant--
                          ``(i) a list of patents for which the 
                      reference product sponsor believes a claim of 
                      patent infringement could reasonably be asserted 
                      by the reference product sponsor, or by a patent 
                      owner that has granted an exclusive license to the 
                      reference product sponsor with respect to the 
                      reference product, if a person not licensed by the 
                      reference product sponsor engaged in the making, 
                      using, offering to sell, selling, or importing 
                      into the United States of the biological product 
                      that is the subject of the subsection (k) 
                      application; and
                          ``(ii) an identification of the patents on 
                      such list that the reference product sponsor would 
                      be prepared to license to the subsection (k) 
                      applicant.
                    ``(B) List and description by subsection (k) 
                applicant.--Not later than 60 days after receipt of the 
                list under subparagraph (A), the subsection (k) 
                applicant--
                          ``(i) may provide to the reference product 
                      sponsor a list of patents to which the subsection 
                      (k) applicant believes a claim of patent 
                      infringement could reasonably be asserted by the 
                      reference product sponsor if a person not licensed 
                      by the reference product sponsor engaged in the 
                      making, using, offering to sell, selling, or 
                      importing into the United States of the biological 
                      product that is the subject of the subsection (k) 
                      application;
                          ``(ii) shall provide to the reference product 
                      sponsor, with respect to each patent listed by the 
                      reference product sponsor under subparagraph (A) 
                      or listed by the subsection (k) applicant under 
                      clause (i)--
                                    ``(I) a detailed statement that 
                                describes, on a claim by claim basis, 
                                the factual and legal basis of the 
                                opinion of the subsection (k) applicant 
                                that such patent is invalid, 
                                unenforceable, or will not be infringed 
                                by the commercial marketing of the 
                                biological product that is the subject 
                                of the subsection (k) application; or
                                    ``(II) a statement that the 
                                subsection (k) applicant does not intend 
                                to begin commercial marketing of the 
                                biological product before the date that 
                                such patent expires; and
                          ``(iii) shall provide to the reference product 
                      sponsor a response regarding each patent 
                      identified by the reference product sponsor under 
                      subparagraph (A)(ii).
                    ``(C) Description by reference product sponsor.--Not 
                later than 60 days after receipt of the list and 
                statement under subparagraph (B), the reference product 
                sponsor shall provide to the subsection (k) applicant a 
                detailed statement that describes, with respect to each 
                patent described in subparagraph (B)(ii)(I), on a claim 
                by

[[Page 124 STAT. 812]]

                claim basis, the factual and legal basis of the opinion 
                of the reference product sponsor that such patent will 
                be infringed by the commercial marketing of the 
                biological product that is the subject of the subsection 
                (k) application and a response to the statement 
                concerning validity and enforceability provided under 
                subparagraph (B)(ii)(I).
            ``(4) Patent resolution negotiations.--
                    ``(A) In general.--After receipt by the subsection 
                (k) applicant of the statement under paragraph (3)(C), 
                the reference product sponsor and the subsection (k) 
                applicant shall engage in good faith negotiations to 
                agree on which, if any, patents listed under paragraph 
                (3) by the subsection (k) applicant or the reference 
                product sponsor shall be the subject of an action for 
                patent infringement under paragraph (6).
                    ``(B) Failure to reach agreement. <<NOTE: Time 
                period. Applicability.>> --If, within 15 days of 
                beginning negotiations under subparagraph (A), the 
                subsection (k) applicant and the reference product 
                sponsor fail to agree on a final and complete list of 
                which, if any, patents listed under paragraph (3) by the 
                subsection (k) applicant or the reference product 
                sponsor shall be the subject of an action for patent 
                infringement under paragraph (6), the provisions of 
                paragraph (5) shall apply to the parties.
            ``(5) Patent resolution if no agreement.-- 
        <<NOTE: Notification.>> 
                    ``(A) Number of patents.--The subsection (k) 
                applicant shall notify the reference product sponsor of 
                the number of patents that such applicant will provide 
                to the reference product sponsor under subparagraph 
                (B)(i)(I).
                    ``(B) Exchange of patent lists.--
                          ``(i) In general. <<NOTE: Deadline.>> --On a 
                      date agreed to by the subsection (k) applicant and 
                      the reference product sponsor, but in no case 
                      later than 5 days after the subsection (k) 
                      applicant notifies the reference product sponsor 
                      under subparagraph (A), the subsection (k) 
                      applicant and the reference product sponsor shall 
                      simultaneously exchange--
                                    ``(I) the list of patents that the 
                                subsection (k) applicant believes should 
                                be the subject of an action for patent 
                                infringement under paragraph (6); and
                                    ``(II) the list of patents, in 
                                accordance with clause (ii), that the 
                                reference product sponsor believes 
                                should be the subject of an action for 
                                patent infringement under paragraph (6).
                          ``(ii) Number of patents listed by reference 
                      product sponsor.--
                                    ``(I) In general.--Subject to 
                                subclause (II), the number of patents 
                                listed by the reference product sponsor 
                                under clause (i)(II) may not exceed the 
                                number of patents listed by the 
                                subsection (k) applicant under clause 
                                (i)(I).
                                    ``(II) Exception.--If a subsection 
                                (k) applicant does not list any patent 
                                under clause (i)(I), the reference 
                                product sponsor may list 1 patent under 
                                clause (i)(II).
            ``(6) <<NOTE: Deadlines.>> Immediate patent infringement 
        action.--

[[Page 124 STAT. 813]]

