I

104TH CONGRESS

2D SESSION H. R. 4270

To require reporting on research and development expenditures for drugs

approved for marketing, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 1996

Mr. SANDERS introduced the following bill; which was referred to the

Committee on Commerce

A BILL

To require reporting on research and development expenditures for drugs approved for marketing, 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 ‘‘Health Care Research

5 and Development and Consumer Protection Act’’.

6 SEC. 2. FINDINGS.

7 The Congress makes the following findings:

8 (1) Public health needs are advanced by the de9 velopment and distribution of new drug therapies
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1 (2) The public interest in the development of

2 new drug therapies is parallel to the public interest

3 in controlling public and private health care costs.

4 (3) The Federal Government needs mechanisms

5 to ensure that portions of revenues from the sale of

6 drugs to consumers are reinvested in the research

7 and development of new technologies.

8 (4) The Federal Government is the single larg9 est supporter of biomedical research in the world,

10 spending $33 billion in 1994 alone for biomedical

11 and related health research.

12 (5) The Federal Government provides 80 per13 cent of the monies spent each year for fundamental

14 biomedical research at universities, medical schools,

15 and other non-profit institutions.

16 (6) Of all the cancer drugs developed since the

17 founding of the National Cancer Institute’s new

18 drug program in 1955 and approved for marketing

19 by the Food and Drug Administration through

20 1992, 34 of 37 cancer drugs, or 92 percent, were de21 veloped with taxpayer funds.

22 (7) The public should not have to pay twice for

23 health care inventions, first as taxpayers and second

24 as consumers.
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1 (8) The Department of Health and Human

2 Services has the responsibility for funding basic bio3 medical research, for funding medical treatment

4 through the programs under titles XVIII and XIX

5 of the Social Security Act, for providing direct medi6 cal care, and, more generally, for protecting the

7 health and safety of the public, it is incumbent upon

8 the Secretary of Health and Human Services to re9 quire a reasonable relationship between the pricing

10 of drugs, the public investment in those drugs, and

11 the health and safety needs of the public.

12 (9) The Department of Health and Human

13 Services, academic researchers, and the general pub14 lic have the right to know, but lack the necessary in15 formation about, information about the actual costs

16 for drug development, the general revenues gen17 erated from the sale of pharmaceutical drugs, and

18 the taxpayer’s investment in new drug development.

19 (10) The Department of Health and Human

20 Services lacks the necessary information to make ap21 propriate decisions about the reasonableness of drug

22 prices or the impact of its policies on research and

23 development of new medical technologies.
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1 SEC. 3. REPORT ON RESEARCH OF THE FEDERAL GOVERN2 MENT.

3 (a) INVOLVEMENT OF THE FEDERAL GOVERN4 MENT.—For each drug for which an application under sec5 tion 505, 507, or 512 of the Federal Food, Drug, and

6 Cosmetic Act has been approved the following shall be re7 ported to the Secretary of Health and Human Services:

8 (1) Each patent, cooperative research and de9 velopment agreement under section 12 of the Ste10 venson-Wydler Technology Innovation Act of 1980,

11 or other contractual agreement with the Federal

12 Government which contributed to the development of

13 the drug. The dollar amount of Federal funds ex14 pended, the agency of the Federal Government

15 which provided such funds, the dates of any contrac16 tual agreements, and the nature of the research and

17 development activity shall be included in the report.

18 (2) Each grant, contract, or other funding

19 mechanism of the Federal Government which was

20 used to support research or development activities

21 with respect to the drug, including any grant or con22 tract by the Federal Government to an institution of

23 higher education or other non profit institution or

24 other funds expended by the Federal Government on

25 research and development which directly contributed

26 to the development of the drug. The dollar amount
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1 of Federal funds expended, the agency of the Fed2 eral Government which provided such funds, the

3 dates of any contractual agreements, and the nature

4 of the research and development activity shall be in5 cluded in the report.

6 The Secretary shall make such report available to the pub7 lic.

8 (b) RESEARCH AND DEVELOPMENT.—

9 (1) IN GENERAL.—For each drug for which an

10 application under section 505, 507, or 512 of the

11 Federal Food, Drug, and Cosmetic Act has been ap12 proved the total amount expended for each type of

13 research and development of the drug in each cal14 endar year, including pre-clinical research and phase

15 I, II, and III clinical trials, the entity which made

16 the expenditures, and the amount provided by the

17 Federal Government shall be reported to the Sec18 retary of Health and Human Services.

19 (2) PUBLIC DISCLOSURE OF DATA.—If a drug

20 is protected under section 527(a) of the Federal

21 Food, Drug, and Cosmetic Act or under a patent,

22 the material reported under paragraph (1) for such

23 drug shall be made available by the Secretary to the

24 public. If a drug is not protected under such section

25 or a patent, the Secretary shall make the report
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1 available to the public in a form which does not

2 identify individual entities.

