Preserve Access to Affordable Generics and Biosimilars Act

The bill would add a new Section 27 to the Federal Trade Commission Act making it unlawful to enter into a patent-settlement agreement covering a drug or biological product that has anticompetitive effects. An agreement would be presumed anticompetitive if the generic or biosimilar applicant receives anything of value and agrees to limit or forgo research, development, manufacturing, marketing, or sales of its competing product. That presumption could be rebutted only if the parties show the value was compensation for unrelated goods or services, or that the agreement's procompetitive benefits outweigh its harms. Exempt settlements include those granting only an early-entry license, reasonable litigation cost reimbursements up to $7,500,000 (in 2025, adjusted annually), or a covenant not to sue. Violators face civil penalties up to three times the value received and could lose the 180-day generic-drug marketing exclusivity period.

The bill would also require chief executives or lead negotiators to certify — within 30 days of filing — that materials submitted to the FTC and the Department of Justice represent the complete agreement, including oral understandings and any related side deals. Agreement-notification requirements would be extended to cover Patent Trial and Appeal Board proceedings. The FTC would have six years from the certification filing date to commence enforcement, and must report to Congress within one year on whether an additional exclusion for releases of damage claims should be added.

Brand-name pharmaceutical and biological product manufacturers who hold drug patents and bring infringement claims, and the generic drug and biosimilar companies that settle those claims. Consumers and health-care payers — including federal programs like Medicare and Medicaid, which fund over 40 percent of the roughly $450 billion spent annually on retail prescription drugs — stand to benefit if earlier generic entry lowers prices. The FTC and Department of Justice would gain new enforcement roles.

For patients and payers, faster generic entry means lower out-of-pocket costs and reduced federal drug spending. For pharmaceutical companies, the bill would eliminate a settlement structure that has allowed both brand and generic firms to profit from delayed competition rather than compete on price. The certification and penalty provisions would raise legal and financial risks for companies that structure side deals to circumvent the prohibition.

The FTC would enforce the new prohibition by filing civil actions in federal district courts, seeking civil penalties up to three times the value exchanged in a violating agreement, mandatory injunctions, and other equitable relief. Parties to covered agreements must already file them with the FTC and the Department of Justice under the Medicare Modernization Act; the bill would add a CEO certification requirement within 30 days of each filing, attesting that the filing is complete, including oral understandings. The FTC has a six-year limitations window running from the certification date. Within one year of enactment, the FTC must report to the Senate and House Judiciary Committees on whether damage-release clauses should also be exempt from the prohibition.