II 

113TH CONGRESS 

1ST SESSION S. 626 

To de-link research and development incentives from drug prices for new 

medicines to treat HIV/AIDS and to stimulate greater sharing of scientific knowledge. 

IN THE SENATE OF THE UNITED STATES 

MARCH 20, 2013 

Mr. SANDERS introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To de-link research and development incentives from drug 

prices for new medicines to treat HIV/AIDS and to 

stimulate greater sharing of scientific knowledge. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Prize Fund for HIV/ 

5 AIDS Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

8 (1) The Centers for Disease Control and Pre9 vention estimates that more than 1,100,000 people 


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1 are living with HIV in the United States, and that 

2 1 in 5 of those people living with HIV is unaware 

3 of their infection. 

4 (2) An estimated 49,000 Americans become in5 fected with HIV each year. 

6 (3) More than 15,000 people with AIDS still 

7 die each year in the United States. 

8 (4) Through 2010, more than 636,000 people 

9 with AIDS in the United States have died since the 

10 epidemic began. 

11 (5) Globally, UNAIDS estimates that more 

12 than 34,000,000 persons are living with HIV. 

13 (6) Persons with HIV/AIDS require access to 

14 antiretroviral drugs. 

15 (7) In the United States, public and private 

16 sector expenditures on antiretroviral drugs currently 

17 exceed $9,000,000,000 per year. 

18 (8) The United States Federal Government is 

19 the largest funder of treatments for HIV/AIDS in 

20 the developing world. 

21 (9) The development of new medicines and vac22 cines for HIV/AIDS is a national priority. 

23 (10) Market exclusivity for new products is an 

24 expensive, inefficient, and unfair mechanism to re25 ward investments in new products, and has created 


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1 hardships for persons with HIV/AIDS and busi2 nesses that employ persons with HIV/AIDS. 

3 (11) By de-linking research and development 

4 incentives from product prices, and by eliminating 

5 legal monopolies to sell new medicines for the treat6 ment of HIV/AIDS, it is possible to induce invest7 ments that are medically more important, procure 

8 products at low prices from competitive suppliers, 

9 and introduce more efficient incentives for research 

10 and development. 

11 SEC. 3. PURPOSE. 

12 It is the purpose of this Act to provide sustainable 

13 financing of incentives to encourage investments in re14 search and development of new medicines for HIV/AIDS 

15 and to share knowledge, data, materials, and technology, 

16 through the establishment of a Prize Fund for HIV/AIDS, 

17 while enhancing access to such medicines by eliminating 

18 legal monopolies on the manufacture, distribution, and 

19 sale of such medicines. 

20 SEC. 4. DEFINITIONS. 

21 In this Act: 

22 (1) BIOLOGICAL PRODUCT.—The term ‘‘biologi23 cal product’’ has the meaning given such term in 

24 section 351 of the Public Health Service Act (42 

25 U.S.C. 262). 


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1 (2) DRUG.—The term ‘‘drug’’ has the meaning 

2 given such term in section 201 of the Federal Food, 

3 Drug, and Cosmetic Act (21 U.S.C. 321). 

4 (3) DUAL USE PRODUCT.—The term ‘‘dual use 

5 product’’ means a product that is a qualifying treat6 ment for HIV/AIDS and that has a significant use 

7 for other diseases. 

8 (4) FUND.—The term ‘‘Fund’’ means the Prize 

9 Fund for HIV/AIDS established under section 7. 

10 (5) MARKET CLEARANCE.—The term ‘‘market 

11 clearance’’ means the approval of an application 

12 under section 505 of the Federal Food, Drug, and 

13 Cosmetic Act (21 U.S.C. 355) or the approval of a 

14 biologics license application under subsection (a) of 

15 section 351 of the Public Health Service Act (42 

16 U.S.C. 262). 

17 (6) QUALIFYING TREATMENT FOR HIV/AIDS.— 

18 The term ‘‘qualifying treatment for HIV/AIDS’’ 

19 means an antiretrovial drug, biological product, vac20 cine, or other treatment primarily used for HIV/ 

21 AIDS that has been certified as a qualifying product 

22 by the Secretary of Health and Human Services, for 

23 purposes of the Prize Fund for HIV/AIDS. 