                    ``(A) Action if agreement on patent list.--If the 
                subsection (k) applicant and the reference product 
                sponsor agree on patents as described in paragraph (4), 
                not later than 30 days after such agreement, the 
                reference product sponsor shall bring an action for 
                patent infringement with respect to each such patent.
                    ``(B) Action if no agreement on patent list.--If the 
                provisions of paragraph (5) apply to the parties as 
                described in paragraph (4)(B), not later than 30 days 
                after the exchange of lists under paragraph (5)(B), the 
                reference product sponsor shall bring an action for 
                patent infringement with respect to each patent that is 
                included on such lists.
                    ``(C) Notification and publication of complaint.--
                          ``(i) Notification to secretary.--Not later 
                      than 30 days after a complaint is served to a 
                      subsection (k) applicant in an action for patent 
                      infringement described under this paragraph, the 
                      subsection (k) applicant shall provide the 
                      Secretary with notice and a copy of such 
                      complaint.
                          ``(ii) Publication by 
                      secretary. <<NOTE: Federal Register, 
                      publication. Notice.>> --The Secretary shall 
                      publish in the Federal Register notice of a 
                      complaint received under clause (i).
            ``(7) Newly issued or licensed patents.--In the case of a 
        patent that--
                    ``(A) is issued to, or exclusively licensed by, the 
                reference product sponsor after the date that the 
                reference product sponsor provided the list to the 
                subsection (k) applicant under paragraph (3)(A); and
                    ``(B) the reference product sponsor reasonably 
                believes that, due to the issuance of such patent, a 
                claim of patent infringement could reasonably be 
                asserted by the reference product sponsor if a person 
                not licensed by the reference product sponsor engaged in 
                the making, using, offering to sell, selling, or 
                importing into the United States of the biological 
                product that is the subject of the subsection 
                (k) <<NOTE: Deadlines.>> application,
        not later than 30 days after such issuance or licensing, the 
        reference product sponsor shall provide to the subsection (k) 
        applicant a supplement to the list provided by the reference 
        product sponsor under paragraph (3)(A) that includes such 
        patent, not later than 30 days after such supplement is 
        provided, the subsection (k) applicant shall provide a statement 
        to the reference product sponsor in accordance with paragraph 
        (3)(B), and such patent shall be subject to paragraph (8).
            ``(8) Notice of commercial marketing and preliminary 
        injunction.--
                    ``(A) Notice of commercial 
                marketing. <<NOTE: Deadline.>> --The subsection (k) 
                applicant shall provide notice to the reference product 
                sponsor not later than 180 days before the date of the 
                first commercial marketing of the biological product 
                licensed under subsection (k).
                    ``(B) Preliminary injunction.--After receiving the 
                notice under subparagraph (A) and before such date of 
                the first commercial marketing of such biological 
                product, the reference product sponsor may seek a 
                preliminary injunction prohibiting the subsection (k) 
                applicant from

[[Page 124 STAT. 814]]

                engaging in the commercial manufacture or sale of such 
                biological product until the court decides the issue of 
                patent validity, enforcement, and infringement with 
                respect to any patent that is--
                          ``(i) included in the list provided by the 
                      reference product sponsor under paragraph (3)(A) 
                      or in the list provided by the subsection (k) 
                      applicant under paragraph (3)(B); and
                          ``(ii) not included, as applicable, on--
                                    ``(I) the list of patents described 
                                in paragraph (4); or
                                    ``(II) the lists of patents 
                                described in paragraph (5)(B).
                    ``(C) Reasonable cooperation.--If the reference 
                product sponsor has sought a preliminary injunction 
                under subparagraph (B), the reference product sponsor 
                and the subsection (k) applicant shall reasonably 
                cooperate to expedite such further discovery as is 
                needed in connection with the preliminary injunction 
                motion.
            ``(9) Limitation on declaratory judgment action.--
                    ``(A) Subsection (k) application provided.--If a 
                subsection (k) applicant provides the application and 
                information required under paragraph (2)(A), neither the 
                reference product sponsor nor the subsection (k) 
                applicant may, prior to the date notice is received 
                under paragraph (8)(A), bring any action under section 
                2201 of title 28, United States Code, for a declaration 
                of infringement, validity, or enforceability of any 
                patent that is described in clauses (i) and (ii) of 
                paragraph (8)(B).
                    ``(B) Subsequent failure to act by subsection (k) 
                applicant.--If a subsection (k) applicant fails to 
                complete an action required of the subsection (k) 
                applicant under paragraph (3)(B)(ii), paragraph (5), 
                paragraph (6)(C)(i), paragraph (7), or paragraph (8)(A), 
                the reference product sponsor, but not the subsection 
                (k) applicant, may bring an action under section 2201 of 
                title 28, United States Code, for a declaration of 
                infringement, validity, or enforceability of any patent 
                included in the list described in paragraph (3)(A), 
                including as provided under paragraph (7).
                    ``(C) Subsection (k) application not provided.--If a 
                subsection (k) applicant fails to provide the 
                application and information required under paragraph 
                (2)(A), the reference product sponsor, but not the 
                subsection (k) applicant, may bring an action under 
                section 2201 of title 28, United States Code, for a 
                declaration of infringement, validity, or enforceability 
                of any patent that claims the biological product or a 
                use of the biological product.''.

    (b) Definitions.--Section 351(i) of the Public Health Service Act 
(42 U.S.C. 262(i)) is amended--
            (1) by striking ``In this section, the term `biological 
        product' means'' and inserting the following: ``In this section:
            ``(1) The term `biological product' means'';
            (2) in paragraph (1), as so designated, by inserting 
        ``protein (except any chemically synthesized polypeptide),'' 
        after ``allergenic product,''; and
            (3) by adding at the end the following:

[[Page 124 STAT. 815]]

            ``(2) The term `biosimilar' or `biosimilarity', in reference 
        to a biological product that is the subject of an application 
        under subsection (k), means--
                    ``(A) that the biological product is highly similar 
                to the reference product notwithstanding minor 
                differences in clinically inactive components; and
                    ``(B) there are no clinically meaningful differences 
                between the biological product and the reference product 
                in terms of the safety, purity, and potency of the 
                product.
            ``(3) The term `interchangeable' or `interchangeability', in 
        reference to a biological product that is shown to meet the 
        standards described in subsection (k)(4), means that the 
        biological product may be substituted for the reference product 
        without the intervention of the health care provider who 
        prescribed the reference product.
            ``(4) The term `reference product' means the single 
        biological product licensed under subsection (a) against which a 
        biological product is evaluated in an application submitted 
        under subsection (k).''.

