II 

114TH CONGRESS 

2D SESSION S. 3457 

To establish Centers for Medicare & Medicaid Services SBIR or STTR 

program grants which shall be known as Medicare commercialization grants. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 28, 2016 

Mr. GARDNER (for himself and Mr. COONS) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To establish Centers for Medicare & Medicaid Services SBIR 

or STTR program grants which shall be known as Medicare commercialization grants. 

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 ‘‘Reducing Medicare 

5 Costs through Innovation Act’’. 

6 SEC. 2. MEDICARE COMMERCIALIZATION GRANTS. 

7 (a) DEFINITIONS.—In this section: 

8 (1) The term— 

mstockstill on DSK3G9T082PROD with BILLS

2 

•S 3457 IS

1 (A) ‘‘Administrator’’ means the Adminis2 trator of the Centers for Medicare & Medicaid 

3 Services; and 

4 (B) ‘‘Secretary’’ means the Secretary of 

5 Health and Human Services. 

6 (2) The terms ‘‘commercialization’’, ‘‘Phase I’’, 

7 ‘‘Phase II’’, ‘‘Phase III’’, ‘‘SBIR’’, and ‘‘STTR’’ 

8 have the meanings given those terms in section 9(e) 

9 of the Small Business Act (15 U.S.C. 638(e)). 

10 (3) The term ‘‘eligible medical product’’ means 

11 a product— 

12 (A) for which a grant recipient received a 

13 Medicare commercialization grant; 

14 (B) which will maintain or improve quality 

15 of care while reducing costs (as determined by 

16 the Secretary); and 

17 (C)(i) that is a drug, as defined under sec18 tion 201(g)(1) of Federal Food, Drug, and Cos19 metic Act (21 U.S.C. 321(g)(1)); 

20 (ii) that is a biological product, as defined 

21 in section 351 of the Public Health Service Act 

22 (42 U.S.C. 262); 

23 (iii) that is a combination product, as de24 scribed in section 503(g) of the Federal Food, 

25 Drug, and Cosmetic Act (21 U.S.C. 353(g)); or 

mstockstill on DSK3G9T082PROD with BILLS

3 

•S 3457 IS

1 (iv) that is a device, as defined in section 

2 201(h) of the Federal Food, Drug, and Cos3 metic Act (21 U.S.C. 321(h)), for which ap4 proval under section 515 of such Act is re5 quired. 

6 (4) The term ‘‘eligible small business concern’’ 

7 means a small business concern that— 

8 (A) has a focus on the diseases or condi9 tions that are the top 10 cost drivers in the 

10 Medicare program under title XVIII of the So11 cial Security Act (42 U.S.C. 1395 et seq.), as 

12 determined by the Secretary in accordance with 

13 subsection (b)(3); 

14 (B) is otherwise eligible for a Centers for 

15 Medicare & Medicaid Services SBIR or STTR 

16 program grant; 

17 (C) has completed Phase I activities; and 

18 (D) has funding for Phase II activities. 

19 (5) The term ‘‘small business concern’’ has the 

20 meaning given the term in section 3 of the Small 

21 Business Act (15 U.S.C. 632). 

22 (b) MEDICARE COMMERCIALIZATION GRANTS.— 

23 (1) ESTABLISHMENT OF PROGRAM.—The Sec24 retary shall establish within the Centers for Medi25 care & Medicaid Services SBIR or STTR program 

mstockstill on DSK3G9T082PROD with BILLS

4 

•S 3457 IS

1 a grant program referred to as the ‘‘Medicare com2 mercialization grant program’’ through which the 

3 Secretary shall award grants to eligible small busi4 ness concerns with approved applications to assist 

5 such small business concerns in Phase III activities 

6 related to developing novel eligible medical products 

7 and receiving approval or clearance by the Food and 

8 Drug Administration for such eligible medical prod9 ucts in accordance with paragraph (2). 

10 (2) APPROVAL PROCESS FOR GRANT RECIPI11 ENT’S NOVEL DRUGS, DEVICES, OR DIAGNOSTICS.— 

12 A grantee may choose to submit an application for 

13 approval of novel drugs, devices, or diagnostics 

14 through a traditional approval process or through 

15 the pilot program for parallel review of medical 

16 products described in subsection (c). 

17 (3) APPLICATIONS.— 

18 (A) SOLICITATION OF APPLICATIONS.— 

19 The Secretary shall issue an annual solicitation 

20 of applications for the grant program under 

21 paragraph (1), with a focus on the diseases or 

22 conditions that are the top 10 cost drivers in 

23 the Medicare program under title XVIII of the 

24 Social Security Act (42 U.S.C. 1395 et seq.), as 

mstockstill on DSK3G9T082PROD with BILLS

5 

•S 3457 IS

1 determined by the Secretary in accordance with 

2 subparagraph (B). 

3 (B) COST DRIVERS IN MEDICARE.—The 

4 Secretary shall assess, in consultation with 

5 stakeholders, and take into consideration for 

6 purposes of determining such cost drivers and 

7 the eligibility of a small business concern, as 

8 described in subsection (a)(4)(A)— 

9 (i) high volume medical procedures 

10 that are paid for under the Medicare pro11 gram; 

12 (ii) diseases or conditions that a high 

13 number of Medicare beneficiaries are af14 fected by; 

15 (iii) high cost medical procedures that 

16 are paid for under the Medicare program; 

17 (iv) diseases or conditions that Medi18 care beneficiaries are affected by that re19 sult in a high cost to the Medicare pro20 gram; and 

21 (v) areas described in clauses (i) 

22 through (iv) for which there is a high po23 tential for innovation or cost reduction. 