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1 SEC. 5. ELIMINATION OF EXCLUSIVE RIGHTS TO MARKET 

2 DRUGS AND BIOLOGICAL PRODUCTS. 

3 (a) IN GENERAL.—Notwithstanding title 35, United 

4 States Code, relevant provisions of the Federal Food, 

5 Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) (including 

6 amendments made by the Drug Price Competition and 

7 Patent Term Restoration Act of 1984 (Public Law 98– 

8 417; commonly referred to as the ‘‘Hatch-Waxman Act’’)), 

9 the Medicare Prescription Drug, Improvement, and Mod10 ernization Act of 2003 (Public Law 108–173), and any 

11 other provision of law providing any patent right or exclu12 sive marketing period for any qualifying treatment for 

13 HIV/AIDS or manufacturing process for a qualifying 

14 treatment for HIV/AIDS (such as pediatric extensions 

15 under section 505A of the Federal Food, Drug, and Cos16 metic Act (21 U.S.C. 355a) or orphan drug marketing ex17 clusivity under subchapter B of chapter V of such Act (21 

18 U.S.C. 360aa et seq.)), no person shall have the right to 

19 exclusively manufacture, distribute, sell, or use a quali20 fying treatment for HIV/AIDS or a manufacturing proc21 ess for a qualifying treatment for HIV/AIDS in interstate 

22 commerce, including the exclusive right to rely on health 

23 registration data or the 30-month stay-of-effectiveness pe24 riod for Orange Book patents under section 505(j) of such 

25 Act (21 U.S.C. 355(j)). 


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1 (b) REMUNERATION.—A person that is eligible for 

2 prize payments from the Prize Fund for HIV/AIDS shall 

3 receive such payments— 

4 (1) in lieu of any remuneration the person 

5 would have otherwise received for the exclusive mar6 keting, distribution, sale, or use of a qualifying 

7 treatment for HIV/AIDS or manufacturing process 

8 for a qualifying treatment for HIV/AIDS but for the 

9 application of subsection (a); and 

10 (2) in addition to any other remuneration that 

11 such person receives by reason of the nonexclusive 

12 marketing, distribution, sale, or use of the qualifying 

13 treatment for HIV/AIDS or manufacturing process 

14 for a qualifying treatment for HIV/AIDS. 

15 (c) APPLICATION.—This section shall apply only with 

16 respect to the marketing, distribution, sale, or use of a 

17 qualifying treatment for HIV/AIDS or a manufacturing 

18 process for a qualifying treatment for HIV/AIDS that oc19 curs on or after October 1, 2014. 

20 (d) DUAL USE PRODUCTS.—In the case of a dual use 

21 product, the elimination of exclusive rights under sub22 section (a) shall apply only with respect to the manufac23 ture, distribution, marketing, sale, or use of the product 

24 for the treatment of HIV/AIDS. 


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1 SEC. 6. QUALIFYING TREATMENTS FOR HIV/AIDS. 

2 Prize payments from the Fund under section 8 shall 

3 be limited to qualifying treatments for HIV/AIDS, as de4 fined in section 4. 

5 SEC. 7. PRIZE FUND FOR HIV/AIDS. 

6 (a) ESTABLISHMENT.—There is hereby established in 

7 the Treasury of the United States a revolving fund to be 

8 known as the ‘‘Prize Fund for HIV/AIDS’’, which shall 

9 consist of amounts appropriated to the Fund and amounts 

10 credited to the Fund under subsection (d). 

11 (b) PRIZE FUND ADMINISTRATION.—The Secretary 

12 of Health and Human Services shall designate a Prize 

13 Fund Director and other officials as needed to administer 

14 the Fund. 

