I 

113TH CONGRESS 

2D SESSION H. R. 5790 

To authorize the Director of the National Institutes of Health to design 

and enter into agreements for the implementation of prize competitions 

with the goal of improving health outcomes and thereby reducing Federal 

expenditures. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 3, 2014 

Mr. YOUNG of Indiana introduced the following bill; which was referred to the 

Committee on Energy and Commerce, and in addition to the Committee 

on Ways and Means, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To authorize the Director of the National Institutes of 

Health to design and enter into agreements for the implementation of prize competitions with the goal of improving health outcomes and thereby reducing Federal 

expenditures. 

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 ‘‘Health Prizes Reward5 ing Innovation, Savings, and Effectiveness Act of 2014’’. 


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1 SEC. 2. PRIZE COMPETITIONS. 

2 (a) IN GENERAL.—Part B of title IV of the Public 

3 Health Service Act (42 U.S.C. 284 et seq.) is amended 

4 by adding at the end the following: 

5 ‘‘SEC. 409K. PRIZE COMPETITIONS FOR IMPROVING 

6 HEALTH OUTCOMES AND REDUCING FED7 ERAL EXPENDITURES. 

8 ‘‘(a) GOALS.—The goal of the prize competitions 

9 under this section is to improve health outcomes, thereby 

10 reducing Federal expenditures on health programs. 

11 ‘‘(b) INITIAL ACTIONS.— 

12 ‘‘(1) IDENTIFICATION OF DISEASES AND CONDI13 TIONS.—Not later than 6 months after the date of 

14 enactment of the Health Prizes Rewarding Innova15 tion, Savings, and Effectiveness Act of 2014, the Di16 rector of NIH, in consultation with the Director of 

17 the Congressional Budget Office, the Administrator 

18 for the Centers for Medicare & Medicaid Services, 

19 and relevant health economists, shall identify 3 to 5 

20 human diseases or health conditions with respect to 

21 which— 

22 ‘‘(A) the Federal Government, for such 

23 diseases and conditions, collectively spends a 

24 total of not less than $5,000,000,000 per year 

25 on prevention and treatment activities; 


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1 ‘‘(B) public and private investment in re2 search is disproportionately small in comparison 

3 with such investment for other human diseases 

4 and conditions for which the Federal Govern5 ment has similar or greater expenditures on 

6 prevention and treatment activities; and 

7 ‘‘(C) the prize competitions under this sec8 tion would be appropriate for achieving the goal 

9 described in subsection (a). 

10 ‘‘(2) DESIGN OF PRIZE COMPETITIONS.—Not 

11 later than 12 months after the date of enactment of 

12 the Health Prizes Rewarding Innovation, Savings, 

13 and Effectiveness Act of 2014, the Director of NIH 

14 shall— 

15 ‘‘(A) design prize competitions— 

16 ‘‘(i) to cooperate with competitors to 

17 realize innovations to achieve the goal de18 scribed in subsection (a) with respect to 

19 one or more diseases or conditions identi20 fied pursuant to subsection (b); and 

21 ‘‘(ii) to award one or more prizes— 

22 ‘‘(I) if appropriate, at the begin23 ning of or during the competitions, to 

24 the competitors whose innovations are 


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1 most promising or demonstrate 

2 progress; and 

3 ‘‘(II) at the end of the competi4 tions, to the competitors whose inno5 vations prove to be the best solutions; 

6 ‘‘(B) ensure that the design of such com7 petitions— 

8 ‘‘(i) is realistic, given the amount of 

9 funds to be awarded as prizes; 

10 ‘‘(ii) does not reflect any bias con11 cerning the type of innovations which will 

12 prove to be the best solutions; 

13 ‘‘(iii) allows any person to participate 

14 as a competitor without regard to the per15 son’s place of incorporation, primary place 

16 of business, citizenship, and residency, as 

17 applicable; and 

18 ‘‘(iv) addresses areas of unmet need 

19 with regard to a lack of recent and pend20 ing innovations; and 

21 ‘‘(C) submit to the Congress a report on 

22 the design of such competitions. 

23 ‘‘(3) CONSULTATION.—In carrying out para24 graphs (1) and (2), the Director of NIH shall con25 sult with— 


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1 ‘‘(A) medical, economic, budgetary, innova2 tion, and venture capital experts; and 

3 ‘‘(B) the heads of relevant Federal agen4 cies, including the Commissioner of Food and 

5 Drugs, the Director of the National Science 

6 Foundation, and the Administrator of the Small 

7 Business Administration. 

8 ‘‘(c) SIMULATION.—The Director of NIH shall— 

9 ‘‘(1) not later than 14 months after the date of 

10 enactment of the Health Prizes Rewarding Innova11 tion, Savings, and Effectiveness Act of 2014, award 

12 one or more contracts— 

13 ‘‘(A) to perform a simulation of the prize 

14 competitions to be conducted under this section, 

15 based on the designs developed under sub16 section (b)(2) and in consultation with the cat17 egories of experts and agency heads described 

18 in subsection (b)(3); and 

19 ‘‘(B) to use the simulation to assess the ef20 fectiveness of the design; and 

21 ‘‘(2) not later than 4 months after awarding 

22 such one or more contracts, submit to the Congress 

23 a report on the results of the simulation and assess24 ment. 