3 SEC. 4. REASONABLE PRICE AGREEMENT.

4 (a) IN GENERAL.—If any Federal agency or any non5 profit entity undertakes federally funded health care re6 search and development and is to convey or provide a pat7 ent or other exclusive right to use such research and devel8 opment for a drug or other health care technology, such

9 agency or entity shall not make such conveyance or pro10 vide such patent or other right until the person who will

11 receive such patent or other right first agrees to a reason12 able pricing agreement with the Secretary of Health and

13 Human Services or the Secretary makes a determination

14 that the public interest is served by a waiver of the reason15 able pricing agreement provided in accordance with sub16 section (b).

17 (b) WAIVER.—No waiver shall take effect under sub18 section (a) before the public is given notice of the proposed

19 waiver and provided a reasonable opportunity to comment

20 on the proposed waiver. A decision to grant a waiver shall

21 set out the Secretary’s finding that such a waiver is in

22 the public interest.
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1 SEC. 5. PURCHASE OF DRUGS DEVELOPED WITH TAXPAYER

2 SUPPORT.

3 For any drug approved for marketing by the Food

4 and Drug Administration which was developed with sig5 nificant Federal support, the Secretary of Health and

6 Human Services shall review the price of the drug for pur7 poses of determining a reasonable price for Federal reim8 bursements under the programs under titles XVIII and

9 XIX of the Social Security Act and other Federal pro10 grams that elect to participate in the Secretary’s reason11 able pricing program, In determining a reasonable price

12 for a drug, the Secretary shall consider—

13 (1) the public interest in continued health care

14 research and development,

15 (2) the contribution of the person marketing

16 such drug to the drug research and development ex17 penses, including the amount, timing, and risk of in18 vestment in such research and development,

19 (3) the contribution of the Federal Government

20 to the research and development of such drug, in21 cluding the amount, timing, and risk of investment

22 in such research and development,

23 (4) the therapeutic value of such drug,

24 (5) the number of patients who are expected to

25 purchase such drug,
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1 (6) the cost of producing and marketing of such

2 drug,

3 (7) the cost of therapies which are similar to

4 the therapy using such drug, and

5 (8) other relevant factors.

6 SEC. 6. MATERIAL TRANSFER AGREEMENT.

7 If in connection with research and development for

8 health care technologies, the Secretary of Health and

9 Human Services determines that the public interest will

10 be advanced by the ability of the Secretary to conduct re11 search on biological substances or other materials, the

12 Secretary shall have the authority to compel the owner of

13 such substances or materials to provide the Secretary with

14 such substances or materials in accordance with a mate15 rials transfer agreement. The agreement shall—

16 (1) provide the owner of such substances or ma17 terials compensation for the costs incurred in mak18 ing the transfer to the Secretary;

19 (2) define the terms and conditions under which

20 the Secretary may use the materials;

21 (3) not grant rights in intellectual property or

22 rights for commercial purposes; and

23 (4) require that the material be used for re24 search purposes only.
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1 SEC. 7. PROMOTION OF RESEARCH AND DEVELOPMENT.

2 (a) ACCOUNT.—Any person engaged in the manufac3 ture of drugs for introduction into interstate commerce

4 shall, in accordance with subsection (b), establish for each

5 drug an account for funds to be reinvested in research

6 and development for health care technologies.

7 (b) REINVESTMENT IN RESEARCH AND DEVELOP8 MENT.—To insure that adequate funds are being made

9 available for research and development of new health care

10 technologies, the Secretary of Health and Human Services

11 shall establish for persons engaged in the manufacture of

12 drugs for introduction into interstate commerce the mini13 mum amount such person should make available for re14 search and development of its new health care technologies

15 based upon a percentage of sales revenue for that drug.

16 The Secretary may require different percentages for mini17 mum reinvestment for different classes of drugs based

18 upon patient protection, orphan drug status, or magnitude

19 of sales.

20 (c) ADDITIONAL RULES.—The Secretary shall adopt

21 regulations concerning qualifying research and develop22 ment expenditures and the reporting requirements for per23 sons who are subject to subsections (a) and (b).

24 SEC. 8. REPORTS ON SALES.

25 Any person engaged in the manufacture and sale of

26 drugs approved under section 505, 507, or 512 of the Fed-
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1 eral Food, Drug, and Cosmetic Act shall report to the

2 Health Care Financing Administration the total number

3 of each drug it has sold and the total revenue it has re4 ceived from such sales, including sales made outside the

5 United States.

6 SEC. 9. GOVERNMENT EXPENDITURE ON PRESCRIPTION

7 DRUGS.

8 The Secretary of Health and Human Services shall

9 report to the Congress annually on the estimate of the

10 amount of money the Federal government expends, di11 rectly or through reimbursement, for the purchase of pre12 scription drugs, including an estimate of the amount of

13 money expended each year on drugs which were developed

14 with significant Federal support.

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