15 (c) ADVISORY BOARD.—The Secretary of Health and 

16 Human Services shall appoint an advisory board for the 

17 Fund. 

18 (d) AMOUNTS CREDITED TO THE FUND.—The Sec19 retary of the Treasury shall credit to the Fund the interest 

20 on, and the proceeds from sale or redemption of, obliga21 tions held in the Fund. 

22 SEC. 8. PRIZE PAYMENTS FOR MEDICAL INNOVATION. 

23 (a) AWARD.—For fiscal year 2015, and each subse24 quent fiscal year, the Prize Fund Director shall award to 

25 persons described in subsection (b) prize payments for 

26 medical innovation relating to a qualifying treatment for 


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1 HIV/AIDS, or a new manufacturing process for such a 

2 qualifying treatment for HIV/AIDS. 

3 (b) ELIGIBILITY.—To be eligible to receive a prize 

4 payment under subsection (a) a person shall be— 

5 (1) in the case of a qualifying treatment for 

6 HIV/AIDS that is a drug or biological product, the 

7 first person to receive market clearance with respect 

8 to the drug or biological product; 

9 (2) in the case of a manufacturing process for 

10 a qualifying treatment for HIV/AIDS, the holder of 

11 the patent with respect to such process; or 

12 (3) in the case of open source contributions 

13 with respect to a qualifying treatment for HIV/ 

14 AIDS, the persons or communities that openly 

15 shared knowledge, data, materials, and technology 

16 on a royalty-free and nondiscriminatory basis. 

17 (c) CRITERIA.—The Prize Fund Director shall, by 

18 regulation, establish criteria for the selection of recipients, 

19 and for determining the amount, of prize payments under 

20 this section. Such criteria shall include consideration of 

21 the following: 

22 (1) The number of patients who benefit from 

23 the qualifying treatment for HIV/AIDS or manufac24 turing process involved. 


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1 (2) The incremental therapeutic benefit of the 

2 qualifying treatment for HIV/AIDS or manufac3 turing process involved as compared to existing 

4 drugs, biological products, and manufacturing proc5 esses available to treat the same disease or condi6 tion, except that the Prize Fund Director shall pro7 vide for cases where drugs, biological products, or 

8 manufacturing processes are developed at roughly 

9 the same time, so that the comparison is to products 

10 that were not recently developed. 

11 (3) Improved efficiency of manufacturing proc12 esses for drugs or biological processes. 

13 (4) The extent to which knowledge, data, mate14 rials, and technology that are openly shared have 

15 contributed to the successful development of new 

16 products or improved processes for manufacturing 

17 products. 

18 (d) REQUIREMENTS.—In awarding prize payments 

19 under this section, the Prize Fund Director shall comply 

20 with the following: 

21 (1) In cases where a new qualifying treatment 

22 for HIV/AIDS or manufacturing process for a quali23 fying treatment of HIV/AIDS offers an improvement 

24 over an existing qualifying treatment for HIV/AIDS 

25 or manufacturing process for a qualifying treatment 


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1 and such new qualifying treatment or manufacturing 

2 process competes with or replaces the existing quali3 fying treatment or manufacturing process, the Prize 

4 Fund Director shall continue to make prize pay5 ments for the existing qualifying treatment or manu6 facturing process to the degree that the new quali7 fying treatment or manufacturing process was based 

8 on or benefitted from the development of the exist9 ing qualifying treatment or manufacturing process. 

10 (2) The Prize Fund Director may award prize 

11 payments for a qualifying treatment for HIV/AIDS 

12 or a manufacturing process for a qualifying treat13 ment for HIV/AIDS for not more than 10 fiscal 

14 years, regardless of the term of any related patents. 

