Health Care Research and Development and Consumer Protection Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Research and Development 
and Consumer Protection Act''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) Public health needs are advanced by the development and 
        distribution of new drug therapies
            (2) The public interest in the development of new drug 
        therapies is parallel to the public interest in controlling 
        public and private health care costs.
            (3) The Federal Government needs mechanisms to ensure that 
        portions of revenues from the sale of drugs to consumers are 
        reinvested in the research and development of new technologies.
            (4) The Federal Government is the single largest supporter 
        of biomedical research in the world, spending $33 billion in 
        1994 alone for biomedical and related health research.
            (5) The Federal Government provides 80 percent of the 
        monies spent each year for fundamental biomedical research at 
        universities, medical schools, and other non-profit 
        institutions.
            (6) Of all the cancer drugs developed since the founding of 
        the National Cancer Institute's new drug program in 1955 and 
        approved for marketing by the Food and Drug Administration 
        through 1992, 34 of 37 cancer drugs, or 92 percent, were 
        developed with taxpayer funds.
            (7) The public should not have to pay twice for health care 
        inventions, first as taxpayers and second as consumers.
            (8) The Department of Health and Human Services has the 
        responsibility for funding basic biomedical research, for 
        funding medical treatment through the programs under titles 
        XVIII and XIX of the Social Security Act, for providing direct 
        medical care, and, more generally, for protecting the health 
        and safety of the public, it is incumbent upon the Secretary of 
        Health and Human Services to require a reasonable relationship 
        between the pricing of drugs, the public investment in those 
        drugs, and the health and safety needs of the public.
            (9) The Department of Health and Human Services, academic 
        researchers, and the general public have the right to know, but 
        lack the necessary information about, information about the 
        actual costs for drug development, the general revenues 
        generated from the sale of pharmaceutical drugs, and the 
        taxpayer's investment in new drug development.
            (10) The Department of Health and Human Services lacks the 
        necessary information to make appropriate decisions about the 
        reasonableness of drug prices or the impact of its policies on 
research and development of new medical technologies.

SEC. 3. REPORT ON RESEARCH OF THE FEDERAL GOVERNMENT.

    (a) Involvement of the Federal Government.--For each drug for which 
an application under section 505, 507, or 512 of the Federal Food, 
Drug, and Cosmetic Act has been approved the following shall be 
reported to the Secretary of Health and Human Services:
            (1) Each patent, cooperative research and development 
        agreement under section 12 of the Stevenson-Wydler Technology 
        Innovation Act of 1980, or other contractual agreement with the 
        Federal Government which contributed to the development of the 
        drug. The dollar amount of Federal funds expended, the agency 
        of the Federal Government which provided such funds, the dates 
        of any contractual agreements, and the nature of the research 
        and development activity shall be included in the report.
            (2) Each grant, contract, or other funding mechanism of the 
        Federal Government which was used to support research or 
        development activities with respect to the drug, including any 
        grant or contract by the Federal Government to an institution 
        of higher education or other non profit institution or other 
        funds expended by the Federal Government on research and 
        development which directly contributed to the development of 
        the drug. The dollar amount of Federal funds expended, the 
        agency of the Federal Government which provided such funds, the 
        dates of any contractual agreements, and the nature of the 
        research and development activity shall be included in the 
        report.
The Secretary shall make such report available to the public.
    (b) Research and Development.--
            (1) In general.--For each drug for which an application 
        under section 505, 507, or 512 of the Federal Food, Drug, and 
        Cosmetic Act has been approved the total amount expended for 
        each type of research and development of the drug in each 
        calendar year, including pre-clinical research and phase I, II, 
        and III clinical trials, the entity which made the 
        expenditures, and the amount provided by the Federal Government 
        shall be reported to the Secretary of Health and Human 
        Services.
            (2) Public Disclosure of Data.--If a drug is protected 
        under section 527(a) of the Federal Food, Drug, and Cosmetic 
        Act or under a patent, the material reported under paragraph 
        (1) for such drug shall be made available by the Secretary to 
        the public. If a drug is not protected under such section or a 
        patent, the Secretary shall make the report available to the 
        public in a form which does not identify individual entities.

SEC. 4. REASONABLE PRICE AGREEMENT.

    (a) In General.--If any Federal agency or any non-profit entity 
undertakes federally funded health care research and development and is 
to convey or provide a patent or other exclusive right to use such 
research and development for a drug or other health care technology, 
such agency or entity shall not make such conveyance or provide such 
patent or other right until the person who will receive such patent or 
other right first agrees to a reasonable pricing agreement with the 
Secretary of Health and Human Services or the Secretary makes a 
determination that the public interest is served by a waiver of the 
reasonable pricing agreement provided in accordance with subsection 
(b).
    (b) Waiver.--No waiver shall take effect under subsection (a) 
before the public is given notice of the proposed waiver and provided a 
reasonable opportunity to comment on the proposed waiver. A decision to 
grant a waiver shall set out the Secretary's finding that such a waiver 
is in the public interest.

SEC. 5. PURCHASE OF DRUGS DEVELOPED WITH TAXPAYER SUPPORT.

