I

103D CONGRESS

1ST SESSION H. R. 1334

To amend the Public Health Service Act to establish a process to provide

for reasonable prices for drugs, devices, and other tangible products

made available to the public as a consequence of funding by the National

Institutes of Health, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 11, 1993

Mr. WYDEN introduced the following bill; which was referred to the Committee

on Energy and Commerce

A BILL

To amend the Public Health Service Act to establish a process to provide for reasonable prices for drugs, devices,

and other tangible products made available to the public

as a consequence of funding by the National Institutes

of Health, and for other purposes.

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 ‘‘Federal Research

5 Product Commercialization Act’’.
2

•HR 1334 IH

1 SEC. 2. ESTABLISHMENT OF PROCESS REGARDING REA2 SONABLE PRICES FOR PRODUCTS DEVEL3 OPED AS CONSEQUENCE OF FUNDING BY NA4 TIONAL INSTITUTES OF HEALTH.

5 Part G of title IV of the Public Health Service Act

6 (42 U.S.C. 289 et seq.) is amended by inserting after sec7 tion 498 the following section:

8 ‘‘REASONABLE PRICES FOR PRODUCTS DEVELOPED WITH

9 ASSISTANCE OF INSTITUTES

10 ‘‘SEC. 498B. (a) IN GENERAL.—Subject to the provi11 sions of this section, for fiscal year 1994 and subsequent

12 fiscal years, a project of biomedical research relating to

13 the development of a drug, device, or other tangible prod14 uct may not be conducted or supported by any agency of

15 the National Institutes of Health unless there are in effect

16 such regulations issued by the Secretary as may be nec17 essary to ensure that, in the event the product is (in ac18 cordance with applicable law) to be made available to the

19 public, there is compliance with the following:

20 ‘‘(1) The research entity, in accordance with

21 this section, will ensure that the commercial parties

22 involved make the product available to the public at

23 a reasonable price, and that the commercial parties

24 pay to the National Institutes of Health royalties

25 reasonably related to the amounts expended by such

26 Institutes with respect to the product.
3

•HR 1334 IH

1 ‘‘(2) For purposes of paragraph (1), the re2 search entity will conduct a competitive process of

3 bidding in order to select entities to serve as com4 mercial parties regarding the product. With respect

5 to such bidding, a solicitation of applications con6 taining bids will be published in the Federal

7 Register.

8 ‘‘(3) Applicants under paragraph (2) will not be

9 approved by the research entity as commercial par10 ties regarding the project unless the following condi11 tions are met:

12 ‘‘(A) The application specifies a formula

13 for determining the price at which the product

14 will be made available to the public, and the

15 formula results in a price that is in accordance

16 with paragraph (1).

17 ‘‘(B) The application specifies the royalties

18 to be paid to the National Institutes of Health,

19 and the royalties are in accordance with para20 graph (1).

21 ‘‘(C) The application demonstrates that

22 the applicant possesses the appropriate bio23 medical and commercial expertise.
4

•HR 1334 IH

1 ‘‘(D) The application is in such form, is

2 made in such manner, and contains such other

3 information as the Secretary may require.

4 ‘‘(4)(A) Subject to subparagraph (B), in select5 ing commercial parties under paragraph (3), the re6 search entity will, if there are a sufficient number of

7 qualified applicants, approve such applications as

8 may be necessary to ensure that commercial parties

9 compete in making the product available to the

10 public.

11 ‘‘(B) The research entity will comply with sub12 paragraph (A) only to the extent not inconsistent

13 with paragraph (1).

14 ‘‘(5)(A) If there is an insufficient number of

15 qualified applicants to provide for competing com16 mercial parties, the research entity will, in approving

17 applications to provide for an exclusive arrangement

18 for making the product available to the public, re19 quire that the applicants negotiate prices and royal20 ties under paragraph (1) with the Secretary.

21 ‘‘(B) If an exclusive arrangement under sub22 paragraph (A) is to be made, the Secretary will

23 publish in the Federal Register a notice of such fact.

24 ‘‘(C) An exclusive arrangement under subpara25 graph (A) will not become legally binding until the
5

•HR 1334 IH

1 expiration of the 90-period beginning on the date on

2 which the notice required in subparagraph (B) with

3 respect to the arrangement is published in the

4 Federal Register.

5 ‘‘(b) APPLICABILITY.—Subsection (a) applies with re6 spect to a drug, device, or other tangible product only if

7 the project of research involved provides a material con8 tribution to achieving status as a drug, device, or other

9 product that, under applicable law, is permitted to be

10 made available to the public.

11 ‘‘(c) REQUIRED AGREEMENTS.—With respect to a

12 project of research described in subsection (a), regulations

13 under such subsection shall, in the case of the non-Federal

14 entities involved, impose the requirements of this section

15 as required agreements between such entities and the Na16 tional Institutes of Health, including (if the project is sup17 ported by such Institutes) imposing the requirements as

18 conditions of the receipt from such Institutes of the award

19 of the grant, cooperative agreement, or contract for the

20 conduct of the project. Conditions for such awards shall,

21 as necessary, include conditions governing the arrange22 ments that the research entity involved makes with enti23 ties to serve as commercial parties regarding the drug, de24 vice, or other tangible product involved, without regard to
6

•HR 1334 IH

1 whether the National Institutes of Health is a direct party

2 to such arrangements.

3 ‘‘(d) CONSULTATIONS REGARDING REGULATIONS.—

4 In issuing regulations pursuant to subsection (a), the Sec5 retary shall consult with the Director of NIH and with

6 the Administrator of the Health Care Financing Adminis7 tration.

8 ‘‘(e) DEFINITIONS.—For purposes of this section:

9 ‘‘(1) The term ‘commercial parties’ means the

10 parties that make available to the public a drug, de11 vice, or other tangible product.

12 ‘‘(2) The term ‘make available’, with respect to

13 the use by the public of a drug, device, or other

14 tangible product, means—

15 ‘‘(A) to manufacture the product; or

16 ‘‘(B) to sell or trade the product, or to

17 offer to sell or trade the product.

18 ‘‘(3) The term ‘product’ means a drug, device,

19 or other tangible product.

20 ‘‘(4)(A) The term ‘research entity’, with respect

21 to project of biomedical research described in sub22 section (a), means the entity with the principal prop23 erty interest in the results of the research, without

24 regard to whether the entity is the National Insti25 tutes of Health or a non-Federal entity.
7

•HR 1334 IH

1 ‘‘(B) An entity is a research entity under sub2 paragraph (A) without regard to whether the prop3 erty interest in the results of the project involved—

4 ‘‘(i) is directly in the drug, device, or other

5 product that is the subject of the project; or

6 ‘‘(ii) is only in findings that relate to the

7 product.’’.

Æ