15 (3) For any fiscal year, the Prize Fund Direc16 tor may not award a prize payment for any single 

17 qualifying treatment for HIV/AIDS or manufac18 turing process for a qualifying treatment in an 

19 amount that exceeds 50 percent of the total amount 

20 appropriated to the Fund for that year. 

21 (4) For every qualifying treatment for HIV/ 

22 AIDS that receives market clearance, the Prize 

23 Fund Director shall determine whether and in what 

24 amount to award a prize payment for the qualifying 

25 treatment for HIV/AIDS not later than the end of 


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1 the fourth full calendar-year quarter following the 

2 calendar-year quarter in which the qualifying treat3 ment for HIV/AIDS receives market clearance. 

4 SEC. 9. OPEN SOURCE DIVIDEND PRIZES. 

5 (a) IN GENERAL.—In order to induce greater access 

6 and the open sharing of knowledge, data, materials, and 

7 technology, at least 5 percent of the prize payments from 

8 the Fund shall be dedicated to Open Source Dividend 

9 Prizes. 

10 (b) PROCEDURES.— 

11 (1) IN GENERAL.—The Prize Fund Director 

12 shall adopt procedures for the allocation of Open 

13 Source Dividend Prizes. Such procedures shall— 

14 (A) be fully transparent regarding the 

15 process for evaluating the value of open sharing 

16 of knowledge, data, materials, and technology; 

17 (B) reward the open, nondiscriminatory, 

18 and royalty-free sharing of knowledge, data, 

19 materials, and technology that has contributed 

20 to the development of the new qualifying treat21 ment for HIV/AIDS or manufacturing proc22 esses that are rewarded under section 7; 

23 (C) in the case of rewards for contributing 

24 to the development of new qualifying treatment 

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1 warded under section 7, provide for a time-lim2 ited period of nominations for persons or com3 munities whose contributions were considered 

4 useful, including the evidence to support such 

5 nominations to describe the significance of the 

6 contribution; and 

7 (D) provide for rules and procedures to 

8 protect against conflicts of interest. 

9 (2) PUBLIC AVAILABILITY OF NOMINATIONS.— 

10 The nominations described in paragraph (1)(C), and 

11 the evidence supporting such nominations, shall be 

12 public. The public shall be allowed to provide com13 mentary and additional evidence on such nomina14 tions before awards are made. 

15 SEC. 10. COMPETITIVE INTERMEDIARIES FOR FUNDING IN16 TERIM TECHNOLOGIES. 

17 (a) IN GENERAL.—The Prize Fund Director may au18 thorize multiple nonprofit intermediaries to manage Fund 

19 payments to reward projects for interim research and de20 velopment of new qualifying treatments for HIV/AIDS, or 

21 for open source dividend prizes. Such intermediaries shall 

22 compete for funding from non-Federal entities that co23 fund the Fund. 

24 (b) AVAILABILITY.—Prizes awarded by competitive 

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1 nities that provide open, nondiscriminatory, and royalty2 free licenses to relevant intellectual property rights. 

3 (c) RULES.—The Prize Fund Director shall adopt 

4 rules to ensure the transparency and accountability of any 

5 entities authorized to act as competitive intermediaries 

6 under subsection (a). 

7 (d) ALLOCATION.—The Secretary of Health and 

8 Human Services shall determine how much of the Fund 

9 shall be managed by competitive intermediaries to reward 

10 projects for interim research and development of new 

11 qualifying treatments for HIV/AIDS or for open source 

12 dividend prizes. 

13 SEC. 11. SPECIAL TRANSITION RULES. 

14 (a) IN GENERAL.—A qualifying treatment for HIV/ 

15 AIDS that is on the market on October 1, 2014, shall 

16 remain eligible for prize payments for not more than 10 

17 fiscal years, consistent with section 8(d)(3). 

18 (b) DETERMINATION OF VALUE.—In determining the 

19 amount of a prize payment for a qualifying treatment for 

20 HIV/AIDS described in subsection (a), the Prize Fund Di21 rector shall calculate the incremental value of the quali22 fying treatment for HIV/AIDS as of the date on which 

23 the qualifying treatment for HIV/AIDS was first intro24 duced in the market. 