24 (C) APPLICATION REQUIREMENT.—Each 

25 eligible small business concern that applies for 

mstockstill on DSK3G9T082PROD with BILLS

6 

•S 3457 IS

1 a Medicare commercialization grant shall in2 clude in the application for such grant a de3 scription of each source of funding for the eligi4 ble business concern and the amount of funding 

5 from each such source. 

6 (4) DURATION.—An eligible small business con7 cern may receive a Medicare commercialization grant 

8 for a period of not less than 1 year and not more 

9 than 3 years. 

10 (5) NO LIMIT ON NUMBER OF RECIPIENTS.— 

11 The Secretary shall not limit the number of eligible 

12 small business concerns that may receive a Medicare 

13 commercialization grant. 

14 (6) PERIODIC ASSESSMENT.—At the completion 

15 of the third year for which grants are awarded 

16 under this subsection, the Secretary shall prepare an 

17 assessment containing information about the cost re18 ductions and improvements in care that result from 

19 such grants, including— 

20 (A) a general assessment of the cost driv21 ers that the grants were intended to address; 

22 (B) information about the novel eligible 

23 medical products that the grantees developed or 

24 received approval or clearance for with the aid 

25 of grant funding under this subsection; and 

mstockstill on DSK3G9T082PROD with BILLS

7 

•S 3457 IS

1 (C) the potential for a reduction in costs 

2 that may result if such novel eligible medical 

3 products were used nationwide. 

4 (7) REPORT.—The Secretary shall prepare and 

5 submit to Congress, at the completion of the third 

6 year for which grants are awarded under this sub7 section and following the assessment described in 

8 paragraph (6), a summary report containing the in9 formation described in paragraph (6). The Secretary 

10 shall also post each such report on the website of the 

11 Department of Health and Human Services. 

12 (8) FUNDING.—To carry out the grant program 

13 under this subsection, the Secretary shall use 

14 amounts allocated for the SBIR and STTR pro15 grams of the Department of Health and Human 

16 Services under subsections (f) and (n), respectively, 

17 of section 9 of the Small Business Act (15 U.S.C. 

18 638). 

19 (9) COLLABORATION.—The Secretary shall col20 laborate with the heads of other divisions within the 

21 Department of Health and Human Services as the 

22 Secretary determines necessary to carry out this 

23 subsection. 

24 (c) PILOT PROGRAM FOR PARALLEL REVIEW OF

25 MEDICAL PRODUCTS.— 

mstockstill on DSK3G9T082PROD with BILLS

8 

•S 3457 IS

1 (1) IN GENERAL.—Not later than 60 days after 

2 the date of enactment of this section, the Secretary 

3 and the Administrator shall jointly establish a pilot 

4 program for parallel review of eligible medical prod5 ucts that is similar to the ‘‘Pilot Program for Par6 allel Review of Medical Products’’ described in the 

7 notice of the Centers for Medicare & Medicaid Serv8 ices, published in the Federal Register on October 

9 11, 2011 (76 Fed. Reg. 62808) (referred to in this 

10 subsection as the ‘‘pilot program’’). Such pilot pro11 gram shall not affect the applicable criteria or 

12 standards for approving, clearing, or classifying 

13 medical products under the Federal Food, Drug, 

14 and Cosmetic Act (21 U.S.C. 301) and shall not af15 fect the criteria and standards relating to determina16 tions about a reimbursement designation or a na17 tional coverage determination under the Medicare 

18 program under title XVIII of the Social Security 

19 Act. 

20 (2) PURPOSE.—The purposes of the pilot pro21 gram are to— 

22 (A) reduce the timeline of the review proc23 esses for purposes of approval by the Food and 

24 Drug Administration under the Federal Food, 

25 Drug, and Cosmetic Act (21 U.S.C. 301) and 

mstockstill on DSK3G9T082PROD with BILLS

9 

•S 3457 IS

1 a reimbursement designation and a national 

2 coverage determination under the Medicare pro3 gram under title XVIII of the Social Security 

4 Act for certain medical products developed by 

5 Medicare commercialization grant recipients; 

6 and 

7 (B) increase the efficiency of, and commu8 nication between, the Department of Health 

9 and Human Services and the Centers for Medi10 care & Medicaid Services. 

11 (3) ELIGIBLE PARTICIPANTS.—The pilot pro12 gram established under this subsection shall be 

13 available— 

14 (A) only to recipients of a Medicare com15 mercialization grant under this subsection (b) 

16 who choose to participate in such pilot program; 

17 and 

18 (B) only for the review of eligible medical 

19 products. 

20 (4) PARALLEL REVIEW PROCESS.—As part of 

21 the pilot program— 

22 (A) to the extent practicable, the Secretary 

23 and the Administrator shall notify participating 

24 grant recipients of the data that may be necmstockstill on DSK3G9T082PROD with BILLS

10 

•S 3457 IS

1 essary for the grant recipient to submit at the 

2 beginning of the review process; and 

3 (B) the Administrator shall begin review 

4 for purposes of a reimbursement designation 

5 and a national coverage determination under 

6 the Medicare program under title XVIII of the 

7 Social Security Act for an eligible medical prod8 uct while the Secretary of Health and Human 

9 Services is reviewing that eligible medical prod10 uct for approval under the Federal Food, Drug, 

11 and Cosmetic Act (21 U.S.C. 301). 

12 (5) ALLOCATION OF RESOURCES.—The Admin13 istrator shall allocate the resources necessary to 

14 carry out the pilot program. 

Æ 

mstockstill on DSK3G9T082PROD with BILLS