    (c) Conforming Amendments Relating to Patents.--
            (1) Patents.--Section 271(e) of title 35, United States 
        Code, is amended--
                    (A) in paragraph (2)--
                          (i) in subparagraph (A), by striking ``or'' at 
                      the end;
                          (ii) in subparagraph (B), by adding ``or'' at 
                      the end; and
                          (iii) by inserting after subparagraph (B) the 
                      following:
            ``(C)(i) with respect to a patent that is identified in the 
        list of patents described in section 351(l)(3) of the Public 
        Health Service Act (including as provided under section 
        351(l)(7) of such Act), an application seeking approval of a 
        biological product, or
            ``(ii) if the applicant for the application fails to provide 
        the application and information required under section 
        351(l)(2)(A) of such Act, an application seeking approval of a 
        biological product for a patent that could be identified 
        pursuant to section 351(l)(3)(A)(i) of such Act,''; and
                          (iv) in the matter following subparagraph (C) 
                      (as added by clause (iii)), by striking ``or 
                      veterinary biological product'' and inserting ``, 
                      veterinary biological product, or biological 
                      product'';
                    (B) in paragraph (4)--
                          (i) in subparagraph (B), by--
                                    (I) striking ``or veterinary 
                                biological product'' and inserting ``, 
                                veterinary biological product, or 
                                biological product''; and
                                    (II) striking ``and'' at the end;
                          (ii) in subparagraph (C), by--
                                    (I) striking ``or veterinary 
                                biological product'' and inserting ``, 
                                veterinary biological product, or 
                                biological product''; and
                                    (II) striking the period and 
                                inserting ``, and'';
                          (iii) by inserting after subparagraph (C) the 
                      following:

[[Page 124 STAT. 816]]

            ``(D) <<NOTE: Courts.>> the court shall order a permanent 
        injunction prohibiting any infringement of the patent by the 
        biological product involved in the infringement until a date 
        which is not earlier than the date of the expiration of the 
        patent that has been infringed under paragraph (2)(C), provided 
        the patent is the subject of a final court decision, as defined 
        in section 351(k)(6) of the Public Health Service Act, in an 
        action for infringement of the patent under section 351(l)(6) of 
        such Act, and the biological product has not yet been approved 
        because of section 351(k)(7) of such Act.''; and
                          (iv) in the matter following subparagraph (D) 
                      (as added by clause (iii)), by striking ``and 
                      (C)'' and inserting ``(C), and (D)''; and
                    (C) by adding at the end the following:

    ``(6)(A) <<NOTE: Applicability.>> Subparagraph (B) applies, in lieu 
of paragraph (4), in the case of a patent--
            ``(i) that is identified, as applicable, in the list of 
        patents described in section 351(l)(4) of the Public Health 
        Service Act or the lists of patents described in section 
        351(l)(5)(B) of such Act with respect to a biological product; 
        and
            ``(ii) for which an action for infringement of the patent 
        with respect to the biological product--
                    ``(I) was brought after the expiration of the 30-day 
                period described in subparagraph (A) or (B), as 
                applicable, of section 351(l)(6) of such Act; or
                    ``(II) was brought before the expiration of the 30-
                day period described in subclause (I), but which was 
                dismissed without prejudice or was not prosecuted to 
                judgment in good faith.

    ``(B) In an action for infringement of a patent described in 
subparagraph (A), the sole and exclusive remedy that may be granted by a 
court, upon a finding that the making, using, offering to sell, selling, 
or importation into the United States of the biological product that is 
the subject of the action infringed the patent, shall be a reasonable 
royalty.
    ``(C) The owner of a patent that should have been included in the 
list described in section 351(l)(3)(A) of the Public Health Service Act, 
including as provided under section 351(l)(7) of such Act for a 
biological product, but was not timely included in such list, may not 
bring an action under this section for infringement of the patent with 
respect to the biological product.''.
            (2) Conforming amendment under title 28.--Section 2201(b) of 
        title 28, United States Code, is amended by inserting before the 
        period the following: ``, or section 351 of the Public Health 
        Service Act''.

    (d) Conforming Amendments Under the Federal Food, Drug, and Cosmetic 
Act.--
            (1) Content and review of applications.--Section 
        505(b)(5)(B) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355(b)(5)(B)) is amended by inserting before the period 
        at the end of the first sentence the following: ``or, with 
        respect to an applicant for approval of a biological product 
        under section 351(k) of the Public Health Service Act, any 
        necessary clinical study or studies''.
            (2) New active ingredient.--Section 505B of the Federal 
        Food, Drug, and Cosmetic Act (21 U.S.C. 355c) is amended by 
        adding at the end the following:

[[Page 124 STAT. 817]]

    ``(n) New Active Ingredient.--
            ``(1) Non-interchangeable biosimilar biological product.--A 
        biological product that is biosimilar to a reference product 
        under section 351 of the Public Health Service Act, and that the 
        Secretary has not determined to meet the standards described in 
        subsection (k)(4) of such section for interchangeability with 
        the reference product, shall be considered to have a new active 
        ingredient under this section.
            ``(2) Interchangeable biosimilar biological product.--A 
        biological product that is interchangeable with a reference 
        product under section 351 of the Public Health Service Act shall 
        not be considered to have a new active ingredient under this 
        section.''.