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1 (c) MAXIMUM AMOUNT.—With respect to qualifying 

2 treatment for HIV/AIDS described in subsection (a), the 

3 Prize Fund Director may award— 

4 (1) of the amount appropriated to the Fund for 

5 fiscal year 2015, not more than 90 percent of such 

6 amount; and 

7 (2) of the amount appropriated to the Fund for 

8 each of the succeeding 9 fiscal years, not more than 

9 a percentage of such amount that is equal to 9 per10 cent less the percentage applicable to the preceding 

11 fiscal year under this subsection. 

12 SEC. 12. ARBITRATION. 

13 In the case of a qualifying treatment for HIV/AIDS 

14 that is on the market on October 1, 2014, and subject 

15 to patents owned by a party other than the person who 

16 first received market clearance for the qualifying treat17 ment for HIV/AIDS, the Prize Fund Director shall estab18 lish an arbitration procedure to determine an equitable di19 vision of any prize payments under this Act among the 

20 patent owners and the person who first received market 

21 clearance for the qualifying treatment for HIV/AIDS. 

22 SEC. 13. FUNDING. 

23 (a) APPROPRIATIONS.— 

24 (1) START-UP COSTS.—For fiscal year 2015, 

25 there are authorized to be appropriated to the Fund, 


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1 such sums as may be necessary to carry out this 

2 Act. 

3 (2) PROGRAM IMPLEMENTATION.—For fiscal 

4 year 2015 and each subsequent fiscal year, there is 

5 authorized to be appropriated to the Fund, and 

6 there is appropriated, out of any funds in the Treas7 ury not otherwise appropriated, an amount equal to 

8 0.02 percent of the gross domestic product of the 

9 United States for the preceding fiscal year (as such 

10 amount is determined by the Secretary of Com11 merce). 

12 (3) AVAILABILITY.—Funds appropriated to the 

13 Fund for a fiscal year shall remain available for ex14 penditure in accordance with this Act until the end 

15 of the 3-year period beginning on October 1 of such 

16 fiscal year. Any such funds that are unexpended at 

17 the end of such period shall revert to the Treasury. 

18 (b) IMPOSITION OF ANNUAL FEE ON HEALTH IN19 SURANCE PROVIDERS.— 

20 (1) IN GENERAL.—Each covered entity engaged 

21 in the business of providing health insurance shall 

22 pay to the Secretary, not later than the annual pay23 ment date of each calendar year beginning after 

24 2014, a fee in an amount determined under para25 graph (3). 


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1 (2) ANNUAL PAYMENT DATE.—For purposes of 

2 this section, the term ‘‘annual payment date’’ 

3 means, with respect to any calendar year, a date de4 termined by the Secretary, which in no event, may 

5 be later than September 30 of such calendar year. 

6 (3) DETERMINATION OF FEE AMOUNT.— 

7 (A) IN GENERAL.—The total of all fees 

8 paid by all covered entities for any given year 

9 shall be the amount described in subsection 

10 (a)(2) multiplied by the ratio of the number of 

11 persons receiving treatments for HIV/AIDS 

12 that are insured in the private sector to the 

13 number of persons receiving treatments for 

14 HIV/AIDS who received insurance or reim15 bursements or care from the public sector. 

16 (B) INDIVIDUAL CONTRIBUTIONS.—With 

17 respect to each covered entity, the fee under 

18 this section for any calendar year shall be equal 

19 to the ratio of the covered entity’s net pre20 miums written with respect to health insurance 

21 for any United States health risk taken into ac22 count under subsection (c) during the preceding 

23 calendar year, to the sum of such net premiums 

24 for all covered entities, multiplied by the 

25 amount under subparagraph (A). 