    For any drug approved for marketing by the Food and Drug 
Administration which was developed with significant Federal support, 
the Secretary of Health and Human Services shall review the price of 
the drug for purposes of determining a reasonable price for Federal 
reimbursements under the programs under titles XVIII and XIX of the 
Social Security Act and other Federal programs that elect to 
participate in the Secretary's reasonable pricing program, In 
determining a reasonable price for a drug, the Secretary shall 
consider--
            (1) the public interest in continued health care research 
        and development,
            (2) the contribution of the person marketing such drug to 
        the drug research and development expenses, including the 
        amount, timing, and risk of investment in such research and 
        development,
            (3) the contribution of the Federal Government to the 
        research and development of such drug, including the amount, 
        timing, and risk of investment in such research and 
        development,
            (4) the therapeutic value of such drug,
            (5) the number of patients who are expected to purchase 
        such drug,
            (6) the cost of producing and marketing of such drug,
            (7) the cost of therapies which are similar to the therapy 
        using such drug, and
            (8) other relevant factors.

SEC. 6. MATERIAL TRANSFER AGREEMENT.

    If in connection with research and development for health care 
technologies, the Secretary of Health and Human Services determines 
that the public interest will be advanced by the ability of the 
Secretary to conduct research on biological substances or other 
materials, the Secretary shall have the authority to compel the owner 
of such substances or materials to provide the Secretary with such 
substances or materials in accordance with a materials transfer 
agreement. The agreement shall--
            (1) provide the owner of such substances or materials 
        compensation for the costs incurred in making the transfer to 
        the Secretary;
            (2) define the terms and conditions under which the 
        Secretary may use the materials;
            (3) not grant rights in intellectual property or rights for 
        commercial purposes; and
            (4) require that the material be used for research purposes 
        only.

SEC. 7. PROMOTION OF RESEARCH AND DEVELOPMENT.

    (a) Account.--Any person engaged in the manufacture of drugs for 
introduction into interstate commerce shall, in accordance with 
subsection (b), establish for each drug an account for funds to be 
reinvested in research and development for health care technologies.
    (b) Reinvestment in Research and Development.--To insure that 
adequate funds are being made available for research and development of 
new health care technologies, the Secretary of Health and Human 
Services shall establish for persons engaged in the manufacture of 
drugs for introduction into interstate commerce the minimum amount such 
person should make available for research and development of its new 
health care technologies based upon a percentage of sales revenue for 
that drug. The Secretary may require different percentages for minimum 
reinvestment for different classes of drugs based upon patient 
protection, orphan drug status, or magnitude of sales.
    (c) Additional Rules.--The Secretary shall adopt regulations 
concerning qualifying research and development expenditures and the 
reporting requirements for persons who are subject to subsections (a) 
and (b).

SEC. 8. REPORTS ON SALES.

    Any person engaged in the manufacture and sale of drugs approved 
under section 505, 507, or 512 of the Federal Food, Drug, and Cosmetic 
Act shall report to the Health Care Financing Administration the total 
number of each drug it has sold and the total revenue it has received 
from such sales, including sales made outside the United States.

SEC. 9. GOVERNMENT EXPENDITURE ON PRESCRIPTION DRUGS.

    The Secretary of Health and Human Services shall report to the 
Congress annually on the estimate of the amount of money the Federal 
government expends, directly or through reimbursement, for the purchase 
of prescription drugs, including an estimate of the amount of money 
expended each year on drugs which were developed with significant 
Federal support.

Summary: Health Care Research and Development and Consumer Protection Act - Requires reporting to the Secretary of Health and Human Services and public disclosure of certain research and development patent and funding information, including the amount of Federal funds expended, with regard to new drugs, new animal drugs, and antibiotics approved for marketing under the Federal Food, Drug, and Cosmetic Act. Provides that if any Federal agency or any nonprofit entity undertakes federally funded health care R and D, and is to convey or provide a patent or other exclusive right to use such R and D for a drug or other health care technology, such agency or entity shall not make such conveyance or provide such patent or other right until the person who will receive it first agrees to a reasonable pricing agreement with the Secretary or the Secretary makes a determination that the public interest is served by a waiver of the reasonable pricing agreement. Requires, for any drug approved for marketing by the Food and Drug Administration which was developed with significant Federal support, that the Secretary review the drug price to determine a reasonable price for Federal reimbursements under titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act and other Federal programs that elect to participate in the Secretary's reasonable pricing program. Provides that, if in connection with R and D for health care technologies the Secretary determines that the public interest will be advanced by his or her ability to conduct research on biological substances or other materials, the Secretary shall have the authority to compel the owner of such substances or materials to provide them to him or her in accordance with a described materials transfer agreement. Requires any person engaged in the manufacture of drugs for introduction into interstate commerce to establish for each drug, in accordance with specified procedures, an account for funds to be reinvested in R and D for health care technologies. Requires certain sales reports to the Health Care Financing Administration with regard to new drugs, new animal drugs, and antibiotics approved for marketing under the Federal Food, Drug, and Cosmetic Act. Directs the Secretary to report to the Congress annually on estimated Federal expenditures, made directly or through reimbursement, for purchasing prescription drugs, including estimated annual expenditures on drugs developed with significant Federal support.