    (e) <<NOTE: 42 USC 262 note.>> Products Previously Approved Under 
Section 505.--
            (1) Requirement to follow section 351.--Except as provided 
        in paragraph (2), an application for a biological product shall 
        be submitted under section 351 of the Public Health Service Act 
        (42 U.S.C. 262) (as amended by this Act).
            (2) Exception.--An application for a biological product may 
        be submitted under section 505 of the Federal Food, Drug, and 
        Cosmetic Act (21 U.S.C. 355) if--
                    (A) such biological product is in a product class 
                for which a biological product in such product class is 
                the subject of an application approved under such 
                section 505 not later than the date of enactment of this 
                Act; and
                    (B) <<NOTE: Deadlines.>> such application--
                          (i) has been submitted to the Secretary of 
                      Health and Human Services (referred to in this 
                      subtitle as the ``Secretary'') before the date of 
                      enactment of this Act; or
                          (ii) is submitted to the Secretary not later 
                      than the date that is 10 years after the date of 
                      enactment of this Act.
            (3) Limitation.--Notwithstanding paragraph (2), an 
        application for a biological product may not be submitted under 
        section 505 of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 355) if there is another biological product approved 
        under subsection (a) of section 351 of the Public Health Service 
        Act that could be a reference product with respect to such 
        application (within the meaning of such section 351) if such 
        application were submitted under subsection (k) of such section 
        351.
            (4) Deemed approved under section 351 <<NOTE: Effective 
        date.>> .--An approved application for a biological product 
        under section 505 of the Federal Food, Drug, and Cosmetic Act 
        (21 U.S.C. 355) shall be deemed to be a license for the 
        biological product under such section 351 on the date that is 10 
        years after the date of enactment of this Act.
            (5) Definitions.--For purposes of this subsection, the term 
        ``biological product'' has the meaning given such term under 
        section 351 of the Public Health Service Act (42 U.S.C. 262) (as 
        amended by this Act).

    (f) Follow-on Biologics User Fees.--
            (1) Development of user fees for biosimilar biological 
        products.--
                    (A) In general. <<NOTE: Deadline. Recommenda- 
                tions.>> --Beginning not later than October 1, 2010, the 
                Secretary shall develop recommendations to

[[Page 124 STAT. 818]]

                present to Congress with respect to the goals, and plans 
                for meeting the goals, for the process for the review of 
                biosimilar biological product applications submitted 
                under section 351(k) of the Public Health Service Act 
                (as added by this Act) for the first 5 fiscal years 
                after fiscal year 2012. <<NOTE: Consultation.>> In 
                developing such recommendations, the Secretary shall 
                consult with--
                          (i) the Committee on Health, Education, Labor, 
                      and Pensions of the Senate;
                          (ii) the Committee on Energy and Commerce of 
                      the House of Representatives;
                          (iii) scientific and academic experts;
                          (iv) health care professionals;
                          (v) representatives of patient and consumer 
                      advocacy groups; and
                          (vi) the regulated industry.
                    (B) Public review of recommendations.--After 
                negotiations with the regulated industry, the Secretary 
                shall--
                          (i) present the recommendations developed 
                      under subparagraph (A) to the Congressional 
                      committees specified in such subparagraph;
                          (ii) <<NOTE: Federal Register, 
                      publication.>> publish such recommendations in the 
                      Federal Register;
                          (iii) <<NOTE: Time period.>> provide for a 
                      period of 30 days for the public to provide 
                      written comments on such recommendations;
                          (iv) hold a meeting at which the public may 
                      present its views on such recommendations; and
                          (v) after consideration of such public views 
                      and comments, revise such recommendations as 
                      necessary.
                    (C) Transmittal of 
                recommendations. <<NOTE: Deadline.>> --Not later than 
                January 15, 2012, the Secretary shall transmit to 
                Congress the revised recommendations under subparagraph 
                (B), a summary of the views and comments received under 
                such subparagraph, and any changes made to the 
                recommendations in response to such views and comments.
            (2) <<NOTE: Effective date.>>  Establishment of user fee 
        program.--It is the sense of the Senate that, based on the 
        recommendations transmitted to Congress by the Secretary 
        pursuant to paragraph (1)(C), Congress should authorize a 
        program, effective on October 1, 2012, for the collection of 
        user fees relating to the submission of biosimilar biological 
        product applications under section 351(k) of the Public Health 
        Service Act (as added by this Act).
            (3) Transitional provisions for user fees for biosimilar 
        biological products.--
                    (A) Application of the prescription drug user fee 
                provisions.--Section 735(1)(B) of the Federal Food, 
                Drug, and Cosmetic Act (21 U.S.C. 379g(1)(B)) is amended 
                by striking ``section 351'' and inserting ``subsection 
                (a) or (k) of section 351''.
                    (B) <<NOTE: 42 USC 262 note.>> Evaluation of costs 
                of reviewing biosimilar biological product 
                applications. <<NOTE: Time period.>> --During the period 
                beginning on the date of enactment of this Act and 
                ending on October 1, 2010, the Secretary shall collect 
                and evaluate data regarding the costs of reviewing 
                applications for biological products submitted under 
                section 351(k) of the

[[Page 124 STAT. 819]]

                Public Health Service Act (as added by this Act) during 
                such period.
                    (C) Audit.--
                          (i) <<NOTE: Time period.>>  In general.--On 
                      the date that is 2 years after first receiving a 
                      user fee applicable to an application for a 
                      biological product under section 351(k) of the 
                      Public Health Service Act (as added by this Act), 
                      and on a biennial basis thereafter until October 
                      1, 2013, the Secretary shall perform an audit of 
                      the costs of reviewing such applications under 
                      such section 351(k). Such an audit shall compare--
                                    (I) the costs of reviewing such 
                                applications under such section 351(k) 
                                to the amount of the user fee applicable 
                                to such applications; and
                                    (II)(aa) such ratio determined under 
                                subclause (I); to
                                    (bb) the ratio of the costs of 
                                reviewing applications for biological 
                                products under section 351(a) of such 
                                Act (as amended by this Act) to the 
                                amount of the user fee applicable to 
                                such applications under such section 
                                351(a).
                          (ii) Alteration of user fee.--If the audit 
                      performed under clause (i) indicates that the 
                      ratios compared under subclause (II) of such 
                      clause differ by more than 5 percent, then the 
                      Secretary shall alter the user fee applicable to 
                      applications submitted under such section 351(k) 
                      to more appropriately account for the costs of 
                      reviewing such applications.
                          (iii) Accounting standards.--The Secretary 
                      shall perform an audit under clause (i) in 
                      conformance with the accounting principles, 
                      standards, and requirements prescribed by the 
                      Comptroller General of the United States under 
                      section 3511 of title 31, United State Code, to 
                      ensure the validity of any potential variability.
            (4) Authorization of appropriations.--There is authorized to 
        be appropriated to carry out this subsection such sums as may be 
        necessary for each of fiscal years 2010 through 2012.