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1 (c) AMOUNTS TAKEN INTO ACCOUNT.—For purposes 

2 of subsection (b)(3), the net premiums written with re3 spect to health insurance for any United States health risk 

4 that are taken into account during any calendar year with 

5 respect to any covered entity shall be determined as fol6 lows: 

7 (1) With respect to a covered entity’s net pre8 miums written during the calendar year that are not 

9 more than $25,000,000, the percentage of net pre10 miums written that are taken into account is 0 per11 cent. 

12 (2) With respect to a covered entity’s net pre13 miums written during the calendar year that are 

14 more than $25,000,000 but less than $50,000,000, 

15 the percentage of net premiums written that are 

16 taken into account is 50 percent. 

17 (3) With respect to a covered entity’s net pre18 miums written during the calendar year that are 

19 $50,000,000 or more, the percentage of net pre20 miums written that are taken into account is 100 

21 percent. 

22 (d) COVERED ENTITY.— 

23 (1) IN GENERAL.—For purposes of this section, 

24 the term ‘‘covered entity’’ means any entity which 


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1 provides health insurance for any United States 

2 health risk. 

3 (2) EXCLUSION.—Such term does not include 

4 any governmental entity. 

5 SEC. 14. DONOR INNOVATION PRIZE FUND. 

6 (a) IN GENERAL.—In order to further separate prod7 uct prices from research and development incentives and 

8 to facilitate the supply of low-cost generic drugs for the 

9 treatment of HIV/AIDS in developing countries, there is 

10 established in the Treasury of the United States a ‘‘Donor 

11 Innovation Prize Fund’’. 

12 (b) AMOUNT IN FUND.—The amount in the Donor 

13 Innovation Prize Fund shall consist of— 

14 (1) an amount set aside by the Secretary of 

15 Health and Human Services that is equal to 10 per16 cent of the amount of money estimated by such Sec17 retary as the cost of qualifying treatments for HIV/ 

18 AIDS used by programs supported by the Presi19 dent’s Emergency Plan for AIDS Relief (commonly 

20 referred to as ‘‘PEPFAR’’) or other federally sup21 ported programs to fund the treatment of HIV/ 

22 AIDS in developing countries; and 

23 (2) other amounts donated to the Fund as de24 scribed in subsection (d). 


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1 (c) USE OF FUNDS.—The Secretary of Health and 

2 Human Services (referred to in this section as the ‘‘Sec3 retary’’) shall use the funds from the Donor Innovation 

4 Prize Fund to reward the owners and developers of prod5 ucts that permit open competition for products in devel6 oping countries, either by not patenting products, pro7 viding nondiscriminatory royalty-free open licenses to all 

8 patents and other intellectual property claims on at least 

9 a field of use for the treatment of HIV/AIDS in developing 

10 countries, or through licenses to the Medicine Patent Pool. 

11 (d) ENCOURAGEMENT BY SECRETARY.—The Sec12 retary shall encourage other donors and developing coun13 try governments to contribute a similar fraction of drug 

14 purchase budgets to the Donor Innovation Prize Fund, in 

15 order to facilitate greater competition for generic drugs, 

16 while providing a sustainable source of rewards for innova17 tion. 

18 (e) PRIZES.—The Secretary shall establish and 

19 award prize payments from the Donor Innovation Prize 

20 Fund by applying similar eligibility rules, selection cri21 teria, and requirements as are applied with respect to 

22 prize payments awarded from the Prize Fund for HIV/ 

23 AIDS under section 8. 

24 (f) TRANSPARENCY.—The Secretary shall adopt pro25 cedures to ensure that the operation of the Donor InnovaVerDate Mar 15 2010 15:58 Mar 27, 2013 Jkt 029200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\S626.IS S626

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1 tion Prize Fund is transparent and supported by a de2 scription of the methods, data sources, assumptions, out3 comes, and related information that will allow the public 

4 to understand how the Secretary reaches its criteria-set5 ting and award decisions. 

Æ 


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