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1 ‘‘(d) ADJUSTMENTS TO DESIGN.—Not later than 21 

2 months after the date of enactment of the Health Prizes 

3 Rewarding Innovation, Savings, and Effectiveness Act of 

4 2014, the Director of NIH shall— 

5 ‘‘(1) taking into consideration the results of the 

6 simulation under subsection (c), and subject to the 

7 requirements of subparagraphs (A) and (B) of sub8 section (b)(2), make such adjustments to the design 

9 of the prize competitions under this section as the 

10 Director determines appropriate; and 

11 ‘‘(2) submit to the Congress a report on any 

12 such adjustments. 

13 ‘‘(e) IMPLEMENTATION OF PRIZE COMPETITIONS.— 

14 ‘‘(1) IN GENERAL.—The Director of NIH shall 

15 enter into an agreement with one or more private 

16 entities to implement prize competitions based on 

17 the designs developed under subsection (b)(2), as ad18 justed under subsection (d). 

19 ‘‘(2) DURATION.—The prize competitions under 

20 paragraph (1) shall require competitors to dem21 onstrate the effectiveness of their innovations over a 

22 period of not more than 5 years. 

23 ‘‘(3) GUIDANCE AND ACCESS TO TESTING FA24 CILITIES.—The Secretary and the Commissioner of 

25 Food and Drugs may cooperate with qualified comVerDate Sep 11 2014 21:37 Dec 04, 2014 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5790.IH H5790

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1 petitors in the prize competitions under paragraph 

2 (1) by providing guidance and access to testing fa3 cilities. 

4 ‘‘(4) NUMBER OF PRIZE COMPETITIONS.—The 

5 Director shall conduct— 

6 ‘‘(A) a total of not more than 5 prize com7 petitions under this section; and 

8 ‘‘(B) not more than 2 such prize competi9 tions with respect to any disease or condition. 

10 ‘‘(f) TRACKING; REPORTING.—The Director of NIH 

11 shall— 

12 ‘‘(1) collect information on— 

13 ‘‘(A) the medical efficacy of innovations 

14 funded through the prize competitions under 

15 subsection (e); and 

16 ‘‘(B) the actual and potential effect of the 

17 innovations on Federal expenditures; and 

18 ‘‘(2) not later than one year after the conclu19 sion of the prize competitions under subsection (e), 

20 and not later than the end of each of the 4 suc21 ceeding years, submit to the Congress a report on 

22 the information collected under paragraph (1). 

23 ‘‘(g) INTELLECTUAL PROPERTY.— 

24 ‘‘(1) PROHIBITION ON THE GOVERNMENT AC25 QUIRING INTELLECTUAL PROPERTY RIGHTS.—The 


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1 Federal Government may not gain an interest in in2 tellectual property developed by a participant in a 

3 prize competition under subsection (e) without the 

4 written consent of the participant. 

5 ‘‘(2) LICENSES.—The Federal Government may 

6 negotiate a license for the use of intellectual prop7 erty developed by a participant in a prize competi8 tion under subsection (e). 

9 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.— 

10 ‘‘(1) IN GENERAL.—To carry out this section, 

11 in lieu of amounts authorized to be appropriated by 

12 section 402A, there are authorized to be appro13 priated $50,000,000. 

14 ‘‘(2) MINIMUM PERCENTAGE FOR PRIZES.—Of 

15 the total assistance awarded to private entities under 

16 subsection (e) (including in-kind contributions and 

17 testing or other technical support) to implement any 

18 prize competition under this section— 

19 ‘‘(A) not more than 30 percent of such as20 sistance shall be for administration of the prize 

21 competition; and 

22 ‘‘(B) not less than 70 percent of such as23 sistance shall be awarded as prizes to competi24 tors in the prize competition.’’. 


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1 (b) PRIZES EXCLUDED FROM GROSS INCOME OF RE2 CIPIENTS.— 

3 (1) IN GENERAL.—Section 74 of the Internal 

4 Revenue Code of 1986 is amended by adding at the 

5 end the following new subsection: 

6 ‘‘(d) CERTAIN PRIZES FOR IMPROVING HEALTH

7 OUTCOMES.—Gross income shall not include the value of 

8 any prize received by the taxpayer pursuant to a prize 

9 competition under section 409K of the Public Health 

10 Service Act (as in effect immediately after the enactment 

11 of this subsection).’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by this subsection shall apply to taxable years end14 ing after the date of the enactment of this Act. 

Æ 


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