    (g) Pediatric Studies of Biological Products.--
            (1) In general.--Section 351 of the Public Health Service 
        Act (42 U.S.C. 262) is amended by adding at the end the 
        following:

    ``(m) Pediatric Studies.--
            ``(1) Application of certain provisions.--The provisions of 
        subsections (a), (d), (e), (f), (i), (j), (k), (l), (p), and (q) 
        of section 505A of the Federal Food, Drug, and Cosmetic Act 
        shall apply with respect to the extension of a period under 
        paragraphs (2) and (3) to the same extent and in the same manner 
        as such provisions apply with respect to the extension of a 
        period under subsection (b) or (c) of section 505A of the 
        Federal Food, Drug, and Cosmetic Act.
            ``(2) Market exclusivity for new biological products.--If, 
        prior <<NOTE: Determination.>>  to approval of an application 
        that is submitted under subsection (a), the Secretary determines 
        that information relating to the use of a new biological product 
        in the pediatric population may produce health benefits in that 
        population, the Secretary makes a written request for pediatric 
        studies

[[Page 124 STAT. 820]]

        (which shall include a timeframe for completing such studies), 
        the applicant agrees to the request, such studies are completed 
        using appropriate formulations for each age group for which the 
        study is requested within any such timeframe, and the reports 
        thereof are submitted and accepted in accordance with section 
        505A(d)(3) of the Federal Food, Drug, and Cosmetic Act--
                    ``(A) the periods for such biological product 
                referred to in subsection (k)(7) are deemed to be 4 
                years and 6 months rather than 4 years and 12 years and 
                6 months rather than 12 years; and
                    ``(B) if the biological product is designated under 
                section 526 for a rare disease or condition, the period 
                for such biological product referred to in section 
                527(a) is deemed to be 7 years and 6 months rather than 
                7 years.
            ``(3) Market exclusivity for already-marketed biological 
        products.--If the Secretary <<NOTE: Determination.>>  determines 
        that information relating to the use of a licensed biological 
        product in the pediatric population may produce health benefits 
        in that population and makes a written request to the holder of 
        an approved application under subsection (a) for pediatric 
        studies (which shall include a timeframe for completing such 
        studies), the holder agrees to the request, such studies are 
        completed using appropriate formulations for each age group for 
        which the study is requested within any such timeframe, and the 
        reports thereof are submitted and accepted in accordance with 
        section 505A(d)(3) of the Federal Food, Drug, and Cosmetic Act--
                    ``(A) the periods for such biological product 
                referred to in subsection (k)(7) are deemed to be 4 
                years and 6 months rather than 4 years and 12 years and 
                6 months rather than 12 years; and
                    ``(B) if the biological product is designated under 
                section 526 for a rare disease or condition, the period 
                for such biological product referred to in section 
                527(a) is deemed to be 7 years and 6 months rather than 
                7 years.
            ``(4) Exception.--The Secretary shall not extend a period 
        referred to in paragraph (2)(A), (2)(B), (3)(A), or (3)(B) if 
        the determination under section 505A(d)(3) is made later than 9 
        months prior to the expiration of such period.''.
            (2) Studies regarding pediatric research.--
                    (A) Program for pediatric study of drugs.--
                Subsection (a)(1) of section 409I of the Public Health 
                Service Act (42 U.S.C. 284m) is amended by inserting ``, 
                biological products,'' after ``including drugs''.
                    (B) Institute of medicine study.--Section 505A(p) of 
                the Federal Food, Drug, and Cosmetic Act <<NOTE: 21 USC 
                355a.>>  (21 U.S.C. 355b(p)) is amended by striking 
                paragraphs (4) and (5) and inserting the following:
            ``(4) review and assess the number and importance of 
        biological products for children that are being tested as a 
        result of the amendments made by the Biologics Price Competition 
        and Innovation Act of 2009 and the importance for children, 
        health care providers, parents, and others of labeling changes 
        made as a result of such testing;

[[Page 124 STAT. 821]]

            ``(5) review and assess the number, importance, and 
        prioritization of any biological products that are not being 
        tested for pediatric use; and
            ``(6) offer recommendations for ensuring pediatric testing 
        of biological products, including consideration of any 
        incentives, such as those provided under this section or section 
        351(m) of the Public Health Service Act.''.

    (h) <<NOTE: Time periods. 42 USC 262 note.>>  Orphan Products.--If a 
reference product, as defined in section 351 of the Public Health 
Service Act (42 U.S.C. 262) (as amended by this Act) has been designated 
under section 526 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360bb) for a rare disease or condition, a biological product seeking 
approval for such disease or condition under subsection (k) of such 
section 351 as biosimilar to, or interchangeable with, such reference 
product may be licensed by the Secretary only after the expiration for 
such reference product of the later of--
            (1) the 7-year period described in section 527(a) of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360cc(a)); and
            (2) the 12-year period described in subsection (k)(7) of 
        such section 351.

SEC. 7003. <<NOTE: 42 USC 262 note.>>  SAVINGS.

    (a) Determination.--The Secretary of the Treasury, in consultation 
with the Secretary of Health and Human Services, shall for each fiscal 
year determine the amount of savings to the Federal Government as a 
result of the enactment of this subtitle.
    (b) Use.--Notwithstanding any other provision of this subtitle (or 
an amendment made by this subtitle), the savings to the Federal 
Government generated as a result of the enactment of this subtitle shall 
be used for deficit reduction.

   Subtitle B--More Affordable Medicines for Children and Underserved 
                               Communities

SEC. 7101. EXPANDED PARTICIPATION IN 340B PROGRAM.

    (a) Expansion of Covered Entities Receiving Discounted Prices.--
Section 340B(a)(4) of the Public Health Service Act (42 U.S.C. 
256b(a)(4)) is amended by adding at the end the following:
                    ``(M) A children's hospital excluded from the 
                Medicare prospective payment system pursuant to section 
                1886(d)(1)(B)(iii) of the Social Security Act, or a 
                free-standing cancer hospital excluded from the Medicare 
                prospective payment system pursuant to section 
                1886(d)(1)(B)(v) of the Social Security Act, that would 
                meet the requirements of subparagraph (L), including the 
                disproportionate share adjustment percentage requirement 
                under clause (ii) of such subparagraph, if the hospital 
                were a subsection (d) hospital as defined by section 
                1886(d)(1)(B) of the Social Security Act.
                    ``(N) An entity that is a critical access hospital 
                (as determined under section 1820(c)(2) of the Social 
                Security Act), and that meets the requirements of 
                subparagraph (L)(i).
                    ``(O) An entity that is a rural referral center, as 
                defined by section 1886(d)(5)(C)(i) of the Social 
                Security Act, or

[[Page 124 STAT. 822]]

                a sole community hospital, as defined by section 
                1886(d)(5)(C)(iii) of such Act, and that both meets the 
                requirements of subparagraph (L)(i) and has a 
                disproportionate share adjustment percentage equal to or 
                greater than 8 percent.''.

    (b) Extension of Discount to Inpatient Drugs.--Section 340B of the 
Public Health Service Act (42 U.S.C. 256b) is amended--
            (1) in paragraphs (2), (5), (7), and (9) of subsection (a), 
        by striking ``outpatient'' each place it appears; and
            (2) in subsection (b)--
                    (A) by striking ``Other Definition'' and all that 
                follows through ``In this section'' and inserting the 
                following: ``Other Definitions.--
            ``(1) In general.--In this section''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Covered drug.--In this section, the term `covered 
        drug'--
                    ``(A) means a covered outpatient drug (as defined in 
                section 1927(k)(2) of the Social Security Act); and
                    ``(B) includes, notwithstanding paragraph (3)(A) of 
                section 1927(k) of such Act, a drug used in connection 
                with an inpatient or outpatient service provided by a 
                hospital described in subparagraph (L), (M), (N), or (O) 
                of subsection (a)(4) that is enrolled to participate in 
                the drug discount program under this section.''.

    (c) Prohibition on Group Purchasing Arrangements.--Section 340B(a) 
of the Public Health Service Act (42 U.S.C. 256b(a)) is amended--
            (1) in paragraph (4)(L)--
                    (A) in clause (i), by adding ``and'' at the end;
                    (B) in clause (ii), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking clause (iii); and
            (2) in paragraph (5), as amended by subsection (b)--
                    (A) by redesignating subparagraphs (C) and (D) as 
                subparagraphs (D) and (E); respectively; and
                    (B) by inserting after subparagraph (B), the 
                following:
                    ``(C) Prohibition on group purchasing 
                arrangements.--
                          ``(i) In general.--A hospital described in 
                      subparagraph (L), (M), (N), or (O) of paragraph 
                      (4) shall not obtain covered outpatient drugs 
                      through a group purchasing organization or other 
                      group purchasing arrangement, except as permitted 
                      or provided for pursuant to clauses (ii) or (iii).
                          ``(ii) Inpatient drugs.--Clause (i) shall not 
                      apply to drugs purchased for inpatient use.
                          ``(iii) Exceptions.--The Secretary shall 
                      establish reasonable exceptions to clause (i)--
                                    ``(I) with respect to a covered 
                                outpatient drug that is unavailable to 
                                be purchased through the program under 
                                this section due to a drug shortage 
                                problem, manufacturer noncompliance, or 
                                any other circumstance beyond the 
                                hospital's control;
                                    ``(II) to facilitate generic 
                                substitution when a generic covered 
                                outpatient drug is available at a lower 
                                price; or

[[Page 124 STAT. 823]]

                                    ``(III) to reduce in other ways the 
                                administrative burdens of managing both 
                                inventories of drugs subject to this 
                                section and inventories of drugs that 
                                are not subject to this section, so long 
                                as the exceptions do not create a 
                                duplicate discount problem in violation 
                                of subparagraph (A) or a diversion 
                                problem in violation of subparagraph 
                                (B).
                          ``(iv) Purchasing arrangements for inpatient 
                      drugs.--The Secretary shall ensure that a hospital 
                      described in subparagraph (L), (M), (N), or (O) of 
                      subsection (a)(4) that is enrolled to participate 
                      in the drug discount program under this section 
                      shall have multiple options for purchasing covered 
                      drugs for inpatients, including by utilizing a 
                      group purchasing organization or other group 
                      purchasing arrangement, establishing and utilizing 
                      its own group purchasing program, purchasing 
                      directly from a manufacturer, and any other 
                      purchasing arrangements that the Secretary 
                      determines is appropriate to ensure access to drug 
                      discount pricing under this section for inpatient 
                      drugs taking into account the particular needs of 
                      small and rural hospitals.''.

    (d) Medicaid Credits on Inpatient Drugs.--Section 340B of the Public 
Health Service Act (42 U.S.C. 256b) is amended by striking subsection 
(c) and inserting the following:
    ``(c) Medicaid Credit.--Not 
later <<NOTE: Deadline. Determination.>>  than 90 days after the date of 
filing of the hospital's most recently filed Medicare cost report, the 
hospital shall issue a credit as determined by the Secretary to the 
State Medicaid program for inpatient covered drugs provided to Medicaid 
recipients.''.

    (e) <<NOTE: 42 USC 256b.>>  Effective Dates.--
            (1) In general.--The amendments made by this section and 
        section 7102 shall take effect on January 1, 2010, and shall 
        apply to drugs purchased on or after January 1, 2010.
            (2) Effectiveness.--The amendments made by this section and 
        section 7102 shall be effective and shall be taken into account 
        in determining whether a manufacturer is deemed to meet the 
        requirements of section 340B(a) of the Public Health Service Act 
        (42 U.S.C. 256b(a)), notwithstanding any other provision of law.

SEC. 7102. IMPROVEMENTS TO 340B PROGRAM INTEGRITY.

    (a) Integrity Improvements.--Subsection (d) of section 340B of the 
Public Health Service Act (42 U.S.C. 256b) is amended to read as 
follows:
    ``(d) Improvements in Program Integrity.--
            ``(1) Manufacturer compliance.--
                    ``(A) In general.--From amounts appropriated under 
                paragraph (4), the Secretary shall provide for 
                improvements in compliance by manufacturers with the 
                requirements of this section in order to prevent 
                overcharges and other violations of the discounted 
                pricing requirements specified in this section.
                    ``(B) Improvements.--The improvements described in 
                subparagraph (A) shall include the following:

[[Page 124 STAT. 824]]

                          ``(i) The development of a system to enable 
                      the Secretary to verify the accuracy of ceiling 
                      prices calculated by manufacturers under 
                      subsection (a)(1) and charged to covered entities, 
                      which shall include the following:
                                    ``(I) Developing and publishing 
                                through an appropriate policy or 
                                regulatory issuance, precisely defined 
                                standards and methodology for the 
                                calculation of ceiling prices under such 
                                subsection.
                                    ``(II) Comparing regularly the 
                                ceiling prices calculated by the 
                                Secretary with the quarterly pricing 
                                data that is reported by manufacturers 
                                to the Secretary.
                                    ``(III) Performing spot checks of 
                                sales transactions by covered entities.
                                    ``(IV) Inquiring into the cause of 
                                any pricing discrepancies that may be 
                                identified and either taking, or 
                                requiring manufacturers to take, such 
                                corrective action as is appropriate in 
                                response to such price discrepancies.
                          ``(ii) The <<NOTE: Procedures.>>  
                      establishment of procedures for manufacturers to 
                      issue refunds to covered entities in the event 
                      that there is an overcharge by the manufacturers, 
                      including the following:
                                    ``(I) Providing the Secretary with 
                                an explanation of why and how the 
                                overcharge occurred, how the refunds 
                                will be calculated, and to whom the 
                                refunds will be issued.
                                    ``(II) Oversight by the Secretary to 
                                ensure that the refunds are issued 
                                accurately and within a reasonable 
                                period of time, both in routine 
                                instances of retroactive adjustment to 
                                relevant pricing data and exceptional 
                                circumstances such as erroneous or 
                                intentional overcharging for covered 
                                drugs.
                          ``(iii) The provision of access through the 
                      Internet website of the Department of Health and 
                      Human Services to the applicable ceiling prices 
                      for covered drugs as calculated and verified by 
                      the Secretary in accordance with this section, in 
                      a manner (such as through the use of password 
                      protection) that limits such access to covered 
                      entities and adequately assures security and 
                      protection of privileged pricing data from 
                      unauthorized re-disclosure.
                          ``(iv) The development of a mechanism by 
                      which--
                                    ``(I) rebates and other discounts 
                                provided by manufacturers to other 
                                purchasers subsequent to the sale of 
                                covered drugs to covered entities are 
                                reported to the Secretary; and
                                    ``(II) appropriate credits and 
                                refunds are issued to covered entities 
                                if such discounts or rebates have the 
                                effect of lowering the applicable 
                                ceiling price for the relevant quarter 
                                for the drugs involved.
                          ``(v) Selective auditing of manufacturers and 
                      wholesalers to ensure the integrity of the drug 
                      discount program under this section.

[[Page 124 STAT. 825]]

                          ``(vi) The imposition of sanctions in the form 
                      of civil monetary penalties, which--
                                    ``(I) shall be assessed according to 
                                standards established in regulations to 
                                be promulgated by the Secretary not 
                                later than 180 days after the date of 
                                enactment of the Patient Protection and 
                                Affordable Care Act;
                                    ``(II) shall not exceed $5,000 for 
                                each instance of overcharging a covered 
                                entity that may have occurred; and
                                    ``(III) <<NOTE: Applicability.>>  
                                shall apply to any manufacturer with an 
                                agreement under this section that 
                                knowingly and intentionally charges a 
                                covered entity a price for purchase of a 
                                drug that exceeds the maximum applicable 
                                price under subsection (a)(1).
            ``(2) Covered entity compliance.--
                    ``(A) In general.--From amounts appropriated under 
                paragraph (4), the Secretary shall provide for 
                improvements in compliance by covered entities with the 
                requirements of this section in order to prevent 
                diversion and violations of the duplicate discount 
                provision and other requirements specified under 
                subsection (a)(5).
                    ``(B) Improvements.--The improvements described in 
                subparagraph (A) shall include the following:
                          ``(i) <<NOTE: Procedures.>>  The development 
                      of procedures to enable and require covered 
                      entities to regularly update (at least annually) 
                      the information on the Internet website of the 
                      Department of Health and Human Services relating 
                      to this section.
                          ``(ii) The development of a system for the 
                      Secretary to verify the accuracy of information 
                      regarding covered entities that is listed on the 
                      website described in clause (i).
                          ``(iii) <<NOTE: Guidance.>>  The development 
                      of more detailed guidance describing methodologies 
                      and options available to covered entities for 
                      billing covered drugs to State Medicaid agencies 
                      in a manner that avoids duplicate discounts 
                      pursuant to subsection (a)(5)(A).
                          ``(iv) The establishment of a single, 
                      universal, and standardized identification system 
                      by which each covered entity site can be 
                      identified by manufacturers, distributors, covered 
                      entities, and the Secretary for purposes of 
                      facilitating the ordering, purchasing, and 
                      delivery of covered drugs under this section, 
                      including the processing of chargebacks for such 
                      drugs.
                          ``(v) <<NOTE: Sanctions. Determination.>>  The 
                      imposition of sanctions, in appropriate cases as 
                      determined by the Secretary, additional to those 
                      to which covered entities are subject under 
                      subsection (a)(5)(E), through one or more of the 
                      following actions:
                                    ``(I) Where a covered entity 
                                knowingly and intentionally violates 
                                subsection (a)(5)(B), the covered entity 
                                shall be required to pay a monetary 
                                penalty to a manufacturer or 
                                manufacturers in the form of interest on 
                                sums for which the covered entity is 
                                found liable under subsection (a)(5)(E), 
                                such interest to be compounded monthly 
                                and equal

[[Page 124 STAT. 826]]

                                to the current short term interest rate 
                                as determined by the Federal Reserve for 
                                the time period for which the covered 
                                entity is liable.
                                    ``(II) Where the Secretary 
                                determines a violation of subsection 
                                (a)(5)(B) was systematic and egregious 
                                as well as knowing and intentional, 
                                removing the covered entity from the 
                                drug discount program under this section 
                                and disqualifying the entity from re-
                                entry into such program for a reasonable 
                                period of time to be determined by the 
                                Secretary.
                                    ``(III) Referring matters to 
                                appropriate Federal authorities within 
                                the Food and Drug Administration, the 
                                Office of Inspector General of 
                                Department of Health and Human Services, 
                                or other Federal agencies for 
                                consideration of appropriate action 
                                under other Federal statutes, such as 
                                the Prescription Drug Marketing Act (21 
                                U.S.C. 353).
            ``(3) Administrative dispute resolution process.--
                    ``(A) In general.--Not 
                later <<NOTE: Deadline. Regulations.>>  than 180 days 
                after the date of enactment of the Patient Protection 
                and Affordable Care Act, the Secretary shall promulgate 
                regulations to establish and implement an administrative 
                process for the resolution of claims by covered entities 
                that they have been overcharged for drugs purchased 
                under this section, and claims by manufacturers, after 
                the conduct of audits as authorized by subsection 
                (a)(5)(D), of violations of subsections (a)(5)(A) or 
                (a)(5)(B), including appropriate procedures for the 
                provision of remedies and enforcement of determinations 
                made pursuant to such process through mechanisms and 
                sanctions described in paragraphs (1)(B) and (2)(B).
                    ``(B) Deadlines and procedures.--Regulations 
                promulgated by the Secretary under subparagraph (A) 
                shall--
                          ``(i) designate or establish a decision-making 
                      official or decision-making body within the 
                      Department of Health and Human Services to be 
                      responsible for reviewing and finally resolving 
                      claims by covered entities that they have been 
                      charged prices for covered drugs in excess of the 
                      ceiling price described in subsection (a)(1), and 
                      claims by manufacturers that violations of 
                      subsection (a)(5)(A) or (a)(5)(B) have occurred;
                          ``(ii) establish such deadlines and procedures 
                      as may be necessary to ensure that claims shall be 
                      resolved fairly, efficiently, and expeditiously;
                          ``(iii) establish procedures by which a 
                      covered entity may discover and obtain such 
                      information and documents from manufacturers and 
                      third parties as may be relevant to demonstrate 
                      the merits of a claim that charges for a 
                      manufacturer's product have exceeded the 
                      applicable ceiling price under this section, and 
                      may submit such documents and information to the 
                      administrative official or body responsible for 
                      adjudicating such claim;
                          ``(iv) <<NOTE: Audits.>>  require that a 
                      manufacturer conduct an audit of a covered entity 
                      pursuant to subsection (a)(5)(D)

[[Page 124 STAT. 827]]

                      as a prerequisite to initiating administrative 
                      dispute resolution proceedings against a covered 
                      entity;
                          ``(v) permit the official or body designated 
                      under clause (i), at the request of a manufacturer 
                      or manufacturers, to consolidate claims brought by 
                      more than one manufacturer against the same 
                      covered entity where, in the judgment of such 
                      official or body, consolidation is appropriate and 
                      consistent with the goals of fairness and economy 
                      of resources; and
                          ``(vi) include provisions and procedures to 
                      permit multiple covered entities to jointly assert 
                      claims of overcharges by the same manufacturer for 
                      the same drug or drugs in one administrative 
                      proceeding, and permit such claims to be asserted 
                      on behalf of covered entities by associations or 
                      organizations representing the interests of such 
                      covered entities and of which the covered entities 
                      are members.
                    ``(C) Finality of administrative resolution.--The 
                administrative resolution of a claim or claims under the 
                regulations promulgated under subparagraph (A) shall be 
                a final agency decision and shall be binding upon the 
                parties involved, unless invalidated by an order of a 
                court of competent jurisdiction.
            ``(4) Authorization of appropriations.--There are authorized 
        to be appropriated to carry out this subsection, such sums as 
        may be necessary for fiscal year 2010 and each succeeding fiscal 
        year.''.

    (b) Conforming Amendments.--Section 340B(a) of the Public Health 
Service Act (42 U.S.C. 256b(a)) is amended--
            (1) in subsection (a)(1), by adding at the end the 
        following: ``Each such 
        agreement <<NOTE: Contracts. Reports. Deadlines.>>  shall 
        require that the manufacturer furnish the Secretary with 
        reports, on a quarterly basis, of the price for each covered 
        drug subject to the agreement that, according to the 
        manufacturer, represents the maximum price that covered entities 
        may permissibly be required to pay for the drug (referred to in 
        this section as the `ceiling price'), and shall require that the 
        manufacturer offer each covered entity covered drugs for 
        purchase at or below the applicable ceiling price if such drug 
        is made available to any other purchaser at any price.''; and
            (2) in the first sentence of subsection (a)(5)(E), as 
        redesignated by section 7101(c), by inserting ``after audit as 
        described in subparagraph (D) and'' after ``finds,''.

SEC. 7103. GAO STUDY TO MAKE RECOMMENDATIONS ON IMPROVING THE 340B 
            PROGRAM.

    (a) Report.--Not later than 18 months after the date of enactment of 
this Act, the Comptroller General of the United States shall submit to 
Congress a report that examines whether those individuals served by the 
covered entities under the program under section 340B of the Public 
Health Service Act (42 U.S.C. 256b) (referred to in this section as the 
``340B program'') are receiving optimal health care services.
    (b) Recommendations.--The report under subsection (a) shall include 
recommendations on the following:

[[Page 124 STAT. 828]]

            (1) Whether the 340B program should be expanded since it is 
        anticipated that the 47,000,000 individuals who are uninsured as 
        of the date of enactment of this Act will have health care 
        coverage once this Act is implemented.
            (2) Whether mandatory sales of certain products by the 340B 
        program could hinder patients access to those therapies through 
        any provider.
            (3) Whether income from the 340B program is being used by 
        the covered entities under the program to further the program 
        objectives.